8-K: Plymouth Industrial REIT Reports Solid Q4 Results, Announces Share Repurchase Program

Plymouth Industrial REIT (PLYM) announced its Q4 and full-year 2024 financial results, highlighting strategic portfolio moves and a new share repurchase program.

Summary

• Plymouth Industrial REIT reported a net income attributable to common stockholders of $3.25 per share for Q4 2024 and $3.06 per share for the full year.
• Core FFO was $0.46 per share in Q4 and $1.83 per share for the year, while AFFO was $0.40 per share in Q4 and $1.74 per share for the year.
• Same-store NOI increased by 1.1% on a GAAP basis and decreased by 0.5% on a cash basis for Q4, excluding early termination income.
• For the full year, same-store NOI increased by 1.5% on a GAAP basis and 4.1% on a cash basis, excluding early termination income.
• The company completed the contribution of 34 properties in the Chicago MSA to a joint venture with Sixth Street Partners for $356.6 million.
• A share repurchase program of up to $90 million was authorized by the Board of Directors.
• Full-year 2025 guidance includes a net loss per share of $0.26 to $0.23 and Core FFO of $1.85 to $1.89 per share.
• Leasing activity saw a 19.4% increase in rental rates on a cash basis for leases commenced in Q4 and a 17.1% increase for the full year.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to solid financial results, strategic portfolio moves, and a share repurchase program. However, some negative factors like decreased same-store NOI and a projected net loss temper the overall outlook.

Positives

• The company authorized a share repurchase program of up to $90 million.
• The company completed a joint venture with Sixth Street Partners, unlocking capital and expanding the platform.
• The company improved liquidity on its balance sheet.
• The company saw a 17% increase in cash rent spreads on renewals and new leases during 2024.
• The company completed phase 1 of its development program, consisting of 772,622 square feet across seven buildings, which is 100% leased.
• The company entered into a $600 million amended and restated unsecured credit facility, providing expanded borrowing capacity and extended maturities.
• The company acquired a portfolio of industrial properties in Cincinnati, Ohio for $20.1 million, which equates to an initial NOI yield of 6.8%.

Negatives

• Same store NOI decreased 0.5% on a cash basis excluding early termination income for the quarter.
• Total portfolio occupancy at December 31, 2024 was 92.5% and reflects a 110-basis-point negative impact from previously disclosed tenancy issues in Cleveland, a 10-basis-point positive impact from the inclusion of the recently acquired Cincinnati portfolio, and a 70-basispoint negative impact from net leasing activity in the fourth quarter of 2024.
• Full year 2025 guidance includes a net loss per weighted average common share of $0.26 to $0.23.

Risks

• The company faces risks and uncertainties that could cause actual results to differ materially from forward-looking statements.
• The company's 2025 guidance does not include the impact of any prospective dispositions or capitalization activities.
• The company's success depends on its ability to manage and lease its properties effectively.
• The company's performance is subject to market conditions and economic factors.

Future Outlook

Plymouth issued its full year 2025 guidance ranges for net loss per weighted average common share of $0.26 to $0.23 and Core FFO of $1.85 to $1.89 per weighted average common share and units along with accompanying assumptions.

Management Comments

• During 2024, our focus on driving organic growth through leasing and improved property operations resulted in a 17% increase in cash rent spreads on renewals and new leases.
• With nearly one third of our existing leases scheduled to expire over the next two years, we see further opportunity to increase rents.
• We also entered into an exciting partnership with Sixth Street by expanding our platform and providing access to a significant amount of capital to fuel accretive growth to benefit our shareholders.
• Based on our capital allocation decisions, improved liquidity on our balance sheet, and a strong mix of assets in the Golden Triangle, we believe Plymouth is well-positioned to take advantage of market opportunities in 2025.

Industry Context

Plymouth's markets experienced better trends than the broader national story on the industrial market in Q4 2024 and in what is projected for 2025, according to Cushman & Wakefield, Moody's Analytics CRE, and CBRE EA data.

Comparison to Industry Standards

• Cushman & Wakefield noted that the national average asking rent for industrial space rose by 0.9% QOQ to $10.13 per square foot (psf).
• In the Midwest at year-end 2024, the average net asking rental rates increased 8.0% to $6.59 per square foot psf with an additional 2.5% projected increase to $7.01 psf by year-end 2026.
• Overall vacancy remained 30 bps below pre-pandemic levels, with half of the markets tracked by Cushman & Wakefield Research recording rates below 6.0% at year-end.
• Vacancy rates continued to be nuanced by size segment with smaller industrial product (under 100,000 sf) remaining tight at 3.9%, which is the leasing segment that Plymouth mostly deals in with average tenant size at 58,340 sf.
• Big-box product (300,000+ sf) recorded a 10.7% vacancy rate, driven by 51% of YTD speculative deliveries in this segment.
• In Plymouth markets, according to Moodys Analytics CRE data, asking rents increased 2.4% during 2024 and are forecasted to grow 3.0% in 2025 with a five-year average annual asking rent growth of 3.5%.

Stakeholder Impact

• Shareholders will benefit from the share repurchase program and potential for long-term value creation.
• Tenants will continue to receive cost-effective industrial space that is functional, flexible, and safe.
• Employees will be part of a company that is strategically positioned for growth.

Next Steps

• The company will continue to actively market the balance of the building in St. Louis and is also working with its new tenant on expansion options.
• The company expects to execute a 300,000-square-foot replacement tenant in Columbus shortly.
• The company will continue to drive long-term shareholder value.

Key Dates