LXP Industrial Trust (NYSE:LXP) executives said the company closed 2025 with higher occupancy, strong leasing spreads and lower leverage, while outlining plans to restart development in Phoenix amid improving big-box demand and lower construction costs.
2025 operating highlights: occupancy gains and leasing spreads
Chairman and CEO Will Eglin said the fourth quarter capped a “successful year,” pointing to leasing momentum, strategic property sales and balance sheet improvements. LXP increased portfolio occupancy by 350 basis points year over year to 97.1% at the end of 2025 and reduced leverage from 5.9x to 4.9x net debt to adjusted EBITDA.
Eglin said market fundamentals improved during the quarter, with LXP’s target markets accounting for more than 66% of overall U.S. net absorption of about 54 million square feet. He highlighted demand from larger users seeking facilities over 500,000 square feet built within the last five years, and cited Phoenix, Indianapolis, Fort Worth and Houston as markets leading that demand.
Early progress on 2026 expirations and vacancy commentary
LXP said it has already addressed roughly 3 million square feet, or 41%, of its 2026 lease rollover, achieving an average cash rental increase of about 28%, excluding two fixed-rate renewals. CFO Nathan Brunner added that LXP’s estimated mark-to-market opportunity remains “compelling,” with in-place rents about 16% below market for leases expiring through 2030 and second-generation vacancy, based on broker estimates (inclusive of fixed-rate renewals).
Brunner discussed several property-specific leasing items:
- A new 10-year lease was secured in the fourth quarter for a 380,000-square-foot Indianapolis facility, with 3.5% annual rental increases and a 34% rent increase over the prior rent. Brunner said the benefit to same-store NOI will be recognized beginning in the second half of 2026 due to concessions.
- A tenant moved out at year-end from a 160,000-square-foot Phoenix facility; management expects re-leasing could generate a 40%–50% rent increase.
- Two large 2026 expirations were extended via fixed-rate renewals: a 650,000-square-foot Cleveland facility (2.5% annual escalators) and a 769,000-square-foot St. Louis facility (1.5% annual escalators). Brunner said the extensions support occupancy and uninterrupted cash flow, with no leasing concessions.
- LXP renewed a 194,000-square-foot Cincinnati facility and a 70,000-square-foot Greenville-Spartanburg facility, producing cash rent spreads of about 15% and 7%, respectively.
For the first half of 2026, the company identified two move-outs: 121,000 square feet at a multi-tenant facility in Greenville-Spartanburg (expired at the end of January) and a 230,000-square-foot facility in Tampa scheduled to expire in February. Brunner said the Tampa asset is in an infill location in Sabal Business Park and that LXP plans renovations, including adding rail capabilities, which it expects could lift rent by 10%–20%. However, LXP’s same-store guidance assumes the property remains vacant during 2026.
During Q&A, executives noted that while there has been significant tour and RFP activity across vacancies, it has remained challenging to get deals “across the finish line.” Management said it expects progress in 2026 and reiterated that vacancy leasing offers a chance to move rents into the “mid-$30s.”
Financial results and 2026 guidance
Brunner reported fourth-quarter adjusted company FFO of $0.79 per diluted share, or approximately $47 million. For the full year, adjusted company FFO was $3.15 per diluted share, or $187 million.
The company issued 2026 adjusted company FFO guidance of $3.22 to $3.37 per share, representing 4.6% growth at the midpoint. Brunner said the outlook assumes proceeds from fourth-quarter property sales are redeployed into a Phoenix development project; management characterized that capital redeployment as a near-term drag on 2026 FFO but a contributor to growth in later years. The guidance does not assume additional dispositions or investments.
On property-level performance, LXP reported full-year same-store NOI growth of 2.9%, while fourth-quarter same-store NOI was flat versus the year-ago quarter. Brunner attributed the quarterly comparison to lower same-store occupancy of 97.3% at year-end 2025, versus 99.5% in 2024. For 2026, management guided to same-store NOI growth of 1.5%–2.5%, with the midpoint reflecting a 3.25% positive contribution from contractual escalators and renewals offset by 1.25% from lower occupancy and higher concessions (free rent). The company’s guidance assumes same-store average occupancy of 96%–97%.
Brunner also said the variance between 2025 same-store NOI guidance and the 2.9% outcome was about $200,000, driven by slightly higher-than-budgeted property expense “leakage” across roughly half a dozen properties, including vacant assets where LXP carried full operating expenses and leased assets with expense caps that were impacted by unbudgeted costs.
Portfolio repositioning, dispositions, and capital allocation
LXP said it exited five non-target markets during 2025 and continued to focus investment in its 12 target markets, which account for 87% of gross book value. Total 2025 disposition volume was $389 million, including $116 million from non-target market sales in the fourth quarter. Management said stabilized assets sold in 2025 carried an average cash cap rate of 5.7%.
The company highlighted the September sale of its Indianapolis and Ocala development properties to a user buyer at an implied cap rate of approximately 5% and a 20% premium to cost. Eglin said sale proceeds were primarily used to reduce high-coupon debt. LXP also acquired one Atlanta property in September to satisfy a 1031 exchange requirement and repurchased about 277,000 shares at an average price of $49.47 in December 2025 and January 2026.
At year-end, LXP held approximately $170 million of cash, which management said is currently weighing on earnings but provides flexibility as the company looks to create value from its land bank. In Q&A, Eglin said LXP continues to work through its non-target portfolio and noted that about $200 million of assets are in negotiations that could lead to additional outcomes not included in guidance, while also cautioning about managing taxable gains.
Phoenix development restart and land bank focus
Executives emphasized a shift in 2026 priorities toward disciplined investment and external growth, “mainly in our land bank,” alongside opportunistic buybacks that do not compromise balance sheet progress. LXP said its development program has produced 15 facilities since 2019 at a 7.1% weighted-average stabilized yield on first-generation leases and generated $91 million of sale proceeds in excess of cost basis; at year-end, the development program was 98% leased or sold.
Eglin said LXP will break ground on a 1 million-square-foot speculative project on its 315-acre West Valley Phoenix land site. The company cited an acceleration in leasing of 1 million-square-foot buildings in the submarket, with eight of 10 such buildings leasing or selling over the past 18 months and the remaining two in advanced negotiations. Management also pointed to construction costs that are roughly $20 per square foot below peak levels. The Phoenix project is expected to complete in the first half of 2027 with an estimated $120 million budget and a stabilized cash yield of 7%–7.5%.
During Q&A, executives said they would not be surprised to see interest before completion given limited available supply, and they indicated there is additional runway for future development on the Phoenix site, with management later noting plans for more than 5 million square feet across the location. CIO Brendan Mullinix said build-to-suit opportunities remain of interest, particularly within the land bank, and management will continue to evaluate both build-to-suit and speculative development as market supply dynamics improve.
On redevelopment, Brunner said approximately 600,000 square feet of projects in Orlando and Richmond are progressing, with Richmond expected to complete in the second quarter and Orlando in the third quarter, and anticipated yields on cost in the “low teens.”
On the balance sheet, Brunner reiterated leverage of 4.9x net debt to adjusted EBITDA at year-end and said S&P Global Ratings revised LXP’s outlook to positive during the fourth quarter. LXP repaid about $220 million of debt during 2025, including $140 million of 6.75% senior notes due 2028 via a cash tender offer in the fourth quarter. After quarter-end, the company recast its $600 million revolving credit facility and $250 million term loan, extending maturities to January 2030 and January 2029, respectively, and reducing interest costs.
For credit loss assumptions, Brunner said LXP had no credit loss in 2025 and included $500,000 of credit loss at the low end of 2026 guidance “only,” describing it as a prudent step given stress in certain sectors.
About LXP Industrial Trust (NYSE:LXP)
LXP Industrial Trust is a real estate investment trust that specializes in the ownership, acquisition and management of industrial properties across North America. The company’s portfolio consists of warehouses, distribution centers and manufacturing facilities designed to support supply-chain and logistics operations. By focusing on long-term leasing arrangements, LXP Industrial Trust aims to provide stable income streams while delivering value to tenants through modern, well-positioned industrial space.
The firm’s primary business activities include sourcing and under-writing new property investments, overseeing development and redevelopment projects, and implementing asset-management strategies to enhance the performance of its holdings.
