Good morning, and welcome to the LXP Industrial Trust Fourth Quarter Earnings Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions]. Thank you. I would now like to turn the call over to Heather Gentry, IR. Please go ahead, Heather.

Thank you, operator. Welcome to LXP Industrial Trust fourth quarter 2024 earnings conference call and webcast. The earnings release was distributed this morning and both the release and quarterly supplemental are available on our website in the Investors section and will be furnished to the SEC on a Form 8-K. Certain statements made during this conference call regarding future events and expected results may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. LXP believes that these statements are based on reasonable assumptions. However, certain factors and risks, including those included in today's earnings press release and those described in reports that LXP files with the SEC from time to time could cause LXP's actual results to differ materially from those expressed or implied by such statements. Except as required by law, LXP does not undertake a duty to update any forward-looking statements. In the earnings press release and quarterly supplemental disclosure package, LXP has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure. Any references in these documents to adjusted company FFO refer to adjusted company funds from operations available to all equity holders on a fully diluted basis. Operating performance measures of an individual investment are not intended to be viewed as presenting a numerical measure of LXP's historical or future financial performance, financial position or cash flows. On today's call, Will Eglin, Chairman and CEO; Beth Boulerice, CFO; Brendan Mullinix, CIO and Executive Vice President, James Dudley, will provide a recent business update and commentary on fourth quarter results. I will now turn the call over to Will.

Thanks, Heather. Good morning, everyone. Our fourth quarter results were highlighted by continued favorable leasing outcomes and solid same store NOI growth. Leasing volume in the quarter of nearly 1 million square feet produced exceptionally strong base and cash based rental increases of approximately 66% and 43% respectively, excluding a fixed rate renewal. Our fourth quarter performance capped off a great year of accomplishment in our business. On the investment side, we sold our remaining consolidated office assets, opportunistically divested four industrial assets and sold our ground lease property in Phoenix, resulting in considerable value creation. We redeployed most of the proceeds into a build to suit and four Class A properties in our Sunbelt markets at attractive pricing. Moving to leasing, we completed 4.5 million square feet of volume and continued to post exceptional mark to market outcomes, increasing base and cash base rents approximately 46% and 40% respectively, excluding TI amortization in one prior lease and one fixed rate renewal. Additionally, our average annual escalators continue to trend higher reaching 2.8% at year-end and we achieved strong same store NOI growth of 5% for the year. These results demonstrate the strength of our leasing team and the value of owning high-quality assets in our target market. On the balance sheet front, in the third quarter, we capitalized on a favorable market window and executed forward interest rate swap agreements on $333 million of floating rate debt. These transactions combined with the repayment of $50 million of floating rate term loan debt after quarter end effectively locked in fixed rates on 97% of our debt through year end 2026. Further, we reduced leverage to 5.9 times net debt to adjusted EBITDA at year end, down from 6.1 times at the end of the third quarter. We are focused on…

Thanks, Will. During the fourth quarter, we acquired four industrial assets for approximately $158 million in Atlanta, Houston and Savannah. The Class A facilities have an average initial yield of 6% with a weighted average lease term of 6.3 years and 3.6% average annual escalators. The properties were built to modern specs with an average age of two years and a building size of approximately 294,000 square feet. These three markets in the Sunbelt have continued to experience positive net absorption and are benefiting from investment in transportation infrastructure and onshoring trends with significant investment in advanced manufacturing facilities, including several large projects nearing completion and operations. Our 625,000 square foot Class A build to suit in the Greenville Spartanburg market substantially completed late in the fourth quarter with an aggregate estimated investment of approximately $74 million and an estimated cash cap rate of a little over 7%. The facility is leased for 12 years with 3% escalations and was built to modern specs including 40-foot clear height and the capacity to expand by an additional 174,000 square feet. Rent commenced with a substantial completion of the building in December. While we are being selective with respect to new investments, we will evaluate opportunities to unlock value in properties outside of our target markets to make strategic investments in our target markets as we did in 2024. Finally, we sold our interest in the approximately 100-acre Phoenix Ground lease land parcel upon the exercise of the tenant's purchase option late in the fourth quarter. Our share of the sales proceeds was approximately $83 million or $871,000 per acre, representing an approximately $60 million profit over our initial investment in just under three years. As a reminder, we acquired the original 415-acre site in the West Valley of Phoenix in 2021 for $101 million or approximately $243,000 an acre. The recent sale of the 100 acres unlocked considerable value and we believe demonstrates the potential to produce additional value from the site over time. The remaining 315 acres can support as much as approximately 5 million square feet of future industrial spec development and build-to-suit opportunities with build-to-suit projects currently our focus. With that, I'll turn the call over to James to discuss leasing.

Thanks, Brendan. We're pleased to see that the overall industrial leasing market is beginning to show signs of improvement post-election. Cushman reported the U.S. net absorption increased a little over 10% quarter over quarter nationally as construction deliveries continue to decelerate. Our top 12 markets, which comprise less than 30 of the total inventories nationwide, experienced net absorption of approximately 32 million square feet, making up a significant portion of U.S. Net absorption in the fourth quarter. National vacancy ticked up slightly in the fourth quarter, but appears to be slowing when compared to the first half of 2024, potentially indicating vacancy could reach peak level by midyear 2025. Average national asking rents ticked slightly higher in the quarter with annual rent growth relatively flat. Rent growth in our top 12 markets grew on average just over 1% in the quarter. Tenant activity is increasing across our markets, although final decision-making remains slow. During the quarter, we addressed our remaining 2024 lease expiration, except for two small vacancies in DFW and Greenville Spartanburg markets, posting final cash rental growth of approximately 28%, excluding fixed rate renewals on all leases that expired in 2024. With respect to vacancies, we expect both facilities to lease in 2025 as they are well positioned in their respective markets and anticipate the average mark-to-market on these assets to be approximately 45%. We achieved excellent leasing outcomes during the quarter and subsequently illustrating the portfolio's asset quality and value of owning Class A newer product. On the renewal side, we leased our 150,000 square foot facility in the Chicago market for three years with 4% average annual rental bumps and 118,000 square feet of space at our multi-tenanted facility in Nashville for seven years with 3.5% annual escalators, a cash rental increase of approximately 29% and…

Thanks, James. Total gross revenues in the fourth quarter were approximately $101 million which included $15 million of additional revenue from a sales type lease due to the exercise of the purchase option at our Phoenix ground leased asset. Our fourth quarter property operating expenses were about $15 million, of which 89% was attributable to tenant reimbursement. Adjusted company FFO in the fourth quarter was $0.16 per diluted common share or approximately $47 million, with full year 2024 adjusted company FFO of $0.64 per diluted common share. As mentioned earlier, our 2025 adjusted company FFO guidance range is $0.61 to $0.65 per diluted common share. In addition to leasing assumptions, this guidance includes the impact of higher interest expense on our term loans with the all-in rate increasing from approximately 2.7% to approximately 4.3%. Lower interest income on cash on the balance sheet and less benefit from the capitalization of interest given the substantial completion of our development projects in 2024. G&A was approximately $10 million in the quarter, with our 2024 G&A coming in within our expected range at $40 million. We expect 2025 G&A to be within a range of $39 million to $41 million. Our same-store portfolio was 99.5% leased at quarter end, and same-store NOI increased 4.1% in the fourth quarter when compared to the same period in 2023. At quarter end, approximately 98.5% of our portfolio leases had escalation with an average annual rate of 2.8%. With respect to 2025, we are estimating same-store NOI growth to be within a range of 3% to 4%, which considers a range of leasing assumptions. At year-end, our total consolidated debt outstanding was approximately $1.6 billion with a weighted average interest rate of 3.68% and a weighted average term to maturity of 5.5 years. Subsequent to year-end, we repaid $50 million on our term loan and our $600 million unsecured credit facility remains fully available. With that, I'll turn the call back over to the operator, who will conduct the question-and-answer portion of this call.

[Operator Instructions]. And our first question comes from the line of Todd Thomas with KeyBanc Capital Markets.

Good morning. I just wanted to touch on some of the larger boxes, the developments. It sounds like there's some additional interest there. Can you just elaborate a little bit further and discuss the environment a little bit and whether the type of users interested has changed? And then also through this cycle, are you seeing any change in to stabilize yield expectations relative to the 6% to 6.5%, I think that you were previously -- that you've been targeting for those projects?

Todd, this is James. I'll take the first part of that question and let Brendan touch on the yield piece. But we were very excited to see the activity that we've seen in January. Looking back to last year, activity was really slow kind of across the markets through mid-February. And for example, in India, we had 3 tours over 2 days in early January. And it seems like there are a lot more tire kickers. We still need to see leases get signed. There was one lease that got signed recently in that market. That submarket in particular, we've seen a couple of transactions in the Greenville market, too, that give us hope that they're real and that we're going to move some transactions along. As far as the type of tenants, it's still pretty broad. We have some construction-based tenants. We have some e-commerce tenants. We've got 3 PLs, kicking the tires. So again, kind of a broad range of different types of tenants looking at the space. But it does feel different than last year and the back half of last year as far as the activity -- and as these deals start to get signed in the markets, hopefully, it pushes some of these tenants that have been way to make a decision off the sidelines and to making a decision.

And then with respect to yield expectations, as was just discussed, the balance of what remains to lead in the development pipeline is really concentrated in these larger buildings, which is -- remains a more competitive part of the market from a supply standpoint. I would estimate that this remaining balance to lease these larger buildings stabilized around 6%. And that prior guidance to also included the stabilization of the Aetna project that we recently stabilized at much higher yields, too.

Okay. That's helpful. And then I wanted to just ask about the comments around lower tenant retention -- you talked about, I think, previously move out early in the year, I think, around 125,000 square feet and then another larger July 1. Is that what you're referring to? Or is there some additional known move-out activity nonrenewals that you're aware of? Or is that just some additional conservatism that's sort of embedded in the guidance? I mean, what kind of renewal rate are you assuming as you work through the balance of the 25 expirations?

So, a couple of things. One, there is one known move-out that we would add to that list. You mentioned the 124 that's in Northwest Atlanta. There's also a 248 in Houston that's currently leased to a 3PL through April that we know is going to move out. We've had some good activity on that space. And then you referred to the contraction option that we have in Richmond with Philip Morris and we're working through getting that property ready to go back and lease. The good news is on the Houston asset and on the Philip Mors asset, we expect really strong mark-to-market on both of those. And then the balance of the commentary is just really about being conservative, the majority of what we have is in the back half of the year. And we're not exactly sure how it's going to play out, but we don't have the same certainty that we had on some of the 2024 outcomes going into 2025.

Okay. All right. Thank you.

And our next question comes from the line of Vince Tibone with Green Street. Vince please go ahead.

Good morning. Could you elaborate a little bit further on just the competitive landscape for each of your 1 million square foot development projects? Like specifically, how many buildings are you really competing against for tenants in each market, submarket? Any further color there would be very helpful.

Sure, Vince. This is James again. So, going to Andy first. there are 10 buildings over 50 -- call it 550,000 square feet in our submarket, for over 944. So, it's really if we're competing for a single tenant million square foot or -- we have four other competitors, so we're one of five. And if we're kind of looking at cutting the building, then it jumps up to being Greenville, the market is a little bit tighter there from a competitive perspective. And we did have a couple of good outcomes there where we had a 3PL at least one of our 1 million square foot competitors in Japan, and we had another competitor come off the market that's sold to a tenant. So real competition there is only a handful if you're talking about 1 million square foot users, call it, being $105 million -- there is some sublease space on the market that would add to that, but it's got some functional obsolescence and we don't really consider it to be competition. And then kind of looking into Central Florida, it really depends on how big of a geography you want to look at there. But it's -- again, it's a handful of buildings. In our direct market, we really only have 1 that we compete with. But if you expand it and kind of take it in Plant City in the I-4 corridor, then it grows to be about 5.

No, that's superb color. I appreciate that. Maybe just switching gears. Can you just talk about kind of what's the near-term capital allocation plan, just given the discount NAV currently? Just how are you thinking about buying and selling, capital recycling any additional development potentially? I just love to get your thoughts there?

Sure. Last year, we did some sales out of noncore markets. There may be a little bit of that going forward. We are focused on the 12 markets that we would expect to put more capital to work in -- on -- with respect to land that we own, we would be interested in build to suit because there's a yield premium there. But beyond that, it's a priority for us to work our leverage down to 5 times. We think that that's key in terms of improving our valuation.

[Operator Instructions]. Your next question comes from the line of James Kammert with Evercore ISI. James please go ahead.

Thank you. Good morning. Will your comments that, obviously, at the low end of guidance, there's no pursuing leasing on the recently developed properties. And then are you into maybe have sort of lease-up get to the higher end of guidance and more in the second half of the year. Is that a reasonable assumption?

Yes, Jim, that's exactly right.

Okay. And then I was also just trying to think, you got $0.16 coming run rate out of the fourth quarter, $0.64 annualized. I realized there are offsets, but how much I guess, relating to the earlier question, sort of a headwind to get kind of lower end of your guidance. Are you -- are some of those bigger headwinds just remind me? Because it seems like a fairly sharp drop-off, just trying to make sure we got all the pieces.

Jim, it's Beth. -- sure. One of the things is interest expense. So, our net interest expense is going up. a little over $0.01 relating to the 2024 bond refi and also due to the step-up in the swap on our term loan. If you remember, our term loan was at 2.7% and now it's going up to 4.3%. So, there's a spread there. and also capitalized interest of about $0.01 is also being reflected in the guidance that's coming down because we did the substantial completion of our development projects last year. So those are -- that's the other piece that I think maybe you didn't have.

That's helpful. Appreciate it.

And your next question comes from the line of Mitch Germain with Citizens JMP. Mitch, please go ahead.

This is Jyoti on for Mitch. Just a quick question here. Now the next purchase option is exercised, what are the discussions around the land bank? I think you mentioned there to suit there.

Yes, that's correct. As we've said, the focus remains on build-to-suit. So, in Phoenix, we've continued to respond to build-to-suit inquiries there. And I would say of the entirety of the land bank, there's the most activity has been there in Phoenix, and that's where I would anticipate our next build to see ours.

Thank you.

[Operator Instructions]. There's no further question at this time. I will now turn the call over to Will Eglin for closing remarks. Will?

Well, thanks to all of you for joining us this morning. Please visit our website or contact Heather Gentry if you would like to receive our quarterly materials. And in addition, as always, you may contact me or the other members of our senior management team with any questions. Thanks again, and have a great day.

That concludes today's call. Thank you all for joining. You may now disconnect.