Plymouth Industrial REIT Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Hi, thanks. Good morning. First, I just wanted to ask about the Memphis investment going in 8% with rent upside over time. With regard to the near-term expirations, what kind of tenant retention do you anticipate as you look to capture that mark to market, and what's the timeline for that?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay, and it sounded like you were seeing an increase in investment opportunities and that the window was opening a bit. I'm assuming this is what you were referencing on some level. But just curious if you could talk about your appetite and if there's more behind Memphis that you're seeing today. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 1:00PM, PLYM.N - Q2 2024 Plymouth Industrial REIT Inc Earnings Call

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay. And then, in Cleveland, so the tenant moved out at 2100 International Drive. What's -- can you talk about the timeline to backfill that space

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay, got it. And so that's for half of the building, and there's other -- what's tenant demand look like in general for the balance of the space? And is the backup for also half the space or would that be potentially for more?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay. And then just last question I just had on the Chicago property tax appeal. A shopping center reported sort of a similar outcome in their Chicago portfolio, which they benefited from in the quarter. They're also going to see a longer-term improvement from that as well. And I'm just wondering if the tax environment in Chicago has changed a little bit in your view, and are there more potential tax wins in the Chicago portfolio that you see that might be possible with Chicago being about 20% of the portfolio's ABR?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay. Do you feel that the tax environment though in Chicago has improved a little bit? I know that that's been a difficult market for property taxes in the past. Do you feel that there's been a little bit of a change in taxes in Chicago and Cook County? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 1:00PM, PLYM.N - Q2 2024 Plymouth Industrial REIT Inc Earnings Call

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay. All right. Thank you.

Question: Rich Anderson - Wedbush Securities Inc. - Analyst : Thanks. Good morning, and thanks for having me on the call. First-time caller, long-time listener, I guess. So the 9.7%, maybe you said this in the commentary in terms of the cash same-store NOI. What would it have been without the tax situation in Chicago?

Question: Rich Anderson - Wedbush Securities Inc. - Analyst : Okay. And when you -- back to the Memphis transaction, and you used dispositions to fund some of that, is there any dispositions within that that you think that -- is there something, anything in there that's non-core that you acquired that maybe would be sold over time? Or do you want all of it?

Question: Rich Anderson - Wedbush Securities Inc. - Analyst : Okay. In terms of the cash-releasing spreads, you did sort of [$14 million,$15 million-ish]. This Memphis is $18 million to $20 million in terms of future mark to market. You're way down by fixed renewals. Talk to me about the impact of that on what you could be achieving in the absence of the fixed renewals and when does that sort of truly burn off that we get the full gamut of cash-releasing spreads out of the company?

Question: Rich Anderson - Wedbush Securities Inc. - Analyst : Okay. You said you're closing on in the end of your Phase 1 of your development program. My conversations as you're going through the launch, the Phase 2 process was sort of undefined. And if that's the wrong word, I apologize. But I wonder how defined has it become now that you're nearing the end of Phase 1 and where you're looking to deploy capital in the Phase 2 process of your development pipeline.

Question: Rich Anderson - Wedbush Securities Inc. - Analyst : Okay. And then last for me, just to take your temperature on the whole onshoring movement, it's an important part of your thesis where you guys exist. Do you have any view about whether it's real or political? And by political, I mean, get somebody elected. And then come 2025, suddenly, it's not moving as fast as we saw. I'm wondering where you stand, and I hate to ask a cynical question, but I can't help myself.

Question: Rich Anderson - Wedbush Securities Inc. - Analyst : Okay. Good stuff. Thanks very much.

Question: Nick Thillman - Robert W. Baird & Co. Inc. - Analyst : Hey, guys. Hoping to get a little more commentary on the leasing front, just 2Q volume a little bit slower than 1Q. I understand the pipeline here is around 900,000 square feet. I guess, the slowdown in 2Q, is it just kind of the spaces that you guys have available or [were there just seems] a little bit more larger, chunkier deals, I guess? Maybe talk about the lease gestation sort of timeline you're dealing with today.

Question: Nick Thillman - Robert W. Baird & Co. Inc. - Analyst : And then maybe on the -- touching on the disposition sort of front, I guess, what is the -- you outlined kind of Columbus as the user buying that. But is there any other sort of disposition slated for the back half of the year in present outlook?

Question: Nick Thillman - Robert W. Baird & Co. Inc. - Analyst : And then Anthony, just some clarification. Basically, the reduction on the top end of the range is essentially, you're not really expecting the FedEx space to kind of be leased in the next quarter or so, maybe by year end or something along those lines, and that's kind of the moving piece to help offset some of the accretion from that Memphis portfolio, correct?

Question: Nick Thillman - Robert W. Baird & Co. Inc. - Analyst : That's it for me. Thank you, guys.

Question: Bryan Maher - B. Riley Securities - Analyst : Thanks. Just a couple for me, most have been asked and answered. Expenses seem pretty under control, the [tax] in the future, potential for more tax appeals. And I'd be interested to hear if there are in other markets that (technical difficulty) potential for more tax appeal success. Is there anything going on in the variability of expenses positively or negatively that we should be thinking about?

Question: Bryan Maher - B. Riley Securities - Analyst : Okay. And then are there any other potential vacates that would be of material in nature that's on your radar screen that maybe we should be thinking about?

Question: Bryan Maher - B. Riley Securities - Analyst : Okay. Good to know. And then just last from me and maybe a little bit on an open-ended question I would love a little commentary on. But between you guys and other industrial REITs we cover, this kind of 15%, 20%-plus rent increases on renewals that have been going on for some time, it seems like it will go on for a bit longer given the demand that you talked about. It can't go on forever, so how are you thinking about that, not in the next one to two years but more in the next kind of three to five years?

Question: Bryan Maher - B. Riley Securities - Analyst : Thanks. That's helpful. And maybe, I just wonder if I could slip it in. You guys have a pretty specific niche, and you target a handful of certain markets. But I'm sure that you explore other markets as well. Without necessarily identifying a new market for Plymouth, is there something out there on the radar screen that would kind of fit your niche that you may explore that would be kind of use for us?

Question: Bryan Maher - B. Riley Securities - Analyst : Thanks, and I hope we don't ask too many crazy questions.

Question: Mitchell Germain - Citizens JMP Group, LLC - Analyst : Thank you. You did 7% same-store growth in the first quarter, 9.7% this quarter. It seems like you maintained your guidance for the year. Is that just a hint of conservatism, or is there a real deceleration that's going to come about in the back part?

Question: Mitchell Germain - Citizens JMP Group, LLC - Analyst : Thank you. I know you're fully leased on the development now. How much of that is actually income producing, or there's still some sites that are -- obviously, there's one lease that you just did, but -- or some of that is still in process of commencing?

Question: Mitchell Germain - Citizens JMP Group, LLC - Analyst : Got you. Okay. Last one for me. Jeff, maybe just -- if you could just talk a little bit about the process around Memphis. You bought assets for bulk of your career. I'm curious kind of what your sense of the potential bidding pool, kind of how much organized capital was involved, or maybe just even outbidding on properties would be -- I'd be curious.

Question: Mitchell Germain - Citizens JMP Group, LLC - Analyst : That's super helpful. Thanks.

Question: Nikita Bely - J.P. Morgan Securities LLC - Analyst : Hey, good morning. In your prepared comments, you talked about occupancy dipping in 3Q and then picking back up in 4Q. If we were to look at year-end occupancy, where exactly would you expect your year-end same store and the overall company occupancy to be at December 31 roughly?

Question: Nikita Bely - J.P. Morgan Securities LLC - Analyst : And that's the year-end figure, okay, in the same store?

Question: Nikita Bely - J.P. Morgan Securities LLC - Analyst : Yes, got it. Any other one-time items that there's potentially embedded in your second half of this year's outlook?

Question: Nikita Bely - J.P. Morgan Securities LLC - Analyst : Got it. And for the tenants that you guys are discussing for your St. Louis property, when would you expect for them to take occupancy and commence the rent payment? I know that's a big lease of 770 square feet, right?

Question: Nikita Bely - J.P. Morgan Securities LLC - Analyst : '25, got it. Okay, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 1:00PM, PLYM.N - Q2 2024 Plymouth Industrial REIT Inc Earnings Call

Question: Anthony Hau - Truist Securities - Analyst : Good morning, guys. Thanks for taking my questions. So it seems like manufacturing is slowing down with companies laying off employees, cutting production to counter falling orders and rising inventories. I just want to get your thoughts on that subject and whether you guys have any concern on the potential impact to demand in your markets?

Question: Anthony Hau - Truist Securities - Analyst : Okay. Thank you.

Question: Brendan Lynch - Barclays Bank PLC - Analyst : Great. Thanks for taking my question. Joined a bit late coming from another call, so I apologize if this has already been addressed. But with the St. Louis asset, there was a suggestion that some of the prospective tenants were looking to take the available space and would potentially commission

Question: Brendan Lynch - Barclays Bank PLC - Analyst : Okay. That's helpful. And to the extent you haven't already discussed it, just any additional commentary that you could give on the two that you're further along in the negotiations with? What are the considerations that are kind of being ironed out now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 1:00PM, PLYM.N - Q2 2024 Plymouth Industrial REIT Inc Earnings Call

Question: Brendan Lynch - Barclays Bank PLC - Analyst : Yes.

Question: Brendan Lynch - Barclays Bank PLC - Analyst : Okay. Thanks for the color.

Question: Steven Dumanski - Janney Montgomery Scott LLC - Analyst : Thank you. Can you please provide further insight on the Jacksonville market, especially in reference to your current development and the recent completions?

Question: Steven Dumanski - Janney Montgomery Scott LLC - Analyst : I just -- I guess I wanted to see if you currently see a significant difference between yields rather than between the secondary and primary markets. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2024 / 1:00PM, PLYM.N - Q2 2024 Plymouth Industrial REIT Inc Earnings Call

Question: Steven Dumanski - Janney Montgomery Scott LLC - Analyst : Thank you.