LXP Industrial Trust (NYSE:LXP) Q4 2023 Earnings Conference Call February 15, 2024 8:30 AM ET

Company Participants

Heather Gentry - Investor Relations

Will Eglin - Chairman and CEO

Beth Boulerice - Chief Financial Officer

Brendan Mullinix - Chief Investment Officer

James Dudley - Executive Vice President

Conference Call Participants

Todd Thomas - KeyBanc Capital Markets

Camille Bonnel - Bank of America

Jim Kammert - Evercore

Mitch Germain - JMP Securities

Jessica Zheng - Green Street

Operator

Thank you for standing by and welcome to the LXP Industrial Trust Fourth Quarter 2023 Earnings Conference Call and Webcast. [Operator Instructions]. As a reminder today’s call is being recorded.

I will now like to hand today’s call over to Heather Gentry. Please go ahead.

Heather Gentry

Thank you, operator. Welcome to LXP Industrial Trust fourth quarter 2023 earnings conference call and webcast. The earnings release was distributed this morning and both the release and quarterly supplemental are available on our website at www.lxp.com in the Investors section and will be furnished to the SEC on a Form 8-K.

Certain statements made during this conference call regarding future events and expected results may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

LXP believes that these statements are based on reasonable assumptions. However, certain factors and risks, including those included in today’s earnings press release and those described in reports that LXP files with the SEC from time to time, could cause LXP’s actual results to differ materially from those expressed or implied by such statements. Except as required by law, LXP does not undertake a duty to update any forward-looking statements.

In the earnings press release and quarterly supplemental disclosure package, LXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure. Any references in these documents to adjusted company FFO refer to adjusted company funds from operations available to all equity holders and unitholders on a fully diluted basis.

Operating performance measures of an individual investment are not intended to be viewed as presenting a numerical measure of LXP’s historical or future financial performance, financial position or cash flows.

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

I will now turn the call over to Will.

Will Eglin

Thanks, Heather, and good morning, everyone. Our fourth quarter results were strong propelled by robust leasing volume and excellent leasing spreads. We also took advantage of refinancing opportunities that will effectively extend our debt maturities to 2027. Our fourth quarter leasing activity built on the strong momentum we maintained throughout the year in which we leased 6.8 million square feet at attractive base and cash based rental increases of approximately 52% and 37%, respectively, excluding fixed renewals. Over half of our 2024 industrial expirations were addressed in 2023, and we expect good results on the remaining 2.9 million square feet. We are in negotiations for the majority of these 2024 expirations and anticipate that renewals will result in a 20% to 30% cash rental increase based on current market conditions. Our two remaining office assets in Fort Mill, South Carolina are currently under contract for $16 million subject to certain closing conditions. We expect to collect approximately $1.8 million of rent for these assets in 2024 prior to their projected sale in the second quarter.