TERRENO REALTY CORPORATION This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We caution investors that forward-looking statements are based on management's beliefs and on assumptions made by, and information currently available to, management. When used, the words "anticipate", "believe", "estimate", "expect", "intend", "may", "might", "plan", "project", "result", "should", "will", "seek", "target", "see", "likely", "position", "opportunity", "outlook", "potential", "future" and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors, that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
•the factors included under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , which was filed with theSecurities and Exchange Commission onFebruary 9, 2022 , in this Quarterly Report on Form 10-Q, and in our other public filings;
•our ability to identify and acquire industrial properties on terms favorable to us;
•general volatility of the capital markets and the market price of our common stock;
•adverse economic or real estate conditions or developments in the industrial real estate sector and/or in the markets in which we acquire properties;
•our dependence on key personnel and our reliance on third-party property managers;
•our inability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies;
•our ability to manage our growth effectively;
•tenant bankruptcies and defaults on, or non-renewal of, leases by tenants;
•decreased rental rates or increased vacancy rates;
•increased interest rates and operating costs;
•the discontinuation of London Interbank Offered Rate ("LIBOR") and the replacement of LIBOR with an alternative reference rate;
•declining real estate valuations and impairment charges;
•our expected leverage, our failure to obtain necessary outside financing, and existing and future debt service obligations;
•our ability to make distributions to our stockholders;
•our failure to successfully hedge against interest rate increases;
•our failure to successfully operate acquired properties;
•risks relating to our real estate redevelopment, renovation and expansion strategies and activities;
•the ongoing impact of the novel coronavirus ("COVID-19"), or the impact of any
future pandemic, epidemic or outbreak of any other highly infectious disease, on
the U.S. , regional and global economies and on our business, financial condition
and results of operations and that of our tenants;
•our failure to qualify or maintain our status as a real estate investment trust ("REIT"), and possible adverse changes to tax laws;
•uninsured or underinsured losses and costs relating to our properties or that otherwise result from future litigation;
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•environmental uncertainties and risks related to natural disasters;
•financial market fluctuations; and
•changes in real estate and zoning laws and increases in real property tax rates.
OverviewTerreno Realty Corporation ("Terreno", and together with its subsidiaries, "we", "us", "our", "our Company", or "the Company") acquires, owns and operates industrial real estate in six major coastalU.S. markets:Los Angeles ,Northern New Jersey /New York City ,San Francisco Bay Area ,Seattle ,Miami , andWashington, D.C. We invest in several types of industrial real estate, including warehouse/distribution (approximately 79.5% of our total annualized base rent as ofMarch 31, 2022 ), flex (including light industrial and research and development, or R&D) (approximately 4.7%), transshipment (approximately 6.5%) and improved land (approximately 9.3%). We target functional properties in infill locations that may be shared by multiple tenants and that cater to customer demand within the various submarkets in which we operate. Infill locations are geographic locations surrounded by high concentrations of already developed land and existing buildings. As ofMarch 31, 2022 , we owned a total of 256 buildings (including one property consisting of 18 buildings held for sale) aggregating approximately 15.1 million square feet, 37 improved land parcels consisting of approximately 128.3 acres and four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres. As ofMarch 31, 2022 , our buildings and improved land parcels were approximately 96.9% and 94.9% leased (including 0.1 million square feet of vacancy acquired during the fourth quarter of 2021), respectively, to 565 customers, the largest of which accounted for approximately 4.7% of our total annualized base rent. See "Item 1 - Our Investment Strategy - Industrial Facility General Characteristics" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 for a general description of these types of industrial real estate. We are an internally managedMaryland corporation and elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or the Code, commencing with our taxable year endedDecember 31, 2010 .
The following table summarizes by type our investments in real estate as of
Number of Buildings or Annualized Base Rent
Type Improved Land Parcels (in thousands) 1 % of Total
Warehouse/distribution 225 $ 151,652 79.5 %
Flex 13 8,930 4.7 %
Transshipment 18 12,379 6.5 %
Improved land 37 17,831 9.3 %
Total 293 $ 190,792 100.0 %
1Annualized base rent is calculated as contractual monthly base rent per the
leases, excluding any partial or full rent abatements, as of March 31, 2022 ,
multiplied by 12.
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The following table summarizes by market our investments in real estate as ofMarch 31, 2022 : Northern New Jersey/New York San Francisco Total/Weighted Los Angeles City Bay Area Seattle Miami Washington, D.C. Average Investments in Real Estate Number of Buildings 51 62 46 43 32 22 256 Rentable Square Feet 2,695,418 3,449,112
2,197,008 2,781,352 2,262,361 1,761,704 15,146,955 % of Total
17.8 % 22.8 % 14.5 % 18.4 % 14.9 % 11.6 % 100.0 %
Occupancy % as of March 31, 2022 4 99.3 % 97.8 % 98.9 % 96.7 % 93.8 % 93.0 % 96.9 %
Annualized Base Rent (in thousands) 1
30,799
16.7 % 26.0 % 17.8 % 17.3 % 11.2 % 11.0 % 100.0 %
Annualized Base Rent 1 Per Occupied
Square Foot $ 10.78 $ 13.33 $ 14.17 $ 11.14 $ 9.10 $ 11.64 $ 11.79
Weighted Average Remaining Lease Term
(Years) 2 6.2 4.6 3.5 3.8 4.6 2.9 4.4
Investments in Improved Land
Number of Land Parcels 10 10 3 9 2 3 37
Acres 20.7 54.2 7.1 22.4 3.2 20.7 128.3
% of Total 16.2 % 42.2 % 5.5 % 17.5 % 2.5 % 16.1 % 100.0 %
Occupancy % as of March 31, 2022 90.5 % 100.0 % 100.0 % 79.3 % 100.0 % 100.0 % 94.9 %
Annualized Base Rent (in thousands) 1
1,447
25.8 % 41.1 % 8.1 % 12.9 % 2.4 % 9.7 % 100.0 %
Annualized Base Rent 1 Per Occupied
Square Foot $ 5.64 $ 3.19 $
4.70
3.4 5.6 3.9 3.6 2.4 5.7 4.8
Total Investments in Real Estate and
Improved Land
Annualized Base Rent (in thousands) 1 $ 33,479 $ 52,284 $
32,246
17.5 % 27.4 % 16.9 % 16.9 % 10.4 % 10.9 % 100.0 %
Gross Book Value (in thousands) 3
455,589$ 568,692 $ 416,213 $ 313,775 $ 3,047,160 % of Total Gross Book Value 17.7 % 24.7 % 15.0 % 18.6 % 13.7 % 10.3 % 100.0 % 1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as ofMarch 31, 2022 , multiplied by 12. 2Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as ofMarch 31, 2022 , weighted by the respective square footage. 3Includes four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres, and one property consisting of 18 buildings held for sale with a gross book value of approximately$42.3 million . 4Includes 0.1 million square feet of vacancy acquired inMiami that was pre-leased and expected to commence prior toJune 30, 2022 . As ofMarch 31, 2022 , we owned four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately$144.4 million , including redevelopment costs, capitalized interest and 20
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other costs.
The following table summarizes our capital expenditures incurred during the
three months ended
For the Three Months Ended March 31,
2022 2021
Building improvements $ 9,516 $ 1,754
Tenant improvements 4,547 921
Leasing commissions 4,691 2,742
Redevelopment, renovation and expansion 11,951 572
Total capital expenditures 1 $ 30,705 1Includes approximately$23.5 million and$1.2 million for the three months endedMarch 31, 2022 and 2021, respectively, related to leasing acquired vacancy, redevelopment construction in progress and renovation and expansion projects (stabilization capital) at twenty-one and five properties for the three months endedMarch 31, 2022 and 2021, respectively. Our industrial properties are typically subject to leases on a "triple net basis," in which tenants pay their proportionate share of real estate taxes, insurance and operating costs, or are subject to leases on a "modified gross basis," in which tenants pay expenses over certain threshold levels. In addition, approximately 94.6% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases. Lease terms typically range from three to ten years. We monitor the liquidity and creditworthiness of our tenants on an ongoing basis by reviewing outstanding accounts receivable balances, and as provided under the respective lease agreements, review the tenant's financial condition periodically as appropriate. As needed, we hold discussions with the tenant's management about their business and we conduct site visits of the tenant's operations. 21
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Our top 20 customers based on annualized base rent as ofMarch 31, 2022 are as follows: % of Total Annualized % of Total Rentable Rentable Base Rent Annualized Customer Leases Square Feet Square Feet (in thousands) 1 Base Rent 1 Amazon.com 2 6 471,880 3.1 % $ 9,059 4.7 % 2 FedEx Corporation 3 6 246,779 1.6 % 4,843 2.5 % 3 Danaher 3 171,707 1.1 % 3,844 2.0 % 4 United States Government 8 300,732 2.0 % 3,757 2.0 % 5 District of Columbia 7 197,617 1.3 % 3,362 1.8 % 6 O'Neill Logistics 2 237,692 1.6 % 2,069 1.1 % 7 Port Kearny Security, Inc. 4 1 - - % 2,040 1.1 % 8 DirectBuy Home Improvement 2 230,891 1.5 % 2,011 1.1 % 9 Costco-Innovel Solutions LLC 1 219,910 1.5 % 1,870
1.0 %
Hanjin International America, Inc. and 10 Hanjin Transportation Co., LTD 1 114,061 0.7 % 1,848 1.0 % 11 XPO Logistics 2 180,717 1.2 % 1,843 1.0 % 12 L3 Harris Technologies, Inc. 1 147,898 1.0 % 1,751 0.9 % 13 Divergent Technologies, Inc. 5 2 72,808 0.5 % 1,613 0.8 % 14 Bar Logistics 1 203,263 1.3 % 1,546 0.8 % 15 YRC 2 61,252 0.4 % 1,540 0.8 % 16 Topaz Lighting Corp. 1 190,000 1.3 % 1,507 0.8 % 17 Envogue International 2 192,000 1.3 % 1,454 0.8 % 18 United States Postal Service 2 53,000 0.3 % 1,438 0.7 % 19 Lilac Solutions Inc. 1 92,884 0.6 % 1,378 0.7 % 20 Sarcona Management Corporation 6 2 28,124 0.2 % 1,368 0.7 % Total 53 3,413,215 22.5 % $ 50,141 26.3 % 1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as ofMarch 31, 2022 , multiplied by 12. 2Includes two improved land parcels consisting of approximately 6.2 acres. 3Includes two improved land parcels consisting of approximately 7.7 acres. 4Includes an improved land parcel consisting of approximately 16.9 acres. 5Includes an improved land parcel consisting of approximately 1.4 acres. 6Includes an improved land parcel consisting of approximately 2.6 acres. The following table summarizes the anticipated lease expirations for leases in place as ofMarch 31, 2022 , without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations: % of Total Rentable Annualized Base Rent % of Total Annualized Year Rentable Square Feet Square Feet (in thousands) 2, 3 Base Rent 2022 1 1,443,454 9.5 % $ 13,283 6.1 % 2023 2,076,496 13.7 % 27,686 12.7 % 2024 1,878,782 12.5 % 25,178 11.5 % 2025 1,862,741 12.3 % 33,669 15.4 % 2026 2,421,286 16.0 % 38,130 17.5 % Thereafter 4,990,057 32.9 % 80,515 36.8 % Total 14,672,816 96.9 % $ 218,461 100.0 % 1Includes leases that expire on or afterMarch 31, 2022 and month-to-month leases totaling approximately 92,415 square feet. 2Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as ofMarch 31, 2022 , multiplied by 12. 3Includes annualized base rent related to 37 improved land parcels totaling approximately 128.3 acres. 22
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Our ability to re-lease or renew expiring space at rental rates equal to or in excess of current rental rates will impact our results of operations. As ofMarch 31, 2022 , leases representing approximately 6.1% of the total annualized base rent of our portfolio are scheduled to expire during the year endingDecember 31, 2022 . We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our 2022 expirations will be above the rates currently being paid for the same space. Cash rent changes on new and renewed leases totaling approximately 0.7 million square feet commencing during the three months endedMarch 31, 2022 were approximately 34.8% higher as compared to the previous rental rates for that same space. We had a tenant retention ratio of 47.7% for the three months endedMarch 31, 2022 . We define tenant retention ratio as the square footage of all leases commenced during the period that are rented by existing tenants divided by the square footage of all expiring leases during the reporting period. The square footage of tenants that default or buy-out prior to expiration of their lease and short-term leases of less than one year are not included in the calculation. Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates equal to or above the current average rental rates. Further, re-leased/renewed rental rates in a particular market may not be consistent with rental rates across our portfolio as a whole and re-leased/renewed rental rates for particular properties within a market may not be consistent with rental rates across our portfolio within a particular market, in each case due to a number of factors, including local real estate conditions, local supply and demand for industrial space, the condition of the property, the impact of leasing incentives, including free rent and tenant improvements, and whether the property, or space within the property, has been redeveloped.
Recent Developments
Acquisition Activity
During the three months endedMarch 31, 2022 , we acquired two industrial properties for a total purchase price of approximately$86.2 million . The properties were acquired from unrelated third parties using existing cash on hand, net proceeds from dispositions, net proceeds from the issuance of common stock and debt. The following table sets forth the industrial properties we acquired during the three months endedMarch 31, 2022 : Number of Square Purchase Price Stabilized PropertyName Location Acquisition Date Buildings Feet (in thousands) 1 Cap Rate 2 Acreage 3 Countyline #29 & #30 4Hialeah, FL February 9, 2022 2 407,000 $ 73,200 3.8 % - 33rd PlaceBellevue, WA February 23, 2022 2 29,000 13,040 3.4 % 1.2 Total/Weighted Average 4 436,000 $ 86,240 3.7 % 1.2 1Excludes intangible liabilities and mortgage premiums, if any. The total aggregate initial investment was approximately$70.3 million , including$1.4 million in capitalized closing costs and acquisition costs and$2.3 million in assumed intangible liabilities and$19.6 million in other credits related to near term capital expenditures at the Countyline #29 & #30 properties. 2Stabilized capitalization rates, referred to herein as stabilized cap rates, are calculated, at the time of acquisition, as annualized cash basis net operating income for the property stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property. Total acquisition cost basis for the property includes the initial purchase price, the effects of marking assumed debt to market, buyer's due diligence and closing costs, estimated near-term capital expenditures and leasing costs necessary to achieve stabilization. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year endedDecember 31, 2021 and in our other public filings. 3Represents acreage of improved land parcels. 4The property is included in the redevelopment pool and is expected to be completed by the third quarter of 2022. 23
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Redevelopment Activity
As ofMarch 31, 2022 , we had four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres with a total expected investment of approximately$144.4 million , including redevelopment costs, capitalized interest and other costs as follows: Estimated Amount Total Expected Amount Spent to Remaining to Estimated Estimated Investment (in Date (in Spend (in Stabilized Cap Estimated Post-Development Completion % Pre-leased PropertyName thousands) 1 thousands) thousands) Rate 2 Square Feet QuarterMarch 31, 2022 73rd Street $ 20,616 $ 18,063 $ 2,553 5.5 % 128,844 Q3 2022 33.5 % Countyline #29 & #30 75,538 64,124 11,414 3.8 % 407,084 Q3 2022 100.0 % Paterson Plank III 3 23,643 19,188 4,455 4.5 % N/A Q1 2023 - % Berryessa 4 24,563 23,823 740 5.1 % N/A Q1 2023 - % Total/Weighted Average$ 144,360 $ 125,198 $ 19,162 4.4 % 535,928 84.0 % 1Total expected investment for the properties include the initial purchase price, buyer's due diligence and closing costs, estimated near-term redevelopment expenditures, capitalized interest and leasing costs necessary to achieve stabilization. 2Estimated stabilized cap rates are calculated as estimated annualized cash basis net operating income for the properties stabilized to market occupancy (generally 95%) divided by the total acquisition cost for the property. We define cash basis net operating income for the property as net operating income excluding straight-line rents and amortization of lease intangibles. These stabilized cap rates are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control, including risks related to our ability to meet our estimated forecasts related to stabilized cap rates and those risk factors contained in our Annual Report on Form 10-K for the year endedDecember 31, 2021 and in our other public filings. 3Improved land parcel of approximately 4.9 acres. 4Improved land parcel of approximately 7.2 acres.
ATM Program
We have an at-the-market equity offering program (the "$300 Million ATM Program") pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to$300.0 million ($221.4 million remaining as ofMarch 31, 2022 ) in amounts and at times as we determine from time to time. Prior to the implementation of the$300 Million ATM Program, we had a previous at-the-market equity program (the "Previous$300.0 million ATM Program"), which was substantially utilized as ofJune 10, 2021 and which is no longer active. We intend to use the net proceeds from the offering of the shares under the$300 Million ATM Program, if any, for general corporate purposes, which may include future acquisitions, redevelopments and repayment of indebtedness, including borrowings under our revolving credit facility. During the three months endedMarch 31, 2022 , we did not issue any common stock under the$300 Million ATM Program. Share Repurchase Program We have a share repurchase program authorizing us to repurchase up to 3,000,000 shares of our outstanding common stock from time to time throughDecember 31, 2022 . Purchases made pursuant to this program, if any, will be made in either the open market or in privately negotiated transactions as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. As ofMarch 31, 2022 , we had not repurchased any shares of our common stock pursuant to our share repurchase program.
Dividend and Distribution Activity
OnMay 3, 2022 , our board of directors declared a cash dividend in the amount of$0.34 per share of our common stock payable onJuly 14, 2022 to the stockholders of record as of the close of business onJune 30, 2022 . 24
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Contractual Commitments
As ofMay 3, 2022 , we had outstanding contracts with third-party sellers to acquire ten industrial properties for a total aggregate purchase price of$177.7 million , as described under the heading "Material Cash Commitments" in this Quarterly Report on Form 10-Q. There is no assurance that we will acquire the properties under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions.
Inflation
TheU.S. economy has experienced an increase in inflation rates recently. A wide variety of industries and sectors are affected by increasing commodity prices. Inflation has increased construction costs, including tenant improvements and capital projects, and operating costs. Most of our leases require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation. In addition, leases with respect to approximately 64.0% of our total rentable square feet expire within five years which enables us to seek to replace existing leases with new leases at the then-existing market rate.
Financial Condition and Results of Operations
We derive substantially all of our revenues from rents received from tenants under existing leases on each of our properties. These revenues include fixed base rents and recoveries of certain property operating expenses that we have incurred and that we pass through to the individual tenants. Approximately 94.6% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases. Lease terms typically range from three to ten years. Our primary cash expenses consist of our property operating expenses, which include: real estate taxes, repairs and maintenance, management expenses, insurance, utilities, general and administrative expenses, which include compensation costs, office expenses, professional fees and other administrative expenses, acquisition costs, which include third-party costs paid to brokers and consultants, and interest expense, primarily on our revolving credit facility, term loans and senior unsecured notes. Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions at various times during the course of such periods. The results of operations of any acquired property are included in our financial statements as of the date of its acquisition. The analysis of our results below for the three months endedMarch 31, 2022 and 2021 includes the changes attributable to same store properties. The same store pool for the comparison of the three months endedMarch 31, 2022 and 2021 includes all properties that were owned and in operation as ofMarch 31, 2022 and sinceJanuary 1, 2021 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as ofMarch 31, 2022 . As ofMarch 31, 2022 , the same store pool consisted of 200 buildings aggregating approximately 12.3 million square feet representing approximately 81.6% of our total square feet owned and 24 improved land parcels consisting of approximately 91.5 acres. As ofMarch 31, 2022 , the non-same store properties, which we acquired, redeveloped, or sold during 2021 and 2022 or were held for sale or in redevelopment as ofMarch 31, 2022 , consisted of 56 buildings (including one property consisting of 18 buildings held for sale) aggregating approximately 2.8 million square feet, 13 improved land parcels consisting of approximately 36.8 acres and four properties under redevelopment that, upon completion, will consist of two properties aggregating approximately 0.5 million square feet and two improved land parcels aggregating approximately 12.1 acres. As ofMarch 31, 2022 and 2021, our consolidated same store pool occupancy was approximately 98.4% and 97.4%, respectively.
Our future financial condition and results of operations, including rental revenues, straight-line rents and amortization of lease intangibles, may be impacted by the acquisitions of additional properties, and expenses may vary materially from historical results.
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Comparison of the Three Months EndedMarch 31, 2022 to the Three Months EndedMarch 31, 2021 : For the Three Months Ended March 31, 2022 2021 $ Change % Change (Dollars in thousands) Rental revenues 1 Same store$ 40,853 $ 37,681 $ 3,172 8.4 % Non-same store operating properties 2 9,488 2,128 7,360 345.9 % Total rental revenues 50,341 39,809 10,532 26.5 % Tenant expense reimbursements 1 Same store 11,449 10,033 1,416 14.1 % Non-same store operating properties 2 2,245 849 1,396 164.4 % Total tenant expense reimbursements 13,694 10,882 2,812 25.8 % Total revenues 64,035 50,691 13,344 26.3 % Property operating expenses Same store 13,655 12,253 1,402 11.4 % Non-same store operating properties 2 3,221 1,259 1,962 155.8 % Total property operating expenses 16,876 13,512 3,364 24.9 % Net operating income 3 Same store 38,647 35,461 3,186 9.0 % Non-same store operating properties 2 8,512 1,718 6,794 395.5 % Total net operating income$ 47,159 $ 37,179 $ 9,980 26.8 % Other costs and expenses Depreciation and amortization 14,982 11,376 3,606 31.7 % General and administrative 7,527 5,582 1,945 34.8 % Acquisition costs 28 55 (27) (49.1) % Total other costs and expenses 22,537 17,013 5,524 32.5 % Other income (expense) Interest and other income 121 236 (115) (48.7) % Interest expense, including amortization (5,081) (4,145) (936) 22.6 % Total other expense (4,960) (3,909) (1,051) 26.9 % Net income$ 19,662 $ 16,257 $ 3,405 20.9 % 1Accounting Standards Update ("ASU") No. 2018-11, Leases (Topic 842), Targeted Improvements, allows us to elect not to separate lease and non-lease rental income. All rental income earned pursuant to tenant leases is reflected as one line, "Rental revenues and tenant expense reimbursements" on our accompanying consolidated statements of operations. We believe that the above presentation of rental revenues and tenant expense reimbursements is not, and is not intended to be, a presentation in accordance with GAAP, and a reconciliation to total revenue is provided above. We believe this information is frequently used by management, investors, and other interested parties to evaluate our performance. See "Note 2 - Significant Accounting Policies" in our condensed notes to consolidated financial statements for more information regarding our adoption of this standard. 2Includes 2022 and 2021 acquisitions and dispositions, thirteen improved land parcels, four properties under redevelopment and one property held for sale with a gross book value of approximately$42.3 million as ofMarch 31, 2022 . 3Includes straight-line rents and amortization of lease intangibles. See "Non-GAAP Financial Measures" in this Quarterly Report on Form 10-Q for a definition and reconciliation of net operating income and same store net operating income from net income and a discussion of why we believe net operating income and same store net operating income are useful supplemental measures of our operating performance. 26 -------------------------------------------------------------------------------- Table of Contents Revenues. Total revenues increased approximately$13.3 million for the three months endedMarch 31, 2022 compared to the same period from the prior year due primarily to increased revenue on new and renewed leases, property acquisitions during 2022 and 2021 and an increase in occupancy rate. Cash rents on new and renewed leases totaling approximately 0.7 million square feet commencing during the three months endedMarch 31, 2022 increased approximately 34.8% compared to the previous rental rates for that same space. For the three months endedMarch 31, 2022 and 2021, approximately$1.8 million and$1.1 million , respectively, was recorded in straight-line rental revenues related to contractual rent abatements given to certain tenants. Property operating expenses. Total property operating expenses increased approximately$3.4 million during the three months endedMarch 31, 2022 compared to the same period from the prior year. The increase in total property operating expenses was primarily due to an increase of approximately$2.0 million attributable to property acquisitions during 2022 and 2021 as well as increases in real estate taxes related to annual rate increases at certain of our properties. Depreciation and amortization. Depreciation and amortization increased approximately$3.6 million during the three months endedMarch 31, 2022 compared to the same period from the prior year primarily due to property acquisitions during 2022 and 2021. General and administrative expenses. General and administrative expenses increased approximately$1.9 million primarily due to increased restricted stock amortization and other compensation expenses due to an increase in the number of employees and salaries for the three months endedMarch 31, 2022 compared to the same period from the prior year. Interest and other income. Interest and other income remained consistent for the three months endedMarch 31, 2022 compared to the same period from the prior year.
Interest expense, including amortization. Interest expense increased
approximately
Liquidity and Capital Resources
The primary objective of our financing strategy is to maintain financial flexibility with a conservative capital structure using retained cash flows, proceeds from dispositions of properties, long-term debt and the issuance of common and perpetual preferred stock to finance our growth. Over the long-term, we intend to:
•limit the sum of the outstanding principal amount of our consolidated indebtedness and the liquidation preference of any outstanding perpetual preferred stock to less than 35% of our total enterprise value;
•maintain a fixed charge coverage ratio in excess of 2.0x;
•maintain a debt-to-adjusted EBITDA ratio below 6.0x;
•limit the principal amount of our outstanding floating rate debt to less than 20% of our total consolidated indebtedness; and
•have staggered debt maturities that are aligned to our expected average lease term (five to seven years), positioning us to re-price parts of our capital structure as our rental rates change with market conditions.
We intend to preserve a flexible capital structure with a long-term goal to
maintain our investment grade rating and be in a position to issue additional
unsecured debt and perpetual preferred stock. Fitch Ratings assigned us an
issuer rating of BBB with a stable outlook. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency. There can be no assurance
that we will be able to maintain our current credit rating. Our credit rating
can affect the amount and type of capital we can access, as well as the terms of
any financings we may obtain. In the event our current credit rating is
downgraded, it may become difficult or expensive to obtain additional financing
or refinance existing obligations and commitments. We intend to primarily
utilize senior unsecured notes, term loans, credit facilities, dispositions of
properties, and proceeds from the issuance of common stock and perpetual
preferred stock. We may also assume debt in connection with property
acquisitions which may have a higher loan-to-value ratio.
We expect to meet our short-term liquidity requirements generally through net
cash provided by operations, existing cash balances and, if necessary,
short-term borrowings under our revolving credit facility. We believe that our
net cash provided by operations will be adequate to fund operating requirements,
pay interest on any borrowings and fund distributions in accordance with the
REIT requirements of the federal income tax laws. In the near-term, we intend to
fund future investments in properties
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with cash on hand, term loans, senior unsecured notes, mortgages, borrowings under our revolving credit facility, perpetual preferred and common stock issuances and, from time to time, property dispositions. We expect to meet our long-term liquidity requirements, including with respect to other investments in industrial properties, property acquisitions, property redevelopments, renovations and expansions and scheduled debt maturities, through borrowings under our revolving credit facility, periodic issuances of common stock, perpetual preferred stock, and long-term unsecured and secured debt, and, from time to time, with proceeds from the disposition of properties. The success of our acquisition strategy may depend, in part, on our ability to obtain and borrow under our revolving credit facility and to access additional capital through issuances of equity and debt securities. We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Equity Sources of Liquidity
The following sets forth certain information regarding our current at-the-market
common stock offering program as of
Maximum Aggregate
Offering Price (in Aggregate Common Stock
ATM Stock Offering Program Date Implemented thousands) Available (in thousands)
$300 Million ATM Program June 11, 2021 $ 300,000 $ 221,434
The table below sets forth the activity under our at-the-market common stock
offering programs during the three months ended
Weighted Average
For the Three Months Ended Shares Sold Price Per Share Net Proceeds Sales Commissions March 31, 2022 - $ - $ - $ - March 31, 2021 706,524$ 58.20 $ 40,526 $ 596 Debt Sources of Liquidity As ofMarch 31, 2022 , we had$50.0 million of senior unsecured notes that mature inSeptember 2022 ,$100.0 million of senior unsecured notes that mature inJuly 2024 ,$50.0 million of senior unsecured notes that mature inJuly 2026 ,$50.0 million of senior unsecured notes that mature inOctober 2027 ,$100.0 million of senior unsecured notes that mature inJuly 2028 ,$100.0 million of senior unsecured notes that mature inDecember 2029 ,$125.0 million of senior unsecured notes that mature inAugust 2030 , and$50.0 million of senior unsecured notes that mature inJuly 2031 (collectively, the "Senior Unsecured Notes"), and a credit facility (the "Facility"), which consists of a$250.0 million revolving credit facility that matures inAugust 2025 and a$100.0 million term loan that matures inJanuary 2027 . As of bothMarch 31, 2022 and 2021, there were no borrowings outstanding on our revolving credit facility and$100.0 million of borrowings outstanding on our term loan. The aggregate amount of the Facility may be increased to a total of up to$650.0 million , subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Facility are limited to the lesser of (i) the sum of the$100.0 million term loan and the$250.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Facility, including the term loan, is generally to be paid based upon, at our option, either (i) LIBOR plus the applicable LIBOR margin or (ii) the applicable base rate which is the greatest of the administrative agent's prime rate, 0.50% above the federal funds effective rate, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Facility plus 1.25%. The applicable LIBOR margin will range from 1.00% to 1.45% (1.00% as ofMarch 31, 2022 ) for the revolving credit facility and 1.15% to 1.65% (1.15% as ofMarch 31, 2022 ) for the$100.0 million term loan, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value. The Facility requires quarterly payments of an annual facility fee in an amount ranging from 0.15% to 0.30%, depending on the ratio of our outstanding consolidated indebtedness to the value of our consolidated gross asset value. The Facility and the Senior Unsecured Notes are guaranteed by us and by substantially all of the current and to-be-formed subsidiaries of the borrower that own an unencumbered property. The Facility and the Senior Unsecured Notes are not secured by our properties or by interests in the subsidiaries that hold such properties. The Facility and the Senior Unsecured Notes include a series of financial and other covenants with which we must comply. We were in compliance with the covenants under the Facility and the Senior Unsecured Notes as ofMarch 31, 2022 and 2021. 28
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As of
The following tables summarize our debt maturities and principal payments as ofMarch 31, 2022 and our market capitalization, capitalization ratios, Adjusted EBITDA, interest coverage, fixed charge coverage and debt ratios as of and for the three months endedMarch 31, 2022 and 2021 (dollars in thousands, except per share data): Senior Credit Unsecured Facility Term Loan Notes Total Debt 2022 (9 months) $ - $ - $ 50,000 $ 50,000 2023 - - - - 2024 - - 100,000 100,000 2025 - - - - 2026 - - 50,000 50,000 Thereafter - 100,000 425,000 525,000 Total Debt - 100,000 625,000 725,000 Deferred financing costs, net - (480) (3,656) (4,136) Total Debt, net $ - $ 99,520 $ 621,344 $ 720,864 Weighted average interest rate n/a 1.3% 3.2% 3.0% As of March As of March 31, 2022 31, 2021 Total Debt, net$ 720,864 $ 448,004 Equity Common Stock Shares Outstanding 1 75,525,288 69,372,554 Market Price 2$ 74.05 $ 59.21 Total Equity 5,592,648 4,107,549 Total Market Capitalization$ 6,313,512 $ 4,555,553 Total Debt-to-Total Investments in Properties 3 23.7% 19.1% Total Debt-to-Total Market Capitalization 4 11.4% 9.8% Floating Rate Debt as a % of Total Debt 5 13.8% 22.3% Unhedged Floating Rate Debt as a % of Total Debt 6 13.8% 11.2% Adjusted EBITDA 7$ 42,582 $ 33,803 Interest Coverage 8 8.4 x 8.2 x Fixed Charge Coverage 9 7.4 x 8.1 x Total Debt-to-Adjusted EBITDA 10 4.2 x 3.3 x Weighted Average Maturity of Total Debt (years) 5.7 4.3 1Includes 308,677 and 216,047 shares of unvested restricted stock outstanding as ofMarch 31, 2022 and 2021, respectively. Also includes 423,012 and 270,546 shares held in the Deferred Compensation Plan as ofMarch 31, 2022 and 2021, respectively. 2Closing price of our shares of common stock on theNew York Stock Exchange onMarch 31, 2022 and 2021, respectively, in dollars per share. 3Total debt-to-total investments in properties is calculated as total debt, including premiums and net of deferred financing costs, divided by total investments in properties, including one property held for sale as ofMarch 31, 2022 with a gross book value of approximately$42.3 million . 4Total debt-to-total market capitalization is calculated as total debt, including premiums and net of deferred financing costs, divided by total market capitalization. 5Floating rate debt as a percentage of total debt is calculated as floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs. Floating rate debt includes our$100.0 million variable-rate term loan borrowings, of which$50.0 million was subject to an interest 29 -------------------------------------------------------------------------------- Table of Contents rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage, as ofMarch 31, 2021 . The interest rate cap expired onMay 4, 2021 . See "Note 8 - Derivative Financial Instruments" in our condensed notes to consolidated financial statements for more information regarding our prior interest rate cap. 6Unhedged floating rate debt as a percentage of total debt is calculated as unhedged floating rate debt, including premiums and net of deferred financing costs, divided by total debt, including premiums and net of deferred financing costs. Hedged debt includes our$100.0 million variable-rate term loan borrowings, of which$50.0 million was subject to an interest rate cap of 4.0% plus 1.20% to 1.70%, depending on leverage, as ofMarch 31, 2021 . The interest rate cap expired onMay 4, 2021 . See "Note 8 - Derivative Financial Instruments" in our condensed notes to consolidated financial statements for more information regarding our prior interest rate cap. 7Earnings before interest, taxes, gains (losses) from sales of property, depreciation and amortization, acquisition costs and stock-based compensation ("Adjusted EBITDA") for the three months endedMarch 31, 2022 and 2021, respectively. See "Non-GAAP Financial Measures" in this Quarterly Report on Form 10-Q for a definition and reconciliation of Adjusted EBITDA from net income and a discussion of why we believe Adjusted EBITDA is a useful supplemental measure of our operating performance. 8Interest coverage is calculated as Adjusted EBITDA divided by interest expense, including amortization. See "Non-GAAP Financial Measures" in this Quarterly Report on Form 10-Q for a definition and reconciliation of Adjusted EBITDA from net income and a discussion of why we believe Adjusted EBITDA is a useful supplemental measure of our operating performance. 9Fixed charge coverage is calculated as Adjusted EBITDA divided by interest expense, including amortization plus capitalized interest. See "Non-GAAP Financial Measures" in this Quarterly Report on Form 10-Q for a definition and reconciliation of Adjusted EBITDA from net income and a discussion of why we believe Adjusted EBITDA is a useful supplemental measure of our operating performance. 10Total debt-to-Adjusted EBITDA is calculated as total debt, including premiums and net of deferred financing costs, divided by annualized Adjusted EBITDA. See "Non-GAAP Financial Measures" in this Quarterly Report on Form 10-Q for a definition and reconciliation of Adjusted EBITDA from net income and a discussion of why we believe Adjusted EBITDA is a useful supplemental measure of our operating performance.
The following table sets forth the cash dividends paid or payable per share
during the three months ended
Dividend per
For the Three Months Ended Security Share Declaration Date Record Date Date Paid March 31, 2022 Common stock$ 0.34 February 8, 2022 March 25, 2022 April 8, 2022 Sources and Uses of Cash Our principal sources of cash are cash from operations, borrowings under loans payable, draws on our Facility, common and preferred stock issuances, proceeds from property dispositions and issuances of unsecured notes. Our principal uses of cash are asset acquisitions, debt service, capital expenditures, operating costs, corporate overhead costs and common stock dividends. Cash From Operating Activities. Net cash provided by operating activities totaled approximately$28.0 million for the three months endedMarch 31, 2022 compared to approximately$26.2 million for the three months endedMarch 31, 2021 . This increase in cash provided by operating activities is primarily attributable to additional cash flows generated from the properties acquired during 2022 and 2021 and increased rents on new and renewed leases at our same store properties. Cash From Investing Activities. Net cash used in investing activities was approximately$96.8 million and$112.4 million for the three months endedMarch 31, 2022 and 2021, respectively, which consisted primarily of cash paid for property acquisitions of approximately$68.1 million and$104.4 million , respectively, and additions to capital improvements of approximately$28.8 million and$8.0 million , respectively. Cash From Financing Activities. Net cash used in financing activities was approximately$26.5 million for the three months endedMarch 31, 2022 , which consisted primarily approximately$25.6 million in equity dividend payments. Net cash provided by financing activities was approximately$8.8 million for the three months endedMarch 31, 2021 , which consisted primarily of approximately$40.5 million in net common stock issuance proceeds, partially offset by approximately$19.9 million in equity dividend payments and approximately$11.3 million in mortgage loan payments. 30
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Critical Accounting Policies
A summary of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year endedDecember 31, 2021 and in the condensed notes to consolidated financial statements in this Quarterly Report on Form 10-Q.
Material Cash Commitments
As ofMay 3, 2022 , we have ten outstanding contracts with third-party sellers to acquire ten industrial properties for a total aggregate purchase price of$177.7 million . There is no assurance that we will acquire the properties under contract because the proposed acquisitions are subject to the completion of satisfactory due diligence and various closing conditions.
The following table summarizes our material cash commitments due by period as of
Less than 1 More than 5
Material Cash Commitments Year 1-3 Years 3-5 Years Years Total
Debt $ 50,000 $ 100,000 $ 150,000 $ 425,000 $ 725,000
Debt interest payments 20,130 36,030 28,530 34,078 118,768
Operating lease commitments 473 855 889 1,188 3,405
Purchase obligations 1 177,707 - - - 177,707
Total $ 248,310 $ 136,885 $ 179,419 $ 460,266 $ 1,024,880
1As of May 3, 2022
As of May 3, 2022 , we executed three non-binding letters of intent with
third-party sellers to acquire three industrial properties for a total
anticipated purchase price of approximately $108.4 million . In the normal course
of its business, we enter into non-binding letters of intent to purchase
properties from third parties that may obligate us to make payments or perform
other obligations upon the occurrence of certain events, including the execution
of a purchase and sale agreement and satisfactory completion of various due
diligence matters. There can be no assurance that we will enter into purchase
and sale agreements with respect to these properties or otherwise complete any
such prospective purchases on the terms described or at all.
Non-GAAP Financial Measures
We use the following non-GAAP financial measures that we believe are useful to investors as key supplemental measures of our operating performance: funds from operations, or FFO, Adjusted EBITDA, net operating income, or NOI, same store NOI and cash-basis same store NOI. FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI should not be considered in isolation or as a substitute for measures of performance in accordance with GAAP. Further, our computation of FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI may not be comparable to FFO, Adjusted EBITDA, NOI, same store NOI and cash-basis same store NOI reported by other companies. We compute FFO in accordance with standards established by theNational Association of Real Estate Investment Trusts ("Nareit"), which defines FFO as net income (loss) (determined in accordance with GAAP), excluding gains (losses) from sales of property and impairment write-downs of depreciable real estate, plus depreciation and amortization on real estate assets and after adjustments for unconsolidated partnerships and joint ventures (which are calculated to reflect FFO on the same basis). We believe that presenting FFO provides useful information to investors regarding our operating performance because it is a measure of our operations without regard to specified non-cash items, such as real estate depreciation and amortization and gain or loss on sale of assets. We believe that FFO is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient. As a result, we believe that the use of FFO, together with the required GAAP presentations, provide a more complete understanding of our operating performance. 31
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The following table reflects the calculation of FFO reconciled from net income for the three months endedMarch 31, 2022 and 2021 (dollars in thousands except per share data): For the Three Months Ended March 31, 2022 2021 $ Change % Change Net income$ 19,662 $ 16,257 $ 3,405 20.9 % Depreciation and amortization 14,982 11,376 3,606 31.7 % Non-real estate depreciation (23) (13) (10) 76.9 % Allocation to participating securities 1 (141) (86) (55) 64.0 % Funds from operations attributable to common stockholders 2$ 34,480 $ 27,534 $ 6,946 25.2 % Basic FFO per common share$ 0.46 $ 0.40 $ 0.06 15.0 % Diluted FFO per common share$ 0.46 $ 0.40 $ 0.06 15.0 % Weighted average basic common shares 75,199,529
68,603,068
Weighted average diluted common shares 75,284,498
68,862,922
1To be consistent with our policies of determining whether instruments granted in share-based payment transactions are participating securities and accounting for earnings per share, the FFO per common share is adjusted for FFO distributed through declared dividends (if any) and allocated to all participating securities (weighted average common shares outstanding and unvested restricted shares outstanding) under the two-class method. Under this method, allocations were made to 303,666 and 211,746 of weighted average unvested restricted shares outstanding for the three months endedMarch 31, 2022 and 2021, respectively. 2Includes performance share award expense of approximately$1.5 million and$1.3 million for the three months endedMarch 31, 2022 and 2021, respectively. See "Note 10 - Stockholders' Equity" in our condensed notes to consolidated financial statements for more information regarding our performance share awards. FFO increased by approximately$6.9 million for the three months endedMarch 31, 2022 , compared to the same period from the prior year due primarily to same store NOI growth of approximately$3.2 million for the three months endedMarch 31, 2022 compared to the same period from the prior year, as well as property acquisitions during 2022. The FFO increase was partially offset by increased weighted average common shares outstanding and increased general and administrative expenses due to additional headcount for the three months endedMarch 31, 2022 compared to the same period from the prior year. We compute Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, gain on sales of real estate investments, acquisition costs and stock-based compensation. We believe that presenting Adjusted EBITDA provides useful information to investors regarding our operating performance because it is a measure of our operations on an unleveraged basis before the effects of tax, gain (loss) on sales of real estate investments, non-cash depreciation and amortization expense, acquisition costs and stock-based compensation. By excluding interest expense, Adjusted EBITDA allows investors to measure our operating performance independent of our capital structure and indebtedness and, therefore, allows for more meaningful comparison of our operating performance between quarters and other interim periods as well as annual periods and for the comparison of our operating performance to that of other companies, both in the real estate industry and in other industries. As we are currently in a growth phase, acquisition costs are excluded from Adjusted EBITDA to allow for the comparison of our operating performance to that of stabilized companies. The following table reflects the calculation of Adjusted EBITDA reconciled from net income for the three months endedMarch 31, 2022 and 2021 (dollars in thousands): For the Three Months Ended March 31, 2022 2021 $ Change % Change Net income$ 19,662 $ 16,257 $ 3,405 20.9 % Depreciation and amortization 14,982 11,376 3,606 31.7 % Interest expense, including amortization 5,081 4,145 936 22.6 % Stock-based compensation 2,829 1,970 859 43.6 % Acquisition costs 28 55 (27) (49.1) % Adjusted EBITDA$ 42,582 $ 33,803 $ 8,779 26.0 % 32
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We compute NOI as rental revenues, including tenant expense reimbursements, less property operating expenses. We compute same store NOI as rental revenues, including tenant expense reimbursements, less property operating expenses on a same store basis. NOI excludes depreciation, amortization, general and administrative expenses, acquisition costs and interest expense, including amortization. We compute cash-basis same store NOI as same store NOI excluding straight-line rents and amortization of lease intangibles. The same store pool includes all properties that were owned and in operation as ofMarch 31, 2022 and sinceJanuary 1, 2021 and excludes properties that were either disposed of prior to, held for sale to a third party or in redevelopment as ofMarch 31, 2022 . As ofMarch 31, 2022 , the same store pool consisted of 200 buildings aggregating approximately 12.3 million square feet representing approximately 81.6% of our total square feet owned and 24 improved land parcels containing approximately 91.5 acres. We believe that presenting NOI, same store NOI and cash-basis same store NOI provides useful information to investors regarding the operating performance of our properties because NOI excludes certain items that are not considered to be controllable in connection with the management of the properties, such as depreciation, amortization, general and administrative expenses, acquisition costs and interest expense. By presenting same store NOI and cash-basis same store NOI, the operating results on a same store basis are directly comparable from period to period.
The following table reflects the calculation of NOI, same store NOI and
cash-basis same store NOI reconciled from net income for the three months ended
For the Three Months Ended
March 31,
2022 2021 $ Change % Change
Net income 1 $ 19,662 $ 16,257 $ 3,405 20.9 %
Depreciation and amortization 14,982 11,376 3,606 31.7 %
General and administrative 7,527 5,582 1,945 34.8 %
Acquisition costs 28 55 (27) (49.1) %
Total other income and expenses 4,960 3,909 1,051 26.9 %
Net operating income 47,159 37,179 9,980 26.8 %
Less non-same store NOI 2 (8,512) (1,718) (6,794) 395.5 %
Same store NOI $ 38,647 $ 35,461 $ 3,186 9.0 %
Less straight-line rents and amortization of lease
intangibles 3 (2,130) (2,731) 601 (22.0) %
Cash-basis same store NOI $ 36,517 $ 32,730 $ 3,787 11.6 %
Less termination fee income (148) (118) (30) 25.4 %
Cash-basis same store NOI excluding termination fees
11.5 %
1Includes approximately $0.1 million of lease termination income for both the
three months ended March 31, 2022 and 2021.
2Includes 2021 and 2022 acquisitions and dispositions, 13 improved land parcels
consisting of approximately 36.8 acres, four properties under redevelopment, one
completed redevelopment property with an aggregate book value of approximately
$7.5 million and one property consisting of 18 buildings held for sale with a
gross book value of approximately $42.3 million , as of March 31, 2022 .
3Includes straight-line rents and amortization of lease intangibles for the same
store pool only.
Cash-basis same store NOI increased by approximately $3.8 million for the three
months ended March 31, 2022 compared to the same period from the prior year due
to increased rental revenue on new and renewed leases and contractual rent
increases. For both the three months ended March 31, 2022 and 2021, total
contractual rent abatements of approximately $0.9 million , were given to certain
tenants in the same-store pool and approximately $0.1 million in lease
termination income was received from certain tenants in the same store pool. In
addition, for the three months ended March 31, 2022 and 2021, cash-basis same
store NOI included approximately $0.1 million related to properties that were
acquired vacant or with near term expirations in 2020.
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