What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2020-11-04 · 114 added, 242 removed, 423 unchanged (46% of the section changed)

3 unchanged sentences

(in thousands – except share and per share data)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Investments in real estate

8 unchanged sentences

Restricted cash 1,028 656

Senior secured loan, net — 15,858

Other assets, net 43,504 38,829

14 unchanged sentences

Common stock:

$ 0.01 par value, 400,000,000 shares authorized, and 68,233,344 and 67,252,787 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

$ 0.01 par value, 400,000,000 shares authorized, and 69,102,008 and 68,376,364 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively.

Additional paid-in capital

1,645,876 1,589,301

Common stock held in deferred compensation plan, 139,224 and 0 shares at September 30, 2020 and December 31, 2019, respectively

Common stock held in deferred compensation plan, 270,546 and 139,224 shares at March 31, 2021 and December 31, 2020, respectively

( 14,867 ) ( 7,546 )

Retained earnings 2,092 5,926

6 unchanged sentences

(in thousands – except share and per share data)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2020 2019 2020 2019

For the Three Months Ended March 31,

Rental revenues and tenant expense reimbursements $ 50,691 $ 45,116

9 unchanged sentences

Interest expense, including amortization ( 4,145 ) ( 4,006 )

Gain on sales of real estate investments 9,016 1,782 26,766 6,247

Total other income (expense) ( 3,909 ) ( 3,442 )

9 unchanged sentences

Terreno Realty Corporation

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

(in thousands)

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2020 2019 2020 2019

For the Three Months Ended March 31,

Net income $ 16,257 $ 12,856

Other comprehensive income (loss):

Other comprehensive income:

Cash flow hedge adjustment 106 73

4 unchanged sentences

(in thousands – except share data)

Nine months ended September 30, 2020:

Three months ended March 31, 2021:

Common Stock Additional

15 unchanged sentences

Balance as of March 31, 2021 69,102,008 $ 693 $ 1,645,876 270,546 $ ( 14,867 ) $ 2,092 $ ( 77 ) $ 1,633,717

Net income — — — — — 30,704 — 30,704

Issuance of common stock, net of issuance costs of $ 630

630,490 7 32,068 — — — — 32,075

Forfeiture of common stock related to employee awards ( 352 ) — — — — — — —

Stock-based compensation — — 2,197 — — — — 2,197

Common stock dividends ($ 0.27 per share)

— — — — — ( 18,478 ) — ( 18,478 )

Deposits to deferred compensation plan ( 3,730 ) — 200 3,730 ( 200 ) — — —

Other comprehensive income — — — — — — 46 46

Balance as of June 30, 2020 68,322,213 $ 684 $ 1,587,057 139,224 $ ( 7,546 ) $ 9,389 $ ( 318 ) $ 1,589,266

Net income — — — — — 22,722 — 22,722

Issuance of common stock, net of issuance costs of $ 70

8,250 — 424 — — — — 424

Forfeiture of common stock related to employee awards ( 4,794 ) — — — — — — —

Repurchase of common stock related to employee awards ( 149,865 ) — ( 9,597 ) — — — — ( 9,597 )

Issuance of restricted stock 57,540 — — — — — — —

Stock-based compensation — — 1,460 — — — — 1,460

Common stock dividends ($ 0.29 per share)

— — — — — ( 19,828 ) — ( 19,828 )

Other comprehensive income — — — — — — 50 50

Balance as of September 30, 2020 68,233,344 $ 684 $ 1,579,344 139,224 $ ( 7,546 ) $ 12,283 $ ( 268 ) $ 1,584,497

Nine months ended September 30, 2019:

Three months ended March 31, 2020:

Common Stock Additional

in Capital Accumulated

in Capital Common Shares Held in Deferred Compensation Plan Deferred Compensation Plan Accumulated

Other Comprehensive

10 unchanged sentences

— — — — — ( 18,314 ) — ( 18,314 )

Deposits to deferred compensation plan ( 135,494 ) — 7,346 135,494 ( 7,346 ) — — —

Other comprehensive income — — — — — — 73 73

Balance as of March 31, 2020 67,695,805 $ 677 $ 1,552,592 135,494 $ ( 7,346 ) $ ( 2,837 ) $ ( 364 ) $ 1,542,722

Net income — — — 10,379 — 10,379

Issuance of common stock, net of issuance costs of $ 1,718

2,386,470 24 106,958 — — 106,982

Forfeiture of common stock related to employee awards ( 19,651 ) — — — — —

Stock-based compensation — — 1,268 — — 1,268

Common stock dividends ($ 0.24 per share)

— — — ( 15,719 ) — ( 15,719 )

Other comprehensive income — — — — 92 92

Balance as of June 30, 2019 65,495,713 $ 656 $ 1,426,860 $ 9,268 $ ( 606 ) $ 1,436,178

Net income — — — 14,784 — 14,784

Issuance of common stock, net of issuance costs of $ 1,194

1,458,630 14 72,138 — — 72,152

Forfeiture of common stock related to employee awards ( 23,138 ) — — — — —

Issuance of restricted stock 80,805 — — — — —

Stock-based compensation — — 781 — — 781

Common stock dividends ($ 0.27 per share)

— — — ( 18,094 ) — ( 18,094 )

Other comprehensive income — — — — 85 85

Balance as of September 30, 2019 67,012,010 $ 670 $ 1,499,779 $ 5,958 $ ( 521 ) $ 1,505,886

The accompanying condensed notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Depreciation and amortization 11,376 11,100

Gain on sales of real estate investments ( 26,766 ) ( 6,247 )

Deferred financing cost amortization 393 367

7 unchanged sentences

Cash paid for property acquisitions ( 104,372 ) ( 30,081 )

Proceeds from sales of real estate investments, net 70,685 25,305

Additions to construction in progress ( 140 ) ( 2,709 )

1 unchanged sentence

Repayments on senior secured loan — 4,987

Net cash provided by (used in) investing activities 8,479 ( 236,662 )

Net cash used in investing activities ( 112,379 ) ( 36,194 )

CASH FLOWS FROM FINANCING ACTIVITIES

2 unchanged sentences

Repurchase of common stock related to employee awards ( 582 ) ( 240 )

Borrowings on credit facility — 17,000

Payments on credit facility — ( 36,000 )

Payments on mortgage loan payable ( 11,271 ) ( 32,732 )

Payment of deferred financing costs ( 10 ) —

Dividends paid to common stockholders ( 19,870 ) ( 18,158 )

Net cash (used in) provided by financing activities ( 42,572 ) 191,107

Net increase in cash and cash equivalents and restricted cash 43,275 22,936

Net cash provided by (used in) financing activities 8,793 ( 28,673 )

Net decrease in cash and cash equivalents and restricted cash ( 77,431 ) ( 42,709 )

Cash and cash equivalents and restricted cash at beginning of period 107,836 112,739

4 unchanged sentences

Accounts payable related to capital improvements 8,720 9,149

Non-cash repayment of senior secured loan — ( 39,085 )

Non-cash issuance of common stock to the deferred compensation plan ( 7,321 ) ( 7,346 )

2 unchanged sentences

Acquisition of properties $ 109,882 $ 30,617

Assumption of other assets and liabilities ( 797 ) ( 11,786 )

Acquisition and assumption of other assets and liabilities ( 5,510 ) ( 536 )

Net cash paid for property acquisitions $ 104,372 $ 30,081

5 unchanged sentences

All square feet, acres, occupancy and number of properties disclosed in these condensed notes to the consolidated financial statements are unaudited.

As of September 30, 2020, the Company owned 219 buildings aggregating approximately 13.1 million square feet, 22 improved land parcels consisting of approximately 85.0 acres and one property under redevelopment expected to contain approximately 0.2 million square feet upon completion.

As of March 31, 2021, the Company owned 228 buildings aggregating approximately 13.7 million square feet, 25 improved land parcels consisting of approximately 92.5 acres and two properties under redevelopment expected to contain approximately 0.3 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.

36 unchanged sentences

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 three or nine months ended September 30, 2020 or 2019.

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 .

Prior to the adoption of ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”) , the Company evaluated its senior secured loan (the “Senior Secured Loan”), which was classified as held-for-investment, for impairment quarterly.

If the Senior Secured Loan was considered to be impaired, the Company would record 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 was expected solely from the collateral.

Actual losses, if any, could differ significantly from the Company’s estimates.

The Senior Secured Loan was fully repaid in May 2020 and there were no impairment charges recorded to the carrying value of the Senior Secured Loan during both the three or nine months ended September 30, 2020 or 2019.

On January 1, 2020, the Company adopted ASC 326 on a prospective basis, which had no material impact to the Company's consolidated financial statements.

ASC 326 replaces the current “incurred loss” model with an “expected loss” model that requires consideration of a broader range of information used under the incurred losses model.

Under ASC 326, the Company is required to re-evaluate the expected loss of its loans portfolio at each balance sheet date.

For the three and nine months ended September 30, 2020, the Company had no allowances for loan losses.

There were no impairment charges recorded to the carrying values of the Company’s properties during the three months ended March 31, 2021 or 2020.

Property Acquisitions.

12 unchanged sentences

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 $ 1.3 million for both the three months ended September 30, 2020 and 2019, and approximately $ 4.1 million and $ 3.2 million, for the nine months ended September 30, 2020 and 2019, respectively.

The origination value of in-place leases is based on costs to execute similar leases, including

commissions and other related costs.

The total net impact to rental revenues due to the amortization of above and below-market leases was a net increase of approximately $ 1.4 million for both the three months ended March 31, 2021 and 2020.

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 September 30, 2020 is 8.1 years.

As of September 30, 2020 and December 31, 2019, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):

September 30, 2020 December 31, 2019

The remaining weighted average lease term related to these intangible assets and liabilities as of March 31, 2021 is 7.5 years.

As of March 31, 2021 and December 31, 2020, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):

March 31, 2021 December 31, 2020

Gross Accumulated

27 unchanged sentences

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 Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash and cash equivalents at beginning of period $ 107,180 $ 110,082

4 unchanged sentences

Cash and cash equivalents and restricted cash 30,405 70,030

Net increase in cash and cash equivalents and restricted cash $ 43,275 $ 22,936

Net decrease in cash and cash equivalents and restricted cash $ ( 77,431 ) $ ( 42,709 )

Revenue Recognition.

7 unchanged sentences

Consistent with the Financial Accounting Standards Board staff question-and-answer document released on April 10, 2020, the Company elected to account for lease concessions related to the effects of the novel coronavirus ("COVID-19") as though no lease modification was made in instances where total contractual lease payments over the term of the lease were unchanged.

Due to the effects of COVID-19, the future contractual lease payments of certain of the Company's tenants were not probable and as such, approximately $ 0.2 million and $ 1.1 million of straight-line rent receivables were reversed during the three and nine months ended September 30, 2020, respectively.

As of September 30, 2020 and December 31, 2019, approximately $ 28.1 million and $ 27.4 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately $ 1.3 million and $ 0.2 million as of September 30, 2020 and December 31, 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.

The Company elected to apply this standard only to contracts that were not completed as of January 1, 2018.

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 No.

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.

Due to the effects of COVID-19, the future contractual lease payments of certain of the Company's tenants were not probable and as such, approximately

$ 0.1 million and $ 0.5 million of straight-line rent receivables were reversed during the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021 and December 31, 2020, approximately $ 34.3 million and $ 32.5 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately $ 1.3 million and $ 0.9 million as of March 31, 2021 and December 31, 2020, respectively, were included as a component of other assets in the accompanying consolidated balance sheets.

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 financing costs related to the revolving credit facility and debt liabilities are shown at cost, net of accumulated amortization in the aggregate of approximately $ 9.1 million and $ 8.3 million as of September 30, 2020 and December 31, 2019, respectively.

Deferred financing costs associated with the Company’s revolving credit facility are classified as an asset, as a component of other assets in the accompanying consolidated balance sheets, 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 financing costs related to the revolving credit facility and debt liabilities are carried at cost, net of accumulated amortization in the aggregate of approximately $ 9.7 million and $ 9.4 million as of March 31, 2021 and December 31, 2020, respectively.

Income Taxes.

8 unchanged sentences

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 September 30, 2020 and December 31, 2019, the Company did not 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.

As of March 31, 2021 and December 31, 2020, the Company did not 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, which as of March 31, 2021 include years 2017 to 2020 for Federal purposes.

Stock-Based Compensation and Other Long-Term Incentive Compensation.

10 unchanged sentences

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.

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.

1 unchanged sentence

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.

(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.

18 unchanged sentences

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 September 30, 2020, the Company owned 62 buildings aggregating approximately 3.6 million square feet and nine land parcels consisting of approximately 48.8 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately 29.2 % of its annualized base rent.

Such annualized base rent percentages are based on contractual base rent from leases in effect as of September 30, 2020, excluding any partial or full rent abatements.

As of March 31, 2021, the Company owned 63 buildings aggregating approximately 3.6 million square feet and nine land parcels consisting of approximately 48.6 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately 28.3 % of its annualized base rent.

Such annualized base rent percentages are based on contractual base rent from leases in effect as of March 31, 2021, excluding any partial or full rent abatements.

Other real estate companies compete with the Company in its real estate markets.

1 unchanged sentence

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 tenant that accounted for greater than 10% of the Company's annualized base rent as of September 30, 2020.

The Company had no tenant that accounted for greater than 10% of the Company's annualized base rent as of March 31, 2021.

Investments in Real Estate

During the three months ended September 30, 2020, the Company acquired one industrial building containing approximately 22,000 square feet.

The total initial investment, including acquisition costs, was approximately $ 6.5 million, of which $ 3.7 million was recorded to land, $ 2.3 million to buildings and improvements, and $ 0.5 million to intangible assets.

Additionally, the Company assumed $ 0.1 million in intangible liabilities.

During the nine months ended September 30, 2020, the Company acquired three industrial buildings containing approximately 101,000 square feet and two improved land parcels containing approximately 5.5 acres.

The total aggregate initial investment,

including acquisition costs, was approximately $ 47.6 million, of which $ 34.8 million was recorded to land, $ 11.0 million to buildings and improvements, and $ 1.8 million to intangible assets.

Additionally, the Company assumed $ 0.7 million in intangible liabilities.

The Company recorded revenues and net income for the three months ended September 30, 2020 of approximately $ 0.8 million and $ 0.4 million, respectively, and recorded revenues and net income for the nine months ended September 30, 2020 of approximately $ 1.5 million and $ 0.7 million, respectively, related to the 2020 acquisitions.

During the three months ended September 30, 2019, the Company acquired 11 industrial buildings containing approximately 442,000 square feet and one improved land parcel containing approximately 2.0 acres.

The total aggregate initial investment, including acquisition costs, was approximately $ 148.3 million, of which $ 118.6 million was recorded to land, $ 25.4 million to buildings and improvements, and $ 4.3 million to intangible assets.

Additionally, the Company assumed $ 3.5 million in intangible liabilities.

During the nine months ended September 30, 2019, the Company acquired 15 industrial buildings containing approximately 608,000 square feet, and three improved land parcels containing approximately 21.7 acres.

The total aggregate initial investment, including acquisition costs, was approximately $ 267.7 million, of which $ 213.0 million was recorded to land, $ 43.2 million to buildings and improvements, and $ 11.5 million to intangible assets.

Additionally, the Company assumed $ 9.9 million in intangible liabilities.

The Company recorded revenues and net income for the three months ended September 30, 2019 of approximately $ 2.4 million and $ 0.9 million, respectively, and recorded revenues and net income for the nine months ended September 30, 2019 of approximately $ 3.8 million and $ 1.6 million, respectively, related to the 2019 acquisitions.

During the three months ended March 31, 2021, the Company acquired four industrial properties with a total initial investment, including acquisition costs, of approximately $ 109.9 million, of which $ 63.7 million was recorded to land, $ 41.8 million to buildings and improvements, and $ 4.4 million to intangible assets.

Additionally, the Company assumed $ 5.6 million in liabilities.

The Company recorded revenues and net income for the three months ended March 31, 2021 of approximately $ 0.5 million and $ 0.3 million, respectively, related to the 2021 acquisitions.

During the three months ended March 31, 2020, the Company acquired two industrial properties with a total aggregate initial investment, including acquisition costs, of approximately $ 30.6 million, of which $ 21.9 million was recorded to land, $ 7.6 million to buildings and improvements, and $ 1.1 million to intangible assets.

Additionally, the Company assumed $ 0.5 million in liabilities.

The Company recorded revenues and net income for the three months ended March 31, 2020 of approximately $ 0.1 million and $ 0.1 million, respectively, related to the 2020 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.

As of September 30, 2020, the Company had one property under redevelopment expected to contain approximately 0.2 million square feet upon completion with a total expected investment of approximately $ 63.3 million, including redevelopment costs, capitalized interest and other costs of approximately $ 61.2 million.

During the third quarter of 2020, the Company completed redevelopment of its Kent 192 property in Seattle, Washington, an approximately 0.2 million square foot redevelopment property.

The total investment was approximately $ 33.9 million.

The Company capitalized interest associated with redevelopment and expansion activities of approximately $ 0.4 million and $ 0.9 million, respectively, during the three months ended September 30, 2020 and 2019 and approximately $ 1.5 million and $ 2.5 million, respectively, during the nine months ended September 30, 2020 and 2019.

The properties were acquired from unrelated third parties using existing cash on hand, proceeds from property sales and issuance of common stock.

As of March 31, 2021, the Company had two properties under redevelopment expected to contain approximately 0.3 million square feet upon completion with a total expected investment of approximately $ 71.6 million, including redevelopment costs, capitalized interest and other costs of approximately $ 65.9 million.

The Company capitalized interest associated with redevelopment and expansion activities of approximately $ 0 and $ 0.7 million, respectively, during the three months ended March 31, 2021 and 2020 .

Held for Sale/Disposed Assets

1 unchanged sentence

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 September 30, 2020, the Company had no properties held for sale.

During the nine months ended September 30, 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 nine months ended September 30, 2019, the Company sold one property located in the Los Angeles market for a sales price of approximately $ 12.4 million, resulting in a gain of approximately $ 4.5 million and one property located in the Miami market for a sales price of approximately $ 14.0 million, resulting in a gain of $ 1.8 million.

As of March 31, 2021, the Company had no properties held for sale.

There were no properties sold during the three months ended March 31, 2021 or 2020.

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 %.

The Senior Senior Secured Loan was fully repaid in May 2020 and was secured by a portfolio of six improved land parcels located primarily in Newark, New Jersey.

As of September 30, 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.

As of September 30, 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, $ 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 September 30, 2020 and December 31, 2019, there were no borrowings outstanding on the revolving credit facility and $ 100.0 million of borrowings outstanding on the term loan.

As of September 30, 2020, the Company had one interest rate cap to hedge the variable cash flows associated with $ 50.0 million of its $ 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 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 March 31, 2021, 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 March 31, 2021 and December 31, 2020, there were no borrowings outstanding on the revolving credit facility and $ 100.0 million of borrowings outstanding on the term loan.

As of March 31, 2021 and December 31, 2020, the Company had one interest rate cap to hedge the variable cash flows associated with $ 50.0 million of its $ 100.0 million variable-rate term loan.

See “Note 9 - Derivative Financial Instruments” for more information regarding the Company’s interest rate cap.

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 $ 100.0 million term loan and the $ 250.0 million revolving credit facility, 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 September 30, 2020) for the revolving credit facility and 1.20 % to 1.70 % ( 1.20 % as of September 30, 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.

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 March 31, 2021) for the revolving credit facility and 1.20 % to 1.70 % ( 1.20 % as of March 31, 2021) 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.

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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 September 30, 2020 and December 31, 2019.

As of September 30, 2020, the Company had one mortgage loan payable, net of deferred financing costs, totaling approximately $ 11.4 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 September 30, 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 September 30, 2020 were as follows (dollars in thousands):

The Company was in compliance with the covenants under the Facility and the Senior Unsecured Notes as of March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2021, the Company fully repaid its $ 11.3 million mortgage loan payable.

As of December 31, 2020, this mortgage loan payable, net of deferred financing costs, totaled approximately $ 11.3 million, and bore interest at a weighted average fixed annual rate of 5.5 %.

The mortgage loan payable was collateralized by one property.

As of December 31, 2020, the total gross book value of the property securing the mortgage loan payable was approximately $ 32.7 million.

The scheduled principal payments of the Company’s debt as of March 31, 2021 were as follows (dollars in thousands):

Facility Term Loan Senior

Notes Mortgage

Payable Total Debt

Notes Total Debt

2021 (9 months) $ — $ — $ — $ —

1 unchanged sentence

2024 — — 100,000 100,000

2023 — — — — —

2024 — — 100,000 — 100,000

Thereafter — — 200,000 200,000

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Weighted average interest rate n/a 1.3 % 3.8 % 3.3 %

The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of September 30, 2020.

The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of March 31, 2021.

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):

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The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.

As of September 30, 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.

As of March 31, 2021 and 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 had a notional value of $ 50.0 million and effectively capped 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 was required to make certain monthly variable rate payments on the term loan, while the applicable counterparty was obligated to make certain monthly floating rate payments based on LIBOR to the Company in the event LIBOR was greater than 4.0 %, referencing the same notional amount.

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.

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Strike Fair Value Notional Amount

September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019

Interest rate cap 12/1/2014 5/4/2021 4.0 % $ — $ — $ 50,000 $ 50,000

March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020

Interest rate cap 12/1/2014 5/4/2021 4.0 % $ — $ — $ 50,000 $ 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 the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2020 2019 2020 2019

The following table presents the effect of the Company’s derivative financial instruments on its accompanying consolidated statements of operations for the three months ended March 31, 2021 and 2020 (dollars in thousands):

For the Three Months Ended March 31,

Interest rate caps in cash flow hedging relationships:

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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 September 30, 2020, 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 September 30, 2020 and December 31, 2019 (dollars in thousands):

As of March 31, 2021, 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 March 31, 2021 and December 31, 2020 (dollars in thousands):

Fair Value Measurement Using

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Interest rate caps at:

September 30, 2020 $ — $ — $ — $ —

March 31, 2021 $ — $ — $ — $ —

December 31, 2020 $ — $ — $ — $ —

Financial Instruments Disclosed at Fair Value

As of September 30, 2020 and December 31, 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.

As of March 31, 2021 and December 31, 2020, 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 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 September 30, 2020 and December 31, 2019 (dollars in thousands):

The following table sets forth the carrying value and the estimated fair value of the Company’s debt as of March 31, 2021 and December 31, 2020 (dollars in thousands):

Fair Value Measurement Using

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(Level 3) Carrying Value

Senior secured loan at:

September 30, 2020 $ — $ — $ — $ — $ —

December 31, 2019 $ 15,915 $ — $ 15,915 $ — $ 15,858

September 30, 2020 $ 485,308 $ — $ 485,308 $ — $ 459,083

March 31, 2021 $ 458,647 $ — $ 458,647 $ — $ 448,004

December 31, 2020 $ 481,809 $ — $ 481,809 $ — $ 459,118

1 unchanged sentence

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 ($ 92.9 million remaining as of September 30, 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 31, 2019 and which is no longer active.

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 ($ 43.0 million remaining as of March 31, 2021) in amounts and at times to be determined by the Company from time to time.

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.

During the three and nine months ended September 30, 2020, the Company issued an aggregate of 8,250 and 1,054,577 shares, respectively, of common stock at a weighted average offering price of $ 59.92 and $ 53.09 per share, respectively, under the $ 300 Million ATM Program, resulting in net proceeds of approximately $ 0.5 million and $ 55.2 million, respectively, and paying total compensation to the applicable sales agents of approximately $ 7,000 and $ 0.8 million, respectively.

During the three and nine months ended September 30, 2019, the Company issued an aggregate of 1,458,630 and 5,822,701 shares, respectively, of common stock at a weighted average offering price of $ 50.28 and $ 45.40 per share, respectively, under the $ 300 Million ATM Program and the $ 250 Million ATM Program, resulting in net proceeds of approximately $ 72.3 million and $ 260.5 million, respectively, and paying total compensation to the applicable sales agents of approximately $ 1.1 million and $ 3.8 million, respectively.

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 Board of Directors on November 3, 2020).

During the three months ended March 31, 2021, the Company issued an aggregate of 706,524 shares of common stock at a weighted average offering price of $ 58.20 per share, under the $ 300 Million ATM Program, resulting in net proceeds of approximately $ 40.5 million, and paying total compensation to the applicable sales agents of approximately $ 0.6 million.

During the three months ended March 31, 2020, the Company issued an aggregate of 427,027 of common stock at a weighted average offering price of $ 53.37 per share, under the $ 300 Million ATM Program, resulting in net proceeds of approximately $ 22.5 million and paying total compensation to the applicable sales agents of approximately $ 0.3 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.

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.

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The program may be suspended or discontinued at any time.

As of September 30, 2020, the Company had not repurchased any shares of stock pursuant to its share repurchase program.

In connection with the Annual Meeting of Stockholders on May 5, 2020, the Company granted a total of 11,190 shares of the Company's 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 and $ 0.6 million in compensation costs for the three and nine months ended September 30, 2020, respectively, related to this issuance.

In 2019, the Company established a Non-Qualified Deferred Compensation Plan (“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.

As of March 31, 2021, the Company had not repurchased any shares of stock pursuant to its share repurchase program.

The Company has a Non-Qualified Deferred Compensation Plan (“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.

1 unchanged sentence

Subsequent changes in the fair value of the shares are not recognized.

During the three and nine months ended September 30, 2020 , 0 and 139,224 shares, respectively, of common stock were deposited into the Deferred Compensation Plan.

As of September 30, 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 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 September 30, 2020 ranged from $ 14.20 to $ 60.83 .

The fair value of the restricted stock that was granted during the nine months ended September 30, 2020 was approximately $ 4.7 million and the vesting period for the restricted stock is three to five years .

As of September 30, 2020, the Company had approximately $ 8.5 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 4.0 years.

The Company recognized compensation costs of approximately $ 0.6 million and $ 0.4 million for the three months ended September 30, 2020 and 2019, respectively, and approximately $ 2.0 million and $ 1.3 million for the nine months ended September 30, 2020 and 2019, respectively, 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 nine months ended September 30, 2020:

During the three months ended March 31, 2021 and 2020 , 131,322 and 135,494 shares of common stock, respectively, were deposited into the Deferred Compensation Plan.

As of March 31, 2021, 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 1,084,436 were remaining 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 March 31, 2021 ranged from $ 14.20 to $ 60.83 .

The fair value of the restricted stock that was granted during the three months ended March 31, 2021 was approximately $ 1.5 million.

The vesting period for restricted stock is generally three to five years .

As of March 31, 2021, the Company had approximately $ 8.7 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 3.4 years.

The Company recognized compensation costs of approximately $ 0.6 million and $ 0.7 million for the three months ended March 31, 2021 and 2020, respectively, related to the restricted stock issuances.

Restricted Stock Activity:

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Vested ( 13,336 ) 43.04

Non-vested shares outstanding as of September 30, 2020 203,729 $ 50.19

The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of September 30, 2020:

Non-vested shares outstanding as of March 31, 2021 216,047 $ 51.71

The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of March 31, 2021:

Non-vested Shares Vesting Schedule Number of Shares

2021 (9 months) —

Thereafter 57,540

Total Non-vested Shares 216,047

Long-Term Incentive Plan:

As of September 30, 2020, there are three open performance measurement periods for the Performance Share awards:

As of March 31, 2021, there are three open performance measurement periods for the Performance Share awards:

January 1, 2019 to December 31, 2021, January 1, 2020 to December 31, 2022, and January 1, 2021 to December 31, 2023.

During the nine months ended September 30, 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.

During the three months ended March 31, 2021, the Company issued 131,322 shares of common stock at a price of $ 55.75 per share related to the Performance Share awards for the performance period from January 1, 2018 to December 31, 2020.

The expense related to the Performance Share awards granted prior to January 1, 2019 varied 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 Performance Share Period Maximum Potential Payout Fair Value September 30, 2020 Accrual September 30, 2020 Expense for the Three Months Ended September 30, Expense for the Nine Months Ended September 30,

2020 2019 2020 2019

January 1, 2018 - December 31, 2020 $ 7,482 $ 5,968 $ 5,467 $ 398 $ 547 $ 1,123 $ 2,433

Fair Value Performance Share Period Maximum Potential Payout Fair Value March 31, 2021 Accrual March 31, 2021 Expense for the Three Months Ended March 31,

January 1, 2018 - December 31, 2020 $ — $ — $ — $ — $ 606

Total $ — $ — $ — $ — $ 606

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.

Under the Amended LTIP, 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.

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The following table summarizes certain information with respect to the Performance Share awards granted on or after January 1, 2019 (dollars in thousands):

Performance Share Period Fair Value on Date of Grant Expense for the Three Months Ended September 30, Expense for the Nine Months Ended September 30,

2020 2019 2020 2019

Performance Share Period Fair Value on Date of Grant Expense for the Three Months Ended March 31,

January 1, 2019 - December 31, 2021 $ 4,829 $ 402 $ 402

January 1, 2020 - December 31, 2022 5,572 464 465

January 1, 2021 - December 31, 2023 5,469 456 —

Total $ 15,870 $ 1,322 $ 867

The following table sets forth the cash dividends paid or payable per share during the nine months ended September 30, 2020:

The following table sets forth the cash dividends paid or payable per share during the three months ended March 31, 2021:

For the Three Months Ended Security Dividend per

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March 31, 2021 Common stock $ 0.29 February 9, 2021 March 26, 2021 April 9, 2021

June 30, 2020 Common stock $ 0.27 May 5, 2020 June 30, 2020 July 14, 2020

September 30, 2020 Common stock $ 0.29 August 4, 2020 October 2, 2020 October 16, 2020

Net Income (Loss) Per Share

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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 antidilutive securities or dilutive restricted stock awards outstanding for both the three and nine months ended September 30, 2020 and 2019.

The Company had no antidilutive securities or dilutive restricted stock awards outstanding for both the three months ended March 31, 2021 and 2020.

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 291,893 and 406,970 of weighted average unvested restricted shares outstanding for the three months ended September 30, 2020 and 2019, respectively, and 387,990 and 394,089 of weighted average unvested restricted shares outstanding for the nine months ended September 30, 2020 and 2019, respectively.

Under this method, allocations were made to 211,746 and 434,538 of weighted average unvested restricted shares outstanding for the three months ended March 31, 2021 and 2020, respectively.

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 259,854 and 294,570 for both the three and nine months ended September 30, 2020 and 2019, respectively.

Diluted shares related to the Performance Share awards were 259,854 and 407,139 for the three months ended March 31, 2021 and 2020, respectively.

Commitments and Contingencies

Contractual Commitments.

As of November 3, 2020, the Company has five outstanding contracts with third-party sellers to acquire three buildings and two improved land parcels consisting of 8.3 acres for a total aggregate anticipated purchase price of $ 42.5 million.

As of May 4, 2021, the Company had outstanding contracts with third-party sellers to acquire six industrial properties for a total aggregate anticipated purchase price of approximately $ 93.9 million.

There is no assurance that the Company will acquire the properties under contract because the proposed acquisitions are subject to due diligence and various closing conditions.

The following table summarizes certain information with respect to the properties the Company has under contract:

Market Number of

Buildings Square Feet Purchase Price (in

thousands) Assumed Debt (in

Los Angeles 1

1 12,618 $ 14,300 $ —

Northern New Jersey/New York City

1 16,159 10,625 —

San Francisco Bay Area — — — —

Seattle 1 38,883 11,737 —

Washington, D.C.

Total 3 67,660 $ 42,462 $ —

1 Includes one improved land parcel containing approximately 2.5 acres.

2 Includes one improved land parcel containing approximately 5.8 acres.

As of November 3, 2020, the Company has executed two non-binding letter of intent with third-party sellers to acquire four industrial buildings consisting of approximately 125,000 square feet and one improved land parcel consisting of approximately 2.2 acres for a purchase price of approximately $ 25.6 million.

In the normal course of its business, the Company enters into non-binding letters of intent to purchase properties from third parties that may obligate the Company to make payments or perform other obligations upon the occurrence of certain events, including the execution of a purchase and sale agreement and satisfactory completion of various due diligence matters.

There can be no assurance that the Company will enter into a purchase and sale agreement with respect to the property or otherwise complete any such prospective purchase on the terms described or at all.

Subsequent Events

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 November 3, 2020, the Company has granted rent deferrals to 59 tenants aggregating approximately 2.6 % of annualized base rent.

No rent abatements were granted.

For the 59 rent deferrals granted:

• 13 tenants aggregating 0.1 % of annualized base rent ( 5.4 % of total deferrals) have completed their rent deferral period and have fully repaid the deferral amounts;

• 34 tenants aggregating 2.2 % of annualized base rent ( 82.3 % of total deferrals) have not completed their rent deferral repayment period and are fulfilling the terms of their deferral agreements;

• 12 tenants aggregating 0.3 % of annualized base rent ( 12.3 % of total deferrals) have defaulted on their rent deferral repayments.

On October 26, 2020, the Company acquired one improved land parcel consisting of approximately 1.9 acres located in Los Angeles, California, for a total purchase price of approximately $ 10.0 million.

On April 6, 2021, the Company acquired one property in Miami, Florida for a total purchase price of approximately $ 5.8 million.

The property was acquired from an unrelated third-party using existing cash on hand.

On November 3, 2020, the Company’s board of directors declared a cash dividend in the amount of $ 0.29 per share of its common stock payable on January 5, 2021 to the stockholders of record as of the close of business on December 15, 2020.

On November 3, 2020, the Company’s board of directors approved an extension of the share repurchase program which will authorize the Company to repurchase up to 3,000,000 shares of its outstanding common stock from time to time through December 31, 2022 .

On April 13, 2021, the Company acquired one property in Kent, Washington for a total purchase price of approximately $ 10.0 million.

The property was acquired from an unrelated third-party using existing cash on hand.

On April 22, 2021, the Company acquired one property in San Jose, CA for a total purchase price of approximately $ 8.0 million.

The property was acquired from an unrelated third-party using existing cash on hand.

On May 4, 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 July 14, 2021 to the stockholders of record as of the close of business on June 30, 2021.

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

What changed 10-Q

Item 1. Financial Statements