Plymouth Industrial REIT Reports Fourth Quarter Results and Issues 2019 Guidance

BOSTON–(BUSINESS WIRE)–Plymouth Industrial REIT, Inc. (NYSE America: PLYM) (the “Company”)
today announced its consolidated financial results for the quarter ended
December 31, 2018 and other recent developments. A comparison of the
reported amounts per share for the fourth quarter of 2018 to prior-year
periods has been affected by an increase in the common stock outstanding
resulting from the completion of, and the use of proceeds from, the
Company’s initial listed public offering (the “IPO”) in June 2017, its
preferred stock offering in October 2017, a follow-on common stock
offering in July 2018 and a private placement of preferred stock in
December 2018, as discussed below.

Fourth Quarter and Subsequent Highlights

  • Reported results for the fourth quarter of 2018 reflect a net loss
    attributable to common stockholders of $5.2 million, or $(1.10) per
    weighted average common share, including a loss on extinguishment of
    debt of $1 million and a gain on sale of real estate of $1 million;
    net operating income (“NOI”) of $8.8 million; Funds from operations
    attributable to common stockholders and unit holders (“FFO”) of $0.35
    per weighted average common share and units; and Adjusted FFO (“AFFO”)
    of $0.23 per weighted average common share and units.
  • For the fourth quarter of 2018, declared a regular quarterly cash
    dividend of $0.375 for the common stock and a regular quarterly cash
    dividend of $0.46875 per share for the 7.50% Series A Cumulative
    Redeemable Preferred Stock (“the “Preferred Stock”).
  • Issued initial 2019 guidance of a net loss of $(1.87) to $(1.77) per
    share; Nareit FFO attributable to common stockholders and unit holders
    of $2.50 to $2.60 per diluted share; and AFFO of $1.90 to $2.00 per
    diluted share.

Jeff Witherell, Chairman and Chief Executive Officer of Plymouth
Industrial REIT, noted, “2018 has been a transformational year for us,
and the previous investments we made in our people, infrastructure and
processes enabled us to accelerate our pace of acquisition and capital
markets activity during the second half of the year with minimal
incremental overhead. With over 2 million square feet added to the
portfolio in the fourth quarter alone, we were able to exceed our
expectations for the year on every key metric and position us for a
period of earnings and cash flow growth that is more indicative of the
value we have created in our portfolio. At the same time, the strategic
investment from Madison brings in a valuable and well-respected partner
that has enabled us to maintain a disciplined approach to capital
allocation and a much clearer path to improving our capital structure.”

Financial Results for the Fourth Quarter of 2018

The completion of the IPO in June 2017, a preferred stock offering in
October 2017, a follow-on common stock offering in July 2018 and the
strategic investment by Madison in December 2018 provided the Company
with a meaningfully different capital structure for the fourth quarter
of 2018 compared to the fourth quarter of 2017. The Company believes the
use of the respective proceeds and related higher share count, makes
year-over-year comparisons less meaningful, particularly on a per share
basis.

Net loss attributable to common stockholders for the quarter ended
December 31, 2018 was $5.2 million, or $(1.10) per weighted average
common share outstanding, compared with net loss attributable to common
stockholders of $5.3 million, or $(1.44) per weighted average common
share, for the same period in 2017. The decrease in net loss for the
fourth quarter of 2018 was primarily due to a decrease in operating loss
of $1.2m primarily driven by the acquisition activity in 2018, gain on
sale of real estate realized in the fourth quarter 2018 of $1 million,
offset by an increases in interest expense of $0.7 million, loss on debt
extinguishment of $1 million and preferred dividends $0.35 million,
Weighted average common shares outstanding for the fourth quarters
ending 2018 and 2017 were 4.7 million and 3.7 million, respectively.

Consolidated total revenues for the quarter ended December 31, 2018 were
$13.6 million, compared with $8.4 million for the same period in 2017.

NOI for the quarter ended December 31, 2018 was $8.8 million compared
with NOI of $5.3 million for the same period in 2017.

EBITDA for the quarter ended December 31, 2018 was $7.0 million compared
with $3.2 million for the same period in 2017.

FFO attributable to common stockholders and unit holders for the quarter
ended December 31, 2018 was $2.0 million, or $0.35 per weighted average
common share and unit, compared with $(0.7) million, or $(0.17) per
weighted average common share and unit for the same period in 2017,
primarily as a result of increased depreciation and amortization driven
by acquisition activity, the loss on extinguishment of debt of $1
million and the increase in weighted average shares following the public
offering completed in July 2018, offset by an increase in preferred
stock dividends of $0.35 million and the gain on sale of real estate of
$1 million.

AFFO for the quarter ended December 31, 2018 was $1.3 million, or $0.23
per weighted average common share and unit, compared with $190,000, or
$0.05 per weighted average common share, for the same period in 2017,
primarily driven by the change in FFO attributable to common
stockholders and unit holders, a net decrease in deferred finance fees
and non-cash interest of $855,000, increased straight line rent and
above/below market rent adjustments of $161,000, increased recurring
capital expenditures and lease commissions of approximately $540,000
incurred in the quarter and the increase in weighted average shares
following the public offering completed in July 2018.

See “Non-GAAP Financial Measures” for complete definitions of NOI,
EBITDA, FFO and AFFO and the financial tables accompanying this press
release for reconciliations of net income to NOI, EBITDA, FFO and AFFO.

Investment Activity

As of December 31, 2018, the Company had real estate investments
comprised of 55 industrial properties totaling 12.0 million square feet
with occupancy of 95.0%.

On October 15, 2018, the Company completed the acquisition of a 1.1
million-square-foot multi-tenant Class B industrial property in the
greater Cincinnati, Ohio market for total consideration of $24.8
million. The building is 92% leased and projected to provide an initial
yield of 8.5%. The acquisition was funded with the issuance of 626,011
operating partnership units valued at approximately $10.6 million, or
$17.00 per unit, the assumption of $13.9 million of existing mortgage
debt secured by the property and $0.25 million in cash.

On December 14, 2018, the Company completed the transformational
acquisition of a 20-building, 1.1 million-square-foot light industrial
and flex portfolio in Jacksonville, Florida for $97.1 million. The
portfolio is 96% leased and projected to provide an initial yield of
8.4%. The acquisition was funded with approximately $34 million in
proceeds from the Madison International Realty investment described
below and a $63 million short-term loan that the Company expects to
refinance during the first quarter of 2019 with long-term secured
financing with a life insurance company.

On December 19, 2018, the Company sold 525 West Marquette, a
112,144-square-foot industrial building in Milwaukee, Wisconsin, for
$5.3 million, resulting in a one-time gain of $1 million on the sale in
the fourth quarter of 2018. Proceeds from the sale were used to pay down
$3.4 million of debt on the Company’s $78 million loan with Transamerica
Life Insurance Company and for general corporate purposes.

On January 4, 2019, the Company completed the acquisition of a
73,875-square-foot, multi-tenant Class B industrial building in the
Chicago area for $5.4 million in cash. The acquisition was funded with
borrowings on the Company’s credit facility and is projected to provide
an initial yield of 8.9%.

Leasing Activity

Leases commencing during the fourth quarter of 2018 totaled an aggregate
of 115,000 square feet, all of which were for leases of at least six
months. These leases included 87,000 square feet of renewal leases and
28,000 square feet of new leases. The Company will experience a 17.6%
increase in rental rates on a cash basis from these leases.

For the twelve months ended December 31, 2018, leases executed totaled
1,546,000 square feet, of which 1,451,000 square feet was for leases of
at least six months. The leases six months or longer included 482,000
square feet of renewal leases and 969,000 square feet of new leases. The
Company will experience a 5.8% increase in rental rates, on a cash
basis, from all of the leases executed in 2018 with a lease term of at
least six months. The weighted average term for these leases is 4.3
years. Absent a previously disclosed 40,000-square-foot lease in the
third quarter with the Federal Aviation Administration, the Company
would have reported a 9.6% increase in rental rates on a cash basis from
these leases for the full year 2018.

Capital Markets Activity

On December 14, 2018, the Company issued to Madison International Realty
4,411,764 shares of the Company’s Series B Convertible Redeemable
Preferred Stock at a price of $17.00 per share, or $75.0 million
aggregate consideration, in a private placement. The shares of Series B
Convertible Redeemable Preferred Stock are convertible into shares of
the Company’s common stock, at the option of the holders, commencing on
January 1, 2022. Prior to the receipt of stockholder approval, such
conversion into shares of common stock is limited to the aggregate of
the 19.99% limit under applicable NYSE American rules.

The annual cash dividend on each share of Series B Convertible
Redeemable Preferred Stock is 3.25%, or $0.5525 per share, for the
period from the closing of the private placement through December 31,
2019, and is payable when, as and if declared by the Company’s Board of
Directors, quarterly in cash on January 15, April 15, July 15 and
October 15 of each year, commencing on January 15, 2019. The annual cash
rate increases to 3.50% in year two; 3.75% in year three; 4.00% in year
four; 6.50% in year five; and 12.00% in year six. As noted below, the
liquidation preference of Series B Convertible Redeemable Preferred
Stock accretes at a higher annual internal rate or return.

The shares of Series B Convertible Redeemable Preferred Stock have a
liquidation preference in an amount per share equal to the greater of
(i) an amount necessary for the holders to receive a 12% annual internal
rate of return on the issue price of $17.00 and (ii) $21.89, subject to
adjustment, plus accrued and unpaid dividends. Concurrently with the
closing of the private placement, the Company and Madison entered into
an agreement requiring the Company to file a registration statement with
the Securities and Exchange Commission to register for resale the shares
of the Company’s common stock issuable upon the conversion of the Series
B Convertible Redeemable Preferred Stock on or before the date that is
60 days prior to the third anniversary of the closing of the private
placement.

$5.0 Million Stock Repurchase Authorization

On December 14, 2018, the Company’s Board of Directors authorized a
stock repurchase plan providing for the purchase in the aggregate of up
to $5 million of the Company’s common stock. No stock repurchases were
made during the fourth quarter of 2018.

Quarterly Distributions to Stockholders

On November 29, 2018, the Company’s Board of Directors declared a
regular quarterly cash dividend of $0.46875 per share for the Preferred
Stock for the fourth quarter of 2018. The dividend was paid on December
31, 2018 to stockholders of record on December 14, 2018.

On December 13, 2018, the Company’s Board of Directors declared a
regular quarterly cash dividend of $0.375 per share for Company’s common
stock for the fourth quarter of 2018. The dividend was payable on
January 31, 2019, to stockholders of record on December 28, 2018.

Guidance for 2019

For the year ending December 31, 2019, the Company issued its guidance
for net loss of $(1.87) to $(1.77) per weighted average common share and
operating unit outstanding, Nareit FFO attributable to common
stockholders and unit holders of $2.50 to $2.60 per weighted average
common share and unit and AFFO of $1.90 to $2.00 per weighted average
common share and unit.

See “Non-GAAP Financial Measures” for a complete definition of FFO and
AFFO and the financial table accompanying this press release for
reconciliations of net income to FFO and AFFO.

Commenting on the 2019 guidance, Mr. Witherell added, “Our initial
outlook for the year reflects the significant work we accomplished in
2018 that added embedded growth to our portfolio through acquisition
activity and strong new and renewal leasing as well as the sourcing of
attractive capital through the strategic investment with Madison
International Realty. These expected results at the midpoint of our
range would represent strong dividend coverage with Nareit FFO and AFFO
per share nearly double what we achieved in 2018.”

A reconciliation of projected net loss per weighted average common share
and unit outstanding to projected Nareit FFO attributable to common
stockholders and unit holders per weighted average common share and unit
and AFFO per weighted average common share and unit is provided as
follows:

   
Full Year
2019 Range
Low     High
Net loss $ (1.87 ) $ (1.77 )
Add: Real estate depreciation & amortization 5.43 5.43
Less: Preferred stock dividends (1.06 )   (1.06 )
FFO attributable to common stockholders and unit holders 2.50 2.60
Deferred finance fee amortization 0.19 0.19
Stock compensation 0.16 0.16
Straight-line rent (0.08 ) (0.09 )
Above/below market lease rents (0.21 ) (0.23 )
Recurring capital expenditures (0.66 )   (0.63 )
AFFO attributable to common stockholders and unit holders $ 1.90     $ 2.00  
 

The Company’s guidance for net loss, FFO attributable to common
stockholders and unit holders and AFFO attributable to common
stockholders and unit holders for 2019 is based on the following
assumptions and does not include the potential impact of future
acquisitions or dispositions, if completed:

  • Total revenues of $65.4 million to $66.0 million
  • Net operating income of $43.2 million to $43.6 million
  • EBITDA of $35.9 million to $36.5 million
  • General and administrative expenses of $7.0 to $7.3 million, including
    non-cash expenses of $1.0 million
  • Same-store portfolio occupancy of 95% to 96%
  • Recurring capital expenditures of $3.2 million to $3.7 million
  • 5.9 million common shares and operating partnership units outstanding

Earnings Conference Call and Webcast

The Company will host a conference call and live audio webcast, both
open for the general public to hear, later today at 1:00 p.m. Eastern
Time. The number to call for this interactive teleconference is (412)
717-9587. A replay of the call will be available through March 15, 2019,
by dialing (412) 317-0088 and entering the replay access code, 10128919.

The live audio webcast
of the Company’s quarterly conference call will be available online in
the Investor Relations section of the Company’s website at ir.plymouthreit.com.
The online replay will be available approximately one hour after the end
of the call and archived for approximately 90 days.

About Plymouth

Plymouth Industrial REIT, Inc. is a vertically integrated and
self-managed real estate investment trust focused on the acquisition and
operation of single and multi-tenant industrial properties located in
secondary and select primary markets across the United States. The
Company seeks to acquire properties that provide income and growth that
enable the Company to leverage its real estate operating expertise to
enhance shareholder value through active asset management, prudent
property re-positioning and disciplined capital deployment.

Forward-Looking Statements

This press release includes “forward-looking statements” that are made
pursuant to the safe harbor provisions of Section 27A of the Securities
Act of 1933 and of Section 21E of the Securities Exchange Act of 1934.
The forward-looking statements in this release do not constitute
guarantees of future performance. Investors are cautioned that
statements in this press release, which are not strictly historical
statements, including, without limitation, statements regarding
management’s plans, objectives and strategies, constitute
forward-looking statements. Such forward-looking statements are subject
to a number of known and unknown risks and uncertainties that could
cause actual results to differ materially from those anticipated by the
forward-looking statement, many of which may be beyond our control.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as “may,” “plan,” “seek,” “will,”
“expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or
the negative thereof or variations thereon or similar terminology. Any
forward-looking information presented herein is made only as of the date
of this press release, and we do not undertake any obligation to update
or revise any forward-looking information to reflect changes in
assumptions, the occurrence of unanticipated events, or otherwise.

 
PLYMOUTH INDUSTRIAL REIT, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(In thousands, except share and per share amounts)
         
 
 
 
December 31, December 31,
2018 2017
Assets
Real estate properties $ 452,610 $ 303,402
Less accumulated depreciation   (41,279 )   (25,013 )
Real estate properties, net 411,331 278,389
 
Cash 5,394 12,915
Cash held in escrow 7,808 5,074
Restricted cash 1,759 1,174
Deferred lease intangibles, net 37,940 27,619
Other assets   5,931     4,782  
Total assets $ 470,163   $ 329,953  
 
Liabilities, Preferred Stock and Equity
Liabilities:
Secured mortgage debt, net 288,993 195,431
Mezzanine debt to investor, net 29,364
Borrowings under line of credit, net 28,187 20,837
Deferred interest 1,357
Accounts payable, accrued expenses and other liabilities 21,996 16,015
Deferred lease intangibles, net   7,067     6,807  
Total Liabilities   346,243     269,811  
 
 
Preferred stock, par value $0.01 per share, 100,000,000 shares
authorized,
Series A; 2,040,000 shares issued and outstanding at December 31,
2018 and 2017 (aggregate liquidation preference of $51,000 at
December 31, 2018 and 2017)
48,868 48,931

Series B; 4,411,764 and no shares issued and outstanding at
December 31, 2018 and 2017, respectively (aggregate liquidation
preference of $75,000 at December 31, 2018)

72,192
 
Equity (Deficit):
Common stock, $0.01 par value: 900,000,000 shares authorized;
4,821,876 and 3,819,201 shares issued and outstanding at December
31, 2018 and December 31, 2017, respectively
49 39
 
Additional paid in capital 126,327 123,270
Accumulated deficit   (137,983 )   (119,213 )
Total stockholders’ equity (deficit) (11,607 ) 4,096
Non-controlling interest   14,467     7,115  
Total equity (deficit)   2,860     11,211  
Total liabilities, preferred stock and equity $ 470,163   $ 329,953  
 
 
PLYMOUTH INDUSTRIAL REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(In thousands, except share and per share amounts)
                 
 
 
For the Three Months For the Year
Ended December 31, Ended December 31,
2018 2017 2018 2017
 
Rental revenue $ 10,387 $ 6,379 $ 36,632 $ 18,372
Tenant recoveries 3,242 2,031 12,051 6,443
Other revenue   8     1     534     3  
Total revenues   13,637     8,411     49,217     24,818  
 
Operating expenses:
Property 4,860 3,122 17,449 8,205
Depreciation and amortization 7,553 4,943 26,788 13,998
General and administrative 1,733 2,031 6,032 5,189
Acquisition costs       17         103  
Total operating expenses   14,146     10,113     50,269     27,495  
 
Operating loss (509 ) (1,702 ) (1,052 ) (2,677 )
 
Other income (expense):
Interest expense (3,957 ) (3,219 ) (15,734 ) (11,581 )
Loss on debt extinguishment (988 ) (5,393 )
Gain on sale of real estate 1,004 1,004
Gain on disposition of equity investment       8         231  
Total other expense   (3,941 )   (3,211 )   (20,123 )   (11,350 )
 
Net loss $ (4,450 ) $ (4,913 ) $ (21,175 ) $ (14,027 )
 
Net loss attributable to non-controlling interest $ (750 ) $ (489 ) $ (2,459 ) $ (5,320 )
 
Net loss attributable to Plymouth Industrial REIT, Inc. $ (3,700 ) $ (4,424 ) $ (18,716 ) $ (8,707 )
 
Less: Preferred stock dividends 1072 723 3,940 723
Less: Series B preferred stock accretion to redemption value 359 359
Less: amount allocated to participating securities 46 128 201 128
       
Net loss attributable to common shareholders $ (5,177 ) $ (5,275 ) $ (23,216 ) $ (9,558 )
 

Net loss per share attributable to Plymouth Industrial REIT, Inc.
common stockholders

$ (1.10 ) $ (1.44 ) $ (5.76 ) $ (4.45 )
 
Weighted-average common shares outstanding basic and diluted   4,696,264     3,656,044     4,027,329     2,149,977  
 

Non-GAAP Financial Measures Definitions

Net Operating Income (NOI): We consider net operating income, or
NOI, to be an appropriate supplemental measure to net income because it
helps both investors and management understand the core operations of
our properties. We define NOI as total revenue (including rental
revenue, tenant reimbursements, management, leasing and development
services revenue and other income) less property-level operating
expenses including allocated overhead. NOI excludes depreciation and
amortization, general and administrative expenses, impairments,
gain/loss on sale of real estate, interest expense, and other
non-operating items.

EBITDA: We believe that earnings before interest, taxes,
depreciation and amortization, or EBITDA, is helpful to investors as a
supplemental measure of our operating performance as a real estate
company because it is a direct measure of the actual operating results
of our industrial properties. We also use this measure in ratios to
compare our performance to that of our industry peers.

Funds From Operations attributable to common stockholders (“FFO”):
Funds from operations, or FFO, is a non-GAAP financial measure that is
widely recognized as a measure of REIT operating performance. We
consider FFO to be an appropriate supplemental measure of our operating
performance as it is based on a net income analysis of property
portfolio performance that excludes non-cash items such as depreciation.
The historical accounting convention used for real estate assets
requires straight-line depreciation of buildings and improvements, which
implies that the value of real estate assets diminishes predictably over
time. Since real estate values rise and fall with market conditions,
presentations of operating results for a REIT, using historical
accounting for depreciation, could be less informative. We define FFO,
consistent with the National Association of Real Estate Investment
Trusts, or NAREIT, definition, as net income, computed in accordance
with GAAP, excluding: gains (or losses) from sales of property,
depreciation and amortization of real estate assets, impairment losses,
losses on extinguishment of debt and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to
reflect FFO on the same basis. Other equity REITs may not calculate FFO
as we do, and, accordingly, our FFO may not be comparable to such other
REITs’ FFO. FFO should not be used as a measure of our liquidity, and is
not indicative of funds available for our cash needs, including our
ability to pay dividends.

In December 2018, NAREIT issued a white paper restating the definition
of FFO. The purpose of the restatement was not to change the fundamental
definition of FFO, but to clarify existing NAREIT guidance.

Contacts

Tripp Sullivan
SCR Partners
(615) 760-1104
TSullivan@scr-ir.com

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