What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-05 compared with 2020-11-04 · 137 added, 297 removed, 371 unchanged (54% of the section changed)

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Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

• the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission on February 6, 2020, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which was filed with the Securities and Exchange Commission on May 6, 2020, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, which was filed with the Securities and Exchange Commission on August 5, 2020, and in our other public filings, which you should interpret as being heightened as a result of the numerous and ongoing adverse impacts of COVID-19;

• our ability to identify and acquire industrial properties on terms favorable to us;

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

We invest in several types of industrial real estate, including warehouse/distribution (approximately 82.2% of our annualized base rent as of September 30, 2020), flex buildings (including light industrial and research and development, or R&D, approximately 5.2%), transshipment (approximately 5.3%), and improved land parcels (approximately 7.3%).

We invest in several types of industrial real estate, including warehouse/distribution (approximately 81.6% of our annualized base rent as of March 31, 2021), flex buildings (including light industrial and research and development, or R&D, approximately 5.0%), transshipment (approximately 5.6%), and improved land parcels (approximately 7.8%).

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

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

As of September 30, 2020, we owned a total of 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 September 30, 2020, the buildings and improved land parcels were approximately 97.3% and 98.5% leased, respectively, to 476 customers, the largest of which accounted for approximately 5.5% of our total annualized base rent.

As of March 31, 2021, we owned a total of 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.

As of March 31, 2021, the buildings and improved land parcels were approximately 96.1% and 97.9% leased, respectively, to 519 customers, the largest of which accounted for approximately 5.3% of our total annualized base rent.

See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in our Annual Report on Form 10-K for the year ended December 31, 2020 for a general description of these types of industrial real estate.

We are an internally managed Maryland corporation and elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or the Code, commencing with our taxable year ended December 31, 2010.

The following table summarizes by type our investments in real estate as of September 30, 2020:

The following table summarizes by type our investments in real estate as of March 31, 2021:

Type Number of Buildings or Improved Land Parcels Annualized Base Rent (000's) 1

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Total/Weighted Average 253 $ 153,782 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of September 30, 2020, multiplied by 12.

The following table summarizes by market our investments in real estate as of September 30, 2020:

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2021, multiplied by 12.

The following table summarizes by market our investments in real estate as of March 31, 2021:

Los Angeles Northern New Jersey/New York City San Francisco Bay Area Seattle Miami Washington, D.C.

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% of Total 18.9 % 26.2 % 15.8 % 16.3 % 11.6 % 11.2 % 100.0 %

Occupancy % as of September 30, 2020 98.8 % 94.5 % 97.4 % 98.8 % 99.6 % 97.4 % 97.3 %

Occupancy % as of March 31, 2021 98.4 % 94.1 % 99.9 % 98.7 % 86.8% 4

97.4 % 96.1 %

Annualized Base Rent

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% of Total 17.7 % 52.6 % 5.4 % 6.3 % 3.5 % 14.5 % 100.0 %

Occupancy % as of September 30, 2020 100.0 % 100.0 % 68.1 % 100.0 % 100.0 % 100.0 % 98.5 %

Occupancy % as of March 31, 2021 88.2 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 97.9 %

Annualized Base Rent

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% of Total Gross Book Value 19.8 % 28.3 % 17.4 % 16.7 % 8.5 % 9.3 % 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of September 30, 2020, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of September 30, 2020, weighted by the respective square footage.

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

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

The following table summarizes our capital expenditures incurred during 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

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2021, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of March 31, 2021, weighted by the respective square footage.

3 Includes two properties under redevelopment expected to contain approximately 0.3 million square feet upon completion, as discussed below.

4 Includes our acquisition of the Countyline property totaling approximately 273,577 square feet that was 32.1% leased to one tenant as of March 31, 2021, with the remaining 67.9% pre-leased to four tenants with leases commencing between April and July 2021.

As of March 31, 2021, we owned 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 following table summarizes our capital expenditures incurred during the three months ended March 31, 2021 and 2020 (dollars in thousands):

For the Three Months Ended March 31,

Building improvements $ 1,754 $ 3,330

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$ 5,989 $ 7,751

1 Includes approximately $6.5 million and $9.5 million for the three months ended September 30, 2020 and 2019, respectively, and approximately $15.4 million and $31.7 million for the nine months ended September 30, 2020 and 2019, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 13 and 12 properties for the three months ended September 30, 2020 and 2019, respectively, and at 14 and 15 properties for the nine months ended September 30, 2020 and 2019, respectively.

1 Includes approximately $1.2 million and $4.4 million for the three months ended March 31, 2021 and 2020, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation, and expansion projects (stabilized capital) at five and ten properties for the three months ended March 31, 2021 and 2020, respectively.

Our industrial properties are typically subject to leases on a “triple net basis,” in which tenants pay their proportionate share of real estate taxes, insurance and operating costs, or are subject to leases on a “modified gross basis,” in which tenants pay expenses over certain threshold levels.

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As needed, we hold discussions with the tenant’s management about their business and we conduct site visits of the tenant’s operations.

Our top 20 customers based on annualized base rent as of September 30, 2020 are as follows:

Our top 20 customers based on annualized base rent as of March 31, 2021 are as follows:

Customer Leases Rentable

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1 147,898 1.1 % 1,700 1.1 %

10 O'Neill Logistics 2 237,692 1.7 % 1,576 1.0 %

11 Topaz Lighting Corp.

1 190,000 1.4 % 1,463 1.0 %

11 O'Neill Logistics 2 237,692 1.8 % 1,458 1.0 %

12 Port Kearny Security, Inc.

1 — — % 1,458 1.0 %

13 United States Postal Service 2 81,950 0.6 % 1,438 0.9 %

14 YRC 2 61,252 0.4 % 1,432 0.9 %

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18 Saia Motor Freight Line LLC 1 52,086 0.4 % 1,315 0.9 %

18 Space Systems/Loral LLC 2 107,060 0.8 % 1,246 0.9 %

19 Northrop Grumman Systems Corporation 1 103,200 0.8 % 1,300 0.8 %

20 JAM'N Logistics 1 110,336 0.8 % 1,266 0.8 %

20 Fredmore Inc.

DBA Airpark Newark 5

2 — — % 1,206 0.8 %

Total 49 3,596,988 26.3 % $ 46,747 30.4 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of September 30, 2020, multiplied by 12.

2 Includes an improved land parcel consisting of 2.8 acres.

3 Includes two improved land parcels totaling 7.7 acres.

4 Lease area consists of 16.9 acres of improved land.

5 Lease area consists of 10.6 acres of improved land.

The following table summarizes the anticipated lease expirations for leases in place as of September 30, 2020, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2021, multiplied by 12.

2 Includes an improved land parcel consisting of approximately 2.8 acres.

3 Includes two improved land parcels totaling approximately 7.7 acres.

The following table summarizes the anticipated lease expirations for leases in place as of March 31, 2021, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:

Year Rentable Square Feet % of Total Rentable

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Total 13,122,897 96.1 % 173,219 100.0 %

1 Includes leases that expire on or after September 30, 2020 and month-to-month leases totaling approximately 67,877 square feet.

2 Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of September 30, 2020, multiplied by 12.

1 Includes leases that expire on or after March 31, 2021 and month-to-month leases totaling approximately 122,414 square feet.

2 Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of March 31, 2021, multiplied by 12.

3 Includes annualized base rent related to 25 improved land parcels totaling approximately 92.5 acres.

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

As of September 30, 2020, leases representing approximately 15.2% of the total annualized base rent of our portfolio are scheduled to expire through December 31, 2021.

We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our 2020 and 2021 expirations will be above the rates currently being paid for the same space.

Rent changes on new and renewed leases totaling approximately 0.9 million square feet commencing during the three months ended September 30, 2020 were approximately 20.3% higher as compared to the previous rental rates for that same space, and rent changes on new and renewed leases totaling approximately 2.0 million square feet commencing during the nine months ended September 30, 2020 were approximately 25.2% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio of 59.6% and 54.9%, respectively, for the three and nine months ended September 30, 2020.

Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates equal to or above the current average rental rates, particularly given the current leasing environment has slowed due to shelter-in-place orders and other mitigation efforts put in place in connection with COVID-19, which will reduce revenue from what it would be in a normal leasing environment.

As of March 31, 2021, leases representing approximately 8.7% of the total annualized base rent of our portfolio are scheduled to expire through December 31, 2021.

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

Rent changes on new and renewed leases totaling approximately 0.3 million square feet commencing during the three months ended March 31, 2021 were approximately 16.0% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio of 82.3% for the three months ended March 31, 2021.

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

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

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

Recent Developments

The COVID-19 pandemic, and mitigation measures put in place by governments to slow it, have caused significant economic disruption.

We are headquartered in San Francisco and our employees have been working remotely in accordance with recommendations by the City of San Francisco since March 2020.

We utilize local, third-party property managers, and they are generally working remotely, as recommended by their municipalities.

We have business continuity and communication plans that have allowed, and we believe, although there can be no assurance, will continue to allow us to operate and manage our portfolio effectively during such disruptions.

We expect that we will, for the intermediate term, employ lower density work arrangements consistent with social distancing and our business continuity plan.

While the impact of the COVID-19 pandemic on our business is not possible to predict accurately, we continue to work

with our 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, we have 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.

The acquisition and disposition markets slowed in the early months of the COVID-19 pandemic as market participants searched for price discovery.

While transaction markets returned to more normal volumes recently, our acquisition volume will remain dependent on both the quality and pricing of the opportunity set and the price of our stock relative to net asset value per share.

We believe, although there can be no assurance, that our balance sheet is well positioned to make opportunistic acquisitions as we have no remaining debt maturities in 2020, a n $11.4 million mortgag e loan maturing in April 2021, and no balance outstanding on our $250 million revolving credit facility.

In addition, we had a cash balance of approximate ly $155.3 million as of September 30, 2020 .

See “ Item 1A - Risk Factors ” in this Quarterly Report on Form 10-Q for additional discussion regarding the risks to which we are and may be subject as a result of the COVID-19 pandemic.

Acquisition Activity

During the three months ended September 30, 2020, we acquired one industrial building containing approximately 22,000 square feet for a total purchase price of approximately $6.3 million.

The property was acquired from an unrelated third party using existing cash on hand, net proceeds from dispositions and net proceeds from the issuance of common stock.

The following table sets forth the industrial property we acquired during the three months ended September 30, 2020:

During the three months ended March 31, 2021, we acquired four industrial properties containing approximately 529,000 square feet for a total purchase price of approximately $110.1 million.

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

The following table sets forth the industrial properties we acquired during the three months ended March 31, 2021:

Property Name Location Acquisition Date Number of

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(in thousands) 1

Starlite Street South San Francisco July 10, 2020 1 22,000 $ 6,300 4.7 %

256 Patterson Plank Carlstadt, NJ January 13, 2021 1 16,159 $ 10,625 5.2 %

117th Place NE Kirkland, WA February 25, 2021 1 126,721 33,750 3.0 %

Hialeah, FL March 17, 2021 2 273,577 48,114 3.7 %

Edison San Leandro, CA March 31, 2021 3 112,392 17,600 5.6 %

Total/Weighted Average 7 528,849 $ 110,089 3.9 %

1 Excludes intangible liabilities and mortgage premiums, if any.

The total initial investment was approximately $6.5 million, including $0.1 million in capitalized closing costs and acquisition costs and $0.1 million in assumed intangible liabilities.

The total initial investment was approximately $109.9 million, including $1.6 million in capitalized closing costs and acquisition costs, $4.7 million in assumed intangible liabilities and $6.1 million in other credits related to near term capital expenditures at the Countyline property.

2 Stabilized capitalization rates, referred to herein as stabilized cap rates, are calculated, at the time of acquisition, as annualized cash basis net operating income for the property stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property.

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We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles.

These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2019, in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and in our other public filings.

These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2020, in our Quarterly Report on this Form 10-Q and in our other public filings.

3 The property was 32.1% leased to one tenant as of March 31, 2021, with the remaining 67.9% pre-leased to four tenants with leases commencing between April and July 2021.

Redevelopment Activity

As of September 30, 2020, we have 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 as follows:

As of March 31, 2021, we 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 as follows:

Property Name Total Expected

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Stabilization

Quarter % Pre-leased September 30, 2020

Quarter % Pre-leased March 31, 2021

Sodo Row - North & South $ 64,133 $ 61,814 $ 2,319 4.3 % 234,308 Q4 2021 27.0 %

Americas Gateway 5 7,429 4,069 3,360 5.5 % 51,800 Q4 2022 — %

Total/Weighted Average $ 71,562 $ 65,883 $ 5,679 4.4 % 286,108 22.1 %

1 Total expected investment for the property includes the initial purchase price, due diligence and closing costs, estimated near-term redevelopment expenditures, capitalized interest and leasing costs necessary to achieve stabilization.

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We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles.

These estimated stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2019, in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and in our other public filings.

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

The total investment was approximately $33.9 million with an estimated stabilized cap rate of 5.0%.

These estimated stabilized cap rates are subject to risks, uncertainties, and assumptions and are not

guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2020, in this Quarterly Report on Form 10-Q and in our other public filings.

Disposition Activity

During the nine months ended September 30, 2020, we 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.

The following summarizes the condensed results of operations of the properties sold during 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

Rental revenues $ 88 $ 1,016 $ 2,167 $ 2,971

Tenant expense reimbursements (34) 278 449 1,034

Property operating expenses (32) (359) (686) (1,222)

Depreciation and amortization — (417) (414) (1,258)

Income from operations $ 22 $ 518 $ 1,516 $ 1,525

We have an at-the-market equity offering program (the “$300 Million ATM Program”) pursuant to which we may issue and sell shares of our 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 as we determine from time to time.

Prior to the implementation of the $300 Million ATM Program, we 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.

We had no disposition activity during the three months ended March 31, 2021 and 2020, respectively.

We have an at-the-market equity offering program (the “$300 Million ATM Program”) pursuant to which we may issue and sell shares of our 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 as we determine from time to time.

We intend 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 our revolving credit facility, if any.

During the three and nine months ended September 30, 2020, we 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.

Long Term Incentive Plan

On January 8, 2019, we amended and restated our Amended and Restated Long-Term Incentive Plan (as amended and restated, the “Amended LTIP”).

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.

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 fair value of the performance share awards for the performance measurement period of January 1, 2020 to December 31, 2022 is $0.5 million, which will be recognized quarterly over a three-year period.

Stock-based compensation expense for the performance share awards was $1.3 million and $3.8 million for the three and nine months ended September 30, 2020, respectively.

Equity Incentive Plan

On April 30, 2019, our stockholders approved the 2019 Equity Incentive Plan (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 our 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.

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.

Senior Secured Loan

We had a senior secured loan (the “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 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.

During the three months ended March 31, 2021, we 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.

Share Repurchase Program

We have a share repurchase program authorizing us to repurchase up to 3,000,000 shares of our 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).

We have a share repurchase program authorizing us to repurchase up to 3,000,000 shares of our outstanding common stock from time to time through December 31, 2022.

Purchases made pursuant to this 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, we had not repurchased any shares of stock pursuant to our share repurchase program.

As of March 31, 2021, we had not repurchased any shares of stock pursuant to our share repurchase program.

Dividend and Distribution Activity

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

On May 4, 2021, our board of directors declared a cash dividend in the amount of $0.29 per share of our common stock payable on July 14, 2021 to the stockholders of record as of the close of business on June 30, 2021.

Contractual Commitments

As of November 3, 2020, we have 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.

Additionally, we have executed two non-binding letters of intent with a third-party seller to acquire four industrial buildings consisting of approximately 125,000 square feet and one improved land parcel consisting of approximately 2.2 acres for an anticipated purchase price of approximately $25.6 million, as described under the heading “Contractual Obligations” in this Quarterly Report on Form 10-Q.

There is no assurance that we will acquire the properties and land parcels under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions.

There can also be no assurance that we will enter into a purchase and sale agreement with respect to the property under non-binding letter of intent or otherwise complete any such prospective purchase on the terms described or at all.

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

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

Financial Condition and Results of Operations

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The results of operations of any acquired property are included in our financial statements as of the date of its acquisition.

The analysis of our results below for the three and nine months ended September 30, 2020 and 2019 includes the changes attributable to same store properties.

The same store pool for the comparison of the three and nine months ended September 30, 2020 and 2019 includes all properties that were owned and in operation as of September 30, 2020 and since January 1, 2019 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of September 30, 2020.

As of September 30, 2020, the same store pool consisted of 198 buildings aggregating approximately 12.0 million square feet representing approximately 91.5% of our total square feet owned and 14 improved land parcels consisting of 54.2 acres.

As of September 30, 2020, the non-same store properties, which we acquired, redeveloped, or sold during 2019 and 2020 or were held for sale (if any) or in redevelopment as of September 30, 2020, consisted of 21 buildings aggregating approximately 1.1 million square feet, eight improved land parcels containing approximately 30.8 acres and one property under redevelopment expected to contain approximately 0.2 million square feet upon completion.

As of September 30, 2020 and 2019, our consolidated same store pool occupancy was approximately 98.5% and 98.1%, respectively.

The analysis of our results below for the three months ended March 31, 2021 and 2020 includes the changes attributable to same store properties.

The same store pool for the comparison of the three months ended March 31, 2021 and 2020 includes all properties that were owned and in operation as of March 31, 2021 and since January 1, 2020 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of March 31, 2021.

As of March 31, 2021, the same store pool consisted of 213 buildings aggregating approximately 12.7 million square feet representing approximately 93.0% of our total square feet owned and 19 improved land parcels consisting of 79.6 acres.

As of March 31, 2021, the non-same store properties, which we acquired, redeveloped, or sold during 2020 and 2021 or were held for sale (if any) or in redevelopment as of March 31, 2021, consisted of 15 buildings aggregating approximately 1.0 million square feet, six improved land parcels containing approximately 12.9 acres and two properties under redevelopment expected to contain approximately 0.3 million square feet upon completion.

As of March 31, 2021 and 2020, our consolidated same store pool occupancy was approximately 97.4% and 97.0%, respectively.

Our future financial condition and results of operations, including rental revenues, straight-line rents and amortization of lease intangibles, may be impacted by the acquisitions of additional properties, and expenses may vary materially from historical results.

Comparison of the Three Months Ended September 30, 2020 to the Three Months Ended September 30, 2019:

For the Three Months Ended September 30,

Comparison of the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020:

For the Three Months Ended March 31,

2021 2020 $ Change % Change

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Interest expense, including amortization (4,145) (4,006) (139) 3.5 %

Gain on sales of real estate investments 9,016 1,782 7,234 405.9 %

Total other income (expense) 5,180 (1,338) 6,518 n/a

Total other income (expense) (3,909) (3,442) (467) 13.6 %

Net income $ 16,257 $ 12,856 $ 3,401 26.5 %

5 unchanged sentences

See “Note 2 - Significant Accounting Policies” in our condensed notes to consolidated financial statements for more information regarding our adoption of this standard.

2 Includes 2020 and 2019 acquisitions and dispositions, eight improved land parcels and one property under redevelopment as of September 30, 2020.

2 Includes 2021 and 2020 acquisitions and dispositions, six improved land parcels and two properties under redevelopment as of March 31, 2021.

3 Includes straight-line rents and amortization of lease intangibles.

See “Non-GAAP Financial Measures” in this Quarterly Report on Form 10-Q for a definition and reconciliation of net operating income and same store net operating income from net income and a discussion of why we believe net operating income and same store net operating income are useful supplemental measures of our operating performance.

Total revenues increased approximately $3.8 million for the three months ended September 30, 2020 compared to the same period from the prior year due primarily to property acquisitions during 2020 and 2019 and increased revenue on new and renewed leases.

Cash rents on new and renewed leases totaling approximately 0.9 million square feet commencing during the three months ended September 30, 2020 increased approximately 20.3% compared to the same period from the prior year.

For the three months ended September 30, 2020 and 2019, approximately $1.1 million and $0.4 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

During the three months ended September 30, 2020, due to the effects of COVID-19, approximately $0.2 million in straight-line rent receivables was reversed.

Additionally, during the three months ended September 30, 2020, we terminated a lease with the existing tenant at our Belleville property and executed a new lease with a leading e-commerce firm.

The lease termination fee received was approximately $3.3 million and the non-cash deferred rent receivable write-off was approximately $3.4 million.

Total revenues increased approximately $5.6 million for the three months ended March 31, 2021 compared to the same period from the prior year due primarily to property acquisitions during 2021 and 2020 and increased revenue on new and renewed leases.

Cash rents on new and renewed leases totaling approximately 0.3 million square feet commencing during the three months ended March 31, 2021 increased approximately 16.0% as compared to the previous rental rates for that same space.

For the three months ended March 31, 2021 and 2020 approximately $1.1 million and $0.6 million, respectively, was recorded in straight-line rental revenue related to contractual rent abatements given to certain tenants.

Property operating expenses.

Total property operating expenses increased approximately $1.2 million during the three months ended September 30, 2020 compared to the same period from the prior year.

Total property operating expenses increased approximately $1.6 million during the three months ended March 31, 2021 compared to the same period from the prior year.

The increase in total property operating expenses was primarily in the same store pool (approximately $1.2 million) and due to increases in real estate taxes related to annual rate increases, as well as utilities expenses incurred at certain of our properties.

Depreciation and amortization.

Depreciation and amortization increased approximately $1.0 million during the three months ended September 30, 2020 compared to the same period from the prior year primarily due to property acquisitions and dispositions during 2020 and 2019.

General and administrative expenses.

General and administrative expenses remained consistent for the three months ended September 30, 2020 compared to the same period from the prior year.

Interest and other income.

Interest and other income decreased approximately $0.8 million for the three months ended September 30, 2020 compared to the same period from the prior year primarily due to a decrease in our outstanding Senior Secured Loan balance as a result of the repayment of such loan in May 2020.

Interest expense, including amortization.

Interest expense decreased approximately $0.1 million for the three months ended September 30, 2020 compared to the same period from the prior year primarily due to a lower interest rate on our variable rate term loan and the repayment of a $32.7 million mortgage loan, offset by the issuance of a $100.0 million of senior unsecured debt in December 2019.

Gain on sales of real estate investments.

Gain on sales of real estate investments increased approximately $7.2 million for the three months ended September 30, 2020 compared to the same period from the prior year.

We recognized a gain of $9.0 million from the sale of one property during the three months ended September 30, 2020, compared to a recognized gain of approximately $1.8 million from the sale of one property in the same period from the prior year.

Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019:

For the Nine Months Ended September 30,

2020 2019 $ Change % Change

(Dollars in thousands)

Rental revenues 1

Same store $ 92,663 $ 90,565 $ 2,098 2.3 %

Non-same store operating properties 2

16,142 8,341 7,801 93.5 %

Total rental revenues 108,805 98,906 9,899 10.0 %

Tenant expense reimbursements 1

Same store 26,602 25,304 1,298 5.1 %

Non-same store operating properties 2

2,598 1,797 801 44.6 %

Total tenant expense reimbursements 29,200 27,101 2,099 7.7 %

Total revenues 138,005 126,007 11,998 9.5 %

Property operating expenses

Same store 31,309 29,497 1,812 6.1 %

Non-same store operating properties 2

4,761 2,896 1,865 64.4 %

Total property operating expenses 36,070 32,393 3,677 11.4 %

Net operating income 3

Same store 87,956 86,372 1,584 1.8 %

Non-same store operating properties 2

13,979 7,242 6,737 93.0 %

Total net operating income $ 101,935 $ 93,614 $ 8,321 8.9 %

Other costs and expenses

Depreciation and amortization 34,683 32,168 2,515 7.8 %

General and administrative 16,553 17,852 (1,299) (7.3) %

Acquisition costs 186 48 138 287.5 %

Total other costs and expenses 51,422 50,068 1,354 2.7 %

Other income (expense)

Interest and other income 805 3,171 (2,366) (74.6) %

Interest expense, including amortization (11,802) (12,269) 467 (3.8) %

Gain on sales of real estate investments 26,766 6,247 20,519 328.5 %

Total other income (expense) 15,769 (2,851) 18,620 n/a

Net income $ 66,282 $ 40,695 $ 25,587 62.9 %

2018-11, Leases (Topic 842), Targeted Improvements allows us to elect not to separate lease and non-lease rental income.

All rental income earned pursuant to tenant leases is reflected as one line, “Rental revenues and tenant expense reimbursements” on our accompanying consolidated statements of operations.

We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with GAAP.

We believe this information is frequently used by management, investors, and other interested parties to evaluate our performance.

See “Note 2 - Significant Accounting Policies” in our condensed notes to consolidated financial statements for more information regarding our adoption of this standard.

2 Includes 2019 and 2020 acquisitions and dispositions, eight improved land parcels and one property under redevelopment as of September 30, 2020.

3 Includes straight-line rents and amortization of lease intangibles.

Total revenues increased approximately $12.0 million for the nine months ended September 30, 2020 compared to the same period from the prior year due primarily to property acquisitions during 2020 and 2019 and increased revenue on new and renewed leases.

Cash rents on new and renewed leases totaling approximately 2.0 million square feet commencing during the nine months ended September 30, 2020 increased approximately 25.2% compared to the same period from the prior year.

For the nine months ended September 30, 2020 and 2019, approximately $3.0 million and $1.7 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

During the nine months ended September 30, 2020, due to the effects of COVID-19, approximately $1.1 million in straight-line rent receivables was reversed.

For the nine months ended September 30, 2020, approximately $0.7 million in rent abatements was provided to the tenant at our Caribbean property.

Additionally, during the three months ended September 30, 2020, we terminated a lease with the existing tenant at our Belleville property and executed a new lease with a leading e-commerce firm.

The lease termination fee received was approximately $3.3 million and the non-cash deferred rent receivable write-off was approximately $3.4 million.

Property operating expenses.

Total property operating expenses increased approximately $3.7 million (approximately $1.8 million in the same-store pool) during the nine months ended September 30, 2020 compared to the same period from the prior year.

The increase in total property operating expenses was due to annual rate increases in real estate taxes, as well as additional utilities expenses incurred at certain of our properties.

Depreciation and amortization.

Depreciation and amortization increased approximately $2.5 million during the nine months ended September 30, 2020 compared to the same period from the prior year primarily due to property acquisitions during 2019 and 2020.

Depreciation and amortization increased approximately $0.3 million during the three months ended March 31, 2021 compared to the same period from the prior year primarily due to property acquisitions and dispositions during 2021 and 2020.

General and administrative expenses.

General and administrative expenses decreased approximately $1.3 million for the nine months ended September 30, 2020 compared to the same period from the prior year due primarily to a decrease of approximately $1.8 million in stock based compensation expense, including a decrease in performance share award expense of $2.6 million, offset by an increase in restricted stock amortization.

The decrease in performance share award expense primarily related to the expense for performance share awards granted prior to January 1, 2019, which varies quarter to quarter based on our relative share price performance.

General and administrative expenses decreased for the three months ended March 31, 2021 compared to the same period from the prior year primarily due to a $0.2 million decrease in performance share award expense.

Interest and other income.

Interest and other income decreased approximately $2.4 million for the nine months ended September 30, 2020 compared to the same period from the prior year primarily due to a decrease in our outstanding Senior Secured Loan balance as a result of the repayment of such loan in May 2020.

Interest and other income decreased approximately $0.3 million for the three months ended March 31, 2021 compared to the same period from the prior year primarily due to the repayment of the outstanding Senior Secured Loan in May 2020.

Interest expense, including amortization.

Interest expense decreased approximately $0.5 million for the nine months ended September 30, 2020 compared to the same period from the prior year.

This decrease is primarily due to a lower interest rate on our variable rate term loan, the repayment of a $32.7 million mortgage loan, and an increase in capitalized interest, offset by the issuance of a $100.0 million of senior unsecured debt in December 2019.

Gain on sales of real estate investments.

Gain on sales of real estate investments increased approximately $20.5 million for the nine months ended September 30, 2020 compared to the same period from the prior year.

We recognized a gain of $26.8 million from the sale of four properties during the nine months ended September 30, 2020, compared to a recognized gain of approximately $6.2 million from the sale of two properties in the same period from the prior year.

Interest expense increased approximately $0.1 million for the three months ended March 31, 2021 compared to the same period from the prior year primarily due to a lower capitalized interest in 2021, offset by the lower interest rate on our variable rate term loan and the repayment of a $32.7 million mortgage loan in 2020 and a $11.3 million mortgage loan in 2021.

Liquidity and Capital Resources

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The success of our acquisition strategy may depend, in part, on our ability to obtain and borrow under our revolving credit facility and to access additional capital through issuances of equity and debt securities.

The following sets forth certain information regarding our current at-the-market common stock offering program as of September 30, 2020:

The following sets forth certain information regarding our current at-the-market common stock offering program as of March 31, 2021:

ATM Stock Offering Program Date Implemented Maximum Aggregate

Offering Price (in

thousands) Aggregate Common Stock Available as of three and nine months ended (in thousands)

thousands) Aggregate Common Stock Available as of three months ended (in thousands)

$300 Million ATM Program May 17, 2019 $ 300,000 $ 42,968

The table below sets forth the activity under our at-the-market common stock offering programs during the three and nine months ended September 30, 2020 and 2019, respectively (in thousands, except share and price per share data):

For the Three Months Ended September 30,

Shares Sold Weighted Average

Price Per Share Net Proceeds (in

thousands) Sales Commissions

(in thousands)

September 30, 2020 8,250 $ 59.92 $ 487 $ 7

September 30, 2019 1,458,630 $ 50.28 $ 72,283 $ 1,064

For the Nine Months Ended September 30,

The table below sets forth the activity under our at-the-market common stock offering programs during the three months ended March 31, 2021 and 2020, respectively (in thousands, except share and price per share data):

For the Three Months Ended,

Shares Sold Weighted Average

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(in thousands)

September 30, 2020 1,054,577 $ 53.09 $ 55,175 $ 812

September 30, 2019 5,822,701 $ 45.40 $ 260,531 $ 3,833

We had the 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 September 30, 2020, we 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 our revolving credit facility and $100.0 million of borrowings outstanding on our term loan.

As of September 30, 2020, we had one interest rate cap to hedge the variable cash flows associated with $50.0 million of our 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.

As of December 31, 2019, we 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 our existing $100.0 million variable-rate term loan.

We are 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 us in the event LIBOR is greater than 4.0%, referencing the same notional amount.

March 31, 2021 706,524 $ 58.20 $ 40,526 $ 596

March 31, 2020 427,027 $ 53.37 $ 22,458 $ 330

As of March 31, 2021, we 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 our revolving credit facility and $100.0 million of borrowings outstanding on our term loan.

As of March 31, 2021, we had one interest rate cap to hedge the variable cash flows associated with $50.0 million of our 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.

We were 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 us in the event LIBOR was greater than 4.0%, referencing the same notional amount.

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.

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 our 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 our outstanding consolidated indebtedness to the value of our consolidated gross asset value.

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 our outstanding consolidated indebtedness to the value of our 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 our outstanding consolidated indebtedness to the value of our 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 we must comply.

We were 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 and December 31, 2019, we had outstanding mortgage loans payable, net of deferred financing costs, of approximately $11.4 million and $44.3 million, respectively, and held cash and cash equivalents totaling approximately $155.3 million and $110.1 million, respectively.

The following tables summarize our debt maturities and principal payments and market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the nine months ended September 30, 2020 and 2019 (dollars in thousands, except per share data):

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

As of March 31, 2021 and December 31, 2020, we had an outstanding mortgage loan payable, net of deferred financing costs, of approximately $0 and $11.3 million, respectively, and held cash and cash equivalents totaling approximately $29.4 million and $107.2 million, respectively.

The mortgage loan payable was paid off in full during the three months ended March 31, 2021.

The following tables summarize our debt maturities and principal payments and market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the three months ended March 31, 2021 and 2020 (dollars in thousands, except per share data):

Facility Term Loan Senior

Notes Mortgage

Payable Total Debt

Notes Total Debt

2021 (9 months) $ — $ — $ — $ —

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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%

As of September 30, 2020 As of September 30, 2019

As of March 31, 2021 As of March 31, 2020

Total Debt, net $ 448,004 $ 459,008

10 unchanged sentences

Total Debt-to-Total Market Capitalization 5

10.9 % 11.4 %

Floating Rate Debt as a % of Total Debt 6

10 unchanged sentences

Weighted Average Maturity of Total Debt (years) 4.3 5.2

1 Includes 203,729 and 427,868 shares of unvested restricted stock outstanding as of September 30, 2020 and 2019, respectively.

2 Closing price of our shares of common stock on the New York Stock Exchange on September 30, 2020 and September 28, 2019, respectively, in dollars per share.

1 Includes 216,047 and 438,835 shares of unvested restricted stock outstanding as of March 31, 2021 and 2020, respectively.

Also includes 270,546 and 135,494 shares held in the Deferred Compensation Plan as of March 31, 2021 and 2020, respectively.

2 Closing price of our shares of common stock on the New York Stock Exchange on March 31, 2021 and 2020, respectively, in dollars per share.

3 Total debt-to-total investments in properties is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties.

4 Total debt-to-total investments in properties and Senior Secured Loan is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties, including the Senior Secured Loan, net of deferred loan fees of approximately $0 and $0.1 million, as of September 30, 2020 and 2019, respectively.

5 Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization as of September 30, 2020 and 2019, respectively.

4 Total debt-to-total investments in properties and Senior Secured Loan is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties, including the Senior Secured Loan, which was fully repaid in May 2020, net of deferred loan fees of approximately $0 as of both March 31, 2021 and 2020.

5 Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization as of March 31, 2021 and 2020.

6 Floating rate debt as a percentage of total debt is calculated as floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs.

Floating rate debt includes $100.0 million variable-rate term loan borrowings, of which $50.0 million is subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of September 30, 2020, and our $150.0 million variable-rate term loan borrowings, of which $100.0 million was subject to interest rate caps of 4.0% plus 1.20% to 1.70% as of September 30, 2019.

Floating rate debt includes our $100.0 million variable-rate term loan borrowings, of which $50.0 million was subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of both March 31, 2021 and 2020.

See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.

7 Unhedged floating rate debt as a percentage of total debt is calculated as unhedged floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs.

Hedged debt includes our $100.0 million variable-rate term loan borrowings, of which $50.0 million is subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of September 30, 2020, and our $150.0 million variable rate term loan borrowings of which $100.0 million was subject to interest rate caps of 4.0% plus 1.20% to 1.70% as of September 30, 2019.

Hedged debt includes our $100.0 million variable-rate term loan borrowings, of which $50.0 million was subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of both March 31, 2021 and 2020.

See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.

1 unchanged sentence

9 Mortgage loans payable as a percentage of total investments in properties is calculated as mortgage loans payable, including premiums and net of deferred financing costs, divided by total investments in properties.

10 Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the nine months ended September 30, 2020 and 2019, respectively.

10 Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the three months ended March 31, 2021 and 2020, respectively.

See “Non-GAAP Financial Measures” in this Quarterly Report on Form 10-Q for a definition and reconciliation of Adjusted EBITDA from net income and a discussion of why we believe Adjusted EBITDA is a useful supplemental measure of our operating performance.

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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

1 unchanged sentence

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

Sources and Uses of Cash

2 unchanged sentences

Cash From Operating Activities.

Net cash provided by operating activities totaled approximately $77.4 million for the nine months ended September 30, 2020 compared to approximately $68.5 million for the nine months ended September 30, 2019.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties we acquired during 2019 and 2020 and same store properties.

Net cash provided by operating activities totaled approximately $26.2 million for the three months ended March 31, 2021 compared to approximately $22.2 million for the three months ended March 31, 2020.

This increased in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties we acquired during 2021 and 2020 and same store properties.

Cash From Investing Activities.

Net cash provided by investing activities was approximately $8.5 million and net cash used in investing activities was $236.7 million, respectively, for the nine months ended September 30, 2020 and 2019, which consisted primarily of cash paid for property acquisitions of approximately $46.8 million and $216.8 million, respectively, additions to capital improvements of approximately $31.3 million and $45.2 million, respectively, offset by net cash received for the Senior Secured Loan of $15.9 million and $0, respectively, and net proceeds from sales of real estate investments of approximately $70.7 million and $25.3 million, respectively.

Net cash used in investing activities was approximately $112.4 million and $36.2 million, respectively, for the three months ended March 31, 2021 and 2020, which consisted primarily of cash paid for property acquisitions of approximately $104.4 million and $30.1 million, respectively, and additions to capital improvements of approximately $8.0 million and $11.1 million, respectively, offset by partial repayment of our Senior Secured Loan of approximately $5.0 million.

Cash From Financing Activities.

Net cash used in financing activities was approximately $42.6 million for the nine months ended September 30, 2020, which consisted primarily of approximately $55.2 million in net common stock issuance proceeds offset by approximately $54.9 million in equity dividend payments and approximately $33.0 million in mortgage loan payments.

Net cash provided by financing activities was approximately $191.1 million for the nine months ended September 30, 2019, which consisted primarily of approximately $260.7 million in net common stock issuance proceeds offset by $19.0 million in net payments on our Facility and approximately $45.5 million in equity dividend payments.

Net cash provided by financing activities was approximately $8.8 million for the three months ended March 31, 2021, which consisted primarily of approximately $40.5 million in net common stock issuance proceeds partially offset by approximately $19.9 million in equity dividend payments and approximately $11.3 million in payments on mortgage loans payable.

Net cash used in financing activities was approximately $28.7 million for the three months ended March 31, 2020, which consisted primarily of approximately $22.5 million in net common stock issuance proceeds partially offset by approximately $18.2 million in equity dividend payments and $32.7 million in payments on mortgage loans payable.

Critical Accounting Policies

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Contractual Obligations

As of November 3, 2020, we have five outstanding contracts with third-party sellers to acquire three industrial properties consisting of approximately 68,000 square feet and two improved land parcels consisting of 5.8 acres for a total aggregate anticipated purchase price of approximately $42.5 million.

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

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

The following table summarizes certain information with respect to the properties we have 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, we have executed two non-binding letters 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 total anticipated purchase price of approximately $25.6 million.

In the normal course of our business, we enter into non-binding letters of intent to purchase properties from third parties that may obligate us 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 we 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.

The following table summarizes our contractual obligations due by period as of September 30, 2020 (dollars in thousands):

The following table summarizes our contractual obligations due by period as of March 31, 2021 (dollars in thousands):

Contractual Obligations Less than 1

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As a result, we believe that the use of FFO, together with the required GAAP presentations, provide a more complete understanding of our operating performance.

The following table reflects the calculation of FFO reconciled from net income for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands except per share data):

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

2020 2019 $ Change % Change 2020 2019 $ Change % Change

The following table reflects the calculation of FFO reconciled from net income for the three months ended March 31, 2021 and 2020 (dollars in thousands except per share data):

For the Three Months Ended March 31,

2021 2020 $ Change % Change

$ 16,257 $ 12,856 $ 3,401 26.5 %

Gain on sales of real estate investments (9,016) (1,782) (7,234) 405.9 % (26,766) (6,247) (20,519) 328.5 %

Depreciation and amortization

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1 To be consistent with our policies of determining whether instruments granted in share-based payment transactions are participating securities and accounting for earnings per share, the FFO per common share is adjusted for FFO 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.

2 Includes performance share award expense of approximately $1.3 million and $1.6 million for the three months ended September 30, 2020 and 2019, respectively, and approximately $3.8 million and $6.4 million 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.

2 Includes performance share award expense of approximately $1.3 million and $1.5 million for the three months ended March 31, 2021 and 2020, respectively.

See “Note 11 – Stockholders’ Equity” in the condensed notes to consolidated financial statements for more information regarding our performance share awards.

FFO increased by approximately $1.8 million and $7.6 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods from the prior year due primarily to property acquisitions during 2019 and 2020 and same store NOI growth of approximately $0.8 million and $1.6 million for the three and nine months ended September 30, 2020, respectively, compared to the same periods from the prior year.

In addition, FFO increased due to a decrease in performance share award expense of approximately $0.3 million and $2.6 million for the three and nine months ended September 30, 2020, respectively.

FFO increased by approximately $3.8 million for the three months ended March 31, 2021 compared to the same period from the prior year due primarily to property acquisitions during 2020 and 2021 and same store NOI growth of approximately $3.2 million for the three months ended March 31, 2021 compared to the same period from the prior year.

We compute Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, gain on sales of real estate investments, acquisition costs and stock-based compensation.

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As we are currently in a growth phase, acquisition costs are excluded from Adjusted EBITDA to allow for the comparison of our operating performance to that of stabilized companies.

The following table reflects the calculation of Adjusted EBITDA reconciled from net income 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 $ Change % Change 2020 2019 $ Change % Change

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three months ended March 31, 2021 and 2020 (dollars in thousands):

For the Three Months Ended March 31,

2021 2020 $ Change % Change

Net income $ 16,257 $ 12,856 $ 3,401 26.5 %

Gain on sales of real estate investments (9,016) (1,782) (7,234) 405.9 (26,766) (6,247) (20,519) 328.5 %

Depreciation and amortization 11,376 11,100 276 2.5 %

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We compute NOI as rental revenues, including tenant expense reimbursements, less property operating expenses.

We compute same store NOI as rental revenues, including tenant expense reimbursements, less property operating expenses on a same store basis.

We compute same store NOI as rental revenues, including tenant expense reimbursements, less property operating expenses on a

same store basis.

NOI excludes depreciation, amortization, general and administrative expenses, acquisition costs and interest expense, including amortization.

We compute cash-basis same store NOI as same store NOI excluding straight-line rents and amortization of lease intangibles.

The same store pool includes all properties that were owned and in operation as of September 30, 2020 and since January 1, 2019 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of September 30, 2020.

The same store pool includes all properties that were owned and in operation as of March 31, 2021 and since January 1, 2020 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of March 31, 2021.

We believe that presenting NOI, same store NOI and cash-basis same store NOI provides useful information to investors regarding the operating performance of our properties because NOI excludes certain items that are not considered to be controllable in connection with the management of the properties, such as depreciation, amortization, general and administrative expenses, acquisition costs and interest expense.

By presenting same store NOI and cash-basis same store NOI, the operating results on a same store basis are directly comparable from period to period.

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income 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 $ Change % Change 2020 2019 $ Change % Change

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three months ended March 31, 2021 and 2020 (dollars in thousands):

For the Three Months Ended March 31,

2021 2020 $ Change % Change

$ 16,257 $ 12,856 $ 3,401 26.5 %

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Acquisition costs 55 52 3 5.8 %

Total other income and expenses (5,180) 1,338 (6,518) n/a (15,769) 2,851 (18,620) n/a

Total other income and expenses 3,909 3,442 467 13.6 %

Net operating income 37,179 33,208 3,971 12.0 %

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Less straight-line rents and amortization of lease intangibles 4

2,509 (1,346) 3,855 n/a 811 (4,772) 5,583 n/a

(2,434) (1,442) (992) 68.8 %

Cash-basis same store NOI 3

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Cash-basis same store NOI excluding termination fees $ 32,449 $ 30,325 $ 2,124 7.0 %

1 Includes approximately $3.5 million and $40,000 of lease termination income for the three months ended September 30, 2020 and 2019, respectively, and approximately $3.7 million and $0.2 million of lease termination income for the nine months ended September 30, 2020 and 2019, respectively.

2 Includes 2019 and 2020 acquisitions and dispositions, eight improved land parcels and one property under redevelopment.

3 Includes approximately $3.5 million and $40,000 of lease termination income for the three months ended September 30, 2020 and 2019, respectively, and approximately $3.6 million and $0.2 million of lease termination income for the nine months ended September 30, 2020 and 2019, respectively.

1 Includes approximately $0.1 million and $39,000 of lease termination income for the three months ended March 31, 2021 and 2020, respectively.

2 Includes 2020 and 2021 acquisitions and dispositions, six improved land parcels and two properties under redevelopment.

3 Includes approximately $0.1 million and $39,000 of lease termination income for the three months ended March 31, 2021 and 2020, respectively.

4 Includes straight-line rents and amortization of lease intangibles for the same store pool only.

Cash-basis same store NOI increased by approximately $4.6 million for the three months ended September 30, 2020 compared to the same period from the prior year.

Such increase included a cash termination fee of approximately $3.3 million paid in July 2020, related to the termination of a lease held with the existing tenant at our Belleville property.

We have since executed a new lease with a leading e-commerce firm.

In connection with the termination we incurred a non-cash deferred rent receivable write-off of approximately $3.4 million.

In addition, cash-basis same store NOI increased due to increased rental revenue on new and renewed leases.

For the three months ended September 30, 2020 and 2019, respectively, total contractual rent abatements of approximately $0.6 million and $0.4 million, were given to certain tenants in the same-store pool and approximately $3.5 million and $40,000, in lease termination income was received from certain tenants in the same store pool.

Approximately $0.3 million of the increase in cash-basis same store NOI for the three months ended September 30, 2020 related to properties that were acquired vacant or with near term expirations in 2018.

Cash-basis same store NOI increased by approximately $7.2 million for the nine months ended September 30, 2020 compared to the same period from the prior year.

Such increase included a cash termination fee of approximately $3.3 million paid in July 2020, related to the termination of a lease held with the existing tenant at our Belleville property.

We have since executed a new lease with a leading e-commerce firm.

In connection with the termination we incurred a non-cash deferred rent receivable write-off of approximately $3.4 million.

In addition, cash-basis same store NOI increased due to increased rental revenue on new and renewed leases, offset by a decrease in occupancy rate.

For the nine months ended September 30, 2020 and 2019, total contractual rent abatements of $1.7 million and $1.6 million, respectively, were given to certain tenants in the same-store pool and approximately $3.6 million and $0.2 million, respectively, in lease termination income was received from certain tenants in the same store pool.

Approximately $0.7 million of the increase in cash-basis same store NOI for the nine months ended September 30, 2020 related to properties that were acquired vacant or with near term expirations in 2018.

Cash-basis same store NOI increased by approximately $2.4 million for the three months ended March 31, 2021 compared to the same period from the prior year due to increased rental revenue on new and renewed leases.

For the three months ended March 31, 2021 and 2020, total contractual rent abatements of approximately $0.9 million and $0.4 million, respectively, were given to certain tenants in the same-store pool and approximately $0.1 million and $39,000 in lease termination income was received from certain tenants in the same store pool.

Approximately $0.8 million of the increase in cash-basis same store NOI for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 related to properties that were acquired vacant or with near term expirations in 2019.

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 2. Management’s Discussion and Analysis