What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-12 compared with 2024-02-14 · 196 added, 221 removed, 1072 unchanged (28% of the section changed)

14 unchanged sentences

We have audited the accompanying consolidated balance sheets of Essential Properties Realty Trust, Inc.

(a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

(a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedules included under Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 12, 2025, expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the measurement of the fair values used in the purchase price allocation of real estate acquisitions

As described further in Notes 2 and 3 to the consolidated financial statements, the acquisition of real estate for investment purposes is typically accounted for as an asset acquisition in which the Company allocates the purchase price of acquired properties to land, buildings, site improvements and other identified tangible and intangible assets and liabilities on a relative fair value basis.

The Company acquired approximately $1.0 billion of real estate investments during the year ended December 31, 2023.

The Company acquired approximately $724.3 million of real estate investments subject to this allocation process during the year ended December 31, 2024.

We identified fair value measurements used to allocate the purchase price to the assets acquired and liabilities assumed in the real estate acquisitions as a critical audit matter.

The principal consideration for our determination that the fair value measurements used to allocate the purchase price to the assets acquired and liabilities assumed in the real estate acquisitions is a critical audit matter is the

higher risk of estimation uncertainty in determining fair value estimates.

Specifically, fair value measurements were sensitive to establishing a range of market assumptions for land values, building replacement values, and rental rates.

Establishing the market assumptions for land, building, site improvements and rent included identifying the relevant properties in the established range most comparable to the acquired property.

There was a high degree of subjective and complex auditor judgment in evaluating these key inputs assumptions.

Our audit procedures related to the fair value measurements used to allocate the purchase price to assets acquired and liabilities assumed in the real estate acquisitions included the following, among others.

We obtained an understanding, evaluated the design, and tested the operating effectiveness of relevant controls relating to the process to allocate the purchase price of real estate acquisitions, including internal controls over the selection and review of the inputs and assumptions to estimate fair value, including those used by third-party valuation professionals.

For a selection of real estate acquisitions, we involved our real estate valuation professionals with specialized skills and knowledge who assisted in evaluating the valuation techniques and assumptions to the fair value measurements used in the purchase price allocations.

We read the purchase agreements and tested the completeness and accuracy of underlying data used that was contractual in nature, including rental data where applicable.

Specifically, these fair value measurements were sensitive to establishing a range of market assumptions for land values, building replacement values, and rental rates.

Establishing the market assumptions for land, building, site improvements and rent included identifying the relevant properties in the established range that were most comparable to the acquired property.

There was a high degree of subjective and complex auditor judgment in evaluating significant assumptions used in developing the fair value measurements.

Our audit procedures related to the fair value measurements used to allocate the purchase price to the assets acquired and liabilities assumed in the real estate acquisitions included the following, among others:

We obtained an understanding, evaluated the design, and tested the operating effectiveness of relevant controls relating to the allocation of the purchase price of real estate acquisitions, including internal controls over the selection and review of the significant assumptions to estimate fair value, including those used by third-party valuation professionals.

For a selection of real estate acquisitions, we involved our real estate valuation specialists who assisted in evaluating the significant assumptions to the fair value measurements used in the purchase price allocations.

We read the purchase agreements and tested the completeness and accuracy of underlying contractual data used, including rental data where applicable.

The evaluation included comparison of the Company’s assumptions to independently developed ranges using market data from industry transaction databases and published industry reports.

We analyzed where the Company’s market rental rates fell within our real estate valuation professionals’ independently developed ranges to evaluate if management bias was present.

We analyzed where the Company’s market rental rates fell within our real estate valuation specialists’ independently developed ranges to evaluate if management bias was present.

/s/ GRANT THORNTON LLP

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Interest income 3,069 2,011 2,825

Other income 1,548 — —

Income before income tax expense 204,266 192,051 135,740

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Other comprehensive income:

Deferred loss on cash flow hedges — — ( 4,824 )

Unrealized (loss) gain on cash flow hedges ( 9,187 ) 56,736 17,273

Cash flow hedge loss reclassified to interest expense ( 27,687 ) 26 10,059

Total other comprehensive (loss) income ( 36,874 ) 56,762 22,508

Unrealized gain (loss) on cash flow hedges 42,210 ( 9,187 ) 56,736

Cash flow hedge (loss) gain reclassified to interest expense ( 29,310 ) ( 27,687 ) 26

Total other comprehensive income (loss) 12,900 ( 36,874 ) 56,762

Comprehensive income 216,538 154,541 191,504

Net income attributable to non-controlling interests ( 634 ) ( 708 ) ( 612 )

Adjustment for other comprehensive income (loss) attributable to non-controlling interests 174 ( 1,257 ) ( 113 )

Adjustment for other comprehensive (loss) income attributable to non-controlling interests ( 33 ) 174 ( 1,257 )

Comprehensive income attributable to stockholders $ 215,871 $ 154,007 $ 189,635

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Costs related to issuance of common stock — — ( 1,010 ) — — ( 1,010 ) — ( 1,010 )

Other comprehensive income — — — — 55,505 55,505 1,257 56,762

Other comprehensive loss — — — — ( 36,700 ) ( 36,700 ) ( 174 ) ( 36,874 )

Equity based compensation expense 283,751 3 9,003 — — 9,006 — 9,006

5 unchanged sentences

Costs related to issuance of common stock — — ( 1,083 ) — — ( 1,083 ) — ( 1,083 )

Other comprehensive loss — — — — ( 36,700 ) ( 36,700 ) ( 174 ) ( 36,874 )

Other comprehensive income — — — — 12,867 12,867 33 12,900

Equity based compensation expense 188,590 2 10,827 — — 10,829 — 10,829

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Adjustment to rental revenue for tenant credit 635 640 371

Payments made in settlement of cash flow hedges — — ( 4,836 )

Changes in other assets and liabilities:

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Cash flows from financing activities:

Repayment of secured borrowings — — ( 175,781 )

Borrowings under term loans 174,569 247,972 397,523

1 unchanged sentence

Repayments under revolving credit facility ( 220,000 ) ( 70,000 ) ( 443,000 )

Proceeds from issuance of senior unsecured notes — — 396,600

Proceeds from issuance of common stock, net 507,318 403,884 458,267

Payments for taxes related to net settlement of equity awards ( 3,313 ) ( 3,671 ) ( 2,452 )

1 unchanged sentence

Deferred financing costs ( 115 ) ( 2,426 ) ( 4,991 )

Proceeds from issuance of common stock, net 570,243 507,318 403,884

Offering costs ( 1,022 ) ( 948 ) ( 1,008 )

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Reclassification from construction in progress upon project completion $ 200,566 $ 45,518 $ 26,948

Non-cash repayment of term loan facility 200,000 — —

Non-cash borrowing under term loan facility ( 202,028 ) — —

Non-cash debt issuance costs 2,028 — —

Net settlement of proceeds on the sale of investments ( 2,200 ) ( 4,625 ) ( 28,938 )

Non-cash investments in real estate and loan receivable activity 2,200 — 22,679

Unrealized losses on cash flow hedges ( 9,187 ) ( 56,615 ) ( 27,890 )

Unrealized gain (loss) on cash flow hedges 42,210 ( 9,187 ) ( 56,615 )

Non-cash debt issuance costs 4,647 2,028 —

Non-cash repayment of term loan facility 270,000 200,000 —

Non-cash borrowing under term loan facility ( 270,000 ) ( 202,028 ) —

Payable and accrued offering costs 115 24 30

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

ESSENTIAL PROPERTIES REALTY TRUST, INC.

CONSOLIDATED FINANCIAL STATEMENTS

Notes to Consolidated Financial Statements

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All intercompany accounts and transactions have been eliminated in consolidation.

As of December 31, 2023 and 2022, the Company, directly and indirectly, held a 99.7 % and 99.6 % ownership interest in the Operating Partnership, respectively, and the consolidated financial statements include the financial statements of the Operating Partnership as of these dates.

As of December 31, 2024 and 2023, the Company, directly and indirectly, held a 99.7 % ownership interest in the Operating Partnership and the consolidated financial statements include the financial statements of the Operating Partnership as of these dates.

See Note 8—Non-controlling Interests for changes in the ownership interest in the Operating Partnership.

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Therefore, the Company aggregates these investments for reporting purposes and operates in one reportable segment.

The chief operating decision maker ("CODM"), which is the Company's Chief Executive Officer, determines resource allocations based on characteristics of potential future investments (e.g., return on investment, tenant credit quality, industry type, geographic location) and assesses the performance of the Company's existing portfolio based on consolidated net income as presented in the accompanying consolidated statements of operations.

Real Estate Investments

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Under Accounting Standards Update ("ASU") 2017-1, Business Combinations (Topic 805):

Clarifying the Definition of a

Business , an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

Clarifying the Definition of a Business , an acquisition does not qualify as a business when there is no substantive process acquired or substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

Transaction costs related to acquisitions that are asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred.

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Costs incurred which are directly related to properties under development, which include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs and real estate taxes and insurance, are capitalized during the period of development as construction in progress.

After the determination is made to capitalize a cost, it is allocated to the specific component of a project that benefited.

Determination of when a development project commences, and capitalization begins, and when a development project has reached substantial completion, and is available for occupancy and capitalization must cease, involves a degree of judgment.

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The Company does, however, opportunistically agree to reimburse certain of its tenants for development costs at its properties in exchange for contractually-specified rent that generally increases proportionally with its funding.

The Company allocates the purchase price of acquired properties accounted for as asset acquisitions to tangible and identifiable intangible assets or liabilities based on their relative fair values.

The Company allocates the purchase price of acquired properties accounted for as asset acquisitions to tangible assets and liabilities and identifiable intangible assets or liabilities, if any, based on their relative fair values.

Tangible assets may include land, site improvements and buildings.

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Additionally, the Company considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.

The Company uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of the accounting standard governing asset retirement obligations and, when necessary, will record an asset retirement obligation as part of the purchase price allocation.

The Company uses the information obtained as a result of its pre-acquisition due diligence as part of its consideration of the accounting

standard governing asset retirement obligations and, when necessary, will record an asset retirement obligation as part of the purchase price allocation.

Real estate investments that are intended to be sold are designated as "held for sale" on the consolidated balance sheets at the lesser of carrying amount and fair value less estimated selling costs.

Real estate investments are no longer depreciated when they are classified as held for sale.

If the disposal, or intended disposal, of certain

real estate investments represents a strategic shift that has had or will have a major effect on the Company's operations and financial results, the operations of such real estate investments would be presented as discontinued operations in the consolidated statements of operations for all applicable periods.

If the disposal, or intended disposal, of certain real estate investments represents a strategic shift that has had or will have a major effect on the Company's operations and financial results, the operations of such real estate investments would be presented as discontinued operations in the consolidated statements of operations for all applicable periods.

Depreciation and Amortization

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Depreciation on real estate investments $ 115,371 $ 95,527 $ 80,647

Lease incentives are amortized on a straight-line basis as a reduction of rental income over the remaining non-cancellable terms of the respective leases.

Lease incentives are amortized on a straight-line basis as a reduction of rental revenue over the remaining non-cancellable terms of the respective leases.

If a tenant terminates its lease, the unamortized portion of the lease incentive is charged to rental revenue.

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The Company recognizes interest income on loans receivable using the effective-interest method applied on a loan-by-loan basis.

Direct costs associated with originating loans are offset against any related fees received and the balance, along with any premium or discount, is deferred and amortized as an adjustment to interest income over the term of the related loan receivable using the effective-interest method.

Direct costs associated with originating loans are offset against any related fees received and the balance, along with any premium or discount, is deferred and amortized as an adjustment to interest on loans and direct financing lease receivables over the term of the related loan receivable using the effective-interest method.

Direct Financing Lease Receivables

Certain of the Company’s real estate investment transactions are accounted for as direct financing leases.

The Company records the direct financing lease receivables at their net investment, determined as the aggregate minimum lease payments and the estimated non-guaranteed residual value of the leased property less unearned income.

The unearned income is recognized over the term of the related lease so as to produce a constant rate of return on the net investment in the asset.

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These estimations include various macroeconomic factors impacting the likelihood and magnitude of potential credit losses for the Company's loans and direct financing lease receivables during their anticipated term.

Changes in the Company's allowance for credit losses are presented within change in provision for credit losses in it's consolidated statements of operations.

Changes in the Company's allowance for credit losses are presented within change in provision for credit losses in its consolidated statements of operations.

Impairment of Long-Lived Assets

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For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset.

Impairment losses, if any, are recorded directly within the Company's consolidated statements of operations.

Impairment losses, if any, are recorded directly within our consolidated statements of operations.

The Company recorded the following provisions for impairment of long lived assets during the periods presented:

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Forward Equity Sales

The Company has and may continue to enter into forward sale agreements relating to shares of its common stock, either through its 2022 ATM Program (as defined herein) or through underwritten public offerings.

The Company has and may continue to enter into forward sale agreements relating to shares of its common stock, either through its ATM Programs (as defined herein) or through underwritten public offerings.

These agreements may be physically settled in stock, settled in cash or net share settled at the Company’s election.

The Company evaluated its forward sale agreements and concluded they meet the conditions to be classified within stockholders’ equity.

Prior to settlement, a forward sale agreement will be reflected in the diluted earnings per share calculations using the treasury stock method.

Under this method, the number of shares of the Company’s common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares of the Company’s common stock that would be issued upon full physical settlement of such forward sale agreement over the number of shares of the Company’s common stock that could be purchased by the Company in the market (based on the average market price during the reporting period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period).

Consequently, prior to settlement of a forward sale agreement, there will be no dilutive effect on the Company’s earnings per share except during periods when the average market price of the Company’s common stock is above the adjusted forward sale price.

However, upon settlement of a forward sales agreement, if the Company elects to physically settle or net share settle such forward sale agreement, delivery of the Company’s shares will result in dilution to the Company’s earnings per share.

Prior to settlement, a forward sale agreement will be reflected in the diluted net income per share calculations using the treasury stock method.

Under this method, the number of shares of the Company’s common stock used in calculating diluted net income per share is deemed to be increased by the excess, if any, of the number of shares of the Company’s common stock that would be issued upon full physical settlement of such forward sale agreement over the number of shares of the Company’s common stock that could be purchased by the Company in the market (based on the average market price during the reporting period) using the proceeds receivable upon full physical settlement (based on the adjusted forward sale price at the end of the reporting period).

Consequently, prior to settlement of a forward sale agreement, there will be no dilutive effect on the Company’s net income per share except during periods when the average market price of the Company’s common stock is above the adjusted forward sale price.

Deferred Financing Costs

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The Company may also enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment.

If a derivative is designated and qualifies for cash flow hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other

comprehensive income (loss) in the consolidated statements of comprehensive income to the extent that it is effective.

The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment.

If a derivative is designated and qualifies for cash flow hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income to the extent that it is effective.

Any ineffective portion of a change in derivative fair value is immediately recorded in earnings.

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If the assessment of the collectability of substantially all payments due under a lease changes from probable to not probable, any difference between the rental revenue recognized to date and the lease payments that have been collected is recognized as a current period reduction of rental revenue in the consolidated statements of operations.

Conversely, if the assessment of the collectability changes from not probable to probable, any difference is recognized as a current period increase of rental revenue in the consolidated statements of operations.

The Company recorded the following adjustments as increases or decreases to rental revenue for tenant credit during the periods presented:

1 unchanged sentence

(in thousands) 2024 2023 2022

Adjustment to (decrease) increase rental revenue for tenant credit $ ( 640 ) $ ( 371 ) $ 2,900

Adjustment to decrease rental revenue for tenant credit $ ( 635 ) $ ( 640 ) $ ( 371 )

Offering Costs

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Step one, recognition, occurs when an entity concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustained upon examination.

Step two, measurement, determines the amount of benefit that is more-likely-than-not to be realized upon settlement.

Step two, measurement, determines the amount of benefit that is more-likely-than-not to be realized

upon settlement.

Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more-likely-than-not threshold of being sustained.

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The Company’s policy is to classify interest expense and penalties relating to taxes in general and administrative expense in the consolidated statements of operations.

During the years ended December 31, 2023, 2022 and 2021, the Company recorded de minimis interest or penalties relating to taxes, and there were no interest or penalties with

respect to taxes accrued as of December 31, 2023 or 2022.

During the years ended December 31, 2024, 2023 and 2022, the Company recorded de minimis interest or penalties relating to taxes, and there were no interest or penalties with respect to taxes accrued as of December 31, 2024 or 2023.

The 2023, 2022, 2021, and 2020 taxable years remain open to examination by federal and/or state taxing jurisdictions to which the Company is subject.

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The Company grants shares of restricted common stock ("RSAs") and restricted stock units (“RSUs”) to its directors, executive officers and other employees that vest over specified time periods, subject to the recipient’s continued service.

The Company also grants performance-based RSUs to executive officers, the final number of which is determined based on objective and subjective performance conditions and which vest over a multi-year period, subject to the recipient’s continued service.

The Company also grants performance-based RSUs to executive officers, the final number of which is determined based on objective and, with respect to performance-based RSUs issued prior to 2024, subjective performance conditions which vest over a multi-year period, subject to the recipient’s continued service.

The Company accounts for RSAs and RSUs in accordance with ASC 718, Compensation – Stock Compensation, which requires that such compensation be recognized in the financial statements based on its estimated grant-date fair value.

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Recent Accounting Developments

In July 2021, the FASB issued ASU 2021-05, Lease (Topic 842):

Lessors - Certain Leases with Variable Lease Payments ("ASU 2021-05").

The guidance in ASU 2021-05 amends the lease classification requirements for the lessors under certain leases containing variable payments to align with practice under ASC 840.

The lessor should classify and account for a lease with variable lease payments that do not depend on a reference index or a rate as an operating lease if both of the following criteria are met:

1) the lease would have been classified as a sales-type lease or a direct financing lease in accordance with the classification criteria in ASC 842-10-25-2 through 25-3;

and 2) the lessor would have otherwise recognized a day-one loss.

The amendments in ASU 2021-05 are

effective for fiscal years beginning after December 15, 2021, with early adoption permitted.

The adoption of ASU 2021-05 did not have a material impact on the Company's consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

Improvements to Reportable Segment Disclosures ("ASU 2023-07") .

The guidance in ASU 2023-07 improves reportable segment disclosure requirements through enhanced disclosures about significant segment expenses.

ASU 2023-07 includes requirements to disclose the title and position of the Chief Operating Decision Maker ("CODM") along with disclosure of the significant segment expenses regularly provided to the CODM, the extension of certain annual disclosures to interim periods, requirements that entities that have a single reportable segment must apply ASC 280 in its entirety, and requirements that permit more than one measure of segment profit or loss to be reported under certain conditions.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of the guidance on the Company's consolidated financial statements and related disclosures.

ASU 2023-07 includes requirements to disclose the title and position of the CODM along with disclosure of the significant segment expenses regularly provided to the CODM, the extension of certain annual disclosures to interim periods, requirements that entities that have a single reportable segment must apply ASC 280 in its entirety, and requirements that permit more than one measure of segment profit or loss to be reported under certain conditions.

The Company has adopted this guidance effective January 1, 2024 for annual reporting and the amendments are reflected within these consolidated financial statements.

The amendments for interim periods will be adopted for the Company's fiscal year beginning on January 1, 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 requires annual disclosure of specific categories in the rate reconciliation and the provision of additional information for reconciling items that meet a quantitative threshold within the rate reconciliation.

In addition, ASU 2023-09 requires annual disclosure of income taxes paid disaggregated by federal, state and foreign jurisdictions as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis, however early adoption and retrospective application is permitted.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses ("ASU 2024-09").

ASU 2024-03 requires additional disclosures about a public company’s expenses and addresses requests from investors for more detailed information about the types of expenses (e.g., purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (e.g., cost of sales;

selling, general, and administrative (SG&A);

and research and development (R&D)).

All publicly traded REITs will be impacted by the ASU, as it applies to all public companies.

ASU 2024-09 is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

The following table presents information about the number of investments in the Company's real estate investment portfolio as of each date presented:

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_____________________________________

(1) Includes six and eight properties which are subject to leases accounted for as direct financing leases or loans as of December 31, 2023 and 2022, respectively.

(2) Properties secure 20 mortgage loans receivable as of December 31, 2023 and 2022.

(1) Includes seven and six properties which are subject to leases accounted for as direct financing leases or loans as of December 31, 2024 and 2023, respectively.

(2) Properties secure 25 and 20 mortgage loans receivable as of December 31, 2024 and 2023, respectively.

The following table presents information about the gross investment value of the Company's real estate investment portfolio as of each date presented:

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Year ended December 31,

(Dollars in thousands) 2023 2022

Ownership type (1)

(Dollars amounts in thousands) 2024 2023

Ownership type Fee Interest

Number of properties 264 291

Purchase price allocation:

Investment allocation:

Land and improvements $ 333,983 $ 354,331

Building and improvements 484,417 539,062

Construction in progress (3)

105,075 51,870

Intangible lease assets 7,319 2,553

Total purchase price 1,001,021 806,845

Intangible lease liabilities ( 312 ) ( 181 )

Purchase price (including acquisition costs) $ 1,000,840 $ 806,845

Construction in progress (2)

263,232 105,075

(1) During the year ended December 31, 2023, the Company acquired fee interests in 289 properties and acquired two properties subject to ground leases.

(2) During the year ended December 31, 2022, the Company acquired fee interests in 223 properties and acquired one property subject to a ground lease.

Total investments (including acquisition costs) $ 1,088,639 $ 1,000,840

_____________________________________

(1) During the year ended December 31, 2023, the Company acquired fee interests in 289 properties and acquired two properties subject to a ground lease.

(2) Represents amounts incurred at and subsequent to initial investment and includes $ 5.8 million and $ 2.4 million, respectively, of capitalized interest expense during the years ended December 31, 2024 and 2023.

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Sales of investments in real estate ( 51 ) ( 120,809 )

Relinquishment of properties at end of ground lease term ( 2 ) ( 1,543 )

Provisions for impairment of real estate (2)

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_____________________________________________

(1) During the year ended December 31, 2021, the Company identified and recorded provisions for impairment at two vacant and 16 tenanted properties.

(2) During the year ended December 31, 2022, the Company identified and recorded provisions for impairment at four vacant and nine tenanted properties.

(3) During the year ended December 31, 2023, the Company identified and recorded provisions for impairment at two vacant and six tenanted properties.

(1) During the year ended December 31, 2022, the Company identified and recorded provisions for impairment at nine tenanted properties and four vacant properties .

(2) During the year ended December 31, 2023, the Company identified and recorded provisions for impairment at six tenanted properties and two vacant properties.

(3) During the year ended December 31, 2024, the Company identified and recorded provisions for impairment at 17 tenanted properties and five vacant properties.

(4) Includes $ 425.3 million of accumulated depreciation as of December 31, 2024.

Real Estate Investments

The Company's investment properties are leased to tenants under long-term operating leases that typically include one or more renewal options.

See Note 4—Leases for more information about the Company's leases.

Loans and Direct Financing Lease Receivables

As of December 31, 2023 and 2022, the Company had 20 and 23 mortgage loans receivable outstanding, respectively.

As of December 31, 2023 and 2022, the Company had two and three leases accounted for as loans, respectively, with an aggregate carrying amount of $ 223.1 million and $ 238.7 million, respectively.

As of December 31, 2024 and 2023, the Company had 25 and 20 mortgage loans receivable outstanding, respectively, and three and two leases accounted for as loans, respectively, with an aggregate carrying amount of $ 351.6 million and $ 223.1 million, respectively.

The maximum amount of loss due to credit risk is the Company's current principal balance of $ 351.6 million as of December 31, 2024.

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I/O 2 8.53 % 7.75 % 2039 7,300 7,300

Mortgage (2)(3)

I/O 69 7.79 % 7.33 % 2034 51,000 51,000

I/O 1 8.42 % 7.65 % 2040 5,300 5,300

Mortgage (2)(3)

I/O 1 8.54 % 8.50 % 2026 1,525 1,785

Mortgage I/O — 7.00 % 7.00 % 2024 — 500

Mortgage (2)(3)

I/O 2 8.33 % 8.33 % 2026 994 994

4 unchanged sentences

I/O 1 7.73 % 7.20 % 2036 2,470 2,470

Mortgage (2)(3)

I/O 1 8.00 % 8.00 % 2040 1,754 1,754

2 unchanged sentences

I/O 1 8.30 % 8.25 % 2026 760 760

Mortgage (2)(3)

I/O 4 8.64 % 8.05 % 2037 12,250 12,250

Mortgage (2)(3)

I/O 9 8.85 % 8.25 % 2037 25,993 25,993

3 unchanged sentences

I/O 14 10.00 % 8.65 % 2044 57,454 —

Mortgage (2)(3)

I/O 1 10.20 % 9.75 % 2034 7,560 —

Mortgage (2)(3)

I/O 6 10.19 % 9.50 % 2039 17,451 —

I/O 1 8.00 % 8.00 % 2027 900 —

I/O 2 9.54 % 8.25 % 2044 6,400 —

Leasehold interest P+I 1 2.25 % (4) 2034 862 929

Leasehold interest P+I 1 2.41 % (4) 2034 1,283 1,382

2034 1,382 1,473

Leasehold interest P+I 2 4.41 % (4) 2039 20,327 —

27 unchanged sentences

For the years ended December 31, 2024, 2023 and 2022, the changes to the Company's allowance for credit losses were as follows:

(in thousands) Loans and Direct Financing Lease Receivables

(in thousands) Allowance for Credit Losses

Balance at December 31, 2021 $ 814

9 unchanged sentences

_____________________________________

(1) The decrease in expected credit losses was due to assumptions regarding current macroeconomic factors returning to pre-pandemic values due to the reduction of the adverse impact of the COVID-19 pandemic.

(2) The change in expected credit loss was primarily due to an overall increase or decrease in the size of our loans and direct financing lease receivables portfolio.

(1) Changes in expected credit loss were primarily due to overall changes in the size of our loans and direct financing lease receivables portfolio.

The Company considers the ratio of loan to value ("LTV") to be a significant credit quality indicator for its loans and direct financing lease portfolio.

48 unchanged sentences

Intangible market lease liabilities 7.9

liabilities, net and the amortization and accretion of above- and below-market ground leases for the periods presented:

The following table discloses amounts recognized within the consolidated statements of operations related to amortization of in-place leases, amortization and accretion of above- and below-market lease assets and liabilities, net and the amortization and accretion of above- and below-market ground leases for the periods presented:

Year ended December 31,

28 unchanged sentences

Some of the Company’s leases provide that in the event the Company wishes to sell the property subject to that lease, it first must offer the lessee the right to purchase the property on the same terms and conditions as any offer which it intends to accept for the sale of the property.

Scheduled future minimum base rental payments due to be received under the remaining non-cancelable term of the operating leases in place as of December 31, 2023 were as follows:

Scheduled future minimum base rental and interest payments due to be received under the remaining non-cancelable term of operating leases and direct financing lease receivables in place as of December 31, 2024, and to be received under loans receivable through their scheduled maturity dates as of December 31, 2024 were as follows:

(in thousands) Future Minimum Base

3 unchanged sentences

Total $ 7,486,196

_____________________________________

(1) Includes interest payments from loans receivable and base rental payments from direct financing lease receivables of $ 29.2 million for 2025, $ 28.8 million for 2026, $ 28.0 million for 2027, $ 28.1 million for 2028, $ 28.5 million for 2029 and $ 289.4 million for years thereafter.

Since lease renewal periods are exercisable at the option of the lessee, the preceding table presents future minimum base rental payments to be received during the initial non-cancelable lease term only.

12 unchanged sentences

The Company has a number of ground leases, office leases and other equipment leases which are classified as operating leases.

As of December 31, 2023, the Company's ROU assets and lease liabilities were $ 8.9 million and $ 9.8 million, respectively.

As of December 31, 2024, the Company's right of use ("ROU") assets and lease liabilities were $ 8.8 million and $ 9.5 million, respectively.

As of December 31, 2023, the Company's ROU assets and lease liabilities were $ 8.9 million and $ 9.8 million, respectively.

16 unchanged sentences

Total rent expense $ 1,431 $ 1,576 $ 1,492

As of December 31, 2023, future lease payments due from the Company under the ground, office and equipment operating leases where the Company is directly responsible for payment and the future lease payments due under the ground operating leases where the Company's tenants are directly responsible for payment over the next five years and thereafter were as follows:

(in thousands) Office and Equipment Leases Ground Leases

to be Paid by

the Company Ground Leases

Directly by the

Tenants Total Future

As of December 31, 2024, future lease payments under office and equipment operating leases to be paid by the Company directly and future lease payments under ground leases where the Company’s tenants are directly responsible for payment over the next five years and thereafter were as follows:

(in thousands) Office and Equipment Leases Ground Leases Total Future

2025 $ 735 $ 685 $ 1,420

14 unchanged sentences

Unsecured term loans:

2024 Term Loan April 2024 $ — $ 200,000 — % 5.3 %

2027 Term Loan February 2027 $ 430,000 $ 430,000 5.6 % 6.3 %

2 unchanged sentences

450,000 450,000 5.6 % 6.4 %

2030 Term Loan January 2030 (2)

450,000 — 5.6 % — %

Senior unsecured notes July 2031 400,000 400,000 3.0 % 3.0 %

6 unchanged sentences

(in thousands) 2027 Term Loan 2028 Term Loan 2029 Term Loan (1)

2030 Term Loan (1)

Senior Unsecured Notes Revolving Credit Facility (2)

10 unchanged sentences

The Company was not in default of any provisions under any of its outstanding indebtedness as of December 31, 2024 or 2023.

Revolving Credit Facility, 2024 Term Loan, 2028 Term Loan and 2029 Term Loan

Revolving Credit Facility and Credit Facility Term Loans

Revolving Credit Facility and 2024 Term Loan.

In April 2019, the Company, through the Operating Partnership, entered into an amended and restated credit agreement (the “Amended Credit Agreement”) with a group of lenders, amending and restating the terms of the Company’s previous $ 300.0 million revolving credit facility to increase the maximum aggregate initial original principal amount of the revolving loans available thereunder up to $ 400.0 million (the “Revolving Credit Facility”) and to permit the incurrence of an additional $ 200.0 million in term loans thereunder (the “2024 Term Loan”).

11 unchanged sentences

The applicable margin and the revolving facility fee rate are initially a spread and rate, as applicable, set according to a leverage-based pricing grid.

At the Operating Partnership's election, on and after receipt of an investment grade corporate credit rating from S&P, Moody's or Fitch, the applicable margin and the revolving facility fee rate will be a spread and rate, as applicable, set according to the credit ratings provided by S&P, Moody's and/or Fitch.

At the Operating Partnership's election, on and after receipt of an investment grade corporate credit

rating from S&P, Moody's or Fitch, the applicable margin and the revolving facility fee rate will be a spread and rate, as applicable, set according to the credit ratings provided by S&P, Moody's and/or Fitch.

2028 Term Loan.

In July 2022, the Credit Agreement was further amended to provide for an additional $ 400.0 million of second tranche term loans (the “2028 Term Loan”).

Loans under the 2028 Term Loan in an aggregate principal amount of $ 250.0 million were drawn in July 2022, concurrently with the closing of such amendment, and the remaining $ 150.0 million was drawn in October 2022.

Such amendment also amended the applicable margin grid such that the applicable pricing for all borrowings under the Credit Agreement is based on the credit rating of the Company’s long-term senior unsecured non-credit enhanced debt for borrowed money (subject to a single step-down in the applicable pricing if the Company achieves a consolidated leverage ratio that is less than 0.35 to 1:00 while maintaining a credit rating of BBB/Baa2 from S&P, Moody's and/or Fitch), and reset the accordion feature to maintain the $ 600.0 million availability thereunder.

Such amendment also amended the applicable margin grid such that the applicable pricing for all borrowings under the Credit Agreement is based on the credit rating of the Company’s long-term senior unsecured non-credit enhanced debt for borrowed money (and, specific to borrowings under the Revolving Credit Facility and 2028 Term Loan only, subject to a single step-down in the applicable pricing if the Company achieves a consolidated leverage ratio that is less than 0.35 to 1:00 while maintaining a credit rating of BBB/Baa2 from S&P, Moody's and/or Fitch).

2029 Term Loan.

In August 2023, the Credit Agreement was further amended to provide for an additional $ 450.0 million of term loans (the "2029 Term Loan").

Concurrently with the closing of such amendment, loans under the 2029 Term Loan in an aggregate principal amount of $ 250.0 million were drawn, a portion of which was used to pay off the 2024 Term Loan in full.

Additional loans under the 2029 Term Loan were drawn in an aggregate principal amount of $ 125.0 million in September 2023 and $ 75.0 million in October 2023.

The 2029 Term Loan has an original maturity of three years, which may be extended, at the Operating Partnership's election, to February 2029 by exercising two one-year extension options and a six-month extension option.

The 2029 Term Loan will initially bear interest at an annual rate of applicable Adjusted Term SOFR plus an applicable margin.

Amounts previously borrowed and repaid under the 2024 Term Loan cannot be reborrowed.

The Company accounted for the repayment of the 2024 Term Loan as a debt extinguishment and recorded a $ 0.1 million loss on debt extinguishment during the year ended December 31, 2023.

Each of the Revolving Credit Facility, the 2028 Term Loan and the 2029 Term Loan is freely pre-payable at any time.

Additional loans under the 2029 Term Loan were drawn in an aggregate principal amount of $ 125.0 million in September 2023 and $ 75.0 million in October 2023, pursuant to a delayed funding feature.

The 2029 Term Loan has an original maturity of three years , which may be extended, at the Operating Partnership's election, to February 2029 by exercising two one-year extension options and a six-month extension option.

The 2029 Term Loan bears interest at an annual rate of applicable Adjusted Term SOFR plus an applicable margin.

2030 Term Loan .

In July 2024, the Credit Agreement was further amended to provide for an additional $ 450.0 million of term loans (the "2030 Term Loan") and reset the accordion feature to $ 500.0 million.

Concurrently with the closing of such amendment, loans under the 2030 Term Loan in an aggregate principal amount of $ 320.0 million were drawn, a portion of which was used to pay off the outstanding balance on the Revolving Credit Facility.

Additional loans under the 2030 Term Loan were drawn in an aggregate principal amount of $ 130.0 million in August 2024, pursuant to a delayed funding feature.

The 2030 Term Loan has an original maturity of three years , which may be extended, at the Operating Partnership's election, to January 2030 by exercising two one-year extension options and a six-month extension option.

The 2030 Term Loan bears interest at an annual rate of applicable Adjusted Term SOFR plus an applicable margin.

Each of the Revolving Credit Facility, the 2028 Term Loan, the 2029 Term Loan and the 2030 Term Loan is freely pre-payable at any time.

Outstanding credit extensions under the Revolving Credit Facility are mandatorily payable if the amount of such credit extensions exceeds the revolving facility limit.

The Operating Partnership may re-borrow amounts paid down on the Revolving Credit Facility prior to its maturity.

Loans repaid under the 2028 Term Loan and 2029 Term Loan cannot be reborrowed.

Loans repaid under the 2028 Term Loan, 2029 Term Loan and 2030 Term Loan cannot be reborrowed.

The Operating Partnership is the borrower under the Credit Agreement, and the Company and certain of its subsidiaries that own direct or indirect interests in an eligible real property assets are guarantors under the Credit Agreement.

1 unchanged sentence

The Company was in compliance with all financial covenants and was not in default on any provisions under the Credit Agreement as of December 31, 2024 and 2023.

The following table presents information about the Revolving Credit Facility for the periods presented:

The following table presents information about borrowings and repayments under the Revolving Credit Facility for the periods presented:

(in thousands) 2024 2023 2022

23 unchanged sentences

In May 2022, the Operating Partnership made an irrevocable election to have the applicable margin be a spread set according to the Company’s corporate credit ratings provided by S&P, Moody’s and/or Fitch.

The 2027 Term Loan is pre-payable at any time by the Operating Partnership (as borrower) without penalty.

The 2027 Term Loan is pre-payable at any time by the Operating Partnership without penalty.

The Operating Partnership may not re-borrow amounts paid down on the 2027 Term Loan.

3 unchanged sentences

The Company was in compliance with all financial covenants and was not in default of any provisions under the 2027 Term Loan as of December 31, 2024 and 2023.

The following table presents information about aggregate interest expense related to the 2024 Term Loan, 2027 Term Loan, 2028 Term Loan and 2029 Term Loan:

The following table presents information about aggregate interest expense related to the 2024 Term Loan, 2027 Term Loan, 2028 Term Loan, 2029 Term Loan and 2030 Term Loan:

Year ended December 31,

37 unchanged sentences

These derivatives are considered cash flow hedges and are recorded on a gross basis at fair value.

Subsequent to the adoption of ASU 2017-12, assessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach.

Assessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach.

The Company recognizes the entire change in the fair value in accumulated other comprehensive income (loss) and the change is reflected as derivative changes in fair value in the supplemental disclosures of non-cash financing activities in the consolidated statements of cash flows.

6 unchanged sentences

As of December 31, 2024 and 2023, there were no events of default related to the Company's derivative financial instruments.

The following table summarizes the notional amount at inception and fair value of these instruments on the Company's balance sheets as of December 31, 2023 and 2022 (dollar amounts in thousands):

The following table summarizes the notional amount at inception and fair value of these instruments on the Company's consolidated balance sheets, all of which are interest rates swaps designated as hedges, as of December 31, 2024 and 2023 (dollar amounts in thousands):

Fair Value of Asset/(Liability) (2)

Designated as

Hedging Instruments Fixed Rate Paid by

Company Effective Date Maturity Date Notional Value (1)

Number of Swap Agreements Associated Debt Instrument Fixed Rate Paid by Company Maturity Date Aggregate Notional Value (1)

December 31, 2024 December 31, 2023

Interest Rate Swap (3)

1.96 % 5/14/2019 4/12/2024 $ 100,000 $ 981 $ 3,545

Interest Rate Swap (3)

1.95 % 5/14/2019 4/12/2024 50,000 492 1,781

Interest Rate Swap (3)

1.94 % 5/14/2019 4/12/2024 50,000 492 1,777

Interest Rate Swap (3)

1.52 % 12/9/2019 11/26/2026 175,000 10,654 14,685

Interest Rate Swap (3)

1.51 % 12/9/2019 11/26/2026 50,000 3,077 4,248

Interest Rate Swap (3)

1.49 % 12/9/2019 11/26/2026 25,000 1,542 2,120

Interest Rate Swap (3)

1.26 % 7/9/2020 11/26/2026 100,000 6,810 9,324

Interest Rate Swap (3)

1.28 % 7/9/2020 11/26/2026 80,000 5,406 7,418

Interest Rate Swap 3.19 % 9/26/2022 1/25/2028 50,000 688 1,166

Interest Rate Swap 3.35 % 9/26/2022 1/25/2028 50,000 383 804

Interest Rate Swap 3.36 % 9/26/2022 1/25/2028 25,000 180 387

Interest Rate Swap 3.43 % 9/26/2022 1/25/2028 50,000 226 612

Interest Rate Swap 3.71 % 9/26/2022 1/25/2028 50,000 ( 290 ) ( 12 )

Interest Rate Swap 3.70 % 9/26/2022 1/25/2028 25,000 ( 144 ) ( 15 )

Interest Rate Swap 4.00 % 10/26/2022 1/25/2028 50,000 ( 851 ) ( 693 )

Interest Rate Swap 3.95 % 11/28/2022 1/25/2028 25,000 ( 378 ) ( 293 )

Interest Rate Swap 4.03 % 11/28/2022 1/25/2028 25,000 ( 459 ) ( 396 )

Interest Rate Swap 4.06 % 11/28/2022 1/25/2028 25,000 ( 485 ) ( 427 )

Interest Rate Swap 4.07 % 11/28/2022 1/25/2028 25,000 ( 492 ) ( 428 )

Interest Rate Swap 4.15 % 8/24/2023 2/28/2029 50,000 ( 1,550 ) —

Interest Rate Swap 4.38 % 9/29/2023 2/28/2029 75,000 ( 3,193 ) —

Interest Rate Swap 4.39 % 9/29/2023 2/28/2029 50,000 ( 2,114 ) —

Interest Rate Swap 4.32 % 10/11/2023 2/28/2029 25,000 ( 981 ) —

Interest Rate Swap 4.32 % 10/11/2023 2/28/2029 25,000 ( 980 ) —

Interest Rate Swap 4.51 % 10/31/2023 2/28/2029 25,000 ( 1,207 ) —

Interest Rate Swap (4)

4.48 % 4/12/2024 2/28/2029 100,000 ( 4,919 ) —

Interest Rate Swap (4)

4.48 % 4/12/2024 2/28/2029 100,000 ( 4,913 ) —

5 2027 Term Loan 1.41 % November 2026 430,000 20,759 27,489

11 2028 Term Loan 3.66 % January 2028 400,000 3,805 ( 1,622 )

8 2029 Term Loan 4.40 % February 2029 450,000 ( 7,407 ) ( 17,892 )

15 2030 Term Loan 3.82 % December 2029 450,000 2,972

$ 1,730,000 $ 20,129 $ 7,975

2 unchanged sentences

(2) Derivatives in an asset position are included within derivative assets and derivatives in a liability position are included within derivative liabilities in the Company's consolidated balance sheets.

(3) In June 2022, the Company converted the reference rate used in these interest rate swaps from 1-month LIBOR to 1-month Adjusted Term SOFR.

(4) The Company entered into two forward swap contracts during the year ended December 31, 2023.

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.

The following table presents amounts recorded to accumulated other comprehensive income related to derivative and hedging activities for the periods presented:

The following table presents amounts recorded to accumulated other comprehensive income (loss) related to derivative and hedging activities for the periods presented:

Year ended December 31,

3 unchanged sentences

As of December 31, 2023, the fair value of derivatives in a net asset position, including accrued interest but excluding any adjustment for nonperformance risk related to these agreements, was $ 31.1 million and the fair value of derivatives in a net liability position, including accrued interest but excluding an adjustment for nonperformance risk related to these agreements, was $ 23.4 million.

During the year ended December 31, 2023, the Company realized a gain on the change in fair value of its interest rate swaps of $ 27.7 million, which was included as a reduction of interest expense in the Company's consolidated statements of operations.

During the years ended December 31, 2022 and 2021, the Company realized a loss on the change in fair value of its interest rate swaps of approximately $ 26,000 and $ 10.1 million, respectively, which are included in interest expense in the Company's consolidated statements of operations.

During the years ended December 31, 2024 and 2023, the Company realized a gain on the change in fair value of its interest rate swaps of $ 29.3 million and $ 27.7 million, respectively, which are included as a reduction of interest expense in the Company's consolidated statements of operations.

During the year ended December 31, 2022, the Company realized a loss on the change in fair value of its interest rate swaps of approximately $ 26,000 , which was included in interest expense in the Company's consolidated statements of operations.

As of December 31, 2024 and December 31, 2023, the Company had not posted any collateral related to these agreements and was not in breach of any provisions of such agreements.

1 unchanged sentence

Stockholders' Equity

In April 2021, the Company completed a follow-on primary offering of 8,222,500 shares of its common stock, including 1,072,500 shares of common stock purchased by the underwriters pursuant to an option to purchase additional shares, at a public offering price of $ 23.50 per share.

Net proceeds from this follow-on offering, after deducting underwriting discounts and commissions and other expenses, were $ 185.1 million.

In August 2022, the Company completed a follow-on primary offering of 8,740,000 shares of its common stock, including the full exercise of the underwriters' option to purchase 1,140,000 additional shares of common stock, at a public offering price of $ 23.00 per share.

In August 2022, the Company completed a follow-on primary offering of 8,740,000 shares of its common stock, including the full exercise of the underwriters' option to purchase up to 1,140,000 additional shares of common stock, at a public offering price of $ 23.00 per share.

Net proceeds from this follow-on offering, after deducting underwriting discounts and commissions and other expenses, were $ 192.6 million.

In February 2023, the Company completed a follow-on primary offering of 8,855,000 shares of its common stock, including the full exercise of the underwriters' option to purchase 1,155,000 additional shares of common stock, at a public offering price of $ 24.60 per share, and entered into forward sale agreements relating to all such shares.

All shares were physically settled as of May 2023 and the Company realized net proceeds from this offering, after deducting underwriting discounts and commissions and other expenses, of $ 209.3 million.

In February 2023, the Company completed a follow-on primary offering of 8,855,000 shares of its common stock, including the full exercise of the underwriters' option to purchase up to 1,155,000 additional shares of common stock, at a public offering price of $ 24.60 per share, and entered into forward sale agreements relating to all such shares.

All of these forward sale agreements were physically settled as of May 2023 and the Company realized net proceeds from this offering, after deducting underwriting discounts and commissions and other expenses, of $ 209.3 million.

In September 2023, the Company completed a follow-on primary offering of 12,006,000 shares of its common stock, including the full exercise of the underwriters' option to purchase up to 1,566,000 additional shares of common stock, at a public offering price of $ 23.00 per share, and entered into forward sale agreements relating to all such shares.

Through December 31, 2023, the Company physically settled 8,165,087 shares under the forward sale agreements relating to this offering, realizing net proceeds of $ 180.0 million.

Assuming full physical settlement of the remaining forward sale agreements, net proceeds from this offering, after deducting underwriting discounts and commissions and other expenses and making certain other adjustments as provided in the forward sale agreements, are expected to be $ 263.4 million.

The Company is required to settle the balance of the forward sale agreements by September 2024.

All of these forward sale agreements were physically settled as of March 2024 and the Company realized net proceeds from this offering, after deducting underwriting discounts and commissions and other expenses, of $ 263.4 million.

In March 2024, the Company completed a follow-on primary offering of 10,350,000 shares of its common stock, including the full exercise of the underwriters' option to purchase up to 1,350,000 additional shares of common stock, at a public offering price of $ 24.75 per share, and entered into forward sale agreements relating to all such shares.

All of these forward sale agreements were physically settled as of December 2024 and the Company realized net proceeds from this offering, after deducting underwriting discounts and commissions and other expenses, of $ 245.0 million.

At the Market Program

In May 2022, the Company established a new at the market common equity offering program, pursuant to which it can publicly offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $ 500 million (the "2022 ATM Program") through the identified sales agents, as its sales agents or, if applicable, as forward sellers, or directly to such agents as principals.

In addition to the issuance and sale by the Company of shares to or through the agents, the 2022 ATM Program also permits the Company to enter into

separate forward sale agreements with the identified forward purchasers.

References to the Company's "ATM Program" are to the 2022 ATM Program or the 2022 ATM Program and its prior ATM programs as the context requires.

The following table presents information about the 2022 ATM Program and the Company's prior ATM Programs:

In May 2022, the Company established a new at the market common equity offering program, pursuant to which it could publicly offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $ 500 million (the "2022 ATM Program") through the identified sales agents, as its sales agents or, if applicable, as forward sellers, or directly to such agents as principals.

In addition to the issuance and sale by the Company of shares to or through the agents, the 2022 ATM Program also permitted the Company to enter into separate forward sale agreements with the identified forward purchasers.

In June 2024, the Company established a new at the market common equity offering program, pursuant to which it could publicly offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $ 500 million (the "June 2024 ATM Program") through the identified sales agents, as its sales agents or, if applicable, as forward sellers, or directly to such agents as principals.

In addition to the issuance and sale by the Company of shares to or through the agents, the June 2024 ATM Program also permitted the Company to enter into separate forward sale agreements with the identified forward purchasers.

In connection with establishing the June 2024 ATM Program, the Company terminated the 2022 ATM Program and no additional stock can be sold thereunder.

In October 2024, the Company established a new at the market common equity offering program, pursuant to which it could publicly offer and sell, from time to time, shares of its common stock with an aggregate gross sales price of up to $ 750 million (the "October 2024 ATM Program") through the identified sales agents, as its sales agents or, if applicable, as forward sellers, or directly to such agents as principals.

In addition to the issuance and sale by the Company of shares to or through the agents, the October 2024 ATM Program also permitted the Company to enter into separate forward sale agreements with the identified forward purchasers.

In connection with establishing the October 2024 ATM Program, the Company terminated the June 2024 ATM Program and no additional stock can be sold thereunder.

As context requires, the October 2024 ATM Program, the June 2024 ATM Program, the 2022 ATM Program and prior ATM programs are referred herein as the "ATM Programs."

The following table presents information about the ATM Programs (dollar amounts in thousands):

Program Name Date Established Date Terminated Maximum Sales Authorization Gross Sales through December 31, 2024

2019 ATM Program August 2019 June 2020 $ 200,000 $ 184,400

2020 ATM Program June 2020 July 2021 $ 250,000 $ 166,800

2021 ATM Program July 2021 May 2022 $ 350,000 $ 348,140

2022 ATM Program (1)

May 2022 $ 500,000 $ 220,643

May 2022 June 2024 $ 500,000 $ 383,426

June 2024 ATM Program (1)

June 2024 October 2024 $ 500,000 $ 339,992

October 2024 ATM Program (1)

October 2024 $ 750,000 $ 78,915

_____________________________________

(1) Includes 1,937,450 shares that the Company sold on a forward basis and were not physically settled as of December 31, 2023.

(1) Includes 4,027,834 shares from the 2022 ATM Program, 6,704,172 shares from the June 2024 ATM Program and 2,387,104 shares from the October 2024 ATM Program that the Company sold on a forward basis and were not physically settled as of December 31, 2024.

The following table details information related to activity under the ATM Program for each period presented:

7 unchanged sentences

_____________________________________

(1) Includes 1,937,450 shares that the Company sold on a forward basis and were not physically settled as of December 31, 2023.

(1) Includes 13,119,110 shares that the Company sold on a forward basis during the year ended December 31, 2024 and were not physically settled as of December 31, 2024.

(2) During the year ended December 31, 2024, the Company issued an additional 1,937,450 shares of common stock which were previously sold on a forward basis under the ATM Program and were unsettled as of December 31, 2023.

5 unchanged sentences

September 5, 2024 September 30, 2024 October 11, 2024 $ 0.29 $ 50,964

June 9, 2023 June 30, 2023 July 14, 2023 $ 0.28 $ 43,551

May 31, 2024 June 28, 2024 July 12, 2024 $ 0.29 $ 50,965

March 7, 2024 March 29, 2024 April 12, 2024 $ 0.285 $ 50,079

November 30, 2022 December 30, 2022 January 13, 2023 $ 0.275 $ 39,246

December 1, 2023 December 29, 2023 January 12, 2024 $ 0.285 $ 47,024

September 7, 2023 September 29, 2023 October 13, 2023 $ 0.28 $ 43,788

1 unchanged sentence

March 7, 2023 March 31, 2023 April 14, 2023 $ 0.275 $ 41,031

December 3, 2021 December 31, 2021 January 13, 2022 $ 0.26 $ 32,466

November 30, 2022 December 30, 2022 January 13, 2023 $ 0.275 $ 39,246

September 2, 2022 September 30, 2022 October 14, 2022 $ 0.27 $ 38,533

May 27, 2021 June 30, 2021 July 15, 2021 $ 0.25 $ 29,559

June 2, 2022 June 30, 2022 July 14, 2022 $ 0.27 $ 35,916

March 14, 2022 March 31, 2022 April 13, 2022 $ 0.26 $ 34,188

5 unchanged sentences

As of December 31, 2024, the Company held 187,537,592 OP Units, representing a 99.7 % limited partner interest in the Operating Partnership.

As of the same date, certain members of management and external parties (the "Non-controlling OP Unit Holders") held 553,847 OP Units in the aggregate, representing a 0.3 % limited partner interest in the Operating Partnership.

As of the same date, external parties (the "Non-controlling OP Unit Holders") held 553,847 OP Units in the aggregate, representing a 0.3 % limited partner interest in the Operating Partnership.

As of December 31, 2023, the Company held 164,635,150 OP Units, representing a 99.7 % limited partner interest in the Operating Partnership and the Non-controlling OP Unit Holders held 553,847 OP Units in the aggregate, representing a 0.3 % limited partner interest in the Operating Partnership.

32 unchanged sentences

Restricted Stock Awards

In June 2018, an aggregate of 691,290 shares of RSAs were issued to the Company's directors, executive officers and other employees under the Equity Incentive Plans.

These RSAs vested over periods ranging from one year to three years from the date of grant, subject to the individual recipient's continued provision of service to the Company through the applicable vesting dates.

In January 2019, RSAs relating to an aggregate of 46,368 shares of unvested restricted common stock were granted to the Company's executive officers, other employees and an external consultant under the Equity Incentive Plans.

1 unchanged sentence

The Company estimates the grant date fair value of RSAs granted under the Equity Incentive Plans using the average market price of the Company's common stock on the date of grant.

The final vesting of these RSAs occurred in January 2023.

The following table presents information about the Company's RSAs for the periods presented:

4 unchanged sentences

Fair value of shares vested during the period — 128 139

The following table presents information about the Company's RSAs as of the dates presented:

(Dollars in thousands) 2023 2022 2021

Total unrecognized compensation cost $ — $ 2 $ 130

Weighted average period over which compensation cost will be recognized (in years) — 0.1 1.0

Restricted Stock Units

In 2019, 2020, 2021, 2022 and 2023 the Company issued target grants of 119,085 , 84,684 , 126,353 , 149,699 and 147,587 performance-based RSUs, respectively, to the Company's senior management team under the Equity Incentive Plans.

Of these awards, 75 % are non-vested RSUs for which vesting percentages and the ultimate number of units vesting is calculated based on the total stockholder return ("TSR") of the Company's common stock as compared to the TSR of peer companies identified in the grant agreements.

In 2019, 2020, 2021, 2022, 2023 and 2024, the Company issued grants of 119,085 , 84,684 , 126,353 , 149,699 , 147,587 and 149,936 performance-based RSUs at target, respectively, to the Company’s senior management team under the Equity Incentive Plans.

Of these awards, 75 %, in the case of awards issued in 2019, 2020, 2021, 2022, and 2023, and 100 %, in the case of awards issued in 2024, are non-vested RSUs for which vesting percentages and the ultimate number of units vesting is calculated based on the total stockholder return (“TSR”) of the Company’s common stock as compared to the TSR of peer companies identified in the grant agreements over the relevant performance period.

The payout schedule can produce vesting percentages ranging from 0 % to 250 % of target.

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Risk free rate 4.46 %

The remaining 25 % of these performance-based RSUs vest based on the Compensation Committee's subjective evaluation of the individual recipient's achievement of certain strategic objectives over the performance period of the award.

In January 2022 and February 2023, the Compensation Committee identified specific performance targets and completed its subjective evaluation in relation to the performance-based RSUs granted in 2019 and 2020 and concluded that 78,801 and 50,598 RSUs, respectively, should be awarded.

50 % of these RSUs vested immediately upon the Compensation Committee's certification and the remaining 50 % vested on December 31, 2022 and December 31, 2023.

The remaining 25 % of these performance-based RSUs issued in 2019, 2020, 2021, 2022, and 2023 vest based on the Compensation Committee's subjective evaluation of the individual recipient’s achievement of certain strategic objectives over the relevant performance period of the award.

In January 2022, February 2023 and February 2024, the Compensation Committee identified specific performance targets and completed its subjective evaluation in relation to the performance-based RSUs issued in 2019, 2020 and 2021 and concluded that 78,801 , 50,598 and 63,448 RSUs, respectively, should be awarded.

50 % of these RSUs vested immediately upon the Compensation Committee's certification and the remaining 50 % vested or will vest on the December 31st following the Compensation Committee's certification, subject to the recipient's continued provision of service to the Company through such date.

The Company began recording compensation expense with respect to these subjective performance-based RSUs granted in 2019, 2020 and 2021 after the completion of the Compensation Committee's subjective evaluation.

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As of December 31, 2024, the Compensation Committee had not identified specific performance targets relating to the individual recipients' achievement of strategic objectives for the remainder of the subjective awards granted in 2022 and 2023.

As such, these awards do not have either a service inception or a grant date for GAAP accounting purposes and the Company recorded no compensation expense with respect to this portion of the performance-based RSUs during the years ended December 31, 2023, 2022 and 2021.

In 2020, 2021, 2022 and 2023, the Company issued an aggregate of 184,760 , 135,686 , 199,793 and 210,406 RSUs, respectively, to the Company’s executive officers, other employees and directors under the Equity Incentive Plan.

As such, these awards do not have either a service inception or a grant date for GAAP accounting purposes and the Company recorded no compensation expense with respect to this portion of these performance-based RSUs during the years ended December 31, 2024, 2023 and 2022.

In 2020, 2021, 2022, 2023 and 2024, the Company issued an aggregate of 184,760 , 135,686 , 199,793 , 210,406 and 179,187 RSUs, respectively, to the Company’s executive officers, other employees and directors under

the Equity Incentive Plan.

These awards vest over a period of up to five years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates.

In January 2022, the Company issued 69,372 performance-based RSUs (at target) to an executive officer under the Equity Incentive Plans.

These RSUs vest based on the compound annual growth rate of the Company's adjusted funds from operations ("AFFO CAGR") over a five year performance period, and the payout schedule can produce vesting percentages ranging from 0 % to 200 % of target.

To the extent the performance goal is achieved, these performance-based RSUs will vest in 50 % increments on each of the four-year and five-year anniversary of

the grant date, subject to the recipient's continued provision of service to the Company through the applicable vesting dates.

As of December 31, 2023 and 2022, based on its AFFO CAGR forecasts, the Company believes it is probable that the maximum performance level will be achieved and recorded compensation expense based off of this estimate during the years ended December 31, 2023 and 2022.

These RSUs vest based on the compound annual growth rate of the Company's adjusted funds from operations ("AFFO CAGR") over a four year performance period, and the payout schedule can produce vesting percentages ranging from 0 % to 200 % of target.

To the extent the performance goal is achieved, these performance-based RSUs will vest in 50 % increments on each of the four-year and five-year anniversary of the grant date, subject to the recipient's continued provision of service to the Company through the applicable vesting dates.

As of December 31, 2024 and 2023, based on its AFFO CAGR forecasts, the Company believed it was probable that the maximum performance level will be achieved and recorded compensation expense based off of this estimate during the years ended December 31, 2024 and 2023.

A portion of the RSUs that vested in 2024, 2023, and 2022 were net share settled such that the Company withheld shares with a value equal to the relevant employee's income and employment tax obligations with respect to the vesting and remitted a cash payment to the appropriate taxing authority.

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The guidance requires the classification of the Company’s unvested restricted common stock and units, which contain rights to receive non-forfeitable dividends or dividend equivalents, as participating securities requiring the two-class method of computing net income per share.

Diluted net income per share of common stock further considers the effect of potentially dilutive shares of common stock outstanding during the period, including the assumed vesting of RSUs with market-, performance- or service-based vesting conditions, where dilutive.

Diluted net income per share of common stock further considers the effect of potentially dilutive shares of common stock outstanding during the period, including the assumed vesting of RSUs with a market-based or service-based vesting condition, where dilutive.

The OP Units held by non-controlling interests represent potentially dilutive securities as the OP Units may be redeemed for cash or, at the Company’s election, exchanged for shares of the Company’s common stock on a one -for-one basis.

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The Company has employment agreements with certain of its executive officers.

These employment agreements have an initial term of four years , with automatic one year extensions unless notice of non-renewal is provided by either party.

These employment agreements have an initial term of approximately four years , with automatic one year extensions unless notice of non-renewal is provided by either party.

These agreements provide for initial annual base salaries and an annual performance bonus.

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These measurements are classified as Level 3 within the fair value hierarchy.

The Company believes the carrying value of its borrowings under the Revolving Credit Facility, the 2024 Term Loan, the 2027 Term Loan, the 2028 Term Loan, and the 2029 Term Loan as of December 31, 2023 and 2022 approximate fair value.

The Company believes the carrying value of its borrowings under the Revolving Credit Facility, the 2027 Term Loan, the 2028 Term Loan, and the 2029 Term Loan as of December 31, 2024 and 2023, and the carrying value of its borrowings under the 2030 Term Loan as of December 31, 2024, approximate fair value.

The Company measures the fair value of its senior unsecured notes and derivative financial instruments on a recurring basis.

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December 31, 2024

Financial assets:

Financial (liabilities) assets:

Senior unsecured notes (1)

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December 31, 2023

Financial assets:

Financial (liabilities) assets:

Senior unsecured notes (1)

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Long-lived assets

Convenience store $ 1,500 Sales comparison approach Non-binding sales agreement $ 1,500

Pet care services 2,139 Sales comparison approach Binding sales agreement 2,139

Quick service restaurant 871 Discounted cash flow approach Terminal value:

Quick Service $ 1,870 Sales comparison approach Binding sales agreement $ 1,870

Casual Dining 2,100 Sales comparison approach Non-binding sales agreement 2,100

Pet Care Services 267 sales comparison approach Non-binding sales agreement 267

Family Dining 1,295 Discounted cash flow approach Terminal Value:

Discount Rate:

Family Dining 1,080 Discounted cash flow approach Terminal Value:

Discount Rate:

The fair values of impaired real estate were determined by using the following information, depending on availability, in order of preference:

(i) signed purchase and sale agreements or letters of intent;

(ii) recently quoted

bid or ask prices;

(ii) recently quoted bid or ask prices;

(iii) estimates of future cash flows, which consider, among other things, contractual and forecasted rental revenues, leasing assumptions, terminal capitalization rates, discount rates and expenses based upon market conditions;

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The Company has evaluated all events and transactions that occurred after December 31, 2024 through the filing of this Annual Report on Form 10-K and determined that there have been no events that have occurred that would require adjustment to disclosures in the consolidated financial statements except as disclosed below.

Equity Awards

In January 2024, the Company issued an aggregate of 51,158 shares of unvested RSUs to certain of the Company’s employees under the Equity Incentive Plan.

These awards vest over a period of up to four years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the applicable vesting dates.

Credit Facility Amendment

In February 2025, the Company entered into an amendment to the Credit Agreement and, pursuant to such amendment, among other things, the availability of extensions of credit under the Revolving Credit Facility was increased to $ 1.0 billion, the accordion feature was increased to $ 1.0 billion and the Revolving Credit Facility's termination date was extended to February 2030, after giving effect to extension options exercisable at the Operating Partnership's election.

Subsequent Acquisition and Disposition Activity

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In addition, the Company invested $ 2.3 million in mortgage loans receivable subsequent to December 31, 2024.

Subsequent to December 31, 2023, the Company sold its investment in four real estate properties for an aggregate gross sales price of $ 9.1 million and incurred $ 0.3 million of disposition costs related to these transactions.

2022 ATM Program Activity

In January 2024, the Company sold 34,000 shares of its common stock on a forward basis under the 2022 ATM Program for gross proceeds of $ 0.9 million.

Forward Equity Settlement

In January 2024, the Company physically settled 1,374,363 shares of its common stock sold on a forward basis under the September 2023 follow-on primary offering for net proceeds of $ 30.0 million.

All settled shares were sold on a forward basis during the year ended December 31, 2023.

Subsequent to December 31, 2024, the Company sold its investment in seven real estate properties for an aggregate gross sales price of $ 19.7 million and incurred $ 0.8 million of disposition costs related to these transactions.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data