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 pipeline,
development pipeline and dispositions for the three months ended
March 31, 2022 (the “2022 first quarter”)1:
Highlights
- Completed the acquisition of an approximately 217,000 square
foot building in the Charlotte, North Carolina market for a
purchase price of $23.6 million, before transaction costs
- Entered into an agreement to acquire a to-be-constructed
approximately 280,000 square foot building in the
Greenville/Spartanburg, South Carolina market
- Completed three leases totaling approximately 133,000 square
feet, including a new lease of first generation space at INDUS’
recently-acquired property in the Charleston, South Carolina
market
- Stabilized2 and total portfolio were both 100.0% leased as of
March 31, 2022
- Commenced the sale process to dispose of the Company’s
remaining legacy office/flex portfolio along with a small storage
facility that is located in the same park
Leasing Activity3
INDUS reported the following second generation leasing metrics
for the 2022 first quarter:
Number of Leases
Square Feet
Weighted Avg. Lease Term in
Years
Weighted Avg. Lease Costs PSF
per Year4
Weighted Avg. Rent
Growth5
Straight-line
Basis
Cash Basis
New Leases
1
10,000
5.0
$0.49
46.3%
28.6%
Renewals
1
38,846
2.1
$0.13
12.6%
12.1%
Total / Avg.
2
48,846
2.7
$0.62
18.5%
15.0%
In addition to the above leases signed during the period, INDUS
also executed a first generation lease with the existing tenant to
expand into the balance of the Charleston, South Carolina property
acquired in November 2021. This lease totaled approximately 84,000
square feet and is expected to commence in June 2022.
As of March 31, 2022, INDUS’ 36 buildings aggregated
approximately 5.4 million square feet. INDUS’ portfolio percentage
leased and percentage leased of stabilized properties were as
follows:
Mar. 31,
2022
Dec. 31,
2021
Sept. 30,
2021
June 30,
2021
Percentage Leased
100.0%
98.4%
95.4%
95.3%
Percentage Leased – Stabilized
Properties
100.0%
100.0%
99.4%
99.4%
Acquisition Pipeline
During the 2022 first quarter, INDUS completed the acquisition
of a recently constructed, 217,000 square foot building in the
Charlotte, North Carolina market (“782 Paragon Way”). 782 Paragon
Way is fully leased on a short-term basis through July 2022 with
in-place rents that we believe are below current market rates. The
Company expects that 782 Paragon Way will be re-leased to stabilize
at an approximate 4.7% cash capitalization rate. The Company used
cash on hand to pay the $23.6 million purchase price, before
transaction costs.
Also during the 2022 first quarter, the Company announced that
it entered into a purchase agreement to acquire a
to-be-constructed, approximately 280,000 square foot building in
the Greenville/Spartanburg, South Carolina market (the
“Greenville/Spartanburg Acquisition”), which is being developed on
speculation by the seller. The Greenville/Spartanburg Acquisition
is expected to be delivered upon completion in the 2023 first
quarter and would be the Company’s first entry into this
market.
The following is a summary of INDUS’ acquisition pipeline as of
March 31, 2022:
Acquisition
Market
Building Size (SF)
Type
Purchase Price
(in millions)
Expected
Closing
Acquisitions Under Contract
Nashville Acquisition (two buildings)
Nashville, TN
184,000
Forward (42.9%
pre-leased)
$31.5
Q2 2022
Charleston Forward Acquisition (one
building)
Charleston, SC
263,000
Forward
$28.0
Q4 2022
Greenville-Spartanburg Acquisition
(one building)
Greenville-Spartanburg, SC
280,000
Forward
$28.5
Q1 2023
Charlotte Forward Acquisition (one
building)
Charlotte, NC
231,000
Forward
$21.2
Q2 2023
Subtotal – Acquisitions Under
Contract
958,000
$109.2
The acquisitions in INDUS’ pipeline are each subject to certain
remaining contingencies. There can be no guarantee that these
transactions will be completed under their current terms,
anticipated timelines, or at all.
Development Pipeline
The following is a summary of INDUS’ development pipeline as of
March 31, 2022:
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
American Parkway (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
Q3 2023
Total Development Pipeline
828,000
INDUS expects that the total development and stabilization costs
of developments in its pipeline will total approximately $96.0
million (including all amounts previously spent). The Company
estimates that the underwritten weighted average stabilized Cash
NOI yield on its development pipeline is between 6.0% - 6.5%.6
Actual initial full year stabilized Cash NOI yields may vary from
INDUS’ 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 and the
completion and stabilization of the projects in the development
pipeline are each subject to a number of contingencies. 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 2022 first quarter, INDUS commenced the sale process
to fully exit its legacy investment in its remaining office/flex
properties (“Office/Flex Portfolio”). The Office/Flex Portfolio is
comprised of seven buildings totaling approximately 175,000 square
feet located in Windsor and Bloomfield, Connecticut. Additionally,
INDUS intends to sell an approximate 18,000 square foot storage
building that is located within the same business park. Following
the sale of the Office/Flex Portfolio, INDUS is expected to be a
pure-play industrial/logistics REIT.
About INDUS
INDUS is a real estate business principally engaged in
developing, acquiring, managing, and leasing industrial/logistics
properties. INDUS owns 36 buildings aggregating approximately 5.4
million square feet in Connecticut, Pennsylvania, North Carolina,
South Carolina, and Florida.
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’ 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’ pipeline, the
estimated underwritten stabilized Cash NOI yield of the Company’s
development pipeline, the Company’s intention to exit its
office/flex portfolio, 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’ Securities and Exchange Commission filings,
including the “Business,” “Risk Factors” and “Forward-Looking
Statements” sections in INDUS’ Annual Report on Form 10-K for the
fiscal year ended December 31, 2021, filed with the SEC on March
11, 2022, as updated by other filings with the Securities and
Exchange Commission. 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 Portfolio information and statistics are comprised solely of
the Company’s industrial/logistics buildings and excludes the
Company’s office/flex portfolio and other properties held for
sale.
2 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.
3 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.
Leasing metrics also exclude leases tied to properties undergoing
redevelopment or repositioning. During the 2022 first quarter,
INDUS commenced the repositioning of 52,000 square feet in
Connecticut from principally office use to an industrial/logistics
use. During the 2022 first quarter, the Company entered into a
7-year lease with a new industrial/logistics tenant to occupy that
space upon the completion of its repositioning. The existing tenant
in that space will pay an early termination fee of approximately
$7.40 per square foot upon completion of the work related to the
repositioning.
4 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.
5 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.
6 As a part of INDUS’ 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20220405006234/en/
Jon Clark Executive Vice President, Chief Financial
Officer (860) 286-2419 jclark@indusrt.com
Investor Relations investor@indusrt.com
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