GLADSTONE COMMERCIAL CORP 10-Q

Item 1. Financial Statements Gladstone Commercial Corporation Condensed Consolidated Balance Sheets (Dollars in Thousands, Except Share and Per Share Data) (Unaudited) March 31, 2022 December 31, 2021 ASSETS Real estate, at cost $ 1,240,928 $ 1,225,258 Less: accumulated depreciation 276,612 266,672 Total real estate, net 964,316 958,586 Lease intangibles, net 112,655 114,494 Cash and cash equivalents 9,585 7,956 Restricted cash 5,075 5,222 Funds held in escrow 9,820 7,304 Right-of-use assets from operating leases 5,305 5,361 Deferred rent receivable, net 37,991 39,066 Other assets 9,662 5,363 TOTAL ASSETS $ 1,154,409 $ 1,143,352 LIABILITIES, MEZZANINE EQUITY AND EQUITY LIABILITIES Mortgage notes payable, net (1) $ 446,720 $ 449,944 Borrowings under Revolver 34,550 33,550 Borrowings under Term Loan A and Term Loan B, net 224,113 224,032 Deferred rent liability, net 29,297 26,770 Operating lease liabilities 5,460 5,509 Asset retirement obligation 3,790 3,769 Accounts payable and accrued expenses 5,363 6,736 Due to Adviser and Administrator (1) 3,574 3,431 Other liabilities 16,711 16,788 TOTAL LIABILITIES $ 769,578 $ 770,529 Commitments and contingencies (2) MEZZANINE EQUITY Series E and G redeemable preferred stock, net, par value $ 0.001 per share; $ 25 per share liquidation preference; 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 TOTAL MEZZANINE EQUITY $ 170,261 $ 170,261 EQUITY Senior common stock, par value $ 0.001 per share; 950,000 shares authorized; and 443,880 and 600,061 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (3) $ 1 $ 1 Common stock, par value $ 0.001 per share, 62,292,200 and 62,290,000 shares authorized; and 38,548,992 and 37,473,587 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (3) 38 37 Series F redeemable preferred stock, par value $ 0.001 per share; $ 25 per share liquidation preference; 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 Accumulated other comprehensive income 2,921 ( 1,346 ) Distributions in excess of accumulated earnings ( 482,493 ) ( 468,523 ) TOTAL STOCKHOLDERS' EQUITY $ 213,262 $ 201,303 OP Units held by Non-controlling OP Unitholders (3) 1,308 1,259 TOTAL EQUITY $ 214,570 $ 202,562 TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY $ 1,154,409 $ 1,143,352 (1) Refer to Note 2 “Related-Party Transactions” (2) Refer to Note 7 “Commitments and Contingencies” (3) Refer to Note 8 “Equity and Mezzanine Equity” The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents Gladstone Commercial Corporation Condensed Consolidated Statements of Operations and Comprehensive Income (Dollars in Thousands, Except Share and Per Share Data) (Unaudited) For the three months ended March 31, 2022 2021 Operating revenues Lease revenue $ 35,531 $ 34,677 Total operating revenues $ 35,531 $ 34,677 Operating expenses Depreciation and amortization $ 14,689 $ 16,710 Property operating expenses 6,623 6,561 Base management fee (1) 1,547 1,444 Incentive fee (1) 1,340 1,236 Administration fee (1) 462 297 General and administrative 997 656 Total operating expenses $ 25,658 $ 26,904 Other (expense) income Interest expense $ ( 6,586 ) $ ( 7,164 ) Loss on sale of real estate, net — ( 882 ) Other income 104 311 Total other expense, net $ ( 6,482 ) $ ( 7,735 ) Net income $ 3,391 $ 38 Net (income) loss (available) attributable to OP Units held by Non-controlling OP Unitholders ( 2 ) 41 Net income attributable to the Company $ 3,389 $ 79 Distributions attributable to Series D, E, F, and G preferred stock ( 2,946 ) ( 2,847 ) 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 ) Earnings (loss) per weighted average share of common stock - basic & diluted Income (loss) available (attributable) to common shareholders $ 0.01 $ ( 0.08 ) Weighted average shares of common stock outstanding Basic and Diluted 37,902,653 35,714,107 Earnings per weighted average share of senior common stock $ 0.26 $ 0.26 Weighted average shares of senior common stock outstanding - basic 449,442 723,841 Comprehensive income 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 Comprehensive income $ 7,658 $ 2,462 Comprehensive (income) loss (available) attributable to OP Units held by Non-controlling OP Unitholders ( 2 ) 41 Total comprehensive income available to the Company $ 7,656 $ 2,503 (1) Refer to Note 2 “Related-Party Transactions” The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents Gladstone Commercial Corporation Condensed Consolidated Statements of Cash Flows (Dollars in Thousands) (Unaudited) For the three months ended March 31, 2022 2021 Cash flows from operating activities: Net income $ 3,391 $ 38 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,689 16,710 Loss on sale of real estate, net — 882 Amortization of deferred financing costs 369 394 Amortization of deferred rent asset and liability, net ( 615 ) ( 1,395 ) Amortization of discount and premium on assumed debt, net 12 14 Asset retirement obligation expense 21 27 Amortization of right-of-use asset from operating leases and operating lease liabilities, net 7 13 Operating changes in assets and liabilities (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 (decrease) in other liabilities 856 ( 446 ) Leasing commissions paid ( 962 ) ( 555 ) Net cash provided by operating activities $ 17,187 $ 16,879 Cash flows from investing activities: Acquisition of real estate and related intangible assets $ ( 13,463 ) $ ( 10,846 ) Improvements of existing real estate ( 942 ) ( 1,669 ) Proceeds from sale of real estate — 5,106 Receipts from lenders for funds held in escrow 28 1,768 Payments to lenders for funds held in escrow ( 2,544 ) ( 559 ) Receipts from tenants for reserves 875 1,215 Payments to tenants from reserves ( 1,016 ) ( 1,541 ) Deposits on future acquisitions ( 509 ) — Net cash used in investing activities $ ( 17,571 ) $ ( 6,526 ) Cash flows from financing activities: Proceeds from issuance of equity $ 22,166 $ 11,465 Offering costs paid ( 395 ) ( 153 ) Redemption of Series F preferred stock ( 55 ) — Borrowings under mortgage notes payable — 5,500 Payments for deferred financing costs — ( 584 ) Principal repayments on mortgage notes payable ( 3,460 ) ( 7,497 ) Borrowings from revolving credit facility 23,100 13,000 Repayments on revolving credit facility ( 22,100 ) ( 66,900 ) Borrowings on term loan — 50,000 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 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 Cash, cash equivalents, and restricted cash at end of period $ 14,660 $ 14,605 SUPPLEMENTAL AND NON-CASH INFORMATION Tenant funded fixed asset improvements included in deferred rent liability, net $ 3,340 $ 1,102 Acquisition of real estate and related intangible assets $ — $ 300 Unrealized gain related to interest rate hedging instruments, net $ 4,267 $ 2,424 6 Table of Contents Capital improvements and leasing commissions included in accounts payable and accrued expenses $ 497 $ 788 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 three months ended March 31, 2022 2021 Cash and cash equivalents $ 9,585 $ 9,871 Restricted cash 5,075 4,734 Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows $ 14,660 $ 14,605 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents Gladstone Commercial Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Organization, Basis of Presentation and Significant Accounting Policies Gladstone Commercial Corporation is a real estate investment trust (“REIT”) that was incorporated under the General Corporation Law of the State of Maryland on February 14, 2003. We focus on acquiring, owning and managing primarily office and industrial 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. Our Adviser and Administrator collectively employ all of our personnel and pay their salaries, benefits, and other general expenses directly. Gladstone Commercial Corporation conducts substantially all of its operations through a subsidiary, Gladstone Commercial Limited Partnership, a Delaware limited partnership (the “Operating Partnership”). All references herein to “we,” “our,” “us” and the “Company” mean Gladstone Commercial Corporation and its consolidated subsidiaries, except where it is made clear that the term means only Gladstone Commercial Corporation. Interim Financial Information Our interim financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data presented herein was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of our management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of financial statements for the interim period, have been included. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the U.S. Securities and Exchange Commission on February 15, 2022. 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 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. Significant Accounting Policies The preparation of our financial statements in accordance with GAAP requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could materially differ from these estimates. 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 months ended March 31, 2022. 8 Table of Contents 2. Related-Party Transactions Gladstone Management and Gladstone Administration We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and other general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by Mr. David Gladstone, our chairman and chief executive officer. Two of our executive officers, Mr. Gladstone and Mr. Terry Lee Brubaker (our vice chairman and chief operating officer) serve as directors and executive officers of our Adviser and our Administrator. Our co-president, Mr. Robert Cutlip is executive vice presidents of commercial and industrial real estate of our Adviser. Mr. Michael LiCalsi, our general counsel and secretary, also serves as our Administrator’s president, general counsel and secretary, as well as executive vice president of administration of our Adviser. We have entered into an advisory agreement with our Adviser, as amended from time to time (the “Advisory Agreement”), and an administration agreement with our Administrator (the “Administration Agreement”). The services and fees under the Advisory Agreement and Administration Agreement are described below. 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. Our Board of Directors reviews and considers renewing the agreements with our Adviser and Administrator each July. During their July 2021 meeting, our Board of Directors reviewed and renewed the Administration Agreement for an additional year, through August 31, 2022. Base Management Fee 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 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 Pursuant to the Advisory Agreement, the calculation of the incentive fee rewards the Adviser in circumstances where our quarterly Core FFO (defined at the end of this paragraph), before giving effect to any incentive fee, or pre-incentive fee Core FFO, exceeds 2.0 % quarterly, or 8.0 % annualized, of adjusted total stockholders’ equity (after giving effect to the base management fee but before giving effect to the incentive fee). We refer to this as the hurdle rate. The Adviser will receive 15.0 % of the amount of our pre-incentive fee Core FFO that exceeds the hurdle rate. 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 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 Under the Advisory Agreement, we will pay to the Adviser a capital gain-based incentive fee that will be calculated and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement). In determining the capital gain fee, we will calculate aggregate realized capital gains and aggregate realized capital losses for the applicable time period. For this purpose, aggregate realized capital gains and losses, if any, equals the realized gain or loss calculated by the difference between the sales price of the property, less any costs to sell the property and the current gross value of the property (equal to the property’s original acquisition price plus any subsequent non-reimbursed capital improvements) of the disposed property. At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0 % of such amount. No capital gain fee was recognized during the three months ended March 31, 2022 or 2021. 9 Table of Contents Termination Fee The Advisory Agreement includes a termination fee clause whereby, in the event of our termination of the agreement without cause (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to two times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24 -month period prior to such termination. A termination fee is also payable if the Adviser terminates the Advisory Agreement after we have defaulted and applicable cure periods have expired. The Advisory Agreement may also be terminated for cause by us (with 30 days’ prior written notice and the vote of at least two-thirds of our independent directors), with no termination fee payable. Cause is defined in the agreement to include if the Adviser breaches any material provisions thereof, the bankruptcy or insolvency of the Adviser, dissolution of the Adviser and fraud or misappropriation of funds. Administration Agreement Under the terms of the Administration Agreement, we pay separately for our allocable portion of the Administrator’s overhead expenses in performing its obligations to us including, but not limited to, rent and our allocable portion of the salaries and benefits expenses of our Administrator’s employees, including, but not limited to, our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel and secretary), and their respective staffs. Our allocable portion of the Administrator’s expenses are generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements. 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 months ended March 31, 2022 and 2021, we recorded an administration fee of $ 0.5 million and $ 0.3 million, respectively. Gladstone Securities Gladstone Securities, LLC (“Gladstone Securities”), is a privately held broker dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of managers of Gladstone Securities. Mortgage Financing Arrangement Agreement We entered into an agreement with Gladstone Securities, effective June 18, 2013, for it to act as our non-exclusive agent to assist us with arranging mortgage financing for properties we own. In connection with this engagement, Gladstone Securities will, from time to time, continue to solicit the interest of various commercial real estate lenders or recommend to us third party lenders offering credit products or packages that are responsive to our needs. We pay Gladstone Securities a financing fee in connection with the services it provides to us for securing mortgage financing on any of our properties. The amount of these financing fees, which are payable upon closing of the financing, are based on a percentage of the amount of the mortgage, generally ranging from 0.15 % to a maximum of 1.00 % of the mortgage obtained. 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 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. Dealer Manager Agreement On February 20, 2020 we entered into a dealer manager agreement (the “Dealer Manager Agreement”), whereby Gladstone Securities will act as the exclusive dealer manager in connection with our offering (the “Offering”) of up to (i) 20,000,000 shares of 6.00 % Series F Cumulative Redeemable Preferred Stock, par value $ 0.001 per share (the “Series F Preferred Stock”), on a “reasonable best efforts” basis (the “Primary Offering”), and (ii) 6,000,000 shares of Series F Preferred Stock pursuant to our distribution reinvestment plan (the “DRIP”) to those holders of the Series F Preferred Stock who participate in such DRIP. 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 10 Table of Contents 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”). No Selling Commissions or Dealer Manager Fee shall be paid with respect to shares sold pursuant to the DRIP. 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 $ 0.1 million to Gladstone Securities during the three months ended March 31, 2022 in connection with the Offering. 3. 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 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 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, 2022 2021 Calculation of basic earnings (loss) per share of common stock: 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 Basic earnings (loss) per share of common stock $ 0.01 $ ( 0.08 ) Calculation of diluted earnings (loss) per share of common stock: 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 Effect of convertible Senior Common Stock (2) — — Denominator for diluted weighted average shares of common stock (2) 37,902,653 35,714,107 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 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. 11 Table of Contents 4. Real Estate and Intangible Assets Real Estate 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 Real estate: Land (1) $ 150,589 $ 149,773 Building and improvements 1,019,020 1,004,362 Tenant improvements 71,319 71,123 Accumulated depreciation ( 276,612 ) ( 266,672 ) Real estate, net $ 964,316 $ 958,586 (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 $ 9.9 million and $ 10.7 million for the three months ended March 31, 2022 and 2021, respectively. Acquisitions 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): 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 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 Land $ 816 $ 258 Building 10,250 8,759 Tenant Improvements 196 88 In-place Leases 847 817 Leasing Costs 525 803 Customer Relationships 567 294 Above Market Leases 279 127 Below Market Leases ( 17 ) (1) — Total Purchase Price $ 13,463 $ 11,146 (1) This amount includes $ 17 of prepaid rent included in Other liabilities on the condensed consolidated balance sheets. 12 Table of Contents Future Lease Payments 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 Nine Months Ending 2022 $ 88,866 2023 110,944 2024 104,954 2025 101,197 2026 92,659 2027 74,431 Thereafter 284,547 $ 857,598 In accordance with the lease terms, substantially all operating expenses are required to be paid by the tenant directly, or reimbursed to us from the tenant; however, we would be required to pay operating expenses on the respective properties in the event the tenants fail to pay them. Lease Revenue Reconciliation 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) Lease revenue reconciliation 2022 2021 $ Change % Change Fixed lease payments $ 31,332 $ 30,757 $ 575 1.9 % Variable lease payments 4,199 3,920 279 7.1 % $ 35,531 $ 34,677 $ 854 2.5 % 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 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 In-place leases $ 106,738 $ ( 64,497 ) $ 105,891 $ ( 62,604 ) Leasing costs 82,974 ( 45,477 ) 81,487 ( 43,982 ) Customer relationships 72,489 ( 39,572 ) 71,922 ( 38,220 ) $ 262,201 $ ( 149,546 ) $ 259,300 $ ( 144,806 ) Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion Above market leases $ 15,817 $ ( 11,718 ) $ 15,538 $ ( 11,520 ) 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 $ 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. 13 Table of Contents 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 In-place leases 10.7 14.2 Leasing costs 10.7 14.2 Customer relationships 16.1 19.2 Above market leases 12.7 14.2 Below market leases 7.1 0.0 All intangible assets & liabilities 11.9 15.4 5. Real Estate Dispositions, Held for Sale and Impairment Charges Real Estate Dispositions 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, 2021 Operating revenue $ 233 Operating expense 113 Other expense, net ( 1,622 ) (1) (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 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 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. Future impairment losses may result, and could be significant, should market conditions deteriorate in the markets in which we hold our assets or should we be unable to secure leases at terms that are favorable to us, which could impact the estimated cash flow of our properties over the period in which we plan to hold our properties. Additionally, changes in management’s decisions to either own and lease long-term or sell a particular asset will have an impact on this analysis. 14 Table of Contents 6. Mortgage Notes Payable and 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 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 March 31, 2022 March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2022 Mortgage and other secured loans: Fixed rate mortgage loans 61 $ 433,253 $ 436,530 (1) (2) Variable rate mortgage loans 6 16,153 16,338 (3) (2) Premiums and discounts, net - ( 117 ) ( 130 ) N/A N/A Deferred financing costs, mortgage loans, net - ( 2,569 ) ( 2,794 ) N/A N/A Total mortgage notes payable, net 67 $ 446,720 $ 449,944 (4) Variable rate revolving credit facility 62 (6) $ 34,550 $ 33,550 LIBOR + 1.90 % 7/2/2023 Total revolver 62 $ 34,550 $ 33,550 Variable rate term loan facility A - (6) $ 160,000 $ 160,000 LIBOR + 1.85 % 7/2/2024 Variable rate term loan facility B - (6) 65,000 65,000 LIBOR + 2.00 % 2/11/2026 Deferred financing costs, term loan facility - ( 887 ) ( 968 ) N/A N/A Total term loan, net N/A $ 224,113 $ 224,032 Total mortgage notes payable and credit facility 129 $ 705,383 $ 707,526 (5) (1) Interest rates on our fixed rate mortgage notes payable vary from 2.80 % to 6.63 %. (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 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 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 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 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. 15 Table of Contents 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 Nine Months Ending December 31, 2022 $ 101,744 2023 72,676 2024 45,915 2025 38,089 2026 43,228 2027 68,758 Thereafter 78,996 Total $ 449,406 (1) (1) This figure does not include $( 0.1 ) million of premiums and (discounts), net, and $ 2.6 million of deferred financing costs, which are reflected in mortgage notes payable, net on the condensed 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. Interest Rate Cap and Interest Rate Swap Agreements We have entered into interest rate cap agreements that cap the interest rate on certain of our variable-rate debt and we have assumed or entered into interest rate swap agreements in which we hedged our exposure to variable interest rates by agreeing to pay fixed interest rates to our respective counterparty. We have adopted the fair value measurement provisions for our financial instruments recorded at fair value. The fair value guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. 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 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. We record changes in the fair value of the interest rate cap agreements quarterly based on the current market valuations at quarter end. 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 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 $ 1,228 (1) $ 233,557 $ 1,950 $ 233,632 $ 324 (1) We have entered into various interest rate cap agreements on 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 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 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 16 Table of Contents 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 $ 72,919 $ 2,700 $ ( 432 ) $ 73,212 $ 841 $ ( 1,217 ) The following table presents the impact of our derivative instruments in the condensed consolidated financial statements (dollars in thousands): Amount of gain recognized in Comprehensive Income Three Months Ended March 31, 2022 2021 Derivatives in cash flow hedging relationships Interest rate caps $ 1,624 $ 55 Interest rate swaps 2,643 2,369 Total $ 4,267 $ 2,424 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 March 31, 2022 December 31, 2021 Interest rate caps Other assets $ 1,950 $ 324 Interest rate swaps Other assets 2,700 841 Interest rate swaps Other liabilities ( 432 ) ( 1,217 ) Total derivative liabilities, net $ 4,218 $ ( 52 ) 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. The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.” Credit Facility On July 2, 2019, we amended, extended and upsized our Credit Facility, expanding Term Loan A from $ 75.0 million to $ 160.0 million, and increased our Revolver from $ 85.0 million to $ 100.0 million. Term Loan A has a maturity date of July 2, 2024, and the Revolver has a maturity date of July 2, 2023. The interest rate for the Credit Facility is equal to LIBOR plus a spread ranging from 125 to 215 basis points, depending on our leverage. 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. The Credit Facility’s bank syndicate is comprised of KeyBank, Fifth Third Bank, U.S. 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. 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 our 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 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. 17 Table of Contents 7. Commitments and Contingencies Ground Leases We are obligated as lessee under four ground leases. 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 Nine Months Ending December 31, 2022 $ 368 2023 492 2024 493 2025 494 2026 498 2027 506 Thereafter 6,301 Total anticipated lease payments $ 9,152 Less: amount representing interest ( 3,692 ) Present value of lease payments $ 5,460 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. Our ground leases have a weighted average remaining lease term of 19.1 years and a weighted average discount rate of 5.32 %. 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. 8. Equity and Mezzanine Equity Stockholders’ Equity The following table summarizes the changes in our equity for the three months ended March 31, 2022 and 2021 (in thousands): 18 Table of Contents For the three months ended March 31, 2022 2021 Senior Common Stock Balance, beginning of period $ 1 $ 1 Issuance of senior common stock, net — — Balance, end of period $ 1 $ 1 Common Stock Balance, beginning of period $ 37 $ 35 Issuance of common stock, net 1 1 Balance, end of period $ 38 $ 36 Series F Preferred Stock Balance, beginning of period $ — $ — Issuance of Series F preferred stock, net — — Redemption of Series F preferred stock, net — — Balance, end of period $ — $ — Additional Paid in Capital Balance, beginning of period $ 671,134 $ 626,533 Issuance of common stock and Series F preferred stock, net 21,749 11,312 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 ) Balance, end of period $ 692,795 $ 639,053 Accumulated Other Comprehensive Income Balance, beginning of period $ ( 1,346 ) $ ( 4,345 ) Comprehensive income 4,267 2,424 Balance, end of period $ 2,921 $ ( 1,921 ) Distributions in Excess of Accumulated Earnings Balance, beginning of period $ ( 468,523 ) $ ( 409,041 ) Distributions declared to common, senior common, and preferred stockholders ( 17,354 ) ( 16,460 ) Redemption of Series F preferred stock, net ( 5 ) — Net income attributable to the Company 3,389 79 Balance, end of period $ ( 482,493 ) $ ( 425,422 ) Total Stockholders' Equity Balance, beginning of period $ 201,303 $ 213,183 Issuance of common stock and Series F preferred stock, net 21,750 11,313 Redemption of OP Units — 4,812 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 Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership ( 143 ) ( 3,604 ) Net income attributable to the Company 3,389 79 Balance, end of period $ 213,262 $ 211,747 Non-Controlling Interest Balance, beginning of period $ 1,259 $ 2,854 Distributions declared to Non-controlling OP Unit holders ( 96 ) ( 189 ) Redemptions of OP Units — ( 4,812 ) Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership 143 3,604 Net loss attributable to OP units held by Non-controlling OP Unitholders 2 ( 41 ) Balance, end of period $ 1,308 $ 1,416 Total Equity $ 214,570 $ 213,163 19 Table of Contents Distributions We paid the following distributions per share for the three months ended March 31, 2022 and 2021: For the three months ended March 31, 2022 2021 Common Stock and Non-controlling OP Units $ 0.37620 $ 0.37545 Senior Common Stock 0.2625 0.2625 Series D Preferred Stock — (1) 0.4374999 Series E Preferred Stock 0.414063 0.414063 Series F Preferred Stock 0.375 0.375 Series G Preferred Stock 0.375 (2) — (1) We redeemed all outstanding shares of our Series D Preferred Stock on June 30, 2021. (2) Our shares of Series G Preferred Stock were issued on June 28, 2021. Recent Activity Common Stock ATM Program 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. Baird & Co. Incorporated (“Baird”), Goldman Sachs & Co. LLC (“Goldman Sachs”), Stifel, Nicolaus & Company, Incorporated (“Stifel”), BTIG, LLC, and Fifth Third Securities, Inc. (“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 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. All other change in control situations would require input from our Board of Directors. In addition, our Series E Preferred Stock and Series G Preferred Stock are redeemable at the option of the applicable shareholder in the event a delisting event occurs. We will periodically evaluate the likelihood that a delisting event or change of control 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%, or a delisting event, is remote. Universal Shelf Registration Statements On January 11, 2019, we filed a universal registration statement on Form S-3, File No. 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 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 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, 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. 20 Table of Contents Series F Preferred Stock On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary (i) setting forth the rights, preferences and terms of the Series F Preferred Stock and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series F Preferred Stock. The reclassification decreased the number of shares classified as common stock from 86,290,000 shares immediately prior to the reclassification to 60,290,000 shares immediately after the reclassification. We sold 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 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 March 31, 2022 and December 31, 2021, there were 256,994 and 256,994 outstanding OP Units held by Non-controlling OP Unitholders, respectively. 9. Subsequent Events Distributions 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 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 Senior Common Stock Distributions Payable to the Holders of Record During the Month of: Payment Date Distribution per Share April May 6, 2022 $ 0.0875 May June 6, 2022 0.0875 June July 6, 2022 0.0875 $ 0.2625 Series F Preferred Stock Distributions Record Date Payment Date Distribution per Share April 28, 2022 May 6, 2022 $ 0.125 May 27, 2022 June 6, 2022 0.125 June 29, 2022 July 6, 2022 0.125 $ 0.375 21 Table of Contents Equity Activity 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 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 %. 22 Table of Contents