BOSTON–(BUSINESS WIRE)–Plymouth Industrial REIT, Inc. (NYSE: PLYM) (the “Company”) today announced its consolidated financial results for the second quarter ended June 30, 2022 and other recent developments.
Second Quarter and Subsequent Highlights
- Reported results for the second quarter of 2022 reflect a net loss attributable to common stockholders of $(0.17) per weighted average common share; net operating income (“NOI”) of $31.8 million; Core Funds from Operations attributable to common stockholders and unit holders (“Core FFO”) of $0.47 per weighted average common share and units; and Adjusted FFO (“AFFO”) of $0.41 per weighted average common share and units.
- Same store NOI (“SS NOI”) increased 9.4% on a GAAP basis excluding early termination income for the second quarter compared with the same period in 2021; increased 15.8% on a cash basis excluding early termination income.
- During the second quarter and to date in the third quarter of 2022, acquired six industrial buildings totaling approximately 662,000 square feet for $65.4 million, a weighted average price of $102.8 per square foot and a weighted average initial projected yield of 5.9%.
- Commenced leases during the second quarter totaling 1,483,651 square feet with a 22.2% increase in rental rates on a cash basis from leases greater than six months; through the first half of 2022, a total of 2,792,936 square feet commenced with a 19.5% increase in rental rates on a cash basis from leases greater than six months. Through July 2022, approximately 92.0% of 2022 lease expirations have already been addressed in addition to 664,425 square feet of vacancy leased to new tenants.
- Recast existing unsecured credit facility to include five new lenders, increasing its total borrowing capacity up to $800 million from $500 million and providing additional borrowing capacity to fund future growth.
- Declared a regular quarterly cash dividend for the second quarter of 2022 of $0.22 for the common stock and paid a regular quarterly cash dividend of $0.46875 per share for the 7.50% Series A Cumulative Redeemable Preferred Stock (“the Preferred Stock”).
- Affirmed the previously issued full year 2022 guidance ranges for Core FFO per weighted average common share and units and updated net loss per weighted average common share and units as well as a number of the accompanying guidance assumptions.
Jeff Witherell, Chairman and Chief Executive Officer of Plymouth Industrial REIT, noted, “The strong leasing results throughout the first half of the year generated much better than anticipated same store NOI growth, which combined with the contributions from previous acquisitions, led to another quarter of double-digit Core FFO and AFFO increases. We expect the embedded rent growth in our portfolio to continue to fuel our organic growth for the balance of the year. While our acquisition pipeline remains very robust, we have elected to allocate capital to our development program until some semblance of stability is restored in the transaction market as well as the capital markets. With 92% of our 2022 lease expirations already addressed and good progress on our development pre-leasing, we have been able to offset the impact from higher interest rates as well as focus on driving rental spreads in 2023 and bringing the new developments online late this year and in early 2023.”
Financial Results for the Second Quarter of 2022
Net loss attributable to common stockholders for the quarter ended June 30, 2022 was $6.6 million, or $(0.17) per weighted average common share outstanding, compared with net loss attributable to common stockholders of $7.4 million, or $(0.25) per weighted average common share, for the same period in 2021. The net loss decreased year-over-year primarily due to an increase in net operating income, offset by increases in interest and depreciation expense associated with acquisition activity. Weighted average common shares outstanding for the second quarters ended June 30, 2022 and 2021 were 39.1 million and 29.4 million, respectively. Plymouth has a total of 40.1 million common shares outstanding as of August 2, 2022, including the previously announced conversion of 2.2 million shares of the Series B Convertible Preferred Stock.
Consolidated total revenues for the quarter ended June 30, 2022 were $45.6 million, compared with $32.9 million for the same period in 2021.
NOI for the quarter ended June 30, 2022 was $31.8 million compared with $21.8 million for the same period in 2021. Same store NOI (“SS NOI”) excluding early termination income – Cash basis for the quarter ended June 30, 2022 was $21.0 million compared with $18.1 million for the same period in 2021, an increase of 15.8%. SS NOI for the second quarter was positively impacted by rent escalations, renewal and new leasing spreads, and increased operating expense recoveries, partially offset by an increase in operating expenses. SS NOI excluding early termination income – GAAP basis for the quarter ended June 30, 2022 was $21.6 million compared with $19.8 million for the same period in 2021, an increase of 9.4%.
EBITDAre for the quarter ended June 30, 2022 was $27.7 million compared with $18.4 million for the same period in 2021.
Core FFO for the quarter ended June 30, 2022 was $18.6 million compared with $12.3 million for the same period in 2021, primarily as a result of the growth in same-store NOI and the contribution from acquisitions. The Company reported Core FFO for the quarter ended June 30, 2022 of $0.47 per weighted average common share and unit compared with $0.41 per weighted average common share and unit for the same period in 2021, representing a 14.6% increase. Weighted average common shares and units outstanding for the second quarters ended June 30, 2022, and 2021 were 39.9 million and 30.2 million, respectively. Plymouth has a total of 40.6 million common shares and units outstanding as of August 2, 2022, including the conversion of 2.2 million shares of the Series B Convertible Preferred Stock.
AFFO for the quarter ended June 30, 2022 was $16.5 million, or $0.41 per weighted average common share and unit, compared with $9.8 million, or $0.32 per weighted average common share and unit, for the same period in 2021, representing a 28.1% increase. The current period results reflected the change in Core FFO offset by increased commissions associated with leasing activity.
See “Non-GAAP Financial Measures” for complete definitions of NOI, EBITDAre, Core FFO and AFFO and the financial tables accompanying this press release for reconciliations of net income to NOI, EBITDAre, Core FFO and AFFO.
Capital Markets Activity and Liquidity
On April 29, 2022, the Company converted 50% of the 4,411,764 shares of its Series B Preferred Stock into common stock on a one-to-one basis.
On May 2, 2022, the Company recast its unsecured credit facility to increase the total borrowing capacity to $800 million, comprised of a $150 million increase in its unsecured line of credit to a total of $350 million and a new five-year $150 million term loan that matures in 2027 for a total of $450 million in unsecured term loans.
During the second quarter of 2022, the Company issued approximately 927,900 common shares through its ATM program at an average price of $26.85 per share, raising approximately $24.4 million in net proceeds.
On July 13, 2022, the Company amended its interest rate swap agreement with JPMorgan Chase Bank, N.A. for a notional amount of $100 million to transition the interest rate swap agreement from the USD-LIBOR floating rate at a fixed rate of 1.591% to USD-SOFR CME Term and adjusting the fixed rate to 1.504%. The amendment is effective July 1, 2022 and terminates August 8, 2026. The Company also amended its separate interest rate swap agreement with Capital One, N.A. for a notional amount of $200 million to transition the interest rate swap agreement from the USD-LIBOR floating rate at a fixed rate of 1.609% to USD-SOFR CME Term and adjusting the fixed rate to 1.5273%. The amendment is effective July 1, 2022 and terminates February 11, 2027.
As of August 2, 2022, the Company’s current cash balance was approximately $15.9 million, excluding operating expense escrows of approximately $7.2 million, and it has approximately $282.5 million of capacity under the existing unsecured line of credit.
Investment Activity
As of June 30, 2022, the Company had real estate investments comprised of 206 industrial buildings totaling 33.6 million square feet. During the second quarter, the Company acquired 5 industrial buildings in Charlotte, Chicago, Cincinnati, Cleveland, and St. Louis totaling 464,351 square feet for a total of $48.9 million, a weighted average price of $109 per square foot, and a weighted average initial yield of 5.8%.
Subsequent to quarter end, the Company acquired one industrial building in Cleveland, Ohio totaling 197,518 square feet for $16.5 million, a weighted average price of $84 per square foot, and a weighted average initial yield projected yield of 6.3%.
Plymouth currently has two buildings under construction in Atlanta, Georgia of 237,000 square feet and 180,000 square feet and another building in Cincinnati, Ohio of 156,000 square feet for a total investment of approximately $39.6 million with estimated completions in the second half of 2022. Additionally, a 70,000-square-foot industrial building in Portland, Maine, completed during December 2021 at an investment of $9.3 million, is 50% leased and is being fit-up for occupancy starting in the third quarter of 2022. The Company has an additional 367,000 square feet of building area in various stages of planning. Plymouth has an additional 1.3 million square feet that could potentially be developed on land it already owns.
Leasing Activity
Leases that commenced during the second quarter ended June 30, 2022 totaled an aggregate of 1,483,651 square feet, all of which are associated with leases with terms of at least six months. These leases included 463,630 square feet of renewal leases and 1,020,021 square feet of new leases. The Company will experience a 22.2% increase in rental rates on a cash basis from these leases. As of June 30, 2022, the Company’s total portfolio was 97.3% occupied.
Plymouth has signed an additional 4,203,788 square feet of leases that will commence during the balance of 2022 with an expected 15.4% increase in rental rates on a cash basis from these leases. Including all first half 2022 leasing activity, the Company has signed a total of 7,043,782 square feet in leases commencing in 2022 and will experience a 17.1% increase in rental rates on a cash basis from these leases.
Quarterly Distributions to Stockholders
On June 16, 2022, the Board of Directors declared a regular quarterly common stock dividend of $0.22 per share for the second quarter of 2022. The dividend was paid on July 29, 2022 to stockholders of record on June 30, 2022.
On June 1, 2022, the Company announced the Board of Directors declared a regular quarterly cash dividend of $0.46875 per share for the Preferred Stock for the second quarter of 2022. The dividend was paid on June 30, 2022 to stockholders of record on June 15, 2022.
Guidance for 2022
The Company affirmed its previously issued full year 2022 guidance ranges for Core FFO per weighted average common share and units and updated net loss per weighted average common share and units as well as a number of the accompanying guidance assumptions:
|
(Dollars, shares and units in thousands) |
|
Full Year 2022 Range1 |
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|
|
|
Low |
|
High |
||||
|
Core FFO attributable to common stockholders and unit holder per share |
|
$ |
1.80 |
|
|
$ |
1.85 |
|
|
Same Store Portfolio NOI growth – cash basis2 |
|
|
7.50% |
|
|
|
8.00% |
|
|
Average Same Store Portfolio occupancy – full year |
|
|
98.0% |
|
|
|
98.5% |
|
|
General and administrative expenses3 |
|
$ |
16,000 |
|
|
$ |
15,650 |
|
|
Interest expense, net |
|
$ |
32,600 |
|
|
$ |
32,300 |
|
|
Weighted average common shares and units outstanding4 |
|
|
39,550 |
|
|
|
39,550 |
|
|
Reconciliation of net loss attributable to common stockholders and unit holders per share to Core FFO guidance: |
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|
|
|
Full Year 2022 Range |
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|
|
|
Low |
|
High |
||||
|
Net loss |
|
$ |
(0.58) |
|
|
$ |
(0.53) |
|
|
Add: Real estate depreciation & amortization |
|
2.49 |
|
|
2.49 |
|
||
|
Add: Loss on extinguishment of debt |
|
0.06 |
|
|
0.06 |
|
||
|
Add: Acquisition expenses |
|
0.01 |
|
|
0.01 |
|
||
|
Less: Change in fair value of warrants |
|
(0.04) |
|
|
(0.04) |
|
||
|
Less: Preferred stock dividends |
|
(0.14) |
|
|
(0.14) |
|
||
|
Core FFO |
|
$ |
1.80 |
|
|
$ |
1.85 |
|
|
|
|
|
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|
1) |
Our 2022 guidance refers to the Company’s in-place portfolio as of August 2, 2022. Our 2022 guidance does not include prospective acquisitions, dispositions, or capitalization activities that have not closed. |
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|
2) |
The Same Store Portfolio consists of 121 buildings aggregating 21,961,888 rentable square feet. The Same Store projected performance reflects an annual NOI on a cash basis, excluding termination income. |
|
|
3) |
Includes non-cash stock compensation of $2 million for 2022. |
|
|
4) |
The weighted average common shares and units outstanding includes 2,205,882 shares of the Company’s Preferred stock – Series B Convertible that was converted to common stock on a one-to-one basis. As of August 2, 2022, the Company has 40,617,860 common shares and units outstanding. |
About Plymouth
Plymouth Industrial REIT, Inc. (NYSE: PLYM) is a real estate investment trust focused on the acquisition, ownership and management of single and multi-tenant industrial properties, including distribution centers, warehouses, light industrial and small bay industrial properties, located in primary and secondary markets within the main industrial, distribution and logistics corridors of the United States.
