Executive Summary / Key Takeaways

• Differentiated Strategy Yields Resilience: Plymouth Industrial REIT ($PLYM) is strategically focused on acquiring and actively managing smaller footprint, infill industrial properties in supply-constrained secondary markets, a niche that consistently outperforms larger bulk assets and insulates the portfolio from new development.
• Robust Operational Performance & Leasing Momentum: The company reported strong Q2 2025 results, with Same Store Rental Revenue and NOI (cash basis) both growing 4.1%, driven by over 1.4 million square feet of new leasing at blended cash rent spreads exceeding 13%, addressing nearly 70% of 2025 expirations.
• Strategic Capital Deployment Fuels Growth: Bolstered by the transformative Sixth Street partnership and an upsized credit facility, PLYM deployed $204 million into acquisitions in Q2 2025, including a significant Ohio portfolio, and continues to execute on a $90 million share repurchase program, reflecting a balanced capital allocation approach.
• Positive Outlook for H2 2025: Management reaffirmed full-year 2025 Core FFO guidance, anticipating a stronger second half driven by the stabilization of transitory vacancies, embedded rent growth from below-market leases, and the full contribution from recent acquisitions, targeting year-end same-store occupancy near 96.5%.
• Vertically Integrated Moat: PLYM's vertically integrated platform and hands-on asset management are critical differentiators, enabling superior operational control, cost efficiency, and the ability to execute complex value-add strategies that competitors often cannot, thereby enhancing long-term value creation.

Plymouth's Differentiated Blueprint in Industrial Real Estate

Plymouth Industrial REIT, established in 2011 and public since its 2017 IPO, has meticulously carved out a distinct and resilient position within the competitive industrial real estate landscape. Its core mission revolves around the acquisition, ownership, and management of single and multi-tenant industrial properties—ranging from distribution centers and warehouses to light industrial and small bay facilities—primarily within the vital industrial, distribution, and logistics corridors of the United States. This strategic focus on "smaller footprint, infill industrial properties in dense, supply-constrained submarkets" is not merely a preference but a foundational differentiator.

This deliberate strategy positions Plymouth in a segment that consistently outperforms the broader market. Its infill assets boast occupancy rates over 400 basis points higher than broader market averages, largely because speculative development tends to concentrate on larger, bulk products. This insulation from new supply is a critical competitive advantage, allowing Plymouth to capture strong rent growth. The company's properties, with their modular layouts and multi-tenant configurations, are inherently flexible. This design mitigates binary vacancy risk and supports resilient cash flows, enabling rapid adaptation to evolving tenant demands driven by reshoring, inventory realignment, and supply chain diversification.

Plymouth's most significant competitive moat lies in its vertically integrated platform. This operational model is not a mere technological add-on but a fundamental aspect of its business, allowing for in-house property management, asset management, and construction teams. This integration translates into tangible benefits: enhanced operational control, superior margins through efficient management, and stronger customer loyalty via tailored services. For instance, this agility enables Plymouth to manage "shorter waltz" leases effectively and execute complex value-add strategies that larger, less nimble competitors might avoid. The Memphis acquisition, for example, was a "special situation" at an initial 8% yield, expected to reach 10% over two to three years, precisely because Plymouth's in-house capabilities could manage its complex moving parts, including converting a call center back to industrial space.

In the broader industrial market, Plymouth faces formidable competitors like Prologis (PLD), Rexford Industrial Realty (REXR), EastGroup Properties (EGP), and STAG Industrial (STAG). While Prologis leverages global scale and advanced technology, Plymouth's strength lies in its localized market expertise and operational agility, allowing it to be more cost-efficient in niche segments. Compared to Rexford's Western U.S. focus or EastGroup's Sunbelt concentration, Plymouth's broader national footprint in secondary markets offers diversified revenue streams and resilience. Its active asset management contrasts with STAG's more acquisition-heavy strategy, potentially leading to faster innovation in property enhancements and better cost control. Plymouth's ability to identify and execute on opportunities in secondary markets, often at costs well below replacement value (averaging under $50 per square foot since its IPO), underscores a data-informed, disciplined approach to capital deployment.

Financial Fortitude: Performance and Capital Deployment

Plymouth's recent financial performance reflects the effectiveness of its differentiated strategy and active asset management. For the second quarter ended June 30, 2025, the company reported rental revenue of $47.058 million. While this was a decrease from $48.649 million in Q2 2024, primarily due to the contribution of Chicago properties into a joint venture and dispositions, it was partially offset by robust performance in its Same Store Portfolio. Same Store Rental Revenue grew 4.1%, and Same Store Net Operating Income (NOI) on a cash basis also increased by 4.1%, demonstrating the underlying health of its core assets.

Leasing activity was a significant highlight, with over 1.4 million square feet commenced in Q2 2025, bringing the year-to-date total to nearly 6 million square feet. This activity addressed almost 70% of the company's 2025 lease expirations and generated impressive blended cash rent spreads exceeding 13%. Property expenses saw a slight increase, mainly driven by higher real estate taxes, operating expenses, and utilities in the Same Store Portfolio. General and administrative expenses also rose due to increased professional fees and non-cash compensation, while interest expense decreased by approximately $1.957 million compared to Q2 2024. The company recorded a notable loss of $7.222 million in its investment in unconsolidated joint ventures for the quarter, alongside a gain of $827,000 from financing transactions related to fair market value adjustments of warrants and a forward contract. Net income (loss) attributable to common stockholders was ($0.14) per share, with Core FFO at $0.46 per share and AFFO at $0.44 per share for the quarter.

Plymouth maintains a strong liquidity position, with approximately $299 million available as of June 30, 2025, comprising $13.2 million in cash and cash equivalents and $285.8 million on its KeyBank unsecured line of credit.

The balance sheet is further strengthened by having 74.5% of its debt fixed, including through interest rate swaps, and no debt maturities in 2025. This financial flexibility is crucial for its growth initiatives.

Capital deployment remains a key strategic pillar. In Q2 2025, Plymouth closed on $204 million of acquisitions, notably the 1.95-million-square-foot Ohio Light industrial portfolio for $193 million. This acquisition, one of the largest in company history, was secured at an initial yield of 6.7%, with in-place rents approximately 22% below market and a weighted average remaining lease term (WALT) of 2.6 years, offering significant embedded rent growth. The company also acquired a 100,420-square-foot single-tenant warehouse in Atlanta for $11.7 million at a 6.95% initial NOI yield. Demonstrating a balanced approach to capital allocation, Plymouth repurchased and retired 805,394 shares of common stock at an average price of $16.28 during Q2 2025, with $76.9 million remaining under its $90 million share repurchase program.

Outlook and Growth Catalysts: A Stronger Second Half

Management has consistently reaffirmed its full-year 2025 Core FFO guidance, projecting a stronger second half of the year. This optimistic outlook is predicated on the continued lease-up of vacant spaces, embedded rent growth, and the full contribution from recently acquired assets. The company anticipates ending 2025 with same-store occupancy near 96.5%, a significant improvement from Q4 2024's 92.2% for the same-store pool. This increase is largely driven by the successful lease-up of larger format speculative spaces, with approximately 70% of the 1.6 million square feet of such space already addressed.

Key leasing activities underpin this confidence. The 624,000 square foot St. Louis expiration is in DocuSign for a three-year renewal, and two large international company leases totaling 370,000 square feet for 2026 expirations are in the signature cycle. The Ohio Light acquisition portfolio, with its short 2.6-year WALT and 22% below-market rents, presents a substantial mark-to-market opportunity, with management anticipating elevated renewal rates. The company also expects to operate within a 6x leverage range for the balance of 2025.

Plymouth's acquisition pipeline remains robust, standing at approximately $750 million, double the level seen in Q1 2025, with all contemplated transactions located in existing operating markets. Approximately $90-91 million of the capital sourced from the transformative Sixth Street transaction remains to be deployed by year-end, through a combination of acquisitions and opportunistic share repurchases. The company is actively pursuing a large off-market portfolio, which, if successful, would significantly advance its full-year acquisition volume. Furthermore, Plymouth has 200,000 square feet ready for build-to-suit development in Cincinnati and 115,000 square feet in a new Memphis acquisition, though it plans to avoid speculative development in the near term unless high-single-digit yields are secured.

Navigating Headwinds: Risks and Resilience

While Plymouth's strategic focus provides a degree of insulation, the company is not immune to broader economic and market risks. The overall economy can significantly impact operational performance, potentially affecting distributions, debt service, or other financial obligations. Interest rate fluctuations, though largely mitigated by 74.5% fixed debt and interest rate swaps, still pose a risk to the variable portion of its debt, particularly its KeyBank unsecured line of credit.

Tenant credit risk, while actively managed through watch lists and letters of credit, can present "surprising velocity of change," as seen with recent unanticipated tenant issues in Cleveland. One online retailer abruptly ceased operations, and another business became non-viable, leading to evictions and cleanup costs. However, Plymouth's vertically integrated team demonstrated resilience by swiftly identifying new prospects and pursuing legal remedies, securing a new tenant at a 27% positive spread for one of the Cleveland properties. The company has also observed an increase in short-term space requirements, driven by inventory adjustments and shifting trade flows, and a "significant increase from various CPL companies for bulk storage requirements" related to tariffs, indicating a "rush to get product into the country." While these present short-term challenges, they also highlight the dynamic demand for industrial space.

Conclusion

Plymouth Industrial REIT's investment thesis is compelling, rooted in its disciplined focus on acquiring and actively managing smaller footprint, infill industrial properties in secondary markets. This strategy, combined with its vertically integrated operational model, provides a distinct competitive advantage, enabling superior cost efficiency, operational agility, and the ability to unlock significant value through proactive asset management and strategic repositioning. Despite a dynamic market and some recent tenant-specific challenges, Plymouth's robust leasing activity, strong liquidity, and strategic capital deployment initiatives—bolstered by the Sixth Street partnership—position it for sustained cash flow growth. The reaffirmed 2025 Core FFO guidance and projected occupancy gains underscore a confident outlook, making Plymouth Industrial REIT an intriguing prospect for investors seeking resilient growth in the industrial real estate sector.