What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-08 · 245 added, 156 removed, 495 unchanged (45% of the section changed)

8 unchanged sentences

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;

• 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 our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, which was filed with the Securities and Exchange Commission on May 8, 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;

21 unchanged sentences

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.

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%).

Northern New Jersey/New York City;

San Francisco Bay Area;

Seattle and Washington, D.C.

We invest in several types of industrial real estate, including warehouse/distribution (approximately 77.5% of our total annualized base rent as of June 30, 2024), flex (including light industrial and research and development, or R&D) (approximately 3.8%), transshipment (approximately 6.5%) and improved land (approximately 12.2%).

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.

As of June 30, 2024, we owned a total of 292 buildings aggregating approximately 18.1 million square feet, 45 improved land parcels consisting of approximately 152.4 acres, nine properties under development or redevelopment and approximately 35.4 acres of land for future development.

As of June 30, 2024, our buildings and improved land parcels were approximately 96.0% and 98.1% leased, respectively, to 668 customers, the largest of which accounted for approximately 3.4% 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:

The following table summarizes by type our investments in real estate as of June 30, 2024:

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

4 unchanged sentences

Total 337 $ 289,494 100.0 %

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.

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.

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2024, multiplied by 12.

The following table summarizes by market our investments in real estate as of June 30, 2024:

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

Total/Weighted Average

3 unchanged sentences

% of Total 19.1 % 15.4 % 20.4 % 18.1 % 15.1 % 11.9 % 100.0 %

Occupancy % as of March 31, 2024 4

Occupancy % as of June 30, 2024 4

92.7 % 97.6 % 99.7 % 94.1 % 94.1 % 98.4 % 96.0 %

10 unchanged sentences

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

Occupancy % as of March 31, 2024

Occupancy % as of June 30, 2024

100.0 % 100.0 % 100.0 % 100.0 % 88.8 % 100.0 % 98.1 %

14 unchanged sentences

% of Total Gross Book Value 23.8 % 17.5 % 18.2 % 18.2 % 13.3 % 9.0 % 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

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,

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2024, multiplied by 12.

2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of June 30, 2024, weighted by the respective square footage.

3 Includes nine properties under development or redevelopment that, upon completion, will consist of ten buildings aggregating approximately 1.1 million square feet and one approximately 2.8-acre improved land parcel and approximately 35.4 acres of land for future development.

4 Occupancy decreased during the three months ended June 30, 2024 primarily due to 99,000 square feet of acquired vacancy.

As of June 30, 2024, we owned nine properties under development or redevelopment that, upon completion, will consist of ten buildings aggregating approximately 1.1 million square feet and one approximately 2.8-acre improved land parcel, and

approximately 35.4 acres of land for future development, with a total expected investment of approximately $564.2 million, including redevelopment costs, capitalized interest and other costs.

The following table summarizes our capital expenditures incurred during the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

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

2024 2023 2024 2023

Operating portfolio:

Building improvements $ 11,293 $ 6,548 $ 15,727 $ 12,952

1 unchanged sentence

Leasing commissions 2,769 3,612 5,074 6,788

Development, redevelopment, renovation and expansion 34,756 11,620

Total capital expenditures 1

$ 15,136 $ 12,222 $ 22,580 $ 22,412

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.

Properties under development and redevelopment:

Development, redevelopment, renovation and expansion $ 38,323 $ 25,777 $ 73,079 $ 37,397

1 Includes approximately $4.4 million for both the three months ended June 30, 2024 and 2023, and approximately $6.5 million and $9.8 million for the six months ended June 30, 2024 and 2023, respectively, related to leasing acquired vacancy.

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.

3 unchanged sentences

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 March 31, 2024 are as follows:

Our top 20 customers based on annualized base rent as of June 30, 2024 are as follows:

Customer Leases Rentable

5 unchanged sentences

6 308,889 1.7 % 7.7 6,358 2.2 %

3 O'Neill Logistics

3 Imperial Bag & Paper Co LLC

1 505,729 2.8 % — 4,729 1.6 %

1 unchanged sentence

8 306,372 1.7 % — 4,540 1.6 %

5 O'Neill Logistics

2 429,692 2.4 % — 4,480 1.5 %

3 171,707 0.9 % — 4,201 1.5 %

7 District of Columbia

8 unchanged sentences

1 161,680 0.9 % — 2,598 0.9 %

11 Port Kearny Security, Inc.

1 — — % 16.9 2,460 1.0 %

12 Northrop Grumman Systems Corporation

2 148,458 0.8 % — 2,489 0.9 %

13 Port Kearny Security, Inc.

1 — — % 16.9 2,460 0.8 %

14 Sarcona Management Corporation

4 unchanged sentences

1 — — % 7.2 2,246 0.8 %

16 L3 Harris Technologies, Inc.

2 170,114 1.1 % — 2,218 0.9 %

17 JAM'N Logistics Inc.

1 110,336 0.6 % — 2,231 0.8 %

18 Fisica Inc.

2 170,114 0.9 % — 2,230 0.7 %

19 Costco-Innovel Solutions LLC

3 unchanged sentences

1 114,061 0.6 % — 1,970 0.7 %

20 Team Alliance Logistics Inc.

DBA A&V Transportation

2 — — % 4.4 1,877 0.8 %

Total 51 3,942,260 21.8 % 39.5 $ 69,746 24.1 %

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:

1 Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2024, multiplied by 12.

The following tables summarize the anticipated lease expirations for leases in place as of June 30, 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

33 unchanged sentences

Total $ 325,909 100.0 %

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.

1 Includes leases that expire on or after June 30, 2024 and month-to-month leases totaling approximately 53,107 square feet.

2 Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of June 30, 2024, multiplied by 12.

4 Includes leases that expire on or after June 30, 2024 and month-to-month leases totaling approximately 2.4 acres.

5 Includes leases that expire on or after June 30, 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.

As of June 30, 2024, leases representing approximately 3.7% of the total annualized base rent of our portfolio are scheduled to expire during the remainder of 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 remaining 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 18.9 acres of improved land commencing during the three months ended June 30, 2024 were approximately 45.9% higher as compared to the previous rental rates for that same space, and cash rent changes on new and renewed leases totaling approximately 1.2 million square feet and 22.2 acres commencing during the six months ended June 30, 2024 were approximately 46.5% higher as compared to the previous rental rates for that same space.

We had a tenant retention ratio for the operating portfolio of 56.4% and 56.6%, respectively, for the three and six months ended June 30, 2024.

We had a tenant retention ratio for the improved land portfolio of 61.2% and 65.7%, respectively, for the three and six months ended June 30, 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.

4 unchanged sentences

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.

During the three months ended June 30, 2024, we acquired one industrial property and one portfolio of industrial properties, for a total purchase price of approximately $448.8 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:

The following table sets forth the industrial property and the portfolio of industrial properties we acquired during the three months ended June 30, 2024:

Property Name Location Acquisition Date Number of

2 unchanged sentences

(in thousands) 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 %

Fleet Alexandria, VA April 15, 2024 4 357,000 $ 84,300 5.3 %

Multi-market portfolio of industrial properties 3

Various May 2, 2024 28 1,237,600 364,500 5.0 %

Total/Weighted Average 32 1,594,600 $ 448,800 5.1 %

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.

The total aggregate initial investment was approximately $472.8 million, including $4.9 million in capitalized closing costs and acquisition costs, and $19.2 million in assumed intangible liabilities.

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

2 unchanged sentences

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:

3 Additional information about the Multi-market portfolio of industrial properties, including the purchase prices by market, property addresses, property locations and building square footage, is included in the subsequent tables.

The following tables summarize certain information with respect to the Multi-market portfolio of industrial properties:

Market Purchase Price (in thousands)

45 unchanged sentences

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:

As of June 30, 2024, we had nine properties under development or redevelopment that, upon completion, will consist of ten buildings aggregating approximately 1.1 million square feet and one approximately 2.8-acre improved land parcel.

Additionally, we owned approximately 35.4 acres of land for future development that, upon completion, will consist of three buildings aggregating approximately 0.7 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 June 30, 2024:

Property Name Total Expected

4 unchanged sentences

Stabilization

Quarter % Pre-leased March 31, 2024

Quarter % Pre-leased June 30, 2024

Properties under development or redevelopment:

8 unchanged sentences

43,802 38,912 5.8 % 178,201 — Q3 2024 100.0 %

Countyline Building 40 4

15,431 13,681 5.3 % 31,378 — Q4 2024 — %

28,486 25,036 3.1 % — 2.8 Q1 2025 — %

Paterson Plank III

35,301 32,671 3.8 % 47,316 — Q1 2025 — %

1 unchanged sentence

40,513 27,530 5.1 % 91,500 — Q2 2025 100.0 %

Paterson Plank III

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

139th Street 5

15 unchanged sentences

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 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.

6 In July 2024, we pre-leased 67% of Countyline Building 33.

The seven-year lease will commence upon completion of building construction and tenant improvements.

During the six months ended June 30, 2024, we completed development of two properties.

The following table summarizes certain information with respect to the development properties completed during the six months ended June 30, 2024:

Property Name Location Total

Investment (in

Stabilized Cap

Post-Development Square Feet Post-Development Acreage Completion Quarter

Countyline Building 38 Hialeah, FL $ 88,500 5.0 % 506,215 — Q2 2024

Countyline Building 40 Hialeah, FL 43,800 6.3 % 186,107 — Q2 2024

Total/Weighted Average $ 132,300 5.4 % 692,322 —

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

2 Estimated stabilized cap rates are calculated as estimated annualized cash basis net operating income for the properties stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property.

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

Disposition Activity

During the 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,

During the six months ended June 30, 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 and six months ended June 30, 2024 (dollars in thousands):

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

2024 2023 2024 2023

Rental revenues $ — $ 144 $ 140 $ 289

3 unchanged sentences

Income from operations $ — $ 105 $ 114 $ 228

Senior Unsecured Notes

In July 2024, we repaid the $100.0 million tranche of our 7-year senior unsecured notes using existing cash on hand.

The notes bore interest at 3.8% and had an original maturity date of July 14, 2024.

Public Offering

1 unchanged sentence

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.

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 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 ($155.2 million remaining as of June 30, 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.

During the three months ended June 30, 2024, we did not issue any common stock under the $500 Million ATM Program.

During the six months ended June 30, 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

3 unchanged sentences

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.

As of June 30, 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.

On August 6, 2024, our board of directors declared a cash dividend in the amount of $0.49 per share of our common stock payable on October 11, 2024 to the stockholders of record as of the close of business on September 30, 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.

As of August 6, 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.

12 unchanged sentences

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.

The analysis of our results below for the three and six months ended June 30, 2024 and 2023 includes the changes attributable to same store properties.

The same store pool for the comparison of the three and six months ended June 30, 2024 and 2023 includes all properties that were owned and in operation as of June 30, 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 June 30, 2024.

As of June 30, 2024, the same store pool consisted of 246 buildings aggregating approximately 14.7 million square feet representing approximately 81.2% 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 June 30, 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 June 30, 2024, consisted of 46 buildings aggregating approximately 3.4 million square feet, one improved land parcel consisting of approximately 7.1 acres, nine properties under development or redevelopment and approximately 35.4 acres of land for future development.

As of June 30, 2024 and 2023, our consolidated same store pool occupancy was approximately 96.0% and 98.1%, 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 March 31, 2024 to the Three Months Ended March 31, 2023:

For the Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023:

For the Three Months Ended June 30,

2024 2023 $ Change % Change

29 unchanged sentences

Interest expense, including amortization (5,520) (5,900) 380 (6.4) %

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

Gain on sales of real estate investments — 12,257 (12,257) (100.0) %

Total other income (expense) (1,188) 7,330 (8,518) n/a

6 unchanged sentences

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.

2 Includes 2024 and 2023 acquisitions and dispositions, one improved land parcel, nine properties under development or redevelopment and approximately 35.4 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.

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.

Total revenues increased approximately $14.7 million for the three months ended June 30, 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 0.5 million square feet and 18.9 acres of improved land commencing during the three months ended June 30, 2024 increased approximately 45.9% compared to the previous rental rates for that same space in the same period from the prior year.

For the three months ended June 30, 2024 and 2023, approximately $2.1 million and $2.3 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.4 million and $0.2 million, respectively, was recorded in lease termination revenue.

The increase in total revenues was partially offset by a decrease in occupancy for the three months ended June 30, 2024 compared to the same period from the prior year.

The decrease in occupancy was primarily due to 99,000 square feet of acquired vacancy.

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.

Total property operating expenses increased approximately $5.2 million during the three months ended June 30, 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 $2.2 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.

Depreciation and amortization increased approximately $4.8 million during the three months ended June 30, 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.

General and administrative expenses increased approximately $0.8 million during the three months ended June 30, 2024 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.

Interest and other income.

Interest and other income increased approximately $3.4 million for the three months ended June 30, 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 $0.4 million for the three months ended June 30, 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 June 30, 2024.

Gain on sales of real estate investments.

Gain on sales of real estate investments decreased approximately $12.3 million for the three months ended June 30, 2024 compared to the same period from the prior year.

We did not sell any properties during the three months ended June 30, 2024.

We recognized a gain of approximately $12.3 million from the sale of one property during the three months ended June 30, 2023.

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023:

For the Six Months Ended June 30,

2024 2023 $ Change % Change

(Dollars in thousands)

Rental revenues 1

Same store $ 120,094 $ 115,271 $ 4,823 4.2 %

Non-same store operating properties 2

20,707 7,738 12,969 167.6 %

Total rental revenues 140,801 123,009 17,792 14.5 %

Tenant expense reimbursements 1

Same store 34,568 29,443 5,125 17.4 %

Non-same store operating properties 2

3,908 1,734 2,174 125.4 %

Total tenant expense reimbursements 38,476 31,177 7,299 23.4 %

Total revenues 179,277 154,186 25,091 16.3 %

Property operating expenses

Same store 39,208 34,744 4,464 12.8 %

Non-same store operating properties 2

5,454 2,223 3,231 145.3 %

Total property operating expenses 44,662 36,967 7,695 20.8 %

Net operating income 3

Same store 115,454 109,970 5,484 5.0 %

Non-same store operating properties 2

19,161 7,249 11,912 164.3 %

Total net operating income $ 134,615 $ 117,219 $ 17,396 14.8 %

Other costs and expenses

Depreciation and amortization 43,951 36,391 7,560 20.8 %

General and administrative 21,053 19,086 1,967 10.3 %

Acquisition costs and other 36 75 (39) (52.0) %

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

Total other costs and expenses 65,040 55,552 9,488 17.1 %

Other income (expense)

Interest and other income 7,225 2,936 4,289 146.1 %

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 (10,760) (13,275) 2,515 (18.9) %

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 5,715 12,257 (6,542) (53.4) %

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.

Total other income (expense) 2,180 1,918 262 13.7 %

Net income $ 71,755 $ 63,585 $ 8,170 12.8 %

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 notes to consolidated financial statements for more information regarding our adoption of this standard.

2 Includes 2023 and 2024 acquisitions and dispositions, one improved land parcel, nine properties under development or redevelopment and approximately 35.4 acres of land entitled for future development.

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

Total revenues increased approximately $25.1 million for the six months ended June 30, 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 1.2 million square feet and 22.2 acres commencing during the six months ended June 30, 2024 increased approximately 46.5% compared to the same space in the same period from the prior year.

For the six months ended June 30, 2024 and 2023, approximately $3.3 million and $4.1 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.5 million and $0.2 million, respectively, was recorded in lease termination revenue.

The increase in total revenues was partially offset by a decrease in occupancy for the six months ended June 30, 2024 compared to the same period from the prior year.

The decrease in occupancy was primarily due to 99,000 square feet of acquired vacancy.

Property operating expenses.

Total property operating expenses increased approximately $7.7 million during the six months ended June 30, 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 $3.2 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 $7.6 million during the six months ended June 30, 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 $2.0 million for the six months ended June 30, 2024 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.

Interest and other income.

Interest and other income increased approximately $4.3 million during the six months ended June 30, 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 $2.5 million for the six months ended June 30, 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 $6.5 million for the six months ended June 30, 2024 compared to the same period from the prior year.

We recognized a gain of approximately $5.7 million from the sale of one property during the six months ended June 30, 2024, as compared to a gain of approximately $12.3 million from the sale of one property during the same period from the prior year.

Liquidity and Capital Resources

7 unchanged sentences

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.

9 unchanged sentences

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

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

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 June 30, 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:

The tables below set forth the activity under our at-the-market common stock offering programs during the three and six months ended June 30, 2024 and 2023, respectively:

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

1 unchanged sentence

(in thousands)

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

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

June 30, 2024 — $ — $ — $ —

June 30, 2023 617,106 $ 62.75 $ 38,164 $ 562

For the Six Months Ended

Shares Sold Weighted Average

Price Per Share Net Proceeds

(in thousands) Sales Commissions

(in thousands)

June 30, 2024 2,353,278 $ 64.00 $ 148,424 $ 2,184

June 30, 2023 967,106 $ 62.95 $ 59,998 $ 883

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”).

As of June 30, 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”).

In July 2024, we repaid the $100.0 million tranche of 7-year Senior Unsecured Notes using existing cash on hand.

The notes bore interest at 3.8% and had an original maturity date of July 14, 2024.

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.

As of both June 30, 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.

1 unchanged sentence

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 applicable SOFR margin will range from 1.10% to 1.55% (1.10% as of June 30, 2024) for the revolving credit facility and 1.25% to 1.75% (1.25% as of June 30, 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.

2 unchanged sentences

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):

We were in compliance with the covenants under the Amended Facility and the Senior Unsecured Notes as of June 30, 2024 and December 31, 2023.

As of June 30, 2024 and December 31, 2023, we held cash and cash equivalents totaling approximately $182.0 million and $165.4 million, respectively.

The following tables summarize our debt maturities and principal payments as of June 30, 2024 and our market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the six months ended June 30, 2024 and 2023 (dollars in thousands, except per share data):

Facility Term Loan Senior

9 unchanged sentences

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

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

1 In July 2024, we repaid the $100.0 million tranche of 7-year Senior Unsecured Notes using existing cash on hand.

The notes bore interest at 3.8% and had an original maturity date of July 14, 2024.

As of June 30, 2024 As of June 30, 2023

Total Debt, net $ 771,976 $ 771,148

17 unchanged sentences

Weighted Average Maturity of Total Debt (years) 3.8 4.8

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.

1 Includes 426,404 and 373,897 shares of unvested restricted stock outstanding as of June 30, 2024 and 2023, respectively.

Also includes 508,663 and 514,539 shares held in the Deferred Compensation Plan as of June 30, 2024 and 2023, respectively.

2 Closing price of a share of our common stock on the New York Stock Exchange on June 28, 2024 and June 30, 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.

1 unchanged sentence

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.

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

5 unchanged sentences

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:

The following table sets forth the cash dividends paid or payable per share during the six months ended June 30, 2024:

For the Three

2 unchanged sentences

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

June 30, 2024 Common Stock $ 0.45 May 7, 2024 June 28, 2024 July 12, 2024

Sources and Uses of Cash

2 unchanged sentences

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.

Net cash provided by operating activities totaled approximately $111.4 million for the six months ended June 30, 2024 compared to approximately $87.4 million for the six months ended June 30, 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.

Net cash used in investing activities was approximately $547.1 million and $406.5 million for the six months ended June 30, 2024 and 2023, respectively, which consisted primarily of cash paid for property acquisitions of approximately $468.9 million and $378.1 million, respectively, additions to capital improvements of approximately $88.4 million and $53.0 million, respectively, and was partially offset by proceeds from sales of real estate investments of approximately $10.2 million and $24.6 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.

Net cash provided by financing activities was approximately $452.0 million for the six months ended June 30, 2024, which consisted primarily of approximately $535.6 million in net proceeds from the issuance of common stock, partially offset by approximately $82.6 million in equity dividend payments.

Net cash provided by financing activities was approximately $351.1 million for the six months ended June 30, 2023, which consisted primarily of approximately $415.8 million in net proceeds from the issuance of common stock, partially offset by approximately $63.9 million in equity dividend payments.

Critical Accounting Policies And Estimates

1 unchanged sentence

Material Cash Commitments

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

The following table summarizes our material cash commitments due by period as of June 30, 2024 (dollars in thousands):

Material Cash Commitments Less than 1

1 unchanged sentence

Debt $ 100,000 1

$ 150,000 $ 250,000 $ 275,000 $ 775,000

Debt interest payments 16,140 27,533 19,848 8,095 71,616

2 unchanged sentences

Total $ 117,081 $ 179,548 $ 271,505 $ 283,219 $ 851,353

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.

1 In July 2024, we repaid the $100.0 million tranche of 7-year Senior Unsecured Notes using existing cash on hand.

The notes bore interest at 3.8% and had an original maturity date of July 14, 2024.

2 As of August 6, 2024.

Non-GAAP Financial Measures

1 unchanged sentence

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.

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.

4 unchanged sentences

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

The following table reflects the calculation of FFO reconciled from net income for the three and six months ended June 30, 2024 and 2023 (dollars in thousands except per share data):

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

2024 2023 $ Change % Change 2024 2023 $ Change % Change

$ 35,696 $ 40,254 $ (4,558) (11.3) % $ 71,755 $ 63,585 $ 8,170 12.8 %

15 unchanged sentences

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.

Under this method, allocations were made to 439,993 and 374,514 of weighted average unvested restricted shares outstanding for the three months ended June 30, 2024 and 2023, respectively, and 434,788 and 374,251 of weighted average unvested restricted shares outstanding for the six months ended June 30, 2024 and 2023, respectively.

FFO increased by approximately $12.4 million and $22.2 million for the three and six months ended June 30, 2024, respectively, compared to the same periods from the prior year due primarily to property acquisitions during 2023 and 2024 as well as same store NOI growth of approximately $1.6 million and $5.5 million for the three and six months ended June 30, 2024, respectively, compared to the same periods from the prior year.

The FFO increase was partially offset by increased weighted average common shares outstanding and increased general and administrative expenses due to increased restricted stock amortization and other compensation expenses, including an increase in bonus expense and an increase in the number of employees and salaries for the three and six months ended June 30, 2024 compared to the same periods from the prior year.

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

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

amortization expense, acquisition costs and stock-based compensation.

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

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

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

For the Three Months Ended March 31,

2024 2023 $ Change % Change

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

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

2024 2023 $ Change % Change 2024 2023 $ Change % Change

Net income $ 35,696 $ 40,254 $ (4,558) (11.3) % $ 71,755 $ 63,585 $ 8,170 12.8 %

3 unchanged sentences

Stock-based compensation 3,988 3,805 183 4.8 % 7,344 6,843 501 7.3 %

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

Acquisition costs and other 36 27 9 33.3 % 36 75 (39) (52.0) %

Adjusted EBITDA $ 68,252 $ 55,961 $ 12,291 22.0 % $ 128,131 $ 107,912 $ 20,219 18.7 %

3 unchanged sentences

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

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

The same store pool includes all properties that were owned and in operation as of June 30, 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 June 30, 2024.

As of June 30, 2024, the same store pool consisted of 246 buildings aggregating approximately 14.7 million square feet representing approximately 81.2% 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.

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

The following table reflects the calculation of NOI, same store NOI and cash-basis same store NOI reconciled from net income for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

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

2024 2023 $ Change % Change 2024 2023 $ Change % Change

$ 35,696 $ 40,254 $ (4,558) (11.3) % $ 71,755 $ 63,585 $ 8,170 12.8 %

1 unchanged sentence

General and administrative 10,543 9,766 777 8.0 % 21,053 19,086 1,967 10.3 %

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

Acquisition costs and other 36 27 9 33.3 % 36 75 (39) (52.0) %

Total other income and expenses 1,188 (7,330) 8,518 n/a (2,180) (1,918) (262) 13.7 %

8 unchanged sentences

$ 55,662 $ 51,089 $ 4,573 9.0 % $ 110,507 $ 99,594 $ 10,913 11.0 %

Less termination fee income (100) (20) (80) 400.0 %

Less termination fee income (413) — (413) n/a (512) (20) (492) 2,460.0 %

Cash-basis same store NOI excluding termination fees $ 55,249 $ 51,089 $ 4,160 8.1 % $ 109,995 $ 99,574 $ 10,421 10.5 %

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.

1 Includes approximately $0.4 million and $0.2 million of lease termination income for the three months ended June 30, 2024 and 2023, respectively, and approximately $0.5 million and $0.2 million of lease termination income for the six months ended June 30, 2024 and 2023, respectively.

2 Includes 2023 and 2024 acquisitions and dispositions, one improved land parcel, nine properties under development or redevelopment and approximately 35.4 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.

Cash-basis same store NOI increased by approximately $4.6 million for the three months ended June 30, 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 June 30, 2024 and 2023, total contractual rent abatements of approximately $0.5 million and $1.7 million, respectively, were given to certain tenants in the same store pool and approximately $0.4 million and $0, respectively, in lease termination income was received from certain tenants in the same store pool.

In addition, approximately $0.3 million of the increase in cash-basis same store NOI for the three months ended June 30, 2024 related to properties that were acquired vacant or with near term expirations in 2022.

Cash-basis same store NOI increased by approximately $10.9 million for the six months ended June 30, 2024 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases.

For the six months ended June 30, 2024 and 2023, total contractual rent abatements of approximately $0.7 million and $3.5 million, respectively, were given to certain tenants in the same-store pool and approximately $0.5 million and $20,000, 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 six months ended June 30, 2024 related to properties that were acquired vacant or with near term expirations in 2022.

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.

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