What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-06 · 92 added, 56 removed, 278 unchanged (35% of the section changed)

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our expected leverage;

our level of indebtedness, which could reduce funds available for other business purposes and reduce our operational flexibility;

covenants in our unsecured notes, which may limit our flexibility and adversely affect our financial condition;

our ability to maintain our investment grade credit rating;

changes in the values of our assets;

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The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance, including factors and risks included in other sections of this report.

In addition, we discussed a number of material risks in our Annual Report on Form 10-K for the year ended December 31, 2020, and in Part II, Item 1A below.

In addition, we discussed a number of material risks in our Annual Report on Form 10-K for the year ended December 31, 2020, in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and in Part II, Item 1A below.

Those risks continue to be relevant to our performance and financial condition.

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We are an internally-managed REIT focused on the acquisition, ownership and management of specialized properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities.

We have leased and expect to continue to

lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, taxes and insurance.

We have leased and expect to continue to lease our properties on a triple-net lease basis, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including structural repairs, maintenance, taxes and insurance.

We were incorporated in Maryland on June 15, 2016.

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We are the sole general partner of our Operating Partnership and own, directly or through subsidiaries, 100% of the limited partnership interests in our Operating Partnership.

As of March 31, 2021, we had 16 full-time employees.

As of March 31, 2021, we owned 68 properties that were 100% leased to state-licensed cannabis operators and comprising an aggregate of approximately 5.9 million rentable square feet (including approximately 2.1 million rentable square feet under development/redevelopment) in 18 states, with a weighted-average remaining lease term of approximately 16.7 years.

As of March 31, 2021, we had invested approximately $1.1 billion in the aggregate (excluding transaction costs) and had committed an additional approximately $330.0 million (including tenant improvements and construction costs accrued but not yet funded as of March 31, 2021) to reimburse certain tenants and sellers for completion of construction and tenant improvements at our properties.

As of June 30, 2021, we had 19 full-time employees.

As of June 30, 2021, we owned 72 properties that were 100% leased to state-licensed cannabis operators and comprising an aggregate of approximately 6.6 million rentable square feet (including approximately 2.2 million rentable square feet under development/redevelopment) in 18 states, with a weighted-average remaining lease term of approximately 16.7 years.

As of June 30, 2021, we had invested approximately $1.3 billion in the aggregate (excluding transaction costs) and had committed an additional approximately $347.8 million (including tenant improvements and construction costs accrued but not yet funded as of June 30, 2021) to reimburse certain tenants and sellers for completion of construction and tenant improvements at our properties, excluding the $18.5 million construction loan to a developer for construction of a regulated cannabis cultivation and processing facility in California.

Factors Impacting Our Operating Results

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The extent to which COVID-19 impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others.

Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown.

Our tenants’ ability to pay their rent obligations to us depends, in part, on whether our tenants can continue their regulated cannabis operations and the ability and willingness of consumers to visit dispensary businesses.

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While laws and practices vary from state to state, state and local governmental authorities and regulated cannabis businesses have taken additional measures to ensure the safety and well-being of employees, patients and consumers, including but not limited to restrictions associated with social distancing requirements and additional levels of protection for medical cannabis patients with more vulnerability to health complications from COVID-19.

Despite these measures, cannabis dispensaries may experience declines in customer traffic or may be required to close in response to new government regulatory orders, which could have a significant adverse financial impact on certain of our tenants.

Despite these measures, cannabis dispensaries may experience declines in customer traffic or may be required to close in response to new government regulatory orders, which may result from a prolonged outbreak or resurgence of COVID-19 cases, and could have a significant adverse financial impact on certain of our tenants.

In 2020, we undertook in-depth discussions with each of our tenants as they navigated the COVID-19 pandemic and associated severe economic disruption.

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and a total of approximately $1.5 million in rent was deferred for May and June 2020.

As of March 31, 2021, we have not executed deferrals for any other tenants, other than the deferrals for the three tenants discussed above.

As of June 30, 2021, we have not executed deferrals for any other tenants, other than the deferrals for the three tenants discussed above.

Significant Tenants and Concentrations of Risk

As of March 31, 2021, we owned 68 properties located in 18 states.

As of June 30, 2021, we owned 72 properties located in 18 states.

Many of our tenants are tenants at multiple properties.

We seek to manage our portfolio-level risk through geographic diversification and by minimizing dependence on any single property or tenant.

At March 31, 2021, none of our properties accounted for 5% or more of our net real estate held for investment.

See Note 2 in the notes to the condensed consolidated financial statements for further information regarding the tenants in our portfolio that represented the largest percentage of our total rental revenues for the three months ended March 31, 2021.

At June 30, 2021, none of our properties accounted for 5% or more of our net real estate held for investment.

Competitive Environment

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Investments in Real Estate

See Note 6 in the notes to the condensed consolidated financial statements for information regarding our investments in real estate activity and property portfolio activity during the three months ended March 31, 2021.

Comparison of the Three Months Ended March 31, 2021 and 2020

Comparison of the Three and Six Months Ended June 30, 2021 and 2020

The following table sets forth the results of our operations (in thousands):

For the Three Months Ended

For the Six Months Ended

Rental (including tenant reimbursements)

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Net income attributable to common stockholders

Rental revenues for the three months ended March 31, 2021 increased by approximately $21.8 million, or 103%, to approximately $42.9 million, compared to approximately $21.1 million for the three months ended March 31, 2020.

Approximately $911,000 of the increase in rental revenues was generated by the properties acquired during the three months ended March 31, 2021.

Rental revenues for the three months ended June 30, 2021 increased by approximately $24.6 million, or 101%, to approximately $48.9 million, compared to approximately $24.3 million for the three months ended June 30, 2020.

Approximately $1.8 million of the increase in rental revenues was generated by the properties acquired during the three months ended June 30, 2021.

The remaining approximately $22.8 million increase in rental revenues was generated by properties we acquired in prior periods, including annual escalations and related rents on amendments which increased the tenant improvement allowances on certain of the leases.

Total revenues for the three months ended June 30, 2020 included the drawdown of part of the security deposits totaling approximately $743,000 at certain properties occupied by three tenants as part of the temporary rent deferral programs put in place last year at the onset of the COVID-19 pandemic.

As of June 30, 2021, approximately $1.3 million of the deferred rents, property management fees and security deposits have been repaid.

The remaining total balance of approximately $1.2 million is scheduled for pro rata monthly payments through December 2021.

Rental revenues for the three months ended June 30, 2021 also included $625,000 in stipulated rent paid by the receivership in place previously at the Company’s Los Angeles, California property related to rent owed to the

Company by the receivership in 2020.

The receivership concluded and the Company re-leased the property in January 2021 to a subsidiary of Holistic Industries Inc.

Rental revenues for the six months ended June 30, 2021 increased by approximately $46.3 million, or 102%, to approximately $91.8 million, compared to approximately $45.5 million for the six months ended June 30, 2020.

Approximately $4.8 million of the increase in rental revenue was generated by the properties acquired during the six months ended June 30, 2021.

The remaining approximately $41.5 million increase in rental revenue was generated by properties acquired in prior periods, including annual escalations and related rents on amendments which increased the tenant improvements allowances on certain of our leases.

Total revenues for the six months ended June 30, 2020 also included approximately $422,000 of tenant reimbursements, rent collected and associated lease penalties through the drawdown of the security deposit at the Company’s Los Angeles, California property, where the tenant was in receivership and defaulted on its lease obligations, and the drawdown of part of the security deposits totaling approximately $940,000 at certain properties as part of the temporary rent deferral programs with the three tenants described above.

Rental revenues also include tenant reimbursements related to reimbursements by tenants for property insurance premiums and property tax paid at certain properties.

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General and Administrative Expense .

General and administrative expense for the three months ended March 31, 2021 increased by approximately $2.3 million to approximately $5.6 million, compared to approximately $3.3 million for the three months ended March 31, 2020.

The increase in general and administrative expense was primarily due to higher compensation to employees, the hiring of additional employees and higher public company costs, travel and occupancy costs.

Compensation expense for the three months ended March 31, 2021 included approximately $2.1 million of non-cash stock-based compensation.

Compensation expense for the three months ended March 31, 2020 included approximately $825,000 of non-cash stock-based compensation.

General and administrative expense for the three months ended June 30, 2021 increased by approximately $2.6 million to approximately $5.6 million, compared to approximately $3.0 million for the three months ended June 30, 2020.

General and administrative expense for the six months ended June 30, 2021 increased by approximately $4.8 million to approximately $11.2 million.

The increase in general and administrative expense for both periods was primarily due to higher compensation to employees, the hiring of additional employees and higher public company costs, travel and occupancy costs.

Compensation expense for the three and six months ended June 30, 2021 included approximately $2.1 million and $4.2 million, respectively, of non-cash stock-based compensation.

Compensation expense for the three and six months ended June 30, 2020 included approximately $822,000 and $1.6 million, respectively, of non-cash stock-based compensation.

Depreciation Expense.

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Interest and Other Income.

Interest and other income for the three months ended March 31, 2021 decreased by approximately $1.3 million compared to the three months ended March 31, 2020.

The decrease was due to lower interest rates on our interest-bearing investments, partially offset by higher balances of interest bearing investments, resulting from proceeds from our common stock offerings.

Interest and other income for the three months ended June 30, 2021 decreased by approximately $898,000 compared to the three months ended June 30, 2020.

Interest and other income for the six months ended June 30, 2021 decreased by approximately $2.2 million compared to the six months ended June 30, 2020.

The decrease was due to lower interest rates on our interest-bearing investments, partially offset by higher balances of interest bearing investments resulting from proceeds from our common stock offerings and issuance of the Unsecured Senior Notes.

Interest Expense.

Interest expense related to our Exchangeable Senior Notes.

Interest expense for the three months ended March 31, 2021 and 2020 included approximately $525,000 and $501,000, respectively, of non-cash interest expense.

Comparison of the Three Months Ended March 31, 2021 and 2020

Interest expense consists of interest on our Exchangeable Senior Notes issued in February 2019 and our Unsecured Senior Notes issued on May 25, 2021.

Interest expense for the three months ended June 30, 2021 and 2020 included approximately $649,000 and $507,000, respectively, of non-cash interest expense;

and interest expense for the six months ended June 30, 2021 and 2020 included approximately $1.2 million and $1.0 million, respectively, of non-cash interest expense.

Comparison of the Six Months Ended June 30, 2021 and 2020

Net cash provided by operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash provided by financing activities

Ending cash, cash equivalents and restricted cash

Operating Activities

Cash flows provided by operating activities for the three months ended March 31, 2021 and 2020 were approximately $42.6 million and $19.6 million, respectively.

Cash flows provided by operating activities for the six months ended June 30, 2021 and 2020 were approximately $89.4 million and $43.1 million, respectively.

Cash flows provided by operating activities were generally from contractual rent and security deposits from our properties, partially offset by our general and administrative expense.

Investing Activities

Cash flows used in investing activities for the three months ended March 31, 2021 were approximately $13.0 million, of which approximately $93.1 million related to the purchases of investments in real estate and funding of a portion of the tenant improvement allowances and construction funding at our properties, partially offset by cash provided by investing activities of approximately $80.1 million related to net purchases and maturities of short-term investments.

Cash flows used in investing activities for the three months ended March 31, 2020 were approximately $308.3 million, of which approximately $155.2 million primarily related to the purchase of investment in real estate and funding of a portion of the tenant improvement allowances and construction funding at our properties, approximately $838,000 related to deposits to escrow for acquisitions, and the remaining approximately $152.3 million related to the net purchases and maturities of short-term investments.

Cash flows used in investing activities for the six months ended June 30, 2021 were approximately $287.2 million, of which approximately $257.3 million related to the purchases of investments in real estate and funding of a portion of the tenant improvement allowances and construction funding at our properties.

The remaining approximately $29.9 million related to net purchases and maturities of short-term investments.

Cash flows used in investing activities for the six months ended June 30, 2020 were approximately $501.0 million, of which approximately $298.9 million primarily related to the purchase of investment in real estate and funding of a portion of the tenant improvement allowances and construction funding at our properties, approximately $400,000 related to deposits to escrow for acquisitions, and the remaining approximately $201.8 million related to the net purchases and maturities of short-term investments.

Financing Activities

Net cash used in financing activities of approximately $33.4 million during the three months ended March 31, 2021 was the result of dividend payments of approximately $30.1 million to common and preferred stockholders and approximately $3.3 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees.

Net cash provided by financing activities of approximately $302.7 million during the three months ended March 31, 2020 was the result of approximately $317.8 million in net proceeds from the issuance of our common stock, partially offset by dividend payments of approximately $13.0 million to common and preferred stockholders and approximately $2.2 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees.

Net cash provided by financing activities of approximately $228.1 million during the six months ended June 30, 2021 was the result of approximately $293.5 million in net proceeds from the issuance of our Unsecured Senior Notes, partially offset by dividend payments of approximately $62.0 million to common and preferred stockholders and approximately $3.4 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees.

Net cash provided by financing activities of approximately $402.3 million during the six months ended June 30, 2020 was the result of approximately $434.8 million in net proceeds from the follow-on issuance of shares of our common stock, partially offset by dividend payments of approximately $30.3 million to common and preferred stockholders and approximately $2.2 million related to net share settlement of equity awards to pay the required withholding taxes upon vesting of restricted stock for certain employees.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements.

We expect to use significant cash to acquire additional properties, develop and redevelop existing properties, pay dividends to our stockholders, fund our operations, service our Exchangeable Senior Notes, and meet other general business needs.

Sources and Uses of Cash

We derive all of our revenues from the leasing of our properties and collecting rental income, which includes operating expense reimbursements, based on contractual arrangements with our tenants.

This source of revenue represents our primary source of liquidity to fund our dividends, Exchangeable Senior Notes interest payments, general and administrative expenses, property development and redevelopment activities, property operating expenses and other expenses incurred related to managing our existing portfolio and investing in additional properties.

This source of revenue represents our primary source of liquidity to fund our dividends, interest payments on Exchangeable Senior Notes and Unsecured Senior Notes, general and administrative expenses, property development and redevelopment activities, property operating expenses and other expenses incurred related to managing our existing portfolio and investing in additional properties.

To the extent additional resources are needed, we expect to fund our investment activity generally through equity or debt issuances either in the public or private markets.

Where possible, we also may issue limited partnership interests in our Operating Partnership to acquire properties from existing owners seeking a tax-deferred transaction.

In May 2021, we received an investment grade rating from a ratings agency.

We sought to obtain an investment grade rating to facilitate access to the investment grade unsecured debt market as part of our overall strategy to maximize our financial flexibility and manage our overall cost of capital.

On May 25, 2021, we completed the private placement of $300.0 million aggregate principal amount of Unsecured Senior Notes issued by our Operating Partnership.

The Unsecured Senior Notes are the Operating Partnership’s general unsecured and unsubordinated obligations, are fully and unconditionally guaranteed by us and all of the direct and indirect subsidiaries of the Operating Partnership, and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured indebtedness, including the Exchangeable Senior Notes.

The terms of the Unsecured Senior Notes are governed by an indenture, which requires compliance with various financial covenants including limits on the amount of total leverage and secured debt maintained by the Operating Partnership and which require the Operating Partnership to maintain minimum levels of debt service coverage.

Management believes that it was in compliance with those covenants as of June 30, 2021.

Subject to the terms of the indenture, any new subsidiary of the Operating Partnership will also guarantee the Unsecured Senior Notes.

In addition, the terms of the indenture provide that if the debt rating on the Unsecured Senior Notes is downgraded or withdrawn entirely, interest on the Unsecured Senior Notes will increase to a range of 6.0% to 6.5% based on such debt rating.

We are party to equity distribution agreements with six sales agents, pursuant to which we may offer and sell from time to time through an “at-the-market” offering program, or ATM Program, up to $500.0 million in shares of our common stock.

As of March 31, 2021, we had approximately $231.7 million in shares of common stock available for issuance under the ATM Program and did not issue any shares of common stock under the ATM Program during the three months ended March 31, 2021.

As of June 30, 2021, we had approximately $231.7 million in shares of common stock available for issuance under the ATM Program and did not issue any shares of common stock under the ATM Program during the six months ended June 30, 2021.

We have filed an automatic shelf registration statement, which may permit us, from time to time, to offer and sell common stock, preferred stock, warrants and other securities to the extent necessary or advisable to meet our liquidity needs.

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As a result of this distribution requirement, our Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can.

Our ability to continue to pay dividends is dependent upon our ability to continue to generate cash flows, service any debt obligations we have, including our Exchangeable Senior Notes, and make accretive new investments.

The following table describes the dividends declared by the Company during the three months ended March 31, 2021:

The following table describes the dividends declared by the Company during the six months ended June 30, 2021:

Security Class

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April 15, 2021

June 15, 2021

April 1, 2021 to June 30, 2021

July 15, 2021

June 15, 2021

Series A preferred stock

April 15, 2021 to July 14, 2021

July 15, 2021

Contractual Obligations

The following table summarizes our contractual obligations as of March 31, 2021 (in thousands):

2021 (nine months ending December 31)

Additionally, as of March 31, 2021, we had approximately $263.9 million outstanding in commitments related to tenant improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease.

As of March 31, 2021, these amounts had not been requested by the tenants.

The commitments

discussed in this paragraph are excluded from the table of contractual obligations above, as tenant improvement allowances generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease.

The following table summarizes our contractual obligations as of June 30, 2021 (in thousands):

2021 (six months ending December 31)

Additionally, as of June 30, 2021, we had approximately $287.2 million outstanding in commitments related to tenant improvement allowances, which generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease.

As of June 30, 2021, we also had $12.5 million outstanding in commitments to fund a construction loan, which the developer is required to complete by June 2022, subject to extension in certain circumstances.

As of June 30, 2021, these amounts had not been requested.

The commitments discussed in this paragraph are excluded from the table of contractual obligations above, as tenant improvement allowances generally may be requested by the tenants at any time up until a date that is near the expiration of the initial term of the applicable lease and construction loan funding generally may be requested by the borrower from time to time, subject to satisfaction of certain conditions.

Non-GAAP Financial Information

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We calculate AFFO by adding to FFO certain non-cash or infrequent or unpredictable expenses which may impact comparability, consisting of non-cash stock-based compensation expense and non-cash interest expense generally.

For the three months ended March 31, 2021, FFO (diluted), AFFO and FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock.

As a result, for purposes of calculating FFO (diluted), cash and non-cash interest expense of the Exchangeable Senior Notes was added back to FFO, and the total diluted weighted-average common shares outstanding increased by 2,170,959 shares for the period, which were the potentially issuable shares as if the Exchangeable Senior Notes were exchanged at the beginning of the period.

These adjustments applied only for the three months ended March 31, 2021.

The Exchangeable Senior Notes were anti-dilutive for purposes of calculating earnings per diluted share for the three months ended March 31, 2020, and as such, were treated as anti-dilutive for purposes of calculating FFO, AFFO and FFO and AFFO per diluted share for the three months ended March 31, 2020.

For the three and six months ended June 30, 2021, FFO (diluted), AFFO and FFO and AFFO per diluted share include the dilutive impact of the assumed full exchange of the Exchangeable Senior Notes for shares of common stock.

As a result, for purposes of calculating FFO (diluted), cash and non-cash interest expense of the Exchangeable Senior Notes was added back to FFO, and the total diluted weighted-average common shares outstanding increased by 2,182,691 shares for both periods, which were the potentially issuable shares as if the Exchangeable Senior Notes were exchanged at the beginning of the respective periods.

These adjustments applied only for the three and six months ended June 30, 2021.

The Exchangeable Senior Notes were anti-dilutive for purposes of calculating earnings per diluted share for the three and six months ended June 30, 2020, and as such, were treated as anti-dilutive for purposes of calculating FFO, AFFO and FFO and AFFO per diluted share for the three and six months ended June 30, 2020.

Our computation of FFO and AFFO may differ from the methodology for calculating FFO and AFFO utilized by other equity REITs and, accordingly, may not be comparable to such REITs.

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FFO and AFFO should be considered only as supplements to net income computed in accordance with GAAP as measures of operations.

The table below is a reconciliation of net income attributable to common stockholders to FFO and AFFO for the three months ended March 31, 2021 and 2020 (in thousands, except share and per share amounts):

The table below is a reconciliation of net income attributable to common stockholders to FFO and AFFO for the three and six months ended June 30, 2021 and 2020 (in thousands, except share and per share amounts):

For the Three Months Ended

For the Six Months Ended

Net income attributable to common stockholders

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FFO attributable to common stockholders (basic)

Cash and non-cash interest expense

Cash and non-cash interest expense on Exchangeable Senior Notes

FFO attributable to common stockholders (diluted)

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Impairment indicators or triggering events for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors.

We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the property, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration.

determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value.

of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration.

Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value.

We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives.

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We also elected the lessor practical expedient, allowing us to continue to amortize previously capitalized initial direct leasing costs incurred prior to the adoption of Topic 842.

As lessee, we recognized a liability to account for our future obligations related to our corporate office lease, which has a remaining lease term of approximately 4.0 years and 4.3 years as of March 31, 2021 and December 31, 2020, respectively, excluding the extension option that we are not reasonably certain to exercise, and a corresponding right-of-use asset.

The lease liability is measured based on the present value of the future lease payments discounted using the estimated incremental borrowing rate of 7.25%, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an

amount equal to the lease payments.

As lessee, we recognized a liability to account for our future obligations related to our corporate office lease, which has a remaining lease term of approximately 3.8 years and 4.3 years as of June 30, 2021 and December 31, 2020, respectively, excluding the extension option that we are not reasonably certain to exercise, and a corresponding right-of-use asset.

The lease liability is measured based on the present value of the future lease payments discounted using the estimated incremental borrowing rate of 7.25%, which is

the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period.

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The FASB has issued additional guidance for companies to account for any coronavirus related rent concessions in the form of FASB staff and board members’ remarks at the April 8, 2020 public meeting and the FASB staff question-and-answer document issued on April 10, 2020.

We have elected the practical expedient which allows us to not have to evaluate whether concessions provided in response to coronavirus pandemic are lease modifications.

We have elected the practical expedient which allows us to not have to evaluate whether concessions provided in response to the coronavirus pandemic are lease modifications.

This relief is subject to certain conditions being met, including ensuring the total remaining lease payments are substantially the same or less as compared to the original lease payments prior to the concession being granted.

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and (c) an amount equal to our gross investment in the property (including the purchase price at acquisition and any additional investment in the property made by us during the term of the lease), indexed to inflation.

At March 31, 2021, our gross investment in the property with the purchase option was approximately $30.5 million.

At March 31, 2021, the purchase option was not exercisable.

At June 30, 2021, our gross investment in the property with the purchase option was approximately $30.5 million.

At June 30, 2021, the purchase option was not exercisable.

Stock-Based Compensation

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Interest Rate Risk

As of March 31, 2021, we had approximately $143.75 million of Exchangeable Senior Notes outstanding at a fixed interest rate, and therefore, if interest rates decline, our required payments may exceed those based on current market rates.

As of June 30, 2021, we had $300.0 million of Unsecured Senior Notes and approximately $143.75 million of Exchangeable Senior Notes outstanding at fixed interest rates, and therefore, if interest rates decline, our required payments may exceed those based on current market rates.

It is possible that a property we acquire in the future would be subject to a mortgage, which we may assume.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis