What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-04 compared with 2021-05-05 · 246 added, 143 removed, 365 unchanged (52% 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, 2020, which was filed with the Securities and Exchange Commission on February 10, 2021, in this Quarterly Report on Form 10-Q, 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;

• 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, 2020, which was filed with the Securities and Exchange Commission on February 10, 2021, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which was filed with the Securities and Exchange Commission on May 5, 2021, in this Quarterly Report on Form 10-Q 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 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 invest in several types of industrial real estate, including warehouse/distribution (approximately 81.0% of our annualized base rent as of June 30, 2021), flex buildings (including light industrial and research and development, or R&D, approximately 5.1%), transshipment (approximately 5.8%), and improved land parcels (approximately 8.1%).

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 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.

As of June 30, 2021, we owned a total of 234 buildings aggregating approximately 13.8 million square feet, 27 improved land parcels consisting of approximately 97.6 acres and three properties under redevelopment expected to contain approximately 0.4 million square feet upon completion.

As of June 30, 2021, the buildings and improved land parcels were approximately 97.5% and 98.0% leased, respectively, to 535 customers, the largest of which accounted for approximately 5.1% 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 March 31, 2021:

The following table summarizes by type our investments in real estate as of June 30, 2021:

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

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Improved land 27 13,087 8.1 %

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 March 31, 2021, multiplied by 12.

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

Total 261 $ 162,475 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2021, multiplied by 12.

The following table summarizes by market our investments in real estate as of June 30, 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 % 25.9 % 15.6 % 17.0 % 11.5 % 11.1 % 100.0 %

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

Occupancy % as of June 30, 2021

98.4 % 97.0 % 97.2 % 99.0 % 94.8 % 97.9 % 97.5 %

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% of Total 16.8 % 50.0 % 7.3 % 9.0 % 3.3 % 13.6 % 100.0 %

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

Occupancy % as of June 30, 2021

88.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 98.0 %

Annualized Base Rent

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$ 472,922 $ 668,383 $ 419,264 $ 432,660 $ 215,554 $ 217,668 $ 2,426,451

% 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 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,

% of Total Gross Book 19.5 % 27.5 % 17.3 % 17.8 % 8.9 % 9.0 % 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 June 30, 2021, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of June 30, 2021, weighted by the respective square footage.

3 Includes three properties under redevelopment expected to contain approximately 0.4 million square feet upon completion, as discussed below.

As of June 30, 2021, we owned three properties under redevelopment expected to contain approximately 0.4 million square feet upon completion with a total expected investment of approximately $91.6 million, including redevelopment costs, capitalized interest and other costs.

The following table summarizes our capital expenditures incurred during the three and six months ended June 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 2021 2020

Building improvements $ 9,940 $ 4,264 $ 11,694 $ 7,594

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$ 22,735 $ 8,874 $ 28,724 $ 16,625

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.

1 Includes approximately $13.8 million and $4.5 million for the three months ended June 30, 2021 and 2020, respectively, and approximately $15.0 million and $8.9 million for the six months ended June 30, 2021 and 2020, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 14 and 13 properties for the three months ended June 30, 2021 and 2020, respectively, and at 14 and 13 properties for the six months ended June 30, 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 March 31, 2021 are as follows:

Our top 20 customers based on annualized base rent as of June 30, 2021 are as follows:

Customer Leases Rentable

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7 314,519 2.3 % 5,178 3.2 %

3 United States Government 8 300,732 2.2 % 3,748 2.4 %

3 Danaher 3 171,707 1.2 % 3,844 2.4 %

4 United States Government 8 300,732 2.2 % 3,757 2.3 %

5 District of Columbia 7 234,071 1.7 % 3,342 2.1 %

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7 Costco-Innovel Solutions LLC 1 219,910 1.6 % 1,816 1.1 %

8 Port Kearny Security, Inc.

1 — — % 1,800 1.1 %

9 XPO Logistics 2 180,717 1.3 % 1,764 1.1 %

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

12 Bar Logistics 1 203,263 1.5 % 1,546 1.0 %

13 Topaz Lighting Corp.

1 190,000 1.4 % 1,507 0.9 %

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 % 1,441 0.9 %

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

16 KTL Logistics LLC 1 40,000 0.3 % 1,431 0.9 %

17 Envogue International 1 192,000 1.4 % 1,411 0.9 %

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

18 Lilac Solutions Inc.

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20 Northrop Grumman Systems Corporation 1 103,200 0.7 % 1,300 0.7 %

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

Total 49 3,526,652 25.6 % $ 47,667 29.3 %

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.

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 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:

3 Includes an improved land parcel consisting of approximately 7.7 acres.

4 Includes an improved land parcel consisting of approximately 16.9 acres.

The following table summarizes the anticipated lease expirations for leases in place as of June 30, 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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% of Total Annualized

2021 (6 months) 1

762,659 5.5 % 10,583 5.7 %

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Total 13,444,773 97.4 % 185,587 100.0 %

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.

1 Includes leases that expire on or after June 30, 2021 and month-to-month leases totaling approximately 111,650 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 June 30, 2021, multiplied by 12.

3 Includes annualized base rent related to 27 improved land parcels totaling approximately 97.6 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 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.

As of June 30, 2021, leases representing approximately 5.7% 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.

Rent changes on new and renewed leases totaling approximately 0.8 million square feet commencing during the three months ended June 30, 2021 were approximately 21.1% higher as compared to the previous rental rates for that same space, and rent changes on new and renewed leases totaling approximately 1.1 million square feet commencing during the six months ended June 30, 2021 were approximately 19.7% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio of 64.3% and 72.8%, respectively, for the three and six months ended June 30, 2021.

We define tenant retention ratio 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.

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Acquisition Activity

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.

During the three months ended June 30, 2021, we acquired six industrial properties for a total purchase price of approximately $54.2 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:

The following table sets forth the industrial properties we acquired during the three months ended June 30, 2021:

Property Name Location Acquisition Date Number of

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(in thousands) 1

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 %

73rd Street 3

Miami, Florida April 6, 2021 — — $ 5,800 5.1 %

68th Kent Kent, Washington April 13, 2021 2 67,120 10,000 5.5 %

San Jose, California April 22, 2021 — — 8,004 4.8 %

Gramercy Place Torrance, California May 12, 2021 1 17,407 6,290 4.7 %

Occidental Avenue Seattle, Washington May 12, 2021 3 51,853 16,450 4.6 %

SW 16th Street 5

Renton, Washington June 14, 2021 — — 7,615 1.5 %

Total/Weighted Average 6 136,380 $ 54,159 4.4 %

1 Excludes intangible liabilities and mortgage premiums, if any.

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.

The total aggregate initial investment was approximately $57.8 million, including $1.5 million in capitalized closing costs and acquisition costs and $2.1 million in assumed intangible liabilities.

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, 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.

3 Represents an improved land parcel containing approximately 5.8 acres, that is being redeveloped with two industrial distribution buildings expected to total approximately 129,000 square feet.

4 Represents an improved land parcel containing approximately 2.2 acres.

5 Represents an improved land parcel containing approximately 2.9 acres.

Redevelopment Activity

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:

As of June 30, 2021, we have three properties under redevelopment expected to contain approximately 0.4 million square feet upon completion with a total expected investment of approximately $91.6 million, including redevelopment costs, capitalized interest and other costs as follows:

Property Name Total Expected

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Estimated Post-Development Square Feet Estimated

Stabilization

Quarter % Pre-leased March 31, 2021

Quarter % Pre-leased June 30, 2021

Sodo Row - North & South $ 63,988 $ 62,412 $ 1,576 4.3 % 234,308 Q4 2021 40.5 %

Americas Gateway 7,429 5,301 2,128 5.5 % 51,800 Q4 2022 — %

73rd Street 20,136 9,610 10,526 5.1 % 129,000 Q4 2022 — %

Total/Weighted Average $ 91,553 $ 77,323 $ 14,230 4.6 % 415,108 22.9 %

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.

2 Estimated stabilized cap rates are calculated 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.

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, 2020, in this Quarterly Report on Form 10-Q and in our other public filings.

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

2 Estimated stabilized cap rates are calculated as estimated annualized cash basis net operating income for the properties stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property.

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, 2020 and in our other public filings.

Disposition Activity

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 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.

We had no disposition activity during the six months ended June 30, 2021.

During the six months ended June 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.

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 ($273.2 million remaining as of June 30, 2021) 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 previous at-the-market equity program (the "Previous $300.0 million ATM Program"), which was substantially utilized as of June 10, 2021 and which is no longer active.

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, redevelopments and repayment of indebtedness, including borrowings under our revolving credit facility.

During the three and six months ended June 30, 2021, we issued an aggregate of 1,084,294 and 1,790,818 shares, respectively, of common stock at a weighted average offering price of $64.21 and $61.84 per share, respectively, under the Previous $300 Million ATM and the $300 Million ATM Program, resulting in net proceeds of approximately $68.6 million and $109.1 million, respectively, and paying total compensation to the applicable sales agents of approximately $1.0 million and $1.6 million, respectively.

Share Repurchase Program

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The program may be suspended or discontinued at any time.

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

As of June 30, 2021, we had not repurchased any shares of stock pursuant to our share repurchase program

Senior Unsecured Notes

On July 15, 2021, we issued in a private placement (i) $100.0 million of senior guaranteed green notes (the “Series A Notes”) and (ii) $50.0 million of senior guaranteed notes (the “Series B Notes” and, together with the Series A Notes, the “Notes”).

The Series A Notes bear interest at a fixed annual interest rate of 2.41% and mature in July 2028, and the Series B Notes bear interest at a fixed annual interest rate of 2.84% and mature in July 2031.

The Notes are guaranteed us and by substantially all of the current and to-be-formed subsidiaries of the borrower that own an unencumbered property.

The Notes are unsecured by our properties or by interests in the subsidiaries that hold such properties.

The Notes include a series of financial and other covenants with which we must comply.

Dividend and Distribution Activity

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.

On August 3, 2021, our board of directors declared a cash dividend in the amount of $0.34 per share of our common stock payable on October 15, 2021 to the stockholders of record as of the close of business on October 1, 2021.

Contractual Commitments

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.

As of August 3, 2021, we have outstanding contracts with third-party sellers to acquire seven industrial properties for a total aggregate purchase price of $107.1 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 under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions.

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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 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.

The analysis of our results below for the three and six months ended June 30, 2021 and 2020 includes the changes attributable to same store properties.

The same store pool for the comparison of the three and six months ended June 30, 2021 and 2020 includes all properties that were owned and in operation as of June 30, 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 June 30, 2021.

As of June 30, 2021, the same store pool consisted of 213 buildings aggregating approximately 12.7 million square feet representing approximately 92.0% of our total square feet owned and 19 improved land parcels consisting of 79.6 acres.

As of June 30, 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 June 30, 2021, consisted of 21 buildings aggregating approximately 1.1 million square feet, eight improved land parcels containing approximately 18.1 acres and three properties under redevelopment expected to contain approximately 0.4 million square feet upon completion.

As of June 30, 2021 and 2020, our consolidated same store pool occupancy was approximately 97.8% and 96.1%, 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 March 31, 2021 to the Three Months Ended March 31, 2020:

For the Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020:

For the Three Months Ended June 30,

2021 2020 $ Change % Change

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Interest expense, including amortization (4,016) (3,909) (107) 2.7 %

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

Gain on sales of real estate investments — 17,750 (17,750) (100.0) %

Total other income (expense) (3,795) 14,031 (17,826) n/a

Net income $ 17,378 $ 30,704 $ (13,326) (43.4) %

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

2 Includes 2021 and 2020 acquisitions and dispositions, eight improved land parcels and three properties under redevelopment as of June 30, 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 $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.

Total revenues increased approximately $7.6 million for the three months ended June 30, 2021 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2021 and 2020 and an increase in occupancy rate.

Cash rents on new and renewed leases totaling approximately 0.8 million square feet commencing during the three months ended June 30, 2021 increased approximately 21.1% compared to the previous rental rates for that same space.

For the three months ended June 30, 2021 and 2020, approximately $1.1 million and $1.3 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

Property operating expenses.

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.

Total property operating expenses increased approximately $1.2 million during the three months ended June 30, 2021 compared to the same period from the prior year.

The increase in total property operating expenses was primarily due to an increase of approximately $0.7 million attributable to property acquisitions during 2021 and 2020.

Depreciation and amortization.

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.

Depreciation and amortization increased approximately $0.5 million during the three months ended June 30, 2021 compared to the same period from the prior year primarily due to property acquisitions during 2021 and 2020.

General and administrative expenses.

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.

General and administrative expenses increased approximately $1.2 million primarily due to higher performance share award expense of approximately $0.3 million and increased compensation expenses for the three months ended June 30, 2021 compared to the same period from the prior year.

Interest and other income.

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 and other income remained consistent for the three months ended June 30, 2021 compared to the same period from the prior year.

Interest expense, including amortization.

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.

Interest expense increased approximately $0.1 million for the three months ended June 30, 2021 compared to the same period from the prior year primarily due to reduced capitalized interest of approximately $0.3 million for the three months ended June 30, 2021, partially offset by the repayment of a mortgage loan payable in the amount of approximately $11.3 million.

Gain on sales of real estate investments.

Gain on sales of real estate investments decreased approximately $17.8 million for the three months ended June 30, 2021 compared to the same period from the prior year.

We did not sell any properties during the three months ended June 30, 2021 and we sold three properties in the same period from the prior year.

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020:

For the Six Months Ended June 30,

2021 2020 $ Change % Change

(Dollars in thousands)

Rental revenues 1

Same store $ 75,718 $ 68,306 $ 7,412 10.9 %

Non-same store operating properties 2

6,526 3,435 3,091 90.0 %

Total rental revenues 82,244 71,741 10,503 14.6 %

Tenant expense reimbursements 1

Same store 20,336 18,418 1,918 10.4 %

Non-same store operating properties 2

1,406 699 707 101.2 %

Total tenant expense reimbursements 21,742 19,117 2,625 13.7 %

Total revenues 103,986 90,858 13,128 14.4 %

Property operating expenses

Same store 24,367 22,639 1,728 7.6 %

Non-same store operating properties 2

2,316 1,203 1,113 92.5 %

Total property operating expenses 26,683 23,842 2,841 11.9 %

Net operating income 3

Same store 71,687 64,085 7,602 11.9 %

Non-same store operating properties 2

5,616 2,931 2,685 91.6 %

Total net operating income $ 77,303 $ 67,016 $ 10,287 15.4 %

Other costs and expenses

Depreciation and amortization 23,344 22,559 785 3.5 %

General and administrative 12,448 11,423 1,025 9.0 %

Acquisition costs 172 63 109 173.0 %

Total other costs and expenses 35,964 34,045 1,919 5.6 %

Other income (expense)

Interest and other income 457 754 (297) (39.4) %

Interest expense, including amortization (8,161) (7,915) (246) 3.1 %

Gain on sales of real estate investments — 17,750 (17,750) (100.0) %

Total other income (expense) (7,704) 10,589 (18,293) n/a

Net income $ 33,635 $ 43,560 $ (9,925) (22.8) %

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 2020 and 2021 acquisitions and dispositions, eight improved land parcels and three properties under redevelopment as of June 30, 2021.

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

Total revenues increased approximately $13.1 million for the six months ended June 30, 2021 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2021 and 2020 and an increase in occupancy rate.

Cash rents on new and renewed leases totaling approximately 1.1 million square feet commencing during the six months ended June 30, 2021 increased approximately 19.7% compared to the same period from the prior year.

For the six months ended June 30, 2021 and 2020, approximately $2.2 million and $1.9 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

Property operating expenses.

Total property operating expenses increased approximately $2.8 million during the six months ended June 30, 2021 compared to the same period from the prior year.

The increase in total property operating expenses was primarily due to an increase of approximately $1.1 million attributable to property acquisitions during 2021 and 2020.

Depreciation and amortization.

Depreciation and amortization increased approximately $0.8 million during the six months ended June 30, 2021 compared to the same period from the prior year primarily due to property acquisitions during 2020 and 2021.

General and administrative expenses.

General and administrative expenses increased approximately $1.0 million for the six months ended June 30, 2021 compared to the same period from the prior year, primarily due to increased compensation expenses.

Interest and other income.

Interest and other income decreased approximately $0.3 million for the six months ended June 30, 2021 compared to the same period from the prior year primarily due to the pay down of our outstanding senior secured loan balance.

Interest expense, including amortization.

Interest expense increased approximately $0.2 million for the six months ended June 30, 2021 compared to the same period from the prior year.

This increase is primarily due to reduced capitalized interest of approximately $0.9 million, partially offset by the repayment of a $32.7 million mortgage loan in 2020 and a $11.3 million mortgage loan in 2021.

Gain on sales of real estate investments.

Gain on sales of real estate investments decreased approximately $17.8 million for the six months ended June 30, 2021 compared to the same period from the prior year.

We did not sell any properties during the six months ended June 30, 2021, and we sold three properties in the same period from the prior year.

Liquidity and Capital Resources

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In the near-term, we intend to fund future investments in properties with cash on hand, term loans, senior unsecured notes, mortgages, borrowings under our revolving credit facility, perpetual preferred and common stock issuances and, from time to time, property dispositions.

We expect to meet our long-term liquidity requirements, including with respect to other investments in industrial properties, property acquisitions, property redevelopments, renovations and expansions and scheduled debt maturities, through borrowings under our revolving credit facility, periodic issuances of common stock, perpetual preferred stock, and long-term secured and unsecured debt, and, from time to time, with proceeds from the disposition of properties.

We expect to meet our long-term liquidity requirements, including with respect to other investments in industrial properties, property acquisitions, property

redevelopments, renovations and expansions and scheduled debt maturities, through borrowings under our revolving credit facility, periodic issuances of common stock, perpetual preferred stock, and long-term unsecured and secured debt, and, from time to time, with proceeds from the disposition of properties.

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 March 31, 2021:

The following sets forth certain information regarding our current at-the-market common stock offering program as of June 30, 2021:

ATM Stock Offering Program Date Implemented Maximum Aggregate

Offering Price (in

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 months ended March 31, 2021 and 2020, respectively (in thousands, except share and price per share data):

For the Three Months Ended,

Offering Price (in thousands) Aggregate Common Stock Available as of three and six months ended (in thousands)

$300 Million ATM Program June 11, 2021 $ 300,000 $ 273,174

The table below sets forth the activity under our at-the-market common stock offering programs during the three and six months ended June 30, 2021 and 2020, respectively (in thousands, except share and price per share data):

For the Three Months Ended June 30,

Shares Sold Weighted Average

Price Per Share Net Proceeds (in

thousands) Sales Commissions

Price Per Share Net Proceeds (in thousands) Sales Commissions

(in thousands)

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.

June 30, 2021 1,084,294 $ 64.21 $ 68,611 $ 1,010

June 30, 2020 619,300 $ 52.81 $ 32,230 $ 474

For the Six Months Ended June 30,

Shares Sold Weighted Average

Price Per Share Net Proceeds (in thousands) Sales Commissions

(in thousands)

June 30, 2021 1,790,818 $ 61.84 $ 109,137 $ 1,606

June 30, 2020 1,046,327 $ 53.04 $ 54,688 $ 804

As of June 30, 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, $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, a $100.0 million term loan that matures in January 2022.

As of both June 30, 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 June 30, 2021, we did not have any active interest rate caps.

We previously had an active interest rate cap to hedge the variable cash flows associated with $50.0 million of our existing $100.0 million variable-rate term loan, which expired May 4, 2021.

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.

Under the interest rate cap, 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 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 applicable LIBOR margin will range from 1.05% to 1.50% (1.05% as of June 30, 2021) for the revolving credit facility and 1.20% to 1.70% (1.20% as of June 30, 2021) and the $100.0 million term loan, 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 are unsecured by our properties or by interests in the subsidiaries that hold such properties.

The Facility and the Senior Unsecured Notes include a series of financial and other covenants with which we must comply.

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):

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 June 30, 2021 and December 31, 2020.

The Notes are guaranteed us and by substantially all of the current and to-be-formed subsidiaries of the borrower that own an unencumbered property.

The Notes are unsecured by our properties or by interests in the subsidiaries that hold such properties.

The Notes include a series of financial and other covenants with which we must comply.

As of June 30, 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 $40.0 million and $107.2 million, respectively.

The mortgage loan payable was fully repaid in January 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 six months ended June 30, 2021 and 2020 (dollars in thousands, except per share data):

Facility Term Loan Senior

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

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

As of June 30, 2021 As of June 30, 2020

Total Debt, net $ 448,154 $ 459,044

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18.5 % 21.1 %

Total Debt-to-Total Investments in Properties and Senior Secured Loan 4

19.1 % 20.8 %

Total Debt-to-Total Market Capitalization 4

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Weighted Average Maturity of Total Debt (years) 4.1 5.0

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.

1 Includes 215,962 and 438,483 shares of unvested restricted stock outstanding as of June 30, 2021 and 2020, respectively.

Also includes 275,727 and 139,224 shares held in the Deferred Compensation Plan as of June 30, 2021 and 2020, respectively.

2 Closing price of our shares of common stock on the New York Stock Exchange on June 30, 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, 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.

4 Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization.

5 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 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.

6 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 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.

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8 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 three months ended March 31, 2021 and 2020, respectively.

9 Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the six months ended June 30, 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 three months ended March 31, 2021:

The following table sets forth the cash dividends paid or payable per share during the six months ended June 30, 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, 2021 Common stock $ 0.29 May 4, 2021 June 30, 2021 July 14, 2021

Sources and Uses of Cash

2 unchanged sentences

Cash From Operating Activities.

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.

Net cash provided by operating activities totaled approximately $59.2 million for the six months ended June 30, 2021 compared to approximately $45.4 million for the six months ended June 30, 2020.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2020 and 2021 and same store properties, as we acquired ten properties during six months ended June 30, 2021 compared to four properties acquired in the same period from the prior year.

Cash From Investing Activities.

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.

Net cash used in investing activities was approximately $183.4 million and net cash provided by investing activities was $5.5 million, for the six months ended June 30, 2021 and 2020, respectively, which consisted primarily of cash paid for property acquisitions of approximately $160.0 million and $40.4 million, respectively, additions to capital improvements of approximately $23.4 million and $19.7 million, respectively, partially offset by net cash received for the senior secured loan of $0 and $15.9 million, respectively, and net proceeds from sales of real estate investments of approximately $0 and $49.7 million, respectively.

Cash From Financing Activities.

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.

Net cash provided by financing activities was approximately $59.1 million for the six months ended June 30, 2021, which consisted primarily of approximately $111.0 million in net common stock issuance proceeds partially offset by approximately $40.0 million in equity dividend payments and approximately $11.3 million in mortgage loan payments.

Net cash used in financing activities was approximately $14.9 million for the six months ended June 30, 2020, which consisted primarily of approximately $54.7 million in net common stock issuance proceeds, partially offset by approximately $36.5 million in equity dividend payments and approximately $32.8 million in mortgage loan payments.

Critical Accounting Policies

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Contractual Obligations

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.

As of August 3, 2021, we have seven outstanding contracts with third-party sellers to acquire seven industrial properties for a total aggregate purchase price of $107.1 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 our contractual obligations due by period as of March 31, 2021 (dollars in thousands):

The following table summarizes our contractual obligations due by period as of June 30, 2021 (dollars in thousands):

Contractual Obligations Less than 1

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Total $ 220,856 $ 73,662 $ 116,795 $ 215,475 $ 626,788

As of August 3, 2021, we executed five non-binding letters of intent with third-party sellers to acquire five industrial properties for a total anticipated purchase price of approximately $59.9 million.

In the normal course of its 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 purchase and sale agreements with respect to these properties or otherwise complete any such prospective purchases on the terms described or at all.

Non-GAAP Financial Measures

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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 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

The following table reflects the calculation of FFO reconciled from net income for the three and six months ended June 30, 2021 and 2020 (dollars in thousands except per share data):

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 $ Change % Change 2021 2020 $ Change % Change

$ 17,378 $ 30,704 $ (13,326) (43.4) % $ 33,635 $ 43,560 $ (9,925) (22.8) %

Depreciation and amortization

Gain on sales of real estate investments — (17,750) 17,750 n/a — (17,750) 17,750 n/a

Depreciation and amortization 11,968 11,459 509 4.4 % 23,344 22,559 785 3.5 %

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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 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.

Under this method, allocations were made to 216,025 and 438,595 of weighted average unvested restricted shares outstanding for the three months ended June 30, 2021 and 2020, respectively, and 213,897 and 436,567 of weighted average unvested restricted shares outstanding for the six months ended June 30, 2021 and 2020, respectively.

2 Includes performance share award expense of approximately $1.3 million and $1.0 million for the three months ended June 30, 2021 and 2020, respectively, and approximately $2.6 million and $2.5 million for the six months ended

June 30, 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 $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.

FFO increased by approximately $5.0 million and $8.8 million for the three and six months ended June 30, 2021, respectively, compared to the same periods from the prior year due primarily to same store NOI growth of approximately $4.4 million and $7.6 million for the three and six months ended June 30, 2021, respectively, compared to the same periods from the prior year as well as property acquisitions during 2020 and 2021.

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 months ended March 31, 2021 and 2020 (dollars in thousands):

For the Three Months Ended March 31,

2021 2020 $ Change % Change

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three and six months ended June 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 $ Change % Change 2021 2020 $ Change % Change

Net income $ 17,378 $ 30,704 $ (13,326) (43.4) % $ 33,635 $ 43,560 $ (9,925) (22.8) %

Gain on sales of real estate investments — (17,750) 17,750 n/a — (17,750) 17,750 n/a

Depreciation and amortization 11,968 11,459 509 4.4 % 23,344 22,559 785 3.5 %

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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 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.

The same store pool includes all properties that were owned and in operation as of June 30, 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 June 30, 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 months ended March 31, 2021 and 2020 (dollars in thousands):

For the Three Months Ended March 31,

2021 2020 $ 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 and six months ended June 30, 2021 and 2020 (dollars in thousands):

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 $ Change % Change 2021 2020 $ Change % Change

$ 17,378 $ 30,704 $ (13,326) (43.4) % $ 33,635 $ 43,560 $ (9,925) (22.8) %

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Acquisition costs 117 11 106 963.6 % 172 63 109 173.0 %

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

Total other income and expenses 3,795 (14,031) 17,826 n/a 7,704 (10,589) 18,293 n/a

Net operating income 40,124 33,808 6,316 18.7 % 77,303 67,016 10,287 15.4 %

9 unchanged sentences

Cash-basis same store NOI excluding termination fees $ 33,871 $ 30,029 $ 3,842 12.8 % $ 66,321 $ 60,356 $ 5,965 9.9 %

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.

1 Includes approximately $0.1 million and $0.2 million of lease termination income for the three months ended June 30, 2021 and 2020, respectively, and approximately $0.2 million of lease termination income for both the six months ended June 30, 2021 and 2020.

2 Includes 2020 and 2021 acquisitions and dispositions, eight improved land parcels and three properties under redevelopment.

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

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.

Cash-basis same store NOI increased by approximately $3.8 million for the three months ended June 30, 2021 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases.

For the three months ended June 30, 2021 and 2020, total contractual rent abatements of approximately $0.7 million and $1.2 million, respectively, were given to certain tenants in the same-store pool and approximately $0 and $0.1 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $0.9 million of the increase in cash-basis same store NOI for the three months ended June 30, 2021 related to properties that were acquired vacant or with near term expirations in 2019.

Cash-basis same store NOI increased by approximately $6.0 million for the six months ended June 30, 2021 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases, partially offset by a decrease in occupancy rate.

For both the six months ended June 30, 2021 and 2020, total contractual rent abatements of approximately $1.6 million were given to certain tenants in the same-store pool and approximately $0.1 million and $0.2 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $1.7 million of the increase in cash-basis same store NOI for the six months ended June 30, 2021 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