Plymouth Industrial REIT, Inc.

Good day and welcome to the Plymouth Industrial REIT second quarter 2023 earnings conference call. Today, all participants will be in a listen-only mode. Should you need any assistance during today's call, please signal for 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 touchtone phone. If you would like to withdraw your question at any time, please press star then two. Please note that today's event is being recorded. At this time, I would like to turn the conference over to Trip Sullivan of Investor Relations. Please go ahead, sir.

Thank you. Good morning. Welcome to the Plymouth Industrial Reit conference call to review the company's results for the second quarter of 2023. On the call today will be Jeff Witherall, Chairman and Chief Executive Officer, Anthony Saladino, Executive Vice President and Chief Financial Officer, Jim Connolly, Executive Vice President of Asset Management, and Ann 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 files with the SEC. A replay of this call will be available shortly after the conclusion of the call through August 10, 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, August 3, 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 some 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 disclosed in the company's filings with the SEC. We also will 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 Witherow. Please go ahead.

Thanks, Tripp. Good morning, everyone, and thank you for joining us today. We are more than halfway through the year, and our team continues to execute across the objectives we outlined for 2023. Fundamentals continue to be strong with positive absorption, better than expected leasing volumes and rent increases, along with market rent growth. Achieving our objectives through the balance of the year will position us for even better growth in 2024. Let's turn to growth first. Our organic growth is right on track with a 6% increase in cash same-store NOI this quarter and a 7.5% increase through the first half of the year. Occupancy in the same-store pool is still around 99%, and our portfolio continues to be among the top performers in the sector. Leasing results demonstrate the attention we are providing the portfolio, as well as the strong fundamentals in our specific markets. We have addressed 88% of our 2023 expirations and 24% of our 2024 expirations. Both are at a pace in rent increase ahead of where we were this time a year ago. We saw a 19.3% increase in rental rates on a cash basis for the quarter, and through July 31st, we have achieved a 23.1% increase on leases commencing in the second half of the year. That's in line with our commentary last quarter that we might be trending ahead of the 18% to 20% portfolio mark-to-market we have previously estimated. In our development program, we have three more projects left to deliver by year-end. The two buildings in Jacksonville are fully leased with deliveries in Q3 and Q4, and our second Atlanta project is coming online in Q3. We still have work to do on leasing up this Atlanta building and the one in Cincinnati that was delivered in Q2. Both of these properties are well located, and I'm confident we'll get these leased up within underwriting. Across the entire $61 million that we have in our development program, we're expecting initial returns in the range of 79%. Based on the success of this program, we will continue to explore additional opportunities if the returns meet our threshold and we have a clear line of sight on pre-leasing. other major initiative is to continue improving our capital structure. We have now lowered our net debt plus preferred metric for five straight quarters and on a path to get to 7x by year end and further delevering in 2024. While leasing up our new developments are part of this equation, another big piece is the elimination of our 7.5% Series A preferred stock. We announced last night that we will redeem the $49 million that's still outstanding. Anthony will get into more of the details later, but I want to highlight two of the main sources of capital for this redemption. First, we activated the ATM program during the quarter and for part of July and executed at prices that, in combination with sale proceeds from the sale of a property anticipated to occur within the next 60 days, will allow us to eliminate the secured debt on that property and redeploy the proceeds toward the Series A redemption on an accretive basis. I've talked about this before, and it bears repeating now. We have a handful of properties that we would sell for real estate reasons, meaning it makes more sense to be owned by a user and or it's a property where we might have little to no scale in that market as opposed to a strategy of capital recycling. This potential disposition fits that description perfectly. I want to thank a couple of people who have made big contributions to Plymouth over the years. First, I'd like to thank Martin Barber, who many of you know from his decades of experience in the REIT sector. He retired from our board, effective with June's annual meeting, after many years of service to Plymouth and its shareholders. Second, I'd like to recognize Penn White, who co-founded Plymouth with me and retired from his positions as president and CIO last month. He'll continue to serve on the board of directors, as well as advise the company on acquisitions and strategy. We're fortunate to have benefited over the years from Penn's contributions, as well as the investment team he helped put in place. We have a deep, experienced team at Plymouth, and that gave us the luxury of not having to backfill those roles. Before I turn it over to Jim, I'd like to highlight that last month we published our first ESG report. We are proud of the effort our team went through to document all of the different activities, initiatives, and investments we've made throughout our company and our portfolio. You can find it on the dedicated ESG page on our website. Jim, why don't you provide some color on the leasing activity? Thanks, Jeff. Good morning.