What changed in this filing

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Item 2. Properties

2021-02-10 compared with 2020-02-06 · 27 added, 22 removed, 100 unchanged (33% of the section changed)

As of December 31, 2019, we owned a total of 220 buildings aggregating approximately 13.3 million square feet, 19 improved land parcels consisting of approximately 77.6 acres and four properties under redevelopment expected to contain approximately 0.5 million square feet upon completion.

The buildings and improved land parcels were approximately 96.8% and 92.0% leased, respectively, to 493 customers, the largest of which accounted for approximately 3.6% of our total annualized base rent.

As of December 31, 2020, we owned a total of 222 buildings aggregating approximately 13.2 million square feet, 25 improved land parcels consisting of approximately 91.5 acres and one property under redevelopment expected to contain approximately 0.2 million square feet upon completion.

As of December 31, 2020, the buildings and improved land parcels were approximately 97.8% and 98.6% leased, respectively, to 488 customers, the largest of which accounted for approximately 5.4% of our total annualized base rent.

The properties are located in Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C.

We invest in several types of industrial real estate, including warehouse/distribution buildings, flex buildings (including light industrial and research and development, or R&D), transshipment buildings and improved land parcels.

See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in this Annual

Report on Form 10-K for a general description of these types of industrial real estate.

We target functional buildings in infill locations that may be shared by multiple tenants and that cater to customer demand within the various submarkets in which we operate.

See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in this Annual Report on Form 10-K for a general description of these types of industrial real estate.

We target functional properties in infill locations that may be shared by multiple tenants and that cater to customer demand within the various submarkets in which we operate.

Infill locations are geographic locations surrounded by high concentrations of already developed land and existing buildings.

40 unchanged sentences

$ 462,966 $ 651,417 $ 389,188 $ 356,528 $ 153,918 $ 217,211 $ 2,231,228

% of Total Gross Book Value 20.7 % 29.2 % 17.4 % 16.0 % 7.0 % 9.7 % 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of December 31, 2020, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of December 31, 2020, weighted by the respective square footage.

3 Includes four properties under redevelopment expected to contain approximately 0.5 million square feet upon completion, as discussed below.

As of December 31, 2019, we owned four properties under redevelopment expected to contain approximately 0.5 million square feet upon completion with a total expected investment of approximately $120.4 million, including redevelopment costs, capitalized interest and other costs of approximately $52.4 million.

3 Includes one property under redevelopment expected to contain approximately 0.2 million square feet upon completion, as discussed below.

As of December 31, 2020, we owned one property under redevelopment expected to contain approximately 0.2 million square feet upon completion with a total expected investment of approximately $64.1 million, including redevelopment costs, capitalized interest and other costs of approximately $61.4 million.

The following table summarizes our capital expenditures incurred during the three months and years ended December 31, 2020 and 2019 (dollars in thousands):

15 unchanged sentences

Customer Leases Rentable

1 United States Government 9 381,431 2.9 % $ 4,919 3.6 %

1 Amazon.com 2

5 471,880 3.6 % $ 8,198 5.4 %

2 FedEx Corporation 3

7 314,519 2.4 % 5,114 3.4 %

3 Amazon.com 3 260,462 2.0 % 4,805 3.5 %

3 United States Government 8 300,732 2.3 % 3,748 2.5 %

4 Danaher 3 171,707 1.3 % 3,732 2.5 %

5 AmerisourceBergen 1 211,418 1.5 % 2,469 1.7 %

5 District of Columbia 7 234,071 1.8 % 3,334 2.2 %

6 United States Postal Service 3 125,950 1.0 % 2,758 1.8 %

7 DirectBuy Home Improvement 1 230,891 1.7 % 1,915 1.3 %

8 Costco-Innovel Solutions LLC 1 219,910 1.7 % 1,816 1.2 %

9 XPO Logistics 2 180,717 1.4 % 1,732 1.1 %

8 District of Columbia 3 124,744 0.9 % 1,632 1.2 %

9 Miami International Freight Systems 1 192,454 1.4 % 1,463 1.1 %

10 Port Kearny Security, Inc.

10 L3 Harris Technologies, Inc.

1 147,898 1.1 % 1,651 1.1 %

11 O'Neill Logistics 2 237,692 1.8 % 1,466 1.0 %

12 Topaz Lighting Corp.

1 190,000 1.4 % 1,463 1.0 %

13 Port Kearny Security, Inc.

1 — — % 1,458 1.0 %

14 YRC 2 61,252 0.5 % 1,423 0.9 %

15 Envogue International 1 192,000 1.5 % 1,411 0.9 %

16 Bar Logistics 1 203,263 1.5 % 1,393 0.9 %

14 L3 Harris Technologies, Inc.

17 Lilac Solutions Inc.

1 92,884 0.7 % 1,338 0.9 %

2 unchanged sentences

20 JAM'N Logistics 1 110,336 0.7 % 1,229 0.7 %

18 Northrop Grumman Systems 1 103,200 0.8 % 1,183 0.9 %

19 Fredmore Inc.

DBA Airpark Newark 4

1 — — % 1,171 0.9 %

20 Exquisite Apparel Corporation 1 114,061 0.9 % 1,077 0.8 %

Total 51 3,644,848 27.6 % $ 47,705 31.4 %

1 unchanged sentence

2 Includes an improved land parcel consisting of 2.8 acres.

3 Lease area consists of 16.9 acres of improved land.

3 Includes two improved land parcels totaling 7.8 acres.

4 Lease area consists of 16.9 acres of improved land.

11 unchanged sentences

Our ability to re-lease or renew expiring space at rental rates equal to or in excess of current rental rates will impact our results of operations.

As of December 31, 2019, leases representing approximately 12.6% of the total rentable square footage of our portfolio are scheduled to expire during the year ending December 31, 2020.

As of December 31, 2020, leases representing approximately 11.9% of the total annualized base rent of our portfolio are scheduled to expire during the year ending December 31, 2021.

We currently expect that on average, the rental rates we are likely to achieve on any new (re-leased) or renewed leases for our 2021 expirations will be above the rates currently being paid for the same space.

Rent changes on new and renewed leases totaling approximately 0.6 million square feet commencing during the three months ended December 31, 2020 were approximately 10.9% higher as compared to the previous rental rates for that same space, and rent changes on new and renewed leases totaling approximately 2.6 million square feet commencing during the year ended December 31, 2020 were approximately 22.1% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio of 64.3% and 57.7% for the three months and year ended December 31, 2020, respectively.

We define tenant retention as the square footage of all leases commenced during the period that are rented by existing tenants divided by the square footage of all expiring leases during the reporting period.

The square footage of tenants that default or buy-out prior to expiration of their lease and short-term leases of less than one year, are not included in the calculation.

Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates above the current average rental rates.

Further, re-leased/renewed rental rates in a particular market may not be consistent with rental rates across our portfolio as a whole and re-leased/renewed rental rates for particular properties within a market may not be consistent with rental rates across our portfolio within a particular market, in each case due to a number of factors, including local real estate conditions, local supply and demand for industrial space, the condition of the property, the impact of leasing incentives, including free rent and tenant improvements and whether the property, or space within the property, has been redeveloped.

As of December 31, 2019, four properties with a gross investment book value of approximately $114.9 million were encumbered by mortgage loans payable, net of deferred financing costs, totaling approximately $44.3 million, which bear interest at a weighted average fixed annual rate of 4.1%.

As of December 31, 2020, one property with a gross investment book value of approximately $32.7 million was encumbered by a mortgage loan payable, net of deferred financing costs, totaling approximately $11.3 million, which bears interest at a weighted average fixed annual rate of 5.49%.

Subsequent to December 31, 2020, we paid off such mortgage loan.

Legal Proceedings.

3 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 2. Properties