QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
June 30, 2020 | December 31, 2019 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Investments in real estate | |||||||||||
Land | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Construction in progress | |||||||||||
Intangible assets | |||||||||||
Total investments in properties | |||||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Net investments in properties | |||||||||||
Properties held for sale, net | |||||||||||
Net investments in real estate | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Senior secured loan, net | |||||||||||
Other assets, net | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Liabilities | |||||||||||
Credit facility | $ | $ | |||||||||
Term loans payable, net | |||||||||||
Senior unsecured notes, net | |||||||||||
Mortgage loans payable, net | |||||||||||
Security deposits | |||||||||||
Intangible liabilities, net | |||||||||||
Dividends payable | |||||||||||
Performance share awards payable | |||||||||||
Accounts payable and other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
Equity | |||||||||||
Stockholders’ equity | |||||||||||
Common stock: $ | |||||||||||
Additional paid-in capital | |||||||||||
Common stock held in deferred compensation plan, | ( | ||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and equity | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Rental revenues and tenant expense reimbursements | $ | $ | $ | $ | |||||||||||||||||||
Total revenues | |||||||||||||||||||||||
COSTS AND EXPENSES | |||||||||||||||||||||||
Property operating expenses | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Acquisition costs | |||||||||||||||||||||||
Total costs and expenses | |||||||||||||||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||||||||||
Interest and other income | |||||||||||||||||||||||
Interest expense, including amortization | ( | ( | ( | ( | |||||||||||||||||||
Gain on sales of real estate investments | |||||||||||||||||||||||
Total other income (expense) | ( | ( | |||||||||||||||||||||
Net income | |||||||||||||||||||||||
Allocation to participating securities | ( | ( | ( | ( | |||||||||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||||||||||
EARNINGS PER COMMON SHARE - BASIC AND DILUTED: | |||||||||||||||||||||||
Net income available to common stockholders - basic | $ | $ | $ | $ | |||||||||||||||||||
Net income available to common stockholders - diluted | $ | $ | $ | $ | |||||||||||||||||||
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Cash flow hedge adjustment | |||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Common Stock | Additional Paid- in Capital | Common Shares Held in Deferred Compensation Plan | Deferred Compensation Plan | Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Retained Earnings | Total | ||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 | $ | $ | — | $ | — | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs of $ | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock related to employee awards | ( | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Deposits to deferred compensation plan | ( | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs of $ | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Forfeiture of common stock related to employee awards | ( | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Deposits to deferred compensation plan | ( | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid- in Capital | Accumulated Other Comprehensive Loss | |||||||||||||||||||||||||||||||||
Number of Shares | Amount | Retained Earnings | Total | ||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs of $ | — | — | |||||||||||||||||||||||||||||||||
Repurchase of common stock related to employee awards | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs of $ | — | — | |||||||||||||||||||||||||||||||||
Forfeiture of common stock related to employee awards | ( | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Common stock dividends ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
For the Six Months Ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
Straight-line rents | ( | ( | |||||||||
Amortization of lease intangibles | ( | ( | |||||||||
Depreciation and amortization | |||||||||||
Gain on sales of real estate investments | ( | ( | |||||||||
Deferred financing cost amortization | |||||||||||
Deferred senior secured loan fee amortization | ( | ( | |||||||||
Stock-based compensation | |||||||||||
Changes in assets and liabilities | |||||||||||
Other assets | ( | ( | |||||||||
Accounts payable and other liabilities | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Cash paid for property acquisitions | ( | ( | |||||||||
Proceeds from sales of real estate investments, net | |||||||||||
Additions to construction in progress | ( | ( | |||||||||
Additions to buildings, improvements and leasing costs | ( | ( | |||||||||
Repayments on senior secured loan | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Issuance of common stock | |||||||||||
Issuance costs on issuance of common stock | ( | ( | |||||||||
Repurchase of common stock | ( | ( | |||||||||
Borrowings on credit facility | |||||||||||
Payments on credit facility | ( | ||||||||||
Payments on mortgage loan payable | ( | ( | |||||||||
Dividends paid to common stockholders | ( | ( | |||||||||
Net cash (used in) provided by financing activities | ( | ||||||||||
Net increase in cash and cash equivalents and restricted cash | |||||||||||
Cash and cash equivalents and restricted cash at beginning of period | |||||||||||
Cash and cash equivalents and restricted cash at end of period | $ | $ | |||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||||||
Cash paid for interest, net of capitalized interest | $ | $ | |||||||||
Supplemental disclosures of non-cash transactions | |||||||||||
Accounts payable related to capital improvements | |||||||||||
Non-cash issuance of common stock to the deferred compensation plan | ( | ||||||||||
Lease liability arising from recognition of right-of-use asset | |||||||||||
Non-cash repayment of senior secured loan | ( | ||||||||||
Reconciliation of cash paid for property acquisitions | |||||||||||
Acquisition of properties | $ | $ | |||||||||
Assumption of other assets and liabilities | ( | ( | |||||||||
Net cash paid for property acquisitions | $ | $ | |||||||||
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
Gross | Accumulated Amortization | Net | Gross | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
In-place leases | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
Above-market leases | ( | ( | |||||||||||||||||||||||||||||||||
Below-market leases | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | ( | $ | $ | ( | $ | ( |
Description | Standard Depreciable Life | |||||||
Land | Not depreciated | |||||||
Building | ||||||||
Building Improvements | ||||||||
Tenant Improvements | Shorter of lease term or useful life | |||||||
Leasing Costs | Lease term | |||||||
In-place Leases | Lease term | |||||||
Above/Below-Market Leases | Lease term |
For the Six Months Ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Beginning | |||||||||||
Cash and cash equivalents at beginning of period | $ | $ | |||||||||
Restricted cash | |||||||||||
Cash and cash equivalents and restricted cash | |||||||||||
Ending | |||||||||||
Cash and cash equivalents at end of period | |||||||||||
Restricted cash | |||||||||||
Cash and cash equivalents and restricted cash | |||||||||||
Net increase in cash and cash equivalents and restricted cash | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Property operating expenses | ( | ( | ( | ( | ||||||||||||||||||||||
Depreciation and amortization | ( | ( | ( | ( | ||||||||||||||||||||||
Income from operations | $ | $ | $ | $ |
Credit Facility | Term Loan | Senior Unsecured Notes | Mortgage Loan Payable | Total Debt | |||||||||||||||||||||||||
2020 (6 months) | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
2021 | |||||||||||||||||||||||||||||
2022 | |||||||||||||||||||||||||||||
2023 | |||||||||||||||||||||||||||||
2024 | |||||||||||||||||||||||||||||
Thereafter | |||||||||||||||||||||||||||||
Total debt | |||||||||||||||||||||||||||||
Deferred financing costs, net | ( | ( | ( | ( | |||||||||||||||||||||||||
Total debt, net | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Weighted average interest rate | n/a | % | % | % | % |
2020 | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
Thereafter | |||||
Total | $ |
Derivative Instrument | Effective Date | Maturity Date | Interest Rate Strike | Fair Value | Notional Amount | |||||||||||||||||||||||||||||||||||||||
June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||||||||
Interest rate cap | 12/1/2014 | 5/4/2021 | % | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Interest rate cap | 9/1/2015 | 2/3/2020 | % | |||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Interest rate caps in cash flow hedging relationships: | |||||||||||||||||||||||
Amount of gain recognized in AOCI on derivatives (effective portion) | $ | $ | $ | $ | |||||||||||||||||||
Amount of gain reclassified from AOCI into interest expense (effective portion) | $ | $ | $ | $ |
Fair Value Measurement Using | |||||||||||||||||||||||
Total Fair Value | Quoted Price in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Interest rate caps at: | |||||||||||||||||||||||
June 30, 2020 | $ | $ | $ | $ | |||||||||||||||||||
December 31, 2019 | $ | $ | $ | $ |
Fair Value Measurement Using | |||||||||||||||||||||||||||||
Total Fair Value | Quoted Price in Active Markets for Identical Assets and Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Carrying Value | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Senior secured loan at: | |||||||||||||||||||||||||||||
June 30, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
December 31, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Debt at: | |||||||||||||||||||||||||||||
June 30, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
December 31, 2019 | $ | $ | $ | $ | $ |
Shares | Weighted Average Grant Date Fair Value | ||||||||||
Non-vested shares outstanding as of December 31, 2019 | $ | ||||||||||
Granted | |||||||||||
Forfeited | ( | ||||||||||
Vested | ( | ||||||||||
Non-vested shares outstanding as of June 30, 2020 | $ |
Non-vested Shares Vesting Schedule | Number of Shares | |||||||
2020 (6 months) | ||||||||
2021 | ||||||||
2022 | ||||||||
2023 | ||||||||
2024 | ||||||||
Thereafter | ||||||||
Total Non-vested Shares |
Fair Value Performance Share Period | Fair Value June 30, 2020 | Accrual June 30, 2020 | Expense for the Three Months Ended June 30, | Expense for the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||
January 1, 2018 - December 31, 2020 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
January 1, 2017 - December 31, 2019 | ||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ |
Performance Share Period | Fair Value on Date of Grant | Expense for the Three Months Ended June 30, | Expense for the Six Months Ended June 30, | |||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||
January 1, 2019 - December 31, 2021 | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
January 1, 2020 - December 31, 2022 | ||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
For the Three Months Ended | Security | Dividend per Share | Declaration Date | Record Date | Date Paid | |||||||||||||||||||||||||||
March 31, 2020 | Common stock | $ | February 5, 2020 | March 27, 2020 | April 10, 2020 | |||||||||||||||||||||||||||
June 30, 2020 | Common stock | $ | May 5, 2020 | June 30, 2020 | July 14, 2020 |
Market | Number of Buildings | Square Feet | Purchase Price (in thousands) | Assumed Debt (in thousands) | ||||||||||||||||||||||
Los Angeles | $ | $ | ||||||||||||||||||||||||
Northern New Jersey/New York City | ||||||||||||||||||||||||||
San Francisco Bay Area | ||||||||||||||||||||||||||
Seattle 1 | ||||||||||||||||||||||||||
Miami | ||||||||||||||||||||||||||
Washington, D.C. | ||||||||||||||||||||||||||
Total | $ | $ |
Type | Number of Buildings or Improved Land Parcels | Annualized Base Rent (000's) 1 | % of Total | |||||||||||||||||
Warehouse/distribution | 194 | $ | 116,936 | 81.9 | % | |||||||||||||||
Flex | 10 | 7,696 | 5.4 | % | ||||||||||||||||
Transshipment | 14 | 7,566 | 5.3 | % | ||||||||||||||||
Improved land | 22 | 10,562 | 7.4 | % | ||||||||||||||||
Total/Weighted Average | 240 | $ | 142,760 | 100.0 | % |
Los Angeles | Northern New Jersey/New York City | San Francisco Bay Area | Seattle | Miami | Washington, D.C. | Total/Weighted Average | |||||||||||||||||
Investments in Real Estate | |||||||||||||||||||||||
Number of Buildings | 41 | 62 | 40 | 29 | 28 | 18 | 218 | ||||||||||||||||
Rentable Square Feet | 2,560,682 | 3,552,681 | 2,033,381 | 1,839,566 | 1,563,326 | 1,534,625 | 13,084,261 | ||||||||||||||||
% of Total | 19.6 | % | 27.2 | % | 15.5 | % | 14.1 | % | 11.9 | % | 11.7 | % | 100.0 | % | |||||||||
Occupancy % as of June 30, 2020 | 98.9 | % | 88.8 | % | 97.2 | % | 98.3 | % | 100.0 | % | 99.1 | % | 96.0 | % | |||||||||
Annualized Base Rent (000’s) 1 | $ | 23,061 | $ | 35,564 | $ | 25,903 | $ | 16,986 | $ | 14,214 | $ | 16,470 | $ | 132,198 | |||||||||
% of Total | 17.4 | % | 26.9 | % | 19.6 | % | 12.8 | % | 10.8 | % | 12.5 | % | 100.0 | % | |||||||||
Annualized Base Rent1 Per Occupied Square Foot | $ | 9.10 | $ | 11.27 | $ | 13.10 | $ | 9.39 | $ | 9.09 | $ | 10.83 | $ | 10.53 | |||||||||
Weighted Average Remaining Lease Term (Years) 2 | 6.5 | 4.1 | 3.8 | 3.0 | 3.9 | 3.7 | 4.3 | ||||||||||||||||
Investments in Improved Land | |||||||||||||||||||||||
Number of Land Parcels | 6 | 9 | 2 | 2 | 2 | 1 | 22 | ||||||||||||||||
Acres | 11.9 | 48.8 | 4.0 | 3.7 | 3.2 | 13.4 | 85.0 | ||||||||||||||||
% of Total | 14.0 | % | 57.5 | % | 4.7 | % | 4.4 | % | 3.7 | % | 15.7 | % | 100.0 | % | |||||||||
Occupancy % as of June 30, 2020 | 100.0 | % | 100.0 | % | 68.1 | % | 100.0 | % | 100.0 | % | 100.0 | % | 98.5 | % | |||||||||
Annualized Base Rent (000’s) 1 | $ | 2,590 | $ | 5,536 | $ | 647 | $ | 552 | $ | 394 | $ | 843 | $ | 10,562 | |||||||||
% of Total | 24.5 | % | 52.5 | % | 6.1 | % | 5.2 | % | 3.7 | % | 8.0 | % | 100.0 | % | |||||||||
Annualized Base Rent1 Per Occupied Square Foot | $ | 4.98 | $ | 2.66 | $ | 5.50 | $ | 3.72 | $ | 2.85 | $ | 1.45 | $ | 2.93 | |||||||||
Weighted Average Remaining Lease Term (Years) 2 | 4.7 | 5.3 | 1.7 | 3.8 | 3.2 | 9.5 | 5.6 | ||||||||||||||||
Total Investments in Real Estate | |||||||||||||||||||||||
Annualized Base Rent (000’s) 1 | $ | 25,651 | $ | 41,100 | $ | 26,550 | $ | 17,538 | $ | 14,608 | $ | 17,313 | $ | 142,760 | |||||||||
Gross Book Value (000’s) 3 | $ | 427,510 | $ | 645,498 | $ | 383,973 | $ | 329,652 | $ | 167,708 | $ | 217,103 | $ | 2,171,444 | |||||||||
% of Total | 19.7 | % | 29.7 | % | 17.7 | % | 15.2 | % | 7.7 | % | 10.0 | % | 100.0 | % |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Building improvements | $ | 4,264 | $ | 4,395 | $ | 7,594 | $ | 9,442 | |||||||||||||||
Tenant improvements | 763 | 1,192 | 1,028 | 1,927 | |||||||||||||||||||
Leasing commissions | 1,484 | 1,290 | 4,426 | 3,101 | |||||||||||||||||||
Redevelopment, renovation and expansion | 2,363 | 9,588 | 3,577 | 16,172 | |||||||||||||||||||
Total capital expenditures 1 | $ | 8,874 | $ | 16,465 | $ | 16,625 | $ | 30,642 |
Customer | Leases | Rentable Square Feet | % of Total Rentable Square Feet | Annualized Base Rent (000’s) 1 | % of Total Annualized Base Rent | |||||||||||||||||||||||||||
1 | Amazon.com2 | 4 | 260,462 | 2.0 | % | $ | 5,153 | 3.6 | % | |||||||||||||||||||||||
2 | FedEx Corporation3 | 7 | 314,519 | 2.4 | % | 5,054 | 3.5 | % | ||||||||||||||||||||||||
3 | United States Government | 8 | 300,732 | 2.3 | % | 3,748 | 2.6 | % | ||||||||||||||||||||||||
4 | Danaher | 3 | 171,707 | 1.3 | % | 3,732 | 2.6 | % | ||||||||||||||||||||||||
5 | District of Columbia | 5 | 197,617 | 1.5 | % | 2,751 | 1.9 | % | ||||||||||||||||||||||||
6 | AmerisourceBergen | 1 | 211,418 | 1.6 | % | 2,543 | 1.8 | % | ||||||||||||||||||||||||
7 | DirectBuy Home Improvement | 1 | 230,891 | 1.8 | % | 1,860 | 1.3 | % | ||||||||||||||||||||||||
8 | XPO Logistics | 2 | 180,717 | 1.4 | % | 1,732 | 1.2 | % | ||||||||||||||||||||||||
9 | L3 Harris Technologies, Inc. | 1 | 147,898 | 1.1 | % | 1,651 | 1.2 | % | ||||||||||||||||||||||||
10 | Topaz Lighting Corp. | 1 | 190,000 | 1.4 | % | 1,463 | 1.0 | % | ||||||||||||||||||||||||
11 | Miami International Freight Systems4 | 1 | 192,454 | 1.5 | % | 1,463 | 1.0 | % | ||||||||||||||||||||||||
12 | Port Kearny Security, Inc.5 | 1 | — | — | % | 1,437 | 1.0 | % | ||||||||||||||||||||||||
13 | O'Neill Logistics | 2 | 237,692 | 1.8 | % | 1,429 | 1.0 | % | ||||||||||||||||||||||||
14 | YRC | 2 | 61,252 | 0.5 | % | 1,412 | 1.0 | % | ||||||||||||||||||||||||
15 | Bar Logistics | 2 | 203,263 | 1.6 | % | 1,393 | 1.0 | % | ||||||||||||||||||||||||
16 | Lilac Solutions Inc. | 1 | 92,884 | 0.7 | % | 1,338 | 0.9 | % | ||||||||||||||||||||||||
17 | Saia Motor Freight Line LLC | 1 | 52,086 | 0.4 | % | 1,280 | 0.9 | % | ||||||||||||||||||||||||
18 | Space Systems/Loral LLC | 2 | 107,060 | 0.8 | % | 1,246 | 0.9 | % | ||||||||||||||||||||||||
19 | JAM'N Logistics | 1 | 110,336 | 0.8 | % | 1,229 | 0.9 | % | ||||||||||||||||||||||||
20 | Fredmore Inc. DBA Airpark Newark6 | 2 | — | — | % | 1,206 | 0.9 | % | ||||||||||||||||||||||||
Total | 48 | 3,262,988 | 24.9 | % | $ | 43,120 | 30.2 | % |
Year | Rentable Square Feet | % of Total Rentable Square Feet | Annualized Base Rent (000’s) 2, 3 | % of Total Annualized Base Rent | ||||||||||||||||||||||
2020 1 | 779,156 | 6.0 | % | 8,606 | 5.4 | % | ||||||||||||||||||||
2021 | 2,335,498 | 17.8 | % | 22,092 | 14.0 | % | ||||||||||||||||||||
2022 | 1,651,530 | 12.6 | % | 18,293 | 11.6 | % | ||||||||||||||||||||
2023 | 1,790,549 | 13.7 | % | 22,592 | 14.3 | % | ||||||||||||||||||||
2024 | 1,545,968 | 11.8 | % | 20,567 | 13.0 | % | ||||||||||||||||||||
Thereafter | 4,455,989 | 34.1 | % | 66,047 | 41.7 | % | ||||||||||||||||||||
Total | 12,558,690 | 96.0 | % | 158,197 | 100.0 | % |
Property Name | Location | Acquisition Date | Number of Buildings | Square Feet | Purchase Price (in thousands) 1 | Stabilized Cap Rate 2 | ||||||||||||||||||||||||||||||||
84th Kent 3 | Kent, WA | April 17, 2020 | — | — | $ | 4,500 | 5.7 | % | ||||||||||||||||||||||||||||||
Hudson | Seattle, WA | May 13, 2020 | 1 | 13,000 | 5,611 | 4.0 | % | |||||||||||||||||||||||||||||||
Total/Weighted Average | 1 | 13,000 | $ | 10,111 | 4.8 | % |
Property Name | Total Expected Investment (in thousands) 1 | Amount Spent to Date (in thousands) | Estimated Amount Remaining to Spend (in thousands) | Estimated Stabilized Cap Rate 2 | Estimated Post-Development Square Feet | Estimated Completion Quarter | % Pre-leased June 30,2020 | |||||||||||||||||||||||||||||||||||||
Sodo Row - North & South | $ | 62,271 | $ | 58,003 | $ | 4,268 | 4.5 | % | 234,308 | Q3 2021 | 14.0 | % | ||||||||||||||||||||||||||||||||
Kent 192 | 34,763 | 31,810 | 2,953 | 5.4 | % | 219,910 | Q4 2020 | — | % | |||||||||||||||||||||||||||||||||||
Total/Weighted Average | $ | 97,034 | $ | 89,813 | $ | 7,221 | 4.8 | % | 454,218 | 7.0 | % |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Rental revenues | $ | 590 | $ | 749 | $ | 1,339 | $ | 1,483 | |||||||||||||||
Tenant expense reimbursements | 294 | 274 | 609 | 675 | |||||||||||||||||||
Property operating expenses | (159) | (267) | (444) | (663) | |||||||||||||||||||
Depreciation and amortization | — | (315) | (210) | (632) | |||||||||||||||||||
Income from operations | $ | 725 | $ | 441 | $ | 1,294 | $ | 863 |
For the Three Months Ended June 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Rental revenues 1 | |||||||||||||||||||||||
Same store | $ | 30,795 | $ | 30,284 | $ | 511 | 1.7 | % | |||||||||||||||
Non-same store operating properties 2 | 5,522 | 2,679 | 2,843 | 106.1 | % | ||||||||||||||||||
Total rental revenues | 36,317 | 32,963 | 3,354 | 10.2 | % | ||||||||||||||||||
Tenant expense reimbursements 1 | |||||||||||||||||||||||
Same store | 8,689 | 8,228 | 461 | 5.6 | % | ||||||||||||||||||
Non-same store operating properties 2 | 736 | 539 | 197 | 36.5 | % | ||||||||||||||||||
Total tenant expense reimbursements | 9,425 | 8,767 | 658 | 7.5 | % | ||||||||||||||||||
Total revenues | 45,742 | 41,730 | 4,012 | 9.6 | % | ||||||||||||||||||
Property operating expenses | |||||||||||||||||||||||
Same store | 10,274 | 9,769 | 505 | 5.2 | % | ||||||||||||||||||
Non-same store operating properties 2 | 1,660 | 940 | 720 | 76.6 | % | ||||||||||||||||||
Total property operating expenses | 11,934 | 10,709 | 1,225 | 11.4 | % | ||||||||||||||||||
Net operating income 3 | |||||||||||||||||||||||
Same store | 29,210 | 28,743 | 467 | 1.6 | % | ||||||||||||||||||
Non-same store operating properties 2 | 4,598 | 2,278 | 2,320 | 101.8 | % | ||||||||||||||||||
Total net operating income | $ | 33,808 | $ | 31,021 | $ | 2,787 | 9.0 | % | |||||||||||||||
Other costs and expenses | |||||||||||||||||||||||
Depreciation and amortization | 11,459 | 10,648 | 811 | 7.6 | % | ||||||||||||||||||
General and administrative | 5,665 | 6,757 | (1,092) | (16.2) | % | ||||||||||||||||||
Acquisition costs | 11 | 1 | 10 | 1000.0 | % | ||||||||||||||||||
Total other costs and expenses | 17,135 | 17,406 | (271) | (1.6) | % | ||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Interest and other income | 190 | 817 | (627) | (76.7) | % | ||||||||||||||||||
Interest expense, including amortization | (3,909) | (4,053) | 144 | (3.6) | % | ||||||||||||||||||
Gain on sales of real estate investments | 17,750 | — | 17,750 | n/a | |||||||||||||||||||
Total other income (expense) | 14,031 | (3,236) | 17,267 | n/a | |||||||||||||||||||
Net income | $ | 30,704 | $ | 10,379 | $ | 20,325 | 195.8 | % |
For the Six Months Ended June 30, | |||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Rental revenues 1 | |||||||||||||||||||||||
Same store | $ | 61,035 | $ | 59,983 | $ | 1,052 | 1.8 | % | |||||||||||||||
Non-same store operating properties 2 | 10,706 | 4,596 | 6,110 | 132.9 | % | ||||||||||||||||||
Total rental revenues | 71,741 | 64,579 | 7,162 | 11.1 | % | ||||||||||||||||||
Tenant expense reimbursements 1 | |||||||||||||||||||||||
Same store | 17,445 | 16,838 | 607 | 3.6 | % | ||||||||||||||||||
Non-same store operating properties 2 | 1,672 | 1,193 | 479 | 40.1 | % | ||||||||||||||||||
Total tenant expense reimbursements | 19,117 | 18,031 | 1,086 | 6.0 | % | ||||||||||||||||||
Total revenues | 90,858 | 82,610 | 8,248 | 10.0 | % | ||||||||||||||||||
Property operating expenses | |||||||||||||||||||||||
Same store | 20,543 | 19,689 | 854 | 4.3 | % | ||||||||||||||||||
Non-same store operating properties 2 | 3,299 | 1,713 | 1,586 | 92.6 | % | ||||||||||||||||||
Total property operating expenses | 23,842 | 21,402 | 2,440 | 11.4 | % | ||||||||||||||||||
Net operating income 3 | |||||||||||||||||||||||
Same store | 57,937 | 57,132 | 805 | 1.4 | % | ||||||||||||||||||
Non-same store operating properties 2 | 9,079 | 4,076 | 5,003 | 122.7 | % | ||||||||||||||||||
Total net operating income | $ | 67,016 | $ | 61,208 | $ | 5,808 | 9.5 | % | |||||||||||||||
Other costs and expenses | |||||||||||||||||||||||
Depreciation and amortization | 22,559 | 21,063 | 1,496 | 7.1 | % | ||||||||||||||||||
General and administrative | 11,423 | 12,720 | (1,297) | (10.2) | % | ||||||||||||||||||
Acquisition costs | 63 | 1 | 62 | 6200.0 | % | ||||||||||||||||||
Total other costs and expenses | 34,045 | 33,784 | 261 | 0.8 | % | ||||||||||||||||||
Other income (expense) | |||||||||||||||||||||||
Interest and other income | 754 | 2,339 | (1,585) | (67.8) | % | ||||||||||||||||||
Interest expense, including amortization | (7,915) | (8,317) | 402 | (4.8) | % | ||||||||||||||||||
Gain on sales of real estate investments | 17,750 | 4,465 | 13,285 | 297.5 | % | ||||||||||||||||||
Total other income (expense) | 10,589 | (1,513) | 12,102 | n/a | |||||||||||||||||||
Net income | $ | 43,560 | $ | 25,911 | $ | 17,649 | 68.1 | % |
ATM Stock Offering Program | Date Implemented | Maximum Aggregate Offering Price (in thousands) | Aggregate Common Stock Available as of three and six months ended (in thousands) | |||||||||||||||||
$300 Million ATM Program | May 17, 2019 | $ | 300,000 | $ | 93,300 |
For the Three Months Ended June 30, | Shares Sold | Weighted Average Price Per Share | Net Proceeds (in thousands) | Sales Commissions (in thousands) | ||||||||||||||||||||||
June 30, 2020 | 619,300 | $ | 52.81 | $ | 32,230 | $ | 474 | |||||||||||||||||||
June 30, 2019 | 2,375,270 | $ | 45.76 | $ | 107,123 | $ | 1,576 |
For the Six Months Ended June 30, | Shares Sold | Weighted Average Price Per Share | Net Proceeds (in thousands) | Sales Commissions (in thousands) | ||||||||||||||||||||||
June 30, 2020 | 1,046,327 | $ | 53.04 | $ | 54,688 | $ | 804 | |||||||||||||||||||
June 30, 2019 | 4,364,071 | $ | 43.77 | $ | 188,248 | $ | 2,770 |
Credit Facility | Term Loan | Senior Unsecured Notes | Mortgage Loan Payable | Total Debt | |||||||||||||||||||||||||
2020 (6 months) | $ | — | $ | — | $ | — | $ | 231 | $ | 231 | |||||||||||||||||||
2021 | — | — | — | 11,271 | 11,271 | ||||||||||||||||||||||||
2022 | — | 100,000 | 50,000 | — | 150,000 | ||||||||||||||||||||||||
2023 | — | — | — | — | — | ||||||||||||||||||||||||
2024 | — | — | 100,000 | — | 100,000 | ||||||||||||||||||||||||
Thereafter | — | — | 200,000 | — | 200,000 | ||||||||||||||||||||||||
Total Debt | — | 100,000 | 350,000 | 11,502 | 461,502 | ||||||||||||||||||||||||
Deferred financing costs, net | — | (313) | (2,131) | (14) | (2,458) | ||||||||||||||||||||||||
Total Debt, net | $ | — | $ | 99,687 | $ | 347,869 | $ | 11,488 | $ | 459,044 | |||||||||||||||||||
Weighted average interest rate | n/a | 1.7 | % | 3.8 | % | 5.5 | % | 3.4 | % |
As of June 30, 2020 | As of June 30, 2019 | ||||||||||
Total Debt, net | $ | 459,044 | $ | 442,694 | |||||||
Equity | |||||||||||
Common Stock | |||||||||||
Shares Outstanding 1 | 68,322,213 | 65,495,713 | |||||||||
Market Price 2 | $ | 52.64 | $ | 49.04 | |||||||
Total Equity | 3,596,481 | 3,211,910 | |||||||||
Total Market Capitalization | $ | 4,055,525 | $ | 3,654,604 | |||||||
Total Debt-to-Total Investments in Properties 3 | 21.1 | % | 22.3 | % | |||||||
Total Debt-to-Total Investments in Properties and Senior Secured Loan 4 | 21.1 | % | 22.1 | % | |||||||
Total Debt-to-Total Market Capitalization 5 | 11.3 | % | 12.1 | % | |||||||
Floating Rate Debt as a % of Total Debt 6 | 21.7 | % | 33.7 | % | |||||||
Unhedged Floating Rate Debt as a % of Total Debt 7 | 10.9 | % | 11.3 | % | |||||||
Mortgage Loans Payable as a % of Total Debt 8 | 2.5 | % | 10.2 | % | |||||||
Mortgage Loans Payable as a % of Total Investments in Properties 9 | 0.5 | % | 2.3 | % | |||||||
Adjusted EBITDA 10 | $ | 60,842 | $ | 56,987 | |||||||
Interest Coverage 11 | 7.7 | x | 6.9 | x | |||||||
Fixed Charge Coverage 12 | 6.8 | x | 5.8 | x | |||||||
Total Debt-to-Adjusted EBITDA 13 | 3.7 | x | 3.9 | x | |||||||
Weighted Average Maturity of Total Debt (years) | 5.0 | 4.1 | |||||||||
For the Three Months Ended | Security | Dividend per Share | Declaration Date | Record Date | Date Paid | ||||||||||||||||||||||||
March 31, 2020 | Common stock | $ | 0.27 | February 5, 2020 | March 27, 2020 | April 10, 2020 | |||||||||||||||||||||||
June 30, 2020 | Common stock | $ | 0.27 | May 5, 2020 | June 30, 2020 | July 14, 2020 | |||||||||||||||||||||||
Market | Number of Buildings | Square Feet | Purchase Price (in thousands) | Assumed Debt (in thousands) | |||||||||||||||||||
Los Angeles | — | — | $ | — | $ | — | |||||||||||||||||
Northern New Jersey/New York City | — | — | — | — | |||||||||||||||||||
San Francisco Bay Area | — | — | — | — | |||||||||||||||||||
Seattle1 | — | — | 7,275 | — | |||||||||||||||||||
Miami | — | — | — | — | |||||||||||||||||||
Washington, D.C. | — | — | — | — | |||||||||||||||||||
Total | — | — | $ | 7,275 | $ | — |
Contractual Obligations | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | Total | ||||||||||||||||||||||||
Debt | $ | 11,502 | $ | 150,000 | $ | 100,000 | $ | 200,000 | $ | 461,502 | |||||||||||||||||||
Debt interest payments | 13,843 | 25,593 | 20,545 | 22,935 | 82,916 | ||||||||||||||||||||||||
Operating lease commitments | 273 | 280 | — | — | 553 | ||||||||||||||||||||||||
Purchase obligations | 7,275 | — | — | — | 7,275 | ||||||||||||||||||||||||
Total | $ | 32,893 | $ | 175,873 | $ | 120,545 | $ | 222,935 | $ | 552,246 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 30,704 | $ | 10,379 | $ | 20,325 | 195.8 | % | $ | 43,560 | $ | 25,911 | $ | 17,649 | 68.1 | % | |||||||||||||||||||||||||||||||
Gain on sales of real estate investments | (17,750) | — | (17,750) | n/a | (17,750) | (4,465) | (13,285) | 297.5 | % | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 11,459 | 10,648 | 811 | 7.6 | % | 22,559 | 21,063 | 1,496 | 7.1 | % | |||||||||||||||||||||||||||||||||||||
Non-real estate depreciation | (20) | (27) | 7 | (25.9) | % | (46) | (55) | 9 | (16.4) | % | |||||||||||||||||||||||||||||||||||||
Allocation to participating securities 1 | (152) | (128) | (24) | 18.8 | % | (305) | (263) | (42) | 16.0 | % | |||||||||||||||||||||||||||||||||||||
Funds from operations attributable to common stockholders 2 | $ | 24,241 | $ | 20,872 | $ | 3,369 | 16.1 | % | $ | 48,018 | $ | 42,191 | $ | 5,827 | 13.8 | % | |||||||||||||||||||||||||||||||
Basic FFO per common share | $ | 0.36 | $ | 0.33 | $ | 0.03 | 9.1 | % | 0.71 | $ | 0.67 | $ | 0.04 | 6.0 | % | ||||||||||||||||||||||||||||||||
Diluted FFO per common share | $ | 0.36 | $ | 0.33 | $ | 0.03 | 9.1 | % | 0.71 | $ | 0.67 | $ | 0.04 | 6.0 | % | ||||||||||||||||||||||||||||||||
Weighted average basic common shares | 67,622,005 | 63,780,645 | 67,342,293 | 62,625,224 | |||||||||||||||||||||||||||||||||||||||||||
Weighted average diluted common shares | 68,029,144 | 64,075,215 | 67,749,432 | 62,919,794 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 30,704 | $ | 10,379 | $ | 20,325 | 195.8 | % | $ | 43,560 | $ | 25,911 | $ | 17,649 | 68.1 | % | |||||||||||||||||||||||||||||||
Gain on sales of real estate investments | (17,750) | — | (17,750) | n/a | (17,750) | (4,465) | (13,285) | 297.5 | % | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 11,459 | 10,648 | 811 | 7.6 | % | 22,559 | 21,063 | 1,496 | 7.1 | % | |||||||||||||||||||||||||||||||||||||
Interest expense, including amortization | 3,909 | 4,053 | (144) | (3.6) | % | 7,915 | 8,317 | (402) | (4.8) | % | |||||||||||||||||||||||||||||||||||||
Stock-based compensation | 2,316 | 3,660 | (1,344) | (36.7) | % | 4,495 | 6,160 | (1,665) | (27.0) | % | |||||||||||||||||||||||||||||||||||||
Acquisition costs | 11 | 1 | 10 | 1000.0 | % | 63 | 1 | 62 | 6200.0 | % | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 30,649 | $ | 28,741 | $ | 1,908 | 6.6 | % | $ | 60,842 | $ | 56,987 | $ | 3,855 | 6.8 | % |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | $ Change | % Change | 2020 | 2019 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
Net income 1 | $ | 30,704 | $ | 10,379 | $ | 20,325 | 195.8 | % | $ | 43,560 | $ | 25,911 | $ | 17,649 | 68.1 | % | |||||||||||||||||||||||||||||||
Depreciation and amortization | 11,459 | 10,648 | 811 | 7.6 | % | 22,559 | 21,063 | 1,496 | 7.1 | % | |||||||||||||||||||||||||||||||||||||
General and administrative | 5,665 | 6,757 | (1,092) | (16.2) | % | 11,423 | 12,720 | (1,297) | (10.2) | % | |||||||||||||||||||||||||||||||||||||
Acquisition costs | 11 | 1 | 10 | 1000.0 | % | 63 | 1 | 62 | 6200.0 | % | |||||||||||||||||||||||||||||||||||||
Total other income and expenses | (14,031) | 3,236 | (17,267) | n/a | (10,589) | 1,513 | (12,102) | n/a | |||||||||||||||||||||||||||||||||||||||
Net operating income | 33,808 | 31,021 | 2,787 | 9.0 | % | 67,016 | 61,208 | 5,808 | 9.5 | % | |||||||||||||||||||||||||||||||||||||
Less non-same store NOI 2 | (4,598) | (2,278) | (2,320) | 101.8 | % | (9,079) | (4,076) | (5,003) | 122.7 | % | |||||||||||||||||||||||||||||||||||||
Same store NOI 3 | $ | 29,210 | $ | 28,743 | $ | 467 | 1.6 | % | $ | 57,937 | $ | 57,132 | $ | 805 | 1.4 | % | |||||||||||||||||||||||||||||||
Less straight-line rents and amortization of lease intangibles 4 | (1,103) | (1,766) | 663 | (37.5) | % | (1,698) | (3,426) | 1,728 | (50.4) | % | |||||||||||||||||||||||||||||||||||||
Cash-basis same store NOI 3 | $ | 28,107 | $ | 26,977 | $ | 1,130 | 4.2 | % | $ | 56,239 | $ | 53,706 | $ | 2,533 | 4.7 | % |
Exhibit Number | Exhibit Description | |||||||
31.1* | ||||||||
31.2* | ||||||||
31.3* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
32.3** | ||||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
101.DEF* | Inline XBRL Taxonomy Definition Linkbase Document | |||||||
104* | Cover Page Interactive Data File (formatted as inline XBRL and with applicable taxonomy extension information contained in Exhibits 101.*) |
Terreno Realty Corporation | |||||||||||
August 5, 2020 | By: | /s/ W. Blake Baird | |||||||||
W. Blake Baird | |||||||||||
Chairman and Chief Executive Officer | |||||||||||
August 5, 2020 | By: | /s/ Michael A. Coke | |||||||||
Michael A. Coke | |||||||||||
President | |||||||||||
August 5, 2020 | By: | /s/ Jaime J. Cannon | |||||||||
Jaime J. Cannon | |||||||||||
Chief Financial Officer |
/s/ W. Blake Baird | |||||
Chairman and Chief Executive Officer | |||||
(Principal Executive Officer) |
/s/ Michael A. Coke | |||||
President |
/s/ Jaime J. Cannon | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) |
/s/ W. Blake Baird | |||||
Chairman and Chief Executive Officer | |||||
(Principal Executive Officer) |
/s/ Michael A. Coke | |||||
President |
/s/ Jaime J. Cannon | |||||
Chief Financial Officer | |||||
(Principal Financial Officer) |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common stock, shares issued (in shares) | 68,322,213 | 68,322,213 |
Common stock, shares outstanding (in shares) | 67,252,787 | 67,252,787 |
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 30,704 | $ 10,379 | $ 43,560 | $ 25,911 |
Other comprehensive income (loss): | ||||
Cash flow hedge adjustment | 46 | 92 | 119 | 155 |
Comprehensive income | $ 30,750 | $ 10,471 | $ 43,679 | $ 26,066 |
Consolidated Statements of Equity (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |||
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Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
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Statement of Stockholders' Equity [Abstract] | ||||
Issuance costs | $ 630 | $ 426 | $ 1,718 | $ 1,427 |
Dividends per share, common stock (in dollars per share) | $ 0.27 | $ 0.27 | $ 0.24 | $ 0.24 |
Organization |
6 Months Ended |
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Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | 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 June 30, 2020, the Company owned 218 buildings (including one building held for sale) aggregating approximately 13.1 million square feet, 22 improved land parcels consisting of approximately 85.0 acres and two properties under redevelopment expected to contain approximately 0.5 million square feet upon completion. 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.
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Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | 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, 2019 and the notes thereto, which was filed with the Securities and Exchange Commission on February 6, 2020. Use of Estimates. The preparation of the interim 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 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 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 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 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 or six months ended June 30, 2020 or 2019. Loans Held-for-Investment. Loans that are held-for-investment are carried at cost, net of loan fees and origination costs, as applicable, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of loans that are held-for-investment. Prior to the adoption of ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”), the Company evaluated its senior secured loan (the “Senior Secured Loan”), which was classified as held-for-investment, for impairment quarterly. If the Senior Secured Loan was considered to be impaired, the Company would record an allowance through the provision for Senior Secured Loan losses to reduce the carrying value of the Senior Secured Loan to the present value of expected future cash flows discounted at the Senior Secured Loan’s contractual effective rate or the fair value of the collateral, if repayment was expected solely from the collateral. Actual losses, if any, could differ significantly from the Company’s estimates. The Senior Secured Loan was fully repaid during the three months ended June 30, 2020 and there were no impairment charges recorded to the carrying value of the Senior Secured Loan during the three or six months ended June 30, 2020 or 2019. On January 1, 2020, the Company adopted ASC 326 on a prospective basis, which had no material impact to the Company's consolidated financial statements. ASC 326 replaces the current “incurred loss” model with an “expected loss” model that requires consideration of a broader range of information used under the incurred losses model. Under ASC 326, the Company is required to re-evaluate the expected loss of its loans portfolio at each balance sheet date. For the three and six months ended June 30, 2020, the Company had no allowances for loan losses. 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 $1.3 million and $1.0 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $2.7 million and $1.9 million, for the six months ended June 30, 2020 and 2019, 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 June 30, 2020 is 8.1 years. As of June 30, 2020 and December 31, 2019, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):
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 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.
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):
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 on-going 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. Consistent with the Financial Accounting Standards Board staff question-and-answer document released on April 10, 2020, the Company elected to account for lease concessions related to the effects of COVID-19 as though no lease modification was made in instances where total contractual lease payments over the term of the lease were unchanged. Due to the effects of COVID-19, the future contractual lease payments of certain of the Company's tenants were not probable and as such, approximately $0.4 million and $0.9 million straight-line rent receivables was reversed during the three and six months ended June 30, 2020, respectively. As of June 30, 2020 and December 31, 2019, approximately $29.0 million and $27.4 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately $1.1 million and $0.2 million as of June 30, 2020 and December 31, 2019, respectively, were included as a component of other assets in the accompanying consolidated balance sheets. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that were not completed as of January 1, 2018. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, the guidance impacts revenue related to the sales of real estate, which is evaluated in conjunction with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”) (see below). Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09 (see above). Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company will derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. As a result of adoption of the standard, there was no material impact to the Company’s consolidated financial statements. 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 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 shown at cost, net of accumulated amortization in the aggregate of approximately $8.8 million and $8.3 million as of June 30, 2020 and December 31, 2019, 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 June 30, 2020 and December 31, 2019, 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 beginning with the 2010 calendar year. 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 preestablished 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 on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period. For Performance Share awards granted prior to January 1, 2019, the Company estimates the fair value of the Performance Share awards using a Monte Carlo simulation model on the date of grant and at each reporting period. The Performance Share awards granted prior to January 1, 2019 are recognized as compensation expense over the requisite performance period based on the fair value of the Performance Share awards at the balance sheet date, which varies quarter to quarter based on the Company’s relative share price performance, and are included as a component of performance share awards payable in the accompanying consolidated balance sheets. Use of Derivative Financial Instruments. ASC 815, Derivatives and Hedging (See “Note 9 – Derivative Financial Instruments”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why the Company uses derivative instruments, (b) how the Company accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments. The Company records all derivatives on the accompanying consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. Fair Value of Financial Instruments. ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (See “Note 10 - 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.
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Concentration of Credit Risk |
6 Months Ended |
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Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | 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 June 30, 2020, the Company owned 62 buildings aggregating approximately 3.6 million square feet and nine land parcels consisting of approximately 48.8 acres located in Northern New Jersey/New York City, which accounted for a combined percentage of approximately 26.9% of its annualized base rent. Such annualized base rent percentages are based on contractual base rent from leases in effect as of June 30, 2020, excluding any partial or full rent abatements. 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 June 30, 2020.
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Investments in Real Estate |
6 Months Ended |
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Jun. 30, 2020 | |
Real Estate [Abstract] | |
Investments in Real Estate | Investments in Real Estate During the three months ended June 30, 2020, the Company acquired one industrial building containing approximately 13,000 square feet and one improved land parcel containing approximately 2.8 acres. The total aggregate initial investment, including acquisition costs, was approximately $10.5 million, of which $9.0 million was recorded to land, $1.2 million to buildings and improvements, and $0.3 million to intangible assets. Additionally, the Company assumed $0.1 million in intangible liabilities. During the six months ended June 30, 2020, the Company acquired two industrial buildings containing approximately 79,000 square feet and two improved land parcels containing approximately 5.5 acres. The total aggregate initial investment, including acquisition costs, was approximately $41.1 million, of which $30.9 million was recorded to land, $8.9 million to buildings and improvements, and $1.3 million to intangible assets. Additionally, the Company assumed $0.6 million in intangible liabilities. The Company recorded revenues and net income for the three months ended June 30, 2020 of approximately $0.5 million and $0.4 million, respectively, and recorded revenues and net income for the six months ended June 30, 2020 of approximately $0.6 million and $0.5 million, respectively, related to the 2020 acquisitions. During the three months ended June 30, 2019, the Company acquired two industrial buildings containing approximately 119,000 square feet. The total aggregate initial investment, including acquisition costs, was approximately $51.2 million, of which $34.8 million was recorded to land, $13.1 million to buildings and improvements, and $3.3 million to intangible assets. Additionally, the Company assumed $3.1 million in intangible liabilities. During the six months ended June 30, 2019, the Company acquired four industrial buildings containing approximately 165,000 square feet, and two improved land parcels containing approximately 19.7 acres. The total aggregate initial investment, including acquisition costs, was approximately $119.4 million, of which $94.4 million was recorded to land, $17.8 million to buildings and improvements, and $7.2 million to intangible assets. Additionally, the Company assumed $6.4 million in intangible liabilities. The Company recorded revenues and net income for the three months ended June 30, 2019 of approximately $1.2 million and $0.6 million, respectively, and recorded revenues and net income for the six months ended June 30, 2019 of approximately $1.4 million and $0.7 million, respectively, related to the 2019 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, issuance of common stock and borrowings on the revolving credit facility. As of June 30, 2020, the Company had two properties under redevelopment expected to contain approximately 0.5 million square feet upon completion with a total expected investment of approximately $97.0 million, including redevelopment costs, capitalized interest and other costs of approximately $89.8 million. The Company capitalized interest associated with redevelopment and expansion activities of approximately $0.4 million and $0.8 million, respectively, during the three months ended June 30, 2020 and 2019 and approximately $1.0 million and $1.6 million, respectively, during the six months ended June 30, 2020 and 2019.
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Held for Sale/Disposed Assets |
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Held For Sale/Disposed Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Held for Sale/Disposed Assets | 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 June 30, 2020, the Company had entered into an agreement with a third-party purchaser to sell one property located in the Miami, Florida market for a sales price of approximately $22.2 million (net book value of approximately $11.8 million). The sale of the property is subject to various closing conditions. The following summarizes the condensed results of operations of the property held for sale as of June 30, 2020 for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):
During the six months ended June 30, 2020, the Company sold three properties located in the Washington, D.C. market for a total aggregate sales price of approximately $51.3 million, resulting in a gain of approximately $17.8 million. During the six months ended June 30, 2019, the Company sold one property located in the Los Angeles market for a sales price of approximately $12.4 million, resulting in a gain of approximately $4.5 million.
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Senior Secured Loan |
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Jun. 30, 2020 | |
Receivables [Abstract] | |
Senior Secured Loan | Senior Secured LoanThe Company had a Senior Secured Loan outstanding to a borrower that bore interest at an annual interest rate of 8.0% and was fully repaid during the three months ended June 30, 2020. The Senior Secured Loan was secured by a portfolio of six improved land parcels located primarily in Newark, New Jersey. As of June 30, 2020 and December 31, 2019, there was approximately $0 and $15.9 million, respectively, net of deferred loan fees of approximately $0 and $0.1 million, respectively, outstanding on the Senior Secured Loan and approximately $0 and $0.3 million, respectively, of interest receivable outstanding on the Senior Secured Loan. Interest receivable is included as a component of other assets in the accompanying consolidated balance sheets. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Note 7. Debt As of June 30, 2020, the Company had $50.0 million of senior unsecured notes that mature in September 2022, $100.0 million of senior unsecured notes that mature in July 2024, $50.0 million of senior unsecured notes that mature in July 2026,$50.0 million of senior unsecured notes that mature in October 2027, $100.0 million of senior unsecured notes that mature in December 2029 (collectively, the “Senior Unsecured Notes”), and a credit facility (the “Facility”), which consists of a $250.0 million unsecured revolving credit facility that matures in October 2022, and a $100.0 million term loan that matures in January 2022. As of both June 30, 2020 and December 31, 2019, there were no borrowings outstanding on the revolving credit facility and $100.0 million of borrowings outstanding on the term loan. As of June 30, 2020, the Company had one interest rate cap to hedge the variable cash flows associated with its $100.0 million term loan. As of December 31, 2019, the Company had two interest rate caps to hedge the variable cash flows associated with its existing $100.0 million variable-rate term loan. See “Note 9 - Derivative Financial Instruments” for more information regarding the Company’s interest rate caps. The aggregate amount of the Facility may be increased to a total of up to $600.0 million, subject to the approval of the administrative agent and the identification of lenders willing to make available additional amounts. Outstanding borrowings under the Facility are limited to the lesser of (i) the sum of the $100.0 million term loan and the $250.0 million revolving credit facility, or (ii) 60.0% of the value of the unencumbered properties. Interest on the Facility, including the term loan, is generally to be paid based upon, at the Company’s option, either (i) LIBOR plus the applicable LIBOR 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, or thirty-day LIBOR plus the applicable LIBOR margin for LIBOR rate loans under the Facility plus 1.25%. The applicable LIBOR margin will range from 1.05% to 1.50% (1.05% as of June 30, 2020) for the revolving credit facility and 1.20% to 1.70% (1.20% as of June 30, 2020) for the $100.0 million term loan that matures in January 2022, depending on the ratio of the Company’s outstanding consolidated indebtedness to the value of the Company’s consolidated gross asset value. The Facility requires quarterly payments of an annual facility fee 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 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 Facility and the Senior Unsecured Notes are unsecured by the Company’s properties or by interests in the subsidiaries that hold such properties. The 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 Facility and the Senior Unsecured Notes as of June 30, 2020 and December 31, 2019. As of June 30, 2020, the Company had one mortgage loan payable, net of deferred financing costs, totaling approximately $11.5 million, which bore interest at a weighted average fixed annual rate of 5.5%. The mortgage loan payable is collateralized by one property, is non-recourse and requires monthly interest and principal payments until it matures in April 2021. As of December 31, 2019, the Company had two mortgage loans payable, net of deferred financing costs, totaling approximately $44.3 million, which bore interest at a weighted average fixed annual interest rate of 4.1%. As of June 30, 2020 and December 31, 2019, the total gross book value of the properties securing the debt was approximately $33.9 million and $114.9 million, respectively. The scheduled principal payments of the Company’s debt as of June 30, 2020 were as follows (dollars in thousands):
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Leasing |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Leasing | Leasing The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of June 30, 2020. 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):
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Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments Risk Management Objective of Using Derivatives The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of its known or expected cash payments principally related to its borrowings. Derivative Instruments The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate caps as part of its interest rate risk management strategy. Interest rate caps involve the receipt of variable amounts from a counterparty at the end of each period in which the interest rate exceeds the agreed fixed price. The Company does not use derivatives for trading or speculative purposes. The Company requires that hedging derivative instruments be highly effective in reducing the risk exposure that they are designated to hedge. As a result, there is no significant ineffectiveness from any of its derivative activities. The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Derivatives that are not designated as hedges must be adjusted to fair value through earnings. For a derivative that is designated and that qualifies as a cash flow hedge, the effective portion of the change in fair value of the derivative is initially recorded in accumulated other comprehensive income (loss) (“AOCI”). Amounts recorded in AOCI are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. As of June 30, 2020, the Company had one interest rate cap to hedge the variable cash flows associated with $50.0 million of its existing $100.0 million variable-rate term loan. The cap has a notional value of $50.0 million and will effectively cap the annual interest rate payable at 4.0% plus 1.20% to 1.70%, depending on leverage, with respect to $50.0 million for the period from December 1, 2014 (effective date) to May 4, 2021. The Company previously had an additional interest rate cap with a notional value of $50.0 million (which expired on February 3, 2020) to hedge the variable cash flows associated with $50.0 million of its existing $100.0 million variable-rate term loan. The Company is required to make certain monthly variable rate payments on the term loan, while the applicable counterparty is obligated to make certain monthly floating rate payments based on LIBOR to the Company in the event LIBOR is greater than 4.0%, referencing the same notional amount. The Company records all derivative instruments on a gross basis in other assets on the accompanying consolidated balance sheets, and accordingly, there are no offsetting amounts that net assets against liabilities. The following table presents a summary of the Company’s derivative instruments designated as hedging instruments (dollars in thousands):
The effective portion of changes in the fair value of derivatives designated and qualified as cash flow hedges is recorded in AOCI and will be reclassified to interest expense in the period that the hedged forecasted transaction affects earnings on the Company’s variable rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings into interest expense. The following table presents the effect of the Company’s derivative financial instruments on its accompanying consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):
The Company estimates that approximately $0.3 million will be reclassified from AOCI as an increase to interest expense over the next twelve months.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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). Recurring Measurements – Interest Rate Contracts Fair Value of Interest Rate Caps Currently, the Company uses interest rate cap agreements to manage its interest rate risk. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the derivatives. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. As of June 30, 2020, the Company applied the provisions of this standard to the valuation of its interest rate caps. The following sets forth the Company’s financial instruments that are accounted for at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 (dollars in thousands):
Financial Instruments Disclosed at Fair Value As of June 30, 2020 and December 31, 2019, 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 derivative instruments were evaluated based on Level 2 inputs. The fair values of the Company’s mortgage loans payable and 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 Facility approximated its carrying value because the variable interest rates approximate market borrowing rates available to the Company, which are Level 2 inputs. The fair value of the Company’s Senior Secured Loan approximated its carrying value because the interest rate approximates the market lending rate available to the borrower, which is a Level 2 input. The following table sets forth the carrying value and the estimated fair value of the Company’s Senior Secured Loan and debt as of June 30, 2020 and December 31, 2019 (dollars in thousands):
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ EquityThe 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 “$300 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 $300.0 million ($93.3 million remaining as of June 30, 2020) in amounts and at times to be determined by the Company from time to time. Prior to the implementation of the $300 Million ATM Program, the Company had a $250.0 million ATM program (the “$250 Million ATM Program”), which was substantially utilized as of May 31, 2019 and which is no longer active. Actual sales under the $300 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 and six months ended June 30, 2020, the Company issued an aggregate of 619,300 and 1,046,327 shares, respectively, of common stock at a weighted average offering price of $52.81 and $53.04 per share, respectively, under the $300 Million ATM Program, resulting in net proceeds of approximately $32.2 million and $54.7 million, respectively, and paying total compensation to the applicable sales agents of approximately $0.5 million and $0.8 million, respectively. During the three and six months ended June 30, 2019, the Company issued an aggregate of 2,375,270 and 4,364,071 shares, respectively, of common stock at a weighted average offering price of $45.76 and $43.77 per share, respectively, under the $300 Million ATM Program and the $250 Million ATM Program, resulting in net proceeds of approximately $107.1 million and $188.2 million, respectively, and paying total compensation to the applicable sales agents of approximately $1.6 million and $2.8 million, respectively. 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, 2020. 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 June 30, 2020, the Company had not repurchased any shares of stock pursuant to its share repurchase program. In connection with the Annual Meeting of Stockholders on May 5, 2020, the Company granted a total of 11,190 shares of the Company's common unrestricted stock to its independent directors under the 2019 Plan with a grant date fair value per share of $53.62. The grant date fair value of the common stock was determined using the closing price of the Company’s common stock on the date of the grant. The Company recognized approximately $0.6 million in compensation costs for both the three and six months ended June 30, 2020 related to this issuance. In 2019, the Company established a Non-Qualified Deferred Compensation Plan (“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 and six months ended June 30, 2020, 3,730 and 139,224 shares, respectively, of common stock were deposited into the Deferred Compensation Plan. As of June 30, 2020, 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 1,429,652 were remaining 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 June 30, 2020 ranged from $14.20 to $58.08. The fair value of the restricted stock that was granted during the six months ended June 30, 2020 was approximately $1.2 million and the vesting period for the restricted stock is three years. As of June 30, 2020, the Company had approximately $5.8 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 3.5 years. The Company recognized compensation costs of approximately $0.7 million and $0.4 million for the three months ended June 30, 2020 and 2019, respectively, and approximately $1.4 million and $0.9 million for the six months ended June 30, 2020 and 2019, respectively, 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 six months ended June 30, 2020: Restricted Stock Activity:
The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of June 30, 2020:
Long-Term Incentive Plan: As of June 30, 2020, there are three open performance measurement periods for the Performance Share awards: January 1, 2018 to December 31, 2020, January 1, 2019 to December 31, 2021, and January 1, 2020 to December 31, 2022. During the six months ended June 30, 2020, the Company issued 135,494 shares of common stock at a price of $54.22 per share related to the Performance Share awards for the performance period from January 1, 2017 to December 31, 2019. The expense related to the open Performance Share awards granted prior to January 1, 2019 varies quarter to quarter based on the Company’s relative share price performance. The following table summarizes certain information with respect to the Performance Share awards granted prior to January 1, 2019 (dollars in thousands):
Under the Amended LTIP, which the Company amended and restated on January 8, 2019, each participant’s Performance Share target award for target awards granted on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period. The following table summarizes certain information with respect to the Performance Share awards granted on or after January 1, 2019 (dollars in thousands):
Dividends: The following table sets forth the cash dividends paid or payable per share during the six months ended June 30, 2020:
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Net Income (Loss) Per Share |
6 Months Ended |
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Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | 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 both the three and six months ended June 30, 2020 and 2019. 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 438,595 and 385,587 of weighted average unvested restricted shares outstanding for the three months ended June 30, 2020 and 2019, respectively, and 436,567 and 387,542 of weighted average unvested restricted shares outstanding for the six months ended June 30, 2020 and 2019, 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 407,139 and 294,570 for both the three and six months ended June 30, 2020 and 2019, respectively.
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Commitments and Contingencies |
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Commitments and Contingencies | Commitments and ContingenciesContractual Commitments. As of August 4, 2020, the Company has one outstanding contract with a third-party seller to acquire one improved land parcel for a total of approximately 7.0 acres. There is no assurance that the Company will acquire the property under contract because the proposed acquisition is subject to due diligence and various closing conditions. The following table summarizes certain information with respect to the property the Company has under contract:
1Includes one improved land parcel containing approximately 7.0 acres. As of August 4, 2020, the Company has executed two non-binding letters of intent with third-party sellers to acquire one industrial building consisting of approximately 13,000 square feet and one improved land parcel consisting of approximately 4.7 acres for a total anticipated purchase price of approximately $22.7 million. In the normal course of its business, the Company enters into non-binding letters of intent to purchase properties from third parties that may obligate the Company to make payments or perform other obligations upon the occurrence of certain events, including the execution of a purchase and sale agreement and satisfactory completion of various due diligence matters. There can be no assurance that the Company will enter into purchase and sale agreements with respect to these properties or otherwise complete any such prospective purchases on the terms described or at all.
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The COVID-19 pandemic, and mitigation measures put in place by governments to slow it, have caused widespread economic disruption. The Company is headquartered in San Francisco, California and its employees have been working remotely in compliance with shelter-in-place orders mandated across the San Francisco Bay Area on March 16, 2020. The Company utilizes local, third-party property managers, and they are generally under similar shelter-in-place orders and are working remotely. The Company has business continuity and communication plans that the Company believes, although there can be no assurance, allow the Company to operate and manage its portfolio effectively during such disruptions. The Company expects that even after shelter-in-place orders have been lifted, it will, for the intermediate term, employ lower density work arrangements consistent with social distancing and the Company’s business continuity plan. Terreno Realty Corporation continues to work with its customers who have been forced to close or otherwise limit operations or whose businesses have been adversely impacted during the pandemic to, on a case-by-case basis, provide rent deferments. For vacant space and upcoming lease expirations, the current leasing environment has slowed due to shelter-in-place orders, which will reduce revenue from what it would be in a normal leasing environment. With regard to rent billed for July 2020, the Company received, as of August 4, 2020, approximately 95% of such rent in cash and an additional 1% by applying security deposits. As of August 4, 2020: •174 tenants, representing approximately 36.0% of the Company’s total tenants had requested rent deferral or abatement. Such requests aggregated 7.0% of the Company’s annualized base rent; •Of the 174 requests, the Company granted rent deferrals to 61 tenants aggregating 2.7% of annualized base rent (35.1% of total requests by number and 38.7% by dollar amount) which represents 76.7% of the total dollar deferral requests (3.6% of annualized base rent) from those tenants. The Company did not grant any rent abatement; •The Company denied 50 tenant requests aggregating 1.8% of annualized base rent (28.7% of total requests by number and 25.7% by dollar amount). 59 tenants aggregating 1.6% of annualized base rent requesting rent deferral or abatement rescinded their requests (33.3% of requests by number and 22.5% by dollar amount); •The Company is still in discussions with four tenants who are requesting 0.05% of the Company's annualized base rent in rent deferral or abatement (2.3% of requests by number and 0.7% by dollar amount); and •The Company may in the future amend or enter into additional rent deferral agreements. The acquisition and disposition markets have slowed as market participants search for price discovery. The Company’s acquisition volume will remain dependent on both the quality and pricing of the opportunity set and the price of its stock relative to net asset value per share. The Company has no remaining debt maturities in 2020, an $11.5 million mortgage loan maturing in April 2021, and no balance outstanding on its $250.0 million revolving credit facility. In addition, the Company had a cash and cash equivalents balance of approximately $148.3 million as of June 30, 2020, in the accompanying consolidated balance sheets. On July 9, 2020, the Company terminated a lease with the existing tenant at its Belleville property and executed a new lease with a leading e-commerce firm. The lease termination fee received was approximately $3.3 million and the deferred rent receivable write-off was approximately $3.4 million. On July 10, 2020, the Company acquired one industrial building totaling 22,000 square feet located in South San Francisco, CA for a total purchase price of approximately $6.3 million. The property was acquired from an unrelated third party using existing cash on hand. On July 23, 2020, the Company sold one industrial building totaling 192,500 square feet located in Miami Lakes, Florida for a sales price of approximately $22.2 million. The property was sold to an unrelated third party. On August 4, 2020, the Company’s board of directors declared a cash dividend in the amount of $0.29 per share of its common stock payable on October 16, 2020 to the stockholders of record as of the close of business on October 2, 2020.
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Significant Accounting Policies (Policy) |
6 Months Ended |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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, 2019 and the notes thereto, which was filed with the Securities and Exchange Commission on February 6, 2020. |
Use of Estimates | Use of Estimates. The preparation of the interim 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 | Capitalization of Costs. The Company capitalizes costs directly related to the 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 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 redevelopment, renovation or expansion commences until the asset is ready for its intended use, at the weighted average borrowing rate during the period.
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Investments in Real Estate | 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 | 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 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. |
Loans Held-for-Investment | Loans Held-for-Investment. Loans that are held-for-investment are carried at cost, net of loan fees and origination costs, as applicable, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of loans that are held-for-investment. Prior to the adoption of ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”), the Company evaluated its senior secured loan (the “Senior Secured Loan”), which was classified as held-for-investment, for impairment quarterly. If the Senior Secured Loan was considered to be impaired, the Company would record an allowance through the provision for Senior Secured Loan losses to reduce the carrying value of the Senior Secured Loan to the present value of expected future cash flows discounted at the Senior Secured Loan’s contractual effective rate or the fair value of the collateral, if repayment was expected solely from the collateral. Actual losses, if any, could differ significantly from the Company’s estimates. The Senior Secured Loan was fully repaid during the three months ended June 30, 2020 and there were no impairment charges recorded to the carrying value of the Senior Secured Loan during the three or six months ended June 30, 2020 or 2019.On January 1, 2020, the Company adopted ASC 326 on a prospective basis, which had no material impact to the Company's consolidated financial statements. ASC 326 replaces the current “incurred loss” model with an “expected loss” model that requires consideration of a broader range of information used under the incurred losses model. Under ASC 326, the Company is required to re-evaluate the expected loss of its loans portfolio at each balance sheet date. For the three and six months ended June 30, 2020, the Company had no allowances for loan losses. |
Property Acquisitions | 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. |
Depreciation and Useful Lives of Real Estate and Intangible Assets | 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 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. |
Held for Sale Assets | 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. 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. 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. |
Revenue Recognition | 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 on-going 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. Consistent with the Financial Accounting Standards Board staff question-and-answer document released on April 10, 2020, the Company elected to account for lease concessions related to the effects of COVID-19 as though no lease modification was made in instances where total contractual lease payments over the term of the lease were unchanged. Due to the effects of COVID-19, the future contractual lease payments of certain of the Company's tenants were not probable and as such, approximately $0.4 million and $0.9 million straight-line rent receivables was reversed during the three and six months ended June 30, 2020, respectively. As of June 30, 2020 and December 31, 2019, approximately $29.0 million and $27.4 million, respectively, of straight-line rent and accounts receivable, net of allowances of approximately $1.1 million and $0.2 million as of June 30, 2020 and December 31, 2019, respectively, were included as a component of other assets in the accompanying consolidated balance sheets. Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption. Under the modified retrospective approach, an entity may also elect to apply this standard to either (i) all contracts as of January 1, 2018 or (ii) only to contracts that were not completed as of January 1, 2018. A completed contract is a contract for which all (or substantially all) of the revenue was recognized under legacy GAAP that was in effect before the date of initial application. The Company elected to apply this standard only to contracts that were not completed as of January 1, 2018. Based on the Company’s evaluation of contracts within the scope of ASU No. 2014-09, the guidance impacts revenue related to the sales of real estate, which is evaluated in conjunction with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”) (see below). Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets that do not meet the definition of a business. Generally, the Company’s sales of real estate would be considered a sale of a nonfinancial asset as defined by ASC 610-20. ASC 610-20 refers to the revenue recognition principles under ASU No. 2014-09 (see above). Under ASC 610-20, if the Company determines it does not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, the Company will derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. As a result of adoption of the standard, there was no material impact to the Company’s consolidated financial statements.
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Deferred Financing Costs | 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 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 shown at cost, net of accumulated amortization in the aggregate of approximately $8.8 million and $8.3 million as of June 30, 2020 and December 31, 2019, respectively. |
Income Taxes | 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 June 30, 2020 and December 31, 2019, 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 beginning with the 2010 calendar year.
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Stock-Based Compensation and Other Long-Term Incentive Compensation | 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 preestablished 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 on or after January 1, 2019 will be expressed as a number of shares of common stock and settled in shares of common stock. Target awards were previously expressed as a dollar amount and settled in shares of common stock. Commencing with Performance Share awards granted on or after January 1, 2019, the grant date fair value of the Performance Share awards will be determined under current accounting treatment using a Monte Carlo simulation model on the date of grant and recognized on a straight-line basis over the performance period. For Performance Share awards granted prior to January 1, 2019, the Company estimates the fair value of the Performance Share awards using a Monte Carlo simulation model on the date of grant and at each reporting period. The Performance Share awards granted prior to January 1, 2019 are recognized as compensation expense over the requisite performance period based on the fair value of the Performance Share awards at the balance sheet date, which varies quarter to quarter based on the Company’s relative share price performance, and are included as a component of performance share awards payable in the accompanying consolidated balance sheets.
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Use of Derivative Financial Instruments | Use of Derivative Financial Instruments. ASC 815, Derivatives and Hedging (See “Note 9 – Derivative Financial Instruments”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why the Company uses derivative instruments, (b) how the Company accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect the Company’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments. The Company records all derivatives on the accompanying consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments. ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) (See “Note 10 - 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 | 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. |
Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets and liabilities | As of June 30, 2020 and December 31, 2019, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):
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Schedule of depreciation and useful lives of real estate and intangible assets | The following table reflects the standard 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.
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Schedule of cash and cash equivalents and restricted cash | 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):
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Schedule of cash and cash equivalents and restricted cash | 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):
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Held for Sale/Disposed Assets (Tables) |
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Held For Sale/Disposed Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of results of operations of property held for sale | The following summarizes the condensed results of operations of the property held for sale as of June 30, 2020 for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of principal payments | The scheduled principal payments of the Company’s debt as of June 30, 2020 were as follows (dollars in thousands):
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Leasing (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of minimum future cash rentals on tenant operating leases | The following is a schedule of minimum future cash rentals on tenant operating leases in effect as of June 30, 2020. 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):
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Derivative Financial Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative instruments designated as hedging instruments | The following table presents a summary of the Company’s derivative instruments designated as hedging instruments (dollars in thousands):
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Schedule of effects of derivative financial instruments on consolidated statements of operations | The following table presents the effect of the Company’s derivative financial instruments on its accompanying consolidated statements of operations for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value assets measured on a recurring basis | The following sets forth the Company’s financial instruments that are accounted for at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 (dollars in thousands):
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Schedule of carrying value and fair value of senior secured loan and debt | The following table sets forth the carrying value and the estimated fair value of the Company’s Senior Secured Loan and debt as of June 30, 2020 and December 31, 2019 (dollars in thousands):
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Stockholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of total restricted shares granted | 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 six months ended June 30, 2020: Restricted Stock Activity:
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Vesting schedule of the total non-vested shares of restricted stock outstanding | The following is a vesting schedule of the total non-vested shares of restricted stock outstanding as of June 30, 2020:
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Schedule of certain information with respect to the Performance Share awards | The following table summarizes certain information with respect to the Performance Share awards granted prior to January 1, 2019 (dollars in thousands):
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Schedule of certain information with respect to the Performance Share awards | The following table summarizes certain information with respect to the Performance Share awards granted on or after January 1, 2019 (dollars in thousands):
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Schedule of cash dividends paid or payable per share | The following table sets forth the cash dividends paid or payable per share during the six months ended June 30, 2020:
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Commitments and Contingencies (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of properties under contract | The following table summarizes certain information with respect to the property the Company has under contract:
1Includes one improved land parcel containing approximately 7.0 acres.
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Organization (Details) - 6 months ended Jun. 30, 2020 ft² in Thousands |
property
segment
|
ft² |
a |
---|---|---|---|
Real Estate [Line Items] | |||
Number of markets | segment | 6 | ||
Buildings | |||
Real Estate [Line Items] | |||
Number of properties | 218 | ||
Improved land parcels | |||
Real Estate [Line Items] | |||
Number of properties | 22 | ||
Square Feet | ft² | 13,100 | ||
Redevelopment property | |||
Real Estate [Line Items] | |||
Number of properties | 2 | ||
Square Feet | 500 | 85.0 | |
Redevelopment property, held for sale | |||
Real Estate [Line Items] | |||
Square Feet | ft² | 500 |
Significant Accounting Policies - Schedule of Depreciation and Useful Lives of Real Estate and Intangible Assets (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Building | |
Finite-Lived Intangible Assets [Line Items] | |
Standard depreciable life | 40 years |
Building Improvements | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Standard depreciable life | 5 years |
Building Improvements | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Standard depreciable life | 40 years |
Significant Accounting Policies - Summary of the Reconciliation of Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
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Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents at beginning of period | $ 110,082 | $ 31,004 |
Restricted cash at beginning of period | 2,657 | 3,475 |
Cash and cash equivalents and restricted cash at beginning of period | 112,739 | 34,479 |
Cash and cash equivalents at end of period | 148,269 | 117,188 |
Restricted cash at end of period | 515 | 2,976 |
Cash and cash equivalents and restricted cash at end of period | 148,784 | 120,164 |
Net increase in cash and cash equivalents and restricted cash | $ 36,045 | $ 85,685 |
Concentration of Credit Risk (Details) - Northern New Jersey/New York City ft² in Millions |
Jun. 30, 2020
ft²
a
property
|
---|---|
Real Estate Properties [Line Items] | |
Percentage accounted by properties of its annualized base rent | 26.90% |
Office building | |
Real Estate Properties [Line Items] | |
Number of properties | 62 |
Square Feet | ft² | 3.6 |
Land parcels | |
Real Estate Properties [Line Items] | |
Number of properties | 9 |
Square Feet | a | 48.8 |
Held for Sale/Disposed Assets - Summary of Operations of Properties Held for Sale (Details) - Held for sale - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | $ 370 | $ 243 | $ 740 | $ 554 |
Property operating expenses | (117) | (99) | (210) | (200) |
Depreciation and amortization | (102) | (105) | (204) | (209) |
Income from operations | $ 151 | $ 39 | $ 326 | $ 145 |
Senior Secured Loan (Details) $ in Millions |
Jun. 30, 2020
USD ($)
property
|
Dec. 31, 2019
USD ($)
|
---|---|---|
Improved land parcels | ||
Number of properties | property | 22 | |
Senior Secured Loan Receivable | ||
Loan, stated interest rate | 8.00% | |
Loan outstanding, net of deferred income | $ 0.0 | $ 15.9 |
Loan, deferred income | 0.0 | 0.1 |
Interest receivable | $ 0.0 | $ 0.3 |
Senior Secured Loan Receivable | Improved land parcels | Real Estate | ||
Number of properties | property | 6 |
Leasing (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Lessor, Operating Lease, Payments, Fiscal Year Maturity [Abstract] | |
2020 | $ 67,785 |
2021 | 126,306 |
2022 | 108,402 |
2023 | 87,933 |
2024 | 68,909 |
Thereafter | 152,328 |
Total | $ 611,663 |
Derivative Financial Instruments - Summary of Derivative Instruments Designated as Hedging Instruments (Details) - USD ($) |
Jun. 30, 2020 |
Dec. 31, 2019 |
Apr. 01, 2019 |
Dec. 01, 2014 |
---|---|---|---|---|
Interest rate cap | ||||
Derivative [Line Items] | ||||
Derivative cap interest rate | 4.00% | |||
Interest rate cap, Maturity 5/4/2021 | ||||
Derivative [Line Items] | ||||
Derivative cap interest rate | 4.00% | |||
Fair Value | $ 0 | $ 0 | ||
Notional amount | $ 50,000,000.0 | 50,000,000 | $ 50,000,000.0 | |
Interest rate cap, Maturity 4/1/2019 | ||||
Derivative [Line Items] | ||||
Derivative cap interest rate | 4.00% | |||
Fair Value | $ 0 | 0 | ||
Notional amount | 0 | 50,000,000 | $ 50,000,000.0 | |
Interest rate cap, Maturity 2/3/2020 | ||||
Derivative [Line Items] | ||||
Fair Value | 0 | 0 | ||
Notional amount | $ 50,000,000 | $ 100,000,000 |
Derivative Financial Instruments - Summary of the Effect of the Company's Derivative Financial Instruments on its Accompanying Consolidated Statements of Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Amount of gain recognized in AOCI on derivatives (effective portion) | $ 0 | $ 89 | $ 0 | $ 176 |
Amount of gain reclassified from AOCI into interest expense (effective portion) | $ 46 | $ 89 | $ 119 | $ 176 |
Fair Value Measurements - Financial Instruments Accounted at Fair Value on a Recurring Basis (Details) - Interest rate cap - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | $ 0 | $ 0 |
Quoted Price in Active Markets for Identical Assets and Liabilities (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Asset | $ 0 | $ 0 |
Fair Value Measurements - Carrying Value and Estimated Fair Value of Company Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Assets | ||
Senior secured loan, fair value | $ 0 | $ 15,915 |
Senior secured loan, carrying value | 0 | 15,858 |
Liabilities | ||
Debt, fair value | 495,763 | 503,028 |
Debt, carrying value | 459,044 | 491,575 |
Quoted Price in Active Markets for Identical Assets and Liabilities (Level 1) | ||
Assets | ||
Senior secured loan, fair value | 0 | 0 |
Liabilities | ||
Debt, fair value | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets | ||
Senior secured loan, fair value | 0 | 15,915 |
Liabilities | ||
Debt, fair value | 495,763 | 503,028 |
Significant Unobservable Inputs (Level 3) | ||
Assets | ||
Senior secured loan, fair value | 0 | 0 |
Liabilities | ||
Debt, fair value | $ 0 | $ 0 |
Stockholders' Equity - Restricted Stock Activity (Details) |
6 Months Ended |
---|---|
Jun. 30, 2020
$ / shares
shares
| |
Shares | |
Granted (in shares) | shares | 20,501 |
Forfeited (in shares) | shares | (352) |
Vested (in shares) | shares | (8,436) |
Non-vested shares outstanding at end of period (in shares) | shares | 438,483 |
Weighted Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 58.08 |
Forfeited (in dollars per share) | $ / shares | 32.45 |
Vested (in dollars per share) | $ / shares | 31.89 |
Non-vested shares outstanding at end of period (in dollars per share) | $ / shares | $ 29.52 |
Restricted stock | |
Shares | |
Non-vested shares outstanding at beginning of period (in shares) | shares | 426,770 |
Weighted Average Grant Date Fair Value | |
Non-vested shares outstanding at beginning of period (in dollars per share) | $ / shares | $ 28.20 |
Stockholders' Equity - Cash Dividends Paid or Payable Per Share (Details) - $ / shares |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Apr. 30, 2019 |
Feb. 05, 2019 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
|
Dividends Payable [Line Items] | ||||||
Dividend per share, common stock (in dollars per share) | $ 0.27 | $ 0.27 | $ 0.24 | $ 0.24 | ||
Common Stock | ||||||
Dividends Payable [Line Items] | ||||||
Dividend per share, common stock (in dollars per share) | $ 0.27 | $ 0.27 |
Net Income (Loss) Per Share (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Weighted average unvested restricted shares outstanding (in shares) | 438,595 | 385,587 | 436,567 | 387,542 |
Restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive restricted stock awards outstanding securities not participate in losses (in shares) | 0 | 0 | 0 | 0 |
Performance Shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive restricted stock awards outstanding securities not participate in losses (in shares) | 407,139 | 294,570 | 407,139 | 294,570 |
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