What changed in this filing

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Item 1A. Risk Factors

2022-02-22 compared with 2021-02-24 · 62 added, 65 removed, 489 unchanged (21% of the section changed)

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You should consider carefully the following information as an investor and/or prospective investor in our securities.

The risks described below may not be the

only risks we face.

The risks described below may not be the only risks we face.

Additional risks not presently known to us or that we currently believe are immaterial may also significantly impact our business operations.

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As a result, we will rely on our Adviser to perform due diligence investigations of these tenants, their operations, and their prospects.

We may not learn all of the material information we need to know regarding these businesses through our investigations.

We may not learn all of the material information we need to know regarding these

businesses through our investigations.

As a result, it is possible that we could lease properties to tenants that ultimately are unable to pay rent to us, which could adversely impact the amount available for distributions.

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We expect to lease a significant number of our properties to medium-sized farming operations and related agricultural businesses, which will expose us to a number of unique risks related to these entities.

For example, medium-sized agricultural

businesses may be more likely than larger farming operations to have difficulty making lease payments when they experience adverse events.

For example, medium-sized agricultural businesses may be more likely than larger farming operations to have difficulty making lease payments when they experience adverse events.

They also tend to experience significant fluctuations in their operating results and to be more vulnerable to competitors’ actions and market conditions, as well as general economic downturns.

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Tenants that are subject to significant debt obligations may be unable to make their rent payments if there are adverse changes in their businesses or in general economic conditions.

Tenants that have been impacted adversely through the COVID-19 pandemic may not be able to make timely rental payments due to government-mandated lockdowns or other measures taken to address the pandemic.

Tenants that have been impacted adversely by COVID-19 pandemic may not be able to make timely rental payments due to labor shortages, supply chain issues, or due to government-mandated lockdowns or other measures taken to address the pandemic.

Tenants that have experienced leveraged restructurings or acquisitions will generally have substantially greater debt and substantially lower net worth than they had prior to the leveraged transaction.

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In situations where management of the tenant will change after a transaction, it may be difficult for our Adviser to determine with certainty the likelihood of the tenant’s business success and of it being able to pay rent throughout the lease term.

companies are more vulnerable to adverse conditions in their businesses or industries and economic conditions generally, as well as to increases in interest rates.

These companies are more vulnerable to adverse conditions in their businesses or industries and economic conditions generally, as well as to increases in interest rates.

In addition, these companies’ revenues and expenses may fluctuate according to the growing season, which may impact their ability to make regular lease payments.

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While we do not expect participation rents to make up a significant portion of our overall leased portfolio, we intend to enter into additional leases with participation rent components.

We anticipate that these types of leases will have a floor that guarantees a minimum amount of rental income that generally satisfies our investment return criteria;

however, such leases will still be impacted by factors related to the success of the farmer-tenant’s

harvest, including, but not limited to, declining crop prices and lower-than-average crop production, that may result in us receiving less rent than anticipated or projected when entering into such leases.

We anticipate that the majority of such leases will continue to have a floor that guarantees a minimum amount of rental income that generally satisfies our investment return criteria;

however, such leases will still be impacted by factors related to the success of the farmer-tenant’s harvest, including, but not limited to, declining crop prices and lower-than-average crop production, that may result in us receiving less rent than anticipated or projected when entering into such leases.

A reduction in the rent we receive could have a material adverse effect on our cash flow and ability to make distributions to our stockholders.

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Permanent crops have plant structures (such as trees, vines, or bushes) that produce yearly crops without being replanted.

Examples include almonds, apples, blueberries, figs, oranges, and table and wine grapes.

Examples include almonds, apples, blueberries, figs, pistachios, oranges, and table and wine grapes.

Permanent crops generally involve more risk than annual row crops because permanent crops require more time and capital to plant.

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As permanent crops produce yearly crops without being replanted, they are more expensive to replace and more susceptible to disease and poor weather than annual row crops.

If a farmer loses a permanent crop to any natural disaster, such as drought, flooding, fire or disease, there would generally be significant time and capital needed to return the land to production because a tree or vine may take years to grow before bearing fruit.

tree or vine may take years to grow before bearing fruit.

Permanent crop farmland also prevents the farmer from being able to rotate crop types to keep up with changing market conditions or changes to the weather or soil.

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Many climatologists predict increases in average temperatures, more extreme temperatures and increases in volatile weather over time.

The effects of climate change may be more significant along coastlines, such as in the California coastal areas where we partially focus our acquisition efforts, due to rising sea levels resulting from melting of polar ice caps, which could result in increased risk of coastal erosion, flooding, degradation in the quality of groundwater aquifers and expanding agricultural weed and pest populations.

The effects of climate change may be more significant along coastlines, such as in the California coastal areas where we partially focus our acquisition efforts, due to rising sea levels resulting from melting of polar ice caps, which could result in increased risk of coastal erosion, flooding, degradation in the availability and quality of groundwater aquifers, and expanding agricultural weed and pest populations.

As a result, the effects of climate change could make our properties less suitable for farming or other alternative uses, which could adversely impact the value of our properties, our ability to generate rental revenue from leasing our properties and our cash available for distribution to stockholders.

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To the extent we issue debt securities, other instruments of indebtedness, or additional preferred stock or borrow additional money from banks or other financial institutions, we will be additionally exposed to risks associated with leverage, including increased risk of loss.

If we issue additional preferred securities that rank senior to our common shares in our capital structure,

the holders of such preferred securities may have separate voting rights and other rights, preferences, or privileges, economic and otherwise, more favorable than those of our common shares and our currently-designated preferred securities (including our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock), and the issuance of such preferred securities could have the effect of delaying, deferring, or preventing a transaction or a change of control that might involve a premium price for common stockholders.

If we issue additional preferred securities that rank senior to our common shares in our capital structure, the holders of such preferred securities may have separate voting rights and other rights, preferences, or privileges, economic and otherwise, more favorable than those of our common shares and our currently-designated preferred securities (including our Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock), and the issuance of such preferred securities could have the effect of delaying, deferring, or preventing a transaction or a change of control that might involve a premium price for common stockholders.

Any inability to access additional financing on terms that are favorable to us may adversely affect our ability to grow and our business generally.

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Accordingly, we may be unable to obtain the degree of leverage that we believe to be optimal, which may cause us to have less cash for distributions to stockholders.

Our use of leverage could also make us more vulnerable to a downturn in our business or the economy generally and a significant increase in the ratio of our indebtedness to our assets may have an adverse effect on the market price of our common stock.

Our use of leverage could also

make us more vulnerable to a downturn in our business or the economy generally and a significant increase in the ratio of our indebtedness to our assets may have an adverse effect on the market price of our common stock.

Our income from operations may not be enough to cover our debt service obligations, which may affect distributions to stockholders or cause us to incur losses.

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As of December 31, 2021, the mortgages on certain of our properties were cross-collateralized.

To the extent that any of the properties in which we have an interest are cross-collateralized, any default by the property owner subsidiary under the

mortgage note relating to the one property will result in a default under the financing arrangements relating to any other property that also provides security for that mortgage note or is cross-collateralized or cross-defaulted with such mortgage note.

To the extent that any of the properties in which we have an interest are cross-collateralized, any default by the property owner subsidiary under the mortgage note relating to the one property will result in a default under the financing arrangements relating to any other property that also provides security for that mortgage note or is cross-collateralized or cross-defaulted with such mortgage note.

Such a default may adversely affect our financial condition, results of operations and ability to pay distributions to our stockholders.

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Interest rate fluctuations may adversely affect our results of operations.

We may experience interest rate volatility in connection with mortgage loans on our properties or other variable-rate debt that we may obtain from time to time.

The interest rate on our existing line of credit is variable, and, although we seek to mitigate this risk by structuring such provisions to contain a maximum interest rate or escalation rate, as applicable, and obtain interest rate swaps on certain borrowings to limit our exposure to interest rate risk, these features do not eliminate this risk.

We may experience interest rate volatility in connection with mortgage loans on our properties or other variable-rate debt that we may obtain from time to time, such as our existing lines of credit, which are variable.

Although we seek to mitigate this risk by structuring such provisions to contain a maximum interest rate or escalation rate, as applicable, and obtain interest rate swaps on certain borrowings to limit our exposure to interest rate risk, these features do not eliminate this risk.

We are also exposed to the effects of interest rate changes as a result of holding cash and cash equivalents in short-term, interest-bearing investments.

Additionally, increases in interest rates, or reduced access to credit markets due, among other things, to more stringent lending requirements or a high level of leverage, may make it difficult for us to refinance our mortgage debt as it matures or limit the availability of mortgage debt, thereby limiting our acquisition and/or refinancing activities.

Even in the event that we are able to secure mortgage debt on, or otherwise finance our mortgage debt, due to increased costs associated with securing financing and other factors beyond our control, we may be unable to refinance the entire mortgage debt as it matures or be subject to unfavorable terms (such as higher loan fees, interest rates, and periodic payments) if we do refinance the mortgage debt.

Even in the event that we are able to secure mortgage debt on, or otherwise finance our mortgage debt, due to increased costs associated with securing financing

and other factors beyond our control, we may be unable to refinance the entire mortgage debt as it matures or be subject to unfavorable terms (such as higher loan fees, interest rates, and periodic payments) if we do refinance the mortgage debt.

A significant change in interest rates could have an adverse impact on our results of operations.

In the years prior to the current COVID-19 pandemic, the Federal Reserve had made gradual increases in the federal funds rate.

Any future increases due to other key economic indicators, such as the unemployment rate or inflation, may cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

It is expected that the Federal Reserve may resume increasing the federal funds rate due to other key economic indicators, such as the unemployment rate or rising inflation, and any such increases may cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms.

Any prolonged adverse economic conditions could have a material adverse effect on our business, financial condition, and results of operations.

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Federal Reserve is a major participant in, and its actions significantly impact, the real estate debt markets.

Over the past year, the Federal Reserve has made gradual increases in the federal funds rate.

While the Federal Reserve is expected to make gradual increases in the federal funds rate, there can be no assurance if and when such increases will be made.

These increases in the federal funds rate and any future increases due to other key economic indicators, such as the unemployment rate or inflation, may cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms and the market value of our capital stock.

This may result in future acquisitions by us generating lower overall economic returns and increasing the costs associated with refinancing current debt, which could potentially reduce future cash flow available for distributions.

It is difficult to predict future legislation, regulation, and actions under the new presidential administration, and we cannot predict or control the impact future actions by regulators or government bodies, such as the U.S.

It is difficult to predict future legislation, regulation, and executive actions, and we cannot predict or control the impact future actions by regulators or government bodies, such as the U.S.

Federal Reserve, will have on our business.

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A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources.

These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data, or causing operational disruption.

These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems or those of our third-party providers for purposes of misappropriating assets, stealing confidential information, corrupting data, or causing operational disruption.

The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation, and damage to our business relationships.

As our reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided to us by third-party service providers.

extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our financial results, operations, or confidential information will not be negatively impacted by such an incident.

Our business may be adversely affected by the ongoing COVID-19 outbreak.

We have implemented or plan on implementing additional processes, procedures, and internal controls to help prevent, detect, and mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber-incident, do not guarantee that a cyber-incident will not occur and/or that our financial results, operations, or confidential information will not be negatively impacted by such an incident.

Our business may be adversely affected by the ongoing COVID-19 pandemic or other public health emergencies..

As of the date of this filing, the outbreak of COVID-19, which the World Health Organization has declared a Public Health Emergency of International Concern, is continuing.

The outbreak of COVID-19 has resulted in numerous deaths, adversely impacted global commercial activity, and contributed to significant volatility in certain equity and debt markets.

The global impact of the outbreak continues to evolve, and many countries reacted by instituting quarantines, prohibitions on travel, and the closure of offices, businesses, schools, retail stores, and other public venues.

Businesses also implemented similar precautionary measures.

Global recessionary conditions are currently expected to continue in 2021 and possibly beyond as a direct result of the COVID-19 pandemic, although the actual impact and duration are unknown.

Much of the United States economy has reopened or is in the process of reopening, but, at the same time, the pandemic is intensifying in many areas of the country.

Accordingly, some jurisdictions have rolled back reopening plans, and more widespread reinstatement of directives and mandates requiring businesses to again curtail or cease normal operations remains a possibility.

Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, continue to create significant disruption in supply chains and economic activity and have had and are likely to continue to have a particularly adverse impact on transportation, hospitality, tourism, entertainment, and other industries.

Even if a COVID-19 vaccine is widely distributed and accepted, there can be no assurance that the vaccine will ultimately be successful in limiting or stopping the spread of COVID-19.

As COVID-19 continues to spread, the potential impacts are increasingly uncertain and difficult to assess.

The global impact of the outbreak, and COVID-19 variants, continues to evolve, and many countries continue to react by instituting quarantines, prohibitions on travel, and the closure of offices, businesses, schools, retail stores, and other public venues.

Businesses have also implemented similar precautionary measures over the course of the pandemic.

While the United States economy has reopened, the widespread impact of the pandemic continues to be felt throughout the country.

As such, more widespread reinstatement of directives and mandates requiring businesses to again curtail or cease normal operations remains a possibility.

Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, continue to create significant disruption in labor force availability, supply chains, and economic activity and have had and are likely to continue to have a particularly adverse impact on transportation, hospitality, tourism, entertainment, and other industries.

Even though COVID-19 vaccines are widely available, there can be no assurance that the vaccines will be accepted by all or ultimately be successful in limiting or stopping the spread of COVID-19.

As COVID-19 and COVID-19 variants continue to spread, the potential impacts are increasingly uncertain and difficult to assess.

Any public health emergency, including any outbreak of COVID-19, SARS, H1N1/09 flu, avian flu, other coronavirus, Ebola or other existing or new epidemic diseases, or the threat thereof, could have a significant adverse impact on the Company and could adversely affect the Company’s ability to fulfill its investment objectives.

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We cannot accurately estimate the impact that a public health threat could have on our farmland portfolio, but it could disrupt the businesses of our tenant-farmers and impact their ability to make lease payments to us, including under modified lease terms allowing for deferred rent, thereby decreasing the overall value of our leasehold interests in the properties, which could adversely impact our business, financial condition, or results of operations.

Further, the operations of the Company may be significantly impacted, or even temporarily or permanently halted, as a result of government shelter-in-place measures, voluntary and precautionary restrictions on travel or meetings, paused or reversed reopening orders, and other factors related to a public health emergency, including its potential adverse impact on the health of the Adviser’s and Administrator’s personnel.

Further, the operations of the Company may be significantly impacted, or even temporarily or permanently halted, as a result of government shelter-in-place measures, vaccine mandates, voluntary and precautionary restrictions on travel or meetings, paused or reversed reopening orders, and other factors related to a public health emergency, including its potential adverse impact on the health of the Adviser’s and Administrator’s personnel.

As a result, there is a risk that this continuing crisis could adversely impact the Company’s ability to source, manage, and divest investments and the Company’s ability to achieve its investment objectives, all of which could result in significant losses to the Company and could impact the Company’s ability to make interest and distribution payments to lenders and stockholders, respectively, including their respective amounts.

Risks Associated With Our Use of an Adviser to Manage Our Business

We are dependent upon our key management personnel for our future success, particularly David Gladstone, Terry Lee Brubaker, and Lewis Parrish.

We are dependent upon our key management personnel for our future success, particularly David Gladstone, Terry Lee Brubaker, Bill Reiman, Bill Frisbie, and Lewis Parrish.

We are dependent on our senior management and other key management members to carry out our business and investment strategies.

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Terry Lee Brubaker, our vice chairman and chief operating officer;

Bill Reiman and Bill Frisbie, our Executive Vice Presidents;

and Lewis Parrish, our chief financial officer and assistant treasurer.

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Our Adviser manages our real estate portfolio and locates, evaluates, recommends and negotiates the acquisition of our real estate investments and mortgage loans.

At the same time, our 2020 Advisory Agreement permits our Adviser to conduct other commercial activities and to provide management and advisory services to other entities, including, but not limited to, Gladstone Capital, Gladstone Commercial and Gladstone Investment, each of which is affiliated with us.

At the same time, our Advisory Agreement permits our Adviser to conduct other commercial activities and to provide management and advisory services to other entities, including, but not limited to, Gladstone Commercial, Gladstone Capital, and Gladstone Investment, each of which is affiliated with us.

Each of our executive officers, other than Mr.

Parrish, is also an executive officer of Gladstone Commercial, which actively makes real estate investments, and each of our directors and executive officers, other than Messrs.

Beckhorn and Parrish, are also executive officers and directors, as applicable, of Gladstone Capital and Gladstone Investment, which actively make loans to and invest in small- and medium-sized companies.

As a result, we may from time to time have conflicts of interest with our Adviser in its management of our business and that of Gladstone Commercial, Gladstone Investment or Gladstone Capital, which may arise primarily from the involvement of our Adviser, Gladstone Capital, Gladstone Commercial, Gladstone Investment and their affiliates in other activities that may conflict with our business.

Parrish, is also an executive officer of Gladstone Commercial, which actively makes real estate investments, and Gladstone Capital and Gladstone Investment, which actively make loans to and invest in small- and medium-sized companies;

and each of our directors and executive officers, other than Mr.

Parrish and Jennifer Smith, our chief valuation officer, are also executive officers and directors, as applicable, of Gladstone Acquisition, a special purpose acquisition company.

As a result, we may, from time to time, have conflicts of interest with our Adviser in its management of our business and that of Gladstone Commercial, Gladstone Investment, Gladstone Capital, or Gladstone Acquisition, which may arise

primarily from the involvement of our Adviser, Gladstone Commercial, Gladstone Capital, Gladstone Investment, Gladstone Acquisition, and their affiliates in other activities that may conflict with our business.

Examples of these potential conflicts include:

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• we may experience competition with our affiliates for potential financing transactions;

• our Adviser and other affiliates, such as Gladstone Capital, Gladstone Commercial and Gladstone Investment, could compete for the time and services of our officers and directors and reduce the amount of time they are able to devote to management of our business.

• our Adviser and other affiliates, such as Gladstone Commercial, Gladstone Capital, Gladstone Investment, and Gladstone Acquisition could compete for the time and services of our officers and directors and reduce the amount of time they are able to devote to management of our business.

These and other conflicts of interest between us and our Adviser could have a material adverse effect on the operation of our business and the selection or management of our real estate investments.

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The Advisory Agreement entitles our Adviser to incentive compensation based on our FFO, which rewards our Adviser if our quarterly pre-incentive fee FFO exceeds 1.75% (7.0% annualized) of our total adjusted common equity.

Our pre-incentive fee FFO for a particular quarter for incentive compensation purposes excludes the effect of any unrealized gains, losses, or other items during that quarter that do not affect realized net income, even if these adjustments result in a net loss on our

statement of operations for that quarter.

Thus, we may be required to pay our Adviser incentive compensation for a fiscal quarter even if we incur a net loss for that quarter as determined in accordance with GAAP.

Thus, we may be required to pay our Adviser incentive compensation for a fiscal quarter even if we incur a net loss for that quarter as determined in accordance with U.S.

generally-accepted accounting principles (“GAAP”).

Risks Associated With Ownership of Our Common Stock and OP Units and Our Tax Status

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• Our articles of incorporation prohibit ownership of more than 3.3% of the outstanding shares of our capital stock by one person, except for certain qualified institutional investors, which are limited to holding 9.8% of our common stock.

As of February 23, 2021, David Gladstone, our chairman, chief executive officer, and president, owned, directly or indirectly, including through certain foundations and trusts, approximately 9.4% of our common stock, and the Gladstone Future Trust, for the benefit of Mr.

Gladstone’s children, owned approximately 2.5% of our common stock, in each case pursuant to an exception approved by our Board of Directors and in compliance with our charter.

As of February 18, 2022, David Gladstone, our chairman, chief executive officer, and president, and pursuant to an exception approved by our Board of Directors and in compliance with our charter, owned, directly or indirectly, including through certain foundations and trusts, approximately 7.3% of our common stock, and the Gladstone Future Trust, for the benefit of Mr.

Gladstone’s children, owned approximately 2.0% of our common stock.

The ownership restriction may discourage a change of control and may deter individuals or entities from making tender offers for our capital stock, which offers might otherwise be financially attractive to our stockholders or which might cause a change in our management.

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Our rights and the rights of our stockholders to take action against our directors and officers are limited.

Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be advisable and in our best interests and with the care that an ordinarily

prudent person in a like position would use under similar circumstances.

In addition, our charter (i) eliminates our directors’ and officers’ liability to us and our stockholders for money damages except for liability resulting from actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a final judgment and that is material to the cause of action and (ii) requires us to indemnify directors and officers for liability resulting from actions taken by them in those capacities to the maximum extent permitted by Maryland law.

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Holders of our common stock are not entitled to preemptive rights or other protection against dilutions.

As additional acquisition opportunities arise, we may issue additional shares of common stock or preferred stock, or we may issue OP Units, which are redeemable for

cash or, at our option, our common stock on a one-to-one basis, to raise the capital necessary to finance these acquisitions, thus potentially further diluting stockholders’ equity.

As additional acquisition opportunities arise, we may issue additional shares of common stock or preferred stock, or we may issue OP Units, which are redeemable for cash or, at our option, our common stock on a one-to-one basis, to raise the capital necessary to finance these acquisitions, thus potentially further diluting stockholders’ equity.

As such, our common stockholders bear the risk of our future offerings reducing the per-share trading price of our common stock and diluting their interest in us.

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We intend to pay out our income to our stockholders in a manner intended to satisfy the distribution requirement applicable to REITs and to avoid corporate income tax and the 4% excise tax.

Differences in timing between the recognition of income and the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of our taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year.

Differences in timing between the recognition of income and

the related cash receipts or the effect of required debt amortization payments could require us to borrow money or sell assets to pay out enough of our taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

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To facilitate compliance with this requirement, our charter prohibits any individual from owning more than 3.3% in value of our outstanding stock.

Pursuant to an exception from this limit contained in our charter, as of February 23, 2021, David Gladstone owned, directly or indirectly, including through certain foundations and trusts, approximately 9.4% of our outstanding common stock, and the Gladstone Future Trust, for the benefit of Mr.

Gladstone’s children, owned approximately 2.5% of our outstanding common stock.

For purposes of the REIT stock ownership diversification requirements, the shares owned by the Gladstone Future Trust are attributed to Mr.

Gladstone, resulting in Mr.

Gladstone having an aggregate beneficial ownership of 11.9% of our outstanding common stock.

Pursuant to an exception from this limit contained in our charter, as of February 18, 2022, David Gladstone owned, directly or indirectly, including through certain trusts, aggregate beneficial ownership of approximately 8.7% of our outstanding common stock.

In addition, the David and Lorna Gladstone Foundation, a private charitable foundation, owned approximately 0.6% of our outstanding common stock.

Our Board of Directors may also reduce the 3.3% ownership limitation if it determines that doing so is necessary for us to maintain our qualification for REIT treatment.

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The IRS may take the position that transactions in which we acquire a property and lease it back to the seller do not qualify as leases for federal income tax purposes but are, instead, financing arrangements or loans.

If a sale-leaseback transaction were so re-characterized, we might fail to satisfy the asset or income tests required for REIT qualification and consequently could lose

our REIT status.

If a sale-leaseback transaction were so re-characterized, we might fail to satisfy the asset or income tests required for REIT qualification and consequently could lose our REIT status.

Alternatively, the amount of our REIT taxable income could be recalculated, which could cause us to fail the distribution test for REIT qualification.

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One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, which is our distribution rate as a percentage of our share price, relative to market interest rates.

If market interest rates increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher dividends or interest.

If market interest rates increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher

dividends or interest.

The market price of our common stock likely will be based primarily on the earnings that we derive from rental income with respect to our properties and our related distributions to stockholders, and not from the underlying appraised value of the properties themselves.

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Even if the Series C Preferred Stock is listed on Nasdaq or another national securities exchange within one calendar year of the offering’s termination date, as anticipated, there is a risk that such shares may be thinly traded, and the market for such shares may be relatively illiquid compared to the market for other types of securities, with the spread between the bid and asked prices considerably greater than the spreads of other securities with comparable terms and features.

Additionally, our charter contains restrictions on the ownership and transfer of our securities, including the Series C Preferred Stock, and these restrictions may inhibit your ability to sell the Series C Preferred Stock promptly, or at all.

C Preferred Stock promptly, or at all.

Also, since the Series C Preferred Stock does not have a stated maturity date, you may be forced to hold your Series C Preferred Stock and receive stated dividends on the shares of Series C Preferred Stock when, as, and if authorized by our Board of Directors and declared by us with no assurance as to ever receiving the liquidation preference.

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The Series C Preferred Stock is a “covered security” and therefore is not subject to registration under the state securities, or “Blue Sky,” regulations in the various states in which it may be sold due to its seniority to our common stock, which is listed on Nasdaq.

If our common stock, Series B Preferred Stock, and Series D Term Preferred Stock are all no longer listed on Nasdaq or another national securities exchange, we will be required to register this offering in any state in which we offer shares of the Series C Preferred Stock.

In the event that our common stock, Series B Preferred Stock, and Series D Term Preferred Stock are all no longer listed on Nasdaq or another national securities exchange, we will be required to register this offering in any state in which we offer shares of the Series C Preferred Stock.

This would require the termination of this offering and could result in our raising an amount of gross proceeds that is substantially less than the amount of the gross proceeds we expect to raise if the maximum amount of the Series C Offering is sold.

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The Series B Preferred Stock, Series C Preferred Stock, and Series D Term Preferred Stock will bear a risk of redemption by us.

We may voluntarily redeem some or all of the Series B Preferred Stock at any time after March 9, 2021.

We may voluntarily redeem some or all of the Series B Preferred Stock at any time on or after June 1, 2022.

In addition, we may voluntarily redeem some or all of the Series C Preferred Stock on or after the first anniversary of the offering’s termination date.

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On and after January 31, 2023, and before January 31, 2026, we may, at our option, redeem the Series D Term Preferred Stock, in whole or in part, at any time or from time to time.

We may have an incentive to redeem any of our series of preferred stock voluntarily if market conditions allow us to issue other preferred stock or debt securities at a dividend or interest rate that is lower than the dividend rate on such series of preferred stock.

We may have an incentive to redeem any of our series of preferred stock voluntarily if market conditions allow us to issue common stock, other preferred stock, or debt securities at a dividend or interest rate that is lower than the dividend rate on such series of preferred stock.

UNRESOLVED STAFF COMMENTS

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

What changed 10-K

Item 1A. Risk Factors