INDUS REALTY TRUST, INC. [INDT] Filings

10-Q 1 indt-20220331x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number 1-12879

INDUS REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)


Maryland			06-0868496
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

641 Lexington Avenue, New York, New York			10022
(Address of principal executive offices)			(Zip Code)

Registrant’s Telephone Number, Including Area Code (212) 218-7910

______________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	INDT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding at May 6, 2022: 10,186,143

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INDUS REALTY TRUST, INC.

FORM 10-Q

Index


PART I -		FINANCIAL INFORMATION

	ITEM 1	Financial Statements

		Consolidated Balance Sheets (unaudited) as of March 31, 2022 and December 31, 2021	3

		Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2022 and 2021	4

		Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2022 and 2021	5

		Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three Months Ended March 31, 2022 and 2021	6

		Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2022 and 2021	7

		Notes to Consolidated Financial Statements (unaudited)	8

	ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

	ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	28

	ITEM 4	Controls and Procedures	28

PART II -		OTHER INFORMATION

	ITEM 1	Legal Proceedings	29

	ITEM 1A	Risk Factors	29

	ITEM 2	Not Applicable

	ITEM 3-5	Not Applicable

	ITEM 6	Exhibits	29

		SIGNATURES	36

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PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

INDUS REALTY TRUST, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

(unaudited)


	March 31, 2022	December 31, 2021
ASSETS
Real estate assets at cost, net	$ 419,888	$ 387,647
Cash and cash equivalents	125,727	150,263
Restricted cash	665	10,644
Other assets	37,650	34,102
Assets of discontinued operations	7,930	7,990
Total assets	$ 591,860	$ 590,646

LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage loans and construction loan, net of debt issuance costs	$ 168,950	$ 169,818
Deferred revenue	6,423	7,365
Accounts payable and accrued liabilities	13,183	9,671
Dividends payable	1,630	1,629
Other liabilities	11,216	15,254
Liabilities of discontinued operations	830	832
Total liabilities	202,232	204,569

Stockholders' Equity
Common stock, par value $0.01 per share, 50,000,000 shares authorized, 10,186,143 and 10,183,730 shares issued and outstanding, respectively	102	102
Additional paid-in capital	400,004	399,754
Accumulated deficit	(12,230)	(10,869)
Accumulated other comprehensive income (loss)	1,752	(2,910)
Total stockholders' equity	389,628	386,077
Total liabilities and stockholders' equity	$ 591,860	$ 590,646

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Operations

(dollars in thousands, except per share data)

(unaudited)



	For the Three Months Ended
	March 31, 2022		March 31, 2021
Rental revenue	$	11,519	$	9,530

Expenses:
Operating expenses of rental properties		1,299		1,410
Real estate taxes		1,477		1,367
Depreciation and amortization expense		4,156		3,106
General and administrative expenses		2,934		2,970
Total expenses		9,866		8,853

Other income (expense):
Interest expense		(1,519)		(1,749)
Change in fair value of financial instruments		—		260
Gain on sales of real estate assets		—		20
Investment and other income		21		7
Other expense		(3)		—
		(1,501)		(1,462)

Income (loss) from continuing operations		152		(785)

Discontinued operations:
(Loss) income from discontinued operations		(86)		17
Gain on sale of equipment		203		—
Income from discontinued operations		117		17

Net income (loss)	$	269	$	(768)

Income (loss) per Common Share-Basic:
Income (loss) from continuing operations	$	0.02	$	(0.12)
Income from discontinued operations	$	0.01	$	-
Net income (loss) per common share	$	0.03	$	(0.12)

Income (loss) per Common Share-Diluted:
Income (loss) from continuing operations	$	0.02	$	(0.12)
Income from discontinued operations	$	0.01	$	-
Net income (loss) per common share	$	0.03	$	(0.12)


Weighted average shares outstanding - basic		10,185		6,236
Weighted average shares outstanding - diluted		10,421		6,236

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Comprehensive Income

(dollars in thousands)

(unaudited)



	For the Three Months Ended
	March 31, 2022		March 31, 2021
Net income (loss)	$	269	$	(768)

Other comprehensive income:
Reclassifications included in net income (loss)		451		488
Unrealized gain on cash flow hedges		4,211		2,991
Total other comprehensive income		4,662		3,479
Total comprehensive income	$	4,931	$	2,711

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(dollars in thousands)

(unaudited)


For the Three Months Ended March 31, 2022 and 2021

	Shares of			Additional				Accumulated Other
	Common Stock	Common		Paid-in		Accumulated		Comprehensive
	Issued	Stock		Capital		Deficit		Income (Loss)		Total

Balance at December 31, 2021	10,183,730	$	102	$	399,754	$	(10,869)	$	(2,910)	$	386,077
Equity awards issued	2,698		—		—		—		—		—
Stock-based compensation expense	—		—		273		—		—		273
Shares acquired to satisfy employee tax withholding requirements on stock awards	(285)		—		(23)		—		—		(23)
Common stock dividend, $0.16 per share	—		—		—		(1,630)		—		(1,630)
Net income	—		—		—		269		—		269
Total other comprehensive income, net of tax	—		—		—		—		4,662		4,662
Balance at March 31, 2022	10,186,143	$	102	$	400,004	$	(12,230)	$	1,752	$	389,628



Balance at December 31, 2020	5,663,040	$	57	$	116,732	$	(9,817)	$	(7,855)	$	99,117
Stock-based compensation expense	—		—		214		—		—		214
Exercise of stock options	233		—		6		—		—		6
Sale of common stock, net	1,927,049		19		108,657		—		—		108,676
Special dividend	125,212		1		7,845		(11,250)		—		(3,404)
Net loss	—		—		—		(768)		—		(768)
Total other comprehensive income, net of tax	—		—		—		—		3,479		3,479
Balance at March 31, 2021	7,715,534	$	77	$	233,454	$	(21,835)	$	(4,376)	$	207,320

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



	For the Three Months Ended
	March 31, 2022		March 31, 2021
Net income (loss)	$	269	$	(768)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		4,396		3,343
Noncash rental revenue including straight-line rents		(983)		(437)
Stock-based compensation expense		273		214
Amortization of debt issuance costs		228		166
Gain on sales of equipment		(203)		—
Change in fair value of financial instruments		—		(260)
Gain on sales of real estate assets		—		(20)
Changes in assets and liabilities:
Other assets		1,051		2,428
Accounts payable and accrued liabilities		(225)		(423)
Deferred revenue		(600)		(652)
Other liabilities		(239)		237
Net cash provided by operating activities		3,967		3,828

Investing activities:
Acquisitions of land and buildings		(24,026)		—
Additions to real estate assets		(8,675)		(1,200)
Deposits on building and land acquisitions		(3,375)		—
Proceeds from sale of equipment, net of expenses		250		—
Deferred leasing costs and other		(20)		(284)
Proceeds from sales of real estate assets, net of expenses		—		496
Net cash used in investing activities		(35,846)		(988)
Financing activities:
Principal payments on mortgage loans		(1,076)		(1,267)
Dividends paid to stockholders		(1,629)		(3,404)
Proceeds from mortgage and construction loans		69		—
Proceeds from sale of common stock		—		108,676
Payment of debt issuance costs		—		(260)
Proceeds from exercise of stock options		—		6
Net cash (used in) provided by financing activities		(2,636)		103,751
Net (decrease) increase in cash and cash equivalents and restricted cash		(34,515)		106,591
Cash and cash equivalents and restricted cash at beginning of period		160,907		28,124
Cash and cash equivalents and restricted cash at end of period	$	126,392	$	134,715

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Notes to Consolidated Financial Statements

(dollars in thousands unless otherwise noted, except per share data)

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

INDUS Realty Trust, Inc., a Maryland corporation, (“INDUS” or the “Company”) is a real estate business that has elected to be taxed as a real estate investment trust (“REIT”) as defined in the Internal Revenue Service Code of 1986, as amended (the “Code”) and is principally engaged in developing, acquiring, managing and leasing high-quality industrial and logistics properties in select supply-constrained markets in the United States. The Company conducts substantially all of its business through its operating partnership, INDUS RT, LP, a Maryland limited partnership (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. As used herein, the “Company” refers to INDUS Realty Trust, Inc. and its consolidated subsidiaries and partnerships, including the Operating Partnership, except where context otherwise requires.

As of March 31, 2022, INDUS owned 35 industrial/logistics properties aggregating approximately 5.4 million square feet located in Connecticut, Pennsylvania, North Carolina, South Carolina and Florida. INDUS seeks to add to its property portfolio through the acquisition and development of land or the acquisition of modern, market-appropriate logistics buildings in the markets it targets, all of which can serve multiple drivers of demand in the modern supply chain. INDUS also owns undeveloped land parcels, much of which is not consistent with the Company’s core industrial and logistics strategy, and, therefore, the Company sells certain parcels periodically over time.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year. Certain amounts from the prior year periods have been reclassified to conform to the current presentation.

INDUS’ consolidated financial statements reflect its accounts and its consolidated subsidiaries. INDUS consolidates the subsidiaries it controls through (i) voting rights or similar rights or (ii) by means other than voting rights if INDUS is the primary beneficiary of a variable interest entity (“VIE”). There have been no VIEs in which INDUS is not a primary beneficiary.

These financial statements have been prepared in conformity with the standards of accounting measurement set forth by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 270, “Interim Reporting” and in accordance with the accounting policies stated in INDUS’ audited consolidated financial statements for the year ended December 31, 2021 included in INDUS’ Annual Report on Form 10-K, filed with the SEC on March 11, 2022. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing in that report. All adjustments, comprising only normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of results for the interim periods, have been reflected and all intercompany transactions have been eliminated.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The actual results experienced by INDUS may differ materially and adversely from INDUS’ estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

There are various accounting updates recently issued which represent technical corrections to the accounting literature or apply to specific industries. INDUS does not expect the application of any of these other updates to have an impact on its consolidated financial statements.

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Cash, Cash Equivalents and Restricted Cash

INDUS considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. INDUS’ restricted cash primarily consists of reserves for real estate taxes as required by certain mortgage note obligations as well as proceeds from property sales held by a qualified intermediary to be used for a tax deferred Section 1031 Like-Kind Exchanges (“1031 Like-Kind Exchange”) under the Code.

The following table presents a reconciliation of cash, cash equivalents and restricted cash:


	March 31,		December 31,
		2022		2021
Cash and cash equivalents	$	125,727	$	150,263
Restricted cash		665		10,644
Total cash, cash equivalents and restricted cash	$	126,392	$	160,907

Discontinued Operations

Operating results and the gain or loss on sale for a component or groups of components, whose disposition represents a strategic shift that has or will have a major effect on the Company’s operations and financial results, are presented as discontinued operations in the statements of operations and the assets and liabilities of the component to be disposed of are classified as held for sale. In March 2022, INDUS commenced the sale process to fully exit its legacy investment in its remaining office/flex properties (“Office/Flex Portfolio). The Office/Flex Portfolio is comprised of seven buildings totaling approximately 175,000 square feet located in Windsor and Bloomfield, Connecticut. Additionally, INDUS intends to sell an approximate 18,000 square foot storage building that had been used in the operations of the Office/Flex Portfolio and is located within the same business park. In March 2022, the Company closed its Landscaping Division which primarily served the Office/Flex Portfolio and recorded a gain on sale of $203 for the three months ended March 31, 2022. The disposition of the Office/Flex Portfolio represents a strategic shift and following the sale, the Company will be positioned as a pure-play industrial/logistics real estate business with a modern portfolio located in select high-growth markets. The Office/Flex Portfolio is recorded as discontinued operations as of March 2022 and for all prior periods presented, the related assets and liabilities are presented as assets and liabilities held for sale on the consolidated balance sheets and the related operating results are presented as income (loss) from discontinued operations on the consolidated statements of operations (see Note 4).

Reclassifications

Reclassifications were made related to discontinued operations as discussed in Discontinued Operations above. These reclassifications did not affect the Company's total financial position, results of operations or cash flows.

2. Sales of Common Stock

Public Offering

On February 2, 2021, INDUS filed a universal shelf registration statement on Form S-3 (the “Universal Shelf”) with the SEC. Under the Universal Shelf, the Company could offer and sell up to $500,000 of a variety of securities including the Company’s common stock (“Common Stock”), preferred stock, warrants, depositary shares, units or any combination of such securities. Under the Universal Shelf, the Company may periodically offer one or more types of securities in amounts, at prices and on terms announced.

On March 5, 2021, under its Universal Shelf, INDUS completed an underwritten public offering of 1,750,000 shares of its Common Stock at a price to the underwriters of $56.85 per share. On March 15, 2021, the underwriters exercised their option to purchase an additional 177,049 shares of common stock from INDUS at the same price. INDUS received net proceeds of $108,676, after expenses, from the aggregate of 1,927,049 shares issued on March 5, 2021, and March 15, 2021. The Company has used the proceeds from the issuance of its Common Stock to finance its acquisition and development pipeline and for other corporate purposes.

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3. Fair Value

INDUS applies the provisions of ASC 820, which establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs, when measuring fair value. The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value, as follows:

Level 1 applies to assets or liabilities for which there are quoted market prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 2 assets and liabilities include INDUS’ interest rate swap agreements (see Note 5). These inputs are readily available in public markets or can be derived from information available in publicly quoted markets, therefore, INDUS has categorized these derivative instruments as Level 2 within the fair value hierarchy.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The following are INDUS’ financial assets and liabilities carried at fair value and measured at fair value on a recurring basis:


	March 31, 2022
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Interest rate swap asset	$	—	$	1,220	$	—
Interest rate swap liabilities	$	—	$	365	$	—


	December 31, 2021
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Interest rate swap assets	$	—	$	188	$	—
Interest rate swap liabilities	$	—	$	3,995	$	—

The amounts included in the consolidated financial statements for cash and cash equivalents, leasing receivables from tenants, accounts payable and accrued liabilities and interest rate swap assets and liabilities approximate their fair values because of the short-term maturities of these instruments. The fair values of the interest rate swaps (used for purposes other than trading) are determined based on discounted cash flow models that incorporate the cash flows of the derivatives as well as the current Overnight Index Swap Rate and swap curve along with other market data, taking into account current interest rates and the credit worthiness of the counterparty for assets and the credit worthiness of INDUS for liabilities.

The fair values of the mortgage loans and construction loan, net of debt issuance costs, are estimated based on current rates offered to INDUS for similar debt of the same remaining maturities and, additionally, INDUS considers its credit worthiness in determining the fair value of its mortgage loans. At March 31, 2022 and December 31, 2021, the carrying values of the mortgage loans and construction loan were $168,950 and $169,818, respectively, and the fair values of the mortgage loans and construction loan were $178,607 and $180,731, respectively.

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4. Real Estate Assets and Discontinued Operations

Real estate assets consist of:


	Estimated
	Useful Lives	March 31, 2022		December 31, 2021
Land		$	56,572	$	55,104
Land improvements	10 to 30 years		65,849		65,520
Buildings and improvements	10 to 40 years		318,619		295,964
Tenant improvements	Shorter of useful life or terms of related lease		32,109		31,576
Construction in progress			31,559		20,799
Development costs			3,799		3,673
			508,507		472,636
Accumulated depreciation			(88,619)		(84,989)
		$	419,888	$	387,647

Total depreciation expense related to real estate assets was as follows:



	For the Three Months Ended
	March 31, 2022		March 31, 2021
Depreciation expense	$	3,637	$	2,679

On January 19, 2022, INDUS closed on the purchase of 782 Paragon Way (“782 Paragon”), an approximately 217,000 square foot fully leased building in the Charlotte, North Carolina market for $24,026, including transaction costs. INDUS determined the fair value of the assets acquired approximated the purchase price, which was allocated to real estate assets.

In March 2022, the Company announced its intention to sell its Office/Flex Portfolio (see Note 1). The Office/Flex Portfolio is comprised of seven buildings totaling approximately 175,000 square feet located in Windsor and Bloomfield, Connecticut. Additionally, INDUS intends to sell an approximate 18,000 square foot storage building that had been used in the operations of the Office/Flex Portfolio and is located within the same business park. The disposition of the Office/Flex Portfolio represents a strategic shift for the Company and, as such, is being treated as a discontinued operation as of March 31, 2022. Accordingly, for all prior periods presented, the related assets and liabilities are presented as assets and liabilities held for sale on the consolidated balance sheets.

Real estate assets in discontinued operations consist of:


	March 31, 2022		December 31, 2021
Land	$	31	$	31
Land improvements		1,840		1,840
Buildings and improvements		15,403		15,396
Tenant improvements		3,485		3,485
Construction in progress		555		338
		21,314		21,090
Accumulated depreciation		(14,781)		(14,571)
		6,533		6,519
Other assets		1,397		1,471
Total assets associated with real estate assets held for sale	$	7,930	$	7,990


Accounts payable and accrued liabilities	$	100	$	67
Deferred revenue		518		620
Other liabilities		212		145
Total liabilities associated with real estate assets held for sale	$	830	$	832

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5. Mortgages Loans, Construction Loan and Interest Rate Swaps

INDUS’ nonrecourse mortgage loans and construction loan consist of:


Mortgage loans:	March 31, 2022		December 31, 2021
4.39%, due January 2, 2025 *	$	17,661	$	17,824
4.17%, due May 1, 2026 *		12,185		12,291
3.79%, due November 17, 2026 *		22,958		23,152
4.39%, due August 1, 2027 *		9,405		9,476
3.97%, due September 1, 2027		11,111		11,174
4.57%, due February 1, 2028 *		17,025		17,145
3.60%, due January 2, 2030 *		6,139		6,182
3.48%, due February 1, 2030		14,186		14,287
3.50%, due July 1, 2030 *		4,881		4,914
4.33%, due August 1, 2030		15,770		15,867
4.51%, due April 1, 2034		13,271		13,356
Mortgage loans		144,592		145,668
Debt issuance costs		(1,677)		(1,745)
Mortgage loans, net of debt issuance costs		142,915		143,923

Construction loan:
One-month LIBOR plus 1.40%, due May 7, 2023		26,342		26,273
Debt issuance costs		(307)		(378)
Construction loan, net of debt issuance costs		26,035		25,895

Mortgage loans and construction loan, net of debt issuance costs	$	168,950	$	169,818

*Variable rate loans for which INDUS entered into interest rate swap agreements to effectively fix the interest rates on these loans to the rates reflected above.

INDUS’ weighted average interest rate on its mortgage loans and its construction loan, including the effect of its interest rate swap agreements, was 3.76% as of March 31, 2022 and December 31, 2021. The Company accounts for its interest rate swap agreements as effective cash flow hedges. Amounts in accumulated other comprehensive income (“AOCI”) will be reclassified into interest expense over the term of the swap agreements to achieve fixed interest rates on each variable rate mortgage. None of the interest rate swap agreements contain any credit risk related contingent features. In the first quarter of 2022 and 2021, INDUS recognized gains, included in other comprehensive income, of $4,662 and $3,479, respectively, on its interest rate swap agreements. As of March 31, 2022, $361 was expected to be reclassified over the next twelve months to AOCI from interest expense. Interest expense related to INDUS’ interest rate swap agreements in the first quarters of 2022 and 2021 was $451 and $488, respectively.

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The following table summarizes the notional and fair value of our interest rate swaps designated as cash flow hedges at March 31, 2022 and December 31, 2021:


						Fair Value of Interest Rate
				Current Notional Value		Derivative Assets/(Liabilities)
			LIBOR	(in thousands)		(in thousands)
Effective	Maturity		Interest	March 31,	December 31,	March 31,	December 31,
Date	Date		Strike Rate	2022	2021	2022	2021

September 1, 2013	September 1, 2023	(a)	2.840%	$ 7,133	$ 7,204	($ 71)	($ 249)
January 1, 2015	January 1, 2025	(a)	2.260%	8,990	9,068	88	(390)
January 1, 2016	January 1, 2025	(a)	1.932%	1,538	1,552	20	(40)

September 1, 2015	September 1, 2025	(b)	2.118%	2,165	9,608	93	(334)
December 10, 2015	September 1, 2025	(b)	2.015%	9,521	2,185	28	(68)
November 17, 2016	November 17, 2026	(b)	2.085%	11,272	11,359	129	(518)

May 3, 2016	May 1, 2026		1.910%	12,185	12,291	216	(369)

March 15, 2017	March 1, 2027	(c)	2.501%	10,538	10,621	(73)	(641)
February 1, 2018	February 1, 2028	(c)	2.782%	6,487	6,524	(213)	(641)

July 14, 2017	August 1, 2027		4.390%	9,405	9,476	(8)	(526)

January 2, 2020	January 1, 2030		1.849%	6,139	6,182	158	(219)

July 1, 2020	July 1, 2030		0.942%	4,881	4,914	488	188

				$ 90,254	$ 90,984	$ 855	($ 3,807)

(a) (b) and (c) represent multiple interest rate swap agreements against a single mortgage

In July 2017, the Financial Conduct Authority in the United Kingdom, which regulates LIBOR, announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after June 30, 2023. INDUS currently expects LIBOR-indexed rates to be available through that date, however, it is possible that they will become unavailable prior to that time. The interest rate on INDUSs floating rate debt under nonrecourse mortgage loans is based on LIBOR, however, INDUS entered into interest rate swap agreements whereby the floating LIBOR rates under all mortgage loans are hedged, effectively fixing the interest rate on those loans. INDUS’ loan documents contain provisions that contemplate alternative methods to determine the base rate applicable to our LIBOR-indexed debt to the extent LIBOR-indexed rates are not available. INDUS will continue to monitor and evaluate the impact, if any, on debt payments and the value of the Company’s floating rate debt.

On April 21, 2022, INDUS entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) for a $250 million secured credit facility (the “New Credit Facility”) (see Note 6), amending and restating the $100 million credit facility executed on August 5, 2021 (the “Existing Credit Facility”) to include the addition of a delayed draw term loan facility (the “DDTL Facility”) of $150 million for a term of five years, pursuant to which up to three separate draws may be made prior to April 21, 2023 (the first two of which must each be in a minimum amount of $25 million). The DDTL will bear interest at the Secured Overnight Financing Rate (“SOFR”) plus 1.15%, based on the Company’s ratio of total indebtedness to total assets. Concurrent with the closing on the DDTL, the Company entered into an interest rate swap agreement to fix the interest rate on the DDTL at an effective rate of 4.15%.

6. Revolving Credit Agreements

On April 21, 2022, the Credit Agreement was amended and restated to provide for, among other things: (1) the addition of the DDTL Facility of $150 million (see Note 5), pursuant to which up to three separate draws may be made prior to April 21, 2023 (the first two of which must each be in a minimum amount of $25 million), and (2) the transition from London Interbank Offered Rate (“LIBOR”) to SOFR for floating rate borrowings for all purposes under the Credit Agreement. The DDTL Facility will mature on April 21, 2027. The New Credit Facility continues to include a $100 million revolving credit facility (the “Revolving Credit Facility”), however, the maturity of the Revolving Credit Facility has been extended to April 21, 2025. The two one-year extensions at the Company’s option under the Existing Credit Facility remain in place under the New Credit Facility. The New Credit Facility also increases the uncommitted

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incremental facility, which, as amended, would enable the Company to increase the New Credit Facility by up to $250 million in the aggregate, for a total of $500 million.

Borrowings under the New Credit Facility will continue to bear interest subject to a pricing grid for changes in the Company’s total leverage. Based on the Company’s current leverage, the initial annual interest rates under the New Credit Facility would be (i) SOFR plus 1.20% for revolving borrowings (the same applicable margin as under the Existing Credit Facility), and (ii) SOFR plus 1.15% for term borrowings (compared with LIBOR plus 1.20% under the Existing Credit Facility). The annual interest rate under the Existing Credit Facility was the one-month LIBOR plus 1.20%.

Under the terms of the New Credit Facility, INDUS must maintain: (i) a consolidated tangible net worth of $319,149 plus 75% of the aggregate increases in stockholders’ equity of the Company by reason of issuance or sale of equity of the Company; (ii) a fixed charge coverage ratio of (a) 1.25 to 1.0 through March 31, 2022, and (b) 1.50 to 1.0 on and after June 30, 2022; (iii) a maximum leverage ratio of total indebtedness to total assets of less than 60% on the last day of any fiscal quarter; (iv) a maximum secured leverage ratio of total secured indebtedness to total asset value of (a) 50% through December 31, 2022, and (b) 40% on and after March 31, 2023; (v) a minimum borrowing base of (a) $75,000 through December 30, 2022 (compared with $30,000 under the Existing Credit Facility), (b) $125,000 from December 31, 2022 through December 30, 2023 (compared with $50,000 under the Existing Credit Facility), and (c) $250,000 on and after December 31, 2023 (compared with $100,000 under the Existing Credit Facility); and (vi) a minimum of (a) five industrial unencumbered properties from June 30, 2021 through December 30, 2023, and (b) eight industrial unencumbered properties on and after December 31, 2023.

As of March 31, 2022, the Company was in compliance with the covenants of the Existing Credit Facility. Based on the collateral in place as of March 31, 2022, $89,631 could be borrowed under the New Credit Facility. There have been no borrowings under the New Credit Facility, however, the New Credit Facility secures certain unused standby letters of credit aggregating $3,899 that are related to INDUS' development activities.

The Existing Credit Facility replaced INDUS’ $35,000 revolving credit line and $15,000 property acquisitions credit line with Webster Bank, N.A.that were scheduled to expire on September 30, 2021. Borrowings under this credit line were at a rate of one-month LIBOR plus 2.50% and one-month LIBOR plus 2.75% under this former revolving credit line and acquisition credit line, respectively.

7. Stockholders’ Equity

Per Share Results

Basic and diluted per share results were based on the following:



	For the Three Months Ended
	March 31, 2022		March 31, 2021
Net income (loss)	$	269	$	(768)

Weighted average shares outstanding for computation of basic per share results		10,185,000		6,236,000
Incremental shares from assumed exercise of stock options and warrants and the grant of restricted stock units (a)		236,000		—
Adjusted weighted average shares for computation of diluted per share results		10,421,000		6,236,000

(a)

Incremental shares from the assumed exercise of INDUS stock options are not included in periods where the inclusion of such shares would be anti-dilutive. The incremental shares from the assumed exercise of stock options for the first quarter of 2021 would have been 95,000. For the first quarter of 2021, there was also a Warrant for the purchase of 515,747 shares of Common Stock that was anti-dilutive.

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