LXP Industrial Trust

Hello and welcome to LXP Industrial Trust second 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 one on your telephone keypad. I will now turn the conference over to Heather Gentry, IR. Please go ahead. Thank you, Operator.

Welcome to LXP Industrial Trust second 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 LXP's actual results to differ materially from those expressed or implied by such statements. Except as required by law, LXP does not undertake a duty to update any forward-looking statements. In the Earnings Press Release and Quarterly Supplemental Disclosure Package, LXP 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 LXC's historical or future financial performance, financial position, or cash flow. On today's call, Will Eglin, Chairman and CEO, Beth Bulleris, CFO, Brendan Mullenix, CIO, and Executive Vice President James Dudley will provide a recent business update and commentary on second quarter results. I will now turn the call over to Will.

Thanks, Heather. Good morning, everyone. We continue to make progress in all areas of our business during the second quarter with excellent leasing results in our development portfolio and strong same store industrial NOI growth of 5.8%. Leasing volume of 1.6 million square feet in our development portfolio included our 488,000 square foot facility in Phoenix, and 1.1 million square foot facility in Columbus. These leasing outcomes produced an estimated average cash yield of 7.5%, excluding partner promotes, resulting in yields well in excess of our original guidance. We have strong tenant interest that are remaining 3.8 million square feet of projects available for lease and expect to make more progress during the balance of the year. Total cost for these remaining projects is approximately $293 million, or 6% of our gross asset value, of which we have $45 million left to fund. Our development pipeline has been a valuable vehicle for adding single-tenant warehouse facilities to our portfolio, and since initiating our warehouse development program, we have leased seven industrial facilities. These positive results highlight our continued success in development leasing and our ability to deliver superior outcomes relative to the purchase market. Moving on to sales, we continue to anticipate that our Philadelphia and New Jersey office assets will be sold by year-end. Buyer due diligence is well underway at our 1701 Market Street property in Philadelphia, and our Whippany, New Jersey asset is under contract, subject to standard closing conditions. The two remaining facilities leased to Wells Fargo in South Carolina are to be marketed for sale later this year. Our Palo Alto office facility, which generates two cents of FFO per share, is subject to a ground lease that expires in December 2023. And as a result, this asset will no longer produce FFO after this year. Currently, we aren't expecting any additional sales activity this year, but continue to view certain industrial assets in non-target markets as potential sources of incremental liquidity. Turning to our balance sheet, net debt to adjusted EBITDA at quarter end was 6.3 times, and our $600 million revolving credit facility was fully available. Our net debt to adjusted EBITDA would be six times, including pro forma stabilization of our leased development projects. Additional EBITDA will be realized as we continue to stabilize our development pipeline and overall leverage is expected to decline as NOI comes online. We are targeting a leverage range of five to six times net debt to adjusted EBITDA. With that, I'll turn the call over to Brendan to discuss our investments in more detail.