LXP - Earnings call transcript Q1 2024

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Operator

Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the LXP Industrial Trust First Quarter 2024 Earnings Call and Webcast. [Operator Instructions]I would now like to turn the conference over to Heather Gentry, Investor Relations. Please go ahead.

Heather Gentry

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

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

T. Wilson Eglin

good morning, Thanks, everyone. Heather, and

to manage while to lease continue capitalizing million on quarter year, leasing, and After consistent opportunities, approximately million our leverage. start development in active market were lower anticipate with end, results focus quarter marking we our quarter with rents towards expectations, renewal the slow we investment First and square build-to-suit leased a to efforts feet feet. approximately on continued negotiations square strong and volume X.X process after we second we X.X on

and result X.X%. in to clear that due in continued market On specs, among are although highways, X.X%. in negotiate, further NOI increased a of In million macroeconomic to make be approximately trailer leasing, high versus or and X.X% that of square power.Overall, average will X.X% of position to Class annual another range positive are second from partly X% uncertainty height, the modern and now and our ample the which airports auto properties increase XXXX pipeline. to escalators the to the including our negotiating to ports, in high-quality no previous an will our same-store leases continue perspectives in be of strength guarantee expect development X%, RFPs that our negotiation our to promising, due dock longer environment addition, our X.X we there responding any feet up take This our quarter, target we feature range activity access on to a note, from of A is the we Renewals bargaining to parking and assets desirable we all easy most their quarter spots markets.As executed. believe rents the doors, tenants' in disconnect on between is

our main our end, is through rent rent estimates $X.XX share current per side, initial of remaining XXXX investment cash while estimates opportunity $X.XX by in as Greenville/Spartanburg. developments the the our The build-to-suit and through supported of build-to-suit investment the pipeline.Based $XX or pursue one share million we of below constructed continue quarter, on a per the in lease million opportunities during future stabilization mark-to-market we to that balance and investment are our assets us target these committed newly contractual foot of of project below on escalators, into the to markets earnings our fit of rents, criteria.Moving area of and $XX or approximately XXX,XXX in initial to on sheet. produce the portfolio rents focus, In market quarter capital up.On estimated our to terms. growth to outcomes an act of market stabilization accretive our by spec to market recycle cash XXXX, as addition This increase the is to square development will estimated these provides development pipeline growth is

we at and good EBITDA, have focused in the occupancy debt towards out of Brendan ended X.Xx and range low of over effectively quarter end leverage our We moving liquidity driven call adjusted our and We our will which Xx, target rent to Xx to have the to investment discuss growth.With detail. pipeline the gains extended to on are net in development XXXX. that, be more activity to by I'll turn maturities

Brendan Mullinix

foot $X.XX of service was Phoenix facility X% estimated a per excluding an partner facility X.X%, approximately quarter. our years first in remaining partner $XX promotes X into placed the any in foot with development average in square previously approximately promote. invested in leased We square $XX the build-to-suit cash left spec development, approximately our rent at The a $XX for annual yield million XXX,XXX escalations and excluding projects, to leased during project. stabilized fund We Will. with starting and Thanks, quarter million million of

completed also We project construction base foot the in square of our XXX,XXX development building January. Columbus

on tenant building. and approximately facility balance to for square XX,XXX responding We are currently the at of these feet in they're negotiations interest the the

bank. inquiries of number target in are including investment a On our primary our land the side, projects reviewing markets, build-to-suit projects, Phoenix our with we focus, involving

an to initial approximately of manufacturer for auto in project mentioned, $XX international parts acres million, build-to-suit an Will had the price estimated square XX-foot we've will be market a during square including XXX,XXX on cash distribution purchase be XXX,XXX height. cross-dock specs, can quarter foot As rate expanded built of by facility The warehouse for also XX feet. X.XX%.The Greenville/Spartanburg clear the to committed facility approximately modern an capitalization

first $XX years are the in in funded we to data event the with fourth project needs the leased land estimated commence to leasing. to and that, the that million expect the I'll term purchase XX previously their our land the for will complete Phoenix capital center project X% expect completion.We We share exercises lease potential escalators option project recycling proceeds, proceeds of the late or receive fourth quarter a to in capital to discuss be turn build-to-suit The of of annual initial projects the XXXX. with parcel call future the any including James over the user quarter.With of to XXX-acre quarter

James Dudley

was significantly supply-demand first new Thanks, in over to quarter-over-quarter. were Brendan. currently Nationally, spec the dynamics That down. our the be flat slow volume market the taking net country. quarter-over-quarter rate across knowing imbalance markets a the Rents in Leasing the time. help but ago, with the continue decrease continuing with construction absorption said, they year place starts quarter, should was vacancy in than higher up average target

the facility inquiries [ foot first across feet markets ] In a facility extension up. foot bumps XXXX.We we cash X% the through an also our rental XX%. our increase had We XXX,XXX at of activity X% annual in after is remainder and at that annual end. of X-year Atlanta currently approximately market a better the The X-year quarter by at feels included commentary outcomes notable XXX,XXX tours encouraged square finalized approximately Memphis This pick with extension approximately of quarter, square rental rental leasing square a increase bumps approximately are a with for with as the X cash XX%. facility market XXX,XXX the leased in

for expirations produce Beth of a of to XX% negotiations. and square lease results. foot primarily I'll entering our attributable is to portion our XX.X% conditions.Our rental quarter expect market square included current executed estimated are feet XXXX stabilized expirations X.X at portfolio our million bumps XX% several previous X.X financial industrial A call of approximately the XX%. the remaining We rental to currently that, leased at was over still our our square on quarter cash cash the XXX,XXX industrial we Additionally, with versus renewal additional an XXXX to portfolio increase remaining discuss feet in XXXX development based X-year facility turn X.X% approximately the to expirations pool.With end. increase a in non-leased million The change of stabilized

Beth Boulerice

James. Thanks,

to $XX G&A of $X.X in diluted We tenant or million quarter. property with company operating First approximately which revenue quarter adjusted $XX the XX% share was attributable expenses million, first $X.XX about of was quarter. first the was produced in FFO of common per $XX million million, reimbursement.

We on transition in efficiencies, have as our footprint costs our been we including New offices. overhead focused York and shrinking Florida Dallas operating to

our we XXXX. Penn approximately space foot square XX,XXX subleased the office quarter, March During One through

rent anticipate within $XX.X approximately $XXX,XXX will decline million We and to XXXX annually, annually expense expect initially G&A to We by by million. a XXXX. million of be $XX.X now range March after roughly $X

escalations outlook end, of our same credit with X.X% happy Our reaffirming their Approximately that X.Xx, to negative fully back net industrial same-store period our EBITDA and million when our credit debt outlook X.X%.At rating, quarter the rating. first from increased the Moody's to available. quarter industrial unsecured same-store changing portfolio at $XXX facility average an revolving to stable portfolio BaaX to XXXX. quarter annual our and report was was in our leases of and We're leased industrial NOI removed adjusted was XX% had XX.X% end, compared rate in

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

the rate XX% fixed approximately turn was Finally, quarter over the question-and-answer debt back to our operator, who call. the conduct I'll of percentage that, call end.With this will portion at

Operator

Instructions] with of the first question KeyBanc. from line [Operator Your Thomas Todd is

Unknown Analyst

on is Todd. for This AJ

for First James. off, maybe

Indy on X just wanted a leasing? service those kind specifically could to quarter. ground placed regarding you the provide and Florida of what see the regarding you and the the So of footers interest into leased color bit million I if you're around during seeing buildings

James Dudley

Sure.

that something results hopeful but right if we've have had soon, to close frustrating. in ultimately really got mean, So There you would kind Indy, But there's some Indy. in that never executing there just these I really We'll been good continue instead that a you just market, we're now. and in the shown nothing the Florida of guess of On size commentary to I but of of specific calls tenants see it the decided tenants to been put deal, one yet. that couple renew couple -- are to has going really landed in buildings, until leasing just cost. recently activity we up I we're general, of know into activity I those something get a And then Louisville in market consolidate a around done. at unfortunately, we've high are

renewals. rents push on to continue We

the bit I hearing think have aren't it's new rent think convince side, pretty And that's really little have as to isn't particular about hopper. longer some things really we the to and happy to happen, in right do markets having Will's do reality a educate the that to do in of are this rent.On slow. you and get along kind pay and everyone's around needs and all some that, a tenants those the a lot the a I mark-to-market lot there's supply. going just where But if exposure that have them they're a now, to the going tenants in more still because has the are commentary then slowness renewals market a that supply we supply that on that of submarket, there your spec come there's to have of deals the to the other is just where landlords more to the up aggressive gone taking higher

Unknown Analyst

little last a point. guess That's to more And helpful. Okay. I that bit then

upcoming assumed end low the the was guidance online guys that So up in lease had there the high last end lease provided no quarter. that while assume at some fourth there quarter you that was

maintained you You but forecast. same-store up guidance, growth NOI the took

provide the remain Should more be color we you about the on should assumptions? how just same bit those? development could So they or a little thinking

James Dudley

Yes.

get same-store renewed were that I us XXX% is should think just the to we sure going assumptions The that development the some It around same. weren't by renewals the the guidance. and tighten really renewed. we were remain we a post of big allows executed driven quarter. up we mostly couple that ones to uncertainty There haven't

Operator

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

Jonathan Petersen

to on misunderstood, that. just maybe follow wanted I Well, I Great. up

through you an increase? interest So maybe same-store with increased are guess to doesn't offset I an FFO overall. why higher there, where flow guidance at? it the expense rates there Is

Beth Boulerice

deals exactly, that pool Exactly, It's the also it's been in they're have the come that John. online, service interest have yet. development placed expense, same-store into not and

Jonathan Petersen

tenant were talk these some Got the that expected the ago? interest different market what about of types broadly maybe now the lease is developments it. the a portfolio, than so Can up in even type or you of development maybe you're right year that and in when tenants just more in the are out started seeing you

James Dudley

where tenant e-commerce mean, there of and some in it's of know to that follow down along what another XPL out if going space, than them. took different the kind good space that continue there's and up then and tenant some with pops I don't we I food is XPLs Phoenix expected. to big are Certainly, a big example beverage probably markets that construction. take a see is piece different

also pretty just still broad it's retailers. So major

these broad continues momentum. deals these really of getting look. it about markets be the line in across some to So creating finish and a hopefully It's some

Jonathan Petersen

on Got these forma leverage, will where long-term best, that And put you leverage just leased pro move curious to once the relative to it. up? that does developments And your what then are targets? maybe

Beth Boulerice

projecting in we'll middle range. the to down of Xx range where leased get the into mid-X right our they Once it's Xx Yes. And we're comfortable. of we're up, be

Jonathan Petersen

other relocation we Is about costs One now me. Florida. into anything that is question think are release it. noticed the G&A press there should for that Got location that? the of Palm I on or company going from the Beach, any West

Beth Boulerice

No.

some be New to with going there's subleasing fact, space. us York our In savings office

Operator

Street. line the Vince Tibone from is of with question go next Your ahead. Green Please

Vince Tibone

how Could X beginning those speculative the if unlet the you all, And projects? discuss changed, expectations for since year? the your current at yield have of

T. Wilson Eglin

pipeline, our previously. those Yes. to we're the not guidance to regard promote With unleased guided we've after that in X.X% to X% assets development from the changing

While there's a less exceeded visibility the in for little and lease the the Columbus that have be Phoenix, buildings. of in a at larger couple recent stabilized outcomes to moment

keep So to to we're going X% that X.X%.

Vince Tibone

of of concessions how space think to the related even can you interesting? Okay. rent of elevated would to in to try you're How if Great. see of markets the competitive are reduce be developing or in or with where lease spec to up And you're you kind dynamics faster follow-up projects buildings or you just touch that. kind Are starting owners many then offer a competing markets on some certain behaving? competitive others

James Dudley

get to owner. bit owner say, seen from varies a aggressive, I little more other Yes, certainly owners in we would specifically Indy. It have some

tenant process -- down it's before that to the we decided the with XX there. before, yes, say X more was mentioned I that basically to a Louisville. aggressive rents from right But went we there And options some I were As also was would saw so, concessions tenants to now. that there, run go

being You're definitely offered. rent seeing more free

higher TIs seeing offered. You're being

their to there say become to on is building yes, concessions. the it's I people would some So And to see sit going that this get think that to want as we're and buildings goes to on are rent. going aggressive because compression vacant, to try longer I continue more more leased.

Vince Tibone

guys tenants expectations cutting you No, well? environment? in guess unchanged. Like plan respond your one to you approach others last to Do trying this handle So I just to how I basis? rent that effective as situation? plan be mean rents that of may you a do mentioned are think how to net sense. kind there's get environment do cut how to guys yield makes you guys advantage on is where just you respond do that or

James Dudley

concrete have truck we in competition. a markets have we're a court, an large a only superior also asset, private some think in are development we play building extent, that do our differently have all we're than best of owner some things little With attributes to because courts, that with the bit Indy We competition. like our that long-term we we of we physical all our partners, but to driving ones truck our X feel the

regard we Ocala. So We've believe advantages that that Greenville. the the in think in some A do in location best we similar Class what park in we and have got to be really only

maybe are to tenants go to low yes, aggressive feel I attributes that of to don't we have as in play, going our we because market. if want So to relative what's have competition as But the going prospective like we we have we want. get mean, on do some to some

Operator

Your line Camille of the from Bonnel next question with of is America. Bank

Jing Xian Tan

to the up, chain adding Every week, disruptions. new something front pops geopolitical on supply

how you facing this speak are what dealing in to saying So with can inventory these they're tenants of risks? terms and about managing levels thinking

James Dudley

I there the been still supply chain has resilient. one, think a I is Well, change. think

some with from commentary to to there chain. the that's things disruptions what the heard about that moving maybe really down kind to additional supply trying but we're to that right, tenants supply pause taking from to chain have what consumers. by through get is, closer are safety the their COVID, that have shoring continuing we space, is But certainly hearing think of tenants getting up slowed they're stock move closer forward the consumer, been away forward with moving caused You're and and take

Jing Xian Tan

at, focused or strategy on? looking active distribution Amazon of requirements have you that had of in space and conversations whether size they're that sense the recent pretty any type Okay. been Have the with getting type interesting. a them more has of they're And be been That's market.

James Dudley

They regional seem just the in the the they've into larger been up that pursuing yes, said couple It what of same more variety. market and market. their type centers of to delivery. proximity distribution be so of can broader different to more a some ties to consumer, about smaller shore I some requirements, do they the But day with

Jing Xian Tan

hot helpful. quite a That's your you centers Outside finally, in opportunities And topic. land bank? other Phoenix, just still data of any do see

Brendan Mullinix

Brendan. been well. markets, center in would our that's market target in I potential core terms note our of be of and The would is Phoenix data best for another Columbus, active is This very holdings, opportunity as

Operator

are there for now Mr. time, And over at remarks. closing Will I back will further questions. the to this no call Eglin turn

T. Wilson Eglin

for our have all other if members thanks contact contact senior Thanks with any morning. our of you our management or this you'd again, joining our a of me the addition, or Well, quarterly and to call Heather in materials. day. receive Please you Gentry great And may as always, visit like questions. website to team

Operator

the concludes earnings Industrial Trust quarter and This webcast. LXP XXXX for Thank call you first joining.

now disconnect. may You

LXP Industrial Trust (LXP) 2 May 242024 Q1 Earnings call transcript