Earnings call transcript: Plymouth Industrial’s Q4 2024 results miss forecasts

Plymouth Industrial REIT (PLYM) reported its Q4 2024 earnings on February 26, 2025, revealing a miss on both earnings per share (EPS) and revenue compared to forecasts. The company reported an EPS of $3.24, significantly above the forecasted $0.0314. However, revenue came in at $47.57 million, falling short of the expected $50.76 million. The stock reacted negatively, with a 1.93% drop in after-hours trading, closing at $16.62. According to InvestingPro data, PLYM has experienced a significant 30.16% decline over the past six months and currently trades near its 52-week low of $16.20.

Key Takeaways

• EPS significantly exceeded forecasts, but revenue missed expectations.
• Stock price declined by 1.93% in after-hours trading.
• Strong focus on acquisitions and market expansion in the Midwest.
• Occupancy rates improved to 94.3% in early 2025.
• Strategic partnership with Sixth Street to support acquisition growth.

Company Performance

Plymouth Industrial REIT demonstrated a mixed performance in Q4 2024. While the EPS beat suggests strong cost management or other financial maneuvers, the revenue shortfall indicates challenges in achieving top-line growth. The company’s focus on expanding its portfolio through acquisitions and improving occupancy rates reflects a strategic emphasis on long-term growth. InvestingPro analysis reveals the company maintains a high dividend yield of 5.78% and has raised its dividend for three consecutive years, though it trades at a notably high P/E ratio of 864.74. For deeper insights into PLYM’s valuation and growth prospects, investors can access comprehensive Pro Research Reports, available exclusively on InvestingPro.

Financial Highlights

• Revenue: $47.57 million, missing the forecast of $50.76 million.
• Earnings per share: $3.24, well above the forecast of $0.0314.
• Occupancy rate: Increased to 94.3% from 92.5%.

Earnings vs. Forecast

Plymouth Industrial’s EPS of $3.24 significantly surpassed the forecast of $0.0314, representing a major positive surprise. However, revenue of $47.57 million fell short of the expected $50.76 million, a miss that may have contributed to the negative market reaction. The discrepancy between strong EPS and weaker revenue could indicate effective cost management but potential challenges in revenue generation.

Market Reaction

Following the earnings announcement, Plymouth Industrial’s stock fell by 1.93% in after-hours trading, closing at $16.62. This decline suggests investor concerns over the revenue miss and its implications for future growth. The stock remains closer to its 52-week low of $16.06, reflecting broader market challenges and specific company issues.

Outlook & Guidance

Looking forward, Plymouth Industrial REIT plans to focus on acquisitions, with a guidance midpoint assuming $360 million in new purchases. The company expects to achieve a going-in yield of approximately 6.75% and is exploring speculative leasing opportunities. The strategic partnership with Sixth Street is expected to provide capital for up to $500 million in acquisitions, supporting the company’s growth ambitions. With a beta of 1.37 and a current ratio of 0.74, InvestingPro data suggests the company faces both market volatility and liquidity challenges. InvestingPro subscribers have access to over 30 additional financial metrics and exclusive ProTips that provide deeper insights into PLYM’s financial health and growth potential.

Executive Commentary

CEO Jeff Witherell emphasized the company’s strategic direction, stating, "We should be doing more value add. That’s how you create value in real estate." This focus on value-add strategies highlights the company’s commitment to enhancing its portfolio’s performance. Additionally, Jim Connolly, EVP Asset Management, noted a "significant increase from various VPL companies for bulk storage requirements," indicating potential demand growth in the sector.

Risks and Challenges

• Revenue growth challenges: The revenue miss raises concerns about the company’s ability to drive top-line growth.
• Market saturation: Increasing competition in key markets could pressure margins and growth opportunities.
• Economic conditions: Broader macroeconomic pressures could impact leasing demand and acquisition financing.
• Supply chain issues: Potential disruptions could affect property development and acquisition timelines.

Q&A

During the earnings call, analysts inquired about the impact of tariffs and reshoring on warehouse demand, with management highlighting positive trends. Questions also focused on the strategic partnership with Sixth Street and how it might influence future acquisitions. Concerns about market pricing and acquisition strategies were addressed, with management expressing confidence in their competitive positioning.

Overall, Plymouth Industrial REIT’s Q4 2024 earnings reveal a complex landscape of strong EPS performance amid revenue challenges, with strategic initiatives aimed at long-term growth.

Full transcript - Plymouth Industrial REIT Inc (NYSE:PLYM) Q4 2024:

Conference Operator: Good morning and welcome to the Plymouth Industrial REIT Conference Call to review the company’s results for the fourth quarter of twenty twenty four. All participants will be in listen only mode. Please note, this event is being recorded. I would now like to turn the conference over to John Wilfong of Investor Relations. Please go ahead.

John Wilfong, Investor Relations, Plymouth Industrial REIT: Thank you. Good morning. Welcome to the Plymouth Industrial REIT conference call to review the company’s results for the fourth quarter of twenty twenty four. Yesterday afternoon, we issued our earnings release and posted a copy of our prepared commentary and a supplemental deck on the quarterly results section of our Investor Relations page. In addition to these earnings documents, a copy of our 10 K, when filed, can be found on the SEC filings page of the IRR site.

Our supplemental deck includes our full year 2025 guidance assumptions, detailed information on our operations, portfolio and balance sheet and definitions of non GAAP measures and reconciliations to the most comparable GAAP measures. We will reference this information in our remarks. With me today is Jeff Witherell, Chairman and Chief Executive Officer Anthony Saladino, President and Chief Financial Officer Jim Connolly, Executive Vice President of Asset Management and Ann Hayward, General Counsel. I would like to point out everyone to our forward looking statements on Page one of our supplemental presentation and and encourage you to read them carefully. They apply to statements made in this call, our press release, our prepared commentary and in our supplemental financial information.

And now I’d like to turn the call over to Jeff.

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Thanks, John. Good morning, and thank you for joining us today. I’ll hit a few highlights first and then we’ll go to Q and A. We’ve made some big announcements this past few months relating to securing capital that can propel our accretive growth. In late August, we announced the strategic transaction with Sixth Street.

I view this as transformative for us in several respects. Most notably, we put a valuation marker on our largest portfolio with the Chicago recap JV and sourced capital for up to $500,000,000 in acquisitions. We secured a tremendous partner in Sixth Street, who has continued to build out their real estate platform. We also significantly enhanced our borrowing capacity with the refinancing and upsizing of our unsecured credit facilities to $1,500,000,000 With this increase in the revolver and recasting one of the term loans, we’ve extended our maturities and enhanced the ability to pursue other unsecured debt. The combination of Sixth Street’s investment and expanded borrowing capacity fully addresses our our current capital needs.

Our focus for 2025 will be on leasing, opportunities and capital deployment, both of which will be key themes in the coming quarters. Our earnings release and prepared commentary also discussed leasing and deployment as well as some tenant challenges we faced in the prior quarter that we didn’t anticipate. However, we are confident in our ability to navigate these challenges and lease the remaining spaces. Market conditions remain favorable, particularly in buildings under 250,000 square feet, where over 95% of our leases and 67% of our wholly owned portfolio’s rentable square footage As we address our remaining lease expirations, we expect a tightening supply in this segment to support our mark to market leasing efforts. Historically, we’ve maintained high occupancy across our portfolio, and we anticipate strong momentum as we take care of the balance of 2025 expirations.

We’ve also made solid progress on capital deployment. The Cincinnati acquisitions totaled approximately 762,000 square feet for $61,300,000 And we continue to unlock value through recycling and value added activities in our newly acquired Memphis portfolio. Our pipeline now exceeds 11,000,000 square feet and $1,000,000,000 in potential acquisitions with nearly all of these opportunities located in our existing markets. We know these markets well and with the capital now in place, we we are strategically positioned to expand our scale. I look forward to providing further updates in the coming months as we execute on our leasing and capital deployment strategies.

I would now like to turn it over to the operator for questions.

Conference Operator: Thank you. We will now begin the question and answer session. And the first question is from Eric Bordan from BMO Capital Markets. Please go ahead.

Eric Bordan, Analyst, BMO Capital Markets: Hey, good morning, everyone. Jeff, just on the last comment around the $1,000,000,000 potential acquisitions, it sounds like based on your guidance up to about half of that could be on balance sheet. Could you talk about the other $500,000,000 or so, whether that would be a potential balance sheet acquisition or would that be under the JV?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Hey, Eric. Thanks for the question. I mean, that’s just our total pipeline, right? So are we going to be able to execute all $1,000,000,000 Probably not. I mean we’re focused on balance sheet.

I will say that there’s $150,000,000 portfolio within that $1,000,000,000 that would most likely be JV material. So we’re working it, we’re in the bid process on it right now. We’ll see how that develops. But the majority is on balance sheet. The majority of it is in two or three of our top markets.

Eric Bordan, Analyst, BMO Capital Markets: Okay. That’s helpful. And then with the acquisitions in guidance, how are you thinking about the timing of acquisitions and the initial cap rates on those?

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: At the midpoint, Eric, we assume $360,000,000 of acquisitions, of which about $70,000,000 is already banked with the remainder to be deployed somewhat evenly over the coming quarters. In terms of going in yield, I would strike that at about 6.75%. It could tighten up a bit as we continue to navigate the bid process. But I think those are good parameters in terms of how to view deployment and initial yields.

Eric Bordan, Analyst, BMO Capital Markets: Appreciate that. And then one more, if I may. Just on the guidance bridge on Page 10 of the prepared remarks, appreciate all the detailed color there, but I was just hoping that you could talk about the puts and takes to get to the low end of your guidance and to reach the high end of your guidance?

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: Well, listen, at the midpoint, we have reset the same store portfolio. It’s now 168 buildings encompassing about 26,000,000 square feet, which now represents I think 89% of the total in place portfolio as of February. So if we think about the same store driver, we do have to look back to Q4 twenty twenty four occupancy, which I believe stood at about 92% for this particular subset of the portfolio. So at the midpoint, we’re assuming about three eighty bps of occupancy improvement, which equates to lease up of just over 1,000,000 square feet. And a lot of that is comprised of the three buildings that we’ve been talking a lot about, the two in Cleveland and the one in St.

Louis. And so if you think beyond the midpoint to the extent that we have accelerated deployment or some surprises to the upside on some of the transitory vacancy, we can realize a result better than midpoint to the extent that we don’t deploy as anticipated. There could be a little drag and then to the extent that some of the leasing is a bit more protracted, you’ll have a bit of a muting with respect to the outcome.

Eric Bordan, Analyst, BMO Capital Markets: All right. Well, thank you very much. I’ll leave it there.

Conference Operator: Thanks. And the next question is from Todd Thomas from KeyBanc Capital Markets. Please go ahead.

Todd Thomas, Analyst, KeyBanc Capital Markets: Hi, thanks. Good morning. I just wanted to follow-up on that a little bit as it pertains to sort of the guidance and some of the leasing. And I wanted to ask about the timing specifically of the 740,000 square feet of leases signed, which includes 600,000 of the former FedEx (NYSE:FDX) Logistics site in St. Louis.

So that $0.07 per share impact on the full year FFO, what’s the timing like for that? What’s commenced versus what is still to commence going forward? And can you talk a little bit about the leasing environment as it pertains to the remaining vacancies whether and whether there is any speculative leasing for vacant space included in the guidance?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. All of that carryover vacant space that has been leased up is all commenced already. So all 700,000 is already commenced. As far as our projections on leasing, we are focused on the vacancy that came in through the year. You’ll see that vacancy has gone up from $92,500,000 I mean occupancy has gone up from $92,500,000 up to $94,300,000 already this year, which shows this space has been leased.

We do have a lot of prospects for our existing vacancy. It has been a big pickup in leasing activity towards the January and through February. So we expect including big lease, big bulk leasing base as well.

Todd Thomas, Analyst, KeyBanc Capital Markets: Okay. Is there any additional or any speculative leasing for vacant space included in the guidance at the high end of the range?

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: Yes. So of the $1,000,000 that I just spoke of, to Jim’s point, call about $700,000 is already addressed. So there’s the balance of that that is speculative.

Todd Thomas, Analyst, KeyBanc Capital Markets: Okay. And then can you provide a little bit more detail on the remaining 25 expirations? Appreciate some of the notes around that, including the other big box, the $625,000 in St. Louis. It sounds like you expect that tenant to renew, but can you provide a little bit more detail there and also discuss the Columbus (WA:CLC) downsize or vacate that you noted the timeline and sort of what’s embedded around those assumptions within the guidance?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Sure.

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: A little bit of overall market analysis first. So basically in our markets as shown in our prepared comments, rental growth rate is normalizing between 34%. But we still expect to see mid to low 20% growth on rent spreads on our small to mid sized space, anything under 150,000 square feet. And on the larger spaces, we’re kind of getting tenants looking to take space as is to keep the rents down and so no TI, but so from a net effective point that’s still pretty high. Now on St.

Louis, that lease it’s fairly short term, but the tenant has expressed interest in expanding in the rest of the space and continuing that lease on afterwards as well as exploring vacancy in our other locations as well. In Columbus, the ODW is planning on leaving. They have expressed some interest in potentially staying on under a contract extension and part of the building. We have two prospects that would fill the entire building that we’re working with at the moment and they would it would be immediately after OVW left. So we could see little to minimal downtime.

Conference Operator: And the next question will be from Rich Anderson from Wedbush. Please go ahead.

Rich Anderson, Analyst, Wedbush: Hi, thanks. Good morning. So on the St. Louis lease, I guess I want to understand why you’re optimistic if it’s going from 600,000 square feet to 450,000 the following year. Yet I’m wondering why the tenant is sort of got a funny cadence to it in terms of the space it’s taking even though you have a feeling that it’s going to sort of commit longer term.

Can you kind of give the back story there a little bit on that transaction?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. So that space, the current configuration at least is based off like one contract. This is a large international distributor, look headquartered in Europe and they told us when they as soon as they signed

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: the lease that we usually

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: stay on like we usually we plan on finding additional contracts and move them into this building. The feedback so far from the tenant has been really like the building and they’re looking for more space to come in.

Rich Anderson, Analyst, Wedbush: Okay. Turning to Cleveland, I don’t know if you said this, I apologize, but what’s the expectation to putting those situations to bed? And if you can give also the back story, because I thought a quarter or two or a quarter ago, you kind of thought it was to be a faster turnaround than it’s turning out to be. Can you sort of give me some color on that as well? Thanks.

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes. We had one potential candidate lined up to take one of the buildings right away, but we that is just slowed down a little bit. But Cleveland is a very tight market. I mean the vacancy rate is 3% or less and there’s really nothing in the market over 100,000 square feet. So we feel really good about leasing this up.

We’ve already leased up $120,000 of the vacancy and we expect over the next couple of months to have deals inked on the balance.

Rich Anderson, Analyst, Wedbush: Okay. And then lastly for me, I know the guidance has you at $360,000,000 in terms of acquisitions midpoint. Would that I’m trying to do the math, but would that sort of fully address the redeployment of the entire $500,000,000 from the Sixth Street transaction or would

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: there still be more meat on the bone to address? Rich, it gets us close because remember we deployed $100,000,000 when we acquired the Memphis portfolio in mid year of twenty twenty four. Okay.

Rich Anderson, Analyst, Wedbush: Sounds good. Thanks very much. Thanks, Rich.

Conference Operator: The next question is from Nick Thielman from Baird. Please go ahead.

Nick Thielman, Analyst, Baird: Hey, good morning guys. Maybe just points of clarification. The 2,200,000 square feet of availability in the core portfolio, that includes the St. Louis and Cleveland around like over half of that space is kind of spoken for or not spoken for, but in that bucket? And then, Anthony, if you could just elaborate on changes to the same store pool.

It sounds like that St. Louis asset that was the former FedEx space is moving into the pool. Just wondering if ODW or Geotis, if any of those are moved in or out of the pool for ’25?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Right. So, yes, the additional space has been taken off the space that has been leased up has taken off of the available pool. So just to note, at the end of the year, and this was unusual for us, there was only 71.4 of the 24 expirations were addressed, but that number is already up to 80 over 80. And if you include the transactions that incurred between the end of the year and February 24. So we expect that to be 90s in like a month or two.

Anthony Saladino, President and Chief Financial Officer, Plymouth Industrial REIT: With respect to same store, Nick, the composition has changed as we said and provided for in the materials. To your point, FedEx is in the same store pool as is Geotis, ODW is not. And the other kind of key driver in that pool is the reintroduction of the Laddy Building, it’s 142,000 square foot building in St. Louis that was previously in the repositioning pool. So that has come into the same store portfolio in 2025 and I believe that’s contributing approximately seven bps to the year over year growth.

Nick Thielman, Analyst, Baird: That’s helpful. Maybe for Jeff, I mean, I guess, what do you think the disconnect is between your guys’ view of the Sixth Street transaction and kind of the market’s view? And as the Board, you guys obviously announced the buyback, but I guess how patient are you guys going to be if the stock continues to kind of linger at these levels? Like are you guys are you going to pursue alternative strategies? Just kind of your views there.

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: I mean, yes, I mean, nobody likes complication. I think that’s the biggest feedback we have. I think the biggest thing that we look at is our equity in ’twenty three and ’twenty four. I mean, The Street is telling us we’re not going to give you any more equity because they’re not pricing your stock correctly. So we did what we thought was in the best interest of shareholders and that’s a transformative transaction, plenty of capital to put we can get into all the details on Chicago, which we’ve talked about ad nauseam of why that was a good move to take that entire 6,000,000 square feet and put it into a JV.

I mean, we’ve been patient for seven years, Nick. We continue to do our blocking and tackling. I guess we look at where our stock price is versus where we believe the value, where our NAV is. And I think your NAV is around in the mid to high 20s. And we’re in the market every day bidding on our tight property.

So in Columbus, we’re bidding right now on a building across the street from our property. So it’s identical and there’s 10 bidders on it and I can tell you we’re not going to be the winning bidder on it. So if somebody is using a cap rate to value Plymouth and it’s anything north of 6.75, they’re totally off the mark. We’re getting outbid in all of our markets ten, eleven, 12 bids. So what we need to do is we need to find good property, the shorter waltz like we did in Cincinnati and we’ve got some deals that are teed up that are going to work out really well for Plymouth.

So we have a lot of patience and I think the Sixth Street deal is going to work out fantastic. I think everything is priced correctly for us. So we’re going to get this money deployed. We did put a buyback in as you mentioned. I’m glad you brought that up.

We’ll see how the stock performs over the next few months. But I think if you look at where our stock price is and what we can buy it back at, it’s kind of a no brainer for us to do that. But that’s going to be based on whether we can put the capital to work in properties that we believe in. So right now, the pipeline looks good. So we feel good about that.

But it’s just another option for us.

Nick Thielman, Analyst, Baird: That’s helpful. And just last one, Anthony, with the new title and Jeff, you could speak to this as well. Is there any additional areas of focus you’re kind of looking on as President or areas that are different than your current responsibilities as CFO?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: I’ll speak to that. No, it’s really just, I mean, Anthony’s expertise, obviously as CFO has proven out over the last couple of years. But beyond that, he’s got a handle on acquisitions, processes that go into making the company better overall. So I think it’s a great move for us and it’s a great move for him.

Conference Operator: The next question is from Mitch Germain from Citizens JMP. Please go ahead.

Mitch Germain, Analyst, Citizens JMP: Maybe Jeff, since you were just mentioning the Sixth Street relationship, I’m curious how engaged are they with you to grow their relationship with you guys?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Hey, Mitch. Yes, so across our platform, different levels are engaged with Sixth Street somewhat on a daily basis. I am engaged with their lead on this and we talk regularly. So this was this is supposed to be transformative. It’s going to take time.

As you know, we’ve done several JVs that have worked out really well for Plymouth. And so I think we’re pretty smart about that. And we are looking at some JVs with them. And I think that’s probably the real basis of the relationship is the Sixth Street deal is the JV. They’re very focused on us growing the REIT balance sheet because they’re going to win on their warrant position, which is why we did the deal.

So if the stock moves as they anticipate and we anticipate, they’ll make some money and we’ll do well as well. So outside of that, I can’t speculate on it. They’re a growing platform. They have announced some core money, $17,000,000,000 of core money just came into Sixth Street. So we’re talking to them about industrial on

Nick Thielman, Analyst, Baird: a daily basis. And I

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: think that’s going to prove out really well for Plymouth shareholders long term.

Mitch Germain, Analyst, Citizens JMP: Okay. That’s super helpful. I’m curious about some of the pricing trends in the market today. I think you talked about how cap rates 6.75% or maybe even lower. Obviously, Memphis was acquired and one of the more recent deals were a little bit higher.

So I mean, is it safe to say that we’re seeing contraction across the board?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: I think that’s correct. As we sit here today, we are seeing we’re still seeing negative leverage in the marketplace, which again baffles us. I’ve never been a negative leverage person on how that works. But we’re seeing a lot of capital into industrial. We’re starting to see it in our markets.

That being said, and I said this before about the Memphis transaction. There were a lot of moving parts on Memphis. And there was $100,000,000 portfolio, 80 plus tenants. You have an office building that needed to be sold, a small one. We have a call center that we’re our construction team is in the process of converting back to industrial as we speak.

And then there’s a vacant parcel of land that we can build 120,000 square feet, let’s say, on. So all of those are components that need people that know what they’re doing. We can do all that in house, which is what we’re doing. And we think that’s going to add a lot of value to the Memphis portfolio. So that’s why there weren’t as many bidders.

And that’s why if you have an office in Memphis with people on the ground, you can attack a portfolio like that and get those changes accomplished very accretively. And I think that’s why we were the winning bidder on it. So what I don’t want people to take away is A, that Memphis is an eight cap market because that’s not the case. There’s a special situation. And Cincinnati is the same thing.

We have work to do in Cincinnati. We’ve got some small tenants. We’re going to renew them. We’ll move some of them out. We’ll expand tenants.

Again, we have a eight person office in Ohio. So for us to do that, it doesn’t cost us much time and money to do it. Like we’re equipped to do it, others aren’t. So I think that’s where you get into it. And as I mentioned in Columbus, there’s a building with one asset deal, three tenants, but there’s 10 bidders on it.

And the pricing is going to get out of whack on that. So we have to continue to fight for deals, which are good for Plymouth and we’ll do it. But it is I don’t think anybody’s going to sit here and think that cap rates are going to continue to rise in the industrial space. So it’s tough. But we’ve proven that we can buy and we will continue to execute.

Mitch Germain, Analyst, Citizens JMP: Thank you for that. One more for me if I might. Just there’s clearly situations that on the leasing front that you guys have discussed and it just seems based on that commentary that there’s a preference to do more of these kind of strategic or call it value enhancing, value add type of investments. So talk about maybe Jeff if you can just talk about factoring in weighing the existing situations versus doing more value add and do you guys have the capabilities to handle all of that all at once?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Yes. I mean, it looks the acquisition, we didn’t put a lot of information out on it yet, but we just closed on a deal in Cincinnati this year. You’re kind of a single asset deal 260,000 square feet. That doesn’t need a lot of value add component work to it. But the portfolio that we bought for $20,000,000 and then the other balance of that’s going to close in the next couple of weeks.

There’s a lot of small tenants and I said we will do the Plymouth work on that. So we’re built for it. We should do more value add. I mean, we’re real estate people. We have been for thirty years and we understand how to buy real estate correctly at the right basis.

We’re not afraid of short walls. I don’t think we missed too many things when it comes to buying a piece of real estate. So we should be doing more of it. You got to balance that with FFO, right? We’re in the cash flow growth business as a public REIT, but as a real estate group, we should be buying more value add.

So that’s the balance that we try to look at on each acquisition. So it is not an easy answer for it. We should be doing more value add. That’s how you create value in real estate. We’ve said 100 times, we’re not a net lease REIT.

But I think a lot of times we’re looked at as you’ve just got to smooth out your FFO. So there’s a balance there.

John Wilfong, Investor Relations, Plymouth Industrial REIT: Thank you.

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Thank you, Mitch.

Conference Operator: And the next question is from Brendan Lynch from Barclays (LON:BARC). Please go ahead.

John Wilfong, Investor Relations, Plymouth Industrial REIT0: Great. Thanks for taking my questions. Jeff, you mentioned that there’s a lot of capital coming into your markets. Is that specifically for acquisitions? Are you also seeing an increase in development spending?

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: No. We’re seeing it mostly, Brendon, just in acquisitions. It’s coming from all sides. Like I said, there’ll be 10 bidders and it’s going to run the gamut of who those buyers are. I mean, there’s still a lot of money out there.

I think they would get into development, but I think that that’s been we’re starting to see a lot of absorption. I mean, I think if you look at a market like Cleveland that we continue to focus on, there’s a I think it’s about 1,200,000 square feet of product under construction and 90% of it’s leased. So I think we’re at that point where someone’s going to start to go into Cleveland and start to build spec, because there’s only 100,000 square feet available of new product. Now there’s places like Dallas and there’s some parts of Columbus that are severely overbuilt. I mean, if you look at Columbus, Class A is 17% vacancy and obviously by definition a new 32 foot clear building would be designated Class A.

But the balance outside of Class A, it’s a 5.2% vacancy. So I don’t think in Columbus you can be building any new product anytime soon. There’s just a lot of vacancy. So I think it depends on the market. But I think there’s a lot of capital and I think once in certain markets, I think you start to see some spec development.

John Wilfong, Investor Relations, Plymouth Industrial REIT0: That’s helpful. Maybe also just talking high level, any impact that you’re seeing from the tariffs or potential for tariffs and reshoring initiatives? Obviously, you have more Heartland exposure than a lot of your peers with more coastal exposure. Maybe anything that you’re seeing in terms of your customer base and conversations you’re having with them?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Yes, as we got to tariffs, we’re seeing a significant increase from various VPL companies for bulk storage requirements, both short and midterm. Some of these we have actively in negotiations, but it seems to be like a rush to get product into the country and in warehouses as soon as possible. So there’s definitely a booked up demand.

John Wilfong, Investor Relations, Plymouth Industrial REIT0: Great. Thank you.

Jeff Witherell, Chairman and Chief Executive Officer, Plymouth Industrial REIT: Thank you.

Conference Operator: The next question is from Mike Mueller from JPMorgan. Please go ahead.

John Wilfong, Investor Relations, Plymouth Industrial REIT1: Yes. Hi. I apologize if I missed this, but what is the, I guess, Columbus rent on the two new prospects compared to the move out rent? And what’s the timing during the year on that?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: Well, we’re talking the move out is at the June and the timing on the leases would be July or August and then the other one would be between July and probably September. The actual the rents because we’re subdivided in building, they may go to a gross lease versus a triple net lease, but the net effective rent would be slightly higher.

Conference Operator: Okay.

John Wilfong, Investor Relations, Plymouth Industrial REIT1: And then last question, when you’re looking at the ’26 expirations, are there any similar chunky known move outs at this point?

Jim Connolly, Executive Vice President of Asset Management, Plymouth Industrial REIT: No. ’26 seems fine. There’s no rejections for move outs at this point.

John Wilfong, Investor Relations, Plymouth Industrial REIT: Okay. Thank you.

Conference Operator: Thanks. And ladies and gentlemen, this concludes our question and answer session and thus concludes today’s call. We thank you very much for attending today’s presentation. At this time, you may disconnect your lines. Take care.

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