Lease Expirations
The table below reflects our consolidated in-service portfolio lease expiration schedule at June 30, 2020 (in thousands, except percentage data and number of leases):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Consolidated Portfolio
|
|
|
|
|
|
Industrial
|
|
|
|
Non-Reportable
|
|
|
Year of
Expiration
|
Square
Feet
|
|
Annual Rental
Revenue*
|
|
Number of Leases
|
|
Square
Feet
|
|
Annual Rental
Revenue*
|
|
Square
Feet
|
|
Annual Rental
Revenue*
|
Remainder of 2020
|
3,989
|
|
$
|
19,552
|
|
|
53
|
|
3,988
|
|
$
|
19,546
|
|
|
1
|
|
$
|
6
|
|
2021
|
12,356
|
|
58,522
|
|
|
137
|
|
12,356
|
|
58,522
|
|
|
—
|
|
—
|
|
2022
|
18,554
|
|
78,822
|
|
|
150
|
|
18,537
|
|
78,630
|
|
|
17
|
|
192
|
|
2023
|
13,731
|
|
69,820
|
|
|
147
|
|
13,710
|
|
69,528
|
|
|
21
|
|
292
|
|
2024
|
14,394
|
|
71,908
|
|
|
136
|
|
14,389
|
|
71,846
|
|
|
5
|
|
62
|
|
2025
|
14,453
|
|
74,311
|
|
|
126
|
|
14,451
|
|
74,286
|
|
|
2
|
|
25
|
|
2026
|
10,212
|
|
49,047
|
|
|
55
|
|
10,212
|
|
49,047
|
|
|
—
|
|
—
|
|
2027
|
8,284
|
|
39,479
|
|
|
33
|
|
8,279
|
|
39,422
|
|
|
5
|
|
57
|
|
2028
|
8,283
|
|
54,363
|
|
|
32
|
|
8,164
|
|
50,876
|
|
|
119
|
|
3,487
|
|
2029
|
8,428
|
|
45,436
|
|
|
26
|
|
8,428
|
|
45,436
|
|
|
—
|
|
—
|
|
2030 and Thereafter
|
21,284
|
|
125,023
|
|
|
64
|
|
21,284
|
|
125,023
|
|
|
—
|
|
—
|
|
Total Leased
|
133,968
|
|
$
|
686,283
|
|
|
959
|
|
133,798
|
|
$
|
682,162
|
|
|
170
|
|
$
|
4,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Portfolio Square Feet
|
138,452
|
|
|
|
|
|
138,241
|
|
|
|
211
|
|
|
Percent Leased
|
96.8
|
%
|
|
|
|
|
|
96.8
|
%
|
|
|
|
80.5
|
%
|
|
|
* Annualized rental revenue represents average annual base rental payments, on a straight-line basis for the term of each lease, from space leased to tenants at the end of the most recent reporting period. Annualized rental revenue excludes additional amounts paid by tenants as reimbursement for operating expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Building Acquisitions
Our decision process in determining whether or not to acquire a property or portfolio of properties involves several factors, including expected rent growth, multiple yield metrics, property locations and expected demographic growth in each location, current occupancy of the properties, tenant profile and remaining terms of the in-place leases in the properties. It is difficult to predict which markets may present acquisition opportunities that align with our strategy. Because of the numerous factors considered in our acquisition decisions, we do not establish specific target yields for future acquisitions.
No buildings were acquired during the six months ended June 30, 2020, and six buildings were acquired during the year ended December 31, 2019. The following table summarizes the acquisition price, percent leased at time of acquisition and in-place yields of industrial building acquisitions (in thousands, except percentage data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date 2020 Acquisitions
|
|
|
|
|
|
Full Year 2019 Acquisitions
|
|
|
|
|
Type
|
Acquisition Price*
|
|
In-Place Yield**
|
|
Percent Leased at Acquisition Date***
|
|
Acquisition Price*
|
|
In-Place Yield**
|
|
Percent Leased at Acquisition Date***
|
Industrial
|
$
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
$
|
217,106
|
|
|
4.1
|
%
|
|
88.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Includes fair value of real estate assets and net acquired lease-related intangible assets, including above or below market leases, but excludes other acquired working capital assets and liabilities.
|
|
|
|
|
|
|
|
|
|
|
|
** In-place yields of completed acquisitions are calculated as the current annualized net rental payments from space leased to tenants at the date of acquisition, divided by the acquisition price of the acquired real estate. Annualized net rental payments are comprised of base rental payments, excluding additional amounts payable by tenants as reimbursement for operating expenses, less current annualized operating expenses not recovered through tenant reimbursements.
|
|
|
|
|
|
|
|
|
|
|
|
*** Represents percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced, at the date of acquisition.
|
|
|
|
|
|
|
|
|
|
|
|
Building Dispositions
We regularly work to identify, consider and pursue opportunities to dispose of properties on an opportunistic basis and on a basis that is generally consistent with our strategic plans. Our ability to dispose of properties, from time to time, on favorable terms is a key performance indicator from the perspective of management, as a source of capital to fund future investment, and we believe that evaluating our disposition activity is also useful to investors.
We sold one consolidated building during the six months ended June 30, 2020 and 28 consolidated buildings during the year ended December 31, 2019. The following table summarizes the sales prices, in-place yields and percent leased of industrial building dispositions (in thousands, except percentage data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date 2020 Dispositions
|
|
|
|
|
|
Full Year 2019 Dispositions
|
|
|
|
|
Type
|
Sales Price
|
|
In-Place Yield*
|
|
Percent Leased**
|
|
Sales Price
|
|
In-Place Yield*
|
|
Percent Leased**
|
Industrial
|
$
|
27,450
|
|
|
6.4
|
%
|
|
100.0
|
%
|
|
$
|
425,767
|
|
|
5.6
|
%
|
|
91.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
* In-place yields of completed dispositions are calculated as annualized net operating income from space leased to tenants at the date of sale on a lease-up basis, including full rent from all executed leases, even if currently in a free rent period, divided by the sales price. Annualized net operating income is comprised of base rental payments, excluding reimbursement of operating expenses, less current annualized operating expenses not recovered through tenant reimbursements.
|
|
|
|
|
|
|
|
|
|
|
|
** Represents percentage of total square feet leased based on executed leases and without regard to whether the leases have commenced, at the date of sale.
|
|
|
|
|
|
|
|
|
|
|
|
Development
We expect to generate future earnings from Rental Operations as development properties are placed in service and leased. Development activities, and our ability to lease those developments, are viewed by management as key indicators of future earnings growth and provide useful information to investors for the same reasons. At June 30, 2020, we had 6.7 million square feet of property under development with total estimated costs upon completion of $856.8 million compared to 6.4 million square feet with total estimated costs upon completion of $835.0 million at June 30, 2019. The square footage and estimated costs include both consolidated properties and unconsolidated joint venture development activity at 100%.
The following table summarizes our properties under development at June 30, 2020 (in thousands, except percentage data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership Type
|
Square
Feet
|
|
Percent
Leased
|
|
Total
Estimated
Project Costs
|
|
Total
Incurred
to Date
|
|
Amount
Remaining
to be Spent
|
Consolidated properties
|
6,372
|
|
63
|
%
|
|
$
|
835,787
|
|
|
$
|
559,803
|
|
|
$
|
275,984
|
|
Unconsolidated joint venture properties
|
358
|
|
100
|
%
|
|
21,037
|
|
|
10,322
|
|
|
10,715
|
|
Total
|
6,730
|
|
65
|
%
|
|
$
|
856,824
|
|
|
$
|
570,125
|
|
|
$
|
286,699
|
|
Results of Operations
A summary of our operating results and property statistics is as follows (in thousands, except number of properties and per share or Common Unit data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Rental and related revenue from continuing operations
|
$
|
226,374
|
|
|
$
|
213,107
|
|
|
$
|
445,129
|
|
|
$
|
423,072
|
|
General contractor and service fee revenue
|
12,137
|
|
|
23,919
|
|
|
19,751
|
|
|
78,883
|
|
Operating income
|
76,361
|
|
|
99,161
|
|
|
135,818
|
|
|
161,442
|
|
General Partner
|
|
|
|
|
|
|
|
Net income attributable to common shareholders
|
$
|
39,820
|
|
|
$
|
71,053
|
|
|
$
|
59,276
|
|
|
$
|
115,604
|
|
Weighted average common shares outstanding
|
368,836
|
|
|
359,681
|
|
|
368,513
|
|
|
359,412
|
|
Weighted average common shares and potential dilutive securities
|
372,573
|
|
|
362,926
|
|
|
372,197
|
|
|
362,615
|
|
Partnership
|
|
|
|
|
|
|
|
Net income attributable to common unitholders
|
$
|
40,176
|
|
|
$
|
71,674
|
|
|
$
|
59,802
|
|
|
$
|
116,607
|
|
Weighted average Common Units outstanding
|
372,167
|
|
|
362,826
|
|
|
371,790
|
|
|
362,517
|
|
Weighted average Common Units and potential dilutive securities
|
372,573
|
|
|
362,926
|
|
|
372,197
|
|
|
362,615
|
|
General Partner and Partnership
|
|
|
|
|
|
|
|
Basic income per common share or Common Unit:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.20
|
|
|
$
|
0.16
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
Diluted income per common share or Common Unit:
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.11
|
|
|
$
|
0.20
|
|
|
$
|
0.16
|
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
Number of in-service consolidated properties at end of period
|
468
|
|
476
|
|
468
|
|
476
|
In-service consolidated square footage at end of period
|
138,452
|
|
138,715
|
|
138,452
|
|
138,715
|
Number of in-service unconsolidated joint venture properties at end of period
|
39
|
|
43
|
|
39
|
|
43
|
In-service unconsolidated joint venture square footage at end of period
|
11,109
|
|
12,867
|
|
11,109
|
|
12,867
|
Supplemental Performance Measures
In addition to net income computed in accordance with GAAP, we assess and measure the overall operating results of the General Partner and the Partnership using certain non-GAAP supplemental performance measures, which include (i) Funds From Operations ("FFO"), (ii) PNOI and (iii) Same-Property Net Operating Income - Cash Basis ("SPNOI").
These non-GAAP metrics are commonly used by industry analysts and investors as supplemental operating performance measures of REITs and are viewed by management to be useful indicators of operating performance. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, many industry analysts and investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. Management believes that the use of FFO, PNOI and SPNOI, combined with net income (which remains the primary GAAP measure of performance), improves the understanding of operating results of REITs among the investing public and makes comparisons of REIT operating results more meaningful.
The most comparable GAAP measure to FFO is net income (loss) attributable to common shareholders or common unitholders, while the most comparable GAAP measure to PNOI and SPNOI is income (loss) from continuing operations before income taxes.
FFO, PNOI and SPNOI each exclude expenses that materially impact our overall results of operations and, therefore, should not be considered as a substitute for net income (loss) attributable to common shareholders or common unitholders, income (loss) from continuing operations before income taxes, or any other measures derived in accordance with GAAP. Furthermore, these metrics may not be comparable to other similarly titled measures of other companies.
Funds From Operations
The National Association of Real Estate Investment Trusts ("NAREIT") created FFO as a non-GAAP supplemental measure of REIT operating performance. FFO, as defined by NAREIT, represents GAAP net income (loss), excluding gains or losses from sales of real estate assets (including real estate assets incidental to our business) and related taxes, gains and losses from change in control, impairment charges related to real estate assets (including real estate assets incidental to our business) plus certain non-cash items such as real estate asset depreciation and amortization, and after similar adjustments for unconsolidated partnerships and joint ventures. We calculate FFO in accordance with the definition that was adopted by the Board of Governors of NAREIT.
Management believes that the use of FFO as a performance measure enables investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT's activity and assists them in comparing these operating results between periods or between different companies that use the NAREIT definition of FFO.
The following table shows a reconciliation of net income attributable to common shareholders or common unitholders to the calculation of FFO attributable to common shareholders or common unitholders (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income attributable to common shareholders of the General Partner
|
$
|
39,820
|
|
|
$
|
71,053
|
|
|
$
|
59,276
|
|
|
$
|
115,604
|
|
Add back: Net income attributable to noncontrolling interests - common limited partnership interests in the Partnership
|
356
|
|
|
621
|
|
|
526
|
|
|
1,003
|
|
Net income attributable to common unitholders of the Partnership
|
40,176
|
|
|
71,674
|
|
|
59,802
|
|
|
116,607
|
|
Adjustments:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
86,704
|
|
|
83,004
|
|
|
172,063
|
|
|
158,996
|
|
Company share of unconsolidated joint venture depreciation, amortization and other adjustments
|
2,306
|
|
|
2,417
|
|
|
4,500
|
|
|
4,770
|
|
Gains on sale of properties
|
(23)
|
|
|
(30,691)
|
|
|
(9,008)
|
|
|
(30,683)
|
|
Gain on land sales
|
(6,070)
|
|
|
(1,950)
|
|
|
(6,205)
|
|
|
(2,700)
|
|
Impairment charges
|
—
|
|
|
—
|
|
|
5,626
|
|
|
—
|
|
Income tax (benefit) expense triggered by sales of real estate assets
|
(150)
|
|
|
6,616
|
|
|
(210)
|
|
|
7,001
|
|
Gains on sales of real estate assets - share of unconsolidated joint ventures
|
334
|
|
|
(2,028)
|
|
|
308
|
|
|
(4,527)
|
|
FFO attributable to common unitholders of the Partnership
|
$
|
123,277
|
|
|
$
|
129,042
|
|
|
$
|
226,876
|
|
|
$
|
249,464
|
|
Additional General Partner Adjustments:
|
|
|
|
|
|
|
|
Net income attributable to noncontrolling interests - common limited partnership interests in the Partnership
|
(356)
|
|
|
(621)
|
|
|
(526)
|
|
|
(1,003)
|
|
Noncontrolling interest share of adjustments
|
(744)
|
|
|
(496)
|
|
|
(1,474)
|
|
|
(1,138)
|
|
FFO attributable to common shareholders of the General Partner
|
$
|
122,177
|
|
|
$
|
127,925
|
|
|
$
|
224,876
|
|
|
$
|
247,323
|
|
Property-Level Net Operating Income - Cash Basis
PNOI is comprised of rental revenues from continuing operations less rental expenses and real estate taxes from continuing operations, along with certain other adjusting items. As a performance metric that consists of only the cash-based revenues and expenses directly related to ongoing real estate rental operations, PNOI is narrower in scope than NAREIT FFO.
PNOI, as we calculate it, may not be directly comparable to similarly titled, but differently calculated, measures for other REITs. We believe that PNOI is another useful supplemental performance measure, as it is an input in many REIT valuation models and it provides a means by which to evaluate the performance of the properties within our Rental Operations segments. The operations of our industrial properties, as well as our non-reportable Rental Operations (our residual non-industrial properties that have not yet been sold, referred to throughout as "non-reportable"), are collectively referred to as "Rental Operations."
The major factors influencing PNOI are occupancy levels, acquisitions and sales, development properties that achieve stabilized operations, rental rate increases or decreases, and the recoverability of operating expenses.
Note 11 to the consolidated financial statements included in Part I, Item 1 of this Report shows a calculation of our PNOI for the three and six months ended June 30, 2020 and 2019 and provides a reconciliation of PNOI for our Rental Operations segments to income from continuing operations before income taxes.
Same-Property Net Operating Income - Cash Basis
We also evaluate the performance of our properties, including our share of properties we jointly control, on a "same- property" basis, using a metric referred to as SPNOI. We view SPNOI as a useful supplemental performance measure because it improves comparability between periods by eliminating the effects of changes in the composition of our portfolio.
On an individual property basis, SPNOI is generally computed in a consistent manner as PNOI.
We define our "same-property" population once a year at the beginning of the current calendar year and include buildings that were stabilized (the term "stabilized" means properties that have reached 90% leased or that have been in-service for at least one year since development completion or acquisition) as of January 1 of the prior calendar year. The "same-property" pool is also adjusted to remove properties that were sold subsequent to the beginning of the current calendar year. As such, the "same-property" population for the period ended June 30, 2020 includes all properties that we owned or jointly controlled at January 1, 2020, which had both been owned or jointly controlled and had reached stabilization by January 1, 2019, and have not been sold.
A reconciliation of income from continuing operations before income taxes to SPNOI is presented as follows (in thousands, except percentage data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Percent
|
|
Six Months Ended June 30,
|
|
|
Percent
|
|
|
2020
|
|
2019
|
Change
|
|
2020
|
|
2019
|
Change
|
Income from continuing operations before income taxes
|
|
$
|
40,047
|
|
|
$
|
78,185
|
|
|
|
$
|
59,599
|
|
|
$
|
123,338
|
|
|
Share of SPNOI from unconsolidated joint ventures
|
|
4,677
|
|
|
4,542
|
|
|
|
9,319
|
|
|
8,986
|
|
|
PNOI excluded from the "same-property" population
|
|
(12,917)
|
|
|
(8,305)
|
|
|
|
(23,687)
|
|
|
(13,937)
|
|
|
Earnings from Service Operations
|
|
(1,731)
|
|
|
(730)
|
|
|
|
(2,777)
|
|
|
(3,108)
|
|
|
Rental Operations revenues and expenses excluded from PNOI
|
|
(9,641)
|
|
|
(12,316)
|
|
|
|
(14,735)
|
|
|
(25,336)
|
|
|
Non-Segment Items
|
|
133,344
|
|
|
85,092
|
|
|
|
278,090
|
|
|
199,097
|
|
|
SPNOI
|
|
$
|
153,779
|
|
|
$
|
146,468
|
|
5.0
|
%
|
|
$
|
305,809
|
|
|
$
|
289,040
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
The composition of the line items titled "Rental Operations revenues and expenses excluded from PNOI" and "Non-Segment Items" from the table above are shown in greater detail in Note 11 to the consolidated financial statements included in Part I, Item 1 of this Report.
We believe that the factors that impact SPNOI are generally the same as those that impact PNOI. The following table details the number of properties, square feet, average commencement occupancy and average cash rental rate for the properties included in SPNOI for the respective periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Number of properties
|
455
|
|
455
|
|
455
|
|
455
|
Square feet (in thousands) (1)
|
127,744
|
|
127,744
|
|
127,744
|
|
127,744
|
Average commencement occupancy percentage (2)
|
98.6%
|
|
98.2%
|
|
98.5%
|
|
97.9%
|
Average rental rate - cash basis (3)
|
$4.80
|
|
$4.66
|
|
$4.78
|
|
$4.64
|
|
|
|
|
|
|
|
|
(1) Includes the total square feet of the consolidated properties that are in the "same-property" population as well as 4.9 million square feet of space for unconsolidated joint ventures, which represents our ratable share of the 9.8 million total square feet of space for buildings owned by unconsolidated joint ventures that are in the "same-property" population.
|
|
|
|
|
|
|
|
(2) Commencement occupancy represents the percentage of total square feet where the leases have commenced.
|
|
|
|
|
|
|
|
(3) Represents the average annualized contractual rent per square foot for tenants in occupancy in properties in the "same-property" population. Cash rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period, its rent would equal zero for purposes of this metric.
|
|
|
|
|
|
|
|
Comparison of Three Months Ended June 30, 2020 to Three Months Ended June 30, 2019
Rental and Related Revenue
The following table sets forth rental and related revenue from continuing operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
Rental and related revenue:
|
|
|
|
Industrial
|
$
|
224,472
|
|
|
$
|
211,004
|
|
Non-reportable Rental Operations and non-segment revenues
|
1,902
|
|
|
2,103
|
|
Total rental and related revenue from continuing operations
|
$
|
226,374
|
|
|
$
|
213,107
|
|
|
|
|
|
|
|
|
|
The primary reasons for the increase in rental and related revenue from continuing operations were:
•We acquired six properties and placed 30 developments in service from January 1, 2019 to June 30, 2020, which provided incremental revenues from continuing operations of $12.7 million during the three months ended June 30, 2020, as compared to the same period in 2019.
•The increase in rental revenue included $4.0 million of higher expense recoveries primarily related to increased recoverable real estate taxes compared to the same period in 2019.
•Increases in rental rates and occupancy within our "same-property" portfolio, as well as the lease up of properties that were placed in service prior to January 1, 2019 but were not in the "same-property" portfolio, also contributed to the increase to rental and related revenue from continuing operations.
•The sale of 29 in-service properties since January 1, 2019, which did not meet the criteria to be classified within discontinued operations, resulted in a decrease of $7.9 million to rental and related revenue from continuing operations in the three months ended June 30, 2020, as compared to the same period in 2019, which partially offset the aforementioned increases to rental and related revenue from continuing operations.
Rental Expenses and Real Estate Taxes
The following table sets forth rental expenses and real estate taxes from continuing operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
Rental expenses:
|
|
|
|
Industrial
|
$
|
17,017
|
|
|
$
|
17,190
|
|
Non-reportable Rental Operations and non-segment expenses
|
540
|
|
|
407
|
|
Total rental expenses from continuing operations
|
$
|
17,557
|
|
|
$
|
17,597
|
|
|
|
|
|
|
|
|
|
Real estate taxes:
|
|
|
|
Industrial
|
$
|
36,628
|
|
|
$
|
32,220
|
|
Non-reportable Rental Operations and non-segment expenses
|
135
|
|
|
155
|
|
Total real estate tax expense from continuing operations
|
$
|
36,763
|
|
|
$
|
32,375
|
|
|
|
|
|
|
|
|
|
Overall, real estate tax expense from continuing operations increased by $4.4 million during the three months ended June 30, 2020, compared to the same period in 2019. The increase to real estate tax expense was mainly due to higher real estate tax assessments in certain of our markets and the result of acquisitions and developments placed in service from January 1, 2019 to June 30, 2020. These increases were partially offset by the impact of property sales that did not meet the criteria to be classified within discontinued operations.
Depreciation and Amortization
Depreciation and amortization expense from continuing operations was $86.7 million and $83.0 million for the three months ended June 30, 2020 and 2019, respectively. The increase in depreciation and amortization expense for the three months ended June 30, 2020 was mainly the result of continued growth in our portfolio through development.
Gain on Sale of Properties - Continuing Operations
The $30.6 million recognized as gain on sale of properties in continuing operations for the three months ended June 30, 2019 was primarily the result of the sale of one property that did not meet the criteria for inclusion in discontinued operations.
There were no building dispositions during the three months ended June 30, 2020.
General and Administrative Expenses
General and administrative expenses consist of two components. The first component includes general corporate expenses, and the second component represents the indirect operating costs not allocated to, or absorbed by, either the development, leasing and operation of our consolidated properties or our Service Operations. Such indirect operating costs are primarily comprised of employee compensation, including related costs such as benefits and wage-related taxes, but also include other ancillary costs such as travel and information technology support. Total indirect operating costs, prior to any allocation or absorption, and general corporate expenses are collectively referred to as our overall pool of overhead costs.
Those indirect costs not allocated to or absorbed by these operations are charged to general and administrative expenses. We regularly review our total overhead cost structure relative to our leasing, development and construction volume and adjust the level of total overhead, generally through changes in our level of staffing in various functional departments, as necessary, in order to control overall general and administrative expense.
General and administrative expenses were $13.6 million and $13.4 million for the three months ended June 30, 2020 and 2019, respectively. The following table sets forth the factors that led to the increased general and administrative expenses (in millions):
|
|
|
|
|
|
General and administrative expenses - three months ended June 30, 2019
|
$
|
13.4
|
|
Decrease to overall pool of overhead costs
|
(1.2)
|
|
Overhead restructuring charges (1)
|
2.1
|
|
Increased absorption of costs by consolidated leasing and development activities (2)
|
(2.9)
|
|
Decreased allocation of costs to Service Operations and Rental Operations
|
2.2
|
|
General and administrative expenses - three months ended June 30, 2020
|
$
|
13.6
|
|
(1) We recognized $2.1 million of overhead restructuring charges, primarily related to benefits provided to certain associates that terminated employment as part of a voluntary retirement package offered to certain eligible employees during the three months ended June 30, 2020.
(2) We capitalized $1.4 million and $9.5 million of our total overhead costs to leasing and development, respectively, for consolidated properties during the three months ended June 30, 2020, compared to capitalizing $2.6 million and $6.0 million of such costs, respectively, for the three months ended June 30, 2019. Combined overhead costs capitalized to leasing and development totaled 33.8% and 25.6% of our overall pool of overhead costs for the three months ended June 30, 2020 and 2019, respectively, with the higher percentage being attributable to increased development volume during the three months ended June 30, 2020. Additionally, $4.0 million of our total overhead costs, which were not capitalizable, were recorded as expenses and presented separately in the line item "Non-Incremental Costs Related to Successful Leases" on the Consolidated Statements of Operations during the three months ended June 30, 2020, compared to $3.4 million of such expenses during the three months ended June 30, 2019.
Interest Expense
Interest expense from continuing operations was $22.8 million and $23.5 million for the three months ended June 30, 2020 and 2019, respectively. Although our overall level of borrowings increased from 2019, as we financed growth in our portfolio, we have reduced our overall cost of borrowing through refinancing $766.3 million of higher rate unsecured notes since June 30, 2019.
We capitalized $6.8 million and $6.2 million of interest costs for the three months ended June 30, 2020 and 2019, respectively, which also contributed to the lower interest expense from continuing operations.
Debt Extinguishment
During the three months ended June 30, 2020, we repurchased and canceled $216.3 million of unsecured notes, which had a stated interest rate of 3.88% pursuant to a tender offer completed by the Partnership. We recognized a loss of $15.0 million in connection with the cancellation of these notes including the repayment premium and write-off of the deferred financing costs.
We did not repurchase any unsecured notes during the three months ended June 30, 2019.
Comparison of Six Months Ended June 30, 2020 to Six Months Ended June 30, 2019
Rental and Related Revenue
The following table sets forth rental and related revenue from continuing and discontinued operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
Rental and related revenue:
|
|
|
|
Industrial
|
$
|
441,424
|
|
|
$
|
419,407
|
|
Non-reportable Rental Operations and non-segment revenues
|
3,705
|
|
|
3,665
|
|
Total rental and related revenue from continuing operations
|
$
|
445,129
|
|
|
$
|
423,072
|
|
|
|
|
|
|
|
|
|
The following factors contributed to the increase in rental and related revenue from continuing operations:
•We acquired six properties and placed 30 developments in service from January 1, 2019 to June 30, 2020, which provided incremental revenues from continuing operations of $25.7 million in the six months ended June 30, 2020, as compared to the same period in 2019.
•Increased occupancy and rental rates within our "same-property" portfolio, as well as the lease up of properties that were placed in service prior to January 1, 2019 but were not in the "same-property" portfolio, also contributed to the increase to rental and related revenue from continuing operations.
•The increase in rental revenue included $7.4 million of higher expense recoveries primarily related to increased recoverable real estate taxes compared to the same period in 2019.
•The sale of 29 in-service properties, since January 1, 2019, which did not meet the criteria for inclusion within discontinued operations, resulted in a decrease of $15.9 million to rental and related revenue from continuing operations in the six months ended June 30, 2020, as compared to the same period in 2019, which partially offset the aforementioned increases to rental and related revenue from continuing operations.
•The increase in rental revenue was also partially offset by a $5.1 million increase in collectability reserves for contractual and straight-line receivables, primarily as a result of current economic conditions caused by the COVID-19 pandemic during the six months ended June 30, 2020.
Rental Expenses and Real Estate Taxes
The following table sets forth rental expenses and real estate taxes from continuing and discontinued operations (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
Rental expenses:
|
|
|
|
Industrial
|
$
|
35,538
|
|
|
$
|
37,411
|
|
Non-reportable Rental Operations and non-segment expenses
|
862
|
|
|
854
|
|
Total rental expenses from continuing operations
|
$
|
36,400
|
|
|
$
|
38,265
|
|
|
|
|
|
|
|
|
|
Real estate taxes:
|
|
|
|
Industrial
|
$
|
72,867
|
|
|
$
|
64,528
|
|
Non-reportable Rental Operations and non-segment expenses
|
623
|
|
|
289
|
|
Total real estate tax expense from continuing operations
|
$
|
73,490
|
|
|
$
|
64,817
|
|
|
|
|
|
|
|
|
|
Overall, rental expenses from continuing operations decreased by $1.9 million in the six months ended June 30, 2020, compared to the same period in 2019. The decrease to rental expenses was primarily due to lower snow removal costs compared to the same period in 2019.
Overall, real estate tax expense from continuing operations increased by $8.7 million in the six months ended June 30, 2020, compared to the same period in 2019. The increase to real estate tax expense was mainly the result of acquisitions and developments placed in service from January 1, 2019 to June 30, 2020 and increased tax assessments in certain of our markets. These increases were partially offset by the impact of property sales that did not meet the criteria to be classified within discontinued operations.
Depreciation and Amortization
Depreciation and amortization expense was $172.1 million and $159.0 million for the six months ended June 30, 2020 and 2019, respectively. The increase in depreciation and amortization expense for the six months ended June 30, 2020 was mainly the result of continued growth in our portfolio through development.
Gain on Sale of Properties - Continuing Operations
The $8.9 million recognized as gain on sale of properties in continuing operations for the six months ended June 30, 2020 was primarily the result of the sale of one consolidated property that did not meet the criteria for inclusion in discontinued operations.
The $30.4 million recognized as gain on sale of properties in continuing operations for the six months ended June 30, 2019 was primarily comprised of the gains from the sale of one property that did not meet the criteria for inclusion in discontinued operations.
Impairment Charges
During the six months ended June 30, 2020, we recognized $5.6 million of impairment charges related to writing off pre-acquisition costs, primarily non-refundable purchase deposits, for certain planned purchases of undeveloped land that we no longer anticipate completing due to the economic impact of the COVID-19 pandemic.
We did not recognize any impairment charges during the six months ended June 30, 2019.
General and Administrative Expense
General and administrative expenses were $35.4 million for both the six months ended June 30, 2020 and 2019. The following table sets forth the factors that impacted general and administrative expenses (in millions):
|
|
|
|
|
|
General and administrative expenses - six months ended June 30, 2019
|
$
|
35.4
|
|
Decrease to overall pool of overhead costs
|
(0.1)
|
|
|
|
Overhead restructuring charges (1)
|
2.1
|
|
Increased absorption of costs by consolidated leasing and development activities (2)
|
(7.1)
|
|
Decreased allocation of costs to Service Operations and Rental Operations (3)
|
5.1
|
|
General and administrative expenses - six months ended June 30, 2020
|
$
|
35.4
|
|
(1) We recognized approximately $2.1 million of overhead restructuring charges, primarily related to benefits provided to certain associates that terminated employment as part of a voluntary retirement package offered to certain eligible employees during the six months ended June 30, 2020.
(2) We capitalized $2.3 million and $18.2 million of our total overhead costs to leasing and development, respectively, for consolidated properties during the six months ended June 30, 2020, compared to capitalizing $3.3 million and $11.0 million of such costs, respectively, for the six months ended June 30, 2019. Combined overhead costs capitalized to leasing and development totaled 28.5% and 11.9% of our overall pool of overhead costs for the six months ended June 30, 2020 and 2019, respectively, with the higher percentage being attributable to increased development volume for the six months ended June 30, 2020. Additionally, $6.6 million of our total overhead costs, which were not capitalizable, were recorded as expenses and presented separately in the line item "Non-Incremental Costs Related to Successful Leases" on the Consolidated Statements of Operations during the six months ended June 30, 2020, compared to $5.6 million of such expenses during the six months ended June 30, 2019.
(3) The decrease in allocation of costs to Service Operations and Rental Operations resulted from a lower volume of third-party construction projects during the six months ended June 30, 2020.
Interest Expense
Interest expense allocable to continuing operations was $46.3 million and $45.6 million for the six months ended June 30, 2020 and 2019, respectively. The increase in interest expense from continuing operations for the six months ended June 30, 2020 was primarily due to increased overall borrowings, partially offset by lower average interest rates.
We capitalized $13.7 million and $12.9 million of interest costs during the six months ended June 30, 2020 and 2019, respectively.
Debt Extinguishment
During the six months ended June 30, 2020, we redeemed $300.0 million of unsecured notes with a stated interest rate of 4.38% and repurchased and canceled $216.3 million of unsecured notes with a stated interest rate of 3.88% pursuant to a tender offer completed by the Partnership. In connection with redemption and repurchase of these unsecured notes, we recognized a total loss of $32.8 million including the redemption/repayment premium and write-off of the deferred financing costs.
We did not redeem or repurchase any unsecured notes during the six months ended June 30, 2019.
Liquidity and Capital Resources
Sources of Liquidity
We expect to meet our short-term liquidity requirements over the next 12 months, which include payments of dividends and distributions, completion of development projects that are currently under construction and capital expenditures needed to maintain our current real estate assets, through working capital, net cash provided by operating activities and short term borrowings on the Partnership's unsecured line of credit. We had $29.9 million of cash on hand and no outstanding borrowings on the Partnership's $1.20 billion unsecured line of credit at June 30, 2020.
In addition to our existing sources of liquidity, we expect to meet long-term liquidity requirements, such as scheduled mortgage and unsecured debt maturities, financing of development activities (and, to a lesser extent, acquisitions) and other capital improvements, through multiple sources of capital including operating cash flow, proceeds from property dispositions and accessing the public debt and equity markets.
Rental Operations
Cash flows from Rental Operations is our primary source of liquidity and provides a stable source of cash flow to fund operational expenses. We believe that this cash-based revenue stream is substantially aligned with revenue recognition (except for items such as periodic straight-line rental income accruals and amortization of above or below market rents) as cash receipts from the leasing of rental properties are generally received in advance of, or a short time following, the actual revenue recognition.
We are subject to a number of risks, which have intensified as the result of the COVID-19 outbreak, related to general economic conditions, including reduced occupancy, tenant defaults and bankruptcies and potential reduction in rental rates upon renewal or re-letting of properties, any of which would result in reduced cash flow from operations.
Debt and Equity Securities
We use the Partnership's unsecured line of credit (which is guaranteed by the General Partner) as a temporary source of capital to fund development activities, acquire additional rental properties and provide working capital.
In February 2020, a consolidated joint venture obtained an $18.4 million secured loan from a third party financial institution, with a fixed annual interest rate of 3.41% and a maturity date of March 1, 2035.
Also in February 2020, we issued $325.0 million of senior unsecured notes, which bear interest at a stated interest rate of 3.05%, have an effective interest rate of 3.19%, and mature on March 1, 2050, for cash proceeds of $316.4 million.
In June 2020, we issued $350.0 million of senior unsecured notes, which bear interest at a stated interest rate of 1.75%, have an effective interest rate of 1.85%, and mature on July 1, 2030, for cash proceeds of $346.8 million.
The Partnership has issued debt securities pursuant to certain indentures and related supplemental indentures, which also require us to comply with financial ratios and other covenants regarding our operations. We were in compliance with all such covenants, as well as applicable covenants under our unsecured line of credit, at June 30, 2020.
The Partnership's unsecured line of credit has an interest rate that is indexed to LIBOR. In 2017, the Alternative Reference Rates Committee ("ARRC") proposed that the Secured Overnight Funding Rate ("SOFR") replace LIBOR. ARRC also proposed that the transition to SOFR from LIBOR take place by the end of 2021. As the Partnership's unsecured line of credit agreement has provisions that allow for automatic transition to a new rate, the Partnership has no other material debt arrangements that are indexed to LIBOR, and has settled all of our outstanding interest rate swaps in November 2019, we believe that the transition will not have a material impact on our consolidated financial statements.
At June 30, 2020, we had on file with the SEC an automatic shelf registration statement on Form S-3 relating to the offer and sale, from time to time, of an indeterminate amount of debt and equity securities (including guarantees of the Partnership's debt securities by the General Partner). Equity securities are offered and sold by the General Partner, and the net proceeds of such offerings are contributed to the Partnership in exchange for additional General Partner Units or Preferred Units. From time to time, we expect to issue additional securities under this automatic shelf registration statement to fund the repayment of long-term debt upon maturity and for other general corporate purposes.
The General Partner has an ATM equity program that allows it to issue new common shares at $0.01 par value per share, from time to time, with an aggregate offering price of up to $400.0 million. During the three months ended June 30, 2020, the General Partner issued 2.0 million common shares under its ATM equity program, resulting in net proceeds of $70.6 million after paying total compensation of $714,000 to the applicable sales agents. Including 8,700 shares issued during the three months ended March 31, 2020, the General Partner issued a total of 2.0 million common shares under its ATM equity program for the six months ended June 30, 2020, resulting in net proceeds of $70.9 million after paying total compensation of $717,000 to the applicable sales agents. Other fees related to these issuances, totaling $204,000, were also paid during the six months ended June 30, 2020. As of June 30, 2020, the ATM equity program still had $118.9 million worth of new common shares available to issue.
Sale of Real Estate Assets
We regularly work to identify, consider and pursue opportunities to dispose of non-strategic properties on an opportunistic basis and on a basis that is generally consistent with our strategic plans. Our ability to dispose of such properties on favorable terms, or at all, is dependent upon a number of factors including the availability of credit to potential buyers to purchase properties at prices that we consider acceptable. Although we believe that we have demonstrated our ability to generate significant liquidity through the disposition of non-strategic properties, potential future adverse changes to general market and economic conditions, including the uncertain economic outlook caused by the COVID-19 pandemic, could negatively impact our further ability to dispose of such properties.
Sales of land and properties provided $34.5 million and $97.5 million in net proceeds during the six months ended June 30, 2020 and 2019, respectively.
Transactions with Unconsolidated Joint Ventures
Transactions with unconsolidated joint ventures also provide a source of liquidity. From time to time we will sell properties to unconsolidated joint ventures, while retaining a continuing interest in that entity, and receive proceeds commensurate to those interests that we do not own. Additionally, unconsolidated joint ventures will from time to time obtain debt financing or sell properties and will then distribute to us, and our joint venture partners, all or a portion of the proceeds from such transactions.
Uses of Liquidity
Our principal uses of liquidity include the following:
•property investment;
•leasing/capital costs;
•dividends and distributions to shareholders and unitholders;
•long-term debt maturities;
•opportunistic repurchases of outstanding debt; and
•other contractual obligations.
Property Investment
Our overall strategy is to continue to increase our investment in quality industrial properties, primarily through development, on both a speculative and build-to-suit basis, supplemented with acquisitions in higher barrier markets with the highest growth potential. Pursuant to this strategy, we evaluate development and acquisition opportunities based upon our market outlook, including general economic conditions, supply and long-term growth potential. Our ability to make future property investments is dependent upon identifying suitable acquisition and development opportunities, and our continued access to our longer-term sources of liquidity, including issuances of debt or equity securities as well as generating cash flow by disposing of selected properties.
Leasing/Capital Costs
Tenant improvements and lease-related costs pertaining to our initial leasing of newly completed space, or vacant space in acquired properties, are referred to as first generation expenditures. Such first generation expenditures for tenant improvements are included within "development of real estate investments" in our Consolidated Statements of Cash Flows, while such expenditures for capitalizable lease-related costs are included within "other deferred leasing costs."
Cash expenditures related to the construction of a building's shell, as well as the associated site improvements, are also included within "development of real estate investments" in our Consolidated Statements of Cash Flows.
Tenant improvements and leasing costs to renew or re-let rental space that we previously leased to tenants for second generation leases are referred to as second generation expenditures. Building improvements that are not specific to any tenant but serve to improve integral components of our real estate properties are also second generation expenditures. One of the principal uses of our liquidity is to fund the second generation leasing/capital expenditures of our real estate investments.
The following table summarizes our second generation capital expenditures by type of expenditure, as well as capital expenditures for the development of real estate investments and for other deferred leasing costs (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
Second generation tenant improvements
|
$
|
7,975
|
|
|
$
|
6,999
|
|
Second generation leasing costs
|
7,297
|
|
|
11,511
|
|
Building improvements
|
1,790
|
|
|
1,953
|
|
Total second generation capital expenditures
|
$
|
17,062
|
|
|
$
|
20,463
|
|
Development of real estate investments
|
$
|
333,212
|
|
|
$
|
205,315
|
|
Other deferred leasing costs
|
$
|
17,306
|
|
|
$
|
11,152
|
|
The capital expenditures in the table above include the capitalization of internal overhead costs. We capitalized $2.3 million and $3.3 million of overhead costs that are incremental to executing leases, including both first and second generation leases, during the six months ended June 30, 2020 and 2019, respectively. We capitalized $18.2 million and $11.0 million of overhead costs related to development activities, including both development and tenant improvement projects on first and second generation space, during the six months ended June 30, 2020 and 2019, respectively. Combined overhead costs capitalized to leasing and development totaled 28.5% and 11.9% of our overall pool of overhead costs for the six months ended June 30, 2020 and 2019, respectively.
Further discussion of the capitalization of overhead costs can be found herein, in the quarter-to-quarter and year-to-year comparisons of general and administrative expenses of this Item 2 as well as in the Critical Accounting Policies section of Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2019 Annual Report.
In addition to the capitalization of overhead costs, the totals for development of real estate assets in the table above include the capitalization of $13.7 million and $12.9 million of interest costs during the six months ended June 30, 2020 and 2019, respectively.
Both our first and second generation expenditures vary significantly between leases on a per square foot basis, dependent upon several factors including the product type, the nature of a tenant's operations, the specific physical characteristics of each individual property and the market in which the property is located.
Dividend and Distribution Requirements
The General Partner is required to meet the distribution requirements of the Code in order to maintain its REIT status. We paid regular dividends or distributions of $0.235 per common share or Common Unit in the first and second quarters of 2020, and the General Partner's board of directors declared dividends or distributions of $0.235 per common share or Common Unit for the third quarter of 2020.
We expect to continue to distribute at least an amount equal to our taxable earnings, to meet the requirements to maintain the General Partner's REIT status, and additional amounts as determined by the General Partner's board of directors. Distributions are declared at the discretion of the General Partner's board of directors and are subject to actual cash available for distribution, our financial condition, capital requirements and such other factors as the General Partner's board of directors deems relevant.
Debt Maturities
Debt outstanding at June 30, 2020 had a face value totaling $3.11 billion with a weighted average interest rate of 3.38% and maturities at various dates through 2050. Of this total amount, we had $3.06 billion of unsecured debt, $50.6 million of secured debt and no outstanding borrowings on our unsecured line of credit at June 30, 2020. Scheduled principal amortization, maturities and early repayments of such debt totaled $518.2 million for the six months ended June 30, 2020.
The following table is a summary of the scheduled future amortization and maturities of our indebtedness at June 30, 2020 (in thousands, except percentage data):
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Future Repayments
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Year
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Scheduled
Amortization
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Maturities
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Total
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|
Weighted Average Interest Rate of
Future Repayments
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Remainder of 2020
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$
|
2,404
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|
|
$
|
—
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|
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$
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2,404
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|
|
4.94
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%
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2021
|
4,003
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|
|
9,047
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|
|
13,050
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|
|
5.49
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%
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2022
|
4,217
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|
|
83,740
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|
|
87,957
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|
|
3.99
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%
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2023
|
4,444
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|
|
250,000
|
|
|
254,444
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|
|
3.75
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%
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2024
|
4,685
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300,000
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|
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304,685
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|
|
3.92
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%
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2025
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4,610
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|
|
—
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4,610
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|
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5.15
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%
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2026
|
2,724
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|
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375,000
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|
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377,724
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|
|
3.37
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%
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2027
|
1,077
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475,000
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476,077
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|
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3.18
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%
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2028
|
744
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|
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500,000
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|
|
500,744
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|
|
4.45
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%
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2029
|
770
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|
|
400,000
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|
|
400,770
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|
|
2.88
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%
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2030
|
797
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|
|
350,000
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|
|
350,797
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|
|
1.86
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%
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Thereafter
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3,705
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|
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332,402
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|
|
336,107
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|
|
3.20
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%
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$
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34,180
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|
|
$
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3,075,189
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$
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3,109,369
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|
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3.38
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%
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We anticipate generating capital to fund our debt maturities by using undistributed cash generated from our Rental Operations and property dispositions and by raising additional capital from future debt or equity transactions.
Repayments of Outstanding Debt
To the extent that it supports our overall capital strategy, we may purchase or redeem some of our outstanding unsecured notes prior to their stated maturities.
In March 2020, we redeemed $300.0 million of unsecured notes that were scheduled to mature in June 2022.
In June 2020, we repurchased and canceled $216.3 million of unsecured notes that were scheduled to mature in October 2022 pursuant to a tender offer completed by the Partnership.
Contractual Obligations
Aside from repayments of long-term debt and the issuances of senior unsecured notes described above, there have been no other material changes in our outstanding commitments since December 31, 2019, as previously discussed in our 2019 Annual Report.
Historical Cash Flows
Cash, cash equivalents and restricted cash were $58.6 million and $17.0 million at June 30, 2020 and 2019, respectively. The following table highlights significant changes in net cash associated with our operating, investing and financing activities (in millions):
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Six Months Ended June 30,
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2020
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2019
|
General Partner
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|
|
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Net cash provided by operating activities
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$
|
261.2
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|
|
$
|
257.8
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Net cash used for investing activities
|
$
|
(334.0)
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|
|
$
|
(331.7)
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Net cash provided by financing activities
|
$
|
10.0
|
|
|
$
|
65.4
|
|
|
|
|
|
Partnership
|
|
|
|
Net cash provided by operating activities
|
$
|
261.2
|
|
|
$
|
257.8
|
|
Net cash used for investing activities
|
$
|
(334.0)
|
|
|
$
|
(331.7)
|
|
Net cash provided by financing activities
|
$
|
10.0
|
|
|
$
|
65.4
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Operating Activities
Cash flows from operating activities provide the cash necessary to meet our operational requirements and the receipt of rental income from Rental Operations continues to be our primary source of operating cash flows.
Investing Activities
Highlights of significant cash sources and uses are as follows:
•During the six months ended June 30, 2020, we did not acquire any buildings. We paid cash of $108.2 million for building acquisitions during the six months ended June 30, 2019. We paid cash of $95.9 million for undeveloped land acquisitions during the six months ended June 30, 2020, compared to $200.9 million for land acquisitions during the same period in 2019.
•Real estate development costs were $333.2 million during the six months ended June 30, 2020, compared to $205.3 million during the same period in 2019.
•Sales of land and properties provided $34.5 million in net proceeds during the six months ended June 30, 2020, compared to $97.5 million during the same period in 2019.
•During the six months ended June 30, 2020, we received repayments of $110.0 million on our notes receivable related to the disposition of our medical office portfolio in 2017, compared to $130.0 million of repayments of notes receivable from property sales during the same period in 2019.
•Second generation tenant improvements, leasing costs and building improvements totaled $17.1 million during the six months ended June 30, 2020 compared to $20.5 million during the same period in 2019.
•For the six months ended June 30, 2020, we made capital contributions of $4.8 million to unconsolidated joint ventures, compared to $6.0 million during the same period in 2019.
Financing Activities
The following items highlight significant capital transactions:
•During the six months ended June 30, 2020, the General Partner issued 2.0 million common shares pursuant to its ATM equity program for net proceeds of $70.7 million, compared to 1.1 million common shares for net proceeds of $35.7 million during the same period in 2019.
•During the six months ended June 30, 2020, the Partnership issued $325.0 million of senior unsecured notes, which bear interest at a stated interest rate of 3.05%, have an effective interest rate of 3.19% and mature on March 1, 2050, for cash proceeds of $316.4 million. The Partnership also issued $350.0 million of senior unsecured notes, which bear interest at a stated interest rate of 1.75%, have an effective interest rate of 1.85% and mature on July 1, 2030, for cash proceeds of $346.8 million. We did not issue any senior unsecured notes during the same period in 2019.
•During the six months ended June 30, 2020, the Partnership paid total cash of $547.0 million for the early redemption of $300.0 million of senior unsecured notes that were scheduled to mature in June 2022 and the early repurchase and cancellation of $216.3 million of senior unsecured notes due in October 2022. We did not repurchase or redeem any senior unsecured notes during the six months ended June 30, 2019.
•During the six months ended June 30, 2020, a consolidated joint venture of the Partnership obtained a secured loan from a third party financial institution for gross proceeds of $18.4 million. We did not obtain any secured loans during the same period in 2019.
•During the six months ended June 30, 2019, the Partnership repaid three secured loans for $41.7 million. We did not repay secured loans during the six months ended June 30, 2020.
•We increased borrowings on the Partnership's unsecured line of credit by $222.0 million during the six months ended June 30, 2019. For the six months ended June 30, 2020, we did not have any net borrowings on the unsecured line of credit.
•We paid regular cash dividends totaling $173.1 million and $154.6 million during the six months ended June 30, 2020 and 2019, respectively.
•Changes in book cash overdrafts are classified as financing activities within our Consolidated Statements of Cash Flows. Book cash overdrafts were $30.2 million at June 30, 2019. We did not have any book cash overdrafts at June 30, 2020.
•We paid off a special assessment bond for $9.9 million which was reflected within Other Financing Activities on our Consolidated Statements of Cash Flows during six months ended June 30, 2019. We did not make similar significant repayments during the six months ended June 30, 2020.
Off Balance Sheet Arrangements - Investments in Unconsolidated Joint Ventures
We analyze our investments in unconsolidated joint ventures to determine if they meet the criteria for classification as a VIE and would require consolidation. We (i) evaluate the sufficiency of the total equity at risk, (ii) review the voting rights and decision-making authority of the equity investment holders as a group and whether there are limited partners (or similar owning entities) that lack substantive participating or kick out rights and (iii) establish whether or not activities within the venture are on behalf of an investor with disproportionately few voting rights in making this VIE determination. To the extent that we (i) are the sole entity that has the power to direct the activities of the VIE and (ii) have the obligation or rights to absorb the VIE's losses or receive its benefits, then we would be determined to be the primary beneficiary of the VIE and would consolidate it. At the end of each reporting period,
we re-assess our conclusions as to which, if any, party within the VIE is considered the primary beneficiary. To the extent that our joint ventures do not qualify as VIEs, we further assess each joint venture partner's substantive participating rights to determine if the venture should be consolidated. There were no unconsolidated joint ventures that met the criteria to be a VIE at June 30, 2020.
We have equity interests in unconsolidated partnerships and limited liability companies that primarily own and operate rental properties and hold land for development. These unconsolidated joint ventures are primarily engaged in the operation and development of industrial real estate properties. These investments provide us with increased market share and tenant and property diversification. The equity method of accounting is used for these investments in which we have the ability to exercise significant influence, but not control, over operating and financial policies. As a result, the assets and liabilities of these entities are not included on our balance sheet. Our investments in and advances to unconsolidated joint ventures represented approximately 2% of our total assets at June 30, 2020 and December 31, 2019. Total assets of our unconsolidated joint ventures were $421.6 million and $419.1 million at June 30, 2020 and December 31, 2019, respectively. The combined revenues of our unconsolidated joint ventures totaled $13.7 million and $30.0 million for the six months ended June 30, 2020 and 2019, respectively.
We have guaranteed the repayment of certain secured and unsecured loans of our unconsolidated joint ventures. The outstanding balances on the guaranteed portion of these loans totaled $59.9 million and $150.8 million at June 30, 2020 and 2019, respectively.