What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-02-15 compared with 2021-02-16 · 222 added, 232 removed, 1042 unchanged (30% of the section changed)

2 unchanged sentences

Report of Management on Internal Controls over Financial Reporting

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounti n g Firm (PCAOB ID 238 )

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Controls over Financial Reporting appearing under Item 8.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Report of Management on Internal Controls over Financial Reporting appearing under Item 8.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

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As described in Notes 1, 4, and 5 to the consolidated financial statements, the Company’s consolidated total real estate, net balance was $958.6 million as of December 31, 2021.

During 2020, the Company recognized an impairment charge of $3.6 million.

During 2021, the Company did not recognize any impairment charges.

Management periodically reviews the carrying value of each property to determine if circumstances indicate impairment of the carrying value of the investment exists.

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/s/ PricewaterhouseCoopers LLP

McLean, Virginia

Washington, DC

February 15, 2022

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Mortgage notes payable, net (1) $ 449,944 $ 456,177

Borrowings under Revolver, net 53,312 51,579

Borrowings under Term Loan, net 159,203 121,276

Borrowings under Revolver 33,550 53,312

Borrowings under Term Loan A and Term Loan B, net 224,032 159,203

Deferred rent liability, net 26,770 20,633

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Accounts payable and accrued expenses 6,736 4,459

Liabilities related to assets held for sale — 21

Due to Adviser and Administrator (1) 3,431 2,960

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MEZZANINE EQUITY

Series D and E redeemable preferred stock, net, par value $ 0.001 per share;

Series D, E and G redeemable preferred stock, net, par value $ 0.001 per share;

$ 25 per share liquidation preference;

12,760,000 shares authorized;

10,760,000 and 12,760,000 shares authorized;

and 7,061,448 and 6,571,003 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively (3)

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$ 25 per share liquidation preference;

26,000,000 and 0 shares authorized and 116,674 and 0 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively (3)

26,000,000 shares authorized;

and 422,920 and 116,674 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively (3)

Additional paid in capital 671,134 626,533

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Base management fee (1) 5,882 5,648 5,174

5,648 5,174 5,054

Incentive fee (1) 4,859 4,301 3,688

4,301 3,688 3,042

Administration fee (1) 1,448 1,598 1,690

1,598 1,690 1,605

General and administrative 3,218 3,259 3,235

Impairment charge — 3,621 1,813

Total operating expense before incentive fee waiver $ 102,816 $ 99,855 $ 80,231

Incentive fee waiver (1) ( 16 ) — —

Total operating expenses $ 102,800 $ 99,855 $ 80,231

1 unchanged sentence

Interest expense $ ( 26,887 ) $ ( 26,803 ) $ ( 28,279 )

Gain on sale of real estate, net 8,096 2,952 2,763

(Loss) gain on sale of real estate, net ( 1,148 ) 8,096 2,952

Other income 2,880 395 712

1 unchanged sentence

Net income $ 9,733 $ 14,985 $ 9,541

Net (income) loss (available) attributable to OP Units held by Non-controlling OP Unitholders ( 47 ) 87 ( 4 )

Net loss (income) attributable (available) to OP Units held by Non-controlling OP Unitholders 40 ( 47 ) 87

Net income attributable to the Company $ 9,773 $ 14,938 $ 9,628

Distributions attributable to Series A, B, D, E, and F preferred stock ( 10,973 ) ( 10,822 ) ( 10,416 )

Series A and B Preferred Stock offering costs write off — ( 2,674 ) —

Distributions attributable to Series D, E, F, and G preferred stock ( 11,488 ) ( 10,973 ) ( 10,822 )

Series A, B, and D preferred stock offering costs write off ( 2,141 ) — ( 2,674 )

Distributions attributable to senior common stock ( 698 ) ( 816 ) ( 892 )

Net income (loss) available (attributable) to common stockholders $ 3,149 $ ( 4,760 ) $ 973

Earnings (loss) per weighted average share of common stock - basic & diluted

Earnings (loss) available (attributable) to common shareholders $ 0.09 $ ( 0.16 ) $ 0.03

Net (loss) income (attributable) available to common stockholders $ ( 4,554 ) $ 3,149 $ ( 4,760 )

(Loss) earnings per weighted average share of common stock - basic & diluted

(Loss) Income (attributable) available to common shareholders $ ( 0.12 ) $ 0.09 $ ( 0.16 )

Weighted average shares of common stock outstanding

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Comprehensive income

Change in unrealized loss related to interest rate hedging instruments, net $ ( 2,219 ) $ ( 1,978 ) $ ( 183 )

Other Comprehensive loss ( 2,219 ) ( 1,978 ) ( 183 )

Change in unrealized gain (loss) related to interest rate hedging instruments, net $ 2,854 $ ( 2,219 ) $ ( 1,978 )

Other Comprehensive gain (loss) 2,854 ( 2,219 ) ( 1,978 )

Net income $ 9,733 $ 14,985 $ 9,541

Comprehensive income $ 12,587 $ 12,766 $ 7,563

Comprehensive (income) loss (available) attributable to OP Units held by Non-controlling OP Unitholders ( 47 ) 87 ( 4 )

Comprehensive loss (income) attributable (available) to OP Units held by Non-controlling OP Unitholders 40 ( 47 ) 87

Total comprehensive income available to the Company $ 12,627 $ 12,719 $ 7,650

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Conversion of senior common stock to common stock — — 49,725 ( 59,824 ) — — — — — — — — — —

Retirement of senior common stock, net — — — ( 2,266 ) — — — — ( 34 ) — — ( 34 ) — ( 34 )

Redemption of Series A and B preferred stock, net ( 2,264,000 ) — — — ( 2 ) — — — ( 53,924 ) — ( 2,674 ) ( 56,600 ) — ( 56,600 )

Distributions declared to common, senior common and preferred stockholders — — — — — — — — ( 23 ) — ( 57,815 ) ( 57,838 ) ( 1,049 ) ( 58,887 )

Comprehensive income — — — — — — — — — ( 1,978 ) — ( 1,978 ) — ( 1,978 )

Issuance of Non-controlling OP Units as consideration in real estate acquisitions, net — — — — — — — — — — — — 13,975 13,975

Redemptions of OP Units — — 263,300 — — — — — 6,143 — — 6,143 ( 6,143 ) —

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership — — — — — — — — ( 5,507 ) — — ( 5,507 ) 5,507 —

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Balance at December 31, 2019 — — 32,593,651 806,435 $ — $ 1 $ 32 $ — $ 571,205 $ ( 2,126 ) $ ( 360,978 ) $ 208,134 $ 2,903 $ 211,037

Issuance of Series A and B preferred stock and common stock, net — — 3,025,727 — — — 3 — 64,539 — — 64,542 — 64,542

Issuance of common stock and Series F preferred stock, net — 116,674 2,691,971 — — — 3 — 55,485 — — 55,488 — 55,488

Conversion of senior common stock to common stock — — 46,348 ( 56,063 ) — — — — — — — — — —

Redemption of Series A and B preferred stock, net ( 2,264,000 ) — — — ( 2 ) — — — ( 53,924 ) — ( 2,674 ) ( 56,600 ) — ( 56,600 )

Distributions declared to common, senior common, preferred stockholders and Non-controlling OP Unit holders — — — — — — — — — — ( 63,001 ) ( 63,001 ) ( 756 ) ( 63,757 )

Comprehensive income — — — — — — — — — ( 2,219 ) — ( 2,219 ) — ( 2,219 )

Redemptions of OP Units — — 263,300 — — — — — 6,143 — — 6,143 ( 6,143 ) —

Issuance of Non-controlling OP Units as consideration in real estate acquisitions, net — — — — — — — — — — — — 503 503

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership — — — — — — — — ( 157 ) — — ( 157 ) 157 —

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Comprehensive income — — — — — — — — — 2,854 — 2,854 — 2,854

Issuance of Non-controlling OP Units as consideration in real estate acquisitions, net — — — — — — — — — — — — 503 503

Reclassification into interest expense — — — — — — — — — 145 — 145 — 145

Redemptions of OP Units — — 246,039 — — — — — 4,812 — — 4,812 ( 4,812 ) —

Redemption of Series D preferred stock, net — — — — — — — — — — ( 2,141 ) ( 2,141 ) — ( 2,141 )

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership — — — — — — — — ( 3,736 ) — — ( 3,736 ) 3,736 —

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Impairment charge — 3,621 1,813

Gain on sale of real estate, net ( 8,096 ) ( 2,952 ) ( 2,763 )

Loss (gain) on sale of real estate, net 1,148 ( 8,096 ) ( 2,952 )

Amortization of deferred financing costs 1,583 1,531 1,641

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Increase in deferred rent receivable ( 2,900 ) ( 1,899 ) ( 1,477 )

(Decrease) increase in accounts payable and accrued expenses ( 1,680 ) 1,540 515

Increase (decrease) in accounts payable and accrued expenses 2,834 ( 1,680 ) 1,540

Increase in amount due to Adviser and Administrator 471 56 381

Increase in other liabilities 1,418 1,808 2,075

Tenant inducement payments ( 20 ) — —

Leasing commissions paid ( 1,974 ) ( 1,464 ) ( 1,177 )

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Offering costs paid ( 4,579 ) ( 988 ) ( 3,431 )

Retirement of senior common stock — — ( 34 )

Redemption of Series A and B perpetual preferred stock — ( 56,600 ) —

Redemption of Series A, B, and D perpetual preferred stock ( 87,739 ) — ( 56,600 )

Borrowings under mortgage notes payable 21,500 52,578 69,650

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Principal repayments on mortgage notes payable ( 28,470 ) ( 50,662 ) ( 57,438 )

Proceeds from issuance of term loan facility 37,700 47,300 —

Borrowings on term loan 65,000 37,700 47,300

Borrowings from revolving credit facility 69,900 142,700 165,400

Repayments on revolving credit facility ( 90,250 ) ( 141,200 ) ( 163,600 )

Decrease in security deposits ( 22 ) ( 192 ) 83

Increase (decrease) in security deposits 98 ( 22 ) ( 192 )

Distributions paid for common, senior common, preferred stock and Non-controlling OP Unitholders ( 67,592 ) ( 63,757 ) ( 58,887 )

Net cash provided by (used in) financing activities $ 39,352 $ 74,249 $ ( 21,157 )

Net increase in cash, cash equivalents, and restricted cash $ 4,588 $ 2,406 $ 2

Net cash provided by financing activities $ 21,753 $ 39,352 $ 74,249

Net (decrease) increase in cash, cash equivalents, and restricted cash $ ( 2,898 ) $ 4,588 $ 2,406

Cash, cash equivalents, and restricted cash at beginning of period $ 16,076 $ 11,488 $ 9,082

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Cash paid during year for interest $ 23,393 $ 26,098 $ 25,685

Tenant funded fixed asset improvements $ 2,978 $ 2,787 $ 1,608

Tenant funded fixed asset improvements included in deferred rent liability, net $ 9,192 $ 2,978 $ 2,787

Acquisition of real estate and related intangible assets $ 300 $ 1,542 $ —

Assumed mortgage in connection with acquisition $ — $ — $ 6,918

Reserves released by title company to tenant $ — $ — $ 3,966

Capital improvements and leasing commissions included in accounts payable and accrued expenses $ 512 $ 1,070 $ 390

Unrealized loss related to interest rate hedging instruments, net $ ( 2,219 ) $ ( 1,978 ) $ ( 183 )

Unrealized gain (loss) related to interest rate hedging instruments, net $ 2,854 $ ( 2,219 ) $ ( 1,978 )

Increase in asset retirement obligation assumed in acquisition $ 600 $ — $ 164

Non-controlling OP Units issued in connection with acquisition $ — $ 503 $ —

Series A and B Preferred Stock offering cost write off $ — $ 2,674 $ —

Series A, B, and D Preferred Stock offering cost write off $ 2,141 $ — $ 2,674

Right-of-use asset from operating leases $ — $ — $ 5,998

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We have elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes.

We focus on acquiring, owning and managing primarily office and industrial properties.

We focus on acquiring, owning and managing primarily industrial and office properties.

Subject to certain restrictions and limitations, our business is managed by Gladstone Management Corporation, a Delaware corporation (the “Adviser”), and administrative services are provided by Gladstone Administration, LLC, a Delaware limited liability company (the “Administrator”), each pursuant to a contractual arrangement with us.

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We made payments of $ 0.8 million, $ 0.6 million, and $ 2.5 million for deferred financing costs during the years ended December 31, 2021, 2020, and 2019, respectively.

Total amortization expense related to deferred

financing costs is included in interest expense and was $ 1.5 million, $ 1.6 million, and $ 1.4 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Gains on Sale of Real Estate, Net

Gains on sale of real estate, net, consist of the excess consideration received for a property over the property carrying value at the time of sale, or gains on real estate, offset by consideration received for a property less than the property carrying value at the time of sale, or loss on sale of real estate.

Total amortization expense related to deferred financing costs is included in interest expense and was $ 1.6 million, $ 1.5 million, and $ 1.6 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Gains (Losses) on Sale of Real Estate, Net

Gains (losses) on sale of real estate, net, consist of the excess consideration received for a property over the property carrying value at the time of sale, or gains on real estate, offset by consideration received for a property less than the property carrying value at the time of sale, or loss on sale of real estate.

Lease Revenue

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In the event that the collectability of deferred rent with respect to any given tenant is in doubt, we record an allowance for uncollectible accounts or record a direct write-off of the specific rent receivable.

We incurred $ 0.2 million in deferred rent write offs during each of the years ended December 31, 2020 and 2018, respectively.

We incurred $ 0.4 million and $ 0.2 million in deferred rent write offs during each of the years ended December 31, 2021 and 2020, respectively.

No such reserves or direct write offs were recorded during the year ended 2019.

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We recognize interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense.

We recognize unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the

uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation.

We recognize unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation.

For the years ended December 31, 2021, 2020, and 2019, we did no t record any provisions for uncertain tax positions.

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The liabilities are accreted to their estimated obligation over the life of the leases for the respective properties.

We accrued $ 0.2 million of liabilities in connection with acquisitions for the year ended December 31, 2019, and no liabilities in connection with acquisitions for the years ended December 31, 2020 and 2018.

We recorded accretion expense of $ 0.1 million in each of the years ended December 31, 2020, 2019, and 2018, respectively, to general and administrative expense.

We accrued $ 0.6 million and $ 0.2 million of liabilities in connection with acquisitions for the years ended December 31, 2021 and 2019, respectively, and no liabilities in connection with acquisitions for the year ended December 31, 2020.

We recorded accretion expense of $ 0.1 million in each of the years ended December 31, 2021, 2020, and 2019, to general and administrative expense.

Costs of future expenditures for obligations are discounted to their present value.

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Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “Financial Instruments - Credit Losses (Topic 326)” (“ASU 2016-13”).

The new standard requires more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair market value through net income.

The standard also requires that financial assets measured at amortized cost be presented at the net amounts anticipated to be collected, through an allowance for credit losses that is deducted from the amortized cost basis.

We are required to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets.

We adopted ASU 2016-13 beginning with the three months ended March 31, 2020.

Adopting ASU 2016-13 has not resulted in a material impact to our consolidated financial statements, as we do not have any loans receivable outstanding.

In March 2020, the FASB issued Accounting Standards Update 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), subsequently clarified in January 2021 by Accounting Standards Update 2021-01 “Reference Rate Reform (Topic 848)” (“ASU 2021-01”).

The main provisions of this update provide optional expedients and exceptions for contracts, hedging relationships, and other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate

expected to be discontinued because of reference rate reform.

ASU 2020-04 is effective for all entities as of March 12, 2020, and ASU 2021-01 is effective for all entities as of January 31, 2021.

We adopted ASU 2020-04 beginning with the three months ended March 31, 2020, and ASU 2021-01 as of January 31, 2021.

Adopting ASU 2020-04 and ASU 2021-01 has not resulted in a material impact to our consolidated statements, as ASU 2020-04 and ASU 2021-01 allows for prospective application of any changes in the effective interest rate for our LIBOR based debt, and allows for practical expedients that will allow us to treat our derivative instruments designated as cash flow hedges consistent with how they are currently accounted for.

In April 2020, the FASB issued a staff question-and-answer document, Topic 842 and Topic 840:

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This election is available for concessions that result in the total payments required by the modified contract being substantially the same as or less than the total payments required by the original contract.

At this time, we have granted rent deferrals to three tenants representing approximately 2 % of total portfolio rents.

The agreements with these tenants include current partial payments in exchange for rent deferrals of varying terms with deferred amounts to be paid by the respective tenant back to us, for the period starting in July 2020 and ending in March 2021.

We have elected to not evaluate these leases under the lease modification accounting framework.

Related-Party Transactions

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Brubaker (our vice chairman and chief operating officer) serve as directors and executive officers of our Adviser and our Administrator.

Our president, Mr.

Cutlip, is an executive managing director of our Adviser.

Our co-presidents, Messrs.

Cutlip and Cooper, are executive managing directors of our Adviser.

Michael LiCalsi, our general counsel and secretary, also serves as our Administrator’s president, general counsel and secretary.

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The Sixth Amended Advisory Agreement replaced the Fifth Amended Advisory Agreement’s 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 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 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 is payable quarterly in arrears and is 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 calculation of the other fees in the agreement remained unchanged.

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For the years ended December 31, 2021, 2020, and 2019, we recorded an incentive fee of $ 4.9 million, $ 4.3 million, and $ 3.7 million, respectively.

The Adviser did no t waive any portion of the incentive fee for the years ended December 31, 2020, 2019, and 2018.

Waivers cannot be recouped by the Adviser in the future.

Our Advisor issued a waiver of the incentive fee of $ 0.02 million during the year ended December 31, 2021.

Our Adviser did no t waive any portion of the incentive fee for the years ended December 31, 2020 and 2019.

Waivers are non-contractual, unconditional, and irrevocable and cannot be recouped by the Adviser in the future.

Capital Gain Fee

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We believe that the methodology of allocating the Administrator’s total expenses by approximate percentage of time services were performed among all companies serviced by our Administrator more closely approximates fees paid to actual services performed.

For the years ended December 31, 2020, 2019, and 2018, we recorded an administration

fee of $ 1.6 million, $ 1.7 million, and $ 1.6 million, respectively.

For the years ended December 31, 2021, 2020, and 2019, we recorded an administration fee of $ 1.4 million, $ 1.6 million, and $ 1.7 million, respectively.

Our Board of Directors reviews and considers approving or renewing the Administration Agreement each July.

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Gladstone Securities may, in its sole discretion, reallow a portion of the Dealer Manager Fee to participating broker-dealers in support of the Offering.

Earnings per Share of Common Stock

The following tables set forth the computation of basic and diluted earnings (loss) per share of common stock for the years ended December 31, 2020, 2019 and 2018, respectively.

We paid fees of $ 0.7 million to Gladstone Securities during the year ended December 31, 2021 in connection with the Offering.

(Loss) Earnings per Share of Common Stock

The following tables set forth the computation of basic and diluted (loss) earnings per share of common stock for the years ended December 31, 2021, 2020 and 2019, respectively.

The OP Units held by Non-controlling OP Unitholders (which may be redeemed for shares of common stock) have been excluded from the diluted earnings per share calculation, as there would be no effect on the amounts since the Non-controlling OP Unitholders’ share of income would also be added back to net income.

Net income figures are presented net of such non-controlling interests in the earnings per share calculation.

We computed basic earnings (loss) per share for the years ended December 31, 2020, 2019 and 2018, respectively, using the weighted average number of shares outstanding during the periods.

Diluted earnings (loss) per share for the years ended December 31, 2020, 2019 and 2018, reflects additional shares of common stock related to our convertible Senior Common Stock, if the effect would be dilutive, that would have been outstanding if dilutive potential shares of common stock had been

issued, as well as an adjustment to net income (loss) available (attributable) to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

We computed basic (loss) earnings per share for the years ended December 31, 2021, 2020 and 2019, respectively, using the weighted average number of shares outstanding during the periods.

Diluted (loss) earnings per share for the years ended December 31, 2021, 2020 and 2019, reflects additional shares of common stock related to our convertible Senior Common Stock, if the effect would be dilutive, that would have been outstanding if dilutive potential shares of common stock had been issued, as well as an adjustment to net (loss) income (attributable) available to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

For the year ended December 31,

2021 2020 2019

Calculation of basic earnings (loss) per share of common stock:

Net income (loss) available (attributable) to common stockholders $ 3,149 $ ( 4,760 ) $ 973

Calculation of basic (loss) earnings per share of common stock:

Net (loss) income (attributable) available to common stockholders $ ( 4,554 ) $ 3,149 $ ( 4,760 )

Denominator for basic weighted average shares of common stock (1) 36,537,306 34,040,085 30,695,902

Basic earnings (loss) per share of common stock $ 0.09 $ ( 0.16 ) $ 0.03

Calculation of diluted earnings (loss) per share of common stock:

Net income (loss) available (attributable) to common stockholders $ 3,149 $ ( 4,760 ) $ 973

Net income (loss) available (attributable) to common stockholders plus assumed conversions (2) $ 3,149 $ ( 4,760 ) $ 973

Basic (loss) earnings per share of common stock $ ( 0.12 ) $ 0.09 $ ( 0.16 )

Calculation of diluted (loss) earnings per share of common stock:

Net (loss) income (attributable) available to common stockholders $ ( 4,554 ) $ 3,149 $ ( 4,760 )

Net (loss) income (attributable) available to common stockholders plus assumed conversions (2) $ ( 4,554 ) $ 3,149 $ ( 4,760 )

Denominator for basic weighted average shares of common stock (1) 36,537,306 34,040,085 30,695,902

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Denominator for diluted weighted average shares of common stock (2) 36,537,306 34,040,085 30,695,902

Diluted earnings (loss) per share of common stock $ 0.09 $ ( 0.16 ) $ 0.03

Diluted (loss) earnings per share of common stock $ ( 0.12 ) $ 0.09 $ ( 0.16 )

(1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 316,987 , 502,586 , and 700,924 for the years ended December 31, 2021, 2020, and 2019, respectively.

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Real Estate and Intangible Assets

The following table sets forth the components of our investments in real estate as of December 31, 2020 and 2019, respectively, excluding real estate held for sale as of December 31, 2020 and 2019, respectively (dollars in thousands):

The following table sets forth the components of our investments in real estate as of December 31, 2021 and 2020, respectively, excluding real estate held for sale as of December 31, 2020 (dollars in thousands):

December 31, 2021 December 31, 2020

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Real estate depreciation expense on building and tenant improvements was $ 39.6 million, $ 36.0 million, and $ 32.8 million for the years ended December 31, 2021, 2020, and 2019, respectively.

During the year ended December 31, 2020 and 2019 we acquired nine and 18 properties, respectively, which are summarized below (dollars in thousands):

Year Ended Aggregate Square Footage Weighted Average Lease Term Aggregate Purchase Price Capitalized Acquisition Costs

During the year ended December 31, 2021 and 2020 we acquired 11 and nine properties, respectively, which are summarized below (dollars in thousands):

Year Ended Aggregate Square Footage Weighted Average Lease Term Aggregate Purchase Price Aggregate Capitalized Acquisition Costs

December 31, 2021 (1) 949,174 13.4 years $ 100,453 $ 798

December 31, 2020 (2) 1,717,502 12.2 years $ 129,974 $ 814

(1) On January 22, 2021, we acquired a 180,152 square foot property in Findlay, Ohio for $ 11.1 million.

The property is fully leased to one tenant and had 14.2 years of remaining lease term at the time we acquired the property.

On June 17, 2021, we acquired a 25,200 square foot property in Baytown, Texas for $ 8.2 million.

The property is fully leased to one tenant and had 12.6 years remaining lease term at the time we acquired the property.

On July 21, 2021, we acquired an 80,604 square foot, four -property portfolio in Pacific, Missouri for $ 22.1 million.

These properties are fully leased to one tenant and had 17.4 years remaining lease term at the time we acquired the portfolio.

On August 20, 2021, we acquired an 81,760 square foot, two -property portfolio in Peru, Illinois for $ 4.8 million.

These properties are fully leased to one tenant and had 15.0 years remaining lease term at the time we acquired the portfolio.

On November 3, 2021, we acquired a 161,458 square foot property in Charlotte, North Carolina for $ 12.9 million.

This property is fully leased to one tenant and had 7.9 years remaining lease term at the time we acquired the property.

On December 21, 2021, we acquired a 120,000 square foot property in Atlanta, Georgia for $ 12.1 million.

This property is fully leased to one tenant and had 15.0 years of remaining lease term at the time we acquired the property.

On December 21, 2021, we acquired a 300,000 square foot property in Crossville, Tennessee for $ 29.2 million.

This property is fully leased to one tenant and had 11.0 years remaining lease term at the time we acquired the property.

(2) On January 8, 2020, we acquired a 64,800 square foot property in Indianapolis, Indiana for $ 5.3 million.

The property is leased to three tenants, with a weighted average lease term of 7.2 years.

The property is leased to three tenants and had a weighted average lease term of 7.2 years at the time we acquired the property.

On January 27, 2020, we acquired a 320,838 square foot, three -property portfolio in Houston, Texas, Charlotte, North Carolina, and St.

Charles, Missouri for $ 34.7

The portfolio has a weighted average lease term of 20.0 years.

Charles, Missouri for $ 34.7 million.

The portfolio had a weighted average lease term of 20.0 years at the time we acquired the portfolio.

On March 9, 2020, we acquired a 504,400 square foot property in Crandall, Georgia for $ 32.0 million.

This property is fully leased to one tenant for 10.5 years.

On September 1, 2020, we acquired a 153,600 square foot property in Terre Haute, Indiana for $ 10.6 million.

This property is fully leased to one tenant for 9.7 years.

The property is fully leased to one tenant and had 10.5 years remaining lease term at the time we acquired the property.

On September 1, 2020, we acquired a 153,600 square foot property in Indianapolis, Indiana, for $ 10.6 million.

The property is fully leased to one tenant and had 9.7 years remaining lease term at the time we acquired the property.

On October 14, 2020, we acquired a 240,714 square foot property in Montgomery, Alabama, for $ 14.3 million.

This property is fully leased to one tenant for 7.2 years.

The property is fully leased to one tenant and had 7.2 years remaining lease term at the time we acquired the property.

On December 18, 2020, we acquired a 277,883 square foot property in Huntsville, Alabama, for $ 20.0 million.

This property is fully leased to one tenant for 9.2 years.

The property is fully leased to one tenant and had 9.2 years remaining lease term at the time we acquired the property.

On December 21, 2020, we acquired a 155,267 square foot property in Pittsburgh, Pennsylvania, for $ 13.0 million.

This property is fully leased to one tenant for 10.0 years.

(2) On February 8, 2019, we acquired a 26,050 square foot property in Moorestown, New Jersey for $ 2.7 million.

This property is fully leased to one tenant for 15.1 years.

On February 28, 2019, we acquired a 34,800 square foot property in Indianapolis, Indiana for $ 3.6 million.

This property is fully leased to one tenant for 10.0 years.

On April 5, 2019, we acquired a 383,000 square foot, two property portfolio located in Ocala, Florida for $ 19.2 million.

This portfolio is leased to one tenant, and has a weighted average lease term of 20.1 years.

On April 30, 2019, we acquired a 54,430 square foot property in Columbus, Ohio for $ 3.2 million.

This property is fully leased to one tenant for 7.0 years.

On June 18, 2019, we acquired a 676,031 square foot property in Tifton, Georgia, for $ 17.9 million.

This property is fully leased to one tenant for 8.5 years.

On July 30, 2019, we acquired a 78,452 square foot property in Denton, Texas, for $ 6.6 million.

This property is fully leased to one tenant for 11.9 years.

On September 26, 2019, we acquired a 211,000 square foot two property portfolio in Temple, Texas, for $ 14.1 million.

This portfolio is leased to one tenant, and has a weighted average lease term of 20.0 years.

On November 14, 2019, we acquired a 231,509 square foot property in Indianapolis, Indiana, for $ 8.2 million.

This property is fully leased to one tenant for 13.5 years.

On December 16, 2019, we acquired a 241,000 square foot property in Jackson, Tennessee, for $ 9.1 million.

This property is fully leased to one tenant for 9.7 years.

On December 17, 2019, we acquired a 117,000 square foot property in Carrollton, Georgia, for $ 8.1 million.

This property is fully leased to one tenant for 12.0 years.

On December 17, 2019, we acquired a 509,211 square foot six property portfolio, for $ 37.6 million.

The portfolio is fully leased to one tenant, and has a weighted average lease term of 10.0 years.

(3) During the years ended December 31, 2020 and 2019, we capitalized $0.8 million and $1.2 million, respectively, of acquisition costs.

The property is fully leased to one tenant and had 10.0 years remaining lease term at the time we acquired the property.

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the year ended December 31, 2021 and 2020, respectively, as follows (dollars in thousands):

Year ended December 31, 2020 Year ended December 31, 2019

Year ended December 31, 2021

Year ended December 31, 2020

Acquired assets and liabilities Purchase price Purchase price

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(1) This amount includes $ 2,711 of land value subject to a land lease agreement, which we may purchase for a nominal fee.

(2) This amount includes $ 53 of loans receivable included in Other assets on the consolidated balance sheets.

(3) This amount includes $ 62 of prepaid rent included in Other liabilities on the consolidated balance sheets.

(2) This amount includes $ 336 and $ 53 of loans receivable included in Other assets on the consolidated balance sheets, respectively.

(3) This amount includes $ 62 of prepaid rent included in Other liabilities on the consolidated balance sheets.

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(Dollars in Thousands)

Lease revenue reconciliation 2020 2019 $ Change % Change

Lease revenue reconciliation 2021 2020 2019

Fixed lease payments $ 121,303 $ 117,248 $ 110,273

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$ 137,688 $ 133,152 $ 114,387

At December 31, 2021 and 2020 , accounts receivable from tenants totaled $ 1.4 million and $ 1.7 million, respectively, included in other assets on the consolidated balance sheets.

Legal Settlements

In August 2021, we reached separate legal settlements through which we recognized $ 2.4 million, net, recorded in other income on the consolidated statement of operations and comprehensive income.

Intangible Assets

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of December 31, 2020 and 2019, excluding real estate held for sale as of December 31, 2020 and 2019, respectively (dollars in thousands):

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of December 31, 2021 and 2020, excluding real estate held for sale as of December 31, 2020 (dollars in thousands):

December 31, 2021 December 31, 2020

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Below market leases and deferred revenue ( 48,241 ) 21,471 ( 38,319 ) 17,686

$ ( 23,243 ) $ 7,016 $ ( 17,820 ) $ 4,995

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 20.7 million, $ 19.4 million, and $ 19.2 million for the years ended December 31, 2021, 2020, and 2019, respectively, and is included in depreciation and amortization expense in the consolidated statement of operations and comprehensive income.

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All intangible assets & liabilities 15.3 15.0

The estimated aggregate amortization expense to be recorded for in-place leases, leasing costs and customer relationships for each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of December 31, 2020 (dollars in thousands):

Year Estimated Amortization Expense

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

During the year ended December 31, 2020, we sold six non-core properties, located in Charlotte, North Carolina, Maple Heights, Ohio, Champaign, Illinois, and Austin, Texas, which are summarized in the table below (dollars in thousands):

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

During the year ended December 31, 2021, we sold three non-core properties, located in Rancho Cordova, California, Champaign, Illinois, and Richmond, Virginia, 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

123,971 $ 9,473 $ 633 $ ( 1,148 )

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Operating expense 695 3,230 905

Other income (expense), net 8,181 (1) ( 54 ) ( 586 )

Income (expense) from real estate and related assets sold $ 9,350 $ ( 575 ) $ 1,724

(1) Includes an $ 8.1 million gain on sale of real estate, net.

Other expense, net ( 1,865 ) (1) ( 239 ) ( 223 )

(Loss) income from real estate and related assets sold $ ( 1,569 ) $ ( 1,527 ) $ 548

(1) Includes a $ 1.1 million loss on sale of real estate, net, from three property sales.

Real Estate Held for Sale

At December 31, 2021, we had no properties classified as held for sale.

At December 31, 2020, we had three properties classified as held for sale, located in Boston Heights, Ohio, Rancho Cordova, California, and Champaign, Illinois.

We considered these assets to be non-core to our long term strategy.

At December 31, 2019, we had one property classified as held for sale, located in Charlotte, North Carolina.

This property was sold during the year ended December 31, 2020.

Our assets classified as held for sale at December 31, 2020 were not classified as discontinued operations because it does not represent a strategic shift in our operations, and it does not have a major effect on our financial results.

The table below summarizes the components of income from real estate and related assets held for sale at December 31, 2020 (dollars in thousands):

For the year ended December 31,

2020 2019 2018

Operating revenue $ 1,861 $ 1,769 $ 1,288

Operating expense 2,938 (1) 985 792

Other expense, net ( 388 ) ( 364 ) ( 394 )

(Loss) income from real estate and related assets held for sale $ ( 1,465 ) $ 420 $ 102

(1) Includes a $ 1.9 million impairment charge.

Two of these properties were sold during the year ended December 31, 2021.

Our Boston Heights, Ohio property is classified as held and used as of December 31, 2021, as this property no longer meets the held for sale criteria.

The table below summarizes the components of the assets and liabilities held for sale reflected on the accompanying consolidated balance sheet (dollars in thousands):

December 31, 2020 December 31, 2019

December 31, 2020

Assets Held for Sale

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Total Assets Held for Sale $ 8,498

Liabilities Held for Sale

Asset retirement obligation $ — $ 21

Total Liabilities Held for Sale $ — $ 21

Impairment Charges

We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the year ended December 31, 2020 and identified three held and used assets, located in Blaine, Minnesota, Champaign, Illinois, and Rancho Cordova, California, which were impaired by an aggregate of $ 3.6 million during the year ended December 31, 2020 when we determined the carrying value of these assets was unrecoverable based on an undiscounted cash flow analysis.

We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the year ended December 31, 2021 and did not recognize an impairment charge.

During the year ended December 31, 2020, we identified three held and used assets, located in Blaine, Minnesota, Champaign, Illinois, and Rancho Cordova, California, which were impaired by an aggregate of $ 3.6 million when we determined the carrying value of these assets was unrecoverable based on an undiscounted cash flow analysis.

As a result, we recorded an impairment charge to reflect the fair market value of these assets.

The Rancho Cordova, California property was further impaired when we classified the property as held for sale as of December 31, 2020 to record the carrying value equal to the fair value less costs of sale and recorded an impairment charge to our Rancho Cordova, California asset of $ 0.7 million, which is reflected in aggregate impairment charge of $ 3.6 million during the year ended December 31, 2020.

We classified one property as held for sale at December 31, 2019.

We performed an analysis of the property classified as held for sale and compared the fair market value of the asset less selling costs against the carrying value of the asset available for sale.

As a result of this analysis, we recorded an impairment charge of $ 1.8 million during the year ended December 31, 2019, as the fair market value minus selling costs was less than the carrying value.

The Rancho Cordova property was further impaired when we classified the property as held for sale as of December 31, 2020 to record the carrying value equal to the fair value less costs of sale and recorded an impairment charge to our Rancho Cordova, California asset of $ 0.7 million, which is reflected in the aggregate impairment charge of $ 3.6 million, as the fair market value minus selling costs was less than the carrying value.

Fair market value for this asset was calculated using Level 3 inputs (defined in Note 6 “Mortgage Notes Payable and Credit Facility”), which were determined using a negotiated sales price from an executed purchase and sale agreement with a third party.

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Mortgage Notes Payable and Credit Facility

Our revolving credit facility and term loan facility are collectively referred to herein as the Credit Facility.

Our $ 100.0 million unsecured revolving credit facility (“Revolver”), $ 160.0 million term loan facility (“Term Loan A”), and $ 65.0 million term loan facility (“Term Loan B”), are collectively referred to herein as the Credit Facility.

Our mortgage notes payable and Credit Facility as of December 31, 2021 and December 31, 2020 are summarized below (dollars in thousands):

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Variable rate revolving credit facility 60 (6) $ 33,550 $ 53,900 LIBOR + 1.90 %

Deferred financing costs, revolving credit facility - ( 588 ) ( 821 ) N/A N/A

Total revolver, net 50 $ 53,312 $ 51,579

Variable rate term loan facility - $ 160,000 $ 122,300 LIBOR + 1.60 %

Total revolver 60 $ 33,550 $ 53,900

Variable rate term loan facility A - 160,000 160,000 LIBOR + 1.85 %

Variable rate term loan facility B - 65,000 — LIBOR + 2.00 %

February 11, 2026

Deferred financing costs, term loan facility - ( 968 ) ( 797 ) N/A N/A

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(1) Interest rates on our fixed rate mortgage notes payable vary from 2.80 % to 6.63 %.

(2) We have 53 mortgage notes payable with maturity dates ranging from 11/1/2021 through 8/1/2037 .

(2) We have 52 mortgage notes payable with maturity dates ranging from April 22, 2022 through August 1, 2037 .

(3) Interest rates on our variable rate mortgage notes payable vary from one month LIBOR + 2.35 % to one month LIBOR + 2.75 %.

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We will also indemnify lenders against claims resulting from the presence of hazardous substances or activity involving hazardous substances in violation of environmental laws on a property.

During the year ended December 31, 2020, we repaid seven mortgages collateralized by eight properties, which are summarized below (dollars in thousands):

During the year ended December 31, 2021, we repaid three mortgages collateralized by three properties, which are summarized below (dollars in thousands):

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

$ 7,669 4.91 %

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

Variable Rate Debt Repaid Interest Rate on Variable Rate Debt Repaid

$ 7,500 LIBOR + 2.50 %

During the year ended December 31, 2020, we issued six mortgages, collateralized by six properties, which are summarized below (dollars in thousands):

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

During the year ended December 31, 2021, we issued two mortgages, collateralized by two properties, which are summarized below (dollars in thousands):

Fixed Rate Debt Issued Interest Rate on Fixed Rate Debt

$ 21,500 (1) 3.36 %

(1) We issued an aggregate of $ 18.3 million of fixed rate debt in connection with our three property portfolio acquisition on January 27, 2020, with a maturity date of February 1, 2030 and a rate of 3.625 %.

We issued $ 17.5 million of floating rate debt swapped to fixed of 2.8 % in connection with our March 9, 2020 property acquisition, with a maturity date of March 9, 2030.

We issued $ 10.3 million of fixed rate debt in connection with our December 18, 2020 property acquisition, with a maturity date of January 1, 2028 and a rate of 3.0 %.

We issued $ 6.4 million of floating rate debt swapped to fixed of 3.25 % in connection with our December 21, 2020 property acquisition, with a maturity date of December 23, 2030.

(1) On January 22, 2021, we issued $ 5.5 million of floating rate debt swapped to fixed debt of 3.24 % in connection with one property acquisition.

Scheduled principal payments of mortgage notes payable for each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

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$ 452,868 (1)

(1) This figure is does not include $( 0.2 ) million premiums and (discounts), net, and $ 3.5 million of deferred financing costs, which are reflected in mortgage notes payable on the consolidated balance sheet.

(1) This figure is does not include $( 0.1 ) million premiums and (discounts), net, and $ 2.8 million of deferred financing costs, which are reflected in mortgage notes payable on the consolidated balance sheets.

We believe we will be able to address all mortgage notes payable maturing over the next 12 months through a combination of refinancing our existing indebtedness, cash from operations, proceeds from one or more equity offerings and availability on our Credit Facility.

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(1) We have entered into various interest rate cap agreements on new variable rate debt with LIBOR caps ranging from 1.50 % to 2.75 %.

We have assumed or entered into interest rate swap agreements in connection with certain of our acquisitions, whereby we will pay our counterparty a fixed interest rate on a monthly basis, and receive payments from our counterparty equivalent to the stipulated floating rate.

stipulated floating rate.

The fair value of our interest rate swap agreements are recorded in other liabilities on our accompanying consolidated balance sheets.

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The following tables present the impact of our derivative instruments in the consolidated financial statements (dollars in thousands):

Amount of loss recognized in Comprehensive Income

Amount of gain (loss) recognized in Comprehensive Income

2021 2020 2019

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Total $ 2,854 $ ( 2,219 ) $ ( 1,978 )

The following table presents the reclassifications of our derivative instruments out of accumulated other comprehensive income into interest expense in the consolidated financial statements (dollars in thousands):

Amount reclassified out of Accumulated Other Comprehensive Income

2021 2020 2019

Derivatives in cash flow hedging relationships

Interest rate caps $ ( 145 ) $ — $ —

Total $ ( 145 ) $ — $ —

The following table sets forth certain information regarding our derivative instruments (dollars in thousands):

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Interest rate caps Other assets $ 324 $ 9

Interest rate swaps Other assets 841 —

Interest rate swaps Other liabilities ( 1,217 ) ( 3,055 )

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Credit Facility

On August 7, 2013, we procured our senior unsecured revolving credit facility (“Revolver”) with KeyBank National Association (“KeyBank”) (serving as revolving lender, a letter of credit issuer and an administrative agent).

In October 2015, we expanded our Revolver to $ 85.0 million and entered into a term loan facility (“Term Loan”) whereby we added a $ 25.0 million, five -year Term Loan subject to the same leverage tiers as the Revolver, with the interest rate at each leverage tier being five basis points lower than that of the Revolver.

We have the option to repay the Term Loan in full, or in part, at any time without penalty or premium prior to the maturity date.

On October 27, 2017, we amended this Credit Facility, increasing the Term Loan from $ 25.0 million, to $ 75.0 million, with the Revolver commitment remaining at $ 85.0 million.

The Term Loan maturity date was extended to October 27, 2022, and the Revolver maturity date was extended to October 27, 2021.

On August 7, 2013, we procured our Revolver with KeyBank National Association (“KeyBank”) (serving as revolving lender, a letter of credit issuer and an administrative agent).

In October 2015, we expanded our Revolver to $ 85.0 million and entered into Term Loan A whereby we added a $ 25.0 million, five -year Term Loan subject to the same leverage tiers as the Revolver, with the interest rate at each leverage tier being five basis points lower than that of the Revolver.

We have the option to repay Term Loan A in full, or in part, at any time without penalty or premium prior to the maturity date.

On October 27, 2017, we amended this Credit Facility, increasing Term Loan A from $ 25.0 million, to $ 75.0 million, with the Revolver commitment remaining at $ 85.0 million.

Term Loan A’s maturity date was extended to October 27, 2022, and the Revolver maturity date was extended to October 27, 2021.

In connection with the amendment, the interest rate for the Credit Facility was reduced by 25 basis points at each of the leverage tiers.

At the time of amendment, we entered into multiple interest rate cap agreements on the amended Term Loan, which cap LIBOR at 2.75 % to hedge our exposure to variable interest rates.

On July 2, 2019, we amended, extended and upsized our Credit Facility, expanding the Term Loan from $ 75.0 million to $ 160.0 million, inclusive of a delayed draw component whereby we can incrementally borrow on the Term Loan up to the $ 160.0 million commitment, and increasing the Revolver from $ 85.0 million to $ 100.0 million.

The Term Loan has a new five -year term, with a maturity date of July 2, 2024, and the Revolver has a new four -year term, with a maturity date of July 2, 2023.

At the time of amendment, we entered into multiple interest rate cap agreements on Term Loan A, which cap LIBOR at 2.75 % to hedge our exposure to variable interest rates.

On July 2, 2019, we amended, extended and upsized our Credit Facility, expanding Term Loan A from $ 75.0 million to $ 160.0 million, inclusive of a delayed draw component whereby we can incrementally borrow on the Term Loan up to the $ 160.0 million commitment, and increasing the Revolver from $ 85.0 million to $ 100.0 million.

Term Loan A has a new five -year term, with a maturity date of July 2, 2024, and the Revolver has a new four -year term, with a maturity date of July 2, 2023.

The interest rate margin for the Credit Facility was reduced by 10 basis points at each of the leverage tiers.

We entered into multiple interest rate cap agreements on the amended Term Loan, which cap LIBOR ranging from 2.50 % to 2.75 %, to hedge our exposure to variable interest rates.

We entered into multiple interest rate cap agreements on Term Loan A, which cap LIBOR ranging from 2.50 % to 2.75 %, to hedge our exposure to variable interest rates.

We used the net proceeds derived from the amended Credit Facility to repay all previously existing borrowings under the Revolver.

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

On February 11, 2021, we added a new $ 65.0 million Term Loan B, inclusive of a $ 15.0 million delayed funding component, which was funded on July 20, 2021.

Term Loan B has a maturity date of February 11, 2026 and a LIBOR floor of 25 basis points, plus a spread ranging from 140 to 225 basis points, depending on leverage.

We entered into multiple interest rate cap agreements on Term Loan B, which cap LIBOR from 1.50 % to 1.75 %.

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

As of December 31, 2021, there was $ 65.0 million outstanding under Term Loan B.

As of December 31, 2021, there was $ 258.6 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 2.00 % and $ 19.5 million outstanding under letters of credit, at a weighted average interest rate of 1.90 %.

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Series F Preferred Stock 1.5000 0.7500 (4) —

Series G Preferred Stock 0.75 (5) — —

(1) We fully redeemed our Series A and B Preferred Stock on October 28, 2019.

(2) Prior to July 1, 2020, Series F Preferred Stock distributions were declared, but not paid, as there were no Series F Preferred Stock shares outstanding on the applicable dividend record dates.

(2) We redeemed all outstanding shares of our Series D Preferred Stock on June 30, 2021.

(3) We issued our Series E Preferred Stock on October 4, 2019.

(4) Prior to July 1, 2020, Series F Preferred Stock distributions were declared, but not paid, as there were no Series F Preferred Stock shares outstanding on the applicable dividend record dates.

(5) Series G Preferred Stock was issued on June 28, 2021.

For federal income tax purposes, distributions paid to stockholders may be characterized as ordinary income, capital gains, return of capital or a combination of the foregoing.

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For the year ended December 31, 2021 100.00000 % — % — %

Series G Preferred Stock

For the year ended December 31, 2019 — % — % — %

For the year ended December 31, 2020 — % — % — %

For the year ended December 31, 2021 100.00000 % — % — %

Recent Activity

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Mezzanine Equity

Both our 7.00 % Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”), and 6.625 % Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”) are classified as mezzanine equity in our consolidated balance sheet because both are redeemable at the option of the shareholder upon a change of control of greater than 50% in accordance with ASC 480-10-S99 “Distinguishing Liabilities from Equity,” which requires mezzanine equity classification for preferred stock issuances with redemption features which are outside of the control of the issuer.

A change in control of the Company, outside of our control, is only possible if a tender offer is accepted by over 90 % of our shareholders.

Our 7.00 % Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”), 6.625 % Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”) and 6.00 % Series G Cumulative Redeemable Preferred Stock (“Series G Preferred Stock”), are classified as mezzanine equity in our consolidated balance sheet because all three are redeemable at the option of the shareholder upon a change of control of greater than 50% in accordance with ASC 480-10-S99 “Distinguishing Liabilities from Equity,” which requires mezzanine equity classification for preferred stock issuances with redemption features which are outside of the control of the issuer.

A change in control of the Company, outside of our control, is only possible if a

tender offer is accepted by over 90 % of our shareholders.

All other change in control situations would require input from our Board of Directors.

In addition, our Series E Preferred Stock is redeemable at the option of the shareholder in the event a delisting event occurs.

We will periodically evaluate the likelihood that a change of control or delisting event of greater than 50% will take place, and if we deem this probable, we would adjust the Series D Preferred Stock and Series E Preferred Stock presented in mezzanine equity to their redemption value, with the

offset to gain (loss) on extinguishment.

In addition, our Series E Preferred Stock and Series G Preferred Stock are redeemable at the option of the shareholder in the event a delisting event occurs.

We will periodically evaluate the likelihood that a change of control or delisting event of greater than 50% will take place, and if we deem this probable, we would adjust the Series E Preferred Stock and Series G Preferred Stock presented in mezzanine equity to their redemption value, with the offset to gain (loss) on extinguishment.

We currently believe the likelihood of a change of control of greater than 50% is remote.

We did not have an active At-the-Market program for our Series D Preferred Stock during the year ended December 31, 2020.

Series G Preferred Stock Offering

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.

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.

Articles Supplementary Reclassifying Remaining Series D Preferred Stock

On August 5, 2021, we filed Articles Supplementary (the “Reclassification Articles Supplementary”) with the State Department of Assessments and Taxation of Maryland (“SDAT”), pursuant to which our board of directors reclassified and designated the remaining 2,490,445 shares of authorized but unissued Series D Preferred Stock as additional shares of common stock.

After giving effect to the filing of the Reclassification Articles Supplementary, our authorized capital stock consists of 62,290,000 shares of common stock, 6,760,000 shares of Series E Preferred Stock, 26,000,000 shares of Series F Preferred Stock, 4,000,000 shares of Series G Preferred Stock, and 950,000 shares of senior common stock.

The Reclassification Articles Supplementary did not increase our authorized shares of capital stock.

Series E Preferred Stock 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 sold 0.3 million shares of our Series E Preferred Stock, raising $ 7.1 million in net proceeds pursuant to the Series E Preferred Stock Sales Agreement during the year ended December 31, 2020.

As of December 31, 2020, 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 pursuant to the Series E Preferred Stock Sales Agreement during the year ended December 31, 2021.

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

Universal Shelf Registration Statement

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As of December 31, 2021, we had remaining capacity to sell up to $ 626.0 million of Series F Preferred Stock.

Amendment to Operating Partnership Agreement

In connection with the authorization of the Series F Preferred Stock in February of 2020, the Operating Partnership controlled by the Company through its ownership of GCLP Business Trust II, the general partner of the Operating Partnership, adopted the Second Amendment to its Second Amended and Restated Agreement of Limited Partnership (collectively, the “Amendment”), as amended from time to time, establishing the rights, privileges and preferences of 6.00 % Series F Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series F Preferred Units”).

The Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series F Preferred Units as are issued shares of Series F Preferred Stock by the Company in connection with the offering upon the Company’s contribution to the Operating Partnership of the net proceeds of the offering.

Generally, the Series F Preferred Units provided for under the Amendment have preferences, distribution rights and other provisions substantially equivalent to those of the Series F Preferred Stock.

Amendment to Articles of Restatement

On June 23, 2021, we filed with the SDAT the Articles Supplementary (i) setting forth the rights, preferences and terms of our newly designated Series G Preferred Stock and (ii) reclassifying and designating 4,000,000 shares of our authorized and unissued shares of common stock as shares of Series G Preferred Stock.

Amendments to Operating Partnership Agreement

In connection with the authorization of the Series F Preferred Stock in February of 2020, the Operating Partnership controlled by the Company through its ownership of GCLP Business Trust II, the general partner of the Operating Partnership, adopted the Second Amendment to its Second Amended and Restated Agreement of Limited Partnership (collectively, the “Second Amendment”), as amended from time to time, establishing the rights, privileges and preferences of 6.00 % Series F Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series F Preferred Units”).

The Second Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series F Preferred Units as are issued shares of Series F Preferred Stock by the Company in connection with the offering upon the Company’s contribution to the Operating Partnership of the net proceeds of the offering.

Generally, the Series F Preferred Units provided for under the Second Amendment have preferences, distribution rights and other provisions substantially equivalent to those of the Series F Preferred Stock.

On June 23, 2021, the Operating Partnership adopted the Third Amendment to its Second Amended and Restated Agreement of Limited Partnership, including Exhibit SGP thereto (collectively, the “Third Amendment”), establishing the rights, privileges, and preferences of 6.00 % Series G Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series G Term Preferred Units”).

The Third Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series G Term Preferred Units as are issued shares of Series G Preferred Stock by the Company in connection with the offering of Series G Preferred Stock upon the Company’s contribution to the Operating Partnership of the net proceeds of the offering of Series G Preferred Stock.

Generally, the Series G Preferred Units provided for under the Third Amendment have preferences, distribution rights, and other provisions substantially equivalent to those of the Series G Preferred Stock.

Non-controlling Interests in Operating Partnership

As of December 31, 2021 and 2020, we owned approximately 99.3 % and 98.6 %, respectively, of the outstanding OP Units.

On October 30, 2018, we issued 742,937 OP units as partial consideration to acquire a 218,703 square foot, two property portfolio located in Detroit, Michigan for $ 21.7 million.

During November 2019, 263,300 OP units were redeemed for Common Stock.

On January 8, 2020, we issued 23,396 OP units as partial consideration to acquire a 64,800 square foot property located in Indianapolis, Indiana for $ 5.3 million.

During the year ended December 31, 2021, we redeemed 246,039 OP units for an equivalent amount of common stock.

The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders.

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On January 11, 2022, our Board of Directors declared the following monthly distributions for the months of January, February, and March of 2022:

Record Date Payment Date Common Stock and Non-controlling OP Unit Distributions per Share Series D Preferred Distributions per Share Series E Preferred Distributions per Share

Record Date Payment Date Common Stock and Non-controlling OP Unit Distributions per Share Series E Preferred Distributions per Share Series G Preferred Distributions per Share

January 21, 2022 January 31, 2022 $ 0.12540 $ 0.1380210 $ 0.125000

16 unchanged sentences

We made no sales under our Series E Preferred ATM Program subsequent to December 31, 2021 and through February 15, 2022.

Acquisition Activity

On January 22, 2021, we purchased a 180,152 square foot industrial property in Findlay, Ohio for $ 11.1 million.

This property is fully leased to one tenant on a 14.2 year lease.

Financing Activity

On January 22, 2021, we issued $ 5.5 million of floating rate debt swapped to a fixed rate of 3.24 % in connection with the industrial property acquisition on the same date, with a maturity date of February 15, 2031.

On February 11, 2021, we added a new $ 65.0 million term loan component to our Credit Facility, inclusive of a $ 15.0 million delayed funding component.

The New Term Loan has a maturity date of 60 months from the closing of the amended Credit Facility and a London Inter-bank Offered Rate floor of 25 basis points.

GLADSTONE COMMERCIAL CORPORATION

10 unchanged sentences

Depreciation (2) Net Real

Estate (3) Year

Construction/

28 unchanged sentences

Industrial Building — 55 4,717 3,250 55 7,967 8,022 2,890 5,132 1992 / 2013

Richmond, Virginia (4)

Office Building — 736 5,336 486 736 5,822 6,558 2,207 4,351 1972 12/30/2005

Champaign, Illinois (5)

Office Building — 687 2,036 ( 1,057 ) 326 1,340 1,666 754 912 1996 2/21/2006

Burnsville, Minnesota (3)

26 unchanged sentences

Lawrenceville, Georgia (3)

Medical Office Building — 678 2,807 — 678 2,807 3,485 1,064 2,421 2005 12/13/2007

Snellville, Georgia (3)

Medical Office Building — 176 727 — 176 727 903 276 627 1986 12/13/2007

Covington, Georgia (3)

Initial Cost Total Cost

7 unchanged sentences

Depreciation (2) Net Real

Estate (3) Year

Construction/

1 unchanged sentence

Medical Office Building — 232 959 — 232 959 1,191 363 828 2000 12/13/2007

Snellville, Georgia (4)

Medical Office Building — 176 727 — 176 727 903 256 647 1986 12/13/2007

Covington, Georgia (4)

Medical Office Building — 232 959 — 232 959 1,191 338 853 2000 12/13/2007

Conyers, Georgia (3)

59 unchanged sentences

Colleyville, Texas

Retail Building 2,382 1,277 2,424 — 1,277 2,424 3,701 656 3,045 2000 3/27/2014

Coppell, Texas

Retail Building 2,742 1,448 3,349 — 1,448 3,349 4,797 880 3,917 2005 5/8/2014

Columbus, Ohio (3)

Initial Cost Total Cost

7 unchanged sentences

Depreciation (2) Net Real

Estate (3) Year

Construction/

Improvements Date

Retail Building 2,518 1,277 2,424 — 1,277 2,424 3,701 591 3,110 2000 3/27/2014

Rancho Cordova, California (5)

Office Building — 990 8,017 2,797 990 10,814 11,804 3,553 8,251 1986 5/13/2014

Coppell, Texas

Retail Building 2,900 1,448 3,349 — 1,448 3,349 4,797 765 4,032 2005 5/8/2014

Columbus, Ohio (4)

Office Building — 990 8,017 2,860 990 10,877 11,867 3,058 8,809 1986 5/13/2014

Taylor, Pennsylvania

57 unchanged sentences

Delaware, Ohio (3)

Industrial Building — 316 2,355 — 316 2,355 2,671 264 2,407 2005 4/30/2019

Tifton, Georgia

Industrial Building 8,168 — 15,190 1,725 1,725 15,190 16,915 1,296 15,619 1995 / 2003

Denton, Texas (3)

Industrial Building — 1,497 4,151 — 1,496 4,152 5,648 446 5,202 2012 7/30/2019

Temple, Texas (3)

Initial Cost Total Cost

7 unchanged sentences

Depreciation (2) Net Real

Estate (3) Year

Construction/

1 unchanged sentence

Industrial Building — 200 4,335 65 200 4,400 4,600 403 4,197 1973 / 2006

Tifton, Georgia

Industrial Building 8,467 — 15,190 1,725 1,725 15,190 16,915 785 16,130 1995 / 2003

Denton, Texas (4)

Industrial Building — 1,497 4,151 — 1,496 4,152 5,648 262 5,386 2012 7/30/2019

Temple, Texas (3)

Industrial Building — 296 6,425 99 296 6,524 6,820 597 6,223 1978 / 2006

Temple, Texas (4)

Industrial Building — 296 6,425 99 296 6,524 6,820 334 6,486 1978 / 2006

Indianapolis, Indiana (3)

34 unchanged sentences

Industrial Building 6,375 1,422 10,094 150 1,422 10,244 11,666 474 11,192 1994 12/21/2020

Findlay, Ohio

Industrial Building 5,368 258 8,847 — 258 8,847 9,105 298 8,807 1992 / 2008

Baytown, Texas (3)

Industrial Building — 1,604 5,533 3 1,607 5,533 7,140 145 6,995 2018 6/17/2021

Pacific, Missouri (3)

Industrial Building — 926 7,294 — 926 7,294 8,220 106 8,114 2019 / 2021

Pacific, Missouri (3)

Industrial Building — 235 1,852 — 235 1,852 2,087 27 2,060 2019 / 2021

Pacific, Missouri (3)

Industrial Building — 607 4,782 — 607 4,782 5,389 70 5,319 2019 / 2021

Pacific, Missouri (3)

Industrial Building — 257 2,027 — 257 2,027 2,284 29 2,255 2019 / 2021

Peru, Illinois (3)

Industrial Building — 89 1,413 — 89 1,413 1,502 23 1,479 1987 / 1998

Peru, Illinois (3)

Industrial Building — 140 2,225 — 140 2,225 2,365 37 2,328 1987 / 1998

Charlotte, North Carolina (3)

Industrial Building — 1,400 10,615 — 1,400 10,615 12,015 71 11,944 1972 / 2018

Atlanta, Georgia (3)

Industrial Building — 1,255 8,787 599 1,255 9,386 10,641 9 10,632 1974 12/21/2021

Crossville, Tennessee

Industrial Building 16,000 434 24,589 — 434 24,589 25,023 19 25,004 2020 12/21/2021

$ 452,868 $ 148,023 $ 989,917 $ 87,318 $ 149,773 $ 1,075,485 $ 1,225,258 $ 266,672 $ 958,586

2 unchanged sentences

Depreciable life of all improvements is the shorter of the useful life of the assets or the life of the respective leases on each building, which range from 5 - 20 years.

(3) The net real estate figure includes real estate held for sale as of December 31, 2020 of $ 8.1 million.

(3) These properties are in our unencumbered pool of assets on our Credit Facility.

(5) These properties were impaired during the year ended December 31, 2020.

The following table reconciles the change in the balance of real estate during the years ended December 31, 2021, 2020 and 2019, respectively (in thousands):

8 unchanged sentences

(2) The real estate figure includes $ 7.4 million of real estate held for sale as of December 31, 2019.

(3) The real estate figure includes $ 3.2 million of real estate held for sale as of December 31, 2018.

The following table reconciles the change in the balance of accumulated depreciation during the years ended December 31, 2021, 2020 and 2019, respectively (in thousands):

6 unchanged sentences

(2) The accumulated depreciation figure includes $ 3.4 million of real estate held for sale as of December 31, 2019.

(3) The accumulated depreciation figure includes $ 0.2 million of real estate held for sale as of December 31, 2018.

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

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data