Earnings call transcript: LXP Industrial Trust Q2 2025 beats EPS forecast

LXP Industrial Trust, with a market capitalization of $2.33 billion, reported robust earnings for Q2 2025, with an EPS of $0.09, significantly exceeding the forecasted -$0.015. Revenue also surpassed expectations at $86.74 million, compared to a projected $83.92 million. The stock responded positively in pre-market trading, rising 1.73% to $8.21, despite a previous day decline of 1.67%. According to InvestingPro analysis, the company currently appears fairly valued based on its comprehensive Fair Value model.

Key Takeaways

• LXP Industrial Trust’s EPS beat expectations by 700%.
• Revenue exceeded forecasts by 3.36%.
• Portfolio occupancy increased to 94.1% in Q2.
• The stock saw a pre-market rise of 1.73%.

Company Performance

LXP Industrial Trust demonstrated strong performance in Q2 2025, marked by a significant earnings beat and increased revenue. With an impressive gross profit margin of 82.57% and revenue growth of 5.68% over the last twelve months, the company improved its portfolio occupancy to 94.1%, up from 93.3% in Q1, reflecting effective property management and leasing strategies. This performance aligns with broader industry trends showing demand for logistics facilities. InvestingPro subscribers can access 8 additional key insights about LXP’s performance and valuation metrics through the platform’s comprehensive Pro Research Report.

Financial Highlights

• Revenue: $86.74 million, up from forecasted $83.92 million.
• Earnings per share: $0.09, surpassing the forecast of -$0.015.
• Same Store NOI Growth: 4.7% in Q2.
• Portfolio Occupancy: 94.1%, up from 93.3% in Q1.

Earnings vs. Forecast

LXP Industrial Trust’s Q2 2025 results significantly exceeded expectations, with a 700% surprise in EPS and a 3.36% revenue surprise. This marks a strong quarter compared to previous periods, showcasing the company’s ability to outperform market forecasts.

Market Reaction

Following the earnings announcement, LXP’s stock rose 1.73% in pre-market trading to $8.21, indicating a positive investor response. This uptick comes despite a 1.67% decline in the previous session, suggesting renewed confidence in the company’s financial health.

Outlook & Guidance

LXP has tightened its 2025 Adjusted Company FFO guidance to $0.62-$0.64 per share and expects year-end same store occupancy to reach 97-99%. The company is also focusing on reducing net debt to EBITDA to 5x and exploring capital recycling opportunities worth approximately $100 million. Notably, LXP maintains a healthy current ratio of 1.54 and has consistently maintained dividend payments for 32 consecutive years, currently offering a substantial 6.69% dividend yield. For detailed analysis of LXP’s financial health and future prospects, investors can access the full company assessment through InvestingPro’s exclusive research tools.

Executive Commentary

CEO Will Eglin emphasized the desirability of LXP’s portfolio, stating, "We believe our portfolio of modern logistics facilities with strong tenant credit and a geographic footprint aligned with advanced manufacturing investment is highly desirable in the current market environment." He also highlighted the priority of generating more EBITDA and reducing net debt to EBITDA.

Risks and Challenges

• High net debt to EBITDA ratio remains a concern, despite recent reductions.
• Tenant retention challenges anticipated in 2025 could impact occupancy rates.
• Market volatility may influence future stock performance and investor sentiment.

Q&A

During the earnings call, analysts inquired about leasing activity and tenant retention strategies. Executives noted an uptick in leasing activity but acknowledged slow decision-making processes. They also expressed interest in build-to-suit opportunities, reflecting a proactive approach to market demands.

Full transcript - LXP Industrial Trust (LXP) Q2 2025:

Audra, Conference Operator: Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the LXP Industrial Trust Second Quarter Earnings Call and Webcast. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. At this time, I would like to turn the conference over to Heather Gentry, Investor Relations. Please go ahead.

Heather Gentry, Investor Relations, LXP Industrial Trust: Thank you, operator. Welcome to LXP Industrial Trust’s second quarter twenty twenty five earnings conference call and webcast. The earnings release was distributed this morning, and both the release and quarterly supplemental are available on our website at www.lxp.com in the Investors section and will be furnished to the SEC on a Form eight ks. 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 and unitholders 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 and Nathan Brunner, CFO, will provide a recent business update and commentary on second quarter results. Brendan Melenix, CIO and James Dudley, Executive Vice President and Director of Asset Management will be available for the Q and A portion of this call. I will now turn the call over to Will.

Will Eglin, Chairman and CEO, LXP Industrial Trust: Thanks, Heather, and good morning, everyone. We produced strong second quarter results highlighted by the lease up of our 1,100,000 square foot development facility in Greenville Spartanburg, same store NOI growth of 4.7% and continued progress reducing our leverage with net debt to adjusted EBITDA of 5.8 times at quarter end. Our performance reflects the resilience of our core business amid a continuing soft industrial real estate environment and uncertain macroeconomic backdrop. Overall U. S.

Net absorption was approximately 30,000,000 square feet in the second quarter. Of this absorption, 20,000,000 square feet was in our 12 target markets indicating our markets held up relatively well compared to the broader market with net absorption in five of our markets exceeding 2,000,000 square feet. Large corporate users and 3PLs were the primary drivers of overall absorption favoring higher quality properties. This trend bodes well for our portfolio, which is 92% comprised of Class A facilities with an average age of just over nine years. New deliveries are at a five year low and are expected to continue declining.

The construction pipeline in our 12 target markets is approximately 90,000,000 square feet, down nearly 75% from the 2022 peak of approximately three thirty million square feet. On the leasing front, year to date we’ve leased approximately 2,400,000 square feet with second generation base and cash based rent spreads of approximately 4146% respectively. We reached a significant milestone this quarter with the lease of our 1,100,000 square foot development facility in the Greenville Spartanburg market to a U. S. Subsidiary of a global logistics company.

This was a great outcome that resulted in immediate occupancy and low TI with annual cash base rent of approximately 6,000,000 Since 2019, we’ve developed 15 facilities totaling 9,100,000 square feet of which 74% has been leased at an average estimated stabilized cash yield of 7.1%. We have had users touring our other big box facilities in Indianapolis and Central Florida with the Indianapolis market much more active when compared to a year ago. Many of our 2025 expirations were addressed previously and the remaining lease roll this year represents just 1.2% of our ABR with rents that are approximately 30% to 35 below market. We’re forecasting lower tenant retention for 2025 with year end same store occupancy of approximately 97% to 99%. And our current mark to market on leases expiring through 2030 remains attractive with in place rents 17% below market based on brokers’ estimates.

On the investment front, during the quarter, we sold a property in Chillicothe, Ohio to a user buyer for approximately $40,000,000 at a cash capitalization rate of 4.3%. This sale and along with another sale in the first quarter bolstered our cash position. We accretively redeployed a portion of the Chillicothe sales proceeds to fund the repurchase of approximately $28,000,000 of our floating rate trust preferred securities at a 5% discount to par. Based on the discounted purchase price, the current yield on the repurchase securities was approximately 6.6%. The transaction market for individual properties and small portfolios has been resilient.

Given the stability we are seeing in the investment sales market, we are evaluating some modest capital recycling opportunities outside of our target markets for reinvestment that we would expect to be largely earnings neutral. We continue to concentrate our investment strategy in 12 target markets in the Sunbelt and select Lower Midwest states, which account for approximately 85% of our gross assets. With a more focused geographic approach, we have the ability to scale and continue deepening our expertise and relationships within these markets, which provides both investment and operational advantages. Our target markets are experiencing positive demographic trends and are continuing to see investment in the onshoring of advanced manufacturing, reflecting business friendly government policies and high quality logistics infrastructure among other attributes. In fact, in a recent CNBC report ranking the top states for business, 10 of our 12 target markets are in the top 10 states and all 12 are in the top 20 further validating our investment thesis that our target markets stand to outperform.

With that, Nathan will now discuss our financials, leasing and balance sheet in more detail.

Nathan Brunner, CFO, LXP Industrial Trust: Thanks, Will. Adjusted company FFO in the second quarter was $0.16 per diluted common share or approximately $47,000,000 This morning, we tightened our 2025 adjusted company FFO guidance to a new range of $0.62 to $0.64 The low end was increased with the lease up of our 1,100,000 square foot facility in Greenville Spartanburg, which is expected to contribute $3,700,000 of base rent and operating expense reimbursement in 2025. The high end of the range has been revised given where we are in the year as timelines continue to be elongated regarding tenant decision making processes. We are now including approximately $2,000,000 of GAAP rent contribution from prospective leasing activity across the remaining development facilities for the second half of the year. During the quarter, we produced same store NOI growth of 4.7% with our same store portfolio 98% leased at quarter end.

Our same store NOI growth guidance for full year 2025 remains unchanged at 3% to 4%. This guidance assumes year end occupancy for the same store pool of of approximately 97% to 99%. We reported second quarter G and A of approximately $9,600,000 and our expectations for 2025 gs and A are unchanged at 39,000,000 to $41,000,000 On the leasing front, we increased our portfolio occupancy in the second quarter to 94.1%, up from 93.3% as of first quarter. As Will mentioned, we leased our 1,100,000 square foot development facility in the Greenville Spartanburg market during the quarter for initial lease term of two years with two five year renewal options. The initial base rent is $5.5 per square foot with 3.25% annual rent bumps.

The tenant took occupancy of the facility in late May and cash rent commences August 1. The estimated stabilized cash yield on our cost basis is approximately 8%. We also renewed our approximately 101,000 square foot lease in the Atlanta market at an outdoor storage facility in Minneapolis, both of which were twenty twenty five expirations. We increased both the base and cash based rents at the Atlanta facility approximately 38% and extended the lease for five years with 3.5% rental bumps. The Minneapolis outdoor storage facility was encumbered by a five year fixed rate renewal option.

We successfully negotiated a ten year renewal with the tenant at the current in place rent to enhance the marketability of this property as it is a near term disposition candidate. We had two tenant move outs at quarter end, which included our 248,000 square foot facility in Houston and our 355,000 square foot facility in Savannah. We collected two months of holdover rent at the Houston facility during the quarter and have prospective activity at both buildings. We currently have approximately 600,000 square feet of redevelopment projects underway. This includes a 350,000 square foot redevelopment in Orlando, which commenced in the quarter and a 250,000 square foot redevelopment in Richmond.

Both facilities are anticipated to complete in the 2026 and produce yields on cost in the low teens. Moving to balance sheet. We continue to execute on our plans to reduce leverage and increase the proportion of hedged and fixed rate debt. As a reminder, in September 2024, we capitalized on a favorable market window and executed interest rate swaps to lock in fixed rates on $250,000,000 of floating rate bank term loan and $83,000,000 of our trust preferred securities, leaving approximately $47,000,000 of trust preferred securities unhedged in anticipation of potential opportunities to repurchase the securities. During the quarter, we repurchased approximately 28,000,000 of trust preferred securities at a 5% discount to par.

This transaction, along with the $50,000,000 term loan repayment in January, increased our hedged and fixed rate debt to 99% of debt outstanding in 2025 and 2026, with a weighted average interest rate of 3.9%. Net debt to adjusted EBITDA was 5.8x at quarter end, down 0.4 turns over the last twelve months. Reducing leverage remains a key focus for the company as we pursue our business plan and grow EBITDA. At quarter end, we had approximately $71,000,000 of cash on balance sheet. With that, I’ll turn the call back over to Will.

Will Eglin, Chairman and CEO, LXP Industrial Trust: Thanks, Nathan. In closing, we’re pleased with our second quarter results. We believe our portfolio of modern logistics facilities with strong tenant credit and a geographic footprint aligned with advanced manufacturing investment is highly desirable in the current market environment. We will continue to focus on creating value for our shareholders by increasing occupancy, marking rents to market, raising rents through annual escalators and concentrating on our 12 market investment strategy. With that, I’ll turn the call back over to the operator.

Audra, Conference Operator: Thank you. We will now begin the question and answer session. We’ll take our first question from Anthony Paolone at JPMorgan.

Anthony Paolone, Analyst, JPMorgan: Great. Thanks. Good morning. Just first question on disposition. Can you talk about what drove the the low cap rate on on the sale?

Will Eglin, Chairman and CEO, LXP Industrial Trust: Yeah. I mean, the situation there really involved finding a user that wanted to own So the execution was much better than if we sold that into the, you know, investor marketplace.

Anthony Paolone, Analyst, JPMorgan: Okay. And then, also on capital markets then, can you you mentioned still potentially select selectively selling some things. Can you give a sense as to maybe order of magnitude that you have in the market to sell in the near term? And also just some broader comments on depth of market for your assets, maybe where cap rates are, you know, what types of buyers and what types of product do folks want right now?

Will Eglin, Chairman and CEO, LXP Industrial Trust: Yeah. I I I think we would test the market with about a 100,000,000 of dispositions going forward. And I would say that, you know, after Liberation Day, we were a little bit concerned that there would be volatility in the investment sales market, and it’s really held up very well. So, we’ll be back in the business of creating some liquidity from our asset base that’s outside of our 12 target markets and I think we’re optimistic that we’ll do very well.

Anthony Paolone, Analyst, JPMorgan: Okay. And then just last one. Can you talk about just what traffic has been like for leasing up some of the larger empty boxes?

James Dudley, Executive Vice President and Director of Asset Management, LXP Industrial Trust: Sure, Tony. This is James. How are you this morning? So I’ll I’ll start with Indy. So Indy has been has really picked up really since fourth quarter of last year.

There’s been a lot of big box activity. There were two really good deals that got signed in not in a particular submarket, but in one of the the major submarkets in Indy. Subsequent to quarter end. There are a couple eight hundreds that have gotten done. There’s a 1.2 that’s in process getting done.

So we’ve had some competition get taken off, and we’ve had a number of RFPs, a number of tours, and we’re feeling confident that we’re gonna land one. It really hasn’t been a, you know, a building issue. It’s been a size issue. We’ve just been kind of in the middle of the size of the sizes that have been leased. So optimistic on Indy.

Central Florida, generally, has just been a little bit slower on the on the big box. We have had some renewed interest recently. We’ve got some interest from a full building user that that just kinda came across, and and there’s some deals that are in the works in the smaller, you know, kind of half a million size. So things seem to be picking up there, but, you know, promising activity for sure in Indy and then hopeful activity in Central Florida.

Anthony Paolone, Analyst, JPMorgan: Okay. Great. Thank you.

Brendan Melenix, CIO, LXP Industrial Trust: Thanks, Tony.

Audra, Conference Operator: We’ll move next to Todd Thomas at KeyBanc.

Todd Thomas, Analyst, KeyBanc: Hi, thanks. First question, I wanted to ask about the comments you made around the year end lease rate target for the same store pool in the 97% to 99% range. The portfolio is 98% leased today. You have four remaining expirations that represent a little over 100 basis points of occupancy. Can you provide an update on some of those expirations, the 380,000 square footer in Indianapolis that’s scheduled to expire tomorrow?

And curious if you have an update on the remaining three as well.

James Dudley, Executive Vice President and Director of Asset Management, LXP Industrial Trust: Sure. So the three eighty you just mentioned is a no move out. We expect that we’re going to get a little bit of holdover rent from them. Going back to the Indy market, there’s been a significant amount of activity on that asset. So we’re hopeful that we’re gonna be able to backfill that space relatively quickly.

We’ll see. But, like I said, good activity there. Then we’ve got the two small, 80,000 square footers. Those are both also move outs, one in Savannah and then one across the street or across the highway in Indianapolis. We have those out in the market.

And then the last one is still unknown. It’s a 160,000 square feet in Phoenix. You know, if the tenant stays great, there’s there’s the potential they may. It’s across the street from one of their manufacturing plants. But if we get the building back, that’s a pretty tight market with a a really strong mark to market of around 50%.

It’s got 40 foot clear and right on the 303.

Todd Thomas, Analyst, KeyBanc: Okay. And then for 2026, any sense how, I mean, you commented that tenant retention was was going to be a little bit lower in 2025. Any sense what tenant retention may look like, in ’26 at this point? And and are there any known move outs, that that, you know, are worth, discussing right now?

James Dudley, Executive Vice President and Director of Asset Management, LXP Industrial Trust: So most of our lease expirations are kind of back here back end of the year in ’26. We have started some dialogue with, probably 25% of the tenants. And I would say for the most part, it’s really positive on renewal. There are a couple of situations where tenants are contemplating their supply chain and whether or not the market that they’re in is is what fits for them. And then we have one situation with a small three p l in Memphis that isn’t sure the size still fits.

I think we’re going to have strong retention, but we may have a few tenants here or there that move out. But overall, 19% mark to market next year, and we think we’re going to have a successful overall outcome.

Todd Thomas, Analyst, KeyBanc: Okay. And then I wanted to shift to the land bank. It sounds like the build to suit market’s stronger than it’s been or getting stronger, I should say. Curious if you’re seeing that and if there are opportunities within the land bank

Brendan Melenix, CIO, LXP Industrial Trust: Hi. This is Brandon. Yeah. We’ve continued to respond to build the suit interest at both our Phoenix site and our the site. I don’t have anything further to report on that today, but I I will comment that we’ve seen more potential interest of late at our Columbus site where we have about 69 acres remaining.

That so the immediate market area around our site there has tightened significantly. We recently had a 1,200,000 square foot building there in the market lease. So there’s there’s there’s good activity there. Columbus is is looking strong. The decision making on build to suit is, you know, a little bit like what we’ve seen with other, and commented on on other large space decisions.

So it’s been kind of protracted. Some cases, we we you know, in Phoenix, we’ve had cases where we’ve competed against, existing spec product where there may be motivated landlords, who who can be competitive on pricing. And then in some other cases, we’ve had situations where, you know, RP processes that we’ve responded to where the tenants defer decision and then schedule constraints may favor existing buildings versus taking completion risk on on new build. But, there there there’s certainly built to interest out there, so we’re optimistic that, that we’ll land something in that space.

Todd Thomas, Analyst, KeyBanc: Alright. Thank you.

Will Eglin, Chairman and CEO, LXP Industrial Trust: Thanks, Todd.

Audra, Conference Operator: We’ll move next to Vince Tibone at Green Street.

Vince Tibone, Analyst, Green Street: Hi, good morning. As you think about capital recycling, could either the cold storage or office j JV properties or, you know, potential candidates for sale? Or should we consider, you know, those, you know, properties or or or businesses you’ll stand for at least the foreseeable future?

Will Eglin, Chairman and CEO, LXP Industrial Trust: I think for modeling purposes, you should think of those portfolios as as being pretty static. I think there is, you know, one opportunity in in the office JV that may may turn into a sale candidate. But, for for the most part, I would think of those being static portfolios.

Nathan Brunner, CFO, LXP Industrial Trust: No. That makes sense.

Vince Tibone, Analyst, Green Street: And then just, you know, continue on the point of capital recycling. I mean, is there a point where you would potentially, you know, shift from, you know, selling to purchase properties to to consider buying back shares here in some form of leverage neutral fashion just given, you know, where stock trades on a discount NAV or, you know, main evaluation evaluation metric. It seems like that could be an interesting avenue over, you know, further acquisitions. Curious how you’re thinking about, you know, that that opportunity and trade off.

Brendan Melenix, CIO, LXP Industrial Trust: Yeah. I I think so.

Will Eglin, Chairman and CEO, LXP Industrial Trust: I think the number one priority for us that’s going to improve our evaluation the most is, know, generating more EBITDA from from our vacancy and reducing net debt to EBITDA. You know, if we can drive that down to five times with, you know, visibility on that, it’s, you know, a very, timelines to get there, but I think that’s that’s the thing that’ll help the valuation the most. In the, in the context of share repurchase, if if we could if we could do some of both, that would that would be fine. I do think it’s an important, you know, longer term priority to recycle the capital out of our non target markets and really focus on on the 12 that are our core strategy. And there will be some, you know, tax implications where we wanna complete some ten thirty one exchanges in order to protect our our basis.

But share share repurchase could be part of the mix, but I really want to stay committed to reaching that five times net debt to EBITDA leverage point.

Vince Tibone, Analyst, Green Street: Got it. Thank you. Maybe just last one for me. I just wanted to clarify a comment from Nathan earlier about, I believe, was $2,000,000 included in the 25 guide from future leasing activity. Is is that solely is that 2,000,000, you know, directly tied to either the two vacant million square footers or is that any vacant property right now?

So it would be kind of 2,000,000 from any existing vacancy that you’re able to lease through your end. Just kind of curious where you’re you know, if you could elaborate on that, kind of just get a sense of where you’re how you’re thinking about, you know, just the the new leasing opportunity through your end.

Speaker 9: Vince, the $2,000,000 really relates to the total opportunity set of the two big boxes. We also have another development that’s two buildings, one half leased in Central Florida. It’s really those three projects that that opportunity relates to. And when you look at those three projects and you think about the annual run rate potential of those projects, it’s something like $15,000,000 of cash based rent and OpEx reimbursement. And so I think that’s important context.

So it’s sort of 2,000,000 of contribution out of you know, a pipeline that has $15,000,000 of annual run rate when it’s leased. But it just to be crystal clear, it does not include any other second generation vacancies.

Vince Tibone, Analyst, Green Street: Got it. Thank you.

Nathan Brunner, CFO, LXP Industrial Trust: Thanks Vince.

Audra, Conference Operator: Next we’ll take Mitch Germain at Citizens Capital Markets.

Heather Gentry, Investor Relations, LXP Industrial Trust0: Thank you. So I’m curious about the move outs in the back part of this year, and I think you referenced three with one that you weren’t sure about. I’m curious how many

Will Eglin, Chairman and CEO, LXP Industrial Trust: of those three were always kind

Heather Gentry, Investor Relations, LXP Industrial Trust0: of known move outs, or was any of that a result of some of the recent macro and legislation issues?

James Dudley, Executive Vice President and Director of Asset Management, LXP Industrial Trust: So I I guess I can run through them real quick. So the the three eighty in Indy, they moved to a competitive building that had tax abatement. So they were able to get tax abatement when we didn’t have it. So it was a an operating expense issue. The other two moved into new space where they actually consolidated.

So the 80,000 square feet in Indianapolis moved one of their operations from Buffalo and moved into a 350,000 square foot building in Plainfield. And the, smaller one in, in Savannah moved from 88,000 square feet into 800. So, it was, you know, it was a size a size requirement and then a particular situation, with tax abatement.

Heather Gentry, Investor Relations, LXP Industrial Trust0: Gotcha. That’s super helpful. You previously had suggested, you know, sales were off the table, and it does seem like activities picked up, more than you anticipated. I’m curious if that same phenomenon that’s happening in the investment sales market is also happening within the leasing markets where, you know, while you anticipated things would be a little bit slower and you’re seeing a little bit more resiliency?

James Dudley, Executive Vice President and Director of Asset Management, LXP Industrial Trust: I would say activity has definitely picked up. You know, the it’s really about getting it from activity to across the finish line and getting signed. There seem to be a whole lot of, you know, starts where where you’re having conversations with tenants or even getting through the RFP process. You feel like a a tenant’s ready to sign, and then you get a pause. So I think there’s a lot more tire kicking.

I think there’s still concern over macro uncertainty, and I think if tenants can, you know, put decisions off, they are. I think you’ve also seen, you know, a lot of three PL activity. It’s really driven the market, and I think that’s also, indicative of the fact that tenants are concerned about uncertainty and maybe looking to three PL’s, but both to cut costs and to give them flexibility.

Heather Gentry, Investor Relations, LXP Industrial Trust0: Great. That’s helpful. Any, last question for me. Any update on, Phoenix and the opportunity there?

Brendan Melenix, CIO, LXP Industrial Trust: No. Not not beyond what I commented on early or in the conversation. So continuing to to see interest there and be optimistic about the potential there.

Anthony Paolone, Analyst, JPMorgan: Great. Thank you.

Brendan Melenix, CIO, LXP Industrial Trust: Thanks Mitch.

Audra, Conference Operator: And we’ll move next to Jim Kamert at Evercore ISI.

Heather Gentry, Investor Relations, LXP Industrial Trust1: Good morning. Thank you. I guess Nathan you mentioned some pretty attractive returns on redevelopment activity. Could you refresh my memory? You know, what kind of dollar volume of redevelopments, could LXP be looking at in the next twelve to eighteen months?

Brendan Melenix, CIO, LXP Industrial Trust: David, do you wanna take it? You take it. Yeah. Sure. I can I can the the two, redevelopments that were announced just to summarize those?

One, the the larger project is a redevelopment project in in Orlando that follows on an investment that we made last year where we acquired the fee interest in the land beneath the 205,000 square foot building that we own there that was also encumbered by a below market building lease of, that was at $2.48 a square foot. So in addition, we bought an expansion of that building that our tenant had owned. So today, we own a 351,000 square foot building, very well located in Southwest Orange County submarket of Orlando, which is which is outperforming the rest of the market. The the budget there is 9,400,000.0 on the the redevelopment. And then the second project that, we’ve announced is in Richmond.

It’s a 252,000 square foot building that, was originally developed as part of a four building, campus for a single user. There, the tenant exercised an early termination right that they had for this particular building. And the the benefit there to us is it that was income or buy below market lease as well. So we removed that encumbrance. There, the estimated cost of redevelopment is $3,700,000, which is, principally just to separate the building systems and do, some additional upgrades, expanding parking, and and things like that for the billing to operate more independently from the other, buildings.

As Nathan shared in his prepared remarks, both projects are anticipated to complete in the first quarter of next year and produce yields on cost in the low teens.

Heather Gentry, Investor Relations, LXP Industrial Trust1: Right. No. That’s extremely helpful. I’m sorry, probably didn’t pose the question probably. I’m thinking beyond those you disclosed, what would you say just in the portfolio, can you identify material amounts of redevelopment opportunities is a better way to phrase, I’m sorry, you know, beyond what you’ve already identified.

Is that a source of opportunity for for Lexington?

Brendan Melenix, CIO, LXP Industrial Trust: You know, I think that there’s additional opportunity in the portfolio. We’re not quantifying it today.

Heather Gentry, Investor Relations, LXP Industrial Trust1: Okay. Fair enough. And then finally, you know, you’re very helpful to comments in Indianapolis still regarding lease up. It’s more a question of, you know, just a large box that haven’t been too many users. But for that and, in the Florida large lease up, are you seeing the competing landlords panic in any regard, you know, sort of dropping rents?

Or it’s not something that, we should be concerned about that, you know, sort of race to the bottom here. It’s just a lack of demand and but no one’s sort of blinking yet on rents.

James Dudley, Executive Vice President and Director of Asset Management, LXP Industrial Trust: You know, there there there are some landlords that are are willing to do that. But typically, when they do that, and I can think of two in in in Indy right now, it’s because they have something that’s functionally wrong with their building or they’re in a location that’s not desirable. If you’re if you’re down the middle with your asset, I think rents are gonna continue to hold. I think where where you’ll see the softness in the market will be in free rent and and tenant improvements rising.

Heather Gentry, Investor Relations, LXP Industrial Trust1: Good. Good. Thank you very much.

Will Eglin, Chairman and CEO, LXP Industrial Trust: Thanks, Jim.

Audra, Conference Operator: And that concludes our q and a session. I will now turn the conference back over to Will Eglin for closing remarks.

Will Eglin, Chairman and CEO, LXP Industrial Trust: Well, we appreciate everyone joining our call this morning, and we look forward to updating you on our progress over the balance of the year. Thanks again for joining us today.

Audra, Conference Operator: And this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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