Plymouth Industrial REIT, Inc.

Good morning and welcome to the Plymouth Industrial REIT first quarter 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Tripp Sullivan of Investor Relations. Please go ahead.

Thank you. Good morning. Welcome to the Plymouth Industrial Reit conference call to review the company's results for the first quarter of 2023. On the call today will be Jeff Witherell, Chairman and Chief Executive Officer, Penn White, President and Chief Investment Officer, Anthony Saladino, Executive Vice President and Chief Financial Officer, Jim Conley, 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 May 11, 2023. 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, May 4th, 2023, 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 day 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 disclosed in 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. We're only a few weeks removed from the Q4 call, and I would like to note that the first quarter was right in line with or slightly better than our outlook for the year. That's exactly what we have this quarter, so we will keep our prepared remarks relatively brief this morning. Same store NOI growth is expected to be the main driver of our organic growth this year, and we reported a 9.1% increase on a cash basis with occupancy in the same store pool at 99.1%. That's a bit above the full year rate we guided to, and Anthony will walk you through that later. We believe the strong same-store NOI growth we're producing puts us near the top of the sector, and we're pleased with how the portfolio is performing. Leasing is a top priority, both within the existing portfolio and in the development program, and we are in great shape with our 2023 expirations and have a strong start on 2024 expirations. Jim will highlight a few stats in a moment, but I'd like to call out the 15.9% increase on a cash basis for leases that commence during the quarter and the 20.5% increase on leases commencing over the next three quarters. That gets us to a full year total of a 19.3% increase. Known all along that we'd have a heavy mixture of contractual rent renewals this year, but we're still hitting the 18 to 20% mark to market with the big increases we're getting on new leases. With our quarterly business update in early April, we shared the current status of our development program. We've brought three of the Phase 1 development projects online with two of them fully leased, a project in Atlanta and one in Portland, Maine, and the other in Cincinnati undergoing active leasing. We have one more project in Atlanta that is expected to be completed later this quarter, and we are actively leasing it. We also expanded Phase 1 to include two smaller projects in Jacksonville. These are already fully leased, and are expected to be completed in the third and fourth quarter. Current development program represents a total investment of $61 million, and we're expecting initial returns on this investment in the range of 7% to 9%. This program has been a good way to unlock the value in land we already owned, and we expect to selectively pursue additional projects if the returns meet our threshold and if we have a clear line of sight on pre-leasing. Golden Triangle continues to be the region where we're seeing a large number of announcements for reshoring and nearshoring initiatives. With over 90% of our portfolio located in this region, we believe we will continue to benefit from the favorable supply and demand dynamics projected to occur over the next 5 to 10 years. One point worth noting is that we are getting these strong rent increases on an absolute and net effective basis, combined with the higher same-store NOI on a much lower cost basis. The other major initiative we've outlined for this year is to continue improving our capital structure. Our net debt plus preferred metric has declined again this quarter, making this the fourth consecutive quarter of reductions. As Anthony will describe later, we expect further delevering to occur as the developments come online, and we will look for other opportunities to improve our capital structure when they make sense. Jim, why don't you provide some color on the leasing activity?