Plymouth Industrial REIT Inc Q3 2023 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. I just wanted to touch on the development leasing and just see if you could provide a little bit more detail around tenant demand and the potential timeline to continue to get some leasing done, particularly at Fisher Park one and New Calhoun, too?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay. And then how should we think about new starts moving forward from here? Is there anything that you're contemplating, anything that might hit before year end or in early 2024?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay. And then Anthony, you commented on the balance sheet and overall leverage, which came in quite a bit, as you mentioned. So you're now below the 7 times threshold. What's the next target in terms of leverage, and where do you expect to be over the next few quarters after the disposition and the additional lease up in the development pipeline? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 02, 2023 / 1:00PM, PLYM.N - Q3 2023 Plymouth Industrial REIT Inc Earnings Call

Question: Nick Thillman - Robert W. Baird & Co. - Analyst : Hey, good morning, guys. Maybe a question for Jeff or Jim, just on 2024 leasing. You've gotten 2.2 million square feet done. Just some of the larger known expirations FedEx communication test design. Are any of those addressed in what you've done so far, or maybe get a color on those two individual leases?

Question: Nick Thillman - Robert W. Baird & Co. - Analyst : That's helpful. And maybe just like that extra some of these larger boxes, obviously, a lot in the news on just new supply being in bigger box, maybe what's in-place rents relative to what development rents would be?

Question: Nick Thillman - Robert W. Baird & Co. - Analyst : And then maybe for Anthony, you guys, in prior quarters, had mentioned maybe refinancing the AIG loan with more secured debt. Was that more a factor of just working towards this investment-grade balance sheet, or what's the pricing on maybe secured that is not as great as you initially had thought? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 02, 2023 / 1:00PM, PLYM.N - Q3 2023 Plymouth Industrial REIT Inc Earnings Call

Question: John Kim - BMO Capital Markets - Analyst : Thank you. Your '23 guidance implies a fourth-quarter increase FFO and same-store NOI to $0.48 and 9.5% on the NOI front. I know you had some developments that may help with earnings, but can you just walk us through some of the drivers to get to your fourth-quarter implied guidance?

Question: John Kim - BMO Capital Markets - Analyst : On your discussion of '24 leasing activity so far and the lift that you've achieved, you guys mentioned that in '23, you started off at a more modest level and then there's cash leasing spreads accelerated during the year. I was wondering if you could just comment on that dynamic. Is that a function of the mix of renewals versus new leases a year ago, and you see a similar acceleration in '24 mark-to-markets?

Question: John Kim - BMO Capital Markets - Analyst : If I could squeeze one more in. The 4.9% cap rate you got on your disposition. I know they went to a user, but what was the mark-to-market of that asset?

Question: Anthony Hau - Truist Securities - Analyst : Hi, guys. Thanks for the question. I just noticed that occupancy is down in Memphis, like, I think, 2.3%. Recreating, providing color on that?

Question: Anthony Hau - Truist Securities - Analyst : If you don't mind, what industry is that? Is it like they got 3PL or?

Question: Anthony Hau - Truist Securities - Analyst : Okay, thanks.

Question: Bryan Maher - B. Riley Securities - Analyst : Thanks, and good morning. Just one or two for me. Are you guys starting to see any slowdown in construction activity in your markets that you would chalk up to the higher interest rate environment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 02, 2023 / 1:00PM, PLYM.N - Q3 2023 Plymouth Industrial REIT Inc Earnings Call

Question: Bryan Maher - B. Riley Securities - Analyst : And then as it relates to getting leverage down successfully, and congratulations for that, is that increasing your appetite to start to look at new acquisitions? And if so, would that be funded with kind of a combination of cash and debt? Or would you skew towards some capital recycling activity?

Question: Bryan Maher - B. Riley Securities - Analyst : No. I know it's mainly just how would you find in capital recycling? You've pretty much addressed it. That's all I have and congratulations on getting out of New Jersey.

Question: Barry Oxford - Colliers Securities - Analyst : Hey, Jeff. You touched on acquisitions, but are you saying, look, there are some one-off opportunities in the market. But look across the board, I just don't like what I see from a pricing standpoint.

Question: Barry Oxford - Colliers Securities - Analyst : Right. But, okay --

Question: Barry Oxford - Colliers Securities - Analyst : Yeah, but it sounds like you're waiting for the market to come to you?

Question: Barry Oxford - Colliers Securities - Analyst : Yeah. Jeff, on supply, are you seeing supply kind of sort of slashed deliveries seeping into your markets or maybe not as much as the national numbers would indicate?

Question: Barry Oxford - Colliers Securities - Analyst : Right. Is that what one of the reasons why you're not interested in to expect development at this particular juncture also?

Question: Mitch Germain - JMP Securities LLC - Analyst : Thanks for taking my question. The contractual renewals that Jim you referenced, are those at market or are they at an agreed-upon level?

Question: Mitch Germain - JMP Securities LLC - Analyst : So that's already baked into the leases at signing is kind of what you're suggesting?

Question: Mitch Germain - JMP Securities LLC - Analyst : Okay. That's helpful. And then, Anthony, I think you kind of mentioned the AIG loan. Obviously, it's on the line now. You're going to swap a portion of that. I'm assuming the swaps have flexibility for you to pay down without penalty. Is that the way that you're structuring that?

Question: Mitch Germain - JMP Securities LLC - Analyst : Okay. But as we think about 2024, obviously, we'll have a little bit of a push higher in rate because of the change from the composition of that debt from the AIG to the line. Is that the way to think about it?

Question: Mitch Germain - JMP Securities LLC - Analyst : Okay, great. Thanks, guys. Good quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 02, 2023 / 1:00PM, PLYM.N - Q3 2023 Plymouth Industrial REIT Inc Earnings Call

Question: Mike Mueller - J.P. Morgan Securities LLC - Analyst : Yeah, hi. I guess on the developments, the build-to-suits, I mean, can you talk a little bit about return requirements just given the capital markets backdrop, given what you would traditionally underwrite on spec, and just kind of put all that into context?

Question: Mike Mueller - J.P. Morgan Securities LLC - Analyst : Okay, got it. And then I guess with the acquisitions being pretty spotty at this point. I mean, how should we think about dispositions over the next few quarters? And I know you have something lined up in the fourth quarter. But even if you don't see anything on the acquisition side, do you think you'll still be somewhat active on the disposition front?

Question: Mike Mueller - J.P. Morgan Securities LLC - Analyst : Okay. Thank you.

Question: Anthony Hau - Truist Securities - Analyst : Hey, Anthony. I have a follow-up question about the swap. What rate should we expect for those?

Question: Anthony Hau - Truist Securities - Analyst : Okay. And for your watch list, has that change over the past six months? And do you expect like bad debt reserve to return back to a pre-COVID level?

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