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Item 2. Management’s Discussion and Analysis

2021-11-03 compared with 2021-08-04 · 195 added, 180 removed, 431 unchanged (47% 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 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;

• 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 our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which was filed with the Securities and Exchange Commission on August 4, 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 81.0% 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 invest in several types of industrial real estate, including warehouse/distribution (approximately 80.5% of our annualized base rent as of September 30, 2021), flex buildings (including light industrial and research and development, or R&D, approximately 4.9%), transshipment (approximately 6.0%), and improved land parcels (approximately 8.6%).

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 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.

As of September 30, 2021, we owned a total of 241 buildings (including three buildings held for sale) aggregating approximately 14.1 million square feet, 31 improved land parcels consisting of approximately 114.7 acres and four properties under redevelopment expected to contain approximately 0.4 million square feet upon completion.

As of September 30, 2021, the buildings and improved land parcels were approximately 98.0% and 96.1% leased, respectively, to 548 customers, the largest of which accounted for approximately 5.2% 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 June 30, 2021:

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

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

Type Number of Buildings or Improved Land Parcels Annualized Base Rent (in thousands) 1

Warehouse/distribution 212 $ 137,531 80.5 %

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Total 272 $ 170,978 100.0 %

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:

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, 2021, multiplied by 12.

The following table summarizes by market our investments in real estate as of September 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 19.0 % 25.3 % 15.6 % 16.4 % 12.8 % 10.9 % 100.0 %

Occupancy % as of June 30, 2021

Occupancy % as of September 30, 2021

98.3 % 98.5 % 96.5 % 99.7 % 95.4 % 99.0 % 98.0 %

Annualized Base Rent

Annualized Base Rent (in thousands) 1

$ 26,823 $ 43,366 $ 29,006 $ 23,668 $ 15,820 $ 17,592 $ 156,275

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% of Total 14.3 % 47.1 % 6.2 % 17.9 % 2.8 % 11.7 % 100.0 %

Occupancy % as of June 30, 2021

Occupancy % as of September 30, 2021

88.0 % 95.4 % 100.0 % 100.0 % 100.0 % 100.0 % 96.1 %

Annualized Base Rent

(in thousands) 1

$ 3,334 $ 6,369 $ 1,405 $ 2,305 $ 422 $ 868 $ 14,703

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3.8 6.2 3.6 3.3 2.8 8.3 5.3

Total Investments in Real Estate

Annualized Base Rent (000’s) 1

Total Investments in Real Estate and Improved Land

Annualized Base Rent (in thousands) 1

$ 30,157 $ 49,735 $ 30,411 $ 25,973 $ 16,242 $ 18,460 $ 170,978

Gross Book Value (000’s) 3

% of Total Annualized Base Rent 1

17.6 % 29.1 % 17.8 % 15.2 % 9.5 % 10.8 % 100.0 %

% 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,

Gross Book Value (in thousands) 3

$ 503,384 $ 718,269 $ 428,832 $ 482,947 $ 264,199 $ 218,046 $ 2,615,677

% of Total Gross Book Value 19.2 % 27.5 % 16.4 % 18.5 % 10.1 % 8.3 % 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, 2021, multiplied by 12.

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

3 Includes four properties under redevelopment expected to contain approximately 0.4 million square feet upon completion, as discussed below and one property held for sale with a gross book value of approximately $23.6 million).

As of September 30, 2021, we owned four properties under redevelopment expected to contain approximately 0.4 million square feet upon completion with a total expected investment of approximately $117.8 million, including redevelopment costs, capitalized interest and other costs.

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

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

2021 2020 2021 2020

Building improvements $ 9,320 $ 4,507 $ 21,014 $ 12,101

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$ 21,405 $ 13,652 $ 50,129 $ 30,277

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.

1 Includes approximately $14.2 million and $6.5 million for the three months ended September 30, 2021 and 2020, respectively, and approximately $28.0 million and $15.4 million for the nine months ended September 30, 2021 and 2020, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 15 and 13 properties for the three months ended September 30, 2021 and 2020, respectively, and at 17 and 14 properties for the nine months ended September 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 June 30, 2021 are as follows:

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

Customer Leases Rentable

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Square Feet Annualized

(in thousands) 1

1 Amazon.com 2

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1 190,000 1.3 % 1,507 0.9 %

14 Envogue International 1 192,000 1.4 % 1,454 0.9 %

15 YRC 2 61,252 0.4 % 1,441 0.8 %

16 United States Postal Service 2 53,000 0.4 % 1,438 0.8 %

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 %

17 Lilac Solutions Inc.

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19 Northrop Grumman Systems Corporation 1 103,200 0.7 % 1,300 0.8 %

20 Premium Transportation Services, Inc.

1 40,000 0.4 % 1,295 0.8 %

Total 50 3,483,962 24.7 % $ 48,492 28.4 %

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 an improved land parcel consisting of approximately 7.7 acres.

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, 2021, multiplied by 12.

2 Includes two improved land parcels consisting of approximately 6.2 acres.

3 Includes two improved land parcels 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:

The following table summarizes the anticipated lease expirations for leases in place as of September 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

Square Feet Annualized Base Rent

(in thousands) 2, 3

% of Total Annualized

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Total 13,816,359 98.0 % 195,032 100.0 %

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.

1 Includes leases that expire on or after September 30, 2021 and month-to-month leases totaling approximately 44,699 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, 2021, multiplied by 12.

3 Includes annualized base rent related to 31 improved land parcels totaling approximately 114.7 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 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.

As of September 30, 2021, leases representing approximately 12.2% of the total annualized base rent of our portfolio are scheduled to expire through December 31, 2022.

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 0.8 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.

Rent changes on new and renewed leases totaling approximately 0.8 million square feet commencing during the three months ended September 30, 2021 were approximately 34.9% higher as compared to the previous rental rates for that same space, and rent changes on new and renewed leases totaling approximately 1.9 million square feet commencing during the nine months ended September 30, 2021 were approximately 26.8% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio of 57.5% and 67.4%, respectively, for the three and nine months ended September 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.

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Acquisition Activity

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

During the three months ended September 30, 2021, we acquired 10 industrial properties for a total purchase price of approximately $167.0 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 June 30, 2021:

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

Property Name Location Acquisition Date Number of

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(in thousands) 1

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 %

Countyline #26 Hialeah, Florida July 14, 2021 1 220,942 $ 39,409 3.7 % —

13020 & 13030 Cerise Hawthorne, California July 14, 2021 2 21,846 8,075 5.4 % —

1150 & 1250 W.

Trenton Ave Orange, California July 30, 2021 2 34,224 9,335 3.6 % —

MLK 9801 Seattle, Washington August 11, 2021 — — 11,900 2.4 % 3.1

MLK 9845 Seattle, Washington August 11, 2021 — — 15,750 3.4 % 3.4

MLK 9600 Seattle, Washington August 11, 2021 — — 22,350 4.9 % 5.2

Foley Street Hayward, California August 26, 2021 2 40,504 8,250 4.9 % —

Paterson Plank III Carlstadt, New Jersey August 27, 2021 — — 17,850 4.5 % 4.9

97 Third Street Kearny, New Jersey September 27, 2021 — — 26,250 3.1 % 5.4

13025 Cerise Hawthorne, California September 30, 2021 1 21,000 7,875 2.9 % —

Total/Weighted Average 8 338,516 $ 167,044 3.8 % 22.0

1 Excludes intangible liabilities and mortgage premiums, if any.

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.

The total aggregate initial investment was approximately $176.8 million, including $3.9 million in capitalized closing costs and acquisition costs and $10.8 million in assumed intangible liabilities and $4.9 million in other credits related to near term capital expenditures at the Countyline #26 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.

Total acquisition cost basis for the property includes the initial purchase price, the effects of marking assumed debt to market, buyer’s due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization.

Total acquisition cost basis for the property includes the initial purchase price, the effects of marking assumed debt to market, buyer’s due diligence and closing costs, estimated near-term

capital expenditures and leasing costs necessary to achieve stabilization.

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 and in our other public filings.

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 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:

As of September 30, 2021, we have four properties under redevelopment expected to contain approximately 0.4 million square feet upon completion with a total expected investment of approximately $117.8 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

Quarter % Pre-leased June 30, 2021

Quarter % Pre-leased September 30, 2021

Sodo Row - North & South $ 66,609 $ 63,145 $ 3,464 5.0 % 234,308 Q4 2021 64.8 %

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73rd Street 20,136 12,493 7,643 5.1 % 129,000 Q4 2022 — %

Paterson Plank III 23,643 18,638 5,005 4.5 % N/A Q4 2022 — %

Total/Weighted Average $ 117,817 $ 99,949 $ 17,868 4.9 % 415,108 36.5 %

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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.

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 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.

During the nine months ended September 30, 2021, we sold one property located in the Seattle, Washington market for a sales price of approximately $10.3 million, resulting in a gain of approximately $3.2 million.

The following summarizes the condensed results of operations of the properties sold during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

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

2021 2020 2021 2020

Rental revenues $ 50 $ 21 $ 279 $ 153

Tenant expense reimbursements 31 10 76 34

Property operating expenses (23) (21) (91) (72)

Depreciation and amortization (17) (41) (120) (119)

Income from operations $ 41 $ (31) $ 144 $ (4)

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 ($223.2 million remaining as of September 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.

During the three and nine months ended September 30, 2021, we issued an aggregate of 751,539 and 2,542,357 shares, respectively, of common stock at a weighted average offering price of $66.51 and $63.22 per share, respectively, under the Previous $300 Million ATM and the $300 Million ATM Program, resulting in net proceeds of approximately $49.3 million and $158.4 million, respectively, and paying total compensation to the applicable sales agents of approximately $0.7 million and $2.3 million, respectively.

Share Repurchase Program

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The program may be suspended or discontinued at any time.

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

As of September 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.

On October 28, 2021, we issued $125.0 million of senior guaranteed notes (the “2.38% Notes”) in a private placement pursuant to a note purchase agreement entered into on August 17, 2021 with certain institutional investors.

The 2.38% Notes bear interest at a fixed rate of 2.38% and mature in August 2030.

The 2.38% Notes and, together with the Series A Notes and the Series B Notes, the “Notes”, are guaranteed by us and by substantially all of the current and to-be-formed subsidiaries of the borrower that own an unencumbered property.

The Notes are not secured 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 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.

On November 2, 2021, our board of directors declared a cash dividend in the amount of $0.34 per share of our common stock payable on January 5, 2022 to the stockholders of record as of the close of business on December 15, 2021.

Contractual Commitments

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.

As of November 2, 2021, we have outstanding contracts with third-party sellers to acquire five industrial properties for a total aggregate purchase price of $94.2 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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Our primary cash expenses consist of our property operating expenses, which include:

real estate taxes, repairs and maintenance, management expenses, insurance, utilities, general and administrative expenses, which include compensation costs, office expenses, professional fees and other administrative expenses, acquisition costs, which include third-party costs paid to brokers and consultants, and interest expense, primarily on our mortgage loans, revolving credit facility, term loans and senior unsecured notes.

paid to brokers and consultants, and interest expense, primarily on our mortgage loan, revolving credit facility, term loans and senior unsecured notes.

Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions at various times during the course of such periods.

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 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.

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

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

As of September 30, 2021, the same store pool consisted of 209 buildings aggregating approximately 12.5 million square feet representing approximately 88.6% of our total square feet owned and 19 improved land parcels consisting of 79.6 acres.

As of September 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 September 30, 2021, consisted of 32 buildings (including three buildings held for sale) aggregating approximately 1.6 million square feet, 12 improved land parcels containing approximately 35.1 acres and four properties under redevelopment expected to contain approximately 0.4 million square feet upon completion.

As of September 30, 2021 and 2020, our consolidated same store pool occupancy was approximately 98.7% and 98.3%, 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 June 30, 2021 to the Three Months Ended June 30, 2020:

For the Three Months Ended June 30,

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

For the Three Months Ended September 30,

2021 2020 $ Change % Change

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

2 Includes 2021 and 2020 acquisitions and dispositions, twelve improved land parcels, one property held for sale with a gross book value of $23.6 million and four properties under redevelopment as of September 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 $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.

Total revenues increased approximately $10.1 million for the three months ended September 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 September 30, 2021 increased approximately 34.9% compared to the previous rental rates for that same space.

For the three months ended September 30, 2021 and 2020, approximately $1.5 million and $1.1 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 $1.2 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.

Total property operating expenses increased approximately $2.0 million during the three months ended September 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 $1.4 million attributable to property acquisitions during 2021 and 2020 as well as increases in real estate taxes related to annual rate increases at certain of our properties.

Depreciation and amortization.

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.

Depreciation and amortization increased approximately $1.5 million during the three months ended September 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 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.

General and administrative expenses increased approximately $1.7 million primarily due to increased restricted stock amortization and other compensation expenses due to an increase in the number of employees for the three months ended September 30, 2021 compared to the same period from the prior year.

Interest and other income.

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

Interest and other income remained consistent for the three months ended September 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 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.

Interest expense increased approximately $0.8 million for the three months ended September 30, 2021 compared to the same period from the prior year primarily due to the issuance of approximately $150.0 million of senior unsecured notes on July 15, 2021 and reduced capitalized interest of approximately $0.3 million, 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,

Gain on sales of real estate investments decreased approximately $5.8 million for the three months ended September 30, 2021 compared to the same period from the prior year.

We recognized a gain of approximately $3.2 million from the sale of one property during the three months ended September 30, 2021, as compared to a recognized gain of approximately $9.0 million from the sale of one property in the same period from the prior year.

Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020:

For the Nine Months Ended September 30,

2021 2020 $ Change % Change

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

2 Includes 2020 and 2021 acquisitions and dispositions, twelve improved land parcels, one property held for sale with a gross book value of $23.6 million and four properties under redevelopment as of September 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.

Total revenues increased approximately $23.3 million for the nine months ended September 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 1.9 million square feet commencing during the nine months ended September 30, 2021 increased approximately 26.8% compared to the same period from the prior year.

For the nine months ended September 30, 2021 and 2020, approximately $3.7 million and $3.0 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.

Total property operating expenses increased approximately $4.8 million during the nine months ended September 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 $2.6 million attributable to property acquisitions during 2021 and 2020 as well as increases in real estate taxes related to annual rate increases at certain of our properties.

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.

Depreciation and amortization increased approximately $2.3 million during the nine months ended September 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.

General and administrative expenses increased approximately $2.7 million for the nine months ended September 30, 2021 primarily due to increased restricted stock amortization and other compensation expenses due to an increase in the number of employees compared to the same period from the prior year.

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 and other income decreased approximately $0.1 million for the nine months ended September 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.

Interest expense increased approximately $1.0 million for the nine months ended September 30, 2021 compared to the same period from the prior year.

This increase is primarily due to the issuance of approximately $150.0 million of senior unsecured notes on July 15, 2021 and reduced capitalized interest of approximately $1.2 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.

Gain on sales of real estate investments decreased approximately $23.6 million for the nine months ended September 30, 2021 compared to the same period from the prior year.

We sold one property during the nine months ended September 30, 2021 and sold four 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 unsecured and secured 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 June 30, 2021:

ATM Stock Offering Program Date Implemented Maximum Aggregate

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

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

ATM Stock Offering Program Date Implemented Maximum Aggregate Offering Price (in thousands) Aggregate Common Stock Available (in thousands)

$300 Million ATM Program June 11, 2021 $ 300,000 $ 223,190

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,

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, 2021 and 2020, respectively (in thousands, except share and price per share data):

For the Three Months Ended September 30,

Shares Sold Weighted Average

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(in thousands)

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,

September 30, 2021 751,539 $ 66.51 $ 49,259 $ 725

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

For the Nine Months Ended September 30,

Shares Sold Weighted Average

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(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.

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.

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 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.

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

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 June 30, 2021 and December 31, 2020.

September 30, 2021 2,542,357 $ 63.22 $ 158,396 $ 2,331

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

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 2.38% Notes bear interest at a fixed rate of 2.38% and mature in August 2030.

The Notes are not secured 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.

As of September 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 July 2028, $100.0 million of senior unsecured notes that mature in December 2029 and $50.0 million of senior unsecured notes that mature in July 2031, (collectively, and with the 2.38% Notes, the “Senior Unsecured Notes”).

On August 20, 2021, our subsidiary entered into a Sixth Amended and Restated Senior Credit Agreement (the “Amended Facility”) which consists of a $250.0 million revolving credit facility that matures in August 2025 (previously October 2022) and a $100.0 million term loan that matures in January 2027 (previously January 2022).

Among other things, the Amended Facility extended the maturity date of the revolving credit facility and the $100.0 million term loan.

As of both September 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.

The aggregate amount of the Amended Facility may be increased to a total of up to $650.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts.

Outstanding borrowings under the Amended 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 Amended 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 Amended Facility plus 1.25%.

The applicable LIBOR margin will range from 1.00% to 1.45% (1.00% as of September 30, 2021) for the revolving credit facility (previously 1.05% to 1.50%) and 1.15% to 1.65% (1.15% as of September 30, 2021) for the $100.0 million term loan (previously 1.20% to 1.70%), depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value.

The Amended 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.

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

The Amended Facility and the Senior Unsecured Notes are not secured by our properties or by interests in the subsidiaries that hold such properties.

The Amended 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 Amended Facility and the Senior Unsecured Notes as of September 30, 2021 and December 31, 2020.

As of September 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 $68.7 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):

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, 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% 3.4% 3.1%

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

As of September 30, 2021 As of September 30, 2020

Total Debt, net $ 596,623 $ 459,083

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Total Debt-to-Total Market Capitalization 4

11.7 % 10.9 %

Floating Rate Debt as a % of Total Debt 5

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Weighted Average Maturity of Total Debt (years) 5.6 4.7

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.

1 Includes 288,548 and 203,729 shares of unvested restricted stock outstanding as of September 30, 2021 and 2020, respectively.

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

2 Closing price of our shares of common stock on the New York Stock Exchange on September 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 including one property held for sale with a gross book value of $23.6 million.

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.

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7 Mortgage loans payable as a percentage of total debt is calculated as mortgage loans payable, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs.

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.

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.

9 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, 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 six months ended June 30, 2021:

The following table sets forth the cash dividends paid or payable per share during the nine months ended September 30, 2021:

For the Three Months Ended Security Dividend per

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June 30, 2021 Common stock $ 0.29 May 4, 2021 June 30, 2021 July 14, 2021

September 30, 2021 Common stock $ 0.34 August 3, 2021 October 1, 2021 October 15, 2021

Sources and Uses of Cash

Our principal sources of cash are cash from operations, borrowings under loans payable, draws on our Facility, common and preferred stock issuances, proceeds from property dispositions and issuances of unsecured notes.

Our principal sources of cash are cash from operations, borrowings under loans payable, draws on our Amended Facility, common and preferred stock issuances, proceeds from property dispositions and issuances of unsecured notes.

Our principal uses of cash are asset acquisitions, debt service, capital expenditures, operating costs, corporate overhead costs and common stock dividends.

Cash From Operating Activities.

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.

Net cash provided by operating activities totaled approximately $98.4 million for the nine months ended September 30, 2021 compared to approximately $77.4 million for the nine months ended September 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 20 properties during nine months ended September 30, 2021 compared to five properties acquired in the same period from the prior year.

Cash From Investing Activities.

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.

Net cash used in investing activities was approximately $359.9 million and net cash provided by investing activities was $8.5 million for the nine months ended September 30, 2021 and 2020, respectively, which consisted primarily of cash paid for property acquisitions of approximately $325.0 million and $46.8 million, respectively, additions to capital improvements of approximately $44.5 million and $31.3 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 $9.6 million and $70.7 million, respectively.

Cash From Financing Activities.

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.

Net cash provided by financing activities was approximately $227.4 million for the nine months ended September 30, 2021, which consisted primarily of approximately $152.5 million in net common stock issuance proceeds and borrowings of $150.0 million in connection with our issuance of senior unsecured notes partially offset by approximately $60.4 million in equity dividend payments and approximately $11.3 million in mortgage loan payments.

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, partially offset by approximately $54.9 million in equity dividend payments and approximately $33.0 million in mortgage loan payments.

Critical Accounting Policies

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Contractual Obligations

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.

As of November 2, 2021, we have five outstanding contracts with third-party sellers to acquire five industrial properties for a total aggregate purchase price of $94.2 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 June 30, 2021 (dollars in thousands):

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

Contractual Obligations Less than 1

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Purchase obligations 1

94,211 — — — 94,211

Total $ 161,777 $ 130,214 $ 72,580 $ 426,398 $ 790,969

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.

1 As of November 2, 2021

As of November 2, 2021, we executed four non-binding letters of intent with third-party sellers to acquire four industrial properties for a total anticipated purchase price of approximately $175.3 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.

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Further, our computation of FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI may not be comparable to FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI reported by other companies.

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), which defines FFO as net income (loss) (determined in accordance with GAAP), excluding gains (losses) from sales of property and impairment write-downs of depreciable real estate, plus depreciation and amortization on real estate assets and after adjustments for unconsolidated partnerships and joint ventures (which are calculated to reflect FFO on the same basis).

of property and impairment write-downs of depreciable real estate, plus depreciation and amortization on real estate assets and after adjustments for unconsolidated partnerships and joint ventures (which are calculated to reflect FFO on the same basis).

We believe that presenting FFO provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets.

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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 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,

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

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

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

$ 21,360 $ 22,722 $ (1,362) (6.0) % $ 54,995 $ 66,282 $ (11,287) (17.0) %

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

Gain on sales of real estate investments (3,185) (9,016) 5,831 (64.7) % (3,185) (26,766) 23,581 (88.1) %

Depreciation and amortization 13,636 12,124 1,512 12.5 % 36,980 34,683 2,297 6.6 %

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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 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.

Under this method, allocations were made to 262,512 and 291,893 of weighted average unvested restricted shares outstanding for the three months ended September 30, 2021 and 2020, respectively, and 230,280 and 387,990 of weighted average unvested restricted shares outstanding for the nine months ended September 30, 2021 and 2020, respectively.

2 Includes performance share award expense of approximately $1.3 million for both the three months ended September 30, 2021 and 2020 and approximately $3.8 million for both the nine months ended September 30, 2021 and 2020.

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 $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.

FFO increased by approximately $6.0 million and $14.7 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods from the prior year due primarily to same store NOI growth of approximately $3.8 million and $11.3 million for the three and nine months ended September 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.

We believe that presenting Adjusted EBITDA provides useful information to investors regarding our operating performance because it is a measure of our operations on an unleveraged basis before the effects of tax, gain (loss) on sales of real estate investments, non-cash depreciation and amortization expense, acquisition costs and stock-based compensation.

amortization expense, acquisition costs and stock-based compensation.

By excluding interest expense, Adjusted EBITDA allows investors to measure our operating performance independent of our capital structure and indebtedness and, therefore, allows for more meaningful comparison of our operating performance between quarters and other interim periods as well as annual periods and for the comparison of our operating performance to that of other companies, both in the real estate industry and in other industries.

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 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,

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

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

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

Net income $ 21,360 $ 22,722 $ (1,362) (6.0) % $ 54,995 $ 66,282 $ (11,287) (17.0) %

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

Gain on sales of real estate investments (3,185) (9,016) 5,831 (64.7) % (3,185) (26,766) 23,581 (88.1) %

Depreciation and amortization 13,636 12,124 1,512 12.5 % 36,980 34,683 2,297 6.6 %

1 unchanged sentence

Stock-based compensation 2,360 1,859 501 26.9 % 7,007 6,353 654 10.3 %

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

Acquisition costs — 123 (123) n/a 172 186 (14) (7.5) %

Adjusted EBITDA $ 38,857 $ 31,699 $ 7,158 22.6 % $ 108,816 $ 92,540 $ 16,276 17.6 %

3 unchanged sentences

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 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.

The same store pool includes all properties that were owned and in operation as of September 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 September 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 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,

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, 2021 and 2020 (dollars in thousands):

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

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

2 unchanged sentences

General and administrative 6,800 5,130 1,670 32.6 % 19,248 16,553 2,695 16.3 %

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

Acquisition costs — 123 (123) n/a 172 186 (14) (7.5) %

Total other income and expenses 1,273 (5,180) 6,453 n/a 8,977 (15,769) 24,746 n/a

5 unchanged sentences

Less straight-line rents and amortization of lease intangibles 3

(2,786) (2,129) (657) 30.9 % (5,219) (3,570) (1,649) 46.2 %

(2,435) 1,412 (3,847) n/a (7,633) (2,167) (5,466) 252.2 %

Cash-basis same store NOI

2 unchanged sentences

Cash-basis same store NOI excluding termination fees $ 34,742 $ 31,274 $ 3,468 11.1 % $ 100,115 $ 90,782 $ 9,333 10.3 %

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.

1 Includes approximately $0.7 million and $3.5 million of lease termination income for the three months ended September 30, 2021 and 2020, respectively, and approximately $0.8 million and $3.7 million of lease termination income for the nine months ended September 30, 2021 and 2020, respectively.

2 Includes 2020 and 2021 acquisitions and dispositions, twelve improved land parcels, one property held for sale with a gross book value of approximately $23.6 million and four 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 $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.

Cash-basis same store NOI was unchanged for the three months ended September 30, 2021 compared to the same period from the prior year primarily due to $3.5 million in lease termination income in the prior period.

Excluding lease termination income, cash-basis same store NOI increased by approximately $3.5 million due to increased rental revenue on new and renewed leases and contractual rent increases.

For the three months ended September 30, 2021 and 2020, total contractual rent abatements of approximately $0.7 million and $0.8 million, respectively, were given to certain tenants in the same-store pool and approximately $15,000 and $3.5 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $0.5 million of the increase in cash-basis same store NOI for the three months ended September 30, 2021 related to properties that were acquired vacant or with near term expirations in 2019.

Cash-basis same store NOI increased by approximately $5.9 million for the nine months ended September 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 the nine months ended September 30, 2021 and 2020, total contractual rent abatements of approximately $2.3 million and $2.4 million, respectively, were given to certain tenants in the same-store pool and approximately $0.2 million and $3.6 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $2.1 million of the increase in cash-basis same store NOI for the nine months ended September 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