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 ~~September~~June 30, ~~2021~~2022


☐			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~~number: 001-34603

_________________________

Terreno Realty Corporation

(Exact Name of Registrant as Specified in Its Charter)

_________________________


Maryland									27-1262675
(State or Other Jurisdiction of Incorporation or Organization)									(I.R.S. Employer Identification No.)

10500 NE 8th Street, Suite 301 Bellevue, WA									98004

(Address of Principal Executive Offices)									(Zip Code)

Registrant’s telephone number, including area code: (415) 655-4580

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

TRNO

New 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”

~~“smaller~~ “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ~~71,318,411~~75,546,968 shares of its common stock, $0.01 par value per share, outstanding as of ~~November~~August 1, ~~2021.~~2022.

~~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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021	2
	Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	3
	Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	4
	Consolidated Statements of Equity for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	5
	Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021	76
	Condensed Notes to Consolidated Financial Statements	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2019
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4239
Item 4.	Controls and Procedures	4239

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	4340
Item 1A.	Risk Factors	4340
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4340
Item 3.	Defaults Upon Senior Securities	4340
Item 4.	Mine Safety Disclosures	4340
Item 5.	Other Information	4340
Item 6.	Exhibits	4441
SIGNATURES		4542

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)


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
		(Unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Investments in real estate	Investments in real estate					Investments in real estate
Land	Land	$	1,339,382	$	1,138,233	Land	$	1,732,321	$	1,556,952
Buildings and improvements	Buildings and improvements	1,051,571		942,688		Buildings and improvements	1,303,031		1,210,591
Construction in progress	Construction in progress	99,949		61,448		Construction in progress	99,142		65,157
Intangible assets	Intangible assets	101,175		88,859		Intangible assets	121,946		114,126
Total investments in properties	Total investments in properties	2,592,077		2,231,228		Total investments in properties	3,256,440		2,946,826
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(265,628)		(238,073)		Accumulated depreciation and amortization	(296,568)		(279,062)
Net investments in properties	Net investments in properties	2,326,449		1,993,155		Net investments in properties	2,959,872		2,667,764
Properties held for sale, net		18,302		—
Net investments in real estate		2,344,751		1,993,155

Cash and cash equivalents	Cash and cash equivalents	68,732		107,180		Cash and cash equivalents	7,237		204,404
Restricted cash	Restricted cash	4,970		656		Restricted cash	3,096		397

Other assets, net	Other assets, net	53,050		38,829		Other assets, net	58,677		51,650
Total assets	Total assets	$	2,471,503	$	2,139,820	Total assets	$	3,028,882	$	2,924,215
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Liabilities	Liabilities					Liabilities
Credit facility	Credit facility	$	—	$	—	Credit facility	$	12,000	$	—
Term loans payable, net	Term loans payable, net	99,470		99,791		Term loans payable, net	99,545		99,495
Senior unsecured notes, net	Senior unsecured notes, net	497,153		348,063		Senior unsecured notes, net	621,514		621,175
Mortgage loan payable, net		—		11,264

Security deposits	Security deposits	22,268		13,870		Security deposits	26,559		23,914
Intangible liabilities, net	Intangible liabilities, net	37,543		24,608		Intangible liabilities, net	56,587		51,025
Dividends payable	Dividends payable	24,239		19,870		Dividends payable	25,686		25,618
Performance share awards payable		—		7,482

Accounts payable and other liabilities	Accounts payable and other liabilities	40,358		26,688		Accounts payable and other liabilities	57,406		45,025
Total liabilities	Total liabilities	721,031		551,636		Total liabilities	899,297		866,252
Commitments and contingencies (Note 13)		0		0
Commitments and contingencies (Note 12)						Commitments and contingencies (Note 12)	0		0
Equity	Equity					Equity
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Common stock: $0.01 par value, 400,000,000 shares authorized, and 71,015,523 and 68,376,364 shares issued and outstanding, at September 30, 2021 and December 31, 2020, respectively.		712		686
Common stock: $0.01 par value, 400,000,000 shares authorized, and 75,120,374 and 75,068,575 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively.						Common stock: $0.01 par value, 400,000,000 shares authorized, and 75,120,374 and 75,068,575 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively.	752		752
Additional paid-in capital	Additional paid-in capital	1,768,794		1,589,301		Additional paid-in capital	2,087,682		2,069,604
Common stock held in deferred compensation plan, 275,727 and 139,224 shares at September 30, 2021 and December 31, 2020, respectively.		(15,197)		(7,546)
Retained (deficit) earnings		(3,837)		5,926
Common stock held in deferred compensation plan, 426,594 and 275,727 shares at June 30, 2022 and December 31, 2021, respectively.						Common stock held in deferred compensation plan, 426,594 and 275,727 shares at June 30, 2022 and December 31, 2021, respectively.	(26,982)		(15,197)
Retained earnings						Retained earnings	68,133		2,804

Accumulated other comprehensive loss		—		(183)

Total stockholders’ equity	Total stockholders’ equity	1,750,472		1,588,184		Total stockholders’ equity	2,129,585		2,057,963
Total liabilities and equity	Total liabilities and equity	$	2,471,503	$	2,139,820	Total liabilities and equity	$	3,028,882	$	2,924,215

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

Table of Contents

Terreno Realty Corporation

Consolidated Statements of Operations

(in thousands – except share and per share data)

(Unaudited)
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2021 2020 2021 2020
REVENUES
Rental revenues and tenant expense reimbursements $ 57,269 $ 47,147 $ 161,255 $ 138,005
Total revenues 57,269 47,147 161,255 138,005
COSTS AND EXPENSES
Property operating expenses 14,200 12,228 40,883 36,070
Depreciation and amortization 13,636 12,124 36,980 34,683
General and administrative 6,800 5,130 19,248 16,553
Acquisition costs — 123 172 186
Total costs and expenses 34,636 29,605 97,283 87,492
OTHER INCOME (EXPENSE)
Interest and other income 228 51 685 805
Interest expense, including amortization (4,686) (3,887) (12,847) (11,802)
Gain on sales of real estate investments 3,185 9,016 3,185 26,766
Total other income (expense) (1,273) 5,180 (8,977) 15,769
Net income 21,360 22,722 54,995 66,282
Allocation to participating securities (87) (194) (191) (277)
Net income available to common stockholders $ 21,273 $ 22,528 $ 54,804 $ 66,005
EARNINGS PER COMMON SHARE - BASIC AND DILUTED:
Net income available to common stockholders - basic $ 0.30 $ 0.33 $ 0.79 $ 0.98
Net income available to common stockholders - diluted $ 0.30 $ 0.33 $ 0.79 $ 0.97
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 70,516,787 68,112,661 69,571,511 67,600,957
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 70,752,863 68,372,515 69,799,206 67,860,811


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
REVENUES
Rental revenues and tenant expense reimbursements	$	65,369	$	53,295	$	129,404	$	103,986

Total revenues	65,369		53,295		129,404		103,986
COSTS AND EXPENSES
Property operating expenses	15,804		13,171		32,680		26,683
Depreciation and amortization	15,288		11,968		30,270		23,344
General and administrative	7,333		6,866		14,860		12,448
Acquisition costs and other	1,027		117		1,055		172
Total costs and expenses	39,452		32,122		78,865		62,647
OTHER INCOME (EXPENSE)
Interest and other income	115		221		236		457
Interest expense, including amortization	(5,047)		(4,016)		(10,128)		(8,161)

Gain on sales of real estate investments	76,048		—		76,048		—
Total other income (expense)	71,116		(3,795)		66,156		(7,704)
Net income	97,033		17,378		116,695		33,635



Allocation to participating securities	(382)		(53)		(467)		(104)
Net income available to common stockholders	$	96,651	$	17,325	$	116,228	$	33,531
EARNINGS PER COMMON SHARE - BASIC AND DILUTED:
Net income available to common stockholders - basic	$	1.28	$	0.25	$	1.55	$	0.49
Net income available to common stockholders - diluted	$	1.28	$	0.25	$	1.54	$	0.48
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	75,250,655		69,580,253		75,225,233		69,094,360
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING	75,340,872		69,808,430		75,310,343		69,317,407

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

Table of Contents

Terreno Realty Corporation

Consolidated Statements of Comprehensive Income

(in thousands)

(Unaudited)

~~(Unaudited)~~

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2021 2020 2021 2020
Net income $ 21,360 $ 22,722 $ 54,995 $ 66,282
Other comprehensive income:
Cash flow hedge adjustment — 50 183 169
Comprehensive income $ 21,360 $ 22,772 $ 55,178 $ 66,451


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	97,033	$	17,378	$	116,695	$	33,635
Other comprehensive income:
Cash flow hedge adjustment	—		77		—		183
Comprehensive income	$	97,033	$	17,455	$	116,695	$	33,818

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

Table of Contents

Terreno Realty Corporation

Consolidated Statements of Equity

(in thousands – except share data)

(Unaudited)

~~Nine~~

Six months ended ~~September~~June 30, ~~2021:~~2022:


		Common Stock			Additional Paid- in Capital				Common Shares Held in Deferred Compensation Plan	Deferred Compensation Plan			Retained (Deficit) Earnings					Accumulated Other Comprehensive Loss						Common Stock				Additional Paid- in Capital				Common Shares Held in Deferred Compensation Plan		Deferred Compensation Plan				Retained (Deficit) Earnings				Accumulated Other Comprehensive Loss
		Number of Shares	Amount									Total					Number of Shares				Amount										Total
Balance as of December 31, 2020		68,376,364	$	686			$	1,589,301				139,224			$	(7,546)				$	5,926			$	(183)	$	1,588,184
Balance as of December 31, 2021																							Balance as of December 31, 2021	75,068,575		$	752			$	2,069,604		275,727			$	(15,197)			$	2,804			$	—			$	2,057,963
Net income	Net income	—	—		—				—	—			16,257					—			16,257		Net income	—		—		—				—		—				19,662				—				19,662
Issuance of common stock, net of issuance costs of $731		837,846	7		47,866				—	—			—					—			47,873

Repurchase of common stock related to employee awards		(6,534)	—		(582)				—	—			—					—			(582)
Issuance of common stock, net of issuance costs of $—																							Issuance of common stock, net of issuance costs of $—	147,285		—		—				—		—				—				—				—
Forfeiture of common stock related to employee awards																							Forfeiture of common stock related to employee awards	(1,206)		—		—				—		—				—				—				—
Common shares acquired related to employee awards																							Common shares acquired related to employee awards	(6,348)		—		(493)				—		—				—				—				(493)

Issuance of restricted stock	Issuance of restricted stock	25,654	—		—				—	—			—					—			—		Issuance of restricted stock	41,255		—		—				—		—				—				—				—
Stock-based compensation	Stock-based compensation	—	—		1,970				—	—			—					—			1,970		Stock-based compensation	—		—		2,829				—		—				—				—				2,829
Common stock dividends ($0.29 per share)		—	—		—				—	—			(20,091)					—			(20,091)
Common stock dividends ($0.34 per share)																							Common stock dividends ($0.34 per share)	—		—		—				—		—				(25,680)				—				(25,680)
Deposits to deferred compensation plan	Deposits to deferred compensation plan	(131,322)	—		7,321				131,322	(7,321)			—					—			—		Deposits to deferred compensation plan	(147,285)		—		11,535				147,285		(11,535)				—				—				—
Other comprehensive income		—	—		—				—	—			—					106			106
Balance as of March 31, 2021		69,102,008	$	693	$	1,645,876			270,546	$	(14,867)		$	2,092				$	(77)		$	1,633,717

Balance as of March 31, 2022																							Balance as of March 31, 2022	75,102,276		$	752	$	2,083,475			423,012		$	(26,732)			$	(3,214)			$	—			$	2,054,281
Net income	Net income	—	—		—				—	—			17,378					—			17,378		Net income	—		—		—				—		—				97,033				—				97,033
Issuance of common stock, net of issuance costs of $1,228		1,094,656	11		68,382				—	—			—					—			68,393
Issuance of common stock, net of issuance costs of $112																							Issuance of common stock, net of issuance costs of $112	37,833		—		1,947				—		—				—				—				1,947
Forfeiture of common stock related to employee awards	Forfeiture of common stock related to employee awards	(85)	—		—				—	—			—					—			—		Forfeiture of common stock related to employee awards	(28,185)		—		—				—		—				—				—				—

Stock-based compensation	Stock-based compensation	—	—		2,677				—	—			—					—			2,677		Stock-based compensation	—		—		2,010				—		—				—				—				2,010
Common stock dividends ($0.29 per share)		—	—		—				—	—			(20,428)					—			(20,428)
Common stock dividends ($0.34 per share)																							Common stock dividends ($0.34 per share)	—		—		—				—		—				(25,686)				—				(25,686)
Deposits to deferred compensation plan	Deposits to deferred compensation plan	(5,181)	—		330				5,181	(330)			—					—			—		Deposits to deferred compensation plan	(3,582)		—		250				3,582		(250)				—				—				—
Other comprehensive income		—	—		—				—	—			—					77			77
Balance as of June 30, 2021		70,191,398	$	704	$	1,717,265			275,727	$	(15,197)		$	(958)				$	—		$	1,701,814
Net income		—	—		—				—	—			21,360					—			21,360
Issuance of common stock, net of issuance costs of $807		751,539	8		49,169				—	—			—					—			49,177

Balance as of June 30, 2022																							Balance as of June 30, 2022	75,120,374		$	752	$	2,087,682			426,594		$	(26,982)			$	68,133			$	—			$	2,129,585

Issuance of restricted stock		72,586	—		—				—	—			—					—			—
Stock-based compensation		—	—		2,360				—	—			—					—			2,360
Common stock dividends ($0.34 per share)		—	—		—				—	—			(24,239)					—			(24,239)

Balance as of September 30, 2021		71,015,523	$	712	$	1,768,794			275,727	$	(15,197)		$	(3,837)				$	—		$	1,750,472

~~Nine~~

Six months ended ~~September~~June 30, ~~2020:~~2021:


		Common Stock			Additional Paid- in Capital				Common Shares Held in Deferred Compensation Plan	Deferred Compensation Plan			Retained (Deficit) Earnings					Accumulated Other Comprehensive Loss						Common Stock				Additional Paid- in Capital				Common Shares Held in Deferred Compensation Plan		Deferred Compensation Plan				Retained (Deficit) Earnings				Accumulated Other Comprehensive Loss
		Number of Shares	Amount									Total					Number of Shares				Amount										Total
Balance as of December 31, 2019		67,252,787	$	673			$	1,514,266				—			$	—				$	2,621			$	(437)	$	1,517,123
Balance as of December 31, 2020																							Balance as of December 31, 2020	68,376,364		$	686			$	1,589,301		139,224			$	(7,546)			$	5,926			$	(183)			$	1,588,184
Net income	Net income	—	—		—				—	—			12,856					—			12,856		Net income	—		—		—				—		—				16,257				—				16,257
Issuance of common stock, net of issuance costs of $426		562,521	4		29,647				—	—			—					—			29,651
Issuance of common stock, net of issuance costs of $731																							Issuance of common stock, net of issuance costs of $731	837,846		7		47,866				—		—				—				—				47,873

Repurchase of common stock related to employee awards		(4,510)	—		(240)				—	—			—					—			(240)
Common shares acquired related to employee awards																							Common shares acquired related to employee awards	(6,534)		—		(582)				—		—				—				—				(582)

Issuance of restricted stock	Issuance of restricted stock	20,501	—		—				—	—			—					—			—		Issuance of restricted stock	25,654		—		—				—		—				—				—				—
Stock-based compensation	Stock-based compensation	—	—		1,573				—	—			—					—			1,573		Stock-based compensation	—		—		1,970				—		—				—				—				1,970
Common stock dividends ($0.27 per share)		—	—		—				—	—			(18,314)					—			(18,314)
Common stock dividends ($0.29 per share)																							Common stock dividends ($0.29 per share)	—		—		—				—		—				(20,091)				—				(20,091)
Deposits to deferred compensation plan	Deposits to deferred compensation plan	(135,494)	—		7,346				135,494	(7,346)			—					—			—		Deposits to deferred compensation plan	(131,322)		—		7,321				131,322		(7,321)				—				—				—
Other comprehensive income	Other comprehensive income	—	—		—				—	—			—					73			73		Other comprehensive income	—		—		—				—		—				—				106				106
Balance as of March 31, 2020		67,695,805	$	677	$	1,552,592			135,494	$	(7,346)		$	(2,837)				$	(364)		$	1,542,722
Balance as of March 31, 2021																							Balance as of March 31, 2021	69,102,008		$	693	$	1,645,876			270,546		$	(14,867)			$	2,092			$	(77)			$	1,633,717
Net income	Net income	—	—		—				—	—			30,704					—			30,704		Net income	—		—		—				—		—				17,378				—				17,378
Issuance of common stock, net of issuance costs of $630		630,490	7		32,068				—	—			—					—			32,075
Issuance of common stock, net of issuance costs of $1,228																							Issuance of common stock, net of issuance costs of $1,228	1,094,656		11		68,382				—		—				—				—				68,393
Forfeiture of common stock related to employee awards	Forfeiture of common stock related to employee awards	(352)	—		—				—	—			—					—			—		Forfeiture of common stock related to employee awards	(85)		—		—				—		—				—				—				—

Stock-based compensation	Stock-based compensation	—	—		2,197				—	—			—					—			2,197		Stock-based compensation	—		—		2,677				—		—				—				—				2,677
Common stock dividends ($0.27 per share)		—	—		—				—	—			(18,478)					—			(18,478)
Common stock dividends ($0.29 per share)																							Common stock dividends ($0.29 per share)	—		—		—				—		—				(20,428)				—				(20,428)
Deposits to deferred compensation plan	Deposits to deferred compensation plan	(3,730)	—		200				3,730	(200)			—					—			—		Deposits to deferred compensation plan	(5,181)		—		330				5,181		(330)				—				—				—
Other comprehensive income	Other comprehensive income	—	—		—				—	—			—					46			46		Other comprehensive income	—		—		—				—		—				—				77				77
Balance as of June 30, 2020		68,322,213	$	684	$	1,587,057			139,224	$	(7,546)		$	9,389				$	(318)		$	1,589,266
Net income		—	—		—				—	—			22,722					—			22,722
Issuance of common stock, net of issuance costs of $70		8,250	—		424				—	—			—					—			424
Forfeiture of common stock related to employee awards		(4,794)	—		—				—	—			—					—			—
Repurchase of common stock related to employee awards		(149,865)	—		(9,597)				—	—			—					—			(9,597)
Balance as of June 30, 2021																							Balance as of June 30, 2021	70,191,398		$	704	$	1,717,265			275,727		$	(15,197)			$	(958)			$	—			$	1,701,814

Issuance of restricted stock		57,540	—		—				—	—			—					—			—
Stock-based compensation		—	—		1,460				—	—			—					—			1,460
Common stock dividends ($0.29 per share)		—	—		—				—	—			(19,828)					—			(19,828)

Other comprehensive income		—	—		—				—	—			—					50			50
Balance as of September 30, 2020		68,233,344	$	684	$	1,579,344			139,224	$	(7,546)		$	12,283				$	(268)		$	1,584,497

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

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Terreno Realty Corporation

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES	CASH FLOWS FROM OPERATING ACTIVITIES					CASH FLOWS FROM OPERATING ACTIVITIES
Net income	Net income	$	54,995	$	66,282	Net income	$	116,695	$	33,635
Adjustments to reconcile net income to net cash provided by operating activities	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	Straight-line rents	(5,845)		1,051		Straight-line rents	(4,437)		(3,591)
Amortization of lease intangibles	Amortization of lease intangibles	(5,117)		(4,054)		Amortization of lease intangibles	(6,609)		(3,071)
Depreciation and amortization	Depreciation and amortization	36,980		34,683		Depreciation and amortization	30,270		23,344

Gain on sales of real estate investments	Gain on sales of real estate investments	(3,185)		(26,766)		Gain on sales of real estate investments	(76,048)		—
Deferred financing cost amortization	Deferred financing cost amortization	1,035		1,024		Deferred financing cost amortization	611		747
Deferred senior secured loan fee amortization		—		(57)

Stock-based compensation	Stock-based compensation	7,007		6,353		Stock-based compensation	4,839		4,647
Changes in assets and liabilities	Changes in assets and liabilities					Changes in assets and liabilities
Other assets	Other assets	(1,913)		(3,678)		Other assets	(2,658)		(4,811)
Accounts payable and other liabilities	Accounts payable and other liabilities	14,484		2,530		Accounts payable and other liabilities	564		8,324
Net cash provided by operating activities	Net cash provided by operating activities	98,441		77,368		Net cash provided by operating activities	63,227		59,224
CASH FLOWS FROM INVESTING ACTIVITIES	CASH FLOWS FROM INVESTING ACTIVITIES					CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property acquisitions	Cash paid for property acquisitions	(325,039)		(46,780)		Cash paid for property acquisitions	(276,975)		(160,031)
Proceeds from sales of real estate investments, net	Proceeds from sales of real estate investments, net	9,596		70,685		Proceeds from sales of real estate investments, net	106,835		—
Additions to construction in progress	Additions to construction in progress	(6,181)		(7,989)		Additions to construction in progress	(18,571)		(3,021)
Additions to buildings, improvements and leasing costs	Additions to buildings, improvements and leasing costs	(38,324)		(23,352)		Additions to buildings, improvements and leasing costs	(30,346)		(20,362)

Repayments on senior secured loan		—		15,915
Net cash (used in) provided by investing activities		(359,948)		8,479

Net cash used in investing activities						Net cash used in investing activities	(219,057)		(183,414)
CASH FLOWS FROM FINANCING ACTIVITIES	CASH FLOWS FROM FINANCING ACTIVITIES					CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock	Issuance of common stock	154,806		55,986		Issuance of common stock	2,059		112,613
Issuance costs on issuance of common stock	Issuance costs on issuance of common stock	(2,331)		(812)		Issuance costs on issuance of common stock	(49)		(1,606)
Repurchase of common stock related to employee awards	Repurchase of common stock related to employee awards	(582)		(9,837)		Repurchase of common stock related to employee awards	(493)		(582)

Borrowings on credit facility	Borrowings on credit facility	45,000		—		Borrowings on credit facility	12,000		25,000
Payments on credit facility	Payments on credit facility	(45,000)		—		Payments on credit facility	—		(25,000)

Borrowings on senior unsecured notes		150,000		—

Payments on mortgage loan payable	Payments on mortgage loan payable	(11,271)		(32,960)		Payments on mortgage loan payable	—		(11,271)
Payment of deferred financing costs	Payment of deferred financing costs	(2,860)		—		Payment of deferred financing costs	(857)		(131)
Dividends paid to common stockholders	Dividends paid to common stockholders	(60,389)		(54,949)		Dividends paid to common stockholders	(51,298)		(39,961)

Net cash provided by (used in) financing activities		227,373		(42,572)
Net (decrease) increase in cash and cash equivalents and restricted cash		(34,134)		43,275
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(38,638)		59,062
Net decrease in cash and cash equivalents and restricted cash						Net decrease in cash and cash equivalents and restricted cash	(194,468)		(65,128)
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	107,836		112,739		Cash and cash equivalents and restricted cash at beginning of period	204,801		107,836
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	73,702	$	156,014	Cash and cash equivalents and restricted cash at end of period	$	10,333	$	42,708
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION	SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION					SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of capitalized interest	Cash paid for interest, net of capitalized interest	11,975		12,975		Cash paid for interest, net of capitalized interest	$	10,520	$	7,612
Supplemental disclosures of non-cash transactions	Supplemental disclosures of non-cash transactions					Supplemental disclosures of non-cash transactions
Accounts payable related to capital improvements	Accounts payable related to capital improvements	16,938		11,472		Accounts payable related to capital improvements	29,039		16,131
Non-cash issuance of common stock to the deferred compensation plan	Non-cash issuance of common stock to the deferred compensation plan	(7,651)		(7,546)		Non-cash issuance of common stock to the deferred compensation plan	(11,785)		(7,651)

Lease liability arising from recognition of right-of-use asset	Lease liability arising from recognition of right-of-use asset	424		460		Lease liability arising from recognition of right-of-use asset	—		424
Reconciliation of cash paid for property acquisitions

Acquisition of properties	Acquisition of properties	344,452		47,577		Acquisition of properties	$	291,873	$	167,660
Assumption of other assets and liabilities	Assumption of other assets and liabilities	(19,413)		(797)		Assumption of other assets and liabilities	(14,898)		(7,629)
Net cash paid for property acquisitions	Net cash paid for property acquisitions	$	325,039	$	46,780	Net cash paid for property acquisitions	$	276,975	$	160,031

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 6 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 ~~September~~June 30, ~~2021,~~2022, the Company owned ~~241~~249 buildings ~~(including 3 buildings held for sale)~~ aggregating approximately ~~14.1~~15.1 million square feet, 3142 improved land parcels consisting of approximately ~~114.7~~147.7 acres and 4 properties under redevelopment ~~expected to contain~~that, upon completion, will consist of 2 properties aggregating approximately ~~0.4~~0.3 million square feet ~~upon completion.~~and 2 improved land parcels aggregating approximately 12.1 acres.

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 Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021 and the notes thereto, which was filed with the Securities and Exchange Commission on February ~~10, 2021.~~9, 2022.

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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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 no impairment charges recorded to the carrying values of the Company’s properties during the three or ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 or ~~2020.~~2021.

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 ~~$2.0~~$3.5 million and ~~$1.2~~$1.6 million for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and approximately ~~$5.1~~$6.6 million and ~~$4.1~~$3.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, 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 ~~September~~June 30, ~~2021~~2022 was ~~7.2~~6.5 years. As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):


		September 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
		Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net			Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
In-place leases	In-place leases	$	98,238	$	(70,266)	$	27,972	$	85,026	$	(64,668)	$	20,358	In-place leases	$	118,352	$	(77,524)	$	40,828	$	110,351	$	(72,266)	$	38,085
Above-market leases	Above-market leases	3,841		(3,756)		85		3,833		(3,697)		136		Above-market leases	3,594		(3,555)		39		3,775		(3,706)		69
Below-market leases	Below-market leases	(62,778)		25,235		(37,543)		(45,798)		21,190		(24,608)		Below-market leases	(90,123)		33,536		(56,587)		(78,753)		27,728		(51,025)
Total	Total	$	39,301	$	(48,787)	$	(9,486)	$	43,061	$	(47,175)	$	(4,114)	Total	$	31,823	$	(47,543)	$	(15,720)	$	35,373	$	(48,244)	$	(12,871)

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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

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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.


Description						Standard Depreciable Life
Land						Not depreciated
Building						40 years
Building Improvements						5-40 years
Tenant Improvements						Shorter of lease term or useful life
Leasing Costs						Lease term
In-place Leases						Lease term
Above/Below-Market Leases						Lease 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 (dollars in thousands):


		For the Nine Months Ended September 30,					For the Six Months Ended June 30,
		2021		2020			2022		2021
Beginning	Beginning					Beginning
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	$	107,180	$	110,082	Cash and cash equivalents at beginning of period	$	204,404	$	107,180
Restricted cash	Restricted cash	656		2,657		Restricted cash	397		656
Cash and cash equivalents and restricted cash	Cash and cash equivalents and restricted cash	107,836		112,739		Cash and cash equivalents and restricted cash	204,801		107,836
Ending	Ending					Ending
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	68,732		155,324		Cash and cash equivalents at end of period	7,237		39,955
Restricted cash	Restricted cash	4,970		690		Restricted cash	3,096		2,753
Cash and cash equivalents and restricted cash	Cash and cash equivalents and restricted cash	73,702		156,014		Cash and cash equivalents and restricted cash	10,333		42,708
Net (decrease) increase in cash and cash equivalents and restricted cash		$	(34,134)	$	43,275
Net decrease in cash and cash equivalents and restricted cash						Net decrease in cash and cash equivalents and restricted cash	$	(194,468)	$	(65,128)

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.

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As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, approximately ~~$42.0~~$42.7 million and ~~$32.5~~$39.7 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately ~~$1.2~~$0.7 million and ~~$0.9~~$0.5 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, were included as a component of other assets in the accompanying consolidated balance sheets.

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 revolving credit facility are classified as an asset, as a component of other assets in the accompanying consolidated balance sheets, 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 carried at cost, net of accumulated amortization in the aggregate of approximately ~~$10.3~~$11.2 million and ~~$9.4~~$10.6 million as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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, which as of ~~September~~June 30, ~~2021~~2022, include years ~~2017~~2018 to ~~2020~~2021 for federal purposes.

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 its 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 ~~preestablished~~pre-established 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. 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~~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, which varies

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~~quarter to quarter based on the Company’s relative share price 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 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~~

Table 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.Contents

Fair Value of Financial Instruments. ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (See “Note 109 - 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).

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 1 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 1 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 ~~September~~June 30, ~~2021,~~2022, the Company owned 6344 buildings aggregating approximately ~~3.6~~2.9 million square feet and 1013 improved land parcels consisting of approximately ~~54.1~~68.0 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately ~~29.1%~~24.9% of its annualized base rent. Such annualized base rent percentages are based on contractual base rent from leases in effect as of ~~September~~June 30, ~~2021,~~2022, 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 tenant that accounted for greater than 10% of the Company's annualized base rent as of ~~September~~June 30, ~~2021.~~2022.

Note 4. Investments in Real Estate

During the three months ended ~~September~~June 30, ~~2021,~~2022, the Company acquired 10 ~~industrial properties with a total initial~~

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investment, including acquisition costs, of approximately $176.8 million, of which $127.3 million was recorded to land, $42.1 million to buildings and improvements, and $7.4 million to intangible assets. Additionally, the Company assumed $11.7 million in liabilities.

~~During the nine months ended September 30, 2021, the Company acquired 20~~ industrial properties with a total initial investment, including acquisition costs, of approximately ~~$344.5~~$221.6 million, of which ~~$235.0~~$169.5 million was recorded to land, ~~$93.7~~$43.7 million to buildings and improvements, and ~~$15.8~~$8.4 million to intangible assets. Additionally, the Company assumed ~~$19.5~~$12.8 million in liabilities.

During the six months ended June 30, 2022, the Company acquired 12 industrial properties with a total initial investment, including acquisition costs, of approximately $291.9 million, of which $199.5 million was recorded to land, $82.8 million to buildings and improvements, and $9.6 million to intangible assets. Additionally, the Company assumed $15.0 million in liabilities.

The Company recorded revenues and net income for the three months ended ~~September~~June 30, ~~2021~~2022 of approximately ~~$3.7~~$1.7 million and ~~$1.3~~$0.7 million, respectively, and recorded revenues and net income for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 of approximately ~~$6.2~~$1.7 million and ~~$2.3~~$0.7 million, respectively, related to the ~~2021~~2022 acquisitions.

During the three months ended ~~September~~June 30, ~~2020,~~2021, the Company acquired 1 industrial property with a total initial investment, including acquisition costs, of approximately $6.5 million, of which $3.7 million was recorded to land, $2.3 million to buildings and improvements, and $0.5 million to intangible assets. Additionally, the Company assumed $0.1 million in liabilities.

~~During the nine months ended September 30, 2020, the Company acquired 5~~6 industrial properties with a total initial investment, including acquisition costs, of approximately ~~$47.6~~$57.8 million, of which ~~$34.8~~$44.0 million was recorded to land, ~~$11.0~~$9.8 million to buildings and improvements, and ~~$1.8~~$4.0 million to intangible assets. Additionally, the Company assumed ~~$0.7~~$2.2 million in liabilities.

During the six months ended June 30, 2021, the Company acquired 10 industrial properties with a total initial investment, including acquisition costs, of approximately $167.7 million, of which $107.7 million was recorded to land, $51.6 million to buildings and improvements, and $8.4 million to intangible assets. Additionally, the Company assumed $7.8 million in liabilities.

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The Company recorded revenues and net income for the three months ended ~~September~~June 30, ~~2020~~2021 of approximately ~~$0.8~~$2.0 million and ~~$0.4~~$0.7 million, respectively, and recorded revenues and net income for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 of approximately ~~$1.5~~$2.5 million and ~~$0.7~~$1.0 million, respectively, related to the ~~2020~~2021 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 and the issuance of common stock and borrowings on the revolving credit facility.

As of ~~September~~June 30, ~~2021,~~2022, the Company had 4 properties under redevelopment ~~expected to contain~~that, upon completion, will consist of 2 properties aggregating approximately ~~0.4~~0.3 million square feet ~~upon completion~~and 2 improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately ~~$117.8~~$108.3 million, including redevelopment costs, capitalized interest and other costs. During the second quarter of 2022, the Company completed redevelopment of its Countyline 29 property in Hialeah, FL consisting of approximately 0.2 million square feet. The total investment was approximately $37.7 million. The Company capitalized interest associated with redevelopment and expansion activities of approximately ~~$0.2~~$1.6 million and ~~$0.4~~$0.1 million during the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020, respectively, and approximately $0.3 million and $1.5 million during the nine months ended September 30,~~ 2021, ~~and 2020,~~ respectively.

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 ~~September~~June 30, ~~2021,~~2022, the Company ~~had entered into an agreement with a third-party purchaser to sell~~did not have any properties held for sale.

During the six months ended June 30, 2022, the Company sold 1 property (consisting of 18 buildings) located in the Northern New ~~Jersey~~Jersey/New York City market for a sales price of approximately ~~$32.7 million (net book value of approximately $18.3 million). The sale of the property is subject to various closing conditions.~~

~~During the nine months ended September 30, 2021, the Company sold 1 property located in the Seattle market for a sales price of approximately $10.3~~$110.4 million, resulting in a gain of approximately ~~$3.2 million.~~

During the nine months ended September 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, and 1 property located in the Miami market for a sales price of approximately $22.2 million, resulting in a gain of approximately $9.0$76.0 million.

Note 6. ~~Senior Secured Loan~~Debt

The following table summarizes the components of the Company’s indebtedness as of June 30, 2022 and December 31, 2021 (dollars in thousands). The Company ~~had a senior~~has no secured loan outstanding to a borrower that bore interest at a fixed annual interest rate of 8.0% and was fully repaid in May 2020. The senior secured loan was secured by a portfolio of 6 improved land parcels located primarily in Newark, New Jersey.debt:

~~Note 7. Debt~~


	June 30, 2022		December 31, 2021		Margin Above SOFR	Interest Rate 1		Contractual Maturity Date

Unsecured Debt:
Unsecured Debt:
Credit Facility	$	12,000	$	—	1.1% 2	2.3	%	8/20/2025
5-Year Term Loan	100,000		100,000		1.3% 2	2.8	%	1/1/2027
$50M 7-Year Unsecured 3	50,000		50,000 4		n/a	4.2	%	9/1/2022
$100M 7-Year Unsecured 3	100,000		100,000		n/a	3.8	%	7/14/2024
$50M 10-Year Unsecured 3	50,000		50,000		n/a	4.0	%	7/7/2026
$50M 12-Year Unsecured 3	50,000		50,000		n/a	4.7	%	10/31/2027
$100M 7-Year Unsecured 3	100,000		100,000		n/a	2.4	%	7/15/2028
$100M 10-Year Unsecured 3	100,000		100,000		n/a	3.1	%	12/3/2029
$125M 9-Year Unsecured 3	125,000		125,000		n/a	2.4	%	8/17/2030
$50M 10-Year Unsecured 3	50,000		50,000		n/a	2.8	%	7/15/2031
Total Unsecured Debt	737,000		725,000




Total Unsecured Debt	737,000		725,000
Less: Unamortized premium/discount and debt issuance costs	(3,941)		(4,330)
Total	$	733,059	$	720,670

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As1Reflects the contractual interest rate under the terms of ~~September~~each loan as of June 30, ~~2021,~~2022. Excludes the ~~Company had $50.0 million~~effects of ~~senior unsecured notes that mature in September 2022,~~unamortized debt issuance costs and unamortized fair market value premiums, if any.

2The interest rates on these loans are comprised of the Secured Overnight Financing Rate (“SOFR”) plus a SOFR margin. The SOFR margins will range from 1.10% to 1.55% (1.10% as of June 30, 2022) for the revolving credit facility and 1.25% to 1.75% (1.25% as of June 30, 2022) for the $100.0 million term loan, depending on the ratio of ~~senior unsecured notes that mature in July 2024, $50.0 million~~the Company’s outstanding consolidated indebtedness to the value of senior unsecured notes that mature in July 2026, $50.0 million of senior unsecured notes that mature in October 2027, $100.0 million of senior unsecured notes that mature in July 2028, $100.0 million of senior unsecured notes that mature in December 2029the Company’s consolidated gross asset value and ~~$50.0 million of senior unsecured notes that mature in July 2031 (collectively,~~includes a 10 basis points SOFR credit adjustment.

3Collectively, the “Senior Unsecured Notes”).

4On August 1, 2022, the Company prepaid a $50.0 million tranche of the Senior Unsecured Notes using borrowings from the Company’s revolving credit facility. The notes bore interest at 4.23% and had an original maturity date of September 1, 2022.

On ~~August 20, 2021, a subsidiary of~~June 29, 2022, the Company entered into athe First Amendment to the Sixth Amended and Restated Senior Credit Agreement ~~(the~~(as amended, the “Amended Facility”) which (i) increased the borrowing capacity of the revolving credit facility by $150.0 million to $400.0 million, (ii) decreased the accordion feature by $150.0 million to $500.0 million, and (iii) provided for the calculation of interest, pricing and fees based on SOFR instead of LIBOR. The Amended Facility consists of a ~~$250.0~~$400.0 million revolving credit facility that matures in August 2025 ~~(previously October 2022)~~ and a $100.0 million term loan that matures in January ~~2027 (previously January 2022). Among other things, the Amended Facility extended the maturity date of the revolving credit facility and the $100.0 million term loan.~~2027. As of ~~both September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there were no$12.0 million and $0, respectively, of borrowings outstanding on the revolving credit facility and $100.0 million of borrowings outstanding on the term loan. As of September 30, 2021, the Company had no interest rate caps. As of December 31, 2020, the Company had 1 interest rate cap to hedge the variable cash flows associated with $50.0 million of its $100.0 million variable-rate term loan, which expired on May 4, 2021. See “Note 9 - Derivative Financial Instruments” for more information regarding the Company’s interest rate cap.

The aggregate amount of the Amended Facility may be increased ~~to a total of~~ up to ~~$650.0~~$500.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Amended Facility are limited to the lesser of (i) the sum of the $100.0 million term loan and the ~~$250.0~~$400.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Amended Facility, including the term loan, is generally to be paid based upon, at the Company’s option, either (i) ~~LIBOR~~SOFR plus the applicable ~~LIBOR~~SOFR margin or (ii) the applicable base rate, which is the greatest of the administrative agent’s prime rate, 0.50% above the federal funds effective rate, or thirty-day ~~LIBOR~~SOFR plus the applicable ~~LIBOR~~SOFR margin for ~~LIBOR~~SOFR rate loans under the Amended Facility plus 1.25%. The applicable ~~LIBOR~~SOFR margin will range from ~~1.00%~~1.10% to ~~1.45% (1.00%~~1.55% (1.10% as of ~~September~~June 30, ~~2021)~~2022) for the revolving credit facility ~~(previously 1.05%~~and 1.25% to ~~1.50%) and 1.15% to 1.65% (1.15%~~1.75% (1.25% as of ~~September~~June 30, ~~2021)~~2022) for the $100.0 million term loan, ~~(previously 1.20% to 1.70%),~~ depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset ~~value.~~value and includes a 10 basis points SOFR credit adjustment. The Amended Facility requires quarterly payments of an annual facility fee in an amount ranging from 0.15% to 0.30%, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value.

The Amended 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 Amended Facility and the Senior Unsecured Notes are not secured by the Company’s properties or by interests in the subsidiaries that hold such properties. The Amended Facility and the Senior Unsecured Notes include a series of financial and other covenants with which the Company must comply. The Company was in compliance with the covenants under the Amended Facility and the Senior Unsecured Notes as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

~~During the nine months ended September 30, 2021, the Company fully repaid its $11.3 million mortgage loan payable. As~~

Table of December 31, 2020, this mortgage loan payable, net of deferred financing costs, totaled approximately $11.3 million, and bore interest at a weighted average fixed annual rate of 5.5%. The mortgage loan payable was collateralized by 1 property. As of December 31, 2020, the total gross book value of the property securing the debt was approximately $32.7 million. As of September 30, 2021, the Company did not have any encumbered properties.Contents

The scheduled principal payments of the Company’s debt as of ~~September~~June 30, ~~2021~~2022 were as follows (dollars in thousands):


		Credit Facility		Term Loan			Senior Unsecured Notes			Total Debt				Credit Facility			Term Loan			Senior Unsecured Notes				Total Debt
2021 (3 months)		$	—	$	—		$	—		$	—
2022		—		—			50,000			50,000
2022 (6 months)													2022 (6 months)	$	—		$	—		$	50,000		1	$	50,000
2023	2023	—		—			—			—			2023	—			—			—				—
2024	2024	—		—			100,000			100,000			2024	—			—			100,000				100,000
2025	2025	—		—			��			—			2025	12,000			—			—				12,000
2026													2026	—			—			50,000				50,000
Thereafter	Thereafter	—		100,000			350,000			450,000			Thereafter	—			100,000			425,000				525,000
Total debt	Total debt	—		100,000			500,000			600,000			Total debt	12,000			100,000			625,000				737,000
Deferred financing costs, net	Deferred financing costs, net	—		(530)			(2,847)			(3,377)			Deferred financing costs, net	—			(455)			(3,486)				(3,941)
Total debt, net	Total debt, net	$	—	$	99,470		$	497,153		$	596,623		Total debt, net	$	12,000		$	99,545		$	621,514			$	733,059
Weighted average interest rate	Weighted average interest rate	n/a		1.3		%	3.4		%	3.1		%	Weighted average interest rate	2.3		%	2.8		%	3.2		%		3.1		%

1On August 1, 2022, the Company prepaid a $50.0 million tranche of the Senior Unsecured Notes using borrowings from the Company’s revolving credit facility. The notes bore interest at 4.23% and had an original maturity date of September 1, 2022.

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Note 8.7. Leasing

The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of ~~September~~June 30, ~~2021.~~2022. 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):


2021 (3 months)		$	41,954
2022		166,074
2022 (6 months)				2022 (6 months)	$	197,769
2023	2023	147,806		2023	192,204
2024	2024	126,887		2024	172,502
2025	2025	104,747		2025	145,417
2026				2026	116,084
Thereafter	Thereafter	89,427		Thereafter	240,375
Total	Total	$	676,895	Total	$	1,064,351

Note 9.8. 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 may enter 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 may be 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 has historically usedhad no 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.June 30, 2022. 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.

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 September 30, 2020, the~~ Company had 1 interest rate cap to hedge the variable cash flows associated with $50.0 million of its existing $100.0 million variable-rate term loan, that expired on May 4, 2021. The cap had a notional value of $50.0 million and effectively capped 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. The Company previously had an additional interest rate cap with a notional value of $50.0 million (which expired on February 3, 2020) to hedge the variable cash flows associated with $50.0 million of its existing $100.0 million variable-rate term loan. Under each interest rate cap, the Company was required to make certain monthly variable rate payments on the term loan, while the applicable counterparty was obligated to make certain monthly floating rate payments based on LIBOR to the Company in the event LIBOR was greater than 4.0%, referencing the same notional amount.

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.

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The following table presents the effect of the Company’s derivative financial instruments on its accompanying consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands):


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Interest rate caps in cash flow hedging relationships:	Interest rate caps in cash flow hedging relationships:									Interest rate caps in cash flow hedging relationships:
Amount of gain recognized in AOCI on derivatives (effective portion)		$	—	$	—	$	—	$	—
Amount of gain recognized in accumulated other comprehensive income (loss) (“AOCI”) on derivatives (effective portion)										Amount of gain recognized in accumulated other comprehensive income (loss) (“AOCI”) on derivatives (effective portion)	$	—	$	—	$	—	$	—
Amount of gain reclassified from AOCI into interest expense (effective portion)	Amount of gain reclassified from AOCI into interest expense (effective portion)	$	—	$	50	$	183	$	169	Amount of gain reclassified from AOCI into interest expense (effective portion)	$	—	$	77	$	—	$	183

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Note ~~10.~~9. 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).

Financial Instruments Disclosed at Fair Value

As of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 mortgage loan 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 ~~Amended~~ Facility approximated its carrying value because the variable interest rates approximate market borrowing rates available to the Company, which are Level 2 inputs.

The following table sets forth the carrying value and the estimated fair value of the Company’s debt as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 (dollars in thousands):


		Fair Value Measurement Using											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			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

Liabilities	Liabilities											Liabilities
Debt at:	Debt at:											Debt at:
September 30, 2021		$	623,267	$	—	$	623,267	$	—	$	596,623
December 31, 2020		$	481,809	$	—	$	481,809	$	—	$	459,118
June 30, 2022												June 30, 2022	$	687,014	$	—	$	687,014	$	—	$	733,059
December 31, 2021												December 31, 2021	$	743,592	$	—	$	743,592	$	—	$	720,670

Note ~~11.~~10. 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 aggregate offering price of up to $300.0 million ($~~223.2~~219.4 million remaining as of ~~September~~June 30, ~~2021)~~2022) 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 previous at-the-market equity offering program (the “Previous $300 Million ATM Program”), which was substantially utilized as of June 10, 2021 and 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 both the three and ~~nine~~six months ended ~~September~~June 30, 2022, the Company issued an aggregate of 27,087 shares of common stock at a weighted average offering price of $76.03 per share under the $300 Million ATM Program, resulting in net proceeds of approximately $2.0 million and paying total compensation to the applicable sales agents of approximately $29,000. During the three and six months ended June 30, 2021, the Company issued an aggregate of ~~751,539~~1,084,294 and ~~2,542,357~~1,790,818 shares, respectively, of common stock at a weighted average offering price of ~~$66.51~~$64.21 and ~~$63.22~~$61.84 per share, respectively, under the Previous $300 Million ATM Program and the $300 Million ATM Program, resulting in net proceeds of approximately ~~$49.3~~$68.6 million and ~~$158.4~~$109.1 million, respectively, and paying total compensation to the applicable sales agents of approximately ~~$0.7~~$1.0 million and ~~$2.3 million, respectively.~~

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During the three and nine months ended September 30, 2020, the Company issued an aggregate of 8,250 and 1,054,577 shares, respectively, of common stock at a weighted average offering price of $59.92 and $53.09 per share, respectively, under the Previous $300 Million ATM Program, resulting in net proceeds of approximately $0.5 million and $55.2 million, respectively, and paying total compensation to the applicable sales agents of approximately $7,000 and $0.8$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, 2022. 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 ~~September~~June 30, ~~2021,~~2022, the Company had not repurchased any shares of stock pursuant to its share repurchase program.

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In connection with the Annual Meeting of Stockholders on May ~~4, 2021,~~3, 2022, the Company granted a total of 10,362 unrestricted 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 $63.70. The grant date fair value of the 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 and $0.7~~$0.8 million ~~respectively,~~ in compensation costs for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 related to this issuance.

The Company has a Non-Qualified Deferred Compensation Plan ~~(“Deferred~~(the “Deferred Compensation Plan”) maintained for the benefit of select employees and members 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 ~~both~~ the three months ended June 30, 2022 and 2021, ~~September 30, 2021~~3,582 and ~~2020, no~~5,181 shares of common stock, ~~were deposited into the Deferred Compensation Plan~~respectively, and during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~ 2022 and ~~2020,~~2021, ~~136,503~~150,867 and ~~139,224~~136,503 shares of common stock, respectively, were deposited into the Deferred Compensation Plan.

As of ~~September~~June 30, ~~2021,~~2022, 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 ~~1,001,573~~819,008 were remaining and 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 ~~September~~June 30, ~~2021~~2022 ranged from $14.20 to ~~$68.20.~~$78.33. The fair value of the restricted stock that was granted during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was approximately ~~$6.5~~$3.9 million and the vesting period for the restricted stock is typically between one and five years. As of ~~September~~June 30, ~~2021,~~2022, the Company had approximately ~~$11.9~~$10.7 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 ~~3.3~~2.8 years. The Company recognized compensation costs of approximately ~~$1.0 million~~$0.8 and ~~$0.6~~$0.7 million for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and approximately ~~$2.4~~$2.2 million and ~~$2.0~~$1.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, 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 ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:

Restricted Stock Activity:


		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
Non-vested shares outstanding as of December 31, 2020		203,729	$	50.19

Non-vested shares outstanding as of December 31, 2021					Non-vested shares outstanding as of December 31, 2021	289,186	$	55.90
Granted	Granted	98,240	65.87		Granted	53,287	72.69
Forfeited	Forfeited	(85)	59.29		Forfeited	(29,391)	59.41
Vested	Vested	(13,336)	43.04		Vested	(20,558)	50.64
Non-vested shares outstanding as of September 30, 2021		288,548	$	55.86
Non-vested shares outstanding as of June 30, 2022					Non-vested shares outstanding as of June 30, 2022	292,524	$	58.98

The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of ~~September~~June 30, ~~2021:~~2022:


Non-vested Shares Vesting Schedule	Non-vested Shares Vesting Schedule	Number of Shares	Non-vested Shares Vesting Schedule	Number of Shares
2021 (3 months)		—
2022		42,092
2022 (6 months)			2022 (6 months)	12,313
2023	2023	45,770	2023	53,868
2024	2024	91,824	2024	100,004
2025	2025	57,540	2025	75,017
2026			2026	51,322
Thereafter	Thereafter	51,322	Thereafter	—
Total Non-vested Shares	Total Non-vested Shares	288,548	Total Non-vested Shares	292,524

Long-Term Incentive Plan:

As of ~~September~~June 30, ~~2021,~~2022, there are 3 open performance measurement periods for the Performance Share awards: January 1, ~~2019 to December 31, 2021, January 1,~~ 2020 to December 31, 2022, ~~and~~ January 1, 2021 to December 31, 2023. During the nine months ended September 30, 2021, the Company issued 131,322 shares of common stock at a price of $55.75 per share related to the Performance Share awards for the performance period from2023, and January 1, ~~2018~~2022 to December 31, ~~2020. 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):~~2024.
Fair Value Performance Share Period Fair Value September 30, 2021 Accrual September 30, 2021 Expense for the Three Months Ended September 30, Expense for the Nine Months Ended September 30,
2021 2020 2021 2020
January 1, 2018 - December 31, 2020 $ — $ — $ — $ 398 $ — $ 1,123

Under the Amended LTIP, 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 and includes the forfeiture of certain of the Performance Share awards during the three and six months ended June 30, 2022 (dollars in thousands):
Performance Share Period Fair Value on Date of Grant Expense for the Three Months Ended September 30, Expense for the Nine Months Ended September 30,
2021 2020 2021 2020
January 1, 2019 - December 31, 2021 $ 4,829 $ 402 $ 402 $ 1,207 $ 1,206
January 1, 2020 - December 31, 2022 5,572 465 464 1,394 1,394
January 1, 2021 - December 31, 2023 5,469 455 — 1,366 —
Total $ 15,870 $ 1,322 $ 866 $ 3,967 $ 2,600


Performance Share Period	Fair Value on Date of Grant		Expense for the Three Months Ended June 30,				Expense for the Six Months Ended June 30,
			2022		2021		2022		2021
January 1, 2019 - December 31, 2021	$	4,829	$	—	$	403	$	—	$	805
January 1, 2020 - December 31, 2022	4,882		(110)		465		354		929
January 1, 2021 - December 31, 2023	4,820		133		455		589		911
January 1, 2022 - December 31, 2024	5,789		421		—		—		—
Total	$	20,320	$	444	$	1,323	$	1,908	$	2,645

Dividends:

The following table sets forth the cash dividends paid or payable per share during the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:

For the Three Months Ended

Security

Dividend per
Share

Declaration Date

Record Date

Date Paid

March 31, ~~2021~~

~~Common stock~~

~~0.29~~

~~February 9, 2021~~

~~March 26, 2021~~

~~April 9, 2021~~

~~June 30, 2021~~

~~Common stock~~

~~0.29~~

~~May 4, 2021~~

~~June 30, 2021~~

~~July 14, 2021~~

~~September 30, 2021~~2022

Common stock

0.34

~~August 3, 2021~~February 8, 2022

~~October 1, 2021~~March 25, 2022

~~October 15, 2021~~April 8, 2022

June 30, 2022

Common stock

0.34

May 3, 2022

June 30, 2022

July 14, 2022

Note ~~12.~~11. 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 no antidilutive securities or dilutive restricted stock awards outstanding for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

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 ~~262,512~~295,247 and ~~291,893~~216,025 of weighted average unvested restricted shares outstanding for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~230,280~~299,433 and ~~387,990~~213,897 of weighted average unvested restricted shares outstanding for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, 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 ~~236,076~~90,217 and ~~227,695~~85,110 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, and ~~259,854~~228,177 and 223,047 for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021, respectively.

Note ~~13.~~12. Commitments and Contingencies

Contractual Commitments. As of ~~November~~August 2, ~~2021,~~2022, the Company ~~has~~had 3 outstanding contracts with third-party sellers to acquire 53 industrial properties for a total purchase price of ~~$94.2~~approximately $51.3 million. There is no assurance that the Company will acquire the properties under contract because the proposed acquisitions are subject to due diligence and various closing conditions.

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As of ~~November~~August 2, ~~2021,~~2022, the Company ~~has executed 4~~had 3 non-binding letters of intent with third-party sellers to acquire 43 industrial properties for a total anticipated purchase price of approximately ~~$175.3~~$78.5 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.

Note ~~14.~~13. Subsequent Events

On ~~October 1, 2021,~~July 5, 2022, the Company acquired 1 industrial property in ~~Woodinville, Washington,~~Medley, FL, for a total purchase price of approximately ~~$23.6 million. The property was acquired from an unrelated third party using existing cash on hand.~~

On October 12, 2021, the Company acquired 1 industrial property in Brooklyn, New York, for a total purchase price of approximately $4.5 million. The property was acquired from an unrelated third party using existing cash on hand.

~~On October 12, 2021, the Company sold 1 industrial property in East Hanover, New Jersey, for a total sales price of approximately $32.7 million (net book value of approximately $18.3 million).~~

On October 14, 2021, the Company acquired 1 industrial property in Gardena, California, for a total purchase price of approximately $8.8 million. The property was acquired from an unrelated third party using existing cash on hand.

~~On October 20, 2021, the Company acquired 1 industrial property in Elizabeth, New Jersey, for a total purchase price of approximately $44.0~~$20.0 million. The property was acquired from an unrelated third party using existing cash on hand and ~~proceeds~~borrowings from the Company’s revolving credit facility.

On ~~October 29, 2021,~~August 2, 2022, the Company acquired 1 industrial property in ~~San Jose, California,~~Hawthorne, CA, for a total purchase price of approximately ~~$23.0~~$6.5 million. The property was acquired from an unrelated third party using ~~existing cash on hand.~~borrowings from the Company’s revolving credit facility.

On ~~October 29, 2021,~~August 1, 2022, the Company ~~acquired~~prepaid a $50.0 million tranche of the Senior Unsecured Notes using borrowings from the Company’s revolving credit facility. The notes bore interest at 4.23% and had an original maturity date of September 1, ~~industrial property in Alexandria, Virginia, for a total purchase price of approximately $9.0 million. The property was acquired from an unrelated third party using existing cash on hand.~~2022.

On ~~October 28, 2021, the Company issued $125.0 million of senior guaranteed notes (the “2.38% Notes”) in a private placement pursuant to a note purchase agreement entered into on~~ August 17, 2021 with certain institutional investors. The 2.38% Notes bear interest of 2.38% and mature in August 2030. The 2.38% Notes are guaranteed by the Company and by substantially all of the current and to-be-formed subsidiaries of the borrower that own an unencumbered property. The 2.38% Notes are not secured by the Company's properties or by interests in the subsidiaries that hold such properties. The 2.38% Notes include a series of financial and other covenants with which the Company must comply.

~~On November~~ 2, ~~2021,~~2022, the Company’s board of directors declared a cash dividend in the amount of ~~$0.34~~$0.40 per share of its common stock payable on ~~January 5,~~October 14, 2022 to the stockholders of record as of the close of business on ~~December 15, 2021.~~September 30, 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management. When used, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will”, “seek”, “target”, “see”, “likely”, “position”, “opportunity”, “outlook”, “potential”, ��future” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors, that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.

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Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

•the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, which was filed with the Securities and Exchange Commission on February ~~10, 2021,~~9, 2022, in our Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021,~~2022, which was filed with the Securities and Exchange Commission on May ~~5, 2021, in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, which was filed with the Securities and Exchange Commission on August~~ 4, ~~2021,~~2022, in this Quarterly Report on Form 10-Q, and in our other public ~~filings, which you should interpret as being heightened as a result of the numerous and ongoing adverse impacts of COVID-19;~~filings;

•our ability to identify and acquire industrial properties on terms favorable to us;

•general volatility of the capital markets and the market price of our common stock;

•adverse economic or real estate conditions or developments in the industrial real estate sector and/or in the markets in which we 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;

•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;~~activities (including rising inflation, supply chain disruptions and construction delays);

•the ongoing impact of ~~COVID-19~~the novel coronavirus (“COVID-19”), or the impact of any future pandemic, epidemic or outbreak of any other highly infectious disease, on the U.S., regional and global economies and ~~the~~on our business, financial condition and results of operations and that 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;

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•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.

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Overview

Terreno Realty Corporation (“Terreno”, and together with its subsidiaries, “we”, “us”, “our”, “our Company”, or “the Company”) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. We invest in several types of industrial real estate, including warehouse/distribution (approximately ~~80.5%~~77.7% of our total annualized base rent as of ~~September~~June 30, ~~2021)~~2022), flex ~~buildings~~ (including light industrial and research and development, or R~~&D, approximately 4.9%~~&D) (approximately 4.5%), transshipment (approximately ~~6.0%~~6.2%), and improved land ~~parcels~~ (approximately ~~8.6%~~11.6%). We target functional ~~buildings~~properties in infill locations that may be shared by multiple tenants and that cater to customer demand within the various submarkets in which we operate. Infill locations are geographic locations surrounded by high concentrations of already developed land and existing buildings. As of ~~September~~June 30, ~~2021,~~2022, we owned a total of ~~241~~249 buildings ~~(including three buildings held for sale)~~ aggregating approximately ~~14.1~~15.1 million square feet, 3142 improved land parcels consisting of approximately ~~114.7~~147.7 acres and four properties under redevelopment ~~expected to contain~~that, upon completion, will consist of two properties aggregating approximately ~~0.4~~0.3 million square feet ~~upon completion.~~and two improved land parcels aggregating approximately 12.1 acres. As of ~~September~~June 30, ~~2021, the~~2022, our buildings and improved land parcels were approximately ~~98.0%~~97.9% and ~~96.1%~~97.0% leased, respectively, to ~~548~~576 customers, the largest of which accounted for approximately ~~5.2%~~4.5% of our total annualized base rent. See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 for a general description of these types of industrial real estate.

We are an internally managed Maryland corporation and elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, 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 ~~September~~June 30, ~~2021:~~2022:


Type	Type	Number of Buildings or Improved Land Parcels	Annualized Base Rent (in thousands) 1		% of Total		Type	Number of Buildings or Improved Land Parcels	Annualized Base Rent (in thousands) 1		% of Total
Warehouse/distribution	Warehouse/distribution	212	$	137,531	80.5	%	Warehouse/distribution	218	$	157,589	77.7	%
Flex	Flex	12	8,423		4.9	%	Flex	13	9,121		4.5	%
Transshipment	Transshipment	17	10,322		6.0	%	Transshipment	18	12,525		6.2	%
Improved land	Improved land	31	14,702		8.6	%	Improved land	42	23,667		11.6	%
Total	Total	272	$	170,978	100.0	%	Total	291	$	202,902	100.0	%

1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of ~~September~~June 30, ~~2021,~~2022, multiplied by 12.

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The following table summarizes by market our investments in real estate as of ~~September~~June 30, ~~2021:~~2022:


		Los Angeles			Northern New Jersey/New York City			San Francisco Bay Area			Seattle			Miami			Washington, D.C.			Total/Weighted Average				Los Angeles			Northern New Jersey/New York City			San Francisco Bay Area			Seattle			Miami			Washington, D.C.			Total/Weighted Average
Investments in Real Estate	Investments in Real Estate																						Investments in Real Estate
Number of Buildings	Number of Buildings	49			63			46			36			29			18			241			Number of Buildings	53			44			52			45			33			22			249
Rentable Square Feet	Rentable Square Feet	2,678,531			3,570,180			2,196,337			2,309,059			1,808,591			1,534,625			14,097,323			Rentable Square Feet	2,753,852			2,868,885			2,438,401			2,814,762			2,464,338			1,761,704			15,101,942
% of Total	% of Total	19.0		%	25.3		%	15.6		%	16.4		%	12.8		%	10.9		%	100.0		%	% of Total	18.2		%	19.0		%	16.1		%	18.6		%	16.4		%	11.7		%	100.0		%
Occupancy % as of September 30, 2021		98.3		%	98.5		%	96.5		%	99.7		%	95.4		%	99.0		%	98.0		%
Occupancy % as of June 30, 2022																							Occupancy % as of June 30, 2022	99.3		%	96.1		%	99.9		%	97.5		%	99.6		%	94.1		%	97.9		%
Annualized Base Rent (in thousands) 1	Annualized Base Rent (in thousands) 1	$	26,823		$	43,366		$	29,006		$	23,668		$	15,820		$	17,592		$	156,275		Annualized Base Rent (in thousands) 1	$	30,158		$	40,670		$	34,506		$	32,199		$	21,920		$	19,783		$	179,236
% of Total	% of Total	17.2		%	27.7		%	18.6		%	15.1		%	10.1		%	11.3		%	100.0		%	% of Total	16.8		%	22.7		%	19.3		%	18.0		%	12.2		%	11.0		%	100.0		%
Annualized Base Rent 1 Per Occupied Square Foot	Annualized Base Rent 1 Per Occupied Square Foot	$	10.18		$	12.34		$	13.68		$	10.28		$	9.17		$	11.58		$	11.31		Annualized Base Rent 1 Per Occupied Square Foot	$	11.03		$	14.74		$	14.16		$	11.74		$	8.93		$	11.94		$	11.79
Weighted Average Remaining Lease Term (Years) 2	Weighted Average Remaining Lease Term (Years) 2	6.2			4.8			3.3			3.8			4.7			3.2			4.5			Weighted Average Remaining Lease Term (Years) 2	5.9			4.7			3.2			4.2			5.1			3.0			4.4

Investments in Improved Land	Investments in Improved Land																						Investments in Improved Land
Number of Land Parcels	Number of Land Parcels	8			10			3			7			2			1			31			Number of Land Parcels	11			13			3			10			2			3			42
Acres	Acres	16.4			54.1			7.1			20.5			3.2			13.4			114.7			Acres	22.9			68.0			7.1			25.8			3.2			20.7			147.7
% of Total	% of Total	14.3		%	47.1		%	6.2		%	17.9		%	2.8		%	11.7		%	100.0		%	% of Total	15.5		%	46.1		%	4.8		%	17.5		%	2.1		%	14.0		%	100.0		%
Occupancy % as of September 30, 2021		88.0		%	95.4		%	100.0		%	100.0		%	100.0		%	100.0		%	96.1		%
Occupancy % as of June 30, 2022																							Occupancy % as of June 30, 2022	90.7		%	100.0		%	100.0		%	91.3		%	100.0		%	100.0		%	97.0		%
Annualized Base Rent (in thousands) 1	Annualized Base Rent (in thousands) 1	$	3,334		$	6,369		$	1,405		$	2,305		$	422		$	868		$	14,703		Annualized Base Rent (in thousands) 1	$	6,150		$	9,785		$	1,452		$	4,124		$	422		$	1,733		$	23,666
% of Total	% of Total	22.7		%	43.2		%	9.6		%	15.7		%	2.9		%	5.9		%	100.0		%	% of Total	26.0		%	41.3		%	6.1		%	17.4		%	1.8		%	7.4		%	100.0		%
Annualized Base Rent 1 Per Occupied Square Foot	Annualized Base Rent 1 Per Occupied Square Foot	$	5.30		$	2.91		$	4.56		$	2.73		$	3.07		$	1.49		$	3.11		Annualized Base Rent 1 Per Occupied Square Foot	$	6.82		$	3.45		$	4.72		$	4.18		$	3.07		$	1.98		$	3.90
Weighted Average Remaining Lease Term (Years) 2	Weighted Average Remaining Lease Term (Years) 2	3.8			6.2			3.6			3.3			2.8			8.3			5.3			Weighted Average Remaining Lease Term (Years) 2	4.5			6.1			3.6			3.3			2.2			5.5			4.7

Total Investments in Real Estate and Improved Land	Total Investments in Real Estate and Improved Land																						Total Investments in Real Estate and Improved Land
Annualized Base Rent (in thousands) 1	Annualized Base Rent (in thousands) 1	$	30,157		$	49,735		$	30,411		$	25,973		$	16,242		$	18,460		$	170,978		Annualized Base Rent (in thousands) 1	$	36,308		$	50,455		$	35,958		$	36,323		$	22,342		$	21,516		$	202,902
% of Total Annualized Base Rent 1	% of Total Annualized Base Rent 1	17.6		%	29.1		%	17.8		%	15.2		%	9.5		%	10.8		%	100.0		%	% of Total Annualized Base Rent 1	17.9		%	24.9		%	17.7		%	17.9		%	11.1		%	10.5		%	100.0		%
Gross Book Value (in thousands) 3	Gross Book Value (in thousands) 3	$	503,384		$	718,269		$	428,832		$	482,947		$	264,199		$	218,046		$	2,615,677		Gross Book Value (in thousands) 3	$	586,895		$	764,302		$	554,107		$	605,016		$	427,330		$	318,790		$	3,256,440
% of Total Gross Book Value	% of Total Gross Book Value	19.2		%	27.5		%	16.4		%	18.5		%	10.1		%	8.3		%	100.0		%	% of Total Gross Book Value	18.0		%	23.5		%	17.0		%	18.6		%	13.1		%	9.8		%	100.0		%

1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of ~~September~~June 30, ~~2021,~~2022, multiplied by 12.

2Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of ~~September~~June 30, ~~2021,~~2022, weighted by the respective square footage.

3Includes four properties under redevelopment ~~expected to contain~~that, upon completion, will consist of two properties aggregating approximately ~~0.4~~0.3 million square feet ~~upon completion, as discussed below~~ and ~~one property held for sale with a gross book value of~~two improved land parcels aggregating approximately ~~$23.6 million).~~12.1 acres.

As of ~~September~~June 30, ~~2021,~~2022, we owned four properties under redevelopment ~~expected to contain~~that, upon completion, will consist of two properties aggregating approximately ~~0.4~~0.3 million square feet ~~upon completion~~and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately ~~$117.8~~$108.3 million, including redevelopment costs, capitalized interest and other costs.

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The following table summarizes our capital expenditures incurred during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2021 2020 2021 2020
Building improvements $ 9,320 $ 4,507 $ 21,014 $ 12,101
Tenant improvements 3,538 677 6,958 1,705
Leasing commissions 4,495 5,284 12,222 9,710
Redevelopment, renovation and expansion 4,052 3,184 9,935 6,761
Total capital expenditures 1
$ 21,405 $ 13,652 $ 50,129 $ 30,277


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Building improvements	$	11,356	$	9,940	$	20,872	$	11,694
Tenant improvements	6,577		2,499		11,124		3,420
Leasing commissions	5,245		4,985		9,936		7,727
Redevelopment, renovation and expansion	7,232		5,311		19,183		5,883
Total capital expenditures 1	$	30,410	$	22,735	$	61,115	$	28,724

1Includes approximately ~~$14.2~~$19.2 million and ~~$6.5~~$13.8 million for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and approximately ~~$28.0~~$42.7 million and ~~$15.4~~$15.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 1529 and 1314 properties for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and at 1734 and 14 properties for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, respectively. Also includes approximately $3.4 million and ~~2020, respectively.~~$3.6 million for the three and six months ended June 30, 2022, respectively, related to roof replacements in advance of rooftop solar installations as part of our ESG initiatives.

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 ~~95.2%~~93.6% 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~~ongoing basis by reviewing outstanding accounts receivable balances, and as provided under the respective lease agreements, review the tenant’s financial condition periodically as appropriate. As needed, we hold discussions with the tenant’s management about their business and we conduct site visits of the tenant’s operations.

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Our top 20 customers based on annualized base rent as of ~~September~~June 30, ~~2021~~2022 are as follows:


		Customer	Leases	Rentable Square Feet	% of Total Rentable Square Feet		Annualized Base Rent (in thousands) 1		% of Total Annualized Base Rent			Customer	Leases	Rentable Square Feet	% of Total Rentable Square Feet		Annualized Base Rent (in thousands) 1		% of Total Annualized Base Rent
1	1	Amazon.com 2	6	471,880	3.3	%	$	8,898	5.2	%	1	Amazon.com 2	6	471,880	3.1	%	$	9,069	4.5	%
2	2	FedEx Corporation 3	7	300,779	2.1	%	5,236		3.1	%	2	FedEx Corporation 3	6	246,779	1.6	%	4,880		2.4	%
3	3	Danaher	3	171,707	1.2	%	3,844		2.2	%	3	Danaher	3	171,707	1.1	%	3,960		2.0	%
4	4	United States Government	8	300,732	2.1	%	3,757		2.2	%	4	United States Government	8	300,732	2.0	%	3,794		1.9	%
5	5	District of Columbia	7	234,071	1.7	%	3,332		1.9	%	5	District of Columbia	7	234,071	1.5	%	3,343		1.6	%
6	6	DirectBuy Home Improvement	1	230,891	1.6	%	2,011		1.2	%	6	O'Neill Logistics	2	237,692	1.6	%	2,069		1.0	%
7	7	Costco-Innovel Solutions LLC	1	219,910	1.6	%	1,870		1.1	%	7	Port Kearny Security, Inc. 4	1	—	—	%	2,040		1.0	%
8	8	Port Kearny Security, Inc. 4	1	—	—	%	1,800		1.1	%	8	DirectBuy Home Improvement	2	230,891	1.5	%	2,011		1.0	%
9	9	XPO Logistics	2	180,717	1.3	%	1,764		1.0	%	9	B&B Granite Block Sales, LLC 5	1	—	—	%	1,944		1.0	%
10	10	L3 Harris Technologies, Inc.	1	147,898	1.0	%	1,700		1.0	%	10	Costco-Innovel Solutions LLC	1	219,910	1.5	%	1,870		0.9	%
11	11	O'Neill Logistics	2	237,692	1.7	%	1,606		0.9	%	11	Hanjin International America, Inc. and Hanjin Transportation Co., LTD	1	114,061	0.8	%	1,848		0.9	%
12	12	Bar Logistics	1	203,263	1.4	%	1,546		0.9	%	12	XPO Logistics	2	180,717	1.2	%	1,843		0.9	%
13	13	Topaz Lighting Corp.	1	190,000	1.3	%	1,507		0.9	%	13	Team Alliance Logistics Inc. DBA A&V Transportation 6	2	—	—	%	1,777		0.9	%
14	14	Envogue International	1	192,000	1.4	%	1,454		0.9	%	14	L3 Harris Technologies, Inc.	1	147,898	1.0	%	1,751		0.8	%
15	15	YRC	2	61,252	0.4	%	1,441		0.8	%	15	Divergent Technologies, Inc. 7	2	72,808	0.6	%	1,613		0.8	%
16	16	United States Postal Service	2	53,000	0.4	%	1,438		0.8	%	16	Bar Logistics	1	203,263	1.3	%	1,593		0.8	%
17	17	Lilac Solutions Inc.	1	92,884	0.7	%	1,378		0.8	%	17	Topaz Lighting Corp.	1	190,000	1.2	%	1,552		0.8	%
18	18	Saia Motor Freight Line LLC	1	52,086	0.4	%	1,315		0.8	%	18	YRC	2	61,252	0.4	%	1,540		0.8	%
19	19	Northrop Grumman Systems Corporation	1	103,200	0.7	%	1,300		0.8	%	19	PODS Enterprises. LLC	1	201,977	1.3	%	1,515		0.7	%
20	20	Premium Transportation Services, Inc.	1	40,000	0.4	%	1,295		0.8	%	20	Envogue International	1	192,000	1.3	%	1,454		0.7	%
		Total	50	3,483,962	24.7	%	$	48,492	28.4	%		Total	51	3,477,638	23.0	%	$	51,466	25.4	%

1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of ~~September~~June 30, ~~2021,~~2022, multiplied by 12.

2Includes two improved land parcels consisting of approximately 6.2 acres.

3Includes two improved land parcels consisting of approximately 7.7 acres.

4Includes an improved land parcel consisting of approximately 16.9 acres.

5Includes an improved land parcel consisting of approximately 7.2 acres.

6Includes two improved land parcels consisting of approximately 4.4 acres.

7Includes an improved land parcel consisting of approximately 1.4 acres.

The following table summarizes the anticipated lease expirations for leases in place as of ~~September~~June 30, ~~2021,~~2022, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:


Year	Year	Rentable Square Feet	% of Total Rentable Square Feet		Annualized Base Rent (in thousands) 2, 3	% of Total Annualized Base Rent		Year	Rentable Square Feet	% of Total Rentable Square Feet		Annualized Base Rent (in thousands) 2, 3		% of Total Annualized Base Rent
2021 (3 months) 1		554,023	3.9	%	4,114	2.1	%
2022		1,834,622	13.0	%	19,620	10.1	%
2022 (6 months) 1								2022 (6 months) 1	988,633	6.5	%	$	8,027	3.4	%
2023	2023	1,993,796	14.1	%	26,725	13.7	%	2023	1,955,040	12.9	%	26,103		11.1	%
2024	2024	1,783,109	12.6	%	24,547	12.6	%	2024	1,854,679	12.3	%	25,150		10.8	%
2025	2025	1,608,763	11.4	%	25,538	13.1	%	2025	1,805,514	12.0	%	35,947		15.3	%
2026								2026	2,447,748	16.2	%	38,749		16.5	%
Thereafter	Thereafter	6,042,046	43.0	%	94,488	48.4	%	Thereafter	5,733,470	38.0	%	100,337		42.9	%
Total	Total	13,816,359	98.0	%	195,032	100.0	%	Total	14,785,084	97.9	%	$	234,313	100.0	%

1Includes leases that expire on or after ~~September~~June 30, ~~2021~~2022 and month-to-month leases totaling approximately ~~44,699~~30,348 square feet.

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2Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of ~~September~~June 30, ~~2021,~~2022, multiplied by 12.

3Includes annualized base rent related to 3142 improved land parcels totaling approximately ~~114.7~~147.7 acres.

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Our ability to re-lease or renew expiring space at rental rates equal to or in excess of current rental rates will impact our results of operations. As of ~~September~~June 30, ~~2021,~~2022, leases representing approximately ~~12.2%~~3.4% of the total annualized base rent of our portfolio are scheduled to expire ~~through~~during the year ending December 31, 2022. We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our ~~2021~~2022 expirations will be above the rates currently being paid for the same space. ~~Rent~~Cash rent changes on new and renewed leases totaling approximately ~~0.8~~0.5 million square feet and 7.2 acres of improved land commencing during the three months ended ~~September~~June 30, ~~2021~~2022 were approximately ~~34.9%~~55.4% higher as compared to the previous rental rates for that same space, and cash rent changes on new and renewed leases totaling approximately ~~1.9~~1.2 million square feet and 11.3 acres commencing during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 were approximately ~~26.8%~~42.8% higher as compared to the previous rental rates for that same space. We had a tenant retention ratio for the operating portfolio of ~~57.5%~~27.5% and ~~67.4%~~38.6%, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. We had a tenant retention ratio for the improved land portfolio of 100.0% and 87.4%, respectively, for the three and six months ended June 30, 2022. We define tenant retention ratio as the square footage or acreage of all leases commenced during the period that are rented by existing tenants divided by the square footage or acreage of all expiring leases during the reporting period. The square footage or acreage of tenants that default or buy-out prior to expiration of their lease and short-term leases of less than one year are not included in the calculation.

Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates equal to or above the current average rental rates. Further, re-leased/renewed rental rates in a particular market may not be consistent with rental rates across our portfolio as a whole and re-leased/renewed rental rates for particular properties within a market may not be consistent with rental rates across our portfolio within a particular market, in each case due to a number of factors, including local real estate conditions, local supply and demand for industrial space, the condition of the property, the impact of leasing incentives, including free rent and tenant improvements, and whether the property, or space within the property, has been redeveloped.

Recent Developments

Acquisition Activity

During the three months ended ~~September~~June 30, ~~2021,~~2022, we acquired 10ten industrial properties for a total purchase price of approximately ~~$167.0~~$203.3 million. The properties were acquired from unrelated third parties using existing cash on hand, ~~and~~net proceeds from dispositions, net proceeds from the issuance of common ~~stock.~~stock and debt. The following table sets forth the industrial properties we acquired during the three months ended ~~September~~June 30, ~~2021:~~2022:
Property Name Location Acquisition Date Number of
Buildings Square
Feet
Purchase Price
(in thousands) 1
Stabilized
Cap Rate 2
Acreage
Countyline #26 Hialeah, Florida July 14, 2021 1 220,942 $ 39,409 3.7 % —
13020 & 13030 Cerise Hawthorne, California July 14, 2021 2 21,846 8,075 5.4 % —
1150 & 1250 W. Trenton Ave Orange, California July 30, 2021 2 34,224 9,335 3.6 % —
MLK 9801 Seattle, Washington August 11, 2021 — — 11,900 2.4 % 3.1
MLK 9845 Seattle, Washington August 11, 2021 — — 15,750 3.4 % 3.4
MLK 9600 Seattle, Washington August 11, 2021 — — 22,350 4.9 % 5.2
Foley Street Hayward, California August 26, 2021 2 40,504 8,250 4.9 % —
Paterson Plank III Carlstadt, New Jersey August 27, 2021 — — 17,850 4.5 % 4.9
97 Third Street Kearny, New Jersey September 27, 2021 — — 26,250 3.1 % 5.4
13025 Cerise Hawthorne, California September 30, 2021 1 21,000 7,875 2.9 % —
Total/Weighted Average 8 338,516 $ 167,044 3.8 % 22.0


Property Name	Location	Acquisition Date	Number of Buildings	Square Feet	Purchase Price (in thousands) 1		Stabilized Cap Rate 2		Acreage 3
NE 91st	Redmond, WA	April 8, 2022	2	32,000	$	9,780	4.1	%	—
87 Doremus	Newark, NJ	April 18, 2022	—	—	17,300		5.3	%	9.7
3660 Thomas Road	Santa Clara, CA	May 4, 2022	1	135,000	54,600		2.5	%	—
127 Doremus Avenue	Newark, NJ	May 19, 2022	—	—	11,900		6.9	%	2.4
3660 Fee Ana	Anaheim, CA	May 24, 2022	—	—	15,000		4.7	%	2.1
332 Hindry Avenue	Inglewood, CA	May 25, 2022	1	19,000	9,280		2.4	%	—
8320-8400 Isis Avenue	Los Angeles, CA	May 25, 2022	1	40,000	17,902		3.2	%	—
Teagarden	San Leandro, CA	June 1, 2022	5	104,000	34,600		3.5	%	—
293 Roanoke Avenue	Newark, NJ	June 7, 2022	—	—	13,000		5.4	%	1.8
8660 Willows Road	Redmond, WA	June 17, 2022	—	—	19,900		4.3	%	3.5





Total/Weighted Average			10	330,000	$	203,262	3.8	%	19.5

1Excludes intangible liabilities and mortgage premiums, if any. The total aggregate initial investment was approximately ~~$176.8~~$221.6 million, including ~~$3.9~~$8.4 million in capitalized closing costs and acquisition costs and ~~$10.8~~$9.9 million in assumed intangible ~~liabilities and $4.9 million in other credits related to near term capital expenditures at the Countyline #26 property.~~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

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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

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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, ~~2020~~2021 and in our other public filings.

3Represents acreage of improved land parcels.

Redevelopment Activity

As of ~~September~~June 30, ~~2021,~~2022, we ~~have~~had four properties under redevelopment ~~expected to contain~~that, upon completion, will consist of two properties aggregating approximately ~~0.4~~0.3 million square feet ~~upon completion~~and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately ~~$117.8~~$108.3 million, including redevelopment costs, capitalized interest and other costs as follows:


Property Name	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 September 30, 2021		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 June 30, 2022
Sodo Row - North & South		$	66,609	$	63,145	$	3,464	5.0	%	234,308	Q4 2021	64.8	%
Americas Gateway 5		7,429		5,673		1,756		5.5	%	51,800	Q4 2022	—	%
73rd Street	73rd Street	20,136		12,493		7,643		5.1	%	129,000	Q4 2022	—	%	73rd Street	$	20,616	$	18,313	$	2,303	6.5	%	128,844	Q3 2022	66.1	%
Paterson Plank III		23,643		18,638		5,005		4.5	%	N/A	Q4 2022	—	%
Countyline #30														Countyline #30	37,867		37,102		765		3.8	%	205,107	Q3 2022	100.0	%
Berryessa 3														Berryessa 3	24,563		24,182		381		5.1	%	N/A	Q1 2023	—	%
Paterson Plank III 4														Paterson Plank III 4	25,303		19,545		5,758		4.4	%	N/A	Q2 2023	—	%
Total/Weighted Average	Total/Weighted Average	$	117,817	$	99,949	$	17,868	4.9	%	415,108		36.5	%	Total/Weighted Average	$	108,349	$	99,142	$	9,207	4.7	%	333,951		86.9	%

1Total expected investment for the properties include 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.

2Estimated stabilized cap rates are calculated as estimated annualized cash basis net operating income for the properties stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These ~~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, ~~2020~~2021 and in our other public filings.

3Improved land parcel of approximately 7.2 acres.

4Improved land parcel of approximately 4.9 acres.

During the second quarter of 2022, we completed redevelopment of our Countyline 29 property in Hialeah, FL consisting of approximately 0.2 million square feet. The property has an estimated stabilized cap rate of 3.8% and the total aggregate investment was approximately $37.7 million.

Disposition Activity

During the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we sold one property (consisting of 18 buildings) located in the ~~Seattle, Washington~~Northern New Jersey/New York City market for a sales price of approximately ~~$10.3~~$110.4 million, resulting in a gain of approximately ~~$3.2~~$76.0 million.

The following summarizes the condensed results of operations of the ~~properties~~property sold during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021 and 2020~~2022 (dollars in thousands):
For the Three Months Ended September 30, For the Nine Months Ended September 30,
2021 2020 2021 2020
Rental revenues $ 50 $ 21 $ 279 $ 153
Tenant expense reimbursements 31 10 76 34
Property operating expenses (23) (21) (91) (72)
Depreciation and amortization (17) (41) (120) (119)
Income from operations $ 41 $ (31) $ 144 $ (4)

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	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Rental revenues	$	458	$	1,005	$	1,554	$	1,985
Tenant expense reimbursements	122		422		647		1,001
Property operating expenses	(186)		(478)		(745)		(1,152)
Depreciation and amortization	—		(273)		(243)		(554)
Income from operations	$	394	$	676	$	1,213	$	1,280

Credit Facility

On June 29, 2022, we entered into the First Amendment to the Sixth Amended and Restated Senior Credit Agreement (as amended, the “Amended Facility”) which (i) increased the borrowing capacity of the revolving credit facility by $150.0 million to $400.0 million, (ii) decreased the accordion feature by $150.0 million to $500.0 million, and (iii) provided for the calculation of interest, pricing and fees based on SOFR instead of LIBOR.

Senior Unsecured Notes

On August 1, 2022, we prepaid a $50.0 million tranche of the Senior Unsecured Notes using borrowings from our revolving credit facility. The notes bore interest at 4.23% and had an original maturity date of September 1, 2022.

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 $300.0 million ($~~223.2~~219.4 million remaining as of ~~September~~June 30, ~~2021)~~2022) 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 previous at-the-market equity program, ~~(the “Previous $300.0 million ATM Program”),~~ which was substantially utilized as of June 10, 2021 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, redevelopments and repayment of indebtedness, including borrowings under our revolving credit facility. During both the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, we issued an aggregate of ~~751,539 and 2,542,357~~27,087 shares ~~respectively,~~ of common stock at a weighted average offering price of ~~$66.51 and $63.22~~$76.03 per share ~~respectively,~~ under ~~the Previous $300 Million ATM and~~ the $300 Million ATM Program, resulting in net proceeds of approximately ~~$49.3~~$2.0 million ~~and $158.4 million, respectively,~~ and paying total compensation to the applicable sales agents of approximately ~~$0.7 million and $2.3 million, respectively.~~$29,000.

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, 2022. Purchases made pursuant to this program, if any, will be made in either the open market or in privately negotiated transactions as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. As of ~~September~~June 30, ~~2021,~~2022, we had not repurchased any shares of our common stock pursuant to our share repurchase program.

~~Senior Unsecured Notes~~

On July 15, 2021, we issued in a private placement (i) $100.0 million of senior guaranteed green notes (the “Series A Notes”) and (ii) $50.0 million of senior guaranteed notes (the “Series B Notes”). The Series A Notes bear interest at a fixed annual interest rate of 2.41% and mature in July 2028, and the Series B Notes bear interest at a fixed annual interest rate of 2.84% and mature in July 2031. On October 28, 2021, we issued $125.0 million of senior guaranteed notes (the “2.38% Notes”) in a private placement pursuant to a note purchase agreement entered into on August 17, 2021 with certain institutional investors. The 2.38% Notes bear interest at a fixed rate of 2.38% and mature in August 2030. The 2.38% Notes and, together with the Series A Notes and the Series B Notes, the “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 Notes are not secured by our properties or by interests in the subsidiaries that hold such properties. The Notes include a series of financial and other covenants with which we must comply.

Dividend and Distribution Activity

On ~~November~~August 2, ~~2021,~~2022, our board of directors declared a cash dividend in the amount of ~~$0.34~~$0.40 per share of our common stock payable on ~~January 5,~~October 14, 2022 to the stockholders of record as of the close of business on ~~December 15, 2021.~~September 30, 2022.

Contractual Commitments

As of ~~November~~August 2, ~~2021,~~2022, we ~~have~~had outstanding contracts with third-party sellers to acquire ~~five~~three industrial properties for a total aggregate purchase price of ~~$94.2~~$51.3 million, as described under the heading ~~“Contractual Obligations”~~“Material Cash Commitments” in this Quarterly Report on Form 10-Q. There is no assurance that we will acquire the properties under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions.

Inflation

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The U.S. economy has experienced an increase in inflation rates recently affecting consumers and a wide variety of industries and sectors. Inflation has increased construction costs, including tenant improvements and capital projects, and operating costs. Most of our leases require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, leases with respect to approximately 59.9% of our total rentable square feet expire within five years which enables us to seek to replace existing leases with new leases at the then-existing market rate.

Financial Condition and Results of Operations

We derive substantially all of our revenues from rents received from tenants under existing leases on each of our properties. These revenues include fixed base rents and recoveries of certain property operating expenses that we have incurred and that we pass through to the individual tenants. ~~Approximately 95.2%~~Approximately 93.6% 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

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paid to brokers and consultants, and interest expense, primarily on our ~~mortgage loan,~~ 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 includes the changes attributable to same store properties. The same store pool for the comparison of the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 includes all properties that were owned and in operation as of ~~September~~June 30, ~~2021~~2022 and since January 1, ~~2020~~2021 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of ~~September~~June 30, ~~2021.~~2022. As of ~~September~~June 30, ~~2021,~~2022, the same store pool consisted of ~~209~~200 buildings aggregating approximately ~~12.5~~12.4 million square feet representing approximately ~~88.6%~~81.8% of our total square feet owned and 1924 improved land parcels consisting of ~~79.6~~approximately 91.5 acres. As of ~~September~~June 30, ~~2021,~~2022, the non-same store properties, which we acquired, redeveloped, or sold during ~~2020~~2021 and ~~2021~~2022 or were held for sale ~~(if any)~~ or in redevelopment as of ~~September~~June 30, ~~2021,~~2022, consisted of 3249 buildings ~~(including three buildings held for sale)~~ aggregating approximately ~~1.6~~2.7 million square feet, 1218 improved land parcels ~~containing~~consisting of approximately ~~35.1~~56.2 acres and four properties under redevelopment ~~expected to contain~~that, upon completion, will consist of two properties aggregating approximately ~~0.4~~0.3 million square feet ~~upon completion.~~and two improved land parcels aggregating approximately 12.1 acres. As of ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, our consolidated same store pool occupancy was approximately ~~98.7%~~98.0% and ~~98.3%~~97.9%, 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 ~~September~~June 30, ~~2021~~2022 to the Three Months Ended ~~September~~June 30, ~~2020:~~2021:


		For the Three Months Ended September 30,									For the Three Months Ended June 30,
		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(Dollars in thousands)									(Dollars in thousands)
Rental revenues 1	Rental revenues 1									Rental revenues 1
Same store	Same store	$	38,992	$	35,238	$	3,754	10.7	%	Same store	$	41,443	$	38,876	$	2,567	6.6	%
Non-same store operating properties 2	Non-same store operating properties 2	6,651		1,826		4,825		264.2	%	Non-same store operating properties 2	11,018		3,559		7,459		209.6	%
Total rental revenues	Total rental revenues	45,643		37,064		8,579		23.1	%	Total rental revenues	52,461		42,435		10,026		23.6	%
Tenant expense reimbursements 1	Tenant expense reimbursements 1									Tenant expense reimbursements 1
Same store	Same store	10,413		9,766		647		6.6	%	Same store	10,936		9,915		1,021		10.3	%
Non-same store operating properties 2	Non-same store operating properties 2	1,213		317		896		282.6	%	Non-same store operating properties 2	1,972		945		1,027		108.7	%
Total tenant expense reimbursements	Total tenant expense reimbursements	11,626		10,083		1,543		15.3	%	Total tenant expense reimbursements	12,908		10,860		2,048		18.9	%
Total revenues	Total revenues	57,269		47,147		10,122		21.5	%	Total revenues	65,369		53,295		12,074		22.7	%
Property operating expenses	Property operating expenses									Property operating expenses
Same store	Same store	12,213		11,659		554		4.8	%	Same store	12,719		11,751		968		8.2	%
Non-same store operating properties 2	Non-same store operating properties 2	1,987		569		1,418		249.2	%	Non-same store operating properties 2	3,085		1,420		1,665		117.3	%
Total property operating expenses	Total property operating expenses	14,200		12,228		1,972		16.1	%	Total property operating expenses	15,804		13,171		2,633		20.0	%
Net operating income 3	Net operating income 3									Net operating income 3
Same store	Same store	37,192		33,345		3,847		11.5	%	Same store	39,660		37,040		2,620		7.1	%
Non-same store operating properties 2	Non-same store operating properties 2	5,877		1,574		4,303		273.4	%	Non-same store operating properties 2	9,905		3,084		6,821		221.2	%
Total net operating income	Total net operating income	$	43,069	$	34,919	$	8,150	23.3	%	Total net operating income	$	49,565	$	40,124	$	9,441	23.5	%
Other costs and expenses	Other costs and expenses									Other costs and expenses
Depreciation and amortization	Depreciation and amortization	13,636		12,124		1,512		12.5	%	Depreciation and amortization	15,288		11,968		3,320		27.7	%
General and administrative	General and administrative	6,800		5,130		1,670		32.6	%	General and administrative	7,333		6,866		467		6.8	%
Acquisition costs		—		123		(123)		(100.0)	%
Acquisition costs and other										Acquisition costs and other	1,027		117		910		777.8	%
Total other costs and expenses	Total other costs and expenses	20,436		17,377		3,059		17.6	%	Total other costs and expenses	23,648		18,951		4,697		24.8	%
Other income (expense)	Other income (expense)									Other income (expense)
Interest and other income	Interest and other income	228		51		177		347.1	%	Interest and other income	115		221		(106)		(48.0)	%
Interest expense, including amortization	Interest expense, including amortization	(4,686)		(3,887)		(799)		20.6	%	Interest expense, including amortization	(5,047)		(4,016)		(1,031)		25.7	%

Gain on sales of real estate investments	Gain on sales of real estate investments	3,185		9,016		(5,831)		(64.7)	%	Gain on sales of real estate investments	76,048		—		76,048		n/a
Total other income (expense)	Total other income (expense)	(1,273)		5,180		(6,453)		n/a		Total other income (expense)	71,116		(3,795)		74,911		n/a
Net income	Net income	$	21,360	$	22,722	$	(1,362)	(6.0)	%	Net income	$	97,033	$	17,378	$	79,655	458.4	%

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,~~accounting principles generally accepted in the United States of America (“GAAP”), and a reconciliation to total revenue is provided above. We believe this information is frequently used by management, investors, and other interested parties to evaluate our performance. See “Note 2 - Significant Accounting Policies” in our condensed notes to consolidated financial statements for more information regarding our adoption of this standard.

2Includes ~~2021~~2022 and ~~2020~~2021 acquisitions and dispositions, ~~twelve~~eighteen improved land parcels ~~one property held for sale with a gross book value of $23.6 million~~ and four properties under redevelopment as of ~~September~~June 30, ~~2021.~~2022.

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.

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Revenues. Total revenues increased approximately ~~$10.1~~$12.1 million for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during ~~2021~~2022 and ~~2020~~2021 and an increase in occupancy rate. Cash rents on new and renewed leases totaling approximately ~~0.8~~0.5 million square feet commencing during the three months ended ~~September~~June 30, ~~2021~~2022 increased approximately ~~34.9%~~55.4% compared to the previous rental rates for that same space. For the three months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ approximately ~~$1.5~~$1.4 million and $1.1 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants.

Property operating expenses. Total property operating expenses increased approximately ~~$2.0~~$2.6 million during the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year. The increase in total property operating expenses was primarily due to an increase of approximately ~~$1.4~~$1.7 million attributable to property acquisitions during ~~2021~~2022 and ~~2020~~2021 as well as increases in insurance premiums, real estate taxes related to annual rate increases and utilities expenses incurred at certain of our properties.

Depreciation and amortization. Depreciation and amortization increased approximately ~~$1.5~~$3.3 million during the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year primarily due to property acquisitions during ~~2021~~2022 and ~~2020.~~2021.

General and administrative expenses. General and administrative expenses increased approximately ~~$1.7~~$0.5 million primarily due to increased restricted stock amortization and other compensation expenses due to an increase in the number of employees and salaries for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year.

Acquisition costs and other. Acquisition costs and other increased approximately $0.9 million during the three months ended June 30, 2022 compared to the same period from the prior year primarily due to environmental remediation at our Avenue A property of approximately $1.0 million.

Interest and other income. Interest and other income ~~remained consistent~~ for the three months ended ~~September~~June 30, ~~2021 compared to~~2022 remained consistent with the same period ~~from~~in the prior year.

Interest expense, including amortization. Interest expense increased approximately ~~$0.8~~$1.0 million for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year primarily due to the issuance of approximately $150.0 million of senior unsecured notes on July 15, 2021 and ~~reduced capitalized interest~~$125.0 million of ~~approximately $0.3 million, partially offset by the repayment of a mortgage loan payable in the amount of approximately $11.3 million.~~senior unsecured notes on October 28, 2021.

Gain on sales of real estate investments. Gain on sales of real estate investments ~~decreased~~increased approximately ~~$5.8~~$76.0 million for the three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year. We ~~recognized a gain of approximately $3.2 million from the sale of~~sold one property during the three months ended ~~September~~June 30, ~~2021, as compared to a recognized gain of approximately $9.0 million from~~2022 and we did not sell any properties during the ~~sale of one property in the same period from the prior year.~~three months ended June 30, 2021.

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Comparison of the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2021~~2022 to the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2020:~~2021:


		For the Nine Months Ended September 30,									For the Six Months Ended June 30,
		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change
		(Dollars in thousands)									(Dollars in thousands)
Rental revenues 1	Rental revenues 1									Rental revenues 1
Same store	Same store	$	113,667	$	102,639	$	11,028	10.7	%	Same store	$	82,297	$	76,558	$	5,739	7.5	%
Non-same store operating properties 2	Non-same store operating properties 2	14,220		6,166		8,054		130.6	%	Non-same store operating properties 2	20,505		5,686		14,819		260.6	%
Total rental revenues	Total rental revenues	127,887		108,805		19,082		17.5	%	Total rental revenues	102,802		82,244		20,558		25.0	%
Tenant expense reimbursements 1	Tenant expense reimbursements 1									Tenant expense reimbursements 1
Same store	Same store	30,422		27,914		2,508		9.0	%	Same store	22,385		19,948		2,437		12.2	%
Non-same store operating properties 2	Non-same store operating properties 2	2,946		1,286		1,660		129.1	%	Non-same store operating properties 2	4,217		1,794		2,423		135.1	%
Total tenant expense reimbursements	Total tenant expense reimbursements	33,368		29,200		4,168		14.3	%	Total tenant expense reimbursements	26,602		21,742		4,860		22.4	%
Total revenues	Total revenues	161,255		138,005		23,250		16.8	%	Total revenues	129,404		103,986		25,418		24.4	%
Property operating expenses	Property operating expenses									Property operating expenses
Same store	Same store	36,179		33,962		2,217		6.5	%	Same store	26,375		24,005		2,370		9.9	%
Non-same store operating properties 2	Non-same store operating properties 2	4,704		2,108		2,596		123.1	%	Non-same store operating properties 2	6,305		2,678		3,627		135.4	%
Total property operating expenses	Total property operating expenses	40,883		36,070		4,813		13.3	%	Total property operating expenses	32,680		26,683		5,997		22.5	%
Net operating income 3	Net operating income 3									Net operating income 3
Same store	Same store	107,910		96,591		11,319		11.7	%	Same store	78,307		72,501		5,806		8.0	%
Non-same store operating properties 2	Non-same store operating properties 2	12,462		5,344		7,118		133.2	%	Non-same store operating properties 2	18,417		4,802		13,615		283.5	%
Total net operating income	Total net operating income	$	120,372	$	101,935	$	18,437	18.1	%	Total net operating income	$	96,724	$	77,303	$	19,421	25.1	%
Other costs and expenses	Other costs and expenses									Other costs and expenses
Depreciation and amortization	Depreciation and amortization	36,980		34,683		2,297		6.6	%	Depreciation and amortization	30,270		23,344		6,926		29.7	%
General and administrative	General and administrative	19,248		16,553		2,695		16.3	%	General and administrative	14,860		12,448		2,412		19.4	%
Acquisition costs		172		186		(14)		(7.5)	%
Acquisition costs and other										Acquisition costs and other	1,055		172		883		513.4	%
Total other costs and expenses	Total other costs and expenses	56,400		51,422		4,978		9.7	%	Total other costs and expenses	46,185		35,964		10,221		28.4	%
Other income (expense)	Other income (expense)									Other income (expense)
Interest and other income	Interest and other income	685		805		(120)		(14.9)	%	Interest and other income	236		457		(221)		(48.4)	%
Interest expense, including amortization	Interest expense, including amortization	(12,847)		(11,802)		(1,045)		8.9	%	Interest expense, including amortization	(10,128)		(8,161)		(1,967)		24.1	%

Gain on sales of real estate investments	Gain on sales of real estate investments	3,185		26,766		(23,581)		(88.1)	%	Gain on sales of real estate investments	76,048		—		76,048		n/a
Total other income (expense)	Total other income (expense)	(8,977)		15,769		(24,746)		n/a		Total other income (expense)	66,156		(7,704)		73,860		n/a
Net income	Net income	$	54,995	$	66,282	$	(11,287)	(17.0)	%	Net income	$	116,695	$	33,635	$	83,060	246.9	%

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 ~~2020~~2021 and ~~2021~~2022 acquisitions and dispositions, ~~twelve~~eighteen improved land parcels ~~one property held for sale with a gross book value of $23.6 million~~ and four properties under redevelopment as of ~~September~~June 30, ~~2021.~~2022.

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Revenues. Total revenues increased approximately ~~$23.3~~$25.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during ~~2021~~2022 and ~~2020~~2021 and an increase in occupancy rate. Cash rents on new and renewed leases totaling approximately ~~1.9~~1.2 million square feet commencing during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 increased approximately ~~26.8%~~42.8% compared to the same period from the prior year. For the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ approximately ~~$3.7~~$3.2 million and ~~$3.0~~$2.2 million, respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain ~~tenants.~~tenants and approximately $0.1 million and $0.2 million, respectively, was recorded in lease termination revenue.

Property operating expenses. Total property operating expenses increased approximately ~~$4.8~~$6.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year. The increase in total property operating expenses was primarily due to an increase of approximately ~~$2.6~~$3.6 million attributable to property acquisitions during ~~2021~~2022 and ~~2020~~2021 as well as increases in insurance premiums, real estate taxes related to annual rate increases and utilities expenses incurred at certain of our properties.

Depreciation and amortization. Depreciation and amortization increased approximately ~~$2.3~~$6.9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year primarily due to property acquisitions during ~~2020~~2021 and ~~2021.~~2022.

General and administrative expenses. General and administrative expenses increased approximately ~~$2.7~~$2.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 primarily due to increased restricted stock amortization and other compensation expenses, ~~due to~~including an increase in bonus expense and an increase in the number of employees compared to the same period from the prior year.

~~Interest~~Acquisition costs and other. Acquisition costs and other ~~income.~~ ~~Interest and other income decreased~~increased approximately ~~$0.1~~$0.9 million ~~for~~during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year primarily due to environmental remediation at our Avenue A property of approximately $1.0 million.

Interest and other income. Interest and other income for the ~~pay down of our outstanding senior secured loan balance.~~six months ended June 30, 2022 remained consistent with the same period in the prior year.

Interest expense, including amortization. Interest expense increased approximately ~~$1.0~~$2.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year. This increase iswas primarily due to the issuance of approximately $150.0 million of senior unsecured notes on July 15, 2021 and ~~reduced capitalized interest~~$125.0 million of ~~approximately $1.2 million,~~senior unsecured notes on October 28, 2021, partially offset by the repayment of ~~a $32.7 million mortgage loan in 2020 and a~~an $11.3 million mortgage loan in 2021.

Gain on sales of real estate investments. Gain on sales of real estate investments ~~decreased~~increased approximately ~~$23.6~~$76.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year. We sold one property during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~sold four~~we did not sell any properties induring the ~~same period from the prior year.~~

six months ended June 30, 2021.

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~~(five to seven 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 perpetual preferred stock. Fitch Ratings assigned us an issuer rating of BBB with a stable outlook. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. There can be no assurance that we will be able to maintain our current credit rating. Our credit rating can affect the amount and type of capital we can access, as well as the terms of any financings we may obtain. In the event our current credit rating is downgraded, it may become difficult or expensive to obtain additional financing or refinance existing obligations and commitments. We intend to primarily utilize senior unsecured notes, term loans, credit facilities, dispositions of properties, and proceeds from the issuance of common stock and perpetual preferred stock. We may also assume debt in connection with property acquisitions which may have a higher ~~loan-to-value.~~loan-to-value ratio.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations, existing cash balances and, if necessary, short-term borrowings under our revolving credit facility. We believe that our net cash provided by operations will be adequate to fund operating requirements, pay interest on any borrowings and fund distributions in accordance with the REIT requirements of the federal income tax laws. In the near-term, we intend to fund future investments in properties 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 unsecured and secured debt, and, from time to time, with proceeds from the disposition of properties. The success of our acquisition strategy may depend, in part, on our ability to obtain and borrow under our revolving credit facility and to access additional capital through issuances of equity and debt securities.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Equity Sources of Liquidity

The following sets forth certain information regarding our current at-the-market common stock offering program as of ~~September~~June 30, ~~2021:~~2022:

ATM Stock Offering Program

Date Implemented

Maximum Aggregate Offering Price (in thousands)

Aggregate Common Stock Available (in thousands)

ATM Stock Offering Program

Date Implemented

Maximum Aggregate Offering Price (in thousands)

Aggregate Common Stock Available (in thousands)

$300 Million ATM Program

June 11, 2021

300,000

223,190

$300 Million ATM Program

June 11, 2021

300,000

219,375

The table below sets forth the activity under our at-the-market common stock offering programs during thethree and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively (in thousands, except share and price per share data):
For the Three Months Ended September 30, Shares Sold Weighted Average
Price Per Share Net Proceeds (in thousands) Sales Commissions
(in thousands)
September 30, 2021 751,539 $ 66.51 $ 49,259 $ 725
September 30, 2020 8,250 $ 59.92 $ 487 $ 7

For the Nine Months Ended September 30, Shares Sold Weighted Average
Price Per Share Net Proceeds (in thousands) Sales Commissions
(in thousands)
September 30, 2021 2,542,357 $ 63.22 $ 158,396 $ 2,331
September 30, 2020 1,054,577 $ 53.09 $ 55,175 $ 812


For the Three Months Ended	Shares Sold	Weighted Average Price Per Share		Net Proceeds (in thousands)		Sales Commissions (in thousands)
June 30, 2022	27,087	$	76.03	$	2,030	$	29
June 30, 2021	1,084,294	$	64.21	$	68,611	$	1,010

For the Six Months Ended	Shares Sold	Weighted Average Price Per Share		Net Proceeds (in thousands)		Sales Commissions (in thousands)
June 30, 2022	27,087	$	76.03	$	2,030	$	29
June 30, 2021	1,790,818	$	61.84	$	109,137	$	1,606

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~~On July 15, 2021, we issued in a private placement (i) $100.0 million~~Debt Sources of senior guaranteed green notes (the “Series A Notes”) and (ii) $50.0 million of senior guaranteed notes (the “Series B Notes”). The Series A Notes bear interest at a fixed annual interest rate of 2.41% and mature in July 2028, and the Series B Notes bear interest at a fixed annual interest rate of 2.84% and mature in July 2031. On October 28, 2021, we issued $125.0 million of senior guaranteed notes (the “2.38% Notes”) in a private placement pursuant to a note purchase agreement entered into on August 17, 2021 with certain institutional investors. The 2.38% Notes bear interest at a fixed rate of 2.38% and mature in August 2030. The 2.38% Notes and, together with the Series A Notes and the Series B Notes, the “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 Notes are not secured by our properties or by interests in the subsidiaries that hold such properties. The Notes include a series of financial and other covenants with which we must comply.Liquidity

As of ~~September~~June 30, ~~2021,~~2022, 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, $100.0 million of senior unsecured notes that mature in July 2028, $100.0 million of senior unsecured notes that mature in December 2029, $125.0 million of senior unsecured notes that mature in August 2030, and $50.0 million of senior unsecured notes that mature in July 2031 (collectively, ~~and with the 2.38% Notes,~~ the “Senior Unsecured Notes”).

On ~~August 20, 2021, our subsidiary~~June 29, 2022, we entered into athe First Amendment to the Sixth Amended and Restated Senior Credit Agreement ~~(the~~(as amended, the “Amended Facility”) which (i) increased the borrowing capacity of the revolving credit facility by $150.0 million to $400.0 million, (ii) decreased the accordion feature by $150.0 million to $500.0 million, and (iii) provided for the calculation of interest, pricing and fees based on SOFR instead of LIBOR. The Amended Facility consists of a ~~$250.0~~$400.0 million revolving credit facility that matures in August 2025 ~~(previously October 2022)~~ and a $100.0 million term loan that matures in January ~~2027 (previously January 2022). Among other things, the Amended Facility extended the maturity date of the revolving credit facility and the $100.0 million term loan.~~2027. As of ~~both September~~June 30, ~~2021~~2022 and ~~December 31, 2020,~~2021, there were no$12.0 million and $0, respectively, of borrowings outstanding on our revolving credit facility and $100.0 million of borrowings outstanding on our term loan.

The aggregate amount of the Amended Facility may be increased ~~to a total of~~ up to ~~$650.0~~$500.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Amended Facility are limited to the lesser of (i) the sum of the $100.0 million term loan and the ~~$250.0~~$400.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Amended Facility, including the term loan, is generally to be paid based upon, at our option, either (i) ~~LIBOR~~SOFR plus the applicable ~~LIBOR~~SOFR margin or (ii) the applicable base rate, which is the greatest of the administrative agent’s prime rate, 0.50% above the federal funds effective rate, or thirty-day ~~LIBOR~~SOFR plus the applicable ~~LIBOR~~SOFR margin for ~~LIBOR~~SOFR rate loans under the Amended Facility plus 1.25%. The applicable ~~LIBOR~~SOFR margin will range from ~~1.00%~~1.10% to ~~1.45% (1.00%~~1.55% (1.10% as of ~~September~~June 30, ~~2021)~~2022) for the revolving credit facility ~~(previously 1.05%~~and 1.25% to ~~1.50%) and 1.15% to 1.65% (1.15%~~1.75% (1.25% as of ~~September~~June 30, ~~2021)~~2022) for the $100.0 million term loan, ~~(previously 1.20% to 1.70%),~~ depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset ~~value.~~value and includes a 10 basis points SOFR credit adjustment.. The Amended Facility requires quarterly payments of an annual facility fee in an amount ranging from 0.15% to 0.30%, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value.

The Amended Facility and the Senior Unsecured Notes are guaranteed by us and by substantially all of the current and to-be-formed subsidiaries of the borrower that own an unencumbered property. The Amended Facility and the Senior Unsecured Notes are not secured by our properties or by interests in the subsidiaries that hold such properties. The Amended Facility and the Senior Unsecured Notes include a series of financial and other covenants with which we must comply. We were in compliance with the covenants under the Amended Facility and the Senior Unsecured Notes as of ~~September~~June 30, ~~2021~~2022 and 2021.

As of June 30, 2022 and December 31, ~~2020.~~

~~As of September 30,~~ 2021, ~~and December 31, 2020,~~ we ~~had an outstanding mortgage loan payable, net of deferred financing costs, of approximately $0 and $11.3 million, respectively, and~~ held cash and cash equivalents totaling approximately ~~$68.7~~$7.2 million and ~~$107.2~~$204.4 million, respectively. ~~The mortgage loan payable was fully repaid in January 2021.~~

The following tables summarize our debt maturities and principal payments as of June 30, 2022 and our market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands, except per share data):
Credit
Facility Term Loan Senior
Unsecured
Notes Total Debt
2021 (3 months) $ — $ — $ — $ —
2022 — — 50,000 50,000
2023 — — — —
2024 — — 100,000 100,000
2025 — — — —
Thereafter — 100,000 350,000 450,000
Total Debt — 100,000 500,000 600,000
Deferred financing costs, net — (530) (2,847) (3,377)
Total Debt, net $ — $ 99,470 $ 497,153 $ 596,623
Weighted average interest rate n/a 1.3% 3.4% 3.1%
As of September 30, 2021 As of September 30, 2020
Total Debt, net $ 596,623 $ 459,083
Equity
Common Stock
Shares Outstanding 1
71,291,250 68,372,568
Market Price 2
$ 63.23 $ 54.76
Total Equity 4,507,746 3,744,082
Total Market Capitalization $ 5,104,369 $ 4,203,165
Total Debt-to-Total Investments in Properties 3
22.8 % 21.1 %
Total Debt-to-Total Market Capitalization 4
11.7 % 10.9 %
Floating Rate Debt as a % of Total Debt 5
16.7 % 21.7 %
Unhedged Floating Rate Debt as a % of Total Debt 6
16.7 % 10.9 %
Mortgage Loans Payable as a % of Total Debt 7
— % 2.5 %
Mortgage Loans Payable as a % of Total Investments in Properties 8
— % 0.5 %
Adjusted EBITDA 9
$ 108,816 $ 92,540
Interest Coverage 10
8.5 x 7.8 x
Fixed Charge Coverage 11
8.3 x 7.0 x
Total Debt-to-Adjusted EBITDA 12
3.8 x 3.6 x
Weighted Average Maturity of Total Debt (years) 5.6 4.7


	Credit Facility		Term Loan		Senior Unsecured Notes			Total Debt
2022 (6 months)	$	—	$	—	$	50,000	1	$	50,000
2023	—		—		—			—
2024	—		—		100,000			100,000
2025	12,000		—		—			12,000
2026	—		—		50,000			50,000
Thereafter	—		100,000		425,000			525,000
Total Debt	12,000		100,000		625,000			737,000
Deferred financing costs, net	—		(455)		(3,486)			(3,941)
Total Debt, net	$	12,000	$	99,545	$	621,514		$	733,059
Weighted average interest rate	2.3%		2.8%		3.2%			3.1%

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1On August 1, 2022, we prepaid a $50.0 million tranche of the Senior Unsecured Notes using borrowings from our revolving credit facility. The notes bore interest at 4.23% and had an original maturity date of September 1, 2022.


	As of June 30, 2022			As of June 30, 2021
Total Debt, net	$	733,059		$	448,154
Equity
Common Stock
Shares Outstanding 1	75,546,968			70,467,125
Market Price 2	$	55.73		$	64.52
Total Equity	4,210,233			4,546,539
Total Market Capitalization	$	4,943,292		$	4,994,693
Total Debt-to-Total Investments in Properties 3	22.5%			18.5%

Total Debt-to-Total Market Capitalization 4	14.8%			9.0%
Floating Rate Debt as a % of Total Debt 5	15.2%			22.3%
Unhedged Floating Rate Debt as a % of Total Debt 6	15.2%			22.3%


Adjusted EBITDA 7	$	86,939		$	69,959
Interest Coverage 8	8.6		x	8.6		x
Fixed Charge Coverage 9	7.4		x	8.5		x
Total Debt-to-Adjusted EBITDA 10	4.1		x	3.1		x
Weighted Average Maturity of Total Debt (years)	5.4			4.1

1Includes ~~288,548~~292,524 and ~~203,729~~215,962 shares of unvested restricted stock outstanding as of ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Also includes ~~275,727~~426,594 and ~~139,224~~275,727 shares held in the Deferred Compensation Plan as of ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

2Closing price of a share of our ~~shares of~~ common stock on the New York Stock Exchange on ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, 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 $23.6 million.~~properties.

4Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization.

5Floating 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 our $100.0 million variable-rate term loan borrowings, of which $50.0 million was subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of December 31, 2020. See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.

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6Unhedged 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 was subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage as of December 31, 2020. See “Note 9 - Derivative Financial Instruments” in our condensed notes to consolidated financial statements for more information regarding our interest rate caps.

7Mortgage 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.

8Mortgage 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 $23.6 million.

9Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation (“Adjusted EBITDA”) for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, 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.

108Interest 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.

119Fixed 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.

1210Total 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.

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The following table sets forth the cash dividends paid or payable per share during the ~~nine~~six months ended ~~September~~June 30, ~~2021:~~2022:

For the Three
Months Ended

Security

Dividend per
Share

Declaration Date

Record Date

Date Paid

March 31, ~~2021~~2022

~~Common stock~~

~~0.29~~

~~February 9, 2021~~

~~March 26, 2021~~

~~April 9, 2021~~

~~June 30, 2021~~

~~Common stock~~

~~0.29~~

~~May 4, 2021~~

~~June 30, 2021~~

~~July 14, 2021~~

~~September 30, 2021~~

Common stock

0.34

~~August 3, 2021~~February 8, 2022

~~October 1, 2021~~March 25, 2022

~~October 15, 2021~~April 8, 2022

June 30, 2022

Common stock

0.34

May 3, 2022

June 30, 2022

July 14, 2022

Sources and Uses of Cash

Our principal sources of cash are cash from operations, borrowings under loans payable, draws on our Amended Facility, common and preferred stock issuances, proceeds from property dispositions and issuances of unsecured notes. Our principal uses of cash are asset acquisitions, debt service, capital expenditures, operating costs, corporate overhead costs and common stock dividends.

Cash From Operating Activities. Net cash provided by operating activities totaled approximately ~~$98.4~~$63.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 compared to approximately ~~$77.4~~$59.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during ~~2020~~2022 and 2021 and increased rents on new and renewed leases at our same store ~~properties, as we acquired 20 properties during nine months ended September 30, 2021 compared to five properties acquired in the same period from the prior year.~~properties.

Cash From Investing Activities. Net cash used in investing activities was approximately ~~$359.9~~$219.1 million and ~~net cash provided by investing activities was $8.5~~$183.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, which consisted primarily of cash paid for property acquisitions of approximately ~~$325.0~~$277.0 million and ~~$46.8~~$160.0 million, respectively, and additions to capital improvements of approximately ~~$44.5~~$48.9 million and $31.3 million, respectively, partially offset by net cash received for the senior secured loan of $0 and $15.9 million, respectively, and net proceeds from sales of real estate investments of approximately $9.6 million and $70.7$23.4 million, respectively.

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Cash From Financing Activities. Net cash used in financing activities was approximately $38.6 million for the six months ended June 30, 2022, which consisted primarily of approximately $51.3 million in equity dividend payments, partially offset by a $12.0 million draw on our revolving credit facility and approximately $1.5 million in net proceeds from the issuance of common stock. Net cash provided by financing activities was approximately ~~$227.4~~$59.1 million for the ~~nine~~six months ended ~~September~~June 30, 2021, which consisted primarily of approximately ~~$152.5~~$111.0 million in net ~~common stock issuance~~ proceeds ~~and borrowings of $150.0 million in connection with our~~from the issuance of ~~senior unsecured notes~~common stock, partially offset by approximately ~~$60.4~~$40.0 million in equity dividend payments and approximately $11.3 million in mortgage loan payments. Net cash used in financing activities was approximately $42.6 million for the nine months ended September 30, 2020, which consisted primarily of approximately $55.2 million in net common stock issuance proceeds, partially offset by approximately $54.9 million in equity dividend payments and approximately $33.0 million in mortgage loan payments.

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, ~~2020~~2021 and in the condensed notes to consolidated financial statements in this Quarterly Report on Form 10-Q.

~~Off-Balance Sheet Arrangements~~

~~Contractual Obligations~~Material Cash Commitments

As of ~~November~~August 2, ~~2021,~~2022, we have ~~five~~three outstanding contracts with third-party sellers to acquire ~~five~~three industrial properties for a total aggregate purchase price of ~~$94.2~~$51.3 million. There is no assurance that we will acquire the properties under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions.

The following table summarizes our ~~contractual obligations~~material cash commitments due by period as of ~~September~~June 30, ~~2021~~2022 (dollars in thousands):


Contractual Obligations		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Material Cash Commitments												Material Cash Commitments	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
Debt	Debt	$	50,000	$	100,000	$	50,000	$	400,000	$	600,000	Debt	$	50,000	$	100,000	$	162,000	$	425,000	$	737,000
Debt interest payments	Debt interest payments	17,155		30,080		22,580		26,398		96,213		Debt interest payments	19,073		34,155		27,533		32,163		112,924
Operating lease commitments	Operating lease commitments	411		134		—		—		545		Operating lease commitments	634		1,354		1,436		1,167		4,591

Purchase obligations 1	Purchase obligations 1	94,211		—		—		—		94,211		Purchase obligations 1	51,300		—		—		—		51,300
Total	Total	$	161,777	$	130,214	$	72,580	$	426,398	$	790,969	Total	$	121,007	$	135,509	$	190,969	$	458,330	$	905,815

1As of ~~November~~August 2, ~~2021~~2022

As of ~~November~~August 2, ~~2021,~~2022, we executed ~~four~~three non-binding letters of intent with third-party sellers to acquire ~~four~~three industrial properties for a total anticipated purchase price of approximately ~~$175.3~~$78.5 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

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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.

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.

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

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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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands except per share data):


		For the Three Months Ended September 30,								For the Nine Months Ended September 30,									For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2021		2020		$ Change		% Change		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Net income	Net income	$	21,360	$	22,722	$	(1,362)	(6.0)	%	$	54,995	$	66,282	$	(11,287)	(17.0)	%	Net income	$	97,033	$	17,378	$	79,655	458.4	%	$	116,695	$	33,635	$	83,060	246.9	%
Gain on sales of real estate investments	Gain on sales of real estate investments	(3,185)		(9,016)		5,831		(64.7)	%	(3,185)		(26,766)		23,581		(88.1)	%	Gain on sales of real estate investments	(76,048)		—		(76,048)		n/a		(76,048)		—		(76,048)		n/a

Depreciation and amortization	Depreciation and amortization	13,636		12,124		1,512		12.5	%	36,980		34,683		2,297		6.6	%	Depreciation and amortization	15,288		11,968		3,320		27.7	%	30,270		23,344		6,926		29.7	%
Non-real estate depreciation	Non-real estate depreciation	(22)		(13)		(9)		69.2	%	(52)		(59)		7		(11.9)	%	Non-real estate depreciation	(21)		(17)		(4)		23.5	%	(44)		(30)		(14)		46.7	%
Allocation to participating securities 1	Allocation to participating securities 1	(126)		(125)		(1)		0.8	%	(302)		(438)		136		(31.1)	%	Allocation to participating securities 1	(144)		(90)		(54)		60.0	%	(285)		(176)		(109)		61.9	%
Funds from operations attributable to common stockholders 2	Funds from operations attributable to common stockholders 2	$	31,663	$	25,692	$	5,971	23.2	%	$	88,436	$	73,702	$	14,734	20.0	%	Funds from operations attributable to common stockholders 2	$	36,108	$	29,239	$	6,869	23.5	%	$	70,588	$	56,773	$	13,815	24.3	%
Basic FFO per common share	Basic FFO per common share	$	0.45	$	0.38	$	0.07	18.4	%	1.27		$	1.09	$	0.18	16.5	%	Basic FFO per common share	$	0.48	$	0.42	$	0.06	14.3	%	$	0.94	$	0.82	$	0.12	14.6	%
Diluted FFO per common share	Diluted FFO per common share	$	0.45	$	0.38	$	0.07	18.4	%	1.27		$	1.09	$	0.18	16.5	%	Diluted FFO per common share	$	0.48	$	0.42	$	0.06	14.3	%	$	0.94	$	0.82	$	0.12	14.6	%
Weighted average basic common shares	Weighted average basic common shares	70,516,787		68,112,661						69,571,511		67,600,957						Weighted average basic common shares	75,250,655		69,580,253						75,225,233		69,094,360
Weighted average diluted common shares	Weighted average diluted common shares	70,752,863		68,372,515						69,799,206		67,860,811						Weighted average diluted common shares	75,340,872		69,808,430						75,310,343		69,317,407

1To 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 ~~262,512~~295,247 and ~~291,893~~216,025 of weighted average unvested restricted shares outstanding for the three

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months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~230,280~~299,433 and ~~387,990~~213,897 of weighted average unvested restricted shares outstanding for the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020,~~ respectively.

2Includes performance share award expense of approximately $0.4 million and $1.3 million for ~~both~~ the three months ended ~~September~~June 30, 2022 and 2021, ~~and 2020~~respectively, and approximately ~~$3.8~~$1.9 million and $2.6 million for ~~both~~ the ~~nine~~six months ended ~~September~~June 30, 2022 and 2021, ~~and 2020.~~respectively. See “Note 1110 – Stockholders’ Equity” in ~~the~~our condensed notes to consolidated financial statements for more information regarding our performance share awards.

FFO increased by approximately ~~$6.0~~$6.9 million and ~~$14.7~~$13.8 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, compared to the same periods from the prior year due primarily to property acquisitions during 2021 and 2022 as well as same store NOI growth of approximately ~~$3.8~~$2.6 million and ~~$11.3~~$5.8 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, respectively, compared to the same periods from the prior ~~year as well as~~year. The FFO increase was partially offset by increased weighted average common shares outstanding, increased acquisition costs and other due to environmental remediation at our Avenue A property ~~acquisitions during 2020~~ and ~~2021.~~increased general and administrative expenses due to additional headcount for the three and six months ended June 30, 2022 compared to the same periods from the prior year.

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

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amortization expense, acquisition costs and stock-based compensation. By excluding interest expense, Adjusted EBITDA allows investors to measure our operating performance independent of our capital structure and indebtedness and, therefore, allows for more meaningful comparison of our operating performance between quarters and other interim periods as well as annual periods and for the comparison of our operating performance to that of other companies, both in the real estate industry and in other industries. As we are currently in a growth phase, acquisition costs are excluded from Adjusted EBITDA to allow for the comparison of our operating performance to that of stabilized companies.

The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands):


		For the Three Months Ended September 30,								For the Nine Months Ended September 30,									For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2021		2020		$ Change		% Change		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Net income	Net income	$	21,360	$	22,722	$	(1,362)	(6.0)	%	$	54,995	$	66,282	$	(11,287)	(17.0)	%	Net income	$	97,033	$	17,378	$	79,655	458.4	%	$	116,695	$	33,635	$	83,060	246.9	%
Gain on sales of real estate investments	Gain on sales of real estate investments	(3,185)		(9,016)		5,831		(64.7)	%	(3,185)		(26,766)		23,581		(88.1)	%	Gain on sales of real estate investments	(76,048)		—		(76,048)		n/a		(76,048)		—		(76,048)		n/a
Depreciation and amortization	Depreciation and amortization	13,636		12,124		1,512		12.5	%	36,980		34,683		2,297		6.6	%	Depreciation and amortization	15,288		11,968		3,320		27.7	%	30,270		23,344		6,926		29.7	%
Interest expense, including amortization	Interest expense, including amortization	4,686		3,887		799		20.6	%	12,847		11,802		1,045		8.9	%	Interest expense, including amortization	5,047		4,016		1,031		25.7	%	10,128		8,161		1,967		24.1	%

Stock-based compensation	Stock-based compensation	2,360		1,859		501		26.9	%	7,007		6,353		654		10.3	%	Stock-based compensation	2,010		2,677		(667)		(24.9)	%	4,839		4,647		192		4.1	%
Acquisition costs		—		123		(123)		n/a		172		186		(14)		(7.5)	%
Acquisition costs and other																		Acquisition costs and other	1,027		117		910		777.8	%	1,055		172		883		513.4	%
Adjusted EBITDA	Adjusted EBITDA	$	38,857	$	31,699	$	7,158	22.6	%	$	108,816	$	92,540	$	16,276	17.6	%	Adjusted EBITDA	$	44,357	$	36,156	$	8,201	22.7	%	$	86,939	$	69,959	$	16,980	24.3	%

We compute NOI as rental revenues, including tenant expense reimbursements, less property operating expenses. We compute same store NOI as rental revenues, including tenant expense reimbursements, less property operating expenses on a same store basis. NOI excludes depreciation, amortization, general and administrative expenses, acquisition costs and interest expense, including amortization. We compute cash-basis same store NOI as same store NOI excluding straight-line rents and amortization of lease intangibles. The same store pool includes all properties that were owned and in operation as of ~~September~~June 30, ~~2021~~2022 and since January 1, ~~2020~~2021 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as of ~~September~~June 30, ~~2021.~~2022. As of ~~September~~June 30, ~~2021,~~2022, the same store pool consisted of ~~209~~200 buildings aggregating approximately ~~12.5~~12.4 million square feet representing approximately ~~88.6%~~81.8% of our total square feet owned and 1924 improved land parcels containing approximately ~~79.6~~91.5 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 (dollars in thousands):


		For the Three Months Ended September 30,								For the Nine Months Ended September 30,									For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2021		2020		$ Change		% Change		2021		2020		$ Change		% Change			2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Net income 1	Net income 1	$	21,360	$	22,722	$	(1,362)	(6.0)	%	$	54,995	$	66,282	$	(11,287)	(17.0)	%	Net income 1	$	97,033	$	17,378	$	79,655	458.4	%	$	116,695	$	33,635	$	83,060	246.9	%
Depreciation and amortization	Depreciation and amortization	13,636		12,124		1,512		12.5	%	36,980		34,683		2,297		6.6	%	Depreciation and amortization	15,288		11,968		3,320		27.7	%	30,270		23,344		6,926		29.7	%
General and administrative	General and administrative	6,800		5,130		1,670		32.6	%	19,248		16,553		2,695		16.3	%	General and administrative	7,333		6,866		467		6.8	%	14,860		12,448		2,412		19.4	%
Acquisition costs		—		123		(123)		n/a		172		186		(14)		(7.5)	%
Acquisition costs and other																		Acquisition costs and other	1,027		117		910		777.8	%	1,055		172		883		513.4	%
Total other income and expenses	Total other income and expenses	1,273		(5,180)		6,453		n/a		8,977		(15,769)		24,746		n/a		Total other income and expenses	(71,116)		3,795		(74,911)		n/a		(66,156)		7,704		(73,860)		n/a
Net operating income	Net operating income	43,069		34,919		8,150		23.3	%	120,372		101,935		18,437		18.1	%	Net operating income	49,565		40,124		9,441		23.5	%	96,724		77,303		19,421		25.1	%
Less non-same store NOI 2	Less non-same store NOI 2	(5,877)		(1,574)		(4,303)		273.4	%	(12,462)		(5,344)		(7,118)		133.2	%	Less non-same store NOI 2	(9,905)		(3,084)		(6,821)		221.2	%	(18,417)		(4,802)		(13,615)		283.5	%
Same store NOI	Same store NOI	$	37,192	$	33,345	$	3,847	11.5	%	$	107,910	$	96,591	$	11,319	11.7	%	Same store NOI	$	39,660	$	37,040	$	2,620	7.1	%	$	78,307	$	72,501	$	5,806	8.0	%
Less straight-line rents and amortization of lease intangibles 3	Less straight-line rents and amortization of lease intangibles 3	(2,435)		1,412		(3,847)		n/a		(7,633)		(2,167)		(5,466)		252.2	%	Less straight-line rents and amortization of lease intangibles 3	(1,735)		(2,964)		1,229		(41.5)	%	(3,865)		(5,695)		1,830		(32.1)	%
Cash-basis same store NOI	Cash-basis same store NOI	$	34,757	$	34,757	$	—	—	%	$	100,277	$	94,424	$	5,853	6.2	%	Cash-basis same store NOI	$	37,925	$	34,076	$	3,849	11.3	%	$	74,442	$	66,806	$	7,636	11.4	%
Less termination fee income	Less termination fee income	(15)		(3,483)		3,468		(99.6)	%	(162)		(3,642)		3,480		(95.6)	%	Less termination fee income	(100)		(29)		(71)		244.8	%	(248)		(147)		(101)		68.7	%
Cash-basis same store NOI excluding termination fees	Cash-basis same store NOI excluding termination fees	$	34,742	$	31,274	$	3,468	11.1	%	$	100,115	$	90,782	$	9,333	10.3	%	Cash-basis same store NOI excluding termination fees	$	37,825	$	34,047	$	3,778	11.1	%	$	74,194	$	66,659	$	7,535	11.3	%

1Includes approximately ~~$0.7~~$0.1 million and ~~$3.5~~$0.1 million of lease termination income for the three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and approximately ~~$0.8~~$0.2 million and ~~$3.7~~$0.2 million of lease termination income for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

2Includes ~~2020~~2021 and ~~2021~~2022 acquisitions and dispositions, ~~twelve~~18 improved land parcels consisting of approximately 56.2 acres and four properties under redevelopment and one completed redevelopment property ~~held for sale~~ with ~~a gross~~an aggregate book value of approximately ~~$23.6~~$37.7 million ~~and four properties under redevelopment.~~as of June 30, 2022.

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

Cash-basis same store NOI was unchanged for the three months ended September 30, 2021 compared to the same period from the prior year primarily due to $3.5 million in lease termination income in the prior period. Excluding lease termination income, cash-basis same store NOI increased by approximately $3.5 million due to increased rental revenue on new and renewed leases and contractual rent increases. For the three months ended September 30, 2021 and 2020, total contractual rent abatements of approximately $0.7 million and $0.8 million, respectively, were given to certain tenants in the same-store pool and approximately $15,000 and $3.5 million, respectively, in lease termination income was received from certain tenants in the same store pool. In addition, approximately $0.5 million of the increase in cash-basis same store NOI for the three months ended September 30, 2021 related to properties that were acquired vacant or with near term expirations in 2019.

Cash-basis same store NOI increased by approximately ~~$5.9~~$3.8 million for the ~~nine~~three months ended ~~September~~June 30, ~~2021~~2022 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases ~~partially offset by a decrease~~and contractual rent increases included in ~~occupancy rate.~~pre-existing leases. For the ~~nine~~three months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, total contractual rent abatements of approximately ~~$2.3~~$0.5 million and ~~$2.4~~$0.7 million, respectively, were given to certain tenants in the same-store pool and approximately ~~$0.2~~$0.1 million and ~~$3.6~~$0 million, respectively, in lease termination income was received from certain tenants in the same store pool. In addition, approximately ~~$2.1~~$0.1 million of the increase in cash-basis same store NOI for the ~~nine~~three months ended ~~September~~June 30, ~~2021~~2022 related to properties that were acquired vacant or with near term expirations in ~~2019.~~2020.

Cash-basis same store NOI increased by approximately $7.6 million for the six months ended June 30, 2022 compared to the same period from the prior year primarily due to increased rental revenue on new and renewed leases and increased occupancy. For the six months ended June 30, 2022 and 2021, total contractual rent abatements of approximately $1.4 million and $1.6 million, respectively, were given to certain tenants in the same-store pool and approximately $0.2 million and $0.1 million, respectively, in lease termination income was received from certain tenants in the same store pool. In addition, approximately $0.2 million of the increase in cash-basis same store NOI for the six months ended June 30, 2022 related to properties that were acquired vacant or with near term expirations in 2020.

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Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk~~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 ~~September~~June 30, ~~2021,~~2022, we had $100.0 million of borrowings outstanding under our Amended Facility, none of which were subject to interest rate caps. See “Note 98 - Derivative Financial Instruments” in ~~the~~our condensed notes to consolidated financial statements for more information regarding our prior interest rate ~~caps.~~cap. Amounts borrowed under our Amended Facility bear interest at a variable rate based on ~~LIBOR~~SOFR plus an applicable ~~LIBOR~~SOFR margin. The weighted average interest rate on borrowings outstanding under our Amended Facility was ~~1.3%~~2.8% as of ~~September~~June 30, ~~2021.~~2022. If the ~~LIBOR~~SOFR rate were to fluctuate by 0.25%, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows by approximately $0.3 million annually on the total of the outstanding balances on our Amended Facility as of ~~September~~June 30, ~~2021.~~2022.

~~In the event~~We expect that all LIBOR settings relevant to us will cease to be published or will no longer be representative after June 30, 2023. As a result, any of our LIBOR-based borrowings that extend beyond such date will need to be converted to a replacement rate. If a contract is not transitioned to an alternative variable rate and LIBOR is discontinued, the ~~interest~~impact is likely to vary by contract. As of June 30, 2022, each of the agreements governing our variable rate debt either have been transitioned to SOFR or provide for ~~our debt, including our Amended Facility,~~the replacement of LIBOR if it becomes unavailable during the term of such agreement.

The discontinuation of LIBOR 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 or swaps, but as our contracts indexed to LIBOR are converted to SOFR, the differences between LIBOR and SOFR, plus the recommended spread adjustment, could result in interest costs that are higher than if LIBOR remained available. Additionally, although SOFR is the ARRC’s recommended replacement rate, it is also possible that lenders may instead choose alternative replacement rates that may differ from LIBOR in ways similar to SOFR or ~~alternate base rate could be~~in ways that would result in higher ~~or more volatile than LIBOR prior~~interest costs for us. It is not yet possible to ~~its discontinuance. We understand that LIBOR is expected to remain available through~~predict the magnitude of LIBOR’s end ~~of 2021, but may be discontinued or otherwise become unavailable thereafter.~~on our borrowing costs given the remaining uncertainty about which rates will replace LIBOR.

Item 4. Controls and ~~Procedures~~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 ~~September~~June 30, ~~2021~~2022 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~~Proceedings.

We are not involved in any material litigation nor, to our knowledge, is any material litigation threatened against us.

Item 1A. Risk ~~Factors~~Factors.

Except to the extent updated below 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, ~~2020.~~2021.

Item 2. Unregistered Sale of Equity Securities and Use of ~~Proceeds~~Proceeds.

(a)Not Applicable.

(b)Not Applicable.

(c)Not Applicable.

Item 3. Defaults Upon Senior ~~Securities~~Securities.

None.

Item 4. Mine Safety ~~Disclosures~~Disclosures.

Not Applicable.

Item 5. Other ~~Information~~Information.

None.

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Item 6. Exhibits


Exhibit Number						Exhibit Description





~~10.1~~						Note Purchase Agreement, dated as of August 17, 2021, among the Registrant, Terreno Realty LLC and the institutions named in Schedule B thereto as purchasers (previously filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K on August 23, 2021 and incorporated herein by reference).
































































~~10.2~~10.1						First Amendment, dated as of June 29, 2022, to the Sixth Amended and Restated Senior Credit Agreement, ~~dated as of August 20, 2021,~~ among Terreno Realty LLC, as “Borrower”, KeyBank National Association, both individually as a “Lender” and as “Administrative Agent”, MUFG Union Bank, N.A., as co-syndication agent and joint lead arranger, PNC Bank, National Association, as co-syndication agent, PNC Capital Markets LLC, as joint lead arranger, Regions Bank, as co-syndication agent, Regions Capital Markets, as joint lead arranger and the several banks, financial institutions and other entities which may from time to time become parties as additional “Lenders” (previously filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K on ~~August 26, 2021~~July 5, 2022 and incorporated herein by reference).

31.1*						Rule 13a-14(a)/15d-14(a) Certification dated ~~November~~August 3,~~, 2021.~~ 2022.

31.2*						Rule 13a-14(a)/15d-14(a) Certification dated ~~November~~August 3,~~, 2021.~~ 2022.

31.3*						Rule 13a-14(a)/15d-14(a) Certification dated ~~November~~August 3,~~, 2021.~~ 2022.

32.1**						18 U.S.C. § 1350 Certification dated ~~November~~August 3,~~, 2021.~~ 2022.

32.2**						18 U.S.C. § 1350 Certification dated ~~November~~August 3,~~, 2021.~~ 2022.

32.3**						18 U.S.C. § 1350 Certification dated ~~November~~ August 3,~~, 2021.~~ 2022.

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.*)

________________

* 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

~~November~~August 3, ~~2021~~2022	By:	/s/ W. Blake Baird
		W. Blake Baird
		Chairman and Chief Executive Officer

~~November~~August 3, ~~2021~~2022	By:	/s/ Michael A. Coke
		Michael A. Coke
		President

~~November~~August 3, ~~2021~~2022	By:	/s/ Jaime J. Cannon
		Jaime J. Cannon
		Chief Financial Officer (Principal Financial Officer)

August 3, 2022	By:	/s/ Melinda Weston
		Melinda Weston
		Chief Accounting Officer (Principal Accounting Officer)


Fair Value Performance Share Period	Fair Value September 30, 2021		Accrual September 30, 2021		Expense for the Three Months Ended September 30,				Expense for the Nine Months Ended September 30,
					2021		2020		2021		2020

January 1, 2018 - December 31, 2020	$	—	$	—	$	—	$	398	$	—	$	1,123


	As of September 30, 2021			As of September 30, 2020
Total Debt, net	$	596,623		$	459,083
Equity
Common Stock
Shares Outstanding 1	71,291,250			68,372,568
Market Price 2	$	63.23		$	54.76
Total Equity	4,507,746			3,744,082
Total Market Capitalization	$	5,104,369		$	4,203,165
Total Debt-to-Total Investments in Properties 3	22.8		%	21.1		%

Total Debt-to-Total Market Capitalization 4	11.7		%	10.9		%
Floating Rate Debt as a % of Total Debt 5	16.7		%	21.7		%
Unhedged Floating Rate Debt as a % of Total Debt 6	16.7		%	10.9		%
Mortgage Loans Payable as a % of Total Debt 7	—		%	2.5		%
Mortgage Loans Payable as a % of Total Investments in Properties 8	—		%	0.5		%
Adjusted EBITDA 9	$	108,816		$	92,540
Interest Coverage 10	8.5		x	7.8		x
Fixed Charge Coverage 11	8.3		x	7.0		x
Total Debt-to-Adjusted EBITDA 12	3.8		x	3.6		x
Weighted Average Maturity of Total Debt (years)	5.6			4.7