Tripp Sullivan - Investor Relations Jeff Witherell - Chairman and Chief Executive Officer Pen White - President and Chief Investment Officer Dan Wright - Executive Vice President and Chief Financial Officer.

Barry Oxford - D.A. Davidson Henry Coffey - Wedbush Securities.

Good afternoon. And welcome to the Plymouth Industrial REIT Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Tripp Sullivan of Investor Relations. Please go ahead..

Thank you. Welcome to the Plymouth Industrial REIT conference call to review the company’s results for the third quarter of 2018. On the call today will be Jeff Witherell, Chairman and Chief Executive Officer; Pen White, President and Chief Investment Officer; and Dan Wright, Executive Vice President and Chief Financial Officer.

Our results were released this morning in our earnings press release, which can be found on the Investor Relations section of our website, along with our Form 10-Q and supplemental filed with the SEC. A replay of this call will be available shortly after the conclusion of the call through November 20, 2018.

The numbers to access the replay are provided in the earnings press release. For those who listen to the replay of this call we remind you that the remarks made herein are as of today, November 13, 2018, and will not be updated subsequent to this call.

During this call certain comments and statements we make may be deemed forward-looking statements within the meaning prescribed by the securities laws, including statements related to the future performance of our portfolio, our pipeline of potential acquisitions and other investments, future dividends and financing activities.

All forward-looking statements represent Plymouth’s judgment as of the date of this conference call and are subject to risk and uncertainties that can cause actual results to differ materially from our current expectations.

Investors are urged to carefully review various disclosures made by the company, including the risk and other information disclosed in the company’s filings with the SEC. We will also discuss certain non-GAAP measures, including, but not limited to, FFO, AFFO and adjusted EBITDA.

Definitions of these non-GAAP measures and reconciliations to the most comparable GAAP measures, are included in our filings with the SEC. I’ll now turn the call over to Jeff Witherell. Please go ahead..

Thanks, Tripp. Good afternoon, everyone. In addition to Pen and Dan, Jim Connolly, who heads up our Asset Management, and Anne Hayward, our General Counsel, are here with us in the room. We had a number of key milestones in the third quarter indicative of our objectives we established throughout the year.

The opportunities we see across the industrial marketplace and in our markets in particular continue to meet and often exceeds our expectations in many ways. We have a very committed and talented team.

And we will remain focused on driving revenues, increasing NOIs and cash flows through leasing in asset management, as well as outsourcing the right opportunities and selecting the best capital partners to realize the value we've created in our platform. As of today, we own and operate 53 properties containing 11 million square feet of space.

I'm going to touch on our key operating areas. We're having a record year for leasing in 2018 and I don't see any signs of that slowing down the balance of this year or next.

Asset one property in Columbus that we anticipated being fully leased this quarter we now think it's more likely to be the first half of next year we would already be sitting at close to 98% occupancy. With a big head start on next year's leasing already underway, I'm confident we'll move that up in this quarter's 94% in short order.

Now it's worth noting what that implies. Increased revenues, increased NOI and increasing cash flow all coming from embedded growth within the portfolio. We placed a big emphasis on this here internally and I think it shows in our overall results.

So with acquisitions we continue to find the right deals that give us scale in our targeted markets and feed our growth through the substantial spread generated by these higher-yielding properties.

Pen will cover our two most recent transactions in a moment, but they each demonstrate how we’re able to choose the right opportunities that create both short and long-term growth. Using OP units and assuming existing debt on the Fisher Industrial Park acquisition in Cincinnati is a great example.

We will look to do more of those while staying disciplined with the OP unit pricing. We also have no shortage of discussions with institutional investors who are interested in joint ventures.

They see the value of our platforms, and our ability to successfully invest in the Class B industrial space we will continue to explore those opportunities should they meet our strict underwriting criteria as we’re not opposed to growing the portfolio through JVs.

We do have some more work to do on the balance sheet but we’re down to one term loan that was used to eliminate our mezzanine debt. Give the financing work we’ve done over the last two years I really don't lose much sleep over our ability to take care of this loan.

We are actively exploring a number of options to take care of this debt, bring our overall leverage down and provide a more consistent source of capital.

We completed our July common offering, which enabled us to achieve shelf eligibility and the flexibility that comes with that capability; a month later we put into place an ATM program that would give us flexibility for future capital raises.

We have not used the ATM since putting it in place as there continues to be a significant disconnect between what we and others believe our NAV to be and where the stock has been trading. We’re reluctant to issue equity at these stock price level and we will continue to be disciplined in that regard.

With that Pen why don’t you walk us through some of the leasing activities?.

Thanks, Jeff. Good morning everybody. Let’s start off with commentary on our leasing I’ll then provide some color on our most recent acquisitions.

Year-to-date we’ve signed leases of approximately 1.5 million square feet; for the third quarter we had leases commencing for an aggregate of 215,000 square foot that were split fairly evenly between new and renewal leases.

Overall we had a 2.1% decrease on these rents on a cash basis but that was heavily influenced by one lease at Airport Business Park in Memphis with the Federal Aviation Administration as the tenant there.

The prior lease had amortized significant tenant improvements and the new lease did not incur any leasing commissions or TI dollars, that’s a trade off, we will take in most cases as we expect the contractual rent increases to kick in over time.

If we back out that one lease we had 14.4% increase on the cash basis; for the year-to-date period that would've given us 9.0% increase on the cash basis which is in line with the 8% to 9% mark-to market that we believe exists in our portfolio.

At quarter end our occupancy was 94.4%, we expect to continue to improve both on a same store and combined basis as additional leases commence. By the first half of next year we expect this percentage to be in the high 90s as we backfill a couple of other vacancies. We’ve now narrowed our vacancy down to 549,000 square foot as of September 30th.

For the 1.8 million square foot scheduled to expire in 2019 we already have 917,000 square feet signed or committed thus far, bringing our tenant retention ratio to 51% for 2019. For 2018, we're expecting our tenant retention ratio will end up in the 38% to 40% range.

Regarding acquisitions, we expanded our footprint in Cleveland with the purchase of a 400,000 square foot multi-tenant industrial building for $27 million located in Cleveland's tightest and most sought after Southeast submarket.

We viewed this as essentially a Class A property that we were able to secure with Class B pricing with an ingoing yield of 7.6%. Also of note, we completed another acquisition in Ohio just after the close of the quarter, a 1.1 million square foot multi-tenant property in Cincinnati that Jeff alluded to earlier.

We acquired that for $24.8 million, translating to an ingoing cap rate of 8.5%. We structured this acquisition as a up REIT and in so doing assumed about $14 million of existing debt and issued about $10.6 million of OPE units priced at $17 per share.

This Class B industrial building is one of the more unique properties in our portfolio and included about 50 acres of outside storage and available land for future development along with rail service and about 400,000 square feet of crane-served space.

In addition to these two Ohio transactions, the pipeline remains very robust as we're tracking properties in markets we're already in such as Chicago, Atlanta, Memphis and Indianapolis as well as new markets such as Pittsburgh, St. Louis and Jacksonville.

We're comprised of properties that are both stable with long term tenancy as well as properties that have near term lease roll and more value added in nature.

In most cases, we are still prioritizing Class B warehouse, distribution and light manufacturing or flex type properties at a times Class A properties when the pricing make sense from a risk adjusted standpoint. So at this point I'm going turn over to Dan to discuss our financial results. .

Thank you Pen. The third quarter results have us on track for our full year outlook.

Based on the implied fourth quarter that comes from this outlook you can see a clear trend of acceleration in revenues and NOI, but you can also see quarterly fluctuation that naturally occurs in the company of our size when relatively small expenses in one quarter trend higher or lower in the next.

Though while our small numbers definitely benefiting us on the move up and to the right on our two major metrics but is making the quarterly variability of FFO and AFFO seem more volatile than it really is. We continue to believe that a full year basis is the best way to track our progress at this stage of our growth segment.

In the third quarter, I would note that our net loss is a $1.22 per weighted average share compared with $2.20 per weighted average common share in the second quarter and $0.74 from the prior year.

The year-over-year increase in net loss was primarily due to the reasons we noted in the earnings release, namely, higher depreciation and amortization from the substantial acquisition activity, higher property expenses and a loss on the extinguishment of debt related to the payout of MWG portfolio loan.

This was offset by an increase in revenues predominantly generated to our acquisition activity.

Looking at the results on a sequential basis for the second quarter the major items are decreased and the loss on extinguishment of debt $2.8 million, decreased interest expense of $641,000, increased property expenses of $520,000 predominantly from the one off property tax adjustments recorded in the second quarter and declining revenues as a result of the Columbus vacancy.

Net operating income decreased to 7.3 million compared with the 8.2 million in the second quarter, an increase from 4.3 million in the prior year. Year-over-year increase in NOI was due to the acquisition activity added some $3.5 million, offset by a decrease of some $327,000 due to vacancies.

Looking at the results on a sequential basis from the second quarter the primary item impacting the change in NOI is the $520,000 one-time real estate tax adjustment that was recorded and discussed in Q2.

EBITDA was $5.9 million compared with 6.7 million in the second quarter, and 3.3 million in the prior year period for the same reasons I just mentioned for net operating income, along with an increase in G&A of approximately $170,000 as a result of incurred professional fees related to public company reporting and compliance.

Looking at the results on a sequential basis from second quarter, the largest moving pieces for the same reasons I just mentioned for NOI. FFO attributable to common stock and OP unitholders was $0.28 for the quarter compared with $0.39 in the second quarter and $0.11 per share in the prior year period.

Looking at the results on the sequential basis from Q2, substantially attributable to items mentioned previously, offset by a decline in interest expense. AFFO was $0.16 per share compared with $0.42 per share in the first quarter and $0.31 per share in the prior year. Looking at the results on a sequential basis from Q2.

This is attributable to amounts mentioned previously, offset by increased capital expenditures on a recurring basis associated with leasing activities incurred in the third quarter and a net decrease in non-cash and deferred financing amortization as a result of the mezzanine and MWG portfolio loan refinancing.

Turning to our guidance we’re revising our outlook upwards for 2018; total revenues for 2018 are estimated to be in the range of 47.4 million to $47.6 million compared with 44.8 million and 45.6 million previously, NOI is estimated to be in a range of 30.3 million to 30.5 million compared with 28.9 million to 29.8 million previously.

Both revenues and NOI have moved up based on the addition of our Diamond Parkway and the Fisher Industrial Park acquisitions; with these two large acquisitions, we would expect quarterly run rate for NOI of somewhere close to 8.2 million to 8.4 million before factoring in any other transactions.

Recall that when quoted -- projected these initial yields on an acquisition that it is effectively a proxy for expected NOI. Hopefully that will help with future modeling. G&A for the year is estimated to be in the range of 5.60 million to $5.8 million.

Continued use of professionals for fees for audit and other works to support SEC compliance and related transactions has kept a level of expense up so far this year.

We would expect quarterly run rate for G&A of approximately 1.4 million heading into 2019 as a consistent number; depreciation and amortization will increase due to the addition of the $240 million in acquisitions, including Fisher Industrial Park that we’ve completed since mid 2017; that’s currently running at approximately $6.8 million per quarter after adjusting for these most recent acquisitions.

We increased the expected common stock and operating partnership units outstanding by year-end to $5.9 million which is entirely related to the UPREIT transaction that was completed in mid-October. There has been no issuance of common stock on ATM and it hasn't have been utilized due to the disconnect in the stock price from our net asset value.

We expect fourth quarter FFO will increase substantially from Q3 and we'll walk through our expectations for 2019 when we report our full year and fourth quarter results in March and hope to provide a more detailed guidance on the quarterly reviews.

For AFFO, the timing of leasing commissions on recurring CapEx is a single biggest factor in quarterly variability. We can see the variability is distinct in the respective quarters $0.04 in Q1, $0.42 in Q2 and $0.16 in Q3. The differences are driven by the non-cash impact to straight line rents, recurring capital expenditures and leasing commissions.

So in the first three quarters, we incurred nearly $2 million in recurring capital expenditures or roughly $0.40 per share. These are expenditures related to opportunities such as the AMTEK early renewal for 134,000 square feet for a ten year term at the Elgin Illinois property.

We can debate the merits of accounting for it that way, but the fact of the matter is with the company of our size and at this stage with regards to growth cycle, these expenditures and their timing are meaningful.

We will not hold back on the actual expenditures that allow us to realize increased value of the property and therefore of the company from releasing solely to enhance AFFO for a specific quarter. We have made a lot of progress on our balance sheet including the assumption of debt on the Fisher Industrial Park acquisition.

We now have 78% of our debt in place with fixed interest rates for the next five to 10 years at just over 4.2%. The one item we want to clean up on the balance sheet is the $31 million of floating rate term loan and we're working on a number of options to pay off or refinance that loan well before it comes due in August of 2021.

We are confident we will be able to do so. We continue our efforts to improve the balance sheet, improve our access to capital and drive both FFO and AFFO both higher to acquisitions and new leases. Be happy to answer any additional questions on this commentary during the question-and-answer. Operator, we're now ready to take questions. .

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Barry Oxford with D.A. Davidson. Please go ahead. .

Great thanks guys. Jeff, when you were talking about underwriting of some capital partners, what are if you could just broad barrage gives us kind of your underwriting standards.

And then type of characteristics might those capital partners have?.

Sure Barry. I mean the underwriting characteristics for us are from the REIT perspective, we have to make money. And I know it sounds simple but that's -- we want to make money. So again the purpose of doing that is a couple of points.

One, we want to drive fee revenue, if we're not doing acquisitions inside the REIT we should be doing them outside the REIT in a joint venture with long term capital partners of which there’re many in this space.

So I guess I am referring to is that it’s our type of product it would be product that we might want to buy at some point it could be little more value add than what we would take on in the REIT, some leasing that needs to be done, minor improvements to the property and this improvement -- improvements in management I think we’ve seen that across a couple of properties that we bought in last year or two is that the management were just inefficient.

There were vacancies because the private equity firm was reluctant to spend $80,000 on repairing the floor let’s say, those are real time cases, so obviously we want to make money, drive fee income, and then also have some sort of promote at the back end, industry-standard where we think -- you as an analyst probably can't derive a value that we get from something like that, but internally we would see that and it would be I don’t know you want to call it gravy, call it extra, whatever you want to call it but it could basically be there; I mean the type of partners we’re in conversations all the time with foreign capital as well as domestic capital, but it is more longer-term capital than short-term; it’s not so much private equity as it is just -- just larger longer-term capital..

So Jeff when you use the OP units at $17 a share, that’s pretty good pricing do you think that you’ve kind of set the bar and that $17 is going to kind of be accepted in the marketplace going forward when you do these deals or would this be something special?.

Well I think everything is timing Barry I think when we initiated discussions with that seller our stock price was a lot higher than let’s say it is today but the reason they would be spread if you will between what our stock price was in the $17 is that there’re benefits for the seller doing this, and this is not -- this is not a one-way street, sellers are doing it because they’re deferring substantial taxes, we can give you examples to help you out I mean one transaction I mean the seller is looking at maybe saving -- deferring $2.5 million to $3 million of federal tax, if you can earn a dividend yield on that 250,000 to 300,000 -- I am sorry 2 million to 3 million that turns into about $240,000 a year in dividend income that, on money the otherwise it would've sent to the federal government.

So, clearly it’s very selfish on their side; it’s also a great estate planning tool.

It's a great state, it’s a state planning tool, their areas get stepped up in bases once they make the OP unit transaction with us they can put those units up into trust and things like that, so it’s very efficient from the state planning basis and that seller I mean never paid federal tax on that money, just never.

So it took not leasing you would see why would it, if the stock is 16 and you do a $17 OP unit why would they do it, well there’s an incentive for them to do it. As far as setting the bar we’re not going to play games, I mean the spread right now is too far to get back to 17.

So, until the market realizes the embedded value that’s in the stock we all know the numbers we’ve all seen your research reports and we concur and until that gap gets closed, it will be very difficult for us to do any type of an OP unit transaction. .

Right great. Question for Pen, the asset in Columbus where the tenant moves. What type of activity are you seeing? And are you going to have to do a major rehab as far as TIs or are you going to be able to get a tenant to kind of come in and take the space fairly close to as is for lack for a better word. .

We're seeing good activity to answer your question, we really don't have to do much to that property. It's pretty much in moving condition. We're going to spend minimal dollars on upgrading some of the office space which represents in light of the 5% of the overall building. But it's in a great location.

We're doing lots of activity tenants that are getting ready to get their moving plans done for first quarter are looking at it now. So I think we're going to be on target in terms of being able to get that property leased in the short order. .

Okay, great. Thanks for the color. A question for Dan. When I'm looking at the two acquisitions that's you all did. It does give you a nice boost going into the fourth quarter from an FFO standpoint. Maybe guess you're closing up to covering the dividend at least in my model.

I mean do you agree with my analysis that you guys could be covering the dividend in 4Q. .

Excuse me I apologize for the cold --. I think we're going to be very very close to that. I think your analysis on that is very much within the ballpark. .

The next question comes from Henry Coffey with Wedbush Securities. Please go ahead. .

Yes good afternoon and thank you for taking my call. And I know I'm sorry, but you're cold, but I understand it's going to be snowing out there. So we were talking internally down here while the stock was falling and trying to figure out what was in or not in investor's volumes of. And so this is a very general question.

With the series bankruptcy and everything else going on, from your perspective, what is the tone of the industrial market, is it full of -- or full of angst or full of opportunity.

Or are you worried about vacancies or are you worried about being able to find great investment opportunities? So just from your point of view what is the overall tone of the market?.

That's quite a question we'll let Pen handle that…. .

Thanks. No it's not an unfair question. We really do not see a lot of angst, any at all on the ground. And yes, the series is kind of a one-off situation. But we're seeing continued improvements on all levels in most every market that we're in and some that we want to be in. We see a good solid rental growth rate potential.

And we see the wind is still on our back. We don't see it abating anytime soon. So we're guardedly optimistic and we see it with the tenants that we talked to with the prospects we talked to. So right now I think we're in a good position. .

One of our commercial real estate companies when we were asking them where they were going to get volume from, said, cited a couple of different areas where they thought there would be a lot of transactional activity and they mentioned industrial REITs, whereas lots of other pockets of the market are saying to slow down what do you think in your mind is driving the transactional volumes in the industrial REIT space?.

Well I think it’s a number of factors, there is more onshoring as opposed to offshoring these days, then there were four, five, six years ago; I think that you’re seeing the overall economy from a macro level is helping most all industry types and we have a fairly diversified -- set of diversified tenants, where we really are not seeing any -- we’re seeing a lot of activity in terms of potential acquisitions, so I think yes, so it's going to be other sectors which I can’t really comment on per se, but we read the same papers, so you kind of know what's hot and what's cold.

But I think across the Board if you talk to almost every real estate company and follow the research reports the same research reports that we read there’s very solid evidence that what’s going on in the industrial space right now whether it’s driven by the economy or by e-commerce or what have you it’s all -- all the arrows seemed to be pointed in the right direction..

This concludes our question-and-answer session; I would now like to turn the conference back over to Jeff Witherell for any closing remarks..

Great. Thank you, so thanks everyone for joining us this afternoon, as always we’re available for follow-up questions and we look forward to talking to you next year. Thank you..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..