STAG INDUSTRIAL, INC. You should read the following discussion with the financial statements and related notes included elsewhere in Item 1 of this report and the audited financial statements and related notes thereto included in our most recent Annual Report on Form 10-K.
As used herein, except where the context otherwise requires, "Company," "we," "our" and "us," refer toSTAG Industrial, Inc. and our consolidated subsidiaries and partnerships, including our operating partnership,STAG Industrial Operating Partnership, L.P. (the "Operating Partnership").
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). You can identify forward-looking statements by the use of words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "seeks," "should," "will," and variations of such words or similar expressions. Forward-looking statements in this report include, among others, statements about our future financial condition, results of operations, capitalization rates on future acquisitions, our business strategy and objectives, including our acquisition strategy, occupancy and leasing rates and trends, and expected liquidity needs and sources (including capital expenditures and the ability to obtain financing or raise capital). 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 factors included in our Annual Report on Form 10-K for the year ended
•the ongoing adverse effects of the public health crisis of the novel
coronavirus disease ("COVID-19") pandemic, or any future pandemic, epidemic or
outbreak of infectious disease, on the financial condition, results of
operations, cash flows and performance of the Company and its tenants, the real
estate market and the global economy and financial markets;
•our ability to raise equity capital on attractive terms;
•the competitive environment in which we operate;
•real estate risks, including fluctuations in real estate values, the general economic climate in local markets and competition for tenants in such markets, and the repurposing or redevelopment of retail properties into industrial properties (in part or whole);
•decreased rental rates or increased vacancy rates;
•potential defaults (including bankruptcies or insolvency) on or non-renewal of leases by tenants;
•acquisition risks, including our ability to identify and complete accretive acquisitions and/or failure of such acquisitions to perform in accordance with projections;
•the timing of acquisitions and dispositions;
•technological developments, particularly those affecting supply chains and logistics;
•potential natural disasters, epidemics, pandemics, and other potentially
catastrophic events such as acts of war and/or terrorism (including the
escalating conflict between
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•international, national, regional and local economic conditions;
•the general level of interest rates and currencies;
•potential changes in the law or governmental regulations and interpretations of
those laws and regulations, including changes in real estate and zoning laws or
real estate investment trust ("REIT") or corporate income 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;
•credit risk in the event of non-performance by the counterparties to the interest rate swaps and revolving and unfunded debt;
•how and when pending forward equity sales may settle;
•lack of or insufficient amounts of insurance;
•our ability to maintain our qualification as a REIT;
•our ability to retain key personnel;
•litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and
•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.
Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth above, as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Certain Definitions In this report:
"GAAP" means generally accepted accounting principles in
"Total annualized base rental revenue" means the contractual monthly base rent as ofMarch 31, 2022 (which differs from rent calculated in accordance with GAAP) multiplied by 12. If a tenant is in a free rent period as ofMarch 31, 2022 , the total annualized base rental revenue is calculated based on the first contractual monthly base rent amount multiplied by 12. "Occupancy rate" means the percentage of total leasable square footage for which either revenue recognition has commenced in accordance with GAAP or the lease term has commenced as of the close of the reporting period, whichever occurs earlier. "Value Add Portfolio" means our properties that meet any of the following criteria: (i) less than 75% occupied as of the acquisition date; (ii) will be less than 75% occupied due to known move-outs within two years of the acquisition date; (iii) out of service with significant physical renovation of the asset; or (iv) development. "Stabilization" for properties under development or being redeveloped means, the earlier of achieving 90% occupancy or 12 months after completion. With respect to properties acquired and immediately added to the Value Add Portfolio, (i) if acquired with less than 75% occupancy as of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy or 12 months from the acquisition date; or (ii) if acquired and will be less than 75% occupied due to known move-outs within two years of the acquisition date, Stabilization will occur upon the earlier of achieving 90% occupancy after the known move-outs have occurred or 12 months after the known move-outs have occurred. 24
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"Operating Portfolio" means all warehouse and light manufacturing assets that were acquired stabilized or have achieved Stabilization. The Operating Portfolio excludes non-core flex/office assets, assets contained in the Value Add Portfolio, and assets classified as held for sale.
"Comparable Lease" means a lease in the same space with a similar lease structure as compared to the previous in-place lease, excluding new leases for space that was not occupied under our ownership.
"SL Rent Change" means the percentage change in the average monthly base rent over the term of the lease that commenced during the period compared to the Comparable Lease for assets included in the Operating Portfolio. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses, and this calculation excludes the impact of any holdover rent. "Cash Rent Change" means the percentage change in the base rent of the lease commenced during the period compared to the base rent of the Comparable Lease for assets included in the Operating Portfolio. The calculation compares the first base rent payment due after the lease commencement date compared to the base rent of the last monthly payment due prior to the termination of the lease, excluding holdover rent. Rent under gross or similar type leases are converted to a net rent based on an estimate of the applicable recoverable expenses. "New Lease" means a lease that is signed for an initial term equal to or greater than 12 months for any vacant space, including a lease signed by a new tenant or an existing tenant that is expanding into new (additional) space. "Renewal Lease" means a lease signed by an existing tenant to extend the term for 12 months or more, including (i) a renewal of the same space as the current lease at lease expiration, (ii) a renewal of only a portion of the current space at lease expiration, or (iii) an early renewal or workout, which ultimately does extend the original term for 12 months or more.
Overview
We are a real estate operating company focused on the acquisition, ownership, and operation of industrial properties throughoutthe United States . We are aMaryland corporation and our common stock is publicly traded on theNew York Stock Exchange under the symbol "STAG." We are organized and conduct our operations to maintain our qualification as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and generally are not subject to federal income tax to the extent we currently distribute our income to our stockholders and maintain our qualification as a REIT. We remain subject to state and local taxes on our income and property and toU.S. federal income and excise taxes on our undistributed income.
Factors That May Influence Future Results of Operations
Our ability to increase revenues or cash flow will depend in part on our (i) external growth, specifically our acquisition activity, and (ii) internal growth, specifically our portfolio occupancy and rental rates. A variety of other factors, including those noted below, also may affect our future results of operations. COVID-19 Pandemic
Since
We did not incur significant disruptions or enter into any rent deferral agreements from the COVID-19 pandemic during the three months endedMarch 31, 2022 . We will continue to evaluate tenant rent relief requests on an individual basis, considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor are we foregoing our contractual rights under our lease agreements. The COVID-19 pandemic or a future pandemic, epidemic or outbreak of infectious disease affecting states or regions in which we or our tenants operate could have material and adverse effects on our business, financial condition, results of operations and cash flows due to, among other factors: health or other government authorities requiring the closure of offices or other businesses or instituting quarantines of personnel as the result of, or in order to avoid, exposure to a contagious disease; 25 -------------------------------------------------------------------------------- Table of Contents disruption in supply and delivery chains; a general decline in business activity and demand for real estate; reduced economic activity, general economic decline or recession, which may impact our tenants' businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to make rent payments to us timely, or at all, or to otherwise seek modifications of lease obligations; difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; and the potential negative impact on the health of our personnel, particularly if a significant number of our employees are impacted, which would result in a deterioration in our ability to ensure business continuity during a disruption. The extent to which the COVID-19 pandemic or any other pandemic, epidemic or disease impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including among others, the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures. Nevertheless, the COVID-19 pandemic (or a future pandemic, epidemic or disease) presents material uncertainty and risk with respect to our business, financial condition, results of operations and cash flows.
Outlook
Since the economic trough from the COVID-19 pandemic inApril 2020 , theU.S. economy has rebounded and GDP increased by approximately 5.7% in 2021. However, in the first quarter of 2022, this economic growth was overshadowed by continued high inflation rates and supply chain disruptions due to many factors, including, but not limited to,Russia's invasion ofUkraine and the ongoing COVID-19 pandemic (including periods of rising COVID-19 cases from new or mutated variants). While the macro-economic conditions continue to evolve and impact our tenants, we believe we will continue to benefit from having a well-diversified portfolio across various markets, tenant industries, and lease terms. Additionally, we believe that the COVID-19 pandemic and geopolitical tensions are accelerating a number of trends that positively impactU.S. industrial demand. Over the course of the COVID-19 pandemic, theU.S. federal and state governments, as well as theFederal Reserve , responded with a series of fiscal and monetary policies to ease the economic burden of COVID-19 closures on businesses and individuals. Given the historically high inflation and strong employment reports in the first quarter of 2022, theFederal Reserve has shifted away from an expansionary monetary policy and raised interest rates 25 basis points to a range between 0.25% to 0.50% inMarch 2022 , which was the first rate increase in over three years. We expect monetary policy to continue to tighten with increasing interest rates and decreasingFederal Reserve balance sheet; provided, that fiscal policy will likely remain accommodative, as needed, to counteract COVID-19 variants. We believe that the current economic environment, while volatile, will provide us with an opportunity to demonstrate the diversification of our portfolio. Specifically, we believe our existing portfolio should benefit from competitive rental rates and strong occupancy. In addition to our diversified portfolio, we believe that certain characteristics of our business and capital structure should position us well in an uncertain environment, including, among others, our minimal amount of floating rate debt (taking into account our hedging activities) and ample liquidity.
Due to the ongoing COVID-19 pandemic, we expect acceleration in a number of industrial specific trends will continue to support long-term demand for industrial properties, including:
•the rise of e-commerce (as compared to the traditional retail store distribution model) and the concomitant demand by e-commerce industry participants for well-located, functional distribution space; •the increasing attractiveness ofthe United States as a manufacturing and distribution location because of the size of theU.S. consumer market, an increase in overseas labor costs, a desire for greater supply chain resilience and redundancy and the overall cost of supplying and shipping goods (i.e. the shortening and fattening of the supply chain); and •the overall quality of the transportation infrastructure inthe United States . Our portfolio continues to benefit from historically low availability throughout the national industrial market. While the COVID-19 pandemic has caused both positive and negative impacts at varying levels across different industries and geographies, the rise of e-commerce, actions taken by federal and state governments and theFederal Reserve , and the recent economic recovery have resulted in strong demand for industrial space. We believe that the diversification of our portfolio by market, tenant industry, and tenant credit will prove to be a strength in this environment. Industrial development continues to be concentrated in the larger primary markets and, after a brief deceleration, it has returned to and exceeded pre-COVID-19 26 -------------------------------------------------------------------------------- Table of Contents pandemic levels. We will continue to monitor the supply and demand fundamentals for industrial real estate and assess its impact on our business.
Conditions in Our Markets
The buildings in our portfolio are located in markets throughout
Rental Income
We receive income primarily in the form of rental income from the tenants who occupy our buildings. The amount of rental income generated by the buildings in our portfolio depends principally on occupancy and rental rates. During the three months endedMarch 31, 2022 , the SL Rent Change and the Cash Rent Change on New Leases and Renewal Leases in the Operating Portfolio together grew approximately 25.1% and 15.2%, respectively, during the three months endedMarch 31, 2022 . Future economic downturns or regional downturns affecting our submarkets that impair our ability to renew or re-lease space and the ability of our tenants to fulfill their lease commitments, as in the case of tenant bankruptcies, including those brought on by the COVID-19 pandemic, could adversely affect our ability to maintain or increase rental rates at our buildings. Our ability to lease our properties and the attendant rental rate is dependent upon, among other things, (i) the overall economy, (ii) the supply/demand dynamic in our markets, (iii) the quality of our properties, including age, clear height, and configuration, and (iv) our tenants' ability to meet their contractual obligations to us. The following table summarizes the Operating Portfolio leases that commenced during the three months endedMarch 31, 2022 . Any rental concessions in such leases are accounted for on a straight-line basis over the term of the lease. Cash Total Costs Basis Rent Per Weighted Average Lease Per SLRent Per Square Cash SL Rent Term(2) Rental Concessions Operating Portfolio Square Feet Square Foot Square Foot Foot(1) Rent Change Change (years) per Square Foot(3) Three months ended March 31, 2022 New Leases 1,179,224$ 6.04 $ 6.44 $ 3.61 25.0 % 36.4 % 7.1 $ 1.28 Renewal Leases 1,960,672$ 4.97 $ 5.32 $ 0.95 8.9 % 17.9 % 5.9 $ 0.10 Total/weighted average 3,139,896$ 5.37 $ 5.74 $ 1.96 15.2 % 25.1 % 6.3 $ 0.54 (1)"Total Costs" means the costs for improvements of vacant and renewal spaces, as well as the contingent-based legal fees and commissions for leasing transactions. Total Costs per square foot represent the total costs expected to be incurred on the leases that commenced during the period and do not reflect actual expenditures for the period. (2)'Weighted average lease term' means the contractual lease term in years, assuming that tenants do not exercise any renewal options, purchase options, or early termination rights, weighted by square footage. (3)Represents the total rental concessions for the entire lease term. Additionally, for the three months endedMarch 31, 2022 , leases related to the Value Add Portfolio and first generation leasing, with a total of 511,236 square feet, are excluded from the Operating Portfolio statistics above.
Property Operating Expenses
Our property operating expenses generally consist of utilities, real estate
taxes, management fees, insurance, and site repair and maintenance costs. For
the majority of our tenants, our property operating expenses are controlled, in
part, by the triple net provisions in tenant leases. In our triple net leases,
the tenant is responsible for all aspects of and costs related to the building
and its operation during the lease term, including utilities, taxes, insurance,
and maintenance costs, but typically excluding roof and building structure.
However, we also have modified gross leases and gross leases in our building
portfolio, which may require us to absorb certain building related expenses of
our tenants. In our modified gross leases, we are responsible for certain
building related expenses during the lease term, but most of the expenses are
passed through to the tenant for reimbursement to us. In our gross leases, we
are responsible for all expenses related to the building and its operation
during the lease term. Our overall performance will be affected by the extent to
which we are able to pass-through property operating expenses to our tenants.
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Scheduled Lease Expirations
Our ability to re-lease space subject to expiring leases impacts our results of
operations and will be affected by economic and competitive conditions in our
markets and by the desirability of our individual buildings. Leases that
comprise approximately 6.8% of our annualized base rental revenue will expire
during the period from April 1, 2022 to March 31, 2023 , excluding month-to-month
leases. We assume, based upon internal renewal probability estimates that some
of our tenants will renew and others will vacate and the associated space will
be re-let subject to downtime assumptions. Using the aforementioned assumptions,
we expect that the rental rates on the respective new leases will be greater
than the rates under existing leases expiring during the period April 1, 2022 to
March 31, 2023 , thereby resulting in an increase in revenue from the same space.
The following table summarizes lease expirations for leases in place as of
March 31, 2022 , plus available space, for each of the ten calendar years
beginning with 2022 and thereafter in our portfolio. The information in the
table assumes that tenants do not exercise renewal options or early termination
rights.
Total
Annualized
Number % of Base Rental % of Total
of Total Revenue Annualized
Leases Total Rentable Occupied (in Base Rental
Lease Expiration Year Expiring Square Feet Square Feet thousands) Revenue
Available - 3,412,002 - - -
Month-to-month leases 3 123,031 0.1 % $ 477 0.1 %
Remainder of 2022 34 3,559,398 3.3 % 16,780 3.3 %
2023 100 13,138,341 12.3 % 57,723 11.4 %
2024 98 13,767,694 12.9 % 63,864 12.6 %
2025 88 12,901,137 12.1 % 58,034 11.4 %
2026 97 14,658,908 13.7 % 71,460 14.1 %
2027 75 11,979,061 11.2 % 57,918 11.4 %
2028 44 6,886,711 6.6 % 31,679 6.2 %
2029 41 7,039,607 6.6 % 33,763 6.7 %
2030 27 3,763,278 3.5 % 21,576 4.3 %
2031 39 7,182,980 6.7 % 34,219 6.7 %
Thereafter 47 11,710,329 11.0 % 60,082 11.8 %
Total 693 110,122,477 100.0 % $ 507,575 100.0 %
Portfolio Acquisitions
The following table summarizes our acquisitions during the three months ended
March 31, 2022 .
Purchase Price
Market(1) Date Acquired Square Feet Number of Buildings (in thousands)
Kansas City, MO January 6, 2022 702,000 1 $ 60,428
Chicago, IL January 31, 2022 72,499 1 8,128
Columbus, OH February 8, 2022 138,213 1 11,492
Cleveland, OH February 8, 2022 136,800 1 13,001
Nashville, TN March 10, 2022 109,807 1 12,810
Greenville/Spartanburg, SC March 10, 2022 289,103 1 28,274
Memphis, TN March 18, 2022 195,622 1 15,828
Greenville/Spartanburg, SC March 18, 2022 155,717 1 16,390
Three months ended March 31, 2022 1,799,761 8 $
166,351
(1) As defined by
Portfolio Dispositions
During the three months endedMarch 31, 2022 , we sold one building and one land parcel comprised of approximately 0.2 million rentable square feet with a net book value of approximately$11.3 million to third parties. Net proceeds from the sales of rental property were approximately$35.3 million and we recognized the full gain on the sales of rental property, net, of approximately$24.0 million for the three months endedMarch 31, 2022 . 28 -------------------------------------------------------------------------------- Table of Contents Top Markets The following table summarizes information about the 20 largest markets in our portfolio based on total annualized base rental revenue as ofMarch 31, 2022 . Top 20 Markets(1) % of Total Annualized Base Rental RevenueChicago, IL 7.8 %Philadelphia, PA 7.1 %Greenville /Spartanburg, SC 5.4 %Milwaukee /Madison, WI 4.5 %Detroit, MI 4.3 %Columbus, OH 4.1 %Minneapolis/St Paul, MN 3.8 %Pittsburgh, PA 3.8 %Houston, TX 3.0 %West Michigan , MI 2.4 %Charlotte, NC 2.3 %Indianapolis, IN 2.3 %El Paso, TX 2.2 %Cincinnati /Dayton, OH 2.0 %Cleveland, OH 1.9 %Boston, MA 1.9 %Kansas City, MO 1.8 %Columbia, SC 1.6 %Westchester /So Connecticut, CT/NY 1.6 %Washington, DC 1.5 % Total 65.3 % (1) As defined by CoStar.Top Industries
The following table summarizes information about the 20 largest tenant
industries in our portfolio based on total annualized base rental revenue as of
% of Total Annualized
Top 20 Tenant Industries (1) Base Rental Revenue
Air Freight & Logistics 10.8 %
Containers & Packaging 8.3 %
Auto Components 7.1 %
Trading Companies & Distributors (Industrial Goods) 5.3 %
Commercial Services & Supplies 5.3 %
Internet & Direct Mkt Retail 4.9 %
Machinery 4.7 %
Distributors (Consumer Goods) 4.6 %
Household Durables 4.5 %
Food & Staples Retailing 3.5 %
Media 3.4 %
Building Products 3.2 %
Specialty Retail 2.9 %
Chemicals 2.3 %
Road & Rail 2.2 %
Electronic Equip, Instruments 2.1 %
Food Products 2.1 %
Beverages 2.0 %
Textiles, Apparel, Luxury Good 2.0 %
Household Products 1.7 %
Total 82.9 %
(1) Industry classification based on Global Industry Classification Standard methodology.
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Top Tenants
The following table summarizes information about the 20 largest tenants in our
portfolio based on total annualized base rental revenue as of March 31, 2022 .
% of Total Annualized
Top 20 Tenants(1) Number of Leases Base Rental Revenue
Amazon 7 3.2 %
Eastern Metal Supply, Inc. 5 1.0 %
American Tire Distributors Inc 7 1.0 %
FedEx Corporation 4 0.9 %
Tempur Sealy International Inc 2 0.9 %
Lippert Component Manufact 5 0.8 %
Kenco Logistic Services, LLC 3 0.8 %
Penguin Random House LLC 1 0.8 %
DS Smith North America 2 0.7 %
Westrock Company 7 0.7 %
GXO Logistics, Inc. 2 0.7 %
DHL Supply Chain 4 0.7 %
LKQ Corporation 4 0.7 %
Hachette Book Group, Inc. 1 0.7 %
Yanfeng US Automotive Interior 2 0.7 %
Ford Motor Company 1 0.7 %
Carolina Beverage Group 3 0.7 %
Packaging Corp of America 5 0.6 %
Schneider Electric USA, Inc. 3 0.6 %
Costco Wholesale Corporation 1 0.6 %
Total 69 17.5 %
(1) Includes tenants, guarantors, and/or non-guarantor parents.
Critical Accounting Policies
See "Critical Accounting Policies" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 for a discussion of our critical accounting policies and estimates. Results of Operations The following discussion of the results of our same store (as defined below) net operating income ("NOI") should be read in conjunction with our consolidated financial statements included in this report. For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see "Non-GAAP Financial Measures" below. Same store results are considered to be useful to investors in evaluating our performance because they provide information relating to changes in building-level operating performance without taking into account the effects of acquisitions or dispositions. We encourage the reader to not only look at our same store results, but also our total portfolio results, due to historic and future growth. We define same store properties as properties that were in the Operating Portfolio for the entirety of the comparative periods presented. The results for same store properties exclude termination fees, solar income, and other income adjustments. Same store properties exclude Operating Portfolio properties with expansions placed into service afterDecember 31, 2020 . OnMarch 31, 2022 , we owned 463 industrial buildings consisting of approximately 94.6 million square feet and representing approximately 85.9% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy decreased approximately 0.5% to 97.4% as ofMarch 31, 2022 compared to 97.9% as ofMarch 31, 2021 .
Comparison of the three months ended
The following table summarizes selected operating information for our same store portfolio and our total portfolio for the three months endedMarch 31, 2022 and 2021 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the three months endedMarch 31, 2022 and 2021 with respect to the buildings acquired and sold afterDecember 31, 2020 , Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio afterDecember 31, 2020 , and our flex/office buildings, Value Add Portfolio, and buildings classified as held for sale. 30
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Same Store Portfolio Acquisitions/Dispositions Other Total Portfolio
Three months ended March 31 , Change Three months ended March 31 , Three months ended March 31 , Three months ended March 31 , Change
2022 2021 $ % 2022 2021 2022 2021 2022 2021 $ %
Revenue
Operating revenue
Rental income $ 133,168 $ 128,952 $ 4,216 3.3 % $ 21,043 $ 3,280 $ 4,390 $ 1,593 $ 158,601 $ 133,825 $ 24,776 18.5 % Other income 278 102 176 172.5 % - 68 330 - 608 170 438 257.6 % Total operating revenue 133,446 129,054 4,392 3.4 % 21,043 3,348 4,720 1,593 159,209 133,995 25,214 18.8 % Expenses Property 26,852 24,932 1,920 7.7 % 3,813 1,550 1,110 520 31,775 27,002 4,773 17.7 %
Net operating income(1)
2.4 % $ 17,230 $ 1,798 $ 3,610 $ 1,073 127,434 106,993 20,441 19.1 %
Other expenses
General and administrative 12,313 12,790 (477) (3.7) %
Depreciation and amortization 67,366 58,407 8,959 15.3 %
Other expenses 497 852 (355) (41.7) %
Total other expenses 80,176 72,049 8,127 11.3 %
Total expenses 111,951 99,051 12,900 13.0 %
Other income (expense)
Interest and other income 34 32 2 6.3 %
Interest expense (17,259) (15,358) (1,901) 12.4 %
Debt extinguishment and modification expenses - (679) 679 (100.0) %
Gain on the sales of rental property, net 23,955 6,409 17,546 273.8 %
Total other income (expense) 6,730 (9,596) 16,326 170.1 %
Net income $ 53,988 $ 25,348 $ 28,640 113.0 %
(1)For a detailed discussion of NOI, including the reasons management believes NOI is useful to investors, see "Non-GAAP Financial Measures" below.
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Net Income
Net income for our total portfolio increased by approximately
Same Store Total Operating Revenue
Same store total operating revenue consists primarily of rental income from (i)
fixed lease payments, variable lease payments, straight-line rental income, and
above and below market lease amortization from our properties ("lease income"),
and (ii) other tenant billings for insurance, real estate taxes and certain
other expenses ("other billings").
For a detailed reconciliation of our same store total operating revenue to net income, see the table above.
Same store rental income, which includes lease income and other billings as
discussed below, increased by approximately
Same store lease income increased by approximately$2.1 million , or 2.0%, to approximately$109.4 million for the three months endedMarch 31, 2022 compared to approximately$107.3 million for the three months endedMarch 31, 2021 . The increase was primarily due to an increase in rental income of approximately$4.3 million from the execution of new leases and lease renewals with existing tenants and a net decrease in the amortization of net above market leases of approximately$0.2 million . These increases were partially offset by the reduction of base rent of approximately$2.4 million due to tenant vacancies. Same store other billings increased by approximately$2.1 million , or 9.5%, to approximately$23.8 million for the three months endedMarch 31, 2022 compared to approximately$21.7 million for the three months endedMarch 31, 2021 . The increase was attributable to an increase of approximately$1.7 million related to other expense reimbursements from an increase in corresponding expenses and changes to lease terms where we began paying the operating expenses on behalf of tenants that had previously paid its operating expenses directly to respective vendors. Additionally, there was an increase in real estate taxes levied by the taxing authority and changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid its taxes directly to the taxing authority of approximately$0.4 million .
Same Store Operating Expenses
Same store operating expenses consist primarily of property operating expenses and real estate taxes and insurance.
For a detailed reconciliation of our same store operating expenses to net income, see the table above.
Total same store property operating expenses increased by approximately$1.9 million , or 7.7%, to approximately$26.9 million for the three months endedMarch 31, 2022 compared to approximately$24.9 million for the three months endedMarch 31, 2021 . This increase was primarily related to an increase in utilities expense of approximately$0.8 million and real estate taxes of approximately$0.7 million levied by the taxing authority and changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid its taxes directly to the taxing authority. The increase was also attributable to increases of approximately$0.2 million in insurance expense and approximately$0.2 million in repairs and maintenance and other expenses.
Acquisitions and Dispositions Net Operating Income
For a detailed reconciliation of our acquisitions and dispositions NOI to net income, see the table above.
Subsequent toDecember 31, 2020 , we acquired 74 buildings consisting of approximately 13.1 million square feet (excluding eight buildings that were included in the Value Add Portfolio atMarch 31, 2022 or transferred from the Value Add Portfolio to the Operating Portfolio afterDecember 31, 2020 ), and sold 23 buildings consisting of approximately 2.9 million square feet and one land parcel. For the three months endedMarch 31, 2022 and 2021, the buildings acquired afterDecember 31, 2020 contributed approximately$16.9 million and$0.8 million to NOI, respectively. For the three months endedMarch 31, 2022 and 2021, the buildings sold afterDecember 31, 2020 contributed approximately$0.3 million and$1.0 million to NOI, respectively. Refer to Note 3 in the accompanying Notes to Consolidated Financial Statements for additional discussion regarding buildings acquired or sold. 32
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Other Net Operating Income
Other assets include our flex/office buildings, Value Add Portfolio, and Operating Portfolio buildings with expansions placed in service or transferred from the Value Add Portfolio to the Operating Portfolio afterDecember 31, 2020 . Other NOI also includes termination, solar, and other income adjustments from buildings in our same store portfolio.
For a detailed reconciliation of our other NOI to net income, see the table above.
These buildings contributed approximately$2.7 million and$0.8 million to NOI for the three months endedMarch 31, 2022 and 2021, respectively. Additionally, there was approximately$0.9 million and$0.3 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the three months endedMarch 31, 2022 and 2021, respectively.
Total Other Expenses
Total other expenses consist of general and administrative expenses, depreciation and amortization, and other expenses.
Total other expenses increased approximately$8.1 million , or 11.3%, for the three months endedMarch 31, 2022 to approximately$80.2 million compared to approximately$72.0 million for the three months endedMarch 31, 2021 . The increase was primarily a result of an increase in depreciation and amortization of approximately$9.0 million due to an increase in the depreciable asset base from net acquisitions. This increase was partially offset by a decrease in general and administrative expenses of approximately$0.5 million primarily due to the adoption of our retirement vesting program onJanuary 7, 2021 and related acceleration of equity-based compensation expense for certain eligible employees that did not recur during the three months endedMarch 31, 2022 .
Total Other Income (Expense)
Total other income (expense) consists of interest and other income, interest expense, and gain on the sales of rental property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt. Total other income (expense) increased approximately$16.3 million , or 170.1%, for the three months endedMarch 31, 2022 to a total net other income of approximately$6.7 million compared approximately$9.6 million net other expense for the three months endedMarch 31, 2021 . This increase was primarily a result of an increase in the gain on the sales of rental property, net of approximately$17.5 million . This increase was partially offset by an increase in interest expense of approximately$1.9 million which is primarily attributable to the issuance of$325.0 million of unsecured notes onSeptember 28, 2021 .
Non-GAAP Financial Measures
In this report, we disclose funds from operations ("FFO") and NOI, which meet
the definition of "non-GAAP financial measures" as set forth in Item 10(e) of
Regulation S-K promulgated by the Securities and Exchange Commission ("SEC"). As
a result, we are required to include in this report a statement of why
management believes that presentation of these measures provides useful
information to investors.
Funds From Operations
FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further, FFO should be compared with our reported net income (loss) in accordance with GAAP, as presented in our consolidated financial statements included in this report. We calculate FFO in accordance with the standards established by theNational Association of Real Estate Investment Trusts ("Nareit"). FFO represents GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating buildings, land sales, impairment write-downs of depreciable real estate, real estate related depreciation and amortization (excluding amortization of deferred financing costs and fair market value of debt adjustment) and after adjustments for unconsolidated partnerships and joint ventures. 33 -------------------------------------------------------------------------------- Table of Contents Management uses FFO as a supplemental performance measure because it is a widely recognized measure of the performance of 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 buildings that result from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our buildings, 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. In addition, other REITs may not calculate FFO in accordance with the Nareit definition, 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 our FFO attributable to common stockholders and unit holders for the periods presented to net income, the nearest GAAP equivalent.
Three months ended March 31,
Reconciliation of Net Income to FFO (in thousands) 2022 2021
Net income $ 53,988 $ 25,348
Rental property depreciation and amortization 67,313 58,339
Gain on the sales of rental property, net (23,955) (6,409)
FFO 97,346 77,278
Preferred stock dividends - (1,289)
Redemption of preferred stock - (2,582)
Amount allocated to restricted shares of common stock and unvested units
(157) (237)
FFO attributable to common stockholders and unit holders $ 97,189 $ 73,170
Net Operating Income
We consider NOI to be an appropriate supplemental performance measure to net
income (loss) because we believe it helps investors and management understand
the core operations of our buildings. NOI is defined as rental income, which
includes billings for common area maintenance, real estate taxes and insurance,
less property expenses and real estate taxes and insurance. NOI should not be
viewed as an alternative measure of our financial performance since it excludes
expenses which could materially impact our results of operations. Further, our
NOI may not be comparable to that of other real estate companies, as they may
use different methodologies for calculating NOI.
The following table sets forth a reconciliation of our NOI for the periods presented to net income, the nearest GAAP equivalent.
Three months ended March 31,
Reconciliation of Net Income to NOI (in thousands) 2022 2021
Net income $ 53,988 $ 25,348
General and administrative 12,313 12,790
Depreciation and amortization 67,366 58,407
Interest and other income (34) (32)
Interest expense 17,259 15,358
Debt extinguishment and modification expenses - 679
Other expenses 497 852
Gain on the sales of rental property, net (23,955) (6,409)
Net operating income $ 127,434 $ 106,993
34-------------------------------------------------------------------------------- Table of Contents Cash Flows
Comparison of the three months ended
The following table summarizes our cash flows for the three months ended
Three months ended March 31, Change
Cash Flows (dollars in thousands) 2022 2021 $ %
Net cash provided by operating activities $ 88,879 $ 73,460 $ 15,419 21.0 %
Net cash used in investing activities $ 148,797 $ 79,502 $ 69,295 87.2 %
Net cash provided by financing activities $ 74,727 $ 8,020 $ 66,707 831.8 %
Net cash provided by operating activities increased approximately $15.4 million
to approximately $88.9 million for the three months ended March 31, 2022
compared to approximately $73.5 million for the three months ended March 31,
2021 . The increase was primarily attributable to incremental operating cash
flows from property acquisitions completed after March 31, 2021 , and operating
performance at existing properties. These increases were partially offset by the
loss of cash flows from property dispositions completed after March 31, 2021 and
fluctuations in working capital due to the timing of payments and rental
receipts.
Net cash used in investing activities increased approximately $69.3 million to
approximately $148.8 million for the three months ended March 31, 2022 compared
to approximately $79.5 million for the three months ended March 31, 2021 . The
increase was primarily attributable to the acquisition of eight buildings for a
total cash consideration of approximately $166.4 million for the three months
ended March 31, 2022 compared to the acquisition of six buildings for a total
cash consideration of approximately $95.1 million for the three months ended
March 31, 2021 .
Net cash provided by financing activities increased approximately $66.7 million
to approximately $74.7 million for the three months ended March 31, 2022
compared to approximately $8.0 million for the three months ended March 31,
2021 . The increase is primarily attributable to the redemption of preferred
stock with an aggregate liquidation value of $75.0 million during the three
months ended March 31, 2021 that did not recur, as well as an increase in net
proceeds received from the sale of common stock of approximately $33.5 million ,
during the three months ended March 31, 2022 . These increases were partially
offset by a net cash outflow of approximately $38.0 million from our unsecured
credit facility and an increase of approximately $6.2 million in dividends paid
during the three months ended March 31, 2022 compared to the three months ended
March 31, 2021 .
Liquidity and Capital Resources
We believe that our liquidity needs will be satisfied through cash flows generated by operations, disposition proceeds, and financing activities. Operating cash flow from rental income, expense recoveries from tenants, and other income from operations is our principal source of funds to pay operating expenses, debt service, recurring capital expenditures, and the distributions required to maintain our REIT qualification. We primarily rely on the capital markets (common and preferred equity and debt securities) to fund our acquisition activity. We seek to increase cash flows from our properties by maintaining quality building standards that promote high occupancy rates and permit increases in rental rates, while reducing tenant turnover and controlling operating expenses. We believe that our revenue, together with proceeds from building sales and equity and debt financings, will continue to provide funds for our short-term and medium-term liquidity needs. Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our buildings, including interest expense, interest rate swap payments, scheduled principal payments on outstanding indebtedness, property acquisitions under contract, general and administrative expenses, and capital expenditures for tenant improvements and leasing commissions. Our long-term liquidity needs, in addition to recurring short-term liquidity needs as discussed above, consist primarily of funds necessary to pay for property acquisitions, non-recurring capital expenditures, and scheduled debt maturities. We intend to satisfy our long-term liquidity needs through cash flow from operations, the issuance of equity or debt securities, other borrowings, property dispositions, or, in connection with acquisitions of certain additional buildings, the issuance of common units in theOperating Partnership . 35 -------------------------------------------------------------------------------- Table of Contents As ofMarch 31, 2022 , we had total immediate liquidity of approximately$397.1 million , comprised of$34.8 million of cash and cash equivalents and$362.3 million of immediate availability on our unsecured credit facility. In addition, we require funds to pay dividends to holders of our common stock and common units in theOperating Partnership . Any future dividends on our common stock are voluntary and declared in the sole discretion of our board of directors, subject to the distribution requirements to maintain our REIT status for federal income tax purposes, and may be reduced or stopped for any reason, including to use funds for other liquidity requirements. The following table summarizes the dividends declared on our outstanding common stock during the three months endedMarch 31, 2022 . Month Ended 2022 Declaration Date Record Date Per Share Payment Date March 31 January 10, 2022 March 31, 2022$ 0.121667 April 18, 2022 February 28 January 10, 2022 February 28, 2022 0.121667 March 15, 2022 January 31 January 10, 2022 January 31, 2022 0.121667 February 15, 2022 Total$ 0.365001
On
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Table of Contents
Indebtedness Outstanding
The following table summarizes certain information with respect to our
indebtedness outstanding as of
Principal
Outstanding as of
March 31, 2022 (in Interest
Loan thousands) Rate(1)(2) Maturity Date Prepayment Terms(3)
Unsecured credit facility:
Unsecured Credit Facility(4) $ 384,000 L + 0.775% October 23, 2026 i
Total unsecured credit facility 384,000
Unsecured term loans:
Unsecured Term Loan D 150,000 2.85 % January 4, 2023 i
Unsecured Term Loan E 175,000 3.77 % January 15, 2024 i
Unsecured Term Loan F 200,000 2.96 % January 12, 2025 i
Unsecured Term Loan G 300,000 1.13 % February 5, 2026 i
Unsecured Term Loan A 150,000 3.23 % March 15, 2027 i
Total unsecured term loans 975,000
Total unamortized deferred financing fees
and debt issuance costs (4,075)
Total carrying value unsecured term loans, 970,925
net
Unsecured notes: Series F Unsecured Notes 100,000 3.98 % January 5, 2023 ii Series A Unsecured Notes 50,000 4.98 % October 1, 2024 ii Series D Unsecured Notes 100,000 4.32 % February 20, 2025 ii Series G Unsecured Notes 75,000 4.10 % June 13, 2025 ii Series B Unsecured Notes 50,000 4.98 % July 1, 2026 ii Series C Unsecured Notes 80,000 4.42 % December 30, 2026 ii Series E Unsecured Notes 20,000 4.42 % February 20, 2027 ii Series H Unsecured Notes 100,000 4.27 % June 13, 2028 ii Series I Unsecured Notes 275,000 2.80 % September 29, 2031 ii Series J Unsecured Notes 50,000 2.95 % September 28, 2033 ii Total unsecured notes 900,000 Total unamortized deferred financing fees and debt issuance costs (2,942) Total carrying value unsecured notes, net 897,058 Mortgage notes (secured debt):Wells Fargo Bank , National Association 46,106 4.31 % December 1, 2022 iii CMBS Loan Thrivent Financial for Lutherans 3,397 4.78 % December 15, 2023 iv United of Omaha Life Insurance Company 4,894 3.71 % October 1, 2039 ii Total mortgage notes 54,397 Less: Net unamortized fair market value (136)
discount
Total unamortized deferred financing fees and debt issuance costs (71) Total carrying value mortgage notes, net 54,190
Total / weighted average interest rate(5)
2.87 %
(1)Interest rate as ofMarch 31, 2022 . AtMarch 31, 2022 , the one-month LIBOR ("L") was 0.452%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums. The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on the our debt rating and leverage ratio, as defined in the respective loan agreements. (2)The unsecured term loans have a stated interest rate of one-month LIBOR plus a spread of 0.85%, with the exception of Unsecured Term Loan D which has a stated interest rate of one-month LIBOR plus a spread of 1.0%. As ofMarch 31, 2022 , one-month LIBOR for the Unsecured Term Loans A, D, E, F, and G was swapped to a fixed rate of 2.38%, 1.85%, 2.92%, 2.11%, and 0.28%, respectively. One-month LIBOR for the Unsecured Term Loan A will be swapped to a fixed rate of 1.30% effectiveApril 1, 2022 . One-month LIBOR for the Unsecured Term Loan G will be swapped to a fixed rate of 0.94% effectiveApril 18, 2023 . (3)Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable with penalty; (iii) pre-payable without penalty three months prior to the maturity date, subject to defeasance; and (iv) pre-payable without penalty three months prior to the maturity date. (4)The capacity of our unsecured credit facility is$750.0 million . The initial maturity date isOctober 24, 2025 , or such later date which may be extended pursuant to two six-month extension options exercisable by us in our discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension, (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date, and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. 37 -------------------------------------------------------------------------------- Table of Contents (5)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of$975.0 million of debt, and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The aggregate undrawn nominal commitments on our unsecured credit facility and unsecured term loans as ofMarch 31, 2022 was approximately$362.3 million , including issued letters of credit. Our actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on our debt covenant compliance. Our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes are subject to ongoing compliance with a number of financial and other covenants. As ofMarch 31, 2022 , we were in compliance with the applicable financial covenants. Subsequent toMarch 31, 2022 , onApril 28, 2022 , we entered into a note purchase agreement for the future private placement by theOperating Partnership of$400.0 million senior unsecured notes, maturingJune 28, 2032 , with a fixed annual interest rate of 4.12%. The unsecured notes are expected to be issued on or aroundJune 28, 2022 , subject to conditions. The note purchase agreement contains a number of financial covenants substantially similar to the financial covenants contained in our unsecured credit facility, plus a financial covenant that requires us to maintain a minimum interest coverage ratio of not less than 1.50:1.00. The Company and certain of its subsidiaries will guarantee the obligations under the unsecured notes. The following table summarizes our debt capital structure as ofMarch 31, 2022 . Debt Capital Structure March 31, 2022 Total principal outstanding (in thousands)$ 2,313,397 Weighted average duration (years) 4.3 % Secured debt 2.4 % % Debt maturing next 12 months 12.8 % Net Debt to Real Estate Cost Basis(1) 34.5 % (1)"Net Debt" means amounts outstanding under our unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes, less cash and cash equivalents. "Real Estate Cost Basis" means the book value of rental property and deferred leasing intangibles, exclusive of the related accumulated depreciation and amortization. We regularly pursue new financing opportunities to ensure an appropriate balance sheet position. As a result of these dedicated efforts, we are confident in our ability to meet future debt maturities and fund acquisitions. We believe that our current balance sheet is in an adequate position at the date of this filing, despite possible volatility in the credit markets. Our interest rate exposure on our floating rate debt is managed through the use of interest rate swaps, which fix the rate of our long term floating rate debt. For a detailed discussion on our use of interest rate swaps, see "Interest Rate Risk" below. Equity Preferred Stock
We are authorized to issue up to 20,000,000 shares of preferred stock, par value
Common Stock
We are authorized to issue up to 300,000,000 shares of common stock, par value
The following table summarizes our at-the-market ("ATM") common stock offering
program as of March 31, 2022 . Pursuant to the equity distribution agreements for
our ATM common stock offering program, we may from time to time sell common
stock through sales agents and their affiliates, including shares sold on a
forward basis under forward sale agreements.
Aggregate Available as
Maximum Aggregate Offering of March 31, 2022 (in
ATM Common Stock Offering Program Date Price (in thousands) thousands)
2022 $750 million ATM February 17, 2022 $ 750,000 $ 750,000
38--------------------------------------------------------------------------------
Table of Contents
The following table summarizes the activity under the ATM common stock offering
programs during the three months ended
Three months ended March 31, 2022
Sales
Shares Weighted Average Agents' Fees Net Proceeds (in
ATM Common Stock Offering Program Sold Price Per Share (in thousands) thousands)
2019 $600 million ATM(1) 128,335 $ 45.03 $ 58 $ 5,721
Total/weighted average 128,335 $ 45.03 $ 58 $ 5,721 (1)This program ended before
In connection with our underwritten public offering that closed inNovember 2021 , onDecember 3, 2021 , we executed a forward sale agreement for the sale of an additional 1,200,000 shares of common stock on a forward basis at a price of$41.87 per share. We did not initially receive any proceeds from the sale of shares on a forward basis. OnMarch 29, 2022 , we physically settled in full the forward sales agreement by issuing 1,200,000 shares of common stock for net proceeds of approximately$49.7 million , or$41.39 per share.
Noncontrolling Interest
We own our interests in all of our properties and conduct substantially all of our business through theOperating Partnership . We are the sole member of the sole general partner of theOperating Partnership . As ofMarch 31, 2022 , we owned approximately 97.9% of the common units in theOperating Partnership , and our current and former executive officers, directors, senior employees and their affiliates, and third parties that contributed properties to us in exchange for common units in theOperating Partnership owned the remaining 2.1%.
Interest Rate Risk
We use interest rate swaps to fix the rate of our variable rate debt. As of
We recognize all derivatives on the balance sheet at fair value. If the derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income (loss), which is a component of equity. Derivatives that are not designated as hedges must be adjusted to fair value and the changes in fair value must be reflected as income or expense. We have established criteria for suitable counterparties in relation to various specific types of risk. We only use counterparties that have a credit rating of no lower than investment grade at swap inception fromMoody's Investor Services ,Standard & Poor's , or Fitch Ratings or other nationally recognized rating agencies. 39 -------------------------------------------------------------------------------- Table of Contents The following table details our outstanding interest rate swaps as ofMarch 31, 2022 . Notional Amount (in Fair Value Pay Fixed Receive Variable Interest Rate Derivative Counterparty Trade Date Effective Date thousands) (in thousands) Interest Rate Interest Rate Maturity DateWells Fargo Bank, N.A. Jan-08-2015 Mar-20-2015$ 25,000 $ - 1.8280 % One-month L Mar-31-2022 The Toronto-Dominion Bank Jan-08-2015 Feb-14-2020$ 25,000 $ - 2.4535 % One-month L Mar-31-2022Regions Bank Jan-08-2015 Feb-14-2020$ 50,000 $ - 2.4750 % One-month L Mar-31-2022Capital One, N.A. Jan-08-2015 Feb-14-2020$ 50,000 $ - 2.5300 % One-month L Mar-31-2022 The Toronto-Dominion Bank Jul-20-2017 Oct-30-2017$ 25,000 $ (64) 1.8485 % One-month L Jan-04-2023 Royal Bank of Canada Jul-20-2017 Oct-30-2017$ 25,000 $ (63) 1.8505 % One-month L Jan-04-2023Wells Fargo Bank, N.A. Jul-20-2017 Oct-30-2017$ 25,000 $ (63) 1.8505 % One-month L Jan-04-2023PNC Bank, N.A. Jul-20-2017 Oct-30-2017$ 25,000 $ (63) 1.8485 % One-month L Jan-04-2023PNC Bank, N.A. Jul-20-2017 Oct-30-2017$ 50,000 $ (126) 1.8475 % One-month L Jan-04-2023 The Toronto-Dominion Bank Apr-20-2020 Sep-29-2020$ 75,000 $ 1,223 0.2750 % One-month L Apr-18-2023Wells Fargo Bank, N.A. Apr-20-2020 Sep-29-2020$ 75,000 $ 1,219 0.2790 % One-month L Apr-18-2023 The Toronto-Dominion Bank Apr-20-2020 Mar-19-2021$ 75,000 $ 1,223 0.2750 % One-month L Apr-18-2023Wells Fargo Bank, N.A. Apr-20-2020 Mar-19-2021$ 75,000 $ 1,218 0.2800 % One-month L Apr-18-2023 The Toronto-Dominion Bank Jul-24-2018 Jul-26-2019$ 50,000 $ (548) 2.9180 % One-month L Jan-12-2024PNC Bank, N.A. Jul-24-2018 Jul-26-2019$ 50,000 $ (549) 2.9190 % One-month L Jan-12-2024 Bank of Montreal Jul-24-2018 Jul-26-2019$ 50,000 $ (548) 2.9190 % One-month L Jan-12-2024U.S. Bank, N.A. Jul-24-2018 Jul-26-2019$ 25,000 $ (274) 2.9190 % One-month L Jan-12-2024Wells Fargo Bank, N.A. May-02-2019 Jul-15-2020$ 50,000 $ 280 2.2460 % One-month L Jan-15-2025U.S. Bank, N.A. May-02-2019 Jul-15-2020$ 50,000 $ 284 2.2459 % One-month L Jan-15-2025Regions Bank May-02-2019 Jul-15-2020$ 50,000 $ 280 2.2459 % One-month L Jan-15-2025 Bank of Montreal Jul-16-2019 Jul-15-2020$ 50,000 $ 1,008 1.7165 % One-month L Jan-15-2025U.S. Bank, N.A. Feb-17-2021 Apr-18-2023$ 150,000 $ 6,853 0.9385 % One-month L Feb-5-2026Wells Fargo Bank, N.A. Feb-17-2021 Apr-18-2023$ 75,000 $ 3,409 0.9365 % One-month L Feb-5-2026 The Toronto-Dominion Bank Feb-17-2021 Apr-18-2023$ 75,000 $ 3,419 0.9360 % One-month L Feb-5-2026Regions Bank Oct-26-2021 Apr-01-2022$ 50,000 $ 2,419 1.3045 % One-month L Mar-15-2027 Bank of Montreal Oct-26-2021 Apr-01-2022$ 50,000 $ 2,438 1.3045 % One-month L Mar-15-2027PNC Bank, N.A. Oct-26-2021 Apr-01-2022$ 50,000 $ 2,423 1.3045 % One-month L Mar-15-2027 The swaps outlined in the above table were all designated as cash flow hedges of interest rate risk, and all are valued as Level 2 financial instruments. Level 2 financial instruments are defined as significant other observable inputs. As ofMarch 31, 2022 , the fair value of 14 of our interest rate swaps were in an asset position of approximately$27.7 million , including any adjustment for nonperformance risk related to these agreements. The remaining nine interest rate swaps were in a liability position of approximately$2.3 million , including any adjustment for nonperformance risk related to these agreements. As ofMarch 31, 2022 , we had approximately$1,359.0 million of variable rate debt. As ofMarch 31, 2022 , all of our outstanding variable rate debt, with the exception of our unsecured credit facility, was fixed with interest rate swaps through maturity. To the extent interest rates increase, interest costs on our floating rate debt not fixed with interest rate swaps will increase, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. From time to time, we may enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.
Off-balance Sheet Arrangements
As of
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