The following discussion should be read in conjunction with the consolidated
financial statements and the related notes thereto that appear in Part I, Item 1
"Financial Statements" of this Quarterly Report on Form 10-Q. The terms
"Company," "we," "us," and "our" refer to Rexford Industrial Realty, Inc. and
its consolidated subsidiaries except where the context otherwise requires.
Forward-Looking Statements
  We make statements in this quarterly report that are forward-looking
statements, which are usually identified by the use of words such as
"anticipates," "believes," "expects," "intends," "may," "might," "plans,"
"estimates," "projects," "seeks," "should," "will," "result" and variations of
such words or similar expressions. Our forward-looking statements reflect our
current views about our plans, intentions, expectations, strategies and
prospects, which are based on the information currently available to us and on
assumptions we have made. Although we believe that our plans, intentions,
expectations, strategies and prospects as reflected in or suggested by our
forward-looking statements are reasonable, we can give no assurance that our
plans, intentions, expectations, strategies or prospects will be attained or
achieved and you should not place undue reliance on these forward-looking
statements. Furthermore, actual results may differ materially from those
described in the forward-looking statements and may be affected by a variety of
risks and factors including, without limitation:
•the competitive environment in which we operate;
•real estate risks, including fluctuations in real estate values and the general
economic climate in local markets and competition for tenants in such markets;
•decreased rental rates or increasing vacancy rates;
•potential defaults on or non-renewal of leases by tenants;
•potential bankruptcy or insolvency of tenants;
•acquisition risks, including failure of such acquisitions to perform in
accordance with expectations;
•the timing of acquisitions and dispositions;
•potential natural disasters such as earthquakes, wildfires or floods;
•the consequence of any future security alerts and/or terrorist attacks;
•national, international, regional and local economic conditions, including
impacts and uncertainty from trade disputes and tariffs on goods imported to the
United States and goods exported to other countries;
•the general level of interest rates;
•potential changes in the law or governmental regulations that affect us and
interpretations of those laws and regulations, including changes in real estate
and zoning or real estate investment trust ("REIT") tax laws, and potential
increases in real property tax rates;
•financing risks, including the risks that our cash flows from operations may be
insufficient to meet required payments of principal and interest and we may be
unable to refinance our existing debt upon maturity or obtain new financing on
attractive terms or at all;
•lack of or insufficient amounts of insurance;
•our failure to complete acquisitions;
•our failure to successfully integrate acquired properties;
•our ability to qualify and maintain our qualification as a REIT;
•our ability to maintain our current investment grade rating by Fitch Ratings
("Fitch"), Moody's Investors Services ("Moody's) or from Standard and Poor's
Ratings Services ("S&P");
•litigation, including costs associated with prosecuting or defending pending or
threatened claims and any adverse outcomes;
•possible environmental liabilities, including costs, fines or penalties that
may be incurred due to necessary remediation of contamination of properties
presently owned or previously owned by us;
•an epidemic or pandemic (such as the outbreak and worldwide spread of novel
coronavirus ("COVID-19"), and the measures that international, federal, state
and local governments, agencies, law enforcement and/or health authorities may
implement to address it, which may (as with COVID-19) precipitate or exacerbate
one or more of the above-mentioned factors and/or other risks, and significantly
disrupt or prevent us from operating our business in the ordinary course for an
extended period; and
                                       38
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•other events outside of our control.


  Accordingly, there is no assurance that our expectations will be
realized. Except as otherwise required by the federal securities laws, we
disclaim any obligations or undertaking to publicly release any updates or
revisions to any forward-looking statement contained herein (or elsewhere) to
reflect any change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based. The
reader should carefully review our financial statements and the notes thereto,
as well as the section entitled "Risk Factors" in our Annual Report on Form 10-K
for the year ended December 31, 2020.
Company Overview
  Rexford Industrial Realty, Inc. is a self-administered and self-managed
full-service REIT focused on owning and operating industrial properties in
Southern California infill markets. We were formed as a Maryland corporation on
January 18, 2013, and Rexford Industrial Realty, L.P. (the "Operating
Partnership"), of which we are the sole general partner, was formed as a
Maryland limited partnership on January 18, 2013. Through our controlling
interest in our Operating Partnership and its subsidiaries, we acquire, own,
improve, redevelop, lease and manage industrial real estate principally located
in Southern California infill markets, and, from time to time, acquire or
provide mortgage debt secured by industrial property. We are organized and
conduct our operations to qualify as a REIT under the Internal Revenue Code of
1986 (the "Code"), as amended, and generally are not subject to federal taxes on
our income to the extent we distribute our income to our shareholders and
maintain our qualification as a REIT.
  As of June 30, 2021, our consolidated portfolio consisted of 266 properties
with approximately 33.0 million rentable square feet. In addition, we currently
manage an additional 20 properties with approximately 1.0 million rentable
square feet.
  Our goal is to generate attractive risk-adjusted returns for our stockholders
by providing superior access to industrial property investments and mortgage
debt investments secured by industrial property in high-barrier Southern
California infill markets. Our target markets provide us with opportunities to
acquire both stabilized properties generating favorable cash flow, as well as
properties or land parcels where we can enhance returns through value-add
renovations and redevelopments. Scarcity of available space and high barriers
limiting new construction of for-lease product all contribute to create superior
long-term supply/demand fundamentals within our target infill Southern
California industrial property markets. With our vertically integrated operating
platform and extensive value-add investment and management capabilities, we
believe we are positioned to capitalize upon the opportunities in our markets to
achieve our objectives.
2021 Year to Date Highlights
Acquisitions
•During the first quarter of 2021, we completed the acquisition of 11
properties, which included 0.7 million rentable square feet of buildings and
19.0 acres of low coverage outdoor storage sites and land for future
redevelopment for an aggregate purchase price of $163.5 million.
•During the second quarter of 2021, we completed the acquisition of ten
properties, which included 0.8 million rentable square feet of buildings and
15.5 acres of low coverage outdoor storage sites and land for future
redevelopment for an aggregate purchase price of $256.9 million.
Dispositions
•During the first quarter of 2021, we sold two properties with a combined 0.1
million rentable square feet, for a total gross sales price of $20.8 million,
and recognized $10.9 million in gains on sale of real estate.
•During the second quarter of 2021, we sold one property with 29,730 rentable
square feet, for a gross sales price of $8.2 million, and recognized $2.8
million in gains on sale of real estate.
Equity
•During the first quarter of 2021, we issued 2,415,386 shares of common stock
under our at-the-market equity offering program for gross proceeds of $119.8
million, or approximately $49.61 per share.
•During the first half of 2021, we entered into forward equity sales agreements
with certain financial institutions acting as forward purchasers under our
at-the-market equity offering program with respect to respect to 1,797,787
shares of common stock at a weighted average initial forward sale price of
$50.77 per share. In June 2021, we physically settled
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these forward equity sales agreements by issuing 1,797,787 shares of common
stock in exchange for net proceeds of $91.2 million.
•In May 2021, we entered into forward equity sales agreements with certain
financial institutions acting as forward purchasers in connection with an
underwritten public offering of 9,000,000 shares of our common stock at an
initial forward sale price of $55.29 per share, or $497.6 million. In June 2021,
we partially settled these forward equity sales agreements by issuing 1,809,526
shares of common stock in exchange for net proceeds of $100.0 million.
•On July 12, 2021, we announced that we will redeem all 3,600,000 shares of our
5.875% Series A Cumulative Redeemable Preferred Stock on August 16, 2021, at a
redemption price of $25.00 per share, plus all accrued and unpaid dividends
through August 15, 2021.
Financing
•On June 30, 2021, we exercised the accordion option on our existing credit
facility to increase the borrowing capacity of our senior unsecured revolving
credit facility by $200.0 million to $700.0 million from $500.0 million.
•On June 30, 2021, we amended our $150 million unsecured term loan facility to,
among other things, reduce the applicable LIBOR margin by 60 basis points so
that our current pricing is LIBOR plus 0.95% per annum, subject to our credit
ratings.
Repositioning & Redevelopment
•During the second quarter of 2021:
•We stabilized our redevelopment project that was branded as "The Merge" and our
repositioning property located at 16221 Arthur Street, which have a combined 0.4
million rentable square feet;
•We completed the repositioning of two of our properties located at 8745-8775
Production Avenue and Rancho Pacifica Buildings 1 and 6, which were 46.6% and
50.0% occupied, respectively, and both 100% leased, as of June 30, 2021. These
properties will stabilize in the third quarter of 2021 upon lease commencement.
We also completed the redevelopment of our property located at 851 Lawrence
Drive, and subsequent to June 30, 2021, we leased all four available units; and
•We pre-leased each of our repositioning/redevelopment properties located at
19007 Reyes Avenue and 29025-29055 Avenue Paine to a single tenant. The leases
are expected to commence in the fourth quarter of 2021 subject to completion of
repositioning/redevelopment site work.
Factors That May Influence Future Results of Operations

COVID-19 Update
In response to COVID-19, most municipalities in Southern California, including
many municipalities in which we own properties, have mandated a moratorium on
all commercial evictions and have given tenants impacted by COVID-19 the
unilateral right to defer rent while the emergency orders are in effect, with
repayment generally within six to twelve months after the end of the local
emergency. Only a small number of municipalities have allowed their local orders
to expire or modified the orders to exclude some tenants (based on the tenant's
number of employees, being a publicly traded company or multinational company,
or other characteristics), and in many of the local municipalities in which we
operate, the eviction restrictions and rent deferment rights are set to expire
by September 30, 2021, while in other municipalities the restrictions expire
when the local emergency is lifted. We cannot currently predict whether or not
these restrictions may be extended or for how long. Some of the orders have been
extended multiple times. A number of our tenants have taken advantage of the
relief provided by the local government mandates authorizing deferral of rent,
irrespective of such tenants' actual ability to pay such rent, and we are
currently unable to predict the ultimate impact that the COVID-19 pandemic will
have on our tenants or the number of tenants that will continue to take
advantage of the relief provided by the local government mandates authorizing
the deferral of rent.
•As of July 22, 2021, we have collected 98.7% of our second quarter 2021
contractual billings, which includes contractual base rent (including COVID-19
related deferral billings) and tenant reimbursements charged to tenants.
•As of June 30, 2021, we had 1,532 leases representing in-place annualized base
rent ("ABR") of $340.8 million. ABR is defined/calculated as the monthly
contractual base rent per the leases, excluding any rent abatements, as of
June 30, 2021, multiplied by 12.
•Since the onset of the COVID-19 pandemic, we have provided rent relief to
tenants in the form of deferred rent of
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approximately $4.6 million, or 1.4% of our ABR.
•As of July 22, 2021, we have collected approximately $3.9 million, or 97.6% of
deferred rent payments due as of June 30, 2021.
•As of June 30, 2021, we had outstanding rent deferrals of $554,000, or 0.2% of
ABR, of which $413,000 is due through the remainder of 2021.
•During 2021, we did not enter into any rent relief agreements granting
additional deferrals of base rent.
The continued impact of the pandemic on our and our tenants' businesses is
largely dependent on efforts to stem the spread of COVID-19, including
governmental efforts to distribute vaccines and overall vaccination rates in the
areas in which we own properties.
Market and Portfolio Fundamentals

Our operating results depend upon the infill Southern California industrial real estate market.


  The infill Southern California industrial real estate sector has continued to
exhibit strong fundamentals. These high-barrier infill markets are characterized
by a relative scarcity of available product, generally operating at
approximately 98% occupancy, coupled with the limited ability to introduce new
supply due to high land and redevelopment costs and a dearth of developable land
in markets experiencing a net reduction in supply as over time more industrial
property is converted to non-industrial uses than can be delivered.
Consequently, available industrial supply has continued to decrease in many of
our target infill submarkets and construction deliveries have fallen short of
demand. Meanwhile, underlying tenant demand within our infill target markets
continues to demonstrate growth, illustrated or driven by strong re-leasing
spreads and renewal activity, an expanding regional economy, substantial growth
in ecommerce transaction and delivery volumes, as well as further compression of
delivery time-frames to consumers and to businesses, increasing the significance
of last-mile facilities for timely fulfillment.
Tenant demand remains strong within our portfolio, which is strategically
located within prime infill Southern California industrial markets. The quality
and intensity of tenant demand through the second quarter of 2021 is
demonstrated through the Company's strong leasing spreads and volume, achieving
rental rates and related terms from new and renewing tenants that have generally
exceeded those from pre-COVID-19 periods (see "-Leasing Activity and Rental
Rates" below). This tenant demand has been driven by a wide range of sectors,
from consumer products, healthcare and medical products to aerospace, food,
construction, and logistics, as well as by an emerging electric vehicle
industry, among other sectors. We have also observed a notable increase in
ecommerce-oriented tenants securing space within our portfolio, in part driven
by the impacts of the COVID-19 pandemic, which has accelerated the growth in the
range and volume of goods and customers transacting through ecommerce. In
addition, ecommerce-related delivery demand associated with last-mile
distribution are driving discernible shifts in inventory-handling strategies
among retailers and distributors, which we believe is driving incremental demand
for our infill property locations. Our portfolio, which we believe represents
prime locations with superior functionality within the largest last-mile
logistics distribution market in the nation, is well-positioned to attract
incremental ecommerce-oriented demand.
We believe our portfolio's leasing performance during the first half of 2021 has
generally outpaced that of the infill markets within which we operate, although,
as discussed in more detail below, our target infill markets continue to operate
at or near historically high levels of occupancy. We believe this performance
has been driven by our highly entrepreneurial business model focused on
acquiring and improving industrial property in superior locations so that our
portfolio reflects a higher level of quality and functionality, on average, as
compared to typical available product within the markets within which we
operate. We also believe the quality and entrepreneurial approach demonstrated
by our team of real estate professionals actively managing our properties and
our tenants enables the potential to outcompete within our markets that we
believe are generally otherwise owned by more passive, less-focused real estate
owners.
General Market Conditions
The following are general market conditions and do not necessarily reflect the
results of our portfolio. For our portfolio specific results see "-Rental
Revenues" and "-Results of Operations" below.
In Los Angeles County, market fundamentals were strong during the second quarter
of 2021. Average asking lease rates increased significantly both
quarter-over-quarter and year-over-year, and vacancy decreased
quarter-over-quarter, with several submarkets achieving or retaining sub 1%
vacancy rates, bringing overall vacancy below pre-pandemic levels. Current
market conditions indicate rents are likely to increase throughout 2021, as
demand has been consistently strong, occupancy still
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remains at near capacity levels and new development is limited by a lack of land
availability and an increase in land and development costs.
In Orange County, market fundamentals were strong during the second quarter of
2021. Average asking lease rates increased both quarter-over-quarter and
year-over-year and vacancy was unchanged quarter-over-quarter, remaining at low
levels. Current market conditions indicate rents are likely to continue to
increase throughout 2021, as demand has accelerated over the year and there
remains a continued low availability of industrial product in this region.
In San Diego, vacancy decreased quarter-over-quarter to a record low and average
asking lease rates were increased quarter-over-quarter and year-over-year.

In Ventura County, vacancy decreased quarter-over-quarter and average asking lease rates increased quarter-over-quarter and year-over-year.


  Lastly, in the Inland Empire, new industrial product continues to be absorbed
well in the market.  In the Inland Empire West, which contains infill markets in
which we operate, vacancy decreased quarter-over-quarter and year-over-year,
reaching a new historic low, and average asking lease rates increased
significantly both quarter-over-quarter and year-over-year. Current market
conditions indicate rents are likely to continue to increase throughout 2021. We
generally do not focus on properties located within the non-infill Inland Empire
East sub-market where available land and the development and construction
pipeline for new supply is substantial.
Acquisitions and Value-Add Repositioning and Redevelopment of Properties
  The Company's growth strategy comprises acquiring leased, stabilized
properties as well as properties with value-add opportunities to improve
functionality and to deploy our value-driven asset management programs in order
to increase cash flow and value. Additionally, from time to time, we may acquire
land parcels or properties with excess land for ground-up redevelopment
projects. Acquisitions may comprise single property investments as well as the
purchase of portfolios of properties, with transaction values ranging from
approximately $10 million single property investments to portfolios potentially
valued in the billions of dollars. The Company's geographic focus remains infill
Southern California. However, from time-to-time, portfolios could be acquired
comprising a critical mass of infill Southern California industrial property
that could include some assets located in markets outside of infill Southern
California. In general, to the extent non-infill-Southern California assets were
to be acquired as part of a larger portfolio, the Company may underwrite such
investments with the potential to dispose such assets over a certain period of
time in order to maximize its core focus on infill Southern California, while
endeavoring to take appropriate steps to satisfy REIT safe harbor requirements
to avoid prohibited transactions under REIT tax laws.
A key component of our growth strategy is to acquire properties through
off-market and lightly marketed transactions that are often operating at
below-market occupancy or below-market rent at the time of acquisition or that
have near-term lease roll-over or that provide opportunities to add value
through functional or physical repositioning and improvements. Through various
repositioning, redevelopment, and professional leasing and marketing strategies,
we seek to increase the properties' functionality and attractiveness to
prospective tenants and, over time, to stabilize the properties at occupancy
rates that meet or exceed market rates.
A repositioning can provide a range of property improvements. This may include a
complete structural renovation of a property whereby we convert large
underutilized spaces into a series of smaller and more functional spaces, or it
may include the creation of additional square footage, the modernization of the
property site, the elimination of functional obsolescence, the addition or
enhancement of loading areas and truck access, the enhancement of
fire-life-safety systems or other accretive improvements, in each case designed
to improve the cash flow and value of the property. We have a number of
significant repositioning properties, which are presented in the tables below,
as well as range of smaller spaces in repositioning, that due to their smaller
size, relative scope, projected repositioning costs or relatively nominal amount
of down-time, are not presented below, however, in the aggregate, may be
substantial.
A repositioning property that is considered significant is typically defined as
a property where a significant amount of space is held vacant in order to
implement capital improvements, the cost to complete repositioning work and
lease-up is estimated to be greater than $1 million and the repositioning and
lease-up time frame is estimated to be greater than six months. A repositioning
is considered complete once the investment is fully or nearly fully deployed and
the property is marketable for leasing. Because each repositioning effort is
unique and determined based on the property, targeted tenants and overall trends
in the general market and specific submarket, the timing and effect of the
repositioning on our rental revenue and occupancy levels will vary, and, as a
result, will affect the comparison of our results of operations from period to
period with limited predictability.
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A redevelopment property is defined as a property where we plan to fully or
partially demolish an existing building(s) due to building obsolescence and/or a
property with excess or vacant land where we plan to construct a ground-up
building.
As of June 30, 2021, seven of our properties were under current repositioning or
redevelopment and three of our properties were in the lease-up stage. In
addition, we have a pipeline of 12 additional properties for which we anticipate
beginning repositioning/redevelopment construction work between the third
quarter of 2021 and the third quarter of 2022. The tables below set forth a
summary of these properties, as well the properties that were most recently
stabilized in 2021 and 2020, as the timing of these stabilizations have a direct
impact on our current and comparative results of operations. We consider a
repositioning/redevelopment property to be stabilized upon the earlier of (i)
reaching 90% occupancy or (ii) one year from the date construction work is
completed.
                                                                                                                    Estimated Construction Period(1)
                                                            Total Property          Repositioning/                                                                  Total Property
                                                            Rentable Square        Lease-up Rentable                                                                 Leased % at
Property (Submarket)                         Market             Feet(2)             Square Feet(2)               Start                         Completion              6/30/21
Current Repositioning:
12821 Knott Street (West OC)(3)                OC              165,171                 165,171                  1Q-2019                          4Q-2021                  -%
12133 Greenstone Avenue
(Mid-Counties)(4)                              LA               12,586                       -                  1Q-2021                          1Q-2022                  -%
19007 Reyes Avenue (South Bay)(5)              LA                    -                       -                  2Q-2021                          4Q-2021                 100%
11600 Los Nietos Road (Mid-Counties)           LA              103,982                 103,982                  2Q-2021                          1Q-2022                  -%
Total Current Repositioning                                    281,739                 269,153

Lease-up (Repositioning):
8745-8775 Production Avenue (Central
SD)                                            SD               46,820                  26,200                  1Q-2021                          2Q-2021                 100%
Rancho Pacifica Buildings 1 & 6
(South Bay)(6)                                 LA              488,114                 488,114                  4Q-2020                          2Q-2021                 100%
Total Lease-up                                                 534,934                 514,314

Future Repositioning:
15650-15700 Avalon Boulevard (South
Bay)(7)                                        LA               98,259                  98,259                  3Q-2021                          1Q-2022                 92%
900 East Ball Road (North OC)                  OC               62,607                         62.607           4Q-2021                          2Q-2022                 100%
8985 Crestmar Point (Central SD)               SD               56,550                  56,550                  4Q-2021                          2Q-2022                 87%
3441 MacArthur Boulevard (OC
Airport)                                       OC              122,060                 122,060                  1Q-2022                          4Q-2022                 100%
Total Future Repositioning                                     339,476                 339,476


                     - See footnotes starting on page 44 -
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                                                                                                   Estimated Construction Period(1)
                                                                     Estimated
                                                                   Redevelopment                                                                   Total Property
                                                                  Rentable Square                                                                   Leased % at
Property (Submarket)                             Market               Feet(8)                   Start                         Completion              6/30/21
Current Redevelopment:
29025-29055 Avenue Paine (San Fernando
Valley)(9)                                         LA                 111,260                  1Q-2021                          4Q-2021               100% (9)
415-435 Motor Avenue (San Gabriel
Valley)                                            LA                  94,315                  2Q-2021                          2Q-2022            

-%


1055 Sandhill Avenue (South Bay)                   LA                 127,853                  2Q-2021                          1Q-2023                  -%
Total Current Redevelopment                                           333,428

Lease-up (Redevelopment):
851 Lawrence Drive (Ventura)(10)                   VC                  90,773                  4Q-2019                          2Q-2021               -% (10)

Future Redevelopment:
9615 Norwalk Boulevard
(Mid-Counties)(11)                                 LA                 201,467                  3Q-2021                          4Q-2022           

100%


15601 Avalon Boulevard (South Bay)(12)             LA                  86,830                  3Q-2021                          4Q-2022            

100%


9920-10020 Pioneer Blvd (Mid-Counties)             LA                 165,449                  3Q-2021                          1Q-2023           

5%


12752-12822 Monarch Street (West OC)(13)           OC                 275,695                  4Q-2021                          4Q-2022           

100%

4416 Azusa Canyon Road (San Gabriel
Valley)(14)                                        LA                 129,830                  1Q-2022                          4Q-2022           

-%

8888-8892 Balboa Avenue (Central SD)               SD                 120,900                  1Q-2022                          4Q-2022           

21%

15010 Don Julian Road (San Gabriel
Valley)                                            LA                 219,242                  1Q-2022                          2Q-2023           

100%

12772 San Fernando Road (San Fernando
Valley)                                            LA                 146,746                  3Q-2022                          3Q-2023                 52%
Total Future Redevelopment                                          1,346,159


                                                                 Stabilized Rentable                                                  Total Property
Stabilized(15)                                   Market              Square Feet                   Period Stabilized               Leased % at 6/30/21
The Merge (Inland Empire West)                     SB                   333,544                         2Q-2021                            91%
16221 Arthur Street (Mid-Counties)                 LA                    61,372                         2Q-2021                            100%
Total 2021 Stabilized                                                   

394,916



2455 Conejo Spectrum Street (Ventura)              VC                    98,218                         1Q-2020                            100%
635 8th Street (San Fernando Valley)               LA                    72,250                         1Q-2020                            100%
16121 Carmenita Road (Mid-Counties)                LA                   105,477                         3Q-2020                            100%
10015 Waples Court (Central SD)                    SD                   106,412                         3Q-2020                            100%
1210 North Red Gum Street (North OC)               OC                    64,570                         3Q-2020                            100%
7110 E. Rosecrans Avenue - Unit B (South
Bay)                                               LA                    37,417                         3Q-2020                            100%
29003 Avenue Sherman (San Fernando
Valley)                                            LA                    68,123                         4Q-2020                            100%
727 Kingshill Place (South Bay)                    LA                    46,005                         4Q-2020                            100%
Total 2020 Stabilized                                                   598,472



(1)The estimated start period is the period we anticipate starting physical
construction on a project. Prior to physical construction, we engage in
pre-construction activities, which include design work, securing permits or
entitlements, site work, and other necessary activities preceding construction.
The estimated completion period is our current estimate of the period in which
we will have substantially completed a project and the project is made available
for occupancy. We expect to update our timing estimates on a quarterly basis.
The estimated construction period is subject to change as a result of a number
of factors including but not limited to permit requirements, delays in
construction (including delays related to the COVID-19 pandemic), changes in
scope, and other unforeseen circumstances.
(2)"Total Property Rentable Square Feet" is the total rentable square footage of
the entire property or particular building(s)
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(footnoted if applicable) under repositioning/lease-up. "Repositioning/Lease-up
Rentable Square Feet " is the actual rentable square footage that is subject to
repositioning at the property/building, and may be less than Total Property
Rentable Square Feet.
(3)At 12821 Knott Street, we are repositioning the existing 120,800 rentable
square foot building and are constructing approximately 45,000 rentable square
feet of new warehouse space.
(4)12133 Greenstone Avenue is a single tenant container storage facility with a
12,586 rentable square foot truck terminal building on 4.8 acres with excess
land. As part of the repositioning, we plan to demolish the existing building.
(5)At 19007 Reyes Avenue, a 4.5 acre industrial site, we are clearing
dysfunctional improvements and converting to a single tenant paved container
storage facility. As of June 30, 2021, this property has been pre-leased with
the lease expected to commence in the fourth quarter of 2021, subject to
completion of repositioning work.
(6)Rancho Pacifica Buildings 1 & 6 are located at 2301-2329 Pacifica Place and
2332-2366 Pacifica Place, and represent two buildings totaling 488,114 rentable
square feet, out of six buildings at our Rancho Pacifica Park property, which
have a total 1,152,883 rentable square feet. As of June 30, 2021, the two
remaining vacant units have been leased with leases expected to commence in
August/September 2021.
(7)As of June 30, 2021, 15650-15700 Avalon Boulevard contains two buildings
totaling 166,088 rentable square feet. Upon termination of the current
short-term lease, we plan to demolish one of the existing buildings and
reposition the property into a single-tenant low coverage facility which will
have one 98,259 rentable square foot building at completion.
(8)Represents the estimated rentable square footage of the project upon
completion of redevelopment.
(9)As of June 30, 2021, 29025-29055 Avenue Paine has been pre-leased with the
lease expected to commence in December 2021, subject to completion of
redevelopment work.
(10)Subsequent to June 30, 2021, we leased all four units at 851 Lawrence Drive.
As of the filing date of this Quarterly Report on Form 10-Q, this property is
100% leased.
(11)9615 Norwalk Boulevard is a 10.26 acre storage-yard with buildings totaling
26,362 rentable square feet. The property was leased to a tenant under a short
term lease through June 30, 2021. We plan to demolish the existing buildings and
construct a new 201,467 rentable square foot building.
(12)In February 2021, we leased 15601 Avalon Boulevard to a tenant under a
short-term lease. Upon termination of the lease, we will demolish the existing
building (63,690 rentable square feet) and construct a new 86,830 rentable
square foot building.
(13)As of June 30, 2021, 12752-12822 Monarch Street contains two buildings
totaling 276,585 rentable square feet. We plan to demolish one building with
98,360 rentable square feet and add a new 97,470 rentable square foot building
after the in-place lease terminates. At completion, the total project will
contain 275,695 rentable square feet.
(14)At 4416 Azusa Canyon Road, we will demolish the existing building (70,510
rentable square feet) and construct a new 129,830 rentable square foot building
upon termination of the in-place lease.
(15)We consider a repositioning property to be stabilized upon the earlier of
(i) reaching 90% occupancy or (ii) one year from the date construction work is
completed.
  Properties that are nonoperational as a result of repositioning or
redevelopment activity may qualify for varying levels of interest, insurance and
real estate tax capitalization during the redevelopment and construction period.
An increase in our repositioning and redevelopment activities resulting from
value-add acquisitions could cause an increase in the asset balances qualifying
for interest, insurance and tax capitalization in future periods. We capitalized
$0.9 million and $1.6 million of interest expense and $0.4 million and $0.8
million of insurance and real estate tax expenses during the three and six
months ended June 30, 2021, respectively, related to our repositioning and
redevelopment projects.

Rental Revenues


  Our operating results depend primarily upon generating rental revenue from the
properties in our portfolio. The amount of rental revenue generated by these
properties is affected by our ability to maintain or increase occupancy levels
and rental rates at our properties, which will depend upon our ability to lease
vacant space and re-lease expiring space at favorable rates.
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Occupancy Rates


  As of June 30, 2021, our consolidated portfolio, inclusive of space in
repositioning as described in the subsequent paragraph, was approximately 95.4%
occupied, while our stabilized consolidated portfolio exclusive of such space
was approximately 98.2% occupied. We believe the opportunity to increase
occupancy at our properties will be an important driver of future revenue
growth. An opportunity to drive this growth will derive from the completion and
lease-up of repositioning and redevelopment projects that are currently under
construction.
  As summarized in the tables under "-Acquisitions and Value-Add Repositioning
and Redevelopment of Properties" above, as of June 30, 2021, seven of our
properties with a combined 0.6 million rentable square feet at completion are
under current repositioning or redevelopment, and three additional properties
with a combined 0.6 million rentable square feet are in the lease-up stage.
Additionally, we have a near-term pipeline of 12 repositioning and redevelopment
projects with a combined 1.7 million of estimated rentable square feet at
completion. Vacant space at these properties is concentrated in our Los Angeles,
Orange County, San Diego and Ventura markets and represents 2.9% of our total
consolidated portfolio square footage as of June 30, 2021. Including vacant
space at these properties, our weighted average occupancy rate as of June 30,
2021 in our Los Angeles, Orange County, San Diego and Ventura markets was 95.0%,
95.1%, 94.7% and 93.5%, respectively. Excluding vacant space at these
properties, our weighted average occupancy rate as of June 30, 2021, in these
markets was 98.4%, 98.6%, 97.7% and 97.0%, respectively. We believe that an
important portion of our long-term future growth will come from the completion
of these projects currently under or scheduled for repositioning, as well as
through the identification or acquisition of new opportunities for repositioning
and redevelopment, whether in our existing portfolio or through new investments,
which may vary from period to period subject to market conditions.
  The occupancy rate of properties not undergoing repositioning is affected by
regional and local economic conditions in our Southern California infill
markets. In the last several years, the Los Angeles, Orange County and San Diego
markets have continued to show historically low vacancy and positive absorption,
resulting from high tenant demand combined with low product availability.
Accordingly, our properties in these markets have generally exhibited a similar
trend. We believe that general market conditions will remain positive in 2021,
and the opportunity to increase occupancy and rental rates at our properties
will be an important driver of future revenue growth; however, there can be no
assurance that recent positive market trends will continue, due in part to the
ongoing COVID-19 pandemic and the impact it will have on the global economy and
our local infill Southern California markets.
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Leasing Activity and Rental Rates

The following tables set forth our leasing activity for new and renewal leases for the three and six months ended June 30, 2021:


                                                                                                      New Leases
                                                                                   Weighted Average         Effective Rent
                                    Number                                            Lease Term              Per Square               GAAP Leasing                 Cash Leasing
Quarter                            of Leases          Rentable Square Feet            (in years)               Foot(1)                Spreads(2)(4)                Spreads(3)(4)
Q1-2021                                 52                  909,694                         5.2            $       12.52                         43.8  %                      26.7  %

Q2-2021                                 71                1,207,516                         5.7            $       15.48                         38.9  %                      25.3  %
Total/Weighted Average                 123                2,117,210                         5.5            $       14.21                         40.8  %                      25.8  %


                                                                                                  Renewal Leases                                                                                         Expired Leases                        Retention %(7)
                                                                                Weighted Average         Effective Rent
                                  Number                                           Lease Term              Per Square               GAAP Leasing                  Cash Leasing                Number                Rentable Square           Rentable Square
Quarter                         of Leases          Rentable Square Feet            (in years)               Foot(1)                 Spreads(2)(5)                Spreads(3)(5)              of Leases                   Feet(6)                     Feet
Q1-2021                              70                1,049,547                         4.6            $       12.93                          48.5  %                      35.4  %             120                       1,781,667                     79.2  %

Q2-2021                              68                  981,781                         4.1            $       11.96                          30.7  %                      18.8  %             121                       1,881,074                     74.0  %
Total/Weighted Average              138                2,031,328                         4.3            $       12.46                          39.2  %                      26.7  %             241                       3,662,741                     76.6  %


(1)Effective rent per square foot is the average base rent calculated in
accordance with GAAP, over the term of the lease, expressed in dollars per
square foot per year. Includes all new and renewal leases that were executed
during the quarter.
(2)Calculated as the change between GAAP rents for new or renewal leases and the
expiring GAAP rents on the expiring leases for the same space.
(3)Calculated as the change between starting cash rents for new or renewal
leases and the expiring cash rents on the expiring leases for the same space.
(4)The GAAP and cash re-leasing spreads for new leases executed during the six
months ended June 30, 2021, exclude 33 leases aggregating 1,144,913 rentable
square feet for which there was no comparable lease data. Of these 33 excluded
leases, 11 leases aggregating 687,102 rentable square feet are leases of
recently repositioned/redeveloped space. Comparable leases generally exclude:
(i) space that has never been occupied under our ownership, (ii) recently
repositioned/redeveloped space, (iii) space that has been vacant for over one
year or (iv) space with lease terms shorter than six months.
(5)The GAAP and cash re-leasing rent spreads for renewal leases executed during
the six months ended June 30, 2021, exclude four leases totaling 102,577
rentable square feet for which there was no comparable lease data. Comparable
leases generally exclude space with lease terms shorter than six months.
(6)Includes leases totaling 789,989 rentable square feet that expired during the
six months ended June 30, 2021, for which the space has been or will be placed
into repositioning or redevelopment.
(7)Retention is calculated as renewal lease square footage plus
relocation/expansion square footage, divided by the square footage of leases
expiring during the period. Retention excludes square footage related to the
following: (i) expiring leases associated with space that is placed into
repositioning after the tenant vacates, (ii) early terminations with
pre-negotiated replacement leases and (iii) move outs where space is directly
leased by subtenants.
  Our leasing activity is impacted both by our repositioning and redevelopment
efforts, as well as by market conditions. While we reposition a property, its
space may become unavailable for leasing until completion of our repositioning
efforts. As of June 30, 2021, we have seven current repositioning/redevelopment
projects with estimated construction completion periods ranging from the fourth
quarter of 2021 through the first quarter of 2023, and additional repositioning
and redevelopment projects in our pipeline with estimated completion dates
through the third quarter of 2023. We expect these properties to have
                                       47
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positive impacts on our leasing activity and revenue generation as we complete our value-add plans and place these properties in service.

Scheduled Lease Expirations


  Our ability to re-lease space subject to expiring leases is affected by
economic and competitive conditions in our markets and by the relative
desirability of our individual properties, which may impact our results of
operations. The following table sets forth a summary schedule of lease
expirations for leases in place as of June 30, 2021, for each of the 10 full and
partial calendar years beginning with 2021 and thereafter, plus space that is
available and under current repositioning.
                                                                                                                                               Percentage of Total        Annualized Base
                                        Number of Leases          Total

Rentable Square Percentage of Total Annualized Annualized Base Rent per Square Year of Lease Expiration

                    Expiring                     Feet(1)                 Owned Square Feet         Base Rent(2)              Rent(3)                  Foot(4)
Vacant(5)                                          -                         920,299                         2.8  %       $         -                         -  %       $             -
Current Repositioning(6)                           -                         599,896                         1.8  %                 -                         -  %       $             -
MTM Tenants                                       12                         202,097                         0.6  %             2,783                       0.8  %       $         13.77
Remainder of 2021                                171                       1,779,375                         5.4  %            19,815                       5.8  %       $         11.14
2022                                             403                       4,821,913                        14.6  %            53,539                      15.7  %       $         11.10
2023                                             358                       4,732,192                        14.4  %            54,088                      15.9  %       $         11.43
2024                                             273                       5,245,138                        15.9  %            55,944                      16.4  %       $         10.67
2025                                             129                       4,028,996                        12.2  %            40,522                      11.9  %       $         10.06
2026                                             115                       5,028,637                        15.3  %            52,022                      15.3  %       $         10.35
2027                                              16                       1,202,372                         3.6  %            11,390                       3.4  %       $          9.47
2028                                              12                         591,074                         1.8  %             6,810                       2.0  %       $         11.52
2029                                               9                         550,549                         1.7  %             6,917                       2.0  %       $         12.56
2030                                              12                       1,320,331                         4.0  %            15,132                       4.4  %       $         11.46
Thereafter                                        22                       1,932,516                         5.9  %            21,864                       6.4  %       $         11.31
Total Consolidated Portfolio                   1,532                      32,955,385                       100.0  %       $   340,826

100.0 % $ 10.84




(1)Represents the contracted square footage upon expiration.
(2)Calculated as monthly contracted base rent (before rent abatements) per the
terms of such lease, as of June 30, 2021, multiplied by 12. Excludes billboard
and antenna revenue and tenant reimbursements. Amounts in thousands.
(3)Calculated as annualized base rent set forth in this table divided by
annualized base rent for the total portfolio as of June 30, 2021.
(4)Calculated as annualized base rent for such leases divided by the occupied
square feet for such leases as of June 30, 2021.
(5)Represents vacant space (not under repositioning) as of June 30, 2021.
Includes leases aggregating 415,219 rentable square feet that had been signed
but had not yet commenced as of June 30, 2021.
(6)Represents vacant space at properties that were classified as repositioning
or redevelopment properties as of June 30, 2021. Excludes stabilized properties
and properties in lease-up. Refer to the table under "-Acquisitions and
Value-Add Repositioning and Redevelopment of Properties" for additional details
related to these properties
  As of June 30, 2021, in addition to 0.9 million rentable square feet of
currently available space in our portfolio and 0.6 million rentable square feet
of vacant space under current repositioning, leases representing 5.4% and 14.6%
of the aggregate rentable square footage of our portfolio are scheduled to
expire during the remainder of 2021 and 2022, respectively. During the six
months ended June 30, 2021, we renewed 138 leases for 2.0 million rentable
square feet, resulting in a 76.6% retention rate. Our retention rate during the
period was impacted by the combination of low vacancy and high demand in many of
our key markets. During the six months ended June 30, 2021, new and renewal
leases had a weighted average term of 5.5 and 4.3 years, and we expect future
new and renewal leases to have similar terms.
  The leases scheduled to expire during the remainder of 2021 and 2022 represent
approximately 5.8% and 15.7% respectively, of the total annualized base rent for
our portfolio as of June 30, 2021. We estimate that, on a weighted average
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basis, in-place rents of leases scheduled to expire during the remainder of 2021
and 2022 are currently below current market asking rates, although individual
units or properties within any particular submarket may currently be leased
either above, below, or at the current market asking rates within that
submarket. As described under "-Market and Portfolio Fundamentals" above, we
expect market dynamics to remain strong and that these positive trends will
continue to provide a favorable environment for additional increases in lease
renewal rates. Accordingly, we expect the remainder of 2021 will show positive
renewal rates and leasing spreads.
Conditions in Our Markets
The properties in our portfolio are located primarily in Southern California
infill markets. Positive or negative changes in economic or other conditions,
including the impact of the ongoing COVID-19 pandemic, and related state and
local government reactions, adverse weather conditions and natural disasters in
this market may affect our overall performance.

Property Expenses


  Our property expenses generally consist of utilities, real estate taxes,
insurance, site repair and maintenance costs, and the allocation of overhead
costs. For the majority of our properties, our property expenses are recovered,
in part, by either the triple net provisions or modified gross expense
reimbursements in tenant leases. The majority of our leases also comprise
contractual three percent annual rental rate increases meant, in part, to help
mitigate potential increases in property expenses over time. However, the terms
of our leases vary, and, in some instances, we may absorb property expenses. Our
overall financial results will be impacted by the extent to which we are able to
pass-through property expenses to our tenants.

Taxable REIT Subsidiary
As of June 30, 2021, our Operating Partnership indirectly and wholly owns
Rexford Industrial Realty and Management, Inc., which we refer to as our
services company. We have elected, together with our services company, to treat
our services company as a taxable REIT subsidiary for federal income tax
purposes. A taxable REIT subsidiary generally may provide non-customary and
other services to our tenants and engage in activities that we or our
subsidiaries (other than a taxable REIT subsidiary) may not engage in directly
without adversely affecting our qualification as a REIT, provided a taxable REIT
subsidiary may not operate or manage a lodging facility or health care facility
or provide rights to any brand name under which any lodging facility or health
care facility is operated. We may form additional taxable REIT subsidiaries in
the future, and our Operating Partnership may contribute some or all of its
interests in certain wholly owned subsidiaries or their assets to our services
company. Any income earned by our taxable REIT subsidiaries will not be included
in our taxable income for purposes of the 75% or 95% gross income tests, except
to the extent such income is distributed to us as a dividend, in which case such
dividend income will qualify under the 95%, but not the 75%, gross income test.
Because a taxable REIT subsidiary is subject to federal income tax, and state
and local income tax (where applicable) as a regular corporation, the income
earned by our taxable REIT subsidiaries generally will be subject to an
additional level of tax as compared to the income earned by our other
subsidiaries. Our taxable REIT subsidiary is a C-corporation subject to federal
and state income tax. However, it has a cumulative unrecognized net operation
loss carryforward and therefore there is no income tax provision for the six
months ended June 30, 2021 and 2020.

Critical Accounting Policies


  The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions in certain circumstances that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses for the
reporting periods. Actual amounts may differ from these estimates and
assumptions. Management evaluates these estimates on an ongoing basis, based
upon information currently available and on various assumptions that it believes
are reasonable as of the date hereof. In addition, other companies in similar
businesses may use different estimation policies and methodologies, which may
affect the comparability of our results of operations and financial condition to
those of other companies.
  In our Annual Report on Form 10-K for the year ended December 31, 2020, we
identified certain critical accounting policies that affect certain of our more
significant estimates and assumptions used in preparing our consolidated
financial statements. We have not made any material changes to our critical
accounting policies during the period covered by this report.

Results of Operations


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  Our consolidated results of operations are often not comparable from period to
period due to the effect of (i) property acquisitions, (ii) property
dispositions and (iii) properties that are taken out of service for
repositioning or redevelopment during the comparative reporting periods. Our
"Total Portfolio" represents all of the properties owned during the reported
periods. To eliminate the effect of changes in our Total Portfolio due to
acquisitions, dispositions, and repositioning/redevelopment and to highlight the
operating results of our on-going business, we have separately presented the
results of our "Stabilized Same Properties Portfolio."
  For the three and six months ended June 30, 2021 and 2020, our Stabilized Same
Properties Portfolio includes all properties in our industrial portfolio that
were wholly-owned by us for the period from January 1, 2020 through June 30,
2021, and that were stabilized prior to January 1, 2020, which consisted of 195
properties aggregating approximately 24.7 million rentable square feet. Results
for our Stabilized Same Properties Portfolio exclude any properties that were
acquired or sold during the period from January 1, 2020 through June 30, 2021,
properties classified as current or future repositioning, redevelopment or
lease-up during 2021 or 2020, interest income, interest expense and corporate
general and administrative expenses.
In addition to the properties included in our Stabilized Same Properties
Portfolio, our Total Portfolio includes the 59 properties aggregating
approximately 6.5 million rentable square feet that were purchased between
January 1, 2020 and June 30, 2021, and the seven properties aggregating
approximately 0.4 million rentable square feet that were sold between January 1,
2020 and June 30, 2021.
  At June 30, 2021 and 2020, our Stabilized Same Properties Portfolio occupancy
was approximately 98.4% and 97.4%, respectively. For the three months ended
June 30, 2021 and 2020, our Stabilized Same Properties Portfolio weighted
average occupancy was approximately 98.5% and 97.5%, respectively.
Comparatively, for the six months ended June 30, 2021 and 2020, our Stabilized
Same Properties Portfolio weighted average occupancy was approximately 98.4% and
97.7%.

Comparison of the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020


  The following table summarizes the historical results of operations for our
Stabilized Same Properties Portfolio and Total Portfolio for the three months
ended June 30, 2021 and 2020 (dollars in thousands):

                                                                 Stabilized Same Properties Portfolio                                                                    Total Portfolio
                                            Three Months Ended June 30,                                               %                 Three Months Ended June 30,                                                 %
                                               2021                2020             Increase/(Decrease)            Change                  2021                 2020             Increase/(Decrease)              Change
REVENUES

Rental income                            $      79,376          $ 72,682          $              6,694                 9.2  %       $       104,236          $ 79,770          $             24,466                   30.7  %
Management, leasing and
development services                                 -                 -                             -                   -  %                   109               114                            (5)                  (4.4) %
Interest income                                      -                 -                             -                   -  %                    15                66                           (51)                 (77.3) %
TOTAL REVENUES                                  79,376            72,682                         6,694                 9.2  %               104,360            79,950                        24,410                   30.5  %
OPERATING EXPENSES
Property expenses                               17,940            16,887                         1,053                 6.2  %                24,555            18,884                         5,671                   30.0  %
General and administrative                           -                 -                             -                   -  %                10,695             8,972                         1,723                   19.2  %
Depreciation and amortization                   24,329            25,480                        (1,151)               (4.5) %                36,228            28,381                         7,847                   27.6  %
TOTAL OPERATING EXPENSES                        42,269            42,367                           (98)               (0.2) %                71,478            56,237                        15,241                   27.1  %
OTHER EXPENSES
Acquisition expenses                                 -                 -                             -                   -  %                     2                14                           (12)                 (85.7) %
Interest expense                                     -                 -                             -                   -  %                 9,593             7,428                         2,165                   29.1  %

TOTAL EXPENSES                                  42,269            42,367                           (98)               (0.2) %                81,073            63,679                        17,394                   27.3  %

Gains on sale of real estate                         -                 -                             -                   -  %                 2,750                 -                         2,750                      -  %
NET INCOME                               $      37,107          $ 30,315          $              6,792                22.4  %       $        26,037          $ 16,271          $              9,766                   60.0  %


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Rental Income


  Under current lease accounting guidance, we account for and present all rental
income earned pursuant to tenant leases, including tenant reimbursements, as a
single component in one line, "Rental income," in our consolidated statements of
operations. In the following table, we present the components of rental income
separately, which includes rental revenue, tenant reimbursements and other
income related to leases. We believe that the below presentation of rental
income is not, and is not intended to be, a presentation in accordance with
GAAP. We are presenting this information because we believe it is frequently
used by management, investors, securities analysts and other interested parties
to understand and evaluate the Company's performance.
                                                                 Stabilized Same Properties Portfolio                                                                        Total Portfolio
                                          Three Months Ended June 30,                                                 %                    Three Months Ended June 30,                                                  %
Category                                     2021                2020             Increase/(Decrease)               Change                    2021     

           2020             Increase/(Decrease)               Change

Rental revenue(1)                      $      66,563          $ 61,451          $              5,112                      8.3  %       $        86,814          $ 67,349          $             19,465                     28.9  %
Tenant reimbursements (2)                     12,595            11,254                         1,341                     11.9  %                17,119            12,433                         4,686                     37.7  %
Other income(3)                                  218               (23)                          241                  1,047.8  %                   303               (12)                          315                  2,625.0  %
Rental income                          $      79,376          $ 72,682          $              6,694                      9.2  %       $       104,236          $ 79,770          $             24,466                     30.7  %


  Our Stabilized Same Properties Portfolio and Total Portfolio rental income
increased by $6.7 million, or 9.2%, and $24.5 million, or 30.7%, respectively,
during the three months ended June 30, 2021, compared to the three months ended
June 30, 2020, for the reasons described below:
(1) Rental Revenue
  Our Stabilized Same Properties Portfolio and Total Portfolio rental revenue
increased by $5.1 million, or 8.3%, and $19.5 million, or 28.9%, respectively,
during the three months ended June 30, 2021, compared to the three months ended
June 30, 2020. The increase in our Stabilized Same Properties Portfolio rental
revenue is primarily due to an increase in average rental rates on new and
renewal leases, an increase in the weighted average occupancy of the portfolio
and a net increase in rental revenue due to bad debt recoveries and a decrease
in reserves for tenant and deferred rent receivables, partially offset by a
decrease in amortization of net below-market lease intangibles. Our Total
Portfolio rental revenue was also positively impacted by the incremental
revenues from the 59 properties we acquired between January 1, 2020, and
June 30, 2021.
(2) Tenant Reimbursements
  Our Stabilized Same Properties Portfolio tenant reimbursements revenue
increased by $1.3 million, or 11.9%, and our Total Portfolio tenant
reimbursements revenue increased by $4.7 million, or 37.7%, during the three
months ended June 30, 2021, compared to the three months ended June 30, 2020.
The increase in our Stabilized Same Properties Portfolio tenant reimbursements
revenue is primarily due to an increase in the weighted average occupancy of the
portfolio, an increase in recoverable property expenses, and an increase in
tenant reimbursements due to timing differences in completing prior year
recoverable expense reconciliations for comparable periods. Our Total Portfolio
tenant reimbursements revenue was also impacted by the incremental tenant
reimbursements from the 59 properties we acquired between January 1, 2020 and
June 30, 2021.
(3) Other Income
  Our Stabilized Same Properties Portfolio and Total Portfolio other income
increased by $0.2 million, or 1,047.8%, and $0.3 million, or 2,625.0%,
respectively, during the three months ended June 30, 2021, compared to the three
months ended June 30, 2020, due to an increase in miscellaneous income and the
reversal of prior period late fee income in 2020.
Management, Leasing and Development Services

Our Total Portfolio management, leasing and development services revenue decreased by $5 thousand, or 4.4%, during the three months ended June 30, 2021, compared to the three months ended June 30, 2020.


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Interest Income


  Interest income decreased by $0.1 million, or 77.3%, during the three months
ended June 30, 2021, compared to the three months ended June 30, 2020, primarily
due to a decrease in the average cash balance invested in money market accounts.
Property Expenses
  Our Stabilized Same Properties Portfolio and Total Portfolio property expenses
increased by $1.1 million, or 6.2%, and $5.7 million, or 30.0%, respectively,
during the three months ended June 30, 2021, compared to the three months ended
June 30, 2020. The increase in our Stabilized Same Properties Portfolio property
expenses is primarily due to increases in repairs and maintenance expense,
including non-recoverable costs related to fire and water damage at two
properties, real estate tax expense relating to California Proposition 13 annual
increases, allocated overhead costs reflecting a higher employee headcount and
insurance expense due to increased premiums. Our Total Portfolio property
expenses were also impacted by incremental expenses from the 59 properties we
acquired between January 1, 2020, and June 30, 2021.
General and Administrative
  Our Total Portfolio general and administrative expenses increased by $1.7
million, or 19.2%, during the three months ended June 30, 2021, compared to the
three months ended June 30, 2020, primarily due to increases in non-cash equity
compensation expense, accrued bonus expense and payroll related costs due to a
higher employee headcount.
Depreciation and Amortization
Our Stabilized Same Properties Portfolio depreciation and amortization expense
decreased by $1.2 million, or 4.5%, during the three months ended June 30, 2021,
compared to the three months ended June 30, 2020, primarily due to
acquisition-related in-place lease intangibles becoming fully depreciated at
certain of our properties subsequent to January 1, 2020, partially offset by an
increase in depreciation expense related to capital improvements placed into
service subsequent to January 1, 2020. Our Total Portfolio depreciation and
amortization expense increased by $7.8 million, or 27.6%, during the three
months ended June 30, 2021, compared to the three months ended June 30, 2020,
primarily due to the incremental expense from the 59 properties we acquired
between January 1, 2020, and June 30, 2021.
Acquisition Expenses
  Our Total Portfolio acquisition expenses decreased by $12 thousand, or 85.7%,
during the three months ended June 30, 2021, compared to the three months ended
June 30, 2020.
Interest Expense
  Our Total Portfolio interest expense increased by $2.2 million, or 29.1%,
during the three months ended June 30, 2021, compared to the three months ended
June 30, 2020. The increase in interest expense is primarily comprised of the
following: (i) a $2.1 million increase due to the issuance of $400.0 million of
2.125% senior notes in November 2020, (ii) a $0.2 million increase due to the
assumption of $66.4 million of debt as part of the consideration for the
acquisition of 11 properties during 2020 and one additional property during 2021
and (iii) a $0.2 million decrease in capitalized interest related to our
repositioning and redevelopment properties. These increases were partially
offset by a $0.3 million net decrease in interest expense related to the
repayment of our $100.0 million term loan facility and termination of the
related interest rate swap in November 2020 (see Note 7 to the consolidated
financial statements for additional details).
Gains on Sale of Real Estate
  During the three months ended June 30, 2021, we recognized gains on sale of
real estate of $2.8 million from the disposition of one property that was sold
for a gross sales price of $8.2 million. During the three months ended June 30,
2020, we did not complete any property dispositions.

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Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

The following table summarizes the historical results of operations for our Stabilized Same Properties Portfolio and Total Portfolio for the six months ended June 30, 2021 and 2020 (dollars in thousands):



                                                                   Stabilized Same Properties Portfolio                                                                  Total Portfolio
                                                   Six Months Ended                                                                           Six Months Ended
                                                       June 30,                                                         %                         June 30,                                                        %
                                                2021                 2020             Increase/(Decrease)             Change               2021        

      2020             Increase/(Decrease)             Change
REVENUES

Rental income                             $     156,724          $ 145,648          $             11,076                  7.6  %       $ 203,880          $ 157,260          $             46,620                  29.6  %
Management, leasing and development
services                                              -                  -                             -                    -  %             214                207                             7                   3.4  %
Interest income                                       -                  -                             -                    -  %              29                163                          (134)                (82.2) %
TOTAL REVENUES                                  156,724            145,648                        11,076                  7.6  %         204,123            157,630                        46,493                  29.5  %
OPERATING EXPENSES
Property expenses                                35,294             33,683                         1,611                  4.8  %          48,130             36,998                        11,132                  30.1  %
General and administrative                            -                  -                             -                    -  %          22,175             18,289                         3,886                  21.2  %
Depreciation and amortization                    48,959             51,607                        (2,648)                (5.1) %          71,372             55,904                        15,468                  27.7  %
TOTAL OPERATING EXPENSES                         84,253             85,290                        (1,037)                (1.2) %         141,677            111,191                        30,486                  27.4  %
OTHER EXPENSES
Acquisition expenses                                  -                  -                             -                    -  %              31                 19                            12                  63.2  %
Interest expense                                      -                  -                             -                    -  %          19,345             14,877                         4,468                  30.0  %

TOTAL EXPENSES                                   84,253             85,290                        (1,037)                (1.2) %         161,053            126,087                        34,966                  27.7  %

Gains on sale of real estate                          -                  -                             -                    -  %          13,610                  -                        13,610                     -  %
NET INCOME                                $      72,471          $  60,358          $             12,113                 20.1  %       $  56,680          $  31,543          $             25,137                  79.7  %


Rental Income
  The following table reports the breakdown of 2021 and 2020 rental income, as
reported prior to the adoption of ASC 842 (dollars in thousands). We believe
that the below presentation of rental income is not, and is not intended to be,
a presentation in accordance with GAAP. We are presenting this information
because we believe it is frequently used by management, investors, securities
analysts and other interested parties to evaluate the Company's performance.
                                                                Stabilized Same Properties Portfolio                                                                 Total Portfolio
                                                Six Months Ended                                                                           Six Months Ended
                                                    June 30,                                                         %                         June 30,                                                       %
Category                                     2021                 2020             Increase/(Decrease)             Change               2021               2020             Increase/(Decrease)             Change
Rental revenue(1)                      $     131,494          $ 122,957          $              8,537                  6.9  %       $ 169,667          $ 132,604          $             37,063                 28.0  %
Tenant reimbursements (2)                     24,911             22,509                         2,402                 10.7  %          33,763             24,426                         9,337                 38.2  %
Other income(3)                                  319                182                           137                 75.3  %             450                230                           220                 95.7  %
Rental income                          $     156,724          $ 145,648          $             11,076                  7.6  %       $ 203,880          $ 157,260          $             46,620                 29.6  %


  Our Stabilized Same Properties Portfolio and Total Portfolio rental income
increased by $11.1 million, or 7.6%, and $46.6 million, or 29.6%, respectively,
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020, for the reasons described below:
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(1) Rental Revenue


  Our Stabilized Same Properties Portfolio and Total Portfolio rental revenue
increased by $8.5 million, or 6.9%, and $37.1 million, or 28.0%, respectively,
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020. The increase in our Stabilized Same Properties Portfolio rental
revenue is primarily due to the increase in average rental rates on new and
renewal leases, an increase in the weighted average occupancy of the portfolio,
and a net increase in rental revenue due to bad debt recoveries and a decrease
in reserves for tenant and deferred rent receivables, partially offset by a
decrease in amortization of net below-market lease intangibles. Our Total
Portfolio rental revenue was also positively impacted by the incremental
revenues from the 59 properties we acquired between January 1, 2020, and
June 30, 2021.
(2) Tenant Reimbursements
  Our Stabilized Same Properties Portfolio tenant reimbursements revenue
increased by $2.4 million, or 10.7%, and our Total Portfolio tenant
reimbursements revenue increased by $9.3 million, or 38.2% during the six months
ended June 30, 2021, compared to the six months ended June 30, 2020. The
increase in our Stabilized Same Properties Portfolio tenant reimbursements
revenue is primarily due to an increase in the weighted average occupancy of the
portfolio, an increase in recoverable property expenses and an increase in
tenant reimbursements due to timing differences in completing prior year
recoverable expense reconciliations for comparable periods. Our Total Portfolio
tenant reimbursements revenue was also impacted by the incremental tenant
reimbursements from the 59 properties we acquired between January 1, 2020 and
June 30, 2021.
(3) Other Income
  Our Stabilized Same Properties Portfolio and Total Portfolio other income
increased by $0.1 million, or 75.3%, and $0.2 million, or 95.7%, respectively,
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020, due to an increase in miscellaneous income and the reversal of
prior period late fee income in 2020.
Management, Leasing and Development Services
  Our Total Portfolio management, leasing and development services revenue
increased by $7 thousand, or 3.4%, during the six months ended June 30, 2021,
compared to the six months ended June 30, 2020.
Interest Income
  Interest income decreased by $0.1 million, or 82.2%, during the six months
ended June 30, 2021, compared to the six months ended June 30, 2020, due to a
decrease in both the average cash balance invested in money market accounts and
the average interest rate earned.
Property Expenses
  Our Stabilized Same Properties Portfolio and Total Portfolio property expenses
increased by $1.6 million, or 4.8%, and $11.1 million, or 30.1%, respectively,
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020. The increase in our Stabilized Same Properties Portfolio property
expenses is primarily due to increases in real estate tax expense relating to
California Proposition 13 annual increases, repairs and maintenance expense,
including non-recoverable costs related to fire and water damage at two
properties, allocated overhead costs reflecting a higher employee headcount,
insurance expense and utilities expense. Our Total Portfolio property expenses
were also impacted by incremental expenses from the 59 properties we acquired
between January 1, 2020, and June 30, 2021.
General and Administrative
  Our Total Portfolio general and administrative expenses increased by $3.9
million, or 21.2%, during the six months ended June 30, 2021, compared to the
six months ended June 30, 2020, primarily due to increases in non-cash equity
compensation expense, payroll related costs due to a higher employee headcount
and accrued bonus expense.
                                       54
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Depreciation and Amortization
Our Stabilized Same Properties Portfolio depreciation and amortization expense
decreased by $2.6 million, or 5.1%, during the six months ended June 30, 2021,
compared to the six months ended June 30, 2020, primarily due to
acquisition-related in-place lease intangibles becoming fully depreciated at
certain of our properties subsequent to January 1, 2020, partially offset by an
increase in depreciation expense related to capital improvements placed into
service subsequent to January 1, 2020. Our Total Portfolio depreciation and
amortization expense increased by $15.5 million, or 27.7%, during the six months
ended June 30, 2021, compared to the six months ended June 30, 2020, primarily
due to the incremental expense from the 59 properties we acquired between
January 1, 2020, and June 30, 2021.
Acquisition Expenses
  Our Total Portfolio acquisition expenses increased by $12 thousand or 63.2%,
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020.
Interest Expense
  Our Total Portfolio interest expense increased by $4.5 million, or 30.0%,
during the six months ended June 30, 2021, compared to the six months ended
June 30, 2020. The increase in interest expense is primarily comprised of the
following: (i) a $4.3 million increase related to the issuance of $400.0 million
of 2.125% senior notes in November 2020, (ii) a $0.7 million increase due to the
assumption of $66.4 million of debt as part of the consideration for the
acquisition of 11 properties during 2020 and one additional property during 2021
and (iii) a $0.3 million decrease in capitalized interest related to our
repositioning and redevelopment properties. These increases were partially
offset by the following decreases: (i) a $0.7 million net decrease related to
the repayment of our $100.0 million term loan facility and termination of the
related interest rate swap in November 2020 (see Note 7 to the consolidated
financial statements for additional details) and (ii) a $0.4 million decrease
related to our variable rate $60 million term loan due to a decrease in LIBOR.
Gains on Sale of Real Estate
During the six months ended June 30, 2021, we recognized gains on sale of real
estate of $13.6 million from the disposition of three properties that were sold
for an aggregate gross sales price of $29.0 million. During the six months ended
June 30, 2020, we did not complete any property dispositions.
                                       55
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Non-GAAP Supplemental Measure: Funds From Operations


  We calculate funds from operations ("FFO") attributable to common stockholder
in accordance with the standards established by the National Association of Real
Estate Investment Trusts ("NAREIT"). FFO represents net income (loss) (computed
in accordance with accounting principles generally accepted in the United States
("GAAP")), excluding gains (or losses) from sales of depreciable operating
property or assets incidental to our business, impairment losses of depreciable
operating property or assets incidental to our business, real estate related
depreciation and amortization (excluding amortization of deferred financing
costs and amortization of above/below-market lease intangibles) and after
adjustments for unconsolidated joint ventures.
  Management uses FFO as a supplemental performance measure because, in
excluding real estate related depreciation and amortization, gains and losses
from property dispositions, and asset impairments, it provides a performance
measure that, when compared year over year, captures trends in occupancy rates,
rental rates and operating costs. We also believe that, as a widely recognized
measure of performance used by other REITs, FFO may be used by investors as a
basis to compare our operating performance with that of other REITs.
  However, because FFO excludes depreciation and amortization and captures
neither the changes in the value of our properties that result from use or
market conditions nor the level of capital expenditures and leasing commissions
necessary to maintain the operating performance of our properties, all of which
have real economic effects and could materially impact our results from
operations, the utility of FFO as a measure of our performance is limited. Other
equity REITs may not calculate or interpret FFO in accordance with the NAREIT
definition as we do, and, accordingly, our FFO may not be comparable to such
other REITs' FFO. FFO should not be used as a measure of our liquidity, and is
not indicative of funds available for our cash needs, including our ability to
pay dividends.

The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to FFO (in thousands):



                                                     Three Months Ended June 30,                 Six Months Ended June 30,
                                                       2021                  2020                 2021                  2020
Net income                                       $       26,037          $  16,271          $       56,680          $  31,543
Add:
Depreciation and amortization                            36,228             28,381                  71,372             55,904

Deduct:


Gains on sale of real estate                              2,750                  -                  13,610                  -
Funds From Operations (FFO)                      $       59,515          $  44,652          $      114,442          $  87,447
Less: preferred stock dividends                          (3,637)            (3,637)                 (7,273)            (7,273)
Less: FFO attributable to noncontrolling
interest(1)                                              (3,256)            (2,005)                 (6,390)            (3,455)
Less: FFO attributable to participating
securities(2)                                              (224)              (192)                   (433)              (387)

FFO attributable to common stockholders $ 52,398 $ 38,818 $ 100,346 $ 76,332




(1)Noncontrolling interests represent (i) holders of outstanding common units of
the Company's Operating Partnership that are owned by unit holders other than
the Company and (ii) holders of Series 1 CPOP Units and Series 2 CPOP Units.
(2)Participating securities include unvested shares of restricted stock,
unvested LTIP units and unvested performance units.
Non-GAAP Supplemental Measures: NOI and Cash NOI
  Net operating income ("NOI") is a non-GAAP measure which includes the revenue
and expense directly attributable to our real estate properties. NOI is
calculated as rental income less property expenses (before interest expense,
depreciation and amortization).
                                       56
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  We use NOI as a supplemental performance measure because, in excluding real
estate depreciation and amortization expense, general and administrative
expenses, interest expense, gains (or losses) on sale of real estate and other
non-operating items, it provides a performance measure that, when compared year
over year, captures trends in occupancy rates, rental rates and operating
costs. We also believe that NOI will be useful to investors as a basis to
compare our operating performance with that of other REITs. However, because NOI
excludes depreciation and amortization expense and captures neither the changes
in the value of our properties that result from use or market conditions, nor
the level of capital expenditures and leasing commissions necessary to maintain
the operating performance of our properties (all of which have real economic
effect and could materially impact our results from operations), the utility of
NOI as a measure of our performance is limited. Other equity REITs may not
calculate NOI in a similar manner and, accordingly, our NOI may not be
comparable to such other REITs' NOI. Accordingly, NOI should be considered only
as a supplement to net income as a measure of our performance. NOI should not be
used as a measure of our liquidity, nor is it indicative of funds available to
fund our cash needs. NOI should not be used as a substitute for cash flow from
operating activities in accordance with GAAP.
  NOI on a cash-basis ("Cash NOI") is a non-GAAP measure, which we calculate by
adding or subtracting the following items from NOI: (i) fair value lease revenue
and (ii) straight-line rental revenue adjustments. We use Cash NOI, together
with NOI, as a supplemental performance measure. Cash NOI should not be used as
a measure of our liquidity, nor is it indicative of funds available to fund our
cash needs. Cash NOI should not be used as a substitute for cash flow from
operating activities computed in accordance with GAAP.

The following table sets forth the revenue and expense items comprising NOI and the adjustments to calculate Cash NOI (in thousands):



                                                    Three Months Ended June 30,                 Six Months Ended June 30,
                                                      2021                  2020                 2021                  2020

Rental income                                  $       104,236          $  79,770                 203,880            157,260
Property expenses                                       24,555             18,884                  48,130             36,998
Net Operating Income                           $        79,681          $  60,886          $      155,750          $ 120,262
Amortization of (below) above market lease
intangibles, net                                        (3,386)            (2,669)                 (6,098)            (5,071)
Straight line rental revenue adjustment                 (4,840)            (6,212)                 (9,039)            (7,884)
Cash Net Operating Income                      $        71,455          $  

52,005 $ 140,613 $ 107,307

The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to NOI and Cash NOI (in thousands):


                                                     Three Months Ended June 30,                 Six Months Ended June 30,
                                                       2021                  2020                 2021                  2020
Net income                                       $       26,037          $  16,271          $       56,680          $  31,543
Add:
General and administrative                               10,695              8,972                  22,175             18,289
Depreciation and amortization                            36,228             28,381                  71,372             55,904
Acquisition expenses                                          2                 14                      31                 19
Interest expense                                          9,593              7,428                  19,345             14,877
Deduct:
Management, leasing and development services                109                114                     214                207
Interest income                                              15                 66                      29                163

Gains on sale of real estate                              2,750                  -                  13,610                  -

Net Operating Income                             $       79,681          $  60,886          $      155,750          $ 120,262
Amortization of (below) above market lease
intangibles, net                                         (3,386)            (2,669)                 (6,098)            (5,071)
Straight line rental revenue adjustment                  (4,840)            (6,212)                 (9,039)            (7,884)
Cash Net Operating Income                        $       71,455          $  52,005          $      140,613          $ 107,307



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Non-GAAP Supplemental Measure: EBITDAre


  We calculate earnings before interest expense, income taxes, depreciation and
amortization for real estate ("EBITDAre") in accordance with the standards
established by NAREIT. EBITDAre is calculated as net income (loss) (computed in
accordance with GAAP), before interest expense, income tax expense, depreciation
and amortization, gains (or losses) from sales of depreciable operating
property, impairment losses and adjustments for unconsolidated joint ventures.
   We believe that EBITDAre is helpful to investors as a supplemental measure of
our operating performance as a real estate company because it is a direct
measure of the actual operating results of our properties. We also use this
measure in ratios to compare our performance to that of our industry peers. In
addition, we believe EBITDAre is frequently used by securities analysts,
investors and other interested parties in the evaluation of equity REITs.
However, our industry peers may not calculate EBITDAre in accordance with the
NAREIT definition as we do and, accordingly, our EBITDAre may not be comparable
to our peers' EBITDAre. Accordingly, EBITDAre should be considered only as a
supplement to net income (loss) as a measure of our performance.

The following table sets forth a reconciliation of net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to EBITDAre (in thousands):


                                                   Three Months Ended June 30,                 Six Months Ended June 30,
                                                     2021                  2020                 2021                  2020
Net income                                     $       26,037          $  16,271          $       56,680          $  31,543
Interest expense                                        9,593              7,428                  19,345             14,877
Depreciation and amortization                          36,228             28,381                  71,372             55,904
Gains on sale of real estate                           (2,750)                 -                 (13,610)                 -

EBITDAre                                       $       69,108          $  52,080          $      133,787          $ 102,324



Supplemental Guarantor Information
In March 2020, the Securities and Exchange Commission (SEC) adopted amendments
to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure
requirements related to certain registered securities. The rule became effective
January 4, 2021. The Company and the Operating Partnership have filed a
registration statement on Form S-3 with the SEC registering, among other
securities, debt securities of the Operating Partnership, which will be fully
and unconditionally guaranteed by the Company. At June 30, 2021, the Operating
Partnership had issued and outstanding $400.0 million of 2.125% senior notes due
2030 (the "$400 Million Notes"). The obligations of the Operating Partnership to
pay principal, premiums, if any, and interest on the $400 Million Notes are
guaranteed on a senior basis by the Company. The guarantee is full and
unconditional, and the Operating Partnership is a consolidated subsidiary of the
Company.
As a result of the amendments to Rule 3-10 of Regulation S-X, subsidiary issuers
of obligations guaranteed by the parent are not required to provide separate
financial statements, provided that the subsidiary obligor is consolidated into
the parent company's consolidated financial statements, the parent guarantee is
"full and unconditional" and, subject to certain exceptions as set forth below,
the alternative disclosure required by Rule 13-01 is provided, which includes
narrative disclosure and summarized financial information. Accordingly, separate
consolidated financial statements of the Operating Partnership have not been
presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi), the Company has
excluded the summarized financial information for the Operating Partnership as
the assets, liabilities and results of operations of the Company and the
Operating Partnership are not materially different than the corresponding
amounts presented in the consolidated financial statements of the Company, and
management believes such summarized financial information would be repetitive
and not provide incremental value to investors.
Liquidity and Capital Resources

Overview


  Our short-term liquidity requirements consist primarily of funds to pay for
operating expenses, interest expense, general and administrative expenses,
capital expenditures, tenant improvements and leasing commissions, and
distributions to our common and preferred stockholders and holders of common
units of partnership interests in our Operating Partnership ("OP Units"). We
expect to meet our short-term liquidity requirements through available cash on
hand, cash flow from operations, by drawing on our unsecured revolving credit
facility and by issuing shares of common stock pursuant to our at-the-market
equity offering program or issuing other securities as described below.
                                       58
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  Our long-term liquidity needs consist primarily of funds necessary to pay for
acquisitions, recurring and non-recurring capital expenditures and scheduled
debt maturities. We intend to satisfy our long-term liquidity needs through net
cash flow from operations, proceeds from long-term unsecured and secured
financings, borrowings available under our unsecured revolving credit facility,
the issuance of debt and/or equity securities, including preferred stock, and
proceeds from selective real estate dispositions as we identify capital
recycling opportunities.
  As of June 30, 2021, our cash and cash equivalents were $64.2 million, and we
did not have any borrowings outstanding under our unsecured revolving credit
facility, leaving $700.0 million available for future borrowings.
Sources of Liquidity

Cash Flow from Operations


  Cash flow from operations is one of our key sources of liquidity and is
primarily dependent upon: (i) the occupancy levels and lease rates at our
properties, (ii) our ability to collect rent, (iii) the level of operating costs
we incur and (iv) our ability to pass through operating expenses to our tenants.
Our ability to use cash from operations to continue to meet our liquidity needs
could be affected by various risks and uncertainties, including, but not limited
to, the effects of the COVID-19 pandemic. We are subject to a number of risks,
which have been heightened as the result of the COVID-19 pandemic, related to
general economic conditions, including reduced occupancy levels, tenant defaults
and bankruptcies and potential reductions in rental rates on new and renewal
leases, which have the potential to affect our overall performance and resulting
cash flows from operations.
  ATM Program
On November 9, 2020, we established an at-the-market equity offering program
pursuant to which we may sell from time to time shares of our common stock
having an aggregate sales price of up to $750.0 million (the "$750 Million ATM
Program") through sales agents or by entering into forward equity sale
agreements with certain financial institutions acting as forward purchasers.
During the six months ended June 30, 2021, we directly sold a total of 2,415,386
shares of our common stock under the $750 Million ATM Program at a weighted
average price of $49.61 per share, for gross proceeds of $119.8 million, and net
proceeds of $118.3 million, after deducting the sales agents' fee.
During the six months ended June 30, 2021, we also entered into forward equity
sales agreements with certain financial institutions acting as a forward
purchasers under the $750 Million ATM Program with respect to 1,797,787 shares
of our common stock at a weighted average initial forward sale price of $50.77
per share. We did not receive any proceeds from the sale of common shares by the
forward purchasers at the time of sale.
In June 2021, we physically settled the forward equity sale agreements related
to the $750 Million ATM Program in full by issuing 1,797,787 shares of common
stock in exchange for net proceeds of $91.2 million. The net proceeds were
calculated based on a weighted average net forward sale price at the time of
settlement of $50.71 per share.
  As of June 30, 2021, approximately $508.1 million of common stock remains
available to be sold under the $750 Million ATM Program. Future sales, if any,
will depend on a variety of factors to be determined by us from time to time,
including among others, market conditions, the trading price of our common stock
and capital needs. We intend to use the net proceeds from the offering of shares
under the $750 Million ATM Program, if any, to fund potential acquisition
opportunities, repay amounts outstanding from time to time under our unsecured
revolving credit facility or other debt financing obligations, to fund our
repositioning or redevelopment activities and/or for general corporate purposes.
  Securities Offerings
We evaluate the capital markets on an ongoing basis for opportunities to raise
capital, and as circumstances warrant, we may issue additional securities, from
time to time, to fund acquisitions, for the repayment of long-term debt upon
maturity and for other general corporate purposes. Such securities may include
common equity, preferred equity and/or debt of us or our subsidiaries. Any
future issuance, however, is dependent upon market conditions, available pricing
and capital needs and there can be no assurance that we will be able to complete
any such offerings of securities.
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On May 24, 2021, we entered into forward equity sales agreements with certain
financial institutions acting as forward purchasers in connection with an
offering of 9,000,000 shares of common stock (the "Forward Sales Agreements"),
pursuant to which the forward purchasers borrowed and sold an aggregate of
9,000,000 shares of common stock in the offering. We did not receive any
proceeds from the sale of common shares by the forward purchasers at the time of
the offering. The net forward sale price that we will receive upon physical
settlement of the agreements, which was initially $55.29 per share, will be
subject to adjustment for (i) a floating interest rate factor equal to a
specified daily rate less a spread, (ii) the forward purchasers' stock borrowing
costs and (iii) scheduled dividends during the term of the forward sale
agreements.
On June 21, 2021, we partially settled the Forward Sales Agreements by issuing
1,809,526 shares of common stock in exchange for net proceeds of $100.0 million.
The net proceeds were calculated based on the net forward sale price on the
settlement date of $55.26 per share.
We currently expect to physically settle the remaining 7,190,474 shares under
the Forward Sales Agreements by issuing shares of our common stock in exchange
for cash proceeds upon one or more settlement dates, at our discretion, prior to
the scheduled maturity date of November 23, 2022. As of June 30, 2021, the net
forward sale price was $55.01 and would result in $395.5 million in cash
proceeds upon physical settlement of the remaining shares under the Forward
Sales Agreements.
  Capital Recycling
We continuously evaluate opportunities for the potential disposition of
properties in our portfolio when we believe such disposition is appropriate in
view of our business objectives. In evaluating these opportunities, we consider
a variety of criteria including, but not limited to, local market conditions and
lease rates, asset type and location, as well as potential uses of proceeds and
tax considerations. Tax considerations include entering into tax-deferred
like-kind exchanges under Section 1031 of the Code ("1031 Exchange"), when
possible, to defer some or all of the taxable gains, if any, on dispositions.
During the six months ended June 30, 2021, we completed the sale of three
properties for a total gross sales price of $29.0 million and total net cash
proceeds of $27.7 million. The net cash proceeds were used to partially fund the
acquisition of five properties during the six months ended June 30, 2021,
through 1031 Exchange transactions.
We anticipate continuing to selectively and opportunistically dispose of
properties, however, the timing of any potential future dispositions will depend
on market conditions, asset-specific circumstances or opportunities, and our
capital needs. Our ability to dispose of selective properties on advantageous
terms, or at all, is dependent upon a number of factors including the
availability of credit to potential buyers to purchase properties at prices that
we consider acceptable, which may be impacted by the ongoing COVID-19 pandemic.
Investment Grade Rating
On October 29, 2020, we received an investment grade rating of Baa3 from Moody's
and an investment grade rating of BBB from S&P, and in November 2020, Fitch
affirmed our investment grade credit rating of BBB with a stable outlook on our
Credit Agreement (described below), our $225 million unsecured term loan
facility (the "$225 Million Term Loan Facility"), our $150 million unsecured
term loan facility (the "$150 Million Term Loan Facility"), our $100 million
unsecured guaranteed senior notes (the "$100 Million Notes"), our $125 million
unsecured guaranteed senior notes (the "$125 Million Notes") and our $25 million
unsecured guaranteed senior notes and $75 million unsecured guaranteed senior
notes (together the "Series 2019A and 2019B Notes"). They also affirmed our
investment grade credit rating of BB+ on our 5.875% Series A Cumulative
Redeemable Preferred Stock, our 5.875% Series B Cumulative Redeemable Preferred
Stock and our 5.625% Series C Cumulative Redeemable Preferred Stock. Our credit
ratings are based on our operating performance, liquidity and leverage ratios,
overall financial position and other factors employed by the credit rating
agencies in their rating analysis of us, and, although it is our intent to
maintain our investment grade credit rating, there can be no assurance that we
will be able to maintain our current credit ratings. In the event our current
credit ratings are downgraded, it may become difficult or more expensive to
obtain additional financing or refinance existing indebtedness as maturities
become due.
  Credit Agreement
On June 30, 2021, we exercised our option under the Third Amended and Restated
Credit Agreement (the "Credit Agreement") to utilize the accordion feature to
increase the authorized borrowing capacity of our unsecured revolving credit
facility (the "Revolver") by $200.0 million from $500.0 million to $700.0
million. Subject to certain terms and conditions set forth in the Credit
Agreement, we may increase the size of the Credit Agreement by an additional
$700.0 million, which may be comprised of additional revolving commitments under
the Revolver, term loan tranches or any combination of the foregoing.
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The Revolver is scheduled to mature on February 13, 2024 and has two six-month
extension options available. Interest on the Revolver is generally to be paid
based upon, at our option, either (i) LIBOR plus an applicable margin that is
based upon our investment grade ratings or (ii) the Base Rate (which is defined
as the highest of (a) the federal funds rate plus 0.50%, (b) the administrative
agent's prime rate or (c) the Eurodollar Rate plus 1.00%) plus an applicable
margin that is based on our investment grade ratings. As of June 30, 2021, the
margins for the Revolver range from 0.725% to 1.40% per annum for LIBOR-based
loans and 0.00% to 0.45% per annum for Base Rate-based loans, depending on our
investment grade ratings.
   In addition to the interest payable on amounts outstanding under the
Revolver, we are required to pay an applicable facility fee on each lender's
commitment amount under the Revolver, regardless of usage. The applicable
facility fee ranges in amount from 0.125% to 0.300% per annum, depending on our
investment grade ratings.

The Revolver may be voluntarily prepaid in whole or in part at any time without premium or penalty.


  The Credit Agreement contains usual and customary events of default including
defaults in the payment of principal, interest or fees, defaults in compliance
with the covenants set forth in the Credit Agreement and other loan
documentation, cross-defaults to certain other indebtedness, and bankruptcy and
other insolvency defaults. If an event of default occurs and is continuing under
the Credit Agreement, the unpaid principal amount of all outstanding loans,
together with all accrued unpaid interest and other amounts owing in respect
thereof, may be declared immediately due and payable.
  As of the filing date of this Quarterly Report on Form 10-Q, we had $62.0
million outstanding under the Revolver, leaving $638.0 million available for
future borrowings.
Uses of Liquidity
Acquisitions
  One of our most significant liquidity needs has historically been for the
acquisition of real estate properties. Year to date including properties
acquired subsequent to quarter end, we have acquired 24 properties with 1.7
million rentable square feet of buildings and 45.8 acres of low coverage outdoor
storage sites and land for future redevelopment for an aggregate purchase price
of $493.9 million, and we are actively monitoring a volume of properties in our
markets that we believe represent attractive potential investment opportunities
to continue to grow our business. As of the filing date of this Quarterly Report
on Form 10-Q, we have over $650 million of acquisitions under contract or letter
of intent. There can be no assurance we will complete any such acquisitions.
While the actual number of acquisitions that we complete will be dependent upon
a number of factors, in the short term, we expect to fund our acquisitions
through available cash on hand, cash flows from operations, borrowings available
under the Revolver, recycling capital through property dispositions and, in the
long term, through the issuance of equity securities or proceeds from long-term
secured and unsecured financings. See Note 3 "Investments in Real Estate" to the
Consolidated Financial Statements for a summary of the properties we acquired
during the six months ended June 30, 2021.
Recurring and Nonrecurring Capital Expenditures
  Capital expenditures are considered part of both our short-term and long-term
liquidity requirements. As discussed above under - Factors that May Influence
Future Results -Acquisitions and Value-Add Repositioning and Redevelopment of
Properties, as of June 30, 2021, 10 of our properties were under current
repositioning, redevelopment, or lease-up and we have a pipeline of 12
additional properties for which we anticipate beginning construction work during
2021/2022. We currently estimate that approximately $201.0 million of capital
will be required over the next three full and partial years (2021-2023), to
complete the repositioning/redevelopment of these properties. However, this
estimate is based on our current construction plans and budgets, both of which
are subject to change as a result of a number of factors, including as a result
of the COVID-19 pandemic and restrictions intended to prevent its spread, which
has and may continue to cause delays or which may increase costs associated with
building materials or construction services. If we are unable to complete
construction on schedule or within budget, we could incur increased construction
costs and experience potential delays in leasing the properties. We expect to
fund these projects through a combination of cash flow from operations, the
issuance of common stock under the $750 Million ATM Program and borrowings
available under the Revolver.
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The following table sets forth certain information regarding non-recurring and recurring capital expenditures at the properties in our portfolio as follows:


                                                                                 Six Months Ended June 30, 2021
                                                                                                                    Per Square
                                                                  Total(1)               Square Feet(2)               Foot(3)
Non-Recurring Capital Expenditures(4)                          $     38,552               18,826,541              $       2.05
Recurring Capital Expenditures(5)                                     4,594               32,065,289              $       0.14
Total Capital Expenditures                                     $     43,146


(1)Cost is reported in thousands. Excludes the following capitalized costs: (i)
compensation costs of personnel directly responsible for and who spend their
time on redevelopment, renovation and rehabilitation activity and (ii) interest,
property taxes and insurance costs incurred during the pre-construction and
construction periods of repositioning or redevelopment projects.
(2)For non-recurring capital expenditures, reflects the aggregate square footage
of the properties in which we incurred such capital expenditures. For recurring
capital expenditures, reflects the weighted average square footage of our
consolidated portfolio during the period.
(3)Per square foot amounts are calculated by dividing the aggregate capital
expenditure costs by the square footage as defined in (1) and (2) above.
(4)Non-recurring capital expenditures are expenditures made with respect to
improvements to the appearance of such property or any redevelopment or other
major upgrade or renovation of such property, and further includes capital
expenditures for seismic upgrades, or capital expenditures for deferred
maintenance existing at the time such property was acquired.
(5)Recurring capital expenditures are expenditures made with respect to the
maintenance of such property and replacement of items due to ordinary wear and
tear including, but not limited to, expenditures made for maintenance of parking
lots, roofing materials, mechanical systems, HVAC systems and other structural
systems.
Contractual Obligations
  Refer to our Annual Report on Form 10-K for the year ended December 31, 2020,
for a discussion of our contractual obligations. There have been no material
changes, outside of the ordinary course of business, to these contractual
obligations during the six months ended June 30, 2021. See Note 5 "Notes
Payable" to the Consolidated Financial Statements for information regarding our
minimum future principal payments due on our outstanding debt. See Note 6
"Leases" to the Consolidated Financial Statements for information regarding our
future minimum office lease payments. See Note 10 "Commitments and
Contingencies" to the Consolidated Financial Statements for information
regarding our commitments for tenant improvement and construction work.
Notice of Redemption of Series A Preferred Stock
On July 12, 2021, we announced that we will redeem all 3,600,000 shares of our
5.875% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred
Stock") on August 16, 2021 (the "Redemption Date"). The redemption price for the
Series A Preferred Stock is equal to $25.00 per share, plus all accrued and
unpaid dividends on such shares up to but not including the Redemption Date, in
an amount equal to $0.183594 per share, for a total payment of $25.183594 per
share, or $90.7 million. Upon redemption of the outstanding Series A Preferred
Stock on August 16, 2021, we will incur an associated non-cash charge of $3.3
million as a reduction to net income available to common stockholders for the
related original issuance costs.
Dividends and Distributions
  In order to maintain our qualification as a REIT, we are required to
distribute annually at least 90% of our REIT taxable income, determined without
regard to the dividends paid deduction and excluding any net capital gains. To
satisfy the requirements to qualify as a REIT and generally not be subject to
U.S. federal income tax, we intend to distribute a percentage of our cash flow
on a quarterly basis to holders of our common stock. In addition, we intend to
make distribution payments to holders of OP Units and preferred units and
dividend payments to holders of our preferred stock.
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  On July 19, 2021, our board of directors declared the following quarterly cash
dividends/distributions:
                                                       Amount per
Security                                               Share/Unit                 Record Date                    Payment Date
Common stock                                         $       0.24                 September 30, 2021               October 15, 2021
OP Units                                             $       0.24                 September 30, 2021               October 15, 2021
5.875% Series A Cumulative Redeemable
Preferred Stock(1)                                   $          -                                  -                              -
5.875% Series B Cumulative Redeemable
Preferred Stock                                      $   0.367188                 September 15, 2021             September 30, 2021
5.625% Series C Cumulative Redeemable
Preferred Stock                                      $   0.351563                 September 15, 2021             September 30, 2021
4.43937% Cumulative Redeemable Convertible
Preferred Units                                      $   0.505085                 September 15, 2021             September 30, 2021
4.00% Cumulative Redeemable Convertible
Preferred Units                                      $       0.45                 September 15, 2021             September 30, 2021


(1)In connection with the redemption of our Series A Preferred Stock described
above, on the Redemption Date, holders of our Series A Preferred Stock will
receive a pro-rated dividend for the period commencing on and including July 1,
2021 and ending on and including August 15, 2021. See "-Notice of Redemption of
Series A Preferred Stock" above for additional information.
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Consolidated Indebtedness

The following table sets forth certain information with respect to our consolidated indebtedness outstanding as of June 30, 2021:


                                                                             Margin Above               Effective                 Principal Balance           Maturity Date of
                                         Contractual Maturity Date              LIBOR                Interest Rate(1)             (in thousands)(2)           Effective Swaps
Unsecured and Secured Debt:
Unsecured Debt:
Revolving Credit Facility(3)                               2/13/2024 (4)          0.850  % (5)                0.951  %          $                -
$225M Term Loan Facility                                   1/14/2023              1.100  % (5)                2.474  % (6)                 225,000               1/14/2022
$150M Term Loan Facility                                   5/22/2025              0.950  % (5)(7)             3.713  % (8)                 150,000               11/22/2024
$100M Senior Notes                                          8/6/2025                   n/a                    4.290  %                     100,000
$125M Senior Notes                                         7/13/2027                   n/a                    3.930  %                     125,000
$25M Series 2019A Senior Notes                             7/16/2029                   n/a                    3.880  %                      25,000
$400M Senior Notes                                         12/1/2030                   n/a                    2.125  %                     400,000
$75M Series 2019B Senior Notes                             7/16/2034                   n/a                    4.030  %                      75,000
Total Unsecured Debt                                                                                                            $        1,100,000

Secured Debt:
2601-2641 Manhattan Beach Boulevard                         4/5/2023                   n/a                    4.080  %          $            4,009
$60M Term Loan                                              8/1/2023 (9)          1.700  %                    1.801  %                      58,499
960-970 Knox Street                                        11/1/2023                   n/a                    5.000  %                       2,444
7612-7642 Woodwind Drive                                    1/5/2024                   n/a                    5.240  %                       3,851
11600 Los Nietos Road                                       5/1/2024                   n/a                    4.190  %                       2,706
5160 Richton Street                                       11/15/2024                   n/a                    3.790  %                       4,330
22895 Eastpark Drive                                      11/15/2024                   n/a                    4.330  %                       2,716
701-751 Kingshill Place                                     1/5/2026                   n/a                    3.900  %                       7,100
13943-13955 Balboa Boulevard                                7/1/2027                   n/a                    3.930  %                      15,492
2205 126th Street                                          12/1/2027                   n/a                    3.910  %                       5,200
2410-2420 Santa Fe Avenue                                   1/1/2028                   n/a                    3.700  %                      10,300
11832-11954 La Cienega Boulevard                            7/1/2028                   n/a                    4.260  %                       4,037
Gilbert/La Palma                                            3/1/2031                   n/a                    5.125  %                       2,207
7817 Woodley Avenue                                         8/1/2039                   n/a                    4.140  %                       3,192
Total Secured Debt                                                                                                              $          126,083
Total Consolidated Debt                                                                                       2.990  %          $        1,226,083


(1)Includes the effect of interest rate swaps that were effective as of June 30,
2021.  Assumes a 1-month LIBOR rate of 0.10050% as of June 30, 2021, as
applicable. Excludes the effect of amortization of debt issuance costs,
premiums/discounts and the facility fee on the Revolver.
(2)Excludes unamortized debt issuance costs and premiums/discounts totaling $7.1
million as of June 30, 2021.
(3)The Revolver is subject to an applicable facility fee which is calculated as
a percentage of the total lenders' commitment amount, regardless of usage. The
applicable facility fee will range from 0.125% to 0.30% per annum depending upon
our investment grade rating.
(4)Two additional six-month extensions are available at the borrower's option,
subject to certain terms and conditions.
(5)The interest rates on these loans are comprised of LIBOR plus a LIBOR margin.
The LIBOR margin will range from 0.725% to 1.400% per annum for the Revolver,
0.90% to 1.75% per annum for the $225 Million Term Loan Facility and 0.80% to
1.60% per annum for the $150 Million Term Loan Facility, depending on our
investment grade rating, which may change from time to time.
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(6)As of June 30, 2021, the $225 Million Term Loan Facility has been effectively
fixed at 1.374% plus the applicable LIBOR margin through the use of two interest
rate swaps as follows: (i) $125 million with a strike rate of 1.349% and an
effective date of February 14, 2018, and (ii) $100 million with a strike rate of
1.406% and an effective date of August 14, 2018, plus the applicable LIBOR
margin.
(7)On June 30, 2021, we amended the $150 Million Term Loan to reduce the
applicable LIBOR margin from a range of 1.40% to 2.35% per annum to a range of
0.80% to 1.60% per annum, based on our credit ratings.
(8)As of June 30, 2021, the $150 Million Term Loan Facility has been effectively
fixed at 2.7625% plus an applicable LIBOR margin through the use of an interest
rate swap with a notional value of $150.0 million and an effective date of
July 22, 2019.
(9)The $60 million term loan is secured by six properties. One 24-month
extension is available at the borrower's option, subject to certain terms and
conditions.

  The following table summarizes the composition of our consolidated debt
between fixed-rate and variable-rate and secured and unsecured debt as of
June 30, 2021:
                                     Average Term Remaining                 Stated                     Effective                Principal Balance
                                           (in years)                    Interest Rate              Interest Rate(1)            (in thousands)(2)            % of Total
Fixed vs. Variable:
Fixed                                         6.4                            3.05%                       3.05%                $        1,167,584                 95%
Variable                                      2.1                        LIBOR + 1.70%                   1.80%                $           58,499                 5%
Secured vs. Unsecured:
Secured                                       4.0                                                        3.03%                $          126,083                 10%
Unsecured                                     6.4                                                        2.98%                $        1,100,000                 90%


(1)Includes the effect of interest rate swaps that were effective as of June 30,
2021. Excludes the effect of amortization of debt issuance costs,
premiums/discounts and the facility fee on the Revolver. Assumes a one-month
LIBOR rate of 0.10050% as of June 30, 2021, as applicable.
(2)Excludes unamortized debt issuance costs and discounts totaling $7.1 million
as of June 30, 2021.
  At June 30, 2021, we had total consolidated indebtedness of $1.2 billion,
excluding unamortized debt issuance costs and premiums/discounts, with a
weighted average interest rate of 2.99% and an average term-to-maturity of 6.2
years. As of June 30, 2021, $1.2 billion, or 95% of our outstanding indebtedness
had an interest rate that was effectively fixed under either the terms of the
loan ($792.6 million) or an interest rate swap ($375.0 million).
  At June 30, 2021, we had consolidated indebtedness of $1.2 billion, reflecting
a net debt to total combined market capitalization of approximately 12.0%. Our
total market capitalization is defined as the sum of the liquidation preference
of our outstanding preferred stock and preferred units plus the market value of
our common stock excluding shares of nonvested restricted stock, plus the
aggregate value of common units not owned by us, plus the value of our net
debt. Our net debt is defined as our consolidated indebtedness less cash and
cash equivalents.

Debt Covenants


  The Credit Agreement, $225 Million Term Loan Facility, $150 Million Term Loan
Facility, $100 Million Notes, $125 Million Notes and Series 2019A and 2019B
Notes all include a series of financial and other covenants that we must comply
with, including the following covenants which are tested on a quarterly basis:
•Maintaining a ratio of total indebtedness to total asset value of not more than
60%;
•For the Credit Agreement, $225 Million Term Loan Facility and $150 Million Term
Loan Facility, maintaining a ratio of secured debt to total asset value of not
more than 45%;
•For the $100 Million Notes, $125 Million Notes and Series 2019A and 2019B Notes
(together the "Senior Notes"), maintaining a ratio of secured debt to total
asset value of not more than 40%;
•For the Senior Notes, maintaining a ratio of total secured recourse debt to
total asset value of not more than 15%;
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•For the Credit Agreement, $225 Million Term Loan Facility and $150 Million Term
Loan Facility, maintaining a minimum tangible net worth of at least the sum of
(i) $2,061,865,500, and (ii) an amount equal to at least 75% of the net equity
proceeds received by the Company after September 30, 2019;
•For the Senior Notes, maintaining a minimum tangible net worth of at least the
sum of (i) $760,740,750, and (ii) an amount equal to at least 75% of the net
equity proceeds received by the Company after September 30, 2016;
•Maintaining a ratio of adjusted EBITDA (as defined in each of the loan
agreements) to fixed charges of at least 1.5 to 1.0;
•Maintaining a ratio of total unsecured debt to total unencumbered asset value
of not more than 60%; and
•Maintaining a ratio of unencumbered NOI (as defined in each of the loan
agreements) to unsecured interest expense of at least 1.75 to 1.00.

The $400 Million Notes contains the following covenants that we must comply
with:
•Maintaining a ratio of total indebtedness to total asset value of not more than
60%;
•Maintaining a ratio of secured debt to total asset value of not more than 40%;
•Maintaining a Debt Service Coverage Ratio of at least 1.5 to 1.0; and
•Maintaining a ratio of unencumbered assets to unsecured debt of at least 1.5 to
1.0.
  The Credit Agreement, $225 Million Term Loan Facility, $150 Million Term Loan
Facility and Senior Notes also contain limitations on our ability to pay
distributions on our common stock. Specifically, our cash dividends may not
exceed the greater of (i) 95% of our FFO (as defined in the credit agreement)
and (ii) the amount required for us to qualify and maintain our REIT status. If
an event of default exists, we may only make distributions sufficient to qualify
and maintain our REIT status.
   Additionally, subject to the terms of the Senior Notes, upon certain events
of default, including, but not limited to, (i) a default in the payment of any
principal, make-whole payment amount, or interest under the Senior Notes, (ii) a
default in the payment of certain of our other indebtedness, (iii) a default in
compliance with the covenants set forth in the Senior Notes agreement and (iv)
bankruptcy and other insolvency defaults, the principal and accrued and unpaid
interest and the make-whole payment amount on the outstanding Senior Notes will
become due and payable at the option of the purchasers. In addition, we are
required to maintain at all times a credit rating on the Senior Notes from
either S&P, Moody's or Fitch.
  The $60 Million Term Loan contains the following financial covenants:
•Maintaining a Debt Service Coverage Ratio (as defined in the term loan
agreement) of at least 1.10 to 1.00, to be tested quarterly;
•Maintaining Unencumbered Liquid Assets (as defined in the term loan agreement)
of not less than (i) $5 million, or (ii) $8 million if we elect to have Line of
Credit Availability (as defined in the term loan agreement) included in the
calculation, of which $2 million must be cash or cash equivalents, to be tested
annually as of December 31 of each year;
•Maintaining a minimum Fair Market Net Worth (as defined in the term loan
agreement) of at least $75 million, to be tested annually as of December 31 of
each year.

We were in compliance with all of our quarterly debt covenants as of June 30, 2021.


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Cash Flows Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

The following table summarizes the changes in net cash flows associated with our operating, investing, and financing activities for the six months ended June 30, 2021 and 2020 (in thousands):


                                                 Six Months Ended June 30,
                                                   2021                 2020           Change
Cash provided by operating activities      $      101,677           $   71,179      $   30,498
Cash used in investing activities          $     (449,158)          $ (210,317)     $ (238,841)
Cash provided by financing activities      $      234,203           $  

314,721 $ (80,518)




  Net cash provided by operating activities. Net cash provided by operating
activities increased by $30.5 million to $101.7 million for the six months ended
June 30, 2021, compared to $71.2 million for the six months ended June 30,
2020. The increase was primarily attributable to the incremental cash flows from
property acquisitions completed subsequent to January 1, 2020, the increase in
Cash NOI from our Stabilized Same Properties Portfolio and changes in working
capital, partially offset by an increase in cash interest paid for comparable
periods.
  Net cash used in investing activities. Net cash used in investing activities
increased by $238.8 million to $449.2 million for the six months ended June 30,
2021, compared to $210.3 million for the six months ended June 30, 2020. The
increase was primarily attributable to a $250.3 million increase in cash paid
for property acquisitions and acquisition related deposits and a $16.3 million
increase in cash paid for construction and repositioning/redevelopment projects,
partially offset by a $27.7 million increase in proceeds from the sale of three
properties during the current period.
  Net cash provided by financing activities. Net cash provided by financing
activities decreased by $80.5 million to $234.2 million for the six months ended
June 30, 2021, compared to $314.7 million for the six months ended June 30,
2020. The decrease was primarily attributable to a decrease of $64.9 million in
net cash proceeds from the issuance of shares of our common stock and an
increase of $16.0 million in dividends and distributions paid to common
stockholders and unit holders resulting from the increase in the number of
common shares and units outstanding and the increase in our quarterly per share
cash dividend, partially offset by a decrease of $1.3 million in deferred loan
costs paid for comparable periods.
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