What changed in this filing

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Item 1. Business

2024-02-21 compared with 2023-02-22 · 29 added, 30 removed, 234 unchanged (20% of the section changed)

29 unchanged sentences

We believe that moderate leverage is prudent and we aspire to become an investment grade borrower over time.

In addition to our use of leverage, we were active in the equity markets during 2022 by issuing shares of common stock under our common stock at-the-market program (“Common ATM Program”), pursuant to our At-the-Market Equity Offering Sales Agreement (the “Common Stock Sales Agreement”) with Robert W.

In addition to our use of leverage, we were active in the equity markets during 2023 by issuing shares of common stock under our common stock at-the-market program, pursuant to our At-the-Market Equity Offering Sales Agreement (the “Common Stock Sales Agreement”) with Robert W.

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

6 unchanged sentences

333-236143) (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 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.

Investment Policies

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While we will continue to acquire select multi-tenant industrial and office properties, our primary focus is single-tenant industrial and office properties.

Generally, we lease properties to tenants that our Adviser deems creditworthy under leases that will be full recourse obligations of our tenants or their affiliates.

Generally, we

lease properties to tenants that our Adviser deems creditworthy under leases that will be full recourse obligations of our tenants or their affiliates.

We seek to obtain lease terms of approximately seven to 15 years with built-in rental increases.

1 unchanged sentence

These relationships provide local expertise to ensure that our properties are properly maintained and that our tenants have local points of contact to address property issues.

This strategy improves our operating efficiencies, increases

local market intelligence for the Adviser, and generally does not increase our costs as the local property managers are reimbursed by the tenants in accordance with the lease agreements.

This strategy improves our operating efficiencies, increases local market intelligence for the Adviser, and generally does not increase our costs as the local property managers are reimbursed by the tenants in accordance with the lease agreements.

Underwriting Criteria, Due Diligence Process and Negotiating Lease Provisions

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

Please see Item 2 of this Form 10-K for a summary of our portfolio by industry and geographic location.

Please see Part I, Item 2, “Properties” of this Form 10-K for a summary of our portfolio by industry and geographic location.

• Property Valuation .

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Our Adviser then computes the value of the property based on historical and projected operating results.

In addition, each property that we propose to purchase is appraised by an independent appraiser.

In addition, each property that we propose to purchase is appraised by an

independent appraiser.

These appraisals may take into consideration, among other things, the terms and conditions of the particular lease transaction and the conditions of the credit markets at the time the purchase is negotiated, as well as a value assessment of like properties in the market.

2 unchanged sentences

Our Adviser generally seeks to acquire investment properties that are essential or important to the ongoing operations of the prospective tenant.

We believe that these investment properties

provide better protection in the event a tenant files bankruptcy, as leases on properties essential or important to the operations of a bankrupt tenant are typically less likely to be rejected in bankruptcy or otherwise terminated.

We believe that these investment properties provide better protection in the event a tenant files bankruptcy, as leases on properties essential or important to the operations of a bankrupt tenant are typically less likely to be rejected in bankruptcy or otherwise terminated.

• Lease Provisions that Enhance and Protect Value .

36 unchanged sentences

None of the $295.9 million in mortgage notes payable, net, outstanding as of December 31, 2023 have recourse to the Company.

On August 7, 2013, we procured a senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“Keybank”) (serving as a revolving lender, a letter of credit issuer and an administrative agent) and other syndicated lenders.

Our Revolver was initially for $60.0 million, but was increased to $85.0 million through subsequent amendments.

On October 5, 2015, we added a $25.0 million 5-year term loan facility (“Term Loan A”).

On October 27, 2017, we expanded our Term Loan A to $75.0 million and extended the maturity date to October 27, 2022, and also extended the maturity date of our Revolver through October 27, 2021.

On July 2, 2019, we expanded our Term Loan A from $75.0 million to $160.0 million, inclusive of a delayed draw component whereby we can incrementally borrow on the Term Loan A up to the $160.0 million commitment, and increased the Revolver from $85.0 million to $100.0 million.

The Term Loan A has a five-year term, with a maturity date of July 2, 2024, and the Revolver has a four-year term, with a maturity date of July 2, 2023.

The interest rate margin for each of the Term Loan A and Revolver was reduced by 10 basis points at each leverage tier.

On August 7, 2013, we procured a senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“KeyBank”) (serving as a revolving lender, a letter of credit issuer and an administrative agent) for $60.0 million that was increased to $100.0 million through subsequent amendments.

On October 5, 2015, we added a $25.0 million five-year term loan facility (“Term Loan A”) that was increased to $160.0 million through subsequent amendments.

On February 11, 2021, we added a new $65.0 million term loan component, inclusive of a $15.0 million delayed funding component which was funded on July 20, 2021 (“Term Loan B”).

Term Loan B has a maturity date of 60 months from the closing of the amended Credit Facility and a London Inter-bank Offered Rate (“LIBOR”) floor of 25 basis points.

On August 18, 2022, we added a new $140.0 million term loan facility component (“Term Loan C”).

4 unchanged sentences

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

As of December 31, 2022, there was $150.0 million outstanding under Term Loan C, and we used all net proceeds to repay all outstanding borrowings on the Revolver, pay off mortgage debt, and fund acquisitions.

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

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

As of December 31, 2023, there was $445.8 million outstanding under our Credit Facility at a weighted average interest rate of approximately 6.84% and $2.0 million outstanding under letters of credit at a weighted average interest rate of 1.50%.

Conflict of Interest Policy

1 unchanged sentence

In addition, our directors are subject to certain provisions of Maryland law that are designed to minimize conflicts.

However, we cannot assure you that these policies or provisions of law will reduce or eliminate the influence of these conflicts.

However, we cannot provide assurance that these policies or provisions of law will reduce or eliminate the influence of these conflicts.

Under our current conflict of interest policy, without the approval of a majority of our independent directors, we will not:

17 unchanged sentences

The officers, directors and employees of our Adviser have significant experience in making investments in and lending to businesses of all sizes, and investing in real estate.

We have entered into an investment advisory agreement with our Adviser, as amended from time to time (including the Seventh Amended and Restated Investment Advisory Agreement dated January 10, 2023, the “Advisory Agreement”), under which our Adviser is responsible for managing our assets and liabilities, for operating our business on a day-to-day basis and for identifying, evaluating, negotiating and consummating investment transactions consistent with our investment policies as determined by our Board of Directors from time to time.

We have entered into an investment advisory agreement with our Adviser, as amended from time to time (including the Seventh Amended and Restated Investment Advisory Agreement dated January 10, 2023 and the Eighth Amended and Restated Investment Advisory Agreement dated July 11, 2023, the “Advisory Agreement”), under which our Adviser is responsible for managing our assets and liabilities, for operating our business on a day-to-day basis and for identifying, evaluating, negotiating and consummating investment transactions consistent with our investment policies as determined by our Board of Directors from time to time.

The Administrator employs our chief financial officer, treasurer, chief compliance officer, and general counsel and secretary (who also serves as our Administrator’s president, general counsel, and secretary) and their respective staffs and provides administrative services for us under the administration agreement with our Administrator (the “Administration Agreement”).

David Gladstone, our chairman and chief executive officer, is also the chairman, chief executive officer and the controlling stockholder of our Adviser and our Administrator.

Terry Lee Brubaker, our vice chairman and chief operating officer, also serves in the same capacities for our Adviser and our Administrator.

Terry Lee Brubaker, our chief operating officer, also serves in the same capacities for our Adviser and our Administrator.

Arthur “Buzz” Cooper, our president, is also an executive managing director of our Adviser.

2 unchanged sentences

Gladstone, Brubaker, and Cooper, Laura Gladstone, who is a managing director of our Adviser, and John Sateri, who is also a managing director of our Adviser.

We believe that the review process of our investment committee gives us a unique competitive advantage over other REITs because of the substantial experience that its members possess and their unique perspective in evaluating the blend of corporate credit, real estate and lease terms that collectively provide an acceptable risk for our investments.

We believe that the review process of our investment committee gives us a competitive advantage over other REITs because of the substantial experience that its members possess and their unique perspective in evaluating the blend of corporate credit, real estate and lease terms that collectively provide an acceptable risk for our investments.

Our Adviser’s board of directors has empowered our investment committee to authorize and approve our investments, subject to the terms of the Advisory Agreement.

3 unchanged sentences

Our Adviser and Administrator are headquartered in McLean, Virginia, a suburb of Washington, D.C., and our Adviser also has offices in other states.

Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Advisory and Administration Agreements” for a detailed discussion on the Adviser and Administrator’s fee structure.

Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Advisory and Administration Agreements” of this Form 10-K for a detailed discussion on the Adviser and Administrator’s fee structure.

Adviser Duties and Authority under the Advisory Agreement

9 unchanged sentences

The actual terms and conditions of transactions involving investments in properties are determined at the sole discretion of our Adviser, subject at all times to compliance with the foregoing requirements.

However, some types of transactions require the prior approval of our Board of Directors, including a majority of our independent directors, including the following:

However, some types of transactions, including the following, require the prior approval of our Board of Directors, including a majority of our independent directors:

• loans not secured or otherwise supported by real property;

• any acquisition or which at the time of investment would have a cost exceeding 20% of our total assets;

• any acquisition which at the time of investment would have a cost exceeding 20% of our total assets;

• transactions that involve conflicts of interest with our Adviser or other affiliates (other than reimbursement of expenses in accordance with the Advisory Agreement);

2 unchanged sentences

For example, our Adviser and Administrator also serve as the external adviser or administrator, respectively, to Gladstone Capital and Gladstone Investment, both publicly traded business development companies affiliated with us, and Gladstone Land, a publicly traded agricultural REIT that is also our affiliate.

However, under the Advisory Agreement, our Adviser is required to devote sufficient resources to the administration of our affairs to discharge its obligations under the agreement.

However, under the Advisory Agreement, our Adviser is required to devote sufficient resources to the administration of our affairs to discharge its obligations

under the agreement.

The Advisory Agreement is not assignable or transferable by either us or our Adviser without the consent of the other party, except that our Adviser may assign the Advisory Agreement to an affiliate for whom our Adviser agrees to guarantee its obligations to us.

5 unchanged sentences

We also entered into an agreement with Gladstone Securities, effective June 18, 2013, for it to act as our non-exclusive agent to assist us with arranging mortgage financing for properties we own.

In connection with this engagement, Gladstone Securities may from time to time solicit the interest of various commercial real estate lenders or recommend to us third party lenders offering credit products or packages that are responsive to our needs.

In connection with this engagement, Gladstone Securities may from time to time solicit the interest of various commercial real estate lenders or recommend third party lenders to us offering credit products or packages that are responsive to our needs.

We pay Gladstone Securities a financing fee in connection with the services it provides to us for securing mortgage financing on any of our properties.

8 unchanged sentences

Under the Dealer Manager Agreement, Gladstone Securities, as dealer manager, provides certain sales, promotional and marketing services to the Company in connection with the Offering, and the Company pays 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.

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

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

4 unchanged sentences

We expect that a total of 15 to 20 full time employees of our Adviser and our Administrator will spend substantially all or all of their time on our matters during calendar year 2024.

president and CFO, accounting team, and the employees of our Adviser that manage our assets and our investments spend all of their time on our matters.

Our president and CFO, accounting team, and the employees of our Adviser that manage our assets and our investments spend all of their time on our matters.

To the extent that we acquire more investments, we anticipate that the number of employees of our Adviser and our Administrator who devote time to our matters will increase.

11 unchanged sentences

We must own, operate, manage, acquire and develop our properties in compliance with the laws and regulations of the United States, as well as state and local laws and regulations in the markets where our properties are located, which may differ among jurisdictions.

In response to public health emergencies such as the recent COVID-19 pandemic, federal governmental authorities, as well as state and local governmental authorities in jurisdictions where our properties are located, have in recent years implemented laws and regulations which impacted our ability to operate our business in the ordinary course.

These governmental authorities may take similar actions in the future in the event of new public health emergencies, or if a new strain of COVID-19 emerges.

In response to public health emergencies, federal governmental authorities, as well as state and local governmental authorities in jurisdictions where our properties are located, have in recent years implemented laws and regulations which impacted our ability to operate our business in the ordinary course.

These governmental authorities may take similar actions in the future in the event of new public health emergencies.

Such regulations may materially affect our results of operations for the year ending December 31, 2024.

9 unchanged sentences

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

What changed 10-K

Item 1. Business