STAG filing — read by section

Item 2. Management’s Discussion and Analysis

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 
 You should read the following discussion with the financial statements and related notes included elsewhere in Item 1 of this report and the audited financial statements and related notes thereto included in our most recent Annual Report on Form 10-K. 
 
 As used herein, except where the context otherwise requires, “Company,” “we,” “our” and “us,” refer to STAG Industrial, Inc. and our consolidated subsidiaries and partnerships, including our operating partnership, STAG Industrial Operating Partnership, L.P. (the “Operating Partnership”). 
 
 Forward-Looking Statements 
 
 This report contains “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). You can identify forward-looking statements by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. Forward-looking statements in this report include, among others, statements about our future financial condition, results of operations, capitalization rates on future acquisitions, our business strategy and objectives, including our acquisition strategy, occupancy and leasing rates and trends, and expected liquidity needs and sources (including capital expenditures and the ability to obtain financing or raise capital). Our forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by our forward-looking statements are reasonable, we can give no assurance that our plans, intentions, expectations, strategies or prospects will be attained or achieved and you should not place undue reliance on these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and may be affected by a variety of risks and factors including, without limitation: 
 
 • the factors included in our Annual Report on Form 10-K for the year ended December 31, 2019, as updated elsewhere in this report, including those set forth under the headings “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations;” 
 
 • the potential adverse effect of the ongoing public health crisis of the novel coronavirus disease (“COVID-19”) pandemic, or any future pandemic, epidemic or outbreak of infectious disease, on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets; 
 
 • our ability to raise equity capital on attractive terms; 
 
 • the competitive environment in which we operate; 
 
 • real estate risks, including fluctuations in real estate values, the general economic climate in local markets and competition for tenants in such markets, and the repurposing or redevelopment of retail properties into industrial properties (in part or whole); 
 
 • decreased rental rates or increased vacancy rates; 
 
 • potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants; 
 
 • acquisition risks, including our ability to identify and complete accretive acquisitions and/or failure of such acquisitions to perform in accordance with projections; 
 
 • the timing of acquisitions and dispositions; 
 
 • technological developments, particularly those affecting supply chains and logistics; 
 
 • potential natural disasters, epidemics, pandemics, and other potentially catastrophic events such as acts of war and/or terrorism; 
 
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 • international, national, regional and local economic conditions; 
 
 • the general level of interest rates and currencies; 
 
 • potential changes in the law or governmental regulations and interpretations of those laws and regulations, including changes in real estate and zoning laws or real estate investment trust (“REIT”) or corporate income tax laws, and potential increases in real property tax rates; 
 
 • financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all; 
 
 • credit risk in the event of non-performance by the counterparties to the interest rate swaps and revolving and unfunded debt; 
 
 • how and when pending forward equity sales may settle; 
 
 • lack of or insufficient amounts of insurance; 
 
 • our ability to maintain our qualification as a REIT; 
 
 • our ability to retain key personnel; 
 
 • litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and 
 
 • possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us. 
 
 Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth above, as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 
 
 Certain Definitions 
 
 In this report: 
 
 We define “GAAP” as generally accepted accounting principles in the United States. 
 
 We define “total annualized base rental revenue” as the contractual monthly base rent as of June 30, 2020 (which differs from rent calculated in accordance with GAAP) multiplied by 12. If a tenant is in a free rent period as of June 30, 2020, the total annualized base rental revenue is calculated based on the first contractual monthly base rent amount multiplied by 12. 
 
 We define “occupancy rate” as the percentage of total leasable square footage for which either revenue recognition has commenced in accordance with GAAP or the lease term has commenced as of the close of the reporting period, whichever occurs earlier. 
 
 We define the “Value Add Portfolio” as properties that meet any of the following criteria: (i) less than 75% occupied as of the acquisition date; (ii) will be less than 75% occupied due to known move-outs within two years of the acquisition date; (iii) out of service with significant physical renovation of the asset; or (iv) development. 
 
 We define “Stabilization” for properties under development or being redeveloped as the earlier of achieving 90% occupancy or 12 months after completion. With respect to properties acquired and immediately added to the Value Add Portfolio, (i) if acquired with less than 75% occupancy as of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy or 12 months from the acquisition date; or (ii) if acquired and will be less than 75% occupied due to known move-outs within two years of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy after the known move-outs have occurred or 12 months after the known move-outs have occurred. 
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 We define the “Operating Portfolio” as all warehouse and light manufacturing assets that were acquired stabilized or have achieved Stabilization. The Operating Portfolio excludes non-core flex/office assets, assets contained in the Value Add Portfolio, and assets classified as held for sale. 
 
 We define a “Comparable Lease” as a lease in the same space with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership. 
 
 We define “SL Rent Change” as the percentage change in the average monthly base rent over the term of the lease that commenced during the period compared to the Comparable Lease for assets included in the Operating Portfolio. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses, and this calculation excludes the impact of any holdover rent. 
 
 We define “Cash Rent Change” as the percentage change in the base rent of the lease commenced during the period compared to the base rent of the Comparable Lease for assets included in the Operating Portfolio. The calculation compares the first base rent payment due after the lease commencement date compared to the base rent of the last monthly payment due prior to the termination of the lease, excluding holdover rent. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses. 
 
 We define “New Lease” as any lease that is signed for an initial term equal to or greater than 12 months for any vacant space, including a lease signed by a new tenant or an existing tenant that is expanding into new (additional) space. 
 
 We define “Renewal Lease” as a lease signed by an existing tenant to extend the term for 12 months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration, or (iii) an early renewal or workout, which ultimately does extend the original term for 12 months or more. 
 
 Overview 
 
 We are a REIT focused on the acquisition, ownership, and operation of single-tenant, industrial properties throughout the United States. We are a Maryland corporation and our common stock is publicly traded on the New York Stock Exchange under the symbol “STAG.” 
 
 We are organized and conduct our operations to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and generally are not subject to federal income tax to the extent we currently distribute our income to our stockholders and maintain our qualification as a REIT. We remain subject to state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed income. 
 
 Factors That May Influence Future Results of Operations 
 
 Our ability to increase revenues or cash flow will depend in part on our (i) external growth, specifically acquisition activity, and (ii) internal growth, specifically occupancy and rental rates on our portfolio. A variety of other factors, including those noted below, also affect our future results of operations. 
 
 COVID-19 Pandemic 
 
 Since initially being reported in December 2019, COVID-19 has spread around the world, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has severely harmed global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the pandemic is rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic is negatively impacting almost every industry, including the real estate industry and the industries of our tenants, directly or indirectly. The rapid development and fluidity of the COVID-19 pandemic precludes any prediction as to the ultimate adverse impact the pandemic may have on our business, financial condition, results of operations and cash flows. 
 
 While we did not incur significant disruptions from the COVID-19 pandemic during the six months ended June 30, 2020, a number of our tenants requested rent deferral or rent abatement as a result of the pandemic. We entered into a limited number of rent deferral agreements during the three months ended June 30, 2020, which resulted in approximately $1.5 million of rent deferrals during the three and six months ended June 30, 2020. We evaluate tenant rent relief requests on an individual basis, 
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 considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor are we foregoing our contractual rights under our lease agreements. 
 
 The COVID-19 pandemic or a future pandemic, epidemic or outbreak of infectious disease affecting states or regions in which we or our tenants operate could have material and adverse effects on our business, financial condition, results of operations and cash flows due to, among other factors: health or other government authorities requiring the closure of offices or other businesses or instituting quarantines of personnel as the result of, or in order to avoid, exposure to a contagious disease; disruption in supply and delivery chains; a general decline in business activity and demand for real estate; reduced economic activity, general economic decline or recession, which may impact our tenants’ businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to make rent payments to us timely, or at all, or to otherwise seek modifications of lease obligations; difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; and the potential negative impact on the health of our personnel, particularly if a significant number of our employees are impacted, which would result in a deterioration in our ability to ensure business continuity during a disruption. 
 
 The extent to which the COVID-19 pandemic or any other pandemic, epidemic or disease impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Nevertheless, the COVID-19 pandemic (or a future pandemic, epidemic or disease) presents material uncertainty and risk with respect to our business, financial condition, results of operations and cash flows. 
 
 Outlook 
 
 Our business is affected by the uncertainty regarding the current COVID-19 pandemic, the effectiveness of policies introduced to neutralize the disease, and the impact of those policies on economic activity. In June, the National Bureau of Economic Research announced the United States entered into a recession in February 2020. While there has been a negative impact to our tenants, we believe we will benefit from having a well-diversified portfolio across industry, market, and lease term. Additionally, we strongly believe the current economic environment is likely to curb new industrial supply in the near term and to accelerate a number of trends that positively impact industrial demand. 
 
 The U.S. federal and state governments, as well as the Federal Reserve, responded to the uncertain economic outlook with a series of policies to ease the economic burden of COVID-19 closures on businesses and individuals. The major U.S. congressional policy action known as the Coronavirus, Aid, Relief and Economic Security Act, or the CARES Act, allocated $2 trillion in federal aid to specific industries, small businesses and individuals. The Federal Reserve also took major actions in response to the COVID-19 pandemic, including the completion of two emergency federal funds rate cuts in March 2020 to a range between 0% to 0.25%, adding liquidity to the bond market, establishing new lending facilities, and expanding its bond buying program to include mortgage backed securities, investment grade corporate debt, and high yield corporate ETFs. 
 
 The current economic circumstances, while challenging, will provide an opportunity to demonstrate the diversification of our portfolio. Specifically, our existing portfolio should benefit from competitive rental rates and strong occupancy. Furthermore, we believe certain characteristics of our business should position us well in an uncertain environment, including the fact that we have a highly diversified portfolio, minimal floating rate debt exposure (taking into account our hedging activities), strong liquidity, strong access to capital, and that many of our competitors for the assets we purchase tend to be smaller local and regional investors who are likely to be more heavily impacted by interest rates and availability of capital. 
 
 Due to the COVID-19 pandemic, we expect acceleration in a number of industrial specific trends to support stronger long-term demand, including: 
 
 • the rise of e-commerce (as compared to the traditional retail store distribution model) and the concomitant demand by e-commerce industry participants for well-located, functional distribution space; 
 • the increasing attractiveness of the United States as a manufacturing and distribution location because of the size of the U.S. consumer market, an increase in overseas labor costs, a desire for greater supply chain resilience and redundancy and the overall cost of supplying and shipping goods (i.e. the shortening and fattening of the supply chain); and 
 • the overall quality of the transportation infrastructure in the United States. 
 
 Our portfolio continues to benefit from historically low availability throughout the national industrial market. We expect a near-term reduction in demand, in the aggregate, brought on by the pandemic. Certain industries and geographies are expected to be more heavily impacted. We believe the diversification of our portfolio by market, tenant industry, and tenant credit will prove 
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 to be a strength in this environment. Industrial development continues to be concentrated in the larger primary markets, but it is likely to decelerate in the near-term. We have limited exposure to many of the most active development markets. We will continue to monitor the supply and demand fundamentals for industrial real estate and assess its impact on our business. 
 
 Conditions in Our Markets 
 
 The buildings in our portfolio are located in markets throughout the United States. Positive or negative changes in economic or other conditions, new supply, adverse weather conditions, natural disasters, epidemics, and other factors in these markets may affect our overall performance. 
 
 Rental Income 
 
 We receive income primarily in the form of rental income from the tenants who occupy our buildings. The amount of rental income generated by the buildings in our portfolio depends principally on occupancy and rental rates. As of June 30, 2020, our Operating Portfolio was approximately 97.6% leased and our SL Rent Change on New Leases and Renewal Leases in our Operating Portfolio together grew approximately 9.6% and 10.2% during the three and six months ended June 30, 2020, respectively. Our Cash Rent Change on New Leases and Renewal Leases in our Operating Portfolio together grew approximately 1.6% and 2.2% during the three and six months ended June 30, 2020. 
 
 Future economic downturns or regional downturns affecting our submarkets that impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease commitments, as in the case of tenant bankruptcies, including those brought on by the COVID-19 pandemic, could adversely affect our ability to maintain or increase rental rates at our buildings. Our ability to lease our properties and the attendant rental rate is dependent upon, among other things, (i) the overall economy, (ii) the supply/demand dynamic in our markets, (iii) the quality of our properties, including age, clear height, and configuration, and (iv) our tenants’ ability to meet their contractual obligations to us. 
 
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 The following table summarizes our Operating Portfolio leases that commenced during the three and six months ended June 30, 2020. Certain leases contain rental concessions; any such rental concessions are accounted for on a straight-line basis over the term of the lease. 
 
 Operating Portfolio Square Feet Cash 
Basis Rent Per 
Square Foot SL Rent Per 
Square Foot Total Costs Per 
 Square 
 Foot (1) 
 Cash 
Rent Change SL Rent Change Weighted Average Lease 
 Term (2) 
 (years) 
 Rental Concessions per Square Foot (3) 
 
 Three months ended June 30, 2020 
 New Leases 444,952 $ 3.77 $ 4.20 $ 4.78 (8.3) % 4.0 % 11.5 $ 0.50 
 Renewal Leases 2,276,692 $ 4.36 $ 4.61 $ 1.08 3.4 % 10.6 % 5.8 $ 0.54 
 
 Total/weighted average 2,721,644 $ 4.27 $ 4.54 $ 1.68 1.6 % 9.6 % 6.7 $ 0.53 
 Six months ended June 30, 2020 
 New Leases 872,423 $ 3.97 $ 4.29 $ 3.20 (5.2) % 4.2 % 8.3 $ 0.52 
 Renewal Leases 3,622,946 $ 4.44 $ 4.65 $ 0.92 4.0 % 11.6 % 5.1 $ 0.36 
 
 Total/weighted average 4,495,369 $ 4.35 $ 4.58 $ 1.36 2.2 % 10.2 % 5.7 $ 0.39 

 (1) We define Total Costs as the costs for improvements of vacant and renewal spaces, as well as the contingent-based legal fees and commissions for leasing transactions. Total Costs per square foot represent the total costs expected to be incurred on the leases that commenced during the period and do not reflect actual expenditures for the period. 
 (2) We define weighted average lease term as the contractual lease term in years, assuming that tenants exercise no renewal options, purchase options, or early termination rights, weighted by square footage. 
 (3) Represents the total rental concessions for the entire lease term. 
 
 Additionally, for the three and six months ended June 30, 2020, leases commenced totaling 481,938 square feet related to Value Add assets and are excluded from the Operating Portfolio statistics above. 
 
 Property Operating Expenses 
 
 Our property operating expenses generally consist of utilities, real estate taxes, management fees, insurance, and site repair and maintenance costs. For the majority of our tenants, our property operating expenses are controlled, in part, by the triple net provisions in tenant leases. In our triple net leases, the tenant is responsible for all aspects of and costs related to the building and its operation during the lease term, including utilities, taxes, insurance and maintenance costs, but typically excluding roof and building structure. However, we also have modified gross leases and gross leases in our building portfolio. The terms of those leases vary and on some occasions we may absorb certain building related expenses of our tenants. In our modified gross leases, we are responsible for some building related expenses during the lease term, but the cost of most of the expenses is passed through to the tenant for reimbursement to us. In our gross leases, we are responsible for all costs related to the building and its operation during the lease term. Our overall performance will be affected by the extent to which we are able to pass-through property operating expenses to our tenants. 
 
 Scheduled Lease Expirations 
 
 Our ability to re-lease space subject to expiring leases will impact our results of operations and is affected by economic and competitive conditions in our markets and by the desirability of our individual buildings. Leases that comprise approximately 9.4% of our annualized base rental revenue will expire during the period from July 1, 2020 to June 30, 2021, excluding month-to-month leases. We assume, based upon internal renewal probability estimates that some of our tenants will renew and others will vacate and the associated space will be re-let subject to downtime assumptions. Using the aforementioned assumptions, we expect that the rental rates on the respective new leases will generally be the same as the rates under existing leases expiring during the period July 1, 2020 to June 30, 2021, thereby resulting in approximately the same revenue from the same space. 
 
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 The following table summarizes lease expirations for leases in place as of June 30, 2020, plus available space, for each of the ten calendar years beginning with 2020 and thereafter in our portfolio. The information in the table assumes that tenants exercise no renewal options and no early termination rights. 
 
 Lease Expiration Year Number 
of 
Leases 
Expiring Total Rentable 
Square Feet % of 
Total 
Occupied 
Square Feet Total Annualized 
Base Rental 
Revenue 
(in thousands) % of Total 
Annualized 
Base Rental Revenue 
 Available — 2,795,864 — — — 
 Month-to-month leases 6 793,541 0.9 % $ 2,946 0.7 % 
 Remainder of 2020 13 3,814,198 4.3 % 17,759 4.5 % 
 2021 67 10,585,161 11.9 % 47,783 12.0 % 
 2022 77 9,295,289 10.4 % 40,975 10.3 % 
 2023 80 11,878,562 13.3 % 47,540 11.9 % 
 2024 65 11,247,169 12.6 % 48,827 12.3 % 
 2025 53 8,967,432 10.1 % 39,013 9.8 % 
 2026 44 7,047,276 7.9 % 32,518 8.2 % 
 2027 24 3,361,401 3.8 % 16,970 4.3 % 
 2028 24 4,505,880 5.1 % 19,526 4.9 % 
 2029 22 4,055,023 4.5 % 19,959 5.0 % 
 Thereafter 52 13,496,702 15.2 % 64,176 16.1 % 
 Total 527 91,843,498 100.0 % $ 397,992 100.0 % 

 Portfolio Summary 
 
 The following table summarizes information relating to diversification by building type in our portfolio as of June 30, 2020. 
 
 Square Footage Annualized Base Rental Revenue 
 Building Type Number of Buildings Amount % Occupancy Rate Amount 
(in thousands) % 
 Warehouse/Distribution 376 82,914,376 90.3 % 97.5 % $ 355,661 89.4 % 
 Light Manufacturing 70 7,902,777 8.6 % 98.1 % 38,299 9.6 % 
 Total Operating Portfolio/weighted average 
 446 90,817,153 98.9 % 97.6 % $ 393,960 99.0 % 
 
 Value Add/Other 3 594,030 0.6 % 39.7 % 1,158 0.3 % 
 Flex/Office 8 432,315 0.5 % 48.9 % 2,874 0.7 % 
 Total portfolio/weighted average 
 457 91,843,498 100.0 % 97.0 % $ 397,992 100.0 % 

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 Portfolio Acquisitions 
 
 The following table summarizes our acquisitions during the three and six months ended June 30, 2020. 
 
 Market (1) 
 Date Acquired Square Feet Buildings Purchase Price 
(in thousands) 
 Detroit, MI January 10, 2020 491,049 1 $ 29,543 
 Rochester, NY January 10, 2020 124,850 1 8,565 
 Minneapolis/St Paul, MN February 6, 2020 139,875 1 10,460 
 Sacramento, CA February 6, 2020 160,534 1 18,468 
 Richmond, VA February 6, 2020 78,128 1 5,481 
 Milwaukee/Madison, WI February 7, 2020 81,230 1 7,219 
 Detroit, MI February 11, 2020 311,123 1 23,141 
 Philadelphia, PA March 9, 2020 78,000 1 6,571 
 Tulsa, OK March 9, 2020 134,600 1 9,895 
 Three months ended March 31, 2020 1,599,389 9 119,343 
 Sacramento, CA June 11, 2020 54,463 1 5,730 
 Chicago, IL June 29, 2020 67,817 1 6,184 
 Three months ended June 30, 2020 122,280 2 $ 11,914 
 Six months ended June 30, 2020 1,721,669 11 $ 131,257 

 (1) As defined by CoStar Realty Information Inc (“CoStar”). If the building is located outside of a CoStar defined market, the city and state is reflected. 
 
 Portfolio Dispositions 
 
 During the six months ended June 30, 2020, we sold four buildings comprised of approximately 1.2 million rentable square feet with a net book value of approximately $54.1 million to third parties. Net proceeds from the sales of rental property were approximately $101.9 million and we recognized the full gain on the sales of rental property, net, of approximately $47.8 million for the six months ended June 30, 2020. 
 
 Geographic Diversification 
 The following table summarizes information about the 20 largest markets in our portfolio based on total annualized base rental revenue as of June 30, 2020. 
 
 Top 20 Markets (1) 
 % of Total Annualized Base Rental Revenue 
 Philadelphia, PA 8.7 % 
 Chicago, IL 7.0 % 
 Greenville/Spartanburg, SC 5.8 % 
 Detroit, MI 4.6 % 
 Milwaukee/Madison, WI 4.3 % 
 Pittsburgh, PA 4.3 % 
 Minneapolis/St Paul, MN 4.2 % 
 Houston, TX 3.6 % 
 Charlotte, NC 2.7 % 
 Indianapolis, IN 2.5 % 
 Boston, MA 2.5 % 
 Cincinnati/Dayton, OH 2.5 % 
 West Michigan, MI 2.4 % 
 Columbus, OH 2.3 % 
 El Paso, TX 2.2 % 
 Columbia, SC 1.8 % 
 Westchester/So Connecticut, CT/NY 1.7 % 
 Raleigh/Durham, NC 1.5 % 
 Kansas City, MO 1.5 % 
 Memphis, TN 1.4 % 
 Total 67.5 % 

 (1) As defined by CoStar. 
 
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 Industry Diversification 
 
 The following table summarizes information about the 20 largest tenant industries in our portfolio based on total annualized base rental revenue as of June 30, 2020. 
 
 Top 20 Tenant Industries (1) 
 % of Total Annualized Base Rental Revenue 
 Auto Components 12.1 % 
 Air Freight & Logistics 8.0 % 
 Containers & Packaging 7.3 % 
 Commercial Services & Supplies 7.3 % 
 Machinery 4.6 % 
 Household Durables 4.6 % 
 Food Products 4.5 % 
 Building Products 4.5 % 
 Internet & Direct Mkt Retail 3.9 % 
 Food & Staples Retailing 3.7 % 
 Electrical Equipment 3.6 % 
 Media 3.1 % 
 Beverages 2.8 % 
 Household Products 2.7 % 
 Electronic Equip, Instruments 2.3 % 
 Specialty Retail 2.2 % 
 Chemicals 2.0 % 
 Textiles, Apparel, Luxury Good 1.9 % 
 Metals & Mining 1.7 % 
 Pharmaceuticals 1.5 % 
 Total 84.3 % 

 (1) Industry classification based on Global Industry Classification Standard methodology. 
 
 Tenant Diversification 
 
 The following table summarizes information about the 20 largest tenants in our portfolio based on total annualized base rental revenue as of June 30, 2020. 
 
 Top 20 Tenants (1) 
 Number of Leases % of Total Annualized Base Rental Revenue 
 Amazon 4 2.5 % 
 General Service Administration 1 1.8 % 
 XPO Logistics, Inc. 5 1.3 % 
 TriMas Corporation 4 1.0 % 
 Solo Cup 1 1.0 % 
 DS Smith North America 2 0.9 % 
 American Tire Distributors Inc 5 0.9 % 
 Ford Motor Company 1 0.8 % 
 Hachette Book Group, Inc. 1 0.8 % 
 Packaging Corp of America 5 0.8 % 
 Yanfeng US Automotive Interior 2 0.8 % 
 Schneider Electric USA, Inc. 3 0.8 % 
 FedEx Corporation 3 0.8 % 
 WestRock Company 6 0.8 % 
 Kenco Logistic Services, LLC 2 0.7 % 
 Perrigo Company 2 0.7 % 
 Carolina Beverage Group 2 0.7 % 
 Generation Brands 1 0.7 % 
 DHL Supply Chain 4 0.7 % 
 Emerson Electric 2 0.6 % 
 Total 56 19.1 % 

 (1) Includes tenants, guarantors, and/or non-guarantor parents. 
 
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 Critical Accounting Policies 
 
 See “Critical Accounting Policies” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019, for a discussion of our critical accounting policies and estimates. 
 
 Results of Operations 
 
 The following discussion of our results of our same store (as defined below) net operating income (“NOI”) should be read in conjunction with our Consolidated Financial Statements. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. Same store results are considered to be useful to investors in evaluating our performance because they provide information relating to changes in building-level operating performance without taking into account the effects of acquisitions or dispositions. We encourage the reader to not only look at our same store results, but also our total portfolio results, due to historic and future growth. 
 
 We define same store properties as properties that were in the Operating Portfolio for the entirety of the comparative periods presented. Same Store excludes termination fees, solar income, and revenue associated with one-time tenant reimbursements of capital expenditures. Same store properties exclude Operating Portfolio properties with expansions placed into service after December 31, 2018. On June 30, 2020, we owned 368 industrial buildings consisting of approximately 73.4 million square feet, which represents approximately 79.9% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy increased approximately 1.0% to 97.2% as of June 30, 2020 compared to 96.2% as of June 30, 2019. 
 
 Comparison of the three months ended June 30, 2020 to the three months ended June 30, 2019 
 
 The following table summarizes selected operating information for our same store portfolio and our total portfolio for the three months ended June 30, 2020 and 2019 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the three months ended June 30, 2020 and 2019 with respect to the buildings acquired and disposed of and Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018 and our flex/office buildings and Value Add Portfolio. 
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 Same Store Portfolio Acquisitions/Dispositions Other Total Portfolio 
 Three months ended June 30, Change Three months ended June 30, Three months ended June 30, Three months ended June 30, Change 
 2020 2019 $ % 2020 2019 2020 2019 2020 2019 $ % 
 Revenue 
 Operating revenue 
 Rental income $ 89,486 $ 88,884 $ 602 0.7 % $ 24,639 $ 5,684 $ 3,346 $ 1,794 $ 117,471 $ 96,362 $ 21,109 21.9 % 
 Other income 103 283 (180) (63.6) % 39 1 4 — 146 284 (138) (48.6) % 
 Total operating revenue 89,589 89,167 422 0.5 % 24,678 5,685 3,350 1,794 117,617 96,646 20,971 21.7 % 
 Expenses 
 Property 15,522 14,967 555 3.7 % 3,770 1,086 1,100 902 20,392 16,955 3,437 20.3 % 
 Net operating income (1) 
 $ 74,067 $ 74,200 $ (133) (0.2) % $ 20,908 $ 4,599 $ 2,250 $ 892 97,225 79,691 17,534 22.0 % 
 Other expenses 
 General and administrative 9,406 8,587 819 9.5 % 
 
 Depreciation and amortization 53,606 44,633 8,973 20.1 % 
 
 Other expenses 588 427 161 37.7 % 
 Total other expenses 63,600 53,647 9,953 18.6 % 
 Total expenses 83,992 70,602 13,390 19.0 % 
 Other income (expense) 
 Interest and other income 156 2 154 7,700.0 % 
 Interest expense (15,333) (12,193) (3,140) 25.8 % 
 Loss on extinguishment of debt (834) — (834) 100.0 % 
 Gain on involuntary conversion 657 — 657 100.0 % 
 Gain on the sales of rental property, net 1,045 317 728 229.7 % 
 Total other income (expense) (14,309) (11,874) (2,435) (20.5) % 
 Net income $ 19,316 $ 14,170 $ 5,146 36.3 % 

 (1) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. 
 
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 Net Income 
 
 Net income for our total portfolio increased by $5.1 million or 36.3% to $19.3 million for the three months ended June 30, 2020, compared to $14.2 million for the three months ended June 30, 2019. 
 
 Same Store Total Operating Revenue 
 
 Same store total operating revenue consists primarily of rental income consisting of (i) fixed lease payments, variable lease payments, straight-line rental income, and above and below market lease amortization from our properties (“lease income”), and (ii) other tenant billings for insurance, real estate taxes and certain other expenses (“other billings”). 
 
 For a detailed reconciliation of our same store total operating revenue to net income, see the table above. 
 
 Same store rental income, which is comprised of lease income and other billings as discussed below, increased by $0.6 million or 0.7% to $89.5 million for the three months ended June 30, 2020 compared to $88.9 million for the three months ended June 30, 2019. 
 
 Same store lease income decreased by $0.2 million or 0.3% to $76.1 million for the three months ended June 30, 2020 compared to $76.3 million for the three months ended June 30, 2019. The decrease is primarily attributable to the reduction of rental income of approximately $1.9 million for certain leases in which we determined that the future collectability was not reasonably assured, and accordingly we converted to the cash basis of accounting and reversed any accounts receivable and accrued rent balances into rental income and did not recognize revenue for payments that were not received from the tenants. This decrease was also attributable to an approximately $0.6 million decrease due to a reduction of base rent due to tenants downsizing their spaces and vacancies, as well as approximately $0.1 million decrease due to a net increase in the amortization of net above market leases. These decreases were partially offset by an increase in rental income of approximately $2.4 million due to new leases and renewals of existing tenants. 
 
 Same store other billings increased by $0.8 million or 6.4% to $13.4 million for the three months ended June 30, 2020 compared to $12.6 million for the three months ended June 30, 2019. The increase was primarily attributable to an increase in real estate taxes levied by the taxing authority and changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously been paid by the tenant directly to the taxing authority of approximately $0.4 million. The increase was also attributable to an increase of approximately $0.4 million related to other expense reimbursements due to new leases. 
 
 Same Store Operating Expenses 
 
 Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance. 
 
 For a detailed reconciliation of our same store operating expenses to net income, see the table above. 
 
 Total same store property operating expenses increased by $0.6 million or 3.7% to $15.5 million for the three months ended June 30, 2020 compared to $15.0 million for the three months ended June 30, 2019. This increase was primarily related to an increase in real estate taxes levied by the taxing authority and changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid the taxing authorities directly of approximately $0.6 million, as well as an increase of $0.1 million related to repairs and maintenance and snow removal expense. These increases were partially offset by an decrease in utilities expense of approximately $0.1 million. 
 
 Acquisitions and Dispositions Net Operating Income 
 
 For a detailed reconciliation of our acquisitions and dispositions NOI to net income, see the table above. 
 
 Subsequent to December 31, 2018, we acquired 75 buildings consisting of approximately 16.6 million square feet (excluding five buildings that were included in the Value Add Portfolio at June 30, 2020 or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018), and sold 13 buildings and two land parcels consisting of approximately 2.8 million square feet. For the three months ended June 30, 2020 and 2019, the buildings acquired after December 31, 2018 contributed approximately $21.0 million and $4.1 million to NOI, respectively. For the three months ended June 30, 2020 and 2019, the buildings sold after December 31, 2018 contributed approximately $(0.1) million and $0.5 million to NOI, 
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 respectively. Refer to Note 3 in the accompanying Notes to Consolidated Financial Statements for additional discussion regarding buildings acquired or sold. 
 
 Other Net Operating Income 
 
 Our other assets include our flex/office buildings, Value Add Portfolio, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018. Other NOI also includes termination, solar, and other income adjustments from buildings in our same store portfolio. 
 
 For a detailed reconciliation of our other NOI to net income, see the table above. 
 
 At June 30, 2020, we owned eight flex/office buildings consisting of approximately 0.4 million square feet, three buildings in our Value Add Portfolio consisting of approximately 0.6 million square feet, and three buildings consisting of approximately 0.8 million square feet that were Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018. These buildings contributed approximately $1.6 million and $0.9 million to NOI for the three months ended June 30, 2020 and 2019, respectively. Additionally, there was approximately $0.7 million and $24,000 of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the three months ended June 30, 2020 and 2019, respectively. 
 
 Total Other Expenses 
 
 Total other expenses consist of general and administrative expenses, depreciation and amortization, and other expenses. 
 
 Total other expenses increased $10.0 million or 18.6% for the three months ended June 30, 2020 to $63.6 million compared to $53.6 million for the three months ended June 30, 2019. The increase is primarily a result of an increase in depreciation and amortization of approximately $9.0 million due to an increase in the depreciable asset base as a result of net acquisitions. Additionally, general and administrative expenses increased by approximately $0.8 million primarily due to increases in compensation and other payroll costs. 
 
 Total Other Income (Expense) 
 
 Total other income (expense) consists of interest and other income, interest expense, loss on extinguishment of debt, gain on involuntary conversion, and gain on the sales of rental property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt. 
 
 Total net other expense increased $2.4 million or 20.5% for the three months ended June 30, 2020 to $14.3 million compared $11.9 million for the three months ended June 30, 2019. This increase is primarily a result of an increase in interest expense of approximately $3.1 million which was primarily attributable to the funding of unsecured term loans on March 25, 2020, December 18, 2019, and July 25, 2019. Additionally we recognized a loss on extinguishment of debt of approximately $0.8 million during the three months ended June 30, 2020 that was primarily related to the refinance of the Unsecured Term Loan B and Unsecured Term Loan C on April 17, 2020, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements. These increases were partially offset by an increase in the gain on the sales of rental property, net of approximately $0.7 million and a gain on involuntary conversion of approximately $0.7 million related to an eminent domain taking of a portion of a parcel of land that occurred during the three months ended June 30, 2020. Additionally, there was an increase of approximately $0.2 million in interest and other income due to an increased cash and cash equivalents balance during the three months ended June 30, 2020 compared to the three months ended June 30, 2019. 
 
 Comparison of the six months ended June 30, 2020 to the six months ended June 30, 2019 
 
 The following table summarizes selected operating information for our same store portfolio and our total portfolio for the six months ended June 30, 2020 and 2019 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the six months ended June 30, 2020 and 2019 with respect to the buildings acquired and disposed of and Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018 and our flex/office buildings and Value Add Portfolio. 
 
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 Same Store Portfolio Acquisitions/Dispositions Other Total Portfolio 
 Six months ended June 30, Change Six months ended June 30, Six months ended June 30, Six months ended June 30, Change 
 2020 2019 $ % 2020 2019 2020 2019 2020 2019 $ % 
 Revenue 
 Operating revenue 
 Rental income $ 181,045 $ 179,748 $ 1,297 0.7 % $ 48,767 $ 8,912 $ 5,998 $ 3,317 $ 235,810 $ 191,977 $ 43,833 22.8 % 
 Other income 271 332 (61) (18.4) % 45 39 39 — 355 371 (16) (4.3) % 
 Total operating revenue 181,316 180,080 1,236 0.7 % 48,812 8,951 6,037 3,317 236,165 192,348 43,817 22.8 % 
 Expenses 
 Property 32,352 32,608 (256) (0.8) % 7,560 2,080 2,427 1,778 42,339 36,466 5,873 16.1 % 
 Net operating income (1) 
 $ 148,964 $ 147,472 $ 1,492 1.0 % $ 41,252 $ 6,871 $ 3,610 $ 1,539 193,826 155,882 37,944 24.3 % 
 Other expenses 
 General and administrative 19,779 17,799 1,980 11.1 % 
 
 Depreciation and amortization 106,294 86,936 19,358 22.3 % 
 Loss on impairments — 5,344 (5,344) (100.0) % 
 Other expenses 1,064 826 238 28.8 % 
 Total other expenses 127,137 110,905 16,232 14.6 % 
 Total expenses 169,476 147,371 22,105 15.0 % 
 Other income (expense) 
 Interest and other income 235 18 217 1,205.6 % 
 Interest expense (30,197) (25,027) (5,170) 20.7 % 
 Loss on extinguishment of debt (834) — (834) 100.0 % 
 Gain on involuntary conversion 657 — 657 100.0 % 
 Gain on the sales of rental property, net 47,804 1,591 46,213 2,904.7 % 
 Total other income (expense) 17,665 (23,418) 41,083 (175.4) % 
 Net income $ 84,354 $ 21,559 $ 62,795 291.3 % 

 (1) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below. 
 
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 Net Income 
 
 Net income for our total portfolio increased by $62.8 million or 291.3% to $84.4 million for the six months ended June 30, 2020 compared to $21.6 million for the six months ended June 30, 2019. 
 
 Same Store Total Operating Revenue 
 
 Same store total operating revenue consists primarily of rental income consisting of (i) fixed lease payments, variable lease payments, straight-line rental income, and above and below market lease amortization from our properties (“lease income”), and (ii) other tenant billings for insurance, real estate taxes and certain other expenses (“other billings”). 
 
 For a detailed reconciliation of our same store total operating revenue to net income, see the table above. 
 
 Same store rental income, which is comprised of lease income and other billings as discussed below, increased by $1.3 million or 0.7% to $181.0 million for the six months ended June 30, 2020 compared to $179.7 million for the six months ended June 30, 2019. 
 
 Same store lease income increased by $1.5 million or 0.9% to $153.5 million for the six months ended June 30, 2020 compared to $152.0 million for the six months ended June 30, 2019. Approximately $4.7 million of the increase was attributable to rental increases due to new leases and renewals of existing tenants. This increase was partially offset by a reduction of rental income of approximately $1.7 million for certain leases in which we determined that the future collectability was not reasonably assured, and accordingly we converted to the cash basis of accounting and reversed any accounts receivable and accrued rent balances into rental income and did not recognize revenue for payments that were not received from the tenants. Rental income also decreased by approximately $1.5 million decrease due to a reduction of base rent due to tenants downsizing their spaces and vacancies. 
 
 Same store other billings decreased by $0.2 million or 0.5% to $27.5 million for the six months ended June 30, 2020 compared to $27.7 million for the six months ended June 30, 2019. The decrease was primarily attributable to a decrease in the reimbursement of real estate taxes of approximately $0.3 million due to a decrease in real estate taxes levied by the taxing authority and vacancy. This decrease was partially offset by an increase of approximately $0.1 related to other expense reimbursements due to new leases. 
 
 Same Store Operating Expenses 
 
 Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance. 
 
 For a detailed reconciliation of our same store operating expenses to net income, see the table above. 
 
 Total same store operating expenses decreased by $0.3 million or 0.8% to $32.4 million for the six months ended June 30, 2020 compared to $32.6 million for the six months ended June 30, 2019. This decrease was primarily related to a decrease in snow removal expense of approximately 1.0 million, as well as a decrease in utility expense of approximately $0.1 million. These decreases were partially offset by an increase in repairs and maintenance expense of approximately $0.7 million and real estate taxes of approximately $0.1 million. 
 
 Acquisitions and Dispositions Net Operating Income 
 
 For a detailed reconciliation of our acquisitions and dispositions NOI to net income, see the table above. 
 
 Subsequent to December 31, 2018, we acquired 75 buildings consisting of approximately 16.6 million square feet (excluding five buildings that were included in the Value Add Portfolio at June 30, 2020 or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018), and sold 13 buildings and two land parcels consisting of approximately 2.8 million square feet. For the six months ended June 30, 2020 and June 30, 2019, the buildings acquired after December 31, 2018 contributed approximately $41.5 million and $4.9 million to NOI, respectively. For the six months ended June 30, 2020 and June 30, 2019, the buildings sold after December 31, 2018 contributed approximately $(0.2) million and $2.0 million to NOI, respectively. Refer to Note 3 in the accompanying Notes to Consolidated Financial Statements for additional discussion regarding buildings acquired or sold. 
 
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 Other Net Operating Income 
 
 Our other assets include our flex/office buildings, Value Add Portfolio, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018. Other NOI also includes termination, solar, and other income adjustments from buildings in our same store portfolio. 
 
 For a detailed reconciliation of our other NOI to net income, see the table above. 
 
 At June 30, 2020, we owned eight flex/office buildings consisting of approximately 0.4 million square feet, three buildings in our Value Add Portfolio consisting of approximately 0.6 million square feet, and three buildings consisting of approximately 0.8 million square feet that were Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2018. These buildings contributed approximately $2.8 million and $1.4 million to NOI for the six months ended June 30, 2020 and June 30, 2019, respectively. Additionally, there was $0.8 million and $0.1 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the six months ended June 30, 2020 and June 30, 2019, respectively. 
 
 Total Other Expenses 
 
 Total other expenses consist of general and administrative expenses, depreciation and amortization, loss on impairments, and other expenses. 
 
 Total other expenses increased $16.2 million or 14.6% to $127.1 million for the six months ended June 30, 2020 compared to $110.9 million for the six months ended June 30, 2019. This is primarily a result of an increase in depreciation and amortization of approximately $19.4 million as a result of net acquisitions that increased the depreciable asset base, as well as an increase of approximately $2.0 million in general and administrative expense primarily due to increases in compensation and other payroll costs. These increases were partially offset by a reduction in loss on impairments of approximately $5.3 million as there were no loss on impairments recognized during the six months June 30, 2020. 
 
 Total Other Income (Expense) 
 
 Total other income (expense) consists of interest and other income, interest expense, loss on extinguishment of debt, gain on involuntary conversion, and gain on the sales of rental property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt. 
 
 Total net other expense increased $41.1 million or 175.4% to a total net other income of $17.7 million for the six months ended June 30, 2020 compared to $23.4 million total net other expense for the six months ended June 30, 2019. This increase is primarily the result of a increase in gain on the sales of rental property, net of approximately $46.2 million and a gain on involuntary conversion of approximately $0.7 million related to an eminent domain taking of a portion of a parcel of land that occurred during the six months ended June 30, 2020. Additionally, there was an increase of approximately $0.2 million in interest and other income due to an increased cash and cash equivalents balance during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. These increases were partially offset by an increase in interest expense of approximately $5.2 million which was primarily attributable to the funding of unsecured term loans on March 25, 2020, December 18, 2019, and July 25, 2019. Additionally we recognized a loss on extinguishment of debt of approximately $0.8 million during the six months ended June 30, 2020 that was primarily related to the refinance of the Unsecured Term Loan B and the Unsecured Term Loan C on April 17, 2020, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements. 
 
 Non-GAAP Financial Measures 
 
 In this report, we disclose funds from operations (“FFO”) and NOI, which meet the definition of “non-GAAP financial measures” as set forth in Item 10(e) of Regulation S-K promulgated by the Securities and Exchange Commission (“SEC”). As a result, we are required to include in this report a statement of why management believes that presentation of these measures provides useful information to investors. 
 
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 Funds From Operations 
 
 FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, FFO should be compared with our reported net income (loss) in accordance with GAAP, as presented in our consolidated financial statements included in this report. 
 
 We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”). FFO represents GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating buildings, land sales, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. 
 
 Management uses FFO as a supplemental performance measure because it is a widely recognized measure of the performance of REITs. FFO may be used by investors as a basis to compare our operating performance with that of other REITs. 
 
 However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our buildings that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our buildings, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other REITs may not calculate FFO in accordance with the NAREIT definition, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. FFO should not be used as a measure of our liquidity, and is not indicative of funds available for our cash needs, including our ability to pay dividends. 
 
 The following table sets forth a reconciliation of our FFO attributable to common stockholders and unit holders for the periods presented to net income, the nearest GAAP equivalent. 
 
 Three months ended June 30, Six months ended June 30, 
 Reconciliation of Net Income to FFO (in thousands) 2020 2019 2020 2019 
 Net income $ 19,316 $ 14,170 $ 84,354 $ 21,559 
 Rental property depreciation and amortization 53,537 44,559 106,154 86,788 
 Loss on impairments — — — 5,344 
 Gain on the sales of rental property, net (1,045) (317) (47,804) (1,591) 
 FFO 71,808 58,412 142,704 112,100 
 Preferred stock dividends (1,289) (1,289) (2,578) (2,578) 
 
 Amount allocated to restricted shares of common stock and unvested units (196) (232) (406) (479) 
 FFO attributable to common stockholders and unit holders $ 70,323 $ 56,891 $ 139,720 $ 109,043 

 Net Operating Income 
 
 We consider NOI to be an appropriate supplemental performance measure to net income (loss) because we believe it helps investors and management understand the core operations of our buildings. NOI is defined as rental income, which includes billings for common area maintenance, real estate taxes and insurance, less property expenses and real estate taxes and insurance. NOI should not be viewed as an alternative measure of our financial performance since it excludes expenses which could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI. 
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 The following table sets forth a reconciliation of our NOI for the periods presented to net income, the nearest GAAP equivalent. 
 
 Three months ended June 30, Six months ended June 30, 
 Reconciliation of Net Income to NOI (in thousands) 2020 2019 2020 2019 
 Net income $ 19,316 $ 14,170 $ 84,354 $ 21,559 
 
 General and administrative 9,406 8,587 19,779 17,799 
 Transaction costs 8 79 59 153 
 Depreciation and amortization 53,606 44,633 106,294 86,936 
 Interest and other income (156) (2) (235) (18) 
 Interest expense 15,333 12,193 30,197 25,027 
 Loss on impairments — — — 5,344 
 Gain on involuntary conversion (657) — (657) — 
 Loss on extinguishment of debt 834 — 834 — 
 Other expenses 580 348 1,005 673 
 
 Gain on the sales of rental property, net (1,045) (317) (47,804) (1,591) 
 Net operating income $ 97,225 $ 79,691 $ 193,826 $ 155,882 

 Cash Flows 
 
 Comparison of the six months ended June 30, 2020 to the six months ended June 30, 2019 
 
 The following table summarizes our cash flows for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. 
 
 Six months ended June 30, Change 
 Cash Flows (dollars in thousands) 2020 2019 $ % 
 Net cash provided by operating activities $ 148,088 $ 110,571 $ 37,517 33.9 % 
 Net cash used in investing activities $ 55,089 $ 444,544 $ (389,455) (87.6) % 
 Net cash provided by financing activities $ 9,739 $ 321,026 $ (311,287) (97.0) % 

 Net cash provided by operating activities increased $37.5 million to $148.1 million for the six months ended June 30, 2020 compared to $110.6 million for the six months ended June 30, 2019. The increase was primarily attributable to incremental operating cash flows from property acquisitions completed after June 30, 2019, and operating performance at existing properties. These increases were partially offset by the loss of cash flows from property dispositions completed after June 30, 2019 and fluctuations in working capital due to timing of payments and rental receipts. 
 
 Net cash used in investing activities decreased $389.5 million to $55.1 million for the six months ended June 30, 2020 compared to $444.5 million for the six months ended June 30, 2019. The decrease was primarily attributable to an increase in proceeds from sales of rental property, net related to the disposition of four buildings during the six months ended June 30, 2020 for net proceeds of approximately $101.9 million, compared to the six months ended June 30, 2019 where we sold five buildings and two land parcels for net proceeds of approximately $17.7 million. The decrease was also attributable to the acquisition of 11 buildings for a total cash consideration of approximately $131.1 million for the six months ended June 30, 2020 compared to the acquisition of 24 buildings for a total cash consideration of approximately $445.4 million for the six months ended June 30, 2019. 
 
 Net cash provided by financing activities decreased $311.3 million to $9.7 million for the six months ended June 30, 2020 compared to $321.0 million for the six months ended June 30, 2019. The decrease is primarily attributable to a decrease of net proceeds from the sales of common stock of approximately $212.3 million, an increase of net cash outflow on our unsecured credit facility of approximately $174.5 million, and an increase of approximately $21.9 million in dividends paid during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. These increases were partially offset by an increase in proceeds from unsecured term loans of approximately $100.0 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. 
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 Liquidity and Capital Resources 
 
 We believe that our liquidity needs will be satisfied through cash flows generated by operations, disposition proceeds, and financing activities. Operating cash flow is primarily rental income, expense recoveries from tenants, and other income from operations and is our principal source of funds that we use to pay operating expenses, debt service, recurring capital expenditures and the distributions required to maintain our REIT qualification. We look to the capital markets (common equity, preferred equity, and debt) to primarily fund our acquisition activity. We seek to increase cash flows from our properties by maintaining quality standards for our buildings that promote high occupancy rates and permit increases in rental rates while reducing tenant turnover and controlling operating expenses. We believe that our revenue, together with proceeds from building sales and debt and equity financings, will continue to provide funds for our short-term and medium-term liquidity needs. 
 
 Our short-term liquidity requirements consist primarily of funds to pay for operating expenses and other expenditures directly associated with our buildings, including interest expense, interest rate swap payments, scheduled principal payments on outstanding indebtedness, funding of property acquisitions under contract, general and administrative expenses, and capital expenditures for tenant improvements and leasing commissions. 
 
 Our long-term liquidity needs, in addition to recurring short-term liquidity needs as discussed above, consist primarily of funds necessary to pay for acquisitions, non-recurring capital expenditures, and scheduled debt maturities. We intend to satisfy our long-term liquidity needs through cash flow from operations, the issuance of equity or debt securities, other borrowings, property dispositions, or, in connection with acquisitions of certain additional buildings, the issuance of common units in the Operating Partnership. 
 
 In response to the COVID-19 pandemic, we have worked to ensure that we maintain adequate liquidity. On April 17, 2020 we refinanced the Unsecured Term Loan B and the Unsecured Term Loan C, as discussed in “Indebtedness Outstanding” below. When incorporating the remaining undrawn balance available on our unsecured credit facility, the approximately $134.4 million of forward equity proceeds available to us at our option through January 13, 2021, and unused 1031 like-kind exchange proceeds, our total liquidity as of June 30, 2020 was approximately $741.4 million, with a material amount of that liquidity comprised of cash and cash equivalents. 
 
 As of June 30, 2020, we had total immediate liquidity of approximately $599.1 million, comprised of $102.1 million of cash and cash equivalents and $497.0 million of immediate availability on our unsecured credit facility. 
 
 In addition, we require funds for future dividends to be paid to our common and preferred stockholders and unit holders in the Operating Partnership. These distributions on our common stock are voluntary (at the discretion of our board of directors), to the extent we have satisfied distribution requirements in order to maintain our REIT status for federal income tax purposes, and may be reduced or stopped if needed to fund other liquidity requirements or for other reasons. The following table summarizes the dividends attributable to our outstanding common stock that had a record date during the six months ended June 30, 2020. 
 
 Month Ended 2020 Declaration Date Record Date Per Share Payment Date 
 
 June 30 April 9, 2020 June 30, 2020 $ 0.12 July 15, 2020 
 May 31 April 9, 2020 May 29, 2020 0.12 June 15, 2020 
 April 30 April 9, 2020 April 30, 2020 0.12 May 15, 2020 
 March 31 January 8, 2020 March 31, 2020 0.12 April 15, 2020 
 February 29 January 8, 2020 February 28, 2020 0.12 March 16, 2020 
 January 31 January 8, 2020 January 31, 2020 0.12 February 18, 2020 
 Total $ 0.72 

 On July 9, 2020, our board of directors declared the common stock dividends for the months ending July 31, 2020, August 31, 2020, and September 30, 2020 at a monthly rate of $0.12 per share of common stock. 
 
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 During the six months ended June 30, 2020, we declared quarterly cumulative dividends on the 6.875% Series C Cumulative Redeemable Preferred Stock (“Series C Preferred Stock”) at a rate equivalent to the fixed annual rate of $1.71875 per share. The following table summarizes the dividends on the Series C Preferred Stock during the six months ended June 30, 2020. 
 
 Quarter Ended 2020 Declaration Date Series C 
Preferred Stock Per Share Payment Date 
 
 June 30 April 9, 2020 $ 0.4296875 June 30, 2020 
 March 31 January 8, 2020 0.4296875 March 31, 2020 
 Total $ 0.8593750 

 On July 9, 2020, our board of directors declared the Series C Preferred Stock dividends for the quarter ending September 30, 2020 at a quarterly rate of $0.4296875 per share. 
 
 Indebtedness Outstanding 
 
 The following table summarizes certain information with respect to our indebtedness outstanding as of June 30, 2020 
 
 Loan Principal Outstanding as of June 30, 2020 (in thousands) Interest 
 Rate (1)(2) 
 Maturity Date Prepayment Terms (3) 
 
 Unsecured credit facility: 
 Unsecured Credit Facility (4) 
 $ — L + 0.90% January 12, 2024 i 
 Total unsecured credit facility — 
 
 Unsecured term loans: 
 Unsecured Term Loan A 150,000 3.38 % March 31, 2022 i 
 Unsecured Term Loan D 150,000 2.85 % January 4, 2023 i 
 Unsecured Term Loan G (5) 
 300,000 3.31 % April 18, 2023 i 
 Unsecured Term Loan E 175,000 3.92 % January 15, 2024 i 
 Unsecured Term Loan F 200,000 L + 1.00% January 12, 2025 i 
 Total unsecured term loans 975,000 
 Less: Total unamortized deferred financing fees and debt issuance costs (4,718) 
 Total carrying value unsecured term loans, net 970,282 
 
 Unsecured notes: 
 Series F Unsecured Notes 100,000 3.98 % 
 
 January 5, 2023 ii 
 Series A Unsecured Notes 50,000 4.98 % October 1, 2024 ii 
 Series D Unsecured Notes 100,000 4.32 % February 20, 2025 ii 
 Series G Unsecured Notes 75,000 4.10 % June 13, 2025 ii 
 Series B Unsecured Notes 50,000 4.98 % July 1, 2026 ii 
 Series C Unsecured Notes 80,000 4.42 % December 30, 2026 ii 
 Series E Unsecured Notes 20,000 4.42 % February 20, 2027 ii 
 Series H Unsecured Notes 100,000 4.27 % June 13, 2028 ii 
 Total unsecured notes 575,000 
 
 Less: Total unamortized deferred financing fees and debt issuance costs (1,918) 
 
 Total carrying value unsecured notes, net 573,082 
 
 Mortgage notes (secured debt): 
 
 Wells Fargo Bank, National Association CMBS Loan 49,473 4.31 % December 1, 2022 iii 
 Thrivent Financial for Lutherans 3,619 4.78 % December 15, 2023 iv 
 Total mortgage notes 53,092 
 Add: Total unamortized fair market value premiums 34 
 Less: Total unamortized deferred financing fees and debt issuance costs (299) 
 Total carrying value mortgage notes, net 52,827 
 Total / weighted average interest rate (6) 
 $ 1,596,191 3.48 % 

 (1) Interest rate as of June 30, 2020. At June 30, 2020, the one-month LIBOR (“L”) was 0.16225%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on the our debt rating, as defined in the respective loan agreements. 
 (2) The unsecured term loans have a stated interest rate of one-month LIBOR plus a spread of 1.0%, with the exception of the Unsecured Term Loan G which has a spread of 1.5% and is subject to a minimum rate for LIBOR of 0.25%. As of June 30, 2020, one-month LIBOR for the Unsecured Term Loans A, D E, and G was swapped to a fixed rate of 2.38%, 1.85%, 2.92%, and 1.72%, respectively. One-month LIBOR for the Unsecured Term Loan F was swapped to a fixed rate of 2.11% effective July 15, 2020. One-month LIBOR for the Unsecured Term Loan G will be swapped to a fixed rate of 1.17% effective September 29, 2020 and 0.28% effective March 19, 2021. 
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 (3) Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date, however can be defeased; and (iv) pre-payable without penalty three months prior to the maturity date. 
 (4) The capacity of the unsecured credit facility is $500.0 million. The initial maturity date is January 15, 2023, which may be extended pursuant to two six-month extension options exercisable at our discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension, (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date, and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. 
 (5) The initial maturity date is April 16, 2021, which may be extended pursuant to two one-year extension options exercisable at our discretion upon advance written notice. Exercise of each one-year option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension, (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date, and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. 
 (6) The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $775.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. 
 
 The aggregate undrawn nominal commitments on the unsecured credit facility and unsecured term loans as of June 30, 2020 was approximately $497.0 million, including issued letters of credit. Our actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on our debt covenant compliance. 
 
 Our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes are subject to ongoing compliance with a number of financial and other covenants. As of June 30, 2020, we were in compliance with the applicable financial covenants. 
 
 On April 17, 2020, we entered into the $300.0 million Unsecured Term Loan G with Wells Fargo, National Association, as administrative agent on behalf of the various lenders under the agreement. In connection with execution of the Unsecured Term Loan G, the Unsecured Term Loan B and Unsecured Term Loan C were paid in full. As of June 30, 2020, the Unsecured Term Loan G bore an interest rate of LIBOR plus a spread of 1.5% based on our debt rating, as defined in the loan agreement, and subject to a minimum rate for LIBOR of 0.25%. The Unsecured Term Loan G matures on April 16, 2021, subject to two one-year extension options at our discretion, and subject to certain conditions (other than lender discretion) such as the absence of default and the payment of an extension fee. We intend to exercise both extension options. To exercise the extension options we are required pay a fee equal to (i) 0.15% of the outstanding amount on the effective day of the first extension period and (ii) 0.20% of the outstanding amount on the effective day of the second extension period. The Unsecured Term Loan G has an accordion feature that allows us to increase its borrowing capacity to $600.0 million, subject to the satisfaction of certain conditions and lender consents. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the Unsecured Term Loan G. The agreement also contains financial and other covenants substantially similar to the covenants in our unsecured credit facility. 
 
 The following table summarizes our debt capital structure as of June 30, 2020. 
 
 Debt Capital Structure June 30, 2020 
 Total principal outstanding (in thousands) $ 1,603,092 
 Weighted average duration (years) 3.9 
 
 % Secured debt 3.3 % 
 % Debt maturing next 12 months — % 
 Net Debt to Real Estate Cost Basis (1) 
 31.8 % 

 (1) We define Net Debt as our amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes, less cash and cash equivalents. We define Real Estate Cost Basis as the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization. 
 
 We regularly pursue new financing opportunities to ensure an appropriate balance sheet position. As a result of these dedicated efforts, we are confident in our ability to meet future debt maturities and building acquisition funding needs. We believe that our current balance sheet is in an adequate position at the date of this filing, despite possible volatility in the credit markets. 
 
 Our interest rate exposure as it relates to interest expense payments on our floating rate debt is managed through our use of interest rate swaps, which fix the rate of our long term floating rate debt. For a detailed discussion on our use of interest rate swaps, see “Interest Rate Risk” below. 
 
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 Equity 
 
 Preferred Stock 
 
 The following table summarizes our outstanding preferred stock issuances as of June 30, 2020. 
 
 Preferred Stock Issuances Issuance Date Number of Shares Liquidation Value Per Share Interest Rate 
 
 Series C Preferred Stock March 17, 2016 3,000,000 $ 25.00 6.875 % 

 C ommon Stock 
 
 The following table summarizes our at-the-market (“ATM”) common stock offering program as of June 30, 2020. We may from time to time sell common stock through sales agents under the program. There was no activity under the ATM common stock offering program during the three months ended June 30, 2020. 
 
 ATM Common Stock Offering Program Date Maximum Aggregate Offering Price (in thousands) Aggregate Common Stock Available as of June 30, 2020 (in thousands) 
 2019 $600 million ATM February 14, 2019 $ 600,000 $ 318,248 

 On January 13, 2020, we completed an underwritten public offering of an aggregate 10,062,500 shares of common stock at a price to the underwriters of $30.9022 per share, consisting of (i) 5,600,000 shares offered directly by us and (ii) 4,462,500 shares offered by the forward dealer in connection with certain forward sale agreements (including 1,312,500 shares offered pursuant to the underwriters’ option to purchase additional shares, which option was exercised in full). The offering closed on January 16, 2020 and we received net proceeds from the sale of shares offered directly by us of approximately $173.1 million. Subject to our right to elect cash or net share settlement, we have the ability to settle the forward sales agreements at any time through scheduled maturity date of the forward sale agreements of January 13, 2021. 
 
 Noncontrolling Interest 
 
 We own our interests in all of our properties and conduct substantially all of our business through the Operating Partnership. We are the sole member of the sole general partner of the Operating Partnership. As of June 30, 2020, we owned approximately 97.7% of the Operating Partnership, and our current and former executive officers, directors, senior employees and their affiliates, and third parties who contributed properties to us in exchange for common units in our Operating Partnership, owned the remaining 2.3%. 
 
 Interest Rate Risk 
 
 We use interest rate swaps to fix the rate of our variable rate debt. As of June 30, 2020, all of our outstanding variable rate debt, with the exception of our Unsecured Term Loan F was fixed with interest rate swaps through maturity. The Unsecured Term Loan F was swapped to a fixed rate effective July 15, 2020 through maturity. 
 
 We recognize all derivatives on the balance sheet at fair value. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income (loss), which is a component of equity. Derivatives that are not designated as hedges must be adjusted to fair value and the changes in fair value must be reflected as income or expense. 
 
 We have established criteria for suitable counterparties in relation to various specific types of risk. We only use counterparties that have a credit rating of no lower than investment grade at swap inception from Moody’s Investor Services, Standard & Poor’s, or Fitch Ratings or other nationally recognized rating agencies. 
 
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 The following table details our outstanding interest rate swaps as of June 30, 2020. 
 
 Interest Rate
Derivative Counterparty Trade Date Effective Date Notional Amount 
(in thousands) Fair Value 
(in thousands) Pay Fixed Interest Rate Receive Variable Interest Rate Maturity Date 
 The Toronto-Dominion Bank Oct-14-2015 Sep-29-2016 $ 25,000 $ (76) 1.3830 % One-month L Sep-29-2020 
 PNC Bank, N.A. Oct-14-2015 Sep-29-2016 $ 50,000 $ (153) 1.3906 % One-month L Sep-29-2020 
 Regions Bank Oct-14-2015 Sep-29-2016 $ 35,000 $ (106) 1.3858 % One-month L Sep-29-2020 
 U.S. Bank, N.A. Oct-14-2015 Sep-29-2016 $ 25,000 $ (77) 1.3950 % One-month L Sep-29-2020 
 Capital One, N.A. Oct-14-2015 Sep-29-2016 $ 15,000 $ (46) 1.3950 % One-month L Sep-29-2020 
 Royal Bank of Canada Jan-08-2015 Mar-20-2015 $ 25,000 $ (280) 1.7090 % One-month L Mar-21-2021 
 The Toronto-Dominion Bank Jan-08-2015 Mar-20-2015 $ 25,000 $ (280) 1.7105 % One-month L Mar-21-2021 
 The Toronto-Dominion Bank Jan-08-2015 Sep-10-2017 $ 100,000 $ (1,493) 2.2255 % One-month L Mar-21-2021 
 Wells Fargo, N.A. Jan-08-2015 Mar-20-2015 $ 25,000 $ (750) 1.8280 % One-month L Mar-31-2022 
 The Toronto-Dominion Bank Jan-08-2015 Feb-14-2020 $ 25,000 $ (1,027) 2.4535 % One-month L Mar-31-2022 
 Regions Bank Jan-08-2015 Feb-14-2020 $ 50,000 $ (2,072) 2.4750 % One-month L Mar-31-2022 
 Capital One, N.A. Jan-08-2015 Feb-14-2020 $ 50,000 $ (2,121) 2.5300 % One-month L Mar-31-2022 
 The Toronto-Dominion Bank Jul-20-2017 Oct-30-2017 $ 25,000 $ (1,093) 1.8485 % One-month L Jan-04-2023 
 Royal Bank of Canada Jul-20-2017 Oct-30-2017 $ 25,000 $ (1,094) 1.8505 % One-month L Jan-04-2023 
 Wells Fargo, N.A. Jul-20-2017 Oct-30-2017 $ 25,000 $ (1,094) 1.8505 % One-month L Jan-04-2023 
 PNC Bank, N.A. Jul-20-2017 Oct-30-2017 $ 25,000 $ (1,093) 1.8485 % One-month L Jan-04-2023 
 PNC Bank, N.A. Jul-20-2017 Oct-30-2017 $ 50,000 $ (2,184) 1.8475 % One-month L Jan-04-2023 
 The Toronto-Dominion Bank Apr-20-2020 Sep-29-2020 $ 75,000 $ (290) 0.2750 % One-month L Apr-18-2023 
 Wells Fargo, N.A. Apr-20-2020 Sep-29-2020 $ 75,000 $ (298) 0.2790 % One-month L Apr-18-2023 
 The Toronto-Dominion Bank Apr-20-2020 Mar-19-2021 $ 75,000 $ (251) 0.2750 % One-month L Apr-18-2023 
 Wells Fargo, N.A. Apr-20-2020 Mar-19-2021 $ 75,000 $ (258) 0.2800 % One-month L Apr-18-2023 
 The Toronto-Dominion Bank Jul-24-2018 Jul-26-2019 $ 50,000 $ (4,932) 2.9180 % One-month L Jan-12-2024 
 PNC Bank, N.A. Jul-24-2018 Jul-26-2019 $ 50,000 $ (4,932) 2.9190 % One-month L Jan-12-2024 
 Bank of Montreal Jul-24-2018 Jul-26-2019 $ 50,000 $ (4,932) 2.9190 % One-month L Jan-12-2024 
 U.S. Bank, N.A. Jul-24-2018 Jul-26-2019 $ 25,000 $ (2,466) 2.9190 % One-month L Jan-12-2024 
 Wells Fargo, N.A. May-02-2019 Jul-15-2020 $ 50,000 $ (4,633) 2.2460 % One-month L Jan-15-2025 
 U.S. Bank, N.A. May-02-2019 Jul-15-2020 $ 50,000 $ (4,632) 2.2459 % One-month L Jan-15-2025 
 Regions Bank May-02-2019 Jul-15-2020 $ 50,000 $ (4,632) 2.2459 % One-month L Jan-15-2025 
 Bank of Montreal Jul-16-2019 Jul-15-2020 $ 50,000 $ (3,436) 1.7165 % One-month L Jan-15-2025 

 The swaps outlined in the above table were all designated as cash flow hedges of interest rate risk, and all are valued as Level 2 financial instruments. Level 2 financial instruments are defined as significant other observable inputs. As of June 30, 2020, the fair value of all of our 29 interest rate swaps were in a liability position of approximately $50.7 million, including any adjustment for nonperformance risk related to these agreements. 
 
 As of June 30, 2020, we had $975.0 million of variable rate debt. As of June 30, 2020, all of our outstanding variable rate debt, with the exception of our Unsecured Term Loan F, was fixed with interest rate swaps through maturity. The Unsecured Term Loan F was swapped to a fixed rate effective July 15, 2020 through maturity. To the extent interest rates increase, interest costs on our floating rate debt not fixed with interest rate swaps will increase, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. From time to time, we may enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions. 
 
 Off-balance Sheet Arrangements 
 
 As of June 30, 2020, we had letters of credit related to development projects and certain other agreements of approximately $3.0 million. As of June 30, 2020, we had no other material off-balance sheet arrangements.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
STAG Industrial, Inc. 10-Q

Item 2. Management’s Discussion and Analysis
