GLADSTONE COMMERCIAL CORP 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations All statements contained herein, other than historical facts, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provide,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our business, financial condition, liquidity, results of operations, funds from operations or prospects to be materially different from any future business, financial condition, liquidity, results of operations, funds from operations or prospects expressed or implied by such forward-looking statements. For further information about these and other factors that could affect our future results, please see the captions titled “Forward-Looking Statements” and “Risk Factors” in this report and/or in our Annual Report on Form 10-K for the year ended December 31, 2024. We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q. This Quarterly Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. We have not independently verified the information contained in such sources. All references to “we,” “our,” “us” and the “Company” in this Report mean Gladstone Commercial Corporation and its consolidated subsidiaries, except where otherwise noted or where the context indicates that the term means only Gladstone Commercial Corporation. General We are an externally advised real estate investment trust (“REIT”) that was incorporated under the General Corporation Law of the State of Maryland on February 14, 2003. We focus on acquiring, owning, and managing primarily industrial and office properties. Our properties are geographically diversified and our tenants cover a broad cross section of business sectors and range in size from small to very large private and public companies, many of which are corporations that do not have publicly-rated debt. We have historically entered into, and intend in the future to enter into, purchase agreements primarily for real estate having net leases with remaining terms of approximately seven to 15 years and contractual rental rate increases. Under a net lease, the tenant is required to pay most or all operating, maintenance, repair, and insurance costs and real estate taxes with respect to the leased property. We actively communicate with private equity funds, real estate brokers and other third parties to locate properties for potential acquisition or to provide mortgage financing in an effort to build our portfolio. We target secondary growth markets that possess favorable economic growth trends, diversified industries, and growing population and employment. All references to annualized generally accepted accounting principles (“GAAP”) rent are rents that each tenant pays in accordance with the terms of its respective lease reported evenly over the non-cancelable term of the lease. As of August 6, 2025: • we owned 143 properties totaling 17.0 million square feet of rentable space, located in 27 states; • our occupancy rate was 98.7%; • the weighted average remaining term of our mortgage debt was 3.0 years and the weighted average interest rate was 4.22%; and • the average remaining lease term of the portfolio was 7.0 years. 26 Table of Contents Business Environment The overall business environment remained unpredictable in the second quarter of 2025. The “Liberation Day” tariff announcements of April 2, 2025 fueled an initial drop in treasury rates followed by more recent increases as the Federal Reserve decided to keep its benchmark rate constant. Despite tariff uncertainty and a persistently elevated interest rate environment, consumer demand has remained resilient, as demonstrated by recent bank earnings. Tenant demand is unpredictable, and some tenants want to lock in space now, while others want to delay decision-making as long as possible. Until we have greater certainty around the timing and magnitude of future rate changes, we expect conditions to remain largely consistent with the current environment. According to Cushman & Wakefield plc (“Cushman”), industrial demand moderately improved through the June 2025 year to date period with 309.0 million square feet of new leasing activity compared to 307.9 million square feet during the same period last year. Also, according to Cushman, the share of build to suit opportunities increased from 16.8% of total construction product during the June 2024 year to date period to 30.4% during the same period in 2025. The speculative share in the second quarter of 2025 also dropped to its lowest level since the second quarter of 2020. These dramatic changes are generally indicative of tenants adapting their supply chains to fit the current environment. Finally, national industrial rents increased 2.6% year over year in the second quarter of 2025, according to Cushman, consistent with steady demand and more sustainable long term growth relative to the post-COVID boom. The office market continues to see modest recovery in 2025. According to Cushman, net absorption was negative again in the second quarter of 2025, but the four-quarter rolling absorption average moved up 49% year over year. Finally, 35 markets posted positive net absorption over the past four quarters according to Cushman, indicating that office fundamentals are moving favorably in many locations. We collected 100% of all outstanding base rents for the six months ended June 30, 2025. This is a testament to the strength of our credit underwriting and asset management teams. We believe that we have a diverse tenant base, and specifically, we do not have significant exposure to tenants in the retail, hospitality, airlines, and oil and gas industries. Additionally, our properties are located across 27 states, which we believe mitigates our exposure to regional economic and weather-related issues, including regulations or laws implemented by state and local governments in any one geographic market or area. In the past, we have received rent modification requests from certain of our tenants, and it is possible we may receive additional requests in the future. We believe we currently have adequate liquidity in the near term, and believe that our cash on hand combined with the availability under our Credit Facility is sufficient to cover all near-term debt obligations and operating expenses and to continue our industrial property-focused growth strategy. We are in compliance with all of our debt covenants as of June 30, 2025. Based on market observations and conversations we routinely have with lenders, we believe that credit continues to be available for well-capitalized borrowers, as demonstrated by the Operating Partnership’s issuance, on December 18, 2024, of $75.0 million of senior unsecured notes in a private placement and the Operating Partnership’s entry on May 30, 2025 into a new $20.0 million unsecured term loan (“Term Loan D”). We continue to monitor our portfolio and intend to maintain a reasonably conservative liquidity position for the foreseeable future. Other Business Environment Considerations The geopolitical landscape remains fractured due to recent world events. Many domestic manufacturing businesses seek to limit supply chain disruptions by bringing their operations back to the United States. During the first quarter of 2025, the United States began a “reciprocal tariff” plan in an effort to increase the competitiveness of domestic manufacturing. The full impact of such tariffs is yet to be known, but we believe we are well positioned in our industrial portfolio as we monitor the broader market conditions. We expect that industrial demand will be further buoyed by government investment in infrastructure and advanced manufacturing operations. On the office side, a level of work-from-home trends appears to be here to stay, but many employees are returning to the office, particularly following the presidential transition. These uncertain times create both risks and opportunities for us and our tenants, and we believe we are well-capitalized and positioned to take advantage. The environmental landscape remains unpredictable due to the increase in intensity of weather patterns, including hurricanes. We continue to monitor our properties and have not seen any significant impact to our properties in Florida, Georgia, North Carolina, South Carolina, Tennessee, and Texas from the recently begun hurricane season. We continue to focus on re-leasing vacant space, renewing upcoming lease expirations, re-financing upcoming loan maturities, and acquiring additional properties with associated long-term leases. Currently, we have four partially vacant buildings and one fully vacant building. Our available vacant space at June 30, 2025 represented 1.3% of our total square footage and the annual 27 Table of Contents carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $1.9 million. We continue to actively seek new tenants for these properties. We believe our lease expiration schedule for the remainder of 2025 is manageable, as it equates to 1.5% of our lease revenue at June 30, 2025. Property acquisitions since the beginning of 2020 have totaled $551.6 million and all but one acquisition transaction was industrial in nature, with a weighted average lease term of 14.1 years and a weighted average lease term of 11.2 years at the time of this filing. Our ability to make new investments is highly dependent upon our ability to procure financing. Our principal sources of financing generally include the issuance of equity securities, long-term unsecured notes in the private placement market, long-term mortgage loans secured by properties, borrowings under our $125.0 million senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“KeyBank”), which matures in August 2026, our $160.0 million term loan facility (“Term Loan A”), which matures in August 2027, our $60.0 million term loan facility (“Term Loan B”), which matures in February 2026, our $150.0 million term loan facility (“Term Loan C”) which matures in February 2028, our Operating Partnership’s Term Loan D, a $20.0 million unsecured term loan which matures in May 2027, and our Operating Partnership’s $75.0 million senior unsecured notes (the “2029 Notes”) which mature in December 2029. As of June 30, 2025, there was $40.0 million outstanding under Term Loan B. We refer to the Revolver, Term Loan A, Term Loan B, and Term Loan C collectively herein as the “Credit Facility”. While lenders’ credit standards have tightened, we continue to look to private credit institutions, national and regional banks, insurance companies and non-bank lenders to finance our real estate activities. Recent Developments Sale Activity During the six months ended June 30, 2025, we continued to execute our capital recycling program, whereby we sold properties outside of our core markets and redeployed proceeds to either fund property acquisitions in our target secondary growth markets, or repay outstanding debt. We expect to continue to execute our capital recycling plan and sell non-core properties as reasonable disposition opportunities become available. During the six months ended June 30, 2025, we sold one non-core property, located in Hickory, North Carolina, which is summarized in the table below (dollars in thousands): Aggregate Square Footage Sold Aggregate Sales Price Aggregate Sales Costs Aggregate Gain on Sale of Real Estate, net 60,000 $ 5,050 $ 310 $ 377 On April 30, 2025, we completed the transaction to sell our 676,031 square foot property in Tifton, Georgia for $18.5 million, incurring $0.3 million in closing costs, which are included in other income in the condensed consolidated statement of operations for the three and six months ended June 30, 2025. During the year ended December 31, 2024, we recorded a sales-type lease receivable and derecognized the carrying value of this property, recognizing a $3.9 million selling profit from sales-type lease, net, that was included in the gain on sale of real estate, net, in the consolidated statement of operations. Acquisition Activity During the six months ended June 30, 2025, we acquired ten industrial properties located in Houston, Texas; Dallas-Fort Worth, Texas; Germantown, Wisconsin; and Harrison Township, Michigan, which are summarized below (dollars in thousands): Aggregate Square Footage Weighted Average Remaining Lease Term at Time of Acquisition Aggregate Purchase Price Aggregate Capitalized Acquisition Expenses Aggregate Annualized GAAP Fixed Lease Payments 874,871 14.3 years $ 153,067 $ 867 $ 13,155 Leasing Activity During the six months ended June 30, 2025, we executed two leases, which are summarized below (dollars in thousands): 28 Table of Contents Aggregate Square Footage Weighted Average Remaining Lease Term Aggregate Annualized GAAP Fixed Lease Payments Aggregate Leasing Commissions 123,017 1.3 years $ 1,240 $ 4 Financing Activity During the six months ended June 30, 2025, we repaid one mortgage, collateralized by one property, which is summarized in the table below (dollars in thousands): Aggregate Variable Rate Debt Repaid Weighted Average Interest Rate on Variable Rate Debt Repaid $ 7,181 SOFR + 2.25% Equity Activities Common Stock ATM Programs On February 22, 2022, we entered into Amendment No. 1 to our 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”). The amendment permitted shares of common stock to be issued pursuant to the Prior Common Stock Sales Agreement under the Company’s Registration Statement on Form S-3 (File No. 333-236143) (the “2020 Registration Statement”), and future registration statements on Form S-3. We terminated the Prior Common Stock Sales Agreement effective as of February 10, 2023 in connection with the expiration of the 2020 Registration Statement on February 11, 2023. 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 with the SEC dated March 3, 2023 and March 7, 2023, to the prospectus dated November 23, 2022, for the offer and sale of an aggregate offering amount of $250.0 million of common stock. During the six months ended June 30, 2025, we did not sell any shares of common stock under the 2023 Common Stock Sales Agreement. On March 26, 2024, we entered into Amendment No. 1 to the 2023 Common Stock Sales Agreement (the “2024 Common Stock Sales Agreement”). The amendment permitted shares of common stock to be issued pursuant to the 2024 Common Stock Sales Agreement under the 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 six months ended June 30, 2025, we sold 2,521,007 shares of common stock, raising approximately $38.0 million in net proceeds under the 2024 Common Stock Sales Agreement. Universal Shelf Registration Statements 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. Series F Preferred Stock Continuous Offering 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 6.00% Series F Cumulative Redeemable Preferred Stock, par value $0.001 per share, (the “Series F Preferred Stock”) and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series F Preferred Stock. The reclassification decreased the number of shares classified as common stock from 86,290,000 shares immediately prior to the reclassification to 60,290,000 shares immediately after the reclassification. We sold 15,700 shares of our Series F Preferred Stock, raising $0.4 million in net proceeds, during the six months ended June 30, 2025. 29 Table of Contents The primary offering for our Series F Preferred Stock terminated according to its terms on June 1, 2025. We expensed $0.3 million in prepaid offering costs due to the termination. Non-controlling Interest in Operating Partnership Gladstone Commercial Corporation conducts substantially all of its operations through a subsidiary, Gladstone Commercial Limited Partnership, a Delaware limited partnership (the “Operating Partnership”). As of June 30, 2025 and December 31, 2024, we owned approximately 99.9% and 99.9%, respectively, of the outstanding operating partnership units in the Operating Partnership (“OP Units”). As of June 30, 2025 and December 31, 2024, there were 39,474 and 39,474 outstanding OP Units held by holders who do not control the Operating Partnership (“Non-controlling OP Unitholders”), respectively. Diversity of Our Portfolio Gladstone Management Corporation, a Delaware corporation (our “Adviser”), seeks to diversify our portfolio to avoid dependence on any one particular tenant, industry or geographic market. By diversifying our portfolio, our Adviser intends to reduce the adverse effect on our portfolio of a single under-performing investment or a downturn in any particular industry or geographic market. For the six months ended June 30, 2025, our largest tenant comprised only 5.3% of total lease revenue. The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three and six months ended June 30, 2025 and 2024 (dollars in thousands): For the three months ended June 30, For the six months ended June 30, 2025 2024 2025 2024 Industry Classification Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue Lease Revenue Percentage of Lease Revenue Automotive $ 5,556 14.2 % $ 5,418 14.6 % $ 11,088 14.3 % $ 10,721 14.7 % Diversified/Conglomerate Services 5,062 12.8 5,210 14.1 10,306 13.4 9,837 13.5 Buildings and Real Estate 3,874 9.8 3,671 9.9 7,693 10.0 7,341 10.1 Telecommunications 3,658 9.3 3,347 9.0 7,131 9.3 6,710 9.2 Diversified/Conglomerate Manufacturing 3,131 7.9 2,483 6.7 5,919 7.7 4,945 6.8 Personal, Food & Miscellaneous Services 2,616 6.6 2,370 6.4 5,232 6.8 4,718 6.5 Beverage, Food & Tobacco 3,324 8.4 1,467 4.0 4,835 6.3 2,932 4.0 Banking 2,245 5.7 2,382 6.4 4,516 5.9 4,696 6.5 Personal & Non-Durable Consumer Products 1,829 4.6 1,878 5.1 3,657 4.7 3,794 5.2 Machinery 1,815 4.6 1,868 5.0 3,651 4.7 3,476 4.8 Healthcare 1,704 4.3 2,504 6.8 3,538 4.6 4,727 6.5 Chemicals, Plastics & Rubber 1,327 3.4 1,326 3.6 2,700 3.5 2,643 3.6 Containers, Packaging & Glass 1,157 2.9 1,157 3.1 2,313 3.0 2,310 3.2 Childcare 573 1.4 573 1.5 1,146 1.5 1,146 1.6 Information Technology 572 1.4 576 1.6 1,143 1.5 1,146 1.6 Electronics 280 0.7 284 0.8 591 0.8 571 0.8 Printing & Publishing 266 0.7 266 0.7 533 0.7 533 0.7 Oil & Gas 248 0.6 — — 497 0.6 — — Education 173 0.4 154 0.4 299 0.4 287 0.4 Home & Office Furnishings 123 0.3 123 0.3 246 0.3 246 0.3 Total $ 39,533 100.0 % $ 37,057 100.0 % $ 77,034 100.0 % $ 72,779 100.0 % 30 Table of Contents The tables below reflect the breakdown of total lease revenue by state for the three and six months ended June 30, 2025 and 2024 (dollars in thousands): State Lease Revenue for the three months ended June 30, 2025 Percentage of Lease Revenue Number of Leases for the three months ended June 30, 2025 Lease Revenue for the three months ended June 30, 2024 Percentage of Lease Revenue Number of Leases for the three months ended June 30, 2024 Texas $ 6,623 16.8 % 17 $ 4,614 12.5 % 14 Pennsylvania 5,306 13.4 11 4,079 11.0 11 Florida 4,482 11.3 9 4,296 11.6 9 Ohio 2,924 7.4 15 3,066 8.3 15 Georgia 2,259 5.7 8 3,364 9.1 11 Alabama 2,175 5.5 6 2,184 5.9 6 North Carolina 2,110 5.3 9 2,351 6.3 10 Colorado 1,872 4.7 4 1,870 5.0 4 Michigan 1,766 4.5 7 1,707 4.6 6 Wisconsin 1,268 3.2 3 454 1.2 2 All Other States 8,748 22.2 45 9,072 24.5 48 Total $ 39,533 100.0 % 134 $ 37,057 100.0 % 136 State Lease Revenue for the six months ended June 30, 2025 Percentage of Lease Revenue Number of Leases for the six months ended June 30, 2025 Lease Revenue for the six months ended June 30, 2024 Percentage of Lease Revenue Number of Leases for the six months ended June 30, 2024 Texas $ 11,953 15.5 % 17 $ 9,143 12.6 % 14 Pennsylvania 10,552 13.7 11 7,815 10.7 11 Florida 8,866 11.5 9 8,551 11.7 9 Ohio 6,008 7.8 15 6,252 8.6 15 North Carolina 4,509 5.9 9 4,684 6.4 10 Georgia 4,466 5.8 8 6,320 8.7 11 Alabama 4,343 5.6 6 4,342 6.0 6 Colorado 3,743 4.9 4 3,739 5.1 4 Michigan 3,510 4.6 7 3,339 4.6 6 Indiana 2,540 3.3 10 2,329 3.2 11 All Other States 16,544 21.4 38 16,265 22.4 39 Total $ 77,034 100.0 % 134 $ 72,779 100.0 % 136 Our Adviser and Administrator Our Adviser is led by a management team with extensive experience purchasing real estate and originating mortgage loans. Our Adviser and Gladstone Administration, LLC, a Delaware limited liability company (our “Administrator”) are controlled by Mr. David Gladstone, who is also our chairman and chief executive officer. Mr. Gladstone also serves as the chairman and chief executive officer of both our Adviser and Administrator, as well as president and chief investment officer of our Adviser. Mr. Arthur “Buzz” Cooper, our president, also serves as executive vice president of commercial and industrial real estate of our Adviser. Our Administrator employs our chief financial officer, treasurer, chief compliance officer, chief administrative officer, co-general counsels, co-secretaries, and their respective staffs. Mr. Michael LiCalsi, our chief administrative officer, co-general counsel, and co-secretary, also serves in the same roles for our Adviser and Administrator (in addition to serving as president of our Administrator). Mr. Erich Hellmold, our co-general counsel and co-secretary, also serves in the same roles for our Adviser and Administrator. Our Adviser and Administrator also provide investment advisory and administrative services, respectively, to certain of our affiliates, including, but not limited to, Gladstone Capital Corporation and Gladstone Investment Corporation, both publicly-traded business development companies, Gladstone Land Corporation, a publicly-traded REIT that primarily invests in farmland, and Gladstone Alternative Income Fund, a non-diversified, closed-end management company that operates as an “interval fund” that is also our affiliate. With the exception of Mr. Gary Gerson, our chief financial officer, Mr. Jay Beckhorn, our treasurer, and Mr. Cooper, all of our executive officers and all of our directors serve as either directors or executive officers, or both, of Gladstone Capital Corporation, Gladstone Investment Corporation, and Gladstone Alternative Income Fund. In addition, with the exception of Messrs. Cooper and Gerson, all of our executive officers and all of our directors, serve as either directors or executive officers, or both, of Gladstone Land Corporation. Messrs. Cooper and Gerson generally spend all of their 31 Table of Contents time focused on the Company, and do not put forth any material efforts in assisting affiliated companies. In the future, our Adviser may provide investment advisory services to other companies, both public and private. Advisory and Administration Agreements 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. David Gladstone, our chairman and chief executive officer. 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. Under the terms of the Advisory Agreement, we are responsible for all expenses incurred for our direct benefit. Examples of these expenses include legal, accounting, interest, directors’ and officers’ insurance, stock transfer services, stockholder-related fees, consulting and related fees. In addition, we are also responsible for all fees charged by third parties that are directly related to our business, which include real estate brokerage fees, mortgage placement fees, lease-up fees and transaction structuring fees (although we may be able to pass all or some of such fees on to our tenants and borrowers). Our entrance into the Advisory Agreement and each amendment thereto has been approved unanimously by our board of directors (“Board of Directors”). Our Board of Directors reviews and considers renewing the agreement with our Adviser annually, typically during the month of July. During its July 2025 meeting, our Board of Directors reviewed and renewed the Advisory Agreement and Administration Agreement for an additional year, through August 31, 2026. Base Management Fee The base management fee is payable quarterly in arrears and 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 Advisory Agreement as the current gross value of our property portfolio (meaning the aggregate of each property’s original acquisition price plus the cost of any subsequent capital improvements thereon). Our Adviser does not charge acquisition or disposition fees when we acquire or dispose of properties as is common in other externally managed REITs; however, our Adviser may earn fee income from our borrowers, tenants or other sources. 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 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 (attributable) 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 (attributable) to common stockholders for the period, and one-time events pursuant to changes in GAAP. On January 10, 2023, we amended and restated the Advisory Agreement by entering into the Seventh Amended Advisory Agreement, as approved unanimously by our Board of Directors, including specifically, our independent directors. The Seventh Amended Advisory Agreement contractually eliminated the payment of the incentive fee for the quarters ended March 31, 2023 and June 30, 2023. The calculation of the other fees was unchanged. On July 11, 2023, we amended and restated the Advisory Agreement by entering into the Eighth Amended Advisory Agreement, as approved unanimously by our Board of Directors, including specifically, our independent directors. The Eighth Amended Advisory Agreement contractually eliminated the payment of the incentive fee for the quarters 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 was unchanged. 32 Table of Contents Capital Gain Fee Under the Advisory Agreement, we will pay to the Adviser a capital gain-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 will 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 current gross value of the property (equal to the property’s original acquisition price plus any subsequent non-reimbursed capital improvements) 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 three and six months ended June 30, 2025 or 2024. Termination Fee The Advisory Agreement includes a termination fee clause 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 agreement after the Company has defaulted and applicable cure periods have expired. The 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 of the agreement, the bankruptcy or insolvency of the Adviser, dissolution of the Adviser and fraud or misappropriation of funds. 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, co-general counsels and co-secretaries (Mr. LiCalsi also serves as our Administrator’s president, co-general counsel and co-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 appropriate 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. Significant Accounting Policies and Estimates The preparation of our financial statements in accordance with GAAP requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could materially differ from these estimates. A summary of all of our significant accounting policies is provided in Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024, filed by us with the U.S. Securities and Exchange Commission (the “SEC”) on February 18, 2025 (our “2024 Form 10-K”). There were no material changes to our critical accounting policies or estimates during the six months ended June 30, 2025. Results of Operations The weighted average yield on our total portfolio, which was 8.5% and 8.6% as of June 30, 2025 and 2024, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements. The weighted average yield does not account for the interest expense incurred on the mortgages placed on our properties or other types of existing indebtedness. 33 Table of Contents A comparison of our operating results for the three and six months ended June 30, 2025 and 2024 is below (dollars in thousands, except per share amounts) : For the three months ended June 30, 2025 2024 $ Change % Change Operating revenues Lease revenue $ 39,533 $ 37,057 $ 2,476 6.7 % Total operating revenues $ 39,533 $ 37,057 $ 2,476 6.7 % Operating expenses Depreciation and amortization $ 14,249 $ 16,015 $ (1,766) (11.0) % Property operating expenses 7,258 5,807 1,451 25.0 % Base management fee 1,640 1,516 124 8.2 % Incentive fee 709 1,245 (536) (43.1) % Administration fee 590 594 (4) (0.7) % General and administrative 1,400 1,046 354 33.8 % Impairment charge 9 — 9 100.0 % Total operating expense before incentive fee waiver $ 25,855 $ 26,223 $ (368) (1.4) % Incentive fee waiver (709) (250) (459) 183.6 % Total operating expenses $ 25,146 $ 25,973 $ (827) (3.2) % Other income (expense) Interest expense $ (10,058) $ (9,463) $ (595) 6.3 % Gain (loss) on sale of real estate, net 377 (47) 424 (902.1) % Other (expense) income (72) 26 (98) (376.9) % Total other expense, net $ (9,753) $ (9,484) $ (269) 2.8 % Net income $ 4,634 $ 1,600 $ 3,034 189.6 % Distributions attributable to Series E, F, and G preferred stock (3,085) (3,116) 31 (1.0) % Distributions attributable to senior common stock (101) (105) 4 (3.8) % Gain (loss) on extinguishment of Series F preferred stock 9 (4) 13 (325.0) % Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders $ 1,457 $ (1,625) $ 3,082 (189.7) % Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ 0.03 $ (0.04) $ 0.07 (175.0) % FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 15,338 $ 14,437 $ 901 6.2 % FFO available to common stockholders and Non-controlling OP Unitholders - diluted (1) $ 15,439 $ 14,542 $ 897 6.2 % FFO per weighted average share of common stock and Non-controlling OP Units - basic (1) $ 0.33 $ 0.36 $ (0.03) (8.3) % FFO per weighted average share of common stock and Non-controlling OP Units - diluted (1) $ 0.33 $ 0.36 $ (0.03) (8.3) % (1) Refer to the “Funds from Operations” section below within the Management’s Discussion and Analysis section for the definition of FFO. 34 Table of Contents For the six months ended June 30, 2025 2024 $ Change % Change Operating revenues Lease revenue $ 77,034 $ 72,779 $ 4,255 5.8 % Total operating revenues $ 77,034 $ 72,779 $ 4,255 5.8 % Operating expenses Depreciation and amortization $ 27,492 $ 29,341 $ (1,849) (6.3) % Property operating expenses 14,158 11,692 2,466 21.1 % Base management fee 3,207 3,051 156 5.1 % Incentive fee 1,348 2,416 (1,068) (44.2) % Administration fee 1,212 1,225 (13) (1.1) % General and administrative 2,284 2,093 191 9.1 % Impairment charge 9 493 (484) (98.2) % Total operating expense before incentive fee waiver $ 49,710 $ 50,311 $ (601) (1.2) % Incentive fee waiver (709) (1,021) 312 (30.6) % Total operating expenses $ 49,001 $ 49,290 $ (289) (0.6) % Other income (expense) Interest expense $ (19,196) $ (18,960) $ (236) 1.2 % Gain on sale of real estate, net 377 236 141 59.7 % Gain on debt extinguishment, net — 300 (300) (100.0) % Other income 559 60 499 831.7 % Total other expense, net $ (18,260) $ (18,364) $ 104 (0.6) % Net income $ 9,773 $ 5,125 $ 4,648 90.7 % Distributions attributable to Series E, F, and G preferred stock (6,193) (6,229) 36 (0.6) % Distributions attributable to senior common stock (202) (211) 9 (4.3) % Loss on extinguishment of Series F preferred stock (1) (7) 6 (85.7) % Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders $ 3,377 $ (1,322) $ 4,699 (355.4) % Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders per weighted average share and unit - basic & diluted $ 0.07 $ (0.03) $ 0.10 (333.3) % FFO available to common stockholders and Non-controlling OP Unitholders - basic (1) $ 30,501 $ 27,976 $ 2,525 9.0 % FFO available to common stockholders and Non-controlling OP Unitholders - diluted (1) $ 30,703 $ 28,187 $ 2,516 8.9 % FFO per weighted average share of common stock and Non-controlling OP Unit - basic (1) $ 0.67 $ 0.69 $ (0.02) (2.9) % FFO per weighted average share of common stock and Non-controlling OP Unit - diluted (1) $ 0.67 $ 0.69 $ (0.02) (2.9) % (1) Refer to the “Funds from Operations” section below within the Management’s Discussion and Analysis section for the definition of FFO. Same Store Analysis For the purposes of the following discussion, “same store properties” are properties we owned as of January 1, 2024, which have not been subsequently vacated or disposed of. “Acquired & disposed properties” are properties which were acquired, disposed of or classified as held for sale at any point subsequent to December 31, 2023. “Properties with vacancy” are properties that were fully vacant or had greater than 5.0% vacancy, based on square footage, at any point subsequent to December 31, 2023. 35 Table of Contents Operating Revenues For the three months ended June 30, (Dollars in Thousands) Lease Revenues 2025 2024 $ Change % Change Same Store Properties $ 32,194 $ 30,296 $ 1,898 6.3 % Acquired & Disposed Properties 3,214 2,522 692 27.4 % Properties with Vacancy 4,125 4,239 (114) (2.7) % $ 39,533 $ 37,057 $ 2,476 6.7 % For the six months ended June 30, (Dollars in Thousands) Lease Revenues 2025 2024 $ Change % Change Same Store Properties $ 64,201 $ 60,337 $ 3,864 6.4 % Acquired & Disposed Properties 4,561 4,031 530 13.1 % Properties with Vacancy 8,272 8,411 (139) (1.7) % $ 77,034 $ 72,779 $ 4,255 5.8 % Lease revenues consist of rental income and operating expense recoveries earned from our tenants. Lease revenues from same store properties increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to an increase in recovery revenue from property expenses and an increase in rental rates from leasing activity subsequent to the three months ended June 30, 2024. Lease revenues increased for acquired and disposed of properties for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to an increase in recovery revenue from property expenses and an increase in rental rates on the 12 properties acquired subsequent to June 30, 2024, partially offset by accelerated rent on a lease termination during the three and six months ended June 30, 2024. Lease revenues decreased for our properties with vacancy for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, mainly due to a loss of rental revenue from increased vacancy, partially offset by an increase in variable lease payments. Operating Expenses Depreciation and amortization expense decreased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to the reduced depreciation and amortization expense from the five property sales subsequent to June 30, 2024, partially offset by an increase in depreciation and amortization expense on the 12 properties acquired subsequent to June 30, 2024. For the three months ended June 30, (Dollars in Thousands) Property Operating Expenses 2025 2024 $ Change % Change Same Store Properties $ 5,244 $ 4,055 $ 1,189 29.3 % Acquired & Disposed Properties 74 205 (131) (63.9) % Properties with Vacancy 1,940 1,547 393 25.4 % $ 7,258 $ 5,807 $ 1,451 25.0 % For the six months ended June 30, (Dollars in Thousands) Property Operating Expenses 2025 2024 $ Change % Change Same Store Properties $ 10,142 $ 7,695 $ 2,447 31.8 % Acquired & Disposed Properties 162 651 (489) (75.1) % Properties with Vacancy 3,854 3,346 508 15.2 % $ 14,158 $ 11,692 $ 2,466 21.1 % Property operating expenses consist of franchise taxes, property management fees, insurance, ground lease payments, property maintenance and repair expenses paid on behalf of certain of our properties. The increase in property operating expenses for same store properties for the three and six months ended June 30, 2025, from the comparable 2024 period, was a result of 36 Table of Contents general cost increases due to the inflationary environment during the three and six months ended June 30, 2025. The decrease in property operating expenses for acquired and disposed of properties for the three and six months ended June 30, 2025, from the comparable 2024 period, is a result of a decrease in property operating expenses from the seven property sales during and subsequent to June 30, 2024, minimally offset by the property operating expense from the 12 properties acquired subsequent to June 30, 2024. The increase in property operating expenses for properties with vacancy for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, is primarily a result of increased real estate expense and other general cost increases due to the inflationary environment. The base management fee paid to the Adviser increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to an increase in Gross Tangible Real Estate over the three and six months ended June 30, 2025 from property acquisitions as compared to Gross Tangible Real Estate during the three and six months ended June 30, 2024. The calculation of the base management fee is described in detail above under the subheading “Advisory and Administration Agreements.” The net incentive fee paid to the Adviser decreased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to the Adviser waiving a larger portion of the incentive fee for the three and six months ended June 30, 2025. The calculation of the incentive fee is described in detail above under the subheading “Advisory and Administration Agreements.” The administration fee paid to the Administrator decreased slightly for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to our Administrator allocating a smaller portion of expenses to us. The calculation of the administration fee is described in detail above under the subheading “Advisory and Administration Agreements.” General and administrative expenses increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, mainly due to higher audit expenses and expensing Series F Preferred Stock prepaid offering costs due to the termination of the primary offering. Other Income and Expenses Interest expense increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024. This increase was primarily the result of increased interest costs on variable rate debt, as a result of larger amounts drawn on the Revolver, as well as new interest expense on the 2029 Notes. We sold one non-core office property during the six months ended June 30, 2025, and as a result, incurred a gain on sale of real estate, net. We sold four non-core office properties during the six months ended June 30, 2024, and as a result, incurred a gain on sale of real estate, net, and a gain on debt extinguishment, net. Other income decreased for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, due to incurring $0.3 million in closing costs associated with the completion of the sale transaction at our Tifton, Georgia property. Other income increased for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, due to interest income earned from sales-types leases and nonrecurring income items. Net Income (Loss) Available (Attributable) to Common Stockholders and Non-controlling OP Unitholders Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to an increase in recovery revenue from property expenses, an increase in rental rates from leasing activity, a decrease in the net incentive fee payable to the Adviser, and lower depreciation expense. This was partially offset by higher general and administrative fees during the period. Liquidity and Capital Resources Overview Our sources of liquidity include cash flows from operations, cash and cash equivalents, borrowings under our Credit Facility, and additional issuances of equity and/or debt securities. Our available liquidity as of June 30, 2025 was $38.7 million, consisting of approximately $11.7 million in cash and cash equivalents and available borrowing capacity of $27.0 million under our Credit Facility. Our available borrowing capacity under the Credit Facility decreased to $25.1 million as of August 6, 2025. 37 Table of Contents Future Capital Needs We actively seek conservative investments that we expect are likely to produce income to allow us to pay distributions to our stockholders and Non-controlling OP Unitholders. We intend to use the proceeds received from future equity raised and debt capital borrowed to continue to invest in industrial properties, which is our strategic focus, or to a lesser extent, office real property, or pay down outstanding borrowings under our Revolver. Accordingly, to ensure that we are able to effectively execute our business strategy, we routinely review our liquidity requirements and continually evaluate all potential sources of liquidity. Our short-term liquidity needs include proceeds necessary to fund our distributions to stockholders, pay the debt service costs on our existing long-term mortgages, bank debt, and long-term private debt, refinance maturing debt and fund our current operating costs. Our long-term liquidity needs include proceeds necessary to grow and maintain our portfolio of investments. We believe that our available liquidity is sufficient to fund our distributions to stockholders, pay debt service costs, and fund our current operating costs in the near term. We also believe we will be able to refinance our mortgage debt, bank debt, and long-term private debt as they mature. Additionally, to satisfy our short-term obligations, we may request credits to our management fees that are issued from our Adviser, although our Adviser is under no obligation to provide any such credits, either in whole or in part. We further believe that our cash flows from operations coupled with the financing capital available to us in the future are sufficient to fund our long-term liquidity needs. Equity Capital During the six months ended June 30, 2025, we raised net proceeds of $38.0 million of common equity under the 2024 Common Stock Sales Agreement. We raised net proceeds of $0.4 million from sales of our Series F Preferred Stock during the six months ended June 30, 2025. As of August 6, 2025, we had the ability to raise up to $1.0 billion of additional equity capital through the sale and issuance of securities that are registered under the 2024 Registration Statement, in one or more future public offerings. We expect to continue to use our 2024 Common Stock Sales Agreement as a source of liquidity for the remainder of 2025. Debt Capital As of June 30, 2025, we had 39 mortgage notes payable in the aggregate principal amount of $259.5 million, collateralized by a total of 44 properties with a remaining weighted average maturity of 3.1 years. The weighted-average interest rate on the mortgage notes payable as of June 30, 2025 was 4.22%. We continue to see banks and other non-bank lenders willing to issue mortgages for properties comparable to those held in our portfolio on terms that are commercially reasonable. As of June 30, 2025, we had mortgage debt in the aggregate principal amount of $7.9 million payable during the remainder of 2025 and $35.4 million payable during 2026. The 2025 principal amount payable includes both amortizing principal payments and one balloon principal payment due during the remaining six months of 2025. We anticipate being able to refinance our mortgages that come due during 2026 with a combination of new mortgage debt, availability under our Credit Facility, the issuance of long-term unsecured notes in the private placement market, the issuance of additional equity securities under our 2024 Common Stock Sales Agreement, the sale and issuance of other equity securities that are registered under the 2024 Registration Statement, or the sale and issuance of unregistered equity or debt securities. Operating Activities Net cash provided by operating activities during the six months ended June 30, 2025, was $53.5 million, as compared to net cash provided by operating activities of $28.6 million for the six months ended June 30, 2024. The majority of cash from operating activities is generated from the lease revenues that we receive from our tenants. We utilize this cash to fund our property-level operating expenses and use the excess cash primarily for debt and interest payments on our mortgage notes payable, interest payments on our Credit Facility, distributions to our stockholders, management fees to our Adviser, Administration fees to our Administrator and other entity-level operating expenses. 38 Table of Contents Investing Activities Net cash used in investing activities during the six months ended June 30, 2025, was $155.8 million, which primarily consisted of ten property acquisitions and capital improvements performed at certain of our properties, partially offset by proceeds from one property sale. Net cash provided by investing activities during the six months ended June 30, 2024, was $5.8 million, which primarily consisted of proceeds from four property sales, partially offset by a five-property acquisition, coupled with capital improvements performed at certain of our properties. Financing Activities Net cash provided by financing activities during the six months ended June 30, 2025, was $103.1 million, which primarily consisted of the issuance of $39.0 million of equity, net borrowings on our credit facility, and $20.0 million in borrowings on Term Loan D, our new unsecured term loan, partially offset by $12.0 million of mortgage principal repayments and distributions paid to common, senior common and preferred shareholders. Net cash used in financing activities for the six months ended June 30, 2024, was $36.1 million, which primarily consisted of $22.1 million of mortgage debt repayments, and distributions paid to common, senior common and preferred shareholders, partially offset by the issuance of $11.4 million of equity and net borrowings on our Credit Facility. Credit Facility On August 18, 2022, we amended, extended and upsized our Credit Facility, increasing our Revolver from $100.0 million to $120.0 million (and extending 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 the Term Loan C to $150.0 million, as permitted under the terms of the Credit Facility. We entered into multiple interest rate swap agreements on Term Loan A and Term Loan C, which swap the interest rate to fixed rates from 3.15% to 3.75%. We incurred fees of approximately $4.2 million in connection with extending and upsizing our Credit Facility. 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 June 30, 2025, there was $444.4 million outstanding under our Credit Facility at a weighted average interest rate of approximately 5.76% and $2.1 million outstanding letters of credit, at a weighted average interest rate of 1.35%. As of August 6, 2025, the maximum additional amount we could draw under the Credit Facility was $25.1 million. We were in compliance with all covenants under the Credit Facility as of June 30, 2025. Unsecured Term Loan D On May 30, 2025, we and the Operating Partnership entered into a Term Loan Agreement with KeyBank, in connection with the $20.0 million Term Loan D. Term Loan D is unsecured and has a maturity date of May 30, 2027 and a SOFR spread ranging from 155 to 200 basis points throughout the life of the loan. The amount outstanding approximates fair value as of June 30, 2025. The proceeds were used to pay down the Revolver. Senior Unsecured Notes 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 June 30, 2025. The proceeds were used to pay down Term Loan B by $20.0 million and the Revolver by $55.0 million. 39 Table of Contents Contractual Obligations The following table reflects our material contractual obligations as of June 30, 2025 (dollars in thousands): Payments Due by Period Contractual Obligations Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Debt Obligations (1) $ 798,886 $ 61,043 $ 552,048 $ 165,033 $ 20,762 Interest on Debt Obligations (2) 106,917 41,603 51,012 12,983 1,319 Operating Lease Obligations (3) 5,454 457 934 907 3,156 Finance Lease Obligations (3) 8,059 160 356 356 7,187 Purchase Obligations (4) 7,591 6,797 794 — — $ 926,907 $ 110,060 $ 605,144 $ 179,279 $ 32,424 (1) Debt obligations represent borrowings under our Revolver, which represents $94.4 million of the debt obligation due in 2026, Term Loan A, which represents $160.0 million of the debt obligation due in 2027, Term Loan B, which represents $40.0 million of the debt obligation due in 2026, Term Loan C, which represents $150.0 million of the debt obligation due in 2028, Term Loan D, which represents $20.0 million of the debt obligation due in 2027, the 2029 Notes, which represents $75.0 million of the debt obligation due in 2029, and mortgage notes payable that were outstanding as of June 30, 2025. This figure does not include $6,378 of premiums and (discounts), net and $4.5 million of deferred financing costs, net, which are reflected in mortgage notes payable, net, borrowings under Term Loan A, Term Loan B, Term Loan C, net, borrowings under unsecured Term Loan D, net, and senior unsecured notes, net, on the condensed consolidated balance sheets. (2) Interest on debt obligations includes estimated interest on borrowings under our Revolver, Term Loan A, Term Loan B, Term Loan C, Term Loan D, the 2029 Notes, and mortgage notes payable. The balance and interest rate on our Revolver, Term Loan A, Term Loan B, Term Loan C, and Term Loan D is variable; thus, the interest payment obligation calculated for purposes of this table was based upon rates and balances as of June 30, 2025. (3) Operating and finance lease obligations represent the ground lease payments due on four of our properties. (4) Purchase obligations consist of tenant and capital improvements at six of our properties. Off-Balance Sheet Arrangements We did not have any material off-balance sheet arrangements as of June 30, 2025. Funds from Operations The National Association of Real Estate Investment Trusts (“NAREIT”) developed Funds from Operations (“FFO”) as a relevant non-GAAP supplemental measure of operating performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the same basis determined under GAAP. FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses on property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash flows from operating activities in accordance with GAAP, which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income. FFO should not be considered an alternative to net income as an indication of our performance or to cash flows from operations as a measure of liquidity or ability to make distributions. Comparison of FFO, using the NAREIT definition, to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs. FFO available to common stockholders and holders of Non-controlling interests in the Operating Partnership (“Non-controlling OP Unitholders”) is FFO adjusted to subtract distributions made to holders of preferred stock and senior common stock. We believe that net income (loss) available (attributable) to common stockholders is the most directly comparable GAAP measure to FFO available to common stockholders and Non-controlling OP Unitholders. Basic funds from operations per share (“Basic FFO per share”), and diluted funds from operations per share (“Diluted FFO per share”), is FFO available to common stockholders and Non-controlling OP Unitholders divided by the number of weighted average shares of the aggregate of shares of common stock and OP Units held by Non-controlling OP Unitholders outstanding and FFO available to common stockholders and Non-controlling OP Unitholders divided by the number of weighted average shares of the aggregate of shares of common stock and OP Units held by Non-controlling OP Unitholders outstanding on a 40 Table of Contents diluted basis, respectively, during a period. We believe that FFO available to common stockholders, Basic FFO per share and Diluted FFO per share are useful to investors because they provide investors with a further context for evaluating our FFO results in the same manner that investors use net income and earnings per share (“EPS”), in evaluating net income available to common stockholders. In addition, because most REITs provide FFO available to common stockholders, Basic FFO and Diluted FFO per share information to the investment community, we believe these are useful supplemental measures when comparing us to other REITs. We believe that net income is the most directly comparable GAAP measure to FFO, Basic EPS is the most directly comparable GAAP measure to Basic FFO per share, and that Diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share. The following table provides a reconciliation of our FFO available to common stockholders for the three and six months ended June 30, 2025 and 2024, respectively, to the most directly comparable GAAP measure, net income (loss) available (attributable) to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock: 41 Table of Contents For the three months ended June 30, For the six months ended June 30, (Dollars in Thousands, Except for Per Share Amounts) (Dollars in Thousands, Except for Per Share Amounts) 2025 2024 2025 2024 Calculation of basic FFO per share of common stock and Non-controlling OP Unit Net income $ 4,634 $ 1,600 $ 9,773 $ 5,125 Less: Distributions attributable to preferred and senior common stock (3,186) (3,221) (6,395) (6,440) Add/Less: Gain (loss) on extinguishment of Series F preferred stock, net 9 (4) (1) (7) Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders $ 1,457 $ (1,625) $ 3,377 $ (1,322) Adjustments: Add: Real estate depreciation and amortization $ 14,249 $ 16,015 $ 27,492 $ 29,341 Add: Impairment charge 9 — 9 493 Add: Loss on sale of real estate, net — 47 — — Less: Gain on sale of real estate, net (377) — (377) (236) Less: Gain on debt extinguishment, net — — — (300) FFO available to common stockholders and Non-controlling OP Unitholders - basic $ 15,338 $ 14,437 $ 30,501 $ 27,976 Weighted average common shares outstanding - basic 46,219,663 40,311,476 45,417,792 40,157,479 Weighted average Non-controlling OP Units outstanding 39,474 241,637 39,474 276,140 Weighted average common shares and Non-controlling OP Units 46,259,137 40,553,113 45,457,266 40,433,619 Basic FFO per weighted average share of common stock and Non-controlling OP Unit $ 0.33 $ 0.36 $ 0.67 $ 0.69 Calculation of diluted FFO per share of common stock and Non-controlling OP Unit Net income $ 4,634 $ 1,600 $ 9,773 $ 5,125 Less: Distributions attributable to preferred and senior common stock (3,186) (3,221) (6,395) (6,440) Add/Less: Gain (loss) on extinguishment of Series F preferred stock, net 9 (4) (1) (7) Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders $ 1,457 $ (1,625) $ 3,377 $ (1,322) Adjustments: Add: Real estate depreciation and amortization $ 14,249 $ 16,015 $ 27,492 $ 29,341 Add: Impairment charge 9 — 9 493 Add: Income impact of assumed conversion of senior common stock 101 105 202 211 Add: Loss on sale of real estate, net — 47 — — Less: Gain on sale of real estate, net (377) — (377) (236) Less: Gain on debt extinguishment, net — — — (300) FFO available to common stockholders and Non-controlling OP Unitholders plus assumed conversions $ 15,439 $ 14,542 $ 30,703 $ 28,187 Weighted average common shares outstanding - basic 46,219,663 40,311,476 45,417,792 40,157,479 Weighted average Non-controlling OP Units outstanding 39,474 241,637 39,474 276,140 Effect of convertible senior common stock 328,559 342,247 328,559 342,247 Weighted average common shares and Non-controlling OP Units outstanding - diluted 46,587,696 40,895,360 45,785,825 40,775,866 Diluted FFO per weighted average share of common stock and Non-controlling OP Unit $ 0.33 $ 0.36 $ 0.67 $ 0.69 Distributions declared per share of common stock and Non-controlling OP Unit $ 0.30 $ 0.30 $ 0.60 $ 0.60 42 Table of Contents