Business Overview

Plymouth Industrial REIT, Inc. (PLYM) is a real estate investment trust (REIT) focused on acquiring, owning, and managing single and multi-tenant industrial properties, including distribution centers, warehouses, light industrial, and small bay industrial facilities. The company has a diverse portfolio of 129 properties spanning 11 states, with a total of approximately 29.3 million rentable square feet as of December 31, 2024.

Plymouth Industrial REIT was formed in March 2011 by Jeffrey Witherell, who has over 30 years of experience in the commercial real estate industry. The company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns substantially all of its assets and conducts its business through its Operating Partnership, Plymouth Industrial Operating Partnership, L.P.

Throughout its history, Plymouth has faced and overcome various challenges. In 2017, the company completed an offering of 7.50% Series A Cumulative Redeemable Preferred Stock, which included 240,000 shares exercised under the underwriters' over-allotment. The following year, Plymouth completed a private placement of its Series B Convertible Redeemable Preferred Stock, raising $75 million in aggregate consideration.

A significant milestone for the company came in 2022 when it took action to address its Series B Preferred Stock, converting the remaining 2.21 million shares into common stock. This move simplified Plymouth's capital structure and positioned the company for further growth.

Regional Presence

As part of its expansion strategy, Plymouth has established regional offices in Columbus, Ohio, Jacksonville, Florida, Memphis, Tennessee, and Atlanta, Georgia, in addition to its headquarters in Boston, Massachusetts. This regional presence has allowed the company to better manage its growing portfolio and capitalize on opportunities in various markets.

Plymouth's vertically integrated, self-administered, and self-managed REIT structure has enabled it to effectively execute its strategy of targeting industrial properties in Primary and Secondary markets across the United States. The company focuses on the main industrial, distribution, and logistics corridors, which has resulted in a portfolio with lower occupancy and rental rate volatility compared to properties in Gateway markets.

Portfolio Diversification

The company's portfolio is diversified across 34 different industry types, with its top tenants operating in the logistics, transportation, automotive, and wholesale/retail sectors. As of December 31, 2024, the portfolio was 92.3% leased to 443 different tenants. Plymouth's top 10 tenants accounted for just 17.3% of total annualized base rent, providing further diversification.

Plymouth's properties are primarily categorized into three main property types: Warehouse/Distribution, Warehouse/Light Manufacturing, and Small Bay Industrial. The Warehouse/Distribution properties account for the largest portion of the portfolio, comprising 68.6% of the total rentable square feet and 59.8% of the total annualized base rent as of December 31, 2024. These properties are typically used for distribution, logistics, and e-commerce fulfillment.

The Warehouse/Light Manufacturing properties make up 21.1% of the total rentable square feet and 21.3% of the total annualized base rent. These properties are utilized for light industrial and manufacturing operations. The Small Bay Industrial properties, which include flex space, account for 10.3% of the total rentable square feet and 18.9% of the total annualized base rent. These properties offer smaller tenant spaces that are suitable for a variety of uses, such as office, warehouse, and light manufacturing.

Financials

For the full year 2024, Plymouth reported total revenue of $198.35 million, net income of $142.37 million, and Core FFO of $83.64 million, or $1.86 per weighted average common share and unit. The company's AFFO for the year was $79.79 million, or $1.77 per weighted average common share and unit. Operating cash flow for the year was $96.07 million, which was also the free cash flow figure.

For the fourth quarter of 2024, Plymouth reported revenue of $47.57 million and net income of $147.41 million. Operating cash flow and free cash flow figures for the quarter were not provided.

Liquidity

Plymouth's balance sheet remains healthy, with net debt of $626.17 million as of December 31, 2024, and a debt-to-total market capitalization ratio of 52.7%. The company has a well-laddered debt maturity schedule, with no significant maturities until 2027.

As of December 31, 2024, Plymouth had $17.55 million in cash and cash equivalents. The company's debt-to-equity ratio stood at 1.11, with a current ratio and quick ratio both at 0.42. Plymouth also has access to a $480 million credit line under the KeyBank unsecured line of credit.

Financials and Growth

In 2024, Plymouth acquired 9 properties for a total purchase price of $122.04 million, with a weighted average capitalization rate of 6.75%. The company also completed the contribution of its 34-property Chicago portfolio to a joint venture with Sixth Street Partners, retaining a 35% ownership stake. This transaction provided Plymouth with $250 million of capital to pursue additional acquisitions.

For 2025, Plymouth provided guidance for $360 million of acquisitions at a weighted average capitalization rate of 6.75%, which would increase the company's total owned portfolio to over 30 million square feet. Management also expects to see continued leasing momentum, with the goal of addressing 90% of 2025 expirations by the end of the year.

The company's 2025 guidance includes several key assumptions:

1. The same-store portfolio includes 168 buildings encompassing 26 million square feet, representing 89% of the total in-place portfolio as of February.
2. An expected 380 basis points of occupancy improvement in the same-store portfolio, or around 1 million square feet of lease-up.
3. This occupancy improvement is primarily driven by leasing up 740,000 square feet, including 600,000 square feet at the former FedEx Logistics site in St. Louis.
4. The guidance incorporates a 7 cents per share impact from the leases signed on the former FedEx Logistics site.
5. Additional speculative leasing assumptions are included in the high end of their guidance range, beyond the 740,000 square feet already leased.
6. Expected rental growth of 3-4% in their markets, with 15-20% rent growth on smaller spaces under 150,000 square feet, and around 10% rent growth on larger spaces.

Risks and Opportunities

As with any real estate investment, Plymouth faces risks related to tenant defaults, lease rollovers, and changes in market conditions. The company's focus on secondary industrial markets helps mitigate some of this risk, as these markets often have less competition and more stable occupancy and rental rates.

One of Plymouth's key opportunities is its ability to execute value-add strategies, such as renovations, tenant improvements, and repositioning of assets. The company's in-house property management and construction teams allow it to efficiently undertake these projects and capture the upside.

Additionally, Plymouth's strategic partnership with Sixth Street Partners provides access to additional capital for future growth. The company's pipeline of potential acquisitions exceeds $1 billion, giving it ample opportunities to expand its portfolio and scale its platform.

Geographic Concentration

Plymouth's portfolio is strategically concentrated in several key markets, which contribute to the company's total annualized rent as follows:

1. Memphis - 21.1%
2. Jacksonville - 13.5%
3. Cleveland - 13.1%
4. Indianapolis - 11.3%
5. Cincinnati - 10.3%
6. Columbus - 9.4%
7. St. Louis - 8.7%
8. Atlanta - 7.7%
9. South Bend - 2.2%
10. Boston - 1.8%
11. Charlotte - 0.9%

This geographic diversification across Primary and Secondary markets helps mitigate the company's exposure to any single market while allowing it to capitalize on regional growth opportunities.

Conclusion

Plymouth Industrial REIT has established itself as a diversified player in the industrial real estate sector, with a focus on secondary markets that offer attractive risk-adjusted returns. The company's strong financial position, experienced management team, and strategic partnerships position it well for continued growth and value creation. As Plymouth executes on its acquisition and leasing strategies, investors may find the company's story increasingly compelling. With a clear growth strategy, robust guidance for 2025, and a diversified portfolio across key industrial markets, Plymouth Industrial REIT appears well-positioned to capitalize on the ongoing demand for industrial real estate.