Terreno Realty Corp 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management. When used, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will”, “seek”, “target”, “see”, “likely”, “position”, “opportunity”, “outlook”, “potential”, “future” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors, that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends. 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, 2023, which was filed with the Securities and Exchange Commission on February 7, 2024, 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; • general volatility of the capital markets and the market price of our common stock; • adverse economic or real estate conditions or developments in the industrial real estate sector and/or in the markets in which we own properties; • our dependence on key personnel and our reliance on third-party property managers; • our inability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies; • our ability to manage our growth effectively; • tenant bankruptcies and defaults on, or non-renewal of, leases by tenants; • decreased rental rates or increased vacancy rates; • increased interest rates and operating costs; • declining real estate valuations and impairment charges; • our expected leverage, our failure to obtain necessary outside financing, and existing and future debt service obligations; • our ability to make distributions to our stockholders; • our failure to successfully hedge against interest rate increases; • our failure to successfully operate acquired properties; • 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; • uninsured or underinsured losses and costs relating to our properties or that otherwise result from future litigation; 18 Table of Contents • environmental uncertainties and risks related to natural disasters; • financial market fluctuations; and • changes in real estate and zoning laws and increases in real property tax rates. Overview Terreno Realty Corporation (“Terreno”, and together with its subsidiaries, “we”, “us”, “our”, “our Company”, or “the Company”) acquires, owns and operates industrial real estate in six major coastal U.S. markets: 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 76.0% 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 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 March 31, 2024: Type Number of Buildings or Improved Land Parcels Annualized Base Rent (in thousands) 1 % of Total Warehouse/distribution 224 $ 189,876 76.0 % Flex 14 9,409 3.8 % Transshipment 20 18,399 7.4 % Improved land 45 32,061 12.8 % 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 March 31, 2024, multiplied by 12. 19 Table of Contents 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. Total/Weighted Average Investments in Real Estate Number of Buildings 53 44 56 44 38 23 258 Rentable Square Feet 2,603,447 2,636,157 3,042,305 2,739,130 3,006,585 1,795,046 15,822,670 % of Total 16.5 % 16.7 % 19.2 % 17.3 % 19.0 % 11.3 % 100.0 % Occupancy % as of March 31, 2024 4 97.7 % 94.2 % 93.6 % 95.2 % 99.4 % 97.5 % 96.2 % Annualized Base Rent (in thousands) 1 $ 34,542 $ 49,924 $ 44,295 $ 33,750 $ 32,338 $ 22,835 $ 217,684 % of Total 15.9 % 22.9 % 20.3 % 15.5 % 14.9 % 10.5 % 100.0 % Annualized Base Rent 1 Per Occupied Square Foot $ 13.58 $ 20.11 $ 15.56 $ 12.94 $ 10.83 $ 13.05 $ 14.30 Weighted Average Remaining Lease Term (Years) 2 5.4 4.1 3.5 3.7 5.0 3.0 4.2 Investments in Improved Land Number of Land Parcels 13 13 4 10 3 2 45 Acres 27.0 68.0 14.3 25.9 9.9 7.3 152.4 % of Total 17.7 % 44.6 % 9.4 % 17.0 % 6.5 % 4.8 % 100.0 % Occupancy % as of March 31, 2024 88.9 % 92.4 % 100.0 % 100.0 % 100.0 % 100.0 % 94.6 % Annualized Base Rent (in thousands) 1 $ 7,916 $ 12,175 $ 2,837 $ 6,099 $ 1,959 $ 1,075 $ 32,061 % of Total 24.7 % 38.0 % 8.8 % 19.0 % 6.1 % 3.4 % 100.0 % Annualized Base Rent 1 Per Occupied Square Foot $ 7.58 $ 4.65 $ 4.86 $ 5.64 $ 4.55 $ 3.69 $ 5.28 Weighted Average Remaining Lease Term (Years) 2 3.5 4.3 6.0 2.9 7.2 3.6 4.3 Total Investments in Real Estate and Improved Land Annualized Base Rent (in thousands) 1 $ 42,458 $ 62,099 $ 47,132 $ 39,849 $ 34,297 $ 23,910 $ 249,745 % of Total Annualized Base Rent 1 17.0 % 24.9 % 18.9 % 16.0 % 13.7 % 9.5 % 100.0 % Gross Book Value (in thousands) 3 $ 751,864 $ 830,337 $ 767,068 $ 611,374 $ 809,750 $ 331,566 $ 4,101,959 % 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 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 20 Table of Contents 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, 2024 2023 Building improvements $ 4,434 $ 6,404 Tenant improvements 705 610 Leasing commissions 2,305 3,176 Development, redevelopment, renovation and expansion 34,756 11,620 Total capital expenditures 1 $ 42,200 $ 21,810 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. In addition, 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. We monitor the liquidity and creditworthiness of our tenants on an ongoing basis by reviewing outstanding accounts receivable balances, and as provided under the respective lease agreements, review the tenant’s financial condition periodically as appropriate. As needed, we hold discussions with the tenant’s management about their business and we conduct site visits of the tenant’s operations. 21 Table of Contents Our top 20 customers based on annualized base rent as of March 31, 2024 are as follows: Customer Leases Rentable Square Feet % of Total Rentable Square Feet Improved Land Acreage Annualized Base Rent (in thousands) 1 % of Total Annualized Base Rent 2 1 Amazon.com 5 471,880 3.0 % 2.8 $ 9,779 3.9 % 2 FedEx Corporation 5 242,889 1.5 % 7.7 5,229 2.1 % 3 O'Neill Logistics 2 429,692 2.8 % — 4,403 1.7 % 4 United States Government 8 272,808 1.7 % — 4,212 1.7 % 5 Danaher 3 171,707 1.1 % — 4,078 1.6 % 6 District of Columbia 8 245,888 1.6 % — 3,585 1.4 % 7 International Cargo Terminals Inc. 1 31,601 0.2 % — 3,399 1.4 % 8 Motivate LLC 3 101,234 0.6 % — 2,973 1.2 % 9 Meta Platforms, Inc. 1 225,678 1.4 % — 2,896 1.2 % 10 Lucid USA, Inc. 1 161,680 1.0 % — 2,598 1.0 % 11 Port Kearny Security, Inc. 1 — — % 16.9 2,460 1.0 % 12 Northrop Grumman Systems Corporation 2 148,458 0.9 % — 2,458 1.0 % 13 Sarcona Management Corporation 2 28,124 0.2 % 4.9 2,325 0.9 % 14 Triton Logistics Inc. 1 190,907 1.2 % — 2,273 0.9 % 15 B&B Granite Block Sales, LLC 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. 1 110,336 0.7 % — 2,145 0.9 % 18 Costco-Innovel Solutions LLC 1 219,910 1.4 % — 1,984 0.8 % 19 Hanjin International America, Inc. and Hanjin Transportation Co., LTD 1 114,061 0.7 % — 1,970 0.8 % 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 March 31, 2024, 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 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: Buildings: Year Rentable Square Feet % of Total Rentable Square Feet Annualized Base Rent (in thousands) 2 % of Total Annualized Base Rent 3 2024 (9 months) 1 912,111 5.8 % $ 12,420 4.4 % 2025 1,991,936 12.6 % 30,990 11.0 % 2026 3,069,132 19.4 % 46,901 16.7 % 2027 2,606,404 16.5 % 42,946 15.3 % 2028 2,029,148 12.8 % 39,791 14.1 % Thereafter 4,608,770 29.1 % 71,318 25.4 % Total 15,217,501 96.2 % $ 244,366 86.9 % 22 Table of Contents Improved Land Parcels: Year Improved Land Acreage % of Total Improved Land Acreage Annualized Base Rent (in thousands) 2 % of Total Annualized Base Rent 3 2024 (9 months) 4 21.2 13.9 % $ 4,357 1.5 % 2025 14.9 9.8 % 3,626 1.3 % 2026 17.9 11.7 % 4,882 1.7 % 2027 15.5 10.2 % 5,102 1.8 % 2028 14.8 9.6 % 3,945 1.4 % Thereafter 60.1 39.4 % 14,979 5.4 % Total 144.4 94.6 % $ 36,891 13.1 % Total Buildings and Improved Land Parcels: Year Total Annualized Base Rent (in thousands) 3 % of Total Annualized Base Rent 3 2024 (9 months) 5 $ 16,777 5.9 % 2025 34,616 12.3 % 2026 51,783 18.4 % 2027 48,048 17.1 % 2028 43,736 15.5 % Thereafter 86,297 30.8 % Total $ 281,257 100.0 % 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. 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 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 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. The square footage or acreage of tenants that default or buy-out prior to expiration of their lease and short-term leases of less than one year are not included in the calculation. Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates equal to or above the current average rental rates. Further, re-leased/renewed rental rates in a particular market may not be consistent with rental rates across our portfolio as a whole and re-leased/renewed rental rates for particular properties within a market may not be consistent with rental rates across our portfolio within a particular market, in each case due to a number of factors, including local real estate conditions, local supply and demand for industrial space, the condition of the property, the impact of leasing incentives, including free rent and tenant improvements, and whether the property, or space within the property, has been redeveloped. 23 Table of Contents Recent Developments Acquisition Activity 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 Purchase Price (in thousands) 1 Stabilized Cap Rate 2 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 $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. Total acquisition cost basis for the property includes the initial purchase price, the effects of marking assumed debt to market, buyer’s due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 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 24 Table of Contents 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 25 Table of Contents Development and Redevelopment Activity 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 Investment (in thousands) 1 Amount Spent to Date (in thousands) 2 Estimated Stabilized Cap Rate 3 Estimated Post-Development Square Feet Estimated Post-Development Acreage Estimated Stabilization Quarter % Pre-leased March 31, 2024 Properties under development or redevelopment: Countyline Phase IV Countyline Building 32 4 $ 40,132 $ 14,734 6.0 % 164,307 — Q4 2025 — % Countyline Building 33 4 38,977 16,077 6.0 % 158,042 — Q4 2025 — % Countyline Building 38 4, 6 88,500 80,181 5.0 % 506,215 — Q2 2024 100.0 % Countyline Building 39 4 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 % Maple III 28,109 25,447 3.2 % — 2.8 Q4 2024 — % 147th Street 18,095 12,178 6.1 % 31,378 — Q4 2024 — % East Garry Avenue 40,553 21,352 5.1 % 91,500 — Q1 2025 100.0 % Paterson Plank III 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 for future development: Countyline Phase IV Countyline Phase IV Land 4, 7 216,900 81,855 6.0 % 814,772 — 2025-2027 n/a Total $ 216,900 $ 81,855 6.0 % 814,772 — n/a 1 Excludes below-market lease adjustments recorded at acquisition. Total expected investment for the properties includes the initial purchase price, buyer’s due diligence and closing costs, estimated near-term redevelopment expenditures, capitalized interest and leasing costs necessary to achieve stabilization. 2 Excludes below-market lease adjustments recorded at acquisition. 3 Estimated stabilized cap rates, referred to herein as estimated stabilized cap rates, are calculated as estimated annualized cash basis net operating income for the property stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These 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. 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. 26 Table of Contents 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 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, 2024 2023 Rental revenues $ 140 $ 144 Tenant expense reimbursements 28 29 Property operating expenses (30) (26) Depreciation and amortization (24) (24) Income from operations $ 114 $ 123 Public Offering 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 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. ATM Program 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 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 27 Table of Contents We have a share repurchase program authorizing us to repurchase up to 3,000,000 shares of our outstanding common stock from time to time through December 31, 2024. Purchases made pursuant to this program, if any, will be made in either the open market or in privately negotiated transactions as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. As of March 31, 2024, we had not repurchased any shares of our common stock pursuant to our share repurchase program. Dividend and Distribution Activity 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 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. Inflation The U.S. 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. In recent years, inflation has increased construction costs, including tenant improvements and capital projects, goods and labor, and operating costs. Most of our leases require the tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, leases with respect to approximately 69.2% of our total rentable square feet and improved land acreage expire within five years which enables us to seek to replace existing leases with new leases at the then-existing market rate. Financial Condition and Results of Operations We derive substantially all of our revenues from rents received from tenants under existing leases on each of our properties. These revenues include fixed base rents and recoveries of certain property operating expenses that we have incurred and that we pass through to the individual tenants. Approximately 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. Our primary cash expenses consist of our property operating expenses, which include: real estate taxes, repairs and maintenance, management expenses, insurance, utilities, general and administrative expenses, which include compensation costs, office expenses, professional fees and other administrative expenses, acquisition costs, which include third-party costs paid to brokers and consultants, and interest expense, primarily on our revolving credit facility, term loans and senior unsecured notes. Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions at various times during the course of such periods. The results of operations of any acquired property are included in our financial statements as of the date of its acquisition. The analysis of our results below for the three 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. 28 Table of Contents 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 March 31, 2024 to the Three Months Ended March 31, 2023: For the Three Months Ended March 31, 2024 2023 $ Change % Change (Dollars in thousands) Rental revenues 1 Same store $ 60,175 $ 57,031 $ 3,144 5.5 % Non-same store operating properties 2 6,843 2,507 4,336 173.0 % Total rental revenues 67,018 59,538 7,480 12.6 % Tenant expense reimbursements 1 Same store 16,767 14,616 2,151 14.7 % Non-same store operating properties 2 1,245 497 748 150.5 % Total tenant expense reimbursements 18,012 15,113 2,899 19.2 % Total revenues 85,030 74,651 10,379 13.9 % Property operating expenses Same store 19,148 17,691 1,457 8.2 % Non-same store operating properties 2 1,742 690 1,052 152.5 % Total property operating expenses 20,890 18,381 2,509 13.6 % Net operating income 3 Same store 57,794 53,956 3,838 7.1 % Non-same store operating properties 2 6,346 2,314 4,032 174.2 % Total net operating income $ 64,140 $ 56,270 $ 7,870 14.0 % Other costs and expenses Depreciation and amortization 20,939 18,159 2,780 15.3 % General and administrative 10,510 9,320 1,190 12.8 % Acquisition costs and other — 48 (48) (100.0) % Total other costs and expenses 31,449 27,527 3,922 14.2 % Other income (expense) Interest and other income 2,893 1,963 930 47.4 % Interest expense, including amortization (5,240) (7,375) 2,135 (28.9) % 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 % 1 Accounting Standards Update (“ASU”) No. 2018-11, Leases (Topic 842), allows us to elect not to separate lease and non-lease rental income. All rental income earned pursuant to tenant leases is reflected as one line, “Rental revenues and tenant expense reimbursements” on our accompanying consolidated statements of operations. We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and a reconciliation to total revenue is provided above. 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 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. 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. 29 Table of Contents Revenues. 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 $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 $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 $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 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 $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 decreased approximately $2.1 million for the three months ended March 31, 2024 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 during the three months ended March 31, 2024. Gain on sales of real estate investments. 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 The primary objective of our financing strategy is to maintain financial flexibility with a conservative capital structure using retained cash flows, proceeds from dispositions of properties, long-term debt and the issuance of common and perpetual preferred stock to finance our growth. Over the long-term, we intend to: • limit the sum of the outstanding principal amount of our consolidated indebtedness and the liquidation preference of any outstanding perpetual preferred stock to less than 35% of our total enterprise value; • maintain a fixed charge coverage ratio in excess of 2.0x; • 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; and • have staggered debt maturities that are aligned to our expected average lease term (five to seven years), positioning us to re-price parts of our capital structure as our rental rates change with market conditions. 30 Table of Contents 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 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. There can be no assurance that we will be able to maintain our current credit rating. Our credit rating can affect the amount and type of capital we can access, as well as the terms of any financings we may obtain. In the event our current credit rating is downgraded, it may become difficult or expensive to obtain additional financing or refinance existing obligations and commitments. We intend to primarily utilize senior unsecured notes, term loans, credit facilities, dispositions of properties, and proceeds from the issuance of common stock and perpetual preferred stock. We may also assume debt in connection with property acquisitions which may have a higher loan-to-value ratio. We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances and, if necessary, short-term borrowings under our revolving credit facility. We believe that our net cash provided by operations will be adequate to fund operating requirements, pay interest on any borrowings and fund distributions in accordance with the REIT requirements of the federal income tax laws. In the near-term, we intend to fund future investments in properties, property developments and redevelopments and scheduled debt maturities with cash on hand, term loans, senior unsecured notes, borrowings under our revolving credit facility, perpetual preferred and common stock issuances and, from time to time, property dispositions. We expect to meet our long-term liquidity requirements, including with respect to other investments in industrial properties, property acquisitions, property developments and redevelopments, renovations and expansions and scheduled debt maturities, through borrowings under our revolving credit facility, periodic issuances of common stock, perpetual preferred stock, and long-term unsecured and secured debt, and, from time to time, with proceeds from the disposition of properties. The success of our acquisition strategy may depend, in part, on our ability to obtain and borrow under our revolving credit facility and to access additional capital through issuances of equity and debt securities. We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. Equity Sources of Liquidity On 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 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. 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 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 (in thousands) Sales Commissions (in thousands) March 31, 2024 2,353,278 $ 64.00 $ 148,424 $ 2,184 March 31, 2023 350,000 $ 63.30 $ 21,834 $ 321 31 Table of Contents Debt Sources of Liquidity 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 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. Outstanding borrowings under the Amended Facility are limited to the lesser of (i) the sum of the $400.0 million revolving credit facility, the $100.0 million term loan maturing in January 2027 and the $100.0 million term loan maturing in January 2028, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Amended Facility, including the term loans, is generally to be paid based upon, at our option, either (i) 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 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. The Amended Facility and the Senior Unsecured Notes are guaranteed by us and by substantially all of the current and to-be-formed subsidiaries of the borrower that own an unencumbered property. The Amended Facility and the Senior Unsecured Notes are not secured by our properties or by interests in the subsidiaries that hold such properties. The Amended Facility and the Senior Unsecured Notes include a series of financial and other covenants with which we must comply. We were in compliance with the covenants under the Amended Facility and the Senior Unsecured Notes as of 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): Credit Facility Term Loan Senior Unsecured Notes Total Debt 2024 (9 months) $ — $ — $ 100,000 $ 100,000 2025 — — — — 2026 — — 50,000 50,000 2027 — 100,000 50,000 150,000 2028 — 100,000 100,000 200,000 Thereafter — — 275,000 275,000 Total Debt — 200,000 575,000 775,000 Deferred financing costs, net — (796) (2,434) (3,230) Total Debt, net $ — $ 199,204 $ 572,566 $ 771,770 Weighted average interest rate n/a 6.6% 3.1% 4.0% 32 Table of Contents As of March 31, 2024 As of March 31, 2023 Total Debt, net $ 771,770 $ 770,941 Less: Cash and cash equivalents (649,575) (11,054) Net Debt $ 122,195 $ 759,887 Equity Common Stock Shares Outstanding 1 96,704,102 83,122,297 Market Price 2 $ 66.40 $ 64.60 Total Equity 6,421,152 5,369,700 Total Market Capitalization $ 7,192,922 $ 6,140,641 Total Debt-to-Total Investments in Properties 3 18.8% 20.2% Total Debt-to-Total Market Capitalization 4 10.7% 12.6% Floating Rate Debt as a % of Total Debt 5 25.8% 25.8% Net Income $ 36,059 $ 23,331 Adjusted EBITDA 6 $ 59,879 $ 51,951 Interest Coverage 7 11.4 x 7.0 x Fixed Charge Coverage 8 7.2 x 6.5 x Net Debt-to-Adjusted EBITDA 9 0.5 x 3.7 x Weighted Average Maturity of Total Debt (years) 4.1 5.1 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, 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. 7 Interest coverage is calculated as Adjusted EBITDA divided by interest expense, including amortization. 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. 8 Fixed charge coverage is calculated as Adjusted EBITDA divided by interest expense, including amortization plus capitalized interest. 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. 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. 33 Table of Contents The following table sets forth the cash dividends paid or payable per share during the three months ended March 31, 2024: For the Three Months Ended Security Dividend per Share Declaration Date Record Date Date Paid March 31, 2024 Common Stock $ 0.45 February 6, 2024 March 28, 2024 April 5, 2024 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, 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 $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 $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 $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 A summary of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and in the condensed notes to consolidated financial statements in this Quarterly Report on Form 10-Q. Material Cash Commitments 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 Year 1-3 Years 3-5 Years More than 5 Years Total Debt $ 100,000 $ 150,000 $ 250,000 $ 275,000 $ 775,000 Debt interest payments 16,140 27,533 21,010 11,153 75,836 Operating lease commitments 889 1,978 1,715 323 4,905 Purchase obligations 1 — — — — — Total $ 117,029 $ 179,511 $ 272,725 $ 286,476 $ 855,741 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 34 Table of Contents 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, 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). We believe that presenting FFO provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets. We believe that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient. 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 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 Net income $ 36,059 $ 23,331 $ 12,728 54.6 % Gain on sales of real estate investments (5,715) — (5,715) n/a Depreciation and amortization 20,939 18,159 2,780 15.3 % Non-real estate depreciation (39) (32) (7) 21.9 % Allocation to participating securities 1 (227) (189) (38) 20.1 % FFO attributable to common stockholders $ 51,017 $ 41,269 $ 9,748 23.6 % Basic FFO per common share $ 0.57 $ 0.52 $ 0.05 9.6 % Diluted FFO per common share $ 0.57 $ 0.51 $ 0.06 11.8 % Basic weighted average common shares outstanding 88,873,871 79,895,886 Diluted weighted average common shares outstanding 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 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 35 Table of Contents 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 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 % Gain on sales of real estate investments (5,715) — (5,715) n/a Depreciation and amortization 20,939 18,159 2,780 15.3 % Interest expense, including amortization 5,240 7,375 (2,135) (28.9) % Stock-based compensation 3,356 3,038 318 10.5 % Acquisition costs and other — 48 (48) n/a Adjusted EBITDA $ 59,879 $ 51,951 $ 7,928 15.3 % We compute NOI as rental revenues, including tenant expense reimbursements, less property operating expenses. We compute same store NOI as rental revenues, including tenant expense reimbursements, less property operating expenses on a same store basis. NOI excludes depreciation, amortization, general and administrative expenses, acquisition costs and interest expense, including amortization. We compute cash-basis same store NOI as same store NOI excluding straight-line rents and amortization of lease intangibles. The same store pool 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. We believe that presenting NOI, same store NOI and cash-basis same store NOI provides useful information to investors regarding the operating performance of our properties because NOI excludes certain items that are not considered to be controllable in connection with the management of the properties, such as depreciation, amortization, general and administrative expenses, acquisition costs and interest expense. By presenting same store NOI and cash-basis same store NOI, the operating results on a same store basis are directly comparable from period to period. 36 Table of Contents 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 Net income 1 $ 36,059 $ 23,331 $ 12,728 54.6 % Depreciation and amortization 20,939 18,159 2,780 15.3 % General and administrative 10,510 9,320 1,190 12.8 % Acquisition costs and other — 48 (48) n/a Total other income and expenses (3,368) 5,412 (8,780) n/a Net operating income 64,140 56,270 7,870 14.0 % Less non-same store NOI (6,346) 2 (2,314) 2 (4,032) 174.2 % Same store NOI $ 57,794 $ 53,956 $ 3,838 7.1 % Less straight-line rents and amortization of lease intangibles 3 (2,950) (5,451) 2,501 (45.9) % Cash-basis same store NOI $ 54,844 $ 48,505 $ 6,339 13.1 % Less termination fee income (100) (20) (80) 400.0 % Cash-basis same store NOI excluding termination fees $ 54,744 $ 48,485 $ 6,259 12.9 % 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 $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.