INDUS Realty Trust, Inc. (Nasdaq: INDT) (“INDUS” or the
“Company”) announced the following updates on leasing, its
acquisition and development pipeline, its potential dispositions
and the impact of the COVID-19 pandemic on the Company’s rent
collections:
Highlights
- Signed approximately 202,000 square feet of first generation
leases on in-service industrial/logistics portfolio bringing
industrial/logistics portfolio to 99.2% leased as of March 31,
2021; subsequently increased to 99.4% leased
- Signed a fifteen-year lease agreement and development agreement
with Amazon for an approximately 141,000 square foot build-to-suit
industrial/logistics building on the Company’s land parcel on Old
Statesville Road in Charlotte, North Carolina
- Announced development of a new approximately 234,000 square
foot industrial/logistics building on the Company’s undeveloped
land at 110 Tradeport Drive in the Hartford, Connecticut market
that is 67% pre-leased
- Subsequent to quarter end, entered into an agreement to
acquire, for a purchase price of approximately $11.7 million, a
fully leased approximately 127,500 square foot industrial/logistics
building in the Lehigh Valley of Pennsylvania
- Subsequent to quarter end, closed on the acquisition of
approximately 14 acres of undeveloped land in Orlando for
$5.25 million
- Total potential proceeds of approximately $18.8 million from
sales of non-core land currently under agreement, if all agreements
were to close
Leasing Activity
During the three months ended March 31, 2021 (the “2021 first
quarter”), INDUS executed four first generation leases totaling
approximately 202,000 square feet at 160 and 180 International
Drive in the Charlotte market and 170 Sunport Lane in the Orlando,
Florida market. These new leases had a weighted average lease term
of 6.5 years and a weighted average lease cost per square foot per
year of $1.19.1
As a result of the lease executions mentioned above, both 160
and 180 International Drive in the Charlotte market are now fully
leased. These two buildings aggregating approximately 283,000
square feet were speculative industrial/logistics developments
delivered together in the fourth quarter of fiscal 2019.
Additionally, including a lease signed subsequent to the 2021 first
quarter, the Company’s most recent value-add acquisition, 170
Sunport Lane in the Orlando market, is over 60% leased with only
approximately 27,000 square feet of vacancy remaining.
Additionally, during the 2021 first quarter, INDUS executed two
first generation leases totaling approximately 297,000 square feet
for projects currently in its development pipeline (see below
section on “Acquisition & Development Pipeline”). One of these
first generation leases is a fifteen-year lease agreement and
development agreement with Amazon for a build-to-suit development
(the “Charlotte Build-to-Suit”) on the Company’s 44 acre land
parcel located on Old Statesville Road in Charlotte (the “Charlotte
Land”). Under these agreements, INDUS has agreed to develop a
last-mile approximately 141,000 square foot industrial/logistics
facility for use by Amazon. The facility would utilize all of the
development potential of the Charlotte Land and is expected to be
completed in the 2021 third quarter.
The other of these first generation leases is a seven-year
agreement with a leading global shipping and logistics company for
a portion of a to-be-constructed approximately 234,000 square foot
industrial/logistics building on the Company’s 16 acre land parcel
at 110 Tradeport Drive (the “110 Tradeport Development”) in New
England Tradeport (“NE Tradeport”), the Company’s industrial park
in Windsor and East Granby, Connecticut. Under the terms of the
agreement, the tenant will relocate from its existing approximately
74,000 square foot space in one of the Company’s existing NE
Tradeport industrial/logistics buildings into approximately 156,000
square feet in the 110 Tradeport Development upon its completion,
which is expected by March 31, 2022. INDUS intends to market the
remaining approximately 78,000 square feet in the 110 Tradeport
Development for lease.
In connection with its anticipated election to become a real
estate investment trust for the year ending December 31, 2021, the
Company changed its fiscal year from November 30 to December 31
effective with the 2021 fiscal year that began on January 1, 2021.
As a result of this change, the Company had a one-month transition
period of December 2020 (the “Transition Period”). In December
2020, INDUS renewed an approximately 228,000 square foot full
building lease in the Lehigh Valley with a third-party logistics
company that was originally scheduled to expire on September 30,
2021. This renewal extended the lease term by 12 months.
As of March 31, 2021, INDUS’s thirty industrial/logistics
buildings aggregated approximately 4,206,000 square feet and
represented 91.5% of INDUS’s total real estate portfolio. As a
result of the activity described above, INDUS’s in-service
industrial/logistics portfolio’s percentage leased was as
follows:
|
Mar 31,2021 |
Dec 31,2020 |
Aug 31,2020 |
May 31,2020 |
Percentage Leased |
99.2 |
% |
94.5 |
% |
94.3 |
% |
94.3 |
% |
Percentage Leased – Stabilized Properties2 |
99.2 |
% |
95.7 |
% |
99.7 |
% |
99.7 |
% |
No new office/flex leasing was completed during the Transition
Period or the 2021 first quarter. INDUS’s eleven office/flex
buildings, which aggregate approximately 393,000 square feet and
comprise 8.5% of INDUS’s total real estate portfolio, were 71.3%
leased as of March 31, 2021, unchanged from December 31, 2020.
Acquisition & Development Pipeline
Subsequent to March 31, 2021, INDUS entered into an agreement to
purchase an approximately 127,500 square foot industrial/logistics
building on approximately 13.7 acres of land in the Lehigh Valley
for a purchase price of $11.7 million (the “Lehigh Valley
Acquisition”). The Lehigh Valley Acquisition is fully leased
through December 2022 to a subsidiary of a publicly traded
multinational chemical company and has a 4.5% in-place cash
capitalization rate (first full year Cash NOI/purchase price). The
Lehigh Valley Acquisition has excess, unutilized land that INDUS
believes could receive approvals to be used for additional parking,
for outdoor storage or to expand the existing building. The Company
expects the Lehigh Valley Acquisition to close by June 30,
2021.
The following is a summary of INDUS’s development pipeline for
its industrial/logistics portfolio as of April 13, 2021, which
includes today’s closing on the purchase of an approximately 14
acre parcel of undeveloped land in Orlando for $5.25 million (the
“Orlando Land”), a portion of which was funded using proceeds of
Section 1031 like-kind exchanges from previous non-core asset
sales:
Name |
Market |
BuildingSize (SF) |
Type |
ExpectedDelivery |
Owned Land |
|
|
|
|
Charlotte Land |
Charlotte, NC |
141,000 |
Build-to-Suit |
Q3 2021 |
Lehigh Valley Land |
Lehigh Valley, PA |
103,000 |
Speculative |
Q4 2021 |
110 Tradeport Development |
Hartford, CT |
234,000 |
67% Pre-leased |
Q1 2022 |
Orlando Land |
Orlando, FL |
195,000 |
Speculative |
Q1 2022 |
|
|
|
|
|
Land Under
Purchase & Sale Agreement |
First
& Second Allentown Purchase Agreements |
Lehigh
Valley, PA |
206,000 |
Speculative |
Q2
2022 |
Total |
|
879,000 |
|
|
INDUS expects that the total development and stabilization costs
of developments in its pipeline will total approximately $112
million, of which approximately $21 million has been expended
through April 13, 2021. The Company has underwritten a weighted
average stabilized Cash NOI yield between 6.1% - 6.6% on its
development pipeline. Included in this total is the 110 Tradeport
Development which will benefit from the low cost basis of the
already entitled 16 acre land parcel owned by the Company. The
Company estimates the 110 Tradeport Development will generate an
underwritten stabilized Cash NOI yield between 7.7% - 8.2%.3 Actual
initial full year stabilized Cash NOI yields may vary from INDUS’s
underwritten stabilized Cash NOI yield ranges based on the actual
total cost to complete a project or acquire a property and its
actual initial full year stabilized Cash NOI.
The Company anticipates obtaining construction financing to fund
a portion of the development costs for the Charlotte Build-to-Suit.
Obtaining construction financing, closing on the Lehigh Valley
Acquisition, completion of the development pipeline and
stabilization of completed buildings in the development pipeline
are subject to various significant contingencies and cannot be
guaranteed to be completed in the expected timing, at the Company’s
underwritten yields, or at all.
Dispositions
As of April 13, 2021, INDUS has entered into agreements to sell
the following non-core undeveloped land parcels:
Name |
Location |
Property
Size |
ExpectedClosing |
Sale
Price($ in millions) |
Florida Nursery Farm |
Quincy, FL |
1,066 acres |
Q2 2021 |
$1.1 |
Southwick, MA Land |
Southwick, MA |
91 acres |
Q3 2021 |
$5.3 |
Stratton Farms Residential
Parcels4 |
Suffield, CT |
7 lots |
Q3 2021 |
$0.4 |
60 Griffin Road South
Land |
Bloomfield, CT |
34 acres |
Q3 2021 |
$0.6 |
Meadowood Residential
Parcels |
Simsbury, CT |
277 acres |
Q4 2021 |
$5.4 |
East
Granby / Windsor Parcels |
East
Granby / Windsor, CT |
280
acres |
2022 |
$6.0 |
Total Gross Proceeds of Dispositions Under Agreement, if
Consummated |
|
|
|
$18.8 |
Closings on these potential dispositions are subject to various
significant contingencies and cannot be guaranteed to be completed
in the expected time-frame, at the expected sales prices shown, or
at all.
Rent Collections/COVID-19 Impact
As was the case in the fiscal year ended November 30, 2020,
COVID-19 did not have a material impact on the Company’s rent
collection during the Transition Period and the 2021 first quarter.
INDUS collected 99.9% of rent in each of the months of December
2020 through March 2021, inclusive of rent relief and deferrals.
Since the onset of COVID-19, INDUS has entered into a total of
three agreements that granted rent relief aggregating approximately
0.4% of INDUS’s total annual rental revenue for the fiscal year
ended November 30, 2020. INDUS has not received any new requests
for rent relief since the end of the 2021 first quarter and no
previous requests remain outstanding.
About INDUS
INDUS (formerly known as Griffin Industrial Realty, Inc.) is a
real estate business principally engaged in developing, acquiring,
managing and leasing industrial/logistics properties. INDUS owns 41
buildings totaling approximately 4.6 million square feet (including
30 industrial/logistics buildings aggregating approximately 4.2
million square feet) in Connecticut, Pennsylvania, North Carolina
and Florida in addition to over 3,400 acres of undeveloped
land.
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’s beliefs
and expectations regarding future events or conditions including,
without limitation, statements regarding the completion of
acquisitions and dispositions under agreements, construction and
development plans and timelines, the estimated underwritten
stabilized Cash NOI of the 110 Tradeport Development, expected
total development and stabilization costs of developments in
INDUS’s pipeline, anticipated leasing activity, expectations
regarding excess, unutilized land at the Lehigh Valley Acquisition,
anticipated financing for the Charlotte Build-to-Suit, 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’s Securities and Exchange
Commission filings, including the “Business,” “Risk Factors” and
“Forward-Looking Statements” sections in INDUS’s Annual Report on
Form 10-K for the fiscal year ended November 30, 2020 filed with
the SEC on February 18, 2021 and the “Risk Factors” section in
INDUS’s Registration Statement on Form S-3, filed with the SEC on
February 2, 2021. 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.
CONTACT:Anthony
GaliciChief Financial
Officer(860)
286-1307agalici@indusrt.com
Ashley PizzoDirector, IR & Capital
Markets(212)
218-7914apizzo@indusrt.com
1 Weighted average 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.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.
170 Sunport Lane, which was 53.4% leased as of March 31, 2021, was
acquired in March 2020 and is now included in the Stabilized
Properties pool for the 2021 first quarter.3 As a part of INDUS’s
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.4 The sale of the 16 Stratton Farms
Residential Parcels for a total of approximately $0.9 million is to
be completed in two parts. The sale of the first 9 lots closed in
February 2021 and accounted for approximately $0.5 million of the
gross sales price. The sale of the remaining 7 lots is expected to
close in the 2021 third quarter and represents approximately $0.4
million of the total gross sales price.
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