On Tuesday, KeyBanc reiterated its Overweight rating on Plymouth Industrial REIT (NYSE:PLYM) with a steady price target of $25.00. The firm's assessment follows Plymouth Industrial REIT's first-quarter 2024 activity update, which showed consistent progress in leasing and development efforts.
During the quarter, the company addressed an additional 10.5% of its lease expirations set for 2024 since Sunday, February 19, and recorded a 60 basis points (bps) improvement in expected rent change for commencements in the same year, now anticipated to be 16.3%.
The company's same-store occupancy experienced a slight decline of 10 bps from December 31 to 98.3%, while the overall portfolio occupancy decreased more significantly by 120 bps sequentially to 96.9%, primarily due to new development deliveries.
Still, Plymouth Industrial REIT successfully leased an additional 54,000 square feet at Fisher Park I in Cincinnati. This leasing activity has brought the total leased rate within its development program to 93%, leaving approximately 50,000 square feet remaining to be leased.
While there remains uncertainty regarding the lease expiration on July 31 at the company's 769,000 square foot facility in St. Louis, currently leased to FedEx (NYSE:FDX), there appears to be moderate interest from potential tenants for both single and partial space usage. In the event FedEx decides to vacate, there is already interest in utilizing around 200,000 square feet of expansion space at the site.
KeyBanc pointed out that no investment or balance sheet activities were announced for the quarter. The firm believes that the current stock price reflects the potential impact of FedEx vacating its facility, as the shares are trading at a 7.5% implied capitalization rate and a 57% 2024 adjusted funds from operations (AFFO) multiple discount compared to the Industrial REIT subsector.
Any new lease or renewal at the FedEx-occupied facility would be seen as a positive development for Plymouth Industrial REIT's shares in the near term.
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