What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2022-11-07 · 165 added, 293 removed, 443 unchanged (51% of the section changed)

3 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Real estate, at cost $ 1,285,539 $ 1,287,297

18 unchanged sentences

Accounts payable and accrued expenses 9,822 9,606

Liabilities related to assets held for sale 16 —

Due to Adviser and Administrator (1) 2,457 3,356

5 unchanged sentences

$ 25 per share liquidation preference;

10,760,000 shares authorized;

and 7,061,448 and 7,061,448 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively (3)

10,750,886 and 10,751,486 shares authorized;

and 7,052,334 and 7,052,934 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively (3)

$ 170,041 $ 170,056

2 unchanged sentences

950,000 shares authorized;

and 431,064 and 600,061 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively (3)

and 407,092 and 431,064 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively (3)

Common stock, par value $ 0.001 per share, 62,309,915 and 62,305,727 shares authorized;

and 39,607,009 and 37,473,587 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively (3)

and 39,998,220 and 39,744,359 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively (3)

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

$ 25 per share liquidation preference;

25,997,800 and 26,000,000 shares authorized and 597,616 and 422,920 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively (3)

25,989,199 and 25,992,787 shares authorized and 694,489 and 670,895 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively (3)

Additional paid in capital 725,874 721,327

12 unchanged sentences

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

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

2022 2021 2022 2021

For the three months ended March 31,

Operating revenues

8 unchanged sentences

General and administrative 1,063 997

Impairment charge 10,718 — 12,092 —

Total operating expense before incentive fee waiver $ 37,448 $ 25,498 $ 90,932 $ 77,404

Incentive fee waiver (1) — — — ( 16 )

Total operating expenses $ 25,434 $ 25,658

1 unchanged sentence

Interest expense $ ( 8,828 ) $ ( 6,586 )

Gain (loss) on sale of real estate, net 8,902 — 8,902 ( 882 )

Other income 105 104

3 unchanged sentences

Net income attributable to the Company $ 2,404 $ 3,389

Distributions attributable to Series D, E, F, and G preferred stock ( 2,987 ) ( 2,868 ) ( 8,900 ) ( 8,571 )

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

Distributions attributable to Series E, F, and G preferred stock ( 3,022 ) ( 2,946 )

Distributions attributable to senior common stock ( 109 ) ( 116 )

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

Gain on repurchase of Series G preferred stock 3 —

Net (loss) income (attributable) available to common stockholders $ ( 729 ) $ 322

6 unchanged sentences

Comprehensive income

Change in unrealized gain related to interest rate hedging instruments, net $ 6,790 $ 421 $ 13,660 $ 2,125

Other Comprehensive gain 6,790 421 13,660 2,125

Change in unrealized (loss) gain related to interest rate hedging instruments, net $ ( 5,895 ) $ 4,267

Other Comprehensive (loss) gain ( 5,895 ) 4,267

Net income $ 2,397 $ 3,391

Comprehensive income $ 9,287 $ 4,919 $ 21,119 $ 8,782

Comprehensive (loss) income $ ( 3,498 ) $ 7,658

Comprehensive loss (income) attributable (available) to OP Units held by Non-controlling OP Unitholders 7 ( 2 )

Total comprehensive income available to the Company $ 9,291 $ 4,898 $ 21,131 $ 8,824

Total comprehensive (loss) income available to the Company $ ( 3,491 ) $ 7,656

(1) Refer to Note 2 “Related-Party Transactions”

3 unchanged sentences

(Dollars in Thousands)

For the nine months ended September 30,

For the three months ended March 31,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization 15,474 14,689

Impairment charge 12,092 —

(Gain) loss on sale of real estate, net ( 8,902 ) 882

Amortization of deferred financing costs 410 369

4 unchanged sentences

Operating changes in assets and liabilities

(Increase) decrease in other assets ( 1,476 ) 114

Decrease in deferred rent receivable ( 1,192 ) ( 1,907 )

Increase in accounts payable and accrued expenses 3,388 4,071

Increase in amount due to Adviser and Administrator 273 228

Decrease (increase) in other assets 924 ( 372 )

(Decrease) increase in deferred rent receivable ( 938 ) 1,156

Decrease in accounts payable and accrued expenses ( 502 ) ( 1,508 )

(Decrease) increase in amount due to Adviser and Administrator ( 899 ) 143

Increase in other liabilities 166 856

Tenant inducement payments — ( 20 )

Leasing commissions paid ( 401 ) ( 962 )

3 unchanged sentences

Improvements of existing real estate ( 1,961 ) ( 942 )

Proceeds from sale of real estate 26,847 5,106

Receipts from lenders for funds held in escrow 3,218 28

3 unchanged sentences

Deposits on future acquisitions ( 709 ) ( 509 )

Net cash used in investing activities $ ( 75,536 ) $ ( 45,956 )

Net cash provided by (used in) investing activities $ 674 $ ( 17,571 )

Cash flows from financing activities:

2 unchanged sentences

Redemption of Series F preferred stock ( 91 ) ( 55 )

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

Borrowings under mortgage notes payable 56,313 5,500

Retirement of Senior Common stock ( 55 ) —

Repurchase of Series G preferred stock ( 12 ) —

Payments for deferred financing costs ( 70 ) —

2 unchanged sentences

Repayments on revolving credit facility ( 10,000 ) ( 22,100 )

Borrowings on term loan 150,000 65,000

Repayments on term loan ( 5,000 ) —

Increase (decrease) in security deposits — ( 25 )

Distributions paid for common, senior common, preferred stock and Non-controlling OP Unitholders ( 15,114 ) ( 17,365 )

Net cash provided by (used in) financing activities $ 23,146 $ ( 8,611 )

Net cash (used in) provided by financing activities $ ( 12,794 ) $ 1,866

Net increase in cash, cash equivalents, and restricted cash $ 2,799 $ 1,482

3 unchanged sentences

Tenant funded fixed asset improvements included in deferred rent liability, net $ 722 $ 3,340

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

Unrealized gain related to interest rate hedging instruments, net $ ( 5,895 ) $ 4,267

Capital improvements and leasing commissions included in accounts payable and accrued expenses $ 2,350 $ 497

Increase in asset retirement obligation assumed in acquisition $ 718 $ —

Non-controlling OP Units issued in connection with acquisition $ 2,393 $ —

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

Dividends paid on Series F Preferred Stock via additional share issuances $ 112 $ 88

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

For the nine months ended September 30,

For the three months ended March 31,

Cash and cash equivalents $ 14,286 $ 9,585

18 unchanged sentences

Securities and Exchange Commission (the “SEC”) on February 22, 2023.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Use of Estimates

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

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

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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

3 unchanged sentences

A summary of all of our significant accounting policies is provided in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies,” to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.

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

There were no material changes to our critical accounting policies during the three months ended March 31, 2023.

Related-Party Transactions

5 unchanged sentences

Gladstone and Mr.

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

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

Our president, Mr.

3 unchanged sentences

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

As of September 30, 2022 and December 31, 2021, $ 3.7 million and $ 3.4 million, respectively, were collectively due to our Adviser and Administrator.

As of March 31, 2023 and December 31, 2022, $ 2.5 million and $ 3.4 million, respectively, were collectively due to our Adviser and Administrator.

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

5 unchanged sentences

The calculation of the other fees in the Advisory Agreement remains unchanged.

For the three and nine months ended September 30, 2022, we recorded a base management fee of $ 1.6 million and $ 4.7 million, respectively.

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

For the three months ended March 31, 2023 and 2022, we recorded a base management fee of $ 1.6 million and $ 1.5 million, respectively.

Incentive Fee

4 unchanged sentences

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.

For the three and nine months ended September 30, 2022, we recorded an incentive fee of $ 1.5 million and $ 4.2 million, respectively.

For the three and nine months ended September 30, 2021, we recorded an incentive fee of $ 1.3 million and $ 3.5 million, respectively, partially offset by credits related to non-contractual, unconditional, and irrevocable waivers issued by the Advisor of $ 0 and $ 0.02 million, respectively.

The Adviser did no t waive any portion of the incentive fee for the three and nine months ended September 30, 2022.

On January 10, 2023, the Company amended and restated 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”).

The Company’s entrance into the Amended Agreement was approved unanimously by our board of directors, including specifically, our independent directors.

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

The calculation of the other fees remains unchanged.

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

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

Capital Gain Fee

3 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 nine months ended September 30, 2022 or 2021.

No capital gain fee was recognized during the three months ended March 31, 2023 or 2022.

Termination Fee

7 unchanged sentences

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

For the three and nine months ended September 30, 2022, we recorded an administration fee of $ 0.5 million and $ 1.3 million, respectively.

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

For the three months ended March 31, 2023 and 2022, we recorded an administration fee of $ 0.6 million and $ 0.5 million, respectively.

Gladstone Securities

8 unchanged sentences

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

We paid financing fees to Gladstone Securities of $ 0.1 million and $ 0.3 million during the three and nine months ended September 30, 2022, respectively, which are included in mortgage notes payable, net, in the condensed consolidated balance sheets, or 0.29 % and 0.32 %, respectively, of the mortgage principal secured.

We paid financing fees to Gladstone Securities of $ 14,000 during the nine months ended September 30, 2021, which are included in mortgage notes payable, net, in the condensed consolidated balance sheets, or 0.25 % of the mortgage principal secured.

We did not pay financing fees to Gladstone Securities during the three months ended March 31, 2023 and 2022.

Our Board of Directors renewed the agreement for an additional year, through August 31, 2023, at its July 2022 meeting.

Dealer Manager Agreement

On February 20, 2020 we entered into a dealer manager agreement (the “Dealer Manager Agreement”), whereby Gladstone Securities will act as the exclusive dealer manager in connection with our offering (the “Offering”) of up to (i) 20,000,000 shares of 6.00 % Series F Cumulative Redeemable Preferred Stock, par value $ 0.001 per share (the “Series F Preferred Stock”), on a “reasonable best efforts” basis (the “Primary Offering”), and (ii) 6,000,000 shares of Series F Preferred Stock pursuant to our distribution reinvestment plan (the “DRIP”) to those holders of the Series F Preferred Stock who participate in such DRIP.

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

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

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

No Selling Commissions or Dealer Manager Fee shall be paid with respect to shares sold pursuant to the DRIP.

On February 20, 2020 we entered into a dealer manager agreement, as amended on February 9, 2023 (together, the “Dealer Manager Agreement”), whereby Gladstone Securities acts as the exclusive dealer manager in connection with our offering (the “Offering”) of up to (i) 20,000,000 shares of 6.00 % Series F Cumulative Redeemable Preferred Stock, par value $ 0.001 per share (the “Series F Preferred Stock”), on a “reasonable best efforts” basis (the “Primary Offering”), and (ii) 6,000,000 shares of Series F Preferred Stock pursuant to our distribution reinvestment plan (the “DRIP”) to those holders of the Series F Preferred Stock who participate in such DRIP.

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

333-268549), as the same may be amended and/or supplemented (the “2022 Registration Statement”), under the Securities Act of 1933, as amended, and will be offered and sold pursuant to a prospectus supplement, dated February 9, 2023, and a base prospectus dated November 23, 2022 relating to the 2022 Registration Statement.

During the years ended December 31, 2020, 2021 and 2022, the Series F Preferred Stock was registered with the SEC pursuant to a registration statement on Form S-3 (File No.

333-236143) (the “2020 Registration Statement”), and offered and sold pursuant to a prospectus supplement, dated February 20, 2020, and a base prospectus dated February 11, 2020.

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

No Selling Commissions or Dealer Manager Fee are paid with respect to shares sold pursuant to the DRIP.

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

We paid fees of $ 0.1 million and $ 0.4 million to Gladstone Securities during the three and nine months ended September 30, 2022, respectively, in connection with the Offering.

We paid fees of $ 0.4 million and $ 0.5 million to Gladstone Securities during the three and nine months ended September 30, 2021, respectively, in connection with the Offering.

We paid fees of $ 0.03 million and $ 0.1 million to Gladstone Securities during the three months ended March 31, 2023 and 2022, respectively, in connection with the Offering.

(Loss) Earnings Per Share of Common Stock

The following tables set forth the computation of basic and diluted (loss) earnings per share of common stock for the three and nine months ended September 30, 2022 and 2021.

The following tables set forth the computation of basic and diluted (loss) earnings per share of common stock for the three months ended March 31, 2023 and 2022.

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

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

We computed basic (loss) earnings per share for the three and nine months ended September 30, 2022 and 2021 using the weighted average number of shares outstanding during the respective periods.

Diluted (loss) earnings per share for the three and nine months ended September 30, 2022 and 2021 reflects additional shares of common stock related to our convertible senior common stock (the “Senior Common Stock”), if the effect of conversion would be dilutive, that would have been outstanding if such dilutive potential shares of common stock had been issued, as well as an adjustment to net (loss) income (attributable) available to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

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

2022 2021 2022 2021

We computed basic (loss) earnings per share for the three months ended March 31, 2023 and 2022 using the weighted average number of shares outstanding during the respective periods.

Diluted (loss) earnings per share for the three months ended March 31, 2023 and 2022 reflects additional shares of common stock related to our convertible senior common stock (the “Senior Common Stock”), if the effect of conversion would be dilutive, that would have been outstanding if such dilutive potential shares of common stock had been issued, as well as an adjustment to net (loss) income (attributable) available to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

For the three months ended March 31,

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

9 unchanged sentences

Diluted (loss) earnings per share of common stock $ ( 0.02 ) $ 0.01

(1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 273,072 and 262,412 for the three and nine months ended September 30, 2022, respectively, and 256,994 and 337,205 for the three and nine months ended September 30, 2021, respectively.

(2) We excluded convertible shares of Senior Common Stock of 363,246 and 532,785 from the calculation of diluted earnings per share for the three and nine months ended September 30, 2022 and 2021, respectively, because they were anti-dilutive.

(1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 391,468 and 256,994 for the three months ended March 31, 2023 and 2022, respectively.

(2) We excluded convertible shares of Senior Common Stock of 345,687 and 374,123 from the calculation of diluted earnings per share for the three months ended March 31, 2023 and 2022, respectively, because they were anti-dilutive.

Real Estate and Intangible Assets

The following table sets forth the components of our investments in real estate as of September 30, 2022 and December 31, 2021, respectively, excluding real estate held for sale as of September 30, 2022 (dollars in thousands):

September 30, 2022 December 31, 2021

The following table sets forth the components of our investments in real estate as of March 31, 2023 and December 31, 2022, respectively, excluding real estate held for sale as of March 31, 2023 and December 31, 2022 (dollars in thousands):

March 31, 2023 December 31, 2022

Land (1) $ 152,695 $ 152,916

4 unchanged sentences

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

Real estate depreciation expense on building and tenant improvements was $ 11.0 million and $ 31.1 million for the three and nine months ended September 30, 2022, respectively.

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

We acquired 11 industrial properties during the nine months ended September 30, 2022, and eight industrial properties during the nine months ended September 30, 2021.

Real estate depreciation expense on building and tenant improvements was $ 11.3 million and $ 9.9 million for the three months ended March 31, 2023 and 2022, respectively.

We did not acquire any properties during the three months ended March 31, 2023, and acquired two industrial properties during the three months ended March 31, 2022.

The acquisitions are summarized below (dollars in thousands):

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

September 30, 2022 (1) 1,105,006 13.8 years $ 98,276 $ 776

September 30, 2021 (2) 367,716 15.5 years $ 46,225 $ 370

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

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

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

2 unchanged sentences

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

On May 4, 2022, we acquired a two -property, 260,719 square foot portfolio in Cleveland, Ohio and Fort Payne, Alabama for $ 19.5 million.

The properties are fully leased to one tenant and had 11.4 years of remaining lease term at the time we acquired the properties.

On May 12, 2022, we acquired a three -property, 345,584 square foot portfolio in Wilmington, North Carolina for $ 18.9 million.

The properties are fully leased to one tenant and had 13.1 years of remaining lease term at the time we acquired the properties.

On August 5, 2022, we acquired a two -property, 246,000 square foot portfolio in Bridgeton, New Jersey and Vineland, New Jersey for $ 32.7 million.

The properties are fully leased to one tenant and had 15.1 years of remaining lease term at the time we acquired the properties.

On September 16, 2022, we acquired a 67,328 square foot property in Jacksonville, Florida for $ 8.1 million.

The property is fully leased to one tenant and had 20.0 years of remaining lease term at the time we acquired the property.

On September 20, 2022, we acquired a 49,375 square foot property in Fort Payne, Alabama for $ 5.6 million.

The property is fully leased to one tenant and had 14.8 years of remaining lease term at the time we acquired the property.

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

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

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

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

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

These properties are fully leased to one tenant for 17.4 years at time we acquired the portfolio.

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

These properties are fully leased to one tenant for 15.0 years at time we acquired the portfolio.

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the nine months ended September 30, 2022 and 2021, respectively, as follows (dollars in thousands):

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Acquired assets and liabilities Purchase price Purchase price

Land $ 5,949 $ 4,116

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the three months ended March 31, 2022 as follows (dollars in thousands):

Three Months Ended March 31, 2022

Acquired assets and liabilities Purchase price

Building 10,250

6 unchanged sentences

Total Purchase Price $ 13,463

(1) This amount includes $ 9 and $ 46 of loans receivable included in Other assets on the condensed consolidated balance sheets, respectively.

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

Future Lease Payments

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the three months ending December 31, 2022 and each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of September 30, 2022 (dollars in thousands):

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the nine months ending December 31, 2023 and each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of March 31, 2023 (dollars in thousands):

Year Tenant Lease Payments

Three Months Ending 2022 $ 30,721

Nine Months Ending December 31, 2023 $ 87,845

Thereafter 299,003

2 unchanged sentences

Lease Revenue Reconciliation

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three and nine months ended September 30, 2022 and 2021, respectively (dollars in thousands):

For the three months ended September 30,

(Dollars in Thousands)

Lease revenue reconciliation 2022 2021 $ Change % Change

Fixed lease payments $ 35,752 $ 30,230 $ 5,522 18.3 %

Variable lease payments 4,082 4,104 ( 22 ) ( 0.5 ) %

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

For the nine months ended September 30,

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three months ended March 31, 2023 and 2022, respectively (dollars in thousands):

For the three months ended March 31,

(Dollars in Thousands)

4 unchanged sentences

Intangible Assets

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of September 30, 2022 and December 31, 2021, respectively, excluding real estate held for sale as of September 30, 2022 (dollars in thousands):

September 30, 2022 December 31, 2021

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of March 31, 2023 and December 31, 2022, respectively, excluding real estate held for sale as of March 31, 2023 and December 31, 2022 (dollars in thousands):

March 31, 2023 December 31, 2022

Lease Intangibles Accumulated Amortization Lease Intangibles Accumulated Amortization

6 unchanged sentences

Below market leases and deferred revenue ( 64,346 ) 25,547 ( 66,138 ) 26,141

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 4.7 million and $ 14.5 million for the three and nine months ended September 30, 2022, respectively, and $ 5.0 million and $ 15.7 million for the three and nine months ended September 30, 2021, respectively, and is included in depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to above-market lease values was $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2022, respectively, and $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 2021, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to below-market lease values was $ 1.5 million and $ 3.1 million for the three and nine months ended September 30, 2022, respectively, and $ 0.9 million and $ 3.3 million for the three and nine months ended September 30, 2021, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the nine months ended September 30, 2022 and 2021, respectively, were as follows:

Intangible Assets & Liabilities 2022 2021

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 4.1 million and $ 4.7 million for the three months ended March 31, 2023 and 2022, respectively, and is included in depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to above-market lease values was $ 0.2 million and $ 0.2 million for the three months ended March 31, 2023 and 2022, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to below-market lease values was $ 1.9 million and $ 0.8 million for the three months ended March 31, 2023 and 2022, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

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

Intangible Assets & Liabilities March 31, 2022

In-place leases 10.7

6 unchanged sentences

Real Estate Dispositions

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 did not sell any properties during the three months ended March 31, 2023 and 2022.

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

During the 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

Our dispositions during the nine months ended September 30, 2022 were not classified as discontinued operations because they did not represent a strategic shift in operations, nor will such dispositions have a major effect on our operations and financial results.

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

The table below summarizes the components of operating income from the real estate and related assets disposed of during the three and nine months ended September 30, 2022 and 2021 (dollars in thousands):

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

2022 2021 2022 2021

Operating revenue $ 3,505 $ 730 $ 4,961 $ 2,442

Operating expense 51 442 2,215 1,506

Other income (expense), net 8,902 (1) ( 36 ) 8,857 (1) 42

Income from real estate and related assets sold $ 12,356 $ 252 $ 11,603 $ 978

(1) Includes an $ 8.9 million gain on sale of real estate, net, on three property sales.

Real Estate Held for Sale

At September 30, 2022, we had two properties classified as held for sale, located in Columbus, Ohio and Allen, Texas.

At March 31, 2023, we had two properties classified as held for sale, located in Columbia, South Carolina and Baytown, Texas.

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

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

The table below summarizes the components of the assets and liabilities held for sale at September 30, 2022 reflected on the accompanying condensed consolidated balance sheets (dollars in thousands):

September 30, 2022

At December 31, 2022, we had one property classified as held for sale, located in Columbia, South Carolina.

The table below summarizes the components of the assets and liabilities held for sale at March 31, 2023 and December 31, 2022 reflected on the accompanying condensed consolidated balance sheets (dollars in thousands):

March 31, 2023 December 31, 2022

Assets Held for Sale

1 unchanged sentence

Lease intangibles, net 41 —

Deferred rent receivable, net 775

Total Assets Held for Sale $ 4,722 $ 3,013

Liabilities Held for Sale

Asset retirement obligation $ 16

Total Liabilities Held for Sale $ 16

Impairment Charges

We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the nine months ended September 30, 2022 and identified one held and used asset, located in Columbia, South Carolina, which was impaired by $ 10.7 million.

In performing our impairment testing, the undiscounted cash flow for this asset was below the carrying value.

We engaged a third party expert to determine the fair value for this asset, which was calculated using level 3 inputs.

As part of their analysis, a sales comparison approach was used with the value per square foot range between $ 9.87 per

square foot and $ 55.48 per square foot, with a weighted average of $ 30.72 per square foot.

As a result, we recorded an impairment charge to the carrying value, to record this property at the appraised value of $ 4.5 million.

We evaluated our held for sale assets to determine if any of these assets were impaired during the nine months ended September 30, 2022, and identified one held for sale asset, located in Parsippany, New Jersey, which was impaired by $ 1.4 million.

In performing our held for sale assessment, the carrying value of this asset was above the fair value, less costs of sale.

As a result, we impaired this property to equal the fair market value less costs of sale.

The property was sold during the nine months ended September 30, 2022.

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

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

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

Future impairment losses may result, and could be significant, should market conditions deteriorate in the markets in which we hold our assets or should we be unable to secure leases at terms that are favorable to us, which could impact the estimated cash flow of our properties over the period in which we plan to hold our properties.

Additionally, changes in management’s decisions to either own and lease long-term or sell a particular asset will have an impact on this analysis.

We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the three months ended March 31, 2023 and 2022, and did not recognize an impairment charge.

Mortgage Notes Payable and Credit Facility

Our $ 125.0 million unsecured revolving credit facility (“Revolver”), $ 160.0 million term loan facility (“Term Loan A”), $ 60.0 million term loan facility (“Term Loan B”), and $ 150.0 million term loan facility (“Term Loan C”), are collectively referred to herein as the Credit Facility.

Our mortgage notes payable and Credit Facility as of September 30, 2022 and December 31, 2021 are summarized below (dollars in thousands):

Our mortgage notes payable and Credit Facility as of March 31, 2023 and December 31, 2022 are summarized below (dollars in thousands):

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

September 30, 2022 September 30, 2022 December 31, 2021 September 30, 2022 September 30, 2022

March 31, 2023 March 31, 2023 December 31, 2022 March 31, 2023 March 31, 2023

Mortgage and other secured loans:

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

(2) We have 44 mortgage notes payable with maturity dates ranging from December 6, 2022 through August 1, 2037.

(3) The weighted average interest rate on the mortgage notes outstanding as of September 30, 2022 was approximately 4.19 %.

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

(5) The weighted average interest rate on all debt outstanding as of September 30, 2022 was approximately 4.31 %.

(6) The amount we may draw under our Credit Facility is based on a percentage of the fair value of a combined pool of 82 unencumbered properties as of September 30, 2022.

(2) We have 44 mortgage notes payable with maturity dates ranging from April 6, 2023 through August 1, 2037.

(3) The weighted average interest rate on the mortgage notes outstanding as of March 31, 2023 was approximately 4.24 %.

(4) As of March 31, 2023, Secured Overnight Financing Rate (“SOFR”) was approximately 4.87 %.

(5) The weighted average interest rate on all debt outstanding as of March 31, 2023 was approximately 5.33 %.

(6) The amount we may draw under our Credit Facility is based on a percentage of the fair value of a combined pool of 84 unencumbered properties as of March 31, 2023.

N/A - Not Applicable

Mortgage Notes Payable

As of September 30, 2022, we had 44 mortgage notes payable, collateralized by a total of 50 properties with a net book value of $ 556.7 million.

As of March 31, 2023, we had 44 mortgage notes payable, collateralized by a total of 50 properties with a net book value of $ 550.1 million.

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

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

As of September 30, 2022, we did not have any mortgages subject to recourse.

As of March 31, 2023, we did not have any mortgages subject to recourse.

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

During the nine months ended September 30, 2022, we repaid 13 mortgages, collateralized by 27 properties, which is 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 %

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 is summarized in the table below (dollars in thousands):

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

$ 41,313 (1) 4.39 %

(1) We issued $ 10.0 million of fixed rate debt with a maturity date of May 4, 2027, in connection with the two -property portfolio 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 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

$ 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 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

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.

We made payments of $ 5.6 million and $ 6.2 million for deferred financing costs during the three and nine months ended September 30, 2022.

We did not make any payments for deferred financing costs during the three months ended September 30, 2021, but made payments of $ 0.6 million for deferred financing costs during the nine months ended September 30, 2021.

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

During the three months ended March 31, 2023, we did not issue or repay any mortgages.

We made payments of $ 0.1 million for deferred financing costs during the three months ended March 31, 2023.

We did not make any payments for deferred financing costs during the three months ended March 31, 2022.

Scheduled principal payments of mortgage notes payable for the nine months ending December 31, 2023, and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

Year Scheduled Principal Payments

Three Months Ending December 31, 2022 $ 16,030

Nine Months Ending December 31, 2023 $ 64,537

Thereafter 69,345

11 unchanged sentences

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

At September 30, 2022 and December 31, 2021, our interest rate cap agreements and interest rate swaps were valued using Level 2 inputs.

At March 31, 2023 and December 31, 2022, our interest rate cap agreements and interest rate swaps were valued using Level 2 inputs.

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

2 unchanged sentences

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

The following table summarizes the interest rate caps at September 30, 2022 and December 31, 2021 (dollars in thousands):

September 30, 2022 December 31, 2021

The following table summarizes the interest rate caps at March 31, 2023 and December 31, 2022 (dollars in thousands):

March 31, 2023 December 31, 2022

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

2 unchanged sentences

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

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

The fair value of our interest rate swap agreements is recorded in

other assets or other liabilities on our accompanying condensed consolidated balance sheets.

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

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

The following table summarizes our interest rate swaps at September 30, 2022 and December 31, 2021 (dollars in thousands):

September 30, 2022 December 31, 2021

The following table summarizes our interest rate swaps at March 31, 2023 and December 31, 2022 (dollars in thousands):

March 31, 2023 December 31, 2022

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

1 unchanged sentence

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

Amount of gain (loss), net, recognized in Comprehensive Income

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

2022 2021 2022 2021

Amount of (loss) gain, net, recognized in Comprehensive Income

Three Months Ended March 31,

Derivatives in cash flow hedging relationships

4 unchanged sentences

Amount reclassified out of Accumulated Other Comprehensive Income

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

2022 2021 2022 2021

Three Months Ended March 31,

Interest rate caps $ 263 $ —

2 unchanged sentences

Asset (Liability) Derivatives Fair Value at

Derivatives Designated as Hedging Instruments Balance Sheet Location September 30, 2022 December 31, 2021

Derivatives Designated as Hedging Instruments Balance Sheet Location March 31, 2023 December 31, 2022

Interest rate caps Other assets $ 3,264 $ 4,629

2 unchanged sentences

Total derivative liabilities, net $ 5,741 $ 11,996

The fair value of all mortgage notes payable outstanding as of September 30, 2022 was $ 346.8 million , as compared to the carrying value stated above of $ 367.6 million.

The fair value of all mortgage notes payable outstanding as of March 31, 2023 was $ 329.6 million, as compared to the carrying value stated above of $ 354.6 million.

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

The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”

Reference Rate Reform

Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”) contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

As of September 30, 2022, we elected to apply the hedge accounting expedients related to probability and the assessment of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives.

We also elected the option to not reassess a previous accounting determination, and the option to not dedesignate a hedging relationship due to a change in a critical term.

Application of these expedients preserves the presentation of derivatives consistent with past presentation.

The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in our hedging activities occur.

Credit Facility

On July 2, 2019, we amended, extended and upsized our Credit Facility, expanding Term Loan A from $ 75.0 million to $ 160.0 million, and increased our Revolver from $ 85.0 million to $ 100.0 million.

Term Loan A has a maturity date of July 2, 2024, and the Revolver has a maturity date of July 2, 2023.

The interest rate for the Credit Facility is equal to LIBOR plus a spread ranging from 125 to 215 basis points, depending on our leverage.

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

The Credit Facility’s bank syndicate is comprised of KeyBank, Fifth Third Bank, U.S.

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

On February 11, 2021, we added a new $ 65.0 million Term Loan B, inclusive of a $ 15.0 million delayed funding component.

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

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

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

As of 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 and fund acquisitions.

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.

2 unchanged sentences

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.

We incurred fees of approximately $ 4.2 million in connection with extending and upsizing

our Credit Facility.

As of March 31, 2023, 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 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 September 30, 2022, the maximum additional amount we could draw under the Credit Facility was $ 56.0 million.

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

The amount outstanding under the Credit Facility approximates fair value as of September 30, 2022.

As of March 31, 2023, there was $ 396.3 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 6.32 %, and $ 14.4 million outstanding under letters of credit, at a weighted average interest rate of 1.50 %.

As of March 31, 2023, the maximum additional amount we could draw under the Credit Facility was $ 77.5 million.

We were in compliance with all covenants under the Credit Facility as of March 31, 2023.

The amount outstanding under the Credit Facility approximates fair value as of March 31, 2023.

Commitments and Contingencies

1 unchanged sentence

We are obligated as lessee under four ground leases.

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

Future minimum rental payments due under the terms of these leases for the nine months ending December 31, 2023 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year Future Lease Payments Due Under Operating Leases

Three Months Ending December 31, 2022 $ 123

Nine Months Ending December 31, 2023 $ 369

Thereafter 5,790

2 unchanged sentences

Present value of lease payments $ 5,255

Rental expense incurred for properties with ground lease obligations during the three and nine months ended September 30, 2022 was $ 0.1 million and $ 0.3 million, respectively, and during the three and nine months ended September 30, 2021 was $ 0.1 million and $ 0.4 million, respectively.

Rental expense incurred for properties with ground lease obligations during the three months ended March 31, 2023 and 2022 was $ 0.1 million and $ 0.1 million, respectively.

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

1 unchanged sentence

Letters of Credit

As of September 30, 2022, there was $ 17.1 million outstanding under letters of credit.

As of March 31, 2023, there was $ 14.4 million outstanding under letters of credit.

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

1 unchanged sentence

Stockholders’ Equity

The following table summarizes the changes in our equity for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

The following table summarizes the changes in our equity for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

Senior Common Stock

13 unchanged sentences

Issuance of common stock and Series F preferred stock, net 4,385 21,749

Redemption of OP Units — — — 4,812

Redemption of Series F preferred stock, net 86 55

Retirement of senior common stock, net 52 —

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership 24 ( 143 )

2 unchanged sentences

Balance, beginning of period $ 11,640 $ ( 1,346 )

Comprehensive income 6,790 421 13,660 2,125

Comprehensive (loss) income ( 5,895 ) 4,267

Reclassification into interest expense 263 —

3 unchanged sentences

Distributions declared to common, senior common, and preferred stockholders ( 15,108 ) ( 17,354 )

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

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

4 unchanged sentences

Issuance of common stock and Series F preferred stock, net 4,386 21,750

Redemption of OP Units — — — 4,812

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

Redemption of Series F preferred stock, net 81 50

Retirement of senior common stock, net 52 —

Distributions declared to common, senior common, and preferred stockholders ( 15,108 ) ( 17,354 )

Comprehensive income 6,790 421 13,660 2,125

Comprehensive (loss) income ( 5,895 ) 4,267

Reclassification into interest expense 263 —

5 unchanged sentences

Distributions declared to Non-controlling OP Unit holders ( 118 ) ( 96 )

Issuance of Non-controlling OP Units as consideration in real estate acquisitions, net 2,394 — 2,394 —

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

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership ( 24 ) 143

3 unchanged sentences

Distributions

We paid the following distributions per share for the three and nine months ended September 30, 2022 and 2021:

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

2022 2021 2022 2021

We paid the following distributions per share for the three months ended March 31, 2023 and 2022:

For the three months ended March 31,

Common Stock and Non-controlling OP Units $ 0.30000 $ 0.37620

Senior Common Stock 0.2625 0.2625

Series D Preferred Stock — — (1) — 0.8749998 (1)

Series E Preferred Stock 0.414063 0.414063

1 unchanged sentence

Series G Preferred Stock 0.375 0.375

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

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

Recent Activity

Common Stock ATM Program

During the 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 with sales agents Robert W.

Incorporated, Goldman Sachs & Co.

LLC, Stifel, Nicolaus & Company, Incorporated, BTIG, LLC, and Fifth Third Securities, Inc.

Common Stock ATM Programs

During the three months ended March 31, 2023, we sold 0.2 million shares of common stock, raising $ 4.0 million in net proceeds under our At-the-Market Equity Offering Sales Agreement with sales agents Robert W.

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

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

(“Fifth Third”).

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.

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 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).

1 to the At-the-Market Equity Offering Sales Agreement, dated December 3, 2019 (together, the “Prior Common Stock Sales Agreement”).

The amendment permitted shares of common stock to be issued pursuant to the Prior Common Stock Sales Agreement under the 2020 Registration Statement, and future registration statements on Form S-3 (the “Prior Common Stock ATM Program”).

We terminated the Prior Common Stock Sales Agreement effective as of February 10, 2023 in connection with the expiration of the 2020 Registration Statement on February 11, 2023.

On March 3, 2023, we entered into an At-the-Market Equity Offering Sales Agreement (the “2023 Common Stock Sales Agreement”), with BofA Securities, inc.

(“BofA”), Goldman Sachs, Baird, KeyBanc Capital Markets Inc.

(“KeyBanc”), and Fifth Third (collectively the “Common Stock Sales Agents”).

In connection with the 2023 Common Stock Sales Agreement, we filed prospectuses dated March 3, 2023 and March 7, 2023, to the prospectus dated November 23, 2022, with the SEC, for the offer and sale of an aggregate offering amount of up to $ 250.0 million of common stock.

During the three months ended March 31, 2023, we did not sell any shares of common stock under the 2023 Common Stock Sales Agreement.

Mezzanine Equity

5 unchanged sentences

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

Universal Shelf Registration Statement

On January 29, 2020, we filed a 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.

The 2020 Universal Shelf allows us to issue up to $ 800.0 million of securities.

Of the $ 800.0 million of available capacity under our 2020 Universal Shelf, approximately $ 636.5 million is reserved for the sale of our Series F Preferred Stock, and $ 63.0 million is reserved for our Common Stock ATM Program.

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

During the three months ended March 31, 2023, 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.

We did not sell any shares of our Series E Preferred Stock pursuant to the Series E Preferred Stock Sales Agreement during the three months ended March 31, 2023.

We terminated the Series E Preferred Stock Sales Agreement effective as of February 10, 2023.

Universal Shelf Registration Statements

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

The 2020 Registration Statement was declared effective on February 11, 2020.

The 2020 Registration Statement allowed us to issue up to $ 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 our Series F Preferred Stock, and $ 63.0 million was reserved for our Prior Common Stock ATM Program.

The 2020 Registration Statement expired on February 11, 2023.

On November 23, 2022, we filed 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.

Series F Preferred Stock

On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary (i) setting forth the rights, preferences and terms of the Series F Preferred Stock and (ii) reclassifying and designating 26,000,000 shares

of our authorized and unissued shares of common stock as shares of Series F Preferred Stock.

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

We sold 164,400 shares of our Series F Preferred Stock, raising $ 3.7 million in net proceeds during the 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.

We sold 22,256 shares of our Series F Preferred Stock, raising $ 0.5 million in net proceeds, during the three months ended March 31, 2023.

Non-controlling Interest in Operating Partnership

As of September 30, 2022 and December 31, 2021, we owned approximately 99.0 % and 99.3 %, re spectively, 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 nine months ended September 30, 2021 , we redeemed 246,039 OP Units for an equivalent amount of common stock.

As of March 31, 2023 and December 31, 2022, we owned approximately 99.0 % and 99.0 %, re spectively, of the outstanding OP Units.

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

As of September 30, 2022 and December 31, 2021, there were 391,468 and 256,994 outstanding OP Units held by Non-controlling OP Unitholders, respectively.

As of March 31, 2023 and December 31, 2022, there were 391,468 and 391,468 outstanding OP Units held by Non-controlling OP Unitholders, respectively.

Subsequent Events

Distributions

On October 11, 2022, our Board of Directors declared the following monthly distributions for the months of October, November and December of 2022:

On April 11, 2023, our Board of Directors declared the following monthly distributions for the months of April, May and June of 2023:

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

October 21, 2022 October 31, 2022 $ 0.12540 $ 0.138021 $ 0.125

November 18, 2022 November 30, 2022 0.12540 0.138021 0.125

December 20, 2022 December 30, 2022 0.12540 0.138021 0.125

April 21, 2023 April 28, 2023 $ 0.10 $ 0.138021 $ 0.125

May 23, 2023 May 31, 2023 0.10 0.138021 0.125

June 21, 2023 June 30, 2023 0.10 0.138021 0.125

$ 0.30 $ 0.414063 $ 0.375

2 unchanged sentences

Payment Date Distribution per Share

October November 4, 2022 $ 0.0875

November December 5, 2022 0.0875

December January 6, 2023 0.0875

April May 5, 2023 $ 0.0875

May June 5, 2023 0.0875

June July 5, 2023 0.0875

Series F Preferred Stock Distributions

Record Date Payment Date Distribution per Share

October 26, 2022 November 4, 2022 $ 0.125

November 23, 2022 December 5, 2022 0.125

December 28, 2022 January 6, 2023 0.125

April 26, 2023 May 5, 2023 $ 0.125

May 26, 2023 June 5, 2023 0.125

June 27, 2023 July 5, 2023 0.125

Equity Activity

Subsequent to September 30, 2022 and through November 7, 2022, we raised $ 0.2 million in net proceeds from the sale of 8,500 shares of Series F Preferred Stock.

Sale Activity

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

Subsequent to March 31, 2023 and through May 3, 2023, we raised $ 0.3 million in net proceeds from the sale of 13,172 shares of Series F Preferred Stock.

Acquisition Activity

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

On April 14, 2023, we purchased a 76,089 square foot industrial property in Riverdale, Illinois for $ 5.3 million.

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

Financing Activity

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 %.

Election of Director

Effective October 11, 2022, Paula Novara was elected to our Board of Directors.

Novara also serves as head of human resources, facilities and office management and IT of the Adviser and certain of its affiliates.

On April 6, 2023, we repaid $ 2.7 million of fixed rate debt, collateralized by one property, at an interest rate of 4.16 %.

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

What changed 10-Q

Item 1. Financial Statements