STAG INDUSTRIAL, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

You should read the following discussion together with the financial statements and related notes included elsewhere in Section 1 of this report and the audited financial statements and related notes included in our most recent Annual Report on Form 10-K.

As used herein, except where the context otherwise requires, "Company," "we,"
"our" and "us," refer to STAG Industrial, Inc. and our consolidated subsidiaries
and partnerships, including our operating partnership, STAG Industrial Operating
Partnership, L.P. (the "Operating Partnership").

Forward-looking statements

This report contains "forward-looking statements" within the meaning of the safe
harbor from civil liability provided for such statements by the Private
Securities Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")). You can
identify forward-looking statements 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.
Forward-looking statements in this report include, among others, statements
about our future financial condition, results of operations, capitalization
rates on future acquisitions, our business strategy and objectives, including
our acquisition strategy, occupancy and leasing rates and trends, and expected
liquidity needs and sources (including capital expenditures and the ability to
obtain financing or raise capital). 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. 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:

• factors included in our annual report on Form 10-K for the year ended
December 31, 2021as updated elsewhere in this report, including those discussed under the headings “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

•the ongoing adverse effects of the public health crisis of the novel
coronavirus disease ("COVID-19") pandemic, or any future pandemic, epidemic or
outbreak of infectious disease, on the financial condition, results of
operations, cash flows and performance of the Company and its tenants, the real
estate market and the global economy and financial markets;

•our ability to raise equity on attractive terms;

•the competitive environment in which we operate;

•real estate risks, including fluctuations in real estate values, the general
economic climate in local markets and competition for tenants in such markets,
and the repurposing or redevelopment of retail properties into industrial
properties (in part or whole);

• lower rental rates or higher vacancy rates;

• potential payment defaults (including bankruptcy or insolvency) or non-renewal of leases by tenants;

•acquisition risks, including our ability to identify and complete accretive
acquisitions and/or failure of such acquisitions to perform in accordance with
projections;

•the schedule of acquisitions and disposals;

•technological developments, particularly those affecting supply chains and logistics;

•potential natural disasters, epidemics, pandemics, and other potentially
catastrophic events such as acts of war and/or terrorism (including the conflict
between Russia and Ukraine and the related impact on macroeconomic conditions as
a result of such conflict);
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•international, national, regional and local economic conditions;

•the general level of interest rates and currencies;

•potential changes in the law or governmental regulations and interpretations of
those laws and regulations, including changes in real estate and zoning laws or
real estate investment trust ("REIT") or corporate income 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;

•credit risk in the event of non-performance of counterparties to interest rate swaps and revolving and unfunded debt;

• how and when pending stock forward sales may be settled;

•the absence or insufficiency of the amounts of insurance;

•our ability to maintain our REIT qualification;

•our ability to retain key personnel;

• litigation, including costs associated with pursuing or defending claims and any adverse outcomes; and

• potential environmental liabilities, including costs, fines or penalties that may be incurred as a result of the necessary remediation of contamination on properties we currently own or previously owned.

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. Moreover, you should interpret
many of the risks identified in this report, as well as the risks set forth
above, as being heightened as a result of the ongoing and numerous adverse
impacts of the COVID-19 pandemic. 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.

Certain Definitions

In this report:

“GAAP” means generally accepted accounting principles in United States.

"Total annualized base rental revenue" means the contractual monthly base rent
as of June 30, 2022 (which differs from rent calculated in accordance with GAAP)
multiplied by 12. If a tenant is in a free rent period as of June 30, 2022, the
total annualized base rental revenue is calculated based on the first
contractual monthly base rent amount multiplied by 12.

"Occupancy rate" means the percentage of total leasable square footage for which
either revenue recognition has commenced in accordance with GAAP or the lease
term has commenced as of the close of the reporting period, whichever occurs
earlier.

"Value Add Portfolio" means our properties that meet any of the following
criteria: (i) less than 75% occupied as of the acquisition date (ii) will be
less than 75% occupied due to known move-outs within two years of the
acquisition date; (iii) out of service with significant physical renovation of
the asset; or (iv) development.

"Stabilization" for properties under development or being redeveloped means, the
earlier of achieving 90% occupancy or 12 months after completion. With respect
to properties acquired and immediately added to the Value Add Portfolio, (i) if
acquired with less than 75% occupancy as of the acquisition date, Stabilization
will occur upon the earlier of achieving 90% occupancy or 12 months from the
acquisition date; or (ii) if acquired and will be less than 75% occupied due to
known move-outs within two years of the acquisition date, Stabilization will
occur upon the earlier of achieving 90% occupancy after the known move-outs have
occurred or 12 months after the known move-outs have occurred.
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"Operating Portfolio" means all warehouse and light manufacturing assets that
were acquired stabilized or have achieved Stabilization. The Operating Portfolio
excludes non-core flex/office assets, assets contained in the Value Add
Portfolio, and assets classified as held for sale.

“Comparable Lease” means a lease in the same space with a similar lease structure to the previous lease in place, excluding new leases for space that was not occupied under our ownership.

"SL Rent Change" means the percentage change in the average monthly base rent
over the term of the lease that commenced during the period compared to the
Comparable Lease for assets included in the Operating Portfolio. Rent under
gross or similar type leases are converted to a net rent based on an estimate of
the applicable recoverable expenses, and this calculation excludes the impact of
any holdover rent.

"Cash Rent Change" means the percentage change in the base rent of the lease
commenced during the period compared to the base rent of the Comparable Lease
for assets included in the Operating Portfolio. The calculation compares the
first base rent payment due after the lease commencement date compared to the
base rent of the last monthly payment due prior to the termination of the lease,
excluding holdover rent. Rent under gross or similar type leases are converted
to a net rent based on an estimate of the applicable recoverable expenses.

"New Lease" means a lease that is signed for an initial term equal to or greater
than 12 months for any vacant space, including a lease signed by a new tenant or
an existing tenant that is expanding into new (additional) space.

"Renewal Lease" means a lease signed by an existing tenant to extend the term
for 12 months or more, including (i) a renewal of the same space as the current
lease at lease expiration, (ii) a renewal of only a portion of the current space
at lease expiration, or (iii) an early renewal or workout, which ultimately does
extend the original term for 12 months or more.

Insight

We are a real estate operating company focused on the acquisition, ownership,
and operation of industrial properties throughout the United States. We are a
Maryland corporation and our common stock is publicly traded on the New York
Stock Exchange under the symbol "STAG."

We are organized and conduct our operations to maintain our qualification as a
REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended, and generally are not subject to federal income tax to the extent we
currently distribute our income to our stockholders and maintain our
qualification as a REIT. We remain subject to state and local taxes on our
income and property and to U.S. federal income and excise taxes on our
undistributed income.

We recently effected a previously announced management succession. On July 1,
2022, William R. Crooker became our Chief Executive Officer, in addition to his
role as President, and was appointed to our board of directors. In connection
with Mr. Crooker's promotion, Benjamin S. Butcher resigned from the role of
Chief Executive Officer and became Executive Chair of the board of directors. As
Chief Executive Officer, Mr. Crooker leads and manages our business, executes
the strategies developed by management and the board and serves as the chief
spokesperson to our employees, stockholders and business counterparties. As
Executive Chair, Mr. Butcher manages the business of the board, regularly
consults with Mr. Crooker on key corporate matters and serves as a liaison
between the Board and the management team.

Factors That May Affect Future Operating Results

Our ability to increase revenues or cash flow will depend in part on our (i)
external growth, specifically our acquisition activity, and (ii) internal
growth, specifically our portfolio occupancy and rental rates. A variety of
other factors, including those noted below, also may affect our future results
of operations.

COVID-19 Pandemic

Since March 2020the COVID-19 pandemic has severely affected global economic activity, caused significant volatility and negative pressure in financial markets, and negatively impacted almost all sectors, including the real estate sector and the our tenants, directly or indirectly.

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We did not incur significant disruptions or enter into any rent deferral
agreements from the COVID-19 pandemic during the three and six months ended
June 30, 2022. We will continue to evaluate tenant rent relief requests on an
individual basis, considering a number of factors. Not all tenant requests will
ultimately result in modified agreements, nor are we foregoing our contractual
rights under our lease agreements.

The COVID-19 pandemic or a future pandemic, epidemic or outbreak of infectious
disease affecting states or regions in which we or our tenants operate could
have material and adverse effects on our business, financial condition, results
of operations and cash flows due to, among other factors: health or other
government authorities requiring the closure of offices or other businesses or
instituting quarantines of personnel as the result of, or in order to avoid,
exposure to a contagious disease; disruption in supply and delivery chains; a
general decline in business activity and demand for real estate; 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 lease obligations; difficulty accessing debt and
equity capital on attractive terms, or at all, and a severe disruption and
instability in the global financial markets or deteriorations in credit and
financing conditions, which may affect our access to capital necessary to fund
business operations or address maturing liabilities on a timely basis; and the
potential negative impact on the health of our personnel, particularly if a
significant number of our employees are impacted, which would result in a
deterioration in our ability to ensure business continuity during a disruption.

The extent to which the COVID-19 pandemic or any other pandemic, epidemic or
disease impacts our operations and those of our tenants will depend on future
developments, which are highly uncertain and cannot be predicted with
confidence, including among others, the scope, severity and duration of the
pandemic, the actions taken to contain the pandemic or mitigate its impact, and
the direct and indirect economic effects of the pandemic and containment
measures. Nevertheless, the COVID-19 pandemic (or a future pandemic, epidemic or
disease) presents material uncertainty and risk with respect to our business,
financial condition, results of operations and cash flows.

Outlook

Our business is affected by the uncertainty regarding the current high
inflationary, rising interest rate environment, COVID-19 pandemic, and
geopolitical tensions in Europe. These factors are key drivers of recent
financial market volatility, continued supply chain bottlenecks, and slower
economic growth. In the first quarter of 2022, U.S. GDP declined by 1.6%, while
labor conditions remained strong with an unemployment rate at 3.6%. During the
second quarter, the general consensus among economists suggests that we should
expect a higher recession risk to continue over the next year. While the
macro-economic conditions continue to evolve and impact our tenants, we believe
we will continue to benefit from having a well-diversified portfolio across
various markets, tenant industries, and lease terms. Additionally, we believe
that the COVID-19 pandemic and geopolitical tensions are accelerating a number
of trends that positively impact U.S. industrial demand.

Over the course of the COVID-19 pandemic, the U.S. federal and state
governments, as well as the Federal Reserve, responded to the profoundly
uncertain outlook with a series of fiscal and monetary policies to ease the
economic burden of COVID-19 closures on businesses and individuals. During the
first six months of 2022, given the historically high inflation levels and
strong employment reports, the Federal Reserve shifted away from an expansionary
monetary policy. In accordance with that shift in policy, the Federal Reserve
has raised interest rates several times in 2022, including by 25 basis points in
March, 50 basis points in May and 75 basis points in June, resulting in a range
between 1.5% to 1.75% as of June 30, 2022. The Federal Reserve indicates
monetary policy will continue to tighten with higher interest rates and a
shrinking of Federal Reserve balance sheet until inflation measures approach its
long-term targets.

We believe that the current economic environment, while volatile, will provide
us with an opportunity to demonstrate the diversification of our portfolio.
Specifically, we believe our existing portfolio should benefit from competitive
rental rates and strong occupancy. In addition to our diversified portfolio, we
believe that certain characteristics of our business and capital structure
should position us well in an uncertain environment, including, among others,
our minimal amount of floating rate debt (taking into account our hedging
activities) and ample liquidity.

Due to the ongoing COVID-19 pandemic, we expect the acceleration of a number of specific industry trends to continue to support long-term demand for industrial properties, including:

•the rise of e-commerce (compared to the traditional distribution model of retail stores) and the concomitant demand from players in the e-commerce industry for a well-located and functional distribution space;

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•the increasing attractiveness of the United States as a manufacturing and
distribution location because of the size of the U.S. consumer market, an
increase in overseas labor costs, a desire for greater supply chain resilience
and redundancy and the overall cost of supplying and shipping goods (i.e. the
shortening and fattening of the supply chain); and
•the overall quality of the transportation infrastructure in the United States.

Our portfolio continues to benefit from historically low availability throughout
the national industrial market. While the COVID-19 pandemic has caused both
positive and negative impacts at varying levels across different industries and
geographies, the rise of e-commerce, actions taken by federal and state
governments and the Federal Reserve, and the recent economic recovery have
resulted in strong demand for industrial space. We believe that the
diversification of our portfolio by market, tenant industry, and tenant credit
will prove to be a strength in this environment. Industrial development
continues to be concentrated in the larger primary markets and, after a brief
deceleration, it has returned to and exceeded pre-COVID-19 pandemic levels. We
will continue to monitor the supply and demand fundamentals for industrial real
estate and assess its impact on our business.

Conditions in our markets

The properties in our portfolio are located in markets across United States. Positive or negative changes in economic or other conditions, new supplies, adverse weather conditions, natural disasters, epidemics and other factors in these markets may affect our overall performance.

Rental income

We receive income primarily in the form of rental income from the tenants who
occupy our buildings. The amount of rental income generated by the buildings in
our portfolio depends principally on occupancy and rental rates. During the
three and six months ended June 30, 2022, the SL Rent Change on New Leases and
Renewal Leases in the Operating Portfolio together grew approximately 21.9% and
23.6%, respectively. During the three and six months ended June 30, 2022, the
Cash Rent Change on New Leases and Renewal Leases in the Operating Portfolio
together grew approximately 14.1% and 14.6%, respectively.

Future economic downturns or regional downturns affecting our submarkets that
impair our ability to renew or re-lease space and the ability of our tenants to
fulfill their lease commitments, as in the case of tenant bankruptcies,
including those brought on by the COVID-19 pandemic, could adversely affect our
ability to maintain or increase rental rates at our buildings. Our ability to
lease our properties and the attendant rental rate is dependent upon, among
other things, (i) the overall economy, (ii) the supply/demand dynamic in our
markets, (iii) the quality of our properties, including age, clear height, and
configuration, and (iv) our tenants' ability to meet their contractual
obligations to us.

The following table summarizes the Operating Portfolio leases that commenced
during the three and six months ended June 30, 2022. Any rental concessions in
such leases are accounted for on a straight-line basis over the term of the
lease.

                                                              Cash                                 Total Costs
                                                           Basis Rent                                  Per                                                        Weighted Average Lease
                                                               Per             SL Rent Per           Square                Cash                SL Rent                   Term(2)                  Rental Concessions
Operating Portfolio                   Square Feet          Square Foot         Square Foot           Foot(1)            Rent Change             Change                   (years)                  per Square Foot(3)
Three months ended June 30,
2022
New Leases                           1,312,102             $   4.51          $       4.65          $   1.64                    14.8  %            22.0  %                    4.4                 $            0.11
Renewal Leases                       1,915,146             $   4.94          $       5.17          $   0.81                    13.7  %            21.9  %                    4.1                 $            0.20
Total/weighted average               3,227,248             $   4.76          $       4.96          $   1.15                    14.1  %            21.9  %                    4.3                 $            0.17
Six months ended June 30,
2022
New Leases                           2,491,326             $   5.24          $       5.50          $   2.58                    20.2  %            29.6  %                    5.7                 $            0.66
Renewal Leases                       3,875,818             $   4.96          $       5.25          $   0.88                    11.2  %            19.8  %                    5.0                 $            0.15
Total/weighted average               6,367,144             $   5.07          $       5.35          $   1.54                    14.6  %            23.6  %                    5.3                 $            0.35


(1)"Total Costs" means the costs for improvements of vacant and renewal spaces,
as well as the contingent-based legal fees and commissions for leasing
transactions. Total Costs per square foot represent the total costs expected to
be incurred on the leases that commenced during the period and do not reflect
actual expenditures for the period.
(2)"Weighted average lease term" means the contractual lease term in years,
assuming that tenants do not exercise any renewal options, purchase options, or
early termination rights, weighted by square footage.
(3)Represents the total rental concessions for the entire lease term.

Additionally, for the three and six months ended June 30, 2022, leases related
to the Value Add Portfolio and first generation leasing, with a total of 237,123
and 748,359 square feet, are excluded from the Operating Portfolio statistics
above.
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Property operating expenses

Our property operating expenses generally consist of utilities, real estate
taxes, management fees, insurance, and site repair and maintenance costs. For
the majority of our tenants, our property operating expenses are controlled, in
part, by the triple net provisions in tenant leases. In our triple net leases,
the tenant is responsible for all aspects of and costs related to the building
and its operation during the lease term, including utilities, taxes, insurance,
and maintenance costs, but typically excluding roof and building structure.
However, we also have modified gross leases and gross leases in our building
portfolio, which may require us to absorb certain building related expenses of
our tenants. In our modified gross leases, we are responsible for certain
building related expenses during the lease term, but most of the expenses are
passed through to the tenant for reimbursement to us. In our gross leases, we
are responsible for all expenses related to the building and its operation
during the lease term. Our overall performance will be affected by the extent to
which we are able to pass-through property operating expenses to our tenants.

Expected expiration of leases

Our ability to re-lease space subject to expiring leases impacts our results of
operations and will be affected by economic and competitive conditions in our
markets and by the desirability of our individual buildings. Leases that
comprise approximately 7.2% of our annualized base rental revenue will expire
during the period from July 1, 2022 to June 30, 2023, excluding month-to-month
leases. We assume, based upon internal renewal probability estimates that some
of our tenants will renew and others will vacate and the associated space will
be re-let subject to downtime assumptions. Using the aforementioned assumptions,
we expect that the rental rates on the respective new leases will be greater
than the rates under existing leases expiring during the period July 1, 2022 to
June 30, 2023, thereby resulting in an increase in revenue from the same space.

The following table summarizes lease expirations for leases in place as of
June 30, 2022, plus available space, for each of the ten calendar years
beginning with 2022 and thereafter in our portfolio. The information in the
table assumes that tenants do not exercise renewal options or early termination
rights.

                                                                                                                              Total
                                                                                                                           Annualized
                                                      Number                                            % of              Base Rental             % of Total
                                                        of                                             Total                 Revenue              Annualized
                                                      Leases             Total Rentable               Occupied                 (in               Base Rental
Lease Expiration Year                                Expiring             Square Feet               Square Feet            thousands)              Revenue
Available                                                -                2,071,543                            -                   -                        -
Month-to-month leases                                    5                  499,933                          0.5  %       $    2,199                      0.4  %
Remainder of 2022                                       24                2,399,250                          2.2  %           11,419                      2.2  %
2023                                                    86               11,027,366                         10.1  %           49,215                      9.5  %
2024                                                   102               13,937,975                         12.7  %           65,475                     12.5  %
2025                                                    93               13,525,906                         12.4  %           61,151                     11.6  %
2026                                                   107               16,662,534                         15.2  %           80,440                     15.3  %
2027                                                    82               13,086,216                         12.0  %           62,628                     11.9  %
2028                                                    50                7,464,890                          6.8  %           34,657                      6.6  %
2029                                                    43                7,210,849                          6.5  %           34,903                      6.6  %
2030                                                    27                3,763,278                          3.4  %           21,646                      4.1  %
2031                                                    40                7,292,855                          6.7  %           34,795                      6.6  %
Thereafter                                              52               12,559,435                         11.5  %           66,811                     12.7  %
Total                                                  711              111,502,030                        100.0  %       $  525,339                    100.0  %


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Portfolio Acquisitions

The following table summarizes our acquisitions during the three and six months
ended June 30, 2022.

                                                                                                                                                   Purchase Price
Market(1)                                                         Date Acquired               Square Feet            Number of Buildings           (in thousands)
Kansas City, MO                                                      January 6, 2022           702,000                          1                $        60,428
Chicago, IL                                                         January 31, 2022            72,499                          1                          8,128
Columbus, OH                                                        February 8, 2022           138,213                          1                         11,492
Cleveland, OH                                                       February 8, 2022           136,800                          1                         13,001
Nashville, TN                                                         March 10, 2022           109,807                          1                         12,810
Greenville/Spartanburg, SC                                            March 10, 2022           289,103                          1                         28,274
Memphis, TN                                                           March 18, 2022           195,622                          1                         15,828
Greenville/Spartanburg, SC                                            March 18, 2022           155,717                          1                       

16,390

Three months ended March 31, 2022                                                            1,799,761                          8                $       166,351
Atlanta, GA                                                            April 1, 2022           210,858                          1                         21,119
Minneapolis/St. Paul, MN                                               April 4, 2022           160,000                          1                         13,472
West Michigan, MI                                                     April 14, 2022           211,125                          2                         12,274
Pittsburgh, PA                                                        April 19, 2022           400,000                          1                         50,178
Greenville/Spartanburg, SC(2)                                         April 22, 2022                 -                          -                          5,559
Birmingham, AL                                                           May 5, 2022            67,168                          1                          7,871
South Bay/San Jose, CA                                                  June 7, 2022           175,325                          1                         29,630
Washington, DC                                                         June 29, 2022           140,555                          1                         20,257
Hampton Roads, VA                                                      June 29, 2022           102,512                          1                         10,561
Three months ended June 30, 2022                                                             1,467,543                          9                $      

170,921

Six months ended June 30, 2022                                                               3,267,304                         17                $      

337,272


(1) As defined by CoStar Realty Information Inc ("CoStar"). If the building is
located outside of a CoStar defined market, the city and state is reflected.
(2) We acquired vacant land parcels.

Portfolio breakdown

During the six months ended June 30, 2022, we sold two building and one land
parcel comprised of approximately 0.3 million rentable square feet with a net
book value of approximately $14.1 million to third parties. Net proceeds from
the sales of rental property were approximately $38.4 million and we recognized
the full gain on the sales of rental property, net, of approximately $24.3
million for the six months ended June 30, 2022.

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Top Markets

The following table summarizes information about the 20 largest markets in our
portfolio based on total annualized base rental revenue as of June 30, 2022.

Top 20 Markets(1)                                   % of Total Annualized Base Rental Revenue
Chicago, IL                                                                             7.5  %
Philadelphia, PA                                                                        7.3  %
Greenville/Spartanburg, SC                                                              5.4  %
Milwaukee/Madison, WI                                                                   4.4  %
Pittsburgh, PA                                                                          4.2  %
Detroit, MI                                                                             4.0  %
Columbus, OH                                                                            4.0  %
Minneapolis/St Paul, MN                                                                 3.9  %
Houston, TX                                                                             2.9  %
Charlotte, NC                                                                           2.5  %
West Michigan, MI                                                                       2.5  %
Indianapolis, IN                                                                        2.2  %
El Paso, TX                                                                             2.2  %
Cincinnati/Dayton, OH                                                                   1.9  %
Cleveland, OH                                                                           1.9  %
Boston, MA                                                                              1.8  %
Kansas City, MO                                                                         1.8  %
Washington, DC                                                                          1.7  %
Columbia, SC                                                                            1.6  %
Westchester/So Connecticut, CT/NY                                                       1.5  %
Total                                                                                  65.2  %


(1) As defined by CoStar.

Top Industries

The following table summarizes information on the 20 largest tenant industries in our portfolio based on total annualized base rental income as of
June 30, 2022.

                                                                                             % of Total Annualized
Top 20 Tenant Industries(1)                                                                   Base Rental Revenue
Air Freight & Logistics                                                                                      11.3  %
Containers & Packaging                                                                                        8.0  %
Auto Components                                                                                               7.2  %
Commercial Services & Supplies                                                                                5.3  %
Trading Companies & Distribution (Industrial Goods)                                                           5.2  %
Machinery                                                                                                     5.1  %
Internet & Direct Market Retail                                                                               4.8  %
Distributors (Consumer Goods)                                                                                 4.5  %
Household Durables                                                                                            4.4  %
Food & Staples Retailing                                                                                      3.5  %
Media                                                                                                         3.3  %
Building Products                                                                                             3.1  %
Specialty Retail                                                                                              2.9  %
Chemicals                                                                                                     2.3  %
Electronic Equip, Instruments                                                                                 2.2  %
Road & Rail                                                                                                   2.1  %
Food Products                                                                                                 2.0  %
Beverages                                                                                                     2.0  %
Textiles, Apparel, Luxury Goods                                                                               1.9  %
Health Care Equipment & Supplies                                                                              1.8  %
Total                                                                                                        82.9  %

(1) Industrial classification based on the Global Industry Classification Standard methodology.

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Top Tenants

The following table summarizes information about the 20 largest tenants in our
portfolio based on total annualized base rental revenue as of June 30, 2022.

                                                                                                              % of Total Annualized
Top 20 Tenants(1)                                                      Number of Leases                        Base Rental Revenue
Amazon                                                                                  7                                      3.1  %
Eastern Metal Supply, Inc.                                                              5                                      1.0  %
American Tire Distributors, Inc.                                                        7                                      0.9  %
FedEx Corporation                                                                       4                                      0.9  %
Tempur Sealy International, Inc.                                                        2                                      0.9  %
Lippert Component Manufacturing                                                         5                                      0.8  %
Kenco Logistic Services, LLC                                                            3                                      0.8  %
Penguin Random House, LLC                                                               1                                      0.7  %
Westrock Company                                                                        7                                      0.7  %
DS Smith North America                                                                  2                                      0.7  %
GXO Logistics, Inc.                                                                     2                                      0.7  %
DHL Supply Chain                                                                        4                                      0.7  %
LKQ Corporation                                                                         4                                      0.7  %
Ford Motor Company                                                                      1                                      0.7  %
Iron Mountain Information Management                                                    5                                      0.7  %
Carolina Beverage Group                                                                 3                                      0.6  %
Yanfeng US Automotive Interior                                                          2                                      0.6  %
Hachette Book Group, Inc.                                                               1                                      0.6  %
Packaging Corp of America                                                               5                                      0.6  %
Schneider Electric USA, Inc.                                                            3                                      0.6  %
Total                                                                                  73                                     17.0  %

(1) Includes tenants, guarantors and/or non-guarantor parents.

Critical accounting policies

See "Critical Accounting Policies" in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report on Form 10-K
for the year ended December 31, 2021 for a discussion of our critical accounting
policies and estimates.

Results of Operations

The following discussion of the results of our same store (as defined below) net
operating income ("NOI") should be read in conjunction with our consolidated
financial statements included in this report. For a detailed discussion of NOI,
including the reasons management believes NOI is useful to investors, see
"Non-GAAP Financial Measures" below. Same store results are considered to be
useful to investors in evaluating our performance because they provide
information relating to changes in building-level operating performance without
taking into account the effects of acquisitions or dispositions. We encourage
the reader to not only look at our same store results, but also our total
portfolio results, due to historic and future growth.

We define same store properties as properties that were in the Operating
Portfolio for the entirety of the comparative periods presented. The results for
same store properties exclude termination fees, solar income, and other income
adjustments. Same store properties exclude Operating Portfolio properties with
expansions placed into service after December 31, 2020. On June 30, 2022, we
owned 459 industrial buildings consisting of approximately 93.2 million square
feet and representing approximately 83.6% of our total portfolio, that are
considered our same store portfolio in the analysis below. Same store occupancy
increased approximately 1.1% to 98.7% as of June 30, 2022 compared to 97.6% as
of June 30, 2021.

Comparison of the three months ended June 30, 2022 at the end of three months
June 30, 2021

The following table summarizes selected operating information for our same store
portfolio and our total portfolio for the three months ended June 30, 2022 and
2021 (dollars in thousands). This table includes a reconciliation from our same
store portfolio to our total portfolio by also providing information for the
three months ended June 30, 2022 and 2021 with respect to the buildings acquired
and sold after December 31, 2020, Operating Portfolio buildings with expansions
placed into service or transferred from the Value Add Portfolio to the Operating
Portfolio after December 31, 2020, and our flex/office buildings, Value Add
Portfolio, and buildings classified as held for sale.
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                                                 Same Store Portfolio                                         Acquisitions/Dispositions                           Other                                              Total Portfolio
                             Three months ended June 30,                      Change                         Three months ended June 30,               Three months ended June 30,            Three months ended June 30,                      Change
                               2022                  2021               $                %                      2022                     2021             2022              2021                2022                  2021                $                %
Revenue
Operating revenue
Rental income            $      131,020          $ 129,436          $ 1,584             1.2  %       $       23,675                   $ 4,941          $  6,362          $ 3,428          $      161,057          $ 137,805          $ 23,252            16.9  %
Other income                         57                172             (115)          (66.9) %                    1                         -               385              450                     443                622              (179)          (28.8) %
Total operating revenue         131,077            129,608            1,469             1.1  %               23,676                     4,941             6,747            3,878                 161,500            138,427            23,073            16.7  %
Expenses
Property                         23,229             23,617             (388)           (1.6) %                4,218                     1,255             1,427              484                  28,874             25,356             3,518            13.9  %
Net operating income(1)  $      107,848          $ 105,991          $ 1,857             1.8  %       $       19,458                   $ 3,686          $  5,320          $ 3,394                 132,626            113,071            19,555            17.3  %
Other expenses
General and administrative                                                                                                                                                                        12,234             12,578              (344)           (2.7) %

Depreciation and amortization                                                                                                                                                                     69,279             57,332            11,947            20.8  %

Other expenses                                                                                                                                                                                       532                511                21             4.1  %
Total other expenses                                                                                                                                                                              82,045             70,421            11,624            16.5  %
Total expenses                                                                                                                                                                                   110,919             95,777            15,142            15.8  %
Other income (expense)
Interest and other income                                                                                                                                                                             23                 30                (7)          (23.3) %
Interest expense                                                                                                                                                                                 (17,896)           (15,273)           (2,623)           17.2  %

Gain on the sales of rental property, net                                                                                                                                                            376              5,976            (5,600)          (93.7) %
Total other income (expense)                                                                                                                                                                     (17,497)            (9,267)           (8,230)           88.8  %
Net income                                                                                                                                                                                $       33,084          $  33,383          $   (299)           (0.9) %

(1) For a detailed discussion of the NOI, including why management believes the NOI is useful to investors, see “Non-GAAP Financial Measures” below.

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Net Income

Net income for our total portfolio decreased by approximately $0.3 million, or
0.9%, to approximately $33.1 million for the three months ended June 30, 2022,
compared to approximately $33.4 million for the three months ended June 30,
2021.

Total comparable store operating revenue

Same store total operating revenue consists primarily of rental income from (i)
fixed lease payments, variable lease payments, straight-line rental income, and
above and below market lease amortization from our properties ("lease income"),
and (ii) other tenant billings for insurance, real estate taxes and certain
other expenses ("other billings").

For a detailed reconciliation of our total same store revenue and net income, see the table above.

Same store rental income, which includes rental income and other billings, as shown below, increased by approximately $1.6 millioni.e. 1.2%, at approximately $131.0 million for the three months ended June 30, 2022 compared to approximately $129.4 million for the three months ended June 30, 2021.

Same store lease income increased by approximately $2.3 million, or 2.1%, to
approximately $109.4 million for the three months ended June 30, 2022 compared
to approximately $107.1 million for the three months ended June 30, 2021. The
increase was primarily due to an increase in rental income of approximately $5.4
million from the execution of new leases and lease renewals with existing
tenants and a net decrease in the amortization of net above market leases of
approximately $0.3 million. These increases were partially offset by the
reduction of base rent of approximately $3.4 million due to tenant vacancies.

Same store other billings decreased by approximately $0.7 million, or 3.1%, to
approximately $21.6 million for the three months ended June 30, 2022 compared to
approximately $22.3 million for the three months ended June 30, 2021. The
decrease was primarily attributable to a decrease of approximately $1.0 million
due to a decrease in real estate taxes levied by the taxing authority. This
decrease was partially offset by an increase in other expense reimbursements
from an increase in corresponding expenses.

Same store operating expenses

Comparable store operating expenses mainly include property operating expenses and property taxes and insurance.

For a detailed reconciliation of our same store operating expenses to net income, see the table above.

Total same store property operating expenses decreased by approximately $0.4
million, or 1.6%, to approximately $23.2 million for the three months ended
June 30, 2022 compared to approximately $23.6 million for the three months ended
June 30, 2021. This decrease was primarily related to a decrease in real estate
taxes levied by the taxing authority of approximately $0.6 million and other
expenses of approximately $0.2 million. These decreases were partially offset by
an increase in insurance and snow removal expense of approximately $0.2 million
and $0.2 million, respectively.

Acquisitions and disposals Net operating income

For a detailed reconciliation of BNE from our acquisitions and divestitures to net income, see the table above.

Subsequent to December 31, 2020, we acquired 83 buildings consisting of
approximately 14.6 million square feet (excluding eight buildings that were
included in the Value Add Portfolio at June 30, 2022 or transferred from the
Value Add Portfolio to the Operating Portfolio after December 31, 2020), and
sold 24 buildings consisting of approximately 3.0 million square feet and one
land parcel. For the three months ended June 30, 2022 and 2021, the buildings
acquired after December 31, 2020 contributed approximately $19.6 million and
$2.0 million to NOI, respectively. For the three months ended June 30, 2022 and
2021, the buildings sold after December 31, 2020 contributed approximately
$(0.1) million and $1.7 million to NOI, respectively. Refer to Note 3 in the
accompanying Notes to Consolidated Financial Statements for additional
discussion regarding buildings acquired or sold.

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Other Net Operating Income

Other assets include our flex/office buildings, Value Add Portfolio, buildings
classified as held for sale, and Operating Portfolio buildings with expansions
placed in service or transferred from the Value Add Portfolio to the Operating
Portfolio after December 31, 2020. Other NOI also includes termination, solar,
and other income adjustments from buildings in our same store portfolio.

For a detailed reconciliation of our other net operating income to net income, see the table above.

These buildings contributed approximately $3.6 million and $2.7 million to NOI
for the three months ended June 30, 2022 and 2021, respectively. Additionally,
there was approximately $1.7 million and $0.7 million of termination, solar, and
other income adjustments from certain buildings in our same store portfolio for
the three months ended June 30, 2022 and 2021, respectively.

Total other expenses

Total other expenses include general and administrative expenses, depreciation and other expenses.

Total other expenses increased approximately $11.6 million, or 16.5%, for the
three months ended June 30, 2022 to approximately $82.0 million compared to
approximately $70.4 million for the three months ended June 30, 2021. The
increase was primarily a result of an increase in depreciation and amortization
of approximately $11.9 million due to an increase in the depreciable asset base
from net acquisitions. This increase was partially offset by a decrease in
general and administrative expenses of approximately $0.3 million which was
primarily due to the adoption of our retirement vesting program on January 7,
2021 and related acceleration of equity-based compensation expense for certain
eligible employees that did not recur during the three months ended June 30,
2022.

Total Other Income (Expense)

Total other income (expense) consists of interest and other income, interest
expense, and gain on the sales of rental property, net. Interest expense
includes interest incurred during the period as well as adjustments related to
amortization of financing fees and debt issuance costs, and amortization of fair
market value adjustments associated with the assumption of debt.

Total other expense increased approximately $8.2 million, or 88.8%, for the
three months ended June 30, 2022 to approximately $17.5 million compared
approximately $9.3 million for the three months ended June 30, 2021. This
increase was primarily a result of a decrease in the gain on the sales of rental
property, net of approximately $5.6 million. This increase was also attributable
to an increase in interest expense of approximately $2.6 million which is
primarily attributable to the issuance of $325.0 million of unsecured notes on
September 28, 2021.

Comparison of the six months ended June 30, 2022 at the end of six months
June 30, 2021

The following table summarizes selected operating information for our same store
portfolio and our total portfolio for the six months ended June 30, 2022 and
2021 (dollars in thousands). This table includes a reconciliation from our same
store portfolio to our total portfolio by also providing information for the six
months ended June 30, 2022 and 2021 with respect to the buildings acquired and
disposed of and Operating Portfolio buildings with expansions placed into
service or transferred from the Value Add Portfolio to the Operating Portfolio
after December 31, 2020 and our flex/office buildings, Value Add Portfolio and
buildings classified as held for sale.

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                                                   Same Store Portfolio                                          Acquisitions/Dispositions                              Other                                                    Total Portfolio
                               Six months ended June 30,                        Change                           Six months ended June 30,                    Six months ended June 30,                 Six months ended June 30,                          Change
                                2022                  2021               $                 %                       2022                     2021                2022                 2021                2022                  2021                $                  %
Revenue
Operating revenue
Rental income             $      262,929          $ 256,638          $ 6,291               2.5  %       $       44,720                   $ 8,222          $       12,009          $ 6,770          $      319,658          $ 271,630          $ 48,028                 17.7  %
Other income                         336                274               62              22.6  %                    -                        68                     715              450                   1,051                792               259                 32.7  %
Total operating revenue          263,265            256,912            6,353               2.5  %               44,720                     8,290                  12,724            7,220                 320,709            272,422            48,287                 17.7  %
Expenses
Property                          49,783             48,308            1,475               3.1  %                8,085                     2,854                   2,781            1,196                  60,649             52,358             8,291                 15.8  %
Net operating income(1)   $      213,482          $ 208,604          $ 4,878               2.3  %       $       36,635                   $ 5,436          $        9,943          $ 6,024                 260,060            220,064            39,996                 18.2  %
Other expenses
General and administrative                                                                                                                                                                                 24,547             25,368              (821)                (3.2) %

Depreciation and amortization                                                                                                                                                                             136,645            115,739            20,906                 18.1  %

Other expenses                                                                                                                                                                                              1,029              1,363              (334)               (24.5) %
Total other expenses                                                                                                                                                                                      162,221            142,470            19,751                 13.9  %
Total expenses                                                                                                                                                                                            222,870            194,828            28,042                 14.4  %
Other income (expense)
Interest and other income                                                                                                                                                                                      57                 62                (5)                (8.1) %
Interest expense                                                                                                                                                                                          (35,155)           (30,631)           (4,524)                14.8  %
Debt extinguishment and modification expenses                                                                                                                                                                   -               (679)              679               (100.0) %

Gain on the sales of rental property, net                                                                                                                                                                  24,331             12,385            11,946                 96.5  %
Total other income (expense)                                                                                                                                                                              (10,767)           (18,863)            8,096                (42.9) %
Net income                                                                                                                                                                                         $       87,072          $  58,731          $ 28,341                 48.3  %

(1) For a detailed discussion of the NOI, including why management believes the NOI is useful to investors, see “Non-GAAP Financial Measures” below.

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Net Income

Net income from our total portfolio increased by $28.3 millioni.e. 48.3%, at
$87.1 million for the six months ended June 30, 2022 compared to $58.7 million
for the six months ended June 30, 2021.

Total comparable store operating revenue

Same store total operating revenue consists primarily of rental income
consisting of (i) fixed lease payments, variable lease payments, straight-line
rental income, and above and below market lease amortization from our properties
("lease income"), and (ii) other tenant billings for insurance, real estate
taxes and certain other expenses ("other billings").

For a detailed reconciliation of our total same store revenue and net income, see the table above.

Same store rental income, which is comprised of lease income and other billings
as discussed below, increased by approximately $6.3 million, or 2.5%, to
approximately $262.9 million for the six months ended June 30, 2022 compared to
approximately $256.6 million for the six months ended June 30, 2021.

Same store lease income increased by approximately $4.9 million, or 2.3%, to
approximately $217.7 million for the six months ended June 30, 2022 compared to
approximately $212.8 million for the six months ended June 30, 2021.
Approximately $8.4 million of the increase was attributable to rental increases
due to the execution of new leases and lease renewals with existing tenants and
a net decrease in the amortization of net above market leases of approximately
$0.5 million. These increases were also attributable to an increase in rental
income of approximately $1.0 million at one property in which, during the six
months ended June 30, 2021, we determined that the future collectability of
rental payments was not reasonably assured, and accordingly, we converted to the
cash basis of accounting and reversed any accounts receivable and accrued rent
balances into rental income and did not recognize revenue for payments that were
not received from the tenant. The lease was subsequently terminated and replaced
with a new tenant in September 2021, and during the six months ended June 30,
2022, the former tenant repaid the rental amounts past due, both of which
contributed to the increase in rental income during the six months ended
June 30, 2022 compared to the six months ended June 30, 2021. These increases
were partially offset by the reduction of base rent of approximately $5.0
million due to tenant vacancy.

Same store other billings increased by approximately $1.4 million, or 3.2%, to
approximately $45.2 million for the six months ended June 30, 2022 compared to
approximately $43.8 million for the six months ended June 30, 2021. The increase
was attributable to an increase of approximately $2.0 million related to other
expense reimbursements due to an increase in corresponding expenses and changes
to lease terms where we began paying the operating expenses on behalf of tenants
that had previously paid its operating expenses directly to respective vendors.
This increase was partially offset by a decrease in real estate taxes levied by
the taxing authority of approximately $0.6 million.

Same store operating expenses

Comparable store operating expenses mainly include property operating expenses and property taxes and insurance.

For a detailed reconciliation of our same store operating expenses to net income, see the table above.

Total same store operating expenses increased by approximately $1.5 million or
3.1% to approximately $49.8 million for the six months ended June 30, 2022
compared to approximately $48.3 million for the six months ended June 30, 2021.
This increase was due to increases in utility expense of approximately $0.7
million, insurance expense of approximately $0.3 million, repairs and
maintenance expense of approximately $0.2 million, and snow removal expense of
approximately $0.2 million.

Acquisitions and disposals Net operating income

For a detailed reconciliation of BNE from our acquisitions and divestitures to net income, see the table above.

Subsequent to December 31, 2020, we acquired 83 buildings consisting of
approximately 14.6 million square feet (excluding eight buildings that were
included in the Value Add Portfolio at June 30, 2022 or transferred from the
Value Add Portfolio to the Operating Portfolio after December 31, 2020), and
sold 24 buildings consisting of approximately 3.0 million square feet and one
land parcel. For the six months ended June 30, 2022 and June 30, 2021, the
buildings acquired after December 31, 2020 contributed approximately $36.5
million and $2.7 million to NOI, respectively. For the six months ended June 30,
2022 and June 30, 2021, the buildings sold after December 31, 2020 contributed
approximately $0.1 million and $2.7 million to NOI,
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respectively. Refer to Note 3 in the accompanying Notes to Consolidated
Financial Statements for additional discussion regarding buildings acquired or
sold.

Other Net Operating Income

Our other assets include our flex/office buildings, Value Add Portfolio,
buildings classified as held for sale, and Operating Portfolio buildings with
expansions placed in service or transferred from the Value Add Portfolio to the
Operating Portfolio after December 31, 2020. Other NOI also includes
termination, solar, and other income adjustments from buildings in our same
store portfolio.

For a detailed reconciliation of our other net operating income to net income, see the table above.

These buildings contributed approximately $7.2 million and $4.9 million to NOI
for the six months ended June 30, 2022 and June 30, 2021, respectively.
Additionally, there was approximately $2.7 million and $1.1 million of
termination, solar, and other income adjustments from certain buildings in our
same store portfolio for the six months ended June 30, 2022 and June 30, 2021,
respectively.

Total Other Expenses

Total other expenses include general and administrative expenses, depreciation and other expenses.

Total other expenses increased approximately $19.8 million, or 13.9%, to
approximately $162.2 million for the six months ended June 30, 2022 compared to
approximately $142.5 million for the six months ended June 30, 2021. This is
primarily a result of an increase in depreciation and amortization of
approximately $20.9 million as a result of net acquisitions that increased the
depreciable asset base. This increase was partially offset by a decrease in
general and administrative expenses of approximately $0.8 million which was
primarily due to the adoption of our retirement vesting program on January 7,
2021 and related acceleration of equity-based compensation expense for certain
eligible employees that did not recur during the six months ended June 30, 2022.
Additionally, other expenses decreased approximately $0.3 million that was
primarily due to the settlement of litigation related to a terminated
acquisition contract during the COVID-19 pandemic that did not recur during the
six months ended June 30, 2022.

Total other income (expenses)

Total other income (expense) consists of interest and other income, interest
expense, debt extinguishment and modification expenses, and gain on the sales of
rental property, net. Interest expense includes interest incurred during the
period as well as adjustments related to amortization of financing fees and debt
issuance costs, and amortization of fair market value adjustments associated
with the assumption of debt.

Total other expense decreased approximately $8.1 million, or 42.9%, to
approximately $10.8 million for the six months ended June 30, 2022 compared to
approximately $18.9 million for the six months ended June 30, 2021. This
decrease is primarily the result of an increase in gain on the sales of rental
property, net of approximately $11.9 million. This was partially offset by an
increase in interest expense of approximately $4.5 million which is primarily
attributable to the issuance of $325.0 million of unsecured notes on September
28, 2021.

Non-GAAP Financial Measures

In this report, we disclose funds from operations ("FFO") and NOI, which meet
the definition of "non-GAAP financial measures" as set forth in Item 10(e) of
Regulation S-K promulgated by the Securities and Exchange Commission ("SEC"). As
a result, we are required to include in this report a statement of why
management believes that presentation of these measures provides useful
information to investors.

Funds from operations

FFO should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indication of our performance, and we believe that
to understand our performance further, FFO should be compared with our reported
net income (loss) in accordance with GAAP, as presented in our consolidated
financial statements included in this report.

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We calculate FFO in accordance with the standards established by the National
Association of Real Estate Investment Trusts ("Nareit"). FFO represents GAAP net
income (loss), excluding gains (or losses) from sales of depreciable operating
buildings, land sales, impairment write-downs of depreciable real estate, real
estate related depreciation and amortization (excluding amortization of deferred
financing costs and fair market value of debt adjustment) and after adjustments
for unconsolidated partnerships and joint ventures.

Management uses FFO as a supplemental performance measure because it is a widely
recognized measure of the performance of REITs. FFO may be used by investors as
a basis to compare our operating performance with that of other REITs.

However, because FFO excludes depreciation and amortization and captures neither
the changes in the value of our buildings that result from use or market
conditions nor the level of capital expenditures and leasing commissions
necessary to maintain the operating performance of our buildings, all of which
have real economic effects and could materially impact our results from
operations, the utility of FFO as a measure of our performance is limited. In
addition, other REITs may not calculate FFO in accordance with the Nareit
definition, 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.

The following table provides a reconciliation of our FFO attributable to common shareholders and unitholders for the periods presented in net income, the nearest GAAP equivalent.

                                                        Three months ended June 30,                 Six months ended June 30,
Reconciliation of Net Income to FFO (in
thousands)                                                2022                  2021                 2022                  2021
Net income                                         $        33,084          

$33,383 $87,072 $58,731
Depreciation and amortization of rental properties

                                                69,225             57,291                 136,538            115,630

Gain on the sales of rental property, net                     (376)            (5,976)                (24,331)           (12,385)
FFO                                                        101,933             84,698                 199,279            161,976
Preferred stock dividends                                        -                  -                       -             (1,289)
Redemption of preferred stock                                    -                  -                       -             (2,582)
Amount allocated to restricted shares of
common stock and unvested units                               (145)              (224)                   (302)              (461)
FFO attributable to common stockholders and
unit holders                                       $       101,788          $  84,474          $      198,977          $ 157,644



Net Operating Income

We consider NOI to be an appropriate supplemental performance measure to net
income (loss) because we believe it helps investors and management understand
the core operations of our buildings. NOI is defined as rental income, which
includes billings for common area maintenance, real estate taxes and insurance,
less property expenses and real estate taxes and insurance. NOI should not be
viewed as an alternative measure of our financial performance since it excludes
expenses which could materially impact our results of operations. Further, our
NOI may not be comparable to that of other real estate companies, as they may
use different methodologies for calculating NOI.

The following table provides a reconciliation of our NOI for the periods presented to net earnings, the closest GAAP equivalent.

                                                        Three months ended June 30,                 Six months ended June 30,
Reconciliation of Net Income to NOI (in
thousands)                                                2022                  2021                 2022                  2021
Net income                                          $       33,084          

$33,383 $87,072 $58,731
general and administrative

                                  12,234             12,578                  24,547             25,368

Depreciation and amortization                               69,279             57,332                 136,645            115,739
Interest and other income                                      (23)               (30)                    (57)               (62)
Interest expense                                            17,896             15,273                  35,155             30,631

Debt extinguishment and modification expenses                    -                  -                       -                679
Other expenses                                                 532                511                   1,029              1,363

Gain on the sales of rental property, net                     (376)            (5,976)                (24,331)           (12,385)
Net operating income                                $      132,626          $ 113,071          $      260,060          $ 220,064



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Cash Flows

Comparison of the six months ended June 30, 2022 at the end of six months
June 30, 2021

The following table summarizes our cash flows for the six months ended June 30, 2022 compared to the half-year ended June 30, 2021.

                                                          Six months ended June 30,                           Change
Cash Flows (dollars in thousands)                          2022                  2021                $                    %
Net cash provided by operating activities            $      191,188          $ 162,373          $  28,815                   17.7  %
Net cash used in investing activities                $      334,909          $ 202,017          $ 132,892                   65.8  %
Net cash provided by financing activities            $      136,372          $  37,820          $  98,552                  260.6  %



Net cash provided by operating activities increased approximately $28.8 million
to approximately $191.2 million for the six months ended June 30, 2022 compared
to approximately $162.4 million for the six months ended June 30, 2021. The
increase was primarily attributable to incremental operating cash flows from
property acquisitions completed after June 30, 2021, and operating performance
at existing properties. These increases were partially offset by the loss of
cash flows from property dispositions completed after June 30, 2021 and
fluctuations in working capital due to the timing of payments and rental
receipts.

Net cash used in investing activities increased approximately $132.9 million to
approximately $334.9 million for the six months ended June 30, 2022 compared to
approximately $202.0 million for the six months ended June 30, 2021. The
increase was primarily attributable to the acquisition of 17 buildings and land
parcels for a total cash consideration of approximately $337.3 million for the
six months ended June 30, 2022 compared to the acquisition of 15 buildings for a
total cash consideration of approximately $221.8 million for the six months
ended June 30, 2021.

Net cash provided by financing activities increased approximately $98.6 million
to approximately $136.4 million for the six months ended June 30, 2022 compared
to approximately $37.8 million for the six months ended June 30, 2021. The
increase is primarily attributable to the funding of the $400.0 million
unsecured note on June 28, 2022 that did not occur during the six months ended
June 30, 2021. The increase is also attributable to the redemption of preferred
stock with an aggregate liquidation value of $75.0 million during the six months
ended June 30, 2021 that did not recur. These increases were partially offset by
a net cash outflow of approximately $357.0 million from our unsecured credit
facility and an increase of approximately $11.3 million in dividends paid during
the six months ended June 30, 2022 compared to the six months ended June 30,
2021, as well as decrease in net proceeds received from the sale of common stock
of approximately $8.5 million during the six months ended June 30, 2022 compared
to the six months ended June 30, 2021.

Cash and capital resources

We believe that our liquidity needs will be satisfied through cash flows
generated by operations, disposition proceeds, and financing activities.
Operating cash flow from rental income, expense recoveries from tenants, and
other income from operations is our principal source of funds to pay operating
expenses, debt service, recurring capital expenditures, and the distributions
required to maintain our REIT qualification. We primarily rely on the capital
markets (common and preferred equity and debt securities) to fund our
acquisition activity. We seek to increase cash flows from our properties by
maintaining quality building standards that promote high occupancy rates and
permit increases in rental rates, while reducing tenant turnover and controlling
operating expenses. We believe that our revenue, together with proceeds from
building sales and equity and debt financings, will continue to provide funds
for our short-term and medium-term liquidity needs.

Our short-term liquidity requirements consist primarily of funds necessary to
pay for operating expenses and other expenditures directly associated with our
buildings, including interest expense, interest rate swap payments, scheduled
principal payments on outstanding indebtedness, property acquisitions under
contract, general and administrative expenses, and capital expenditures
including tenant improvements and leasing commissions.

Our long-term liquidity needs, in addition to recurring short-term liquidity
needs as discussed above, consist primarily of funds necessary to pay for
property acquisitions and scheduled debt maturities. We intend to satisfy our
long-term liquidity needs through cash flow from operations, the issuance of
equity or debt securities, other borrowings, property dispositions, or, in
connection with acquisitions of certain additional buildings, the issuance of
common units in the Operating Partnership.

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As of June 30, 2022, we had total immediate liquidity of approximately $643.0
million, comprised of $12.6 million of cash and cash equivalents and $630.4
million of immediate availability on our unsecured credit facility.

After quarter end, on July 26, 2022, we amended and restated our unsecured
credit facility to increase the aggregate commitments available for borrowing
thereunder from $750.0 million to up to $1.0 billion. Also on July 26, 2022, we
entered into two loan agreements maturing in 2028 and totaling $375.0 million in
principal and repaid two term loans maturing in 2023 and 2024 and totaling
$325.0 million in principal.

In addition, we require funds to pay dividends to holders of our common stock
and common units in the Operating Partnership. Any future dividends on our
common stock are voluntary and declared in the sole discretion of our board of
directors, subject to the distribution requirements to maintain our REIT status
for federal income tax purposes, and may be reduced or stopped for any reason,
including to use funds for other liquidity requirements. The following table
summarizes the dividends declared on our outstanding common stock during the six
months ended June 30, 2022.

Month Ended 2022                                  Declaration Date                 Record Date               Per Share               Payment Date

June 30                                       April 14, 2022                 June 30, 2022                 $ 0.121667          July 15, 2022
May 31                                        April 14, 2022                 May 31, 2022                    0.121667          June 15, 2022
April 30                                      April 14, 2022                 April 29, 2022                  0.121667          May 16, 2022
March 31                                      January 10, 2022               March 31, 2022                  0.121667          April 18, 2022
February 28                                   January 10, 2022               February 28, 2022               0.121667          March 15, 2022
January 31                                    January 10, 2022               January 31, 2022                0.121667          February 15, 2022
Total                                                                                                      $ 0.730002



On July 12, 2022, our board of directors declared dividends on our common stock
for the months ending July 31, 2022, August 31, 2022, and September 30, 2022 at
a monthly rate of $0.121667 per share.


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Contents

Outstanding debt

The following table summarizes certain information relating to our outstanding debt as of June 30, 2022.

                                                       Principal
                                                   Outstanding as of
                                                   June 30, 2022 (in            Interest
Loan                                                  thousands)                Rate(1)(2)                Maturity Date             Prepayment Terms(3)
Unsecured credit facility:
Unsecured Credit Facility(4)(5)                   $        116,000                  L + 0.775%       October 23, 2026                         i
Total unsecured credit facility                            116,000

Unsecured term loans:
Unsecured Term Loan D(6)                                   150,000                     2.85  %       January 4, 2023                          i
Unsecured Term Loan E(6)                                   175,000                     3.77  %       January 15, 2024                         i
Unsecured Term Loan F                                      200,000                     2.96  %       January 12, 2025                         i
Unsecured Term Loan G                                      300,000                     1.13  %       February 5, 2026                         i
Unsecured Term Loan A                                      150,000                     2.15  %       March 15, 2027                           i
Total unsecured term loans                                 975,000
Total unamortized deferred financing fees
and debt issuance costs                                     (3,728)
Total carrying value unsecured term loans,                 971,272

report

Unsecured notes:
Series F Unsecured Notes                                   100,000                     3.98  %       January 5, 2023                         ii
Series A Unsecured Notes                                    50,000                     4.98  %       October 1, 2024                         ii
Series D Unsecured Notes                                   100,000                     4.32  %       February 20, 2025                       ii
Series G Unsecured Notes                                    75,000                     4.10  %       June 13, 2025                           ii
Series B Unsecured Notes                                    50,000                     4.98  %       July 1, 2026                            ii
Series C Unsecured Notes                                    80,000                     4.42  %       December 30, 2026                       ii
Series E Unsecured Notes                                    20,000                     4.42  %       February 20, 2027                       ii
Series H Unsecured Notes                                   100,000                     4.27  %       June 13, 2028                           ii
Series I Unsecured Notes                                   275,000                     2.80  %       September 29, 2031                      ii
Series K Unsecured Notes                                   400,000                     4.12  %       June 28, 2032                           ii
Series J Unsecured Notes                                    50,000                     2.95  %       September 28, 2033                      ii
Total unsecured notes                                    1,300,000
Total unamortized deferred financing fees
and debt issuance costs                                     (4,936)
Total carrying value unsecured notes, net                1,295,064

Mortgage notes (secured debt):
Wells Fargo Bank, National Association CMBS                 45,603                     4.31  %       December 1, 2022                        iii

Ready

Thrivent Financial for Lutherans                             3,363                     4.78  %       December 15, 2023                       iv
United of Omaha Life Insurance Company                       4,844                     3.71  %       October 1, 2039                         ii
Total mortgage notes                                        53,810
Less: Net unamortized fair market value                       (136)

delivery

Total unamortized deferred financing fees
and debt issuance costs                                        (39)
Total carrying value mortgage notes, net                    53,635

Total interest rate / weighted average(7) $2,435,971

            3.25  %



(1)Interest rate as of June 30, 2022. At June 30, 2022, the one-month LIBOR
("L") was 1.78671%. The current interest rate is not adjusted to include the
amortization of deferred financing fees or debt issuance costs incurred in
obtaining debt or any unamortized fair market value premiums. The spread over
the applicable rate for our unsecured credit facility and unsecured term loans
is based on the our debt rating and leverage ratio, as defined in the respective
loan agreements.
(2)The unsecured term loans have a stated interest rate of one-month LIBOR plus
a spread of 0.85%, with the exception of Unsecured Term Loan D which has a
stated interest rate of one-month LIBOR plus a spread of 1.0%. As of June 30,
2022, one-month LIBOR for the Unsecured Term Loans A, D, E, F, and G was swapped
to a fixed rate of 1.30%, 1.85%, 2.92%, 2.11%, and 0.28%, respectively.
One-month LIBOR for the Unsecured Term Loan G will be swapped to a fixed rate of
0.94% effective April 18, 2023.
(3)Prepayment terms consist of (i) pre-payable with no penalty; (ii) pre-payable
with penalty; (iii) pre-payable without penalty three months prior to the
maturity date, subject to defeasance; and (iv) pre-payable without penalty three
months prior to the maturity date.
(4)The capacity of our unsecured credit facility is $750.0 million. The initial
maturity date is October 24, 2025, or such later date which may be extended
pursuant to two six-month extension options exercisable by us in our discretion
upon advance written notice. Exercise of each six-month option is subject to the
following conditions: (i) absence of a default immediately before the extension
and immediately after giving effect to the extension, (ii) accuracy of
representations and warranties as of the extension date (both immediately before
and after the extension), as if made on the extension date, and (iii) payment of
a fee. Neither extension option is subject to lender consent, assuming proper
notice and satisfaction of the conditions.
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(5)Subsequent to June 30, 2022, on July 26, 2022, we entered into an amended and
restated loan agreement for the unsecured credit facility. See below for
additional details.
(6)Subsequent to June 30, 2022, the Unsecured Term Loan D and Unsecured Term
Loan E were repaid in full in connection with our new unsecured term loan
agreements entered into on July 26, 2022. See below for additional details.
(7)The weighted average interest rate was calculated using the fixed interest
rate swapped on the notional amount of $975.0 million of debt, and is not
adjusted to include the amortization of deferred financing fees or debt issuance
costs incurred in obtaining debt or any unamortized fair market value premiums
or discounts.

The aggregate undrawn nominal commitments on our unsecured credit facility and
unsecured term loans as of June 30, 2022 was approximately $630.4 million,
including issued letters of credit. Our actual borrowing capacity at any given
point in time may be less and is restricted to a maximum amount based on our
debt covenant compliance.

Our unsecured credit facility, unsecured term loans, unsecured notes, and
mortgage notes are subject to ongoing compliance with a number of financial and
other covenants. As of June 30, 2022, we were in compliance with the applicable
financial covenants.

On July 26, 2022, we entered into an amended and restated credit agreement for
our unsecured credit facility (the "July 2022 Credit Agreement"), which provided
for an increase in the aggregate commitments available for borrowing under our
unsecured credit facility from $750.0 million to up to $1.0 billion. The July
2022 Credit Agreement also provided for the replacement of one-month LIBOR for
one-month Secured Overnight Financing Rate ("SOFR"), plus a 0.10% adjustment.
Other than the increase in the borrowing commitments and the interest rate
provisions described above, the material terms of our unsecured credit facility
remain unchanged.

On July 26, 2022, we entered into separate loan agreements for (i) a new $187.5
million unsecured term loan with Bank of America, N.A. and the other lenders
party thereto ("Unsecured Term Loan H"), and (i) a new $187.5 million unsecured
term loan with Wells Fargo Bank, National Association, and the other lenders
party thereto ("Unsecured Term Loan I"). In connection with the new unsecured
term loans, the $150.0 million Unsecured Term Loan D and the $175.0 million
Unsecured Term Loan E were repaid in full. Each of the Unsecured Term Loan H and
the Unsecured Term Loan I bears a current annual interest rate of one-month
SOFR, plus a 0.10% adjustment and a spread of 0.85% based on our debt rating and
leverage ratio (as defined in the applicable loan agreement), and matures on
January 25, 2028. On July 27, 2022, we entered into seven interest rate swaps
with a total notional amount of $375.0 million that fix SOFR at 2.579% on the
new unsecured term loans. The new interest rate swap with a notional amount of
$50.0 million is effective on July 27, 2022 and matures on January 25, 2028. The
remaining interest rate swaps become effective on January 4, 2023 and January
12, 2024 upon the maturity of the interest rate swaps previously designated to
the Unsecured Term Loan D and Unsecured Term Loan E, respectively, and mature on
January 25, 2028.

On April 28, 2022, we entered into a note purchase agreement (the "April 2022
NPA") for the private placement by our Operating Partnership of $400.0 million
senior unsecured notes (the "Series K Unsecured Notes") maturing June 28, 2032,
with a fixed annual interest rate of 4.12%. The April 2022 NPA contains a number
of financial covenants substantially similar to the financial covenants
contained in our unsecured credit facility and other unsecured notes, plus a
financial covenant that requires us to maintain a minimum interest coverage
ratio of not less than 1.50:1.00. Our Operating Partnership issued the Series K
Unsecured Notes on June 28, 2022. The Company and certain wholly owned
subsidiaries of our Operating Partnership are guarantors of the Series K
Unsecured Notes.

The following table summarizes the structure of our debt capital at June 30, 2022.

Debt Capital Structure                           June 30, 2022

Total principal outstanding (in thousands) $2,444,810
Weighted average duration (years)

                        5.0

% Secured debt                                           2.2  %
% Debt maturing next 12 months                          12.1  %
Net Debt to Real Estate Cost Basis(1)                   35.8  %


(1)"Net Debt" means amounts outstanding under our unsecured credit facility,
unsecured term loans, unsecured notes, and mortgage notes, less cash and cash
equivalents. "Real Estate Cost Basis" means the book value of rental property
and deferred leasing intangibles, exclusive of the related accumulated
depreciation and amortization.

We regularly pursue new financing opportunities to ensure an appropriate balance
sheet position. As a result of these dedicated efforts, we are confident in our
ability to meet future debt maturities and fund acquisitions. We believe that
our current balance sheet is in an adequate position at the date of this filing,
despite possible volatility in the credit markets.

Our interest rate exposure on our floating rate debt is managed through the use
of interest rate swaps, which fix the rate of our long term floating rate debt.
For a detailed discussion on our use of interest rate swaps, see "Interest Rate
Risk" below.
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Equity

Preferred Stock

We are authorized to issue up to 20,000,000 shares of preferred stock, par value
$0.01 per share. As of June 30, 2022 and December 31, 2021, there were no shares
of preferred stock issued or outstanding.

Ordinary actions

We are authorized to issue up to 300,000,000 common shares, par value
$0.01 per share.

The following table summarizes our at-the-market ("ATM") common stock offering
program as of June 30, 2022. Pursuant to the equity distribution agreements for
our ATM common stock offering program, we may from time to time sell common
stock through sales agents and their affiliates, including shares sold on a
forward basis under forward sale agreements. There was no activity under the ATM
common stock offering program during the three months ended June 30, 2022.
                                                                                                     Aggregate Available as
                                                                    Maximum Aggregate Offering        of June 30, 2022 (in
ATM Common Stock Offering Program               Date                   Price (in thousands)                thousands)
2022 $750 million ATM                   February 17, 2022           $               750,000          $            750,000



In connection with our underwritten public offering that closed in November
2021, on December 3, 2021, we executed a forward sale agreement for the sale of
an additional 1,200,000 shares of common stock on a forward basis at a price of
$41.87 per share. We did not initially receive any proceeds from the sale of
shares on a forward basis. On March 29, 2022, we physically settled in full the
forward sales agreement by issuing 1,200,000 shares of common stock for net
proceeds of approximately $49.7 million, or $41.39 per share.

Non-controlling interest

We own our interests in all of our properties and conduct substantially all of
our business through the Operating Partnership. We are the sole member of the
sole general partner of the Operating Partnership. As of June 30, 2022, we owned
approximately 97.9% of the common units in the Operating Partnership, and our
current and former executive officers, directors, senior employees and their
affiliates, and third parties that contributed properties to us in exchange for
common units in the Operating Partnership owned the remaining 2.1%.

Interest rate risk

We use interest rate swaps to fix the rate of our floating rate debt. From
June 30, 2022all of our outstanding floating rate debt, except for our unsecured credit facility, was secured using interest rate swaps until maturity.

We recognize all derivatives on the balance sheet at fair value. If the
derivative is designated as 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 (loss), which is a
component of equity. Derivatives that are not designated as hedges must be
adjusted to fair value and the changes in fair value must be reflected as income
or expense.

We have established criteria for suitable counterparties in relation to various
specific types of risk. We only use counterparties that have a credit rating of
no lower than investment grade at swap inception from Moody's Investor Services,
Standard & Poor's, or Fitch Ratings or other nationally recognized rating
agencies.

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The following table details our outstanding interest rate swaps as of June 30,
2022.

                                                                                                       Notional
                                                                                                        Amount
                                                                                                          (in               Fair Value               Pay Fixed            Receive Variable
Interest Rate Derivative Counterparty                 Trade Date             Effective Date           thousands)          (in thousands)           Interest Rate            Interest Rate             Maturity Date
The Toronto-Dominion Bank                          Jul-20-2017             Oct-30-2017               $   25,000          $          108                  1.8485  %       One-month L               Jan-04-2023
Royal Bank of Canada                               Jul-20-2017             Oct-30-2017               $   25,000          $          107                  1.8505  %       One-month L               Jan-04-2023
Wells Fargo Bank, N.A.                             Jul-20-2017             Oct-30-2017               $   25,000          $          107                  1.8505  %       One-month L               Jan-04-2023
PNC Bank, N.A.                                     Jul-20-2017             Oct-30-2017               $   25,000          $          108                  1.8485  %       One-month L               Jan-04-2023
PNC Bank, N.A.                                     Jul-20-2017             Oct-30-2017               $   50,000          $          216                  1.8475  %       One-month L               Jan-04-2023
The Toronto-Dominion Bank                          Apr-20-2020             Sep-29-2020               $   75,000          $        1,633                  0.2750  %       One-month L               Apr-18-2023
Wells Fargo Bank, N.A.                             Apr-20-2020             Sep-29-2020               $   75,000          $        1,627                  0.2790  %       One-month L               Apr-18-2023
The Toronto-Dominion Bank                          Apr-20-2020             Mar-19-2021               $   75,000          $        1,633                  0.2750  %       One-month L               Apr-18-2023
Wells Fargo Bank, N.A.                             Apr-20-2020             Mar-19-2021               $   75,000          $        1,626                  0.2800  %       One-month L               Apr-18-2023
The Toronto-Dominion Bank                          Jul-24-2018             Jul-26-2019               $   50,000          $          171                  2.9180  %       One-month L               Jan-12-2024
PNC Bank, N.A.                                     Jul-24-2018             Jul-26-2019               $   50,000          $          170                  2.9190  %       One-month L               Jan-12-2024
Bank of Montreal                                   Jul-24-2018             Jul-26-2019               $   50,000          $          170                  2.9190  %       One-month L               Jan-12-2024
U.S. Bank, N.A.                                    Jul-24-2018             Jul-26-2019               $   25,000          $           85                  2.9190  %       One-month L               Jan-12-2024
Wells Fargo Bank, N.A.                             May-02-2019             Jul-15-2020               $   50,000          $          930                  2.2460  %       One-month L               Jan-15-2025
U.S. Bank, N.A.                                    May-02-2019             Jul-15-2020               $   50,000          $          936                  2.2459  %       One-month L               Jan-15-2025
Regions Bank                                       May-02-2019             Jul-15-2020               $   50,000          $          933                  2.2459  %       One-month L               Jan-15-2025
Bank of Montreal                                   Jul-16-2019             Jul-15-2020               $   50,000          $        1,590                  1.7165  %       One-month L               Jan-15-2025
U.S. Bank, N.A.                                    Feb-17-2021             Apr-18-2023               $  150,000          $        7,690                  0.9385  %       One-month L               Feb-5-2026
Wells Fargo Bank, N.A.                             Feb-17-2021             Apr-18-2023               $   75,000          $        3,818                  0.9365  %       One-month L               Feb-5-2026
The Toronto-Dominion Bank                          Feb-17-2021             Apr-18-2023               $   75,000          $        3,861                  0.9360  %       One-month L               Feb-5-2026
Regions Bank                                       Oct-26-2021             Apr-01-2022               $   50,000          $        3,446                  1.3045  %       One-month L               Mar-15-2027
Bank of Montreal                                   Oct-26-2021             Apr-01-2022               $   50,000          $        3,472                  1.3045  %       One-month L               Mar-15-2027
PNC Bank, N.A.                                     Oct-26-2021             Apr-01-2022               $   50,000          $        3,462                  1.3045  %       One-month L               Mar-15-2027



The swaps outlined in the above table were all designated as cash flow hedges of
interest rate risk, and all are valued as Level 2 financial instruments. Level 2
financial instruments are defined as significant other observable inputs. As of
June 30, 2022, the fair value of all 23 of our interest rate swaps were in an
asset position of approximately $37.9 million, including any adjustment for
nonperformance risk related to these agreements.

As of June 30, 2022, we had approximately $1,091.0 million of variable rate
debt. As of June 30, 2022, all of our outstanding variable rate debt, with the
exception of our unsecured credit facility, was fixed with interest rate swaps
through maturity. To the extent interest rates increase, interest costs on our
floating rate debt not fixed with interest rate swaps will increase, which could
adversely affect our cash flow and our ability to pay principal and interest on
our debt and our ability to make distributions to our security holders. From
time to time, we may enter into interest rate swap agreements and other interest
rate hedging contracts, including swaps, caps and floors. In addition, an
increase in interest rates could decrease the amounts third parties are willing
to pay for our assets, thereby limiting our ability to change our portfolio
promptly in response to changes in economic or other conditions.

Off-balance sheet arrangements

As of June 30, 2022, we had letters of credit related to development projects
and certain other agreements of approximately $3.6 million. As of June 30, 2022,
we had no other material off-balance sheet arrangements.

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