LXP Industrial Trust

speaker's remarks, there will be a question and answer session. If you'd 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, press star one again. Thank you. I would now like to turn the call over to Heather Gentry, IR. Please go ahead, Heather.

Thank you, Operator. Welcome to LXP Industrial Trust's fourth 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-K. 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, LXC does not undertake a duty to update any forward-looking statements. In the Earnings Press Release and Quarterly Supplemental Disclosure Package, LXC has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure. Any references in these documents to adjusted company FFO refer to adjusted company funds from operations available to all equity 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 flows. 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 fourth quarter results. I will now turn the call over to Will.

Thanks, Heather. Good morning, everyone. Our fourth quarter results were highlighted by continued favorable leasing outcomes and solid same-store NOI growth. Leasing volume in the quarter of nearly 1 million square feet produced exceptionally strong base and cash-based rental increases of approximately 66% and 43%, respectively, excluding a fixed-rate renewal. Our fourth quarter performance capped off a great year of accomplishment in our business. On the investment side, we sold our remaining consolidated office assets, opportunistically divested of four industrial assets, and sold our ground lease property in Phoenix, resulting in considerable value creation. We redeployed most of the proceeds into a build-to-suit and four Class A properties in our Sunbelt markets at attractive pricing. Moving to leasing, we completed 4.5 million square feet of volume and continued to post exceptional mark-to-market outcomes, increasing base and cash base rents approximately 46% and 40% respectively, excluding TI amortization in one prior lease and one fixed-rate renewal. Additionally, our average annual escalators continued to trend higher, reaching 2.8% at year-end and we achieved strong same-store NOI growth of 5% for the year. These results demonstrate the strength of our leasing team and the value of owning high-quality assets in our target market. On the balance sheet front, in the third quarter, we capitalized on a favorable market window and executed forward interest rate swap agreements on $333 million of floating rate debt. These transactions, combined with the repayment of $50 million of floating rate term loan debt after quarter end, effectively locked in fixed rates on 97% of our debt through year end 2026. Further, we reduced leverage to 5.9 times net debt to adjusted EBITDA at year end, down from 6.1 times at the end of the third quarter. We are focused on reducing leverage over time by growing EBITDA through the lease up of vacant assets, marking rents to market, and increasing rents with annual escalators. Regarding big box development leasing, in early December, we disclosed that our negotiations with a full building user did not result in a lease at our 1.1 million square foot facility in Ocala, Florida. While this area of our business was slow in 2024, and an interest seems to have picked up recently, and we believe some of the uncertainty around space use decisions may be receding. We currently have activity at all three of our large vacancies for both full and partial users. As industrial fundamentals begin to show signs of improvement, our 2025 outlook remains cautiously optimistic. The markets we operate in, primarily the Sun Belt and Lower Midwest, have experienced more resilient industrial fundamentals relative to select coastal markets. We are also encouraged that U.S. manufacturing activity expanded in January after 26 consecutive months of contraction. While we are still operating in an uncertain environment, our below-market rents and predominantly Class A portfolio characteristics are positive factors that we expect will continue to enable us to drive strong mark-to-market rental increases in a market environment characterized by flight to quality. Finally, this morning we announced full year 2025 adjusted company FFO guidance in the range of 61 cents to 65 cents per diluted common share. This guidance, among other factors, is reflective of the disproportionate impact big box leasing has on funds from operation. The low end of this guidance assumes we do not lease any of the big boxes in 2025. and the high end represents all three big box leases executed in the second half of the year. Resolving remaining vacancies is a key operational objective for us that will add considerable earnings growth. The building blocks to sustained FFO growth remain intact, including the lease up of 3.7 million square feet, 2.8% average annual rental escalations, mark-to-market of in-place rents, and a core portfolio positioned in markets that stand to benefit from long-term demographic trends, advanced manufacturing investment, business-friendly regulatory environments, and logistics infrastructure. Before I turn the call over to Brendan, I'd like to extend our heartfelt thanks to Beth, who has made immeasurable contributions to our company's success during her tenure as our Chief Financial Officer and in other capacities since joining LXB in 2007. As previously announced, Nathan Brunner, who is currently our Executive Vice President of Capital Markets, will assume the CFO role on March 1st of this year. Nathan has already proven himself as a tremendous addition to our team, and we are confident that he will hit the ground running in his new role. With that, Brendan will now discuss investment activity in more detail.