LXP - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to LXP Industrial Trust Third Quarter 2024 Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Heather Gentry, Investor Relations. Please go ahead.

Heather Gentry

Thank you, operator. Trust's XXXX Industrial and Conference LXP Webcast. to Third 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

statements Certain believes Reform within based events of the are expected statements the conference that Act may results Private future during regarding this Litigation of meaning LXP XXXX. constitute these made Securities assumptions. reasonable call and forward-looking on statements

certain and implied earnings results actual with time, described such by that However, factors included to risks, in or LXP's files press in to statements. including today's differ LXP the those time cause those SEC materially from release, from and could expressed reports those

individual and commentary James Chairman Beth CFO, CIO; on Boulerice, Eglin, results. Will an or be CEO; provide measure undertake all are of business by or to measures these press Any quarter will Dudley, President, release Except flows. and law, duty forward-looking On In unitholders diluted package, to the call, future a from position not holders disclosure non-GAAP update to cash equity most reconciled fully performance in measures LXP's supplemental does LXP company all LXP financial Executive presenting adjusted a third refer today's Vice the a operations directly statements. adjusted Brendan measure. basis. Operating of required Mullinix, not recent has to historical available as funds on comparable references financial and earnings and intended any FFO to company investment update and documents viewed numerical performance, financial as GAAP a quarterly to

Will. turn now over call will I to the

T. Wilson Eglin

by Thanks, leasing and Heather, X.X%. outcomes NOI strong characterized great We quarter, good growth a of and same-store had third everyone. morning,

our respectively, quarter increases XXX,XXX and Ohio. resulted approximately XX% of volume square Base XX%, rental project in and portfolio Second-generation development progress in our with square on of and leasing Base approximately lease-up Cash foot the development Columbus, feet XXX,XXX we of leasing made in attractive the

We X most continue X.X building our facilities facility. to Ocala, million interesting remaining with at work closely a at prospects Florida user big-box our development at activity our the square full promising project, Greenville/Spartanburg foot with

Our as to Belt the these market second-generation target focus Sun others. Lower well and many has on performed relative have this success Midwest to year, markets contributed leasing our

We initiatives. to strong and growth, continue and to markets trends, manufacturing job infrastructure, long-term including supported support by advanced logistics designed programs favor spending that population are demographic government

transaction the and our several Sun reinvestment more have we Belt the and service expertise becoming for relationships. where provider strong sold tenant active, market With have market opportunistically assets target we of markets scale, into outside markets,

million market $XX and sales of the the an to quarter, industrial sold in Chicago, end, $XXX asset sold Cleveland for we During subsequent produced X gross proceeds million. in quarter facilities we which

facility additional Sun Further to adding purchase on in Atlanta. and assets exposure, industrial are our Houston and for diligence acquired in a Savannah million in in $XX X we October Belt

$XX lease approximately debt and for now tenant Phoenix million their our of under has reduction. receive that In to ground utilize reinvestment sale which addition, option, we expect to plan purchase proceeds, we exercised the

the to Moving sheet. balance

current weighted and levels. X.X%. is XX debt to rate of fixed loan market third at preferred. our basis of million for the the estimate were window interest executed of the XX% quarter, of million $XXX trust points interest approximately a percentage average XXXX $XXX capitalized a increased our actions the on swaps approximately we swapping our and interest on or favorable approximately These During term rate for rates, $XX swapped short-term We that XXXX below million

increase dividend and per Board our be increasing prior our The increase Consistent newly announced an we the of X.X% of our quarter dividend this that annually, annualized an over XXXX. dividend morning common share of will declared common $X.XX in represents goal of paid Trustees share. dividend of first with authorized the

on lease-up available our for growth As market our of estimated our profile focus square we XX% capturing opportunities through approximately feet portfolio the current million enhancing rents remains X lease mark-to-market XXXX. be internal the with to through that look are ahead, in and below

and greenhouse corporate certifications of emphasizes report October. we gas on our solar Finally, portfolio. enhancement resiliency portfolio first of responsibility The our published our across further XXXX This and and inventory of our operations. included emissions the project, continued building green completion of the focus efficiencies our a in sustainability our in the completion report the

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

Brendan Mullinix

Will. Thanks,

leasing we with lease-up XX. servicing the on the During data commencing progress on the to building escalations lease in XXX,XXX X.X% quarter, the portfolio market. leased of our The August provider square a continued to space foot full with with make Columbus development X logistics was years annual facility for our the center

XXXX. included lease. a a a XXX,XXX [ building a stabilized the the estimate of first and encumbered is we value-add in a was during opportunity yield outcome lease ] given cash X.X%. quarter We Portlando activity completion Investment quarter within facility below-market the that the be in The own of to by ground square-foot our industrial great recent that portfolio project the This at

the acres, tenant facility, fee foot land square under acres a million. on expansion $X.X along We were acquired constructed XXX,XXX approximately with interest the of in XX.X X.X

pursue lease property. expanded interest subject the that tenant of XXX,XXX Following with warehouse May, square we us fee providing in repositioning in the expires flexibility the a entire own short-term to transaction, to the the foot to a the

$XXX quarter in part other market that relating lack million On in considerations markets. to portfolio and $XX foot the scale square for million approximately the during facility X.X the our million the due in industrial foot square quarter These for we market Chicago X-property demographic of reference we'll earlier and were XXX,XXX sales assets Cleveland sold the to [indiscernible]. sold to these a subsequent and side,

Houston we asset in is building average Also markets. presence quarter rate shortly, these Savannah, Atlanta The expanding our end, in these on anticipate in an we and further X of acquisition sales on on the cap target and following closing closed approximately X%. in a buildings

Our a an of aggregate approximately at average expected is X% rate annual cap weighted escalations and of X X.X% buildings the average lease average initial cash years. to be investment of $XXX in with million term X.X

respectively. of All buildings are size an age with of the Class facilities feet and and XXX,XXX A X average square building approximately years,

target remaining very We Lower to capital Belt are on add Sun our opportunities in [ the interested additive recycling best in current in Midwest. of are our still ] our holdings and our acquisitions opportunistic prospects Phoenix, build-to-suit to bank land and the context in with that markets in

tenant the land exercised their acres parcel XXX purchase leases that Finally, approximately of Phoenix option. our has

sales X-year of share or We expect close to under hold $XX $XX transaction than our more just million proceeds year-end approximately be before period. in will this a original million our the cost

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

Todd Thomas

is end approaching single Thanks, the see rate little rate. in growth Brendan. continues is vacancy there the behind development from case market X.X%, left market is the X.X% low which our we The in a digits. the national terms pipeline Rent up currently in Once vacancy industrial of quarter quarter. Cushman national second with rise markets top across vacancy to it, reporting the believe the in very & of third Wakefield delivers, remaining

on have absorption able been embedded was renewals to have leasing. to opportunity significant rate absorption significant over and and million the square negative number the on down in predominantly U.S. the markets. feet from third quarter. XX.X within portfolio continue from feet, tenant push came square quarter second and mark-to-market for the successfully We U.S. second-generation California XX.X from absorption million Northeastern pressure Downward the net

broader In million third down in square markets reported positive feet the contrast, from our XX quarter, market. markets to the little compared strength XX square over of of XX of net top feet in absorption second slightly demonstrating a our the relative quarter, million absorption the

the as newer to in deals the outcomes, of the increase, specs of our Class consistent market remain tenant activity We've leasing traffic up to second-generation attributes. back with modern facilities XXXX. continued continue the for slow to assets look first end While and A highlighting XXXX portfolio and RFP quarter strong our use softness with further markets significantly tours tenants our of of quality from produce with moving,

XX%, we in a foot X-year and two respectively, renewal lease square at XXXX rental This with XXX,XXX expirations. D.C. a achieved renewal approximately at facility Baltimore, increases addressed XX-year bumps included XX% rental the Cash market our XX,XXX the lease Indianapolis. were X.XX% bumps square quarter, foot and our transactions. During these flow X.X% of property in at in

fixed date, of approximately marked expirations approximately rate renewals, tenant To XXXX XX%, to we've retention XX%. excluding bringing

feet approximately flow expect XX% on the produce XXXX. cash We remaining in of to XXX,XXX square increases

XXX,XXX square resulted market. a rental tenant multi-tenanted X-year X.X% we tenants the quarter, Additionally, increase lease leased, over With for square for the in XX,XXX increase and rental feet first-generation [indiscernible] We a originally XX% in our one leased was the the lease a which replaced rent The during XX basis of quarter XXXX and excluding term which at and bumps, third prior annual XXXX, annual Nashville facility new signed with XX% the foot a on that, expiration. the extended bumps. was end point XX.X% vacancy.

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

Beth Boulerice

reimbursement. third James. million, the were X% of was million, of gross approximately about expenses property with which operating $XX tenant Thanks, in to quarter revenues Total $XX attributable

we are or per adjusted in approximately quarter $X.XX million. We our diluted XXXX third tightening FFO $X.XX $XX a adjusted million diluted Third the share approximately company per to quarter. of D&A FFO new $XX morning, common share. company this common $X.XX to announced range was was

employee that million We million of forward. reductions estimate recognized cost we call, of roughly anticipate for approximately savings to quarter's we last the these quarter. third in have $X.X in on discussed approximately costs. onetime $X.X these severance personnel which result We will annual XXXX charges $X.X As charges will moving in million, be

of Our expected $XX range to G&A $XX within a XXXX million to still is million. be

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

be expectations same-store to now are tightening of X.XX%. NOI We to XXXX range our X.XX% a within growth

the forward swap we agreements. entered rate During quarter, into interest

rate rate reminder, the XXXX, $XXX new As our available loan the deleveraging. million current forward interest leaving rate swap of at are $XXX the January X of for January effective interest expire XXXX. $XX These $XXX on million end a average XX, at on million our term fixed and X.XX% for million agreements swaps years, term interest loan

on the million swapped percentage million for $XXX.X rate interest our XX, well preferred XX% XXXX as increased transactions reducing approximately call, rate XX, additional future October at XXXX to our fixed X.X% debt these our company XXXX. $X.XX quarter's October we XXXX, loan Additionally, XX%, the as share. the expense of securities $XX.X The impact to term combination approximately we last to fix of from that trust interest per by and about from On projected FFO would interest estimated adjusted XXXX expense. average

mitigated The during impact, latest be swap on preferred ended we $X.XX approximately the in the securities have debt SOFR for and with transactions share expense curve. increase this the to loan now the per to term quarter interest adjusted net We EBITDA aggregate trust X.Xx. and the quarter expect based of

X.X average sheet to weighted low progressing credit was term X target end, our leasing $XXX on Xx, debt this million of At target interest X.X% consolidated billion million weighted at There a total our through $X.X was quarter leverage can of on years. combination average available. approximately end, the cash facility fully remains the with approximately quarter to was focus of balance we rents. and rate range a increasing expect to $XX of and over revolving vacancy and our maturity of of unsecured time reach outstanding end a we and Our

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

Operator

Instructions] [Operator

Thomas Our first from question Todd from comes KeyBanc.

Unknown Analyst

for A.J. Todd. This on is

updates interest the in And regarding elsewhere? helpful. comments off, Greenville/Spartanburg additional Are going specifically And still able with? Would user opening building any back timing then you to just Indie Ocala that around just little comments. would to bit Will's talks more be around the provide properties, perhaps you're a marketing and be the levels? First that information building quantifying you any full

Brendan Mullinix

not it's to Sure. we're market and for large a in leases still a Ocala, time. this No, working with in tenant take long unusual

continuing last like transaction course, on was is would in quite the making to we're slow Indie, available timing think progress. compared we more feel Hard when last than we're be. Greenville, that to what exactly for we building And closer months same having are reported closer there. we building reported to ago, say lease, time, with in we now. we're a the And which I there's when So leased. to activity few that tenant were time. The of work but We

I progress. in making optimistic So that we're think each cautiously we're instance

Unknown Analyst

around for you Okay. the about with was That's the data just And If quick, center that ago helpful. mistaken, land. option purchase then not the did real the XXX-acre I'm X for Phoenix deal operator. years

I X% think with escalators. it million was $X.X

So And a on I to Is about think equates acres? the cap. remaining correct? X.X% that update any then that XXX

Brendan Mullinix

activity cash bit other good in a on but in-place my them. we've ] decisions is a about cap build-to-suit these inquiries at at And there, there. on tenant just the little cap a longer, been of Unfortunately, it's then of little on that looked and number [ X as in rate of we've been It's rent and ground the there's bit the terms site, days, the some build-to-suit like remarks, a taking prepared focused said I lease. balance site

Unknown Analyst

Okay. I real that. to those? rates quarter then on lastly, dispositions, just And the subsequent the were what quick, appreciate cap end

Brendan Mullinix

that The was assets sold, the X selling were cap X%. rate

Operator

Our question from John comes next from Jefferies. Peterson

Jonathan Petersen

look expectations that on So of? maybe any us guidepost expiration schedule to and of be if move-outs the you spread and 'XX, if in can aware about renewals at in terms there's give leasing lease 'XX think any we should we

James Dudley

John, James. this is

XXX we in then at got the in feet known X We've a from a XXXX, million leases contracted. market first square that looking And have quarter. So that we Richmond move-outs. us X had tenant the

take will X. July the a contractual had buildings, that they to one and effect contract of So option

are those known move-outs. X the So

market. Now And there X about the lease, square role below projected million the to our expirations market. that is XX be XXXX, lease feet, are about of to gotten we've Mars XXXX below have we looking projection through there XX% about leases. pretty XX% remaining then sizable And a

Jonathan Petersen

sorry report you're do Okay. All REIT this first right. election I'm the but That's And to the you, great. to after to results.

seem the your positioned And trend manufacturing, the for thinking reactions I'm which election guys on what So knee-jerk of about specifically which well thoughts? results pretty I that over we've of years, mean guess, Any trend onshoring specifically? seen are the couple what last you of for.

James Dudley

will lot -- so say. Republican are around of there's of I point some require and too both regulatory whole you think, to spending I in that -- mean history a to. focus of government a inside be revisited more maybe There's I it's I think and less is say little spending undoing things not country this I it lot a those not nature. there's parties. scrutiny plans early can would amended, manufacturing, governments and that that programs that But the political that's, supporting that might still a of in consistent there congressional think it

Operator

from Evercore. question next Our from comes Kammert Jim

James Kammert

knocked was of It maybe left, in out end, range, Given the what quarter think the could Is you've the I kind as sales bucket? us you like what's post them in X please? it that dollar kind here of totality. remains remind what's of always assets. looks to noncore that X discussed X

Brendan Mullinix

Yes.

previous that plans in I we've of in is assets can to if to said time, from calls, we with markets time think have where a what we scale Jim, get no St. Kansas if can to a we Philadelphia, markets a Louis. And those in couple good -- we in one extract value, have got be We've in like will. we City. building tend handful

monetize alternate driven we there's And take over it really it of capital. of time, that have dollar on rather but than trying a it's handful a assets a value hang by use comes we as just So when there to being good may we'll it.

with Manuka good couple expect that shortly assets that's will of capital the So close a to of to using sale. fit that out be coming portfolio we've a that respect we got

James Kammert

the then makes you of me cap the could That expensive sense. from the And trust you retiring it's stack". preferred remind what prevents sort "debt Obviously, securities. in most

Brendan Mullinix

it's with the extremely swap one take floating it's reduce to has Well, maturity opportunity why a that retiring might some it, advantage to a million some did long-dated it And on that thing We quite at -- discussions bit. of and the we've is that us spread a associated left good pretty lead was and that a the of still discount covenant-light, value. off reason to and so we par. would with $XX the cost had that

if a for we at I find now. it can think in But think So just otherwise, it to way leave value in buy discount, alone there's doing a that. I we'll

Operator

from Citizens comes [Operator from question Germain Mitch Instructions] next JMP. Our

Mitch Germain

little on a more just Well, bit the clarity plan.

You mentioned, Belt. growing obviously, the Sun exposures in

your You've got XX% of outside. about rents

the to you or about over Sun Belt, it portfolio of way position time? are market thinking scale? want the of is that So is kind it you kind How

T. Wilson Eglin

Well, we're sales Sun better the would of that's like we're skew had lower from to and the Belt, We're share into Belt going still way. the that And capital to them. get these over and in but in moment, capital we that add specifically still a At still just redeploying Sun Sun in, markets the we Belt. is the Midwest the the we today, I opportunity set XX% think a portfolio allocation. disproportionate

Mitch Germain

know James, you. the sentiment in that suggested change little larger had seeing previously a toward a any Are slowdown those sort properties type Got activity? the you leases? in any demand. of bit you that had of increasing I of

Todd Thomas

an been in increase definitely There's activity.

maybe signed all in quarter have good period are we to there's which signed. will Indy been that a to expectation momentum. speaking probably that that good several the So in we been an hasn't the other Indy, now have particularly right have large markets, been be market deals get had in, And which there there where going anything markets, signed big are fourth there our is leases time, in exposure of recently the that box because in

is up. RFP traffic

X earlier, all Will active on prospects, have as We properties. mentioned

like optimistic, right moving cautiously but the So direction. things feel in they're

Mitch Germain

price Great. and those the what And the clarify, think -- Savannah I could missed price? is if X I just just planned purchase then X I the assets, acquisitions, you guys that of purchase other

Brendan Mullinix

aggregate million. aggregates In $XXX to the it --

Mitch Germain

you And haven't have million. $XXX about you? though, then rate, cap talked

Brendan Mullinix

total, a it's In X rate. cap

Operator

have turn Will call to I Eglin We questions. the for back to remarks. no further closing would like over

T. Wilson Eglin

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

Operator

This call. conference concludes you participation. your today's for Thank

You may now disconnect.

LXP Industrial Trust (LXP) 6 Nov 242024 Q3 Earnings call transcript