Plymouth Industrial REIT Inc

ITEM 1A. Risk Factors

TheExcept as set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 3, 2025. For a full description of these risk factors, please refer to Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024.

Risks Related to the Mergers

The Mergers are subject to certain closing conditions which may impose unexpected delays in the completion of the Mergers, or the Mergers may not be completed at all.

The Mergers are currently expected to close in early 2026, assuming that all of the conditions in the Merger Agreement are satisfied or waived. The Merger Agreement provides that either we or Parent may terminate the Merger Agreement if the Mergers have not occurred on or before July 24, 2026. Certain events may delay the completion of the Mergers or result in a termination of the Merger Agreement. Some of these events are outside the control of either party. In particular, the completion of the Mergers are subject to (i) affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote on the REIT Merger; (ii) the receipt by us of an opinion, on which Parent shall be entitled to rely, to the effect that, for all taxable periods commencing with our initial taxable year ended December 31, 2012 through our taxable year ended on the closing date, we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code and (iii) other closing conditions as set forth in the Merger Agreement. 

If the required vote is not obtained at our special meeting (including any adjournment or postponement thereof) at which the REIT Merger has been voted upon, either we or Parent may terminate the Merger Agreement. If the Merger Agreement is terminated by Parent, under certain circumstances, we may be required to pay a termination fee of $40.1 million to Parent, except that the termination fee will be $15.0 million if, pursuant to the applicable terms of the Merger Agreement and no later than 11:59 p.m. (New York City time) on November 25, 2025 (as may be adjusted pursuant to the terms of the Merger Agreement), we terminate the Merger Agreement in order to enter into a definitive agreement with a third party with respect to a superior proposal. 

We may incur significant additional costs in connection with any delay in completing the Mergers or termination of the Merger Agreement, in addition to significant transaction costs, including legal, financial advisory, accounting and other costs we have already incurred. We cannot provide any assurance that the conditions to the completion of the Mergers will be satisfied or waived or that any adverse change, effect, event, circumstance, occurrence or state of facts that could give rise to the termination of the Merger Agreement will not occur, and we cannot provide any assurances as to whether or when the Mergers will be completed on the terms or timeline set forth in the Merger Agreement or at all.

Failure to complete the Mergers in a timely manner or at all could materially and adversely affect our stock price and future business and financial results.

We can provide no assurance that the Mergers will occur or that the conditions to the Mergers will be satisfied in a timely manner or at all. Also, we can provide no assurance that an event, change or other circumstance that could give rise to the termination of the Merger Agreement will not occur. Delays in completing the Mergers or the failure to complete the Mergers at all could materially and adversely affect our future business and financial results, and, in that event, the market price of our common stock may decline significantly, particularly to the extent that the current market price reflects a market assumption that the Mergers will be completed. If the Mergers are delayed for any reason, we will be subject to several risks, including the diversion of management focus and resources from operational matters and other strategic opportunities while working to complete the Mergers, any of which could materially and adversely affect our results of operations, cash flows, financial condition and our ability to pay distributions to our stockholders.

The pendency of the Mergers could materially and adversely affect our business and operations.

In connection with the pending Mergers, some of our tenants, prospective tenants or vendors may delay or defer decisions concerning their business relationships or transactions with us, which could negatively impact our revenues, earnings, cash flows and expenses, regardless of whether the Mergers are completed. In addition, under the Merger Agreement, we are restricted from entering into certain corporate transactions and taking certain other specified actions, and requires that we conduct our business in all material respects in the ordinary course and consistent with past practice until the completion of the Mergers or the termination of the Merger Agreement. These restrictions, which could be in place for an extended period of time if the completion of the Mergers is delayed, could prevent us from pursuing attractive business opportunities that may arise prior to completion of the Mergers or from making appropriate changes to business or organizational structure. This could in turn materially and adversely impact our business, financial condition and results of operations.

The pendency of the Mergers may also make it more difficult for us to effectively recruit, retain and incentivize key personnel and may cause distractions from our strategy and day-to-day operations for our current employees and management. Further, uncertainty about the effect of the Mergers on our employees may have a material adverse effect on us during the pendency of the Mergers, as this uncertainty may impair our ability to retain and motivate key personnel during the pendency of the Mergers. Employee retention may be particularly challenging as our employees may experience uncertainty about their future roles following consummation of the Mergers.

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An adverse judgment in a lawsuit challenging the Mergers may prevent the Mergers from becoming effective or from becoming effective within the expected timeframe.

Our stockholders may file lawsuits challenging the Mergers or the other transactions contemplated by the Merger Agreement, which may name us and/or our board of directors as defendants. If litigation or other legal proceedings are brought against us or against our board in connection with the Merger Agreement, we will defend against it, but we cannot provide any assurance as to the outcome of such lawsuits, including the amount of costs associated with defending these claims or any other liabilities that may be incurred in connection with the litigation of these claims. 

One of the conditions to the completion of the Mergers is that no preliminary or permanent injunction by any governmental entity of competent jurisdiction, such as a court, is in effect that makes illegal or otherwise prohibits the consummation of the Mergers. As such, if any future legal actions result in an injunction prohibiting the consummation of the Mergers, then such injunction may prevent the consummation of the Mergers on the agreed terms, within the expected timeframe or at all, any of which could substantially harm our business. Whether or not any plaintiffs claim is successful, this type of litigation may result in significant costs and divert managements attention and resources, which could have a material adverse effect on our business, results of operation or financial position.

We are expected to incur significant costs in connection with the Merger, which may be in excess of those anticipated by us.

We have incurred and expect to continue to incur costs associated with negotiating and completing the Mergers. These costs have been, and will continue to be, substantial. The substantial majority of costs will consist of transaction costs related to the Mergers and include, among others, fees paid to financial, legal and accounting advisors, filing fees, and employee retention and other employment-related costs. Many of these costs will be borne by us even if the Mergers are not completed. 

The go-shop provision in the Merger Agreement may not result in a superior proposal, and the existence of the go-shop period could create uncertainty that may negatively affect our business, employees and relationships with third parties.

The Merger Agreement permits us, for a limited period of time following its execution, to actively solicit alternative acquisition proposals from third parties (the go-shop period). There can be no assurance that this process will result in a superior proposal or that any third party will be willing to engage in discussions regarding an alternative transaction. After the expiration of the go-shop period, our ability to solicit, discuss, initiate, or knowingly encourage alternative proposals is substantially limited, and we may only respond to unsolicited, bona fide written proposals that may reasonably be expected to lead to a superior proposal, subject to the terms of the Merger Agreement. As a result, if no superior proposal is made during the go-shop period, it may be less likely that a third party will pursue an alternative acquisition thereafter.

Additionally, the pendency of the solicitation process during the go-shop period may negatively impact our business operations, including potential distractions to management, uncertainty among employees, tenants, suppliers, financing sources and other business partners, and could adversely affect our ability to recruit or retain key personnel. Even if a superior proposal is made, there is no assurance that such proposal will ultimately be completed. Moreover, if we terminate the Merger Agreement under circumstances relating to a superior proposal, we may be required to pay a termination fee of $40.1 million to Parent, except that the termination fee will be $15.0 million if, pursuant to the applicable terms of the Merger Agreement and no later than 11:59 p.m. (New York City time) on November 25, 2025 (as may be adjusted pursuant to the terms of the Merger Agreement), we terminate the Merger Agreement in order to enter into a definitive agreement with a third party with respect to a superior proposal. This may discourage a potential third-party acquiror from making an alternative transaction proposal, even if it were prepared to pay consideration with a higher value than implied in the Mergers, or cause such third-party to propose to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee.