INDUS Realty Trust, Inc. (Nasdaq: INDT) (“INDUS” or the
“Company”) today reported financial results for the three
months ended November 30, 2020 (the “2020 fourth quarter”) and the
twelve months ended November 30, 2020 (“fiscal 2020”).
2020 Fourth Quarter & Recent
Highlights
- Net Loss of ($11.1) million and
($12.7) million for the 2020 fourth quarter and fiscal 2020,
respectively, an increase of 328% in net loss compared to the three
months ended November 30, 2019 (the “2019 fourth quarter”) and a
decrease of 447% from net income during the twelve months ended
November 30, 2019 (“fiscal 2019”)
- Net Operating Income (“NOI”)* of
$7.1 million and $26.9 million for the 2020 fourth quarter and
fiscal 2020, respectively (respective increases of 12.6% and 11.1%
over the 2019 fourth quarter and fiscal 2019)
- Cash NOI of Industrial/Logistics
Properties* of $5.5 million and $21.6 million for the 2020 fourth
quarter and fiscal 2020, respectively (respective increases of 5.1%
and 9.3% over the 2019 fourth quarter and fiscal 2019)
- Core FFO* of $2.7 million and $11.0
million for the 2020 fourth quarter and fiscal 2020, respectively
(respective increases of 6.0% and 6.3% over the 2019 fourth quarter
and fiscal 2019)
- Adjusted EBITDAre* of $5.0 million
and $19.3 million for the 2020 fourth quarter and fiscal 2020,
respectively (respective increases of 10.4% and 10.1% over the 2019
fourth quarter and fiscal 2019)
- Stabilized in-service industrial
portfolio1 was 95.4% leased; total industrial portfolio was 94.3%
leased as of November 30, 2020
- Completed five lease renewals and
one new lease of industrial/logistics properties2 during the 2020
fourth quarter with weighted average rent growth on a straight-line
basis of 13.3% and weighted average cash rent growth of 0.5%3
- Continued construction on an approximately 103,000 SF
industrial/logistics building in the Lehigh Valley
- Subsequent to fiscal 2020 year end, under a preliminary
agreement, commenced the re-design of the Charlotte Land (as
defined below) to accommodate the build-to-suit of a last-mile
industrial/logistics facility for a leading e-commerce company
- Completed the disposition of an approximately 40,000 square
foot vacant office/flex building at 55 Griffin Road South for $1.4
million in gross proceeds
- Subsequent to the end of the 2020
fourth quarter, entered into an agreement to sell approximately 91
acres of undeveloped land in Southwick, MA for total proceeds of
$5.25 million
- Completed a corporate re-branding,
reincorporated from Delaware to Maryland, adopted a calendar fiscal
year end beginning January 1, 2021 and intend to elect to be taxed
as a real estate investment trust (“REIT”) for the fiscal year
ending December 31, 2021
*See Note Regarding
Non-GAAP Measures below.
Results of OperationsINDUS
reported total rental revenue of $9.7 million and $37.4 million for
the 2020 fourth quarter and fiscal 2020, respectively, as compared
to $8.8 million and $34.2 million for the 2019 fourth quarter and
fiscal 2019, respectively. The approximately $3.2 million increase
in rental revenue in fiscal 2020, as compared to fiscal 2019, was
principally due to the acquisition of three industrial/logistics
properties in Orlando, FL between October 2019 and March 2020 (the
“Orlando Properties”), the commencement of leases of first
generation space that started in fiscal 2020 and, to a lesser
extent, leases of second generation previously vacant space, an
increase in expense reimbursements, early lease termination fees
and other lease related revenue.
NOI increased to $7.1 million and $26.9 million
in the 2020 fourth quarter and fiscal 2020, respectively, from $6.3
million and $24.2 million in the 2019 fourth quarter and fiscal
2019, respectively. The increase in NOI in fiscal 2020, as compared
to fiscal 2019, primarily reflected more space under lease in
fiscal 2020, due mostly to the industrial/logistics buildings added
to the company’s portfolio in fiscal 2020 and fiscal 2019, as noted
above.
Cash NOI* for the 2020 fourth quarter and fiscal
2020 were $6.3 million and $24.3 million, respectively, as compared
to $6.1 million and $22.7 million for the comparable prior
year periods. The increases in Cash NOI during the 2020 fourth
quarter and fiscal 2020 periods over the respective 2019 periods,
principally reflected increases in rental revenue as a result of
more space under lease as noted above and, to a lesser extent,
increases in rental rates partially offset by a greater amount of
free rent concessions related to lease renewals in the Company’s
industrial/logistics properties.
General and administrative expenses increased to
approximately $10.0 million in fiscal 2020 from approximately
$7.7 million in fiscal 2019 principally reflecting
approximately $1.4 million in expenses, primarily legal fees
related to the Company’s decision to operate as a REIT effective on
January 1, 2021 and other strategic growth initiatives in fiscal
2020. Other contributors to the increase in fiscal 2020 over fiscal
2019 were increases in incentive compensation and stock option
expenses, and legal fees related to new leases that were expensed
in fiscal 2020 (instead of capitalizing those costs and amortizing
over the lease term, as had been done previously), as required
under the new lease accounting standard adopted in fiscal 2020.
Depreciation and amortization expense increased
to approximately $13.6 million in fiscal 2020 from approximately
$11.8 million in fiscal 2019, principally related to the Orlando
Properties and 160 International Drive and 180 International Drive
in Charlotte, NC, both of which were speculative developments
delivered in the 2019 fourth quarter. Interest expense increased to
approximately $7.3 million in fiscal 2020 from approximately $6.4
million in fiscal 2019, principally related to borrowings to
finance a portion of the costs to purchase two of the Orlando
Properties.
INDUS also reported changes in other income and
expenses during fiscal 2020 including an impairment loss, change in
fair value of financial instruments, and gains on sales of real
estate assets. INDUS reported an impairment loss of approximately
$2.1 million in fiscal 2020 on its two multi-story office buildings
aggregating 161,000 square feet in Windsor, CT (“5 and 7 Waterside
Crossing”). In fiscal 2020, the INDUS had an approximately $2.3
million gain on sales of real estate assets. Lastly, the change in
fair value of financial instruments of $6.0 million in fiscal 2020
reflects changes in the value of the warrant and contingent value
rights that were issued as part of the private placement that was
completed on August 24, 2020.
In fiscal 2020, the Company incurred a net loss
of approximately $12.7 million as compared to net income of
approximately $3.7 million in fiscal 2019. In the 2020 fourth
quarter, the Company incurred a net loss of approximately
$11.1 million as compared to a net loss of approximately $2.6
million in the 2019 fourth quarter. In addition to the items
described above, contributing to the net loss in fiscal 2020 and
the 2020 fourth quarter, as compared to the net income in fiscal
2019 and the net loss in the 2019 fourth quarter, was a tax
provision in fiscal 2020 arising from the de-recognition of the
Company’s deferred tax assets and liabilities related to the
Company’s expected election to be taxed as a REIT effective in
fiscal 2021 (as defined below), as compared to an income tax
benefit in fiscal 2019 and the 2019 fourth quarter.
Supplemental Financial Measures
For the 2020 fourth quarter and fiscal 2020, Adjusted EBITDAre* was
$5.0 million and $19.3 million, as compared to $4.5 million and
$17.6 million in the 2019 fourth quarter and fiscal 2019,
respectively. The increase in Adjusted EBITDAre was primarily
impacted by higher rental revenues partially offset by higher
general and administrative costs in fiscal 2020.
For the 2020 fourth quarter and fiscal 2020,
Core FFO* was $2.7 million and $11.0 million, respectively, as
compared to $2.6 million and $10.4 million in the 2019 fourth
quarter and fiscal 2019, respectively. The increase in Core FFO was
primarily impacted by the same changes in rental revenue and
general and administrative costs noted above for Adjusted EBITDAre,
in addition to higher interest expense during the 2020 periods.
Industrial/Logistics Leasing
Activity2During the 2020 fourth quarter,
the Company executed five renewal leases and one new lease in its
industrial/logistics portfolio aggregating approximately 498,000
square feet with a weighted average lease term of 5.0 years and
weighted average tenant improvement and leasing commission costs
per square foot per year of $0.52. The weighted average rent growth
on a straight-line basis was 13.3%, and the weighted average rent
growth on a cash basis was 0.5%.3
During fiscal 2020, the Company executed five
new leases and eleven renewal leases in its industrial/logistics
portfolio aggregating over 1,053,000 square feet with an average
lease term of 5.5 years and weighted average rent growth on a
straight-line basis and cash basis of 15.0% and 2.6%, respectively.
INDUS’s industrial/logistics portfolio tenant retention rate4
during fiscal 2020 was 79%, as measured by the number of tenants
who renewed during the year.
DispositionsIn fiscal 2020,
INDUS completed several sales aggregating approximately 46 acres of
undeveloped land, together with one vacant approximately 40,000
square foot office/flex building located at 55 Griffin Road South
in Bloomfield, CT (“55 Griffin Road South”). 55 Griffin Road South
was sold in November 2020 for gross proceeds of $1.4 million. In
addition, the 46 acres of undeveloped land (which was zoned for a
mix of residential, commercial and other uses) and a small easement
sold for a combined total of $1.9 million in gross proceeds.
As of the end of fiscal 2020, INDUS was under
three separate agreements to sell a total of approximately 571
acres of undeveloped land in Connecticut in the towns of East
Granby and Windsor, Simsbury and Suffield. Under an option purchase
agreement, INDUS granted the buyer an option to purchase
approximately 280 acres of undeveloped land for a minimum purchase
price of $6.0 million. Under a separate option agreement, INDUS
granted another buyer an option to purchase approximately 277 acres
of an unbuilt residential development called Meadowood for net
proceeds of approximately $5.4 million. Under another sale
agreement, INDUS agreed to sell the 16 residential lots remaining
in a residential subdivision called Stratton Farms to a buyer for
gross proceeds of $0.9 million.
Subsequent to the end of fiscal 2020, INDUS
entered into a purchase and sale agreement to sell approximately 91
acres of undeveloped land in Southwick, MA to a buyer for a
purchase price of $5.25 million.
Also subsequent to the end of the 2020 fourth
quarter, the Company began marketing 5 and 7 Waterside Crossing,
which were previously under an agreement for sale during fiscal
2020 but the buyer did not close on the transaction.
Each of the Company’s current sale or option
purchase agreements are subject to significant contingencies and it
is possible that the sales or purchases contemplated thereunder
will not be completed under their respective terms, or at all.
Land & Building
AcquisitionsDuring fiscal 2020, the Company acquired 3320
Maggie Boulevard, a fully-leased approximately 108,000 square foot
building in Orlando, and 170 Sunport Lane, a mostly-vacant
approximately 68,000 square foot building in Orlando.
Also during fiscal 2020, the Company entered
into separate agreements to purchase approximately 23 acres of land
in the Lehigh Valley (“First & Second Allentown Purchase
Agreements”) and approximately 14 acres of land in Orlando
(“Orlando Purchase Agreement”) for a combined total purchase price
of $9.45 million (see “Development Activity”). These agreements are
subject to significant contingencies and it is possible that the
acquisitions contemplated thereunder will not be completed under
their respective terms, or at all.
Development ActivityAs of
November 30, 2020, INDUS owned 14 acres of land for development in
the Lehigh Valley (the “Lehigh Valley Land”) and 44 acres of land
in Charlotte (the “Charlotte Land”), both of which INDUS acquired
in fiscal 2019. In fiscal 2020, the Company began construction of
an approximately 103,000 square foot industrial/logistics building
on the Lehigh Valley Land which it expects to deliver in the second
half of 2021. In fiscal 2020 the Company completed the entitlements
to construct three industrial/logistics buildings aggregating
approximately 520,000 square feet on the Charlotte Land.
Subsequent to year end, under a preliminary
agreement, INDUS commenced the re-design of the Charlotte Land to
accommodate the build-to-suit of a last-mile industrial/logistics
facility for a leading e-commerce company. The proposed
build-to-suit would utilize all of the development potential of the
Charlotte Land and includes an approximately 142,000 square foot
building with surplus parking. The Company estimates that the total
development cost for the project will be between $35-$45 million
(including the land cost) and that the tenant would enter into a
fifteen-year lease for the property at a rental rate calculated as
a percentage of the total project cost.
The following table summarizes INDUS’s current
and planned development and acquisition activities as described
above:
|
|
|
|
|
|
Project |
Market |
Type |
EstimatedCompletion |
PlannedSquareFootage |
Lehigh Valley Land |
Lehigh Valley, PA |
Speculative Development |
Q4 2021 |
103,000 |
|
Charlotte Land |
Charlotte, NC |
Build-to-Suit Development |
Q4 2021 |
142,000 |
|
First & Second Allentown
Purchase Agreements |
Lehigh Valley, PA |
Speculative Development |
Q2 2022 |
206,000 |
|
Orlando Purchase
Agreement |
Orlando, FL |
Speculative Development |
Q1 2022 |
195,000 |
|
Total |
|
|
|
646,000 |
|
The total estimated investment in INDUS’s
current and planned development and acquisition activities (as
described above) is approximately $93.7 million (inclusive of
leasing costs), with approximately $11.4 million spent as of
November 30, 2020. As a part of INDUS’s standard development and
acquisition underwriting process, INDUS analyzes the targeted
initial full year stabilized Cash NOI yield for each development
project and acquisition target and establishes a range of initial
full year stabilized Cash NOI yields, which it refers to as
“underwritten stabilized Cash NOI yields.” INDUS’s weighted average
underwritten stabilized Cash NOI yield from the current and planned
development and acquisition activities shown above is expected to
range between 6.0% and 6.5%. Underwritten stabilized Cash NOI
yields are calculated as a development project’s or acquisition’s
initial full year stabilized Cash NOI as a percentage of its
estimated total investment, including costs to stabilize the
buildings to 95% occupancy (other than in connection with
build-to-suit development projects and single tenant properties).
INDUS calculates initial full year stabilized Cash NOI for a
development project or acquisition by subtracting its estimate of
the development project’s or acquisition’s initial full year
stabilized operating expenses, real estate taxes and non-cash
rental revenue, including straight-line rents (before interest,
income taxes, if any, and depreciation and amortization), from its
estimate of its initial full year stabilized rental revenue. Actual
initial full year stabilized Cash NOI yields may vary from INDUS’s
underwritten stabilized Cash NOI yield ranges based on the actual
total cost to complete a project or acquire a property and its
actual initial full year stabilized Cash NOI.
Liquidity & Capital
ResourcesAs of November 30, 2020, the Company had cash and
cash equivalents of $28.5 million, as well as $34.5 million in
borrowing capacity under its revolving credit facilities. As of
November 30, 2020, there were no borrowings outstanding under the
credit facilities.
Subsequent to November 30, 2020, the Company and
Webster Bank N.A. (“Webster Bank”), the lender under its credit
facilities, agreed to terms whereby 160 International Drive and 180
International Drive in Charlotte would be added to the collateral
of the Amended Webster Credit Line and the borrowing capacity under
the Amended Webster Credit Line would be increased to a maximum of
$35.0 million, up from $19.5 million as of November 30, 2020. The
increase in the amount available under the Amended Webster Credit
Line is subject to completion of a definitive loan amendment to the
Amended Webster Credit Line, which may not be finalized under
current terms, or at all. INDUS’s credit facilities with Webster
Bank mature on September 1, 2021 and contain one option to extend
for an additional 12 months, subject to certain conditions.
Also subsequent to fiscal 2020, on February 2,
2021, INDUS filed a new universal shelf registration statement on
Form S-3 (the “Universal Shelf”) with the U.S. Securities and
Exchange Commission (“SEC”), which, once declared effective, will
replace the universal shelf registration statement on Form S-3 that
was filed with the SEC on April 11, 2018 and amended by its
post-effective amendment on Form S-3 that was filed with the SEC on
January 4, 2021. Once effective, under the Universal Shelf, the
Company may offer and sell up to $500 million of a variety of
securities including common stock, preferred stock, warrants,
depositary shares, units or any combination of such securities
during the three year period that commences upon the effective date
of the Universal Shelf. Similarly, under the Universal Shelf, the
Company may periodically offer one or more types of securities in
amounts, at prices and on terms announced, if and when the
securities are ever offered. If INDUS obtains additional capital by
issuing equity, the interests of its existing stockholders will be
diluted. If the Company incurs additional indebtedness, that
indebtedness may impose financial and other covenants that may
significantly restrict INDUS’s operations.
Corporate UpdatesOn December
30, 2020, the Company completed an internal merger (the “Merger”)
to reincorporate from a Delaware corporation to a Maryland
corporation. Following the Merger, on December 31, 2020, the
Company changed its name from Griffin Industrial Realty, Inc.
(“Griffin”) to INDUS Realty Trust, Inc.
As previously announced, INDUS intends to elect
to be taxed as a REIT under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended for the taxable year
ending December 31, 2021. In connection with this election to be
taxed as a REIT, INDUS also changed its fiscal year end from
November 30 to December 31, effective beginning with the next
fiscal year, which began on January 1, 2021 and will end on
December 31, 2021 (“fiscal 2021”). As a result of the change in
fiscal year, there will be a one-month transition period from
December 1, 2020 to December 31, 2020, the results of which are
expected to be reported in the Company’s Quarterly Report on Form
10-Q to be filed for the first quarter of fiscal 2021.
PortfolioAs of November 30,
2020, INDUS owned 30 industrial/logistics properties containing an
aggregate of approximately 4,206,000 rentable square feet that was
94.3% leased (95.4% leased for stabilized properties) with a
weighted average remaining lease term of 4.9 years. The 2020 fourth
quarter was the first period in which INDUS’s speculative
developments at 160 International Drive and 180 International Drive
in Charlotte, NC were included in the stabilized pool, as the
developments have been completed for over one year. These two
properties were 37.1% leased as of November 30, 2020. The
unstabilized pool as of the fiscal 2020 year end was limited to
only 170 Sunport Lane in Orlando, FL, which was acquired in March
2020 as a value-add acquisition and recently underwent a renovation
to better position the property for lease-up.
INDUS also owns 11 office/flex properties
containing an aggregate of 392,000 square feet that was 71.3%
leased as of November 30, 2020, in addition to over 3,400 acres of
undeveloped land.
Rent Collection / COVID-19
ImpactCOVID-19 did not have a material impact on the
Company’s rent collections in fiscal 2020, as 99% of all cash rent
due in each month of fiscal 2020, inclusive of rent relief, was
collected. In fiscal 2020, the Company entered into agreements with
two tenants that granted rent relief aggregating approximately 0.4%
of the Company’s total rental revenue for fiscal 2020. The much
larger of these two tenants is a subsidiary of a Fortune 500
company and the rent relief was granted as part of an early 5-year
renewal of that tenant’s lease. Subsequent to November 30, 2020, a
tenant that leases an approximately 7,000 square foot restaurant
building in Connecticut requested rent relief. The tenant’s annual
base rent represents 0.2% of INDUS’s fiscal 2020 rental revenue,
and the tenant has paid all rent through October 31, 2020. As of
the date of this press release, the Company has not yet determined
if it will grant rent relief in connection with this request.
Fourth Quarter Webcast, Earnings
Supplement and Investor PresentationINDUS is hosting a
pre-recorded webcast that will be available starting tomorrow,
February 19, 2021 at 8:00 A.M. Eastern Time, to discuss its 2020
fourth quarter and fiscal 2020 financial results. Supplemental
materials containing additional financial and operating information
will be available on INDUS’s website at the start of the webcast.
All investors and other interested parties are invited to dial in
to the listen-only webcast which, together with the supplemental
information, can be accessed via the Investors section of INDUS’s
website at www.indusrt.com/investors or the webcast can be accessed
directly by logging on at
https://services.choruscall.com/links/indt210216.html. An archived
recording of the webcast will be available through May 18,
2021.
About INDUSINDUS (formerly
known as Griffin Industrial Realty, Inc.) is a real estate business
principally engaged in developing, acquiring, managing and leasing
industrial/logistics properties. INDUS owns 41 buildings totaling
approximately 4.6 million square feet (including 30
industrial/logistics buildings aggregating approximately 4.2
million square feet) in Connecticut, Pennsylvania, North Carolina
and Florida in addition to over 3,400 acres of undeveloped
land.
*See Note Regarding
Non-GAAP Measures below.
Forward-Looking Statements:This
Press Release includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements include INDUS’s beliefs and
expectations regarding future events or conditions including,
without limitation, statements regarding INDUS’s intention to elect
to be taxed as a REIT, completion of contemplated acquisition and
disposition agreements, construction and development plans and
timelines, including, without limitation, that our underwritten
capitalization rates for development projects may not be achieved,
the re-design of the Charlotte Land, including related estimated
costs and leasing activity, INDUS’s underwritten stabilized
capitalization rates for development projects, expected capital
availability and liquidity, the entry into of a definitive loan
amendment to the Amended Webster Credit Line, as well as expected
leasing activity in the portfolio. Although INDUS believes that its
plans, intentions and expectations reflected in such
forward-looking statements are reasonable, it can give no assurance
that such plans, intentions or expectations will be achieved. The
projected information disclosed herein is based on assumptions and
estimates that, while considered reasonable by INDUS as of the date
hereof, are inherently subject to significant business, economic,
competitive and regulatory uncertainties and contingencies, many of
which are beyond the control of INDUS and which could cause actual
results and events to differ materially from those expressed or
implied in the forward-looking statements. Other important factors
that could affect the outcome of the events set forth in these
statements are described in INDUS’s Securities and Exchange
Commission filings, including the “Business,” “Risk Factors” and
“Forward-Looking Statements” sections in INDUS’s Annual Report on
Form 10-K for the fiscal year ended November 30, 2020 filed with
the SEC on February 18, 2021 and the “Risk Factors” section in
INDUS’s Registration Statement on Form S-3, filed with the SEC on
February 2, 2021. INDUS disclaims any obligation to update any
forward-looking statements as a result of developments occurring
after the date of this press release except as required by law.
__________________________1 “Stabilized”
properties reflects in-service properties / buildings that have
either (a) reached 90.0% leased or (b) exceeded 12 months since
their development completion or acquisition date, whichever is
earlier. Stabilized properties exclude 170 Sunport Lane, which was
acquired in the 2020 second quarter and was 25.9% leased as of
November 30, 2020.
2 Leasing activity is shown for industrial/logistics portfolio
only. Excludes new and renewal leases which have an initial term of
twelve months or less, as well as leases for first generation space
on properties acquired or developed by INDUS.
3 Weighted average rent growth reflects the percentage change of
annualized rental rates between the previous leases and the current
leases. The rental rate change on a straight-line basis represents
average annual base rental payments on a straight-line basis for
the term of each lease including free rent periods. Cash basis rent
growth represents the change in starting rental rates per the lease
agreement on new and renewed leases signed during the period, as
compared to the previous ending rental rates for that same space.
The cash rent growth calculation excludes free rent periods.
4 Retention is calculated as (total industrial leases renewed or
extended) ÷ (total industrial leases renewed or extended + total
industrial leases that expired and were not renewed) during the
period.
INDUS REALTY TRUST, INC.Consolidated
Statements of Operations(dollars in thousands, except per share
data)(unaudited)
|
|
For the Three Months Ended |
|
For the Fiscal Year Ended |
|
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
Rental revenue |
|
$ |
9,685 |
|
|
$ |
8,759 |
|
|
$ |
37,388 |
|
|
$ |
34,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses of rental
properties |
|
|
1,053 |
|
|
|
1,118 |
|
|
|
4,864 |
|
|
|
4,987 |
|
Real estate taxes |
|
|
1,502 |
|
|
|
1,310 |
|
|
|
5,612 |
|
|
|
5,008 |
|
Depreciation and amortization
expense |
|
|
3,435 |
|
|
|
2,995 |
|
|
|
13,623 |
|
|
|
11,801 |
|
General and administrative
expenses |
|
|
3,175 |
|
|
|
2,110 |
|
|
|
9,960 |
|
|
|
7,677 |
|
Total operating
expenses |
|
|
9,165 |
|
|
|
7,533 |
|
|
|
34,059 |
|
|
|
29,473 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(1,814 |
) |
|
|
(1,632 |
) |
|
|
(7,281 |
) |
|
|
(6,408 |
) |
Change in fair value of
financial instruments |
|
|
(5,560 |
) |
|
|
— |
|
|
|
(5,974 |
) |
|
|
— |
|
Gain on sale of real estate
assets |
|
|
1,504 |
|
|
|
— |
|
|
|
2,329 |
|
|
|
7,829 |
|
Impairment loss |
|
|
(2,085 |
) |
|
|
(3,100 |
) |
|
|
(2,085 |
) |
|
|
(3,100 |
) |
Investment income |
|
|
10 |
|
|
|
22 |
|
|
|
41 |
|
|
|
264 |
|
Gain on insurance
recovery |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
126 |
|
|
|
|
(7,945 |
) |
|
|
(4,710 |
) |
|
|
(12,970 |
) |
|
|
(1,289 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income tax benefit (provision) |
|
|
(7,425 |
) |
|
|
(3,484 |
) |
|
|
(9,641 |
) |
|
|
3,455 |
|
Income tax (provision)
benefit |
|
|
(3,638 |
) |
|
|
902 |
|
|
|
(3,076 |
) |
|
|
213 |
|
Net (loss)
income |
|
$ |
(11,063 |
) |
|
$ |
(2,582 |
) |
|
$ |
(12,717 |
) |
|
$ |
3,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net (loss) income per
common share |
|
$ |
(1.96 |
) |
|
$ |
(0.51 |
) |
|
$ |
(2.42 |
) |
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net (loss) income per
common share |
|
$ |
(1.96 |
) |
|
$ |
(0.51 |
) |
|
$ |
(2.42 |
) |
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding for computation of basic per share results |
|
|
5,658 |
|
|
|
5,073 |
|
|
|
5,259 |
|
|
|
5,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding for computation of diluted per share results |
|
|
5,658 |
|
|
|
5,073 |
|
|
|
5,259 |
|
|
|
5,106 |
|
Note Regarding Non-GAAP Financial Measures
The Company uses NOI, Cash NOI, NOI of
Industrial/Logistics Properties, Cash NOI of Industrial/Logistics
Properties, Funds from Operations (“FFO”), Core Funds from
Operations (“Core FFO”), Earnings before Interest, Taxes,
Depreciation and Amortization for Real Estate (“EBITDAre”) and
Adjusted EBITDAre as supplemental non-GAAP performance measures.
Management believes that the use of these measures combined with
net (loss) income (which remains the Company’s primary measure of
performance), improves the understanding of the Company’s operating
results among the investing public and makes comparisons of
operating results to other REITs more meaningful. The most
comparable U.S. GAAP measure to FFO, Core FFO, EBITDAre and
Adjusted EBITDAre is net income (loss).
These measures exclude expenses that materially
impact the Company’s overall results of operations and, therefore,
should not be considered as a substitute measures derived in
accordance with U.S. GAAP. Furthermore, these metrics may not
be comparable to other similarly titled measures of other
companies.
Certain of these measures may be calculated
based on or substantially in accordance with definitions set forth
by The National Association of Real Estate Investment Trusts
(“Nareit”). Nareit is widely recognized as a representative
organization for REITs and real estate companies with an interest
in U.S. real estate. Nareit’s members are REITs and other real
estate companies throughout the world that own, operate, and
finance income-producing real estate, as well as those firms and
individuals who advise, study, and service those businesses. For
periods prior to the Company’s conversion to a REIT, the Company
further adjusts Nareit definitions to remove the impact of income
tax benefits or provisions in order to enhance the comparability of
the Company’s performance prior to its conversion to a REIT with
its performance following its conversion to a REIT. The Company
does not intend to include this tax adjustment for periods
beginning on or after January 1, 2021.
NOI, Cash NOI, NOI of Industrial/Logistics
Properties and Cash NOI of Industrial/Logistics Properties
NOI is a non-GAAP measure that includes the
rental revenue and operating expense directly attributable to the
Company’s real estate properties. The Company uses NOI as a
supplemental performance measure because, in excluding real estate
depreciation and amortization expense, general and administrative
expenses, interest expense, gains (or losses) on the sale of real
estate and other non-operating items, it provides a performance
measure that, when compared year over year, captures trends in
occupancy rates, rental rates and operating costs. The Company also
believes that NOI will be useful to investors as a basis to compare
its operating performance with that of other REITs. However,
because NOI excludes depreciation and amortization expense and
captures neither the changes in the value of the Company’s
properties that result from use or market conditions, nor the level
of capital expenditures and leasing commissions necessary to
maintain the operating performance of its properties (all of which
have real economic effect and could materially impact the Company’s
results from operations), the utility of NOI as a measure of the
Company’s performance is limited. Other equity REITs may not
calculate NOI in a similar manner and, accordingly, the Company’s
NOI may not be comparable to such other REITs’ NOI. Accordingly,
NOI should be considered only as a supplement to net income as a
measure of the Company’s performance. NOI should not be used as a
measure of the Company’s liquidity, nor is it indicative of funds
available to fund the Company’s cash needs. NOI should not be used
as a substitute for cash flow from operating activities in
accordance with U.S. GAAP.
Cash NOI is a non-GAAP measure that the Company
calculates by adding or subtracting non-cash rental revenue,
including straight-line rental revenue, from NOI. The Company uses
Cash NOI, together with NOI, as supplemental performance measures.
Cash NOI should not be used as a measure of the Company’s
liquidity, nor is it indicative of funds available to fund the
Company’s cash needs. Cash NOI should not be used as a substitute
for cash flow from operating activities computed in accordance with
U.S. GAAP.
The Company presents NOI and Cash NOI for its
industrial/logistics properties by subtracting the NOI and Cash NOI
attributable to its non-industrial/logistics properties from the
NOI and Cash NOI, as applicable, for its total real estate
portfolio.
NOI and Cash NOI for INDUS’s
industrial/logistics properties and total portfolio were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in 000s) |
|
For the Three Months Ended |
|
|
For the Fiscal Year Ended |
|
|
Nov. 30, 2020 |
|
|
Nov. 30, 2019 |
|
Increase |
|
|
Nov. 30, 2020 |
|
|
Nov. 30, 2019 |
|
Increase |
Industrial/Warehouse: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI |
$ |
6,301 |
|
$ |
5,500 |
|
14.6 |
% |
|
$ |
23,713 |
|
$ |
21,193 |
|
11.9 |
% |
Cash NOI |
$ |
5,544 |
|
$ |
5,276 |
|
5.1 |
% |
|
$ |
21,559 |
|
$ |
19,727 |
|
9.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI |
$ |
7,130 |
|
$ |
6,331 |
|
12.6 |
% |
|
$ |
26,912 |
|
$ |
24,222 |
|
11.1 |
% |
Cash NOI |
$ |
6,325 |
|
$ |
6,093 |
|
3.8 |
% |
|
$ |
24,309 |
|
$ |
22,655 |
|
7.3 |
% |
Funds from Operations
In an effort to improve the understanding of the
Company’s operating results as compared to its operating results in
a prior period and that of other REITs, the Company presents a
funds from operations metric substantially similar to funds from
operations, as calculated in accordance with standards established
by Nareit (“Nareit FFO”).
Nareit FFO is calculated as net income
(calculated in accordance with U.S. GAAP), excluding: (a)
depreciation and amortization related to real estate, (b) gains and
losses from the sale of certain real estate assets, (c) gains and
losses from change in control and (d) impairment write-downs of
certain real estate assets and investments in entities when the
impairment is directly attributable to decreases in the value of
depreciable real estate held by the entity.
The Company defines FFO as Nareit FFO, plus an
adjustment to remove the impact of an income tax benefit or
provision. The Company includes the adjustment for income taxes
because, beginning with the taxable year ending December 31, 2021,
the Company intends to elect to be taxed as a REIT and believes
including this adjustment enhances the comparability of the
Company’s results for periods prior to this tax election. The
Company believes it is useful to investors to have enhanced
transparency into the way in which its management evaluates
operating performance to prior comparable periods and with that of
other REITs.
Core Funds from Operations
The Company defines Core FFO as FFO excluding
(a) costs related to the REIT Conversion, (b) change in fair value
of financial instruments, and (c) gains or losses on insurance
recoveries and/or extinguishment of debt or derivative
instruments.
Earnings Before Interest, Taxes, Depreciation
and Amortization for Real Estate
The Company defines EBITDAre in accordance with
standards established by Nareit. EBITDAre represents net income
(loss) (computed in accordance with U.S. GAAP) excluding (a)
interest expense, (b) income tax expense, (c) depreciation and
amortization expense, (d) gains and losses on the disposition of
real estate assets (including gains or losses on change of
control), (e) impairment write-downs of depreciated property and of
investments in unconsolidated affiliates caused by a decrease in
value of depreciated property in the affiliate, and (f) adjustments
to reflect the entity’s share of EBITDAre of unconsolidated
affiliates. INDUS does not currently have any unconsolidated
properties or joint ventures.
Adjusted Earnings Before Interest, Taxes,
Depreciation and Amortization for Real Estate
The Company defines Adjusted EBITDAre as
EBITDAre plus (a) general and administrative expenses related to
the REIT Conversion, (b) non-cash stock-based compensation expense
and expenses or credits related to the Company’s non-qualified
deferred compensation plan that are included in general and
administrative expenses, (c) change in fair value of financial
instruments, and (d) gains or losses on the extinguishment of debt
or derivative instruments.
INDUS REALTY TRUST, INC.Non-GAAP
Reconciliations – FFO and Core FFO(dollars in thousands)
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Fiscal Year Ended |
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
Net (loss) income |
($ |
11,063 |
) |
|
($ |
2,582 |
) |
|
($ |
12,717 |
) |
|
$ |
3,668 |
|
Exclude: |
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
3,435 |
|
|
|
2,995 |
|
|
|
13,623 |
|
|
|
11,801 |
|
Non-real estate depreciation & amortization expense |
|
(20 |
) |
|
|
(21 |
) |
|
|
(79 |
) |
|
|
(81 |
) |
Gain on sales of real estate assets |
|
(1,504 |
) |
|
|
- |
|
|
|
(2,329 |
) |
|
|
(7,829 |
) |
Impairment loss |
|
2,085 |
|
|
|
3,100 |
|
|
|
2,085 |
|
|
|
3,100 |
|
Income tax provision (benefit) |
|
3,638 |
|
|
|
(902 |
) |
|
|
3,076 |
|
|
|
(213 |
) |
FFO |
|
(3,429 |
) |
|
|
2,590 |
|
|
|
3,659 |
|
|
|
10,446 |
|
Exclude: |
|
|
|
|
|
|
|
General and administrative expenses related to REIT conversion
(1) |
|
615 |
|
|
|
- |
|
|
|
1,366 |
|
|
|
- |
|
Gain on insurance recovery |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(126 |
) |
Amortization of terminated swap agreement |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
31 |
|
Change in fair value of financial instruments |
|
5,560 |
|
|
|
- |
|
|
|
5,974 |
|
|
|
- |
|
Core FFO |
$ |
2,746 |
|
|
$ |
2,590 |
|
|
$ |
10,999 |
|
|
$ |
10,351 |
|
(1) For the three months and fiscal year ended November 30,
2020, includes legal fees of $503 and $1,129, respectively, and
consulting costs related to accounting, compensation and
recruitment of personnel of $112 and $237, respectively.
INDUS REALTY TRUST, INC.Non-GAAP
Reconciliations – EBITDAre and Adjusted EBITDAre(dollars in
thousands)
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Fiscal Year Ended |
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
Net (loss) income |
($ |
11,063 |
) |
|
($ |
2,582 |
) |
|
($ |
12,717 |
) |
|
$ |
3,668 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
1,814 |
|
|
|
1,632 |
|
|
|
7,281 |
|
|
|
6,408 |
|
Depreciation and amortization
expense |
|
3,435 |
|
|
|
2,995 |
|
|
|
13,623 |
|
|
|
11,801 |
|
Gain on sales of real estate
assets |
|
(1,504 |
) |
|
|
- |
|
|
|
(2,329 |
) |
|
|
(7,829 |
) |
Impairment loss |
|
2,085 |
|
|
|
3,100 |
|
|
|
2,085 |
|
|
|
3,100 |
|
Income tax provision
(benefit) |
|
3,638 |
|
|
|
(902 |
) |
|
|
3,076 |
|
|
|
(213 |
) |
EBITDAre |
|
(1,595 |
) |
|
|
4,243 |
|
|
|
11,019 |
|
|
|
16,935 |
|
|
|
|
|
|
|
|
|
General and administrative
expenses related to REIT Conversion (1) |
|
615 |
|
|
|
- |
|
|
|
1,366 |
|
|
|
- |
|
Noncash compensation
expenses |
|
382 |
|
|
|
252 |
|
|
|
979 |
|
|
|
637 |
|
Change in fair value of
financial instruments |
|
5,560 |
|
|
|
- |
|
|
|
5,974 |
|
|
|
- |
|
Adjusted EBITDAre |
$ |
4,962 |
|
|
$ |
4,495 |
|
|
$ |
19,338 |
|
|
$ |
17,572 |
|
(1) For the three months and fiscal year ended November 30,
2020, includes legal fees of $503 and $1,129, respectively, and
consulting costs related to accounting, compensation and
recruitment of personnel of $112 and $237, respectively.
INDUS REALTY TRUST, INC.Non-GAAP
Reconciliations – NOI and Cash NOI(dollars in thousands)
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Fiscal Year Ended |
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
|
Nov. 30, 2020 |
|
Nov. 30, 2019 |
Net (loss) income |
($ |
11,063 |
) |
|
($ |
2,582 |
) |
|
($ |
12,717 |
) |
|
$ |
3,668 |
|
Income tax provision
(benefit) |
|
3,638 |
|
|
|
(902 |
) |
|
|
3,076 |
|
|
|
(213 |
) |
Pretax (loss) income |
|
(7,425 |
) |
|
|
(3,484 |
) |
|
|
(9,641 |
) |
|
|
3,455 |
|
Exclude: |
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
3,435 |
|
|
|
2,995 |
|
|
|
13,623 |
|
|
|
11,801 |
|
General and administrative expenses |
|
3,175 |
|
|
|
2,110 |
|
|
|
9,960 |
|
|
|
7,677 |
|
Interest expense |
|
1,814 |
|
|
|
1,632 |
|
|
|
7,281 |
|
|
|
6,408 |
|
Change in fair value of financial instruments |
|
5,560 |
|
|
|
- |
|
|
|
5,974 |
|
|
|
- |
|
Gain on sales of real estate assets |
|
(1,504 |
) |
|
|
- |
|
|
|
(2,329 |
) |
|
|
(7,829 |
) |
Impairment loss |
|
2,085 |
|
|
|
3,100 |
|
|
|
2,085 |
|
|
|
3,100 |
|
Investment income |
|
(10 |
) |
|
|
(22 |
) |
|
|
(41 |
) |
|
|
(264 |
) |
Gain on insurance recovery |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(126 |
) |
NOI |
|
7,130 |
|
|
|
6,331 |
|
|
|
26,912 |
|
|
|
24,222 |
|
Noncash rental revenue
including straight-line rents |
|
(805 |
) |
|
|
(238 |
) |
|
|
(2,603 |
) |
|
|
(1,567 |
) |
Cash NOI |
$ |
6,325 |
|
|
$ |
6,093 |
|
|
$ |
24,309 |
|
|
$ |
22,655 |
|
|
|
|
|
|
|
|
|
NOI |
$ |
7,130 |
|
|
$ |
6,331 |
|
|
$ |
26,912 |
|
|
$ |
24,222 |
|
Exclude: |
|
|
|
|
|
|
|
Rental revenue from non-industrial/logistics properties |
|
(1,492 |
) |
|
|
(1,574 |
) |
|
|
(6,159 |
) |
|
|
(6,223 |
) |
Operating expenses of non-industrial/logistics properties |
|
452 |
|
|
|
524 |
|
|
|
2,098 |
|
|
|
2,278 |
|
Real estate taxes of non-industrial/logistics properties |
|
211 |
|
|
|
219 |
|
|
|
862 |
|
|
|
916 |
|
NOI of industrial/logistics
properties |
|
6,301 |
|
|
|
5,500 |
|
|
|
23,713 |
|
|
|
21,193 |
|
Noncash rental revenue
including straight-line rents of industrial/logistics
properties |
|
(757 |
) |
|
|
(224 |
) |
|
|
(2,154 |
) |
|
|
(1,466 |
) |
Cash NOI of
Industrial/Logistics Properties |
$ |
5,544 |
|
|
$ |
5,276 |
|
|
$ |
21,559 |
|
|
$ |
19,727 |
|
CONTACT:Anthony
GaliciChief Financial
Officer(860) 286-1307
agalici@indusrt.com
Ashley PizzoDirector, IR & Capital
Markets(212)
218-7914apizzo@indusrt.com
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