What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-15 · 164 added, 146 removed, 349 unchanged (47% of the section changed)

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

Our properties are geographically diversified and our tenants cover a broad cross section of business sectors and range in size from small to very

large private and public companies, many of which are corporations that do not have publicly-rated debt.

We have historically entered into, and intend in the future to enter into, purchase agreements primarily for real estate having net leases with remaining terms of approximately seven to 15 years and built-in rental rate increases.

Our properties are geographically diversified and our tenants cover a broad cross section of business sectors and range in size from small to very large private and public companies, many of which are corporations that do not have publicly-rated debt.

We have historically

entered into, and intend in the future to enter into, purchase agreements primarily for real estate having net leases with remaining terms of approximately seven to 15 years and built-in rental rate increases.

Under a net lease, the tenant is required to pay most or all operating, maintenance, repair and insurance costs and real estate taxes with respect to the leased property.

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Business Environment

In March 2020, the World Health Organization characterized COVID-19 as a pandemic, and infection continues in the United States and many parts of the world.

Since the onset of the pandemic, the spread of the coronavirus identified as COVID-19 has resulted in authorities throughout the United States and the world implementing widespread measures attempting to contain the spread and impact of COVID-19, such as travel bans and restrictions, quarantines, shelter in place orders, vaccine mandates, the promotion of social distancing and limitations on business activity, including business closures.

Generally, although certain restrictive measures were implemented during certain periods of 2021, the prevalence and scale of closures and operating limitations were less severe as compared to 2020.

These measures and the pandemic have generally caused significant national and global economic disruption, including disrupted business operations, such as those of certain of our tenants, increased unemployment and underemployment levels, and continue to have an adverse effect on office demand for space in the short term, at a minimum.

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 other factors.

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

However, the increased cost of construction materials and product delivery delays caused by supply chain disruption, and the apparent labor shortage we are facing nationally, have resulted in inflation and higher costs for both industrial and office construction projects.

Industrial absorption increased on a nominal basis in 2020, compared to 2019, according to research reports and continues to be strong through the third quarter of 2021 averaging approximately 100 million square feet of absorption each quarter.

Construction activity for the industrial sector remains strong as both third quarter and year end 2021 estimates have approximately $500.0 million of properties under construction with over 30% of that space pre-leased.

Research reports also reflect that the office sector experienced negative absorption for each of the first three quarters of 2021 and office space available for sublease has increased and placing downward pressure on office rental rates.

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

The yield on the 10 year US Treasury Note has increased significantly since the beginning of 2021 and finished 2021 at 1.51%.

After completing the 11th year of the current cycle, some national research firms had been estimating that both pricing and investment sales volume would be peaking and the national economy would be slowing in the near term.

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

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

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

Impact of COVID-19 on Our Business

The extent to which the COVID-19 pandemic 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 duration and long-term scope of the pandemic;

the adequate production, distribution, acceptance and efficacy of vaccinations;

development and acceptance of therapeutics;

the spread and effect of COVID-19 variants;

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

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.

The demand for industrial space has continued due to the continuing growth of e-commerce and recent trend of manufacturing onshoring, which appears to have partially rebounded from the adverse effects of COVID-19 on the commercial real estate industry in 2020, 2021, and early 2022.

However, the increased cost of construction materials and product delivery delays caused by supply chain disruption and related inventory management issues, and the apparent labor shortage we are facing nationally, have resulted in inflation and higher costs for both industrial and office construction projects.

Further, a tightening of available financing due primarily to higher interest rates has caused a slowdown in new construction starts throughout the fourth quarter of 2022, as compared to the record breaking third quarter of 2022, which should lead to lowered deliveries into 2024.

The industrial market recorded its strongest year in 2021, surpassing 500 million square feet in net absorption, according to research, and continued to remain strong through the third quarter of 2022 absorbing over 350 million square feet through the end of 2022.

Construction activity for the industrial sector saw record amounts of groundbreakings in the third quarter of 2022, bringing the total amount under development to over 600 million square feet.

Industrial markets continued to tighten, bringing the vacancy rate to an all-time low of 3.3% at the end of the third quarter of 2022.

The office sector struggled less in 2022 than 2021, posting negative net absorption of 37 million square feet in 2022 compared to negative net absorption of 59 million square feet in 2021.

Tenants continue to put their space up for sublease to reduce costs, with year-end sublease vacancy totaling 136 million square feet.

Industry expectations are for an increase in office vacancy rates as leases roll over the next few years, which will lead to downsizing and lower renewal rates for spaces currently offered for sublease.

Interest rates remain volatile in response to competing concerns about inflationary pressures, and interest rate increases by the Federal Reserve and are expected to increase.

The yield on the 10-year U.S.

Treasury Note has increased significantly since the beginning of 2022 and finished 2022 at 3.88%.

Global recessionary conditions may occur over the next 6-24 months as a direct result of central bank intervention to curb inflation.

As of February 22, 2023, we have collected 100% of all outstanding rent collections for calendar year 2022.

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

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

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

Additionally, our properties are located across 27 states, which we believe mitigates our exposure to economic issues, including regulations or laws implemented by state and local governments in response to public health emergencies, in any one geographic market or area.

We also have a cap on industry sector concentration to further diversify our portfolio and mitigate risk.

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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.

In addition, on August 18, 2022, we added a new $150.0 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, including the recent spread of COVID-19 variants, will have on our business, financial condition, liquidity, results of operations, funds from operations or prospects, we believe that it is important to share where we stand today, how our response to COVID-19 is progressing and how our operations and financial condition may change as the fight against COVID-19 continues.

Other Business Environment Considerations

The short-term and long-term economic implications are unknown, in relation to recent world events including inflation, supply chain disruptions, labor shortages, rising interest rates, the ongoing COVID-19 pandemic and associated government response in addition to any subsequent shift in policy, 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 and related inventory management issues, labor shortages, rising interest rates, public health emergencies such as the COVID-19 pandemic and associated governmental responses in addition to any subsequent shift in policy, 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 LIBOR, although LIBOR is currently anticipated to be phased out by June 2023.

LIBOR is expected to transition to a new standard rate, SOFR, which will incorporate 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.

We are currently monitoring the transition as SOFR becomes the standard benchmark for variable rate debt.

During the transition further changes or reforms to the determination of supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market for LIBOR-based debt, or the value of our portfolio of LIBOR-indexed, floating-rate debt.

The London Inter-bank Offered Rate (“LIBOR”) is anticipated to be phased out by June 2023, and LIBOR is being transitioned to a new standard rate, the Secured Overnight Financing Rate (“SOFR”).

During 2022, we began transitioning our variable rate debt to SOFR, and, at December 31, 2022, all of our variable rate debt was based upon SOFR, with the exception of $41.8 million of hedged variable rate mortgages still based on LIBOR, which we are planning to transition to SOFR prior to the mid-2023 phase out of LIBOR.

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 only have seven partially vacant buildings and two fully vacant buildings.

We believe our lease expiration schedule for 2022 is quite manageable as it equates to 4.5% of annual rental income and the expirations are due to occur at the end of June, July, and October.

Property acquisitions increased during the third and fourth

quarters of the year ended December 31, 2021 equating to over $80.0 million in volume.

At December 31, 2022, we only had five partially vacant buildings and three fully vacant buildings.

We believe our lease expiration schedule for 2023 is quite manageable as it equates to 7.0% of annual rental income with a majority of the expirations due to occur in the second half of the year.

Property acquisitions increased during the third and fourth quarters of the year ended December 31, 2022 equating to almost $63.0 million in volume.

Every acquisition was industrial in nature, reinforcing our commitment to increase our portfolio’s industrial allocation.

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 senior unsecured revolving credit facility (“Revolver”), with 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, 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.

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

During the year ended December 31, 2021, we sold three non-core properties, located in Rancho Cordova, California;

Champaign, Illinois;

and Richmond, Virginia, which are summarized in the table below (dollars in thousands):

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

During the year ended December 31, 2022, we sold five non-core properties, located in Jupiter, Florida, Parsippany, New Jersey, Boston Heights, Ohio, Columbus, Ohio, and Allen, Texas, which are summarized in the table below (dollars in thousands):

Aggregate Square Footage Sold Aggregate Sales Price Aggregate Sales Costs Aggregate Impairment Charge for the Twelve Months Ended December 31, 2022 Aggregate Gain on Sale of Real Estate, net

291,604 $ 41,270 $ 1,771 $ 1,374 $ 10,052

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Leasing Activity

During and subsequent to the year ended December 31, 2021, we executed 16 lease extensions and/or modifications, which are summarized below (dollars in thousands):

During the year ended December 31, 2022, we executed 13 lease extensions and/or modifications, 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

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Our leases have remaining terms ranging from 1.9 years to 15.0 years.

During the year ended December 31, 2021, we had eight lease contractions, which are aggregated below (dollars in thousands):

During the year ended December 31, 2022, we had two lease terminations, which are aggregated below (dollars in thousands):

Aggregate Square Footage Reduced Aggregate Accelerated Rent Aggregate Accelerated Rent Recognized through December 31, 2022

216,095 $ 5,888 $ 5,710

(1) We have signed leases with two replacement tenants for 211,408 square feet of the 497,369 square feet reduced with no downtime and sold one of these properties with 42,213 square feet.

Financing Activity

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

During the year ended December 31, 2022, we repaid 14 mortgages, collateralized by 28 properties, which are summarized below (dollars in thousands):

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

$ 104,906 4.64 %

Variable Rate Debt Repaid Interest Rate on Variable Rate Debt Repaid

$ 7,500 LIBOR + 2.50%

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

Fixed Rate Debt Issued Interest Rate on Fixed Rate Debt

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

$ 30,336 LIBOR/SOFR + 2.50%

During the year ended December 31, 2022, we issued six mortgages, collateralized by 11 properties, which are summarized below (dollars in thousands):

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

$ 47,913 (1) 4.60 %

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

Legal Settlement

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

(1) We issued $10.0 million of fixed rate debt with a maturity date of May 4, 2027, in connection with our two-property portfolio we acquired on May 4, 2022.

The interest rate is fixed at 4.00%.

We issued $10.0 million of fixed rate debt with a maturity date of June 1, 2032, in connection with our 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 our 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 our property acquisition on September 16, 2022.

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

We issued $6.6 million of swapped to fixed rate debt with a maturity date of September 16, 2029, in connection with the property acquisition on October 26, 2022.

The interest rate is swapped to a fixed rate of 5.90%.

Variable Rate Debt Issued Interest Rate on Variable Rate Debt

$ 15,000 (1) SOFR + 2.50%

(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%.

This mortgage was repaid on August 18, 2022.

During the year ended December 31, 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

Variable Rate Debt Extended Interest Rate on Variable Rate Debt Extended Extension Term

$ 7,059 (1) LIBOR + 2.75% 1.0 year

(1) We repaid this mortgage on August 18, 2022.

Equity Activity

Common Stock ATM Program

During the year ended December 31, 2021, we sold 1.8 million shares of common stock, raising $36.6 million in net proceeds under our Common ATM Program, pursuant to which we may sell shares of our common stock in an aggregate offering price of up to $250.0 million (the “Common Stock ATM Program”).

During the year ended December 31, 2022, we sold 2.1 million shares of common stock, raising approximately $43.2 million in net proceeds under our Common ATM Program, pursuant to which we may sell shares of our common stock in an aggregate offering price of up to $250.0 million (the “Common Stock ATM Program”).

As of December 31, 2022, we had a remaining capacity to sell up to $23.9 million of common stock under the Common Stock Sales Agreement.

The proceeds from these issuances were used to acquire real estate, repay outstanding debt and for other general corporate purposes.

We terminated the Common Stock Sales Agreement effective February 10, 2023 in connection with the expiration of our registration statement on Form S-3 (File No.

333-236143) (the “2020 Registration Statement”) on February 11, 2023.

Amendment to Articles of Restatement

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

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

After giving effect to the filing of the Reclassification Articles

Supplementary in August 2021, our authorized capital stock consisted of 62,290,000 shares of common stock, 6,760,000 shares of Series E Preferred Stock, 26,000,000 shares of Series F Preferred Stock, 4,000,000 shares of Series G Preferred Stock, and 950,000 shares of senior common stock.

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

Series E Preferred ATM Program

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

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

During the year ended December 31, 2022, we had an At-the-Market Equity Offering Sales Agreement (the “Series E Preferred Stock Sales Agreement”) with sales agents Baird, Goldman Sachs, Stifel, Fifth Third, and U.S.

Bancorp Investments, Inc., pursuant to which we could, from time to time, offer to sell shares of our Series E Preferred Stock, in an aggregate offering price of up to $100.0 million (the “Series E Preferred ATM Program”).

We did not sell any shares of our Series E Preferred Stock pursuant to the Series E Preferred Stock Sales Agreement during the year ended December 31, 2022.

As of December 31, 2022, we had remaining capacity to sell up to $92.8 million of Series E Preferred Stock under the Series E Preferred ATM Program.

We terminated the Series E Preferred Stock Sales Agreement effective February 10, 2023 in connection with the expiration of the 2020 Registration Statement on February 11, 2023.

Universal Shelf Registration Statement

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

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

As of December 31, 2021, we had the ability to issue up to $340.2 million under the 2019 Universal Shelf.

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

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

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

The 2020 Universal Shelf 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 Series F Preferred Stock.

As of December 31, 2021, we had the ability to issue up to $689.5 million of securities under the 2020 Universal Shelf.

On January 11, 2019, we filed a 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 Registration Statement”).

The 2019 Registration Statement became effective on February 13, 2019 and replaced our prior shelf registration statement.

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

On January 29, 2020, we filed the 2020 Registration Statement.

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

The 2020 Registration Statement allowed us to issue up to an additional $800.0 million of securities.

Of the $800.0 million of available capacity under our 2020 Registration Statement, approximately $636.5 million was reserved for the sale of Series F Preferred Stock.

As of December 31, 2022, we had the ability to issue up to $644.0 million of securities under the 2020 Registration Statement.

The 2020 Registration Statement expired on February 11, 2023.

On November 23, 2022, we filed an automatic registration statement on Form S-3 (File No.

333-268549) (the “2022 Registration Statement”).

There is no limit on the aggregate amount of the securities that we may offer pursuant to the 2022 Registration Statement.

Preferred Series F Continuous Offering

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As of December 31, 2022, we had remaining capacity to sell up to $619.6 million of Series F Preferred Stock.

Amendment to Operating Partnership Agreement

Amendments to Operating Partnership Agreement

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

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

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

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

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

Amendment to the Advisory Agreement

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

and preferences of 6.00% Series G Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series G Term Preferred Units”).

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

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

On August 5, 2021, the Operating Partnership adopted the Fourth Amendment to its Second Amended and Restated Agreement of Limited Partnership, including Exhibit SGP thereto, to remove all references to the 7.00% Series D Cumulative Redeemable Preferred Units of the Partnership and update the rights, privileges, and preferences accordingly.

Amendments to the Advisory Agreement

On July 14, 2020, we amended and restated our existing advisory agreement with our Advisor (as defined herein), as amended from time to time (the “Advisory Agreement”), by entering into the Sixth Amended and Restated Investment Advisory Agreement between the Company and the Adviser (the “Sixth Amended Advisory Agreement”).

The Company’s entrance into the Sixth Amended Advisory Agreement was approved by its Board of Directors, including, specifically, unanimously by its independent directors.

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The revised Base Management Fee calculation began with the fee calculations for the quarter ended September 30, 2020.

On January 10, 2023, we amended the Sixth Amended Advisory Agreement, by entering into the Seventh Amended and Restated Investment Advisory Agreement between the Company and the Adviser (the “Seventh Amended Advisory Agreement”), which was approved unanimously by our board of directors, including specifically, our independent directors.

The Seventh Amended Advisory Agreement waived the payment of the incentive fee, as applicable, for the quarters ending March 31, 2023 and June 30, 2023.

The calculation of the other fees remains unchanged.

Non-controlling Interests in Operating Partnership

As of December 31, 2022 and 2021, we owned approximately 99.0% and 99.3%, respectively, of the outstanding 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 year ended December 31, 2021, we redeemed 246,039 OP units for an equivalent amount of common stock.

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Robert Cutlip, who announced his intention to resign on or about June 30, 2022.

Cutlip’s resignation is in connection with his planned retirement.

Cutlip’s resignation was in connection with his planned retirement.

Cutlip resigned as of June 30, 2022, and Mr.

Cooper is now our sole president.

Our Adviser and Administrator

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

Cutlip and Mr.

Cooper, our co-presidents, are also executive managing directors of our Adviser.

Cooper, our president, is also an executive managing director of our Adviser.

Our Administrator employs our chief financial officer, treasurer, chief compliance officer, and general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary) and their respective staffs.

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With the exception of Mr.

Gerson, our chief financial officer, Jay Beckhorn, our treasurer, and Messrs.

Cutlip and Cooper, our co-presidents, all of our executive

officers and all of our directors serve as either directors or executive officers, or both, of Gladstone Capital and Gladstone Investment.

Gerson, our chief financial officer, Jay Beckhorn, our treasurer, and Mr.

Cooper, our president, all of our executive officers and all of our directors serve as either directors or executive officers, or both, of Gladstone Capital and Gladstone Investment.

In addition, with the exception of Messrs.

Cutlip, Cooper, and Gerson, all of our executive officers and all of our directors, serve as either directors or executive officers, or both, of Gladstone Land.

Cutlip, Cooper, and Gerson generally spend all of their time focused on the Company, and do not put forth any material efforts in assisting affiliated companies.

Cooper and Gerson, all of our executive officers and all of our directors, serve as either directors or executive officers, or both, of Gladstone Land.

Cooper and Gerson generally spend all of their time focused on the Company, and do not put forth any material efforts in assisting affiliated companies.

In the future, our Adviser may provide investment advisory services to other companies, both public and private.

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Many of the services performed by our Adviser and Administrator in managing our day-to-day activities are summarized below.

This summary is provided to illustrate the material functions which our Adviser and Administrator perform for us pursuant to the terms of the Advisory Agreement and Administration Agreement, respectively.

This summary is provided to illustrate the material functions which our Adviser and Administrator perform for us pursuant to the terms of the Advisory Agreement with our Advisor and an administration agreement with our Administrator (the “Administration Agreement”).

Advisory Agreement

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The revised Base Management Fee calculation began with the fee calculations for the quarter ended September 30, 2020.

On January 10, 2023, we amended and restated the Sixth Amended Advisory Agreement, by entering into the Seventh Amended Advisory Agreement, which was approved unanimously by our board of directors, including specifically, our independent directors.

The Seventh Amended Advisory Agreement waived the payment of the incentive fee, as applicable, for the quarters ending March 31, 2023 and June 30, 2023.

The calculation of the other fees remains unchanged.

Incentive Fee

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

Core FFO (as defined in the Advisory Agreement) is GAAP net income (loss) available to common stockholders, excluding the incentive fee, depreciation and amortization, any realized and unrealized

gains, losses or other non-cash items recorded in net income (loss) available to common stockholders for the period, and one-time events pursuant to changes in GAAP.

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.

Capital Gain Fee

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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.

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.

Critical Accounting Policies

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Interest expense $ (32,457) $ (26,887) $ (5,570) 20.7 %

(Loss) gain on sale of real estate, net (1,148) 8,096 (9,244) (114.2) %

Gain (loss) on sale of real estate, net 10,052 (1,148) 11,200 (975.6) %

Other income 454 2,880 (2,426) (84.2) %

4 unchanged sentences

Distributions attributable to senior common stock (458) (698) 240 (34.4) %

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders $ (4,594) $ 3,196 $ (7,790) (243.7) %

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.12) $ 0.09 $ (0.21) (233.3) %

Loss on extinguishment of Series F preferred stock (10) — (10) 100.0 %

Gain on repurchase of Series G preferred stock 37 — 37 100.0 %

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (3,062) $ (4,594) $ 1,532 (33.3) %

Net loss attributable to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.08) $ (0.12) $ 0.04 (33.3) %

FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 60,642 $ 56,865 $ 3,777 6.6 %

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FFO per weighted average share of common stock and Non-controlling OP Unit - diluted (1) $ 1.54 $ 1.54

$ (0.02) (1.3) %

FFO per weighted average share of common stock and Non-controlling OP Unit - diluted, as adjusted for comparability (1) $ 1.54 $ 1.60 $ (0.06) (3.8) %

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

Lease revenues from same store properties increased for the year ended December 31, 2021, primarily due to increased lease revenue from the amortization of tenant funded improvements, coupled with accelerated rent from tenants that have terminated their leases early.

One of the tenants that terminated early will remain in the building through October 2022, and we fully re-leased the space related to two other terminations with no downtime.

Lease revenues increased for acquired and disposed of properties for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily as a result of our acquisition of 11 properties during the year ended December 31, 2021, and the inclusion of a full year of lease revenues recorded in 2021 for nine properties acquired during the year ended December 31, 2020, partially offset by a decrease in lease revenues from the nine property sales during and subsequent to December 31, 2020.

Lease revenues decreased for properties with vacancy for the year ended December 31, 2021, as our average vacancy has increased from the year ended December 31, 2020.

Lease revenues from same store properties increased for the year ended December 31, 2022, primarily due to accelerated rent from one tenant that terminated their lease early and will remain in the building through January 2023, partially offset by less income recognized from tenant funded projects, where our tenants used their capital to improve our buildings.

Lease revenues increased for acquired and disposed of properties for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to accelerated rent from two lease terminations, one of which related to a property we sold.

This was coupled with our acquisition of 13 properties during the year ended December 31, 2022, and the inclusion of a full year of lease revenues recorded in 2022 for 11 properties acquired during the year ended December 31, 2021, partially offset by a decrease in lease revenues from the eight properties sold during and subsequent to December 31, 2021.

Lease revenues increased for properties with vacancy for the year ended December 31, 2022 due to vacant space being leased.

Operating Expenses

Depreciation and amortization increased for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily due to recognizing a full year of depreciation for the nine properties acquired during the year ended December 31, 2020, as well as increased depreciation expense from the 11 properties acquired during the year ended December 31, 2021, partially offset by a decrease in depreciation expense for the three properties sold during the year ended December 31, 2021.

Depreciation and amortization increased for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to recognizing a full year of depreciation for the 11 properties acquired during the year ended December 31, 2021, as well as increased depreciation expense from the 13 properties acquired during the year ended December 31, 2022, partially offset by a decrease in depreciation expense for the five properties sold during the year ended December 31, 2022.

For the year ended December 31,

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

Property operating expenses remained flat for same store properties for the year ended December 31, 2021, as compared to the year ended December 31, 2020, as many of our tenants have not been operating fully in their properties since March 2020, due to the ongoing COVID-19 pandemic.

The decrease in property operating expenses on acquired and disposed of properties for the year ended December 31, 2021, as compared to the year ended December 31, 2020, is a result of a decrease in property operating expenses from nine property sales during and subsequent to December 31, 2020, partially offset by increased property operating expenses on the 11 properties we acquired during the year ended December 31, 2021, coupled with a full year of property operating expenses for the nine properties acquired during the year ended December 31, 2020.

The increase in property operating expenses for properties with vacancy for the year ended December 31, 2021, as compared to the year ended December 31, 2020, is due to increased average vacancy in our portfolio subsequent to December 31, 2020.

Property operating expenses increased for same store properties for the year ended December 31, 2022, as compared to the year ended December 31, 2021, due to general cost increases due to the inflationary environment.

The decrease in property operating expenses on acquired and disposed of properties for the year ended December 31, 2022, as compared to the year ended December 31, 2021, is a result of a decrease in property operating expenses from eight property sales during and subsequent to December 31, 2021, partially offset by increased property operating expenses on the 13 properties we acquired during the year ended December 31, 2022, coupled with a full year of property operating expenses for the 11 properties acquired during the year ended December 31, 2021.

The decrease in property operating expenses for properties with vacancy for the year ended December 31, 2022, as compared to the year ended December 31, 2021, is a result of reduced real estate tax during the period, partially offset by general cost increases due to the inflationary environment.

The base management fee paid to the Adviser increased for the year ended December 31, 2022, as compared to the year ended December 31, 2021, due to an increase in gross tangible real estate, the main component of the base management fee calculation under the Sixth Amended Advisory Agreement.

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

The incentive fee paid to the Adviser increased for the year ended December 31, 2021, as compared to the year ended December 31, 2020, because of an increase in pre-incentive fee FFO.

The increase in pre-incentive fee FFO was primarily due to an increase in lease revenues from the 11 properties acquired during the year ended December 31, 2021, coupled with a full

year of lease revenues from the nine properties acquired during the year ended December 31, 2020, partially offset by an increase in property operating expenses due to increased portfolio average vacancy.

The incentive fee paid to the Adviser increased for the year ended December 31, 2022, as compared to the year ended December 31, 2021, due to an increase in pre-incentive fee Core FFO.

The increase in pre-incentive fee Core FFO was primarily due to an increase in lease revenues from the 13 properties acquired during the year ended December 31, 2022,

coupled with a full year of lease revenues from the 11 properties acquired during the year ended December 31, 2021.

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

The administration fee paid to the Administrator decreased for the year ended December 31, 2021, as compared to the year ended December 31, 2020.

The decrease is a result of our Administrator incurring fewer costs that are allocated to the Company.

The administration fee paid to the Administrator increased for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

The increase is a result of our Administrator incurring greater costs that are allocated to the Company.

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

General and administrative expenses decreased for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily as a result of a decrease in due diligence expenses, slightly offset by an increase in legal expenses.

No impairment charge was recorded during the year ended December 31, 2021.

The impairment charge during the year ended December 31, 2020 resulted from impairment charges recorded on our Blaine, Minnesota, Champaign, Illinois and Rancho Cordova, California properties.

We subsequently sold the Champaign, Illinois and Rancho Cordova, California properties during the year ended December 31, 2021.

General and administrative expenses increased for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily as a result of an increase in due diligence expenses for potential acquisition targets that were not completed, coupled with an increase in legal fees.

We recorded an impairment charge during the year ended December 31, 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 year ended December 31, 2021.

Other Income and Expenses

Interest expense increased for the year ended December 31, 2022, as compared to the year ended December 31, 2021.

This increase is primarily a result of increased borrowings on our Credit Facility, partially offset by decreased mortgage borrowings.

The loss on sale of real estate, net, during the year ended December 31, 2021 is a result of the sale of three properties.

The gain on sale of real estate, net, during the year ended December 31, 2020 was a result of the sale of six of our properties.

Other income increased during the year ended December 31, 2021, as compared to the year ended December 31, 2020, as a result of legal settlement income.

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 decreased for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily because of losses on sale, net recognized on three property sales and an increase in depreciation and amortization expense from property acquisition activity during and subsequent to December 31, 2020, partially offset by an increase in lease revenues from leasing activity and acquisition activity.

This increase is primarily a result of increased borrowing costs, 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.

The gain on sale of real estate, net, during the year ended December 31, 2022 is a result of the sale of five properties.

The loss on sale of real estate, net, during the year ended December 31, 2021 was a result of the sale of three of our properties.

Other income decreased during the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to legal settlement income earned during the year ended December 31, 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 year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to asset acquisition activity causing an increase in operating revenues during and subsequent to December 31, 2021, coupled with a gain on sale of real estate, net, from five property sales, partially offset by an increase in interest expense due to higher borrowing costs due to global interest rate expansion.

A discussion of the results of operations for the year ended December 31, 2020 is found in Item 7 of Part II of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 15, 2022, which is available free of charge on the SEC's website at www.sec.gov and on the investors section of our website at www.GladstoneCommercial.com.

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Series F Preferred Stock Continuous Public Offering 5,415 238,100 24.96

Series G Preferred Stock Public Offering $ 96,573 4,000,000 25.00

$ 48,585 2,368,156

As of February 15, 2022, we had the ability to raise up to $335.6 million of additional equity capital through the sale and issuance of securities that are registered under our 2019 Universal Shelf, in one or more future public offerings.

Of the $335.6 million capacity under our 2019 Universal Shelf, approximately $142.3 million is reserved for additional sales under our Common ATM Program, and approximately $92.8 million is reserved for additional sales under our Series E Preferred Stock Sales Agreement as of February 15, 2022.

As of February 15, 2022, we had the ability to raise up to $688.4 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 $688.4 million of available capacity under our 2020 Universal Shelf, approximately $624.9 million is reserved for the sale of our Series F Preferred Stock as of February 15, 2022.

As of February 22, 2023, there is no limit on the aggregate amount of the securities that we may offer pursuant to the 2022 Registration Statement.

At December 31, 2022, we had the ability to raise up to $644.0 million of additional equity capital through the sale and issuance of securities that were registered under the 2020 Registration Statement.

Of the $644.0 million of available capacity under our 2020 Registration Statement, approximately $23.9 million was reserved for additional sales under our Common Stock ATM Program, and approximately $619.6 million was reserved for the sale of our Series F Preferred Stock as of February 22, 2023.

As of December 31, 2022, we had 44 mortgage notes payable in the aggregate principal amount of $362.0 million, collateralized by a total of 50 properties with a remaining weighted average maturity of 4.3 years.

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

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

Consequently, we remain focused on obtaining mortgages through regional banks, non-bank lenders and, to a lesser extent, the commercial mortgage backed securities market.

As of December 31, 2022, we had mortgage debt in the aggregate principal amount of $67.3 million payable during 2023 and $20.4 million payable during 2024.

The 2022 principal amounts payable include both amortizing principal payments and nine balloon principal payments.

The 2023 principal amounts payable include both amortizing principal payments and five balloon principal payments.

We anticipate being able to refinance our mortgages that come due during 2023 and 2024 with a combination of new mortgage debt, availability under our Credit Facility and the issuance of additional equity securities.

We have successfully repaid $15.2 million of debt over the past 12 months with either new mortgage debt or by generating additional availability by adding properties to our unsecured pool under our Credit Facility, as well as additional funds generated from our July 2019 Credit Facility amendment, which resulted in us expanding our Term Loan A from $75.0 million to $160.0 million, and increasing our Revolver from $85.0 million to $100.0 million.

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

We have successfully repaid $135.2 million of debt over the past 12 months with either new mortgage debt or by generating additional availability by adding properties to our unsecured pool under our Credit Facility, as well as additional funds generated from our 2022 Credit Facility amendment, which resulted in us reducing our Term Loan B from $65.0 million to $60.0 million, increasing our Revolver from $100.0 million to $125.0 million, and adding Term Loan C, a new $150.0 million term loan component.

Operating Activities

Net cash provided by operating activities during the year ended December 31, 2022, was $69.2 million, as compared to net cash provided by operating activities of $70.1 million for the year ended December 31, 2021.

This increase was primarily a result of an increase in operating revenues received from the properties acquired during the past 12 months, partially offset by an increase in property operating expenses, due to increased average vacancy in our portfolio.

The majority of cash from operating

activities is generated from the rental payments and operating expense recoveries that we receive from our tenants.

This change was primarily a result of an increase in operating revenues received from the properties acquired during the past 12 months, 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 rental payments and operating expense recoveries that we receive from our tenants.

We utilize this cash to fund our property-level operating expenses and use the excess cash primarily for debt and interest payments on our mortgage notes payable, interest payments on our Credit Facility, distributions to our stockholders, management fees to our Adviser, administration fees to our Administrator and other entity-level operating expenses.

Investing Activities

Net cash used in investing activities during the year ended December 31, 2021, was $94.8 million, which primarily consisted of the acquisition of 11 properties and tenant improvements performed at certain of our properties, coupled with the capital improvements performed at certain of our properties, partially offset by proceeds from the sale of real estate.

Net cash used in investing activities during the year ended December 31, 2020, was $100.3 million, which primarily consisted of the acquisition of nine properties, coupled with the capital improvements performed at certain of our properties, partially offset by proceeds from sale of real estate.

Net cash used in investing activities during the year ended December 31, 2022, was $82.5 million, which primarily consisted of the acquisition of 13 properties, coupled with the capital improvements performed at certain of our properties, partially offset by proceeds from the sale of real estate.

Net cash used in investing activities during the year ended December 31, 2021, was $94.8 million, which primarily consisted of the acquisition of 11 properties, coupled with the capital improvements performed at certain of our properties, partially offset by proceeds from sale of real estate.

Financing Activities

Net cash provided by financing activities during the year ended December 31, 2021, was $21.8 million, which primarily consisted of proceeds from our common and preferred equity offerings, mortgage borrowings on new acquisitions and borrowings from our Term Loan B, partially offset by distributions paid to our stockholders and Non-controlling OP Unitholders.

Net cash provided by financing activities for the year ended December 31, 2020, was $39.4 million, which primarily consisted of proceeds from our common stock and Series E Preferred Stock offerings, mortgage borrowings on new acquisitions and borrowings on our Credit Facility, partially offset by distributions paid to our stockholders and Non-controlling OP Unitholders.

Net cash provided by financing activities during the year ended December 31, 2022, was $16.2 million, which primarily consisted of proceeds from our common and preferred equity offerings, mortgage borrowings on new acquisitions and a net increase in Credit Facility borrowings, partially offset by the repayment of outstanding mortgage debt and distributions paid to our stockholders and Non-controlling OP Unitholders.

Net cash provided by financing activities for the year ended December 31, 2021, was $21.8 million, which primarily consisted of proceeds from our common and preferred stock offerings, mortgage borrowings on new acquisitions and borrowings on our Credit Facility, partially offset by distributions paid to our stockholders and Non-controlling OP Unitholders.

Credit Facility

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Term Loan B has a maturity date of 60 months from the closing of the amended Credit Facility and a LIBOR floor of 25 basis points.

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

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 ranging from 3.15% to 3.75%.

We also entered into an interest rate swap agreement on Term Loan A to replace the expiring rate caps, which swaps the interest rate to a fixed rate of 3.70%.

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

As of December 31, 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.

As of December 31, 2022, there was $393.3 million outstanding under our Credit Facility at a weighted average interest rate of approximately 5.75% and $15.6 million outstanding under letters of credit at a weighted average interest rate of 1.50%.

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$ 934,440 $ 107,015 $ 131,549 $ 432,298 $ 263,578

(1) Debt obligations represent borrowings under our Revolver, which represents $33.6 million of the debt obligation due in 2023, Term Loan A, which represents $160.0 million of the debt obligation due in 2024, Term Loan B, which represents $65.0 million of the debt obligation due in 2026 and mortgage notes payable that were outstanding as of December 31, 2021.

This figure does not include $(0.1) million of premiums and (discounts), net, and $3.8 million of deferred financing costs, net, which are reflected in mortgage notes payable, net, borrowings under Revolver, and borrowings under Term Loan A and Term Loan B, net, on the consolidated balance sheet.

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

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

(1) Debt obligations represent borrowings under our Revolver, which represents $23.3 million of the debt obligation due in 2026, Term Loan A, which represents $160.0 million of the debt obligation due in 2027, Term Loan B, which represents $60.0 million of the debt obligation due in 2026, Term Loan C, which represents $150.0 million of the debt obligation due in 2028 and mortgage notes payable that were outstanding as of December 31, 2022.

This figure does not include $(0.1) million of premiums and (discounts), net, and $6.0 million of deferred financing costs, net, which are reflected in mortgage notes payable, net, borrowings under Revolver, and borrowings under Term Loan A, Term Loan B and Term Loan C, net, on the consolidated balance sheet.

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

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

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of December 31, 2022.

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

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

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 and FFO as adjusted for comparability for the years ended December 31, 2022 and 2021 to the most directly comparable GAAP measure, net income (loss), and a computation of basic and diluted FFO and diluted FFO as adjusted for comparability per weighted average total share:

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

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders $ (4,594) $ 3,196

Loss on extinguishment of Series F preferred stock (10) —

Gain on repurchase of Series G preferred stock 37 —

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (3,062) $ (4,594)

Real estate depreciation and amortization 61,664 60,311

11 unchanged sentences

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

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders $ (4,594) $ 3,196

Loss on extinguishment of Series F preferred stock (10) —

Gain on repurchase of Series G preferred stock 37 —

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (3,062) $ (4,594)

Real estate depreciation and amortization 61,664 60,311

17 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-K

Item 7. Management’s Discussion and Analysis