LXP Industrial Trust, a real estate investment trust focused on single-tenant warehouse/distribution real estate investments, has reported its fourth quarter and full year 2023 results. The company recorded net income attributable to common shareholders of $13.0 million, or $0.04 per diluted common share for the fourth quarter and $23.9 million, or $0.08 per diluted common share for the full year.
T. Wilson Eglin, Chairman and CEO of LXP, expressed optimism about the company's performance, stating, "We had an excellent fourth quarter, highlighted by robust leasing volume. Leasing momentum was strong throughout the year, with 6.8 million square feet leased in 2023 at attractive base and cash base rental increases of approximately 52% and 37%, respectively, excluding fixed-rate renewals, same-store industrial NOI growth of more than 4% and our stabilized industrial portfolio was 100% leased at year-end."
In terms of financial results, the company's total gross revenues for the quarter ended December 31, 2023, were $83.0 million, compared with $81.1 million for the same period in 2022. The increase was primarily attributed to revenue from acquisitions, market rent increases, and stabilized development projects. Net income attributable to common shareholders for the quarter ended December 31, 2023, was $13.0 million, or $0.04 per diluted share, compared to $36.9 million, or $0.13 per diluted share for the same period in 2022. LXP generated adjusted company funds from operations (FFO) of $51.4 million, or $0.17 per diluted share, for the fourth quarter of 2023, compared to $47.9 million, or $0.17 per diluted share for the fourth quarter of 2022.
Regarding transaction activity, LXP reported the completion of 2.2 million square feet of new leases and lease extensions for the fourth quarter, raising industrial base and cash base rents by 39.4% and 28.4%, respectively. The company also extended its $300.0 million term loan until January 31, 2027, and issued $300.0 million aggregate principal amount of 6.75% senior notes due 2028.
Looking ahead, LXP estimates its net income attributable to common shareholders for the year ending December 31, 2024, to be within an expected range of $(0.02) to $0.02 per diluted common share. The company also estimates its adjusted company FFO for the same period to be within an expected range of $0.61 to $0.65 per diluted common share.
LXP Industrial Trust's shares have moved -0.8% following the announcement and are currently trading at a price of $8.75.
The company's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $396,971 | $325,969 | $330,448 | $343,997 | $321,245 | $338,651 |
| Operating Margins | 57% | 87% | 56% | 112% | 32% | 16% |
| Net Margins | 56% | 86% | 55% | 111% | 35% | 16% |
| Net Income (k) | $227,415 | $279,910 | $183,302 | $382,648 | $113,783 | $54,255 |
| Net Interest Expense (k) | $79,880 | $65,095 | $55,201 | $46,708 | $45,417 | $45,161 |
| Depreciation & Amort. (k) | $168,191 | $147,594 | $161,592 | $176,714 | $180,567 | $183,226 |
| Diluted Shares (k) | 240,811 | 237,935 | 268,183 | 287,370 | 282,473 | 291,253 |
| Earnings Per Share | $0.93 | $1.15 | $0.66 | $1.34 | $0.38 | $0.17 |
| EPS Growth | n/a | 23.66% | -42.61% | 103.03% | -71.64% | -55.26% |
| Avg. Price | $6.65 | $8.26 | $9.31 | $11.68 | $12.6 | $8.73 |
| P/E Ratio | 7.15 | 7.18 | 14.11 | 8.65 | 33.16 | 51.35 |
| Free Cash Flow (k) | -$98,148 | $180,852 | $147,864 | -$68,173 | -$82,437 | $38,777 |
LXP Industrial is likely overvalued at its current price of $8.75 per share due to declining revenues, flat capital expenditure trend, shrinking operating margins, declining earnings per share, and a negative PEG ratio. Despite this, the company's operating margins compare favorably with the Specialty Real Estate Investment Trust industry average, averaging 60.0% over the last 6 years.
In terms of value factors, LXP Industrial is trading above its fair value with a P/E ratio of 51.5 and a P/B ratio of 1.18. The firm's free cash flows have averaged $19.79 million over the last 5 years, with a negative compounded growth rate of -1.3% and a high year-on-year growth variability coefficient of 408.87%. Additionally, the company's P/E ratio is higher than the Real Estate sector average, and its shares are trading at a premium considering its historical average P/E ratio of 20.63.
It's important to note that this analysis is not personalized financial advice and individuals should conduct thorough research and/or consult with a financial advisor before making any investment decisions.
