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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
OR
☐ 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 1-34907
____________________________________________________________________________
STAG Industrial, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________________ | | | | | | | | | | | |
Maryland | | 27-3099608 |
(State or other jurisdiction of | | (IRS Employer Identification No.) |
incorporation or organization) | | |
| | | |
One Federal Street | | |
23rd Floor | | |
Boston, | Massachusetts | | 02110 |
(Address of principal executive offices) | | (Zip code) |
(617) 574-4777
(Registrant’s telephone number, including area code)
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 | STAG | New York Stock Exchange |
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 ☒
The number of shares of common stock outstanding at May 2, 2022 was 179,213,310.
STAG Industrial, Inc.
Table of Contents | | | | | | | | |
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PART I. | | |
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Item 1. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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PART II. | | |
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Item 1. | | |
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Item 1A. | | |
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Item 2. | | |
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Item 3. | | |
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Item 4. | | |
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Item 5. | | |
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Item 6. | | |
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Part I. Financial Information
Item 1. Financial Statements
STAG Industrial, Inc.
Consolidated Balance Sheets
(unaudited, in thousands, except share data) | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Assets | | | |
Rental Property: | | | |
Land | $ | 626,385 | | | $ | 617,297 | |
Buildings and improvements, net of accumulated depreciation of $650,370 and $611,867, respectively | 4,535,725 | | | 4,435,743 | |
Deferred leasing intangibles, net of accumulated amortization of $288,640 and $282,038, respectively | 561,267 | | | 567,658 | |
Total rental property, net | 5,723,377 | | | 5,620,698 | |
Cash and cash equivalents | 34,830 | | | 18,981 | |
Restricted cash | 3,175 | | | 4,215 | |
Tenant accounts receivable | 98,320 | | | 93,600 | |
Prepaid expenses and other assets | 64,308 | | | 60,953 | |
Interest rate swaps | 27,696 | | | 5,220 | |
Operating lease right-of-use assets | 29,151 | | | 29,582 | |
| | | |
Total assets | $ | 5,980,857 | | | $ | 5,833,249 | |
Liabilities and Equity | | | |
Liabilities: | | | |
Unsecured credit facility | $ | 384,000 | | | $ | 296,000 | |
Unsecured term loans, net | 970,925 | | | 970,577 | |
Unsecured notes, net | 897,058 | | | 896,941 | |
Mortgage notes, net | 54,190 | | | 54,744 | |
Accounts payable, accrued expenses and other liabilities | 72,726 | | | 76,475 | |
Interest rate swaps | 2,298 | | | 17,052 | |
Tenant prepaid rent and security deposits | 36,062 | | | 37,138 | |
Dividends and distributions payable | 22,282 | | | 21,906 | |
Deferred leasing intangibles, net of accumulated amortization of $22,245 and $21,136, respectively | 33,712 | | | 35,721 | |
Operating lease liabilities | 32,725 | | | 33,108 | |
Total liabilities | 2,505,978 | | | 2,439,662 | |
Commitments and contingencies (Note 11) | | | |
Equity: | | | |
Preferred stock, par value $0.01 per share, 20,000,000 shares authorized at March 31, 2022 and December 31, 2021; none issued or outstanding | — | | | — | |
Common stock, par value $0.01 per share, 300,000,000 shares authorized at March 31, 2022 and December 31, 2021, 179,211,305 and 177,769,342 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 1,792 | | | 1,777 | |
Additional paid-in capital | 4,179,361 | | | 4,130,038 | |
Cumulative dividends in excess of earnings | (805,400) | | | (792,332) | |
Accumulated other comprehensive income (loss) | 24,652 | | | (11,783) | |
Total stockholders’ equity | 3,400,405 | | | 3,327,700 | |
Noncontrolling interest | 74,474 | | | 65,887 | |
Total equity | 3,474,879 | | | 3,393,587 | |
Total liabilities and equity | $ | 5,980,857 | | | $ | 5,833,249 | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Operations
(unaudited, in thousands, except per share data) | | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2022 | | 2021 | | | | |
Revenue | | | | | | | |
Rental income | $ | 158,601 | | | $ | 133,825 | | | | | |
Other income | 608 | | | 170 | | | | | |
Total revenue | 159,209 | | | 133,995 | | | | | |
Expenses | | | | | | | |
Property | 31,775 | | | 27,002 | | | | | |
General and administrative | 12,313 | | | 12,790 | | | | | |
Depreciation and amortization | 67,366 | | | 58,407 | | | | | |
| | | | | | | |
Other expenses | 497 | | | 852 | | | | | |
Total expenses | 111,951 | | | 99,051 | | | | | |
Other income (expense) | | | | | | | |
Interest and other income | 34 | | | 32 | | | | | |
Interest expense | (17,259) | | | (15,358) | | | | | |
Debt extinguishment and modification expenses | — | | | (679) | | | | | |
| | | | | | | |
Gain on the sales of rental property, net | 23,955 | | | 6,409 | | | | | |
Total other income (expense) | 6,730 | | | (9,596) | | | | | |
Net income | $ | 53,988 | | | $ | 25,348 | | | | | |
Less: income attributable to noncontrolling interest after preferred stock dividends | 1,162 | | | 473 | | | | | |
Net income attributable to STAG Industrial, Inc. | $ | 52,826 | | | $ | 24,875 | | | | | |
Less: preferred stock dividends | — | | | 1,289 | | | | | |
Less: redemption of preferred stock | — | | | 2,582 | | | | | |
Less: amount allocated to participating securities | 62 | | | 73 | | | | | |
Net income attributable to common stockholders | $ | 52,764 | | | $ | 20,931 | | | | | |
Weighted average common shares outstanding — basic | 177,827 | | | 158,430 | | | | | |
Weighted average common shares outstanding — diluted | 178,065 | | | 159,126 | | | | | |
Net income per share — basic and diluted | | | | | | | |
| | | | | | | |
| | | | | | | |
Net income per share attributable to common stockholders — basic | $ | 0.30 | | | $ | 0.13 | | | | | |
Net income per share attributable to common stockholders — diluted | $ | 0.30 | | | $ | 0.13 | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Comprehensive Income
(unaudited, in thousands) | | | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2022 | | 2021 | | | | |
Net income | $ | 53,988 | | | $ | 25,348 | | | | | |
Other comprehensive income: | | | | | | | |
Income on interest rate swaps | 37,237 | | | 12,150 | | | | | |
Other comprehensive income | 37,237 | | | 12,150 | | | | | |
Comprehensive income | 91,225 | | | 37,498 | | | | | |
Income attributable to noncontrolling interest after preferred stock dividends | (1,162) | | | (473) | | | | | |
Other comprehensive income attributable to noncontrolling interest | (802) | | | (268) | | | | | |
Comprehensive income attributable to STAG Industrial, Inc. | $ | 89,261 | | | $ | 36,757 | | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Equity
(unaudited, in thousands, except share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preferred Stock | | Common Stock | | Additional Paid-in Capital | | Cumulative Dividends in Excess of Earnings | | Accumulated Other Comprehensive Income (Loss) | | Total Stockholders’ Equity | | Noncontrolling Interest - Unit Holders in Operating Partnership | | Total Equity |
| | Shares | | Amount | | | | | | |
Three months ended March 31, 2022 | | | | | | | | | | | | | | | | | |
Balance, December 31, 2021 | $ | — | | | 177,769,342 | | | $ | 1,777 | | | $ | 4,130,038 | | | $ | (792,332) | | | $ | (11,783) | | | $ | 3,327,700 | | | $ | 65,887 | | | $ | 3,393,587 | |
Proceeds from sales of common stock, net | — | | | 1,328,335 | | | 13 | | | 54,963 | | | — | | | — | | | 54,976 | | | — | | | 54,976 | |
| | | | | | | | | | | | | | | | | |
Dividends and distributions, net | — | | | — | | | — | | | — | | | (65,114) | | | — | | | (65,114) | | | (1,474) | | | (66,588) | |
Non-cash compensation activity, net | — | | | 48,628 | | | 1 | | | (3,279) | | | (780) | | | — | | | (4,058) | | | 5,737 | | | 1,679 | |
Redemption of common units to common stock | — | | | 65,000 | | | 1 | | | 1,216 | | | — | | | — | | | 1,217 | | | (1,217) | | | — | |
Rebalancing of noncontrolling interest | — | | | — | | | — | | | (3,577) | | | — | | | — | | | (3,577) | | | 3,577 | | | — | |
Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 36,435 | | | 36,435 | | | 802 | | | 37,237 | |
Net income | — | | | — | | | — | | | — | | | 52,826 | | | — | | | 52,826 | | | 1,162 | | | 53,988 | |
Balance, March 31, 2022 | $ | — | | | 179,211,305 | | | $ | 1,792 | | | $ | 4,179,361 | | | $ | (805,400) | | | $ | 24,652 | | | $ | 3,400,405 | | | $ | 74,474 | | | $ | 3,474,879 | |
Three months ended March 31, 2021 | | | | | | | | | | | | | | | | | |
Balance, December 31, 2020 | $ | 75,000 | | | 158,209,823 | | | $ | 1,582 | | | $ | 3,421,721 | | | $ | (742,071) | | | $ | (40,025) | | | $ | 2,716,207 | | | $ | 54,845 | | | $ | 2,771,052 | |
Proceeds from sales of common stock, net | — | | | 680,276 | | | 7 | | | 21,559 | | | — | | | — | | | 21,566 | | | — | | | 21,566 | |
Redemption of preferred stock | (75,000) | | | — | | | — | | | 2,573 | | | (2,582) | | | — | | | (75,009) | | | — | | | (75,009) | |
Dividends and distributions, net | — | | | — | | | — | | | — | | | (58,828) | | | — | | | (58,828) | | | (1,436) | | | (60,264) | |
Non-cash compensation activity, net | — | | | 95,190 | | | 1 | | | (3,214) | | | (121) | | | — | | | (3,334) | | | 6,607 | | | 3,273 | |
Redemption of common units to common stock | — | | | 97,159 | | | 1 | | | 1,622 | | | — | | | — | | | 1,623 | | | (1,623) | | | — | |
Rebalancing of noncontrolling interest | — | | | — | | | — | | | (474) | | | — | | | — | | | (474) | | | 474 | | | — | |
Other comprehensive income | — | | | — | | | — | | | — | | | — | | | 11,882 | | | 11,882 | | | 268 | | | 12,150 | |
Net income | — | | | — | | | — | | | — | | | 24,875 | | | — | | | 24,875 | | | 473 | | | 25,348 | |
Balance, March 31, 2021 | $ | — | | | 159,082,448 | | | $ | 1,591 | | | $ | 3,443,787 | | | $ | (778,727) | | | $ | (28,143) | | | $ | 2,638,508 | | | $ | 59,608 | | | $ | 2,698,116 | |
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The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Consolidated Statements of Cash Flows
(unaudited, in thousands) | | | | | | | | | | | | | |
| Three months ended March 31, | | |
| 2022 | | 2021 | | |
Cash flows from operating activities: | | | | | |
Net income | $ | 53,988 | | | $ | 25,348 | | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Depreciation and amortization | 67,366 | | | 58,407 | | | |
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Non-cash portion of interest expense | 864 | | | 487 | | | |
Amortization of above and below market leases, net | (84) | | | 1,474 | | | |
Straight-line rent adjustments, net | (4,450) | | | (4,676) | | | |
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Gain on the sales of rental property, net | (23,955) | | | (6,409) | | | |
Non-cash compensation expense | 3,260 | | | 4,615 | | | |
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Change in assets and liabilities: | | | | | |
Tenant accounts receivable | (262) | | | 3,281 | | | |
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Prepaid expenses and other assets | (3,371) | | | (4,132) | | | |
Accounts payable, accrued expenses and other liabilities | (3,401) | | | (4,613) | | | |
Tenant prepaid rent and security deposits | (1,076) | | | (322) | | | |
Total adjustments | 34,891 | | | 48,112 | | | |
Net cash provided by operating activities | 88,879 | | | 73,460 | | | |
Cash flows from investing activities: | | | | | |
Acquisitions of land and buildings and improvements | (144,600) | | | (81,969) | | | |
Additions of land and building and improvements | (17,061) | | | (10,269) | | | |
Acquisitions of other assets | (2,134) | | | — | | | |
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Proceeds from sales of rental property, net | 35,326 | | | 23,884 | | | |
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Acquisition deposits, net | (711) | | | 2,008 | | | |
Acquisitions of deferred leasing intangibles | (19,617) | | | (13,156) | | | |
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Net cash used in investing activities | (148,797) | | | (79,502) | | | |
Cash flows from financing activities: | | | | | |
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Proceeds from unsecured credit facility | 675,000 | | | 393,000 | | | |
Repayment of unsecured credit facility | (587,000) | | | (267,000) | | | |
Proceeds from unsecured term loans | — | | | 300,000 | | | |
Repayment of unsecured term loans | — | | | (300,000) | | | |
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Repayment of mortgage notes | (586) | | | (531) | | | |
Payment of loan fees and costs | (4) | | | (2,750) | | | |
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Proceeds from sales of common stock, net | 55,126 | | | 21,639 | | | |
Redemption of preferred stock | — | | | (75,000) | | | |
Dividends and distributions | (66,213) | | | (59,996) | | | |
Repurchase and retirement of share-based compensation | (1,596) | | | (1,342) | | | |
Net cash provided by financing activities | 74,727 | | | 8,020 | | | |
Increase in cash and cash equivalents and restricted cash | 14,809 | | | 1,978 | | | |
Cash and cash equivalents and restricted cash—beginning of period | 23,196 | | | 20,339 | | | |
Cash and cash equivalents and restricted cash—end of period | $ | 38,005 | | | $ | 22,317 | | | |
Supplemental disclosure: | | | | | |
Cash paid for interest, net of capitalized interest | $ | 17,172 | | | $ | 13,471 | | | |
Supplemental schedule of non-cash investing and financing activities | | | | | |
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Additions to building and other capital improvements | $ | (539) | | | $ | — | | | |
Transfer of other assets to building and other capital improvements | $ | 539 | | | $ | — | | | |
Acquisitions of land and buildings and improvements | $ | — | | | $ | (4,239) | | | |
Acquisitions of deferred leasing intangibles | $ | — | | | $ | (703) | | | |
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Change in additions of land, building, and improvements included in accounts payable, accrued expenses, and other liabilities | $ | 590 | | | $ | 4,281 | | | |
Additions to building and other capital improvements from non-cash compensation | $ | (26) | | | $ | — | | | |
Assumption of mortgage notes | $ | — | | | $ | 5,103 | | | |
Fair market value adjustment to mortgage notes acquired | $ | — | | | $ | (161) | | | |
Change in loan fees, costs, and offering costs included in accounts payable, accrued expenses, and other liabilities | $ | (167) | | | $ | 879 | | | |
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Dividends and distributions accrued | $ | 22,282 | | | $ | 19,657 | | | |
The accompanying notes are an integral part of these consolidated financial statements.
STAG Industrial, Inc.
Notes to Consolidated Financial Statements
(unaudited)
1. Organization and Description of Business
STAG Industrial, Inc. (the “Company”) is an industrial real estate operating company focused on the acquisition and operation of single-tenant, industrial properties throughout the United States. The Company was formed as a Maryland corporation and has elected to be treated and intends to continue to qualify as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. The Company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns substantially all of its assets and conducts substantially all of its business through its operating partnership, STAG Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). As of March 31, 2022 and December 31, 2021, the Company owned a 97.9% and 98.1%, respectively, common equity interest in the Operating Partnership. The Company, through its wholly owned subsidiary, is the sole general partner of the Operating Partnership. As used herein, the “Company” refers to STAG Industrial, Inc. and its consolidated subsidiaries, including the Operating Partnership, except where context otherwise requires.
As of March 31, 2022, the Company owned 551 industrial buildings in 40 states with approximately 110.1 million rentable square feet.
COVID-19 Pandemic
The Company and the real estate industry generally continue to face risks and uncertainties related to the ongoing public health crisis of the novel coronavirus disease (“COVID-19”) pandemic.
The Company closely monitors the effect of the COVID-19 pandemic on all aspects of its business, including how the pandemic will affect its tenants and business partners. The Company did not incur significant disruptions from the COVID-19 pandemic or enter into any rent deferral agreements during the three months ended March 31, 2022 and 2021. The Company will continue to evaluate tenant rent relief requests on an individual basis, considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor is the Company foregoing its contractual rights under its lease agreements.
The Company remains unable to predict the ultimate impact that the pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties. The extent to which the COVID-19 pandemic affects the Company’s operations and those of its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.
2. Summary of Significant Accounting Policies
Interim Financial Information
The accompanying interim financial statements have been presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Regulation S-X for interim financial information. Accordingly, these statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements include all adjustments, consisting of normal recurring items, necessary for their fair statement in conformity with GAAP. Interim results are not necessarily indicative of results for a full year. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Basis of Presentation
The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership, and their consolidated subsidiaries. Interests in the Operating Partnership not owned by the Company are referred to as “Noncontrolling Common Units.” These Noncontrolling Common Units are held by other limited partners in the form of common units (“Other Common Units”) and long term incentive plan units (“LTIP units”) issued pursuant to the STAG Industrial, Inc. 2011 Equity Incentive Plan, as amended and restated (the “2011 Plan”). All significant intercompany balances and transactions have been
eliminated in the consolidation of entities. The financial statements of the Company are presented on a consolidated basis for all periods presented.
Restricted Cash
The following table presents a reconciliation of cash and cash equivalents and restricted cash reported on the accompanying Consolidated Balance Sheets to amounts reported on the accompanying Consolidated Statements of Cash Flows.
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Reconciliation of cash and cash equivalents and restricted cash (in thousands) | | March 31, 2022 | | December 31, 2021 | | | | |
Cash and cash equivalents | | $ | 34,830 | | | $ | 18,981 | | | | | |
Restricted cash | | 3,175 | | | 4,215 | | | | | |
Total cash and cash equivalents and restricted cash | | $ | 38,005 | | | $ | 23,196 | | | | | |
Taxes
Federal Income Taxes
The Company’s taxable REIT subsidiary recognized net income of approximately $0.1 million and $0 for the three months ended March 31, 2022 and 2021, respectively.
State and Local Income, Excise, and Franchise Tax
State and local income, excise, and franchise taxes in the amount of approximately $0.5 million and $0.4 million have been recorded in other expenses on the accompanying Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021, respectively.
Uncertain Tax Positions
As of March 31, 2022 and December 31, 2021, there were no liabilities for uncertain tax positions.
Concentrations of Credit Risk
Management believes the current credit risk of the Company’s portfolio is reasonably well diversified and does not contain any unusual concentration of credit risk.
3. Rental Property
The following table summarizes the components of rental property as of March 31, 2022 and December 31, 2021.
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Rental Property (in thousands) | | March 31, 2022 | | December 31, 2021 |
Land | | $ | 626,385 | | | $ | 617,297 | |
Buildings, net of accumulated depreciation of $433,560 and $406,670, respectively | | 4,126,324 | | | 4,035,210 | |
Tenant improvements, net of accumulated depreciation of $27,270 and $26,065, respectively | | 43,788 | | | 43,999 | |
Building and land improvements, net of accumulated depreciation of $189,540 and $179,132, respectively | | 324,917 | | | 320,041 | |
Construction in progress | | 40,696 | | | 36,493 | |
Deferred leasing intangibles, net of accumulated amortization of $288,640 and $282,038, respectively | | 561,267 | | | 567,658 | |
Total rental property, net | | $ | 5,723,377 | | | $ | 5,620,698 | |
Acquisitions
The following table summarizes the acquisitions of the Company during the three months ended March 31, 2022. The Company accounted for all of its acquisitions as asset acquisitions.
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Market(1) | | Date Acquired | | Square Feet | | Number of Buildings | | Purchase Price (in thousands) |
Kansas City, MO | | January 6, 2022 | | 702,000 | | | 1 | | | $ | 60,428 | |
Chicago, IL | | January 31, 2022 | | 72,499 | | | 1 | | | 8,128 | |
Columbus, OH | | February 8, 2022 | | 138,213 | | | 1 | | | 11,492 | |
Cleveland, OH | | February 8, 2022 | | 136,800 | | | 1 | | | 13,001 | |
Nashville, TN | | March 10, 2022 | | 109,807 | | | 1 | | | 12,810 | |
Greenville/Spartanburg, SC | | March 10, 2022 | | 289,103 | | | 1 | | | 28,274 | |
Memphis, TN | | March 18, 2022 | | 195,622 | | | 1 | | | 15,828 | |
Greenville/Spartanburg, SC | | March 18, 2022 | | 155,717 | | | 1 | | | 16,390 | |
Three months ended March 31, 2022 | | | | 1,799,761 | | | 8 | | | $ | 166,351 | |
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(1) As defined by CoStar Realty Information Inc (“CoStar”). If the building is located outside of a CoStar defined market, the city and state is reflected.
The following table summarizes the allocation of the total purchase price paid (on the closing dates) for the assets and liabilities acquired by the Company during the three months ended March 31, 2022 in connection with the acquisitions identified in the table above.
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| | Three months ended March 31, 2022 | | |
Acquired Assets and Liabilities | | Purchase Price (in thousands) | | Weighted Average Amortization Period (years) of Intangibles at Acquisition | | | | |
Land | | $ | 10,746 | | | N/A | | | | |
Buildings | | 127,778 | | | N/A | | | | |
Tenant improvements | | 692 | | | N/A | | | | |
Building and land improvements | | 5,384 | | | N/A | | | | |
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Other assets | | 2,134 | | | N/A | | | | |
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Deferred leasing intangibles - In-place leases | | 11,512 | | | 5.3 | | | | |
Deferred leasing intangibles - Tenant relationships | | 7,319 | | | 9.0 | | | | |
Deferred leasing intangibles - Above market leases | | 959 | | | 6.9 | | | | |
Deferred leasing intangibles - Below market leases | | (173) | | | 3.7 | | | | |
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Total purchase price | | $ | 166,351 | | | | | | | |
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The following table summarizes the results of operations for the three months ended March 31, 2022 for the buildings acquired during the three months ended March 31, 2022, which are included in the Company’s Consolidated Statements of Operations from the date of acquisition.
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Results of Operations (in thousands) | | Three months ended March 31, 2022 | | |
Total revenue | | $ | 1,251 | | | |
Net loss | | $ | 113 | | | |
Dispositions
During the three months ended March 31, 2022, the Company sold one building and one land parcel to third parties comprised of approximately 0.2 million rentable square feet with a net book value of approximately $11.3 million. This building contributed approximately $0.2 million and $0.4 million to revenue for the three months ended March 31, 2022 and 2021, respectively. This building contributed approximately $0.2 million and $0.3 million to net income (exclusive of gain on the sales of rental property, net) for the three months ended March 31, 2022 and 2021, respectively. Net proceeds from the sales of rental property were approximately $35.3 million and the Company recognized the full gain on the sales of rental property, net, of approximately $24.0 million for the three months ended March 31, 2022.
Deferred Leasing Intangibles
The following table summarizes the deferred leasing intangibles on the accompanying Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.
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| | March 31, 2022 | | December 31, 2021 |
Deferred Leasing Intangibles (in thousands) | | Gross | | Accumulated Amortization | | Net | | Gross | | Accumulated Amortization | | Net |
Above market leases | | $ | 89,747 | | | $ | (31,436) | | | $ | 58,311 | | | $ | 91,565 | | | $ | (32,110) | | | $ | 59,455 | |
Other intangible lease assets | | 760,160 | | | (257,204) | | | 502,956 | | | 758,131 | | | (249,928) | | | 508,203 | |
Total deferred leasing intangible assets | | $ | 849,907 | | | $ | (288,640) | | | $ | 561,267 | | | $ | 849,696 | | | $ | (282,038) | | | $ | 567,658 | |
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Below market leases | | $ | 55,957 | | | $ | (22,245) | | | $ | 33,712 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
Total deferred leasing intangible liabilities | | $ | 55,957 | | | $ | (22,245) | | | $ | 33,712 | | | $ | 56,857 | | | $ | (21,136) | | | $ | 35,721 | |
The following table summarizes the amortization expense and the net decrease to rental income for the amortization of deferred leasing intangibles during the three months ended March 31, 2022 and 2021.
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| | Three months ended March 31, | | |
Deferred Leasing Intangibles Amortization (in thousands) | | 2022 | | 2021 | | | | |
Net increase (decrease) to rental income related to above and below market lease amortization | | $ | 79 | | | $ | (1,480) | | | | | |
Amortization expense related to other intangible lease assets | | $ | 24,077 | | | $ | 22,447 | | | | | |
The following table summarizes the amortization of deferred leasing intangibles over the next five calendar years (including the remainder of 2022) as of March 31, 2022.
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Year | | Amortization Expense Related to Other Intangible Lease Assets (in thousands) | | Net Decrease to Rental Income Related to Above and Below Market Lease Amortization (in thousands) |
Remainder of 2022 | | $ | 67,986 | | | $ | 180 | |
2023 | | $ | 80,666 | | | $ | 727 | |
2024 | | $ | 69,720 | | | $ | 1,361 | |
2025 | | $ | 60,629 | | | $ | 1,185 | |
2026 | | $ | 52,145 | | | $ | 1,626 | |
4. Debt
The following table summarizes the Company’s outstanding indebtedness, including borrowings under the Company’s unsecured credit facility, unsecured term loans, unsecured notes, and mortgage notes as of March 31, 2022 and December 31, 2021.
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Loan | | Principal Outstanding as of March 31, 2022 (in thousands) | | Principal Outstanding as of December 31, 2021 (in thousands) | | Interest Rate(1)(2) | | Maturity Date | | Prepayment Terms(3) |
Unsecured credit facility: | | | | | | | | | | |
Unsecured Credit Facility(4) | | $ | 384,000 | | | $ | 296,000 | | | L + 0.775% | | October 23, 2026 | | i |
Total unsecured credit facility | | 384,000 | | | 296,000 | | | | | | | |
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Unsecured term loans: | | | | | | | | | | |
Unsecured Term Loan D | | 150,000 | | | 150,000 | | | 2.85 | % | | January 4, 2023 | | i |
Unsecured Term Loan E | | 175,000 | | | 175,000 | | | 3.77 | % | | January 15, 2024 | | i |
Unsecured Term Loan F | | 200,000 | | | 200,000 | | | 2.96 | % | | January 12, 2025 | | i |
Unsecured Term Loan G | | 300,000 | | | 300,000 | | | 1.13 | % | | February 5, 2026 | | i |
Unsecured Term Loan A | | 150,000 | | | 150,000 | | | 3.23 | % | | March 15, 2027 | | i |
Total unsecured term loans | | 975,000 | | | 975,000 | | | | | | | |
Total unamortized deferred financing fees and debt issuance costs | | (4,075) | | | (4,423) | | | | | | | |
Total carrying value unsecured term loans, net | | 970,925 | | | 970,577 | | | | | | | |
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Unsecured notes: | | | | | | | | | | |
Series F Unsecured Notes | | 100,000 | | | 100,000 | | | 3.98 | % |
| January 5, 2023 | | ii |
Series A Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | October 1, 2024 | | ii |
Series D Unsecured Notes | | 100,000 | | | 100,000 | | | 4.32 | % | | February 20, 2025 | | ii |
Series G Unsecured Notes | | 75,000 | | | 75,000 | | | 4.10 | % | | June 13, 2025 | | ii |
Series B Unsecured Notes | | 50,000 | | | 50,000 | | | 4.98 | % | | July 1, 2026 | | ii |
Series C Unsecured Notes | | 80,000 | | | 80,000 | | | 4.42 | % | | December 30, 2026 | | ii |
Series E Unsecured Notes | | 20,000 | | | 20,000 | | | 4.42 | % | | February 20, 2027 | | ii |
Series H Unsecured Notes | | 100,000 | | | 100,000 | | | 4.27 | % | | June 13, 2028 | | ii |
Series I Unsecured Notes | | 275,000 | | | 275,000 | | | 2.80 | % | | September 29, 2031 | | ii |
Series J Unsecured Notes | | 50,000 | | | 50,000 | | | |