What changed in this filing

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Item 1. Financial Statements

2024-05-06 compared with 2023-11-06 · 187 added, 289 removed, 479 unchanged (50% of the section changed)

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Real estate, at cost $ 1,209,932 $ 1,221,364

27 unchanged sentences

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

and 7,052,334 and 7,052,934 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively (3)

and 7,052,334 and 7,052,334 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively (3)

$ 170,041 $ 170,041

2 unchanged sentences

950,000 shares authorized;

and 406,425 and 431,064 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively (3)

and 402,817 and 406,425 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively (3)

Common stock, par value $ 0.001 per share, 62,329,084 and 62,326,818 shares authorized;

and 39,917,995 and 39,744,359 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively (3)

and 40,003,481 and 40,000,596 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively (3)

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

$ 25 per share liquidation preference;

25,975,673 and 25,992,787 shares authorized and 899,049 and 670,895 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively (3)

25,970,030 and 25,972,296 shares authorized and 929,692 and 918,601 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively (3)

Additional paid in capital 730,465 730,256

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,

2023 2022 2023 2022

For the three months ended March 31,

Operating revenues

9 unchanged sentences

Impairment charge 493 —

Total operating expense before incentive fee waiver $ 24,086 $ 24,664

Incentive fee waiver (1) ( 771 ) —

Total operating expenses $ 23,315 $ 24,664

2 unchanged sentences

Gain on sale of real estate, net 283 —

Gain on debt extinguishment, net 300 —

Other income 34 105

Total other (expense) income, net $ ( 5,085 ) $ 111 $ ( 23,338 ) $ ( 13,373 )

Total other (expense), net $ ( 8,880 ) $ ( 8,723 )

Net income $ 3,526 $ 3,167

5 unchanged sentences

Gain on repurchase of Series G preferred stock — 3

Net loss attributable to common stockholders $ ( 1,419 ) $ ( 310 ) $ ( 9,063 ) $ ( 1,385 )

Loss per weighted average share of common stock - basic & diluted

Loss attributable to common shareholders $ ( 0.04 ) $ ( 0.01 ) $ ( 0.23 ) $ ( 0.04 )

Net income available to common stockholders $ 304 $ 41

Income per weighted average share of common stock - basic & diluted

Income available to common stockholders $ 0.01 $ —

Weighted average shares of common stock outstanding

4 unchanged sentences

Change in unrealized gain related to interest rate hedging instruments, net $ 5,417 $ ( 5,895 )

Other Comprehensive gain 5,089 6,790 7,218 13,660

Other comprehensive income (loss) 5,417 ( 5,895 )

Net income $ 3,526 $ 3,167

Comprehensive income $ 6,881 $ 9,577 $ 7,588 $ 21,512

Comprehensive income (loss) $ 8,943 $ ( 2,728 )

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

Total comprehensive income available to the Company $ 6,878 $ 9,581 $ 7,666 $ 21,524

Total comprehensive income (loss) available to the Company $ 8,941 $ ( 2,721 )

(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:

3 unchanged sentences

Impairment charge 493 —

Gain on debt extinguishment, net ( 300 ) —

Gain on sale of real estate, net ( 283 ) —

5 unchanged sentences

Operating changes in assets and liabilities

Decrease (increase) in other assets 2,279 ( 1,476 )

Decrease in other assets 1,752 924

Decrease in deferred rent receivable ( 1,149 ) ( 938 )

Increase in accounts payable and accrued expenses 2,320 3,388

(Decrease) increase in amount due to Adviser and Administrator ( 804 ) 273

Decrease in accounts payable and accrued expenses ( 725 ) ( 502 )

Increase (decrease) in amount due to Adviser and Administrator 366 ( 899 )

(Decrease) increase in other liabilities ( 550 ) 166

2 unchanged sentences

Cash flows from investing activities:

Acquisition of real estate and related intangible assets $ ( 17,539 ) $ ( 95,882 )

Improvements of existing real estate ( 822 ) ( 1,961 )

5 unchanged sentences

Deposits on future acquisitions ( 250 ) ( 709 )

Net cash used in investing activities $ ( 3,588 ) $ ( 75,536 )

Net cash provided by investing activities $ 18,468 $ 674

Cash flows from financing activities:

4 unchanged sentences

Repurchase of Series G preferred stock — ( 12 )

Repurchase of common stock ( 998 ) —

Borrowings under mortgage notes payable 9,000 56,313

Payments for deferred financing costs — ( 70 )

2 unchanged sentences

Repayments on revolving credit facility ( 19,700 ) ( 10,000 )

Borrowings on term loan — 150,000

Repayments on term loan — ( 5,000 )

Increase in security deposits ( 47 ) —

Distributions paid for common, senior common, preferred stock and Non-controlling OP Unitholders ( 15,181 ) ( 15,114 )

Net cash (used in) provided by financing activities $ ( 38,819 ) $ 23,146

Net increase in cash, cash equivalents, and restricted cash $ 6,082 $ 4,508

Net cash used in financing activities $ ( 34,708 ) $ ( 12,794 )

Net (decrease) increase in cash, cash equivalents, and restricted cash $ ( 1,217 ) $ 2,799

Cash, cash equivalents, and restricted cash at beginning of period $ 16,135 $ 15,992

2 unchanged sentences

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

Unrealized gain related to interest rate hedging instruments, net $ 7,218 $ 13,660

Unrealized gain (loss) related to interest rate hedging instruments, net $ 5,417 $ ( 5,895 )

Right-of-use asset from operating leases $ ( 686 ) $ —

Operating lease liabilities $ 795 $ —

Capital improvements and leasing commissions included in accounts payable and accrued expenses $ 6,868 $ 2,350

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

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

Dividends paid on Series F Preferred Stock via additional share issuances $ 131 $ 112

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 $ 10,451 $ 14,286

8 unchanged sentences

Subject to certain restrictions and limitations, our business is managed by Gladstone Management Corporation, a Delaware corporation (the “Adviser”), and administrative services are provided by Gladstone Administration, LLC, a Delaware limited liability company (the “Administrator”), each pursuant to a contractual arrangement with us.

Our Adviser and Administrator collectively employ all of our personnel and pay their salaries, benefits, and other general expenses directly.

Our Adviser and Administrator collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly.

Gladstone Commercial Corporation conducts substantially all of its operations through a subsidiary, Gladstone Commercial Limited Partnership, a Delaware limited partnership (the “Operating Partnership”).

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Securities and Exchange Commission (the “SEC”) on February 21, 2024.

The results of operations for the three and nine months ended September 30, 2023 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, 2024 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Revision of Previously Issued Financial Statements

In connection with the preparation of its financial statements for the second quarter of 2023, the Company identified errors in the calculation of depreciation of tenant funded improvement assets at a number of its properties.

In connection with the preparation of the Company’s financial statements for the second quarter of 2023, we identified errors in the calculation of depreciation of tenant funded improvement assets at a number of the Company’s properties.

The Company had depreciated these assets through a term that was different than their useful lives, the correction of which resulted in changes to depreciation expense, a non-cash amount, and net income.

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The Company evaluated the errors and determined that the related impact was not material to the Consolidated Statements of Operations and Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Cash Flows or Consolidated Statements of Equity for any period impacted.

The Company has revised the previously issued Condensed Consolidated Statements of Operations and Comprehensive Income, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows and Stockholders’ Equity tables as of and for the three and nine months ended September 30, 2022 to correct for such errors and these revisions are reflected in this Form 10-Q.

The Company will also correct previously reported financial information for these errors in its future filings, as applicable.

The Company has revised the previously issued Condensed Consolidated Statements of Operations and Comprehensive Income, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows and Stockholders’ Equity tables as of and for the three months ended March 31, 2023 to correct for such errors and these revisions are reflected in this Form 10-Q.

The Company will also correct previously reported financial information for these errors in our future filings, as applicable.

A summary of the corrections to the impacted financial statement line items to the Company’s previously issued Consolidated Statements of Operations and Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Cash Flows and Consolidated Statements of Equity for each affected period is presented in Note 9, “Revision of Previously Issued Financial Statements.”

7 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, 2023.

There were no material changes to our critical accounting policies during the three and nine months ended September 30, 2023.

There were no material changes to our critical accounting policies during the three months ended March 31, 2024.

Related-Party Transactions

Gladstone Management and Gladstone Administration

We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and other general expenses directly.

Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by Mr.

4 unchanged sentences

Our president, Mr.

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

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

Michael LiCalsi, our general counsel and secretary, also serves as our Administrator’s president, general counsel and secretary, as well as executive vice president of administration of our Adviser.

1 unchanged sentence

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

As of September 30, 2023 and December 31, 2022, $ 2.6 million and $ 3.4 million, respectively, were collectively due to our Adviser and Administrator.

As of March 31, 2024 and December 31, 2023, $ 2.9 million and $ 2.6 million, respectively, was 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.

Our Board of Directors reviews and considers renewing the agreements with our Adviser and Administrator each July.

Our Board of Directors reviews and considers renewing the agreements with our Adviser and Administrator annually, typically during the month of July.

During their July 2023 meeting, our Board of Directors reviewed and renewed the Administration Agreement for an additional year, through August 31, 2024 and simultaneously entered into the Eighth Amended and Restated Investment Advisory Agreement (the “Eighth Amended Advisory Agreement”).

3 unchanged sentences

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

For the three and nine months ended September 30, 2023, we recorded a base management fee of $ 1.6 million and $ 4.8 million, respectively.

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 months ended March 31, 2024, we recorded a base management fee of $ 1.5 million.

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

Incentive Fee

8 unchanged sentences

On July 11, 2023, the Company entered into the Eighth Amended Advisory Agreement, as approved unanimously by our Board of Directors, including specifically, our independent directors.

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

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

In addition, the Eighth Amended Advisory Agreement also clarified 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.

For the three and nine months ended September 30, 2023, the contractually eliminated incentive fee would have been $ 0.9 million and $ 3.4 million, respectively.

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

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

The calculation of the other fees was unchanged.

For the three months ended March 31, 2024, we recorded an incentive fee of $ 1.2 million, partially offset by credits related to non-contractual, unconditional, and irrevocable waivers issued by the Advisor of $ 0.8 million.

For the three months ended March 31, 2023, the contractually eliminated incentive fee would have been $ 1.1 million.

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, 2023 or 2022.

No capital gain fee was recognized during the three months ended March 31, 2024 or 2023.

Termination Fee

2 unchanged sentences

The Advisory Agreement may also be terminated for cause by us (with 30 days’ prior written notice and the vote of at least two-thirds of our independent directors), with no termination fee payable.

Cause is defined in the agreement to include if the Adviser breaches any material provisions thereof, the bankruptcy or insolvency of the Adviser, dissolution of the Adviser and fraud or misappropriation of funds.

Cause is defined in the Advisory Agreement to include if the Adviser breaches any material provisions thereof, the bankruptcy or insolvency of the Adviser, dissolution of the Adviser and fraud or misappropriation of funds.

Administration Agreement

2 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, 2023, we recorded an administration fee of $ 0.6 million and $ 1.7 million, respectively.

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 months ended March 31, 2024, we recorded an administration fee of $ 0.6 million.

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

Gladstone Securities

3 unchanged sentences

Mortgage Financing Arrangement Agreement

We 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.

We 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 our owned properties.

In connection with this engagement, Gladstone Securities will, from time to time, continue to 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.

2 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 $ 0.03 million and $ 0.1 million during the three and nine months ended September 30, 2023, which are included in mortgage payable, net, in the condensed consolidated balance sheets, or 0.38 % and 0.29 % of the mortgage principal secured.

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, which are included in mortgage payable, net, in the condensed consolidated balance sheets, or 0.29 % and 0.32 % of the mortgage principal secured.

We did not pay financing fees to Gladstone Securities during the three months ended March 31, 2024 and 2023.

Our Board of Directors renewed the agreement for an additional year, through August 31, 2024, at its July 2023 meeting.

1 unchanged sentence

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 is 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.

Prior to the effectiveness of the Company’s Registration Statement on Form S-3 (File No.

333-277877) (the “2024 Registration Statement”), the Series F Preferred Stock was registered with the SEC pursuant to an automatic shelf registration statement on Form S-3 (File No.

333-268549), as was amended and supplemented (the “2022 Registration Statement”), under the Securities Act of 1933, as amended, and was 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.

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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 $ 0.5 million to Gladstone Securities during the three and nine months ended September 30, 2023, respectively, in connection with 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.

Loss Per Share of Common Stock

The following tables set forth the computation of basic and diluted loss per share of common stock for the three and nine months ended September 30, 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 per share calculations, as there would be no effect on the amounts since the Non-controlling OP Unitholders’ share of loss would also be added back to net loss.

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

We computed basic loss per share for the three and nine months ended September 30, 2023 and 2022 using the weighted average number of shares outstanding during the respective periods.

Diluted loss per share for the three and nine months ended September 30, 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 attributable 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,

2023 2022 2023 2022

Calculation of basic loss per share of common stock:

Net loss attributable to common stockholders $ ( 1,419 ) $ ( 310 ) $ ( 9,063 ) $ ( 1,385 )

We paid fees of $ 0.02 million to Gladstone Securities during the three months ended March 31, 2024 in connection with the Offering.

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

Earnings Per Share of Common Stock

The following tables set forth the computation of basic and diluted earnings per share of common stock for the three months ended March 31, 2024 and 2023.

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 earnings per share calculations, as there would be no effect on the amounts since the Non-controlling OP Unitholders’ share of earnings would also be added back to net income.

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

We computed basic earnings per share for the three months ended March 31, 2024 and 2023 using the weighted average number of shares outstanding during the respective periods.

Diluted earnings per share for the three months ended March 31, 2024 and 2023 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 earnings attributable 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 earnings per share of common stock:

Net income available to common stockholders $ 304 $ 41

Denominator for basic weighted average shares of common stock (1) 40,003,481 39,922,359

Basic loss per share of common stock $ ( 0.04 ) $ ( 0.01 ) $ ( 0.23 ) $ ( 0.04 )

Calculation of diluted loss per share of common stock:

Net loss attributable to common stockholders $ ( 1,419 ) $ ( 310 ) $ ( 9,063 ) $ ( 1,385 )

Net loss attributable to common stockholders plus assumed conversions (2) $ ( 1,419 ) $ ( 310 ) $ ( 9,063 ) $ ( 1,385 )

Basic earnings per share of common stock $ 0.01 $ —

Calculation of diluted earnings per share of common stock:

Net income available to common stockholders $ 304 $ 41

Net earnings available to common stockholders plus assumed conversions (2) $ 304 $ 41

Denominator for basic weighted average shares of common stock (1) 40,003,481 39,922,359

1 unchanged sentence

Denominator for diluted weighted average shares of common stock (2) 40,003,481 39,922,359

Diluted loss per share of common stock $ ( 0.04 ) $ ( 0.01 ) $ ( 0.23 ) $ ( 0.04 )

(1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 391,468 and 391,468 for the three and nine months ended September 30, 2023, respectively, and 273,072 and 262,412 for the three and nine months ended September 30, 2022, respectively.

(2) We excluded convertible shares of Senior Common Stock of 345,132 and 363,246 from the calculation of diluted earnings per share for the three and nine months ended September 30, 2023 and 2022, respectively, because they were anti-dilutive.

Diluted earnings per share of common stock $ 0.01 $ —

(1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 310,643 for the three months ended March 31, 2024 and 391,468 for the three months ended March 31, 2023.

(2) We excluded convertible shares of Senior Common Stock of 342,247 and 345,687 from the calculation of diluted earnings per share for the three months ended March 31, 2024 and 2023, 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, 2023 and December 31, 2022, respectively, excluding real estate held for sale as of September 30, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

The following table sets forth the components of our investments in real estate as of March 31, 2024 and December 31, 2023, respectively, excluding real estate held for sale as of March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

Land (1) $ 140,873 $ 143,442

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 $ 8.9 million and $ 31.2 million for the three and nine months ended September 30, 2023, respectively.

Real estate depreciation expense on building and tenant improvements was $ 10.7 million and $ 30.7 million for the three and nine months ended September 30, 2022, respectively.

We acquired three properties during the nine months ended September 30, 2023 and acquired 11 industrial properties during the nine months ended September 30, 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, 2023 (1) 183,803 18.7 years $ 17,539 $ 349

September 30, 2022 (2) 1,105,006 13.8 years $ 98,276 $ 776

(1) On April 14, 2023, we acquired a 76,089 square foot property in Riverdale, Illinois for $ 5.4 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 July 10, 2023, we acquired a 7,714 square foot property in Dallas-Fort Worth, Texas for $ 3.0 million.

The property is fully leased to one tenant and had 9.9 years of remaining lease term at the time we acquired the property.

On July 28, 2023, we acquired a 100,000 square foot property in Dallas-Fort Worth, Texas for $ 9.2 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.

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

The property is fully leased to one tenant and had 12.7 years of remaining lease term at the time we acquired the property.

On March 11, 2022, we acquired a 56,000 square foot property in Oklahoma City, Oklahoma for $ 6.0 million.

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.

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the nine months ended September 30, 2023 and 2022 as follows (dollars in thousands):

Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022

Acquired assets and liabilities Purchase price Purchase price

Land $ 2,714 $ 5,949

Building 11,423 77,903

Tenant Improvements 692 1,468

In-place Leases 1,001 4,907

Leasing Costs 1,270 5,387

Customer Relationships 439 2,937

Above Market Leases — 328 (1)

Below Market Leases — ( 603 ) (2)

Total Purchase Price $ 17,539 $ 98,276

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

(2) This amount includes $ 32 of prepaid rent included in Other liabilities on the condensed consolidated balance sheets.

Real estate depreciation expense on building and tenant improvements was $ 9.8 million for the three months ended March 31, 2024.

Real estate depreciation expense on building and tenant improvements was $ 10.6 million for the three months ended March 31, 2023.

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, 2023 and each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of September 30, 2023 (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, 2024 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year Tenant Lease Payments

Three Months Ending December 31, 2023 $ 28,906

Nine Months Ending December 31, 2024 $ 85,646

Thereafter 330,221

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, 2023 and 2022, respectively (dollars in thousands):

For the three months ended September 30,

(Dollars in Thousands)

Lease revenue reconciliation 2023 2022 $ Change % Change

Fixed lease payments $ 31,945 $ 35,752 $ ( 3,807 ) ( 10.6 ) %

Variable lease payments 4,519 4,082 437 10.7 %

$ 36,464 $ 39,834 $ ( 3,370 ) ( 8.5 ) %

For the nine months ended September 30,

(Dollars in Thousands)

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, 2024 and 2023, respectively (dollars in thousands):

For the three months ended March 31,

Lease revenue reconciliation 2024 2023 $ Change % Change

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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, 2023 and December 31, 2022, respectively, excluding real estate held for sale as of September 30, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

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, 2024 and December 31, 2023, respectively, excluding real estate held for sale as of March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

Lease Intangibles Accumulated Amortization Lease Intangibles Accumulated Amortization

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Below market leases and deferred revenue ( 59,326 ) 31,775 ( 59,411 ) 30,087

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 3.6 million and $ 12.9 million for the three and nine months ended September 30, 2023, respectively, and $ 4.7 million and $ 14.5

million for the three and nine months ended September 30, 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 $ 0.1 million and $ 0.4 million for the three and nine months ended September 30, 2023, respectively, and $ 0.2 million and $ 0.6 million for the three and nine months ended September 30, 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 $ 1.8 million and $ 6.2 million for the three and nine months ended September 30, 2023, respectively, and $ 1.5 million and $ 3.1 million for the three and nine months ended September 30, 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 nine months ended September 30, 2023 and 2022, were as follows:

Intangible Assets & Liabilities September 30, 2023 September 30, 2022

In-place leases 18.0 14.2

Leasing costs 18.0 14.2

Customer relationships 22.7 20.2

Above market leases 0.0 15.7

Below market leases 0.0 13.0

All intangible assets & liabilities 19.6 15.7

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 3.5 million for the three months ended March 31, 2024, and $ 4.1 million for the three months ended March 31, 2023, 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 $ 0.1 million for the three months ended March 31, 2024 and $ 0.2 million for the three months ended March 31, 2023, 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 $ 1.7 million for the three months ended March 31, 2024 and $ 1.9 million for the three months ended March 31, 2023, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

Real Estate Dispositions, Held for Sale and Impairment Charges

Real Estate Dispositions

We sold five properties during the nine months ended September 30, 2023 and three properties during the nine months ended September 30, 2022.

During the nine months ended September 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 sold three properties during the three months ended March 31, 2024 and no properties during the three months ended March 31, 2023.

During the three months ended March 31, 2024, we continued to execute our capital recycling program, whereby we sold non-core properties.

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, 2023, we sold five non-core properties, located in Baytown, Texas;

Birmingham, Alabama;

Pittsburgh, Pennsylvania;

Eatontown, New Jersey;

and Taylorsville, Utah, which are summarized in the table below (dollars in thousands):

Aggregate Square Footage Sold Aggregate Sales Price Aggregate Sales Costs Aggregate Impairment Charge for the Nine Months Ended September 30, 2023 Aggregate Gain on Sale of Real Estate, net

During the three months ended March 31, 2024, we sold three non-core properties,

located in Columbus, Ohio;

Draper, Utah;

and Richardson, Texas, which are summarized in the table below (dollars in thousands):

Aggregate Square Footage Sold Aggregate Sales Price Aggregate Sales Costs Aggregate Impairment Charge for the Three Months Ended March 31, 2024 Aggregate Gain on Sale of Real Estate, net

357,179 $ 19,523 $ 898 $ 493 $ 283

Our dispositions during the nine months ended September 30, 2023 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.

Our dispositions during the three months ended March 31, 2024 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 real estate and related assets disposed of during the three and nine months ended September 30, 2023 and 2022 (dollars in thousands):

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

2023 2022 2023 2022

The table below summarizes the components of operating income from real estate and related assets disposed of during the three months ended March 31, 2024 and 2023 (dollars in thousands):

For the three months ended March 31,

Operating revenue $ 17 $ 1,701

2 unchanged sentences

Income (expense) from real estate and related assets sold $ ( 394 ) $ 19

(1) Includes a $ 4.7 million gain on sale of real estate, net, on three property sales.

(1) Includes a $ 0.5 million impairment charge on one property.

(3) Includes a $ 4.2 million gain on sale of real estate, net, on five property sales.

(2) Includes a $ 0.3 million gain on sale of real estate, net, on the sale of three properties and a $ 0.3 million gain on debt extinguishment, net, on the sale of two of those properties.

Real Estate Held for Sale

At September 30, 2023, we had four properties classified as held for sale, located in Columbia, South Carolina;

Richardson, Texas;

Columbus, Ohio;

and Blaine, Minnesota.

At March 31, 2024, we had two properties classified as held for sale, located in Tifton, Georgia and Egg Harbor, New Jersey.

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

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 September 30, 2023 and December 31, 2022 reflected on the accompanying condensed consolidated balance sheets (dollars in thousands):

September 30, 2023 December 31, 2022

At December 31, 2023, we had three properties classified as held for sale, located in Richardson, Texas;

Columbus, Ohio;

and Tifton, Georgia.

The table below summarizes the components of the assets and liabilities held for sale at March 31, 2024 and December 31, 2023 reflected on the accompanying condensed consolidated balance sheets (dollars in thousands):

March 31, 2024 December 31, 2023

Assets Held for Sale

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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, 2023 and identified two held and used assets, located in Columbus, Ohio and Draper, Utah, which were impaired by $ 9.0 million.

We also recognized an impairment charge of $ 4.6 million on two held for sale assets, located in Richardson, Texas and Taylorsville, Utah during the nine months ended September 30, 2023.

In performing our held for sale assessment, the carrying value of these assets were above the fair value, less costs of sale.

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

We recognized an impairment charge of $ 12.1 million during the nine months ended September 30, 2022 on two held for sale assets, located in Columbia, South Carolina and Parsippany, New Jersey.

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, 2024 and did not recognize an impairment charge.

We recognized an impairment charge of $ 0.5 million on one held for sale asset, located in Richardson, Texas during the three months ended March 31, 2024.

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.

We did not recognize an impairment charge during the three months ended March 31, 2023.

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, 2023 and December 31, 2022 are summarized below (dollars in thousands):

Our mortgage notes payable and Credit Facility as of March 31, 2024 and December 31, 2023 are summarized below (dollars in thousands):

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

September 30, 2023 September 30, 2023 December 31, 2022 September 30, 2023 September 30, 2023

March 31, 2024 March 31, 2024 December 31, 2023 March 31, 2024 March 31, 2024

Mortgage and other secured loans:

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Total mortgage notes payable and credit facility 129 $ 719,356 $ 738,861 (5)

(1) As of September 30, 2023, interest rates on our fixed rate mortgage notes payable varied from 2.80 % to 6.63 %.

(2) As of September 30, 2023, we had 43 mortgage notes payable with maturity dates ranging from January 1, 2024 through August 1, 2037.

(3) The weighted average interest rate on the mortgage notes outstanding as of September 30, 2023 was approximately 4.20 %.

(4) As of September 30, 2023, Secured Overnight Financing Rate (“SOFR”) was approximately 5.31 %.

(5) The weighted average interest rate on all debt outstanding as of September 30, 2023 was approximately 5.70 %.

(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, 2023.

(1) As of March 31, 2024, interest rates on our fixed rate mortgage notes payable varied from 2.80 % to 6.63 %.

(2) As of March 31, 2024, we had 39 mortgage notes payable with maturity dates ranging from June 18, 2024 through August 1, 2037.

(3) The weighted average interest rate on the mortgage notes outstanding as of March 31, 2024 was approximately 4.16 %.

(4) As of March 31, 2024, Secured Overnight Financing Rate (“SOFR”) was approximately 5.34 %.

(5) The weighted average interest rate on all debt outstanding as of March 31, 2024 was approximately 5.78 %.

(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, 2024.

N/A - Not Applicable

Mortgage Notes Payable

As of September 30, 2023, we had 43 mortgage notes payable, collateralized by a total of 49 properties with a net book value of $ 496.5 million.

As of March 31, 2024, we had 39 mortgage notes payable, collateralized by a total of 45 properties with a net book value of $ 460.7 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, 2023, we did not have any mortgages subject to recourse.

As of March 31, 2024, 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, 2023, we repaid four mortgages, collateralized by four properties, which are summarized in the table below (dollars in thousands):

During the three months ended March 31, 2024, we repaid two mortgages, collateralized by two properties, which are summarized in the table below (dollars in thousands):

Fixed Rate Debt Repaid Interest Rate on Fixed Rate Debt Repaid

$ 17,674 5.05 %

During the nine months ended September 30, 2023, we issued three mortgages, collateralized by three properties, which are summarized in the table below (dollars in thousands):

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

$ 9,000 6.10 %

During the nine months ended September 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

We made payments of $ 0.3 million and $ 0.4 million for deferred financing costs during the three and nine months ended September 30, 2023.

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.

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

We did not make any payments for deferred financing costs during the three months ended March 31, 2024.

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

Scheduled principal payments of mortgage notes payable for the nine months ending December 31, 2024, 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, 2023 $ 11,995

Nine Months Ending December 31, 2024 $ 14,253

Thereafter 48,527

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

At March 31, 2024 and December 31, 2023, 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.

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During the next 12 months, we estimate that an additional $ 4.6 million will be reclassified out of accumulated other comprehensive income into interest expense in our condensed consolidated statements of operations and comprehensive income, as a reduction to interest expense.

The following table summarizes the interest rate caps at September 30, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

The following table summarizes the interest rate caps at March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

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

1 unchanged sentence

(1) We have entered into various interest rate cap agreements on variable rate debt with SOFR caps ranging from 1.75 % to 5.50 %.

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.

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 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.

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 have designated our interest rate swaps as cash flow hedges, and we record changes in the fair value of the respective interest rate swap agreement to accumulated other comprehensive income on the 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, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

The following table summarizes our interest rate swaps at March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

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

2 unchanged sentences

Amount of gain, net, recognized in Comprehensive Income

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

2023 2022 2023 2022

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,

2023 2022 2023 2022

Three Months Ended March 31,

Interest rate caps $ 106 $ 263

2 unchanged sentences

Asset (Liability) Derivatives Fair Value at

Derivatives Designated as Hedging Instruments Balance Sheet Location September 30, 2023 December 31, 2022

Derivatives Designated as Hedging Instruments Balance Sheet Location March 31, 2024 December 31, 2023

Interest rate caps Other assets $ 194 $ 684

2 unchanged sentences

Total derivative liabilities, net $ 11,660 $ 6,236

The fair value of all mortgage notes payable outstanding as of September 30, 2023 was $ 273.2 million, as compared to the carrying value stated above of $ 311.0 million.

The fair value of all mortgage notes payable outstanding as of March 31, 2024 was $ 251.8 million, as compared to the carrying value stated above of $ 276.0 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.

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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, 2023, there was $ 441.0 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 6.77 %, and $ 2.9 million outstanding under letters of credit, at a weighted average interest rate of 1.50 %.

As of September 30, 2023, the maximum additional amount we could draw under the Credit Facility was $ 44.9 million.

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

The amount outstanding under the Credit Facility approximates fair value as of September 30, 2023.

As of March 31, 2024, there was $ 446.0 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 6.80 %, and no outstanding letters of credit.

As of March 31, 2024, the maximum additional amount we could draw under the Credit Facility was $ 47.3 million.

We were in compliance with all covenants under the Credit Facility as of March 31, 2024.

The amount outstanding under the Credit Facility approximates fair value as of March 31, 2024.

Commitments and Contingencies

Ground Leases

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, 2023 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

We are obligated as lessee under three ground leases.

Future minimum rental payments due under the terms of these leases for the nine months ending December 31, 2024 and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

Year Future Lease Payments Due Under Operating Leases

Three Months Ending December 31, 2023 $ 124

Nine Months Ending December 31, 2024 $ 343

Thereafter 3,359

2 unchanged sentences

Present value of lease payments $ 4,241

Rental expense incurred for properties with ground lease obligations during the three and nine months ended September 30, 2023 was $ 0.1 million and $ 0.3 million, respectively, and during the three and nine months ended September 30, 2022 was $ 0.1 million and $ 0.3 million, respectively.

Rental expense incurred for properties with ground lease obligations during the three months ended March 31, 2024 was $ 0.1 million and during the three months ended March 31, 2023 was $ 0.1 million.

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, 2023, there was $ 2.9 million outstanding under letters of credit.

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

As of March 31, 2024, there were no outstanding letters of credit.

Equity and Mezzanine Equity

Stockholders’ Equity

The following table summarizes the changes in our equity for the three and nine months ended September 30, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

The following table summarizes the changes in our equity for the three months ended March 31, 2024 and 2023 (dollars in thousands):

Three Months Ended March 31,

Senior Common Stock

4 unchanged sentences

Issuance of common stock, net — 1

Repurchase of common stock, net — — ( 1 ) —

Balance, end of period $ 40 $ 40

2 unchanged sentences

Issuance of Series F preferred stock, net — —

Redemption of Series F preferred stock, net — —

Balance, end of period $ 1 $ 1

2 unchanged sentences

Issuance of common stock and Series F preferred stock, net 197 4,385

Repurchase of common stock, net — — 998 —

Redemption of Series F preferred stock, net 55 86

4 unchanged sentences

Balance, beginning of period $ 7,758 $ 11,640

Comprehensive income 5,089 6,790 7,218 13,660

Comprehensive income (loss) 5,417 ( 5,895 )

Reclassification into interest expense 106 263

4 unchanged sentences

Redemption of Series F preferred stock, net ( 3 ) ( 5 )

Net income attributable to the Company 1,789 2,791 448 7,864

Net income available to the Company 3,524 3,174

Balance, end of period $ ( 596,475 ) $ ( 541,042 )

2 unchanged sentences

Issuance of common stock and Series F preferred stock, net 197 4,386

Repurchase of common stock, net — — 997 —

Redemption of Series F preferred stock, net 52 81

1 unchanged sentence

Distributions declared to common, senior common, and preferred stockholders ( 15,220 ) ( 15,108 )

Comprehensive income 5,089 6,790 7,218 13,660

Comprehensive income (loss) 5,417 ( 5,895 )

Reclassification into interest expense 106 263

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership ( 43 ) 24

Net income attributable to the Company 1,789 2,791 448 7,864

Net income available to the Company 3,524 3,174

Balance, end of period $ 147,313 $ 190,882

2 unchanged sentences

Distributions declared to Non-controlling OP Unit holders ( 93 ) ( 118 )

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

Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership 43 ( 24 )

3 unchanged sentences

Distributions

We paid the following distributions per share for the three and nine months ended September 30, 2023 and 2022:

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

2023 2022 2023 2022

We paid the following distributions per share for the three months ended March 31, 2024 and 2023:

For the three months ended March 31,

Common Stock and Non-controlling OP Units $ 0.30 $ 0.30

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On February 22, 2022, we entered into Amendment No.

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”).

During the nine months ended September 30, 2023, we sold 0.2 million shares of common stock, raising approximately $ 4.0 million in net proceeds under our At-the-Market Equity Offering Sales Agreement with sales agents Robert W.

1 to 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”).

(“Fifth Third”), 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.

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.

3 unchanged sentences

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 up to $ 250.0 million of common stock.

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

Common Stock Buyback Program

During the nine months ended September 30, 2023, we repurchased $ 1.0 million worth of our common stock through our common stock repurchase program.

During the three months ended March 31, 2024, we did not sell any shares of common stock under the 2023 Common Stock Sales Agreement.

On March 26, 2024, we entered into Amendment No.

1 to the 2023 Common Stock Sales Agreement (the “2024 Common Stock Sales Agreement”).

The amendment permitted shares of common stock to be issued pursuant to the 2024 Common Stock Sales Agreement under the 2024 Registration Statement, and future registration statements on Form S-3.

In connection with the 2024 Common Stock Sales Agreement, we filed a prospectus supplement dated March 26, 2024, to the prospectus dated March 21, 2024, 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, 2024, we did not sell any shares of common stock under the 2024 Common Stock Sales Agreement.

Mezzanine Equity

2 unchanged sentences

All other change in control situations would require input from our Board of Directors.

In addition, our Series E Preferred Stock and Series G Preferred Stock are redeemable at the option of the applicable shareholder in the event a delisting event occurs.

We will periodically evaluate the likelihood that a delisting event or change of control of greater than 50 % will take place, and if we deem this probable, we adjust the Series E Preferred Stock, and Series G Preferred Stock presented in mezzanine equity to their redemption value, with the offset to gain (loss) on extinguishment.

In addition, our

Series E Preferred Stock and Series G Preferred Stock are redeemable at the option of the applicable shareholder in the event a delisting event occurs.

We will periodically evaluate the likelihood that a delisting event or change of control of greater than 50 % will take place, and if we deem this probable, we will adjust the Series E Preferred Stock, and Series G Preferred Stock presented in mezzanine equity to their redemption value, with the offset to gain (loss) on extinguishment.

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

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 nine months ended September 30, 2023.

However, we terminated the 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.

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

On March 13, 2024, we filed the 2024 Registration Statement, which was declared effective on March 21, 2024.

The 2024 Registration Statement allows us to issue up to $ 1.3 billion of securities and replaces the 2022 Registration Statement.

Series F Preferred Stock

1 unchanged sentence

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

We sold 229,677 shares of our Series F Preferred Stock, raising $ 5.2 million in net proceeds, during the nine months ended September 30, 2023.

We sold 7,580 shares of our Series F Preferred Stock, raising $ 0.2 million in net proceeds, during the three months ended March 31, 2024.

Non-controlling Interest in Operating Partnership

As of September 30, 2023 and December 31, 2022, we owned approximately 99.0 % and 99.0 %, re spectively, of the outstanding OP Units.

As of March 31, 2024 and December 31, 2023, we owned approximately 99.2 % and 99.2 %, 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, 2023 and December 31, 2022, there were 391,468 and 391,468 outstanding OP Units held by Non-controlling OP Unitholders, respectively.

As of March 31, 2024 and December 31, 2023, there were 310,643 and 310,643 outstanding OP Units held by Non-controlling OP Unitholders, respectively.

Revision of Previously Issued Financial Statements

As discussed in Note 1, the Company identified errors in its calculation of the depreciation of tenant funded improvement assets at a number of its properties.

A summary of the corrections to the impacted financial statement line items in the Company’s previously issued Consolidated Statements of Operations and Comprehensive Income, Consolidated Statements of Cash Flows and Consolidated Statements of Equity for the quarter ended September 30, 2022, and Consolidated Balance Sheets for the year ended December 31, 2022 included in previously filed Annual Reports on Form 10-K and Condensed Consolidated Statements of Operations and Comprehensive Income, Condensed Consolidated Statements of Cash Flows and the Stockholders’ Equity tables for periods presented below, which were presented in previously filed Quarterly Reports on Form 10-Q, is as follows:

As discussed in Note 1, the Company identified errors in its calculation of the depreciation of certain tenant funded improvement assets at a number of its properties.

A summary of the corrections to the impacted financial statement line items in the Company’s previously issued Condensed Consolidated Statements of Operations and Comprehensive Income, Condensed Consolidated Statements of Cash Flows and the Stockholders’ Equity tables for the quarter ended March 31, 2023, which was presented in a previously filed Quarterly Report on Form 10-Q, is as follows:

Condensed Consolidated Statements of Operations and Comprehensive Income

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised

Three Months Ended March 31, 2023

As Previously Reported Adjustments As Revised

Operating expenses

Depreciation and amortization $ 15,474 $ ( 770 ) $ 14,704

Total operating expense before incentive fee waiver $ 37,448 $ ( 290 ) $ 37,158 $ 90,932 $ ( 393 ) $ 90,539

Total operating expenses $ 25,434 $ ( 770 ) $ 24,664

6 unchanged sentences

Net income $ 2,397 $ 770 $ 3,167

Total comprehensive income available to the Company $ 9,291 $ 290 $ 9,581 $ 21,131 $ 393 $ 21,524

Consolidated Balance Sheets

As of December 31, 2022

As Previously Reported Adjustments As Revised

accumulated depreciation $ 286,994 $ ( 844 ) $ 286,150

Total real estate, net $ 1,000,303 $ 844 $ 1,001,147

Real estate and related assets held for sale $ 3,013 $ 280 $ 3,293

TOTAL ASSETS $ 1,201,509 $ 1,124 $ 1,202,633

Distributions in excess of accumulated earnings $ ( 530,228 ) $ 1,124 $ ( 529,104 )

TOTAL STOCKHOLDERS' EQUITY $ 202,780 $ 1,124 $ 203,904

TOTAL EQUITY $ 204,570 $ 1,124 $ 205,694

TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY $ 1,201,509 $ 1,124 $ 1,202,633

Total comprehensive loss attributable to the Company $ ( 3,491 ) $ 770 $ ( 2,721 )

Stockholders’ Equity

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

As Previously Reported Adjustments As Revised As Previously Reported Adjustments As Revised

Three Months Ended March 31, 2023

As Previously Reported Adjustments As Revised

Distributions in Excess of Accumulated Earnings

8 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

As Previously Reported Adjustments As Revised

5 unchanged sentences

Distributions

On October 10, 2023, our Board of Directors declared the following monthly distributions for the months of October, November and December of 2023:

On April 9, 2024, our Board of Directors declared the following monthly distributions for the months of April, May and June of 2024:

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 20, 2023 October 31, 2023 $ 0.10 $ 0.138021 $ 0.125

November 20, 2023 November 30, 2023 0.10 0.138021 0.125

December 18, 2023 December 29, 2023 0.10 0.138021 0.125

April 19, 2024 April 30, 2024 $ 0.10 $ 0.138021 $ 0.125

May 17, 2024 May 31, 2024 0.10 0.138021 0.125

June 19, 2024 June 28, 2024 0.10 0.138021 0.125

$ 0.30 $ 0.414063 $ 0.375

2 unchanged sentences

Payment Date Distribution per Share

October November 3, 2023 $ 0.0875

November December 5, 2023 0.0875

December January 5, 2024 0.0875

April May 6, 2024 $ 0.0875

May June 5, 2024 0.0875

June July 5, 2024 0.0875

Series F Preferred Stock Distributions

Record Date Payment Date Distribution per Share

October 25, 2023 November 3, 2023 $ 0.125

November 28, 2023 December 5, 2023 0.125

December 27, 2023 January 5, 2024 0.125

April 22, 2024 May 3, 2024 $ 0.125

May 23, 2024 June 5, 2024 0.125

June 25, 2024 July 5, 2024 0.125

Equity Activity

Subsequent to September 30, 2023 and through November 6, 2023, we raised $ 0.1 million in net proceeds from the sale of 4,318 shares of Series F Preferred Stock.

Acquisition Activity

On October 12, 2023, we purchased a 69,920 square foot industrial property in Allentown, Pennsylvania for $ 7.8 million.

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

On November 3, 2023, we purchased a 67,709 square foot industrial property in Indianapolis, Indiana for $ 4.5 million.

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

Subsequent to March 31, 2024 and through May 6, 2024, we raised $ 0.7 million in net proceeds from the sale of 50,827 shares of common stock under our 2024 Common Stock Sales Agreement.

Sale Activity

On October 2, 2023, we sold our 146,483 square foot office property in Columbia, South Carolina for $ 7.0 million.

We realized a $ 2.9 million gain on sale, net.

Financing Activity

On October 2, 2023, we repaid $ 9.0 million in fixed rate debt, collateralized by one property, at an interest rate of 4.04 %.

We realized a $ 2.8 million gain on debt extinguishment.

On April 30, 2024, we sold our 29,257 square foot property in Egg Harbor, New Jersey for $ 2.6 million.

We realized a $ 0.05 million loss on sale.

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