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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Griffin Industrial Realty, Inc.    GRIF

GRIFFIN INDUSTRIAL REALTY, INC.

(GRIF)
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GRIFFIN INDUSTRIAL REALTY : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

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07/09/2020 | 04:42pm EDT

Overview




Griffin Industrial Realty, Inc. ("Griffin") is a real estate business
principally engaged in developing, acquiring, managing and leasing
industrial/warehouse properties. Griffin seeks to add to its
industrial/warehouse property portfolio through the acquisition and development
of land or the purchase of buildings in select markets targeted by Griffin.
Griffin also owns several office/flex properties and undeveloped land.
Periodically, Griffin may sell certain of its real estate assets that it has
owned for an extended time period and the use of which is not consistent with
Griffin's core focus on industrial/warehouse properties.



The significant accounting policies and methods used in the preparation of
Griffin's unaudited consolidated financial statements included in Item 1 of this
Quarterly Report on Form 10-Q are consistent with those used in the preparation
of Griffin's audited consolidated financial statements for its fiscal year ended
November 30, 2019 ("fiscal 2019") included in Griffin's Annual Report on
Form 10-K ("Form 10-K") as filed with the United States Securities and Exchange
Commission (the "SEC") on February 13, 2020.



The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses in the reporting period. Griffin regularly
evaluates estimates and assumptions related to the useful life and
recoverability of long-lived assets, stock-based compensation expense, deferred
income tax asset valuations and the valuation of derivative instruments. Griffin
bases its estimates and assumptions on current facts, historical experience and
various other factors that it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities and the accrual of costs and expenses that are
not readily apparent from other sources. The actual results experienced by
Griffin may differ materially and adversely from Griffin's estimates. To the
extent there are material differences between the estimates and the actual
results, future results of operations will be affected. The significant
accounting estimates used by Griffin in the preparation of its financial
statements for the three months and six months ended May 31, 2020 are consistent
with those used by Griffin to prepare its consolidated financial statements for
fiscal 2019.



Summary



For the three months ended May 31, 2020 (the "2020 second quarter"), Griffin
incurred a net loss of approximately $0.7 million, as compared to net income of
approximately $5.8 million for the three months ended May 31, 2019 (the "2019
second quarter"). The net loss in the 2020 second quarter, as compared to net
income in the 2019 second quarter, principally reflected an approximately
$8.0 million decrease in operating income, an approximately $0.3 million
increase in interest expense and an approximately $0.1 million decrease in
investment income in the 2020 second quarter, as compared to the 2019 second
quarter, partially offset by an approximately $0.2 million income tax benefit in
the 2020 second quarter, as compared to an approximately $1.7 million income tax
expense in the 2019 second quarter.



The approximately $8.0 million decrease in operating income in the 2020 second
quarter, as compared to the 2019 second quarter, principally reflected: (a) a
decrease of approximately $7.6 million of gain on property sales (revenue from
property sales less costs related to property sales) in the 2020 second quarter,
as compared to the 2019 second quarter; (b) increases of approximately
$0.6 million and approximately $0.4 million in general and administrative
expenses and depreciation and amortization expense, respectively, in the 2020
second quarter, as compared to the 2019 second quarter; and (c) an approximately
$0.1 million gain from an insurance recovery in the 2019 second quarter;
partially offset by (d) an approximately $0.7 million increase in net operating
income from leasing ("Leasing NOI")  1  , which Griffin defines as rental
revenue less operating expenses of rental properties in the 2020 second quarter,
as compared to the 2019 second quarter.



1Leasing NOI is not a financial measure in conformity with U.S. GAAP. It is
presented because Griffin believes it is a useful financial indicator for
measuring results of its real estate leasing activities. However, it should not
be considered as an alternative to operating income as a measure of operating
results in accordance with U.S. GAAP.

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The increase in Leasing NOI in the 2020 second quarter, as compared to the 2019
second quarter, principally reflected higher rental revenue as a result of more
space being under lease in the 2020 second quarter than the 2019 second quarter,
driven by rental revenue from three industrial/warehouse buildings in Orlando,
Florida acquired subsequent to May 31, 2019, an industrial/warehouse building in
the Charlotte, North Carolina area that was completed subsequent to May 31, 2019
and, to a lesser extent, improved occupancy in Griffin's other existing
industrial/warehouse properties. The gain from property sales in the 2020 second
quarter reflected the sale, to a local utility company, of an easement (the
"Florida Easement Sale") on a small area of Griffin's nursery farm in Quincy
Florida (the "Florida Farm"). The gain from property sales in the 2019 second
quarter principally reflected a pretax gain of approximately $7.4 million from
the sale of approximately 280 acres of undeveloped land in Simsbury, Connecticut
(the "Simsbury Land Sale"). The higher depreciation and amortization expense in
the 2020 second quarter, as compared to the 2020 second quarter, principally
reflected depreciation and amortization expense on the buildings that were added
to Griffin's real estate portfolio subsequent to May 31, 2019. The higher
general and administrative expenses in the 2020 second quarter, as compared to
the 2019 second quarter, principally reflected expenses incurred in connection
with Griffin's potential conversion to a real estate investment trust ("REIT"),
as previously announced. The higher interest expense in the 2020 second quarter,
as compared to the 2019 second quarter, principally reflected the higher amount
of mortgage loans outstanding and higher borrowings under Griffin's credit lines
in the 2020 second quarter, as compared to the 2019 second quarter. The income
tax benefit in the 2020 second quarter, as compared to the income tax expense in
the 2019 second quarter, reflected the pretax loss of approximately $0.9 million
in the 2020 second quarter, as compared to pretax income of approximately
$7.5 million in the 2019 second quarter.



For the six months ended May 31, 2020 (the "2020 six month period"), Griffin
incurred a net loss of approximately $1.0 million, as compared to net income of
approximately $5.2 million for the six months ended May 31, 2019 (the "2019 six
month period"). The net loss in the 2020 six month period, as compared to net
income in the 2019 six month period, principally reflected an approximately
$7.4 million decrease in operating income, an approximately $0.4 million
increase in interest expense and an approximately $0.2 million decrease in
investment income in the 2020 six month period, as compared to the 2019 six
month period, partially offset by an approximately $0.3 million income tax
benefit in the 2020 six month period, as compared to an approximately
$1.5 million income tax expense in the 2019 six month period.



The approximately $7.4 million decrease in operating income in the 2020 six
month period, as compared to the 2019 six month period, principally reflected:
(a) a decrease of approximately $7.0 million of gain on property sales in the
2020 six month period, as compared to the 2019 six month period; (b) increases
of approximately $0.7 million and approximately $0.6 million in depreciation and
amortization expense and general and administrative expenses, respectively, in
the 2020 six month period, as compared to the 2019 six month period; and (c) the
effect of an approximately $0.1 million gain from an insurance recovery in the
2019 six month period; partially offset by (d) an approximately $1.0 million
increase in Leasing NOI in the 2020 six month period, as compared to the 2019
six month period.



The increase in Leasing NOI in the 2020 six month period, as compared to the
2019 six month period, principally reflected higher rental revenue as a result
of more space being under lease in the 2020 six month period than the 2019 six
month period, driven by rental revenue from three industrial/warehouse buildings
in Orlando, Florida acquired subsequent to May 31, 2019, an industrial/warehouse
building in the Charlotte, North Carolina area that was completed subsequent to
May 31, 2019 and , to a lesser extent, improved occupancy in Griffin's other
existing industrial/warehouse properties. The gain from property sales in the
2020 six month period reflected a total of approximately $0.7 million from the
sale of approximately seven acres of undeveloped land in Windsor, Connecticut
(the "2020 Windsor Land Sale") that was completed in the three months ended
February 29, 2020 (the "2020 first quarter") and the Florida Easement Sale. The
gain from property sales in the 2019 six month period principally reflected a
pretax gain of approximately $7.4 million from the Simsbury Land Sale. The
higher depreciation and amortization expense in the 2020 six month period, as
compared to the 2019 six month period, principally reflected depreciation and
amortization expense on the buildings that were added to Griffin's real estate
portfolio subsequent to May 31, 2019. The higher general and administrative
expenses in the 2020 six month period, as compared to the 2019 six month period,
principally reflected expenses incurred in connection with Griffin's potential
conversion to a REIT, as previously announced. The gain from an insurance
recovery in the 2019 six month period reflected the settlement of an insurance
claim for storm damage to the Florida Farm. The higher interest expense in the
2020 six month period, as compared to the 2019 six month period, principally
reflected the higher amount of mortgage loans outstanding in the 2020 six month
period, as compared to the 2019 six month period. The income tax benefit in the
2020 six month period, as compared to

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the income tax expense in the 2019 six month period, reflected the pretax loss of approximately $1.3 million in the 2020 six month period, as compared to pretax income of approximately $6.7 million in the 2019 six month period.



Results of Operations



Impact of Covid-19



During and subsequent to the 2020 six month period, the world has been impacted
by the spread of the coronavirus (COVID-19), which has created significant
economic uncertainty and volatility. The full extent to which the coronavirus
pandemic impacts Griffin's business, operations, liquidity and financial results
will depend on numerous evolving factors that Griffin is not able to predict at
this time, including: the duration and scope of the pandemic; governmental,
business and individuals' actions that have been and continue to be taken in
response to the pandemic; the impact on economic activity from the pandemic and
actions taken in response; the effect on Griffin's tenants and their businesses;
the ability of tenants to make their rental payments; any closures of tenants'
facilities; the ability of existing or prospective tenants to evaluate or enter
into leases; and Griffin's ability to complete property sales. Any of these
events could materially adversely impact Griffin's business, financial
condition, results of operations or stock price.



Griffin collected essentially 100% of April 2020 rent and 99% of rent in each of
May and June 2020. In March and April 2020, Griffin received aggregate rent
relief requests from tenants representing 22% of total monthly rent. Griffin has
not received any new requests for rent relief subsequent to April 30, 2020.
Griffin has not finalized agreements with the three tenants whose rent relief
requests remain outstanding. Based on the current discussions, the anticipated
amount of rent relief granted to the three tenants whose requests remain
outstanding would equate to less than 1% of Griffin's total annual rental
revenue. All other requests for rent relief were either denied by Griffin or the
tenants withdrew their requests.



See Part II, Item 1A "Risk Factors" for further discussion of the possible impact of the COVID-19 pandemic on Griffin's business.

2020 Second Quarter Compared to 2019 Second Quarter




Rental revenue increased to approximately $9.2 million in the 2020 second
quarter from approximately $8.4 million in the 2019 second quarter, whereas
revenue from property sales was approximately $0.1 million in the 2020 second
quarter as compared to approximately $8.7 million in the 2019 second quarter.
Accordingly, total revenue decreased to approximately $9.3 million in the 2020
second quarter from approximately $17.1 million in the 2019 second quarter.



Revenue from property sales of approximately $0.1 million in the 2020 second
quarter reflected proceeds from the Florida Easement Sale. As costs related to
that transaction were minimal, the pretax gain from the Florida Easement Sale
was approximately $0.1 million. Revenue from property sales of approximately
$8.7 million in the 2020 second quarter principally reflected approximately
$7.7 million from the Simsbury Land Sale, which generated a pretax gain of
approximately $7.4 million, and approximately $0.7 million from the sale of
approximately 116 acres of undeveloped land in East Windsor, Connecticut (the
"East Windsor Land"). Property sales occur periodically and year to year changes
in revenue from property sales may not be indicative of any trends in Griffin's
real estate business.



The approximately $0.8 million increase in rental revenue in the 2020 second
quarter, as compared to the 2019 second quarter, principally reflected rental
revenue of approximately $0.5 million from industrial/warehouse buildings that
were added to Griffin's portfolio subsequent to May 31, 2019, rental revenue of
approximately $0.2 million from leasing first generation space in 6975
Ambassador Drive ("6975 Ambassador"), an approximately 134,000 square foot
building in the Lehigh Valley of Pennsylvania, which was completed in the three
months ended November 30, 2018, and an increase of approximately $0.1 million of
rental revenue from tenant expense reimbursements.



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Summaries of the total square footage and leased square footage of Griffin's
industrial/warehouse buildings and Griffin's total real estate portfolio are as
follows:




                                            Total       Leased
                                           Square       Square      Percentage

Industrial/Warehouse Properties Footage Footage Leased

       As of May 31, 2019                 3,645,000    3,441,000      94.4%
       As of November 30, 2019            4,029,000    3,732,000      92.6%
       As of May 31, 2020                 4,206,000    3,966,000      94.3%

       Total Portfolio
       As of May 31, 2019                 4,078,000    3,751,000      92.0%
       As of November 30, 2019            4,462,000    4,034,000      90.4%
       As of May 31, 2020                 4,639,000    4,249,000      91.6%




The industrial/warehouse buildings added to Griffin's portfolio subsequent to
May 31, 2019 reflected the acquisition of three buildings aggregating
approximately 277,000 square feet in Orlando, Florida and the completion of
construction of two buildings aggregating approximately 283,000 square feet in
the Charlotte, North Carolina area. Of the three industrial/warehouse buildings
acquired in Orlando, Florida, 7466 Chancellor Drive ("7466 Chancellor"), an
approximately 100,000 square foot building acquired in the 2019 fourth quarter
and 3320 Maggie Boulevard ("3320 Maggie"), an approximately 108,000 square foot
building acquired in the three months ended February 29, 2020 (the "2020 first
quarter"), were both fully leased at the time of their acquisition, whereas 170
Sunport Lane ("170 Sunport"), an approximately 68,000 square foot building
acquired in the 2020 second quarter, was mostly vacant when acquired and
remained as such as of May 31, 2020. Construction of the two
industrial/warehouse buildings in the Charlotte, North Carolina area,
160 International Drive ("160 International") and 180 International Drive ("180
International"), was completed in the 2019 fourth quarter. 160 International is
approximately 147,000 square feet and was 71% leased as of May 31, 2020, whereas
180 International is approximately 136,000 square feet and was not leased as of
May 31, 2020.



In the 2020 second quarter, Griffin entered into three new leases aggregating
approximately 283,000 square feet of industrial/warehouse space and renewed two
leases aggregating approximately 126,000 square feet of industrial/warehouse
space. An existing industrial/warehouse tenant in the Lehigh Valley of
Pennsylvania entered into both an early renewal of approximately 101,000 square
feet and a new lease for an additional approximately 201,000 square feet,
replacing a tenant that vacated as a result of an expiring lease. Additionally,
an existing tenant in New England Tradeport ("NE Tradeport"), Griffin's
industrial park in Windsor and East Granby, Connecticut, entered into a lease to
expand into an additional 59,000 square feet to replace a tenant vacating that
space as a result of an expiring lease. The other new lease reflects a tenant
that will relocate from approximately 11,000 square feet in one of Griffin's
office/flex buildings into approximately 22,000 square feet in NE Tradeport that
was vacated on February 29, 2020 as a result of a lease expiration. Also in the
2020 second quarter, a lease aggregating approximately 24,000 square feet of
industrial/warehouse space in NE Tradeport was renewed. As of May 31, 2020,
Griffin's thirty industrial/warehouse buildings comprised of approximately
2,052,000 square feet in the north submarket of Hartford, Connecticut,
approximately 1,317,000 square feet in the Lehigh Valley, approximately 560,000
square feet in the Charlotte, North Carolina area and approximately 277,000
square feet in Orlando, Florida represented 91% of Griffin's total real estate
portfolio and were 94.3% leased. The percentage leased for stabilized  2
industrial/warehouse properties was 99.7% as of May 31, 2020, as compared to
99.1% leased for stabilized industrial/warehouse properties as of February 29,
2020.



For Griffin's office/flex portfolio, two leases aggregating approximately
17,000 square feet expired in the 2020 second quarter and were not renewed and a
tenant that leased approximately 11,000 square feet of office/flex space agreed
to relocate into an industrial/warehouse building in NE Tradeport, as discussed
above. Griffin's twelve office/flex buildings, which aggregate approximately
433,000 square feet and represent 9% of Griffin's total real estate portfolio,
were 65.2% leased as of May 31, 2020. Griffin's total real estate portfolio of
approximately 4,639,000 square feet was 91.6% leased as of May 31, 2020 (96.2%
leased for stabilized properties), as compared to a portfolio of 4,570,000
square feet that was 92.7% leased as of February 29, 2020 (96.4% leased for
stabilized properties).



2 Stabilized properties reflect buildings that have reached 90% leased or have
been in-service for at least one year since development completion or
acquisition date, whichever is earlier. Stabilized properties exclude 160 and
180 International Drive and 170 Sunport Lane.

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Operating expenses of rental properties increased to approximately $2.5 million
in the 2020 second quarter from approximately $2.4 million in the 2019 second
quarter. Operating expenses of approximately $0.2 million related to the
properties added to Griffin's portfolio subsequent to May 31, 2019 were
partially offset by a decrease of approximately $0.1 million in operating
expenses for all other properties. The decrease in operating expenses for all
properties in the portfolio in the 2020 second quarter reflected approximately
$0.2 million from lower snow removal expenses in the 2020 second quarter, as
compared to the 2019 second quarter, partially offset by an increase of
approximately $0.1 million in real estate taxes in the 2020 second quarter, as
compared to the 2019 second quarter.



Leasing NOI and Leasing NOI on a cash basis ("Cash Leasing NOI") 3 for Griffin's industrial/warehouse properties and for Griffin's total portfolio for the 2020 and 2019 second quarters were as follows:




                                                       Industrial/Warehouse Properties      Total Portfolio
                                                          2020                2019          2020      2019
                                                         Second              Second        Second    Second
                                                         Quarter             Quarter       Quarter   Quarter
Rental revenue                                               $ 7,665$ 6,928$ 9,214$ 8,421
Operating expenses of rental properties                      (1,807)             (1,658)   (2,470)   (2,419)
Leasing NOI                                                    5,858               5,270     6,744     6,002
Noncash rental revenue including straight-line rents           (387)               (346)     (540)     (378)
Cash Leasing NOI                                             $ 5,471$ 4,924$ 6,204$ 5,624




The increases in Leasing NOI and Cash Leasing NOI principally reflected the
increases in rental revenue as a result of more space under lease in the 2020
second quarter, as compared to the 2019 second quarter, due mostly to the
industrial/warehouse buildings added to Griffin's portfolio subsequent to
May 31, 2019, and to a lesser extent, from improved occupancy and increases in
rental rates in Griffin's other industrial/warehouse properties. See below for a
reconciliation of Leasing NOI and Cash Leasing NOI to net income/(loss) reported
in the Consolidated Financial Statements.



Depreciation and amortization expense increased to approximately $3.4 million in the 2020 second quarter from approximately $2.9 million in the 2019 second quarter principally reflecting depreciation and amortization expense on properties added to Griffin's portfolio subsequent to the 2019 second quarter.




General and administrative expenses increased to approximately $2.4 million in
the 2020 second quarter from approximately $1.8 million in the 2019 second
quarter principally reflecting increases in legal and consulting fees, stock
option expenses and all other general and administrative expenses of
approximately $0.4 million, $0.1 million and $0.1 million, respectively. The
increase in legal and consulting fees principally reflected expenses related to
Griffin's efforts to pursue conversion to a REIT. The increase in stock option
expenses principally reflects the options granted to Gordon F. DuGan under the
Chairmanship and Advisory Agreement (the "Advisory Agreement") upon Mr. DuGan's
appointment as Chairman of the Board of Directors on March 3, 2020.



Operating income in the 2019 second quarter included a gain on an insurance recovery of approximately $0.1 million, which related solely to proceeds, net of expenses, from the settlement of an insurance claim for storm damage to the Florida Farm.




Interest expense increased to approximately $1.9 million in the 2020 second
quarter from approximately $1.6 million in the 2019 second quarter principally
reflecting an approximately $0.2 million increase as a result of a higher amount
of debt outstanding in the 2020 second quarter, as compared to the 2019 second
quarter, and an approximately $0.1 million increase from lower capitalized
interest in the 2020 second quarter, as compared to the 2019 second quarter.



Investment income was minimal in the 2020 second quarter, as compared to approximately $0.1 million in the 2019 second quarter which reflects having fewer short-term investments (repurchase agreements with Webster Bank,


3 Cash Leasing NOI is not a financial measure in conformity with U.S. GAAP. It
is presented because Griffin believes it is a useful financial indicator for
measuring results of its real estate leasing activities. However, it should not
be considered as an alternative to operating income as a measure of operating
results in accordance with U.S. GAAP.

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N.A. ("Webster Bank") that are collateralized with securities issued by the United States Government or its sponsored agencies) in the 2020 second quarter, as compared to the 2019 second quarter.




The income tax benefit of approximately $0.2 million in the 2020 second quarter,
as compared to an income tax provision of approximately $1.7 million in the 2019
second quarter, principally reflected a pretax loss of approximately
$0.9 million in the 2020 second quarter versus pretax income of approximately
$7.5 million in the 2019 second quarter.



2020 Six Month Period Compared to 2019 Six Month Period




Rental revenue increased to approximately $18.1 million in the 2020 six month
period from approximately $16.9 million in the 2019 six month period, whereas
revenue from property sales was approximately $0.9 million in the 2020 six month
period, as compared to approximately $9.5 million in the 2019 six month period.
Accordingly, total revenue decreased to approximately $19.0 million in the 2020
six month period from approximately $26.4 million in the 2019 six month period.



Revenue from property sales of approximately $0.9 million in the 2020 six month
period reflected approximately $0.8 million from the 2020 Windsor Land Sale and
approximately $0.1 million from the Florida Easement Sale. The 2020 Windsor Land
Sale resulted in a pretax gain of approximately $0.6 million and the pretax gain
on the Florida Easement Sale was approximately $0.1 million. Revenue from
property sales of approximately $9.5 million in the 2019 six month period
principally reflected approximately $7.7 million from the Simsbury Land Sale,
which generated a pretax gain of approximately $7.4 million, and a total of
approximately $1.6 million from the sales of the East Windsor Land and its
development rights in two separate transactions. Property sales occur
periodically and year to year changes in revenue from property sales may not be
indicative of any trends in Griffin's real estate business.



Rental revenue increased to approximately $18.1 million in the 2020 six month
period from approximately $16.9 million in the 2019 six month period principally
reflecting rental revenue of approximately $0.7 million from the
industrial/warehouse buildings that were added to Griffin's portfolio subsequent
to May 31, 2019, rental revenue of approximately $0.3 million from leasing first
generation space in 6975 Ambassador and rental revenue of approximately
$0.2 million from leasing other previously vacant space.



Operating expenses of rental properties increased to approximately $5.3 million
in the 2020 six month period from approximately $5.1 million in the 2019 six
month period principally reflecting operating expenses of the
industrial/warehouse buildings added to Griffin's portfolio subsequent to
May 31, 2019.



Leasing NOI and Leasing NOI on a cash basis for Griffin's industrial/warehouse
properties and for Griffin's total portfolio for the 2020 and 2019 six month
periods were as follows:




                                                      Industrial/Warehouse Properties        Total Portfolio
                                                          2020               2019           2020        2019
                                                        Six Month          Six Month      Six Month   Six Month
                                                         Period             Period         Period      Period
Rental revenue                                              $ 15,042$ 13,847$ 18,128$ 16,858
Operating expenses of rental properties                      (3,817)            (3,466)     (5,326)     (5,084)
Leasing NOI                                                   11,225             10,381      12,802      11,774
Noncash rental revenue including straight-line rents           (707)              (959)     (1,052)     (1,008)
Cash Leasing NOI                                            $ 10,518$ 9,422$ 11,750$ 10,766




The increases in Leasing NOI and Cash Leasing NOI principally reflected the
increases in rental revenue as a result of more space under lease in the 2020
six month period, as compared to the 2019 six month period, due mostly to the
industrial/warehouse buildings added to Griffin's portfolio subsequent to
May 31, 2019, and to a lesser extent, from improved occupancy and increases in
rental rates in Griffin's other industrial/warehouse properties. See below for a

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reconciliation of Leasing NOI and Cash Leasing NOI to net income/(loss) reported in the Consolidated Financial Statements.




Depreciation and amortization expense increased to approximately $6.6 million in
the 2020 six month period from approximately $5.9 million in the 2019 six month
period principally reflecting depreciation and amortization expense related to
the industrial/warehouse properties added to Griffin's portfolio subsequent to
May 31, 2019.



General and administrative expenses increased to approximately $4.5 million in
the 2020 six month period from approximately $3.9 million in the 2019 six month
period principally reflecting increases in legal and consulting fees, stock
option expenses and all other general and administrative expenses of
approximately $0.5 million, $0.2 million and $0.2 million, respectively,
partially offset by decreases of approximately $0.2 million related to Griffin's
non-qualified deferred compensation plan and approximately $0.1 million due to
lower compensation expense. The increase in legal and consulting fees
principally reflected expenses related to Griffin's efforts to pursue conversion
to a REIT. The increase in stock option expenses principally reflects the
options granted to Gordon F. DuGan under the Advisory Agreement upon Mr. DuGan's
appointment as Chairman of the Board of Directors on March 3, 2020. The decrease
in expenses related to the non-qualified deferred compensation plan reflected
the effect of lower stock market performance on a lower level of participant
balances in the 2020 six month period, as compared to the 2019 six month period,
which resulted in a decrease in the non-qualified deferred compensation plan
liability in the 2020 six month period, as compared to an increase in the
non-qualified deferred compensation plan liability in the 2019 six month period.
The lower compensation expense principally reflected the retirement of Frederick
M. Danziger as Griffin's Executive Chairman and the resignation of Griffin's
Director of Acquisitions in the three months ended August 31, 2019. Mr. Danziger
remained as Non-executive Chairman through March 3, 2020, when Mr. DuGan was
appointed as Chairman. Mr. Danziger remains a director on Griffin's Board.



Operating income in the 2019 six month period also included a gain on insurance
recovery of approximately $0.1 million, which related solely to proceeds, net of
expenses, from the settlement of the insurance claim for storm damage to the
Florida Farm.



Interest expense increased to approximately $3.7 million in the 2020 six month
period from approximately $3.3 million in the 2019 six month period reflecting
approximately $0.3 million as a result of a higher amount of debt outstanding in
the 2020 six month period, as compared to the 2019 six month period, and
approximately $0.1 million from lower capitalized interest in the 2020 six month
period, as compared to the 2019 six month period.



Investment income was minimal in the 2020 six month period, as compared to
approximately $0.2 million in the 2019 six month period reflecting having fewer
short-term investments in the 2020 six month period, as compared to the 2019 six
month period.



The income tax benefit of approximately $0.3 million in the 2020 six month
period, as compared to an income tax provision of approximately $1.5 million in
the 2019 six month period, principally reflected a pretax loss of approximately
$1.3 million in the 2020 six month period versus pretax income of approximately
$6.7 million in the 2019 six month period. The effective tax rate of 21.1% for
the 2020 six month period reflected the federal statutory income tax rate
adjusted for the effects of permanent differences and state income taxes. The
effective tax rate in the 2020 six month period is based on management's
projections of pretax results and permanent differences for the balance of the
year. To the extent that actual results differ from current projections, the
effective income tax rate may change.



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Below is a reconciliation of Leasing NOI and Cash Leasing NOI to operating income and net income as reported in the consolidated financial statements:




                                                        2020          2019             2020            2019
                                                       Second        Second          Six Month      Six Month
                                                       Quarter       Quarter          Period          Period
Net (loss) income                                    $ (693,000)$ 5,819,000$ (1,013,000)$ 5,233,000
Income tax benefit (provision)                           175,000   (1,683,000)           271,000    (1,503,000)
Pretax (loss) income                                   (868,000)     7,502,000       (1,284,000)      6,736,000
Exclude:
Investment income                                        (2,000)      (89,000)          (28,000)      (181,000)
Interest expense                                       1,899,000     1,618,000         3,691,000      3,268,000
Operating income                                       1,029,000     9,031,000         2,379,000      9,823,000
Exclude:
Gain on insurance recovery                                     -     (126,000)                 -      (126,000)
Costs related to property sales                           19,000     1,009,000           185,000      1,823,000
Depreciation and amortization expense                  3,359,000     2,939,000         6,594,000      5,881,000
General and administrative expenses                    2,438,000     1,809,000         4,495,000      3,899,000
Revenue from property sales                            (101,000)   (8,660,000)         (851,000)    (9,526,000)
Leasing NOI                                            6,744,000     6,002,000        12,802,000     11,774,000
Noncash rental revenue including straight-line rents   (540,000)     (378,000)       (1,052,000)    (1,008,000)
Cash Leasing NOI                                     $ 6,204,000$ 5,624,000$ 11,750,000$ 10,766,000

Leasing NOI                                          $ 6,744,000$ 6,002,000$ 12,802,000$ 11,774,000
Exclude:
Rental revenue from non-industrial/warehouse
properties                                           (1,549,000)   (1,493,000)       (3,086,000)    (3,011,000)
Operating expenses of non-industrial/warehouse
properties                                               663,000       761,000         1,509,000      1,618,000
Leasing NOI of industrial/warehouse properties         5,858,000     5,270,000        11,225,000     10,381,000
Noncash rental revenue including straight-line rents
of industrial/warehouse properties                     (387,000)     

(346,000) (707,000) (959,000) Cash Leasing NOI for industrial/warehouse properties $ 5,471,000$ 4,924,000$ 10,518,000$ 9,422,000

Off Balance Sheet Arrangements

Griffin does not have any material off balance sheet arrangements.

Liquidity and Capital Resources




Net cash provided by operating activities was approximately $2.8 million in the
2020 six month period, as compared to approximately $3.5 million in the 2019 six
month period. The approximately $0.7 million decrease in net cash provided by
operating activities in the 2020 six month period, as compared to the 2019 six
month period, principally reflected an increase of approximately $0.7 million in
cash used as a result of changes in assets and liabilities. The higher cash
usage from changes in assets and liabilities was driven by a payment of
approximately $1.9 million under Griffin's non-qualified deferred compensation
plan to Mr. Danziger in the 2020 six month period as a result of his retirement
in fiscal 2019, partially offset by favorable changes aggregating approximately
$1.2 million in other assets, accounts payable and accrued liabilities and
deferred revenue. The cash generated from the increase in Leasing NOI was offset
by higher general and administrative expenses and higher interest expense.



Net cash used in investing activities was approximately $18.6 million in the
2020 six month period, as compared to approximately $1.3 million in the 2019 six
month period. The net cash used in investing activities in the 2020 six month
period reflected: (a) cash payments of approximately $13.7 million for the
acquisitions of 3320 Maggie and 170 Sunport; (b) cash payments of approximately
$6.3 million for additions to real estate assets; and (c) cash payments of
approximately $0.4 million for deferred leasing costs and other uses; partially
offset by (d) cash proceeds of approximately $1.0 million from a decrease in
short-term investments; and (e) cash proceeds of approximately $0.8 million from
property sales.

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The acquisitions of 3320 Maggie and 170 Sunport were each made utilizing a
reverse like-kind exchange structure (a "Reverse 1031 Like-Kind Exchange") under
Section 1031 of the Internal Revenue Code of 1986, as amended. As such, as of
May 31, 2020, 3320 Maggie and 170 Sunport were in the possession of a qualified
intermediary engaged to execute the Reverse 1031 Like-Kind Exchanges until
subsequent sale transactions and the Reverse 1031 Like-Kind Exchanges are
completed. Griffin retains essentially all of the legal and economic benefits
and obligations related to 3320 Maggie and 170 Sunport prior to the completion
of each of the Reverse 1031 Like-Kind Exchanges. Accordingly, 3320 Maggie and
170 Sunport are included in Griffin's consolidated financial statements as a
consolidated variable interest entities until the legal title of each is
transferred to Griffin upon completion of the Reverse 1031 Like-Kind Exchanges.



The approximately $6.3 million of cash payments for additions to real estate assets in the 2020 six month period reflected the following:




        Tenant and building improvements related to leasing   $ 4.0 million
        New building construction (including site work)       $ 1.2 million
        Development costs and infrastructure improvements     $ 1.1 million




Cash payments in the 2020 six month period for tenant and building improvements
related to new leases signed in the latter part of fiscal 2019 and the 2020 six
month period, with approximately $2.2 million of tenant and building
improvements in the 2020 six month period related to leases of first generation
space. Cash payments for new building construction (including site work) in the
2020 six month period reflected final payments of the construction costs for 160
International and 180 International, which were completed in the 2019 fourth
quarter. Cash payments in the 2020 six month period for development costs and
infrastructure improvements principally reflected planning and design costs
related to: (i) the planned development of three industrial/warehouse buildings
aggregating approximately 520,000 square feet on an approximately 44 acre parcel
of undeveloped land in Charlotte, North Carolina that was purchased in fiscal
2019; and (ii) the planned development of an approximately 103,000 square foot
industrial/warehouse building on an approximately 14 acre parcel of undeveloped
land in the Lehigh Valley of Pennsylvania that was purchased in fiscal 2019.



Cash payments of approximately $0.4 million in the 2020 six month period for
deferred leasing costs and other uses principally reflected lease commissions
paid to real estate brokers for new leases.



The $1.0 million of cash from short-term investments in the 2020 six month
period reflected the maturity of Griffin's repurchase agreement that was
collateralized with securities issued by the United States Government or its
sponsored agencies, with Webster Bank, N.A. ("Webster Bank"). The approximately
$0.8 million of cash proceeds from property sales in the 2020 six month period
reflected the 2020 Windsor Land Sale and the Florida Easement Sale.



The net cash used in investing activities of approximately $1.3 million in the
2019 six month period reflected: (a) cash payments of approximately $7.5 million
for additions to real estate assets; and (b) cash payments of approximately
$0.3 million for deferred leasing costs and other uses; partially offset by (c)
$5.0 million of cash from a decrease in short-term investments; and (d) net cash
proceeds of approximately $9.2 million from property sales, partially offset by
approximately $7.6 million of proceeds from property sales deposited into escrow
at closing for the purchase of a replacement property for a 1031 Like-Kind
Exchange.



The approximately $7.5 million of cash payments for additions to real estate assets in the 2019 six month period reflected the following:




        New building construction (including site work)       $ 6.1 million
        Tenant and building improvements related to leasing   $ 1.2 million
        Development costs and infrastructure improvements     $ 0.2 million




Cash payments for new building construction (including site work) in the 2019
six month period included approximately $5.7 million for construction, on
speculation, of 160 and 180 International. Cash payments for new building
construction in the 2019 six month period also included a total of approximately
$0.4 million for two industrial/warehouse buildings that were completed in the
three months ended November 30, 2018. Cash payments for tenant and building
improvements in the 2019 six month period were related to leases signed in the
latter part of fiscal

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2018 and fiscal 2019, with approximately $0.5 million of tenant and building
improvements in the 2019 six month period related to leases of first generation
space.



Cash payments of approximately $0.3 million for deferred leasing costs and other
uses in the 2019 six month period reflected approximately $0.4 million of cash
payments for lease commissions and other costs related to new and renewed
leases, partially offset by approximately $0.1 million of cash received from the
insurance settlement for storm damage to the Florida Farm.



Net cash provided by financing activities was approximately $13.9 million in the
2020 six month period, as compared to net cash used in financing activities of
approximately $3.8 million in the 2019 six month period. The net cash provided
by financing activities in the 2020 six month period reflected: (a)
$21.5 million of proceeds from mortgage loans; (b) $2.5 million of proceeds from
the sale of common stock under an agreement with Griffin's newly elected
Chairman (see below); and (c) approximately $0.1 million of proceeds from the
exercise of stock options; partially offset by (d) approximately $5.4 million of
principal payments on mortgage loans; (e) an approximately $2.5 million dividend
payment on Griffin's common stock that was declared in the 2019 fourth quarter
and paid in the 2020 six month period; (f) approximately $1.8 million for a net
repayment under Griffin's line of credit for acquisitions (the "Acquisition
Credit Line") with Webster Bank; and (g) approximately $0.4 million of payments
for debt issuance costs.



Proceeds from mortgage loans in the 2020 six month period reflected a
$15.0 million nonrecourse mortgage loan (the "2020 State Farm Mortgage") with
State Farm Life Insurance Company ("State Farm"), and a $6.5 million nonrecourse
mortgage loan (the "2019 Webster Mortgage") with Webster Bank. On December 20,
2019, two wholly owned subsidiaries of Griffin entered into the 2019 Webster
Mortgage, collateralized by 7466 Chancellor, that has a ten-year term with
monthly principal payments based on a twenty-five-year amortization schedule.
The interest rate for the 2019 Webster Mortgage is a floating rate of the
one-month LIBOR rate plus 1.75%. At the time the 2019 Webster Mortgage closed,
Griffin entered into an interest rate swap agreement with Webster Bank that
effectively fixes the interest rate on the 2019 Webster Mortgage at 3.60% for
the entire loan term. Approximately $5.9 million of the proceeds from the 2019
Webster Mortgage were used to repay Webster Bank for the borrowing under the
Acquisition Credit Line that was used to finance a portion of the purchase price
of 7466 Chancellor (see below).



On January 23, 2020, two wholly owned subsidiaries of Griffin entered into the
2020 State Farm Mortgage, which is collateralized by two industrial/warehouse
buildings in the Lehigh Valley of Pennsylvania, 6975 Ambassador and 871 Nestle
Way, that aggregate approximately 254,000 square feet. The 2020 State Farm
Mortgage has a ten-year term with monthly principal payments based on a
twenty-five-year amortization schedule. The interest rate for the 2020 State
Farm Mortgage is 3.48%. Approximately $3.2 million of the proceeds from the 2020
State Farm Mortgage were used to repay the mortgage loan on 871 Nestle Way that
was scheduled to mature on January 27, 2020.



The approximately $5.4 million of principal payments on mortgage loans in the
2020 six month period reflected the repayment of the mortgage loan on 871 Nestle
Way and a total of approximately $2.2 million of recurring principal payments on
Griffin's nonrecourse mortgage loans. The approximately $1.8 million net
repayment on revolving lines of credit in the 2020 six month period reflected
the repayment of the approximately $5.9 million that was outstanding on the
Acquisition Credit Line as of November 30, 2019, representing the amount that
was drawn to finance a portion of the purchase price of 7466 Chancellor,
partially offset by $4.1 million borrowed on the Acquisition Credit Line in the
2020 first quarter that was used to finance a portion of the purchase price of
3320 Maggie.



The net cash used in financing activities in the 2019 six month period
reflected: (a) an approximately $2.3 million dividend payment on Griffin's
common stock that was declared in the 2018 fourth quarter and paid in the 2019
first quarter; and (b) approximately $1.9 million of recurring principal
payments on mortgage loans; partially offset by (c) proceeds of approximately
$0.1 million from the exercise of stock options; and (d) approximately
$0.3 million of proceeds from the construction to permanent mortgage loan (the
"2019 State Farm Loan") with State Farm that provided a significant portion of
the funds for the construction of 220 Tradeport Drive, an approximately 234,000
square foot industrial/warehouse building in NE Tradeport, and tenant
improvements related to the full building lease of that building. On August 1,
2019, Griffin converted the 2019 State Farm Loan to a $14.1 million nonrecourse
permanent

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mortgage that matures on April 1, 2034. The interest rate on the 2019 State Farm Loan is 4.51% with monthly principal payments based on a twenty-five-year amortization schedule.




On April 11, 2018, Griffin filed a universal shelf registration statement on
Form S-3 (the "Universal Shelf") with the SEC. Under the Universal Shelf,
Griffin may offer and sell up to $50 million of a variety of securities
including common stock, preferred stock, warrants, depositary shares, debt
securities, units or any combination of such securities during the three year
period that commenced upon the Universal Shelf becoming effective on April 25,
2018. Under the Universal Shelf, Griffin may periodically offer one or more
types of securities in amounts, at prices and on terms announced, if and when
the securities are ever offered. On May 10, 2018, Griffin filed a prospectus
supplement with the SEC under which it may issue and sell, from time to time, up
to an aggregate of $30 million of its Common Stock under an "at-the-market"
equity offering program (the "ATM Program") through Robert W. Baird & Co.
Incorporated ("Baird"), as sales agent. Under the sales agreement with Baird,
Griffin sets the parameters for the sales of its Common Stock under the ATM
Program, including the number of shares to be issued, the time period during
which sales are requested to be made, limitations on the number of shares that
may be sold in any one trading day and any minimum price below which sales of
shares may not be made. Sales of Common Stock, if any, under the ATM Program
would be made in offerings as defined in Rule 415 of the Securities Act of 1933,
as amended (the "Securities Act"). In addition, with the prior consent of
Griffin, Baird may also sell shares in privately negotiated transactions.
Griffin expects to use the net proceeds, if any, from the ATM Program for
acquisitions of target properties consistent with Griffin's investment
strategies, repayment of debt and general corporate purposes. If Griffin obtains
additional capital by issuing equity, the interests of its existing stockholders
will be diluted. If Griffin incurs additional indebtedness, that indebtedness
may impose financial and other covenants that may significantly restrict
Griffin's operations. Griffin cannot give assurance that it could issue Common
Stock under the ATM Program or obtain additional capital under the Universal
Shelf on favorable terms, or at all. See "Risk Factors-Risks Related to the Real
Estate Industry-Volatility in the capital and credit markets could materially
adversely impact Griffin" and "Risk Factors-Risks Related to Griffin's Common
Stock-Issuances or sales of Griffin's common stock or the perception that such
issuances or sales might occur could adversely affect the per share trading
price of Griffin's common stock" included in Part I, Item 1A "Risk Factors" of
Griffin's Annual Report on Form 10-K filed with the SEC for the fiscal year
ended November 30, 2019.



On December 10, 2019, Griffin entered into an Option Purchase Agreement (the
"East Granby/Windsor Option Agreement") whereby Griffin granted the buyer an
exclusive one-year option, in exchange for a nominal fee, to purchase
approximately 280 acres of undeveloped land in East Granby and Windsor,
Connecticut. The purchase price has a range of a minimum of $6.0 million to a
maximum of $7.95 million based upon the final approved use of the land. The
buyer may extend the option period for an additional two years upon payment of
additional option fees. The land subject to the East Granby/Windsor Option
Agreement does not have any of the approvals that would be required for the
buyer's planned use of the land. A closing on the land sale contemplated by the
East Granby/Windsor Option Agreement is subject to several significant
contingencies, including the buyer securing contracts under a competitive
bidding process that would require changes in the use of the land and obtaining
local and state approvals for that planned use. There is no guarantee that the
land sale contemplated under the East Granby/Windsor Option Agreement will be
completed under its current terms, or at all.



On February 3, 2020, Griffin entered into an option agreement (the "Meadowood
Option Agreement") with a national land conservation organization (the
"Conservation Organization") to sell the approximate 277 acres (the "Meadowood
Land") of Griffin's approved but unbuilt residential development, Meadowood, in
Simsbury, Connecticut. For a minimal fee, the Meadowood Option Agreement grants
the Conservation Organization the right to purchase the Meadowood Land for open
space and farmland preservation whereby Griffin would receive net proceeds of
approximately $5.4 million, if the purchase option is exercised. The Meadowood
Option Agreement grants the Conservation Organization an initial term of twelve
months, with one six-month extension, to exercise its option to acquire the
Meadowood Land. Completion of a sale of the Meadowood Land contemplated under
the Meadowood Option Agreement is subject to several contingencies, including
the satisfactory outcome of due diligence by the Conservation Organization and
the Conservation Organization securing funding from several public and private
sources to acquire the Meadowood Land. There is no guarantee that a sale of the
Meadowood Land contemplated under the Meadowood Option Agreement will be
completed under its current terms, or at all.



In the 2020 six month period, Griffin's Board of Directors approved a plan for
Griffin to pursue conversion to a real estate investment trust ("REIT") for
federal income tax purposes. At Griffin's 2020 Annual Meeting of Stockholders
(the "2020 Annual Meeting"), amendments to Griffin's bylaws and Griffin's
reincorporation from Delaware to Maryland were approved by Griffin's
stockholders, essentially enabling Griffin to continue to pursue its conversion
to a REIT. If

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successful in the conversion process, Griffin may elect REIT status for federal
income tax purposes commencing with the taxable year beginning January 1, 2021.
In connection with the REIT conversion, Griffin would be required to distribute
its accumulated earnings and profits (the "E&P Distribution") to stockholders.
Griffin currently estimates the range of its required E&P Distribution to be
approximately $14.0 million to $19.0 million. Griffin's actual E&P Distribution
may vary depending on a number of items, including the occurrence and timing of
certain transactions and Griffin's actual results through December 31, 2020.
Griffin intends for the E&P Distribution to be paid out in a combination of at
least 20% in cash and up to 80% in Griffin Common Stock. The Company continues
to evaluate the appropriate timing for conversion to a REIT.



On March 4, 2020, Griffin announced its intention to offer for sale its two
multi-story office buildings ("5 and 7 Waterside") in Griffin Center in the
greater Hartford, Connecticut area. However, as a result of the current market
conditions caused by the COVID-19 pandemic, Griffin has suspended its efforts to
sell 5 and 7 Waterside. Griffin expects to resume its efforts to sell 5 and 7
Waterside when Griffin believes that the market environment for such sale is
more stable.



On March 3, 2020, Gordon F. DuGan was appointed as Chairman of the Board of
Directors. Mr. DuGan and Griffin entered into the Advisory Agreement whereby Mr.
DuGan also agreed to serve as a non-employee advisor to Griffin on, amongst
other things, growth strategy, including identifying markets, acquisitions and
other transactions, recruitment of key personnel, potential capital raising
efforts and general management advice (collectively the "Advisory Services"). As
compensation to Mr. DuGan for providing such Advisory Services, Mr. DuGan
received: (i) an non-qualified stock option to acquire 48,000 shares of Griffin
Common Stock at an exercise price of $45.98 per share under the Griffin
Industrial Realty, Inc. 2009 Stock Option Plan (the "2009 Plan"); and (ii) a
non-qualified stock option (the "Supplemental Advisor Option") to acquire 52,000
shares of Griffin Common Stock at an exercise price of $46.91 per share under
the Griffin Industrial Realty, Inc. and Griffin Industrial, LLC 2020 Incentive
Award Plan (the "2020 Incentive Award Plan").



On March 9, 2020, Griffin completed the sale of 53,293 shares of Griffin's
Common Stock at a price per share of $46.91, for cash proceeds of approximately
$2.5 million, in accordance with the Advisory Agreement and pursuant to a Stock
Purchase Agreement, dated as of March 5, 2020, between Mr. DuGan and Griffin.



On June 30, 2020, a wholly-owned subsidiary of Griffin (the "Borrower") closed
on a nonrecourse mortgage loan (the "2020 Webster Mortgage") with Webster Bank
for $5.1 million. The 2020 Webster Mortgage is collateralized by 3320 Maggie,
which was acquired on February 18, 2020. The 2020 Webster Mortgage has a
ten-year term with monthly principal payments based on a twenty-five-year
amortization schedule. The interest rate for the 2020 Webster Mortgage is a
floating rate of the one month LIBOR rate plus 2.56%. At the time the 2020
Webster Mortgage closed, Griffin entered into an interest rate swap agreement
with Webster Bank that effectively fixes the interest rate of the 2020 Webster
Mortgage at 3.50% for the entire loan term. $4.1 million of the proceeds from
the 2020 Webster Mortgage were used to repay Webster Bank for the borrowing
under Griffin's Acquisition Credit Line that was used to finance a portion of
the purchase price of 3320 Maggie.



On June 24, 2020, Griffin entered into a Purchase and Sale Agreement (the
"Allentown Purchase Agreement") to acquire, for a purchase price of
$3.1 million, an approximately 18 acre site in the Lehigh Valley of Pennsylvania
for the intended development of an approximately 150,000 square foot
industrial/warehouse building. A closing on the land acquisition contemplated by
the Allentown Purchase Agreement is subject to significant contingencies,
including Griffin obtaining all governmental approvals for its planned
development of the land that would be acquired. There is no guarantee that the
land acquisition as contemplated under the Allentown Purchase Agreement will be
completed under its current terms, or at all.



In the near-term, Griffin plans to continue to invest in its real estate
business, including the construction of additional buildings on its undeveloped
land, expenditures for tenant improvements as new leases and lease renewals are
signed, infrastructure improvements required for future development of its real
estate holdings and the potential acquisition of additional properties and/or
undeveloped land parcels in the Middle Atlantic, Northeast and Southeast regions
to expand the industrial/warehouse portion of its real estate portfolio. Real
estate acquisitions may or may not occur based on many factors, including real
estate pricing. Griffin may commence speculative construction projects on its
undeveloped land that is either currently owned or acquired in the future if it
believes market conditions are favorable for such development. Griffin may also
construct build-to-suit facilities on its undeveloped land if lease terms are
favorable.

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As of May 31, 2020, Griffin had cash and cash equivalents of approximately
$4.0 million. Management believes that its cash and cash equivalents as of
May 31, 2020, cash generated from leasing operations and property sales, and
borrowing capacity under the Webster Credit Line and the Acquisition Credit Line
will be sufficient to meet its working capital requirements, to make other
investments in real estate assets, and to pay dividends on its Common Stock,
when and if declared by the Board of Directors, for at least the next twelve
months.



Forward-Looking Information



The above information in Management's Discussion and Analysis of Financial
Condition and Results of Operations includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act of 1934, as amended. These forward-looking statements include, but are not
limited to the possibility of property sales pursuant to certain option
agreements; completion of property sales under agreement; anticipated closing
dates of such sales and Griffin's plans with regard to the foregoing properties;
the potential sale of 5 and 7 Waterside; potential vacancies in Griffin's
buildings; the acquisition and development of additional properties and/or
undeveloped land parcels; construction of additional buildings, tenant
improvements and infrastructure improvements; expectations regarding any
potential issuance of securities under the ATM Program or the Universal Shelf
and anticipated use of any future proceeds from the ATM program; Griffin's
anticipated future liquidity and capital expenditures; completion of a sale of
the Meadowood Land; conversion to a REIT, the estimated range of the E&P
Distribution, expectations and uncertainties related to COVID-19 and other
statements with the words "believes," "anticipates," "plans," "expects" or
similar expressions. Although Griffin believes that its plans, intentions and
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such plans, intentions or expectations will be achieved.
The forward-looking statements made herein are based on assumptions and
estimates that, while considered reasonable by Griffin as of the date hereof,
are inherently subject to significant business, economic, competitive and
regulatory uncertainties and contingencies, many of which are beyond the control
of Griffin. Griffin's actual results could differ materially from those
anticipated in these forward-looking statements as a result of various important
factors, including those set forth under the heading Part I, Item 1A "Risk
Factors" in Griffin's Annual Report on Form 10-K for the fiscal year ended
November 30, 2019 filed with the SEC on February 13, 2020 and under the heading
Part II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q.



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