INDUS Realty Trust, Inc. (Nasdaq: INDT) (“INDUS” or the
“Company”), a U.S. based industrial/logistics REIT,
announced the following updates on leasing, its acquisition and
development pipeline, its potential dispositions and other
corporate matters for the three months ended September 30, 2021
(the “2021 third quarter”):
Highlights
- Acquired a 139,500 square foot
industrial/logistics building in Lakeland, Florida for a purchase
price of $17.8 million
- Entered into an agreement to
acquire, for a purchase price of $31.5 million, an
under-construction, approximately 184,000 square foot
industrial/logistics portfolio in Nashville, Tennessee
- Entered into an agreement to
acquire, for a purchase price of $14.6 million, an approximately
128,000 square foot, fully-leased, industrial/logistics building in
Charlotte, North Carolina
- Entered into an agreement to
acquire, for a purchase price of $2.25 million, approximately 10.6
acres of undeveloped land in the Lehigh Valley of Pennsylvania,
upon which INDUS intends to construct, on speculation, an
approximately 90,000 square foot industrial/logistics building
- Entered into three separate
non-binding letters of intent (“LOIs”) for three
industrial/logistics buildings totaling approximately 690,000
square feet for a combined purchase price of approximately $77.8
million
- Completed new leases of
approximately 115,000 square feet and renewals of approximately
145,000 square feet in the industrial/logistics portfolio
- Generated proceeds of approximately
$7.4 million from real estate sales in the 2021 third quarter and
announced approximately $40.7 million under contract for sale
- Entered into a new secured
revolving credit facility of up to $100 million
- Stabilized industrial/logistics
portfolio1 was 99.4% leased as of September 30, 2021
Industrial/Logistics Leasing
Activity2
INDUS reported the following metrics for its
industrial/logistics portfolio for the 2021 third quarter:
|
Number of Leases |
Square Feet |
Weighted Avg. Lease Term in Years |
Weighted Avg. Lease Costs PSF per
Year3 |
Weighted Avg. Rent Growth4 |
|
Straight-line Basis |
Cash Basis |
New Leases |
2 |
115,000 |
4.9 |
$0.44 |
27.0% |
14.2% |
Renewals |
2 |
145,000 |
4.2 |
$0.53 |
15.7% |
4.3% |
Total / Avg. |
4 |
260,000 |
4.5 |
$0.49 |
20.0% |
8.0% |
As of September 30, 2021, INDUS’s 33
industrial/logistics buildings aggregated approximately 4.9 million
square feet. INDUS’s industrial/logistics portfolio’s percentage
leased and percentage leased of stabilized properties were as
follows:
|
Sept. 30,2021 |
June 30,2021 |
Mar. 31,2021 |
Dec. 31,2020 |
Percentage Leased |
95.4% |
95.3% |
99.2% |
94.5% |
Percentage Leased – Stabilized Properties |
99.4% |
99.4% |
99.2% |
95.7% |
As of September 30, 2021, INDUS’s industrial/logistics portfolio
vacancy was approximately 225,000 square feet, of which
approximately 198,000 square feet was added to its portfolio on
June 28, 2021, when the Company acquired its newest value-add
acquisition in Charlotte, North Carolina.
Acquisition Pipeline
On August 5, 2021, INDUS purchased a 139,500
square foot industrial/logistics building in Lakeland, Florida for
a purchase price of $17.8 million (the “Lakeland Acquisition”). The
Lakeland Acquisition is fully leased to two tenants with a weighted
average remaining lease term of a little over two years and has a
4.0% in-place cash capitalization rate5. The Lakeland Acquisition
increases the Company’s Central Florida industrial/logistics
portfolio to approximately 416,000 square feet, not including the
approximately 195,000 square foot two-building Orlando speculative
development (“Landstar Logistics”) expected to be completed by the
end of the 2022 third quarter (see below).
On August 5, 2021, INDUS also entered into an
agreement (the “Forward Purchase Agreement”) to acquire, for a
purchase price of $31.5 million, an under-construction,
approximately 184,000 square foot industrial/logistics portfolio in
Nashville, Tennessee (the “Nashville Acquisition”). The Nashville
Acquisition is being developed on speculation by the seller and,
upon completion, will be comprised of two buildings located in
close proximity to downtown Nashville which will be delivered to
INDUS vacant. Under the terms of the Forward Purchase Agreement,
INDUS expects to close on the Nashville Acquisition by the end of
the 2021 fourth quarter.
On August 20, 2021, INDUS entered into an
agreement (the “Purchase Agreement”) to acquire, for a purchase
price of $14.6 million, an approximately 128,000 square foot,
fully leased, industrial/logistics building in Charlotte, North
Carolina (the “Charlotte Acquisition”). Under the terms of the
Purchase Agreement, INDUS expects to close on the Charlotte
Acquisition in the first part of the 2021 fourth quarter. Upon
closing of the Charlotte Acquisition and completion of the
Charlotte Build-to-Suit (see below), INDUS will own approximately
1.2 million square feet across five high-quality
industrial/logistics buildings in the Charlotte market.
During September 2021, INDUS entered into three
non-binding LOIs for the purchases of three industrial/logistics
buildings for a combined purchase price of approximately $77.8
million. The three buildings that would be acquired aggregate
approximately 690,000 square feet. One of these buildings is
located in one of INDUS’s existing markets, while the other two
located in a new INDUS target market in the Southeast. One of these
potential acquisitions is for an existing building, whereas the
other two potential acquisitions are forward purchases that, upon
completion of construction, are expected to be delivered vacant in
the 2022 fourth quarter. All three potential acquisitions are
subject to the execution of definitive purchase and sale
agreements, as well as satisfactory completion of due diligence and
other contingencies.
The following is a summary of INDUS’s
acquisition pipeline for its industrial/logistics portfolio as of
September 30, 2021:
Acquisition |
Market |
Building Size (SF) |
|
Type |
Purchase Price (in millions) |
Expected Closing |
Acquisitions Under Contract |
|
|
|
|
|
|
Nashville Acquisition (two buildings) |
Nashville, TN |
184,000 |
|
Forward |
$ |
31.5 |
Q4 2021 |
Charlotte Acquisition (one building) |
Charlotte, NC |
128,000 |
|
Fully-Leased |
$ |
14.6 |
Q4 2021 |
Subtotal – Acquisitions Under Contract |
|
312,000 |
|
|
$ |
46.1 |
|
|
|
|
|
|
|
|
Acquisitions Under LOI |
Forward
purchases (three separate agreements for three buildings) |
690,000 |
|
Forward & Value-Add |
$ |
77.8 |
|
|
|
|
|
|
|
|
Total Acquisition Pipeline – Under Contract &
LOI |
1,002,000 |
|
|
$ |
123.9 |
|
Closings on the purchases of the Nashville
Acquisition, the Charlotte Acquisition and the three transactions
under LOIs are each subject to a number of contingencies, including
the satisfactory completion of due diligence by INDUS. There can be
no guarantee that these transactions will be completed under their
current terms, anticipated timelines, or at all.
Development Pipeline
On August 6, 2021, INDUS entered into an
agreement (the “Land Purchase Agreement”) to acquire, for a
purchase price of $2.25 million, approximately 10.6 acres of
undeveloped land in the Lehigh Valley of Pennsylvania (the “Lehigh
Valley Land”). Under the terms of the Land Purchase Agreement,
INDUS expects to close on the Lehigh Valley Land upon the seller
receiving the requisite development entitlements for the Lehigh
Valley Land, estimated to be during the first half of fiscal 2022.
Subsequent to closing on the purchase of the Lehigh Valley Land,
INDUS expects to begin construction, on speculation, of an
approximately 90,000 square foot industrial/logistics building.
The following is a summary of INDUS’s
development pipeline for its industrial/logistics portfolio as of
September 30, 2021:
Name |
Market |
Building Size (SF) |
|
Type |
Expected Delivery |
Owned Land |
|
|
|
|
|
Charlotte Build-to-Suit (one building) |
Charlotte, NC |
141,000 |
|
Build-to-Suit |
Early October 2021 |
First Lehigh Valley Land parcel (one building) |
Lehigh Valley, PA |
103,000 |
|
Speculative |
Q4 2021 |
110 Tradeport Drive (one building) |
Hartford, CT |
234,000 |
|
67% Pre-leased |
Q3 2022 |
Landstar Logistics (two buildings) |
Orlando, FL |
195,000 |
|
Speculative |
Q3
2022 |
|
|
|
|
|
|
Land Under Purchase & Sale Agreement |
First & Second Allentown Purchase Agreements (one
building) |
Lehigh Valley, PA |
206,000 |
|
Speculative |
Q4 2022 |
Second Lehigh Valley Land parcel (one building) |
Lehigh Valley, PA |
90,000 |
|
Speculative |
Q1 2023 |
Total Development Pipeline |
|
969,000 |
|
|
|
INDUS expects that the total development and
stabilization costs of developments in its pipeline will total
approximately $131.4 million (including all amounts previously
spent). The Company estimates that the underwritten weighted
average stabilized Cash NOI yield on its development pipeline is
between 5.8% - 6.3%.6 Actual initial full year stabilized Cash NOI
yields may vary from INDUS’s estimated underwritten stabilized Cash
NOI yield range based on the actual total cost to complete a
project or acquire a property and its actual initial full year
stabilized Cash NOI.
Closings on the purchases contemplated under the
First & Second Allentown Purchase Agreements and the Second
Lehigh Valley Land parcel, in addition to the completion and
stabilization of the development pipeline, are each subject to a
number of contingencies including the satisfactory completion of
due diligence by INDUS. There can be no guarantee that these
transactions and developments will be completed under their current
terms, anticipated timelines, at the Company’s estimated
underwritten yields, or at all.
Disposition Pipeline
During the 2021 third quarter, INDUS received a total of
approximately $7.4 million of cash from several sales of real
estate assets, including approximately $5.5 million from the sale
of the approximately 277 acres of undeveloped land that comprised
the Company’s Meadowood residential development in Simsbury,
Connecticut. As of September 30, 2021, INDUS had agreements in
place to sell the following non-core properties and undeveloped
land parcels:
Name |
Location |
Property Size |
Expected Closing |
Sale Price (in millions) |
1985 Blue Hills Avenue & Adjacent Land7 |
Windsor, CT |
165,000 SF; 39 acres |
Q4 2021 |
$18.0 |
Connecticut Nursery Farm |
E. Granby/Granby, CT |
670 acres |
Q4 2021 |
$10.3 |
5 & 7 Waterside Crossing; 21 Griffin Road N |
Windsor, CT |
209,000 SF |
Q4 2021 |
$5.2 |
Florida Nursery Farm |
Quincy, FL |
1,066 acres |
Q4 2021 |
$1.2 |
East Granby/Windsor Parcels |
E. Granby/Windsor, CT |
280 acres |
2022 |
$6.0 |
Total
Gross Proceeds of Dispositions Under Agreement, if
Consummated |
|
$40.7 |
Closings on these potential dispositions are
subject to various significant contingencies and cannot be
guaranteed to be completed in the expected time-frame, at the
expected sales prices shown, or at all.
Corporate Updates
On August 5, 2021, the Company’s operating
partnership, INDUS RT, LP, and the Company, as parent guarantor,
entered into an agreement for a new secured revolving credit
facility of up to $100 million (the “New Credit Facility”) that
replaced its former credit facilities. The New Credit Facility also
includes an uncommitted incremental facility, which would enable
the New Credit Facility to be increased up to $250 million in the
aggregate (subject to obtaining lender commitments). Borrowings
under the New Credit Facility bear interest subject to a pricing
grid for changes in the Company’s total leverage. Based on the
Company’s current leverage, the initial annual interest rate under
the New Credit Facility is one-month LIBOR plus 1.20%, compared to
a rate of one-month LIBOR plus 2.50% and one-month LIBOR plus 2.75%
under its former revolving credit line and acquisition credit line,
respectively, immediately prior to entering into the New Credit
Facility.
On September 2, 2021, INDUS entered into a sales
agreement, with Robert W. Baird & Co. Incorporated, BMO Capital
Markets Corp., BTIG, LLC, Citigroup Global Markets Inc., JMP
Securities LLC, KeyBanc Capital Markets Inc. and Morgan Stanley
& Co. LLC, each an agent (collectively “the agents”), relating
to shares of its common stock, $0.01 par value per share (the
“Common Stock”), offered by a prospectus supplement and the
accompanying prospectus pursuant to a continuous offering or
at-the-market equity issuance program (the “ATM program”). In
accordance with the terms of the sales agreement, INDUS may, from
time to time, offer and sell shares of its Common Stock having an
aggregate gross sales price of up to $100 million through the
agents, or directly to the agents, acting as principals, pursuant
to the prospectus supplement filed on September 3, 2021, and the
accompanying prospectus, dated August 10, 2021. As of September 30,
2021, INDUS had not yet issued any shares of common stock under the
ATM program.
About INDUS
INDUS is a real estate business principally
engaged in developing, acquiring, managing and leasing
industrial/logistics properties. INDUS owns 43 buildings totaling
approximately 5.3 million square feet (including 33
industrial/logistics buildings aggregating approximately 4.9
million square feet) in Connecticut, Pennsylvania, North Carolina
and Florida in addition to over 3,100 acres of undeveloped
land.
1 Stabilized Properties reflect buildings that have reached 90%
leased or have been in service for at least one year since
development completion or acquisition date, whichever is earlier.
7800 Tuckaseegee Road, an approximately 395,000 square foot
industrial/logistics building in Charlotte, North Carolina, which
was 50.1% leased as of September 30, 2021, was acquired on June 28,
2021, and is not included in the Stabilized Properties pool for the
2021 third quarter.2 Leasing metrics exclude 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 Lease cost per square foot per year reflects
total lease costs (tenant improvements, leasing commissions and
legal costs) per square foot per year of the lease term.4 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.5 INDUS
calculates “in-place cash capitalization rate” by dividing the
first twelve months of contractual cash rent following acquisition
(excluding any future rent escalations provided subsequently in the
lease and percentage rent) by the gross acquisition cost, including
the contracted purchase price and related capitalized transaction
costs, in the related properties. In-place cash capitalization rate
is a measure (expressed as a percentage) of the contractual cash
rent expected to be earned on an acquired property in the first
year. Because it excludes operating expenses (which are typically
minimal, if any, due to the triple net nature of INDUS’s leases)
and any future rent increases or additional rent that may be
contractually provided for in the lease, as well as any other
income or fees that may be earned from lease modifications or asset
dispositions, an in-place cash capitalization rate does not
represent the annualized investment rate of return of an acquired
property. Additionally, actual contractual cash rent earned from
the properties acquired may differ from the in-place cash
capitalization rate based on other factors, including difficulties
collecting anticipated rental revenues and unanticipated expenses
at these properties that we cannot pass on to tenants. 6 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.” 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.7 1985 Blue Hills Avenue is
currently encumbered by a mortgage loan with a balance of
approximately $4.8 million that INDUS expects to repay upon the
closing of the sale of this asset. 1985 Blue Hills Avenue
contributed approximately $1.3 million of annualized cash base rent
(based on the quarter ended September 30, 2021) with minimal
operating expenses (which are typically minimal, if any, due to the
triple net nature of INDUS’s leases) to INDUS’s
industrial/logistics Cash NOI.
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 the
completion of acquisitions and dispositions under agreements or
under LOIs, construction and development plans and timelines,
expected total development and stabilization costs of developments
in INDUS’s pipeline, the estimated underwritten stabilized Cash NOI
yield of the Company’s development pipeline, and expected capital
availability and liquidity. 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 Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 2021, filed with the SEC on
August 9, 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.
CONTACT:Anthony
GaliciExecutive Vice President, Chief Financial
Officer(860) 286-1307
agalici@indusrt.com
Ashley PizzoVice President, Capital
Markets & Investor Relations(212)
218-7914 apizzo@indusrt.com
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