Terreno Realty Corp 10-K

Item 9A. Controls And Procedures. Evaluation of Disclosure Controls and Procedures Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer, President and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), and has concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to give reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer, President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Management’s Annual Report on Internal Control Over Financial Reporting Terreno Realty Corporation’s management is responsible for establishing and maintaining adequate internal control over financial reporting. This internal control system was designed to provide reasonable assurance to the company’s management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Terreno Realty Corporation’s management assessed the effectiveness of its internal control over financial reporting as of December 31, 2020. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on its assessment, management of Terreno Realty Corporation believes that, as of December 31, 2020, the company’s internal control over financial reporting is effective based on those criteria. Terreno Realty Corporation’s independent auditors have issued an audit report on the effectiveness of the company’s internal control over financial reporting, as stated in their report included in this Annual Report on Form 10-K, (which expresses an unqualified opinion on the effectiveness of the company’s internal control over financial reporting as of December 31, 2020). 51 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Terreno Realty Corporation Opinion on Internal Control Over Financial Reporting We have audited Terreno Realty Corporation’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Terreno Realty Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria . We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and the financial statement schedule listed in the Index at Item 15 of the Company and our report dated February 10, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Francisco, California February 10, 2021 52 Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. Part III Item 10. Directors, Executive Officers and Corporate Governance. The information required by Item 10 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated herein by reference. Item 11. Executive Compensation. The information required by Item 11 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by Item 12 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by Item 13 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information required by Item 14 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders, which we anticipate will be filed no later than 120 days after the end of our fiscal year ended December 31, 2020 and is incorporated herein by reference. 53 Part IV Item 15. Exhibits and Financial Statement Schedules. (a) 1. and 2. Financial Statements and Schedules The following consolidated financial information is included as a separate section of this Annual Report on Form 10-K beginning on page F-1 as follows: Page Report of Independent Registered Public Accounting Firm 1 Consolidated Balance Sheets as of December 31, 2020 and 2019 3 Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 4 Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018 5 Consolidated Statements of Equity for the years ended December 31, 2020, 2019 and 2018 6 Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 7 Notes to Consolidated Financial Statements 9 Schedule III – Real Estate Investments and Accumulated Depreciation 1 All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted, or the required information is included in the consolidated financial statements and notes thereto. 3. Exhibits The exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index at the end of this Annual Report on Form 10-K immediately preceding the signature page, which is incorporated by reference herein. Item 16. Form 10-K Summary. None. 54 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Terreno Realty Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Terreno Realty Corporation (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income , equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 10, 2021 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate. 1 Valuation of acquired properties Description of matter In the year ended December 31, 2020, the Company completed 11 real estate acquisitions for a total purchase price of $100.4 million. The properties were acquired from unrelated third parties. As further discussed in Notes 2 and 4 of the consolidated financial statements, the transactions were accounted for as asset acquisitions. The purchase price for each acquisition was allocated to the individual acquired assets and liabilities based on their relative fair values. Auditing the Company’s real estate acquisitions is complex and required the involvement of a valuation specialist due to the judgments and estimates in determining the fair value of the components of each acquisition. The fair value of the tangible assets is determined by valuing the property as if it were vacant. Land values are derived from current comparative sales values, when available, or management’s estimates of the fair value based on market conditions and the experience of the Company’s management team. Building and improvement values are calculated as replacement cost less depreciation, or management’s estimates of the fair value of these assets using discounted cash flow analyses or similar methods. The fair value of the above and below-market leases is based on the present value of the difference between the contractual amounts to be received pursuant to the acquired leases (using a discount rate that reflects the risks associated with the acquired leases) and the Company’s estimate of the market lease rates measured over a period equal to the remaining term of the leases plus the term of any below-market fixed rate renewal options. All of these assumptions are sensitive to and affected by expected future market or economic conditions, particularly those in the markets in which the Company’s acquisitions occur. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for real estate acquisitions relative to purchase accounting, including controls over the review of the valuation models and related significant assumptions underlying the valuation of the acquired assets and liabilities. To test the purchase price allocations to the assets and liabilities acquired, our audit procedures included, among others, review of the purchase agreements, assessing the methodologies and testing the significant assumptions discussed above used to value the components of the acquired properties, assessing the sensitivity of changes in significant assumptions on the purchase price allocation and testing the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We compared land comparative sales values, building replacement cost and depreciation estimates, market rental rates, discount rate and market rental growth rates with external market data, and the incorporation of these assumptions in the cash flow projections and overall valuation conclusions. We also tested the completeness and accuracy of the underlying data. We involved our valuation specialists to assist in the assessment of the methodology utilized by the Company and to test certain of the assumptions used in the valuation of land, building and above and below market intangibles. /s/ Ernst & Young LLP We have served as the Company‘s auditor since 2012. San Francisco, California February 10, 2021 2 Terreno Realty Corporation Consolidated Balance Sheets (in thousands – except share and per share data) December 31, 2020 December 31, 2019 ASSETS Investments in real estate Land $ 1,138,233 $ 1,055,146 Buildings and improvements 942,688 909,201 Construction in progress 61,448 101,253 Intangible assets 88,859 88,594 Total investments in properties 2,231,228 2,154,194 Accumulated depreciation and amortization ( 238,073 ) ( 208,279 ) Net investments in real estate 1,993,155 1,945,915 Cash and cash equivalents 107,180 110,082 Restricted cash 656 2,657 Senior secured loan, net — 15,858 Other assets, net 38,829 33,952 Total assets $ 2,139,820 $ 2,108,464 LIABILITIES AND EQUITY Liabilities Credit facility $ — $ — Term loan payable, net 99,791 99,583 Senior unsecured notes, net 348,063 347,674 Mortgage loans payable, net 11,264 44,318 Security deposits 13,870 14,149 Intangible liabilities, net 24,608 28,127 Dividends payable 19,870 18,158 Performance share awards payable 7,482 11,633 Accounts payable and other liabilities 26,688 27,699 Total liabilities 551,636 591,341 Commitments and contingencies (Note 14) Equity Stockholders’ equity Common stock: $ 0.01 par value, 400,000,000 shares authorized, and 68,376,364 and 67,252,787 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively 686 673 Additional paid-in capital 1,589,301 1,514,266 Common stock held in deferred compensation plan, 139,224 and 0 shares at December 31, 2020 and December 31, 2019, respectively ( 7,546 ) — Retained earnings 5,926 2,621 Accumulated other comprehensive loss ( 183 ) ( 437 ) Total stockholders’ equity 1,588,184 1,517,123 Total liabilities and equity $ 2,139,820 $ 2,108,464 The accompanying notes are an integral part of these consolidated financial statements. 3 Terreno Realty Corporation Consolidated Statements of Operations (in thousands – except share and per share data) For the Year Ended December 31, 2020 2019 2018 REVENUES Rental revenues and tenant expense reimbursements $ 186,884 $ 171,022 $ 151,657 Total revenues 186,884 171,022 151,657 COSTS AND EXPENSES Property operating expenses 49,096 44,201 39,988 Depreciation and amortization 45,875 44,015 40,816 General and administrative 23,489 23,924 21,503 Acquisition costs 271 45 124 Total costs and expenses 118,731 112,185 102,431 OTHER INCOME (EXPENSE) Interest and other income 873 3,815 3,664 Interest expense, including amortization ( 15,997 ) ( 16,338 ) ( 18,211 ) Loss on extinguishment of debt — ( 189 ) — Gain on sales of real estate investments 26,766 9,391 28,610 Total other income (expense) 11,642 ( 3,321 ) 14,063 Net income 79,795 55,516 63,289 Allocation to participating securities ( 400 ) ( 351 ) ( 401 ) Net income available to common stockholders, net of redemption of preferred stock and preferred stock dividends $ 79,395 $ 55,165 $ 62,888 EARNINGS PER COMMON SHARE – BASIC AND DILUTED: Net income available to common stockholders - basic, net of redemption of preferred stock and preferred stock dividends $ 1.17 $ 0.86 $ 1.09 Net income available to common stockholders - diluted, net of redemption of preferred stock and preferred stock dividends $ 1.16 $ 0.85 $ 1.09 BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 67,762,927 64,428,406 57,486,399 DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 68,170,066 64,722,976 57,486,399 The accompanying notes are an integral part of these consolidated financial statements. 4 Terreno Realty Corporation Consolidated Statements of Comprehensive Income (in thousands) For the Year Ended December 31, 2020 2019 2018 Net income $ 79,795 $ 55,516 $ 63,289 Other comprehensive income (loss): cash flow hedge adjustment 254 324 285 Comprehensive income $ 80,049 $ 55,840 $ 63,574 The accompanying notes are an integral part of these consolidated financial statements. 5 Terreno Realty Corporation Consolidated Statements of Equity (in thousands – except share data) Common Stock Additional Paid-in Capital Common Shares Held in Deferred Compensation Plan Deferred Compensation Plan Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Number of Shares Amount Balance as of December 31, 2017 55,368,737 $ 553 $ 1,023,184 — $ — $ 4,803 $ ( 1,046 ) $ 1,027,494 Net income — — — — — 63,289 — 63,289 Issuance of common stock, net of issuance costs of $ 3,489 5,698,326 57 212,164 — — — — 212,221 Repurchase of common stock related to employee awards ( 107,267 ) — ( 3,870 ) — — — — ( 3,870 ) Issuance of restricted stock 53,915 — — — — — — — Stock-based compensation — — 2,285 — — — — 2,285 Common stock dividends — — — — — ( 53,907 ) — ( 53,907 ) Other comprehensive loss — — — — — — 285 285 Balance as of December 31, 2018 61,013,711 610 1,233,763 — — 14,185 ( 761 ) 1,247,797 Net income — — — — — 55,516 — 55,516 Issuance of common stock, net of issuance costs of $ 4,593 6,271,863 63 280,436 — — — — 280,499 Repurchase of common stock related to employee awards ( 143,886 ) — ( 3,959 ) — — — — ( 3,959 ) Issuance of restricted stock 111,099 — — — — — — — Stock-based compensation — — 4,026 — — — — 4,026 Common stock dividends — — — — — ( 67,080 ) — ( 67,080 ) Other comprehensive income — — — — — — 324 324 Balance as of December 31, 2019 67,252,787 673 1,514,266 — — 2,621 ( 437 ) 1,517,123 Net income — — — — — 79,795 — 79,795 Issuance of common stock, net of issuance costs of $ 1,406 1,344,281 13 70,638 — — — — 70,651 Forfeiture of common stock related to employee awards ( 5,146 ) — ( 265 ) — — — — ( 265 ) Repurchase of common stock related to employee awards ( 154,375 ) — ( 9,572 ) — — — — ( 9,572 ) Issuance of restricted stock 78,041 — — — — — — — Stock-based compensation — — 6,688 — — — — 6,688 Common stock dividends — — — — ( 76,490 ) — ( 76,490 ) Deposits to deferred compensation plan ( 139,224 ) — 7,546 139,224 ( 7,546 ) — — — Other comprehensive income — — — — — — 254 254 Balance as of December 31, 2020 68,376,364 $ 686 $ 1,589,301 139,224 $ ( 7,546 ) $ 5,926 $ ( 183 ) $ 1,588,184 The accompanying notes are an integral part of these consolidated financial statements. 6 Terreno Realty Corporation Consolidated Statements of Cash Flows (in thousands) For the Year Ended December 31, 2020 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 79,795 $ 55,516 $ 63,289 Adjustments to reconcile net income to net cash provided by operating activities Straight-line rents ( 361 ) ( 2,597 ) ( 3,459 ) Amortization of lease intangibles ( 5,420 ) ( 4,682 ) ( 3,694 ) Depreciation and amortization 45,875 44,015 40,816 Loss on extinguishment of debt — 189 — Gain on sales of real estate investments ( 26,766 ) ( 9,391 ) ( 28,610 ) Deferred financing cost amortization 1,391 1,562 1,442 Deferred senior secured loan fee amortization ( 57 ) ( 531 ) ( 392 ) Stock-based compensation 9,826 10,644 9,270 Changes in assets and liabilities Other assets ( 3,911 ) ( 1,579 ) ( 1,531 ) Accounts payable and other liabilities 678 1,542 468 Net cash provided by operating activities 101,050 94,688 77,599 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for property acquisitions ( 98,088 ) ( 238,661 ) ( 221,806 ) Proceeds from sales of real estate investments, net 70,685 47,133 79,594 Additions to construction in progress ( 8,989 ) ( 27,884 ) ( 9,668 ) Additions to buildings, improvements and leasing costs ( 31,611 ) ( 32,070 ) ( 28,977 ) Cash paid for senior secured loan — — ( 55,000 ) Repayment on senior secured loan 15,915 — — Origination and other fees received on senior secured loan — — 900 Net cash used in investing activities ( 52,088 ) ( 251,482 ) ( 234,957 ) CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common stock 64,767 278,058 208,949 Issuance costs on issuance of common stock ( 940 ) ( 4,023 ) ( 3,030 ) Repurchase of common stock related to employee awards ( 9,837 ) ( 3,959 ) ( 3,870 ) Borrowings on credit facility — 17,000 204,000 Payments on credit facility — ( 36,000 ) ( 185,000 ) Payments on term loans payable — ( 50,000 ) — Borrowings on senior unsecured notes — 100,000 — Payments on mortgage loans payable ( 33,077 ) ( 1,514 ) ( 19,201 ) Payment of deferred financing costs — ( 943 ) ( 1,366 ) Dividends paid to common stockholders ( 74,778 ) ( 63,565 ) ( 51,445 ) Net cash (used in) provided by financing activities ( 53,865 ) 235,054 149,037 Net (decrease) increase in cash and cash equivalents and restricted cash ( 4,903 ) 78,260 ( 8,321 ) Cash and cash equivalents and restricted cash at beginning of year 112,739 34,479 42,800 Cash and cash equivalents and restricted cash at end of year $ 107,836 $ 112,739 $ 34,479 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest, net of capitalized interest 16,315 18,351 19,787 7 Supplemental disclosures of non-cash transactions Accounts payable related to capital improvements 10,552 12,498 10,712 Non-cash issuance of common stock to the deferred compensation plan ( 7,546 ) — — Non-cash repayment of senior secured loan — ( 39,085 ) — Lease liability arising from recognition of right-of-use asset — 647 — Reconciliation of cash paid for property acquisitions Acquisition of properties 100,391 250,506 227,058 Assumption of other assets and liabilities ( 2,303 ) ( 11,845 ) ( 5,252 ) Net cash paid for property acquisitions $ 98,088 $ 238,661 $ 221,806 The accompanying notes are an integral part of these consolidated financial statements. 8 Terreno Realty Corporation Notes to Consolidated Financial Statements Note 1. Organization Terreno Realty Corporation (“Terreno”, and together with its subsidiaries, the “Company”) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. All square feet, acres, occupancy, expected investment and related expected redevelopment costs and number of properties and improved land parcels disclosed in these notes to the consolidated financial statements are unaudited. As of December 31, 2020, the Company owned 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. The Company is an internally managed Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2010. Note 2. Significant Accounting Policies Basis of Presentation. The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include all of the Company’s accounts and its subsidiaries and all intercompany balances and transactions have been eliminated in consolidation. Use of Estimates. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Capitalization of Costs. The Company capitalizes costs directly related to the redevelopment, renovation and expansion of its investment in real estate. Costs associated with such projects are capitalized as incurred. If the project is abandoned, these costs are expensed during the period in which the redevelopment, renovation or expansion project is abandoned. Costs considered for capitalization include, but are not limited to, construction costs, interest, real estate taxes and insurance, if appropriate. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress. In the event that the activities to ready the asset for its intended use are suspended, the capitalization period will cease until such activities are resumed. Costs incurred for maintaining and repairing properties, which do not extend their useful lives, are expensed as incurred. Interest is capitalized based on actual capital expenditures from the period when redevelopment, renovation or expansion commences until the asset is ready for its intended use, at the weighted average borrowing rate during the period. Investments in Real Estate. Investments in real estate, including tenant improvements, leasehold improvements and leasing costs, are stated at cost, less accumulated depreciation, unless circumstances indicate that the cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. The Company also reviews the impact of above and below-market leases, in-place leases and lease origination costs for acquisitions and records an intangible asset or liability accordingly. Impairment. Carrying values for financial reporting purposes are reviewed for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. Examples of such events or changes in circumstances may include classifying an asset to be held for sale, changing the intended hold period or when an asset remains vacant significantly longer than expected. The intended use of an asset either held for sale or held for use can significantly impact how impairment is measured. If an asset is intended to be held for the long-term, the recoverability is based on the undiscounted future cash flows. If the asset carrying value is not supported on an undiscounted future cash flow basis, then the asset carrying value is measured against the lower of cost or the present value of expected cash flows over the expected hold period. An impairment charge to earnings is recognized for the excess of the asset’s carrying value over the lower of cost or the present values of expected cash flows over the expected hold period. If an asset is intended to be sold, impairment is determined using the estimated fair value less costs to sell. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions, among other things, regarding current and future economic and market conditions and the availability of capital. The Company determines the estimated fair values based on its assumptions regarding rental rates, lease-up and holding periods, as well as sales prices. When available, current market information is used to 9 determine capitalization and rental growth rates. If available, current comparative sales values may also be used to establish fair value. When market information is not readily available, the inputs are based on the Company’s understanding of market conditions and the experience of the Company’s management team. Actual results could differ significantly from the Company’s estimates. The discount rates used in the fair value estimates represent a rate commensurate with the indicated holding period with a premium layered on for risk. There were no impairment charges recorded to the carrying values of the Company’s properties during the years ended December 31, 2020, 2019 or 2018. Loans Held-for-Investment. Loans that are held-for-investment are carried at cost, net of loan fees and origination costs, as applicable, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of loans that are held-for-investment. The Company evaluates its senior secured loan (the “Senior Secured Loan”), which is classified as held-for-investment, for impairment quarterly. If the Senior Secured Loan is considered to be impaired, the Company records an allowance through the provision for Senior Secured Loan losses to reduce the carrying value of the Senior Secured Loan to the present value of expected future cash flows discounted at the Senior Secured Loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Actual losses, if any, could differ significantly from the Company’s estimates. There were no impairment charges recorded to the carrying value of the Senior Secured Loan during the years ended December 31, 2020 and 2019. Property Acquisitions. Effective January 1, 2017, the Company adopted Accounting Standards Codification (“ASC”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not considered a business. To be a business, the set of acquired activities and assets must include inputs and one or more substantive processes that together contribute to the ability to create outputs. The Company has determined that its real estate property acquisitions will generally be accounted for as asset acquisitions under the clarified definition. Prior to January 1, 2017, the Company generally accounted for property acquisitions as business combinations, in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations . Upon acquisition of a property, the Company estimates the fair value of acquired tangible assets (consisting generally of land, buildings and improvements) and intangible assets and liabilities (consisting generally of the above and below-market leases and the origination value of all in-place leases). The Company determines fair values using Level 3 inputs such as replacement cost, estimated cash flow projections and other valuation techniques and applying appropriate discount and capitalization rates based on available market information. Mortgage loans assumed in connection with acquisitions are recorded at their fair value using current market interest rates for similar debt at the date of acquisition. Acquisition-related costs associated with asset acquisitions are capitalized to individual tangible and intangible assets and liabilities assumed on a relative fair value basis and acquisition-related costs associated with business combinations are expensed as incurred. The fair value of the tangible assets is determined by valuing the property as if it were vacant. Land values are derived from current comparative sales values, when available, or management’s estimates of the fair value based on market conditions and the experience of the Company’s management team. Building and improvement values are calculated as replacement cost less depreciation, or management’s estimates of the fair value of these assets using discounted cash flow analyses or similar methods. The fair value of the above and below-market leases is based on the present value of the difference between the contractual amounts to be received pursuant to the acquired leases (using a discount rate that reflects the risks associated with the acquired leases) and the Company’s estimate of the market lease rates measured over a period equal to the remaining term of the leases plus the term of any below-market fixed rate renewal options. The above and below-market lease values are amortized to rental revenues over the remaining initial term plus the term of any below-market fixed rate renewal options that are considered bargain renewal options of the respective leases. The total net impact to rental revenues due to the amortization of above and below-market leases was a net increase of approximately $ 5.4 million, $ 4.7 million and $ 3.7 million, for the years ended December 31, 2020, 2019 and 2018, respectively. The origination value of in-place leases is based on costs to execute similar leases including commissions and other related costs. The origination value of in-place leases also includes real estate taxes, insurance and an estimate of lost rental revenue at market rates during the estimated time required to lease up the property from vacant to the occupancy level at the date of acquisition. The remaining weighted average lease term related to these intangible assets and liabilities as of December 31, 2020 is 7.8 years. As of December 31, 2020 and 2019, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands): 10 December 31, 2020 December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net In-place leases $ 85,026 $ ( 64,668 ) $ 20,358 $ 84,425 $ ( 59,504 ) $ 24,921 Above-market leases 3,833 ( 3,697 ) 136 4,169 ( 3,853 ) 316 Below-market leases ( 45,798 ) 21,190 ( 24,608 ) ( 44,099 ) 15,972 ( 28,127 ) Total $ 43,061 $ ( 47,175 ) $ ( 4,114 ) $ 44,495 $ ( 47,385 ) $ ( 2,890 ) Projected net amortization of the intangible assets and liabilities for the next five years and thereafter as of December 31, 2020 is as follows (dollars in thousands): 2021 $ 2,460 2022 1,513 2023 525 2024 ( 46 ) 2025 ( 242 ) Thereafter ( 8,324 ) Total $ ( 4,114 ) Depreciation and Useful Lives of Real Estate and Intangible Assets. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets or liabilities. The following table reflects the standard depreciable lives typically used to compute depreciation and amortization. However, such depreciable lives may be different based on the estimated useful life of such assets or liabilities. Description Standard Depreciable Life Land Not depreciated Building 40 years Building Improvements 5 - 40 years Tenant Improvements Shorter of lease term or useful life Leasing Costs Lease term In-place leases Lease term Above/Below-Market Leases Lease term Held for Sale Assets . The Company considers a property to be held for sale when it meets the criteria established under ASC 360, Property, Plant, and Equipment (See “Note 5 – Held for Sale/Disposed Assets”). Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. Cash and Cash Equivalents. Cash and cash equivalents consists of cash held in a major banking institution and other highly liquid short-term investments with original maturities of three months or less. Cash equivalents are generally invested in U.S. government securities, government agency securities or money market accounts. Restricted Cash. Restricted cash includes cash held in escrow in connection with property acquisitions and reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage loan obligations. 11 The following summarizes the reconciliation of cash and cash equivalents and restricted cash as presented in the accompanying consolidated statements of cash flows (dollars in thousands): For the Year Ended December 31, 2020 2019 2018 Beginning Cash and cash equivalents at beginning of year $ 110,082 $ 31,004 $ 35,710 Restricted cash 2,657 3,475 7,090 Cash and cash equivalents and restricted cash 112,739 34,479 42,800 Ending Cash and cash equivalents at end of year 107,180 110,082 31,004 Restricted cash 656 2,657 3,475 Cash and cash equivalents and restricted cash 107,836 112,739 34,479 Net (decrease) increase in cash and cash equivalents and restricted cash $ ( 4,903 ) $ 78,260 $ ( 8,321 ) Revenue Recognition. The Company records rental revenue from operating leases on a straight-line basis over the term of the leases and maintains an allowance for estimated losses that may result from the inability of its tenants to make required payments. If tenants fail to make contractual lease payments that are greater than the Company’s allowance for doubtful accounts, security deposits and letters of credit, then the Company may have to recognize additional doubtful account charges in future periods. The Company monitors the liquidity and creditworthiness of its tenants on an on-going basis by reviewing their financial condition periodically as appropriate. Each period the Company reviews its outstanding accounts receivable, including straight-line rents, for doubtful accounts and provides allowances as needed. The Company also records lease termination fees when a tenant has executed a definitive termination agreement with the Company and the payment of the termination fee is not subject to any conditions that must be met or waived before the fee is due to the Company. If a tenant remains in the leased space following the execution of a definitive termination agreement, the applicable termination will be deferred and recognized over the term of such tenant’s occupancy. Tenant expense reimbursement income includes payments and amounts due from tenants pursuant to their leases for real estate taxes, insurance and other recoverable property operating expenses and is recognized as revenues during the same period the related expenses are incurred. As of December 31, 2020 and 2019, approximately $ 32.5 million and $ 27.4 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately $ 0.9 million and $ 0.2 million for the years ended December 31, 2020 and 2019, respectively, were included as a component of other assets in the accompanying consolidated balance sheets. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU No. 2014-09"), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company's adoption. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, the guidance impacts revenue related to the sales of real estate, which is evaluated in conjunction with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets ("ASC 610-20") (see below). Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU 2014-09 (see above). Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company will derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. As a result of adoption of the standard, there was no material impact to the Company’s consolidated financial statements. Deferred Financing Costs. Costs incurred in connection with financings are capitalized and amortized to interest expense using the effective interest method over the term of the related loan. Deferred financing costs associated with the Company's revolving credit facility are classified as an asset and deferred financing costs associated with debt liabilities are reported as a direct deduction from the carrying amount of the debt liability in the accompanying consolidated balance sheets. Deferred 12 financing costs related to the revolving credit facility and debt liabilities are shown at cost, net of accumulated amortization in the aggregate of approximately $ 9.4 million and $ 8.3 million as of December 31, 2020 and 2019, respectively. Income Taxes. The Company elected to be taxed as a REIT under the Code and operates as such beginning with its taxable year ended December 31, 2010. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its stockholders. If it fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the IRS grants it relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes it is organized and operates in such a manner as to qualify for treatment as a REIT. ASC 740-10, Income Taxes, (“ASC 740-10”), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740-10 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold are recorded as a tax expense in the current year. As of December 31, 2020 and 2019, the Company did no t have any unrecognized tax benefits and does not believe that there will be any material changes in unrecognized tax positions over the next 12 months. The Company’s tax returns are subject to examination by federal, state and local tax jurisdictions beginning with the 2010 calendar year. Stock-Based Compensation and Other Long-Term Incentive Compensation. The Company follows the provisions of ASC 718, Compensation-Stock Compensation, to account for its stock-based compensation plan, which requires that the compensation cost relating to stock-based payment transactions be recognized in the financial statements and that the cost be measured on the fair value of the equity or liability instruments issued. The Company's 2019 Equity Incentive Plan (the "2019 Plan") provides for the grant of restricted stock awards, performance share awards, unrestricted shares or any combination of the foregoing. Stock-based compensation is recognized as a general and administrative expense in the accompanying consolidated statements of operations and measured at the fair value of the award on the date of grant. The Company estimates the forfeiture rate based on historical experience as well as expected behavior. The amount of the expense may be subject to adjustment in future periods depending on the specific characteristics of the stock-based award. In addition, the Company has awarded long-term incentive target awards (the “Performance Share awards”) under its Amended and Restated Long-Term Incentive Plan (as amended and restated the "Amended LTIP"), which the Company amended and restated on January 8, 2019, to its executives that may be payable in shares of the Company’s common stock after the conclusion of each pre-established performance measurement period, which is generally three years. The amount that may be earned is variable depending on the relative total shareholder return of the Company’s common stock as compared to the total shareholder return of the MSCI U.S. REIT Index (RMS) and the FTSE Nareit Equity Industrial Index over the pre-established performance measurement period. Under the Amended LTIP, each participant’s Performance Share award granted on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period. For Performance Share awards granted prior to January 1, 2019, the Company estimates the fair value of the Performance Share awards using a Monte Carlo simulation model on the date of grant and at each reporting period. The Performance Share awards granted prior to January 1, 2019 are recognized as compensation expense over the requisite performance period based on the fair value of the Performance Share awards at the balance sheet date, which varies quarter to quarter based on the Company’s relative share price performance, and are included as a component of Performance Share awards payable in the accompanying consolidated balance sheets. Use of Derivative Financial Instruments. ASC 815, Derivatives and Hedging (See “Note 9 – Derivative Financial Instruments”) , provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why the Company uses derivative instruments, (b) how the Company accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments. 13 The Company records all derivatives on the accompanying consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. 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. 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. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. Fair Value of Financial Instruments . ASC 820, Fair Value Measurements and Disclosures (See “Note 10 – Fair Value Measurements”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides guidance for using fair value to measure financial assets and liabilities. ASC 820 requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3). New Accounting Standards. ASU No. 2016-02 requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) a right-of-use asset (“ROU asset”), which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU No. 2016-02 also requires lessees to classify leases as either a finance or operating lease based on whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification is used to evaluate whether the lease expense should be recognized based on an effective interest method as a finance lease or on a straight-line basis over the term of the lease as an operating lease. The Company is the lessee of one office space, which was classified as an operating lease under Topic 840. As the Company elected the package of practical expedients as described above, the classification of existing leases was not reassessed and as such, this lease continues to be accounted for as an operating lease. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements (“ASU No. 2018-11”), which provides lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met. Upon adoption of ASU No. 2016-02, the Company adopted this practical expedient, specifically related to its tenant reimbursements which would otherwise be accounted for under the new revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements as 1) the timing and pattern of transfer of the nonlease components and associated lease components are the same and 2) the non-lease component is not the predominant component in the arrangement. In addition, ASU No. 2018-11 provides an additional optional transition method to allow entities to apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease accounting standard will continue to be reported under the current lease accounting standards of Topic 840. The Company adopted this transition method upon adoption of ASU No. 2016-02 on January 1, 2019. There was no cumulative-effect adjustment to the opening balance of retained earnings upon adoption. In December 2018, the FASB issued ASU No. 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU No. 2018-20”), which permits lessors, as an accounting policy election, to not evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs and instead to account for these costs as if they were lessee costs. In addition, ASU No. 2018-20 requires lessors to 1) exclude lessor costs paid directly by lessees to third parties on the lessor’s behalf from variable payments and 2) include lessor costs that are reimbursed by the lessee in the measurement of variable lease revenue and the associated expense. The amendments also clarify that lessors are required to allocate the variable payments to the lease and non-lease components and follow the recognition guidance in Topic 842 for the lease component and other applicable guidance, such as ASU No. 2014-09, for the non-lease component. As a result of the adoption of ASU No. 2016-02, ASU No. 2018-11, and ASC No. 2018-20, there was no material impact to the Company’s consolidated financial statements as a lessor or lessee. In accordance with the guidance, the Company has combined rental revenues and tenant expense reimbursements on the Company’s consolidated statements of operations. The Company 14 does not currently capitalize internal leasing costs. In addition, on January 1, 2019, the Company recognized a lease liability of approximately $ 0.9 million and a related ROU asset of approximately $ 0.8 million on its consolidated balance sheets, based on the present value of lease payments for the remaining term of the Company’s corporate office lease, which was approximately 3.5 years as of the adoption date. As the rate implicit in the lease was not readily determinable, the discount rate applied to measure the lease liability and ROU asset was based on the Company’s incremental borrowing rate of 2.7 % as of the adoption date. The lease liability is included as a component of accounts payable and other liabilities and the ROU asset is included as a component of other assets in the accompanying consolidated balance sheets. All operating lease expense is recognized on a straight-line basis over the lease term. As of December 31, 2020, the lease liability was approximately $ 0.4 million and the ROU asset was approximately $ 0.4 million. Segment Disclosure. ASC 280, Segment Reporting , establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate are geographically diversified and the chief operating decision makers evaluate operating performance on an individual asset level. As each of the Company’s assets has similar economic characteristics, the assets have been aggregated into one reportable segment. Note 3. Concentration of Credit Risk Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company may maintain deposits in federally insured financial institutions in excess of federally insured limits. However, the Company’s management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. As of December 31, 2020, the Company owned 62 buildings aggregating approximately 3.6 million square feet and nine improved land parcels consisting of approximately 48.6 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately 29.5 % of its annualized base rent. Such annualized base rent percentages are based on contractual base rent from leases in effect as of December 31, 2020, excluding any partial or full rent abatements. Other real estate companies compete with the Company in its real estate markets. This results in competition for tenants to occupy space. The existence of competing properties could have a material impact on the Company’s ability to lease space and on the level of rent that can be achieved. The Company had no tenants that accounted for greater than 10% of its rental revenues for the years ended December 31, 2020, 2019 and 2018. Note 4. Investments in Real Estate During the year ended December 31, 2020, the Company acquired six industrial buildings containing approximately 0.2 million square feet and five improved land parcels containing approximately 12.0 acres. The total aggregate initial investment, including acquisition costs, was approximately $ 100.4 million, of which $ 78.8 million was recorded to land, $ 17.0 million to buildings and improvements and $ 4.6 million to intangible assets. Additionally, the Company assumed $ 2.1 million in intangible liabilities. The following table sets forth the wholly-owned industrial properties the Company acquired during the year ended December 31, 2020: 15 Property Name Location Acquisition Date Number of Buildings Square Feet Purchase Price (in thousands) 1 Old Bayshore 2 San Jose, CA March 12, 2020 — — $ 11,784 Gladwick Rancho Dominguez, CA March 12, 2020 1 65,670 17,950 84th Kent 3 Kent, WA April 17, 2020 — — 4,500 Hudson Seattle, WA May 31, 2020 1 13,000 5,611 Starlite Street South San Francisco, CA July 10, 2020 1 22,275 6,300 Aviation Blvd 4 Inglewood, CA October 26, 2020 — — 10,000 Porter Street Los Angeles, CA November 5, 2020 1 13,000 4,400 SE 32nd Street Bellevue, WA November 6, 2020 1 39,000 11,737 Maple Street 5 Rancho Dominguez, CA December 5, 2020 — — 9,750 East Marginal 6 Tukwila, WA December 30, 2020 — — 6,625 McLaren Irvine, CA December 30, 2020 1 11,348 8,000 Total 6 163,794 $ 96,657 1 The total aggregate investment was approximately $ 100.4 million, including $ 1.6 million in closing costs and acquisition costs. Additionally, the Company assumed $ 2.1 million in intangible liabilities. 2 An improved land parcel containing approximately 2.7 acres. 3 Also includes an improved land parcel containing approximately 2.8 acres. 4 An improved land parcel containing approximately 1.9 acres. 5 An improved land parcel containing approximately 2.5 acres. 6 An improved land parcel containing approximately 2.1 acres. The Company recorded revenues and net income for the year ended December 31, 2020 of approximately $ 2.4 million and $ 1.1 million, respectively, related to the 2020 acquisitions. During the year ended December 31, 2019, the Company acquired 17 industrial buildings containing approximately 0.7 million square feet and four improved land parcels containing approximately 22.6 acres. The total aggregate initial investment, including acquisition costs, was approximately $ 289.6 million, of which $ 224.1 million was recorded to land, $ 53.9 million to buildings and improvements and $ 11.6 million to intangible assets. Additionally, the Company assumed $ 10.0 million in intangible liabilities. As of December 31, 2020, the Company 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. During the year ended December 31, 2020, the Company completed redevelopment of its Kent 192 property in Kent, Washington and 6th Avenue South property in Seattle, Washington, totaling approximately 0.3 million square feet. The total investment was approximately $ 49.8 million. The Company capitalized interest associated with redevelopment and expansion activities of approximately $ 1.6 million, $ 3.2 million and $ 2.5 million, respectively, during the years ended December 31, 2020, 2019 and 2018. The following table sets forth the wholly-owned industrial properties the Company acquired during the year ended December 31, 2019: 16 Property Name Location Acquisition Date Number of Buildings Square Feet Purchase Price (in thousands) 1 49th Street Queens, NY Februrary 12, 2019 1 19,000 $ 24,017 81 N Hackensack 2 Kearny, NJ March 8, 2019 — — 25,000 48 3rd and 286 Central 3 Kearny, NJ March 29, 2019 1 28,124 14,085 Minnesota and Tennessee San Francisco, CA May 28, 2019 2 119,089 47,775 51 Kero 4 Carlstadt, NJ August 7, 2019 — — 4,025 Anderson Los Angeles, CA August 19, 2019 5 53,016 18,100 Auburn 400 Auburn, WA August 21, 2019 1 70,345 9,450 Morgan Brooklyn, NY August 29, 2019 2 195,598 80,500 20th Street Oakland, CA August 30, 2019 1 92,884 23,752 Slauson Santa Fe Springs, CA August 30, 2019 2 29,927 5,331 East Marginal 5 Seattle, WA November 15, 2019 — — 2,850 Whelan East Rutherford, NJ December 13, 2019 1 50,305 12,000 917 Valley Puyallup, WA December 19, 2019 1 40,816 6,725 Total 17 699,104 $ 273,610 1 The total aggregate investment was approximately $ 289.6 million, including $ 6.0 million in closing costs and acquisition costs. Additionally, the Company assumed $ 10.0 million in intangible liabilities. 2 An improved land parcel containing approximately 16.8 acres. 3 Also includes an improved land parcel containing approximately 2.9 acres. 4 An improved land parcel containing approximately 2.0 acres. 5 An improved land parcel containing approximately 0.9 acres. The Company recorded revenues and net income for the year ended December 31, 2019 of approximately $ 7.6 million and $ 3.0 million, respectively, related to the 2019 acquisitions. The above assets and liabilities were recorded at fair value, which uses Level 3 inputs. The properties were acquired from unrelated third parties using existing cash on hand, proceeds from property sales, issuance of common stock and borrowings on the revolving credit facility. Note 5. Held for Sale/Disposed Assets The Company considers a property to be held for sale when it meets the criteria established under ASC 360, Property, Plant, and Equipment . Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. As of December 31, 2020, the Company did no t have any properties held for sale. During the year ended December 31, 2020, the Company sold three properties located in the Washington, D.C. market for a total aggregate sales price of approximately $ 51.3 million, resulting in a gain of approximately $ 17.8 million, and one property located in the Miami market for a sales price of approximately $ 22.2 million, resulting in a gain of approximately $ 9.0 million. During the year ended December 31, 2019, the Company sold one property in the Los Angeles market for a sales price of approximately $ 12.4 million, resulting in a gain of approximately $ 4.5 million, one redevelopment property in the Miami market for a sales price of approximately $ 14.0 million, resulting in a gain of approximately $ 1.8 million, and two properties located in the Washington, D.C. market for an aggregate sales price of approximately $ 22.5 million, resulting in an aggregate gain of approximately $ 3.1 million. Note 6. Senior Secured Loan The Company had a Senior Secured Loan outstanding to a borrower that bore interest at a fixed annual interest rate of 8.0 % and was fully repaid in May 2020. The Senior Secured Loan was secured by a portfolio of six improved land parcels located primarily in Newark, New Jersey. As of December 31, 2020 and December 31, 2019, there was approximately $ 0 and $ 15.9 million, respectively, net of deferred loan fees of approximately $ 0 and $ 0.1 million, respectively, outstanding on the Senior Secured Loan and approximately $ 0 and $ 0.3 million, respectively, of interest receivable outstanding on the Senior Secured Loan. Interest receivable is included as a component of other assets in the accompanying consolidated balance sheets. 17 Note 7. Debt As of December 31, 2020, the Company had $ 50.0 million of senior unsecured notes that mature in September 2022, $ 100.0 million of senior unsecured notes that mature in July 2024, $ 50.0 million of senior unsecured notes that mature in July 2026, $ 50.0 million of senior unsecured notes that mature in October 2027 and $ 100.0 million of senior unsecured notes that mature in December 2029 (collectively, the “Senior Unsecured Notes”), and a credit facility (the “Facility”), which consists of a $ 250.0 million unsecured revolving credit facility that matures in October 2022 and a $ 100.0 million term loan that matures in January 2022. As of both December 31, 2020 and 2019, there were no borrowings outstanding on the revolving credit facility and $ 100.0 million of borrowings outstanding on the term loan. As of December 31, 2020, the Company had one interest rate cap to hedge the variable cash flows associated with $ 50.0 million of its existing $ 100.0 million variable-rate term loan. As of December 31, 2019, the Company had two interest rate caps to hedge the variable cash flows associated with its existing $ 100.0 million variable-rate term loan. See “Note 9 - Derivative Financial Instruments” for more information regarding the Company’s interest rate caps. The aggregate amount of the Facility may be increased to a total of up to $ 600.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Facility are limited to the lesser of (i) the sum of the $ 250.0 million revolving credit facility and the $ 100.0 million term loan or (ii) 60.0 % of the value of the unencumbered properties. Interest on the Facility, including the term loan, is generally to be paid based upon, at the Company’s option, either (i) LIBOR plus the applicable LIBOR margin or (ii) the applicable base rate which is the greatest of the administrative agent’s prime rate, 0.50 % above the federal funds effective rate, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Facility plus 1.25 %. The applicable LIBOR margin will range from 1.05 % to 1.50 % ( 1.05 % as of December 31, 2020) for the revolving credit facility and 1.20 % to 1.70 % ( 1.20 % as of December 31, 2020) for the $ 100.0 million term loan that matures in January 2022, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value. The Facility requires quarterly payments of an annual facility fee in an amount ranging from 0.15 % to 0.30 % depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value. The Facility and the Senior Unsecured Notes are guaranteed by the Company and by substantially all of the current and to-be-formed subsidiaries of the Company that own an unencumbered property. The Facility and the Senior Unsecured Notes are unsecured by the Company’s properties or by interests in the subsidiaries that hold such properties. The Facility and the Senior Unsecured Notes include a series of financial and other covenants with which the Company must comply. The Company was in compliance with the covenants under the Facility and the Senior Unsecured Notes as of December 31, 2020 and 2019. As of December 31, 2020, the Company had one mortgage loan payable, net of deferred financing costs, totaling approximately $ 11.3 million, which bore interest at a weighted average fixed annual rate of 5.5 %. The mortgage loan payable is collateralized by one property, is non-recourse and requires monthly interest and principal payments until it matures in April 2021. As of December 31, 2019, the Company had two mortgage loans payable, net of deferred financing costs, totaling approximately $ 44.3 million, which bore interest at a weighted average fixed annual interest rate of 4.1 %. As of December 31, 2020 and December 31, 2019, the total gross book value of the properties securing the debt was approximately $ 32.7 million and $ 114.9 million, respectively. The scheduled principal payments of the Company’s debt as of December 31, 2020 were as follows (dollars in thousands): Credit Facility Term Loans Senior Unsecured Notes Mortgage Loans Payable Total Debt 2021 $ — $ — $ — $ 11,271 $ 11,271 2022 — 100,000 50,000 — 150,000 2023 — — — — — 2024 — — 100,000 — 100,000 2025 — — — — — Thereafter — — 200,000 — 200,000 Total Debt — 100,000 350,000 11,271 461,271 Deferred financing costs, net — ( 209 ) ( 1,937 ) ( 7 ) ( 2,153 ) Total Debt, net $ — $ 99,791 $ 348,063 $ 11,264 $ 459,118 Weighted Average Interest Rate n/a 1.3 % 3.8 % 5.5 % 3.3 % 18 Note 8. Leasing The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of December 31, 2020. The schedule does not reflect future rental revenues from the renewal or replacement of existing leases and excludes property operating expense reimbursements (dollars in thousands): 2021 $ 143,050 2022 129,114 2023 108,490 2024 89,365 2025 70,106 Thereafter 163,096 Total $ 703,221 Note 9. Derivative Financial Instruments Risk Management Objective of Using Derivatives The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of its known or expected cash payments principally related to its borrowings. Derivative Instruments The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps involve the receipt of variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price. The Company does not use derivatives for trading or speculative purposes. The Company requires that hedging derivative instruments be highly effective in reducing the risk exposure that they are designated to hedge. As a result, there is no significant ineffectiveness from any of its derivative activities. The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative that is designated and that qualifies as a cash flow hedge, the effective portion of the change in fair value of the derivative is initially recorded in accumulated other comprehensive income (loss) (“AOCI”). Amounts recorded in AOCI are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. As of December 31, 2020, the Company had one interest rate cap to hedge the variable cash flows associated with $ 50.0 million of its existing $ 100.0 million variable-rate term loan. The cap has a notional value of $ 50.0 million and will effectively cap the annual interest rate payable at 4.0 % plus 1.20 % to 1.70 %, depending on leverage, with respect to $ 50.0 million for the period from December 1, 2014 (effective date) to May 4, 2021. The Company previously had an additional interest rate cap with a notional value of $ 50.0 million (which expired on February 3, 2020) to hedge the variable cash flows associated with $ 50.0 million of its existing $ 100.0 million variable-rate term loan. The Company is required to make certain monthly variable rate payments on the term loan, while the applicable counterparty is obligated to make certain monthly floating rate payments based on LIBOR to the Company in the event LIBOR is greater than 4.0 %, referencing the same notional amount. 19 The Company records all derivative instruments on a gross basis in other assets on the accompanying consolidated balance sheets, and accordingly, there are no offsetting amounts that net assets against liabilities. The following table presents a summary of the Company’s derivative instruments designated as hedging instruments (dollars in thousands): Derivative Instrument Effective Date Maturity Date Interest Rate Strike Fair Value Notional Amount December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Assets: Interest Rate Cap 12/1/2014 5/4/2021 4.0 % $ — $ — $ 50,000 $ 50,000 Interest Rate Cap 9/1/2015 2/3/2020 4.0 % — — — 50,000 Total $ — $ — $ 50,000 $ 100,000 The effective portion of changes in the fair value of derivatives designated and qualified as cash flow hedges is recorded in AOCI and will be reclassified to interest expense in the period that the hedged forecasted transaction affects earnings on the Company’s variable rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings into interest expense. The following table presents the effect of the Company’s derivative financial instruments on its accompanying consolidated statements of operations for years ended December 31, 2020 and 2019 (dollars in thousands): For the Year Ended December 31, 2020 2019 Interest rate caps in cash flow hedging relationships: Amount of gain recognized in AOCI on derivatives (effective portion) $ — $ ( 26 ) Amount of gain reclassified from AOCI into interest expense (effective portion) $ 254 $ 350 The Company estimates that approximately $ 0.2 million will be reclassified from AOCI as an increase to interest expense over the next twelve months. Note 10. Fair Value Measurements ASC 820 requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3). Recurring Measurements – Interest Rate Contracts Fair Value of Interest Rate Caps Currently, the Company uses interest rate cap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. As of December 31, 2020 and 2019, the Company applied the provisions of this standard to the valuation of its interest rate caps. The following sets forth the Company’s financial instruments that are accounted for at fair value on a recurring basis as of December 31, 2020 and 2019 (dollars in thousands): Fair Value Measurement Using Total Fair Value Quoted Price in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Interest rate caps at: December 31, 2020 $ — $ — $ — $ — December 31, 2019 $ — $ — $ — $ — 20 Financial Instruments Disclosed at Fair Value As of December 31, 2020 and 2019, the fair values of cash and cash equivalents, accounts receivable, and accounts payable approximated their carrying values because of the short-term nature of these investments or liabilities based on Level 1 inputs. The fair values of the Company’s derivative instruments were evaluated based on Level 2 inputs. The fair values of the Company’s mortgage loans payable and Senior Unsecured Notes were estimated by calculating the present value of principal and interest payments, based on borrowing rates available to the Company, which are Level 2 inputs, adjusted with a credit spread, as applicable, and assuming the loans are outstanding through maturity. The fair value of the Company’s Facility approximated its carrying value because the variable interest rates approximate market borrowing rates available to the Company, which are Level 2 inputs. The fair value of the Company’s Senior Secured Loan approximated its carrying value because the interest rate approximates the market lending rate available to the borrower, which is a Level 2 input. The following table sets forth the carrying value and the estimated fair value of the Company’s Senior Secured Loan and debt as of December 31, 2020 and 2019 (dollars in thousands): Fair Value Measurement Using Total Fair Value Quoted Price in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Carrying Value Assets Senior Secured Loan at: December 31, 2020 $ — $ — $ — $ — $ — December 31, 2019 $ 15,915 $ — $ 15,915 $ — $ 15,858 Liabilities Debt at: December 31, 2020 $ 481,809 $ — $ 481,809 $ — $ 459,118 December 31, 2019 $ 503,028 $ — $ 503,028 $ — $ 491,575 Note 11. Stockholders’ Equity The Company’s authorized capital stock consists of 400,000,000 shares of common stock, $ 0.01 par value per share, and 100,000,000 shares of preferred stock, $ 0.01 par value per share. The Company has an at-the-market equity offering program (the “$ 300 Million ATM Program”) pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 300.0 million ($ 84.1 million remaining as of December 31, 2020) in amounts and at times to be determined by the Company from time to time. Prior to the implementation of the $ 300 Million ATM Program, the Company had a $ 250.0 million ATM program (the “$ 250 Million ATM Program”), which was substantially utilized as of May 2019 and is no longer active. Actual sales under the $ 300 Million ATM Program, if any, will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Company’s common stock, determinations by the Company of the appropriate sources of funding for the Company and potential uses of funding available to the Company. The Company intends to use the net proceeds from the offering of the shares under the $ 300 Million ATM Program, if any, for general corporate purposes, which may include future acquisitions and repayment of indebtedness, including borrowings under the Facility. During the year ended December 31, 2020, the Company issued an aggregate of 1,197,597 shares of common stock at a weighted average offering price of $ 54.08 per share under the $ 300 Million ATM Program, resulting in net proceeds of approximately $ 63.8 million and paying total compensation to the applicable sales agents of approximately $ 0.9 million. During the year ended December 31, 2019, the Company issued an aggregate of 6,064,576 shares of common stock at a weighted average offering price of $ 45.85 per share under the $ 300 Million ATM Program and the $ 250 Million ATM Program, resulting in net proceeds of approximately $ 274.0 million and paying total compensation to the applicable sales agents of approximately $ 4.0 million. The Company has a share repurchase program authorizing the Company to repurchase up to 3,000,000 shares of its outstanding common stock from time to time through December 31, 2022 (extended from December 31, 2020 by the Company's Board of Directors on November 3, 2020). Purchases made pursuant to the program will be made in either the open market or in privately negotiated transactions as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market 21 conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. As of December 31, 2020, the Company has not repurchased any shares of its common stock pursuant to the share repurchase program. On April 30, 2019, the Company’s stockholders approved the 2019 Plan, which replaces the Amended and Restated 2010 Equity Incentive Plan (the “2010 Plan”). The 2019 Plan permits the grant of restricted stock awards, performance share awards and unrestricted stock awards. The maximum number of shares of the Company’s common stock that may be issued under the 2019 Plan is 1,898,961 , which consists of (i) 1,510,079 shares initially reserved and available for issuance under the 2019 Plan and (ii) 388,882 shares underlying outstanding awards under the 2010 Plan, which if forfeited, canceled or otherwise terminated under the 2010 Plan shall be added to the shares available for issuance under the 2019 Plan. No further awards will be made under the 2010 Plan. In connection with the annual meeting of stockholders on May 5, 2020, the Company granted a total of 11,190 shares of unrestricted common stock to its independent directors under the 2019 Plan with a grant date fair value per share of $ 53.62 . The grant date fair value of the unrestricted common stock was determined using the closing price of the Company’s common stock on the date of the grant. The Company recognized approximately $ 0.6 million in compensation costs for the year ended December 31, 2020 related to this issuance. In 2019, the Company established a Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) maintained for the benefit of select employees and members of the Company’s Board of Directors, in which certain of their cash and equity-based compensation may be deposited. Deferred Compensation Plan assets are held in a rabbi trust, which is subject to the claims of the Company’s creditors in the event of bankruptcy or insolvency. The shares held in the Deferred Compensation Plan are classified within stockholders’ equity in a manner similar to the manner in which treasury stock is classified. Subsequent changes in the fair value of the shares are not recognized. During the year ended December 31, 2020, 139,224 shares of common stock were deposited into the Deferred Compensation Plan. As of December 31, 2020, there were 1,898,961 shares of common stock authorized for issuance as restricted stock grants, unrestricted stock awards or Performance Share awards under the 2019 Plan, of which 1,376,906 were remaining and available for issuance. The grant date fair value per share of restricted stock awards issued during the period from February 16, 2010 (commencement of operations) to December 31, 2020 ranged from $ 14.20 to $ 60.83 . The fair value of the restricted stock that was granted during the year ended December 31, 2020 was approximately $ 4.7 million and the vesting period for the restricted stock is three to five years . As of December 31, 2020, the Company had approximately $ 7.9 million of total unrecognized compensation costs related to restricted stock issuances, which is expected to be recognized over a remaining weighted average period of approximately 3.7 years. The Company recognized compensation costs of approximately $ 2.6 million, $ 1.9 million and $ 1.9 million, respectively, for the years ended December 31, 2020, 2019 and 2018 related to the restricted stock issuances. The following is a summary of the total restricted shares granted to the Company’s executive officers and employees with the related weighted average grant date fair value share prices for the years ended December 31, 2020, 2019 and 2018. 22 Restricted Stock Activity: Shares Weighted Average Grant Date Fair Value Non-vested shares outstanding as of December 31, 2017 357,183 $ 21.01 Granted 53,915 34.63 Forfeited ( 11,830 ) 20.30 Vested ( 15,338 ) 20.21 Non-vested shares outstanding as of December 31, 2018 383,930 22.98 Granted 111,099 46.99 Forfeited ( 52,892 ) 31.02 Vested ( 15,367 ) 23.90 Non-vested shares outstanding as of December 31, 2019 426,770 28.20 Granted 78,041 60.11 Forfeited ( 5,146 ) 51.58 Vested ( 295,936 ) 21.07 Non-vested shares outstanding as of December 31, 2020 203,729 $ 50.19 The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of December 31, 2020 : Non-vested Shares Vesting Schedule Number of Shares 2021 13,336 2022 12,297 2023 37,247 2024 83,309 2025 57,540 Thereafter — Total Non-vested Shares 203,729 Long-Term Incentive Plan: As of December 31, 2020, there are three open performance measurement periods for the Performance Share awards: January 1, 2018 to December 31, 2020, January 1, 2019 to December 31, 2021 and January 1, 2020 to December 31, 2022. During the year ended December 31, 2020, the Company issued 135,494 shares of common stock at a price of $ 54.22 per share related to the Performance Share awards for the performance period from January 1, 2017 to December 31, 2019. The expense related to the open Performance Share awards granted prior to January 1, 2019 varies quarter to quarter based on the Company's relative share price performance. The following table summarizes certain information with respect to the Performance Share awards granted prior to January 1, 2019 (dollars in thousands): Fair Value Accrual Expense Maximum Potential Payout For the Year Ended December 31, Fair Value Performance Share Period December 31, 2020 December 31, 2020 2020 2019 2018 January 1, 2018 - December 31, 2020 $ 7,482 $ 7,482 $ 7,482 $ 3,138 $ 3,208 $ 1,135 January 1, 2017 - December 31, 2019 — — — — 3,217 2,540 January 1, 2016 - December 31, 2018 — — — — — 3,388 Total $ 7,482 $ 7,482 $ 7,482 $ 3,138 $ 6,425 $ 7,063 23 Under the Amended LTIP, which the Company amended and restated on January 8, 2019, each participant’s Performance Share target award for target awards granted on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period. The following table summarizes certain information with respect to the Performance Share awards granted on or after January 1, 2019 (dollars in thousands): Expense For the Year Ended December 31, Performance Share Period Fair Value on Date of Grant 2020 2019 2018 January 1, 2019 - December 31, 2021 $ 4,829 $ 1,610 $ 1,610 $ — January 1, 2020 - December 31, 2022 5,572 1,857 — — Total $ 10,401 $ 3,467 $ 1,610 $ — Dividends: The following table sets forth the cash dividends paid or payable per share during the years ended December 31, 2020 and 2019: For the Three Months Ended Security Dividend per Share Declaration Date Record Date Date Paid March 31, 2020 Common stock $ 0.27 February 05, 2020 March 27, 2020 April 10, 2020 June 30, 2020 Common stock $ 0.27 May 05, 2020 June 30, 2020 July 14, 2020 September 30, 2020 Common stock $ 0.29 August 04, 2020 October 02, 2020 October 16, 2020 December 31, 2020 Common stock $ 0.29 November 03, 2020 December 15, 2020 January 05, 2021 For the Three Months Ended Security Dividend per Share Declaration Date Record Date Date Paid March 31, 2019 Common stock $ 0.24 February 05, 2019 March 29, 2019 April 12, 2019 June 30, 2019 Common stock $ 0.24 April 30, 2019 July 05, 2019 July 19, 2019 September 30, 2019 Common stock $ 0.27 July 26, 2019 October 04, 2019 October 18, 2019 December 31, 2019 Common stock $ 0.27 October 29, 2019 December 31, 2019 January 14, 2020 Note 12. Net Income (Loss) Per Share Pursuant to ASC 260-10-45, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities , unvested share-based payment awards that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing earnings per share allocates earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s non-vested shares of restricted stock are considered participating securities since these share-based awards contain non-forfeitable rights to dividends irrespective of whether the awards ultimately vest or expire. The Company had no anti-dilutive securities or dilutive restricted stock awards outstanding for the years ended December 31, 2020, 2019 and 2018. In accordance with the Company’s policies of determining whether instruments granted in share-based payment transactions are participating securities and accounting for earnings per share, the net income (loss) per common share is adjusted for earnings distributed through declared dividends (if any) and allocated to all participating securities (weighted average common shares outstanding and unvested restricted shares outstanding) under the two-class method. Under this method, allocations were made to 341,673 , 402,380 and 368,912 of weighted average unvested restricted shares outstanding for the years ended December 31, 2020, 2019 and 2018, respectively. 24 Performance Share awards which may be payable in shares of the Company’s common stock after the conclusion of each pre-established performance measurement period are included as contingently issuable shares in the calculation of diluted weighted average common shares of stock outstanding assuming the reporting period is the end of the measurement period, and the effect is dilutive. Diluted shares related to the Performance Share awards were 407,139 and 294,570 for the years ended December 31, 2020 and 2019, respectively. Note 13. Commitments and Contingencies Litigation . The Company is not involved in any material litigation nor, to its knowledge, is any material litigation threatened against it. In the normal course of business, from time to time, the Company may be involved in legal actions relating to the ownership and operations of its properties. Management does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material effect on the consolidated financial position, results of operations or cash flows of the Company. Environmental Matters. The industrial properties that the Company owns and will acquire are subject to various federal, state and local environmental laws. Under these laws, courts and government agencies have the authority to require the Company, as owner of a contaminated property, to clean up the property, even if it did not know of or was not responsible for the contamination. These laws also apply to persons who owned a property at the time it became contaminated, and therefore it is possible the Company could incur these costs even after the Company sells some of the properties it acquires. In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner’s ability to borrow using the property as collateral or to sell the property. Under applicable environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, pay for the clean-up of that facility if it becomes contaminated and threatens human health or the environment. Furthermore, various court decisions have established that third parties may recover damages for injury caused by property contamination. For instance, a person exposed to asbestos at one of the Company’s properties may seek to recover damages if he or she suffers injury from the asbestos. Lastly, some of these environmental laws restrict the use of a property or place conditions on various activities. An example would be laws that require a business using chemicals to manage them carefully and to notify local officials that the chemicals are being used. The Company could be responsible for any of the costs discussed above. The costs to clean up a contaminated property, to defend against a claim, or to comply with environmental laws could be material and could adversely affect the funds available for distribution to its stockholders. The Company generally obtains “Phase I environmental site assessments”, or ESAs, on each property prior to acquiring it. However, these ESAs may not reveal all environmental costs that might have a material adverse effect on the Company’s business, assets, results of operations or liquidity and may not identify all potential environmental liabilities. The Company utilizes local third-party property managers for day-to-day property management and will rely on these third parties to operate its industrial properties in compliance with applicable federal, state and local environmental laws in their daily operation of the respective properties and to promptly notify the Company of any environmental contaminations or similar issues. As a result, the Company may become subject to material environmental liabilities of which it is unaware. The Company can make no assurances that (1) future laws or regulations will not impose material environmental liabilities on it, or (2) the environmental condition of the Company’s industrial properties will not be affected by the condition of the properties in the vicinity of its industrial properties (such as the presence of leaking underground storage tanks) or by third parties unrelated to the Company. The Company was not aware of any significant or material exposures as of December 31, 2020 or 2019. General Uninsured Losses. The Company carries property and rental loss, liability and terrorism insurance. The Company believes that the policy terms, conditions, limits and deductibles are adequate and appropriate under the circumstances, given the relative risk of loss, the cost of such coverage and current industry practice. In addition, the Company’s properties are located, or may in the future be located, in areas that are subject to earthquake and flood activity. As a result, the Company has obtained, as applicable, limited earthquake and flood insurance on those properties. There are, however, certain types of extraordinary losses, such as those due to acts of war that may be either uninsurable or not economically insurable. Although the Company has obtained coverage for certain acts of terrorism, with policy specifications and insured limits that it believes are commercially reasonable, there can be no assurance that the Company will be able to collect under such policies. Should an uninsured loss occur, the Company could lose its investment in, and anticipated profits 25 and cash flows from, a property. The Company was not aware of any significant or material exposures as of December 31, 2020 or 2019. Contractual Commitments. As of February 9, 2021, the Company had outstanding contracts with third-party sellers to acquire six industrial properties for a total aggregate purchase price of approximately $ 123.8 million. There is no assurance that the Company will acquire the properties under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions. Note 14. Subsequent Events The COVID-19 pandemic, and mitigation measures put in place by governments to slow it, have caused widespread economic disruption. The Company is headquartered in San Francisco, California and its employees have been working remotely in compliance with shelter-in-place orders mandated across the San Francisco Bay Area on March 16, 2020. The Company utilizes local, third-party property managers, and they are generally under similar shelter-in-place orders and are working remotely. The Company has business continuity and communication plans that the Company believes, although there can be no assurance, allow the Company to operate and manage its portfolio effectively during such disruptions. The Company expects that even after shelter-in-place orders have been lifted, it will, for the intermediate term, employ lower density work arrangements consistent with social distancing and the Company’s business continuity plan. The Company continues to work with its customers who have been forced to close or otherwise limit operations or whose businesses have been adversely impacted during the COVID-19 pandemic to, on a case-by-case basis, provide rent deferments. Through February 8, 2021, the Company has granted rent deferrals to 62 tenants aggregating approximately 2.8 % of annualized base rent. No rent abatements were granted. For the 62 rent deferrals granted: • 17 tenants aggregating 0.3 % of annualized base rent ( 11.0 % of total deferrals) have completed their rent deferral period and have fully repaid the deferral amounts; • 31 tenants aggregating 2.1 % of annualized base rent ( 73.6 % of total deferrals) have not completed their rent deferral repayment period and are fulfilling the terms of their deferral agreements; and • 14 tenants aggregating 0.4 % of annualized base rent ( 15.4 % of total deferrals) have defaulted on their rent deferral repayments. On January 4, 2021, the Company repaid the $ 11.3 million mortgage loan payable that was to mature in April 2021 and bore interest at 5.5 %. On January 19, 2021, the Company acquired one building totaling approximately 16,000 square feet, located in Carlstadt, New Jersey, for a total purchase price of approximately $ 10.6 million. The property was acquired from an unrelated third-party using existing cash on hand. On February 9, 2021, the Company’s Board of Directors declared a cash dividend in the amount of $ 0.29 per share of its common stock payable on April 9, 2021 to the stockholders of record as of the close of business on March 26, 2021. 26 Terreno Realty Corporation Schedule III Real Estate Investments and Accumulated Depreciation As of December 31, 2020 (in thousands) Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount Carried at December 31, 2020 Property Name No. of Bldgs. Location Encumbrances Land Buildings & Improvements Land Buildings & Improvements Total Accumulated Depreciation Year Acquired Year Constructed Los Angeles 104th Street 1 Los Angeles, CA $ — $ 3,701 $ 976 $ — $ 3,701 $ 976 $ 4,677 $ 84 2017 1951 139th Street 2 Carson, CA — 21,236 15,783 2 21,236 15,785 37,021 1,262 2017 1965/2003 630 Glasgow 1 Inglewood, CA — 2,245 1,855 400 2,245 2,255 4,500 734 2011 1988 747 Glasgow 1 Inglewood, CA — 1,759 1,555 295 1,759 1,850 3,609 439 2014 1981 14611 Broadway 1 Gardena, CA — 4,757 1,243 1,020 4,757 2,263 7,020 965 2013 1962 19601 Hamilton 1 Torrance, CA — 7,409 4,072 895 7,409 4,967 12,376 1,348 2011 1985 709 Hindry 1 Inglewood, CA — 2,105 2,972 214 2,105 3,186 5,291 412 2016 1984 Acacia 1 Compton, CA — 5,143 1,985 139 5,143 2,124 7,267 228 2017 1972 Anderson 5 Los Angeles, CA — 17,095 1,271 1,268 17,095 2,539 19,634 76 2019 1912-1987 Aviation — Inglewood, CA — 9,544 498 — 9,544 498 10,042 5 2020 Dominguez — Los Angeles, CA — 11,370 1,535 3,082 11,370 4,617 15,987 339 2017 Garfield 5 Commerce, CA — 27,539 22,694 4,427 27,539 27,121 54,660 8,369 2012 2002 Gladwick 1 Rancho Dominguez, CA — 11,636 5,998 — 11,636 5,998 17,634 123 2020 2009 Hawthorne 8 Hawthorne, CA — 17,226 10,069 1,742 17,226 11,811 29,037 1,287 2017 1952/1986 Las Hermanas 1 Compton, CA — 3,330 751 806 3,330 1,557 4,887 325 2014 1970 Lynwood 3 Lynwood, CA — 43,885 — — 43,885 — 43,885 — 2017 1988 McLaren 1 Irvine, CA — 7,459 668 — 7,459 668 8,127 1 2020 1982 Manhattan Beach 1 Redondo Beach, CA — 7,874 5,641 787 7,874 6,428 14,302 1,576 2012 1963/1970 Maple — Rancho Dominguez, CA — 9,371 607 285 9,371 892 10,263 1 2020 1965 Porter 1 Los Angeles, CA — 3,791 399 — 3,791 399 4,190 1 2020 1911/1968 Shoemaker — Santa Fe Springs, CA — 4,759 1,099 25 4,759 1,124 5,883 81 2018 1986/1997 Slauson — Santa Fe Springs, CA — 4,679 697 694 4,679 1,391 6,070 51 2019 1967/1973 South Main 2 Carson, CA — 16,371 7,045 17,096 16,371 24,141 40,512 6,783 2012/2014 2016 South Main III 1 Gardena, CA — 11,521 12,467 — 11,521 12,467 23,988 1,183 2017 2016 Telegraph Springs 2 Santa Fe Springs, CA — 7,063 7,236 309 7,063 7,545 14,608 777 2017 2007 Vermont 1 Torrance, CA — 10,173 7,105 221 10,173 7,326 17,499 591 2018 1978 1215 Walnut 1 Compton, CA — 6,130 2,522 10 6,130 2,532 8,662 244 2017 1969/1990 Walnut II 1 Compton, CA — 6,097 5,069 955 6,097 6,024 12,121 402 2018 1969 Northern New Jersey/ New York City 1 Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount Carried at December 31, 2020 Property Name No. of Bldgs. Location Encumbrances Land Buildings & Improvements Land Buildings & Improvements Total Accumulated Depreciation Year Acquired Year Constructed 1 Dodge Drive 1 West Caldwell, NJ — 3,819 2,982 2,029 3,819 5,011 8,830 1,672 2013 1985 17 Madison 1 Fairfield, NJ — 974 1,647 543 974 2,190 3,164 685 2013 1979 20 Pulaski 1 Bayonne, NJ — 4,003 4,946 1,641 4,003 6,587 10,590 1,478 2014 1965 22 Madison 1 Fairfield, NJ — 1,365 1,607 1,039 1,365 2,646 4,011 296 2015 1979 48th 3rd and 286 Central 1 Kearny, NJ — 12,061 1,664 6 12,061 1,670 13,731 93 2019 1978/1983 49th Street 1 Queens, NY — 21,674 2,999 1,169 21,674 4,168 25,842 349 2019 1966 50 Kero 2 Carlstadt, NJ — 10,343 3,876 3,082 10,343 6,958 17,301 744 2017 1970 51 Kero — Carlstadt, NJ — 3,236 589 1 3,236 590 3,826 27 2019 1956-1966 74th North Bergen 1 North Bergen, NJ — 2,933 1,817 959 2,933 2,776 5,709 361 2016 1973 81 N. Hackensack — Kearny, NJ — 25,901 — — 25,901 — 25,901 — 2019 85 Doremus — Newark, NJ — 5,918 513 — 5,918 513 6,431 45 2018 341 Michele 1 Carlstadt, NJ — 2,372 4,798 960 2,372 5,758 8,130 1,202 2013 1973 422 Frelinghuysen — Newark, NJ — 16,728 — 6,781 16,728 6,781 23,509 676 2017 465 Meadow 1 Carlstadt, NJ — 713 1,618 263 713 1,881 2,594 455 2013 1972 550 Delancy 1 Newark, NJ — 9,230 4,855 2,010 9,230 6,865 16,095 1,547 2013 1987 620 Division 1 Elizabeth, NJ — 6,491 3,568 3,531 6,491 7,099 13,590 3,001 2011 1980 7777 West Side 1 North Bergen, NJ — 4,525 8,856 — 4,525 8,856 13,381 844 2017 1967 900 Hart 1 Piscataway, NJ — 3,202 3,866 1,301 3,202 5,167 8,369 1,121 2014 1983 901 North — Elizabeth, NJ — 8,035 913 829 8,035 1,742 9,777 455 2016 2016 Avenue A 4 Carlstadt, NJ — 7,516 4,660 723 7,516 5,383 12,899 742 2017 1951/1957 Belleville 1 Kearny, NJ 11,271 12,845 18,041 1,808 12,845 19,849 32,694 4,476 2011 2006 Commerce 1 Carlstadt, NJ — 1,656 1,544 128 1,656 1,672 3,328 105 2018 1969 Dell 1 Carlstadt, NJ — 6,641 771 548 6,641 1,319 7,960 314 2011 1972 Ethel 2 Piscataway, NJ — 2,748 3,801 1,641 2,748 5,442 8,190 1,394 2013 1981/1984 Interstate 2 South Brunswick, NJ — 13,686 12,135 14,625 13,686 26,760 40,446 6,523 2010/2013 1999/2014 JFK Airgate 4 Queens, NY — 18,282 32,933 5,252 18,282 38,185 56,467 9,210 2013 1986/1991 Manor 1 East Rutherford, NJ — 4,076 5,262 1,709 4,076 6,971 11,047 1,112 2015 1968 Melanie Lane 3 East Hanover, NJ — 5,931 13,178 3,098 5,931 16,276 22,207 3,944 2013 1980/1998 Middlebrook 18 Bound Brook, NJ — 16,442 10,241 13,038 16,442 23,279 39,721 8,927 2010 1958/1976 Morgan 2 Brooklyn, NY — 71,051 10,888 956 71,051 11,844 82,895 442 2019 1960/1980 & 1967 New Dutch 1 Fairfield, NJ — 4,773 2,004 — 4,773 2,004 6,777 238 2017 1976 Paterson Plank 1 Carlstadt, NJ — 4,127 455 519 4,127 974 5,101 118 2016 1998 Schoolhouse 1 Somerset, NJ — 2,375 5,705 425 2,375 6,130 8,505 800 2016 2009 Stockton — Newark, NJ — 12,327 1,282 222 12,327 1,504 13,831 359 2017 Terminal Way 2 Avenel, NJ — 3,537 3,598 926 3,537 4,524 8,061 623 2014 1950/1968 Whelan 1 East Rutherford, NJ — 6,366 5,704 473 6,366 6,177 12,543 164 2019 2005 Wilson 1 Newark, NJ — 2,016 484 813 2,016 1,297 3,313 311 2016 1970 2 Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount Carried at December 31, 2020 Property Name No. of Bldgs. Location Encumbrances Land Buildings & Improvements Land Buildings & Improvements Total Accumulated Depreciation Year Acquired Year Constructed Woodside 1 Queens, NY — 23,987 3,796 3,972 23,987 7,768 31,755 652 2018 2018 San Francisco Bay Area 20th Street 1 Oakland, CA — 18,092 6,730 1,420 18,092 8,150 26,242 347 2019 1970 & 2003 238/242 Lawrence 2 South San Francisco, CA — 6,674 2,655 1,616 6,674 4,271 10,945 1,626 2010 1986 240 Littlefield 1 South San Francisco, CA — 5,107 3,293 2,806 5,107 6,099 11,206 1,225 2013 2013 299 Lawrence 1 South San Francisco, CA — 1,352 1,198 548 1,352 1,746 3,098 600 2010 1968 631 Brennan 1 San Jose, CA — 1,932 2,245 559 1,932 2,804 4,736 804 2012 1975 Ahern 2 Union City, CA — 3,246 2,749 1,049 3,246 3,798 7,044 1,329 2010 1986 Ahern II 1 Union City, CA — 2,467 4,527 201 2,467 4,728 7,195 870 2015 1997 Burroughs 3 San Leandro, CA — 5,400 7,092 1,408 5,400 8,500 13,900 1,626 2014 1966 Caribbean 3 Sunnyvale, CA — 17,483 14,493 2,874 17,483 17,367 34,850 4,303 2012 1980/1981 Carlton Court 1 South San Francisco, CA — 2,036 1,475 162 2,036 1,637 3,673 483 2012 1981 Clawiter 1 Hayward, CA — 5,964 1,159 167 5,964 1,326 7,290 283 2011 1967 Hotchkiss 1 Fremont, CA — 4,163 3,152 1,071 4,163 4,223 8,386 458 2017 1997 Hotchkiss II 1 Fremont, CA — 3,042 3,081 355 3,042 3,436 6,478 203 2018 1997 Merced 4 San Leandro, CA — 25,621 9,318 2,678 25,621 11,996 37,617 825 2018 1958 Michele 1 South San Francisco, CA — 2,710 2,540 659 2,710 3,199 5,909 419 2016 1979 Minnesota and Tennessee 2 San Francisco, CA — 34,738 13,141 739 34,738 13,880 48,618 561 2019 1963 Old Bayshore — San Jose, CA — 10,244 1,609 — 10,244 1,609 11,853 44 2020 1987 San Clemente 1 Hayward, CA — 5,126 3,938 152 5,126 4,090 9,216 284 2018 1982 Starlite 1 South San Francisco, CA — 3,736 144 418 3,736 562 4,298 2 2020 1967 West 140th 2 San Leandro, CA — 9,578 6,297 3,745 9,578 10,042 19,620 1,363 2016 1959 Whitney 3 San Leandro, CA — 13,821 9,016 2,087 13,821 11,103 24,924 942 2018 1974 Wicks 1 San Leandro, CA — 2,224 298 — 2,224 298 2,522 24 2018 1976 Central Pacific Business Park I 3 Union City, CA — 8,468 14,165 1,081 8,468 15,246 23,714 2,930 2014 1989 Central Pacific Business Park II 4 Union City, CA — 13,642 23,658 4,937 13,642 28,595 42,237 6,100 2015 2015 Seattle 6th Ave South 1 Seattle, WA — 7,215 8,670 0 7,215 8,670 15,885 142 2020 1960 79 Ave South 1 Kent, WA — 1,267 1,503 767 1,267 2,270 3,537 531 2014 2000 84th Kent — Kent, WA — 4,552 136 256 4,552 392 4,944 12 2020 1963/2000 917 Valley 1 Puyallup, WA — 2,203 4,551 — 2,203 4,551 6,754 128 2019 2006 3401 Lind 1 Renton, WA — 2,999 6,707 1,417 2,999 8,124 11,123 1,148 2014 1984/2012 4225 2nd Avenue 1 Seattle, WA — 4,236 4,049 2,012 4,236 6,061 10,297 1,006 2015 1957 4930 3rd Avenue South 1 Seattle, WA — 3,984 2,424 817 3,984 3,241 7,225 507 2016 1964 12119 East Marginal — Tukwila, WA — 4,950 1,740 — 4,950 1,740 6,690 2 2020 1996 3 Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount Carried at December 31, 2020 Property Name No. of Bldgs. Location Encumbrances Land Buildings & Improvements Land Buildings & Improvements Total Accumulated Depreciation Year Acquired Year Constructed 17600 West Valley Highway 1 Tukwila, WA — 3,361 5,260 1,425 3,361 6,685 10,046 1,791 2012 1986 Auburn 400 1 Auburn, WA — 4,415 5,234 202 4,415 5,436 9,851 208 2019 2000 Auburn 1307 1 Auburn, WA — 4,253 5,034 337 4,253 5,371 9,624 1,000 2014 2002 Dawson 1 Seattle, WA — 3,902 278 331 3,902 609 4,511 103 2017 1964 Denver 1 Seattle, WA — 3,203 1,345 489 3,203 1,834 5,037 383 2016 1953 East Valley 1 Renton, WA — 2,693 2,959 53 2,693 3,012 5,705 205 2018 1991 East Marginal — Renton, WA — 2,618 380 114 2,618 494 3,112 22 2019 1991 Hanford 1 Seattle, WA — 3,821 2,250 542 3,821 2,792 6,613 300 2017 1952 Hudson 1 Seattle, WA — 4,471 912 — 4,471 912 5,383 16 2020 2006 Kent 188 1 Kent, WA — 3,251 4,719 1,248 3,251 5,967 9,218 1,937 2010 1979 Kent 190 1 Kent, WA — 4,560 5,561 395 4,560 5,956 10,516 1,067 2015 1992/1999 Kent 192 1 Kent, WA — 12,752 20,642 — 12,752 20,642 33,394 247 2020 2017 Kent 202 1 Kent, WA — 5,761 9,114 2,810 5,761 11,924 17,685 2,241 2015 1981 Kent 216 1 Kent, WA — 3,672 5,408 967 3,672 6,375 10,047 1,317 2014 1996 Kent Corporate Park 4 Kent, WA — 5,032 6,916 2,125 5,032 9,041 14,073 1,695 2015 1980/1981 Lucile 1 Seattle, WA — 4,498 3,504 1,342 4,498 4,846 9,344 816 2017 1976 Lund 1 Auburn, WA — 2,573 4,399 173 2,573 4,572 7,145 596 2016 1999 Olympic 1 Tukwila, WA — 1,499 1,431 536 1,499 1,967 3,466 554 2015 1978 SeaTac 8th Avenue 1 Burien, WA — 2,501 4,020 1,915 2,501 5,935 8,436 1,355 2013 1988 SE 32nd Street 1 Bellevue, WA — 9,059 2,081 — 9,059 2,081 11,140 7 2020 1982 SW 34th 1 Renton, WA — 2,912 3,289 498 2,912 3,787 6,699 775 2014 1996/2010 Valley Corporate 2 Kent, WA — 5,264 9,096 1,916 5,264 11,012 16,276 3,064 2011 1987 Miami 26th Street 1 Miami, FL — 3,444 4,558 1,178 3,444 5,736 9,180 1,178 2012 1973 48th Avenue 2 Miami Gardens, FL — 4,322 2,187 586 4,322 2,773 7,095 634 2011 1987 70th Avenue 1 Miami, FL — 1,434 2,333 198 1,434 2,531 3,965 674 2011 1999 70th Avenue II 1 Miami, FL — 2,152 3,418 553 2,152 3,971 6,123 557 2016 1969 70th Avenue III 1 Miami, FL — 2,543 3,167 690 2,543 3,857 6,400 454 2016 1974 70th Avenue IV 1 Miami, FL — 1,119 1,456 329 1,119 1,785 2,904 186 2017 1969 70th Avenue V 1 Miami, FL — 5,036 3,419 1,526 5,036 4,945 9,981 320 2017 1974 74th Avenue 1 Miami, FL — 2,327 3,538 646 2,327 4,184 6,511 531 2016 1986 78th Avenue 1 Doral, FL — 2,445 1,755 2,840 2,445 4,595 7,040 1,305 2012 1977 81st Street 2 Medley, FL — 2,938 5,242 1,315 2,938 6,557 9,495 1,301 2015 1996/2003 94th Avenue 1 Doral, FL — 3,000 3,580 352 3,000 3,932 6,932 365 2017 1989 107th Avenue 1 Medley, FL — 2,787 2,036 506 2,787 2,542 5,329 715 2013 2001 101st Road 1 Medley, FL — 2,647 3,258 468 2,647 3,726 6,373 959 2013 2012 131st Street 1 Medley, FL — 2,903 5,729 599 2,903 6,328 9,231 1,257 2014 1999 4 Initial Cost to Company Costs Capitalized Subsequent to Acquisition Gross Amount Carried at December 31, 2020 Property Name No. of Bldgs. Location Encumbrances Land Buildings & Improvements Land Buildings & Improvements Total Accumulated Depreciation Year Acquired Year Constructed 12950 SW South River 1 Medley, FL — 1,971 4,029 739 1,971 4,768 6,739 581 2016 2000 Americas Gateway 6 Doral, FL — 11,152 11,721 3,734 11,152 15,455 26,607 4,131 2013 1978/1982 Miami International Trade Center 4 Medley, FL — 5,063 10,958 1,694 5,063 12,652 17,715 2,059 2015 1996 Washington, D.C. 75th Ave 5 Landover, MD — 10,658 18,615 4,757 10,658 23,372 34,030 4,264 2014 1987/1990 2920 V Street 1 Washington, D.C. — 2,248 1,670 1,499 2,248 3,169 5,417 336 2017 1958 3601 Pennsy 1 Landover, MD — 2,331 4,375 1,219 2,331 5,594 7,925 1,192 2013 1996 4230 Forbes 1 Lanham, MD — 1,736 2,395 1,130 1,736 3,525 5,261 643 2013 2003 Business Parkway 1 Lanham, MD — 3,038 3,007 1 3,038 3,008 6,046 347 2016 2002 Hampton Overlook 3 Capitol Heights, MD — 4,602 7,521 993 4,602 8,514 13,116 1,081 2016 1989/1990 New Ridge — Hanover, MD — 5,689 1,567 443 5,689 2,010 7,699 247 2016 V Street 6 Washington, D.C. — 67,132 41,299 13,756 67,132 55,055 122,187 10,370 2015 1955/1963 Subtotal 222 11,271 1,138,235 735,826 206,859 1,138,233 942,688 2,080,921 169,708 Unamortized net deferred financing costs ( 7 ) Intangible assets 88,859 68,365 Total 222 $ 11,264 $ 1,138,235 $ 735,826 $ 206,859 $ 1,138,233 $ 942,688 $ 2,169,780 $ 238,073 5 Terreno Realty Corporation Schedule III Real Estate Investments and Accumulated Depreciation – (Continued) As of December 31, 2020 (in thousands) A summary of activity for real estate and accumulated depreciation for the years ended December 31, 2020 and 2019 is as follows: 2020 2019 Investment in Properties Balance at beginning of year $ 2,154,194 $ 1,845,776 Acquisition of properties 100,391 289,591 Disposition of properties ( 53,978 ) ( 41,560 ) Construction in progress 7,029 28,154 Improvements, net of write-offs 23,592 32,233 Balance at end of year $ 2,231,228 $ 2,154,194 2020 2019 Accumulated Depreciation Balance at beginning of year $ 208,279 $ 169,772 Amortization of lease intangible assets 6,702 10,123 Depreciation expense 37,020 33,630 Disposition of properties and write-offs ( 13,928 ) ( 5,246 ) Balance at end of year $ 238,073 $ 208,279 6 Exhibit Index Exhibit Number Exhibit Description 3.1 Articles of Amendment and Restatement of Registrant, as amended (previously filed as Exhibit 3.1 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 on January 6, 2010 and incorporated herein by reference). 3.2 Articles Supplementary for Registrant’s 7.75% Series A Cumulative Redeemable Preferred Stock (previously filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K on July 19, 2012 and incorporated herein by reference). 3.3 Articles Supplementary (previously filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K on February 9, 2017 and incorporated herein by reference). 3.4 Amended and Restated Bylaws of Registrant (previously filed as Exhibit 3.2 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 on January 6, 2010 and incorporated herein by reference). 3.5 First Amendment to Amended and Restated Bylaws of Registrant (previously filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K on February 9, 2017 and incorporated herein by reference). 4.1 Specimen Common Stock Certificate of Registrant (previously filed as Exhibit 4.1 to Amendment No. 3 to the Registrant’s Registration Statement on Form S-11 on January 15, 2010 and incorporated herein by reference). 4.2 Description of Securities of Registrant (previously filed as Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K on February 6, 2020 and incorporated herein by reference). 10.1+ Amended and Restated Severance Agreement between Registrant and W. Blake Baird, dated as of February 18, 2014 (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on February 19, 2014 and incorporated herein by reference). 10.2+ Amended and Restated Severance Agreement between Registrant and Michael A. Coke dated as of February 18, 2014 (previously filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K on February 19, 2014 and incorporated herein by reference). 10.3+ Severance Agreement between Registrant and Jaime J. Cannon dated as of February 18, 2014 (previously filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K on February 19, 2014 and incorporated herein by reference). 10.4+ Amended and Restated 2010 Equity Incentive Plan of Registrant (previously filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A on March 19, 2014 and incorporated herein by reference). 10.5+ Form of Restricted Stock Award Agreement for Executive Officers and Employees (previously filed as Exhibit 10.4 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 on January 6, 2010 and incorporated herein by reference). 10.6+ Form of Restricted Stock Award Agreement for Non-Employee Directors (previously filed as Exhibit 10.5 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 on January 6, 2010 and incorporated herein by reference). 7 10.7+ 2019 Equity Incentive Plan of Registrant (previously filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-8 on April 30, 2019 and incorporated herein by reference). 10.8+ Form of Restricted Stock Award Agreement for Executive Officers and Employees (previously filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 on April 30, 2019 and incorporated herein by reference). 10.9+ Form of Indemnification Agreement between Registrant and its Directors and Executive Officers (previously filed as Exhibit 10.6 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 on January 6, 2010 and incorporated herein by reference). 10.10+ Amended and Restated Long-Term Incentive Plan of Registrant effective as of January 1, 2019 (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on January 14, 2019 and incorporated by reference herein). 10.11+ Form of Award Notice under the Amended and Restated Long-Term Incentive Plan of Registrant (previously filed as Exhibit 10.9 to the Registrant's Annual Report on Form 10-K on February 6, 2019 and incorporated by reference herein). 10.12+ Amended and Restated Long-Term Incentive Plan of Registrant, effective as of January 1, 2014 (previously filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K on February 19, 2014 and incorporated by reference herein). 10.13+ Form of Award Notice under the Long-Term Incentive Plan of Registrant (previously filed as Exhibit 10.8 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 on January 6, 2010 and incorporated by reference herein). 10.14 Fifth Amended and Restated Senior Credit Agreement, dated as of October 19, 2018, among Terreno Realty LLC, KeyBank National Association, both individually as a “Lender” and as “Administrative Agent”, KeyBanc Capital Markets, as joint lead arranger, MUFG Union Bank, N.A., as co-syndication agent and joint lead arranger, PNC Bank, National Association, as co-syndication agent, PNC Capital Markets LLC, as joint lead arranger, Regions Bank, as co-syndication agent, Regions Capital Markets, as joint lead arranger and the several banks, financial institutions and other entities which may from time to time become parties as additional “Lenders” (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on October 25, 2018 and incorporated herein by reference). 10.15 Note Purchase Agreement, dated as of June 7, 2017, among the Registrant, Terreno Realty LLC and the institutions named in Schedule B thereto as purchasers (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on June 12, 2017 and incorporated herein by reference). 10.16 Note Purchase Agreement, dated as of June 2, 2016, among the Registrant, Terreno Realty LLC and the institutions named in Schedule B thereto as purchasers (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on June 7, 2016 and incorporated herein by reference). 10.17 Note Purchase Agreement, dated as of September 1, 2015, among the Registrant, Terreno Realty LLC and the institutions named in Schedule B thereto as purchasers (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on September 8, 2015 and incorporated herein by reference). 10.18 Note Purchase Agreement, dated as of September 12, 2019, among the Registrant, Terreno Realty LLC and the institutions named in Schedule B thereto as purchasers (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on September 18, 2019 and incorporated herein by reference). 8 10.19+ Severance Agreement between the Registrant and Andrew T. Burke, dated as of February 18, 2014 (previously filed as Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K on February 8, 2017 and incorporated herein by reference). 10.20+ Severance Agreement between the Registrant and John T. Meyer, dated as of February 18, 2014 (previously filed as Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K on February 8, 2017 and incorporated herein by reference). 10.21+ Deferred Compensation Plan of Registrant (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K on November 8, 2019 and incorporated herein by reference). 21* Subsidiaries of Registrant. 23* Consent of Independent Registered Public Accounting Firm. 24.1* Power of Attorney (included on the signature page to this Annual Report on Form 10-K). 31.1* Certification of Chief Executive Officer, pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Chief Financial Officer, pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.3* Certification of President, pursuant to Rules 13a-15(e) and 15d-15(e), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.3** Certification of President, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF* Inline XBRL Taxonomy Definition Linkbase Document 104* Cover Page Interactive Data File (formatted as inline XBRL and with applicable taxonomy extension information contained in Exhibits 101.*) * Filed herewith. 9 ** Furnished herewith. + Exhibit is a management contract or compensatory plan or arrangement. 10 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on February 10, 2021. Terreno Realty Corporation By: /s/ W. Blake Baird W. Blake Baird Chairman and Chief Executive Officer Power of Attorney We, the undersigned directors of Terreno Realty Corporation hereby severally constitute and appoint W. Blake Baird and Michael A. Coke, and each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us in our names in the capacities indicated below, all amendments to this report, and generally to do all things in our names and on our behalf in such capacities to enable Terreno Realty Corporation to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ W. Blake Baird W. Blake Baird Chairman, Chief Executive Officer and Director (principal executive officer) February 10, 2021 /s/ Michael A. Coke Michael A. Coke President and Director February 10, 2021 /s/ Jaime J. Cannon Jaime J. Cannon Executive Vice President and Chief Financial Officer (principal financial and accounting officer) February 10, 2021 /s/ Linda Assante Linda Assante Director February 10, 2021 /s/ LeRoy E. Carlson LeRoy E. Carlson Director February 10, 2021 /s/ David M. Lee David M. Lee Director February 10, 2021 /s/ Gabriela F. Parcella Gabriela F. Parcella Director February 10, 2021 /s/ Douglas M. Pasquale Douglas M. Pasquale Director February 10, 2021 /s/ Dennis Polk Dennis Polk Director February 10, 2021