Exhibit 99.2

 

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ANALYSIS OF OPERATING RESULTS AND FINANCIAL CONDITION FOR

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

 

     Page  

Consolidated Balance Sheets

   3

Consolidated Statements of Income

   5

Portfolio Summary

   7

Third Quarter Fact Sheet

   8

Same Park Cash NOI by Region and Type

   9

Analysis of Capital Expenditures

   11

Funds from Operations (FFO), Core FFO and Funds Available for Distribution (FAD)

   12

Capital Structure and Financial Condition

   14

Portfolio Operating Analysis and Statistics

   15

Lease Expirations

   19

Quarter- and Year-to-Date Production Statistics

   22

Definitions and Non-GAAP Disclosures

   24

Forward-Looking Statements

When used within this supplemental information package, the words “may,” “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” “intends,” and similar expressions are intended to identify “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may cause the actual results and performance of the Company to be materially different from those expressed or implied in the forward-looking statements. Such factors include the duration and severity of the COVID-19 pandemic and its impact on our business and our customers; the impact of competition from new and existing commercial facilities which could impact rents and occupancy levels at the Company’s facilities; the Company’s ability to evaluate, finance, and integrate acquired and developed properties into the Company’s existing operations; the Company’s ability to effectively compete in the markets that it does business in; the impact of the regulatory environment as well as national, state, and local laws and regulations including, without limitation, those governing REITs; security breaches, including ransomware, or a failure of the Company’s networks, systems or technology, which could adversely impact the Company’s operations or its business, customer and employee relationships or result in fraudulent payments; the impact of general economic and business conditions, including as a result of the economic fallout of the COVID-19 pandemic; rental rates and occupancy levels at the Company’s facilities; and changes in these conditions as a result of the COVID-19 pandemic, the availability of permanent capital at attractive rates, the outlook and actions of rating agencies and risks detailed from time to time in the Company’s SEC reports, including quarterly reports on Form 10-Q, reports on Form 8-K, and annual reports on Form 10-K.

 

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        September 30, 2021           December 31, 2020      

ASSETS

   
   

Cash and cash equivalents

  $ 46,594   $ 69,083     (a) 
   

Real estate facilities, at cost

   

Land

    865,062     843,765  

Buildings and improvements

    2,207,095     2,080,895  
 

 

 

 

 

 

 

 
    3,072,157     2,924,660  

Accumulated depreciation

    (1,157,947     (1,101,739
 

 

 

 

 

 

 

 
    1,914,210     1,822,921     (b) 

Properties held for sale, net (1)

    46,811     75,138  

Land and building held for development, net

    62,467     37,922  
 

 

 

 

 

 

 

 
    2,023,488     1,935,981  
   

Rent receivable

    2,427     1,519     (c) 

Deferred rent receivable

    37,078     36,788  

Other assets

    18,891     14,334     (d) 
 

 

 

 

 

 

 

 

Total assets

  $ 2,128,478   $ 2,057,705  
 

 

 

 

 

 

 

 
   

LIABILITIES AND EQUITY

   
   

Accrued and other liabilities

  $ 99,208   $ 82,065     (e) 
 

 

 

 

 

 

 

 

Total liabilities

    99,208     82,065  
   

Equity

   

PS Business Parks, Inc.’s stockholders’ equity:

   

Preferred stock

    944,750     944,750  

Common stock

    275     274  

Paid-in capital

    741,032     738,022     (f) 

Accumulated earnings

    113,444     73,631     (g) 
 

 

 

 

 

 

 

 

Total PS Business Parks, Inc.’s stockholders’ equity

    1,799,501     1,756,677  

Noncontrolling interests

    229,769     218,963  
 

 

 

 

 

 

 

 

Total equity

    2,029,270     1,975,640  
 

 

 

 

 

 

 

 

Total liabilities and equity

  $ 2,128,478   $ 2,057,705  
 

 

 

 

 

 

 

 

 

 

See following page for additional detail related to the tickmarks shown in the table above.

 

(1)

As of September 30, 2021, the Company had reclassified to properties held for sale (“AHFS”) a total of 1.2 million square feet, including a 53,000 square foot industrial building located in Beltsville, Maryland, a 371,000 square foot industrial-flex business park located in San Diego, California (subsequently sold in October 2021), and a 772,000 square foot industrial-flex business park located in Irving, Texas. As of December 31, 2020, properties held for sale includes the 1.2 million square feet described above, along with a single-tenant industrial-flex building totaling 22,000 square feet located in Irving, Texas which was sold in September 2021, a 244,000 square foot office business park located in Herndon, Virginia which was sold in July 2021, and a 198,000 square foot office oriented flex business park located in Chantilly, Virginia which was sold in June 2021.

 

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  (a)

   Change in cash and cash equivalents         
  

Beginning cash balance at December 31, 2020

         $ 69,083
  

Net cash provided by operating activities

           232,408
  

Net cash used in investing activities

           (103,588
  

Net cash used in financing activities

           (151,309
           

 

 

 

  

Ending cash balance at September 30, 2021

         $ 46,594
           

 

 

 

           

  (b)

   Change in real estate facilities, at cost         
  

Beginning balance at December 31, 2020

         $ 1,822,921
  

Acquisition of real estate

           121,201
  

Recurring capital improvements

           8,350
  

Tenant improvements, gross

           11,314
  

Capitalized lease commissions

           5,438
  

Nonrecurring capital improvements

           1,019
  

Depreciation and amortization of real estate facilities

           (67,182
  

Transfer from land and building held for development, net

           9,052
  

Transfer to properties held for sale, net

           2,097
           

 

 

 

  

Ending balance at September 30, 2021

         $             1,914,210
           

 

 

 

           
              Increase  

  (c)

   Change in rent receivable        September 30, 2021            December 31, 2020          (Decrease)  
     

 

 

 

  

 

 

 

  

 

 

 

  

Non-government customers

   $ 1,558    $ 646    $ 912
  

U.S. Government customers

     869      873      (4
     

 

 

 

  

 

 

 

  

 

 

 

      $ 2,427    $ 1,519    $ 908
     

 

 

 

  

 

 

 

  

 

 

 

           
              Increase  

  (d)

   Change in other assets      September 30, 2021        December 31, 2020        (Decrease)  
     

 

 

 

  

 

 

 

  

 

 

 

  

Lease intangible assets, net

   $ 9,142    $ 9,058    $ 84
  

Prepaid property taxes and insurance

     5,170      3,121      2,049
  

Other

     4,579      2,155      2,424
     

 

 

 

  

 

 

 

  

 

 

 

      $ 18,891    $ 14,334    $ 4,557
     

 

 

 

  

 

 

 

  

 

 

 

           
              Increase  

  (e)

   Change in accrued and other liabilities      September 30, 2021        December 31, 2020        (Decrease)  
     

 

 

 

  

 

 

 

  

 

 

 

  

Customer security deposits

   $ 41,289    $ 38,457    $ 2,832
  

Accrued property taxes

     23,061      12,513      10,548
  

Customer prepaid rent

     13,737      12,518      1,219
  

Lease intangible liabilities, net

     6,569      6,392      177
  

Other

     14,552      12,185      2,367
     

 

 

 

  

 

 

 

  

 

 

 

      $ 99,208    $ 82,065    $ 17,143
     

 

 

 

  

 

 

 

  

 

 

 

           

  (f)

   Change in paid-in capital         
  

Beginning paid-in capital at December 31, 2020

         $ 738,022
  

Issuance costs

           (105
  

Exercise of stock options

           906
  

Stock compensation expense, net

           5,889
  

Cash paid for taxes in lieu of stock upon vesting of restricted stock units

           (3,680
           

 

 

 

  

Ending paid-in capital at September 30, 2021

         $ 741,032
           

 

 

 

           

  (g)

   Change in accumulated earnings         
  

Beginning accumulated earnings at December 31, 2020

         $ 73,631
  

Net income

           162,665
  

Distributions to preferred stockholders

           (36,139
  

Distributions to common stockholders

           (86,713
           

 

 

 

  

Ending accumulated earnings at September 30, 2021

         $ 113,444
           

 

 

 

 

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         For the Three Months Ended    
September 30,
      For the Nine Months Ended    
September 30,
   
     2021   2020   2021   2020    
          

Rental income

   $ 110,448   $ 103,760   $ 327,859   $ 310,535   (a)
          

Expenses:

          

Cost of operations

     33,091     32,096     98,158     93,490   (b)

Depreciation and amortization

     23,857     23,064     69,356     72,646  

General and administrative

     5,148     5,047     14,329     11,374   (c)
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

     62,096     60,207     181,843     177,510  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
          

Interest and other income

     411     230     1,590     1,012   (d)

Interest and other expense

     (224     (536     (703     (900   (e)

Gain on sale of real estate facilities

     29,924     7,652     49,117     27,273  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

     78,463     50,899     196,020     160,410  

Allocation to noncontrolling interests

     (13,850     (8,124     (33,355     (26,011  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income allocable to PS Business Parks, Inc.

     64,613     42,775     162,665     134,399  

Allocation to preferred stockholders

     (12,046     (12,046     (36,139     (36,139  

Allocation to restricted stock unit holders

     (350     (149     (828     (543  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income allocable to common stockholders

   $ 52,217   $ 30,580   $ 125,698   $ 97,717  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
          

Net income per share of common stock

          

Basic

   $ 1.90   $ 1.11   $ 4.57   $ 3.56  

Diluted

   $ 1.89   $ 1.11   $ 4.55   $ 3.55  
          

Weighted average common stock outstanding

          

Basic

     27,543     27,483     27,523     27,470  

Diluted

     27,635     27,565     27,623     27,560  

 

 

See following page for additional detail related to the tickmarks shown in the table above.

 

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        For The Three Months Ended     Increase     For the Nine Months Ended     Increase  
   (a)   Rental income:         September 30, 2021                 September 30, 2020                 (Decrease)                 September 30, 2021                 September 30, 2020                 (Decrease)        
 

Same Park (1) (2)

  $ 99,161     $ 91,501     $ 7,660     $ 291,119     $ 271,315     $ 19,804  
 

Same Park non-cash rental income (1) (3)

    131       1,430       (1,299)       682       4,526       (3,844)  
 

Non-Same Park (1) (2)

    4,200       1,570       2,630       10,808       5,759       5,049  
 

Non-Same Park non-cash rental income (1) (3)

    270       127       143       1,357       426       931  
 

Multifamily

    2,308       2,201       107       6,883       7,249       (366)  
 

Rental income from assets sold or held for sale (4)

    4,378       6,931       (2,553)       17,010       21,260       (4,250)  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    $ 110,448     $ 103,760     $ 6,688     $ 327,859     $ 310,535     $ 17,324  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

  (b)

  Cost of operations:            
 

Same Park (1)

  $ 28,470     $ 27,637     $ 833     $ 83,148     $ 79,745     $ 3,403  
 

Same Park non-cash expense (1) (5)

    391       220       171       1,241       712       529  
 

Non-Same Park (1)

    1,389       900       489       3,729       2,607       1,122  
 

Non-Same Park non-cash expense (1) (5)

    16       6       10       42       18       24  
 

Multifamily

    1,161       1,066       95       3,405       3,084       321  
 

Operating expenses from assets sold or held for sale (4)

    1,664       2,267       (603)       6,593       7,324       (731)  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    $ 33,091     $ 32,096     $ 995     $ 98,158     $ 93,490     $ 4,668  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

  (c)

  General and administrative expenses:            
 

Compensation expense

  $ 1,782     $ 1,431     $ 351     $ 5,035     $ 4,608     $ 427  
 

Stock compensation expense

    1,913       2,275       (362)       5,057       3,608       1,449  
 

Professional fees and other

    1,453       1,341       112       4,237       3,158       1,079  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    $ 5,148     $ 5,047     $ 101     $ 14,329     $ 11,374     $ 2,955  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

  (d)

  Interest and other income:            
 

Management fee income

  $ 66     $ 65     $ 1     $ 199     $ 198     $ 1  
 

Interest income

    3       20       (17)       11       365       (354)  
 

Other income

    342       145       197       1,380       449       931  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    $ 411     $ 230     $ 181     $ 1,590     $ 1,012     $ 578  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
             

  (e)

 

Interest and other expense:

       
 

Interest expense and credit facility fee (6)

  $ (89)     $ (79)     $ (10)     $ (246)     $ (237)     $ (9)  
 

Amortization of credit facility origination costs

    (117)       (58)       (59)       (232)       (173)       (59)  
 

Other expense

    (18)       (399)       381       (225)       (490)       265  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    $ (224)     $ (536)     $ 312     $ (703)     $ (900)     $ 197  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

 

(1)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Same Park and Non-Same Park.

(2)

Same Park rental income is presented net of (a) accounts receivable write-offs (recoveries) of $0.0 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and ($0.1) million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.1 million and $2.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.6 million and $6.3 million for the nine months ended September 30, 2021 and 2020, respectively. Non-Same Park rental income is presented net of (a) accounts receivable write-offs (recoveries) of $0.0 million for the three and nine months ended September 30, 2021 and 2020 and (b) rent deferrals and abatements of $0.1 million and $0.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.1 million and $0.0 million for the nine months ended September 30, 2021 and 2020, respectively.

(3)

Non-cash rental income represents amortization of deferred rent receivable (net of write-offs), in-place intangibles, tenant improvement reimbursements, and lease incentive. Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.1 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $0.3 million and $2.5 million for the nine months ended September 30, 2021 and 2020, respectively. Non-Same Park non-cash rental income is presented net of deferred rent receivable write-offs of $0.0 million for the three and nine months ended September 30, 2021 and 2020.

(4)

As of September 30, 2021, the Company had reclassified AHFS of 1.2 million square feet, including a 53,000 square foot industrial building located in Beltsville, Maryland, a 371,000 square foot industrial-flex business park located in San Diego, California (subsequently sold in October 2021), and a 772,000 square foot industrial-flex business park located in Irving, Texas. As of December 31, 2020, properties held for sale includes the 1.2 million square feet described above along with a single-tenant industrial-flex building totaling 22,000 square feet located in Irving, Texas which was sold in September 2021, a 244,000 square foot office business park located in Herndon, Virginia which was sold in July 2021, and a 198,000 square foot office oriented flex business park located in Chantilly, Virginia which was sold in June 2021. Also included in the respective periods in 2020 are assets sold comprising 40,000 square feet sold in September 2020 and 113,000 square feet sold in January 2020.

(5)

Non-cash expense represents stock compensation expense attributable to employees whose compensation expense is recorded in costs of operations.

(6)

Interest expense was $0.0 million for the three and nine months ended September 30, 2021 and 2020.

 

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PROPERTY INFORMATION  
        For The Three Months Ended September 30,                   For the Nine Months Ended September 30,            
                2021                             2020                 % Change                 2021                             2020                 % Change  

Total Portfolio (1)

           

Total rentable square footage at period end

    26,869,000       25,822,000       4.1%       26,869,000       25,822,000       4.1%  

Weighted average occupancy

    94.7%       91.5%       3.5%       93.9%       92.1%       2.0%  

Period end occupancy

    95.5%       91.7%       4.1%       95.5%       91.7%       4.1%  

Cash rental income per occupied square foot (2) (3)

           

Industrial

  $ 14.40     $ 13.47       6.9%     $ 14.17     $ 13.19       7.4%  

Flex

  $ 20.16     $ 19.11       5.5%     $ 20.10     $ 18.96       6.0%  

Office

  $ 25.41     $ 24.52       3.6%     $ 25.05     $ 24.58       1.9%  

Total cash rental income per occupied square foot

  $ 16.53     $ 15.76       4.9%     $ 16.35     $ 15.53       5.3%  

Cash rental income per available foot (2) (3)

           

Industrial

  $ 13.86     $ 12.31       12.6%     $ 13.51     $ 12.15       11.2%  

Flex

  $ 18.92     $ 17.70       6.9%     $ 18.68     $ 17.52       6.6%  

Office

  $ 21.93     $ 22.17       (1.1%)     $ 21.68     $ 22.48       (3.6%)  

Total cash rental income per available foot

  $ 15.67     $ 14.42       8.7%     $ 15.36     $ 14.31       7.3%  
           

Same Park Portfolio (2)

           

Total rentable square footage at period end

    25,053,000       25,053,000             25,053,000       25,053,000        

Weighted average occupancy

    94.8%       92.6%       2.4%       94.0%       92.6%       1.5%  

Period end occupancy

    95.5%       92.8%       2.9%       95.5%       92.8%       2.9%  

Cash rental income per occupied square foot (2) (4)

           

Industrial

  $ 14.50     $ 13.47       7.6%     $ 14.25     $ 13.21       7.9%  

Flex

  $ 20.14     $ 19.09       5.5%     $ 20.07     $ 18.93       6.0%  

Office

  $ 25.41     $ 24.52       3.6%     $ 25.05     $ 24.58       1.9%  

Total cash rental income per occupied square foot

  $ 16.70     $ 15.78       5.8%     $ 16.49     $ 15.59       5.8%  

Cash rental income per available foot (2) (4)

           

Industrial

  $ 13.99     $ 12.52       11.7%     $ 13.61     $ 12.27       10.9%  

Flex

  $ 18.90     $ 17.70       6.8%     $ 18.65     $ 17.50       6.6%  

Office

  $ 21.93     $ 22.17       (1.1%)     $ 21.68     $ 22.48       (3.6%)  

Total cash rental income per available foot

  $ 15.83     $ 14.61       8.4%     $ 15.49     $ 14.44       7.3%  
           

Non-Same Park Portfolio (2)

           

Total rentable square footage at period end

    1,816,000       769,000       136.2%       1,816,000       769,000       136.2%  

Weighted average occupancy

    93.6%       55.3%       69.3%       92.8%       74.9%       23.9%  

Period end occupancy

    95.0%       55.3%       71.8%       95.0%       55.3%       71.8%  

Cash rental income per occupied square foot (2) (5)

           

Industrial

  $ 12.96     $ 13.61       (4.8%)     $ 12.75     $ 12.29       3.7%  

Flex

  $ 21.30     $ 20.58       3.5%     $ 22.05     $ 21.03       4.9%  

Office

  $     $           $     $        

Total cash rental income per occupied square foot

  $ 13.45     $ 14.74       (8.8%)     $ 13.38     $ 13.35       0.2%  

Cash rental income per available foot (2) (5)

           

Industrial

  $ 12.14     $ 7.03       72.7%     $ 11.84     $ 9.02       31.3%  

Flex

  $ 19.95     $ 17.97       11.0%     $ 20.37     $ 18.63       9.3%  

Office

  $     $           $     $        

Total cash rental income per available foot

  $ 12.60     $ 8.16       54.4%     $ 12.42     $ 10.01       24.1%  
           

Multifamily Portfolio

           

Number of units

    395       395             395       395        

Average rent per unit (6)

  $ 2,044     $ 2,084       (1.9%)     $ 2,044     $ 2,084       (1.9%)  

Weighted average occupancy

    94.7%       91.1%       4.0%       94.5%       92.6%       2.1%  

Period end occupancy

    96.2%       94.4%       1.9%       96.2%       94.4%       1.9%  

 

 

 

(1)

Excludes multifamily assets, AHFS comprising 1.2 million square feet, an asset sold in September 2021 comprising 22,000 square feet sold, an asset sold in July 2021 comprising 244,000 square feet, an asset sold in June 2021 comprising 198,000 square feet, and assets sold in 2020 comprising 153,000 square feet for the periods shown.

(2)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Cash Rental Income per Available Foot, Cash Rental Income per Occupied Square Foot, Same Park, and Non-Same Park.

(3)

Included in the calculation of Total Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.7 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $1.3 million and $0.8 million for the nine months ended September 30, 2021 and 2020, respectively, (b) accounts receivable write-offs (recoveries) of $0.0 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $0.0 million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.2 million and $2.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.7 million and $6.3 million for the nine months ended September 30, 2021 and 2020, respectively.

(4)

Included in the calculation of Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.7 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $1.3 million and $0.8 million for the nine months ended September 30, 2021 and 2020, respectively, (b) accounts receivable write-offs (recoveries) of $0.0 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and ($0.1) million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively, and (c) rent deferrals and abatements of $0.1 million and $2.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.6 million and $6.3 million for the nine months ended September 30, 2021 and 2020, respectively.

(5)

Included in the calculation of Non-Same Park Cash Rental Income per Occupied Square Feet and Cash Rental Income per Available foot is (a) lease buyout income of $0.0 million for both of the three and nine months ended September 30, 2021 and 2020, (b) accounts receivable write-offs (recoveries) of $0.0 million for both of the three and nine months ended September 30, 2021 and 2020, and (c) rent deferrals and abatements of $0.1 million and $0.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.1 million and $0.0 million for the nine months ended September 30, 2021 and 2020, respectively.

(6)

Average rent per unit is defined as the total potential monthly rental revenue (actual rent for occupied apartment units plus market rent for vacant apartment units) divided by the total number of rentable apartment units.

 

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NET OPERATING INCOME  
    For The Three Months Ended September 30,           For the Nine Months Ended September 30,        
            2021                     2020             % Change             2021                     2020             % Change  

Rental income

           

Same Park (1) (2) (3)

  $ 99,292     $ 92,931       6.8%     $ 291,801     $ 275,841       5.8%  

Non-Same Park (1)

    4,470       1,697       163.4%       12,165       6,185       96.7%  

Multifamily

    2,308       2,201       4.9%       6,883       7,249       (5.0%)  

Assets sold or held for sale

    4,378       6,931       (36.8%)       17,010       21,260       (20.0%)  
 

 

 

   

 

 

     

 

 

   

 

 

   

Total rental income

    110,448       103,760       6.4%       327,859       310,535       5.6%  
 

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted cost of operations (1) (5)

           

Same Park (1) (6)

    28,470       27,637       3.0%       83,148       79,745       4.3%  

Non-Same Park (1)

    1,389       900       54.3%       3,729       2,607       43.0%  

Multifamily

    1,161       1,066       8.9%       3,405       3,084       10.4%  

Assets sold or held for sale

    1,643       2,250       (27.0%)       6,511       7,271       (10.5%)  
 

 

 

   

 

 

     

 

 

   

 

 

   

Total

    32,663       31,853       2.5%       96,793       92,707       4.4%  
 

 

 

   

 

 

     

 

 

   

 

 

   

Net operating income

           

Same Park (1)

    70,822       65,294       8.5%       208,653       196,096       6.4%  

Non-Same Park (1)

    3,081       797       286.6%       8,436       3,578       135.8%  

Multifamily

    1,147       1,135       1.1%       3,478       4,165       (16.5%)  

Assets sold or held for sale

    2,735       4,681       (41.6%)       10,499       13,989       (24.9%)  
 

 

 

   

 

 

     

 

 

   

 

 

   

Total net operating income

  $ 77,785     $ 71,907       8.2%     $ 231,066     $ 217,828       6.1%  
 

 

 

   

 

 

     

 

 

   

 

 

   

CASH NET OPERATING INCOME

 

        For The Three Months Ended September 30,                   For the Nine Months Ended September 30,            
    2021     2020     % Change     2021     2020     % Change  

Cash rental income (1) (5)

           

Same Park (1) (2) (4)

  $ 99,161     $ 91,501       8.4%     $ 291,119     $ 271,315       7.3%  

Non-Same Park (1)

    4,200       1,570       167.5%       10,808       5,759       87.7%  

Multifamily

    2,308       2,200       4.9%       6,883       7,245       (5.0%)  

Assets sold or held for sale

    4,326       6,959       (37.8%)       17,106       20,876       (18.1%)  
 

 

 

   

 

 

     

 

 

   

 

 

   

Total cash rental income

    109,995       102,230       7.6%       325,916       305,195       6.8%  
 

 

 

   

 

 

     

 

 

   

 

 

   

Adjusted cost of operations (1) (5)

           

Same Park (1) (6)

    28,470       27,637       3.0%       83,148       79,745       4.3%  

Non-Same Park (1)

    1,389       900       54.3%       3,729       2,607       43.0%  

Multifamily

    1,161       1,066       8.9%       3,405       3,084       10.4%  

Assets sold or held for sale

    1,643       2,250       (27.0%)       6,511       7,271       (10.5%)  
 

 

 

   

 

 

     

 

 

   

 

 

   

Total adjusted cost of operations

    32,663       31,853       2.5%       96,793       92,707       4.4%  
 

 

 

   

 

 

     

 

 

   

 

 

   

Cash net operating income

           

Same Park (1)

    70,691       63,864       10.7%       207,971       191,570       8.6%  

Non-Same Park (1)

    2,811       670       319.6%       7,079       3,152       124.6%  

Multifamily

    1,147       1,134       1.1%       3,478       4,161       (16.4%)  

Assets sold or held for sale

    2,683       4,709       (43.0%)       10,595       13,605       (22.1%)  
 

 

 

   

 

 

     

 

 

   

 

 

   

Total cash net operating income

  $ 77,332     $ 70,377       9.9%     $ 229,123     $ 212,488       7.8%  
 

 

 

   

 

 

     

 

 

   

 

 

   

EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION FOR REAL ESTATE (EBITDAre) (1)

 

    For The Three Months Ended September 30,           For the Nine Months Ended September 30,        
    2021     2020     % Change     2021     2020     % Change  

Net income

  $ 78,463     $ 50,899       54.2%     $ 196,020     $ 160,410       22.2%  

Net interest (income) expense

    203       117       73.5%       467       45       937.8%  

Depreciation and amortization

    23,857       23,064       3.4%       69,356       72,646       (4.5%)  

Gain on sale of real estate facilities and development rights

    (29,924)       (7,652)       291.1%       (49,117)       (27,273)       80.1%  
 

 

 

   

 

 

     

 

 

   

 

 

   

EBITDAre

  $ 72,599     $ 66,428       9.3%     $ 216,726     $ 205,828       5.3%  
 

 

 

   

 

 

     

 

 

   

 

 

   

 

 

 

(1)

Refer to page 24, Definition and Non-GAAP Disclosures, for the definitions of Same Park, Non-Same Park, Cash Rental Income, Adjusted Cost of Operations, and EBITDAre.

(2)

Same Park rental income and cash rental income include lease buyout income of $0.7 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $1.3 million and $0.8 million for the nine months ended September 30, 2021 and 2020, respectively.

(3)

Same Park rental income is presented net of (a) accounts receivable write-offs (recoveries) of $0.0 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and ($0.1) million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively, and (b) deferred rent receivable write-offs of $0.1 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and $0.3 million and $2.5 million for the nine months ended September 30, 2021 and 2020, respectively.

(4)

Same Park cash rental income is presented net of (a) accounts receivable write-offs (recoveries) of $0.0 million and $0.3 million for the three months ended September 30, 2021 and 2020, respectively, and ($0.1) million and $1.3 million for the nine months ended September 30, 2021 and 2020, respectively, and (b) rent deferrals and abatements of $0.1 million and $2.0 million for the three months ended September 30, 2021 and 2020, respectively, and $0.6 million and $6.3 million for the nine months ended September 30, 2021 and 2020, respectively.

(5)

Refer to page 6 for a reconciliation of cash rental income to rental income and adjusted cost of operations to cost of operations as reported on our GAAP statements of income.

(6)

The table below details Same Park Adjusted Cost of Operations:

 

        For The Three Months Ended September 30,                   For the Nine Months Ended September 30,            
    2021     2020     % Change     2021     2020     % Change  

Cost of operations

           

Property taxes

  $ 10,749     $ 10,517       2.2   $ 32,022     $ 31,357       2.1

Utilities

    4,934       4,477       10.2     13,321       12,936       3.0

Repairs and maintenance

    5,957       5,868       1.5     16,613       16,018       3.7

Compensation

    4,001       3,974       0.7     11,946       11,688       2.2

Snow removal

                      1,011       70       1,344.3

Property insurance

    1,290       1,243       3.8     3,551       2,908       22.1

Other expenses

    1,539       1,558       (1.2 %)      4,684       4,768       (1.8 %) 
 

 

 

   

 

 

     

 

 

   

 

 

   

Total cost of operations

  $ 28,470     $ 27,637       3.0   $ 83,148     $ 79,745       4.3
 

 

 

   

 

 

     

 

 

   

 

 

   

 

8


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     For the Three Months Ended  
     September 30, 2021      September 30, 2020      Total  
         Industrial                Flex                Office                Total                Industrial                Flex                  Office                  Total              % Change  

Cash rental income (1)

                          

Northern California

   $ 24,159      $ 2,603      $ 2,699      $ 29,461      $ 21,170      $ 2,291      $ 3,071      $ 26,532        11.0%  

Southern California

     9,805        3,288        239        13,332        8,859        3,059        203        12,121        10.0%  

Dallas

     3,154        1,970               5,124        2,947        1,915               4,862        5.4%  

Austin

     2,352        6,431               8,783        2,077        6,190               8,267        6.2%  

Northern Virginia

     5,144        5,723        8,932        19,799        5,057        5,285        8,757        19,099        3.7%  

South Florida

     12,121        519        41        12,681        10,445        426        42        10,913        16.2%  

Seattle

     3,235        1,837        140        5,212        2,956        1,785        128        4,869        7.0%  

Suburban Maryland

     985               3,784        4,769        1,029               3,809        4,838        (1.4%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     60,955        22,371        15,835        99,161        54,540        20,951        16,010        91,501        8.4%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Adjusted cost of operations (1)

                          

Northern California

     5,090        691        788        6,569        5,046        648        794        6,488        1.2%  

Southern California

     2,315        944        105        3,364        2,501        915        91        3,507        (4.1%)  

Dallas

     979        730               1,709        1,024        797               1,821        (6.2%)  

Austin

     894        2,588               3,482        787        2,333               3,120        11.6%  

Northern Virginia

     1,529        1,704        3,598        6,831        1,457        1,597        3,194        6,248        9.3%  

South Florida

     3,327        151        19        3,497        3,143        154        20        3,317        5.4%  

Seattle

     844        463        67        1,374        868        424        66        1,358        1.2%  

Suburban Maryland

     285               1,359        1,644        315               1,463        1,778        (7.5%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     15,263        7,271        5,936        28,470        15,141        6,868        5,628        27,637        3.0%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Cash NOI (1)

                          

Northern California

     19,069        1,912        1,911        22,892        16,124        1,643        2,277        20,044        14.2%  

Southern California

     7,490        2,344        134        9,968        6,358        2,144        112        8,614        15.7%  

Dallas

     2,175        1,240               3,415        1,923        1,118               3,041        12.3%  

Austin

     1,458        3,843               5,301        1,290        3,857               5,147        3.0%  

Northern Virginia

     3,615        4,019        5,334        12,968        3,600        3,688        5,563        12,851        0.9%  

South Florida

     8,794        368        22        9,184        7,302        272        22        7,596        20.9%  

Seattle

     2,391        1,374        73        3,838        2,088        1,361        62        3,511        9.3%  

Suburban Maryland

     700               2,425        3,125        714               2,346        3,060        2.1%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

   $ 45,692      $       15,100      $       9,899      $       70,691      $       39,399      $      14,083      $      10,382      $ 63,864        10.7%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(1)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

 

9


LOGO

 

     For the Nine Months Ended  
     September 30, 2021      September 30, 2020      Total  
         Industrial                Flex                  Office                  Total                  Industrial                  Flex                  Office                  Total              % Change  

Cash rental income (1)

                          

Northern California

   $ 70,003      $ 7,437      $ 7,995      $ 85,435      $ 62,515      $ 6,967      $ 9,251      $ 78,733        8.5%  

Southern California

     29,015        10,050        639        39,704        25,573        9,052        591        35,216        12.7%  

Dallas

     9,374        5,967               15,341        8,809        5,692               14,501        5.8%  

Austin

     6,817        19,251               26,068        6,062        18,231               24,293        7.3%  

Northern Virginia

     15,194        16,719        26,465        58,378        14,878        15,707        26,422        57,007        2.4%  

South Florida

     34,872        1,491        124        36,487        30,832        1,373        99        32,304        12.9%  

Seattle

     9,473        5,329        411        15,213        8,776        5,136        475        14,387        5.7%  

Suburban Maryland

     3,170               11,323        14,493        3,011               11,863        14,874        (2.6%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     177,918        66,244        46,957        291,119        160,456        62,158        48,701        271,315        7.3%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Adjusted cost of operations (1)

                          

Northern California

     14,830        2,045        2,284        19,159        14,382        1,986        2,338        18,706        2.4%  

Southern California

     7,009        2,631        261        9,901        6,898        2,588        246        9,732        1.7%  

Dallas

     3,186        2,433               5,619        3,013        2,535               5,548        1.3%  

Austin

     2,462        7,376               9,838        2,268        6,774               9,042        8.8%  

Northern Virginia

     4,622        5,090        10,136        19,848        4,387        4,565        9,690        18,642        6.5%  

South Florida

     9,356        442        58        9,856        8,806        412        51        9,269        6.3%  

Seattle

     2,457        1,283        197        3,937        2,412        1,225        169        3,806        3.4%  

Suburban Maryland

     934               4,056        4,990        894               4,106        5,000        (0.2%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     44,856        21,300        16,992        83,148        43,060        20,085        16,600        79,745        4.3%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Cash NOI (1)

                          

Northern California

     55,173        5,392        5,711        66,276        48,133        4,981        6,913        60,027        10.4%  

Southern California

     22,006        7,419        378        29,803        18,675        6,464        345        25,484        16.9%  

Dallas

     6,188        3,534               9,722        5,796        3,157               8,953        8.6%  

Austin

     4,355        11,875               16,230        3,794        11,457               15,251        6.4%  

Northern Virginia

     10,572        11,629        16,329        38,530        10,491        11,142        16,732        38,365        0.4%  

South Florida

     25,516        1,049        66        26,631        22,026        961        48        23,035        15.6%  

Seattle

     7,016        4,046        214        11,276        6,364        3,911        306        10,581        6.6%  

Suburban Maryland

     2,236               7,267        9,503        2,117               7,757        9,874        (3.8%)  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

   $ 133,062      $       44,944      $       29,965      $      207,971      $   117,396      $      42,073      $ 32,101      $      191,570        8.6%  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(1)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Same Park, Cash Rental Income, Adjusted Cost of Operations, and Cash NOI.

 

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             For the Nine Months Ended September 30,          
  

 

 

 
                         2021                                               2020                       
  

 

 

    

 

 

 
               

Commercial Recurring Capital Expenditures (1)

     

 Same Park

     

 Capital improvements

   $ 8,005      $ 5,415  

 Tenant improvements

     9,860        9,229  

 Lease commissions

     5,031        4,509  
  

 

 

    

 

 

 

Total Same Park Recurring Capital Expenditures

     22,896        19,153  

 Non-Same Park

     

 Capital improvements

     97        11  

 Tenant improvements

     358        18  

 Lease commissions

     187        185  
  

 

 

    

 

 

 

Total Non-Same Park Recurring Capital Expenditures

     642        214  
  

 

 

    

 

 

 

Total Recurring Capital Expenditures

     23,538        19,367  

Assets sold or held for sale Recurring Capital Expenditures

     1,498        3,310  
  

 

 

    

 

 

 

Total commercial Recurring Capital Expenditures

     25,036        22,677  

 Non-recurring Property Renovations (1)

     1,019        512  

 Multifamily capital expenditures

     7       
  

 

 

    

 

 

 

Total capital expenditures

   $ 26,062      $ 23,189  
  

 

 

    

 

 

 
     

Same Park Recurring Capital Expenditures as a percentage of NOI

     11.0%        9.8%  

 

 

 

(1)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Recurring Capital Expenditures and Non-recurring Property Renovations.

 

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     For the Three Months Ended   For the Nine Months Ended
     September 30,   September 30,
         2021             2020                   2021                       2020          

Net income allocable to common stockholders

   $ 52,217   $ 30,580   $ 125,698   $ 97,717

Adjustments

        

Gain on sale of real estate facilities

     (29,924     (7,652     (49,117     (27,273

Depreciation and amortization

     23,857     23,064     69,356     72,646

Net income allocable to noncontrolling interests

     13,850     8,124     33,355     26,011

Net income allocable to restricted stock unit holders

     350     149     828     543

FFO allocated to joint venture partner

     (22     (21     (67     (102
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO allocable to diluted common stock and units (1)

     60,328     54,244     180,053     169,542

Maryland reincorporation costs

                 510      

Non-capitalizable demolition costs

           335           335

Acceleration of stock compensation expense due to President and Chief Executive Officer retirement

           1,687           1,687
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO allocable to diluted common stock and units (1)

     60,328     56,266     180,563     171,564

Adjustments

        

Recurring capital improvements

     (3,836     (1,390     (8,102     (5,426

Tenant improvements

     (3,876     (2,533     (10,218     (9,247

Capitalized lease commissions

     (1,996     (1,783     (5,218     (4,694

Total recurring capital expenditures for assets sold or held for sale

     (471     (1,146     (1,498     (3,310

Total multifamily capital expenditures

                 (7      

Non-cash rental income (2)

     (453     (1,530     (1,943     (5,340

Non-cash stock compensation expense (3)

     2,341     831     6,422     2,704

Cash paid for taxes in lieu of stock upon vesting of restricted stock units

     (478     (442     (3,680     (4,102
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FAD allocable to diluted common stock and units (1)

     51,559     48,273     156,319     142,149

Distributions to common stockholders

     (28,923     (28,860     (86,713     (86,533

Distributions to noncontrolling interests - common units

     (7,671     (7,671     (23,012     (23,012

Distributions to restricted stock unit holders

     (179     (140     (545     (469

Distributions to noncontrolling interests - joint venture

     (20     (46     (60     (109
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash available after fixed charges

     14,766     11,556     45,989     32,026

Non-recurring property renovations (1)

     (176     (299     (1,019     (512

Investment in multifamily development

     (13,516     (2,971     (30,540     (5,094

Investment in industrial development

     (165     (2,971     (1,381     (5,843
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained cash (1)

   $ 909   $ 5,315   $ 13,049   $ 20,577
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        

Weighted average outstanding

        

Common stock

     27,543     27,483     27,523     27,470

Operating partnership units

     7,305     7,305     7,305     7,305

Restricted stock units

     33     49     42     65

Common stock equivalents

     92     82     100     90
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total diluted common stock and units

     34,973     34,919     34,970     34,930
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        

FFO per share

   $ 1.72   $ 1.55   $ 5.15   $ 4.85

Core FFO per share

   $ 1.72   $ 1.61   $ 5.16   $ 4.91

FAD distribution payout ratio (4)

     71.4%       76.1%       70.6%       77.5%  

 

 

(1)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definition of FFO, Core FFO, FAD, Non-Recurring Property Renovations and Retained Cash.

(2)

Non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursements, and lease incentives.

(3)

Amounts shown are net of accelerated stock compensation expense related to the former President and Chief Executive Officer retirement, which is also excluded from the computation of Core FFO.

(4)

FAD distribution payout ratio is equal to total distributions to common stockholders, unit holders, restricted stock unit holders and our joint venture partner divided by FAD during the same reporting period.

 

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     As of September 30, 2021     As of December 31, 2020  
       Total        

% of Total

Market

  Capitalization  

   

    Wtd Avg    

Rate

    Total    

% of Total

Market

Capitalization

   

    Wtd Avg    

Rate

 
  

 

 

   

 

 

 

Unsecured Debt:

    

Credit facility borrowing ($400.0 million at LIBOR + 0.70%) (1)

   $ -       -       -        

Credit facility borrowing ($250.0 million at LIBOR + 0.825%) (1)

         $ -       -       -  

Unrestricted cash

     (46,594         (69,083    
  

 

 

       

 

 

     

Net debt

   $ (46,594     -       -     $ (69,083     -       -  
  

 

 

       

 

 

     
            

Preferred Equity:

            

5.200% Series W preferred stock (7,590,000 depositary shares outstanding) callable 10/20/21

   $ 189,750       3.0     $ 189,750       3.5  

5.250% Series X preferred stock (9,200,000 depositary shares outstanding) callable 9/21/22

     230,000       3.6       230,000       4.2  

5.200% Series Y preferred stock (8,000,000 depositary shares outstanding) callable 12/7/22

     200,000       3.1       200,000       3.6  

4.875% Series Z preferred stock (13,000,000 depositary shares outstanding) callable 11/4/24

     325,000       5.1       325,000       5.9  
  

 

 

       

 

 

     

Total preferred equity

   $ 944,750       14.8     5.10   $ 944,750       17.2     5.10
  

 

 

       

 

 

     
            
  

 

 

       

 

 

     

Total net debt and preferred equity

   $ 898,156       14.1     5.10   $ 875,667       15.9     5.10
  

 

 

       

 

 

     
            

Common stock (27,546,153 and 27,488,547 shares outstanding as of September 30, 2021 and December 31, 2020, respectively) (2)

   $ 4,317,584       67.9     $ 3,652,403       66.4  

Common operating partnership units (7,305,355 units outstanding as of September 30, 2021 and December 31, 2020) (2)

     1,145,041       18.0       970,663       17.7  
  

 

 

       

 

 

     

Total common equity and operating partnership units (2)

   $       5,462,625       85.9     $       4,623,066       84.1  
  

 

 

       

 

 

     
            

Total implied market capitalization

   $ 6,360,781       100.0     $ 5,498,733       100.0  
  

 

 

       

 

 

     
     For the Nine Months Ended     For the year ended  
     September 30, 2021     December 31, 2020  

Interest expense and related expenses (3)

   $ 478         $ 548      

Preferred distributions

     36,139           48,186      
  

 

 

       

 

 

     

Total fixed charges and preferred distributions

   $ 36,617         $ 48,734      
  

 

 

       

 

 

     
            

Ratio of EBITDAre to fixed charges and preferred distributions

     5.9x           5.7x      

Ratio of FFO to total fixed charges and preferred distributions (4)

     5.9x           5.7x      

Ratio of net debt and preferred equity to EBITDAre (5)

     3.1x           3.2x      

 

 

 

(1)

In August 2021, the Company amended and restated its Credit Facility which increased the aggregate principal amount of the Credit Facility from $250.0 million to $400.0 million.

(2)

Total common equity is calculated as the total number of shares of common stock and operating partnership units outstanding multiplied by the Company’s closing stock price at the end of each respective period shown. Closing stock prices on September 30, 2021 and December 31, 2020 were $156.74 and $132.87, respectively.

(3)

Interest expense and related expenses includes facility fees associated with our unsecured credit facility.

(4)

Ratio of FFO to total fixed charges and preferred distributions is calculated by dividing FFO excluding fixed charges and preferred distributions by total fixed charges and preferred distributions.

(5)

Ratio of net debt and preferred equity to EBITDAre is calculated as total net debt and preferred equity divided by EBITDAre. Ratio of net debt and preferred equity to EBITDAre as of September 30, 2021 is calculated using annualized EBITDAre for the nine months ended September 30, 2021.

 

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Industry Concentration as of September 30, 2021 (1) (2)  
                      
                   Percentage of
      Total Rental Income      
 

Business services

           22.0%  

Logistics

           14.7%  

Technology

           10.0%  

Retail, food, and automotive

           8.6%  

Construction and engineering

           8.4%  

Health services

           6.7%  

Government

           5.9%  

Electronics

           3.0%  

Home furnishings

           2.5%  

Insurance and financial services

           2.1%  

Aerospace/defense

           1.8%  

Communications

           1.7%  

Education

           1.0%  

Other

           11.6%  
        

 

 

 

Total

           100.0%  
        

 

 

 
                      
Top 10 Customers by Total Annual Rental Income as of September 30, 2021 (2)  
                      

Customer

   Square
    Footage    
     Annualized
     Rental Income  (3)     
     Percentage of Total
    Annualized Rental Income    
 
                      

US Government

     602,000    $ 10,760      2.6%  

Amazon Inc.

     543,000      6,748      1.6%  

KZ Kitchen Cabinet & Stone

     370,000      5,417      1.3%  

Luminex Corporation

     199,000      4,400      1.0%  

ECS Federal, LLC

     126,000      2,898      0.7%  

Lockheed Martin Corporation

     124,000      2,707      0.6%  

Applied Materials, Inc.

     173,000      2,692      0.6%  

CentralColo, LLC

     96,000      2,446      0.6%  

Carbel, LLC

     236,000      2,076      0.5%  

Great Way Trading & Transportation, Inc.

     176,000      2,041      0.5%  
  

 

 

    

 

 

    

 

 

 

Total

     2,645,000    $ 42,185      10.0%  
  

 

 

    

 

 

    

 

 

 

 

 

 

(1)

Industry concentration is categorized based on customers’ Standard Industrial Classification code.

(2)

Excludes assets held for sale as of September 30, 2021.

(3)

For leases expiring within one year, annualized rental income includes only the income to be received under the existing lease from October 1, 2021 through the respective date of expiration.

 

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Rentable Square Footage of Same Park Properties by Product Type as of September 30, 2021 (1)  
              

Markets

         Industrial                  Flex                    Office                  Total                 % of Total       
              

Northern California

     6,391      514      340      7,245      28.9%  

Southern California

     2,299      582      31      2,912      11.6%  

Dallas

     1,300      793             2,093      8.4%  

Austin

     755      1,208             1,963      7.8%  

Northern Virginia

     1,564      1,242      1,726      4,532      18.1%  

South Florida

     3,728      126      12      3,866      15.4%  

Seattle

     1,052      270      28      1,350      5.4%  

Suburban Maryland

     341             751      1,092      4.4%  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     17,430      4,735      2,888      25,053      100.0%  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Percentage by Product Type

     69.6%        18.9%        11.5%        100.0%     
              
Same Park Weighted Average Occupancy Rates by Product Type for the Three Months Ended September 30, 2021 (1)  
              

Markets                    

                Industrial                    Flex                    Office                  Total        
              

Northern California

        95.9%        93.7%        77.5%        94.9%  

Southern California

        97.6%        95.4%        98.1%        97.2%  

Dallas

        92.8%        88.6%               91.2%  

Austin

        96.9%        92.6%               94.2%  

Northern Virginia

        95.7%        98.1%        86.4%        92.8%  

South Florida

        98.5%        87.8%        100.0%        98.2%  

Seattle

        95.6%        95.2%        69.6%        95.0%  

Suburban Maryland

        98.0%               89.6%        92.2%  

Total

        96.5%        93.9%        86.2%        94.8%  
              
Same Park Weighted Average Occupancy Rates by Product Type for the Nine Months Ended September 30, 2021 (1)  
              

Markets                    

                Industrial                    Flex                    Office                  Total        
              

Northern California

        95.1%        89.9%        79.4%        94.0%  

Southern California

        97.1%        94.5%        95.7%        96.6%  

Dallas

        89.9%        87.0%               88.8%  

Austin

        96.7%        93.6%               94.8%  

Northern Virginia

        94.5%        97.2%        86.6%        92.2%  

South Florida

        97.3%        84.2%        100.0%        96.9%  

Seattle

        94.5%        95.0%        67.9%        94.1%  

Suburban Maryland

        98.1%               89.3%        92.1%  

Total

        95.5%        93.0%        86.4%        94.0%  

 

 

(1)

Excludes assets sold or held for sale as of September 30, 2021.

 

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Rentable Square Footage of Properties by Product Type as of September 30, 2021 (1)  
              

Markets

        Industrial                   Flex                    Office                  Total                 % of Total       
              

Northern California

     6,391      593      340      7,324      27.3%  

Southern California

     2,989      582      31      3,602      13.4%  

Dallas

     2,101      793             2,894      10.8%  

Austin

     755      1,208             1,963      7.3%  

Northern Virginia

     1,810      1,242      1,726      4,778      17.8%  

South Florida

     3,728      126      12      3,866      14.4%  

Seattle

     1,052      270      28      1,350      5.0%  

Suburban Maryland

     341             751      1,092      4.0%  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     19,167      4,814      2,888      26,869      100.0%  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Percentage by Product Type

     71.3%        17.9%        10.8%        100.0%     
              
Weighted Average Occupancy Rates by Product Type for the Three Months Ended September 30, 2021 (1)  
              

Markets

          Industrial      Flex      Office      Total  
              

Northern California

        95.9%        93.6%        77.5%        94.8%  

Southern California

        98.0%        95.4%        98.1%        97.6%  

Dallas

        90.8%        88.6%               90.1%  

Austin

        96.9%        92.6%               94.2%  

Northern Virginia

        95.2%        98.1%        86.4%        92.8%  

South Florida

        98.5%        87.8%        100.0%        98.2%  

Seattle

        95.6%        95.2%        69.6%        95.0%  

Suburban Maryland

        98.0%               89.6%        92.2%  

Total

        96.3%        93.8%        86.2%        94.7%  
              
Weighted Average Occupancy Rates by Product Type for the Nine Months Ended September 30, 2021 (1)  
              

Markets

          Industrial      Flex      Office      Total  
              

Northern California

        95.1%        90.2%        79.4%        93.9%  

Southern California

        97.4%        94.5%        95.7%        96.9%  

Dallas

        87.7%        87.0%               87.5%  

Austin

        96.7%        93.6%               94.8%  

Northern Virginia

        94.2%        97.2%        86.6%        92.2%  

South Florida

        97.3%        84.2%        100.0%        96.9%  

Seattle

        94.5%        95.0%        67.9%        94.1%  

Suburban Maryland

        98.1%               89.3%        92.1%  

Total

        95.3%        93.0%        86.4%        93.9%  

 

 

(1)

Excludes assets sold or held for sale as of September 30, 2021.

 

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(1)

Excludes assets sold or held for sale as of September 30, 2021.

 

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Lease Expirations - Total Portfolio (1)  
           

Year of Lease Expiration

       Leased Square Footage          Annualized
    Rental Income (2)     
         % Total            % of Total Annualized  
Rental Income
 
           

                2021

     1,442    $ 25,689      5.7%        5.7%  

                2022

     5,815      102,022      22.8%        22.8%  

                2023

     5,808      96,421      21.5%        21.5%  

                2024

     4,583      79,706      17.8%        17.8%  

                2025

     3,123      53,568      12.0%        12.0%  

            Thereafter

     4,997      90,397      20.2%        20.2%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     25,768    $ 447,803      100.0%        100.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Industrial (1)  
           

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (2)
     % of
Industrial
     % of Total Annualized
Rental Income
 
           

                2021

     1,017    $ 14,758      5.2%        3.3%  

                2022

     3,874      56,391      19.9%        12.6%  

                2023

     4,244      61,719      21.8%        13.8%  

                2024

     3,289      50,950      18.0%        11.4%  

                2025

     2,265      33,602      11.9%        7.5%  

            Thereafter

     3,999      65,507      23.2%        14.6%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     18,688    $ 282,927      100.0%        63.2%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Flex (1)  
           

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (2)
     % of
Flex
     % of Total Annualized
Rental Income
 
           

                2021

     247    $ 5,672      5.9%        1.2%  

                2022

     1,236      26,337      27.5%        5.9%  

                2023

     972      19,231      20.1%        4.3%  

                2024

     841      17,031      17.8%        3.8%  

                2025

     629      13,991      14.6%        3.1%  

            Thereafter

     617      13,493      14.1%        3.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     4,542    $ 95,755      100.0%        21.3%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Office  
           

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (2)
     % of
Office
     % of Total Annualized
Rental Income
 
           

                2021

     178    $ 5,259      7.6%        1.2%  

                2022

     705      19,294      27.9%        4.3%  

                2023

     592      15,471      22.4%        3.4%  

                2024

     453      11,725      17.0%        2.6%  

                2025

     229      5,975      8.6%        1.4%  

            Thereafter

     381      11,397      16.5%        2.6%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     2,538    $ 69,121      100.0%        15.5%  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(1)

Excludes assets held for sale as of September 30, 2021.

(2)

Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

 

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Lease Expirations - Northern California  
           

Year of Lease Expiration

       Leased Square Footage          Annualized
      Rental Income  (1)      
     % of
    No. CA    
         % of Total Annualized    
Rental Income
 
           

                2021

     237    $ 6,441      5.0%        1.4%  

                2022

     1,128      21,342      16.4%        4.7%  

                2023

     1,390      25,629      19.8%        5.7%  

                2024

     1,186      21,149      16.3%        4.7%  

                2025

     851      13,611      10.5%        3.0%  

            Thereafter

     2,240      41,570      32.0%        9.3%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     7,032    $ 129,742      100.0%        28.8%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Southern California (2)  
           

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (1)
     % of
So. CA
     % of Total Annualized
Rental Income
 
           

                2021

     176    $ 3,744      5.6%        0.8%  

                2022

     943      17,793      26.4%        4.0%  

                2023

     832      15,781      23.4%        3.5%  

                2024

     628      12,902      19.2%        2.9%  

                2025

     357      6,616      9.8%        1.5%  

            Thereafter

     595      10,493      15.6%        2.3%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     3,531    $ 67,329      100.0%        15.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Dallas (2)  
           

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (1)
     % of
Dallas
     % of Total Annualized
Rental Income
 
           

                2021

     191    $ 2,803      9.2%        0.6%  

                2022

     729      7,648      25.1%        1.7%  

                2023

     742      8,146      26.7%        1.8%  

                2024

     425      5,110      16.8%        1.2%  

                2025

     205      2,270      7.4%        0.5%  

            Thereafter

     413      4,522      14.8%        1.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     2,705    $ 30,499      100.0%        6.8%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           
Lease Expirations - Austin  
           

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (1)
     % of
Austin
     % of Total Annualized
Rental Income
 
           

                2021

     112    $ 1,757      4.9%        0.4%  

                2022

     366      7,586      21.1%        1.7%  

                2023

     286      5,367      14.9%        1.2%  

                2024

     337      7,280      20.3%        1.6%  

                2025

     408      8,698      24.2%        2.0%  

            Thereafter

     330      5,249      14.6%        1.2%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     1,839    $ 35,937      100.0%        8.1%  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

 

(1)

Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

(2)

Excludes assets held for sale as of September 30, 2021.

 

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Lease Expirations - Northern Virginia

 

Year of Lease Expiration

       Leased Square Footage          Annualized
      Rental Income  (1)      
     % of
  No. VA  
         % of Total Annualized    
Rental Income
 
           

                2021

     321     $ 5,626       6.3%        1.3%  

                2022

     1,209       25,880       28.7%        5.8%  

                2023

     760       14,358       15.9%        3.2%  

                2024

     699       13,466       15.0%        3.0%  

                2025

     679       12,921       14.3%        2.9%  

            Thereafter

     848       17,827       19.8%        4.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

                     4,516     $                 90,078               100.0%                    20.2%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           

Lease Expirations - South Florida

 

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (1)
     % of
So. FL
     % of Total Annualized
Rental Income
 
           

                2021

     266     $ 2,468       4.9%        0.6%  

                2022

     957       12,500       24.7%        2.8%  

                2023

     1,062       13,948       27.6%        3.1%  

                2024

     912       12,703       25.1%        2.8%  

                2025

     341       4,426       8.7%        1.0%  

            Thereafter

     275       4,536       9.0%        1.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     3,813     $ 50,581       100.0%        11.3%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           

Lease Expirations - Suburban Maryland (2)

 

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (1)
     % of
Sub. MD
     % of Total Annualized
Rental Income
 
           

                2021

     67     $ 1,375       6.4%        0.3%  

                2022

     200       3,886       17.9%        0.9%  

                2023

     288       6,245       28.8%        1.4%  

                2024

     148       3,283       15.2%        0.7%  

                2025

     126       2,383       11.0%        0.5%  

            Thereafter

     179       4,480       20.7%        1.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     1,008     $ 21,652       100.0%        4.8%  
  

 

 

    

 

 

    

 

 

    

 

 

 
           

Lease Expirations - Seattle

 

Year of Lease Expiration

   Leased Square Footage      Annualized
Rental Income (1)
     % of
Seattle
     % of Total Annualized
Rental Income
 
           

                2021

     72     $ 1,475       6.7%        0.3%  

                2022

     283       5,387       24.5%        1.2%  

                2023

     448       6,947       31.6%        1.6%  

                2024

     248       3,813       17.4%        0.9%  

                2025

     156       2,643       12.0%        0.6%  

            Thereafter

     117       1,720       7.8%        0.4%  
  

 

 

    

 

 

    

 

 

    

 

 

 

                Total

     1,324     $ 21,985       100.0%        5.0%  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

 

(1)

Annualized rental income represents annualized outgoing rents inclusive of related estimated expense recoveries. Actual rental income amounts may vary depending upon re-leasing of expiring spaces.

(2)

Excludes assets held for sale as of September 30, 2021.

 

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    Total Portfolio Activity (1) (2)

Industrial (1)

  Wtd. Avg.
    Occupancy    
  Leasing
      Volume      
    Customer
    Retention    
  Transaction Costs
    per Executed Foot    
  Transaction Costs
    as a % of Rents  (3)    
      Cash Rental Rate    
Change (3)
      Net Effective Rent    
Change (3)

Northern California

  95.9%     374,000     73.4%           $  3.47   5.5%   9.9%   25.3%

Southern California

  98.0%     249,000     84.9%     3.55     8.9%   9.5%   20.6%

Dallas

  90.8%     116,000     82.3%     4.64     17.0%   7.3%   26.0%

Austin

  96.9%     64,000     63.9%     1.28     3.9%   9.6%   22.0%

Northern Virginia

  95.2%     146,000     95.6%     5.48     9.7%   5.3%   19.4%

South Florida

  98.5%     196,000     48.4%     1.66     4.2%   13.6%   28.3%

Seattle

  95.6%     102,000     96.8%     5.64     13.6%   3.8%   6.7%

Suburban Maryland

  98.0%     43,000         1.68     5.1%   -3.8%   3.4%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Industrial Totals by Market

  96.3%     1,290,000     74.6%           $  3.55   7.6%   9.0%   22.4%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Flex (1)

                             

Northern California

  93.6%     96,000     80.5%           $  1.51   2.5%   7.0%   14.0%

Southern California

  95.4%     41,000     73.8%     2.83     7.3%   -0.3%   4.4%

Dallas

  88.6%     73,000     84.1%     3.16     11.6%   4.8%   16.9%

Austin

  92.6%     60,000     20.0%     2.49     6.0%   -0.7%   3.4%

Northern Virginia

  98.1%     179,000     95.4%     5.58     6.7%   0.7%   8.3%

South Florida

  87.8%     26,000     87.6%     2.76     4.2%   9.2%   22.4%

Seattle

  95.2%     30,000     45.8%     2.95     7.7%   8.2%   16.5%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Flex Totals by Market

  93.8%     505,000     69.7%           $  3.57   6.1%   2.6%   10.0%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Office

                             

Northern California

  77.5%     20,000     53.2%           $  0.27   0.7%   -19.8%   -22.1%

Southern California

  98.1%                    

Northern Virginia

  86.4%     142,000     72.3%     15.23     11.8%   -8.0%   -1.9%

South Florida

  100.0%                    

Seattle

  69.6%                    

Suburban Maryland

  89.6%     38,000     80.2%     5.08     9.0%   -3.1%   4.0%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Office Totals by Market

  86.2%     200,000     71.7%           $  11.82   11.1%   -9.2%   -3.8%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

             

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

Company Totals by Type

  94.7%     1,995,000     72.8%           $  4.38   7.9%   5.0%   15.4%

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excludes assets held for sale as of September 30, 2021.

(2)

Average lease term for leases executed during the three months ended September 30, 2021 was 3.7 years.

(3)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Transaction Costs as a Percentage of Rents, Cash Rental Rate Change, and Average Net Effective Rent Growth.

 

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    Total Portfolio Activity (1) (2)

Industrial (1)

  Wtd. Avg.
    Occupancy    
  Leasing
        Volume        
    Customer
        Retention        
  Transaction Costs
    per Executed Foot    
    Transaction Costs
    as a % of Rents  (3)    
    Cash Rental Rate  
Change (3)
    Net Effective Rent  
Change (3)

Northern California

  95.1%     1,156,000     76.5%            $  2.66   4.7%   12.5%   28.3%

Southern California

  97.4%     732,000     79.6%     2.39     6.5%   6.6%   13.9%

Dallas

  87.7%     437,000     82.9%     3.70     16.8%   4.0%   12.0%

Austin

  96.7%     208,000     81.0%     1.12     3.8%   8.6%   26.9%

Northern Virginia

  94.2%     375,000     85.5%     4.73     9.6%   4.6%   11.0%

South Florida

  97.3%     767,000     56.9%     1.56     4.1%   10.1%   23.9%

Seattle

  94.5%     199,000     87.5%     3.90     10.8%   11.5%   20.8%

Suburban Maryland

  98.1%     93,000     91.5%     2.19     5.4%   -2.0%   5.5%

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

Industrial Totals by Market

          95.3%                     3,967,000             75.3%                    $                 2.68   6.4%   8.8%   20.6%

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

Flex (1)

                               

Northern California

  90.2%     190,000     70.2%            $  1.41   3.1%   0.3%   4.1%

Southern California

  94.5%     164,000     76.9%     2.35     4.4%   1.0%   10.0%

Dallas

  87.0%     195,000     75.2%     3.21     12.1%   3.8%   14.6%

Austin

  93.6%     122,000     28.4%     4.41     10.9%   -0.8%   3.2%

Northern Virginia

  97.2%     436,000     91.5%     4.60     8.1%   -0.8%   3.6%

South Florida

  84.2%     41,000     79.1%     1.87     3.5%   8.3%   21.1%

Seattle

  95.0%     71,000     46.6%     2.65     6.6%   7.0%   14.5%

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

Flex Totals by Market

  93.0%     1,219,000     70.2%            $  3.36   7.1%   1.0%   7.0%

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

Office

                               

Northern California

  79.4%     56,000     62.3%            $  0.78   1.7%   -13.3%   -13.2%

Southern California

  95.7%     6,000     57.6%     2.68     6.5%   3.0%   10.1%

Northern Virginia

  86.6%     324,000     64.7%     11.07     12.5%   -7.8%   -1.3%

South Florida

  100.0%                    

Seattle

  67.9%     8,000         11.79     24.8%   8.5%   19.7%

Suburban Maryland

  89.3%     109,000     76.3%     2.65     5.3%   -4.6%   4.2%

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

Office Totals by Market

  86.4%     503,000     66.4%            $  8.01   10.8%   -7.7%   -1.9%

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

             

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

Company Totals by Type

  93.9%     5,689,000     73.1%            $  3.29           7.2%                   4.9%                   14.2%        

 

 

 

 

 

 

   

 

 

 

 

   

 

 

 

 

 

 

 

 

(1)

Excludes assets held for sale as of September 30, 2021.

(2)

Average lease term for leases executed during the nine months ended September 30, 2021 was 3.4 years.

(3)

Refer to page 24, Definitions and Non-GAAP Disclosures, for the definitions of Transaction Costs as a Percentage of Rents, Cash Rental Rate Change, and Average Net Effective Rent Growth.

 

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Provided within this supplemental information package are measures not defined in accordance with U.S. generally accepted accounting principles (“GAAP”). We believe our presentation of these non-GAAP measures assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. These non-GAAP measures discussed below are not substitutes of other measures of financial performance presented in accordance with GAAP. In addition, other real estate investment trusts (“REITs”) may compute these measures differently, so comparisons among REITs may not be helpful.

Adjusted Cost of Operations – Adjusted cost of operations represents cost of operations, excluding non-cash stock compensation expense for employees whose compensation expense is recorded in cost of operations, which can vary significantly period to period based upon the performance of the Company. The GAAP measure most directly comparable to adjusted cost of operations is cost of operations.

Assets sold or held for sale – Assets sold or held for sale represents 113,000 square feet of assets sold in January 2020, 40,000 square feet of assets sold in September 2020, 198,000 square feet of assets sold in June 2021, 244,000 square feet of assets sold in July 2021, and 22,000 square feet of assets sold in September 2021, and includes 1.2 million square feet of assets held for sale as of September 30, 2021. The assets held for sale represent a 53,000 square foot industrial building located in Beltsville, Maryland, a 371,000 square foot industrial-flex business park located in San Diego, California (subsequently sold in October 2021), and a 772,000 square foot industrial-flex business park located in Irving, Texas.

Average Net Effective Rent Growth – Average net effective rent growth represents the weighted average percentage change in net effective rents for leases executed during a period compared against the prior leases for the same units. Net effective rent represents average rental payments for the term of a lease on a straight-line basis, excluding operating expense reimbursements.

Cash NOI – We utilize cash NOI to evaluate the cash flow performance of our business parks. Cash NOI represents NOI adjusted to exclude non-cash items included in rental income and in cost of operations. The non-cash rental income includes amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursements, and lease incentives. The non-cash expense is equal to stock compensation expense for employees whose compensation expense is recorded in cost of operations. We believe that cash NOI assists investors in analyzing cash flow performance of our business parks. The GAAP measure most directly comparable to cash NOI is net income.

Cash Rental Income – Cash rental income represents rental income, excluding non-cash rental income, specifically amortization of deferred rent receivable (net of write-offs), in-place lease intangible, tenant improvement reimbursements, and lease incentives.

Cash Rental Income per Available Square Foot – Cash rental income per available square foot is computed by dividing Cash Rental Income for the period by weighted average available square feet for the same period. Cash rental income per available square foot for the three and nine month periods is annualized.

Cash Rental Income per Occupied Square Foot – Cash rental income per occupied square foot is computed by dividing Cash Rental Income for the period by weighted average occupied square feet for the same period. Cash rental income per occupied square foot for the three and nine month periods is annualized.

Cash Rental Rate Change – Cash rental rate change percentages are computed by taking the percentage difference between outgoing rents (including estimated expense recoveries) and incoming rents (including estimated expense recoveries) for leases executed during the period. Leases executed on spaces vacant for more than the preceding twelve months have been excluded.

Core FFO and Core FFO per share – Core FFO represents FFO excluding the net impact of (i) income allocated to preferred stockholders to the extent redemption value exceeds the related carrying value and (ii) other nonrecurring income or expense items as appropriate. Core FFO per share represents Core FFO allocable to diluted common stock and units divided by total weighted average diluted common stock and units. We believe our presentation of Core FFO and Core FFO per share assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. The GAAP measures most directly comparable to Core FFO and Core FFO per share are net income and earnings per share, respectively.

Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”) – EBITDAre is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and is often utilized to evaluate the performance of real estate companies. EBITDAre is calculated as GAAP net income before interest, depreciation and amortization and adjusted to exclude gains or losses from sales of depreciable real estate assets and impairment charges on real estate assets. We believe our presentation of EBITDAre assists investors and analysts in evaluating the operating performance of our business activities, including the impact of general and administrative expenses, and without the impact from gains or losses from sales of depreciable real estate assets. The GAAP measure most directly comparable EBITDAre is net income.

Free Cash Available after Fixed Charges – Free cash available after fixed charges represents FAD less dividends and distributions.

 

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Funds Available for Distribution (“FAD”) – FAD is a non-GAAP measure that represents Core FFO adjusted to (a) deduct recurring capital improvements that maintains the condition of our real estate, tenant improvements and lease commissions and (b) remove certain non-cash rental income or expenses such as amortization of deferred rent receivable and non-cash stock compensation expense. We believe our presentation of FAD assists investors and analysts in analyzing and comparing our operating and financial performance between reporting periods. FAD is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because they exclude investing and financing activities presented on our statements of cash flows. The GAAP measure most directly comparable to FAD is operating cash flow from our statements of cash flows.

Funds from Operations (“FFO”) and FFO per share – FFO and FFO per share are non-GAAP measures defined by NAREIT and are considered helpful measures of REIT performance by REITs and m