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 corporate updates for the three months
ended June 30, 2022 (the “2022 second quarter”)1:
Highlights
- Completed the acquisition of a fully leased, approximately
205,000 square foot portfolio of last-mile facilities located in
the Orlando and Palm Beach, Florida markets
- Completed two leases of first generation space totaling
approximately 102,000 square feet and two lease renewals totaling
approximately 256,000 square feet
- Developed and placed in service a 67% pre-leased, approximately
102,000 square foot building in Lehigh Valley, Pennsylvania
- Stabilized2 portfolio was 100.0% leased as of June 30, 2022;
total in-service portfolio was 99.4% leased as of June 30,
2022
- Amended and restated the existing $100 million Credit Agreement
to increase the size to $250 million with the addition of a new
$150 million delayed draw term loan with a term of five years (the
“Term Loan”)
- Repaid four existing mortgages covering ten buildings with $60
million in proceeds from the Term Loan resulting in no fixed-rate
debt maturities until 2027
Leasing Activity3
INDUS reported the following second generation leasing metrics
for the 2022 second 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
Renewals
2
256,000
3.2
$0.46
41.1%
34.7%
In addition to the above leases signed during the period, INDUS
also executed two first generation leases totaling approximately
102,000 square feet for projects currently in its development
pipeline (see below section on “Development Pipeline”). One lease
is for the expansion of a seven-year agreement with a leading
global shipping and logistics company for the balance of 110
Tradeport Drive. The tenant had previously signed a lease for
156,000 square feet and in the 2022 second quarter opted to lease
the remaining 78,000 square feet. The other lease is a five-year
agreement for approximately 24,000 square feet at Landstar
Logistics. These leases are expected to commence in the third
quarter of 2022.
As of June 30, 2022, INDUS’ 39 buildings aggregated
approximately 5.7 million square feet. INDUS’ portfolio percentage
leased and percentage leased of stabilized properties were as
follows:
June 30,
2022
Mar. 31,
2022
Dec. 31,
2021
Sept. 30,
2021
Percentage Leased
99.4%
100.0%
98.4%
95.4%
Percentage Leased – Stabilized
Properties
100.0%
100.0%
100.0%
99.4%
As of June 30, 2022, INDUS’ only vacancy reflects approximately
34,000 square feet in the Lehigh Valley, Pennsylvania building that
was developed and placed in service in the 2022 second quarter (see
below section on “Development Pipeline”).
The short-term full-building lease of approximately 216,000
square feet at 782 Paragon Way in the Charlotte, North Carolina
market is expected to expire in the third quarter of 2022. INDUS is
currently marketing the space for lease and believes current market
rents are significantly above the previous in-place rent.
Acquisition Pipeline
During the 2022 second quarter, INDUS completed the acquisition
of a fully leased, approximately 205,000 square foot portfolio
located in the Orlando and Palm Beach, Florida markets. The Company
used cash on hand to pay the $31.6 million purchase price, before
transaction costs, which equates to an in-place cash capitalization
rate of approximately 4.6%. With this addition, in Florida INDUS
owns approximately 621,000 square feet across seven buildings in
addition to a two-building project totaling 195,000 square feet
currently under development.
The following is a summary of INDUS’ acquisition pipeline as of
June 30, 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
Q4 2022
Charleston Forward Acquisition (one
building)
Charleston, SC
263,000
Forward
$28.0
Q1 2023
Greenville-Spartanburg Acquisition
(one building)
Greenville-Spartanburg, SC
280,000
Forward
$28.5
Q2 2023
Charlotte Forward Acquisition (one
building)
Charlotte, NC
231,000
Forward
$21.2
Q3 2023
Total Acquisition Pipeline
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
During the 2022 second quarter, INDUS completed and placed into
service its approximately 102,000 square foot building in Lehigh
Valley, Pennsylvania. INDUS had pre-leased approximately 68,000
square feet of this building and is currently marketing the
remaining approximately 34,000 square feet (see above section on
“Leasing Activity”).
The following is a summary of INDUS’ development pipeline as of
June 30, 2022:
Name
Market
Building Size (SF)
Type
Expected Delivery
Owned Land
110 Tradeport Drive (one building)
Hartford, CT
234,000
100% Pre-leased
Q3 2022
Landstar Logistics (two buildings)
Orlando, FL
195,000
Speculative/12.3% Pre-leased
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
Q1 2024
Lehigh Valley Land 2 parcel (one
building)
Lehigh Valley, PA
91,000
Speculative
Q1 2024
Total Development Pipeline
816,000
INDUS expects that the total development and stabilization costs
of developments in its pipeline will total approximately $102
million, of which $36 million has been 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 parcels 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.
Corporate Updates
On April 21, 2022, the Company amended its Credit Agreement to
increase the size to $250 million with the addition of the new $150
million Term Loan. In addition, INDUS amended the maturity of its
existing $100 million revolving credit facility under the Amended
Credit Agreement from August 2024 to a new expiration date of April
2025 which remains subject to two, one-year extension options. The
Amended Credit Agreement includes an accordion feature enabling the
Company to increase the total borrowing up to an aggregate of $500
million which may take the form of additional revolving loan
capacity or additional term loans, subject to certain conditions.
The Term Loan bears an interest rate subject to a pricing grid
based upon the Company’s ratio of total indebtedness to total asset
value. Based on the Company’s current indebtedness, the Term Loan
would bear an interest rate of SOFR plus a spread of 1.15%.
Concurrent with the closing on the Term Loan, the Company entered
into an interest rate swap to fix the interest rate on the Term
Loan at an effective rate of 4.15%.
In May, the Company made an initial draw of $60 million from the
Term Loan to repay approximately $62 million of existing mortgage
debt (the “Repaid Debt”) which had encumbered ten buildings. In the
third quarter of 2022, the properties previously secured by the
Repaid Debt will be added to the Company’s borrowing capacity under
the Amended Credit Agreement. The Company currently has no
borrowings outstanding under its revolving credit facility and no
fixed rate debt maturities until 2027.
About INDUS
INDUS is a real estate business principally engaged in
developing, acquiring, managing, and leasing industrial/logistics
properties. INDUS owns 39 buildings aggregating approximately 5.7
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, and the
estimated underwritten stabilized Cash NOI yield of the Company’s
development pipeline. 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 (“SEC”) filings, including the “Business,” “Risk
Factors” and “Forward-Looking Statements” sections in INDUS’ Annual
Report on Form 10-K for the year ended December 31, 2021, filed
with the SEC on March 11, 2022, as updated by other filings with
the SEC. 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. 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/20220706005854/en/
Jon Clark Executive Vice President, Chief Financial Officer
(860) 286-2419 jclark@indusrt.com
Investor Relations investor@indusrt.com
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