What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-02-12 compared with 2024-02-13 · 171 added, 108 removed, 398 unchanged (41% of the section changed)

11 unchanged sentences

Those tests involve the percentage of income that we earn from specified sources, the percentage of our assets that falls within specified categories, the diversity of our capital stock ownership and the percentage of our earnings that we distribute.

As of December 31, 2023, we owned 569 buildings in 41 states with approximately 112.3 million rentable square feet, consisting of 493 warehouse/distribution buildings, 70 light manufacturing buildings, one flex/office building, and five Value Add Portfolio buildings.

As of December 31, 2024, we owned 591 buildings in 41 states with approximately 116.6 million rentable square feet.

We own both single- and multi-tenant properties, although the majority of our portfolio is single-tenant.

2 unchanged sentences

As of December 31, 2024, we owned approximately 98.0% of the common units in our Operating Partnership, and our current and former executive officers, directors, senior employees and their affiliates, and other third parties owned the remaining 2.0%.

In connection with the successful completion of the previously announced management succession plan, (i) on June 30, 2023, the term of Benjamin S.

Butcher as Executive Chairman ended, and he continues to serve on our board of directors as a non-management director, and (ii) on July 1, 2023, Larry T.

Guillemette become the independent Chairman of the Board.

In addition, on March 31, 2023, Steven T.

Kimball joined our Company as Executive Vice President–Real Estate Operations.

Factors That May Influence Future Results of Operations

1 unchanged sentence

A variety of other factors, including those noted below, also affect our future results of operations.

The industrial real estate business is affected by the recent high inflationary, rising interest rate environment, disruption in the banking industry, and geopolitical tensions.

The industrial real estate business is affected by general macro-economic trends including recent changes in interest rates, inflation, and geopolitical tensions.

These factors are key drivers of financial market volatility and raise concerns about a slowing global economy.

gross domestic product (“GDP”) declined during the first two quarters of 2022, GDP increased more than 2.0% during the year ended June 30, 2023 and surged in the third quarter of 2023 to a 4.9% annualized growth rate.

Labor conditions held strong with a consistent 3.7% unemployment rate as of December 2023.

Going forward, the general consensus among economists is to expect low growth in the United States with a continued historically elevated risk of recession.

While the macro-economic conditions continue to evolve and could result in tighter credit conditions, weakening tenant cash flows, and rising vacancy rates, we believe we will continue to benefit from having a well-diversified portfolio across various markets, tenant industries, and lease terms.

Additionally, we believe that recent moves toward more regional supply chains and geopolitical tensions have accelerated a number of trends that positively impact U.S.

gross domestic product (“GDP”) declined during the first two quarters of 2022, real GDP has increased for nine consecutive quarters with the most recent measure showing 3.1% growth in the third quarter of 2024.

Labor conditions are slowing but holding solid with a 4.1% unemployment rate as of December 2024.

The general consensus among economists is low growth in the United States with a continued historically elevated risk of recession.

While the macro-economic conditions will evolve and could result in tighter credit conditions, weakening tenant cash flows, and rising vacancy rates, we believe we will benefit on a relative basis from having a well-diversified portfolio across various markets, tenant industries, and lease terms.

Additionally, we believe that recent moves toward more regional supply chains and geopolitical tensions positively affect U.S.

industrial demand.

However, given the current uncertainty and events discussed above, our acquisition activity slowed in 2022 and 2023 relative to our historical acquisition pace.

However, given the current uncertainty and events discussed above, our acquisition activity slowed since 2022.

We believe that the current economic environment, while volatile, will provide us with an opportunity to demonstrate the diversification of our portfolio.

Specifically, we believe our existing portfolio should benefit from competitive rental rates and strong occupancy.

In addition to our diversified portfolio, we believe that certain characteristics of our business and capital

structure should position us well in an uncertain environment, including our minimal floating rate debt exposure (taking into account our hedging activities), strong banking relationships, strong liquidity, access to capital, and the fact that many of our competitors for the assets we purchase tend to be smaller local and regional investors who may have been more heavily impacted by rising interest rates and lack of available capital.

In addition to our diversified portfolio, we believe that certain characteristics of our business and capital structure should position us well in an uncertain environment, including our minimal floating rate debt exposure (taking into account our hedging activities), strong banking relationships, strong liquidity, and access to capital.

Due to demographic/consumer trends, geopolitical uncertainty and recent legislation supporting U.S.

infrastructure, we expect acceleration in a number of industrial specific trends to support stronger long term demand, including:

infrastructure, we expect industrial-specific trends to support stronger long term demand, including:

• the continued growth 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 which is driving higher inventory to sales ratios and greater domestic warehouse demand over the long term (i.e.

consumer market, an increase in overseas labor costs, policies that promote domestic and regional manufacturing onshoring and nearshoring, a desire for greater supply chain resilience and redundancy which is driving higher inventory to sales ratios and greater domestic warehouse demand over the long term (i.e.

the shortening and fattening of the supply chain);

• 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.

Demand moderated in 2023 relative to recent peaks, but remains solid across a broad array of our markets.

Vacancy and availability rates, while rising, remain low by historical standards.

The supply pipeline remains robust, albeit smaller and more notably concentrated in very large warehouses.

Construction starts declined as a result of both moderating demand and volatile capital markets in 2023.

The weakening global and U.S.

economic trends could be a notable headwind and may result in relatively less demand for space and higher vacancy.

Our portfolio continues to have strong occupancy and benefits from geographic diversity throughout the national industrial market.

Demand across the industrial market is moderating relative to recent peaks.

Vacancy and availability rates, while rising, remain low by historical standards in many markets.

The supply pipeline remains robust, albeit smaller and, in certain market, concentrated in very large warehouses.

Construction starts continue to decline as a result of both moderating demand and volatile capital markets.

The volatile global and U.S.

macro-economic trends could be a notable headwind and could result in relatively less demand for space, increased credit loss, and higher vacancy.

We believe that the diversification of our portfolio by market, tenant industry, and tenant credit will prove to be a strength in this environment.

On October 22, 2024, American Tire Distributors, Inc.

(“ATD”), a tenant that accounts for approximately 1% of our total annualized base rental revenue as of December 31, 2024, voluntarily filed for reorganization under Chapter 11 of the United States Bankruptcy Code.

ATD leases seven buildings from us totaling 840,658 square feet.

Annualized base rental revenue for the seven buildings is approximately $6.1 million as of December 31, 2024.

ATD’s bankruptcy filings indicate an intent to continue operations and to sell its assets to its current lender group.

The contemplated transaction would eliminate a significant amount of debt and should provide the reorganized business with access to new capital.

ATD is current on its rent obligations to us.

While the sale and reorganization may not be successful and pursuant to the sale and reorganization ATD could assume or reject any or all of the seven leases (including after closing of the sale of ATD to its lenders), we do not currently believe that the tenant’s bankruptcy is reasonably likely to have a material adverse effect on our results of operations or financial condition.

Conditions in Our Markets

8 unchanged sentences

Any rental concessions in such leases 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 (years)

Operating Portfolio Square Feet Cash Basis Rent Per Square Foot Straight-line Rent Per Square Foot Total Costs Per Square Foot (1)

Cash Rent Change Straight-line Rent Change Weighted Average Lease Term (years)

Rental Concessions per Square Foot (2)

32 unchanged sentences

We have determined that judgments regarding the impairment of tangible and intangible rental property and deferred leasing intangible liabilities represents a critical accounting estimate that has the potential to be material in future periods and has been material in certain periods presented in this Form 10-K.

As discussed below in “Critical Accounting Policies,” we evaluate the carrying value of all tangible and intangible rental property assets and deferred leasing intangible liabilities (collectively, the “property”) held for use for possible impairment when an event or change in circumstance has occurred that indicates their carrying value may not be recoverable.

carrying value may not be recoverable.

The evaluation includes estimating and reviewing anticipated future undiscounted cash flows to be derived from the property.

If such cash flows are less than the property’s carrying value, an impairment charge is

recognized to the extent by which the asset’s carrying value exceeds the estimated fair value.

If such cash flows are less than the property’s carrying value, an impairment charge is recognized to the extent by which the asset’s carrying value exceeds the estimated fair value.

Estimating future cash flows is highly subjective and is based in part on assumptions related to anticipated hold period, future occupancy, rental rates, capital requirements, and exit capitalization rates that could differ from actual results.

26 unchanged sentences

The above and below market lease values are amortized into rental income over the remaining lease term.

The value of in-place lease intangibles and tenant relationships are amortized over the remaining lease term (and expected renewal period of the respective lease for tenant relationships) as increases to depreciation and amortization expense.

The value of in-place lease intangibles and tenant relationships are amortized over the remaining lease term (and expected renewal period of the

respective lease for tenant relationships) as increases to depreciation and amortization expense.

The remaining lease terms are adjusted for bargain renewal options or assumed exercises of early termination options, as applicable.

If a tenant subsequently

terminates its lease, any unamortized portion of above and below market leases is accelerated into rental income and the in-place lease value and tenant relationships are accelerated into depreciation and amortization expense over the shortened lease term.

If a tenant subsequently terminates its lease, any unamortized portion of above and below market leases is accelerated into rental income and the in-place lease value and tenant relationships are accelerated into depreciation and amortization expense over the shortened lease term.

The purchase price allocated to deferred leasing intangible assets are included in rental property, net on the accompanying Consolidated Balance Sheets, and the purchase price allocated to deferred leasing intangible liabilities are included in deferred leasing intangibles, net on the accompanying Consolidated Balance Sheets under the liabilities section.

11 unchanged sentences

Tenant improvements Shorter of useful life or terms of related lease

Interest in Joint Ventures

We have equity interests in consolidated joint ventures that are primarily engaged in the development and operation of industrial real estate properties.

We evaluated the joint ventures under the variable interest entity (“VIE”) model of consolidation and determined that the joint ventures are not VIEs.

Accordingly, we determined to account for our interest in the joint ventures under the voting interest model of consolidation, as we have a majority voting interest and financial control.

Control is determined using accounting standards related to the consolidation of joint ventures and VIEs.

The evaluation of control includes a review of the entity’s governing documents and our rights and obligations.

In determining whether we have a controlling financial interest in a joint venture, we consider various factors, including the percentage of voting interests owned, the ability to direct the activities that most significantly impact the entity’s economic performance, and the extent of our exposure to the entity’s returns.

We also consider whether other parties hold substantive participating rights or protective rights that would preclude consolidation.

We reevaluate our consolidation conclusions on an ongoing basis and upon occurrence of certain significant events under the accounting standards consolidation guidance.

The assets and liabilities of the consolidated joint ventures are included in the accompanying Consolidated Balance Sheets, and the joint ventures’ results of operations are included in the accompanying Consolidated Statements of Operations.

Each joint venture partner’s share of its joint venture is reflected as noncontrolling interest in the accompanying consolidated financial statements.

Our interest in the joint ventures is recognized under the hypothetical liquidation at book value model.

Under this model, our earnings from and equity interest in the joint ventures are recorded based on our proportionate share of the ownership of the joint venture, after giving effect to incentive fees earned by the joint venture partner.

For leases in which we are the lessee, we recognize a right-of-use asset and corresponding lease liability on the accompanying Consolidated Balance Sheets equal to the present value of the fixed lease payments.

In determining operating right-of-use asset and lease liability for our operating leases, we estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases.

In determining operating right-of-use asset

and lease liability for our operating leases, we estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases.

We utilize a market-based approach to estimate the incremental borrowing rate for each individual lease.

1 unchanged sentence

The excess of the cost of an acquired business over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed is recorded as goodwill.

Our goodwill of approximately $4.9 million represents amounts allocated to the assembled workforce from the acquired management company, and is presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.

As of December 31, 2024, our goodwill of approximately $4.9 million represents amounts allocated to the assembled workforce from the acquired management company, and is presented in prepaid expenses and other assets on the accompanying Consolidated Balance Sheets.

Our goodwill has an indeterminate life and is not amortized, but is tested for impairment on an annual basis at December 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired.

5 unchanged sentences

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of

forecasted transactions, are considered cash flow hedges.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

5 unchanged sentences

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, restricted cash, tenant accounts receivable, interest rate swaps, accounts payable, accrued expenses, unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes.

See Note 4 in the accompanying Notes to Consolidated Financial Statements for the fair value of our indebtedness.

29 unchanged sentences

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.

Same store results are 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.

1 unchanged sentence

The results for same store properties exclude termination fees, solar income, and other income adjustments.

Same store properties exclude Operating Portfolio properties with expansions placed into service after December 31, 2021.

Same store properties exclude Operating Portfolio properties with expansions placed into service after January 1, 2023.

On December 31, 2024, we owned 535 industrial buildings consisting of approximately 106.4 million square feet, which represents approximately 91.3% of our total portfolio, that are considered our same store portfolio in the analysis below.

3 unchanged sentences

The following table summarizes selected operating information for our same store portfolio and our total portfolio for the years ended December 31, 2024 and 2023 (dollars in thousands).

This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the years ended December 31, 2023 and 2022 with respect to the buildings acquired and sold after December 31, 2021, Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2021, flex/office buildings, Value Add Portfolio buildings, and buildings classified as held for sale.

This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the years ended December 31, 2024 and 2023 with respect to the buildings acquired and sold after January 1, 2023, Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023, Value Add Portfolio buildings, and buildings classified as held for sale.

Same Store Portfolio Acquisitions/Dispositions Other Total Portfolio

19 unchanged sentences

Debt extinguishment and modification expenses (703) — (703) 100.0 %

Gain on involuntary conversion 11,843 — 11,843 100.0 %

Gain on the sales of rental property, net 32,273 54,100 (21,827) (40.3) %

2 unchanged sentences

(1) For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see “Non-GAAP Financial Measures” below.

Net income for our total portfolio increased by approximately $15.0 million or 8.2% to approximately $197.2 million for the year ended December 31, 2023 compared to approximately $182.2 million for the year ended December 31, 2022.

Net income for our total portfolio decreased by approximately $3.9 million or 2.0% to approximately $193.3 million for the year ended December 31, 2024 compared to approximately $197.2 million for the year ended December 31, 2023.

Same Store Total Operating Revenue

6 unchanged sentences

Additionally, there was a decrease in same store lease income of approximately $3.1 million which was primarily attributable to management’s evaluation of operating leases to determine the probability of collecting substantially all of the lessee’s remaining lease payments under the lease term.

For those that are not probable of collection, we convert to the cash basis of accounting.

Management determined two tenants should be converted from the cash basis of accounting back to the accrual basis of accounting, for which approximately $1.5 million of straight-line rental income was recognized.

This was offset by certain other tenants converting from the accrual basis of accounting to the cash basis of accounting, for which approximately $2.5 million of straight-line rental income was either reversed or was not recognized.

For those leases that are not probable of collection, we convert to the cash basis of accounting.

During the year ended December 31, 2024, management determined certain leases should be converted from the accrual basis of accounting to the cash basis of accounting, which accounts for an approximately $1.3 million decrease during the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Additionally, management converted certain leases from the cash basis of accounting back to the accrual basis of accounting during the year ended December 31, 2023, for which approximately $1.8 million of straight-line accrued rental balance was reinstated.

Same store other billings increased approximately $8.2 million or 6.6% to approximately $132.5 million for the year ended December 31, 2024 compared to approximately $124.3 million for the year ended December 31, 2023.

The increase was attributable to (i) an increase of approximately $5.7 million of real estate tax reimbursements due to an increase in real estate taxes levied by the taxing authority for certain tenants for which we pay the real estate taxes on their behalf, (ii) changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid the taxes directly to the taxing authorities, and (iii) occupancy of previously vacant buildings.

The increase was also attributable to an increase of approximately $4.0 million in other expense reimbursements which was primarily due to an increase in corresponding expenses.

The increase was attributable to an increase of approximately $5.3 million in other expense reimbursements which was primarily due to an increase in corresponding expenses.

The increase was also attributable to an increase of approximately $2.9 million of real estate tax reimbursements due to an increase in real estate taxes levied by the taxing authority for certain tenants for which we pay the real estate taxes on their behalf, changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid the taxes directly to the taxing authorities, and occupancy of previously vacant buildings.

Same Store Operating Expenses

Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance.

Same store operating expenses consists primarily of property operating expenses and real estate taxes and insurance.

For a detailed reconciliation of our same store portfolio operating expenses to net income, see the table above.

Total same store operating expenses increased approximately $6.7 million or 5.0% to approximately $140.3 million for the year ended December 31, 2024 compared to approximately $133.6 million for the year ended December 31, 2023.

This increase was due to increases in real estate tax, insurance, repairs and maintenance, other expenses, and utilities expense of approximately $4.0 million, $2.5 million, $1.4 million, $1.4 million, and $0.2 million, respectively.

These increases were partially offset by a reduction of snow removal expense of approximately $0.8 million.

This increase was due to increases in real estate tax, other, insurance, repairs and maintenance, and snow removal expenses of approximately $3.4 million, $1.3 million, $0.9 million, $0.7 million, and $0.7 million, respectively.

These increases were partially offset by a reduction of utilities expense of approximately $0.3 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, 2021, we acquired 35 buildings consisting of approximately 5.4 million square feet (excluding seven buildings that were included in the Value Add Portfolio at December 31, 2023 or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2021), and sold 18 buildings consisting of approximately 3.8 million

For the years ended December 31, 2023 and December 31, 2022, the buildings acquired after December 31, 2021 contributed approximately $28.2 million and $16.0 million to NOI, respectively.

For the years ended December 31, 2023 and December 31, 2022, the buildings sold after December 31, 2021 contributed approximately $3.2 million and $10.9 million to NOI, respectively.

Subsequent to January 1, 2023, we acquired 39 buildings consisting of approximately 6.7 million square feet (excluding nine buildings that were included in the Value Add Portfolio at December 31, 2024 or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023), and sold 20 buildings consisting of approximately 3.7 million square feet.

the years ended December 31, 2024 and December 31, 2023, the buildings acquired after January 1, 2023 contributed approximately $27.1 million and $3.2 million to NOI, respectively.

For the years ended December 31, 2024 and December 31, 2023, the buildings sold after January 1, 2023 contributed approximately $0.4 million and $11.5 million to NOI, 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, buildings classified as held for sale, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after December 31, 2021.

Our other assets include our Value Add Portfolio, buildings classified as held for sale, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023.

Other NOI also includes termination, solar, and other income adjustments from buildings in our same store portfolio.

5 unchanged sentences

Total other expenses increased approximately $18.9 million or 5.7% for the year ended December 31, 2024 to approximately $349.6 million compared to approximately $330.6 million for the year ended December 31, 2023.

This increase was primarily attributable to an increase in depreciation and amortization of approximately $3.4 million due to an increase in the depreciable asset base from net acquisitions after December 31, 2022, as well as an increase in general and administrative expenses of approximately $0.5 million primarily due to increases in compensation and other payroll costs and professional fees.

Other expenses also increased approximately $0.3 million due to the relinquishment of an acquisition deposit of approximately $2.5 million related to the termination of an acquisition contract in January 2023, whereas the relinquishment of an acquisition deposit of approximately $2.1 million related to a terminated acquisition contract was recognized during the year ended December 31, 2022.

These increases were partially offset by a decrease in loss on impairment of approximately $1.8 million, as there was no loss on impairment recognized during the year ended December 31, 2023, compared to a loss on impairment recognized at one building during the year ended December 31, 2022.

This increase was primarily attributable to an increase in depreciation and amortization of approximately $14.6 million due to an increase in the depreciable asset base from net acquisitions after December 31, 2023.

Additionally, a loss on impairment of approximately $5.0 million was recognized during the year ended December 31, 2024, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, that did not occur during the year ended December 31, 2023.

Additionally, general and administrative expenses increased by approximately $1.7 million primarily due to increases in compensation and other payroll costs.

These increases were partially offset by a decrease in other expenses of approximately $2.4 million, which was primarily attributed to the relinquishment of an acquisition deposit of approximately $2.5 million related to the termination of an acquisition contract during the year ended December 31, 2023 that did not recur during the year ended December 31, 2024.

Total Other Income (Expense)

Total other income (expense) consists of interest and other income, interest expense, debt extinguishment and modification expenses, and gain on the sales of rental property, net.

Total other income (expense) consists of interest and other income, interest expense, debt extinguishment and modification expenses, 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 approximately $19.1 million or 90.0% to approximately $40.4 million for the year ended December 31, 2023 compared to approximately $21.3 million for the year ended December 31, 2022.

This increase was primarily attributable to an increase in interest expense of approximately $16.6 million which was primarily attributable to the issuance of $400.0 million of unsecured notes on June 28, 2022, an additional $50.0 million (net) of unsecured term loans on July 26, 2022, and an increase in one-month Term SOFR.

This increase was also attributable to a decrease in the gain on the sales of rental property, net of approximately $3.4 million.

These increases were partially offset by a decrease in debt and modification expenses of approximately $0.8 million, as there were no debt and modification expenses during the year ended December 31, 2023.

Total other expense increased approximately $29.3 million or 72.5% to approximately $69.7 million for the year ended December 31, 2024 compared to approximately $40.4 million for the year ended December 31, 2023.

This increase was primarily a result of a decrease in the gain on the sales of rental property, net of approximately $21.8 million.

This increase was also attributable to an increase in interest expense of approximately $18.6 million which was primarily attributable to the issuance of $450.0 million of unsecured notes on May 28, 2024, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements.

This increase was also attributable to an increase in debt extinguishment and modification expenses of approximately $0.7 million related to the unsecured term loan amendment and the 2024 Credit Agreement (as defined below) amendment during the year ended December 31, 2024, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements.

These increases were partially offset by an increase in gain on involuntary conversion of approximately $11.8 million during the year ended December 31, 2024, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, that did not occur during the year ended December 31, 2023.

Non-GAAP Financial Measures

18 unchanged sentences

FFO $ 458,741 $ 421,317 $ 401,353

Preferred stock dividends — — (1,289)

Redemption of preferred stock — — (2,582)

Amount allocated to restricted shares of common stock and unvested units (533) (546) (558)

14 unchanged sentences

Loss on impairment 4,967 — 1,783

Gain on involuntary conversion (11,843) — —

Debt extinguishment and modification expenses 703 — 838

12 unchanged sentences

These increases were partially offset by the loss of cash flows from property dispositions completed after December 31, 2023 and fluctuations in working capital due to timing of payments and rental receipts.

Net cash used in investing activities decreased approximately $127.2 million to approximately $320.3 million for the year ended December 31, 2023, compared to approximately $447.5 million for the year ended December 31, 2022.

The decrease was primarily attributable to the acquisition of 16 buildings during the year ended December 31, 2023 of approximately $321.9 million, compared to the acquisition of 26 buildings during the year ended December 31, 2022 of approximately $472.6 million.

Additionally, there was a decrease in cash paid for additions of land and building and improvements of approximately $3.8 million during the year ended December 31, 2023 compared to the year ended December 31, 2022.

These decreases in net cash used in investing activities were partially offset by decrease in proceeds from sales of rental property, net of approximately $29.7 million during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Net cash provided by (used in) financing activities decreased approximately $138.9 million to approximately $75.7 million net cash used in financing activities for the year ended December 31, 2023, compared to approximately $63.2 million net cash provided by financing activities for the year ended December 31, 2022.

This decrease was primarily attributable to the funding of the $400.0 million unsecured notes on June 28, 2022 and the $50.0 million (net) unsecured term loans on July 26, 2022, that did not occur during the year ended December 31, 2023, as well as the redemption of $100.0 million of unsecured notes on January 5, 2023 that did not occur during the year ended December 31, 2022.

These decreases were partially offset by an increase in net borrowings of approximately $348.0 million under our unsecured credit facility and an increase in proceeds from sales of common stock, net of approximately $14.7 million during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Additionally, we paid in full a mortgage note of approximately $3.2 million during the year ended December 31, 2023, compared to the year ended December 31, 2022, in which we paid in full a mortgage note in the amount of approximately $46.6 million.

Net cash used in investing activities increased approximately $410.7 million to approximately $731.1 million for the year ended December 31, 2024, compared to approximately $320.3 million for the year ended December 31, 2023.

The increase was primarily attributable to the acquisition rental property during the year ended December 31, 2024 of approximately $706.6 million, compared to the acquisition of rental property during the year ended December 31, 2023 of approximately $321.9 million.

Additionally, there was an increase in cash paid for additions of land and building and improvements related to development and other capital expenditures of approximately $42.6 million during the year ended December 31, 2024 compared to the year ended December 31, 2023.

These increases were partially offset by an increase in proceeds from sales of rental property, net of approximately $20.9 million during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Net cash provided by (used in) financing activities increased approximately $362.0 million to approximately $286.3 million net cash provided by financing activities for the year ended December 31, 2024, compared to approximately $75.7 million net cash used in financing activities for the year ended December 31, 2023.

This increase was primarily attributable to the issuance of $450.0 million of unsecured notes on May 28, 2024, as discussed in Note 4 in the accompanying Notes to Consolidated Financial Statements.

Additionally there was an increase of approximately $97.8 million in proceeds from sales of common stock, net during the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was also attributable to the redemption of $100.0 million of unsecured notes on January 5, 2023 compared to the redemption of $50.0 million of unsecured notes on October 1, 2024.

These increases were partially offset by a decrease in net borrowings of approximately $220.0 million under our unsecured credit facility and an increase of approximately $7.4 million in dividends and distributions paid during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Additionally, there was an increase of approximately $12.2 million in payments of loan fees and costs during the year ended December 31, 2024 compared to the year ended December 31, 2023, which was primarily attributable to the 2024 Credit Agreement (as

defined below) that was entered into on September 10, 2024, as discussed in Note 4 to the accompanying Notes to Consolidated Financial Statements.

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 from rental income, expense recoveries from tenants, and other income from operations is our principal source of funds to pay operating expenses, debt service, recurring capital expenditures, and the distributions required to maintain our REIT qualification.

We primarily rely on the capital markets (equity and debt securities) to fund our acquisition activity.

Operating cash flow from rental income, expense recoveries from tenants, and other income from operations are our principal sources of funds to pay operating expenses, debt service, recurring capital expenditures, and the distributions required to maintain our REIT qualification.

We primarily rely on the capital markets (equity and debt securities and bank borrowings) to fund our acquisition activity.

We seek to increase cash flows from our properties by maintaining quality building standards that promote high occupancy rates and permit increases in rental rates, while reducing tenant turnover and controlling operating expenses.

4 unchanged sentences

As of December 31, 2024, we had total immediate liquidity of approximately $623.1 million, comprised of approximately $36.3 million of cash and cash equivalents and approximately $586.8 million of immediate availability on our unsecured credit facility.

When incorporating our total immediate liquidity of $615.4 million and approximately $41.3 million of forward sale proceeds available to us under our ATM common stock offering program through December 14, 2024, our total liquidity was approximately $656.7 million as of December 31, 2023.

In addition, we require funds to pay dividends to holders of our common stock and common units in our Operating Partnership.

6 unchanged sentences

Unsecured Credit Facility (4)

$ 402,000 Term SOFR + 0.855% October 23, 2026 i

$ 409,000 Term SOFR + 0.875% September 7, 2029 i

Total unsecured credit facility 409,000

Unsecured term loans:

Unsecured Term Loan F 200,000 2.94 % January 12, 2025 i

Unsecured Term Loan F (5)

200,000 2.96 % March 23, 2029 i

Unsecured Term Loan G 300,000 1.80 % February 5, 2026 i

6 unchanged sentences

Unsecured notes:

Series A Unsecured Notes 50,000 4.98 % October 1, 2024 ii

Series D Unsecured Notes 100,000 4.32 % February 20, 2025 ii

4 unchanged sentences

Series H Unsecured Notes 100,000 4.27 % June 13, 2028 ii

Series L Unsecured Notes 175,000 6.05 % May 28, 2029 ii

Series M Unsecured Notes 125,000 6.17 % May 28, 2031 ii

Series I Unsecured Notes 275,000 2.80 % September 29, 2031 ii

1 unchanged sentence

Series J Unsecured Notes 50,000 2.95 % September 28, 2033 ii

Series N Unsecured Notes 150,000 6.30 % May 28, 2034 ii

Total unsecured notes 1,600,000

1 unchanged sentence

Total carrying value unsecured notes, net 1,594,092

Mortgage notes (secured debt):

Mortgage note (secured debt):

United of Omaha Life Insurance Company 4,322 3.71 % October 1, 2039 ii

Total mortgage notes 4,537

Total mortgage note 4,322

Net unamortized fair market value discount (127)

Total unamortized deferred financing fees and debt issuance costs —

Total carrying value mortgage notes, net 4,401

Total carrying value mortgage note, net 4,195

Total / weighted average interest rate (6)

4 unchanged sentences

The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on our debt rating and leverage ratio, as defined in the respective loan agreements.

(2) Our unsecured credit facility has a stated rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%, less a sustainability-related interest rate adjustment of 0.02%.

Our unsecured term loans have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%, less a sustainability-related interest rate adjustment of 0.02%.

(2) Our unsecured credit facility has a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%.

Our unsecured term loans have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%.

As of December 31, 2024, one-month Term SOFR for the Unsecured Term Loans A, F, G, H, and I was swapped to a fixed rate of 1.31%, 2.11%, 0.95%, 2.50%, and 2.66%, respectively (which includes the 0.10% adjustment).

One-month Term SOFR for the Unsecured Term Loan H will be swapped to a fixed rate of 2.50% effective January 12, 2024.

The Unsecured Term Loan F provides for the election of Daily Simple Secured Overnight Financing Rate (“Daily SOFR”), and effective January 15, 2025, Daily SOFR was swapped to a fixed rate of 3.98%.

(3) Prepayment terms consist of (i) pre-payable with no penalty;

1 unchanged sentence

(4) The capacity of our unsecured credit facility is $1.0 billion.

The initial maturity date is October 24, 2025, or such later date which may be extended pursuant to two six-month extension options exercisable by us in our discretion upon advance written notice.

The initial maturity date is September 8, 2028, or such later date which may be extended pursuant to two six-month extension options exercisable by us in our discretion upon advance written notice.

Exercise of each six-month option is subject to the following conditions:

1 unchanged sentence

Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions.

We are required to pay a facility fee on the aggregate commitment amount (currently $1.0 billion) at a rate per annum of 0.1% to 0.3%, depending on our debt rating, as defined in the credit agreement.

We are required to pay a facility fee on the aggregate commitment amount (currently $1.0 billion) at a rate per annum of 0.1% to 0.3%, depending on our debt rating, as defined in the 2024 Credit Agreement (as defined below).

The facility fee is due and payable quarterly.

(5) The initial maturity date of the Unsecured Term Loan F is March 25, 2027, or such later date which may be extended pursuant to two one-year extension options exercisable by us in our discretion upon advance written notice.

Exercise of each one-year option is subject to the following conditions:

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 $1,025.0 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 or discounts.

The aggregate undrawn nominal commitments on our unsecured credit facility as of December 31, 2023 was approximately $594.7 million, including issued letters of credit.

The aggregate undrawn nominal commitments on our unsecured credit facility and unsecured term loans as of December 31, 2024 was approximately $586.8 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.

On December 15, 2023, the mortgage note associated with Thrivent Financial for Lutherans in the amount of approximately $3.2 million was repaid in full.

On January 19, 2023, the sustainability-related interest rate adjustment for our Unsecured Term Loan H and Unsecured Term Loan I went into effect in connection with our 2022 public disclosure assessment score of “A” from the Global Real Estate Sustainability Benchmark (GRESB).

The interest rate adjustment, a 0.02% interest rate reduction for each instrument, will end on June 29, 2024, in accordance with the respective loan agreements.

On January 5, 2023, we redeemed in full at maturity the $100.0 million in aggregate principal amount of the Series F Unsecured Notes with a fixed interest rate of 3.98%.

On October 1, 2024, we redeemed in full at maturity the $50.0 million in aggregate principal amount of the Series A Unsecured Notes with a fixed interest rate of 4.98%.

On September 10, 2024, we entered into the second amended and restated credit agreement for our unsecured credit facility (the “2024 Credit Agreement”) to, (i) extend the maturity date to September 8, 2028, or such later date which may be extended pursuant to two six-month extension options exercisable by us at our discretion, subject to certain conditions, including the payment of a fee, and (ii) provide that borrowings under our unsecured credit facility will, at our election, bear interest based on a Base Rate, Adjusted Term SOFR or Adjusted Daily Simple SOFR (each as defined in the 2024 Credit Agreement), which interest rate will be increased by 0.10% for any SOFR Loan (as defined in the 2024 Credit Agreement), plus an applicable spread based on our debt rating and leverage ratio (each as defined in the 2024 Credit Agreement).

Other than the increase in the borrowing commitments and the interest rate provisions described above, the material terms of our unsecured credit facility remain unchanged.

On June 29, 2024, the sustainability-related interest rate reduction of 0.02% on our unsecured credit facility and each of our unsecured term loans ended in accordance with the respective loan agreements.

On March 25, 2024, we entered into a second amended and restated term loan agreement for the Unsecured Term Loan F to (i) extend the maturity date to March 25, 2027, with two one-year extension options, subject to certain conditions, that would extend the maturity date to March 23, 2029 if both exercised, and (ii) provide that borrowings under the Unsecured Term Loan F will, at our election, bear interest based on a Base Rate, Adjusted Term SOFR, or Adjusted Daily Simple SOFR (each as defined in the loan agreement), which interest rate will be increased by 0.10% for any SOFR Loan (as defined in the loan agreement), plus an applicable spread based on our debt rating and leverage ratio (each as defined in the loan agreement), less a sustainability-related adjustment.

Other than the maturity and interest rate provisions described above, the material terms remain unchanged.

On March 13, 2024, we entered into a note purchase agreement (the “March 2024 NPA”) for the private placement by the Operating Partnership of $175.0 million senior unsecured notes maturing May 28, 2029, with a fixed annual interest rate of 6.05%, $125.0 million senior unsecured notes maturing May 28, 2031, with a fixed annual interest rate of 6.17%, and $150.0 million senior unsecured notes maturing May 28, 2034, with a fixed annual interest rate of 6.30%.

The March 2024 NPA contains a number of financial covenants substantially similar to the financial covenants contained in our unsecured credit facility and other unsecured notes, plus a financial covenant that requires us to maintain a minimum interest coverage ratio of not less than 1.50:1.00.

The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the unsecured notes.

On May 28, 2024, we issued all of the notes under the March 2024 NPA.

The following table summarizes our debt capital structure as of December 31, 2024.

5 unchanged sentences

Net Debt to Real Estate Cost Basis (1)

(1) “Net Debt” means amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes, less cash and cash equivalents.

(1) “Net Debt” means amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage note, less cash and cash equivalents.

“Real Estate Cost Basis” means the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization.

32 unchanged sentences

As of December 31, 2024 and December 31, 2023, there were no shares of preferred stock issued or outstanding.

C ommon Stock

We are authorized to issue up to 300,000,000 shares of common stock, par value $0.01 per share.

3 unchanged sentences

2022 $750 million ATM February 17, 2022 $ 750,000 $ 510,513

There was no settled activity under the ATM common stock offering program during the three months ended December 31, 2023.

Subsequent to December 31, 2023, on January 9, 2024 we sold 567,112 shares on a forward basis under the ATM common stock offering program at a sale price of $38.8818 per share (an aggregate of approximately $22.1 million gross sale price), or $38.5058 per share net of commissions.

We did not receive any proceeds from the sale of such shares on a forward basis.

We expect to fully physically settle the applicable forward sale agreement on one or more dates prior to the scheduled maturity date of January 9, 2025, at which point we would receive the proceeds net of certain costs;

provided, however, we may elect to cash settle or net share settle such forward sale agreement at any time through the scheduled maturity date.

On December 14, 2023, we sold 1,100,000 shares on a forward basis under the ATM common stock offering program at a sale price of $38.00 per share (an aggregate of approximately $41.8 million gross sale price), or $37.62 per share net of commissions.

We did not receive any proceeds from the sale of such shares on a forward basis.

We expect to fully physically settle the applicable forward sale agreement on one or more dates prior to the scheduled maturity date of December 14, 2024, at which point we would receive the proceeds net of certain costs;

provided, however, we may elect to cash settle or net share settle such forward sale agreement at any time through the scheduled maturity date.

On June 16, 2023, we sold 992,295 shares on a forward basis under the ATM common stock offering program at a weighted average sale price of $36.5319 per share (an aggregate of approximately $36.3 million in gross sale price), or $36.1820 per share net of commissions.

We did not initially receive any proceeds from the sale of shares on a forward basis.

On July 27, 2023, we physically settled in full the forward sales agreements by issuing 992,295 shares of common stock for net proceeds of approximately $35.9 million, or $36.2046 per share.

On May 5, 2023, we sold 725,698 shares on a forward basis under the ATM common stock offering program at a sale price of $35.0458 per share (an aggregate of approximately $25.4 million in gross sale price), or $34.6953 per share net of commissions.

We did not initially receive any proceeds from the sale of shares on a forward basis.

On July 27, 2023, we physically settled in full the forward sales agreements by issuing 725,698 shares of common stock for net proceeds of approximately $25.2 million, or $34.7714 per share.

The following tables summarize the activity for shares sold on a forward basis (including under the ATM common stock offering program) and settled during the three months and year ended December 31, 2024.

We initially do not receive any proceeds from the sales of shares on a forward basis.

We may physically settle the applicable forward sale agreements on one or more dates prior to the respective scheduled maturity dates, at which point we would receive the proceeds net of certain costs;

provided, however, we may elect to cash settle or net share settle such forward sale agreements at any time through the respective scheduled maturity dates.

Forward Sale Agreements Shares Gross Sales Proceeds

(in thousands)

Weighted Average Gross Sales Price Per Share

Weighted Average Net Sales Price Per Share

Sales Commissions Per Share (1)

Net Proceeds Received Per Share (2)

Forward Sale Agreements Outstanding at September 30, 2024 4,228,508 165,841

New forward sale agreements 79,500 3,109 $ 39.12 $ 38.73 $ 0.39

Forward sale agreements settled (3)

(4,308,008) (168,950) $ 38.93

Forward Sale Agreements Outstanding at December 31, 2024 — $ —

(1) Upon a forward sale, the equity distribution agent typically earns a sales commission of 1% of the gross sales price.

(2) Reflects amount we received per share upon settlement of the forward sale.

From a forward sale until its settlement, the net proceeds (that is, gross sales proceeds net the sales commission) increase by an interest rate factor, a portion of which is retained by the equity distribution agent.

(3) We physically settled outstanding forward equity sale agreements by issuing shares of common stock in exchange for net proceeds of approximately $167.7 million.

Forward Sale Agreements Shares Gross Sales Proceeds

(in thousands)

Weighted Average Gross Sales Price Per Share

Weighted Average Net Sales Price Per Share

Sales Commissions Per Share (1)

Net Proceeds Received Per Share (2)

Forward Sale Agreements Outstanding at December 31, 2021 1,200,000 $ 50,243

Forward sale agreements settled (3)

(1,200,000) (50,243) $ 41.39

Forward Sale Agreements Outstanding at December 31, 2022 — —

New forward sale agreements 2,817,993 103,483 $ 36.72 $ 36.36 $ 0.36

Forward sale agreements settled (3)

(1,717,993) (61,683) $ 35.60

Forward Sale Agreements Outstanding at December 31, 2023 1,100,000 41,800

New forward sale agreements 3,208,008 127,150 $ 39.64 $ 39.23 $ 0.41

Forward sale agreements settled (3)

(4,308,008) (168,950) $ 38.93

Forward Sale Agreements Outstanding at December 31, 2024 — $ —

(1) Upon a forward sale, the equity distribution agent typically earns a sales commission of 1% of the gross sales price.

(2) Reflects amount we received per share upon settlement of the forward sale.

(3) We physically settled outstanding forward equity sale agreements by issuing shares of common stock in exchange for net proceeds of approximately $167.7 million, $61.2 million, and $49.7 million, for the years ended December 31, 2024, 2023, and 2022, respectively.

Noncontrolling Interests

2 unchanged sentences

On December 13, 2024, we formed a joint venture with a third party that is primarily engaged in the development and eventual operation of two industrial real estate properties located in Concord, North Carolina.

At December 31, 2024, we held a 90% interest and the third party held the remaining 10% interest in the joint venture.

On August 8, 2024, we formed a joint venture with a third party that is primarily engaged in the development and eventual operation of an industrial real estate property located in Reno, Nevada.

At December 31, 2024, we held a 95% interest and the third party held the remaining 5% interest in the joint venture.

Interest Rate Risk

9 unchanged sentences

As of December 31, 2024, we had 21 interest rate swaps outstanding that were in an asset position of approximately $36.5 million, including any adjustment for nonperformance risk related to these agreements.

During the year ended December 31, 2024, we entered into four interest rate swaps with an aggregate notional value of $200.0 million which fix Daily SOFR at 3.98% effective January 15, 2025 and mature on March 25, 2027.

As of December 31, 2024, we had approximately $1.4 billion of variable rate debt.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis