What changed in this filing

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Item 1. Financial Statements

2022-05-04 compared with 2021-11-01 · 163 added, 268 removed, 441 unchanged (49% of the section changed)

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(Dollars in Thousands, Except Share and Per Share Data)

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Real estate, at cost $ 1,240,928 $ 1,225,258

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Lease intangibles, net 112,655 114,494

Real estate and related assets held for sale 4,005 8,498

Cash and cash equivalents 9,585 7,956

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Borrowings under Revolver 34,550 33,550

Borrowings under Term Loan, net 223,951 159,203

Borrowings under Term Loan A and Term Loan B, net 224,113 224,032

Deferred rent liability, net 29,297 26,770

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Accounts payable and accrued expenses 5,363 6,736

Liabilities related to assets held for sale 13 —

Due to Adviser and Administrator (1) 3,574 3,431

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MEZZANINE EQUITY

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

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

$ 25 per share liquidation preference;

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

and 7,061,448 and 6,571,003 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (3)

10,760,000 shares authorized;

and 7,061,448 and 7,061,448 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (3)

$ 170,261 $ 170,261

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950,000 shares authorized;

and 634,179 and 750,372 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (3)

and 443,880 and 600,061 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (3)

Common stock, par value $ 0.001 per share, 62,292,200 and 62,290,000 shares authorized;

and 36,880,119 and 35,331,970 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (3)

and 38,548,992 and 37,473,587 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (3)

Series F redeemable preferred stock, par value $ 0.001 per share;

$ 25 per share liquidation preference;

26,000,000 shares authorized and 335,162 and 116,674 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (3)

25,997,800 and 26,000,000 shares authorized and 487,473 and 422,920 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (3)

Additional paid in capital 692,795 671,134

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(Dollars in Thousands, Except Share and Per Share Data)

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

2021 2020 2021 2020

For the three months ended March 31,

Operating revenues

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Base management fee (1) 1,547 1,444

1,472 1,418 4,369 4,219

Incentive fee (1) 1,340 1,236

1,266 1,128 3,540 3,301

Administration fee (1) 462 297

382 361 1,016 1,194

General and administrative 997 656

Impairment charge — 1,184 — 2,905

Total operating expense before incentive fee waiver $ 25,498 $ 25,254 $ 77,404 $ 75,199

Incentive fee waiver (1) $ — $ — $ ( 16 ) $ —

Total operating expenses $ 25,658 $ 26,904

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Interest expense $ ( 6,586 ) $ ( 7,164 )

Gain (loss) on sale of real estate, net — 1,196 ( 882 ) 1,184

Loss on sale of real estate, net — ( 882 )

Other income 104 311

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Distributions attributable to Series D, E, F, and G preferred stock ( 2,946 ) ( 2,847 )

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

Distributions attributable to senior common stock ( 116 ) ( 187 )

Loss on extinguishment of Series F preferred stock ( 5 ) —

Net income (loss) available (attributable) to common stockholders $ 322 $ ( 2,955 )

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Comprehensive income

Change in unrealized gain (loss) related to interest rate hedging instruments, net $ 421 $ 276 $ 2,125 $ ( 2,733 )

Other Comprehensive gain (loss) 421 276 2,125 ( 2,733 )

Change in unrealized gain related to interest rate hedging instruments, net $ 4,267 $ 2,424

Other Comprehensive gain 4,267 2,424

Net income $ 3,391 $ 38

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(Dollars in Thousands)

For the nine months ended September 30,

For the three months ended March 31,

Cash flows from operating activities:

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Depreciation and amortization 14,689 16,710

Impairment charge — 2,905

Loss (gain) on sale of real estate, net 882 ( 1,184 )

Loss on sale of real estate, net — 882

Amortization of deferred financing costs 369 394

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Operating changes in assets and liabilities

Decrease in other assets 114 2,397

Increase in deferred rent receivable ( 1,907 ) ( 1,042 )

Increase in accounts payable and accrued expenses 4,071 1,960

(Increase) decrease in other assets ( 372 ) 224

Increase (decrease) in deferred rent receivable 1,156 ( 355 )

(Decrease) increase in accounts payable and accrued expenses ( 1,508 ) 1,063

Increase in amount due to Adviser and Administrator 143 265

Increase in other liabilities 1,016 660

Tenant inducement payments ( 20 ) —

Increase (decrease) in other liabilities 856 ( 446 )

Leasing commissions paid ( 962 ) ( 555 )

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Deposits on future acquisitions ( 509 ) —

Deposits applied against acquisition of real estate investments — 2,891

Net cash used in investing activities $ ( 17,571 ) $ ( 6,526 )

2 unchanged sentences

Offering costs paid ( 395 ) ( 153 )

Redemption of Series D perpetual preferred stock ( 87,739 ) —

Redemption of Series F preferred stock ( 55 ) —

Borrowings under mortgage notes payable — 5,500

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Borrowings on term loan — 50,000

Increase (decrease) in security deposits 83 ( 1 )

Decrease in security deposits ( 25 ) ( 6 )

Distributions paid for common, senior common, preferred stock and Non-controlling OP Unitholders ( 17,365 ) ( 16,649 )

Net cash (used in) provided by financing activities $ ( 8,611 ) $ 24,398

Net (decrease) increase in cash, cash equivalents, and restricted cash $ ( 874 ) $ 3,774

Net cash provided by (used in) financing activities $ 1,866 $ ( 11,824 )

Net increase (decrease) in cash, cash equivalents, and restricted cash $ 1,482 $ ( 1,471 )

Cash, cash equivalents, and restricted cash at beginning of period $ 13,178 $ 16,076

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Acquisition of real estate and related intangible assets $ — $ 300

Unrealized gain (loss) related to interest rate hedging instruments, net $ 2,125 $ ( 2,733 )

Unrealized gain related to interest rate hedging instruments, net $ 4,267 $ 2,424

Capital improvements and leasing commissions included in accounts payable and accrued expenses $ 497 $ 788

Non-controlling OP Units issued in connection with acquisition $ — $ 502

Series D Preferred Stock offering cost write off $ 2,141 $ —

Dividends paid on Series F Preferred Stock via additional share issuances $ 88 $ —

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows (dollars in thousands):

For the nine months ended September 30,

For the three months ended March 31,

Cash and cash equivalents $ 9,585 $ 9,871

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Securities and Exchange Commission on February 15, 2022.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, including the impact of extraordinary events such as the novel coronavirus (“COVID-19”) pandemic, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, including the impact of extraordinary events such as the ongoing coronavirus (“COVID-19”) pandemic, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

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A summary of all of our significant accounting policies is provided in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

There were no material changes to our critical accounting policies during the three and nine months ended September 30, 2021.

Recently Issued Accounting Pronouncements

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

Accounting for Lease Concessions related to the Effects of the COVID-19 Pandemic (“COVID-19 Q&A”), to address frequently asked questions pertaining to lease concessions arising from the effects of the COVID-19 pandemic.

Existing lease guidance requires entities to determine if a lease concession was a result of a new arrangement reached with the tenant, which would be addressed under the lease modification accounting framework, or if a lease concession was under the enforceable rights and obligations within the existing lease agreement, which would not fall under the lease modification accounting framework.

The COVID-19 Q&A clarifies that entities may elect to not evaluate whether lease-related relief granted in light of the effects of COVID-19 is a lease

modification, as long as the concession does not result in a substantial increase in rights of the lessor or obligations of the lessee.

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.

There were no material changes to our critical accounting policies during the three months ended March 31, 2022.

Related-Party Transactions

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

Our president, Mr.

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

Our co-president, Mr.

Robert Cutlip is executive vice presidents of commercial and industrial real estate of our Adviser.

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

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

As of September 30, 2021 and December 31, 2020, $ 3.2 million and $ 3.0 million, respectively, were collectively due to our Adviser and Administrator.

As of March 31, 2022 and December 31, 2021, $ 3.6 million and $ 3.4 million, respectively, were collectively due to our Adviser and Administrator.

Our entrance into the Advisory Agreement and each amendment thereto has been approved unanimously by our Board of Directors.

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Base Management Fee

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

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

Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties, as is common in other externally managed REITs;

however, our Adviser may earn fee income from our borrowers, tenants or other sources.

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

The revised base management fee calculation began with the fee calculations for the quarter ended September 30, 2020.

For the three and nine months ended September 30, 2021, we recorded a base management fee of $ 1.5 million and $ 4.4 million, respectively.

For the three and nine months ended September 30, 2020, we recorded a base management fee of $ 1.4 million and $ 4.2 million, respectively.

The revised base management fee is 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 Advisory Agreement remains unchanged.

For the three months ended March 31, 2022 and 2021, we recorded a base management fee of $ 1.5 million and $ 1.4 million, respectively.

Incentive Fee

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However, in no event shall the incentive fee for a particular quarter exceed by 15.0 % (the cap) the average quarterly incentive fee paid by us for the previous four quarters (excluding quarters for which no incentive fee was paid).

Core FFO (as defined in the Advisory Agreement) is GAAP

net income (loss) available to common stockholders, excluding the incentive fee, depreciation and amortization, any realized and unrealized gains, losses or other non-cash items recorded in net income (loss) available to common stockholders for the period, and one-time events pursuant to changes in GAAP.

For the three and nine months ended September 30, 2021, we recorded an incentive fee of $ 1.3 million and $ 3.5 million, respectively, partially offset by credits related to unconditional voluntary and irrevocable waivers issued by the Adviser of $ 0.00 million and $ 0.02 million, respectively, resulting in a net incentive fee for the three and nine months ended September 30, 2021 of $ 1.3 million and $ 3.5 million, respectively.

For the three and nine months ended September 30, 2020, we recorded an incentive fee of $ 1.1 million and $ 3.3 million, respectively.

The Adviser did no t waive any portion of the incentive fee for the three and nine months ended September 30, 2020.

Core FFO (as defined in the Advisory Agreement) is GAAP net income (loss) available to common stockholders, excluding the incentive fee, depreciation and amortization, any realized and unrealized gains, losses or other non-cash items recorded in net income (loss) available to common stockholders for the period, and one-time events pursuant to changes in GAAP.

For the three months ended March 31, 2022 and 2021, we recorded an incentive fee of $ 1.3 million and $ 1.2 million, respectively.

The Adviser did no t waive any portion of the incentive fee for the three months ended March 31, 2022 or 2021.

Capital Gain Fee

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

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

No capital gain fee was recognized during the three months ended March 31, 2022 or 2021.

Termination 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 three and nine months ended September 30, 2021, we recorded an administration fee of $ 0.4 million and $ 1.0 million, respectively.

For the three and nine months ended September 30, 2020, we recorded an administration fee of $ 0.4 million and $ 1.2 million, respectively.

For the three months ended March 31, 2022 and 2021, we recorded an administration fee of $ 0.5 million and $ 0.3 million, respectively.

Gladstone Securities

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The amount of the financing fees may be reduced or eliminated, as determined by us and Gladstone Securities, after taking into consideration various factors, including, but not limited to, the involvement of any third-party brokers and market conditions.

We did no t pay financing fees to Gladstone Securities during the three months ended September 30, 2021, but we paid financing fees to Gladstone Securities of $ 14,000 during the nine months ended September 30, 2021, which are included in mortgage notes payable, net, in the condensed consolidated balance sheets, or 0.25 % of the mortgage principal secured.

We did no t pay financing fees to Gladstone Securities during the three months ended September 30, 2020, but we paid financing fees to Gladstone Securities of $ 89,637 during the nine months ended September 30, 2020, which are included in mortgage notes payable, net, in the condensed consolidated balance sheets, or 0.25 % of the mortgage principal secured.

We did no t pay financing fees to Gladstone Securities during the three months ended March 31, 2022.

We paid financing fees to Gladstone Securities of $ 14,000 during the three months ended March 31, 2021, which are included in mortgage notes payable, net, in the condensed consolidated balance sheets, or 0.25 % of the mortgage principal secured.

Our Board of Directors renewed the agreement for an additional year, through August 31, 2022, at its July 2021 meeting.

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The Series F Preferred Stock is registered with the SEC pursuant to a registration statement on Form S-3 (File No.

333-236143), as the same may be amended and/or supplemented (the “Registration Statement”), under the Securities Act of 1933, as amended, and will be offered and sold pursuant to a prospectus supplement, dated February 20, 2020, and a base prospectus dated February 11, 2020 relating to the Registration Statement (the “Prospectus”).

333-236143), as the same may be amended and/or supplemented (the “Registration Statement”), under the Securities Act of

1933, as amended, and will be offered and sold pursuant to a prospectus supplement, dated February 20, 2020, and a base prospectus dated February 11, 2020 relating to the Registration Statement (the “Prospectus”).

Under the Dealer Manager Agreement, Gladstone Securities, as dealer manager, will provide certain sales, promotional and marketing services to us in connection with the Offering, and we will pay Gladstone Securities (i) selling commissions of 6.0 % of the gross proceeds from sales of Series F Preferred Stock in the Primary Offering (the “Selling Commissions”), and (ii) a dealer manager fee of 3.0 % of the gross proceeds from sales of Series F Preferred Stock in the Primary Offering (the “Dealer Manager Fee”).

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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.

We paid fees of $ 0.5 million to Gladstone Securities during the nine months ended September 30, 2021 in connection with the Offering.

We paid fees of $ 0.1 million to Gladstone Securities during the three months ended March 31, 2022 in connection with the Offering.

Earnings (Loss) 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 three and nine months ended September 30, 2021 and 2020.

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 (loss) per share calculations, as there would be no effect on the amounts since the Non-controlling OP Unitholders’ share of earnings (loss) would also be added back to net income (loss).

The following tables set forth the computation of basic and diluted earnings (loss) per share of common stock for the three months ended March 31, 2022 and 2021.

The operating partnership units in the Operating Partnership (“OP Units”) held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”) (which may be redeemed for shares of common stock) have been excluded from the diluted earnings (loss) per share calculations, as there would be no effect on the amounts since the Non-controlling OP Unitholders’ share of earnings (loss) would also be added back to net income (loss).

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

We computed basic earnings (loss) per share for the three and nine months ended September 30, 2021 and 2020 using the weighted average number of shares outstanding during the respective periods.

Diluted earnings (loss) per share for the three and nine months ended September 30, 2021 and 2020 reflects additional shares of common stock related to our convertible senior common stock (the “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) attributable to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

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

2021 2020 2021 2020

We computed basic earnings (loss) per share for the three months ended March 31, 2022 and 2021 using the weighted average number of shares outstanding during the respective periods.

Diluted earnings (loss) per share for the three months ended March 31, 2022 and 2021 reflects additional shares of common stock related to our convertible senior common stock (the “Senior Common Stock”), if the effect of conversion would be dilutive, that would have been outstanding if such dilutive potential shares of common stock had been issued, as well as an adjustment to net income (loss) attributable to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

For the three months ended March 31,

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

Net income (loss) attributable to common stockholders $ 1,439 $ ( 128 ) $ ( 4,547 ) $ ( 2,643 )

Net income (loss) available (attributable) to common stockholders $ 322 $ ( 2,955 )

Denominator for basic weighted average shares of common stock (1) 37,902,653 35,714,107

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

Net income (loss) attributable to common stockholders $ 1,439 $ ( 128 ) $ ( 4,547 ) $ ( 2,643 )

Net income (loss) attributable to common stockholders plus assumed conversions (2) $ 1,439 $ ( 128 ) $ ( 4,547 ) $ ( 2,643 )

Net income (loss) available (attributable) to common stockholders $ 322 $ ( 2,955 )

Net income (loss) available (attributable) to common stockholders plus assumed conversions (2) $ 322 $ ( 2,955 )

Denominator for basic weighted average shares of common stock (1) 37,902,653 35,714,107

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Diluted earnings (loss) per share of common stock $ 0.01 $ ( 0.08 )

(1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 256,994 and 337,205 for the three and nine months ended September 30, 2021, respectively, and 503,033 and 502,435 for the three and nine months ended September 30, 2020, respectively.

(2) We excluded convertible shares of Senior Common Stock of 532,785 and 641,430 from the calculation of diluted earnings (loss) per share for the three and nine months ended September 30, 2021 and 2020, respectively, because they were anti-dilutive.

(1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 256,994 and 500,299 for the three months ended March 31, 2022 and 2021, respectively.

(2) We excluded convertible shares of Senior Common Stock of 374,123 and 592,156 from the calculation of diluted earnings (loss) per share for the three months ended March 31, 2022 and 2021, respectively, because they were anti-dilutive.

Real Estate and Intangible Assets

The following table sets forth the components of our investments in real estate as of September 30, 2021 and December 31, 2020, excluding real estate held for sale as of September 30, 2021 and December 31, 2020, respectively (dollars in thousands):

September 30, 2021 December 31, 2020

The following table sets forth the components of our investments in real estate as of March 31, 2022 and December 31, 2021, respectively (dollars in thousands):

March 31, 2022 December 31, 2021

Land (1) $ 150,589 $ 149,773

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(1) This amount includes $ 4,436 of land value subject to land lease agreements which we may purchase at our option for a nominal fee.

Real estate depreciation expense on building and tenant improvements was $ 9.8 million and $ 30.0 million for the three and nine months ended September 30, 2021, respectively.

Real estate depreciation expense on building and tenant improvements was $ 9.0 million and $ 27.2 million for the three and nine months ended September 30, 2020, respectively.

We acquired eight properties during the nine months ended September 30, 2021, and six properties during the nine months ended September 30, 2020.

Real estate depreciation expense on building and tenant improvements was $ 9.9 million and $ 10.7 million for the three months ended March 31, 2022 and 2021, respectively.

We acquired two properties during the three months ended March 31, 2022, and one property during the three months ended March 31, 2021.

The acquisitions are summarized below (dollars in thousands):

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

September 30, 2021 (1) 367,716 15.5 years $ 46,225 $ 370

September 30, 2020 (2) 1,043,638 14.2 years $ 82,599 $ 339

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

March 31, 2022 (1) 136,000 10.2 years $ 13,463 $ 163

March 31, 2021 (2) 180,152 14.2 years $ 11,146 $ 146

(1) On February 24, 2022, we acquired an 80,000 square foot property in Wilkesboro, North Carolina for $ 7.5 million.

The property is fully leased to one tenant and had 12.7 years of remaining lease term at the time we acquired the property.

On March 11, 2022, we acquired a 56,000 square foot property in Oklahoma City, Oklahoma for $ 6.0 million.

The property is fully leased to one tenant and had 7.0 years of remaining lease term at the time we acquired the property.

(2) 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 for 14.2 years at 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 for 12.6 years at 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 for 17.4 years at 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 for 15.0 years at time we acquired the portfolio.

(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 at 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 million.

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

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

The property is fully leased to one tenant for 10.5 years at 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 for 9.7 years at time we acquired the property.

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the nine months ended September 30, 2021 and 2020, respectively, as follows (dollars in thousands):

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

The property is fully leased to one tenant and had 14.2 years of 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 three months ended March 31, 2022 and 2021, respectively, as follows (dollars in thousands):

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021

Acquired assets and liabilities Purchase price Purchase price

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Total Purchase Price $ 13,463 $ 11,146

(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 $ 46 and $ 53 of loans receivable included in Other assets on the condensed consolidated balance sheets, respectively.

(1) This amount includes $ 17 of prepaid rent included in Other liabilities on the condensed consolidated balance sheets.

Future Lease Payments

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the three months ending December 31, 2021 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the nine months ending December 31, 2022 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year Tenant Lease Payments

Three Months Ending 2021 $ 28,699

Nine Months Ending 2022 $ 88,866

Thereafter 284,547

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Lease Revenue Reconciliation

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three and nine months ended September 30, 2021 and 2020, respectively (dollars in thousands):

For the three months ended September 30,

(Dollars in Thousands)

Lease revenue reconciliation 2021 2020 $ Change % Change

Fixed lease payments $ 30,230 $ 29,116 $ 1,114 3.8 %

Variable lease payments 4,104 4,026 78 1.9 %

$ 34,334 $ 33,142 $ 1,192 3.6 %

For the nine months ended September 30,

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three months ended March 31, 2022 and 2021, respectively (dollars in thousands):

For the three months ended March 31,

(Dollars in Thousands)

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$ 35,531 $ 34,677 $ 854 2.5 %

Legal Settlements

In August 2021, we reached separate legal settlements through which we recognized $ 2.4 million, net, recorded in other income on the condensed 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 September 30, 2021 and December 31, 2020, excluding real estate held for sale as of September 30, 2021 and December 31, 2020, respectively (dollars in thousands):

September 30, 2021 December 31, 2020

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of March 31, 2022 and December 31, 2021, respectively (dollars in thousands):

March 31, 2022 December 31, 2021

Lease Intangibles Accumulated Amortization Lease Intangibles Accumulated Amortization

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Below market leases and deferred revenue ( 51,581 ) 22,284 ( 48,241 ) 21,471

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 5.0 million and $ 15.7 million for the three and nine months ended September 30, 2021, respectively, and $ 4.8 million and $ 14.9 million for the three and nine months ended September 30, 2020, respectively, and is included in depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to above-market lease values was $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2021, respectively, and $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2020, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to below-market lease values was $ 0.9 million and $ 3.3 million for the three and nine months ended September 30, 2021, respectively, and $ 0.7 million and $ 2.1 million for the three and nine months ended September 30, 2020, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the nine months ended September 30, 2021 and 2020, respectively, were as follows:

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 4.7 million and $ 6.0 million for the three months ended March 31, 2022 and 2021, respectively, and is included in depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to above-market lease values was $ 0.2 million and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to below-market lease values was $ 0.8 million and $ 1.6 million for the three months ended March 31, 2022 and 2021, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the three months ended March 31, 2022 and 2021, respectively, were as follows:

Intangible Assets & Liabilities 2022 2021

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Real Estate Dispositions

During the nine months ended September 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 in our target secondary growth markets, or repay 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 nine months ended September 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

81,758 $ 5,473 $ 367 $ ( 882 )

Our dispositions during the nine months ended September 30, 2021 were not classified as discontinued operations because they did not represent a strategic shift in operations, nor will such dispositions have a major effect on our operations and financial results.

Accordingly, the operating results of these properties are included within continuing operations for all periods reported.

The table below summarizes the components of operating income from the real estate and related assets disposed of during the three and nine months ended September 30, 2021, and 2020 (dollars in thousands):

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

2021 2020 2021 2020

We did not sell any properties during the three months ended March 31, 2022.

We expect to continue to execute our capital recycling plan and sell non-core properties as reasonable disposition opportunities become available, and use the sales proceeds to acquire properties in our target, secondary growth markets, or pay down outstanding debt.

During the three months ended March 31, 2021, we sold two non-core properties, located in Rancho Cordova, California and Champaign, Illinois.

The table below summarizes the components of operating income from the real estate and related assets disposed of during the three months ended March 31, 2021 (dollars in thousands):

For the three months ended March 31,

Operating revenue $ 233

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Other expense, net ( 1,622 ) (1)

Loss from real estate and related assets sold $ — $ ( 1,301 ) $ ( 1,499 ) $ ( 1,330 )

(Loss) income from real estate and related assets sold $ ( 1,502 )

(1) Includes a $ 0.9 million loss on sale of real estate, net, on two property sales.

Real Estate Held for Sale

As of September 30, 2021, we had one property classified as held for sale, located in Richmond, Virginia.

We consider this asset to be non-core to our long term strategy.

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

Two of the properties were sold during the nine months ended September 30, 2021.

Our Boston Heights, Ohio property is classified as held and used as of September 30, 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 condensed consolidated balance sheets (dollars in thousands):

September 30, 2021 December 31, 2020

Assets Held for Sale

Total real estate held for sale $ 4,005 $ 8,114

Lease intangibles, net — 384

Total Assets Held for Sale $ 4,005 $ 8,498

Liabilities Held for Sale

Asset retirement obligation 13 —

Total Liabilities Held for Sale $ 13 $ —

At March 31, 2022 and December 31, 2021, we did no t have any properties classified as held for sale.

Impairment Charges

We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the nine months ended September 30, 2021 and did no t recognize an impairment charge.

We recognized an aggregate impairment charge of $ 2.9 million during the nine months ended September 30, 2020 on three held and used assets, located in Blaine, Minnesota, Champaign, Illinois, and Rancho Cardova, California.

In performing our impairment testing, the undiscounted cash flows for this asset were below the carrying value, so we impaired the asset and wrote it down to its fair value, which we determined using third party purchase offers.

We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the three months ended March 31, 2022 and 2021, and did no t recognize an impairment charge.

We continue to evaluate our properties on a quarterly basis for changes that could create the need to record impairment.

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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 September 30, 2021 and December 31, 2020 are summarized below (dollars in thousands):

Our mortgage notes payable and Credit Facility as of March 31, 2022 and December 31, 2021 are summarized below (dollars in thousands):

Encumbered properties at Carrying Value at Stated Interest Rates at Scheduled Maturity Dates at

September 30, 2021 September 30, 2021 December 31, 2020 September 30, 2021 September 30, 2021

March 31, 2022 March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2022

Mortgage and other secured loans:

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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 %.

As of September 30, 2021, one month LIBOR was approximately 0.08 %.

(4) The weighted average interest rate on the mortgage notes outstanding as of September 30, 2021 was approximately 4.19 %.

(5) The weighted average interest rate on all debt outstanding as of September 30, 2021 was approximately 3.45 %.

(6) The amount we may draw under our Credit Facility is based on a percentage of the fair value of a combined pool of 56 unencumbered properties as of September 30, 2021.

As of March 31, 2022, one month LIBOR was approximately 0.45 %.

(4) The weighted average interest rate on the mortgage notes outstanding as of March 31, 2022 was approximately 4.19 %.

(5) The weighted average interest rate on all debt outstanding as of March 31, 2022 was approximately 3.52 %.

(6) The amount we may draw under our Credit Facility is based on a percentage of the fair value of a combined pool of 62 unencumbered properties as of March 31, 2022.

N/A - Not Applicable

Mortgage Notes Payable

As of September 30, 2021, we had 53 mortgage notes payable, collateralized by a total of 68 properties with a net book value of $ 667.8 million.

As of March 31, 2022, we had 52 mortgage notes payable, collateralized by a total of 67 properties with a net book value of $ 663.6 million.

We have limited recourse liabilities that could result from any one or more of the following circumstances:

a borrower voluntarily filing for bankruptcy, improper conveyance of a property, fraud or material misrepresentation, misapplication or misappropriation of rents, security deposits, insurance proceeds or condemnation proceeds, or physical waste or damage to the property resulting from a borrower’s gross negligence or willful misconduct.

As of September 30, 2021, we did not have any mortgages subject to recourse.

As of March 31, 2022, we did not have any mortgages subject to recourse.

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 nine months ended September 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 nine months ended September 30, 2021, we issued one mortgage, collateralized by one property, which is summarized in the table below (dollars in thousands):

Fixed Rate Debt Issued Interest Rate on Fixed Rate Debt

$ 5,500 (1) 3.24 %

(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.

We did no t make any payments for deferred financing costs during the three months ended September 30, 2021 but made payments of $ 0.6 million for deferred financing costs during the nine months ended September 30, 2021.

We made payments of $ 0.03 million and $ 0.4 million for deferred financing costs during the three and nine months ended September 30, 2020, respectively.

Scheduled principal payments of mortgage notes payable for the three months ending December 31, 2021, and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

During the three months ended March 31, 2022, we did not issue or repay any mortgages.

We did not make any payments for deferred financing costs during the three months ended March 31, 2022 but made payments of $ 0.6 million for deferred financing costs during the three months ended March 31, 2021.

Scheduled principal payments of mortgage notes payable for the nine months ending December 31, 2022, and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

Year Scheduled Principal Payments

Three Months Ending December 31, 2021 $ 13,551

Nine Months Ending December 31, 2022 $ 101,744

Thereafter 78,996

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Generally, we will estimate the fair value of our interest rate caps and interest rate swaps, in the absence of observable market data, using estimates of value including estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date.

At September 30, 2021 and December 31, 2020, our interest rate cap agreements and interest rate swaps were valued using Level 2 inputs.

At March 31, 2022 and December 31, 2021, our interest rate cap agreements and interest rate swaps were valued using Level 2 inputs.

The fair value of the interest rate cap agreements is recorded in other assets on our accompanying condensed consolidated balance sheets.

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If the interest rate cap qualifies for hedge accounting, the change in the estimated fair value is recorded to accumulated other comprehensive income to the extent that it is effective, with any ineffective portion recorded to interest expense in our condensed consolidated statements of operations and comprehensive income.

If the interest rate cap does

not qualify for hedge accounting, or if it is determined the hedge is ineffective, any change in the fair value is recognized in interest expense in our consolidated statements of operations and comprehensive income.

The following table summarizes the interest rate caps at September 30, 2021 and December 31, 2020 (dollars in thousands):

September 30, 2021 December 31, 2020

If the interest rate cap does not qualify for hedge accounting, or if it is determined the hedge is ineffective, any change in the fair value is recognized in interest expense in our consolidated statements of operations and comprehensive income.

The following table summarizes the interest rate caps at March 31, 2022 and December 31, 2021 (dollars in thousands):

March 31, 2022 December 31, 2021

Aggregate Cost Aggregate Notional Amount Aggregate Fair Value Aggregate Notional Amount Aggregate Fair Value

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

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

The fair value of our interest rate swap agreements is recorded in other assets or other liabilities on our accompanying condensed consolidated balance sheets.

We have designated our interest rate swaps as cash flow hedges, and we record changes in the fair value of the interest rate swap agreement to accumulated other comprehensive income on the condensed consolidated balance sheets.

We record changes in fair value on a quarterly basis, using current market valuations at quarter end.

The following table summarizes our interest rate swaps at September 30, 2021 and December 31, 2020 (dollars in thousands):

September 30, 2021 December 31, 2020

We record changes in fair value on a quarterly basis, using current

market valuations at quarter end.

The following table summarizes our interest rate swaps at March 31, 2022 and December 31, 2021 (dollars in thousands):

March 31, 2022 December 31, 2021

Aggregate Notional Amount Aggregate Fair Value Asset Aggregate Fair Value Liability Aggregate Notional Amount Aggregate Fair Value Asset Aggregate Fair Value Liability

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The following table presents the impact of our derivative instruments in the condensed consolidated financial statements (dollars in thousands):

Amount of gain (loss) recognized in Comprehensive Income

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Amount of gain recognized in Comprehensive Income

Three Months Ended March 31,

Derivatives in cash flow hedging relationships

2 unchanged sentences

Total $ 4,267 $ 2,424

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

Amount reclassified out of Accumulated Other Comprehensive Income

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Interest rate caps $ ( 145 ) $ — $ ( 145 ) $ —

Total $ ( 145 ) $ — $ ( 145 ) $ —

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

Asset (Liability) Derivatives Fair Value at

Derivatives Designated as Hedging Instruments Balance Sheet Location September 30, 2021 December 31, 2020

Derivatives Designated as Hedging Instruments Balance Sheet Location March 31, 2022 December 31, 2021

Interest rate caps Other assets $ 1,950 $ 324

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Total derivative liabilities, net $ 4,218 $ ( 52 )

The fair value of all mortgage notes payable outstanding as of September 30, 2021 was $ 458.6 million , as compared to the carrying value stated above of $ 448.0 million.

The fair value of all mortgage notes payable outstanding as of March 31, 2022 was $ 440.8 million , as compared to the carrying value stated above of $ 446.7 million.

The fair value is calculated based on a discounted cash flow analysis, using management’s estimate of market interest rates on long-term debt with comparable terms and loan to value ratios.

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

As of September 30, 2021, there was $ 65.0 million outstanding under Term Loan B, and we used all net proceeds to repay all outstanding borrowings on the Revolver and fund acquisitions.

As of September 30, 2021, there was $ 227.1 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 1.97 %, and $ 18.7 million outstanding under letters of credit, at a weighted average interest rate of 1.90 %.

As of September 30, 2021, the maximum additional amount we could draw under the Credit Facility was $ 26.1 million.

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

The amount outstanding under the Credit Facility approximates fair value as of September 30, 2021.

As of March 31, 2022, there was $ 65.0 million outstanding under Term Loan B, and we used all net proceeds to repay all outstanding borrowings on the Revolver and fund acquisitions.

As of March 31, 2022, there was $ 259.6 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 2.35 %, and $ 20.5 million outstanding under letters of credit, at a weighted average interest rate of 1.90 %.

As of March 31, 2022, the maximum additional amount we could draw under the Credit Facility was $ 25.6 million.

We were in compliance with all covenants under the Credit Facility as of March 31, 2022.

The amount outstanding under the Credit Facility approximates fair value as of March 31, 2022.

Commitments and Contingencies

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We are obligated as lessee under four ground leases.

Future minimum rental payments due under the terms of these leases for the three months ending December 31, 2021 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Future minimum rental payments due under the terms of these leases for the nine months ending December 31, 2022 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year Future Lease Payments Due Under Operating Leases

Three Months Ending December 31, 2021 $ 122

Nine Months Ending December 31, 2022 $ 368

Thereafter 6,301

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Present value of lease payments $ 5,460

Rental expense incurred for properties with ground lease obligations during the three and nine months ended September 30, 2021 was $ 0.1 million and $ 0.4 million, respectively, and during the three and nine months ended September 30, 2020 was $ 0.1 million and $ 0.4 million, respectively.

Rental expense incurred for properties with ground lease obligations during the three months ended March 31, 2022 and 2021 was $ 0.1 million and $ 0.1 million, respectively.

Our ground leases are treated as operating leases and rental expenses are reflected in property operating expenses on the condensed consolidated statements of operations and comprehensive income.

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Letters of Credit

As of September 30, 2021, there was $ 18.7 million outstanding under letters of credit.

As of March 31, 2022, there was $ 20.5 million outstanding under letters of credit.

These letters of credit are not reflected on our condensed consolidated balance sheets.

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Stockholders’ Equity

The following table summarizes the changes in our equity for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

The following table summarizes the changes in our equity for the three months ended March 31, 2022 and 2021 (in thousands):

For the three months ended March 31,

Senior Common Stock

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Issuance of Series F preferred stock, net — —

Redemption of Series F preferred stock, net — —

Balance, end of period $ — $ —

3 unchanged sentences

Redemption of OP Units — 4,812

Redemption of Series F preferred stock, net 55 —

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership ( 143 ) ( 3,604 )

3 unchanged sentences

Comprehensive income 4,267 2,424

Reclassification into interest expense 145 — 145 —

Balance, end of period $ 2,921 $ ( 1,921 )

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Distributions declared to common, senior common, and preferred stockholders ( 17,354 ) ( 16,460 )

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

Redemption of Series F preferred stock, net ( 5 ) —

Net income attributable to the Company 3,389 79

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Redemption of OP Units — 4,812

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

Redemption of Series F preferred stock, net 50 —

Distributions declared to common, senior common, and preferred stockholders ( 17,354 ) ( 16,460 )

Comprehensive income 4,267 2,424

Reclassification into interest expense 145 — 145 —

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership ( 143 ) ( 3,604 )

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Distributions declared to Non-controlling OP Unit holders ( 96 ) ( 189 )

Issuance of Non-controlling OP Units as consideration in real estate acquisitions, net — — — 502

Redemptions of OP Units — ( 4,812 )

3 unchanged sentences

Total Equity $ 214,570 $ 213,163

(1) No shares of Series F Preferred Stock were outstanding prior to July 1, 2020.

Distributions

We paid the following distributions per share for the three and nine months ended September 30, 2021 and 2020:

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

2021 2020 2021 2020

We paid the following distributions per share for the three months ended March 31, 2022 and 2021:

For the three months ended March 31,

Common Stock and Non-controlling OP Units $ 0.37620 $ 0.37545

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

(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) Our shares of Series G Preferred Stock were issued on June 28, 2021.

Recent Activity

Amendment to Articles of Restatement

On June 23, 2021, we filed with the State Department of Assessments and Taxation of Maryland (“SDAT”) the Articles Supplementary (i) setting forth the rights, preferences and terms of our newly designated 6.00 % Series G Cumulative Redeemable Preferred Stock (“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.

Amendment to Operating Partnership Agreement

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 “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 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 Amendment have preferences, distribution rights, and other provisions substantially equivalent to those of the Series G Preferred Stock.

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 7.00 % Series D Cumulative Redeemable Preferred Stock (“Series D Preferred Stock”).

Common Stock ATM Program

During the nine months ended September 30, 2021, we sold 1.2 million shares of common stock, raising $ 24.1 million in net proceeds under our At-the-Market Equity Offering Sales Agreements with sales agents Robert W.

During the three months ended March 31, 2022, we sold 0.9 million shares of common stock, raising $ 20.3 million in net proceeds under our At-the-Market Equity Offering Sales Agreements with sales agents Robert W.

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

LLC (“Goldman Sachs”), Stifel, Nicolaus & Company, Incorporated (“Stifel”), BTIG, LLC, and Fifth Third Securities, Inc.

(“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 September 30, 2021, we had remaining capacity to sell up to $ 159.4 million of common stock under the Common Stock ATM Program.

(“Fifth Third”).

On February 22, 2022, we entered into Amendment No.1 to our existing At-the-Market Equity Offering Sales Agreement (the “Common Stock Sales Agreement”), with Baird, Goldman Sachs, Stifel, BTIG, and Fifth Third (the “Common Stock Sales Agents”), dated December 3, 2019.

The amendment permits shares of common stock to be issued pursuant to the Common Stock Sales Agreement under the Company’s Registration Statement on Form S-3 (File No.

333-236143) and future registration statements on Form S-3 (the “Common Stock ATM Program”).

As of March 31, 2022, we had remaining capacity to sell up to $ 47.0 million of common stock pursuant to the Common Stock ATM Program under the 2020 Universal Shelf (as defined below).

Mezzanine Equity

Our Series D Preferred Stock, 6.625 % Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”), and Series G Preferred Stock are classified as mezzanine equity in our condensed consolidated balance sheets because all three are redeemable at the option of the shareholder upon a change of control of greater than 50 %.

Our 6.625 % Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”), and Series G Preferred Stock are classified as mezzanine equity in our condensed consolidated balance sheets because both are redeemable at the option of the shareholder upon a change of control of greater than 50 %.

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

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

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 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

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

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

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

As of September 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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333-229209, and an amendment thereto on Form S-3/A on January 24, 2019 (collectively referred to as the “2019 Universal Shelf”).

The 2019 Universal Shelf became effective on February 13, 2019 and replaced our prior universal shelf registration statement.

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

As of September 30, 2021, we had the ability to issue up to $ 352.7 million of securities under the 2019 Universal Shelf.

The 2019 Universal Shelf allowed us to issue up to $ 500.0 million of securities and expired on February 13, 2022.

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

333-236143 (the “2020 Universal Shelf”).

The 2020 Universal Shelf was declared effective on February 11, 2020 and is in addition to the 2019 Universal Shelf.

The 2020 Universal Shelf was declared effective on February 11, 2020 and was in addition to the 2019 Universal Shelf.

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 Series F Preferred Stock.

As of September 30, 2021, we had the ability to issue up to $ 691.7 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 Series F Preferred Stock, and $ 63.0 million is reserved for our Common Stock ATM Program.

As of March 31, 2022, we had the ability to issue up to $ 671.8 million of securities under the 2020 Universal Shelf.

Series F Preferred Stock

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

We sold 217,422 shares of our Series F Preferred Stock, raising $ 4.9 million in net proceeds during the nine months ended September 30, 2021.

As of September 30, 2021, we had remaining capacity to sell up to $ 628.2 million of Series F Preferred Stock.

We sold 62,883 shares of our Series F Preferred Stock, raising $ 1.4 million in net proceeds during the three months ended March 31, 2022.

As of March 31, 2022, we had remaining capacity to sell up to $ 624.3 million of Series F Preferred Stock.

Non-controlling Interest in Operating Partnership

As of September 30, 2021 and December 31, 2020, we owned approximately 99.3 % and 98.6 %, re spectively, of the outstanding OP Units.

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

As of March 31, 2022 and December 31, 2021, we owned approximately 99.3 % and 99.3 %, re spectively, of the outstanding OP Units.

During the three months ended March 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 our common stock, with the distributions on the OP Units held by us being utilized to make distributions to our common stockholders.

As of September 30, 2021 and December 31, 2020, there were 256,994 and 503,033 outstanding OP Units held by Non-controlling OP Unitholders, respectively.

As of March 31, 2022 and December 31, 2021, there were 256,994 and 256,994 outstanding OP Units held by Non-controlling OP Unitholders, respectively.

Subsequent Events

Distributions

On October 12, 2021, our Board of Directors declared the following monthly distributions for the months of October, November and December of 2021:

On April 12, 2022, our Board of Directors declared the following monthly distributions for the months of April , May and June of 2022:

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

October 22, 2021 October 29, 2021 $ 0.125275 $ 0.138021 $ 0.125

November 19, 2021 November 30, 2021 0.125275 0.138021 0.125

December 23, 2021 December 31, 2021 0.125275 0.138021 0.125

April 22, 2022 April 29, 2022 $ 0.12540 $ 0.138021 $ 0.125

May 20, 2022 May 31, 2022 0.12540 0.138021 0.125

June 22, 2022 June 30, 2022 0.12540 0.138021 0.125

$ 0.37620 $ 0.414063 $ 0.375

2 unchanged sentences

Payment Date Distribution per Share

October November 5, 2021 $ 0.0875

November December 6, 2021 0.0875

December January 5, 2022 0.0875

April May 6, 2022 $ 0.0875

May June 6, 2022 0.0875

June July 6, 2022 0.0875

Series F Preferred Stock Distributions

Record Date Payment Date Distribution per Share

October 28, 2021 November 5, 2021 $ 0.125

November 29, 2021 December 6, 2021 0.125

December 29, 2021 January 5, 2022 0.125

April 28, 2022 May 6, 2022 $ 0.125

May 27, 2022 June 6, 2022 0.125

June 29, 2022 July 6, 2022 0.125

Equity Activity

Subsequent to September 30, 2021 and through November 1, 2021, we raised $ 8.0 million in net proceeds from the sale of 378,495 shares of common stock under our Common Stock ATM Program and $ 0.8 million in net proceeds from the sale of 33,572 shares of Series F Preferred Stock.

Subsequent to March 31, 2022 and through May 4, 2022, we raised $ 2.0 million in net proceeds from the sale of 91,227 shares of common stock under our Common Stock ATM Program and $ 0.4 million in net proceeds from the sale of 18,431 shares of Series F Preferred Stock.

Acquisition Activity

On May 4, 2022, we purchased a 260,719 square foot, two property portfolio in Cleveland, Ohio and Fort Payne, Alabama, for $ 19.3 million.

These properties are fully leased to one tenant on a triple net basis with a remaining lease term of 11.4 years.

Financing Activity

On October 26, 2021, we repaid $ 3.2 million of fixed rate debt, collateralized by one property, at an interest rate of 4.92 %.

On April 27, 2022, we refinanced $ 14.8 million of fixed rate debt coming due on May 1, 2022 with a new $ 15.0 million note, collateralized by two properties, at a variable interest rate of Secured Overnight Financing Rate plus 2.50 %, subject to a 3.25 % minimum, and a two year term.

On May 4, 2022, we issued $ 10.0 million of fixed rate debt in connection with the two property portfolio acquired on the same date, with a term of 5.0 years and interest rate of 4.0 %.

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

What changed 10-Q

Item 1. Financial Statements