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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2023

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From _______to ________

Commission File Number: 001-38106

PLYMOUTH INDUSTRIAL REIT, INC.

(Exact name of registrant as specified in its charter)

 

Maryland   27-5466153
(State or other jurisdiction of incorporation or organization)   (I.R.S. Employer Identification No.)
     
20 Custom House Street, 11th Floor, Boston, MA 02110   (617) 340-3814
(Address of principal executive offices)   (Registrant’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading Symbol Name of Each Exchange
on Which Registered
Common Stock, par value $0.01 per share PLYM New York Stock Exchange

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes    No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer       Accelerated filer       Non-accelerated Filer       Smaller reporting company       Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes    No 

As of October 30, 2023, the Registrant had outstanding 45,250,184 shares of common stock.

 

Plymouth Industrial REIT, Inc.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

 

PART I. FINANCIAL INFORMATION PAGE
     
ITEM 1. Financial Statements (Unaudited)  
     
  Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022 1
     
  Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 2
     
  Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2023 and 2022 3
     
  Condensed Consolidated Statements of Changes in Preferred Stock and Equity for the Three and Nine Months Ended September 30, 2023 and 2022 4
     
  Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 6
     
  Notes to Condensed Consolidated Financial Statements 7
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23
     
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 34
     
ITEM 4. Controls and Procedures 34
     
PART II. OTHER INFORMATION 35
     
SIGNATURES 36

 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

PLYMOUTH INDUSTRIAL REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(In thousands, except share and per share amounts)

 

           
   September 30,   December 31, 
   2023   2022 
Assets          
Real estate properties  $1,570,624   $1,555,846 
Less accumulated depreciation   (254,402)   (205,629)
Real estate properties, net   1,316,222    1,350,217 
           
Cash   12,034    11,003 
Cash held in escrow   11,143    13,376 
Restricted cash   7,095    6,834 
Deferred lease intangibles, net   56,316    70,718 
Interest rate swaps   34,115    30,115 
Other assets   39,585    39,055 
Total assets  $1,476,510   $1,521,318 
           
Liabilities, Preferred Stock and Equity          
Liabilities:          
Secured debt, net  $377,714   $389,531 
Unsecured debt, net   447,823    447,345 
Borrowings under line of credit   65,000    77,500 
Accounts payable, accrued expenses and other liabilities   75,112    72,551 
Deferred lease intangibles, net   6,604    8,918 
Financing lease liability   2,265    2,248 
Total liabilities   974,518    998,093 
Commitments and contingencies (Note 12)          
           
Preferred stock, par value $0.01 per share, 100,000,000 shares authorized,          
Series A: 0 and 1,955,513 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively (aggregate liquidation preference of $0 and $48,888 at September 30, 2023 and December 31, 2022, respectively)       46,844 
           
Equity:          
Common stock, $0.01 par value: 900,000,000 shares authorized; 45,250,184 and 42,849,489 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively   452    428 
Additional paid in capital   654,346    635,068 
Accumulated deficit   (191,882)   (194,243)
Accumulated other comprehensive income   33,695    29,739 
Total stockholders' equity   496,611    470,992 
Non-controlling interest    5,381    5,389 
Total equity   501,992    476,381 
Total liabilities, preferred stock and equity  $1,476,510   $1,521,318 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

1 

 

PLYMOUTH INDUSTRIAL REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(In thousands, except share and per share amounts)

 

                 
   For the Three Months
Ended September 30,
   For the Nine Months
Ended September 30,
 
   2023   2022   2023   2022 
                 
Rental revenue  $49,736   $47,788   $149,006   $136,120 
Management fee revenue and other income   29    2    58    90 
Total revenues   49,765    47,790    149,064    136,210 
                     
Operating expenses:                    
Property   15,754    14,495    47,398    42,369 
Depreciation and amortization   22,881    24,860    70,098    71,759 
General and administrative   3,297    4,078    10,586    11,776 
Total operating expenses   41,932    43,433    128,082    125,904 
                     
Other income (expense):                    
Interest expense   (9,473)   (8,983)   (28,592)   (23,303)
Earnings (loss) in investment of unconsolidated joint venture               (147)
Loss on extinguishment of debt   (72)       (72)   (2,176)
Gain on sale of real estate   12,112        12,112     
(Appreciation) depreciation of warrants               1,760 
Total other income (expense)   2,567    (8,983)   (16,552)   (23,866)
                     
Net income (loss)   10,400    (4,626)   4,430    (13,560)
Less: Net income (loss) attributable to non-controlling interest   114    (55)   46    (170)
Net income (loss) attributable to Plymouth Industrial REIT, Inc.   10,286    (4,571)   4,384    (13,390)
Less: Preferred Stock dividends   677    930    2,509    3,949 
Less: Series B Preferred Stock accretion to redemption value       2,371        4,621 
Less: Loss on extinguishment/redemption of Series A Preferred Stock   2,021    56    2,023    80 
Less: Amount allocated to participating securities   83    62    253    194 
Net income (loss) attributable to common stockholders  $7,505   $(7,990)  $(401)  $(22,234)
Net income (loss) per share attributable to common stockholders — basic  $0.17   $(0.19)  $(0.01)  $(0.57)
Net income (loss) per share attributable to common stockholders — diluted  $0.17   $(0.19)  $(0.01)  $(0.57)
                     
Weighted-average common shares outstanding — basic   44,056,855    41,128,421    43,108,039    38,838,811 
Weighted-average common shares outstanding — diluted   44,139,603    41,128,421    43,108,039    38,838,811 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

2 

 

PLYMOUTH INDUSTRIAL REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
UNAUDITED
(In thousands, except share and per share amounts)

 

                 
   For the Three Months
Ended September 30,
   For the Nine Months
Ended September 30,
 
   2023   2022   2023   2022 
                 
Net income (loss)  $10,400   $(4,626)  $4,430   $(13,560)
                     
Other comprehensive income:                    
Unrealized gain (loss) on interest rate swaps   2,935    16,476    4,000    32,404 
Other comprehensive income   2,935    16,476    4,000    32,404 
Comprehensive income (loss)   13,335    11,850    8,430    18,844 
Less: Net income (loss) attributable to non-controlling interest   114    (55)   46    (170)
Less: Other comprehensive income (loss) attributable to non-controlling interest   32    194    44    402 
Comprehensive income (loss) attributable to Plymouth Industrial REIT, Inc.  $13,189   $11,711   $8,340   $18,612 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

3 

 

PLYMOUTH INDUSTRIAL REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PREFERRED STOCK AND EQUITY
UNAUDITED
(In thousands, except share and per share amounts)

 

                                                             
                                                             
  Preferred Stock
Series A
$0.01 Par Value
      Common Stock,
$0.01 Par Value
  Additional
Paid in
  Accumulated   Accumulated
Other
Comprehensive
  Stockholders’   Non-
controlling
  Total  
  Shares   Amount       Shares   Amount   Capital   Deficit   Income   Equity   Interest   Equity  
Balance, January 1, 2023 1,955,513   $ 46,844   -   42,849,489   $ 428   $ 635,068   $ (194,243 ) $ 29,739   $ 470,992   $ 5,389   $ 476,381  
Repurchase and extinguishment of Series A Preferred Stock (1,730   (41                 (2 )       (2 )       (2 )
Net proceeds from common stock                   (137           (137       (137
Stock based compensation                   585             585         585  
Restricted shares issued (forfeited)           181,375     2     (2 )                    
Dividends and distributions                   (10,598 )           (10,598 )   (110 )   (10,708 )
Other comprehensive income                           (6,989   (6,989   (81   (7,070
Reallocation of non-controlling interest                   26             26     (26 )    
Net loss       -               (3,298 )       (3,298 )   (38 )   (3,336 )
Balance, March 31, 2023 1,953,783   $ 46,803  - -   43,030,864   $ 430   $ 624,942   $ (197,543 ) $ 22,750   $ 450,579   $ 5,134   $ 455,713  
Net proceeds from common stock           70,000     1     1,384             1,385         1,385  
Stock based compensation                   716             716         716  
Dividends and distributions                   (10,625 )           (10,625 )   (110 )   (10,735 )
Other comprehensive income                           8,042     8,042     93     8,135  
Reallocation of non-controlling interest                   (3 )           (3 )   3      
Net loss      - -               (2,604 )       (2,604 )   (30 )   (2,634 )
Balance, June 30, 2023 1,953,783   $ 46,803   -   43,100,864   $ 431   $ 616,414   $ (200,147 ) $ 30,792   $ 447,490   $ 5,090   $ 452,580  
Redemption of Series A Preferred Stock (1,953,783 )   (46,803 )             (19 )   (2,021 )       (2,040 )       (2,040 )
Net proceeds from common stock           2,130,600     21     48,249             48,270         48,270  
Stock based compensation                   827             827         827  
Restricted shares issued (forfeited)           18,720                              
Dividends and distributions                   (10,870 )           (10,870 )   (110 )   (10,980 )
Other comprehensive income                           2,903     2,903     32     2,935  
Reallocation of non-controlling interest                   (255 )           (255 )   255      
Net income (loss)       -               10,286         10,286     114     10,400  
Balance, September 30, 2023   $   -   45,250,184   $ 452   $ 654,346   $ (191,882 ) $ 33,695   $ 496,611   $ 5,381   $ 501,992  

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

4 

 

PLYMOUTH INDUSTRIAL REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN PREFERRED STOCK AND EQUITY
UNAUDITED
(In thousands, except share and per share amounts)

 

                                                                     
                                                                     
  Preferred Stock
Series A
$0.01 Par Value
  Preferred Stock
Series B
$0.01 Par Value
    Common Stock,
$0.01 Par Value
  Additional
Paid in
  Accumulated   Accumulated
Other
Comprehensive
  Stockholders’   Non-
controlling
  Total  
  Shares   Amount   Shares   Amount     Shares   Amount   Capital   Deficit   Income   Equity   Interest   Equity  
Balance, January 1, 2022 2,023,551   $ 48,473   4,411,764   $ 94,437     36,110,659   $ 361   $ 532,666   $ (177,258 ) $   $ 355,769   $ 4,831   $ 360,600  
Series B Preferred Stock accretion to redemption value           1,500             (1,500 )           (1,500 )       (1,500 )
Net proceeds from common stock               614,800     7     17,116             17,123         17,123  
Stock based compensation                       442             442         442  
Restricted shares issued               120,160                              
Dividends and distributions                       (9,835 )           (9,835 )   (108 )   (9,943 )
Reallocation of non-controlling interest                       (122 )           (122 )   122      
Other comprehensive income                               9,933     9,933     135     10,068  
Conversion of common stock warrants               139,940     2     3,756             3,758         3,758  
Net loss                           (4,410 )       (4,410 )   (60 )   (4,470 )
Balance, March 31, 2022 2,023,551   $ 48,473   4,411,764   $ 95,937     36,985,559   $ 370   $ 542,523   $ (181,668 ) $ 9,933   $ 371,158   $ 4,920   $ 376,078  
Repurchase and extinguishment of Series A Preferred Stock (16,381 )   (392 )                     (24 )       (24 )       (24 )
Conversion of Series B Preferred Stock       (2,205,882 )   (47,970 )   2,205,882     22     47,948             47,970         47,970  
Series B Preferred Stock accretion to redemption value           750             (750 )           (750 )       (750 )
Net proceeds from common stock               927,900     9     24,375             24,384         24,384  
Stock based compensation                       538             538         538  
Restricted shares issued               13,970                              
Dividends and distributions                       (10,149 )           (10,149 )   (108 )   (10,257 )
Reallocation of non-controlling interest                       (472 )           (472 )   472      
Other comprehensive income                                 5,787     5,787     73     5,860  
Net loss                           (4,409 )       (4,409 )   (55 )   (4,464 )
Balance, June 30, 2022 2,007,170   $ 48,081   2,205,882   $ 48,717     40,133,311   $ 401   $ 604,013   $ (186,101 ) $ 15,720   $ 434,033   $ 5,302   $ 439,335  
Repurchase and extinguishment of Series A Preferred Stock (34,743 )   (832 )                     (56 )       (56 )       (56 )
Series B Preferred Stock accretion to redemption value           2,371             (2,371 )           (2,371 )       (2,371 )
Conversion of Series B Preferred Stock       (2,205,882 )   (51,088 )   1,915,511     19     36,069             36,088         36,088  
Net proceeds from common stock               802,547     8     16,804             16,812         16,812  
Stock based compensation                       518             518         518  
Restricted shares issued (forfeited)               (1,880 )                            
Dividends and distributions                       (10,356 )           (10,356 )   (108 )   (10,464 )
Reallocation of non-controlling interest                       (230 )           (230 )   230      
Other comprehensive income                                 16,282     16,282     194     16,476  
Net loss                           (4,571 )       (4,571 )   (55 )   (4,626 )
Balance, September 30, 2022 1,972,427   $ 47,249     $     42,849,489   $ 428   $ 644,447   $ (190,728 ) $ 32,002   $ 486,149   $ 5,563   $ 491,712  

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5 

 

PLYMOUTH INDUSTRIAL REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(In thousands)

 

         
   For the Nine Months Ended
September 30,
 
   2023   2022 
Operating activities          
Net income (loss)   $4,430   $(13,560)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:          
Depreciation and amortization   70,098    71,759 
Straight line rent adjustment   (1,833)   (3,045)
Intangible amortization in rental revenue, net   (1,820)   (2,632)
Loss on extinguishment of debt   72    2,176 
Amortization of debt related costs   1,708    1,597 
Appreciation (depreciation) of warrants       (1,760)
Stock based compensation   2,128    1,498 
(Earnings) loss in investment of unconsolidated joint venture       147 
Gain on sale of real estate   (12,112)    
Changes in operating assets and liabilities:          
Other assets   588    1,160 
Deferred leasing costs   (4,400)   (4,316)
Accounts payable, accrued expenses and other liabilities   4,400    5,828 
Net cash provided by operating activities   63,259    58,852 
           
Investing activities          
Acquisition of real estate properties       (197,085)
Real estate improvements   (26,542)   (39,687)
Proceeds from sale of real estate, net   18,231    222 
Net cash used in investing activities   (8,311)   (236,550)
           
Financing activities          
Proceeds from issuance of common stock, net   49,499    58,319 
Repayment of secured debt   (12,352)   (19,621)
Proceeds from issuance of unsecured debt       150,000 
Proceeds from line of credit facility   27,500    203,000 
Repayment of line of credit facility   (40,000)   (173,500)
Repurchase of Series A Preferred Stock   (43)   (1,304)
Redemption of Series A Preferred Stock   (48,824)    
Redemption of Series B Preferred Stock       (15,000)
Debt issuance costs   (27)   (1,798)
Dividends and distributions paid   (31,642)   (29,519)
Net cash (used in) provided by financing activities   (55,889)   170,577 
           
Net increase (decrease) in cash, cash held in escrow, and restricted cash   (941)   (7,121)
Cash, cash held in escrow, and restricted cash at beginning of period   31,213    43,374 
Cash, cash held in escrow, and restricted cash at end of period  $30,272   $36,253 
           
Supplemental Cash Flow Disclosures:          
Cash paid for interest  $27,450   $20,645 
Assumption of cash, cash held in escrow, and restricted cash upon consolidation of investment in joint venture  $   $2,895 
           
Supplemental Non-cash Financing and Investing Activities:          
Dividends declared included in dividends payable  $10,205   $9,427 
Distribution payable to non-controlling interest holder  $110   $108 
Series B accretion to redemption value  $   $4,621 
Real estate improvements included in accounts payable, accrued expenses and other liabilities  $3,981   $5,261 
Deferred leasing costs included in accounts payable, accrued expenses and other liabilities  $1,605   $634 
Conversion of common stock warrants  $   $3,758 
Conversion of Series B Preferred Stock  $   $84,058 
Consolidation of net book value of investment in joint venture  $   $5,686 
Assumption of other assets upon consolidation of investment in joint venture  $   $638 
Assumption of accounts payable, accrued expenses and other liabilities upon consolidation of investment in joint venture  $   $1,955 
Assumption of secured debt upon consolidation of investment in joint venture  $   $56,000 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

6 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

1. Nature of the Business and Basis of Presentation

Business

Plymouth Industrial REIT, Inc., (the “Company”, “we” or the “REIT”) is a Maryland corporation formed on March 7, 2011. The Company is structured as an umbrella partnership REIT, commonly called an UPREIT, and owns substantially all of its assets and conducts substantially all of its business through its operating partnership, Plymouth Industrial Operating Partnership, L.P., a Delaware limited partnership (the “Operating Partnership”). The Company, as general partner of the Operating Partnership, controls the Operating Partnership and consolidates the assets, liabilities, and results of operations of the Operating Partnership. As of September 30, 2023 and December 31, 2022, the Company owned a 98.9% and 98.9%, respectively, equity interest in the Operating Partnership.

The Company is a real estate investment trust focused on the acquisition, ownership and management of single and multi-tenant industrial properties, including distribution centers, warehouses, light industrial and small bay industrial properties, located in primary and secondary markets within the main industrial, distribution and logistics corridors of the United States. As of September 30, 2023, the Company, through its subsidiaries, owned 156 industrial properties comprising 211 buildings with an aggregate of approximately 34.1 million square feet, and our regional property management office building located in Columbus, Ohio totaling approximately 17,260 square feet.

2. Summary of Significant Accounting Policies

The accounting policies underlying the accompanying unaudited condensed consolidated financial statements are those set forth in the Company's audited financial statements for the years ended December 31, 2022 and 2021. Additional information regarding the Company’s significant accounting policies related to the accompanying interim financial statements is as follows:

Basis of Presentation

The Company’s interim condensed consolidated financial statements include the accounts of the Company, the Operating Partnership and their subsidiaries. The interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). All significant intercompany transactions have been eliminated in consolidation. These interim condensed consolidated financial statements include adjustments of a normal and recurring nature considered necessary by management to fairly state the Company's financial position and results of operations. These interim condensed consolidated financial statements may not be indicative of financial results for the full year. These interim condensed consolidated financial statements and notes thereto should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the years ended December 31, 2022 and 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the United States Securities and Exchange Commission on February 23, 2023.

Consolidation

We consolidate all entities that are wholly owned and those in which we own less than 100% but control, as well as any Variable Interest Entities (“VIEs”) in which we are the primary beneficiary. We evaluate our ability to control an entity and whether the entity is a VIE and we are the primary beneficiary through consideration of the substantive terms of the arrangement to identify which enterprise has the power to direct the activities of a VIE that most significantly impacts the entity’s economic performance and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Investments in entities in which we do not control but over which we have the ability to exercise significant influence over operating and financial policies are presented under the equity method. Investments in entities that we do not control and over which we do not exercise significant influence are carried at the lower of cost or fair value, as appropriate. Our ability to correctly assess our influence and/or control over an entity affects the presentation of these investments in our condensed consolidated financial statements.

7 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

Consolidated VIEs are those for which the Company is considered to be the primary beneficiary of a VIE. The primary beneficiary is the entity that has a controlling financial interest in the VIE, which is defined by the entity having both of the following characteristics: (1) the power to direct the activities that, when taken together, most significantly impact the VIE’s performance and (2) the obligation to absorb losses or the right to receive the returns from the VIE that could potentially be significant to the VIE. The Company has determined that the Operating Partnership is a VIE and the Company is the primary beneficiary. The Company's only significant asset is its investment in the Operating Partnership, therefore, substantially all of the Company’s assets and liabilities are the assets and liabilities of the Operating Partnership.

Risks and Uncertainties

The state of the overall economy can significantly impact the Company’s operational performance and thus impact its financial position. Should the Company experience a significant decline in operational performance, it may affect the Company’s ability to make distributions to its stockholders, service debt, or meet other financial obligations.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes significant estimates regarding the allocation of tangible and intangible assets and liabilities for real estate acquisitions, impairments of long-lived assets and stock-based compensation. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management adjusts such estimates when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from those estimates and assumptions.

Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains cash and restricted cash, which includes tenant security deposits and cash collateral for its borrowings discussed in Note 5, and cash held in escrow for real estate tax, insurance, tenant capital improvements and leasing commissions, in bank deposit accounts, which at times may exceed federally insured limits. As of September 30, 2023, the Company has not realized any losses in such cash accounts and believes it mitigates its risk of loss by depositing its cash and restricted cash in highly rated financial institutions or within accounts that are below the federally insured limits.

The following table presents a reconciliation of cash, cash held in escrow, and restricted cash reported within our condensed consolidated balance sheets to amounts reported within our condensed consolidated statements of cash flows:

   September 30,   December 31, 
   2023   2022 
Cash  $12,034   $11,003 
Cash held in escrow   11,143    13,376 
Restricted cash   7,095    6,834 
Cash, cash held in escrow, and restricted cash  $30,272   $31,213 

 

Debt Issuance Costs

Debt issuance costs other than those associated with the revolving line of credit facility are reflected as a reduction to the respective loan amounts in the form of a debt discount. Amortization of this expense is included in interest expense in the condensed consolidated statements of operations.

Debt issuance costs amounted to $10,842 and $10,815 at September 30, 2023 and December 31, 2022, respectively, and related accumulated amortization amounted to $7,357 and $6,175 at September 30, 2023 and December 31, 2022, respectively. At September 30, 2023 and December 31, 2022, the Company has classified net unamortized debt issuance costs of $1,636 and $2,306, respectively, related to borrowings under the line of credit to other assets in the condensed consolidated balance sheets.

8 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

Derivative Instruments and Hedging Activities

We record all derivatives on the accompanying condensed consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of its risks, even though hedge accounting does not apply, or we elect not to apply hedge accounting.

In accordance with fair value measurement guidance, we made an accounting policy election to measure the credit risk of our derivative financial instruments that are subject to master netting arrangements on a net basis by the counterparty portfolio. Credit risk is the risk of failure of the counterparty to perform under the terms of the contract. We minimize the credit risk in our derivative financial instruments by entering into transactions with various high-quality counterparties. Our exposure to credit risk at any point is generally limited to amounts recorded as assets on the accompanying condensed consolidated balance sheets.

Earnings (Loss) per Share

The Company follows the two-class method when computing net earnings (loss) per common share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net earnings (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. See Note 11 for details.

Fair Value of Financial Instruments

The Company applies various valuation approaches in determining the fair value of its financial assets and liabilities within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1 — Quoted prices for identical instruments in active markets.

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 — Significant inputs to the valuation model are unobservable.

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement. Level 3 inputs are applied in determining the fair value of our debt, interest rate swaps and performance stock units discussed in Notes 5, 6 and 10 respectively.

9 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

Financial instruments, including cash, restricted cash, cash held in escrow, accounts receivable, accounts payable, accrued expenses and other current liabilities, are considered Level 1 in fair value hierarchy. The amounts reported on the condensed consolidated balance sheets for these financial instruments approximate their fair value due to their relatively short maturities and prevailing interest rates. Derivative financial instruments are considered Level 2 in the fair value hierarchy as discussed in Note 6.

Leases

For leases in which we are the lessee, a right of use asset and lease liability is recorded on the condensed consolidated balance sheets equal to the present value of the fixed lease payments of the corresponding lease. To determine our operating right of use asset and lease liability, we estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases by utilizing a market-based approach. Since the terms under our ground leases are significantly longer than the terms of borrowings available to us on a fully collateralized basis, the estimate of this rate requires significant judgment, and considers factors such as market-based pricing on longer duration financing instruments.

Revenue Recognition

Minimum rental revenue from real estate operations is recognized on a straight-line basis. The straight-line rent calculation on leases includes the effects of rent concessions and scheduled rent increases, and the calculated straight-line rent income is recognized over the lives of the individual leases. In accordance to ASC 842, we assess the collectability of lease receivables (including future minimum rental payments) both at commencement and throughout the lease term. If our assessment of collectability changes during the lease term, any difference between the revenue that would have been received under the straight-line method and the lease payments that have been collected will be recognized as a current period adjustment to rental revenue. Rental revenue associated with leases where collectability has been deemed less than probable is recognized on a cash basis in accordance with ASC 842.

Segments

The Company has one reportable segment, industrial properties. These properties have similar economic characteristics and meet the other criteria that permit the properties to be aggregated into one reportable segment.

Stock Based Compensation

The Company grants stock-based compensation awards to our employees and directors typically in the form of restricted shares of common stock and performance stock units for certain executive officers and key employees. The Company measures stock-based compensation expense based on the fair value of the awards on the grant date and recognizes the expense ratably over the vesting period. Forfeitures of unvested shares are recognized in the period the forfeiture occurs.

10 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

3. Real Estate Properties, Net

Real estate properties, net consisted of the following at September 30, 2023 and December 31, 2022:

   September 30,   December 31, 
   2023   2022 
Land  $227,599   $231,829 
Buildings and improvements   1,196,838    1,141,832 
Site improvements   131,714    132,295 
Construction in progress   14,473    49,890 
Real estate properties at cost   1,570,624    1,555,846 
Less: accumulated depreciation   (254,402)   (205,629)
Real estate properties, net  $1,316,222   $1,350,217 

 

Depreciation expense was $16,943 and $16,565 for the three months ended September 30, 2023 and 2022, respectively, and $50,705 and $47,051 for the nine months ended September 30, 2023 and 2022, respectively.

Acquisition of Properties

There were no acquisitions of properties during the nine months ended September 30, 2023.

Sale of Real Estate

During the nine months ended September 30, 2023, the Company sold a single, 306,000 square foot property located in Chicago, IL for approximately $19,926, recognizing a net gain of $12,112.

4. Leases

As a Lessor

We lease our properties to tenants under agreements that are classified as operating leases. We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term. Many of our leases include the recovery of certain operating expenses such as common area maintenance, insurance, real estate taxes and utilities from our tenants. The recovery of such operating expenses is recognized in rental revenue in the condensed consolidated statements of operations. Some of our tenants’ leases are subject to changes in the Consumer Price Index (“CPI”).

The Company includes accounts receivable and straight-line rent receivables within other assets in the condensed consolidated balance sheets. For the three and nine months ended September 30, 2023 and 2022, rental revenue was derived from various tenants. As such, future receipts are dependent upon the financial strength of the lessees and their ability to perform under the lease agreements.

Rental revenue is comprised of the following:

                 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2023   2022   2023   2022 
Income from leases  $36,783   $34,886   $109,163   $98,832 
Straight-line rent adjustments   216    1,319    1,833    3,045 
Tenant recoveries   12,320    11,042    36,190    31,611 
Amortization of above market leases   (158)   (184)   (494)   (548)
Amortization of below market leases   575    725    2,314    3,180 
Total  $49,736   $47,788   $149,006   $136,120 

 

11 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

Tenant recoveries included within rental revenue for the three and nine months ended September 30, 2023 and 2022 are variable in nature.

As a Lessee

Operating Leases

As of September 30, 2023, we have five office space operating leases and a single ground operating sublease. The office lease agreements do not contain residual value guarantees or an option to renew. The ground sublease agreement does not contain residual value guarantees and includes multiple options to extend the sublease between nineteen and twenty years for each respective option. The operating leases have remaining lease terms ranging from 0.7 years to 32.3 years, which includes the exercise of a single twenty-year renewal option pertaining to the ground sublease. As of September 30, 2023, total operating right of use assets and lease liabilities were approximately $5,050 and $6,059, respectively. The operating lease liability as of September 30, 2023 represents a weighted-average incremental borrowing rate of 4.0% over the weighted-average remaining lease term of 8.4 years. The incremental borrowing rate is our estimated borrowing rate on a fully-collateralized basis for the term of the respective leases.

The following table summarizes the operating lease expense recognized during the three and nine months ended September 30, 2023 and 2022 included in the Company’s condensed consolidated statements of operations.

                 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2023   2022   2023   2022 
Operating lease expense included in general and administrative expense attributable to office leases  $195   $210   $577   $632 
Operating lease expense included in property expense attributable to ground sublease   9    9    27    27 
Non-cash adjustment due to straight-line rent adjustments   36    28    105    78 
Cash paid for amounts included in the measurement of lease liabilities (operating cash flows)  $240   $247   $709   $737 

 

The following table summarizes the maturity analysis of our operating leases, which is discounted by our incremental borrowing rate to calculate the lease liability as included in accounts payable, accrued expenses and other liabilities in the Company’s condensed consolidated balance sheets for the operating leases in which we are the lessee (in thousands):

         
October 1, 2023 - December 31, 2023   $ 330  
2024     1,280  
2025     894  
2026     803  
2027     818  
Thereafter     3,491  
Total minimum operating lease payments   $ 7,616  
Less imputed interest     (1,557 )
Total operating lease liability   $ 6,059  

 

12 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

Financing Leases

As of September 30, 2023, we have a single finance lease in which we are the sublessee for a ground lease. The Company includes the financing lease right of use asset within real estate properties and the corresponding liability within financing lease liability in the condensed consolidated balance sheets. The ground sublease agreement does not contain a residual value guarantee and includes multiple options to extend the sublease between nineteen and twenty years for each respective option. The lease has a remaining lease term of approximately 32.3 years, which includes the exercise of a single twenty-year renewal option. The financing lease liability as of September 30, 2023 represents a weighted-average incremental borrowing rate of 7.8% over the weighted-average remaining lease term of 32.3 years. The incremental borrowing rate is our estimated borrowing rate on a fully-collateralized basis for the term of the respective lease.

The following table summarizes the financing lease expense recognized during the three and nine months ended September 30, 2023 and 2022 included in the Company’s condensed consolidated statements of operations.

                 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2023   2022   2023   2022 
Depreciation/amortization of financing lease right-of-use assets  $7   $7   $20   $21 
Interest expense for financing lease liability   45    44    134    132 
Total financing lease cost  $52   $51   $154   $153 

 

The following table summarizes the maturity analysis of our financing lease (in thousands):

         
October 1, 2023 - December 31, 2023   $ 39  
2024     155  
2025     170  
2026     170  
2027     170  
Thereafter     6,367  
Total minimum financing lease payments   $ 7,071  
Less imputed interest     (4,806 )
Total financing lease liability   $ 2,265  

 

 

13 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

5. Indebtedness

The following table sets forth a summary of the Company’s borrowings outstanding under its respective secured debt, unsecured line of credit and unsecured debt as of September 30, 2023 and December 31, 2022.

    Outstanding Balance at          
Debt   September 30,
2023
    December 31,
2022
    Interest rate at
September 30, 2023
  Final
Maturity Date
Secured debt:                        
AIG Loan   $ 109,646     $ 111,758     4.08%   November 1, 2023
Ohio National Life Mortgage     18,572       19,045     4.14%   August 1, 2024
Allianz Loan     61,546       62,388     4.07%   April 10, 2026
Nationwide Loan     15,000       15,000     2.97%   October 1, 2027
Minnesota Life Memphis Industrial Loan(1)     55,244       56,000     3.15%   January 1, 2028
Lincoln Life Gateway Mortgage     28,800       28,800     3.43%   January 1, 2028
Midland National Life Insurance Mortgage     10,717       10,820     3.50%   March 10, 2028
Minnesota Life Loan     19,683       20,019     3.78%   May 1, 2028
Transamerica Loan     59,669       67,398     4.35%   August 1, 2028
Total secured debt   $ 378,877     $ 391,228          
Unamortized debt issuance costs, net     (1,308 )     (1,985 )        
Unamortized premium/(discount), net     145       288          
Total secured debt, net   $ 377,714     $ 389,531          
                         
Unsecured debt:                        
$100m KeyBank Term Loan(2)     100,000       100,000     3.10%(3)(4)   August 11, 2026
$200m KeyBank Term Loan(2)     200,000       200,000     3.13%(3)(4)   February 11, 2027
$150m KeyBank Term Loan(2)     150,000       150,000     4.50%(3)(4)   May 2, 2027
Total unsecured debt   $ 450,000     $ 450,000          
Unamortized debt issuance costs, net     (2,177 )     (2,655 )        
Total unsecured debt, net   $ 447,823     $ 447,345          
                         
Borrowings under line of credit:                        
KeyBank unsecured line of credit(2)     65,000       77,500     6.98%(3)   August 11, 2025
Total borrowings under line of credit   $ 65,000     $ 77,500          

_______________

(1) On March 11, 2022, a wholly-owned subsidiary of the Operating Partnership assumed a mortgage (the “Minnesota Life Memphis Industrial Loan”) with a balance of $56,000 in conjunction with our acquisition of all outstanding interests in the entity owning the portfolio in Memphis, Tennessee. The Minnesota Life Memphis Industrial Loan, held by Minnesota Life Insurance Company, matures on January 1, 2028, bears interest at 3.15% and is secured by the properties. The Minnesota Life Memphis Industrial Loan requires monthly installments of interest only through January 1, 2023, and afterwards, monthly installments of principal plus accrued interest through January 1, 2028, at which time a balloon payment is required. The Company has the right to prepay the borrowings outstanding, subject to a prepayment penalty in effect until the loan approaches maturity.
(2) On May 2, 2022, the Company entered into an amendment to the KeyBank unsecured facility. The credit facility agreement, as amended, expanded the availability on the KeyBank unsecured line of credit up to $350 million and entered into a new $150 million unsecured term loan (the “$150m KeyBank Term Loan”), with an accordion feature that allows the total borrowing capacity under the credit facility to be increased to $1 billion, subject to certain conditions. The $150m KeyBank Term Loan matures in May 2027. The maturity date for the KeyBank unsecured line of credit remains unchanged. The amendment also provided for the transition of the reference rate for the KeyBank unsecured line of credit and the $100m, $200m, and $150m KeyBank Term Loans from 1-month LIBOR to Secured Overnight Financing Rate (“SOFR”). Borrowings under the credit agreement, as amended, bear interest at either (1) the base rate (determined as the highest of (a) KeyBank’s prime rate, (b) the Federal Funds rate plus 0.50% and (c) the Adjusted Term SOFR for a one month tenor plus 1.0% or (2) SOFR, plus, in either case, a spread (A) between 35 and 90 basis points for revolver base rate loans or between 135 and 190 basis points for revolver SOFR rate loans and (B) between 30 and 85 basis points for term base rate loans or between 130 and 185 basis points for term SOFR rate loans, with the amount of the spread depending on the Company’s total leverage ratio.
(3) For the month of September 2023, the one-month term SOFR for our unsecured debt and borrowings under line of credit was 5.327%. The spread over the applicable rate for the $100m, $150m, and $200m KeyBank Term Loans and KeyBank unsecured line of credit is based on the Company’s total leverage ratio plus the 0.1% SOFR index adjustment.
(4)

As of September 30, 2023, the one-month term SOFR for the $100m, $150m and $200m KeyBank Term Loans was swapped to a fixed rate of 1.504%, 2.904%, and 1.527%, respectively.

 

14 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

Financial Covenant Considerations

The Company is in compliance with all respective financial covenants for our secured and unsecured debt and unsecured line of credit as of September 30, 2023.

Fair Value of Debt

The fair value of our debt and borrowings under line of credit was estimated using Level 3 inputs by calculating the present value of principal and interest payments, using discount rates that best reflect current market interest rates for financings with similar characteristics and credit quality, and assuming each loan is outstanding through its maturity.

The following table summarizes the aggregate principal outstanding under the Company’s indebtedness and the corresponding estimate of fair value as of September 30, 2023 and December 31, 2022:

   September 30, 2023   December 31, 2022 
Indebtedness (in thousands)  Principal Outstanding   Fair Value   Principal Outstanding   Fair Value 
Secured debt  $378,877   $358,727   $391,228   $372,682 
Unsecured debt   450,000    450,000    450,000    450,000 
Borrowings under line of credit, net   65,000    65,000    77,500    77,500 
Total   893,877   $873,727    918,728   $900,182 
Unamortized debt issuance cost, net   (3,485)        (4,640)     
Unamortized premium/(discount), net   145         288      
Total carrying value  $890,537        $914,376      

 

6. Derivative Financial Instruments

Risk Management Objective of Using Derivatives

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  During 2023 and 2022, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

15 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

The following table sets forth a summary of our interest rate swaps as of September 30, 2023 and December 31, 2022.

                Notional Value(1)   Fair Value(2) 
Interest Rate Swap
Counterparty
  Trade
Date
  Effective
Date
  Maturity
Date
  SOFR Interest
Strike Rate
   September 30,
2023
   December 31,
2022
   September 30,
2023
   December 31,
2022
 
Capital One, N.A.  July 13, 2022  July 1, 2022  February 11, 2027   1.527%(3)   $200,000   $200,000   $18,258   $17,062 
JPMorgan Chase Bank, N.A.  July 13, 2022  July 1, 2022  August 8, 2026   1.504%(3)   $100,000   $100,000   $8,258   $7,932 
JPMorgan Chase Bank, N.A.  August 19, 2022  September 1, 2022  May 2, 2027   2.904%       $75,000   $75,000   $3,809   $2,565 
Wells Fargo Bank, N.A.  August 19, 2022  September 1, 2022  May 2, 2027   2.904%       $37,500   $37,500   $1,901   $1,283 
Capital One, N.A.  August 19, 2022  September 1, 2022  May 2, 2027   2.904%       $37,500   $37,500   $1,889   $1,273 

_______________

(1) Represents the notional value of interest rate swaps effective as of September 30, 2023.
(2) As of September 30, 2023, all our interest rate swaps were in an asset position.
(3) On July 13, 2022, the Company entered into amendments to the $200,000 and $100,000 notional interest rate swap agreements with Capital One, N.A. and JPMorgan Chase Bank, N.A., respectively. The amendments transitioned the previous USD-LIBOR floating rates to USD-SOFR CME Term floating rates and were effective as of July 1, 2022.

 

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income (“AOCI”) and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $18,286 will be reclassified as a decrease to interest expense.

The following table sets forth the impact of our interest rate swaps on our condensed consolidated financial statements for the three and nine months ended September 30, 2023 and 2022.

                 
   For the Three Months
Ended September 30,
   For the Nine Months
Ended September 30,
 
Interest Rate Swaps in Cash Flow Hedging Relationships:  2023   2022   2023   2022 
Amount of unrealized gain recognized in AOCI on derivatives   $2,935   $16,476   $4,000   $32,404 
Total interest expense presented in the condensed consolidated statements of operations in which the effects of cash flow hedges are recorded  $3,764   $423   $10,030   $1,762 

 

Fair Value of Interest Rate Swaps

The Company’s valuation of the interest rate swaps is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs including interest rate curves.

The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

16 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

The following tables summarize the Company’s interest rate swaps that are accounted for at fair value on a recurring basis as of September 30, 2023 and December 31, 2022.

       Fair Value Measurements as of September 30, 2023 
Balance Sheet Line Item  Fair Value as of
September 30, 2023
   Level 1   Level 2   Level 3 
Interest rate swaps - Asset  $34,115   $   $34,115   $ 
                     

 

       Fair Value Measurements as of December 31, 2022 
Balance Sheet Line Item  Fair Value as of
December 31, 2022
   Level 1   Level 2   Level 3 
Interest rate swaps - Asset  $30,115   $   $30,115   $ 
                     

 

Non-designated Hedges

The Company does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges. Changes in the fair value of derivatives not designated in hedging relationships would be recorded directly in earnings.

Credit-risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. Specifically, the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company's default on the indebtedness.

As of September 30, 2023, the Company does not have any derivatives in a net liability position. As of September 30, 2023, the Company has not posted any collateral related to these agreements. If the Company had breached any of these provisions at September 30, 2023, it could have been required to settle its obligations under the agreements at their termination value.

7. Common Stock

ATM Program

On February 28, 2023, the Company entered into a distribution agreement with certain sales agents pursuant to which the Company may issue and sell, from time to time, shares of its common stock, with aggregate gross proceeds of $200,000 through an “at-the-market” equity offering program (the “2023 $200 Million ATM Program”). The 2023 $200 Million ATM Program replaced the previous $200 million ATM program, which was entered on November 9, 2021 (“2021 $200 Million ATM Program”).

For the nine months ended September 30, 2023, the Company issued 2,200,600 shares of its common stock under the 2023 $200 Million ATM Program for aggregate net proceeds of approximately $49,518. The Company has approximately $149,292 available for issuance under the 2023 $200 Million ATM Program. No shares were issued under the 2021 $200 Million ATM Program for the nine months ended September 30, 2023.

17 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

Common Stock Dividends

The following table sets forth the common stock dividends that were declared during the nine months ended September 30, 2023 and the year ended December 31, 2022.

   Cash Dividends
Declared
per Share
   Aggregate
Amount
 
2023          
First quarter  $0.2250   $9,682 
Second quarter  $0.2250   $9,709 
Third quarter  $0.2250   $10,193 
Total  $0.6750   $29,584 
           
2022          
First quarter  $0.2200   $8,137 
Second quarter  $0.2200   $8,829 
Third quarter  $0.2200   $9,426 
Fourth quarter  $0.2200   $9,426 
Total  $0.8800   $35,818 

 

8. Preferred Stock

Series A Preferred Stock

On September 6, 2023 (“Redemption Date”), the Series A Preferred Stock was redeemed in cash at a redemption price equal to $25.00 per share, and a dividend in the amount of $0.34647 per share of Series A Preferred Stock was paid in cash to holders of record at the close of business on August 25, 2023. As of the Redemption Date and through September 30, 2023, the shares of Series A Preferred Stock were no longer outstanding.

The following table sets forth the Series A Preferred Stock dividends that were declared during the nine months ended September 30, 2023 and the year ended December 31, 2022.

   Cash Dividends
Declared
per Share
   Aggregate
Amount
 
2023          
First quarter  $0.468750   $916 
Second quarter  $0.468750   $916 
Third quarter  $0.346470   $677 
Total  $1.283970   $2,509 
           
2022          
First quarter  $0.468750   $949 
Second quarter  $0.468750   $945 
Third quarter  $0.468750   $930 
Fourth quarter  $0.468750   $917 
Total  $1.875000   $3,741 

 

18 

 

Plymouth Industrial REIT, Inc.
Notes to Condensed Consolidated Financial Statements
Unaudited

(all dollar amounts in thousands, except share and per share data)

9. Non-Controlling Interests

Operating Partnership Units

In connection with prior acquisitions of real estate property, the Company, through its Operating Partnership, had issued Operating Partnership Units (“OP Units”) to the former owners as part of the acquisition price. The holders of the OP Units are entitled to receive distributions concurrent with the dividends paid on our common stock. The holders of the OP Units can also convert their respective OP Units for the Company’s common stock on a 1-to-1 basis. Upon conversion, the Company adjusts the carrying value of non-controlling interest to reflect its modified share of the book value of the Operating Partnership. Such adjustments are recorded to additional paid-in capital as a reallocation of non-controlling interest on the accompanying condensed consolidated statements of changes in preferred stock and equity.

OP Units outstanding as of September 30, 2023 and December 31, 2022 was 490,299.

The following table sets forth the OP Unit distributions that were declared during the nine months ended September 30, 2023 and the year ended December 31, 2022.

         
   Cash Distributions
Declared per
OP Unit
   Aggregate
Amount
 
2023          
First quarter   $0.2250   $110 
Second quarter  $0.2250   $110 
Third quarter  $0.2250   $110 
Total  $0.6750   $330