LXP - Earnings call transcript Q2 2024

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Operator

Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the LXP Industrial Trust Second Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] I will now 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's Call Webcast. Conference to Second 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 those with reports time including to does statements. LXP today's as from to press factors expressed from in a certain in update undertake However, any not differ forward-looking to described release risks, those Except results required or that earnings by included could LXP's time and duty the actual implied law, those materially statements. cause by files LXP SEC such

release In these available refer reconciled measures company operations non-GAAP financial has the supplemental measure. funds to earnings references LXP most GAAP press disclosure company package, from FFO all to comparable adjusted Any the and to adjusted quarterly directly documents in equity an all not position investment and to of measure to diluted a or a cash financial LXP's or intended presenting viewed numerical individual be as are flows. measures performance historical unitholders basis. Operating financial fully future holders of on performance,

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

turn I call the will over Will. to now

T. Wilson Eglin

pure-play of Based growth the date, with we've to continued have X.X%. and raising results square lease raising industrial We transformation in rental quarter leasing excellent achieved consolidated the up range pleased picked positioning REIT. remaining respectively, and same-store improvement to a expiring on quarter activity considerably X.X% portfolio X.X a outcomes Base office Cash sale . Leasing by good reimbursements on of the NOI strong with of quarter, feet our highlighted we robust million LXP lease. at completed rents and everyone. during and new Base leasing growth assets XX.X% as in activity morning, X%. had tenant also Heather, successfully the We're report second one same-store XX%, our NOI to we're to excluding Thanks, of expectations success X increases second with

signed range. A we expiring We the the speaks on annual high in continue obtained XX% achieve average, leases spreads of Post conditions Cash quarter increases X% we on in support portfolio, outcomes in respectively. feet leases, escalations Strong our at Class XX% attractive and and rent the on X.X to an to of negotiations rental mark-to-market on square facilities. strong million rental quality an And of advanced second which which X.X% continues, additional end, square XX,XXX feet. of are XX%, Market Base to quarter. leasing activity X% leased we and are additional Base

range EBITDA. rents. of vacancy on we the to target reach balance the leasing low and remain Xx, leverage our confident of moving are a ended Moving sheet. end towards quarter Xx of combination can We net We X.Xx debt adjusted raising to focused target through at to and the this

leverage are in investments. markets new asset for exploring non-target that create accelerate we addition, several In liquidity into sales could or redeployment reduction

million that growth square principally available is rents lease. focus we opportunities XXXX We our of our feet a X.X for have current market through ahead, are approximately advantage internal on our taking and XX% total estimate Looking portfolio. of below in the

market to We within external opportunities, build-to-suit fit including growth extent target strategy. also projects continue explore the they to our

speaks shifts effective joining that He Vice role advisory in when March will Markets transition role and him particularly the to corporate Brunner banking, will September. lease his contributions. has LXP. year in Finally, itself industrial the look and finance Beth in LXP we deep and with into join sectors, Executive Nathan's be announced us to net investment excited years CFO We're he have at very an Capital background as President to forward X, Nathan this for and successful many XXXX, M&A earlier of experience.

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

Brendan Mullinix

Thanks, Will.

During million the $XX quarter, our and we spec in projects. invested build-to-suit

fund and spec $XX remaining any $XX approximately promotes, in million have project. We million in partner build-to-suit projects, left excluding our development our to

portfolio. We've this growth footage square development developed Turning the to of avenue we've important since XX% XXXX. leased adding our in approximately

X.X in we with On the continue negotiations. remaining million currently X.X million left see feet lease, to final to activity square feet square

in expect we the Our complete Greenville/Spartanburg of to project the and build-to-suit project that year. is near well end underway,

opportunities the explore bank with our prospects Phoenix. continue to in best land at currently other We

Will's on has depending used point, for build-to-suit dispositions several or the evaluating most as of liquidity, be deleveraging source sales at To Potential time. accretive these earlier more of opportunities, assets become prices are what non-core as types asset a proceeds the from particularly these could we for is market attractive.

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

James Dudley

X.X renewed quarter. in date, expirations, signs bumps million the square expiration XX% fixed and and leasing and resulting of renewals quarter's the at a in last expirations XXXX X excluding as XXXX on XX% On industrial discussed with XX%, average was XXX,XXX in second renewals. starts . We as included of XX%. to the expirations we XXXX X during totaling outcomes, vacancy. average we spreads were markets expirations. feet. anticipate pickup marked activity feet XX% X to with continue evident second quarter market construction approximately X-year market leases we've with XXXX rental in net Leasing X X.XX%. in strong expiration, quarter, leasing XXXX for lease in accelerated XXXX call, The showed lease of demand This across raising are [ a extensions decelerate. our leasing Memphis rents our the on cash at the strong These Brendan. second well saw To rate Both improvement as ] of up lease in quarter, portfolio Thanks, the remaining and was square absorption

expiration off early extension on renewal had in the When with in X% our quarter, square including $X.XX mark-to-market amount, rent amortization. XXXX We during the leases leasing lease increase foot, estimates. an the any loss XX% where the a has Base Base and a in from rents reimbursements increased and in square always respectively. burn loss of in been reflects this $X.XX quarter amortization tenant have lease Atlanta rent XX%, improvement with has such our expiring executed approximately the this similar per including TI excluding impact. to second expiration reimbursement We don't still of The for the in $X.XX numbers The for annual foot XX-month a bumps. signing rent Mars accounted TI portfolio Cash renewal XX% per these significant TI

X% signed XXXX the rent. renewal over a an in foot extension with annual expiration that in an market. lease facility This industrial XX-year bumps during XX% XXX,XXX on was quarter, our Also, prior the we cash square increase a resulted early at the Philadelphia rental

per representing property at with rent. rental foot, in was Finally, square downtime we getting There rent leased X.XX% X-year the with up Memphis foot the a new our annual XXX,XXX over vacant increase XX% square minimal the a market. executed the facility in bumps new lease prior

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

Beth Boulerice

million. quarter expenses property common was second about Revenue of approximately $X.X in to G&A in with attributable $XX of the was was $XX Adjusted which James. the $XX operating $X.XX or tenant company approximately Thanks, second second quarter. share quarter diluted million in reimbursement. the was million, million FFO XX% per

have Florida been which we transition As efficiencies, we included Dallas footprint offices. we mentioned York in focused our to call, New some costs on quarter's our and on office shrinking overhead last operating as

$X.X to moving our completion of the will of portfolio million severance in $X.X onetime costs. by These efforts of charges employee operate will include repositioning, successful made XXXX efficiently part and associated million now more employee of changes annual forward. with cost result savings approximately our G&A approximately As possible

XXXX, approximately we million in $X related CFO the transition. have in will expenses Further to

range $XX G&A to to As our million. now within expected million $XX a of a XXXX result, be is

Our end, of XXXX. period at average an was NOI end of the and when XX% second X% had rate quarter quarter our portfolio quarter with portfolio leases same-store in annual same-store compared in same X.X%. the escalations XX.X% At approximately leased increased to

maturity we the quarter, $XXX.X proceeds senior XXXX fully from at During X.XX% issuance the repaid November. with the the of completed notes XXXX last X.X% million we senior of notes

Our fixed percentage rate debt end. XX% quarter at was approximately

the January. on previously, XXXX when swaps As in expire expense we term the we've indicated loan to interest increase expect

approximately are other interest expense this additional company later year FFO of rate to to end, of common swapping this quarter $X.XX early $X.X At We and We some diluted [indiscernible] with was considering share of fixed year. rate interest billion adjusted based consolidated this by weighted a curve. options maturity anticipate years. or the on debt exposure per current total weighted next a average XXXX outstanding average or impact term long-term approximately forward X.XX% X our

fully Finally, we unsecured with our facility the available. ended $XXX credit second revolving million quarter

back the question-and-answer this I'll operator conduct call call. that, portion the With will turn the to over of who

Operator

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

Anthony Paolone

get bit to pipeline leasing more. I question, First a the development into wanted just

of been of I that of to you some up leasing think pipeline. and million think just the of delivered you large that over much just And you in X.X leasing do again some can of million square prospect how mentioned feet already developments maybe go square these have relates footers? the

James Dudley

Tony, it's James.

stand. through -- of and kind the we just just So where I'll portfolio run

So Ocala think I while. a about for we've talked

be that a to close entire continue take on tenant prospective with the We facility. Ocala would

XXX building then user users responded And identified full Tampa on partial a deal looking our we of our RFPs another have a Greenville/Spartanburg. then our in on have building of couple Indianapolis Shore done that also a facility. think facility. couple tenant have We South getting We've inquired there. Etna, partial about building at And we close that's for a and to we're

Columbus would So now away right good a from and others. a in the on Ocala spot certainty further and little say I having we're on

Anthony Paolone

and think up any being you're discussed just will where comments those, And are. just the yields rents on Okay. on what given end you seeing where

Brendan Mullinix

maintaining X% to prior the we've to. We're X.X% previously of that guidance Yes. guided

Anthony Paolone

And Beth. other question, just then maybe one Okay.

think I guidance X% your previously. was to same-store X% NOI

number, there the for year? that's Just any the kind changes there's of wondering if still if

Beth Boulerice

Yes, guidance, X.X% the we've to upped to Tony, X.X%.

Operator

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

Todd Thomas

$XX to G&A higher That's included clarify? to million wasn't all $XX company you the clarify Can the $X the from was million just sure mentioned FFO. onetime I you a just guidance is Beth, there. nature. like believe, G&A by comments guidance. 'XX. for million, in I prior heard in sounded adjusted question, I I that portion It First wanted

Beth Boulerice

Yes.

million FFO. be an won't of they one-time, So $X.X company going the severance are adjusted so be a charges to

Todd Thomas

Okay. But the balance....

Beth Boulerice

million. The last -- we said range range the time $XX.X was I $XX.X to last have million

million not $XX saying we're $XX to now it's million, but that. million, $X less So than so quite

Todd Thomas

Okay.

But we offset other so about the changed, guidance the basis the you up to sort assumptions points. and $X.XX? up updated pertains Okay. coming then, think XX as low should the it what What took else end of by same-store

Beth Boulerice

outcomes that great It's spreads in of that really done due to that all that. rent, our being the the we've we've able for capture had to motivator GAAP [indiscernible] and leasing and really our

Operator

Okay. And budget of then year were move-outs the guidance of, there I the 'XX. were the for -- just and I a about that balance wanted think, known also included in to handful the and ask

around I discussion was some also 'XX. think there

still in at a anything both square this move-outs? foot 'XX 'XX square there Are or XPL of that aware time? foot a about in in Carrollton, Texas. talked you're a warehouse, XX,XXX else Carolina, is And around warehouse also those XX,XXX You South

James Dudley

the are both we and 'XX, have on activity that in those So of them. are X promising

out. because And short-lived March tenant. XX one expiration that replaced lease I'm the and be one the So become that's vacancies then the maybe we we is other it's tenant moving a doesn't XXX that know they'll we hoping -- have XXXX even

that's Fortunately, tenant next wants expand. it's a multi-tenant to building door and the

that also hopeful there. we minimize So can downtime

Todd Thomas

subsequent proceeds that And any was that disposition Cleveland or asset last just to just on sale, The on share XX. that details Okay. details sale? other for June you asset one me. the some sold Can

T. Wilson Eglin

it above had we very XX-foot a good we for what was for sounds we known X%, selling It's us. a that but cap which height, move-out user ended coming, a sale of That and it a rate XXXX to a clear high, a with facility really good Sure. for asset was bit really -- an up little a was price. a thought

Operator

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

Mitch Germain

perspective seeing some me between a provide in you're math build-to-suit you acquisition Can on what the today? market the . versus

Brendan Mullinix

market I a what structure Xs term. is something Build-to-suit, depending And kind the -- range going to Sure. we're range. to of of X%, be targeting X.X% X% in just the a in to existing the say would is escalation upon high in term

Mitch Germain

Okay. as dispositions, some it much don't some bucket? of it capital in markets added helpful. is scale is That's move-out? you or And where there's kind or What's where that about super either thinking assets have no .

T. Wilson Eglin

focused really markets on scale. don't where and we to it's plan don't Look, have scale

so points can. disposition we're perspective we fourth quarter from being We where rate And basis opportunistic think harvesting since our probably last market improved about value XX has favor cap year. about in a the

the market in discovery handful and we're we're buildings, So some good response. on of doing getting price a

Mitch Germain

That's super get for a questions me, G&A. of helpful. one you on And Beth. apologize last lot I

I a think for talking me. you little just were quick too

missed then you and talked your just the then remarks, some of you million, prepared I savings and from of severance just can about So recognize kind I it. -- $X.X

CFO go . just change. that you more one think the there's Can over time, fees some please? for of I kind additional

Beth Boulerice

Yes. Yes. Sure, Mitch. No problem.

to time So FFO so our onetime, into for those severance But be impact changes. of $X.X for and XXXX. we saving XXXX. company the about are for they $X also going based CFO -- XXXX, that million adjusted impacting also we we're there's that anticipating on about for that's cost, transition But going won't XXXX, be for will million one $X.X FFO million anticipate --

Operator

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

Jing Xian Tan

a a as lot your stabilizing expense it term like asset, seems at Beth, still exposure. manage opening interest done line quarters has the you a your on remarks, to highlighted But in bottom away, drag team floating look of further will the out you So and And to rate drag when pace implies we're which still XXXX. development the few the growth. be earnings

are that to thoughts you So I'm potential your sales? this asset from outlook while can your do what what on dilution and wondering . balancing improve

Beth Boulerice

fixed swaps for are swapping down bond maybe or some as the at place different also of of potentially, loan. in for today We're we're that now. portion pay we at some may exploring rate, now, opportunities the We're a Right looking potential X.XX% right it's Well, well. term it with potentially exposure. that offering -- a

in be expense you're going I And Interest so going is $X.XX, mentioned our by as forward, higher about right. remarks. to

Jing Xian Tan

light And of does is NAV as in you explore those stock where which trading to relative your much seem considerations closer today, peers. to

capital requirement potential equity you're as investment raises source maybe capital opportunity. to or how wondering address about a of Just thinking needs .

T. Wilson Eglin

focused pleased shares very on we progress performed more. list. Well, top more recently, what can we have the the on can be are we're things development achieve And that well stabilizing obviously, that even pipeline but improve the would that making the share of value

So is our cost working of in our better leasing said, as a things valuation standpoint, further. from capital better producing focus and I outcomes portfolio, certainly on, but are improving the

Jing Xian Tan

Okay.

have LXP to small I a high doesn't And ranks very point it still properties. finally, your as this like on So sound you a about few industrial just it at office wanted I point. in company. being believe pure-play up pick a positioned stake

are down? disposition the assets wind included outlined? strategy So you you that planning to those And are also in

T. Wilson Eglin

joint That has it a venture mode liquidating office was since formed. in basically Yes. been

of It winding So quickly a has it the market shrunk And lot. as we buildings in that down are a still as supports. it. handful

Operator

[Operator Kammert Instructions] with . the from Evercore Your Jim next of question comes ISI. line

James Kammert

in terms tilt potential of it? assets a Did of non-core consider that would you're maybe want you you know, I your miss and cap Will, you thinking. the but quantify to sales I that rates? don't maybe did The range dollars hand

T. Wilson Eglin

the market million, sort $XXX $XXX less is we I more of I that million. mean what think than right but have No. would in now than

James Kammert

Okay.

T. Wilson Eglin

rate the was space to of asset it lower area, now, time, and possible than it's [ ] right are so sort has X.XX% we than over better certainly for down. is of go cap are Brendan that sort this as floating X% rates cost And in rates that been, those which far arguably saying, although certainly cap borrowing our

James Kammert

for in drag lease-up [indiscernible] XXXX [ sort then any on how but no assumed I And assets? how of ]. second you remaining where Beth, longer is the recently presume completed leasing? But deals, for assuming Are much those the capitalizing helpful. guidance That's interest, question, is counting much you're

Beth Boulerice

at end assumes assumes the leasing end bit low in all, little fourth The no the a high quarter. and

Operator

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

Jonathan Petersen

seems On most able annual you the from Ocala like near properties? in -- likely the us and give Like since like you guys rate upside about Columbus, to the to are how FFO we that upside those term? should X can that run quantifying think be leasing

Beth Boulerice

It is about $X.XX.

Jonathan Petersen

Okay. think up? you there? that's just potential longest a dotted negotiations waiting and the And to evolved Or the sign terms the Is and how the been it back what's about line? of we've that's Can tenant the Ocala, then on forth for have on lot holding there year. talking one characterize because it I is

James Dudley

internal at And we're done a working and it continues It's for now, just I tenant very trying months move been the know in have waiting the going something that but on process long. slow Their patient, a soon. through to hopefully, this of we're point. we're be to pace. but at we've to it, right is just couple direction saying incredibly

Operator

the And concludes back Will conference Eglinton comments. over question-and-answer now I that for And will closing session. to our turn

T. Wilson Eglin

contact with materials. joining to receive call website everyone, you'll morning. the thank Thanks or other hope of this management senior I our for time any Well, you'd the members Gentry take our me if may always, our as contact in addition, or to you, Heather And again. visit questions. quarterly like you

Operator

participation, conference you for now you your Thank call. concludes may This disconnect. today's and

LXP Industrial Trust (LXP) 31 Jul 242024 Q2 Earnings call transcript