LXP - Earnings call transcript Q4 2021

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Heather Gentry

Thank you, operator. Welcome to LXP Industrial Trust’s Fourth Quarter 2021 Conference Call and Webcast. The earnings release was distributed this morning and both the release and quarterly supplemental are available on our website in the Investors section and will be furnished to the SEC on a Form 8-K. Certain statements made during this conference call regarding future events and expected results may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. LXP believes that these statements are based on reasonable assumptions, however, certain factors and risks including those included in today’s earnings press release and those described in reports that LXP files with the SEC from time to time could cause LXP’s actual results to differ materially from those expressed or implied by such statements. law, forward-looking not statements. by to a required any update as LXP undertake does duty Except measures directly In supplemental has financial disclosure earnings package, the the press LXP reconciled release all GAAP measure. comparable and quarterly to most non-GAAP company fully these funds adjusted diluted available all basis. adjusted operations unit and refer equity to Any references holders to holders FFO in to documents company from on a historical to or measures Operating financial measure individual be intended viewed an not numerical as of position performance of financial are LXP’s future performance, flows. or a presenting investment cash Boulerice, today’s and a Eglin, On commentary Will Chairman call, update business Mullinix, and on provide CEO; will Beth quarter results. CFO; CIO, fourth and Brendan recent call. Presidents, Dudley and James Lara during will Vice the Johnson of available Executive our be question-and-answer portion over I the Will. now turn call to will

Will Eglin

Good XXXX with everyone. exceptionally the results Heather. quarter morning, finished strong across We fourth excellent Board. Thanks,

$XXX of capital venture return enhance ownership institutional overall in million. estimated of assets provides of XX% recapitalize to brought line special the through industrial growth with an powder $XXX has on equity we realize respect significant to estate per outside strategy. recurring fund continue for our the company Further, invest and the quarter activity fee management FFO significant generate and made was to Transaction share. common discipline credit of warehouse at We and used per us formed distribution capabilities in income joint portfolio portfolio and This $X.XX new borrowings. valued the newly investments, of on real focus. common the December, interest falls leases. to guidance to at investments XXXX of dry property to our adjusted that new $X.XX million satisfy our our industrial diluted fully allows company share a robust At of benefits primarily manufacturing repositioning end high our to Adjusted a and progress dispositions venture joint been notable diluted infusion XX build end we FFO our composed purpose fund our our

our into our warehouse With XXX% Through we company REIT have rent distribution pure the built JV demand and strategy play an lease significantly from from sector. we substantially to portfolio our tenant poised industrial diversified a assets. valuable multi-year a now to nearly portfolio growth transformation, consists this net and also transform wholly-owned industrial of transaction, in strong market underlying completed the more benefit

by and warehouse We are increase capturing well-positioned momentum acquiring and leasing strong our quality distribution developing assets our high markets to and rents capabilities. in continue releasing on building to through strong opportunities

developable for quarter, industrial markets. will XXX,XXX of detail to during the projects we of added an the $XX and XXX Brendan fourth quarter these more of development X.X acres build-to-suit. project our our the invested million development completed a Phoenix and feet shortly. foot Exclusive pipeline, Phoenix land, ongoing in square million and transactions discuss in in approximately the Indianapolis we in aggregate commencing During our acquiring Columbus square land

$X.X the during feet side, properties acquisition distribution warehouse overall with quarter, eight fourth of totaling million On the XX%. acquired we occupancy square

$XX Atlanta, Smith construction million from Greenville, included escalations. square of totaling And totaling portfolio dispositions square X% lease feet, which us approximately seven-year the expanded is pre-leased gains of XXX,XXX of project to $XXX including a in We the leasing annual with under Spartanburg Greenville, was completed another the and our with has In we deferred end. one totaled original executed The our outcomes feet our X.X Atlanta for two development X.X% XX% meet buildings lease We tenant’s of project. in leased for X.X plan million annual industrial three achieved Farms, we estimated cash XX requirement. XXXX of value base about in million occupancy development at ongoing Spartanburg, of placed years we leasing our fourth healthy after volume with Our XX.X% of high We service development to in to purchasing cost, be building our two of the XXXX, million. be projects expected increasing to portfolio of and discussed X% in the total in $XXX previously escalations. acquisition the is The and million stabilized gain complete as these quarter $XXX market XXXX. and feet quarter acquisition This XX.X% development properties recently the a million now XXXX approximately base in over exchanges at rents interest partner. quarter substantially allowed square terrific respectively. million estimate $XXX volume on activity complete

rents revenue their lease Since mark-to-market estimates expiration. the worked overall years, have approximately portfolio’s nearly six attractive XX% on and and base which our of quarter end, produced leases of At forecasted XXXX. our the distribution growth increases call, average earnings rent leasing million market rent in would comprise Based expiring was Our the leading the us firms opportunity per average indicates volume rental rental over XXXX projections, industrial industrial base we portfolio foot be cash estimate respectively. this in brokerage’s to our XX% and with our warehouse XXXX. how spreads based an to national through of are. market on on XX.X% with our on With This was we feet last square from team’s X.X base analysis associated of below on $X.XX. near-term brokerage average the target transaction one X.X% and next industrial our believe square on at expiring provide the opportunity rents currently negotiated X% approximately XXXX. we that XXXX underscoring XXXX strong fundamentals expect leasing and expect want achieve I we we to valuable two our could grew increase in emphasize activity. to approximately on achievements important based And on rents markets of strong to industrial year in on substantial up being XX% expirations XXXX, in based respect properties to rents XX% progress in made our that increase in broker they significant we Market fourth estimates. based third-party in aspects have leases portfolio highlight approximately Separate other going strategy. in expiring forward a XXXX quarter our another

a Responsibility website, report review. the First, published on program. our have which steps first you This significant showcasing we build can ESG to to be Corporate our made found encourage we best-in-class I report

strides to our our and respect long-term far proud of so continuing initiatives. look ESG are extremely We progress making forward to with

average held business, high distribution primarily December, changed value our on properties, believe forward book Industrial and excluding gross name our branding exhibits a this in distribution and sale single rebranding attribute Second, industrial the announced tenant to properties. we quality, corporate with corporate focus over warehouse in warehouse of quality clear our XXX height, LXP years the in comprising average consisted of annual strategy portfolio overall properties, year nature feet of escalations of X.X-year with new our that leasing With our our of properties, for aligns a XX.X we attractive growth XX% company end, believe Trust. our million better XX.X We is high strength prospects. position In X.X%. weighted age we will our rent foot distribution and average term growth. X.X square lead average At outcomes extraordinary of summary, portfolio long-term warehouse to believe a with with excellent lease and

million low totaling have vacancy On X.X rent ongoing and is side, growth results square feet tenant initiatives where market robust, environment and we our the projects is five demand development have underway, great strong. in an produced is

a feet development. Additionally, we roughly land XXX bank believe acres support that have will million X of square of we

strong company’s private approximately valuable our industrial against special million our to of With market [Technical a substantially a in has and capacity of time for much Finally, have also index outperforming The XX, our investment and periods and our vibrant ten-year these purpose we market M&A and RMS joint total portfolio complete, pipeline for more December $XXX one, market. growth. accomplishments we with recognized the as venture. five backdrop return continued demand Difficulty] shareholders achievements believe XXXX. we of transformation strong three, the a have the

a determine approach further updates right path the is taking the Our best for review we shareholders. do order has to forward. has to thoughtful the Board and The all that in shareholders for to now intend for outcome of board decided process on conduct company to best strategic comprehensive alternatives time a the Trustees to board until our determined provide not maximize the value

to discuss long-term that, coming the and the that transform in most value detail. to for turn more our are maximize plan carefully With time We to at pleased then over call Brendan, our I’ll the shareholders is now considered opportunity fruition. investments portfolio

Brendan Mullinix

Thanks, Will.

cash Indianapolis, and During completed warehouse we in cap respectively. in in vacancy Indianapolis separate eight and and two and estimated and and target three rates Class purchased property markets stabilized A included purchase X.X% feet portfolios The facility two of projects gap of development the of XXX,XXX Atlanta Atlanta Phoenix our at quarter, purchases Phoenix a square and fourth distribution X.X% industrial Atlanta.

we as than XXX properties have escalations mentioned, X.X the leased in build-to-suit These our attractive substantially Phoenix, most to our to of Will years development points XX [indiscernible] property properties use market. capital. lease basis and Atlanta roughly development annual a of average to average X.X%. of we Fairburn, continuing in with also completed yields view With higher Georgia We purchase As our GXO. term of achieve weighted XXX

in at park, foot in in improvements have XX be we a truck record to During cost We vacancy acquired population while and to warehouse in speculatively. is has stabilized square grading breaking shield venture of and absorption to The and IXX approximately the from for low interstate Ohio. the new access been estimated adjacent and is cash $XX direct appeal frontage X.X full entered since to X%. service million marketing going and east build an perspective Columbus development period, bulk a project joint brand East and quarter a the a acres Aetna expected making in loves XXXX land of on suits the develop an our vertical December, in second Columbus venture to labor appealing stop. contributing site building estimated seen infrastructure shell distribution that submarket has reach to facility and joint million quarter, late Columbus, XX The with in delivered around a

to joint product diamond stabilized in One to opportunity land. ventures in for totally of Class market sites, with A in what site, east quarter us be We adjacent the In to be today, at acquired expect the acquired our support developable Indianapolis, acquired million acres acres Northern square and market we of in attractive similar at yields ongoing park can frontage of interchange Glendale our two we mile The on of to speculative development exciting XXX acres or feet develop X also an Phoenix, we relative comfort. the three. which XX XXX three acquisition bank the added land what could representing loop In very Parkway. off development industrial around to offers a the

its site desirable In is access and substation has rail the served, to addition adjacent a the and valley, in west site. Wells just to location new water the APS multiple

of portfolio, As land regular industrial affordable acquisition projects. continue beach last ports feet. these as attractive the major presence. a to as low development believe of especially fundamentals, our provide Western Phoenix population, and taxes, U.S., we updates significantly pipeline Los well costs, proximity for its modern progress development market the in underway growing operating Angeles, in the currently to provide We’ll long to strong a we Phoenix million previously our is markets noted our will as quarter, This square on the labor X.X including totals expand speculative such

that, call ongoing as results. the farther to to financial discuss over With addition move In Beth, our they projects, along. other turn I’ll

Beth Boulerice

$X.XX Thanks, FFO of generated company fourth Brendan. diluted the quarter We $XX adjusted in million per roughly or common share.

in of mentioned, Will $X.XX came diluted our our FFO per top common of range. share company end XXXX As adjusted

not tenant to will million, operating about generated which the within $XX.X our ongoing revenues the was our $XX evaluating G&A company was announced time. our quarter quarter expenses we $XX.X property We million was which is $XX of board G&A adjusted of for Given providing with range. this million, to previously strategic FFO XXXX be approximately attributable guidance of during at million which XX% bringing XXXX the in process alternatives, reimbursement.

X%. to to was compared XXXX portfolio and in XXX growth end, NOI of industrial same-store to quarter-end, our At industrial when escalations vacancies range same-store X.X%. increasing with Our the average year leases ago. at industrial rate be an of excluding same quarter XX.X% points project We in the annual portfolio period time approximately when Same-store tenant leased X.X%. a was X% basis single of XX% industrial had X.X%

balance the for aggregate value approximately $XXX is April properties with intend million. unencumbered timeline. December these X, net the sale $XXX adjusted And $XX.X with portfolio of range have million properties We sale by held XXXX. NOI Nearly market for all million NOI the believe the market to office Moving is we approximately of of XXXX to in these accelerating times ended of EBITDA of X.X of We XX%. an our in forecasted sheet. debt to for previous our to seven as XX, XXXX

work to have very have we Fortunately, the little done previous exposure we the balance sheet. interest rates on given rising

remains our million available. quarter December rate average was XX%, end at of facility had unsecured a debt of Consolidated we a billion as weighted and weighted average outstanding, Additionally, with interest credit million of approximately term fully approximately X.X% X.X-years. cash and of revolving $XXX $XXX $X.X

capital to Turning markets.

program. we quarter, were net a our basis sold the X.X on which ATM under forward million During million, common of issued previously $XX.X shares proceeds for

had under unsettled December common $XX.X an forward common share $XXX.X XXXX, we As million XX, of or of contracts. shares aggregate million

various As mature reminder, dates XXXX. most a in at the May, these of contracts maturing contracts with

projects promote. our to to development With ongoing our will over call anticipate five development the back I’ll partners spend, turn approximately million Will. regarding $XXX Finally, that, complete that we require excluding

Will Eglin

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

Operator

Our comes question [Operator Mailman from Craig Capital of Markets. KeyBanc first Instructions]

is line ahead. open. Your Please go

Craig Mailman

just so that XX% to a Hey, the good be Well, would right? mark-to-market, clarify, XX% everyone. morning, mark-to-market below, like positive

Will Eglin

Well, that number reflects…

Craig Mailman

I’m sorry.

Will Eglin

in rent each growth That market lease. that the escalations against of built reflects a forecast in

So to that’s XX%. how we get the

Craig Mailman

or Is to But it’s So acreage. way market, think just that’s the XX% right increase. below like it a market-to-market, if saying that it’s XX% you a right? you’re that about

some said it’s I XX% You confusing. market, there’s just been know

Will Eglin

against underlying in rent the The portfolio. market time growth forecast over rent growth

Craig Mailman

okay. helpful. That I guess Okay, is

level, there mismatching think So or this you I giving should capital any about one as guidance, about, way kind any generally items think it bottom drag the as and that is know aren’t into head to consensus just think a the assuming timing, about is a development think, bit deliveries, sales Beth, consider? I we is XXXX. moving raises XXXX continued in right guys of XXXX? you before with I timers items we and but to to think I significant mean, and significant high and of

Beth Boulerice

we said Yes, is trough Craig. XXXX believe. going And here to as we the be

all the that years done last the couple of the Given that. we we’ve in we’ve sales anticipate office that over in that of transformation done

office it’s coming far can some I right the think There’s So that as nothing of just from a you’re impact with that. as on timer that but anything, would development the sales one of and online.

Craig Mailman

as think guys bit Right. below fees a as about we I run little being process. we had and do that quarterly should run rate G&A normal guys you added rate $X a activism, kind to a you to the related of And think million of

Beth Boulerice

Yes.

time not giving We’re on at guidance G&A. this

Craig Mailman

same-store helpful the Okay. level just Fair X%. then to enough. – And was X% high on that XXXX

flat where they you similar once kind is cash So I or portfolio same-store, are rents heading to when I mark-to-markets I X% XXXX like north all where in get baking it of XXXX, XXXX. do today? is of mean, you are start a a assessment out these year sounds presumably then stand pace in else that just trajectory the guys to fair you mean, Will, of well a XXXX, big on mean, in to stay legal assuming growth

Will Eglin

a we’ve company well anything is NOI in That’s I time but will above in same-store our will tell to seen produce growth. that say ever that Well, position the Craig, history.

portfolio So very will with capture that the time to pleased a tell, we’ve work to of lot position but the we’re upside. done it on

Craig Mailman

rates the but are in then sense for know, there’s one I just And are the any assets or material for geopolitical as those bit pricing the your Okay. again. volatility industrial air, pretty what’s little in any you of you front, guys or fresh guys way news I on markets, night’s last shifts industrial know I lastly, been market? but of coming mean, Are in out assets. down public aspects? seeing it’s on year-to-date a competition another

Brendan Mullinix

a No. the Cap In as seen not increased it’s with rates cap short, material it any result. Brendan. Hi, effect sort what in increase on is, we’ve rates, the rates. market have didn’t in have of adverse

Craig Mailman

you. Right. Thank Great.

Will Eglin

Thank you, Craig.

Operator

Instructions] [Operator question from Thalmann. next Our John Massocca comes Landenburg of

ahead. is line go Please Your open.

John Massocca

morning. Good

Will Eglin

Hey, John.

John Massocca

long-term this pertains deals we types kind the specific given in it we Given a as opportunity bespoke about Is particular transaction the should land like the forward? or Glendale acquisition of to a quarter, expect of strategy going this that that market how in more think should building bank? in

Brendan Mullinix

those to to quantify them. would Brendan again. difficult to it’s It’s going transactions Well, opportunities and where to But forward. like forecast continue exactly that open be we may arise

the said we we based terms deployment capital the pricing acquisition current XXXX is of needs do excuse vacancy assets, development have recycling – of me. environment – to we’ve for of the expect So on capital stabilized as where best except previously, environment in and needs, we view

John Massocca

maybe I a on type you return kind of of on those truly expecting And more kind timeline of are ground getting guess up developments? what

Brendan Mullinix

to have – build-to-suit. partner working probably It with build suit. building But So development right would together of to feel that’s of kind it build. depend for that the away. started there we’re working We’ve getting speculative lot much which a how We out. it’ll a on A build there, also our on accelerate site that RFP outcomes what and a may on plan still we’re whole there’s large project. of sizes range plans currently we see

instance, the the two with build-to-suits start a away. those a as buildings we’re building, together, at for building once any if up then speculative just of all of we’ll build-to-suit shows So come sudden but straight instead

a basis, build accelerate say on something for it that out. like would four probably to that could – I speculative years. it’s you timeframe. So would full if get But It could be something be

John Massocca

commissions Okay. office How and And then strokes. kind tenant versus full guidance, XXXX, the I about know maybe not given of XXXX just think planned broad leasing should improvement we you’re sales? providing especially but in

Beth Boulerice

Hey We about they’ll think last same Yes. be John, as it’s Beth. the year.

John Massocca

much. very That’s you All for it right. Okay. all Thank me.

Will Eglin

Thanks, John.

Beth Boulerice

Thanks, John.

Operator

of Jon The next comes Petersen question from Jefferies.

Your line go ahead. is open. Please

Jon Petersen

morning, in process, how you I acquisitions – think kind we guys of of review ever Great. hold should engage the I the selling Thanks. as dispositions? office industrial guys. guess as or are things Good an are and properties active of terms strategic on and as you On about pace buying mean, now. in

to think takes? about next this out trying the however long figure over we how should pieces moving Just the

Will Eglin

Well, portfolio plan the some the most is the be is on acquisitions, sales I in portfolio, for April mainly the but terms to focus have really is desire pipeline push. the there industrial couple We think may X and accelerate well, as that to everything still gain moment. of for funding held remaining the in small principle the but And portfolio. a by part, be development which may reinvesting of sale. exit There focus that’s the market at the by in defer on the office tax from

Jon Petersen

you. Got

back like maybe market number. up, of the kind rent that market market us where where if on minute, than to then to the today where rents give place, rents of that today guess, are we I indication for could able roll growth over guess you and a the rents based next the higher just you sense like years five-years, make market-to-market, we’re help would but Okay. assumptions come cash XX% the that growth or All contractual portfolio the off in rent assumptions rolls, an of sense. are XX% at are just a roll to it’s that a over next I right. five of up, versus number of and us That escalators on I to expect understand makes And

Will Eglin

place. today contract. XXXX amount built fair the recognize a that that is will XXXX is Yes. exceed way, mark expectation a mark-to-market through we’ve we Jon growth we that, through I that when there it you you’ve by that leases the have the and In fact captured And got escalations to in can’t that in mean, have. a the leases,

through Difficulty] talked that that XXXX [Technical So we’ve before about window

Jon Petersen

did. They

of to growing? even stopped even all did of helps But for a anyway, growth the think think it from. it get I just years, would these is Thanks market questions leave still rent sense the where over your there. of I’ll like kind come be time. five I us, where next if

Will Eglin

Thanks, Jon.

Operator

follow-up We a have Massocca. question John from

open. is line ahead. Please Your go

John Massocca

kind of assumed ongoing development one you’re quick Hi, relate remind kind just again, of of – the drives you providing release up for me. as what’s to to the rate cap can as for Time that a development stabilize downtime you but estimates some us, the projects?

Will Eglin

Yes. months It varies and but between the generally by months. XX range in of X project,

John Massocca

you very Okay. Thank much.

Operator

are There on this no lines questions further time. at the

team. So call back I’ll to over the hand the

Will Eglin

and operator, me there is of the you’d for to you. you, all discuss Thank to don’t If you Thank at that like the with anything joining hesitate rest team. call please management, us. to any of or all of thanks

Operator

call. Thank This you joining. today’s concludes for

disconnect lines. now may your You

LXP Industrial Trust (LXP) 24 Feb 222021 Q4 Earnings call transcript