LXP - Earnings call 2 2023 | LXP Industrial Trust

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Operator

Hello, and welcome to LXP Industrial Trust Second Quarter 2023 Earnings Call and Webcast. [Operator Instructions]

I will now turn the conference over to Heather Gentry, IR. Please go ahead.

Heather Gentry

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

measure all these including comparable included non-GAAP future adjusted from the to duty be that financial could measures in risks, time press and all press and cash Any operations refer those reports has measures actual unitholders earnings reconciled from a differ supplemental available by required time statements. factors to in equity release company LXP company diluted documents those references to certain funds LXP law, However, not results on those cause as release LXP's to to fully directly LXP's individual disclosure a viewed FFO measure. to SEC of GAAP and flows. or financial today's or numerical investment as materially forward-looking package, described Except performance with such implied files an historical from statements. In the update and to any performance, undertake quarterly intended financial earnings presenting LXP or adjusted are holders expressed a to by basis. the of most in Operating does position not

will Brendan commentary President, Mullinix, Chairman business and Eglin, Vice Beth quarter provide call Will. CIO; Dudley, I to on results. now second a Executive and and will turn recent over call, CFO; Boulerice, update James today's Will the On CEO;

T. Wilson Eglin

everyone. morning, Good Heather. Thanks,

million volume progress growth excellent and of partner quarter square outcomes estimated all Leasing yields our promotes, included areas industrial foot portfolio original excluding XXX,XXX of We our strong in leasing same-store NOI square the average of our results make continue facility an of foot Phoenix leasing and our excess feet square cash our portfolio X.X%, guidance. yield business resulting in with during in X.X%. to Columbus. X.X development of in well X.X These facility in million in second in development produced

remaining our have at of We make expect strong projects which to million million lease balance square cost value, of we remaining these progress fund. $XXX the tenant Total for gross during interest projects asset million to our available is feet X.X the approximately X% have of more $XX year. for or of and left

in our our a success our the Our purchase have market. leased leasing development continued facilities And positive adding warehouse single-tenant results X to superior These relative ability initiating highlight warehouse pipeline has our development been deliver to program, portfolio. for facilities. vehicle we valuable industrial and outcomes since development to

Moving sales. to on

continue standard to year. closing The South leased to Wells for Street We Philadelphia and underway Philadelphia Jersey in Jersey to conditions. XXXX property well Fargo marketed our Buyer is subject sold this diligence in and are later asset remaining be our New at be contract, is will sale year-end. New by office X assets to Market due Whippany, our anticipate under facilities Carolina that

potential incremental this sales expires Our asset result, to markets in subject $X.XX Currently, this no Alto liquidity. a longer aren't we ground nontarget additional FFO to view after continue this XXXX, share, generates but sources a in Palo any activity facility, is as certain office year. per expecting FFO will and of of industrial year, as which produce December that assets lease

EBITDA Net and credit our was X.Xx $XXX million fully sheet. our debt available. to to facility quarter revolving was balance at adjusted Turning end

of our projects. stabilization EBITDA adjusted to debt net Our leased be pro development forma would including Xx,

EBITDA be NOI comes as expected is to development and to leverage stabilize our will online. decline overall as we Additional realized continue pipeline

of net a adjusted Xx targeting are range We debt Xx leverage to to EBITDA.

more With that, Brendan detail. I'll turn our in to investments call over the to discuss

Brendan Mullinix

Will. outcomes a our and program. second starting quarter leasing our per square we square facility, of with foot X%. in lease Phoenix At approximately the X-year development bumps rental rent $X.XX Reviewing Thanks, executed annual attractive a foot XXX,XXX averaging

starting early facilities additional Phoenix X.X for by and We lease a secured per million at in occupancy annual the requested are tenants our complete, The be square XX-year for square Columbus Both tenants. foot build-outs $X.XX the foot when also the November a escalations expected require the with some rent X.X% and project facility. take of build-out to should early January asset are which Columbus.

of we Greenville-Spartanburg quarter, and shell our and included the a buildings square project, the foot a completed the $X.X facility. in core XXX,XXX remaining million which During

completed completed also in project quarter X and the Florida facility. Shore South end and at June, We X property the shell we subsequent to of corn second facility our of end, the

of the project million. purchase South XXX,XXX July, our we $XX in forward Dallas foot approximately Finally, completed for square

with building With is the ETNA this Columbus a leasing project XX-foot a design. facility to land we on demand market Park in feature square the including own. construction rear-load the commenced specs, foot size XXX,XXX joint Market a we clear XX already of made we've strong. progress will for in height remains date, venture, modern The which

of building $XX of Promote. yield shell Partner completed the to X%, approximately for XXXX a core stabilized cost and in and million quarter cash first the excluding estimated expect an projected We of be

purchase pipeline of warehouses We as market. in development our yields intend to single-tenant continue utilizing adding of portfolio at to a our way excess the

tenant to continue leasing with risk. Our deliveries potential facilities include mitigate to help responsive will development will to staggered strategy demand, smaller be which

nonstabilized gross goal X% to asset our be to value less. Additionally, development our is or around of pipeline speculative target

over discuss With that, to call turn I'll the leasing. to James

James Dudley

target period continues in compared the despite Brendan. our States XXXX. excess softness markets in markets grew solid be the submarket to rents approximately Thanks, XX% tenant same second demand with the supply. across Overall, and some leasing certain to United In quarter, in

coming rents. At of the quarter of mark-to-market portfolios in period growth view we through has estimate rents our more current to still a rent years, industrial rollover approximately ample XX% changed, releases lease end, opportunity not in-place we expect compared that below market. are approach our XXXX expiring and our we As robust

We net expect escalations grow of contractual to in-place on brokers or XX% average on rent rents XX% independent based approximately estimates.

in bumps from Our our approximately was a signed in low. X%. with renewal industrial South portfolio XX.X% cash square with end, quarter X-year quarter a rental foot at vacancy very increase we remaining lease up XX% X.X% annual Carolina, end, leased to tenant Subsequent with facility of Duncan, XXX,XXX a

to second square lease pushed the tenant negotiations length better desire quarter, its X.X feet while excluding While of than renewal XX%, into one fixed renewal at increase completed and X-year exercised lease the us increases of we've during the option base third and cash-based we allowing respectively. quarter, originally approximately spreads Year-to-date, attractive final rent secure XX% the rental cash-based terms extensions had and to the of the and approximately based anticipated. respectively. When million were XX%, also XX%

amount and and We renewal see vacancy. a pickup have remaining negotiations. in activity windows XX% approach, small of XXXX on expirations in to Currently, quarters our and we're approximately lease expect leasing expirations negotiations of meaningful activity on our as XXXX third complete in for we the fourth

in-place on and on brokers' higher are be rents XXXX current based expiring estimates. rents estimates still to expected XX% Our negotiations than to XX%

remaining development leasing activity and report to promising of progress have also on a significant later portion spec pipeline hope the this We additional year.

turn over I'll Beth that, discuss to the With results. call to financial

Beth Boulerice

XX% which expenses James. approximately property $XX quarter with was in operating the Thanks, of million, Revenue second tenant to approximately was of reimbursement. million, $XX attributable

approximately million. Second FFO was quarter diluted $XX common or adjusted company $X.XX share per

are development volume, current We adjusted on other lease-up company This and sales the maintaining share. amongst call. $X.XX items range common per discussed of FFO guidance of $X.XX within diluted considers today's timing to range guidance our a

$XX be the in Second quarter expect portfolio range approximately in and X.X% end, was million. NOI million second to same-store XXXX XX.X% a quarter period industrial to At quarter G&A we compared our the and to industrial same-store $X $XX XXXX. same still was leased increased within G&A of million,

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

our of June credit XXXX. mentioned, revolving million Will unsecured available XX, As as fully facility was $XXX

average X years. of consolidated Our billion quarter with weighted at a maturity X.X% end, $X.X of rate and to was interest approximately outstanding debt term average weighted a

Our rates. debt interest approximately continued percentage which fixed rate higher at to remains XX.X%, mitigate to exposure our

back our Finally, XX% turn call. total of NOI operator at who the of question-and-answer over to NOI. unencumbered over that, portion remains our will the With call conduct the this exceptionally I'll strong

Operator

Your first of Instructions] JPMorgan. Paolone the Anthony line from of comes [Operator question

Anthony Paolone

might things? as refill look you could next was about talk I round to development And what on XXXX? you if yields look just start of you the sort to to as start pipeline the just your like wondering appetite

T. Wilson Eglin

I working I we've overall, on that think, mean Yes. Tony, been exposure. shrinking

did million makes tenant the and facility lot we quarter, X.X feet we this committed we is in own leasing size of relative So to the that think in of foot to square that sense the demand. where XXX,XXX a given Columbus land project we and that see

of So I X% asset position think to time, makes of of target that value, think to gross overall, it's and I sense that sort a then us. that over net sort shrink

you where penciling comment deals do on Brendan, these days? And you see want to

Brendan Mullinix

there, number that we've added to that anticipate we if that an project a the in yield we LXP relative where would of the But just announced you of we and to Well, program, in will gives range, scenarios. single- X.X%-plus Columbus the to be idea multi-tenant be. the stabilized modeled

Anthony Paolone

the just then question projects to available And on second that Okay. lease. are

give along? activity terms demand? just you tenant just about that's us depth of in changed how talked more there. You as coming that's a bit and Can to little Anything color

James Dudley

Tony, it's James.

stages. would in I So say yes, varying we're

properties. activity have We the all on different

Some are further along than others.

commentary companies make I that taking demand just say be well known think think I industrial and So that. we would strong. echo they're But has that it's in decisions, longer I to the across mean, would to the continued pretty I is

ago, So have the activity. need just XX slower it than they process to is XX months but little bit was to a

Operator

KeyBanc of question the next comes from Your line Capital Thomas Todd with Markets.

Todd Thomas

provide of last the discussed in around value whether you or the key or guess, assets million to items a be generate? XXXX in update proceeds around approval $XX I agreement? then expected question. under you of some that's little clarify first executing more Street on those the expect that contract Appreciate Has may changed contingencies bit some Just noncore before the range. you at that's anything commentary And awaiting X around detail assets. an just Philadelphia, the Market the of can quarter,

T. Wilson Eglin

Sure.

value I some the think portfolio erosion in office there's of the been overall.

XXXX the Wells the of contract want them Fargo deposits, a assets cautious little while value So we contract with pegging under under I be and well. we until to think have we have Whippany as about

from value XXXX quantify we think $XX of So diminution want to have that to see Do million, to but just the [indiscernible] wait I assets. market? I the on has with comment to think there been some we you how do

James Dudley

process In both sure. circumstances, we've moved the along. Yes,

have hard they're money environment. We hopefully, and earnest current the smooth but closing from they're sale deposits here, done not in done office until a anticipate,

Todd Thomas

Okay.

assets, Wells those to notification there they're around looking with has they're any office whether the renew both the of or do X vacate On going been decision assets? to assets, or what or X

T. Wilson Eglin

No. period They to in any respect expire renewal the options of terms facility. either renewal exercising with let

process. move get those sale process, But Wells change to assets possible mind moving we're and and and that turn sale, into ahead So market for or their cash during we'll the them involved. it's finish office back could

Todd Thomas

million provide company's on that And Got it. opportunities? the then rate investment And the in you appetite more initial you are additional for yield and the seeing And Okay. surface? what's $XX the begin cap transaction? on quarter, like then a deals acquisition can

Brendan Mullinix

a acquisition shell. spring. at [indiscernible] we range. purchase actually the The looking That stabilized in there, year, yield a early that in forward negotiated agreement Brendan. We It's last was acquired early anticipated we're deal around that

terms additional year. contract that put was again, of one acquisitions, In last under

quarter on revisit expand we While pipeline purchase we're transaction may bank to very the this as monitoring the I've stabilizing pipeline. happens, may purchase announced land And the of as that alternatively, we remain, our we in the and more development with we said, market, Columbus look as focused the market.

Todd Thomas

into projects placed leases to last transition today in projects just that are once the just about sort whether do a you And with service? Okay. available Just the that either I to into into lease complete service? of of time be additional or where leasing, just have the for guess, leased or remind not us before spec I in are placed service? complete for place completed, wondering leasing, the might guess, terms then And along maybe executed you they are of some the expect that, if question, line can developments Beth, of policy there's

Beth Boulerice

Yes.

substantial occupied X is policy the year asset completion our if So is from of or base the building. XX%

of not So many as of is occupancy when that core these placed met. but complete mark are service assets, into and today, shell them until they are

be So that later estimates our the on the that in date. to time are placed properties some leased going as and supplemental when -- will service we've some put achieve in of occupancy

Todd Thomas

it. Got Okay.

I'm if Comfort first Is So and service whether in or Florida, looking not, would during transitioned Central like Ocala they would that... be at transitioned, Mt. be 'XX. the into they're those quarter of leased

Beth Boulerice

Right, X year. Exactly.

Todd Thomas

expect current anticipation leases then leasing otherwise? have And we would be think they when in there the progress those demand, to before service or do on is so pipeline you [indiscernible] without on place based about executed for the projects, negotiations executed any Okay. transitioned leasing and and leases of into

Beth Boulerice

now, We'll tell will on that. on time see. We're that and working

Operator

next Your Instructions] of comes line Camille Bank question Bonnel the America. [Operator of from with

Jing Xian Tan

in cash caught basis? opportunity mark-to-market I GAAP this on around opening is, If guess question or I a comment remarks, the it correctly portfolio was XX%. first within your the my is

James Dudley

then the and basis, that compare is that a place -- versus if number. is The today. And escalators it's the to ending rent the And we the Camille. This lease escalated ending number XX% cash it's the on James. XX% rent is the rent rent, track you also It's the by the in-place in X. compares in basically And XX%.

XX% of below numbers. X we're So as we today, think market. But different

Jing Xian Tan

the XXXX? achieving expectations cash is possible been came it lease on within expectations to tracking XX% ahead just specifically And about you've spreads what be opportunity the it Carolina to of leasing asset, your for outcome. is below seems the this But year-to-date. expand Because your Duncan, portfolio thinking Okay. well that the that South XX% which

dots the So just connect trying there. to

James Dudley

blended. It's Sure.

have left. leases XX We

couple of renewal them at of rate we So very, have X%. it's -- of some them very high ones options, the and and a are some double digits, fixed X%

us of over a to gets the XX% blend it's So those that outcomes XX to XX%. average

Jing Xian Tan

Okay.

excluding So you're like fixed still spreads? the seeing ones increases, double-digit

James Dudley

Yes.

to So for includes average. the those XX% the XX%

expectation XX% going to So rent. that see outcomes increase is XX over yes, we're to XX% those our in

Jing Xian Tan

one final the see Alto me. your office your Palo due And end of is year. Okay. asset the on I secured coming loan for at

on here? your Just get wanted thoughts to your plans

T. Wilson Eglin

we ago, financing. balance. it Xerox X fully it renewal XX-year Yes, payments the used all so credit a support amortizes, essentially will be exercised a And XX rent and the option, years to lease tenant

years So either. we cashed a the asset have ago, won't we ground interest maturity. how expired, that XX We economic that do any the continued and after was lease won't anything have we out of so

Operator

with comes Germain Your from of next JMP question Securities. Mitch the line

Mitch Germain

have of other about known comprise The some some is that XX% kind weighted back I'm that haven't of we you're the just started of those with, under that do yet XXXX talking guess discussion I'm about and -- -- curious the expirations XX%? or are I tenants they XX%, move-outs

James Dudley

James. This is

They're the There's just first which Olive known is XXXX, part. back-end X Mississippi. move-out foot in Branch, weighted. right only facility square in You're XXX,XXX on

Mitch Germain

help maybe, just or or Okay. I Great. regards going think property industrial tap you little quarter. some more of other then that a I market what X were. original kind And a to no of -- out sales on me believe intent, in sales. the more suggested comments Will, know to of you negotiation discussion, office under the sold I I based your And last for are letter that assets Detroit with were the under than you --

perspective? changed So was there your that from anything

T. Wilson Eglin

it Just a seller, great is, be that financing favorable. how acquisition given hard not time to not is a it's observing

market. monitor think we'll just I So the

just in will we We on we I find. market I versus of balance have that a approach if months an But opportunities revolver interest few think our our wouldn't But committing. low. It opportunistic front. keeping that we'll what see be test and me the next handful in think sales about on assets be the surprise

Operator

line question ISI. of comes the of next James Your Evercore from Kammert

James Kammert

Just a clarification.

up. On rents those the quoted you reflect the quarter costs development-type those it now the the and presented second that are additional leased in tenant build-out requirements, are and supplemental, projects, went you X costs think mentioned. the I like But looked newly the full-in

Beth Boulerice

what added exactly That's Jim. the in TI is, it Exactly. now. We've amounts

James Kammert

Okay.

building the sure a renewal the just X-year of Lexington then I intentions is why want on but similar pretty cost expiration quickly are? on tell prior to to what it sort yield representative make [indiscernible] thought. when or the do off Okay. the of to notice question, lease, What because to there the fine up, have just went requirement is was typical And actually, tenants particularly that's say how Mitch's their attractive. part a

James Dudley

X It's to typically XX months.

Operator

question Jon next Jefferies LLC. Your Petersen with of line from comes the

Jonathan Petersen

are renewals change they negotiate the any on couple are looking -- kind they now? that right you that coming of there they these guys renewal? Are Like Curious as you the stand in years in you to and next able renewals? and on over at have Or last escalators on behavior year. of wait is early for as to just any see the where to the seeing lease And change are tenant renewals? does

James Dudley

It James varies. It's Sure. again.

still the and some have upper that proactive until wait that the most And have some in last are circumstances, hand. We minute. we

make they'll by we're they savvy, potentially fine that are we the and window. to their up to sure missing give But have the So ability who space want wait. the to renew ones

around far, mark-to-market, escalators in on some from renewal gotten see a as doing we're average to window. we're when would we've then X%, the portfolio X%. and push perspective, cases, probably on markets say, though our to on to also across X.X%, average, continue typically, on we improving it's So we And kind escalators so discussed an that escalator of I conversations towards

Operator

there no I And at this Eglin. questions turn will to the are further call time. Will

T. Wilson Eglin

great call everyone financial performance performance operational morning. strategy our with to appreciate Thanks to addition, you Gentry quarterly are We or we website strong And are the Please me forward We or believe our for for poised And of going always, and successfully continue like for and joining progress outcomes Heather excited we summary, contact with strong receive of are all produce joining if any areas to management on business. our our in would questions. this our in and continue executing materials. may to in shareholders. as you senior our again contact visit members other producing us.

Operator

conference today's thank concludes you This joining. call. We for

disconnect lines. You may your now

LXP Industrial Trust (LXP) 2 Aug 232023 Q2 Earnings call transcript