What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-07-27 · 177 added, 163 removed, 366 unchanged (48% of the section changed)

18 unchanged sentences

All references to annualized generally accepted accounting principles (“GAAP”) rent are rents that each tenant pays in accordance with the terms of its respective lease reported evenly over the non-cancelable term of the lease.

As of July 27, 2020 :

As of November 5, 2020:

• we owned 120 properties totaling 15.0 million square feet in 28 states;

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The rapid spread of the coronavirus identified as COVID-19 resulted in authorities throughout the United States and the world implementing widespread measures attempting to contain the spread and impact of COVID-19, such as travel bans and restrictions, quarantines, shelter in place orders, the promotion of social distancing and limitations on business activity, including business closures.

These measures and the pandemic have caused a significant national and global economic downturn, disrupted business operations, including those of our tenants, significantly increased unemployment and underemployment levels, and are expected to have an adverse effect on both industrial and office demand for space in the short term.

These measures and the pandemic have caused a significant national and global economic downturn, disrupted business operations, including those of certain of our tenants, significantly increased unemployment and underemployment levels, and are expected to have an adverse effect on office demand for space in the short term, at a minimum.

The demand for industrial space has moderated as well, but the continuing growth of e-commerce is counterbalancing the adverse effects from COVID-19.

Interest rates have been volatile and although interest rates are still low by historical standards (and in some cases have been reduced to help curb the impact of COVID-19), lenders have varied on their required spreads over the last several quarters.

Investment sales volume across all product types in recent months is lower year over year, as compared to 2019 as a direct result of COVID-19.

Investment sales volume across all product types, but especially office and retail, in recent months is lower year over year, as compared to 2019 as a direct result of COVID-19.

After completing the 11th year of the current cycle, some national research firms had been estimating that both pricing and investment sales volume would be peaking and the national economy would be slowing in the near term, prior to the rapid spread of COVID-19.

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Any of these events could materially adversely impact our business, financial condition, liquidity, results of operations, funds from operations or prospects.

As of July 27, 2020 , we have collected approximately 99% of all July cash base rent obligations.

As of November 5, 2020, we have collected 100% of all outstanding October cash base rent obligations and approximately 99% of third quarter 2020 cash base rent obligations.

In April 2020, we granted rent deferrals to three tenants representing approximately 2% of total portfolio rents.

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In connection with one of the rent deferrals, we were able to obtain short term mortgage payment relief from our lender on the loan associated with those properties.

We collected all cash base rent obligations during the first half of 2020 that were not subject to rent deferral agreements.

We collected all cash base rent obligations during the first nine months of 2020 that were not subject to rent deferral agreements.

We may pursue additional loan relief agreements in the future.

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We believe we currently have adequate liquidity in the near term, and we believe the availability on our Credit Facility is sufficient to cover all near term debt obligations and operating expenses.

We are in compliance with all of our debt covenants, and we amended our Credit Facility within the past twelve months to increase our borrowing capacity.

We are in compliance with all of our debt covenants, and we amended our Credit Facility in 2019 to increase our borrowing capacity and extend its maturity date.

We have had numerous conversations with lenders and do not believe there will be a credit freeze in the near term.

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Other Business Environment Considerations

The long-term impact of tax reform in the U.S.

also continues to be unknown at this time, although the lowering of the corporate tax rate is generally expected to be beneficial.

Finally, the continuing uncertainty surrounding the ability of the federal government to address its fiscal condition in both the near and long term, particularly with the recent fiscal stimulus as well as other geo-political issues relating to the global economic slowdown has increased domestic and global instability.

The short-term and long-term economic implications of the presidential election result are unknown at this time, inclusive of the long-term impact of tax reform in the U.S.

Finally, the continuing uncertainty surrounding the ability of the federal government to address its fiscal condition in both the near and long term, particularly with the ongoing discussions regarding additional fiscal stimulus as well as other geopolitical issues relating to the global economic slowdown has increased domestic and global instability.

These developments could cause interest rates and borrowing costs to be volatile, which may adversely affect our ability to access both the equity and debt markets and could have an adverse impact on our tenants as well.

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We continue to focus on re-leasing vacant space, renewing upcoming lease expirations, re-financing upcoming loan maturities, and acquiring additional properties with associated long-term leases.

Currently, we have three partially vacant buildings and three fully vacant buildings.

We have two leases expiring during the remainder of 2020 , which account for 3.9% of lease revenue recognized during the six months ended June 30, 2020 , 11 leases expiring in 2021 , which account for 5.1% of lease revenue recognized during the six months ended June 30, 2020 , and eight leases expiring in 2022 , which account for 6.2% of lease revenue recognized during the six months ended June 30, 2020 .

Our available vacant space at June 30, 2020 represents 4.5% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $1.7 million .

Currently, we have three partially vacant buildings and four fully vacant buildings.

We have no leases expiring during the remainder of 2020, 10 leases expiring in 2021, which account for 5.1% of lease revenue recognized during the nine months ended September 30, 2020, and eight leases expiring in 2022, which account for 6.3% of lease revenue recognized during the nine months ended September 30, 2020.

Our available vacant space at September 30, 2020 represents 5.0% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $4.2 million.

We continue to actively seek new tenants for these properties.

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2020 Sale Activity

During the six months ended June 30, 2020 , we continued to execute our capital recycling program, whereby we sell non-core properties and redeploy proceeds to fund property acquisitions located in our target secondary growth markets, as well as repay outstanding debt.

During the nine months ended September 30, 2020, we continued to execute our capital recycling program, whereby we sell non-core properties and redeploy proceeds to fund property acquisitions located in our target secondary growth markets, as well as repay outstanding debt.

We will continue to execute our capital recycling plan and sell non-core properties as reasonable disposition opportunities become available.

On February 20, 2020 we sold one non-core property located in Charlotte, North Carolina, which is detailed in the table below (dollars in thousands):

Square Footage Sold

Loss on Sale of Real Estate, net

On July 1, 2020 , we sold our Maple Heights, Ohio property for $11.4 million .

We recognized a gain on sale, net, of $1.2 million .

During the nine months ended September 30, 2020, we sold two non-core properties, located in Charlotte, North Carolina and Maple Heights, Ohio, which are detailed in the table below (dollars in thousands):

Aggregate Square Footage Sold Sales Price Sales Costs Gain on Sale of Real Estate, net

411,948 $ 15,501 $ 1,138 $ 1,184

On October 21, 2020, we sold three of our Champaign, Illinois properties for $13.4 million, resulting in a gain on sale, net, of $4.1 million.

2020 Acquisition Activity

During the six months ended June 30, 2020 , we acquired five industrial properties, one property located in Indianapolis, Indiana, a three-property portfolio in Houston, Texas;

During the nine months ended September 30, 2020, we acquired six industrial properties, one property located in Indianapolis, Indiana, a three-property portfolio in Houston, Texas;

Charlotte, North Carolina;

Charles, Missouri, and one property in Chatsworth, Georgia, which are summarized in the table below (dollars in thousands):

Aggregate Square Footage

Weighted Average Lease Term

Aggregate Purchase Price

Capitalized Acquisition Expenses

Aggregate Annualized GAAP Fixed Lease Payments

Aggregate Debt Issued or Assumed

Charles, Missouri, one property in Chatsworth, Georgia, and one property in Indianapolis, Indiana, which are summarized in the table below (dollars in thousands):

Aggregate Square Footage Weighted Average Lease Term Aggregate Purchase Price Capitalized Acquisition Expenses Aggregate Annualized GAAP Fixed Lease Payments Aggregate Debt Issued or Assumed

1,043,638 14.2 years $ 82,599 $ 339 $ 6,146 $ 35,855

On October 14, 2020, we purchased a 240,714 square foot industrial facility in Montgomery, Alabama, for $14.3 million.

This property is fully leased to one tenant on a triple net basis with a remaining lease term of seven years.

2020 Leasing Activity

During the six months ended June 30, 2020 , we executed eight leases, which are summarized below (dollars in thousands):

Aggregate Square Footage

Weighted Average Remaining Lease Term

Aggregate Annualized GAAP Fixed Lease Payments

Aggregate Tenant Improvement

Aggregate Leasing Commissions

On July 8, 2020 , the tenant in our Richmond, Virginia property renewed their lease for an additional six years , with a new maturity date of September 30, 2026 .

During the nine months ended September 30, 2020, we executed 13 leases, which are summarized below (dollars in thousands):

Aggregate Square Footage Weighted Average Remaining Lease Term Aggregate Annualized GAAP Fixed Lease Payments Aggregate Tenant Improvement Aggregate Leasing Commissions

987,902 7.9 years $ 8,340 $ 2,903 $ 1,285

During the nine months ended September 30, 2020, we had one lease termination, which is summarized below (dollars in thousands):

Aggregate Square Footage Reduced Aggregate Termination Fee Aggregate Deferred Rent Write Off

61,358 $ 1,119 $ 225

2020 Financing Activity

During the six months ended June 30, 2020 , we repaid three mortgages, collateralized by four properties, which are summarized in the table below (dollars in thousands):

Aggregate Fixed Rate Debt Repaid

Interest Rate on Fixed Rate Debt Repaid

Aggregate Variable Rate Debt Repaid

Weighted Average Interest Rate on Variable Rate Debt Repaid

During the six months ended June 30, 2020 , we issued four mortgages, collateralized by four properties, which are summarized below (dollars in thousands):

Aggregate Fixed Rate Debt Issued

Weighted Average Interest Rate on Fixed Rate Debt

During the nine months ended September 30, 2020, we repaid four mortgages, collateralized by five properties, which are summarized in the table below (dollars in thousands):

Aggregate Fixed Rate Debt Repaid Interest Rate on Fixed Rate Debt Repaid

$ 5,918 6.00%

Aggregate Variable Rate Debt Repaid Weighted Average Interest Rate on Variable Rate Debt Repaid

$ 16,107 LIBOR + 2.19%

During the nine months ended September 30, 2020, we issued four mortgages, collateralized by four properties, which are summarized below (dollars in thousands):

Aggregate Fixed Rate Debt Issued Weighted Average Interest Rate on Fixed Rate Debt

$ 35,855 (1) 3.22 %

(1) We issued $18.3 million of fixed rate debt in connection with the three-property portfolio acquired on January 27, 2020, with a maturity date of February 1, 2030.

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On March 9, 2020, we issued $17.5 million of floating rate debt swapped to fixed rate debt of 2.8% in connection with the one property acquisition.

On July 1, 2020 , we repaid the $4.0 million variable rate debt on our Maple Heights, Ohio property.

On October 14, 2020, we repaid $12.2 million of fixed rate debt, collateralized by two properties, at a weighted average interest rate of 4.79% and repaid $3.2 million of variable rate debt, collateralized by one property, at an interest rate of LIBOR + 2.25%.

2020 Equity Activities

Common Stock ATM Program

During the six months ended June 30, 2020 , we sold 1.3 million shares of common stock, raising $28.4 million in net proceeds under our At-the-Market Equity Offering Sales Agreements with sales agents Robert W.

During the nine months ended September 30, 2020, we sold 1.6 million shares of common stock, raising $32.4 million in net proceeds under our At-the-Market Equity Offering Sales Agreements with sales agents Robert W.

Incorporated (“Baird”), Goldman Sachs & Co.

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(“Fifth Third”), pursuant to which we may sell shares of our common stock in an aggregate offering price of up to $250.0 million (the “Common Stock ATM Program”).

As of June 30, 2020 , we had remaining capacity to sell up to $208.7 million of common stock under the Common Stock ATM Program.

Preferred ATM Programs

As of September 30, 2020, we had remaining capacity to sell up to $204.6 million of common stock under the Common Stock ATM Program.

Preferred Series E ATM Program

We have an At-the-Market Equity Offering Sales Agreement (the “Series E Preferred Stock Sales Agreement”), with sales agents Baird, Goldman Sachs, Stifel, Fifth Third, and U.S.

Bancorp Investments, Inc., pursuant to which we may, from time to time, offer to sell shares of our Series E Preferred Stock in an aggregate offering price of up to $100.0 million.

We sold 86,564 shares of our Series E Preferred Stock, raising $1.9 million in net proceeds pursuant to the Series E Preferred Stock Sales Agreement during the six months ended June 30, 2020 .

As of June 30, 2020 , we had remaining capacity to sell up to $98.0 million of Series E Preferred Stock under the Series E Preferred Stock Sales Agreement.

We do not have an active At-the-Market program for our Series D Preferred Stock.

We sold 239,399 shares of our Series E Preferred Stock, raising $5.6 million in net proceeds pursuant to the Series E Preferred Stock Sales Agreement during the nine months ended September 30, 2020.

As of September 30, 2020, we had remaining capacity to sell up to $94.4 million of Series E Preferred Stock under the Series E Preferred Stock Sales Agreement.

Universal Shelf Registration Statements

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The 2019 Universal Shelf allows us to issue up to $500.0 million of securities.

As of June 30, 2020 , we had the ability to issue up to $407.2 million under the 2019 Universal Shelf.

As of September 30, 2020, we had the ability to issue up to $399.5 million under the 2019 Universal Shelf.

On January 29, 2020, we filed an additional universal registration statement on Form S-3, File No.

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Of the $800.0 million of available capacity under our 2020 Universal Shelf, approximately $636.5 million is reserved for the sale of our 6.00% Series F Cumulative Redeemable Preferred Stock of the Company, par value $0.001 per share (the “Series F Preferred Stock”).

As of June 30, 2020 , we had the ability to issue up to $800.0 million of securities under the 2020 Universal Shelf, as we have not sold any securities under the 2020 Universal Shelf.

As of September 30, 2020, we had the ability to issue up to $798.9 million of securities under the 2020 Universal Shelf.

Series F Preferred Stock

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The reclassification decreased the number of shares classified as Common Stock from 86,290,000 shares immediately prior to the reclassification to 60,290,000 shares immediately after the reclassification.

Currently, there are no shares of the Series F Preferred Stock outstanding.

We sold 45,102 shares of our Series F Preferred Stock, raising $1.0 million in net proceeds during the three and nine months ended September 30, 2020.

As of September 30, 2020, we had remaining capacity to sell up to $635.4 million of Series F Preferred Stock.

Amendment to Operating Partnership Agreement

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The Company’s entrance into the Amended Agreement was approved by its Board of Directors, including, specifically, unanimously by its independent directors.

The Amended Agreement revised and replaced the previous calculation of the Base Management Fee, which was based on Total Equity, with a calculation based on Gross Tangible Real Estate.

The Amended Agreement revised and replaced the previous calculation of the Base Management Fee (as defined therein), which was based on Total Equity (as defined therein), with a calculation based on Gross Tangible Real Estate.

The revised Base Management Fee will be payable quarterly in arrears and shall be calculated at an annual rate of 0.425% (0.10625% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined in the Amended Agreement as the current gross value of the Company’s property portfolio (meaning the aggregate of each property’s original acquisition price plus the cost of any subsequent capital improvements thereon).

The calculation of the other fees in the Amended Agreement remain unchanged.

The revised Base Management Fee calculation will begin with the fee calculations for the quarter ending September 30, 2020 .

The revised Base Management Fee calculation began with the fee calculations for the quarter ended September 30, 2020.

Diversity of Our Portfolio

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By diversifying our portfolio, our Adviser intends to reduce the adverse effect on our portfolio of a single under-performing investment or a downturn in any particular industry or geographic market.

For the six months ended June 30, 2020 , our largest tenant comprised only 3.6% of total lease revenue.

The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):

For the three months ended June 30,

For the six months ended June 30,

Industry Classification

Lease Revenue

Percentage of Lease Revenue

Lease Revenue

Percentage of Lease Revenue

Lease Revenue

Percentage of Lease Revenue

Lease Revenue

Percentage of Lease Revenue

For the nine months ended September 30, 2020, our largest tenant comprised only 2.7% of total lease revenue.

The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

For the three months ended September 30, For the nine months ended September 30,

2020 2019 2020 2019

Industry Classification Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue

Telecommunications $ 5,598 17.0 % $ 4,756 16.6 % $ 16,748 16.8 % $ 14,331 17.0 %

Diversified/Conglomerate Services 4,124 12.4 4,053 14.1 12,403 12.4 11,321 13.3

Healthcare 4,077 12.3 3,329 11.6 12,156 12.1 9,880 11.6

Automobile 3,445 10.4 3,778 13.2 11,137 11.1 11,332 13.3

Banking 2,530 7.6 2,002 7.0 7,445 7.4 5,991 7.0

Buildings and Real Estate 2,401 7.2 832 2.9 6,794 6.8 3,059 3.6

Information Technology 1,754 5.3 1,534 5.4 5,193 5.2 4,603 5.4

Personal, Food & Miscellaneous Services

Diversified/Conglomerate Manufacturing 1,694 5.1 1,265 4.4 4,562 4.5 3,799 4.5

Personal, Food & Miscellaneous Services 1,507 4.5 1,498 5.2 4,513 4.5 4,497 5.3

Electronics 936 2.8 1,140 4.0 3,403 3.4 3,409 4.0

Machinery 934 2.8 664 2.3 3,235 3.2 1,795 2.1

Beverage, Food & Tobacco 1,065 3.2 790 2.8 3,033 3.0 1,936 2.3

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Personal & Non-Durable Consumer Products 614 1.9 605 2.1 1,838 1.8 1,815 2.1

Childcare 557 1.7 557 1.9 1,671 1.7 1,670 2.0

Containers, Packaging & Glass 338 1.0 503 1.8 1,412 1.4 1,472 1.7

Printing & Publishing 348 1.1 301 1.0 1,028 1.0 902 1.1

Education 199 0.6 165 0.6 607 0.6 495 0.6

Home & Office Furnishings 121 0.4 121 0.4 362 0.4 374 0.4

The tables below reflect the breakdown of total lease revenue by state for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):

Lease Revenue for the three months ended June 30, 2020

Percentage of Lease Revenue

Number of Leases for the three months ended June 30, 2020

Lease Revenue for the three months ended June 30, 2019

Percentage of Lease Revenue

Number of Leases for the three months ended June 30, 2019

Total $ 33,142 100.0 % $ 28,667 100.0 % $ 100,287 100.0 % $ 85,001 100.0 %

The tables below reflect the breakdown of total lease revenue by state for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands):

State Lease Revenue for the three months ended September 30, 2020 Percentage of Lease Revenue Number of Leases for the three months ended September 30, 2020 Lease Revenue for the three months ended September 30, 2019 Percentage of Lease Revenue Number of Leases for the three months ended September 30, 2019

Texas $ 4,847 14.6 % 15 $ 4,092 14.3 % 14

Florida 4,120 12.4 11 3,898 13.6 11

Pennsylvania 3,491 10.5 9 3,393 11.8 9

Ohio 3,429 10.3 14 2,836 9.9 17

Georgia 2,684 8.1 9 1,596 5.6 7

Utah 2,006 6.1 4 1,744 6.1 4

Michigan 1,573 4.7 6 1,507 5.3 6

North Carolina 1,546 4.7 8 1,265 4.4 7

South Carolina 1,230 3.7 2 1,160 4.0 2

Alabama 897 2.7 3 889 3.1 3

All Other States 7,319 22.2 47 6,287 21.9 35

Lease Revenue for the six months ended June 30, 2020

Percentage of Lease Revenue

Number of Leases for the six months ended June 30, 2020

Lease Revenue for the six months ended June 30, 2019

Percentage of Lease Revenue

Number of Leases for the six months ended June 30, 2019

Total $ 33,142 100.0 % 128 $ 28,667 100.0 % 115

State Lease Revenue for the nine months ended September 30, 2020 Percentage of Lease Revenue Number of Leases for the nine months ended September 30, 2020 Lease Revenue for the nine months ended September 30, 2019 Percentage of Lease Revenue Number of Leases for the nine months ended September 30, 2019

Texas $ 15,081 15.0 % 15 $ 12,037 14.2 % 14

Florida 12,549 12.5 11 11,440 13.5 11

Ohio 10,569 10.5 14 8,280 9.7 17

Pennsylvania 10,272 10.2 9 10,154 11.9 9

Georgia 7,616 7.6 9 4,073 4.8 7

Utah 5,941 5.9 4 5,193 6.1 4

Michigan 4,718 4.7 6 4,517 5.3 6

North Carolina 4,547 4.5 8 4,385 5.2 7

South Carolina 3,628 3.6 2 3,478 4.1 2

Minnesota 3,507 3.5 6 2,814 3.3 6

All Other States 21,859 22.0 44 18,630 21.9 32

$ 100,287 100.0 % 128 $ 85,001 100.0 % 115

Our Adviser and Administrator

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Michael LiCalsi, our general counsel and secretary, also serves as our Administrator’s president, general counsel and secretary, as well as executive vice president of administration of our Adviser.

We have entered into an advisory agreement with our Adviser, as amended from time to time (the “Advisory Agreement”), and an administration agreement with our Administrator (the “Administration Agreement”).

We have entered into an advisory agreement with our Adviser, as amended from time to time (including the Sixth Amended and Restated Investment Advisory Agreement dated July 14, 2020, the “Advisory Agreement”), and an administration agreement with our Administrator (the “Administration Agreement”).

The services and fees under the Advisory Agreement and Administration Agreement are described below.

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The calculation of the other fees in the Amended Agreement remain unchanged.

The revised Base Management Fee calculation will begin with the fee calculations for the quarter ending September 30, 2020.

Under the Advisory Agreement prior to the July 14, 2020 amendment, the calculation of the annual base management fee equaled 1.5% of our Total Equity, which is our total stockholders’ equity plus total mezzanine equity (before giving effect to the base management fee and incentive fee), adjusted to exclude the effect of any unrealized gains or losses that do not affect realized net income (including impairment charges) and adjusted for any one-time events and certain non-cash items (the later to occur for a given quarter only upon the approval of our Compensation Committee), and adjusted to include OP Units held by Non-controlling OP Unitholders.

The revised Base Management Fee calculation began with the fee calculations for the quarter ended September 30, 2020.

Under the Advisory Agreement prior to the July 14, 2020 amendment and restatement, the calculation of the annual base management fee equaled 1.5% of our Total Equity, which is our total stockholders’ equity plus total mezzanine equity (before giving effect to the base management fee and incentive fee), adjusted to exclude the effect of any unrealized gains or losses that do not affect realized net income (including impairment charges) and adjusted for any one-time events and certain non-cash items (the later to occur for a given quarter only upon the approval of our Compensation Committee), and adjusted to include OP Units held by Non-controlling OP Unitholders.

The fee was calculated and accrued quarterly as 0.375% per quarter of such Total Equity figure.

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At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0% of such amount.

No capital gain fee was recognized during the three and six months ended June 30, 2020 or 2019 .

No capital gain fee was recognized during the three and nine months ended September 30, 2020 or 2019.

Termination Fee

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Beginning January 1, 2020, we are recording the property operating expenses and offsetting lease revenues for these triple net leased properties on a gross basis, as we have amended our process whereby we are paying operating expenses on behalf of our tenants and receiving reimbursement, whereas, previously these tenants were paying these expenses directly with limited insight provided to us.

There were no other material changes to our critical accounting policies or estimates during the six months ended June 30, 2020 .

There were no other material changes to our critical accounting policies or estimates during the nine months ended September 30, 2020.

Results of Operations

The weighted average yield on our total portfolio, which was 8.3% and 8.7% as of June 30, 2020 and 2019 , respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements.

The weighted average yield on our total portfolio, which was 8.2% and 8.6% as of September 30, 2020 and 2019, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements.

The weighted average yield does not account for the interest expense incurred on the mortgages placed on our properties.

A comparison of our operating results for the three and six months ended June 30, 2020 and 2019 is below (dollars in thousands, except per share amounts) :

For the three months ended June 30,

A comparison of our operating results for the three and nine months ended September 30, 2020 and 2019 is below (dollars in thousands, except per share amounts) :

For the three months ended September 30,

2020 2019 $ Change % Change

Operating revenues

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Interest expense (6,444) (7,170) 726 (10.1) %

Gain on sale of real estate, net 1,196 — 1,196 100.0

Other income, net 204 139 65 46.8 %

Total other expense, net (5,044) (7,031) 1,987 (28.3) %

Distributions attributable to Series A, B, D and E preferred stock

Net income 2,844 2,191 653 29.8 %

Distributions attributable to Series A, B, D, E, and F preferred stock (2,771) (2,612) (159) 6.1 %

Distributions attributable to senior common stock (203) (226) 23 (10.2) %

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(1) Refer to the “Funds from Operations” section below within the Management’s Discussion and Analysis section for the definition of FFO.

For the six months ended June 30,

For the nine months ended September 30,

2020 2019 $ Change % Change

Operating revenues

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Gain on sale of real estate, net 1,184 2,952 (1,768) (59.9) %

Other income 209 291 (82) (28.2) %

Total other expense, net (19,018) (18,163) (855) 4.7 %

Distributions attributable to Series A, B, D, and E preferred stock

Net income 6,070 9,068 (2,998) (33.1) %

Distributions attributable to Series A, B, D, E, and F preferred stock (8,137) (7,837) (300) 3.8 %

Distributions attributable to senior common stock (615) (675) 60 (8.9) %

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Operating Revenues

For the three months ended June 30,

For the three months ended September 30,

(Dollars in Thousands)

Lease Revenues

Lease Revenues 2020 2019 $ Change % Change

Same Store Properties $ 25,975 $ 23,438 $ 2,537 10.8 %

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Properties with Vacancy 2,477 3,643 (1,166) (32.0) %

For the six months ended June 30,

$ 33,142 $ 28,667 $ 4,475 15.6 %

For the nine months ended September 30,

(Dollars in Thousands)

Lease Revenues

Lease Revenues 2020 2019 $ Change % Change

Same Store Properties $ 77,314 $ 70,125 $ 7,189 10.3 %

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Properties with Vacancy 9,516 10,702 (1,186) (11.1) %

$ 100,287 $ 85,001 $ 15,286 18.0 %

Lease revenues consist of rental income and operating expense recoveries earned from our tenants.

Lease revenues from same store properties increased for the three and six months ended June 30, 2020 from the comparable 2019 period, primarily due to increases in rental charges from lease renewals and increased operating expense recoveries from triple net leased properties.

Lease revenues increased for acquired and disposed of properties for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , because we acquired 21 properties during and subsequent to June 30, 2019 , partially offset by a loss of lease revenues from two properties we sold during and subsequent to the three and six months ended June 30, 2019 pursuant to our capital recycling program.

Lease revenues decreased for our properties with vacancy for the three and six months ended June 30, 2020 due to increased vacancy in our portfolio.

Lease revenues from same store properties increased for the three and nine months ended September 30, 2020 from the comparable 2019 period, primarily due to increases in rental charges from lease renewals and increased operating expense recoveries from triple net leased properties.

Lease revenues increased for acquired and disposed of properties for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, because we acquired 18 properties during and subsequent to September 30, 2019, partially offset by a loss of lease revenues from two properties we sold subsequent to the three and nine months ended September 30, 2019 pursuant to our capital recycling program.

Lease revenues decreased for our properties with vacancy for the three and nine months ended September 30, 2020 due to increased vacancy in our portfolio.

On January 1, 2020, we completed the integration of the accounting records of certain of our triple net leased third-party asset managed properties into our accounting system and paid out of our operating bank accounts.

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See table below for a reconciliation of lease revenue for the six months ended June 30, 2020 , and the comparable 2019 period.

See table below for a reconciliation of lease revenue for the nine months ended September 30, 2020, and the comparable 2019 period.

Fixed rental payments consist of fixed rental charges that are contractually due us, and variable rental payments consist of operating expense recoveries that we collect to pay for property operating expenses incurred at certain properties.

Lease revenues relating to the 2019 reporting period have not been amended.

For the three months ended June 30,

For the three months ended September 30,

(Dollars in Thousands)

Lease revenue reconciliation

Lease revenue reconciliation 2020 2019 $ Change % Change

Fixed lease payments $ 29,116 $ 27,660 $ 1,456 5.3 %

Variable lease payments 4,026 1,007 3,019 299.8 %

For the six months ended June 30,

$ 33,142 $ 28,667 $ 4,475 15.6 %

For the nine months ended September 30,

(Dollars in Thousands)

Lease revenue reconciliation

Lease revenue reconciliation 2020 2019 $ Change % Change

Fixed lease payments $ 88,286 $ 82,076 $ 6,210 7.6 %

Variable lease payments 12,001 2,925 9,076 310.3 %

$ 100,287 $ 85,001 $ 15,286 18.0 %

Operating Expenses

Depreciation and amortization increased for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , due to depreciation on capital projects completed subsequent to the three and six months ended June 30, 2019 , coupled with depreciation on the 21 properties acquired during and subsequent to the three and six months ended June 30, 2019 , partially offset by decreased depreciation on the two properties sold during and subsequent to the three and six months ended June 30, 2019 .

For the three months ended June 30,

Depreciation and amortization increased for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, due to depreciation on capital projects completed subsequent to the three and nine months ended September 30, 2019, coupled with depreciation on the 18 properties acquired during and subsequent to the three and nine months ended September 30, 2019, partially offset by decreased depreciation on the two properties sold subsequent to the three and nine months ended September 30, 2019.

For the three months ended September 30,

(Dollars in Thousands)

Property Operating Expenses

Property Operating Expenses 2020 2019 $ Change % Change

Same Store Properties $ 4,866 $ 2,774 $ 2,092 75.4 %

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Properties with Vacancy 1,380 319 1,061 332.6 %

For the six months ended June 30,

$ 6,590 $ 3,202 $ 3,388 105.8 %

For the nine months ended September 30,

(Dollars in Thousands)

Property Operating Expenses

Property Operating Expenses 2020 2019 $ Change % Change

Same Store Properties $ 14,334 $ 8,106 $ 6,228 76.8 %

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Properties with Vacancy 3,793 917 2,876 313.6 %

$ 19,098 $ 9,330 $ 9,768 104.7 %

Property operating expenses consist of franchise taxes, property management fees, insurance, ground lease payments, property maintenance and repair expenses paid on behalf of certain of our properties.

The increase in property operating expenses for same store properties for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , is a result of an increase in our property operating expenses at our triple net leased properties.

The increase in property operating expenses for acquired and disposed of properties for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , is primarily a result of increased property operating expenses from 21 properties acquired during and subsequent to June 30, 2019 , partially offset by a reduction of operating expenses from two properties sold during and subsequent to June 30, 2019 .

The increase in property operating expenses for properties with vacancy for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , is a result of increased vacancy in our portfolio.

The base management fee paid to the Adviser increased for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , due to an increase in total equity over the three and six months ended June 30, 2020 as compared to the three and six months ended June 30, 2019 .

The increase in property operating expenses for same store properties for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, is a result of an increase in our property operating expenses at our triple net leased properties.

The increase in property operating expenses for acquired and disposed of properties for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, is primarily a result of increased property operating expenses from 18 properties acquired during and subsequent to September 30, 2019, partially offset by a reduction of operating expenses from two properties sold subsequent to September 30, 2019.

The increase in property operating expenses for properties with vacancy for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, is a result of increased vacancy in our portfolio.

The base management fee paid to the Adviser increased for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, due to an increase in total equity and gross tangible real estate over the three and nine months ended September 30, 2020 as compared to the three and nine months ended September 30, 2019.

The calculation of the base management fee is described in detail above in “Advisory and Administration Agreements.”

The incentive fee paid to the Adviser increased for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , due to pre-incentive fee Core FFO increasing faster than the hurdle rate.

The incentive fee paid to the Adviser increased for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, due to pre-incentive fee Core FFO increasing faster than the hurdle rate.

The increase in FFO is a result of an increase in total operating revenues, partially offset by an increase in total operating expenses and interest expense.

The calculation of the incentive fee is described in detail above in “Advisory and Administration Agreements.”

The administration fee paid to the Administrator decreased for the three months ended June 30, 2020 , as compared to the three months ended June 30, 2019 , due to our Administrator incurring fewer costs that are allocated to the Company.

The administration fee paid to the Administrator increased during the six months ended June 30, 2020 , as compared to the six months ended June 30, 2019 , due to our Administrator incurring greater costs that are allocated to the Company.

The administration fee paid to the Administrator decreased for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, due to our Administrator incurring fewer costs that are allocated to the Company.

The calculation of the administration fee is described in detail above in “Advisory and Administration Agreements.”

General and administrative expenses decreased for the three months ended June 30, 2020 , as compared to the three months ended June 30, 2019 , primarily as a result of a decrease in due diligence expenses for potential acquisitions.

General and administrative expenses increased for the six months ended June 30, 2020 , as compared to the six months ended June 30, 2019 , primarily as a result of an increase in legal and accounting fees.

We recorded an impairment charge for our Blaine, Minnesota property during the three and six months ended June 30, 2020 , when our held and used impairment testing determined that the carrying value of this property was unrecoverable.

As a result, we recorded an impairment charge to write down the carrying value to fair market value.

We did not record an impairment charge during the three and six months ended June 30, 2019 .

General and administrative expenses increased for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019, primarily as a result of an increase in legal and accounting fees.

We recorded an impairment charge for our Champaign, Illinois and Rancho Cordova, California properties during the three months ended September 30, 2020, when our held and used impairment testing determined that the carrying value of these properties was unrecoverable.

We recorded an impairment charge for our Champaign, Illinois, Rancho Cordova, California and Blaine, Minnesota properties during the nine months ended September 30, 2020, when our held and used impairment testing determined that the carrying value of these properties was unrecoverable.

We did not record an impairment charge during the three and nine months ended September 30, 2019.

Other Income and Expenses

Interest expense decreased for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 .

Interest expense decreased for the three and nine months ended September 30, 2020, as compared to the three and nine months ended September 30, 2019.

This decrease was primarily a result of a decrease in interest rates on our LIBOR based variable rate debt, partially offset by increased interest expense due to higher mortgage borrowings and higher Credit Facility balances outstanding.

Loss on sale of real estate, net, for the six months ended June 30, 2020 is attributable to one non-core office asset located in Charlotte, North Carolina being sold during the period.

Gain on sale of real estate, net, for the six months ended June 30, 2019 is attributable to one non-core office asset located in Maitland, Florida being sold during the period.

Net (Loss) Income (Attributable) Available to Common Stockholders and Non-controlling OP Unitholders

Net loss attributable to common stockholders and Non-controlling OP Unitholders increased for the three and six months ended June 30, 2020 , as compared to the three and six months ended June 30, 2019 , primarily due to the increase in depreciation and amortization expense due to asset acquisition activity subsequent to June 30, 2019 , coupled with the impairment charge recognized during the three and six months ended June 30, 2020 , partially offset by an increase in lease revenues due to asset acquisition activity subsequent to June 30, 2019 , coupled with a decrease in interest expense due to a decrease in LIBOR on our variable rate debt.

Gain on sale of real estate, net, for the nine months ended September 30, 2020, is attributable to one non-core office asset located in Charlotte, North Carolina, and one non-core industrial asset located in Maple Heights, Ohio being sold during the period.

Gain on sale of real estate, net, for the nine months ended September 30, 2019 is attributable to one non-core office asset located in Maitland, Florida being sold during the period.

Net Loss Attributable to Common Stockholders and Non-controlling OP Unitholders

Net loss attributable to common stockholders and Non-controlling OP Unitholders decreased for the three months ended September 30, 2020, as compared to the three months ended September 30, 2019, primarily due to the increase in lease revenues due to asset acquisition activity during and subsequent to September 30, 2019, coupled with a decrease in interest expense due to lower LIBOR rates on our variable rate debt, partially offset by an increase in property operating expenses on our triple net leased properties.

Net loss attributable to common-stock holders and Non-controlling OP Unitholders increased for the nine months ended September 30, 2020, as compared to the nine months ended September 30, 2019, primarily due to impairment charges recognized during the nine months ended September 30, 2020, coupled with an increase in property operating expenses, partially offset by an increase in lease revenue due to asset acquisition activity during and subsequent to September 30, 2019.

Liquidity and Capital Resources

Our sources of liquidity include cash flows from operations, cash and cash equivalents, borrowings under our Revolver and issuing additional equity securities.

Our available liquidity as of June 30, 2020 , was $ 29.1 million , consisting of approximately $ 9.6 million in cash and cash equivalents and available borrowing capacity of $19.5 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility increased to $36.0 million as of July 27, 2020 .

Our available liquidity as of September 30, 2020, was $38.2 million, consisting of approximately $10.4 million in cash and cash equivalents and available borrowing capacity of $27.8 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility increased to $30.0 million as of November 5, 2020.

Future Capital Needs

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Equity Capital

During the six months ended June 30, 2020 , we raised net proceeds of $28.4 million of common equity under our Common Stock ATM Program at a net weighted average per share price of $21.19 .

During the nine months ended September 30, 2020, we raised net proceeds of $32.4 million of common equity under our Common Stock ATM Program at a net weighted average per share price of $20.84.

We used these proceeds to pay down outstanding debt and for other general corporate purposes.

We raised net proceeds of $1.9 million from our Series E Preferred Stock pursuant to our Series E Preferred Stock Sales Agreement during the six months ended June 30, 2020 .

As of July 27, 2020 , we had the ability to raise up to $404.0 million of additional equity capital through the sale and issuance of securities that are registered under the 2019 Universal Shelf, in one or more future public offerings.

Of the $404.0 million of available capacity under our 2019 Universal Shelf, approximately $207.1 million is reserved for additional sales under our Common Stock ATM Program, and approximately $96.5 million is reserved for additional sales under our Series E Preferred Stock Sales Agreement as of July 27, 2020 .

We raised net proceeds of $5.6 million from our Series E Preferred Stock pursuant to our Series E Preferred Stock Sales Agreement during the nine months ended September 30, 2020.

We raised net proceeds of $1.0 million from sales of our Series F Preferred Stock during the nine months ended September 30, 2020.

As of November 5, 2020, we had the ability to raise up to $396.8 million of additional equity capital through the sale and issuance of securities that are registered under the 2019 Universal Shelf, in one or more future public offerings.

Of the $396.8 million of available capacity under our 2019 Universal Shelf, approximately $203.2 million is reserved for additional sales under our Common Stock ATM Program, and approximately $93.1 million is reserved for additional sales under our Series E Preferred Stock Sales Agreement as of November 5, 2020.

We expect to continue to use our at-the-market programs as a source of liquidity for the remainder of 2020.

As of July 27, 2020 , we had the ability to raise up to $800.0 million of additional equity capital through the sale and issuance of securities that are registered under the 2020 Universal Shelf, in one or more future public offerings.

Of the $800.0 million of available capacity under our 2020 Universal Shelf, approximately $636.5 million is reserved for the sale of our Series F Preferred Stock as of July 27, 2020 .

As of June 30, 2020 , we had 55 mortgage notes payable in the aggregate principal amount of $469.4 million , collateralized by a total of 70 properties with a remaining weighted average maturity of 4.8 years.

The weighted-average interest rate on the mortgage notes payable as of June 30, 2020 was 4.27% .

As of November 5, 2020, we had the ability to raise up to $798.4 million of additional equity capital through the sale and issuance of securities that are registered under the 2020 Universal Shelf, in one or more future public offerings.

Of the $798.4 million of available capacity under our 2020 Universal Shelf, approximately $634.9 million is reserved for the sale of our Series F Preferred Stock as of November 5, 2020.

As of September 30, 2020, we had 54 mortgage notes payable in the aggregate principal amount of $462.1 million, collateralized by a total of 69 properties with a remaining weighted average maturity of 4.6 years.

The weighted-average interest rate on the mortgage notes payable as of September 30, 2020 was 4.28%.

We continue to see banks and other non-bank lenders willing to issue mortgages.

Consequently, we are focused on obtaining mortgages through regional banks, non-bank lenders and the CMBS market.

As of June 30, 2020 , we had mortgage debt in the aggregate principal amount of $13.2 million payable during the remainder of 2020 and $33.6 million payable during 2021 .

The 2020 principal amount payable includes both amortizing principal payments and two balloon principal payments due during the remaining six months of 2020 .

We repaid one of the remaining balloon principal payments during July 2020.

We anticipate being able to refinance our mortgages that come due during the remainder of 2020 and 2021 with a combination of new debt and the issuance of additional equity securities.

As of September 30, 2020, we had mortgage debt in the aggregate principal amount of $6.0 million payable during the remainder of 2020 and $33.6 million payable during 2021.

The 2020 principal amount payable includes both amortizing principal payments and one balloon principal payment due during the remaining three months of 2020.

Subsequent to September 30, 2020, we repaid the balloon payment.

We anticipate being able to refinance our mortgages that come due during 2021 with a combination of new debt and the issuance of additional equity securities.

In addition, we have raised substantial equity under our at-the-market programs and plan to continue to use these programs.

Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2020 , was $35.4 million , as compared to net cash provided by operating activities of $29.0 million for the six months ended June 30, 2019 .

This change was primarily a result of an increase in operating revenues from our 21 property acquisitions completed during and subsequent to June 30, 2019 , coupled with contractual lease revenue increases on the in-place portfolio, partially offset by an increase in general and administrative expenses, base management fees and incentive fees.

Net cash provided by operating activities during the nine months ended September 30, 2020, was $52.4 million, as compared to net cash provided by operating activities of $43.1 million for the nine months ended September 30, 2019.

This change was primarily a result of an increase in operating revenues from our 18 property acquisitions completed during and subsequent to September 30, 2019, coupled with contractual lease revenue increases on the in-place portfolio, partially offset by an increase in general and administrative expenses, base management fees and incentive fees.

The majority of cash from operating activities is generated from the lease revenues that we receive from our tenants.

1 unchanged sentence

Investing Activities

Net cash used in investing activities during the six months ended June 30, 2020 , was $70.7 million , which primarily consisted of five property acquisitions, coupled with capital improvements performed at certain of our properties, partially offset by proceeds from the sale of one property.

Net cash used in investing activities during the six months ended June 30, 2019 , was $41.9 million , which primarily consisted of six property acquisitions, coupled with capital improvements performed at certain of our properties, partially offset by proceeds from the sale of one property.

Net cash used in investing activities during the nine months ended September 30, 2020, was $73.0 million, which primarily consisted of six property acquisitions, coupled with capital improvements performed at certain of our properties, partially offset by proceeds from the sale of two properties.

Net cash used in investing activities during the nine months ended September 30, 2019, was $63.6 million, which primarily consisted of nine property acquisitions, coupled with capital improvements performed at certain of our properties, partially offset by proceeds from the sale of one property.

Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2020 , was $38.3 million , which primarily consisted of the issuance of $30.8 million of common and preferred equity, borrowings from our Term Loan of $37.7 million , and the issuance of $35.9 million of new mortgage debt, partially offset by the repayment of $24.4 million of mortgage principal and distributions paid to common, senior common and preferred shareholders.

Net cash provided by financing activities for the six months ended June 30, 2019 , was $14.3 million , which primarily consisted of $41.1 million in new mortgage borrowings coupled with the issuance of $33.7 million of common equity, partially offset by $31.0 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders.

Net cash provided by financing activities during the nine months ended September 30, 2020, was $24.4 million, which primarily consisted of the issuance of $39.6 million of common and preferred equity, borrowings from our Term Loan of $37.7 million, and the issuance of $35.9 million of new mortgage debt, partially offset by the repayment of $31.7 million of mortgage principal and distributions paid to common, senior common and preferred shareholders.

Net cash provided by financing activities for the nine months ended September 30, 2019, was $20.4 million, which primarily consisted of $41.1 million in new mortgage borrowings coupled with the issuance of $41.2 million of common equity, partially offset by $48.1 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders.

Credit Facility

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Bank National Association, The Huntington National Bank, Goldman Sachs Bank USA, and Wells Fargo Bank.

As of June 30, 2020 , there was $203.1 million outstanding under our Credit Facility at a weighted average interest rate of approximately 1.77% and $13.5 million outstanding under letters of credit at a weighted average interest rate of 1.65% .

As of July 27, 2020 , the maximum additional amount we could draw under the Credit Facility was $36.0 million .

We were in compliance with all covenants under the Credit Facility as of June 30, 2020 .

As of September 30, 2020, there was $203.8 million outstanding under our Credit Facility at a weighted average interest rate of approximately 1.76% and $13.7 million outstanding under letters of credit at a weighted average interest rate of 1.65%.

As of November 5, 2020, the maximum additional amount we could draw under the Credit Facility was $30.0 million.

We were in compliance with all covenants under the Credit Facility as of September 30, 2020.

Contractual Obligations

The following table reflects our material contractual obligations as of June 30, 2020 (in thousands):

The following table reflects our material contractual obligations as of September 30, 2020 (in thousands):

Payments Due by Period

Contractual Obligations

Less than 1 Year

More than 5 Years

Contractual Obligations Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years

Debt Obligations (1) $ 665,910 $ 25,556 $ 235,325 $ 243,532 $ 161,497

2 unchanged sentences

Purchase Obligations (4) 2,824 1,508 1,308 8 —

Debt obligations represent borrowings under our Revolver, which represents $43.1 million of the debt obligation due in 2023, our Term Loan, which represents $160.0 million of the debt obligation due in 2024, and mortgage notes payable that were outstanding as of June 30, 2020 .

$ 771,987 $ 49,855 $ 275,419 $ 263,816 $ 182,897

(1) Debt obligations represent borrowings under our Revolver, which represents $43.8 million of the debt obligation due in 2023, our Term Loan, which represents $160.0 million of the debt obligation due in 2024, and mortgage notes payable that were outstanding as of September 30, 2020.

This figure does not include $0.2 million of premiums and discounts, net and $5.1 million of deferred financing costs, net, which are reflected in mortgage notes payable, net, borrowings under Revolver, net and borrowings under Term Loan, net on the condensed consolidated balance sheets.

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The balance and interest rate on our Revolver and Term Loan is variable;

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of June 30, 2020 .

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of September 30, 2020.

(3) Operating lease obligations represent the ground lease payments due on four of our properties.

Purchase obligations consist of tenant and capital improvements at five of our properties.

(4) Purchase obligations consist of tenant and capital improvements at seven of our properties.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of June 30, 2020 .

We did not have any material off-balance sheet arrangements as of September 30, 2020.

Funds from Operations

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We believe that net income is the most directly comparable GAAP measure to FFO, Basic EPS is the most directly comparable GAAP measure to Basic FFO per share, and that Diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share.

The following table provides a reconciliation of our FFO available to common stockholders for the three and six months ended June 30, 2020 and 2019 , respectively, to the most directly comparable GAAP measure, net income available to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock:

For the three months ended June 30,

For the six months ended June 30,

(Dollars in Thousands, Except for Per Share Amounts)

The following table provides a reconciliation of our FFO available to common stockholders for the three and nine months ended September 30, 2020 and 2019, respectively, to the most directly comparable GAAP measure, net income available to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock:

For the three months ended September 30, For the nine months ended September 30,

(Dollars in Thousands, Except for Per Share Amounts) (Dollars in Thousands, Except for Per Share Amounts)

2020 2019 2020 2019

Calculation of basic FFO per share of common stock and Non-controlling OP Unit

Net income $ 2,844 $ 2,191 $ 6,070 $ 9,068

Distributions attributable to preferred and senior common stock (2,974) (2,838) (8,752) (8,512)

2 unchanged sentences

Impairment charge 1,184 — 2,905 —

Loss on sale of real estate, net

Gain on sale of real estate, net (1,196) — (1,184) (2,952)

5 unchanged sentences

Calculation of diluted FFO per share of common stock and Non-controlling OP Unit

Net income $ 2,844 $ 2,191 $ 6,070 $ 9,068

Distributions attributable to preferred and senior common stock (2,974) (2,838) (8,752) (8,512)

3 unchanged sentences

Income impact of assumed conversion of senior common stock 203 226 615 675

Loss on sale of real estate, net

Gain on sale of real estate, net (1,196) — (1,184) (2,952)

7 unchanged sentences

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 2. Management’s Discussion and Analysis