What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-04 compared with 2021-11-03 · 170 added, 283 removed, 343 unchanged (57% of the section changed)

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We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management.

When used, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will”, “seek”, “target”, “see”, “likely”, “position”, “opportunity”, “outlook” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements.

When used, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will”, “seek”, “target”, “see”, “likely”, “position”, “opportunity”, “outlook”, “potential”, “future” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements.

These statements 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.

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

• the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission on February 10, 2021, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which was filed with the Securities and Exchange Commission on May 5, 2021, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which was filed with the Securities and Exchange Commission on August 4, 2021, in this Quarterly Report on Form 10-Q and in our other public filings, which you should interpret as being heightened as a result of the numerous and ongoing adverse impacts of COVID-19;

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

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• increased interest rates and operating costs;

• the potential discontinuation of London Interbank Offered Rate (“LIBOR”);

• the discontinuation of London Interbank Offered Rate (“LIBOR”) and the replacement of LIBOR with an alternative reference rate;

• declining real estate valuations and impairment charges;

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• risks relating to our real estate redevelopment, renovation and expansion strategies and activities;

• the ongoing impact of COVID-19 on the U.S., regional and global economies and the business, financial condition and results of operations of our Company and our tenants;

• the ongoing impact of the novel coronavirus (“COVID-19”), or the impact of any future pandemic, epidemic or outbreak of any other highly infectious disease, on the U.S., regional and global economies and on our business, financial condition and results of operations and that of our tenants;

• our failure to qualify or maintain our status as a real estate investment trust (“REIT”), and possible adverse changes to tax laws;

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

We invest in several types of industrial real estate, including warehouse/distribution (approximately 80.5% of our annualized base rent as of September 30, 2021), flex buildings (including light industrial and research and development, or R&D, approximately 4.9%), transshipment (approximately 6.0%), and improved land parcels (approximately 8.6%).

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

We invest in several types of industrial real estate, including warehouse/distribution (approximately 79.5% of our total annualized base rent as of March 31, 2022), flex (including light industrial and research and development, or R&D) (approximately 4.7%), transshipment (approximately 6.5%) 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 September 30, 2021, we owned a total of 241 buildings (including three buildings held for sale) aggregating approximately 14.1 million square feet, 31 improved land parcels consisting of approximately 114.7 acres and four properties under redevelopment expected to contain approximately 0.4 million square feet upon completion.

As of September 30, 2021, the buildings and improved land parcels were approximately 98.0% and 96.1% leased, respectively, to 548 customers, the largest of which accounted for approximately 5.2% of our total annualized base rent.

As of March 31, 2022, we owned a total of 256 buildings (including one property consisting of 18 buildings held for sale) aggregating approximately 15.1 million square feet, 37 improved land parcels consisting of approximately 128.3 acres and four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres.

As of March 31, 2022, our buildings and improved land parcels were approximately 96.9% and 94.9% leased (including 0.1 million square feet of vacancy acquired during the fourth quarter of 2021), respectively, to 565 customers, the largest of which accounted for approximately 4.7% of our total annualized base rent.

See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in our Annual Report on Form 10-K for the year ended December 31, 2021 for a general description of these types of industrial real estate.

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

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

The following table summarizes by type our investments in real estate as of March 31, 2022:

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

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Total 293 $ 190,792 100.0 %

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

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

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2022, multiplied by 12.

The following table summarizes by market our investments in real estate as of March 31, 2022:

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

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% of Total 17.8 % 22.8 % 14.5 % 18.4 % 14.9 % 11.6 % 100.0 %

Occupancy % as of September 30, 2021

Occupancy % as of March 31, 2022 4

99.3 % 97.8 % 98.9 % 96.7 % 93.8 % 93.0 % 96.9 %

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% of Total 16.2 % 42.2 % 5.5 % 17.5 % 2.5 % 16.1 % 100.0 %

Occupancy % as of September 30, 2021

Occupancy % as of March 31, 2022

90.5 % 100.0 % 100.0 % 79.3 % 100.0 % 100.0 % 94.9 %

Annualized Base Rent

(in thousands) 1

Annualized Base Rent (in thousands) 1

$ 4,601 $ 7,328 $ 1,447 $ 2,300 $ 422 $ 1,733 $ 17,831

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% of Total Gross Book Value 17.7 % 24.7 % 15.0 % 18.6 % 13.7 % 10.3 % 100.0 %

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

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

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

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

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

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

2021 2020 2021 2020

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2022, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of March 31, 2022, weighted by the respective square footage.

3 Includes four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres, and one property consisting of 18 buildings held for sale with a gross book value of approximately $42.3 million.

4 Includes 0.1 million square feet of vacancy acquired in Miami that was pre-leased and expected to commence prior to June 30, 2022.

As of March 31, 2022, we owned four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately $144.4 million, including redevelopment costs, capitalized interest and

The following table summarizes our capital expenditures incurred during the three months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

Building improvements $ 9,516 $ 1,754

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$ 30,705 $ 5,989

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

1 Includes approximately $23.5 million and $1.2 million for the three months ended March 31, 2022 and 2021, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at twenty-one and five properties for the three months ended March 31, 2022 and 2021, respectively.

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

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Lease terms typically range from three to ten years.

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

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

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

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

Our top 20 customers based on annualized base rent as of March 31, 2022 are as follows:

Customer Leases Rentable

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5 District of Columbia 7 197,617 1.3 % 3,362 1.8 %

6 DirectBuy Home Improvement 1 230,891 1.6 % 2,011 1.2 %

7 Costco-Innovel Solutions LLC 1 219,910 1.6 % 1,870 1.1 %

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

7 Port Kearny Security, Inc.

1 — — % 2,040 1.1 %

8 DirectBuy Home Improvement 2 230,891 1.5 % 2,011 1.1 %

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

10 Hanjin International America, Inc.

and Hanjin Transportation Co., LTD 1 114,061 0.7 % 1,848 1.0 %

11 XPO Logistics 2 180,717 1.2 % 1,843 1.0 %

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1 147,898 1.0 % 1,751 0.9 %

11 O'Neill Logistics 2 237,692 1.7 % 1,606 0.9 %

13 Divergent Technologies, Inc.

2 72,808 0.5 % 1,613 0.8 %

14 Bar Logistics 1 203,263 1.3 % 1,546 0.8 %

15 YRC 2 61,252 0.4 % 1,540 0.8 %

16 Topaz Lighting Corp.

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17 Envogue International 2 192,000 1.3 % 1,454 0.8 %

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

18 United States Postal Service 2 53,000 0.3 % 1,438 0.7 %

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1 92,884 0.6 % 1,378 0.7 %

18 Saia Motor Freight Line LLC 1 52,086 0.4 % 1,315 0.8 %

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

20 Premium Transportation Services, Inc.

20 Sarcona Management Corporation 6

2 28,124 0.2 % 1,368 0.7 %

Total 53 3,413,215 22.5 % $ 50,141 26.3 %

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

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2022, multiplied by 12.

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

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

The following table summarizes the anticipated lease expirations for leases in place as of September 30, 2021, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:

5 Includes an improved land parcel consisting of approximately 1.4 acres.

6 Includes an improved land parcel consisting of approximately 2.6 acres.

The following table summarizes the anticipated lease expirations for leases in place as of March 31, 2022, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:

Year Rentable Square Feet % of Total Rentable

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% of Total Annualized

2021 (3 months) 1

1,443,454 9.5 % $ 13,283 6.1 %

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Total 14,672,816 96.9 % $ 218,461 100.0 %

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

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

1 Includes leases that expire on or after March 31, 2022 and month-to-month leases totaling approximately 92,415 square feet.

2 Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of March 31, 2022, multiplied by 12.

3 Includes annualized base rent related to 37 improved land parcels totaling approximately 128.3 acres.

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

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

As of March 31, 2022, leases representing approximately 6.1% of the total annualized base rent of our portfolio are scheduled to expire during the year ending December 31, 2022.

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

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

We had a tenant retention ratio of 57.5% and 67.4%, respectively, for the three and nine months ended September 30, 2021.

Cash rent changes on new and renewed leases totaling approximately 0.7 million square feet commencing during the three months ended March 31, 2022 were approximately 34.8% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio of 47.7% for the three months ended March 31, 2022.

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

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Acquisition Activity

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

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

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

During the three months ended March 31, 2022, we acquired two industrial properties for a total purchase price of approximately $86.2 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 the three months ended March 31, 2022:

Property Name Location Acquisition Date Number of

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(in thousands) 1

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

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

1150 & 1250 W.

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

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

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

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

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

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

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

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

Countyline #29 & #30 4

Hialeah, FL February 9, 2022 2 407,000 $ 73,200 3.8 % —

33rd Place Bellevue, WA February 23, 2022 2 29,000 13,040 3.4 % 1.2

Total/Weighted Average 4 436,000 $ 86,240 3.7 % 1.2

1 Excludes intangible liabilities and mortgage premiums, if any.

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

The total aggregate initial investment was approximately $70.3 million, including $1.4 million in capitalized closing costs and acquisition costs and $2.3 million in assumed intangible liabilities and $19.6 million in other credits related to near term capital expenditures at the Countyline #29 & #30 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.

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

capital expenditures and leasing costs necessary to achieve stabilization.

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

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

These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2021 and in our other public filings.

3 Represents acreage of improved land parcels.

4 The property is included in the redevelopment pool and is expected to be completed by the third quarter of 2022.

Redevelopment Activity

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

As of March 31, 2022, we had four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately $144.4 million, including redevelopment costs, capitalized interest and other costs as follows:

Property Name Total Expected

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Estimated Post-Development Square Feet Estimated

Quarter % Pre-leased September 30, 2021

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

Americas Gateway 5 7,429 5,673 1,756 5.5 % 51,800 Q4 2022 — %

Quarter % Pre-leased March 31, 2022

73rd Street $ 20,616 $ 18,063 $ 2,553 5.5 % 128,844 Q3 2022 33.5 %

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

Countyline #29 & #30 75,538 64,124 11,414 3.8 % 407,084 Q3 2022 100.0 %

Paterson Plank III 3

23,643 19,188 4,455 4.5 % N/A Q1 2023 — %

24,563 23,823 740 5.1 % N/A Q1 2023 — %

Total/Weighted Average $ 144,360 $ 125,198 $ 19,162 4.4 % 535,928 84.0 %

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

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

Disposition Activity

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

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

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

2021 2020 2021 2020

Rental revenues $ 50 $ 21 $ 279 $ 153

Tenant expense reimbursements 31 10 76 34

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

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

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

We have an at-the-market equity offering program (the “$300 Million ATM Program”) pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $300.0 million ($223.2 million remaining as of September 30, 2021) in amounts and at times as we determine from time to time.

3 Improved land parcel of approximately 4.9 acres.

4 Improved land parcel of approximately 7.2 acres.

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 March 31, 2022) in amounts and at times as we determine from time to time.

Prior to the implementation of the $300 Million ATM Program, we had a previous at-the-market equity program (the “Previous $300.0 million ATM Program”), which was substantially utilized as of June 10, 2021 and which is no longer active.

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

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

During the three months ended March 31, 2022, we did not issue any common stock under the $300 Million ATM Program.

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.

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

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

Senior Unsecured Notes

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

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 pursuant to a note purchase agreement entered into on August 17, 2021 with certain institutional investors.

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

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

The Notes are not secured by our properties or by interests in the subsidiaries that hold such properties.

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

As of March 31, 2022, we had not repurchased any shares of our common stock pursuant to our share repurchase program.

Dividend and Distribution Activity

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

On May 3, 2022, our board of directors declared a cash dividend in the amount of $0.34 per share of our common stock payable on July 14, 2022 to the stockholders of record as of the close of business on June 30, 2022.

Contractual Commitments

As of November 2, 2021, we have outstanding contracts with third-party sellers to acquire five industrial properties for a total aggregate purchase price of $94.2 million, as described under the heading “Contractual Obligations” in this Quarterly Report on Form 10-Q.

As of May 3, 2022, we had outstanding contracts with third-party sellers to acquire ten industrial properties for a total aggregate purchase price of $177.7 million, as described under the heading “Material Cash Commitments” in this Quarterly Report on Form 10-Q.

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

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.

Most of our leases require 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.

In addition, leases with respect to approximately 64.0% of our total rentable square feet expire within five years which enables us to seek to replace existing leases with new leases at the then-existing market rate.

Financial Condition and Results of Operations

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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 95.2% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases.

Approxi ma tely 94.6% of 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:

paid to brokers and consultants, and interest expense, primarily on our mortgage loan, 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 analysis of our results below for the three and nine months ended September 30, 2021 and 2020 includes the changes attributable to same store properties.

The same store pool for the comparison of the three and nine months ended September 30, 2021 and 2020 includes all properties that were owned and in operation as of September 30, 2021 and since January 1, 2020 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of September 30, 2021.

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

As of September 30, 2021, the non-same store properties, which we acquired, redeveloped, or sold during 2020 and 2021 or were held for sale (if any) or in redevelopment as of September 30, 2021, consisted of 32 buildings (including three buildings held for sale) aggregating approximately 1.6 million square feet, 12 improved land parcels containing approximately 35.1 acres and four properties under redevelopment expected to contain approximately 0.4 million square feet upon completion.

As of September 30, 2021 and 2020, our consolidated same store pool occupancy was approximately 98.7% and 98.3%, respectively.

The analysis of our results below for the three months ended March 31, 2022 and 2021 includes the changes attributable to same store properties.

The same store pool for the comparison of the three months ended March 31, 2022 and 2021 includes all properties that were owned and in operation as of March 31, 2022 and since January 1, 2021 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of March 31, 2022.

As of March 31, 2022, the same store pool consisted of 200 buildings aggregating approximately 12.3 million square feet representing approximately 81.6% of our total square feet owned and 24 improved land parcels consisting of approximately 91.5 acres.

As of March 31, 2022, the non-same store properties, which we acquired, redeveloped, or sold during 2021 and 2022 or were held for sale or in redevelopment as of March 31, 2022, consisted of 56 buildings (including one property consisting of 18 buildings held for sale) aggregating approximately 2.8 million square feet, 13 improved land parcels consisting of approximately 36.8 acres and four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres.

As of March 31, 2022 and 2021, our consolidated same store pool occupancy was approximately 98.4% and 97.4%, respectively.

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

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

For the Three Months Ended September 30,

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021:

For the Three Months Ended March 31,

2022 2021 $ Change % Change

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Interest expense, including amortization (5,081) (4,145) (936) 22.6 %

Gain on sales of real estate investments 3,185 9,016 (5,831) (64.7) %

Total other income (expense) (1,273) 5,180 (6,453) n/a

Total other expense (4,960) (3,909) (1,051) 26.9 %

Net income $ 19,662 $ 16,257 $ 3,405 20.9 %

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

2 Includes 2021 and 2020 acquisitions and dispositions, twelve improved land parcels, one property held for sale with a gross book value of $23.6 million and four properties under redevelopment as of September 30, 2021.

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

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

Total revenues increased approximately $10.1 million for the three months ended September 30, 2021 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2021 and 2020 and an increase in occupancy rate.

Cash rents on new and renewed leases totaling approximately 0.8 million square feet commencing during the three months ended September 30, 2021 increased approximately 34.9% compared to the previous rental rates for that same space.

For the three months ended September 30, 2021 and 2020, approximately $1.5 million and $1.1 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

Property operating expenses.

Total property operating expenses increased approximately $2.0 million during the three months ended September 30, 2021 compared to the same period from the prior year.

The increase in total property operating expenses was primarily due to an increase of approximately $1.4 million attributable to property acquisitions during 2021 and 2020 as well as increases in real estate taxes related to annual rate increases at certain of our properties.

Depreciation and amortization.

Depreciation and amortization increased approximately $1.5 million during the three months ended September 30, 2021 compared to the same period from the prior year primarily due to property acquisitions during 2021 and 2020.

General and administrative expenses.

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

Interest and other income.

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

Interest expense, including amortization.

Interest expense increased approximately $0.8 million for the three months ended September 30, 2021 compared to the same period from the prior year primarily due to the issuance of approximately $150.0 million of senior unsecured notes on July 15, 2021 and reduced capitalized interest of approximately $0.3 million, partially offset by the repayment of a mortgage loan payable in the amount of approximately $11.3 million.

Gain on sales of real estate investments.

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

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

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

For the Nine Months Ended September 30,

2021 2020 $ Change % Change

(Dollars in thousands)

Rental revenues 1

Same store $ 113,667 $ 102,639 $ 11,028 10.7 %

Non-same store operating properties 2

14,220 6,166 8,054 130.6 %

Total rental revenues 127,887 108,805 19,082 17.5 %

Tenant expense reimbursements 1

Same store 30,422 27,914 2,508 9.0 %

Non-same store operating properties 2

2,946 1,286 1,660 129.1 %

Total tenant expense reimbursements 33,368 29,200 4,168 14.3 %

Total revenues 161,255 138,005 23,250 16.8 %

Property operating expenses

Same store 36,179 33,962 2,217 6.5 %

Non-same store operating properties 2

4,704 2,108 2,596 123.1 %

Total property operating expenses 40,883 36,070 4,813 13.3 %

Net operating income 3

Same store 107,910 96,591 11,319 11.7 %

Non-same store operating properties 2

12,462 5,344 7,118 133.2 %

Total net operating income $ 120,372 $ 101,935 $ 18,437 18.1 %

Other costs and expenses

Depreciation and amortization 36,980 34,683 2,297 6.6 %

General and administrative 19,248 16,553 2,695 16.3 %

Acquisition costs 172 186 (14) (7.5) %

Total other costs and expenses 56,400 51,422 4,978 9.7 %

Other income (expense)

Interest and other income 685 805 (120) (14.9) %

Interest expense, including amortization (12,847) (11,802) (1,045) 8.9 %

Gain on sales of real estate investments 3,185 26,766 (23,581) (88.1) %

Total other income (expense) (8,977) 15,769 (24,746) n/a

Net income $ 54,995 $ 66,282 $ (11,287) (17.0) %

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

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

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

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

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

2 Includes 2020 and 2021 acquisitions and dispositions, twelve improved land parcels, one property held for sale with a gross book value of $23.6 million and four properties under redevelopment as of September 30, 2021.

2 Includes 2022 and 2021 acquisitions and dispositions, thirteen improved land parcels, four properties under redevelopment and one property held for sale with a gross book value of approximately $42.3 million as of March 31, 2022.

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

Total revenues increased approximately $23.3 million for the nine months ended September 30, 2021 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2021 and 2020 and an increase in occupancy rate.

Cash rents on new and renewed leases totaling approximately 1.9 million square feet commencing during the nine months ended September 30, 2021 increased approximately 26.8% compared to the same period from the prior year.

For the nine months ended September 30, 2021 and 2020, approximately $3.7 million and $3.0 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

Total revenues increased approximately $13.3 million for the three months ended March 31, 2022 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2022 and 2021 and an increase in occupancy rate.

Cash rents on new and renewed leases totaling approximately 0.7 million square feet commencing during the three months ended March 31, 2022 increased approximately 34.8% compared to the previous rental rates for that same space.

For the three months ended March 31, 2022 and 2021, approximately $1.8 million and $1.1 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

Property operating expenses.

Total property operating expenses increased approximately $4.8 million during the nine months ended September 30, 2021 compared to the same period from the prior year.

Total property operating expenses increased approximately $3.4 million during the three months ended March 31, 2022 compared to the same period from the prior year.

The increase in total property operating expenses was primarily due to an increase of approximately $2.0 million attributable to property acquisitions during 2022 and 2021 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 $2.3 million during the nine months ended September 30, 2021 compared to the same period from the prior year primarily due to property acquisitions during 2020 and 2021.

Depreciation and amortization increased approximately $3.6 million during the three months ended March 31, 2022 compared to the same period from the prior year primarily due to property acquisitions during 2022 and 2021.

General and administrative expenses.

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

General and administrative expenses increased approximately $1.9 million primarily due to increased restricted stock amortization and other compensation expenses due to an increase in the number of employees and salaries for the three months ended March 31, 2022 compared to the same period from the prior year.

Interest and other income.

Interest and other income decreased approximately $0.1 million for the nine months ended September 30, 2021 compared to the same period from the prior year primarily due to the pay down of our outstanding senior secured loan balance.

Interest and other income remained consistent for the three months ended March 31, 2022 compared to the same period from the prior year.

Interest expense, including amortization.

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

This increase is primarily due to the issuance of approximately $150.0 million of senior unsecured notes on July 15, 2021 and reduced capitalized interest of approximately $1.2 million, partially offset by the repayment of a $32.7 million mortgage loan in 2020 and a $11.3 million mortgage loan in 2021.

Gain on sales of real estate investments.

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

We sold one property during the nine months ended September 30, 2021 and sold four properties in the same period from the prior year.

Interest expense increased approximately $0.9 million for the three months ended March 31, 2022 compared to the same period from the prior year primarily due to the issuance of approximately $150.0 million of senior unsecured notes on July 15, 2021 and $125.0 million of senior unsecured notes on October 28, 2021.

Liquidity and Capital Resources

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• limit the principal amount of our outstanding floating rate debt to less than 20% of our total consolidated indebtedness;

• 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.

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

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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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.

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

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.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances and, if necessary, short-term borrowings under our revolving credit facility.

We believe that our net cash provided by operations will be adequate to fund operating requirements, pay interest on any borrowings and fund distributions in accordance with the REIT requirements of the federal income tax laws.

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.

In the near-term, we intend to fund future investments in properties

with cash on hand, term loans, senior unsecured notes, mortgages, borrowings under our revolving credit facility, perpetual preferred and common stock issuances and, from time to time, property dispositions.

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

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

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

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

The following sets forth certain information regarding our current at-the-market common stock offering program as of March 31, 2022:

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 three and nine months ended September 30, 2021 and 2020, respectively (in thousands, except share and price per share data):

For the Three Months Ended September 30,

Shares Sold Weighted Average

Price Per Share Net Proceeds (in thousands) Sales Commissions

(in thousands)

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

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

For the Nine Months Ended September 30,

Shares Sold Weighted Average

Price Per Share Net Proceeds (in thousands) Sales Commissions

(in thousands)

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

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

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 September 30, 2021, we had $50.0 million of senior unsecured notes that mature in September 2022, $100.0 million of senior unsecured notes that mature in July 2024, $50.0 million of senior unsecured notes that mature in July 2026, $50.0 million of senior unsecured notes that mature in October 2027, $100.0 million of senior unsecured notes that mature in July 2028, $100.0 million of senior unsecured notes that mature in December 2029 and $50.0 million of senior unsecured notes that mature in July 2031, (collectively, and with the 2.38% Notes, the “Senior Unsecured Notes”).

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

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

As of both September 30, 2021 and December 31, 2020, there were no borrowings outstanding on our revolving credit facility and $100.0 million of borrowings outstanding on our term loan.

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

Outstanding borrowings under the Amended Facility are limited to the lesser of (i) the sum of the $100.0 million term loan and the $250.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties.

Interest on the Amended Facility, including the term loan is generally to be paid based upon, at our option, either (i) LIBOR plus the applicable LIBOR margin or (ii) the applicable base rate which is the greatest of the administrative agent’s prime rate, 0.50% above the federal funds effective rate, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Amended Facility plus 1.25%.

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

The Amended Facility requires quarterly payments of an annual facility fee in an amount ranging from 0.15% to 0.30%, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value.

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

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

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

We were in compliance with the covenants under the Amended Facility and the Senior Unsecured Notes as of September 30, 2021 and December 31, 2020.

As of September 30, 2021 and December 31, 2020, we had an outstanding mortgage loan payable, net of deferred financing costs, of approximately $0 and $11.3 million, respectively, and held cash and cash equivalents totaling approximately $68.7 million and $107.2 million, respectively.

The mortgage loan payable was fully repaid in January 2021.

The following tables summarize our debt maturities and principal payments and market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the nine months ended September 30, 2021 and 2020 (dollars in thousands, except per share data):

The table below sets forth the activity under our at-the-market common stock offering programs during the three months ended March 31, 2022 and 2021, respectively (in thousands, except share and price per share data):

For the Three Months Ended Shares Sold Weighted Average Price Per Share Net Proceeds Sales Commissions

March 31, 2022 — $ — $ — $ —

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

Debt Sources of Liquidity

As of March 31, 2022, we had $50.0 million of senior unsecured notes that mature in September 2022, $100.0 million of senior unsecured notes that mature in July 2024, $50.0 million of senior unsecured notes that mature in July 2026, $50.0 million of senior unsecured notes that mature in October 2027, $100.0 million of senior unsecured notes that mature in July 2028, $100.0 million of senior unsecured notes that mature in December 2029, $125.0 million of senior unsecured notes that mature in August 2030, and $50.0 million of senior unsecured notes that mature in July 2031 (collectively, the “Senior Unsecured Notes”), and a credit facility (the “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.

As of both March 31, 2022 and 2021, 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 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 Facility are limited to the lesser of (i) the sum of the $100.0 million term loan and the $250.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties.

Interest on the Facility, including the term loan, is generally to be paid based upon, at our option, either (i) LIBOR plus the applicable LIBOR margin or (ii) the applicable base rate which is the greatest of the administrative agent’s prime rate, 0.50% above the federal funds effective rate, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Facility plus 1.25%.

The applicable LIBOR margin will range from 1.00% to 1.45% (1.00% as of March 31, 2022) for the revolving credit facility and 1.15% to 1.65% (1.15% as of March 31, 2022) 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 not secured by our properties or by interests in the subsidiaries that hold such properties.

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

We were in compliance with the covenants under the Facility and the Senior Unsecured Notes as of March 31, 2022 and 2021.

As of March 31, 2022 and December 31, 2021, we held cash and cash equivalents totaling approximately $106.3 million and $204.4 million, respectively.

The following tables summarize our debt maturities and principal payments as of March 31, 2022 and our market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the three months ended March 31, 2022 and 2021 (dollars in thousands, except per share data):

Facility Term Loan Senior

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Weighted average interest rate n/a 1.3% 3.2% 3.0%

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

As of March 31, 2022 As of March 31, 2021

Total Debt, net $ 720,864 $ 448,004

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Total Debt-to-Total Investments in Properties 3

22.8 % 21.1 %

Total Debt-to-Total Market Capitalization 4

11.7 % 10.9 %

Floating Rate Debt as a % of Total Debt 5

16.7 % 21.7 %

Unhedged Floating Rate Debt as a % of Total Debt 6

16.7 % 10.9 %

Mortgage Loans Payable as a % of Total Debt 7

Mortgage Loans Payable as a % of Total Investments in Properties 8

Adjusted EBITDA 7

4 unchanged sentences

Weighted Average Maturity of Total Debt (years) 5.7 4.3

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

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

2 Closing price of our shares of common stock on the New York Stock Exchange on September 30, 2021 and 2020, respectively, in dollars per share.

3 Total debt-to-total investments in properties is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties including one property held for sale with a gross book value of $23.6 million.

1 Includes 308,677 and 216,047 shares of unvested restricted stock outstanding as of March 31, 2022 and 2021, respectively.

Also includes 423,012 and 270,546 shares held in the Deferred Compensation Plan as of March 31, 2022 and 2021, respectively.

2 Closing price of our shares of common stock on the New York Stock Exchange on March 31, 2022 and 2021, respectively, in dollars per share.

3 Total debt-to-total investments in properties is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties, including one property held for sale as of March 31, 2022 with a gross book value of approximately $42.3 million.

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

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

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

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

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 March 31, 2021.

The interest rate cap expired on May 4, 2021.

See “Note 8 - Derivative Financial Instruments” in our condensed 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 costs.

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

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

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, including one property held for sale with a gross book value of $23.6 million.

9 Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the nine months ended September 30, 2021 and 2020, respectively.

The interest rate cap expired on May 4, 2021.

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

7 Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the three months ended March 31, 2022 and 2021, respectively.

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

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

The following table sets forth the cash dividends paid or payable per share during the three months ended March 31, 2022:

For the Three Months Ended Security Dividend per

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March 31, 2022 Common stock $ 0.34 February 8, 2022 March 25, 2022 April 8, 2022

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

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

Sources and Uses of Cash

Our principal sources of cash are cash from operations, borrowings under loans payable, draws on our Amended 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 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 $98.4 million for the nine months ended September 30, 2021 compared to approximately $77.4 million for the nine months ended September 30, 2020.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2020 and 2021 and same store properties, as we acquired 20 properties during nine months ended September 30, 2021 compared to five properties acquired in the same period from the prior year.

Net cash provided by operating activities totaled approximately $28.0 million for the three months ended March 31, 2022 compared to approximately $26.2 million for the three months ended March 31, 2021.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2022 and 2021 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 $359.9 million and net cash provided by investing activities was $8.5 million for the nine months ended September 30, 2021 and 2020, respectively, which consisted primarily of cash paid for property acquisitions of approximately $325.0 million and $46.8 million, respectively, additions to capital improvements of approximately $44.5 million and $31.3 million, respectively, partially offset by net cash received for the senior secured loan of $0 and $15.9 million, respectively, and net proceeds from sales of real estate investments of approximately $9.6 million and $70.7 million, respectively.

Net cash used in investing activities was approximately $96.8 million and $112.4 million for the three months ended March 31, 2022 and 2021, respectively, which consisted primarily of cash paid for property acquisitions of approximately $68.1 million and $104.4 million, respectively, and additions to capital improvements of approximately $28.8 million and $8.0 million, respectively.

Cash From Financing Activities.

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

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

Net cash used in financing activities was approximately $26.5 million for the three months ended March 31, 2022, which consisted primarily approximately $25.6 million in equity dividend payments.

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

Critical Accounting Policies

A summary of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 and in the condensed notes to consolidated financial statements in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

Contractual Obligations

As of November 2, 2021, we have five outstanding contracts with third-party sellers to acquire five industrial properties for a total aggregate purchase price of $94.2 million.

Material Cash Commitments

As of May 3, 2022, we have ten outstanding contracts with third-party sellers to acquire ten industrial properties for a total aggregate purchase price of $177.7 million.

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

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

Contractual Obligations Less than 1

The following table summarizes our material cash commitments due by period as of March 31, 2022 (dollars in thousands):

Material Cash Commitments Less than 1

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

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Total $ 248,310 $ 136,885 $ 179,419 $ 460,266 $ 1,024,880

1 As of November 2, 2021

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

1 As of May 3, 2022

As of May 3, 2022, we executed three non-binding letters of intent with third-party sellers to acquire three industrial properties for a total anticipated purchase price of approximately $108.4 million.

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

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

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

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

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

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

The following table reflects the calculation of FFO reconciled from net income for the three months ended March 31, 2022 and 2021 (dollars in thousands except per share data):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

$ 19,662 $ 16,257 $ 3,405 20.9 %

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

Depreciation and amortization 14,982 11,376 3,606 31.7 %

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1 To be consistent with our policies of determining whether instruments granted in share-based payment transactions are participating securities and accounting for earnings per share, the FFO per common share is adjusted for FFO distributed through declared dividends (if any) and allocated to all participating securities (weighted average common shares outstanding and unvested restricted shares outstanding) under the two-class method.

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

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

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

FFO increased by approximately $6.0 million and $14.7 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods from the prior year due primarily to same store NOI growth of approximately $3.8 million and $11.3 million for the three and nine months ended September 30, 2021, respectively, compared to the same periods from the prior year as well as property acquisitions during 2020 and 2021.

Under this method, allocations were made to 303,666 and 211,746 of weighted average unvested restricted shares outstanding for the three months ended March 31, 2022 and 2021, respectively.

2 Includes performance share award expense of approximately $1.5 million and $1.3 million for the three months ended March 31, 2022 and 2021, respectively.

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

FFO increased by approximately $6.9 million for the three months ended March 31, 2022, compared to the same period from the prior year due primarily to same store NOI growth of approximately $3.2 million for the three months ended March 31, 2022 compared to the same period from the prior year, as well as property acquisitions during 2022.

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 ended March 31, 2022 compared to the same period from the prior year.

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

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

amortization expense, acquisition costs and stock-based compensation.

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

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

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

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

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

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

Net income $ 19,662 $ 16,257 $ 3,405 20.9 %

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

Depreciation and amortization 14,982 11,376 3,606 31.7 %

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Stock-based compensation 2,829 1,970 859 43.6 %

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

Acquisition costs 28 55 (27) (49.1) %

Adjusted EBITDA $ 42,582 $ 33,803 $ 8,779 26.0 %

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

The same store pool includes all properties that were owned and in operation as of September 30, 2021 and since January 1, 2020 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of September 30, 2021.

The same store pool includes all properties that were owned and in operation as of March 31, 2022 and since January 1, 2021 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of March 31, 2022.

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

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

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

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

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

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three months ended March 31, 2022 and 2021 (dollars in thousands):

For the Three Months Ended March 31,

2022 2021 $ Change % Change

$ 19,662 $ 16,257 $ 3,405 20.9 %

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General and administrative 7,527 5,582 1,945 34.8 %

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

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

Acquisition costs 28 55 (27) (49.1) %

Total other income and expenses 4,960 3,909 1,051 26.9 %

Net operating income 47,159 37,179 9,980 26.8 %

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Less straight-line rents and amortization of lease intangibles 3

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

(2,130) (2,731) 601 (22.0) %

Cash-basis same store NOI

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Cash-basis same store NOI excluding termination fees $ 36,369 $ 32,612 $ 3,757 11.5 %

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

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

1 Includes approximately $0.1 million of lease termination income for both the three months ended March 31, 2022 and 2021.

2 Includes 2021 and 2022 acquisitions and dispositions, 13 improved land parcels consisting of approximately 36.8 acres, four properties under redevelopment, one completed redevelopment property with an aggregate book value of approximately $ 7.5 million and one property consisting of 18 buildings held for sale with a gross book value of approximately $42.3 million, as of March 31, 2022.

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

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

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

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

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

Cash-basis same store NOI increased by approximately $5.9 million for the nine months ended September 30, 2021 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases, partially offset by a decrease in occupancy rate.

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

In addition, approximately $2.1 million of the increase in cash-basis same store NOI for the nine months ended September 30, 2021 related to properties that were acquired vacant or with near term expirations in 2019.

Cash-basis same store NOI increased by approximately $3.8 million for the three months ended March 31, 2022 compared to the same period from the prior year due to increased rental revenue on new and renewed leases and contractual rent increases.

For both the three months ended March 31, 2022 and 2021, total contractual rent abatements of approximately $0.9 million, were given to certain tenants in the same-store pool and approximately $0.1 million in lease termination income was received from certain tenants in the same store pool.

In addition, for the three months ended March 31, 2022 and 2021, cash-basis same store NOI included approximately $0.1 million related to properties that were acquired vacant or with near term expirations in 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis