Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
Form 10-Q
_________________________
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20192020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number 001-34603
_________________________
Terreno Realty CorporationCorporation
(Exact Name of Registrant as Specified in Its Charter)
_________________________
Maryland27-1262675
(State or Other Jurisdiction of
Incorporation or Organization)		(I.R.S. Employer
Identification No.)
Maryland27-1262675
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
101 Montgomery Street,Suite 200
San Francisco, CA
94104
San Francisco,CA
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code: (415) (415) 655-4580
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareTRNONew York Stock Exchange
_________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒ 
The registrant had 65,543,89268,322,713 shares of its common stock, $0.01 par value per share, outstanding as of July 26, 2019.
August 3, 2020.



Table of Contents
Terreno Realty Corporation
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements of Terreno Realty Corporation (unaudited)
Consolidated Balance Sheets as of June 30, 20192020 and December 31, 20182019
2
Consolidated Statements of Operations for the three and six months ended June 30, 20192020 and 20182019
3
Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 20192020 and 20182019
4
Consolidated Statements of Equity for the six months ended June 30, 20192020 and 20182019
5
Consolidated Statements of Cash Flows for the sixsix months ended June 30, 20192020 and 20182019
67
Condensed Notes to Consolidated Financial Statements
78
Management’s Discussion and Analysis of Financial Condition and Results of Operations
23
Quantitative and Qualitative Disclosures About Market Risk
4344
Controls and Procedures
4344
PART II. OTHER INFORMATION
Legal Proceedings
4445
Risk Factors
4445
Unregistered Sales of Equity Securities and Use of Proceeds
4446
Defaults Upon Senior Securities
4446
Mine Safety Disclosures
4446
Other Information
4446
Exhibits
4548
4649


1
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements of Terreno Realty Corporation
Terreno Realty Corporation
Consolidated Balance Sheets
(in thousands – except share and per share data)
June 30, 2019 December 31, 2018June 30, 2020December 31, 2019
(Unaudited)   (Unaudited) 
ASSETS   ASSETS
Investments in real estate   Investments in real estate
Land$930,180
 $833,995
Land$1,077,501  $1,055,146  
Buildings and improvements869,907
 837,816
Buildings and improvements901,215  909,201  
Construction in progress101,080
 94,695
Construction in progress89,813  101,253  
Intangible assets86,183
 79,270
Intangible assets87,791  88,594  
Total investments in properties1,987,350
 1,845,776
Total investments in properties2,156,320  2,154,194  
Accumulated depreciation and amortization(189,719) (169,772)Accumulated depreciation and amortization(218,971) (208,279) 
Net investments in propertiesNet investments in properties1,937,349  1,945,915  
Properties held for sale, netProperties held for sale, net11,825  —  
Net investments in real estate1,797,631
 1,676,004
Net investments in real estate1,949,174  1,945,915  
Cash and cash equivalents117,188
 31,004
Cash and cash equivalents148,269  110,082  
Restricted cash2,976
 3,475
Restricted cash515  2,657  
Senior secured loan, net15,773
 54,492
Senior secured loan, net—  15,858  
Other assets, net33,990
 31,529
Other assets, net37,448  33,952  
Total assets$1,967,558
 $1,796,504
Total assets$2,135,406  $2,108,464  
LIABILITIES AND EQUITY   LIABILITIES AND EQUITY
Liabilities   Liabilities
Credit facility$—
 $19,000
Credit facility$—  $—  
Term loans payable, net149,231
 149,067
Term loans payable, net99,687  99,583  
Senior unsecured notes, net248,413
 248,263
Senior unsecured notes, net347,869  347,674  
Mortgage loans payable, net45,050
 45,767
Mortgage loans payable, net11,488  44,318  
Security deposits12,880
 11,933
Security deposits14,368  14,149  
Intangible liabilities, net27,496
 23,093
Intangible liabilities, net25,867  28,127  
Dividends payable15,719
 14,643
Dividends payable18,485  18,158  
Performance share awards payable8,979
 12,048
Performance share awards payable5,069  11,633  
Accounts payable and other liabilities23,612
 24,893
Accounts payable and other liabilities23,307  27,699  
Total liabilities531,380
 548,707
Total liabilities546,140  591,341  
Commitments and contingencies (Note 13)

 

Commitments and contingencies (Note 13)
Equity   Equity
Stockholders’ equity   Stockholders’ equity
Common stock: $0.01 par value, 400,000,000 shares authorized, and 65,495,713 and 61,013,711 shares issued and outstanding, respectively656
 610
Common stock: $0.01 par value, 400,000,000 shares authorized, and 68,322,213 and 67,252,787 shares issued and outstanding, respectivelyCommon stock: $0.01 par value, 400,000,000 shares authorized, and 68,322,213 and 67,252,787 shares issued and outstanding, respectively684  673  
Additional paid-in capital1,426,860
 1,233,763
Additional paid-in capital1,587,057  1,514,266  
Common stock held in deferred compensation plan, 139,224 and 0 shares at June 30, 2020 and December 31, 2019, respectivelyCommon stock held in deferred compensation plan, 139,224 and 0 shares at June 30, 2020 and December 31, 2019, respectively(7,546) —  
Retained earnings9,268
 14,185
Retained earnings9,389  2,621  
Accumulated other comprehensive loss(606) (761)Accumulated other comprehensive loss(318) (437) 
Total stockholders’ equity1,436,178
 1,247,797
Total stockholders’ equity1,589,266  1,517,123  
Total liabilities and equity$1,967,558
 $1,796,504
Total liabilities and equity$2,135,406  $2,108,464  
The accompanying condensed notes are an integral part of these consolidated financial statements.

2
Table of Contents
Terreno Realty Corporation
Consolidated Statements of Operations
(in thousands – except share and per share data)
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended June 30,For the Six Months Ended June 30,
2019 2018 2019 2018 2020201920202019
REVENUES       REVENUES
Rental revenues and tenant expense reimbursements$41,730
 $37,238
 $82,610
 $74,345
Rental revenues and tenant expense reimbursements$45,742  $41,730  $90,858  $82,610  
Total revenues41,730
 37,238
 82,610
 74,345
Total revenues45,742  41,730  90,858  82,610  
COSTS AND EXPENSES       COSTS AND EXPENSES
Property operating expenses10,709
 10,313
 21,402
 20,206
Property operating expenses11,934  10,709  23,842  21,402  
Depreciation and amortization10,648
 9,774
 21,063
 20,509
Depreciation and amortization11,459  10,648  22,559  21,063  
General and administrative6,757
 5,007
 12,720
 10,085
General and administrative5,665  6,757  11,423  12,720  
Acquisition costs1
 5
 1
 7
Acquisition costs11  1  63  1  
Total costs and expenses28,115
 25,099
 55,186
 50,807
Total costs and expenses29,069  28,115  57,887  55,186  
OTHER INCOME (EXPENSE)       OTHER INCOME (EXPENSE)
Interest and other income817
 921
 2,339
 981
Interest and other income190  817  754  2,339  
Interest expense, including amortization(4,053) (4,626) (8,317) (9,311)Interest expense, including amortization(3,909) (4,053) (7,915) (8,317) 
Gain on sales of real estate investments—
 11,703
 4,465
 14,986
Gain on sales of real estate investments17,750  —  17,750  4,465  
Total other income (expense)(3,236) 7,998
 (1,513) 6,656
Total other income (expense)14,031  (3,236) 10,589  (1,513) 
Net income10,379
 20,137
 25,911
 30,194
Net income30,704  10,379  43,560  25,911  
Allocation to participating securities(64) (125) (162) (190)Allocation to participating securities(194) (64) (277) (162) 
Net income available to common stockholders$10,315
 $20,012
 $25,749
 $30,004
Net income available to common stockholders$30,510  $10,315  $43,283  $25,749  
EARNINGS PER COMMON SHARE - BASIC AND DILUTED:       EARNINGS PER COMMON SHARE - BASIC AND DILUTED:
Net income available to common stockholders - basic$0.16
 $0.35
 $0.41
 $0.54
Net income available to common stockholders - basic$0.45  $0.16  $0.64  $0.41  
Net income available to common stockholders - diluted$0.16
 $0.35
 $0.41
 $0.54
Net income available to common stockholders - diluted$0.45  $0.16  $0.64  $0.41  
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING63,780,645
 56,698,959
 62,625,224
 55,917,610
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING67,622,005  63,780,645  67,342,293  62,625,224  
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING64,075,215
 56,698,959
 62,919,794
 55,917,610
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING68,029,144  64,075,215  67,749,432  62,919,794  
The accompanying condensed notes are an integral part of these consolidated financial statements.

3
Table of Contents
Terreno Realty Corporation
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(Unaudited)
For the Three Months Ended June 30, For the Six Months Ended June 30, For the Three Months Ended June 30,For the Six Months Ended June 30,
2019 2018 2019 2018 2020201920202019
Net income$10,379
 $20,137
 $25,911
 $30,194
Net income$30,704  $10,379  $43,560  $25,911  
Other comprehensive income (loss):       Other comprehensive income (loss):
Cash flow hedge adjustment92
 78
 155
 162
Cash flow hedge adjustment46  92  119155  
Comprehensive income$10,471
 $20,215
 $26,066
 $30,356
Comprehensive income$30,750  $10,471  $43,679  $26,066  
The accompanying condensed notes are an integral part of these consolidated financial statements.

4
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Terreno Realty Corporation
Consolidated Statements of Equity
(in thousands – except share data)
(Unaudited)
Six months ended June 30, 2019:2020:
 Common StockAdditional
Paid-
in Capital		Common Shares Held in Deferred Compensation PlanDeferred Compensation Plan Accumulated
Other Comprehensive
Loss		 
Number of
Shares		AmountRetained
Earnings		Total
Balance as of December 31, 201967,252,787$673  $1,514,266  —$—  $2,621  $(437) $1,517,123  
Net income—————12,856—12,856
Issuance of common stock, net of issuance costs of $426562,521429,647————29,651
Repurchase of common stock related to employee awards(4,510)—(240)————(240)
Issuance of restricted stock20,501———————
Stock-based compensation——1,573————1,573
Common stock dividends ($0.27 per share)—————(18,314)—(18,314)
Deposits to deferred compensation plan(135,494)—7,346135,494(7,346)———
Other comprehensive income——————7373
Balance as of March 31, 202067,695,805$677  $1,552,592  135,494$(7,346) $(2,837) $(364) $1,542,722  
Net income—————30,704—30,704
Issuance of common stock, net of issuance costs of $630630,490732,068————32,075
Forfeiture of common stock related to employee awards(352)———————
Stock-based compensation——2,197————2,197
Common stock dividends ($0.27 per share)—————(18,478)—(18,478)
Deposits to deferred compensation plan(3,730)—2003,730(200)———
Other comprehensive income——————4646
Balance as of June 30, 202068,322,213$684  $1,587,057  139,224$(7,546) $9,389  $(318) $1,589,266  
 Common Stock 
Additional
Paid-
in Capital
   
Accumulated
Other Comprehensive
Loss
  
 
Number of
Shares
 Amount  
Retained
Earnings
  Total
Balance as of December 31, 201861,013,711
 $610
 $1,233,763
 $14,185
 $(761) $1,247,797
Net income—
 —
 —
 15,532
 —
 15,532
Issuance of common stock, net of issuance costs of $1,4272,184,888
 22
 87,902
 —
 —
 87,924
Repurchase of common stock related to employee awards(99,999) —
 (3,959) —
 —
 (3,959)
Issuance of restricted stock30,294
 —
 —
 —
 —
 —
Stock-based compensation—
 —
 928
 —
 —
 928
Common stock dividends ($0.24 per share)—
 —
 —
 (15,109) —
 (15,109)
Other comprehensive income—
 —
 —
 —
 63
 63
Balance as of March 31, 201963,128,894
 $632
 $1,318,634
 $14,608
 $(698) $1,333,176
Net income—
 —
 —
 10,379
 —
 10,379
Issuance of common stock, net of issuance costs of $1,7182,386,470
 24
 106,958
 —
 —
 106,982
Cancellation of common stock related to employee awards(19,651) —
 —
 —
 —
 —
Stock-based compensation—
 —
 1,268
 —
 —
 1,268
Common stock dividends ($0.24 per share)—
 —
 —
 (15,719) —
 (15,719)
Other comprehensive income—
 —
 —
 —
 92
 92
Balance as of June 30, 201965,495,713
 $656
 $1,426,860
 $9,268
 $(606) $1,436,178

Six months ended June 30, 2018:2019:
 Common StockAdditional
Paid-
in Capital		 Accumulated
Other Comprehensive
Loss		 
Number of
Shares		AmountRetained
Earnings		Total
Balance as of December 31, 201861,013,711$610  $1,233,763  $14,185  $(761) $1,247,797  
Net income——  —  15,532  —  15,532  
Issuance of common stock, net of issuance costs of $1,4272,184,88822  87,902  —  —  87,924  
Repurchase of common stock related to employee awards(99,999)—  (3,959) —  —  (3,959) 
Issuance of restricted stock30,294—  —  —  —  —  
Stock-based compensation——  928  —  —  928  
Common stock dividends ($0.24 per share)——  —  (15,109) —  (15,109) 
Other comprehensive income——  —  —  63  63  
Balance as of March 31, 201963,128,894  $632  $1,318,634  $14,608  $(698) $1,333,176  
Net income——  —  10,379  —  10,379  
Issuance of common stock, net of issuance costs of $1,7182,386,47024  106,958  —  —  106,982  
Forfeiture of common stock related to employee awards(19,651)—  —  —  —  —  
Stock-based compensation——  1,268  —  —  1,268  
Common stock dividends ($0.24 per share)——  —  (15,719) —  (15,719) 
Other comprehensive income——  —  —  92  92  
Balance as of June 30, 201965,495,713  $656  $1,426,860  $9,268  $(606) $1,436,178  
 Common Stock 
Additional
Paid-
in Capital
   
Accumulated
Other Comprehensive
Loss
  
 
Number of
Shares
 Amount  
Retained
Earnings
  Total
Balance as of December 31, 201755,368,737
 $553
 $1,023,184
 $4,803
 $(1,046) $1,027,494
Net income—
 —
 —
 10,057
 —
 10,057
Issuance of common stock, net of issuance costs of $132255,197
 3
 8,701
 —
 —
 8,704
Repurchase of common stock related to employee awards(107,267) —
 (3,870) —
 —
 (3,870)
Issuance of restricted stock27,003
 —
 —
 —
 —
 —
Stock-based compensation—
 —
 463
 —
 —
 463
Common stock dividends ($0.22 per share)—
 —
 —
 (12,220) —
 (12,220)
Other comprehensive income—
 —
 —
 —
 84
 84
Balance as of March 31, 201855,543,670
 $556
 $1,028,478
 $2,640
 $(962) $1,030,712
Net income—
 —
 —
 20,137
 —
 20,137
Issuance of common stock, net of issuance costs of $1,7172,835,823
 28
 104,170
 —
 —
 104,198
Stock-based compensation—
 —
 820
 —
 —
 820
Common stock dividends ($0.22 per share)—
 —
 —
 (12,843) —
 (12,843)
Other comprehensive income—
 —
 —
 —
 78
 78
Balance as of June 30, 201858,379,493
 $584
 $1,133,468
 $9,934
 $(884) $1,143,102

The accompanying condensed notes are an integral part of these consolidated financial statements.

5
Table of Contents
Terreno Realty Corporation
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
For the Six Months Ended June 30, For the Six Months Ended June 30,
2019 2018 20202019
CASH FLOWS FROM OPERATING ACTIVITIES   CASH FLOWS FROM OPERATING ACTIVITIES
Net income$25,911
 $30,194
Net income$43,560  $25,911  
Adjustments to reconcile net income to net cash provided by operating activities   Adjustments to reconcile net income to net cash provided by operating activities
Straight-line rents(1,685) (2,199)Straight-line rents(1,218) (1,685) 
Amortization of lease intangibles(1,888) (1,775)Amortization of lease intangibles(2,748) (1,888) 
Depreciation and amortization21,063
 20,509
Depreciation and amortization22,559  21,063  
Gain on sales of real estate investments(4,465) (14,986)Gain on sales of real estate investments(17,750) (4,465) 
Deferred financing cost amortization779
 715
Deferred financing cost amortization692  779  
Deferred senior secured loan fee amortization(446) (98)Deferred senior secured loan fee amortization(57) (446) 
Stock-based compensation6,160
 4,229
Stock-based compensation4,495  6,160  
Changes in assets and liabilities   Changes in assets and liabilities
Other assets(1,670) (2,092)Other assets(3,111) (1,670) 
Accounts payable and other liabilities186
 1,151
Accounts payable and other liabilities(1,049) 186  
Net cash provided by operating activities43,945
 35,648
Net cash provided by operating activities45,373  43,945  
CASH FLOWS FROM INVESTING ACTIVITIES   CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property acquisitions(73,210) (100,881)Cash paid for property acquisitions(40,374) (73,210) 
Proceeds from sales of real estate investments, net11,980
 42,991
Proceeds from sales of real estate investments, net49,690  11,980  
Additions to construction in progress(13,810) (2,469)Additions to construction in progress(4,742) (13,810) 
Additions to buildings, improvements and leasing costs(18,017) (13,327)Additions to buildings, improvements and leasing costs(14,953) (18,017) 
Cash paid for senior secured loan—
 (55,000)
Origination and other fees received on senior secured loan—
 900
Net cash used in investing activities(93,057) (127,786)
Repayments on senior secured loanRepayments on senior secured loan15,915  —  
Net cash provided by (used in) investing activitiesNet cash provided by (used in) investing activities5,536  (93,057) 
CASH FLOWS FROM FINANCING ACTIVITIES   CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock191,018
 107,991
Issuance of common stock55,492  191,018  
Issuance costs on issuance of common stock(2,761) (1,566)Issuance costs on issuance of common stock(805) (2,761) 
Repurchase of common stock(3,959) (3,870)Repurchase of common stock(240) (3,959) 
Borrowings on credit facility17,000
 98,350
Borrowings on credit facility—  17,000  
Payments on credit facility(36,000) (93,000)Payments on credit facility—  (36,000) 
Payments on mortgage loans payable(749) (945)
Payment of deferred financing costs—
 (10)
Payments on mortgage loan payablePayments on mortgage loan payable(32,846) (749) 
Dividends paid to common stockholders(29,752) (24,401)Dividends paid to common stockholders(36,465) (29,752) 
Net cash provided by financing activities134,797
 82,549
Net increase (decrease) in cash and cash equivalents and restricted cash85,685
 (9,589)
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(14,864) 134,797  
Net increase in cash and cash equivalents and restricted cashNet increase in cash and cash equivalents and restricted cash36,045  85,685  
Cash and cash equivalents and restricted cash at beginning of period34,479
 42,800
Cash and cash equivalents and restricted cash at beginning of period112,739  34,479  
Cash and cash equivalents and restricted cash at end of period$120,164
 $33,211
Cash and cash equivalents and restricted cash at end of period$148,784  $120,164  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION   SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of capitalized interest$9,763
 $9,364
Cash paid for interest, net of capitalized interest$8,394  $9,763  
Supplemental disclosures of non-cash transactions   Supplemental disclosures of non-cash transactions
Accounts payable related to capital improvements$9,575
 $6,704
Accounts payable related to capital improvements9,426  9,575  
Non-cash issuance of common stock to the deferred compensation plan Non-cash issuance of common stock to the deferred compensation plan(7,546) —  
Lease liability arising from recognition of right-of-use asset Lease liability arising from recognition of right-of-use asset523  766  
Non-cash repayment of senior secured loan(39,085) —
 Non-cash repayment of senior secured loan—  (39,085) 
Lease liability arising from recognition of right-of-use asset766
 —
Reconciliation of cash paid for property acquisitions   Reconciliation of cash paid for property acquisitions
Acquisition of properties$80,310
 $103,714
Acquisition of properties$41,057  $80,310  
Assumption of other assets and liabilities(7,100) (2,833)Assumption of other assets and liabilities(683) (7,100) 
Net cash paid for property acquisitions$73,210
 $100,881
Net cash paid for property acquisitions$40,374  $73,210  
The accompanying condensed notes are an integral part of these consolidated financial statements.

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Terreno Realty Corporation
Condensed Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Organization
Terreno Realty Corporation (“Terreno”, and together with its subsidiaries, the “Company”) acquires, owns and operates industrial real estate in six6 major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. All square feet, acres, occupancy and number of properties disclosed in these condensed notes to the consolidated financial statements are unaudited. As of June 30, 2019,2020, the Company owned 209218 buildings (including one building held for sale) aggregating approximately 13.013.1 million square feet, 1722 improved land parcels consisting of approximately 74.785.0 acres and four2 properties under redevelopment (including one property held for sale) expected to contain approximately 0.60.5 million square feet upon completion.
The Company is an internally managed Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2010.
Note 2. Significant Accounting Policies
Basis of Presentation. The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. In management’s opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The interim consolidated financial statements include all of the Company’s accounts and its subsidiaries and all intercompany balances and transactions have been eliminated in consolidation. The financial statements should be read in conjunction with the financial statements contained in the Company’s 2018 Annual Report on Form 10-K for the year ended December 31, 2019 and the notes thereto, which was filed with the Securities and Exchange Commission on February 6, 2019.2020.
Use of Estimates. The preparation of the interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Capitalization of Costs. The Company capitalizes costs directly related to the redevelopment, renovation and expansion of its investment in real estate. Costs associated with such projects are capitalized as incurred. If the project is abandoned, these costs are expensed during the period in which the redevelopment, renovation or expansion project is abandoned. Costs considered for capitalization include, but are not limited to, construction costs, interest, real estate taxes and insurance, if appropriate. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress. In the event that the activities to ready the asset for its intended use are suspended, the capitalization period will cease until such activities are resumed. Costs incurred for maintaining and repairing properties, which do not extend their useful lives, are expensed as incurred.
Interest is capitalized based on actual capital expenditures from the period when redevelopment, renovation or expansion commences until the asset is ready for its intended use, at the weighted average borrowing rate during the period.
Investments in Real Estate. Investments in real estate, including tenant improvements, leasehold improvements and leasing costs, are stated at cost, less accumulated depreciation, unless circumstances indicate that the cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. The Company also reviews the impact of above and below-market leases, in-place leases and lease origination costs for acquisitions and records an intangible asset or liability accordingly.
Impairment. Carrying values for financial reporting purposes are reviewed for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. Examples of such events or changes in circumstances may include classifying an asset to be held for sale, changing the intended hold period or when an asset remains vacant significantly longer than expected. The intended use of an asset either held for sale or held for use can significantly impact how impairment is measured. If an asset is intended to be held for the long-term, the recoverability is based on the undiscounted future cash flows. If the asset carrying value is not supported on an undiscounted

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undiscounted future cash flow basis, then the asset carrying value is measured against the lower of cost or the present value of expected cash flows over the expected hold period. An impairment charge to earnings is recognized for the excess of the asset’s carrying value over the lower of cost or the present values of expected cash flows over the expected hold period. If an asset is intended to be sold, impairment is determined using the estimated fair value less costs to sell. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions, among other things, regarding current and future economic and market conditions and the availability of capital. The Company determines the estimated fair values based on its assumptions regarding rental rates, lease-up and holding periods, as well as sales prices. When available, current market information is used to determine capitalization and rental growth rates. If available, current comparative sales values may also be used to establish fair value. When market information is not readily available, the inputs are based on the Company’s understanding of market conditions and the experience of the Company’s management team. Actual results could differ significantly from the Company’s estimates. The discount rates used in the fair value estimates represent a rate commensurate with the indicated holding period with a premium layered on for risk. There were no0 impairment charges recorded to the carrying values of the Company’s properties during the three or six months ended June 30, 20192020 or 2018.2019.
Loans Held-for-Investment.Held-for-Investment. Loans that are held-for-investment are carried at cost, net of loan fees and origination costs, as applicable, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of loans that are held-for-investment. Theheld-for-investment. Prior to the adoption of ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”), the Company evaluatesevaluated its senior secured loan (the “Senior Secured Loan”), which iswas classified as held-for-investment, for impairment quarterly. If the Senior Secured Loan iswas considered to be impaired, the Company recordswould record an allowance through the provision for Senior Secured Loan losses to reduce the carrying value of the Senior Secured Loan to the present value of expected future cash flows discounted at the Senior Secured Loan’s contractual effective rate or the fair value of the collateral, if repayment iswas expected solely from the collateral. Actual losses, if any, could differ significantly from the Company’s estimates. ThereThe Senior Secured Loan was fully repaid during the three months ended June 30, 2020 and there were no0 impairment charges recorded to the carrying value of the Senior Secured Loan during the three or six months ended June 30, 20192020 or 2018.2019.
On January 1, 2020, the Company adopted ASC 326 on a prospective basis, which had no material impact to the Company's consolidated financial statements. ASC 326 replaces the current “incurred loss” model with an “expected loss” model that requires consideration of a broader range of information used under the incurred losses model. Under ASC 326, the Company is required to re-evaluate the expected loss of its loans portfolio at each balance sheet date. For the three and six months ended June 30, 2020, the Company had no allowances for loan losses.
Property Acquisitions. In accordance with Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not considered a business. To be a business, the set of acquired activities and assets must include inputs and one or more substantive processes that together contribute to the ability to create outputs. The Company has determined that its real estate property acquisitions will generally be accounted for as asset acquisitions under the clarified definition. Upon acquisition of a property the Company estimates the fair value of acquired tangible assets (consisting generally of land, buildings and improvements) and intangible assets and liabilities (consisting generally of the above and below-market leases and the origination value of all in-place leases). The Company determines fair values using Level 3 inputs such as replacement cost, estimated cash flow projections and other valuation techniques and applying appropriate discount and capitalization rates based on available market information. Mortgage loans assumed in connection with acquisitions are recorded at their fair value using current market interest rates for similar debt at the date of acquisition. Acquisition-related costs associated with asset acquisitions are capitalized to individual tangible and intangible assets and liabilities assumed on a relative fair value basis and acquisition-related costs associated with business combinations are expensed as incurred.
The fair value of the tangible assets is determined by valuing the property as if it were vacant. Land values are derived from current comparative sales values, when available, or management’s estimates of the fair value based on market conditions and the experience of the Company’s management team. Building and improvement values are calculated as replacement cost less depreciation, or management’s estimates of the fair value of these assets using discounted cash flow analyses or similar methods. The fair value of the above and below-market leases is based on the present value of the difference between the contractual amounts to be received pursuant to the acquired leases (using a discount rate that reflects the risks associated with the acquired leases) and the Company’s estimate of the market lease rates measured over a period equal to the remaining term of the leases plus the term of any below-market fixed rate renewal options. The above and below-market lease values are amortized to rental revenues over the remaining initial term plus the term of any below-market fixed rate renewal options that are considered bargain renewal options of the respective leases. The total net impact to rental revenues due to the amortization of above and below-market leases was a net increase of approximately $1.0$1.3 million and $0.9$1.0 million for the three months ended June 30, 20192020 and 2018,2019, respectively, and approximately $1.9$2.7 million and $1.8$1.9 million, for the six months ended June 30, 2019 2020
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and 2018,2019, respectively. The origination value of in-place leases is based on costs to execute similar leases, including commissions and other related costs. The origination value of in-place leases also includes real estate taxes, insurance and an estimate of lost rental revenue at market rates during the estimated time required to lease up the property from vacant to the occupancy level at the date of acquisition. The remaining weighted average lease term related to these intangible assets and liabilities as of June 30, 20192020 is 8.48.1 years. As of June 30, 20192020 and December 31, 2018,2019, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):

 June 30, 2019 December 31, 2018
 Gross 
Accumulated
Amortization
 Net Gross 
Accumulated
Amortization
 Net
In-place leases$82,014
 $(55,614) $26,400
 $75,101
 $(51,239) $23,862
Above-market leases4,169
 (3,731) 438
 4,169
 (3,610) 559
Below-market leases(40,806) 13,310
 (27,496) (34,485) 11,392
 (23,093)
Total$45,377
 $(46,035) $(658) $44,785
 $(43,457) $1,328

 June 30, 2020December 31, 2019
 GrossAccumulated
Amortization		NetGrossAccumulated
Amortization		Net
In-place leases$83,829  $(62,391) $21,438  $84,425  $(59,504) $24,921  
Above-market leases3,966  (3,732) 234  4,169  (3,853) 316  
Below-market leases(44,321) 18,454  (25,867) (44,099) 15,972  (28,127) 
Total$43,474  $(47,669) $(4,195) $44,495  $(47,385) $(2,890) 
Depreciation and Useful Lives of Real Estate and Intangible Assets. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets or liabilities. The following table reflects the standard depreciable lives typically used to compute depreciation and amortization. However, such depreciable lives may be different based on the estimated useful life of such assets or liabilities.
DescriptionStandard Depreciable Life
LandNot depreciated
Building40 years
Building Improvements5-40 years
Tenant ImprovementsShorter of lease term or useful life
Leasing CostsLease term
In-place LeasesLease term
Above/Below-Market LeasesLease term

Held for Sale Assets. The Company considers a property to be held for sale when it meets the criteria established under Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment (See “Note 5 - Held for Sale/Disposed Assets”). Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale.
Cash and Cash Equivalents. Cash and cash equivalents consists of cash held in a major banking institution and other highly liquid short-term investments with original maturities of three months or less. Cash equivalents are generally invested in U.S. government securities, government agency securities or money market accounts.
Restricted Cash. Restricted cash includes cash held in escrow in connection with property acquisitions and reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage loan obligations.
The following summarizes the reconciliation of cash and cash equivalents and restricted cash as presented in the accompanying consolidated statements of cash flows (in(dollars in thousands):
 For the Six Months Ended June 30,
 2019 2018
Beginning   
Cash and cash equivalents at beginning of period$31,004
 $35,710
Restricted cash3,475
 7,090
Cash and cash equivalents and restricted cash34,479
 42,800
Ending   
Cash and cash equivalents at end of period117,188
 27,701
Restricted cash2,976
 5,510
Cash and cash equivalents and restricted cash120,164
 33,211
Net increase (decrease) in cash and cash equivalents and restricted cash$85,685
 $(9,589)
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For the Six Months Ended June 30,
20202019
Beginning
Cash and cash equivalents at beginning of period$110,082  $31,004  
Restricted cash2,657  3,475  
Cash and cash equivalents and restricted cash112,739  34,479  
Ending
Cash and cash equivalents at end of period148,269  117,188  
Restricted cash515  2,976  
Cash and cash equivalents and restricted cash148,784  120,164  
Net increase in cash and cash equivalents and restricted cash$36,045  $85,685  
Revenue Recognition. The Company records rental revenue from operating leases on a straight-line basis over the term of the leases and maintains an allowance for estimated losses that may result from the inability of its tenants to make required payments. If tenants fail to make contractual lease payments that are greater than the Company’s allowance for doubtful accounts, security deposits and letters of credit, then the Company may have to recognize additional doubtful account charges in future periods. The Company monitors the liquidity and creditworthiness of its tenants on an on-going basis by reviewing their financial condition periodically as appropriate. Each period the Company reviews its outstanding accounts receivable, including straight-line rents, for doubtful accounts and provides allowances as needed. The Company also records lease termination fees when a tenant has executed a definitive termination agreement with the Company and the payment of the termination fee is not subject to any conditions that must be met or waived before the fee is due to the Company. If a tenant remains in the leased space following the execution of a definitive termination agreement, the applicable termination will be deferred and recognized over the term of such tenant’s occupancy. Tenant expense reimbursement income includes payments and amounts due from tenants pursuant to their leases for real estate taxes, insurance and other recoverable property operating expenses and is recognized as revenues during the same period the related expenses are incurred. Consistent with the Financial Accounting Standards Board staff question-and-answer document released on April 10, 2020, the Company elected to account for lease concessions related to the effects of COVID-19 as though no lease modification was made in instances where total contractual lease payments over the term of the lease were unchanged. Due to the effects of COVID-19, the future contractual lease payments of certain of the Company's tenants were not probable and as such, approximately $0.4 million and $0.9 million straight-line rent receivables was reversed during the three and six months ended June 30, 2020, respectively.
As of June 30, 20192020 and December 31, 2018,2019, approximately $25.8$29.0 million and $25.7$27.4 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately $0.3$1.1 million and $0.2 million as of June 30, 20192020 and December 31, 2018,2019, respectively, were included as a component of other assets in the accompanying consolidated balance sheets.
Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption.  Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018.  A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that were not completed as of January 1, 2018.  Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, the guidance impacts revenue related to the sales of real estate, which is evaluated in conjunction with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”) (see below).
Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09 (see above). Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company will derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. As a result of adoption of the standard, there was no material impact to the Company’s consolidated financial statements.
Deferred Financing Costs. Costs incurred in connection with financings are capitalized and amortized to interest expense using the effective interest method over the term of the related loan. Deferred financing costs associated with the Company’s
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revolving credit facility are classified as an asset and deferred financing costs associated with debt liabilities are reported as a direct deduction from the carrying amount of the debt liability in the accompanying consolidated balance sheets. Deferred financing costs related to the revolving credit facility and debt liabilities are shown at cost, net of accumulated amortization in the aggregate of approximately $7.5$8.8 million and $6.9$8.3 million as of June 30, 20192020 and December 31, 2018,2019, respectively.
Income Taxes. The Company elected to be taxed as a REIT under the Code and operates as such beginning with its taxable year ended December 31, 2010. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its stockholders. If it fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the IRS grants it relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes it is organized and operates in such a manner as to qualify for treatment as a REIT.

ASC 740-10, Income Taxes (“ASC 740-10”), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740-10 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold are recorded as a tax expense in the current year. As of June 30, 20192020 and December 31, 2018,2019, the Company did not have any unrecognized tax benefits and does not believe that there will be any material changes in unrecognized tax positions over the next 12 months. The Company’s tax returns are subject to examination by federal, state and local tax jurisdictions beginning with the 2010 calendar year.
Stock-Based Compensation and Other Long-Term Incentive Compensation. The Company follows the provisions of ASC 718, Compensation-Stock Compensation, to account for its stock-based compensation plan, which requires that the compensation cost relating to stock-based payment transactions be recognized in the financial statements and that the cost be measured on the fair value of the equity or liability instruments issued. The Company’s 2019 Equity Incentive Plan (the “2019 Plan”) provides for the grant of restricted stock awards, performance share awards, unrestricted shares or any combination of the foregoing. Stock-based compensation is recognized as a general and administrative expense in the accompanying consolidated statements of operations and measured at the fair value of the award on the date of grant. The Company estimates the forfeiture rate based on historical experience as well as expected behavior. The amount of the expense may be subject to adjustment in future periods depending on the specific characteristics of the stock-based award.
In addition, the Company has awarded long-term incentive target awards (the “Performance Share awards”) under anits Amended and Restated Long-Term Incentive Plan (as amended and restated the “Amended LTIP”), which the Company amended and restated on January 8, 2019, to its executives that may be payable in shares of the Company’s common stock after the conclusion of each pre-establishedpreestablished performance measurement period, which is generally three years. The amount that may be earned is variable depending on the relative total shareholder return of the Company’s common stock as compared to the total shareholder return of the MSCI U.S. REIT Index (RMS) and the FTSE Nareit Equity Industrial Index over the pre-established performance measurement period. On January 8, 2019, the Company amended and restated its Amended and Restated Long-Term Incentive Plan (as amended and restated, the “Amended LTIP”). Under the Amended LTIP, each participant’s Performance Share award granted on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period. For Performance Share awards granted prior to January 1, 2019, the Company estimates the fair value of the Performance Share awards using a Monte Carlo simulation model on the date of grant and at each reporting period. The Performance Share awards granted prior to January 1, 2019 are recognized as compensation expense over the requisite performance period based on the fair value of the Performance Share awards at the balance sheet date, and varywhich varies quarter to quarter based on the Company’s relative share price performance.performance, and are included as a component of performance share awards payable in the accompanying consolidated balance sheets.
Use of Derivative Financial Instruments. ASC 815, Derivatives and Hedging (See “Note 9 – Derivative Financial Instruments”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why the Company uses derivative instruments, (b) how the Company accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows. Further, qualitative disclosures
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are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments.
The Company records all derivatives on the accompanying consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

Fair Value of Financial Instruments. ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (See “Note 10 - Fair Value Measurements”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides guidance for using fair value to measure financial assets and liabilities. ASC 820 requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).
New Accounting Standards. In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2016-02, Leases (Topic 842) (“ASU No. 2016-02”). The amendments in ASU No. 2016-02 change the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU No. 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of ASU No. 2016-02 was permitted. ASU No. 2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Upon adoption of ASU No. 2016-02 on January 1, 2019, the Company adopted the package of practical expedients for all leases that commenced before the effective date of January 1, 2019. Accordingly, the Company did not 1) reassess whether any expired or existing contracts are or contain leases, 2) reassess the lease classification for any expired or existing lease, and 3) reassess initial direct costs for any existing leases. The Company did not elect the practical expedient related to using hindsight to reevaluate the lease term.

ASU No. 2016-02 requires lessees to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and 2) a right-of-use asset (“ROU asset”), which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU No. 2016-02 also requires lessees to classify leases as either a finance or operating lease based on whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification is used to evaluate whether the lease expense should be recognized based on an effective interest method as a finance lease or on a straight-line basis over the term of the lease as an operating lease. The Company is the lessee of one office space, which was classified as an operating lease under Topic 840. As the Company elected the package of practical expedients as described above, the classification of existing leases was not reassessed and as such, this lease continues to be accounted for as an operating lease.

In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements (“ASU No. 2018-11”), which provides lessors with a practical expedient, by class of underlying asset, to not separate nonlease components from the associated lease component and, instead to account for those components as a single component if the nonlease components otherwise would be accounted for under the new revenue recognition standard (Topic 606) and if certain conditions are met. Upon adoption of ASU No. 2016-02, the Company adopted this practical expedient, specifically related to its tenant reimbursements which would otherwise be accounted for under the new revenue recognition standard. The Company believes the two conditions have been met for tenant reimbursements as 1) the timing and pattern of transfer of the nonlease components and associated lease components are the same and 2) the non-lease component is not the predominant component in the arrangement. In addition, ASU No. 2018-11 provides an additional optional transition method to allow entities to apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease accounting standard will continue to be reported under the current lease accounting standards of Topic 840. The Company adopted this transition method upon adoption of ASU No. 2016-02 on January 1, 2019. There was no cumulative-effect adjustment to the opening balance of retained earnings upon adoption.

In December 2018, the FASB issued ASU No. 2018-20, Leases (Topic 842), Narrow-Scope Improvements for Lessors (“ASU No. 2018-20”), which permits lessors, as an accounting policy election, to not evaluate whether certain sales taxes andother similar taxes are lessor costs or lessee costs and instead to account for these costs as if they were lessee costs. In addition,ASU No. 2018-20 requires lessors to 1) exclude lessor costs paid directly by lessees to third parties on the lessor’s behalf fromvariable payments and 2) include lessor costs that are reimbursed by the lessee in the measurement of variable lease revenueand the associated expense. The amendments also clarify that lessors are required to allocate the variable payments to the leaseand non-lease components and follow the recognition guidance in Topic 842 for the lease component and other applicableguidance, such as ASU No. 2014-09, for the non-lease component.


As a result of the adoption of ASU No. 2016-02, ASU No. 2018-11, and ASC No. 2018-20, there was no material impact to the Company’s consolidated financial statements as a lessor or lessee. In accordance with the guidance, the Company has combined rental revenues and tenant expense reimbursements on the Company’s consolidated statements of operations. The Company does not currently capitalize internal leasing costs. In addition, on January 1, 2019, the Company recognized a lease liability of approximately $0.9 million and a related ROU asset of approximately $0.8 million on its consolidated balance sheets, based on the present value of lease payments for the remaining term of the Company’s corporate office lease, which was approximately 3.5 years as of the adoption date. As the rate implicit in the lease was not readily determinate, the discount rate applied to measure the lease liability and ROU asset was based on the Company’s incremental borrowing rate of 2.70% as of the adoption date. Lease liability is included as a component of accounts payable and other liabilities and ROU asset is included as a component of other assets in the accompanying consolidated balance sheets. All operating lease expense is recognized on a straight-line basis over the lease term. As of June 30, 2019, the lease liability was approximately $0.8 million and the ROU asset was approximately $0.7 million.
Segment Disclosure. ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has determined that it has one1 reportable segment, with activities related to investing in real estate. The Company’s investments in real estate are geographically diversified and the chief operating decision makers evaluate operating performance on an individual asset level. As each of the Company’s assets has similar economic characteristics, the assets have been aggregated into one reportable segment.
Note 3. Concentration of Credit Risk
Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company may maintain deposits in federally insured financial institutions in excess of federally insured limits. However, the Company’s management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.
As of June 30, 2019,2020, the Company owned 5962 buildings aggregating approximately 3.33.6 million square feet and eight9 land parcels consisting of approximately 46.748.8 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately 28.5% of its annualized base rent, and 35 buildings aggregating approximately 2.4 million square feet and five land parcels consisting of approximately 10.1 acres located in Los Angeles, which accounted for a combined percentage of approximately 16.3%26.9% of its annualized base rent. Such annualized base rent percentages are based on contractual base rent from leases in effect as of June 30, 2019,2020, excluding any partial or full rent abatements.
Other real estate companies compete with the Company in its real estate markets. This results in competition for tenants to occupy space. The existence of competing properties could have a material impact on the Company’s ability to lease space and on the level of rent that can be achieved. The Company had no tenantstenant that accounted for greater than 10% of its rental revenues for the six months endedCompany's annualized base rent as of June 30, 2019.2020.
Note 4. Investments in Real Estate
During the three months ended June 30, 2020, the Company acquired 1 industrial building containing approximately 13,000 square feet and 1 improved land parcel containing approximately 2.8 acres. The total aggregate initial investment, including acquisition costs, was approximately $10.5 million, of which $9.0 million was recorded to land, $1.2 million to buildings and improvements, and $0.3 million to intangible assets. Additionally, the Company assumed $0.1 million in intangible liabilities.
During the six months ended June 30, 2020, the Company acquired 2 industrial buildings containing approximately 79,000 square feet and 2 improved land parcels containing approximately 5.5 acres. The total aggregate initial investment, including acquisition costs, was approximately $41.1 million, of which $30.9 million was recorded to land, $8.9 million to buildings and
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improvements, and $1.3 million to intangible assets. Additionally, the Company assumed $0.6 million in intangible liabilities.
The Company recorded revenues and net income for the three months ended June 30, 2020 of approximately $0.5 million and $0.4 million, respectively, and recorded revenues and net income for the six months ended June 30, 2020 of approximately $0.6 million and $0.5 million, respectively, related to the 2020 acquisitions.
During the three months ended June 30, 2019, the Company acquired two2 industrial buildings containing approximately 119,000 square feet. The total aggregate initial investment, including acquisition costs, was approximately $51.2 million, of which $34.8 million was recorded to land, $13.1 million to buildings and improvements, and $3.3 million to intangible assets. Additionally, the Company assumed $3.1 million in intangible liabilities.
During the six months ended June 30, 2019, the Company acquired four4 industrial buildings containing approximately 165,000 square feet, and two2 improved land parcels containing approximately 19.7 acres. The total aggregate initial investment, including acquisition costs, was approximately $119.4 million, of which $94.4 million was recorded to land, $17.8 million to buildings and improvements, and $7.2 million to intangible assets. Additionally, the Company assumed $6.4 million in intangible liabilities.
The Company recorded revenues and net income for the three months ended June 30, 2019 of approximately $1.2 million and $0.6 million, respectively, and recorded revenues and net income for the six months ended June 30, 2019 of approximately $1.4 million and $0.7 million, respectively, related to the 2019 acquisitions.
During the three months ended June 30, 2018, the Company acquired two industrial buildings containing approximately 50,000 square feet and one improved land parcel containing approximately 3.5 acres. The total aggregate initial investment, including acquisition costs, was approximately $15.8 million, of which $10.8 million was recorded to land, $3.7 million to buildings and improvements, and $1.3 million to intangible assets. Additionally, the Company assumed $0.4 million in intangible liabilities.

During the six months ended June 30, 2018, the Company acquired five industrial buildings containing approximately 468,000 square feet, including two buildings under redevelopment that upon completion will contain approximately 318,000 square feet, and one improved land parcel containing approximately 3.5 acres. The total aggregate initial investment, including acquisition costs, was approximately $103.7 million, of which $74.4 million was recorded to land, $25.4 million to buildings and improvements, and $3.9 million to intangible assets. Additionally, the Company assumed $2.7 million in intangible liabilities.
The Company recorded revenues and net income for the three months ended June 30, 2018 of approximately $0.8 million and $0.3 million, respectively, and recorded revenues and net income for the six months ended June 30, 2018 of approximately $1.1 million and $0.4 million, respectively, related to the 2018 acquisitions.
The above assets and liabilities were recorded at fair value, which uses Level 3 inputs. The properties were acquired from unrelated third parties using existing cash on hand, proceeds from property sales, issuance of common stock and borrowings on the revolving credit facility.
As of June 30, 2019,2020, the Company has fourhad 2 properties under redevelopment (including one property held for sale) that upon completion willexpected to contain approximately 0.60.5 million square feet upon completion with a total expected investment of approximately $129.3$97.0 million, including redevelopment costs, capitalized interest and other costs of approximately $51.3 million. As of June 30, 2019, one of the properties under redevelopment was under contract to sell for approximately $14.0 million (See “Note 5 - Held for Sale/Disposed Assets”). During the first quarter of 2019, the Company completed redevelopment of its 1775 NW 70th Avenue property in Miami, Florida, an approximately 65,000 square foot redevelopment property. The total investment was approximately $10.0$89.8 million. The Company capitalized interest associated with redevelopment and expansion activities of approximately $0.8$0.4 million and $0.6$0.8 million, respectively, during the three months ended June 30, 2020 and 2019 and 2018 and approximately $1.6$1.0 million and $0.8$1.6 million, respectively, during the six months ended June 30, 20192020 and 2018.2019.
Note 5. Held for Sale/Disposed Assets
The Company considers a property to be held for sale when it meets the criteria established under ASC 360, Property, Plant, and Equipment. Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. As of June 30, 2019,2020, the Company hashad entered into an agreement with a third-party purchaser to sell one property located in the Miami, Florida market for a sales price of approximately $14.0$22.2 million (net book value of approximately $11.6$11.8 million). The sale of the property is subject to various closing conditions. The property is currently under redevelopment and its carrying amount is included as a component of construction in progress in the accompanying consolidated balance sheets.
The following summarizes the condensed results of operations of the property held for sale as of June 30, 20192020 for the three and six months ended June 30, 20192020 and 20182019 (dollars in thousands):
 For the Three Months Ended June 30,For the Six Months Ended June 30,
 2020201920202019
Revenues$370  $243  $740  $554  
Property operating expenses(117) (99) (210) (200) 
Depreciation and amortization(102) (105) (204) (209) 
Income from operations$151  $39  $326  $145  
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2019 2018 2019 2018
Revenues $—
 $20
 $32
 $248
Property operating expenses (34) (13) (32) (50)
Depreciation and amortization —
 (6) —
 (39)
Income from operations $(34) $1
 $—
 $159
During the six months ended June 30, 2020, the Company sold 3 properties located in the Washington, D.C. market for a total aggregate sales price of approximately $51.3 million, resulting in a gain of approximately $17.8 million.
During the six months ended June 30, 2019, the Company sold one1 property located in the Los Angeles market for a sales price of approximately $12.4 million, resulting in a gain of approximately $4.5 million.
During the six months ended June 30, 2018, the Company sold one property located in the Washington, D.C. market for a sales price
13
Table of approximately $20.3 million, resulting in a gain of approximately $3.3 million, and one property located in the Miami market for a sales price of approximately $24.3 million, resulting in a gain of approximately $11.7 million.Contents

Note 6. Senior Secured Loan
As of June 30, 2019, theThe Company had a Senior Secured Loan outstanding to a borrower that bearsbore interest at a fixedan annual interest rate of 8.0% and matures in Maywas fully repaid during the three months ended June 30, 2020. The Senior Secured Loan iswas secured by a portfolio of seven6 improved land parcels located primarily located in Newark, New Jersey. One of the properties securing the Senior Secured Loan may be put to the Company as partial or full repayment of the Senior Secured Loan at a previously agreed upon value. This property may be called by the Company as partial or full repayment of the Senior Secured Loan at a previously agreed upon value. In addition, per the terms of the Senior Secured Loan, the borrower may repay the loan at any time with either cash or deed in lieu, with the deed subject to the Company’s approval. During the six months ended June 30, 2019, the Company acquired two properties that were securing the Senior Secured Loan for a previously agreed upon aggregate purchase price which approximated their fair value of approximately $39.1 million, which resulted in an approximately $39.1 million reduction in the amount outstanding under the Senior Secured Loan. As of June 30, 20192020 and December 31, 2018,2019, there was approximately $15.8 million$0 and $54.5$15.9 million, respectively, net of deferred loan fees of approximately $0.1 million$0 and $0.5$0.1 million, respectively, outstanding on the Senior Secured Loan and approximately $0.3 million$0 and $0.4$0.3 million, respectively, of interest receivable outstanding on the Senior Secured Loan. Interest receivable is included as a component of other assets in the accompanying consolidated balance sheets.
Note 7. Debt
As of June 30, 2019,2020, the Company had $50.0 million of senior unsecured notes that mature in September 2022, $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$50.0 million of senior unsecured notes that mature in October 2027, $100.0 million of senior unsecured notes that mature in December 2029 (collectively, the “Senior Unsecured Notes”), and a credit facility (the “Facility”), which consists of a $250.0 million unsecured revolving credit facility that matures in October 2022, a $50.0 million term loan that matures in August 2021 and a $100.0 million term loan that matures in January 2022. As of both June 30, 20192020 and December 31, 2018,2019, there was $0 and $19.0 million, respectively, ofwere no borrowings outstanding on the revolving credit facility and $150.0$100.0 million of borrowings outstanding on the term loans.loan. As of June 30, 2019,2020, the Company had two1 interest rate capscap to hedge the variable cash flows associated with its $100.0 million of its existing $150.0 million variable-rate term loans.loan. As of December 31, 2018,2019, the Company had three2 interest rate caps to hedge the variable cash flows associated with its existing $150.0$100.0 million variable-rate term loans.loan. See “Note 9 - Derivative Financial Instruments” for more information regarding the Company’s interest rate caps.
The aggregate amount of the Facility may be increased to a total of up to $600.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Facility are limited to the lesser of (i) the sum of the $150.0$100.0 million of term loansloan and the $250.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Facility, including the term loans,loan, is generally to be paid based upon, at the Company’s option, either (i) LIBOR plus the applicable LIBOR 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, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Facility plus 1.25%. The applicable LIBOR margin will range from 1.05% to 1.50% (1.05% as of June 30, 2019)2020) for the revolving credit facility and 1.20% to 1.70% (1.20% as of June 30, 2019)2020) for the $50.0 million term loan that matures in August 2021 and the $100.0 million term loan that matures in January 2022, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value. The Facility requires quarterly payments of an annual facility fee in an amount ranging from 0.15% to 0.30%, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value.
The Facility and the Senior Unsecured Notes are guaranteed by the Company and by substantially all of the current and to-be-formed subsidiaries of the Company that own an unencumbered property. The Facility and the Senior Unsecured Notes are unsecured by the Company’s properties or by interests in the subsidiaries that hold such properties. The Facility and the Senior Unsecured Notes include a series of financial and other covenants with which the Company must comply. The Company was in compliance with the covenants under the Facility and the Senior Unsecured Notes as of June 30, 20192020 and December 31, 2018.2019.
As of June 30, 2020, the Company had 1 mortgage loan payable, net of deferred financing costs, totaling approximately $11.5 million, which bore interest at a weighted average fixed annual rate of 5.5%. The Company has mortgage loansloan payable which areis collateralized by certain of the propertiesone property, is non-recourse and requirerequires monthly interest and principal payments until maturity and are generally non-recourse. The mortgage loans mature between 2020 andit matures in April 2021. As of June 30,December 31, 2019, the Company had two2 mortgage loans payable, net of deferred financing costs, totaling approximately $45.1 million, which bear interest at a weighted average fixed annual rate of 4.1%. As of December 31, 2018, the Company had two mortgage loans payable, net of deferred financing costs, totaling approximately $45.8$44.3 million, which bore interest at a weighted average fixed annual interest rate of 4.1%. As of June 30, 20192020 and December 31, 2018,2019, the total gross book value of the properties securing the debt was approximately $114.6$33.9 million and $114.5$114.9 million, respectively.

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The scheduled principal payments of the Company’s debt as of June 30, 20192020 were as follows (dollars in thousands):
Credit
Facility		Term LoanSenior
Unsecured
Notes		Mortgage
Loan
Payable		Total Debt
2020 (6 months)$—  $—  $—  $231  $231  
2021—  —  —  11,271  11,271  
2022—  100,000  50,000  —  150,000  
2023—  —  —  —  —  
2024—  —  100,000  —  100,000  
Thereafter—  —  200,000  —  200,000  
Total debt—  100,000  350,000  11,502  461,502  
Deferred financing costs, net—  (313) (2,131) (14) (2,458) 
Total debt, net$—  $99,687  $347,869  $11,488  $459,044  
Weighted average interest raten/a1.7 %3.8 %5.5 %3.4 %
 
Credit
Facility
 Term Loans 
Senior
Unsecured
Notes
 
Mortgage
Loans
Payable
 Total Debt
2019 (6 months)$—
 $—
 $—
 $764
 $764
2020—
 —
 —
 33,077
 33,077
2021—
 50,000
 —
 11,271
 61,271
2022—
 100,000
 50,000
 —
 150,000
2023—
 —
 —
 —
 —
Thereafter—
 —
 200,000
 —
 200,000
Total debt—
 150,000
 250,000
 45,112
 445,112
Deferred financing costs, net—
 (769) (1,587) (62) (2,418)
Total debt, net$—
 $149,231
 $248,413
 $45,050
 $442,694
Weighted average interest raten/a
 3.7% 4.1% 4.1% 3.9%

Note 8. Leasing
The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of June 30, 2019.2020. The schedule does not reflect future rental revenues from the renewal or replacement of existing leases and excludes property operating expense reimbursements (dollars in thousands):
2020$67,785  
2021126,306  
2022108,402  
202387,933  
202468,909  
Thereafter152,328  
Total$611,663  
2019 (6 months)$63,982
2020117,081
2021102,089
202284,177
202364,175
Thereafter178,399
Total$609,903

Note 9. Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of its known or expected cash payments principally related to its borrowings.
Derivative Instruments
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps involve the receipt of variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price. The Company does not use derivatives for trading or speculative purposes. The Company requires that hedging derivative instruments be highly effective in reducing the risk exposure that they are designated to hedge. As a result, there is no significant ineffectiveness from any of its derivative activities.

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The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative that is designated and that qualifies as a cash flow hedge, the effective portion of the change in fair value of the derivative is initially recorded in accumulated other comprehensive income (loss) (“AOCI”). Amounts recorded in AOCI are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.
As of June 30, 2019,2020, the Company had two1 interest rate capscap to hedge the variable cash flows associated with $100.0$50.0 million of its existing $150.0$100.0 million variable-rate term loans.loan. The caps have an aggregatecap has a notional value of $100.0$50.0 million and will effectively cap the annual interest rate payable at 4.0% plus 1.20% to 1.70%, depending on leverage, with respect to $50.0 million for the period from December 1, 2014 (effective date) to May 4, 2021 and $50.0 million for the period from September 1, 2015 (effective date) to February 3, 2020.2021. The Company previously had an additional interest rate cap with a notional value of $50.0 million (which expired on April 1, 2019)February 3, 2020) to hedge the variable cash flows associated with $50.0 million of its existing $150.0$100.0 million variable-rate term loans.loan. The Company is required to make certain monthly variable rate payments on the term loans,loan, while the applicable counterparty is obligated to make certain monthly floating rate payments based on LIBOR to the Company in the event LIBOR is greater than 4.0%, referencing the same notional amount.
The Company records all derivative instruments on a gross basis in other assets on the accompanying consolidated balance sheets, and accordingly, there are no offsetting amounts that net assets against liabilities. The following table presents a summary of the Company’s derivative instruments designated as hedging instruments (dollars in thousands):
Derivative
Instrument
Effective
Date
 
Maturity
Date
 
Interest
Rate
Strike
 Fair Value Notional Amount
   June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
Assets:             
Interest rate cap12/1/2014 5/4/2021 4.0% $5
 $25
 $50,000
 $50,000
Interest rate cap9/1/2015 4/1/2019 4.0% —
 —
 —
 50,000
Interest rate cap9/1/2015 2/3/2020 4.0% —
 1
 50,000
 50,000
Total      $5
 $26
 $100,000
 $150,000

Derivative
Instrument		Effective
Date		Maturity
Date		Interest
Rate
Strike		Fair ValueNotional Amount
June 30, 2020December 31, 2019June 30, 2020December 31, 2019
Assets:
Interest rate cap12/1/20145/4/20214.0 %$—  $—  $50,000  $50,000  
Interest rate cap9/1/20152/3/20204.0 %—  —  —  50,000  
Total$—  $—  $50,000  $100,000  
The effective portion of changes in the fair value of derivatives designated and qualified as cash flow hedges is recorded in AOCI and will be reclassified to interest expense in the period that the hedged forecasted transaction affects earnings on the Company’s variable rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings into interest expense.
The following table presents the effect of the Company’s derivative financial instruments on its accompanying consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 and 2018 (in(dollars in thousands):
 For the Three Months Ended June 30, For the Six Months Ended June 30,
 2019 2018 2019 2018
Interest rate caps in cash flow hedging relationships:       
Amount of gain recognized in AOCI on derivatives (effective portion)$89
 $76
 $176
 $131
Amount of gain reclassified from AOCI into interest expense (effective portion)$89
 $76
 $176
 $131

For the Three Months Ended June 30,For the Six Months Ended June 30,
2020201920202019
Interest rate caps in cash flow hedging relationships:
Amount of gain recognized in AOCI on derivatives (effective portion)$—  $89  $—  $176  
Amount of gain reclassified from AOCI into interest expense (effective portion)$46  $89  $119  $176  
The Company estimates that approximately $0.3 million will be reclassified from AOCI as an increase to interest expense over the next twelve months.

Note 10. Fair Value Measurements
ASC 820 requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).
Recurring Measurements – Interest Rate Contracts
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Fair Value of Interest Rate Caps
Currently, the Company uses interest rate cap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. As of June 30, 2019,2020, the Company applied the provisions of this standard to the valuation of its interest rate caps.
The following sets forth the Company’s financial instruments that are accounted for at fair value on a recurring basis as of June 30, 20192020 and December 31, 20182019 (dollars in thousands):
 Fair Value Measurement Using
 Total Fair Value 
Quoted Price in
Active Markets for
Identical Assets
and Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets       
Interest rate caps at:       
June 30, 2019$5
 $—
 $5
 $—
December 31, 2018$26
 $—
 $26
 $—

Fair Value Measurement Using
Total Fair ValueQuoted Price in
Active Markets for
Identical Assets
and Liabilities
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets
Interest rate caps at:
June 30, 2020$— $— $— $— 
December 31, 2019$— $— $— $— 
Financial Instruments Disclosed at Fair Value
As of June 30, 20192020 and December 31, 2018,2019, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these investments or liabilities based on Level 1 inputs. The fair values of the Company’s derivative instruments were evaluated based on Level 2 inputs. The fair values of the Company’s mortgage loans payable and Senior Unsecured Notes were estimated by calculating the present value of principal and interest payments, based on borrowing rates available to the Company, which are Level 2 inputs, adjusted with a credit spread, as applicable, and assuming the loans are outstanding through maturity. The fair value of the Company’s Facility approximated its carrying value because the variable interest rates approximate market borrowing rates available to the Company, which are Level 2 inputs. The fair value of the Company’s Senior Secured Loan approximated its carrying value because the interest rate approximates the market lending rate available to the borrower, which is a Level 2 input.

The following table sets forth the carrying value and the estimated fair value of the Company’s Senior Secured Loan and debt as of June 30, 20192020 and December 31, 20182019 (dollars in thousands):
 Fair Value Measurement Using 
Total Fair ValueQuoted Price in
Active Markets
for Identical
Assets and
Liabilities
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Carrying Value
Assets
Senior secured loan at:
June 30, 2020$—  $—  $—  $—  $—  
December 31, 2019$15,915  $—  $15,915  $—  $15,858  
Liabilities
Debt at:
June 30, 2020$495,763  $—  $495,763  $—  $459,044  
December 31, 2019$503,028  $—  $503,028  $—  $491,575  
 Fair Value Measurement Using  
 Total Fair Value 
Quoted Price in
Active Markets
for Identical
Assets and
Liabilities
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 Carrying Value
Assets         
Senior secured loan at:         
June 30, 2019$15,915
 $—
 $15,915
 $—
 $15,773
December 31, 2018$55,000
 $—
 $55,000
 $—
 $54,492
Liabilities         
Debt at:         
June 30, 2019$446,067
 $—
 $446,067
 $—
 $442,694
December 31, 2018$455,159
 $—
 $455,159
 $—
 $462,097

Note 11. Stockholders’ Equity
The Company’s authorized capital stock consists of 400,000,000 shares of common stock, $0.01 par value per share, and 100,000,000 shares of preferred stock, $0.01 par value per share. The Company has an at-the-market equity offering program (the “$300 Million ATM Program”) pursuant to which the Company may issue and sell shares of its common stock having an
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aggregate offering price of up to $300.0 million ($235.993.3 million remaining as of June 30, 2019)2020) in amounts and at times to be determined by the Company from time to time. Prior to the implementation of the $300 Million ATM Program, the Company had a $250.0 million ATM program (the “$250 Million ATM Program”), which was substantially utilized as of June 30,May 31, 2019 and which is no longer active, and a $200.0 million ATM program (the “$200 Million ATM Program”), which was substantially utilized as of June 30, 2018 and which is no longer active. Actual sales under the $300 Million ATM Program, if any, will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Company’s common stock, determinations by the Company of the appropriate sources of funding for the Company and potential uses of funding available to the Company. During the three and six months ended June 30, 2020, the Company issued an aggregate of 619,300 and 1,046,327 shares, respectively, of common stock at a weighted average offering price of $52.81 and $53.04 per share, respectively, under the $300 Million ATM Program, resulting in net proceeds of approximately $32.2 million and $54.7 million, respectively, and paying total compensation to the applicable sales agents of approximately $0.5 million and $0.8 million, respectively. During the three and six months ended June 30, 2019, the Company issued an aggregate of 2,375,270 and 4,364,071 shares, respectively, of common stock at a weighted average offering price of $45.76 and $43.77 per share, respectively, under the $300 Million ATM Program and the $250 Million ATM Program, resulting in net proceeds of approximately $107.1 million and $188.2 million, respectively, and paying total compensation to the applicable sales agents of approximately $1.6 million and $2.8 million, respectively. During the three and six months ended June 30, 2018, the Company issued an aggregate of 2,826,167 and 2,885,401 shares, respectively, of common stock at a weighted average offering price of $37.48 and $37.43 per share, respectively, under the $250 Million ATM Program and the $200 Million ATM Program, resulting in net proceeds of approximately $104.4 million and $106.4 million, respectively, and paying total compensation to the applicable sales agents of approximately $1.5 million and $1.6 million, respectively.
The Company has a share repurchase program authorizing the Company to repurchase up to 3,000,000 shares of its outstanding common stock from time to time through December 31, 2020. Purchases made pursuant to the program 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 the Company in its 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 June 30, 2019,2020, the Company had not repurchased any shares of stock pursuant to its share repurchase authorization.program.

In connection with the Annual Meeting of Stockholders on April 30, 2019,May 5, 2020, the Company granted a total of 11,20011,190 shares of the Company's common unrestricted stock to its independent directors under the 2019 Plan with a grant date fair value per share of $44.65.$53.62. The grant date fair value of the unrestricted common stock was determined using the closing price of the Company’s common stock on the date of the grant. The Company recognized approximately $0.5$0.6 million in compensation costs for both the three and six months ended June 30, 20192020 related to this issuance.

On April 30,In 2019, the Company’s stockholders approvedCompany established a Non-Qualified Deferred Compensation Plan (“Deferred Compensation Plan”) maintained for the 2019 Plan, which replaces the Amendedbenefit of select employees and Restated 2010 Equity Incentive Plan (the “2010 Plan”). The 2019 Plan permits the grant of restricted stock awards, performance share awards and unrestricted stock awards.  The maximum number of sharesmembers of the Company’s Board of Directors, in which certain of their cash and equity-based compensation may be deposited. Deferred Compensation Plan assets are held in a rabbi trust, which is subject to the claims of the Company’s creditors in the event of bankruptcy or insolvency. The shares held in the Deferred Compensation Plan are classified within stockholders’ equity in a manner similar to the manner in which treasury stock is classified. Subsequent changes in the fair value of the shares are not recognized. During the three and six months endedJune 30, 2020, 3,730 and 139,224 shares, respectively, of common stock that may be issued underwere deposited into the 2019 Plan is 1,898,961, which consists of (i) 1,510,079 shares initially reserved and available for issuance under the 2019 Plan and (ii) 388,882 shares underlying outstanding awards under the 2010 Plan, which if forfeited, canceled or otherwise terminated under the 2010 Plan shall be added to the shares available for issuance under the 2019Deferred Compensation Plan. No further awards will be made under the 2010 Plan.
As of June 30, 2019,2020, there were 1,898,961 shares of common stock authorized for issuance as restricted stock grants, unrestricted stock awards or Performance Share awards under the 2019 Plan, of which 1,517,5601,429,652 were remaining available for issuance. The grant date fair value per share of restricted stock awards issued during the period from February 16, 2010 (commencement of operations) to June 30, 20192020 ranged from $14.20 to $40.29.$58.08. The fair value of the restricted stock that was granted during the six months ended June 30, 20192020 was approximately $1.2 million and the vesting period for the restricted stock is fivethree years. As of June 30, 2019,2020, the Company had approximately $3.9$5.8 million of total unrecognized compensation costs related to restricted stock issuances, which is expected to be recognized over a remaining weighted average period of approximately 2.93.5 years. The Company recognized compensation costs of approximately $0.7 million and $0.4 million for both the three months ended June 30, 2020 and 2019, and 2018respectively, and approximately $1.4 million and $0.9 million for both the six months ended June 30, 2020 and 2019, and 2018respectively, related to the restricted stock issuances.
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The following is a summary of the total restricted shares granted to the Company’s executive officers and employees with the related weighted average grant date fair value share prices for the six months ended June 30, 2019:2020:
Restricted Stock Activity:
 Shares 
Weighted Average Grant
Date Fair Value
Non-vested shares outstanding as of December 31, 2018383,930
 $22.98
Granted30,294
 40.29
Forfeited(28,656) 30.26
Vested(15,367) 23.90
Non-vested shares outstanding as of June 30, 2019370,201
 $23.79

SharesWeighted Average Grant
Date Fair Value
Non-vested shares outstanding as of December 31, 2019426,770  $28.20  
Granted20,501  58.08  
Forfeited(352) 32.45  
Vested(8,436) 31.89  
Non-vested shares outstanding as of June 30, 2020438,483  $29.52  
The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of June 30, 2019:2020:
Non-vested Shares Vesting Schedule Number of Shares
2019 (6 months) —
2020 303,857
2021 14,600
2022 11,937
2023 35,343
Thereafter 4,464
Total non-vested shares 370,201

Non-vested Shares Vesting ScheduleNumber of Shares
2020 (6 months)287,500  
202114,852  
202213,812  
202338,762  
202483,557  
Thereafter—  
Total Non-vested Shares438,483  
Long-Term Incentive Plan:
As of June 30, 2019,2020, there are three open performance measurement periods for the Performance Share awards: January 1, 2017 to December 31, 2019, January 1, 2018 to December 31, 2020, and January 1, 2019 to December 31, 2021.2021, and January 1, 2020 to December 31, 2022. During the six months ended June 30, 2019,2020, the Company issued 196,087135,494 shares of common stock at a price of $36.55$54.22 per share related to the Performance Share awards for the performance period from January 1, 20162017 to December 31, 2018.2019. The expense related to the open Performance Share awards granted prior to January 1, 2019 varies quarter to quarter based on the Company’s relative share price performance.

The following table summarizes certain information with respect to the Performance Share awards granted prior to January 1, 2019 (dollars in thousands):
Fair Value Performance Share PeriodFair Value June 30, 2020Accrual June 30, 2020Expense for the Three Months Ended June 30,Expense for the Six Months Ended June 30,
2020201920202019
January 1, 2018 - December 31, 2020$6,091  $5,069  $119  $1,295  $725  $1,886  
January 1, 2017 - December 31, 2019—  —  —  1,097  —  1,884  
Total$6,091  $5,069  $119  $2,392  $725  $3,770  
Performance Share PeriodFair Value
June 30, 2019		 Accrual
June 30, 2019		 Expense for the Three Months Ended June 30, Expense for the Six Months Ended June 30,
2019 20182019 2018
January 1, 2018 - December 31, 2020$6,065
 $3,021
 $1,295
 $279
 1,886
 523
January 1, 2017 - December 31, 20197,161
 5,958
 1,097
 509
 1,884
 1,109
January 1, 2016 - December 31, 2018—
 —
 —
 579
 —
 1,393
Total$13,226
 $8,979
 $2,392
 $1,367
 $3,770
 $3,025


On January 8, 2019,Under the Amended LTIP, which the Company amended and restated its Amended and Restated Long-Term Incentive Plan. Under the Amended LTIP,on January 8, 2019, each participant’s Performance Share target award for target awards granted on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period.
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The following table summarizes certain information with respect to the Performance Share awards granted on or after January 1, 2019 (dollars in thousands):
Performance Share PeriodFair Value on Date of Grant Expense for the Three Months Ended June 30, Expense for the Six Months Ended June 30,
2019 20182019 2018
January 1, 2019 - December 31, 2021$4,829
 $403
 $—
 $805
 $—

Performance Share PeriodFair Value on Date of GrantExpense for the Three Months Ended June 30,Expense for the Six Months Ended June 30,
2020201920202019
January 1, 2019 - December 31, 2021$4,829  $402  $403  $804  $805  
January 1, 2020 - December 31, 20225,572  465  —  930  —  
Total$10,401  $867  $403  $1,734  $805  
Dividends:
The following table sets forth the cash dividends paid or payable per share during the six months ended June 30, 2019:2020:
For the Three Months EndedSecurityDividend per
Share		Declaration DateRecord DateDate Paid
March 31, 2020Common stock$0.27 February 5, 2020March 27, 2020April 10, 2020
June 30, 2020Common stock$0.27 May 5, 2020June 30, 2020July 14, 2020
For the Three Months EndedSecurity 
Dividend per
Share
 Declaration Date Record Date Date Paid
March 31, 2019Common stock $0.24
 February 5, 2019 March 29, 2019 April 12, 2019
June 30, 2019Common stock $0.24
 April 30, 2019 July 5, 2019 July 19, 2019

Note 12. Net Income (Loss) Per Share
Pursuant to ASC 260-10-45, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, unvested share-based payment awards that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing earnings per share allocates earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s non-vested shares of restricted stock are considered participating securities since these share-based awards contain non-forfeitable rights to dividends irrespective of whether the awards ultimately vest or expire. The Company had no0 antidilutive securities or dilutive restricted stock awards outstanding for both the three and six months ended June 30, 20192020 and 2018.2019.

In accordance with the Company’s policies of determining whether instruments granted in share-based payment transactions are participating securities and accounting for earnings per share, the net income (loss) per common share is adjusted for earnings 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 385,587438,595 and 357,018385,587 of weighted average unvested restricted shares outstanding for the three months ended June 30, 20192020 and 2018,2019, respectively, and 387,542436,567 and 358,253387,542 of weighted average unvested restricted shares outstanding for the six months ended June 30, 20192020 and 2018,2019, respectively.
Performance Share awards which may be payable in shares of the Company’s common stock after the conclusion of each pre-established performance measurement period are included as contingently issuable shares in the calculation of diluted weighted average common shares of stock outstanding assuming the reporting period is the end of the measurement period, and the effect is dilutive. Diluted shares related to the Performance Share awards were 294,570407,139 and 0294,570 for both the three and six months ended June 30, 20192020 and 2018,2019, respectively.
Note 13. Commitments and Contingencies
Contractual Commitments. As of July 31, 2019,August 4, 2020, the Company has six1 outstanding contractscontract with a third-party sellersseller to acquire six industrial properties consisting of approximately 361,000 square feet and one1 improved land parcel containingfor a total of approximately 2.07.0 acres. There is no assurance that the Company will acquire the propertiesproperty under contract because the proposed acquisitions areacquisition is subject to the completion of satisfactory due diligence and various closing conditions.
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The following table summarizes certain information with respect to the propertiesproperty the Company has under contract:
Market
Number of
Buildings
 Square Feet 
Purchase Price (in
thousands)
 
Assumed Debt (in
thousands)
Los Angeles7
 82,884
 $23,525
 $—
Northern New Jersey/New York City 1
2
 195,598
 84,525
 —
San Francisco Bay Area—
 —
 —
 —
Seattle2
 82,245
 12,850
 —
Miami—
 —
 —
 —
Washington, D.C.—
 —
 —
 —
Total11
 360,727
 $120,900
 $—

MarketNumber of
Buildings		Square FeetPurchase Price (in
thousands)		Assumed Debt (in
thousands)
Los Angeles— — $— $— 
Northern New Jersey/New York City— — — — 
San Francisco Bay Area— — — — 
Seattle 1
Includes one improved land parcel containing approximately 2.0 acres.— — 7,275 — 
Miami— — — — 
Washington, D.C.— — — — 
Total— — $7,275 $— 
1Includes 1 improved land parcel containing approximately 7.0 acres.

As of July 31, 2019,August 4, 2020, the Company has executed two2 non-binding letters of intent with third-party sellers to acquire twoone industrial propertiesbuilding consisting of approximately 92,00013,000 square feet and 1 improved land parcel consisting of approximately 4.7 acres for a total anticipated purchase price of approximately $19.0$22.7 million. In the normal course of its business, the Company enters into non-binding letters of intent to purchase properties from third parties that may obligate the Company 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 the Company will enter into purchase and sale agreements with respect to these properties or otherwise complete any such prospective purchases on the terms described or at all.
As of July 31, 2019, the Company has one outstanding contract with a third-party purchaser to sell one property for a sales price of approximately $14.0 million (net book value of approximately $11.6 million). There is no assurance the Company will sell the property under contract because the proposed disposition is subject to various closing conditions.
Note 14. Subsequent Events
The COVID-19 pandemic, and mitigation measures put in place by governments to slow it, have caused widespread economic disruption. The Company is headquartered in San Francisco, California and its employees have been working remotely in compliance with shelter-in-place orders mandated across the San Francisco Bay Area on March 16, 2020. The Company utilizes local, third-party property managers, and they are generally under similar shelter-in-place orders and are working remotely. The Company has business continuity and communication plans that the Company believes, although there can be no assurance, allow the Company to operate and manage its portfolio effectively during such disruptions. The Company expects that even after shelter-in-place orders have been lifted, it will, for the intermediate term, employ lower density work arrangements consistent with social distancing and the Company’s business continuity plan.

Terreno Realty Corporation continues to work with its customers who have been forced to close or otherwise limit operations or whose businesses have been adversely impacted during the pandemic to, on a case-by-case basis, provide rent deferments. For vacant space and upcoming lease expirations, the current leasing environment has slowed due to shelter-in-place orders, which will reduce revenue from what it would be in a normal leasing environment. With regard to rent billed for July 2020, the Company received, as of August 4, 2020, approximately 95% of such rent in cash and an additional 1% by applying security deposits. As of August 4, 2020:

•174 tenants, representing approximately 36.0% of the Company’s total tenants had requested rent deferral or abatement. Such requests aggregated 7.0% of the Company’s annualized base rent;

•Of the 174 requests, the Company granted rent deferrals to 61 tenants aggregating 2.7% of annualized base rent (35.1% of total requests by number and 38.7% by dollar amount) which represents 76.7% of the total dollar deferral requests (3.6% of annualized base rent) from those tenants. The Company did not grant any rent abatement;

•The Company denied 50 tenant requests aggregating 1.8% of annualized base rent (28.7% of total requests by number and 25.7% by dollar amount). 59 tenants aggregating 1.6% of annualized base rent requesting rent deferral or abatement rescinded their requests (33.3% of requests by number and 22.5% by dollar amount);

•The Company is still in discussions with 4 tenants who are requesting 0.05% of the Company's annualized base rent in rent deferral or abatement (2.3% of requests by number and 0.7% by dollar amount); and

•The Company may in the future amend or enter into additional rent deferral agreements.
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The acquisition and disposition markets have slowed as market participants search for price discovery. The Company’s acquisition volume will remain dependent on both the quality and pricing of the opportunity set and the price of its stock relative to net asset value per share. The Company has no remaining debt maturities in 2020, an $11.5 million mortgage loan maturing in April 2021, and 0 balance outstanding on its $250.0 million revolving credit facility. In addition, the Company had a cash and cash equivalents balance of approximately $148.3 million as of June 30, 2020, in the accompanying consolidated balance sheets.
On July 26, 2019,9, 2020, the Company terminated a lease with the existing tenant at its Belleville property and executed a new lease with a leading e-commerce firm. The lease termination fee received was approximately $3.3 million and the deferred rent receivable write-off was approximately $3.4 million.
On July 10, 2020, the Company acquired 1 industrial building totaling 22,000 square feet located in South San Francisco, CA for a total purchase price of approximately $6.3 million. The property was acquired from an unrelated third party using existing cash on hand.
On July 23, 2020, the Company sold 1 industrial building totaling 192,500 square feet located in Miami Lakes, Florida for a sales price of approximately $22.2 million. The property was sold to an unrelated third party.
On August 4, 2020, the Company’s board of directors declared a cash dividend in the amount of $0.27$0.29 per share of its common stock payable on October 18, 201916, 2020 to the stockholders of record as of the close of business on October 4, 2019.2, 2020.


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” 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, 2018,2019, which was filed with the Securities and Exchange Commission on February 6, 20192020, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which was filed with the Securities and Exchange Commission on May 6, 2020, and in our other public filings;filings, which you should interpret as being heightened as a result of the numerous and ongoing adverse impacts of COVID-19;
•our ability to identify and acquire industrial properties on terms favorable to us;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 acquire properties;
•our dependence on key personnel and our reliance on third-party property managers;
•our inability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies;
•our ability to manage our growth effectively;
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•tenant bankruptcies and defaults on or non-renewal of leases by tenants;
•decreased rental rates or increased vacancy rates;
•increased interest rates and operating costs;
•the potential discontinuation of London Interbank Offered Rate (“LIBOR”);
•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 redevelopment, renovation and expansion strategies and activities;
•the ongoing impact of COVID-19 on the U.S., regional and global economies and the business, financial condition and results of operations of our Company and our tenants;
•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: 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 buildings,(approximately 81.9% of our annualized base rent as of June 30, 2020), flex buildings (including light industrial and research and development, or R&D)&D, approximately 5.4%), transshipment buildings,(approximately 5.3%), and improved land parcels.parcels (approximately 7.4%). We target functional buildings 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 June 30, 2019,2020, we owned a total of 209218 buildings aggregating approximately 13.013.1 million  square feet, that22 improved land parcels consisting of approximately 85.0 acres and two properties under redevelopment expected to contain approximately 0.5 million square feet upon completion. The buildings and improved land parcels were approximately 97.9%96.0% and 98.5% leased, respectively, to 456484 customers, the largest of which accounted for approximately 3.7%3.6% of our total annualized base rent, 17 improved land parcels consistingrent. See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in our Annual Report on Form 10-K for the year ended December 31, 2019 for a general description of approximately 74.7 acres that were approximately 93.0% leased to 20 customers and four properties under redevelopment (including one property held for sale) expected to contain approximately 0.6 million square feet upon completion. Improved land is used for truck, trailer and container storage and/or car parking. In the future, we may redevelop some or allthese types of such land. 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, or the Code, commencing with our taxable year ended December 31, 2010.
The following table summarizes by type our investments in real estate as of June 30, 2019:2020:
TypeNumber of Buildings or Improved Land Parcels
Annualized Base Rent (000's) 1
% of Total
Warehouse/distribution194$116,936  81.9 %
Flex107,6965.4 %
Transshipment147,5665.3 %
Improved land2210,5627.4 %
Total/Weighted Average240$142,760  100.0 %
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TypeNumber of Buildings or Improved Land Parcels 
Annualized Base Rent (000's) 1
 % of Total
Warehouse/distribution183
 $104,894
 81.4%
Flex12
 10,718
 8.3%
Transshipment14
 5,900
 4.6%
Improved land17
 7,408
 5.7%
Total/Weighted Average226
 $128,920
 100.0%
11Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2020, multiplied by 12.
Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2019, multiplied by 12.

The following table summarizes by market our investments in real estate as of June 30, 2019:2020:
Los AngelesNorthern New Jersey/New York CitySan Francisco Bay AreaSeattleMiamiWashington, D.C.Total/Weighted Average
Investments in Real Estate
Number of Buildings41  62  40  29  28  18  218  
Rentable Square Feet2,560,682  3,552,681  2,033,381  1,839,566  1,563,326  1,534,625  13,084,261  
% of Total19.6 %27.2 %15.5 %14.1 %11.9 %11.7 %100.0 %
Occupancy % as of June 30, 202098.9 %88.8 %97.2 %98.3 %100.0 %99.1 %96.0 %
Annualized Base Rent
(000’s) 1
$23,061  $35,564  $25,903  $16,986  $14,214  $16,470  $132,198  
% of Total17.4 %26.9 %19.6 %12.8 %10.8 %12.5 %100.0 %
Annualized Base Rent1 Per Occupied Square Foot
$9.10  $11.27  $13.10  $9.39  $9.09  $10.83  $10.53  
Weighted Average Remaining Lease Term (Years) 2
6.5  4.1  3.8  3.0  3.9  3.7  4.3  
Investments in Improved Land
Number of Land Parcels6  9  2  2  2  1  22  
Acres11.9  48.8  4.0  3.7  3.2  13.4  85.0  
% of Total14.0 %57.5 %4.7 %4.4 %3.7 %15.7 %100.0 %
Occupancy % as of June 30, 2020100.0 %100.0 %68.1 %100.0 %100.0 %100.0 %98.5 %
Annualized Base Rent
(000’s) 1
$2,590  $5,536  $647  $552  $394  $843  $10,562  
% of Total24.5 %52.5 %6.1 %5.2 %3.7 %8.0 %100.0 %
Annualized Base Rent1 Per Occupied Square Foot
$4.98  $2.66  $5.50  $3.72  $2.85  $1.45  $2.93  
Weighted Average Remaining Lease Term (Years) 2
4.7  5.3  1.7  3.8  3.2  9.5  5.6  
Total Investments in Real Estate
Annualized Base Rent (000’s) 1
$25,651  $41,100  $26,550  $17,538  $14,608  $17,313  $142,760  
Gross Book Value (000’s) 3
$427,510  $645,498  $383,973  $329,652  $167,708  $217,103  $2,171,444  
% of Total19.7 %29.7 %17.7 %15.2 %7.7 %10.0 %100.0 %
  Los Angeles Northern New Jersey/New York City San Francisco Bay Area Seattle Miami Washington, D.C. Total/Weighted Average
Investments in Real Estate              
Number of Buildings 35 59 39 25 28 23 209
Rentable Square Feet 2,441,026 3,305,629 1,935,725 1,665,625 1,563,352 2,059,482 12,970,839
% of Total 18.8% 25.5% 14.9% 12.8% 12.1% 15.9% 100.0%
Occupancy % as of June 30, 2019 97.6% 98.8% 97.4% 98.8% 98.4% 95.9% 97.9%
Annualized Base Rent
(000’s) 1
 $20,155
 $31,532
 $22,941
 $14,179
 $13,347
 $19,358
 $121,512
% of Total 16.6% 25.9% 18.9% 11.7% 11.0% 15.9% 100.0%
Annualized Base Rent1 Per Occupied Square Foot
 $8.46
 $9.65
 $12.18
 $8.61
 $8.68
 $9.80
 $9.57
Weighted Average Remaining Lease Term (Years) 2
 7.2 4.0 3.8 3.7 4.1 3.9 4.5
               
Investments in Improved Land              
Number of Land Parcels 5
 8
 1
 —
 2
 1
 17
Acres 10.1
 46.7
 1.3
 —
 3.2
 13.4
 74.7
% of Total 13.5% 62.6% 1.7% —
 4.3% 17.9% 100.0%
Occupancy % as of June 30, 2019 47.8% 100.0% 100.0% —
 100.0% 100.0% 93.0%
Annualized Base Rent
(000’s) 1
 $880
 $5,174
 $195
 $—
 $395
 $764
 $7,408
% of Total 11.9% 69.9% 2.6% —
 5.3% 10.3% 100.0%
Annualized Base Rent1 Per Occupied Square Foot
 $4.27
 $2.60
 $3.54
 $—
 $2.86
 $1.31
 $2.48
Weighted Average Remaining Lease Term (Years) 2
 2.5
 6.3
 0.8
 —
 3.6
 0.5
 4.7
               
Total Investments in Real Estate              
Annualized Base Rent (000’s) 1
 $21,035
 $36,706
 $23,136
 $14,179
 $13,742
 $20,122
 $128,920
Gross Book Value (000’s) 3
 $379,399
 $536,465
 $340,123
 $280,133
 $177,174
 $274,056
 $1,987,350
1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2020, multiplied by 12.
1
2Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of June 30, 2020, weighted by the respective square footage.
3Includes two properties under redevelopment expected to contain approximately 0.5 million square feet upon completion, as discussed below.
Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2019, multiplied by 12.
2
Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of June 30, 2019, weighted by the respective square footage.
3
Includes four properties under redevelopment (including one property held for sale) expected to contain approximately 0.6 million square feet upon completion as discussed below.
As of June 30, 2019,2020, we owned fourtwo properties under redevelopment (including one property held for sale) expected to contain approximately 0.60.5 million  square feet upon completion with a total expected investment of approximately $129.3$97.0 million including redevelopment costs, capitalized interest and other costs of approximately $51.3$89.8 million.

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Table of Contents
The following table summarizes our capital expenditures incurred during the three and six months ended June 30, 2020 and 2019 and 2018 (in(dollars in thousands):
For the Three Months Ended June 30,For the Six Months Ended June 30,
2020201920202019
Building improvements$4,264  $4,395  $7,594  $9,442  
Tenant improvements763  1,192  1,028  1,927  
Leasing commissions1,484  1,290  4,426  3,101  
Redevelopment, renovation and expansion2,363  9,588  3,577  16,172  
Total capital expenditures 1
$8,874  $16,465  $16,625  $30,642  
 For the Three Months Ended June 30, For the Six Months Ended June 30,
 2019 2018 2019 2018
Building improvements$4,395
 $5,406
 $9,442
 $7,748
Tenant improvements1,192
 694
 1,927
 1,622
Leasing commissions1,290
 1,572
 3,101
 2,710
Redevelopment, renovation and expansion9,588
 2,161
 16,172
 2,895
Total capital expenditures 1
$16,465
 $9,833
 $30,642
 $14,975
11Includes approximately $4.5 million and $13.8 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $8.9 million and $22.2 million for the six months ended June 30, 2020 and 2019, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 13 properties for both the three months ended June 30, 2020 and 2019, respectively, and at 13 and 14 properties for the six months ended June 30, 2020 and 2019, respectively.
Includes approximately $13.8 million and $6.2 million for the three months ended June 30, 2019 and 2018, respectively, and approximately $22.2 million and $8.2 million for the six months ended June 30, 2019 and 2018, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 13 properties for both the three months ended June 30, 2019 and 2018, and at 14 and 17 properties for the six months ended June 30, 2019 and 2018, respectively.
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 92.4%92.9% 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 on-going 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.
Our top 20 customers based on annualized base rent as of June 30, 20192020 are as follows:
CustomerLeasesRentable
Square Feet		% of Total
Rentable
Square Feet
Annualized
Base Rent
(000’s) 1
% of Total
Annualized
Base Rent
1
Amazon.com2
4260,4622.0 %$5,153  3.6 %
2
FedEx Corporation3
7314,5192.4 %5,054  3.5 %
3United States Government8300,7322.3 %3,748  2.6 %
4Danaher3171,7071.3 %3,732  2.6 %
5District of Columbia5197,6171.5 %2,751  1.9 %
6AmerisourceBergen1211,4181.6 %2,543  1.8 %
7DirectBuy Home Improvement1230,8911.8 %1,860  1.3 %
8XPO Logistics2180,7171.4 %1,732  1.2 %
9L3 Harris Technologies, Inc.1147,8981.1 %1,651  1.2 %
10Topaz Lighting Corp.1190,0001.4 %1,463  1.0 %
11
Miami International Freight Systems4
1192,4541.5 %1,463  1.0 %
12
Port Kearny Security, Inc.5
1—— %1,437  1.0 %
13O'Neill Logistics2237,6921.8 %1,429  1.0 %
14YRC261,2520.5 %1,412  1.0 %
15Bar Logistics2203,2631.6 %1,393  1.0 %
16Lilac Solutions Inc.192,8840.7 %1,338  0.9 %
17Saia Motor Freight Line LLC152,0860.4 %1,280  0.9 %
18Space Systems/Loral LLC2107,0600.8 %1,246  0.9 %
19JAM'N Logistics1110,3360.8 %1,229  0.9 %
20
Fredmore Inc. DBA Airpark Newark6
2—— %1,206  0.9 %
Total483,262,988  24.9 %$43,120  30.2 %
1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2020, multiplied by 12.
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Table of Contents
 CustomerLeases 
Rentable
Square Feet
 
% of Total
Rentable
Square Feet
 
Annualized
Base Rent
(000’s) 1
 
% of Total
Annualized
Base Rent
1United States Government9
 381,431
 2.9% $4,820
 3.7%
2
FedEx Corporation 2
7
 490,779
 3.8% 4,814
 3.7%
3Amazon.com2
 241,462
 1.9% 3,262
 2.5%
4Danaher3
 171,707
 1.3% 3,221
 2.5%
5AmerisourceBergen1
 211,418
 1.6% 2,469
 1.9%
6Northrop Grumman Systems2
 199,866
 1.5% 2,303
 1.8%
7District of Columbia3
 149,203
 1.2% 1,867
 1.5%
8Z Gallerie Inc.1
 230,891
 1.8% 1,805
 1.4%
9XPO Logistics2
 180,717
 1.4% 1,672
 1.3%
10
Port Kearny Security, Inc. 3
1
 —
 —
 1,437
 1.1%
11YRC2
 61,252
 0.5% 1,401
 1.1%
12O'Neill Logistics2
 237,692
 1.8
 1,393
 1.1%
13L3 Harris Technologies, Inc.1
 147,898
 1.1% 1,342
 1.1%
14Miami International Freight Systems1
 192,454
 1.5% 1,320
 1.0%
15Bar Logistics2
 203,263
 1.6% 1,294
 1.0%
16Saia Motor Freight Line LLC1
 52,086
 0.4% 1,245
 1.0%
17Space Systems/Loral LLC2
 107,060
 0.8% 1,210
 0.9%
18JAM'N Logistics1
 110,336
 0.9% 1,193
 0.9%
19
Fredmore Inc. DBA Airpark Newark 4
2
 —
 —
 1,135
 0.9%
20Exquisite Apparel Corporation1
 114,061
 0.9% 1,046
 0.8%
 Total46
 3,483,576
 26.9% $40,249
 31.2%
2Includes an improved land parcel consisting of 2.8 acres.

3Includes an improved land parcel consisting of 7.7 acres.
1
4Tenant occupied our 60th Property in Miami Lakes, FL that was sold on July 23, 2020.
5Lease area consists of 16.9 acres of improved land.
6Lease area consists of 10.6 acres of improved land.
Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of June 30, 2019, multiplied by 12.
2
Includes an improved land parcel consisting of 2.3 acres.
3
Lease area consists of 16.9 acres of improved land.
4
Lease area consists of 10.6 acres of improved land.
The following table summarizes the anticipated lease expirations for leases in place as of June 30, 2019,2020, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:
YearRentable Square Feet% of Total Rentable
Square Feet
Annualized Base Rent
(000’s) 2, 3
% of Total Annualized
Base Rent
2020 1
779,1566.0 %8,606  5.4 %
20212,335,49817.8 %22,092  14.0 %
20221,651,53012.6 %18,293  11.6 %
20231,790,54913.7 %22,592  14.3 %
20241,545,96811.8 %20,567  13.0 %
Thereafter4,455,98934.1 %66,047  41.7 %
Total12,558,69096.0 %158,197100.0 %
Year Rentable Square Feet 
% of Total Rentable
Square Feet
 
Annualized Base Rent
(000’s) 2, 3
 
% of Total Annualized
Base Rent
2019 1
 428,348
 3.3% $4,289
 3.0%
2020 2,140,884
 16.5% 19,736
 13.7%
2021 2,284,429
 17.6% 21,174
 14.8%
2022 1,771,293
 13.7% 18,618
 13.0%
2023 1,552,460
 12.0% 18,890
 13.1%
Thereafter 4,514,840
 34.8% 60,814
 42.4%
Total 12,692,254
 97.9% $143,521
 100.0%
1Includes leases that expire on or after June 30, 2020 and month-to-month leases totaling approximately 61,156 square feet.
1
Includes leases that expire on or after June 30, 2019 and month-to-month leases totaling approximately 4,400 square feet and 0.9 acres.
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, 2019, multiplied by 12.
3
Includes annualized base rent related to 17 improved land parcels totaling approximately 74.7as of June 30, 2020, multiplied by 12.
3Includes annualized base rent related to 22 improved land parcels totaling approximately 85.0 acres.
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 June 30, 2019,2020, leases representing approximately 3.3%6.0% of the total rentable square footage of our portfolio are scheduled to expire through December 31, 2019.2020. We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our 20192020 expirations will be above the rates currently being paid for the same space. Rent changes on new and renewed leases totaling approximately 0.60.5 million square feet commencing during the three months ended June 30, 20192020 were approximately 19.9%38.2% higher as compared to the previous rental rates for that same space, and rent changes on new and renewed leases totaling approximately 1.61.1 million square feet commencing during the six months ended June 30, 20192020 were approximately 16.2%28.9% higher as compared to the previous rental rates for that same space. We had a tenant retention ratio of 18.4% and 52.3%, respectively, for the three and six months ended June 30, 2020. Tenant retention decreased primarily due to 382,000 square foot expirations at our Interstate property, of which 190,000 was released to a new tenant as of June 30, 2020.
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.rates, particularly given the current leasing environment has slowed due to shelter-in-place orders, which will reduce revenue from what it would be in a normal leasing environment. 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.
Recent Developments
COVID-19
The COVID-19 pandemic, and mitigation measures put in place by governments to slow it, have caused significant economic disruption. We are headquartered in San Francisco and our employees have been working remotely in compliance with stay-at-home orders mandated across the San Francisco Bay Area on March 16, 2020. We utilize local, third-party property managers, and they are generally under similar stay-at-home orders and are working remotely. We have business continuity and communication plans that we believe, although there can be no assurance, allow us to operate and manage our portfolio effectively during such disruptions. We expect that even after certain mitigation measures, including stay-at-home
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Table of Contents
orders are relaxed or revoked, we will, for the intermediate term, employ lower density work arrangements consistent with social distancing and our business continuity plan.

While the impact of the COVID-19 pandemic on the Company's business is not possible to predict accurately, we continue to work with its customers who have been forced to close or otherwise limit operations or whose businesses have been adversely impacted during the pandemic to, on a case-by-case basis, provide rent deferments. With regard to rent billed for July 2020, we received, as of August 4, 2020, approximately 95% of such rent in cash and an additional 1% by applying security deposits. As of August 4, 2020:

•174 tenants, representing approximately 36.0% of our total tenants had requested rent deferral or abatement. Such requests aggregated 7.0% of our annualized base rent;

•Of the 174 requests, we granted rent deferrals to 61 tenants aggregating 2.7% of annualized base rent (35.1% of total requests by number and 38.7% by dollar amount) which represents 76.7% of the total dollar deferral requests (3.6% of annualized base rent) from those tenants. We did not grant any rent abatement;

•We denied 50 tenant requests aggregating 1.8% of annualized base rent (28.7% of total requests by number and 25.7% by dollar amount). 59 tenants aggregating 1.6% of annualized base rent requesting rent deferral or abatement rescinded their requests (33.3% of requests by number and 22.5% by dollar amount);

•We reversed $0.4 million and $0.9 million for the three and six months ended June 30, 2020, respectively, in straight-line rent receivables for certain of our tenants where the future contractual lease payments were not probable;

•We are still in discussions with four tenants who are requesting 0.05% of our annualized base rent in rent deferral or abatement (2.3% of requests by number and 0.7% by dollar amount); and

•We may in the future amend or enter into additional rent deferral agreements.
The acquisition and disposition markets have similarly slowed as market participants search for price discovery. Our acquisition volume will remain dependent on both the quality and pricing of the opportunity set and the price of our stock relative to net asset value per share. We believe, although there can be no assurance, that our balance sheet is well positioned to make opportunistic acquisitions as we have no remaining debt maturities in 2020, an $11.5 million mortgage loan maturing in April 2021, and no balance outstanding on our $250 million revolving credit facility. In addition, we had a cash balance of approximately $148.3 million as ofJune 30, 2020. See “Item 1A - Risk Factors” in this Quarterly Report on Form 10-Q for additional discussion regarding the risks to which we are and may be subject as a result of the COVID-19 pandemic.
Acquisition Activity
During the three months ended June 30, 2019,2020, we acquired twoone industrial buildingsbuilding containing approximately 119,00013,000 square feet and one improved land parcel containing approximately 2.8 acres for a total purchase price of approximately $47.8$10.1 million. The property wasproperties were acquired from an unrelated third partyparties 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 propertyproperties we acquired during the three months ended June 30, 2019:2020:
Property NameLocationAcquisition DateNumber of
Buildings		Square
Feet
Purchase Price
(in thousands) 1
Stabilized
Cap Rate 2
84th Kent 3
Kent, WAApril 17, 2020—  —  $4,500  5.7 %
HudsonSeattle, WAMay 13, 20201  13,000  5,611  4.0 %
Total/Weighted Average1  13,000  $10,111  4.8 %
1Excludes intangible liabilities and mortgage premiums, if any. The total aggregate initial investment was approximately $10.5 million, including $0.3 million in capitalized closing costs and acquisition costs and $0.1 million in assumed intangible liabilities.
2Stabilized capitalization rates, referred to herein as stabilized cap rates, are calculated, at the time of acquisition, as annualized cash basis net operating income for the property stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property. Total acquisition cost basis for the property includes the initial purchase price, the effects of marking assumed debt to market, buyer’s due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These
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Table of Contents
Property NameLocation Acquisition Date 
Number of
Buildings
 
Square
Feet
 
Purchase Price
(in thousands) 1
 
Stabilized
Cap Rate 2
Minnesota and TennesseeSan Francisco, CA May 28, 2019 2
 119,089
 $47,775
 4.0%
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, 2019, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in out other public filings..
1
3Represents an improved land parcel containing approximately 2.8 acres.
Excludes intangible liabilities and mortgage premiums, if any. The total aggregate initial investment was approximately $51.2 million, including $0.3 million in capitalized closing costs and acquisition costs.

2
Stabilized capitalization rates, referred to herein as stabilized cap rates, are calculated, at the time of acquisition, as annualized cash basis net operating income for the property stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property. Total acquisition cost basis for the property includes the initial purchase price, the effects of marking assumed debt to market, buyer’s due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2018.
Redevelopment Activity
As of June 30, 2019,2020, we have fourtwo properties under redevelopment (including one property held for sale) that willexpected to contain approximately 0.60.5 million square feet upon completion with a total expected investment of approximately $129.3$97.0 million, including redevelopment costs, capitalized interest and other costs of approximately $51.3$89.8 million as follows:
Property Name
Total Expected
Investment (in
thousands) 1
Amount Spent to Date (in thousands)Estimated
Amount
Remaining to
Spend (in thousands)
Estimated
Stabilized Cap
Rate 2
Estimated Post-Development Square FeetEstimated
Completion
Quarter		% Pre-leased June 30,2020
Sodo Row - North & South$62,271  $58,003  $4,268  4.5 %234,308Q3 202114.0 %
Kent 19234,763  31,810  2,953  5.4 %219,910Q4 2020— %
Total/Weighted Average$97,034  $89,813  $7,221  4.8 %454,2187.0 %
Property Name
Total Expected
Investment (in
thousands) 1
 Amount Spent to Date (in thousands) 
Estimated
Amount
Remaining to
Spend (in thousands)
 
Estimated
Stabilized Cap
Rate 2
 Estimated Post-Development Square Feet 
Estimated
Completion
Quarter
 % Pre-leased as of June 30, 2019
Sodo Row Phase I and II 3
$66,479
 $50,639
 $15,840
 5.1% 234,720
 Q3 2020 13.5%
10100 NW 25th Street 4
12,989
 11,623
 1,366
 N/A
 106,810
 N/A —
6th Avenue South15,522
 14,477
 1,045
 5.1% 50,270
 Q4 2019 —
Kent 19234,297
 24,341
 9,956
 5.6% 219,910
 Q4 2020 —
Total/Weighted Average$129,287
 $101,080
 $28,207
 5.2% 611,710
   6.3%
1Total expected investment for the property 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.
21
Total expected investment for the property 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
Estimated stabilized cap rates are calculated 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. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These estimated 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, 2018.
3
Sodo Row Phase I and II will contain approximately 51,000 and 184,000 square feet, respectively, upon completion.
4
Represents one property held for sale with a gross book value of approximately $11.6 million and accumulated depreciation and amortization of approximately $0 as of June 30, 2019.

During the first quarter of 2019, we completed redevelopment of our 1775 NW 70th Avenue property in Miami, Florida. We executed a full-building five-year lease stabilizing the approximately 65,000 square foot redevelopment property. The total investment was approximately $10.0 million with an estimated stabilized cap raterates are subject to risks, uncertainties, and assumptions and are not guarantees of 5.5%.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, 2020, in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in our other public filings.
Disposition Activity
During the six months ended June 30, 2019,2020, we sold one propertythree properties located in the Los AngelesWashington D.C. market for a sales price of approximately $12.4$51.3 million, resulting in a gain of approximately $4.5$17.8 million.

The following summarizes the condensed results of operations of the propertyproperties sold during the six months ended June 30, 2019, for the three and six months ended June 30, 2020 and 2019 and 2018 (in(dollars in thousands):
 For the Three Months Ended June 30,For the Six Months Ended June 30,
 2020201920202019
Rental revenues$590  $749  $1,339  $1,483  
Tenant expense reimbursements294  274  609  675  
Property operating expenses(159) (267) (444) (663) 
Depreciation and amortization—  (315) (210) (632) 
Income from operations$725  $441  $1,294  $863  
28
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2019 2018 2019 2018
Rental revenues $—
 $129
 $102
 $259
Tenant expense reimbursements —
 41
 34
 67
Property operating expenses —
 (46) (30) (82)
Depreciation and amortization —
 (43) (14) (87)
Income from operations $—
 $81
 $92
 $157
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ATM Program
We have an at-the-market equity offering program (the “$300 Million ATM Program”) pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $300.0 million ($235.993.3 million remaining as of June 30, 2019)2020) in amounts and at times as we determine from time to time. Prior to the implementation of the $300 Million ATM Program, we had a $250.0 millionMillion ATM program (the “$250 Million ATM Program”), which was substantially utilized as of June 30,May 31, 2019 and which is no longer active, and a $200.0 million ATM Program which was substantially utilized as of June 30, 2018 and which is no longer active. We intend to use the net proceeds from the offering of the shares under the $300 Million ATM Program, if any, for general corporate purposes, which may include future acquisitions and repayment of indebtedness, including borrowings under our revolving credit facility. During the three and six months ended June 30, 2019,2020, we issued an aggregate of 2,375,270619,300 and 4,364,0711,046,327 shares, respectively, of common stock at a weighted average offering price of $45.76$52.81 and 43.77$53.04 per share, respectively, under the $300 Million ATM Program, and the $250 Million ATM Program, resulting in net proceeds of approximately $107.1$32.2 million and $188.2$54.7 million, respectively, and paying total compensation to the applicable sales agents of approximately $1.6$0.5 million and $2.8$0.8 million, respectively.
Long Term Incentive Plan
On January 8, 2019, we amended and restated our Amended and Restated Long-Term Incentive Plan (as amended and restated, the “Amended LTIP”). Under the Amended LTIP, each participant’s Performance Shareperformance share target award for target awards granted on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with performance share awards granted on or after January 1, 2019, the grant date fair value of the performance share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period. The fair value of the performance share awards for the performance measurement period of January 1, 20192020 to December 31, 20212022 is $4.8$5.6 million, which will be recognized quarterly over a three-year period. Stock-based compensation expense for the performance share awards for the performance measurement period of January 1, 2019 to December 31, 2021 was $0.4$1.0 million and $0.8$2.5 million for the three and six months ended June 30, 2019,2020, respectively.
Equity Incentive Plan
On April 30, 2019, our stockholders approved the 2019 Equity Incentive Plan (the “2019 Plan”), which replaces the Amended and Restated 2010 Equity Incentive Plan (the “2010 Plan”). The 2019 Plan permits the grant of restricted stock awards, performance share awards and unrestricted stock awards.  The maximum number of shares of our common stock that may be issued under the 2019 Plan is 1,898,961, which consists of (i) 1,510,079 shares initially reserved and available for issuance under the 2019 Plan and (ii) 388,882 shares underlying outstanding awards under the 2010 Plan, which if forfeited, canceled or otherwise terminated under the 2010 Plan shall be added to the shares available for issuance under the 2019 Plan. No further awards will be made under the 2010 Plan.

As of June 30, 2020, there were 1,898,961 shares of common stock authorized for issuance as restricted stock grants, unrestricted stock awards or performance share awards under the 2019 Plan, of which 1,429,652 were remaining available for issuance.
Senior Secured Loan
As of June 30, 2019, we haveWe had a senior secured loan (the “Senior Secured Loan”) outstanding to a borrower that bearsbore interest at a fixed annual interest rate of 8.0% and matures in May 2020 (“was fully repaid during the Senior Secured Loan”).three months ended June 30, 2020. The Senior Secured Loan iswas secured by a portfolio of sevensix improved land parcels located primarily located in Newark, New Jersey. One of the properties securing the Senior Secured Loan may be put to us as partial or full repayment of the Senior Secured Loan at a previously agreed upon value. This property may be called by us as partial or full repayment of the Senior Secured Loan at a previously agreed upon value. In addition, per the terms of the Senior Secured Loan, the borrower may repay the loan at any time with either cash or deed in lieu, with the deed subject to our approval. During the six months ended June 30, 2019, we acquired two properties that were securing the Senior Secured Loan for a previously agreed upon aggregate purchase price which approximated their fair value of approximately $39.1 million, which resulted in an approximately $39.1 million reduction in the amount outstanding on the Senior Secured Loan. As of June 30, 20192020 and December 31, 2018,2019, there was approximately $15.8 million$0 and $54.5$15.9 million, respectively, net of deferred loan fees of approximately $0.1 million$0 and $0.5$0.1 million, respectively, outstanding on the Senior Secured Loan and approximately $0.3 million$0 and $0.4$0.3 million, respectively, of interest receivable outstanding on the Senior Secured Loan.
Share Repurchase Program
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, 2020. Purchases made pursuant to this program 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 June 30, 2019,2020, we havehad not repurchased any shares of stock pursuant to our share repurchase authorization.program.
Dividend and Distribution Activity
29
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On July 26, 2019,August 4, 2020, our board of directors declared a cash dividend in the amount of $0.27$0.29 per share of our common stock payable on October 18, 201916, 2020 to the stockholders of record as of the close of business on October 4, 2019.2, 2020.
Contractual Commitments
As of July 31, 2019,August 4, 2020, we have six outstanding contracts with third-party sellers to acquire six industrial properties, two non-binding letters of intent with third-party sellers to acquire two industrial properties, and one outstanding contract with a third-party seller to sellacquire one industrial propertyimproved land parcel consisting of approximately 7.0 acres, as described under the heading “Contractual Obligations” in this Quarterly Report on Form 10-Q. There is no assurance that we will acquire or dispose of the propertiesproperty under contract because the proposed acquisitions and dispositions areacquisition is subject to the completion of satisfactory due diligence and various closing conditions, and with respect to the properties under non-binding letters of intent, our entry into purchase and sale agreements.conditions.
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 92.4%92.9% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases. Lease terms typically range from three to ten years.
Our primary cash expenses consist of our property operating expenses, which include: real estate taxes, repairs and maintenance, management expenses, insurance, utilities, general and administrative expenses, which include compensation costs, office expenses, professional fees and other administrative expenses, acquisition costs, which include third-party costs paid to brokers and consultants, and interest expense, primarily on our mortgage loans, revolving credit facility, term loans and senior unsecured notes.
Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions at various times during the course of such periods. The results of operations of any acquired property are included in our financial statements as of the date of its acquisition.

The analysis of our results below for the three and six months ended June 30, 20192020 and 20182019 includes the changes attributable to same store properties. The same store pool for the comparison of the three and six months ended June 30, 20192020 and 20182019 includes all properties that were owned and in operation as of June 30, 20192020 and since January 1, 20182019 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of June 30, 2019.2020. As of June 30, 2019,2020, the same store pool consisted of 189198 buildings aggregating approximately 12.0 million square feet representing approximately 92.4%91.8% of our total square feet owned and ten14 improved land parcels consisting of 47.254.2 acres. As of June 30, 2019,2020, the non-same store properties, which we acquired, redeveloped, or sold during 20182019 and 20192020 or were held for sale (if any) or in redevelopment as of June 30, 2019,2020, consisted of 20 buildings aggregating approximately 1.01.1 million square feet, seveneight improved land parcels containing approximately 27.530.8 acres and fourtwo properties under redevelopment (including one property held for sale) expected to contain approximately 0.60.5 million square feet upon completion. As of June 30, 20192020 and 2018,2019, our consolidated same store pool occupancy was approximately 98.8%96.5% and 98.1%97.7%, 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.
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Comparison of the Three Months Ended June 30, 20192020 to the Three Months Ended June 30, 2018:2019:
 For the Three Months Ended June 30,  
 20202019$ Change% Change
 (Dollars in thousands) 
Rental revenues 1
Same store$30,795  $30,284  $511  1.7 %
Non-same store operating properties 2
5,522  2,679  2,843  106.1 %
Total rental revenues36,317  32,963  3,354  10.2 %
Tenant expense reimbursements 1
Same store8,689  8,228  461  5.6 %
Non-same store operating properties 2
736  539  197  36.5 %
Total tenant expense reimbursements9,425  8,767  658  7.5 %
Total revenues45,742  41,730  4,012  9.6 %
Property operating expenses
Same store10,274  9,769  505  5.2 %
Non-same store operating properties 2
1,660  940  720  76.6 %
Total property operating expenses11,934  10,709  1,225  11.4 %
Net operating income 3
Same store29,210  28,743  467  1.6 %
Non-same store operating properties 2
4,598  2,278  2,320  101.8 %
Total net operating income$33,808  $31,021  $2,787  9.0 %
Other costs and expenses
Depreciation and amortization11,459  10,648  811  7.6 %
General and administrative5,665  6,757  (1,092) (16.2)%
Acquisition costs11  1  10  1000.0 %
Total other costs and expenses17,135  17,406  (271) (1.6)%
Other income (expense)
Interest and other income190  817  (627) (76.7)%
Interest expense, including amortization(3,909) (4,053) 144  (3.6)%
Gain on sales of real estate investments17,750  —  17,750  n/a
Total other income (expense)14,031  (3,236) 17,267  n/a
Net income$30,704  $10,379  $20,325  195.8 %
1Accounting Standards Update (“ASU”) No. 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,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.
2Includes 2020 and 2019 acquisitions and dispositions, eight improved land parcels and two properties under redevelopment as of June 30, 2020.
3Includes 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.

31
 For the Three Months Ended June 30,    
 2019 2018 $ Change % Change
 (Dollars in thousands)  
Rental revenues 1
   
Same store$29,224
 $27,272
 $1,952
 7.2 %
Non-same store operating properties 2
3,739
 1,634
 2,105
 128.8 %
Total rental revenues32,963
 28,906
 4,057
 14.0 %
Tenant expense reimbursements 1

 
 
 
Same store8,221
 8,086
 135
 1.7 %
Non-same store operating properties 2
546
 246
 300
 122.0 %
Total tenant expense reimbursements8,767
 8,332
 435
 5.2 %
Total revenues41,730
 37,238
 4,492
 12.1 %
Property operating expenses
 
 
 
Same store9,499
 9,904
 (405) (4.1)%
Non-same store operating properties 2
1,210
 409
 801
 195.8 %
Total property operating expenses10,709
 10,313
 396
 3.8 %
Net operating income 3

 
 
 
Same store27,946
 25,454
 2,492
 9.8 %
Non-same store operating properties 2
3,075
 1,471
 1,604
 109.0 %
Total net operating income$31,021
 $26,925
 $4,096
 15.2 %
Other costs and expenses
 
 
 
Depreciation and amortization10,648
 9,774
 874
 8.9 %
General and administrative6,757
 5,007
 1,750
 35.0 %
Acquisition costs1
 5
 (4) (80.0)%
Total other costs and expenses17,406
 14,786
 2,620
 17.7 %
Other income (expense)
 
 
 
Interest and other income817
 921
 (104) (11.3)%
Interest expense, including amortization(4,053) (4,626) 573
 (12.4)%
Gain on sales of real estate investments—
 11,703
 (11,703) (100.0)%
Total other income (expense)(3,236) 7,998
 (11,234) n/a
Net income$10,379
 $20,137
 $(9,758) (48.5)%
Table of Contents

1
On January 1, 2019, we adopted the practical expedient under Accounting Standards Update (“ASU”) No. 2018-11, Leases (Topic 842), Targeted Improvements, which allows us to elect not to separate lease and non-lease rental income. All rental income earned pursuant to tenant leases is reflected as one line, “Rental revenues and tenant expense reimbursements” on our accompanying consolidated statements of operations. We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with GAAP. We believe this information is frequently used by management, investors, and other interested parties to evaluate our performance. See “Note 2 - Significant Accounting Policies” in our condensed notes to consolidated financial statements for more information regarding our adoption of this standard.
2
Includes 2018 and 2019 acquisitions and dispositions, seven improved land parcels and four properties under redevelopment (including one property held for sale with a gross book value of approximately $11.6 million and accumulated depreciation and amortization of $0) as of June 30, 2019.
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.
Revenues. Total revenues increased approximately $4.5$4.0 million for the three months ended June 30, 20192020 compared to the same period from the prior year due primarily to property acquisitions during 20182020 and 2019 and increased revenue on new and renewed leases.leases, offset by a decline in occupancy rate. Cash rents on new and renewed leases totaling approximately 0.5 million square feet commencing during the three months ended June 30, 2020 increased approximately 38.2% compared to the same period from the prior year. For the three months ended June 30, 2020 and 2019, and 2018, approximately $0.7$1.3 million and $1.0$0.7 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants. For bothDuring the three months ended June 30, 2019 and 2018,2020, due to the effects of COVID-19, approximately $0.4 million in straight-line rent abatementsreceivables was reversed. For the three months ended June 30, 2020, approximately $0.7 million in rent abatement was provided to the tenant at our Belleville property.Caribbean property pursuant to a lease extension.
Property operating expenses. Total property operating expenses increased approximately $0.4$1.2 million during the three months ended June 30, 20192020 compared to the same period from the prior year. The increase in total property operating expenses was primarily due to an increase of approximately $0.8$0.7 million attributable to property acquisitions during 20182020 and 2019, offset by a reduction in snow removal expenses and supplemental real estate taxes.2019.
Depreciation and amortization. Depreciation and amortization increased approximately $0.9$0.8 million during the three months ended June 30, 20192020 compared to the same period from the prior year primarily due to property acquisitions during 20182020 and 2019.
General and administrative expenses. General and administrative expenses decreased approximately $1.1 million primarily due to lower performance share award expense of approximately $1.0 million, partially offset by increased approximately $1.8 millioncompensation expenses for the three months ended June 30, 20192020 compared to the same period from the prior year due primarily to an increase of approximately $1.4 million in performance share award expense. Increase in performance share award expense primarily related to the expense for Performance share awards granted prior to January 1, 2019, which varies quarter to quarter based on our relative share price performance. Performance share award expense for the three months ended June 30, 2019 was approximately $2.8 million as compared to approximately $1.4 million for the prior year period. See “Note 11 – Stockholders’ Equity” in our condensed notes to consolidated financial statements for more information regarding our performance share awards.year.
Interest and other income. Interest and other income decreased approximately $0.1$0.6 million for the three months ended June 30, 20192020 compared to the same period from the prior year primarily due to a decrease in our outstanding Senior Secured Loan balance, offset by higher interest rates on our cash balances.balance.
Interest expense, including amortization. Interest expense decreased approximately $0.6$0.1 million for the three months ended June 30, 20192020 compared to the same period from the prior year primarily due to an increase in capitalized interest of $0.2 million and the payoffrepayment of a mortgage loan payable in the amount of approximately $32.7 million, offset by the issuance of approximately $100.0 million of senior unsecured debt in December 2018, offset by higher2019. In addition, the interest ratesrate on ourthe variable rate term loans.loan was lower during the three months ended June 30, 2020 compared to the same period from the prior year.
Gain on sales of real estate investments. Gain on sales of real estate investments decreasedincreased approximately $11.7$17.8 million  for the three months ended June 30, 20192020 compared to the same period from the prior year. We did not sell any properties during the three months ended June 30, 2019, as compared to a recognized gain of approximately $11.7 million from the sale of one property in the same period from the prior year.

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Comparison of the Six Months Ended June 30, 20192020 to the Six Months Ended June 30, 2018:2019:
 For the Six Months Ended June 30,  
 20202019$ Change% Change
 (Dollars in thousands) 
Rental revenues 1
Same store$61,035  $59,983  $1,052  1.8 %
Non-same store operating properties 2
10,706  4,596  6,110  132.9 %
Total rental revenues71,741  64,579  7,162  11.1 %
Tenant expense reimbursements 1
Same store17,445  16,838  607  3.6 %
Non-same store operating properties 2
1,672  1,193  479  40.1 %
Total tenant expense reimbursements19,117  18,031  1,086  6.0 %
Total revenues90,858  82,610  8,248  10.0 %
Property operating expenses
Same store20,543  19,689  854  4.3 %
Non-same store operating properties 2
3,299  1,713  1,586  92.6 %
Total property operating expenses23,842  21,402  2,440  11.4 %
Net operating income 3
Same store57,937  57,132  805  1.4 %
Non-same store operating properties 2
9,079  4,076  5,003  122.7 %
Total net operating income$67,016  $61,208  $5,808  9.5 %
Other costs and expenses
Depreciation and amortization22,559  21,063  1,496  7.1 %
General and administrative11,423  12,720  (1,297) (10.2)%
Acquisition costs63  1  62  6200.0 %
Total other costs and expenses34,045  33,784  261  0.8 %
Other income (expense)
Interest and other income754  2,339  (1,585) (67.8)%
Interest expense, including amortization(7,915) (8,317) 402  (4.8)%
Gain on sales of real estate investments17,750  4,465  13,285  297.5 %
Total other income (expense)10,589  (1,513) 12,102  n/a
Net income$43,560  $25,911  $17,649  68.1 %
1ASU No. 2018-11, Leases (Topic 842), Targeted Improvements allows us to elect not to separate lease and non-lease rental income. All rental income earned pursuant to tenant leases is reflected as one line, “Rental revenues and tenant expense reimbursements” on our accompanying consolidated statements of operations. We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with GAAP. We believe this information is frequently used by management, investors, and other interested parties to evaluate our performance. See “Note 2 - Significant Accounting Policies” in our condensed notes to consolidated financial statements for more information regarding our adoption of this standard.
2Includes 2019 and 2020 acquisitions and dispositions, eight improved land parcels and two properties under redevelopment as of June 30, 2020.
3Includes 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.
33
 For the Six Months Ended June 30,    
 2019 2018 $ Change % Change
 (Dollars in thousands)  
Rental revenues 1
   
Same store$57,932
 $54,479
 $3,453
 6.3 %
Non-same store operating properties 2
6,647
 3,161
 3,486
 110.3 %
Total rental revenues64,579
 57,640
 6,939
 12.0 %
Tenant expense reimbursements 1
       
Same store16,902
 16,234
 668
 4.1 %
Non-same store operating properties 2
1,129
 471
 658
 139.7 %
Total tenant expense reimbursements18,031
 16,705
 1,326
 7.9 %
Total revenues82,610
 74,345
 8,265
 11.1 %
Property operating expenses       
Same store19,315
 19,426
 (111) (0.6)%
Non-same store operating properties 2
2,087
 780
 1,307
 167.6 %
Total property operating expenses21,402
 20,206
 1,196
 5.9 %
Net operating income 3
       
Same store55,519
 51,287
 4,232
 8.3 %
Non-same store operating properties 2
5,689
 2,852
 2,837
 99.5 %
Total net operating income$61,208
 $54,139
 $7,069
 13.1 %
Other costs and expenses       
Depreciation and amortization21,063
 20,509
 554
 2.7 %
General and administrative12,720
 10,085
 2,635
 26.1 %
Acquisition costs1
 7
 (6) (85.7)%
Total other costs and expenses33,784
 30,601
 3,183
 10.4 %
Other income (expense)       
Interest and other income2,339
 981
 1,358
 138.4 %
Interest expense, including amortization(8,317) (9,311) 994
 (10.7)%
Gain on sales of real estate investments4,465
 14,986
 (10,521) (70.2)%
Total other income (expense)(1,513) 6,656
 (8,169) n/a
Net income$25,911
 $30,194
 $(4,283) (14.2)%
1
On January 1, 2019, we adopted the practical expedient under ASU No. 2018-11, Leases (Topic 842), Targeted Improvements, which allows us to elect not to separate lease and non-lease rental income. All rental income earned pursuant to tenant leases is reflected as one line, “Rental revenues and tenant expense reimbursements” on our accompanying consolidated statements of operations. We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with GAAP. We believe this information is frequently used by management, investors, and other interested parties to evaluate our performance. See “Note 2 - Significant Accounting Policies” in our condensed notes to consolidated financial statements for more information regarding our adoption of this standard.
2
Includes 2018 and 2019 acquisitions and dispositions, seven improved land parcels and four properties under redevelopment (including one property held for sale with a gross book value of approximately $11.6 million and accumulated depreciation and amortization of $0) as of June 30, 2019.
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.

Revenues. Total revenues increased approximately $8.3$8.2 million  for the six months ended June 30, 20192020 compared to the same period from the prior year due primarily to property acquisitions during 20182020 and 2019 and increased revenue on new and renewed leases.leases, offset by a decline in occupancy rate. Cash rents on new and renewed leases totaling approximately 1.1 million square feet commencing during the six months ended June 30, 2020 increased approximately 28.9% compared to the same period from the prior year. For the six months ended June 30, 2020 and 2019, and 2018, approximately $1.3$1.9 million and $1.9$1.3 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants. For bothDuring the six months ended June 30, 2019 and 2018,2020, due to the effects of COVID-19, approximately $0.4$0.9 million in straight-line rent receivables was reversed. For the six months ended June 30, 2020, approximately $0.7 million in rent abatements was provided to the tenant at our BellevilleCaribbean property.
Property operating expenses. Total property operating expenses increased approximately $1.2$2.4 million during the six months ended June 30, 20192020 compared to the same period from the prior year. The increase in total property operating expenses was primarily due to an increase of approximately $1.3$1.6 million attributable to property acquisitions during 20182020 and 2019.
Depreciation and amortization. Depreciation and amortization increased approximately $0.6$1.5 million during the six months ended June 30, 20192020 compared to the same period from the prior year primarily due to property acquisitions during 20182019 and 2019.2020.
General and administrative expenses. General and administrative expenses increaseddecreased approximately $2.6$1.3 million for the six months ended June 30, 20192020 compared to the same period from the prior year due primarily to an increasea decrease of approximately $0.3$1.6 million in stock based compensation expenses and an increase of approximately $1.8 millionexpense including a decrease in performance share award expense. Increaseexpense of $2.3 million. offset by an increase in compensation expenses. The decrease in performance share award expense primarily related to the expense for performance share awards granted prior to January 1, 2019, which varies quarter to quarter based on our relative share price performance. Performance share award expense for the six months ended June 30, 2019 was approximately $4.8 million as compared to approximately $3.0 million for the prior year period. See “Note 11 – Stockholders’ Equity” in our condensed notes to consolidated financial statements for more information regarding our performance share awards.
Interest and other income. Interest and other income increaseddecreased approximately $1.4$1.6 million for the six months ended June 30, 20192020 compared to the same period from the prior year primarily due to an increase of approximately $0.9 milliona decrease in interest earned on our outstanding Senior Secured Loan which we made in May 2018, and higher interest rates on our cash balances.balance.
Interest expense, including amortization. Interest expense decreased approximately $1.0$0.4 million for the six months ended June 30, 20192020 compared to the same period from the prior yearyear. This decrease is primarily due to a lower interest rate on the variable rate term loan, the repayment of a $32.7 million mortgage loan, and an increase in capitalized interest, of $0.7 million andoffset by the payoffissuance of a mortgage loan$100.0 million of senior unsecured debt in December 2018, offset by higher interest rates on our term loans.2019.
Gain on sales of real estate investments. Gain on sales of real estate investments decreasedincreased approximately $10.5$13.3 million  for the six months ended June 30, 20192020 compared to the same period from the prior year. We recognized a gain of $4.5$17.8 million from the sale of one propertythree properties during the six months ended June 30, 2019,2020, as compared to a recognized gain of approximately $15.0$4.5 million from the sale of two propertiesone property in the same period from the prior year.

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 debt-to-adjusted EBITDA ratio below 6.0x;
•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 (5-7 years), positioning us to re-price parts of our capital structure as our rental rates change with market conditions.

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We intend to preserve a flexible capital structure with a long-term goal to maintain our investment grade rating and be in a position to issue additional unsecured debt and additional 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, common stock and perpetual preferred stock. We may also assume debt in connection with property acquisitions which may have a higher loan-to-value.
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 with cash on hand, term loans, senior unsecured notes, mortgages, 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 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 secured and unsecured 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 Facilityrevolving credit facility and to access additional capital through issuances of equity and debt securities.
The following sets forth certain information regarding our current at-the-market common stock offering program as of June 30, 2019:2020:
ATM Stock Offering ProgramDate Implemented 
Maximum Aggregate
Offering Price (in
thousands)
 Aggregate Common Stock
Available as of June 30, 2019 (in thousands)		ATM Stock Offering ProgramDate ImplementedMaximum Aggregate
Offering Price (in
thousands)		Aggregate Common Stock Available as of three and six months ended (in thousands)
$300 Million ATM ProgramMay 17, 2019 $300,000
 $235,897
 $300 Million ATM ProgramMay 17, 2019$300,000  $93,300  
The table below sets forth the activity under our at-the-market common stock offering programs during the three and six months ended June 30, 20192020 and 2018,2019, respectively (in thousands, except share and price per share data):
For the Three Months Ended June 30,Shares SoldWeighted Average
Price Per Share		Net Proceeds (in
thousands)		Sales Commissions
(in thousands)
June 30, 2020619,300  $52.81  $32,230  $474  
June 30, 20192,375,270  $45.76  $107,123  $1,576  
For the Three Months EndedShares Sold 
Weighted Average
Price Per Share
 
Net Proceeds (in
thousands)
 
Sales Commissions
(in thousands)
June 30, 20192,375,270
 $45.76
 $107,123
 $1,576
June 30, 20182,826,167
 $37.48
 $104,380
 $1,536

For the Six Months Ended June 30,Shares SoldWeighted Average
Price Per Share		Net Proceeds (in
thousands)		Sales Commissions
(in thousands)
June 30, 20201,046,327  $53.04  $54,688  $804  
June 30, 20194,364,071  $43.77  $188,248  $2,770  
For the Six Months EndedShares Sold Weighted Average
Price Per Share		 Net Proceeds (in
thousands)		 Sales Commissions
(in thousands)
June 30, 20194,364,071
 $43.77
 $188,248
 $2,770
June 30, 20182,885,401
 $37.43
 $106,424
 $1,566

As of June 30, 2019, we haveWe had a Senior Secured Loan outstanding to a borrower that bearsbore interest at a fixed annual interest rate of 8.0% and matures in Maymatured and was paid off during the quarter ended June 30, 2020. The Senior Secured Loan iswas secured by a portfolio of sevensix improved land parcels located primarily located in Newark, New Jersey. One of the properties securing the Senior Secured Loan may be put to us as partial or full repayment of the Senior Secured Loan at a previously agreed upon value. This property may be called by us as partial or full repayment of the Senior Secured Loan at a previously agreed upon value. In addition, per the terms of the Senior Secured Loan, the borrower may repay the loan at any time with either cash or deed in lieu, with the deed subject to our approval. During the six months ended June 30, 2019, we acquired two properties that were securing the Senior Secured Loan for a previously agreed upon aggregate purchase price which approximated their fair value of approximately $39.1 million, which resulted in an approximately $39.1 million reduction in the amount outstanding on the Senior Secured Loan. As of June 30, 20192020 and December 31, 2018,2019, there was approximately $15.8 million$0 and $54.5$15.9 million, respectively, net of deferred loan fees of approximately $0.1 million$0 and $0.5$0.1 million, respectively, outstanding on the Senior Secured Loan and approximately $0.3 million$0 and $0.4$0.3 million, respectively, of interest receivable outstanding on the Senior Secured Loan.

As of June 30, 2019,2020, we had $50.0 million of senior unsecured notes that mature in September 2022, $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, (collectively,$100.0 million of senior unsecured notes that mature in December 2029
(collectively, the “Senior Unsecured Notes”), and a credit facility (the “Facility”), which consists of a $250.0 million unsecured
revolving credit facility that matures in October 2022, a $50.0 million term loan that matures in August 2021 and a $100.0 million term loan that matures in January 2022. As of both
June 30, 20192020 and December 31, 2018,2019, there was $0 and $19.0 million, respectively, ofwere no borrowings outstanding on our revolving credit facility and $150.0$100.0 million of borrowings outstanding on our term loans. loan.
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As of June 30, 2019,2020, we had twoone interest rate capscap to hedge the variable cash flows associated with $100.0$50.0 million of ourits existing $150.0$100.0 million variable-rate term loans. We previouslyloan. The cap has a notional value of $50.0 million and will effectively cap the annual interest rate payable at 4.0% plus 1.20% to 1.70%, depending on leverage, with respect to $50.0 million for the period from December 1, 2014 (effective date) to May 4, 2021. As of December 31, 2019, we had an additional interest rate cap with a notional value of $50.0 million (which expired on April 1, 2019)February 3, 2020) to hedge the variable cash flows associated with $50.0 million of our existing $150.0$100.0 million variable-rate term loans. See “Note 9 - Derivative Financial Instruments”loan. We are required to make certain monthly variable rate payments on the term loan, while the applicable counterparty is obligated to make certain monthly floating rate payments based on LIBOR to us in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.the event LIBOR is greater than 4.0%, referencing the same notional amount.
The aggregate amount of the Facility may be increased to a total of up to $600.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Facility are limited to the lesser of (i) the sum of the $150.0$100.0 million term loansloan and the $250.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Facility, including the term loans, is generally to be paid based upon, at our option, either (i) LIBOR plus the applicable LIBOR 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, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Facility plus 1.25%. The applicable LIBOR margin will range from 1.05% to 1.50% (1.05% as of June 30, 2019)2020) for the revolving credit facility and 1.20% to 1.70% (1.20% as of June 30, 2019) for the $50.0 million term loan that matures in August 20212020) and the $100.0 million term loan that matures in January 2022, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value. The Facility requires quarterly payments of an annual facility fee in an amount ranging from 0.15% to 0.30%, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value.
The 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 Facility and the Senior Unsecured Notes are unsecured by our properties or by interests in the subsidiaries that hold such properties. The 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 Facility and the Senior Unsecured Notes as of June 30, 20192020 and December 31, 2018.2019.
As of June 30, 20192020 and December 31, 2018,2019, we had outstanding mortgage loans payable, net of deferred financing costs, of approximately $45.1$11.5 million and $45.8$44.3 million, respectively, and held cash and cash equivalents totaling approximately $117.2$148.3 million and $31.0$110.1 million, respectively.
The following tables summarize our debt maturities and principal payments and market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the six months ended June 30, 20192020 and 20182019 (dollars in thousands, except per share data):
Credit
Facility		Term LoanSenior
Unsecured
Notes		Mortgage
Loan
Payable		Total Debt
2020 (6 months)$—  $—  $—  $231  $231  
2021—  —  —  11,271  11,271  
2022—  100,000  50,000  —  150,000  
2023—  —  —  —  —  
2024—  —  100,000  —  100,000  
Thereafter—  —  200,000  —  200,000  
Total Debt—  100,000  350,000  11,502  461,502  
Deferred financing costs, net—  (313) (2,131) (14) (2,458) 
Total Debt, net$—  $99,687  $347,869  $11,488  $459,044  
Weighted average interest raten/a1.7 %3.8 %5.5 %3.4 %
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Credit
Facility
 Term Loans 
Senior
Unsecured
Notes
 
Mortgage
Loans
Payable
 Total Debt
2019 (6 months)$—
 $—
 $—
 $764
 $764
2020—
 —
 —
 33,077
 33,077
2021—
 50,000
 —
 11,271
 61,271
2022—
 100,000
 50,000
 —
 150,000
2023—
 —
 —
 —
 —
Thereafter—
 —
 200,000
 —
 200,000
Total debt—
 150,000
 250,000
 45,112
 445,112
Deferred financing costs, net—
 (769) (1,587) (62) (2,418)
Total debt, net$—
 $149,231
 $248,413
 $45,050
 $442,694
Weighted average interest raten/a
 3.7% 4.1% 4.1% 3.9%
As of June 30, 2020As of June 30, 2019
Total Debt, net$459,044  $442,694  
Equity
Common Stock
Shares Outstanding 1
68,322,213  65,495,713  
Market Price 2
$52.64  $49.04  
Total Equity3,596,481  3,211,910  
Total Market Capitalization$4,055,525  $3,654,604  
Total Debt-to-Total Investments in Properties 3
21.1 %22.3 %
Total Debt-to-Total Investments in Properties and Senior Secured Loan 4
21.1 %22.1 %
Total Debt-to-Total Market Capitalization 5
11.3 %12.1 %
Floating Rate Debt as a % of Total Debt 6
21.7 %33.7 %
Unhedged Floating Rate Debt as a % of Total Debt 7
10.9 %11.3 %
Mortgage Loans Payable as a % of Total Debt 8
2.5 %10.2 %
Mortgage Loans Payable as a % of Total Investments in Properties 9
0.5 %2.3 %
Adjusted EBITDA 10
$60,842  $56,987  
Interest Coverage 11
7.7 x6.9 x
Fixed Charge Coverage 12
6.8 x5.8 x
Total Debt-to-Adjusted EBITDA 13
3.7 x3.9 x
Weighted Average Maturity of Total Debt (years)5.0  4.1  


1Includes 438,483 and 370,201 shares of unvested restricted stock outstanding as of June 30, 2020 and 2019, respectively.
2Closing price of our shares of common stock on the New York Stock Exchange on June 30, 2020 and June 28, 2019, respectively, in dollars per share.
3Total debt-to-total investments in properties is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties, including one property held for sale with a gross book value of approximately $15.1 million and accumulated depreciation and amortization of $3.3 million.
4Total debt-to-total investments in properties and Senior Secured Loan is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties, including one property held for sale with a gross book value of approximately $15.1 million and accumulated depreciation and amortization of $3.3 million, and total Senior Secured Loan, net of deferred loan fees of approximately $0 and $0.1 million, as of June 30, 2020 and 2019, respectively.
5Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization as of June 30, 2020 and 2019, respectively.
6Floating rate debt as a percentage of total debt is calculated as floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs. Floating rate debt includes $100.0 million variable-rate term loan borrowings, of which $50.0 million is subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of June 30, 2020, and $150.0 million variable-rate term loan borrowings, of which $100.0 million is subject to interest rate caps of 4.0% plus 1.20% to 1.70% as of June 30, 2019. See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.
7Unhedged floating rate debt as a percentage of total debt is calculated as unhedged floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs. Hedged debt includes our $100.0 million variable-rate term loan borrowings, of which $50.0 million is subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of June 30, 2020 and $150.0 million variable rate term loan borrowings subject to interest rate caps of 4.0% plus 1.20% to 1.70% as of June 30, 2019. See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.
8Mortgage loans payable as a percentage of total debt is calculated as mortgage loans payable, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs.
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 As of June 30, 2019 As of June 30, 2018
Total Debt, net$442,694
 $466,457
Equity   
Common Stock   
Shares Outstanding 1
65,495,713
 58,379,493
Market Price 2
$49.04
 $37.67
Total Equity3,211,910
 2,199,156
Total Market Capitalization$3,654,604
 $2,665,613
Total Debt-to-Total Investments in Properties 3
22.3% 27.1%
Total Debt-to-Total Investments in Properties and Senior Secured Loan 4
22.1% 26.3%
Total Debt-to-Total Market Capitalization 5
12.1% 17.5%
Floating Rate Debt as a % of Total Debt 6
33.7% 33.1%
Unhedged Floating Rate Debt as a % of Total Debt 7
11.3% 1.1%
Mortgage Loans Payable as a % of Total Debt 8
10.2% 13.7%
Mortgage Loans Payable as a % of Total Investments in Properties 9
2.3% 3.7%
Adjusted EBITDA 10
$56,987
 $49,264
Interest Coverage 11
6.9x 5.3x
Fixed Charge Coverage 12
5.8x 4.9x
Total Debt-to-Adjusted EBITDA 13
3.9x 4.7x
Weighted Average Maturity of Total Debt (years)4.1
 4.9
9Mortgage loans payable as a percentage of total investments in properties is calculated as mortgage loans payable, including premiums and net of deferred financing costs, divided by total investments in properties, including one property held for sale with a gross book value of approximately $15.1 million and accumulated depreciation and amortization of $3.3 million.
1
10Earnings 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, 2020 and 2019, 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.
11Interest 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.
12Fixed 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.
13Total debt-to-Adjusted EBITDA is calculated as total debt, including premiums and net of deferred financing costs, divided by annualized Adjusted EBITDA. 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.
Includes 370,201 and 357,018 shares of unvested restricted stock outstanding as of June 30, 2019 and 2018, respectively.
2
Closing price of our shares of common stock on the New York Stock Exchange on June 28, 2019 and June 29, 2018, respectively, in dollars per share.
3
Total debt-to-total investments in properties is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties.
4
Total debt-to-total investments in properties and Senior Secured Loan is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties and total Senior Secured Loan, net of deferred loan fees of approximately $0.1 million and $0.5 million, as of June 30, 2019 and 2018, respectively.
5
Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization as of June 30, 2019 and 2018, respectively.
6
Floating rate debt as a percentage of total debt is calculated as floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs. Floating rate debt includes $150.0 million variable-rate term loan borrowings, of which $100.0 million are subject to interest rate caps of 4.0% plus 1.20% to 1.70%, depending on leverage as of June 30, 2019, and $150.0 million variable-rate term loan borrowings subject to interest rate caps of 4.0% plus 1.30% to 1.85% as of June 30, 2018. See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.
7
Unhedged floating rate debt as a percentage of total debt is calculated as unhedged floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs. Hedged debt includes our $100.0 million variable-rate term loan borrowings subject to interest rate caps of 4.0% plus 1.20% to 1.70%, depending on leverage as of June 30, 2019 and $150.0 million variable rate term loan borrowings subject to interest rate caps of 4.0% plus 1.30% to 1.85% as of June 30, 2018. See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.
8
Mortgage loans payable as a percentage of total debt is calculated as mortgage loans payable, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs.

9
Mortgage loans payable as a percentage of total investments in properties is calculated as mortgage loans payable, including premiums and net of deferred financing costs, divided by total investments in properties.
10
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, 2019 and 2018, 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.
11
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.
12
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.
13
Total debt-to-Adjusted EBITDA is calculated as total debt, including premiums and net of deferred financing costs, divided by annualized Adjusted EBITDA. 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.
The following table sets forth the cash dividends paid or payable per share during the six months ended June 30, 2019:2020:
For the Three Months EndedSecurityDividend per
Share		Declaration DateRecord DateDate Paid
March 31, 2020Common stock$0.27 February 5, 2020March 27, 2020April 10, 2020
June 30, 2020Common stock$0.27 May 5, 2020June 30, 2020July 14, 2020
For the Three Months Ended
Security
Dividend per
Share
Declaration Date
Record Date
Date Paid
March 31, 2019
Common stock
$0.24

February 5, 2019
March 29, 2019
April 12, 2019
June 30, 2019
Common stock
$0.24

April 30, 2019
July 5, 2019
July 19, 2019

Sources and Uses of Cash
Our principal sources of cash are cash from operations, borrowings under loans payable, draws on our Facility, common and preferred stock issuances, proceeds from property dispositions and issuances of unsecured notes. Our principal uses of cash are asset acquisitions, debt service, capital expenditures, operating costs, corporate overhead costs and common stock dividends.
Cash From Operating Activities. Net cash provided by operating activities totaled approximately $45.4 million for the six months ended June 30, 2020 compared to approximately $43.9 million for the six months ended June 30, 2019 compared to approximately $35.6 million for the six months ended June 30, 2018.2019. This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 20182019 and 20192020 and same store properties, and from interest received on our Senior Secured Loan, which we made in May 2018.properties.
Cash From Investing Activities. Net cash provided by investing activities was approximately $5.5 million and net cash used in investing activities was approximately $93.1 million and $127.8 million, respectively, for the six months ended June 30, 20192020 and 2018,2019, which consisted primarily of cash paid for property acquisitions of approximately $40.4 million and $73.2 million, and $100.9 million, respectively, and additions to capital improvements of approximately $31.8$19.7 million and $15.8$31.8 million, respectively, offset by net cash received for the Senior Secured Loan of $15.9 million and $0, respectively, and net proceeds from sales of real estate investments of approximately $12.0$49.7 million and $43.0$12.0 million, respectively.
Cash From Financing Activities. Net cash used in financing activities was approximately $14.9 million for the six months ended June 30, 2020, which consisted primarily of approximately $54.7 million in net common stock issuance proceeds offset by approximately $36.5 million in equity dividend payments and approximately $32.8 million in mortgage loan payments. Net cash provided by financing activities was approximately $134.8 million for the six months ended June 30, 2019, which consisted primarily of approximately $188.3 million in net common stock issuance proceeds offset by approximately $29.8 million in equity dividend payments and approximately $19.0 million in net payments on our Facility. Net cash provided by financing activities was approximately $82.5 million for the six months ended June 30, 2018, which consisted primarily of approximately $106.4 million in net common stock issuance proceeds and $5.4$21.9 million in net borrowings on our Facility offset by approximately $24.4$29.8 million in equity dividend payments.
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Critical Accounting Policies
A summary of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended December 31, 20182019 and in the condensed notes to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements
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.
Contractual Obligations
As of July 31, 2019,August 4, 2020, we have sixone outstanding contractscontract with a third-party sellersseller to acquire sixone industrial properties.property. There is no assurance that we will acquire the propertiesproperty under contract because the proposed acquisitions areacquisition is subject to the completion of satisfactory due diligence and various closing conditions.
The following table summarizes certain information with respect to the propertiesproperty we have under contract:
Market
Number of
Buildings
 Square Feet 
Purchase Price (in
thousands)
 
Assumed Debt (in
thousands)
Los Angeles7
 82,884
 $23,525
 $—
Northern New Jersey/New York City 1
2
 195,598
 84,525
 —
San Francisco Bay Area—
 —
 —
 —
Seattle2
 82,245
 12,850
 —
Miami—
 —
 —
 —
Washington, D.C.—
 —
 —
 —
Total11
 360,727
 $120,900
 $—
MarketNumber of
Buildings		Square FeetPurchase Price (in
thousands)		Assumed Debt (in
thousands)
Los Angeles— — $— $— 
Northern New Jersey/New York City— — — — 
San Francisco Bay Area— — — — 
Seattle1
Includes one improved land parcel containing approximately 2.0 acres.— — 7,275 — 
Miami— — — — 
Washington, D.C.— — — — 
Total— — $7,275 $— 
1Includes one improved land parcel containing approximately 7.0 acres.

As of July 31, 2019,August 4, 2020, we have executed two non-binding letters of intent with third-party sellers to acquire twoone industrial properties. Thebuilding consisting of approximately 13,000 square feet and one improved land parcel consisting of approximately 4.7 acres for a total anticipated purchase price for these industrial properties isof approximately $19.0$22.7 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 purchase and sale agreements with respect to these properties or otherwise complete any such prospective purchases on the terms described or at all.
As of July 31, 2019, we have one outstanding contract with a third-party purchaser to sell one property for a sales price of approximately $14.0 million (net book value of approximately $11.6 million). There is no assurance that we will sell the property under contract because the proposed disposition is subject to various closing conditions.
The following table summarizes our contractual obligations due by period as of June 30, 20192020 (dollars in thousands):
Contractual ObligationsLess than 1
Year		1-3 Years3-5 YearsMore than 5
Years		Total
Debt$11,502  $150,000  $100,000  $200,000  $461,502  
Debt interest payments13,843  25,593  20,545  22,935  82,916  
Operating lease commitments273  280  —  —  553  
Purchase obligations7,275  —  —  —  7,275  
Total$32,893  $175,873  $120,545  $222,935  $552,246  
Contractual Obligations
Less than 1
Year
 1-3 Years 3-5 Years 
More than 5
Years
 Total
Debt$33,610
 $161,502
 $50,000
 $200,000
 $445,112
Debt interest payments11,728
 20,888
 17,198
 15,000
 64,814
Operating lease commitments267
 553
 —
 —
 820
Redevelopment obligations7,657
 —
 —
 —
 7,657
Purchase obligations120,900
 —
 —
 —
 120,900
Total$174,162
 $182,943
 $67,198
 $215,000
 $639,303

Non-GAAP Financial Measures
We use the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: funds from operations, or FFO, Adjusted EBITDA, net operating income, or NOI, same store NOI and cash-basis same store NOI. FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. Further, our computation of FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI may not be comparable to FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI reported by other companies.

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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 and six months ended June 30, 20192020 and 20182019 (dollars in thousands except per share data):
 For the Three Months Ended June 30,  For the Six Months Ended June 30,  
 20202019$ Change% Change20202019$ Change% Change
Net income$30,704  $10,379  $20,325  195.8 %$43,560  $25,911  $17,649  68.1 %
Gain on sales of real estate investments(17,750) —  (17,750) n/a(17,750) (4,465) (13,285) 297.5 %
Depreciation and amortization
Depreciation and amortization11,459  10,648  811  7.6 %22,559  21,063  1,496  7.1 %
Non-real estate depreciation(20) (27) 7  (25.9)%(46) (55) 9  (16.4)%
Allocation to participating securities 1
(152) (128) (24) 18.8 %(305) (263) (42) 16.0 %
Funds from operations attributable to common stockholders 2
$24,241  $20,872  $3,369  16.1 %$48,018  $42,191  $5,827  13.8 %
Basic FFO per common share$0.36  $0.33  $0.03  9.1 %0.71$0.67  $0.04  6.0 %
Diluted FFO per common share$0.36  $0.33  $0.03  9.1 %0.71$0.67  $0.04  6.0 %
Weighted average basic common shares67,622,005  63,780,645  67,342,293  62,625,224  
Weighted average diluted common shares68,029,144  64,075,215  67,749,432  62,919,794  
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 438,595 and 385,587 of weighted average unvested restricted shares outstanding for the three months ended June 30, 2020 and 2019, respectively, and 436,567 and 387,542 of weighted average unvested restricted shares outstanding for the six months ended June 30, 2020 and 2019, respectively.
2.Includes performance share award expense of approximately $1.0 million and $2.8 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $2.5 million and $4.8 million for the six months ended June 30, 2020 and 2019, respectively. See “Note 11 – Stockholders’ Equity” in the condensed notes to consolidated financial statements for more information regarding our performance share awards.
40
 For the Three Months Ended June 30,     For the Six Months Ended June 30,    
 2019 2018 $ Change % Change 2019 2018 $ Change % Change
Net income$10,379
 $20,137
 $(9,758) (48.5)% $25,911
 $30,194
 $(4,283) (14.2)%
Gain on sales of real estate investments—
 (11,703) 11,703
 n/a
 (4,465) (14,986) 10,521
 (70.2)%
Depreciation and amortization               
Depreciation and amortization10,648
 9,774
 874
 8.9 % 21,063
 20,509
 554
 2.7 %
Non-real estate depreciation(27) (28) 1
 (3.6)% (55) (58) 3
 (5.2)%
Allocation to participating securities 1
(128) (112) (16) 14.3 % (263) (225) (38) 16.9 %
Funds from operations attributable to common stockholders 2
$20,872
 $18,068
 $2,804
 15.5 % $42,191
 $35,434
 $6,757
 19.1 %
Basic FFO per common share$0.33
 $0.32
 $0.01
 3.1 % $0.67
 $0.63
 $0.04
 6.3 %
Diluted FFO per common share$0.33
 $0.32
 $0.01
 3.1 % $0.67
 $0.63
 $0.04
 6.3 %
                
Weighted average basic common shares63,780,645
 56,698,959
     62,625,224
 55,917,610
    
Weighted average diluted common shares64,075,215
 56,698,959
     62,919,794
 55,917,610
    
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 385,587 and 357,018 of weighted average unvested restricted shares outstanding for the three months ended June 30, 2019 and 2018, respectively, and 387,542 and 358,253 of weighted average unvested restricted shares outstanding for the six months ended June 30, 2019 and 2018, respectively.
2
Includes performance share award expense of approximately $2.8 million and $1.4 million for the three months ended June 30, 2019 and 2018, respectively, and approximately $4.8 million and $3.0 million for the six months ended June 30, 2019 and 2018, respectively. See “Note 11 – Stockholders’ Equity” in our condensed notes to consolidated financial statements for more information regarding our performance share awards.

FFO increased by approximately $2.8$3.4 million and $6.8$5.8 million for the three and six months ended June 30, 2019,2020, respectively, compared to the same periodperiods from the prior year due primarily to property acquisitions during 20182019 and 2019,2020 and same store NOI growth of approximately $2.5$0.5 million and $4.2$0.8 million for the three and six months ended June 30, 2019,2020, respectively, compared to the same periodperiods from the prior year, and an increase of approximately $0.9 million foryear. In addition, the six months ended June 30, 2019 in interest and fees earned on our Senior Secured Loan, which we made in May 2018. The FFO increase was offset by an increase of approximately $1.4 million and $1.8 millionincreased due to a decrease in performance share award expense of approximately $1.8 million and $2.1 million for the three and six months ended June 30, 2019,2020, respectively, comparedpartially offset by a decline of approximately $0.2 million and $0.1 million related to the same period from the prior year, and increased weighted average common shares outstandingdisposition of properties for the three and six months ended June 30, 2019 compared to the same period from the prior year.2020, respectively.
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 and six months ended June 30, 20192020 and 20182019 (dollars in thousands):
For the Three Months Ended June 30,     For the Six Months Ended June 30,     For the Three Months Ended June 30,  For the Six Months Ended June 30,  
2019 2018 $ Change % Change 2019 2018 $ Change % Change 20202019$ Change% Change20202019$ Change% Change
Net income$10,379
 $20,137
 $(9,758) (48.5)% $25,911
 $30,194
 $(4,283) (14.2)%Net income$30,704  $10,379  $20,325  195.8 %$43,560  $25,911  $17,649  68.1 %
Gain on sales of real estate investments—
 (11,703) 11,703
 n/a
 (4,465) (14,986) 10,521
 (70.2)%Gain on sales of real estate investments(17,750) —  (17,750) n/a(17,750) (4,465) (13,285) 297.5 %
Depreciation and amortization10,648
 9,774
 874
 8.9 % 21,063
 20,509
 554
 2.7 %Depreciation and amortization11,459  10,648  811  7.6 %22,559  21,063  1,496  7.1 %
Interest expense, including amortization4,053
 4,626
 (573) (12.4)% 8,317
 9,311
 (994) (10.7)%Interest expense, including amortization3,909  4,053  (144) (3.6)%7,915  8,317  (402) (4.8)%
Stock-based compensation3,660
 2,187
 1,473
 67.4 % 6,160
 4,229
 1,931
 45.7 %Stock-based compensation2,316  3,660  (1,344) (36.7)%4,495  6,160  (1,665) (27.0)%
Acquisition costs1
 5
 (4) (80.0)% 1
 7
 (6) (85.7)%Acquisition costs11  1  10  1000.0 %63  1  62  6200.0 %
Adjusted EBITDA$28,741
 $25,026
 $3,715
 14.8 % $56,987
 $49,264
 $7,723
 15.7 %Adjusted EBITDA$30,649  $28,741  $1,908  6.6 %$60,842  $56,987  $3,855  6.8 %
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 June 30, 20192020 and since January 1, 20182019 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of June 30, 2019.2020. As of June 30, 2019,2020, the same store pool consisted of 189198 buildings aggregating approximately 12.0 million square feet representing approximately 92.4%91.8% of our total square feet owned and ten14 improved land parcels containing approximately 47.254.2 acres. 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.

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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, 20192020 and 20182019 (dollars in thousands):
 For the Three Months Ended June 30,  For the Six Months Ended June 30,  
 20202019$ Change% Change20202019$ Change% Change
Net income 1
$30,704  $10,379  $20,325  195.8 %$43,560  $25,911  $17,649  68.1 %
Depreciation and amortization11,459  10,648  811  7.6 %22,559  21,063  1,496  7.1 %
General and administrative5,665  6,757  (1,092) (16.2)%11,423  12,720  (1,297) (10.2)%
Acquisition costs11  1  10  1000.0 %63  1  62  6200.0 %
Total other income and expenses(14,031) 3,236  (17,267) n/a(10,589) 1,513  (12,102) n/a
Net operating income33,808  31,021  2,787  9.0 %67,016  61,208  5,808  9.5 %
Less non-same store NOI 2
(4,598) (2,278) (2,320) 101.8 %(9,079) (4,076) (5,003) 122.7 %
Same store NOI 3
$29,210  $28,743  $467  1.6 %$57,937  $57,132  $805  1.4 %
Less straight-line rents and amortization of lease intangibles 4
(1,103) (1,766) 663  (37.5)%(1,698) (3,426) 1,728  (50.4)%
Cash-basis same store NOI 3
$28,107  $26,977  $1,130  4.2 %$56,239  $53,706  $2,533  4.7 %
 For the Three Months Ended June 30,     For the Six Months Ended June 30,    
 2019 2018 $ Change % Change 2019 2018 $ Change % Change
Net income 1
$10,379
 $20,137
 $(9,758) (48.5)% $25,911
 $30,194
 $(4,283) (14.2)%
Depreciation and amortization10,648
 9,774
 874
 8.9 % 21,063
 20,509
 554
 2.7 %
General and administrative6,757
 5,007
 1,750
 35.0 % 12,720
 10,085
 2,635
 26.1 %
Acquisition costs1
 5
 (4) (80.0)% 1
 7
 (6) (85.7)%
Total other income and expenses3,236
 (7,998) 11,234
 n/a
 1,513
 (6,656) 8,169
 n/a
Net operating income31,021
 26,925
 4,096
 15.2 % 61,208
 54,139
 7,069
 13.1 %
Less non-same store NOI 2
(3,075) (1,471) (1,604) 109.0 % (5,689) (2,852) (2,837) 99.5 %
Same store NOI 3
$27,946
 $25,454
 $2,492
 9.8 % $55,519
 $51,287
 $4,232
 8.3 %
Less straight-line rents and amortization of lease intangibles 4
(1,341) (1,849) 508
 (27.5)% (2,255) (3,688) 1,433
 (38.9)%
Cash-basis same store NOI 3
$26,605
 $23,605
 $3,000
 12.7 % $53,264
 $47,599
 $5,665
 11.9 %
1Includes approximately $0.2 million of lease termination income for both the three months ended June 30, 2020 and 2019, and approximately $0.2 million of lease termination income for both the six months ended June 30, 2020 and 2019.
1
2Includes 2019 and 2020 acquisitions and dispositions, eight improved land parcels and two properties under redevelopment.
3Includes approximately $0.1 million and $0.2 million of lease termination income for the three months ended June 30, 2020 and 2019, respectively, and approximately $0.1 million and $0.2 million of lease termination income for the six months ended June 30, 2020 and 2019, respectively.
4Includes straight-line rents and amortization of lease intangibles for the same store pool only.

Includes approximately $0.2 million and $23,000 of lease termination income for the three months ended June 30, 2019 and 2018, respectively, and approximately $0.2 million and $0.5 million of lease termination income for the six months ended June 30, 2019 and 2018, respectively.
2
Includes 2018 and 2019 acquisitions and dispositions, seven improved land parcels and four properties under redevelopment (including one property held for sale with a gross book value of approximately $11.6 million and accumulated depreciation and amortization of $0).
3
Includes approximately $0.2 million and $23,000 of lease termination income for the three months ended June 30, 2019 and 2018, respectively, and approximately $0.2 million and $0.5 million of lease termination income for the six months ended June 30, 2019 and 2018, respectively.
4
Includes straight-line rents and amortization of lease intangibles for the same store pool only.
Cash-basis same store NOI increased by approximately $3.0$1.1 million for the three months ended June 30, 20192020 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases.leases, offset by a decrease in occupancy rate. The decline in occupancy as compared to the prior quarter was driven primarily by a 192,000 square foot lease expiration at our 130 Interstate property and a 50,000 square foot lease expiration at our Whelan property which was acquired in the fourth quarter of 2019 with a short-term lease. For the three months ended June 30, 20192020 and 2018,2019, respectively, total contractual rent abatements of approximately $0.7$0.8 million and $1.0$0.7 million were given to certain tenants in the same-store pool and approximately $0.2$0.1 million and $23,000$0.2 million in lease termination income was received from certain tenants in the same store pool. For both the three months ended June 30, 2019 and 2018, approximately $0.4 million in rent abatements was provided to the tenant at our Belleville property. In addition, approximately $0.6$0.3 million of the increase in cash-basis same store NOI for the three months ended June 30, 20192020 related to properties that were acquired vacant or with near term expirations in 2017.2018.

Cash-basis same store NOI increased by approximately $5.7$2.5 million for the six months ended June 30, 20192020 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases.leases, offset by a decrease in occupancy rate. For both the six months ended June 30, 20192020 and 2018, respectively,2019, total contractual rent abatements of approximately $0.9 million and $1.9$1.2 million were given to certain tenants in the same-store pool and approximately $0.1 million and $0.2 million, and $0.5 millionrespectively, in lease termination income was received from certain tenants in the same store pool. For both the six months ended June 30, 2019 and 2018, approximately $0.4 million in rent abatements was provided to the tenant at our Belleville property. In addition, approximately $1.1$0.4 million of the increase in cash-basis same store NOI for the six months ended June 30, 20192020 related to properties that were acquired vacant or with near term expirations in 2017.2018.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business strategies, the primary market risk which we are exposed to is interest rate risk. We are exposed to interest rate changes primarily as a result of debt used to maintain liquidity, fund capital expenditures and expand our investment portfolio and operations. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. As described below, some of our outstanding debt bears interest at variable rates, and we expect that some of our future outstanding debt will have variable interest rates. We may use interest rate caps and/or swap agreements to manage our interest rate risks relating to our variable rate debt. We expect to replace variable rate debt on a regular basis with fixed rate, long-term debt to finance our assets and operations.
As of June 30, 2019,2020, we had $150.0$100.0 million of borrowings outstanding under our Facility. Of the $150.0$100.0 million outstanding on the Facility, $100.0$50.0 million is subject to interest rate caps. See “Note 9 - Derivative Financial Instruments” in ourthe condensed notes to consolidated financial statements for more information regarding our interest rate caps. Amounts borrowed under our Facility bear interest at a variable rate based on LIBOR plus an applicable LIBOR margin. The weighted average interest rate on borrowings outstanding under our Facility was 3.68%1.7% as of June 30, 2019.2020. If the LIBOR rate were to fluctuate by 0.25%, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows by approximately $0.4$0.3 million annually on the total of the outstanding balances on our Facility as of June 30, 2019.2020.

In the event that LIBOR is discontinued, the interest rate for our debt, including our Facility, will be based on a replacement rate or an alternate base rate as specified in the applicable documentation governing such debt or as otherwise agreed upon. Such an event would not affect our ability to borrow or maintain already outstanding borrowings, but the replacement rate or alternate base rate could be higher or more volatile than LIBOR prior to its discontinuance. We understand that LIBOR is expected to remain available through the end of 2021, but may be discontinued or otherwise become unavailable thereafter.
Item 4.  Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer, President and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), and has concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to give reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer, President, and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 30, 20192020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not involved in any material litigation nor, to our knowledge, is any material litigation threatened against us.
Item 1A. Risk Factors
The following risk factor supplements the risk factors described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 and should be read in conjunction with the other risk factors presented in our Annual Report on Form 10-K for the year December 31, 2019 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020..
The outbreak of the novel coronavirus (COVID-19) has caused, and could continue to cause, severe disruptions in the U.S., regional and global economies and could materially and adversely impact our business, financial condition and results of operations and the business, financial condition and results of operations of our tenants.
In March 2020, the World Health Organization declared COVID-19 a global pandemic. COVID-19 has caused, and could continue to cause, significant disruptions to the U.S. and global economies and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak is continually and rapidly evolving and, as additional cases of the virus are identified, many countries, including the U.S., have reacted by instituting quarantines, restrictions on travel and/or mandatory closures of businesses. Certain states and cities, including where our headquarters and our properties are located, have also reacted by instituting quarantines, restrictions on travel, “shelter-in-place” rules, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue.
The extent to which COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted accurately, including the scope, severity and duration of such pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of COVID-19 on our business and businesses of our tenants. Nevertheless, COVID-19 and actions taken to contain it or mitigate its impact may materially and adversely affect our businesses, financial condition and results of operations and may also have the effect of heightening many of the risks described in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019. Such risks and potential material adverse impacts include:
•the complete or partial closure of, or other operational restrictions or other issues at, one or more of our properties resulting from government or tenant action has had, and could continue to have, a material adverse impact on our operations and those of our tenants and third-party property managers;
•reduced economic activity impacting the businesses, financial condition and liquidity of our tenants, could cause one or more of our tenants, including certain significant tenants, or one or more of our third-party managers, to be unable to meet their rent payment or other obligations to us in full, or at all, to otherwise seek modifications of such obligations, including rent payment deferrals, or to file for bankruptcy protection.
•We continue to work with its customers who have been forced to close or otherwise limit operations or whose businesses have been adversely impacted during the pandemic to, on a case-by-case basis, provide rent deferments. With regard to rent billed for July 2020, we received, as of August 4, 2020, approximately 95% of such rent in cash and an additional 1% by applying security deposits. As of August 4, 2020:

◦174 tenants, representing approximately 36.0% of the our total tenants had requested rent deferral or abatement. Such requests aggregated 7.0% of our annualized base rent;

◦Of the 174 requests, we granted rent deferrals to 61 tenants aggregating 2.7% of annualized base rent (35.1% of total requests by number and 38.7% by dollar amount) which represents 76.7% of the total dollar deferral requests (3.6% of annualized base rent) from those tenants. We did not grant any rent abatement;

◦We denied 50 tenant requests aggregating 1.8% of annualized base rent (28.7% of total requests by number and 25.7% by dollar amount). 59 tenants aggregating 1.6% of annualized base rent requesting rent deferral or abatement rescinded their requests (33.3%% of requests by number and 22.5% by dollar amount);

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◦We are still in discussions with four tenants who are requesting 0.05% of our annualized base rent in rent deferral or abatement (2.3% of requests by number and 0.7% by dollar amount); and

◦We may in the future amend or enter into additional rent deferral agreements.
•our inability to renew leases, lease vacant space, including vacant space from tenant defaults, or re-lease space as leases expire on favorable terms, or at all, including in the current slowing leasing environment could result in lower rental revenues or cause interruptions or delays in the receipt, or non-receipt, of rental payments;
•state, local or industry-initiated efforts, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions may affect our ability to collect rent or enforce remedies for the failure to pay rent;
•a general decline in business activity and demand for real estate transactions, including the reduced activity in the current environment could adversely affect our ability or desire to grow through investments in industrial properties or make strategic dispositions;
•severe disruption and instability in the U.S. and global financial markets or deteriorations in credit and financing conditions could make it difficult for us to access debt and equity capital on attractive terms, or at all, and impact our ability to fund business activities and repay debt on a timely basis;
•disruptions in the supply of materials or products or the inability of contractors to perform on a timely basis or at all, including as a result of restrictions on construction activity could cause delays in completing ongoing or future construction or re-development projects;
•the potential negative impact of COVID-19 on the health of our personnel, particularly if a significant number of our senior management group or key employees are impacted, could result in a deterioration in our ability to ensure business continuity;
•limited access to our facilities, and to, or among, our management, tenants, support staff, third-party property managers and professional advisors could decrease the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, increase our susceptibility to security breaches, or hamper our ability to comply with regulatory obligations and lead to reputational harm and regulatory issues or fines;
•any inability for us to effectively manage our portfolio and manage our operations or any inability of our third-party property managers to provide services to us while working remotely during the COVID-19 pandemic and for a time after such pandemic could adversely impact our business;
•our potential inability to comply with financial covenants of our credit facility and other debt agreements could result in default and potential acceleration of indebtedness and impact our ability to make additional borrowings under our credit facility or other borrowings in the future.
Except to the extent updated belowabove or previously updated or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in Part I, “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there have been no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2019.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
(a)Not Applicable.
(b)Not Applicable.
(c)Not Applicable.
(a)Not Applicable.
(b)Not Applicable.
(c)Not Applicable.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
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None.

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Item 6. Exhibits
Exhibit
Number
Exhibit Description
10.1
2019 Equity Incentive Plan of Registrant (previously filed as Exhibit 4.7 to the Registrant’s Registration Statement on Form S-8 on April 30, 2019 and incorporated by reference herein).
10.2
Form of Restricted Stock Award Agreement for Executive Officers and Employees (previously filed as Exhibit 4.8 to the Registrant’s Registration Statement on Form S-8 on April 30, 2019 and incorporated by reference herein).
31.1*
31.2*
31.3*
32.1**
32.2**
32.3**
101.SCH*Inline XBRL Taxonomy Extension Schema Document
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*Inline XBRL Taxonomy Definition Linkbase Document
104*Cover Page Interactive Data File (formatted as inline XBRL and with applicable taxonomy extension information contained in Exhibits 101).101.*)
________________
*Filed herewith.
**Furnished herewith.

* Filed herewith.
** Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Terreno Realty Corporation
August 5, 2020Terreno Realty Corporation
By:
July 31, 2019By:/s/ W. Blake Baird
W. Blake Baird
Chairman and Chief Executive Officer
July 31, 2019August 5, 2020By:/s/ Michael A. Coke
Michael A. Coke
President
July 31, 2019August 5, 2020By:/s/ Jaime J. Cannon
Jaime J. Cannon
Chief Financial Officer


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