GLADSTONE COMMERCIAL CORP 10-K

Item 8. Financial Statements and Supplementary Data. Index to Consolidated Financial Statements Report of Management on Internal Control over Financial Reporting 52 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 53 Consolidated Balance Sheets as of December 31, 2024 and 2023 55 Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 56 Consolidated Statements of Equity for the years ended December 31, 2024, 2023 and 2022 57 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 59 Notes to Consolidated Financial Statements 61 Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2024 84 51 Table of Contents Report of Management on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and include those policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets, provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with appropriate authorizations; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, we assessed the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO). Based on our assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2024. The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein. February 18, 2025 52 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Gladstone Commercial Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Gladstone Commercial Corporation and its subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 53 Table of Contents Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Real Estate Impairment Evaluation – Undiscounted Future Cash Flows As described in Notes 1, 4, and 5 to the consolidated financial statements, the Company’s consolidated total real estate, net balance was $0.9 billion as of December 31, 2024. During 2024, the Company recognized an impairment charge of $6.8 million. Management periodically reviews the carrying value of each property to determine if circumstances indicate impairment in the carrying value of the investment exists. If circumstances indicate the possibility of impairment, management prepares a projection of the undiscounted future cash flows, without interest charges, of the specific property and determines if the carrying amount of such property is recoverable. In preparing the projection of undiscounted future cash flows, management estimates cap rates, market rental rates, and tenant improvement allowances using information obtained from market comparability studies and other comparable sources, and applies the undiscounted cash flows against their expected holding period. If impairment were indicated, the carrying value of the property would be written down to its estimated fair value based on management’s best estimate of the property’s discounted future cash flows using market derived cap rates, discount rates and market rental rates applied against the expected hold period. The principal considerations for our determination that performing procedures relating to the undiscounted future cash flows used in the real estate impairment evaluation is a critical audit matter are (i) the significant judgment by management when developing the projection of the undiscounted future cash flows and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the cap rates, market rental rates and expected holding period assumptions. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s real estate impairment evaluation, including controls over the projection of the undiscounted future cash flows. These procedures also included, among others (i) testing management’s process for developing the projection of the undiscounted future cash flows; (ii) evaluating the appropriateness of the undiscounted cash flow model; (iii) testing the completeness and accuracy of underlying data used in the undiscounted cash flow model; and (iv) evaluating the reasonableness of the significant assumptions used by management related to cap rates, market rental rates, tenant improvement allowances, and expected holding periods. Evaluating management’s assumptions related to the cap rates, market rental rates and expected holding period involved evaluating whether the assumptions used by management were reasonable considering (i) the consistency with external market and industry data and (ii) whether the assumptions were consistent with evidence obtained in other areas of the audit. /s/ PricewaterhouseCoopers LLP Washington, DC February 18, 2025 We have served as the Company’s auditor since 2003. 54 Table of Contents Gladstone Commercial Corporation Consolidated Balance Sheets (Dollars in Thousands, Except Share and Per Share Data) December 31, 2024 December 31, 2023 ASSETS Real estate, at cost $ 1,211,793 $ 1,221,364 Less: accumulated depreciation 319,646 299,662 Total real estate, net 892,147 921,702 Lease intangibles, net 95,107 101,048 Real estate and related assets held for sale 4,363 28,787 Cash and cash equivalents 10,956 11,985 Restricted cash 4,118 4,150 Funds held in escrow 5,367 7,515 Right-of-use assets from operating leases 3,961 4,889 Deferred rent receivable, net 45,324 41,006 Sales-type lease receivable, net 18,618 — Other assets 14,387 12,389 TOTAL ASSETS $ 1,094,348 $ 1,133,471 LIABILITIES, MEZZANINE EQUITY AND EQUITY LIABILITIES Mortgage notes payable, net $ 269,579 $ 295,853 Borrowings under Revolver 1,900 75,750 Borrowings under Term Loan A, Term Loan B and Term Loan C, net 347,948 367,258 Senior unsecured notes, net 73,958 — Deferred rent liability, net 21,996 29,324 Operating lease liabilities 4,063 5,093 Asset retirement obligation 5,061 4,928 Accounts payable and accrued expenses 13,198 13,588 Liabilities related to assets held for sale — 676 Due to Adviser and Administrator (1) 2,540 2,556 Other liabilities 12,763 14,138 TOTAL LIABILITIES $ 753,006 $ 809,164 Commitments and contingencies (2) MEZZANINE EQUITY Series E and G redeemable preferred stock, net, par value $ 0.001 per share; $ 25 per share liquidation preference; 10,750,886 and 10,750,886 shares authorized; and 7,052,334 and 7,052,334 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively (3) $ 170,041 $ 170,041 TOTAL MEZZANINE EQUITY $ 170,041 $ 170,041 EQUITY Senior common stock, par value $ 0.001 per share; 950,000 shares authorized; and 389,190 and 406,425 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively (3) $ 1 $ 1 Common stock, par value $ 0.001 per share, 62,400,887 and 62,326,818 shares authorized and 43,986,038 and 40,000,596 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively (3) 44 40 Series F redeemable preferred stock, par value $ 0.001 per share; $ 25 per share liquidation preference; 25,898,227 and 25,972,296 shares authorized; and 914,553 and 918,601 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively (3) 1 1 Additional paid in capital 784,389 730,256 Accumulated other comprehensive income 10,648 7,758 Distributions in excess of accumulated earnings ( 623,912 ) ( 584,776 ) TOTAL STOCKHOLDERS' EQUITY $ 171,171 $ 153,280 OP Units held by Non-controlling OP Unitholders (3) 130 986 TOTAL EQUITY $ 171,301 $ 154,266 TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY $ 1,094,348 $ 1,133,471 (1) Refer to Note 2 “Related-Party Transactions ” (2) Refer to Note 7 “Commitments and Contingencies ” (3) Refer to Note 8 “Equity and Mezzanine Equity” The accompanying notes are an integral part of these consolidated financial statements. 55 Table of Contents Gladstone Commercial Corporation Consolidated Statements of Operations and Comprehensive Income (Dollars in Thousands, Except Share and Per Share Data) For the year ended December 31, 2024 2023 2022 Operating revenues Lease revenue $ 149,388 $ 147,584 $ 148,981 Total operating revenues $ 149,388 $ 147,584 $ 148,981 Operating expenses Depreciation and amortization $ 55,786 $ 57,856 $ 60,154 Property operating expenses 25,418 25,858 26,832 Base management fee (1) 6,111 6,380 6,331 Incentive fee (1) 4,488 — 5,270 Administration fee (1) 2,567 2,350 1,864 General and administrative 3,879 4,363 3,705 Impairment charge 6,822 19,296 12,092 Total operating expense before incentive fee waiver $ 105,071 $ 116,103 $ 116,248 Incentive fee waiver (1) ( 2,263 ) — — Total operating expenses $ 102,808 $ 116,103 $ 116,248 Other income (expense) Interest expense $ ( 37,395 ) $ ( 37,330 ) $ ( 32,457 ) Gain on sale of real estate, net 14,229 7,737 10,052 Gain on debt extinguishment, net 300 2,830 — Other income 326 204 454 Total other expense, net $ ( 22,540 ) $ ( 26,559 ) $ ( 21,951 ) Net income $ 24,040 $ 4,922 $ 10,782 Net (income) loss (available) attributable to OP Units held by Non-controlling OP Unitholders ( 42 ) 63 23 Net income available to the Company $ 23,998 $ 4,985 $ 10,805 Distributions attributable to Series E, F, and G preferred stock ( 12,440 ) ( 12,285 ) ( 11,903 ) Distributions attributable to senior common stock ( 420 ) ( 430 ) ( 458 ) Loss on extinguishment of Series F preferred stock, net ( 14 ) ( 11 ) ( 10 ) Gain on repurchase of Series G preferred stock — 3 37 Net income (loss) available (attributable) to common stockholders $ 11,124 $ ( 7,738 ) $ ( 1,529 ) Income (loss) per weighted average share of common stock - basic & diluted Income (loss) available (attributable) to common stockholders $ 0.27 $ ( 0.19 ) $ ( 0.04 ) Weighted average shares of common stock outstanding Basic and Diluted 41,766,263 39,943,167 38,950,734 Distributions declared per common share $ 1.2000 $ 1.2000 $ 1.5048 Earnings per weighted average share of senior common stock $ 1.05 $ 1.05 $ 1.05 Weighted average shares of senior common stock outstanding - basic 398,828 409,903 436,667 Comprehensive income (loss) Change in unrealized gain (loss) related to interest rate hedging instruments, net $ 2,702 $ ( 4,853 ) $ 12,115 Other comprehensive income (loss) 2,702 ( 4,853 ) 12,115 Net income $ 24,040 $ 4,922 $ 10,782 Comprehensive income $ 26,742 $ 69 $ 22,897 Comprehensive (income) loss (available) attributable to OP Units held by Non-controlling OP Unitholders ( 42 ) 63 23 Total comprehensive income available to the Company $ 26,700 $ 132 $ 22,920 (1) Refer to Note 2 “Related-Party Transactions” The accompanying notes are an integral part of these consolidated financial statements. 56 Table of Contents Gladstone Commercial Corporation Consolidated Statements of Equity (Dollars in Thousands) Series F Preferred Stock Common Stock Senior Common Stock Senior Common Stock Common Stock Series F Preferred Stock Additional Paid in Capital Accumulated Other Comprehensive Income Distributions in Excess of Accumulated Earnings Total Stockholders' Equity Non-Controlling Interest Total Equity Balance at December 31, 2021 422,920 37,473,587 600,061 $ 1 $ 37 $ — $ 671,134 $ ( 1,346 ) $ ( 468,908 ) $ 200,918 $ 1,259 $ 202,177 Issuance of common stock and Series F preferred stock, net 247,975 2,130,056 — — 2 1 48,633 — — 48,636 — 48,636 Conversion of senior common stock to common stock — 140,716 ( 168,997 ) — — — — — — — — — Distributions declared to common, senior common, preferred stockholders and Non-controlling OP Unit holders — — — — — — — — ( 71,027 ) ( 71,027 ) ( 454 ) ( 71,481 ) Comprehensive income — — — — — — — 12,115 — 12,115 — 12,115 Reclassification into interest expense — — — — — — — 871 — 871 — 871 Issuance of Non-controlling OP Units as consideration in real estate acquisitions, net — — — — — — — — — — 2,394 2,394 Redemption of Series F preferred stock, net — — — — — — 174 — ( 10 ) 164 — 164 Repurchase of Series G preferred stock, net — — — — — — — — 37 37 — 37 Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership — — — — — — 1,386 — — 1,386 ( 1,386 ) — Net income — — — — — — — — 10,805 10,805 ( 23 ) 10,782 Balance at December 31, 2022 670,895 39,744,359 431,064 $ 1 $ 39 $ 1 $ 721,327 $ 11,640 $ ( 529,104 ) $ 203,904 $ 1,790 $ 205,694 Issuance of common stock and Series F preferred stock, net 247,706 238,078 — — 1 — 7,118 — — 7,119 — 7,119 Conversion of senior common stock to common stock — 18,114 ( 24,639 ) — — — — — — — — — Retirement of senior common stock, net — — — — — — 52 — — 52 — 52 Distributions declared to common, senior common, preferred stockholders and Non-controlling OP Unit holders — — — — — — — — ( 60,649 ) ( 60,649 ) ( 457 ) ( 61,106 ) Comprehensive income — — — — — — — ( 4,853 ) — ( 4,853 ) — ( 4,853 ) Reclassification into interest expense — — — — — — — 971 — 971 — 971 Redemptions of OP Units — 80,825 — — — — 1,040 — — 1,040 ( 1,040 ) — Redemption of Series F preferred stock, net — — — — — — 477 — ( 11 ) 466 — 466 Repurchase of Series G preferred stock, net — — — — — — — 3 3 — 3 Repurchase of common stock, net — ( 80,780 ) — — — — 998 — — 998 — 998 Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership — — — — — — ( 756 ) — — ( 756 ) 756 — 57 Table of Contents Net income — — — — — — — — 4,985 4,985 ( 63 ) 4,922 Balance at December 31, 2023 918,601 40,000,596 406,425 $ 1 $ 40 $ 1 $ 730,256 $ 7,758 $ ( 584,776 ) $ 153,280 $ 986 $ 154,266 Issuance of common stock and Series F preferred stock, net 70,020 3,699,597 — — 4 — 51,721 — — 51,725 — 51,725 Conversion of senior common stock to common stock — 14,676 ( 17,235 ) — — — — — — — — — Distributions declared to common, senior common, preferred stockholders and Non-controlling OP Unit holders — — — — — — — — ( 63,120 ) ( 63,120 ) ( 184 ) ( 63,304 ) Comprehensive income — — — — — — — 2,702 — 2,702 — 2,702 Reclassification into interest expense — — — — — — — 188 — 188 — 188 Redemptions of OP Units — 271,169 — — — — 3,865 — — 3,865 ( 3,865 ) — Redemption of Series F preferred stock, net ( 74,068 ) — — — — — 1,698 — ( 14 ) 1,684 — 1,684 Adjustment to OP Units held by Non-controlling OP Unitholders resulting from changes in ownership of the Operating Partnership — — — — — — ( 3,151 ) — — ( 3,151 ) 3,151 — Net income — — — — — — — — 23,998 23,998 42 24,040 Balance at December 31, 2024 914,553 43,986,038 389,190 $ 1 $ 44 $ 1 $ 784,389 $ 10,648 $ ( 623,912 ) $ 171,171 $ 130 $ 171,301 The accompanying notes are an integral part of these consolidated financial statements. 58 Table of Contents Gladstone Commercial Corporation Consolidated Statements of Cash Flows (Dollars in Thousands) For the year ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 24,040 $ 4,922 $ 10,782 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 55,786 57,856 60,154 Impairment charge 6,822 19,296 12,092 Gain on debt extinguishment, net ( 300 ) ( 2,830 ) — Gain on sale of real estate, net ( 14,229 ) ( 7,737 ) ( 10,052 ) Amortization of deferred financing costs 1,631 1,646 3,482 Amortization of deferred rent asset and liability, net ( 6,813 ) ( 7,457 ) ( 4,215 ) Increase in sales-type lease receivable ( 136 ) — — Amortization of discount and premium on assumed debt, net 34 41 47 Asset retirement obligation expense 133 126 99 Amortization of right-of-use asset from operating leases and operating lease liabilities, net 7 27 29 Bad debt expense 64 — — Operating changes in assets and liabilities Decrease (increase) in other assets 1,278 1,483 ( 619 ) Decrease in deferred rent receivable ( 5,541 ) ( 3,161 ) ( 1,330 ) (Decrease) increase in accounts payable and accrued expenses ( 41 ) ( 11 ) 1,600 Decrease in amount due to Adviser and Administrator ( 16 ) ( 800 ) ( 75 ) Decrease in other liabilities ( 983 ) ( 722 ) ( 942 ) Leasing commissions paid ( 4,783 ) ( 2,312 ) ( 1,875 ) Net cash provided by operating activities $ 56,953 $ 60,367 $ 69,177 Cash flows from investing activities: Acquisition of real estate and related intangible assets $ ( 27,357 ) $ ( 30,018 ) $ ( 112,970 ) Improvements of existing real estate ( 12,797 ) ( 6,674 ) ( 6,822 ) Proceeds from sale of real estate 37,635 37,008 39,499 Receipts from lenders for funds held in escrow 2,996 4,972 5,945 Payments to lenders for funds held in escrow ( 848 ) ( 3,669 ) ( 7,459 ) Receipts from tenants for reserves 952 1,037 1,843 Payments to tenants from reserves ( 2,308 ) ( 1,518 ) ( 2,549 ) Net cash (used in) provided by investing activities $ ( 1,727 ) $ 1,138 $ ( 82,513 ) Cash flows from financing activities: Proceeds from issuance of equity $ 55,425 $ 10,225 $ 49,676 Offering costs paid ( 821 ) ( 538 ) ( 1,073 ) Redemption of Series F preferred stock ( 1,712 ) ( 488 ) ( 184 ) Retirement of senior common stock — ( 52 ) Repurchase of Series G preferred stock — ( 12 ) ( 176 ) Repurchase of common stock — ( 998 ) Borrowings under mortgage notes payable 15,240 9,000 62,913 Payments for deferred financing costs ( 1,379 ) ( 400 ) ( 5,355 ) Principal repayments on mortgage notes payable ( 41,560 ) ( 70,083 ) ( 153,744 ) Borrowings on term loan — — 150,000 Repayments on term loan ( 20,000 ) — ( 5,000 ) Borrowings under senior unsecured notes 75,000 — — Borrowings from revolving credit facility 83,400 123,600 111,750 Repayments on revolving credit facility ( 157,250 ) ( 71,100 ) ( 122,050 ) Increase in security deposits 158 104 485 Distributions paid for common, senior common, preferred stock and Non-controlling OP Unitholders ( 62,788 ) ( 60,620 ) ( 71,092 ) Net cash (used in) provided by financing activities $ ( 56,287 ) $ ( 61,362 ) $ 16,150 Net (decrease) increase in cash, cash equivalents, and restricted cash $ ( 1,061 ) $ 143 $ 2,814 Cash, cash equivalents, and restricted cash at beginning of period $ 16,135 $ 15,992 $ 13,178 Cash, cash equivalents, and restricted cash at end of period $ 15,074 $ 16,135 $ 15,992 SUPPLEMENTAL AND NON-CASH INFORMATION Cash paid for interest $ 35,666 $ 33,136 $ 27,844 59 Table of Contents Tenant funded fixed asset improvements included in deferred rent liability, net $ ( 479 ) $ ( 1,312 ) $ 17,898 Derecognized carry value of property to sales-type lease receivable $ ( 14,553 ) $ — $ — Capital improvements and leasing commissions included in accounts payable and accrued expenses $ 5,125 $ 5,475 $ 1,632 Unrealized gain related to interest rate hedging instruments, net $ 2,702 $ ( 4,853 ) $ 12,115 Increase in asset retirement obligation assumed in acquisition $ — $ 95 $ 979 Non-controlling OP Units issued in connection with acquisition $ — $ — $ 2,394 Dividends paid on Series F preferred stock via additional share issuances $ 516 $ 487 $ 389 The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows (dollars in thousands): For the year ended December 31, 2024 2023 2022 Cash and cash equivalents $ 10,956 $ 11,985 $ 11,653 Restricted cash 4,118 4,150 4,339 Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows $ 15,074 $ 16,135 $ 15,992 Restricted cash consists of security deposits and receipts from tenants for reserves. These funds will be released to the tenants upon completion of agreed upon tasks, as specified in the lease agreements, mainly consisting of maintenance and repairs on the buildings and upon receipt by us of evidence of insurance and tax payments. The accompanying notes are an integral part of these consolidated financial statements. 60 Table of Contents Gladstone Commercial Corporation Notes to Consolidated Financial Statements 1. Organization, Basis of Presentation and Significant Accounting Policies Gladstone Commercial Corporation was incorporated under the General Corporation Law of the State of Maryland on February 14, 2003. We have elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes. We focus on acquiring, owning and managing primarily industrial and office properties. 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 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”). All further references herein to “we,” “our,” “us” and the “Company” mean Gladstone Commercial Corporation and its consolidated subsidiaries, except where it is made clear that the term means only Gladstone Commercial Corporation. A ll references herein and throughout the Notes to Consolidated Financial Statements to the number of properties and square footage are unaudited. Subsidiaries We conduct substantially all of our operations through the Operating Partnership. We currently control the sole general partner of the Operating Partnership and own, directly or indirectly, a majority of the limited partnership interests in the Operating Partnership (“Non-controlling OP Units”) through two of our subsidiaries, GCLP Business Trust I and II. The financial position and results of operations of the Operating Partnership are consolidated within our financial statements. As of December 31, 2024 and 2023, the Company owned 99.9 % and 99.2 %, respectively, of the outstanding OP Units (See Note 8, “Equity and Mezzanine Equity” for additional discussion regarding OP Units). Gladstone Commercial Lending, LLC, a Delaware limited liability company (“Gladstone Commercial Lending”), a subsidiary of ours, was created to conduct all operations related to our real estate mortgage loans. As the Operating Partnership currently owns all of the membership interests of Gladstone Commercial Lending, the financial position and results of operations of Gladstone Commercial Lending are consolidated with ours. Gladstone Commercial Advisers, Inc., a Delaware corporation (“Commercial Advisers”), and wholly-owned taxable REIT subsidiary (“TRS”) of ours, was created to collect any non-qualifying income related to our real estate portfolio. There has been no such income earned to date. Since we own 100 % of the voting securities of Commercial Advisers, the financial position and results of operations of Commercial Advisers are consolidated within our financial statements. GCLP Business Trust I and GCLP Business Trust II, each a subsidiary and business trust of ours, were formed under the laws of the Commonwealth of Massachusetts on December 28, 2005 . We transferred our 99 % limited partnership interest in the Operating Partnership to GCLP Business Trust I in exchange for 100 shares of the trust. Gladstone Commercial Partners, LLC, a subsidiary of ours, transferred its 1 % general partnership interest in the Operating Partnership to GCLP Business Trust II in exchange for 100 trust shares. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates. Real Estate and Lease Intangibles We record investments in real estate at cost and capitalize improvements and replacements when they extend the useful life or improve the efficiency of the asset. We expense costs of repairs and maintenance as such costs are incurred. We generally compute depreciation using the straight-line method over the estimated useful life, or up to 39 years, for buildings, ten to 25 years for improvements, and the remaining lease term for tenant improvements. 61 Table of Contents Most properties that we acquire are already being operated as rental properties, which we consider to be asset acquisitions under Accounting Standards Codification (“ASC”) 360, “Property Plant and Equipment” (“ASC 360”). When an acquisition is considered an asset acquisition, ASC 360 requires that the purchase price of real estate be allocated to the acquired tangible assets and liabilities, consisting of land, building, tenant improvements, long-term debt assumed and identified intangible assets and liabilities, typically the value of above-market and below-market leases, the value of in-place leases, the value of lease origination costs and the value of tenant relationships, based in each case on their fair values. ASC 360 allows us to capitalize all expenses related to an acquisition accounted for as an asset acquisition into the cost of the acquisition. Management’s estimates of fair value are made using methods similar to those used by independent appraisers (e.g. discounted cash flow analysis). Factors considered by management in its analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases. We also consider information obtained about each property as a result of our pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired and liabilities assumed. In estimating carrying costs, management also includes lost reimbursement of real estate taxes, insurance and other operating expenses as well as estimates of lost rents at market rates during the hypothetical expected lease-up periods, which generally range from nine to 18 months, depending on specific local market conditions. Management also estimates costs to execute similar leases, including leasing commissions, legal and other related expenses to the extent that such costs are not already incurred in connection with a new lease origination as part of the transaction. We allocate purchase price to the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. The “as-if-vacant” value is allocated to land, building and tenant improvements based on management’s determination of the relative fair values of these assets on the date of acquisition. Above-market and below-market in-place lease fair values for acquired properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. When determining the non-cancelable term of the lease, we evaluate which fixed-rate renewal options, if any, should be included. The capitalized above-market lease values, included in the accompanying consolidated balance sheets as part of deferred rent receivable, are amortized as a reduction of rental income over the remaining non-cancelable terms of the respective leases. Total amortization related to above-market lease values was $ 0.5 million, $ 0.6 million, and $ 0.8 million for the years ended December 31, 2024, 2023, and 2022, respectively. The capitalized below-market lease values, included in the accompanying consolidated balance sheets as part of deferred rent liability, are amortized as an increase to rental income over the remaining non-cancelable terms of the respective leases, including any below market renewal periods. Total amortization related to below-market lease values was $ 7.3 million, $ 8.0 million, and $ 5.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. The total amount of the remaining intangible assets acquired, which consists of in-place lease values, lease origination costs, and customer relationship intangible values, are allocated based on management’s evaluation of the specific characteristics of each tenant’s lease and our overall relationship with that respective tenant. Characteristics to be considered by management in determining these values include the nature and extent of our existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and our expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors. The value of in-place leases and lease origination costs are amortized to amortization expense over the remaining term of the respective leases, which generally range from seven to 15 years. The value of customer relationship intangibles, which is the benefit to us resulting from the likelihood of an existing tenant renewing its lease, are amortized to amortization expense over the remaining term and any anticipated renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. Total amortization expense related to these intangible assets and liabilities was $ 16.3 million, $ 16.7 million, and $ 19.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. Should a tenant terminate its lease, the unamortized portion of the above-market and below-market lease values would be charged to rental income and the unamortized portion of in-place lease values, lease origination costs and customer relationship intangibles will be charged to amortization expense through the revised termination date. Sales-Type Lease Receivable 62 Table of Contents We assess lease classification at lease commencement to determine whether a lease should be accounted for as an operating, sales-type, or direct finance lease, as outlined in ASC 842 “Leases” (“ASC 842”). For leases that meet the qualifications to be classified as a sales-type lease, we record a net investment in the lease, calculated as the sum of the present value of the future lease payments and unguaranteed residual value, discounted using the rate implicit in the lease. A selling profit or loss, equal to the difference between the net investment in the lease and the carrying value, is recognized at lease commencement. Allowance for Credit Losses In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The new standard required more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair market value through net income. The standard also required that financial assets measured at amortized cost be presented at the net amount anticipated to be collected, through an allowance for credit losses that is deducted from the amortized cost basis, based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. We adopted ASU 2016-13 during the year ended December 31, 2024. We measure and record expected credit losses for our sales-type lease receivable in our consolidated balance sheet in accordance with ASC 326 “Financial Instruments-Credit Losses” (“ASC 326” or “CECL”). In developing the expected credit loss, we utilize a probability of default method. We estimate the credit loss using the probability of tenant default, the loss given a tenant default, and the loss exposure. Various factors are considered under this method, including tenant’s financial strength, historical losses, and current payment collectibility status. The resulting allowance is recorded as a reduction to the sales-type lease receivable, net, on the consolidated balance sheets. We evaluate the allowance quarterly basis, at minimum, or whenever we become aware of changes in the tenant or guarantor’s credit or collectibility status. Impairment Charges We account for the impairment of real estate in accordance with ASC 360-10-35, “Property, Plant, and Equipment,” which requires us to periodically review the carrying value of each property to determine if circumstances indicate impairment of the carrying value of the investment exists or that depreciation periods should be modified. In determining if impairment exists, we consider such factors as each tenant’s payment history and financial condition, the likelihood of lease renewal, business conditions in the industry in which the tenants operate, whether there are indications that the fair value of the real estate has decreased or our intended holding period of the property is shortened. If any of the factors above indicate the possibility of impairment, we prepare a projection of the undiscounted future cash flows, without interest charges, of the specific property and determine if the carrying amount of such property is recoverable. In preparing the projection of undiscounted future cash flows, we estimate cap rates, market rental rates, and tenant improvement allowances using information that we obtain from market comparability studies and other comparable sources, and apply the undiscounted cash flows against our expected holding period. If impairment were indicated, the carrying value of the property would be written down to its estimated fair value based on our best estimate of the property’s discounted future cash flows using market derived cap rates, discount rates and market rental rates applied against our expected hold period. We evaluate our entire portfolio of properties each quarter for any impairment indicators and perform an impairment analysis on those select properties that have an indication of impairment. Held for Sale Property For properties considered held for sale, we cease depreciating and amortizing the property and value the property at the lower of depreciated and amortized cost or fair value, less costs to dispose. We present qualifying assets and liabilities and the results of operations that have been sold, or otherwise qualify as held for sale, as discontinued operations in all periods when the sale meets the definition of discontinued operations. Under GAAP, the definition of discontinued operations is the disposal of a component or group of components that is disposed or is classified as held for sale and represents a strategic shift that has (or will have) a major effect on our operations and financial results. The components of the property’s net income (loss) that are reflected as discontinued operations if classified as such include operating results, depreciation, amortization, and interest expense. When properties are considered held for sale, but do not qualify as a discontinued operation, we present qualifying assets and liabilities as held for sale in the consolidated balance sheet in all periods that the qualifying assets and liabilities meet the held for sale criteria under ASC 360-10-49-9. The components of the held for sale property’s net income (loss) is recorded within continuing operations under the consolidated statement of operations and comprehensive income. Cash and Cash Equivalents 63 Table of Contents We consider cash equivalents to be short-term, highly-liquid investments that are both readily convertible to cash and have a maturity of three months or less at the time of purchase, except that any such investments purchased with funds held in escrow or similar accounts are classified as restricted cash. Items classified as cash equivalents include money-market deposit accounts. The Company maintains majority of its cash and cash equivalents with financial institutions in the U.S., which management believes to be financially sound and with minimal credit risk. At times, the balance of our cash and cash equivalents may exceed federally insurable limits. Restricted Cash Restricted cash consists of security deposits and receipts from tenants for reserves. These funds will be released to the tenants upon completion of agreed upon tasks, as specified in the lease agreements, mainly consisting of maintenance and repairs on the buildings and upon receipt by us of evidence of insurance and tax payments. For purposes of the consolidated statements of cash flows, changes in restricted cash caused by changes in reserves held for tenants are shown as investing activities. Changes in restricted cash caused by changes in security deposits are reflected as financing activities. Funds Held in Escrow Funds held in escrow consist of funds held by certain of our lenders for properties held as collateral by these lenders. These funds will be released to us upon completion of agreed upon tasks, as specified in the mortgage agreements, mainly consisting of maintenance and repairs on the buildings, and when evidence of insurance and tax payments has been submitted to the lenders. For the purposes of the consolidated statements of cash flows, changes in funds held in escrow caused by changes in lender held reserve balances are shown as investing activities. Deferred Financing Costs Deferred financing costs consist of costs incurred to obtain financing, including legal fees, origination fees and administrative fees. The costs are deferred and amortized using the straight-line method, which approximates the effective interest method, over the term of the secured financing. We made payments of $ 1.4 million, $ 0.4 million, and $ 5.4 million for deferred financing costs during the years ended December 31, 2024, 2023, and 2022, respectively. Total amortization expense related to deferred financing costs is included in interest expense and was $ 1.6 million, $ 1.6 million, and $ 3.5 million for the years ended December 31, 2024, 2023, and 2022, respectively. Gains (Losses) on Sale of Real Estate, Net Gains (losses) on sale of real estate, net, consist of the excess consideration received for a property over the property carrying value at the time of sale, or gains on real estate, offset by consideration received for a property less than the property carrying value at the time of sale, or loss on sale of real estate. Lease Revenue Lease revenue includes rents that each tenant pays in accordance with the terms of its respective lease reported evenly over the non-cancelable term of the lease. Most of our leases contain rental increases at specified intervals. We recognize such revenues on a straight-line basis. Deferred rent receivable in the accompanying consolidated balance sheet includes the cumulative difference between lease revenue, as recorded on a straight-line basis, and rents received from the tenants in accordance with the lease terms, along with the capitalized above-market in-place lease values of certain acquired properties. Deferred rent liability in the accompanying consolidated balance sheet includes the capitalized below-market in-place lease values of certain acquired properties. Accordingly, we determine, in our judgment, to what extent the deferred rent receivable applicable to each specific tenant is collectible. We review deferred rent receivable, as it relates to straight line rents, on a quarterly basis and take into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the geographic area in which the property is located. In the event that the collectability of deferred rent with respect to any given tenant is in doubt, we record an allowance for uncollectible accounts or record a direct write-off of the specific rent receivable. We incurred $ 0.1 million, $ 0.4 million, and $ 0.4 million in deferred rent write offs during each of the years ended December 31, 2024, 2023, and 2022, respectively. Tenant recovery revenue includes payments from tenants as reimbursements for franchise taxes, management fees, insurance, maintenance and repairs, utilities, and ground lease payments. We recognize tenant recovery revenue in the same periods that we incur the related expenses. We do not record any tenant recovery revenues or operating expenses associated with costs paid directly by our tenants for our net leased properties. 64 Table of Contents Income Taxes We have operated and intend to continue to operate in a manner that will allow us to qualify as a REIT under the Internal Revenue Code of 1986, as amended, and, accordingly, will not be subject to federal income taxes on amounts distributed to stockholders (except income from foreclosure property), provided that we distribute at least 90 % of our REIT taxable income to our stockholders and meet certain other conditions. To the extent that we satisfy the distribution requirement but distribute less than 100 % of our taxable income, we will be subject to federal corporate income tax on our undistributed income. Commercial Advisers is a wholly-owned TRS that is subject to federal and state income taxes. Though Commercial Advisers has had no activity to date, we would account for any future income taxes in accordance with the provisions of ASC 740, “Income Taxes.” Under ASC 740-10-25, we would account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50 %) that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite our belief that the filing position is supportable, the benefit of that tax position is not recognized in the statements of operations. We recognize interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. We recognize unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, or by expiration of the applicable statute of limitation. For the years ended December 31, 2024, 2023, and 2022, we did no t record any provisions for uncertain tax positions. Asset Retirement Obligations ASC 410, “Asset Retirement and Environmental Obligation,” requires an entity to recognize a liability for a conditional asset retirement obligation when incurred if the liability can be reasonably estimated. ASC 410-20-20 clarifies that the term “Conditional Asset Retirement Obligation” refers to a legal obligation (pursuant to existing laws or by contract) to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. ASC 410-20-25-6 clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. We have accrued a liability at the present value of the estimated payments expected to be made and corresponding increase to the cost of the related properties for disposal related to all properties constructed prior to 1985 that have, or may have, asbestos present in the building. The liabilities are accreted to their estimated obligation over the life of the leases for the respective properties. We did not accrue any liabilities in connection with acquisitions for the year ended December 31, 2024, and accrued $ 0.1 million and $ 1.0 million of liabilities in connection with acquisitions for the years ended December 31, 2023, and 2022, respectively. We recorded accretion expense of $ 0.1 million in each of the years ended December 31, 2024, 2023, and 2022, to general and administrative expense. Costs of future expenditures for obligations are discounted to their present value. The aggregate undiscounted obligation on all properties is $ 10.5 million and the discount rates used in the calculations range from 2.0 % to 7.0 %. We do not expect to make any material payments in conjunction with these obligations in each of the next five years. Stock Issuance Costs We account for stock issuance costs in accordance with SEC Staff Accounting Bulletin (“SAB”) Topic 5.A, which states that incremental costs directly attributable to a proposed or actual offering of securities may properly be deferred and charged against the gross proceeds of the offering. Accordingly, we record costs incurred related to our ongoing equity offerings to other assets on our consolidated balance sheet and ratably apply these amounts to the cost of equity as stock is issued. If an equity offering is subsequently terminated and there are amounts remaining in other assets that have not been allocated to the cost of the offering, the remaining amounts are recorded as a general and administrative expense on our consolidated statements of operations. Comprehensive Income We record the effective portion of changes in the fair value of the interest rate cap and swap agreements that qualify as cash flow hedges to accumulated other comprehensive income. For the years ended December 31, 2024, 2023, and 2022, we reconciled net income to comprehensive income on the consolidated statements of operations and comprehensive income in the accompanying consolidated financial statements. Segment Reporting 65 Table of Contents In November 2023, the Financial Accounting Standards Board (“FASB”) issued accounting standard update (“ASU”) 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures” to improve reportable segments disclosure requirements. The ASU requires existing annual segment disclosures to also be disclosed on an interim basis and also requires additional disclosures around significant segment expenses and disclosures to identify the title and position of the chief operating decision maker (“CODM”). The standard is effective for the fiscal year ended December 31, 2024, and interim periods thereafter. We adopted ASU 2023-07 as of December 31, 2024. Our current business strategy includes one reporting segment: Real Estate Rental Operations. We generate revenues, earnings, net income, and cash flows through our single segment as follows: We collect rent from our customers through operating leases, including reimbursements for the majority of our property operating costs. We expect to generate earnings growth by increasing rents, maintaining high occupancy rates, and controlling expenses. The primary drivers of our revenue growth will be the rolling of in-place leases to current market rents when leases expire, and the acquisition of new properties. We believe our active portfolio management, combined with the skills of our asset management team will allow us to maximize net income across our portfolio. Our CODM is our Chief Executive Officer. The CODM uses consolidated net income to make decisions about allocating resources to individual properties and assessing performance. The CODM will sometimes reference other metrics, including net operating income, however, as net income is the measure most consistent with the amounts disclosed in the consolidated financial statements, only consolidated net income is disclosed. Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires public entities to disaggregate specific types of expenses, including disclosures for depreciation, intangible asset amortization, and selling expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with prospective application required and retrospective application or early adoption permitted. We are currently evaluating the impact from adopting ASU 2024-03 on our consolidated financial statements and disclosures. 2. Related-Party Transactions Gladstone Management Corporation and Gladstone Administration, LLC 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 general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is owned and controlled by Mr. Gladstone, our chairman and chief executive officer. One of our executive officers, Mr. Gladstone, serves as a director and executive officer of our Adviser and our Administrator. Our president, Mr. Cooper, is also an executive vice president of commercial and industrial real estate of our Adviser. Mr. 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 . We have entered into an advisory agreement with our Adviser, as amended from time to time (the “Advisory Agreement”), and an administration agreement with our Administrator (the “Administration Agreement”). The services and fees under the Advisory Agreement and Administration Agreement are described below. As of December 31, 2024 and December 31, 2023, $ 2.5 million and $ 2.6 million, respectively, was collectively due to our Adviser and Administrator. Base Management Fee On July 14, 2020, the Company amended and restated the Fifth Amended Advisory Agreement by entering into the Sixth Amended and Restated Investment Advisory Agreement between the Company and the Adviser (the “Sixth Amended Advisory Agreement”). The Sixth Amended Advisory Agreement replaced the previous calculation of the base management fee with a calculation based on Gross Tangible Real Estate. The revised Base Management Fee is payable quarterly in arrears and is calculated at an annual rate of 0.425 % ( 0.10625 % per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined in the Sixth Amended Advisory Agreement as the current gross value of the Company’s property portfolio (meaning the aggregate of each property’s original acquisition price plus the cost of any subsequent capital improvements thereon). The calculation of the other fees in the agreement remained unchanged. The revised Base Management Fee calculation began with the fee calculations for the quarter ended September 30, 2020. 66 Table of Contents For the years ended December 31, 2024, 2023, and 2022, we recorded a base management fee of $ 6.1 million, $ 6.4 million, and $ 6.3 million, respectively. Incentive Fee Pursuant to the Advisory Agreement, the calculation of the incentive fee rewards the Adviser in circumstances where our quarterly Core FFO (defined at the end of this paragraph), before giving effect to any incentive fee, or pre-incentive fee Core FFO, exceeds 2.0 % quarterly, or 8.0 % annualized, of adjusted total stockholders’ equity (after giving effect to the base management fee but before giving effect to the incentive fee). We refer to this as the new hurdle rate. The Adviser will receive 15.0 % of the amount of our pre-incentive fee Core FFO that exceeds the new hurdle rate. However, in no event shall the incentive fee for a particular quarter exceed by 15.0 % (the cap) the average quarterly incentive fee paid by us for the previous four quarters (excluding quarters for which no incentive fee was paid). Core FFO (as defined in the Advisory Agreement) is GAAP net income (loss) available to common stockholders, excluding the incentive fee, depreciation and amortization, any realized and unrealized gains, losses or other non-cash items recorded in net income (loss) available to common stockholders for the period, and one-time events pursuant to changes in GAAP. On January 10, 2023, the Company amended and restated the Sixth Amended Advisory Agreement by entering into the Seventh Amended and Restated Investment Advisory Agreement between the Company and the Adviser (the “Seventh Amended Advisory Agreement”), as approved unanimously by our Board of Directors, including specifically, our independent directors. The Seventh Amended Advisory Agreement contractually eliminated the payment of the incentive fee, as applicable, for the quarters ended March 31, 2023 and June 30, 2023. The calculation of the other fees remained unchanged. On July 11, 2023, the Company amended and restated the Seventh Amended Advisory Agreement by entering into the Eighth Amended Advisory Agreement (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 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 remained unchanged. For the year ended December 31, 2024, we recorded an incentive fee of $ 4.5 million, partially offset by credits related to non-contractual, unconditional, and irrevocable waivers issued by the Adviser of $ 2.3 million. For the year ended December 31, 2023, the contractually eliminated incentive fee would have been $ 4.6 million. For the year ended December 31, 2022, we recorded an incentive fee of $ 5.3 million. Our Adviser did no t waive any portion of the incentive fee for the year ended December 31, 2022. Waivers are non-contractual, unconditional, and irrevocable and cannot be recouped by the Adviser in the future. Capital Gain Fee Under the Advisory Agreement, we will pay to the Adviser a capital gains-based incentive fee that will be calculated and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement). In determining the capital gain fee, we calculate aggregate realized capital gains and aggregate realized capital losses for the applicable time period. For this purpose, aggregate realized capital gains and losses, if any, equals the realized gain or loss calculated by the difference between the sales price of the property, less any costs to sell the property and the all-in acquisition cost of the disposed property. 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 years ended December 31, 2024, 2023, or 2022. Termination Fee The Advisory Agreement includes a termination fee whereby, in the event of our termination of the agreement without cause (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to two times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24 -month period prior to such termination. A termination fee is also payable if the Adviser terminates the Advisory Agreement after we have defaulted and applicable cure periods have expired. 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 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. 67 Table of Contents Administration Agreement Under the terms of the Administration Agreement, we pay separately for our allocable portion of our Administrator’s overhead expenses in performing its obligations to us including, but not limited to, rent and our allocable portion of the salaries and benefits expenses of our Administrator’s employees, including, but not limited to, our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel and secretary), and their respective staffs. Our allocable portion of the Administrator’s expenses are generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements. We believe that the methodology of allocating the Administrator’s total expenses by approximate percentage of time services were performed among all companies serviced by our Administrator more closely approximates fees paid to actual services performed. For the years ended December 31, 2024, 2023, and 2022, we recorded an administration fee of $ 2.6 million, $ 2.4 million, and $ 1.9 million, respectively. Our Board of Directors reviews and considers approving or renewing the Administration Agreement each July. Gladstone Securities, LLC Gladstone Securities, LLC (“Gladstone Securities”), is a privately held broker dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is owned and controlled by David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of managers of Gladstone Securities. 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 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. 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. The amount of these financing fees, which are payable upon closing of the financing, are based on a percentage of the amount of the mortgage, generally ranging from 0.15 % to a maximum of 1.0 % of the mortgage obtained. The amount of the financing fees may be reduced or eliminated, as determined by us and Gladstone Securities, after taking into consideration various factors, including, but not limited to, the involvement of any third party brokers and market conditions. We paid financing fees to Gladstone Securities of $ 0.1 million, $ 0.1 million, and $ 0.3 million during the years ended December 31, 2024, 2023, and 2022, respectively, which are included in mortgage notes payable, net, in the consolidated balance sheets, or 0.28 %, 0.29 %, and 0.33 % of total mortgage principal secured or extended during the respective periods. Our Board of Directors renewed the agreement for an additional year, through August 31, 2025, at its July 2024 meeting. Dealer Manager Agreement On February 20, 2020, we entered into a dealer manager agreement, as amended by that certain First Amendment on February 9, 2023 (the “Dealer Manager Agreement”), whereby Gladstone Securities will act as the exclusive dealer manager in connection with our offering (the “Offering”) of up to (i) 20,000,000 shares of our 6.00 % Series F Cumulative Redeemable Preferred Stock of the Company, 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 was previously registered with the SEC pursuant to a 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, 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. The Series F Preferred Stock is currently registered with the SEC pursuant to a registration statement on Form S-3 (File No. 333-277877), as the same may be amended and/or supplemented (the “2024 Registration Statement”), under the Securities Act, and is offered and sold pursuant to a prospectus supplement dated May 1, 2024, and a base prospectus dated March 21, 2024 relating to the 2024 Registration Statement (the “Prospectus”). During the years ended December 31, 2022 and 2023, the Series F Preferred Stock was registered with the SEC pursuant to the 2022 Registration Statement, and offered and sold pursuant to a prospectus supplement, dated February 9, 2023, and a base prospectus dated November 23, 2022. During the year ended December 31, 2024, the Series F Preferred Stock was registered with the SEC pursuant to the 2024 Registration Statement, and offered and sold pursuant to a prospectus supplement, dated May 1, 2024, and a base prospectus dated March 21, 2024. 68 Table of Contents Under the Dealer Manager Agreement, Gladstone Securities, as dealer manager, will provide certain sales, promotional and marketing services to the Company in connection with the Offering, and the Company will pay Gladstone Securities (i) selling commissions of 6.0 % of the gross proceeds from sales of Series F Preferred Stock in the Primary Offering (the “Selling Commissions”), and (ii) a dealer manager fee of 3.0 % of the gross proceeds from sales of Series F Preferred Stock in the Primary Offering (the “Dealer Manager Fee”). No Selling Commissions or Dealer Manager Fee shall be paid with respect to Shares sold pursuant to the DRIP. Gladstone Securities may, in its sole discretion, reallow a portion of the Dealer Manager Fee to participating broker-dealers in support of the Offering. We paid fees of $ 0.1 million, $ 0.5 million, and $ 0.5 million to Gladstone Securities during the years ended December 31, 2024, 2023 and 2022, respectively, in connection with the Offering. 3. Earnings (loss) per Share of Common Stock The following tables set forth the computation of basic and diluted earnings (loss) per share of common stock for the years ended December 31, 2024, 2023 and 2022, respectively. The OP Units held by Non-controlling OP Unitholders (which may be redeemed for shares of common stock) have been excluded from the diluted earnings per share calculation, as there would be no effect on the amounts since the Non-controlling OP Unitholders’ share of income 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 (loss) per share for the years ended December 31, 2024, 2023 and 2022, respectively, using the weighted average number of shares outstanding during the periods. Diluted earnings (loss) per share for the years ended December 31, 2024, 2023 and 2022, reflects additional shares of common stock related to our convertible Senior Common Stock, if the effect would be dilutive, that would have been outstanding if dilutive potential shares of common stock had been issued, as well as an adjustment to net income (loss) available (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 year ended December 31, 2024 2023 2022 Calculation of basic earnings (loss) per share of common stock: Net income (loss) available (attributable) to common stockholders $ 11,124 $ ( 7,738 ) $ ( 1,529 ) Denominator for basic weighted average shares of common stock (1) 41,766,263 39,943,167 38,950,734 Basic earnings (loss) per share of common stock $ 0.27 $ ( 0.19 ) $ ( 0.04 ) Calculation of diluted earnings (loss) per share of common stock: Net income (loss) available (attributable) to common stockholders $ 11,124 $ ( 7,738 ) $ ( 1,529 ) Net income (loss) available (attributable) to common stockholders plus assumed conversions (2) $ 11,124 $ ( 7,738 ) $ ( 1,529 ) Denominator for basic weighted average shares of common stock (1) 41,766,263 39,943,167 38,950,734 Effect of convertible Senior Common Stock (2) — — — Denominator for diluted weighted average shares of common stock (2) 41,766,263 39,943,167 38,950,734 Diluted earnings (loss) per share of common stock $ 0.27 $ ( 0.19 ) $ ( 0.04 ) (1) The weighted average number of OP Units held by Non-controlling OP Unitholders was 157,160 , 382,563 , and 294,941 for the years ended December 31, 2024, 2023, and 2022, respectively. (2) We excluded convertible shares of Senior Common Stock of 330,456 , 345,132 and 363,246 from the calculation of diluted earnings per share for the years ended December 31, 2024, 2023 and 2022, respectively, because it was anti-dilutive. 4. Real Estate and Intangible Assets Real Estate The following table sets forth the components of our investments in real estate as of December 31, 2024 and 2023, respectively, excluding real estate held for sale as of December 31, 2024 (dollars in thousands): 69 Table of Contents December 31, 2024 December 31, 2023 Real estate: Land (1) $ 139,743 $ 143,442 Building and improvements 1,017,534 1,020,661 Tenant improvements 54,516 57,261 Accumulated depreciation ( 319,646 ) ( 299,662 ) Real estate, net $ 892,147 $ 921,702 (1) This amount includes $ 2,711 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 $ 39.5 million, $ 41.2 million, and $ 41.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. Acquisitions During the years ended December 31, 2024 and 2023, we acquired seven and five properties, respectively, which are summarized below (dollars in thousands): Year Ended Aggregate Square Footage Weighted Average Lease Term Aggregate Purchase Price Aggregate Capitalized Acquisition Costs December 31, 2024 (1) 316,727 20.8 years $ 27,357 $ 570 December 31, 2023 (2) 321,432 19.3 years $ 30,018 $ 528 (1) On May 7, 2024, we acquired a five - property, 142,125 square foot portfolio in Warfordsburg, Pennsylvania for $ 12.0 million. The property is fully leased to one tenant and had 25.1 years of remaining lease term at the time we acquired the property. On August 29, 2024, we acquired a 50,102 square foot property in Midland, Texas for $ 10.2 million. The property is fully leased to one tenant and had 15.0 years of remaining lease term at the time we acquired the property. On November 15, 2024, we acquired a 124,500 square foot property in St. Clair, Missouri for $ 5.2 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 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. On October 12, 2023, we acquired a 69,920 square foot property in Allentown, Pennsylvania for $ 7.9 million. The property is fully leased to one tenant and had 20.1 years of remaining lease term at the time we acquired the property. On November 3, 2023, we acquired a 67,709 square foot property in Indianapolis, Indiana for $ 4.6 million. The property is fully leased to one tenant and had 20.1 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 years ended December 31, 2024 and 2023, respectively, as follows (dollars in thousands): Year ended December 31, 2024 Year ended December 31, 2023 Acquired assets and liabilities Purchase price Purchase price Land $ 2,862 $ 4,629 Building 18,919 19,726 Tenant Improvements 613 997 In-place Leases 1,921 1,642 Leasing Costs 2,580 2,733 Customer Relationships 527 684 Above Market Leases 90 (1) — Below Market Leases ( 155 ) (2) ( 393 ) (2) Total Purchase Price $ 27,357 $ 30,018 (1) This amount includes $ 90 of loans receivable included in Other assets on the consolidated balance sheets. 70 Table of Contents (2) This amount includes $ 155 and $ 393 of prepaid rent included in Other liabilities on the consolidated balance sheets, respectively. Future Lease Payments Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands): Year Tenant Lease Payments 2025 $ 121,496 2026 117,748 2027 103,289 2028 90,869 2029 82,912 Thereafter 400,392 $ 916,706 Future sales-types lease payments from tenants under non-cancelable leases and reasonably certain purchase options, for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands): Year Tenant Lease Payments 2025 $ 19,722 2026 — 2027 — 2028 — 2029 — Thereafter — $ 19,722 Difference between undiscounted cash flow and present value 1,086 Sales-type lease receivable $ 18,636 In accordance with the lease terms, substantially all operating expenses are required to be paid by the tenant; however, we would be required to pay operating expenses on the respective properties in the event the tenants fail to pay them. Lease Revenue Reconciliation The table below sets forth the allocation of lease revenue between fixed contractual lease payments and variable lease payments for the years ended December 31, 2024, 2023, and 2022, respectively (dollars in thousands): For the year ended December 31, Lease revenue reconciliation 2024 2023 2022 Fixed lease payments $ 132,272 $ 130,551 $ 132,032 Variable lease payments 17,116 17,033 16,949 $ 149,388 $ 147,584 $ 148,981 Sales-Type Leases For the year ended December 31, 2024, we had one lease classified as a sales-type lease. We recorded a sales-type lease receivable of $ 18.6 million in the consolidate d balance sheet, net of $ 0.02 million in allowance for credit loss, and derecognized the carry value of $ 14.6 million in the consolidated balance sheet. We recognized a $ 3.9 million selling profit from sale-type leases, net, that was included in gain on sale of real estate, net, in the consolidated statements of operations. For the year ended December 31, 2024, t he interest income earned from sales-types leases of $ 0.1 million was included in other income in the consolidated statements of operations. There was no sales-type lease activity in the years ended December 31, 2023 and 2022. In developing the expected credit loss, we reviewed the tenant’s credit rating, which is AA- stable, and performed a 71 Table of Contents collectibility analysis, confirming they were current on payments as of December 31, 2024. The sales-type lease receivable, net, approximates fair value as of December 31, 2024. Accounts Receivable At December 31, 2024 and 2023 , accounts receivable from tenants totaled $ 1.4 million and $ 1.5 million, respectively, included in other assets on the consolidated balance sheets. 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 December 31, 2024 and 2023, excluding real estate held for sale as of December 31, 2024 (dollars in thousands): December 31, 2024 December 31, 2023 Lease Intangibles Accumulated Amortization Lease Intangibles Accumulated Amortization In-place leases $ 96,392 $ ( 64,830 ) $ 98,615 $ ( 63,269 ) Leasing costs 89,093 ( 48,963 ) 84,844 ( 46,096 ) Customer relationships 60,377 ( 36,962 ) 63,185 ( 36,231 ) $ 245,862 $ ( 150,755 ) $ 246,644 $ ( 145,596 ) Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion Above market leases $ 13,718 $ ( 11,582 ) $ 13,431 $ ( 10,675 ) Below market leases and deferred revenue ( 56,616 ) 34,620 ( 59,411 ) 30,087 Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $ 16.3 million, $ 16.7 million, and $ 19.1 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is included in depreciation and amortization expense in the consolidated statement of operations and comprehensive income. Total amortization related to above-market lease values was $ 0.5 million, $ 0.6 million, and $ 0.8 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is included in lease revenue in the consolidated statement of operations and comprehensive income. Total amortization related to below-market lease values was $ 7.3 million, $ 8.0 million, and $ 5.1 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is included in lease revenue in the consolidated statement of operations and comprehensive income. The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the years ended December 31, 2024 and 2023, respectively, were as follows: Intangible Assets & Liabilities 2024 2023 In-place leases 20.9 18.9 Leasing costs 20.9 18.9 Customer relationships 26.9 26.3 Above market leases 25.1 0.0 Below market leases 20.1 20.1 All intangible assets & liabilities 22.3 21.1 The estimated aggregate amortization expense to be recorded for in-place leases, leasing costs and customer relationships for each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of December 31, 2024 (dollars in thousands): 72 Table of Contents Year Estimated Amortization Expense of In-Place Leases, Leasing Costs and Customer Relationships 2025 $ 15,229 2026 13,546 2027 11,896 2028 9,744 2029 8,976 Thereafter 35,716 $ 95,107 The estimated aggregate rental income to be recorded for the amortization of both above and below market leases for each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of December 31, 2024 (dollars in thousands): Year Net Increase to Rental Income Related to Above and Below Market Leases (1) 2025 $ 5,862 2026 3,771 2027 2,479 2028 2,468 2029 2,420 Thereafter 2,761 $ 19,761 (1) Does not include ground lease amortization of $ 99 . 5. Real Estate Dispositions, Held for Sale, and Impairment Charges Real Estate Dispositions During the year ended December 31, 2024, we continued to execute our capital recycling program, whereby we sold properties and reinvested the proceeds into new real estate assets. 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 year ended December 31, 2024, we sold seven non-core properties, located in Columbus, Ohio; Draper, Utah; Richardson, Texas; Egg Harbor, New Jersey; Cumming, Georgia; Lawrenceville, Georgia; and Fridley, Minnesota, which are summarized in the table below (dollars in thousands): Aggregate Square Footage Sold Aggregate Sales Price Aggregate Sales Costs Aggregate Impairment Charge for the Twelve Months Ended December 31, 2024 Aggregate Gain on Sale of Real Estate, net 486,927 $ 38,975 $ 1,340 $ 5,042 $ 10,300 Our 2024 dispositions were not classified as discontinued operations because they did not represent a strategic shift in operations, nor will they have a major effect on our operations and financial results. Accordingly, the operating results of these properties are included within continuing operations for all periods reported. The table below summarizes the components of operating income from the real estate and related assets disposed of during the years ended December 31, 2024, 2023, and 2022, respectively (dollars in thousands): 73 Table of Contents For the year ended December 31, 2024 2023 2022 Operating revenue $ 2,081 $ 4,995 $ 9,206 Operating expense 6,219 (1) 22,051 (3) 8,439 Other income (expense), net 10,381 (2) ( 985 ) ( 1,335 ) Income (expense) from real estate and related assets sold $ 6,243 $ ( 18,041 ) $ ( 568 ) (1) Includes a $ 5.0 million impairment charge. (2) Includes a $ 10.3 million gain on sale of real estate, net, from seven property sales and a $ 0.3 million gain on debt extinguishment from two property sales. (3) Includes a $ 15.7 million impairment charge. Real Estate Held for Sale At December 31, 2024, we had two properties classified as held for sale, located in Hickory, North Carolina and Tifton, Georgia. We consider these assets to be non-core to our long term strategy. 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 held for sale at December 31, 2024 reflected on the accompanying consolidated balance sheet (dollars in thousands): December 31, 2024 December 31, 2023 Total real estate held for sale $ 4,337 $ 27,496 Lease intangibles, net 26 1,284 Deferred rent receivable, net — 7 Total Assets Held for Sale $ 4,363 $ 28,787 Liabilities Held for Sale Deferred rent liability, net $ — $ 676 Total Liabilities Held for Sale $ — $ 676 Impairment Charges We evaluated our portfolio for triggering events to determine if any of our held and used assets were impaired during the year ended December 31, 2024 and identified one held and used asset, located in Oklahoma City, Oklahoma, which was impaired by $ 1.8 million during the quarter ended December 31, 2024. In performing our impairment testing, the undiscounted cash flows were below the carrying value, which resulted in recognizing an impairment charge. We evaluated our held for sale assets to determine if any of these assets were impaired during the year ended December 31, 2024 and identified two held for sale assets, located in Richardson, Texas and Fridley, Minnesota, which were impaired by an aggregate $ 5.0 million during the three months ended March 31, 2024 and September 30, 2024. 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. The properties were sold during the year ended December 31, 2024. During the year ended December 31, 2023, we identified two held and used assets, located in Draper, Utah and Egg Harbor, New Jersey, which were impaired by an aggregate $ 8.0 million during the quarters ended September 30, 2023 and December 31, 2023. In performing our impairment testing, the undiscounted cash flows were below the carrying value, which resulted in an impairment charge. We also identified three held for sale assets, located in Richardson, Texas, Taylorsville, Utah, and Columbus, Ohio, which were impaired by an aggregate $ 11.3 million during the three months ended June 30, 2023 and December 31, 2023. In performing our held for sale assessment, the carrying value of these assets were above the fair value, less costs of sale, which resulted in us recognizing an impairment charge. Fair market value for this asset was calculated using Level 3 inputs (defined in Note 6 “Mortgage Notes Payable, Credit Facility, and Senior Unsecured Notes”), which were determined using a negotiated sales price from an executed purchase and sale agreement with a third party. We continue to evaluate our properties on a quarterly basis for changes that could create the need to record impairment. Future impairment losses may result, and could be significant, should market conditions deteriorate in the markets in which we hold our assets or we are unable to secure leases at terms that are favorable to us, which could 74 Table of Contents impact the estimated cash flow of our properties over the period in which we plan to hold our properties. Additionally, changes in management’s decisions to either own and lease long-term or sell a particular asset will have an impact on this analysis. The fair values for the above properties were calculated using Level 3 inputs which were calculated using an estimated sales price, less estimated costs to sell. The estimated sales price was determined using executed purchase and sale agreements. 6. Mortgage Notes Payable, Credit Facility, and Senior Unsecured Notes 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, Credit Facility, and Senior Unsecured Notes as of December 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 December 31, 2024 December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2024 Mortgage and other secured loans: Fixed rate mortgage loans 44 $ 264,243 $ 298,122 (1) (2) Variable rate mortgage loans 1 7,260 — SOFR + 2.25 % (3) (2) Premiums and discounts, net — ( 8 ) ( 42 ) N/A N/A Deferred financing costs, mortgage loans, net — ( 1,916 ) ( 2,227 ) N/A N/A Total mortgage notes payable, net 45 $ 269,579 $ 295,853 (4) Variable rate revolving credit facility 88 (6) $ 1,900 $ 75,750 SOFR + 1.35 % (3) 8/18/2026 Deferred financing costs, revolving credit facility — — — N/A N/A Total revolver 88 $ 1,900 $ 75,750 Variable rate term loan facility A — 160,000 160,000 SOFR + 1.30 % (3) 8/18/2027 Variable rate term loan facility B — 40,000 60,000 SOFR + 1.30 % (3) 2/11/2026 Variable rate term loan facility C — 150,000 150,000 SOFR + 1.30 % (3) 2/18/2028 Deferred financing costs, term loan facility — ( 2,052 ) ( 2,742 ) N/A N/A Total term loan, net N/A $ 347,948 $ 367,258 Senior unsecured notes — $ 75,000 $ — 6.47 % 12/18/2029 Deferred financing costs, senior unsecured notes — ( 1,042 ) — N/A N/A Total senior unsecured notes, net N/A $ 73,958 $ — Total mortgage notes payable, credit facility. and senior unsecured notes 133 $ 693,385 $ 738,861 (5) (1) Interest rates on our fixed rate mortgage notes payable vary from 2.80 % to 6.63 %. (2) We have 40 mortgage notes payable with maturity dates ranging from September 30, 2025 through August 1, 2037. (3) As of December 31, 2024, SOFR was approximately 4.49 %. (4) The weighted average interest rate on the mortgage notes outstanding at December 31, 2024, was approximately 4.30 %. (5) The weighted average interest rate on all debt outstanding at December 31, 2024, was approximately 5.28 %. (6) The amount we may draw under our Credit Facility is based on a percentage of the fair value of a combined pool of 88 unencumbered properties as of December 31, 2024. N/A - Not Applicable 75 Table of Contents Mortgage Notes Payable As of December 31, 2024, we had 40 mortgage notes payable, collateralized by a total of 45 properties with a net book value of $ 434.2 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 December 31, 2024, we did not have any recourse mortgages. 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 year ended December 31, 2024, we repaid three mortgages collateralized by four properties, which are summarized below (dollars in thousands): Aggregate Fixed Rate Debt Repaid Weighted Average Interest Rate on Fixed Rate Debt Repaid $ 32,464 4.59 % During the year ended December 31, 2024, we issued two mortgages, collateralized by two properties, which are summarized below (dollars in thousands): Aggregate Fixed Rate Debt Issued Weighted Average Interest Rate on Fixed Rate Debt $ 15,240 5.60 % During the year ended December 31, 2024, we extended the maturity date of one mortgage, collateralized by one property, which is summarized in the table below (dollars in thousands): Variable Rate Debt Extended Interest Rate on Variable Rate Debt Extended Extension Term $ 7,386 SOFR + 2.25 % 1.3 years On December 18, 2024, we issued an aggregate $ 75.0 million in senior unsecured notes in a private placement, at a fixed interest rate of 6.47 % and a maturity date of December 18, 2029 (the “2029 Notes”). The proceeds were used to pay down Term Loan B by $ 20.0 million and the Revolver by $ 55.0 million. Scheduled principal payments of mortgage notes payable for each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands): Year Scheduled Principal Payments 2025 $ 19,914 2026 35,367 2027 95,406 2028 37,444 2029 34,851 Thereafter 48,521 $ 271,503 (1) (1) This figure does not include $( 0.01 ) million premiums and (discounts), net, and $ 1.9 million of deferred financing costs, which are reflected in mortgage notes payable on the consolidated balance sheets. We believe we will be able to address all mortgage notes payable maturing over the next 12 months through a combination of refinancing our existing indebtedness, cash from operations, proceeds from one or more equity offerings and availability on our Credit Facility. 76 Table of Contents Interest Rate Caps and Swaps We have entered into interest rate cap agreements that cap the interest rate on certain of our variable-rate debt and we have assumed or entered into interest rate swap agreements in which we hedged our exposure to variable interest rates by agreeing to pay fixed interest rates to our respective counterparty. We have adopted the fair value measurement provisions for our financial instruments recorded at fair value. The fair value guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. 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 December 31, 2024 and 2023, our interest rate cap and interest rate swap agreements were valued using Level 2 inputs. The fair value of the interest rate cap agreements is recorded in other assets on our accompanying consolidated balance sheets. We record changes in the fair value of the interest rate cap agreements quarterly based on the current market valuations at quarter end. If the interest rate cap qualifies for hedge accounting, the change in the estimated fair value is recorded to accumulated other comprehensive income to the extent that it is effective, with any ineffective portion recorded to interest expense in our consolidated statements of operations and comprehensive income. If the interest rate cap does not qualify for hedge accounting, or if it is determined the hedge is ineffective, any change in the fair value is recognized in interest expense in our consolidated statements of operations and comprehensive income. During the next 12 months, we estimate that an additional $ 1.9 million will be reclassified out of accumulated other comprehensive income into interest expense in our consolidated statements of operations and comprehensive income, as a reduction to interest expense. The following table summarizes the interest rate caps at December 31, 2024 and 2023 (dollars in thousands): December 31, 2024 December 31, 2023 Aggregate Cost Aggregate Notional Amount Aggregate Fair Value Aggregate Notional Amount Aggregate Fair Value $ 48 (1) $ 60,000 $ — $ 65,000 $ 684 (1) We have entered into an interest rate cap agreement on variable rate debt with a SOFR cap of 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 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 liabilities on our accompanying 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 December 31, 2024 and 2023 (dollars in thousands): December 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 $ 360,484 $ 8,965 $ ( 19 ) $ 361,676 $ 6,222 $ ( 670 ) The following tables present the impact of our derivative instruments in the consolidated financial statements (dollars in thousands): Amount of gain (loss), net, recognized in Comprehensive Income 2024 2023 2022 Derivatives in cash flow hedging relationships Interest rate caps $ ( 691 ) $ ( 3,038 ) $ 4,301 Interest rate swaps 3,393 ( 1,815 ) 7,814 Total $ 2,702 $ ( 4,853 ) $ 12,115 77 Table of Contents The following table presents the reclassifications of our derivative instruments out of accumulated other comprehensive income into interest expense in the consolidated financial statements (dollars in thousands): Amount reclassified out of Accumulated Other Comprehensive Income 2024 2023 2022 Derivatives in cash flow hedging relationships Interest rate caps $ ( 188 ) $ ( 971 ) $ ( 871 ) Total $ ( 188 ) $ ( 971 ) $ ( 871 ) The following table sets forth certain information regarding our derivative instruments (dollars in thousands): Asset (Liability) Derivatives Fair Value at Derivatives Designated as Hedging Instruments Balance Sheet Location December 31, 2024 December 31, 2023 Interest rate caps Other assets $ — $ 684 Interest rate swaps Other assets 8,965 6,222 Interest rate swaps Other liabilities ( 19 ) ( 670 ) Total derivative liabilities, net $ 8,946 $ 6,236 The fair value of all mortgage notes payable outstanding as of December 31, 2024 was $ 253.1 million, as compared to the carrying value stated above of $ 269.6 million. The fair value is calculated based on a discounted cash flow analysis, using management’s estimate of market interest rates on long-term debt with comparable terms and loan to value ratios. The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.” Credit Facility On August 7, 2013, we procured our $ 60.0 million Revolver with KeyBank National Association (“KeyBank”) (serving as revolving lender, a letter of credit issuer and an administrative agent). In October 2015, we expanded our Revolver to $ 85.0 million and entered into Term Loan A whereby we added a $ 25.0 million, five-year Term Loan subject to the same leverage tiers as the Revolver, with the interest rate at each leverage tier being five basis points lower than that of the Revolver. We have the option to repay Term Loan A in full, or in part, at any time without penalty or premium prior to the maturity date. On October 27, 2017, we amended this Credit Facility, increasing Term Loan A from $ 25.0 million, to $ 75.0 million, with the Revolver commitment remaining at $ 85.0 million. Term Loan A’s maturity date was extended to October 27, 2022, and the Revolver maturity date was extended to October 27, 2021. In connection with the amendment, the interest rate for the Credit Facility was reduced by 25 basis points at each of the leverage tiers. At the time of amendment, we entered into multiple interest rate cap agreements on Term Loan A, which cap LIBOR at 2.75 % to hedge our exposure to variable interest rates. On July 2, 2019, we amended, extended and upsized our Credit Facility, expanding 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 up to the $ 160.0 million commitment, and increasing the Revolver from $ 85.0 million to $ 100.0 million. Term Loan A has a new five-year term, with a maturity date of July 2, 2024, and the Revolver has a new four-year term, with a maturity date of July 2, 2023. The interest rate margin for the Credit Facility was reduced by 10 basis points at each of the leverage tiers. We entered into multiple interest rate cap agreements on Term Loan A, which cap LIBOR ranging from 2.50 % to 2.75 %, to hedge our exposure to variable interest rates. We used the net proceeds derived from the amended Credit Facility to repay all previously existing borrowings under the Revolver. We incurred fees of approximately $ 1.3 million in connection with the Credit Facility amendment. The bank syndicate for the Credit Facility is now comprised of KeyBank, Fifth Third Bank, U.S. Bank National Association, The Huntington National Bank, Goldman Sachs Bank USA, and Wells Fargo Bank, National Association. On February 11, 2021, we added a new $ 65.0 million Term Loan B, inclusive of a $ 15.0 million delayed funding component, which was funded on July 20, 2021. Term Loan B has a maturity date of February 11, 2026 and a LIBOR floor of 25 basis points, plus a spread ranging from 140 to 225 basis points, depending on leverage. We entered into multiple interest rate cap agreements on Term Loan B, which cap LIBOR from 1.50 % to 1.75 %. We incurred fees of approximately $ 0.5 million in connection with issuing Term Loan B. As of December 31, 2024, there was $ 40.0 million outstanding under Term Loan B. 78 Table of Contents On August 18, 2022, we amended, extended and upsized our Credit Facility, increasing our Revolver from $ 100.0 million to $ 120.0 million (and its term to August 2026), adding the new $ 140.0 million Term Loan C, decreasing the principal balance of Term Loan B to $ 60.0 million and extending the maturity date of Term Loan A to August 2027. Term Loan C has a maturity date of February 18, 2028 and a SOFR spread ranging from 125 to 195 basis points, depending on our leverage. On September 27, 2022 we further increased the Revolver to $ 125.0 million and Term Loan C to $ 150.0 million, as permitted under the terms of the Credit Facility. We entered into multiple interest rate swap agreements on Term Loan C, which swap the interest rate to fixed rates ranging from 3.15 % to 3.75 %. We also entered into an interest rate swap agreement on Term Loan A to replace the expiring rate caps, which swaps the interest rate to a fixed rate of 3.70 %. We incurred fees of approximately $ 4.2 million in connection with extending and upsizing our Credit Facility. The net proceeds of the transaction were used to repay the then-outstanding borrowings on the Revolver, pay off mortgage debt, and fund acquisitions. The Credit Facility’s current bank syndicate is comprised of KeyBank, Fifth Third Bank, The Huntington National Bank, Bank of America, Synovus Bank, United Bank, First Financial Bank, and S&T Bank. As of December 31, 2024, there was $ 351.9 million outstanding under our Credit Facility, at a weighted average interest rate of approximately 5.79 % and no outstanding letters of credit. As of December 31, 2024, the maximum additional amount we could draw under the Credit Facility was $ 90.7 million. We were in compliance with all covenants under the Credit Facility as of December 31, 2024. The amount outstanding under the Credit Facility approximates fair value as of December 31, 2024. On December 18, 2024, we and the Operating Partnership entered into a Note Purchase Agreement with the institutional investors named therein, in connection with a private placement of $ 75.0 million of the 2029 Notes. The amount outstanding approximates fair value as of December 31, 2024. 7. Commitments and Contingencies Ground Leases We are obligated as lessee under three ground leases. Future minimum rental payments due under the terms of these leases as of December 31, 2024, are as follows (dollars in thousands): Year Future Lease Payments Due Under Operating Leases 2025 $ 457 2026 460 2027 467 2028 470 2029 470 Thereafter 3,360 Total anticipated lease payments $ 5,684 Less: amount representing interest ( 1,621 ) Present value of lease payments $ 4,063 Rental expense incurred for properties with ground lease obligations was $ 0.3 million, $ 0.3 million, and $ 0.4 million for the years ended December 31, 2024, 2023 and 2022, respectively. Our ground leases are treated as operating leases and rental expenses are reflected in property operating expenses on the consolidated statements of operations and comprehensive income. Our ground leases have a weighted average remaining lease term of 13.2 years and weighted average discount rate of 5.30 %. Letters of Credit As of December 31, 2024, there were no outstanding letters of credit. 8. Equity and Mezzanine Equity Distributions We paid the following distributions per share for the years ended December 31, 2024, 2023, and 2022: 79 Table of Contents For the year ended December 31, 2024 2023 2022 Common Stock and Non-controlling OP Units $ 1.2000 $ 1.2000 $ 1.5048 Senior Common Stock 1.05 1.05 1.05 Series E Preferred Stock 1.656252 1.656252 1.656252 Series F Preferred Stock 1.50 1.50 1.50 Series G Preferred Stock 1.50 1.50 1.50 For federal income tax purposes, distributions paid to stockholders may be characterized as ordinary income, capital gains, return of capital or a combination of the foregoing. The characterization of distributions during each of the last three years is reflected in the table below: Ordinary Income Return of Capital Long-Term Capital Gains Common Stock and OP Units For the year ended December 31, 2022 29.60044 % 70.39956 % — % For the year ended December 31, 2023 5.39525 % 94.60475 % — % For the year ended December 31, 2024 — % 100.00000 % — % Senior Common Stock For the year ended December 31, 2022 100.00000 % — % — % For the year ended December 31, 2023 100.00000 % — % — % For the year ended December 31, 2024 — % 100.00000 % — % Series E Preferred Stock For the year ended December 31, 2022 100.00000 % — % — % For the year ended December 31, 2023 100.00000 % — % — % For the year ended December 31, 2024 — % 100.00000 % — % Series F Preferred Stock For the year ended December 31, 2022 100.00000 % — % — % For the year ended December 31, 2023 100.00000 % — % — % For the year ended December 31, 2024 — % 100.00000 % — % Series G Preferred Stock For the year ended December 31, 2022 100.00000 % — % — % For the year ended December 31, 2023 100.00000 % — % — % For the year ended December 31, 2024 — % 100.00000 % — % Recent Activity Common Stock ATM Program On February 22, 2022, we entered into Amendment No. 1 to the At-the-Market Equity Offering Sales Agreement with sales agents Robert W. Baird & Co. Incorporated (“Baird”), Goldman Sachs & Co. LLC (“Goldman Sachs”), Stifel, Nicolaus & Company, Incorporated, (“Stifel”) BTIG, LLC, and Fifth Third Securities, Inc. (“Fifth Third”), dated December 3, 2019 (together, the “Prior Common Stock Sales Agreement”). We terminated the Prior Common Stock Sales Agreement effective February 10, 2023 in connection with the expiration of our registration statement on Form S-3 (File No. 333-236143) (the “2020 Registration Statement”) on February 11, 2023. 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. During the year ended December 31, 2024, we did not sell any shares of common stock under the 2023 Common Stock Sales Agreement. 80 Table of Contents 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 Company’s Registration Statement on Form S-3 (File No. 333-277877) (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 with the SEC dated March 26, 2024, to the prospectus dated March 21, 2024, for the offer and sale of an aggregate offering amount of $ 250.0 million of common stock. During the year ended December 31, 2024, we sold 3,699,597 shares of common stock, raising approximately $ 53.5 million in net proceeds under the 2024 Common Stock Sales Agreement. Common Stock Buyback Program During the year ended December 31, 2023, we repurchased $ 1.0 million worth of our common stock through our common stock repurchase program. Mezzanine Equity Our 6.625 % Series E Cumulative Redeemable Preferred Stock (“Series E Preferred Stock”) and 6.00 % Series G Cumulative Redeemable Preferred Stock (“Series G Preferred Stock”), are classified as mezzanine equity in our consolidated balance sheet because both are redeemable at the option of the stockholder upon a change of control of greater than 50 % in accordance with ASC 480-10-S99 “Distinguishing Liabilities from Equity,” which requires mezzanine equity classification for preferred stock issuances with redemption features which are outside of the control of the issuer. A change in control of the Company, outside of our control, is only possible if a tender offer is accepted by over 90 % of our stockholders. 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 stockholder in the event a delisting event occurs. We will periodically evaluate the likelihood that a change of control or delisting event of greater than 50 % will take place, and if we deem this probable, we would 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 or delisting event of greater than 50 % is remote. Series E Preferred Stock ATM Program 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 year ended December 31, 2024, as we terminated the Series E Preferred Stock Sales Agreement effective February 10, 2023 in connection with the expiration of the 2020 Registration Statement on February 11, 2023. Universal Shelf Registration Statement On January 11, 2019, we filed a registration statement on Form S-3 (File No. 333-229209), and an amendment thereto on Form-S-3/A on January 24, 2019 (collectively referred to as the “2019 Registration Statement”). The 2019 Registration Statement became effective on February 13, 2019 and replaced our prior registration statement. The 2019 Registration Statement allowed us to issue up to $ 500.0 million of securities and expired on February 13, 2022. On January 29, 2020, we filed the 2020 Registration Statement. The 2020 Registration Statement was declared effective on February 11, 2020 and was in addition to the 2019 Registration Statement. The 2020 Registration Statement allowed us to issue up to an additional $ 800.0 million of securities. Of the $ 800.0 million of available capacity under our 2020 Registration Statement, approximately $ 636.5 million was reserved for the sale of our Series F Preferred Stock. On November 23, 2022, we filed the 2022 Registration Statement. There was no limit on the aggregate amount of the securities that we may 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 replaced the 2022 Registration Statement. Preferred Series F Continuous Offering 81 Table of Contents On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary (i) setting forth the rights, preferences and terms of the Series F Preferred Stock and (ii) reclassifying and designating 26,000,000 shares of the Company’s authorized and unissued shares of common stock as shares of Series F Preferred Stock. The reclassification decreased the number of shares classified as common stock from 86,290,000 shares immediately prior to the reclassification to 60,290,000 shares immediately after the reclassification. We sold 47,328 shares of our Series F Preferred Stock pursuant to the 2024 Registration Statement, raising $ 1.1 million in net proceeds during the year ended December 31, 2024. Amendments to Operating Partnership Agreement In connection with the authorization of the Series F Preferred Stock in February of 2020, the Operating Partnership controlled by the Company through its ownership of GCLP Business Trust II, the general partner of the Operating Partnership, adopted the Second Amendment to its Second Amended and Restated Agreement of Limited Partnership (collectively, the “Second Amendment”), as amended from time to time, establishing the rights, privileges and preferences of 6.00 % Series F Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series F Preferred Units”). The Second Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series F Preferred Units as are issued shares of Series F Preferred Stock by the Company in connection with the offering upon the Company’s contribution to the Operating Partnership of the net proceeds of the offering. Generally, the Series F Preferred Units provided for under the Second Amendment have preferences, distribution rights and other provisions substantially equivalent to those of the Series F Preferred Stock. On June 23, 2021, the Operating Partnership adopted the Third Amendment to its Second Amended and Restated Agreement of Limited Partnership, including Exhibit SGP thereto (collectively, the “Third Amendment”), establishing the rights, privileges, and preferences of 6.00 % Series G Cumulative Redeemable Preferred Units, a newly-designated class of limited partnership interests (the “Series G Term Preferred Units”). The Third Amendment provides for the Operating Partnership’s establishment and issuance of an equal number of Series G Term Preferred Units as are issued shares of Series G Preferred Stock by the Company in connection with the offering of Series G Preferred Stock upon the Company’s contribution to the Operating Partnership of the net proceeds of the offering of Series G Preferred Stock. Generally, the Series G Preferred Units provided for under the Third Amendment have preferences, distribution rights, and other provisions substantially equivalent to those of the Series G Preferred Stock. On August 5, 2021, the Operating Partnership adopted the Fourth Amendment to its Second Amended and Restated Agreement of Limited Partnership, including Exhibit SGP thereto, to remove all references to the 7.00 % Series D Cumulative Redeemable Preferred Units of the Partnership and update the rights, privileges, and preferences accordingly. Non-controlling Interests in Operating Partnership As of December 31, 2024 and 2023, we owned approximately 99.9 % and 99.2 %, respectively, of the outstanding OP Units. During the years ended December 31, 2024 and 2023, we redeemed 271,169 and 80,825 OP units, respectively, for an equivalent amount of common stock. The Operating Partnership is required to make distributions on each OP Unit in the same amount as those paid on each share of the Company’s common stock, with the distributions on the OP Units held by the Company being utilized to make distributions to the Company’s common stockholders. As of December 31, 2024 and 2023, there were 39,474 and 310,643 outstanding OP Units held by Non-controlling OP Unitholders, respectively. 9. Subsequent Events Distributions On January 14, 2025, our Board of Directors declared the following monthly distributions for the months of January, February, and March of 2025: 82 Table of Contents 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 January 24, 2025 January 31, 2025 $ 0.10 $ 0.138021 $ 0.125 February 19, 2025 February 28, 2025 0.10 0.138021 0.125 March 19, 2025 March 31, 2025 0.10 0.138021 0.125 $ 0.30 $ 0.414063 $ 0.375 Series F Preferred Stock Distributions Record Date Payment Date Distribution per Share January 27, 2025 February 5, 2025 $ 0.125 February 25, 2025 March 5, 2025 0.125 March 26, 2025 April 4, 2025 0.125 $ 0.375 Senior Common Stock Distributions Payable to the Holders of Record During the Month of: Payment Date Distribution per Share January February 5, 2025 $ 0.0875 February March 5, 2025 0.0875 March April 4, 2025 0.0875 $ 0.2625 Equity Activity Subsequent to December 31, 2024 and through February 18, 2025, we raised $ 3.3 million in net proceeds from the sale of 205,651 shares of common stock under our 2024 Common Stock Sales Agreement and we raised $ 0.1 million in net proceeds from the sale of 6,500 shares of Series F Preferred Stock. 83 Table of Contents GLADSTONE COMMERCIAL CORPORATION SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2024 (Dollars in Thousands) Initial Cost Total Cost Location of Property Encumbrances Land Buildings & Improvements Improvement Costs Capitalized Subsequent to Acquisition Land Buildings & Improvements Total (1) Accumulated Depreciation (2) Net Real Estate Year Construction/ Improvements Date Acquired Raleigh, North Carolina (3) Office Building $ — $ 960 $ 4,481 $ 1,345 $ 960 $ 5,826 $ 6,786 $ 3,208 $ 3,578 1997 12/23/2003 Canton, Ohio (3) Office Building — 186 3,083 982 187 4,064 4,251 2,080 2,171 1994 1/30/2004 Akron, Ohio (3) Office Building — 1,973 6,771 4,042 1,974 10,812 12,786 5,449 7,337 1968 / 1999 4/29/2004 Canton, North Carolina (3) Industrial Building — 150 5,050 7,285 150 12,335 12,485 4,989 7,496 1998 / 2014 7/6/2004 Crenshaw, Pennsylvania (3) Industrial Building — 100 6,574 269 100 6,843 6,943 3,603 3,340 1991 8/5/2004 Lexington, North Carolina (3) Industrial Building — 820 2,107 69 820 2,176 2,996 1,171 1,825 1986 8/5/2004 Mt. Pocono, Pennsylvania (3) Industrial Building — 350 5,819 18 350 5,837 6,187 3,058 3,129 1995 / 1999 10/15/2004 San Antonio, Texas (3) Office Building — 843 7,514 3,208 843 10,722 11,565 5,518 6,047 1999 2/10/2005 Big Flats, New York (3) Industrial Building — 275 6,459 515 275 6,974 7,249 3,394 3,855 2001 4/15/2005 Wichita, Kansas (3) Office Building — 1,525 9,703 674 1,525 10,377 11,902 5,436 6,466 2000 5/18/2005 Duncan, South Carolina (3) Industrial Building — 783 10,790 1,889 783 12,679 13,462 6,244 7,218 1984 / 2001 / 2007 7/14/2005 Duncan, South Carolina (3) Industrial Building — 195 2,682 470 195 3,152 3,347 1,552 1,795 1984 / 2001 / 2007 7/14/2005 Clintonville, Wisconsin (3) Industrial Building — 55 4,717 3,785 55 8,502 8,557 3,564 4,993 1992 / 2013 10/31/2005 Burnsville, Minnesota (3) Office Building — 3,511 8,746 8,815 3,511 17,561 21,072 9,710 11,362 1984 5/10/2006 Menomonee Falls, Wisconsin (3) Industrial Building — 625 6,911 686 625 7,597 8,222 3,835 4,387 1986 / 2000 6/30/2006 Mason, Ohio (3) Office Building — 797 6,258 1,902 797 8,160 8,957 3,798 5,159 2002 1/5/2007 Raleigh, North Carolina (3) Industrial Building — 1,606 5,513 4,700 1,606 10,213 11,819 5,592 6,227 1994 2/16/2007 Tulsa, Oklahoma (3) Industrial Building — — 14,057 687 — 14,744 14,744 7,687 7,057 2004 3/1/2007 Hialeah, Florida (3) Industrial Building — 3,562 6,672 1,759 3,562 8,431 11,993 3,528 8,465 1956 / 1992 3/9/2007 Mason, Ohio (3) Retail Building — 1,201 4,961 — 1,201 4,961 6,162 2,269 3,893 2007 7/1/2007 Cicero, New York (3) Industrial Building — 299 5,019 150 299 5,169 5,468 2,254 3,214 2005 9/6/2007 Grand Rapids, Michigan (3) Office Building — 1,629 10,500 1,573 1,629 12,073 13,702 5,164 8,538 2001 9/28/2007 Bolingbrook, Illinois (3) Industrial Building — 1,272 5,003 1,070 1,272 6,073 7,345 3,108 4,237 2002 9/28/2007 Decatur, Georgia (3) Medical Office Building — 783 3,241 358 844 3,538 4,382 1,606 2,776 1989 12/13/2007 Decatur, Georgia (3) Medical Office Building — 205 847 94 221 925 1,146 420 726 1989 12/13/2007 Decatur, Georgia (3) Medical Office Building — 257 1,062 118 277 1,160 1,437 527 910 1989 12/13/2007 Snellville, Georgia (3) Medical Office Building — 176 727 81 190 794 984 361 623 1986 12/13/2007 Covington, Georgia (3) Medical Office Building — 232 959 106 250 1,047 1,297 475 822 2000 12/13/2007 Conyers, Georgia (3) Medical Office Building — 296 1,228 135 319 1,340 1,659 609 1,050 1994 12/13/2007 Reading, Pennsylvania (3) Industrial Building — 491 6,202 357 491 6,559 7,050 2,756 4,294 2007 1/29/2008 Pineville, North Carolina (3) 84 Table of Contents Initial Cost Total Cost Location of Property Encumbrances Land Buildings & Improvements Improvement Costs Capitalized Subsequent to Acquisition Land Buildings & Improvements Total (1) Accumulated Depreciation (2) Net Real Estate Year Construction/ Improvements Date Acquired Industrial Building — 669 3,028 293 669 3,321 3,990 1,502 2,488 1985 4/30/2008 Marietta, Ohio (3) Industrial Building — 829 6,607 529 829 7,136 7,965 3,243 4,722 1992 / 2007 8/29/2008 Chalfont, Pennsylvania (3) Industrial Building — 1,249 6,420 1,024 1,249 7,444 8,693 3,406 5,287 1987 8/29/2008 Orange City, Iowa Industrial Building 2,048 258 5,861 6 258 5,867 6,125 2,578 3,547 1990 12/15/2010 Hickory, North Carolina (3) Office Building — 1,163 6,605 357 1,163 6,962 8,125 3,788 4,337 2008 4/4/2011 Springfield, Missouri (3) Office Building — 1,700 12,038 1,237 1,845 13,130 14,975 5,189 9,786 2006 6/20/2011 Dartmouth, Massachusetts (3) Retail Location — — 4,236 — — 4,236 4,236 1,551 2,685 2011 11/18/2011 Springfield, Missouri Retail Location 724 — 2,275 — — 2,275 2,275 954 1,321 2005 12/13/2011 Ashburn, Virginia (3) Office Building — 706 7,858 1,828 705 9,687 10,392 3,334 7,058 2002 1/25/2012 Ottumwa, Iowa Industrial Building 1,166 212 5,072 310 212 5,382 5,594 2,103 3,491 1970 5/30/2012 New Albany, Ohio Office Building — 1,658 8,746 3,441 1,658 12,187 13,845 3,949 9,896 2007 6/5/2012 Columbus, Georgia (3) Office Building — 1,378 4,520 — 1,378 4,520 5,898 2,281 3,617 2012 6/21/2012 Fort Worth, Texas Industrial Building 7,171 963 15,647 — 963 15,647 16,610 5,588 11,022 2005 11/8/2012 Vance, Alabama (3) Industrial Building — 457 10,529 6,692 457 17,221 17,678 5,460 12,218 2013 5/9/2013 Austin, Texas Office Building — 2,330 44,021 6,507 2,330 50,528 52,858 23,567 29,291 1999 7/9/2013 Englewood, Colorado (3) Office Building — 1,503 11,739 1,498 1,503 13,237 14,740 5,685 9,055 2008 12/11/2013 Novi, Michigan (3) Industrial Building — 352 5,626 — 352 5,626 5,978 2,042 3,936 1988 12/27/2013 Allen, Texas (3) Retail Building — 874 3,634 — 874 3,634 4,508 1,292 3,216 2004 3/27/2014 Colleyville, Texas (3) Retail Building — 1,277 2,424 — 1,277 2,424 3,701 852 2,849 2000 3/27/2014 Coppell, Texas (3) Retail Building — 1,448 3,349 — 1,448 3,349 4,797 1,206 3,591 2005 5/8/2014 Taylor, Pennsylvania (3) Industrial Building — 3,101 25,405 1,551 3,101 26,956 30,057 8,872 21,185 2000 / 2006 6/9/2014 Aurora, Colorado (3) Industrial Building — 2,882 3,917 96 2,882 4,013 6,895 1,413 5,482 1983 7/1/2014 Indianapolis, Indiana (3) Office Building — 502 6,422 1,964 499 8,389 8,888 3,810 5,078 1981 / 2014 9/3/2014 Denver, Colorado (3) Industrial Building — 1,621 7,071 11,878 1,621 18,949 20,570 4,341 16,229 1985 10/31/2014 Monroe, Michigan Industrial Building 8,941 658 14,607 195 658 14,802 15,460 4,541 10,919 2004 12/23/2014 Monroe, Michigan Industrial Building 6,239 460 10,225 ( 20 ) 459 10,206 10,665 3,120 7,545 2004 12/23/2014 Dublin, Ohio (3) Office Building — 1,338 5,058 1,086 1,338 6,144 7,482 2,477 5,005 1980 /Various 5/28/2015 Hapeville, Georgia (3) Office Building — 2,272 8,778 263 2,272 9,041 11,313 3,096 8,217 1999 / 2007 7/15/2015 Villa Rica, Georgia Industrial Building 3,162 293 5,277 309 293 5,586 5,879 1,825 4,054 2000 / 2014 10/20/2015 Fort Lauderdale, Florida Office Building 11,008 4,117 15,516 7,400 4,117 22,916 27,033 7,918 19,115 1984 9/12/2016 King of Prussia, Pennsylvania Office Building 13,429 3,681 15,739 473 3,681 16,212 19,893 5,946 13,947 2001 12/14/2016 Conshohocken, Pennsylvania Office Building 8,743 1,996 10,880 1,028 1,996 11,908 13,904 3,319 10,585 1996 6/22/2017 Philadelphia, Pennsylvania Industrial Building 14,045 5,896 16,282 97 5,906 16,369 22,275 5,743 16,532 1994 / 2011 7/7/2017 Maitland, Florida Office Building 13,439 3,073 19,661 872 3,091 20,515 23,606 7,998 15,608 1998 7/31/2017 Maitland, Florida 85 Table of Contents Initial Cost Total Cost Location of Property Encumbrances Land Buildings & Improvements Improvement Costs Capitalized Subsequent to Acquisition Land Buildings & Improvements Total (1) Accumulated Depreciation (2) Net Real Estate Year Construction/ Improvements Date Acquired Office Building 6,738 2,095 9,339 9 2,095 9,348 11,443 2,885 8,558 1999 7/31/2017 Columbus, Ohio (3) Office Building — 1,926 11,410 332 1,925 11,743 13,668 3,707 9,961 2007 12/1/2017 Salt Lake City, Utah (3) Office Building — 4,446 9,938 801 4,446 10,739 15,185 3,700 11,485 2007 12/1/2017 Vance, Alabama (3) Industrial Building — 459 12,224 44 469 12,258 12,727 3,057 9,670 2018 3/9/2018 Columbus, Ohio Industrial Building 4,073 681 6,401 559 681 6,960 7,641 2,084 5,557 1990 9/20/2018 Detroit, Michigan Industrial Building 5,288 1,458 10,092 10 1,468 10,092 11,560 2,254 9,306 1997 10/30/2018 Detroit, Michigan (3) Industrial Building — 662 6,681 10 672 6,681 7,353 1,518 5,835 2002 / 2016 10/30/2018 Lake Mary, Florida Office Building 9,554 3,018 11,756 171 3,020 11,925 14,945 3,106 11,839 1997 / 2018 12/27/2018 Moorestown, New Jersey (3) Industrial Building — 471 1,825 — 471 1,825 2,296 623 1,673 1991 2/8/2019 Indianapolis, Indiana (3) Industrial Building — 255 2,809 — 255 2,809 3,064 644 2,420 1989 / 2019 2/28/2019 Ocala, Florida (3) Industrial Building — 1,286 8,535 — 1,286 8,535 9,821 1,666 8,155 2001 4/5/2019 Ocala, Florida (3) Industrial Building — 725 4,814 849 724 5,664 6,388 1,158 5,230 1965 / 2007 4/5/2019 Delaware, Ohio (3) Industrial Building — 316 2,355 — 316 2,355 2,671 539 2,132 2005 4/30/2019 Tifton, Georgia Industrial Building 7,260 — 15,190 ( 15,190 ) — — — — — 1995 / 2003 6/18/2019 Denton, Texas (3) Industrial Building — 1,497 4,151 — 1,496 4,152 5,648 998 4,650 2012 7/30/2019 Temple, Texas (3) Industrial Building — 200 4,335 65 200 4,400 4,600 937 3,663 1973 / 2006 9/26/2019 Temple, Texas (3) Industrial Building — 296 6,425 99 296 6,524 6,820 1,389 5,431 1978 / 2006 9/26/2019 Indianapolis, Indiana (3) Industrial Building — 1,158 5,162 4 1,162 5,162 6,324 1,605 4,719 1967 / 1998 11/14/2019 Jackson, Tennessee Industrial Building 4,164 311 7,199 — 311 7,199 7,510 1,209 6,301 2019 12/16/2019 Carrollton, Georgia Industrial Building 3,701 291 6,720 — 292 6,719 7,011 1,091 5,920 2015 / 2019 12/17/2019 New Orleans, Louisiana Industrial Building 3,304 2,168 4,667 25 2,166 4,694 6,860 1,248 5,612 1975 12/17/2019 San Antonio, Texas Industrial Building 3,391 775 6,877 864 773 7,743 8,516 1,397 7,119 1985 12/17/2019 Port Allen, Louisiana Industrial Building 2,513 292 3,411 412 291 3,824 4,115 860 3,255 1983 / 2005 12/17/2019 Albuquerque, New Mexico Industrial Building 1,626 673 2,291 4 671 2,297 2,968 450 2,518 1998 / 2017 12/17/2019 Tucson, Arizona Industrial Building 3,044 819 4,636 210 817 4,848 5,665 903 4,762 1987 / 1995 / 2005 12/17/2019 Albuquerque, New Mexico Industrial Building 3,078 818 5,219 240 815 5,462 6,277 971 5,306 2000 / 2018 12/17/2019 Indianapolis, Indiana (3) Industrial Building — 489 3,956 283 493 4,235 4,728 776 3,952 1987 1/8/2020 Houston, Texas Industrial Building 8,878 1,714 14,170 3 1,717 14,170 15,887 2,042 13,845 2000 / 2018 1/27/2020 Charlotte, North Carolina Industrial Building 4,796 1,458 6,778 4 1,461 6,779 8,240 1,241 6,999 1995 / 1999 / 2006 1/27/2020 St. Charles, Missouri Industrial Building 2,653 924 3,749 4 928 3,749 4,677 559 4,118 2012 1/27/2020 Crandall, Georgia Industrial Building 15,651 2,711 26,632 172 2,711 26,804 29,515 3,854 25,661 2020 3/9/2020 Terre Haute, Indiana (3) Industrial Building — 502 8,076 — 502 8,076 8,578 1,047 7,531 2010 9/1/2020 Montgomery, Alabama (3) Industrial Building — 599 11,290 3 602 11,290 11,892 1,891 10,001 1990 / 1997 10/14/2020 Huntsville, Alabama Industrial Building 9,192 1,445 15,040 11,158 1,445 26,198 27,643 3,916 23,727 2001 12/18/2020 Pittsburgh, Pennsylvania 86 Table of Contents Initial Cost Total Cost Location of Property Encumbrances Land Buildings & Improvements Improvement Costs Capitalized Subsequent to Acquisition Land Buildings & Improvements Total (1) Accumulated Depreciation (2) Net Real Estate Year Construction/ Improvements Date Acquired Industrial Building 6,118 1,422 10,094 251 1,422 10,345 11,767 1,876 9,891 1994 12/21/2020 Findlay, Ohio Industrial Building 4,907 258 8,847 — 258 8,847 9,105 1,245 7,860 1992 / 2008 1/22/2021 Baytown, Texas (3) Industrial Building — 1,604 5,533 3 1,607 5,533 7,140 954 6,186 2018 6/17/2021 Pacific, Missouri (3) Industrial Building — 926 7,294 — 926 7,294 8,220 824 7,396 2019 / 2021 7/21/2021 Pacific, Missouri (3) Industrial Building — 235 1,852 — 235 1,852 2,087 209 1,878 2019 / 2021 7/21/2021 Pacific, Missouri (3) Industrial Building — 607 4,782 — 607 4,782 5,389 540 4,849 2019 / 2021 7/21/2021 Pacific, Missouri (3) Industrial Building — 257 2,027 — 257 2,027 2,284 229 2,055 2019 / 2021 7/21/2021 Peru, Illinois (3) Industrial Building — 89 1,413 — 89 1,413 1,502 216 1,286 1987 / 1998 8/20/2021 Peru, Illinois (3) Industrial Building — 140 2,225 — 140 2,225 2,365 339 2,026 1987 / 1998 8/20/2021 Charlotte, North Carolina (3) Industrial Building — 1,400 10,615 — 1,400 10,615 12,015 1,399 10,616 1972 / 2018 11/3/2021 Atlanta, Georgia (3) Industrial Building — 1,255 8,787 1,503 1,255 10,290 11,545 1,104 10,441 1974 12/21/2021 Crossville, Tennessee Industrial Building 15,381 434 24,589 — 434 24,589 25,023 2,034 22,989 2020 12/21/2021 Wilkesboro, North Carolina (3) Industrial Building — 346 5,758 — 346 5,758 6,104 643 5,461 2014 2/24/2022 Oklahoma City, Oklahoma (3) Industrial Building — 470 4,688 ( 1,779 ) 289 3,090 3,379 534 2,845 1999 / 2004 3/11/2022 Cleveland, Ohio Industrial Building 3,490 628 5,252 495 628 5,747 6,375 823 5,552 1966 / 1972 / 2000 / 2013 5/4/2022 Fort Payne, Alabama Industrial Building 6,259 217 10,778 — 217 10,778 10,995 999 9,996 2013 5/4/2022 Wilmington, North Carolina Industrial Building 6,236 1,104 9,730 22 1,104 9,752 10,856 1,139 9,717 2000 / 2020 5/12/2022 Wilmington, North Carolina Industrial Building 3,224 571 5,031 12 571 5,043 5,614 589 5,025 2000 / 2020 5/12/2022 Wilmington, North Carolina Industrial Building 248 44 386 1 44 387 431 45 386 2000 / 2020 5/12/2022 Bridgeton, New Jersey Industrial Building 1,934 571 2,753 3 574 2,753 3,327 351 2,976 2017 8/5/2022 Vineland, New Jersey Industrial Building 14,886 860 24,634 4 864 24,634 25,498 2,101 23,397 2003 / 2009 8/5/2022 Jacksonville, Florida Industrial Building 4,400 1,099 5,587 222 1,099 5,809 6,908 511 6,397 1978 9/16/2022 Fort Payne, Alabama (3) Industrial Building — 39 4,774 — 39 4,774 4,813 348 4,465 2022 9/20/2022 Denver, Colorado Industrial Building 6,600 5,227 4,649 157 5,228 4,805 10,033 450 9,583 1978 10/26/2022 Greenville, South Carolina (3) Industrial Building — 411 3,693 105 410 3,799 4,209 295 3,914 1964 12/21/2022 Riverdale, Illinois Industrial Building 2,738 675 3,862 43 676 3,904 4,580 233 4,347 1949 / 1992 4/14/2023 Dallas Forth Worth, Texas Retail Building 1,467 770 1,636 ( 1 ) 770 1,635 2,405 98 2,307 2010 / 2023 7/10/2023 Dallas Forth Worth, Texas Industrial Building 4,596 1,269 6,617 — 1,268 6,618 7,886 354 7,532 1999 7/28/2023 Allentown, Pennsylvania (3) Industrial Building — 987 5,506 53 988 5,558 6,546 227 6,319 1974 / 2016 10/12/2023 Indianapolis, Indiana (3) Industrial Building — 928 3,102 ( 2 ) 926 3,102 4,028 119 3,909 1997 11/3/2023 Warfordsburg, Pennsylvania (3) Industrial Building — 414 2,925 — 414 2,925 3,339 82 3,257 1991 / 1999 5/7/2024 Warfordsburg, Pennsylvania (3) Industrial Building — 77 542 — 77 542 619 15 604 1991 / 1999 5/7/2024 Warfordsburg, Pennsylvania (3) Industrial Building — 576 4,079 — 576 4,079 4,655 114 4,541 1991 / 1999 5/7/2024 Warfordsburg, Pennsylvania (3) Industrial Building — 101 716 — 101 716 817 20 797 1991 / 1999 5/7/2024 Warfordsburg, Pennsylvania (3) 87 Table of Contents Initial Cost Total Cost Location of Property Encumbrances Land Buildings & Improvements Improvement Costs Capitalized Subsequent to Acquisition Land Buildings & Improvements Total (1) Accumulated Depreciation (2) Net Real Estate Year Construction/ Improvements Date Acquired Industrial Building — 1 6 — 1 6 7 — 7 1991 / 1999 5/7/2024 Midland, Texas (3) Industrial Building — 525 7,772 — 525 7,772 8,297 81 8,216 2024 8/29/2024 St. Clair, Missouri (3) Industrial Building — 1,168 3,493 — 1,169 3,492 4,661 15 4,646 2014 11/15/2024 $ 271,503 $ 140,716 $ 978,909 $ 100,293 $ 140,906 $ 1,079,012 $ 1,219,918 $ 323,434 $ 896,484 (1) The aggregate cost for land and building improvements for federal income tax purposes is the same as the total gross cost of land, building improvements and acquisition costs capitalized for asset acquisitions under ASC 360, which is $ 1,219.9 million. (2) Depreciable life of all buildings is the shorter of the useful life of the asset or 39 years. Depreciable life of all improvements is the shorter of the useful life of the assets or the life of the respective leases on each building, which range from 5 - 25 years. (3) These properties are in our unencumbered pool of assets on our Credit Facility. The following table reconciles the change in the balance of real estate during the years ended December 31, 2024, 2023 and 2022, respectively (in thousands): 2024 2023 2022 Balance at beginning of period $ 1,261,715 $ 1,299,570 $ 1,225,258 Additions: Acquisitions during period 22,394 25,352 99,300 Improvements 12,160 9,087 26,670 Deductions: Dispositions during period ( 69,723 ) ( 53,281 ) ( 39,823 ) Impairments during period ( 6,628 ) ( 19,013 ) ( 11,835 ) Balance at end of period $ 1,219,918 (1) $ 1,261,715 (2) $ 1,299,570 (3) (1) The real estate figure includes $ 8.1 million of real estate held for sale as of December 31, 2024. (2) The real estate figure includes $ 40.4 million of real estate held for sale as of December 31, 2023. (3) The real estate figure includes $ 12.3 million of real estate held for sale as of December 31, 2022. The following table reconciles the change in the balance of accumulated depreciation during the years ended December 31, 2024, 2023 and 2022, respectively (in thousands): 2024 2023 2022 Balance at beginning of period $ 312,517 $ 295,130 $ 267,057 Additions during period 39,511 41,174 41,075 Dispositions during period ( 28,594 ) ( 23,787 ) ( 13,002 ) Balance at end of period $ 323,434 (1) $ 312,517 (2) $ 295,130 (3) (1) The accumulated depreciation figure includes $ 3.8 million of real estate held for sale as of December 31, 2024. (2) The accumulated depreciation figure includes $ 12.9 million of real estate held for sale as of December 31, 2023. (3) The accumulated depreciation figure includes $ 9.0 million of real estate held for sale as of December 31, 2022. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None. 88 Table of Contents