What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-07 compared with 2023-02-08 · 132 added, 156 removed, 973 unchanged (23% of the section changed)

9 unchanged sentences

In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework).

Based on its assessment, management of Terreno Realty Corporation believes that, as of December 31, 2022, the company’s internal control over financial reporting is effective based on those criteria.

Based on its assessment, management of Terreno Realty Corporation determined that, as of December 31, 2023, the company’s internal control over financial reporting is effective based on those criteria.

Terreno Realty Corporation’s independent auditors have issued an audit report on the effectiveness of the company’s internal control over financial reporting, as stated in their report included in this Annual Report on Form 10-K (which expresses an unqualified opinion on the effectiveness of the company’s internal control over financial reporting as of December 31, 2023).

4 unchanged sentences

In our opinion, Terreno Realty Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15 of the Company and our report dated February 8, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and schedule listed in the Index at Item 15 and our report dated February 7, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

15 unchanged sentences

/s/ Ernst & Young LLP

San Francisco, California

Seattle, Washington

February 7, 2024

2 unchanged sentences

Other Information.

On February 7, 2023, David M.

Lee informed us that he would not stand for re-election at our 2023 Annual Meeting of Stockholders (the “Annual Meeting”) in order to focus on other commitments.

Lee will continue to serve on our board of directors and maintain his committee memberships through the Annual Meeting.

Lee’s decision not to stand for re-election was not the result of any disagreement with us on any matter relating to our operations, policies or practices.

On February 6, 2024, Linda Assante informed us that she would not stand for re-election at our 2024 Annual Meeting of Stockholders (the “Annual Meeting”) in order to focus on other commitments.

Assante will continue to serve on our board of directors and maintain her committee memberships through the Annual Meeting.

Assante’s decision not to stand for re-election was not the result of any disagreement with us on any matter relating to our operations, policies or practices.

During the three months ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted , terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K) .

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

45 unchanged sentences

Valuation of acquired properties

Description of matter During the year ended December 31, 2022, the Company completed 20 real estate acquisitions for a total purchase price of $422.3 million.

Description of the Matter During the year ended December 31, 2023, the Company completed seven real estate acquisitions for a total purchase price of $484 million.

The properties were acquired from unrelated third parties.

5 unchanged sentences

Building and improvement values are calculated as replacement cost less depreciation, or management’s estimates of the fair value of these assets using discounted cash flow analyses or similar methods.

The fair value of the above and below-market leases is based on the present value of the difference between the contractual amounts to be received pursuant to the acquired leases (using a discount rate that reflects the risks associated with the acquired leases) and the Company’s estimate of the market lease rates measured over a period equal to the remaining term of the leases plus the term of any below-market fixed rate renewal options.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for real estate acquisitions relative to purchase accounting, including controls over the review of the valuation models and related significant assumptions underlying the valuation of the acquired assets and liabilities.

5 unchanged sentences

We have served as the Company‘s auditor since 2012.

San Francisco, California

Seattle, Washington

February 7, 2024

Financial Statements of Terreno Realty Corporation

Terreno Realty Corporation

26 unchanged sentences

Common stock:

$ 0.01 par value, 400,000,000 shares authorized, and 76,463,482 75,068,575 shares issued and outstanding at December 31, 2022 and 2021, respectively.

$ 0.01 par value, 400,000,000 shares authorized, and 87,487,098 and 76,463,482 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively.

Additional paid-in capital

2,849,961 2,167,276

Common stock held in deferred compensation plan, 417,665 and 275,727 shares at December 31, 2022 and 2021, respectively.

Common stock held in deferred compensation plan, 508,663 and 417,665 shares at December 31, 2023 and December 31, 2022, respectively.

( 31,788 ) ( 26,462 )

53 unchanged sentences

Forfeiture of common stock related to employee awards ( 776 ) — — — — — — —

Repurchase of common stock related to employee awards ( 154,375 ) — ( 9,572 ) — — — — ( 9,572 )

Common shares acquired related to employee awards ( 6,534 ) — ( 582 ) — — — — ( 582 )

Issuance of restricted stock 99,569 — — — — — — —

14 unchanged sentences

— — — — — ( 112,546 ) — ( 112,546 )

Deposits to deferred compensation plan ( 136,503 ) — 7,651 136,503 ( 7,651 ) — — —

Other comprehensive income — — — — — — 183 183

Deposits to deferred compensation plan, net of withdrawals ( 141,938 ) — 11,265 141,938 ( 11,265 ) — — —

Balance as of December 31, 2022 76,463,482 765 2,167,276 417,665 ( 26,462 ) 88,272 — 2,229,851

9 unchanged sentences

Deposits to deferred compensation plan, net of withdrawals ( 90,998 ) — 5,326 90,998 ( 5,326 ) — — —

Other comprehensive income — — — — — — — —

Balance as of December 31, 2023 87,487,098 $ 876 $ 2,849,961 508,663 $ ( 31,788 ) $ 95,578 $ — $ 2,914,627

13 unchanged sentences

Deferred financing cost amortization 1,545 1,371 1,335

Deferred senior secured loan fee amortization — — ( 57 )

Stock-based compensation 13,466 10,171 9,554

3 unchanged sentences

Net cash provided by operating activities

179,677 143,210 132,208

CASH FLOWS FROM INVESTING ACTIVITIES

3 unchanged sentences

Additions to buildings, improvements and leasing costs ( 53,055 ) ( 66,611 ) ( 51,290 )

Repayments on senior secured loan — — 15,915

Net cash used in investing activities

( 570,388 ) ( 337,662 ) ( 666,438 )

CASH FLOWS FROM FINANCING ACTIVITIES

11 unchanged sentences

Net cash provided by financing activities

Net (decrease) increase in cash and cash equivalents and restricted cash ( 176,718 ) 96,965 ( 4,903 )

528,864 17,734 631,195

Net increase (decrease) in cash and cash equivalents and restricted cash

138,153 ( 176,718 ) 96,965

Cash and cash equivalents and restricted cash at beginning of year

18 unchanged sentences

All square feet, acres, occupancy and number of properties disclosed in these notes to the consolidated financial statements are unaudited.

As of December 31, 2022, the Company owned 252 buildings aggregating approximately 15.3 million square feet, 46 improved land parcels consisting of approximately 161.4 acres and three properties under redevelopment that, upon completion, will consist of one building of approximately 34,000 square feet and two improved land parcels aggregating approximately 12.1 acres.

As of December 31, 2023, the Company owned 259 buildings aggregating approximately 16.0 million square feet, 45 improved land parcels consisting of approximately 152.4 acres, seven properties under development or redevelopment and approximately 62.7 acres of land entitled for future development.

The Company is an internally managed Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2010.

7 unchanged sentences

Capitalization of Costs.

The Company capitalizes costs directly related to the redevelopment, renovation and expansion of its investment in real estate.

The Company capitalizes costs directly related to the development, redevelopment, renovation and expansion of its investment in real estate.

Costs associated with such projects are capitalized as incurred.

If the project is abandoned, these costs are expensed during the period in which the redevelopment, renovation or expansion project is abandoned.

If the project is abandoned, these costs are expensed during the period in which the development, redevelopment, renovation or expansion project is abandoned.

Costs considered for capitalization include, but are not limited to, construction costs, interest, real estate taxes and insurance, if appropriate.

2 unchanged sentences

Costs incurred for maintaining and repairing properties, which do not extend their useful lives, are expensed as incurred.

Interest is capitalized based on actual capital expenditures from the period when redevelopment, renovation or expansion commences until the asset is ready for its intended use, at the weighted average borrowing rate during the period.

Interest is capitalized based on actual capital expenditures from the period when development, redevelopment, renovation or expansion commences until the asset is ready for its intended use, at the weighted average borrowing rate during the period.

Investments in Real Estate.

8 unchanged sentences

If an asset is intended to be sold, impairment is determined using the estimated fair value less costs to sell.

The estimation of expected future net cash flows is inherently uncertain and relies on assumptions, among other things, regarding current and future economic and market

conditions and the availability of capital.

The estimation of expected future net cash flows is inherently uncertain and relies on assumptions, among other things, regarding current and future economic and market conditions and the availability of capital.

The Company determines the estimated fair values based on its assumptions regarding rental rates, lease-up and holding periods, as well as sales prices.

When available, current market information is used to determine capitalization and rental growth rates.

When available, current market information is used to

determine capitalization and rental growth rates.

If available, current comparative sales values may also be used to establish fair value.

35 unchanged sentences

2028 ( 3,015 )

2027 ( 2,011 )

Thereafter ( 24,077 )

32 unchanged sentences

Cash and cash equivalents and restricted cash 166,236 28,083 204,801

Net (decrease) increase in cash and cash equivalents and restricted cash $ ( 176,718 ) $ 96,965 $ ( 4,903 )

Net increase (decrease) in cash and cash equivalents and restricted cash $ 138,153 $ ( 176,718 ) $ 96,965

Revenue Recognition.

1 unchanged sentence

If tenants fail to make contractual lease payments that are greater than the Company’s allowance for doubtful accounts, security deposits and letters of credit, then the Company may have to recognize additional doubtful account charges in future periods.

The Company monitors the liquidity and creditworthiness of its tenants on an on-going basis by reviewing their financial condition periodically as appropriate.

The Company monitors the liquidity and creditworthiness of its tenants on an ongoing basis by reviewing their financial condition periodically as appropriate.

Each period the Company reviews its outstanding accounts receivable, including straight-line rents, for doubtful accounts and provides allowances as needed.

31 unchanged sentences

The grant date fair value of the Performance Share awards will be determined using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period.

Use of Derivative Financial Instruments.

The Company records all derivatives on the accompanying consolidated balance sheets at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Fair Value of Financial Instruments .

12 unchanged sentences

As of December 31, 2023, the Company owned 43 buildings aggregating approximately 2.6 million square feet and 13 improved land parcels consisting of approximately 68.0 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately 24.6 % of its annualized base rent.

Such annualized base rent percentages are based on contractual base rent from leases in effect as of December 31, 2022, excluding any partial or full rent abatements.

Such annualized base rent is based on contractual monthly base rent per the leases, for all buildings and improved land parcels, excluding any partial or full rent abatements as of December 31, 2023, multiplied by 12.

Other real estate companies compete with the Company in its real estate markets.

1 unchanged sentence

The existence of competing properties could have a material impact on the Company’s ability to lease space and on the level of rent that can be achieved.

The Company had no tenant that accounted for greater than 10% of the Company's annualized base rent for the years ended December 31, 2022, 2021 and 2020.

The Company had no tenant that accounted for greater than 10% of the Company's annualized base rent for the years ended 2023, 2022 and 2021.

Investments in Real Estate

During the year ended December 31, 2023, the Company acquired seven industrial properties with a total initial investment, including acquisition costs, of approximately $ 512.5 million, of which $ 325.8 million was recorded to land, $ 156.6 million to buildings and improvements, and $ 30.1 million to intangible assets.

Additionally, the Company assumed $ 46.3 million in liabilities.

The following table sets forth the wholly-owned industrial properties the Company acquired during the year ended December 31, 2023:

Property Name Location Acquisition Date Number of

Buildings Square

Feet Improved Land Acreage Purchase Price

(in thousands) 1

Countyline Phase IV 2

Hialeah, FL February 23, 2023 — — 121.0 $ 173,600

9th Street Long Island City, NY March 6, 2023 1 45,000 — 23,000

Morton Newark, CA March 30, 2023 4 603,000 — 186,000

25th Place NE Washington DC May 23, 2023 1 33,000 — 13,400

East Garry Avenue 3

Santa Ana, CA September 6, 2023 — — 4.9 14,800

Santa Fe Redondo Beach, CA October 10, 2023 2 112,000 — 45,700

Van Dyke Red Hook, Brooklyn, NY October 11, 2023 1 96,000 — 27,500

Total/Weighted Average 9 889,000 125.9 $ 484,000

1 Excludes intangible liabilities.

The total aggregate initial investment was approximately $ 512.5 million, including $ 6.1 million in capitalized closing costs and acquisition costs and $ 42.9 million in assumed intangible liabilities and $ 20.5 million in other credits related to near term capital expenditures, free rent and tenant improvements at various properties.

2 Countyline Phase IV is a 121 -acre project entitled for 2.2 million square feet of industrial distribution buildings located in Miami’s Countyline Corporate Park (“Countyline”), immediately adjacent to the Company’s seven buildings within Countyline.

Countyline Phase IV, a landfill redevelopment adjacent to Florida’s Turnpike and the southern terminus of I-75, is expected to contain ten LEED-certified industrial distribution buildings at completion.

3 East Garry Avenue is a 4.9 -acre property that was placed into redevelopment upon acquisition.

The property is expected to contain one approximately 92,000 square foot LEED-certified industrial distribution building at completion.

The Company recorded revenues and net income for the year ended December 31, 2023 of approximately $ 14.8 million and $ 4.9 million, respectively, related to the 2023 acquisitions.

During the year ended December 31, 2022, the Company acquired 20 industrial properties with a total initial investment, including acquisition costs, of approximately $ 422.3 million, of which $ 316.0 million was recorded to land, $ 94.4 million to buildings and improvements, and $ 11.9 million to intangible assets.

3 unchanged sentences

Buildings Square

Feet Purchase Price

Feet Improved Land Acreage Purchase Price

(in thousands) 1

Improved Land Acreage

Countyline 29 & 30 Hialeah, FL February 9, 2022 2 407,000 — $ 73,200

19 unchanged sentences

Total/Weighted Average 17 831,000 35.7 $ 414,813

1 Excludes intangible liabilities and mortgage premiums, if any.

1 Excludes intangible liabilities.

The total aggregate initial investment was approximately $ 422.3 million, including $ 13.0 million in capitalized closing costs and acquisition costs and $ 14.1 million in assumed intangible liabilities and $ 19.6 million in other credits related to near term capital expenditures at the Countyline 29 & 30 properties.

The Company recorded revenues and net income for the year ended December 31, 2022 of approximately $ 11.4 million and $ 3.2 million, respectively, related to the 2022 acquisitions.

During the year ended December 31, 2021, the Company acquired 34 industrial properties with a total initial investment, including acquisition costs, of approximately $ 682.0 million, of which $ 446.3 million was recorded to land, $ 206.8 million to buildings and improvements, and $ 28.9 million to intangible assets.

Additionally, the Company assumed $ 37.4 million in liabilities.

The following table sets forth the wholly-owned industrial properties the Company acquired during the year ended December 31, 2021:

Property Name Location Acquisition Date Number of

Buildings Square

Feet Purchase Price

(in thousands) 1

Improved Land Acreage

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

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

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

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

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

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

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

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

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

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

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

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

1150 & 1250 W.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1 Excludes intangible liabilities and mortgage premiums, if any.

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

The Company recorded revenues and net income for the year ended December 31, 2021 of approximately $ 12.6 million and $ 4.0 million, respectively, related to the 2021 acquisitions.

The above assets and liabilities were recorded at fair value, which uses Level 3 inputs.

The properties were acquired from unrelated third parties using existing cash on hand, proceeds from property sales and the issuance of common stock and borrowings on the revolving credit facility.

As of December 31, 2022, the Company had three properties under redevelopment that, upon completion, will consist of one building of approximately 34,000 square feet and two improved land parcels aggregating approximately 12.1 acres.

The following table summarizes certain information with respect to the properties under redevelopment as of December 31, 2022:

As of December 31, 2023, the Company had seven properties under redevelopment that, upon completion, will consist of six buildings aggregating approximately 1.0 million square feet and one approximately 2.8 -acre improved land parcel.

Additionally, the Company owned approximately 62.7 acres of land entitled for future development that, upon completion, will consist of six buildings aggregating approximately 1.1 million square feet.

The following table summarizes certain information with respect to the properties under development or redevelopment and the land entitled for future development as of December 31, 2023:

Property Name Location Total Expected

Investment (in

Estimated Post-Development Acreage Estimated Post-Development Square Feet

San Jose, CA $ 25,961 7.2 N/A

(in thousands) 1

Estimated Post-Development Square Feet Estimated Post-Development Acreage

Properties under development or redevelopment:

Countyline Phase IV

Countyline Building 38 2

Hialeah, FL $ 88,800 506,215 —

Countyline Building 39 2

Hialeah, FL 43,802 178,201 —

Countyline Building 40 2

Hialeah, FL 41,968 186,107 —

Rancho Dominguez, CA 28,071 — 2.8

Hawthorne, CA 18,095 31,378 —

East Garry Avenue

Santa Ana, CA 40,553 91,500 —

Paterson Plank III

Carlstadt, NJ 25,303 4.9 N/A

Hawthorne, CA 18,060 N/A 34,000

Total/Weighted Average $ 69,324 12.1 34,000

Carlstadt, NJ 35,042 47,316 —

Total $ 296,331 1,040,717 2.8

Land entitled for future development:

Countyline Phase IV

Countyline Phase IV Land 2

Hialeah, FL 295,700 1,137,121 —

Total $ 295,700 1,137,121 —

1 Excludes below-market lease adjustments recorded at acquisition.

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

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

2 Collectively, “Countyline Phase IV”, a 121 -acre project entitled for 2.2 million square feet of industrial distribution buildings located in Countyline, immediately adjacent to the Company’s seven buildings within Countyline.

During 2023, the Company completed development and redevelopment activities for two properties.

The following table summarizes certain information with respect to the completed redevelopment properties as of December 31, 2023:

Property Name Location Total

Investment (in

Square Feet Completion Quarter

America's Gateway Miami, FL $ 7,500 51,800 Q1 2022

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

73rd Street Miami, FL 20,200 128,844 Q3 2022

(in thousands) 1

Post-Development

Square Feet Post-Development Acreage Completion Quarter

Berryessa San Jose, CA $ 26,296 — 6.3 Q2 2023

Countyline Building 41 Hialeah, FL 41,200 190,907 — Q4 2023

Total/Weighted Average $ 67,496 190,907 —

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.

The Company capitalized interest associated with redevelopment and expansion activities of approximately $ 2.6 million, $ 0.7 million and $ 1.6 million during the years ended December 31, 2022, 2021 and 2020, respectively.

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

The Company capitalized interest associated with development, redevelopment and expansion activities of approximately $ 8.5 million, $ 2.6 million and $ 0.7 million during the years ended December 31, 2023, 2022 and 2021, respectively.

Held for Sale/Disposed Assets

1 unchanged sentence

Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale.

As of December 31, 2022 and 2021, the Company did not have any properties held for sale.

As of December 31, 2023, the Company did not have any properties held for sale.

During the year ended December 31, 2023, the Company sold two properties located in the Northern New Jersey/New York City market for a total aggregate sales price of approximately $ 43.2 million, resulting in a gain of approximately $ 21.9 million, one property located in the Washington, D.C.

market for a sales price of approximately $ 18.0 million, resulting in a gain of approximately $ 9.7 million and one property located in the Los Angeles market for a sales price of approximately $ 15.9 million, resulting in a gain of approximately $ 6.6 million.

During the year ended December 31, 2022, the Company sold three properties located in the Northern New Jersey/New York City market for a total aggregate sales price of approximately $ 159.7 million, resulting in a gain of approximately $ 107.1 million, and one property located in the Seattle market for a sales price of approximately $ 8.6 million, resulting in a gain of approximately $ 5.1 million.

During the year ended December 31, 2021, the Company sold one property located in the Seattle market for a sales price of approximately $ 10.3 million, resulting in a gain of approximately $ 3.2 million, and one property located in the Northern New Jersey/New York City market for a sales price of approximately $ 32.7 million, resulting in a gain of approximately $ 13.4 million.

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

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

As of December 31, 2022 and 2021, the Company had $ 775.0 million and $ 725.0 million, respectively, of unsecured debt and no secured debt.

As of both December 31, 2023 and December 31, 2022, the Company had $ 775.0 million of unsecured debt and no secured debt.

The following table summarizes the components of the Company’s indebtedness as of December 31, 2023 and 2022 (dollars in thousands):

24 unchanged sentences

50,000 50,000 n/a 2.8 % 7/15/2031

$ 50 M 10 -Year Unsecured 3

50,000 50,000 n/a 2.8 % 7/15/2031

Total Unsecured Debt 775,000 775,000

Unamortized premium/discount and debt issuance costs ( 4,182 ) ( 4,330 )

Unamortized debt issuance costs ( 3,437 ) ( 4,182 )

Total $ 771,563 $ 770,818

1 Reflects the contractual interest rate under the terms of each loan as of December 31, 2023.

Excludes the effects of unamortized debt issuance costs and unamortized fair market value premiums, if any.

Excludes the effects of unamortized debt issuance costs.

2 The interest rates on these loans are comprised of the Secured Overnight Financing Rate (“SOFR”) plus a SOFR margin.

1 unchanged sentence

3 Collectively, the “Senior Unsecured Notes”.

4 On August 1, 2022, the Company prepaid a $ 50 million tranche of 7-year senior unsecured notes using borrowings from the Company’s revolving credit facility.

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

The Company 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 December 31, 2022 and 2021, there were no borrowings outstanding on the revolving credit facility and $ 200.0 million and $ 100.0 million, respectively, of borrowings outstanding on the term loans.

The Company’s Sixth Amended and Restated Senior Credit Agreement (as amended, 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 both December 31, 2023 and December 31, 2022, there were no borrowings outstanding on the revolving credit facility and $ 200.0 million 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.

24 unchanged sentences

Total $ 1,236,539

Derivative Financial Instruments

The Company had no interest rate caps as of December 31, 2022 or 2021.

The following table presents the effect of the Company’s derivative financial instruments on its accompanying consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):

For the Year Ended December 31,

2022 2021 2020

Interest rate caps in cash flow hedging relationships:

Amount of gain recognized in accumulated other comprehensive income (loss) (“AOCI”) on derivatives (effective portion) $ — $ — $ —

Amount of gain reclassified from AOCI into interest expense (effective portion) $ — $ 183 $ 254

Fair Value Measurements

17 unchanged sentences

The Company has an at-the-market equity offering program (the "$ 500 Million ATM Program") pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 500.0 million ($ 305.8 million remaining as of December 31, 2023) in amounts and at times to be determined by the Company from time to time.

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

Prior to the implementation of the $ 500 Million ATM Program, the Company had two previous at-the-market equity offering programs (the "$ 300 Million ATM Program", and the "Previous $ 300 Million ATM Program"), which were substantially utilized as of September 5, 2023 and June 10, 2021, respectively, and are no longer active.

Actual sales under the $ 500 Million ATM Program, if any, will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Company’s common stock, determinations by the Company of the appropriate sources of funding for the Company and potential uses of funding available to the Company.

During the year ended December 31, 2023, the Company issued an aggregate of 5,152,279 shares of common stock at a weighted average offering price of $ 61.15 per share under the $ 300 Million ATM Program and the $ 500 Million ATM Program, resulting in net proceeds of approximately $ 310.5 million and paying total compensation to the applicable sales agents of approximately $ 4.6 million.

During the year ended December 31, 2022, the Company issued an aggregate of 1,286,125 shares of common stock at a weighted average offering price of $ 61.31 per share under the $ 300 Million ATM Program, resulting in net proceeds of approximately $ 77.7 million and paying total compensation to the applicable sales agents of approximately $ 1.1 million.

approximately $ 160.1 million and paying total compensation to the applicable sales agents of approximately $ 2.4 million.

During the year ended December 31, 2020, the Company issued an aggregate of 1,197,597 shares of common stock at a weighted average offering price of $ 54.08 per share under the Previous $ 300 million ATM Program, resulting in net proceeds of approximately $ 63.8 million, and paying total compensation to the applicable sales agents of approximately $ 0.9 million.

During the year ended December 31, 2021, the Company issued an aggregate of 2,569,771 shares of common stock at a weighted average offering price of $ 63.23 per share under the Previous $ 300 Million ATM Program and the $ 300 Million ATM Program, resulting in net proceeds of approximately $ 160.1 million, and paying total compensation to the applicable sales agents of approximately $ 2.4 million.

On February 13, 2023, the Company completed a public offering of 5,750,000 shares of common stock at a price per share of $ 62.50 , which included the underwriters’ full exercise of their option to purchase an additional 750,000 shares.

The net proceeds of the offering were approximately $ 355.9 million after deducting the underwriting discount and offering costs of approximately $ 3.5 million.

The Company used the net proceeds for acquisitions.

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

1 unchanged sentence

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

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

The Company used the net proceeds for general corporate purposes, which included, without limitation, working capital, repayment of indebtedness, future acquisitions and redevelopments.

The Company has a share repurchase program authorizing the Company to repurchase up to 3,000,000 shares of its outstanding common stock from time to time through December 31, 2024.

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The grant date fair value per share of restricted stock awards issued during the period from February 16, 2010 (commencement of operations) to December 31, 2023 ranged from $ 14.20 to $ 78.33 .

The fair value of the restricted stock that was granted during the year ended December 31, 2022 was approximately $ 9.1 million and the vesting period for the restricted stock is typically between one and five years .

The fair value of the restricted stock that was granted during the year ended December 31, 2023 was approximately $ 8.2 million and the vesting period for the restricted stock is typically between three and five years .

As of December 31, 2023, the Company had approximately $ 14.4 million of total unrecognized compensation costs related to restricted stock issuances, which is expected to be recognized over a remaining weighted average period of approximately 3.1 years.

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January 1, 2021 to December 31, 2023, January 1, 2022 to December 31, 2024, and January 1, 2023 to December 31, 2025.

The expense related to the open Performance Share awards granted prior to January 1, 2020 varies quarter to quarter based on the Company’s relative share price performance.

The following table summarizes certain information with respect to the Performance Share awards granted prior to January 1, 2020 (dollars in thousands):

Fair Value Performance Share Period Maximum Potential Payout Fair Value December 31, 2022

Accrual December 31, 2022

Expense for the Year Ended December 31,

2022 2021 2020

January 1, 2018 - December 31, 2020 $ — $ — $ — $ — $ — $ 3,138

Under the Amended LTIP, each participant’s Performance Share target award for target awards granted on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock.

Target awards were previously expressed as a dollar amount and settled in shares of common stock.

Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period.

The following table summarizes certain information with respect to the Performance Share awards granted on or after January 1, 2019 and includes the forfeiture of certain of the Performance Share awards during the years ended December 31, 2022, 2021 and 2020 (dollars in thousands):

During the year ended December 31, 2023, the Company issued 97,825 shares of common stock at a price of $ 58.56 per share related to the Performance Share awards for the performance period from January 1, 2020 to December 31, 2022.

Performance Share Period Fair Value on Date of Grant 1

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January 1, 2022 - December 31, 2024 5,789 1,928 1,929 —

January 1, 2023 - December 31, 2025 9,040 3,012 — —

Total $ 29,360 $ 6,548 $ 4,490 $ 5,289

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September 30, 2023 Common Stock $ 0.45 August 1, 2023 September 29, 2023 October 13, 2023

December 31, 2022 Common stock $ 0.40 November 1, 2022 December 30, 2022 January 13, 2023

December 31, 2023 Common Stock $ 0.45 October 31, 2023 December 15, 2023 January 5, 2024

For the Three Months Ended Security Dividend per Share Declaration Date Record Date Date Paid

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

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

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

December 31, 2022 Common Stock $ 0.40 November 1, 2022 December 30, 2022 January 13, 2023

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Performance Share awards which may be payable in shares of the Company’s common stock after the conclusion of each pre-established performance measurement period are included as contingently issuable shares in the calculation of diluted weighted average common shares of stock outstanding assuming the reporting period is the end of the measurement period, and the effect is dilutive.

Diluted shares related to the Performance Share awards were 88,373 , 259,468 and 407,139 for the years ended December 31, 2022, 2021 and 2020.

Diluted shares related to the Performance Share awards were 202,071 , 88,373 and 259,468 for the years ended December 31, 2023, 2022 and 2021, respectively.

Commitments and Contingencies

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Contractual Commitments.

As of February 7, 2023, the Company had four outstanding contracts with third-party sellers to acquire four industrial properties for a total purchase price of approximately $ 259.5 million.

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

One of the purchase contracts is for the acquisition, for a total purchase price of approximately $ 173.6 million, of a 121 -acre project entitled for 2.2 million square feet of industrial distribution buildings in Miami’s Countyline Corporate Park (“Countyline”), immediately adjacent to the Company’s seven fully-leased buildings within Countyline.

The project, a landfill redevelopment adjacent to Florida’s Turnpike and the southern terminus of I-75, is 29.8 %% pre-leased with one 191,000 square foot rear-load industrial distribution building and one 506,000 square foot cross-dock industrial distribution building under construction.

At expected completion in 2025 the project is expected to contain ten LEED-certified industrial distribution buildings totaling approximately 2.2 million square feet for a total expected investment of approximately $ 491.1 million.

As of February 6, 2024, the Company had one outstanding contract with a third-party seller to acquire one industrial property for a total purchase price of approximately $ 12.0 million.

There is no assurance that the Company will acquire the property under contract because the proposed acquisition is subject to due diligence and various closing conditions.

Subsequent Events

On January 5, 2024, the Company acquired one industrial property in Bellevue, WA, for a total purchase price of approximately $ 6.5 million.

The property was acquired from an unrelated third party using existing cash on hand.

On February 6, 2024, the Company’s board of directors declared a cash dividend in the amount of $ 0.45 per share of its common stock payable on April 5, 2024 to the stockholders of record as of the close of business on March 28, 2024.

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Depreciation Year

14805 S Maple Ave — Rancho Dominguez, CA — 22,419 682 — 22,419 682 23,102 1 2022 1963/1983

Porter 1 Los Angeles, CA — 3,791 399 3 3,791 402 4,193 34 2020 1911 & 1968

San Pedro — Gardena, CA — 7,598 1,523 314 7,598 1,837 9,435 208 2021

Santa Fe 2 Redondo Beach, CA — 37,049 5,560 — 37,049 5,560 42,608 31 2023 1968

Shoemaker — Santa Fe Springs, CA — 4,759 1,099 281 4,759 1,380 6,139 262 2018 1986/1997

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Vermont 1 Torrance, CA — 10,173 7,105 848 10,173 7,953 18,126 1,298 2018 1978

1215 Walnut 1 Compton, CA — 6,130 2,522 621 6,130 3,143 9,273 432 2017 1969/1990

Walnut II 1 Compton, CA — 6,097 5,069 955 6,097 6,024 12,121 1,141 2018 1969

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New York City

1 Dodge Drive 1 West Caldwell, NJ — 3,819 2,982 2,767 3,819 5,749 9,568 2,087 2013 1985

17 Madison 1 Fairfield, NJ — 974 1,647 771 974 2,418 3,392 918 2013 1979

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48th 3rd and 286 Central 1 Kearny, NJ — 12,061 1,664 1,101 12,061 2,765 14,826 371 2019 1978/1983

9th Street 1 Long Island City, NY — 18,410 5,116 4,099 18,410 9,215 27,625 195 2023 1939

49th Street 1 Queens, NY — 21,674 2,999 1,435 21,674 4,434 26,108 1,150 2019 1966

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629 Henry 1 Elizabeth, NJ — 13,734 1,690 394 13,734 2,084 15,818 61 2022 2004

7777 West Side 1 North Bergen, NJ — 4,525 8,856 — 4,525 8,856 13,381 1,299 2017 1967

900 Hart 1 Piscataway, NJ — 3,202 3,866 1,787 3,202 5,653 8,855 1,839 2014 1983

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228 North Ave 1 Elizabeth, NJ — 40,671 5,218 1,691 40,671 6,909 47,580 502 2021 1975

256 Patterson Plank 1 Carlstadt, NJ — 9,478 1,284 1,754 9,478 3,038 12,516 335 2021 1960

293 Roanoke Avenue — Newark, NJ — 11,395 2,217 381 11,395 2,598 13,992 183 2022 N/A

Gross Amount Carried

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Depreciation Year

256 Patterson Plank 1 Carlstadt, NJ — 9,478 1,284 1,754 9,478 3,038 12,516 202 2021 1960

293 Roanoke Avenue — Newark, NJ — 11,395 2,217 512 11,395 2,729 14,124 55 2022 N/A

Avenue A 4 Carlstadt, NJ — 7,516 4,660 1,455 7,516 6,115 13,631 1,578 2017 1951/1957

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Terminal Way 2 Avenel, NJ — 3,537 3,598 1,334 3,537 4,932 8,469 1,358 2014 1950/1968

Van Dyke 1 Red Hook, Brooklyn, NY — 21,170 3,200 202 21,170 3,402 24,574 20 2023 1921

Whelan 1 East Rutherford, NJ — 6,366 5,704 598 6,366 6,302 12,668 891 2019 2005

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Ahern II 1 Union City, CA — 2,467 4,527 844 2,467 5,371 7,838 1,430 2015 1997

Berryessa — San Jose, CA — 23,057 2,574 812 23,057 3,386 26,443 80 2021

Burroughs 3 San Leandro, CA — 5,400 7,092 1,736 5,400 8,828 14,228 2,634 2014 1966

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Minnesota and Tennessee 2 San Francisco, CA — 34,738 13,141 2,530 34,738 15,671 50,409 1,899 2019 1963

Morton 4 Newark, CA — 65,640 115,039 158 65,640 115,197 180,837 2,384 2023 2020

Old Bayshore — San Jose, CA — 10,244 1,609 149 10,244 1,758 12,002 265 2020 1955

28 unchanged sentences

Kent 190 1 Kent, WA — 4,560 5,561 1,522 4,560 7,083 11,643 1,811 2015 1992/1999

Kent 192 1 Kent, WA — 12,752 20,642 533 12,752 21,175 33,927 1,732 2020

Gross Amount Carried

7 unchanged sentences

Kent 202 1 Kent, WA — 5,761 9,114 3,410 5,761 12,524 18,285 3,757 2015 1981

Kent 216 1 Kent, WA — 3,672 5,408 1,145 3,672 6,553 10,225 1,963 2014 1996

Kent Corporate Park 4 Kent, WA — 5,032 6,916 2,542 5,032 9,458 14,490 3,065 2015 1980/1981

31 unchanged sentences

131st Street 1 Medley, FL — 2,903 5,729 1,285 2,903 7,014 9,917 1,932 2014 1999

7045 NW 46th St 1 Miami, FL — 2,517 2,261 206 2,517 2,467 4,984 12 2022 1986

Gross Amount Carried

5 unchanged sentences

Depreciation Year

7045 NW 46th St 1 Miami, FL — 2,517 2,261 210 2,517 2,471 4,988 103 2022 1986

8050 NW 90th St — Medley, FL — 18,612 2,067 3,497 18,612 5,564 24,176 258 2022 N/A

6 unchanged sentences

Countyline #29 & #30 2 Hialeah, FL — 19,370 52,925 6,455 19,370 59,380 78,750 2,623 2022 2022

Countyline #41 1 Hialeah, FL — 14,044 31,261 385 14,044 31,646 45,690 53 2023 2023

Miami International Trade Center 4 Medley, FL — 5,063 10,958 2,791 5,063 13,749 18,812 3,514 2015 1996

Washington, D.C.

25th Place NE 1 Washington, D.C.

— 7,845 4,932 — 7,845 4,932 12,777 79 2023 2023

75th Ave 5 Landover, MD — 10,658 18,615 6,391 10,658 25,006 35,664 6,880 2014 1987/1990

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Hampton Overlook 3 Capitol Heights, MD — 4,602 7,521 2,234 4,602 9,755 14,357 2,087 2016 1989/1990

New Ridge — Hanover, MD — 5,689 1,567 443 5,689 2,010 7,699 393 2016

Pickett 1 Alexandria, VA — 6,256 2,850 690 6,256 3,540 9,797 250 2021 1963

81 unchanged sentences

§ 1350 Certification dated February 7, 2024.

97* Terreno Realty Corporation Compensation Recovery Policy

101.SCH* Inline XBRL Taxonomy Extension Schema Document

32 unchanged sentences

Carlson Director February 7, 2024

Lee Director February 8, 2023

Oh Director February 7, 2024

3 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures