UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
(Exact name of registrant as specified in charter)
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
(Commission File Number) | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s Telephone Number, including Area Code | ( |
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 | Regulation FD Disclosure |
On January 6, 2022 INDUS Realty Trust, Inc. (“INDUS” or the “Company”) issued a press release announcing the following updates on leasing, its acquisition and development pipeline, its potential dispositions and Corporate updates.
Industrial/Logistics Leasing Activity
During the three months ended December 31, 2021 (the “2021 fourth quarter”), INDUS entered into two first generation leases totaling approximately 224,000 square feet. These leases include approximately 27,000 square feet in Orlando, Florida at a property that was repositioned by INDUS during late 2020 and early 2021 and approximately 197,000 square feet at a value-add property in the Charlotte market which was purchased 50% vacant at the end of the 2021 second quarter. The lease in Orlando commenced in the 2021 fourth quarter and the lease in Charlotte is expected to commence by the end of the 2022 first quarter.
Also during the 2021 fourth quarter, two full-building tenants totaling approximately 256,000 square feet exercised their fixed renewal options for leases expiring in 2022. The buildings were acquired in 2021 with in-place leases that had near-term expirations. The buildings comprise approximately 128,000 square feet in Charlotte, North Carolina (see Township Acquisition under “Acquisition Pipeline” below) and approximately 128,000 square feet in the Lehigh Valley, Pennsylvania market. The fixed renewal options were for five-year terms with no leasing costs and generated weighted average rent growth on a cash basis1 of 2.9%, which is significantly lower than what the Company would expect to realize if the spaces were leased to new tenants.
As of December 31, 2021, INDUS’s 35 industrial/logistics buildings aggregated approximately 5.2 million square feet. INDUS’s industrial/logistics portfolio’s percentage leased and percentage leased of stabilized properties2 were as follows:
Dec. 31, 2021 | Sept. 30, 2021 | June 30, 2021 | Mar. 31, 2021 | |
Percentage Leased | 98.4% | 95.4% | 95.3% | 99.2% |
Percentage Leased – Stabilized Properties | 100.0% | 99.4% | 99.4% | 99.2% |
As of December 31, 2021, INDUS’s only industrial/logistics vacancy reflects approximately 84,000 square feet in a Charleston, South Carolina property acquired on November 12, 2021 (see Charleston Acquisition under “Acquisition Pipeline” below).
Acquisition Pipeline
On October 12, 2021, INDUS completed the acquisition of a fully leased, approximately 128,000 square foot industrial/logistics building in Charlotte, North Carolina (the “Township Acquisition”). The Company used cash on hand to pay the $14.6 million purchase price, before transaction costs, which equates to an in-place cash capitalization rate of approximately 4.6%.
On November 12, 2021, INDUS completed the acquisition of a 57%-leased, approximately 197,000 square foot industrial/logistics building in Charleston, South Carolina (the “Charleston Acquisition”), the Company’s first property in the Charleston market. The Company used cash on hand to pay the $28.6 million purchase price, before transaction costs, and the Company expects that the Charleston Acquisition will stabilize at an approximately 4.6% cash capitalization rate.
During the 2021 fourth quarter, INDUS entered into three separate agreements to acquire, for a combined purchase price of $72.8 million, before transaction costs, two industrial/logistics buildings in the Charlotte, North Carolina market and one industrial/logistics building in the Charleston, South Carolina market.
| ● | The first agreement is for an approximately 217,000 square foot, recently constructed industrial/logistics building (the “Charlotte Acquisition”) for a purchase price of $23.6 million, before transaction costs. The Charlotte Acquisition has a short-term lease in-place and INDUS expects to close on the purchase during the first quarter of 2022. |
| ● | The second agreement is for a to-be-constructed, approximately 231,000 square foot industrial/logistics building (the “Charlotte Forward Acquisition”) which is being developed on speculation by the seller. The Charlotte Forward Acquisition is expected to be delivered vacant upon completion in the first quarter of 2023. The purchase price for the Charlotte Forward Acquisition is approximately $21.2 million, before transaction costs, and INDUS expects to acquire the land in 2022, and to fund portions of the building’s development during 2022 and into the first quarter of 2023. |
| ● | The third agreement is for a to-be-constructed, approximately 263,000 square foot industrial/logistics building in the Charleston, South Carolina market (the “Charleston Forward Acquisition”) for a purchase price of $28.0 million, before transaction costs. The Charleston Forward Acquisition is being developed on speculation by the seller and the building is expected to be completed in the 2022 fourth quarter, at which time INDUS expects to complete the acquisition. |
Also during the 2021 fourth quarter, a full building pre-lease was executed for one of the two buildings that comprise the Nashville Acquisition (see below). This lease totals approximately 79,000 square feet and is expected to commence in the 2022 second quarter.
The following is a summary of INDUS’s acquisition pipeline for its industrial/logistics portfolio as of December 31, 2021:
Acquisition | Market | Building Size (SF) | Type | Purchase Price (in millions) | Expected Closing |
Acquisitions Under Contract | |||||
Nashville Acquisition (two buildings) | Nashville, TN | 184,000 | Forward | $31.5 | Q1 2022 |
Charlotte Acquisition (one building) | Charlotte, NC | 217,000 | Value-Add | $23.6 | Q1 2022 |
Charleston Forward Acquisition (one building) | Charleston, SC | 263,000 | Forward | $28.0 | Q4 2022 |
Charlotte Forward Acquisition (one building) | Charlotte, NC | 231,000 | Forward | $21.2 | Q1 2023 |
Total Acquisition Pipeline Under Contract | 895,000 | $104.3 | |||
The acquisitions in INDUS’s pipeline are each subject to the satisfactory completion of due diligence and other contingencies. There can be no guarantee that these transactions will be completed under their current terms, anticipated timelines, or at all.
Development Pipeline
On October 8, 2021, INDUS completed and placed in service its approximately 141,000 square foot build-to-suit in Charlotte for Amazon.
On December 10, 2021, INDUS completed the acquisition of two previously announced abutting parcels of land in Allentown, PA totaling approximately 23 acres (the “Allentown Land”) for a combined purchase price of approximately $3.9 million, before transaction costs. The Company plans to develop a 206,000 square foot industrial/logistics building on the acquired land parcels.
On December 24, 2021, INDUS entered into a first-generation lease for approximately 68,000 square feet at its Chapmans Road speculative development property (see below). This lease is expected to commence by the end of the 2022 first quarter.
The following is a summary of INDUS’s development pipeline for its industrial/logistics portfolio as of December 31, 2021:
Name | Market | Building Size (SF) | Type | Expected Delivery |
Owned Land | ||||
Chapmans Road (one building) | Lehigh Valley, PA | 103,000 | 66% Pre-leased | Q2 2022 |
110 Tradeport Drive (one building) | Hartford, CT | 234,000 | 67% Pre-leased | Q3 2022 |
Landstar Logistics (two buildings) | Orlando, FL | 195,000 | Speculative | Q3 2022 |
Allentown Land (one building) | Lehigh Valley, PA | 206,000 | Speculative | Q2 2023 |
Land Under Purchase & Sale Agreement | ||||
Lehigh Valley Land parcel (one building) | Lehigh Valley, PA | 90,000 | Speculative | Q2 2023 |
Total Development Pipeline | 828,000 | |||
INDUS expects that the total development and stabilization costs of developments in its pipeline will total approximately $92.8 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%.3 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.
Closing on the purchase of the 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 fourth quarter, INDUS completed four separate, previously announced disposition transactions that generated approximately $34.5 million in aggregate gross proceeds before transactions costs. INDUS utilized $14.1 million of these proceeds to extinguish three mortgages with a weighted average interest rate of approximately 5.0%. Dispositions completed during the quarter included:
| ● | approximately 1,066 acres of undeveloped land in Quincy, Florida for $1.0 million in gross proceeds; |
| ● | approximately 209,000 square feet across three office/flex properties and 8 acres of land in Windsor, Connecticut for $5.2 million in gross proceeds; |
| ● | approximately 165,000 square feet across one industrial/logistics property and 39 acres of land in Windsor, Connecticut for $18.0 million in gross proceeds; and |
| ● | approximately 670 acres of undeveloped land in East Granby and Granby, Connecticut for $10.3 million in gross proceeds. |
Also during the 2021 fourth quarter, the buyer under the previously announced East Granby/Windsor Option Agreement elected not to proceed with the purchase.
Corporate Updates
On October 8, 2021, INDUS completed an underwritten public offering of 2,150,000 shares of its Common Stock at a public offering price of $66.00 per share. On October 22, 2021, the underwriters exercised their option to purchase an additional 293,228 shares of Common Stock from INDUS at the same price. INDUS received proceeds of $152.8 million, after expenses, from the aggregate of 2,443,228 shares issued on October 8, 2021, and October 22, 2021. The Company intends to use the proceeds from the October 8, 2021 and October 22, 2021 sales of its Common Stock to finance its acquisition and development pipeline and for other corporate purposes.
A copy of the Company’s January 6, 2022 press release is attached hereto as Exhibit 99.1. The press release attached as Exhibit 99.1 is being “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of Section 18 of the Exchange Act.
Forward-Looking Statements:
This Current Report on Form 8-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include INDUS’s beliefs and expectations regarding future events or conditions including, without limitation, statements regarding the completion of acquisitions under agreements, pre-leasing agreements, construction and development plans and timelines, expected total development and stabilization costs of developments in INDUS’s pipeline, the estimated underwritten stabilized Cash NOI yield of the Company’s development pipeline, and expected capital availability and liquidity. Although INDUS believes that its plans, intentions and expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such plans, intentions or expectations will be achieved. The projected information disclosed herein is based on assumptions and estimates that, while considered reasonable by INDUS as of the date hereof, are inherently subject to significant business,
economic, competitive and regulatory uncertainties and contingencies, many of which are beyond the control of INDUS and which could cause actual results and events to differ materially from those expressed or implied in the forward-looking statements. Other important factors that could affect the outcome of the events set forth in these statements are described in INDUS’s Securities and Exchange Commission filings, including the “Business,” “Risk Factors” and “Forward-Looking Statements” sections in INDUS’s Annual Report on Form 10-K for the fiscal year ended November 30, 2020, filed with the SEC on February 18, 2021, and Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021, filed with the SEC on November 4, 2021. INDUS disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this Current Report on Form 8-K except as required by law.
Item 9.01 | Financial Statements and Exhibits. |
99.1 | The Company’s Press Release dated January 6, 2022 (attached hereto) |
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
INDUS REALTY TRUST, INC. | ||
|
|
|
| By: | /s/ Jon W. Clark |
|
| Jon W. Clark |
Date: January 6, 2022 |
| Executive Vice President, Chief Financial Officer |