INDUS Realty Trust (INDT) Announces Fiscal 2021 Third Quarter Leasing, Pipeline and Corporate Updates

October 5, 2021 4:04 PM EDT
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INDUS Realty Trust, Inc. (Nasdaq: INDT) (“INDUS” or the “Company”), a U.S. based industrial/logistics REIT, announced the following updates on leasing, its acquisition and development pipeline, its potential dispositions and other corporate matters for the three months ended September 30, 2021 (the “2021 third quarter”):

Highlights

  • Acquired a 139,500 square foot industrial/logistics building in Lakeland, Florida for a purchase price of $17.8 million
  • Entered into an agreement to acquire, for a purchase price of $31.5 million, an under-construction, approximately 184,000 square foot industrial/logistics portfolio in Nashville, Tennessee
  • Entered into an agreement to acquire, for a purchase price of $14.6 million, an approximately 128,000 square foot, fully-leased, industrial/logistics building in Charlotte, North Carolina
  • Entered into an agreement to acquire, for a purchase price of $2.25 million, approximately 10.6 acres of undeveloped land in the Lehigh Valley of Pennsylvania, upon which INDUS intends to construct, on speculation, an approximately 90,000 square foot industrial/logistics building
  • Entered into three separate non-binding letters of intent (“LOIs”) for three industrial/logistics buildings totaling approximately 690,000 square feet for a combined purchase price of approximately $77.8 million
  • Completed new leases of approximately 115,000 square feet and renewals of approximately 145,000 square feet in the industrial/logistics portfolio
  • Generated proceeds of approximately $7.4 million from real estate sales in the 2021 third quarter and announced approximately $40.7 million under contract for sale
  • Entered into a new secured revolving credit facility of up to $100 million
  • Stabilized industrial/logistics portfolio1 was 99.4% leased as of September 30, 2021

Industrial/Logistics Leasing Activity2

INDUS reported the following metrics for its industrial/logistics portfolio for the 2021 third quarter:

Number of LeasesSquare FeetWeighted Avg. Lease Term in YearsWeighted Avg. Lease Costs PSF per Year3Weighted Avg. Rent Growth4
Straight-line BasisCash Basis
New Leases2115,0004.9$0.4427.0%14.2%
Renewals2145,0004.2$0.5315.7%4.3%
Total / Avg.4260,0004.5$0.4920.0%8.0%

As of September 30, 2021, INDUS’s 33 industrial/logistics buildings aggregated approximately 4.9 million square feet. INDUS’s industrial/logistics portfolio’s percentage leased and percentage leased of stabilized properties were as follows:

Sept. 30,2021June 30,2021Mar. 31,2021Dec. 31,2020
Percentage Leased95.4%95.3%99.2%94.5%
Percentage Leased – Stabilized Properties99.4%99.4%99.2%95.7%

As of September 30, 2021, INDUS’s industrial/logistics portfolio vacancy was approximately 225,000 square feet, of which approximately 198,000 square feet was added to its portfolio on June 28, 2021, when the Company acquired its newest value-add acquisition in Charlotte, North Carolina.

Acquisition Pipeline

On August 5, 2021, INDUS purchased a 139,500 square foot industrial/logistics building in Lakeland, Florida for a purchase price of $17.8 million (the “Lakeland Acquisition”). The Lakeland Acquisition is fully leased to two tenants with a weighted average remaining lease term of a little over two years and has a 4.0% in-place cash capitalization rate5. The Lakeland Acquisition increases the Company’s Central Florida industrial/logistics portfolio to approximately 416,000 square feet, not including the approximately 195,000 square foot two-building Orlando speculative development (“Landstar Logistics”) expected to be completed by the end of the 2022 third quarter (see below).

On August 5, 2021, INDUS also entered into an agreement (the “Forward Purchase Agreement”) to acquire, for a purchase price of $31.5 million, an under-construction, approximately 184,000 square foot industrial/logistics portfolio in Nashville, Tennessee (the “Nashville Acquisition”). The Nashville Acquisition is being developed on speculation by the seller and, upon completion, will be comprised of two buildings located in close proximity to downtown Nashville which will be delivered to INDUS vacant. Under the terms of the Forward Purchase Agreement, INDUS expects to close on the Nashville Acquisition by the end of the 2021 fourth quarter.

On August 20, 2021, INDUS entered into an agreement (the “Purchase Agreement”) to acquire, for a purchase price of $14.6 million, an approximately 128,000 square foot, fully leased, industrial/logistics building in Charlotte, North Carolina (the “Charlotte Acquisition”). Under the terms of the Purchase Agreement, INDUS expects to close on the Charlotte Acquisition in the first part of the 2021 fourth quarter. Upon closing of the Charlotte Acquisition and completion of the Charlotte Build-to-Suit (see below), INDUS will own approximately 1.2 million square feet across five high-quality industrial/logistics buildings in the Charlotte market.

During September 2021, INDUS entered into three non-binding LOIs for the purchases of three industrial/logistics buildings for a combined purchase price of approximately $77.8 million. The three buildings that would be acquired aggregate approximately 690,000 square feet. One of these buildings is located in one of INDUS’s existing markets, while the other two located in a new INDUS target market in the Southeast. One of these potential acquisitions is for an existing building, whereas the other two potential acquisitions are forward purchases that, upon completion of construction, are expected to be delivered vacant in the 2022 fourth quarter. All three potential acquisitions are subject to the execution of definitive purchase and sale agreements, as well as satisfactory completion of due diligence and other contingencies.

The following is a summary of INDUS’s acquisition pipeline for its industrial/logistics portfolio as of September 30, 2021:

AcquisitionMarketBuilding Size (SF) TypePurchase Price (in millions)Expected Closing
Acquisitions Under Contract
Nashville Acquisition (two buildings)Nashville, TN184,000 Forward$31.5Q4 2021
Charlotte Acquisition (one building)Charlotte, NC128,000 Fully-Leased$14.6Q4 2021
Subtotal – Acquisitions Under Contract 312,000 $46.1
Acquisitions Under LOI
Forward purchases (three separate agreements for three buildings)690,000 Forward & Value-Add$77.8
Total Acquisition Pipeline – Under Contract & LOI1,002,000 $123.9

Closings on the purchases of the Nashville Acquisition, the Charlotte Acquisition and the three transactions under LOIs are each subject to a number of contingencies, including the satisfactory completion of due diligence by INDUS. There can be no guarantee that these transactions will be completed under their current terms, anticipated timelines, or at all.

Development Pipeline

On August 6, 2021, INDUS entered into an agreement (the “Land Purchase Agreement”) to acquire, for a purchase price of $2.25 million, approximately 10.6 acres of undeveloped land in the Lehigh Valley of Pennsylvania (the “Lehigh Valley Land”). Under the terms of the Land Purchase Agreement, INDUS expects to close on the Lehigh Valley Land upon the seller receiving the requisite development entitlements for the Lehigh Valley Land, estimated to be during the first half of fiscal 2022. Subsequent to closing on the purchase of the Lehigh Valley Land, INDUS expects to begin construction, on speculation, of an approximately 90,000 square foot industrial/logistics building.

The following is a summary of INDUS’s development pipeline for its industrial/logistics portfolio as of September 30, 2021:

NameMarketBuilding Size (SF) TypeExpected Delivery
Owned Land
Charlotte Build-to-Suit (one building)Charlotte, NC141,000 Build-to-SuitEarly October 2021
First Lehigh Valley Land parcel (one building)Lehigh Valley, PA103,000 SpeculativeQ4 2021
110 Tradeport Drive (one building)Hartford, CT234,000 67% Pre-leasedQ3 2022
Landstar Logistics (two buildings)Orlando, FL195,000 SpeculativeQ3 2022
Land Under Purchase & Sale Agreement
First & Second Allentown Purchase Agreements (one building)Lehigh Valley, PA206,000 SpeculativeQ4 2022
Second Lehigh Valley Land parcel (one building)Lehigh Valley, PA90,000 SpeculativeQ1 2023
Total Development Pipeline 969,000

INDUS expects that the total development and stabilization costs of developments in its pipeline will total approximately $131.4 million (including all amounts previously spent). The Company estimates that the underwritten weighted average stabilized Cash NOI yield on its development pipeline is between 5.8% - 6.3%.6 Actual initial full year stabilized Cash NOI yields may vary from INDUS’s estimated underwritten stabilized Cash NOI yield range based on the actual total cost to complete a project or acquire a property and its actual initial full year stabilized Cash NOI.

Closings on the purchases contemplated under the First & Second Allentown Purchase Agreements and the Second Lehigh Valley Land parcel, in addition to the completion and stabilization of the development pipeline, are each subject to a number of contingencies including the satisfactory completion of due diligence by INDUS. There can be no guarantee that these transactions and developments will be completed under their current terms, anticipated timelines, at the Company’s estimated underwritten yields, or at all.

Disposition Pipeline

During the 2021 third quarter, INDUS received a total of approximately $7.4 million of cash from several sales of real estate assets, including approximately $5.5 million from the sale of the approximately 277 acres of undeveloped land that comprised the Company’s Meadowood residential development in Simsbury, Connecticut. As of September 30, 2021, INDUS had agreements in place to sell the following non-core properties and undeveloped land parcels:

NameLocationProperty SizeExpected ClosingSale Price (in millions)
1985 Blue Hills Avenue & Adjacent Land7Windsor, CT165,000 SF; 39 acresQ4 2021$18.0
Connecticut Nursery FarmE. Granby/Granby, CT670 acresQ4 2021$10.3
5 & 7 Waterside Crossing; 21 Griffin Road NWindsor, CT209,000 SFQ4 2021$5.2
Florida Nursery FarmQuincy, FL1,066 acresQ4 2021$1.2
East Granby/Windsor ParcelsE. Granby/Windsor, CT280 acres2022$6.0
Total Gross Proceeds of Dispositions Under Agreement, if Consummated $40.7

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.

Corporate Updates

On August 5, 2021, the Company’s operating partnership, INDUS RT, LP, and the Company, as parent guarantor, entered into an agreement for a new secured revolving credit facility of up to $100 million (the “New Credit Facility”) that replaced its former credit facilities. The New Credit Facility also includes an uncommitted incremental facility, which would enable the New Credit Facility to be increased up to $250 million in the aggregate (subject to obtaining lender commitments). Borrowings under the New Credit Facility bear interest subject to a pricing grid for changes in the Company’s total leverage. Based on the Company’s current leverage, the initial annual interest rate under the New Credit Facility is one-month LIBOR plus 1.20%, compared to a rate of one-month LIBOR plus 2.50% and one-month LIBOR plus 2.75% under its former revolving credit line and acquisition credit line, respectively, immediately prior to entering into the New Credit Facility.

On September 2, 2021, INDUS entered into a sales agreement, with Robert W. Baird & Co. Incorporated, BMO Capital Markets Corp., BTIG, LLC, Citigroup Global Markets Inc., JMP Securities LLC, KeyBanc Capital Markets Inc. and Morgan Stanley & Co. LLC, each an agent (collectively “the agents”), relating to shares of its common stock, $0.01 par value per share (the “Common Stock”), offered by a prospectus supplement and the accompanying prospectus pursuant to a continuous offering or at-the-market equity issuance program (the “ATM program”). In accordance with the terms of the sales agreement, INDUS may, from time to time, offer and sell shares of its Common Stock having an aggregate gross sales price of up to $100 million through the agents, or directly to the agents, acting as principals, pursuant to the prospectus supplement filed on September 3, 2021, and the accompanying prospectus, dated August 10, 2021. As of September 30, 2021, INDUS had not yet issued any shares of common stock under the ATM program.



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