LXP Industrial Trust

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the LXP Industrial Trust first quarter 2023 earnings call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, Again, press the star 1. Thank you. Heather Gentry, Investor Relations. You may begin your conference.

Thank you, Operator. Welcome to LXP Industrial Trust First Quarter 2023 Earnings Conference Call and Webcast. The earnings release was distributed this morning, and both the release and quarterly supplemental are available on our website in the Investor section and will be furnished to the SEC on a Form 8K. Certain statements made during this conference call regarding future events and expected results may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. LXP believes that these statements are based on reasonable assumptions. However, certain factors and risks, including those included in today's earnings press release and those described in reports that LXP files with the SEC from time to time, could cause LXB's actual results to differ materially from those expressed or implied by such statements. Except as required by law, LXB does not undertake a duty to update any forward-looking statements. In the Earnings Press Release and Quarterly Supplemental Disclosure Package, LXB has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure. Any references in these documents to adjusted company FFL Refer to adjusted company funds from operations available to all equity holders and unit holders on a fully diluted basis. Operating performance measures of an individual investment are not intended to be viewed as presenting a numerical measure of LXP's historical or future financial performance, financial position, or cash flow. On today's call, Will Eglin, Chairman and CEO, Beth Polaris, CFO, Brendan Melinek, CIO and Executive Vice President James Dudley will provide a recent business update and commentary on first quarter results. I will now turn the call over to Will.

Thanks Heather and good morning everyone. Our year is off to a good start with positive first quarter operating results and excellent year to date leasing outcomes underscored by significant rental increases and further progress stabilizing our development projects. In the quarter, we leased over 2 million square feet, raising our base and cash base rents approximately 45% and 29%, respectively. Notably, we achieved base and cash base rental increases of approximately 59% and 42%, respectively, when adjusted to exclude one fixed renewal. Average annual increases of 3% for these leases or 3.5% when adjusted for the fixed renewal, continue to highlight the upward trend of our escalators and improvement in our internal growth prospects. Our view of our mark-to-market opportunity remains favorable, and we look forward to a period of more active lease rollover for leases expiring in 2024 and beyond as the year progresses. Subsequent to quarter end, we had a great success leasing our recently completed 1.1 million square foot Columbus development project to an investment grade tenant. We achieved a stabilized cash development yield of 7.3%, excluding our development partner Promote, which was well in excess of our original guidance on yield. Our remaining development pipeline is in various stages of completion, with all projects expected to be completed this year. we are working diligently to stabilize the remaining 4.3 million square feet, which represents roughly 7% of our overall portfolio. And we now expect to achieve stabilized cash yields in the 6% to 6.5% range after Development Partner promotes. Moving to dispositions, we sold our remaining industrial asset in Detroit for $28 million during the quarter. As part of our overall business plan to commit capital to our target markets, we may exit certain non-core industrial markets over time, with our industrial assets in these markets being viewed as potential sources of liquidity. We are actively seeking to dispose of our remaining office assets and look forward to finishing this plan as soon as possible. Our fee-owned office portfolio of four assets, which we believe has an estimated value of approximately $75 million, currently generates approximately $12 million of annualized NOI. In addition, our Palo Alto office facility, which generates two cents per share of FFO, is subject to a ground lease that expires in December of this year with no renewal options. Moving to the balance sheet, net debt to adjusted EBITDA at quarter end was 6.3 times. Our net debt to adjusted EBITDA would be 6.1 times, including pro forma stabilization of the Phoenix facility leased in the quarter and the subsequently leased Columbus project I mentioned earlier. As we continue to stabilize developments, we expect EBITDA to improve and overall leverage to decline over time to be within a target range of five to six times net debt to adjusted EBITDA. On the ESG front, we continue to make important progress. In April, we were named a 2023 green lease leader with gold recognition by the Institute for Market Transformation and the U.S. Department of Energy's Better Buildings Alliance for our green lease practices and policies. We are pleased to receive this recognition and look forward to increasing our green lease square footage through existing and new leases. Finally, we'd like to express our appreciation to Richard Frary, who has served as our lead independent trustee since 2017 and is stepping down in May. He has provided significant support and insights through our portfolio transformation with a commitment to enhancing shareholder value. We look forward to welcoming Jamie Handwerker into this role following the annual meeting in May and benefiting from her valuable industry leadership and experience. With that, I'll turn the call over to Brendan to discuss our investments in more detail.