What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-03 · 218 added, 112 removed, 296 unchanged (53% of the section changed)

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

As of May 3, 2023:

As of August 8, 2023:

• we owned 137 properties totaling 17.3 million square feet of rentable space, located in 27 states;

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Business Environment

The demand for industrial space has continued, largely 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 disruptions 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 lower deliveries into 2024.

The industrial market recorded its strongest year in 2021, surpassing 500 million square feet in net absorption and continued to remain strong throughout 2022, absorbing over 350 million square feet.

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 market fundamentals 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.

Coupled with tighter credit conditions, we expect to see continued softening of office fundamentals over the next 36 months.

The commercial real estate sector was marked by continued uncertainty and volatility in the second quarter of 2023.

In June, the Federal Reserve held rates steady for the first time in 15 months due to inflation decreasing to 3.0%, its biggest improvement since March 2021.

However, the Federal Reserve continued its path of rising rates by raising them 0.25% in the July meeting, signaling that the Fed will look for lower levels of inflation before determining peak rate levels.

With inflation moderating to its lowest year-over-year increase since March 2021, the economy is showing the effects of the rapid rate hikes and tightening credit standards over the past 18 months.

Real estate transaction volumes remain low, as tightened credit standards and increasing capital costs have sidelined many investors.

The industrial sector normalized in the second quarter of 2023, relative to the record setting years of 2021 and 2022;

however, overall fundamentals remain sound, and the sector continues to outperform other property types.

The second quarter of 2023

posted 44.9 million square feet of net absorption, down from 71.0 million square feet in the first quarter of 2023.

Absorption levels for the first half of 2023 were in line with the years leading up to the pandemic, which were historically strong years in the broader context of the e-commerce demand boom kickstarted by the pandemic.

Leasing activity in the industrial sector totaled 141.0 million square feet in the second quarter of 2023, down 8.9% from the first quarter of 2023.

New deliveries totaled 140.0 million square feet, pushing the vacancy rate to 4.1%.

This is the first time the vacancy rate has surpassed 4.0% since the first half of 2021, but it still remains below the 10-year historical average of 5.2%.

The sunbelt continues to outperform, with Savannah, Dallas, and Houston leading major markets for net absorption.

The office sector continued to weaken in the second quarter of 2023.

Nonetheless, for the first time in over a year, second quarter 2023 leasing volume increased by 11.6% to 42.0 million square feet.

The sector posted negative 12.5 million square feet of net absorption, which is 40.0% less than the 20.0 million square feet lost in the first quarter of 2023.

Only 1.4 million square feet of new product broke ground in the second quarter of 2023, which will limit future new deliveries.

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

The yield on the 10-year U.S.

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

Treasury Note has increased significantly since the beginning of 2022 and finished the second quarter of 2023 at 3.81%.

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

We collected 100% of all outstanding cash rents for calendar year 2022.

We collected 100% of all outstanding cash rents for the six months ended June 30, 2023.

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

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We believe we currently have adequate liquidity in the near term, and we believe the availability on our Credit Facility is sufficient to cover all near-term debt obligations and operating expenses and to continue our industrial growth strategy.

We are in compliance with all of our debt covenants as of March 31, 2023.

We are in compliance with all of our debt covenants as of June 30, 2023.

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

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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.

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 and the first quarter of 2023, we began transitioning our variable rate debt to SOFR, and, at March 31, 2023 , all of our variable rate debt was based upon SOFR, with the exception of $20.7 million of hedged variable rate mortgages still based on LIBOR, which we are working to transition to SOFR prior to the mid-2023 phase out of LIBOR.

The London Inter-bank Offered Rate (“LIBOR”) has been phased out as of June 2023.

The Secured Overnight Financing Rate (“SOFR”) is now the new rate standard.

During 2022 and the first half of 2023, we began transitioning our variable rate debt to SOFR, and, at June 30, 2023 , all of our variable rate debt was based upon SOFR, with the exception of $20.5 million of hedged variable rate mortgages still based on LIBOR.

We are actively working to transition the remaining debt to SOFR.

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

Currently, we have five partially vacant buildings and four fully vacant buildings.

Our available vacant space at March 31, 2023 represents 4.1% of our total square footage and the annual

carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $4.3 million .

Currently, we have four partially vacant buildings and four fully vacant buildings.

Our available vacant space at June 30, 2023 represents 4.0% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $3.9 million .

We continue to actively seek new tenants for these properties.

We believe our lease expiration schedule for the remainder of 2023 is quite manageable, as it equates to only 3.3% of our lease revenue at March 31, 2023.

We believe our lease expiration schedule for the remainder of 2023 is quite manageable, as it equates to only 2.1% of our lease revenue at June 30, 2023.

Property acquisitions since the beginning of 2020 have totaled $348.4 million and all transactions were industrial in nature, with a weighted average lease term of 13.3 years and a current weighted average lease term today of 11.0 years.

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

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

Our principal sources of financing generally include the issuance of equity securities, long-term mortgage loans secured by properties, borrowings under

our $125.0 million senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“KeyBank”), which matures in August 2026, our $160.0 million term loan facility (“Term Loan A”), which matures in August 2027, our $60.0 million term loan facility (“Term Loan B”), which matures in February 2026, and our $150.0 million term loan facility (“Term Loan C”) which matures in February 2028.

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

While lenders’ credit standards have tightened, we continue to look to national and regional banks, insurance companies and non-bank lenders to issue mortgages to finance our real estate activities.

While lenders’ credit standards have tightened, we continue to look to national and regional banks, insurance companies and non-bank lenders to make mortgage loans to finance our real estate activities.

Recent Developments

Sale Activity

During the six months ended June 30, 2023 we continued to execute our capital recycling program, whereby we sold non-core properties and redeployed proceeds to either fund property acquisitions in our target secondary growth markets or repay outstanding debt.

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

During the six months ended June 30, 2023, we sold two non-core properties, located in Baytown, Texas and Birmingham, Alabama, 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

42,868 $ 4,650 $ 233 $ (451)

On July 27, 2023 we sold our 26,080 square foot office property in Pittsburgh, Pennsylvania for $6.8 million.

We realized a $3.6 million gain on sale.

Acquisition Activity

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

During the six months ended June 30, 2023, we acquired one industrial property located in Riverdale, Illinois, which is summarized below (dollars in thousands):

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

76,089 20.0 years $ 5,363 $ 98 $ 511

On July 10, 2023, we purchased a 7,714 square foot medical office property in Dallas Fort Worth, Texas for $2.9 million.

This property is fully leased to one tenant on a 10-year lease.

On July 28, 2023 we purchased a 100,000 square foot industrial property in Cedar Hill, Texas for $9.1 million.

This property is fully leased to one tenant on a 20-year lease.

Leasing Activity

During and subsequent to the three months ended March 31, 2023, we executed six leases, which are summarized below (dollars in thousands):

During and subsequent to the six months ended June 30, 2023, we executed ten leases, which are summarized below (dollars in thousands):

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

1,256,292 18.7 years $ 8,614 $ 4,657 $ 1,750

During the six months ended June 30, 2023, we had one lease termination, which is summarized below (dollars in thousands):

Square Footage Reduced Accelerated Rent Accelerated Rent Recognized through June 30, 2023

119,224 $ 2,045 $ 2,045

Financing Activity

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

During the six months ended June 30, 2023, we repaid one mortgage, collateralized by one property, which is summarized in the table below (dollars in thousands):

Fixed Rate Debt Repaid Interest Rate on Fixed Rate Debt Repaid

$ 2,690 4.16 %

On July 28, 2023 we repaid $6.8 million in fixed rate mortgage debt, collateralized by one property, at an interest rate of 5.00%.

On August 4, 2023 we repaid $28.9 million in fixed rate mortgage debt, collateralized by one property, at an interest rate of 4.81%.

During the six months ended June 30, 2023, we extended the maturity date of one mortgage, collateralized by one property, which is summarized in the table below (dollars in thousands):

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

$ 8,769 6.50 % 1.0 year

Equity Activities

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 (the “Common Stock Sales Agreement”) with sales agents Robert W.

During the six months ended June 30, 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 (the “Common Stock Sales Agreement”) with sales agents Robert W.

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

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(“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 $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.

In connection with the 2023 Common Stock Sales Agreement, we filed prospectus supplements 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 $250.0 million of common stock.

During the six months ended June 30, 2023, we did not sell any shares of common stock under the 2023 Common Stock Sales Agreement.

During the six months ended June 30, 2023, we utilized our common stock repurchase program, repurchasing $1.0 million worth of common stock.

All repurchased shares were retired.

Series E Preferred ATM Program

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.

Prior to February 10, 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 did not sell any shares of our Series E Preferred Stock pursuant to the Series E Preferred Stock Sales Agreement during the six months ended June 30, 2023.

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

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

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

We sold 188,919 shares of our Series F Preferred Stock, raising $4.3 million in net proceeds during the six months ended June 30, 2023.

Non-controlling Interest in Operating Partnership

As of March 31, 2023 and December 31, 2022, we owned approximately 99.0% and 99.0%, re spectively, of the outstanding operating partnership units in the Operating Partnership (“OP Units”).

As of March 31, 2023 and December 31, 2022, there were 391,468 and 391,468 outstanding OP Units held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”), respectively.

Director Activity

Terry Lee Brubaker resigned from our Board of Directors, effective April 14, 2023.

Brubaker’s resignation was not a result of any disagreement with the Company on any matters relating to the Company’s operations, policies, or practices.

As of June 30, 2023 and December 31, 2022, we owned approximately 99.0% and 99.0%, re spectively, of the outstanding operating partnership units in the Operating Partnership (“OP Units”).

As of June 30, 2023 and December 31, 2022, there were 391,468 and 391,468 outstanding OP Units held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”), respectively.

Diversity of Our Portfolio

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

For the three months ended March 31, 2023, our largest tenant comprised only 4.3% of total lease revenue.

The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three months ended March 31, 2023 and 2022 (dollars in thousands):

For the three months ended March 31,

Industry Classification Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue

Automotive $ 5,140 14.2 $ 4,636 13.0

For the six months ended June 30, 2023, our largest tenant comprised only 4.2% of total lease revenue.

The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):

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

2023 2022 2023 2022

Industry Classification Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue

Telecommunications $ 7,281 18.9 % $ 5,747 15.8 % $ 12,223 16.5 % $ 11,356 15.8 %

Automotive 5,220 13.5 4,640 12.7 10,349 13.8 9,089 12.6

Diversified/Conglomerate Services 4,660 12.1 4,551 12.5 9,191 12.2 8,059 11.2

Healthcare 3,348 9.2 3,984 11.2

Diversified/Conglomerate Manufacturing 2,762 7.1 2,795 7.7 5,398 7.2 5,218 7.3

Healthcare 2,608 6.7 4,075 11.2 5,955 7.9 9,275 12.9

Personal, Food & Miscellaneous Services 2,345 6.1 1,550 4.3 4,692 6.2 3,097 4.3

Banking 2,336 6.4 2,608 7.3

Buildings and Real Estate 2,313 6.0 2,315 6.4 4,621 6.1 5,419 7.5

Banking 2,272 5.9 2,610 7.2 4,610 6.1 4,657 6.5

Personal & Non-Durable Consumer Products 1,886 4.9 1,104 3.0 3,769 5.0 1,963 2.7

Beverage, Food & Tobacco 1,402 3.8 1,381 3.9

Machinery 1,448 3.7 975 2.7 2,817 3.7 1,948 2.7

Beverage, Food & Tobacco 1,431 3.7 1,407 3.9 2,833 3.8 2,155 3.0

Chemicals, Plastics & Rubber 1,317 3.4 1,206 3.3 2,681 3.6 2,787 3.9

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Total $ 38,658 100.0 % $ 36,399 100.0 % $ 75,212 100.0 % $ 71,930 100.0 %

The tables below reflect the breakdown of total lease revenue by state for the three months ended March 31, 2023 and 2022 (dollars in thousands):

State Lease Revenue for the three months ended March 31, 2023 Percentage of Lease Revenue Number of Leases for the three months ended March 31, 2023 Lease Revenue for the three months ended March 31, 2022 Percentage of Lease Revenue Number of Leases for the three months ended March 31, 2022

The tables below reflect the breakdown of total lease revenue by state for the three and six months ended June 30, 2023 and 2022 (dollars in thousands):

State Lease Revenue for the three months ended June 30, 2023 Percentage of Lease Revenue Number of Leases for the three months ended June 30, 2023 Lease Revenue for the three months ended June 30, 2022 Percentage of Lease Revenue Number of Leases for the three months ended June 30, 2022

Florida $ 6,763 17.5 % 9 $ 4,230 11.6 % 9

Texas 4,332 11.2 12 5,359 14.7 14

Pennsylvania 3,721 9.6 10 3,704 10.2 10

Ohio 3,449 8.9 16 3,550 9.8 16

Georgia 2,973 7.7 11 2,945 8.1 10

North Carolina 2,306 6.0 10 2,146 5.9 10

Alabama 2,248 5.8 6 1,763 4.8 6

Colorado 1,869 4.8 4 850 2.3 3

Michigan 1,612 4.2 6 1,608 4.4 6

Minnesota 1,045 2.7 7 1,013 2.8 7

All Other States 8,340 21.6 46 9,231 25.4 45

Total $ 38,658 100.0 % 137 $ 36,399 100.0 % 136

State Lease Revenue for the six months ended June 30, 2023 Percentage of Lease Revenue Number of Leases for the six months ended June 30, 2023 Lease Revenue for the six months ended June 30, 2022 Percentage of Lease Revenue Number of Leases for the six months ended June 30, 2022

Florida $ 10,881 14.5 % 9 $ 8,467 11.8 % 9

Texas 9,102 12.1 12 10,524 14.6 14

Pennsylvania 7,457 9.9 10 7,437 10.3 10

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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.

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 contractually eliminated the payment of the incentive fee for the quarters ending March 31, 2023 and June 30, 2023.

On January 10, 2023, we amended and restated the Sixth Amended Advisory Agreement by entering into the Seventh Amended Advisory Agreement, as 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 ended March 31, 2023 and June 30, 2023.

The calculation of the other fees remains unchanged.

On July 11, 2023, the Company amended and restated the Seventh Amended Advisory Agreement by entering into the Eighth Amended and Restate Investment Advisory Agreement between the Company and the Advisory (the “Eighth Amended Advisory Agreement”), as approved unanimously by our Board of Directors, including specifically, our independent directors.

The Eight Amended Advisory Agreement contractually eliminated the payment of the incentive fee for the quarters ending September 30, 2023 and December 31, 2023.

In addition, the Eight Amended Advisory Agreement also clarifies that for any future quarter whereby an incentive fee would exceed by greater than 15% the average quarterly incentive fee paid, the

measurement would be versus the last four quarters where an incentive fee was actually paid.

The calculation of the other fees remains unchanged.

Capital Gain Fee

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

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

No capital gain fee was recognized during the three and six months ended June 30, 2023 or 2022.

Termination Fee

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A summary of all of our significant accounting policies is provided in Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022, filed by us with the U.S.

Securities and

Exchange Commission (the “SEC”) on February 22, 2023 (our “2022 Form 10-K”).

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

Securities and Exchange Commission (the “SEC”) on February 22, 2023 (our “2022 Form 10-K”).

There were no material changes to our critical accounting policies or estimates during the six months ended June 30, 2023.

Results of Operations

The weighted average yield on our total portfolio, which was 7.9% and 7.4% as of March 31, 2023 and 2022, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements.

The weighted average yield on our total portfolio, which was 7.9% and 7.6% as of June 30, 2023 and 2022, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements.

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

A comparison of our operating results for the three months ended March 31, 2023 and 2022 is below (dollars in thousands, except per share amounts) :

For the three months ended March 31,

A comparison of our operating results for the three and six months ended June 30, 2023 and 2022 is below (dollars in thousands, except per share amounts) :

For the three months ended June 30,

2023 2022 $ Change % Change

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General and administrative 1,068 958 110 11.5 %

Impairment charge 6,823 1,374 5,449 396.6 %

Total operating expenses $ 33,716 $ 27,773 $ 5,943 21.4 %

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Interest expense $ (9,081) $ (7,121) $ (1,960) 27.5 %

Loss on sale of real estate, net (451) — (451) 100.0 %

Other income 2 119 (117) (98.3) %

Total other expense, net $ (9,530) $ (7,002) $ (2,528) 36.1 %

Net income $ 2,397 $ 3,391 $ (994) (29.3) %

Net (loss) income $ (4,588) $ 1,624 $ (6,212) (382.5) %

Distributions attributable to Series E, F, and G preferred stock (3,058) (2,967) (91) 3.1 %

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Loss on extinguishment of Series F preferred stock (6) — (6) 100.0 %

Gain on repurchase of Series G preferred stock 3 — 3 100.0 %

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders $ (736) $ 324 $ (1,060) (327.2) %

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.02) $ 0.01 $ (0.03) (300.0) %

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (7,758) $ (1,457) $ (6,301) 432.5 %

Net loss attributable to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.19) $ (0.04) $ (0.15) 375.0 %

FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 16,452 $ 15,084 $ 1,368 9.1 %

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FFO per weighted average share of common stock and Non-controlling OP Units - diluted (1) $ 0.41 $ 0.39

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

For the six months ended June 30,

2023 2022 $ Change % Change

Operating revenues

Lease revenue $ 75,212 $ 71,930 $ 3,282 4.6 %

Total operating revenues $ 75,212 $ 71,930 $ 3,282 4.6 %

Operating expenses

Depreciation and amortization $ 31,640 $ 29,804 $ 1,836 6.2 %

Property operating expenses 13,465 13,582 (117) (0.9) %

Base management fee 3,210 3,124 86 2.8 %

Incentive fee — 2,679 (2,679) (100.0) %

Administration fee 1,110 861 249 28.9 %

General and administrative 2,131 1,955 176 9.0 %

Impairment charge 6,823 1,374 5,449 396.6 %

Total operating expenses $ 58,379 $ 53,379 $ 5,000 9.4 %

Other (expense) income

Interest expense $ (17,909) $ (13,706) $ (4,203) 30.7 %

Loss on sale of real estate, net (451) — (451) 100.0 %

Other income 107 223 (116) (52.0) %

Total other expense, net $ (18,253) $ (13,483) $ (4,770) 35.4 %

Net (loss) income $ (1,420) $ 5,068 $ (6,488) (128.0) %

Distributions attributable to Series E, F, and G preferred stock (6,080) (5,913) (167) 2.8 %

Distributions attributable to senior common stock (215) (230) 15 (6.5) %

Loss on extinguishment of Series F preferred stock (11) (5) (6) 120.0 %

Gain on repurchase of Series G preferred stock 3 — 3 100%00

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (7,723) $ (1,080) $ (6,643) 615.1 %

Net loss attributable to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ (0.19) $ (0.03) $ (0.16) 533.3 %

FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 31,191 $ 30,098 $ 1,093 3.6 %

FFO available to common stockholders and Non-controlling OP Unitholders - diluted (1) $ 31,406 $ 30,328 $ 1,078 3.6 %

FFO per weighted average share of common stock and Non-controlling OP Unit - basic (1) $ 0.77 $ 0.78 $ (0.01) (1.3) %

FFO per weighted average share of common stock and Non-controlling OP Unit - diluted (1) $ 0.77 $ 0.78

$ (0.01) (1.3) %

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Operating Revenues

For the three months ended March 31,

For the three months ended June 30,

(Dollars in Thousands)

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$ 38,658 $ 36,399 $ 2,259 6.2 %

For the six months ended June 30,

(Dollars in Thousands)

Lease Revenues 2023 2022 $ Change % Change

Same Store Properties $ 61,290 $ 55,993 $ 5,297 9.5 %

Acquired & Disposed Properties 6,471 9,187 (2,716) (29.6) %

Properties with Vacancy 7,451 6,750 701 10.4 %

$ 75,212 $ 71,930 $ 3,282 4.6 %

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

Lease revenues from same store properties increased for the three months ended March 31, 2023, primarily due to income recognized from tenant funded improvement projects, where our tenants used their capital to improve our buildings, coupled with an increase in variable lease payments due to an increase in property operating expenses, and a corresponding increase in recovery revenue from property operating expenses.

Lease revenues increased for acquired and disposed of properties for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily because we acquired nine properties subsequent to March 31, 2022, partially offset by a decrease in variable lease payments due to a decrease in property operating expenses.

Lease revenues decreased for our properties with vacancy for the three months ended March 31, 2023 due to accelerated rent recognized during the three months ended March 31, 2022 from two tenants that terminated their leases early.

Lease revenues from same store properties increased for the three and six months ended June 30, 2023, due to an increase in variable lease payments due to an increase in property operating expenses, and a corresponding increase in recovery revenue from property operating expenses, accelerated rent from a lease termination, and income recognized from tenant funded improvement projects which were determined to be lessor assets, where our tenants used their capital to improve our properties.

Lease revenues decreased for acquired and disposed of properties for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, primarily due to loss of lease revenue including variable lease payments caused by a decrease in property operating expenses from vacancy at properties held for sale, partially offset by lease revenue from the seven properties acquired subsequent to June 30, 2022.

Lease revenues increased for our properties with vacancy for the three and six months ended June 30, 2023 due to an increase in rental revenue and variable lease payments due to an increase in property operating expenses, from partially leasing space.

Operating Expenses

Depreciation and amortization expense increased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, due to an increase in depreciation and amortization expense on the nine properties acquired subsequent to March 31, 2022.

For the three months ended March 31,

Depreciation and amortization expense increased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, due to an increase in depreciation and amortization expense on the seven properties acquired subsequent to June 30, 2022 and lease-related assets for lease that was terminated during the period.

This was partially offset by the depreciation error corrected during the period, as outlined in Note 1 and Note 9.

For the three months ended June 30,

(Dollars in Thousands)

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$ 6,738 $ 6,959 $ (221) (3.2) %

For the six months ended June 30,

(Dollars in Thousands)

Property Operating Expenses 2023 2022 $ Change % Change

Same Store Properties $ 8,430 $ 7,864 $ 566 7.2 %

Acquired & Disposed Properties 1,365 2,197 (832) (37.9) %

Properties with Vacancy 3,670 3,521 149 4.2 %

$ 13,465 $ 13,582 $ (117) (0.9) %

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

The increase in property operating expenses for same store properties for the three months ended March 31, 2023, from the comparable 2022 period, was a result of tenants requiring more employees to return on site as well as general cost increases due to the inflationary environment during the three months ended March 31, 2023.

The decrease in property operating expenses for acquired and disposed of properties for the three months ended March 31, 2023, from the comparable 2022 period, is a result of a decrease in property operating expenses in relation to two properties held for sale during the three months ended March 31, 2023 that are fully vacant, requiring less costs to operate the empty buildings.

The decrease in property operating expenses for properties with vacancy for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, is a result of reduced real estate tax expense during the period, partially offset by general cost increases due to the inflationary environment during the same period.

The base management fee paid to the Adviser increased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, due to an increase in Gross Tangible Real Estate over the three months ended March 31, 2023 as compared to a smaller increase in Gross Tangible Real Estate during the three months ended March 31, 2022.

The increase in property operating expenses for

same store properties for the three and six months ended June 30, 2023, from the comparable 2022 period, was a result of tenants requiring more employees to return on site as well as general cost increases due to the inflationary environment during the three and six months ended June 30, 2023.

The decrease in property operating expenses for acquired and disposed of properties for the three and six months ended June 30, 2023, from the comparable 2022 period, is a result of a decrease in property operating expenses in relation to two properties held for sale during the three and six months ended June 30, 2023 that are fully vacant, requiring less costs to operate the empty buildings.

The increase in property operating expenses for properties with vacancy for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, is a result of general cost increases due to the inflationary environment during the same period coupled with increased expenses due to partially leasing space.

The base management fee paid to the Adviser increased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, due to an increase in Gross Tangible Real Estate over the three and six months ended June 30, 2023 as compared to a smaller increase in Gross Tangible Real Estate during the three and six months ended June 30, 2022.

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

The incentive fee paid to the Adviser decreased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, due to the payment of the incentive fee being contractually eliminated for the quarter ended March 31, 2023 as outlined in the Seventh Amended Advisory Agreement.

The incentive fee paid to the Adviser decreased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, due to the payment of the incentive fee being contractually eliminated for the quarters ended March 31, 2023 and June 30, 2023, as outlined in the Seventh Amended Advisory Agreement.

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

The administration fee paid to the Administrator increased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, due to our Administrator incurring greater costs that are allocated to us.

The administration fee paid to the Administrator increased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, due to our Administrator incurring greater costs that are allocated to us.

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

General and administrative expenses increased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily as a result of an increase in due diligence expenses for potential acquisition targets that were not completed, coupled with an increase in professional fees.

General and administrative expenses increased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, primarily as a result of an increase in due diligence expenses for potential acquisition targets that were not completed, coupled with an increase in professional fees.

Other Income and Expenses

Interest expense increased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

Interest expense increased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022.

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

Other income remained consistent for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022.

We sold two non-core office properties during the three and six months ended June 30, 2023, and as a result, incurred a loss on sale of real estate, net.

We did not have any property sales during the three and six months ended June 30, 2022.

Other income decreased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, due to nonrecurring income items that occurred in the three months ended June 30, 2022.

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 three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to an increase in interest expense due to higher borrowing costs on variable rate debt due to global interest rate expansion, partially offset by an increase in operating revenues due to asset acquisition activity during and subsequent to March 31, 2022.

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders decreased for the three and six months ended June 30, 2023, as compared to the three and six months ended June 30, 2022, as revised, primarily due to an increase in interest expense due to higher borrowing costs on variable rate debt due to global interest rate expansion and impairment charges recorded on three properties.

This was partially offset by an increase in operating revenues due to asset acquisition activity during and subsequent to June 30, 2022 as well as partially leasing vacant space subsequent to June 30, 2022.

Liquidity and Capital Resources

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

Our available liquidity as of March 31, 2023, was $91.8 million, consisting of approximately $14.3 million in cash and cash equivalents and available borrowing capacity of $77.5 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility decreased to $75.0 million as of May 3, 2023.

Our available liquidity as of June 30, 2023 was $86.8 million, consisting of approximately $16.5 million in cash and cash equivalents and available borrowing capacity of $70.3 million under our Credit Facility.

Our available borrowing capacity under the Credit Facility decreased to $36.5 million as of August 8, 2023.

Future Capital Needs

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Equity Capital

During the three months ended March 31, 2023, we raised net proceeds of $4.0 million of common equity under our Prior Common Stock ATM Program at a net weighted average per share price of $17.10.

We used these proceeds to fund

acquisitions, pay down outstanding debt and for other general corporate purposes.

We did not sell any of our Series E Preferred Stock under our Series E Preferred Stock Sales Agreement during the three months ended March 31, 2023, which was terminated effective as of February 10, 2023.

We raised net proceeds of $0.5 million from sales of our Series F Preferred Stock during the three months ended March 31, 2023.

As of May 3, 2023, there is no limit on the aggregate amount of securities we may offer pursuant to the 2022 Registration Statement.

As of March 31, 2023, we had 44 mortgage notes payable in the aggregate principal amount of $357.0 million, collateralized by a total of 50 properties with a remaining weighted average maturity of 4.1 years.

The weighted-average interest rate on the mortgage notes payable as of March 31, 2023 was 4.24%.

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

During the six months ended June 30, 2023, we raised net proceeds of $4.0 million of common equity under our Prior Common Stock ATM Program at a net weighted average per share price of $17.10.

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

We did not sell any of our Series E Preferred Stock under our Series E Preferred Stock Sales Agreement during the six months ended June 30, 2023, which was terminated effective as of February 10, 2023.

We raised net proceeds of $4.3 million from sales of our Series F Preferred Stock during the six months ended June 30, 2023.

As of August 8, 2023, there is no limit on the aggregate amount of securities we may offer pursuant to the 2022 Registration Statement.

As of June 30, 2023, we had 43 mortgage notes payable in the aggregate principal amount of $350.7 million, collateralized by a total of 49 properties with a remaining weighted average maturity of 3.9 years.

The weighted-average interest rate on the mortgage notes payable as of June 30, 2023 was 4.23%.

We continue to see banks and other non-bank lenders willing to make mortgage loans.

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 March 31, 2023, we had mortgage debt in the aggregate principal amount of $64.5 million payable during the remainder of 2023 and $20.5 million payable during 2024.

The 2023 principal amount payable includes both amortizing principal payments and five balloon principal payments due during the remaining nine months of 2023.

As of June 30, 2023, we had mortgage debt in the aggregate principal amount of $50.2 million payable during the remainder of 2023 and $28.6 million payable during 2024.

The 2023 principal amount payable includes both amortizing principal payments and three balloon principal payments due during the remaining six months of 2023.

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.

1 unchanged sentence

Operating Activities

Net cash provided by operating activities during the three months ended March 31, 2023, was $14.9 million, as compared to net cash provided by operating activities of $17.2 million for the three months ended March 31, 2022.

This change was primarily a result of an increase in interest expense due to higher interest rates on variable rate debt, partially offset by an increase in operating revenues from the nine properties acquired subsequent to March 31, 2022 .

Net cash provided by operating activities during the six months ended June 30, 2023, was $30.7 million, as compared to net cash provided by operating activities of $34.6 million for the six months ended June 30, 2022.

This change was primarily a result of an increase in interest expense due to higher interest rates on variable rate debt, partially offset by an increase in operating revenues from the seven properties acquired subsequent to June 30, 2022.

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

1 unchanged sentence

Investing Activities

Net cash provided by investing activities during the three months ended March 31, 2023, was $0.7 million, which primarily consisted of receipts from lender escrow, partially offset by capital improvements performed at certain of our properties and deposits on future acquisitions.

Net cash used in investing activities during the three months ended March 31, 2022, was $17.6 million, which primarily consisted of two property acquisitions, coupled with capital improvements performed at certain of our properties.

Net cash used in investing activities during the six months ended June 30, 2023, was $6.9 million, which primarily consisted of one property acquisition, coupled with capital improvements performed at certain of our properties, partially offset by proceeds from one property sale.

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

Financing Activities

Net cash used in financing activities during the three months ended March 31, 2023, was $12.8 million, which primarily consisted of $5.0 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders, partially offset by the issuance of $4.6 million of equity.

Net cash provided by financing activities for the three months ended March 31, 2022, was $1.9 million, which primarily consisted of the issuance of $22.2 million of common and preferred equity, partially offset by the repayment $3.5 million of outstanding mortgage debt, and distributions paid to common, senior common and preferred shareholders.

Net cash used in financing activities during the six months ended June 30, 2023, was $19.2 million, which primarily consisted of $11.3 million of mortgage principal repayments, and distributions paid to common, senior common and preferred shareholders, partially offset by the issuance of $8.8 million of equity and net borrowings on our credit facility.

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

Credit Facility

1 unchanged sentence

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.

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

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

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

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

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.

As of June 30, 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 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 May 3, 2023, the maximum additional amount we could draw under the Credit Facility was $75.0 million.

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

As of June 30, 2023, there was $408.5 million outstanding under our Credit Facility at a weighted average interest rate of approximately 6.54% and $14.4 million outstanding under letters of credit at a weighted average interest rate of 1.50%.

As of August 8, 2023, the maximum additional amount we could draw under the Credit Facility was $36.5 million.

We were in compliance with all covenants under the Credit Facility as of June 30, 2023.

Contractual Obligations

The following table reflects our material contractual obligations as of March 31, 2023 (in thousands):

The following table reflects our material contractual obligations as of June 30, 2023 (in thousands):

Payments Due by Period

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$ 935,735 $ 110,476 $ 207,626 $ 517,397 $ 100,236

(1) Debt obligations represent borrowings under our Revolver, which represents $26.3 million of the debt obligation due in 2026, our Term Loan A, which represents $160.0 million of the debt obligation due in 2027, our Term Loan B, which represents $60.0 million of the debt obligation due in 2026, our Term Loan C, which represents $150.0 million of the debt obligation due in 2028 and mortgage notes payable that were outstanding as of March 31, 2023.

(1) Debt obligations represent borrowings under our Revolver, which represents $38.5 million of the debt obligation due in 2026, our Term Loan A, which represents $160.0 million of the debt obligation due in 2027, our Term Loan B, which represents $60.0 million of the debt obligation due in 2026, our Term Loan C, which represents $150.0 million of the debt obligation due in 2028 and mortgage notes payable that were outstanding as of June 30, 2023.

This figure does not include $(0.1) million of premiums and (discounts), net and $5.4 million of deferred financing costs, net, which are reflected in mortgage notes payable, net and borrowings under Term Loan, net on the condensed consolidated balance sheets.

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

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of March 31, 2023.

thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of June 30, 2023.

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

(4) Purchase obligations consist of tenant and capital improvements at 10 of our properties.

(4) Purchase obligations consist of tenant and capital improvements at eight of our properties.

Off-Balance Sheet Arrangements

We did not have any material off-balance sheet arrangements as of March 31, 2023.

We did not have any material off-balance sheet arrangements as of June 30, 2023.

Funds from Operations

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We believe that net income is the most directly comparable GAAP measure to FFO, Basic EPS is the most directly comparable GAAP measure to Basic FFO per share, and that Diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share.

The following table provides a reconciliation of our FFO available to common stockholders for the three months ended March 31, 2023 and 2022, respectively, to the most directly comparable GAAP measure, net income available to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock:

For the three months ended March 31,

(Dollars in Thousands, Except for Per Share Amounts)

The following table provides a reconciliation of our FFO available to common stockholders for the three and six months ended June 30, 2023 and 2022, respectively, to the most directly comparable GAAP measure, net income available to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock:

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

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

2023 2022 2023 2022

Calculation of basic FFO per share of common stock and Non-controlling OP Unit

Net income $ 2,397 $ 3,391

Net (loss) income $ (4,588) $ 1,624 $ (1,420) $ 5,068

Distributions attributable to preferred and senior common stock (3,164) (3,081) (6,295) (6,143)

1 unchanged sentence

Gain on repurchase of Series G preferred stock — — 3 —

Net (loss) gain (attributable) available to common stockholders and Non-controlling OP Unitholders $ (736) $ 324

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (7,758) $ (1,457) $ (7,723) $ (1,080)

Real estate depreciation and amortization $ 16,936 $ 15,167 $ 31,640 $ 29,804

Impairment charge 6,823 1,374 6,823 1,374

Loss on sale of real estate, net 451 — 451 —

FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 16,452 $ 15,084 $ 31,191 $ 30,098

1 unchanged sentence

Weighted average Non-controlling OP Units outstanding 391,468 256,994 391,468 256,994

Total common shares and Non-controlling OP Units 40,313,827 38,159,647

Weighted average common shares and Non-controlling OP Units 40,370,142 39,002,745 40,342,140 38,583,525

Basic FFO per weighted average share of common stock and Non-controlling OP Unit (1) $ 0.41 $ 0.39 $ 0.77 $ 0.78

Calculation of diluted FFO per share of common stock and Non-controlling OP Unit

Net income $ 2,397 $ 3,391

Net (loss) income $ (4,588) $ 1,624 $ (1,420) $ 5,068

Distributions attributable to preferred and senior common stock (3,164) (3,081) (6,295) (6,143)

1 unchanged sentence

Gain on repurchase of Series G preferred stock — — 3 —

Net (loss) gain (attributable) available to common stockholders and Non-controlling OP Unitholders $ (736) $ 324

Net loss attributable to common stockholders and Non-controlling OP Unitholders $ (7,758) $ (1,457) $ (7,723) $ (1,080)

Real estate depreciation and amortization $ 16,936 $ 15,167 $ 31,640 $ 29,804

Impairment charge 6,823 1,374 6,823 1,374

Income impact of assumed conversion of senior common stock 106 114 215 230

Loss on sale of real estate, net 451 — 451 —

FFO available to common stockholders and Non-controlling OP Unitholders plus assumed conversions (1) $ 16,558 $ 15,198 $ 31,406 $ 30,328

4 unchanged sentences

Diluted FFO per weighted average share of common stock and Non-controlling OP Unit (1) $ 0.41 $ 0.39 $ 0.77 $ 0.78

(1) These amounts were unchanged by the revisions described in Note 1, “Organization, Basis of Presentation and Significant Accounting Policies” and Note 9, “Revision of Previously Issued Financial Statements”.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis