INDUS Realty Trust, Inc.

Good morning and welcome to Indus Realty Trust's 2021 Second Quarter Earnings Conference Call. This call will be followed by a question and answer session. You may add yourself into the queue for questions during any time over the course of the call by dialing star 1 on your keypad. Please note also that today's event is being recorded. It is now my pleasure to turn the program over to Ashley Pizzo, Vice President of Capital Markets and Investor Relations at Indus.

Thank you and good morning everyone. Welcome to our second quarter 2021 earnings call. In addition to regularly available earnings materials, INDIS has also published a supplemental presentation which is available on our website at www.indisrt.com under the Investors tab. I would also like to mention that this conference call will contain forward-looking statements under federal securities laws. These statements are based on current expectations, estimates and projections as well as management's beliefs and assumptions. Forward-looking statements are not guarantees of performance, and actual operating results may be affected by a variety of factors. For a list of those factors, please refer to the risks listed in our most recent 10-K filing for the fiscal year ending November 30, 2020. Additionally, our second quarter results press release and supplemental presentation contain additional financial measures such as NOI, FFO, and EBITDA for real estate that are all non-GAAP financial measures. In accordance with Regulation G and Item 10E of Regulation SK, we have provided a reconciliation to those measures. Also, please note that on this call when we refer to occupancy statistics, square footage, and NOI and same property NOI metrics, these refer to our industrial logistics portfolio only, unless otherwise specified. This morning we'll hear from Michael Gamson, our CEO, who will cover recent activity, market conditions, and updates in our pipeline. We will also hear from Anthony Galisi, our CFO, who will cover the second quarter results in detail. After their prepared remarks, we'll be opening it up to your questions. With that, I'll turn the call over to Michael. Michael, will you please begin?

Thank you, Ashley. Good morning, and thank you all for your continued interest in Indus. The industrial sector continued to perform exceptionally well during the quarter. Reports from the major brokerage firms indicate strong rent growth and absorption, national vacancy at 4%, demand exceeding new supply, and record values for industrial and logistics properties. Within this environment, we maintained our strong operating performance, increased our access to additional capital, and accelerated our growth initiatives. As a testament to tenant demand and the quality of our properties, our in-service stabilized portfolio currently is 99.4% leased. For the entire in-service portfolio, we are 95.3% leased, which reflects the addition of a 395,000 square foot 50% leased acquisition in Charlotte, which I'll speak about a bit more later. We see strong tenant demand and increasing rental rates across all of our markets. We are making very good progress on our upcoming rent roll as existing tenants realize there are few to no available options and that rents continue to go up. There are only two lease expirations remaining in 2021, a 108,000 square foot space in Charlotte and a 57,000 square foot space in Connecticut, with expirations scheduled for November and December of this year. We currently are in negotiations with both tenants in those spaces regarding lease extensions, and we have begun to address our 2022 expirations. In terms of capital, we recently entered into an agreement for a new revolving credit facility for up to $100 million with a group of new lenders, led by JPMorgan and Citigroup, who were joined by BMO, KeyBank, and Morgan Stanley. This new facility doubles the availability we previously had and provides a materially lower cost of debt for the future. We appreciate the commitment and support from our new lenders, and we see this as an important next step in transitioning our balance sheet and adding to our financial flexibility to support future growth. So far this year, we are very pleased with our efforts to execute on our investment strategy and create value by finding high-quality properties in our targeted high-growth supply-constrained markets. Since our last call, we have added three new properties to our portfolio, including one we closed on last week. In addition to announcing last night that we have a two-property portfolio in Nashville under agreement, and added a project in the Lehigh Valley to our development pipeline. Touching on the completed acquisitions first, we closed on the 127,000 square foot fully leased building in the Lehigh Valley, which I described in our last earnings call. The Lehigh Valley remains a top performing tier one industrial market, and this property, we believe, has significant long term value creation potential from the current well below market rent and excess land on the site. Our second acquisition, which closed at the very end of the quarter, is a 50% leased recently delivered 395,000 square foot warehouse in the airport sub market of Charlotte. We sourced this opportunity off market and believe we will create value through the lease up of the vacancy. This building is in a market experiencing good absorption and poised for strong rent growth as there are very few future development opportunities inside the major beltway around Charlotte. And we believe this site is an increasingly valuable location due to its essentially traffic-free access to a key highway interchange located adjacent to the Charlotte Airport. So far, we are pleased with the tenant activity on the vacant space and believe we are close to an agreement for a tenant to take the balance of the space. Under the terms of the deal, if this lease gets executed, we would exceed our initial underwriting. We closed last week on a 140,000 square foot modern fully leased building in Lakeland, Florida. This acquisition grows our presence in Central Florida and is located along the important I-4 corridor that connects Tampa and Orlando. We remain very bullish on the demographic and economic trends in Central Florida and believe this building's location and size fit well with market demand. The existing leases for both tenants, the largest of which was executed eight years ago, were struck as fairly cheap, as is deals, with no tenant improvements funded by the landlord. As a result, the current tenants are paying below market rent. We expect there will be significant mark-to-market rent adjustments upon both tenants' lease expirations, which have a weighted average lease term of about two and a half years. Additionally, the tenant in more than 75 percent of the building is very sticky, given their large investment in the space and the property's mission-critical use for its customers. Lastly, we're very excited to enter the Nashville market with the forward purchase of two under-construction buildings totaling 184,000 square feet. Nashville fits squarely within our strategy of high demographic and economic growth markets with significant barriers to new development and that can serve as local, regional, and multi-market distribution needs. The development is located close to major UPS and FedEx facilities, and it is one of the few new infill facilities located in close proximity to downtown Nashville with excellent connectivity to the major regional interstates. The buildings, which we sourced off-market, are being developed on spec and are expected to be completed by year-end. We feel very good about the future opportunities to lease them, noting the very strong absorption and rent growth that the Nashville market has recently experienced. In all, these acquisitions will utilize $103 million of capital into what we believe are great buildings in great locations and in markets with strong long-term fundamentals. We also added one new project to our development pipeline with an agreement to purchase a 10.6 acre parcel of land in the Lehigh Valley that will support the development of a 90,000 square foot building. This land site, which was not widely marketed, is located close to the similarly sized Chapman's Road building we have under construction. While Chapman's remains about four months from completion, We have seen strong tenant interest and meaningful increases in market asking rents, giving us further confidence in the success of this new project, assuming we satisfactorily complete our due diligence and receive the necessary entitlements. We are very excited by the prospect of growing our presence in Lehigh Valley, which continues to be a high-performing logistics market. I think these acquisitions, along with our development pipeline, showcase our ability to invest and add value across the spectrum of acquisitions. raw land, forward purchases, value-add properties, and traditional core stabilized buildings. I'll keep my remarks on the balance of the development pipeline brief, but in terms of construction, as has been widely reported, there remains continued challenges with the availability of certain key construction inputs, notably steel bar joists where lead times are now up to 8 to 10 months versus 3 to 4 months during normal conditions. Pricing of certain other components also remain elevated. However, market rents have continued to increase and cap rates have compressed materially, which results in our estimated development yields remaining relatively stable and development margins increasing. The development pipeline table in the supplement is updated to reflect our best estimates of these impacts. In terms of specific projects, our bill to suit for Amazon and Charlotte remains on track to deliver by the end of the third quarter. We have a construction loan in place at a favorable interest rate for this project, and we began our initial drawdown subsequent to the end of the second quarter. The other projects we have under construction are the Chapman's Road project I mentioned earlier, and the 234,000 square foot, 67% pre-lease warehouse in Connecticut, which is expected to deliver by the end of the second quarter of 2022. We currently are waiting for a building permit for our 195,000 square foot, two building spec development in Orlando. formerly known as Jetport, but now called Landstar Logistics Center, which we hope to commence in the near future to take advantage of the strong demand in that market. I would note that it's been reported by brokers that a developer put a nearby land site under agreement in Orlando at a price 75% higher per buildable square foot than what we paid for our Landstar project, which we tied up just one year ago and closed on this past quarter. All in, our development pipeline, the recently closed acquisition in Lakeland, and the forward Nashville portfolio mentioned a moment ago, will add over 1.1 million square feet to our June 30th existing square footage. This will bring our portfolio to over 5.8 million square feet, which is a growth rate of nearly 40% from where we ended fiscal 2020. Switching to dispositions, we remain focused on our efforts to monetize our non-core assets. and are pleased to have $41 million in dispositions under agreement today. As can happen during due diligence, a couple of deals dropped off our disposition list. As an offset, we added the disposition of our Connecticut nursery farm, which is currently leased to a nursery operator, to our pipeline. This sale is expected to generate proceeds of $10.3 million by year end. Lastly, I wanted to mention that we have updated the corporate governance section of our website to include several new policies and initiatives we've implemented on the ESG front. We have a number of additional projects in the works, and we look forward to sharing our progress with you. With that, I'll turn it over to Anthony for the financial review.