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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
☑ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2021
or
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission file number 001-38106
PLYMOUTH INDUSTRIAL REIT, INC.
(Exact name of registrant in its charter)
Maryland |
27-5466153 |
(State or other jurisdiction of incorporation of organization) |
(I.R.S. Employer Identification Number) |
20 Custom House St, 11th Floor Boston,
MA 02110
(Address of principal executive offices)
Registrant’s telephone number, including area
code: (617) 340-3814
Securities registered pursuant to Section 12(b)
of the Act:
Title of Each Class |
Trading Symbol |
Name of Each Exchange
on Which Registered |
Common Stock, par value $0.01 per share |
PLYM |
New York Stock Exchange |
7.50% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share |
PLYM-PrA |
NYSE American |
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☑ No ☐
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ☐ |
Accelerated filer ☑ |
Non-accelerated filer ☐ |
Smaller reporting company ☐ |
Emerging growth company ☐ |
|
|
|
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether
the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☑
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☑
The aggregate market value of
the registrant’s common stock held by non-affiliates of the registrant (based on the closing price reported on the NYSE on
June 30, 2021) was $614,823,229.
Shares held by all executive officers
and directors of the registrant have been excluded from the foregoing calculation because such persons may be deemed to be affiliates
of the registrant.
The number of shares of the registrant’s
common stock outstanding as of February 18, 2022 was 36,543,219.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s
Definitive Proxy Statement relating to its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual
Report on Form 10-K. The registrant expects to file its Definitive Proxy Statement with the Securities and Exchange Commission within
120 days after December 31, 2021.
Plymouth Industrial
REIT, Inc.
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
We make statements in this Annual Report on Form 10-K that
are forward-looking statements, which are usually identified by the use of words such as “anticipates,” “believes,”
“estimates,” “expects,” “intends,” “may,” “plans,” “projects,”
“seeks,” “should,” “will,” and variations of such words or similar expressions. Our forward-looking
statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information
currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and
prospects as reflected in or suggested by our forward-looking statements are reasonable, we can give no assurance that our plans, intentions,
expectations, strategies or prospects will be attained or achieved and you should not place undue reliance on these forward-looking statements.
Additionally, unforeseen factors emerge from time to time, and we cannot predict which factors will arise or their ultimate impact on
our business or the extent to which any such factor, or combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. One of these factors is the outbreak of the novel coronavirus (COVID-19), the impact of
which is difficult to fully assess at this time due to, among other factors, uncertainty regarding the severity and duration of the outbreak
domestically and internationally and the effectiveness of efforts to contain the spread of the virus and its resulting direct and indirect
impact on the U.S. economy and economic activity. Furthermore, actual results may differ materially from those described in the forward-looking
statements and may be affected by a variety of risks and factors including, without limitation:
|
• |
uncertainty surrounding the social and economic impacts of the current COVID-19 pandemic, including, without limitation, its impact on the Company’s ability to pay common stock dividends and/or the amount and frequency of those dividends; |
|
• |
the competitive environment in which we operate; |
|
• |
real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets; |
|
• |
decreased rental rates or increasing vacancy rates; |
|
• |
potential defaults on or non-renewal of leases by tenants; |
|
• |
potential bankruptcy or insolvency of tenants; |
|
• |
acquisition risks, including failure of such acquisitions to perform in accordance with projections; |
|
• |
the timing of acquisitions and dispositions; |
|
• |
potential natural disasters such as earthquakes, wildfires or floods; |
|
• |
national, international, regional and local economic conditions; |
|
• |
the general level of interest rates; |
|
• |
potential changes in the law or governmental regulations that affect us and interpretations of those laws and regulations, including changes in real estate and zoning or real estate investment trust, or REIT, tax laws, and potential increases in real property tax rates; |
|
• |
financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all; |
|
• |
lack of or insufficient amounts of insurance; |
|
• |
our ability to maintain our qualification as a REIT; |
|
• |
litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and |
|
• |
possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by us. |
Any forward-looking statement speaks
only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events
or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Glossary
In this Annual Report on Form 10-K:
|
• |
“annualized rent” means the monthly base rent for the applicable property or properties as of December 31, 2021, multiplied by 12 and then multiplied by our percentage ownership interest for such property, where applicable, and “total annualized rent” means the annualized rent for the applicable group of properties; |
|
• |
“capitalization rate” means the ratio of a property’s annual net operating income to its purchase price; |
|
• |
“Company Portfolio” means the 128 distribution centers, warehouse, light industrial and small bay industrial properties which we wholly own as of December 31, 2021, and does not include properties held by unconsolidated joint ventures or our property management office located in Columbus, Ohio; |
|
• |
“gateway markets” means gateway cities and the following four largest metropolitan areas in the U.S., each generally consisting of more than 300 million square feet of industrial space: Los Angeles, San Francisco, New York, Washington, DC, Miami and Seattle; |
|
• |
“OP units” means units of limited partnership interest in our operating partnership; |
|
• |
“our operating partnership” means Plymouth Industrial OP, LP, a Delaware limited partnership, and the subsidiaries through which we conduct substantially all of our business; |
|
• |
“Plymouth,” “our company,” “we,” “us” and “our” refer to Plymouth Industrial REIT, Inc., a Maryland corporation, and its consolidated subsidiaries, except where it is clear from the context that the term only means Plymouth Industrial REIT, Inc., the issuer of the shares of Common and Preferred stock, in this annual report; |
|
• |
“primary markets” means the following two metropolitan areas in the U.S., each generally consisting of more than 300 million square feet of industrial space: Chicago and Atlanta; |
|
• |
“secondary markets” means for our purposes non-primary markets, each generally consisting of between 100 million and 300 million square feet of industrial space, including the following metropolitan areas in the U.S.: Austin, Baltimore, Boston, Charlotte, Cincinnati, Cleveland, Columbus, Dallas, Detroit, Houston, Indianapolis, Jacksonville, Kansas City, Memphis, Milwaukee, Nashville, Norfolk, Orlando, Philadelphia, Pittsburgh, Raleigh/Durham, San Antonio, South Florida, St. Louis and Tampa; |
Our definitions of primary and
secondary markets may vary from the definitions of these terms used by investors, analysts or other industrial REITs.
PART I
Item 1. Business
Overview
We are a full service, vertically
integrated, self-administered and self-managed REIT focused on the acquisition, ownership, management, redevelopment and development of
single and multi-tenant industrial properties, including distribution centers, warehouses, light industrial and small bay industrial properties,
located in primary and secondary markets, as well as select sub-markets, with access to large pools of skilled labor in the main industrial,
distribution and logistics corridors of the United States. The Company was founded in March 2011 by two of our executive officers, Jeffrey
Witherell and Pendleton White, Jr., each of whom have over 25 years of experience acquiring, owning and operating commercial real
estate properties. We are a Maryland corporation and our common stock is publicly traded on the New York Stock Exchange under the symbol
“PLYM”. Our headquarters and executive offices are located in Boston, Massachusetts. Additionally, we have regional offices
in Columbus, Ohio, Jacksonville, Florida, and Memphis, Tennessee.
We are structured as an umbrella
partnership REIT, commonly called an UPREIT, and own substantially all of our assets and conduct substantially all of our business through
Plymouth Industrial OP, LP, a Delaware limited partnership (the “Operating Partnership”). As of December 31, 2021, the Company
owned a 98.7% equity interest in the Operating Partnership. Any net proceeds from our public offerings will be contributed to the Operating
Partnership in exchange for OP units. Our interest in the Operating Partnership will generally entitle us to share in cash distributions
from, and in the profits and losses of, our Operating Partnership in proportion to our percentage ownership. As the sole general partner
of the Operating Partnership, we generally have the exclusive power under the partnership agreement to manage and conduct its business
and affairs, subject to certain limited approval and voting rights of the limited partners.
As of December 31, 2021, the Company’s
portfolio consists of 128 industrial properties (the “Company Portfolio”) comprising of 163 buildings located in eleven states
with an aggregate of approximately 29.5 million rentable square feet. The Company Portfolio was 97.4% leased to 395 different tenants
across 35 industry types as of December 31, 2021. We also own a 20% equity interest in, and provide various services to, a joint
venture through a wholly owned subsidiary of the Operating Partnership. The joint venture is accounted for using the equity method of
accounting. As such, the operating data of the joint venture is not consolidated with that of the Company.
Investment Strategy
We intend to continue to focus
on the acquisition of industrial properties located in primary and secondary markets, as well as select sub-markets, with access to large
pools of skilled labor in the main industrial, distribution and logistics corridors of the United States, which we refer to as our target
markets. We believe industrial properties in such target markets will provide superior and consistent cash flow returns at generally lower
acquisition costs relative to replacement cost and to industrial properties in gateway markets. Further, we believe there is a greater
potential for higher rates of appreciation in the value of industrial properties in our target markets relative to industrial properties
in gateway markets.
We believe our target markets provide
us with opportunities to acquire both stabilized properties generating favorable cash flows, as well as properties where we can enhance
returns through leasing, value-add renovations, value-add redevelopment and ground-up development. We focus primarily on the following
investments:
|
• |
single-tenant and multi-tenant industrial properties where tenants are paying below-market rents with near-term lease expirations that we believe have a high likelihood of renewal at market rents; and |
|
• |
multi-tenant industrial properties that we believe would benefit from our value-add management approach to create attractive leasing options for our tenants, and as a result of the presence of smaller tenants, obtain higher per-square-foot rents. |
We believe there are a significant
number of attractive acquisition opportunities available to us in our target markets and that the fragmented ownership of industrial properties
within our target markets and the complex operating requirements of the industrial properties we target generally make it more difficult
for less-experienced or less-focused operators to access comparable investment opportunities on a consistent basis. While we will focus
on investment opportunities in our target markets, we may make opportunistic acquisitions of industrial properties in other markets when
we believe we can achieve attractive risk-adjusted returns.
We also intend to continue pursuing
joint venture arrangements with institutional partners which could provide management fee income, a residual profit-sharing income and
the ability to purchase properties out of the joint venture over time. Such joint ventures may involve investing in industrial assets
that would be characterized as opportunistic or value-add investments. These may involve development or redevelopment strategies that
may require significant up-front capital expenditures, lengthy lease-up periods and result in inconsistent cash flows. As such, these
properties’ risk profiles and return metrics would likely differ from the non-joint venture properties that we target for acquisition.
Investment Criteria
We believe that our market knowledge,
operations systems and internal processes allow us to efficiently analyze the risks associated with an asset’s ability to produce
cash flow going forward. We blend fundamental real estate analysis with corporate credit analysis to make an assessment of probable cash
flows that will be realized in future periods. We also use data-driven and event-driven analytics and primary research to identify and
pursue emerging investment opportunities.
Our investment strategy focuses on
industrial properties in primary and secondary markets, as well as select sub-markets, with access to large pools of skilled labor in
the main industrial, distribution and logistics corridors of the United States for the following reasons:
|
• |
investment yields for industrial properties located in our target markets are often greater than investment yields on both industrial properties and other commercial property types located in gateway markets; |
|
• |
we believe there is less competition for industrial properties in our target markets from institutional real estate buyers; our typical competitors are local investors who often do not have ready access to debt or equity capital; |
|
• |
the industrial markets that we target are highly fragmented with complex operating requirements, which we believe makes it difficult for less-experienced or less-focused operators to access comparable investment opportunities on a consistent basis; |
|
• |
we believe that there is a limited new supply of industrial space in our target markets; |
|
• |
our target markets generally have less occupancy and rental rate volatility than gateway markets; |
|
• |
we believe our target markets generally have more capital appreciation and growth potential at a lower cost basis than gateway markets; and |
|
• |
we believe that the demand for e-commerce-related properties, or e-fulfillment facilities, will continue to grow and play a significant role in our investing strategy. |
We seek to maximize our cash flows
through proactive asset management. Our asset management team actively manages our properties in an effort to maintain high retention
rates, lease vacant space, manage operating expenses and maintain our properties to an appropriate standard. In doing so, we have developed
strong tenant relationships. We intend to leverage those relationships and market knowledge to increase renewals, achieve market rents,
obtain early notification of departures to provide longer re-leasing periods and work with tenants to properly maintain the quality and
attractiveness of our properties.
Our asset management team functions
include strategic planning and decision-making, centralized leasing activities and management of third-party leasing companies. Our asset
management team oversees property management activities relating to our properties which include controlling capital expenditures and
expenses that are not reimbursable by tenants, making regular property inspections, overseeing rent collections and cost control and planning
and budgeting activities. Tenant relations matters, including monitoring of tenant compliance with their property maintenance obligations
and other lease provisions, will be handled by in-house personnel for most of our properties.
Financing Strategy
We intend to maintain a flexible
and growth-oriented capital structure. We intend to use the net proceeds from our public offerings along with additional indebtedness
to acquire industrial properties. Our additional indebtedness may include unsecured arrangements such as our revolving credit facility
and term loan, or, secured arrangements such as a mortgage. We believe that we will have the ability to leverage newly-acquired properties
with our long-term target debt-to-value ratio of less than 50%. We also anticipate using OP units to acquire properties from existing
owners interested in tax-deferred transactions.
Competition
In acquiring our properties, we
compete with other public industrial property sector REITs, income oriented non-traded REITs, private real estate fund managers and local
real estate investors and developers. Historically, local real estate investors and developers have represented our dominant competition
for acquisition opportunities, however, they do not typically have the same access to capital as afforded to us as a publicly traded entity.
We also face significant competition in leasing available space to prospective tenants and in re-leasing space to existing tenants.
We believe we have a competitive
advantage in sourcing attractive acquisitions because the competition for our target assets is primarily from local investors who are
not likely to have ready access to debt or equity capital. In addition, our umbrella partnership real estate investment trust, or UPREIT,
structure enables us to acquire industrial properties on a non-cash basis in a tax efficient manner through the issuance of OP units as
full or partial consideration for the transaction. We will also continue to develop our large existing network of relationships with real
estate and financial intermediaries. These individuals and companies give us access to significant deal flow—both those broadly
marketed and those exposed through only limited marketing. The acquisition of properties will be transacted primarily from third-party
owners of existing leased buildings and secondarily from owner-occupiers through sale-leaseback transactions.
Regulation
General
Our properties are subject to various
laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe that we
have the necessary permits and approvals to operate each of our properties.
Americans with Disabilities Act
Our properties must comply with
Title III of the ADA to the extent that such properties are “public accommodations” as defined under the ADA. Under the ADA,
all public accommodations must meet federal requirements related to access and use by disabled persons. The ADA may require removal of
structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
Although we believe that the properties in the Company Portfolio in the aggregate substantially comply with present requirements of the
ADA, and we have not received any notice for correction from any regulatory agency, we have not conducted a comprehensive audit or investigation
of all of our properties to determine whether we are in compliance and therefore we may own properties that are not in compliance with
the ADA.
ADA compliance is dependent upon
the tenant’s specific use of the property, and as the use of a property changes or improvements to existing spaces are made, we
will take steps to ensure compliance. Noncompliance with the ADA could result in additional costs to attain compliance, imposition of
fines by the U.S. government or an award of damages or attorney’s fees to private litigants. The obligation to make readily achievable
accommodations is an ongoing one, and we will continue to assess our properties and to make alterations to achieve compliance as necessary.
Environmental Matters
The Company Portfolio is subject
to various federal, state and local environmental laws. Under these laws, courts and government agencies have the authority to require
us, as owner of a contaminated property, to clean up the property, even if we did not know of or were not responsible for the contamination.
These laws also apply to persons who owned a property at the time it became contaminated, and therefore, it is possible we could incur
these costs even after we sell some of the properties we acquire. In addition to the costs of cleanup, environmental contamination can
affect the value of a property and, therefore, an owner’s ability to borrow using the property as collateral or to sell the property.
Under applicable environmental laws, courts and government agencies also have the authority to require that a person who sent waste to
a waste disposal facility, such as a landfill or an incinerator, pay for the clean-up of that facility if it becomes contaminated and
threatens human health or the environment.
Furthermore, various court decisions
have established that third parties may recover damages for injury caused by property contamination. For instance, a person exposed to
asbestos at one of our properties may seek to recover damages if he or she suffers injury from the asbestos. Lastly, some of these environmental
laws restrict the use of a property or place conditions on various activities. An example would be laws that require a business using
chemicals to manage them carefully and to notify local officials that the chemicals are being used.
We could be responsible for any
of the costs discussed above. The costs to clean up a contaminated property, to defend against a claim, or to comply with environmental
laws could be material and could adversely affect the funds available for distribution to our stockholders. We usually require Phase I
or similar environmental assessments by independent environmental consultants at the time of acquisition of a property. We generally expect
to continue to obtain a Phase I or similar environmental site assessments by independent environmental consultants on each property
prior to acquiring it. However, these environmental assessments may not reveal all environmental costs that might have a material adverse
effect on our business, assets, results of operations or liquidity and may not identify all potential environmental liabilities.
We can make no assurances that
(1) future laws, ordinances or regulations will not impose material environmental liabilities on us, or (2) the current environmental
condition of our properties will not be affected by tenants, the condition of land or operations in the vicinity of our properties (such
as releases from underground storage tanks), or by third parties unrelated to us.
Insurance
We carry commercial property, liability
and terrorism coverage on all the properties in the Company Portfolio under a blanket insurance policy. Generally, we do not carry insurance
for certain types of extraordinary losses, including, but not limited to, losses caused by riots, war, earthquakes and wildfires unless
the property is in a higher risk area for those events. We believe the policy specifications and insured limits are appropriate and adequate
given the relative risk of loss, the cost of the coverage and standard industry practice, however, our insurance coverage may not be sufficient
to fully cover all of our losses. In addition, our title insurance policies may not insure for the current aggregate market value of the
Company Portfolio, and we do not intend to increase our title insurance coverage as the market value of the Company Portfolio increases.
Human Capital
As of December 31, 2021, we had
thirty-nine full time employees. None of our employees are represented by a collective bargaining agreement.
We are committed to maintaining
a work culture that treats all employees fairly and with respect, promotes inclusivity, provides equal opportunities for the professional
development of our employees and advancement based on merit. As of December 31, 2021, females constituted approximately 38% of
our workforce and 39% of our managerial employees. We intend to continue utilizing a multifaceted recruiting, talent development,
and internal promotion strategy to expand the diversity of our employee base across all roles and functions.
To attract and retain top
talent in our highly competitive industry, we have designed our compensation and benefits programs to provide an effective reward structure
aligned with the achievement of key business objectives. Our employees are eligible for medical and dental insurance, a savings/retirement
plan, disability insurance and receive restricted stock grants per the 2014 Incentive Plan.
Legal Proceedings
We are not currently a party, as
plaintiff or defendant, to any material legal proceedings. From time to time, we may become party to various lawsuits, claims and other
legal proceedings that arise in the ordinary course of our business. There can be no assurance that these matters that may arise in the
future, individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.
Our Corporate Information
Our principal executive offices
are located at 20 Custom House Street, 11th Floor, Boston, Massachusetts 02110. Our telephone number is (617) 340-3814. Our
website is www.plymouthreit.com. We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports
on Form 8-K and all amendments to those reports with the United States Securities and Exchange Commission (“SEC”). Access
to those reports and other filings with the SEC may be obtained, free of charge from our website, www.plymouthreit.com or through the
SEC’s website at www.sec.gov. These reports are available as soon as reasonably practicable after such material is electronically
filed or furnished to the SEC.
Item 1A.
Risk Factors
The following risk factors and
other information in this Annual Report on Form 10-K, including the Management’s Discussion and Analysis of Financial Condition
and Results of Operations section, should be carefully considered. The risks and uncertainties described below are not the only risks
we face. In addition to the continuing effects of the COVID-19 pandemic and resulting national and global disruptions on our business
as discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations, additional or unforeseen
effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of the risks discussed below. Additional
risks and uncertainties not currently known to us or that we may currently deem immaterial also may impair our business operations. If
any of the following or other risks occur, our business financial condition, operating results, cash flows and distributions, as well
as the market price of our securities, could be materially adversely affected.
Summary of Risk Factors
Risks Related to Our Business and Operations:
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Our assets are concentrated in the industrial real estate sector, and our business could be materially and adversely affected by an economic downturn in that sector. |
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Our assets are geographically concentrated in two primary and ten secondary markets, which causes us to be especially susceptible to adverse developments in those markets. |
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Our assets are comprised entirely of industrial properties located in primary and secondary markets, as well as select sub-markets, with access to large pools of skilled labor in the main industrial, distribution and logistics corridors of the United States, which subjects us to risks associated with concentrating the Company’s portfolio on such assets. |
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We are subject to risks associated with single tenant leases, and the default by one or more tenants could materially and adversely affect our results of operations and financial results. |
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We are subject to risks related to tenant concentration, which could materially adversely affect our cash flows, result of operations and financial condition. |
Risks Associated with Our Indebtedness:
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Debt service payments on our significant indebtedness may leave us with insufficient cash resources to operate our properties or pay dividends as current contemplated or necessary to maintain our REIT qualification. |
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Restrictive covenants in our debt instruments could restrict our operations and failure to comply with these restrictions could result in the acceleration of our debt. |
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Unavailability of mortgage debt may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire. |
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Our existing loan agreements contain balloon payment obligations, which may materially and adversely affect our financial condition and our ability to make distributions. |
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Our existing loan agreements are secured by various properties within our portfolio or the equity of our property-owning subsidiaries, so a default under any of these loan documents could result in a loss of the secured properties. |
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Changes in the method of determining the London Interbank Offered Rate (“LIBOR”), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt. |
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An increase in interest rates could adversely impact our financial condition, results of operations and cash flows. |
Risks Related to the Real Estate Industry and
the Broader Economy:
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The illiquidity of real estate assets could significantly impede our ability to response to adverse changes in the performance of our properties and harm our financial results. |
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The ongoing COVID-19 pandemic or any unforeseen factor that emerges out of that pandemic or otherwise could materially adversely affect our results of operations and financial results. |
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Declining real estate valuations and impairment charges could materially adversely affect our financial condition and results of operations. |
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Adverse economic conditions and any dislocations in the credit markets could materially adversely affect our financial condition and results of operations. |
Risks Related to Our Organizational Structure:
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Our success depends on key personnel whose continued service is not guaranteed, and the departure of one or more of our key personnel could adversely affect our ability to manage our business and to implement our growth strategy. |
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Conflicts of interest may exist or could arise in the future between the interests of our stockholders and the interests of the holders of the partnership interests of our operating partnership. |
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Our charter and bylaws, the partnership agreement of our operating partnership and Maryland law contain provisions that may delay, defer, or prevent a change of control transaction. |
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Our charter contains certain ownership limits with respect to our stock. |
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We could increase the number of authorized shares of stock, classify and reclassify unissued stock and issue stock without stockholder approval. |
Risks Related to Our Status as a REIT:
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Failure to maintain our qualification as a REIT would have significant adverse consequences to us. |
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If our operating partnership failed to qualify as a partnership or a disregarded entity for federal tax purposes, we would cease to qualify as a REIT. |
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To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions. |
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Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends. |
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Complying with REIT requirements may affect our profitability and may force us to liquidate or forgo otherwise attractive investments. |
Risks Related to Our Business and Operations
Our portfolio is concentrated in the industrial
real estate sector, and our business would be adversely affected by an economic downturn in that sector.
Our Company Portfolio is
comprised entirely of industrial properties, including distribution centers, warehouses, light industrial and small bay industrial properties.
This concentration may expose us to the risk of economic downturns in the industrial real estate sector to a greater extent than if our
properties were more diversified across other sectors of the real estate industry. In particular, an economic downturn affecting the
market for industrial properties could have a material adverse effect on our results of operations, cash flows, financial condition and
our ability to pay distributions to our stockholders.
Our portfolio is geographically concentrated in
two primary and ten secondary markets, which causes us to be especially susceptible to adverse developments in those markets.
In addition to general, regional,
national, and international economic conditions, our operating performance is impacted by the economic conditions of the specific geographic
markets in which we have concentrations of properties. Our wholly owned portfolio consists of holdings in the following markets (which
accounted for the percentage of our total annualized rent indicated) as of December 31, 2021: Chicago (23.4%); Cleveland (12.8%);
Indianapolis (12.0%); St. Louis (11.1%); Jacksonville (10.4%); Columbus (8.9%); Cincinnati (7.7%); Memphis (6.8%); Atlanta (4.4%); Boston
(1.0%); Philadelphia (0.8%); and Kansas City (0.7%); This geographic concentration could adversely affect our operating performance if
conditions become less favorable in any of the markets in which we have a concentration of properties. We cannot assure you that any
of our target markets will grow or that underlying real estate fundamentals will be favorable to owners and operators of industrial properties.
Our operations may also be affected if competing properties are built in our target markets. Any adverse economic or real estate developments
in our target markets, or any decrease in demand for industrial space resulting from the regulatory environment, business climate or
energy or fiscal problems, could materially and adversely impact our financial condition, results of operations, cash flow, our ability
to satisfy our debt service obligations and our ability to pay distributions to our stockholders.
Our portfolio is comprised of industrial properties
in primary and secondary markets, as well as select sub-markets which subjects us to risks associated with concentrating our portfolio
on such assets.
Our portfolio is comprised of industrial
properties, including distribution centers, warehouses, light industrial and small bay industrial properties in primary and secondary
markets, as well as select sub-markets. While we believe that industrial in our targeted markets have shown positive trends, we cannot
give any assurance that these trends will continue. Any developments or circumstances that adversely affect the value of such industrial
properties generally could have a more significant adverse impact on us than if our portfolio was diversified by asset type, which could
materially and adversely impact our financial condition, results of operations and ability to make distributions to our stockholders.
Our business strategy depends on achieving revenue
growth from anticipated increases in demand for industrial space in our target markets; accordingly, any delay or a weaker than anticipated
economic recovery could materially and adversely affect us and our growth prospects.
Our business strategy depends on
achieving revenue growth and capital appreciation from anticipated near-term growth in demand for industrial space in our target markets
as a result of improving demographic trends and supply and demand fundamentals. As a result, any delay or a weaker than anticipated economic
recovery, particularly in our target markets, could materially and adversely affect us and our growth prospects. Furthermore, even if
economic conditions generally improve, we cannot provide any assurances that demand for industrial space in our target markets will increase
from current levels. If demand does not increase in the near future, or if demand weakens, our future results of operations and our growth
prospects could also be materially and adversely affected.
We may not be aware of characteristics or deficiencies
involving any one or all of the properties that we acquire in the future, which could have a material adverse effect on our business.
Newly acquired properties may have
characteristics or deficiencies unknown to us that could affect their valuation or revenue potential and such properties may not ultimately
perform to our expectations. We cannot assure you that the operating performance of any newly acquired properties will not decline under
our management. Any characteristics or deficiencies in any newly acquired properties that adversely affect the value of the properties
or their revenue-generation potential could have a material adverse effect on our results of operations and financial condition.
We are subject to risks associated with single-tenant
leases, and the default by one or more tenants could materially and adversely affect our results of operations and financial condition.
We are subject to the risk that the
default, financial distress or bankruptcy of a single tenant could cause interruptions in the receipt of rental revenue and/or result
in a vacancy, which is likely to result in the complete reduction in the operating cash flows generated by the property leased to that
tenant and may decrease the value of that property. In addition, a majority of our leases generally require the tenant to pay all or substantially
all of the operating expenses normally associated with the ownership of the property, such as utilities, real estate taxes, insurance
and routine maintenance. Following a vacancy at a single-tenant property, we will be responsible for all of the operating costs at such
property until it can be re-let, if at all.
We are subject to risks related to tenant concentration,
which could materially adversely affect our cash flows, results of operations and financial condition.
As of December 31, 2021, our top
three tenants collectively comprised approximately 6.6% of our total annualized rent. As a result, our financial performance will be dependent,
in large part, on the revenues generated from these significant tenants and, in turn, the financial condition of these tenants. In the
event that a tenant occupying a significant portion of one or more of our properties or whose rental income represents a significant portion
of the rental revenue at our properties were to experience financial weakness or file bankruptcy, it could have a material adverse effect
on our cash flows, results of operations and financial condition.
We may be unable to renew leases, lease vacant
space or re-lease space as leases expire.
Leases representing 14.6%, 10.5%
and 19.4% of the rentable square footage of the industrial properties in our portfolio will expire in 2022, 2023 and 2024, respectively.
We cannot assure you that our leases will be renewed or that our properties will be re-leased at rental rates equal to or above the current
average rental rates or that we will not offer substantial rent abatements, tenant improvements, early termination rights or below-market
renewal options to attract new tenants or retain existing tenants. If the rental rates for our properties decrease, or if our existing
tenants do not renew their leases or we do not re-lease a significant portion of our available space and space for which leases will expire,
our financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading price of,
our stock could be adversely affected.
We may be unable to identify and complete acquisitions
of properties that meet our investment criteria, which may have a material adverse effect on our growth prospects.
Our primary investment strategy
involves the acquisition of industrial properties located in primary and secondary markets, as well as select sub-markets, with access
to large pools of skilled labor in the main industrial, distribution and logistics corridors of the United States. These activities require
us to identify suitable acquisition candidates or investment opportunities that meet our investment criteria and are compatible with our
growth strategies. We may be unable to acquire properties identified as potential acquisition opportunities. Our ability to acquire properties
on favorable terms, or at all, may expose us to the following significant risks:
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we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete; |
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even if we enter into agreements for the acquisition of properties, these agreements are subject to conditions to closing, which we may be unable to satisfy; and |
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we may be unable to finance any given acquisition on favorable terms or at all. |
If we are unable to finance property
acquisitions or acquire properties on favorable terms, or at all, our financial condition, results of operations, cash flows and our ability
to pay distributions on, and the per share trading price of, our stock could be adversely affected. In addition, failure to identify or
complete acquisitions of suitable properties could limit our growth.
Our acquisition activities may pose risks that
could harm our business.
In connection with future acquisitions,
we may be required to incur debt and expenditures and issue additional common stock, preferred stock or units of limited partnership interest
in our operating partnership, or OP units, to pay for the acquired properties. These acquisitions may dilute our stockholders’ ownership
interests, delay or prevent our profitability and may also expose us to risks such as:
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the possibility that we may not be able to successfully integrate any future acquisitions into our portfolio; |
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the possibility that senior management may be required to spend considerable time negotiating agreements and integrating acquired properties, diverting their attention from our other objectives; |
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the possibility that we may overpay for a property; |
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the possible loss or reduction in value of acquired properties; and |
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the possibility of pre-existing undisclosed liabilities regarding acquired properties, including environmental or asbestos liability, for which our insurance may be insufficient or for which we may be unable to secure insurance coverage. |
We cannot assure you that the price
for any future acquisitions will be similar to prior acquisitions. If our revenue does not keep pace with these potential acquisition
and expansion costs, we may incur net losses. There is no assurance that we will successfully overcome these risks or other problems encountered
with acquisitions. See risk factor “—We are a holding company with no direct operations and, as such, we will rely on funds
received from our operating partnership to pay liabilities, and the interests of our stockholders will be structurally subordinated to
all liabilities and obligations of our operating partnership and its subsidiaries.”
We may obtain limited or no warranties when we
purchase a property, which increases the risk that we may lose invested capital in or rental income from such property.
The seller of a property will often
sell such property in its “as is” condition on a “where is” basis and “with all faults,” without any
warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties,
representations and indemnifications that will only survive for a limited period after the closing. Also, many sellers of real estate
are single-purpose entities without any other significant assets. The purchase of properties with limited warranties or from undercapitalized
sellers increases the risk that we may lose some or all of our invested capital in the property as well as the loss of rental income from
such property.
We face significant competition for acquisitions
of industrial properties, which may reduce the number of acquisition opportunities available to us and increase the costs of these acquisitions.
The current market for acquisitions
of industrial properties in our target markets continues to be extremely competitive. This competition may increase the demand for our
target properties and, therefore, reduce the number of suitable acquisition opportunities available to us and increase the prices paid
for such acquisition properties. We also face significant competition for attractive acquisition opportunities from an indeterminate number
of investors, including publicly traded and privately held REITs, private equity investors and institutional investment funds, some of
which have greater financial resources than we do, a greater ability to borrow funds to acquire properties and the ability to accept more
risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition
prices. This competition will increase if investments in real estate become more attractive relative to other forms of investment. Competition
for investments may reduce the number of suitable investment opportunities available to us and may have the effect of increasing prices
paid for such acquisition properties and/or reducing the rents we can charge and, as a result, adversely affecting our operating results.
Our future acquisitions may not yield the returns we expect.
Our future acquisitions and our
ability to successfully operate the properties we acquire in such acquisitions may be exposed to the following significant risks:
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even if we are able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price; |
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we may acquire properties that are not accretive to our results upon acquisition, and we may not successfully manage and lease those properties to meet our expectations; |
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our cash flow may be insufficient to meet our required principal and interest payments; |
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we may spend more than budgeted amounts to make necessary improvements or renovations to acquired properties; |
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result our results of operations and financial condition could be adversely affected; |
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market conditions may result in higher-than-expected vacancy rates and lower than expected rental rates; and |
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we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities such as liabilities for clean-up of undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties. |
If we cannot operate acquired properties
to meet our financial expectations, our financial condition, results of operations, cash flows and our ability to pay distributions on,
and the per share trading price of, our stock could be materially and adversely affected.
We may not be able to successfully operate our
business or generate sufficient cash flows to make or sustain distributions to our stockholders as a publicly traded company.
We may not be able to successfully
operate our business or implement our operating policies and investment strategy as described in this prospectus. Failure to operate successfully
as a listed public company, to develop and implement appropriate control systems and procedures in accordance with the Sarbanes-Oxley
Act or maintain our qualification as a REIT would have an adverse effect on our financial condition, results of operations, cash flow
and per share trading price of our stock. Furthermore, we may not be able to generate sufficient cash flows to pay our operating expenses,
service any debt we may incur in the future and make distributions to our stockholders. Our ability to successfully operate our business
and implement our operating policies and investment strategy will depend on many factors, including:
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the availability of, and our ability to identify, attractive acquisition opportunities consistent with our investment strategy; |
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our ability to contain renovation, maintenance, marketing and other operating costs for our properties; |
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our ability to maintain high occupancy rates and target rent levels; |
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costs that are beyond our control, including title litigation, litigation with tenants, legal compliance, real estate taxes and insurance; interest rate levels and volatility, such as the accessibility of short- and long-term financing on desirable terms; and |
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economic conditions in our target markets as well as the condition of the financial and real estate markets and the economy generally. |
We face significant competition in the leasing
market, which may decrease or prevent increases of the occupancy and rental rates of our properties.
We compete with numerous developers,
owners and operators of real estate, many of whom own properties similar to ours in the same submarkets in which our properties are located.
If our competitors offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants,
we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer
more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants
when our tenants’ leases expire. As a result, our financial condition, results of operations, cash flows and our ability to pay
distributions on, and the value of, our stock could be adversely affected.
We may be required to make rent or other concessions
and/or significant capital expenditures to improve our properties in order to retain and attract tenants, causing our financial condition,
results of operations, cash flows and our ability to pay distributions on, and the per share trading price of, our stock to be adversely
affected.
In order to attract and retain
tenants, we may be required to make rent or other concessions to tenants, accommodate requests for renovations, build-to-suit remodeling
and other improvements or provide additional services to our tenants. Additionally, when a tenant at one of our properties does not renew
its lease or otherwise vacates its space, it is likely that, in order to attract one or more new tenants, we will be required to expend
funds for improvements in the vacated space. As a result, we may have to make significant capital or other expenditures in order to retain
tenants whose leases expire and to attract new tenants in sufficient numbers. Additionally, we may need to raise capital to make such
expenditures. If we are unable to do so or if capital is otherwise unavailable, we may be unable to make the required expenditures. This
could result in non-renewals by tenants upon expiration of their leases, which could have an adverse effect on our financial condition,
results of operations, cash flows and our ability to pay distributions on, and the per share trading price of, our stock.
A substantial majority of the leases in our portfolio
are with tenants who have non-investment grade credit ratings, which may result in our leasing to tenants that are more likely to default
in their obligations to us than an entity with an investment grade credit rating.
A substantial majority of the leases
in our portfolio are with tenants who have non-investment grade credit ratings. The ability of a non-investment grade tenant to meet its
obligations to us cannot be considered as well assured as that of an investment grade tenant. All of our tenants may face exposure to
adverse business or economic conditions which could lead to an inability to meet their obligations to us. However, non-investment grade
tenants may not have the financial capacity or liquidity to adapt to these conditions or may have less diversified businesses, which may
exacerbate the effects of adverse conditions on their businesses. Moreover, the fact that so many of our tenants are not investment grade
may cause investors or lenders to view our cash flows as less stable, which may increase our cost of capital, limit our financing options
or adversely affect the trading price of our stock.
The actual rents we receive for our portfolio
may be less than our asking rents, and we may experience lease roll down from time to time.
As a result of various factors,
including competitive pricing pressure in our submarkets, adverse conditions in our target markets, a general economic downturn and a
decline in the desirability of our properties compared to other properties in our submarkets, we may be unable to realize the asking rents
for properties in our portfolio. In addition, the degree of discrepancy between our asking rents and the actual rents we are able to obtain
may vary both from property to property and among different leased spaces within a single property. If we are unable to obtain rental
rates comparable to our asking rents for the properties in our portfolio, our ability to generate cash flow growth will be negatively
impacted. In addition, depending on fluctuations in asking rental rates at any given time, from time-to-time rental rates for expiring
leases in our portfolio may be higher than starting rental rates for new leases.
Our acquisition of properties or portfolios of
properties through tax-deferred contribution transactions, which could result in stockholder dilution and limit our ability to sell such
assets.
We have acquired, and in the future
we may acquire properties or portfolios of properties through tax-deferred contribution transactions in exchange for OP units, which may
result in stockholder dilution. This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation
we are able to deduct over the tax life of the acquired properties, and requires that we agree to protect the contributors’ ability
to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of
partnership debt to the contributors to maintain their tax bases. These restrictions limit our ability to sell an asset at a time, or
on terms, that would be favorable absent such restrictions.
Potential losses, including from adverse weather
conditions and natural disasters, may not be covered by insurance.
We carry commercial property, liability
and terrorism coverage on all the properties in our portfolio under a blanket insurance policy, in addition to other coverages that may
be appropriate for certain of our properties. We will select policy specifications and insured limits that we believe to be appropriate
and adequate given the relative risk of loss, the cost of the coverage and industry practice. Some of our policies will be insured subject
to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses, which could affect
certain of our properties that are located in areas particularly susceptible to natural disasters. In addition, we may discontinue terrorism
or other insurance on some or all of our properties in the future if the cost of premiums for any such policies exceeds, in our judgment,
the value of the coverage discounted for the risk of loss. We do not carry insurance for certain types of extraordinary losses, such as
loss from riots, war, earthquakes and wildfires because such coverage may not be available or is cost prohibitive or available at a disproportionately
high cost. As a result, we may incur significant costs in the event of loss from riots, war, earthquakes, wildfires and other uninsured
losses.
If we or one or more of our tenants
experiences a loss that is uninsured or that exceeds policy limits, we could lose the capital invested in the damaged properties as well
as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness,
we would continue to be liable for the indebtedness, even if these properties were irreparably damaged. Furthermore, we may not be able
to obtain adequate insurance coverage at reasonable costs in the future as the costs associated with property and casualty renewals may
be higher than anticipated.
We may not be able to rebuild our portfolio to
its existing specifications if we experience a substantial or comprehensive loss of such properties.
In the event that we experience
a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications.
Further, reconstruction or improvement of such a property would likely require significant upgrades to meet zoning and building code requirements.
Environmental and legal restrictions could also restrict the rebuilding of our properties.
We may be unable to sell a property if or when
we decide to do so.
We expect to hold the various properties
in our portfolio until such time as we decide that a sale or other disposition is appropriate. Our ability to dispose of properties on
advantageous terms depends on factors beyond our control, including competition from other sellers and the availability of attractive
financing for potential buyers of our properties. We cannot predict the various market conditions affecting the industrial real estate
market which will exist at any particular time in the future. Due to the uncertainty of market conditions which may affect the future
disposition of our properties, we cannot assure you that we will be able to sell our properties at a profit in the future, which could
adversely affect our financial condition, results of operations, cash flows and our ability to pay distributions on, and the value of,
our stock.
Furthermore, we may be required
to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds
available to correct such defects or to make such improvements.
Joint venture investments could be adversely affected
by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our
co-venturers.
We have co-invested and
may co-invest in the future with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests
in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity. In such event, we have
not been and would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture
or other entity. Investments in partnerships, joint ventures or other entities may, under certain circumstances, involve risks not present
were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their
share of required capital contributions. Partners or co-venturers may have economic or other business interests or goals which are inconsistent
with our business interests or goals and may be in a position to take actions contrary to our policies or objectives, and they may have
competing interests in our markets that could create conflict of interest issues. Such investments may also have the potential risk of
impasses on decisions, such as a sale, because neither we nor the partner or co-venturers would have full control over the partnership
or joint venture. In addition, prior consent of our joint venture partners may be required for a sale or transfer to a third party of
our interests in the joint venture, which would restrict our ability to dispose of our interest in the joint venture. If we become a
limited partner or non-managing member in any partnership or limited liability company and such entity takes or expects to take actions
that could jeopardize our company’s status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such
entity. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and
prevent our officers and/or directors from focusing their time and effort on our business. Consequently, actions by or disputes with
partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. In addition,
we may in certain circumstances be liable for the actions of our third-party partners or co-venturers. Our joint ventures may be subject
to debt and, in the current volatile credit market, the refinancing of such debt may require equity capital calls.
If we fail to implement and maintain an effective
system of integrated internal controls, we may not be able to accurately report our financial results.
We are required to implement substantial
control systems and procedures in order to maintain our qualification as a REIT, satisfy our periodic and current reporting requirements
under applicable SEC regulations and comply with the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010, or Dodd Frank, and the NYSE or other relevant listing standards. As a result, we will incur significant legal, accounting and
other expenses, and our management and other personnel will need to devote a substantial amount of time to comply with these rules and
regulations and establish the corporate infrastructure and control systems and procedures demanded of a publicly traded REIT. These costs
and time commitments could be substantially more than we currently expect.
Matters
impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us
to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, and result
in a breach of the covenants under the agreements governing any of our financing arrangements. There could also be a negative reaction
in the financial markets due to a loss of investor confidence in the Company and the reliability of our financial statements. Confidence
in the reliability of our financial statements could also suffer if we or our independent registered public accounting firm were to report
a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline
in the market price of our stock.
Our growth depends on external sources of capital
that are outside of our control and may not be available to us on commercially reasonable terms or at all.
In order to maintain our qualification
as a REIT, we are required under the Code, among other things, to distribute annually at least 90% of our REIT taxable income, determined
without regard to the dividends paid deduction and excluding any net capital gain. In addition, we will be subject to income tax at regular
corporate rates to the extent that we distribute less than 100% of our REIT taxable income, including any net capital gains. Because of
these distribution requirements, we may not be able to fund future capital needs, including any necessary acquisition financing, from
operating cash flow. Consequently, we intend to rely on third-party sources to fund our capital needs. We may not be able to obtain such
financing on favorable terms or at all and any additional debt we incur will increase our leverage and likelihood of default. Our access
to third-party sources of capital depends, in part, on:
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general market conditions; |
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the market’s perception of our growth potential; |
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our current debt levels; |
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our current and expected future earnings; |
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our cash flow and cash distributions; and |
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the market price per share of our common stock. |
In recent years, the capital markets
have been subject to significant disruptions. If we cannot obtain capital from third-party sources, we may not be able to acquire or develop
properties when strategic opportunities exist, meet the capital and operating needs of our portfolio, satisfy our debt service obligations
or make the cash distributions to our stockholders necessary to maintain our qualification as a REIT.
Risks Related to Our Indebtedness
We have significant indebtedness outstanding,
which may expose us to the risk of default under our debt obligations.
Our total consolidated indebtedness
as of December 31, 2021 consists of approximately $692.2 million of indebtedness. We may incur significant additional debt to finance
future acquisition and development activities.
Payments of principal and interest
on borrowings may leave us with insufficient cash resources to operate our properties or to pay the dividends currently contemplated or
necessary to maintain our REIT qualification. Our level of debt and the limitations imposed on us by our debt agreements could have significant
adverse consequences, including the following:
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our cash flow may be insufficient to meet our required principal and interest payments; |
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we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to meet operational needs; |
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we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness; |
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we may be forced to dispose of one or more of our properties, possibly on unfavorable terms or in violation of certain covenants to which we may be subject; |
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we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations; and |
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our default under any loan with cross default provisions could result in a default on other indebtedness. |
If any one of these events were
to occur, our financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading
price of, our stock could be materially adversely affected. Furthermore, foreclosures could create taxable income without accompanying
cash proceeds, which could hinder our ability to meet the REIT distribution requirements imposed by the Internal Revenue Code of 1986,
as amended, or the Code.
High mortgage rates and/or unavailability of mortgage
debt may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our
net income and the amount of cash distributions we can make.
If mortgage debt is unavailable
to us in the future at reasonable rates, we may not be able to finance the purchase of additional properties or refinance our properties
on favorable terms or at all. If interest rates are higher when we refinance our properties, our income could be reduced. If any of these
events occur, our cash flow could be reduced. This, in turn, could reduce cash available for distribution to our stockholders and materially
and adversely affect our ability to raise more capital by issuing additional equity securities or by borrowing more money.
Our existing loan agreements, and some of our
future financing arrangements are expected to, involve balloon payment obligations, which may materially and adversely affect our financial
condition and our ability to make distributions.
Our existing loan agreements require,
and some of our future financing arrangements may, require us to make a lump-sum or “balloon” payment at maturity. Our ability
to satisfy a balloon payment at maturity is uncertain and may depend upon our ability to obtain additional financing or our ability to
sell property securing such financing. At the time the balloon payment is due, we may or may not be able to refinance the existing financing
on terms as favorable as the original loan or sell the property at a price sufficient to satisfy the balloon payment. The effect of a
refinancing or sale could affect the rate of return to stockholders and the projected time of disposition of our assets. In addition,
payments of principal and interest made to service our debts may leave us with insufficient cash to pay the distributions that we are
required to pay to maintain our qualification as a REIT.
Our existing loan agreements contain, and future
indebtedness we incur may contain, various covenants, and the failure to comply with those covenants could materially and adversely affect
our financial condition, results of operations, cash flows and ability to pay distributions on, and the per share trading price of, our
stock.
Our existing loan agreements contain,
and any future indebtedness we incur, including debt assumed pursuant to property acquisitions, may contain, certain covenants, which,
among other things, restrict our activities, including, as applicable, our ability to sell the underlying property without the consent
of the holder of such indebtedness, to repay or defease such indebtedness or to engage in mergers or consolidations that result in a change
in control of our company. We may also be subject to financial and operating covenants. Failure to comply with any of these covenants
would likely result in a default under the applicable indebtedness that would permit the acceleration of amounts due thereunder and under
other indebtedness and foreclosure of properties, if any, serving as collateral therefor.
Certain loan agreements are secured by various
properties within our portfolio, so a default under any of these loan documents could result in a loss of the secured properties.
Certain loan agreements are secured
by a first lien mortgage on various properties within our portfolio. A default under certain of the loan agreements could result in the
foreclosure on all, or a material portion, of the properties within our portfolio, which could leave us with insufficient cash to make
debt service payments under our loan agreements and to make distributions to our stockholders.
Our existing loan agreements restrict our ability
to engage in some business activities, which could put us at a competitive disadvantage and materially and adversely affect our results
of operations and financial condition.
Our existing loan agreements contain
customary negative covenants and other financial and operating covenants that, among other things:
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restrict our ability to incur additional indebtedness; |
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restrict our ability to dispose of properties; |
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restrict our ability to make certain investments; |
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restrict our ability to enter into material agreements; |
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limit our ability to make capital expenditures; |
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require us to maintain a specified amount of capital as guarantor; |
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restrict our ability to merge with another company; |
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restrict our ability to make distributions to stockholders; and |
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require us to maintain financial coverage and leverage ratios. |
These limitations could restrict
our ability to engage in some business activities, which could materially and adversely affect our financial condition, results of operations,
cash flows and our ability to pay distributions on, and the per share trading price of, our stock. In addition, debt agreements we enter
into in the future may contain specific cross-default provisions with respect to specified other indebtedness, giving the lenders the
right to declare a default if we are in default under other loans in some circumstances.
Future mortgage and other secured debt obligations
expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject
to mortgage debt.
Incurring mortgage and other secured
debt obligations increases our risk of property losses because defaults on indebtedness secured by properties may result in foreclosure
actions initiated by lenders and ultimately our loss of the property securing any loans for which we are in default. Any foreclosure on
a mortgaged property or group of properties could adversely affect the overall value of our portfolio. For tax purposes, a foreclosure
on any of our properties that is subject to a nonrecourse mortgage loan would be treated as a sale of the property for a purchase price
equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds
our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds, which could
hinder our ability to meet the REIT distribution requirements imposed by the Code.
Changes in the method of determining LIBOR, or
the replacement of LIBOR with an alternative reference rate, may adversely affect interest expense related to outstanding debt.
We hold certain debt instruments
on which interest rates move in direct relation to LIBOR, depending on our selection of borrowing options. Governance and oversight bodies
have instituted rules and reforms directed at minimizing the risk of LIBOR manipulation, which may have occurred in the past and could
have an adverse impact on the level of the index.
In July 2017, the Financial Conduct
Authority (the authority that regulates LIBOR) announced it intends to phase out LIBOR by June 30, 2023. The Alternative
Reference Rates Committee ("ARRC") has proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that
represents best practice as the alternative to U.S. dollar LIBOR (“USD LIBOR”) for use in derivatives and other financial
contracts that are currently indexed to USD LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD LIBOR and organizations
are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to
USD LIBOR. Whether or not SOFR will attain market traction as a USD LIBOR replacement tool remains in question. As such, the future of
LIBOR at this time is uncertain. If LIBOR ceases to exist, the interest rates on our debt which is indexed to LIBOR will be determined
using a different successor rate, which may adversely affect interest expense and may result in interest obligations which are more than
or do not otherwise correlate over time with the payments that would have been made on such debt if USD LIBOR were available in its current
form. We are currently monitoring this activity and evaluating the related risks.
An increase in interest rates could adversely
impact our financial condition, results of operations and cash flows.
Our financial condition, results
of operations and cash flows could be significantly affected by changes in interest rates and actions taken by the Federal Reserve or
changes LIBOR or its replacement. Future increases in market interest rates would increase our interest expense under our unhedged variable
rate borrowings and would increase the costs of refinancing existing indebtedness or obtaining new debt. In addition, increases in market
interest rates may result in a decrease in the value of our real estate and a decrease in the market price of our common stock. Increases
in market interest rates may also adversely affect the securities markets generally, which could reduce the market price of our common
stock without regard to our operating performance. Accordingly, unfavorable changes to our borrowing costs and stock price could significantly
impact our ability to access new debt and equity capital going forward. At December 31, 2021, we had approximately $338 million in variable
rate debt outstanding. If we are unable to enter into hedge agreements with respect to, or otherwise refinance, this indebtedness with
acceptable terms, the ultimate impact of future interest rate increases could result in unanticipated reductions in our net operating
income.
Risks Related to the Real Estate Industry and the
Broader Economy
Our performance and value are subject to risks
associated with real estate assets and the real estate industry.
Our ability to pay expected dividends
to our stockholders depends on our ability to generate revenues in excess of expenses, scheduled principal payments on debt and capital
expenditure requirements. Events and conditions generally applicable to owners and operators of real property that are beyond our control
may decrease cash available for distribution and the value of our properties. These events include many of the risks set forth above under
“—Risks Related to Our Business and Operations,” as well as the following:
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local oversupply or reduction in demand for industrial space; |
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adverse changes in financial conditions of buyers, sellers and tenants of properties; |
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vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options, and the need to periodically repair, renovate and re-lease space; |
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increased operating costs, including insurance premiums, utilities, real estate taxes and state and local taxes; |
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civil unrest, acts of war, terrorist attacks and natural disasters, including earthquakes, floods and wildfires, which may result in uninsured or underinsured losses; |
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decreases in the underlying value of our real estate; |
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changing submarket demographics; and |
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changing traffic patterns. |
In addition, periods of economic
downturn or recession, rising interest rates or declining demand for real estate, or the public perception that any of these events may
occur, could result in a general decline in rents or an increased incidence of defaults under existing leases, which would adversely affect
our financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading price of,
our stock.
The ongoing COVID-19 pandemic or any unforeseen
factor that emerges out of that pandemic or otherwise could materially adversely affect our results of operations and financial results.
The COVID-19 pandemic has severely
impacted global economic activity, caused significant volatility in and negative pressure on the financial markets and has had adverse
effects on almost every industry, directly or indirectly. As a result of the ongoing COVID-19 pandemic, public health officials continue
to recommend and mandate precautions to mitigate the spread of the virus, including prohibitions on congregating in heavily populated
areas and shelter-in-place order or similar measures. A number of our tenants have been impacted by such measures as they either
temporarily closed down their operations or are scaling back activity in order to comply, causing a strain on their ability to generate
revenue. As such, our future operations may be adversely impacted by our tenants’ inability to generate revenue and pay their
rent due as a result of the shut-downs and other actions taken to contain or treat
the impact of COVID-19. The extent of such impact
will depend on future developments, which are highly uncertain and cannot be predicted.
The COVID-19 pandemic or any future
pandemic, epidemic or outbreak of infectious disease could have material and adverse effects on our business, financial condition, operating
results and cash flows due to, among other factors, the following:
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governmental authorities requiring the closure of offices or other businesses or instituting quarantines of personnel as a result of, or in order to avoid, exposure to a contagious disease; |
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disruption in supply and delivery chains; |
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a general decline in business activity and demand for real estate; |
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the repurposing or redevelopment of properties made obsolete by the pandemic; |
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reduced economic activity, general economic decline or recession, which may impact our tenants’ businesses, financial condition and liquidity and may cause one or more of our tenants to be unable to make rent payments to us timely, or at all, or to otherwise seek modifications of their lease obligations; |
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difficulty accessing debt and equity capital on attractive terms, or at all, and a significant disruption and instability in global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital to fund business operations or address maturing liabilities on a timely basis; and |
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the potential negative impact on the health of our personnel, particularly if a significant number of our employees are impacted, which may result in a deterioration of our ability to maintain business continuity during a disruption. |
While the COVID-19 pandemic did
not have a significant negative impact on our operations for the year ended December 31, 2021, a number of tenants requested rental deferral
or rent abatement as a result of the pandemic. In response to such requests, during the year ended we entered into a limited number of
rent deferrals, representing approximately 0.04% of our annualized base rent for the fiscal year.
Additional unforeseen factors may
emerge from time-to-time, and we cannot predict which factors will arise or their ultimate impact on our operations or the extent to which
any such factor, or combination of factors, may cause actual results to differ materially from anticipated results. Any further
downward changes in the economy, whether local, national or global, resulting from COVID-19 or some other unforeseen event, could materially
adversely affect the value of our properties and our financial condition and results of operations.
Illiquidity of real estate investments could significantly
impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
The real estate investments made,
and to be made, by us are relatively difficult to sell quickly. As a result, our ability to promptly sell one or more properties in our
portfolio in response to changing economic, financial and investment conditions is limited. Return of capital and realization of gains,
if any, from an investment generally will occur upon disposition or refinancing of the underlying property. We may be unable to realize
our investment objectives by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise
be unable to complete any exit strategy. Our ability to dispose of one or more properties within a specific time period is subject to
the possible weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of
prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies
of jurisdictions in which the property is located.
In addition, the Code imposes restrictions
on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the
tax laws applicable to REITs effectively require that we hold our properties for investment, rather than primarily for sale in the ordinary
course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interest. Therefore,
we may not be able to vary our portfolio in response to economic or other conditions promptly or on favorable terms, which may adversely
affect our financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading price
of, our stock.
Any real estate development and redevelopment
activities are subject to risks particular to development and redevelopment.
We may engage in development and
redevelopment activities with respect to certain properties. To the extent that we do so, we will be subject to the following risks associated
with such development and redevelopment activities:
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unsuccessful development or redevelopment opportunities could result in direct expenses to us; |
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construction or redevelopment costs of a project may exceed original estimates, possibly making the project less profitable than originally estimated, or unprofitable; |
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time required to complete the construction or redevelopment of a project or to lease up the completed project may be greater than originally anticipated, thereby adversely affecting our cash flow and liquidity; |
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contractor and subcontractor disputes, strikes, labor disputes or supply disruptions; |
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failure to achieve expected occupancy and/or rent levels within the projected time frame, if at all; |
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delays with respect to obtaining or the inability to obtain necessary zoning, occupancy, land use and other governmental permits, and changes in zoning and land use laws; |
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occupancy rates and rents of a completed project may not be sufficient to make the project profitable; |
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our ability to dispose of properties developed or redeveloped with the intent to sell could be impacted by the ability of prospective buyers to obtain financing given the current state of the credit markets; and |
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the availability and pricing of financing to fund our development activities on favorable terms or at all. |
These risks could result in substantial
unanticipated delays or expenses and, under certain circumstances, could prevent completion of development or redevelopment activities
once undertaken, any of which could have an adverse effect on our financial condition, results of operations, cash flows and our ability
to pay distributions on, and the per share trading price of, our stock.
Declining real estate valuations and impairment
charges could materially adversely affect our financial condition, results of operations, cash flows and ability to pay distributions
on, and the per share trading price of, our stock.
We intend to review the carrying
value of our properties when circumstances, such as adverse market conditions, indicate a potential impairment may exist. We intend to
base our review on an estimate of the future cash flows (excluding interest charges) expected to result from the property’s use
and eventual disposition on an undiscounted basis. We intend to consider factors such as future operating income, trends and prospects,
as well as the effects of leasing demand, competition and other factors. If our evaluation indicates that we may be unable to recover
the carrying value of a real estate investment, an impairment loss will be recorded to the extent that the carrying value exceeds the
estimated fair value of the property.
Impairment losses have a direct
impact on our operating results because recording an impairment loss results in an immediate negative adjustment to our operating results.
The evaluation of anticipated cash flows is highly subjective and is based in part on assumptions regarding future occupancy, rental rates
and capital requirements that could differ materially from actual results in future periods. A worsening real estate market may cause
us to reevaluate the assumptions used in our impairment analysis. Impairment charges could materially adversely affect our financial condition,
results of operations, cash flows and ability to pay distributions on, and the per share trading price of, our stock.
Adverse economic conditions and the dislocation
in the credit markets could materially adversely affect our financial condition, results of operations, cash flows and ability to pay
distributions on, and the per share trading price of, our stock.
Ongoing challenging economic conditions
have negatively impacted the lending and capital markets, particularly for real estate. The capital markets have experienced significant
adverse conditions in recent years, including a substantial reduction in the availability of, and access to, capital. The risk premium
demanded by lenders has increased markedly, as they are demanding greater compensation for risk, and underwriting standards have been
tightened. In addition, failures and consolidations of certain financial institutions have decreased the number of potential lenders,
resulting in reduced lending sources available to the market. These conditions may limit the amount of indebtedness we are able to obtain
and our ability to refinance our indebtedness and may impede our ability to develop new properties and to replace construction financing
with permanent financing, which could result in our having to sell properties at inopportune times and on unfavorable terms. If these
conditions continue, our financial condition, results of operations, cash flows and ability to pay distributions on, and the per share
trading price of, our stock could be materially adversely affected.
The lack of availability of debt
financing may require us to rely more heavily on additional equity issuances, which may be dilutive to our current stockholders, or on
less efficient forms of debt financing. Additionally, the limited amount of financing currently available may reduce the value of our
properties and limit our ability to borrow against such properties, which could materially adversely affect our financial condition, results
of operations, cash flows and ability to pay distributions on, and the per share trading price of, our stock.
Acquired properties may be located in new markets
where we may face risks associated with investing in an unfamiliar market.
We have acquired, and may continue
to acquire, properties in markets that are new to us. When we acquire properties located in new markets, we may face risks associated
with a lack of market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity
with local government and permitting procedures.
We may choose not to distribute the proceeds of
any sales of real estate to our stockholders, which may reduce the amount of our cash distributions to stockholders.
We may choose not to distribute
any proceeds from the sale of real estate investments to our stockholders. Instead, we may elect to use such proceeds to:
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acquire additional real estate investments; |
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repay debt; |
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buy out interests of any partners in any joint venture in which we are a party; |
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create working capital reserves; or |
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make repairs, maintenance, tenant improvements or other capital improvements or expenditures on our other properties. |
Any decision to retain or invest
the proceeds of any sales, rather than distribute such proceeds to our stockholders may reduce the amount of cash distributions you receive
on your stock.
Uninsured losses relating to real property may
adversely affect your returns.
We attempt to ensure that all of
our properties are adequately insured to cover casualty losses. However, there are certain losses, including losses from floods, earthquakes,
wildfires, acts of war, acts of terrorism or riots, that are not generally insured against or that are not generally fully insured against
because it is not deemed economically feasible or prudent to do so. In addition, changes in the cost or availability of insurance could
expose us to uninsured casualty losses. In the event that any of our properties incurs a casualty loss that is not fully covered by insurance,
the value of our assets will be reduced by the amount of any such uninsured loss, and we could experience a significant loss of capital
invested and potential revenue in these properties and could potentially remain obligated under any recourse debt associated with the
property. Moreover, we, as the general partner of our operating partnership, generally will be liable for all of our operating partnership’s
unsatisfied recourse obligations, including any obligations incurred by our operating partnership as the general partner of joint ventures.
Any such losses could adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on,
and the per share trading price of, our stock. In addition, we may have no source of funding to repair or reconstruct the damaged property,
and we cannot assure you that any such sources of funding will be available to us for such purposes in the future. We evaluate our insurance
coverage annually in light of current industry practice through an analysis prepared by outside consultants.
Our property taxes could increase due to property
tax rate changes or reassessment, which could adversely impact our cash flows.
Even if we maintain our qualification
as a REIT for federal income tax purposes, we will be required to pay some state and local taxes on our properties. The real property
taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities.
The amount of property taxes we pay in the future may increase substantially from what we have paid in the past. If the property taxes
we pay increase, our cash flow would be adversely impacted to the extent that we are not reimbursed by tenants for those taxes, and our
ability to pay any expected dividends to our stockholders could be adversely affected.
Existing conditions at some of our properties
may expose us to liability related to environmental matters.
Independent environmental consultants
conducted a Phase I or similar environmental site assessment of our properties at the time of their acquisition or in connection with
subsequent financings. Such Phase I or similar environmental site assessments are limited in scope and may not include or identify all
potential environmental liabilities or risks associated with the relevant properties. We have not obtained and do not intend to obtain
new or updated Phase I or similar environmental site assessments, which may expose us to liability related to unknown or unanticipated
environmental matters. Unless required by applicable laws or regulations, we may not further investigate, remedy or ameliorate the liabilities
disclosed in the existing Phase I or similar environmental site assessments and this failure may expose us to liability in the future.
We could incur significant costs related to government
regulation and litigation over environmental matters.
Under various federal, state and
local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for
costs and damages resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in, under
or migrating to or from such property, including costs to investigate, clean up such contamination and liability for harm to natural resources.
Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such
contamination, and the liability may be joint and several. These liabilities could be substantial and the cost of any required remediation,
removal, fines or other costs could exceed the value of the property and/or our aggregate assets. In addition, the presence of contamination
or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or personal,
property, or natural resources damage or materially adversely affect our ability to sell, lease or develop our properties or to borrow
using the properties as collateral. In addition, environmental laws may create liens on contaminated sites in favor of the government
for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on our properties, environmental
laws may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require
substantial expenditures.
Some of the properties in our portfolio
have been or may be impacted by contamination arising from current or prior uses of the property, or adjacent properties, for commercial
or industrial purposes. Such contamination may arise from spills of petroleum or hazardous substances or releases from tanks used to store
such materials.
From time to time, we may acquire
properties with known adverse environmental conditions where we believe that the environmental liabilities associated with these conditions
are quantifiable and that the acquisition will yield a superior risk-adjusted return. We perform a Phase I environmental site
assessment at any property we are considering acquiring. In connection with certain financing transactions our lenders have commissioned
independent environmental consultants to conduct Phase I environmental site assessments on the properties in our portfolio. However,
we have not always received copies of the Phase I environmental site assessment reports commissioned by our lenders and, as such, may
not be aware of all potential or existing environmental contamination liabilities at the properties in our portfolio. In addition, Phase
I environmental site assessments are limited in scope and do not involve sampling of soil, soil vapor, or groundwater, and these assessments
may not include or identify all potential environmental liabilities or risks associated with the property. Even where subsurface investigation
is performed, it can be very difficult to ascertain the full extent of environmental contamination or the costs that are likely to flow
from such contamination. We cannot assure you that the Phase I environmental site assessment or other environmental studies identified
all potential environmental liabilities, or that we will not face significant remediation costs or other environmental contamination
that makes it difficult to sell any affected properties. Also, we have not always implemented actions recommended by these assessments,
and recommended investigation and remediation of known or suspected contamination has not always been performed. As a result, we could
potentially incur material liability for these issues, which could adversely impact our financial condition, results of operations, cash
flows and ability to pay distributions on, and the per share trading price of, our stock.
Environmental laws also govern
the presence, maintenance and removal of asbestos-containing building materials, or ACBM, and may impose fines and penalties for failure
to comply with these requirements. Such laws require that owners or operators of buildings containing ACBM (and employers in such buildings)
properly manage and maintain the asbestos, adequately notify or train those who may come into contact with asbestos, and undertake special
precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building. In addition,
the presence of ACBM in our properties may expose us to third-party liability (e.g., liability for personal injury associated with
exposure to asbestos).
In addition, the properties in
our portfolio also are subject to various federal, state and local environmental and health and safety requirements, such as state and
local fire requirements. Moreover, some of our tenants routinely handle and use hazardous or regulated substances and wastes as part of
their operations at our properties, which are subject to regulation. Such environmental and health and safety laws and regulations could
subject us or our tenants to liability resulting from these activities. Environmental liabilities could affect a tenant’s ability
to make rental payments to us. In addition, changes in laws could increase the potential liability for noncompliance. This may result
in significant unanticipated expenditures or may otherwise materially and adversely affect our operations, or those of our tenants, which
could in turn have a material adverse effect on us.
We cannot assure you that costs
or liabilities incurred as a result of environmental issues will not affect our ability to make distributions to you or that such costs
or other remedial measures will not have an adverse effect on our financial condition, results of operations, cash flows and our ability
to pay distributions on, and the per share trading price of, our stock. If we do incur material environmental liabilities in the future,
we may face significant remediation costs, and we may find it difficult to sell any affected properties.
Our properties may contain or develop harmful
mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
When excessive moisture accumulates
in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed
over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation,
chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor
exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms,
including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties
could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected
property or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us
to liability from our tenants, employees of our tenants or others if property damage or personal injury is alleged to have occurred.
We may incur significant costs complying with
various federal, state and local laws, regulations and covenants that are applicable to our properties.
The properties in our portfolio
are subject to various covenants and federal, state and local laws and regulatory requirements, including permitting and licensing requirements.
Local regulations, including municipal or local ordinances and zoning restrictions may restrict our use of our properties and may require
us to obtain approval from local officials or restrict our use of our properties and may require us to obtain approval from local officials
of community standards organizations at any time with respect to our properties, including prior to acquiring a property or when undertaking
renovations of any of our portfolio. Among other things, these restrictions may relate to fire and safety, seismic or hazardous material
abatement requirements. There can be no assurance that existing laws and regulatory policies will not adversely affect us or the timing
or cost of any future acquisitions or renovations, or that additional regulations will not be adopted that increase such delays or result
in additional costs. Our growth strategy may be adversely affected by our ability to obtain permits, licenses and zoning relief. Our failure
to obtain such permits, licenses and zoning relief or to comply with applicable laws could have an adverse effect on our financial condition,
results of operations, cash flows and our ability to pay distributions on, and the per share trading price of, our stock.
In addition, federal and state
laws and regulations, including laws such as the Americans with Disabilities Act, or ADA, and the Fair Housing Amendment Act of 1988,
or FHAA, impose further restrictions on our properties and operations. Under the ADA and the FHAA, all public accommodations must meet
federal requirements related to access and use by disabled persons. Some of our properties may currently be in non-compliance with the
ADA or the FHAA. If one or more of the properties in our portfolio is not in compliance with the ADA, the FHAA or any other regulatory
requirements, we may be required to incur additional costs to bring the property into compliance, including the removal of access barriers,
and we might incur governmental fines or the award of damages to private litigants. In addition, we do not know whether existing requirements
will change or whether future requirements will require us to make significant unanticipated expenditures that will adversely impact our
financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading price of, our
stock.
Risks Related to Our Organizational Structure
Our success depends on key personnel whose continued
service is not guaranteed, and the departure of one or more of our key personnel could adversely affect our ability to manage our business
and to implement our growth strategies or could create a negative perception in the capital markets.
Our continued success and our ability
to manage anticipated future growth depend, in large part, upon the efforts of key personnel, particularly Mr. Jeffrey E. Witherell, our
Chief Executive Officer, and Mr. Pendleton P. White, Jr., our President and Chief Investment Officer, who have extensive market knowledge
and relationships and exercise substantial influence over our operational, financing, acquisition and disposition activity.
Our ability to retain our senior
management, particularly Messrs. Witherell and White, or to attract suitable replacements should any member of our senior management leave,
is dependent on the competitive nature of the employment market. We have not obtained and do not expect to obtain key man life insurance
on any of our key personnel. The loss of services of one or more members of our senior management team, or our inability to attract and
retain highly qualified personnel, could adversely affect our business, diminish our investment opportunities and weaken our relationships
with lenders, business partners, existing and prospective tenants and industry participants. Further, the loss of a member of our senior
management team could be negatively perceived in the capital markets. Any of these developments could adversely affect our financial condition,
results of operations, cash flows and our ability to pay distributions on, and the value of, our stock.
Conflicts of interest may exist or could arise
in the future between the interests of our stockholders and the interests of holders of OP units, which may impede business decisions
that could benefit our stockholders.
Conflicts of interest may exist
or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our operating partnership
or any partner thereof, on the other. Our directors and officers have duties to our company under Maryland law in connection with their
management of our company. At the same time, we, as the general partner of our operating partnership, have fiduciary duties and obligations
to our operating partnership and its limited partners under Delaware law and the partnership agreement of our operating partnership in
connection with the management of our operating partnership. Our fiduciary duties and obligations as the general partner of our operating
partnership may come into conflict with the duties of our directors and officers to our company.
Under Delaware law, a general partner
of a Delaware limited partnership has fiduciary duties of loyalty and care to the partnership and its partners and must discharge its
duties and exercise its rights as general partner under the partnership agreement or Delaware law consistent with the obligation of good
faith and fair dealing. The partnership agreement provides that, in the event of a conflict between the interests of our operating partnership
or any partner, on the one hand, and the separate interests of our company or our stockholders, on the other hand, we, in our capacity
as the general partner of our operating partnership, may give priority to the separate interests of our company or our stockholders (including
with respect to tax consequences to limited partners, assignees or our stockholders), and, in the event of such a conflict, any action
or failure to act on our part or on the part of our directors that gives priority to the separate interests of our company or our stockholders
that does not result in a violation of the contract rights of the limited partners of our operating partnership under its partnership
agreement does not violate the duty of loyalty or any other duty that we, in our capacity as the general partner of our operating partnership,
owe to our operating partnership and its partners or violate the obligation of good faith and fair dealing.
Additionally, the partnership agreement
provides that we generally will not be liable to our operating partnership or any partner for any action or omission taken in our capacity
as general partner, for the debts or liabilities of our operating partnership or for the obligations of the operating partnership under
the partnership agreement, except for liability for our fraud, willful misconduct or gross negligence, pursuant to any express indemnity
we may give to our operating partnership or in connection with a redemption of our OP units. Our operating partnership must indemnify
us, our directors and officers, officers of our operating partnership and our designees from and against any and all claims that relate
to the operations of our operating partnership, unless (1) an act or omission of the person was material to the matter giving rise to
the action and either was committed in bad faith or was the result of active and deliberate dishonesty, (2) the person actually received
an improper personal benefit in violation or breach of the partnership agreement or (3) in the case of a criminal proceeding, the indemnified
person had reasonable cause to believe that the act or omission was unlawful. Our operating partnership must also pay or reimburse the
reasonable expenses of any such person in advance of a final disposition of the proceeding upon its receipt of a written affirmation of
the person’s good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking
to repay any amounts paid or advanced if it is ultimately determined that the person did not meet the standard of conduct for indemnification.
Our operating partnership is not required to indemnify or advance funds to any person with respect to any action initiated by the person
seeking indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification
under the partnership agreement) or if the person is found to be liable to our operating partnership on any portion of any claim in the
action.
Our charter and bylaws, the partnership
agreement of our operating partnership and Maryland law contain provisions that may delay, defer or prevent a change of control transaction.
Our charter contains certain ownership limits
with respect to our stock.
Our charter authorizes our board
of directors to take such actions as it determines are advisable, in its sole and absolute discretion, to preserve our qualification as
a REIT. Our charter also prohibits the actual, beneficial or constructive ownership by any person of more than 9.8% in value or number
of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock, in each case excluding
any shares that are not treated as outstanding for federal income tax purposes. Our board of directors, in its sole and absolute discretion,
may exempt a person, prospectively or retroactively, from these ownership limits if certain conditions are satisfied. However, our bylaws
provide that the board of directors must waive the ownership limit with respect to a particular person if it: (1) determines that such
person’s ownership will not cause any individual’s beneficial ownership of shares of our stock to violate the ownership limit
and that any exemption from the ownership limit will not jeopardize our status as a REIT; and (2) determines that such stockholder does
not and will not own, actually or constructively, an interest in a tenant of ours (or a tenant of any entity whose operations are attributed
in whole or in part to us) that would cause us to own, actually or constructively, more than a 9.8% interest (as set forth in Section
856(d)(2)(B) of the Code) in such tenant or that any such ownership would not cause us to fail to qualify as a REIT under the Code. The
restrictions on ownership and transfer of our stock may:
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discourage a tender offer or other transactions or a change in management or of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interests; or |
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result in the transfer of shares acquired in excess of the restrictions to a trust for the benefit of a charitable beneficiary and, as a result, the forfeiture by the acquirer of the benefits of owning the additional shares. |
We could increase the number of authorized shares of stock, classify and reclassify unissued stock and issue stock without stockholder approval.
Our board of directors, without stockholder
approval, has the power under our charter to amend our charter to increase the aggregate number of shares of stock or the number of shares
of stock of any class or series that we are authorized to issue, to authorize us to issue authorized but unissued shares of our common
stock or preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock into one or more classes
or series of stock and set the terms of such newly classified or reclassified shares. As a result, we may issue additional classes or
series of preferred stock with preferences, powers and rights, voting or otherwise, that are senior to, or otherwise conflict with, the
rights of holders of our common stock and could, depending on the terms of such series, delay or prevent a transaction or change of control
that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their best interest. The holders
of our common stock bear the risk of our future offerings reducing the market price of our securities and diluting their proportionate
ownership.
The rights of the holders of our common stock
are limited by and subordinate to the rights of the holders of our Series A Preferred Stock and Series B Preferred Stock and these rights
may have a negative effect on the value of shares of our common stock.
The holders of shares of our 7.50%
Series A Cumulative Redeemable Preferred Stock, or the Series A Preferred Stock, and our Series B Convertible Redeemable Preferred Stock,
or the Series B Preferred Stock, have rights and preferences generally senior to those of the holders of our common stock. The existence
of these senior rights and preferences may have a negative impact on the value of shares of our common stock. These rights are more fully
set forth in the articles supplementary governing our Series A Preferred Stock and Series B Preferred Stock and include but are not limited
to: (i) the right to receive a liquidation preference, prior to any distribution of our assets to the holders of our common stock and
(ii) the right to cause us to redeem the shares of Series A Preferred Stock and Series B Preferred Stock under certain circumstances.
The holders of the shares of Series B Preferred Stock also have the right to covert those shares into shares of our common stock under
certain circumstances. In addition, the Series A Preferred Stock and the Series B Preferred Stock rank senior to our common stock with
respect to dividend payments, which may limit our ability to make distributions to holders of our common stock.
Certain provisions of Maryland law could inhibit
changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions
that could trigger rights to require us to redeem our shares of common stock.
Certain provisions of the MGCL may
have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances
that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing
market price of such shares, including:
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“business combination” provisions that, subject to certain exceptions, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period; and |
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“control share” provisions that provide that holders of “control shares” of our company (defined as shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise voting power in the election of directors within one of three increasing ranges) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of the voting power of issued and outstanding “control shares,” subject to certain exceptions) have no voting rights with respect to their control shares, except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares. |
As permitted by the MGCL, our bylaws
provide that we will not be subject to the control share provisions of the MGCL, and our board of directors has, by resolution, exempted
us from the business combination between us and any other person. In addition, the board resolution opting out of the business combination
provisions of the MGCL provides that any alteration or repeal of the resolution shall be valid only if approved, at a meeting duly called,
by the affirmative vote of a majority of votes cast by stockholders entitled to vote generally for directors, and our bylaws provide that
any such alteration or repeal of the resolution, or any amendment, alteration or repeal of the provision in our bylaws exempting from
the control share acquisition statute any and all acquisitions by any person of shares of our stock, will be valid only if approved, at
a meeting duly called, by the affirmative vote of a majority of votes cast by stockholders entitled to vote generally for directors.
Certain provisions of the MGCL permit
the board of directors of a Maryland corporation with at least three independent directors and a class of stock registered under the Exchange
Act without stockholder approval and regardless of what is currently provided in its charter or bylaws, to implement certain corporate
governance provisions, some of which (for example, a classified board) are not currently applicable to us. These provisions may have the
effect of limiting or precluding a third party from making an unsolicited acquisition proposal for our company or of delaying, deferring
or preventing a change in control under circumstances that otherwise could provide the holders of our stock with the opportunity to realize
a premium over the current market price.
Certain provisions in the partnership agreement
of our operating partnership may delay or prevent unsolicited acquisitions of us.
Provisions of the partnership agreement
of our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes of our control. These provisions
could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some
stockholders or limited partners might consider such proposals, if made, desirable. These provisions include, among others:
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redemption rights of qualifying parties; |
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a requirement that we may not be removed as the general partner of our operating partnership without our consent; |
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transfer restrictions on OP units; |
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our ability, as general partner, in some cases, to amend the partnership agreement and to cause our operating partnership to issue additional partnership interests with terms that could delay, defer or prevent a merger or other change of control of us or our operating partnership without the consent of our stockholders or the limited partners; and |
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the right of the limited partners to consent to certain transfers of our general partnership interest (whether by sale, disposition, statutory merger or consolidation, liquidation or otherwise). |
Our charter and bylaws, the partnership
agreement of our operating partnership and Maryland law also contain other provisions that may delay, defer or prevent a transaction or
a change of control that might involve a premium price for our common stock or that our stockholders otherwise believe to be in their
best interest.
Our board of directors may change our investment
and financing policies without stockholder approval, and we may become more highly leveraged, which may increase our risk of default under
our debt obligations.
Our investment and financing policies
are exclusively determined by our board of directors. Accordingly, our stockholders, do not control these policies. Further, our charter
and bylaws do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our board of directors may alter
or eliminate our current policy on borrowing at any time without stockholder approval. If this policy changed, we could become more highly
leveraged which could result in an increase in our debt service. Higher leverage also increases the risk of default on our obligations.
In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the
types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity
risk. Changes to our policies with regard to the foregoing could adversely affect our financial condition, results of operations, cash
flows and our ability to pay distributions on, and the per share trading price of, our stock.
Our rights and the rights of our stockholders
to take action against our directors and officers are limited.
As permitted by Maryland law, our
charter eliminates the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting
from:
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actual receipt of an improper benefit or profit in money, property or services; or |
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active and deliberate dishonesty by the director or officer that was established by a final judgment and was material to the cause of action adjudicated. |
In addition, our charter authorizes
us to obligate our company, and our bylaws require us, to indemnify our directors and officers for actions taken by them in those and
certain other capacities to the maximum extent permitted by Maryland law in effect from time to time. Generally, Maryland law permits
a Maryland corporation to indemnify its present and former directors and officers except in instances where the person seeking indemnification
acted in bad faith or with active and deliberate dishonesty, actually received an improper personal benefit in money, property or services
or, in the case of a criminal proceeding, had reasonable cause to believe that his or her actions were unlawful. Under Maryland law, a
Maryland corporation also may not indemnify a director or officer in a suit by or on behalf of the corporation in which the director or
officer was adjudged liable to the corporation or for a judgment of liability on the basis that a personal benefit was improperly received.
A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification,
even though the director or officer did not meet the prescribed standard of conduct; however, indemnification for an adverse judgment
in a suit by us or on our behalf, or for a judgment of liability on the basis that personal benefit was improperly received, is limited
to expenses. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise
exist. Accordingly, in the event that actions taken in good faith by any of our directors or officers impede the performance of our company,
your ability to recover damages from such director or officer will be limited.
We are a holding company with no direct operations
and, as such, we will rely on funds received from our operating partnership to pay liabilities, and the interests of our stockholders
will be structurally subordinated to all liabilities and obligations of our operating partnership and its subsidiaries.
We are a holding company and conduct substantially all
of our operations through our operating partnership. We do not have, apart from an interest in our operating partnership, any independent
operations. As a result, we will rely on distributions from our operating partnership to pay any distributions we might declare on our
stock. We will also rely on distributions from our operating partnership to meet any of our obligations, including any tax liability on
taxable income allocated to us from our operating partnership. In addition, because we are a holding company, your claims as stockholders
will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our operating
partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our
operating partnership and its subsidiaries will be available to satisfy the claims of our stockholders only after all of our and our operating
partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
Our operating partnership may issue
additional OP units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our operating
partnership and would have a dilutive effect on the amount of distributions made to us by our operating partnership and, therefore, the
amount of distributions we can make to our stockholders.
As of December 31, 2021, we have
490,299 OP units outstanding, which were issued in connection with the acquisition of certain properties in our portfolio, and we may
in the future, in connection with our acquisition of properties or otherwise, cause our operating partnership to issue additional OP units
to third parties. Such issuances would reduce our ownership percentage in our operating partnership and affect the amount of distributions
made to us by our operating partnership and, therefore, the amount of distributions we can make to our stockholders. Because you will
not directly own OP units, you will not have any voting rights with respect to any such issuances or other partnership level activities
of our operating partnership.
Risks Related to Our Status as a REIT
Failure to maintain our qualification as a REIT
would have significant adverse consequences to us and the per share trading price of our stock.
We have elected to be taxed as a
REIT for federal income tax purposes commencing with our taxable year ended December 31, 2012 and have operated in a manner that we believe
will allow us to maintain our qualification as a REIT. We cannot assure you that we will remain qualified as a REIT in the future. If
we lose our REIT qualification, we will face serious tax consequences that would substantially reduce the funds available for distribution
to you for each of the years involved because:
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we would not be allowed a deduction for distributions to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates; |
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we also could be subject to the federal alternative minimum tax (for taxable years prior to 2018) and possibly increased state and local taxes; and |
Any such corporate tax liability
could be substantial and would reduce our cash available for, among other things, our operations and distributions to stockholders. In
addition, if we fail to maintain our qualification as a REIT, we will not be required to make distributions to our stockholders. As a
result of all these factors, our failure to maintain our qualification as a REIT also could impair our ability to expand our business
and raise capital and could materially and adversely affect the per share trading price of our stock.
Qualification as a REIT involves
the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations.
The complexity of these provisions and of the applicable Treasury regulations that have been promulgated under the Code, or the Treasury
regulations, is greater in the case of a REIT that, like us, holds its assets through a partnership. The determination of various factual
matters and circumstances not entirely within our control may affect our ability to qualify as a REIT. In order to maintain our qualification
as a REIT, we must satisfy a number of requirements, including requirements regarding the ownership of our stock, requirements regarding
the composition of our assets and a requirement that at least 95% of our gross income in any year must be derived from qualifying sources,
such as “rents from real property.” Also, we must make distributions to stockholders aggregating annually at least 90% of
our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains and losses. In addition,
legislation, new regulations, administrative interpretations or court decisions may materially adversely affect our investors, our ability
to maintain our qualification as a REIT for federal income tax purposes or the desirability of an investment in a REIT relative to other
investments. Even if we maintain our qualification as a REIT for federal income tax purposes, we may be subject to some federal, state
and local income, property and excise taxes on our income or property and, in certain cases, a 100% penalty tax, in the event we sell
property as a dealer. In addition, any taxable REIT subsidiaries that we own will be subject to tax as regular C corporations in the jurisdictions
in which they operate.
If our operating partnership failed to qualify
as a partnership or a disregarded entity for federal income tax purposes, we would cease to qualify as a REIT and suffer other adverse
consequences.
We believe that our operating partnership
will be treated as a partnership or a disregarded entity for federal income tax purposes. During periods in which our operating partnership
is treated as a disregarded entity, our operating partnership will not be subject to federal income tax on its income. Rather, its income
will be attributed to us as the sole owner for federal income tax purposes of the operating partnership. During periods in which our operating
partnership has limited partners other than Plymouth OP Limited, LLC, the operating partnership will be treated as a partnership for federal
income tax purposes. As a partnership, our operating partnership would not be subject to federal income tax on its income. Instead, each
of its partners would be allocated, and may be required to pay tax with respect to, its share of our operating partnership’s income.
We cannot assure you, however, that the Internal Revenue Service, or the IRS, will not challenge the status of our operating partnership
or any other subsidiary partnership in which we own an interest as a partnership for federal income tax purposes, or that a court would
not sustain such a challenge. If the IRS were successful in treating our operating partnership or any such other subsidiary partnership
as an entity taxable as a corporation for federal income tax purposes, we would fail to meet the gross income tests and certain of the
asset tests applicable to REITs and, accordingly, we would likely cease to maintain our qualification as a REIT. Also, if our operating
partnership or any subsidiary partnerships were treated as entities taxable as corporations, such entities could become subject to federal
and state corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to
its partners, including us.
Our taxable REIT subsidiaries will be subject
to federal income tax, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our
taxable REIT subsidiaries are not conducted on arm’s length terms.
We own interests in one taxable REIT
subsidiary and may acquire interests in more taxable REIT subsidiaries in the future. A taxable REIT subsidiary is a corporation other
than a REIT in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a taxable
REIT subsidiary. If a taxable REIT subsidiary owns more than 35% of the total voting power or value of the outstanding securities of another
corporation, such other corporation will also be treated as a taxable REIT subsidiary. Other than some activities relating to lodging
and health care facilities, a taxable REIT subsidiary may generally engage in any business, including the provision of customary or non-customary
services to tenants of its parent REIT. A taxable REIT subsidiary is subject to federal income tax as a regular C corporation. In addition,
a 100% excise tax will be imposed on certain transactions between a taxable REIT subsidiary and its parent REIT that are not conducted
on an arm’s length basis.
To maintain our REIT qualification, we may be
forced to borrow funds during unfavorable market conditions.
To maintain our qualification as
a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, determined without regard
to the dividends paid deduction and excluding net capital gains, and we will be subject to regular corporate income taxes to the extent
that we distribute less than 100% of our REIT taxable income each year. In addition, we will be subject to a 4% nondeductible excise tax
on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95%
of our capital gain net income and 100% of our undistributed income from prior years. Accordingly, we may not be able to retain sufficient
cash flow from operations to meet our debt service requirements and repay our debt. Therefore, we may need to raise additional capital
for these purposes, and we cannot assure you that a sufficient amount of capital will be available to us on favorable terms, or at all,
when needed, which would materially adversely affect our financial condition, results of operations, cash flows and ability to pay distributions
on, and the per share trading price of, our stock. Further, in order to maintain our REIT qualification and avoid the payment of income
and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions
are not favorable for these borrowings. These borrowing needs could result from, among other things, differences in timing between the
actual receipt of cash and inclusion of income for federal income tax purposes, or the effect of non-deductible capital expenditures,
the creation of reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or
at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth
potential, our current debt levels, the per share trading price of our stock, and our current and potential future earnings. We cannot
assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail
our investment activities and/or to dispose of assets at inopportune times, and could adversely affect our financial condition, results
of operations, cash flows and our ability to pay distributions on, and the per share trading price of, our stock.
Dividends payable by REITs do not qualify for
the reduced tax rates available for some dividends.
The maximum tax rate applicable to
“qualified dividend income” payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable
by REITs, however, generally are not eligible for such reduced tax rates. Instead, our ordinary dividends generally are taxed at the higher
tax rates applicable to ordinary income, the current maximum rate of which is 37%. Although these rules do not adversely affect the taxation
of REITs or dividends payable by REITs, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively
less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of
the shares of REITs, including the per share trading price of our stock. However, for taxable years prior to 2026, individual stockholders
are generally allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations, which
would reduce the maximum marginal effective federal income tax rate for individuals on the receipt of such ordinary dividends to 29.6%.
The tax imposed on REITs engaging in “prohibited
transactions” may limit our ability to engage in transactions which would be treated as sales for federal income tax purposes.
A REIT’s net income from prohibited
transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other
than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold
any properties that would be characterized as held for sale to customers in the ordinary course of our business, unless a sale or disposition
qualifies under certain statutory safe harbors, such characterization is a factual determination, and no guarantee can be given that the
IRS would agree with our characterization of our properties or that we will always be able to make use of the available safe harbors.
Complying with REIT requirements may affect our profitability and may
force us to liquidate or forgo otherwise attractive investments.
To maintain our qualification as
a REIT, we must continually satisfy tests concerning, among other things, the nature and diversification of our assets, the sources of
our income and the amounts we distribute to our stockholders. We may be required to liquidate or forgo otherwise attractive investments
in order to satisfy the asset and income tests or to qualify under certain statutory relief provisions. We also may be required to make
distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. As a result, having
to comply with the distribution requirement could cause us to: (1) sell assets in adverse market conditions; (2) borrow on unfavorable
terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. Accordingly,
satisfying the REIT requirements could have an adverse effect on our business results, profitability and ability to execute our business
plan. Moreover, if we are compelled to liquidate our investments to meet any of these asset, income or distribution tests, or to repay
obligations to our lenders, we may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a
100% tax on any resulting gain if such sales constitute prohibited transactions.
Legislative, regulatory, or administrative changes
could adversely affect us or our security holders.
The tax laws or regulations governing
REITs or the administrative interpretations thereof may be amended at any time. We cannot predict if or when any new or amended law, regulation,
or administrative interpretation will be adopted, promulgated, or become effective, and any such change may apply retroactively. New or
amended laws, regulations, or administrative interpretations, could significantly and negatively affect our ability to qualify as a REIT
or the federal income consequences of such qualification or may reduce the relative attractiveness of an investment in a REIT compared
to other corporations not qualified as a REIT.
The Tax Cuts and Jobs Act made significant
changes to the U.S. federal tax rules related to the taxation of individuals and corporations, including REITs and their stockholders.
Additional technical corrections, amendments or administrative guidance with respect to the Tax Cut and Jobs Act may be issued at any
time, and we cannot predict the long-term impact of any future changes on REITs and their stockholders.
Other General Risks
We face risks associated with security breaches
through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology systems.
Our IT related systems are essential
to the operation of our business and our ability to perform day-to-day operations. We face risks associated with security breaches, whether
through cyber-attacks, computer viruses, attachments to e-mails, phishing schemes, persons inside our organization or persons with access
to systems inside of our organization, and other significant disruptions of our IT related systems. The risk of a cybersecurity breach
or disruption, particularly through a cyber-incident, including by computer hackers, foreign governments and cyber terrorists, has generally
increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
Although we employ a number of
measures to prevent, detect and mitigate these threats, which include password protection, frequent password change events, firewall detection
systems, frequent backups, and a redundant data system for core applications, even the most well protected information, networks, systems
and facilities remain potentially vulnerable because the techniques used in such attempted security breaches continuously evolve and generally
are not recognized until launched against a target, and in some cases are designed to not be detected and, in fact, may not be detected.
Moreover,
we also depend on third parties to provide key information technology services such as payroll administration, financial information,
lease and portfolio administration and electronic communications. The security measures employed by such third-party providers may prove
to be ineffective at preventing breaches of their systems. A security breach or other significant disruption involving our IT related
systems could disrupt the proper functioning of our systems; compromise the confidential information of our employees, tenants and vendors;
result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines; result in our inability to monitor
our compliance with the rules and regulations regarding our qualification as a REIT; result in the unauthorized access to, and destruction,
loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others,
which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; require significant
management attention and resources to remedy any damages that result; subject us to claims for breach of contract or failure to safeguard
personal information, damages, credits, penalties or termination of leases or other agreements; or damage our reputation among our tenants
and investors generally.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The following table provides certain
information with respect to the Company Portfolio, as of December 31, 2021.
Market |
|
Property (1) |
|
City |
|
State |
|
Property Type |
|
Year Built/
Renovated (2) |
|
Square
Footage |
|
Occupancy |
|
Annualized
Rent (3) |
|
Percent of
Total
Annualized
Rent (4) |
|
Annualized
Rent/
Square
Footage (5) |
|
Atlanta |
|
11236 Harland Drive |
|
Covington |
|
GA |
|
Warehouse/Distribution |
|
1988 |
|
32,361 |
|
100% |
|
$ |
131,062 |
|
0.1% |
|
$ |
4.05 |
|
|
|
1665 Dogwood Drive |
|
Conyers |
|
GA |
|
Warehouse/Distribution |
|
1973 |
|
198,000 |
|
100% |
|
$ |
663,300 |
|
0.6% |
|
$ |
3.35 |
|
|
|
1715 Dogwood Drive |
|
Conyers |
|
GA |
|
Warehouse/Distribution |
|
1973 |
|
100,000 |
|
100% |
|
$ |
233,431 |
|
0.2% |
|
$ |
2.33 |
|
|
|
32 Dart Road |
|
Newnan |
|
GA |
|
Warehouse/Light Manufacturing |
|
1988, 2014 |
|
194,800 |
|
100% |
|
$ |
564,924 |
|
0.5% |
|
$ |
2.90 |
|
|
|
40 Pinyon Road |
|
Covington |
|
GA |
|
Warehouse/Distribution |
|
1997 |
|
60,148 |
|
100% |
|
$ |
309,556 |
|
0.3% |
|
$ |
5.15 |
|
|
|
Peachtree City |
|
Peachtree City |
|
GA |
|
Small Bay Industrial |
|
1979-2013 |
|
295,693 |
|
93% |
|
$ |
1,510,728 |
|
1.2% |
|
$ |
5.52 |
|
|
|
Peachtree City II |
|
Peachtree City |
|
GA |
|
Small Bay Industrial |
|
1989 |
|
117,000 |
|
99% |
|
$ |
895,839 |
|
0.7% |
|
$ |
7.74 |
|
|
|
6739 New Calhoun Highway NE |
|
Shannon |
|
GA |
|
Warehouse/Distribution |
|
1981, 1996, 2017 |
|
320,000 |
|
100% |
|
$ |
966,400 |
|
0.8% |
|
$ |
3.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boston |
|
56 Milliken |
|
Portland |
|
ME |
|
Warehouse/Light Manufacturing |
|
1966, 1995,
2005, 2013 |
|
200,625 |
|
100% |
|
$ |
1,140,878 |
|
1.0% |
|
$ |
5.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago |
|
11351 W. 183rd |
|
Orland Park |
|
IL |
|
Warehouse/Distribution |
|
2000 |
|
18,768 |
|
100% |
|
$ |
201,756 |
|
0.2% |
|
$ |
10.75 |
|
|
|
11601 Central |
|
Alsip |
|
IL |
|
Warehouse/Distribution |
|
1970 |
|
260,000 |
|
100% |
|
$ |
699,400 |
|
0.6% |
|
$ |
2.69 |
|
|
|
11746 Austin Ave |
|
Alsip |
|
IL |
|
Warehouse/Light Manufacturing |
|
1970 |
|
162,714 |
|
100% |
|
$ |
765,614 |
|
0.6% |
|
$ |
4.71 |
|
|
|
13040 South Pulaski |
|
Alsip |
|
IL |
|
Warehouse/Distribution |
|
1976 |
|
388,403 |
|
100% |
|
$ |
1,899,614 |
|
1.6% |
|
$ |
4.89 |
|
|
|
1355 Holmes |
|
Elgin |
|
IL |
|
Warehouse/Light Manufacturing |
|
1976, 1998 |
|
82,456 |
|
100% |
|
$ |
428,734 |
|
0.4% |
|
$ |
5.20 |
|
|
|
13970 West Laurel |
|
Lake Forest |
|
IL |
|
Small Bay Industrial |
|
1990 |
|
70,196 |
|
100% |
|
$ |
339,249 |
|
0.3% |
|
$ |
4.83 |
|
|
|
144 Tower Drive |
|
Burr Ridge |
|
IL |
|
Warehouse/Distribution |
|
1971, 1988, 2015 |
|
73,785 |
|
97% |
|
$ |
470,262 |
|
0.4% |
|
$ |
6.56 |
|
|
|
1445 Greenleaf |
|
Elk Grove Village |
|
IL |
|
Warehouse/Light Manufacturing |
|
1968 |
|
150,000 |
|
84% |
|
$ |
709,703 |
|
0.6% |
|
$ |
5.63 |
|
|
|
1600 Fleetwood |
|
Elgin |
|
IL |
|
Warehouse/Distribution |
|
1968, 2016 |
|
247,000 |
|
100% |
|
$ |
1,368,700 |
|
1.1% |
|
$ |
5.54 |
|
|
|
16801 Exchange Avenue |
|
Lansing |
|
IL |
|
Warehouse/Light Manufacturing |
|
1987 |
|
455,886 |
|
100% |
|
$ |
1,632,807 |
|
1.4% |
|
$ |
3.58 |
|
|
|
1717 West Harvester Road |
|
Chicago |
|
IL |
|
Warehouse/Distribution |
|
1970 |
|
465,940 |
|
100% |
|
$ |
1,675,855 |
|
1.4% |
|
$ |
3.60 |
|
|
|
1750 South Lincoln |
|
Freeport |
|
IL |
|
Warehouse/Distribution |
|
2001 |
|
499,200 |
|
100% |
|
$ |
1,365,971 |
|
1.1% |
|
$ |
2.74 |
|
|
|
1796 Sherwin |
|
Des Plaines |
|
IL |
|
Warehouse/Distribution |
|
1964 |
|
98,879 |
|
100% |
|
$ |
608,485 |
|
0.5% |
|
$ |
6.15 |
|
|
|
1875 Holmes |
|
Elgin |
|
IL |
|
Warehouse/Light Manufacturing |
|
1989 |
|
134,415 |
|
100% |
|
$ |
616,188 |
|
0.5% |
|
$ |
4.58 |
|
|
|
189 Seeger Ave |
|
Elk Grove |
|
IL |
|
Small Bay Industrial |
|
1972 |
|
25,245 |
|
100% |
|
$ |
151,321 |
|
0.1% |
|
$ |
5.99 |
|
|
|
2401 Commerce |
|
Libertyville |
|
IL |
|
Small Bay Industrial |
|
1994, 2009 |
|
78,574 |
|
100% |
|
$ |
642,619 |
|
0.5% |
|
$ |
8.18 |
|
|
|
28160 North Keith |
|
Lake Forest |
|
IL |
|
Small Bay Industrial |
|
1989 |
|
77,924 |
|
100% |
|
$ |
376,597 |
|
0.3% |
|
$ |
4.83 |
|
|
|
3 West College |
|
Arlington Heights |
|
IL |
|
Warehouse/Light Manufacturing |
|
1978, 2016 |
|
33,263 |
|
100% |
|
$ |
230,000 |
|
0.2% |
|
$ |
6.91 |
|
|
|
350 Armory Drive |
|
South Holland |
|
IL |
|
Warehouse/Light Manufacturing |
|
1972 |
|
64,310 |
|
100% |
|
$ |
376,451 |
|
0.3% |
|
$ |
5.85 |
|
|
|
3841 Swanson |
|
Gurnee |
|
IL |
|
Small Bay Industrial |
|
1978 |
|
99,625 |
|
100% |
|
$ |
453,660 |
|
0.4% |
|
$ |
4.55 |
|
|
|
3940 Stern |
|
St. Charles |
|
IL |
|
Warehouse/Light Manufacturing |
|
1987 |
|
146,959 |
|
100% |
|
$ |
617,753 |
|
0.5% |
|
$ |
4.20 |
|
|
|
4491 Mayflower Road |
|
South Bend |
|
IN |
|
Warehouse/Distribution |
|
2000 |
|
77,000 |
|
100% |
|
$ |
277,200 |
|
0.2% |
|
$ |
3.60 |
|
|
|
4915 W 122nd |
|
Alsip |
|
IL |
|
Small Bay Industrial |
|
1972 |
|
153,368 |
|
100% |
|
$ |
895,025 |
|
0.7% |
|
$ |
5.84 |
|
|
|
4955 Ameritech Drive |
|
South Bend |
|
IN |
|
Warehouse/Distribution |
|
2004 |
|
228,000 |
|
100% |
|
$ |
1,027,500 |
|
0.9% |
|
$ |
4.51 |
|
|
|
5110 South 6th |
|
Milwaukee |
|
WI |
|
Warehouse/Distribution |
|
1972 |
|
58,500 |
|
100% |
|
$ |
210,893 |
|
0.2% |
|
$ |
3.61 |
|
|
|
5502 W. Brick Road |
|
South Bend |
|
IN |
|
Warehouse/Distribution |
|
1998 |
|
101,450 |
|
100% |
|
$ |
346,959 |
|
0.2% |
|
$ |
3.42 |
|
|
|
5681 Cleveland Road |
|
South Bend |
|
IN |
|
Warehouse/Distribution |
|
1994 |
|
62,550 |
|
100% |
|
$ |
213,921 |
|
0.2% |
|
$ |
3.42 |
|
|
|
6000 West 73rd |
|
Bedford Park |
|
IL |
|
Warehouse/Distribution |
|
1974 |
|
148,091 |
|
100% |
|
$ |
598,041 |
|
0.5% |
|
$ |
4.04 |
|
|
|
6035 West Gross Point Road |
|
Niles |
|
IL |
|
Warehouse/Light Manufacturing |
|
1956, 1985 |
|
149,474 |
|
100% |
|
$ |
597,896 |
|
0.5% |
|
$ |
4.00 |
|
|
|
6510 West 73rd |
|
Bedford Park |
|
IL |
|
Warehouse/Distribution |
|
1974 |
|
306,552 |
|
0% |
|
$ |
— |
|
0.0% |
|
$ |
— |
|
|
|
6558 West 73rd |
|
Bedford Park |
|
IL |
|
Warehouse/Light Manufacturing |
|
1975 |
|
301,000 |
|
100% |
|
$ |
1,581,721 |
|
1.3% |
|
$ |
5.25 |
|
|
|
6751 Sayre |
|
Bedford Park |
|
IL |
|
Warehouse/Light Manufacturing |
|
1973 |
|
242,690 |
|
100% |
|
$ |
820,292 |
|
0.7% |
|
$ |
3.38 |
|
|
|
7200 Mason |
|
Bedford Park |
|
IL |
|
Warehouse/Light Manufacturing |
|
1974 |
|
207,345 |
|
100% |
|
$ |
837,329 |
|
0.7% |
|
$ |
4.04 |
|
|
|
7207 Mason Avenue |
|
Bedford Park |
|
IL |
|
Warehouse/Light Manufacturing |
|
1970 |
|
84,195 |
|
100% |
|
$ |
302,114 |
|
0.3% |
|
$ |
3.59 |
|
|
|
7420 Meade Avenue |
|
Bedford Park |
|
IL |
|
Warehouse/Light Manufacturing |
|
1970 |
|
52,344 |
|
100% |
|
$ |
287,369 |
|
0.2% |
|
$ |
5.49 |
|
|
|
1900 S. Batavia Ave |
|
Geneva |
|
IL |
|
Warehouse/Distribution |
|
1958, 1989, 2010 |
|
513,512 |
|
100% |
|
$ |
2,269,722 |
|
1.9% |
|
$ |
4.42 |
|
|
|
5855 Carbonmill Road |
|
South Bend |
|
IN |
|
Warehouse/Distribution |
|
2002 |
|
198,000 |
|
100% |
|
$ |
861,300 |
|
0.7% |
|
$ |
4.35 |
|
|
|
1301 Ridgeview Drive |
|
McHenry |
|
IL |
|
Warehouse/Light Manufacturing |
|
1995, 2020 |
|
218,064 |
|
100% |
|
$ |
886,612 |
|
0.7% |
|
$ |
4.07 |
|
|
|
800 Church Street |
|
Lake Zurich |
|
IL |
|
Warehouse/Distribution |
|
1974, 2020 |
|
116,467 |
|
100% |
|
$ |
512,455 |
|
0.4% |
|
$ |
4.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cincinnati |
|
11540-11630 Mosteller |
|
Sharonville |
|
OH |
|
Warehouse/Light Manufacturing |
|
1959 |
|
358,386 |
|
100% |
|
$ |
1,155,669 |
|
1.0% |
|
$ |
3.22 |
|
|
|
2700 Kemper Road |
|
Sharonville |
|
OH |
|
Small Bay Industrial |
|
1990 |
|
85,718 |
|
100% |
|
$ |
599,966 |
|
0.5% |
|
$ |
7.00 |
|
|
|
2800 Kemper Road |
|
Sharonville |
|
OH |
|
Small Bay Industrial |
|
1989 |
|
82,832 |
|
79% |
|
$ |
556,088 |
|
0.5% |
|
$ |
8.47 |
|
|
|
4115 Thunderbird |
|
Fairfield |
|
OH |
|
Warehouse/Distribution |
|
1991 |
|
70,000 |
|
100% |
|
$ |
262,500 |
|
0.2% |
|
$ |
3.75 |
|
|
|
Fisher Industrial Park |
|
Fairfield |
|
OH |
|
Warehouse/Light Manufacturing |
|
1946 |
|
1,191,640 |
|
94% |
|
$ |
3,364,416 |
|
2.8% |
|
$ |
3.00 |
|
|
|
7585 Empire |
|
Florence |
|
KY |
|
Warehouse/Light Manufacturing |
|
1973 |
|
148,415 |
|
100% |
|
$ |
527,802 |
|
0.4% |
|
$ |
3.56 |
|
|
|
Cornell Commerce Center |
|
Blue Ash |
|
OH |
|
Small Bay Industrial |
|
1976 |
|
165,521 |
|
100% |
|
$ |
1,042,250 |
|
0.9% |
|
$ |
6.30 |
|
|
|
Fairfield Business Center |
|
Fairfield |
|
OH |
|
Small Bay Industrial |
|
1990 |
|
39,558 |
|
100% |
|
$ |
233,788 |
|
0.2% |
|
$ |
5.91 |
|
|
|
2800 Howard Street |
|
Sidney |
|
OH |
|
Warehouse/Light Manufacturing |
|
2016 |
|
480,000 |
|
100% |
|
$ |
1,440,000 |
|
1.2% |
|
$ |
3.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cleveland |
|
1200 Chester Industrial Parkway N |
|
Avon |
|
OH |
|
Warehouse/Distribution |
|
2007, 2009 |
|
207,160 |
|
100% |
|
$ |
921,862 |
|
0.8% |
|
$ |
4.45 |
|
|
|
1200 Chester Industrial Parkway S |
|
Avon |
|
OH |
|
Warehouse/Light Manufacturing |
|
1991 |
|
90,628 |
|
100% |
|
$ |
441,200 |
|
0.4% |
|
$ |
4.87 |
|
|
|
1350 Moore Road |
|
Avon |
|
OH |
|
Warehouse/Distribution |
|
1997 |
|
109,075 |
|
95% |
|
$ |
436,000 |
|
0.4% |
|
$ |
4.23 |
|
|
|
1366 Commerce Drive |
|
Stow |
|
OH |
|
Warehouse/Distribution |
|
1960 |
|
216,000 |
|
93% |
|
$ |
650,000 |
|
0.5% |
|
$ |
3.25 |
|
|
|
14801 County Rd 212 |
|
Findlay |
|
OH |
|
Warehouse/Distribution |
|
1998 |
|
405,000 |
|
100% |
|
$ |
1,485,342 |
|
1.2% |
|
$ |
3.67 |
|
|
|
1755 Enterprise |
|
Twinsburg |
|
OH |
|
Warehouse/Light Manufacturing |
|
1978, 2005 |
|
255,570 |
|
98% |
|
$ |
1,309,735 |
|
1.1% |
|
$ |
5.21 |
|
|
|
2100 International Parkway |
|
Canton |
|
OH |
|
Warehouse/Light Manufacturing |
|
2000 |
|
274,464 |
|
100% |
|
$ |
1,303,704 |
|
1.1% |
|
$ |
4.75 |
|
|
|
2210 International Parkway |
|
Canton |
|
OH |
|
Warehouse/Distribution |
|
2001 |
|
350,000 |
|
100% |
|
$ |
1,491,000 |
|
1.2% |
|
$ |
4.26 |
|
|
|
30339 Diamond Parkway |
|
Glenwillow |
|
OH |
|
Warehouse/Distribution |
|
2007 |
|
400,184 |
|
100% |
|
$ |
2,152,449 |
|
1.8% |
|
$ |
5.38 |
|
|
|
31000 Viking Parkway |
|
Westlake |
|
OH |
|
Small Bay Industrial |
|
1998 |
|
100,150 |
|
100% |
|
$ |
637,829 |
|
0.5% |
|
$ |
6.37 |
|
|
|
Gilchrist Road I |
|
Mogadore |
|
OH |
|
Warehouse/Distribution |
|
1961-1978 |
|
209,592 |
|
100% |
|
$ |
800,877 |
|
0.6% |
|
$ |
3.82 |
|
|
|
Gilchrist Road II |
|
Mogadore |
|
OH |
|
Warehouse/Distribution |
|
1991-1994 |
|
473,046 |
|
100% |
|
$ |
1,623,536 |
|
1.3% |
|
$ |
3.43 |
|
|
|
Gilchrist Road III |
|
Mogadore |
|
OH |
|
Warehouse/Distribution |
|
1994, 1998 |
|
335,521 |
|
92% |
|
$ |
1,150,965 |
|
1.0% |
|
$ |
3.73 |
|
|
|
4211 Shuffel Street NW |
|
Canton |
|
OH |
|
Warehouse/Light Manufacturing |
|
1994 |
|
255,000 |
|
100% |
|
$ |
1,020,000 |
|
0.9% |
|
$ |
4.00 |
|
Market |
|
Property (1) |
|
City |
|
State |
|
Property Type |
|
Year Built/
Renovated (2) |
|
Square
Footage |
|
Occupancy |
|
Annualized
Rent (3) |
|
Percent of
Total
Annualized
Rent (4) |
|
Annualized
Rent/
Square
Footage (5) |
|
Columbus |
|
100 Paragon Parkway |
|
Mansfield |
|
OH |
|
Warehouse/Distribution |
|
1995 |
|
314,736 |
|
100% |
|
$ |
975,000 |
|
0.8% |
|
$ |
3.10 |
|
|
|
1650-1654 Williams Road |
|
Columbus |
|
OH |
|
Warehouse/Distribution |
|
1973, 1974, 1975 |
|
772,450 |
|
100% |
|
$ |
2,211,524 |
|
1.8% |
|
$ |
2.86 |
|
|
|
2120-2138 New World |
|
Columbus |
|
OH |
|
Warehouse/Distribution |
|
1971 |
|
121,200 |
|
100% |
|
$ |
347,988 |
|
0.3% |
|
$ |
2.87 |
|
|
|
3100 Creekside |
|
Lockbourne |
|
OH |
|
Warehouse/Distribution |
|
2000 |
|
340,000 |
|
96% |
|
$ |
1,279,702 |
|
1.1% |
|
$ |
3.94 |
|
|
|
3500 Southwest |
|
Grove City |
|
OH |
|
Warehouse/Distribution |
|
1992, 2018 |
|
527,127 |
|
100% |
|
$ |
1,475,956 |
|
1.2% |
|
$ |
2.80 |
|
|
|
7001 Americana |
|
Reynoldsburg |
|
OH |
|
Warehouse/Distribution |
|
1986, 2007, 2012 |
|
54,100 |
|
100% |
|
$ |
200,711 |
|
0.2% |
|
$ |
3.71 |
|
|
|
8273 Green Meadows |
|
Lewis Center |
|
OH |
|
Warehouse/Distribution |
|
1996, 2007 |
|
77,271 |
|
100% |
|
$ |
388,094 |
|
0.3% |
|
$ |
5.02 |
|
|
|
8288 Green Meadows |
|
Lewis Center |
|
OH |
|
Warehouse/Distribution |
|
1988 |
|
300,000 |
|
100% |
|
$ |
1,014,390 |
|
0.8% |
|
$ |
3.38 |
|
|
|
Graphics Way |
|
Lewis Center |
|
OH |
|
Small Bay Industrial |
|
2000 |
|
73,426 |
|
100% |
|
$ |
444,653 |
|
0.4% |
|
$ |
6.06 |
|
|
|
Orange Point |
|
Lewis Center |
|
OH |
|
Small Bay Industrial |
|
2001 |
|
143,863 |
|
94% |
|
$ |
676,814 |
|
0.6% |
|
$ |
4.99 |
|
|
|
1520 Experiment Farm Road |
|
Troy |
|
OH |
|
Warehouse/Light Manufacturing |
|
1997 |
|
160,000 |
|
100% |
|
$ |
712,000 |
|
0.6% |
|
$ |
4.45 |
|
|
|
2180 Corporate Drive |
|
Troy |
|
OH |
|
Warehouse/Light Manufacturing |
|
1996 |
|
160,000 |
|
100% |
|
$ |
697,484 |
|
0.6% |
|
$ |
4.36 |
|
|
|
952 Dorset Road |
|
Troy |
|
OH |
|
Small Bay Industrial |
|
1988, 1999 |
|
76,800 |
|
100% |
|
$ |
267,920 |
|
0.2% |
|
$ |
3.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indianapolis |
|
2900 Shadeland |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1957, 2001, 2004 |
|
933,439 |
|
99% |
|
$ |
2,868,646 |
|
2.4% |
|
$ |
3.11 |
|
|
|
3035 North Shadeland |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1962, 2004 |
|
562,497 |
|
91% |
|
$ |
1,684,668 |
|
1.4% |
|
$ |
3.30 |
|
|
|
3169 North Shadeland |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1979, 1993 |
|
44,374 |
|
95% |
|
$ |
206,418 |
|
0.2% |
|
$ |
4.92 |
|
|
|
3333 N. Franklin Road |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1967 |
|
276,240 |
|
100% |
|
$ |
1,005,900 |
|
0.8% |
|
$ |
3.64 |
|
|
|
6555 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1969, 1997 |
|
314,775 |
|
98% |
|
$ |
1,392,559 |
|
1.2% |
|
$ |
4.51 |
|
|
|
6575 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1998 |
|
60,000 |
|
100% |
|
$ |
312,000 |
|
0.3% |
|
$ |
5.20 |
|
|
|
6585 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1998 |
|
100,000 |
|
100% |
|
$ |
379,906 |
|
0.3% |
|
$ |
3.80 |
|
|
|
6635 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1998 |
|
99,877 |
|
100% |
|
$ |
564,703 |
|
0.5% |
|
$ |
5.65 |
|
|
|
6701 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1990 |
|
7,820 |
|
100% |
|
$ |
82,500 |
|
0.1% |
|
$ |
10.55 |
|
|
|
6737 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1995 |
|
87,500 |
|
100% |
|
$ |
465,325 |
|
0.4% |
|
$ |
5.32 |
|
|
|
6751 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1997 |
|
100,000 |
|
100% |
|
$ |
480,333 |
|
0.4% |
|
$ |
4.80 |
|
|
|
6951 E 30th Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1995 |
|
44,000 |
|
100% |
|
$ |
197,493 |
|
0.2% |
|
$ |
4.49 |
|
|
|
7901 W. 21st Street |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
1985, 1994 |
|
353,000 |
|
100% |
|
$ |
1,218,400 |
|
1.0% |
|
$ |
3.45 |
|
|
|
Sam Jones |
|
Indianapolis |
|
IN |
|
Warehouse/Light Manufacturing |
|
1970 |
|
484,879 |
|
100% |
|
$ |
1,365,238 |
|
1.1% |
|
$ |
2.82 |
|
|
|
3701 David Howarth Drive |
|
Lafayette |
|
IN |
|
Warehouse/Distribution |
|
2008, 2019 |
|
294,730 |
|
100% |
|
$ |
1,738,764 |
|
1.5% |
|
$ |
5.90 |
|
|
|
7750 Georgetown Road |
|
Indianapolis |
|
IN |
|
Warehouse/Distribution |
|
2006 |
|
102,934 |
|
100% |
|
$ |
468,350 |
|
0.4% |
|
$ |
4.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacksonville |
|
265 Industrial Boulevard |
|
Midway |
|
GA |
|
Warehouse/Distribution |
|
1988, 1999 |
|
187,205 |
|
100% |
|
$ |
327,795 |
|
0.3% |
|
$ |
1.75 |
|
|
|
338 Industrial Boulevard |
|
Midway |
|
GA |
|
Warehouse/Distribution |
|
1996, 2001 |
|
309,084 |
|
100% |
|
$ |
932,556 |
|
0.8% |
|
$ |
3.02 |
|
|
|
430 Industrial Boulevard |
|
Midway |
|
GA |
|
Warehouse/Distribution |
|
1988 |
|
47,599 |
|
100% |
|
$ |
164,118 |
|
0.1% |
|
$ |
3.45 |
|
|
|
Center Point Business Park |
|
Jacksonville |
|
FL |
|
Small Bay Industrial |
|
1990-1997 |
|
537,800 |
|
100% |
|
$ |
3,798,739 |
|
3.2% |
|
$ |
7.06 |
|
|
|
Liberty Business Park |
|
Jacksonville |
|
FL |
|
Small Bay Industrial |
|
1996-1999 |
|
426,916 |
|
91% |
|
$ |
3,562,494 |
|
3.0% |
|
$ |
9.19 |
|
|
|
Salisbury Business Park |
|
Jacksonville |
|
FL |
|
Small Bay Industrial |
|
2001-2012 |
|
168,800 |
|
100% |
|
$ |
1,677,142 |
|
1.4% |
|
$ |
9.94 |
|
|
|
8451 Western Way |
|
Jacksonville |
|
FL |
|
Warehouse/Light Manufacturing |
|
1968, 1975,
1987 |
|
288,750 |
|
100% |
|
$ |
2,049,689 |
|
1.7% |
|
$ |
7.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kansas City |
|
5450 Deramus Avenue |
|
Kansas City |
|
MO |
|
Warehouse/Light Manufacturing |
|
1976 |
|
221,911 |
|
100% |
|
$ |
789,432 |
|
0.7% |
|
$ |
3.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Memphis |
|
210 American |
|
Jackson |
|
TN |
|
Warehouse/Distribution |
|
1967, 1981, 2012 |
|
638,400 |
|
100% |
|
$ |
1,432,570 |
|
1.2% |
|
$ |
2.24 |
|
|
|
Airport Business Park |
|
Memphis |
|
TN |
|
Small Bay Industrial |
|
1985-1989 |
|
235,071 |
|
62% |
|
$ |
2,179,323 |
|
1.8% |
|
$ |
14.95 |
|
|
|
Knight Road |
|
Memphis |
|
TN |
|
Warehouse/Distribution |
|
1986 |
|
131,904 |
|
100% |
|
$ |
347,097 |
|
0.3% |
|
$ |
2.63 |
|
|
|
South Park |
|
Memphis |
|
TN |
|
Warehouse/Distribution |
|
1991, 2005 |
|
566,281 |
|
100% |
|
$ |
1,819,461 |
|
1.5% |
|
$ |
3.21 |
|
|
|
Shelby Distribution |
|
Memphis |
|
TN |
|
Warehouse/Distribution |
|
1989 |
|
202,303 |
|
90% |
|
$ |
542,729 |
|
0.4% |
|
$ |
3.00 |
|
|
|
6290 Shelby View Drive |
|
Memphis |
|
TN |
|
Warehouse/Distribution |
|
1999, 2003 |
|
74,665 |
|
100% |
|
$ |
367,579 |
|
0.3% |
|
$ |
4.92 |
|
|
|
2950 Brother Boulevard |
|
Bartlett |
|
TN |
|
Warehouse/Distribution |
|
1987, 2019 |
|
232,375 |
|
87% |
|
$ |
822,039 |
|
0.7% |
|
$ |
4.08 |
|
|
|
1700-1710 Dunn Avenue |
|
Memphis |
|
TN |
|
Warehouse/Distribution |
|
1957-1959, 1963, 1973 |
|
316,935 |
|
100% |
|
$ |
589,442 |
|
0.5% |
|
$ |
1.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philadelphia |
|
4 East Stow |
|
Marlton |
|
NJ |
|
Warehouse/Distribution |
|
1986 |
|
156,634 |
|
100% |
|
$ |
952,971 |
|
0.8% |
|
$ |
6.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
St. Louis |
|
St. Louis Commerce Center |
|
St. Louis |
|
MO |
|
Warehouse/Distribution |
|
1999-2001 |
|
487,150 |
|
100% |
|
$ |
2,011,613 |
|
1.7% |
|
$ |
4.13 |
|
|
|
Grissom Drive |
|
St. Louis |
|
MO |
|
Warehouse/Light Manufacturing |
|
1970 |
|
79,258 |
|
100% |
|
$ |
282,159 |
|
0.2% |
|
$ |
3.56 |
|
|
|
Metro St Louis |
|
Maryland Heights |
|
MO |
|
Warehouse/Light Manufacturing |
|
1979 |
|
59,055 |
|
100% |
|
$ |
309,985 |
|
0.3% |
|
$ |
5.25 |
|
|
|
Phantom Drive |
|
Hazelwood |
|
MO |
|
Warehouse/Distribution |
|
1971 |
|
129,000 |
|
97% |
|
$ |
526,822 |
|
0.4% |
|
$ |
4.20 |
|
|
|
160-275 Corporate Woods Place |
|
Bridgeton |
|
MO |
|
Warehouse/Distribution |
|
1990 |
|
155,434 |
|
100% |
|
$ |
590,156 |
|
0.5% |
|
$ |
3.80 |
|
|
|
9150 Latty Avenue |
|
Berkeley |
|
MO |
|
Warehouse/Distribution |
|
1965, 2018 |
|
142,364 |
|
100% |
|
$ |
640,638 |
|
0.5% |
|
$ |
4.50 |
|
|
|
3919 Lakeview Corporate Drive |
|
Edwardsville |
|
IL |
|
Warehouse/Distribution |
|
2019 |
|
769,500 |
|
100% |
|
$ |
3,385,800 |
|
2.8% |
|
$ |
4.40 |
|
|
|
4848 Park 370 Boulevard |
|
Hazelwood |
|
MO |
|
Warehouse/Light Manufacturing |
|
2006 |
|
76,092 |
|
100% |
|
$ |
438,933 |
|
0.4% |
|
$ |
5.77 |
|
|
|
3051 Gateway |
|
Edwardsville |
|
IL |
|
Warehouse/Light Manufacturing |
|
2016 |
|
521,171 |
|
100% |
|
$ |
2,058,625 |
|
1.7% |
|
$ |
3.95 |
|
|
|
349 Gateway |
|
Edwardsville |
|
IL |
|
Warehouse/Light Manufacturing |
|
2016 |
|
624,159 |
|
100% |
|
$ |
2,265,697 |
|
1.9% |
|
$ |
3.63 |
|
|
|
11646 Lakeside Crossing |
|
St. Louis |
|
MO |
|
Warehouse/Distribution |
|
2005 |
|
100,021 |
|
100% |
|
$ |
748,492 |
|
0.6% |
|
$ |
7.48 |
|
Existing Portfolio – Industrial Properties |
|
|
|
|
|
|
|
|
|
29,547,106 |
|
97.4% |
|
$ |
119,917,719 |
|
100% |
|
$ |
4.17 |
|
_______________
(1) |
Property listing includes all wholly owned properties as of December 31, 2021 and does not include properties held by unconsolidated joint ventures. |
(2) |
Renovation means significant upgrades, alterations, or additions to building areas, interiors, exteriors and/or systems. |
(3) |
Annualized rent is calculated by multiplying rental payments (defined as cash rents before abatements) for the month ended December 31, 2021, by 12. |
(4) |
Represents the percentage of total annualized rent for properties owned as of December 31, 2021. |
(5) |
Calculated by multiplying rental payments (defined as cash rents before abatements) for the month ended December 31, 2021, by 12, and then dividing by leased square feet for such property as of December 31, 2021. |
As of December 31, 2021, 57 of
our 128 properties were encumbered by mortgage indebtedness totaling $354,239, excluding unamortized deferred financing fees and debt
issuance costs. See Note 7 in the accompanying Notes to the Consolidated Financial Statements for additional information.
Functionality Diversification
The following tables set forth information
relating to functionality diversification by building type based on total square footage and annualized rent as of December 31, 2021.
Property Type |
|
Number of Properties |
|
Occupancy |
|
Total Rentable
Square Feet |
|
Percentage of
Rentable
Square Feet |
|
Annualized
Base Rent |
|
Percentage of
Annualized
Base Rent |
|
Annualized
Base Rent per
Square Foot |
|
Warehouse/Distribution |
|
73 |
|
97.2% |
|
17,883,108 |
|
60.6% |
|
$ |
65,047,523 |
|
54.3% |
|
$ |
3.74 |
|
Warehouse/Light Manufacturing |
|
35 |
|
98.9% |
|
8,609,918 |
|
29.1% |
|
$ |
33,928,153 |
|
28.3% |
|
$ |
3.99 |
|
Small Bay Industrial (1) |
|
20 |
|
94.2% |
|
3,054,080 |
|
10.3% |
|
$ |
20,942,043 |
|
17.4% |
|
$ |
7.28 |
|
Total Company Portfolio |
|
128 |
|
97.4% |
|
29,547,106 |
|
100% |
|
$ |
119,917,719 |
|
100% |
|
$ |
4.17 |
|
______________
(1) |
Small bay industrial is inclusive of flex space totaling 327,081 rentable square feet and annualized base rent of $4,497,215. |
Geographic Diversification
The following tables set forth information
relating to geographic diversification of the Company Portfolio by market based on total annualized rent as of December 31, 2021.
Market |
|
Number of
Properties |
|
Occupancy |
|
Total Rentable
Square Feet |
|
Percentage of
Rentable
Square Feet |
|
Annualized
Base Rent |
|
Percentage of Annualized
Base Rent |
Chicago |
|
39 |
|
95.1% |
|
6,852,144 |
|
23.1% |
|
$ |
28,157,087 |
|
|
23.4% |
Indianapolis |
|
16 |
|
98.2% |
|
3,866,065 |
|
13.0% |
|
|
14,431,204 |
|
|
12.0% |
Cleveland |
|
14 |
|
98.6% |
|
3,681,390 |
|
12.5% |
|
|
15,424,500 |
|
|
12.8% |
Columbus |
|
13 |
|
99.3% |
|
3,120,973 |
|
10.6% |
|
|
10,692,236 |
|
|
8.9% |
St. Louis |
|
11 |
|
99.9% |
|
3,143,204 |
|
10.6% |
|
|
13,258,920 |
|
|
11.1% |
Cincinnati |
|
9 |
|
96.7% |
|
2,622,070 |
|
8.9% |
|
|
9,182,479 |
|
|
7.7% |
Memphis |
|
8 |
|
94.1% |
|
2,397,934 |
|
8.1% |
|
|
8,100,240 |
|
|
6.8% |
Atlanta |
|
8 |
|
98.2% |
|
1,318,002 |
|
4.5% |
|
|
5,275,240 |
|
|
4.4% |
Jacksonville |
|
7 |
|
97.9% |
|
1,966,154 |
|
6.7% |
|
|
12,512,532 |
|
|
10.4% |
Kansas City |
|
1 |
|
100.0% |
|
221,911 |
|
0.8% |
|
|
789,432 |
|
|
0.7% |
Boston |
|
1 |
|
100.0% |
|
200,625 |
|
0.7% |
|
|
1,140,878 |
|
|
1.0% |
Philadelphia |
|
1 |
|
99.8% |
|
156,634 |
|
0.5% |
|
|
952,971 |
|
|
0.8% |
Total Company Portfolio |
|
128 |
|
97.4% |
|
29,547,106 |
|
100% |
|
$ |
119,917,719 |
|
|
100% |
Industry Diversification
The following tables set forth information
relating to tenant diversification of the Company Leased Portfolio by industry based on total square feet occupied and annualized rent
as of December 31, 2021.
Industry |
|
Total Leased
Square Feet |
|
Number of
Leases |
|
Percentage of
Leased
Square Feet |
|
Annualized
Base Rent |
|
Percentage of
Annualized
Base Rent |
|
Annualized
Base Rent per
Square Foot |
|
Logistics & Transportation |
|
8,408,056 |
|
75 |
|
29.2% |
|
$ |
32,947,314 |
|
27.5% |
|
$ |
3.92 |
|
Home & Garden |
|
1,646,180 |
|
14 |
|
5.7% |
|
$ |
5,289,227 |
|
4.4% |
|
$ |
3.21 |
|
Food & Beverage |
|
1,398,717 |
|
20 |
|
4.9% |
|
$ |
6,373,983 |
|
5.3% |
|
$ |
4.56 |
|
Cardboard and Packaging |
|
1,338,266 |
|
15 |
|
4.7% |
|
$ |
5,034,406 |
|
4.2% |
|
$ |
3.76 |
|
Construction |
|
1,354,865 |
|
31 |
|
4.7% |
|
$ |
5,627,073 |
|
4.7% |
|
$ |
4.15 |
|
Printing |
|
1,436,505 |
|
11 |
|
5.0% |
|
$ |
4,873,475 |
|
4.1% |
|
$ |
3.39 |
|
Automotive |
|
2,014,964 |
|
24 |
|
7.0% |
|
$ |
8,111,580 |
|
6.8% |
|
$ |
4.03 |
|
Wholesale/Retail |
|
1,359,691 |
|
26 |
|
4.7% |
|
$ |
5,768,452 |
|
4.8% |
|
$ |
4.24 |
|
Light Manufacturing |
|
1,160,756 |
|
11 |
|
4.0% |
|
$ |
3,951,911 |
|
3.3% |
|
$ |
3.40 |
|
Education |
|
926,896 |
|
9 |
|
3.2% |
|
$ |
4,360,748 |
|
3.6% |
|
$ |
4.70 |
|
Other Industries |
|
7,727,740 |
|
199 |
|
26.9% |
|
$ |
37,579,550 |
|
31.3% |
|
$ |
4.86 |
|
Total Company Portfolio |
|
28,772,636 |
|
435 |
|
100% |
|
$ |
119,917,719 |
|
100% |
|
$ |
4.17 |
|
Tenants
The following table sets forth information
about the ten largest tenants in our Company Portfolio based on total annualized rent as of December 31, 2021.
Tenant |
|
Market |
|
Industry |
|
# of
Leases |
|
Total
Leased
Square Feet |
|
Expiration |
|
|
Annualized
Base
Rent/SF |
|
|
Annualized
Base Rent |
|
Percent of
Total
Annualized
Rent |
|
FedEx Supply Chain, Inc. |
|
St. Louis |
|
Logistics & Transportation |
|
1 |
|
769,500 |
|
7/31/2024 |
|
$ |
4.40 |
|
$ |
3,385,800 |
|
2.8% |
|
Houghton Mifflin Harcourt Company |
|
Chicago |
|
Education |
|
1 |
|
513,512 |
|
3/31/2026 |
|
$ |
4.42 |
|
$ |
2,269,723 |
|
1.9% |
|
Geodis Logistics, LLC |
|
St. Louis |
|
Logistics & Transportation |
|
1 |
|
624,159 |
|
8/31/2022 |
|
$ |
3.63 |
|
$ |
2,265,697 |
|
1.9% |
|
ODW Logistics, Inc. |
|
Columbus |
|
Logistics & Transportation |
|
1 |
|
772,450 |
|
6/30/2025 |
|
$ |
2.86 |
|
$ |
2,211,524 |
|
1.8% |
|
Archway Marketing Holdings, Inc. |
|
Chicago |
|
Logistics & Transportation |
|
3 |
|
503,000 |
|
3/31/2026 |
|
$ |
4.30 |
|
$ |
2,164,500 |
|
1.8% |
|
Schenker, Inc. |
|
St. Louis |
|
Logistics & Transportation |
|
1 |
|
521,171 |
|
9/30/2022 |
|
$ |
3.95 |
|
$ |
2,058,625 |
|
1.7% |
|
Balta US, Inc. |
|
Jacksonville |
|
Home & Garden |
|
2 |
|
629,084 |
|
12/31/2028 |
|
$ |
3.02 |
|
$ |
1,898,956 |
|
1.6% |
|
Communications Test Design, Inc. |
|
Memphis |
|
Logistics & Transportation |
|
2 |
|
566,281 |
|
12/31/2024 |
|
$ |
3.21 |
|
$ |
1,819,461 |
|
1.5% |
|
ASW Supply Chain Services, LLC |
|
Cleveland |
|
Logistics & Transportation |
|
4 |
|
532,437 |
|
11/30/2027 |
|
$ |
3.40 |
|
$ |
1,810,285 |
|
1.5% |
|
Pactiv Corporation |
|
Chicago |
|
Food & Beverage |
|
3 |
|
439,631 |
|
8/31/2023 |
|
$ |
3.95 |
|
$ |
1,737,484 |
|
1.4% |
|
Ten Largest Tenants by Annualized Rent |
|
|
|
19 |
|
5,871,225 |
|
|
|
$ |
3.68 |
|
$ |
21,622,055 |
|
17.9% |
|
All Other |
|
|
|
|
|
416 |
|
22,901,411 |
|
|
|
$ |
4.29 |
|
$ |
98,295,664 |
|
82.1% |
|
Total Company Portfolio |
|
|
|
|
|
435 |
|
28,772,636 |
|
|
|
$ |
4.17 |
|
$ |
119,917,719 |
|
100% |
|
Lease Overview
Triple-net lease: In our
triple-net leases, the tenant is responsible for all aspects of, and costs related to, the property and its operation during the
lease term. The landlord may have responsibility under the lease to perform or pay for certain capital repairs or replacements to the
roof, structure, or certain building systems, such as heating and air conditioning and fire suppression. As of December 31, 2021, there
were 322 triple-net leases in the Company Portfolio, representing approximately 74.2% of our total annualized base rent.
Modified net lease: In our
modified net leases, the landlord is responsible for some property related expenses during the lease term, but the cost of most of the
expenses is passed through to the tenant. As of December 31, 2021, there were 51 modified net leases in the Company Portfolio, representing
approximately 12.9% of our total annualized base rent.
Gross lease: In our
gross leases, the landlord is responsible for all aspects of and costs related to the property and its operation during the lease term.
As of December 31, 2021, there were 62 gross leases in the Company Portfolio, representing approximately 12.9% of the annualized base
rent.
Lease Expirations
As of December 31, 2021, the weighted
average in-place remaining lease term of the Company Portfolio was 3.7 years. The following table sets forth a summary schedule of
lease expirations for leases in place as of December 31, 2021, plus available space, for each of the ten full calendar years commencing
December 31, 2021, and thereafter. The information set forth in the table assumes that tenants exercise no renewal options and no early
termination rights.
Year of Expiration |
|
Total
Rentable
Square Feet |
|
|
Percentage
of Rentable
Square Feet |
|
|
Annualized
Base Rent (1) |
|
|
Percentage
of Annualized
Base Rent (2) |
|
|
Annualized
Base Rent per
Square Foot (3) |
|
Available |
|
|
774,470 |
|
|
|
2.6% |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
2022 |
|
|
4,206,186 |
|
|
|
14.2% |
|
|
$ |
17,479,067 |
|
|
|
14.6% |
|
|
$ |
4.16 |
|
2023 |
|
|
3,158,702 |
|
|
|
10.7% |
|
|
$ |
12,603,138 |
|
|
|
10.5% |
|
|
$ |
3.99 |
|
2024 |
|
|
5,568,798 |
|
|
|
18.8% |
|
|
$ |
23,247,802 |
|
|
|
19.3% |
|
|
$ |
4.17 |
|
2025 |
|
|
5,060,165 |
|
|
|
17.1% |
|
|
$ |
20,383,938 |
|
|
|
17.0% |
|
|
$ |
4.03 |
|
2026 |
|
|
3,249,850 |
|
|
|
11.0% |
|
|
$ |
14,896,127 |
|
|
|
12.4% |
|
|
$ |
4.58 |
|
2027 |
|
|
2,744,489 |
|
|
|
9.3% |
|
|
$ |
11,466,909 |
|
|
|
9.6% |
|
|
$ |
4.18 |
|
2028 |
|
|
1,168,993 |
|
|
|
4.0% |
|
|
$ |
6,214,737 |
|
|
|
5.2% |
|
|
$ |
5.32 |
|
2029 |
|
|
1,595,848 |
|
|
|
5.4% |
|
|
$ |
6,139,029 |
|
|
|
5.1% |
|
|
$ |
3.85 |
|
2030 |
|
|
293,892 |
|
|
|
1.0% |
|
|
$ |
1,403,786 |
|
|
|
1.2% |
|
|
$ |
4.78 |
|
2031 |
|
|
794,242 |
|
|
|
2.7% |
|
|
$ |
2,372,925 |
|
|
|
2.0% |
|
|
$ |
2.99 |
|
Thereafter |
|
|
931,471 |
|
|
|
3.2% |
|
|
$ |
3,710,261 |
|
|
|
3.1% |
|
|
$ |
3.98 |
|
Total Company Portfolio |
|
|
29,547,106 |
|
|
|
100% |
|
|
$ |
119,917,719 |
|
|
|
100% |
|
|
$ |
4.17 |
|
____________________
(1) |
Annualized rent is calculated by multiplying rental payments (defined as cash rents before abatements) for the month ended December 31, 2021, by 12. |
(2) |
Calculated as annualized base rent set forth in this table divided by total annualized base rent for the Company Portfolio as of December 31, 2021. |
(3) |
Calculated as annualized base rent for such leases divided by leased square feet for such leases at each of the properties so impacted by the lease expirations as of December 31, 2021. |
ITEM 3. LEGAL PROCEEDINGS
In the normal course of business,
we could become party to legal actions and proceedings involving matters that are generally incidental to our business. While it will
likely not be possible to ascertain the ultimate outcome of such matters, management expects that the resolution of any such legal actions
and proceedings would not have a material adverse effect on our consolidated financial statements.
There are no legal proceedings
at this time.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
Item 5. MARKET FOR REGISTRANT’S
COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Stockholder Information
As of February 18, 2022, we had
36,543,219 shares of common stock outstanding held of record by a total of approximately 136 stockholders; however, because
many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we believe there are substantially
more beneficial holders of our common stock than record holders. The number of stockholders is based on the records of Continental Stock
Transfer & Trust, which serves as our transfer agent.
Market Information
Our common stock is traded on the
NYSE under the symbol “PLYM.” On December 31, 2021, the closing price of our common stock, as reported on the NYSE, was $32.00.
Distribution Policy
It is our policy to declare quarterly
dividends to the stockholders so as to comply with applicable provisions of the Code governing REITs. The declaration and payment of quarterly
dividends remains subject to the review and approval of the board of directors. To satisfy the requirements to qualify as a REIT, and
to avoid paying tax on our income, we have paid and intend to continue to pay regular quarterly cash dividends of all or substantially
all of our REIT taxable income (excluding net capital gains) to holders of our common stock.
We intend to distribute at least
90% of our taxable income each year (subject to certain adjustments as described below) to our stockholders in order to qualify as a REIT
under the Code and generally expect to distribute 100% of our REIT taxable income so as to avoid the excise tax on undistributed REIT
taxable income.
Distributions to our common stockholders
are authorized by our board of directors in its sole discretion and declared by us out of funds legally available therefor. We expect
that our board of directors, in authorizing the amounts of distributions, will consider a variety of factors, including:
|
• |
actual results of operations and our cash available for distribution; |
|
• |
the timing of the investment of the net proceeds from our offerings; |
|
• |
debt service requirements and any restrictive covenants in our loan agreements; |
|
• |
capital expenditure requirements for our properties; |
|
• |
our taxable income; |
|
• |
the annual distribution requirement under the REIT provisions of the Code; |
|
• |
our operating expenses; |
|
• |
requirements under applicable law; and |
|
• |
other factors that our board of directors may deem relevant. |
Our distributions may exceed our
earnings and profits as determined for U.S. federal income tax purposes primarily due to depreciation and amortization. Our earnings and
profits will be allocated first to our preferred stock dividends and then to our common stock dividends. Any distributions in excess of
our earnings and profits may represent a return of capital for U.S. federal income tax purposes, subject to the extent that such distributions
do not exceed the stockholder's adjusted tax basis in their shares of common or preferred stock, but rather will reduce the adjusted basis
of the shares of common or preferred stock. Therefore, the gain (or loss) recognized on the sale of the common stock or preferred stock
or upon our liquidation will be increased (or decreased) accordingly. To the extent those distributions exceed a taxable U.S. stockholder's
adjusted tax basis in their shares of common or preferred stock, they generally will be treated as a capital gain realized from the taxable
disposition of those shares. The percentage of our stockholder distributions that exceeds our earnings and profits may vary substantially
from year to year.
Although we have no current intention
to do so, we may in the future also choose to pay distributions in the form of our own shares.
We maintain the Plymouth Industrial
REIT, Inc. 2014 Incentive Award Plan (the “Plan”), as discussed in more detail in Note 11 in the accompanying Notes
to Consolidated Financial Statements.
As of December 31, 2021,
the total shares issued under the Plan were as follows:
|
|
# of Securities to be
Issued Upon Exercise
of Outstanding
Options, Warrants,
and Rights |
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and
Rights |
|
# of Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation Plans |
Equity Compensation Plans Approved by Security Holders |
|
227,356 |
(1) |
|
n/a |
|
389,873 |
Equity Compensation Plans Not Approved by Security Holders |
|
n/a |
|
|
n/a |
|
n/a |
___________________
(1) |
Consists of restricted stock awards granted to executive officers and certain employees. |
Issuer Purchases of Equity Securities
None.
ITEM 6. [Reserved]
Item 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis
is based on, and should be read in conjunction with our audited historical financial statements and related notes thereto as of and for
the years ended December 31, 2021 and 2020.
Overview
We are a full service, vertically
integrated, self-administered and self-managed REIT focused on the acquisition, ownership and management of single and multi-tenant industrial
properties, including distribution centers, warehouses, light industrial and small bay industrial properties. The Company Portfolio consists
of 128 industrial properties located in eleven states with an aggregate of approximately 29.5 million rentable square feet leased to 395
different tenants.
Our strategy is to acquire, own
and manage single and multi-tenant industrial properties located in primary and secondary markets, as well as select sub-markets, with
access to large pools of skilled labor in the main industrial, distribution and logistics corridors of the United States. We seek to generate
attractive risk-adjusted returns for our stockholders through a combination of dividends and capital appreciation.
Factors That May Influence Future Results of Operations
Business and Strategy
Our core investment strategy is
to acquire industrial properties located in primary and secondary markets, as well as select sub-markets across the U.S. We expect to
acquire these properties through third-party purchases and structured sale-leasebacks where we believe we can achieve high initial yields
and strong ongoing cash-on-cash returns.
Our target markets are located
in primary and secondary markets, as well as select sub-markets, because we believe these markets tend to have less occupancy and rental
rate volatility and less buyer competition relative to gateway markets. We also believe that the systematic aggregation of such properties
will result in a diversified portfolio that will produce sustainable risk-adjusted returns. Future results of operations may be affected,
either positively or negatively, by our ability to effectively execute this strategy.
We also intend to continue pursuing
joint venture arrangements with institutional partners which could provide management fee income as well as residual profit-sharing income.
Such joint ventures may involve investing in industrial assets that would be characterized as opportunistic or value-add investments.
These may involve development or redevelopment strategies that may require significant up-front capital expenditures, lengthy lease-up
periods and result in inconsistent cash flows. As such, these properties’ risk profiles and return metrics would likely differ from
the non-joint venture properties that we target for acquisition.
Impact of COVID-19
While we are not able to estimate
the ultimate impact of the COVID-19 pandemic on our operating results at this time, the following discussion provides certain information
regarding the impacts of the COVID-19 pandemic on our business and an overview of management’s efforts to respond to anticipated
impacts. While our results for the year ended December 31, 2021 were in line with our expectations, the COVID-19 pandemic and the significant
and wide-ranging efforts of international, federal, state and local public health and governmental authorities in regions across the United
States and the world to combat the spread of the virus, including substantial restrictions on the daily activities of individuals and
the operations of many businesses, have significantly reduced economic activity throughout the country and increased volatility in the
financial markets, which could negatively impact our results of operations in future periods.
As a result of the uncertainty
surrounding the economic environment, we expect that such statistical and other information provided below will change, potentially significantly,
going forward and may not be indicative of the actual impact of the COVID-19 pandemic on our business, operations, cash flows and financial
condition for future periods.
|
• |
As of December 31, 2021, we have collected
approximately 99.7% of recurring base rents and tenant recoveries billed for the fourth quarter of 2021;
however, collections to-date may not be indicative of collections in any future period. |
In an effort to stabilize our operations
and attempt to manage the impact of COVID-19, we have taken a number of proactive measures to maintain the strength of our business, including
the following:
|
• |
The health and safety of our employees and their families is a top priority. We have adapted our operations to protect employees, including by implementing a work from home policy, and our systems have enabled our team to work seamlessly. |
|
• |
We are in frequent communication with our tenants, and we are assisting them in identifying state and federal resources that may be available to support their businesses and employees during the pandemic, including stimulus funds that may be available under the Coronavirus Aid, Relief, and Economic Security Act of 2020. |
|
• |
We have approximately $38.2 million in cash and cash equivalents and approximately $162 million available on our line of credit as of December 31, 2021, to address near-term working capital and other liquidity needs. |
Rental Revenue and Tenant Recoveries
We receive income primarily from
rental revenue from our properties. The amount of rental revenue generated by the Company Portfolio depends principally on the occupancy
levels and lease rates at our properties, our ability to lease currently available space and space that becomes available as a result
of lease expirations and on the rental rates at our properties. The Company Portfolio was approximately 97.4% and 96.4% occupied as of
December 31, 2021, and 2020, respectively. Our occupancy rate is impacted by general market conditions in the geographic areas which our
properties are located and the financial condition of tenants in our target markets.
Scheduled Lease Expirations
Our ability to re-lease space subject
to expiring leases will impact our results of operations and will be affected by economic and competitive conditions in the markets in
which we operate and by the desirability of our individual properties. During the period from January 1, 2022, through to December 31,
2023, an aggregate of 25.1% of the annualized base rent leases in the Company Portfolio are scheduled to expire, which we believe will
provide us an opportunity to adjust below market rates as market conditions continue to improve.
The table below reflects certain
data about our new and renewed leases with terms of greater than six months executed in the year ended December 31, 2021.
Year |
|
Type |
|
Square
Footage |
|
|
% of Total Square Footage |
|
|
Expiring Rent |
|
|
New Rent |
|
|
% Change |
|
|
Tenant Improvements $/SF/YR |
|
|
Lease Commissions $/SF/YR |
|
Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewals |
|
2,487,589 |
|
|
49.3% |
|
|
$ |
4.25 |
|
|
$ |
4.50 |
|
|
|
5.9% |
|
|
$ |
0.19 |
|
|
$ |
0.10 |
|
|
|
New Leases |
|
2,557,312 |
|
|
50.7% |
|
|
$ |
3.76 |
|
|
$ |
4.40 |
|
|
|
17.0% |
|
|
$ |
0.23 |
|
|
$ |
0.22 |
|
|
|
Total |
|
5,044,901 |
|
|
100% |
|
|
$ |
4.00 |
|
|
$ |
4.45 |
|
|
|
11.1% |
|
|
$ |
0.21 |
|
|
$ |
0.16 |
|
Conditions in Our Markets
The Company Portfolio is located
in various primary and secondary markets within the main industrial distribution and logistics corridors of the United States. Positive
or negative changes in economic or other conditions, adverse weather conditions and natural disasters in these markets are likely to affect
our overall performance.
Property Expenses
Our rental expenses generally consist
of utilities, real estate taxes, insurance and repair and maintenance costs. For the majority of the Company Portfolio, property expenses
are controlled, in part, by either the triple net provisions or modified gross lease expense reimbursement provisions in tenant leases.
However, the terms of our tenant leases vary and in some instances the leases may provide that we are responsible for certain property
expenses. Accordingly, our overall financial results will be impacted by the extent to which we are able to pass-through property expenses
to our tenants.
General and Administrative Expenses
We expect to incur increased general
and administrative expenses, including legal, accounting, and other expenses related to corporate governance and public reporting and
compliance. In addition, we anticipate that our staffing levels will increase from current levels as of December 31, 2021, during the
subsequent 12 to 24 months and, as a result, our general and administrative expenses will increase further.
Critical Accounting Policies
Our discussion and analysis of
our company’s historical financial condition and results of operations are based upon its consolidated financial statements, which
have been prepared in accordance with GAAP. The preparation of these financial statements in conformity with GAAP requires management
to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amount of revenue and expenses in the reporting period. Actual amounts may differ from these estimates
and assumptions.
We believe our most critical accounting
policies are the regular evaluation of whether the value of a real estate asset has been impaired and accounting for acquisitions. Each
of these items involves estimates that require management to make judgments that are subjective in nature. We collect historical data
and current market data, and based on our experience we analyze these assumptions in order to arrive at what we believe to be reasonable
estimates. Under different conditions or assumptions, materially different amounts could be reported related to the accounting policies
described below. In addition, application of these accounting policies involves the exercise of judgments on the use of assumptions as
to future uncertainties and, as a result, actual results could materially differ from these estimates.
Use of Estimates
The preparation of the consolidated
financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Management makes significant estimates regarding the allocation
of tangible and intangible assets for real estate acquisitions and impairments of long-lived assets. These estimates and assumptions are
based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using
historical experience and other factors, including the current economic environment. Management adjusts such estimates when facts and
circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from those
estimates and assumptions.
Income Taxes
We elected to be taxed as a REIT
for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2012, and we believe that our organization
and method of operation enable us to continue to meet the requirements for qualification and taxation as a REIT. We had no taxable income
prior to electing REIT status. To maintain our qualification as a REIT, we must meet certain organizational and operational requirements,
including a requirement to distribute at least 90% of our annual REIT taxable income to 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, we generally will not be subject to federal income tax on income that we distribute as dividends to our stockholders.
If we fail to maintain our qualification as a REIT in any tax year, we will be subject to federal income tax on our 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 we are able to obtain relief under certain statutory
provisions. Such an event could materially and adversely affect our net income and net cash available for distribution to stockholders.
Investments in Real Estate
We generally acquire individual
properties, and, in some instances, a portfolio of properties. When we acquire individual operating properties with the intention to hold
the investment for the long-term, we allocate the purchase price to the various components of the acquisition based upon the fair value
of each component. The components typically include land, building, intangible assets related to above and below market leases, value
of costs to obtain tenants, and other assumed assets and liabilities, including debt. We consider Level 3 inputs such as the replacement
cost of such assets, appraisals, property condition reports, comparable market rental data and other related information in determining
the fair value of the tangible assets. The recorded fair value of intangible lease assets or liabilities includes Level 3 inputs
including the value associated with leasing commissions, legal and other costs, as well as the estimated period necessary to lease such
property and lease commencement. An intangible asset or liability resulting from in-place leases that are above or below the market rental
rates are valued based upon our estimates of prevailing market rates for similar leases. Intangible lease assets or liabilities are amortized
over the estimated, reasonably assured lease term of the remaining in-place leases as an adjustment to “Rental revenues” or
“Real estate related depreciation and amortization” depending on the nature of the intangible. The valuation of assumed liabilities
is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.
In an acquisition of multiple properties,
we must also allocate the purchase price among the properties. The allocation of the purchase price is based on our assessment of estimated
fair value and often is based upon the expected future cash flows of the property and various characteristics of the markets where the
property is located. The initial allocation of the purchase price is based on management’s preliminary assessment, which may differ
when final information becomes available.
Impairment of Long-Lived Assets
We assess the carrying values of
our respective long-lived assets whenever events or changes in circumstances indicate the carrying amounts of these assets may not be
fully recoverable.
Recoverability of real estate assets
is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. In order to review our
real estate assets for recoverability, we consider current market conditions, as well as our intent with respect to holding or disposing
of the asset. Our intent with regard to the underlying assets might change as market conditions change, as well as other factors, especially
in the current global economic environment. Fair value is determined through various valuation techniques, including discounted cash flow
models, applying a capitalization rate to estimated net operating income of a property and quoted market values and third-party appraisals,
where considered necessary. The use of projected future cash flows is based on assumptions that are consistent with our estimates of future
expectations and the strategic plan we use to manage our underlying business. If our analysis indicates that the carrying value of the
real estate asset is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the
carrying value exceeds the current estimated fair value of the real estate property.
Assumptions and estimates used
in the recoverability analyses for future cash flows, discount rates and capitalization rates are complex and subjective. Changes in economic
and operating conditions or our intent with regard to our investment that occurs subsequent to our impairment analyses could impact these
assumptions and result in future impairment of our real estate properties.
Consolidation
We consolidate all entities that
are wholly owned and those in which we own less than 100% but control, as well as any variable interest entities in which we are the primary
beneficiary. We evaluate our ability to control an entity and whether the entity is a variable interest entity and we are the primary
beneficiary through consideration of the substantive terms of the arrangement to identify which enterprise has the power to direct the
activities of a variable interest entity that most significantly impacts the entity’s economic performance and the obligation to
absorb losses of the entity or the right to receive benefits from the entity. Investments in entities in which we do not control but over
which we have the ability to exercise significant influence over operating and financial policies are presented under the equity method.
Investments in entities that we do not control and over which we do not exercise significant influence are carried at the lower of cost
or fair value, as appropriate. Our ability to correctly assess our influence and/or control over an entity affects the presentation of
these investments in our consolidated financial statements.
Results of Operations (dollars in thousands)
Our consolidated results of operations
are often not comparable from period to period due to the effect of property acquisitions and dispositions completed during the comparative
reporting periods. Our Total Portfolio represents all of the properties owned during the reported periods. To eliminate the effect of
changes in our Total Portfolio due to acquisitions, dispositions and other and to highlight the operating results of our on-going business,
we have separately presented the results of our Same Store Properties Portfolio and Acquisitions, Dispositions and Other.
For the years ended December 31,
2021, and 2020, we define the Same Store Portfolio as a subset of our Total Portfolio and includes properties that were wholly owned by
us for the entire period presented. We define Acquisitions, Dispositions and Other as any properties that were acquired, sold, or held
for development or repurposing during the period from January 1, 2020 through December 31, 2021.
Year Ended December 31, 2021, Compared to December 31, 2020
The following table summarizes
the results of operations for our Same Store Portfolio, our acquisitions, dispositions and other and total portfolio for the years
ended December 31, 2021 and 2020 (dollars in thousands):
|
|
Same
Store Portfolio |
|
|
Acquisitions,
Dispositions and Other |
|
|
Total
Portfolio |
|
|
|
Year
ended December 31, |
|
|
Change |
|
|
Year
ended December 31, |
|
|
Change |
|
|
Year
ended December 31, |
|
|
Change |
|
|
|
2021 |
|
|
2020 |
|
|
$ |
|
|
% |
|
|
2021 |
|
|
2020 |
|
|
$ |
|
|
% |
|
|
2021 |
|
|
2020 |
|
|
$ |
|
|
% |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenue |
|
$ |
98,416 |
|
|
$ |
95,352 |
|
|
$ |
3,064 |
|
|
3.2% |
|
|
$ |
41,854 |
|
|
$ |
14,484 |
|
|
$ |
27,370 |
|
|
189.0% |
|
|
$ |
140,270 |
|
|
$ |
109,836 |
|
|
$ |
30,434 |
|
|
27.7% |
|
Management fee revenue and other income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
348 |
|
|
|
15 |
|
|
|
333 |
|
|
2220.0% |
|
|
|
348 |
|
|
|
15 |
|
|
|
333 |
|
|
2220.0% |
|
Total revenues |
|
|
98,416 |
|
|
|
95,352 |
|
|
|
3,064 |
|
|
3.2% |
|
|
|
42,202 |
|
|
|
14,499 |
|
|
|
27,703 |
|
|
191.1% |
|
|
|
140,618 |
|
|
|
109,851 |
|
|
|
30,767 |
|
|
28.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property expenses |
|
|
37,626 |
|
|
|
33,879 |
|
|
|
3,747 |
|
|
11.1% |
|
|
|
10,010 |
|
|
|
4,280 |
|
|
|
5,730 |
|
|
133.9% |
|
|
|
47,636 |
|
|
|
38,159 |
|
|
|
9,477 |
|
|
24.8% |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,642 |
|
|
|
56,428 |
|
|
|
14,214 |
|
|
25.2% |
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,920 |
|
|
|
10,362 |
|
|
|
2,558 |
|
|
24.7% |
|
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,198 |
|
|
|
104,949 |
|
|
|
26,249 |
|
|
25.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,968 |
) |
|
|
(18,931 |
) |
|
|
(1,037 |
) |
|
5.5% |
|
Impairment on real estate lease |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(311 |
) |
|
|
311 |
|
|
(100% |
) |
Earnings (loss) in investment of unconsolidated joint venture |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(850 |
) |
|
|
(19 |
) |
|
|
(831 |
) |
|
4,373.7% |
|
Loss on extinguishment of debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(523 |
) |
|
|
— |
|
|
|
(523 |
) |
|
— |
|
Gain on sale of real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,775 |
|
|
|
— |
|
|
|
1,775 |
|
|
— |
|
Unrealized (appreciation) depreciation of warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,121 |
) |
|
|
(103 |
) |
|
|
(5,018 |
) |
|
4,871.8% |
|
Total other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,687 |
) |
|
|
(19,364 |
) |
|
|
(5,323 |
) |
|
27.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(15,267 |
) |
|
$ |
(14,462 |
) |
|
$ |
(805 |
) |
|
5.6% |
|
Rental revenue: Rental revenue
increased $30,434 to $140,270 for the year ended December 31, 2021 as compared to $109,836 for the year ended December 31, 2020. The increase
was primarily related to a net increase in rental revenue from acquisitions, dispositions and other of $27,370 and an increase of $3,064
from same store properties primarily due to scheduled rent steps, leasing activities, and tenant reimbursements for the year ended December
31, 2021.
Management fee revenue: Management
fee revenue and other income represents management fee income earned from the unconsolidated joint venture and other miscellaneous income.
Property expenses: Property
expenses increased $9,477 for the year ended December 31, 2021 to $47,636 as compared to $38,159 for the year ended December 31, 2020
primarily due to a net increase in expenses related to acquisitions and dispositions of $5,730. Property expenses for the same store properties
increased approximately $3,747 primarily due to an increase in real estate taxes and operating expenses.
Depreciation and amortization:
Depreciation and amortization expense increased by approximately $14,214 to approximately $70,642 for the year ended December 31, 2021
as compared to $56,428 for the year ended December 31, 2020, primarily due to a net increase from acquisitions and dispositions of $19,608
and a decrease of $5,394 for the same store properties due to the full depreciation and amortization of certain assets.
General and administrative:
General and administrative expenses increased approximately $2,558 to $12,920 for the year ended December 31, 2021 as compared to
$10,362 for the year ended December 31, 2020. The increase is attributable primarily to a net increase in payroll expense of $1,484 due
to increased head count and compensation increases, an increase in professional fees of $270, an increase in non-cash stock compensation
of $119, offset by a decrease of $483 due to non-cash rent expense from the straight lining of rents.
Interest expense: Interest
expense increased by approximately $1,037 to $19,968 for the year ended December 31, 2021 as compared to $18,931 for the year ended December
31, 2020. The increase is primarily due to additional borrowings associated with our acquisition activity, partially offset by lower interest
rates on our line of credit and term loan facility. The schedule below is a comparative analysis of the components of interest expense
for the years ended December 31, 2021 and 2020.
(In thousands) | |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
| |
| | |
| |
Changes in accrued interest | |
$ | 191 | | |
$ | 148 | |
Amortization of debt related costs | |
| 1,605 | | |
| 1,467 | |
Total change in accrued interest and amortization of debt related costs | |
| 1,796 | | |
| 1,615 | |
Cash interest paid | |
| 18,172 | | |
| 17,316 | |
Total interest expense | |
$ | 19,968 | | |
$ | 18,931 | |
Impairment on real estate lease:
Change in impairment on real estate lease represents a non-cash impairment against the carrying value of the right of use asset associated
with the primary lease of our prior headquarters as discussed in Note 6 to the financial statements.
Earnings (loss) in investment
of unconsolidated joint venture: Earnings (loss) in investment of unconsolidated joint venture represents our share of earnings/(losses)
related to our investment in an unconsolidated joint venture.
Loss on extinguishment of
debt: Loss on extinguishment of debt of $523 for the year ended December 31, 2021 was due to the partial repayment of the
Transamerica Loan.
Gain on sale of real estate: Gain on sale of real estate
of $1,775 represents the gain realized on the sale of real estate for the year ended December 31, 2021. There were no sales of real estate
during the year ended December 31, 2020.
Unrealized (appreciation)/depreciation
of warrants: Unrealized (appreciation)/depreciation of warrants represents the change in the fair market value of our
common stock warrants. The fair value of warrant derivative adjustment of $5,121 for the year ended December 31, 2021 and $103 for the
year ended December 31, 2020 was due to an increase in the common stock warrant liability during 2021 and 2020 as discussed in Note 8
to the financial statements.
Supplemental Earnings Measures
Investors in and industry analysts
following the real estate industry utilize supplemental earnings measures such as net operating income (“NOI), earnings before interest,
taxes, depreciation and amortization for real estate (“EBITDAre”), funds from operations (“FFO”), core
funds from operations (“Core FFO”) and adjusted funds from operations (“AFFO”) as supplemental operating performance
measures of an equity REIT. Historical cost accounting for real estate assets in accordance with accounting principles generally accepted
in the United States of America ("GAAP") implicitly assumes that the value of real estate assets diminishes predictably over
time through depreciation. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts
and investors prefer to supplement operating results that use historical cost accounting with measures such as NOI, EBITDAre, FFO,
Core FFO and AFFO, among others. We provide information related to NOI, EBITDAre, FFO, Core FFO and AFFO both because such industry
analysts are interested in such information, and because our management believes NOI, EBITDAre, FFO, Core FFO and AFFO are important
performance measures. NOI, EBITDAre, FFO, Core FFO and AFFO are factors used by management in measuring our performance. Neither
NOI, EBITDAre, FFO, Core FFO or AFFO should be considered as a substitute for net income, or any other measures derived in accordance
with GAAP. Neither NOI, EBITDAre, FFO, Core FFO or AFFO represents cash generated from operating activities in accordance with
GAAP and neither should be considered as an alternative to cash flow from operating activities as a measure of our liquidity, nor is either
indicative of funds available for our cash needs, including our ability to make cash distributions.
NOI
We consider net operating income,
or NOI, to be an appropriate supplemental measure to net income in that it helps both investors and management understand the core operations
of our properties. We define NOI as total revenue (including rental revenue and tenant reimbursements) less property-level operating expenses.
NOI excludes depreciation and amortization, general and administrative expenses, impairments, gain/loss on sale of real estate, interest
expense, and other non-operating items.
The following is a reconciliation
from historical reported net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP, to
NOI:
(In thousands) | |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
NOI: | |
| | |
| |
Net loss | |
$ | (15,267 | ) | |
$ | (14,462 | ) |
General and administrative | |
| 12,920 | | |
| 10,362 | |
Depreciation and amortization | |
| 70,642 | | |
| 56,428 | |
Interest expense | |
| 19,968 | | |
| 18,931 | |
Impairment on real estate lease | |
| — | | |
| 311 | |
Gain on sale of real estate | |
| (1,775 | ) | |
| — | |
Unrealized appreciation (depreciation) of warrants | |
| 5,121 | | |
| 103 | |
Loss on extinguishment of debt | |
| 523 | | |
| — | |
(Earnings) loss in investment of unconsolidated joint venture | |
| 850 | | |
| 19 | |
Management fee revenue and other income | |
| (348 | ) | |
| (15 | ) |
NOI | |
$ | 92,634 | | |
$ | 71,677 | |
EBITDAre
We define earnings before
interest, taxes, depreciation and amortization for real estate in accordance with the standards established by the National
Association of Real Estate Investment Trusts (“NAREIT”). EBITDAre represents net income (loss), computed in
accordance with GAAP, before interest expense, tax, depreciation and amortization, gains or losses on the sale of rental property, unrealized
appreciation/(depreciation) of warrants, loss on impairments, and loss on extinguishment of debt. We believe that
EBITDAre is helpful to investors as a supplemental measure of our operating performance as a real estate company as it is a
direct measure of the actual operating results of our industrial properties. The following table sets forth a reconciliation of our
historical net loss to EBITDAre for the periods presented:
(In thousands) | |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
EBITDAre: | |
| | |
| |
Net loss | |
$ | (15,267 | ) | |
$ | (14,462 | ) |
Depreciation and amortization | |
| 70,642 | | |
| 56,428 | |
Interest expense | |
| 19,968 | | |
| 18,931 | |
Unrealized appreciation (depreciation) of warrants | |
| 5,121 | | |
| 103 | |
Gain on sale of real estate | |
| (1,775 | ) | |
| — | |
Loss on extinguishment of debt | |
| 523 | | |
| — | |
EBITDAre | |
$ | 79,212 | | |
$ | 61,000 | |
FFO
Funds from operations, or FFO,
is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate
supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes
non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation
of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate
values rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation,
could be less informative. In December 2018, NAREIT issued a white paper restating the definition of FFO. The purpose of the restatement
was not to change the fundamental definition of FFO, but to clarify existing NAREIT guidance. The restated definition of FFO is as follows:
Net Income (calculated in accordance with GAAP), excluding: (i) Depreciation and amortization related to real estate, (ii) Gains and losses
from the sale of certain real estate assets, (iii) Gain and losses from change in control, and (iv) Impairment write-downs of certain
real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real
estate held by the entity.
We define FFO, consistent with
the NAREIT definition. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.
Other equity REITs may not calculate FFO as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. FFO
should not be used as a measure of our liquidity and is not indicative of funds available for our cash needs, including our ability to
pay dividends. Core FFO represents FFO reduced by dividends paid (or declared) to holders of our preferred stock and excludes certain
non-cash operating expenses such as impairment on real estate lease, unrealized appreciation/(depreciation) of warrants and loss on extinguishment
of debt. As with FFO, our reported Core FFO may not be comparable to other REITs’ Core FFO, should not be used as a measure of our
liquidity, and is not indicative of our funds available for our cash needs, including our ability to pay dividends.
The following table sets forth a
reconciliation of our historical net loss to FFO and Core FFO for the periods presented:
| |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
FFO: | |
| | |
| |
Net loss | |
$ | (15,267 | ) | |
$ | (14,462 | ) |
Gain on sale of real estate | |
| (1,775 | ) | |
| — | |
Depreciation and amortization | |
| 70,642 | | |
| 56,428 | |
Depreciation and amortization from unconsolidated joint venture | |
| 1,539 | | |
| 64 | |
FFO | |
$ | 55,139 | | |
$ | 42,030 | |
Preferred stock dividends | |
| (6,608 | ) | |
| (6,444 | ) |
Unrealized appreciation (depreciation) of warrants | |
| 5,121 | | |
| 103 | |
Loss on extinguishment of debt | |
| 523 | | |
| — | |
Impairment on real estate lease | |
| — | | |
| 311 | |
Core FFO | |
$ | 54,175 | | |
$ | 36,000 | |
AFFO
Adjusted funds from operations,
or AFFO, is presented in addition to Core FFO. AFFO is defined as Core FFO, excluding certain non-cash operating revenues and expenses,
acquisition and transaction related costs for transactions not completed and recurring capitalized expenditures. Recurring capitalized
expenditures include expenditures required to maintain and re-tenant our properties, tenant improvements and leasing commissions. AFFO
further adjusts Core FFO for certain other non-cash items, including the amortization or accretion of above or below market rents included
in revenues, straight line rent adjustments, non-cash equity compensation and non-cash interest expense.
We believe AFFO provides a useful
supplemental measure of our operating performance because it provides a consistent comparison of our operating performance across time
periods that is comparable for each type of real estate investment and is consistent with management’s analysis of the operating
performance of our properties. As a result, we believe that the use of AFFO, together with the required GAAP presentations, provide a
more complete understanding of our operating performance.
As with Core FFO, our reported
AFFO may not be comparable to other REITs’ AFFO, should not be used as a measure of our liquidity, and is not indicative of our
funds available for our cash needs, including our ability to pay dividends.
The following table sets forth a
reconciliation of FFO attributable to common stockholders and unit holders to AFFO.
(In thousands) | |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
AFFO: | |
| | |
| |
Core FFO | |
$ | 54,175 | | |
$ | 36,000 | |
Amortization of debt related costs | |
| 1,605 | | |
| 1,467 | |
Non-cash interest expense | |
| 191 | | |
| 148 | |
Stock compensation | |
| 1,559 | | |
| 1,439 | |
Straight line rent | |
| (3,700 | ) | |
| (1,963 | ) |
Above/below market lease rents | |
| (2,096 | ) | |
| (2,075 | ) |
Recurring capital expenditure (1) | |
| (8,767 | ) | |
| (3,263 | ) |
AFFO: | |
$ | 42,967 | | |
$ | 31,753 | |
_______________
(1) |
Excludes non-recurring capital expenditures of $22,547 and $5,427 for the years ended December 31, 2021 and 2020, respectively. |
Cash Flow
A summary of our cash flows for the years ended December
31, 2021 and 2020 are as follows:
(In thousands) | |
Year Ended | |
| |
2021 | | |
2020 | |
Net cash provided by operating activities | |
$ | 57,940 | | |
$ | 41,745 | |
Net cash used in investing activities | |
$ | (356,080 | ) | |
$ | (259,118 | ) |
Net cash provided by financing activities | |
$ | 309,460 | | |
$ | 227,029 | |
Operating activities: Net
cash provided by operating activities for the year ended December 31, 2021 increased approximately $16,195 compared to the year ended
December 31, 2020. The increase was primarily attributable to incremental operating cash flows from acquisitions completed during 2021
and same store properties.
Investing activities: Net
cash used in investing activities for the year ended December 31, 2021 increased approximately $96,962 compared to the year ended December
31, 2020 primarily due to property acquisitions completed during 2021 totaling $337,030 as opposed to $246,353 during 2020, an
increase in capital expenditures of $19,245, offset by a decrease in investments in a joint venture of $6,702 and proceeds from the sale
of real estate property and land parcel of $6,258 during 2021. There were no sales of real estate property during 2020.
Financing activities: Net
cash provided by financing activities for the year ended December 31, 2021 increased approximately $82,431 compared to the year ended
December 31, 2020. The change was predominantly driven by an increase of $76,878 in net proceeds from the issuance of common stock, secured
and unsecured debt and the line of credit, and a decrease in debt issuance costs and repurchase and extinguishment of Series A Preferred
stock of $11,321, offset by an increase of $5,768 in dividends paid.
Liquidity and Capital Resources
We intend to make reserve allocations
as necessary to aid our objective of preserving capital for our investors by supporting the maintenance and viability of properties we
acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities,
it may be necessary to obtain additional funds by borrowing, refinancing properties or liquidating our investments.
Our short-term liquidity requirements
consist primarily of funds to pay for operating expenses and other expenditures directly associated with our properties, including:
|
· |
property expenses that are not borne by our tenants under our leases; |
|
· |
principal and interest expense on outstanding indebtedness; |
|
· |
general and administrative expenses; and |
|
· |
capital expenditures for tenant improvements and leasing commissions. |
In addition, we will require funds
for future dividends required to be paid on our Series A and Series B Preferred Stock.
We intend to satisfy our short-term
liquidity requirements through our existing cash, cash flow from operating activities and the net proceeds of any potential future offerings.
Our long-term liquidity needs consist
primarily of funds necessary to pay for acquisitions, recurring and non-recurring capital expenditures and scheduled debt maturities.
We intend to satisfy our long-term liquidity needs through cash flow from operations, long-term secured and unsecured borrowings, future
issuances of equity and debt securities, property dispositions and joint venture transactions, and, in connection with acquisitions of
additional properties, the issuance of OP units.
The COVID-19 pandemic continues to
create social and economic uncertainty for the Company, its tenants, and stakeholders. Given the wide-ranging impacts of the pandemic,
coupled with external factors that are outside the control of the Company, the extent of such impacts from the COVID-19 pandemic continues
to be dependent on various future developments, which are uncertain and cannot be readily predicted. The Company continues to monitor
potential liquidity restraints resulting from the COVID-19 pandemic, including the evaluation and potential of delayed non-essential capital
that does not impact the safety or ability to lease and/or renew space and maintaining sufficient availability under our revolving line
of credit.
As of December 31, 2021, we had available
liquidity of approximately $200.2 million, comprised of $38.2 million in cash and cash equivalents and $162 million of borrowing capacity
on our KeyBank unsecured line of credit. The Company anticipates it will have sufficient liquidity and access to capital resources to
meet its current obligations and to meet any scheduled debt maturities.
Variable Interest Rates
We are exposed to market risk from
changes in interest rates. Interest rate exposure relates primarily to the effect of interest rate changes on borrowings outstanding under
our borrowing under line of credit and unsecured KeyBank Term Loan, which bear interest at a variable rate.
At December 31, 2021, we had
$338,000 of outstanding variable rate debt, which was subject to a weighted average interest rate of 1.61% as of December 31,
2021. Based on the variable rate borrowings outstanding during the year ended December 31, 2021, we estimate that had the average
interest rate on our weighted average borrowings increased by 25 basis points for the year ended December 31, 2021, our interest expense
for the year would have increased by approximately $566. This estimate assumes the interest rate of each borrowing is raised by 25 basis
points. The impact on future interest expense as a result of future changes in interest rates will depend largely on the gross amount
of our borrowings at that time.
Existing Indebtedness as of December 31, 2021
The following is a schedule of our
indebtedness as of December 31, 2021 ($ in thousands):
Loan |
|
Outstanding
Balance |
|
|
Interest rate at
December 31, 2021 |
|
|
Final Maturity Date |
Secured debt: |
|
|
|
|
|
|
|
|
|
|
AIG Loan |
|
$ |
114,477 |
|
|
|
4.08% |
|
|
November 1, 2023 |
Transamerica Loan |
|
|
68,709 |
|
|
|
4.35% |
|
|
August 1, 2028 |
Allianz Loan |
|
|
63,115 |
|
|
|
4.07% |
|
|
April 10, 2026 |
Minnesota Life Loan |
|
|
20,453 |
|
|
|
3.78% |
|
|
May 1, 2028 |
JPMorgan Chase Loan |
|
|
13,205 |
|
|
|
5.23% |
|
|
January 1, 2027 |
Lincoln Life Gateway Mortgage(4) |
|
|
28,800 |
|
|
|
3.43% |
|
|
January 1, 2028 |
Ohio National Life Mortgage |
|
|
19,660 |
|
|
|
4.14% |
|
|
August 1, 2024 |
Nationwide Loan |
|
|
15,000 |
|
|
|
2.97% |
|
|
October 1, 2027 |
Midland National Life Insurance Mortgage(3) |
|
|
10,820 |
|
|
|
3.50% |
|
|
March 10, 2028 |
Total secured debt |
|
|
354,239 |
|
|
|
|
|
|
|
Unamortized debt issuance costs, net |
|
|
(2,861 |
) |
|
|
|
|
|
|
Unamortized premium/(discount), net |
|
|
697 |
|
|
|
|
|
|
|
Secured debt, net |
|
|
352,075 |
|
|
|
|
|
|
|
Unsecured debt: |
|
|
|
|
|
|
|
|
|
|
$100m KeyBank Term Loan (1) |
|
|
100,000 |
|
|
|
1.60%(2) |
|
|
August 11, 2026 |
$200m KeyBank Term Loan (1) |
|
|
200,000 |
|
|
|
1.60%(2) |
|
|
February 11, 2027 |
Total unsecured debt |
|
|
300,000 |
|
|
|
|
|
|
|
Unamortized debt issuance costs, net |
|
|
(2,160 |
) |
|
|
|
|
|
|
Unsecured debt, net |
|
|
297,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured revolving line of credit: |
|
|
|
|
|
|
|
|
|
|
KeyBank unsecured line of credit |
|
|
38,000 |
|
|
|
1.65%(2) |
|
|
August 11, 2025 |
Borrowings under line of credit, net |
|
$ |
38,000 |
|
|
|
|
|
|
|
________________________
(1) |
On August 11, 2021, the Company entered into a combined $500 million unsecured credit facility, which is comprised of an amended $200 million revolving credit facility (the “KeyBank unsecured line of credit”), an amended $100 million term loan (the “$100m KeyBank unsecured term loan”), and a new $200 million term loan (“the $200m KeyBank unsecured term loan”). The combined unsecured credit facility has an accordion feature enabling the Company to increase the total borrowing capacity under the credit facility up to an aggregate of $1 billion, subject to certain conditions. The amended KeyBank unsecured line of credit matures in August 2025 and has two, six-month extension options, subject to certain conditions, the amended $100m KeyBank unsecured term loan matures in August 2026, and the new $200m KeyBank unsecured term loan matures in February 2027. Amounts outstanding under the KeyBank unsecured line of credit bear interest at LIBOR plus a margin between 135 to 190 basis points with no LIBOR floor and amounts outstanding under the $100m KeyBank unsecured term loan and $200m KeyBank unsecured term loan term facilities bear interest at LIBOR plus a margin between 130 and 185 basis points, in either case depending on the Company’s leverage. |
(2) |
The 1-month LIBOR rate as of December 31, 2021 was 0.10%. The spread over the applicable rate for the $100m and $200m KeyBank unsecured term loans and the KeyBank unsecured line of credit is based on the Company’s total leverage ratio. |
(3) |
On August 12, 2021, a wholly-owned subsidiary of the Operating Partnership assumed a mortgage (the “Midland Mortgage”) with a balance of $10,820 as part of our acquisition of the property in Chicago, Illinois. The Midland Mortgage, held by Midland National Life Insurance Company, matures on March 10, 2028, bears interest at 3.5% and is secured by the property. The Midland Mortgage requires monthly installments of interest only through March 10, 2023 and afterwards, monthly installments of principal plus accrued interest through March 10, 2028, at which time a balloon payment is required. The Company has the right to prepay the borrowings outstanding, subject to a prepayment penalty in effect until the loan approaches maturity. |
(4) |
On October
7, 2021, a wholly-owned subsidiary of the Operating Partnership assumed a mortgage (the “Lincoln Life Gateway Mortgage”)
with a balance of $28,800 as part of our acquisition of the property in St. Louis, Missouri. The Lincoln Life Gateway Mortgage, held
by Lincoln National Life Insurance Company, matures on January 1, 2028, bears interest at 3.43% and is secured by the property. The
Lincoln Life Gateway Mortgage requires monthly installments of interest only through January 1, 2028, at which
time a balloon payment is required. The Company has the right to prepay the borrowings outstanding, subject to a prepayment penalty
in effect until the loan approaches maturity. |
Stock Issuances
Universal Shelf S-3 Registration Statement ($
in thousands)
On August 28, 2020, the Company
completed a follow-on public offering of 8,625,000 shares of common stock, including 1,125,000 shares of common stock issued upon exercise
of the underwriters’ overallotment option, at $12.85 per share resulting in net proceeds of approximately $104,420.
On June 11, 2021, the Company and
Operating Partnership filed a shelf registration statement on Form S-3 (“2021 $750 Million S3 Filing”) with the U.S. Securities
and Exchange Commission (“SEC”) registering an aggregate of $750,000 of securities, consisting of an indeterminate amount
of common stock, preferred stock, depository shares, warrants, rights to purchase our common stock and debt securities. As of December
31, 2021, the Company has $642,924 available for issuance under the 2021 $750 Million S-3 Filing.
ATM Program
On February 27, 2020, the Company
entered into a distribution agreement with KeyBanc Capital Markets Inc., Barclays Capital Inc., J.P. Morgan Securities, LLC, Capital One
Securities, Inc., Robert W. Baird & Co. Incorporated, BMO Capital Markets Corp., D.A. Davidson & Co. and National Securities Corporation
pursuant to which the Company may issue and sell, from time to time, shares of its common stock, with aggregate gross sales proceeds of
up to $100,000, through an “at-the-market” equity offering program. (the “2020 $100 Million ATM Program”).
On May 26, 2021, the Company entered
into a distribution agreement with KeyBanc Capital Markets Inc., Robert W. Baird & Co. Incorporated, Barclays Capital Inc., Berenberg
Capital Markets LLC, BMO Capital Markets Corp., Capital One Securities Inc., JMP Securities LLC, J.P. Morgan Securities, LLC, National
Securities Corporation and Wedbush Securities Inc pursuant to which the Company may issue and sell, from time to time, shares of its common
stock, with aggregate gross sales proceeds of up to $125,000 through an “at-the-market” equity offering program (the “2021
$125 Million ATM Program”).
On August 10, 2021, the Company entered
into an amendment to the 2021 $125 Million ATM Program (the “2021 Amended ATM Program”) to reference the Company’s shelf
registration statement on Form S-3 that was filed with the Securities and Exchange Commission on June 11, 2021.
The Company, under the 2021 Amended ATM Program may issue and sell, from time to time, shares of its common stock, with aggregate gross
sales proceeds of up to $82,288 through an “at-the-market” equity offering program.
On November 9, 2021, the Company
entered into a distribution agreement with KeyBanc Capital Markets Inc., Robert W. Baird & Co. Incorporated, Barclays Capital Inc.,
Berenberg Capital Markets LLC, BMO Capital Markets Corp., Capital One Securities Inc., JMP Securities LLC, J.P. Morgan Securities, LLC,
National Securities Corporation, Wedbush Securities Inc and Wells Fargo Securities pursuant to which the Company may issue and sell, from
time to time, shares of its common stock, with aggregate gross sales proceeds of up to $200,000 through an “at-the-market”
equity offering program (the “2021 $200 Million ATM Program”).
For the year ending December 31,
2021, the Company has issued 10,524,731 shares of its common stock under the 2020 $100 Million ATM Program, 2021 $125 Million ATM Program,
2021 Amended ATM Program, and the 2021 $200 Million ATM Program for aggregate net proceeds of approximately $212,033. The Company has
approximately $154,702 available for issuance under the 2021 $200 Million ATM Program.
Contractual Obligations and Commitments
The following table sets forth
our obligations and commitments as of December 31, 2021:
(in thousands) | |
Payments Due by Period | |
| |
Total | | |
2022 | | |
2023 | | |
2024 | | |
2025 | | |
2026 | | |
Thereafter | |
Principal payments - secured debt | |
$ | 354,239 | | |
$ | 6,054 | | |
$ | 115,815 | | |
$ | 22,280 | | |
$ | 4,041 | | |
$ | 61,796 | | |
$ | 144,253 | |
Principal payments - unsecured debt | |
| 300,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 100,000 | | |
| 200,000 | |
Principal payments - borrowings under line of credit | |
| 38,000 | | |
| — | | |
| — | | |
| — | | |
| 38,000 | | |
| — | | |
| — | |
Interest payments - secured debt | |
| 66,747 | | |
| 14,218 | | |
| 13,575 | | |
| 9,016 | | |
| 8,349 | | |
| 6,604 | | |
| 14,985 | |
Interest payments - unsecured debt (1) | |
| 24,000 | | |
| 4,800 | | |
| 4,800 | | |
| 4,800 | | |
| 4,800 | | |
| 4,267 | | |
| 533 | |
Interest payments - borrowings under line of credit (1) | |
| 2,299 | | |
| 627 | | |
| 627 | | |
| 627 | | |
| 418 | | |
| — | | |
| — | |
Office Leases | |
| 8,457 | | |
| 1,249 | | |
| 1,274 | | |
| 1,243 | | |
| 857 | | |
| 764 | | |
| 3,070 | |
Ground Leases (2) | |
| 8,768 | | |
| 192 | | |
| 192 | | |
| 192 | | |
| 207 | | |
| 207 | | |
| 7,778 | |
Total Contractual Obligations | |
$ | 802,510 | | |
$ | 27,140 | | |
$ | 136,283 | | |
$ | 38,158 | | |
$ | 56,672 | | |
$ | 173,638 | | |
$ | 370,619 | |
____________________
(1) Variable rate interest payments are calculated using the December 31, 2021 interest
rate of 1.60% on the unsecured debt and 1.65% on the borrowings under line of credit.
(2) Includes two ground subleases with a lease term through the end of December
31, 2055. Lease term includes one, twenty year renewal option at a stated rent.
In addition to the contractual obligations
set forth in the table above, we have entered into employment agreements with certain of our executive officers. As approved by the compensation
committee of the Board of Directors the agreements provide for base salaries ranging from $300 to $550 annually with discretionary
cash performance awards. The agreements contain provisions for equity awards, general benefits, and termination and severance provisions,
consistent with similar positions and companies.
We also enter into contracts for
maintenance and other services at certain properties from time to time.
Off-Balance Sheet Arrangements
At December 31, 2021, we have an investment in an unconsolidated
joint venture with our ownership percentage at 20%. We exercise significant influence over, but do not control, the entity. As a result,
we account for this using the equity method of accounting. The aggregate carrying amount of non-recourse debt including both our and our
partners’ share incurred by the joint venture was approximately $56,000 (of which our proportionate share is approximately $11,200).
The table below summarizes the outstanding debt of the joint venture properties at December 31, 2021.
|
Venture
Ownership % |
Stated
Interest Rate |
Stated
Principal
Amount |
Deferred Financing Costs, Net |
Carrying Amount |
Carrying Amount (Our Share) |
Maturity Date |
Memphis Industrial Portfolio |
20% |
3.15% |
$ 56,000 |
$ (542) |
$ 55,458 |
$ 11,091 |
1/1/2028 |
Inflation
The majority of our leases are
either triple net or provide for tenant reimbursement for costs related to real estate taxes and operating expenses. In addition, most
of the leases provide for fixed rent increases. We believe that inflationary increases may be at least partially offset by the contractual
rent increases and tenant payment of taxes and expenses described above. We do not believe that inflation has had a material impact on
our historical financial position or results of operations.
Interest Rate Risk
ASC 815, Derivatives and Hedging
(formerly known as SFAS No. 133, Accounting for Derivative Instruments and hedging Activities, as amended by SFAS No. 138,
Accounting for Certain Derivative Instruments and Certain Hedging Activities), requires us to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair value and the changes in fair value must be reflected as
income or expense. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either
offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other
comprehensive income, which is a component of stockholders’ equity. The ineffective portion of a derivative’s change in fair
value is immediately recognized in earnings. As of December 31, 2021, the Company has no derivative or hedging contracts. Subsequent
to December 31, 2021, the Company entered into 2 interest rate swap agreements as outlined in Note 15 to our consolidated financial
statements.
No assurance can be given that
any future hedging activities by us will have the desired beneficial effect on our results of operations or financial condition.
Recently Issued Accounting Standards
We have reviewed all recently issued
standards and have determined that, other than as disclosed in Note 2 to our consolidated financial statements appearing in this annual
report on Form 10-K, such standards will not have a material impact on our consolidated financial statements or do not otherwise apply
to our operations.
Item 7A.
Quantitative and Qualitative Disclosure About Market Risk
This disclosure has been omitted
as permitted under rules applicable to smaller reporting companies.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
The information with respect to
this Item 8 is hereby incorporated by reference from our Consolidated Financial Statements beginning on page F-1 of this Annual Report
on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and
Procedures
Disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required
to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the forms and rules of the SEC and that such information is accumulated and communicated to management, including the CEO
and CFO, to allow timely decisions regarding required disclosures.
In connection with the preparation
of this annual report on Form 10-K, our management, including the CEO and CFO, evaluated the effectiveness of the design and operation
of our disclosure controls and procedures as of December 31, 2021. Based on that evaluation, our CEO and CFO have concluded that our
disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2021 because of the
material weakness in our internal control over financial reporting, as described below.
Notwithstanding the material
weakness, the Company has concluded that the consolidated financial statements included in this report present fairly, in all material
respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally accepted in the United States of America.
(b) Management’s Report on Internal
Control Over Financial Reporting
The management of Plymouth Industrial
REIT, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined
in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles.
Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of
compliance with the policies or procedures may deteriorate.
Our management, with the participation
of our CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021.
In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
in Internal Control—Integrated Framework (2013). A material weakness is a deficiency, or combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim
financial statements will not be prevented or detected on a timely basis. We have determined that we did not design and maintain effective
user access controls to adequately restrict user access and the ability to modify financial data within certain financial applications,
including ensuring appropriate segregation of duties relating to the preparation and review of journal entries in these financial applications.
This control deficiency did not result in a misstatement of the Company’s annual or interim consolidated financial statements.
However, this control deficiency could result in misstatements of interim or annual consolidated financial statements and disclosures
that would result in a material misstatement that would not be prevented or detected. Therefore, management has concluded that this control
deficiency constitutes a material weakness. Because of this material weakness, management concluded that the Company did not maintain
effective internal control over financial reporting as of December 31, 2021.
The effectiveness of the Company’s
internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm, as stated in their report which appears herein.
(c) Plan for Remediation of Material Weakness
The Company and its Board of
Directors are committed to maintaining a strong internal control environment. Management has evaluated the material weakness described
above and has made significant progress updating its design and implementation of internal control over financial reporting to remediate
the aforementioned material weakness and enhance the Company’s internal control environment during the quarter ended December 31,
2021. The remediation plan has been developed and implemented and includes reviewing and adjusting the access permissions to its financial
applications to more appropriately segregate access, in particular, for those individuals who are also responsible for the review and
approval of new or modified financial data, coupled with additional controls and procedures over the review of journal entries. We are
committed to continuing to improve our internal control over financial reporting and will continue to review, optimize and enhance our
internal control over financial reporting. As we continue to evaluate and work to improve our internal control over financial reporting,
we may take additional measures to address control deficiencies, or we may modify, certain of the remediation measures described above.
The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time
and management has concluded, through testing, that these controls are operating effectively.
(d) Changes in Internal Control Over Financial
Reporting
As described above, there were
changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. HOLDING FOREIGN COMPANIES
ACCOUNTABLE ACT
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information with respect to this
Item 10 is incorporated by reference from our proxy statement, which we intend to file on or before April 30, 2022, in connection with
our 2022 annual meeting of stockholders.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this
Item 11 is incorporated by reference from our proxy statement, which we intend to file on or before April 30, 2022, in connection with
our 2022 annual meeting of stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
Information with respect to this
Item 12 is incorporated by reference from our proxy statement, which we intend to file on or before April 30, 2022, in connection with
our 2022 annual meeting of stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AND DIRECTOR INDEPENDENCE
Information with respect to this
Item 13 is incorporated by reference from our proxy statement, which we intend to file on or before April 30, 2022, in connection with
our 2022 annual meeting of stockholders.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND EXPENSES
Information with respect to this
Item 14 is incorporated by reference from our proxy statement, which we intend to file on or before April 30, 2022, in connection with
our 2022 annual meeting of stockholders.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
See Index to Consolidated Financial
Statements set forth on page F-1 of this Form 10-K as filed as part of this Annual Report on Form 10-K.
(b) Financial Statement
Schedule
Financial Statement Schedule III
as listed in the accompanying Index to Consolidated Financial Statements is filed as part of this Annual Report on Form 10-K.
(c) Exhibits
The exhibits listed in the Exhibit
Index are filed as part of this Annual Report on Form 10-K.
EXHIBIT INDEX
Exhibit |
|
|
Number |
|
Description |
3.1 |
|
Second Articles of Amendment and Restatement of Plymouth Industrial REIT, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 (File No. 333-196798) filed on September 11, 2014) |
3.2 |
|
Second Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 333-173048) filed on September 10, 2014) |
3.3 |
|
Articles of Amendment of Plymouth Industrial REIT, Inc. (incorporated by reference to Exhibit 3.3 to Amendment No. 8 to the Company’s Registration Statement on Form S-11 (File No. 333-19748) filed on June 1, 2017) |
3.4 |
|
Articles Supplementary designating the terms of the Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (File No. 001-38106) filed on October 23, 2017) |
3.5 |
|
Articles Supplementary designating the terms of the Series B Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K (File No. 001-38106) filed on December 17, 2018) |
4.1 |
|
Description of Common Stock (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K (File No. 001-38106) filed on February 27, 2020) |
4.2 |
|
Description of Series A Preferred Stock (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K (File No. 001-38106) filed on February 27, 2020) |
4.3 |
|
Second Amended and Restated 2014 Incentive Award Plan (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (File No. 333-251104) filed on December 3, 2020) |
4.4 |
|
Restricted Stock Agreement (Employee) (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (File No. 333-251104) filed on December 3, 2020) |
4.5 |
|
Restricted Stock Agreement (Director) (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-8 (File No. 333-251104) filed on December 3, 2020) |
10.1 |
|
Amended and Restated Agreement of Limited Partnership of Plymouth Industrial OP, LP (incorporated by reference to Exhibit 10.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-11 (File No. 333-196798) filed on September 11, 2014) |
10.2 |
|
Amended
and Restated Employment Agreement with Jeffrey E. Witherell, dated as of June 19, 2019 (incorporated by reference to Exhibit 10.1
to the Company’s Current Report on Form 8-K (File No. 001-381061) filed on June 24, 2019)† |
10.3 |
|
Amended
and Restated Employment Agreement with Pendleton P. White, Jr., dated as of June 19, 2019 (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-381061) filed on June 24, 2019)† |
10.4 |
|
Amended
and Restated Employment Agreement with Daniel C. Wright, dated as of June 19, 2019 (incorporated by reference to Exhibit 10.3
to the Company’s Current Report on Form 8-K (File No. 001-381061) filed on June 24, 2019)† |
10.5 |
|
Form of Indemnification Agreement between Plymouth Industrial REIT, Inc. and its directors and officers (incorporated by reference to Exhibit 10.6 to Amendment No. 6 to the Company’s Registration Statement on Form S-11 (File No. 333-196798) filed on May 22, 2017) |
10.6 |
|
Limited Liability Company Agreement of Plymouth Industrial 20 LLC (incorporated by reference to Exhibit 10.7 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 (File No. 333-196798) filed on March 29, 2017) |
10.7 |
|
Amended and Restated Promissory Note (AGLIC), dated November 18, 2016, in the original principal amount of $66,240,000.00, made payable to the order of AGLIC, as Holder, by Borrowers, as Maker (incorporated by reference to Exhibit 10.8 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 (File No. 333-196798) filed on March 29, 2017) |
10.8 |
|
Amended and Restated Promissory Note (AHAC), dated November 18, 2016, in the original principal amount of $21,900,000.00, made payable to the order of AHAC, as Holder, by Borrowers, as Maker (incorporated by reference to Exhibit 10.9 to Amendment No. 4 to the Company’s Registration Statement on Form S-11 (File No. 333-196798) filed on March 29, 2017) |
Exhibit |
|
|
Number |
|
Description |
10.9 |
|
Amended
and Restated Promissory Note (NUFIC), dated November 18, 2016, in the original principal amount of $21,900,000.00, made payable to the
order of NUFIC, as Holder, by Borrowers, as Maker (incorporated by reference to Exhibit 10.10 to Amendment No. 4 to the Company’s
Registration Statement on Form S-11 (File No. 333-196798) filed on March 29, 2017) |
10.10 |
|
Amended
and Restated Promissory Note (USLIC), dated November 18, 2016, in the original principal amount of $9,960,000.00, made payable to the
order of USLIC, as Holder, by Borrowers, as Maker (incorporated by reference to Exhibit 10.11 to Amendment No. 4 to the Company’s
Registration Statement on Form S-11 (file No. 333-196798) filed on March 29, 2017) |
10.11 |
|
Loan
Agreement, dated October 17, 2016, by and among American General Life Insurance Company, American Home Assurance Company, National Union
Fire Insurance Company of Pittsburgh, PA. and The United States Life Insurance Company in the City of New York, collectively as Lender,
and the Borrowers named therein. (incorporated by reference to Exhibit 10.12 to Amendment No. 6 to the Company’s Registration
Statement on Form S-11 (File No. 333-196798) filed on March 29, 2017) |
10.12 |
|
Warrant
Agreement, dated as of June 8, 2017, by and among Plymouth Industrial REIT, Inc., DOF IV REIT Holdings, LLC and DOF IV Plymouth PM, LLC
(incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (File No. 001-38106) filed on June 23, 2017) |
10.13 |
|
Stockholders
Agreement, dated as of June 8, 2017, by and among Plymouth Industrial REIT, Inc., DOF IV REIT Holdings, LLC and DOF IV Plymouth PM, LLC
(incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-38106) filed on June 23, 2017) |
10.14 |
|
Amendment
No. 1 to the Amended and Restated Agreement of Limited Partnership of Plymouth Industrial OP LP designating the terms of the Series A
Preferred Units (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-38106)
filed on October 23, 2017). |
10.15 |
|
Amendment
to Stockholders Agreement, dated as of March 29, 2018, by and among Plymouth Industrial REIT, Inc., DOF IV REIT Holdings, LLC and DOF
IV Plymouth PM, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-38106)
filed on April 4, 2018) |
10.16 |
|
Loan
Agreement, dated as of July 10, 2018, by and among Transamerica Life Insurance Company and the Borrowers named therein (incorporated
by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-38106) filed on July 17, 2018) |
10.17 |
|
Investment
Agreement, dated as of November 20, 2018, by and between Plymouth Industrial REIT, Inc. and MIRELF VI Pilgrim, LLC (incorporated by
reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-38106) filed on November 27, 2018) |
10.18 |
|
Second Amended and Restated Credit Agreement, dated as of October 8, 2020, by and among Plymouth Industrial OP, LP, the Guarantors from time to time party thereto, KeyBank National Association and the other Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-38106) filed on October 9, 2020 |
10.19 |
|
First
Amendment to Second Amended and Restated Credit Agreement, dated as of August 11, 2021, by and among Plymouth Industrial OP, LP,
the Guarantors, KeyBank National Association and the other Lenders (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K (File No. 001-38106) filed on August 17, 2021 |
10.20 |
|
Term
Loan Agreement, dated as of August 11, 2021, by and among Plymouth Industrial OP, LP, the Guarantors from time to time party
thereto, KeyBank National Association and the other Lenders party thereto (incorporated by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K (File No. 001-38106) filed on August 17, 2021 |
10.21 |
|
Distribution Agreement, dated as of November 9, 2021, by and among Plymouth Industrial REIT, Inc., Plymouth Industrial OP, LP and the Agents party thereto (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K (File No. 001-38106) filed on November 9, 2021 |
21.1 |
|
List of Subsidiaries* |
23.1 |
|
Consent of Pricewaterhouse Coopers LLP* |
31.1 |
|
Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002* |
31.2 |
|
Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002* |
32.1 |
|
Certification of Chief Executive Officer pursuant
to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002* |
32.2 |
|
Certification of Chief Financial Officer pursuant
to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002* |
101.INS |
|
Inline XBRL Instance Document - the instance document does not
appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.* |
101.XSD |
|
Inline XBRL Taxonomy Extension Schema Document* |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document* |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document* |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document* |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document* |
104 |
|
Cover Page Interactive Data File - formatted in Inline XBRL and contained in Exhibit 101 |
________________
* Filed herewith.
† Management contract or compensation plan or arrangement.
ITEM 16. FORM 10-K SUMMARY
None
SIGNATURES
Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
PLYMOUTH INDUSTRIAL REIT, INC. |
|
|
|
|
|
|
|
By: |
/s/ Jeffrey E. Witherell |
|
|
Name: |
Jeffrey E. Witherell |
|
|
Title: |
Chief Executive Officer |
Pursuant to the requirements of
the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Jeffrey E. Witherell |
|
Chairman of the Board, Chief Executive Officer and Director
(Principal Executive Officer) |
|
February 23, 2022 |
Jeffrey E. Witherell |
|
|
|
|
|
|
/s/ Daniel C. Wright |
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) |
|
February 23, 2022 |
Daniel C. Wright |
|
|
|
|
|
|
|
/s/ Pendleton P. White, Jr. |
|
President, Chief Investment Officer and Director |
|
February 23, 2022 |
Pendleton P. White, Jr. |
|
|
|
|
|
|
|
|
/s/ Martin Barber |
|
Director |
|
February 23, 2022 |
Martin Barber |
|
|
|
|
|
|
|
|
|
/s/ Philip S. Cottone |
|
Director |
|
February 23, 2022 |
Philip S. Cottone |
|
|
|
|
|
|
|
|
|
/s/ Richard DeAgazio |
|
Director |
|
February 23, 2022 |
Richard DeAgazio |
|
|
|
|
|
|
|
|
|
/s/ David G. Gaw |
|
Director |
|
February 23, 2022 |
David G. Gaw |
|
|
|
|
|
|
|
|
|
/s/ John W. Guinee III |
|
Director |
|
February 23, 2022 |
John W. Guinee III |
|
|
|
|
|
|
|
|
|
/s/ Caitlin Murphy |
|
Director |
|
February 23, 2022 |
Caitlin Murphy |
|
|
|
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Plymouth Industrial REIT, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Plymouth Industrial REIT,
Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations,
of changes in preferred stock and equity, and of cash flows for the years then ended, including the related notes and financial statement
schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have
audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and
its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Also
in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December
31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material
weakness in internal control over financial reporting existed as of that date as the Company did not design and maintain effective user
access controls to adequately restrict user access and the ability to modify financial data within certain financial applications, including
ensuring appropriate segregation of duties relating to the preparation and review of journal entries in these financial applications.
A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial
statements will not be prevented or detected on a timely basis. The material weakness referred to above is described in Management's Report
on Internal Control Over Financial Reporting appearing under Item 9A. We considered this material weakness in determining the nature,
timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements, and our opinion regarding the effectiveness
of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for
maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting included in management's report referred to above. Our responsibility is to express opinions on the Company’s
consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free
of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained
in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide
a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current
period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and
that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Real Estate Property Acquisitions
As described in Notes 2 and 3 to the consolidated financial statements, during 2021,
the Company completed 24 property acquisitions for a total purchase price of $376.7 million, of which $43.5 million of land, $304.7 million
of buildings and site improvements, and $28.7 million of net deferred lease intangibles were recorded. The accounting for real estate
property acquisitions requires estimates and judgment as to expectations for future cash flows of the acquired property, the allocation
of those cash flows to identifiable intangible assets and liabilities, and in determining the estimated fair value for assets acquired
and liabilities assumed. The amounts allocated to lease intangibles (leases in place, leasing commissions, tenant relationships, and above
and below market leases) are based on management’s estimates and assumptions, as well as other information compiled by management,
including independent third-party analysis and market data. The process for determining the allocation to these components requires management
to make estimates and assumptions, including rental rates, land value, discount rates, and exit capitalization rates.
The principal considerations for our determination that performing procedures relating
to real estate property acquisitions is a critical audit matter are (i) the significant judgment by management in determining the fair
values of the tangible and intangible assets acquired and liabilities assumed, (ii) a high degree of auditor judgment, subjectivity and
effort in performing procedures and evaluating audit evidence related to management’s assumptions for rental rates, land value,
discount rates, and exit capitalization rates, and (iii) the audit effort involved the use of professionals with specialized skill and
knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence
in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to purchase price accounting, including controls over the allocation of the purchase price to the assets acquired
and liabilities assumed. These procedures also included, among others, testing of management’s process for determining the fair
values of the tangible and intangible assets acquired and liabilities assumed, including (i) reading the purchase agreements, (ii) evaluating
the appropriateness of the models used by management, (iii) for selected acquisitions, testing the completeness and accuracy of the data
used in the models, and (iv) for selected acquisitions, evaluating the reasonableness of assumptions used by management for rental rates,
land value, discount rates, and exit capitalization rates. Evaluating these assumptions involved evaluating whether the assumptions used
by management were reasonable considering (i) consistency with external market and industry data and (ii) whether the assumptions were
consistent with evidence obtained in other areas of the audit. For selected acquisitions, professionals with specialized skill and knowledge
were used to assist in evaluating (i) the appropriateness of management’s models and (ii) the reasonableness of management’s
assumptions used in the models for the rental rates, land value, discount rates, and exit capitalization rates.
/s/PricewaterhouseCoopers LLP
Boston, Massachusetts
February 23, 2022
We have served as the Company’s auditor since 2020.
PLYMOUTH INDUSTRIAL REIT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
| |
December 31, | | |
December 31, | |
| |
2021 | | |
2020 | |
Assets | |
| | | |
| | |
Real estate properties | |
$ | 1,254,007 | | |
$ | 886,681 | |
Less accumulated depreciation | |
| (142,192 | ) | |
| (98,283 | ) |
Real estate properties, net | |
| 1,111,815 | | |
| 788,398 | |
| |
| | | |
| | |
Cash | |
| 26,232 | | |
| 15,668 | |
Cash held in escrow | |
| 11,893 | | |
| 11,939 | |
Restricted cash | |
| 5,249 | | |
| 4,447 | |
Deferred lease intangibles, net | |
| 75,864 | | |
| 66,116 | |
Investment in unconsolidated joint venture | |
| 5,833 | | |
| 6,683 | |
Other assets | |
| 33,919 | | |
| 27,019 | |
Total assets | |
$ | 1,270,805 | | |
$ | 920,270 | |
| |
| | | |
| | |
Liabilities, Preferred Stock and Equity | |
| | | |
| | |
Liabilities: | |
| | | |
| | |
Secured debt, net | |
$ | 352,075 | | |
$ | 328,908 | |
Unsecured debt, net | |
| 297,840 | | |
| 99,254 | |
Borrowings under line of credit | |
| 38,000 | | |
| 90,000 | |
Accounts payable, accrued expenses and other liabilities | |
| 66,880 | | |
| 49,335 | |
Deferred lease intangibles, net | |
| 10,273 | | |
| 11,350 | |
Financing lease liability | |
| 2,227 | | |
| 2,207 | |
Total liabilities | |
| 767,295 | | |
| 581,054 | |
Commitments and contingencies (Note 13) | |
| | | |
| | |
| |
| | | |
| | |
Preferred stock, par value $0.01 per share, 100,000,000 shares authorized, | |
| | | |
| | |
Series A; 2,023,551 and 2,023,999 shares issued and outstanding at December 31, 2021 and 2020, respectively (aggregate liquidation preference of $50,589 and $50,600 at
December 31, 2021 and 2020, respectively) | |
| 48,473 | | |
| 48,485 | |
Series B; 4,411,764 shares issued and outstanding at December 31, 2021 and 2020 (aggregate liquidation preference of $97,277 and $97,230 at December 31, 2021 and 2020, respectively) | |
| 94,437 | | |
| 87,209 | |
| |
| | | |
| | |
Equity: | |
| | | |
| | |
Common stock, $0.01 par value: 900,000,000 shares authorized; 36,110,659 and 25,344,161 shares issued and outstanding at December 31, 2021 and 2020, respectively | |
| 361 | | |
| 253 | |
Additional paid in capital | |
| 532,666 | | |
| 360,752 | |
Accumulated deficit | |
| (177,258 | ) | |
| (162,250 | ) |
Total stockholders' equity | |
| 355,769 | | |
| 198,755 | |
Non-controlling interest | |
| 4,831 | | |
| 4,767 | |
Total equity | |
| 360,600 | | |
| 203,522 | |
Total liabilities, preferred stock and equity | |
$ | 1,270,805 | | |
$ | 920,270 | |
The accompanying notes are an integral part of the consolidated financial statements.
PLYMOUTH INDUSTRIAL REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
| |
| | | |
| | |
| |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
Rental revenue | |
$ | 140,270 | | |
$ | 109,836 | |
Management fee revenue and other income | |
| 348 | | |
| 15 | |
Total revenues | |
| 140,618 | | |
| 109,851 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Property | |
| 47,636 | | |
| 38,159 | |
Depreciation and amortization | |
| 70,642 | | |
| 56,428 | |
General and administrative | |
| 12,920 | | |
| 10,362 | |
Total operating expenses | |
| 131,198 | | |
| 104,949 | |
| |
| | | |
| | |
Other income (expense): | |
| | | |
| | |
Interest expense | |
| (19,968 | ) | |
| (18,931 | ) |
Impairment on real estate lease | |
| — | | |
| (311 | ) |
Earnings (loss) in investment of unconsolidated joint venture | |
| (850 | ) | |
| (19 | ) |
Loss on extinguishment of debt | |
| (523 | ) | |
| — | |
Gain on sale of real estate | |
| 1,775 | | |
| — | |
Unrealized (appreciation) depreciation of warrants | |
| (5,121 | ) | |
| (103 | ) |
Total other income (expense) | |
| (24,687 | ) | |
| (19,364 | ) |
| |
| | | |
| | |
Net loss | |
| (15,267 | ) | |
| (14,462 | ) |
Less: Loss attributable to non-controlling interest | |
| (259 | ) | |
| (649 | ) |
Net loss attributable to Plymouth Industrial REIT, Inc. | |
| (15,008 | ) | |
| (13,813 | ) |
Less: Preferred stock dividends | |
| 6,608 | | |
| 6,444 | |
Less: Series B preferred stock accretion to redemption value | |
| 7,228 | | |
| 7,416 | |
Less: Loss on extinguishment of Series A Preferred Stock | |
| — | | |
| 34 | |
Less: Amount allocated to participating securities | |
| 201 | | |
| 182 | |
Net loss attributable to common stockholders | |
$ | (29,045 | ) | |
$ | (27,889 | ) |
Net loss basic and diluted per share attributable to common stockholders | |
$ | (0.94 | ) | |
$ | (1.52 | ) |
| |
| | | |
| | |
Weighted-average common shares outstanding basic and diluted | |
| 30,910,581 | | |
| 18,381,700 | |
The accompanying notes are an integral part of the consolidated financial statements.
PLYMOUTH INDUSTRIAL REIT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN PREFERRED STOCK AND
EQUITY
YEARS ENDED DECEMBER 31, 2021 AND 2020
(In thousands, except share and per share amounts)
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Preferred Stock Series A $0.01 Par Value | | |
Preferred Stock Series B $0.01 Par Value | | |
Common Stock, $0.01 Par Value | | |
Additional Paid in | | |
Accumulated | | |
Stockholders’ Equity | | |
Non-controlling | | |
Total Equity | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
DeficitAccumulated Deficit | | |
(Deficit)Stockholders’
Equity (Deficit) | | |
Interest | | |
(Deficit) | |
Balance January 1, 2020 | |
| 2,040,000 | | |
$ | 48,868 | | |
| 4,411,764 | | |
$ | 79,793 | | |
| 14,141,355 | | |
$ | 141 | | |
$ | 256,259 | | |
$ | (148,403 | ) | |
$ | 107,997 | | |
$ | 6,767 | | |
$ | 114,764 | |
Repurchase and extinguishment of Series A Preferred stock | |
| (16,001 | ) | |
| (383 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (34 | ) | |
| (34 | ) | |
| — | | |
| (34 | ) |
Series B Preferred stock accretion to redemption value | |
| — | | |
| — | | |
| — | | |
| 7,416 | | |
| — | | |
| — | | |
| (7,416 | ) | |
| — | | |
| (7,416 | ) | |
| — | | |
| (7,416 | ) |
Net proceeds from common stock | |
| — | | |
| — | | |
| — | | |
| — | | |
| 10,837,905 | | |
| 108 | | |
| 135,047 | | |
| — | | |
| 135,155 | | |
| — | | |
| 135,155 | |
Stock based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,439 | | |
| — | | |
| 1,439 | | |
| — | | |
| 1,439 | |
Restricted shares issued | |
| — | | |
| — | | |
| — | | |
| — | | |
| 96,237 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Dividends and distributions | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (25,180 | ) | |
| — | | |
| (25,180 | ) | |
| (744 | ) | |
| (25,924 | ) |
Redemption of partnership units | |
| — | | |
| — | | |
| — | | |
| — | | |
| 268,664 | | |
| 4 | | |
| 4,562 | | |
| — | | |
| 4,566 | | |
| (4,566 | ) | |
| — | |
Reallocation of non-controlling interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3,959 | ) | |
| — | | |
| (3,959 | ) | |
| 3,959 | | |
| — | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (13,813 | ) | |
| (13,813 | ) | |
| (649 | ) | |
| (14,462 | ) |
Balance, December 31, 2020 | |
| 2,023,999 | | |
$ | 48,485 | | |
| 4,411,764 | | |
$ | 87,209 | | |
| 25,344,161 | | |
$ | 253 | | |
$ | 360,752 | | |
$ | (162,250 | ) | |
$ | 198,755 | | |
$ | 4,767 | | |
$ | 203,522 | |
Repurchase and extinguishment of Series A Preferred stock | |
| (448 | ) | |
| (12 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Series B Preferred stock accretion to redemption value | |
| — | | |
| — | | |
| — | | |
| 7,228 | | |
| — | | |
| — | | |
| (7,228 | ) | |
| — | | |
| (7,228 | ) | |
| — | | |
| (7,228 | ) |
Net proceeds from common stock | |
| — | | |
| — | | |
| — | | |
| — | | |
| 10,524,731 | | |
| 106 | | |
| 211,927 | | |
| — | | |
| 212,033 | | |
| — | | |
| 212,033 | |
Stock based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,559 | | |
| — | | |
| 1,559 | | |
| — | | |
| 1,559 | |
Restricted shares issued | |
| — | | |
| — | | |
| — | | |
| — | | |
| 125,434 | | |
| 1 | | |
| — | | |
| — | | |
| 1 | | |
| — | | |
| 1 | |
Dividends and distributions | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (33,584 | ) | |
| — | | |
| (33,584 | ) | |
| (436 | ) | |
| (34,020 | ) |
Redemption of partnership units | |
| — | | |
| — | | |
| — | | |
| — | | |
| 116,333 | | |
| 1 | | |
| 2,086 | | |
| — | | |
| 2,087 | | |
| (2,087 | ) | |
| — | |
Reallocation of non-controlling interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,846 | ) | |
| — | | |
| (2,846 | ) | |
| 2,846 | | |
| — | |
Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (15,008 | ) | |
| (15,008 | ) | |
| (259 | ) | |
| (15,267 | ) |
Balance, December 31, 2021 | |
| 2,023,551 | | |
$ | 48,473 | | |
| 4,411,764 | | |
$ | 94,437 | | |
| 36,110,659 | | |
$ | 361 | | |
$ | 532,666 | | |
$ | (177,258 | ) | |
$ | 355,769 | | |
$ | 4,831 | | |
$ | 360,600 | |
The accompanying notes are an integral part of the consolidated financial statements.
PLYMOUTH INDUSTRIAL REIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| |
| | | |
| | |
| |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
Operating activities | |
| | | |
| | |
Net loss | |
$ | (15,267 | ) | |
$ | (14,462 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 70,642 | | |
| 56,428 | |
Straight line rent adjustment | |
| (3,700 | ) | |
| (1,963 | ) |
Intangible amortization in rental revenue, net | |
| (2,096 | ) | |
| (2,075 | ) |
Loss on extinguishment of debt | |
| 523 | | |
| — | |
Amortization of debt related costs | |
| 1,605 | | |
| 1,467 | |
Unrealized appreciation (depreciation) of warrants | |
| 5,121 | | |
| 103 | |
Impairment on real estate lease | |
| — | | |
| 311 | |
Stock based compensation | |
| 1,559 | | |
| 1,439 | |
(Earnings) loss in investment of unconsolidated joint ventures | |
| 850 | | |
| 19 | |
Gain on sale of real estate | |
| (1,775 | ) | |
| — | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Other assets | |
| (3,883 | ) | |
| (9,614 | ) |
Deferred leasing costs | |
| (5,564 | ) | |
| (2,238 | ) |
Accounts payable, accrued expenses and other liabilities | |
| 9,925 | | |
| 12,330 | |
Net cash provided by operating activities | |
| 57,940 | | |
| 41,745 | |
| |
| | | |
| | |
Investing activities | |
| | | |
| | |
Acquisition of real estate properties | |
| (337,030 | ) | |
| (246,353 | ) |
Real estate improvements | |
| (25,308 | ) | |
| (6,063 | ) |
Proceeds from sale of real estate, net | |
| 6,258 | | |
| — | |
Contribution to and investments
in unconsolidated joint venture | |
| — | | |
| (6,702 | ) |
Net cash used in investing activities | |
| (356,080 | ) | |
| (259,118 | ) |
| |
| | | |
| | |
Financing activities | |
| | | |
| | |
Proceeds from issuance of common stock, net | |
| 212,033 | | |
| 135,155 | |
Proceeds from issuance of secured debt | |
| — | | |
| 96,000 | |
Proceeds from issuance of unsecured debt | |
| 200,000 | | |
| 100,000 | |
Repayment of secured debt | |
| (17,392 | ) | |
| (86,166 | ) |
Proceeds from line of credit facility | |
| 139,000 | | |
| 131,500 | |
Repayment of line of credit facility | |
| (191,000 | ) | |
| (120,400 | ) |
Repurchase of Series A Preferred Stock | |
| (12 | ) | |
| (416 | ) |
Debt issuance costs | |
| (1,692 | ) | |
| (2,935 | ) |
Dividends and distributions paid | |
| (31,477 | ) | |
| (25,709 | ) |
Net cash provided by financing activities | |
| 309,460 | | |
| 227,029 | |
Net (decrease) increase in cash, cash held in escrow, and restricted cash | |
| 11,320 | | |
| 9,656 | |
Cash, cash held in escrow, and restricted cash at beginning of period | |
| 32,054 | | |
| 22,398 | |
Cash, cash held in escrow, and restricted cash at end of period | |
$ | 43,374 | | |
$ | 32,054 | |
Supplemental Cash Flow Disclosures: | |
| | | |
| | |
Cash paid for interest | |
$ | 18,172 | | |
$ | 17,316 | |
Supplemental Non-Cash Investing and Financing Activities: | |
| | | |
| | |
Dividends declared included in dividends payable | |
$ | 8,286 | | |
$ | 5,725 | |
Distribution payable to non-controlling interest holder | |
$ | 103 | | |
$ | 121 | |
Series B accretion to redemption value | |
$ | 7,228 | | |
$ | 7,416 | |
Real estate improvements included in accounts payables, accrued expenses and other liabilities | |
$ | 1,377 | | |
$ | 685 | |
Deferred leasing costs included in accounts payables, accrued expenses and other liabilities | |
$ | 91 | | |
$ | 342 | |
New financing lease | |
$ | — | | |
$ | 2,207 | |
Assumption of secured debt | |
$ | 39,620 | | |
$ | — | |
The accompanying notes are an integral part of the consolidated financial statements.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
1. Nature of the Business and Basis of Presentation
Business
Plymouth Industrial REIT, Inc.,
(the “Company”) is a Maryland corporation formed on March 7, 2011. The Company is structured as an umbrella partnership REIT,
commonly called an UPREIT, and owns substantially all of its assets and conducts substantially all of its business through its operating
partnership, Plymouth Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”).
The Company, as general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities,
and results of operations of the Operating Partnership. As of December 31, 2021, and 2020, the Company owned a 98.7% and 97.7%, respectively,
equity interest in the Operating Partnership.
The Company is a real estate investment
trust focused on the acquisition, ownership and management of single and multi-tenant industrial properties, including distribution centers,
warehouses, light industrial and small bay industrial properties, located in primary and secondary markets within the main industrial,
distribution and logistics corridors of the United States. As of December 31, 2021, the Company, through its subsidiaries, owned 128 industrial
properties comprising 163 buildings with an aggregate of approximately 29.5 million square feet, and our property management office building
located in Columbus, Ohio, totaling approximately 17,260 square feet.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s consolidated
financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).
The Company’s consolidated financial statements include the accounts of the Company, the Operating Partnership and their subsidiaries.
All significant intercompany balances and transactions have been eliminated in the consolidation of entities.
Consolidation
We consolidate all entities that
are wholly owned and those in which we own less than 100% but control, as well as any variable interest entities (“VIEs”)
in which we are the primary beneficiary. We evaluate our ability to control an entity and whether the entity is a variable interest entity
and we are the primary beneficiary through consideration of the substantive terms of the arrangement to identify which enterprise has
the power to direct the activities of a variable interest entity that most significantly impacts the entity’s economic performance
and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Investments in entities in which we
do not control but over which we have the ability to exercise significant influence over operating and financial policies are presented
under the equity method. Investments in entities that we do not control and over which we do not exercise significant influence are carried
at the lower of cost or fair value, as appropriate. Our ability to correctly assess our influence and/or control over an entity affects
the presentation of these investments in our consolidated financial statements.
Consolidated VIEs are those for
which the Company is considered to be the primary beneficiary of a VIE. The primary beneficiary is the entity that has a controlling financial
interest in the VIE, which is defined by the entity having both of the following characteristics: (1) the power to direct the activities
that, when taken together, most significantly impact the VIE’s performance and (2) the obligation to absorb losses or the right
to receive the returns from the VIE that could potentially be significant to the VIE. The Company has determined that the Operating
Partnership is a VIE and the Company is the primary beneficiary. The Company's only significant asset is its investment in the Operating
Partnership, therefore, substantially all of the Company’s assets and liabilities are the assets and liabilities of the Operating
Partnership.
Risks and Uncertainties
The COVID-19 pandemic continues
to be a potential significant risk facing the Company and its tenants. While the Company did not incur any significant disruptions during
the year ended December 31, 2021, it will continue to monitor rent collections and evaluate any tenant rent relief requests on an individual
basis. Given the continued uncertainty surrounding the COVID-19 pandemic and the emergence of variants of the virus, the Company is unable
to predict the future impacts from the COVID-19 pandemic. As such, our future operating results may be adversely impacted by future developments
that impact our tenants’ ability to generate revenue and pay their rent as due.
The state of the overall economy
beyond the current impacts of the COVID-19 pandemic can also significantly impact the Company’s operational performance and thus
impact its financial position. Should the Company experience a significant decline in operational performance, it may affect the Company’s
ability to make distributions to its stockholders, service debt, or meet other financial obligations.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Use of Estimates
The preparation of the consolidated
financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Management makes significant estimates regarding the allocation
of tangible and intangible assets or real estate acquisitions, impairments of long-lived assets, stock-based compensation and its common
stock warrants liability. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates
its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.
Management adjusts such estimates when facts and circumstances dictate. As future events and their effects cannot be determined with precision,
actual results could differ from those estimates and assumptions.
Segments
The Company has one reportable
segment, industrial properties. These properties have similar economic characteristics and also meet the other criteria that permit the
properties to be aggregated into one reportable segment.
Revenue Recognition
Minimum rental revenue from real
estate operations is recognized on a straight-line basis. The straight-line rent calculation on leases includes the effects of rent concessions
and scheduled rent increases, and the calculated straight-line rent income is recognized over the lives of the individual leases. In accordance
with ASC 842, we assess the collectability of lease receivables (including future minimum rental payments) both at commencement and throughout
the lease term. If our assessment of collectability changes during the lease term, any difference between the revenue that would have
been received under the straight-line method and the lease payments that have been collected will be recognized as a current period adjustment
to rental revenue. Rental revenue associated with leases where collectability has been deemed less than probable is recognized on a cash
basis in accordance with ASC 842. Management fee revenue represents management fees earned from the unconsolidated joint venture.
Cash Equivalents and Restricted Cash
The Company considers all highly
liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at December
31, 2021 and 2020. The Company maintains cash and restricted cash, which includes tenant security deposits and cash collateral for its
borrowings discussed in Note 7, and cash held in escrow for real estate tax, insurance, tenant capital improvement and leasing
commissions, in bank deposit accounts, which at times may exceed federally insured limits. As of December 31, 2021, the Company has not
realized any losses in such cash accounts and believes it mitigates its risk of loss by depositing its cash and restricted cash in highly
rated financial institutions.
The following table presents a
reconciliation of cash, cash held in escrow and restricted cash reported within our consolidated balance sheets to amounts reported
within our consolidated statements of cash flows:
Summary
of Significant Accounting Policies - Schedule of Cash, Cash Equivalents and Restricted Cash
| |
December 31, | | |
December 31, | |
| |
2021 | | |
2020 | |
Cash | |
$ | 26,232 | | |
$ | 15,668 | |
Cash held in escrow | |
| 11,893 | | |
| 11,939 | |
Restricted cash | |
| 5,249 | | |
| 4,447 | |
Cash, cash held in escrow, and restricted cash | |
$ | 43,374 | | |
$ | 32,054 | |
Fair Value of Financial Instruments
The Company applies various valuation
approaches in determining the fair value of its financial assets and liabilities within a hierarchy that maximizes the use of observable
inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are
inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of
the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would
use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy
is broken down into three levels based on the source of inputs as follows:
Level 1 — Quoted
prices for identical instruments in active markets.
Level 2 — Quoted
prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 — Significant
inputs to the valuation model are unobservable.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
The availability of observable
inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs
that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the
inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure
purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input
that is significant to the overall fair value measurement. Level 3 inputs are applied in determining the fair value of warrants to
purchase common stock in the amount of $5,517 and $396 at December 31, 2021 and 2020, respectively, discussed in Note 8.
Financial instruments including
cash, restricted cash, cash held in escrow and reserves, accounts receivable, accounts payable and accrued expenses and other current
liabilities are considered Level 1 in fair value hierarchy. The amounts reported on the consolidated balance sheets for
these financial instruments approximate their fair value due to their relatively short maturities and prevailing interest rates.
The fair value of our debt and
borrowings under line of credit was estimated using Level 3 inputs by calculating the present value of principal and interest payments,
using discount rates that best reflect current market interest rates for financings with similar characteristics and credit quality, and
assuming each loan is outstanding through its maturity.
The following table summarizes
the aggregate principal outstanding under the Company’s indebtedness and the corresponding estimate of fair value:
Summary
of Significant Accounting Policies - Schedule of Fair Value of Debt Instruments
| |
| | | |
| | | |
| | | |
| | |
| |
December 31, 2021 | | |
December 31, 2020 | |
Indebtedness (in thousands) | |
Principal Outstanding | | |
Fair Value | | |
Principal Outstanding | | |
Fair Value | |
Secured debt | |
$ | 354,239 | | |
$ | 369,459 | | |
$ | 332,011 | | |
$ | 351,744 | |
Unsecured debt | |
| 300,000 | | |
| 300,000 | | |
| 100,000 | | |
| 100,000 | |
Borrowings under line of credit, net | |
| 38,000 | | |
| 38,000 | | |
| 90,000 | | |
| 90,000 | |
Total | |
| 692,239 | | |
$ | 707,459 | | |
$ | 522,011 | | |
$ | 541,744 | |
Unamortized debt issuance cost, net | |
| (5,021 | ) | |
| | | |
| (4,507 | ) | |
| | |
Unamortized premium/(discount), net | |
| 697 | | |
| | | |
| 658 | | |
| | |
Total carrying value | |
$ | 687,915 | | |
| | | |
$ | 518,162 | | |
| | |
Debt Issuance Costs
Debt issuance costs other than
those associated with the revolving line of credit facility are reflected as a reduction to the respective loan amounts in the form of
a debt discount. Amortization of this expense is included in interest expense in the consolidated statements of operations.
Debt issuance costs amounted to
$9,710 and $8,018 at December 31, 2021 and 2020, respectively, and related accumulated amortization amounted to $4,689 and $3,511 at December
31, 2021 and 2020, respectively. At December 31, 2021 and 2020, the Company has classified net unamortized debt issuance costs of $2,405
and $2,371, respectively, related to borrowings under the line of credit to other assets in the consolidated balance sheets.
Stock Based Compensation
The Company grants stock-based
compensation awards to our employees and directors typically in the form of restricted shares of common stock. The Company measures stock-based
compensation expense based on the fair value of the awards on the grant date and recognizes the expense ratably over the vesting period.
Forfeitures of unvested shares are recognized in the period the forfeiture occurs.
Earnings (Loss) per Share
The Company follows the two-class
method when computing net earnings (loss) per common share as the Company has issued shares that meet the definition of participating
securities. The two-class method determines net earnings (loss) per share for each class of common and participating securities according
to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available
to common stockholders for the period to be allocated between common and participating securities based upon their respective rights
to receive dividends as if all income for the period had been distributed. Diluted net loss per share is the same as basic net loss per
share since the Company does not have any common stock equivalents such as stock options. The common stock warrants are not included
in the computation of diluted net loss per share as they are anti-dilutive for the periods presented.
Income Taxes
The Company has operated in a manner
that allows it to qualify as a REIT for federal income tax purposes. The Company utilizes an UPREIT organizational structure with the
intent to hold properties and securities through an Operating Partnership.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
The Company elected to be taxed
as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended, and has operated as such beginning
with the tax year ending December 31, 2012. 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 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 on income that we distribute as dividends to its stockholders.
If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income tax on our 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 tax years following the year during which qualification is lost, unless it can obtain relief under certain statutory provisions.
Such an event could materially and adversely affect the net income and net cash available for distribution to stockholders. However, the
Company intends to continue to operate in a manner that allows it to qualify for treatment as a REIT.
The Company files income tax returns
in the U.S federal jurisdiction and various state and local jurisdictions. The statute of limitations for the Company’s income
tax returns is generally three years and as such, the Company’s returns that remain subject to examination would be primarily from
2018 and thereafter. Accrued interest and penalties will be recorded as income tax expense if the Company records a liability
in the future.
To the extent the Company does
not utilize the full amount of the annual federal NOLs, the unused amount may normally be carried forward for 20 years to offset taxable
income in future years. The Company had federal NOL carryforwards originating from 2012 through 2020 of approximately $35,322. The Company
will incur no federal taxable income during 2021 after utilizing the dividends paid deduction, resulting in net operating loss carryforwards
to 2022 of approximately $35,322. NOLs generated from 2018 and onwards are not limited to 20 years and can be carried forward indefinitely
with the exception that they can only offset up to 80% of federal taxable income in future years.
Real Estate Property Acquisitions
The Company accounts for its real
estate property acquisitions in accordance with Financial Accounting Standards Board (“FASB”) ASC 805. The Company has concluded
that the acquisition of real estate properties will be accounted for as an asset acquisition as opposed to a business combination. The
significant difference between the two accounting models is that within an acquisition of assets, acquisition costs are capitalized as
a cost of the assets, whereas in a business combination acquisition costs are expensed and not included as part of the consideration transferred.
The accounting for real estate
property acquisitions requires estimates and judgment as to expectations for future cash flows of the acquired property, the allocation
of those cash flows to identifiable intangible assets and liabilities, and in determining the estimated fair value for assets acquired
and liabilities assumed. The amounts allocated to lease intangibles (leases in place, leasing commissions, tenant relationships, and
above and below market leases) are based on management’s estimates and assumptions, as well as other information compiled by management,
including independent third party analysis and market data, and are generally amortized over the remaining life of the related
leases excluding renewal options, except in the case of below market fixed rate rent amounts, which are amortized over the applicable
renewal period. Such inputs are Level 3 in the fair value hierarchy. The process for determining the allocation to these components requires
management to make estimates and assumptions, including rental rates, land value, discount rates, and exit capitalization rates.
Real Estate and Depreciation
Real estate properties are stated
at cost less accumulated depreciation. Depreciation of buildings and other improvements is computed using the straight-line method
over the estimated remaining useful lives of the assets, which generally range from 11 to 40 years for buildings and 3 to 13 years for
site improvements. If the Company determines that impairment has occurred, the affected assets are reduced to their fair value. Building
improvements are capitalized, while maintenance and repair expenses are charged to expense as incurred. Significant renovations
and improvements that improve or extend the useful life of the assets are capitalized.
Buildings
Site Improvements
Amortization of Deferred Lease Intangibles - Assets
and Liabilities
Deferred lease intangible assets
consist of leases in place, leasing commissions, tenant relationships, and above market leases. Deferred lease intangible liabilities
represent below market leases. These intangibles have been recorded at their fair market value in connection with the acquisition of
properties. Intangible assets and liabilities are generally amortized over the remaining life of the related lease following the
evaluation of potential renewal options.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Impairment of Long-Lived Assets
The Company assesses the carrying
values of our respective long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets
may not be fully recoverable.
Recoverability of real estate
assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. In order to review
our real estate assets for recoverability, the Company considers current market conditions, as well as our intent with respect to holding
or disposing of the asset. Our intent with regard to the underlying assets might change as market conditions change, as well as other
factors. Fair value is determined through various valuation techniques, including discounted cash flow models, applying a capitalization
rate to estimated net operating income of a property and quoted market values and third-party appraisals, where considered necessary.
If our analysis indicates that the carrying value of the real estate asset is not recoverable on an undiscounted cash flow basis, we
recognize an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate
property. The Company determined there was no impairment of value of real estate properties as of December 31, 2021 and 2020.
Investment in Unconsolidated Joint Venture
Investment
in unconsolidated joint ventures represents a non-controlling equity interest in a joint venture we entered into during October 2020.
The Company determined that the venture is not a VIE in accordance with the accounting standard for the consolidation of VIEs. As a result,
the Company used the voting interest model under the accounting standard for consolidation in order to determine whether to consolidate
the investment in unconsolidated joint venture. We have concluded that we have the ability to exercise significant influence,
however, do not have control or kick out rights and therefore the investment in the unconsolidated joint venture is accounted for
under the equity method of accounting. Accordingly, we initially recorded our investment at cost, and subsequently adjust for
equity in earnings or losses and cash contributions and distributions. Any difference between the carrying amount of these investments
on the consolidated balance sheets and the underlying equity in net assets will be amortized as an adjustment to equity
in earnings (loss) in investment of unconsolidated joint venture over the life of the related asset. Our net equity investment
in the joint venture is reflected within the consolidated balance sheets, and our share of net income or loss from the joint
venture is included within the consolidated statements of operations.
Non-controlling Interests
As further discussed in Note 10,
the Company has issued non-controlling interests in its Operating Partnership. The net loss attributable to the non-controlling interests
is presented in the Company’s consolidated statements of operations.
New Accounting Standards Recently Adopted
In August 2018, the FASB issued ASU
2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”
(“ASU 2018-13”). ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. ASU 2018-13 is intended to improve the effectiveness of disclosures required by entities regarding recurring
and nonrecurring fair value measurements. ASU 2018-13 was effective for the Company for reporting periods beginning after December 15,
2019, with early adoption permitted. The Company adopted ASU 2018-13 on January 1, 2020 and the adoption did not have a material impact
on the Company’s consolidated financial statements.
New Accounting Pronouncements Issued but not yet Adopted
In March 2020, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2020-04 Reference Rate Reform (Topic 848).
ASU 2020-04 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives and other
contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company
is in the process of evaluating the impact of the guidance.
3. Real Estate Properties
Real estate properties consisted
of the following at December 31, 2021 and 2020:
Real
Estate Properties - Schedule of Real Estate Properties
| |
December 31, 2021 | | |
December 31, 2020 | |
Land | |
$ | 201,164 | | |
$ | 159,681 | |
Buildings and improvements | |
| 930,678 | | |
| 652,191 | |
Site improvements | |
| 108,756 | | |
| 74,129 | |
Construction in progress | |
| 13,409 | | |
| 680 | |
| |
| 1,254,007 | | |
| 886,681 | |
Less accumulated depreciation | |
| (142,192 | ) | |
| (98,283 | ) |
Real estate properties, net | |
$ | 1,111,815 | | |
$ | 788,398 | |
Depreciation expense was $45,387 and $34,406 for the
years ended December 31, 2021 and 2020, respectively.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Acquisition of Properties
The Company made the following acquisitions of properties
during the year ended December 31, 2021:
Real Estate
Properties - Schedule of Real Estate Acquisitions
Location |
|
Date
Acquired |
|
Square
Feet |
|
|
Properties |
|
|
Purchase Price
(in thousands)(1) |
|
Kansas City, MO |
|
February 12, 2021 |
|
221,911 |
|
|
1 |
|
|
$ |
8,600 |
|
St. Louis, MO |
|
March 23, 2021 |
|
142,364 |
|
|
1 |
|
|
|
7,800 |
|
Chicago, IL |
|
March 25, 2021 |
|
149,474 |
|
|
1 |
|
|
|
7,900 |
|
Cleveland, OH |
|
March 29, 2021 |
|
100,150 |
|
|
1 |
|
|
|
7,700 |
|
Columbus, OH |
|
March 29, 2021 |
|
772,450 |
|
|
1 |
|
|
|
29,000 |
|
Memphis, TN |
|
June 29, 2021 |
|
74,665 |
|
|
1 |
|
|
|
5,250 |
|
St. Louis, MO |
|
June 30, 2021 |
|
155,434 |
|
|
1 |
|
|
|
8,800 |
|
Memphis, TN |
|
July 9, 2021 |
|
232,375 |
|
|
1 |
|
|
|
9,200 |
|
Memphis, TN |
|
July 30, 2021 |
|
316,935 |
|
|
1 |
|
|
|
6,277 |
|
Chicago, IL |
|
August 12, 2021 |
|
513,512 |
|
|
1 |
|
|
|
30,100 |
(2) |
St. Louis, MO |
|
August 24, 2021 |
|
769,500 |
|
|
1 |
|
|
|
55,200 |
|
St. Louis, MO |
|
October 5, 2021 |
|
100,021 |
|
|
1 |
|
|
|
11,100 |
|
St. Louis, MO |
|
October 5, 2021 |
|
76,092 |
|
|
1 |
|
|
|
7,700 |
|
St. Louis, MO |
|
October 7, 2021 |
|
1,145,330 |
|
|
2 |
|
|
|
75,100 |
(3) |
Indianapolis, IN |
|
October 26, 2021 |
|
294,730 |
|
|
1 |
|
|
|
23,100 |
|
Indianapolis, IN |
|
November 1, 2021 |
|
102,934 |
|
|
1 |
|
|
|
7,450 |
|
Columbus, OH |
|
November 4, 2021 |
|
396,800 |
|
|
3 |
|
|
|
22,500 |
|
Columbus, OH(4) |
|
December 1, 2021 |
|
17,260 |
|
|
1 |
|
|
|
3,600 |
|
Chicago, IL |
|
December 2, 2021 |
|
334,531 |
|
|
2 |
|
|
|
24,000 |
|
Cincinnati, OH |
|
December 23, 2021 |
|
480,000 |
|
|
1 |
|
|
|
23,500 |
|
Year ended December 31, 2021 |
|
|
|
6,396,468 |
|
|
24 |
|
|
$ |
373,877 |
|
The Company made the following acquisitions of properties
during the year ended December 31, 2020:
Location |
|
Date Acquired |
|
Square Feet |
|
|
Properties |
|
|
Purchase
Price (in thousands)(1) |
|
Chicago, IL |
|
January 24, 2020 |
|
465,940 |
|
|
1 |
|
|
$ |
18,650 |
|
Indianapolis, IN |
|
January 27, 2020 |
|
276,240 |
|
|
1 |
|
|
|
8,800 |
|
Atlanta/Savannah, GA |
|
January 28, 2020 |
|
924,036 |
|
|
5 |
|
|
|
34,700 |
|
Avon, OH |
|
February 14, 2020 |
|
406,863 |
|
|
3 |
|
|
|
15,750 |
|
Atlanta, GA |
|
March 13, 2020 |
|
117,000 |
|
|
1 |
|
|
|
10,056 |
|
St. Louis, MO |
|
September 2, 2020 |
|
487,150 |
|
|
1 |
|
|
|
27,000 |
|
St. Louis, MO |
|
September 3, 2020 |
|
79,258 |
|
|
1 |
|
|
|
3,712 |
|
Jacksonville, FL |
|
September 10, 2020 |
|
288,750 |
|
|
1 |
|
|
|
20,400 |
|
Mansfield, OH |
|
October 23, 2020 |
|
314,736 |
|
|
1 |
|
|
|
10,500 |
|
Cleveland, OH |
|
November 24, 2020 |
|
2,113,623 |
|
|
7 |
|
|
|
94,000 |
|
Year ended December 31, 2020 |
|
|
|
5,473,596 |
|
|
22 |
|
|
$ |
243,568 |
|
___________________
(1) |
Purchase price does not include capitalized acquisition
costs. |
(2) |
The purchase price of $30,100 included the assumption
of $10,820 of existing debt secured by the property. |
(3) |
The purchase price of $75,100 included the assumption of $28,800 of existing debt secured by the property. |
(4) |
Represents purchase of our property management office
building in Columbus, Ohio. |
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
The allocation of the aggregate
purchase price in accordance with Financial Accounting Standards Board (FASB), ASU 2017-01 (Topic 805) “Business Combinations,”
of the assets and liabilities acquired at their relative fair values as of their acquisition date, is as follows:
Real
Estate Properties - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2021 |
|
Year ended December 31, 2020 |
Purchase price allocation |
|
Purchase
Price(1) |
|
|
Weighted average amortization period (years) of intangibles at acquisition |
|
Purchase
Price(2) |
|
|
Weighted average amortization period (years) of intangibles at acquisition |
Total Purchase Price |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase price |
|
$ |
373,877 |
|
|
N/A |
|
$ |
243,568 |
|
|
N/A |
Acquisition costs |
|
|
2,773 |
|
|
N/A |
|
|
2,785 |
|
|
N/A |
Total |
|
$ |
376,650 |
|
|
|
|
$ |
246,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of Purchase Price |
|
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
43,498 |
|
|
N/A |
|
$ |
32,241 |
|
|
N/A |
Building |
|
|
269,686 |
|
|
N/A |
|
|
170,151 |
|
|
N/A |
Site improvements |
|
|
35,055 |
|
|
N/A |
|
|
21,132 |
|
|
N/A |
Total real estate properties |
|
|
348,239 |
|
|
|
|
|
223,524 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Lease Intangibles |
|
|
|
|
|
|
|
|
|
|
|
|
Tenant relationships |
|
|
5,763 |
|
|
4.8 |
|
|
3,768 |
|
|
6.0 |
Leasing commissions |
|
|
5,003 |
|
|
4.6 |
|
|
4,041 |
|
|
5.5 |
Above market lease |
|
|
160 |
|
|
11.0 |
|
|
2,354 |
|
|
6.5 |
Below market lease |
|
|
(2,019 |
) |
|
6.4 |
|
|
(5,975 |
) |
|
6.6 |
Above market ground lease |
|
|
— |
|
|
N/A |
|
|
(1,279 |
) |
|
35.1 |
Below market ground lease |
|
|
— |
|
|
N/A |
|
|
431 |
|
|
35.1 |
Lease in place |
|
|
19,764 |
|
|
4.4 |
|
|
19,489 |
|
|
5.0 |
Net deferred lease intangibles |
|
|
28,671 |
|
|
|
|
|
22,829 |
|
|
|
Assumed debt – market value |
|
|
|
|
|
|
|
|
|
|
|
|
(Above)/below assumed market debt value |
|
|
(260 |
) |
|
6.3 |
|
|
— |
|
|
N/A |
Totals |
|
$ |
376,650 |
|
|
|
|
$ |
246,353 |
|
|
|
______________
(1) |
Totals for the year ended December 31, 2021 include the purchase of our property
management office in Columbus, Ohio. |
(2) |
Totals for the year ended December 31, 2020 include the Ohio Properties’ totals as outlined below. |
On
November 24, 2020, the Company acquired seven
industrial properties consisting of ten
buildings located in the metro-Cleveland, Ohio area (the “Ohio Properties”). The allocation of the aggregate purchase price
for the Ohio Properties of the assets and liabilities acquired at their fair values upon acquisition is as follows:
Real Estate
Properties - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed - 7 Industrial Properties
Purchase price allocation | |
Ohio
Properties Purchase Price | | |
Weighted
average amortization period (years) of intangibles at acquisition |
Total Purchase Price | |
| | | |
|
Purchase price | |
$ | 94,000 | | |
N/A |
Acquisition costs | |
| 1,267 | | |
N/A |
Total | |
$ | 95,267 | | |
|
| |
| | | |
|
Allocation of Purchase Price | |
| | | |
|
Land | |
$ | 7,577 | | |
N/A |
Building | |
| 74,113 | | |
N/A |
Site improvements | |
| 6,285 | | |
N/A |
Total real estate properties | |
| 87,975 | | |
|
| |
| | | |
|
Deferred Lease Intangibles | |
| | | |
|
Tenant relationships | |
| 641 | | |
3.6 |
Leasing commissions | |
| 1,364 | | |
3.7 |
Above market lease value | |
| 458 | | |
1.7 |
Below market lease value | |
| (2,847 | ) | |
6.4 |
Above market ground lease value | |
| (1,279 | ) | |
35.1 |
Below market ground lease value | |
| 431 | | |
35.1 |
Lease in place value | |
| 8,524 | | |
4.5 |
Net deferred lease intangibles | |
| 7,292 | | |
|
| |
| | | |
|
Totals | |
$ | 95,267 | | |
|
All acquisitions completed during the years ended
December 31, 2021 and 2020 were considered asset acquisitions under ASC 805.
Tenant Relationships
Above Market Lease Value
Lease in Place Value
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Sale of Real Estate
During
the year ended December 31, 2021, the Company sold a single, 98,340 square foot property located in Chicago, IL for approximately $2,037
and a single, 74,613 square foot property located in Chicago, IL for approximately $1,159, recognizing a net gain of $1,775. The
Company also completed the sale of a small piece of land located in Memphis, TN for $167. No gain or loss was recognized on the sale
of the land. There were no sales of real estate during the year ended December 31, 2020.
4. Deferred Lease Intangibles
Deferred lease intangible assets consisted of the following
at December 31, 2021 and 2020:
Deferred
Lease Intangibles - Schedule of Finite Lived Intangible Assets
| |
December 31,
2021 | | |
December 31,
2020 | |
Above market lease | |
$ | 5,693 | | |
$ | 6,006 | |
Lease in place | |
| 87,336 | | |
| 71,687 | |
Tenant relationships | |
| 23,761 | | |
| 18,825 | |
Leasing commissions | |
| 30,733 | | |
| 21,494 | |
| |
| 147,523 | | |
| 118,012 | |
Less accumulated amortization | |
| (71,659 | ) | |
| (51,896 | ) |
Deferred lease intangible assets | |
$ | 75,864 | | |
$ | 66,116 | |
Deferred lease intangible liabilities consisted of the
following at December 31, 2021 and 2020:
Deferred
Lease Intangibles - Schedule of Deferred Lease Intangible Liabilities
| |
December 31,
2021 | | |
December 31,
2020 | |
Below market leases | |
$ | 19,791 | | |
$ | 18,453 | |
Less accumulated amortization | |
| (9,518 | ) | |
| (7,103 | ) |
Deferred lease intangible liabilities | |
$ | 10,273 | | |
$ | 11,350 | |
Amortization of above and below
market leases was recorded as an adjustment to rental revenue and amounted to $2,096 and $2,075 for the years ended December 31,
2021 and 2020, respectively. Amortization of all other deferred lease intangibles has been included in depreciation and amortization
in the accompanying consolidated statements of operations and amounted to $25,255 and $21,875 in 2021 and 2020, respectively.
Projected amortization of deferred
lease intangibles for the next five years and thereafter as of December 31, 2021 is as follows:
Deferred
Lease Intangibles - Schedule of Finite Lived Intangible Assets Future Amortization Expense
Year |
|
Amortization Expense
Related to
Other Intangible Lease
Assets and Liabilities
(in thousands) |
|
|
Net Increase to Rental Revenue Related to
Above and Below Market
Lease Amortization
(in thousands) |
|
2022 |
|
$ |
23,132 |
|
|
$ |
(2,020 |
) |
2023 |
|
$ |
17,343 |
|
|
$ |
(1,737 |
) |
2024 |
|
$ |
12,370 |
|
|
$ |
(1,220 |
) |
2025 |
|
$ |
7,489 |
|
|
$ |
(837 |
) |
2026 |
|
$ |
4,576 |
|
|
$ |
(623 |
) |
Thereafter |
|
$ |
8,631 |
|
|
$ |
(1,513 |
) |
5. Investment in Unconsolidated Joint Venture
On October 23, 2020, a wholly owned
subsidiary of the Operating Partnership entered into a $150,000 equity joint venture agreement (the “MIR JV”) with an unrelated
third-party partner (the “MIR JV Partner”). The purpose of the MIR JV agreement is to acquire value-add/opportunistic industrial
properties that meet certain criteria as outlined within the MIR JV agreement. The Operating Partnership will own a 20% interest in the
MIR JV. The Operating Partnership will be responsible for the day-to-day oversight of the MIR JV, its subsidiaries and properties and
will be entitled to an annual asset management fee equal to 1% of total equity contributed to the MIR JV by the partners paid quarterly
as well as a promote based on return thresholds as set forth in the MIR JV agreement. The MIR JV completed its initial investment of a
28-property portfolio of industrial properties totaling approximately 2.3 million square feet in metropolitan Memphis, Tennessee on December
17, 2020 for $86,000. The initial investment was funded by the MIR JV via $30,000 cash equity contributions to the MIR JV on a 20%/80%
pro-rata basis and a 7-year secured mortgage for $56,000.
For the year ended December 31,
2021 and 2020, we recognized fees of $331
and $15,
respectively, from the MIR JV related to asset management services we provided to the MIR JV, and other cost recoveries in the amount
of $159
and $0,
respectively. At December 31, 2021 and 2020, we had a receivable from the MIR JV of $74
and $15,
respectively, representing unpaid asset management fees.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
6. Leases
As a Lessor
We lease our properties to tenants
under agreements that are classified as operating leases. We recognize the total minimum lease payments provided for under the leases
on a straight-line basis over the lease term. Many of our leases include the recovery of certain operating expenses such as common area
maintenance, insurance, real estate taxes and utilities from our tenants. The recovery of such operating expenses is recognized in rental
revenue in the consolidated statements of operations. Some of our tenants’ leases are subject to changes in the Consumer Price Index
(“CPI”).
As of December 31, 2021, undiscounted
future minimum fixed rental payments due under non-cancellable operating leases for each of the next five years and thereafter
were as follows (in thousands):
Leases
- Schedule of Lessor Future Minimum Rental Receipts under Non-Cancellable Leases
Year |
|
Future Minimum
Fixed Rental
Payments |
|
2022 |
|
$ |
115,237 |
|
2023 |
|
|
100,753 |
|
2024 |
|
|
84,429 |
|
2025 |
|
|
61,636 |
|
2026 |
|
|
44,037 |
|
Thereafter |
|
|
83,214 |
|
Total minimum fixed rental receipts |
|
$ |
489,306 |
|
These amounts do not reflect future
rental revenue from the renewal or replacement of existing leases and excludes tenant recoveries and rental increases that are not fixed
or indexed to CPI.
The Company includes accounts receivable
and straight-line rent receivables within other assets in the consolidated balance sheets. For the years ended December 31, 2021
and 2020, rental revenue was derived from various tenants. As such, future receipts are dependent upon the financial strength of the
lessees and their ability to perform under the lease agreements.
Rental revenue is comprised of the following:
Leases
- Schedule of Rental Revenue Components
| |
Year Ended | | |
Year Ended | |
| |
December 31, | | |
December 31, | |
| |
2021 | | |
2020 | |
Income from leases | |
$ | 102,314 | | |
$ | 80,987 | |
Straight-line rent adjustments | |
| 3,700 | | |
| 1,963 | |
Tenant recoveries | |
| 32,160 | | |
| 24,811 | |
Amortization of above market leases | |
| (1,000 | ) | |
| (866 | ) |
Amortization of below market leases | |
| 3,096 | | |
| 2,941 | |
Total | |
$ | 140,270 | | |
$ | 109,836 | |
Tenant recoveries included within
rental revenue for the years ending December 31, 2021 and 2020 are variable in nature.
On April 8, 2020, the FASB provided
feedback on technical inquires received from stakeholders regarding certain accounting topics affected by the COVID-19 pandemic, including
guidance as to whether any concessions granted by a landlord to tenants results in a modification of a lease in accordance to ASC 842.
The FASB concluded that a company can, as a policy election, treat any COVID-19 related rent concessions as a provision included within
the pre-concession lease arrangement, and therefore, not be classified as a lease modification per ASC 842. In order to be considered
a COVID-19 related concession, cash flows may be less than or equal to those prior to the concession, but not substantially greater.
As of December 31, 2021, the Company has entered into a limited number of such COVID-19 related rent deferral concessions and
has elected not to treat such concessions as a modification of the respective lease.
As a Lessee
Operating Leases
As of December 31, 2021,
we have five office space operating leases and a single ground operating sublease. The office lease agreements do not contain residual
value guarantees or an option to renew. The ground sublease agreement does not contain residual value guarantees and includes multiple
options to extend the sublease between nineteen and twenty years for each respective option. The operating leases have remaining lease
terms ranging from 2.4 years to 34.0 years, which includes the exercise of a single twenty-year renewal option pertaining to the ground
sublease. As of December 31, 2021, total operating right of use assets and lease liabilities were approximately $6,552 and $7,830, respectively.
The operating lease liability as of December 31, 2021 represents a weighted-average incremental borrowing rate of 4.1% over the weighted-average
remaining lease term of 9.2 years. The incremental borrowing rate is our estimated borrowing rate on a fully-collateralized basis for
the term of the respective leases.
Other Liabilities
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
As of December 31, 2020,
we had four office space operating leases and a single ground operating sublease. The office lease agreements do not contain residual
value guarantees or an option to renew. The ground sublease agreement does not contain residual value guarantees and includes multiple
options to extend the sublease between nineteen and twenty years for each respective option. The operating leases had remaining
lease terms ranging from 3.7 years to 35.0 years, which includes the exercise of a single twenty-year renewal option pertaining to the
ground sublease. As of December 31, 2020, total operating right of use assets and lease liabilities were approximately $7,159 and $8,545,
respectively. The operating lease liability as of December 31, 2020 represented a weighted-average incremental borrowing rate
of 4.1% over the weighted-average remaining lease term of 10.1 years. The incremental borrowing rate is our estimated borrowing rate
on a fully-collateralized basis for the term of the respective leases.
On September 10, 2020, the Company
entered into a sublease agreement related to the space previously occupied as its headquarters. The Company's decision to re-locate its
headquarters was identified as a triggering event requiring the reassessment of the recoverability of the associated right of use asset
which is recorded in other assets on the consolidated balance sheets. As the Company would not be utilizing this space in the
subsequent period, the right of use asset was de-linked from the previously accrued operating lease liability. Following the Company's
analysis, it was determined that a fair value assessment was necessary. The Company utilized a discounted cash flow model using Level
3 assumptions such as a discount rate to determine the net present value of the remaining right of use asset related to the Company’s
previously occupied headquarters. The Company concluded that the fair market value of the right of use asset was not fully recoverable
and recorded an impairment charge of $311 during the third quarter of 2020 to reflect the fair market value of the right of use asset
associated with the primary lease.
The following table summarizes
the operating lease expense recognized during the years ended December 31, 2021 and 2020 included in the Company’s consolidated
statements of operations.
Minimum
Maximum
Leases -
Schedule of Lease Costs
| |
December 31, | | |
December 31, | |
| |
2021 | | |
2020 | |
Operating lease expense included in general and administrative expense attributable to office leases | |
$ | 806 | | |
$ | 984 | |
Operating lease expense included in property expense attributable to ground sublease | |
| 47 | | |
| 5 | |
Non-cash adjustment due to straight-line rent adjustments | |
| 143 | | |
| (340 | ) |
Cash paid for amounts included in the measurement of lease liabilities (operating cash flows) | |
$ | 996 | | |
$ | 649 | |
The following table summarizes the
maturity analysis of our operating leases, which is discounted by our incremental borrowing rate to calculate the lease liability as
included in accounts payable, accrued expenses, and other liabilities in the Company’s consolidated balance sheets for the
operating leases in which we are the lessee (in thousands):
Leases
- Schedule of Lessee Future Minimum Rental Commitments under Non-Cancellable Leases
Year | |
December 31, 2021 | |
2022 | |
$ | 1,286 | |
2023 | |
| 1,311 | |
2024 | |
| 1,280 | |
2025 | |
| 894 | |
2026 | |
| 801 | |
Thereafter | |
| 4,311 | |
Total minimum operating lease payments | |
$ | 9,883 | |
Less imputed interest | |
| (2,053 | ) |
Total operating lease liability | |
$ | 7,830 | |
Financing Leases
As of December 31, 2021, we have
a single finance lease in which we are the sublessee for a ground lease. The Company includes the financing lease right of use asset
within real estate properties and the corresponding liability within financing lease liability in the consolidated balance sheets.
The ground sublease agreement does not contain a residual value guarantee and includes multiple options to extend the sublease between
nineteen and twenty years for each respective option. The lease has a remaining lease term of approximately 34 years, which includes
the exercise of a single twenty-year renewal option. The financing lease liability as of December 31, 2021 represents a weighted-average
incremental borrowing rate of 7.8% over the weighted-average remaining lease term of 34 years. The incremental borrowing rate is our
estimated borrowing rate on a fully-collateralized basis for the term of the respective lease.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
The following table summarizes the
financing lease expense recognized during the years ended December 31, 2021 and 2020 included in the Company’s consolidated
statements of operations.
Leases
- Schedule of Finance Lease Expense
| |
December 31, | | |
December 31, | |
| |
2021 | | |
2020 | |
Depreciation/amortization of financing lease right-of-use assets | |
$ | 26 | | |
$ | 2 | |
Interest expense for financing lease liability | |
| 175 | | |
| 15 | |
Total financing lease cost | |
$ | 201 | | |
$ | 17 | |
The following table summarizes the
maturity analysis of our financing lease (in thousands):
Leases
- Schedule of Finance Lease, Liability, Fiscal Year Maturity
Year | |
December 31, 2021 | |
2022 | |
$ | 155 | |
2023 | |
| 155 | |
2024 | |
| 155 | |
2025 | |
| 170 | |
2026 | |
| 170 | |
Thereafter | |
| 6,537 | |
Total minimum financing lease payments | |
$ | 7,342 | |
Less imputed interest | |
| (5,115 | ) |
Total financing lease liability | |
$ | 2,227 | |
7. Indebtedness
The following table sets forth a
summary of the Company’s borrowings outstanding under its respective secured debt, unsecured line of credit and unsecured debt
as of December 31, 2021 and 2020.
Indebtedness
- Schedule of Secured and Unsecured Debt Outstanding
|
|
|
Outstanding Balance at |
|
|
|
|
|
|
|
Debt |
|
|
December 31,
2021 |
|
|
|
December 31,
2020 |
|
|
|
Interest rate at
December 31, 2021 |
|
|
Final Maturity Date |
Secured debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIG Loan |
|
$ |
114,477 |
|
|
$ |
117,087 |
|
|
|
4.08% |
|
|
November 1, 2023 |
Transamerica Loan |
|
|
68,709 |
|
|
|
72,960 |
|
|
|
4.35% |
|
|
August 1, 2028 |
Allianz Loan |
|
|
63,115 |
|
|
|
63,115 |
|
|
|
4.07% |
|
|
April 10, 2026 |
Minnesota Life Loan |
|
|
20,453 |
|
|
|
20,870 |
|
|
|
3.78% |
|
|
May 1, 2028 |
JPMorgan Chase Loan |
|
|
13,205 |
|
|
|
13,440 |
|
|
|
5.23% |
|
|
January 1, 2027 |
Lincoln Life Mortgage |
|
|
— |
|
|
|
9,289 |
|
|
|
3.41% |
|
|
January 10, 2022 |
Ohio National Life Mortgage |
|
|
19,660 |
|
|
|
20,250 |
|
|
|
4.14% |
|
|
August 1, 2024 |
Nationwide Loan |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
2.97% |
|
|
October 1, 2027 |
Lincoln Life Gateway Mortgage |
|
|
28,800 |
|
|
|
— |
|
|
|
3.43% |
|
|
January 1, 2028 |
Midland National Life Insurance Mortgage |
|
|
10,820 |
|
|
|
— |
|
|
|
3.50% |
|
|
March 10, 2028 |
Total secured debt |
|
$ |
354,239 |
|
|
$ |
332,011 |
|
|
|
|
|
|
|
Unamortized debt issuance costs, net |
|
|
(2,861 |
) |
|
|
(3,761 |
) |
|
|
|
|
|
|
Unamortized premium/(discount), net |
|
|
697 |
|
|
|
658 |
|
|
|
|
|
|
|
Total secured debt, net |
|
$ |
352,075 |
|
|
$ |
328,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unsecured debt: |
|
|
|
|
|
|
|
|
|
|
|
$100m KeyBank Term Loan |
|
|
100,000 |
|
|
|
100,000 |
|
|
|
1.60% (1) |
|
|
August 11, 2026 |
$200m KeyBank Term Loan |
|
|
200,000 |
|
|
|
— |
|
|
|
1.60% (1) |
|
|
February 11, 2027 |
Total unsecured debt |
|
$ |
300,000 |
|
|
$ |
100,000 |
|
|
|
|
|
|
|
Unamortized debt issuance costs, net |
|
|
(2,160 |
) |
|
|
(746 |
) |
|
|
|
|
|
|
Total unsecured debt, net |
|
$ |
297,840 |
|
|
$ |
99,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings under line of credit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KeyBank unsecured line of credit |
|
|
38,000 |
|
|
|
90,000 |
|
|
|
1.65% (1) |
|
|
August 11, 2025 |
Total borrowings under line of credit |
|
$ |
38,000 |
|
|
$ |
90,000 |
|
|
|
|
|
|
|
_______________
(1) |
The 1-month LIBOR rate as of December 31,
2021 was 0.10%. The spread over the applicable rate for the $100m and $200m KeyBank unsecured term loans and KeyBank
unsecured line of credit is based on the Company’s total leverage ratio. |
Secured Debt
Unsecured Debt
Line of Credit
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
2021 Debt Activity
On August 11, 2021, the Company entered
into a combined $500 million unsecured credit facility, which is comprised of an amended $200 million revolving credit facility (the “KeyBank
unsecured line of credit”), an amended $100 million term loan (the “$100m KeyBank unsecured term loan”), and a new $200
million term loan (the “$200m KeyBank unsecured term loan”). The combined unsecured credit facility has an accordion feature
enabling the Company to increase the total borrowing capacity under the credit facility up to an aggregate of $1 billion, subject to certain
conditions. The amended KeyBank unsecured line of credit matures in August 2025 and has two, six-month extension options, subject to certain
conditions, the amended $100m KeyBank unsecured term loan matures in August 2026, and the new $200m KeyBank unsecured term loan matures
in February 2027. Amounts outstanding under the KeyBank unsecured line of credit bear interest at LIBOR plus a margin between 135 to 190
basis points with no LIBOR floor and amounts outstanding under the $100m KeyBank unsecured term loan and $200m KeyBank unsecured term
loan term facilities bear interest at LIBOR plus a margin between 130 and 185 basis points, in either case depending on the Company’s
leverage.
On August 12, 2021, a wholly-owned
subsidiary of the Operating Partnership assumed a mortgage (the “Midland Mortgage”) with a balance of $10,820 as part of our
acquisition of the property in Chicago, Illinois. The Midland Mortgage, held by Midland National Life Insurance Company, matures on March
10, 2028, bears interest at 3.5% and is secured by the property. The Midland Mortgage requires monthly installments of interest only through
March 10, 2023 and afterwards, monthly installments of principal plus accrued interest through March 10, 2028, at which time a balloon
payment is required. The Company has the right to prepay the borrowings outstanding, subject to a prepayment penalty in effect until the
loan approaches maturity.
On October 7, 2021, a wholly-owned
subsidiary of the Operating Partnership assumed a mortgage (the “Lincoln Life Gateway Mortgage”) with a balance of $28,800
as part of our acquisition of the property in St. Louis, Missouri. The Lincoln Life Gateway Mortgage, held by Lincoln National Life Insurance
Company, matures on January 1, 2028, bears interest at 3.43% and is secured by the property. The Lincoln Life Gateway Mortgage requires
monthly installments of interest only through January 1, 2028, at which time a balloon payment is required. The Company has the
right to prepay the borrowings outstanding, subject to a prepayment penalty in effect until the loan approaches maturity.
On October 12, 2021, the Company
repaid in full, the outstanding principal and interest balance of approximately $9,149 on the Lincoln Life Mortgage.
2020 Debt Activity
On January 22, 2020, the Operating
Partnership (the “KeyBank Term Loan Borrower”) entered into a credit agreement (the “KeyBank Term Loan”) with
KeyBank National Association (“KeyBank”) to provide the KeyBank Term Loan Borrower with a term loan with a total commitment
of $100,000, subject to certain conditions. The KeyBank Term Loan matured on October 22, 2020. Borrowings under the Credit Agreement bear
interest at either (1) the base rate (determined as the highest of (a) KeyBank’s prime rate, (b) the Federal Funds rate plus 0.50%
and (c) the one-month LIBOR rate plus 1.0% or (2) LIBOR, plus, in either case, a spread between 100 and 150 basis points for base rate
loans or a spread between 200 and 250 basis points for LIBOR rate loans, with the amount of such spread depending on the KeyBank Term
Loan Borrower’s total leverage ratio. The credit agreement is secured by the equity interests of certain of the KeyBank Term Loan
Borrower’s wholly-owned subsidiary property owners. The credit agreement contains financial covenants as defined within the KeyBank
Term Loan agreement.
On October 8, 2020, the Company
entered into a new $300 million unsecured credit facility, comprised of $200 million revolving credit facility and $100 million term loan.
KeyBanc Capital Markets, as Lead Arranger, arranged the new facility and term loan. Syndicate lenders include Barclays Bank PLC, JPMorgan
Chase Bank N.A., Bank of Montreal, and Capital One National Association with KeyBank National Association serving as administrative agent.
The unsecured credit facility replaces an existing $100 million secured facility that was set to mature in August 2023, and the $100 million
unsecured term loan replaces a $100 million secured term loan that was set to mature on October 22, 2020. The new unsecured revolving
credit facility has an accordion feature enabling the Company to increase the total borrowing capacity under the credit facility and term
loan up to an aggregate of $500 million, subject to certain conditions. The new credit facility matures in October 2024 and has two, six-month
extension options, subject to certain conditions, and the new term loan matures in October 2025. Amounts outstanding under the facility
and the term loan bear interest at LIBOR (at a floor of 0.30%) plus a margin between 145 to 200 basis points, depending on the Company’s
total leverage ratio, per the agreement.
On September 2, 2020, a wholly-owned
subsidiary of the Operating Partnership entered into a loan agreement (the “Nationwide Loan”) in the amount of $15,000 in
connection with the Company’s acquisition of a property in St. Louis. The Nationwide Loan, held by Nationwide Life Insurance Company
(“Nationwide”), bears interest at 2.97% and is secured by the property. The Nationwide Loan requires monthly installments
of interest only through October 1, 2023 and afterwards, monthly installments of principal plus accrued interest through October 1, 2027,
at which time a balloon payment is required. The Company has the right to prepay the borrowings outstanding, subject to a prepayment penalty
in effect until the loan approaches maturity.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Future Principal Payments of Debt
Principal payments on the Company’s
long-term debt due in each of the next five years and thereafter as of December 31, 2021 are as follows:
Indebtedness
- Schedule of Future Principal Payments Due on Long-Term Debt
Year |
|
Amount |
|
2022 |
|
$ |
6,054 |
|
2023 |
|
|
115,815 |
|
2024 |
|
|
22,280 |
|
2025 |
|
|
42,041 |
|
2026 |
|
|
161,796 |
|
Thereafter |
|
|
344,253 |
|
Total aggregate principal payments |
|
$ |
692,239 |
|
Financial Covenant Considerations
The Company is in compliance with
all respective financial covenants for our secured and unsecured debt and unsecured line of credit as of December 31, 2021.
8. Common Stock
Follow-on Offerings
On August 28, 2020, the Company completed
a follow-on public offering of 8,625,000 shares of common stock, including 1,125,000 shares of common stock issued upon exercise of the
underwriters’ overallotment option at $12.85 per share resulting in net proceeds of approximately $104,420.
IPO
ATM Program
On February 27, 2020, the Company
entered into a distribution agreement with KeyBanc Capital Markets Inc., Barclays Capital Inc., J.P. Morgan Securities, LLC, Capital One
Securities, Inc., Robert W. Baird & Co. Incorporated, BMO Capital Markets Corp., D.A. Davidson & Co. and National Securities Corporation
pursuant to which the Company may issue and sell, from time to time, shares of its common stock, with aggregate gross sales proceeds of
up to $100,000, through an “at-the-market” equity offering program (the “2020 $100 Million ATM Program”).
On May 26, 2021, the Company entered into a distribution
agreement with KeyBanc Capital Markets Inc., Robert W. Baird & Co. Incorporated, Barclays Capital Inc., Berenberg Capital Markets
LLC, BMO Capital Markets Corp., Capital One Securities Inc., JMP Securities LLC, J.P. Morgan Securities, LLC, National Securities Corporation
and Wedbush Securities Inc pursuant to which the Company may issue and sell, from time to time, shares of its common stock, with aggregate
gross sales proceeds of up to $125,000 through an “at-the-market” equity offering program (the “2021 $125 Million ATM
Program”).
On August 10, 2021, the Company entered into an amendment
to the 2021 $125 Million ATM Program (the “2021 Amended ATM Program”) to reference the Company’s shelf registration
statement on Form S-3 that was filed with the Securities and Exchange Commission on June 11, 2021. The Company, under the 2021 Amended
ATM Program, may issue and sell, from time to time, shares of its common stock, with aggregate gross sales proceeds of up to $82,288
through an “at the-market” equity offering program.
On November 9, 2021, the Company
entered into a distribution agreement with KeyBanc Capital Markets Inc., Robert W. Baird & Co. Incorporated, Barclays Capital Inc.,
Berenberg Capital Markets LLC, BMO Capital Markets Corp., Capital One Securities Inc., JMP Securities LLC, J.P. Morgan Securities, LLC,
National Securities Corporation, Wedbush Securities Inc and Wells Fargo Securities, LLC pursuant to which the Company may issue
and sell, from time to time, shares of its common stock, with aggregate gross sales proceeds of up to $200,000
through an “at-the-market” equity offering program (the “2021 $200 Million ATM Program”).
For the year ending December 31,
2021, the Company has issued 10,524,731 shares of its common stock under the 2020 $100 Million ATM Program, 2021 $125 Million ATM Program,
2021 Amended ATM Program, and the 2021 $200 Million ATM Program for aggregate net proceeds of approximately $212,033. The Company has
approximately $154,702 available for issuance under the 2021 $200 Million ATM Program.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Common Stock Warrants
The Company has warrants outstanding
to acquire 354,230 shares of the Company’s common stock at an exercise price of $16.24 per share, which expire in 2022. The warrants
are accounted for as a liability within accounts payable, accrued expenses and other liabilities on the accompanying consolidated balance
sheet as they contain provisions that are considered outside of the Company’s control, such as the holders’ option to receive
cash in lieu and other securities in the event of a reorganization of the Company’s common stock underlying such warrants. The fair
value of these warrants is re-measured at each financial reporting period with any changes in fair value recognized as an unrealized appreciation/depreciation
of warrants in the accompanying consolidated statements of operations. The warrants are not included in the computation of diluted net
loss per share as they are anti-dilutive for the periods presented since the Company recorded a net loss during the years ended December
31, 2021 and 2020.
A roll-forward of the warrants
is as follows:
Common
Stock - Schedule of Stockholders' Equity Note, Warrants
|
|
|
|
|
Balance at January 1, 2020 |
|
$ |
293 |
|
Unrealized appreciation/(depreciation) |
|
|
103 |
|
Balance at December 31, 2020 |
|
|
396 |
|
Unrealized appreciation/(depreciation) |
|
|
5,121 |
|
Balance at December 31, 2021 |
|
$ |
5,517 |
|
The warrants in the amount of $5,517
at December 31, 2021 represent their fair value determined using a Binomial Valuation Model applying Level 3 inputs as described in Note
2. The significant inputs into the model were: exercise price of $16.24, volatility of 17.5%, an expected annual dividend of $0.84, a
term of 0.45 years and an annual risk-free interest rate of 0.19%. The warrants in the amount of $396 at December 31, 2020 represent their
fair value determined using a Binomial Valuation Model applying Level 3 inputs as described in Note 2. The significant inputs into the
model were: exercise price of $16.39, volatility of 27.4%, an expected annual dividend of $0.80, a term of 1.45 years and an annual risk-free
interest rate of 0.13%.
Fair Value, Level 3
Common Stock Dividends
The following table sets forth the
common stock distributions that were declared during the years ended December 31, 2021 and 2020.
Common
Stock - Schedule of Common Stock Dividends Declared
|
|
Cash Dividends
Declared per
Share |
|
|
Aggregate
Amount |
|
2021 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.2000 |
|
|
$ |
5,668 |
|
Second quarter |
|
$ |
0.2100 |
|
|
$ |
6,528 |
|
Third quarter |
|
$ |
0.2100 |
|
|
$ |
7,197 |
|
Fourth quarter |
|
$ |
0.2100 |
|
|
$ |
7,583 |
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.3750 |
|
|
$ |
5,545 |
|
Second quarter |
|
$ |
0.2000 |
|
|
$ |
3,179 |
|
Third quarter |
|
$ |
0.2000 |
|
|
$ |
4,943 |
|
Fourth quarter |
|
$ |
0.2000 |
|
|
$ |
5,069 |
|
Characterization of Common Stock Dividends
Earnings and profits (as defined
under the Internal Revenue Code), the current and accumulated amounts of which determine the taxability of distributions to stockholders,
vary from net income attributable to common stockholders and taxable income because of the different depreciation recovery periods, depreciation
methods, and other items. Distributions in excess of earnings and profits generally constitute a return of capital. The following table
shows the characterization of the distributions on the Company’s common stock for the year ended December 31, 2021.
Common
Stock - Schedule of Dividends Payable
Declaration Date |
|
Date of Record |
|
|
Payable Date |
|
Cash
Distribution |
|
|
Ordinary
Dividend |
|
|
Return of
Capital |
12/15/2020 |
|
12/31/2020 |
|
|
1/29/2021 |
|
$ |
0.2000 |
|
|
$ |
0.198241 |
|
|
$ |
0.001759 |
3/16/2021 |
|
3/31/2021 |
|
|
4/30/2021 |
|
$ |
0.2000 |
|
|
$ |
0.198241 |
|
|
$ |
0.001759 |
5/6/2021 |
|
6/30/2021 |
|
|
7/30/2021 |
|
$ |
0.2100 |
|
|
$ |
0.208153 |
|
|
$ |
0.001847 |
9/15/2021 |
|
9/30/2021 |
|
|
10/29/2021 |
|
$ |
0.2100 |
|
|
$ |
0.208153 |
|
|
$ |
0.001847 |
12/16/2021 |
|
12/31/2022 |
|
|
1/31/2022 |
|
$ |
0.2100 |
(1) |
|
|
— |
|
|
|
— |
(1) |
This distribution was in excess of current and accumulated earnings and profits. Per IRC Section 857(b)(9), this distribution will not impact the basis of securities held by US taxpayer(s) for tax year 2022. |
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
9. Preferred Stock
Series A Preferred Stock
In the fourth quarter of 2017,
the Company completed the offering of 2,040,000 shares of Series A Preferred Stock, including 240,000 shares exercised under the underwriter’s
over-allotment, at a per share price of $25.00 for net cash proceeds of $48,868. The offering of the Series A Preferred Stock was registered
with the SEC, pursuant to a registration statement on Form S-11 declared effective on October 18, 2017.
Series A Preferred Stock
Over-Allotment Option
The relevant features of the Series
A Preferred Stock are as follows:
Liquidation Rights
In the event of any voluntary or
involuntary liquidation, dissolution, or winding-up of the affairs of the Company, the holders of shares of the Series A Preferred Stock
shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders on parity with Series B Preferred
as set forth below, before any payment shall be made to the holders of Common Stock, an amount per share equal to $25.00 per share, plus
any accrued and unpaid dividends.
Redemption Rights
Holders of the Series A Preferred
Stock have the right to require the Company to redeem for cash, their shares of Series A Preferred Stock in the event of a change in control
of the Company or a delisting of the Company’s shares. The Company also has the right to redeem the shares of Series A Preferred
Stock in the event of a change in control of the Company or a delisting of the Company’s shares. Since this contingent redemption
right is outside of the control of the Company, the Company has presented its Series A Preferred Stock as temporary equity. The redemption
price is $25.00 per share, plus any accrued and unpaid dividends.
The Company has the right to redeem
the Series A Preferred Stock at its option commencing on December 31, 2022 at $25.00 per share, plus any accrued and unpaid dividends.
Conversion
The shares of Series A Preferred
Stock are not convertible.
Voting Rights
Holders of shares of the Series
A Preferred Stock generally do not have any voting rights, except in the event dividends are in arrears for six or more quarterly periods
(whether or not consecutive), the number of directors of the Company’s board of directors will automatically be increased by two
and holders of shares of Series A Preferred Stock, voting together as a single class with the holders of the Series B Preferred or any
other then-outstanding class or series of capital stock ranking on parity with the Series A Preferred Stock upon which like voting rights
have been conferred and are exercisable, or collectively, any Voting Preferred Stock and the holders of Series A Preferred Stock will
be entitled to vote for the election of two additional directors to serve on our board of directors, until all unpaid dividends for past
dividend periods shall have been paid in full.
Protective Rights
As long as the shares of Series
A Preferred Stock remain outstanding, the Company cannot, without the affirmative vote or consent of the holders of at least two-thirds
of the outstanding shares of Series A Preferred Stock voting together as a single class with any voting preferred stock, among other things,
authorize, create or issue, or increase the number of authorized or issued shares of, any class or series of capital stock ranking senior
to the Series A Preferred Stock with respect to payment of dividends or the distribution of assets upon our liquidation, dissolution or
winding up, or reclassify any of our authorized capital stock into such capital stock, or create, authorize or issue any obligation or
security convertible into or evidencing the right to purchase such capital stock.
Dividend Rights
When, as and if authorized by our
board of directors, holders of Series A Preferred Stock are entitled to receive cumulative cash dividends from, and including, the
issue date, payable quarterly in arrears on the last day of March, June, September and December of each year, beginning on December 31,
2017 until December 31, 2024, at the rate of 7.5% per annum on the $25.00 liquidation preference per share (equivalent to a fixed
annual rate of $1.875 per share (“Initial Rate”)).
On and after December 31, 2024,
if any shares of Series A Preferred Stock are outstanding, the Company will pay cumulative cash dividends on each then-outstanding share
of Series A Preferred Stock at an annual dividend rate equal to the Initial Rate plus an additional 1.5% of the liquidation preference
per annum, which will increase by an additional 1.5% of the liquidation preference per annum on each subsequent December 31 thereafter,
subject to a maximum annual dividend rate of 11.5% while the Series A Preferred Stock remains outstanding.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
The following table sets forth the
Series A Preferred Stock distributions that were declared or paid during the years ended December 31, 2021 and 2020.
Preferred
Stock - Schedule of Series A Preferred Stock Dividends Declared
|
|
Cash Dividends
Declared per
Share |
|
|
Aggregate
Amount |
|
2021 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.4688 |
|
|
$ |
949 |
|
Second quarter |
|
$ |
0.4688 |
|
|
$ |
949 |
|
Third quarter |
|
$ |
0.4688 |
|
|
$ |
949 |
|
Fourth quarter |
|
$ |
0.4688 |
|
|
$ |
949 |
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.4688 |
|
|
$ |
956 |
|
Second quarter |
|
$ |
0.4688 |
|
|
$ |
956 |
|
Third quarter |
|
$ |
0.4688 |
|
|
$ |
956 |
|
Fourth quarter |
|
$ |
0.4688 |
|
|
$ |
949 |
|
Characterization of Series A Preferred Stock Dividends
Earnings and profits (as defined
under the Internal Revenue Code), the current and accumulated amounts of which determine the taxability of distributions to stockholders,
vary from net income attributable to common stockholders and taxable income because of the different depreciation recovery periods, depreciation
methods, and other items. Distributions in excess of earnings and profits generally constitute a return of capital. The following table
shows the characterization of the distributions on the Company’s Series A Preferred Stock for the year ended December 31, 2021.
Preferred
Stock - Schedule of Series A Preferred Stock Dividends Payable
Declaration Date |
|
Date of Record |
|
|
Payable Date |
|
Cash
Distribution |
|
|
Ordinary
Dividend |
|
|
Return of
Capital |
3/1/2021 |
|
|
3/15/2021 |
|
|
3/31/2021 |
|
$ |
0.468750 |
|
|
$ |
0.468750 |
|
|
$ |
— |
6/1/2021 |
|
|
6/15/2021 |
|
|
6/30/2021 |
|
$ |
0.468750 |
|
|
$ |
0.468750 |
|
|
$ |
— |
9/1/2021 |
|
|
9/15/2021 |
|
|
9/30/2021 |
|
$ |
0.468750 |
|
|
$ |
0.468750 |
|
|
$ |
— |
12/1/2021 |
|
|
12/15/2021 |
|
|
12/31/2021 |
|
$ |
0.468750 |
|
|
$ |
0.468750 |
|
|
$ |
— |
Repurchase and Retirement of Series A Preferred Stock
During Q4 2020, the Company’s
Board of Directors approved the repurchase and retirement of the Company’s Series A Preferred Stock up to a maximum of $5,000 of
the respective Series A Preferred Stock outstanding. The Company commenced its repurchasing of its Series A Preferred Stock on the open
market on November 11, 2020. The Company repurchased and retired 448 shares of Series A Preferred stock and 16,001 shares of
Series A Preferred stock for the years ended December 31, 2021 and 2020, respectively.
Series B Preferred Stock
On December 14, 2018, the Company
in a private placement exempt from registration under the federal securities laws (the “Private Placement”), completed the
offering of 4,411,764 shares of the Company’s Series B Convertible Redeemable Preferred Stock (the “Series B Preferred Stock”)
at a purchase price of $17.00 per share for an aggregate consideration of $75,000 (the “Purchase Price”) or $71,800, net of
issuance costs.
Series B Preferred Stock
Private Placement
The relevant features of the Series
B Preferred Stock are as follows:
Liquidation Preference
The Series B Preferred Stock ranks
senior to the shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), and ranks on a
parity with the shares of the Company’s 7.50% Series A Cumulative Redeemable Preferred Stock, in each case, with respect to dividend
rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company. The shares of Series B Preferred Stock have a Liquidation Preference, (Series B Liquidation Preference) which is defined
as an amount per share equal to the greater of (a) an amount necessary for the Investor to receive a 12.0% annual internal rate of return
on the issue price of $17.00, taking into account dividends paid from December 14, 2018 until (i) the date of the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company, (ii) the Conversion Date, or (iii) the Redemption Date, as the
case may be, and (b) $21.89 (subject to adjustment), plus accrued and unpaid dividends through and including (x) the date of such voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the Company, (y) the Conversion Date, or (z) the Redemption Date,
as the case may be. For the years ended December 31, 2021 and 2020, accretion recorded in relation to the 12% annual internal rate of
return and offering costs was $7,228 and $7,416, respectively.
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Redemption Rights
The Company and the holders of
the Series B Preferred Stock each have the right to redeem the shares of the Series B Preferred Stock upon certain change of control events,
including a delisting of the Company’s common stock. At the option of each holder of Series B Preferred Stock, the Company shall
redeem all of the Series B Preferred Stock at a price equal to the greater of (1) an amount in cash equal to 100% of the Liquidation Preference
thereof and (2) the consideration the holders would have received if they had converted their shares of Series B Preferred Stock into
Common Stock immediately prior to the change of control event. At any time, following December 31, 2022, the Company may elect to redeem
up to fifty percent (50.0%) of the outstanding shares of Series B Preferred Stock, and at any time following December 31, 2023, the Company
may elect to redeem up to one hundred percent (100.0%) of the outstanding shares of Series B Preferred Stock for an amount in cash per
share of Series B Preferred Stock equal to the Redemption Price per share of Series B Preferred Stock. The Redemption Price is defined
as the greater of (i) the Liquidation Preference per share of Series B Preferred Stock as of the Redemption Date or (ii) the 20-day volume
weighted average price per share; provided, however, following such time as the number of shares of Series B Preferred Stock that shall
have been redeemed is equal to the maximum number of shares of Series B Preferred Stock that can be converted (whether into cash or shares
of Common Stock) such that, if all such shares of Series B Preferred Stock had been converted into Common Stock, the certain percentage
investment ownership thresholds would have been reached (but not exceeded), the Redemption Price shall be equal to the Liquidation Preference.
Since the holders of the Series
B Preferred Stock have a contingent redemption right that is outside the control of the Company, the Company has presented its Series
B Preferred Stock as temporary equity.
Conversion Rights
The holders of the Series B Preferred
Stock have the right to convert their shares of Series B Preferred Stock commencing January 1, 2022. Beginning January 1, 2022, if the
20-day volume weighted average price per share of Common Stock is equal to or exceeds $26.35 (subject to adjustment), the Company has
the right to convert each share of Series B Preferred Stock. Commencing December 31, 2024, the Series B Preferred Stock, subject to availability
of funds, are to be automatically converted.
Any conversion of shares of Series
B Preferred Stock may be settled by the Company, at its option, in shares of Common Stock, cash or any combination thereof. However, unless
and until the Company’s stockholders have approved the issuance of greater than 19.99% of the outstanding Common Stock as of the
date of the closing of the Private Placement (December 14, 2018) as required by the NYSE rules and regulations (“stockholder approval”),
the Series B Preferred Stock may not be converted into more than 19.99% of the Company’s outstanding Common Stock as of the date
of the closing of the Private Placement. In addition, the Company cannot opt to convert the Series B Preferred Stock into more than 9.9%
of the outstanding Common Stock without approval of the holders of Series B Preferred Stock.
The initial conversion rate is
one share of Series B Preferred Stock for one share of Common Stock, subject to proportionate adjustments for certain transactions affecting
the Company’s securities such as stock dividends, stock splits, combinations and other corporate reorganization events, provided
that the value of the Common Stock, determined in accordance with terms of the Articles Supplementary is equal to or greater that the
liquidation preference of the Series B Preferred Stock. To the extent the Company opts to settle the conversion of shares of Series
B Preferred Stock in cash, (1) until such time as the maximum number of shares of Series B Preferred Stock have been converted such that,
if all such shares had been converted into Common Stock, stockholder approval would be necessary to convert additional shares into Common
Stock, the Company will pay cash equal to the greater of the liquidation preference or the 20-day volume weighted average price per share
(20 Day VWAP), and (2) following such time, the Company will pay cash equal to the liquidation preference per share of Series B Preferred
Stock. On December 31, 2024, all issued and outstanding shares of Series B Preferred Stock are required to convert at the Settlement
Amount as of that date, provided, however, that prior to the receipt of stockholder approval, conversion of the Series B Preferred
Stock into Common Stock shall be subject to the 19.99% threshold; provided, further, however, that prior to the receipt of the 10.0%
Consent, conversion of the Series B Preferred Stock into Common Stock shall be subject to the 10.0% threshold. The Settlement Amount
is defined as follows:
|
· |
If a Physical Settlement is elected by the Company, the Company shall deliver to the converting holder in respect of each share of Series B Preferred Stock being converted a number of shares of Common Stock equal to the greater of (i) one (1) share of Common Stock or (ii) the quotient of the Liquidation Preference divided by the 20-Day VWAP; |
|
· |
If a Cash Settlement is elected by the Company, the Company shall pay to the converting holder in respect of each share of Series B Preferred Stock being converted into cash in an amount equal to the greater of (i) the Liquidation Preference or (ii) the 20-Day VWAP. This Cash Settlement is without regard to the 10.0% Threshold or the 19.99% Threshold; provided, however, following such time as the maximum number of shares of Series B Preferred Stock have been converted pursuant to this Conversion Section (whether into cash or shares of Common Stock) such that, if all such shares of Series B Preferred Stock had been converted into Common Stock (disregarding the 10.0% Threshold), the 19.99% Threshold would have been reached (but not exceeded), the Cash Settlement Amount shall be equal to the Liquidation Preference; and |
|
· |
If a Combination Settlement is elected by the Company, the Company shall pay or deliver, as the case may be, in respect of each share of Series B Preferred Stock being converted, a Settlement Amount equal to, at the election of the Company, either (i) cash equal to the Cash Settlement Amount or (ii) a number of shares of Common Stock; provided, however, that any Physical Settlement or Combination Settlement shall be subject to (i) the 10.0% Threshold until such time as the 10.0% Consent is received and (ii) the 19.99% Threshold until such time as the stockholder approval is received. |
Voting Rights
Holders of the Series B Preferred
Stock generally do not have any voting rights, except in the event dividends are in arrears for six or more quarterly periods (whether
or not consecutive), the number of directors of the Company’s board of directors will automatically be increased by two and holders
of Series B Preferred Stock, voting together as a single class with the holders of the Series A Preferred or any other then-outstanding
class or series of capital stock ranking on parity with the Series B Preferred Stock upon which like voting rights have been conferred
and are exercisable, or collectively, any Voting Preferred Stock and the holders of Series B Preferred Stock will be entitled to vote
for the election of two additional directors to serve on our board of directors, until all unpaid dividends for past dividend periods
shall have been paid in full.
After December 31, 2024, holders
of Series B Preferred Stock will be entitled to vote as a single class with the holders of Common Stock on an as-converted basis (up to
a maximum of 19.99% of the Common Stock outstanding on the date of the closing of the Private Placement, unless stockholder approval has
been received).
Protective Rights
The Company is required to obtain
an affirmative vote of a majority of the holders of Series B Preferred Stock to (i) authorize, create, issue or increase, or reclassify
any class of capital stock into any class or series of Senior Equity Securities or Parity Equity Securities (as such terms are defined
in the Articles Supplementary), (ii) authorize any class of partnership interests in the Operating Partnership that are senior to the
partnership interests currently in existence, (iii) amend, alter, repeal or otherwise change the rights, preferences, preferences, privileges
or powers of the Series B Preferred Stock, (iv) approve any dividend other than cash dividends paid in the ordinary course of business
consistent with past practice, or required to be paid by the Company to maintain REIT status, (v) affect any voluntary deregistration
under the Securities Exchange Act of 1934, as amended, or voluntary delisting with the NYSE with respect to the Common Stock, (vi) incur
any indebtedness in excess of the limits set forth in the Articles Supplementary, (vii) adopt a “poison pill” or similar anti-takeover
agreement or plan, and (viii) following December 31, 2024, enter into a Change in Control Transaction (as defined in the Articles Supplementary)
or make certain acquisitions.
Dividend Rights
The Series B Preferred Stock bears cumulative
dividends, payable in cash, at a rate equal to (a) 3.25% for the period from the issue date through and including December 31, 2019, (b)
3.50% from January 1, 2020 through and including December 31, 2020, (c) 3.75% from January 1, 2021 through and including December 31,
2021, (d) 4.00% from January 1, 2022 through and including December 31, 2022, (e) 6.50% from January 1, 2023 through and including
December 31, 2023, (f) 12.00% from January 1, 2024 through and including December 31, 2024 and (g) 15.00% from and after January 1, 2025.
Dividends on the Series B Preferred Stock are payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year
or, if such date is not a Business Day, on the immediately succeeding Business Day.
The following table sets forth the
Series B preferred stock dividends that were declared during the years ended December 31, 2021 and
2020.
Preferred
Stock - Schedule of Series B Preferred Stock Dividends Declared
|
|
Cash Dividends |
|
|
|
|
|
|
Declared |
|
|
Aggregate |
|
|
|
per
Share |
|
|
Amount |
|
2021 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.159375 |
|
|
$ |
703 |
|
Second quarter |
|
$ |
0.159375 |
|
|
$ |
703 |
|
Third quarter |
|
$ |
0.159375 |
|
|
$ |
703 |
|
Fourth quarter |
|
$ |
0.159375 |
|
|
$ |
703 |
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.148750 |
|
|
$ |
657 |
|
Second quarter |
|
$ |
0.148750 |
|
|
$ |
657 |
|
Third quarter |
|
$ |
0.148750 |
|
|
$ |
657 |
|
Fourth quarter |
|
$ |
0.148750 |
|
|
$ |
656 |
|
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
10. Non-Controlling Interests
Operating Partnership Units
In connection with the acquisition
of the Shadeland Portfolio on August 11, 2017, the Company, through its Operating Partnership issued 421,438 Operating Partnership Units
(“OP Units”) at $19.00 per OP Unit for a total of approximately $8,007 to the former owners of the Shadeland Portfolio. In
connection with the Cincinnati, Ohio acquisition on October 15, 2018, the Company, through its Operating Partnership issued 626,011 OP
Units at $17.00 per OP Unit for a total of approximately $10,642 to the former owners of the property. The holders of the OP Units are
entitled to receive distributions concurrent with the dividends paid on our common stock.
During the year ended December
31, 2021, 116,333 OP Units were redeemed for 116,333 shares of our common stock. During the year ended December 31, 2020, 268,664
OP Units were redeemed for 268,664 shares of our common stock.
The Company adjusted the carrying
value of non-controlling interest to reflect its share of the book value of the Operating Partnership reflecting the change in the Company’s
ownership of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling
interest on the accompanying consolidated statements of changes in preferred stock and equity. OP Units outstanding as of December
31, 2021 and 2020 were 490,299 and 606,632, respectively.
The following table sets forth the
OP Unit distributions that were declared during the years ended December 31, 2021 and 2020.
Non-Controlling
Interest - Schedule of Redeemable Non-Controlling Interest
|
|
Cash Distributions
Declared per
OP Unit |
|
|
Aggregate
Amount |
|
2021 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.200 |
|
|
$ |
121 |
|
Second quarter |
|
$ |
0.210 |
|
|
$ |
106 |
|
Third quarter |
|
$ |
0.210 |
|
|
$ |
106 |
|
Fourth quarter |
|
$ |
0.210 |
|
|
$ |
103 |
|
|
|
|
|
|
|
|
|
|
2020 |
|
|
|
|
|
|
|
|
First quarter |
|
$ |
0.375 |
|
|
$ |
324 |
|
Second quarter |
|
$ |
0.200 |
|
|
$ |
164 |
|
Third quarter |
|
$ |
0.200 |
|
|
$ |
135 |
|
Fourth quarter |
|
$ |
0.200 |
|
|
$ |
121 |
|
The proportionate share of the
loss attributed to the OP Units was $259 and $649 for the years ended December 31, 2021 and 2020, respectively.
11. Incentive Award Plan
In April 2014, the Company’s
Board of Directors adopted, and in June 2014 the Company’s stockholders approved, the 2014 Incentive Award Plan, or Plan, under
which the Company may grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the
talent for which we compete. The aggregate number of shares of the Company’s common stock and/or LTIP units of partnership interest
in the Company’s Operating Partnership, or LTIP units that are available for issuance under awards granted pursuant to the Plan
is 375,000 shares/LTIP units. In July 2020 the Plan was amended and increased the number of shares/units available per the Plan to 875,000
shares/LTIP units. Shares and units granted under the Plan may be authorized but unissued shares/LTIP units, or, if authorized by the
board of directors, shares purchased in the open market. If an award under the Plan is forfeited, expires or is settled for cash, any
shares/LTIP units subject to such award may, to the extent of such forfeiture, expiration or cash settlement, be used again for new grants
under the Plan. However, the following shares/LTIP units may not be used again for grant under the Plan: (1) shares/LTIP units tendered
or withheld to satisfy grant or exercise price or tax withholding obligations associated with an award; (2) shares subject to a stock
appreciation right, or SAR, that are not issued in connection with the stock settlement of the SAR on its exercise; and (3) shares purchased
on the open market with the cash proceeds from the exercise of options.
The
Plan provides for the grant of stock options, including incentive stock options, or ISOs, and nonqualified stock options, or NSOs, restricted
stock, dividend equivalents, stock payments, restricted stock units, or RSUs, performance shares, other incentive awards, LTIP units,
SARs, and cash awards. As of December 31, 2021, the Company has only issued restricted stock units under the Plan. In addition,
the Company will grant its Independent Board of Directors restricted stock as part of their remuneration. Shares granted as part of the
Plan vest equally over a four-year period while those granted to the Company’s Independent Board of Directors vest equally over
a three-year period. Annual grants given to the Company’s Independent Board of Directors vest the earlier of one year from the
date of grant, or, the next annual shareholder meeting. Holders of restricted shares of common stock have voting rights and rights to
receive dividends, however, the restricted shares of common stock may not be sold, transferred, assigned or pledged and are subject to
forfeiture prior to the respective vesting period. The following table is a summary of the total restricted shares granted for the years
ended December 31, 2021 and 2020:
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
Incentive
Award Plan - Schedule of Nonvested Restricted Stock Shares Activity
|
|
Shares |
|
Unvested restricted stock at January 1, 2020 |
|
|
162,184 |
|
Granted |
|
|
101,540 |
|
Forfeited |
|
|
(5,303 |
) |
Vested |
|
|
(68,196 |
) |
Unvested restricted stock at December 31, 2020 |
|
|
190,225 |
|
Granted |
|
|
126,434 |
|
Forfeited |
|
|
(1,000 |
) |
Vested |
|
|
(88,303 |
) |
Unvested restricted stock at December 31, 2021 |
|
|
227,356 |
|
The Company recorded equity-based
compensation in the amount of $1,559 and $1,439 for the years ended December 31, 2021 and 2020, respectively, which is included in general
and administrative expenses in the accompanying consolidated statements of operations. Equity-based compensation expense for shares
issued to employees and directors is based on the grant-date fair value of the award and recognized on a straight-line basis over the
requisite period of the award. The unrecognized compensation expense associated with the Company’s restricted shares of common
stock was $2,828 and $2,405 for the years ended December 31, 2021 and 2020, respectively, and is expected to be recognized over a weighted
average period of approximately 2.8 years and 3.0 years, respectively. The fair value of the 126,434 restricted shares granted during
the year ended December 31, 2021 was approximately $1,998 with a weighted average fair value of $15.80 per share. The fair value
of the 101,540 restricted shares granted during the year ended December 31, 2020 was approximately $1,665 with a weighted average
fair value of $16.40 per share.
12. Earnings per Share
Net loss per Common Share
Basic and diluted net loss per share
attributable to common stockholders was calculated as follows:
Earnings
per Share - Schedule of Earnings per Share
|
|
|
|
|
|
|
|
|
| |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
Numerator | |
| | |
| |
Net loss | |
$ | (15,267 | ) | |
$ | (14,462 | ) |
Less: Loss attributable to non-controlling interest | |
| (259 | ) | |
| (649 | ) |
Net loss attributable to Plymouth Industrial REIT, Inc. | |
| (15,008 | ) | |
| (13,813 | ) |
Less: Preferred stock dividends | |
| 6,608 | | |
| 6,444 | |
Less: Series B Preferred stock accretion to redemption value | |
| 7,228 | | |
| 7,416 | |
Less: Loss on extinguishment of Series A Preferred Stock | |
| — | | |
| 34 | |
Less: Amount allocated to participating securities | |
| 201 | | |
| 182 | |
Net loss attributable to common stockholders | |
$ | (29,045 | ) | |
$ | (27,889 | ) |
Denominator | |
| | | |
| | |
Weighted-average common shares outstanding basic and diluted | |
| 30,910,581 | | |
| 18,381,700 | |
Net loss per share attributable to common stockholders – basic and diluted | |
$ | (0.94 | ) | |
$ | (1.52 | ) |
The Company uses the two-class method
of computing earnings per common share in which participating securities are included within the basic earnings per share (“EPS”)
calculation. The amount allocated to participating securities is according to dividends declared (whether paid or unpaid). The restricted
stock does not have any participatory rights in undistributed earnings. The unvested shares of restricted stock are accounted for as participating
securities as they contain nonforfeitable rights to dividends.
In periods where there is a net
loss, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable
to common stockholders is the same. The Company’s potential dilutive securities as of December 31, 2021 include the 354,230 shares
of common stock warrants and 227,356 shares of restricted common stock. The common stock warrants and restricted common shares
have been excluded from the computation of diluted net loss per share attributable to common stockholders as the effect of including
them would reduce the net loss per share.
Restricted Stock
Warrants
Plymouth Industrial REIT, Inc.
Notes to Consolidated Financial Statements
(all dollar amounts in thousands, except share and per share data)
13. Commitments and Contingencies
Employment Agreements
The Company has entered into employment
agreements with the Company’s Chief Executive Officer, President and Chief Investment Officer, Chief Financial Officer, and Executive
Vice President Asset Management. As approved by the compensation committee of the Board of Directors the agreements provide for base salaries
ranging from $300 to $550 annually with discretionary cash performance awards. The agreements contain provisions for equity awards, general
benefits, and termination and severance provisions, consistent with similar positions and companies.
Legal Proceedings
The Company is not currently party
to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential
range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.
The Company expenses, as incurred, the costs related to such legal proceedings.
Contingent Liability
In conjunction with the issuance
of the OP Units for acquisitions, the agreements contain a provision for the Company to provide tax protection to the holders if the acquired
properties are sold in a transaction that would result in the recognition of taxable income or gain prior to the sixth anniversary of
the acquisition. The Company intends to hold these investments and has no plans to sell or transfer any interest that would give rise
to a taxable transaction.
14. Retirement Plan
The Company in December 2014 established
an individual SEP IRA retirement account plan for all employees. The Company has accrued a contribution for 2021 in the amount of $552
and an amount of $351 for 2020, which is included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated
balance sheets at December 31, 2021 and 2020, respectively. The Company has no control or administrative responsibility related to the
individual accounts and is not obligated to fund them in future years.
15. Subsequent Events
Subsequent Event
Interest Rate Swap
On January 20, 2022, the Company acquired
a single-building, single-tenant industrial property, consisting of approximately 150,000 square feet, located in Atlanta, Georgia for
an aggregate purchase price of $9,750.
On
January 28, 2022, the Company entered into an interest rate swap agreement with JPMorgan Chase Bank, N.A. for a notional amount of $100,000.
The interest rate swap agreement is based on the USD-LIBOR floating rate at a fixed rate of 1.591%, is effective February 1, 2022, and
terminates August 8, 2026.
On
January 28, 2022, the Company entered into an interest rate swap agreement with Capital One, N.A. for a notional amount of $200,000.
The interest rate swap agreement is based on the USD-LIBOR floating rate at a fixed rate of 1.609%, is effective February 1, 2022, and
terminates February 11, 2027.
On
February 1, 2022, the Company repaid in full, the outstanding principal and interest balance of approximately $13,245
on the JPMorgan Chase Loan.
On
February
7, 2022, the Company acquired a two-building industrial property, consisting
of 8 tenants and approximately 86,400
square feet, located in Jacksonville, Florida for an aggregate purchase price of
$12,300.
Schedule III
Plymouth Industrial REIT, Inc.
Real Estate Properties and Accumulated Depreciation
December 31, 2021 ($ in thousands)
|
|
|
|
Encumbrances |
|
Initial
Costs of Land |
|
Initial
cost of building and improvements |
|
Costs
Capitalized Subsequent to Acquisition |
|
Gross
amounts of land |
|
Gross
amounts of building and improvements |
|
Total
real estate properties gross |
|
Accumulated
Depreciation |
|
Year
Acquired |
|
Year
Built/Renovated |
|
Depreciable
Life (in years) |
|
|
|
|
|
|
Initial Costs to the
Company |
|
|
|
Gross Amounts at
Close of Period |
|
|
|
|
|
|
|
|
Metro Area |
|
Address |
|
Encumbrances |
|
Land |
|
Building and Improvements |
|
Costs Capitalized Subsequent to Acquisition |
|
Land |
|
Building and Improvements |
|
Total (2) |
|
Accumulated Depreciation (3) |
|
Year
Acquired |
|
Year Built/
Renovated (4) |
|
Depreciable Life (in years) (5) |
Atlanta, GA |
|
11236 Harland Drive |
|
-(1) |
|
$ |
271 |
|
$ |
909 |
|
$ |
10 |
|
$ |
271 |
|
$ |
919 |
|
$ |
1,190 |
|
$ |
240 |
|
2017 |
|
1988 |
|
20 |
Atlanta, GA |
|
1665 Dogwood Drive |
|
-(1) |
|
|
494 |
|
|
6,027 |
|
|
31 |
|
|
494 |
|
|
6,058 |
|
|
6,552 |
|
|
1,322 |
|
2017 |
|
1973 |
|
20 |
Atlanta, GA |
|
1715 Dogwood Drive |
|
-(1) |
|
|
270 |
|
|
2,879 |
|
|
1 |
|
|
270 |
|
|
2,880 |
|
|
3,150 |
|
|
590 |
|
2017 |
|
1973 |
|
22 |
Atlanta, GA |
|
32 Dart Road |
|
-(1) |
|
|
256 |
|
|
4,454 |
|
|
513 |
|
|
256 |
|
|
4,967 |
|
|
5,223 |
|
|
1,992 |
|
2014 |
|
1988/2014 |
|
18 |
Atlanta, GA |
|
40 Pinyon Road |
|
|
|
|
794 |
|
|
2,669 |
|
|
1 |
|
|
794 |
|
|
2,670 |
|
|
3,464 |
|
|
255 |
|
2020 |
|
1997 |
|
28 |
Atlanta, GA |
|
611 Highway 74 S. |
|
|
|
|
3,283 |
|
|
13,560 |
|
|
346 |
|
|
3,283 |
|
|
13,906 |
|
|
17,189 |
|
|
1,908 |
|
2019 |
|
1979-2013 |
|
25 |
Atlanta, GA |
|
665 Highway 74 South |
|
|
|
|
1,237 |
|
|
6,952 |
|
|
8 |
|
|
1,237 |
|
|
6,960 |
|
|
8,197 |
|
|
493 |
|
2020 |
|
1989 |
|
36 |
Atlanta, GA |
|
6739 New Calhoun Highway NE |
|
|
|
|
2,876 |
|
|
7,599 |
|
|
— |
|
|
2,876 |
|
|
7,599 |
|
|
10,475 |
|
|
1,093 |
|
2020 |
|
1981/1996
& 2017 |
|
20 |
Boston, MA |
|
56 Milliken Road |
|
-(1) |
|
|
1,418 |
|
|
7,482 |
|
|
378 |
|
|
1,418 |
|
|
7,860 |
|
|
9,278 |
|
|
3,339 |
|
2014 |
|
1966/1995, 2005, 2013 |
|
20 |
Chicago, IL |
|
11351 W. 183rd Street |
|
-(1) |
|
|
361 |
|
|
1,685 |
|
|
17 |
|
|
361 |
|
|
1,702 |
|
|
2,063 |
|
|
531 |
|
2014 |
|
2000 |
|
34 |
Chicago, IL |
|
11601 Central Avenue |
|
-(1) |
|
|
3,479 |
|
|
6,545 |
|
|
26 |
|
|
3,479 |
|
|
6,571 |
|
|
10,050 |
|
|
1,626 |
|
2017 |
|
1970 |
|
21 |
Chicago, IL |
|
11746 Austin Ave |
|
|
|
|
1,062 |
|
|
4,420 |
|
|
115 |
|
|
1,062 |
|
|
4,535 |
|
|
5,597 |
|
|
525 |
|
2019 |
|
1970 |
|
25 |
Chicago, IL |
|
13040 South Pulaski Avenue |
|
-(1) |
|
|
3,520 |
|
|
11,115 |
|
|
180 |
|
|
3,520 |
|
|
11,295 |
|
|
14,815 |
|
|
3,523 |
|
2017 |
|
1976 |
|
16 |
Chicago, IL |
|
1355 Holmes Road |
|
-(1) |
|
|
1,012 |
|
|
2,789 |
|
|
176 |
|
|
1,012 |
|
|
2,965 |
|
|
3,977 |
|
|
1,414 |
|
2014 |
|
1976/1998 |
|
16 |
Chicago, IL |
|
13970 West Laurel Drive |
|
-(1) |
|
|
1,447 |
|
|
1,377 |
|
|
373 |
|
|
1,447 |
|
|
1,750 |
|
|
3,197 |
|
|
516 |
|
2017 |
|
1990 |
|
14 |
Chicago, IL |
|
144 Tower Drive |
|
|
|
|
866 |
|
|
4,174 |
|
|
53 |
|
|
866 |
|
|
4,227 |
|
|
5,093 |
|
|
495 |
|
2019 |
|
1971/1988 & 2015 |
|
29 |
Chicago, IL |
|
1455-1645 Greenleaf Avenue |
|
-(1) |
|
|
1,926 |
|
|
5,137 |
|
|
994 |
|
|
1,926 |
|
|
6,131 |
|
|
8,057 |
|
|
1,243 |
|
2017 |
|
1968 |
|
21 |
Chicago, IL |
|
1600 Fleetwood Drive |
|
-(1) |
|
|
2,699 |
|
|
9,530 |
|
|
83 |
|
|
2,699 |
|
|
9,613 |
|
|
12,312 |
|
|
1,740 |
|
2018 |
|
1968/2016 |
|
23 |
Chicago, IL |
|
16801 Exchange Ave |
|
|
|
|
1,905 |
|
|
9,454 |
|
|
178 |
|
|
1,905 |
|
|
9,632 |
|
|
11,537 |
|
|
1,186 |
|
2019 |
|
1987 |
|
24 |
Chicago, IL |
|
1717 West Harvester Road |
|
|
|
|
3,843 |
|
|
12,848 |
|
|
5 |
|
|
3,843 |
|
|
12,853 |
|
|
16,696 |
|
|
2,119 |
|
2020 |
|
1970 |
|
15 |
Chicago, IL |
|
1750 South Lincoln Drive |
|
-(1) |
|
|
489 |
|
|
9,270 |
|
|
707 |
|
|
489 |
|
|
9,977 |
|
|
10,466 |
|
|
2,017 |
|
2017 |
|
2001 |
|
24 |
Chicago, IL |
|
1796 Sherwin Avenue |
|
-(1) |
|
|
1,542 |
|
|
3,598 |
|
|
98 |
|
|
1,542 |
|
|
3,696 |
|
|
5,238 |
|
|
1,032 |
|
2017 |
|
1964 |
|
19 |
Chicago, IL |
|
1875 Holmes Road |
|
-(1) |
|
|
1,597 |
|
|
5,199 |
|
|
798 |
|
|
1,597 |
|
|
5,997 |
|
|
7,594 |
|
|
2,525 |
|
2014 |
|
1989 |
|
16 |
Chicago, IL |
|
189 Seegers Road |
|
-(1) |
|
|
470 |
|
|
1,369 |
|
|
29 |
|
|
470 |
|
|
1,398 |
|
|
1,868 |
|
|
486 |
|
2014 |
|
1972 |
|
21 |
Chicago, IL |
|
2401 Commerce Drive |
|
-(1) |
|
|
486 |
|
|
4,597 |
|
|
936 |
|
|
486 |
|
|
5,533 |
|
|
6,019 |
|
|
1,613 |
|
2014 |
|
1994/2009 |
|
28 |
Chicago, IL |
|
28160 North Keith Drive |
|
-(1) |
|
|
1,614 |
|
|
1,643 |
|
|
100 |
|
|
1,614 |
|
|
1,743 |
|
|
3,357 |
|
|
503 |
|
2017 |
|
1989 |
|
16 |
Chicago, IL |
|
3 West College Drive |
|
-(1) |
|
|
728 |
|
|
1,531 |
|
|
12 |
|
|
728 |
|
|
1,543 |
|
|
2,271 |
|
|
261 |
|
2018 |
|
1978/2016 |
|
26 |
Chicago, IL |
|
350 Armory Drive |
|
|
|
|
442 |
|
|
835 |
|
|
112 |
|
|
442 |
|
|
947 |
|
|
1,389 |
|
|
152 |
|
2019 |
|
1972 |
|
21 |
Chicago, IL |
|
3841-3865 Swanson Court |
|
-(1) |
|
|
1,640 |
|
|
2,247 |
|
|
140 |
|
|
1,640 |
|
|
2,387 |
|
|
4,027 |
|
|
647 |
|
2017 |
|
1978 |
|
17 |
Chicago, IL |
|
3940 Stern Avenue |
|
-(1) |
|
|
1,156 |
|
|
5,139 |
|
|
1,227 |
|
|
1,156 |
|
|
6,366 |
|
|
7,522 |
|
|
2,573 |
|
2014 |
|
1987 |
|
16 |
Chicago, IL |
|
4915 West 122nd Street |
|
|
|
|
848 |
|
|
3,632 |
|
|
192 |
|
|
848 |
|
|
3,824 |
|
|
4,672 |
|
|
411 |
|
2019 |
|
1972 |
|
26 |
Chicago, IL |
|
5110 South 6th Street |
|
-(1) |
|
|
689 |
|
|
1,014 |
|
|
155 |
|
|
689 |
|
|
1,169 |
|
|
1,858 |
|
|
390 |
|
2017 |
|
1972 |
|
16 |
Chicago, IL |
|
6000 West 73rd Street |
|
-(1) |
|
|
1,891 |
|
|
3,403 |
|
|
— |
|
|
1,891 |
|
|
3,403 |
|
|
5,294 |
|
|
963 |
|
2017 |
|
1974 |
|
17 |
Chicago, IL |
|
6035 West Gross Point Road |
|
|
|
|
2,706 |
|
|
4,351 |
|
|
— |
|
|
2,706 |
|
|
4,351 |
|
|
7,057 |
|
|
261 |
|
2021 |
|
1956/1985 |
|
15 |
Chicago, IL |
|
6510 West 73rd Street |
|
-(1) |
|
|
4,229 |
|
|
4,105 |
|
|
616 |
|
|
4,229 |
|
|
4,721 |
|
|
8,950 |
|
|
1,285 |
|
2017 |
|
1974 |
|
18 |
Chicago, IL |
|
6558 West 73rd Street |
|
-(1) |
|
|
3,444 |
|
|
2,325 |
|
|
— |
|
|
3,444 |
|
|
2,325 |
|
|
5,769 |
|
|
760 |
|
2017 |
|
1975 |
|
16 |
Chicago, IL |
|
6751 Sayre Avenue |
|
-(1) |
|
|
2,891 |
|
|
5,743 |
|
|
— |
|
|
2,891 |
|
|
5,743 |
|
|
8,634 |
|
|
1,269 |
|
2017 |
|
1973 |
|
22 |
Chicago, IL |
|
7200 Mason Ave |
|
-(1) |
|
|
2,519 |
|
|
5,482 |
|
|
1 |
|
|
2,519 |
|
|
5,483 |
|
|
8,002 |
|
|
1,394 |
|
2017 |
|
1974 |
|
18 |
Chicago, IL |
|
7207 Mason Avenue |
|
|
|
|
887 |
|
|
2,608 |
|
|
— |
|
|
887 |
|
|
2,608 |
|
|
3,495 |
|
|
411 |
|
2019 |
|
1970 |
|
20 |
Chicago, IL |
|
7420 Meade Ave |
|
|
|
|
586 |
|
|
367 |
|
|
104 |
|
|
586 |
|
|
471 |
|
|
1,057 |
|
|
111 |
|
2019 |
|
1970 |
|
20 |
Chicago, IL |
|
1900 S. Batavia |
|
-(1) |
|
|
7,337 |
|
|
20,387
|
|
|
23 |
|
|
7,337 |
|
|
20,410 |
|
|
27,747 |
|
|
483 |
|
2021 |
|
1958/1989 & 2010 |
|
15 |
Chicago, IL |
|
4491 N Mayflower Road |
|
|
|
|
289 |
|
|
2,422 |
|
|
153 |
|
|
289 |
|
|
2,575 |
|
|
2,864 |
|
|
498 |
|
2017 |
|
2000 |
|
27 |
Chicago, IL |
|
4955 Ameritech Drive |
|
|
|
|
856 |
|
|
7,251 |
|
|
427 |
|
|
856 |
|
|
7,678 |
|
|
8,534 |
|
|
1,525 |
|
2017 |
|
2004 |
|
27 |
Chicago, IL |
|
5855 West Carbonmill Road |
|
|
|
|
743 |
|
|
6,269 |
|
|
166 |
|
|
743 |
|
|
6,435 |
|
|
7,178 |
|
|
1,285 |
|
2017 |
|
2002 |
|
27 |
Chicago, IL |
|
5861 W Cleveland Road |
|
|
|
|
234 |
|
|
1,966 |
|
|
121
|
|
|
234 |
|
|
2,087 |
|
|
2,321
|
|
|
410 |
|
2017 |
|
1994 |
|
27 |
Chicago, IL |
|
West Brick Road |
|
|
|
|
381 |
|
|
3,209 |
|
|
197
|
|
|
381 |
|
|
3,406
|
|
|
3,787
|
|
|
670 |
|
2017 |
|
1998 |
|
27 |
Chicago, IL |
|
1301 Ridgeview Drive |
|
|
|
|
1,231 |
|
|
12,623
|
|
|
19 |
|
|
1,231 |
|
|
12,642 |
|
|
13,873 |
|
|
59 |
|
2021 |
|
1995/2020 |
|
25 |
Chicago, IL |
|
800 Church Street |
|
|
|
|
2,019 |
|
|
6,197 |
|
|
— |
|
|
2,019 |
|
|
6,197 |
|
|
8,216 |
|
|
30 |
|
2021 |
|
1974/2020 |
|
22 |
Cincinnati, OH |
|
2700-2758 E. Kemper Road |
|
-(1) |
|
|
847 |
|
|
5,196 |
|
|
204 |
|
|
847 |
|
|
5,400 |
|
|
6,247 |
|
|
537 |
|
2019 |
|
1990 |
|
35 |
Cincinnati, OH |
|
2800-2888 E. Kemper Road |
|
-(1) |
|
|
752 |
|
|
5,448 |
|
|
173 |
|
|
752 |
|
|
5,621 |
|
|
6,373 |
|
|
545 |
|
2019 |
|
1989 |
|
35 |
Cincinnati, OH |
|
4115 Thunderbird Lane |
|
-(1) |
|
|
275 |
|
|
2,093 |
|
|
192 |
|
|
275 |
|
|
2,285 |
|
|
2,560 |
|
|
878 |
|
2014 |
|
1991 |
|
22 |
Cincinnati, OH |
|
4514-4548 Cornell Road |
|
-(1) |
|
|
998 |
|
|
7,281 |
|
|
485 |
|
|
998 |
|
|
7,766 |
|
|
8,764 |
|
|
839 |
|
2019 |
|
1976 |
|
28 |
Cincinnati, OH |
|
Fisher Industrial Park |
|
-(1) |
|
|
4,147 |
|
|
18,147 |
|
|
4,338 |
|
|
4,147 |
|
|
22,485 |
|
|
26,632 |
|
|
3,816 |
|
2018 |
|
1946 |
|
20 |
Cincinnati, OH |
|
Mosteller Distribution Center |
|
-(1) |
|
|
1,501 |
|
|
9,424 |
|
|
90 |
|
|
1,501 |
|
|
9,514 |
|
|
11,015 |
|
|
5,053 |
|
2014 |
|
1959 |
|
14 |
Cincinnati, OH |
|
6900-6918 Fairfield Business Drive |
|
-(1) |
|
|
244 |
|
|
2,020 |
|
|
50 |
|
|
244 |
|
|
2,070 |
|
|
2,314 |
|
|
158 |
|
2019 |
|
1990 |
|
38 |
Cincinnati, OH |
|
2800 Howard Street |
|
|
|
|
1,306 |
|
|
20,266 |
|
|
— |
|
|
1,306 |
|
|
20,266 |
|
|
21,572 |
|
|
— |
|
2021 |
|
2016 |
|
31 |
Cincinnati, OH |
|
7585 Empire Drive |
|
-(1) |
|
|
644 |
|
|
2,658 |
|
|
292 |
|
|
644 |
|
|
2,950 |
|
|
3,594 |
|
|
1,811 |
|
2014 |
|
1973 |
|
11 |
Cleveland, OH |
|
1200 Chester Industrial Parkway North |
|
|
|
|
1,213 |
|
|
6,602 |
|
|
1 |
|
|
1,213 |
|
|
6,603 |
|
|
7,816 |
|
|
602 |
|
2020 |
|
2007/2009 |
|
27 |
Cleveland, OH |
|
1200 Chester Industrial Parkway South |
|
|
|
|
562 |
|
|
2,689 |
|
|
30 |
|
|
562 |
|
|
2,719 |
|
|
3,281 |
|
|
287 |
|
2020 |
|
1991 |
|
23 |
Cleveland, OH |
|
1350 Moore Road |
|
|
|
|
809 |
|
|
2,860 |
|
|
23 |
|
|
809 |
|
|
2,883 |
|
|
3,692 |
|
|
359 |
|
2020 |
|
1997 |
|
20 |
Cleveland, OH |
|
1366 Commerce Drive |
|
|
|
|
1,069 |
|
|
4,363 |
|
|
3 |
|
|
1,069 |
|
|
4,366 |
|
|
5,435 |
|
|
428 |
|
2020 |
|
1960 |
|
13 |
Cleveland, OH |
|
14801 Country Rd 212 |
|
|
|
|
985 |
|
|
13,062 |
|
|
1 |
|
|
985 |
|
|
13,063 |
|
|
14,048 |
|
|
1,337 |
|
2019 |
|
1998 |
|
25 |
Cleveland, OH |
|
1755 Enterprise Parkway |
|
-(1) |
|
|
1,411 |
|
|
12,281 |
|
|
1,661 |
|
|
1,411 |
|
|
13,942 |
|
|
15,353 |
|
|
4,259 |
|
2014 |
|
1978/2005 |
|
27 |
Cleveland, OH |
|
2100 International Parkway (2) |
|
|
|
|
— |
|
|
14,818 |
|
|
116 |
|
|
— |
|
|
14,934 |
|
|
14,934 |
|
|
618 |
|
2020 |
|
2000 |
|
31 |
Cleveland, OH |
|
2210 International Parkway |
|
|
|
|
— |
|
|
15,033 |
|
|
5 |
|
|
— |
|
|
15,038 |
|
|
15,038 |
|
|
641 |
|
2020 |
|
2001 |
|
27 |
Cleveland, OH |
|
30339 Diamond Parkway |
|
|
|
|
2,815 |
|
|
22,792 |
|
|
126 |
|
|
2,815 |
|
|
22,918 |
|
|
25,733 |
|
|
2,744 |
|
2018 |
|
2007 |
|
34 |
Cleveland, OH |
|
31000 Viking Parkway |
|
|
|
|
1,458 |
|
|
5,494 |
|
|
— |
|
|
1,458 |
|
|
5,494 |
|
|
6,952 |
|
|
195 |
|
2021 |
|
1998 |
|
29 |
Cleveland, OH |
|
Gilchrist Road I |
|
|
|
|
1,775 |
|
|
6,541 |
|
|
185 |
|
|
1,775 |
|
|
6,726 |
|
|
8,501 |
|
|
528 |
|
2020 |
|
1961-1978 |
|
17 |
Cleveland, OH |
|
Gilchrist Road II |
|
|
|
|
2,671 |
|
|
14,959 |
|
|
154 |
|
|
2,671 |
|
|
15,113 |
|
|
17,784 |
|
|
1,147 |
|
2020 |
|
1994-1998 |
|
22 |
Cleveland, OH |
|
Gilchrist Road III |
|
|
|
|
977 |
|
|
12,416 |
|
|
139 |
|
|
977 |
|
|
12,555 |
|
|
13,532 |
|
|
684 |
|
2020 |
|
1994/1998 |
|
22 |
Cleveland, OH |
|
4211 Shuffel Street NW |
|
|
|
|
1,086 |
|
|
12,287 |
|
|
3 |
|
|
1,086 |
|
|
12,290 |
|
|
13,376 |
|
|
829 |
|
2020 |
|
1994 |
|
21 |
Columbus, OH |
|
100 Paragon Parkway |
|
|
|
|
582 |
|
|
9,130 |
|
|
1 |
|
|
582 |
|
|
9,131 |
|
|
9,713 |
|
|
932 |
|
2020 |
|
1995 |
|
17 |
Columbus, OH |
|
1650-1654 Williams Road |
|
|
|
|
1,581 |
|
|
23,818
|
|
|
5 |
|
|
1,581 |
|
|
23,823 |
|
|
25,404 |
|
|
1,039 |
|
2021 |
|
1973/1974
& 1975 |
|
20 |
Columbus, OH |
|
2120 - 2138 New World Drive |
|
-(1) |
|
|
400 |
|
|
3,007 |
|
|
80 |
|
|
400 |
|
|
3,087 |
|
|
3,487 |
|
|
945 |
|
2017 |
|
1971 |
|
18 |
Columbus, OH |
|
3100 Creekside Parkway |
|
-(1) |
|
|
1,203 |
|
|
9,603 |
|
|
507 |
|
|
1,203 |
|
|
10,110 |
|
|
11,313 |
|
|
3,091 |
|
2014 |
|
2000 |
|
27 |
Columbus, OH |
|
3500 Southwest Boulevard |
|
-(1) |
|
|
1,488 |
|
|
16,730 |
|
|
1,387 |
|
|
1,488 |
|
|
18,117 |
|
|
19,605 |
|
|
6,367 |
|
2014 |
|
1992/2018 |
|
22 |
Columbus, OH |
|
459 Orange Point Drive |
|
-(1) |
|
|
1,256 |
|
|
6,793 |
|
|
105 |
|
|
1,256 |
|
|
6,898 |
|
|
8,154 |
|
|
543 |
|
2019 |
|
2001 |
|
40 |
Columbus, OH |
|
7001 American Pkwy |
|
-(1) |
|
|
331 |
|
|
1,416 |
|
|
82 |
|
|
331 |
|
|
1,498 |
|
|
1,829 |
|
|
694 |
|
2014 |
|
1986/2007 & 2012 |
|
20 |
Columbus, OH |
|
7719 Graphics Way |
|
-(1) |
|
|
1,297 |
|
|
2,743 |
|
|
76 |
|
|
1,297 |
|
|
2,819 |
|
|
4,116 |
|
|
264 |
|
2019 |
|
2000 |
|
40 |
Columbus, OH |
|
8273 Green Meadows Dr. |
|
-(1) |
|
|
341 |
|
|
2,266 |
|
|
393 |
|
|
341 |
|
|
2,659 |
|
|
3,000 |
|
|
837 |
|
2014 |
|
1996/2007 |
|
27 |
Columbus, OH |
|
8288 Green Meadows Dr. |
|
-(1) |
|
|
1,107 |
|
|
8,413 |
|
|
480 |
|
|
1,107 |
|
|
8,893 |
|
|
10,000 |
|
|
4,184 |
|
2014 |
|
1988 |
|
17 |
Columbus, OH |
|
1520-1530 Experiment Farm Road |
|
|
|
|
576 |
|
|
7,164 |
|
|
— |
|
|
576 |
|
|
7,164 |
|
|
7,740 |
|
|
56 |
|
2021 |
|
1997 |
|
25 |
Columbus, OH |
|
2180 Corporate Drive |
|
|
|
|
586 |
|
|
8,311 |
|
|
— |
|
|
586 |
|
|
8,311 |
|
|
8,897 |
|
|
58 |
|
2021 |
|
1996 |
|
27 |
Columbus, OH |
|
952 Dorset Road |
|
|
|
|
242 |
|
|
3,492 |
|
|
— |
|
|
242 |
|
|
3,492 |
|
|
3,734 |
|
|
27 |
|
2021 |
|
1988 |
|
25 |
Indianapolis, IN |
|
2900 N. Shadeland Avenue |
|
|
|
|
4,632 |
|
|
14,572 |
|
|
666 |
|
|
4,632 |
|
|
15,238 |
|
|
19,870 |
|
|
2,848 |
|
2019 |
|
1957/1992 |
|
15 |
Indianapolis, IN |
|
3035 North Shadeland Ave |
|
-(1) |
|
|
1,966 |
|
|
11,740 |
|
|
821 |
|
|
1,966 |
|
|
12,561 |
|
|
14,527 |
|
|
3,694 |
|
2017 |
|
1962/2001
& 2004 |
|
17 |
Indianapolis, IN |
|
3169 North Shadeland Ave |
|
-(1) |
|
|
148 |
|
|
884 |
|
|
(89) |
|
|
148 |
|
|
795 |
|
|
943 |
|
|
309 |
|
2017 |
|
1979/1993 |
|
17 |
Indianapolis, IN |
|
3333 N. Franklin Road |
|
|
|
|
1,363 |
|
|
6,525 |
|
|
25 |
|
|
1,363 |
|
|
6,550 |
|
|
7,913 |
|
|
996 |
|
2020 |
|
1967 |
|
15 |
Indianapolis, IN |
|
4430 Sam Jones Expressway |
|
|
|
|
2,644 |
|
|
12,570 |
|
|
82 |
|
|
2,644 |
|
|
12,652 |
|
|
15,296 |
|
|
1,740 |
|
2019 |
|
1970 |
|
22 |
Indianapolis, IN |
|
6555 East 30th Street |
|
|
|
|
1,881 |
|
|
6,636 |
|
|
492 |
|
|
1,881 |
|
|
7,128 |
|
|
9,009 |
|
|
1,173 |
|
2019 |
|
1969/1997 |
|
17 |
Indianapolis, IN |
|
6575 East 30th Street |
|
|
|
|
566 |
|
|
1,408 |
|
|
2 |
|
|
566 |
|
|
1,410 |
|
|
1,976 |
|
|
226 |
|
2019 |
|
1998 |
|
19 |
Indianapolis, IN |
|
6585 East 30th Street |
|
|
|
|
669 |
|
|
2,216 |
|
|
144 |
|
|
669 |
|
|
2,360 |
|
|
3,029 |
|
|
352 |
|
2019 |
|
1998 |
|
19 |
Indianapolis, IN |
|
6635 East 30th Street |
|
|
|
|
535 |
|
|
2,567 |
|
|
24 |
|
|
535 |
|
|
2,591 |
|
|
3,126 |
|
|
344 |
|
2019 |
|
1998 |
|
19 |
Indianapolis, IN |
|
6701 East 30th Street |
|
|
|
|
334 |
|
|
428 |
|
|
2 |
|
|
334 |
|
|
430 |
|
|
764 |
|
|
119 |
|
2019 |
|
1990 |
|
17 |
Indianapolis, IN |
|
6737 East 30th Street |
|
|
|
|
609 |
|
|
1,858 |
|
|
25 |
|
|
609 |
|
|
1,883 |
|
|
2,492 |
|
|
312 |
|
2019 |
|
1995 |
|
17 |
Indianapolis, IN |
|
6751 East 30th Street |
|
|
|
|
709 |
|
|
2,083 |
|
|
73 |
|
|
709 |
|
|
2,156 |
|
|
2,865 |
|
|
326 |
|
2019 |
|
1997 |
|
18 |
Indianapolis, IN |
|
6951 East 30th Street |
|
|
|
|
424 |
|
|
1,323 |
|
|
56 |
|
|
424 |
|
|
1,379 |
|
|
1,803 |
|
|
210 |
|
2019 |
|
1995 |
|
21 |
Indianapolis, IN |
|
7901 W. 21st Street |
|
|
|
|
1,870 |
|
|
8,844 |
|
|
155 |
|
|
1,870 |
|
|
8,999 |
|
|
10,869 |
|
|
1,103 |
|
2019 |
|
1985/1994 |
|
20 |
Indianapolis, IN |
|
3701 David Howarth Drive |
|
|
|
|
938 |
|
|
21,471 |
|
|
— |
|
|
938 |
|
|
21,471 |
|
|
22,409 |
|
|
121 |
|
2021 |
|
2008/2019 |
|
35 |
Indianapolis, IN |
|
7750 Georgetown Road |
|
|
|
|
1,943 |
|
|
5,605 |
|
|
— |
|
|
1,943 |
|
|
5,605 |
|
|
7,548 |
|
|
40 |
|
2021 |
|
2006 |
|
32 |
Jacksonville, FL |
|
265, 338, 430 Industrial Boulevard |
|
|
|
|
2,562 |
|
|
15,116 |
|
|
411 |
|
|
2,562 |
|
|
15,527 |
|
|
18,089 |
|
|
1,736 |
|
2020 |
|
1988-1996/1999 & 2001 |
|
18 |
Jacksonville, FL |
|
Center Point Business Park |
|
-(1) |
|
|
9,848 |
|
|
26,411 |
|
|
706 |
|
|
9,848 |
|
|
27,117 |
|
|
36,965 |
|
|
3,266 |
|
2018 |
|
1990-1997 |
|
35 |
Jacksonville, FL |
|
Liberty Business Park |
|
-(1) |
|
|
9,347 |
|
|
26,978 |
|
|
513 |
|
|
9,347 |
|
|
27,491 |
|
|
36,838 |
|
|
3,223 |
|
2018 |
|
1996-1999 |
|
38 |
Jacksonville, FL |
|
Salisbury Business Park |
|
-(1) |
|
|
4,354 |
|
|
9,049 |
|
|
16 |
|
|
4,354 |
|
|
9,065 |
|
|
13,419 |
|
|
1,198 |
|
2018 |
|
2001-2012 |
|
32 |
Jacksonville, FL |
|
8451 Western Way |
|
|
|
|
4,240 |
|
|
13,983 |
|
|
86 |
|
|
4,240 |
|
|
14,069 |
|
|
18,309 |
|
|
749 |
|
2020 |
|
1968/1975 & 1987 |
|
32 |
Kansas City, MO |
|
5450 Deramus Avenue |
|
|
|
|
1,483 |
|
|
6,609
|
|
|
22 |
|
|
1,483 |
|
|
6,631 |
|
|
8,114 |
|
|
388 |
|
2021 |
|
1976/1986 & 1994 |
|
20 |
Memphis, TN |
|
210 American Dr. |
|
-(1) |
|
|
928 |
|
|
10,442 |
|
|
668 |
|
|
928 |
|
|
11,110 |
|
|
12,038 |
|
|
6,214 |
|
2014 |
|
1967/1981 & 2012 |
|
13 |
Memphis, TN |
|
3635 Knight Road |
|
-(1) |
|
|
422 |
|
|
2,820 |
|
|
142 |
|
|
422 |
|
|
2,962 |
|
|
3,384 |
|
|
782 |
|
2017 |
|
1986 |
|
18 |
Memphis, TN |
|
4540-4600 Pleasant Hill Road |
|
-(1) |
|
|
1,375 |
|
|
18,854 |
|
|
(161) |
|
|
1,207 |
|
|
18,861 |
|
|
20,068 |
|
|
1,324 |
|
2019 |
|
1991/2005 |
|
37 |
Memphis, TN |
|
6005, 6045 & 6075 Shelby Dr. |
|
-(1) |
|
|
488 |
|
|
4,919 |
|
|
2,011 |
|
|
488 |
|
|
6,930 |
|
|
7,418 |
|
|
2,574 |
|
2014 |
|
1989 |
|
19 |
Memphis, TN |
|
Airport Business Park |
|
|
|
|
1,511 |
|
|
4,352 |
|
|
1,194 |
|
|
1,511 |
|
|
5,546 |
|
|
7,057 |
|
|
1,691 |
|
2017 |
|
1985-1989 |
|
26 |
Memphis, TN |
|
6290 Shelby View Drive |
|
|
|
|
163 |
|
|
4,631 |
|
|
— |
|
|
163 |
|
|
4,631 |
|
|
4,794 |
|
|
74 |
|
2021 |
|
1999/2003 |
|
36 |
Memphis, TN |
|
2950 Brother Boulevard |
|
|
|
|
1,089 |
|
|
7,515 |
|
|
— |
|
|
1,089 |
|
|
7,515 |
|
|
8,604 |
|
|
276 |
|
2021 |
|
1987/2019 |
|
17 |
Memphis, TN |
|
1700-1710 Dunn Avenue |
|
|
|
|
916 |
|
|
5,018 |
|
|
— |
|
|
916 |
|
|
5,018 |
|
|
5,934 |
|
|
192 |
|
2021 |
|
1957-1959/1963 & 1973 |
|
13 |
Philadelphia, PA |
|
4 East Stow Road |
|
-(1) |
|
|
1,580 |
|
|
6,954 |
|
|
145 |
|
|
1,580 |
|
|
7,099 |
|
|
8,679 |
|
|
3,005 |
|
2014 |
|
1986 |
|
22 |
St. Louis, MO |
|
160-275 Corporate Woods Place |
|
|
|
|
2,183 |
|
|
5,956
|
|
|
134 |
|
|
2,183 |
|
|
6,090 |
|
|
8,273 |
|
|
199 |
|
2021 |
|
1990 |
|
19 |
St. Louis, MO |
|
2635-2645 Metro Boulevard |
|
|
|
|
656 |
|
|
2,576 |
|
|
36 |
|
|
656 |
|
|
2,612 |
|
|
3,268 |
|
|
222 |
|
2019 |
|
1979 |
|
30 |
St. Louis, MO |
|
5531 - 5555 Phantom Drive |
|
|
|
|
1,133 |
|
|
3,976 |
|
|
1 |
|
|
1,133 |
|
|
3,977 |
|
|
5,110 |
|
|
489 |
|
2019 |
|
1971 |
|
22 |
St. Louis, MO |
|
9150 Latty Ave |
|
|
|
|
1,674 |
|
|
5,076 |
|
|
— |
|
|
1,674 |
|
|
5,076 |
|
|
6,750 |
|
|
225 |
|
2021 |
|
1965/2018 |
|
22 |
St. Louis, MO |
|
Grissom Drive |
|
|
|
|
656 |
|
|
2,780 |
|
|
— |
|
|
656 |
|
|
2,780 |
|
|
3,436 |
|
|
235 |
|
2020 |
|
1970 |
|
19 |
St. Louis, MO |
|
3919 Lakeview Corporate Drive |
|
|
|
|
4,265 |
|
|
46,225
|
|
|
25 |
|
|
4,265 |
|
|
46,250 |
|
|
50,515 |
|
|
458 |
|
2021 |
|
2019 |
|
37 |
St. Louis, MO |
|
4848 Park 370 Boulevard |
|
|
|
|
1,041 |
|
|
6,127 |
|
|
— |
|
|
1,041 |
|
|
6,127 |
|
|
7,168 |
|
|
58 |
|
2021 |
|
2006 |
|
32 |
St. Louis, MO |
|
3051 Gateway |
|
-(1) |
|
|
3,148 |
|
|
29,791 |
|
|
— |
|
|
3,148 |
|
|
29,791 |
|
|
32,939 |
|
|
241
|
|
2021 |
|
2016 |
|
36 |
St. Louis, MO |
|
349 Gateway |
|
-(1) |
|
|
3,255 |
|
|
36,451 |
|
|
— |
|
|
3,255 |
|
|
36,451 |
|
|
39,706 |
|
|
396 |
|
2021 |
|
2016 |
|
36 |
St. Louis, MO |
|
11646 Lakeside Crossing |
|
|
|
|
1,282 |
|
|
9,293 |
|
|
— |
|
|
1,282 |
|
|
9,293 |
|
|
10,575 |
|
|
76 |
|
2021 |
|
2005 |
|
35 |
St. Louis, MO |
|
St. Louis Commerce Center |
|
-(1) |
|
|
3,927 |
|
|
20,995 |
|
|
— |
|
|
3,927 |
|
|
20,995 |
|
|
24,922 |
|
|
1,012 |
|
2020 |
|
1999-2001 |
|
33 |
Total Real Estate Owned |
|
|
|
$ |
200,255 |
|
$ |
1,005,630 |
|
$ |
29,635 |
|
$ |
200,087 |
|
$ |
1,035,433 |
|
$ |
1,235,520 |
|
$ |
141,722 |
|
|
|
|
|
|
__________________
Note |
(1) |
These properties secure the $352,075 Secured Debt. |
Note |
(2) |
Total does not include development projects of $11,615,
corporate office leasehold improvements of $2,446, Columbus property management office of $3,530 and the finance lease
right of use asset of $896 related to the ground sublease at 2100 International Parkway. |
Note |
(3) |
Total does not include accumulated depreciation related to corporate office leasehold improvements of $462 and Columbus property management office of $7. |
Note |
(4) |
Renovation means significant upgrades, alterations, or additions to building interiors or exteriors and/or systems. |
Note |
(5) |
Depreciation is calculated over the remaining useful
life of the respective property as determined at the time of the purchase allocation, ranging from 11-40 years for buildings and
3-13 years for improvements. |
As of December 31, 2021, the gross aggregate basis for Federal tax purposes of
investments in real estate properties was approximately $1,325,826.
Plymouth Industrial REIT, Inc.
Real Estate Properties and Accumulated Depreciation
December 31, 2021 and 2020 ($ in thousands)
|
|
|
|
|
|
|
| |
Year Ended December 31, | |
| |
2021 | | |
2020 | |
Real Estate | |
| | | |
| | |
Balance at the beginning of the year | |
$ | 886,681 | | |
$ | 655,788 | |
Additions during the year | |
| 374,461 | | |
| 231,040 | |
Disposals during the year | |
| (7,135 | ) | |
| (147 | ) |
Balance at the end of the year | |
$ | 1,254,007 | | |
$ | 886,681 | |
| |
| | | |
| | |
Accumulated Depreciation | |
| | | |
| | |
Balance at the beginning of the year | |
$ | 98,283 | | |
$ | 63,877 | |
Depreciation expense | |
| 45,398 | | |
| 34,484 | |
Disposals during the year | |
| (1,489 | ) | |
| (78 | ) |
Balance at the end of the year | |
$ | 142,192 | | |
$ | 98,283 | |
Plymouth Industrial REIT (AMEX:PLYM-A)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Plymouth Industrial REIT (AMEX:PLYM-A)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024