Plymouth Industrial REIT: Unlocking Upside Through Below-Market Leases and Infill Dominance

Cincinnati, Atlanta, and Ohio: Where Value Meets Opportunity
Plymouth Industrial REIT (NYSE: PLYM) is positioning itself as a prime beneficiary of the industrial real estate cycle through its strategic acquisitions in secondary markets like Ohio and Atlanta. By acquiring functional, infill Class B assets at 22%-25% discounts to market rents and replacement costs, the company has embedded significant upside into its portfolio, particularly as leases roll over in its Ohio portfolio. This article explores how Plymouth's disciplined capital allocation, vertically integrated platform, and robust leasing momentum are setting the stage for outperformance in 2025—and why investors should act before the embedded value is unlocked.

The Ohio Advantage: Embedded Growth in Below-Market Leases

Plymouth's $193 million acquisition of a 1.95-million-square-foot industrial portfolio in Ohio—spanning Columbus, Cincinnati, and Cleveland—is a masterclass in value creation. The portfolio's in-place rents are 22% below current market rates, and its purchase price represented a 25%+ discount to replacement cost, or $99 per square foot. This creates a dual tailwind:

1. Rental Reset Upside: As leases expire over the next 2.5 years (weighted average remaining term of 2.47 years), Plymouth can reset rents to current market rates, leveraging its strong leasing team. Excluding the St. Louis lease, new leases in 2025 already show a 12.2% rental rate increase, a trend that could accelerate as Ohio's industrial demand surges.
2. Cost Efficiency: The discount to replacement cost ensures Plymouth can avoid overpaying for new construction while benefiting from existing, well-located assets. Ohio's status as a logistics hub—serving as a gateway to the Midwest—further supports occupancy and rental growth.

The Ohio deal expands Plymouth's presence there to over 12 million square feet, managed by its Columbus office team. This vertical integration—combining acquisitions, management, and asset optimization—reduces third-party costs and enhances operational control, a key advantage in fragmented markets.

Atlanta and Cincinnati: Expanding the Infill Playbook

Beyond Ohio, Plymouth's Q1 acquisitions in Atlanta and Cincinnati—six buildings totaling 801,241 square feet for $65.1 million—demonstrate its focus on secondary markets with strong industrial fundamentals. These assets, 100% leased with a 4.4-year weighted average lease term, contribute to a 6.8% initial net operating income (NOI) yield, a figure that could rise as leases reset.

The strategy here mirrors the Ohio playbook: acquiring infill Class B properties in high-demand corridors, where proximity to urban centers and logistics networks drives tenant demand. Atlanta, in particular, is a critical distribution node for the Southeast, while Cincinnati benefits from its Midwest gateway status.

Q1 2025: Strong Leasing Momentum and Dividend Resilience

Plymouth's first-quarter results underscore its operational strength despite macroeconomic headwinds:
- Core FFO of $0.44 per share and AFFO of $0.41 per share reflect stable cash flows, while same-store NOI growth of 2.0% on a cash basis hints at stronger performance ahead.
- Leasing activity was robust, with 4.9 million square feet leased in 2025, covering 57.2% of expirations, and renewal leases delivering a 14.9% rental increase.
- Dividend resilience was maintained at $0.24 per share, even as net income dipped due to portfolio adjustments.

The company reaffirmed its 2025 guidance of $1.85–$1.89 Core FFO per share and 6.0–6.5% same-store NOI growth, a significant upgrade from Q1's 2.0% growth. This acceleration will come from:
- The Ohio and Q1 acquisitions, which will contribute to NOI as leases reset.
- A $270–$450 million acquisition pipeline that ensures continued portfolio expansion in 2025.

Catalysts for Outperformance: Leases, Acquisitions, and Liquidity

1. Lease Rollovers: With 94.3% occupancy and 57.2% of 2025 expirations already secured, Plymouth is well-positioned to capitalize on its embedded rent discounts. The 22% gap in Ohio alone could translate to millions in incremental NOI as leases renew.
2. Acquisition Pipeline: The $270–$450 million target is backed by ample liquidity: $8 million cash and $415.5 million undrawn credit, giving Plymouth the flexibility to pursue accretive deals.
3. Dividend and Share Buybacks: While the dividend remains steady, the $90 million repurchase program offers a margin of safety, though management prioritizes acquisitions given the current opportunities.

Risks and Considerations

• Lease Renewal Uncertainty: Tenants could choose not to renew, though Plymouth's 95–97% occupancy target and strong leasing trends suggest this risk is mitigated.
• Economic Conditions: A prolonged downturn could dampen industrial demand, but Plymouth's focus on secondary markets with sticky tenants (e.g., third-party logistics providers, e-commerce) provides resilience.

Investment Thesis: Act Before the Reset

Plymouth's strategy is a textbook example of value investing in industrial real estate: acquiring undervalued assets in high-demand markets, leveraging below-market leases for growth, and maintaining a disciplined balance sheet. With 22% rent discounts in Ohio and a $270+ million pipeline, the company is poised to deliver outsized returns as leases reset and acquisitions integrate.

Investors should note that time is of the essence—the embedded growth in Ohio's leases will begin materializing over the next 2–3 years, compressing the discount to market rents. Meanwhile, Plymouth's low valuation (trading at 15.3x 2025 Core FFO guidance) offers a margin of safety compared to peers.

Final Call: Buy PLYM Before the Upside Unlocks

Plymouth Industrial REIT is a compelling play on the industrial real estate cycle, especially for investors seeking stable dividends and capital appreciation. The combination of below-market leases, accretive acquisitions, and strong liquidity positions the company to outperform peers in 2025 and beyond. Act now to capitalize on the reset opportunity—and avoid paying up later when the embedded value is realized.

Author Note: This analysis is based on publicly available data as of June 2025. Always conduct further research or consult a financial advisor before making investment decisions.