Q4 2020 Plymouth Industrial REIT Inc Earnings Call
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Your line.
Okay.
Good day and welcome to the Q.
Q1 from fourth quarter of 2020 earnings call.
What is the focus will be in a listen only mode should the need assistance. Please keep more of conference for Smith.
Sure.
After today's presentation will be an opportunity for us.
The last quick question you May Press Star then one on the touched on phone to withdraw the question. Please pause for the peak.
Small bits of empathy for the got it.
All of them I'll like to turn the conference over to Chuck Sullivan of interest.
Please go ahead.
Thank you and good morning, welcome to the Plymouth Industrial REIT Conference call to review the company's results for the fourth quarter of 2020 on the call today will be Jeff Witherell, Chairman and Chief Executive Officer, and White, President and Chief Investment Officer, Dan Wright, Executive Vice President and Chief Financial Officer.
Jim Connolly Executive Vice President for the asset management and antifungal of General Counsel.
Our results for you chip.
In the earnings press release, which can be kind of on the Investor Relations section of our website for all of the form 10-K and supplemental public debt.
The replay of this call will be available shortly after the conclusion of the call through March 2021 the.
The numbers the access the replay of provided in the earnings press release for those of you listen to the replay of this call.
Mind, you that the remarks made the rounds.
For today February 26, 2021, it will not be updated subsequent to the call.
During this call certain comments and statements we make may be deemed forward looking statements within the meaning prescribed by the securities laws.
Statements related to the future performance of our portfolio.
Pipeline of potential acquisitions, and other investments future dividends from financing activities all.
Forward looking statements represent some of his judgment as of the date of this conference call and are subject to risk and uncertainties that could cause actual results to differ materially from our current expectations.
For the urge to carefully for the use of various disclosures made by the company, including the risks and other information disclosed on the company's filings with the SEC to you all.
So just kind of certain non-GAAP measures, including but not limited to the peso and adjusted the EBITDA.
Definitions of these non-GAAP measures the reconciliations for the most comparable GAAP measures are included in our filings with the as you see on the I'll turn the call of the Jetblue. The go. Please go ahead.
Yeah.
Thanks trip morning, everyone and thank you for joining us.
The year 2020 of the most disruptive period, the most of us have endured despite the challenges that we are all aware of when they've had an outstanding year on.
Property portfolio performed exceptionally well on the fundamentals in our markets are strong together.
Our leasing pace has been strong you already addressed the recap.
About 2021 exploration, we continue to source of attractive new opportunities in our target markets and have made much progress on improving our balance sheet.
I want to thank the entire Plymouth team for their commitment.
We've worked hard together.
Wherever they work and doing whatever it takes to produce the results are experienced with real estate operator, once again proving itself out.
Let's start today with our portfolio.
I have to add too much probably here at the stats speak for themselves Aki.
The occupancy at year end was $96 four per se.
Cash re leasing spread.
Of eight seven per cent for the full year.
We collected 99% of our rent well for paying down debt.
Same store NOI on the cash basis growth.
The three 7% in the fourth quarter.
The core at the ball and a low dividend payout ratio of the 52% from 59% respectively for the year.
The projected mid strength to continue in 2021, the cash we can spread expected to be in the 8% to 10 per cent range on same store NOI on a cash basis to be in the 3% plus range as I look across the landscape of a public industrial peers those figures stocked up exceptionally well.
Well I do want to provide more color on on how this portfolio of being value based upon the fundamental.
We've added additional information in our supplemental that should.
The health and properly valuing our portfolio the guided data on replacement costs.
Components of any of the rent collections primary and secondary market concentration the breakout of potential developable land and value creation as well as our joint venture and relevant features of our preferred stock.
The viewpoint stand out when you look at the data that's being acquired investment basis of $41 of square foot versus the replacement cost of 75000 square foot can.
Compare that to an implied total enterprise value of $46 a square for based on Yesterdays stock price. We are also seeing an implied cap rate quoted on a of around 8% versus acquisitions planned for 2021 at cap rates in the 7% range and larger portfolios that are market trading line.
The six handle and the cap rate.
Looking across our industrial peers, we see implied cap rate implied enterprise values per square foot well above the expense essentially above powered.
I think that the Delta is unsustainable and quite frankly, unwarranted, we'll be working hard throughout the year the drags on on that comparison and debt.
To keep the investment community on that disconnect.
We believe our core <unk> per Boe guidance.
Guidance for 2021 of the solid with the slight decline year over year, which reflects the impact for the August equity offering and the ATM activity. We had in December and January which collectively increased our share count by 13% since September 30 the for.
Full year, the first quarter guidance implies a significant ramp up in the second half of the year and assuming the status quo with these investments in place also imply an outlook that is right on top of what the street consensus is for the next two years.
As I've stated before our balance sheet priorities have been to ensure that our dividend is well covered debt our leverage profile continues to improve and that we.
Access to multiple sources of capital like dividend with well covered in 2020 and projected to beat though again in 2021.
We are targeting of net debt to adjusted EBITDA ratio of less than seven times by year end 2021, which is the same target we outlined in August of 2020.
We have capacity to acquire wholly owned assets with cash on hand for me from ATM activity, we have access to over $340 million of remaining body power due on Madison joint venture.
We are bullish on the outlook for the industrial in general and within our targeted markets in particular rents are growing up use of.
Supply is constrained in our target markets and now as the times the only type of industrial properties that are positioned to benefit from the favorable supply demand dynamic and accept the large pools of skilled labor.
That being said, we will remain disciplined in growing our portfolio and I believe we've proven that to be the case over the last several years.
Ken why don't you walk us through our acquisition activity.
Thanks, Jeff Good morning, everyone I'll touch on our wholly owned acquisitions first and then walk through our first joint venture transaction.
After our last offering in August we projected putting the $165 million to work between September and the first quarter of 2021.
We're right on track with the plan with the $51 million of transactions, we discussed last quarter and St. Louis in Jacksonville.
On the fourth quarter, we completed two separate transactions to add to our presence in Ohio for a total of $106 million and buzzword of the first acquisition with the multi tenant industrial building located north of the Columbus the chicken.
With a portfolio of kind of industrial building in Akron and canton with a regional office in Columbus, and the footprint that now totaled seven 6 million square feet in Ohio.
We have created one of the larger institutional portfolios from the state with significant scale what are the leaching.
And as of management expertise to work on the ground.
This is the footprint that we've assembled for approximately $41 per square foot.
Well below the replacement cost of approximately $75 per square foot, we've shown on page five of our supplemental.
Wrapping up the initial targets we outlined in September.
We did another transaction in mid February of intensity of first century into that market the pro.
As of 220000 square foot of industrial building, 100% leased to two tenants, which we acquired for $8 6 million.
And it is expected to provide in the initial yield of approximately eight 8%.
We've targeted the Kansas City, and since the launch of distribution and logistical market where the.
Track of economic drivers rent growth and low vacancy and absorbed approximately seven 3 million square feet last year of near record second only to 2017, when I got dropped seven 7 million square feet and it's breaking free rate has now fallen to for 2%. So we look forward for expanding our footprint in that market in the near future.
Switching gears, we completed the first acquisition with our joint venture partner Madison International during the fourth quarter.
This was the 28 building portfolio in Memphis, which transacted at $86 million.
We have a new paradigm of our supplemental and provide some specific details on the transaction and the joint venture.
The highlight a few points the deal was funded with $30 million directly from the partners with the balance from the secured mortgage.
Share accounted for $6 million of equity and we expect to receive an annualized after the management fee of $300000 on the partners. The initial equity investment in addition to our share of the net operating income.
The 28 buildings are located in infill markets and the Memphis Metropolitan area with many of them in close proximity to our existing properties.
I think of them broader footprint on the Memphis market to over 4 million square feet.
We believe this is the solid value add investment with Madison.
We're actively reviewing additional opportunities in our existing markets that fit within our previously stated investment criteria for the joint venture.
Looking ahead to our plans for the balance of the year, we are targeting slightly under $150 million in wholly owned acquisitions for the year.
Our published guidance outlined for the expected timing.
And we are anticipating the cap rates for these acquisitions would be in the low 7% range or even kind of fixed given strong rental growth rates on mark to market opportunities in selected markets that's true.
As noted earlier the industrial fundamentals are strong in our markets.
We have broad exposure to both primary and secondary markets within our current portfolio.
We don't have any plans to migrate the gateway markets, where pricing remains very frothy.
What we are seeing some continued cap rate compression in our target markets, particularly as it relates to larger portfolios.
That obviously speaks well for the value of the portfolio as we have already assembled in these markets and supports our ability the lease up of properties and drive internal growth, but we arent that surprised because the rent growth is from new supply remains constrained for our preferred product.
And we're seeing positive absorption in the markets, where we have invested and continue to invest.
I'll now turn it over to Jim to walk through the leasing activity and portfolio of operations.
Thanks, Ken.
Good morning to the.
We ended 2020, we had released EDI percentage of of leases that were scheduled to expire during the year.
This is comprised.
$2 9 million square feet of space was scheduled to expire going into 2020.
And of that amount of one 9 million square feet the mood.
601000 square feet, which leads to new tenants.
82000 square feet per stage.
We leased 238000 square feet of space that was taken at the start of the year.
Portfolio wide at year end 2022.
Portfolio wide occupancy at year end 2020 was 96, 4% up 90 basis points from Q3.
2020.
So on rental rates increased eight 7% over prior leases lease rates on the cash basis.
In the fourth quarter 22 leases commenced comprising.
The total of 608000 square feet, which included 558000 square feet weighted to the.
So six months or longer in duration.
This amount 382000 square feet renewed and the remaining 175000 square feet was used to new tenants, while we saw the.
<unk>, 4% decrease the rental rates on the cash basis from prior lease rates.
The decrease was influenced by just a few deals one of the five year deal for 243000 square feet in Chicago the status last of the expiring rent and six smaller leases totaling 52000 square feet debt, although have lowest starting rents average for appointing some of these true.
As I mentioned.
Your line portfolio occupancy was up 90 basis points over the third quarter, mainly due to the commencement of 11, new leases of addressing other.
The 70000 square feet of previously vacant space vacancy within our portfolio at year end.
On the 340000 square feet that is being repositioned the store locations, excluding that square footage occupancy rate.
The increase to 97, 9%, which would be 130 basis points higher than it was.
At the end of 2019 include.
Included in the reposition of spaces 80000 square feet.
Debt when you see $595000 in lease termination fees for the needed to move out of Q1 and Q3.
We continue to have minimal impact on the core operations of this.
Of our portfolio related to COVID-19.
On the impact from our tenants.
In feedback from my tendency is the positive on maintaining the business plans in our facilities to date, we have collected 99, 6% of our rents during Q4 Q.
Q1 from February 23rd SC of 97, 5%. Unfortunately.
The only went to total agreements established for in mid 2020.
We have now been paid and so on and low other no others haven't granted since the last year.
Our focus now squarely set on 2021 explorations, we have made great progress to the initially we had for 4 million square feet each.
18, 8% of the current portfolio slated to expire through 2021.
To date, we addressed 2 million square feet or 45, 2% of the schedule of explorations.
Moving this amount is the five year.
503000 square for lease in South Bend.
10 year of 236 out of the square foot lease in Cincinnati and of <unk>.
The seven year 172000 square foot lease Indianapolis just to name a few.
Thus far of rental rates of increased eight 5% over the prior rates on the cash pieces for leasing to over six months in duration at this point I will turn it over to Dan to discuss our financial results.
Thank you Jim Good morning, we provided a very thorough set of disclosures in our earnings release and the supplement which has been expanded with additional information as mentioned previously.
Encourage you to take the opportunity to review those disclosures.
I will focus much on this morning on providing some detail on the results our liquidity and guidance for yield.
And for the first quarter of 2021.
The fourth quarter.
Our results of 40 consents from 38 per weighted average common share and units respectively.
The aim at the midpoint of our full year of 2020 at the full range and two pennies to one of them.
Midpoint of the area.
Range, the latter of which was primarily due to the increased share count, resulting from the fourth quarter ATM activity.
On the small leasing conditions being applied against our recurring capex, but are not anticipated to be executed.
First quarter of 'twenty one.
We saw strong same store property NOI growth on the cash basis of three 7% and three 6% the consumer.
And 12 months ended December 31st 2000.
Which is the.
The midpoint for the industrial sector.
Same store property NOI growth was predominantly driven by the strong.
Strong leakage rates realized from 2020.
Our net debt to adjusted EBITDA ratio at year end of $6 70 accounts, which comparable timberland to the 2019 the can.
Composition of our balance sheet has continued to improve with nearly 35% of all of our debt.
Unsecured thanks to our new unsecured term loan and line of credit.
The ample liquidity currently with $16 million of cash on hand, plus.
For an additional $5 million and on.
Operating expense ex growth for real estate.
Taxes and insurance.
$35 million.
For the room in line, even though the two.
$200 million available under the accordion provision if required.
Our full year 2021 guidance of four ex us.
<unk> of $1 72 in Connecticut all of.
The $1 46 at the midpoint, it's built on the assumptions we've outlined in earnings release earnings supplement.
In addition to the targeted yield range for Bob earlier by Pan from additional key assumptions include.
Same store property NOI growth on the cash basis is projected to be in the range of three to three four per center.
Acquisition timing will be attacked the primary factor in the quarterly cadence, we expect the second quarter too much like the.
The fourth quarter with the kind.
The confusion from the anticipated first quarter, the acquisition being offset by higher share count from the first quarter of ATM activity.
Debt to see the second half of the year benefit from the sequential ramp up of transactions within the first and second quarters of this year.
The higher weighted average share and unit count.
Well for the full year guidance with the <unk>.
2021 weighted average share of new accounts is up 48% from full year of 2020.
As Jeff mentioned earlier, we are on track stable low seven times net debt to adjusted EBITDA of at year end point of water.
Which is the goal we set last quarter.
Again, the timing of acquisitions effects of tranquility income shutting off the year below that number and it could be slightly above it in the two middle quarters before the.
For Q4.
Our first quarter 'twenty to 'twenty, one guidance of core at that low of 30.
The Atms.
Of 20, <unk> at the midpoint with regard to this other cost.
Fourth quarter 2008, net of partial benefit of the Mansfield, Ohio acquisitions in the October.
On the large portfolio of Apple.
On a portfolio acquisition in late November.
As well of a couple of weeks benefit from the JV acquisition.
For the panel.
Okay.
Quarter on you'll see a full benefit of all three transactions for half of quarter from a breach in Kansas City of dreams.
The impact on approach share basis is attributable to the additional share was issued on the ATM in the fourth quarter that would be fully reflected in Q1 2000.
Yes, the ATM activity so far in the first quarter that was completed by the end of January.
That activity equates to a nine 4% increase on a weighted average per share on unit basis.
Fourth quarter of 2020 for the.
The first quarter 2021.
And as of today 13 kind of an increase in total of shares outstanding over the 932010 of period of game.
Yeah.
Same store property NOI growth on the cash basis for the quarter.
First quarter is projected to increase approximately 1% compared to Q1 2020.
The only impacted by higher operating expenses due to the leasing of extreme leverage within our markets.
Same store property NOI growth on the cash basis compared to Q4 2020 is projected to decrease approximately 3% predominantly driven down by higher operating of instruments with the reach and weather.
Overall anticipated timing related to tenant rollover and other actions.
It's escalations on exchanges.
Our overall financial position has never been stronger and we have a good plan for 2021 day.
To take advantage of opportunities to benefit from rental growth in our markets and gain exposure to additional markets consistent with the overall investment objectives.
Operator, we're now ready to take questions.
Moving now begin the question and answer the question to ask a question you May Press Star then one on your Touchtone phone.
Using a speakerphone please pick up the at home for the focusing of the keys.
Can you tell me. The question has been interest and you would like to the China question.
Press Star then two.
At this time, we will pause momentarily to us on the line of often.
The first question comes from Dave Rodgers with Baird. Please go ahead.
Hey, good morning, everybody. Thanks for all of the added disclosures of from nice improvements in the supplement this quarter.
Jeff and the team talk doesn't give a lot of detail about the 2021 lease explorations in the renewals you've accomplished already.
Wanted to check in on that in the kidney stone crop, which is to we've talked about previously maybe of the 501 and related to that the color on those two weeks in particular on whats left in the other 55 per cent that you still have the tackle.
Yeah.
Yes, David Thank you.
I wasn't prepared for that to be the first question, but I was glad you asked it.
As we sit here today.
They are of a lease out on zone.
On that on that property, which is actually 3500 truckloads Boulevard in Columbus, Ohio.
We have the lease out for signature within the kind of so.
Yes.
Disclosure is it's not about the signature of it should get signed today the may but it may not the they never get tied right over the rest of the run.
So thats really good news.
The agenda the team.
You did a great job on that.
And as far as Keene is concerned.
So debt.
The movies the Hunter.
<unk> was not included in the results that were discussed and message on King Best cases currently half of it is leased to an attack on it.
So with the subs.
Now the kicked off of the lease.
Assets became expired.
The other sub tenant and the other half of the space back.
What's the long term deal, but they may expand into additional parts of our drilling as well. So we're working on now.
Hopefully you got that David.
The complicated, but its a lot of activity in that space.
For me.
That sounds really good idea of maybe just a follow up of downtime on the film and then the 8% on cash basis rollout. So far in 'twenty, one really strong and that's a really positive number of thanks for giving that.
Would you anticipate as we get through the year the that you could hold of similar number.
Yes.
Yeah, it's been pretty consistent all along.
For the last couple of years.
And then the downtime on the side of it if we can.
The good states for months.
Our build out but at least stocks immediately on the stock price expires, so from a GAAP basis, there's no downtime.
During the time on rent.
Okay, Great and then maybe the classic for me on it.
You did mention I think it was just under $150 million and the guidance for the year.
The wholly owned so I guess in total do you have a bigger number than you're anticipating deploying if you finish the I missed it.
And then maybe just give us a sense of it sounds like there are sort of ammunition for the pipeline can you talk about the size of the pipeline today.
Compares to what you've seen on the path.
Yes, hi.
We have a fairly robust pipeline like we always have.
Right now for about 525 from $30 million worth of deals that were.
Looking at our underwriting or what have you.
So we feel very very comfortable about the number that we gave out earlier on.
On the phone call.
As Jeff mentioned also we have.
On a fair amount of buying capacity with our joint venture partner with Madison.
We also we have probably over $300 million worth of pipeline activity just for the joint venture itself. So.
We're feeling very confident that.
Certainly the lion's share of if not all of that.
Capital.
We deployed before year end.
Yeah.
Okay. Thank you.
Thank you.
The next question comes from Barry, Oxford with D. A Davidson. Please go ahead.
Great. Thanks, guys looking at your dividend and the.
And you can get the payout ratios in the block.
For sure.
Yeah.
We closed on.
The minimum payout for <unk>.
Eric with the bank's continued in front of the company, which would you guys all on.
The dividend kind of half the increase at some point, yes, I get the mission.
In 'twenty one.
Yes.
Hey, Barry Thanks for the question.
Mike, possibly quite possibly be it well I mean, I don't I don't know.
That's the question or content.
Be careful we got to be careful what the future.
The loss share.
This was not far off I guess, the fact that that's what I'm asking.
Correct.
Okay, Okay, great and then.
I won't get back.
Obviously very strong in the first quarter net.
The guidance for the share count.
Great.
It looks as if you guys aren't planning on your line.
Yeah.
In total.
It looks like we're not.
The question.
Yes, yes.
Because I'm looking at the the share count weighted average for the for the full year.
And it doesn't look like you guys kind of walk.
Or not really kind of baked into more shares issued at the EBIT up.
Right.
We put our guidance out we're not going to speculate on equity offerings heading forward right.
The ATM has proven to be very effective for us.
I think you may have seen from filings from some large institutional investors.
The.
People continue to want to build the position to implement the as they should.
And everything is on the payable for us Barry when it come for those types of things so.
<unk>.
But it's always but as far as the prior to our corporate modeling of concern right. You don't we're not modeling in for.
Of the offerings.
Okay. Okay. So it's about all the really the end of this debt look if off of.
The pipeline heats up and stop the.
Of course, we're going to utilize.
The LTM, especially if the.
If the stock price within a range that we wanted.
Right.
With the tremendous amount of opportunity to grow this business as you know.
We're kind of the only ones that do what we do.
And.
The call those numbers that we've talked about all through last year the revised.
Hello reports of whatever that claiming that the the need for a 1 billion square feet of space I mean, those estimates keep getting pushed out so the next more of five.
The industrial.
Should be good.
We plan to be the.
The good piece of that.
Alright, thanks for the color on that thanks, Scott. Thank you Barry.
The next question is from Craig Mailman with Keybanc. Please go ahead.
Hey, guys.
Just following up on the acquisition.
Out of the guidance the $105 million is that fully identified the either on the contract or otherwise the point.
It's not fully identified now.
The from future facilities.
It's always the floating as you probably probably now but.
Not 100% identified.
Okay. So there is some spec in the mix, but you got through the weather extremes.
Yeah.
Okay and then.
You had mentioned cap rates of kind of low of 7%, maybe the creeping into the <unk> six per cent range on <unk>.
Some of the yields and I guess the factory.
You can you can mix and some lower cap rate.
But how are you guys.
Kind of evaluate.
How much the buy when the stocks trading kind of mid seven caps on an implied basis for my numbers and you guys of the buying.
Inside of the amount and I guess on the other.
You can easily make it accretive the debt that's just from the one of these standpoint.
We're issuing around.
The inbound stuff inside of where you're trading on it.
No.
Okay.
Okay.
Yeah, No I think.
The comment on on.
Net.
Adjusted wanted to say.
You look at every day, we want to make money on every single deal where metrics aggregating assets from snick of aggregating assets.
These days, what we're seeing.
From the ground level of losses, it's good strong rental growth.
And you kind of you kind of.
Zoom out and pick on macro look.
It happened last year in terms of the total absorption across the country of 225 million square feet absorbed which was which was which is the record of 11, 8% above 2019 numbers.
Thank you for you right across the board for 6% asking rents across the board of creeks too.
In the quarter.
Eight 3% from 2019 and either all.
All of our.
Indicative of the type of the cow.
On when that we have behind our back right now.
We're seeing we're seeing we're seeing these numbers play out in our own assets, we're seeing good solid rental growth.
We're seeing yields in the mid Sevens, we're seeing the open the high fixed rates and are you still are different.
The next and we look at it that way. So if we're buying something that we find ourselves buying something in the high touch which for instance, we can you can probably the.
Bad debt, we're buying assets.
Tenants are paying.
Below market rents and the.
Pretty true chance that we're going to be able to mark to market in the near term.
I hope that answers your question, yes, I agree with.
You guys are talking more of the motto of the ambulance.
I mean, I guess, if you look at it on.
The to your point, the Youre volume stuff with below market rents you guys evaluate.
We're generally has kind of stabilized cap rates being low.
Of course is where you've gone from maybe like the bellwether to look at it right because of where the stock is true. If you can roll up 50 to 100 basis points within a year or two for you.
We keep that NPV of the is that kind of the range of of what you guys have been targeting relative to the cap rates.
Yes, no I think that's the that's a pretty good observation and the way to look at it.
Sure.
The deal for looking at yes, we will look at obviously the <unk>.
On the yield but not just just on look at the first year of we look at the second and third and fourth and so on and so forth. So a lot of it depends on the simple kind of on versus multi kind of multi.
Multi tenant we have some.
More moving parts, we look at all of a later most likely recapture rent growth amongst the times.
So it could be 50 to 100 basis points like you said, maybe maybe more.
What are the things are going right now across our markets. So we're feeling.
We're feeling.
Quite quite quite optimistic about this the really are sort of I think I think of more deals along those lines.
Okay, and where are you guys seeing kind of your product type creep into the fixes what markets.
I think youre, saying youre seeing a lot of it depend on purchase of the market as of now.
The quality of the vintage of the age of the building and also the quality of the tenants.
So I think thats hard to generalize that but.
Youre, saying youre seeing cap rates.
Come down moderately in places like Atlanta.
In Chicago.
Obviously, that's come down tremendously in the gateway markets that I mentioned during the earlier, but we're not we're not chasing those types of deals of what to watch we look at look at the.
The pricing.
The profit.
So anyway. Thanks.
Craig and the lot of it has to be the portfolio size.
I think from Brian alluded to in my remarks was.
You take a portfolio of two 3 million square feet and we didn't we closed on the REIT portfolio.
At the end of last year was the high.
Yeah, Hi, Kevin on.
On that.
Debt.
The Cleveland market, that's our market.
So the cap rates of really indicative of really the size of the portfolio of who can put money to work in the way. We do we close on some deals that are probably not in better not ended on the highlights here, but it'll be in the supplement and we just we entered the.
The some properties of St. Louis we entered the Kansas City market and some of the cap rates are significantly high but the one off deals smaller size.
But we can aggregate them.
And so.
There's a lot of it has to do with large portfolio of the thing yes.
Patrick.
And I apologize my phone cut out earlier on the call.
I think you got the <unk> spreads of 10% from 'twenty. One is that inclusive of the stone crop was that just on the role that you want to address our revenue.
The debt that's just on.
The historical one does not include stone crab items.
We're still we're still projecting on a on a.
Companywide basis debt, we expect those releasing spreads to continue into this year as the next year.
So still on crops would be of that range or is that one because of the size.
The a little bit lower the.
It gets off slightly during the year.
I'm not going on.
Exactly what it is but it's not going to be low.
Okay.
And then just one last on apologizes I appreciate the added disclosure around the the JV.
The Madison I'm, just kind of curious as you guys kind of put the waterfall out there are you.
Those are Levered returns right, the 12 and 15.
So you guys would be sort of already in that 12% waterfall.
Bucket.
Yes, that's right.
So are you getting your it should be slightly above that to you already start to accrue some of that 10%.
That goes to you guys.
Right right.
That's correct.
Okay perfect. Thank you.
The next question comes from corners of the landscape with Banca <unk>. Please go ahead.
And on the call on them.
Jumping back to the acquisition pipeline and timing.
I'm looking at $150 million about an acquisition and then the.
Footnote in the supplemental stake could be here and be finished by June 30 of this year. So I'm just wondering what the strength is that the they're actually all completed by June 30 of them then what is the true.
At this pace continues through the end of 2021.
Yeah, I mean the.
Yes.
It's not an exact science right I mean, we're buying properties.
We have more property provided the capital that's been the case of <unk> started the company right.
Where we're deep in the markets that we're in.
We see a lot of off market deals.
All kinds of opportunities all over the place of because we buy short duration. So we're not of net lease REIT. So we're not out there competing with the 10 year leases so.
On the big variety of product out there. So we will you will meet or exceed the numbers that are in our filings.
Okay. Okay. Thanks for that and then Jim.
Just wondering in terms of financing looking at leverage a bit higher than the group still.
Looking back on do you expect the debt for equity mix will look like through these acquisitions through June 30.
Yeah.
Don't look at it on a per acquisition basis, because I mean, we're working off of one.
One thing that we really didn't highlight that much debt.
I'll bring out on I'll answer it now because I think the amazing right. The look at look at a company with our market cap, who has moved into a fully unsecured credit facility of its size.
I think it's somewhat unprecedented.
And I think Thats the testament to call net.
The way we operate the relationships, we have with our lenders, but it's also thoughtful of the asset class of industrial I'm not going to take we're not going to take of 100% credit what sort of take 80% credit for that.
But we don't look at we're not looking at the asset sales, we're going to lever. This on 40% in the next 150% right. So we have made a claim that we want to.
Keep our leverage on the net debt to EBITDA basis of.
Under 7%, that's what we told the investors in.
I think everyone's realized debt debt repayment said something thats, what they do.
So that's how we look at that.
And again.
Glenn on the universe and look at our $400 million market cap REIT and look at our leverage and our growth doesn't exist out there. So we're not worried about leverage.
From that perspective.
Rents are going up.
We're going to continue to chip away at leverage over time.
When it's relevant in the $1 billion market cap again, our leverage profile will be the best of any $1 billion market cap you put out there.
So it will be a positive development I appreciate the color there.
And then just a little higher level.
This will be of particularly on the bulk of the zone.
I'm just wondering if because of that any color here, maybe what the long term plan is for the.
From the effects of the end, whether it's expanding the facility of parking revenue.
The kind of outlook appreciate the.
Yes.
We put that out there.
The tenant I brought this up.
Remember from our last place which was.
When you go out and buy a property we bought plenty of them current.
As we've got of property now it's kind of we can build the 75000 square foot building on it on existing land when we bought that property, we bought it at a nine cap and the land is included and so on the industrial and particularly on a lot of our markets. The land not that expensive relatively speaking so the kind of gets thrown into.
Of the deal it's not like well if you want the building of the accident, if you want the excess land.
We're going to charge you an extra three of $400000.
So the.
While we've been kind of sneak a good of that were.
Presenting for going to buy the buildings are going to want the extra plenty of that come with it the only makes sense and so we do have the ability to build almost 2 million square feet of space.
And we can build it now in certain markets and achieve the yields that we want.
So.
We can buy a day.
No.
The seven or eight cap rate range, and we could build for that yield.
Tenants want that we would do that.
Not necessarily expect developers, we do have the expertise the in house to develop that's my background as well as the few other people here.
And we have a couple of tenants one right now that we're negotiating with them to build the building right next to their existing building for over 200000 square feet.
So the significance of.
The tenants want it.
It's going to be real good business for us the go do that.
Hmm.
And again at the yields of getting their price per square foot of getting there. It's just taken a little bit of time.
Some of our markets, but it's approaching where it makes a lot of sense.
So I have the only the best Thank you. Thank you.
The next question comes from adding truck with cash.
Go ahead.
Okay.
Talk about how portfolios the.
The lower cap line.
Net.
The one off kind of adoption just wondering.
Moving to.
The slides.
Probably the.
EBITDA that the compression of the hardware.
Buyer groups on them.
And Paul on the part of the office.
Mhm.
Hey, Gary.
Kind of coming through a little muffled.
I think I'll rephrase the question of <unk>.
Sure.
I think what you said, we're talking about kind of at what size of the portfolio of the cap rate changes.
The debt.
That's right.
Okay.
Yes.
Kind of all over the board of hard to generalize, but reaching.
Since the first of all year.
Portfolios of that.
Are you kind of of $100 million and up.
Definitely credit at a portfolio of premium, meaning meaning extraordinarily low low cap rates.
Both of them and all of the markets in both of those class of aircrafts.
So it goes without saying that when we buy some of the properties we have been doing.
On one off basis.
Going in yields are.
Our higher.
So.
I don't know if that answers the answers the question I think if there's a portfolio of debt.
The portfolio of might not on.
Obviously, not all of our 100 million it might be in the $20 million to $30 million range.
So you might not.
Hi.
A significant portfolio of premium.
At that level of as you would a $100 million.
But if that makes sense.
Yes that was my question more of the wording.
On the thresholds current costs and then secondly.
Secondly, our JV.
Just wanted to get your higher level of fraud from designer to drive net.
<unk> and expand the platform longer term.
You guys talked about Youre, the only along the do kind of what you do.
How big do you think back in the year.
The design of the grower.
Longer term plans from the JV of standpoint.
Yes.
Yeah, Erin so.
That's the JV or an outgrowth of what kind of we do.
In one of anyone point in time, which is.
Our site has limitations.
As we said in the past the.
Properties that go into the JV is going to require it is going to be.
For the low yield starting out potentially.
And the.
Lots of leasing to do and then it could be some substantial capex in the case of the current properties in Memphis.
No.
It's really it's really a product of that.
We like the fee income.
But it takes a little more strategic than really all of that is that we are in these markets. We know the markets well, we want to be able to be of buyer of more product in these markets and gain even greater scale.
And the JV affords us.
Of that opportunity. So obviously are our financials do not reflect any type of.
And the really promote structure and things like that that to us is going to be all gravy, we think we'll get there, especially with Madison on this JV.
They have significant capital is not a lack of capital for industrial So we will continue to balance.
The deals we do on the JV with what we do in the week.
But.
Make no mistake about it.
<unk>.
Our business is to grow the REIT.
All of this readout.
Creatively and.
And prudently.
As you know.
Tired of ethane it but everybody employment.
Part of the compensation of the stock.
And I know some weak by any of that in summary, the.
We're investing there in place of no stock and I find that to be strange. So we are where all of this together.
And so we're doing what.
We believe is right.
But I don't think youre going to see the JV platform overshadow what happens in the REIT itself.
Okay. So no expectation of Brazilian story.
The foodservice is because of the <unk>.
The platform is more the focus of course, you don't want to give up.
Gail on subs and.
Much of the focus the already from from your own for assets of unfair to say.
That is fair to say, but many of joint ventures, all of our assets right and so.
In market debt.
In line.
The markets that we have a strong presence.
We bring a lot to the table of the JV partner so.
For the low part of you are correct.
David.
Thanks for your bond out of North Dakota.
Thank you.
The next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Oh, Hey, good morning Happy Friday.
The two.
For.
First just going to the guidance.
You guys printed 30, I'm sorry in the first quarter, you're guiding 38 cents.
And as you said, the the guidance, including the additional equity so on annualized basis call. It about 52.
The $150 million of acquisitions that you see in sort of the.
4% spread on on funding costs, whether line of credit et cetera, and the yields get you somewhere on the 20 low 20 range.
For the annualized.
Obviously as long as the partial period.
So that gets you the <unk>.
Annualized would get you the dollars 72, which is the midpoint of your range of obviously.
Im going to be in for the full year does that mean, you're somewhere in the sort of low low 60, maybe $5 50, what are the other what are the other revenue other penny coming from that gets you into that is that some of the leasing debt that you're doing your debt some rent roll up for what are the other areas of growth that we should think about driving the the guide.
This range. This year in addition for the acquisition.
Yes.
Well I like it.
I think I think what we did state in the or was that the first quarter, we're going to ramp up from there.
So we're giving guidance on the first quarter, we haven't seen it on the first quarter that we've given for the full year.
You've got embedded embedded growth, we got rental rate increases going on kind of the portfolio.
We're going to get to those numbers.
Without any problem.
Unless something changes.
On the macro events like we've seen last year, but outside of the aspect of what backlog.
<unk> had enough of.
The macro events right, but but we didnt anticipate.
And when I look out on 22 items really great things in 2022 on the status quo basis.
So I don't know if we can get into a discussion with you here on this call about every penny every which way, but if we've got cash releasing spreads of 8% to 10%.
And we give guidance on the first quarter, we havent given it gave the second third and fourth quarter, but I can tell you. It goes on every quarter for that.
That's how we're bridging the.
That's what we're doing basically what you're saying is if the embedded growth of the portfolio, that's going to drive that that delta.
Right.
Okay cool checking the question is going to the acquisitions on the funding.
Most of the cash and then obviously the ample of line of credit.
The <unk>, which were both types of satisfy the remainder of the $150 million of wholly owned plus fund the whatever you would do on the JV, but sort of going back to Craig's question earlier on the call. This creates added balance was a line of credit cost is cheaper than your equity cost so solid.
How are you.
No I guess, if you did.
Do you view of the remainder of line of credit, which you talked about for both wholly funded whatever you do on the J D.
Obviously needs to be.
Offset with the equity at some point.
So in your internal modeling what you think that you guys sort of bridge that gap, where your equity cost is more in line, but for a line of credit cost.
I'm going to have to leave that for somebody who I understand the question, Alex but I.
I don't get it.
Do you have an answer to that.
I think Alex we can explore that in detail on on a follow up call, but I think the reality of it.
The existing line et cetera, obviously the advantageous.
And that's the kind of sub 2% interest cost and then the cost of equity or equity cost.
Clearly the effect of price.
On the gaming market.
Where that line actually processes, something north of where we are today.
And we think that at this point in time of our share price is.
And the undervalued.
So we would look to have that happen as we move forward on our pricing increase and our market cap.
At the same time, taking advantage of the additional acquisitions within the status quo structure for.
Of the drive the NOI for the price performance as Jeff said, particularly going into the second half of this year.
See that it's beneficial overall.
Sure sure position.
But the exact crossover between an equity the equity cost for some of that cost is determined to dominantly by market price.
Hi, Dan.
Thank you you answered my question in I guess quite day initially no. Good question, which is that the cost of the things that we look for obviously the point of where the dilution from equity.
The offset with the great internal growth that you guys have the.
Portfolio. So thank you Dan.
Thank you Alice.
The next question comes from volume of Mehta with National Securities. Please kind of home.
Good morning.
You've got different of a new market.
The form.
This quarter, we just can't facility both of them if you could talk about.
Is that kind of thing to Mike about Kansas City, how much you've wanted to go there and then moving on it.
The new markets that you guys are looking at.
Good morning.
We've been looking at patent on it.
The number of markets as we've mentioned in our past.
Of course.
And at the right entry point.
So do you like other markets. We don't go into the much we feel we're going to be able to create.
A cluster of properties of our credit portfolio down the line. So this is our first.
What I would think it would be many in the near future.
Kansas City is a.
It's a great market, it's on top of market.
Absorbed over 7 million square feet last year on your record.
Low vacancy rate.
It's got all of the right economic drivers.
The hospitality sector and in the hospital sector and financial services you name it so.
It is well diversified from that standpoint.
There are other markets that we're currently looking at mostly in the southeast.
And I can't we don't have any cash.
Comment on on where we are in terms of letters of intent or purchase and sale of agreements but.
Our pipeline is as I've mentioned before is deep and wide.
<unk>.
From some new markets that I think.
On the road, we'll be able to the mix of amounts announcements when it makes sense for make announcements.
Okay. Good question.
Second question.
It seems on the small amount of.
Researchers a profit share for Q4.
Maybe provide some color on that on one unexpectedly in the per se of more of that revenue.
One.
The high growth.
I didn't quite hear the whole thing you're talking about the series a preferred.
Yes.
Yeah, I mean, that's just the math equation that are.
On a fantastic CFO the numbers on end.
Because of the coupon on that as seven of half and.
No.
The just just under two years now we can call that and.
We think of it when the price is right and you can take advantage of that being minimal so far but I think we would continue to do that I think the.
We think of the great use of of excess cash.
Okay. Thank you.
Thank you.
This concludes our question and answer session I would like to turn the conference back over the course of ALS for interest.
In the remarks.
Great. Thank you. Thank you everyone for joining us and again as always.
And for our own phones here of <unk>, So give us a call and we'll answer any questions you have thanks, so much.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
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