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Item 7. Management’s Discussion and Analysis

2022-02-09 compared with 2021-02-10 · 275 added, 301 removed, 387 unchanged (60% of the section changed)

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This discussion contains forward-looking statements reflecting current expectations that involve risks and uncertainties.

Actual results and the timing of events may differ materially

from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

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We acquire, own and operate industrial real estate in six major coastal U.S.

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 buildings (approximately 82.0% of our total annualized base rent as of December 31, 2020), flex buildings (including light industrial and R&D) (approximately 5.0%), transshipment buildings (approximately 5.3%) and improved land parcels (approximately 7.7%).

We invest in several types of industrial real estate, including warehouse/distribution (approximately 79.5% of our total annualized base rent as of December 31, 2021), flex (including light industrial and research and development, or R&D) (approximately 4.8%), transshipment (approximately 6.4%) and improved land (approximately 9.3%).

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.

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

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, our 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, our 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.

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

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This expectation is based upon prevailing market conditions and may change over time in response to different prevailing market conditions.

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The properties we acquire may be stabilized (fully leased) or unstabilized (have near term lease expirations, be partially or fully vacant and may require physical repositioning).

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2021 Developments

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

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

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

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

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

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

with our customers who have been forced to close or otherwise limit operations or whose businesses have been adversely impacted during the COVID-19 pandemic to, on a case-by-case basis, provide rent deferments.

Through February 8, 2021, we have granted rent deferrals to 62 tenants aggregating approximately 2.8% of annualized base rent.

No rent abatements were granted.

For the 62 rent deferrals granted:

• 17 tenants aggregating 0.3% of annualized base rent (11.0% of total deferrals) have completed their rent deferral period and have fully repaid the deferral amounts;

• 31 tenants aggregating 2.1% of annualized base rent (73.6% of total deferrals) have not completed their rent deferral repayment period and are fulfilling the terms of their deferral agreements;

• 14 tenants aggregating 0.4% of annualized base rent (15.4% of total deferrals) have defaulted on their rent deferral repayments.

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

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

We believe, although there can be no assurance, that our balance sheet is well positioned to make opportunistic acquisitions as we have only $11.3 million of debt maturities expiring in 2021 and no balance outstanding on our $250 million revolving credit facility.

In addition, we had a cash balance of approximately $107.2 million as of December 31, 2020.

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

The COVID-19 pandemic, including the emergence of various variants, has caused significant disruption to the U.S.

and global economies and has contributed to significant volatility and negative pressure in financial markets.

Our operations, including our occupancy, rent collections and acquisition volume, largely returned to pre-COVID levels during the year ended December 31, 2021.

However, there can be no assurance that our business, and that of our tenants, will not be materially and adversely impacted by COVID-19 in the future.

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

Acquisition Activity

During 2020, we acquired six industrial buildings containing approximately 0.2 million square feet and five improved land parcels containing approximately 12.0 acres for a total purchase price of approximately $96.7 million.

The buildings and improved land parcels were acquired from unrelated third parties using existing cash on hand, net proceeds from dispositions and net proceeds from the issuance of common stock.

The following table sets forth the industrial buildings and improved land parcels we acquired during 2020:

During 2021, we acquired 34 industrial properties for a total purchase price of approximately $657.3 million.

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

The following table sets forth the industrial properties we acquired during 2021:

Property Name Location Acquisition Date Number of

Purchase Price

Buildings Square

Feet Purchase Price

(in thousands) 1

Old Bayshore 3

San Jose, CA March 12, 2020 — — $ 11,784 5.0 %

Gladwick Rancho Dominguez, CA March 12, 2020 1 65,670 17,950 3.6 %

Kent, WA April 17, 2020 — — 4,500 5.7 %

Hudson Seattle, WA May 31, 2020 1 13,000 5,611 4.0 %

Starlite Street South San Francisco, CA July 10, 2020 1 22,275 6,300 4.7 %

Aviation Blvd 5

Inglewood, CA October 26, 2020 — — 10,000 5.7 %

Porter Street Los Angeles, CA November 5, 2020 1 12,618 4,400 4.5 %

SE 32nd Street Bellevue, WA November 6, 2020 1 38,883 11,737 4.9 %

Maple Street 6

Rancho Dominguez, CA December 5, 2020 — — 9,750 5.7 %

East Marginal 7

Tukwila, WA December 30, 2020 — — 6,625 4.6 %

McLaren Irvine, CA December 30, 2020 1 11,348 8,000 4.0 %

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

117th Place NE Kirkland, WA February 25, 2021 1 126,721 33,750 2.9 % —

Countyline #24 & #25 Hialeah, FL March 17, 2021 2 273,577 48,114 3.7 % —

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

73rd Street Miami, FL April 6, 2021 — — 5,800 5.1 % 5.8

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

East Gish San Jose, CA April 22, 2021 — — 8,004 4.8 % 2.2

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

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

SW 16th Street Renton, WA June 14, 2021 — — 7,615 1.5 % 2.9

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

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

1150 & 1250 W.

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

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

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

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

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

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

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

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

Woodinville Woodinville, WA October 1, 2021 1 84,238 23,600 3.1 % —

190 Morgan Brooklyn, NY October 12, 2021 1 11,881 4,450 4.9 % —

San Pedro Gardena, CA October 15, 2021 — — 8,800 7.0 % 2.0

228 North Avenue Elizabeth, NJ October 20, 2021 1 30,978 44,000 4.8 % —

Pickett Alexandria, VA October 29, 2021 1 27,683 9,000 4.5 % —

Berryessa San Jose, CA October 29, 2021 — — 23,000 5.2 % 7.2

768 772 Ceres Los Angeles, CA November 18, 2021 2 16,887 7,661 3.4 % —

Tuxedo Hyattsville, MD November 23, 2021 — — 8,000 5.6 % 2.9

Maple II Rancho Dominguez, CA November 30, 2021 — — 13,800 4.9 % 2.3

Eisenhower Alexandria, VA December 10, 2021 3 199,396 60,750 3.0 % —

4501 46th Street Bladensburg, MD December 13, 2021 — — 11,850 3.8 % 4.4

Countyline #27 & #28 Hialeah, FL December 15, 2021 2 401,906 74,142 3.8 % —

Woodinville II Woodinville, WA December 23, 2021 2 118,310 33,500 3.7 % —

Willows Redmond, WA December 27, 2021 — — 3,500 4.9 % 0.8

Total/Weighted Average 34 1,895,024 $ 657,345 4.0 % 52.5

1 The total aggregate initial investment was approximately $100.4 million, including $1.7 million in closing costs and acquisition costs.

Additionally, we assumed $2.1 million in intangible liabilities.

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1 Excludes intangible liabilities and mortgage premiums, if any.

The total aggregate initial investment was approximately $682.0 million, including $12.6 million in capitalized closing costs and acquisition costs and $34.2 million in assumed intangible liabilities and $22.1 million in other credits related to near term capital expenditures at the Countyline #24 & #25, Countyline #26 and Countyline #27 & #28 properties.

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

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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 this Annual Report on Form 10-K.

3 An improved land parcel containing approximately 2.7 acres.

4 An improved land parcel containing approximately 2.8 acres.

5 An improved land parcel containing approximately 1.9 acres.

6 An improved land parcel containing approximately 2.5 acres.

7 An improved land parcel containing approximately 2.1 acres.

Redevelopment Activity

As of December 31, 2020, we owned one property under redevelopment that will 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 as follows:

Property Name Total Expected Investment (in thousands) 1

Amount Spent to Date (in thousands) Estimated Amount Remaining to Spend (in thousands) Estimated Stabilized Cap Rate 2

Estimated Completion Quarter % Pre-leased December 31, 2020

Sodo Row - North & South $ 64,109 $ 61,448 $ 2,661 4.3 % Q4 2021 14.0 %

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

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

As of December 31, 2021, we had 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 as follows:

Property Name Total Expected

Investment (in

Amount Spent to Date (in thousands) Estimated

Spend (in thousands) Estimated

Stabilized Cap

Estimated Post-Development Square Feet Estimated

Quarter % Pre-leased December 31, 2021

Americas Gateway $ 7,429 $ 6,392 $ 1,037 5.5 % 51,800 Q4 2022 50.9 %

Paterson Plank III 3

23,643 19,080 4,563 4.5 % N/A Q4 2022 — %

73rd Street 20,136 16,254 3,882 5.1 % 128,844 Q4 2022 — %

24,563 23,431 1,132 5.1 % N/A Q1 2023 — %

Total/Weighted Average $ 75,771 $ 65,157 $ 10,614 5.0 % 180,644 14.6 %

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

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

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

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

During the year ended December 31, 2020, we completed redevelopment of our Kent 192 property in Kent, Washington and 6th Avenue South property in Seattle, Washington, with estimated stabilized cap rates of 5.0% and 5.1%, respectively.

The total aggregate investment was approximately $49.8 million consisting of approximately 0.3 million square feet.

3 Improved land parcel of approximately 4.9 acres.

4 Improved land parcel of approximately 7.2 acres.

During the fourth quarter of 2021, we completed redevelopment of our Sodo Row - North & South property in Seattle, Washington, an approximately 0.2 million square foot redevelopment property.

The total investment was approximately $62.8 million.

We capitalized interest associated with redevelopment and expansion activities of approximately $0.7 million, $1.6 million and $3.2 million during the years ended December 31, 2021, 2020 and 2019, respectively.

Disposition Activity

During the year ended December 31, 2020, we sold three properties located in the Washington, D.C.

market for a total aggregate sales price of approximately $51.3 million, resulting in a gain of approximately $17.8 million, and one property located in the Miami market for a sales price of approximately $22.2 million, resulting in a gain of approximately $9.0 million.

The following summarizes the condensed results of operations of the properties sold during the year ended December 31, 2020 for the years ended December 31, 2020, 2019 and 2018 (in thousands):

During the year ended December 31, 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, and one property located in the New York/New Jersey market for a sales price of approximately $32.7 million, resulting in a gain of approximately $13.4 million.

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The following summarizes the condensed results of operations of the properties sold during the year ended December 31, 2021 for the years ended December 31, 2021, 2020 and 2019 (dollars in thousands):

For the Year Ended December 31,

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Income from operations $ 890 $ 615 $ 1,053

Public Offering

On November 8, 2021, we completed a public offering of 3,500,000 shares of our common stock at a price per share of $74.50.

On November 10, 2021, we sold an additional 525,000 shares upon the exercise by the underwriters of their option to purchase additional shares.

The net proceeds of the offering were approximately $296.5 million after deducting the underwriting discount and offering costs of approximately $3.3 million.

We intend to use the net proceeds for general corporate purposes, which may include, without limitation, working capital, repayment of indebtedness, future acquisitions and redevelopments.

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 ($221.4 million remaining as of December 31, 2021) in amounts and at times as we determine from time to time.

We intend to use the net proceeds from the offering of the shares under the $300 Million ATM Program, if any, for general corporate purposes, which may include future acquisitions and repayment of indebtedness, including borrowings under our revolving credit facility.

During 2020, we issued an aggregate of 1,197,597 shares of common stock at a weighted average offering price of $54.08 per share under the $300 Million ATM Program, resulting in net proceeds of approximately $63.8 million and paying total compensation to the applicable sales agents of approximately $0.9 million.

Senior Secured Loan

We had a senior secured loan (the “Senior Secured Loan”) outstanding to a borrower that bore interest at a fixed annual interest rate of 8.0% and was fully repaid in May 2020.

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

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 2021, we issued an aggregate of 2,569,771 shares of common stock at a weighted average offering price of $63.23 per share under the Previous $300 Million ATM and the $300 Million ATM Program, resulting in net proceeds of approximately $160.1 million and paying total compensation to the applicable sales agents of approximately $2.4 million.

Share Repurchase Program

We have a share repurchase program authorizing us to repurchase up to 3,000,000 shares of our outstanding common stock from time to time through December 31, 2022 (extended from December 31, 2020 by our board of directors on November 3, 2020).

Purchases made pursuant to the program, if any, will be made in either the open market or in privately negotiated transactions as permitted by federal securities laws and other legal requirements.

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

Purchases made pursuant to this program, if any, will be made in either the open market or in privately negotiated transactions as permitted by federal securities laws and other legal requirements.

The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors.

The program may be suspended or discontinued at any time.

As of December 31, 2020, we have not repurchased any shares of our common stock pursuant to our share repurchase program.

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

Senior Unsecured Notes

On July 15, 2021, we issued (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”) in a private placement.

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.

On October 28, 2021, we issued $125.0 million of senior guaranteed notes (the “2.38% Notes”) in a private placement.

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

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On February 8, 2022, our board of directors declared a cash dividend in the amount of $0.34 per share of our common stock payable on April 8, 2022 to the stockholders of record as of the close of business on March 25, 2022.

The following table sets forth the cash dividends paid or payable per share during the year ended December 31, 2021:

For the Three

Months Ended Security Dividend

Declaration Date Record Date Date Paid

For the Three Months Ended Security Dividend per

Share Declaration Date Record Date Date Paid

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

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Contractual Commitments

As of February 9, 2021, we have outstanding contracts with third-party sellers to acquire six industrial properties for a total aggregate purchase price of approximately $123.8 million, as further described under the heading “Contractual Obligations” in this Annual Report on Form 10-K.

As of February 8, 2022, we have outstanding contracts with third-party sellers to acquire five industrial properties for a total aggregate purchase price of $125.8 million, as described under the heading “Material Cash Commitments” in this Annual Report on Form 10-K.

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.

Current operating conditions in our six markets for our business are very good.

Current operating conditions in our six markets for our business are excellent.

We believe that on average, the rental rates we are likely to achieve on new or renewed leases for our 2022 expirations will be above the rates currently paid for the same space.

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This new development will slow potential rent growth from what it would be without such new development.

We see attractive acquisition opportunities and expect our 2021 acquisition volume to exceed that of 2020, perhaps significantly so.

We see attractive acquisition opportunities.

Nevertheless, our acquisition volume will be dependent on both the quality and pricing of the opportunity set and the price of our stock relative to net asset value (“NAV”).

Those conditions, not knowable in advance, will determine our results.

We will continue to sell assets and redeploy the capital to enhance NAV or return the capital to shareholders.

We will continue to sell assets and redeploy the capital to enhance NAV per share or return the capital to shareholders.

We entered 2022 with our balance sheet exceedingly well positioned for growth as we have no balance outstanding on our $250.0 million revolving credit facility and a cash balance of approximately $204.4 million.

Eleven years ago, we completed our $175 million blind-pool IPO with a plan to invest in infill industrial real estate in the six best coastal U.S.

Since then, we have grown to approximately $4.5 billion, with $4.0 billion of equity as of December 31, 2020.

Within our six markets we have increasingly focused on urban infill locations.

While our net growth will remain limited to a size where we can make directly informed operational decisions, we feel more strongly today than we did eleven years ago about the long-term investment merits of our strategy and the growth opportunities ahead.

While our net growth will remain limited to a size where we can make directly informed operational decisions, we feel more strongly today than we did twelve years ago about the long-term investment merits of our strategy and the growth opportunities ahead.

We are mindful, always, that it is per share rather than aggregate results that matter.

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Our outlook is subject to the risks set forth in this Annual Report on Form 10-K, including the risks set form in “Item 1A - Risk Factors”.

Although the U.S.

economy has been experiencing relatively modest inflation rates recently, and a wide variety of industries and sectors are affected differently by changing commodity prices, inflation has increased construction costs but has not had a significant impact on our operating costs.

economy has experienced an increase in inflation rates recently.

A wide variety of industries and sectors are affected by increasing commodity prices.

Inflation has increased construction costs, including tenant improvements and capital projects, and operating costs, recently.

Most of our leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation.

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Financial Condition and Results of Operations

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We derive substantially all of our revenues from rents received from tenants under existing leases on each of our properties.

These revenues include fixed base rents and recoveries of certain property operating expenses that we have incurred and that we pass through to the individual tenants.

Approximately 92.4% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases.

Approxi mately 94.2% o f our leased space includes fixed rental increases or Consumer Price Index-based rental increases.

Lease terms typically range from three to ten years.

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.

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 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 following analysis of our results below for the years ended December 31, 2020 and 2019 includes the changes attributable to same store properties.

The same store pool for the comparison of the 2020 and 2019 fiscal years includes all properties that were owned and in operation as of December 31, 2020 and since January 1, 2019 and excludes properties that were either disposed of prior to, held for sale to a third-party or in redevelopment as of December 31, 2020.

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

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

As of December 31, 2021, the same store pool consisted of 210 buildings aggregating approximately 12.5 million square feet representing approximately 83.0% of our total square feet owned and 19 improved land parcels consisting of approximately 79.6 acres.

As of December 31, 2020, the non-same store properties, which we acquired, redeveloped or sold during 2019 and 2020, or were held for sale (if any) or in redevelopment as of December 31, 2020, consisted of 24 buildings aggregating approximately 1.2 million square feet, 11 improved land parcels consisting of approximately 37.3 acres and one property under redevelopment expected to contain approximately 0.2 million square feet upon completion.

As of December 31, 2021, the non-same store properties, which we acquired, redeveloped, or sold during 2020 and 2021 or were held for sale (if any) or in redevelopment as of December 31, 2021, consisted of 43 buildings aggregating approximately 2.6 million square feet, 17 improved land parcels consisting of approximately 47.5 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 and 2020, our consolidated same store pool occupancy was approximately 98.2% and 98.0%, respectively.

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

Comparison of the Year Ended December 31, 2020 to the Year Ended Year Ended December 31, 2019:

For the Year Ended December 31,

2020 2019 $ Change % Change

(Dollars in thousands)

Rental revenues 1

Same store $ 124,992 $ 121,191 $ 3,801 3.1 %

Non-same store operating properties 2

22,109 13,455 8,654 64.3 %

Total rental revenues 147,101 134,646 12,455 9.3 %

Tenant expense reimbursements 1

Same store 36,327 33,925 2,402 7.1 %

Non-same store operating properties 2

3,456 2,451 1,005 41.0 %

Total tenant expense reimbursements 39,783 36,376 3,407 9.4 %

Total revenues 186,884 171,022 15,862 9.3 %

Property operating expenses

Same store 42,601 39,655 2,946 7.4 %

Non-same store operating properties 2

6,495 4,546 1,949 42.9 %

Total property operating expenses 49,096 44,201 4,895 11.1 %

Net operating income 3

Same store 118,718 115,461 3,257 2.8 %

Non-same store operating properties 2

19,070 11,360 7,710 67.9 %

Total net operating income $ 137,788 $ 126,821 $ 10,967 8.6 %

Other costs and expenses

Depreciation and amortization 45,875 44,015 1,860 4.2 %

General and administrative 23,489 23,924 (435) (1.8) %

Acquisition costs 271 45 226 502.2 %

Total other costs and expenses 69,635 67,984 1,651 2.4 %

Other income (expense)

Interest and other income 873 3,815 (2,942) (77.1) %

Interest expense, including amortization (15,997) (16,338) 341 (2.1) %

Loss on extinguishment of debt — (189) 189 (100.0) %

Gain on sales of real estate investments 26,766 9,391 17,375 185.0 %

Total other income and (expenses) 11,642 (3,321) 14,963 n/a

Net income $ 79,795 $ 55,516 $ 24,279 43.7 %

1 On January 1, 2019, we adopted the practical expedient under Accounting Standards Update (“ASU”) No.

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

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

We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with accounting principals generally accepted in the United States of America ("GAAP").

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

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

2 Includes 2019 and 2020 acquisitions and dispositions, eleven improved land parcels and one property under redevelopment as of December 31, 2020.

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

See “Non-GAAP Financial Measures” in this Annual Report on Form 10-K for a 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 $15.9 million for the year ended December 31, 2020 compared to the prior year due primarily to property acquisitions during 2019 and 2020 and increased revenue on new and renewed leases.

Cash rents on new and renewed leases totaling approximately 2.6 million square feet commencing during the year ended December 31, 2020 increased approximately 22.1% compared to the same period from the prior year.

For the three months and year ended December 31, 2020, approximately $1.3 million and $4.3 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

During the year ended December 31, 2020, primarily due to the effects of COVID-19 on our tenants, approximately $1.3 million in straight-line rent receivables was reversed.

Additionally, during the year ended December 31, 2020, we terminated a lease with the existing tenant at our Belleville property and executed a new lease with a leading e-commerce firm.

The lease termination fee received was approximately $3.3 million and the non-cash deferred rent receivable write-off was approximately $3.2 million.

Property operating expenses.

Total property operating expenses increased approximately $4.9 million during the year ended December 31, 2020 compared to the prior year.

The increase in total property operating expenses was due primarily to an increase of approximately $1.1 million in utilities and maintenance expenses and $1.5 million attributable to increases in real estate taxes for properties included in our same store pool.

Depreciation and amortization.

Depreciation and amortization increased approximately $1.9 million during the year ended December 31, 2020 compared to the prior year due to property acquisitions during 2019 and 2020.

General and administrative expenses.

General and administrative expenses decreased approximately $0.4 million for the year ended December 31, 2020 compared to the prior year due primarily to decreased performance share award expense offset by increased compensation expense.

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

Performance share award expense for the year ended December 31, 2020 was approximately $6.6 million as compared to approximately $8.0 million for the prior year.

See “Note 11 —Stockholder’s Equity” in our notes to the consolidated financial statements for more information regarding our performance share awards.

Acquisition costs.

Acquisition costs increased $0.2 million for the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to dead deal costs incurred during 2020 with respect to potential acquisitions that did not close.

Interest and other income.

Interest and other income decreased approximately $2.9 million for the year ended December 31, 2020 compared to the prior year primarily due to lower interest and fees earned on our Senior Secured Loan, offset by interest earned on higher cash balances held during the year ended December 31, 2020.

Interest expense, including amortization.

Interest expense decreased approximately $0.3 million for the year ended December 31, 2020 compared to the prior year due primarily to lower average interest rate on our term loan and lower average outstanding borrowings on our mortgage loans payable, offset by a decrease of $0.1 million in capitalized interest compared to the prior year.

Gain on sales of real estate investments .

Gain on sales of real estate investments increased approximately $17.4 million for the year ended December 31, 2020 compared to the prior year.

The aggregate sales price for property sales for the year ended December 31, 2020 was approximately $73.5 million as compared to approximately $48.9 million for the prior year.

The following analysis of our results below for the years ended December 31, 2019 and 2018 includes the changes attributable to same store properties.

The same store pool for the comparison of the 2019 and 2018 fiscal years includes all properties that were owned and in operation as of December 31, 2019 and since January 1, 2018 and excludes properties that were either disposed of prior to, held for sale to a third-party or in redevelopment as of December 31, 2019.

As of December 31, 2019, the same store pool consisted of 187 buildings aggregating approximately 11.8 million square feet representing approximately 88.6% of our total square feet owned and ten improved land parcels consisting of approximately 47.2 acres.

As of December 31, 2019, the non-same store properties, which we acquired or sold during 2018 and 2019, were held for sale (if any) or in redevelopment as of December 31, 2019, consisted of 33 buildings aggregating approximately $1.5 million square feet, nine improved land parcels consisting of approximately 30.4 acres and four properties under redevelopment expected to contain approximately 0.5 million square feet upon completion.

As of December 31, 2019 and 2018, our consolidated same store pool occupancy was approximately 98.4% and 99.1%, respectively.

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Comparison of the Year Ended December 31, 2021 to the Year Ended December 31, 2020:

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Interest expense, including amortization (18,054) (15,997) (2,057) 12.9 %

Loss on extinguishment of debt (189) — (189) n/a

Gain on sales of real estate investments 16,627 26,766 (10,139) (37.9) %

Total other income and expenses (3,321) 14,063 (17,384) n/a

Total other income (expense) (605) 11,642 (12,247) n/a

Net income $ 87,254 $ 79,795 $ 7,459 9.3 %

1 On January 1, 2019, we adopted the practical expedient under ASU No.

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

1 Accounting Standards Update (“ASU”) No.

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

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

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

We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

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

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

2 Includes 2018 and 2019 acquisitions and dispositions, nine improved land parcels and four properties under redevelopment as of December 31, 2019.

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

2 Includes 2020 and 2021 acquisitions and dispositions, seventeen improved land parcels and four properties under redevelopment as of December 31, 2021.

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

Total revenues increased approximately $19.4 million for the year ended December 31, 2019 compared to the prior year due primarily to property acquisitions during 2019 and 2018 and increased revenue on new and renewed leases.

Cash rents on new and renewed leases totaling 0.2 million square feet commencing during the year ended December 31, 2019 increased approximately 17.3% compared to the same period from the prior year.

For the three months and year ended December 31, 2019, approximately $0.3 million and $2.0 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

See “Non-GAAP Financial Measures” in this Annual Report on Form 10-K 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.

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Total revenues increased approximately $35.0 million for the year ended December 31, 2021 compared to the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2021 and 2020.

Cash rents on new and renewed leases totaling approximately 2.6 million square feet commencing during the year ended December 31, 2021 increased approximately 28.4% compared to the same period from the prior year.

For the years ended December 31, 2021 and 2020, approximately $5.3 million and $4.3 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.3 million and $3.7 million, respectively, was recorded in lease termination revenue.

Property operating expenses.

Total property operating expenses increased approximately $7.2 million during the year ended December 31, 2021 compared to the prior year.

The increase in total property operating expenses was due primarily to an increase of approximately $3.5 million attributable to property acquisitions during 2019 and 2018.

The increase in total property operating expenses was primarily due to an increase of approximately $4.6 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 $3.2 million during the year ended December 31, 2019 compared to the prior year due to property acquisitions during 2019 and 2018.

Depreciation and amortization increased approximately $4.8 million during the year ended December 31, 2021 compared to the prior year primarily due to property acquisitions during 2020 and 2021.

General and administrative expenses.

General and administrative expenses increased approximately $2.4 million for the year ended December 31, 2019 compared to the prior year due primarily to increased compensation expense, bonus expense, accounting service fees, and performance share award expense.

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

Performance share award expense for the year ended December 31, 2019 was approximately $8.0 million as compared to approximately $7.1 million for the prior year.

See “Note 11 - Stockholder’s Equity” in our notes to the consolidated financial statements for more information regarding our performance share awards.

Acquisition costs.

Acquisition costs decreased by approximately $0.1 million for the year ended December 31, 2019 compared to the year ended 2018.

General and administrative expenses increased approximately $3.5 million for the year ended December 31, 2021 primarily due to increased restricted stock amortization and other compensation expenses, including an increase in bonus expense of approximately $1.8 million and an increase in the number of employees compared to the prior year.

Interest and other income.

Interest and other income increased approximately $0.2 million for the year ended December 31, 2019 compared to the prior year primarily due to approximately $3.3 million in interest and fees earned on our Senior Secured Loan, which we made in May 2018, and higher cash balances and interest rates during 2019 compared to the prior year.

Interest and other income decreased approximately $0.1 million for the year ended December 31, 2021 compared to the prior year primarily due to the pay down of our outstanding senior secured loan balance.

Interest expense, including amortization.

Interest expense decreased approximately $1.9 million for the year ended December 31, 2019 compared to the prior year due primarily to lower average outstanding borrowings on our revolving credit facility and mortgage loans payable and an increase of $0.7 million in capitalized interest compared to the prior year.

Interest expense increased approximately $2.1 million for the year ended December 31, 2021 compared to the prior year.

This increase was primarily due to the issuance of approximately $275 million of senior unsecured notes during 2021, partially offset by the repayment of a $32.7 million mortgage loan in 2020 and an $11.3 million mortgage loan in 2021.

Gain on sales of real estate investments.

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The aggregate sales price for property sales for the year ended December 31, 2021 was approximately $43.0 million as compared to approximately $73.5 million for the prior year.

Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019:

Discussion of the year ended December 31, 2020 compared to the year ended December 31, 2019 was included in our Annual Report on Form 10-K for the year ended December 31, 2020 on page 34 under Part II, Item 7, “Management's Discussion and Analysis of Financial Position and Results of Operations”, which was filed with the Securities and Exchange Commission on February 10, 2021.

Liquidity and Capital Resources

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• have staggered debt maturities that are aligned to our expected average lease term (5-7 years), positioning us to re-price parts of our capital structure as our rental rates change with market conditions.

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We intend to preserve a flexible capital structure with a long-term goal to maintain our investment grade rating and be in a position to issue additional unsecured debt and perpetual preferred stock.

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Our credit rating can affect the amount and type of capital we can access, as well as the terms of any financings we may obtain.

In the event our current credit rating is downgraded, it may become difficult or expensive to obtain additional

financing or refinance existing obligations and commitments.

We intend to primarily utilize senior unsecured notes, term loans, credit facilities, dispositions of properties, common stock and perpetual preferred stock.

In the event our current credit rating is downgraded, it may become difficult or expensive to obtain additional financing or refinance existing obligations and commitments.

We intend to primarily utilize senior unsecured notes, term loans, credit facilities, dispositions of properties, and proceeds from the issuance of common stock and perpetual preferred stock.

We may also assume debt in connection with property acquisitions which may have a higher loan-to-value ratio.

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

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

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

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

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Equity Sources of Liquidity

On November 8, 2021, we completed a public offering of 3,500,000 shares of our common stock at a price per share of $74.50.

On November 10, 2021, we sold an additional 525,000 shares upon the exercise by the underwriters of their option to purchase additional shares.

The net proceeds of the offering were approximately $296.5 million after deducting the underwriting discount and offering costs of approximately $3.3 million.

We intend to use the net proceeds for general corporate purposes, which may include, without limitation, working capital, repayment of indebtedness, future acquisitions and redevelopments.

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

ATM Stock Offering Program Date Implemented Maximum Aggregate

Offering Price

(in thousands)

Aggregate Common Stock Available as of December 31, 2020 (in thousands)

$300 Million ATM Program May 17, 2019 $ 300,000 $ 84,090

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 $ 221,434

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

For the Year Ended Shares Sold Weighted Average

Price Per Share

Net Proceeds Sales Commissions

For the Year Ended December 31,

Shares Sold Weighted Average

Price Per Share Net Proceeds (in thousands) Sales Commissions

(in thousands)

December 31, 2021 2,569,771 $ 63.23 $ 160,127 $ 2,356

December 31, 2020 1,197,597 $ 54.08 $ 63,828 $ 939

Our Senior Secured Loan bore interest at a fixed annual interest rate of 8.0% and was fully repaid in May 2020.

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

As of December 31, 2020 and December 31, 2019, there was approximately $0 and $15.9 million, respectively, net of deferred loan fees of approximately $0 and $0.1 million, respectively, outstanding on the Senior Secured Loan and approximately $0 and $0.3 million, respectively, of interest receivable outstanding on the Senior Secured Loan.

As of December 31, 2020, we had $50.0 million of senior unsecured notes that mature in September 2022, $100.0 million of senior unsecured notes that mature in July 2024, $50.0 million of senior unsecured notes that mature in July 2026, $50.0 million of senior unsecured notes that mature in October 2027 and $100.0 million of senior unsecured notes that mature in December 2029 (collectively, the “Senior Unsecured Notes”) and a credit facility (the “Facility”), which consists of a $250.0 million unsecured revolving credit facility that matures in October 2022 and a $100.0 million term loan that matures in January 2022.

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

As of December 31, 2020, we had one interest rate cap to hedge the variable cash flows associated with $50.0 million of our existing $100.0 million variable-rate term loan.

The cap has a notional value of $50.0 million and will effectively cap the annual interest rate payable at 4.0% plus 1.20% to 1.70%, depending on leverage, with respect to $50.0 million for the period from December 1, 2014 (effective date) to May 4, 2021.

As of December 31, 2019, we had an additional interest rate cap with a notional value of $50.0 million (which expired on February 3, 2020) to hedge the variable cash flows associated with $50.0 million of our existing $100.0 million variable-rate term loan.

We are required to make certain monthly variable rate payments on the term loan, while the applicable counterparty is obligated to make certain monthly floating rate payments based on LIBOR to us in the event LIBOR is greater than 4.0%, referencing the same notional amount.

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 $250.0 million revolving credit facility and the $100.0 million term loan 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%.

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Debt Sources of Liquidity

On October 28, 2021, we issued $125.0 million of senior guaranteed notes (the “2.38% Notes”) in a private placement.

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 December 31, 2021, we had $50.0 million of senior unsecured notes that mature in September 2022, $100.0 million of senior unsecured notes that mature in July 2024, $50.0 million of senior unsecured notes that mature in July 2026, $50.0 million of senior unsecured notes that mature in October 2027, $100.0 million of Series A Notes, $100.0 million of senior unsecured notes that mature in December 2029, $125.0 million of 2.38% Notes, and $50.0 million of Series B Notes (collectively, 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 and a $100.0 million term loan that matures in January 2027.

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 December 31, 2021 and 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 December 31, 2021) for the revolving credit facility and 1.15% to 1.65% (1.15% as of December 31, 2021) for 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 December 31, 2020 and 2019.

As of December 31, 2020 and 2019, we had outstanding mortgage loans payable, net of deferred financing costs, of approximately $11.3 million and $44.3 million, respectively, and held cash and cash equivalents totaling approximately $107.2 million and $110.1 million, respectively.

Subsequent to December 31, 2020, we used cash on hand to repay the mortgage loan payable of $11.3 million.

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 December 31, 2021 and 2020.

As of December 31, 2021 and 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 $204.4 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 as of and for the year ended December 31, 2021, and market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the years ended December 31, 2021 and 2020 (dollars in thousands, except per share data):

2021 $ — $ — $ — $ 11,271 $ 11,271

2022 — 100,000 50,000 — 150,000

Facility Term Loan Senior

Notes Total Debt

2022 $ — $ — $ 50,000 $ 50,000

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$ 85.29 $ 58.51

Market Value 4,008,847 3,641,066

Total Equity 6,426,116 4,008,847

Total Market Capitalization $ 7,146,786 $ 4,467,965

Total Debt-to-Total Investments in Properties 3

20.6 % 22.8 %

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

20.6 % 22.7 %

Total Debt-to-Total Market Capitalization 4

10.3 % 11.9 %

Floating Rate Debt as a % of Total Debt 5

21.7 % 20.3 %

Unhedged Floating Rate Debt as a % of Total Debt 6

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1 Includes 289,186 and 203,729 shares of unvested restricted stock outstanding as of December 31, 2021 and 2020, respectively.

Also includes 275,727 and 139,224 shares held in the Deferred Compensation Plan as of December 31, 2021 and 2020, respectively.

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

3 Total debt-to-total investments in properties is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties as of December 31, 2020 and 2019, respectively.

4 Total debt-to-total investments in properties and Senior Secured Loan is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties and total Senior Secured Loan, net of deferred loan fees of approximately $0 and $0.1 million, as of December 31, 2020 and 2019, respectively.

The Senior Secured Loan was fully repaid in May 2020.

5 Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization as of December 31, 2020 and 2019, respectively.

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

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

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

Floating rate debt includes $100.0 million variable-rate term loan borrowings, of which $50.0 million is subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of December 31, 2020, and $150.0 million variable-rate term loan borrowings, of which $100.0 million was subject to interest rate caps of 4.0% plus 1.20% to 1.70% as of December 31, 2019.

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

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

Hedged debt includes our $100.0 million variable-rate term loan borrowings, of which $50.0 million is subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of December 31, 2020, and our $100.0 million variable rate term loan borrowings of which $100.0 million was subject to interest rate caps of 4.0% plus 1.20% to 1.70% as of December 31, 2019.

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

8 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, net of deferred financing costs.

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

The interest rate cap expired on May 4, 2021.

See “Note 8 - Derivative Financial Instruments” in our notes to consolidated financial statements for more information regarding our prior interest rate cap.

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

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

The interest rate cap expired on May 4, 2021.

See “Note 8 - Derivative Financial Instruments” in our notes to consolidated financial statements for more information regarding our prior interest rate cap.

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.

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The following table sets forth the cash dividends paid or payable per share during the years ended December 31, 2021 and 2020:

For the Three

Security Dividend

Declaration Date Record Date Date Paid

For the Three Months Ended Security Dividend per

Share Declaration Date Record Date Date Paid

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

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March 31, 2020 Common stock $ 0.27 February 5, 2020 March 27, 2020 April 10, 2020

June 30, 2019 Common stock $ 0.24 April 30, 2019 July 05, 2019 July 19, 2019

September 30, 2019 Common stock $ 0.27 July 26, 2019 October 04, 2019 October 18, 2019

December 31, 2019 Common stock $ 0.27 October 29, 2019 December 31, 2019 January 14, 2020

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

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

December 31, 2020 Common stock $ 0.29 November 3, 2020 December 15, 2020 January 5, 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 $101.1 million for the year ended December 31, 2020 compared to approximately $94.7 million for the year ended 2019.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2020 and 2019 and increased rents on new and renewed leases at our same store properties.

Additionally, during the year ended December 31, 2020, we received cash of approximately $3.3 million related to the termination of a lease held with the existing tenant at our Belleville property.

Net cash provided by operating activities totaled approximately $132.2 million for the year ended December 31, 2021 compared to approximately $101.1 million for the year ended December 31, 2020.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2021 and 2020, as we acquired 34 properties during year ended December 31, 2021 compared to 11 properties acquired in the prior year, and increased rents on new and renewed leases at our same store properties.

Cash From Investing Activities.

Net cash used in investing activities was approximately $52.1 million and $251.5 million, respectively, for the years ended December 31, 2020 and 2019, which consists primarily of cash paid for property acquisitions of $98.1 million and $238.7 million, respectively, and additions to capital improvements of approximately $40.6 million and $60.0 million, respectively, offset by net proceeds from sales of real estate investments of approximately $70.7 million and $47.1 million, respectively, and net cash received for repayment of the Senior Secured Loan of $15.9 million and $0, respectively, for the years ended December 31, 2020 and 2019.

Net cash used in investing activities was approximately $666.4 million and $52.1 million for the years ended December 31, 2021 and 2020, respectively, which consisted primarily of cash paid for property acquisitions of approximately $645.0 million and $98.1 million, respectively, additions to capital improvements of approximately $62.6

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million and $40.6 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 $41.1 million and $70.7 million, respectively, in each case for the years ended December 31, 2021 and 2020.

Cash From Financing Activities.

Net cash used by financing activities was approximately $53.9 million for the year ended December 31, 2020, which consists primarily of approximately $63.8 million in net common stock issuance proceeds, offset by approximately $74.8 million in equity dividend payments and $33.0 million in mortgage loan payments.

Net cash provided by financing activities was approximately $235.1 million for the year ended December 31, 2019, which consists primarily of approximately $274.0 million in net common stock issuance proceeds and borrowings of $100.0 million in connection with our issuance of senior unsecured notes, offset by approximately $63.6 million in equity dividend payments, $50.0 million in payments on our term loan that was to mature in August 2021 and and approximately $19.0 million in net payments on our revolving credit facility.

Net cash provided by financing activities was approximately $631.2 million for the year ended December 31, 2021, which consisted primarily of approximately $456.7 million in net common stock issuance proceeds and borrowings of $275.0 million in connection with our issuance of senior unsecured notes partially offset by approximately $84.6 million in equity dividend payments and approximately $11.3 million in mortgage loan payments.

Net cash used in financing activities was approximately $53.9 million for the year ended December 31, 2020, which consisted primarily of approximately $63.8 million in net common stock issuance proceeds, partially offset by approximately $74.8 million in equity dividend payments and approximately $33.0 million in mortgage loan payments.

Critical Accounting Policies

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Property Acquisitions.

Effective January 1, 2017, we adopted ASU 2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business which requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not considered a business.

Business Combinations (Topic 805):

Clarifying the Definition of a Business requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not considered a business.

To be a business, the set of acquired activities and assets must include inputs and one or more substantive processes that together contribute to the ability to create outputs.

We have determined that our real estate property acquisitions will generally be accounted for as asset acquisitions under the clarified definition.

Prior to January 1, 2017, we generally accounted for property acquisitions as business combinations, in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations .

Upon acquisition of a property we estimate the fair value of acquired tangible assets (consisting generally of land, buildings and improvements) and intangible assets and liabilities (consisting generally of the above and below-market leases and the origination value of all in-place leases).

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The origination value of in-place leases also includes real estate taxes,

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insurance and an estimate of lost rental revenue at market rates during the estimated time required to lease up the property from vacant to the occupancy level at the date of acquisition.

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The amount of the expense may be subject to adjustment in future periods depending on the specific characteristics of the stock-based award.

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In addition, we have awarded long-term incentive target awards (the “Performance Share awards”) under the Amended and Restated Long-Term Incentive Plan (as amended and restated, the “Amended LTIP”), which we amended and restated on January 8, 2019, to our executives that are payable in shares of our common stock after the conclusion of each pre-established performance measurement period, which is generally three years.

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The Performance Share awards granted prior to January 1, 2019 are recognized as compensation expense over the requisite performance period based on the fair value of the Performance Share awards at the balance sheet date, which varies quarter to quarter based on our relative share price performance, and are included as a component of Performance Share awards payable in the accompanying consolidated balance sheets.

Off-Balance Sheet Arrangements

Contractual Obligations

As of February 9, 2021, we have outstanding contracts with third-party sellers to acquire six industrial properties for a total aggregate purchase price of approximately $123.8 million.

Material Cash Commitments

As of February 8, 2022, we have five outstanding contracts with third-party sellers to acquire five industrial properties for a total aggregate purchase price of $125.8 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 material cash commitments due by period as of December 31, 2021 (dollars in thousands):

Material Cash Commitments Less than 1

Year 1-3 Years 3-5 Years More than 5

Debt $ 50,000 $ 100,000 $ 50,000 $ 525,000 $ 725,000

Debt interest payments 20,130 36,030 28,530 34,078 118,768

Operating lease commitments 442 916 883 1,302 3,542

Purchase obligations 1

125,775 — — — 125,775

Total $ 196,347 $ 136,946 $ 79,413 $ 560,380 $ 973,085

1 As of February 8, 2022

As of February 8, 2022, 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 $94.9 million.

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

There can be no assurance that we will enter into purchase and sale agreements with respect to these properties or otherwise complete any such prospective purchases on the terms described or at all.

Non-GAAP Financial Measures

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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).

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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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.

We believe that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time.

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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 (loss), net of redemption of preferred stock and preferred stock dividends for the three months ended December 31, 2020, 2019 and 2018 and for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands except per share data):

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The following table reflects the calculation of FFO reconciled from net income for the three months and years ended December 31, 2021, 2020 and 2019 (dollars in thousands except per share data):

For the Three Months Ended December 31, For the Three Months Ended December 31,

2021 2020 $ Change % Change 2020 2019 $ Change % Change

Net income, net of redemption of preferred stock and preferred stock dividends $ 13,513 $ 14,821 $ (1,308) (8.8) % $ 14,821 $ 22,972 $ (8,151) (35.5) %

Gain on sales of real estate investments — (3,144) 3,144 n/a (3,144) (13,624) 10,480 (76.9) %

$ 32,259 $ 13,513 $ 18,746 138.7 % $ 13,513 $ 14,821 $ (1,308) (8.8) %

Gain on sales of real estate investments (13,442) — (13,442) n/a — (3,144) 3,144 n/a

Depreciation and amortization 13,707 11,192 2,515 22.5 % 11,192 11,847 (655) (5.5) %

Non-real estate depreciation (11) (26) 15 (57.7) % (26) (27) 1 (3.7) %

Non-real estate depreciation (22) (11) (11) n/a (11) (26) 15 (57.7) %

Allocation to participating securities 1

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Basic FFO per common share

$ 0.44 $ 0.36 $ 0.08 22.2 % $ 0.36 $ 0.35 $ 0.01 2.9 %

Diluted FFO per common share

$ 0.44 $ 0.36 $ 0.08 22.2 % $ 0.36 $ 0.35 $ 0.01 2.9 %

Weighted average basic common shares

73,380,519 68,245,315 68,245,315 66,706,245

Weighted average diluted common shares

73,735,244 68,652,454 68,652,454 67,000,815

For the Year Ended December 31, For the Year Ended December 31,

2021 2020 $ Change % Change 2020 2019 $ Change % Change

Net income, net of redemption of preferred stock and preferred stock dividends $ 79,795 $ 55,516 $ 24,279 43.7 % $ 55,516 $ 63,289 $ (7,773) (12.3) %

$ 87,254 $ 79,795 $ 7,459 9.3 % $ 79,795 $ 55,516 $ 24,279 43.7 %

Gain on sales of real estate investments (16,627) (26,766) 10,139 (37.9) % (26,766) (9,391) (17,375) 185.0 %

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Basic FFO per common share

1.71 $ 1.45 $ 0.26 17.9 % 1.45 $ 1.39 $ 0.06 4.3 %

Diluted FFO per common share

1.71 $ 1.44 $ 0.27 18.8 % 1.44 $ 1.38 $ 0.06 4.3 %

Weighted average basic common shares

70,534,202 67,762,927 67,762,927 64,428,406

Weighted average diluted common shares

70,793,670 68,170,066 68,170,066 64,722,976

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 203,729, 426,985, and 383,930 of weighted average unvested restricted shares outstanding

for the three months ended December 31, 2020, 2019 and 2018, respectively, and 341,673, 402,380, and 368,912 for the years ended December 31, 2020, 2019 and 2018, respectively.

2 Includes performance share award expense of approximately $2.9 million, $1.8 million and $2.7 million for the three months ended December 31, 2020, 2019 and 2018, respectively, and approximately $6.6 million, $8.0 million and $7.1 million for the years ended December 31, 2020, 2019 and 2018, respectively, which varies quarter to quarter based on our total shareholder return outperforming the MSCI U.S.

REIT Index (RMS) and the FTSE Nareit Equity Industrial Index over the prior three year period.

Under this method, allocations were made to 288,976, 203,729 and 426,985 of weighted average unvested restricted shares outstanding for the three months ended December 31, 2021, 2020 and 2019, respectively, and 245,075, 341,673 and 402,380 of weighted average unvested restricted shares outstanding for the years ended December 31, 2021, 2020 and 2019, respectively.

2 Includes performance share award expense of approximately $1.3 million, $2.9 million and $1.8 million for the three months ended December 31, 2021, 2020 and 2019, respectively, and approximately $5.3 million, $6.6 million and

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$8.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

See “Note 10 – Stockholders’ Equity” in our notes to consolidated financial statements for more information regarding our performance share awards.

FFO increased by approximately $1.3 million for the three months ended December 31, 2020 compared to the same period from the prior year due primarily to property acquisitions during 2019 and 2020 and same store NOI growth of approximately $1.7 million for the three months ended December 31, 2020 compared to the same period from the prior year.

The FFO increase was offset by increased weighted average common shares outstanding for the three months ended December 31, 2020 compared to the same period from the prior year.

FFO increased by approximately $8.9 million for the year ended December 31, 2020 compared to the same period from the prior year due primarily to property acquisitions during 2019 and 2020 and same store NOI growth of approximately $8.5 million for the year ended December 31, 2020 compared to the same period from the prior year.

FFO also increased due to a decrease of approximately $1.4 million in performance share award expense for the year ended December 31, 2020, compared to the same period from the prior year.

The FFO increase was also offset by approximately $3.0 million in bad debt expense, primarily due to the effects of COVID-19 on our tenants, including approximately $1.3 million in straight-line rent reversals, during the year ended December 31, 2020 as compared to approximately $0.6 million in bad debt expense, including approximately $0.3 million in straight-line rent reversals, during the year-ended December 31, 2019.

Weighted average common shares outstanding for the year ended December 31, 2020 increased compared to the same period from the prior year.

FFO increased by approximately $7.8 million and $22.5 million for the three months and years ended December 31, 2021, respectively, compared to the same periods from the prior year due primarily to same store NOI growth of approximately $4.2 million and $15.5 million for the three months and years ended December 31, 2021, respectively, compared to the same periods from the prior year, as well as property acquisitions during 2021.

The FFO increase was partially offset by increased weighted average common shares outstanding and increased general and administrative expenses due to additional headcount, for the three months and year ended December 31, 2021 compared to the same periods from the prior year.

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

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

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three months ended December 31, 2020, 2019 and 2018 and for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three months and years ended December 31, 2021, 2020 and 2019 (dollars in thousands):

For the Three Months Ended December 31, For the Three Months Ended December 31,

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Net income $ 32,259 $ 13,513 $ 18,746 138.7 % $ 13,513 $ 14,821 $ (1,308) (8.8) %

Gain on sales of real estate investments — (3,144) 3,144 n/a (3,144) (13,624) 10,480 (76.9) %

Depreciation and amortization from continuing operations 11,192 11,847 (655) (5.5) % 11,847 10,250 1,597 15.6 %

Gain on sales of real estate investments (13,442) — (13,442) n/a — (3,144) 3,144 n/a

Depreciation and amortization 13,707 11,192 2,515 22.5 % 11,192 11,847 (655) (5.5) %

Interest expense, including amortization 5,207 4,195 1,012 24.1 % 4,195 4,069 126 3.1 %

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Stock-based compensation 2,547 3,472 (925) (26.6) % 3,472 2,492 980 39.3 %

Acquisition costs 85 (3) 88 n/a (3) (5) 2 (40.0) %

Acquisition costs — 85 (85) n/a 85 (3) 88 n/a

Adjusted EBITDA $ 40,278 $ 32,457 $ 7,821 24.1 % $ 32,457 $ 30,271 $ 2,186 7.2 %

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Gain on sales of real estate investments (16,627) (26,766) 10,139 (37.9) % (26,766) (9,391) (17,375) 185.0 %

Depreciation and amortization from continuing operations 45,875 44,015 1,860 4.2 % 44,015 40,816 3,199 7.8 %

Depreciation and amortization 50,687 45,875 4,812 10.5 % 45,875 44,015 1,860 4.2 %

Interest expense, including amortization 18,054 15,997 2,057 12.9 % 15,997 16,338 (341) (2.1) %

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

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

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

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same store basis.

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

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

The same store pool for the comparison of the three months and years ended December 31, 2020 and 2019 includes all properties that were owned as of December 31, 2020 and since January 1, 2019 and excludes properties that were either disposed of prior to, held for sale to a third-party or in redevelopment as of December 31, 2020.

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

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

As of December 31, 2020, the same store pool consisted of 198 buildings aggregating approximately 12.0 million square feet representing approximately 91.1% of our total square feet owned and 14 improved land parcels containing approximately 54.2 acres.

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

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

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three months and the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three months and years ended December 31, 2021, 2020 and 2019 (dollars in thousands):

For the Three Months Ended December 31, For the Three Months Ended December 31,

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General and administrative 7,716 6,936 780 11.2 % 6,936 6,072 864 14.2 %

Acquisition costs 85 (3) 88 n/a (3) (5) 2 (40.0) %

Acquisition costs — 85 (85) n/a 85 (3) 88 n/a

Total other income and expenses (8,372) 4,127 (12,499) n/a 4,127 470 3,657 778.1

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(5,235) 281.6 % (5,091) 3

(2,943) 114.8 %

Same store NOI 4

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Cash-basis same store NOI

Less same store termination fee income (75) (143) 68 (47.6) % (143) (5) (138) 2760.0 %

$ 35,828 $ 31,877 $ 3,951 12.4 % $ 29,505 $ 28,161 $ 1,344 4.8 %

Less termination fee income (148) (75) (73) 97.3 % (75) (143) 68 (47.6) %

Cash-basis same store NOI excluding termination fees $ 35,680 $ 31,802 $ 3,878 12.2 % $ 29,430 $ 28,018 $ 1,412 5.0 %

1 Includes $0.1 million, $0.1 million and $0 of lease termination income for the three months ended December 31, 2020, 2019 and 2018, respectively.

2 Includes 2019 and 2020 acquisitions and dispositions, one property under redevelopment and two completed redevelopment properties with an aggregate gross book value of approximately $49.3 million as of December 31, 2020.

3 Includes 2018 and 2019 acquisitions and dispositions, four properties under redevelopment and one completed

redevelopment property with a gross book value of approximately $10.0 million as of December 31, 2019.

4 Includes $0.1 million, $0.1 million and $0 of lease termination income for the three months ended December 31, 2020, 2019 and 2018, respectively.

1 Includes approximately $0.1 million of lease termination income for the three months ended December 31, 2021, 2020 and 2019.

2 Includes 2020 and 2021 acquisitions and dispositions, seventeen improved land parcels consisting of approximately 47.5 acres, four properties under redevelopment and one completed redevelopment property with an aggregate book value of approximately $66.6 million as of December 31, 2021.

3 Includes 2019 and 2020 acquisitions and dispositions, eleven improved land parcels consisting of approximately 37.3 acres, one property under redevelopment and two completed redevelopment properties with an aggregate gross book value of approximately $49.3 million as of December 31, 2020.

4 Includes $0.1 million of lease termination income for the three months ended December 31, 2021, 2020 and 2019.

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

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For the Year Ended December 31, For the Year Ended December 31,

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Cash-basis same store NOI

Less same store termination fee income (3,696) (346) (3,350) 968.2 % (346) (699) 353 (50.5) %

$ 136,105 $ 126,300 $ 9,805 7.8 % $ 118,271 $ 109,768 $ 8,503 7.7 %

Less termination fee income (309) (3,717) 3,408 (91.7) % (3,696) (346) (3,350) 968.2 %

Cash-basis same store NOI excluding termination fees $ 135,796 $ 122,583 $ 13,213 10.8 % $ 114,575 $ 109,422 $ 5,153 4.7 %

1 Includes approximately $3.8 million, $0.3 million and $0.7 million of lease termination income for the years ended December 31, 2020, 2019 and 2018, respectively.

2 Includes 2019 and 2020 acquisitions and dispositions, one property under redevelopment and two completed redevelopment properties with an aggregate gross book value of $49.3 million as of December 31, 2020.

3 Includes 2018 and 2019 acquisitions and dispositions, four properties under redevelopment and one completed redevelopment property with a gross book value of approximately $10.0 million as of December 31, 2019.

1 Includes approximately $1.0 million, $3.8 million and $0.3 million of lease termination income for the year ended December 31, 2021, 2020 and 2019, respectively.

4 Includes approximately $0.3 million, $3.7 million and $0.3 million of lease termination income for the years ended December 31, 2021, 2020 and 2019, respectively.

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

Cash-basis same store NOI increased by approximately $1.3 million for the three months ended December 31, 2020 compared to the same period from the prior year.

For the three months ended December 31, 2020 and 2019, approximately $0.7 million and $0.2 million, respectively, of contractual rent abatements were given to certain tenants in the same-store pool and approximately $0.1 million for both periods in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $0.3 million of the increase in cash-basis same store NOI for both the three months ended December 31, 2020 and 2019, related to properties that were acquired vacant or with near term expirations in 2018.

The increase in cash-basis same store NOI was also offset by an increase of approximately $0.1 million in cash bad debt expense during the three months ended December 31, 2020 compared to the same period in the prior year.

Cash-basis same store NOI increased by approximately $8.5 million for the year ended December 31, 2020 compared to the prior year primarily due to increased rental revenue and tenant reimbursement revenue on new and renewed leases and approximately $3.7 million in lease termination income, of which approximately $3.3 million related to the termination of a lease held with the existing tenant at our Belleville property.

We have since executed a new lease for our Belleville property with a leading e-commerce firm.

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

For the years ended December 31, 2020 and 2019, approximately $2.5 million and $1.8 million, respectively, of contractual rent abatements were given to certain tenants in the same-store pool and approximately $3.7 million and $0.3 million, respectively, in lease termination income was received from certain tenants in the same store pool.

Approximately $1.0 million of the increase in cash-basis same store NOI for the year ended December 31, 2020 compared to the year ended December 31, 2019 related to properties that were acquired vacant or with near term expirations in 2018.

The increase in cash-basis same store NOI was also offset by an increase of approximately $1.1 million in cash bad debt expense, primarily due to the effects of COVID-19 on our tenants, during the year ended December 31, 2020 compared to the prior year.

Cash-basis same store NOI increased by approximately $4.0 million for the three months ended December 31, 2021 compared to the same period from the prior year due to increased rental revenue on new and renewed leases and contractual rent increases.

For the three months ended December 31, 2021 and 2020, total contractual rent abatements of approximately $0.5 million and $0.8 million, respectively, were given to certain tenants in the same-store pool and approximately $0.1 million and $0.1 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $0.2 million of the increase in cash-basis same store NOI for the three months ended December 31, 2021 related to properties that were acquired vacant or with near term expirations in 2019.

Cash-basis same store NOI increased by approximately $9.8 million for the year ended December 31, 2021 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases and increased occupancy.

For the year ended December 31, 2021 and 2020, total contractual rent abatements of approximately $2.7 million and $3.2 million, respectively, were given to certain tenants in the same-store pool and approximately $0.3 million and $3.7 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $2.3 million of the increase in cash-basis same store NOI for the year ended December 31, 2021 related to properties that were acquired vacant or with near term expirations in 2019.

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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 7. Management’s Discussion and Analysis