LXP - Earnings call transcript Q4 2024

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Operator

Good morning, and welcome to the LXP Industrial Trust Fourth Quarter Earnings Call and webcast. [Operator Instructions] I would now like to turn the call over to Heather Gentry, IR. Please go ahead, Heather.

Heather Gentry

Thank you, operator. Welcome to LXP Industrial Trust's Fourth Quarter 2024 Earnings Conference Call and Webcast. furnished distributed are and in available section will was and the the release on and supplemental SEC quarterly on be earnings this X-K. both morning release Investors a The Form the to our website this within Certain statements of future events constitute meaning XXXX. Reform Act of the call and statements conference regarding results expected made may Litigation during the forward-looking Private Securities on reasonable believes assumptions. LXP are that statements based these

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

of Chairman Will as performance, individual over now and Mullinix, and financial call, call or Operating recent presenting performance position business fourth update I quarter the LXP's today's to measures on President, Will. CEO; intended and or a turn Beth provide viewed CFO; not Eglin, financial will James Boulerice, future and Brendan an will Dudley, Vice CIO; flows. commentary Executive a investment of to results. be are historical numerical measure cash On

T. Wilson Eglin

everyone. morning, Good Heather. Thanks,

and the renewal. fixed XX%, were approximately highlighted base of outcomes continued produced quarter rental Leasing excluding Our nearly in volume and a increases rate solid respectively fourth exceptionally XX% leasing million strong X and same-store cash-based feet of NOI growth. square quarter favorable results by

quarter our fourth of performance accomplishment in Our great a year business. capped off

opportunistically side, On lease X Class we considerable the industrial assets attractive pricing. build-to-suit investment proceeds sold X property in assets A of sold value at resulting creation. ground our properties most remaining and in Sunbelt a Phoenix, and into in consolidated divested of office redeployed We the market our our

leasing. to volume increasing feet Moving outcomes, post and continued renewal. base mark-to-market rent in completed lease prior X.X rate and approximately amortization base cash We XX%, million and of square one exceptional XX% excluding fixed and TI one respectively to

higher, X% our we X.X% Additionally, NOI achieved leasing our year. of the growth our high-quality target owning and and demonstrate These markets. assets same-store in the trend reaching average at to strength year-end annual team strong of continue of escalators for value the results

and swap favorable adjusted our These transactions with of the window the EBITDA XXXX. of On million down end, quarter on X.Xx quarter. through third reduced leverage to quarter, executed term X.Xx net of Further, in effectively in the rates to we front, after at agreements $XX debt sheet of at balance a million we debt XX% on combined loan $XXX floating third year-end the floating end debt fixed forward of market interest locked year-end, from on rate rate capitalized the rate debt. repayment

rents reducing on rents marking focused are vacant market by lease-up to We escalators. through assets, with leverage of annual time growing increasing EBITDA over the and

in square foot December, early not a facility development leasing. with In we did lease that at our building Florida. negotiations X.X box our disclosed million user in big Ocala, a Regarding result full

around and this space of our picked be While slow the XXXX may have in was seems decisions recently, some we uncertainty of and use business receding. area interest to an believe up

users. all activity have full partial for vacancies and our large at both of X currently We

remains outlook fundamentals to select industrial in, show relative more As begin fundamentals improvement, the The industrial and coastal XXXX to markets experienced Midwest, of primarily resilient Lower we operate have cautiously markets. our Sunbelt optimistic. signs

encouraged of We that months also after activity U.S. are manufacturing XX expanded in contraction. January consecutive

an predominantly positive operating factors quality. are Class a us in our environment, in characteristics we characterized to expect to rents environment are to strong portfolio and mark-to-market uncertain A below-market that continue market will still a rental flight drive increases While enable we by

other big year the funds the leases not FFO lease second The morning, company this of end XXXX the per in on This do this year. Finally, and boxes to executed has from all operation. guidance, we reflective low end announced XXXX, common the the represents $X.XX box the $X.XX leasing disproportionate of big-box range guidance impact half high in assumes among adjusted any guidance factors, share. we is in diluted big of of of X full

a million is logistics in-place square will escalations, blocks portfolio Resolving building that feet, and sustained The trends, considerable stand key remaining annual operational vacancies a long-term X.X to benefit business-friendly of for investment, X.X% infrastructure. us core lease-up growth objective growth. markets environments mark-to-market rents regulatory in rental and average that earnings manufacturing to remain of intact, demographic from the add positioned including advanced FFO

capacity made I contributions extend company's success other Officer Financial tenure Before her in Brendan, since as the turn to I'd who Chief call joining XXXX. to our to heartfelt to over has during thanks immeasurable LXP in Beth and like our our

role ground hit Nathan Capital itself a he Nathan tremendous his proven announced, new we X of who of will year. already to in is CFO the previously this addition Markets, currently confident our our and role. Executive as the running has that Brunner, on will President assume March team, As are Vice

detail. will investment Brendan more discuss activity now in that, With

Brendan Mullinix

Thanks, Will.

manufacturing we X% Class quarter, continued net average absorption in lease escalators. Savannah. and building square million in with A initial a years benefiting Houston to assets from X.X% markets facilities, acquired have average the are of and industrial yield with and annual advanced approximately in investment were years approximately trends onshoring large $XXX to Atlanta, size built The including of fourth Sunbelt and X positive X term average These specs The nearing with X the average for several operations. weighted During projects completion feet. of an transportation infrastructure significant facilities a and experience age properties and XXX,XXX X.X an modern of have investments in

Our years over investment foot with an and of facility the cap Class a Greenville cash build-to-suit million XXX,XXX by the additional building completed quarter an completion substantially and late leased to A approximately Brent square built X% was in an fourth the XX-foot estimated the modern $XX of including square The escalations estimated in December. rate little feet. X%. Spartanburg aggregate market, substantial capacity in commenced to for is the with of height expand XX and clear with specs, XXX,XXX

are markets investments to selective target did to XXXX. in being While to target make new with in we properties evaluate investments, our opportunities markets, will unlock value strategic we as respect of our outside in we

Finally, tenant's our sold option we quarter. parcel Phoenix the purchase late interest plan the in fourth of XXX-acre approximately the groundly in upon exercise the

under acre Our the million share our of over million an approximately in per investment $XX profit initial sales or years. X just representing proceeds $XX approximately was $XXX,XXX

approximately site of and we we reminder, can considerable potential original from focus. as recent feet development XXX future the value the produce of The X as XXX projects million over Phoenix much opportunities support demonstrates industrial the and our time. $XXX,XXX of build to approximately to The sale the spec or XXX-acre As believe the an $XXX X Valley million value, acquired in West acre. build-to-suit in acres remaining acres square XXXX additional for with a site unlocked currently

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

James Dudley

We're debt little show overall as XX% of to absorption Brendan. increased reported a industrial see over pleased quarter-over-quarter beginning improvement is nationally U.S. Thanks, signs election. deliveries market post that the -- to construction the continue leasing decelerate. to

net of XX comprise top up U.S. square than absorption making XX% less inventory which total fourth of significant XX feet, the Our a of the million net absorption quarter. experienced approximately markets, in portion nationwide

appears the the XXXX. peak XXXX, up compared the midyear higher could X% levels slow. ticked average XX grew Rent national increasing vacancy be final in indicating Tenant slowing of vacancy is reach fourth slightly quarter although ticked when Average slightly activity rents growth but rent to by markets growth potentially in with over first markets to quarter. on flat. remains decision-making the quarter, relatively our asking annual just in across half our National in top

and the remaining final excluding in on During markets, XX% our vacancies rate fixed XXXX growth in that X we quarter, addressed release except expired small renewals Spartanburg leases expiration, XXXX. all DFW approximately cash of flow Greenville for posting and

leasing excellent quality in be subsequently, products. during these the of facilities well we vacancies, to illustrating XXXX approximately and average respective are respect they value With Class portfolio on expect their to asset as to lease quarter the assets newer positioned A We owning the markets XX%. and achieved anticipate in mark-to-market and both outcomes

our renewal X.X% cash in side, the our escalators, square feet X% facility respectively. multi-tenanted in X facility rental On XXX,XXX leased market bumps, and space for annual annual the XX% Nashville Chicago years we and of average rental years at XXX%, for with approximately foot square X with XXX,XXX increases a of

rental square In also for approximately our a X% lease rate fixed square facility increase cash at bumps, our represents Columbus, in X-year rent. XX% Greenville, the signed foot prior facility at prior had we years XXX,XXX exercised which over tenant renewal X.X% rent with rent. foot their the the over in a XX We new Spartanburg, a increase XXX,XXX

years after a at the foot representing facility X for XXXX a rent rent. end, with we cash in final square XXX,XXX renewed Phoenix annual increase X.XX% Finally, over our bumps, quarter prior XX% lease expiring

estimated looking mark-to-market addressed to we've the continue specifically at based XX% with be brokers' mark-to-market of about rule. portfolio our the approximately on in estimates. XXXX attractive already XX% to XXXX, And We through opportunities see more current

of our to remaining On in less be mark-to-market the which estimate ABR, the to little a X% the we range of expiration, XXXX XX%. XX% than current represents

but market We downtime. this negotiations rents may XXXX current an several expirations, in lower year of environment realizing involve be and delayed could of decision-making, greater are and in retention uncertainty tender on periods

potentially benefit environment and to leasing stable into where leases percentage XXXX, more well positioned expiring. of have as move we We're XXXX higher we from significantly the

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

Beth Boulerice

of sales-type Phoenix the revenues exercise which of million, approximately $XX $XXX Thanks, additional due the in to assets. were James. at quarter gross fourth a ground included purchase Total our revenue option leased the from lease million

property about XXXX of Adjusted tenant fourth common the year per share attributable fourth company adjusted FFO $XX which operating XX% were per diluted $X.XX was common reimbursement. in share. expenses quarter diluted FFO million, $XX million, approximately $X.XX to full was of quarter with company Our or

guidance adjusted XXXX our earlier, share. common diluted $X.XX range mentioned per company FFO $X.XX is As to

benefit approximately from this less $XX leasing includes increasing substantial assumptions, given range XXXX projects cash our Lower our from G&A the our at the term the X.X% on quarter, our of XXXX. with completion of approximately balance million on impact to X.X%. in expense to income of the all-in approximately interest addition with the expected the million. on coming interest capitalization sheet In guidance interest within G&A $XX in and in was higher loans rate development

expect G&A $XX range a be $XX within We of to million. to XXXX million

was leasing quarter annual estimating X% growth of within Our same-store fourth we compared of the XXXX, in XX.X% of at are to quarter end, same be leased rate the respect X.X%. X%, XX.X% X.X% quarter escalation and end, average of in a with leases portfolio to to increased to assumptions. our With portfolio which had XXXX. range NOI range considers when a At same-store an period same-store approximately NOI

years. consolidated average At year-end, weighted a year-end, to loan we billion approximately was our our million repaid $XXX Subsequent term million rate to average a facility debt with X.XX% of remains our available. on maturity total interest unsecured X.X credit $X.X of and fully term and outstanding $XX weighted

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

Operator

[Operator Instructions]

first our question line comes Todd And KeyBanc Markets. of with from Thomas the Capital

Todd Thomas

the environment there. think also projects? And sounds cycle, there's a were seeing I changed. you've targeting wanted just of to further stabilize this then just you to larger and for bit in Can like some change elaborate that additional boxes, the the that relative a through you been It has X.X%, those -- any interest type the X% and little developments. to some yield previously whether interested expectations bit users touch are to I little you on of discuss the

James Dudley

let were Todd, the Brendan this in we've to we I'll question on very yield piece. of is and the the part excited see take activity first James. that that January. But touch seen

There market. had couple mid-February. still January. signed. through seems the Looking give leases a in kind And we've that there lot need Greenville to particular, India, seen activity to back X really in tire that example, got signed see to more early that we last in real markets year, tours move submarket lease a kickers. too, over that along. we're get slow in going We And days are of in like it was was for That that across recently market, they're us transactions hope one the of some transactions and X

as still broad. the tenants, it's type of far As pretty

We have some construction-based tenants.

We some X have the tenants. e-commerce PLs, tires. We've got kicking

again, sidelines been the way at does in last and it last -- back making the feel of make markets, the the some as of get a these broad and year a different hopefully, decision have types as tenants So decision. to a kind year of and far as to off of that to looking these different than pushes space. deals activity signed start it range half But the tenants of

Brendan Mullinix

And remains -- market balance the just from the I would really stabilized estimate X%. pipeline lead to too. around a expectations, in of project that more respect balance concentrated remains part included stabilized remaining these buildings, to yields, discussed, what with is much lease stabilization Aetna competitive larger development of a supply higher then recently was as we yield guidance which to that in And is the to this these buildings larger the prior of standpoint. at that the also

Todd Thomas

think, around previously about kind you And balance of? activity in that nonrenewals -- Or of lower move-out what referring just out feet is what renewal you through you're to think, helpful. around then talked move Or that and embedded year, the of the I the I to? there then X. work the aware wanted July mean, as I that guidance? some you known additional early That's about, just Okay. the XXX,XXX another square XX retention rate larger tenant are additional I in comments some sort conservatism ask you're is of that's expirations? assuming Is

James Dudley

is known So one there that we move-out list. a couple of that One, things. to add would

XXX mentioned also back out. the XPL to to with strong Richmond contraction that's leased ready the property Atlanta. move know that And There's on through the activity through on and a going good we April in that's good of had asset You Houston we on on We've option and a that news currently Morris we in that the The Mors XXX lease. we're then the in is that and mark-to-market Northwest Houston space. some referred to is working have Philip those. getting asset, to go Philip really expect you both

outcomes the exactly year. commentary some have out, the conservative, the going not is we that majority have balance had it's into being we the on just then in we And we're XXXX about of don't half we same the of really play And the to of of the what sure certainty back going how is but XXXX.

Operator

from line with of Vince comes question next Green Street. our Tibone And the

Vince Tibone

a just further competing competitive how the Like square you of million for on color would Any Could market, submarket? tenants really specifically, each your projects? landscape each little foot bit for in against X further development buildings helpful. many very you be there elaborate are

James Dudley

Sure, Vince. again. This James is

really it's it looking Andy foot our another there square a the a in X bit couple kind jumps we a off there had square tighter to X. from And we going have we there competitors did good and a of we're buildings we're first. submarket, at And of for for other a XXX,XXX so it come our least over where perspective. up Japan, of outcomes is over million cutting competing little that's So if building, a are had XX sold market XPL call in the the tenant competitive -- X square being Greenville, to -- if at have X X market XXX.So foot million tenant. single feet of competitor competitors, we to XX then or we're

on only it being there -- square then would got City big And we million be that in you're have In and look you don't be really space But to but in it's take then is depends X call market handful we if of it that, competition market, want how to the looking Plant foot geography on the $XXX Central it obsolescence some about handful really again, we kind it, with. of add real there to compete of million talking X. -- it's Florida, a some is users, to it's But So consider competition. only you that if I-X a really direct it functional a at buildings. kind grows about sublease corridor, it and there. expand X our of into

Vince Tibone

I Maybe you allocation that's love color. how the just any plan, switching gears. buying your appreciate you about NAV and that. thoughts additional what's I No, talk just the thinking Just selling, recycling development Can just superb discount get capital of about kind are there? currently? capital just to given potentially? near-term

T. Wilson Eglin

we of year, noncore forward. some sales may Last that going There out bit be markets. a did of Sure. little

improving But our work We leverage put focused XX on to beyond suit to build are capital to be that, in our in down valuation. yield because key we us -- interested with would would there's that to that's land a of that priority own, that we Xx. expect it's -- on respect we to the to for We markets think in there. premium a work more terms

Operator

Instructions] [Operator

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

James Kammert

into developed recently the properties. higher lease-up guidance your the pursuing low year. have half on And guidance, of the of the then end that, Is in at reasonable more obviously, end assumption? that of second no to a of you and the sort are comments maybe leasing Will get there's

T. Wilson Eglin

Yes, that's right. exactly Jim,

James Kammert

are $X.XX $X.XX there Okay. question, I the you get offsets, of a then sharp make seems a trying I end much quarter, guess, all you of realized it kind your Are run the And got sort to bigger just out lower -- some off, just also was annualized. just I we think, to drop are to how trying like of coming pieces. headwinds guidance. got fairly headwind Because to me? those sure fourth earlier the relating of rate remind but of

Beth Boulerice

sure. -- Beth. it's Jim,

of One interest things expense. the is

interest net also bond to step-up and to the expense term up. our refi the loan. So on due the relating in is $X.XX little a over XXXX going swap our

was remember, you loan going and it's our term If to at up X.X% now X.X%.

there's spread coming also that's and completion year. there. being of the reflected interest $X.XX a So down also did in development guidance of capitalized projects we because the last about is substantial our

-- that's maybe are those think I piece didn't So you that have. the other

James Kammert

it. That's helpful. Appreciate

Operator

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

Jyoti Yadav

This is on Jyoti Mitch. for

question quick a Just here.

discussions the there. Now option the suit exercised, are the think bank? is land you nexpurchase around mentioned what to there I

Brendan Mullinix

correct. Yes, that's

the build-to-suit. As we've on said, remains focus

to So Phoenix, in most there land Phoenix, we've entirety And the I bank, say been to I build has in where of activity continued and to the would of that's there's inquiries our the build-to-suit there. our. would next respond see anticipate

Operator

Instructions] [Operator

Will? time. the no this at Will call for closing remarks. over I to turn question There's Eglin further now will

T. Wilson Eglin

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

Operator

today's concludes for Thank you That joining. call. all

now disconnect. may You

LXP Industrial Trust (LXP) 13 Feb 252024 Q4 Earnings call transcript