LXP Industrial Trust

question again press star one thank you I will now turn the conference over to Heather Gentry investor relations please go ahead thank you operator welcome to LXP Industrial Trust second quarter 2024 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 8 . 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 LXP's historical or future financial performance financial positions, or cash flows. On today's call, Will Eglin, Chairman and CEO, Seth Polaris, 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, and good morning, everyone. We had excellent second quarter results highlighted by robust leasing activity with continued success in raising rents and strong same-store NOI growth of 5%. Based on the leasing outcomes we've achieved to date, we're raising same-store NOI growth expectations to a new range of 4.5% to 5.5%. We're also pleased to report we've successfully completed our portfolio transformation with the sale of our two remaining consolidated office assets during the quarter, positioning LXP as a pure-play industrial REIT. Leasing activity picked up considerably in the second quarter, with 2.7 million square feet leased at base and cash-based rental increases of 44.5% and 44%, respectively, excluding tenant improvement reimbursements on one expiring lease. We continue to achieve strong mark-to-market outcomes on expiring leases, which speaks to the high quality of our portfolio, 88% of which are Class A facilities. Market conditions support annual rental increases in the 3% to 4% range, and on average, we obtained rental escalations of 3.6% on leases signed in the second quarter. Post-quarter end, we leased an additional 96,000 square feet at attractive base and cash-based rent spreads of 28% and 35%, respectively. Strong leasing activity continues, and we are in advanced negotiations on an additional 1.7 million square feet. Moving to the balance sheet, we ended the quarter at 6.2 times net debt to adjusted EBITDA. We remain focused on moving towards the low end of our target leverage range of five to six times and are confident we can reach this target through a combination of leasing vacancy and raising rents. In addition, we are exploring several asset sales in non-target markets that could accelerate leverage reduction or create liquidity for redeployment into new investments. Looking ahead, our focus is principally on taking advantage of the internal growth opportunities in our portfolio. We estimate that our current rents are approximately 24% below market through 2029, and we have a total of 4.1 million square feet available for lease. We also continue to explore external growth opportunities, including build-to-sue projects to the extent they fit within our target market strategy. Finally, we announced earlier this year that Nathan Brunner will be joining LXP as Executive Vice President of Capital Markets in September. He will transition into the CFO role effective March 1st, 2025, when Beth shifts to an advisory role at LXP. Nathan's background speaks for itself with many successful years in investment banking, particularly in the industrial and net lease sectors, and he has deep corporate finance and M&A experience. We're very excited to have him join us and look forward to his contributions. With that, I'll turn the call over to Brendan to discuss investment activity in more detail.

Thanks, Will. During the quarter, we invested $35 million in our spec and build-to-sue projects. We have approximately $29 million left to fund in our remaining spec development projects, excluding any partner promotes and $36 million in our build to suit project. Turning to our development portfolio, we've leased approximately 60% of the square footage we've developed since adding this important growth avenue in 2019. On the remaining 3.7 million square feet left to lease, we continue to see activity with 1.3 million square feet currently in final negotiations. Our Build-A-Soup project in Greenville Spartanburg is well underway, and we expect that project to complete near the end of the year. We continue to explore other opportunities with the best prospects currently at our land bank in Phoenix. To Will's earlier point, we are valuing several non-core market dispositions as a source of liquidity, particularly as prices for these types of assets has become more attractive. Potential proceeds from these asset sales could be used for deleveraging or build-to-suit opportunities, depending on what is the most creative at the time. With that, I'll turn the call over to James to discuss leasing.