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, dispositions and other corporate matters for the three
months ended December 31, 2021 (the “2021 fourth quarter”):
Highlights
- Developed and placed into service an approximately 141,000
square foot build-to-suit industrial/logistics building in
Charlotte, North Carolina for Amazon
- Acquired an approximately 128,000 square foot
industrial/logistics building in Charlotte, North Carolina and an
approximately 197,000 square foot industrial/logistics building in
the Charleston, South Carolina market for a combined purchase price
of $43.2 million, before transaction costs
- Completed the acquisition of approximately 23 acres of land in
Allentown, Pennsylvania for a total purchase price of approximately
$3.9 million, to support the planned development of a 206,000
square foot industrial/logistics building
- Entered into three separate agreements to acquire, for a
combined purchase price of $72.8 million, before transaction costs,
one existing industrial/logistics building in the Charlotte, North
Carolina market and two to-be-constructed industrial/logistics
buildings under forward purchase agreements in the Charlotte, North
Carolina market and in the Charleston, South Carolina market,
respectively
- Generated gross proceeds of approximately $34.5 million from
real estate sales in the 2021 fourth quarter
- Completed an underwritten public offering of 2,443,228 shares
of the Company’s Common Stock at a public offering price of $66.00
per share for net proceeds of $152.8 million
- Completed two new leases of first generation space totaling
approximately 224,000 square feet and two renewal leases totaling
approximately 256,000 square feet in INDUS’s existing
industrial/logistics portfolio
- Announced the pre-leasing of approximately 147,000 square feet
across two buildings in INDUS’s acquisition and development
pipelines in the Lehigh Valley and Nashville markets
- Stabilized industrial/logistics portfolio1 was 100.0% leased as
of December 31, 2021
Industrial/Logistics Leasing Activity
During the 2021 fourth quarter, INDUS entered into two first
generation leases totaling approximately 224,000 square feet. These
leases include approximately 27,000 square feet in Orlando, Florida
at a property that was repositioned by INDUS during late 2020 and
early 2021 and approximately 197,000 square feet at a value-add
property in the Charlotte market which was purchased 50% vacant at
the end of the 2021 second quarter. The lease in Orlando commenced
in the 2021 fourth quarter and the lease in Charlotte is expected
to commence by the end of the 2022 first quarter.
Also during the 2021 fourth quarter, two full-building tenants
totaling approximately 256,000 square feet exercised their fixed
renewal options for leases expiring in 2022. The buildings were
acquired in 2021 with in-place leases that had near-term
expirations. The buildings comprise approximately 128,000 square
feet in Charlotte, North Carolina (see Township Acquisition under
“Acquisition Pipeline” below) and approximately 128,000 square feet
in the Lehigh Valley, Pennsylvania market. The fixed renewal
options were for five-year terms with no leasing costs and
generated weighted average rent growth on a cash basis2 of 2.9%,
which is significantly lower than what the Company would expect to
realize if the spaces were leased to new tenants.
As of December 31, 2021, INDUS’s 35 industrial/logistics
buildings aggregated approximately 5.2 million square feet. INDUS’s
industrial/logistics portfolio’s percentage leased and percentage
leased of stabilized properties were as follows:
Dec. 31,
2021
Sept. 30,
2021
June 30,
2021
Mar. 31,
2021
Percentage Leased
98.4%
95.4%
95.3%
99.2%
Percentage Leased – Stabilized
Properties
100.0%
99.4%
99.4%
99.2%
As of December 31, 2021, INDUS’s only industrial/logistics
vacancy reflects approximately 84,000 square feet in a Charleston,
South Carolina property acquired on November 12, 2021 (see
Charleston Acquisition under “Acquisition Pipeline” below).
Acquisition Pipeline
On October 12, 2021, INDUS completed the acquisition of a fully
leased, approximately 128,000 square foot industrial/logistics
building in Charlotte, North Carolina (the “Township Acquisition”).
The Company used cash on hand to pay the $14.6 million purchase
price, before transaction costs, which equates to an in-place cash
capitalization rate of approximately 4.6%.
On November 12, 2021, INDUS completed the acquisition of a
57%-leased, approximately 197,000 square foot industrial/logistics
building in Charleston, South Carolina (the “Charleston
Acquisition”), the Company’s first property in the Charleston
market. The Company used cash on hand to pay the $28.6 million
purchase price, before transaction costs, and the Company expects
that the Charleston Acquisition will stabilize at an approximately
4.6% cash capitalization rate.
During the 2021 fourth quarter, INDUS entered into three
separate agreements to acquire, for a combined purchase price of
$72.8 million, before transaction costs, two industrial/logistics
buildings in the Charlotte, North Carolina market and one
industrial/logistics building in the Charleston, South Carolina
market.
- The first agreement is for an approximately 217,000 square
foot, recently constructed industrial/logistics building (the
“Charlotte Acquisition”) for a purchase price of $23.6 million,
before transaction costs. The Charlotte Acquisition has a
short-term lease in-place and INDUS expects to close on the
purchase during the first quarter of 2022.
- The second agreement is for a to-be-constructed, approximately
231,000 square foot industrial/logistics building (the “Charlotte
Forward Acquisition”) which is being developed on speculation by
the seller. The Charlotte Forward Acquisition is expected to be
delivered vacant upon completion in the first quarter of 2023. The
purchase price for the Charlotte Forward Acquisition is
approximately $21.2 million, before transaction costs, and INDUS
expects to acquire the land in 2022, and to fund portions of the
building’s development during 2022 and into the first quarter of
2023.
- The third agreement is for a to-be-constructed, approximately
263,000 square foot industrial/logistics building in the
Charleston, South Carolina market (the “Charleston Forward
Acquisition”) for a purchase price of $28.0 million, before
transaction costs. The Charleston Forward Acquisition is being
developed on speculation by the seller and the building is expected
to be completed in the 2022 fourth quarter, at which time INDUS
expects to complete the acquisition.
Also during the 2021 fourth quarter, a full building pre-lease
was executed for one of the two buildings that comprise the
Nashville Acquisition (see below). This lease totals approximately
79,000 square feet and is expected to commence in the 2022 second
quarter.
The following is a summary of INDUS’s acquisition pipeline for
its industrial/logistics portfolio as of December 31, 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
Q1 2022
Charlotte Acquisition (one building)
Charlotte, NC
217,000
Value-Add
$23.6
Q1 2022
Charleston Forward Acquisition (one
building)
Charleston, SC
263,000
Forward
$28.0
Q4 2022
Charlotte Forward Acquisition (one
building)
Charlotte, NC
231,000
Forward
$21.2
Q1 2023
Total Acquisition Pipeline Under
Contract
895,000
$104.3
The acquisitions in INDUS’s pipeline are each subject to the
satisfactory completion of due diligence and other contingencies.
There can be no guarantee that these transactions will be completed
under their current terms, anticipated timelines, or at all.
Development Pipeline
On October 8, 2021, INDUS completed and placed in service its
approximately 141,000 square foot build-to-suit in Charlotte for
Amazon.
On December 10, 2021, INDUS completed the acquisition of two
previously announced abutting parcels of land in Allentown, PA
totaling approximately 23 acres (the “Allentown Land”) for a
combined purchase price of approximately $3.9 million, before
transaction costs. The Company plans to develop a 206,000 square
foot industrial/logistics building on the acquired land
parcels.
On December 24, 2021, INDUS entered into a first generation
lease for approximately 68,000 square feet at its Chapmans Road
speculative development property (see below). This lease is
expected to commence by the end of the 2022 first quarter.
The following is a summary of INDUS’s development pipeline for
its industrial/logistics portfolio as of December 31, 2021:
Name
Market
Building Size (SF)
Type
Expected Delivery
Owned Land
Chapmans Road (one building)
Lehigh Valley, PA
103,000
66% Pre-leased
Q2 2022
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
Allentown Land (one building)
Lehigh Valley, PA
206,000
Speculative
Q2 2023
Land Under Purchase & Sale
Agreement
Lehigh Valley Land parcel (one
building)
Lehigh Valley, PA
90,000
Speculative
Q2 2023
Total Development Pipeline
828,000
INDUS expects that the total development and stabilization costs
of developments in its pipeline will total approximately $92.8
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%.3
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.
Closing on the purchase of the 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 fourth quarter, INDUS completed four separate,
previously-announced disposition transactions that generated
approximately $34.5 million in aggregate gross proceeds before
transactions costs. INDUS utilized $14.1 million of these proceeds
to extinguish three mortgages with a weighted average interest rate
of approximately 5.0%. Dispositions completed during the quarter
included:
- approximately 1,066 acres of undeveloped land in Quincy,
Florida for $1.0 million in gross proceeds;
- approximately 209,000 square feet across three office/flex
properties and 8 acres of land in Windsor, Connecticut for $5.2
million in gross proceeds;
- approximately 165,000 square feet across one
industrial/logistics property and 39 acres of land in Windsor,
Connecticut for $18.0 million in gross proceeds; and
- approximately 670 acres of undeveloped land in East Granby and
Granby, Connecticut for $10.3 million in gross proceeds.
Also during the 2021 fourth quarter, the buyer under the
previously announced East Granby/Windsor Option Agreement elected
not to proceed with the purchase.
Corporate Updates
On October 8, 2021, INDUS completed an underwritten public
offering of 2,150,000 shares of its Common Stock at a public
offering price of $66.00 per share. On October 22, 2021, the
underwriters exercised their option to purchase an additional
293,228 shares of Common Stock from INDUS at the same price. INDUS
received proceeds of $152.8 million, after expenses, from the
aggregate of 2,443,228 shares issued on October 8, 2021, and
October 22, 2021. The Company intends to use the proceeds from the
October 8, 2021 and October 22, 2021 sales of its Common Stock to
finance its acquisition and development pipeline and for other
corporate purposes.
Upcoming Investor Conferences
INDUS will participate in the Capital One Securities 2nd Annual
REIT Conference to be held virtually January 10, 2022. In
connection with the conference, INDUS will be sharing an updated
investor presentation which will be made available on the Investors
section of its website at ir.indusrt.com prior to the
conference.
About INDUS
INDUS is a real estate business principally engaged in
developing, acquiring, managing and leasing industrial/logistics
properties. INDUS owns 35 industrial/logistics buildings
aggregating approximately 5.2 million square feet in Connecticut,
Pennsylvania, North Carolina, South Carolina and Florida in
addition to several office/flex properties and undeveloped
land.
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 under agreements, pre-leasing agreements, 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 September 30, 2021, filed with the SEC on November 4, 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 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.
7770 Palmetto Commerce Parkway, an approximately 197,000 square
foot industrial/logistics building in Charleston, South Carolina,
which was 57.1% leased as of December 31, 2021, was acquired on
November 12, 2021, and is not included in the Stabilized Properties
pool for the 2021 fourth quarter. 2 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. 3 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220106005896/en/
Ashley Pizzo Vice President, Capital Markets & Investor
Relations (212) 218-7914 apizzo@indusrt.com Jon Clark Executive
Vice President, Chief Financial Officer (860) 286-2419
jclark@indusrt.com
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