Financial Data and Key Metrics Changes - The company reported total gross revenues of approximately 15 million, resulting in adjusted company FFO of 47 million [28][29] - Same-store NOI increased by 5.4% compared to the same period in 2023, with the same-store portfolio being 99.2% leased at quarter end [30] - The company tightened its 2024 adjusted company FFO guidance to a new range of 0.64 per diluted common share [29] Business Line Data and Key Metrics Changes - The company achieved second-generation leasing volume of approximately 490,000 square feet, with Base and Cash Base rental increases of approximately 38% and 22%, respectively [7] - The lease-up of a 250,000 square foot facility in Columbus, Ohio, was completed, with a stabilized cash yield estimated at 8.5% [15][19] - The company sold a 458,000 square foot industrial facility in Cleveland for approximately 137 million [9][18] Market Data and Key Metrics Changes - The national industrial market saw a vacancy rate increase to 6.4% in Q3 2024, up from 6.1% in Q2 2024 [22] - U.S. net absorption for Q3 was 29.4 million square feet, down from over 46.3 million square feet in Q2, with significant negative absorption in California and the Northeastern U.S. [22][23] - The company's top 10 markets reported over 25 million square feet of positive absorption, demonstrating relative strength compared to the broader market [23] Company Strategy and Development Direction - The company continues to focus on enhancing its internal growth profile through the lease-up of 4 million square feet available for lease and capturing mark-to-market opportunities [13] - The company is redeploying capital from asset sales into the Sun Belt markets, where it has scale and market expertise, with over 70% of its portfolio now located in these regions [9][46] - The company is also interested in build-to-suit opportunities and acquisitions that align with its target markets [20] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding leasing activity, noting an increase in tenant activity and RFP traffic [24][49] - The company anticipates cash flow increases of approximately 40% on remaining 2024 lease expirations, with a tenant retention rate of approximately 94% [25][30] - Management commented on the potential impact of government spending programs on manufacturing support, indicating a consistent focus across political parties [41] Other Important Information - The company announced an annualized dividend increase of $0.02 per common share, representing a 3.8% increase over the prior dividend [12] - The company executed interest rate swaps to increase the percentage of fixed or swapped debt to approximately 94% for 2025 and 2026, reducing future projected interest expenses [11][32] Q&A Session Summary Question: Details on Ocala full building user and Greenville/Spartanburg properties - Management is still working with a tenant in Ocala and is optimistic about progress, while Greenville is seeing increased interest [36][37] Question: Update on Phoenix land purchase option and remaining acreage - The cash cap rate on the ground lease is about 6%, with ongoing build-to-suit inquiries on the remaining site [38] Question: Leasing spread expectations for 2025 and 2026 - Known move-outs include a 124,000 square foot lease and a 1 million square foot lease in Richmond, with remaining expirations projected to be 34% below market for 2025 [40] Question: Non-core asset sales and remaining assets - The company has a few assets in non-core markets that may be monetized over time, including properties in Kansas City and Philadelphia [42] Question: Thoughts on retiring trust preferred securities - Management indicated that the trust preferred securities are covenant-light and have value, but discussions for potential retirement at a discount are ongoing [43] Question: Clarification on Sun Belt exposure and market scale - The company is redeploying capital into the Sun Belt but still values lower Midwest markets, with over 70% of rents now from the Sun Belt [46] Question: Activity in larger leases - There has been an increase in activity for larger leases, with expectations for several deals to be signed soon [48]
LXP(LXP) - 2024 Q3 - Earnings Call Transcript