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Item 2. Management’s Discussion and Analysis

2022-11-02 compared with 2022-08-03 · 172 added, 171 removed, 465 unchanged (42% of the section changed)

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

• the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission on February 9, 2022, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 4, 2022, in this Quarterly Report on Form 10-Q, and in our other public filings;

• 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, 2021, which was filed with the Securities and Exchange Commission on February 9, 2022, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, which was filed with the Securities and Exchange Commission on May 4, 2022, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, which was filed with the Securities and Exchange Commission on August 3, 2022, in this Quarterly Report on Form 10-Q, and in our other public filings;

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

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

We invest in several types of industrial real estate, including warehouse/distribution (approximately 77.7% of our total annualized base rent as of June 30, 2022), flex (including light industrial and research and development, or R&D) (approximately 4.5%), transshipment (approximately 6.2%) and improved land (approximately 11.6%).

We invest in several types of industrial real estate, including warehouse/distribution (approximately 77.9% of our total annualized base rent as of September 30, 2022), flex (including light industrial and research and development, or R&D) (approximately 4.3%), transshipment (approximately 6.0%) and improved land (approximately 11.8%).

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 June 30, 2022, we owned a total of 249 buildings aggregating approximately 15.1 million square feet, 42 improved land parcels consisting of approximately 147.7 acres and four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.3 million square feet and two improved land parcels aggregating approximately 12.1 acres.

As of June 30, 2022, our buildings and improved land parcels were approximately 97.9% and 97.0% leased, respectively, to 576 customers, the largest of which accounted for approximately 4.5% of our total annualized base rent.

As of September 30, 2022, we owned a total of 252 buildings (including two buildings held for sale) aggregating approximately 15.4 million square feet, 46 improved land parcels consisting of approximately 159.9 acres and two properties under redevelopment that, upon completion, will consist of two improved land parcels aggregating approximately 12.1 acres.

As of September 30, 2022, our buildings and improved land parcels were approximately 98.4% and 91.6% leased, respectively, to 575 customers, the largest of which accounted for approximately 4.5% 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 June 30, 2022:

The following table summarizes by type our investments in real estate as of September 30, 2022:

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

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Total 298 $ 212,345 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2022, multiplied by 12.

The following table summarizes by market our investments in real estate as of June 30, 2022:

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, 2022, multiplied by 12.

The following table summarizes by market our investments in real estate as of September 30, 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 % 18.6 % 15.8 % 18.2 % 18.2 % 11.4 % 100.0 %

Occupancy % as of June 30, 2022

Occupancy % as of September 30, 2022

99.2 % 95.8 % 99.4 % 97.5 % 99.6 % 99.4 % 98.4 %

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% of Total 17.7 % 42.5 % 4.4 % 16.2 % 6.3 % 12.9 % 100.0 %

Occupancy % as of June 30, 2022

Occupancy % as of September 30, 2022

92.5 % 100.0 % 100.0 % 83.4 % 32.0 % 100.0 % 91.6 %

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% of Total Gross Book Value 19.0 % 23.0 % 16.6 % 18.0 % 13.8 % 9.6 % 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2022, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of June 30, 2022, weighted by the respective square footage.

3 Includes four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.3 million square feet and two improved land parcels aggregating approximately 12.1 acres.

As of June 30, 2022, we owned four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.3 million square feet and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately $108.3 million, including redevelopment costs, capitalized interest and other costs.

The following table summarizes our capital expenditures incurred during the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

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

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, 2022, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of September 30, 2022, weighted by the respective square footage.

3 Includes two properties under redevelopment that, upon completion, will consist of two improved land parcels aggregating approximately 12.1 acres, and two properties held for sale with an aggregate gross book value of approximately $12.1 million.

As of September 30, 2022, we owned two properties under redevelopment that, upon completion, will consist of two improved land parcels aggregating approximately 12.1 acres, with a total expected investment of approximately $51.3 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, 2022 and 2021 (dollars in thousands):

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

2022 2021 2022 2021

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$ 20,457 $ 21,405 $ 81,572 $ 50,129

1 Includes approximately $19.2 million and $13.8 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $42.7 million and $15.0 million for the six months ended June 30, 2022 and 2021, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 29 and 14 properties for the three months ended June 30, 2022 and 2021, respectively, and at 34 and 14 properties for the six months ended June 30, 2022 and 2021, respectively.

Also includes approximately $3.4 million and $3.6 million for the three and six months ended June 30, 2022, respectively, related to roof replacements in advance of rooftop solar installations as part of our ESG initiatives.

1 Includes approximately $12.2 million and $14.2 million for the three months ended September 30, 2022 and 2021, respectively, and approximately $54.9 million and $28.0 million for the nine months ended September 30, 2022 and 2021, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 26 and 15 properties for the three months ended September 30, 2022 and 2021, respectively, and at 34 and 17 properties for the nine months ended September 30, 2022 and 2021, respectively.

Also includes approximately $3.4 million and $3.6 million for the three and nine months ended September 30, 2022, respectively, related to roof replacements in advance of rooftop solar installations as part of our environmental, social and governance initiatives.

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

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

Our top 20 customers based on annualized base rent as of June 30, 2022 are as follows:

Our top 20 customers based on annualized base rent as of September 30, 2022 are as follows:

Customer Leases Rentable

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8 245,888 1.7 % 3,540 1.6 %

6 DirectBuy Home Improvement

1 230,891 1.5 % 3,463 1.6 %

7 O'Neill Logistics

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1 — — % 2,040 1.0 %

8 DirectBuy Home Improvement

2 230,891 1.5 % 2,011 1.0 %

9 B&B Granite Block Sales, LLC 5

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2 61,252 0.4 % 1,540 0.7 %

19 PODS Enterprises.

19 PODS Enterprises, LLC

1 201,977 1.3 % 1,515 0.7 %

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Total 51 3,489,455 22.6 % $ 53,497 25.2 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2022, 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 September 30, 2022, multiplied by 12.

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

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

The following table summarizes the anticipated lease expirations for leases in place as of June 30, 2022, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:

The following table summarizes the anticipated lease expirations for leases in place as of September 30, 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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Total 15,187,570 98.4 % $ 243,882 100.0 %

1 Includes leases that expire on or after June 30, 2022 and month-to-month leases totaling approximately 30,348 square feet.

2 Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of June 30, 2022, multiplied by 12.

1 Includes leases that expire on or after September 30, 2022 and month-to-month leases totaling approximately 32,163 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, 2022, multiplied by 12.

3 Includes annualized base rent related to 46 improved land parcels totaling approximately 159.9 acres.

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

As of June 30, 2022, leases representing approximately 3.4% of the total annualized base rent of our portfolio are scheduled to expire during the year ending December 31, 2022.

As of September 30, 2022, leases representing approximately 11.9% of the total annualized base rent of our portfolio are scheduled to expire through December 31, 2023.

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.

Cash rent changes on new and renewed leases totaling approximately 0.5 million square feet and 7.2 acres of improved land commencing during the three months ended June 30, 2022 were approximately 55.4% higher as compared to the previous rental rates for that same space, and cash rent changes on new and renewed leases totaling approximately 1.2 million square feet and 11.3 acres commencing during the six months ended June 30, 2022 were approximately 42.8% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio for the operating portfolio of 27.5% and 38.6%, respectively, for the three and six months ended June 30, 2022.

We had a tenant retention ratio for the improved land portfolio of 100.0% and 87.4%, respectively, for the three and six months ended June 30, 2022.

Cash rent changes on new and renewed leases totaling approximately 0.7 million square feet and 5.1 acres of improved land commencing during the three months ended September 30, 2022 were approximately 65.9% higher as compared to the previous rental rates for that same space, and cash rent changes on new and renewed leases totaling approximately 1.9 million square feet and 16.5 acres commencing during the nine months ended September 30, 2022 were approximately 50.3% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio for the operating portfolio of 76.2% and 51.4%, respectively, for the three and nine months ended September 30, 2022.

We had a tenant retention ratio for the improved land portfolio of 53.3% and 74.2%, respectively, for the three and nine months ended September 30, 2022.

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

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Acquisition Activity

During the three months ended June 30, 2022, we acquired ten industrial properties for a total purchase price of approximately $203.3 million.

During the three months ended September 30, 2022, we acquired four industrial properties for a total purchase price of approximately $65.9 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 June 30, 2022:

The following table sets forth the industrial properties we acquired during the three months ended September 30, 2022:

Property Name Location Acquisition Date Number of

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(in thousands) 1

NE 91st Redmond, WA April 8, 2022 2 32,000 $ 9,780 4.1 % —

87 Doremus Newark, NJ April 18, 2022 — — 17,300 5.3 % 9.7

3660 Thomas Road Santa Clara, CA May 4, 2022 1 135,000 54,600 2.5 % —

127 Doremus Avenue Newark, NJ May 19, 2022 — — 11,900 6.9 % 2.4

3660 Fee Ana Anaheim, CA May 24, 2022 — — 15,000 4.7 % 2.1

332 Hindry Avenue Inglewood, CA May 25, 2022 1 19,000 9,280 2.4 % —

8320-8400 Isis Avenue Los Angeles, CA May 25, 2022 1 40,000 17,902 3.2 % —

Teagarden San Leandro, CA June 1, 2022 5 104,000 34,600 3.5 % —

293 Roanoke Avenue Newark, NJ June 7, 2022 — — 13,000 5.4 % 1.8

8660 Willows Road Redmond, WA June 17, 2022 — — 19,900 4.3 % 3.5

8050 NW 90th St Medley, FL July 5, 2022 — — $ 20,000 5.6 % 6.7

4857 W 147th St Hawthorne, CA August 2, 2022 — — 6,500 5.0 % 1.3

19500 South Alameda St Rancho Dominguez, CA August 3, 2022 — — 32,075 5.5 % 3.0

3091 East Coronado St Anaheim, CA September 6, 2022 — — 7,325 5.0 % 1.2

Total/Weighted Average — — $ 65,900 5.4 % 12.2

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The total aggregate initial investment was approximately $68.9 million, including $2.0 million in capitalized closing costs and acquisition costs and $1.0 million in assumed intangible liabilities.

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

the total acquisition cost for the property.

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.

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Redevelopment Activity

As of June 30, 2022, we had four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.3 million square feet and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately $108.3 million, including redevelopment costs, capitalized interest and other costs as follows:

As of September 30, 2022, we had two properties under redevelopment that, upon completion, will consist of two improved land parcels aggregating approximately 12.1 acres.

The following table summarizes certain information with respect to the properties under redevelopment as of September 30, 2022:

Property Name Total Expected

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Stabilized Cap

Estimated Post-Development Square Feet Estimated

Quarter % Pre-leased June 30, 2022

$ 20,616 $ 18,313 $ 2,303 6.5 % 128,844 Q3 2022 66.1 %

Countyline #30

Estimated Post-Development Acreage Estimated

Quarter % Pre-leased September 30, 2022

$ 25,961 $ 24,492 $ 1,469 4.9 % 7.2 Q1 2023 — %

24,563 24,182 381 5.1 % N/A Q1 2023 — %

Paterson Plank III

25,303 19,545 5,758 4.4 % N/A Q2 2023 — %

25,303 19,828 5,475 4.4 % 4.9 Q2 2023 — %

Total/Weighted Average $ 51,264 $ 44,320 $ 6,944 4.7 % 12.1 — %

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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 our Annual Report on Form 10-K for the year ended December 31, 2021 and in our other public filings.

3 Improved land parcel of approximately 7.2 acres.

4 Improved land parcel of approximately 4.9 acres.

During the second quarter of 2022, we completed redevelopment of our Countyline 29 property in Hialeah, FL consisting of approximately 0.2 million square feet.

The property has an estimated stabilized cap rate of 3.8% and the total aggregate investment was approximately $37.7 million.

During 2022, we completed redevelopment of three properties aggregating approximately 0.6 million square feet.

The following table summarizes certain information with respect to the completed redevelopment properties as of September 30, 2022:

Property Name Location Total

Investment (in

Stabilized Cap

Square Feet Completion Quarter

America's Gateway Miami, FL $ 7,500 6.6 % 128,844 Q1 2022

Countyline #29 & #30 Hialeah, FL 75,539 3.8 % 407,084 Q2/Q3 2022

73rd Street Miami, FL 20,200 8.1 % 51,800 Q3 2022

Total/Weighted Average $ 103,239 4.8 % 587,728

1 Total investment for the properties include the initial purchase price, buyer’s due diligence and closing costs, 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.

Disposition Activity

During the six months ended June 30, 2022, we sold one property (consisting of 18 buildings) located in the Northern New Jersey/New York City market for a sales price of approximately $110.4 million, resulting in a gain of approximately $76.0 million.

The following summarizes the condensed results of operations of the property sold during the three and six months ended June 30, 2022 (dollars in thousands):

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

During the nine months ended September 30, 2022, we sold one property (consisting of 18 buildings) located in the Northern New Jersey/New York City market for a sales price of approximately $110.4 million, resulting in a gain of approximately $76.0 million.

The following summarizes the condensed results of operations of the property sold during the three and nine months ended September 30, 2022 (dollars in thousands):

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

2022 2021 2022 2021

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Credit Facility

On June 29, 2022, we entered into the First Amendment to the Sixth Amended and Restated Senior Credit Agreement (as amended, the “Amended Facility”) which (i) increased the borrowing capacity of the revolving credit facility by $150.0 million to $400.0 million, (ii) decreased the accordion feature by $150.0 million to $500.0 million, and (iii) provided for the calculation of interest, pricing and fees based on SOFR instead of LIBOR.

On June 29, 2022, we entered into the First Amendment (the “First Amendment”) to the Sixth Amended and Restated Senior Credit Agreement which (i) increased the borrowing capacity of the revolving credit facility by $150.0 million to $400.0 million, (ii) decreased the accordion feature by $150.0 million to $500.0 million, and (iii) provided for the calculation of interest, pricing and fees based on SOFR instead of LIBOR.

On September 2, 2022, we entered into the Second Amendment (the “Second Amendment”) to the Sixth Amended and Restated Senior Credit Agreement (as amended by the First Amendment and the Second Amendment, the “Amended Facility”) to add an additional $100.0 million term loan that matures in January 2028.

We drew the full amount available under the term loan upon entry into the Second Amendment.

See “Note 6 - Debt” in our condensed notes to consolidated financial statements for more information regarding the Amended Facility.

Senior Unsecured Notes

On August 1, 2022, we prepaid a $50.0 million tranche of the Senior Unsecured Notes using borrowings from our revolving credit facility.

On August 1, 2022, we prepaid the $50.0 million tranche of 7-year senior unsecured notes using borrowings from our revolving credit facility.

The notes bore interest at 4.23% and had an original maturity date of September 1, 2022.

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 ($219.4 million remaining as of June 30, 2022) in amounts and at times as we determine from time to time.

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 ($190.5 million remaining as of September 30, 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, 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 both the three and six months ended June 30, 2022, we issued an aggregate of 27,087 shares of common stock at a weighted average offering price of $76.03 per share under the $300 Million ATM Program, resulting in net proceeds of approximately $2.0 million and paying total compensation to the applicable sales agents of approximately $29,000.

During the three and nine months ended September 30, 2022, we issued an aggregate of 444,512 and 471,599 shares of common stock, respectively, at a weighted average offering price of $64.97 and $65.61 per share, respectively, under the $300 Million ATM Program, resulting in net proceeds of approximately $28.5 million and $30.5 million, respectively, and paying total compensation to the applicable sales agents of approximately $0.4 million and $0.4 million, respectively.

Share Repurchase Program

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The program may be suspended or discontinued at any time.

As of June 30, 2022, we had not repurchased any shares of our common stock pursuant to our share repurchase program.

As of September 30, 2022, we had not repurchased any shares of our common stock pursuant to our share repurchase program.

Dividend and Distribution Activity

On August 2, 2022, our board of directors declared a cash dividend in the amount of $0.40 per share of our common stock payable on October 14, 2022 to the stockholders of record as of the close of business on September 30, 2022.

On November 1, 2022, our board of directors declared a cash dividend in the amount of $0.40 per share of our common stock payable on January 13, 2023 to the stockholders of record as of the close of business on December 30, 2022.

Contractual Commitments

As of August 2, 2022, we had outstanding contracts with third-party sellers to acquire three industrial properties for a total aggregate purchase price of $51.3 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.

As of November 1, 2022, we had one outstanding contract with a third-party seller to acquire one industrial property for a total purchase price of $15.6 million and one outstanding contract with a third-party purchaser to sell one industrial property for a sales price of approximately $26.5 million (gross book value of approximately $8.5 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 property under contract because the proposed acquisition is subject to the completion of satisfactory due diligence and various closing conditions.

economy has experienced an increase in inflation rates recently affecting consumers and a wide variety of industries and sectors.

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The results of operations of any acquired property are included in our financial statements as of the date of its acquisition.

The analysis of our results below for the three and six months ended June 30, 2022 and 2021 includes the changes attributable to same store properties.

The same store pool for the comparison of the three and six months ended June 30, 2022 and 2021 includes all properties that were owned and in operation as of June 30, 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 June 30, 2022.

As of June 30, 2022, the same store pool consisted of 200 buildings aggregating approximately 12.4 million square feet representing approximately 81.8% of our total square feet owned and 24 improved land parcels consisting of approximately 91.5 acres.

As of June 30, 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 June 30, 2022, consisted of 49 buildings aggregating approximately 2.7 million square feet, 18 improved land parcels consisting of approximately 56.2 acres and four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.3 million square feet and two improved land parcels aggregating approximately 12.1 acres.

As of June 30, 2022 and 2021, our consolidated same store pool occupancy was approximately 98.0% and 97.9%, respectively.

The analysis of our results below for the three and nine months ended September 30, 2022 and 2021 includes the changes attributable to same store properties.

The same store pool for the comparison of the three and nine months ended September 30, 2022 and 2021 includes all properties that were owned and in operation as of September 30, 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 September 30, 2022.

As of September 30, 2022, the same store pool consisted of 198 buildings aggregating approximately 12.2 million square feet representing approximately 79.3% of our total square feet owned and 24 improved land parcels consisting of approximately 91.5 acres.

As of September 30, 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 September 30, 2022, consisted of 54 buildings (including two properties held for sale) aggregating approximately 3.2 million square feet, 22 improved land parcels consisting of approximately 68.4 acres and two properties under redevelopment that, upon completion, will consist of two improved land parcels aggregating approximately 12.1 acres.

As of September 30, 2022 and 2021, our consolidated same store pool occupancy was approximately 98.9% and 98.6%, respectively.

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

Comparison of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021:

For the Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2022 to the Three Months Ended September 30, 2021:

For the Three Months Ended September 30,

2022 2021 $ Change % Change

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General and administrative 8,139 6,800 1,339 19.7 %

Acquisition costs and other 1,027 117 910 777.8 %

Acquisition costs and other 36 — 36 n/a

Total other costs and expenses 25,132 20,436 4,696 23.0 %

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Interest expense, including amortization (6,265) (4,686) (1,579) 33.7 %

Gain on sales of real estate investments 76,048 — 76,048 n/a

Total other income (expense) 71,116 (3,795) 74,911 n/a

Gain on sales of real estate investments — 3,185 (3,185) (100.0) %

Total other income (expense) (6,090) (1,273) (4,817) 378.4 %

Net income $ 22,439 $ 21,360 $ 1,079 5.1 %

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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 2022 and 2021 acquisitions and dispositions, eighteen improved land parcels and four properties under redevelopment as of June 30, 2022.

2 Includes 2022 and 2021 acquisitions and dispositions, 22 improved land parcels, two properties under redevelopment and two properties held for sale with an aggregate gross book value of approximately $12.1 million as of September 30, 2022.

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 $12.1 million for the three months ended June 30, 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 0.5 million square feet commencing during the three months ended June 30, 2022 increased approximately 55.4% compared to the previous rental rates for that same space.

For the three months ended June 30, 2022 and 2021, approximately $1.4 million and $1.1 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

Total revenues increased approximately $13.5 million for the three months ended September 30, 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 September 30, 2022 increased approximately 65.9% compared to the previous rental rates for that same space.

For the three months ended September 30, 2022 and 2021, approximately $2.4 million and $1.5 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.1 million and $0.5 million, respectively, was recorded in lease termination revenue.

Property operating expenses.

Total property operating expenses increased approximately $2.6 million during the three months ended June 30, 2022 compared to the same period from the prior year.

Total property operating expenses increased approximately $2.9 million during the three months ended September 30, 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 $2.1 million attributable to property acquisitions during 2022 and 2021 as well as increases in insurance premiums, real estate taxes related to annual rate increases and utilities expenses incurred at certain of our properties.

Depreciation and amortization.

Depreciation and amortization increased approximately $3.3 million during the three months ended June 30, 2022 compared to the same period from the prior year primarily due to property acquisitions during 2022 and 2021.

Depreciation and amortization increased approximately $3.3 million during the three months ended September 30, 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 $0.5 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 June 30, 2022 compared to the same period from the prior year.

General and administrative expenses increased approximately $1.3 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 September 30, 2022 compared to the same period from the prior year.

Acquisition costs and other.

Acquisition costs and other increased approximately $0.9 million during the three months ended June 30, 2022 compared to the same period from the prior year primarily due to environmental remediation at our Avenue A property of approximately $1.0 million.

Acquisition costs and other for the three months ended September 30, 2022 remained consistent with the same period in the prior year.

Interest and other income.

Interest and other income for the three months ended June 30, 2022 remained consistent with the same period in the prior year.

Interest and other income for the three months ended September 30, 2022 remained consistent with the same period in the prior year.

Interest expense, including amortization.

Interest expense increased approximately $1.0 million for the three months ended June 30, 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.

Interest expense increased approximately $1.6 million for the three months ended September 30, 2022 compared to the same period from the prior year primarily due to the issuance of approximately $125.0 million of senior unsecured notes on October 28, 2021 and borrowing the full amount available under the new $100.0 million unsecured term loan on September 2, 2022, partially offset by the repayment of $50.0 million of senior unsecured notes on August 1, 2022 that bore interest at 4.23%.

Gain on sales of real estate investments.

Gain on sales of real estate investments increased approximately $76.0 million for the three months ended June 30, 2022 compared to the same period from the prior year.

We sold one property during the three months ended June 30, 2022 and we did not sell any properties during the three months ended June 30, 2021.

Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021:

For the Six Months Ended June 30,

Gain on sales of real estate investments decreased approximately $3.2 million for the three months ended September 30, 2022 compared to the same period from the prior year.

We did not sell any properties during the three months ended September 30, 2022 and we sold one property during the three months ended September 30, 2021.

Comparison of the Nine Months Ended September 30, 2022 to the Nine Months Ended September 30, 2021:

For the Nine Months Ended September 30,

2022 2021 $ Change % Change

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Interest expense, including amortization (16,393) (12,847) (3,546) 27.6 %

Gain on sales of real estate investments 76,048 — 76,048 n/a

Gain on sales of real estate investments 76,048 3,185 72,863 2287.7 %

Total other income (expense) 60,066 (8,977) 69,043 n/a

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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 2022 acquisitions and dispositions, eighteen improved land parcels and four properties under redevelopment as of June 30, 2022.

2 Includes 2021 and 2022 acquisitions and dispositions, 22 improved land parcels, two properties under redevelopment and two properties held for sale with an aggregate gross book value of approximately $12.1 million as of September 30, 2022.

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

Total revenues increased approximately $25.4 million for the six months ended June 30, 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 1.2 million square feet commencing during the six months ended June 30, 2022 increased approximately 42.8% compared to the same period from the prior year.

For the six months ended June 30, 2022 and 2021, approximately $3.2 million and $2.2 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.1 million and $0.2 million, respectively, was recorded in lease termination revenue.

Total revenues increased approximately $39.0 million for the nine months ended September 30, 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 1.9 million square feet commencing during the nine months ended September 30, 2022 increased approximately 50.3% compared to the same period from the prior year.

For the nine months ended September 30, 2022 and 2021, approximately $5.6 million and $3.7 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.3 million and $0.6 million, respectively, was recorded in lease termination revenue.

Property operating expenses.

Total property operating expenses increased approximately $6.0 million during the six months ended June 30, 2022 compared to the same period from the prior year.

Total property operating expenses increased approximately $8.9 million during the nine months ended September 30, 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 $5.7 million attributable to property acquisitions during 2022 and 2021 as well increases in insurance premiums, real estate taxes related to annual rate increases and utilities expenses incurred at certain of our properties.

Depreciation and amortization.

Depreciation and amortization increased approximately $6.9 million during the six months ended June 30, 2022 compared to the same period from the prior year primarily due to property acquisitions during 2021 and 2022.

Depreciation and amortization increased approximately $10.2 million during the nine months ended September 30, 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 $2.4 million for the six months ended June 30, 2022 primarily due to increased restricted stock amortization and other compensation expenses, including an increase in bonus expense and an increase in the number of employees compared to the same period from the prior year.

General and administrative expenses increased approximately $3.8 million for the nine months ended September 30, 2022 primarily due to increased restricted stock amortization and other compensation expenses, including an increase in bonus expense and an increase in the number of employees and salaries compared to the same period from the prior year.

Acquisition costs and other.

Acquisition costs and other increased approximately $0.9 million during the six months ended June 30, 2022 compared to the same period from the prior year primarily due to environmental remediation at our Avenue A property of approximately $1.0 million.

Acquisition costs and other increased approximately $0.9 million during the nine months ended September 30, 2022 compared to the same period from the prior year primarily due to environmental remediation at our Avenue A property of approximately $1.0 million.

Interest and other income.

Interest and other income for the six months ended June 30, 2022 remained consistent with the same period in the prior year.

Interest and other income for the nine months ended September 30, 2022 remained consistent with the same period in the prior year.

Interest expense, including amortization.

Interest expense increased approximately $2.0 million for the six months ended June 30, 2022 compared to the same period from the prior year.

This increase was 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, partially offset by the repayment of an $11.3 million mortgage loan in 2021.

Interest expense increased approximately $3.5 million for the nine months ended September 30, 2022 compared to the same period from the prior year.

This increase was primarily due to the issuance of approximately $125.0 million of senior unsecured notes on October 28, 2021 and borrowing the full amount available under the new $100.0 million unsecured term loan on September 2, 2022, partially offset by the repayment of an $11.3 million mortgage loan in 2021 and the repayment of $50.0 million of senior unsecured notes on August 1, 2022 that bore interest at 4.23%.

Gain on sales of real estate investments.

Gain on sales of real estate investments increased approximately $76.0 million for the six months ended June 30, 2022 compared to the same period from the prior year.

We sold one property during the six months ended June 30, 2022 and we did not sell any properties during the six months ended June 30, 2021.

Gain on sales of real estate investments increased approximately $72.9 million for the nine months ended September 30, 2022 compared to the same period from the prior year.

We recognized a gain of approximately $76.0 million from the sale of one property during the nine months ended September 30, 2022, as compared to a recognized gain of approximately $3.2 million from the sale of one property in the same period from the prior year.

Liquidity and Capital Resources

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Equity Sources of Liquidity

The following sets forth certain information regarding our current at-the-market common stock offering program as of June 30, 2022:

The following sets forth certain information regarding our current at-the-market common stock offering program as of September 30, 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 $ 190,493

The table below sets forth the activity under our at-the-market common stock offering programs during the three and six months ended June 30, 2022 and 2021, respectively (in thousands, except share and price per share data):

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, 2022 and 2021, respectively:

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

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(in thousands)

June 30, 2022 27,087 $ 76.03 $ 2,030 $ 29

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

For the Six Months Ended

Shares Sold Weighted Average

September 30, 2022 444,512 $ 64.97 $ 28,463 $ 419

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

For the Nine Months Ended Shares Sold Weighted Average

Price Per Share Net Proceeds

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(in thousands)

June 30, 2022 27,087 $ 76.03 $ 2,030 $ 29

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

September 30, 2022 471,599 $ 65.61 $ 30,493 $ 449

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

Debt Sources of Liquidity

As of June 30, 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”).

The Amended Facility consists of a $400.0 million revolving credit facility that matures in August 2025 and a $100.0 million term loan that matures in January 2027.

As of June 30, 2022 and 2021, there were $12.0 million and $0, respectively, of 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 up to $500.0 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 $400.0 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) SOFR plus the applicable SOFR 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 SOFR plus the applicable SOFR margin for SOFR rate loans under the Amended Facility plus 1.25%.

The applicable SOFR margin will range from 1.10% to 1.55% (1.10% as of June 30, 2022) for the revolving credit facility and 1.25% to 1.75% (1.25% as of June 30, 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 and includes a 10 basis points SOFR credit adjustment..

As of September 30, 2022, we had $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”).

On September 2, 2022, we entered into the Second Amendment to the Sixth Amended and Restated Senior Credit Agreement to add an additional $100.0 million term loan that matures in January 2028.

We drew the full amount available under the term loan upon entry into the Second Amendment.

The Amended Facility consists of a $400.0 million revolving credit facility that matures in August 2025, a $100.0 million term loan that matures in January 2027 and a $100.0 million term loan that matures in January 2028.

As of September 30, 2022 and December 31, 2021, there were $10.0 million and $0, respectively, of borrowings outstanding on the revolving credit facility and $200.0 million and $100.0 million, respectively, of borrowings outstanding on the term loans.

The aggregate amount of the Amended Facility may be increased by up to an additional $500.0 million to a maximum amount not to exceed $1.1 billion, 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 $400.0 million revolving credit facility, the $100.0 million term loan maturing in January 2027 and the $100.0 million term loan maturing in January 2028, or (ii) 60.0% of the value of the unencumbered properties.

Interest on the Amended Facility, including the term loans, is generally to be paid based upon, at our option, either (i) SOFR plus the applicable SOFR 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, thirty-day SOFR plus the applicable SOFR margin for SOFR rate loans under the Amended Facility plus 1.25%, or 1.25% per annum.

The applicable SOFR margin will range from 1.10% to 1.55% (1.10% as of September 30, 2022) for the revolving credit facility and 1.25% to 1.75% (1.25% as of September 30, 2022) for the term loans, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value and includes a 10 basis points SOFR credit adjustment.

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.

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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 June 30, 2022 and 2021.

As of June 30, 2022 and December 31, 2021, we held cash and cash equivalents totaling approximately $7.2 million and $204.4 million, respectively.

The following tables summarize our debt maturities and principal payments as of June 30, 2022 and our market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the six months ended June 30, 2022 and 2021 (dollars in thousands, except per share data):

We were in compliance with the covenants under the Amended Facility and the Senior Unsecured Notes as of September 30, 2022 and 2021.

As of September 30, 2022 and December 31, 2021, we held cash and cash equivalents totaling approximately $10.2 million and $204.4 million, respectively.

The following tables summarize our debt maturities and principal payments as of September 30, 2022 and our market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the nine months ended September 30, 2022 and 2021 (dollars in thousands, except per share data):

Facility Term Loan Senior

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Weighted average interest rate 3.9% 4.0% 3.1% 3.4%

1 On August 1, 2022, we prepaid a $50.0 million tranche of the Senior Unsecured Notes using borrowings from our revolving credit facility.

The notes bore interest at 4.23% and had an original maturity date of September 1, 2022.

As of June 30, 2022 As of June 30, 2021

As of September 30, 2022 As of September 30, 2021

Total Debt, net $ 780,615 $ 596,623

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Floating Rate Debt as a % of Total Debt 5

Unhedged Floating Rate Debt as a % of Total Debt 6

Adjusted EBITDA 6

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Weighted Average Maturity of Total Debt (years) 5.5 5.6

1 Includes 292,524 and 215,962 shares of unvested restricted stock outstanding as of June 30, 2022 and 2021, respectively.

Also includes 426,594 and 275,727 shares held in the Deferred Compensation Plan as of June 30, 2022 and 2021, respectively.

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

1 Includes 357,076 and 288,548 shares of unvested restricted stock outstanding as of September 30, 2022 and 2021, respectively.

Also includes 426,594 and 275,727 shares held in the Deferred Compensation Plan as of September 30, 2022 and 2021, respectively.

2 Closing price of a share of our common stock on the New York Stock Exchange on September 30, 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 two properties held for sale with an aggregate gross book value of approximately $12.1 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.

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.

7 Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the six months ended June 30, 2022 and 2021, respectively.

6 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, 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 six months ended June 30, 2022:

The following table sets forth the cash dividends paid or payable per share during the nine months ended September 30, 2022:

For the Three

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June 30, 2022 Common stock $ 0.34 May 3, 2022 June 30, 2022 July 14, 2022

September 30, 2022 Common stock $ 0.40 August 2, 2022 September 30, 2022 October 14, 2022

Sources and Uses of Cash

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Cash From Operating Activities.

Net cash provided by operating activities totaled approximately $63.2 million for the six months ended June 30, 2022 compared to approximately $59.2 million for the six months ended June 30, 2021.

Net cash provided by operating activities totaled approximately $109.0 million for the nine months ended September 30, 2022 compared to approximately $98.4 million for the nine months ended September 30, 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 $219.1 million and $183.4 million for the six months ended June 30, 2022 and 2021, respectively, which consisted primarily of cash paid for property acquisitions of approximately $277.0 million and $160.0 million, respectively, and additions to capital improvements of approximately $48.9 million and $23.4 million, respectively.

Net cash used in investing activities was approximately $313.8 million and $359.9 million for the nine months ended September 30, 2022 and 2021, respectively, which consisted primarily of cash paid for property acquisitions of approximately $344.8 million and $325.0 million, respectively, additions to capital improvements of approximately $75.8 million and $44.5 million, respectively, partially offset by net proceeds from sales of real estate investments of approximately $106.8 million and $9.6 million, respectively.

Cash From Financing Activities.

Net cash used in financing activities was approximately $38.6 million for the six months ended June 30, 2022, which consisted primarily of approximately $51.3 million in equity dividend payments, partially offset by a $12.0 million draw on our revolving credit facility and approximately $1.5 million in net proceeds from the issuance of common stock.

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

Net cash provided by financing activities was approximately $11.0 million for the nine months ended September 30, 2022, which consisted primarily of a $162.0 million draw on our revolving credit facility, borrowing the full amount available under the new $100.0 million unsecured term loan and approximately $29.5 million in net proceeds from the issuance of common stock, partially offset by a $152.0 million payment on our revolving credit facility, payment of a $50.0 million tranche of the Senior Unsecured Notes, and approximately $77.0 million in equity dividend payments.

Net cash provided by financing activities was approximately $227.4 million for the nine months ended September 30, 2021, which consisted primarily of approximately $152.5 million in net proceeds from the issuance of common stock and the issuance of approximately $150.0 million of Senior Unsecured Notes, partially offset by approximately $60.4 million in equity dividend payments and approximately $11.3 million in mortgage loan payments.

Critical Accounting Policies

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Material Cash Commitments

As of August 2, 2022, we have three outstanding contracts with third-party sellers to acquire three industrial properties for a total aggregate purchase price of $51.3 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 June 30, 2022 (dollars in thousands):

As of November 1, 2022, we had one outstanding contract with a third-party seller to acquire one industrial property for a total purchase price of $15.6 million.

There is no assurance that we will acquire the property under contract because the proposed acquisition is 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 September 30, 2022 (dollars in thousands):

Material Cash Commitments Less than 1

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Total $ 34,365 $ 143,644 $ 177,982 $ 552,009 $ 907,999

1 As of August 2, 2022

As of August 2, 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 $78.5 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.

1 As of November 1, 2022

As of November 1, 2022, we executed one non-binding letter of intent with a third-party seller to acquire one industrial property for a total anticipated purchase price of approximately $49.5 million.

In the normal course of our 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 a purchase and sale agreement with respect to this property or otherwise complete any such prospective purchase on the terms described or at all.

As of November 1, 2022, we had one outstanding contract with a third-party purchaser to sell one property for a sales price of approximately $26.5 million (gross book value of approximately $8.5 million).

There is no assurance that we will sell the property under contract because the proposed disposition is subject to due diligence and various closing conditions.

Non-GAAP Financial Measures

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

The following table reflects the calculation of FFO reconciled from net income for the three and six months ended June 30, 2022 and 2021 (dollars in thousands except per share data):

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

The following table reflects the calculation of FFO reconciled from net income for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands except per share data):

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

2022 2021 $ Change % Change 2022 2021 $ Change % Change

$ 22,439 $ 21,360 $ 1,079 5.1 % $ 139,134 $ 54,995 $ 84,139 153.0 %

Gain on sales of real estate investments (76,048) — (76,048) n/a (76,048) — (76,048) n/a

Gain on sales of real estate investments — (3,185) 3,185 n/a (76,048) (3,185) (72,863) 2,287.7 %

Depreciation and amortization 16,957 13,636 3,321 24.4 % 47,227 36,980 10,247 27.7 %

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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 295,247 and 216,025 of weighted average unvested restricted shares outstanding for the three

months ended June 30, 2022 and 2021, respectively, and 299,433 and 213,897 of weighted average unvested restricted shares outstanding for the six months ended June 30, 2022 and 2021, respectively.

2 Includes performance share award expense of approximately $0.4 million and $1.3 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $1.9 million and $2.6 million for the six months ended June 30, 2022 and 2021, respectively.

Under this method, allocations were made to 335,038 and 262,512 of weighted average unvested restricted shares outstanding for the three months ended September 30, 2022 and 2021, respectively, and 311,432 and 230,280 of weighted average unvested restricted shares outstanding for the nine months ended September 30, 2022 and 2021, respectively.

2 Includes performance share award expense of approximately $1.3 million for both the three months ended September 30, 2022 and 2021, and approximately $3.2 million and $3.8 million for the nine months ended September 30, 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 and $13.8 million for the three and six months ended June 30, 2022, respectively, compared to the same periods from the prior year due primarily to property acquisitions during 2021 and 2022 as well as same store NOI growth of approximately $2.6 million and $5.8 million for the three and six months ended June 30, 2022, respectively, compared to the same periods from the prior year.

The FFO increase was partially offset by increased weighted average common shares outstanding, increased acquisition costs and other due to environmental remediation at our Avenue A property and increased general and administrative expenses due to additional headcount for the three and six months ended June 30, 2022 compared to the same periods from the prior year.

FFO increased by approximately $7.5 million and $21.4 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods from the prior year due primarily to property acquisitions during 2021 and 2022 as well as same store NOI growth of approximately $2.8 million and $8.6 million for the three and nine months ended September 30, 2022, respectively, compared to the same periods from the prior year.

The FFO increase was partially offset by increased weighted average common shares outstanding, increased acquisition costs and other due to environmental remediation at our Avenue A property and increased general and administrative expenses due to additional headcount for the three and nine months ended September 30, 2022 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.

2 unchanged sentences

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

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

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

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands):

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

2022 2021 $ Change % Change 2022 2021 $ Change % Change

Net income $ 22,439 $ 21,360 $ 1,079 5.1 % $ 139,134 $ 54,995 $ 84,139 153.0 %

Gain on sales of real estate investments (76,048) — (76,048) n/a (76,048) — (76,048) n/a

Gain on sales of real estate investments — (3,185) 3,185 n/a (76,048) (3,185) (72,863) 2,287.7 %

Depreciation and amortization 16,957 13,636 3,321 24.4 % 47,227 36,980 10,247 27.7 %

1 unchanged sentence

Stock-based compensation 2,679 2,360 319 13.5 % 7,518 7,007 511 7.3 %

Acquisition costs and other 1,027 117 910 777.8 % 1,055 172 883 513.4 %

Acquisition costs and other 36 — 36 n/a 1,091 172 919 534.3 %

Adjusted EBITDA $ 48,376 $ 38,857 $ 9,519 24.5 % $ 135,315 $ 108,816 $ 26,499 24.4 %

3 unchanged sentences

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

The same store pool includes all properties that were owned and in operation as of June 30, 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 June 30, 2022.

The same store pool includes all properties that were owned and in operation as of September 30, 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 September 30, 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 six months ended June 30, 2022 and 2021 (dollars in thousands):

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

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands):

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

2022 2021 $ Change % Change 2022 2021 $ Change % Change

2 unchanged sentences

General and administrative 8,139 6,800 1,339 19.7 % 22,999 19,248 3,751 19.5 %

Acquisition costs and other 1,027 117 910 777.8 % 1,055 172 883 513.4 %

Total other income and expenses (71,116) 3,795 (74,911) n/a (66,156) 7,704 (73,860) n/a

Acquisition costs and other 36 — 36 n/a 1,091 172 919 534.3 %

Total other income and expenses 6,090 1,273 4,817 378.4 % (60,066) 8,977 (69,043) n/a

Net operating income 53,661 43,069 10,592 24.6 % 150,385 120,372 30,013 24.9 %

9 unchanged sentences

Cash-basis same store NOI excluding termination fees $ 38,813 $ 35,148 $ 3,665 10.4 % $ 112,509 $ 101,371 $ 11,138 11.0 %

1 Includes approximately $0.1 million and $0.1 million of lease termination income for the three months ended June 30, 2022 and 2021, respectively, and approximately $0.2 million and $0.2 million of lease termination income for the six months ended June 30, 2022 and 2021, respectively.

2 Includes 2021 and 2022 acquisitions and dispositions, 18 improved land parcels consisting of approximately 56.2 acres and four properties under redevelopment and one completed redevelopment property with an aggregate book value of approximately $37.7 million as of June 30, 2022.

1 Includes approximately $0.1 million and $0.7 million of lease termination income for the three months ended September 30, 2022 and 2021, respectively, and approximately $0.3 million and $0.8 million of lease termination income for the nine months ended September 30, 2022 and 2021, respectively.

2 Includes 2021 and 2022 acquisitions and dispositions, 22 improved land parcels consisting of approximately 68.4 acres, two properties under redevelopment, four completed redevelopment properties and two properties held for sale with an aggregate gross book value of approximately $12.1 million as of September 30, 2022.

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

Cash-basis same store NOI increased by approximately $3.8 million for the three months ended June 30, 2022 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases and contractual rent increases included in pre-existing leases.

For the three months ended June 30, 2022 and 2021, total contractual rent abatements of approximately $0.5 million and $0.7 million, respectively, were given to certain tenants in the same-store pool and approximately $0.1 million and $0 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $0.1 million of the increase in cash-basis same store NOI for the three months ended June 30, 2022 related to properties that were acquired vacant or with near term expirations in 2020.

Cash-basis same store NOI increased by approximately $7.6 million for the six months ended June 30, 2022 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 six months ended June 30, 2022 and 2021, total contractual rent abatements of approximately $1.4 million and $1.6 million, respectively, were given to certain tenants in the same-store pool and approximately $0.2 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 six months ended June 30, 2022 related to properties that were acquired vacant or with near term expirations in 2020.

Cash-basis same store NOI increased by approximately $3.3 million for the three months ended September 30, 2022 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases and contractual rent increases included in pre-existing leases.

For the three months ended September 30, 2022 and 2021, total contractual rent abatements of approximately $1.0 million and $0.7 million, respectively, were given to certain tenants in the same-store pool and approximately $0.1 million and $0.5 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 September 30, 2022 related to properties that were acquired vacant or with near term expirations in 2020.

Cash-basis same store NOI increased by approximately $10.9 million for the nine months ended September 30, 2022 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 nine months ended September 30, 2022 and 2021, total contractual rent abatements of approximately $2.4 million and $2.3 million, respectively, were given to certain tenants in the same-store pool and approximately $0.3 million and $0.6 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $0.4 million of the increase in cash-basis same store NOI for the nine months ended September 30, 2022 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