LXP Industrial Trust

Previous wording

•We entered into new leases and lease extensions encompassing 6.8 million square feet. The average fixed rent on the second generation new and extended leases was $5.40 per square foot compared to the average fixed rent on these leases before extension of $3.85 per square foot. The weighted-average cost of tenant improvements and lease commissions was $12.31 per square foot for new first generation leases and $1.82 per square foot for second generation new and extended leases.

Current wording

•We entered into new leases and lease extensions encompassing 4.5 million square feet. The average fixed rent on new and extended leases was $5.89 per square foot compared to the average fixed rent on these leases before extension of $4.22 per square foot excluding tenant reimbursements as part of the expiring rent in one lease and one lease with a fixed-rate renewal. The weighted-average cost of tenant improvements and lease commissions was $2.52 per square foot for new first-generation leases and $3.39 per square foot for second-generation new and extended leases.

Previous wording

•Placed into service warehouse/distribution facilities containing an aggregate of 1.8 million square feet in four target markets.

Current wording

•Placed into service three fully-leased warehouse facilities containing an aggregate of 1.4 million square feet in the Phoenix, Arizona, Greenville/Spartanburg, South Carolina and Columbus, Ohio markets.

Previous wording

•Disposed of our interests in certain properties and one land parcel for an aggregate gross disposition price of $100.2 million.

Current wording

•Disposed of our interests in two office properties and four industrial facilities for an aggregate gross price of $181.1 million.

Previous wording

General. Over the last several years, we have focused our investment activity primarily on income producing single-tenant warehouse and distribution assets and speculative development of warehouse and distribution assets.

Current wording

General. We focus our investment activity primarily on income producing single-tenant warehouse and distribution assets and build-to-suit and speculative development of warehouse and distribution assets.

Previous wording

As of December 31, 2023, we had two non-industrial assets in our consolidated portfolio, which were held for sale. In addition, we expect to recycle out of certain warehouse and distribution facilities located outside of our target markets over time and use the proceeds to reduce indebtedness and invest in our target markets. While our capital recycling strategy has had and may continue to have a near-term dilutive impact on earnings due to the sales of revenue-producing properties, we believe this strategy will benefit shareholder value in the long term.

Current wording

In addition, we may continue to selectively recycle capital out of our target markets over time and as opportunities arise, and use the proceeds to reduce indebtedness and invest in our target markets. We do not expect capital recycling to have a material dilutive impact on earnings.

Previous wording

The industrial real estate market remains one of the most resilient real estate markets in the current economic environment. The main drivers of growth in the industrial real estate market have been e-commerce and near shoring, where companies increase their inventories in the United States to keep up with demand and to protect against future disruptions in the supply chain.

Current wording

The main drivers of growth in the industrial real estate market have been e-commerce and nearshoring. In addition, certain of our target markets are benefiting from advanced manufacturing investments and business-friendly local and state governments.

Previous wording

While we believe the industrial market will continue to grow, there continues to be competition for the acquisition of industrial properties, specifically warehouse/distribution properties. In addition, recessionary fears may cause tenants to reevaluate expansion and growth plans. We continue to prioritize development, specifically build-to-suit projects, over acquisitions of leased properties due to the higher yield that development generally provides.

Current wording

There continues to be competition for the acquisition of industrial properties, specifically warehouse and distribution facilities. While we believe the industrial market will continue to grow, increased costs from international trade policy may cause some tenants to reevaluate expansion and growth plans. We continue to prioritize build-to-suit projects over (1) acquisitions of leased properties due to the relatively higher yield that build-to-suit projects generally provide and (2) speculative development due to the inherent leasing risk.

Previous wording

Lease Term. We primarily acquire assets subject to intermediate and long-term leases with escalating rents, which we believe strengthen our future cash flows and provide a partial hedge against rising interest rates. We intend to maintain a weighted-average lease term longer than many comparable industrial companies and balance our lease expiration schedule.

Current wording

Lease Term. We primarily acquire assets subject to intermediate and long-term leases with escalating rents, which we believe strengthen our future cash flows and provide a partial hedge against rising interest rates. We intend to maintain a weighted-average lease term longer than many comparable industrial companies and balance our lease expiration schedule because we favor certainty of cash flow over lease-rollover risk with single-tenant facilities.

Previous wording

Our industrial investment underwriting focuses more on real estate characteristics such as location and related demographic and local economic trends than it does on tenant credit. This has allowed us to acquire certain short-term leased warehouse/distribution assets, which may be acquired with greater total return potential than long-term leased warehouse/distribution assets and allow for a value-add strategy through the lease renewal or a multi-tenanting process.

Current wording

Our industrial investment underwriting focuses more on real estate characteristics such as location and related demographic and local economic trends than it does on tenant credit. This has allowed us to acquire certain short-term leased or vacant warehouse and distribution facilities, which may be acquired with greater total return potential than long-term leased warehouse and distribution facilities and allow for a value-add strategy through the lease renewal, lease up or a multi-tenanting process.

Previous wording

Our development activities have been focused on speculative development and purchasing newly-developed properties with vacancy. Our target markets are experiencing low vacancy rates. In 2024, we expect to focus our development activities on build-to-suit activities and limit the amount of speculative development to markets where there is sufficient tenant demand. In 2022 and 2023, construction starts in our target markets were generally down compared to construction starts in 2020 and 2021. We believe this will result in lower supply in the future and may provide opportunity for more build-to-suit investment.

Current wording

Development. Our development activities have been focused on build-to-suit projects, speculative development and purchasing newly-developed properties with vacancy. In 2025, we expect to continue to focus our development activities on build-to-suit projects and limit the amount of speculative development to markets where there is sufficient tenant demand. Construction starts in our target markets continue to be down compared to construction starts in previous years. We believe this will ultimately result in lower supply in the future if, and when, demand increases and may provide opportunity for more development investment.

Previous wording

General. Re-leasing properties that are currently vacant or become vacant as leases expire at favorable effective rates is a primary area of focus for our asset management. Renewals of industrial leases, particularly for warehouse/distribution facilities, are generally dependent on location and occupancy alternatives for our tenants.

Current wording

General. Re-leasing properties that are currently vacant or become vacant as leases expire at favorable effective rates is a primary area of focus for our asset management strategy. Renewals of industrial leases, particularly for warehouse and distribution facilities, are generally dependent on location and occupancy alternatives for our tenants.

Previous wording

Inherent Growth. As of December 31, 2023, 98.1% of our industrial leases had scheduled rent increases. The average escalation rate of these leases based on the next rent step was 2.6% as of December 31, 2023. A majority of our leases require tenants to pay operating expenses, including maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses. However, certain of our leases provide for some level of landlord responsibility for capital repairs and replacements, the cost of which is generally factored into the rental rate. Our motivation to release vacant space requires us to meet market demands with respect to rental rates, tenant concessions and landlord responsibilities. Developers are similarly motivated when signing leases with tenants due to the significant competition in the industrial space. As a result, the obligations of our property owner subsidiaries on new leases and newly renewed or extended leases may increase to include, among other items, some form of responsibility for operating expenses and/or capital repairs and replacements.

Current wording

A majority of our leases require tenants to pay operating expenses, including maintenance, real estate taxes, insurance and utilities, thereby reducing our exposure to increases in costs and operating expenses. However, certain of our leases provide for some level of landlord responsibility for capital repairs and replacements, the cost of which is generally factored into the rental rate. Our motivation to release vacant space requires us to meet market demands with respect to rental rates, tenant concessions and landlord responsibilities. Developers may be similarly motivated when signing leases with tenants due to the significant competition in the industrial space. As a result, the obligations of our property owner subsidiaries on new leases and newly renewed or extended leases may increase to include, among other items, some form of responsibility for operating expenses and/or capital repairs and replacements.

Previous wording

During 2023 and 2022, we incurred impairment charges, of $16.5 million and $3.0 million, respectively, on certain of our assets due to each asset's carrying value being below its estimated fair value. Most of the impairment charges in 2023 and 2022 were incurred on non-core assets due to anticipated shortened holding periods. We cannot estimate if we will incur, or the amount of, future impairment charges on our assets. See Part I, Item 1A “Risk Factors”, of this Annual Report.

Current wording

We did not incur any impairment charges during the year ended December 31, 2024. During the year ended December 31, 2023, we incurred impairment charges of $16.5 million on certain of our assets due to each asset's carrying value being below its estimated fair value. Most of the impairment charges in 2023 were incurred on assets due to anticipated shortened holding periods. We cannot estimate if we will incur, or the amount of, future impairment charges on our assets. See Part I, Item 1A “Risk Factors”, of this Annual Report.

Previous wording

Acquisition and Development of Real Estate. Primarily all of our acquisitions of real estate assets and liabilities are accounted for as asset acquisitions. As such, the purchase prices of acquired tangible and intangible assets and liabilities are recorded and allocated at fair value on a relative basis. The recorded allocations of tangible assets are based on the “as-if-vacant” value using estimated cash flow projections of the properties acquired which incorporates discount, capitalization and interest rates as well as available comparable market information. Allocations of intangible assets includes management’s estimates of current market rents and leasing costs.

Current wording

Acquisition and Development of Real Estate. Substantially all of our acquisitions of real estate assets and liabilities are accounted for as asset acquisitions. As such, the purchase prices of acquired tangible and intangible assets and liabilities are recorded and allocated at fair value on a relative basis. The recorded allocations of tangible assets are based on the “as-if-vacant” value using estimated cash flow projections of the properties acquired which incorporates discount, capitalization and interest rates as well as available comparable market information. Allocations of intangible assets includes management’s estimates of current market rents and leasing costs.

Previous wording

We will record an impairment charge related to our investments, including investments in non-consolidated entities, if we determine the fair value of the investments are less than their carrying value and such impairment is other-than-temporary. We evaluate whether events or changes in circumstances indicate that the carrying amount of our investments may not be recoverable. Our evaluation of changes in economic or operating conditions and whether an impairment is other-than-temporary may include developing estimates of fair value, forecasted cash flows or operating income before depreciation and amortization. We estimate undiscounted cash flows and fair value using observable and unobservable data such as operating income, hold periods, estimated capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain impairments are other-than-temporary.

Current wording

We will record an impairment charge related to our investments in non-consolidated entities if we determine the fair value of the investments are less than their carrying value and such impairment is other-than-temporary. We evaluate whether events or changes in circumstances indicate that the carrying amount of our investments may not be recoverable. Our evaluation of changes in economic or operating conditions and whether an impairment is other-than-temporary may include developing estimates of fair value, forecasted cash flows or operating income before depreciation and amortization. We estimate undiscounted cash flows and fair value using observable and unobservable data such as operating income, hold periods, estimated capitalization and discount rates, or relevant market multiples, leasing prospects and local market information and whether certain impairments are other-than-temporary.

Previous wording

Our principal sources of liquidity have been (1) undistributed cash flows generated from our investments, (2) proceeds from the sales of our investments, (3) the public and private equity and debt markets, (4) corporate level borrowings, (5) property specific debt, and (6) commitments from co-investment partners. We believe our dividend policy is conservative, and allows us to retain cash flow for internal growth.

Current wording

Our principal sources of liquidity have been (1) undistributed cash flows generated from our investments, (2) proceeds from the sales of our investments, (3) the public and private equity and debt markets, (4) corporate level borrowings, (5) property specific debt, and (6) commitments from co-investment partners.

Previous wording

Cash flows from operations as reported in the consolidated statements of cash flows totaled $209.4 million for 2023 and $194.3 million for 2022. The increase was primarily related to increased rental revenue related to lease extensions and placing development properties into service, partially offset by a decrease in cash flow due to property sales. The underlying drivers that impact our working capital, and therefore cash flows from operations, are the timing of collection of rents, including reimbursements from tenants, payment of interest on debt and payment of operating and general and administrative costs. We believe the net-lease structure of the leases encumbering a majority of the properties in which we have an interest mitigates the risks of the timing of cash flows from operations since the payment and timing of operating costs related to the properties are generally borne directly by the tenant. The collection and timing of tenant rents are closely monitored by management as part of our cash management program.

Current wording

Cash flows from operations as reported on the consolidated statements of cash flows totaled $211.2 million for 2024 and $209.4 million for 2023. The increase was primarily related to increased rental revenue related to additional sales-type lease income, lease extensions and placing development properties into service, partially offset by a decrease in cash flow due to property sales and increased interest expense. The underlying drivers that impact our working capital, and therefore cash flows from operations, are the timing of collection of rents, including reimbursements from tenants, payment of interest on debt and payment of operating and general and administrative costs. We believe the net-lease structure of the leases encumbering a majority of the properties in which we have an interest mitigates the risks of the timing of cash flows from operations since the payment and timing of operating costs related to the properties are generally borne directly by the tenant. The collection and timing of tenant rents are closely monitored by management as part of our cash management program.

Previous wording

Net cash used in investing activities totaled $183.5 million in 2023 and $236.9 million in 2022. Cash used in investing activities related primarily to acquisitions of real estate, investments in real estate under construction, capital expenditures, lease costs, investments in non-consolidated entities. Cash provided by investing activities primarily related to net proceeds received from the disposition of real estate and distributions from non-consolidated entities and the receipt of principal payments on a note receivable and changes in real estate deposits, net.

Current wording

Net cash provided by (used in) investing activities totaled $86.4 million in 2024 and $(183.5) million in 2023. Cash provided by investing activities primarily related to net proceeds received from the disposition of real estate, realization of the net investment in a sales-type lease, distributions from non-consolidated entities, loan receivable payments and redeeming investments in held-to-maturity securities. Cash used in investing activities related primarily to acquisitions of real estate, investments in real estate under construction, capital expenditures, lease costs, investments in non-consolidated entities and investments in held-to-maturity securities.

Previous wording

Net cash provided by (used in) financing activities totaled $119.0 million in 2023 and ($93.9) million in 2022. Cash provided by financing activities in 2023 was primarily related to the receipt of proceeds from the issuance of the 2028 Senior Notes and borrowings on the credit facility, offset by the repurchase of common shares to settle tax obligations, the purchase of a noncontrolling interest and dividend and debt service payments, Cash used in financing activities in 2022 was primarily related to the repurchase of common shares, the purchase of a noncontrolling interest and dividend and debt service payments, offset by common share issuances and contributions from noncontrolling interests.

Current wording

Net cash provided by (used in) financing activities totaled $(395.0) million in 2024 and $119.0 million in 2023. Cash used in financing activities in 2024 was primarily related to the repayment of the 2024 Senior Notes, the purchase of a noncontrolling interest and dividend and debt service payments, offset by contributions from noncontrolling interests. Cash provided by financing activities in 2023 was primarily related to the receipt of proceeds from the issuance of the 2028 Senior Notes and borrowings on the credit facility, offset by the repurchase of common shares to settle tax obligations, the purchase of a noncontrolling interest and dividend and debt service payments.

Previous wording

During 2021, we amended the terms of our ATM offering program, under which we may, from time to time, sell up to $350.0 million common shares over the term of the program. As of December 31, 2023, common shares with an aggregate value of $295.0 million remain available for issuance under the ATM program.

Current wording

We may, from time to time, sell up to $350.0 million of common shares over the term of the ATM program. During the years ended December 31, 2024 and 2023, we did not sell shares under the ATM program.

Previous wording

Direct Share Purchase Plan. We maintain a direct share purchase plan, which has two components, (i) a dividend reinvestment component and (ii) a direct share purchase component. Under the dividend reinvestment component, common shareholders and holders of OP units may elect to automatically reinvest their dividends and distributions to purchase our common shares. Under the direct share purchase component, our current investors and new investors can make optional cash purchases of our common shares. The administrator of the plan, Computershare Trust Company, N.A., purchases common shares for the accounts of the participants under the plan, at our discretion, either directly from us, on the open market or through a combination of those two options. No shares were purchased from us under the plan in 2023 and 2022.

Current wording

Direct Share Purchase Plan. We maintain a direct share purchase plan, which has two components, (i) a dividend reinvestment component and (ii) a direct share purchase component. Under the dividend reinvestment component, common shareholders may elect to automatically reinvest their dividends to purchase our common shares. Under the direct share purchase component, our current investors and new investors can make optional cash purchases of our common shares. The administrator of the plan, Computershare Trust Company, N.A., purchases common shares for the accounts of the participants under the plan, at our discretion, either directly from us, on the open market or through a combination of those two options. No shares were purchased from us under the plan in 2024 and 2023.

Previous wording

Share Repurchase Program. In August 2022, our Board of Trustees authorized the repurchase of up to an additional 10.0 million common shares under our share repurchase program, which does not have an expiration date. During 2022, 12.1 million common shares were repurchased and retired for an average price of $10.78 per share. No shares were repurchased in 2023. As of December 31, 2023, 6.9 million common shares remain available for repurchase under this authorization.

Current wording

Share Repurchase Program. In August 2022, our Board of Trustees authorized the repurchase of up to an additional 10.0 million common shares under our share repurchase program, which does not have an expiration date. No common shares were repurchased during 2024 and 2023. As of December 31, 2024, 6.9 million common shares remain available for repurchase under this authorization.

Previous wording

Corporate Borrowings. In 2023, we issued $300.0 million aggregate principal amount of our 2028 Senior Notes. We used the proceeds to pay down all amounts under our unsecured revolving credit facility and invested the remaining proceeds in cash and cash equivalents and short-term investments to fund general corporate purposes, including to repay other indebtedness at or in advance of maturity and to fund our development pipeline.

Current wording

Corporate Borrowings. In 2024, we repaid the $198.9 million aggregate principal amount of our 2024 Senior Notes at maturity.

Previous wording

(2)In November 2023, we amended the agreement governing our $300 million term loan. The amendment among other things extends the maturity of the term loan from January 31, 2025 to January 31, 2027. The Term SOFR portion of the interest rate remains swapped to obtain a current fixed rate of 2.722% per annum until January 31, 2025.

Current wording

(2)The Term SOFR portion of the interest rate was swapped to obtain a fixed-rate of 2.722% per annum, until January 31, 2025 and an aggregate amount of $250.0 million of the term loan is swapped to obtain an effective fixed interest rate of 4.31% from January 31, 2025 to January 31, 2027.

Previous wording

During 2007, we issued $200.0 million in Trust Preferred Securities, which bore interest at a fixed rate of 6.804% through April 2017 and, thereafter, bears interest at a variable rate of three-month SOFR plus a 26 basis point adjustment plus 170 basis points. These securities are (1) classified as debt, (2) due in 2037 and (3) currently redeemable by us. As of December 31, 2023, there were $129.1 million of these securities outstanding.

Current wording

During 2007, we issued $200.0 million in Trust Preferred Securities. The Trust Preferred Securities bear interest at a variable rate of three-month SOFR plus a 26 basis point adjustment plus 170 basis points. The interest rate on an aggregate amount of $82.5 million of the Trust Preferred Securities is swapped to obtain an effective fixed interest rate of 5.20% from October 30, 2024 to October 30, 2027. These securities are (1) classified as debt, (2) due in 2037 and (3) currently redeemable by us. As of December 31, 2024, there were $129.1 million of these securities outstanding.

Previous wording

Property Specific Debt. As of December 31, 2023, we have a limited number of consolidated properties subject to mortgages. Our property owner subsidiaries do not have mortgage maturities with balloon payments due until 2031. With respect to mortgages encumbering properties where the expected lease rental revenues are sufficient to provide an estimated property value in excess of the mortgage balance, we believe our property owner subsidiaries have sufficient sources of liquidity to meet these obligations through future cash flows from operations, the credit markets and, if determined appropriate by us, a capital contribution from us from either cash on hand and short-term investments ($199.2 million and $130.1 million, respectively, at December 31, 2023), property sale proceeds or borrowing capacity on our primary credit facility ($600.0 million as of December 31, 2023, subject to covenant compliance).

Current wording

Property Specific Debt. As of December 31, 2024, our secured debt decreased to approximately $55.5 million at December 31, 2024 compared to $60.9 million at December 31, 2023. Our property owner subsidiaries do not have mortgage maturities with balloon payments due until 2031. With respect to mortgages encumbering properties where the expected lease rental revenues are sufficient to provide an estimated property value in excess of the mortgage balance, we believe our property owner subsidiaries have sufficient sources of liquidity to meet these obligations through future cash flows from operations, the credit markets and, if determined appropriate by us, a capital contribution from us from either cash on hand ($101.8 million at December 31, 2024), property sale proceeds or borrowing capacity on our primary credit facility ($600.0 million as of December 31, 2024, subject to covenant compliance).

Previous wording

Our secured debt decreased to approximately $60.9 million at December 31, 2023 compared to $73.2 million at December 31, 2022. We expect to continue to use property specific, non-recourse mortgages in certain situations as we believe that by properly matching a debt obligation, including the balloon maturity risk, with the terms of a lease, our cash-on-cash returns increase and the exposure to residual valuation risk is reduced. In addition, we may procure credit tenant lease financing in certain situations where we are able to monetize all or a significant portion of the rental revenues of a property at an attractive rate.

Current wording

We may continue to use property specific, non-recourse mortgages in certain situations as we believe that by properly matching a debt obligation, including the balloon maturity risk, with the terms of a lease, our cash-on-cash returns increase and the exposure to residual valuation risk is reduced. In addition, we may procure credit tenant lease financing in certain situations where we are able to monetize all or a significant portion of the rental revenues of a property at an attractive rate.

Previous wording

The real estate investments owned by our institutional joint ventures are generally financed with non-recourse debt. Non-recourse debt is generally defined as debt whereby the lenders' sole recourse with respect to borrower defaults is limited to the value of the assets collateralized by the debt. The lender generally does not have recourse against any other assets owned by the borrower or any of the members or partners of the borrower, except for certain specified exceptions listed in the particular loan documents. These exceptions generally relate to “bad boy” acts, including fraud, prohibited transfers and breaches of material representations, and environmental matters. We have guaranteed such obligations for certain of our non-consolidated entities with respect to $458.6 million of such non-recourse debt. We believe the likelihood of making any payments under such guaranties is remote and we generally have an agreement from each partner to reimburse us for its proportionate share of any liability related to a guarantee trigger unless such trigger is caused solely by us.

Current wording

The real estate investments owned by our institutional joint ventures are generally financed with non-recourse debt. Non-recourse debt is generally defined as debt whereby the lenders' sole recourse with respect to borrower defaults is limited to the value of the assets collateralized by the debt. The lender generally does not have recourse against any other assets owned by the borrower or any of the members or partners of the borrower, except for certain specified exceptions listed in the particular loan documents. These exceptions generally relate to “bad boy” acts, including fraud, prohibited transfers and breaches of material representations, and environmental matters. We have guaranteed such obligations for certain of our non-consolidated entities with respect to $432.3 million of such non-recourse debt. We believe the likelihood of making any payments under such guaranties is remote and we generally have an agreement from each partner to reimburse us for its proportionate share of any liability related to a guarantee trigger unless such trigger is caused solely by us.

Previous wording

As we near the completion of the capital recycling of our non-industrial assets, we have recycled, and we expect to continue our recycling efforts with respect to our older industrial assets and/or those outside our target markets. We believe capital recycling (1) provides cost effective and timely capital to deleverage and to support for our investment activities and (2) allows us to maintain line capacity and cash in advance of our development commitments.

Current wording

Part of our strategy to effectively manage our balance sheet involves pursuing and executing well on property dispositions and recycling of capital from our older industrial assets and/or those outside our target markets. We believe capital recycling (1) provides cost effective and timely capital to deleverage and to support our investment activities and (2) allows us to maintain line capacity and cash in advance of our development commitments.

Previous wording

Part of our strategy to effectively manage our balance sheet involves pursuing and executing well on property dispositions and recycling of capital. During 2023, we disposed of our interests in one industrial property, three other properties and one land parcel for an aggregate gross price of $100.2 million. Additionally, the Office JV disposed of one property for $30.1 million of gross proceeds and repaid an aggregate of $29.4 million of non-recourse debt. Additionally, a non-consolidated joint venture, in which we held a 25% ownership interest, disposed of one property for $82.0 million of gross proceeds and we received a distribution of $8.1 million after repayment of $48.9 million of non-recourse debt. The proceeds of our capital recycling efforts were primarily used to (1) fund the development pipeline and (2) make investments in real property.

Current wording

During 2024, we disposed of our interests in four industrial properties and the remaining two office properties for an aggregate gross disposition price of $181.1 million. We also disposed of our ground-leased land parcel for $86.5 million upon the exercise of a tenant purchase option. In addition, the Office JV disposed of three properties for an aggregate gross disposition price of $33.6 million and repaid an aggregate of $23.0 million of its remaining non-recourse debt, and the MFG JV disposed of one property for a gross disposition price of $41.8 million and repaid $35.5 million of non-recourse debt. The disposition proceeds and distributions received from the non-consolidated joint ventures were primarily used to (1) fund the development pipeline and (2) make investments in real property in our target markets.

Previous wording

As of December 31, 2023, we had approximately $1.8 billion of indebtedness, consisting of mortgages and notes payable outstanding, a term loan, 6.75%, 2.375%, 2.70%, and 4.40% Senior Notes and Trust Preferred Securities, with a weighted-average interest rate of approximately 3.9%. The ability of a property owner subsidiary to make debt service payments depends upon the rental revenues of its property and its ability to refinance the mortgage related thereto, sell the related property, or access capital from us or other sources. A property owner subsidiary's ability to accomplish such goals will be affected by numerous economic factors affecting the real estate industry, including the risks described under “Risk Factors” in Part I, Item 1A of this Annual Report.

Current wording

We expect to pay our non-maturity debt service obligations from cash flow from operations. The ability of a property owner subsidiary to make debt service payments on its mortgage depends upon the rental revenues of its property and its ability to refinance the mortgage, sell the related property, or access capital from us or other sources. A property owner subsidiary's ability to accomplish such goals will be affected by numerous economic factors affecting the real estate industry, including the risks described under “Risk Factors” in Part I, Item 1A of this Annual Report.

Previous wording

In connection with our intention to continue to qualify as a REIT for federal income tax purposes, we expect to continue paying regular dividends to our shareholders. These dividends are expected to be paid from operating cash flows and/or from other sources. Since cash used to pay dividends reduces amounts available for capital investments, we generally intend to maintain a conservative dividend payout ratio, reserving such amounts as we consider necessary for the maintenance or expansion of properties in our portfolio, debt reduction, the acquisition of interests in new properties as suitable opportunities arise, and such other factors as our Board of Trustees considers appropriate.

Current wording

In connection with our intention to continue to qualify as a REIT for federal income tax purposes, we expect to continue paying regular dividends to our shareholders. These dividends are expected to be paid from operating cash flows and/or from other sources.

Previous wording

We paid approximately $151.9 million in cash dividends to our common and preferred shareholders in 2023. Although our property owner subsidiaries receive the majority of our base rental payments on a monthly basis, we intend to continue paying dividends quarterly. Amounts accumulated in advance of each quarterly distribution are invested by us in short-term money market or other suitable instruments.

Current wording

We paid approximately $158.2 million in cash dividends to our common and preferred shareholders in 2024. Although our property owner subsidiaries receive the majority of our base rental payments on a monthly basis, we intend to continue paying dividends quarterly. Amounts accumulated in advance of each quarterly distribution are invested by us in short-term money market or other suitable instruments.

Previous wording

As of December 31, 2023, we expect to incur approximately $53.2 million of costs, excluding noncontrolling interests' share and potential developer fees or partner buyouts, to substantially fund our consolidated development project commitments. As of December 31, 2023, we had three consolidated and two non-consolidated subsidiaries that owned land parcels held for industrial development. We are unable to estimate the timing of any required fundings for potential development projects on these parcels.

Current wording

As of December 31, 2024, we expect to incur approximately $29.8 million of costs, excluding noncontrolling interests' share and potential developer fees or partner buyouts, to substantially fund the leasing costs for our placed-in service development projects and infrastructure work for our consolidated and non-consolidated land parcels held for development. We are unable to estimate (1) the timing of any required fundings for such leasing costs until leases are executed and (2) the timing or amount of any additional costs related to the land parcels until we commit to such additional costs.

Previous wording

Multi-Tenant Properties. Primarily as a result of non-renewals at single-tenant net-lease properties, we have interests in multi-tenant properties in our consolidated portfolio. While tenants of these properties are generally responsible for operating expenses in their spaces, but we are responsible for all expenses related to vacant space and certain non-reimbursable building expenses, at these properties.

Current wording

Multi-Tenant Properties. We have interests in a limited number of multi-tenant properties in our consolidated portfolio. While tenants of these properties are generally responsible for operating expenses in their spaces, our property owner subsidiaries are responsible for all expenses related to vacant space and certain non-reimbursable building expenses, at these properties.

Previous wording

Vacant Properties. To the extent there is a vacancy in a property, our property owner subsidiary would be obligated for all operating expenses, including capital expenditures, real estate taxes and insurance. When a property is vacant, our property owner subsidiary may incur substantial capital expenditure and releasing costs to re-tenant the property. However, we believe that, over the long term, our focus on industrial assets will result in significant savings compared to investing in office assets due to the lower operating and re-tenanting costs of industrial assets compared to office assets.

Current wording

Vacant Properties. To the extent there is a vacancy in a property, our property owner subsidiary would be obligated for all operating expenses, including capital expenditures, real estate taxes and insurance. When a property is vacant, our property owner subsidiary may incur substantial capital expenditure and releasing costs to re-tenant the property.

Previous wording

Year ended December 31, 2023 compared with December 31, 2022. The decrease in net income attributable to common shareholders of $83.4 million was primarily due to the items discussed below.

Current wording

Year ended December 31, 2024 compared with December 31, 2023. The increase in net income attributable to common shareholders of $14.2 million was primarily due to the items discussed below.

Previous wording

The increase in depreciation and amortization expense of $3.0 million was primarily due to properties acquired and/or completed and placed in service subsequent to January 1, 2022.

Current wording

The increase in depreciation and amortization expense of $9.3 million was primarily due to properties acquired and/or completed and placed in service.

Previous wording

The increase in property operating expense of $3.5 million was primarily due to an increase in operating expense responsibilities at certain properties.

Current wording

The increase in property operating expense of $2.1 million was primarily due to an increase in operating expense responsibilities at certain properties and carrying costs for vacant development facilities placed into service.

Previous wording

The increase in non-operating income of $2.0 million was primarily due to an increase in interest income earned from investing some of the proceeds received from the 2028 Senior Notes.

Current wording

The increase in non-operating income of $4.7 million was primarily due to an increase in interest income earned from investing in short-term investments.