Nikita Bely

Nikita Bely inquired about LXP's strategy regarding build-to-suit (BTS) developments, potential competition from net lease companies, the rationale for pursuing a spec deal in Phoenix over a BTS, and the bad debt assumption for 2026 compared to 2025.

Answer

Brendan Mullinix, CIO, stated that BTS remains interesting, with LXP's land bank providing a competitive edge. He explained the Phoenix spec project was driven by favorable supply dynamics and attractive construction pricing, with potential for early conversion to spec-to-suit. Nathan Brunner, CFO, confirmed no credit loss in 2025 and included a $500,000 bad debt assumption only in the low end of 2026 guidance as a prudent measure.

Nikita Bely asked about LXP Industrial Trust's strategy regarding build-to-suit opportunities, potential competition from net lease companies, the rationale for pursuing a speculative development in Phoenix versus a build-to-suit, and the bad debt assumption for 2026 compared to 2025.

Answer

CIO Brendan Mullinix stated that build-to-suit remains interesting, especially with the land bank providing an advantage over competitors. He explained the Phoenix spec development was driven by compelling supply dynamics and attractive construction pricing, with potential for an early conversion to a spec-to-suit. CFO Nathan Brunner noted no credit loss in 2025 and included a $500,000 bad debt assumption only in the low end of 2026 guidance as a matter of prudence.

Nikita Bely from J.P. Morgan questioned the drivers behind strong leasing activity, especially from manufacturing and 3PL tenants, and asked for insights on market-level rent trends and current rent bumps on new leases.

Answer

James Connolly, EVP & Asset Management, explained that manufacturing firms are seeking long-term space and 3PL activity is increasing, particularly in markets like Indianapolis, where Plymouth's properties offer a better cost structure. He noted that market rents for smaller footprints are growing, while big-box rents have flattened due to new supply. He confirmed that rent bumps on new and renewal leases are averaging around 3.5%.

Nikita Bely requested specific 2025 guidance for multi-tenant portfolio occupancy absorption and a year-end multi-tenant occupancy target.

Answer

CFO Austen Helfrich stated that for 2025, the company will not provide specific forward-looking guidance for the multi-tenant portfolio. He explained this is to simplify reporting and focus guidance on the same-store portfolio and the consolidated company for better comparability, though historical multi-tenant data remains in the supplemental.

Nikita Bely of JPMorgan Chase & Co. asked for the company's expectation for 2025 market rent growth across the portfolio, distinct from the re-leasing spreads on expiring leases.

Answer

Executive Marshall Loeb provided a bifurcated outlook. For markets east of California, he anticipates rent growth slightly above inflation in the first half of the year, with potential to accelerate to mid-single digits in the second half due to low supply. Conversely, for Los Angeles, he noted that rents are still finding their footing after a period of negative absorption and could continue to move in a negative direction.