What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-10 · 223 added, 124 removed, 331 unchanged (51% of the section changed)

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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 May 10, 2021:

As of August 9, 2021:

• we owned 125 properties totaling 15.6 million square feet of rentable space, located in 27 states;

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The demand for industrial space has continued due to the continuing growth of e-commerce and appears to be partially counterbalancing the adverse effects of COVID-19 on the commercial real estate industry.

Industrial absorption increased on a nominal basis in 2020, compared to 2019, according to research reports.

Industrial absorption increased on a nominal basis in 2020, compared to 2019, according to research reports and continues to be strong through the second quarter of 2021.

Construction activity for the industrial sector remains strong as at year end 2020 there was 327 million square feet under construction with 38% of the space pre-leased.

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.

Research reports also report that the office sector experienced over 100 million square feet of negative absorption during 2020.

Interest rates have been volatile, although they remain low by historical standards.

While the yield on the 10 year US Treasury Note has risen significantly during the past two quarters, the increase in mortgage interest rates has been more muted.

Many lenders implemented interest rate floors and widened spreads when interest rates plummeted last year.

Some of the recent increase in rates has been absorbed by the interest rate floors and lenders tightening spreads as economic conditions improve.

Research reports also report that the office sector experienced over 100 million square feet of negative absorption during 2020, and an additional approximately 35 million square feet of negative absorption during the first quarter of 2021.

Interest rates remain volatile in response to competing concerns about inflationary pressures and the spread and effect of COVID-19 variants.

However, they remain low by historical standards.

Since increasing by 91% during the first quarter of the year, the yield on the 10 year U.S.

Treasury has declined to 1.30%, representing a smaller year-to-date increase of 37%.

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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Global recessionary conditions may occur over the next 12-24 months as a direct result of the COVID-19 pandemic, although the actual impact and duration are unknown.

See “Impact of COVID-19 on Our Business” below for the impact on the COVID-19 pandemic on our business.

See “Impact of COVID-19 on Our Business,” below.

From a more macro-economic perspective, there continues to be significant uncertainties associated with the COVID-19 pandemic, including with respect to the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities and private businesses to attempt to contain the COVID-19 outbreak or to mitigate its impact, including adequate production, distribution and acceptance of vaccines, the extent and duration of social distancing and the adoption of shelter-in-place orders, or reversal of reopening orders, and the ongoing impact of COVID-19 on business and economic activity.

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the adequate production, distribution and acceptance of vaccinations;

the spread and effect of COVID-19 variants;

governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic;

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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 May 10, 2021, we have collected 98% of all outstanding April 2021 cash base rent obligations and approximately 98% of March 2021 cash base rent obligations.

As of August 9, 2021 , we have collected 100% of all outstanding June 2021 cash base rent obligations and approxima tely 99% of July 2021 cash base rent obligations.

We have received and may receive additional rent modification requests in future periods from our tenants.

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We believe that we have a diverse tenant base, and specifically, we do not have significant exposure to tenants in the retail, hospitality, airlines, and oil and gas industries.

These industries, among certain others, have generally been severely impacted by the COVID-19.

These industries, among certain others, have generally been severely impacted by COVID-19.

Additionally, our properties are located across 27 states, which we believe mitigates our exposure to economic issues, including as a result of COVID-19, in any one geographic market or area.

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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 and to continue our industrial growth strategy.

in compliance with all of our debt covenants.

We are in compliance with all of our debt covenants.

We amended our Credit Facility in 2019 to increase our borrowing capacity and extend its maturity date.

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We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our personnel, tenants and stockholders.

While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our business, financial condition, liquidity, results of operations, funds from operations or prospects, we believe that it is important to share where we stand today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 progresses.

While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic, including the recent spread of COVID-19 variants, will have on our business, financial condition, liquidity, results of operations, funds from operations or prospects, we believe that it is important to share where we stand today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 continues.

Other Business Environment Considerations

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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 five partially vacant buildings and two fully vacant buildings.

Our available vacant space at March 31, 2021 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 $4.0 million.

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

Our available vacant space at June 30, 2021 represents 3.5% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $4.2 million.

We continue to actively seek new tenants for these properties.

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We refer to the Revolver, Term Loan A and Term Loan B collectively herein as the Credit Facility.

While lenders’ credit standards have tightened, we continue to look to national and regional banks, insurance companies and non-bank lenders, in addition to the collateralized mortgage backed securities market, (the “CMBS market”), to issue mortgages to finance our real estate activities.

While lenders’ credit standards have tightened, we continue to look to national and regional banks, insurance companies and non-bank lenders, in addition to the collateralized mortgage backed securities market (“CMBS”), to issue mortgages to finance our real estate activities.

Recent Developments

Sale Activity

During the three months ended March 31, 2021, we continued to execute our capital recycling program, whereby we sold properties outside of our core markets and redeploy proceeds to either fund property acquisitions located in our target secondary growth markets, or repay outstanding debt.

During the six months ended June 30, 2021, we continued to execute our capital recycling program, whereby we sold properties outside of our core markets and redeployed proceeds to either fund property acquisitions located in our target secondary growth markets or repaid outstanding debt.

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

During the three months ended March 31, 2021, we sold two non-core properties, located in Rancho Cordova, California and Champaign, Illinois, which are summarized in the table below (dollars in thousands):

During the six months ended June 30, 2021, we sold two non-core properties, located in Rancho Cordova, California and Champaign, Illinois, which are summarized in the table below (dollars in thousands):

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

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Acquisition Activity

During the three months ended March 31, 2021, we acquired one industrial property located in Findlay, Ohio, which is summarized below (dollars in thousands):

Square Footage Lease Term Purchase Price Capitalized Acquisition Expenses Annualized GAAP Fixed Lease Payments Debt Issued

During the six months ended June 30, 2021, we acquired two industrial properties located in Findlay, Ohio and Baytown, Texas, which are summarized below (dollars in thousands):

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

205,352 13.5 years $ 19,341 $ 216 $ 1,495 $ 5,500

On July 21, 2021, we purchased a four property, 80,604 square foot industrial portfolio in Pacific, Missouri, for $22.1 million.

These properties are fully leased to one tenant on a triple net basis with a remaining lease term of 17.4 years.

Leasing Activity

During and subsequent to the three months ended March 31, 2021, we executed five lease extensions and/or modifications, which are summarized below (dollars in thousands):

During and subsequent to the six months ended June 30, 2021, we executed twelve 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

1,266,240 8.6 years $ 8,418 $ 3,239 $ 1,700

During the three months ended March 31, 2021, we had five lease contractions or terminations, which are summarized below (dollars in thousands):

Aggregate Square Footage Reduced (1) Aggregate Accelerated Rent

During the six months ended June 30, 2021, we had seven lease contractions or terminations, which are summarized below (dollars in thousands):

Aggregate Square Footage Reduced Aggregate Square Footage Remaining Aggregate Accelerated Rent Aggregate Accelerated Rent Recognized through June 30, 2021

489,337 (1) 26,220 $ 2,865 $ 1,581

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Financing Activity

During the three months ended March 31, 2021, we repaid one mortgage, collateralized by one property, which is summarized in the table below (dollars in thousands):

During the six months ended June 30, 2021, we repaid one mortgage, collateralized by one property, which is summarized in the table below (dollars in thousands):

Fixed Rate Debt Repaid Interest Rate on Fixed Rate Debt Repaid

$ 4,470 4.90%

During the three months ended March 31, 2021, we issued one mortgage, collateralized by one property, which is summarized below (dollars in thousands):

During the six months ended June 30, 2021, we issued one mortgage, collateralized by one property, which is summarized below (dollars in thousands):

Fixed Rate Debt Issued Interest Rate on Fixed Rate Debt

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Equity Activities

Series G Preferred Stock Offering

On June 28, 2021, we completed an underwritten public offering of 4,000,000 shares of our newly designated 6.00% Series G Cumulative Redeemable Preferred Stock (“Series G Preferred Stock”) at a public offering price of $25.00 per share, raising $100.0 million in gross proceeds and approximately $96.6 million in net proceeds, after payment of underwriting discounts and commissions.

We used the net proceeds from this offering to voluntarily redeem all outstanding shares of our 7.00% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”).

Common Stock ATM Program

During the three months ended March 31, 2021, we sold 0.6 million shares of common stock, raising $11.3 million in net proceeds under our At-the-Market Equity Offering Sales Agreements with sales agents Robert W.

During the six months ended June 30, 2021, we sold 1.0 million shares of common stock, raising $19.4 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 March 31, 2021, we had remaining capacity to sell up to $172.5 million of common stock under the Common Stock ATM Program.

As of June 30, 2021, we had remaining capacity to sell up to $164.3 million of common stock under the Common Stock ATM Program.

Series D Preferred Stock Redemption

On June 30, 2021, we voluntarily redeemed all 3,509,555 outstanding shares of our Series D Preferred Stock at a redemption price of $25.1458333 per share, which represented the liquidation preference per share, plus accrued and unpaid dividends through June 30, 2021, for an aggregate redemption price of approximately $88.3 million.

In connection with this redemption, we recognized a $2.1 million decrease to net income available to common shareholders pertaining to the original issuance costs incurred upon issuance of our Series D Preferred Stock.

Preferred Series E ATM Program

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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 did not sell any shares of our Series E Preferred Stock under the Series E Preferred Stock Sales Agreement during the three months ended March 31, 2021.

As of March 31, 2021, we had remaining capacity to sell up to $92.8 million of Series E Preferred Stock under the Series E Preferred Stock Sales Agreement.

We did not sell any shares of our Series E Preferred Stock under the agreement during the six months ended June 30, 2021.

As of June 30, 2021, we had remaining capacity to sell up to $92.8 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 March 31, 2021, we had the ability to issue up to $365.8 million of securities under the 2019 Universal Shelf.

As of June 30, 2021, we had the ability to issue up to $357.6 million of securities 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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The 2020 Universal Shelf allows us to issue up to an additional $800.0 million of securities.

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 March 31, 2021, we had the ability to issue up to $797.1 million of securities under the 2020 Universal Shelf.

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, par value $0.001 per share (the “Series F Preferred Stock”).

As of June 30, 2021, we had the ability to issue up to $696.0 million of securities under the 2020 Universal Shelf.

Series F Preferred Stock

On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary (i) setting forth the rights, preferences and terms of the Series F Preferred Stock and (ii) reclassifying and designating 26,000,000 shares of the Company’s authorized and unissued shares of Common Stock as shares of Series F Preferred Stock.

On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation (“SDAT”) Articles Supplementary (i) setting forth the rights, preferences and terms of the Series F Preferred Stock and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of Common Stock as shares of Series F Preferred Stock.

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.

We sold 1,500 shares of our Series F Preferred Stock, raising $0.03 million in net proceeds during the three months ended March 31, 2021.

As of March 31, 2021, we had remaining capacity to sell up to $633.6 million of Series F Preferred Stock.

We sold 46,049 shares of our Series F Preferred Stock, raising $1.0 million in net proceeds during the three and six months ended June 30, 2021.

As of June 30, 2021, we had remaining capacity to sell up to $632.5 million of Series F Preferred Stock.

Non-controlling Interest in Operating Partnership

As of March 31, 2021 and December 31, 2020, we owned approximately 99.3% and 98.6%, re spectively, of the outstanding operating partnership units in the Operating Partnership (“OP Units”).

On March 31, 2021 , we redeemed 246,039 OP Units for an equivalent amount of common stock.

As of March 31, 2021 and December 31, 2020, there were 256,994 and 503,033 outstanding OP Units held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”), respectively.

As of June 30, 2021 and December 31, 2020, we owned approximately 99.3% and 98.6%, re spectively, of the outstanding operating partnership units in the Operating Partnership (“OP Units”).

During the six months ended June 30, 2021, we redeemed 246,039 OP Units for an equivalent amount of common stock.

As of June 30, 2021 and December 31, 2020, there were 256,994 and 503,033 outstanding OP Units held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”), respectively.

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 three months ended March 31, 2021, 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 months ended March 31, 2021 and 2020 (dollars in thousands):

For the three months ended March 31,

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

For the six months ended June 30, 2021, our largest tenant comprised only 2.8% 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, 2021 and 2020 (dollars in thousands):

For the three months ended June 30, For the six months ended June 30,

2021 2020 2021 2020

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 $ 5,580 16.7 % $ 5,552 16.5 % $ 11,165 16.3 % $ 11,151 16.6 %

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Healthcare 3,686 11.0 3,972 11.8 7,933 11.7 8,081 12.0

Automobile 2,721 7.8 3,847 11.4

Automotive 2,732 8.2 3,843 11.5 5,453 8.0 7,695 11.5

Banking 2,576 7.7 2,428 7.2 5,117 7.5 4,915 7.3

Personal, Food & Miscellaneous Services 2,475 7.1 1,500 4.5

Buildings and Real Estate 2,289 6.9 2,280 6.8 4,634 6.8 4,392 6.5

Personal, Food & Miscellaneous Services 1,538 4.7 1,505 4.5 4,014 5.9 3,005 4.5

Diversified/Conglomerate Manufacturing 1,883 5.6 1,686 5.0 3,882 5.7 2,869 4.3

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Childcare 572 1.7 557 1.7 1,146 1.7 1,114 1.7

Electronics 412 1.2 1,335 4.0

Printing & Publishing 519 1.6 333 1.0 868 1.3 680 1.0

Electronics 219 0.7 1,133 3.4 630 0.9 2,467 3.7

Education 201 0.6 197 0.6 402 0.6 407 0.6

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Total $ 33,371 100.0 % $ 33,525 100.0 % $ 68,047 100.0 % $ 67,145 100.0 %

The tables below reflect the breakdown of total lease revenue by state for the three months ended March 31, 2021 and 2020 (dollars in thousands):

State Lease Revenue for the three months ended March 31, 2021 Percentage of Lease Revenue Number of Leases for the three months ended March 31, 2021 Lease Revenue for the three months ended March 31, 2020 Percentage of Lease Revenue Number of Leases for the three months ended March 31, 2020

The tables below reflect the breakdown of total lease revenue by state for the three and six months ended June 30, 2021 and 2020 (dollars in thousands):

State Lease Revenue for the three months ended June 30, 2021 Percentage of Lease Revenue Number of Leases for the three months ended June 30, 2021 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

Florida $ 4,197 12.6 % 10 $ 4,201 12.5 % 11

Texas 4,130 11.9 13 5,054 15.0 16

Ohio 3,854 11.5 15 3,488 10.4 15

Pennsylvania 3,780 11.3 10 3,380 10.1 9

Texas 3,302 9.9 14 5,180 15.5 16

Georgia 2,738 8.2 9 2,683 8.0 9

Utah 1,937 5.8 4 1,975 5.9 4

Alabama 1,692 5.1 5 897 2.7 3

North Carolina 1,629 4.9 7 1,551 4.6 8

Michigan 1,585 4.7 6 1,572 4.7 6

South Carolina 1,551 4.6 2 1,169 3.5 2

All Other States 7,106 21.4 46 7,429 22.1 45

Total $ 33,371 100.0 % 128 $ 33,525 100.0 % 128

State Lease Revenue for the six months ended June 30, 2021 Percentage of Lease Revenue Number of Leases for the six months ended June 30, 2021 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

Florida $ 8,418 12.4 % 10 $ 8,430 12.6 % 11

Ohio 7,615 11.2 15 7,140 10.6 15

Pennsylvania 7,602 11.2 10 6,780 10.1 9

Texas 7,431 10.9 14 10,237 15.2 16

Georgia 5,408 7.9 9 4,931 7.3 9

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North Carolina 3,482 5.1 7 3,001 4.5 8

Colorado 1,784 5.1 3 847 2.5 3

Alabama 3,277 4.8 5 1,797 2.7 3

Michigan 3,158 4.6 6 3,145 4.7 6

South Carolina 2,754 4.0 2 2,397 3.6 2

All Other States 15,075 22.3 46 15,352 22.8 45

Total $ 34,677 100.0 % 129 $ 33,619 100.0 % 128

$ 68,047 100.0 % 128 $ 67,145 100.0 % 128

Our Adviser and Administrator

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Robert Cutlip, our president, also serves as the executive vice president of commercial and industrial real estate of our Adviser.

Our Administrator employs our interim chief financial officer, treasurer, chief compliance officer, general counsel and secretary, Michael LiCalsi (who also serves as our Administrator’s president, general counsel, and secretary, as well as executive vice president of administration of our Adviser) and their respective staffs.

Our Administrator employs our chief financial officer, treasurer, chief compliance officer, general counsel and secretary, Michael LiCalsi (who also serves as our Administrator’s president, general counsel, and secretary, as well as executive vice president of administration of our Adviser) and their respective staffs.

Our Adviser and Administrator also provide investment advisory and administrative services, respectively, to certain of our affiliates, including, but not limited to, Gladstone Capital Corporation and Gladstone Investment Corporation, both publicly-traded business development companies, as well as Gladstone Land Corporation, a publicly-traded REIT that primarily invests in farmland.

With the exception of Mr.

Gary Gerson, our interim chief financial officer, Mr.

Gary Gerson, our chief financial officer, Mr.

Jay Beckhorn, our treasurer, and Mr.

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Under the terms of the Advisory Agreement, we are responsible for all expenses incurred for our direct benefit.

Examples of these expenses include legal, accounting, interest, directors’ and officers’ insurance, stock transfer services, stockholder-related

fees, consulting and related fees.

Examples of these expenses include legal, accounting, interest, directors’ and officers’ insurance, stock transfer services, stockholder-related fees, consulting and related fees.

In addition, we are also responsible for all fees charged by third parties that are directly related to our business, which include real estate brokerage fees, mortgage placement fees, lease-up fees and transaction structuring fees (although we may be able to pass all or some of such fees on to our tenants and borrowers).

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Base Management Fee

On July 14, 2020, the Company amended and restated the previous Advisory Agreement by entering into the Sixth Amended and Restated Investment Advisory Agreement between the Company and the Adviser (the “Sixth Amended Advisory Agreement”).

On July 14, 2020, we amended and restated the previous Advisory Agreement by entering into the Sixth Amended and Restated Investment Advisory Agreement between us and the Adviser (the “Sixth Amended Advisory Agreement”).

The Sixth Amended Advisory Agreement replaced the previous calculation of the base management fee with a calculation based on Gross Tangible Real Estate.

The revised base management fee will be payable quarterly in arrears and 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 Sixth Amended Advisory 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 revised base management fee will be payable quarterly in arrears and 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 Sixth Amended Advisory Agreement as the current gross value of our 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.

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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 months ended March 31, 2021 or 2020.

No capital gain fee was recognized during the three and six months ended June 30, 2021 or 2020.

Termination Fee

The Advisory Agreement includes a termination fee clause whereby, in the event of our termination of the agreement without cause (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to two times the sum of the average annual base management fee and incentive fee

earned by the Adviser during the 24-month period prior to such termination.

A termination fee is also payable if the Adviser terminates the agreement after the Company has defaulted and applicable cure periods have expired.

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Administration Agreement

Under the terms of the Administration Agreement, we pay separately for our allocable portion of our Administrator’s overhead expenses in performing its obligations to us including, but not limited to, rent and our allocable portion of the salaries and benefits expenses of our Administrator’s employees, including, but not limited to, our interim chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel and secretary), and their respective staffs.

Under the terms of the Administration Agreement, we pay separately for our allocable portion of our Administrator’s overhead expenses in performing its obligations to us including, but not limited to, rent and our allocable portion of the salaries and benefits expenses of our Administrator’s employees, including, but not limited to, our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel and secretary), and their respective staffs.

Our allocable portion of the Administrator’s expenses are generally derived by multiplying our Administrator’s total expenses by the appropriate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements.

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Securities and Exchange Commission (the “SEC”) on February 16, 2021 (our “2020 Form 10-K”).

There were no material changes to our critical accounting policies or estimates during the three months ended March 31, 2021.

There were no material changes to our critical accounting policies or estimates during the six months ended June 30, 2021.

Results of Operations

The weighted average yield on our total portfolio, which was 8.1% and 8.4% as of March 31, 2021 and 2020, 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 8.0% and 8.3% as of June 30, 2021 and 2020, 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 months ended March 31, 2021 and 2020 is below (dollars in thousands, except per share amounts) :

For the three months ended March 31,

A comparison of our operating results for the three and six months ended June 30, 2021 and 2020 is below (dollars in thousands, except per share amounts) :

For the three months ended June 30,

2021 2020 $ Change % Change

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General and administrative 1,073 752 321 42.7 %

Impairment charge — 1,721 (1,721) (100.0) %

Total operating expense before incentive fee waiver $ 25,003 $ 25,853 $ (850) (3.3) %

Incentive fee waiver (16) — (16) 100.0 %

Total operating expenses $ 24,987 $ 25,853 $ (866) (3.3) %

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Interest expense $ (6,486) $ (6,716) $ 230 (3.4) %

Loss on sale of real estate, net (882) (12) (870) 7,250.0 %

Other income (expense) 311 (5) 316 (6,320.0) %

Other income 223 9 214 2,377.8 %

Total other expense, net $ (6,263) $ (6,707) $ 444 (6.6) %

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Distributions attributable to Series D, E, and F preferred stock (2,856) (2,688) (168) 6.3 %

Series D Preferred Stock offering costs write off (2,141) — (2,141) 100.0 %

Distributions attributable to senior common stock (177) (204) 27 (13.2) %

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FFO available to common stockholders and Non-controlling OP Unitholders - diluted (1) $ 11,315 $ 14,180 $ (2,865) (20.2) %

FFO available to common stockholders and Non-controlling OP Unitholders - diluted, as adjusted for comparability (1) $ 13,456 $ 14,180 $ (724) (5.1) %

FFO per weighted average share of common stock and Non-controlling OP Units - basic (1) $ 0.30 $ 0.41 $ (0.11) (26.8) %

FFO per weighted average share of common stock and Non-controlling OP Units - diluted (1) $ 0.30 $ 0.40

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

$ (0.10) (25.0) %

FFO per weighted average share of common stock and Non-controlling OP Units - diluted, as adjusted for comparability (1) $ 0.36 $ 0.40

$ (0.04) (10.0) %

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

For the six months ended June 30,

2021 2020 $ Change % Change

Operating revenues

Lease revenue $ 68,047 $ 67,145 $ 902 1.3 %

Total operating revenues $ 68,047 $ 67,145 $ 902 1.3 %

Operating expenses

Depreciation and amortization $ 30,901 $ 28,278 $ 2,623 9.3 %

Property operating expenses 13,471 12,508 963 7.7 %

Base management fee 2,896 2,801 95 3.4 %

Incentive fee 2,274 2,173 101 4.6 %

Administration fee 634 833 (199) (23.9) %

General and administrative 1,729 1,630 99 6.1 %

Impairment charge — 1,721 (1,721) (100.0) %

Total operating expense before incentive fee waiver $ 51,905 $ 49,944 $ 1,961 3.9 %

Incentive fee waiver (16) — (16) 100.0 %

Total operating expenses $ 51,889 $ 49,944 $ 1,945 3.9 %

Other (expense) income

Interest expense $ (13,650) $ (13,968) $ 318 (2.3) %

Loss on sale of real estate, net (882) (12) (870) 7,250.0 %

Other income 534 4 530 13,250.0 %

Total other expense, net $ (13,998) $ (13,976) $ (22) 0.2 %

Net income $ 2,160 $ 3,225 $ (1,065) (33.0) %

Distributions attributable to Series D, E, and F preferred stock (5,703) (5,366) (337) 6.3 %

Series D preferred stock offering costs write off (2,141) — (2,141) 100.0 %

Distributions attributable to senior common stock (364) (411) 47 (11.4) %

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (6,048) $ (2,552) $ (3,496) 137.0 %

Net loss attributable to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.17) $ (0.07) $ (0.10) 142.9 %

FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 25,735 $ 27,459 $ (1,724) (6.3) %

FFO available to common stockholders and Non-controlling OP Unitholders - diluted (1) $ 26,099 $ 27,870 $ (1,771) (6.4) %

FFO available to common stockholders and Non-controlling OP Unitholders - diluted, as adjusted for comparability (1) $ 28,240 $ 27,870 $ 370 1.3 %

FFO per weighted average share of common stock and Non-controlling OP Unit - basic (1) $ 0.71 $ 0.80 $ (0.09) (11.3) %

FFO per weighted average share of common stock and Non-controlling OP Unit - diluted (1) $ 0.71 $ 0.80 $ (0.09) (11.3) %

FFO per weighted average share of common stock and Non-controlling OP Unit - diluted, as adjusted for comparability (1) $ 0.76 $ 0.80 $ (0.04) (5.0) %

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

Same Store Analysis

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Operating Revenues

For the three months ended March 31,

For the three months ended June 30,

(Dollars in Thousands)

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$ 33,371 $ 33,525 $ (154) (0.5) %

For the six months ended June 30,

(Dollars in Thousands)

Lease Revenues 2021 2020 $ Change % Change

Same Store Properties $ 56,934 $ 54,731 $ 2,203 4.0 %

Acquired & Disposed Properties 6,042 4,312 1,730 40.1 %

Properties with Vacancy 5,071 8,102 (3,031) (37.4) %

$ 68,047 $ 67,145 $ 902 1.3 %

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

Lease revenues from same store properties increased for the three months ended March 31, 2021 from the comparable 2020 period, primarily due to accelerated rent of $1.2 million earned at three of our properties for tenants that early terminated their leases during the three months ended March 31, 2021.

We signed leases with replacement tenants for equivalent square footage for two of these properties with no downtime during the three months ended March 31, 2021.

This was partially offset by a decrease in operating expense recoveries on our triple net leased properties and base year leased properties, as many of our tenants have incurred fewer operating expenses, due to the COVID-19 pandemic during the three months ended March 31, 2021, as compared to the three months ended March 31, 2020.

Lease revenues increased for acquired and disposed of properties for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, because we acquired 10 properties during and subsequent to March 31, 2020, partially offset by a loss of lease revenues from eight properties we sold during and subsequent to the three months ended March 31, 2020 pursuant to our capital recycling program.

Lease revenues decreased for our properties with vacancy for the three months ended March 31, 2021 due to increased vacancy in our portfolio.

Lease revenues from same store properties increased for the three months ended June 30, 2021 from the comparable 2020 period, primarily due to increased operating expense recoveries from increased property operating expenses incurred on behalf of our tenants at certain properties, due to the easing of COVID-19 restrictions.

Lease revenues from same store properties increased for the six months ended June 30, 2021 from the comparable 2020 period, primarily due to accelerated rent of $2.9 million earned at five of our properties for tenants that early terminated their leases during the three and six months ended June 30, 2021.

We signed leases with replacement tenants for equivalent square footage for two of these properties with no downtime during the six months ended June 30, 2021.

Lease revenues increased for acquired and disposed of properties for the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020, because we acquired six properties during and subsequent to June 30, 2020.

This increase was partially offset by a loss of lease revenues from seven properties we sold during and subsequent to the three and six months ended June 30, 2020.

Lease revenues decreased for our properties with vacancy for the three and six months ended June 30, 2021 due to increased vacancy in our portfolio.

Operating Expenses

Depreciation and amortization increased for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, due to depreciation on capital projects completed subsequent to the three months ended March 31, 2020, coupled with depreciation on the 10 properties acquired during and subsequent to the three months ended March 31, 2020, partially offset by decreased depreciation on the eight properties sold during and subsequent to the three months ended March 31, 2020.

For the three months ended March 31,

Depreciation and amortization increased for the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020, due to depreciation on capital projects completed subsequent to the three and six months ended June 30, 2020, coupled with depreciation on the six properties acquired during and subsequent to the three and six months ended June 30, 2020.

This increase was partially offset by decreased depreciation on the seven properties sold during and subsequent to the three and six months ended June 30, 2020.

For the three months ended June 30,

(Dollars in Thousands)

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$ 6,910 $ 6,295 $ 615 9.8 %

For the six months ended June 30,

(Dollars in Thousands)

Property Operating Expenses 2021 2020 $ Change % Change

Same Store Properties $ 9,085 $ 9,254 $ (169) (1.8) %

Acquired & Disposed Properties 557 774 (217) (28.0) %

Properties with Vacancy 3,829 2,480 1,349 54.4 %

$ 13,471 $ 12,508 $ 963 7.7 %

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 decrease in property operating expenses for same store properties for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, is a result of a decrease in our property operating expenses at our triple net leased properties and base year leased properties, as our tenants incurred fewer expenses during the three months ended March 31, 2021 due to the COVID-19 pandemic.

The increase in property operating expenses for acquired and disposed of properties for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, is primarily a result of increased property operating expenses from 10 properties acquired during and subsequent to March 31, 2020, partially offset by a reduction of operating expenses from eight properties sold during and subsequent to March 31, 2020.

The increase in property operating expenses for properties with vacancy for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, is a result of increased vacancy in our portfolio.

The base management fee paid to the Adviser increased for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, due to an increase in Gross Tangible Real Estate over the three months ended March 31, 2021 as compared to the increase in Total Shareholders’ Equity during the three months ended March 31, 2020.

The increase in property operating expenses for same store properties for the three months ended June 30, 2021 from the comparable 2020 period, is a result of increased property operating expenses incurred on behalf of our tenants due to COVID-19 restrictions being reduced in many parts of the United States.

The decrease in property operating expenses for same store properties for the six months ended June 30, 2021 from the comparable 2020 period, is a result of decreased property operating expenses incurred on behalf of our tenants due to COVID-19 restrictions that were initially instituted during late March 2020, but relaxed during the second quarter of 2021.

Prior to March 2020, our tenants were operating at full capacity with no operating restrictions, while in 2021, many tenants are working towards full occupancy.

The increase in property operating expenses for acquired and disposed of properties for the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020, is primarily a result of increased property operating expenses from six properties acquired during and subsequent to June 30, 2020, partially offset by a reduction of operating expenses from seven properties sold during and subsequent to June 30, 2020.

The increase in property operating expenses for properties with vacancy for the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020, 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, 2021, as compared to the three and six months ended June 30, 2020, due to an increase in Gross Tangible Real Estate over the three and six months ended June 30, 2021 as compared to the increase in Total Shareholders’ Equity during the three and six months ended June 30, 2020.

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 months ended March 31, 2021, as compared to the three months ended March 31, 2020, due to a higher pre-incentive fee Core FFO.

The increase in FFO is a result of an increase in total operating revenues coupled with a decrease in interest expense, but partially offset by an increase in property operating expenses.

The incentive fee paid to the Adviser decreased for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, due to a lower pre-incentive fee Core FFO.

The decrease in FFO is a result of a decrease in total operating revenues coupled with an increase in property operating expenses.

The incentive fee paid to the Adviser increased for the six months ended June 30, 2021, as compared to the six months ended June 30, 2020, due to a higher pre-incentive fee Core FFO.

The increase in FFO is a result of an increase in operating revenues, coupled with a decrease in 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 March 31, 2021, as compared to the three months ended March 31, 2020, due to our Administrator incurring fewer costs that are allocated to the Company.

The administration fee paid to the Administrator decreased for the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020, due to our Administrator incurring fewer costs that are allocated to us.

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 March 31, 2021, as compared to the three months ended March 31, 2020, primarily as a result of a decrease in due diligence costs for properties that were not acquired.

General and administrative expenses increased for the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020, primarily as a result of an increase in legal fees, professional service fees, and shareholder related expenses.

We did not recognize an impairment charge during the three and six months ended June 30, 2021.

During the three and six months ended June 30, 2020, we recognized an impairment charge on our Blaine, Minnesota asset, when our impairment testing determined the fair market value of this property was below our carrying value, and the carrying value was unrecoverable.

Other Income and Expenses

Interest expense decreased for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020.

This decrease was primarily a result of a decrease in interest rates on our LIBOR based variable rate debt, as the three months ended March 31, 2021 had lower average LIBOR due to central banks having accommodating monetary policy, due to the COVID-19 pandemic, as compared to the three months ended March 31, 2020.

Loss on sale of real estate, net, for the three months ended March 31, 2021, is attributable to two non-core office assets located in Champaign, Illinois, and Rancho Cordova, California, being sold during the period.

Loss on sale of real estate, net, for the three months ended March 31, 2020 is attributable to one non-core office asset located in Charlotte, North Carolina being sold during the period.

Interest expense decreased for the three and six months ended June 30, 2021, as compared to the three and six months ended June 30, 2020.

This decrease was primarily a result of a decrease in interest rates on our LIBOR based variable rate debt, as the three and six months ended June 30, 2021 had lower average LIBOR due to central banks having accommodating monetary policy, due to the COVID-19 pandemic, as compared to the three and six months ended June 30, 2020.

Loss on sale of real estate, net, for the six months ended June 30, 2021, is attributable to two non-core office assets located in Rancho Cordova, California and Champaign, Illinois, being sold during the period.

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.

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

Net loss attributable to common stockholders and Non-controlling OP Unitholders increased for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, primarily due to the increase in depreciation and amortization expense due to asset acquisition activity during and subsequent to March 31, 2020, coupled with an increase in property operating expenses due to increased vacancy in our portfolio, but partially offset by an increase in lease revenues due to acquisition activity during and subsequent to March 31, 2020.

Net loss attributable to common stockholders and Non-controlling OP Unitholders increased for the three months ended June 30, 2021, as compared to the three months ended June 30, 2020, primarily due to the increase in depreciation and amortization expense due to asset acquisition activity during and subsequent to June 30, 2020, coupled with an increase in property operating expenses due to increased vacancy in our portfolio, but partially offset by a decrease in interest expense.

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 March 31, 2021, was $28.2 million, consisting of approximately $9.9 million in cash and cash equivalents and available borrowing capacity of $18.3 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility remains at $18.3 million as of May 10, 2021.

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

Our available liquidity as of June 30, 2021, was $37.5 million, consisting of approximately $14.6 million in cash and cash equivalents and available borrowing capacity of $22.9 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility decreased to $18.4 million as of August 9, 2021.

Future Capital Needs

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Equity Capital

During the three months ended March 31, 2021, we raised net proceeds of $11.3 million of common equity under our Common Stock ATM Program at a net weighted average per share price of $18.49.

On June 28, 2021, we completed an underwritten public offering of 4,000,000 shares of our newly designated Series G Preferred Stock at a public offering price of $25.00 per share, raising $100.0 million in gross proceeds and approximately $96.6 million in net proceeds, after payment of underwriting discounts and commissions.

We used the net proceeds from this offering to voluntarily redeem all outstanding shares of our Series D Preferred Stock.

During the six months ended June 30, 2021, we raised net proceeds of $19.4 million of common equity under our Common Stock ATM Program at a net weighted average per share price of $19.61.

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

We did not sell any of our Series E Preferred Stock under our Series E Preferred Stock Sales Agreement during the three months ended March 31, 2021.

We raised net proceeds of $0.03 million from sales of our Series F Preferred Stock during the three months ended March 31, 2021.

As of May 10, 2021, we had the ability to raise up to $362.9 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 $362.9 million of available capacity under our 2019 Universal Shelf, approximately $169.6 million is reserved for additional sales under our Common Stock ATM Program, and approximately $92.8 million is reserved for additional sales under our Series E Preferred

Stock Sales Agreement as of May 10, 2021.

We did not sell any of our Series E Preferred Stock under our Series E Preferred Stock Sales Agreement during the six months ended June 30, 2021.

We raised net proceeds of $1.0 million from sales of our Series F Preferred Stock during the six months ended June 30, 2021.

As of August 9, 2021, we had the ability to raise up to $355.4 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 $355.4 million of available capacity under our 2019 Universal Shelf, approximately $162.1 million is reserved for additional sales under our Common Stock ATM Program, and approximately $92.8 million is reserved for additional sales under our Series E Preferred Stock Sales Agreement as of August 9, 2021.

We expect to continue to use our at-the-market programs as a source of liquidity for the remainder of 2021.

As of May 10, 2021, we had the ability to raise up to $796.9 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 $796.9 million of available capacity under our 2020 Universal Shelf, approximately $633.4 million is reserved for the sale of our Series F Preferred Stock as of May 10, 2021.

As of March 31, 2021, we had 53 mortgage notes payable in the aggregate principal amount of $457.8 million, collateralized by a total of 68 properties with a remaining weighted average maturity of 4.4 years.

The weighted-average interest rate on the mortgage notes payable as of March 31, 2021 was 4.22%.

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

As of August 9, 2021, we had the ability to raise up to $694.1 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 $694.1 million of available capacity under our 2020 Universal Shelf, approximately $630.6 million is reserved for the sale of our Series F Preferred Stock as of August 9, 2021.

As of June 30, 2021, we had 53 mortgage notes payable in the aggregate principal amount of $454.4 million, collateralized by a total of 68 properties with a remaining weighted average maturity of 4.2 years.

The weighted-average interest rate on the mortgage notes payable as of June 30, 2021 was 4.20%.

We continue to see banks and 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 March 31, 2021, we had mortgage debt in the aggregate principal amount of $20.1 million payable during the remainder of 2021 and $105.8 million payable during 2022.

The 2021 principal amount payable includes both amortizing principal payments and two balloon principal payments due during the remaining nine months of 2021.

As of June 30, 2021, we had mortgage debt in the aggregate principal amount of $16.9 million payable during the remainder of 2021 and $105.9 million payable during 2022.

The 2021 principal amount payable includes both amortizing principal payments and two balloon principal payments due during the remaining six months of 2021.

We anticipate being able to refinance our mortgages that come due during 2021 and 2022 with a combination of new mortgage debt, availability under our Credit Facility and the issuance of additional equity securities.

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Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2021, was $16.9 million, as compared to net cash provided by operating activities of $20.3 million for the three months ended March 31, 2020.

This change was primarily a result of an increase in property operating expenses, due to increased vacancy in our portfolio, partially offset by increased operating revenues from our 10 property acquisitions completed during and subsequent to March 31, 2020, coupled with contractual lease revenue increases on the in-place portfolio.

Net cash provided by operating activities during the six months ended June 30, 2021, was $34.4 million, as compared to net cash provided by operating activities of $35.4 million for the six months ended June 30, 2020.

This change was primarily a result of an increase in property operating expenses, due to increased vacancy in our portfolio, partially offset by increased operating revenues from our six property acquisitions completed during and subsequent to June 30, 2020, coupled with contractual lease revenue increases on the in-place portfolio.

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

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Investing Activities

Net cash used in investing activities during the three months ended March 31, 2021, was $6.5 million, which primarily consisted of one property acquisition, 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 three months ended March 31, 2020, was $68.7 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, 2021, was $17.1 million, which primarily consisted of two 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 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.

Financing Activities

Net cash used in financing activities during the three months ended March 31, 2021, was $11.8 million, which primarily consisted of the repayment of $7.5 million of outstanding mortgage debt, repayment of $53.9 million on our Credit Facility, and distributions paid to common, senior common and preferred shareholders, partially offset by the issuance of $11.5 million of common and preferred equity, borrowings from our new Term Loan B of $50.0 million, and the issuance of $5.5 million of new mortgage debt.

Net cash provided by financing activities for the three months ended March 31, 2020, was $51.5 million, which primarily consisted of $35.9 million in new mortgage borrowings coupled with the issuance of $28.3 million of common equity, partially offset by $3.2 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders.

Net cash used in financing activities during the six months ended June 30, 2021, was $14.1 million, which primarily consisted of the repayment of $10.9 million of outstanding mortgage debt, redemption of our Series D Preferred Stock, repayment of $53.9 million, net, on our Revolver, and distributions paid to common, senior common and preferred shareholders, partially offset by the issuance of $120.8 million of common and preferred equity, borrowings from our new Term Loan B of $50.0 million, and the issuance of $5.5 million of new mortgage debt.

Net cash provided by financing activities for the six months ended June 30, 2020, was $38.3 million, which primarily consisted of $35.9 million in new mortgage borrowings coupled with the issuance of $30.8 million of equity, partially offset by $24.4 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders.

Credit Facility

On July 2, 2019, we amended, extended and upsized our Credit Facility, expanding Term Loan A from $75.0 million to $160.0 million, and increasing our Revolver from $85.0 million to $100.0 million.

Term Loan A has a maturity date of July 2, 2024,

and the Revolver has a maturity date of July 2, 2023.

Term Loan A has a maturity date of July 2, 2024, and the Revolver has a maturity date of July 2, 2023.

The interest rate for the Credit Facility is equal to LIBOR plus a spread ranging from 125 to 215 basis points depending on our leverage.

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We incurred fees of approximately $0.5 million in connection with issuing Term Loan B.

As of March 31, 2021, there was $50.0 million outstanding under Term Loan B, and we used all net proceeds to repay all outstanding borrowings on the Revolver.

As of March 31, 2021, there was $210.0 million outstanding under our Credit Facility at a weighted average interest rate of approximately 2.00% and $18.8 million outstanding under letters of credit at a weighted average interest rate of 1.90%.

As of May 10, 2021, the maximum additional amount we could draw under the Credit Facility was $18.3 million.

We were in compliance with all covenants under the Credit Facility as of March 31, 2021.

As of June 30, 2021, there was $50.0 million outstanding under Term Loan B, and we used all net proceeds to repay all outstanding borrowings on the Revolver.

As of June 30, 2021, there was $210.0 million outstanding under our Credit Facility at a weighted average interest rate of approximately 1.99% and $18.1 million outstanding under letters of credit at a weighted average interest rate of 1.90%.

As of August 9, 2021, the maximum additional amount we could draw under the Credit Facility was $18.4 million.

We were in compliance with all covenants under the Credit Facility as of June 30, 2021.

For discussion on the impact COVID-19 has had on our liquidity and capital resources, refer to the Impact of COVID-19 on Our Business section under Business Environment.

Contractual Obligations

The following table reflects our material contractual obligations as of March 31, 2021 (in thousands):

The following table reflects our material contractual obligations as of June 30, 2021 (in thousands):

Payments Due by Period

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$ 762,301 $ 75,065 $ 217,488 $ 295,426 $ 174,322

(1) Debt obligations represent borrowings under our Revolver, which represents $0.0 million of the debt obligation due in 2023, our Term Loan A, which represents $160.0 million of the debt obligation due in 2024, our Term Loan B, which represents $50.0 million of the debt obligation due in 2026 and mortgage notes payable that were outstanding as of March 31, 2021.

This figure does not include $(0.2) million of premiums and (discounts), net and $4.2 million of deferred financing costs, net, which are reflected in mortgage notes payable, net and borrowings under Term Loan, net on the condensed consolidated balance sheets.

(2) Interest on debt obligations includes estimated interest on borrowings under our Revolver and Term Loan and mortgage notes payable.

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 March 31, 2021.

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

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of June 30, 2021.

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

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

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

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of March 31, 2021.

We did not have any material off-balance sheet arrangements as of June 30, 2021.

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 months ended March 31, 2021 and 2020, 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 March 31,

(Dollars in Thousands, Except for Per Share Amounts)

We also present FFO available to our common stockholders and Non-controlling OP Unitholders as adjusted for comparability as an additional supplemental measure, as we believe it is more reflective of our core operating performance, and provides investors and analysts an additional measure to compare our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

FFO as adjusted for comparability is generally calculated as FFO available to common stockholders and Non-controlling OP Unitholders, excluding certain non-recurring and non-cash income and expense adjustments, which management believes are not reflective of the results within our operating real estate portfolio.

The following table provides a reconciliation of our FFO available to common stockholders for the three and six months ended June 30, 2021 and 2020, 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) (Dollars in Thousands, Except for Per Share Amounts)

2021 2020 2021 2020

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

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Distributions attributable to preferred and senior common stock (3,033) (2,892) (6,067) (5,777)

Series D preferred stock offering costs write off (2,141) — (2,141) —

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (3,053) $ (1,927) $ (6,048) $ (2,552)

Real estate depreciation and amortization $ 14,191 $ 14,182 $ 30,901 $ 28,278

Impairment charge — 1,721 — 1,721

Loss on sale of real estate, net — — 882 12

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Distributions attributable to preferred and senior common stock (3,033) (2,892) (6,067) (5,777)

Series D preferred stock offering costs write off (2,141) — (2,141) —

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (3,053) $ (1,927) $ (6,048) $ (2,552)

Real estate depreciation and amortization $ 14,191 $ 14,182 $ 30,901 $ 28,278

Impairment charge — 1,721 — 1,721

Income impact of assumed conversion of senior common stock 177 204 364 411

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Diluted FFO per weighted average share of common stock and Non-controlling OP Unit $ 0.30 $ 0.40 $ 0.71 $ 0.80

Calculation of diluted FFO per share of common stock and Non-controlling OP Unit, as adjusted for comparability

FFO available to common stockholders and Non-controlling OP Unitholders plus assumed conversions $ 11,315 $ 14,180 $ 26,099 $ 27,870

Series D preferred stock offering costs write off 2,141 — 2,141 —

FFO available to common stockholders and Non-controlling OP Unitholders plus assumed conversions, as adjusted for comparability $ 13,456 $ 14,180 $ 28,240 $ 27,870

Weighted average common shares and Non-controlling OP Units outstanding - diluted 37,209,799 35,092,914 36,992,330 34,939,574

Diluted FFO per weighted average share of common stock and Non-controlling OP Unit, as adjusted for comparability $ 0.36 $ 0.40 $ 0.76 $ 0.80

Distributions declared per share of common stock and Non-controlling OP Unit $ 0.37545 $ 0.37545 $ 0.75090 $ 0.75090

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