Q1 2024 Industrial Logistics Properties Trust Earnings Call
Good day and welcome to the industrial Logistics properties Trust first quarter 'twenty 'twenty four earnings conference call.
Operator: and welcome to the Industrial Logistics Properties Trust first quarter 2024 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press Star, then 1 on a touch-tone phone. To withdraw your question, please press Star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Kevin Brady, Director of Investor Relations. Please go ahead.
All participants will be in listen only mode.
So do you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star then one on attached town song.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Kevin Brady Director of Investor Relations. Please go ahead.
Kevin Brady: Thanks, Cindy. Good morning. Joining me on today's call are Yael Duffy, President and Chief Operating Officer, and Tiffany Sy, Chief Financial Officer and Treasurer. Today's call includes a presentation by management, followed by a question and answer session with analysts. Please note that the recording and retransmission of today's conference call is prohibited without the prior written consent of the company. Also, please note that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws.
Kevin Brady: Thank you Cindy good morning, joining me on today's call Argyle, Duffy, President and Chief operating Officer, and Tiffany Tsai, Chief Financial Officer, and Treasurer. Today's call includes a presentation by management followed by a question and answer session with analysts. Please note that the recording and retransmission.
Speaker Change: <unk> mission of today's conference call is prohibited without the prior written consent of the company.
Kevin Brady: These forward-looking statements are based on ILPT's beliefs and expectations as of today, May 1st, 2024, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call. Additional information concerning factors that could cause those differences is contained in our filings with the Securities and Exchange Commission, or SEC, which can be accessed from our website, ILPTREIT.com.
Also please note that today's conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and other securities laws. These forward looking statements are based on <unk> beliefs and expectations as of today May <unk> 2002.
Kevin Brady: 24, and actual results may differ materially from those that we project. The company undertakes no obligation to revise or publicly release the results of any revision to the forward looking statements made in today's conference call.
Kevin Brady: Additional information concerning factors that could cause those differences is contained in our filings with the securities and exchange Commission or S. E C, which can be accessed from our website I L. P T REIT dot com.
Kevin Brady: Investors are cautioned not to place undue reliance upon any forward-looking statement. In addition, we will be discussing non-GAAP financial numbers during this call, including Normalized Funds from Operations or Normalized FFO, Adjusted EBITDA RE, and Cash Basis Net Operating Income or Cash Basis NOI. A reconciliation of these non-GAAP figures to net income is available in our earnings presentation, which can be found on our website. With that, I will turn the call over to Yael.
Kevin Brady: Investors are cautioned not to place undue reliance upon any forward looking statements.
In addition, we will be discussing non-GAAP financial numbers during this call, including normalized funds from operations or normalized <unk> adjusted.
Kevin Brady: Adjusted EBITDA and cash basis, net operating income or cash basis NOI. A reconciliation of these non-GAAP figures to net income is available in our earnings presentation, which can be found on our website with that I will turn the call over to <unk>.
Yael Duffy: Thank you, Kevin, and good morning. On today's call, I will review ILPT's operating and leasing performance and then turn the call over to Tiffany to provide an update on our financial results. We started the year with continued demand for our high-quality portfolio, consistent with the trends we saw throughout 2023. Supported by higher rental income, same property cash basis NOI grew by 2.3% compared to the same period last year. Notably, normalized FFO increased 19% and 17% on a year-over-year and sequential quarter basis, respectively.
Kevin Brady: Thank you Kevin and good morning on today's call I will review I L. P. Ts operating and leasing performance and then turn the call over to Tiffany to provide an update on our financial results.
Speaker Change: We started the year with continued demand for high quality portfolio consistent with the trends we saw throughout 2023.
Tiffany R. Sy: Supported by higher rental income same property cash basis, NOI grew by two 3% compared to the same period last year.
Tiffany R. Sy: Notably normalized <unk> increased 19% and 17% on a year over year and sequential quarter basis respectfully.
Yael Duffy: We executed new and renewal leases for nearly 2 million square feet, and total occupancy reached 99%. As of March 31st, 2024, ILPT's portfolio consisted of 411 warehouse and distribution properties in 39 states, totaling approximately 60 million square feet, which includes 16.7 million square feet of industrial land and properties in Hawaii. ILPT's portfolio has a weighted average remaining lease term of eight years, anchored by tenants with strong business profiles and stable cash flows.
Tiffany R. Sy: We executed new and renewal leases for nearly 2 million square feet and total occupancy reached 99%.
Tiffany R. Sy: As of March 31st 2024.
Tiffany R. Sy: L. P. Ts portfolio consisted of 411 warehouse and distribution properties in 39 states totaling approximately 60 million square feet, which includes $16 7 million square feet of industrial land in properties in Hawaii.
Tiffany R. Sy: I L. P. Pes portfolio has a weighted average remaining lease term of eight.
Tiffany R. Sy: Eight year anchored by tenants with strong business profiles and stable cash flows.
Yael Duffy: ILPT's top 10 tenants account for nearly half of our total annualized rental revenues, and 77% of our revenues come from investment-grade rated tenants or from our secure Hawaii landlady. During the first quarter, we entered into 10 new and renewal leases and one rent reset for approximately 2 million square feet at a weighted average lease term of six years. This activity resulted in a gap in cash leasing spreads of 38.3% and 25%, respectively, and reflects the strongest roll-up in rents over the last six quarters.
Tiffany R. Sy: I L. P cheese top 10 tenants account for nearly half of our total annualized rental revenues and 77% of our revenues come from investment grade rated tenants or from our secure Hawaii land leases.
Tiffany R. Sy: During the first quarter, we entered 10, new and renewal leases and one rent reset for approximately 2 million square feet at a weighted average lease term of six years.
Tiffany R. Sy: This activity resulted in GAAP and cash leasing spreads.
Tiffany R. Sy: 38, 3% and 25% respectfully.
Tiffany R. Sy: Respectfully.
Tiffany R. Sy: Plus the strongest roll up in rents over the last six quarters.
Yael Duffy: The impact of this activity is an increase of $3.5 million in annualized rental revenue, of which 86% will be realized in 2024. These results continue to showcase our ability to generate organic cash flow growth while maintaining portfolio stability. Renewals drove 90% of our leasing activity this quarter, which highlights the continued demand for ILPT's assets and strong tenant retention, which was 94% this quarter. Included in these results is a five-year renewal with Excel, a subsidiary of DHL, for 945,000 square feet in Rock Hill, South Carolina, at a 73% roll-up in gap rent.
Tiffany R. Sy: The impact of this activity is an increase of three and a half million dollars in annualized rental revenue of which 86% will be realized in 2024.
Tiffany R. Sy: These results continue to showcase our ability to generate organic cash flow growth, while maintaining portfolio stability.
Tiffany R. Sy: When north drove 90% of our leasing activity this quarter, which highlights the continued demand for I O P Ts assets and strong tenant retention, which was 94% this quarter.
Tiffany R. Sy: Included in these results is a five year renewal with excel our subsidiary M. D. H L for 945000 square feet in Rock Hill, South Carolina, and a 73% roll up in GAAP rent.
Yael Duffy: This represents an increase of $2.2 million in annualized rent that will go into effect in July of 2024. Looking ahead, 8.4 million square feet, or 10.6% of ILPT's annualized revenue, is scheduled to be leased by the end of 2025. We are currently tracking 41 deals in our pipeline for more than 7.5 million square feet. Once executed, we expect these leases will yield average roll-ups in rent of 20% on the mainland and 30% in Hawaii, further illustrating the strength of our portfolio.
Tiffany R. Sy: This represents an increase of $2.2 million in annualized rent that will go into effect in July of 2024.
Tiffany R. Sy: Looking ahead, $8 4 million square feet or 10, 6% of IOP keys annualized revenue is scheduled to roll by the end of 2025.
Tiffany R. Sy: We are currently tracking 41 deals in our pipeline for more than seven and a half million square feet. Once executed. We expect these leases will yield the average roll up in rent of 20% on the mainland and 30% in Hawaii further illustrating the strength of our portfolio.
Yael Duffy: Included in our pipeline are proposals out to multiple users for the 2.2 million square foot land parcel in Hawaii that became available on April 1st. While we do not yet have a replacement tenant, interest has been strong, and we hope to update you on our progress on future calls.
Tiffany R. Sy: Included in our pipeline or proposals out to multiple use users for the 2.2 million square foot land parcel in Hawaii that became available on April 1st.
Tiffany R. Sy: While we do not yet have a replacement tenant interest has been strong and we hope to update you on our progress on future calls.
Yael Duffy: Before I turn the call over to Tiffany, I wanted to make you aware of the recent publication of the RMR Group's Annual Sustainability Report. The report highlights insights, accomplishments, and data regarding our managers' commitment to long-term ESG goals. We are proud of the progress made to strengthen ILPT's sustainability practices and enhance our ESG transparency and disclosure. You can find links to the complete report, as well as an ILPT-specific tear sheet, on our website at ilptreap.com. Tiffany. Thank you, Yael.
Tiffany R. Sy: Before I turn the call over to Tiffany I wanted to make you aware of the recent publication of the RMR group's annual sustainability report their report.
Tiffany R. Sy: Highlights insights accomplishments and data regarding our managers commitment to long term ESG balls.
Tiffany R. Sy: Router the progress made to strengthen I O P T sustainability practices and enhance our ESG transparency and disclosure you can find links to the complete report as well as an I O P. T specific tear sheet on our website and I O P. T Rieck dotcom Tiffany.
Tiffany R. Sy: Thank you, Yael. Good morning, everyone.
Tiffany R. Sy: Thank you Yale good morning, everyone.
Tiffany R. Sy: Before I cover our first quarter results, I would like to highlight recent financing activities related to our consolidated joint venture, Mountain JV. In March, Mountain JV exercised its first of three one-year options to extend the maturity date of its $1.4 billion floating rate loan. As part of that extension, the JV purchased a one-year interest rate cap with a SOFR strike rate of 3.04% for $26.2 million, slightly higher than our February guidance of $25 million.
Speaker Change: Before I cover our first quarter results I would like to highlight recent financing activities related to our consolidated joint venture Mountain JV and.
Speaker Change: In March Mountain JV exercised its first three one year options to extend the maturity date of its $1 4 billion dollar floating rate loan.
Tiffany R. Sy: As part of that extension the JV purchased a one year interest rate cap with a sulfur strike rate of 3.0% to 4% for $26 $2 million slightly higher than our February guidance of $25 million.
Tiffany R. Sy: Now turning to our first quarter results, normalized FFO of $9.5 million, or $0.14 per share, increased 19.4% compared to the same quarter a year ago and 16.9% on a sequential quarter basis. Adjusted EBITDA RE of $84.4 million increased 4.6% and 1.6% compared to the same quarter a year ago and on a sequential quarter basis. Gap in cash-based NOI of $86.1 million and $82.2 million also increased on a year-over-year and sequential quarter basis.
Tiffany R. Sy: Now turning to our first quarter results normalized <unk> of $9 5 million or 14 cents per share increased 19, 4% compared to the same quarter, a year ago, and 16, 9% on a sequential quarter basis.
Tiffany R. Sy: Adjusted EBIT for Ari of $84 $4 million increased four 6% and one 6% compared to the same quarter, a year ago and on a sequential quarter basis.
Tiffany R. Sy: GAAP and cash basis, NOI of $86 $1 million and $82 $2 million also increased on a year over year and sequential quarter basis.
Tiffany R. Sy: The improvement in each of these metrics reflects an increase in rental income driven by our strong leasing activities across the portfolio. Interest expense of $73.2 million increased 3.5% compared to the same period a year ago and increased slightly on a sequential quarter basis. We estimate our second quarter interest expense to increase slightly, with $58 million of cash interest expense, including the benefits of the cash received from our interest rate cap, and $15.5 million of non-cash amortization of financing and interest rate cap costs.
Tiffany R. Sy: The improvement in each of these metrics reflect an increase in rental income driven by our strong leasing activities across the portfolio.
Tiffany R. Sy: Interest expense of $73 $2 million increased three 5% compared to the same period, a year ago and increased slightly on a sequential quarter basis.
Tiffany R. Sy: We estimate our second quarter interest expense to increase slightly with $58 million of cash interest expense, including the benefit of the cash received from our interest rate cap and.
Tiffany R. Sy: $15 5 million of noncash amortization of financing and interest rate cap costs.
Tiffany R. Sy: Turning to our balance sheet, as of March 31st, our net debt to total assets ratio was 68.6 percent, an improvement of 110 basic points compared to the same period a year ago. The first quarter net debt coverage ratio of 12.1 times declined 70 basis points on a year-over-year basis, reflecting higher adjusted EBITDA already and the continued paydown of our amortizing debt. All of our debt is currently carried at a fixed rate, or a fixed through interest rate cap, with a total weighted average interest rate of 5.35%. Including extension options, IOPT has no debt maturities until 2027.
Tiffany R. Sy: Turning to our balance sheet as of March 31, our net debt to total assets ratio was 68, 6% an improvement of 110 basis points compared to the same period a year ago.
Tiffany R. Sy: The first quarter net debt coverage ratio of $12. One time declined 70 basis points on a year over year basis, reflecting higher adjusted EBITDA already and the continued pay down of our amortizing debt.
Tiffany R. Sy: All of our debt is currently carried at a fixed rate or fixed through interest rate cap with a total weighted average interest rate of 535%.
Polluting extension options I O P. T has no debt maturities until 2027.
Tiffany R. Sy: As of March 31st, we had approximately $128 million of cash on hand and $108 million of restricted cash in our consolidated joint venture. In closing, IOPT is well-positioned to benefit from the demand for its high-quality industrial real estate. The portfolio remains strong, as demonstrated by an occupancy rate of 99 percent, an investment-grade tenant profile representing 77 percent of annualized revenue, and continued revenue momentum driven by rising rates across the portfolio.
Tiffany R. Sy: As of March 31, we had approximately $128 million of cash on hand, and $108 million of restricted cash in our consolidated joint venture.
Tiffany R. Sy: Clothing, I O P. T is well positioned to benefit from the demand for high quality industrial real estate.
Tiffany R. Sy: The portfolio remains strong as demonstrated by an occupancy rate of 99% and investment grade tenant profile, representing 77% of annualized revenue and continued revenue momentum driven by rising rates across the portfolio that concludes our prepared remarks operator. Please open the line for questions.
Operator: That concludes our prepared remarks. Operator, please open the line for questions. We will now begin.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Bryan Maher of B. Reilly FBR. Go ahead, please.
Operator: We will now begin the question and answer session too.
Bryan Anthony Maher: To ask a question you May Press Star then one on your Touchtone phone.
Tiffany R. Sy: If you are using a speakerphone please pick up your handset before pressing the keys.
Operator: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our roster.
Bryan Anthony Maher: Our first question comes from Brian <unk> of B Riley FBR go ahead. Please.
Bryan Anthony Maher: Thank you and good morning Yael and Tiffany. Just a couple for me this morning. We were pretty impressed with the rent roll-ups for the quarter, and we're wondering, and I heard your commentary on the expectations for the mainland, I think 20% and Hawaii 30%, but are you getting any pushback from any of the tenants? You know, how are those negotiations going? Can you just give us a little bit more color in that regard?
Brian: Well, thank you and good morning, Yale and Tiffany.
Brian: Just a couple from me this morning.
Bryan Anthony Maher: We were pretty impressed with the rent roll ups for the quarter and were wondering and I heard your commentary on your expectations for the mainland I think 20% in Hawaii, 30%.
Bryan Anthony Maher: But are you getting any pushback from any of the tenants how are those negotiations going.
Bryan Anthony Maher: Can you just give us a little bit more color in that regard.
Yael Duffy: Sure, so our leasing activity has been strong, and as we mentioned, we have seen continued demand. I think for some of the renewals and even some of the new prospects, it's taking a little bit longer for them to transact, and just the negotiation process has been longer. But a lot of these leases that are expiring were, you know, at a minimum signed five years ago, sometimes ten years ago. So we do expect that we'll still see meaningful roll-ups just because the markets have shifted so significantly since when they signed their original lease.
Speaker Change: Sure So our leasing our leasing activity has been strong in.
Brian: As we mentioned that we have seen continued demand I think for.
Yael Duffy: You know some of the renewals and even some of the new prospects is taking a little bit longer for them to transact.
Brian: And just the negotiation process has been longer but a lot of these leases that are expiring. We're you know at a minimum size five years ago, sometimes 10 years ago. So we do.
Yael Duffy: Do expect that we'll still see meaningful rollout just because the markets have shifted so significantly since when they sign their original leases.
Tiffany R. Sy: And maybe for Tiffany, you know, I know that the cap cost was a little bit higher than you expected, 26 over 25, and I know that October is kind of a lifetime away, but as we sit here today, do you have any thoughts on what that cap might cost when we get to the fall?
Tiffany: Okay, maybe for Tiffany.
Speaker Change: I know that the cap cost was a little bit higher than you expected 26 over 25, and I know that October is kind of a lifetime away but.
Tiffany R. Sy: But as we sit here today do you have any thoughts on what that cap might cost when we get to the fall.
Tiffany R. Sy: Based on today's forward-looking information, we would expect a cap to cost below $30 million for the October cap.
Tiffany R. Sy: And based on today's.
Tiffany R. Sy: Forward looking information, we would expect to cap to cost in the low $30 million.
Tiffany R. Sy: For the October a cow.
Tiffany R. Sy: Okay, and you're sitting on a decent amount of cash. I mean, is there any expectation to utilize any of that, or is the goal just to hold onto cash to get through these cap costs?
Speaker Change: Okay, and you're sitting on a decent amount of cash I mean is there any expectation to utilize any of that or is the goal just to harbor cash to get through these cap costs.
Yael Duffy: Yeah, I think we're planning, we're not planning to do anything but hold that cash for the time being. As you mentioned, we have apartments that we'll need to buy as well as be in a position to address any expansion needs of our tenants. And so we just want to provide ample flexibility for ourselves.
Speaker Change: Yeah, I think we're planning, we're not planning to do anything but hold that cash for the time being as you mentioned, we have caps that will need to buy as well as.
Yael Duffy: Being in a position to address any expansion needs of our tenants and so we just go on to provide ample flexibility for ourselves.
Bryan Anthony Maher: Okay, and just last for me, there's been a couple articles out there recently on the Inland Empire in California, you know, some weakness there. I know that you don't have anything in California, but are you seeing any markets where you do operate where there's been some softening in demand?
Speaker Change: Okay and just last for me there's been a couple of articles out there recently on the inland Empire in California, you know some weakness there I know that you don't have anything in California, but are you seeing any markets, where you do operate where there's been some softening in in demand.
Yael Duffy: No, I think there's been some new products coming online. You know, I think coming out of COVID, I think there were some projects that were delayed and are just starting to deliver. And so we are seeing some new products and competition potentially, specifically, I guess, in one market, I would say the Indianapolis area. But I think as tenants evaluate the cost associated with relocating and the disruption to their business, we have been seeing them continue to be interested in renewing versus moving. But I think We do think this might be a short-term blip in the supply given where interest rates are now. We haven't been seeing too many new projects coming out of the ground.
Bryan Anthony Maher: No I think theres been some new product coming online you know I think coming out of Covid I think there was.
Yael Duffy: Some projects that were delayed and are just starting to deliver and so we are seeing some new product competition potentially.
Yael Duffy: Quickly I guess in one market I would say the Indianapolis area, but I think as tenants evaluate there are costs associated with relocating and the disruption to their business. We have been seeing them continue to be interested in renewing versus relocate.
Yael Duffy: But I think.
Yael Duffy: We do think that what might be a short term blip in.
Yael Duffy: In the supply given where interest rates are now we haven't been seeing too many new projects coming out of the ground.
Yael Duffy: Okay, thank you. That's all for me. Thanks, Brian.
Speaker Change: Okay. Thank you that's all for me.
Yael Duffy: Thanks, Bryan.
Speaker Change: Thanks, Brian.
Operator: Again, if you have a question, please press star then 1. Our next question comes from Mitch Germain of Citizens JMP. Go ahead, please.
Speaker Change: Again, if you have a question. Please press Star then one.
Operator: Our next question comes from Mitch Germain of citizens J M. P. Go ahead. Please.
Mitchell Bradley Germain: Good morning and congratulations on the quarter. I just wanted to make sure you recognize some percentage rent, I believe, from some of your Hawaii tenants in the first quarter. Is there any sort of... You know, kind of fluctuation we should consider in our model when it comes from 1Q to 2Q, or is this, you know, kind of upside that was realized this quarter, it was clean, and it should flow through for the rest of the year?
Mitchell Bradley Germain: Good morning, and congrats on the quarter.
Mitchell Bradley Germain: I just wanted to make sure I think you recognize some percentage rent I believe from some of your Hawaii tenants in the first quarter is should we is there any sort of.
Mitchell Bradley Germain: The fluctuation we should.
Mitchell Bradley Germain: Consider in our model when it comes from <unk> or is this kind of upside that was realized this quarter. It was clean and it should.
Mitchell Bradley Germain: Flow through for the rest of the year.
Tiffany R. Sy: You're right, we did have some percentage rent that was recognized during the quarter, but that was Offset and some other one-time noise, so they kind of canceled each other out. So I feel like this is a good run rate currently.
Speaker Change: Youre right. We did have some percentage rent that was recognized during the quarter.
Speaker Change: But that was.
Tiffany R. Sy: Offset in some other one time noise.
Tiffany R. Sy: So they kind of cancel each other out so feel like this is.
Tiffany R. Sy: A good run rate currently.
Mitchell Bradley Germain: Great. Tiffany, while I have you, I just couldn't hear specifically what you were discussing when it came to interest expense. I recognize you've got the big refi and the hedge that you purchased. Can you just go over? Your prepared comments were with regard to how we should think about forecasting interest expense in 2Q. I know you've got some amortization that flows through, correct?
Speaker Change: Great Tiffany while I have you I just couldn't hear specifically what you were.
Mitchell Bradley Germain: Discussing when it came to interest expense I recognize you've got.
Mitchell Bradley Germain: The big refi.
Mitchell Bradley Germain: And the hedge that you purchased can you just go over.
Mitchell Bradley Germain:
Mitchell Bradley Germain: Your prepared comments, where with regards to how we should think about forecasting interest expense into Q I know you've got some amortization that flows through correct.
Tiffany R. Sy: Yes, that's right. So, apologies for not being able to hear me. So, we expect $58 million of cash interest expense that includes the cash that we would receive related to our caps and then $15.5 million of non-cash amortization of both deferred financing costs and also amortization.
Tiffany: Yes, that's right so apologies for not being able to hear me. So we expect $58 million of cash interest expense that includes the cash that we would receive related to our caps and then $15 $5 million of noncash amortization of deferred financing costs.
Tiffany R. Sy: And also amortization of cap costs.
Mitchell Bradley Germain: Great, that's super helpful. Thank you. Yael, uh, I...
Speaker Change: Great that's super helpful. Thank you.
Tiffany R. Sy: Welcome.
Mitchell Bradley Germain: I E when you're talking about your deal pipeline.
Mitchell Bradley Germain: When you're talking about your deal pipeline... I think you referenced it was over 7 million square feet. 7.5.
Mitchell Bradley Germain: Thank you referenced it was over 7 million square feet seven five so does that I think you said there were multiple offers out for the home depot space So that.
Yael Duffy: So does that, I think you said there were multiple offers out for the Home Depot space, so should we consider, you know, $4 million plus of that $7.5 million is just on that one space, or is it okay? How should I think about, Yeah, so the 7.5 less the 2.2 once, even if we have multiple prospects, we only count them once in our pipeline. Great, so I was curious, I'm sure you track this quarter over quarter; how do you look at your success rate?
Yael Duffy: Should we consider like you know for a million plus of that seven five is just on that one.
Yael Duffy: Speed or is it okay now how should I think about.
Yael Duffy: Yeah, so the seven to seven five less the 2.21.
Yael Duffy: And then if we have multiple <unk>.
Yael Duffy: Prospect, we only counted once in our pipeline.
Yael Duffy: Great.
Speaker Change: Yeah, sorry.
Speaker Change: Sorry go ahead.
Yael Duffy: So it was kind of I was curious like I'm sure you track this quarter over quarter like how do you look at you know kind of your success rate. So you've been given you've been kind enough to provide this pipeline for a while now I'm curious in terms of kind of how should we think about the percentage.
Yael Duffy: So you've been kind enough to provide this pipeline for a while now. I'm curious in terms of how should we think about the percentage of this pipeline actually being finalized to an actual.
Yael Duffy: Of this pipeline actually you know kind of being finalized to an actual lease.
Yael Duffy: Yeah, so it's a good idea; we usually talk about what's in the advanced stages of negotiation. So I would, for the New Deal, we have about, I think, about 10% in the advanced stages of negotiation. And then on the renewal side, it is closer to 30% in advance.
Speaker Change: Yeah. So it's a good we usually do talk about whats in advanced stages of negotiation, so I would.
Yael Duffy: For new deals we have about I think about 10% in advanced stages of negotiation and then on the renewal side. It is closer to 30% in advanced stages mhm.
Mitchell Bradley Germain: That's super helpful. So, which means, yeah, which means it's either an LOI, or we're in the final form of a lease document. Yep. It's how we classify them. Yep. Great. And then. I think you guys have done a great job in terms of transparency in the Home Depot space. I looked, I couldn't see anything in my notes, is there anything that should be pointed out when you look at your expiration schedule for the back part or the next three quarters or maybe even next year that we should be aware of, maybe like a known move out or some sort of one-time circumstance that should be pointed out?
Speaker Change: That's super helpful. So, what's neat, yeah, which means as either an LOI or where.
Mitchell Bradley Germain: In final form of a lease document yep yep.
Mitchell Bradley Germain: Yes.
Mitchell Bradley Germain: Great and then.
Mitchell Bradley Germain: I think you guys have done a great job in terms of transparency towards the home depot space.
Mitchell Bradley Germain: But I.
Mitchell Bradley Germain: I looked I couldn't see anything in my notes is there anything that should be pointed out when you look at your expiration schedule for the back part or the next three quarters or maybe even next year that we should be aware of maybe like a known move out or some sort of onetime circumstance that.
Mitchell Bradley Germain: Should be pointed out.
Yael Duffy: Yeah, so besides the Hawaii land parcel that we've talked about, there is one other property that's about 600,000 square feet in Indianapolis that we expect to get back at the end of June. So those are the two major known vacants, and besides that, we're feeling pretty good. You know, there's always some ins and outs in Hawaii, but usually those get released pretty quickly. Yeah, you had referenced that one last quarter as well, so I was, you know, I think it was more
Mitchell Bradley Germain: Yeah, so besides the the.
Yael Duffy: Hawaii land parcel that we've talked about there is one other property that's about 600000 square feet in Indianapolis that we expect to get back.
Yael Duffy: And at the end of June So those are the two major known Vacates and.
Yael Duffy: Besides that we're feeling pretty good we know there is some ins and outs in Hawaii, but usually those get released pretty quickly. Yeah. You had referenced that one last quarter as well. So I wish you know I think it was more than that with anything other than that one but that's super helpful. Thank you guys. So much.
Mitchell Bradley Germain: Yeah, you had referenced that one last quarter as well, so I was, you know, I think it was more than that, anything other than that one, but that's super helpful. Thank you guys so much.
Speaker Change: Thank you.
Operator: Okay, I have the next question, again from Bryan Maher of B. Riley FBR. Go ahead, please.
Speaker Change: Okay I have the next question again from Brian <unk> of B Riley FBR go ahead. Please.
Bryan Anthony Maher: Thanks. Just following up on Mitch's question on that 600,000 square feet in Indianapolis, do you guys have leads for that property currently? Is that out in the market? You know, what are your expectations that that could go dark, and for how long? So we have been marketing it for a while now.
Bryan Anthony Maher: Oh. Thanks, just following up on <unk> question on that 600000 square feet in India. Masalit do you guys have leads for that property currently is that out in the market.
Bryan Anthony Maher: What are your expectations that that could go dark and for how long.
Yael Duffy: So we have been marketing it for a while now. We have had some proposals, but nothing that's far enough ahead, events to be excited about. I would assume that it might be vacant for maybe up to a year.
Bryan Anthony Maher: So we we have been marketing it for a while now we have had some proposals, but nothing thats far enough.
Yael Duffy: Advanced to be excited about I would assume that it might be vacant for.
Yael Duffy: Maybe up to a year.
Speaker Change: Okay. Thank you.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Yael Duffy, President and Chief Operating Officer, for any closing remarks. Thanks for joining us today and your continued interest in ILPT.
Yael Duffy: This concludes our question and answer session I would like to turn the conference back over to Yell Duffy, President and Chief operating officer for any closing remarks.
Yael Duffy: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Yael Duffy: Thanks, Thanks for joining us today and your continued interest in <unk> L. P T.
Yael Duffy: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.