Lxp Industrial Trust · NYSE:LXP
Lxp Industrial Trust — Lexington Realty Trust — Merger or Acquisition (September 2018)
31 slides from Lxp Industrial Trust's merger presentation, Sep 5, 2018
Slide 1: Lexington Realty Trust Announces Disposition of 21-Property Office Portfolio for $726 Million to Joint Venture
September 4, 2018 Lexington Realty Trust Announces Disposition of 21-Property Office Portfolio for $726 Million to Joint Venture
Slide 2: Disclosure
Disclosure This presentation contains certain 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, which involve known and unknown risks, uncertainties or other factors not under Le
Slide 3: Disclosure
Disclosure This presentation should be read in conjunction with Lexington’s Quarterly Supplemental Information for the second quarter of 2018 as furnished to the Securities and Exchange Commission (“SEC”) on a Current Report on Form 8-K dated August 8, 2018 (the “Quarterly Supplemental Information”)
Slide 4: Transaction Details
Transaction Details . Lexington disposed of 21-property suburban office portfolio for $726 million to newly formed joint venture (one property held in escrow pending lender confirmation of a permitted transfer) . GAAP and cash capitalization rates of 8.6% and 8.1%, respectively . Lexington received
Slide 5: Transaction Benefits
Transaction Benefits . Expected to increase Lexington’s industrial exposure to 60% of consolidated GAAP rent while reducing suburban office exposure to 35% of GAAP rent . Accelerates Lexington’s business plan to recycle capital out of suburban office portfolio to become a single-tenant industrial fo
Slide 6: Office Portfolio Joint Venture Snapshot
Office Portfolio Joint Venture Snapshot Metrics Joint Venture Portfolio # of Properties 21 Total Square Feet 3.8 million Average Building Size (square feet) 182,000 Average Age (years) 23 Average Lease Duration(years) 9.5 % Leased 98.6% Rent per Square Foot - Cash $15.38 Price per square foot $190.0
Slide 7: Office Portfolio Joint Venture Locations
Office Portfolio Joint Venture Locations Geographic Location Tenants Tenant City State East Midwest AvidXchange Charlotte NC 4 properties Atlantic Health Rockaway NJ TMG Health Jessup PA McGuireWoods Richmond VA Amazon Huntington WV Midwest Career Education Schaumburg IL NV PA NJ Corporation IL OH M
Slide 8: Joint Venture Capitalization & Sources/Uses
Joint Venture Capitalization & Sources/Uses Joint Venture Capitalization Lexington Sources & Uses LXP Net Cash Proceeds ($ in Millions) Joint Venture Structure ($ in Millions) Gross Sales Proceeds $ 726 Capitalized Venture Value (purchase price/venture costs) $ 734 Assumed Debt (103) Transaction Cos
Slide 9: 2018 Earnings and Leverage Impact
2018 Earnings and Leverage Impact Impact on Earnings 2018 Previous Guidance 2018 Revised Guidance Net Income $0.24 - $0.27 $0.94-$0.96 Adjusted Company FFO $0.95 - $0.98 $0.92-$0.94 For the quarter ended March 31, 2019, the April 2019 dividend/distribution is expected to be adjusted in-line with tax
Slide 10: Meaningful Progress Continues…
Meaningful Progress Continues… Substantial step toward single-tenant net leased industrial REIT 2013 2017 As Adjusted 6/30/2018 44% 25% Industrial 60% Industrial Industrial 35% Office 6% Other 4% Multi- 8% 61% 52% Tenant Multi- Office Office Tenant 1% Other 2% Other 2% Multi- Tenant 10
Slide 11: Second Quarter
Second Quarter Investor Presentation September 2018 11
Slide 12: Investment Features
Investment Features Single-Tenant, Net-Lease Industrial Strategy High-Quality, Diversified Portfolio Long-Term Growth Potential Active Portfolio Management Consistent Operating Performance Flexible Balance Sheet 12
Slide 13: Investment Strategy
Investment Strategy INVESTMENT . Three-pronged growth strategy—build-to-suit, sale-leaseback, industrial purchases . Long-term net leases, typically 7-20 years FOCUS . Single-tenant properties SECTOR FOCUS . Industrial INCOME & . Provide dividends that are attractive relative to fixed income alterna
Slide 14: Investment Strategy Advantages
Investment Strategy Advantages Investments primarily in single-tenant, net leased properties with long-term leases through build-to-suits, sale leasebacks, or purchases. Industrial Net-Leased Long-Term Leases Build-to-Suits Sale Leasebacks Properties . Total rent payable often . Ability to originate
Slide 15: Portfolio Transformation Continues
Portfolio Transformation Continues Through focused strategy, continue to show meaningful progress towards creating a best-in-class industrial net-lease REIT. As Adjusted Portfolio Metrics 2013 Q2 2018 Status Industrial Exposure 25.3% 60.2% Office Exposure 61.3% 34.5% % of Revenue from Long-Term Leas
Slide 16: Well-Diversified Portfolio (As Adjusted 6/30/2018)
Well-Diversified Portfolio (As Adjusted 6/30/2018) Geographic Diversification Revenue Sources by Property Type 5.3% 2 2 3 1 1 1 1 3 7 1 Industrial 1 2 2 1 7 Office 6 5 2 3 1 6 4 1 6 34.5% Other 6 4 16 1 9 7 3 6 60.2% 1 14 3 5 Top 10 Markets(%) Top 10 Industries(%) Houston/Sugar Land/Baytown TX 9.7 C
Slide 17: Diversified Revenue Sources (As Adjusted 6/30/2018)
Diversified Revenue Sources (As Adjusted 6/30/2018) Top 10 Tenants (GAAP Basis) Revenue by Credit Rating % of Top 10 Tenants or Guarantors Base Rent 39% Dow 4.8% Unrated Preferred Freezer 4.2% Nissan 4.2% 18% Non- FedEx 3.9% IG Metalsa/ Dana 3.2% Swiss RE 2.6% 43% Investment USA 2.6% Grade Undisclos
Slide 18: Industrial Portfolio (As Adjusted 6/30/2018)
Industrial Portfolio (As Adjusted 6/30/2018) Portfolio Metrics Lease Escalations # of Properties 82 4% Total Square Footage 37.5M 7% Annual Escalations Net Operating Income(six months as of 6/30/2018) $87.9M Flat Rent 19% % Leased 99.9% Other Escalations Average Weighted Lease Term(years) 10.1 70% S
Slide 19: Consolidated Office Portfolio (As Adjusted 6/30/2018)
Consolidated Office Portfolio (As Adjusted 6/30/2018) Portfolio Metrics Lease Escalations # of Properties 40 3% Total Square Footage 6.2M 17% Annual Escalations Net Operating Income(six months as of 6/30/2018) $51.0M Flat Rent % Leased 99.4% 59% Other Escalations 21% Average Weighted Lease Term(year
Slide 20: Execution: Strong Acquisition Activity
Execution: Strong Acquisition Activity Historically strong acquisition activity with attractive pricing. Property Build-to-Suit Completion and Acquisition Volume and Cash Capitalization Rate $800 8.4% $727.6 9.0% $700 7.6% 7.4% 8.0% $590.4 6.8% $600 5.8% 7.0% $483.0 6.0% $500 6.4% 5.9% $390.0 5.0% $
Slide 21: Portfolio Repositioning Activity (As Adjusted 6/30/2018)
Portfolio Repositioning Activity (As Adjusted 6/30/2018) Have consistently used proceeds from non-core dispositions to recycle capital into higher-quality properties. Property Disposition Volume and Cash Capitalization Rate $1,000 $966 10.0% $900 9.0% 8.1% $800 7.2% 8.0% (millions) 6.5% $700 6.3% $6
Slide 22: Stable and Predictable Cash Flows (As Adjusted 6/30/2018)
Stable and Predictable Cash Flows (As Adjusted 6/30/2018) Weighted-Average Lease Term Scheduled Rental Increases (In Years) 3% 9.5 9.1 9.1 11% 9.0 8.6 8.6 8.6 Annual increases 8.5 8.2 Flat 20% 8.0 Other scheduled increases 7.5 Stepdowns 2013 2014 2015 2016 2017 Q2 2018 66% Long-term Lease Revenue Le
Slide 23: Managing Lease Expirations (As Adjusted 6/30/2018)
Managing Lease Expirations (As Adjusted 6/30/2018) Diligent focus on addressing upcoming expirations. Lease Expiration Schedule – Consolidated Single-Tenant Properties $18,000 10.7% $16,000 9.9% $14,000 9.1% $12,000 6.5% In 000’s In $10,000 6.2% GAAP Rent $8,000 4.7% 4.4% $6,000 3.6% 3.0% $4,000 2.1
Slide 24: Consistent Operational Performance (As Adjusted 6/30/2018)
Consistent Operational Performance (As Adjusted 6/30/2018) Continue to maintain consistent occupancy through proactive leasing efforts. Historical Occupancy and Leasing Volume 8,000 97.3% 97.6% 98.9% 100.0% 97.2% 96.8% 96.4% 95.9% 96.0% 6,000 95.0% 4,000 SF in 000s in SF Leasing Leasing Volume 90.0%
Slide 25: Flexible Capital Structure (As Adjusted 6/30/2018)
Flexible Capital Structure (As Adjusted 6/30/2018) Maintain maximum flexibility to access most advantageous source of capital. Preferred Amount ($ in Interest Rate/ Trust Equity, Debt Millions) Coupon Preferred, 2.3% 3.1% Unsecured Credit Facility Due 2019 $ - Libor + 1% Unsecured Term Loan Due 2020
Slide 26: Balance Sheet Strategy (As Adjusted 6/30/2018)
Balance Sheet Strategy (As Adjusted 6/30/2018) Focus on extending maturities, unencumbering assets, maintaining investment-grade ratings and selectively utilizing secured financing. Consolidated Debt Maturity Profile ($000’s) Credit Metrics Summary Unencumbered Assets $2.7B Unencumbered NOI 72.7% $3
Slide 27: Non-GAAP Measures-Definitions
Non-GAAP Measures-Definitions Lexington has used non-GAAP financial measures as defined by Regulation G promulgated by the Securities and Exchange Commission in this presentation. Lexington believes that the measures defined below are helpful to investors in measuring Lexington’s performance or that
Slide 28: Non-GAAP Measures-Definitions, cont.
Non-GAAP Measures-Definitions, cont. Net operating income (NOI): a measure of operating performance used to evaluate the individual performance of an investment. This measure is not presented or intended to be viewed as a liquidity or performance measure that presents a numerical measure of Lexingto
Slide 29: Appendix
UD EXINGTON Appendix 29
Slide 30: 2018 Business Plan Execution
2018 Business Plan Execution 2018 Current Guidance As of June 30, 2018 Acquisitions ~ No formal guidance ~ $137M of industrial purchases @ 7.3% & 5.8% GAAP/cash cap rates As of date of this presentation: Dispositions ~ Up to $1 Billion (property dispositions) at estimated GAAP/cash cap rates of 8.7%
Slide 31: Net-Lease Expertise. Diversified Portfolio. Quarterly Dividends.
Net-Lease Expertise. Diversified Portfolio. Quarterly Dividends. One Penn Plaza, Suite 4015 | New York, NY 10119-4015 | (212) 692-7200 | www.lxp.com
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