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 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.

Current wording

The industrial real estate business is affected by general macro-economic trends including recent changes in interest rates, inflation, 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 eight consecutive quarters with the most recent measure showing 3.0% growth in the second quarter of 2024. Labor conditions are slowing, but holding solid with a 4.1% unemployment rate as of September 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

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.

Current wording

The following table summarizes the Operating Portfolio leases that commenced during the three and nine months ended September 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 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.

Current wording

Additionally, for the three and nine months ended September 30, 2024, leases related to the Value Add Portfolio and first generation leasing, with a total of 11,660 and 402,432 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 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.

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 7.3% of our total annualized base rental revenue will expire during the period from October 1, 2024 to September 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 October 1, 2024 to September 30, 2025, thereby resulting in an increase in revenue from the same space.

Previous 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.

Current wording

(1)Leases previously scheduled to expire in 2024, totaling approximately 13.0 million square feet, have been executed as of September 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 and six months ended June 30, 2024.

Current wording

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

Previous wording

During the six months ended June 30, 2024, we sold seven buildings comprised of approximately 1.1 million rentable square feet with a net book value of approximately $52.6 million to third parties. Net proceeds from the sales of rental property were approximately $75.7 million and we recognized the full gain on the sales of rental property, net, of approximately $23.1 million for the six months ended June 30, 2024. The gain on the sales of rental property, net, is inclusive of a loss on the sale of rental property, net, of approximately $2.0 million.

Current wording

During the nine months ended September 30, 2024, we sold eight buildings comprised of approximately 1.3 million rentable square feet with a net book value of approximately $74.4 million to third parties. Net proceeds from the sales of rental property were approximately $97.7 million and we recognized the full gain on the sales of rental property, net, of approximately $23.3 million for the nine months ended September 30, 2024. The gain on the sales of rental property, net, is inclusive of a loss on the sale of rental property, net, of approximately $2.0 million.

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 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.

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 September 30, 2024, we owned 539 industrial buildings consisting of approximately 107.2 million square feet and representing approximately 93.7% of our total portfolio, that are considered our same store portfolio in the analysis below. Same store occupancy decreased approximately 0.2% to 97.7% as of September 30, 2024 compared to 97.9% as of September 30, 2023.

Previous 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.

Current wording

Net income for our total portfolio decreased by approximately $8.4 million, or 16.5%, to approximately $42.7 million for the three months ended September 30, 2024 compared to approximately $51.2 million for the three months ended September 30, 2023.

Previous 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.

Current wording

Same store rental income, which includes lease income and other billings as discussed below, increased by approximately $4.7 million, or 2.8%, to approximately $175.6 million for the three months ended September 30, 2024 compared to approximately $170.8 million for the three months ended September 30, 2023.

Previous wording

Same store lease income increased by approximately $6.0 million, or 4.4%, to approximately $143.1 million for the three months ended June 30, 2024 compared to approximately $137.1 million for the three months ended June 30, 2023. The increase was primarily due to the execution of new leases and lease renewals with existing tenants of approximately $8.8 million. This increase was partially offset by the reduction of base rent of approximately $2.0 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 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 three 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 three months June 30, 2024 as compared to the three months ended June 30, 2023.

Current wording

Same store lease income increased by approximately $4.4 million, or 3.2%, to approximately $143.3 million for the three months ended September 30, 2024 compared to approximately $138.9 million for the three months ended September 30, 2023. The increase was primarily due to the execution of new leases and lease renewals with existing tenants of approximately $8.0 million. This increase was partially offset by the reduction of base rent of approximately $2.0 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 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 three months ended September 30, 2024, management determined certain tenants should be converted from the accrual basis of accounting to the cash basis of accounting, which accounts for approximately $0.3 million of the decrease during the three months September 30, 2024 as compared to the three months ended September 30, 2023. Additionally, management determined one tenant should be converted from the cash basis of accounting back to the accrual basis of accounting, for which approximately $1.1 million of straight-line rental income was recognized during the three months ended September 30, 2023.

Previous wording

Same store other billings increased by approximately $2.2 million, or 7.6%, to approximately $31.3 million for the three months ended June 30, 2024 compared to approximately $29.1 million for the three months ended June 30, 2023. The increase in other billings was primarily attributable to an increase in real estate tax reimbursements of approximately $1.4 million 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 and occupancy of previously vacant buildings. Additionally, the increase was also attributable to an increase of approximately $0.8 million of other expense reimbursements due to an increase in the corresponding expenses and the occupancy of previously vacant buildings.

Current wording

Same store other billings increased by approximately $0.4 million, or 1.3%, to approximately $32.3 million for the three months ended September 30, 2024 compared to approximately $31.9 million for the three months ended September 30, 2023. The increase in other billings was primarily attributable to an increase in real estate tax reimbursements of approximately $1.3 million 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 and occupancy of previously vacant buildings. Additionally, the increase was offset by a decrease of approximately $0.9 million of other expense reimbursements due to a decrease in the corresponding expenses and vacancy of previously occupied buildings.

Previous 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.

Current wording

Total same store property operating expenses increased by approximately $1.5 million, or 4.6%, to approximately $34.8 million for the three months ended September 30, 2024 compared to approximately $33.3 million for the three months ended September 30, 2023. This increase was primarily due to increases in real estate tax, other expenses and insurance expense of approximately $1.8 million, $0.3 million and $0.2 million, respectively. These increases were partially offset by decreases to repairs and maintenance and utility expenses of approximately $0.7 million and $0.1 million, respectively.

Previous 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.

Current wording

Portfolio to the Operating Portfolio after January 1, 2023), and sold 18 buildings consisting of approximately 3.3 million square feet. For the three months ended September 30, 2024 and 2023, the buildings acquired after January 1, 2023 contributed approximately $7.6 million and $1.3 million to NOI, respectively. For the three months ended September 30, 2024 and September 30, 2023, the buildings sold after January 1, 2023 contributed approximately $(0.2) million and $2.1 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 $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.

Current wording

These buildings contributed approximately $3.7 million and $2.5 million to NOI for the three months ended September 30, 2024 and 2023, respectively. Additionally, there was approximately $0.8 million and $1.3 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

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

Current wording

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

Previous wording

Total other expenses increased approximately $11.8 million, or 14.5%, to approximately $92.7 million for the three months ended June 30, 2024 compared to approximately $80.9 million for the three months ended June 30, 2023. The increase was primarily attributable to an increase in depreciation and amortization expense of approximately $6.8 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 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.

Current wording

Total other expenses increased approximately $3.4 million, or 4.2%, to approximately $85.0 million for the three months ended September 30, 2024 compared to approximately $81.6 million for the three months ended September 30, 2023. The increase was primarily attributable to an increase in depreciation and amortization expense of approximately $2.7 million due to an increase in the depreciable asset base from net acquisitions after September 30, 2023. Additionally, general and administrative expenses increased by approximately $0.9 million primarily due to increases in compensation and other payroll costs. These increases were partially offset by a decrease of approximately $0.2 million in other expenses due to a decrease in state income taxes for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Previous 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.

Current wording

Total other expense increased approximately $12.9 million, or 107.1%, to approximately $25.0 million for the three months ended September 30, 2024 compared to approximately $12.1 million for the three months ended September 30, 2023. This increase was primarily attributable to an decrease in the gain on the sales of rental property, net of approximately $11.5 million. This increase was also attributable to an increase in interest expense of approximately $5.0 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. These increases were partially offset by a gain on involuntary conversion of approximately $3.6 million during the three months ended September 30, 2024, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, that did not occur during the three months ended September 30, 2023.

Previous wording

The following table summarizes selected operating information for our same store portfolio and our total portfolio for the six months ended June 30, 2024 and 2023 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the six months ended June 30, 2024 and 2023 with respect to the buildings acquired and disposed of and Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023, Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023, flex/office buildings, Value Add buildings, and buildings classified as held for sale.

Current wording

The following table summarizes selected operating information for our same store portfolio and our total portfolio for the nine months ended September 30, 2024 and 2023 (dollars in thousands). This table includes a reconciliation from our same store portfolio to our total portfolio by also providing information for the nine months ended September 30, 2024 and 2023 with respect to the buildings acquired and disposed of and Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023, Operating Portfolio buildings with expansions placed into service or transferred from the Value Add Portfolio to the Operating Portfolio after January 1, 2023, flex/office buildings, Value Add buildings, and buildings classified as held for sale.

Previous wording

Net income for our total portfolio decreased by $4.9 million, or 4.7%, to $98.5 million for the six months ended June 30, 2024 compared to $103.4 million for the six months ended June 30, 2023.

Current wording

Net income for our total portfolio decreased by $13.3 million, or 8.6%, to $141.3 million for the nine months ended September 30, 2024 compared to $154.6 million for the nine months ended September 30, 2023.

Previous wording

Same store rental income, which is comprised of lease income and other billings as discussed below, increased by approximately $17.4 million, or 5.2%, to approximately $351.9 million for the six months ended June 30, 2024 compared to approximately $334.4 million for the six months ended June 30, 2023.

Current wording

Same store rental income, which is comprised of lease income and other billings as discussed below, increased by approximately $23.3 million, or 4.6%, to approximately $526.4 million for the nine months ended September 30, 2024 compared to approximately $503.1 million for the nine months ended September 30, 2023.

Previous 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.

Current wording

Same store lease income increased by approximately $16.9 million, or 4.1%, to approximately $427.4 million for the nine months ended September 30, 2024 compared to approximately $410.5 million for the nine months ended September 30, 2023. The increase was primarily due to an increase in rental income of approximately $24.3 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 $4.7 million due to tenant vacancies, and a net increase in the amortization of net above market leases of approximately $0.7 million. Additionally, there was a decrease in same store lease income of approximately $2.0 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 nine months ended September 30, 2024, management determined certain 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 nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Additionally, management converted two tenants from the cash basis of accounting back to the accrual basis of accounting during the nine months ended September 30, 2023, for which approximately $1.4 million of straight-line accrued rental balance was reinstated.

Previous 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.

Current wording

Same store other billings increased by approximately $6.4 million, or 6.9%, to approximately $99.0 million for the nine months ended September 30, 2024 compared to approximately $92.6 million for the nine months ended September 30, 2023. The increase was attributable to an increase of approximately $3.5 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 $2.9 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 same store operating expenses increased by approximately $4.2 million or 6.2% to approximately $70.9 million for the six months ended June 30, 2024 compared to approximately $66.7 million for the six months ended June 30, 2023. This increase was due to increases in real estate tax, other expenses, insurance, and snow removal of approximately $2.1 million, $1.3 million, $0.6 million, and $0.4 million, respectively. These increases were partially offset by a reduction of utility expense of approximately $0.2 million.

Current wording

Total same store operating expenses increased by approximately $5.3 million or 5.4% to approximately $105.1 million for the nine months ended September 30, 2024 compared to approximately $99.7 million for the nine months ended September 30, 2023. This increase was due to increases in real estate tax, other expenses, insurance, and snow removal of approximately $3.6 million, $1.3 million, $0.8 million, and $0.4 million, respectively. These increases were partially offset by a reduction of repairs and maintenance and utility expense of approximately $0.4 million and $0.3 million, respectively.

Previous 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 six months ended June 30, 2024 and June 30, 2023, the buildings acquired after January 1, 2023 contributed approximately $9.0 million and $0.3 million to NOI, respectively. For the six months ended June 30, 2024 and June 30, 2023, the buildings sold after January 1, 2023 contributed approximately $1.6 million and $5.2 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

Portfolio to the Operating Portfolio after January 1, 2023), and sold 18 buildings consisting of approximately 3.3 million square feet. For the nine months ended September 30, 2024 and September 30, 2023, the buildings acquired after January 1, 2023 contributed approximately $16.6 million and $1.6 million to NOI, respectively. For the nine months ended September 30, 2024 and September 30, 2023, the buildings sold after January 1, 2023 contributed approximately $(0.3) million and $8.4 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 $6.9 million and $2.0 million to NOI for the six months ended June 30, 2024 and June 30, 2023, respectively. Additionally, there was approximately $2.2 million and $1.3 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the six months ended June 30, 2024 and June 30, 2023, respectively.

Current wording

These buildings contributed approximately $11.4 million and $5.4 million to NOI for the nine months ended September 30, 2024 and September 30, 2023, respectively. Additionally, there was approximately $4.3 million and $2.6 million of termination, solar, and other income adjustments from certain buildings in our same store portfolio for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Previous 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.

Current wording

Total other expenses increased approximately $15.5 million, or 6.3%, to approximately $262.6 million for the nine months ended September 30, 2024 compared to approximately $247.1 million for the nine months ended September 30, 2023. The increase was primarily attributable to an increase in depreciation and amortization expense of approximately $12.0 million due to an increase in the depreciable asset base from net acquisitions after September 30, 2023. Additionally, a loss on impairment of approximately $5.0 million was recognized during the nine months ended September 30, 2024, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, that did not occur during the nine months ended September 30, 2023. Additionally, general and administrative expenses increased by approximately $0.9 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 nine months ended September 30, 2023 that did not recur during the nine months ended September 30, 2024.

Previous wording

Total other income (expense) consists of interest and other income, interest expense, 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.

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

Total other expense increased approximately $16.9 million, or 216.8%, to approximately $24.6 million for the six months ended June 30, 2024 compared to approximately $7.8 million for the six months ended June 30, 2023. This increase was primarily a result of a decrease in the gain on the sales of rental property, net of approximately $14.6 million. This increase was also attributable to an increase in interest expense of approximately $7.3 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 six months ended June 30, 2024, compared to the six months ended June 30, 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 during the six months ended June 30, 2024, as discussed in Note 4 of the accompany Notes to Consolidated Financial Statements. These increases were partially offset by an increase in gain on involuntary conversion of approximately $5.7 million that 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.

Current wording

Total other expense increased approximately $29.8 million, or 150.1%, to approximately $49.6 million for the nine months ended September 30, 2024 compared to approximately $19.8 million for the nine months ended September 30, 2023. This increase was primarily a result of a decrease in the gain on the sales of rental property, net of approximately $26.1 million. This increase was also attributable to an increase in interest expense of approximately $12.3 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, and an increase in one-month Term Secured Overnight Financing Rate (“Term SOFR”) for the nine months ended September 30, 2024, compared to the nine months ended September 30, 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 and the 2024 Credit Agreement (as defined below) amendment during the nine months ended September 30, 2024, as discussed in Note 4 of the accompany Notes to Consolidated Financial Statements. These increases were partially offset by an increase in gain on involuntary conversion of approximately $9.3 million during the nine months ended September 30, 2024, as discussed in Note 3 of the accompanying Notes to Consolidated Financial Statements, that did not occur during the nine months ended September 30, 2023.

Previous 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.

Current wording

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

Previous 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.

Current wording

Net cash provided by operating activities increased approximately $55.9 million to approximately $355.4 million for the nine months ended September 30, 2024 compared to approximately $299.5 million for the nine months ended September 30, 2023. The increase was primarily attributable to incremental operating cash flows from property acquisitions completed after September 30, 2023, and operating performance at existing properties. These increases were partially offset by the loss of cash flows from property dispositions completed after September 30, 2023 and fluctuations in working capital due to timing of payments and rental receipts.

Previous 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.

Current wording

Net cash used in investing activities increased approximately $157.4 million to approximately $390.5 million for the nine months ended September 30, 2024 compared to approximately $233.2 million for the nine months ended September 30, 2023. The increase was primarily attributable to the acquisition of 17 buildings and three parcels of land for a total cash consideration of approximately $404.9 million during the nine months ended September 30, 2024, whereas there were 14 buildings and two land parcels acquired for a total cash consideration of approximately $254.5 million for the nine months ended September 30, 2023. Additionally, there was an increase in cash paid for additions of land and buildings and improvements related to development and other capital expenditures of approximately $5.2 million, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. These increases were partially offset by an increase in proceeds from sales of rental property, net of approximately $0.5 million during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Previous 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.

Current wording

Net cash provided by (used in) financing activities increased approximately $165.5 million to approximately $84.4 million net cash provided by financing activities for the nine months ended September 30, 2024 compared to approximately $81.1 million net cash used in financing activities for the nine months ended September 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 nine months ended September 30, 2024. These increases were partially offset by a decrease in net borrowings of approximately $296.0 million under our unsecured credit facility, an increase of approximately $6.7 million in dividends and distributions paid, and a decrease of approximately $70.0 million due to a reduction of proceeds from the sales of common stock during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Additionally, there was an increase of approximately $12.1 million in payments of loan fees and costs during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to the 2024 Credit Agreement (as defined below) that was entered into on September 10, 2024, as discussed in Note 4 to the accompanying Notes to Consolidated Financial Statements.

Previous 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.

Current wording

As of September 30, 2024, we had total immediate liquidity of approximately $810.0 million, comprised of approximately $70.0 million of cash and cash equivalents and approximately $740.0 million of immediate availability on our unsecured credit facility.

Previous 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.

Current wording

(1)Interest rate as of September 30, 2024. At September 30, 2024, the one-month Term SOFR was 4.84570%. 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

(4)The capacity of our unsecured credit facility is $1.0 billion. The initial maturity date is October 24, 2025, or such later date which may be extended pursuant to two six-month extension options exercisable by us in our discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension, (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date, and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. We are required to pay a facility fee on the aggregate commitment amount (currently $1.0 billion) at a rate per annum of 0.1% to 0.3%, depending on our debt rating, as defined in the credit agreement. The facility fee is due and payable quarterly.

Current wording

(4)The capacity of our unsecured credit facility is $1.0 billion. The initial maturity date is September 8, 2028, or such later date which may be extended pursuant to two six-month extension options exercisable by us in our discretion upon advance written notice. Exercise of each six-month option is subject to the following conditions: (i) absence of a default immediately before the extension and immediately after giving effect to the extension, (ii) accuracy of representations and warranties as of the extension date (both immediately before and after the extension), as if made on the extension date, and (iii) payment of a fee. Neither extension option is subject to lender consent, assuming proper notice and satisfaction of the conditions. We are required to pay a facility fee on the aggregate commitment amount (currently $1.0 billion) at a rate per annum of 0.1% to 0.3%, depending on our debt rating, as defined in the 2024 Credit Agreement (as defined below). The facility fee is due and payable quarterly.

Previous wording

(6)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $1,025.0 million of debt and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts.

Current wording

(7)The weighted average interest rate was calculated using the fixed interest rate swapped on the notional amount of $1,025.0 million of debt and is not adjusted to include the amortization of deferred financing fees or debt issuance costs incurred in obtaining debt or any unamortized fair market value premiums or discounts.

Previous 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.

Current wording

The aggregate undrawn nominal commitments on our unsecured credit facility and unsecured term loans as of September 30, 2024 was approximately $740.0 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 25, 2024, we entered into a second amended and restated term loan agreement for the Unsecured Term Loan F to (i) extend the maturity date to March 25, 2027, with two one-year extension options, subject to certain conditions, that would extend the maturity date to March 23, 2029 if both exercised, and (ii) provide that borrowings under the Unsecured Term Loan F will, at our election, bear interest based on a Base Rate, Adjusted Term SOFR, or Adjusted Daily Simple SOFR (each as defined in the loan agreement), which interest rate will be increased by 0.10% for any SOFR Loan (as defined in the loan agreement), plus an applicable spread based on our debt rating and leverage ratio (each as defined in the loan agreement), less a sustainability-related adjustment. As of March 25, 2024, the Unsecured Term Loan F had a stated annual interest rate equal to the one-month Term SOFR, which includes an adjustment of 0.10%, plus a spread of 0.85%, less a sustainability-related adjustment of 0.02%. Other than the maturity and interest rate provisions described above, the material terms remain unchanged.

Current wording

On March 25, 2024, we entered into a second amended and restated term loan agreement for the Unsecured Term Loan F to (i) extend the maturity date to March 25, 2027, with two one-year extension options, subject to certain conditions, that would extend the maturity date to March 23, 2029 if both exercised, and (ii) provide that borrowings under the Unsecured Term Loan F will, at our election, bear interest based on a Base Rate, Adjusted Term SOFR, or Adjusted Daily Simple SOFR (each as defined in the loan agreement), which interest rate will be increased by 0.10% for any SOFR Loan (as defined in the loan agreement), plus an applicable spread based on our debt rating and leverage ratio (each as defined in the loan agreement), less a sustainability-related adjustment. Other than the maturity and interest rate provisions described above, the material terms remain unchanged.

Previous wording

On January 9, 2024 we sold 567,112 shares on a forward basis under the ATM common stock offering program at a sale price of $38.8818 per share (an aggregate of approximately $22.1 million gross sale price), or $38.5058 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 January 9, 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

We expect to fully physically settle the applicable forward sale agreements on one or more dates prior to the respective scheduled maturity dates, 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 agreements at any time through the respective scheduled maturity dates.