Plymouth Industrial REIT, Inc.

Good morning and welcome to the Plymouth Industrial REIT second quarter 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Trip Sullivan of SCR Partners. Please go ahead.

Thank you. Good morning. Welcome to the Plymouth Industrial REIT conference call to review the company's results for the second quarter of 2021. On the call today will be Jeff Witherell, Chairman and Chief Executive Officer. Penn White, President and Chief Investment Officer. Dan Wright, Executive Vice President and Chief Financial Officer. Jim Connolly, Executive Vice President of Asset Management, and Anne Hayward, General Counsel. Our results were released this morning in our earnings press release, which can be found on the investor relations section of our website, along with our Form 10-Q and supplemental filed with the SEC. A replay of this call will be available shortly after the conclusion of the call through August 13, 2021. The numbers to access the replay are provided in the earnings press release. For those who listened to the replay of this call, we remind you that the remarks made herein are as of today, August 6, 2021, and will not be updated subsequent to this call. During this call, certain comments and statements we make may be deemed forward-looking statements within the meaning prescribed by the securities laws, including statements related to the future performance of our portfolio, our pipeline of potential acquisitions and other investments, future dividends, and financing activities. All forward-looking statements represent Plymouth's judgment as of the date of this conference call and are subject to risk and uncertainties that can cause actual results to differ materially from our current expectations. Investors are urged to carefully review various disclosures made by the company, including the risk and other information closing the company's filings with the SEC. We will also discuss certain non-GAAP measures, including but not limited to core FFO, AFFO, and adjusted EBITDA. Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures are included in our filings with the SEC. I'll now turn the call over to Jeff Witherall. Please go ahead.

Thanks, Tripp. Good morning, everyone, and thank you for joining us today. Our strong performance in the second quarter is a combination of having a great team and a relentless focus on operations. Our leasing and asset management activity combined with strong rental rate increases have led to continued growth within our portfolio. We have expanded our scale in our targeted markets, have an improving balance sheet, and have a robust earnings outlook. We will discuss some details on our progress in each of these areas this morning. Let's start with our portfolio stats at quarter end. We noted on our last call that this quarter would look a lot like Q1, and that was definitely the case. Occupancy was 96.2%. Cash releasing spreads were 7%, bringing us to 9% through the first half of the year. Collections were at 99% 4 FFO and AFFO per share are in line with our forecast. We continue to trust our processes and believe our heritage as real estate operators, combined with our longer-term approach to value creation, will continue to reward our shareholders. Acquisitions will continue to be our primary method of inorganic growth. And Penn will discuss our buildings acquired to date, as well as the increase in our acquisition targets for the year. I want to spend a few moments on development, as it is a natural extension of our skills across the team and can complement that acquisition's growth. We are deploying our capital in a measured and disciplined fashion to unlock the developable GLA within our existing portfolio. Our updated disclosure on page 14 of our supplemental will help track our progress on this front and within the markets where we are pursuing these opportunities. I noted last quarter that we've begun redevelopment at our 1.1 million square foot Fisher Park building in Cincinnati. Having already reconfigured tenant layouts to increase marketable space by 40,000 square feet and commence construction on an additional 58,000 square feet, we've now expanded that redevelopment to a new total of 150,000 square feet that should generate a projected cash yield of 14% on our $4.1 million investment. We aren't using any of the 30 additional acres yet at this property. We are creating this 150,000 square feet of new space by installing floors over the open crane pits left from this building's legacy as GM's iconic manufacturing facility. As noted on page five of the supplemental, we continue to make progress on our 70,000 square foot ground up development in Portland, Maine. We broke ground during the second quarter and we were expecting to complete shell construction in December 2021 at a cost of approximately $7.2 million. We continue to be in discussions with potential tenants to take this space. Our targeted returns for this development are in the high single digits. Moving to Atlanta, we expect to break ground on a new 240,000 square foot industrial building during the fourth quarter. This building will be constructed adjacent to our existing building that is currently 100% leased. And based on existing absorption trends and rent growth within this sub market, we are confident there will be strong demand. The cost is anticipated to be between $12.8 and $13.2 million with a targeted return again in the high single digits. In Jacksonville, it's another market where we have continued to actively explore value creation opportunities and have identified 180,000 square feet for potential development within one of our existing business parks. With the infrastructure already in place in this park, we should be able to accelerate our plans there if permitting proceeds as planned. We will have a better update for you on our third quarter call in terms of timing and development costs. One last point to make on Jacksonville. This is an opportunity that has arisen due to the initiative taken in the local knowledge of our team on the ground there. In addition to the Jacksonville office, we have intentionally supported our increasing scale in markets such as Columbus and Memphis with regional offices, the latter of which is now fully staffed. A local presence is inappropriate for every market where we have substantial scale, but we do see these as a competitive advantage for us in terms of asset management, property management, leasing, and deal sourcing. We have made some of our greatest strides on the balance sheet. As Dan will describe later, we have continued to bring down our cost of capital with expanded borrowing capacity on an unsecured basis and successful execution of our ATM program to match fund our acquisition activity. We have strong support from our banking group and have been able to expand that support with a larger syndicate and create options to ladder our upcoming debt maturities. Our top priorities for the balance sheet are to ensure that our dividend is well covered, our leverage profile continues to improve, and that we have access to multiple sources of capital. The dividend remains well covered with an annualized payout ratio of less than 50% on core FFO and 58% on an AFFO based on our full year midpoint. While leverage ticked down this quarter due to the timing of the ATM activity, the higher net proceeds we are receiving from this program has enabled us to substantially increase our full-year acquisitions target while affirming our full-year guidance and our target of approximately seven times net debt to adjusted EBITDA by year end. With another quarter in the books, we are focused on maintaining our leasing momentum, executing on our acquisition and development pipeline, and efficient property operations. The industrial fundamentals are strong in our markets and elsewhere. Now is the time to own industrial buildings from the first mile to the last mile, and we are capitalizing on the opportunities that can provide the most embedded growth and extend a platform that we believe is incredibly difficult to replicate in our markets. Ken, why don't you walk us through our acquisition activities?