What changed in this filing

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Item 2. Properties

2022-02-09 compared with 2021-02-10 · 50 added, 34 removed, 93 unchanged (47% of the section changed)

As of December 31, 2020, we owned a total of 222 buildings aggregating approximately 13.2 million square feet, 25 improved land parcels consisting of approximately 91.5 acres and one property under redevelopment expected to contain approximately 0.2 million square feet upon completion.

As of December 31, 2020, the buildings and improved land parcels were approximately 97.8% and 98.6% leased, respectively, to 488 customers, the largest of which accounted for approximately 5.4% of our total annualized base rent.

As of December 31, 2021, we owned a total of 253 buildings aggregating approximately 15.1 million square feet, 36 improved land parcels consisting of approximately 127.1 acres and four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.2 million square feet and two improved land parcels aggregating approximately 12.1 acres.

As of December 31, 2021, the buildings and improved land parcels were approximately 95.5% and 94.8% leased (including 0.4 million square feet of vacancy acquired during the fourth quarter of 2021), respectively, to 554 customers, the largest of which accounted for approximately 4.9% of our total annualized base rent.

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

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See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in this Annual Report on Form 10-K for a general description of these types of industrial real estate.

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

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.

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

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

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

Warehouse/distribution 223 $ 146,272 79.5 %

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

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

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Occupancy % as of December 31, 2021 4

Annualized Base Rent (000’s) 1

99.0 % 98.5 % 97.7 % 96.8 % 83.7 % 93.9 % 95.5 %

Annualized Base Rent (in thousands) 1

$ 28,043 $ 43,228 $ 29,861 $ 29,076 $ 16,527 $ 20,036 $ 166,771

% of Total 16.8 % 25.9 % 17.9 % 17.5 % 9.9 % 12.0 % 100.0 %

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Occupancy % as of December 31, 2021

Annualized Base Rent (000’s) 1

90.5 % 100.0 % 100.0 % 78.1 % 100.0 % 100.0 % 94.8 %

Annualized Base Rent

(in thousands) 1

$ 4,341 $ 7,043 $ 1,418 $ 2,163 $ 422 $ 1,707 $ 17,094

% of Total 25.4 % 41.2 % 8.3 % 12.6 % 2.5 % 10.0 % 100.0 %

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3.3 5.9 3.4 3.8 2.6 6.0 5.0

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

$ 32,384 $ 50,271 $ 31,279 $ 31,239 $ 16,949 $ 21,743 $ 183,865

Gross Book Value (000’s) 3

% of Total Annualized Base Rent 1

17.6 % 27.3 % 17.0 % 17.0 % 9.2 % 11.9 % 100.0 %

Gross Book Value (in thousands) 3

$ 537,072 $ 750,302 $ 453,233 $ 551,547 $ 341,946 $ 312,726 $ 2,946,826

% of Total Gross Book Value 18.2 % 25.5 % 15.4 % 18.7 % 11.6 % 10.6 % 100.0 %

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

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

As of December 31, 2020, we owned one property under redevelopment expected to contain approximately 0.2 million square feet upon completion with a total expected investment of approximately $64.1 million, including redevelopment costs, capitalized interest and other costs of approximately $61.4 million.

3 Includes four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.2 million square feet and two improved land parcels aggregating approximately 12.1 acres.

4 Includes 0.4 million square feet of vacancy acquired in Miami.

As of December 31, 2021, we owned four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.2 million square feet and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately $75.8 million, including redevelopment costs, capitalized interest and other costs.

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The following table summarizes our capital expenditures incurred during the three months and years ended December 31, 2021 and 2020 (dollars in thousands):

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$ 17,701 $ 8,336 $ 67,830 $ 38,613

1 Includes approximately $2.0 million and $10.8 million for the three months ended December 31, 2020 and 2019, respectively, and approximately $17.4 million and $42.5 million for the years ended December 31, 2020 and 2019, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 10 and 17 properties for the three months ended December 31, 2020 and 2019, respectively, and 15 and 20 properties for the years ended December 31, 2020 and 2019, respectively.

1 Includes approximately $11.0 million and $2.0 million for the three months ended December 31, 2021 and 2020, respectively, and approximately $39.0 million and $17.4 million for the years ended December 31, 2021 and 2020, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 22 and 10 properties for the three months ended December 31, 2021 and 2020, respectively, and at 24 and 15 properties for the years ended December 31, 2021 and 2020, respectively.

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

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Lease terms typically range from three to ten years.

We monitor the liquidity and creditworthiness of our tenants on an on-going basis by reviewing outstanding accounts receivable balances, and as provided under the respective lease agreements, review the tenant’s financial condition periodically as appropriate.

We monitor the liquidity and creditworthiness of our tenants on an ongoing basis by reviewing outstanding accounts receivable balances, and as provided under the respective lease agreements, review the tenant’s financial condition periodically as appropriate.

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

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

Customer Leases Rentable

Square Feet % of Total

Square Feet Annualized

(in thousands) 1

1 Amazon.com 2

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6 246,779 1.6 % 4,814 2.6 %

3 United States Government 8 300,732 2.3 % 3,748 2.5 %

3 Danaher 3 171,707 1.1 % 3,844 2.1 %

4 United States Government 8 300,732 2.0 % 3,757 2.0 %

5 District of Columbia 7 234,071 1.6 % 3,362 1.8 %

6 United States Postal Service 3 125,950 1.0 % 2,758 1.8 %

6 O'Neill Logistics 2 237,692 1.6 % 2,069 1.1 %

7 DirectBuy Home Improvement 1 230,891 1.5 % 2,011 1.1 %

8 Costco-Innovel Solutions LLC 1 219,910 1.5 % 1,870 1.0 %

9 Port Kearny Security, Inc.

1 — — % 1,800 1.0 %

10 XPO Logistics 2 180,717 1.2 % 1,764 1.0 %

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1 147,898 1.0 % 1,700 0.9 %

11 O'Neill Logistics 2 237,692 1.8 % 1,466 1.0 %

12 Exquisite Apparel Corporation 1 114,061 0.8 % 1,574 0.9 %

13 Bar Logistics 1 203,263 1.3 % 1,546 0.9 %

14 Topaz Lighting Corp.

1 190,000 1.3 % 1,507 0.9 %

13 Port Kearny Security, Inc.

1 — — % 1,458 1.0 %

14 YRC 2 61,252 0.5 % 1,423 0.9 %

15 Envogue International 1 192,000 1.3 % 1,454 0.8 %

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

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

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

18 Lilac Solutions Inc.

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19 Saia Motor Freight Line LLC 1 52,086 0.3 % 1,315 0.7 %

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

20 JAM'N Logistics 1 110,336 0.7 % 1,229 0.7 %

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

Total 49 3,504,023 23.3 % $ 49,003 26.7 %

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

2 Includes an improved land parcel consisting of 2.8 acres.

3 Includes two improved land parcels totaling 7.8 acres.

4 Lease area consists of 16.9 acres of improved land.

The following table summarizes the anticipated lease expirations for leases in place at December 31, 2020, without giving effect to renewal options or termination rights, if any, at or prior to the scheduled expirations:

Year Rentable

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 December 31, 2021, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:

Year Rentable Square Feet % of Total Rentable

Square Feet Annualized Base Rent

(in thousands) 2, 3

% of Total Annualized

2,073,677 13.8 % $ 22,246 10.6 %

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1 Includes leases that expire on or after December 31, 2021 and month-to-month leases totaling approximately 44,655 square feet.

2 Annualized base rent is calculated as monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of December 31, 2020, multiplied by 12.

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 December 31, 2021, multiplied by 12.

3 Includes annualized base rent related to 36 improved land parcels totaling approximately 127.1 acres.

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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 December 31, 2021, leases representing approximately 10.6% of the total annualized base rent of our portfolio are scheduled to expire during the year ending December 31, 2022.

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

We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our 2022 expirations will be above the rates currently being paid for the same space.

Rent changes on new and renewed leases totaling approximately 0.6 million square feet commencing during the three months ended December 31, 2021 were approximately 34.4% higher as compared to the previous rental rates for that same space, and rent changes on new and renewed leases totaling approximately 2.6 million square feet commencing during the year ended December 31, 2021 were approximately 28.4% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio of 64.3% and 57.7% for the three months and year ended December 31, 2020, respectively.

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.

We had a tenant retention ratio of 57.5% and 65.7%, respectively, for the three months and year ended December 31, 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.

Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates above the current average rental rates.

Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates equal to or above the current average rental rates.

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

As of December 31, 2020, one property with a gross investment book value of approximately $32.7 million was encumbered by a mortgage loan payable, net of deferred financing costs, totaling approximately $11.3 million, which bears interest at a weighted average fixed annual rate of 5.49%.

Subsequent to December 31, 2020, we paid off such mortgage loan.

Legal Proceedings.

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Not Applicable.

Table of Content s

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-K

Item 2. Properties