What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-08 compared with 2023-11-01 · 227 added, 244 removed, 424 unchanged (53% 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, 2022, which was filed with the Securities and Exchange Commission on February 8, 2023, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, which was filed with the Securities and Exchange Commission on May 3, 2023, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which was filed with the Securities and Exchange Commission on August 2, 2023, 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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• our failure to successfully operate acquired properties;

• risks relating to our real estate redevelopment, renovation and expansion strategies and activities (including rising inflation, supply chain disruptions and construction delays);

• risks relating to our real estate development, redevelopment, renovation and expansion strategies and activities (including rising inflation, supply chain disruptions and construction delays);

• the impact of any future pandemic, epidemic or outbreak of any highly infectious disease on the U.S., regional and global economies and on our business, financial condition and results of operations and that of our tenants;

• risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems;

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

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

We invest in several types of industrial real estate, including warehouse/distribution (approximately 76.3% of our total annualized base rent as of September 30, 2023), flex (including light industrial and research and development, or R&D) (approximately 3.8%), transshipment (approximately 6.7%) and improved land (approximately 13.2%).

We invest in several types of industrial real estate, including warehouse/distribution (approximately 76.0% of our total annualized base rent as of March 31, 2024), flex (including light industrial and research and development, or R&D) (approximately 3.8%), transshipment (approximately 7.4%) and improved land (approximately 12.8%).

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 September 30, 2023, we owned a total of 257 buildings aggregating approximately 15.8 million square feet, 46 improved land parcels (including one improved land parcel held for sale) consisting of approximately 165.8 acres, eight properties under development or redevelopment and approximately 62.7 acres of land entitled for future development.

As of September 30, 2023, our buildings and improved land parcels were approximately 98.3% and 96.3% leased, respectively, to 563 customers, the largest of which accounted for approximately 3.6% of our total annualized base rent.

As of March 31, 2024, we owned a total of 258 buildings aggregating approximately 15.8 million square feet, 45 improved land parcels consisting of approximately 152.4 acres, ten properties under development or redevelopment and approximately 45.5 acres of land for future development.

As of March 31, 2024, our buildings and improved land parcels were approximately 96.2% and 94.6% leased, respectively, to 572 customers, the largest of which accounted for approximately 3.9% 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, 2023 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, commencing with our taxable year ended December 31, 2010.

The following table summarizes by type our investments in real estate as of September 30, 2023:

The following table summarizes by type our investments in real estate as of March 31, 2024:

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

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Total 303 $ 249,745 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of September 30, 2023, multiplied by 12.

The following table summarizes by market our investments in real estate as of September 30, 2023:

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.

The following table summarizes by market our investments in real estate as of March 31, 2024:

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

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% of Total 16.5 % 16.7 % 19.2 % 17.3 % 19.0 % 11.3 % 100.0 %

Occupancy % as of September 30, 2023

Occupancy % as of March 31, 2024 4

97.7 % 94.2 % 93.6 % 95.2 % 99.4 % 97.5 % 96.2 %

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% of Total 17.7 % 44.6 % 9.4 % 17.0 % 6.5 % 4.8 % 100.0 %

Occupancy % as of September 30, 2023

Occupancy % as of March 31, 2024

88.9 % 92.4 % 100.0 % 100.0 % 100.0 % 100.0 % 94.6 %

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% of Total Gross Book Value 18.3 % 20.2 % 18.7 % 14.9 % 19.7 % 8.2 % 100.0 %

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of September 30, 2023, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of September 30, 2023, weighted by the respective square footage.

3 Includes eight properties under development or redevelopment that, upon completion, will consist of seven buildings aggregating approximately 1.2 million square feet and one approximately 2.8 acre improved land parcel, approximately 62.7 acres of land entitled for future development and one property held for sale with a gross book value of approximately $8.6 million.

As of September 30, 2023, we owned eight properties under development or redevelopment that, upon completion, will consist of seven buildings aggregating approximately 1.2 million square feet and one approximately 2.8 acre improved land parcel, and approximately 62.7 acres of land entitled for future development, with a total expected investment of approximately $631.8 million, including redevelopment costs, capitalized interest and other costs.

The following table summarizes our capital expenditures incurred during the three and nine months ended September 30, 2023 and 2022 (dollars in thousands):

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

2023 2022 2023 2022

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of March 31, 2024, weighted by the respective square footage.

3 Includes ten properties under development or redevelopment that, upon completion, will consist of eleven buildings aggregating approximately 1.6 million square feet and one approximately 2.8-acre improved land parcel and approximately 45.5 acres of land for future development.

4 Occupancy decreased during the three months ended March 31, 2024 primarily due to 123,000 square feet of vacancy at our 620 Division property in Elizabeth, New Jersey, 69,000 square feet of vacancy at our West 140th property in San Leandro, California, and 40,000 square feet of acquired vacancy of which 16,000 square feet was leased subsequent to March 31, 2024 with a May 2024 commencement date.

As of March 31, 2024, we owned ten properties under development or redevelopment that, upon completion, will consist

of eleven buildings aggregating approximately 1.6 million square feet and one approximately 2.8-acre improved land parcel, and approximately 45.5 acres of land for future development, with a total expected investment of approximately $696.7 million, including redevelopment costs, capitalized interest and other costs.

The following table summarizes our capital expenditures incurred during the three months ended March 31, 2024 and 2023 (dollars in thousands):

For the Three Months Ended March 31,

Building improvements $ 4,434 $ 6,404

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$ 42,200 $ 21,810

1 Includes approximately $55.5 million and $12.2 million for the three months ended September 30, 2023 and 2022, respectively, and approximately $102.7 million and $54.9 million for the nine months ended September 30, 2023 and 2022, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 23 and 26 properties for the three months ended September 30, 2023 and 2022, respectively, and at 30 and 34 properties for the nine months ended September 30, 2023 and 2022, respectively.

1 Includes approximately $36.8 million and $17.0 million for the three months ended March 31, 2024 and 2023, respectively, related to leasing acquired vacancy, development and redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 20 properties for both the three months ended March 31, 2024 and 2023.

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 September 30, 2023 are as follows:

Our top 20 customers based on annualized base rent as of March 31, 2024 are as follows:

Customer Leases Rentable

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3 171,707 1.1 % — 4,078 1.6 %

6 DirectBuy Home Improvement 3

1 230,891 1.5 % — 3,585 1.4 %

6 District of Columbia

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1 — — % 16.9 2,460 1.0 %

13 Sarcona Management Corporation

12 Northrop Grumman Systems Corporation

2 148,458 0.9 % — 2,458 1.0 %

14 Bar Logistics, Inc.

13 Sarcona Management Corporation

2 28,124 0.2 % 4.9 2,325 0.9 %

15 L3 Harris Technologies, Inc.

14 Triton Logistics Inc.

1 190,907 1.2 % — 2,273 0.9 %

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1 — — % 7.2 2,246 0.9 %

16 L3 Harris Technologies, Inc.

2 170,114 1.1 % — 2,218 0.9 %

17 JAM'N Logistics Inc.

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19 Hanjin International America, Inc.

and Hanjin Transportation Co., LTD

1 114,061 0.7 % — 1,970 0.8 %

20 XPO Logistics

20 Team Alliance Logistics Inc.

DBA A&V Transportation

2 — — % 4.4 1,877 0.8 %

Total 51 3,336,967 21.1 % 43.9 $ 65,108 26.1 %

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, 2023, multiplied by 12.

2 Total annualized base rent is calculated as contractual monthly base rent per the leases, for all buildings and improved land parcels, excluding any partial or full rent abatements, as of September 30, 2023, multiplied by 12.

3 On October 16, 2023, DirectBuy Home Improvement filed for Chapter 11 bankruptcy and we had fully reserved for all receivables as of September 30, 2023.

Any ultimate recovery of past due rent is undetermined at this time.

The following tables summarize the anticipated lease expirations for leases in place as of September 30, 2023, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.

The following tables summarize the anticipated lease expirations for leases in place as of March 31, 2024, 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 $ 281,257 100.0 %

1 Includes leases that expire on or after September 30, 2023 and month-to-month leases totaling approximately 97,612 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, 2023, multiplied by 12.

3 Total annualized base rent is calculated as contractual monthly base rent per the leases at expiration, for all buildings and/or improved land parcels, excluding any partial or full rent abatements, as of September 30, 2023, multiplied by 12.

4 Includes leases that expire on or after September 30, 2023 and month-to-month leases totaling approximately 2.4 acres.

5 Includes leases that expire on or after September 30, 2023 and month-to-month leases disclosed in footnotes 1 and 4 of the table.

1 Includes leases that expire on or after March 31, 2024 and month-to-month leases totaling approximately 70,607 square feet.

2 Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.

4 Includes leases that expire on or after March 31, 2024 and month-to-month leases totaling approximately 2.4 acres.

5 Includes leases that expire on or after March 31, 2024 and month-to-month leases disclosed in footnotes 1 and 4 of the table.

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

As of September 30, 2023, leases representing approximately 12.1% of the total annualized base rent of our portfolio are scheduled to expire through December 31, 2024.

We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our 2023 and 2024 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 2.8 acres of improved land commencing during the three months ended September 30, 2023 were approximately 38.9% higher as compared to the previous rental rates for that same space.

Excluding one fixed-rate lease renewal for approximately 0.1 million square feet in Oakland, California, cash rents on new and renewed leases increased approximately 48.6% during the three months ended September 30, 2023.

Cash rent changes on new and renewed leases totaling approximately 1.8 million square feet and 11.4 acres commencing during the nine months ended September 30, 2023 were approximately 57.1% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio for the operating portfolio of 61.4% and 55.0%, respectively, for the three and nine months ended September 30, 2023.

We had a tenant retention ratio for the improved land portfolio of 100.0% and 19.4%, respectively, for the three and nine months ended September 30, 2023.

As of March 31, 2024, leases representing approximately 5.9% of the total annualized base rent of our portfolio are scheduled to expire during the year ending December 31, 2024.

We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our 2024 expirations will be above the rates currently being paid for the same space.

Cash rent changes on new and renewed leases totaling approximately 0.7 million square feet and 3.3 acres of improved land commencing during the three months ended March 31, 2024 were approximately 47.2% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio for the operating portfolio of 54.7% for the three months ended March 31, 2024.

We had a tenant retention ratio for the improved land portfolio of 82.5% for the three months ended March 31, 2024.

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 September 30, 2023, we acquired one industrial property for a total purchase price of approximately $14.8 million.

Upon acquisition, the property was placed into redevelopment with a total expected investment of approximately $40.6 million.

The property was acquired from an unrelated third party using existing cash on hand and net proceeds from the issuance of common stock.

The following table sets forth the industrial property we acquired during the three months ended September 30, 2023:

During the three months ended March 31, 2024, we acquired two industrial properties for a total purchase price of approximately $18.5 million.

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

The following table sets forth the industrial properties we acquired during the three months ended March 31, 2024:

Property Name Location Acquisition Date Number of

Buildings Square

Feet Improved Land Acreage Purchase Price

Feet Purchase Price

(in thousands) 1

East Garry Avenue Santa Ana, CA September 6, 2023 — — 4.9 $ 14,800 5.1 %

13045 SE 32nd Street Bellevue, WA January 5, 2024 1 16,000 $ 6,500 5.8 %

181 Lombardy Brooklyn, NY March 22, 2024 1 24,000 12,000 5.7 %

Total/Weighted Average 2 40,000 $ 18,500 5.7 %

1 Excludes intangible liabilities.

The total aggregate initial investment was approximately $16.5 million, including $0.5 million in capitalized closing costs and acquisition costs and $1.6 million in assumed intangible liabilities and $0.4 million in other credits related to tenant improvements at East Garry Avenue.

The total aggregate initial investment was approximately $18.7 million, including $0.2 million in capitalized closing costs and acquisition costs.

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

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These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2023 and in our other public filings.

On April 15, 2024, we acquired one industrial property in Alexandria, Virginia for a total purchase price of approximately $84.3 million.

The property was acquired from an unrelated third party using existing cash on hand and net proceeds from the issuance of common stock.

On May 2, 2024, we acquired a portfolio of industrial properties located in New York City, Northern New Jersey, San Francisco Bay Area and Los Angeles for a total purchase price of approximately $364.5 million.

The portfolio was acquired from an unrelated third party using existing cash on hand and net proceeds from the issuance of common stock.

The following tables summarize certain information with respect to the properties in the portfolio:

Market Purchase Price (in thousands)

New York City $ 152,000

Northern New Jersey 94,000

San Francisco Bay Area 71,000

Los Angeles 47,500

Total $ 364,500

Property Address Location Square Feet

New York City Market

144-02 158th Street Jamaica, Queens, NY 50,400

145-07 156th Street Jamaica, Queens, NY 6,000

145-20 157th Street Jamaica, Queens, NY 62,600

145-45 156th Street Jamaica, Queens, NY 35,800

149-40 182nd Street Jamaica, Queens, NY 15,200

154-09 146th Avenue Jamaica, Queens, NY 45,900

156-15 146th Avenue Jamaica, Queens, NY 26,400

182-09 149th Road Jamaica, Queens, NY 39,700

182-17 150th Avenue Jamaica, Queens, NY 95,200

149-39 Guy R.

Brewer Boulevard Jamaica, Queens, NY 15,000

179-02 150th Avenue Jamaica, Queens, NY 73,700

179-15 149th Road Jamaica, Queens, NY 15,600

NY Parking Lots Jamaica, Queens, NY n/a

Total 481,500

Northern New Jersey Market

195 Anderson Avenue Moonachie, NJ 18,000

1C Terminal Way Avenel, NJ 40,000

2AB Terminal Way Avenel, NJ 81,300

2C Terminal Way Avenel, NJ 40,100

4AB Engelhard Avenue Avenel, NJ 81,800

8AB Engelhard Avenue Avenel, NJ 82,000

Total 343,200

San Francisco Bay Area Market

3528 Arden Road Hayward, CA 101,800

1200-1220 San Mateo Avenue South San Francisco, CA 85,300

20269-20281 Mack Street Hayward, CA 50,800

Total 237,900

Los Angeles Market

16009-16019 Foothill Boulevard Irwindale, CA 30,300

16033 -16037 Foothill Boulevard Irwindale, CA 24,100

16057 -16059 Foothill Boulevard Irwindale, CA 24,500

1355-1365 Foothill Boulevard Azusa, CA 28,900

1335 Foothill Boulevard Azusa, CA 24,200

1201 Foothill Boulevard Azusa, CA 14,600

735-751 Todd Avenue Azusa, CA 28,400

Total 175,000

Total Portfolio 1,237,600

Development and Redevelopment Activity

As of September 30, 2023, we had eight properties under development or redevelopment that, upon completion, will consist of seven buildings aggregating approximately 1.2 million square feet and one approximately 2.8 acre improved land parcel.

Additionally, we 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 September 30, 2023:

As of March 31, 2024, we had ten properties under development or redevelopment that, upon completion, will consist of eleven buildings aggregating approximately 1.6 million square feet and one approximately 2.8-acre improved land parcel.

Additionally, we owned approximately 45.5 acres of land for future development that, upon completion, will consist of four buildings aggregating approximately 0.8 million square feet.

The following table summarizes certain information with respect to the properties under development or redevelopment and the land for future development as of March 31, 2024:

Property Name Total Expected

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Stabilization

Quarter % Pre-leased September 30, 2023

Quarter % Pre-leased March 31, 2024

Properties under development or redevelopment:

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43,802 38,256 5.8 % 178,201 — Q3 2024 100.0 %

Countyline Building 40 4

41,968 35,333 6.0 % 186,107 — Q4 2024 76.7 %

28,109 25,447 3.2 % — 2.8 Q4 2024 — %

18,095 12,178 6.1 % 31,378 — Q4 2024 — %

East Garry Avenue

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35,042 29,888 4.3 % 47,316 — Q1 2025 — %

139th Street 5

104,594 40,694 6.1 % 227,755 — Q4 2027 — %

Total/Weighted Average $ 479,772 $ 314,140 5.5 % 1,590,821 2.8 57.7 %

Land entitled for future development:

Land for future development:

Countyline Phase IV

Countyline Phase IV Land 4, 7

295,700 96,891 6.0 % 1,137,121 — Q1 2025-Q1 2027 n/a

216,900 81,855 6.0 % 814,772 — 2025-2027 n/a

Total $ 216,900 $ 81,855 6.0 % 814,772 — n/a

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4 Collectively, “Countyline Phase IV”, 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 our 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.

During the nine months ended September 30, 2023, we completed redevelopment of one improved land parcel consisting of approximately 6.3 acres.

The following table summarizes certain information with respect to the completed redevelopment property as of September 30, 2023:

Property Name Location Total

Investment (in

Stabilized Cap

Post-Development Square Feet Post-Development Acreage Completion Quarter

Berryessa San Jose, CA $ 26,296 4.9 % — 6.3 Q2 2023

1 Total investment for the property includes 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.

5 This redevelopment property was initially acquired in 2017 for a total initial investment, including closing costs and acquisition costs, of approximately $39.9 million.

The property was in the operating portfolio until January 2024 when redevelopment commenced.

The amount spent to date includes the total initial investment and capital expenditures incurred prior to redevelopment and excludes accumulated depreciation recorded since acquisition.

We expect a total incremental investment of approximately $64.0 million.

6 This development was completed on April 23, 2024.

7 On April 12, 2024, we commenced development of Countyline Building 31 in Countyline Phase IV.

Upon completion, which is expected to occur in the fourth quarter of 2024, Countyline Building 31 will consist of one approximately 162,000 square foot industrial building with a total expected investment of approximately $42.1 million.

The building is 100% pre-leased.

The lease will commence upon completion of the building and will expire in May 2032.

Disposition Activity

During the nine months ended September 30, 2023, we sold one property located in the Northern New Jersey/New York City market for a sales price of approximately $25.5 million, resulting in a gain of approximately $12.3 million.

The following summarizes the condensed results of operations of the property sold during the three and nine months ended September 30, 2023 (dollars in thousands):

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

2023 2022 2023 2022

During the three months ended March 31, 2024, we sold one property located in the Seattle market for a sales price of approximately $11.0 million, resulting in a gain of approximately $5.7 million.

The following summarizes the condensed results of operations of the property sold during the three months ended March 31, 2024 (dollars in thousands):

For the Three Months Ended March 31,

Rental revenues $ 140 $ 144

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Public Offering

On February 13, 2023, we 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.

On March 27, 2024, we completed a public offering of 6,325,000 shares of common stock at a price per share of $62.00, which included the underwriters’ full exercise of their option to purchase an additional 825,000 shares.

The net proceeds of the offering were approximately $387.1 million after deducting the underwriting discount and offering costs of approximately $5.0 million.

We used the net proceeds for acquisitions.

We have an at-the-market equity offering program (the "$500 Million ATM Program") pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $500.0 million ($464.3 million remaining as of September 30, 2023) in amounts and at times as we determine from time to time.

Prior to the implementation of the $500 Million ATM Program, we had a previous at-the-market equity program (the "$300 Million ATM Program"), which was substantially utilized as of September 5, 2023 and which is no longer active.

We used the net proceeds for acquisitions subsequent to March 31, 2024, including the acquisition of an industrial property in Alexandria, Virginia and the acquisition of a portfolio of industrial properties comprised of 28 buildings located in New York City, Northern New Jersey, San Francisco Bay Area and Los Angeles.

We have an at-the-market equity offering program (the "$500 Million ATM Program") pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $500.0 million ($155.2 million remaining as of March 31, 2024) in amounts and at times as we determine from time to time.

We intend to use the net proceeds from the offering of the shares under the $500 Million ATM Program, if any, for general corporate purposes, which may include future acquisitions, redevelopments and repayment of indebtedness, including borrowings under our revolving credit facility.

During the three and nine months ended September 30, 2023, we issued an aggregate of 1,575,173 and 2,542,279 shares, respectively, of common stock at a weighted average offering price of $60.78 and $61.61 per share, respectively, under the $300 Million ATM Program and the $500 Million ATM Program, resulting in net proceeds of approximately $94.4 million and $154.4 million, respectively, and paying total compensation to the applicable sales agents of approximately $1.4 million and $2.3 million, respectively.

During the three months ended March 31, 2024, we issued an aggregate of 2,353,278 shares of common stock at a weighted average offering price of $64.00 per share, under the $500 Million ATM Program, resulting in net proceeds of approximately $148.4 million, and paying total compensation to the applicable sales agents of approximately $2.2 million.

Share Repurchase Program

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The program may be suspended or discontinued at any time.

As of September 30, 2023, we had not repurchased any shares of our common stock pursuant to our share repurchase program.

As of March 31, 2024, we had not repurchased any shares of our common stock pursuant to our share repurchase program.

Dividend and Distribution Activity

On October 31, 2023, our board of directors declared a cash dividend in the amount of $0.45 per share of our common stock payable on January 5, 2024 to the stockholders of record as of the close of business on December 15, 2023.

On May 7, 2024, our board of directors declared a cash dividend in the amount of $0.45 per share of our common stock payable on July 12, 2024 to the stockholders of record as of the close of business on June 28, 2024.

Contractual Commitments

As of October 31, 2023, we had two outstanding contracts with third-party sellers to acquire two industrial properties for a total purchase price of $9.6 million, as described under the heading “Material Cash Commitments” in this Quarterly Report on Form 10-Q.

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

economy experienced a significant increase in inflation rates throughout 2022 and 2023.

As of May 7, 2024, we had no outstanding contracts or non-binding letters of intent to acquire any industrial properties as described under the heading “Material Cash Commitments” in this Quarterly Report on Form 10-Q.

economy experienced a significant increase in inflation rates in recent years.

A wide variety of industries and sectors have been, and will continue to be, affected by increasing commodity prices.

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

Approxi ma tely 96.2% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases.

Approximately 97.2% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases.

Lease terms typically range from three to ten years.

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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 nine months ended September 30, 2023 and 2022 includes the changes attributable to same store properties.

The same store pool for the comparison of the three and nine months ended September 30, 2023 and 2022 includes all properties that were owned and in operation as of September 30, 2023 and since January 1, 2022 and excludes properties that were either disposed of prior to, held for sale to a third party or in development or redevelopment as of September 30, 2023.

As of September 30, 2023, the same store pool consisted of 226 buildings aggregating approximately 13.2 million square feet representing approximately 83.7% of our total square feet owned and 36 improved land parcels consisting of approximately 113.7 acres representing approximately 68.6% of our total acreage owned.

As of September 30, 2023, the non-same store properties, which we acquired, redeveloped, or sold during 2023 and 2022 or were held for sale or in development or redevelopment as of September 30, 2023, consisted of 31 buildings aggregating approximately 2.6 million square feet, ten improved land parcels (including one improved land parcel held for sale) consisting of approximately 52.1 acres, eight properties under development or redevelopment and approximately 62.7 acres of land entitled for future development.

As of September 30, 2023 and 2022, our consolidated same store pool occupancy was approximately 98.5% and 98.1%, respectively.

The analysis of our results below for the three months ended March 31, 2024 and 2023 includes the changes attributable to same store properties.

The same store pool for the comparison of the three months ended March 31, 2024 and 2023 includes all properties that were owned and in operation as of March 31, 2024 and since January 1, 2023 and excludes properties that were either disposed of prior to, held for sale to a third party or in development or redevelopment as of March 31, 2024.

As of March 31, 2024, the same store pool consisted of 246 buildings aggregating approximately 14.7 million square feet representing approximately 93.0% of our total square feet owned and 44 improved land parcels consisting of approximately 145.3 acres representing approximately 95.3% of our total acreage owned.

As of March 31, 2024, the non-same store properties, which we acquired, developed or redeveloped, or sold during 2024 and 2023 or were held for sale or in development or redevelopment as of March 31, 2024, consisted of 12 buildings aggregating approximately 1.1 million square feet, one improved land parcel consisting of approximately 7.1 acres, ten properties under development or redevelopment and approximately 45.5 acres of land for future development.

As of March 31, 2024 and 2023, our consolidated same store pool occupancy was approximately 96.2% and 98.3%, respectively.

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

Comparison of the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022:

For the Three Months Ended September 30,

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023:

For the Three Months Ended March 31,

2024 2023 $ Change % Change

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Interest expense, including amortization (5,240) (7,375) 2,135 (28.9) %

Total other income (expense) (4,721) (6,090) 1,369 (22.5) %

Gain on sales of real estate investments 5,715 — 5,715 n/a

Total other income (expense) 3,368 (5,412) 8,780 n/a

Net income $ 36,059 $ 23,331 $ 12,728 54.6 %

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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 2023 and 2022 acquisitions and dispositions, ten improved land parcels, eight properties under development or redevelopment, approximately 62.7 acres of land entitled for future development and one property held for sale as of September 30, 2023.

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 September 30, 2023 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2023 and 2022 and increased occupancy in the same store pool.

Cash rents on new and renewed leases totaling approximately 0.5 million square feet and 2.8 acres of improved land commencing during the three months ended September 30, 2023 increased approximately 38.9% compared to the previous rental rates for that same space.

For the three months ended September 30, 2023 and 2022, approximately $1.8 million and $2.4 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.1 million was recorded in lease termination revenue for both periods.

In addition, during the three months ended September 30, 2023, approximately $0.4 million was recorded as bad debt expense related to DirectBuy Home Improvement.

Property operating expenses.

Total property operating expenses increased approximately $3.3 million during the three months ended September 30, 2023 compared to the same period from the prior year.

The increase in total property operating expenses was primarily due to an increase of approximately $2.0 million attributable to property acquisitions during 2023 and 2022 as well as increases in insurance premiums and real estate taxes related to annual rate increases.

Depreciation and amortization.

Depreciation and amortization increased approximately $1.3 million during the three months ended September 30, 2023 compared to the same period from the prior year primarily due to property acquisitions during 2023 and 2022.

General and administrative expenses.

General and administrative expenses increased approximately $1.0 million during the three months ended September 30, 2023 compared to the same period from the prior year primarily due to increased compensation expenses including increased restricted stock amortization and LTIP expense, and an increase in the number of employees and salaries compared to the same period from the prior year.

Interest and other income.

Interest and other income increased approximately $0.9 million for the three months ended September 30, 2023 compared to the same period from the prior year primarily due to higher interest rates on our cash and cash equivalent balances.

Interest expense, including amortization.

Interest expense decreased approximately $0.5 million for the three months ended September 30, 2023 compared to the same period from the prior year.

This was primarily due to an increase in capitalized interest for the development and redevelopment properties, partially offset by higher average interest rates on the unsecured term loans and credit facility during the three months ended September 30, 2023.

Comparison of the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022:

For the Nine Months Ended September 30,

2023 2022 $ Change % Change

(Dollars in thousands)

Rental revenues 1

Same store $ 156,229 $ 143,250 $ 12,979 9.1 %

Non-same store operating properties 2

31,737 16,278 15,459 95.0 %

Total rental revenues 187,966 159,528 28,438 17.8 %

Tenant expense reimbursements 1

Same store 40,432 37,191 3,241 8.7 %

Non-same store operating properties 2

8,708 3,486 5,222 149.8 %

Total tenant expense reimbursements 49,140 40,677 8,463 20.8 %

Total revenues 237,106 200,205 36,901 18.4 %

Property operating expenses

Same store 46,382 44,171 2,211 5.0 %

Non-same store operating properties 2

11,054 5,649 5,405 95.7 %

Total property operating expenses 57,436 49,820 7,616 15.3 %

Net operating income 3

Same store 150,279 136,270 14,009 10.3 %

Non-same store operating properties 2

29,391 14,115 15,276 108.2 %

Total net operating income $ 179,670 $ 150,385 $ 29,285 19.5 %

Other costs and expenses

Depreciation and amortization 54,636 47,227 7,409 15.7 %

General and administrative 28,205 22,999 5,206 22.6 %

Acquisition costs and other 126 1,091 (965) (88.5) %

Total other costs and expenses 82,967 71,317 11,650 16.3 %

Other income (expense)

Interest and other income 4,029 411 3,618 880.3 %

Interest expense, including amortization (19,089) (16,393) (2,696) 16.4 %

Gain on sales of real estate investments 12,257 76,048 (63,791) (83.9) %

Total other income (expense) (2,803) 60,066 (62,869) n/a

Net income $ 93,900 $ 139,134 $ (45,234) (32.5) %

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

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

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

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

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

2 Includes 2022 and 2023 acquisitions and dispositions, ten improved land parcels, eight properties under development or redevelopment, approximately 62.7 acres of land entitled for future development and one property held for sale as of September 30, 2023.

2 Includes 2024 and 2023 acquisitions and dispositions, one improved land parcel, ten properties under development or redevelopment and approximately 45.5 acres of land for future development.

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

Total revenues increased approximately $36.9 million for the nine months ended September 30, 2023 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2023 and 2022 and increased occupancy in the same store pool.

Cash rents on new and renewed leases totaling approximately 1.8 million square feet and 11.4 acres commencing during the nine months ended September 30, 2023 increased approximately 57.1% compared to the prior year.

For the nine months ended September 30, 2023 and 2022, approximately $5.9 million and $5.6 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.3 million was recorded in lease termination revenue for both periods.

Total revenues increased approximately $10.4 million for the three months ended March 31, 2024 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases and property acquisitions during 2024 and 2023.

Cash rents on new and renewed leases totaling approximately 0.7 million square feet and 3.3 acres of improved land commencing during the three months ended March 31, 2024 increased approximately 47.2% compared to the previous rental rates for that same space.

For the three months ended March 31, 2024 and 2023, approximately $1.2 million and $1.8 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.1 million was recorded in lease termination revenue for both periods.

The increase in total revenues was partially offset by a decrease in occupancy for the three months ended March 31, 2024 compared to the same period from the prior year.

Property operating expenses.

Total property operating expenses increased approximately $7.6 million during the nine months ended September 30, 2023 compared to the same period from the prior year.

The increase in total property operating expenses was primarily due to an increase of approximately $5.4 million attributable to property acquisitions during 2023 and 2022 as well as increases in insurance premiums and real estate taxes related to annual rate increases.

Total property operating expenses increased approximately $2.5 million during the three months ended March 31, 2024 compared to the same period from the prior year.

The increase in total property operating expenses was primarily due to an increase of approximately $1.1 million attributable to property acquisitions during 2024 and 2023 as well as increases in insurance premiums and real estate taxes.

Depreciation and amortization.

Depreciation and amortization increased approximately $7.4 million during the nine months ended September 30, 2023 compared to the same period from the prior year primarily due to property acquisitions during 2023 and 2022.

Depreciation and amortization increased approximately $2.8 million during the three months ended March 31, 2024 compared to the same period from the prior year primarily due to property acquisitions during 2024 and 2023.

General and administrative expenses.

General and administrative expenses increased approximately $5.2 million for the nine months ended September 30, 2023 compared to the same period from the prior year primarily due to increased compensation expenses including increased restricted stock amortization, LTIP expense and bonus expense, and an increase in the number of employees and salaries compared to the same period from the prior year.

General and administrative expenses increased approximately $1.2 million during the three months ended March 31, 2024 compared to the same period from the prior year primarily due to increased compensation expenses compared to the same period from the prior year, including an increase in the number of employees and salaries and increased restricted stock amortization and LTIP expense.

Acquisition costs and other.

Acquisition costs and other decreased approximately $1.0 million during the nine months ended September 30, 2023 compared to the same period from the prior year primarily due to environmental remediation at our Avenue A property of approximately $1.0 million during the nine months ended September 30, 2022 .

Acquisition costs and other for the three months ended March 31, 2024 remained consistent with the same period in the prior year.

Interest and other income.

Interest and other income increased approximately $3.6 million during the nine months ended September 30, 2023 compared to the same period from the prior year primarily due to higher interest rates on our cash and cash equivalent balances.

Interest and other income increased approximately $0.9 million for the three months ended March 31, 2024 compared to the same period from the prior year primarily due to higher cash and cash equivalent balances and higher interest rates on those balances.

Interest expense, including amortization.

Interest expense increased approximately $2.7 million for the nine months ended September 30, 2023 compared to the same period from the prior year.

This was primarily due to higher average interest rates on the unsecured term loans and credit facility, partially offset by an increase in capitalized interest for the development and redevelopment properties during the nine months ended September 30, 2023.

Interest expense decreased approximately $2.1 million for the three months ended March 31, 2024 compared to the same period from the prior year.

Gain on sales of real estate investments.

Gain on sales of real estate investments decreased approximately $63.8 million for the nine months ended September 30, 2023 compared to the same period from the prior year.

We recognized a gain of approximately $12.3 million from the sale of one property during the nine months ended September 30, 2023, as compared to a gain of approximately $76.0 million from the sale of one property in the same period from the prior year.

Gain on sales of real estate investments increased approximately $5.7 million for the three months ended March 31, 2024 compared to the same period from the prior year.

We recognized an aggregate gain of approximately $5.7 million from the sale of one property during the three months ended March 31, 2024.

We did not sell any properties during the three months ended March 31, 2023.

Liquidity and Capital Resources

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• maintain a fixed charge coverage ratio in excess of 2.0x;

• maintain a debt-to-adjusted EBITDA ratio below 6.0x;

• maintain a net debt-to-adjusted EBITDA ratio below 5.0x;

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

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

Fitch Ratings assigned us an issuer rating of BBB with a positive outlook.

Fitch Ratings assigned us an issuer rating of BBB+ with a stable outlook.

A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency.

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Equity Sources of Liquidity

The net proceeds of the offering were approximately $387.1 million after deducting the underwriting discount and offering costs of approximately $5.0 million.

We used the net proceeds for acquisitions.

The following sets forth certain information regarding our current at-the-market common stock offering program as of September 30, 2023:

The following sets forth certain information regarding our current at-the-market common stock offering program as of March 31, 2024:

ATM Stock Offering Program Date Implemented Maximum Aggregate Offering Price (in thousands) Aggregate Common Stock Available (in thousands)

$500 Million ATM Program September 6, 2023 $ 500,000 $ 155,207

The following tables set forth the activity under our at-the-market common stock offering programs during the three and nine months ended September 30, 2023 and 2022:

The table below sets forth the activity under our at-the-market common stock offering programs during the three months ended March 31, 2024 and 2023, respectively:

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

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(in thousands)

September 30, 2023 1,575,173 $ 60.78 $ 94,357 $ 1,388

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

For the Nine Months Ended

Shares Sold Weighted Average

Price Per Share Net Proceeds

(in thousands) Sales Commissions

(in thousands)

September 30, 2023 2,542,279 $ 61.61 $ 154,355 $ 2,271

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

March 31, 2024 2,353,278 $ 64.00 $ 148,424 $ 2,184

March 31, 2023 350,000 $ 63.30 $ 21,834 $ 321

Debt Sources of Liquidity

As of September 30, 2023, 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”).

As of March 31, 2024, 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”).

Our 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 September 30, 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.

As of both March 31, 2024 and December 31, 2023, 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.

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Interest on the Amended Facility, including the term loans, is generally to be paid based upon, at our option, either (i) the Secured Overnight Financing Rate (“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, 2023) for the revolving credit facility and 1.25% to 1.75% (1.25% as of September 30, 2023) 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 applicable SOFR margin will range from 1.10% to 1.55% (1.10% as of March 31, 2024) for the revolving credit facility and 1.25% to 1.75% (1.25% as of March 31, 2024) 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 September 30, 2023 and December 31, 2022.

As of September 30, 2023 and December 31, 2022, we held cash and cash equivalents totaling approximately $96.2 million and $26.4 million, respectively.

The following tables summarize our debt maturities and principal payments as of September 30, 2023 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, 2023 and 2022 (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 March 31, 2024 and December 31, 2023.

As of March 31, 2024 and December 31, 2023, we held cash and cash equivalents totaling approximately $649.6 million and $165.4 million, respectively.

The following tables summarize our debt maturities and principal payments as of March 31, 2024 and our market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the three months ended March 31, 2024 and 2023 (dollars in thousands, except per share data):

Facility Term Loan Senior

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Weighted average interest rate n/a 6.6% 3.1% 4.0%

As of September 30, 2023 As of September 30, 2022

As of March 31, 2024 As of March 31, 2023

Total Debt, net $ 771,770 $ 770,941

Cash and cash equivalents (649,575) (11,054)

Net Debt $ 122,195 $ 759,887

Shares Outstanding 1

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Fixed Charge Coverage 8

Total Debt-to-Adjusted EBITDA 9

Net Debt-to-Adjusted EBITDA 9

Weighted Average Maturity of Total Debt (years) 4.1 5.1

1 Includes 419,500 and 357,076 shares of unvested restricted stock outstanding as of September 30, 2023 and 2022, respectively.

Also includes 514,539 and 426,594 shares held in the Deferred Compensation Plan as of September 30, 2023 and 2022, respectively.

2 Closing price of a share of our common stock on the New York Stock Exchange on September 30, 2023 and 2022, respectively, in dollars per share.

3 Total debt-to-total investments in properties is calculated as total debt, net of deferred financing costs, divided by total investments in properties, including one property held for sale as of September 30, 2023.

1 Includes 422,563 and 377,909 shares of unvested restricted stock outstanding as of March 31, 2024 and 2023, respectively.

Also includes 508,663 and 512,459 shares held in the Deferred Compensation Plan as of March 31, 2024 and 2023, respectively.

2 Closing price of a share of our common stock on the New York Stock Exchange on March 28, 2024 and March 31, 2023, respectively, in dollars per share.

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

4 Total debt-to-total market capitalization is calculated as total debt, 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, net of deferred financing costs.

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, 2023 and 2022, respectively.

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

6 Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the three months ended March 31, 2024 and 2023, 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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9 Total debt-to-Adjusted EBITDA is calculated as total debt, net of deferred financing costs, divided by annualized Adjusted EBITDA.

The following table sets forth the cash dividends paid or payable per share during the nine months ended September 30, 2023:

9 Net debt-to-Adjusted EBITDA is calculated as net debt divided by annualized Adjusted EBITDA.

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

The following table sets forth the cash dividends paid or payable per share during the three months ended March 31, 2024:

For the Three

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March 31, 2024 Common Stock $ 0.45 February 6, 2024 March 28, 2024 April 5, 2024

June 30, 2023 Common Stock $ 0.40 May 2, 2023 June 30, 2023 July 14, 2023

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

Sources and Uses of Cash

Our principal sources of cash are cash from operations, borrowings under loans payable, draws on our Amended Facility, common and preferred stock issuances, proceeds from property dispositions and issuances of unsecured notes.

Our principal uses of cash are asset acquisitions, debt service, capital expenditures, operating costs, corporate overhead costs and common stock dividends.

Our principal uses of cash are asset acquisitions, developments and redevelopments, debt service, capital expenditures, operating costs, corporate overhead costs and common stock dividends.

Cash From Operating Activities.

Net cash provided by operating activities totaled approximately $140.6 million for the nine months ended September 30, 2023 compared to approximately $109.0 million for the nine months ended September 30, 2022.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2023 and 2022, increased rents on new and renewed leases at our same store properties and increased occupancy in the same store pool.

Net cash provided by operating activities totaled approximately $47.0 million for the three months ended March 31, 2024 compared to approximately $38.8 million for the three months ended March 31, 2023.

This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2024 and 2023 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 $479.6 million and $313.8 million for the nine months ended September 30, 2023 and 2022, respectively, which consisted primarily of cash paid for property acquisitions of approximately $392.5 million and $344.8 million, respectively, additions to capital improvements of approximately $111.7 million and $75.8 million, respectively, and was partially offset by proceeds from dispositions of approximately $24.6 million and $106.8 million, respectively.

Net cash used in investing activities was approximately $48.6 million and $387.4 million for the three months ended March 31, 2024 and 2023, respectively, which consisted primarily of cash paid for property acquisitions of approximately $18.7 million and $364.6 million, respectively, additions to capital improvements of approximately $40.1 million and $22.8 million, respectively, and was partially offset by proceeds from sales of real estate investments of approximately $10.2 million and $0.0 million, respectively.

Cash From Financing Activities.

Net cash provided by financing activities was approximately $411.2 million for the nine months ended September 30, 2023, which consisted primarily of approximately $510.2 million in net proceeds from the issuance of common stock, partially offset by approximately $97.4 million in equity dividend 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 $495.8 million for the three months ended March 31, 2024, which consisted primarily of approximately $535.8 million in net proceeds from the issuance of common stock, partially offset by approximately $39.1 million in equity dividend payments.

Net cash provided by financing activities was approximately $334.1 million for the three months ended March 31, 2023, which consisted primarily of approximately $365.5 million in net proceeds from the issuance of common stock, partially offset by approximately $30.8 million in equity dividend payments.

Critical Accounting Policies And Estimates

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Material Cash Commitments

As of October 31, 2023, we had two outstanding contracts with third-party sellers to acquire two industrial properties for a total purchase price of $9.6 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 September 30, 2023 (dollars in thousands):

The following table summarizes our material cash commitments due by period as of March 31, 2024 (dollars in thousands):

Material Cash Commitments Less than 1

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Purchase obligations 1

9,575 — — — 9,575

Total $ 117,029 $ 179,511 $ 272,725 $ 286,476 $ 855,741

1 As of October 31, 2023

1 As of May 7, 2024.

As of March 31, 2024, we had one outstanding contract with a third-party seller to acquire an industrial property for a total purchase price of $84.3 million and two outstanding contracts with a third-party seller to acquire a portfolio of industrial properties comprised of 28 buildings for a total purchase price of $364.5 million.

Subsequent to March 31, 2024, both the industrial property and the industrial portfolio were acquired, as described under the heading “Acquisition Activity” in this Quarterly Report on Form 10-Q.

Non-GAAP Financial Measures

We use the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance:

funds from operations, or FFO, Adjusted EBITDA, net operating income, or NOI, same store NOI and cash-basis same store NOI.

FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP.

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

funds from operations, or FFO, Adjusted EBITDA, net operating income, or NOI, same store NOI, cash-basis same store NOI and net debt.

FFO, Adjusted EBITDA, NOI, same store NOI, cash-basis same store NOI and net debt should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP.

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

We compute FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), which defines FFO as net income (loss) (determined in accordance with GAAP), excluding gains (losses) from sales of property and impairment write-downs of depreciable real estate, plus depreciation and amortization on real estate assets and after adjustments for unconsolidated partnerships and joint ventures (which are calculated to reflect FFO on the same basis).

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

The following table reflects the calculation of FFO reconciled from net income for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands except per share data):

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

2023 2022 $ Change % Change 2023 2022 $ Change % Change

The following table reflects the calculation of FFO reconciled from net income for the three months ended March 31, 2024 and 2023 (dollars in thousands except per share data):

For the Three Months Ended March 31,

2024 2023 $ Change % Change

$ 36,059 $ 23,331 $ 12,728 54.6 %

14 unchanged sentences

89,436,149 80,344,742

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 404,010 and 335,038 of weighted average unvested restricted shares outstanding for the three months ended September 30, 2023 and 2022, respectively, and 384,239 and 311,432 of weighted average unvested restricted shares outstanding for the nine months ended September 30, 2023 and 2022, respectively.

FFO increased by approximately $9.1 million and $25.7 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods from the prior year due primarily to property acquisitions during 2022 and 2023 as well as same store NOI growth of approximately $4.1 million and $14.0 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods from the prior year.

The FFO increase was partially offset by increased weighted average common shares outstanding, increased interest expense due to higher average interest rates on the unsecured term loans and credit facility and increased general and administrative expenses.

In addition, during the three months ended September 30, 2023, approximately $0.4 million was recorded as bad debt expense related to DirectBuy Home Improvement.

Under this method, allocations were made to 429,583 and 373,985 of weighted average unvested restricted shares outstanding for the three months ended March 31, 2024 and 2023, respectively.

FFO increased by approximately $9.7 million for the three months ended March 31, 2024 compared to the same period from the prior year due primarily to property acquisitions during 2023 and 2024 as well as same store NOI growth of approximately $3.8 million for the three months ended March 31, 2024 compared to the same period from the prior year.

The FFO increase was partially offset by increased weighted average common shares outstanding and increased general and administrative expenses.

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

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

amortization expense, acquisition costs and stock-based compensation.

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

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

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands):

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

2023 2022 $ Change % Change 2023 2022 $ Change % Change

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three months ended March 31, 2024 and 2023 (dollars in thousands):

For the Three Months Ended March 31,

2024 2023 $ Change % Change

Net income $ 36,059 $ 23,331 $ 12,728 54.6 %

3 unchanged sentences

Stock-based compensation 3,356 3,038 318 10.5 %

Acquisition costs and other 51 36 15 41.7 % 126 1,091 (965) (88.5) %

Acquisition costs and other — 48 (48) n/a

Adjusted EBITDA $ 59,879 $ 51,951 $ 7,928 15.3 %

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

The same store pool includes all properties that were owned and in operation as of September 30, 2023 and since January 1, 2022 and excludes properties that were either disposed of prior to, held for sale to a third party or in development or redevelopment as of September 30, 2023.

As of September 30, 2023, the same store pool consisted of 226 buildings aggregating approximately 13.2 million square feet representing approximately 83.7% of our total square feet owned and 36 improved land parcels containing approximately 113.7 acres representing approximately 68.6% of our total acreage owned.

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.

The same store pool includes all properties that were owned and in operation as of March 31, 2024 and since January 1, 2023 and excludes properties that were either disposed of prior to, held for sale to a third party or in development or redevelopment as of March 31, 2024.

As of March 31, 2024, the same store pool consisted of 246 buildings aggregating approximately 14.7 million square feet representing approximately 93.0% of our total square feet owned and 44 improved land parcels containing approximately 145.3 acres representing approximately 95.3% of our total acreage owned.

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

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands):

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

2023 2022 $ Change % Change 2023 2022 $ Change % Change

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three months ended March 31, 2024 and 2023 (dollars in thousands):

For the Three Months Ended March 31,

2024 2023 $ Change % Change

$ 36,059 $ 23,331 $ 12,728 54.6 %

1 unchanged sentence

General and administrative 10,510 9,320 1,190 12.8 %

Acquisition costs and other 51 36 15 41.7 % 126 1,091 (965) (88.5) %

Acquisition costs and other — 48 (48) n/a

Total other income and expenses (3,368) 5,412 (8,780) n/a

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Cash-basis same store NOI excluding termination fees $ 54,744 $ 48,485 $ 6,259 12.9 %

1 Includes approximately $0.1 million of lease termination income for both the three months ended September 30, 2023 and 2022, and approximately $0.3 million of lease termination income for both the nine months ended September 30, 2023 and 2022.

1 Includes approximately $0.1 million and $12,000 of lease termination income for the three months ended March 31, 2024 and 2023, respectively.

2 Includes 2023 and 2024 acquisitions and dispositions, one improved land parcel, ten properties under development or redevelopment and approximately 45.5 acres of land for future development.

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

Cash-basis same store NOI increased by approximately $5.7 million for the three months ended September 30, 2023 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases, contractual rent increases on pre-existing leases and increased occupancy in the same store pool.

For the three months ended September 30, 2023 and 2022, total contractual rent abatements of approximately $0.6 million and $1.4 million, respectively, were given to certain tenants in the same store pool and approximately $0.1 million in lease termination income was received from certain tenants in the same store pool during both periods.

In addition, approximately $0.2 million of the increase in cash-basis same store NOI for the three months ended September 30, 2023 related to properties that were acquired vacant or with near term expirations in 2021.

Cash-basis same store NOI increased by approximately $17.9 million for the nine months ended September 30, 2023 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases and increased occupancy in the same store pool.

For the nine months ended September 30, 2023 and 2022, total contractual rent abatements of approximately $2.9 million and $3.0 million, respectively, were given to certain tenants in the same-store pool and approximately $0.1 million and $0.3 million, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $1.7 million of the increase in cash-basis same store NOI for the nine months ended September 30, 2023 related to properties that were acquired vacant or with near term expirations in 2020.

Cash-basis same store NOI increased by approximately $6.3 million for the three months ended March 31, 2024 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases and contractual rent increases on pre-existing leases.

For the three months ended March 31, 2024 and 2023, total contractual rent abatements of approximately $0.2 million and $1.8 million, respectively, were given to certain tenants in the same store pool and approximately $0.1 million and $19,000, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $1.4 million of the increase in cash-basis same store NOI for the three months ended March 31, 2024 related to properties that were acquired vacant or with near term expirations in 2022.

The increase in cash-basis same store NOI was partially offset by a decrease in occupancy for the three months ended March 31, 2024 compared to the same period from the prior year.

We compute net debt as total debt, less deferred financing costs and cash and cash equivalents.

We believe that presenting net debt provides useful information to investors regarding our ability to repay our outstanding consolidated indebtedness.

See “Debt Sources of Liquidity” in this Quarterly Report on Form 10-Q for a reconciliation of net debt from total debt.

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