LXP Industrial Trust (LXP) Nareit REIT Week: 2024 Investor Conference summary

Portfolio strategy and repositioning

• Completed exit from office assets, redeploying capital into modern logistics properties with a focus on the Sun Belt and Midwest markets.

• Over 70% of assets are in the Sun Belt, with a portfolio age under 10 years, supporting high tenant retention and facility utilization.

• Rents are approximately 24% below market, providing significant mark-to-market growth potential as leases roll.

• Lease escalations have improved, now averaging 3.5%-4%, enhancing internal growth.

• Risk of tenant contraction is low, with move-outs mainly due to tenants outgrowing smaller facilities.

Development pipeline and leasing

• Developed 14 buildings, with 9 leased and 5 in lease-up, totaling 3.7 million sq ft yet to lease.

• Full lease-up could add $20 million in EBITDA and reduce leverage toward the lower end of the target range.

• Leasing activity is slower than previous years, but yields on new projects are expected to be 6-6.5%, above initial underwriting.

• Considering dividing larger facilities for multi-tenant use if demand warrants.

Market conditions and rent trends

• Sun Belt and Midwest markets are outperforming major coastal markets, with recent renewals achieving 27% rent increases on a cash basis.

• Expecting leasing spreads of 20%-30% on a cash basis this year, with significant rollover opportunities in 2026-2027.

• Embedded rent escalators average 2.7% portfolio-wide, with new leases averaging 3.7%.