Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

Document
0001476150FALSE2019Q3--12-31P10Y00014761502019-01-012019-09-30xbrli:shares00014761502019-10-28iso4217:USD00014761502019-09-3000014761502018-12-31iso4217:USDxbrli:shares00014761502019-07-012019-09-3000014761502018-07-012018-09-3000014761502018-01-012018-09-300001476150us-gaap:CommonStockMember2018-12-310001476150us-gaap:AdditionalPaidInCapitalMember2018-12-310001476150us-gaap:RetainedEarningsMember2018-12-310001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001476150us-gaap:RetainedEarningsMember2019-01-012019-03-3100014761502019-01-012019-03-310001476150us-gaap:CommonStockMember2019-01-012019-03-310001476150us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-03-310001476150us-gaap:CommonStockMember2019-03-310001476150us-gaap:AdditionalPaidInCapitalMember2019-03-310001476150us-gaap:RetainedEarningsMember2019-03-310001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-3100014761502019-03-310001476150us-gaap:RetainedEarningsMember2019-04-012019-06-3000014761502019-04-012019-06-300001476150us-gaap:CommonStockMember2019-04-012019-06-300001476150us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300001476150us-gaap:CommonStockMember2019-06-300001476150us-gaap:AdditionalPaidInCapitalMember2019-06-300001476150us-gaap:RetainedEarningsMember2019-06-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-3000014761502019-06-300001476150us-gaap:RetainedEarningsMember2019-07-012019-09-300001476150us-gaap:CommonStockMember2019-07-012019-09-300001476150us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001476150us-gaap:CommonStockMember2019-09-300001476150us-gaap:AdditionalPaidInCapitalMember2019-09-300001476150us-gaap:RetainedEarningsMember2019-09-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001476150us-gaap:CommonStockMember2017-12-310001476150us-gaap:AdditionalPaidInCapitalMember2017-12-310001476150us-gaap:RetainedEarningsMember2017-12-310001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-3100014761502017-12-310001476150us-gaap:RetainedEarningsMember2018-01-012018-03-3100014761502018-01-012018-03-310001476150us-gaap:CommonStockMember2018-01-012018-03-310001476150us-gaap:AdditionalPaidInCapitalMember2018-01-012018-03-310001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-03-310001476150us-gaap:CommonStockMember2018-03-310001476150us-gaap:AdditionalPaidInCapitalMember2018-03-310001476150us-gaap:RetainedEarningsMember2018-03-310001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-03-3100014761502018-03-310001476150us-gaap:RetainedEarningsMember2018-04-012018-06-3000014761502018-04-012018-06-300001476150us-gaap:CommonStockMember2018-04-012018-06-300001476150us-gaap:AdditionalPaidInCapitalMember2018-04-012018-06-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-04-012018-06-300001476150us-gaap:CommonStockMember2018-06-300001476150us-gaap:AdditionalPaidInCapitalMember2018-06-300001476150us-gaap:RetainedEarningsMember2018-06-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-06-3000014761502018-06-300001476150us-gaap:RetainedEarningsMember2018-07-012018-09-300001476150us-gaap:CommonStockMember2018-07-012018-09-300001476150us-gaap:AdditionalPaidInCapitalMember2018-07-012018-09-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-07-012018-09-300001476150us-gaap:CommonStockMember2018-09-300001476150us-gaap:AdditionalPaidInCapitalMember2018-09-300001476150us-gaap:RetainedEarningsMember2018-09-300001476150us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-09-3000014761502018-09-30trno:segmenttrno:property0001476150trno:BuildingsMember2019-09-300001476150trno:RedevelopmentPropertyHeldForSaleMember2019-09-30utr:sqft0001476150us-gaap:LandAndLandImprovementsMember2019-09-30utr:acre0001476150trno:RedevelopmentPropertyMember2019-09-300001476150us-gaap:RealEstateInvestmentMember2019-01-012019-09-300001476150us-gaap:RealEstateInvestmentMember2018-01-012018-09-300001476150us-gaap:RealEstateInvestmentMember2018-07-012018-09-300001476150us-gaap:RealEstateInvestmentMember2019-07-012019-09-300001476150us-gaap:LoansReceivableMember2018-01-012018-09-300001476150us-gaap:LoansReceivableMember2018-07-012018-09-300001476150us-gaap:LoansReceivableMember2019-07-012019-09-300001476150us-gaap:LoansReceivableMember2019-01-012019-09-300001476150us-gaap:LeasesAcquiredInPlaceMember2019-09-300001476150us-gaap:LeasesAcquiredInPlaceMember2018-12-310001476150us-gaap:AboveMarketLeasesMember2019-09-300001476150us-gaap:AboveMarketLeasesMember2018-12-310001476150us-gaap:BuildingMember2019-01-012019-09-300001476150us-gaap:BuildingImprovementsMembersrt:MinimumMember2019-01-012019-09-300001476150srt:MaximumMemberus-gaap:BuildingImprovementsMember2019-01-012019-09-3000014761502019-01-01xbrli:pure0001476150srt:OfficeBuildingMembertrno:NorthernNewJerseyAndNewYorkMember2019-09-300001476150trno:NorthernNewJerseyAndNewYorkMembertrno:LandParcelsMember2019-09-300001476150trno:NorthernNewJerseyAndNewYorkMember2019-09-300001476150srt:OfficeBuildingMembertrno:LosAngelesMember2019-09-300001476150trno:LosAngelesMembertrno:LandParcelsMember2019-09-300001476150trno:LosAngelesMember2019-09-300001476150srt:IndustrialPropertyMembertrno:AssetAcquisitions2019Member2019-07-012019-09-300001476150trno:AssetAcquisitions2019Memberus-gaap:LandAndLandImprovementsMember2019-07-012019-09-300001476150trno:AssetAcquisitions2019Member2019-07-012019-09-300001476150trno:AssetAcquisitions2019Memberus-gaap:LandMember2019-07-012019-09-300001476150trno:AssetAcquisitions2019Memberus-gaap:BuildingMember2019-07-012019-09-300001476150srt:IndustrialPropertyMembertrno:AssetAcquisitions2019Member2019-01-012019-09-300001476150trno:AssetAcquisitions2019Memberus-gaap:LandAndLandImprovementsMember2019-01-012019-09-300001476150trno:AssetAcquisitions2019Member2019-01-012019-09-300001476150trno:AssetAcquisitions2019Memberus-gaap:LandMember2019-01-012019-09-300001476150trno:AssetAcquisitions2019Memberus-gaap:BuildingMember2019-01-012019-09-300001476150srt:IndustrialPropertyMembertrno:AssetAcquisitions2018Member2018-07-012018-09-300001476150trno:AssetAcquisitions2018Memberus-gaap:LandAndLandImprovementsMember2018-07-012018-09-300001476150trno:AssetAcquisitions2018Member2018-07-012018-09-300001476150trno:AssetAcquisitions2018Memberus-gaap:LandMember2018-07-012018-09-300001476150trno:AssetAcquisitions2018Memberus-gaap:BuildingMember2018-07-012018-09-300001476150srt:IndustrialPropertyMembertrno:AssetAcquisitions2018Member2018-01-012018-09-300001476150trno:RedevelopmentPropertyMembertrno:AssetAcquisitions2018Member2018-01-012018-09-300001476150trno:AssetAcquisitions2018Memberus-gaap:LandAndLandImprovementsMember2018-01-012018-09-300001476150trno:AssetAcquisitions2018Member2018-01-012018-09-300001476150trno:AssetAcquisitions2018Memberus-gaap:LandMember2018-01-012018-09-300001476150trno:AssetAcquisitions2018Memberus-gaap:BuildingMember2018-01-012018-09-300001476150trno:RedevelopmentPropertyMember2019-01-012019-09-300001476150trno:RedevelopmentPropertyMembertrno:MiamiFlorida1775NW70thAvenueMembertrno:MiamiMember2019-03-310001476150trno:RedevelopmentPropertyMembertrno:MiamiFlorida1775NW70thAvenueMembertrno:MiamiMember2019-01-012019-03-310001476150trno:MiamiMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2019-01-012019-09-300001476150srt:IndustrialPropertyMemberus-gaap:DiscontinuedOperationsHeldforsaleMembertrno:ThirdPartyPurchaserMembertrno:WashingtonD.c.Member2019-09-300001476150srt:IndustrialPropertyMemberus-gaap:DiscontinuedOperationsHeldforsaleMembertrno:ThirdPartyPurchaserMembertrno:WashingtonD.c.Member2019-01-012019-09-300001476150us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2019-07-012019-09-300001476150us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2018-07-012018-09-300001476150us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2019-01-012019-09-300001476150us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMember2018-01-012018-09-300001476150trno:LosAngelesMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2019-09-300001476150trno:LosAngelesMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2019-01-012019-09-300001476150trno:MiamiMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2019-09-300001476150trno:WashingtonD.c.Memberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2018-09-300001476150trno:WashingtonD.c.Memberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2018-01-012018-09-300001476150trno:MiamiMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2018-09-300001476150trno:MiamiMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMember2018-01-012018-09-300001476150us-gaap:LoansReceivableMember2019-09-300001476150us-gaap:LandAndLandImprovementsMemberus-gaap:LoansReceivableMemberus-gaap:RealEstateMember2019-09-300001476150trno:RealEstateOneMemberus-gaap:LandAndLandImprovementsMemberus-gaap:LoansReceivableMember2019-09-300001476150us-gaap:LandAndLandImprovementsMemberus-gaap:LoansReceivableMembertrno:AcquisitionofPropertySecuringSeniorSecuredLoanMember2019-09-300001476150us-gaap:LoansReceivableMembertrno:AcquisitionofPropertySecuringSeniorSecuredLoanMember2019-09-300001476150us-gaap:LoansReceivableMembertrno:AcquisitionofPropertySecuringSeniorSecuredLoanMember2019-01-012019-09-300001476150us-gaap:LoansReceivableMember2018-12-310001476150us-gaap:SeniorNotesMembertrno:PurchaseAgreementSeniorUnsecuredNotesMember2019-09-120001476150us-gaap:SeniorNotesMembertrno:PurchaseAgreementSeniorUnsecuredNotesMember2019-09-122019-09-120001476150us-gaap:SeniorNotesMembertrno:September2022SeniorUnsecuredNotesMember2019-09-300001476150us-gaap:SeniorNotesMembertrno:July2024SeniorUnsecuredNotesMember2019-09-300001476150us-gaap:SeniorNotesMembertrno:July2026SeniorUnsecuredNotesMember2019-09-300001476150us-gaap:SeniorNotesMembertrno:October2027SeniorUnsecuredNotesMember2019-09-300001476150us-gaap:SeniorNotesMembertrno:October2022UnsecuredRevolvingCreditFacilityMember2019-09-300001476150trno:August2021TermLoanMemberus-gaap:RevolvingCreditFacilityMember2019-09-300001476150us-gaap:RevolvingCreditFacilityMembertrno:January2022TermLoanMember2019-09-300001476150us-gaap:RevolvingCreditFacilityMember2019-09-300001476150us-gaap:RevolvingCreditFacilityMember2018-12-310001476150trno:TermLoanMember2018-12-310001476150trno:TermLoanMember2019-09-30trno:derivative0001476150us-gaap:CashFlowHedgingMemberus-gaap:InterestRateCapMember2019-09-300001476150us-gaap:CashFlowHedgingMemberus-gaap:InterestRateCapMember2018-12-310001476150us-gaap:RevolvingCreditFacilityMember2019-01-012019-09-300001476150us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMember2019-01-012019-09-300001476150us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-09-300001476150us-gaap:LineOfCreditMembertrno:RevolvingCreditFacilityFifthAmendedandRestatedSeniorCreditAgreementMembersrt:MinimumMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-09-300001476150srt:MaximumMemberus-gaap:LineOfCreditMembertrno:RevolvingCreditFacilityFifthAmendedandRestatedSeniorCreditAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-09-300001476150trno:RevolvingCreditFacilityFifthAmendedandRestatedSeniorCreditAgreementMembersrt:MinimumMembertrno:TermLoanMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-09-300001476150srt:MaximumMembertrno:RevolvingCreditFacilityFifthAmendedandRestatedSeniorCreditAgreementMembertrno:TermLoanMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-09-300001476150srt:MinimumMembertrno:TermLoanMembertrno:RevolvingCreditFacilityPreviousAgreementMemberus-gaap:LondonInterbankOfferedRateLIBORMember2019-01-012019-09-300001476150us-gaap:LineOfCreditMembertrno:RevolvingCreditFacilityFifthAmendedandRestatedSeniorCreditAgreementMembersrt:MinimumMember2019-01-012019-09-300001476150srt:MaximumMemberus-gaap:LineOfCreditMembertrno:RevolvingCreditFacilityFifthAmendedandRestatedSeniorCreditAgreementMember2019-01-012019-09-30trno:loan0001476150trno:MortgageLoansPayableMember2019-09-300001476150trno:MortgageLoansPayableMember2018-12-310001476150trno:CreditFacilityMember2019-09-300001476150us-gaap:SeniorNotesMember2019-09-300001476150us-gaap:InterestRateCapMember2019-09-300001476150us-gaap:InterestRateCapMembersrt:MinimumMember2019-09-300001476150srt:MaximumMemberus-gaap:InterestRateCapMember2019-09-300001476150trno:InterestRateCap1Member2014-12-010001476150trno:InterestRateCap3Member2015-09-010001476150trno:InterestRateCap2Member2019-04-010001476150trno:InterestRateCap1Member2019-09-300001476150trno:InterestRateCap1Member2018-12-310001476150trno:InterestRateCap2Member2019-09-300001476150trno:InterestRateCap2Member2018-12-310001476150trno:InterestRateCap3Member2019-09-300001476150trno:InterestRateCap3Member2018-12-310001476150us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateCapMember2019-09-300001476150us-gaap:InterestRateCapMemberus-gaap:FairValueInputsLevel2Member2019-09-300001476150us-gaap:InterestRateCapMemberus-gaap:FairValueInputsLevel3Member2019-09-300001476150us-gaap:InterestRateCapMember2018-12-310001476150us-gaap:FairValueInputsLevel1Memberus-gaap:InterestRateCapMember2018-12-310001476150us-gaap:InterestRateCapMemberus-gaap:FairValueInputsLevel2Member2018-12-310001476150us-gaap:InterestRateCapMemberus-gaap:FairValueInputsLevel3Member2018-12-310001476150us-gaap:FairValueInputsLevel1Member2019-09-300001476150us-gaap:FairValueInputsLevel2Member2019-09-300001476150us-gaap:FairValueInputsLevel3Member2019-09-300001476150us-gaap:FairValueInputsLevel1Member2018-12-310001476150us-gaap:FairValueInputsLevel2Member2018-12-310001476150us-gaap:FairValueInputsLevel3Member2018-12-310001476150trno:AtMarketEquityOfferingProgram300MillionMember2019-01-012019-09-300001476150trno:AtMarketEquityOfferingProgram250MillionMember2018-01-012018-09-300001476150trno:AtMarketEquityOfferingProgram200MillionMember2018-01-012018-09-300001476150trno:AtMarketEquityOfferingProgram300MillionMember2019-07-012019-09-300001476150trno:AtMarketEquityOfferingProgram250MillionMember2019-01-012019-09-300001476150trno:AtMarketEquityOfferingProgram300MillionMember2019-09-300001476150trno:AtMarketEquityOfferingProgram250MillionMember2019-09-300001476150trno:AtMarketEquityOfferingProgram300Millionand250MillionMember2019-07-012019-09-300001476150trno:AtMarketEquityOfferingProgram300Millionand250MillionMember2019-01-012019-09-300001476150trno:AtMarketEquityOfferingProgram250MillionMember2018-07-012018-09-300001476150trno:AtMarketEquityOfferingProgram250MillionMember2018-09-300001476150trno:AtMarketEquityOfferingProgram200MillionMember2018-09-300001476150trno:AtMarketEquityOfferingProgram250Millionand200MillionMember2018-07-012018-09-300001476150trno:AtMarketEquityOfferingProgram250Millionand200MillionMember2018-01-012018-09-300001476150trno:A2019PlanMember2019-04-300001476150trno:AmendedAndRestated2010EquityIncentivePlanMember2019-04-3000014761502019-04-3000014761502019-04-302019-04-300001476150trno:A2019PlanMember2019-09-300001476150us-gaap:RestrictedStockMembersrt:MinimumMember2019-01-012019-09-300001476150srt:MaximumMemberus-gaap:RestrictedStockMember2019-01-012019-09-300001476150us-gaap:RestrictedStockMember2019-01-012019-09-300001476150us-gaap:RestrictedStockMember2019-09-300001476150us-gaap:RestrictedStockMember2019-07-012019-09-300001476150us-gaap:RestrictedStockMember2018-07-012018-09-300001476150us-gaap:RestrictedStockMember2018-01-012018-09-300001476150us-gaap:RestrictedStockMember2018-12-310001476150trno:WithinOneYearMember2019-09-300001476150trno:YearTwoMember2019-09-300001476150trno:YearThreeMember2019-09-300001476150trno:YearFourMember2019-09-300001476150trno:YearFiveMember2019-09-300001476150trno:ThereafterMember2019-09-300001476150trno:LongTermIncentivePlanMember2019-01-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod1Member2019-01-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod1Member2019-07-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod1Member2018-07-012018-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod1Member2018-01-012018-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod2Member2019-01-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod2Member2019-07-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod2Member2018-07-012018-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod2Member2018-01-012018-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod3Member2019-01-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod3Member2019-07-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod3Member2018-07-012018-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod3Member2018-01-012018-09-300001476150us-gaap:PerformanceSharesMember2019-01-012019-09-300001476150us-gaap:PerformanceSharesMember2019-07-012019-09-300001476150us-gaap:PerformanceSharesMember2018-07-012018-09-300001476150us-gaap:PerformanceSharesMember2018-01-012018-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod4Member2019-01-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod4Member2019-07-012019-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod4Member2018-07-012018-09-300001476150us-gaap:PerformanceSharesMembertrno:PerformanceSharesPeriod4Member2018-01-012018-09-300001476150us-gaap:CommonStockMember2019-02-052019-02-050001476150us-gaap:CommonStockMember2019-04-302019-04-300001476150us-gaap:CommonStockMember2019-07-262019-07-26trno:contract0001476150us-gaap:SubsequentEventMembertrno:ThirdPartySellerMember2019-10-300001476150srt:IndustrialPropertyMemberus-gaap:SubsequentEventMembertrno:ThirdPartySellerMember2019-10-300001476150us-gaap:LandAndLandImprovementsMemberus-gaap:SubsequentEventMembertrno:ThirdPartySellerMember2019-10-300001476150trno:LosAngelesMembertrno:ThirdPartySellerMember2019-09-300001476150trno:LosAngelesMembertrno:ThirdPartySellerMember2019-01-012019-09-300001476150trno:ThirdPartySellerMembertrno:NorthernNewJerseyAndNewYorkMember2019-09-300001476150trno:ThirdPartySellerMembertrno:NorthernNewJerseyAndNewYorkMember2019-01-012019-09-300001476150trno:SanFranciscoBayAreaMembertrno:ThirdPartySellerMember2019-09-300001476150trno:SanFranciscoBayAreaMembertrno:ThirdPartySellerMember2019-01-012019-09-300001476150trno:ThirdPartySellerMembertrno:SeattleMember2019-09-300001476150trno:ThirdPartySellerMembertrno:SeattleMember2019-01-012019-09-300001476150trno:MiamiMembertrno:ThirdPartySellerMember2019-09-300001476150trno:MiamiMembertrno:ThirdPartySellerMember2019-01-012019-09-300001476150trno:WashingtonD.c.Membertrno:ThirdPartySellerMember2019-09-300001476150trno:WashingtonD.c.Membertrno:ThirdPartySellerMember2019-01-012019-09-300001476150trno:ThirdPartySellerMember2019-09-300001476150trno:ThirdPartySellerMember2019-01-012019-09-300001476150trno:ThirdPartyPurchaserMemberus-gaap:SubsequentEventMember2019-10-300001476150srt:IndustrialPropertyMembertrno:ThirdPartyPurchaserMemberus-gaap:SubsequentEventMember2019-10-300001476150srt:IndustrialPropertyMembertrno:ThirdPartyPurchaserMemberus-gaap:SubsequentEventMember2019-10-302019-10-300001476150us-gaap:SubsequentEventMember2019-10-292019-10-29
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
Form 10-Q
_________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
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 001-34603
_________________________
Terreno Realty Corporation
(Exact Name of Registrant as Specified in Its Charter)
_________________________
Maryland 27-1262675
(State or Other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
101 Montgomery Street, Suite 200
San Francisco, CA
 94104
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (415655-4580
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareTRNONew 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 (§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 Rule 12b-2 of the Exchange Act).    Yes      No   
The registrant had 67,010,912 shares of its common stock, $0.01 par value per share, outstanding as of October 28, 2019.



Table of Contents
Terreno Realty Corporation
Table of Contents

1

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements of Terreno Realty Corporation
Terreno Realty Corporation
Consolidated Balance Sheets
(in thousands – except share and per share data)
September 30, 2019December 31, 2018
 (Unaudited) 
ASSETS
Investments in real estate
Land$1,046,485  $833,995  
Buildings and improvements896,826  837,816  
Construction in progress96,917  94,695  
Intangible assets89,926  79,270  
Total investments in properties2,130,154  1,845,776  
Accumulated depreciation and amortization(199,838) (169,772) 
Net investments in properties1,930,316  1,676,004  
Properties held for sale, net6,005    
Net investments in real estate1,936,321  1,676,004  
Cash and cash equivalents54,553  31,004  
Restricted cash2,862  3,475  
Senior secured loan, net15,816  54,492  
Other assets, net35,699  31,529  
Total assets$2,045,251  $1,796,504  
LIABILITIES AND EQUITY
Liabilities
Credit facility$  $19,000  
Term loans payable, net149,312  149,067  
Senior unsecured notes, net248,488  248,263  
Mortgage loans payable, net44,686  45,767  
Security deposits13,501  11,933  
Intangible liabilities, net29,664  23,093  
Dividends payable18,093  14,643  
Performance share awards payable10,189  12,048  
Accounts payable and other liabilities25,432  24,893  
Total liabilities539,365  548,707  
Commitments and contingencies (Note 13)
Equity
Stockholders’ equity
Common stock: $0.01 par value, 400,000,000 shares authorized, and 67,012,010 and 61,013,711 shares issued and outstanding, respectively
670  610  
Additional paid-in capital
1,499,779  1,233,763  
Retained earnings5,958  14,185  
Accumulated other comprehensive loss(521) (761) 
Total stockholders’ equity1,505,886  1,247,797  
Total liabilities and equity$2,045,251  $1,796,504  
The accompanying condensed notes are an integral part of these consolidated financial statements.
2

Table of Contents
Terreno Realty Corporation
Consolidated Statements of Operations
(in thousands – except share and per share data)
(Unaudited)
For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2019201820192018
REVENUES
Rental revenues and tenant expense reimbursements$43,397  $37,899  $126,007  $112,244  
Total revenues43,397  37,899  126,007  112,244  
COSTS AND EXPENSES
Property operating expenses10,991  9,486  32,393  29,692  
Depreciation and amortization11,105  10,057  32,168  30,566  
General and administrative5,132  5,047  17,852  15,132  
Acquisition costs47  122  48  129  
Total costs and expenses27,275  24,712  82,461  75,519  
OTHER INCOME (EXPENSE)
Interest and other income832  1,341  3,171  2,323  
Interest expense, including amortization(3,952) (4,406) (12,269) (13,717) 
Gain on sales of real estate investments1,782    6,247  14,986  
Total other income (expense)(1,338) (3,065) (2,851) 3,592  
Net income14,784  10,122  40,695  40,317  
Allocation to participating securities(95) (66) (257) (256) 
Net income available to common stockholders$14,689  $10,056  $40,438  $40,061  
EARNINGS PER COMMON SHARE - BASIC AND DILUTED:
Net income available to common stockholders - basic$0.22  $0.17  $0.64  $0.71  
Net income available to common stockholders - diluted$0.22  $0.17  $0.63  $0.71  
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING65,724,426  58,369,252  63,667,100  56,743,805  
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING66,018,996  58,369,252  63,961,670  56,743,805  
The accompanying condensed notes are an integral part of these consolidated financial statements.
3

Table of Contents
Terreno Realty Corporation
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(Unaudited)
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2019201820192018
Net income$14,784  $10,122  $40,695  $40,317  
Other comprehensive income (loss):
Cash flow hedge adjustment85  70  240  232  
Comprehensive income$14,869  $10,192  $40,935  $40,549  
The accompanying condensed notes are an integral part of these consolidated financial statements.
4

Table of Contents
Terreno Realty Corporation
Consolidated Statements of Equity
(in thousands – except share data)
(Unaudited)
Nine months ended September 30, 2019:
 Common StockAdditional
Paid-
in Capital
 Accumulated
Other Comprehensive
Loss
 
Number of
Shares
AmountRetained
Earnings
Total
Balance as of December 31, 201861,013,711  $610  $1,233,763  $14,185  $(761) $1,247,797  
Net income—  —  —  15,532  —  15,532  
Issuance of common stock, net of issuance costs of $1,427
2,184,888  22  87,902  —  —  87,924  
Repurchase of common stock related to employee awards(99,999) —  (3,959) —  —  (3,959) 
Issuance of restricted stock30,294  —  —  —  —    
Stock-based compensation—  —  928  —  —  928  
Common stock dividends ($0.24 per share)
—  —  —  (15,109) —  (15,109) 
Other comprehensive income—  —  —  —  63  63  
Balance as of March 31, 201963,128,894  $632  $1,318,634  $14,608  $(698) $1,333,176  
Net income—  —  —  10,379  —  10,379  
Issuance of common stock, net of issuance costs of $1,718
2,386,470  24  106,958  —  —  106,982  
Cancellation of common stock related to employee awards(19,651) —  —  —  —    
Stock-based compensation—  —  1,268  —  —  1,268  
Common stock dividends ($0.24 per share)
—  —  —  (15,719) —  (15,719) 
Other comprehensive income—  —  —  —  92  92  
Balance as of June 30, 201965,495,713  $656  $1,426,860  $9,268  $(606) $1,436,178  
Net income—  —  —  14,784  —  14,784  
Issuance of common stock, net of issuance costs of $1,194
1,458,630  14  72,138  —  —  72,152  
Cancellation of common stock related to employee awards(23,138) —  —  —  —    
Issuance of restricted stock80,805  —  —  —  —    
Stock-based compensation—  —  781  —  —  781  
Common stock dividends ($0.27 per share)
—  —  —  (18,094) —  (18,094) 
Other comprehensive income—  —  —  —  85  85  
Balance as of September 30, 201967,012,010  $670  $1,499,779  $5,958  $(521) $1,505,886  

5

Table of Contents
Nine months ended September 30, 2018:
 Common StockAdditional
Paid-
in Capital
 Accumulated
Other Comprehensive
Loss
 
Number of
Shares
AmountRetained
Earnings
Total
Balance as of December 31, 201755,368,737  $553  $1,023,184  $4,803  $(1,046) $1,027,494  
Net income—  —  —  10,057  —  10,057  
Issuance of common stock, net of issuance costs of $132
255,197  3  8,701  —  —  8,704  
Repurchase of common stock related to employee awards(107,267) —  (3,870) —  —  (3,870) 
Issuance of restricted stock27,003  —  —  —  —    
Stock-based compensation—  —  463  —  —  463  
Common stock dividends ($0.22 per share)
—  —  —  (12,220) —  (12,220) 
Other comprehensive income—  —  —  —  84  84  
Balance as of March 31, 201855,543,670  $556  $1,028,478  $2,640  $(962) $1,030,712  
Net income—  —  —  20,137  —  20,137  
Issuance of common stock, net of issuance costs of $1,717
2,835,823  28  104,170  —  —  104,198  
Stock-based compensation—  —  820  —  —  820  
Common stock dividends $0.22 per share)
—  —  —  (12,843) —  (12,843) 
Other comprehensive income—  —  —  —  78  78  
Balance as of June 30, 201858,379,493  $584  $1,133,468  $9,934  $(884) $1,143,102  
Net income—  —  —  10,122  —  10,122  
Issuance of common stock, net of issuance costs of $446
729,667  8  27,435  —  —  27,443  
Issuance of restricted stock26,912  —  —  —  —    
Stock-based compensation—  —  492  —  —  492  
Common stock dividends ($0.24 per share)
—  —  —  (14,200) —  (14,200) 
Other comprehensive income—  —  —  —  70  70  
Balance as of September 30, 201859,136,072  $592  $1,161,395  $5,856  $(814) $1,167,029  

The accompanying condensed notes are an integral part of these consolidated financial statements.
6

Table of Contents
Terreno Realty Corporation
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 For the Nine Months Ended September 30,
 20192018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$40,695  $40,317  
Adjustments to reconcile net income to net cash provided by operating activities
Straight-line rents(2,299) (2,937) 
Amortization of lease intangibles(3,155) (2,678) 
Depreciation and amortization32,168  30,566  
Gain on sales of real estate investments(6,247) (14,986) 
Deferred financing cost amortization1,171  1,081  
Deferred senior secured loan fee amortization(489) (245) 
Stock-based compensation8,152  6,022  
Changes in assets and liabilities
Other assets(3,108) (2,359) 
Accounts payable and other liabilities1,603  2,225  
Net cash provided by operating activities68,491  57,006  
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property acquisitions(216,780) (169,143) 
Proceeds from sales of real estate investments, net25,305  42,991  
Additions to construction in progress(22,950) (5,006) 
Additions to buildings, improvements and leasing costs(22,237) (19,685) 
Cash paid for senior secured loan  (55,000) 
Origination and other fees received on senior secured loan  900  
Net cash used in investing activities(236,662) (204,943) 
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock264,493  135,879  
Issuance costs on issuance of common stock(3,825) (1,971) 
Repurchase of common stock(3,959) (3,870) 
Borrowings on credit facility17,000  141,850  
Payments on credit facility(36,000) (120,000) 
Payments on mortgage loans payable(1,130) (1,425) 
Payment of deferred financing costs  (14) 
Dividends paid to common stockholders(45,472) (37,259) 
Net cash provided by financing activities191,107  113,190  
Net increase (decrease) in cash and cash equivalents and restricted cash22,936  (34,747) 
Cash and cash equivalents and restricted cash at beginning of period34,479  42,800  
Cash and cash equivalents and restricted cash at end of period$57,415  $8,053  
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of capitalized interest$15,585  $15,616  
Supplemental disclosures of non-cash transactions
Accounts payable related to capital improvements$9,409  $6,283  
Non-cash repayment of senior secured loan(39,085)   
Lease liability arising from recognition of right-of-use asset707  —  
Reconciliation of cash paid for property acquisitions
Acquisition of properties$228,566  $174,134  
Assumption of other assets and liabilities(11,786) (4,991) 
Net cash paid for property acquisitions$216,780  $169,143  
The accompanying condensed notes are an integral part of these consolidated financial statements.
7

Table of Contents
Terreno Realty Corporation
Condensed Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Organization
Terreno Realty Corporation (“Terreno”, and together with its subsidiaries, the “Company”) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C. All square feet, acres, occupancy and number of properties disclosed in these condensed notes to the consolidated financial statements are unaudited. As of September 30, 2019, the Company owned 220 buildings (including one building held for sale) aggregating approximately 13.4 million square feet, 18 improved land parcels consisting of approximately 76.7 acres and four properties under redevelopment expected to contain approximately 0.5 million square feet upon completion.
The Company is an internally managed Maryland corporation and elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2010.
Note 2. Significant Accounting Policies
Basis of Presentation. The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. In management’s opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The interim consolidated financial statements include all of the Company’s accounts and its subsidiaries and all intercompany balances and transactions have been eliminated in consolidation. The financial statements should be read in conjunction with the financial statements contained in the Company’s 2018 Annual Report on Form 10-K and the notes thereto, which was filed with the Securities and Exchange Commission on February 6, 2019.
Use of Estimates. The preparation of the interim consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Capitalization of Costs. The Company capitalizes costs directly related to the redevelopment, renovation and expansion of its investment in real estate. Costs associated with such projects are capitalized as incurred. If the project is abandoned, these costs are expensed during the period in which the redevelopment, renovation or expansion project is abandoned. Costs considered for capitalization include, but are not limited to, construction costs, interest, real estate taxes and insurance, if appropriate. These costs are capitalized only during the period in which activities necessary to ready an asset for its intended use are in progress. In the event that the activities to ready the asset for its intended use are suspended, the capitalization period will cease until such activities are resumed. Costs incurred for maintaining and repairing properties, which do not extend their useful lives, are expensed as incurred.
Interest is capitalized based on actual capital expenditures from the period when redevelopment, renovation or expansion commences until the asset is ready for its intended use, at the weighted average borrowing rate during the period.
Investments in Real Estate. Investments in real estate, including tenant improvements, leasehold improvements and leasing costs, are stated at cost, less accumulated depreciation, unless circumstances indicate that the cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. The Company also reviews the impact of above and below-market leases, in-place leases and lease origination costs for acquisitions and records an intangible asset or liability accordingly.
Impairment. Carrying values for financial reporting purposes are reviewed for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. Examples of such events or changes in circumstances may include classifying an asset to be held for sale, changing the intended hold period or when an asset remains vacant significantly longer than expected. The intended use of an asset either held for sale or held for use can significantly impact how impairment is measured. If an asset is intended to be held for the long-term, the recoverability is based on the undiscounted future cash flows. If the asset carrying value is not supported on an undiscounted
8

Table of Contents
future cash flow basis, then the asset carrying value is measured against the lower of cost or the present value of expected cash flows over the expected hold period. An impairment charge to earnings is recognized for the excess of the asset’s carrying value over the lower of cost or the present values of expected cash flows over the expected hold period. If an asset is intended to be sold, impairment is determined using the estimated fair value less costs to sell. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions, among other things, regarding current and future economic and market conditions and the availability of capital. The Company determines the estimated fair values based on its assumptions regarding rental rates, lease-up and holding periods, as well as sales prices. When available, current market information is used to determine capitalization and rental growth rates. If available, current comparative sales values may also be used to establish fair value. When market information is not readily available, the inputs are based on the Company’s understanding of market conditions and the experience of the Company’s management team. Actual results could differ significantly from the Company’s estimates. The discount rates used in the fair value estimates represent a rate commensurate with the indicated holding period with a premium layered on for risk. There were no impairment charges recorded to the carrying values of the Company’s properties during the three or nine months ended September 30, 2019 or 2018.
Loans Held-for-Investment. Loans that are held-for-investment are carried at cost, net of loan fees and origination costs, as applicable, unless the loans are deemed impaired. Impairment occurs when it is deemed probable that the Company will not be able to collect all amounts due according to the contractual terms of loans that are held-for-investment. The Company evaluates its senior secured loan (the “Senior Secured Loan”), which is classified as held-for-investment, for impairment quarterly. If the Senior Secured Loan is considered to be impaired, the Company records an allowance through the provision for Senior Secured Loan losses to reduce the carrying value of the Senior Secured Loan to the present value of expected future cash flows discounted at the Senior Secured Loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Actual losses, if any, could differ significantly from the Company’s estimates. There were no impairment charges recorded to the carrying value of the Senior Secured Loan during the three or nine months ended September 30, 2019 or 2018.
Property Acquisitions. In accordance with Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the integrated set of assets and activities is not considered a business. To be a business, the set of acquired activities and assets must include inputs and one or more substantive processes that together contribute to the ability to create outputs. The Company has determined that its real estate property acquisitions will generally be accounted for as asset acquisitions under the clarified definition. Upon acquisition of a property the Company estimates the fair value of acquired tangible assets (consisting generally of land, buildings and improvements) and intangible assets and liabilities (consisting generally of the above and below-market leases and the origination value of all in-place leases). The Company determines fair values using Level 3 inputs such as replacement cost, estimated cash flow projections and other valuation techniques and applying appropriate discount and capitalization rates based on available market information. Mortgage loans assumed in connection with acquisitions are recorded at their fair value using current market interest rates for similar debt at the date of acquisition. Acquisition-related costs associated with asset acquisitions are capitalized to individual tangible and intangible assets and liabilities assumed on a relative fair value basis and acquisition-related costs associated with business combinations are expensed as incurred.
The fair value of the tangible assets is determined by valuing the property as if it were vacant. Land values are derived from current comparative sales values, when available, or management’s estimates of the fair value based on market conditions and the experience of the Company’s management team. Building and improvement values are calculated as replacement cost less depreciation, or management’s estimates of the fair value of these assets using discounted cash flow analyses or similar methods. The fair value of the above and below-market leases is based on the present value of the difference between the contractual amounts to be received pursuant to the acquired leases (using a discount rate that reflects the risks associated with the acquired leases) and the Company’s estimate of the market lease rates measured over a period equal to the remaining term of the leases plus the term of any below-market fixed rate renewal options. The above and below-market lease values are amortized to rental revenues over the remaining initial term plus the term of any below-market fixed rate renewal options that are considered bargain renewal options of the respective leases. The total net impact to rental revenues due to the amortization of above and below-market leases was a net increase of approximately $1.3 million and $0.9 million for the three months ended September 30, 2019 and 2018, respectively, and approximately $3.2 million and $2.7 million, for the nine months ended September 30, 2019 and 2018, respectively. The origination value of in-place leases is based on costs to execute similar leases, including commissions and other related costs. The origination value of in-place leases also includes real estate taxes, insurance and an estimate of lost rental revenue at market rates during the estimated time required to lease up the property from vacant to the occupancy level at the date of acquisition. The remaining weighted average lease term related to these intangible assets and liabilities as of September 30, 2019 is 7.7 years. As of September 30, 2019 and December 31, 2018, the Company’s intangible assets and liabilities, including properties held for sale (if any), consisted of the following (dollars in thousands):
9

Table of Contents
 September 30, 2019December 31, 2018
 GrossAccumulated
Amortization
NetGrossAccumulated
Amortization
Net
In-place leases$86,294  $(58,219) $28,075  $75,101  $(51,239) $23,862  
Above-market leases4,169  (3,792) 377  4,169  (3,610) 559  
Below-market leases(44,301) 14,637  (29,664) (34,485) 11,392  (23,093) 
Total$46,162  $(47,374) $(1,212) $44,785  $(43,457) $1,328  
Depreciation and Useful Lives of Real Estate and Intangible Assets. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets or liabilities. The following table reflects the standard depreciable lives typically used to compute depreciation and amortization. However, such depreciable lives may be different based on the estimated useful life of such assets or liabilities.
Description  Standard Depreciable Life
Land  Not depreciated
Building  40 years
Building Improvements  
5-40 years
Tenant Improvements  Shorter of lease term or useful life
Leasing Costs  Lease term
In-place Leases  Lease term
Above/Below-Market Leases  Lease term
Held for Sale Assets. The Company considers a property to be held for sale when it meets the criteria established under Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment (See “Note 5 - Held for Sale/Disposed Assets”). Properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale.
Cash and Cash Equivalents. Cash and cash equivalents consists of cash held in a major banking institution and other highly liquid short-term investments with original maturities of three months or less. Cash equivalents are generally invested in U.S. government securities, government agency securities or money market accounts.
Restricted Cash. Restricted cash includes cash held in escrow in connection with property acquisitions and reserves for certain capital improvements, leasing, interest and real estate tax and insurance payments as required by certain mortgage loan obligations.
The following summarizes the reconciliation of cash and cash equivalents and restricted cash as presented in the accompanying consolidated statements of cash flows (in thousands):
For the Nine Months Ended September 30,
20192018
Beginning
Cash and cash equivalents at beginning of period$31,004  $35,710  
Restricted cash3,475  7,090  
Cash and cash equivalents and restricted cash34,479  42,800  
Ending
Cash and cash equivalents at end of period54,553  3,587  
Restricted cash2,862  4,466  
Cash and cash equivalents and restricted cash57,415  8,053  
Net increase (decrease) in cash and cash equivalents and restricted cash$22,936  $(34,747) 
Revenue Recognition. The Company records rental revenue from operating leases on a straight-line basis over the term of the leases and maintains an allowance for estimated losses that may result from the inability of its tenants to make required payments. If tenants fail to make contractual lease payments that are greater than the Company’s allowance for doubtful
10

Table of Contents
accounts, security deposits and letters of credit, then the Company may have to recognize additional doubtful account charges in future periods. The Company monitors the liquidity and creditworthiness of its tenants on an on-going basis by reviewing their financial condition periodically as appropriate. Each period the Company reviews its outstanding accounts receivable, including straight-line rents, for doubtful accounts and provides allowances as needed. The Company also records lease termination fees when a tenant has executed a definitive termination agreement with the Company and the payment of the termination fee is not subject to any conditions that must be met or waived before the fee is due to the Company. If a tenant remains in the leased space following the execution of a definitive termination agreement, the applicable termination will be deferred and recognized over the term of such tenant’s occupancy. Tenant expense reimbursement income includes payments and amounts due from tenants pursuant to their leases for real estate taxes, insurance and other recoverable property operating expenses and is recognized as revenues during the same period the related expenses are incurred.
As of September 30, 2019 and December 31, 2018, approximately $27.3 million and $25.2 million of straight-line rent and accounts receivable, net of allowances of approximately $0.2 million as of both September 30, 2019 and December 31, 2018, were included as a component of other assets in the accompanying consolidated balance sheets.
Effective January 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), using the modified retrospective approach, which requires a cumulative effect adjustment as of the date of the Company’s adoption.  Under the modified retrospective approach,