LXP Industrial: Attractive Dividend Yield, Upside Potential In A Lower Rate Environment

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LXP Industrial owns a high-quality portfolio of single-tenant industrial properties across the U.S.The company recently became a pure-play industrial REIT after fully exiting its office portfolio....

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nLXP Industrial: Attractive Dividend Yield, Upside Potential In A Lower Rate Environment\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-01 09:44 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4724337-lxp-industrial-stock-attractive-dividend-yield-upside-potential-in-lower-rate-environment><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>LXP Industrial owns a high-quality portfolio of single-tenant industrial properties across the U.S.The company recently became a pure-play industrial REIT after fully exiting its office portfolio....</p>\n\n<a href=\"https://seekingalpha.com/article/4724337-lxp-industrial-stock-attractive-dividend-yield-upside-potential-in-lower-rate-environment\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4171","symbol_name":"工业房地产投资信托","start_time":0,"source_url":"https://seekingalpha.com/article/4724337-lxp-industrial-stock-attractive-dividend-yield-upside-potential-in-lower-rate-environment","article_id":"2472263396","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1331173398/image_1331173398.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2472263396","pubTimestamp":1727747080,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"LXP Industrial owns a high-quality portfolio of single-tenant industrial properties across the U.S.The company recently became a pure-play industrial REIT after fully exiting its office portfolio.Whil","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4171":"工业房地产投资信托","BK4224":"工业房地产信托","LXP":"Lxp Industrial Trust"},"translate_title":"LXP Industrial：有吸引力的股息收益率，低利率环境下的上行潜力","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"LXP":0.9},"content_text":"LXP Industrial owns a high-quality portfolio of single-tenant industrial properties across the U.S.The company recently became a pure-play industrial REIT after fully exiting its office portfolio.While LXP carries higher leverage, it has maintained its high-yield dividend.Shares have held flat since my last update, but I remain bullish on its prospects.In my view, strong leasing momentum, robust same-property performance, and positive trends in its debt profile position LXP well for future gains.   Thomas Barwick LXP Industrial Trust (NYSE:LXP) owns and operates single-tenant industrial real estate across the U.S., with key markets in Phoenix, Arizona, Greenville, South Carolina, and Atlanta, Georgia. Collectively, these markets account for approximately 30% of their annualized base rents. Major tenants of LXP include prominent names such as Amazon (AMZN), Nissan (OTCPK:NSANY), and Kellanova (K), to name a few. I last covered LXP in mid-2023, noting that the stock was undervalued by at least 10% due to its robust leasing activity, successful development projects, and steady progress in disposing of its office portfolio. Since then, the stock has essentially remained unchanged, underperforming the broader S&P 500 (SPY), which has gained nearly 30% during the same period. Despite this, I remain bullish on LXP. The company recently exited its office portfolio, solidifying its position as a pure-play industrial REIT. Moreover, with the potential for further interest rate reductions by the Federal Reserve (\"Fed\"), LXP’s higher-yielding dividend relative to peers could become a notable competitive advantage. The company continues to report strong leasing activity and same-property performance and has upgraded its guidance accordingly. For income-focused investors looking for value in the industrial REIT sector, LXP remains one worth continued attention. LXP Stock Key Metrics Compared to other industrial REITs, LXP has outperformed in recent months. Over the last six months, for example, the stock has returned 13%. This compares to about 4.7% and 8.3% for similar sized peers, Plymouth Industrial (PLYM) and First Industrial (FR), respectively. Seeking Alpha - 6-Mth Returns of LXP Compared To Peers While LXP’s share price performance has been more mixed over the last month, its returns over the past year are still in-line with the peer average. At 16x forward funds from operations (“FFO”), LXP trades at a relative discount to most other industrial peers, who command a multiple north of 20x. PLYM at 12x continues to trade at a discount to LXP, but I believe this is justified, given LXP’s higher dividend rate. Seeking Alpha - LXP Dividend Yield Compared To Competitors LXP grades poorly on Seeking Alpha’s (“SA”) quant metrics, and this has contributed to its overall “hold” rating. The SA analyst community and Wall Street, however, are more bullish. Though the stock is seldom covered, most within the community remain bullish on its prospects. Within Wall Street, the sentiment is even more bullish, with about a third of those covering the stock rating it as a “strong buy.” At present, consensus price targets indicate over 13% upside. Seeking Alpha - LXP Quant Factor Grades Compared To Peers Recap Of Recent LXP Results LXP’s Q2 results, reported at the end of July, landed better than expected. The industrial REIT reported growth in same-store net operating income (“NOI”) of 5% as total cash base rents increased by approximately 5%, while property-level expenses held flat. LXP Q2 Investor Supplemental - Snapshot of Comparative NOI LXP reported strong leasing activity of 2.7 MSF, with base and cash base rental increases in the mid-40% range. In addition, LXP reported subsequent leasing activity of just under 100K square feet with base and cash base rental increases in the 30% mark. Furthermore, in providing his quarterly earnings commentary, CEO Will Eglin reported that LXP should realize annual rental increases in the 3% to 4% range, with escalations in the mid-3% range. The strong leasing activity and positive updates in LXP’s development portfolio ultimately led the management team to provide positive revisions to full-year guidance. LXP now sees same-store NOI growing at a rate of 4.5% to 5.5%. Adjusted full-year FFO is also expected to land at a midpoint of $0.635/share following the quarterly beat. This represents a tightened rage with a midpoint slightly above the prior outlook of $0.63/share at the end of Q1. LXP Debt Profile LXP operates with elevated leverage, with an internal target for net debt to adjusted EBITDA of between 5.0x and 6.0x. However, at the end of Q2, the company’s leverage stood above this target at 6.2x. Despite this, LXP has successfully managed its debt obligations and continues to maintain strong access to capital markets. In Q2, for example, the company addressed maturing notes with proceeds from the prior issuance of senior notes in November. While these notes carry a higher interest rate, I view the 2.3% spread as manageable. The overall debt portfolio also bears a manageable weighted average interest rate of 3.8%, with average maturity of 6 years. Furthermore, the nearest maturity is not until 2027. This further minimizes the company's near-term refinancing risk. Additionally, with about 90% of the debt at a fixed rate, LXP is well-positioned to avoid significant interest rate risks in the near future. During the Q2 earnings call, CFO Beth Boulerice mentioned that LXP may face a $0.02/share headwind to FFO due to potential swaps on its variable-rate portion, but this impact is expected to be minimal. LXP Q2 Supplemental - Debt Maturity Schedule LXP Dividend Safety At present, LXP pays a quarterly dividend of $0.13/share, and this payout was most recently increased by 4% at the end of calendar 2023. At LXP’s current trading value, the current payout represents a yield of over 5%. In my last coverage on LXP, I viewed this as an attractive yield relative to both the sector and to the broader markets. While the higher interest rate commanded by holding cash and other risk-free alternatives did reduce the appeal of LXP’s dividend, I believe the Fed's recent rate cuts warrants a reassessment of the appeal of the dividend. Other industrial REIT’s currently offer yields in the 2.5% to 3.5% range. First Industrial, for example, yields about 2.5%, while Plymouth Industrial provides for 4%. Rexford Industrial (REXR), meanwhile, is at around 3%. For investors seeking a higher-yielding industrial REIT, LXP is one of the top names in this metric, in my view. From a safety perspective, the dividend appears well covered. In Q2, LXP reported adjusted FFO of $0.16/share. This represents a coverage ratio of just over 80%. Based on the full-year expectations, coverage would be about 82%. While this is higher than the sector average, I don’t view the dividend at risk, given the company’s limited near-term refinancing risk, strong leasing metrics, and continued rental growth prospects. Is LXP Stock A Buy, Sell, Or Hold? I remain bullish on LXP, as recent performance demonstrates strong leasing momentum, highlighted by substantial rental spreads and the ability to retain annual escalators in future signings. Additionally, the company’s stabilized portfolio is 93.6% leased, and its development projects are well-funded, with encouraging leasing trends. Continued strength in the same-store portfolio has also prompted an upward revision to the full-year outlook. While LXP’s debt load exceeds its target leverage range, I am not concerned about its ability to meet obligations. The company recently addressed a near-term maturity and faces no significant debt maturities until 2027, adding an extra layer of security to its dividend, which currently yields over 5%, a premium compared to other industrial REITs.  Although LXP is trading near the upper end of its 52-week range, recent pullbacks over the last month present an opportunity for income-focused investors seeking a reasonably priced industrial REIT. The stock’s forward FFO multiple is about 16x, notably lower than competitors like First Industrial, which trade above 20x. While a 20x multiple may be overstating LXP's value, I believe LXP could reasonably trade between 18x and 19x. This would suggest a fair value between $11.50 and $12/share, or approximately 15% higher than current trading levels. Combined with its attractive dividend, I believe LXP offers the potential for attractive returns at a modest risk level.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2472263396"}