GRIF - Griffin Industrial Realty

[BG2008]

I spoke with Michael and he mentioned some issues with black out periods.  He was fully aware that it traded above NAV and kind of lamented the inability to tap the ATM.  $10mm traded today.  Pretty incredible going from $200k a day when I was building a position 3 years ago.  I knew of another decent sized investor who trimmed at $78 or so.  Should've, would've, could've!  It is fine.  Frankly, I am kind of excited to see how the company can execute going forward.  Did anyone else see that they got permanent financing for the 2 new under leased Charlotte buildings?  That is usually a sign that they are about to sign a long term lease and the lender is getting comfortable with the trajectory.  I happened with one of their LeHigh warehouses a while ago. 

[CorpRaider]

Clark Street Value Blog post.  I didn't see a lot of stuff that you guys haven't already gone over but thought it might be of some interest. 

 

http://clarkstreetvalue.blogspot.com/2021/03/indus-realty-trust-gpt-20.html

 

h/t twitter wonder-friends

 

General fintwit observation: If the goal of bringing on DuGan was to get some hype amongst his fans, it seems to be working.

 

[BG2008]

Conversant bought 333k more shares.  Another $20mm in shares. 

 

https://www.sec.gov/Archives/edgar/data/0001037390/000101359421000238/indus13da1-011121.htm

[BG2008]

Indus Realty Trust Initiated at Outperform by Baird

 

2021-03-16 14:48:00 GMT DJ Indus Realty Trust Price Target Announced at $67.00/Share by Bair

 

I expected quite a few of the I Banks to initiated in the following quarters

[BG2008]

And just like that, shares are up 6-8% because an IB initiated coverage.  Glad to have taken all my dividends in stock and bought a few more shares at about $60-61.  There is a bit of pattern recognition where shares naturally trade to where equity raises are done at.  Once the deal is done and trading commences, it can gravitates to where the narrative and/or long term fundamentals approaches. 

[BG2008]

Interesting to see Gabelli emerge as net buyer in the $60s

 

https://www.sec.gov/Archives/edgar/data/0001037390/000080724921000042/indt_47.htm

[realassetsvalue]

Continued good progress in Q1 2021 and they're not wasting any time putting the equity raised to work.

https://indusrt.com/wp-content/uploads/2019/06/8K-on-2021-Q1-Leasing-and-Business-Update.pdf

Great progress on leasing - 4 deals, 200k sq ft at 6.5 year WAULT at 160 & 180 International in Charlotte and 170 Sunport in Orlando. Charlotte now fully leased and 170 Sunport up to 60% leased when including additional lease subsequent to Q1 2021. Rent PSF not disclosed so it will be interesting to see where this ends up. Portfolio 99.2% occupied at Q1 2021.

On the development side, agreed the Charlotte BTS deal (its with Amazon) and closed on the land in Orlando. Started a new building in Hartford that's 2/3 pre-leased (expansion of existing tenant in the park so they will have ~80k sq ft to backfill). Total development pipeline of ~$112m (with $21m spent as of mid April so about $90m left to spend), 880k sq ft at target yield on cost of 6.1% - 6.6%.

I estimate this target ~$7.1m of NOI is worth ~$141m at an average 5% cap rate (lower on the Lehigh Valley assets, higher on Hartford / Orlando). This would represent a ~25% profit on cost and ~$4 per share in value creation. They plan to get a construction loan to fund the Amazon BTS, which will enhance ROE further. They could probably get a construction loan to fund the 2/3 pre-leased deal in Hartford as well, which has been their approach on a couple of their past Hartford developments. 

Value-add deal in Lehigh Valley under contract: $11.7m, 128k sq ft, 4.5% cap rate / ~$90 PSF. Lease expires in Dec 2022 and in-place NOI is around $4.15 PSF. INDUS's Lehigh Valley assets have NOI of ~$5 PSF so potential upside on the rents. They also highlight excess / under-utilized land as potential upside through outdoor storage or expanding facility.

Put the FL Nursery under contract to be sold for $1.1m. I had valued this land higher than this at $2.5m based on 5x the rent that used to be paid on this land, so definitely off on this one. This sale reflects about $1k an acre - good reminder to be conservative on this agricultural land that's hard to value. Doesn't have a material impact on the valuation of the company, and good that capital will be reinvested in the core business, but wanted to note that fact.

$18.8m of land sales now under contract with $12.8m of these sales expected in 2021.

I think NAV remains about $70 per share but let's see what the full Q1 supplement has to offer when it comes out.

[BG2008]

Pretty strong price movement last few days.  Any news? 

[thowed]

Only thing I can suggest is the write-up in the latest Rhizome Quarterly.  I hadn't heard of it before, and have been starting to research.  Others are probably faster than me.

[Mephistopheles]

https://www.nytimes.com/2021/05/26/business/lehigh-valley-warehouses-ecommerce.html

Pretty good article on the Lehigh Valley warehouse boom and NIMBYism.

Reading this article make's me a bit nervous. At some point, once the supply/demand imbalance swings in the other direction, this will not be a good investment. So much speculative building. And all these mall closings means so much empty space just waiting to be repurposed. When will that time come? Who knows. On the positive side I feel INDT is an obvious takeover candidate as has been discussed in this thread.

[KJP]

Acquiring 395,000 sq ft Charlotte warehouse for $42 million; selling CT nursery for $10 million:  https://indusrt.com/news/indus-announces-updates-to-acquisition-and-disposition-pipelines/#press

[villainx]

Implies belief the remaining 50% can be attractively leased?  That would be how it goes, right?

[realassetsvalue]

1 hour ago, villainx said:

Implies belief the remaining 50% can be attractively leased?  That would be how it goes, right?

That would presumably be the plan. I hope they provide more color on this deal at NAREIT next week as its significant in size (increases the size of the portfolio by ~10%) and doesn't scream cheap at ~$105 PSF. In theory I am happier to see them doing deals with an angle rather than pure stabilized core acquisitions to grow the empire but I am curious what in-place rents are and what they hope to achieve in the lease-up.

More importantly in my eyes is the CT Nursery sale. Assuming it and their other contracted sales closes, it will be the last major non-core asset left outstanding. They will have sold ~$80m of non-core assets in 2021 with the rest being a couple of office / flex buildings and a bit of land in and around Hartford with a pretty immaterial value, <$10m or so...

As a result they have additional capital to grow the industrial / logistics business and their asset base will be "cleaner" and easier for the market to value.