What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-04 · 121 added, 78 removed, 323 unchanged (38% of the section changed)

40 unchanged sentences

Consolidated Statements of Operations

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(in thousands, except per share amounts)

7 unchanged sentences

Total expenses

Loss before taxes

Loss on extinguishment of debt

Gain on sale of properties, net

Income (loss) before taxes

Net Income (loss)

Weighted average number of shares outstanding, basic and diluted

Net loss per share, basic and diluted

Net income (loss) per share, basic and diluted

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

2 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

Net income (loss)

Other comprehensive income (loss):

1 unchanged sentence

Total other comprehensive income (loss)

Comprehensive loss

Comprehensive income (loss)

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

11 unchanged sentences

Balance, March 31, 2020

Comprehensive income (loss)

Equity-based compensation

Distributions $ 0.09 per

share of common stock

Balance, June 30, 2020

Balance, December 31, 2020

3 unchanged sentences

Balance, March 31, 2021

Comprehensive income

Equity-based compensation

Distributions $ 0.09 per

share of common stock

Balance, June 30, 2021

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

1 unchanged sentence

Consolidated Statements of Cash Flows

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(in thousands)

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net loss to net cash provided by operating activities:

1 unchanged sentence

Amortization of above and below market leases

Shares issued as compensation

Loss on extinguishment of debt

Gain on sale of properties, net

Decrease in allowance for doubtful accounts

12 unchanged sentences

Property improvements, fixtures and equipment

Net cash used in investing activities

Proceeds received on sales of real estate assets

Net cash provided by (used in) investing activities

Cash flows from financing activities:

2 unchanged sentences

Repayments of bank note payable

Net cash provided by financing activities

Repayment of term loan payable

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

14 unchanged sentences

Collectively, the two REITs are referred to as the “Sponsored REITs”.

As of March 31, 2021, the Company owned and operated a portfolio of real estate consisting of 33 operating properties, one redevelopment property and two managed Sponsored REITs and held one promissory note secured by a mortgage on real estate owned by a Sponsored REIT.

As of June 30, 2021, the Company owned and operated a portfolio of real estate consisting of 29 operating properties, one redevelopment property and two managed Sponsored REITs and held one promissory note secured by a mortgage on real estate owned by a Sponsored REIT.

From time-to-time, the Company may acquire real estate or make additional secured loans.

1 unchanged sentence

The following table summarizes the Company’s number of operating properties and rentable square feet of real estate.

As of March 31, 2021 and March 31, 2020, the Company had one and three redevelopment properties, respectively, which are excluded from the table.

As of March 31,

As of June 30, 2021 and June 30, 2020, the Company had one and three redevelopment properties, respectively, which are excluded from the table.

As of June 30,

Operating Properties:

9 unchanged sentences

In the opinion of management, all adjustments (consisting solely of normal recurring matters) necessary for a fair presentation of the financial statements for these interim periods have been included.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other period.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other period.

Financial Instruments

8 unchanged sentences

Total cash, cash equivalents and restricted cash

Restricted cash consists of escrows arising from property sales.

Cash held in escrow is paid when the related issue is resolved.

Recent Accounting Standards

2 unchanged sentences

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

The ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

2 unchanged sentences

Investment in Sponsored REITs:

At each of March 31, 2021 and December 31, 2020, the Company held a non-controlling common stock interest in two Sponsored REITs in which the Company no longer shares in economic benefit or risk.

At each of June 30, 2021 and December 31, 2020, the Company held a non-controlling common stock interest in two Sponsored REITs in which the Company no longer shares in economic benefit or risk.

Management fees and interest income from loans:

Asset management fees range from 1 % to 5 % of collected rents and the applicable contracts are cancellable with 30 days notice.

Asset management fee income from non-consolidated entities amounted to approximately $ 16,000 and $ 21,000 for the three months ended March 31, 2021 and 2020, respectively.

Asset management fee income from non-consolidated entities amounted to approximately $ 34,000 and $ 45,000 for the six months ended June 30, 2021 and 2020, respectively.

From time to time the Company may make secured loans (“Sponsored REIT Loans”) to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes.

7 unchanged sentences

The Sponsored REIT Loan is secured by a mortgage on the underlying property and has a term of approximately two years .

The following is a summary of the Sponsored REIT Loan outstanding as of March 31, 2021:

The following is a summary of the Sponsored REIT Loan outstanding as of June 30, 2021:

(dollars in thousands, except footnotes)

4 unchanged sentences

(1) The interest rate is a fixed rate and this mortgage loan includes an origination fee of $ 164,000 and an exit fee of $ 38,000 when repaid by the borrower.

The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $ 394,000 and $ 382,000 for the three months ended March 31, 2021 and 2020, respectively.

The financial instrument was classified within Level 3 of the fair value hierarchy and had a fair value of approximately $ 20.3 million as of March 31, 2021.

The Company recognized interest income and fees from the Sponsored REIT Loans of approximately $ 793,000 and $ 763,000 for the six months ended June 30, 2021 and 2020, respectively.

The financial instrument was classified within Level 3 of the fair value hierarchy and had a fair value of approximately $ 20.4 million as of June 30, 2021.

On December 6, 2020, the Company entered into a second amendment to the Sponsored REIT Loan which qualified as a troubled debt restructuring.

1 unchanged sentence

There were no commitments to lend additional funds to the Sponsored REIT and the loan is fully collateralized by the mortgage held on the Sponsored REIT's property.

Repayment of the Sponsored REIT Loan outstanding with FSP Monument Circle LLC is expected to be provided substantially through the operation or sale of the collateral.

Repayment of the Sponsored REIT Loan outstanding with FSP Monument Circle LLC is expected to be provided substantially through the sale of the collateral.

Bank Note Payable, Term Loans Payable and Senior Notes

JPM Term Loan

On August 2, 2018, the Company entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and lender (“JPMorgan”), and the other lending institutions party thereto (the “JPM Credit Agreement”), which provides a single unsecured bridge loan in the aggregate principal amount of $ 150 million (the “JPM Term Loan”).

On December 24, 2020, the Company repaid a $ 50 million portion of the JPM Term Loan with a portion of the proceeds from the December 23, 2020 sale of its Durham, North Carolina property, and $ 100 million remains fully advanced and outstanding under the JPM Term Loan.

The JPM Term Loan matures on November 30, 2021.

The Company has the right to extend the maturity date of the JPM Term Loan by two additional six month periods, or until November 30, 2022, (subject to specified exceptions).

The JPM Term Loan was previously evidenced by a Credit Agreement, dated November 30, 2016, among the Company, JPMorgan, as administrative agent and lender, and the other lending institutions party thereto, as amended by a First Amendment, dated October 18, 2017.

The JPM Term Loan bears interest at either (i) a number of basis points over a LIBOR-based rate depending on the Company’s credit rating ( 125.0 basis points over the LIBOR-based rate at March 31, 2021) or (ii) a number of basis points over the base rate depending on the Company’s credit rating ( 25.0 basis points over the base rate at March 31, 2021).

Although the interest rate on the JPM Term Loan is variable under the JPM Credit Agreement, the Company fixed the LIBOR-based rate on a portion of the JPM Term Loan by entering into interest rate swap transactions.

On August 2, 2018, the Company entered into an Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent and lender (“JPMorgan”), and the other lending institutions party thereto (the “JPM Credit Agreement”), which provided a single unsecured bridge loan in the aggregate principal amount of $ 150 million (the “JPM Term Loan”).

On December 24, 2020, the Company repaid a $ 50 million portion of the JPM Term Loan with a portion of the proceeds from the December 23, 2020 sale of its Durham, North Carolina property, and $ 100 million remained fully advanced and outstanding under the JPM Term Loan.

On June 4, 2021, the Company repaid the remaining $ 100 million outstanding on the loan, which had been scheduled to mature on November 30, 2021, and incurred a loss on extinguishment of debt of $ 0.1 million related to unamortized deferred financing costs.

Although the interest rate on the JPM Term Loan was variable under the JPM Credit Agreement, the Company fixed the LIBOR-based rate on a portion of the JPM Term Loan by entering into interest rate swap transactions.

On March 7, 2019, the Company entered into ISDA Master Agreements with various financial institutions to hedge a $ 100 million portion of the future LIBOR-based rate risk under the JPM Credit Agreement.

Effective March 29, 2019, the Company fixed the LIBOR-based rate at 2.44 % per annum on a $ 100 million portion of the JPM Term Loan until November 30, 2021.

Accordingly, based upon the Company’s credit rating, as of March 31, 2021, the effective interest rate on the remaining $ 100 million portion of the JPM Term Loan was 3.69 % per annum.

The JPM Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in

business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates.

The JPM Credit Agreement also contains financial covenants that require the Company to maintain a minimum tangible net worth, a minimum fixed charge coverage ratio, a maximum secured leverage ratio, a maximum leverage ratio, a maximum unencumbered leverage ratio, and minimum unsecured interest coverage.

The JPM Credit Agreement provides for customary events of default with corresponding grace periods, including failure to pay any principal or interest when due, certain cross defaults and a change in control of the Company (as defined in the JPM Credit Agreement).

In the event of a default by the Company, the administrative agent may, and at the request of the requisite number of lenders shall, declare all obligations under the JPM Credit Agreement immediately due and payable, and enforce any and all rights of the lenders or administrative agent under the JPM Credit Agreement and related documents.

For certain events of default related to bankruptcy, insolvency, and receivership, all outstanding obligations of the Company will become immediately due and payable.

The Company was in compliance with the JPM Term Loan financial covenants as of March 31, 2021.

On June 4, 2021, the Company paid approximately $ 1.2 million to terminate the interest rate swap, which was scheduled to mature on November 30, 2021.

BMO Term Loan

On September 27, 2018, the Company entered into a Second Amended and Restated Credit Agreement with the lending institutions party thereto and Bank of Montreal (“BMO”), as administrative agent (the “BMO Credit Agreement”).

The BMO Credit Agreement provides for a single, unsecured term loan borrowing in the amount of $ 220 million (the “BMO Term Loan”) that remains fully advanced and outstanding.

The BMO Term Loan consists of a $ 55 million tranche A term loan and a $ 165 million tranche B term loan.

The tranche A term loan matures on November 30, 2021 and the tranche B term loan matures on January 31, 2024.

The BMO Credit Agreement provides for a single, unsecured term loan borrowing in the initial amount of $ 220 million (the “BMO Term Loan”), of which $ 165 million remains fully advanced and outstanding.

The BMO Term Loan initially consisted of a $ 55 million tranche A term loan and a $ 165 million tranche B term loan.

On June 4, 2021, the Company repaid the tranche A term loan that was scheduled to mature on November 30, 2021, and incurred a loss on extinguishment of debt of $ 0.1 million

related to unamortized deferred financing costs.

The $ 165 million tranche B term loan matures on January 31, 2024.

The BMO Credit Agreement also includes an accordion feature that allows up to $ 100 million of additional loans, subject to receipt of lender commitments and satisfaction of certain customary conditions.

The BMO Term Loan was previously evidenced by an Amended and Restated Credit Agreement, dated October 29, 2014, among the Company, BMO, as administrative agent and lender, and the other lending institutions party thereto, as amended by a First Amendment, dated July 21, 2016, and a Second Amendment, dated October 18, 2017.

The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating ( 125 basis points over LIBOR at March 31, 2021) or (ii) a number of basis points over the base rate depending on the Company’s credit rating ( 25 basis points over the base rate at March 31, 2021).

The BMO Term Loan bears interest at either (i) a number of basis points over LIBOR depending on the Company’s credit rating ( 165 basis points over LIBOR at June 30, 2021) or (ii) a number of basis points over the base rate depending on the Company’s credit rating ( 65 basis points over the base rate at June 30, 2021).

Although the interest rate on the BMO Term Loan is variable under the BMO Credit Agreement, the Company fixed the base LIBOR interest rate by entering into interest rate swap transactions.

1 unchanged sentence

On February 20, 2019, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BMO Term Loan at 2.39 % per annum for the period beginning on August 26, 2020 and ending January 31, 2024.

Accordingly, based upon the Company’s credit rating, as of March 31, 2021, the effective interest rate on the BMO Term Loan was 3.64 % per annum.

Accordingly, based upon the Company’s credit rating, as of June 30, 2021, the effective interest rate on the BMO Term Loan was 4.04 % per annum.

On June 4, 2021, the Company paid approximately $ 0.6 million to terminate the portion of the interest rate swap on the tranche A term loan, which was scheduled to mature on November 30, 2021.

The BMO Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations with respect to indebtedness, liens, investments, mergers and acquisitions, disposition of assets, changes in business, certain restricted payments, the requirement to have subsidiaries provide a guaranty in the event that they incur recourse indebtedness and transactions with affiliates.

3 unchanged sentences

For certain events of default related to bankruptcy, insolvency, and receivership, the commitments of lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.

The Company was in compliance with the BMO Term Loan financial covenants as of March 31, 2021.

The Company was in compliance with the BMO Term Loan financial covenants as of June 30, 2021.

BAML Credit Facility

4 unchanged sentences

● Borrowings made pursuant to the BAML Revolver may be borrowed, repaid and reborrowed from time to time until the initial maturity date of January 12, 2022.

The Company has the right to extend the maturity date of the BAML Revolver by two additional six month periods, or until January 12, 2023, upon payment of a fee and satisfaction of certain customary conditions.

The Company has the right to extend the maturity

date of the BAML Revolver by two additional six month periods, or until January 12, 2023, upon payment of a fee and satisfaction of certain customary conditions.

● The BAML Credit Facility includes an accordion feature that allows for an aggregate amount of up to $ 500 million of additional borrowing capacity applicable to the BAML Revolver and/or the BAML Term Loan, subject to receipt of lender commitments and satisfaction of certain customary conditions.

As of March 31, 2021, there were $ 27.5 million of borrowings outstanding under the BAML Revolver.

The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.20 % over LIBOR at March 31, 2021) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.20 % over the base rate at March 31, 2021).

As of June 30, 2021, there were no borrowings outstanding under the BAML Revolver.

The BAML Revolver bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.55 % over LIBOR at June 30, 2021) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.55 % over the base rate at June 30, 2021).

The BAML Credit Facility also obligates the Company to pay an annual facility fee in an amount that is also based on the Company’s credit rating.

The facility fee is assessed against the total amount of the BAML Revolver, or $ 600 million ( 0.25 % at March 31, 2021).

Based upon the Company’s credit rating, as of March 31, 2021, the interest rate on the BAML Revolver was 1.31 % per annum.

The weighted average interest rate on all amounts outstanding on the BAML Revolver during the three months ended March 31, 2021 was approximately 1.31 % per annum.

The facility fee is assessed against the total amount of the BAML Revolver, or $ 600 million ( 0.30 % at June 30, 2021).

Based upon the Company’s credit rating, as of June 30, 2021, the interest rate on the BAML Revolver was 1.65 % per annum.

The weighted average interest rate on all amounts outstanding on the BAML Revolver during the six months ended June 30, 2021 was approximately 1.31 % per annum.

As of December 31, 2020, there were $ 3.5 million of borrowings outstanding under the BAML Revolver.

5 unchanged sentences

● On September 27, 2012, the Company drew down the entire $ 400 million under the BAML Term Loan and such amount remains fully advanced and outstanding under the BAML Term Loan.

The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.35 % over LIBOR at March 31, 2021) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.35 % over the base rate at March 31, 2021).

The BAML Term Loan bears interest at either (i) a margin over LIBOR depending on the Company’s credit rating ( 1.75 % over LIBOR at June 30, 2021) or (ii) a margin over the base rate depending on the Company’s credit rating ( 0.75 % over the base rate at June 30, 2021).

Although the interest rate on the BAML Credit Facility is variable, the Company fixed the base LIBOR interest rate on the BAML Term Loan by entering into interest rate swap transactions.

On July 22, 2016, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BAML Term Loan at 1.12 % per

annum for the period beginning on September 27, 2017 and ending on September 27, 2021.

Accordingly, based upon the Company’s credit rating, as of March 31, 2021, the effective interest rate on the BAML Term Loan was 2.47 % per annum.

On July 22, 2016, the Company entered into ISDA Master Agreements with a group of banks that fixed the base LIBOR interest rate on the BAML Term Loan at 1.12 % per annum for the period beginning on September 27, 2017 and ending on September 27, 2021.

Accordingly, based upon the Company’s credit rating, as of June 30, 2021, the effective interest rate on the BAML Term Loan was 2.87 % per annum.

BAML Credit Facility General Information

3 unchanged sentences

In the event of a default by the Company, the administrative agent may, and at the request of the requisite number of lenders shall, declare all obligations under the BAML Credit Facility immediately due and payable, terminate the lenders’ commitments to make loans under the BAML Credit Facility, and enforce any and all rights of the lenders or administrative agent under the BAML Credit Facility and related documents.

The Company was in compliance with the BAML Credit Facility financial covenants as of March 31, 2021.

For certain events of default related

to bankruptcy, insolvency, and receivership, the commitments of lenders will be automatically terminated and all outstanding obligations of the Company will become immediately due and payable.

The Company was in compliance with the BAML Credit Facility financial covenants as of June 30, 2021.

The Company may use the proceeds of the loans under the BAML Credit Facility to finance the acquisition of real properties and for other permitted investments;

3 unchanged sentences

On December 20, 2017, the Senior Notes were funded and the proceeds were used to reduce the outstanding balance of the BAML Revolver.

The Senior Notes bear interest depending on the Company’s credit rating.

As of June 30, 2021, the Series A Notes bear interest at 4.49 % per annum and the Series B Notes bear interest at 4.76 % per annum.

The Note Purchase Agreement contains customary financial covenants, including a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, and a maximum unencumbered leverage ratio.

6 unchanged sentences

In the case of an event of default, the Purchasers may, among other remedies, accelerate the payment of all obligations.

The Company was in compliance with the Senior Notes financial covenants as of March 31, 2021.

The Company was in compliance with the Senior Notes financial covenants as of June 30, 2021.

Financial Instruments:

4 unchanged sentences

The variable rates that were fixed under the 2017 Interest Rate Swap, the 2019 JPM Interest Rate Swap and the 2019 BMO Interest Rate Swap (collectively referred to as the “Interest Rate Swaps”) are described in Note 3.

On June 4, 2021, the Company paid approximately $ 1.2 million to terminate the 2019 JPM Interest Rate Swap that was scheduled to mature on November 30, 2021 and approximately $ 0.6 million to terminate a portion of the 2019 BMO Interest Rate Swap that was scheduled to mature on November 30, 2021.

As a result of the terminations, approximately $1.9 million of the balance held in accumulated other comprehensive income (loss) was reclassified into earnings.

The JPM Term Loan and a portion of the BMO Term Loan related to these interest rate swaps was also repaid on June 4, 2021, which is described in Note 3.

The Interest Rate Swaps qualify as cash flow hedges and have been recognized on the consolidated balance sheets at fair value.

1 unchanged sentence

The ineffective portion of a derivative’s change in fair value will be recognized in earnings in the same period in which the hedged interest payments affect earnings, which may increase or decrease reported net income and stockholders’ equity prospectively, depending on future levels of interest rates and other variables affecting the fair values of derivative instruments and hedged items, but will have no effect on cash flows.

The following table summarizes the notional and fair value of the Company’s derivative financial instruments at March 31, 2021.

The following table summarizes the notional and fair value of the Company’s derivative financial instruments at June 30, 2021.

The notional value is an indication of the extent of the Company’s involvement in these instruments at that time, but does not represent exposure to credit, interest rate or market risks.

1 unchanged sentence

(in thousands)

March 31, 2021

June 30, 2021

December 31, 2020

2 unchanged sentences

2019 BMO Interest Rate Swap (1)

(1) The Notional Value will decrease to $ 165 million on November 30, 2021.

(1) The Notional Value decreased to $ 165 million on June 4, 2021.

(2) Classified within Level 2 of the fair value hierarchy.

On March 31, 2021, the 2017 Interest Rate Swap, 2019 JPM Interest Rate Swap and 2019 BMO Interest Rate Swap were reported as liabilities with an aggregate fair value of approximately $ 13.7 million and are included in other liabilities:

derivative liabilities in the consolidated balance sheet at March 31, 2021.

The gain/(loss) on the Company’s Interest Rate Swaps that was recorded in other comprehensive income (loss) (OCI) and the accompanying consolidated statements of operations as a component of interest expense for the three months ended March 31, 2021 and 2020, respectively, was as follows:

On June 30, 2021, the 2017 Interest Rate Swap and 2019 BMO Interest Rate Swap were reported as liabilities with an aggregate fair value of approximately $ 9.4 million and are included in other liabilities:

derivative liabilities in the consolidated balance sheet at June 30, 2021.

The gain/(loss) on the Company’s Interest Rate Swaps that was recorded in other comprehensive income (loss) (OCI) and the accompanying consolidated statements of operations as a component of interest expense for the six months ended June 30, 2021 and 2020, respectively, was as follows:

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Interest Rate Swaps in Cash Flow Hedging Relationships:

18 unchanged sentences

Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue shares were exercised or converted into shares.

There were no potential dilutive shares outstanding at each of March 31, 2021 and 2020.

There were no potential dilutive shares outstanding at each of June 30, 2021 and 2020.

Stockholders’ Equity

As of March 31, 2021, the Company had 107,328,199 shares of common stock outstanding.

As of June 30, 2021, the Company had 107,394,763 shares of common stock outstanding.

The Company declared and paid dividends as follows (in thousands, except per share amounts):

1 unchanged sentence

First quarter of 2021

Second quarter of 2021

First quarter of 2020

Second quarter of 2020

Equity-Based Compensation

4 unchanged sentences

Upon granting an Award, the Company will recognize compensation cost equal to the fair value of the Company’s common stock, as determined by the Company’s Board of Directors, on the date of the grant.

On June 4, 2020, the Company granted 58,998 shares under the Plan to non-employee directors at a compensation cost of approximately $ 337,000 , which was recognized during the year ended December 31, 2020 and is included in general and administrative expenses for such period.

On June 4, 2020, the Company granted 58,998 shares under the Plan to non-employee directors at a compensation cost of approximately $ 337,500 and on May 20, 2021, the Company granted 66,564 shares under the Plan to non-employee directors at a compensation cost of approximately $ 337,500 , which was recognized during the six months ended June 30, 2020 and 2021, respectively, and is included in general and administrative expenses for such periods.

Such shares were fully vested on the date of issuance.

6 unchanged sentences

Shares granted 2021

Balance March 31, 2021

Balance June 30, 2021

The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”).

6 unchanged sentences

are the Company’s taxable REIT subsidiaries operating as taxable corporations under the Code.

The TRSs have gross amounts of net operating losses (“NOLs”) available to those taxable corporations of $ 4.6 million and $ 4.4 million as of each of December 31, 2020, and 2019 respectively.

The TRSs have gross

amounts of net operating losses (“NOLs”) available to those taxable corporations of $ 4.6 million and $ 4.4 million as of each of December 31, 2020, and 2019 respectively.

The NOLs created prior to 2018 will expire between 2030 and 2047 and the NOLs generated after 2017 will not expire.

13 unchanged sentences

A valuation allowance is provided for the full amount of the NOLs as the realization of any tax benefits from such NOLs is not assured.

The gross amount of NOLs available to the Company was $ 13.0 million as of each of March 31, 2021 and December 31, 2020.

The gross amount of NOLs available to the Company was $ 13.0 million as of each of June 30, 2021 and December 31, 2020.

Income Tax Expense

2 unchanged sentences

Because the tax base on the Revised Texas Franchise Tax is derived from an income based measure, it is considered an income tax.

The Company recorded a provision for the Revised Texas Franchise Tax of $ 67,000 and $ 68,000 for the three months ended March 31, 2021 and 2020, respectively.

The Company recorded a provision for the Revised Texas Franchise Tax of $ 123,000 and $ 132,000 for the six months ended June 30, 2021 and 2020, respectively.

The income tax expense reflected in the consolidated statements of operations relates primarily to a franchise tax on the Company’s Texas properties.

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(Dollars in thousands)

4 unchanged sentences

The Company is a lessor of commercial real estate with operations that include the leasing of office and industrial properties.

Many of the leases with customers contain options to extend leases at a fair market rate and may also include options to terminate leases.

Many of the leases with customers contain options to extend leases at a fair market rate and may also include options to

terminate leases.

The Company considers several inputs when evaluating the amount it expects to derive from its leased assets at the end of the lease terms, such as the remaining useful life, expected market conditions, fair value of lease payments, expected fair values of underlying assets, and expected deployment of the underlying assets.

5 unchanged sentences

Although increases in the CPI are not estimated as part of the Company’s measurement of straight-line rent revenue, to the extent that the actual CPI is greater or less than the CPI at lease commencement, there could be changes to realized income or loss.

For the three months ended March 31, 2021 and 2020, the Company recognized the following amounts of income relating to lease payments:

For the six months ended June 30, 2021 and 2020, the Company recognized the following amounts of income relating to lease payments:

Income relating to lease payments:

Three Months Ended

Six Months Ended

(in thousands)

March 31, 2021

March 31, 2020

June 30, 2021

June 30, 2020

Income from leases (1)

(1) Amounts recognized from variable lease payments were $ 14,688 and $ 15,629 for the three months ended March 31, 2021 and 2020, respectively.

(1) Amounts recognized from variable lease payments were $ 28,974 and $ 29,945 for the six months ended June 30, 2021 and 2020, respectively.

Dispositions of properties

In 2021, the Company determined that further debt reduction would provide greater financial flexibility and potentially increase shareholder value.

Accordingly, the Company adopted a strategy to dispose of certain properties in 2021 where it believes its valuation objective has been met.

The Company sold three office properties located in Atlanta, Georgia on May 27, 2021 with an aggregate sales price of approximately $ 219.5 million, at a net gain of approximately $ 22.7 million.

The Company sold an office property in Dulles, Virginia on June 29, 2021 at a loss of $ 2.1 million.

The Company used the proceeds of the dispositions principally to repay outstanding indebtedness.

The Company reports the results of operations of its properties in its consolidated statements of operations, which includes rental income, rental operating expenses, real estate taxes and insurance and depreciation and amortization.

The operating results for the properties that the Company disposed of are summarized below:

For the Three Months Ended

For the Six Months Ended

(in thousands)

Rental revenue

Rental operating expenses

Real estate taxes and insurance

Depreciation and amortization

Income from dispositions

Subsequent Events

On April 2, 2021, the Board of Directors of the Company declared a cash distribution of $ 0.09 per share of common stock payable on May 7, 2021 to stockholders of record on April 16, 2021.

On March 5, 2021, the Company entered into a Purchase and Sale Agreement with a third-party buyer for the disposition of three office properties located in Atlanta, Georgia for a purchase price of approximately $ 219.5 million.

The buyer’s due diligence inspection period expired on April 15, 2021 and the Company had no assurance the sale was probable as of March 31, 2021.

Assuming satisfaction of certain customary conditions to close, the closing of the sale of the properties is expected to take place on or about May 17, 2021;

provided, however, that seller and buyer each have a one -time right to extend the closing date by up to thirty (30) days by providing notice to the other party at least three (3) business days prior to the then scheduled closing date.

On July 6, 2021, the Board of Directors of the Company declared a cash distribution of $ 0.09 per share of common stock payable on August 5, 2021 to stockholders of record on July 16, 2021.

On July 9, 2021, the Company entered into a Purchase and Sale Agreement with a third-party buyer for the disposition of two office properties located in Chantilly, Virginia for a purchase price of approximately $ 40 million.

Assuming satisfaction of certain customary conditions to close, including successful completion by the buyer of a due diligence inspection period, the closing of the sale of the properties is expected to take place on or about September 9, 2021.

On July 13, 2021, the Company entered into a Purchase and Sale Agreement with a third-party buyer for the disposition of two properties located in Chesterfield, Missouri for a purchase price of approximately $ 67 million.

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-Q

Item 1. Financial Statements