STAG Industrial Inc

Previous wording

The industrial real estate business is affected by the recent high inflationary, rising interest rate environment, disruption in the banking industry, and geopolitical tensions. These factors are key drivers of financial market volatility and raise concerns about a slowing global economy. While U.S. gross domestic product (“GDP”) declined during the first two quarters of 2022, real GDP has increased for six consecutive quarters with the most recent measure showing 3.4% growth in the fourth quarter of 2023. Labor conditions are holding strong with a 3.8% unemployment rate as of March 2024. Going forward, the general consensus among economists is to expect low growth in the United States with a continued historically elevated risk of recession. While the macro-economic conditions continue to evolve and could result in tighter credit conditions, weakening tenant cash flows, and rising vacancy rates, we believe we will continue to benefit from having a well-diversified portfolio across various markets, tenant industries, and lease terms. Additionally, we believe that recent moves toward more regional supply chains and geopolitical tensions have accelerated a number of trends that positively impact U.S. industrial demand. However, given the current uncertainty and events discussed above, our acquisition activity slowed in 2022 and 2023 relative to our historical acquisition pace.

Current wording

The industrial real estate business is affected by the recent high inflationary, rising interest rate environment, disruption in the banking industry, and geopolitical tensions. These factors are key drivers of financial market volatility and raise concerns about a slowing global economy. While U.S. gross domestic product (“GDP”) declined during the first two quarters of 2022, real GDP has increased for seven consecutive quarters with the most recent measure showing 1.4% growth in the first quarter of 2024. Labor conditions are slowing, but holding solid with a 4.1% unemployment rate as of June 2024. Going forward, the general consensus among economists is to expect low growth in the United States with a continued historically elevated risk of recession. While the macro-economic conditions continue to evolve and could result in tighter credit conditions, weakening tenant cash flows, and rising vacancy rates, we believe we will continue to benefit from having a well-diversified portfolio across various markets, tenant industries, and lease terms. Additionally, we believe that recent moves toward more regional supply chains and geopolitical tensions have accelerated a number of trends that positively impact U.S. industrial demand. However, given the current uncertainty and events discussed above, our acquisition activity slowed since 2022 relative to our historical acquisition pace.

Previous wording

Our portfolio continues to have strong occupancy and benefits from geographic diversity throughout the national industrial market. Demand across the industrial market is moderating relative to recent peaks. Vacancy and availability rates, while rising, remain low by historical standards in many markets. The supply pipeline remains robust, albeit smaller and more notably concentrated in very large warehouses. Construction starts continue to decline as a result of both moderating demand and volatile capital markets. The weakening global and U.S. economic trends could be a notable headwind and may result in relatively less demand for space and higher vacancy. We believe that the diversification of our portfolio by market, tenant industry, and tenant credit will prove to be a strength in this environment.

Current wording

Our portfolio continues to have strong occupancy and benefits from geographic diversity throughout the national industrial market. Demand across the industrial market is moderating relative to recent peaks. Vacancy and availability rates, while rising, remain low by historical standards in many markets. The supply pipeline remains robust, albeit smaller and more notably concentrated in very large warehouses. Construction starts continue to decline as a result of both moderating demand and volatile capital markets. The weakening global and U.S. economic trends could be a notable headwind and may potentially result in relatively less demand for space, increased credit loss, and higher vacancy. We believe that the diversification of our portfolio by market, tenant industry, and tenant credit will prove to be a strength in this environment.

Previous wording

The following table summarizes the Operating Portfolio leases that commenced during the three months ended March 31, 2024. Any rental concessions in such leases are accounted for on a straight-line basis over the term of the lease.

Current wording

The following table summarizes the Operating Portfolio leases that commenced during the three and six months ended June 30, 2024. Any rental concessions in such leases are accounted for on a straight-line basis over the term of the lease.

Previous wording

Additionally, for the three months ended March 31, 2024, leases related to the Value Add Portfolio and first generation leasing, with a total of 307,841 square feet, are excluded from the Operating Portfolio statistics above.

Current wording

Additionally, for the three and six months ended June 30, 2024, leases related to the Value Add Portfolio and first generation leasing, with a total of 263,831 and 390,772 square feet, respectively, are excluded from the Operating Portfolio statistics above.

Previous wording

Our ability to re-lease space subject to expiring leases will impact our results of operations and is affected by economic and competitive conditions in our markets and by the desirability of our individual buildings. Leases that comprise approximately 8.6% of our total annualized base rental revenue will expire during the period from April 1, 2024 to March 31, 2025, excluding month-to-month leases. We assume, based upon internal renewal probability estimates, that some of our tenants will renew and others will vacate and the associated space will be re-let subject to downtime assumptions. Using the aforementioned assumptions, we expect that the rental rates on the respective new leases will be greater than the rates under existing leases expiring during the period April 1, 2024 to March 31, 2025, thereby resulting in an increase in revenue from the same space.

Current wording

Our ability to re-lease space subject to expiring leases will impact our results of operations and is affected by economic and competitive conditions in our markets and by the desirability of our individual buildings. Leases that comprise approximately 9.1% of our total annualized base rental revenue will expire during the period from July 1, 2024 to June 30, 2025, excluding month-to-month leases. We assume, based upon internal renewal probability estimates, that some of our tenants will renew and others will vacate and the associated space will be re-let subject to downtime assumptions. Using the aforementioned assumptions, we expect that the rental rates on the respective new leases will be greater than the rates under existing leases expiring during the period July 1, 2024 to June 30, 2025, thereby resulting in an increase in revenue from the same space.

Previous wording

(2)Leases previously scheduled to expire in 2024, totaling approximately 10.0 million square feet, have been executed as of March 31, 2024. These leases are excluded from 2024 expirations and are reflected in the new year of expiration.

Current wording

(1)Leases previously scheduled to expire in 2024, totaling approximately 11.4 million square feet, have been executed as of June 30, 2024. These leases are excluded from 2024 expirations and are reflected in the new year of expiration.

Previous wording

The following table summarizes our acquisitions during the three months ended March 31, 2024.

Current wording

The following table summarizes our acquisitions during the three and six months ended June 30, 2024.

Previous wording

We define same store properties as properties that were in the Operating Portfolio for the entirety of the comparative periods presented. The results for same store properties exclude termination fees, solar income, and other income adjustments. Same store properties exclude Operating Portfolio properties with expansions placed into service after January 1, 2023. On March 31, 2024, we owned 548 industrial buildings consisting of approximately 108.9 million square feet and representing approximately 96.4% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy decreased approximately 0.3% to 97.8% as of March 31, 2024 compared to 98.1% as of March 31, 2023.

Current wording

We define same store properties as properties that were in the Operating Portfolio for the entirety of the comparative periods presented. The results for same store properties exclude termination fees, solar income, and other income adjustments. Same store properties exclude Operating Portfolio properties with expansions placed into service after January 1, 2023. On June 30, 2024, we owned 541 industrial buildings consisting of approximately 107.8 million square feet and representing approximately 94.5% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy decreased approximately 0.4% to 97.4% as of June 30, 2024 compared to 97.8% as of June 30, 2023.

Previous wording

Net income for our total portfolio decreased by approximately $13.2 million, or 26.0%, to approximately $37.5 million for the three months ended March 31, 2024 compared to approximately $50.6 million for the three months ended March 31, 2023.

Current wording

Net income for our total portfolio increased by approximately $8.3 million, or 15.7%, to approximately $61.1 million for the three months ended June 30, 2024 compared to approximately $52.8 million for the three months ended June 30, 2023.

Previous wording

Same store rental income, which includes lease income and other billings as discussed below, increased by approximately $9.6 million, or 5.7%, to approximately $179.4 million for the three months ended March 31, 2024 compared to approximately $169.7 million for the three months ended March 31, 2023.

Current wording

Same store rental income, which includes lease income and other billings as discussed below, increased by approximately $8.2 million, or 4.9%, to approximately $174.4 million for the three months ended June 30, 2024 compared to approximately $166.2 million for the three months ended June 30, 2023.

Previous wording

Total same store property operating expenses increased by approximately $2.8 million, or 7.9%, to approximately $37.8 million for the three months ended March 31, 2024 compared to approximately $35.0 million for the three months ended March 31, 2023. This increase was due to increases in snow removal, insurance, repairs and maintenance, real estate tax, and other expenses of approximately $0.9 million, $0.6 million, $0.5 million, $0.4 million, and $0.4 million, respectively.

Current wording

Total same store property operating expenses increased by approximately $1.5 million, or 4.8%, to approximately $33.5 million for the three months ended June 30, 2024 compared to approximately $32.0 million for the three months ended June 30, 2023. This increase was primarily due to increases in real estate tax and other expenses of approximately $1.7 million and $0.8 million, respectively. These increases were partially offset by decreases to snow removal, repairs and maintenance, and utility expenses of approximately $0.4 million, $0.3 million, and $0.3 million, respectively.

Previous wording

Subsequent to January 1, 2023, we acquired 12 buildings consisting of approximately 2.1 million square feet (excluding five buildings that were included in the Value Add Portfolio at March 31, 2024 or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023), and sold 10 buildings consisting of approximately 2.0 million square feet. For the three months ended March 31, 2024 and 2023, the buildings acquired after January 1, 2023 contributed approximately $3.3 million and $— to NOI, respectively. For the three months ended March 31, 2024 and March 31, 2023, the buildings sold after January 1, 2023 contributed approximately $— and $1.3 million to NOI, respectively. Refer to Note 3 in the accompanying Notes to consolidated Financial Statements for additional discussion regarding buildings acquired or sold.

Current wording

Subsequent to January 1, 2023, we acquired 20 buildings consisting of approximately 3.9 million square feet (excluding seven buildings that were included in the Value Add Portfolio at June 30, 2024, or sold or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023), and sold 17 buildings consisting of approximately 3.1 million square feet. For the three months ended June 30, 2024 and 2023, the buildings acquired after January 1, 2023 contributed approximately $5.9 million and $0.2 million to NOI, respectively. For the three months ended June 30, 2024 and June 30, 2023, the buildings sold after January 1, 2023 contributed approximately $0.2 million and $2.8 million to NOI, respectively. Refer to Note 3 in the accompanying Notes to Consolidated Financial Statements for additional discussion regarding buildings acquired or sold.

Previous wording

These buildings contributed approximately $2.9 million and $0.7 million to NOI for the three months ended March 31, 2024 and 2023, respectively. Additionally, there was approximately $0.7 million and $0.9 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the three months ended March 31, 2024 and 2023, respectively.

Current wording

These buildings contributed approximately $3.7 million and $1.2 million to NOI for the three months ended June 30, 2024 and 2023, respectively. Additionally, there was approximately $1.6 million and $0.5 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the three months ended June 30, 2024 and 2023, respectively.

Previous wording

Total other expenses consist of general and administrative expenses, depreciation and amortization, and other expenses.

Current wording

Total other expenses consist of general and administrative expenses, depreciation and amortization, loss on impairment, and other expenses.

Previous wording

Total other expense increased approximately $23.6 million, or 957.9%, to approximately $26.1 million for the three months ended March 31, 2024 compared to approximately $2.5 million for the three months ended March 31, 2023. This increase was primarily a result of a decrease in the gain on the sales of rental property, net of approximately $20.1 million, as there were no sales of rental property during the three months ended March 31, 2024. This increase was also attributable to an increase in interest expense of approximately $2.8 million which was primarily attributable to a higher average credit facility balance and an increase in one-month Term Secured Overnight Financing Rate (“Term SOFR”) for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. This increase was also attributable to an increase in debt extinguishment and modification expenses of approximately $0.7 million related to the unsecured term loan amendment, as discussed in Note 4 of the accompany Notes to Consolidated Financial Statements.

Current wording

Total other income (expense) increased approximately $6.8 million, or 127.2%, to approximately $1.4 million total other income for the three months ended June 30, 2024 compared to approximately $5.3 million total other expense for the three months ended June 30, 2023. This increase was primarily a result of recognizing a gain on involuntary conversion of approximately $5.7 million during the three months ended June 30, 2024, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, that did not occur during the three months ended June 30, 2023. The increase was also attributable to an increase in the gain on the sales of rental property, net of approximately $5.6 million. These increases were partially offset by an increase in interest expense of approximately $4.5 million which was primarily attributable to the issuance of $450.0 million of unsecured notes on May 28, 2024, as discussed in Note 4 of the accompanying Notes to Consolidated Financial Statements. Additionally, there was a higher average credit facility balance and an increase in one-month Term Secured Overnight Financing Rate (“Term SOFR”) for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.

Previous wording

Same store lease income increased by approximately $5.3 million, or 3.8%, to approximately $143.2 million for the three months ended March 31, 2024 compared to approximately $137.9 million for the three months ended March 31, 2023. The increase was primarily due the execution of new leases and lease renewals with existing tenants of approximately $7.9 million. This increase was partially offset by the reduction of base rent of approximately $1.3 million due to tenant vacancies and a net increase in the amortization of net above market leases of approximately $0.2 million. Additionally, there was a decrease in same store lease income of approximately $1.1 million which was primarily attributable to management’s evaluation of operating leases to determine the probability of collecting substantially all of the lessee’s remaining lease payments under the lease term. For those that are not probable of collection, we convert to the cash basis of accounting. Subsequent to March 31, 2023, management determined two tenants should be converted from the accrual basis of accounting to the cash basis of accounting, which accounts for approximately $0.8 million of the decrease during the three months March 31, 2024 as compared to the three months ended March 31, 2023. Additionally, management converted one tenant from the cash basis of accounting back to the accrual basis of accounting during the three months ended March 31, 2023, for which approximately $0.3 million of straight-line accrued rental balance was reinstated.

Current wording

Same store lease income increased by approximately $10.9 million, or 4.0%, to approximately $284.6 million for the six months ended June 30, 2024 compared to approximately $273.7 million for the six months ended June 30, 2023. The increase was primarily due to an increase in rental income of approximately $16.2 million from the execution of new leases and lease renewals with existing tenants. This increase was partially offset by the reduction of base rent of approximately $3.9 million due to tenant vacancies, and a net increase in the amortization of net above market leases of approximately $0.5 million. Additionally, there was a decrease in same store lease income of approximately $0.9 million which was primarily attributable to management’s evaluation of operating leases to determine the probability of collecting substantially all of the lessee’s remaining lease payments under the lease term. For those that are not probable of collection, we convert to the cash basis of accounting. During the six months ended June 30, 2024, management determined two tenants should be converted from the accrual basis of accounting to the cash basis of accounting, which accounts for approximately $0.6 million of the decrease during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Additionally, management converted one tenant from the cash basis of accounting back to the accrual basis of accounting during the six months ended June 30, 2023, for which approximately $0.3 million of straight-line accrued rental balance was reinstated.

Previous wording

Same store other billings increased by approximately $4.3 million, or 13.5%, to approximately $36.1 million for the three months ended March 31, 2024 compared to approximately $31.8 million for the three months ended March 31, 2023. The increase in other billings was primarily attributable to an increase of approximately $3.9 million of expense reimbursements (excluding real estate tax reimbursements) due to an increase in the corresponding expenses and the occupancy of previously vacant buildings. Additionally, the increase was also attributable to an increase in real estate tax reimbursements of approximately $0.4 million due to changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid the taxes directly to the taxing authorities or the building was previously been vacant.

Current wording

Same store other billings increased by approximately $6.5 million, or 10.7%, to approximately $67.3 million for the six months ended June 30, 2024 compared to approximately $60.8 million for the six months ended June 30, 2023. The increase was attributable to an increase of approximately $4.5 million in other expense reimbursements which was primarily due to an increase in corresponding expenses. The increase was also attributable to an increase of approximately $2.0 million of real estate tax reimbursements due to an increase in real estate taxes levied by the taxing authority for certain tenants for which we pay the real estate taxes on their behalf, changes to lease terms where we began paying the real estate taxes on behalf of tenants that had previously paid the taxes directly to the taxing authorities, and occupancy of previously vacant buildings.

Previous wording

Total other expenses increased approximately $0.3 million, or 0.4%, to approximately $84.9 million for the three months ended March 31, 2024 compared to approximately $84.6 million for the three months ended March 31, 2023. The increase was primarily attributable to an increase in depreciation and amortization expense of approximately $2.5 million due to an increase in the depreciable asset base from net acquisitions after March 31, 2023, as well as an increase in general and administrative expenses of approximately $0.3 million primarily due to increases in compensation and other payroll costs. These increases were partially offset by a decrease in other expenses of approximately $2.4 million, which was primarily attributed to the relinquishment of an acquisition deposit of approximately $2.5 million related to the termination of an acquisition contract during the three months ended March 31, 2023 that did not recur during the three months ended March 31, 2024.

Current wording

Total other expenses increased approximately $12.1 million, or 7.3%, to approximately $177.6 million for the six months ended June 30, 2024 compared to approximately $165.5 million for the six months ended June 30, 2023. The increase was primarily attributable to an increase in depreciation and amortization expense of approximately $9.3 million due to an increase in the depreciable asset base from net acquisitions after June 30, 2023. Additionally, a loss on impairment of approximately $5.0 million was recognized during the six months ended June 30, 2024, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, that did not occur during the six months ended June 30, 2023. These increases were partially offset by a decrease in other expenses of approximately $2.2 million, which was primarily attributed to the relinquishment of an acquisition deposit of approximately $2.5 million related to the termination of an acquisition contract during the six months ended June 30, 2023 that did not recur during the six months ended June 30, 2024.

Previous wording

Total other income (expense) consists of interest and other income, interest expense, debt extinguishment and modification expenses, and gain on the sales of rental property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt.

Current wording

Total other income (expense) consists of interest and other income, interest expense, debt extinguishment and modification expenses, gain on involuntary conversion, and gain on the sales of rental property, net. Interest expense includes interest incurred during the period as well as adjustments related to amortization of financing fees and debt issuance costs, and amortization of fair market value adjustments associated with the assumption of debt.

Previous wording

The following table summarizes our cash flows for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Previous wording

Net cash provided by operating activities increased approximately $18.7 million to approximately $105.2 million for the three months ended March 31, 2024 compared to approximately $86.4 million for the three months ended March 31, 2023. The increase was primarily attributable to incremental operating cash flows from property acquisitions completed after March 31, 2023, and operating performance at existing properties. These increases were partially offset by the loss of cash flows from property dispositions completed after March 31, 2023 and fluctuations in working capital due to timing of payments and rental receipts.

Current wording

Net cash provided by operating activities increased approximately $31.2 million to approximately $227.4 million for the six months ended June 30, 2024 compared to approximately $196.2 million for the six months ended June 30, 2023. The increase was primarily attributable to incremental operating cash flows from property acquisitions completed after June 30, 2023, and operating performance at existing properties. These increases were partially offset by the loss of cash flows from property dispositions completed after June 30, 2023 and fluctuations in working capital due to timing of payments and rental receipts.

Previous wording

Net cash provided by (used in) investing activities decreased approximately $86.1 million to approximately $76.3 million net cash used in investing activities for the three months ended March 31, 2024 compared to approximately $9.8 million net cash provided by investing activities for the three months ended March 31, 2023. The decrease to a net cash used in investing activities was primarily attributable to the acquisition of one building for a total cash consideration of approximately $49.3 million during the three months ended March 31, 2024, whereas there were no acquisitions for the three months ended March 31, 2023. This decrease was also attributable to a decrease in proceeds from sales of rental property, net of approximately $36.3 million during the three months ended March 31, 2024, as there were no dispositions of rental property during the three months ended March 31, 2024.

Current wording

Net cash used in investing activities increased approximately $222.0 million to approximately $247.6 million for the six months ended June 30, 2024 compared to approximately $25.6 million for the six months ended June 30, 2023. The increase was primarily attributable to the acquisition of 11 buildings and one parcel of land for a total cash consideration of approximately $281.1 million during the six months ended June 30, 2024, whereas there were two buildings acquired for a total cash consideration of approximately $40.7 million for the six months ended June 30, 2023. This increase was partially offset by a decrease in cash paid for the additions of land and buildings and improvements related to development and other capital expenditures of approximately $13.5 million, as well as an increase in proceeds from sales of rental property, net of approximately $6.4 million during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Previous wording

Net cash used in financing activities decreased approximately $67.2 million to approximately $37.7 million for the three months ended March 31, 2024 compared to approximately $104.9 million for the three months ended March 31, 2023. This decrease was primarily attributable to the redemption of $100.0 million of unsecured notes on January 5, 2023 that did not occur during the three months ended March 31, 2024. This decrease was partially offset by a decrease in net borrowings of approximately $27.0 million under our unsecured credit facility and an increase of approximately $4.8 million in dividends and distributions paid during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Net cash provided by (used in) financing activities increased approximately $215.7 million to approximately $32.9 million net cash provided by financing activities for the six months ended June 30, 2024 compared to approximately $182.9 million net cash used in financing activities for the six months ended June 30, 2023. This increase was primarily attributable to the issuance of $450.0 million of unsecured notes on May 28, 2024, as discussed in Note 4 in the accompanying Notes to Consolidated Financial Statements. The increase was also attributable to the redemption of $100.0 million of unsecured notes on January 5, 2023 that did not occur during the six months ended June 30, 2024. These increases were partially offset by a decrease in net borrowings of approximately $316.0 million under our unsecured credit facility, an increase of approximately $6.2 million in dividends and distributions paid, and a decrease of approximately $8.8 million due to a reduction of proceeds from the sales of common stock during the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Previous wording

As of March 31, 2024, we had total immediate liquidity of approximately $574.1 million, comprised of $12.4 million of cash and cash equivalents and $561.7 million of immediate availability on our unsecured credit facility. When incorporating our total immediate liquidity of $574.1 million and approximately $41.4 million and $21.8 million of forward sale proceeds available to us under our ATM common stock offering program through December 14, 2024 and January 9, 2025, respectively, our total liquidity was approximately $637.3 million as of March 31, 2024.

Current wording

As of June 30, 2024, we had total immediate liquidity of approximately $902.9 million, comprised of $33.3 million of cash and cash equivalents and $869.6 million of immediate availability on our unsecured credit facility. When incorporating our total immediate liquidity of $902.9 million and approximately $41.5 million, $21.9 million, and $8.8 million of forward sale proceeds available to us under our ATM common stock offering program through December 14, 2024, January 9, 2025, and March 31, 2025, respectively, our total liquidity was approximately $975.1 million as of June 30, 2024.

Previous wording

(1)Interest rate as of March 31, 2024. At March 31, 2024, the one-month Term SOFR was 5.32874%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on our debt rating and leverage ratio, as defined in the respective loan agreements.

Current wording

(1)Interest rate as of June 30, 2024. At June 30, 2024, the one-month Term SOFR was 5.33717%. The current interest rate is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts. The spread over the applicable rate for our unsecured credit facility and unsecured term loans is based on our debt rating and leverage ratio, as defined in the respective loan agreements.

Previous wording

(2)Our unsecured credit facility has a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%, less a sustainability-related interest rate adjustment of 0.02%. Our unsecured term loans have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%, less a sustainability-related interest rate adjustment of 0.02%. As of March 31, 2024, one-month Term SOFR for the Unsecured Term Loans A, F, G, H, and I was swapped to a fixed rate of 1.31%, 2.11%, 0.95%, 2.50%, and 2.66%, respectively (which includes the 0.10% adjustment). The Unsecured Term Loan F provides for the election of Daily Simple Secured Overnight Financing Rate (“Daily SOFR”), and effective January 15, 2025, Daily SOFR will be swapped to a fixed rate of 3.98%.

Current wording

(2)Our unsecured credit facility has a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.775%. Our unsecured term loans have a stated interest rate of one-month Term SOFR plus a 0.10% adjustment and a spread of 0.85%. As of June 30, 2024, one-month Term SOFR for the Unsecured Term Loans A, F, G, H, and I was swapped to a fixed rate of 1.31%, 2.11%, 0.95%, 2.50%, and 2.66%, respectively (which includes the 0.10% adjustment). The Unsecured Term Loan F provides for the election of Daily Simple Secured Overnight Financing Rate (“Daily SOFR”), and effective January 15, 2025, Daily SOFR will be swapped to a fixed rate of 3.98%.

Previous wording

The aggregate undrawn nominal commitments on our unsecured credit facility and unsecured term loans as of March 31, 2024 was approximately $561.7 million, including issued letters of credit. Our actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on our debt covenant compliance.

Current wording

The aggregate undrawn nominal commitments on our unsecured credit facility and unsecured term loans as of June 30, 2024 was approximately $869.6 million, including issued letters of credit. Our actual borrowing capacity at any given point in time may be less and is restricted to a maximum amount based on our debt covenant compliance.

Previous wording

On March 13, 2024, we entered into a note purchase agreement (the “March 2024 NPA”) for the private placement by the Operating Partnership of $175.0 million senior unsecured notes maturing May 28, 2029, with a fixed annual interest rate of 6.05%, $125.0 million senior unsecured notes maturing May 28, 2031, with a fixed annual interest rate of 6.17%, and $150.0 million senior unsecured notes maturing May 28, 2034, with a fixed annual interest rate of 6.30%. The March 2024 NPA contains a number of financial covenants substantially similar to the financial covenants contained in our unsecured credit facility and other unsecured notes, plus a financial covenant that requires us to maintain a minimum interest coverage ratio of not less than 1.50:1.00. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the unsecured notes. We may issue the notes under the March 2024 NPA on or prior to May 28, 2024, and as of March 31, 2024, the notes had not been issued.

Current wording

On March 13, 2024, we entered into a note purchase agreement (the “March 2024 NPA”) for the private placement by the Operating Partnership of $175.0 million senior unsecured notes maturing May 28, 2029, with a fixed annual interest rate of 6.05%, $125.0 million senior unsecured notes maturing May 28, 2031, with a fixed annual interest rate of 6.17%, and $150.0 million senior unsecured notes maturing May 28, 2034, with a fixed annual interest rate of 6.30%. The March 2024 NPA contains a number of financial covenants substantially similar to the financial covenants contained in our unsecured credit facility and other unsecured notes, plus a financial covenant that requires us to maintain a minimum interest coverage ratio of not less than 1.50:1.00. The Company and certain wholly owned subsidiaries of the Operating Partnership are guarantors of the unsecured notes. On May 28, 2024, we issued all of the notes under the March 2024 NPA.

Previous wording

Subsequent to March 31, 2024, on April 1, 2024, we sold 227,146 shares on a forward basis under the ATM common stock offering program at a sale price of $39.1020 per share (an aggregate of approximately $8.9 million gross sale price), or $38.6621 per share net of commissions. We did not receive any proceeds from the sale of such shares on a forward basis. We expect to fully physically settle the applicable forward sale agreement on one or more dates prior to the scheduled maturity date of March 31, 2025, at which point we would receive the proceeds net of certain costs; provided, however, we may elect to cash settle or net share settle such forward sale agreement at any time through the scheduled maturity date.

Current wording

On April 1, 2024, we sold 227,146 shares on a forward basis under the ATM common stock offering program at a sale price of $39.1020 per share (an aggregate of approximately $8.9 million gross sale price), or $38.6621 per share net of commissions. We did not receive any proceeds from the sale of such shares on a forward basis. We expect to fully physically settle the applicable forward sale agreement on one or more dates prior to the scheduled maturity date of March 31, 2025, at which point we would receive the proceeds net of certain costs; provided, however, we may elect to cash settle or net share settle such forward sale agreement at any time through the scheduled maturity date.

Previous wording

The swaps are all designated as cash flow hedges of interest rate risk, and all are valued as Level 2 financial instruments. Level 2 financial instruments are defined as significant other observable inputs. As of March 31, 2024, we had 17 interest rate swaps outstanding that were in an asset position of approximately $57.5 million. As of March 31, 2024, the fair value of four interest rate swaps were in a liability position of approximately $0.1 million, including any adjustment for nonperformance risk related to these agreements.

Current wording

The swaps are all designated as cash flow hedges of interest rate risk, and all are valued as Level 2 financial instruments. Level 2 financial instruments are defined as significant other observable inputs. As of June 30, 2024, all of our 21 interest rate swaps outstanding were in an asset position of approximately $54.5 million, including any adjustment for nonperformance risk related to these agreements.

Previous wording

During the three months ended March 31, 2024, we entered into four interest rate swaps with an aggregate notional value of $200.0 million which fix Daily SOFR at 3.98% effective January 15, 2025 and mature on March 25, 2027.

Current wording

During the six months ended June 30, 2024, we entered into four interest rate swaps with an aggregate notional value of $200.0 million which fix Daily SOFR at 3.98% effective January 15, 2025 and mature on March 25, 2027.

Previous wording

As of March 31, 2024, we had approximately $1,460.0 million of variable rate debt. As of March 31, 2024, all of our outstanding variable rate debt, with the exception of our unsecured credit facility, was fixed with interest rate swaps through initial maturity. To the extent interest rates increase, interest costs on our floating rate debt not fixed with interest rate swaps will increase, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. From time to time, we may enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.

Current wording

As of June 30, 2024, we had approximately $1,152.0 million of variable rate debt. As of June 30, 2024, all of our outstanding variable rate debt, with the exception of our unsecured credit facility, was fixed with interest rate swaps through initial maturity. To the extent interest rates increase, interest costs on our floating rate debt not fixed with interest rate swaps will increase, which could adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our security holders. From time to time, we may enter into interest rate swap agreements and other interest rate hedging contracts, including swaps, caps and floors. In addition, an increase in interest rates could decrease the amounts third parties are willing to pay for our assets, thereby limiting our ability to change our portfolio promptly in response to changes in economic or other conditions.

Previous wording

As of March 31, 2024, we had letters of credit related to development projects and certain other agreements of approximately $3.3 million. As of March 31, 2024, we had no other material off-balance sheet arrangements.

Current wording

As of June 30, 2024, we had letters of credit related to development projects and certain other agreements of approximately $3.4 million. As of June 30, 2024, we had no other material off-balance sheet arrangements.