10-Q 1 trno-20240331.htm 10-Q trno-20240331
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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, 2024
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: 001-34603
_________________________
Terreno Realty Corporation
(Exact Name of Registrant as Specified in Its Charter)
_________________________
Maryland27-1262675
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
10500 NE 8th Street, Suite 1910 Bellevue, WA
98004
(Address of Principal Executive Offices)(Zip Code)
Registrant’s telephone number, including area code: (415655-4580

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareTRNONew 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 filerAccelerated filer
Non-accelerated filerSmaller 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 registrant had 96,704,102 shares of its common stock, $0.01 par value per share, outstanding as of May 6, 2024.

Terreno Realty Corporation
Table of Contents
Item 1A.

1

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements of Terreno Realty Corporation
Terreno Realty Corporation
Consolidated Balance Sheets
(in thousands – except share and per share data)
March 31, 2024December 31, 2023
 (unaudited) 
ASSETS
Investments in real estate
Land$1,986,161 $1,995,494 
Buildings and improvements1,569,386 1,561,532 
Construction in progress399,478 343,485 
Intangible assets146,934 147,329 
Total investments in properties4,101,959 4,047,840 
Accumulated depreciation and amortization(403,197)(384,480)
Net investments in properties3,698,762 3,663,360 
Cash and cash equivalents649,575 165,400 
Restricted cash10,874 836 
Other assets, net79,588 75,081 
Total assets$4,438,799 $3,904,677 
LIABILITIES AND EQUITY
Liabilities
Credit facility$ $ 
Term loans payable, net199,204 199,145 
Senior unsecured notes, net572,566 572,418 
Security deposits33,742 32,934 
Intangible liabilities, net81,338 84,718 
Dividends payable43,517 39,052 
Accounts payable and other liabilities63,848 61,783 
Total liabilities994,215 990,050 
Equity
Stockholders’ equity
Common stock: $0.01 par value, 400,000,000 shares authorized, and 96,195,439 and 87,487,098 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively.
963 876 
Additional paid-in capital
3,387,289 2,849,961 
Common stock held in deferred compensation plan: 508,663 and 508,663 shares at March 31, 2024 and December 31, 2023, respectively.
(31,788)(31,788)
Retained earnings88,120 95,578 
Total stockholders’ equity3,444,584 2,914,627 
Total liabilities and equity$4,438,799 $3,904,677 
The accompanying condensed notes are an integral part of these consolidated financial statements.
2

Terreno Realty Corporation
Consolidated Statements of Operations
(in thousands – except share and per share data)
(Unaudited)
For the Three Months Ended March 31,
 20242023
REVENUES
Rental revenues and tenant expense reimbursements$85,030 $74,651 
Total revenues85,030 74,651 
COSTS AND EXPENSES
Property operating expenses20,890 18,381 
Depreciation and amortization20,939 18,159 
General and administrative10,510 9,320 
Acquisition costs and other 48 
Total costs and expenses52,339 45,908 
OTHER INCOME (EXPENSE)
Interest and other income2,893 1,963 
Interest expense, including amortization(5,240)(7,375)
Gain on sales of real estate investments5,715  
Total other income (expense) 3,368 (5,412)
Net income36,059 23,331 
Allocation to participating securities(154)(105)
Net income available to common stockholders$35,905 $23,226 
EARNINGS PER COMMON SHARE - BASIC AND DILUTED:
Net income available to common stockholders - basic$0.40 $0.29 
Net income available to common stockholders - diluted$0.40 $0.29 
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING88,873,871 79,895,886 
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING89,436,149 80,344,742 
The accompanying condensed notes are an integral part of these consolidated financial statements.
3

Terreno Realty Corporation
Consolidated Statements of Equity
(in thousands – except share data)
(Unaudited)

Three months ended March 31, 2024:
 Common StockAdditional
Paid-
in Capital
Common Shares Held in Deferred Compensation PlanDeferred Compensation Plan Retained
Earnings
 
Number of
Shares
AmountTotal
Balance as of December 31, 202387,487,098 $876 $2,849,961 508,663 $(31,788)$95,578 $2,914,627 
Net income— — — — — 36,059 36,059 
Issuance of common stock, net of issuance costs of $3,226
8,678,278 87 534,955 — — — 535,042 
Forfeiture of common stock related to employee awards(9,324)— — — — — — 
Common shares acquired related to employee awards(14,517)— (983)— — — (983)
Issuance of restricted stock53,904 — — — — — — 
Stock-based compensation— — 3,356 — — — 3,356 
Common stock dividends ($0.45 per share)
— — — — — (43,517)(43,517)
Balance as of March 31, 202496,195,439 $963 $3,387,289 508,663 $(31,788)$88,120 $3,444,584 
Three months ended March 31, 2023:
 Common StockAdditional
Paid-
in Capital
Common Shares Held in Deferred Compensation PlanDeferred Compensation PlanRetained
Earnings
 
Number of
Shares
AmountTotal
Balance as of December 31, 202276,463,482 $765 $2,167,276 417,665 $(26,462)$88,272 $2,229,851 
Net income— — — — — 23,331 23,331 
Issuance of common stock, net of issuance costs of $943
6,197,825 62 377,426 — — — 377,488 
Forfeiture of common stock related to employee awards(6,434)— — — — — — 
Common shares acquired related to employee awards(9,745)— (627)— — — (627)
Issuance of restricted stock59,504 — — — — — — 
Stock-based compensation— — 3,038 — — — 3,038 
Common stock dividends ($0.40 per share)
— — — — — (33,209)(33,209)
Deposits to deferred compensation plan(94,794)— 5,547 94,794 (5,547)— — 
Balance as of March 31, 202382,609,838 $827 $2,552,660 512,459 $(32,009)$78,394 $2,599,872 
The accompanying condensed notes are an integral part of these consolidated financial statements.
4

Terreno Realty Corporation
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 For the Three Months Ended March 31,
 20242023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$36,059 $23,331 
Adjustments to reconcile net income to net cash provided by operating activities
Straight-line rents(1,451)(2,173)
Amortization of lease intangibles(3,350)(3,541)
Depreciation and amortization20,939 18,159 
Gain on sales of real estate investments(5,715) 
Deferred financing cost amortization387 383 
Stock-based compensation3,356 3,038 
Changes in assets and liabilities
Other assets(3,763)(3,998)
Accounts payable and other liabilities577 3,602 
Net cash provided by operating activities
47,039 38,801 
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property acquisitions(18,657)(364,600)
Proceeds from sales of real estate investments, net10,172  
Additions to construction in progress(32,216)(8,904)
Additions to buildings, improvements and leasing costs(7,882)(13,862)
Net cash used in investing activities
(48,583)(387,366)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock538,269 366,499 
Issuance costs on issuance of common stock(2,477)(978)
Repurchase of common stock related to employee awards(983)(627)
Borrowings on credit facility 29,000 
Payments on credit facility (29,000)
Dividends paid to common stockholders(39,052)(30,753)
Net cash provided by financing activities
495,757 334,141 
Net increase (decrease) in cash and cash equivalents and restricted cash
494,213 (14,424)
Cash and cash equivalents and restricted cash at beginning of period
166,236 28,083 
Cash and cash equivalents and restricted cash at end of period
$660,449 $13,659 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of capitalized interest$9,750 $8,381 
Supplemental disclosures of non-cash transactions
Accounts payable related to capital improvements29,062 17,219 
Non-cash issuance of common stock to the deferred compensation plan (5,547)
Lease liability arising from recognition of right-of-use asset1,228  
Reconciliation of cash paid for property acquisitions
Acquisition of properties$18,628 $406,730 
Assumption of other assets and liabilities29 (42,130)
Net cash paid for property acquisitions$18,657 $364,600 
The accompanying condensed notes are an integral part of these consolidated financial statements.
5

Terreno Realty Corporation
Condensed Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Organization
Terreno Realty Corporation (“Terreno”, and together with its subsidiaries, the “Company”) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. All square feet, acres, occupancy and number of properties disclosed in these condensed notes to the consolidated financial statements are unaudited. As of March 31, 2024, the Company owned 258 buildings aggregating approximately 15.8 million square feet, 45 improved land parcels consisting of approximately 152.4 acres, ten properties under development or redevelopment and approximately 45.5 acres of land for future development.
The Company is an internally managed Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2010.
Note 2. Significant Accounting Policies
Basis of Presentation. The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. In management’s opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The interim consolidated financial statements include all of the Company’s accounts and its subsidiaries and all intercompany balances and transactions have been eliminated in consolidation. The financial statements should be read in conjunction with the financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and the notes thereto, which was filed with the Securities and Exchange Commission on February 7, 2024.
Use of Estimates. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Capitalization of Costs. The Company capitalizes costs directly related to the development, redevelopment, renovation and expansion of its investment in real estate. Costs associated with such projects are capitalized as incurred. If the project is abandoned, these costs are expensed during the period in which the development, redevelopment, renovation or expansion project is abandoned. Costs considered for capitalization include, but are not limited to, construction costs, interest, real estate taxes and insurance, if appropriate. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress. In the event that the activities to ready the asset for its intended use are suspended, the capitalization period will cease until such activities are resumed. Costs incurred for maintaining and repairing properties, which do not extend their useful lives, are expensed as incurred.
Interest is capitalized based on actual capital expenditures from the period when development, redevelopment, renovation or expansion commences until the asset is ready for its intended use, at the weighted average borrowing rate during the period.
Investments in Real Estate. Investments in real estate, including tenant improvements, leasehold improvements and leasing costs, are stated at cost, less accumulated depreciation, unless circumstances indicate that the cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. The Company also reviews the impact of above and below-market leases, in-place leases and lease origination costs for acquisitions and records an intangible asset or liability accordingly.
Impairment. Carrying values for financial reporting purposes are reviewed for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. Examples of such events or changes in circumstances may include classifying an asset to be held for sale, changing the intended hold period or when an asset remains vacant significantly longer than expected. The intended use of an asset either held for sale or held for use can significantly impact how impairment is measured. If an asset is intended to be held for the long-term, the recoverability is based on the undiscounted future cash flows. If the asset carrying value is not supported on an undiscounted future cash flow basis, then the asset carrying value is measured against the lower of cost or the present value of expected cash
6

flows over the expected hold period. An impairment charge to earnings is recognized for the excess of the asset’s carrying value over the lower of cost or the present values of expected cash flows over the expected hold period. If an asset is intended to be sold, impairment is determined using the estimated fair value less costs to sell. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions, among other things, regarding current and future economic and market conditions and the availability of capital. The Company determines the estimated fair values based on its assumptions regarding rental rates, lease-up and holding periods, as well as sales prices. When available, current market information is used to determine capitalization and rental growth rates. If available, current comparative sales values may also be used to establish fair value. When market information is not readily available, the inputs are based on the Company’s understanding of market conditions and the experience of the Company’s management team. Actual results could differ significantly from the Company’s estimates. The discount rates used in the fair value estimates represent a rate commensurate with the indicated holding period with a premium layered on for risk. There were no impairment charges recorded to the carrying values of the Company’s properties during the three months ended March 31, 2024 or 2023.
Property Acquisitions. In accordance with Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not considered a business. To be a business, the set of acquired activities and assets must include inputs and one or more substantive processes that together contribute to the ability to create outputs. The Company has determined that its real estate property acquisitions will generally be accounted for as asset acquisitions under the clarified definition. Upon acquisition of a property the Company estimates the fair value of acquired tangible assets (consisting generally of land, buildings and improvements) and intangible assets and liabilities (consisting generally of the above and below-market leases and the origination value of all in-place leases). The Company determines fair values using Level 3 inputs such as replacement cost, estimated cash flow projections and other valuation techniques and applying appropriate discount and capitalization rates based on available market information. Mortgage loans assumed in connection with acquisitions are recorded at their fair value using current market interest rates for similar debt at the date of acquisition. Acquisition-related costs associated with asset acquisitions are capitalized to individual tangible and intangible assets and liabilities assumed on a relative fair value basis and acquisition-related costs associated with business combinations are expensed as incurred.
The fair value of the tangible assets is determined by valuing the property as if it were vacant. Land values are derived from current comparative sales values, when available, or management’s estimates of the fair value based on market conditions and the experience of the Company’s management team. Building and improvement values are calculated as replacement cost less depreciation, or management’s estimates of the fair value of these assets using discounted cash flow analyses or similar methods. The fair value of the above and below-market leases is based on the present value of the difference between the contractual amounts to be received pursuant to the acquired leases (using a discount rate that reflects the risks associated with the acquired leases) and the Company’s estimate of the market lease rates measured over a period equal to the remaining term of the leases plus the term of any below-market fixed rate renewal options. The above and below-market lease values are amortized to rental revenues over the remaining initial term plus the term of any below-market fixed rate renewal options that are considered bargain renewal options of the respective leases. The total net impact to rental revenues due to the amortization of above and below-market leases was a net increase of approximately $3.4 million and $3.5 million for the three months ended March 31, 2024 and 2023, respectively. The origination value of in-place leases is based on costs to execute similar leases, including commissions and other related costs. The origination value of in-place leases also includes real estate taxes, insurance and an estimate of lost rental revenue at market rates during the estimated time required to lease up the property from vacant to the occupancy level at the date of acquisition. The remaining weighted average lease term related to these intangible assets and liabilities as of March 31, 2024 was 6.3 years. As of March 31, 2024 and December 31, 2023, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):
 March 31, 2024December 31, 2023
 GrossAccumulated
Amortization
NetGrossAccumulated
Amortization
Net
In-place leases$143,049 $(97,152)$45,897 $143,444 $(93,476)$49,968 
Above-market leases3,885 (3,493)392 3,885 (3,463)422 
Below-market leases(136,946)55,608 (81,338)(137,047)52,329 (84,718)
Total$9,988 $(45,037)$(35,049)$10,282 $(44,610)$(34,328)
Depreciation and Useful Lives of Real Estate and Intangible Assets. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets or liabilities. The following table reflects the standard
7

depreciable lives typically used to compute depreciation and amortization. However, such depreciable lives may be different based on the estimated useful life of such assets or liabilities.
DescriptionStandard Depreciable Life
LandNot depreciated
Building40 years
Building Improvements
5-40 years
Tenant ImprovementsShorter of lease term or useful life
Leasing CostsLease term
In-place LeasesLease term
Above/Below-Market LeasesLease term
Held for Sale Assets. The Company considers a property to be held for sale when it meets the criteria established under Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment (See “Note 5 - Held for Sale/Disposed Assets”). Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale.
Cash and Cash Equivalents. Cash and cash equivalents consists of cash held in a major banking institution and other highly liquid short-term investments with original maturities of three months or less. Cash equivalents are generally invested in U.S. government securities, government agency securities or money market accounts.
Restricted Cash. Restricted cash includes cash held in escrow in connection with property acquisitions and reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage loan obligations.
The following summarizes the reconciliation of cash and cash equivalents and restricted cash as presented in the accompanying consolidated statements of cash flows (dollars in thousands):
For the Three Months Ended March 31,
20242023
Beginning
Cash and cash equivalents at beginning of period
$165,400 $26,393 
Restricted cash836 1,690 
Cash and cash equivalents and restricted cash166,236 28,083 
Ending
Cash and cash equivalents at end of period
649,575 11,054 
Restricted cash10,874 2,605 
Cash and cash equivalents and restricted cash660,449 13,659 
Net increase (decrease) in cash and cash equivalents and restricted cash$494,213 $(14,424)
Revenue Recognition. The Company records rental revenue from operating leases on a straight-line basis over the term of the leases and maintains an allowance for estimated losses that may result from the inability of its tenants to make required payments. If tenants fail to make contractual lease payments that are greater than the Company’s allowance for doubtful accounts, security deposits and letters of credit, then the Company may have to recognize additional doubtful account charges in future periods. The Company monitors the liquidity and creditworthiness of its tenants on an ongoing basis by reviewing their financial condition periodically as appropriate. Each period the Company reviews its outstanding accounts receivable, including straight-line rents, for doubtful accounts and provides allowances as needed. The Company also records lease termination fees when a tenant has executed a definitive termination agreement with the Company and the payment of the termination fee is not subject to any conditions that must be met or waived before the fee is due to the Company. If a tenant remains in the leased space following the execution of a definitive termination agreement, the applicable termination will be deferred and recognized over the term of such tenant’s occupancy. Tenant expense reimbursement income includes payments and amounts due from tenants pursuant to their leases for real estate taxes, insurance and other recoverable property operating expenses and is recognized as revenues during the same period the related expenses are incurred.
8

As of March 31, 2024 and December 31, 2023, approximately $56.6 million and $56.1 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately $1.5 million and $1.2 million as of March 31, 2024 and December 31, 2023, respectively, were included as a component of other assets in the accompanying consolidated balance sheets.
Deferred Financing Costs. Costs incurred in connection with financings are capitalized and amortized to interest expense using the effective interest method over the term of the related loan. Deferred financing costs associated with the Company’s revolving credit facility are classified as an asset, as a component of other assets in the accompanying consolidated balance sheets, and deferred financing costs associated with debt liabilities are reported as a direct deduction from the carrying amount of the debt liability in the accompanying consolidated balance sheets. Deferred financing costs related to the revolving credit facility and debt liabilities are carried at cost, net of accumulated amortization in the aggregate of approximately $13.9 million and $13.5 million as of March 31, 2024 and December 31, 2023, respectively.
Income Taxes. The Company elected to be taxed as a REIT under the Code and operates as such beginning with its taxable year ended December 31, 2010. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its stockholders. If it fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the IRS grants it relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes it is organized and operates in such a manner as to qualify for treatment as a REIT.
ASC 740-10, Income Taxes (“ASC 740-10”), provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740-10 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold are recorded as a tax expense in the current year. As of March 31, 2024 and December 31, 2023, the Company did not have any unrecognized tax benefits and does not believe that there will be any material changes in unrecognized tax positions over the next 12 months. The Company’s tax returns are subject to examination by federal, state and local tax jurisdictions, which as of March 31, 2024, include years 2020 to 2023 for federal purposes.
Stock-Based Compensation and Other Long-Term Incentive Compensation. The Company follows the provisions of ASC 718, Compensation-Stock Compensation, to account for its stock-based compensation plan, which requires that the compensation cost relating to stock-based payment transactions be recognized in the financial statements and that the cost be measured on the fair value of the equity or liability instruments issued. The Company’s 2019 Equity Incentive Plan (the “2019 Plan”) provides for the grant of restricted stock awards, performance share awards, unrestricted shares or any combination of the foregoing. Stock-based compensation is recognized as a general and administrative expense in the accompanying consolidated statements of operations and measured at the fair value of the award on the date of grant. The Company estimates the forfeiture rate based on historical experience as well as expected behavior. The amount of the expense may be subject to adjustment in future periods depending on the specific characteristics of the stock-based award.
In addition, the Company has awarded long-term incentive target awards (the “Performance Share awards”) under its Amended and Restated Long-Term Incentive Plan (as amended and restated, the “Amended LTIP”), which the Company amended and restated on January 8, 2019, to its executives that may be payable in shares of the Company’s common stock after the conclusion of each pre-established performance measurement period, which is generally three years. The amount that may be earned is variable depending on the relative total shareholder return of the Company’s common stock as compared to the total shareholder return of the MSCI U.S. REIT Index (RMS) and the FTSE Nareit Equity Industrial Index over the pre-established performance measurement period. Under the Amended LTIP, each participant’s Performance Share award granted will be expressed as a number of shares of common stock and settled in shares of common stock. The grant date fair value of the Performance Share awards will be determined using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period.
9

Fair Value of Financial Instruments. ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (See “Note 8 - Fair Value Measurements”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also provides guidance for using fair value to measure financial assets and liabilities. ASC 820 requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).
Segment Disclosure. ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments. The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate are geographically diversified and the chief operating decision makers evaluate operating performance on an individual asset level. As each of the Company’s assets has similar economic characteristics, the assets have been aggregated into one reportable segment.
Note 3. Concentration of Credit Risk
Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company may maintain deposits in federally insured financial institutions in excess of federally insured limits. However, the Company’s management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.
As of March 31, 2024, the Company owned 44 buildings aggregating approximately 2.6 million square feet and 13 improved land parcels consisting of approximately 68.0 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately 24.9% of its annualized base rent. Such annualized base rent is based on contractual monthly base rent per the leases, for all buildings and improved land parcels, excluding any partial or full rent abatements as of March 31, 2024, multiplied by 12.
Other real estate companies compete with the Company in its real estate markets. This results in competition for tenants to occupy space. The existence of competing properties could have a material impact on the Company’s ability to lease space and on the level of rent that can be achieved. The Company had no tenant that accounted for greater than 10% of the Company's annualized base rent as of March 31, 2024.
Note 4. Investments in Real Estate
During the three months ended March 31, 2024, the Company acquired two industrial properties with a total initial investment, including acquisition costs, of approximately $18.7 million, of which $15.1 million was recorded to land and $3.6 million to buildings and improvements.
The Company did not record any revenues or net income for the three months ended March 31, 2024 related to the 2024 acquisitions.
During the three months ended March 31, 2023, the Company acquired three industrial properties with a total initial investment, including acquisition costs, of approximately $406.7 million, of which $245.9 million was recorded to land, $143.0 million to buildings and improvements, and $17.8 million to intangible assets. Additionally, the Company assumed $42.7 million in liabilities.
The Company recorded revenues and net loss for the three months ended March 31, 2023 of approximately $0.3 million and $0.2 million, respectively, related to the 2023 acquisitions.
The above assets and liabilities were recorded at fair value, which uses Level 3 inputs. The properties were acquired from unrelated third parties using existing cash on hand, proceeds from property sales and issuances of common stock and borrowings on the revolving credit facility.
As of March 31, 2024, the Company had ten properties under development or redevelopment that, upon completion, will consist of eleven buildings aggregating approximately 1.6 million square feet and one approximately 2.8-acre improved land parcel. Additionally, the Company owned approximately 45.5 acres of land for future development that, upon completion, will consist of four buildings aggregating approximately 0.8 million square feet. The following table summarizes certain
10

information with respect to the properties under development or redevelopment and the land for future development as of March 31, 2024:
Property NameLocation
Total Expected
Investment
(in thousands) 1
Estimated Post-Development Square FeetEstimated Post-Development Acreage
Properties under development or redevelopment:
Countyline Phase IV
Countyline Building 32 2
Hialeah, FL$40,132 164,307— 
Countyline Building 33 2
Hialeah, FL38,977 158,042— 
Countyline Building 38 2, 4
Hialeah, FL88,500 506,215— 
Countyline Building 39 2
Hialeah, FL43,802 178,201— 
Countyline Building 40 2
Hialeah, FL41,968 186,107— 
Maple III
Rancho Dominguez, CA28,109  2.8 
147th Street
Hawthorne, CA18,095 31,378— 
East Garry Avenue
Santa Ana, CA40,553 91,500— 
Paterson Plank III
Carlstadt, NJ35,042 47,316— 
139th Street 3
Gardena, CA104,594 227,755— 
Total$479,772 1,590,8212.8 
Land for future development:
Countyline Phase IV
Countyline Phase IV Land 2, 5
Hialeah, FL$216,900 814,772— 
Total$216,900 814,772— 
1Excludes below-market lease adjustments recorded at acquisition. Total expected investment for the properties includes the initial purchase price, buyer’s due diligence and closing costs, estimated near-term redevelopment expenditures, capitalized interest and leasing costs necessary to achieve stabilization.
2Collectively, “Countyline Phase IV”, a 121-acre project entitled for 2.2 million square feet of industrial distribution buildings located in Miami’s Countyline Corporate Park (“Countyline”), immediately adjacent to the Company’s seven buildings within Countyline. Countyline Phase IV, a landfill redevelopment adjacent to Florida’s Turnpike and the southern terminus of I-75, is expected to contain ten LEED-certified industrial distribution buildings at completion.
3This redevelopment property was initially acquired in 2017 for a total initial investment, including closing costs and acquisition costs, of approximately $39.9 million. The property was in the operating portfolio until January 2024 when redevelopment commenced. The amount spent to date includes the total initial investment and capital expenditures incurred prior to redevelopment and excludes accumulated depreciation recorded since acquisition. The Company expects a total incremental investment of approximately $64.0 million.
4This development was completed on April 23, 2024.
5On April 12, 2024, the Company commenced development of Countyline Building 31 in Countyline Phase IV. Upon completion, which is expected to occur in the fourth quarter of 2024, Countyline Building 31 will consist of one approximately 162,000 square foot industrial building with a total expected investment of approximately $42.1 million. The building is 100% pre-leased. The lease will commence upon completion of the building and will expire in May 2032.
The Company capitalized interest associated with development, redevelopment, renovation or expansion activities of approximately $3.1 million and $0.7 million during the three months ended March 31, 2024 and 2023, respectively.
Note 5. Held for Sale/Disposed Assets
The Company considers a property to be held for sale when it meets the criteria established under ASC 360, Property, Plant, and Equipment. Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. As of March 31, 2024, the Company did not have any properties held for sale.
11

During the three months ended March 31, 2024, the Company sold one property located in the Seattle market for a sales price of approximately $11.0 million, resulting in a gain of approximately $5.7 million.
During the three months ended March 31, 2023, there were no properties sold.
Note 6. Debt
As of both March 31, 2024 and December 31, 2023, the Company had $775.0 million of unsecured debt and no secured debt. The following table summarizes the components of the Company’s indebtedness as of March 31, 2024 and December 31, 2023 (dollars in thousands):
March 31, 2024December 31, 2023Margin Above SOFR
Interest Rate 1
Contractual Maturity Date
Unsecured Debt:
Credit Facility$ $ 
1.1% 2
n/a8/20/2025
5-Year Term Loan
100,000 100,000 
1.3% 2
6.6 %1/15/2027
5-Year Term Loan
100,000 100,000 
1.3% 2
6.6 %1/15/2028
$100M 7-Year Unsecured 3
100,000 100,000 n/a3.8 %7/14/2024
$50M 10-Year Unsecured 3
50,000 50,000 n/a4.0 %7/7/2026
$50M 12-Year Unsecured 3
50,000 50,000 n/a4.7 %10/31/2027
$100M 7-Year Unsecured 3
100,000 100,000 n/a2.4 %7/15/2028
$100M 10-Year Unsecured 3
100,000 100,000 n/a3.1 %12/3/2029
$125M 9-Year Unsecured 3
125,000 125,000 n/a2.4 %8/17/2030
$50M 10-Year Unsecured 3
50,000 50,000 n/a2.8 %7/15/2031
Total Unsecured Debt775,000 775,000 
Less: Unamortized debt issuance costs(3,230)(3,437)
Total$771,770 $771,563 
1Reflects the contractual interest rate under the terms of each loan as of March 31, 2024. Excludes the effects of unamortized debt issuance costs.
2The interest rates on these loans are comprised of the Secured Overnight Financing Rate (“SOFR”) plus a SOFR margin. The SOFR margins will range from 1.10% to 1.55% (1.10% as of March 31, 2024) for the revolving credit facility and 1.25% to 1.75% (1.25% as of March 31, 2024) for the term loans, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value and includes a 10 basis points SOFR credit adjustment.
3Collectively, the “Senior Unsecured Notes”.

The Company’s Sixth Amended and Restated Senior Credit Agreement (as amended, the “Amended Facility”) consists of a $400.0 million revolving credit facility that matures in August 2025, a $100.0 million term loan that matures in January 2027 and a $100.0 million term loan that matures in January 2028. As of both March 31, 2024 and December 31, 2023, there were no borrowings outstanding on the revolving credit facility and $200.0 million of borrowings outstanding on the term loans.

The aggregate amount of the Amended Facility may be increased by up to an additional $500.0 million to a maximum amount not to exceed $1.1 billion, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Amended Facility are limited to the lesser of (i) the sum of the $400.0 million revolving credit facility, the $100.0 million term loan maturing in January 2027 and the $100.0 million term loan maturing in January 2028, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Amended Facility, including the term loans, is generally to be paid based upon, at the Company’s option, either (i) SOFR plus the applicable SOFR margin or (ii) the applicable base rate, which is the greatest of the administrative agent’s prime rate, 0.50% above the federal funds effective rate, thirty-day SOFR plus the applicable SOFR margin for SOFR rate loans under the Amended Facility plus 1.25%, or 1.25% per annum. The applicable SOFR margin will range from 1.10% to 1.55% (1.10% as of March 31, 2024) for the revolving credit facility and 1.25% to 1.75% (1.25% as of March 31, 2024) for the term loans, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value and includes a 10 basis points SOFR credit adjustment. The Amended Facility requires quarterly payments of an annual facility fee
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in an amount ranging from 0.15% to 0.30%, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value.
The Amended Facility and the Senior Unsecured Notes are guaranteed by the Company and by substantially all of the current and to-be-formed subsidiaries of the Company that own an unencumbered property. The Amended Facility and the Senior Unsecured Notes are not secured by the Company’s properties or by interests in the subsidiaries that hold such properties. The Amended Facility and the Senior Unsecured Notes include a series of financial and other covenants with which the Company must comply. The Company was in compliance with the covenants under the Amended Facility and the Senior Unsecured Notes as of March 31, 2024 and December 31, 2023.
The scheduled principal payments of the Company’s debt as of March 31, 2024 were as follows (dollars in thousands):
Credit
Facility
Term LoanSenior
Unsecured
Notes
Total Debt
2024 (9 months)$$$100,000

$100,000
2025
202650,00050,000
2027100,00050,000150,000
2028100,000100,000200,000
Thereafter275,000275,000
Total debt200,000575,000775,000
Deferred financing costs, net(796)(2,434)(3,230)
Total debt, net$$199,204$572,566$771,770
Weighted average interest raten/a6.6 %3.1 %4.0 %
Note 7. Leasing
The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of March 31, 2024. The schedule does not reflect future rental revenues from the renewal or replacement of existing leases and excludes property operating expense reimbursements (dollars in thousands):
2024 (9 months)$191,714 
2025248,407 
2026215,793 
2027166,429 
2028123,768 
Thereafter299,079 
Total$1,245,190 
Note 8. Fair Value Measurements
ASC 820 requires disclosure of the level within the fair value hierarchy in which the fair value measurements fall, including measurements using quoted prices in active markets for identical assets or liabilities (Level 1), quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active (Level 2), and significant valuation assumptions that are not readily observable in the market (Level 3).
Financial Instruments Disclosed at Fair Value
As of March 31, 2024 and December 31, 2023, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values because of the short-term nature of these investments or liabilities based on Level 1 inputs. The fair values of the Company’s Senior Unsecured Notes were estimated by calculating the present value of principal and interest payments, based on borrowing rates available to the Company, which are Level 2 inputs, adjusted with a credit spread, as applicable, and assuming the loans are outstanding through maturity. The fair value of the Company’s Amended Facility approximated its carrying value because the variable interest rates approximate market borrowing rates available to the Company, which are Level 2 inputs.
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The following table sets forth the carrying value and the estimated fair value of the Company’s debt as of March 31, 2024 and December 31, 2023 (dollars in thousands):
 Fair Value Measurement Using 
Total Fair ValueQuoted Price in
Active Markets
for Identical
Assets and
Liabilities
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying Value
Liabilities
Debt at:
March 31, 2024$714,028 $ $714,028 $ $771,770 
December 31, 2023$721,269 $ $721,269 $ $771,563 
Note 9. Stockholders’ Equity
The Company’s authorized capital stock consists of 400,000,000 shares of common stock, $0.01 par value per share, and 100,000,000 shares of preferred stock, $0.01 par value per share. The Company has an at-the-market equity offering program (the "$500 Million ATM Program") pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $500.0 million ($155.2 million remaining as of March 31, 2024) in amounts and at times to be determined by the Company from time to time. Prior to the implementation of the $500 Million ATM Program, the Company had a previous at-the-market equity offering program (the "$300 Million ATM Program"), which was substantially utilized as of September 5, 2023 and is no longer active. Actual sales under the $500 Million ATM Program, if any, will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the Company’s common stock, determinations by the Company of the appropriate sources of funding for the Company and potential uses of funding available to the Company. During the three months ended March 31, 2024, the Company issued an aggregate of 2,353,278 shares of common stock at a weighted average offering price of $64.00 per share under the $500 Million ATM Program, resulting in net proceeds of approximately $148.4 million and paying total compensation to the applicable sales agents of approximately $2.2 million. During the three months ended March 31, 2023, the Company issued an aggregate of 350,000 shares of common stock at a weighted average offering price of $63.30 per share under the $300 Million ATM Program, resulting in net proceeds of approximately $21.8 million, and paying total compensation to the applicable sales agents of approximately $0.3 million.
On March 27, 2024, the Company completed a public offering of 6,325,000 shares of common stock at a price per share of $62.00, which included the underwriters’ full exercise of their option to purchase an additional 825,000 shares. The net proceeds of the offering were approximately $387.1 million after deducting the underwriting discount and offering costs of approximately $5.0 million. The Company used the net proceeds for acquisitions subsequent to March 31, 2024, including the acquisition of an industrial property in Alexandria, Virginia and the acquisition of a portfolio of industrial properties comprised of 28 buildings located in New York City, Northern New Jersey, San Francisco Bay Area and Los Angeles.
On February 13, 2023, the Company completed a public offering of 5,750,000 shares of common stock at a price per share of $62.50, which included the underwriters’ full exercise of their option to purchase an additional 750,000 shares. The net proceeds of the offering were approximately $355.9 million after deducting the underwriting discount and offering costs of approximately $3.5 million. The Company used the net proceeds for acquisitions.
The Company has a share repurchase program authorizing the Company to repurchase up to 3,000,000 shares of its outstanding common stock from time to time through December 31, 2024. Purchases made pursuant to the program will be made in either the open market or in privately negotiated transactions as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The program may be suspended or discontinued at any time. As of March 31, 2024, the Company had not repurchased any shares of common stock pursuant to its share repurchase program.
The Company has a Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) maintained for the benefit of select employees and members of the Company’s Board of Directors, in which certain of their cash and equity-based compensation may be deposited. Deferred Compensation Plan assets are held in a rabbi trust, which is subject to the claims of the Company’s creditors in the event of bankruptcy or insolvency. The shares held in the Deferred Compensation Plan are classified within stockholders’ equity in a manner similar to the manner in which treasury stock is classified. Subsequent changes in the fair value of the shares are not recognized. During the three months ended March 31, 2024 and 2023, 0 and
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94,794 shares of common stock, respectively, were deposited into the Deferred Compensation Plan. During both the three months ended March 31, 2024 and 2023, there were no shares of common stock withdrawn from the Deferred Compensation Plan.
As of March 31, 2024, there were 1,898,961 shares of common stock authorized for issuance as restricted stock grants, unrestricted stock awards or Performance Share awards under the 2019 Plan, of which 455,910 were remaining and available for issuance. The grant date fair value per share of restricted stock awards issued during the period from February 16, 2010 (commencement of operations) to March 31, 2024 ranged from $14.20 to $78.33. The fair value of the restricted stock that was granted during the three months ended March 31, 2024 was approximately $3.3 million and the vesting period for the restricted stock is typically between three and five years. As of March 31, 2024, the Company had approximately $15.4 million of total unrecognized compensation costs related to restricted stock issuances, which is expected to be recognized over a remaining weighted average period of approximately 3.0 years. The Company recognized compensation costs of approximately $1.4 million for both the three months ended March 31, 2024 and 2023 related to the restricted stock issuances.
The following is a summary of the total restricted shares granted to the Company’s executive officers and employees with the related weighted average grant date fair value share prices for the three months ended March 31, 2024:
Restricted Stock Activity:
SharesWeighted Average Grant
Date Fair Value
Non-vested shares outstanding as of December 31, 2023419,057 $60.99 
Granted53,904 60.93 
Forfeited(9,324)68.01 
Vested(41,074)64.35 
Non-vested shares outstanding as of March 31, 2024422,563 $60.50 
The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of March 31, 2024:
Non-vested Shares Vesting ScheduleNumber of Shares
2024 (9 months)71,990 
202598,912 
202677,006 
2027101,585 
202873,070 
Thereafter 
Total Non-vested Shares422,563 
Long-Term Incentive Plan:
As of March 31, 2024, there were three open performance measurement periods for the Performance Share awards: January 1, 2022 to December 31, 2024, January 1, 2023 to December 31, 2025, and January 1, 2024 to December 31, 2026. During the three months ended March 31, 2024, the Company did not issue any shares of common stock related to the Performance Share awards for the performance period from January 1, 2021 to December 31, 2023.
The following table summarizes certain information with respect to the Performance Share awards granted on or after January 1, 2019 and includes the forfeiture of certain of the Performance Share awards during 2024 (dollars in thousands):
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Performance Share Period
Fair Value on Date of Grant 1
Expense for the Three Months Ended March 31,
20242023
January 1, 2021 - December 31, 2023$4,820 $ $402 
January 1, 2022 - December 31, 20245,789 482 482 
January 1, 2023 - December 31, 20259,040 639 753 
January 1, 2024 - December 31, 20269,247 790  
Total$28,896 $1,911 $1,637 
1     Reflects the fair value on date of grant for all performance shares outstanding at March 31, 2024.
Dividends:
The following table sets forth the cash dividends paid or payable per share during the three months ended March 31, 2024:
For the Three Months EndedSecurityDividend per ShareDeclaration DateRecord DateDate Paid
March 31, 2024Common Stock$0.45 February 6, 2024March 28, 2024April 5, 2024
Note 10. Net Income (Loss) Per Share
Pursuant to ASC 260-10-45, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, unvested share-based payment awards that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The two-class method of computing earnings per share allocates earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. The Company’s non-vested shares of restricted stock are considered participating securities since these share-based awards contain non-forfeitable rights to dividends irrespective of whether the awards ultimately vest or expire. The Company had no antidilutive securities or dilutive restricted stock awards outstanding for the three months ended March 31, 2024 and 2023.
In accordance with the Company’s policies of determining whether instruments granted in share-based payment transactions are participating securities and accounting for earnings per share, the net income (loss) per common share is adjusted for earnings distributed through declared dividends (if any) and allocated to all participating securities (weighted average common shares outstanding and unvested restricted shares outstanding) under the two-class method. Under this method, allocations were made to 429,583 and 373,985 of weighted average unvested restricted shares outstanding for the three months ended March 31, 2024 and 2023, respectively.
Performance Share awards which may be payable in shares of the Company’s common stock after the conclusion of each pre-established performance measurement period are included as contingently issuable shares in the calculation of diluted weighted average common shares of stock outstanding assuming the reporting period is the end of the measurement period, and the effect is dilutive. Diluted shares related to the Performance Share awards were 562,278 and 448,856 for the three months ended March 31, 2024 and 2023, respectively.
Note 11. Subsequent Events
On April 12, 2024, the Company commenced development of Countyline Building 31 in Hialeah, Florida. Upon completion, which is expected to occur in the fourth quarter of 2024, Countyline Building 31 will consist of one approximately 162,000 square foot industrial building with a total expected investment of approximately $42.1 million. The building is 100% pre-leased. The lease will commence upon completion of the building and will expire in May 2032.
On April 15, 2024, the Company acquired one industrial property in Alexandria, Virginia for a total purchase price of approximately $84.3 million. The property was acquired from an unrelated third party using existing cash on hand.
On April 23, 2024, the Company completed the development of Countyline Building 38 in Hialeah, Florida. Countyline Building 38 consists of one approximately 506,000 square foot industrial building with a total investment of approximately $88.5 million. The building is 100% leased through November 2034.
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On May 2, 2024, the Company acquired a portfolio of industrial properties located in New York City, Northern New Jersey, San Francisco Bay Area and Los Angeles for a total purchase price of approximately $364.5 million. The portfolio is comprised of 28 buildings totaling approximately 1.2 million square feet.
On May 7, 2024, the Company’s board of directors declared a cash dividend in the amount of $0.45 per share of its common stock payable on July 12, 2024 to the stockholders of record as of the close of business on June 28, 2024.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We caution investors that forward-looking statements are based on management’s beliefs and on assumptions made by, and information currently available to, management. When used, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “project”, “result”, “should”, “will”, “seek”, “target”, “see”, “likely”, “position”, “opportunity”, “outlook”, “potential”, “future” and similar expressions which do not relate solely to historical matters are intended to identify forward-looking statements. These statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors, that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. We expressly disclaim any responsibility to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on results and trends at the time they are made, to anticipate future results or trends.
Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the Securities and Exchange Commission on February 7, 2024, in this Quarterly Report on Form 10-Q, and in our other public filings;
our ability to identify and acquire industrial properties on terms favorable to us;
general volatility of the capital markets and the market price of our common stock;
adverse economic or real estate conditions or developments in the industrial real estate sector and/or in the markets in which we own properties;
our dependence on key personnel and our reliance on third-party property managers;
our inability to comply with the laws, rules and regulations applicable to companies, and in particular, public companies;
our ability to manage our growth effectively;
tenant bankruptcies and defaults on, or non-renewal of, leases by tenants;
decreased rental rates or increased vacancy rates;
increased interest rates and operating costs;
declining real estate valuations and impairment charges;
our expected leverage, our failure to obtain necessary outside financing, and existing and future debt service obligations;
our ability to make distributions to our stockholders;
our failure to successfully hedge against interest rate increases;
our failure to successfully operate acquired properties;
risks relating to our real estate development, redevelopment, renovation and expansion strategies and activities (including rising inflation, supply chain disruptions and construction delays);
the impact of any future pandemic, epidemic or outbreak of any highly infectious disease on the U.S., regional and global economies and on our business, financial condition and results of operations and that of our tenants;
risks associated with security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems;
our failure to qualify or maintain our status as a real estate investment trust (“REIT”), and possible adverse changes to tax laws;
uninsured or underinsured losses and costs relating to our properties or that otherwise result from future litigation;
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environmental uncertainties and risks related to natural disasters;
financial market fluctuations; and
changes in real estate and zoning laws and increases in real property tax rates.
Overview
Terreno Realty Corporation (“Terreno”, and together with its subsidiaries, “we”, “us”, “our”, “our Company”, or “the Company”) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. We invest in several types of industrial real estate, including warehouse/distribution (approximately 76.0% of our total annualized base rent as of March 31, 2024), flex (including light industrial and research and development, or R&D) (approximately 3.8%), transshipment (approximately 7.4%) and improved land (approximately 12.8%). We target functional properties in infill locations that may be shared by multiple tenants and that cater to customer demand within the various submarkets in which we operate. Infill locations are geographic locations surrounded by high concentrations of already developed land and existing buildings. As of March 31, 2024, we owned a total of 258 buildings aggregating approximately 15.8 million square feet, 45 improved land parcels consisting of approximately 152.4 acres, ten properties under development or redevelopment and approximately 45.5 acres of land for future development. As of March 31, 2024, our buildings and improved land parcels were approximately 96.2% and 94.6% leased, respectively, to 572 customers, the largest of which accounted for approximately 3.9% of our total annualized base rent. See “Item 1 – Our Investment Strategy – Industrial Facility General Characteristics” in our Annual Report on Form 10-K for the year ended December 31, 2023 for a general description of these types of industrial real estate.
We are an internally managed Maryland corporation and elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with our taxable year ended December 31, 2010.
The following table summarizes by type our investments in real estate as of March 31, 2024:
TypeNumber of Buildings or Improved Land Parcels
Annualized Base Rent (in thousands) 1
% of Total
Warehouse/distribution224$189,876 76.0 %
Flex149,409 3.8 %
Transshipment2018,399 7.4 %
Improved land4532,061 12.8 %
Total303$249,745 100.0 %
1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.
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The following table summarizes by market our investments in real estate as of March 31, 2024:
Los AngelesNorthern New Jersey/New York CitySan Francisco Bay AreaSeattleMiamiWashington, D.C.Total/Weighted Average
Investments in Real Estate
Number of Buildings53 44 56 44 38 23 258 
Rentable Square Feet2,603,447 2,636,157 3,042,305 2,739,130 3,006,585 1,795,046 15,822,670 
% of Total16.5 %16.7 %19.2 %17.3 %19.0 %11.3 %100.0 %
Occupancy % as of March 31, 2024 4
97.7 %94.2 %93.6 %95.2 %99.4 %97.5 %96.2 %
Annualized Base Rent (in thousands) 1
$34,542 $49,924 $44,295 $33,750 $32,338 $22,835 $217,684 
% of Total15.9 %22.9 %20.3 %15.5 %14.9 %10.5 %100.0 %
Annualized Base Rent 1 Per Occupied Square Foot
$13.58 $20.11 $15.56 $12.94 $10.83 $13.05 $14.30 
Weighted Average Remaining Lease Term (Years) 2
5.4 4.1 3.5 3.7 5.0 3.0 4.2 
Investments in Improved Land
Number of Land Parcels13 13 10 45 
Acres27.0 68.0 14.3 25.9 9.9 7.3 152.4 
% of Total17.7 %44.6 %9.4 %17.0 %6.5 %4.8 %100.0 %
Occupancy % as of March 31, 2024
88.9 %92.4 %100.0 %100.0 %100.0 %100.0 %94.6 %
Annualized Base Rent (in thousands) 1
$7,916 $12,175 $2,837 $6,099 $1,959 $1,075 $32,061 
% of Total24.7 %38.0 %8.8 %19.0 %6.1 %3.4 %100.0 %
Annualized Base Rent Per Occupied Square Foot
$7.58 $4.65 $4.86 $5.64 $4.55 $3.69 $5.28 
Weighted Average Remaining Lease Term (Years) 2
3.5 4.3 6.0 2.9 7.2 3.6 4.3 
Total Investments in Real Estate and Improved Land
Annualized Base Rent (in thousands) 1
$42,458 $62,099 $47,132 $39,849 $34,297 $23,910 $249,745 
% of Total Annualized Base Rent 1
17.0 %24.9 %18.9 %16.0 %13.7 %9.5 %100.0 %
Gross Book Value (in thousands) 3
$751,864 $830,337 $767,068 $611,374 $809,750 $331,566 $4,101,959 
% of Total Gross Book Value18.3 %20.2 %18.7 %14.9 %19.7 %8.2 %100.0 %
1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.
2Weighted average remaining lease term is calculated by summing the remaining lease term of each lease as of March 31, 2024, weighted by the respective square footage.
3Includes ten properties under development or redevelopment that, upon completion, will consist of eleven buildings aggregating approximately 1.6 million square feet and one approximately 2.8-acre improved land parcel and approximately 45.5 acres of land for future development.
4Occupancy decreased during the three months ended March 31, 2024 primarily due to 123,000 square feet of vacancy at our 620 Division property in Elizabeth, New Jersey, 69,000 square feet of vacancy at our West 140th property in San Leandro, California, and 40,000 square feet of acquired vacancy of which 16,000 square feet was leased subsequent to March 31, 2024 with a May 2024 commencement date.
As of March 31, 2024, we owned ten properties under development or redevelopment that, upon completion, will consist
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of eleven buildings aggregating approximately 1.6 million square feet and one approximately 2.8-acre improved land parcel, and approximately 45.5 acres of land for future development, with a total expected investment of approximately $696.7 million, including redevelopment costs, capitalized interest and other costs.
The following table summarizes our capital expenditures incurred during the three months ended March 31, 2024 and 2023 (dollars in thousands):
For the Three Months Ended March 31,
20242023
Building improvements$4,434 $6,404 
Tenant improvements705 610 
Leasing commissions2,305 3,176 
Development, redevelopment, renovation and expansion34,756 11,620 
Total capital expenditures 1
$42,200 $21,810 
1Includes approximately $36.8 million and $17.0 million for the three months ended March 31, 2024 and 2023, respectively, related to leasing acquired vacancy, development and redevelopment construction in progress and renovation and expansion projects (stabilization capital) at 20 properties for both the three months ended March 31, 2024 and 2023.
Our industrial properties are typically subject to leases on a “triple net basis,” in which tenants pay their proportionate share of real estate taxes, insurance and operating costs, or are subject to leases on a “modified gross basis,” in which tenants pay expenses over certain threshold levels. In addition, approximately 97.2% of our leased space includes fixed rental increases or Consumer Price Index-based rental increases. Lease terms typically range from three to ten years. We monitor the liquidity and creditworthiness of our tenants on an ongoing basis by reviewing outstanding accounts receivable balances, and as provided under the respective lease agreements, review the tenant’s financial condition periodically as appropriate. As needed, we hold discussions with the tenant’s management about their business and we conduct site visits of the tenant’s operations.
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Our top 20 customers based on annualized base rent as of March 31, 2024 are as follows:
CustomerLeasesRentable
Square Feet
% of Total
Rentable
Square Feet
Improved Land Acreage
Annualized
Base Rent
(in thousands) 1
% of Total
Annualized
Base Rent 2
1
Amazon.com
5471,8803.0 %2.8$9,779 3.9 %
2
FedEx Corporation
5242,8891.5 %7.75,229 2.1 %
3
O'Neill Logistics
2429,6922.8 %— 4,403 1.7 %
4
United States Government
8272,8081.7 %— 4,212 1.7 %
5
Danaher
3171,7071.1 %— 4,078 1.6 %
6
District of Columbia
8245,8881.6 %— 3,585 1.4 %
7
International Cargo Terminals Inc.
131,6010.2 %— 3,399 1.4 %
8
Motivate LLC
3101,2340.6 %— 2,973 1.2 %
9
Meta Platforms, Inc.
1225,6781.4 %— 2,896 1.2 %
10
Lucid USA, Inc.
1161,6801.0 %— 2,598 1.0 %
11
Port Kearny Security, Inc.
1— %16.9 2,460 1.0 %
12
Northrop Grumman Systems Corporation
2148,4580.9 %— 2,458 1.0 %
13
Sarcona Management Corporation
228,1240.2 %4.92,325 0.9 %
14
Triton Logistics Inc.
1190,9071.2 %— 2,273 0.9 %
15
B&B Granite Block Sales, LLC
1— %7.2 2,246 0.9 %
16
L3 Harris Technologies, Inc.
2170,1141.1 %— 2,218 0.9 %
17
JAM'N Logistics Inc.
1110,3360.7 %— 2,145 0.9 %
18
Costco-Innovel Solutions LLC
1219,9101.4 %— 1,984 0.8 %
19
Hanjin International America, Inc. and Hanjin Transportation Co., LTD
1114,0610.7 %— 1,970 0.8 %
20
Team Alliance Logistics Inc. DBA A&V Transportation
2— %4.4 1,877 0.8 %
Total513,336,96721.1 %43.9$65,108 26.1 %
1Annualized base rent is calculated as contractual monthly base rent per the leases, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.
2Total annualized base rent is calculated as contractual monthly base rent per the leases, for all buildings and improved land parcels, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.
The following tables summarize the anticipated lease expirations for leases in place as of March 31, 2024, without giving effect to the exercise of unexercised renewal options or termination rights, if any, at or prior to the scheduled expirations:
Buildings:
YearRentable Square Feet% of Total Rentable
Square Feet
Annualized Base Rent
(in thousands) 2
% of Total Annualized
Base Rent 3
2024 (9 months) 1
912,1115.8 %$12,420 4.4 %
20251,991,93612.6 %30,990 11.0 %
20263,069,13219.4 %46,901 16.7 %
20272,606,40416.5 %42,946 15.3 %
20282,029,14812.8 %39,791 14.1 %
Thereafter4,608,77029.1 %71,318 25.4 %
Total15,217,50196.2 %$244,366 86.9 %
22

Improved Land Parcels:
YearImproved Land Acreage% of Total Improved Land Acreage
Annualized Base Rent
(in thousands) 2
% of Total Annualized
Base Rent 3
2024 (9 months) 4
21.213.9 %$4,357 1.5 %
202514.99.8 %3,626 1.3 %
202617.911.7 %4,882 1.7 %
202715.510.2 %5,102 1.8 %
202814.89.6 %3,945 1.4 %
Thereafter60.139.4 %14,979 5.4 %
Total144.494.6 %$36,891 13.1 %

Total Buildings and Improved Land Parcels:
Year
Total Annualized Base Rent (in thousands)3
% of Total Annualized Base Rent 3
2024 (9 months) 5
$16,777 5.9 %
202534,616 12.3 %
202651,783 18.4 %
202748,048 17.1 %
202843,736 15.5 %
Thereafter86,297 30.8 %
Total$281,257 100.0 %
1Includes leases that expire on or after March 31, 2024 and month-to-month leases totaling approximately 70,607 square feet.
2Annualized base rent is calculated as contractual monthly base rent per the leases at expiration, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.
3Total annualized base rent is calculated as contractual monthly base rent per the leases at expiration, for all buildings and/or improved land parcels, excluding any partial or full rent abatements, as of March 31, 2024, multiplied by 12.
4Includes leases that expire on or after March 31, 2024 and month-to-month leases totaling approximately 2.4 acres.
5Includes leases that expire on or after March 31, 2024 and month-to-month leases disclosed in footnotes 1 and 4 of the table.
Our ability to re-lease or renew expiring space at rental rates equal to or in excess of current rental rates will impact our results of operations. As of March 31, 2024, leases representing approximately 5.9% of the total annualized base rent of our portfolio are scheduled to expire during the year ending December 31, 2024. We currently expect that, on average, the rental rates we are likely to achieve on new (re-leased) or renewed leases for our 2024 expirations will be above the rates currently being paid for the same space. Cash rent changes on new and renewed leases totaling approximately 0.7 million square feet and 3.3 acres of improved land commencing during the three months ended March 31, 2024 were approximately 47.2% higher as compared to the previous rental rates for that same space. We had a tenant retention ratio for the operating portfolio of 54.7% for the three months ended March 31, 2024. We had a tenant retention ratio for the improved land portfolio of 82.5% for the three months ended March 31, 2024. We define tenant retention ratio as the square footage or acreage of all leases commenced during the period that are rented by existing tenants divided by the square footage or acreage of all expiring leases during the reporting period. The square footage or acreage of tenants that default or buy-out prior to expiration of their lease and short-term leases of less than one year are not included in the calculation.
Our past performance may not be indicative of future results, and we cannot assure you that leases will be renewed or that our properties will be re-leased at all or at rental rates equal to or above the current average rental rates. Further, re-leased/renewed rental rates in a particular market may not be consistent with rental rates across our portfolio as a whole and re-leased/renewed rental rates for particular properties within a market may not be consistent with rental rates across our portfolio within a particular market, in each case due to a number of factors, including local real estate conditions, local supply and demand for industrial space, the condition of the property, the impact of leasing incentives, including free rent and tenant improvements, and whether the property, or space within the property, has been redeveloped.
23

Recent Developments
Acquisition Activity
During the three months ended March 31, 2024, we acquired two industrial properties for a total purchase price of approximately $18.5 million. The properties were acquired from unrelated third parties using existing cash on hand, net proceeds from dispositions and net proceeds from the issuance of common stock. The following table sets forth the industrial properties we acquired during the three months ended March 31, 2024:
Property Name