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, 2024, which was filed with the Securities and Exchange Commission on February 5, 2025, 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; • a decline in economic activity caused by ongoing changes and negotiations of trade polices, tariffs and related government actions; • 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; • elevated 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 elevated 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; 19 Table of Contents • 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; • 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: New York City/Northern New Jersey, Los Angeles, Miami, San Francisco Bay Area, Seattle, and Washington, D.C. We invest in several types of industrial real estate, including warehouse/distribution (approximately 79.1% of our total annualized base rent as of March 31, 2025), flex (including light industrial and research and development, or R&D) (approximately 3.3%), transshipment (approximately 6.7%) and improved land (approximately 10.9%). 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, 2025, we owned a total of 298 buildings aggregating approximately 19.3 million square feet, 47 improved land parcels consisting of approximately 150.6 acres, five properties under development or redevelopment and approximately 22.4 acres of land for future development. As of March 31, 2025, our buildings and improved land parcels were approximately 96.6% and 95.1% leased, respectively, to 663 customers, the largest of which accounted for approximately 5.5% of our total annualized base rent. See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in our Annual Report on Form 10-K for the year ended December 31, 2024 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, 2025: Type Number of Buildings or Improved Land Parcels Annualized Base Rent (in thousands) 1 % of Total Warehouse/distribution 262 $ 259,336 79.1 % Flex 15 10,724 3.3 % Transshipment 21 21,954 6.7 % Improved land 47 35,755 10.9 % Total 345 $ 327,769 100.0 % 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, 2025, multiplied by 12. 20 Table of Contents The following table summarizes by market our investments in real estate as of March 31, 2025: Northern New Jersey/New York City Los Angeles Miami San Francisco Bay Area Seattle Washington, D.C. Total/Weighted Average Investments in Real Estate Number of Buildings 65 62 44 55 44 28 298 Rentable Square Feet 3,839,972 2,902,510 4,458,701 3,153,615 2,731,583 2,180,643 19,267,024 % of Total 19.9 % 15.1 % 23.1 % 16.4 % 14.2 % 11.3 % 100.0 % Occupancy % as of March 31, 2025 95.9 % 96.8 % 95.0 % 98.9 % 96.5 % 97.6 % 96.6 % Annualized Base Rent (in thousands) 1 $ 79,531 $ 43,286 $ 51,497 $ 50,884 $ 35,787 $ 31,029 $ 292,014 % of Total 27.3 % 14.8 % 17.6 % 17.4 % 12.3 % 10.6 % 100.0 % Annualized Base Rent 1 Per Occupied Square Foot $ 21.61 $ 15.40 $ 12.15 $ 16.32 $ 13.58 $ 14.58 $ 15.69 Weighted Average Remaining Lease Term (Years) 2 4.0 5.1 5.6 3.5 3.1 2.5 4.2 Investments in Improved Land Number of Land Parcels 13 15 3 4 10 2 47 Acres 62.3 30.9 9.9 14.3 25.9 7.3 150.6 % of Total 41.4 % 20.5 % 6.6 % 9.5 % 17.2 % 4.8 % 100.0 % Occupancy % as of March 31, 2025 100.0 % 96.4 % 100.0 % 100.0 % 75.7 % 100.0 % 95.1 % Annualized Base Rent (in thousands) 1 $ 14,158 $ 10,017 $ 2,210 $ 2,974 $ 4,984 $ 1,412 $ 35,755 % of Total 39.7 % 28.0 % 6.2 % 8.3 % 13.9 % 3.9 % 100.0 % Annualized Base Rent 1 Per Occupied Square Foot $ 5.21 $ 7.71 $ 5.13 $ 4.78 $ 5.83 $ 4.45 $ 5.71 Weighted Average Remaining Lease Term (Years) 2 3.6 2.2 8.1 5.7 2.9 8.3 4.0 Total Investments in Real Estate and Improved Land Annualized Base Rent (in thousands) 1 $ 93,689 $ 53,303 $ 53,707 $ 53,858 $ 40,771 $ 32,441 $ 327,769 % of Total Annualized Base Rent 1 28.6 % 16.3 % 16.4 % 16.4 % 12.4 % 9.9 % 100.0 % Gross Book Value (in thousands) 3 $ 1,342,257 $ 831,942 $ 1,095,063 $ 829,286 $ 618,449 $ 429,776 $ 5,146,773 % of Total Gross Book Value 26.0 % 16.2 % 21.3 % 16.1 % 12.0 % 8.4 % 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, 2025, multiplied by 12. 2 Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of March 31, 2025, weighted by the respective square footage. 3 Includes five properties under development or redevelopment that, upon completion, will consist of eight buildings aggregating approximately 0.8 million square feet and approximately 22.4 acres of land for future development. As of March 31, 2025, we owned five properties under development or redevelopment that, upon completion, will consist of eight buildings aggregating approximately 0.8 million square feet and approximately 22.4 acres of land for future development, with a total expected investment of approximately $392.8 million, including redevelopment costs, capitalized interest and other costs. 21 Table of Contents The following table summarizes our capital expenditures incurred during the three months ended March 31, 2025 and 2024 (dollars in thousands): For the Three Months Ended March 31, 2025 2024 Operating portfolio: Building and tenant improvements $ 9,152 $ 5,139 Leasing commissions 1,497 2,305 Total 1 $ 10,649 $ 7,444 Properties under development and redevelopment: Development, redevelopment, renovation and expansion $ 21,599 $ 34,756 1 Includes approximately $2.1 million and $2.0 million for the three months ended March 31, 2025 and 2024, respectively, of costs incurred related to leasing acquired vacancy, renovation and expansion projects (stabilization capital). 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 97.0% 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. 22 Table of Contents Our top 20 customers based on annualized base rent as of March 31, 2025 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 6 783,880 4.2 % 2.8 $ 17,747 5.5 % 2 FedEx Corporation 6 308,889 1.6 % 7.7 6,726 2.1 % 3 Imperial Bag & Paper Co LLC 1 505,729 2.6 % — 4,729 1.4 % 4 United States Government 8 316,796 1.6 % — 4,623 1.4 % 5 Meta Platforms, Inc. 2 299,775 1.6 % — 4,583 1.4 % 6 O'Neill Logistics 2 429,692 2.2 % — 4,546 1.4 % 7 Danaher 3 171,707 0.9 % — 4,201 1.3 % 8 District of Columbia 8 245,888 1.3 % — 3,692 1.1 % 9 Fisica Inc. (previously L3 Harris Applied Technologies, Inc.) 1 181,022 0.9 % — 3,627 1.1 % 10 MD Turbines Inc. 2 284,161 1.5 % — 3,580 1.1 % 11 International Cargo Terminals Inc. 1 31,601 0.2 % — 3,501 1.1 % 12 Motivate LLC 3 101,234 0.5 % — 3,070 0.9 % 13 Sentury Tire USA Inc. 1 161,787 0.8 % — 2,710 0.8 % 14 Lucid USA, Inc. 1 161,680 0.8 % — 2,676 0.8 % 15 Port Kearny Security, Inc. 1 — — % 16.9 2,546 0.8 % 16 Northrop Grumman Systems Corporation 2 148,458 0.8 % — 2,532 0.8 % 17 Sarcona Management Corporation 2 28,124 0.1 % 4.9 2,413 0.7 % 18 Triton Logistics Inc. 1 190,907 1.0 % — 2,349 0.7 % 19 B&B Granite Block Sales, LLC 1 — — % 7.2 2,336 0.7 % 20 Cryoport Systems, LLC 1 91,500 0.5 % — 2,251 0.7 % Total 53 4,442,830 23.1 % 39.5 $ 84,438 25.8 % 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, 2025, 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, 2025, multiplied by 12. The following tables summarize the anticipated lease expirations for leases in place as of March 31, 2025, 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 2025 (9 months) 1 1,507,750 7.8 % $ 28,336 7.6 % 2026 3,618,754 18.8 % 55,791 15.0 % 2027 2,908,434 15.1 % 48,841 13.1 % 2028 2,633,926 13.7 % 51,639 13.9 % 2029 2,142,366 11.1 % 42,819 11.5 % Thereafter 5,798,349 30.1 % 104,239 28.0 % Total 18,609,579 96.6 % $ 331,665 89.1 % 23 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 2025 (9 months) 4 15.8 10.5 % $ 4,603 1.2 % 2026 23.7 15.7 % 6,766 1.8 % 2027 15.8 10.5 % 5,175 1.4 % 2028 23.4 15.5 % 6,052 1.6 % 2029 14.2 9.4 % 3,366 0.9 % Thereafter 50.3 33.5 % 14,656 4.0 % Total 143.2 95.1 % $ 40,618 10.9 % Total Buildings and Improved Land Parcels: Year Total Annualized Base Rent (in thousands) 3 % of Total Annualized Base Rent 3 2025 (9 months) 5 $ 32,939 8.8 % 2026 62,557 16.8 % 2027 54,016 14.5 % 2028 57,691 15.5 % 2029 46,185 12.4 % Thereafter 118,895 32.0 % Total $ 372,283 100.0 % 1 Includes leases that expire on or after March 31, 2025 and month-to-month leases totaling approximately 43,026 square feet. Approximately 0.6 million square feet of the space expiring during 2025 has either been renewed or pre-leased as of March 31, 2025. 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, 2025, 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, 2025, multiplied by 12. 4 Includes leases that expire on or after March 31, 2025 and month-to-month leases totaling approximately 2.4 acres. 5 Includes leases that expire on or after March 31, 2025 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, 2025, leases representing approximately 8.8% of the total annualized base rent of our portfolio are scheduled to expire during the remainder of the year ending December 31, 2025. We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our remaining 2025 expirations will be above the rates currently being paid for the same space. Cash rent changes on new and renewed leases totaling approximately 0.6 million square feet and 4.3 acres of improved land commencing during the three months ended March 31, 2025 were approximately 34.2% higher as compared to the previous rental rates for that same space. We had a tenant retention ratio for the operating portfolio of 71.7% for the three months ended March 31, 2025. We had a tenant retention ratio for the improved land portfolio of 0.0% for the three months ended March 31, 2025. 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. 24 Table of Contents Recent Developments Development and Redevelopment Activity As of March 31, 2025, we had five properties under development or redevelopment that, upon completion, will consist of eight buildings aggregating approximately 0.8 million square feet. Additionally, we owned approximately 22.4 acres of land for future development that, upon completion, will consist of two buildings aggregating approximately 0.4 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, 2025: 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 Stabilization Quarter % Pre-leased March 31, 2025 Properties under development or redevelopment: Countyline Phase IV 4 Countyline Building 32 $ 40,100 $ 33,500 6.0 % 164,300 Q4 2025 50.0 % Countyline Building 33 39,900 36,900 5.9 % 158,000 Q3 2025 100.0 % Countyline Building 34 55,900 33,400 5.7 % 219,900 Q4 2025 69.5 % Paterson Plank III 35,200 34,200 3.8 % 47,300 Q3 2025 — % 139th Street 5 104,600 41,300 6.1 % 223,500 Q4 2027 — % Total/Weighted Average $ 275,700 $ 179,300 5.7 % 813,000 48.3 % Land for future development: Countyline Phase IV 4 Countyline Phase IV Land 117,100 38,500 6.0 % 433,200 2026-2027 N/A Total $ 117,100 $ 38,500 6.0 % 433,200 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, 2024 and in our other public filings. 4 “Countyline Phase IV” is a 121-acre project entitled for 2.2 million square feet of industrial distribution buildings located in Miami’s Countyline Corporate Park (“Countyline”), immediately adjacent to 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. 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. 25 Table of Contents During the three months ended March 31, 2025, we completed the redevelopment of one property. The following table summarizes certain information with respect to that redevelopment property completed during the three months ended March 31, 2025: Property Name Location Total Expected Investment (in thousands) 1 Estimated Stabilized Cap Rate 2 Post-Development Square Feet Post-Development Acreage Completion Quarter East Garry Avenue Santa Ana, CA $ 41,300 5.1 % 91,500 — Q1 2025 1 Total investment for the property 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. 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, 2024 and in our other public filings. We capitalized interest associated with development, redevelopment and expansion activities of approximately $1.3 million and $3.1 million during the three months ended March 31, 2025 and 2024, respectively. Disposition Activity The following table summarizes the properties we sold during the three months ended March 31, 2025 (dollars in thousands): Market Number of Properties Total Sales Price Total Gain San Francisco Bay Area 2 $ 24,880 $ 11,842 The following summarizes the condensed results of operations of the properties sold during the three months ended March 31, 2025 (dollars in thousands): For the Three Months Ended March 31, 2025 2024 Rental revenues $ 142 $ 301 Tenant expense reimbursements 21 91 Property operating expenses (13) (91) Depreciation and amortization (4) (100) Income from operations $ 146 $ 201 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 ($200.8 million remaining as of March 31, 2025) 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, 2025, we issued an aggregate of 3,506,371 shares of common stock at a weighted average offering price of $67.71 per share under the $500 Million ATM Program, resulting in net proceeds of approximately $234.0 million and paying total compensation to the applicable sales agents of approximately $3.4 million. Share Repurchase Program 26 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, 2026. 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, 2025, we had not repurchased any shares of our common stock pursuant to our share repurchase program. Dividend and Distribution Activity On May 6, 2025, our board of directors declared a cash dividend in the amount of $0.49 per share of our common stock payable on July 11, 2025 to the stockholders of record as of the close of business on June 27, 2025. Contractual Commitments As of May 6, 2025, we had two outstanding contracts with third-party sellers to acquire two industrial properties for a total purchase price of approximately $49.0 million. There is no assurance that we will acquire the properties under contract because the proposed acquisitions are subject to due diligence and various closing conditions. As of May 6, 2025, we had three non-binding letters of intent with third-party sellers to acquire three industrial properties for a total anticipated purchase price of approximately $75.8 million. In the normal course of its business, we enter into non-binding letters of intent to purchase properties from third parties that may obligate us to make payments or perform other obligations upon the occurrence of certain events, including the execution of a purchase and sale agreement and satisfactory completion of various due diligence matters. There can be no assurance that we will enter into a purchase and sale agreement with respect to these properties or otherwise complete any such prospective purchases on the terms described or at all. 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 may 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 68.0% 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. Trade Policies, Tariffs and Related Government Actions There have been significant changes, and continue to be ongoing discussion and commentary regarding potential significant changes, to U.S. and foreign trade policies, tariffs, non-tariff barriers and related government actions. Such changes and potential changes have created significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, tariffs and related government actions. These developments, or the perception that certain potential developments could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between certain foreign countries and the United States. Any of these impacts could depress economic activity, including consumption, and have a material adverse effect on the businesses of our current and future tenants as well as on our business, financial condition and results of operations. See Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q for additional disclosure regarding trade policies, tariffs and related government actions. 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 97.0% 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 27 Table of Contents paid to brokers and consultants, and interest expense, primarily on our revolving credit facility, term loans, mortgage loan 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, 2025 and 2024 includes the changes attributable to same store properties. The same store pool for the comparison of the three months ended March 31, 2025 and 2024 includes all properties that were owned and in operation as of March 31, 2025 and since January 1, 2024 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, 2025. As of March 31, 2025, the same store pool consisted of 251 buildings aggregating approximately 15.6 million square feet representing approximately 80.9% of our total square feet owned and 45 improved land parcels consisting of approximately 146.7 acres representing approximately 97.4% of our total acreage owned. As of March 31, 2025, the non-same store properties, which we acquired, developed or redeveloped, or sold during 2025 and 2024 or were held for sale or in development or redevelopment as of March 31, 2025, consisted of 47 buildings aggregating approximately 3.7 million square feet, two improved land parcels consisting of approximately 3.9 acres, five properties under development or redevelopment and approximately 22.4 acres of land for future development. As of March 31, 2025 and 2024, our consolidated same store pool occupancy was approximately 97.4% and 96.3%, respectively. Our future financial condition and results of operations, including rental revenues, straight-line rents and amortization of lease intangibles, may be impacted by the acquisitions of additional properties, and expenses may vary materially from historical results. 28 Table of Contents Comparison of the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024: For the Three Months Ended March 31, 2025 2024 $ Change % Change (Dollars in thousands) Rental revenues 1 Same store $ 66,864 $ 65,195 $ 1,669 2.6 % Non-same store operating properties 2 19,410 1,823 17,587 964.7 % Total rental revenues 86,274 67,018 19,256 28.7 % Tenant expense reimbursements 1 Same store 20,122 17,550 2,572 14.7 % Non-same store operating properties 2 4,024 462 3,562 771.0 % Total tenant expense reimbursements 24,146 18,012 6,134 34.1 % Total revenues 110,420 85,030 25,390 29.9 % Property operating expenses Same store 22,373 20,186 2,187 10.8 % Non-same store operating properties 2 6,394 704 5,690 808.2 % Total property operating expenses 28,767 20,890 7,877 37.7 % Net operating income 3 Same store 64,613 62,559 2,054 3.3 % Non-same store operating properties 2 17,040 1,581 15,459 977.8 % Total net operating income $ 81,653 $ 64,140 $ 17,513 27.3 % Other costs and expenses Depreciation and amortization 26,929 20,939 5,990 28.6 % General and administrative 11,734 10,510 1,224 11.6 % Acquisition costs and other 2 — 2 n/a Total other costs and expenses 38,665 31,449 7,216 22.9 % Other income (expense) Interest and other income 1,223 2,893 (1,670) (57.7) % Interest expense, including amortization (7,927) (5,240) (2,687) 51.3 % Gain on sales of real estate investments 11,842 5,715 6,127 107.2 % Total other (expense) income 5,138 3,368 1,770 52.6 % Net income $ 48,126 $ 36,059 $ 12,067 33.5 % 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 2025 and 2024 acquisitions and dispositions, two improved land parcels, five properties under development or redevelopment and approximately 22.4 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. 29 Table of Contents Revenues. Total revenues increased approximately $25.4 million for the three months ended March 31, 2025 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases during 2025 and 2024 and property acquisitions during 2024. Cash rents on new and renewed leases totaling approximately 0.6 million square feet and 4.3 acres of improved land commencing during the three months ended March 31, 2025 increased approximately 34.2% compared to the previous rental rates for that same space in the same period from the prior year. For the three months ended March 31, 2025 and 2024, approximately $3.5 million and $1.2 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants and approximately $0.2 million and $0.1 million, respectively, was recorded in lease termination revenue. Additionally, total revenues for both the three months ended March 31, 2025 and 2024 were partially offset by approximately $1.7 million and $0.3 million, respectively, of bad debt expense. Bad debt expense for the three months ended March 31, 2025 included a straight-line rent reserve of approximately $0.4 million related to a Seattle-based third-party logistics tenant that occupies approximately 0.1 million square feet at our Kent 188 property. Property operating expenses. Total property operating expenses increased approximately $7.9 million during the three months ended March 31, 2025 compared to the same period from the prior year. The increase in total property operating expenses was primarily due to an increase of approximately $5.7 million attributable to property acquisitions during 2024 as well as increases in insurance premiums and real estate taxes. Depreciation and amortization. Depreciation and amortization increased approximately $6.0 million during the three months ended March 31, 2025 compared to the same period from the prior year primarily due to property acquisitions during 2024. General and administrative expenses. General and administrative expenses increased approximately $1.2 million during the three months ended March 31, 2025 compared to the same period from the prior year primarily due to increased compensation expenses, including increased restricted stock amortization, Performance Share award 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 decreased approximately $1.7 million for the three months ended March 31, 2025 compared to the same period from the prior year primarily due to lower cash and cash equivalent balances and lower interest rates on those balances. Interest expense, including amortization. Interest expense increased approximately $2.7 million for the three months ended March 31, 2025 compared to the same period from the prior year. This was primarily due to a decrease in capitalized interest for the development and redevelopment properties. Gain on sales of real estate investments. Gain on sales of real estate investments increased approximately $6.1 million for the three months ended March 31, 2025 compared to the same period from the prior year. We recognized an aggregate gain of approximately $11.8 million from the sale of two properties during the three months ended March 31, 2025 and an aggregate gain of approximately $5.7 million from the sale of one property during the three months ended March 31, 2024. 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. 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. We may also assume debt in connection with property acquisitions which may have a higher loan-to-value ratio. 30 Table of Contents 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 The following sets forth certain information regarding our current at-the-market common stock offering program as of March 31, 2025: ATM Stock Offering Program Date Implemented Maximum Aggregate Offering Price (in thousands) Aggregate Common Stock Available (in thousands) $500 Million ATM Program August 28, 2024 $ 500,000 $ 200,836 The table below sets forth the activity under our at-the-market common stock offering program during the three months ended March 31, 2025 and 2024: For the Three Months Ended Shares Sold Weighted Average Price Per Share Net Proceeds (in thousands) Sales Commissions (in thousands) March 31, 2025 3,506,371 $ 67.71 $ 233,980 $ 3,443 March 31, 2024 2,353,278 $ 64.00 $ 148,424 $ 2,184 Debt Sources of Liquidity As of March 31, 2025, we had $50.0 million of senior unsecured notes that mature in July 2026, $50.0 million of senior unsecured notes that mature in October 2027, $100.0 million of senior unsecured notes that mature in July 2028, $100.0 million of senior unsecured notes that mature in December 2029, $125.0 million of senior unsecured notes that mature in August 2030, and $50.0 million of senior unsecured notes that mature in July 2031 (collectively, the “Senior Unsecured Notes”). The Amended Facility consists of a $600.0 million revolving credit facility that matures in January 2029, 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 March 31, 2025, there were no borrowings outstanding on the revolving credit facility and $200.0 million of borrowings outstanding on the term loans. As of December 31, 2024, there were $82.0 million of 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 $450.0 million to a maximum aggregate amount not to exceed $1.25 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 $600.0 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, 2025) for the revolving credit facility and 1.25% to 1.75% (1.25% as of March 31, 2025) 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 31 Table of Contents 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, 2025 and December 31, 2024. As of March 31, 2025 and December 31, 2024, we had a mortgage loan payable with a total contractual principal amount of approximately $72.9 million which bears interest at a contractual fixed interest rate of 3.9% and matures in March 2028. The mortgage was assumed in an acquisition and was recorded at fair value in the amount of $69.2 million using an effective interest rate of 5.6%. The unamortized fair value adjustment as of March 31, 2025 and December 31, 2024 was approximately $3.3 million and $3.6 million, respectively. As of March 31, 2025 and December 31, 2024, we held cash and cash equivalents totaling approximately $156.5 million and $18.1 million, respectively. The following tables summarize our debt maturities and principal payments as of March 31, 2025 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, 2025 and 2024 (dollars in thousands, except per share data): Credit Facility Term Loan Senior Unsecured Notes Mortgage Loan Payable Total Debt 2025 (9 months) $ — $ — $ — $ — $ — 2026 — — 50,000 — 50,000 2027 — 100,000 50,000 — 150,000 2028 — 100,000 100,000 72,879 272,879 2029 — — 100,000 — 100,000 Thereafter — — 175,000 — 175,000 Subtotal — 200,000 475,000 72,879 747,879 Unamortized fair value adjustment — — — (3,306) (3,306) Total Debt — 200,000 475,000 69,573 744,573 Deferred financing costs, net — (561) (1,930) (170) (2,661) Total Debt, net $ — $ 199,439 $ 473,070 $ 69,403 $ 741,912 Weighted average interest rate n/a 5.6% 3.0% 3.9% 3.8% 32 Table of Contents As of March 31, 2025 As of March 31, 2024 Total Debt, net $ 741,912 $ 771,770 Less: Cash and cash equivalents (156,502) (649,575) Net Debt $ 585,410 $ 122,195 Equity Common Stock Shares Outstanding 1 103,324,037 96,704,102 Market Price 2 $ 63.22 $ 66.40 Total Equity 6,532,146 6,421,152 Total Market Capitalization $ 7,274,058 $ 7,192,922 Total Debt-to-Total Investments in Properties 3 14.4% 18.8% Total Debt-to-Total Market Capitalization 4 10.2% 10.7% Floating Rate Debt as a % of Total Debt 5 26.9% 25.8% Net Income $ 48,126 $ 36,059 Adjusted EBITDA 6 $ 75,394 $ 59,879 Interest Coverage 7 9.5 x 11.4 x Fixed Charge Coverage 8 8.2 x 7.2 x Net Debt-to-Adjusted EBITDA 9 1.9 x 0.5 x Weighted Average Maturity of Total Debt (years) 3.5 4.1 1 Includes 446,411 and 422,563 shares of unvested restricted stock outstanding as of March 31, 2025 and 2024, respectively. Also includes 533,423 and 508,663 shares held in the Deferred Compensation Plan as of March 31, 2025 and 2024, respectively. 2 Closing price of a share of our common stock on the New York Stock Exchange on March 31, 2025 and March 28, 2024, 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, 2025 and 2024, 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, 2025: For the Three Months Ended Security Dividend per Share Declaration Date Record Date Date Paid March 31, 2025 Common Stock $ 0.49 February 4, 2025 March 27, 2025 April 4, 2025 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 $61.4 million for the three months ended March 31, 2025 compared to approximately $47.0 million for the three months ended March 31, 2024. This increase in cash provided by operating activities for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 is primarily attributable to additional cash flows generated from the properties acquired during 2024 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 $23.8 million and $48.6 million for the three months ended March 31, 2025 and 2024, respectively. Such amounts consisted primarily of additions to capital improvements of approximately $47.9 million and $40.1 million during the three months ended March 31, 2025 and 2024, respectively, and cash paid for property acquisitions of approximately $18.7 million in the three months ended March 31, 2024. Such amounts were partially offset by proceeds from sales of real estate investments during the three months ended March 31, 2025 and 2024 of approximately $24.0 million and $10.2 million, respectively. Cash From Financing Activities. Net cash provided by financing activities was approximately $101.2 million for the three months ended March 31, 2025, which consisted primarily of approximately $234.0 million in net proceeds from the issuance of common stock, and $50.0 million in revolving credit facility borrowings, partially offset by approximately $48.9 million in equity dividend payments, and repayment of $132.0 million of borrowings on the revolving credit facility. 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. 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, 2024 and in the condensed notes to consolidated financial statements in this Quarterly Report on Form 10-Q. Material Cash Commitments As of May 6, 2025, we had two outstanding contracts with third-party sellers to acquire two industrial properties for a total price of $49.0 million. There is no assurance that we will acquire the properties under contracts because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions. The following table summarizes our material cash commitments due by period as of March 31, 2025 (dollars in thousands): Material Cash Commitments Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total Debt $ — $ 372,879 $ 200,000 $ 175,000 $ 747,879 Debt interest payments 13,457 32,147 17,948 4,328 67,880 Operating lease commitments 962 1,942 1,111 — 4,015 Material construction contracts 18,034 — — — 18,034 Purchase obligations 1 49,000 — — — 49,000 Total $ 81,453 $ 406,968 $ 219,059 $ 179,328 $ 886,808 1 As of May 6, 2025. 34 Table of Contents Non-GAAP Financial Measures We use the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: funds from operations, or FFO, Adjusted EBITDA, net operating income, or NOI, same store NOI, 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, 2025 and 2024 (dollars in thousands except per share data): For the Three Months Ended March 31, 2025 2024 $ Change % Change Net income $ 48,126 $ 36,059 $ 12,067 33.5 % Gain on sales of real estate investments (11,842) (5,715) (6,127) 107.2 % Depreciation and amortization 26,929 20,939 5,990 28.6 % Non-real estate depreciation (36) (39) 3 (7.7) % Allocation to participating securities 1 (274) (227) (47) 20.7 % FFO attributable to common stockholders $ 62,903 $ 51,017 $ 11,886 23.3 % Basic FFO per common share $ 0.62 $ 0.57 $ 0.05 8.8 % Diluted FFO per common share $ 0.62 $ 0.57 $ 0.05 8.8 % Basic weighted average common shares outstanding 100,767,821 88,873,871 Diluted weighted average common shares outstanding 101,046,910 89,436,149 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 445,765 and 429,583 of weighted average unvested restricted shares outstanding for the three months ended March 31, 2025 and 2024, respectively. 35 Table of Contents FFO increased by approximately $11.9 million for the three months ended March 31, 2025 compared to the same period from the prior year due primarily to property acquisitions during 2024 as well as same store NOI growth of approximately $2.1 million for the three months ended March 31, 2025 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 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 months ended March 31, 2025 compared to the same period from the prior year. Additionally, the increase in FFO for both the three months ended March 31, 2025 and 2024 was also partially offset by approximately $1.7 million and $0.3 million, respectively, of bad debt expense. Bad debt expense for the three months ended March 31, 2025 included a straight-line rent reserve of approximately $0.4 million related to a Seattle-based third-party logistics tenant that occupies approximately 0.1 million square feet at our Kent 188 property. 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, 2025 and 2024 (dollars in thousands): For the Three Months Ended March 31, 2025 2024 $ Change % Change Net income $ 48,126 $ 36,059 $ 12,067 33.5 % Gain on sales of real estate investments (11,842) (5,715) (6,127) 107.2 % Depreciation and amortization 26,929 20,939 5,990 28.6 % Interest expense, including amortization 7,927 5,240 2,687 51.3 % Stock-based compensation 4,252 3,356 896 26.7 % Acquisition costs and other 2 — 2 n/a Adjusted EBITDA $ 75,394 $ 59,879 $ 15,515 25.9 % 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, 2025 and since January 1, 2024 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, 2025. As of March 31, 2025, the same store pool consisted of 251 buildings aggregating approximately 15.6 million square feet representing approximately 80.9% of our total square feet owned and 45 improved land parcels containing approximately 146.7 acres representing approximately 97.4% 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, 2025 and 2024 (dollars in thousands): For the Three Months Ended March 31, 2025 2024 $ Change % Change Net income 1 $ 48,126 $ 36,059 $ 12,067 33.5 % Depreciation and amortization 26,929 20,939 5,990 28.6 % General and administrative 11,734 10,510 1,224 11.6 % Acquisition costs and other 2 — 2 n/a Total other income and expenses (5,138) (3,368) (1,770) 52.6 % Net operating income 81,653 64,140 17,513 27.3 % Less non-same store NOI (17,040) 2 (1,581) 2 (15,459) 977.8 % Same store NOI $ 64,613 $ 62,559 $ 2,054 3.3 % Less straight-line rents and amortization of lease intangibles 3 (2,711) (4,689) 1,978 (42.2) % Cash-basis same store NOI $ 61,902 $ 57,870 $ 4,032 7.0 % Less termination fee income (116) (87) (29) 33.3 % Cash-basis same store NOI excluding termination fees $ 61,786 $ 57,783 $ 4,003 6.9 % 1 Includes approximately $0.2 million and $0.1 million of lease termination income for the three months ended March 31, 2025 and 2024, respectively. 2 Includes 2025 and 2024 acquisitions and dispositions, two improved land parcels, five properties under development or redevelopment and approximately 22.4 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 $4.0 million for the three months ended March 31, 2025 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, 2025 and 2024, total contractual rent abatements of approximately $1.2 million and $1.1 million, respectively, were given to certain tenants in the same store pool and approximately $0.1 million and $0.1 million, respectively, in lease termination income was received from certain tenants in the same store pool. In addition, approximately $0.5 million of the increase in cash-basis same store NOI for the three months ended March 31, 2025 related to properties that were acquired vacant or with near term expirations in 2024. 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.