LXP - Earnings call transcript Q2 2022

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Operator

Good morning and welcome to the LXP Industrial Trust Second Quarter Conference Call and Webcast. All participants’ will be ion 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, IR at LXP. ahead. go Please

Heather Gentry

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

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

Wilson Eglin

morning, Heather Thanks, everyone. good and

believe Our and and the environment. results, the and extremely volatile demand by facilities. strategy our consistently evidenced pleased markets remains our rent as second a of operating end. of our capital We're owning growth XX% to financial investment success with which quarter core business well average quarter on of continues value operate our warehouse in Tenant distribution healthy of increases in extensions year-over-year strong approximately markets in million cash XX% through reflect target in new feet markets lease approximately and average based We estimates. portfolio, quarter market with leases of escalations during distribution brokers' completed and X%. portfolios square and in below are in estimated place, leases XX% Currently, our X distribution the annual independent warehouse warehouse to respectively, of rental our be on base resulting based XX% we

adjusted Based lease lease on expirations approximately to portfolio as mark are XX%, rents market which average XX% XX% from brokers' expires. or industrial industrial our XXXX, our to for when compelling Our opportunity of in we the on grow cash rollover a remains towards heavy of for period through XXXX ABR forecasted move rent independent estimates, escalations. XXXX to today

are or X% majority X.X% expect rent markets improve to being our with executed embedded our higher continue enhancing of escalations the annual our of leases growth industrial opportunity. escalations, further annual in also We to average as

and is average age of overall our our portfolio. the the our quality From some shares asset provides in a is years strategy debt. pipeline, industrial lease sources other soften liquidity more environment. pay grade, to portfolio of development tenant and fund utilized our sales recessionary credit and repurchase a proceeds to investment were which strong has improved demand is X.X be down will Tenant perspective, protection XX% weighted of management with if years, capital facilities than Our active X.X the term average allocation

context do complete in any tax not useful gain, the are need of exchanges to we a currently the see deferring further year. this acquisitions While XXXX

the for pipeline total have projects commenced a On quarter remains We Florida project development extremely now outlook six favorable. development on and front, our development we new the Central underway. in a our during of

further We an broaden to development $XX.XX per Year-to-date, that X.X we additional this the shares authorized today million quarter XX common for in prospective share and Indianapolis, XXX also bank acres making our projects. the we've our price an land and increased repurchased investments Atlanta announced shares. Board of opportunity at of average which repurchase

We refreshment continue Johnson to serve drive value as an extensive business aligns intend creation previously and Derrick’s capital with various appointed authorization process goals. act attractive board. at our as of to XX-years across as UPS including finance warrant. to of we operations market at view This Board ongoing well spent on warehouse with strategy, and our expertise shareholders the part In consistent Independent conditions focus. Derrick outlined use of and shares was on for organizations, new July, our appointment share Trustee very marketing, development, to repurchases our an distribution

skills formally be Derrick shareholders. Board pleased will great our to are to experience and of his We and to value welcome believe

for publish the the to ESG current in ESG perform of planned GRESB we and practices. our path environment. portfolio consistently to current corporate enhancing year to summary, second our establishing the XXXX In this maintaining forward submitted our continuing and and well program, positioned calendar we believe ESG best-in-class down including the look disclosure, is on to been we We've fall. Additionally, improving busy responsibility front, recently report

the opportunities, to detail. on stabilizing repurchases, through our other shareholder completing Our pipeline turn capitalizing over monetization, focus I'll that, opportunities. in call and to including on investments asset remains share maximizing Brendan all discuss value development more With and releasing

Brendan Mullinix

acquisition cash rates bringing to X.X% million Thanks, acquisitions We allow and stabilized and to These quarter, Phoenix in us to $XX gains. the respectively. approximately at stabilized one $XXX during million of X% year-to-date Will. activity purchased million of $XX defer up cap average for taxable the asset industrial market GAAP

on of Greenville, to for development comprised our versus million projects the Development stabilized buildings focus continues investment Our Spartanburg, totaled six of target quarter are markets with $XX which Columbus Indianapolis, purchase Phoenix, XX the projects, across assets. Central in funding development ongoing strategy and Florida.

Ocala the expect fall to Columbus to with We deliver quarter scheduled remainder deliveries our the this of this and of projects through quarter of year fourth second XXXX. the

on call, presence we quarter's last in on the foot corridor, expanding a building, deliveries. mentioned facilities on distribution buildings Florida we the XXX,XXX warehouse May commenced spec foot loading activity XX construction leasing with development Ruskin, two feature acres, with rear in Tampa designs. project I-XX limited our in square And market. roughly Tampa has existing experienced strong will XX heights As for clear

X%. in project overall site an cash a to we completed expect approximately the Atlanta yield million. in Approximately of of remaining second stabilized our land footage next acres aggregate is our This developable development projected additional existing increases quarter for of XX purchased during acres our markets. the Georgia existing project to of land in our the We Indiana. these to acreage are Mt. square million bank allowing Fairburn, in Comfort, $X with further estimated investment quarter, in approximately of development to completed stabilized XXXX XX the and adjacent and for Indianapolis be an for $XX Also cost land of development

further The of for the discuss encouraged Phoenix market in larger move strong general update exceptionally exciting call parcel and footprint early plans to interest opportunity us been secure XXX a to are in this as to turn start has the square at market. in by users prospective that, billable Olam the Phoenix. will our point, acre has leasing. We James an from but to Farms you along. our been With provides indications at Nothing over land footage I'll formalized we

James Dudley

Thanks, Brendan.

quarter industrial portfolio was end Our occupancy stabilized XX.X%. at

expirations call, quarter's focused we've and XXXX XXXX development mentioned are we space As well vacant to-date as lease on and portfolios, all expirations. select industrial and our XXXX leasing in purchase on as addressed last

more XXXX We've good had of success to current broker our we expect of a expiring negotiations at deal third-party estimates. space rents XX% portfolio. distribution based and expirations, Looking and on warehouse increase in than leasing

left have two second increased industrial in all assets, Olive bumps good At square we for properties, respectively. development our Branch, generation early leased extensions XX% rental portfolio, space three both feet thereafter. Olive and our executed across new and fill a from Lafayette, which Starting a annual at activity. facilities Mississippi our quarter showing we the lease XXXX extension Indiana Aside X.X% with of over with we are during prior to of lease rate a XXXX for expiration facility, five-year feet just lease combined XXX,XXX square XXX,XXX Branch the and

starting Phoenix one facility We at extension at the facilities tenant than annual our feet first our with of totaling XX% quarter for also in bumps. increase will executed more likely is in square two cash XXXX the with XX-years in X% tenant of Lafayette X.X% lease rent which the by portfolio, development quarter our occupancy slated September completion bumps. annual current we the leased with In for Project five-year with XXXX. XXX PV XXX,XXX fourth project a

in to a continues estimated a underwriting mentioned, above resulting of XX% tenant square show foot, As approximately Phoenix demand starting the Brendan assumptions. rent strong market our $X.XX

three an portfolio. the great to our X.X% This the Subsequent in cash in at as spec quarter existing XX% us bumps another this the park, years also we XXX,XXX to square we're the second Tampa, raise balance for extended industrial as on building early outcome XXXX see facility Florida. for expiration tenant. for We strong activity development was well close, with to annual able with continue of foot where rent

our turn attractive the of and call feet discuss for to our rent occupancy at bumps XX% five to warehouse financial results. facility leased I'll the up over XX,XXX above XXX%. to is bringing underwriting remaining assumptions years, we annual with Beth The of Florida With square that, Additionally, X%. $X distribution starting Lakeland,

Beth Boulerice

of Revenues share diluted company generated approximately for are common XXXX reaffirming quarter with approximately of expenses James. XX% were $XX to for We million reimbursement. operating our $X.XX tenant per roughly to the $X.XX the was property $X.XX million $XX and or million of range quarter guidance adjusted attributable FFO $XX of which Thanks, per share.

joint As million and industrial opportunistic several sales guidance a office our in reflects of sales XXXX. in $XXX no approximately acquisition and other office other this volume, reminder, range venture additional

$XXX approximately G&A now Our is to and $XX million, forecasted a estimated excluding advisory million $XX of million spend range to our within is be development XXXX costs.

leased the year was to portfolio XX.X% at industrial basis quarter-end, when points, XXX a same-store increasing same period time compared Our ago.

Our NOI year-to-date. quarter-over-quarter X.X% grew same-store and industrial X.X%

our industrial had escalations leases same-store projecting with approximately to X% X.X%. within in We XX% rate of quarter will At average industrial NOI growth an X%. still portfolio of range end, are be a our that XXXX of annual

and XXth. asset cash office quarter, industrial of of as the one for respectively. two During still sold assets $XX X.X% GAAP million of for market cap portfolio and sale is our of target assets June Most we of rate held X.X% outside including our office and

With quarter-end, million. Subsequent opportunity $XXX market took industrial for aggregate and to properties the million to our approximately forecasted was within of XXXX $XX.X monetize assets value of target a NOI million to $XXX range these market outside an profile. be estimated the that to we

our In at storage purchase within NOI. tenant were addition, completed XX% and lease. These we resulted sold and exercised EBITDA over cash option the Georgia At initial in with times million net of cost an was $X.X their of X.X office our at quarter over facility and respectively. cap end, McDonough, NOI adjusted our debt X.X% property unencumbered sales the and to total rates at in average GAAP cold X.X%,

we XXth, scheduled we extend share million $XXX.X these more to contracts of under to capital opportunities. raising out chose to December mature common forward These June were aggregate of XXXX in had sale contracts. but May, an consider advantageous As until unsettled

flexibility continuing revolving end. be maturity $XXX we June Subsequent terms have to the and Our added settled of available under capacity credit to rate debt to million and against keep balance of extending we rising call covenant our amended years and outstanding net quarter contracts margin of maturity term We at With at that, end our quarter out unsecured X.X quarter-end, X.X% turn debt portion of the borrowing July the to consolidated calculation. over average improve for $X.X applicable fixed. Consolidated revolving EBITDA over to at debt interest protected XX% for times With weighted XXth, rates. is adjusted approximately billion, X.X average would sheet unsecured facility. us back facility the these well I'll a a debt of credit currently to was XXXX Will. as our weighted

Wilson Eglin

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

Operator

is John Thank you. a question for from the have open your line Massocca did is floor Thalmann. Instructions] now gentlemen, John, from coming Landenburg we [Operator Ladies and questions. And live.

John Massocca

morning. Good

Wilson Eglin

John. morning, Good

John Massocca

or Just the out cap development what tight focus of in supply back obviously, look or is. you're Has expansion there? continued the terms of of keep of year. you in and cap curious in balance the Typically the has there where kind environment given seeing demand, that's been rate maybe kind as targeted yields there side, the any rates robust help half of kind

Wilson Eglin

Brendan, do your offer that? you want on to perspective

Brendan Mullinix

in the sure. interest question market days. inflation continue seems is changing Hi, period following that a is rapidly and good it forecast to morning. asking rates. rates be The Yes, And in on the the cap these everyone of the impact that in rise discovery, really really price resulting we

a out too cap of variables. rates by So remains point influenced to that I think are I'll seen. variety be it

the the market the in escalation rental relative the have quality. to also opportunities, as market to You basis structure, the just consider mark as building lease well and lease place to duration,

So it's kind to of hard [indiscernible].

John Massocca

in given stock reverse on if Just where you Okay. versus pure And you want we apples-to-apples, something a as it little developments. are to is kind can I a in is of stock valuation Or kind what holistically? kind buybacks, investment know, the a terms you outlook, today? an mix of about you essentially will? it get of how bit your think weighing, the of, versus is of investment mean, then cost yield what the capital, you of is

Wilson Eglin

versus of risk. Sure. opportunity the we're forward and same we're of because in with buyback good being got space, cost the more us the so land pleased development is that pipeline for bank, looking time, that we're immediate at and we've new capital. very Well, a opportunity the share it's but change At cautious taking in

think now. So more we like the We potentially than buyback adding to right pipeline. it's more opportunity the one share valuable development

John Massocca

the mean, I then was sorry on I rate And taking if broad, disposition of deal, maybe Okay. but industrial missed cap it’s that penciled? I'm a bit, front, maybe everything on just kind terms

Wilson Eglin

you that? wanna do Beth, through walk

Beth Boulerice

industrial John. so one get cap them and the were morning, building during average, of of were we at them was On Good portfolio. three an a cash know, Yes, you quarter, to office assets sold the Sure. a X.X% to rate all the get two all in of of three on basis.

John Massocca

the industrial assets? Okay. And the maybe just other versus

Wilson Eglin

was for I off subsequent went the quarter probably that the a to think we sales XX-year sold Yes, a data is point at property end best rate. X.XX% the roughly in Wilsonville, about cap lease which

John Massocca

from very it That’s much. Okay. me. Thank you

Wilson Eglin

John. Thanks,

Operator

Instructions] John, line question Petersen is live. from coming from Jon you. next your Thank [Operator is Jefferies. The

Jon Petersen

all I for listed sales, the I the office I good Thanks Hey, time. morning. any -- are know just for guess update, mean these sale. of on

some up there? Hill You like you buyers Coyote Market been mean, Jose in San coming Street kind a kind demand closer And Philadelphia on JLL's the can can like what little still the Google, expiration a any and lease indication for of XXXX Market more has natural can of get soon, of like just or website. these pretty of are I area, as like year see curious I'm give I not Street on things to in us a away, out. expiration, half but ways you whether is

that is process how on Just color any going?

Wilson Eglin

Well, good. so far so

one not although lease office But sell of as redevelopment. have a asset is where building, and there's rent acknowledge going there. reduced office little value buyer debt, expiring, amortized be by term that's there that's it's know, cash an Palo this more a And But the Street, stay the year value probably of that to ground You possible. portfolio. between there's going it's some little fully just in the Market to sale repositioning lease for to residual bit have the difficult so that's one Alto, here we a where to a we've we and become flow that no but using an bit to that's and that's

the office far majority buyers got has for so market transact in. it a so but portfolio, more identified So, challenging vast become of to good, the we've

Jon Petersen

mean, this Just conditions? year-end? all I level stuff transacting confidence on the what's market by these given

Wilson Eglin

know, still high. pretty You

Jon Petersen

additional two, we selling if be joint about within have ventures, some thinking those JV I year in the portfolios. I then know been that look some sales portfolios? And you be thinking within should there has Okay. for models at of we those should we're stuff selective if mean, next or about our -- the we out

Wilson Eglin

The I steadily. office shrink selling portfolio portfolio. to continue been certainly where Yes, think is down that we've there in plan to it the

some have pace that the next then after we in opportunities we'll to and and of what shrink sales the see quarters, good that. to couple to So some continue make have is

Jon Petersen

redeploying buyback question, sales, been terms from investing warehouses the talk using. of Okay. these And then decision program, at at I back to have in properties you've and obviously current rates, current stock? and you guess, making asset between about last us share proceeds your the rates cap Maybe cap just which buying

Wilson Eglin

think I over bank more in as and to fund buyback build land pipeline. development sheet And provides opportunity the I time. preserving us to interested mentioned, for the balance more additional we're then

buyback for moment the reasons. a to need anything acquisitions don't is at tax we than purchase So and foresee deferral better

Jon Petersen

Okay. All you. right, great. Thank

Operator

Massocca John Thank you. with is Landenburg live. follow-up. a And line John, back from we have in your

John Massocca

start land as how going that look the to Or that bank, executing that projects a one today? mean, on XXXX? is can out? should the your assets with Is a bank Just soon for be land year development about some timeline think of we quick something three I on two, the as have you

Wilson Eglin

jump to that? on want you do in Brendan,

Brendan Mullinix

parcel first likely land start project estimate relatively of and I to The XXXX. would The Yes, recent largest adjacent balance that would there to ongoing bank existing projects. are -- we in our our Phoenix, most and in say I likely so they're acquisitions hi. that we're the

will (ph) the which – to can lease next we develop and additional So we under projects then year probably wait [planning] the we are that think to will there construction, currently from win. happen

John Massocca

Okay. That was you. Thank it.

Operator

Thank you. Wendy, Ma ISI. your from live. And Wendy line from the next question coming is is Evercore

Wendy Ma

taking Thank morning. for question. good my you Yes,

color your about quarter Thank be? question will EBITDA the X.X the at net if quick your net much could so to a the you some EBITDA provide debt stabilize have you. please including Just is leverage, [four] How shares us (ph) you But to debt end. existing pipeline? the

Wilson Eglin

Sure. Beth?

Beth Boulerice

good Yes, online X.X times the development. something point. Wendy. that at morning, come coming X.X so leverage We around a fixed like the Hi, be will most of you projects will that in be anticipate quoted down, our that

Wendy Ma

Thank Yes, yes. Okay. that's That's you. helpful. Yes, my question.

Beth Boulerice

welcome. You're

Operator

Thank in the to the call I like were And time. would Wilson now there back this other no to for questions at queue closing hand Eglin you. remarks. Q&A

Wilson Eglin

if always, for this again Thanks of other I any further won't team. as me morning. Good. reach out to Management hesitate joining have questions, you Senior member us to hope And any you our or

a thanks and day. have great again So

Operator

does today's you. Ladies conference. this Thank gentlemen, and conclude

time You this have may for you wonderful your at Thank day. and your a lines disconnect participation.

LXP Industrial Trust (LXP) 4 Aug 222022 Q2 Earnings call transcript