What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-07 compared with 2022-08-01 · 155 added, 148 removed, 381 unchanged (44% of the section changed)

16 unchanged sentences

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

As of August 1, 2022:

As of November 7, 2022:

• we owned 137 properties totaling 17.2 million square feet of rentable space, located in 27 states;

4 unchanged sentences

Since the onset of the COVID-19 pandemic in March 2020, authorities throughout the United States and the world have implemented widespread measures attempting to contain its spread and impact, such as travel restrictions, quarantines, the promotion of social distancing and limitations on business activity.

Generally, year to date 2022 has seen the lifting of certain restrictive measures that were implemented during 2020 and 2021.

Generally, year to date 2022 has seen the lifting of most restrictive measures that were implemented during 2020 and 2021.

These measures, and the pandemic generally, have caused significant national and global economic disruption, including disrupted business operations, including those of some of our tenants, and continue to have an adverse effect on demand for office space in the short term, including office utilization rates.

Economic recovery in the United States and various other regions of the world has continued, but may be threatened by the continued adverse effects of COVID-19 and more significantly by continuing inflationary conditions, rising interest rates and the impact of ongoing or escalated geopolitical tensions and conflict.

Economic recovery in the United States and various other regions of the world has continued, but may be threatened by the further adverse effects of COVID-19 and more significantly by continuing inflationary conditions, rising interest rates and the impact of ongoing or escalated geopolitical tensions and conflict.

The demand for industrial space has remained strong due to the continuing growth of e-commerce and reshoring of manufacturing operations, but appears to be only partially counterbalancing the adverse effects of COVID-19 on the commercial real estate industry.

8 unchanged sentences

Global recessionary conditions may occur over the next 24 months caused in part by inflation, the ongoing COVID-19 pandemic, and geopolitical conditions, although the actual timeline, impact and duration are unknown.

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

From a more macro-economic perspective, there continue to be significant uncertainties associated with the current economic environment and increasing probability of near-term recession.

Impact of COVID-19 on Our Business

The extent to which the COVID-19 pandemic and subsequent inflationary pressures and supply chain disruption may impact our business, financial condition, liquidity, results of operations, funds from operations or prospects will depend on numerous evolving factors that we are not able to predict at this time, including the impact on economic activity from the pandemic (such as the effect on market rental rates and commercial real estate values) and actions taken in response;

the effect on our tenants and their businesses;

the ability of our tenants to make their rental payments;

any closures of our tenants’ properties;

and our ability to secure debt financing, service future debt obligations or pay distributions to our stockholders.

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

As of August 1, 2022, we have collected 100% of all outstanding rent collections for calendar year 2021 and the first half of 2022.

In the past, we have received rent modification requests from our tenants, and we may receive additional requests in the future.

There are no outstanding COVID-19 related rent modifications in place.

We believe we currently have adequate liquidity in the near term, and we believe the availability on our Credit Facility (defined in “Other Business Environment Considerations” below) is sufficient to cover all near-term debt obligations and operating expenses and to continue our industrial growth strategy.

We are in compliance with all of our debt covenants.

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

In addition, on February 11, 2021, we added a new $65.0 million term loan component.

We have had numerous conversations with lenders, and credit continues to be available for well capitalized borrowers.

We continue to monitor our portfolio and intend to maintain a reasonably conservative liquidity position for the foreseeable future.

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

While we are unable to determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic, will have on our business, financial condition, liquidity, results of operations, funds from operations or prospects, we

believe that it is important to share where we stand today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 continues.

Other Business Environment Considerations

The short-term and long-term economic implications are unknown, in relation to recent world events, including inflation, supply chain disruptions, labor shortages, rapidly rising interest rates, the ongoing COVID-19 pandemic and associated government response in addition to any subsequent shift in policy, geopolitical conditions, new regulations or the long-term impact of social and infrastructure spending and tax reform in the U.S.

The short-term and long-term economic implications are unknown, in relation to recent world events, including inflation, supply chain disruptions, labor shortages, rapidly rising interest rates, long term impact of the COVID-19 pandemic and associated government response in addition to any subsequent shift in policy, geopolitical conditions, new regulations or the long-term impact of social and infrastructure spending and tax reform in the U.S.

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

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

All of our variable rate debt is based upon one-month London Interbank Offered Rate (“LIBOR”), although LIBOR is currently anticipated to be phased out by June 2023.

LIBOR is expected to transition to a new standard rate, Secured Overnight Financing Rate (“SOFR”), which will incorporate repo data collected from multiple data sets.

The majority of our variable rate debt is based upon the Secured Overnight Financing Rate (“SOFR”), although we have some variable rate mortgages based on the one-month London Interbank Offered Rate (“LIBOR”), which include fallback language providing a mechanism for the parties to negotiate a new reference interest rate in the event that LIBOR ceases to exist.

LIBOR is currently anticipated to be phased out by June 2023 and is expected to transition to SOFR, which incorporates repo data collected from multiple data sets.

The intent is to adjust the SOFR to minimize differences between the interest that a borrower would be paying using LIBOR versus what it will be paying using SOFR.

2 unchanged sentences

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

Currently, we have seven partially vacant buildings and two fully vacant buildings.

Our available vacant space at June 30, 2022 represents 2.7% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $4.2 million .

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

There are no outstanding COVID-19 related rent modifications in place.

Our available vacant space at September 30, 2022 represents 3.1% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $3.8 million .

We continue to actively seek new tenants for these properties.

We believe our lease expiration schedule for the remainder of 2 022 is quite manageable, as it equates to only 4.3% of our lease revenue at June 30, 2022 .

Property acquisitions since the beginning of 2019 have totaled nearly $410.0 million and all transactions were industrial in nature, with a weighted average lease term of 12.6 years and a current weighted average lease term today of 10.5 years.

We believe our lease expiration schedule for the remainder of 2 022 is quite manageable, as it equates to only 2.7% of our lease revenue at September 30, 2022 .

Property acquisitions since the beginning of 2019 have totaled $455.4 million and all transactions were industrial in nature, with a weighted average lease term of 12.9 years and a current weighted average lease term today of 10.8 years.

Our ability to make new investments is highly dependent upon our ability to procure financing.

Our principal sources of financing generally include the issuance of equity securities, long-term mortgage loans secured by properties, borrowings under our $100.0 million senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“KeyBank”), which matures in July 2023, our $160.0 million term loan facility (“Term Loan A”), which matures in July 2024 and our $65.0 million term loan facility (“Term Loan B”), which matures in February 2026.

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

Our principal sources of financing generally include the issuance of equity securities, long-term mortgage loans secured by properties, borrowings under our $125.0 million senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“KeyBank”), which matures in August 2026, our $160.0 million term loan facility (“Term Loan A”), which matures in August 2027, our $60.0 million term loan facility (“Term Loan B”), which matures in February 2026, and our $150.0 million term loan facility (“Term Loan C”) which matures in February 2028.

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

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

Recent Developments

Sale Activity

During the nine months ended September 30, 2022 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, and use the sales proceeds to acquire properties in our target, secondary growth markets, or pay down outstanding debt.

During the nine months ended September 30, 2022, we sold three non-core properties, located in Jupiter, Florida, Parsippany, New Jersey, and Boston Heights, Ohio.

Aggregate Square Footage Sold Aggregate Sales Price Aggregate Sales Costs Aggregate Impairment Charge for the Nine Months Ended September 30, 2022 Aggregate Gain on Sale of Real Estate, net

145,111 $ 28,000 $ 1,153 $ 1,374 $ 8,902

On October 28, 2022, we sold one of our properties in Columbus, Ohio for $2.3 million, resulting in a gain on sale, net, of $0.02 million.

Acquisition Activity

During the six months ended June 30, 2022, we acquired seven industrial properties located in Wilkesboro, North Carolina, Oklahoma City, Oklahoma, Cleveland, Ohio, Fort Payne, Alabama, and Wilmington, North Carolina, which are summarized below (dollars in thousands):

During the nine months ended September 30, 2022, we acquired 11 industrial properties located in Wilkesboro, North Carolina, Oklahoma City, Oklahoma, Cleveland, Ohio, Fort Payne, Alabama, Wilmington, North Carolina, Bridgeton, New Jersey, Vineland, New Jersey, and Jacksonville, Florida which are summarized below (dollars in thousands):

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

1,105,006 13.8 years $ 98,276 $ 776 $ 6,722 $ 41,313

On October 26, 2022, we purchased a 68,674 square foot industrial property in Denver, Colorado for $12.0 million.

This property is fully leased to 1.00 tenant on a 20.0 year lease.

Leasing Activity

During and subsequent to the six months ended June 30, 2022, we executed six leases, which are summarized below (dollars in thousands):

During and subsequent to the nine months ended September 30, 2022, we executed nine leases, which are summarized below (dollars in thousands):

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

501,501 8.1 years $ 5,744 $ 5,670 $ 2,029

On July 22, 2022, we executed a lease for 41,225 square feet of vacant space in our Austin, Texas property for 5.7 years.

During the six months ended June 30, 2022, we had one lease termination, which is detailed below (dollars in thousands):

Aggregate Square Footage Reduced Aggregate Accelerated Rent Aggregate Accelerated Rent Recognized through June 30, 2022

On October 12, 2022, we executed a lease amendment at our Egg Harbor, New Jersey property to extend the lease term an additional 2.0 years.

On October 31, 2022, we executed a lease for 20,682 square feet of vacant space in our Mason, Ohio property for 7.3 years, bringing the property to full occupancy.

During the nine months ended September 30, 2022, we had two lease terminations, which are summarized below (dollars in thousands):

Aggregate Square Footage Reduced Aggregate Accelerated Rent Aggregate Accelerated Rent Recognized through September 30, 2022

216,095 $ 5,888 $ 5,175

Financing Activity

During the six months ended June 30, 2022, we repaid one mortgage, collateralized by four properties, which is detailed in the table below (dollars in thousands):

Fixed Rate Debt Repaid Interest Rate on Fixed Rate Debt Repaid

During the nine months ended September 30, 2022, we repaid 13 mortgages, collateralized by 27 properties, which are summarized in the table below (dollars in thousands):

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

$ 97,843 4.75 %

On July 5, 2022, we repaid $3.6 million in fixed rate mortgage debt, collateralized by one property, at an interest rate of 5.05%.

On August 1, 2022, we repaid $6.6 million in fixed rate mortgage debt, collateralized by one property, at an interest rate of 4.53%.

During the six months ended June 30, 2022, we issued three mortgages, collateralized by seven properties, which is summarized in the table below (dollars in thousands):

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

$ 30,336 LIBOR/SOFR + 2.50% (1)

(1) As of September 30, 2022, Secured Overnight Financing Rate (“SOFR”) was approximately 2.98%.

During the nine months ended September 30, 2022, we issued five mortgages, collateralized by 10 properties, which are summarized in the table below (dollars in thousands):

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

2 unchanged sentences

The interest rate is fixed at 4.00%.

We issued $10.0 million of fixed rate debt in connection with the three-property acquisition on May 12, 2022 with a maturity date of June 1, 2032.

We issued $10.0 million of fixed rate debt with a maturity date of June 1, 2032, in connection with the three-property acquisition on May 12, 2022.

The interest rate is fixed at 3.40%.

We issued $16.9 million of fixed rate debt with a maturity date of August 1, 2027, in connection with the two-property acquisition on August 5, 2022.

The interest rate is fixed at 4.95%.

We issued $4.4 million of swapped to fixed rate debt with a maturity date of September 16, 2029, in connection with the property acquisition on September 16, 2022.

The interest rate is swapped to a fixed rate of 5.39%.

Variable Rate Debt Issued Interest Rate on Variable Rate Debt

1 unchanged sentence

(1) We issued $15.0 million of variable rate debt in connection with refinancing mortgage debt at two properties with a new maturity date of April 27, 2024 and interest rate of SOFR plus 2.50%.

During the six months ended June 30, 2022, we extended the maturity date of two mortgages, collateralized by four properties, which is summarized in the table below (dollars in thousands):

Fixed Rate Debt Extended Interest Rate on Fixed Rate Debt Extended Extension Term

On October 26, 2022, we issued $6.6 million of swapped to fixed rate debt in connection with property acquisition on the same date, with a term of 6.9 years and interest rate swapped to 5.90%.

During the nine months ended September 30, 2022, we extended the maturity date of three mortgages, collateralized by five properties, which is summarized in the table below (dollars in thousands):

Aggregate Fixed Rate Debt Extended Weighted Average Interest Rate on Fixed Rate Debt Extended Extension Term

$ 14,633 5.41 % 1.0 year

1 unchanged sentence

$ 7,059 LIBOR + 2.75% 1.0 year

On July 27, 2022, we extended the maturity date of $11.0 million in fixed rate mortgage debt, collateralized by one property, for 1.0 year at an interest rate of 5.50%.

On August 18, 2022, we amended, extended and upsized our Credit Facility, increasing our Revolver from $100.0 million to $120.0 million (and its term to August 2026), adding the new $140.0 million Term Loan C, decreasing the principal balance of Term Loan B to $60.0 million and extending the maturity date of Term Loan A to August 2027.

Term Loan C has a maturity date of February 18, 2028 and a SOFR spread ranging from 125 to 195 basis points, depending on our leverage.

On September 27, 2022 we further increased the Revolver to $125.0 million and Term Loan C to $150.0 million, as permitted under the terms of the Credit Facility.

We entered into multiple interest rate swap agreements on Term Loan C, which swap the interest rate to fixed rates from 3.15% to 3.75%.

We incurred fees of approximately $4.2 million in connection with extending and upsizing our Credit Facility.

As of September 30, 2022, there was $150.0 million outstanding under Term Loan C, and we used all net proceeds to repay all outstanding borrowings on the Revolver, pay off mortgage debt, and fund acquisitions.

The Credit Facility’s current bank syndicate is comprised of KeyBank, Fifth Third Bank, The Huntington National Bank, Bank of America, Synovus Bank, United Bank, First Financial Bank, and S&T Bank.

Equity Activities

Common Stock ATM Program

During the six months ended June 30, 2022, we sold 1.5 million shares of common stock, raising $31.7 million in net proceeds under our At-the-Market Equity Offering Sales Agreements (the “Common Stock Sales Agreement”) with sales agents Robert W.

During the nine months ended September 30, 2022, we sold 2.0 million shares of common stock, raising $40.6 million in net proceeds under our At-the-Market Equity Offering Sales Agreements (the “Common Stock Sales Agreement”) with sales agents Robert W.

Incorporated, Goldman Sachs & Co.

1 unchanged sentence

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”), dated December 3, 2019.

1 to our Common Stock Sales Agreement.

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 June 30, 2022, we had remaining capacity to sell up to $35.5 million of common stock pursuant to the Common Stock ATM Program under the 2020 Universal Shelf (as defined below).

Universal Shelf Registration Statements

As of September 30, 2022, we had remaining capacity to sell up to $26.5 million of common stock pursuant to the Common Stock ATM Program under the 2020 Universal Shelf (as defined below).

Universal Shelf Registration Statement

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

3 unchanged sentences

Of the $800.0 million of available capacity under our 2020 Universal Shelf, approximately $636.5 million is reserved for the sale of our 6.00% Series F Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series F Preferred Stock”) and $63.0 million is reserved for our Common Stock ATM Program.

As of June 30, 2022, we had the ability to issue up to $658.7 million of securities under the 2020 Universal Shelf.

As of September 30, 2022, we had the ability to issue up to $648.6 million of securities under the 2020 Universal Shelf.

Series F Preferred Stock

1 unchanged sentence

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 126,028 shares of our Series F Preferred Stock, raising $2.9 million in net proceeds during the three and six months ended June 30, 2022.

As of June 30, 2022, we had remaining capacity to sell up to $622.6 million of Series F Preferred Stock.

We sold 164,400 shares of our Series F Preferred Stock, raising $3.7 million in net proceeds during the three and nine months ended September 30, 2022.

As of September 30, 2022, we had remaining capacity to sell up to $621.6 million of Series F Preferred Stock.

Non-controlling Interest in Operating Partnership

As of June 30, 2022 and December 31, 2021, we owned approximately 99.3% and 99.3%, re spectively, of the outstanding operating partnership units in the Operating Partnership (“OP Units”).

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

As of June 30, 2022 and December 31, 2021, there were 256,994 and 256,994 outstanding OP Units held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”), respectively.

As of September 30, 2022 and December 31, 2021, we owned approximately 99.0% and 99.3%, re spectively, of the outstanding operating partnership units in the Operating Partnership (“OP Units”).

On September 20, 2022 , we issued 134,474 OP Units as partial consideration to acquire our 49,375 square foot property located in Fort Payne, Alabama for $5.6 million .

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

As of September 30, 2022 and December 31, 2021, there were 391,468 and 256,994 outstanding OP Units held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”), respectively.

Diversity of Our Portfolio

1 unchanged sentence

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

For the six months ended June 30, 2022, our largest tenant comprised only 4.3% of total lease revenue.

The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

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

For the nine months ended September 30, 2022, our largest tenant comprised only 3.9% of total lease revenue.

The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands):

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

2022 2021 2022 2021

1 unchanged sentence

Telecommunications $ 5,859 14.7 $ 5,815 16.7 $ 17,216 15.6 $ 16,978 16.8

Healthcare 4,075 11.2 3,686 11.0 9,275 12.9 5,453 8.0

Automotive 4,815 12.1 3,392 9.9 14,085 12.6 8,845 8.6

Diversified/Conglomerate Services 4,248 10.7 4,631 13.5 13,338 11.9 14,148 13.8

Buildings and Real Estate 2,315 6.4 2,289 6.9 5,419 7.5 3,882 5.7

Diversified/Conglomerate Manufacturing 2,795 7.7 1,883 5.6 5,218 7.3 5,117 7.5

Healthcare 4,025 10.1 3,786 11.0 12,084 10.8 11,720 11.4

Banking 5,726 14.4 2,597 7.6 10,941 9.8 7,713 7.5

Diversified/Conglomerate Manufacturing 2,779 7.0 1,866 5.4 8,198 7.3 5,748 5.6

Buildings and Real Estate 2,317 5.8 2,331 6.8 6,976 6.2 6,968 6.8

Personal, Food & Miscellaneous Services 1,809 4.5 1,540 4.5 4,906 4.4 5,552 5.4

Chemicals, Plastics & Rubber 1,206 3.3 1,204 3.6 2,787 3.9 2,953 4.3

Information Technology 1,109 3.0 1,685 5.0 2,411 3.4 2,292 3.4

Beverage, Food & Tobacco 1,430 3.6 1,497 4.4 4,216 3.8 4,450 4.3

Personal & Non-Durable Consumer Products 1,669 4.2 617 1.8 3,634 3.3 1,852 1.8

Chemicals, Plastics & Rubber 1,208 3.0 1,208 3.5 3,619 3.2 3,499 3.4

Machinery 995 2.5 970 2.8 2,944 2.6 2,991 2.9

Containers, Packaging & Glass 971 2.4 777 2.3 2,850 2.6 1,985 1.9

Information Technology 669 1.7 1,673 4.9 2,824 2.5 5,011 4.9

Childcare 573 1.4 573 1.7 1,718 1.5 1,718 1.7

Printing & Publishing 229 0.6 571 1.7 688 0.6 1,439 1.4

Electronics 179 0.5 219 0.7 406 0.6 402 0.6

Education 204 0.5 203 0.6 611 0.5 606 0.6

Electronics 185 0.5 166 0.5 546 0.5 796 0.8

Home & Office Furnishings 123 0.3 121 0.4 370 0.3 362 0.4

Total $ 39,834 100.0 % $ 34,334 100.0 % $ 111,764 100.0 % $ 102,381 100.0 %

The tables below reflect the breakdown of total lease revenue by state for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

State Lease Revenue for the three months ended June 30, 2022 Percentage of Lease Revenue Number of Leases for the three months ended June 30, 2022 Lease Revenue for the three months ended June 30, 2021 Percentage of Lease Revenue Number of Leases for the three months ended June 30, 2021

The tables below reflect the breakdown of total lease revenue by state for the three and nine months ended September 30, 2022 and 2021 (dollars in thousands):

State Lease Revenue for the three months ended September 30, 2022 Percentage of Lease Revenue Number of Leases for the three months ended September 30, 2022 Lease Revenue for the three months ended September 30, 2021 Percentage of Lease Revenue Number of Leases for the three months ended September 30, 2021

Texas $ 5,452 13.7 % 15 $ 3,801 11.1 % 15

New Jersey 4,271 10.7 4 756 2.2 4

Florida 3,775 9.5 9 4,191 12.2 10

4 unchanged sentences

Alabama 1,933 4.9 7 1,634 4.8 5

Michigan 1,608 4.4 6 1,585 4.7 6

South Carolina 1,719 4.3 2 1,408 4.1 2

Utah 1,326 3.6 3 1,937 5.8 4

Michigan 1,608 4.0 6 1,609 4.7 6

All Other States 8,774 22.0 48 9,096 26.4 48

Total $ 39,834 100.0 % 136 $ 34,334 100.0 % 131

State Lease Revenue for the six months ended June 30, 2022 % of Lease Revenue Number of Leases for the six months ended June 30, 2022 Lease Revenue for the six months ended June 30, 2021 % of Lease Revenue Number of Leases for the six months ended June 30, 2021

State Lease Revenue for the nine months ended September 30, 2022 % of Lease Revenue Number of Leases for the nine months ended September 30, 2022 Lease Revenue for the nine months ended September 30, 2021 % of Lease Revenue Number of Leases for the nine months ended September 30, 2021

Texas $ 15,971 14.3 % 15 $ 11,232 11.0 % 15

4 unchanged sentences

North Carolina 6,354 5.7 10 5,084 5.0 7

New Jersey 5,772 5.2 4 2,259 2.2 4

Alabama 5,254 4.7 7 4,911 4.8 5

1 unchanged sentence

South Carolina 4,530 4.2 2 4,162 4.1 2

Utah 2,648 3.8 3 3,827 5.6 4

All Other States 26,405 23.4 48 26,494 25.8 48

6 unchanged sentences

Terry Lee Brubaker, our vice chairman and chief operating officer, is also the vice chairman and chief operating officer of our Adviser and Administrator and assistant secretary of our Adviser.

Arthur “Buzz” Cooper, our current sole president (as Mr.

Bob Cutlip, our previous other co-president with Mr.

Cooper, retired on June 30, 2022), also serves as executive vice president of commercial and industrial real estate of our Adviser.

Arthur “Buzz” Cooper, our president, also serves as executive vice president of commercial and industrial real estate of our Adviser.

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

27 unchanged sentences

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

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

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

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

5 unchanged sentences

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.

Core FFO (as defined in the Advisory Agreement) is GAAP net (loss) income (attributable) 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 (loss) income (attributable) available to common stockholders for the period, and one-time events pursuant to changes in GAAP.

The Incentive Fee is used by the Adviser primarily for performance-based compensation related to certain of its employees.

4 unchanged sentences

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

No capital gain fee was recognized during the three and six months ended June 30, 2022 or 2021.

No capital gain fee was recognized during the three and nine months ended September 30, 2022 or 2021.

Termination Fee

11 unchanged sentences

Securities and Exchange Commission (the “SEC”) on February 15, 2022 (our “2021 Form 10-K”).

There were no material changes to our critical accounting policies or estimates during the six months ended June 30, 2022.

There were no material changes to our critical accounting policies or estimates during the nine months ended September 30, 2022.

Results of Operations

The weighted average yield on our total portfolio, which was 7.6% and 8.0% as of June 30, 2022 and 2021, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements.

The weighted average yield on our total portfolio, which was 7.8% and 7.9% as of September 30, 2022 and 2021, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements.

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

A comparison of our operating results for the three and six months ended June 30, 2022 and 2021 is below (dollars in thousands, except per share amounts) :

For the three months ended June 30,

A comparison of our operating results for the three and nine months ended September 30, 2022 and 2021 is below (dollars in thousands, except per share amounts) :

For the three months ended September 30,

2022 2021 $ Change % Change

10 unchanged sentences

Impairment charge 10,718 — 10,718 100.0 %

Total operating expense before incentive fee waiver $ 27,825 $ 25,003 $ 2,822 11.3 %

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

Total operating expenses $ 37,448 $ 25,498 $ 11,950 46.9 %

1 unchanged sentence

Interest expense $ (9,107) $ (6,688) $ (2,419) 36.2 %

Gain on sale of real estate, net 8,902 — 8,902 100.0 %

Other income 316 2,350 (2,034) (86.6) %

2 unchanged sentences

Distributions attributable to Series D, E, F, and G preferred stock (2,987) (2,868) (119) 4.1 %

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

Distributions attributable to senior common stock (114) (170) 56 (32.9) %

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (1,509) $ (3,053) $ 1,544 (50.6) %

Net loss attributable to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.04) $ (0.08) $ 0.04 (50.0) %

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders $ (604) $ 1,460 $ (2,064) (141.4) %

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.02) $ 0.04 $ (0.06) (150.0) %

FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 16,976 $ 16,220 $ 756 4.7 %

FFO available to common stockholders and Non-controlling OP Unitholders - diluted (1) $ 17,090 $ 16,390 $ 700 4.3 %

FFO available to common stockholders and Non-controlling OP Unitholders - diluted, as adjusted for comparability (1) $ 15,198 $ 13,456 $ 1,742 12.9 %

FFO per weighted average share of common stock and Non-controlling OP Units - basic (1) $ 0.43 $ 0.44 $ (0.01) (2.3) %

2 unchanged sentences

FFO per weighted average share of common stock and Non-controlling OP Units - diluted, as adjusted for comparability (1) $ 0.43 $ 0.44

$ (0.01) (2.3) %

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

For the six months ended June 30,

For the nine months ended September 30,

2022 2021 $ Change % Change

15 unchanged sentences

Interest expense $ (22,813) $ (20,338) $ (2,475) 12.2 %

Loss on sale of real estate, net — (882) 882 (100.0) %

Gain (loss) on sale of real estate, net 8,902 (882) 9,784 (1,109.3) %

Other income 538 2,884 (2,346) (81.3) %

19 unchanged sentences

Operating Revenues

For the three months ended June 30,

For the three months ended September 30,

(Dollars in Thousands)

4 unchanged sentences

$ 39,834 $ 34,334 $ 5,500 16.0 %

For the six months ended June 30,

For the nine months ended September 30,

(Dollars in Thousands)

5 unchanged sentences

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

Lease revenues from same store properties increased for the three months ended June 30, 2022, primarily due to accelerated rent recognized during the three months ended June 30, 2022 from one tenant that terminated their lease early.

Lease revenues from same store properties decreased for the six months ended June 30, 2022, primarily due to accelerated rent recognized during the six months ended June 30, 2021 from two tenants that terminated their leases early, partially offset by increased rent from lease amendments executed subsequent to June 30, 2021.

We fully re-leased the space from the two terminations with no downtime.

Lease revenues increased for acquired and disposed of properties for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, because we acquired 16 properties subsequent to June 30, 2021.

This increase was partially offset by a loss of lease revenues from one property we sold subsequent to June 30, 2021.

Lease revenues increased for our properties with vacancy for the three and six months ended June 30, 2022 due to vacant space being leased.

Lease revenues from same store properties increased for the three and nine months ended September 30, 2022, primarily due to income recognized from tenant funded improvement projects, where our tenants used their capital to improve our buildings, partially offset by a decrease in variable lease payments due to a decrease in property operating expenses, and a corresponding decrease in recovery revenue from property operating expenses.

Lease revenues increased for acquired and disposed of properties for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, primarily due to accelerated rent from a lease termination relating to one property we sold, coupled with us acquiring 11 industrial properties during the nine months ended September 30, 2022, partially offset by a loss of revenues from three properties sold during the same period.

Lease revenues increased for our properties with vacancy for the three and nine months ended September 30, 2022 due to vacant space being leased.

Operating Expenses

Depreciation and amortization expense increased for the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, due to an increase in depreciation and amortization expense on the 16 properties acquired subsequent to June 30, 2021.

Depreciation and amortization expense decreased for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021, primarily due to accelerated depreciation and amortization related to two tenants with early lease terminations during the six months ended June 30, 2021, partially offset by an increase in depreciation and amortization expense on the 16 properties we acquired subsequent to June 30, 2021.

For the three months ended June 30,

Depreciation and amortization expense increased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, due to an increase in depreciation and amortization expense on the 11 industrial properties acquired during the nine months ended September 30, 2022, partially offset by a decrease in depreciation and amortization expense on the three properties sold during the same period.

For the three months ended September 30,

(Dollars in Thousands)

4 unchanged sentences

$ 6,536 $ 6,807 $ (271) (4.0) %

For the six months ended June 30,

For the nine months ended September 30,

(Dollars in Thousands)

5 unchanged sentences

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

The decrease in property operating expenses for same store properties for the three months ended June 30, 2022, from the comparable 2021 period, is a result of reduced real estate tax expense during the period, partially offset by general cost increases due to the inflationary environment during the three months ended June 30, 2022.

The increase in property operating expenses for same store properties for the six months ended June 30, 2022, from the comparable 2021 period, is a result of general cost increases due to the inflationary environment during the six months ended June 30, 2022.

The increase in property operating expenses for acquired and disposed of properties for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, is primarily a result of our 16 property acquisitions subsequent to June 30, 2021, partially offset by the sale of one property subsequent to June 30, 2021.

The decrease in property operating expenses for properties with vacancy for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, is a result of reduced real estate tax expense during the period, partially offset by general cost increases due to the inflationary environment during the three and six months ended June 30, 2022.

The base management fee paid to the Adviser increased for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, due to an increase in Gross Tangible Real Estate over the three and six months ended June 30, 2022 as compared to the increase in Gross Tangible Real Estate during the three and six months ended June 30, 2021.

The decrease in property operating expenses for same store properties for the three and nine months ended September 30, 2022, from the comparable 2021 period, is a result of

reduced real estate tax expense during the period, partially offset by general cost increases due to the inflationary environment during the three and nine months ended September 30, 2022.

The decrease in property operating expenses for acquired and disposed of properties for the three months ended September 30, 2022, from the comparable 2021 period, is a result of a decrease in property operating expenses in relation to three property sales during the three months ended September 30, 2022.

The increase in property operating expenses for acquired and disposed of properties for the nine months ended September 30, 2022, from the comparable 2021 period, is a result of an increase in property operating expenses for the 11 industrial properties acquired during the nine months ended September 30, 2022.

The decrease in property operating expenses for properties with vacancy for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, is a result of reduced real estate tax expense during the period, partially offset by general cost increases due to the inflationary environment during the same period.

The base management fee paid to the Adviser increased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, due to an increase in Gross Tangible Real Estate over the three and nine months ended September 30, 2022 as compared to a smaller increase in Gross Tangible Real Estate during the three and nine months ended September 30, 2021.

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

The incentive fee paid to the Adviser increased for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, due to a higher pre-incentive fee Core FFO.

The incentive fee paid to the Adviser increased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, due to a higher pre-incentive fee Core FFO.

The increase in Core FFO is a result of an increase in operating revenues.

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

The administration fee paid to the Administrator increased for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, due to our Administrator incurring greater costs that are allocated to us.

The administration fee paid to the Administrator increased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, due to our Administrator incurring greater costs that are allocated to us.

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

General and administrative expenses decreased for the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, primarily as a result of a decrease in legal costs.

General and administrative expenses increased for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021, primarily as a result of an increase in accounting fees and shareholder related expenses, partially offset by a decrease in legal costs.

General and administrative expenses increased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, primarily as a result of an increase in due diligence expenses for potential acquisition targets that were not completed, partially offset by a decrease in professional fees.

We recorded an impairment charge during the three and nine months ended September 30, 2022 on two properties, as we had determined the carrying value of these properties was in excess of the fair market value, and not recoverable.

Accordingly, we impaired these properties to fair market value.

We did not record an impairment charge during the three and nine months ended September 30, 2021.

Other Income and Expenses

Interest expense increased for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021.

This increase was primarily a result of increased interest costs on variable rate debt, as global interest rates have increased to counteract growing inflation.

We did not sell any properties during the six months ended June 30, 2022, and as a result, incurred no gain or loss.

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

Other income decreased for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, primarily due to a cancelled sale fee we earned during the three and six months ended June 30, 2021.

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

Net loss attributable to common stockholders and Non-controlling OP Unitholders decreased for the three and six months ended June 30, 2022, as compared to the three and six months ended June 30, 2021, primarily due to the increase in operating revenues due to asset acquisition activity during and subsequent to June 30, 2021, partially offset by an increase in interest expense due to higher borrowing costs on variable rate debt due to global interest rate expansion.

Interest expense increased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021.

This increase was primarily a result of increased interest costs on variable rate debt, as global interest rates have increased to counteract growing inflation, coupled with expensed deferred financing fees associated with mortgage repayments, and the Credit Facility amendment.

We sold three non-core office properties during the three and nine months ended September 30, 2022, and as a result, incurred a gain on sale of real estate, net.

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

Other income decreased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, primarily due to a cancelled sale fee we earned during the three and nine months ended September 30, 2021, coupled with income from a legal settlement.

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

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders increased for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, primarily due to the increase in operating revenues due to asset acquisition activity during and subsequent to September 30, 2021, coupled with a gain on sale of real estate, net, from three non-core office property sales, partially offset by an increase in interest expense due to higher borrowing costs on variable rate debt due to global interest rate expansion.

Liquidity and Capital Resources

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

Our available liquidity as of June 30, 2022, was $29.1 million, consisting of approximately $10.7 million in cash and cash equivalents and available borrowing capacity of $18.4 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility increased to $34.6 million as of August 1, 2022.

Our available liquidity as of September 30, 2022, was $69.5 million, consisting of approximately $13.5 million in cash and cash equivalents and available borrowing capacity of $56.0 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility decreased to $35.5 million as of November 7, 2022.

Future Capital Needs

9 unchanged sentences

Equity Capital

During the six months ended June 30, 2022, we raised net proceeds of $31.7 million of common equity under our Common Stock ATM Program at a net weighted average per share price of $20.84.

During the nine months ended September 30, 2022, we raised net proceeds of $40.6 million of common equity under our Common Stock ATM Program at a net weighted average per share price of $20.38.

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

We did not sell any of our Series E Preferred Stock under our Series E Preferred Stock Sales Agreement during the six months ended June 30, 2022.

We raised net proceeds of $2.9 million from sales of our Series F Preferred Stock during the six months ended June 30, 2022.

As of August 1, 2022, we had the ability to raise up to $650.7 million of additional equity capital through the sale and issuance of securities that are registered under the 2020 Universal Shelf, in one or more future public offerings.

Of the $650.7 million of available capacity under our 2020 Universal Shelf, approximately $28.0 million is reserved for additional sales under our Common Stock ATM Program, and approximately $622.2 million is res erved for the sale of our Series F Preferred Stock as of August 1, 2022.

We did not sell any of our Series E Preferred Stock under our Series E Preferred Stock Sales Agreement during the nine months ended September 30, 2022.

We raised net proceeds of $3.7 million from sales of our Series F Preferred Stock during the nine months ended September 30, 2022.

As of November 7, 2022, we had the ability to raise up to $648.3 million of additional equity capital through the sale and issuance of securities that are registered under the 2020 Universal Shelf, in one or more future public offerings.

Of the $648.3 million of available capacity under our 2020 Universal Shelf, approximately $26.5 million is reserved for additional sales under our Common Stock ATM Program, and approximately $621.3 million is res erved for the sale of our Series F Preferred Stock as of November 7, 2022.

We expect to continue to use our Common Stock ATM Program as a source of liquidity for the remainder of 2022.

As of June 30, 2022, we had 54 mortgage notes payable in the aggregate principal amount of $465.8 million, collateralized by a total of 70 properties with a remaining weighted average maturity of 3.7 years.

The weighted-average interest rate on the mortgage notes payable as of June 30, 2022 was 4.18%.

As of September 30, 2022, we had 44 mortgage notes payable in the aggregate principal amount of $370.3 million, collateralized by a total of 50 properties with a remaining weighted average maturity of 4.4 years.

The weighted-average interest rate on the mortgage notes payable as of September 30, 2022 was 4.19%.

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

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

As of June 30, 2022, we had mortgage debt in the aggregate principal amount of $72.9 million payable during the remainder of 2022 and $83.6 million payable during 2023.

The 2022 principal amount payable includes both amortizing principal payments and six balloon principal payments due during the remaining six months of 2022.

As of September 30, 2022, we had mortgage debt in the aggregate principal amount of $16.0 million payable during the remainder of 2022 and $66.1 million payable during 2023.

The 2022 principal amount payable includes both amortizing principal payments and one balloon principal payments due during the remaining three months of 2022.

We anticipate being able to refinance our mortgages that come due during 2022 and 2023 with a combination of new mortgage debt, availability under our Credit Facility and the issuance of additional equity securities.

1 unchanged sentence

Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2022, was $34.6 million, as compared to net cash provided by operating activities of $34.4 million for the six months ended June 30, 2021.

This change was primarily a result of an increase in operating revenues from our 16 property acquisitions completed subsequent to June 30, 2021, partially offset by an increase in interest expense due to higher interest rates on variable rate debt.

Net cash provided by operating activities during the nine months ended September 30, 2022, was $56.9 million, as compared to net cash provided by operating activities of $53.7 million for the nine months ended September 30, 2021.

This change was primarily a result of an increase in operating revenues from our 11 industrial property acquisitions during the nine months ended September 30, 2022 , partially offset by an increase in interest expense due to higher interest rates on variable rate debt.

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

1 unchanged sentence

Investing Activities

Net cash used in investing activities during the six months ended June 30, 2022, was $57.8 million, which primarily consisted of seven property acquisitions, coupled with capital improvements performed at certain of our properties.

Net cash used in investing activities during the six months ended June 30, 2021, was $17.1 million, which primarily consisted of two property acquisitions, coupled with capital improvements performed at certain of our properties, partially offset by proceeds from the sale of two properties.

Net cash used in investing activities during the nine months ended September 30, 2022, was $75.5 million, which primarily consisted of 11 property acquisitions, coupled with capital improvements performed at certain of our properties, partially offset by the sale of three properties.

Net cash used in investing activities during the nine months ended September 30, 2021, was $46.0 million, which primarily consisted of eight property acquisitions, coupled with capital improvements performed at certain of our properties, partially offset by proceeds from the sale of two properties.

Financing Activities

Net cash provided in financing activities during the six months ended June 30, 2022, was $25.3 million, which primarily consisted of the issuance of $35.3 million of common and preferred equity, partially offset by the repayment of $22.0 million of outstanding mortgage debt, and distributions paid to common, senior common and preferred shareholders.

Net cash used in financing activities for the six months ended June 30, 2021, was $14.1 million, which primarily consisted of $10.9 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders, partially offset by $5.5 million in new mortgage borrowings coupled with the issuance of $120.8 million of equity.

Net cash provided in financing activities during the nine months ended September 30, 2022, was $23.1 million, which primarily consisted of the issuance of $45.2 million of common and preferred equity, coupled with a net increase in Credit Facility borrowings of $119.2 million, partially offset by the repayment of $138.9 million of outstanding mortgage debt, and distributions paid to common, senior common and preferred shareholders.

Net cash used in financing activities for the nine months ended September 30, 2021, was $8.6 million, which primarily consisted of $14.3 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders, partially offset by $5.5 million in new mortgage borrowings coupled with the issuance of $130.0 million of equity.

Credit Facility

9 unchanged sentences

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

As of June 30, 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.

As of June 30, 2022, there was $272.0 million outstanding under our Credit Facility at a weighted average interest rate of approximately 3.68% and $19.5 million outstanding under letters of credit at a weighted average interest rate of 1.90%.

As of August 1, 2022, the maximum additional amount we could draw under the Credit Facility was $34.6 million.

We were in compliance with all covenants under the Credit Facility as of June 30, 2022.

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

As of September 30, 2022, there was $60.0 million outstanding under Term Loan B, and we used all net proceeds to repay all outstanding borrowings on the Revolver.

Term Loan C has a maturity date of February 18, 2028 and a SOFR spread ranging from 125 to 195 basis points, depending on our leverage.

On September 27, 2022 we further increased the Revolver to $125.0 million and the Term Loan C to $150.0 million, as permitted under the terms of the Credit Facility.

We entered into multiple interest rate swap agreements on Term Loan C, which swap the interest rate to fixed rates from 3.15% to 3.75%.

We incurred fees of approximately $4.2 million in connection with extending and upsizing our Credit Facility.

The Credit Facility’s current bank syndicate is comprised of KeyBank, Fifth Third Bank, The Huntington National Bank, Bank of America, Synovus Bank, United Bank, First Financial Bank, and S&T Bank.

As of September 30, 2022, there was $377.8 million outstanding under our Credit Facility at a weighted average interest rate of approximately 4.43% and $17.1 million outstanding under letters of credit at a weighted average interest rate of 1.75%.

As of November 7, 2022, the maximum additional amount we could draw under the Credit Facility was $35.5 million.

We were in compliance with all covenants under the Credit Facility as of September 30, 2022.

Contractual Obligations

The following table reflects our material contractual obligations as of June 30, 2022 (in thousands):

The following table reflects our material contractual obligations as of September 30, 2022 (in thousands):

Payments Due by Period

5 unchanged sentences

$ 906,804 $ 116,268 $ 116,079 $ 414,633 $ 259,824

(1) Debt obligations represent borrowings under our Revolver, which represents $47.0 million of the debt obligation due in 2023, our Term Loan A, which represents $160.0 million of the debt obligation due in 2024, our Term Loan B, which represents $65.0 million of the debt obligation due in 2026 and mortgage notes payable that were outstanding as of June 30, 2022.

(1) Debt obligations represent borrowings under our Revolver, which represents $7.8 million of the debt obligation due in 2026, our Term Loan A, which represents $160.0 million of the debt obligation due in 2027, our Term Loan B, which represents $60.0 million of the debt obligation due in 2026, our Term Loan C, which represents $150.0 million of the debt obligation due in 2028 and mortgage notes payable that were outstanding as of September 30, 2022.

This figure does not include $(0.1) million of premiums and (discounts), net and $6.2 million of deferred financing costs, net, which are reflected in mortgage notes payable, net and borrowings under Term Loan, net on the condensed consolidated balance sheets.

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

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

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of June 30, 2022.

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

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of September 30, 2022.

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

1 unchanged sentence

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of June 30, 2022.

We did not have any material off-balance sheet arrangements as of September 30, 2022.

Funds from Operations

12 unchanged sentences

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

The following table provides a reconciliation of our FFO available to common stockholders for the three and six months ended June 30, 2022 and 2021, respectively, to the most directly comparable GAAP measure, net income available to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock:

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

The following table provides a reconciliation of our FFO available to common stockholders for the three and nine months ended September 30, 2022 and 2021, respectively, to the most directly comparable GAAP measure, net income available to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock:

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

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

5 unchanged sentences

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

Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders $ (1,509) $ (3,053) $ (1,183) $ (6,048)

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders $ (604) $ 1,460 $ (1,790) $ (4,589)

Real estate depreciation and amortization $ 15,764 $ 14,760 $ 45,672 $ 45,661

1 unchanged sentence

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

Gain on sale of real estate, net (8,902) — (8,902) —

FFO available to common stockholders and Non-controlling OP Unitholders - basic $ 16,976 $ 16,220 $ 47,072 $ 41,954

8 unchanged sentences

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

Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders $ (1,509) $ (3,053) $ (1,183) $ (6,048)

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders $ (604) $ 1,460 $ (1,790) $ (4,589)

Real estate depreciation and amortization $ 15,764 $ 14,760 $ 45,672 $ 45,661

2 unchanged sentences

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

Gain on sale of real estate, net (8,902) — (8,902) —

FFO available to common stockholders and Non-controlling OP Unitholders plus assumed conversions $ 17,090 $ 16,390 $ 47,416 $ 42,488

12 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis