What changed in this filing

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Item 1. Financial Statements

2021-04-29 compared with 2020-10-30 · 317 added, 330 removed, 391 unchanged (62% of the section changed)

4 unchanged sentences

(in thousands, except share and per share data)

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Real estate, at cost:

3 unchanged sentences

Less accumulated depreciation ( 14,157 ) ( 10,111 )

Property under development 1,346 —

Real estate held for investment, net 611,430 537,622

6 unchanged sentences

Term loan, net $ 174,161 $ 174,105

Revolving credit facility 13,000 —

Lease intangible liabilities, net 18,895 16,930

3 unchanged sentences

Commitments and contingencies

Shareholders’ equity

Stockholders’ equity

Common stock, $ 0.01 par value, 400,000,000 shares authorized;

25,734,474 and 8,860,760 shares issued and outstanding;

as of September 30, 2020 and December 31, 2019, respectively

28,467,117 and 28,203,545 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 506,432 501,045

(Deficit)/Retained earnings ( 5,984 ) 28

Accumulated other comprehensive loss ( 110 ) —

Total shareholders’ equity 447,074 164,533

Retained (loss) earnings ( 12,582 ) ( 7,464 )

Accumulated other comprehensive income 2,434 235

Total stockholders’ equity 496,569 494,098

Noncontrolling interests 28,909 33,975

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share data)

Successor Predecessor Successor Predecessor

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Rental revenue (including reimbursable) $ 11,932 $ 5,508

8 unchanged sentences

Interest expense, net ( 905 ) ( 1,699 )

Gain on sales of real estate 54 1,674 1,070 5,773

Gain on forfeited earnest money deposit — 250

Total other expense ( 964 ) ( 775 ) ( 2,495 ) ( 2,576 )

Net loss ( 2,341 ) ( 2,740 ) ( 4,298 ) ( 4,550 )

Net loss attributable to noncontrolling interests ( 263 ) — ( 799 ) —

Net loss attributable to common shareholders ( 2,078 ) ( 2,740 ) ( 3,499 ) ( 4,550 )

Cumulative preferred stock dividends and redemption premium 36 — 42 —

Net loss attributable to common shareholders $ ( 2,114 ) $ ( 2,740 ) $ ( 3,541 ) $ ( 4,550 )

Total other income (expense), net ( 905 ) ( 1,449 )

Net income (loss) before income tax expense 791 ( 1,552 )

Income tax expense ( 50 ) —

Net income (loss) 741 ( 1,552 )

Net income (loss) attributable to noncontrolling interests 40 ( 425 )

Net income (loss) attributable to common shareholders $ 701 $ ( 1,127 )

Amounts available to common shareholders per common share:

Basic $ ( 0.11 ) N/A $ ( 0.26 ) N/A

Diluted $ ( 0.11 ) N/A $ ( 0.26 ) N/A

Basic $ 0.02 $ ( 0.10 )

Diluted $ 0.02 $ ( 0.10 )

Weighted average common shares:

Basic 18,825,389 N/A 13,771,457 N/A

Diluted 18,825,389 N/A 13,771,457 N/A

Other comprehensive loss:

Net loss $ ( 2,341 ) $ ( 2,740 ) $ ( 4,298 ) $ ( 4,550 )

Unrealized (loss) gain on derivatives, net ( 128 ) — ( 128 ) 55

Total comprehensive loss ( 2,469 ) ( 2,740 ) ( 4,426 ) ( 4,495 )

Comprehensive loss attributable to noncontrolling interests ( 281 ) — ( 817 ) —

Comprehensive loss attributable to common shareholders $ ( 2,188 ) $ ( 2,740 ) $ ( 3,609 ) $ ( 4,495 )

Basic 28,348,975 11,797,645

Diluted 30,052,940 11,797,645

Other comprehensive income (loss):

Net income (loss) $ 741 $ ( 1,552 )

Change in unrealized gain on derivatives, net 2,323 —

Total comprehensive income (loss) 3,064 ( 1,552 )

Comprehensive income (loss) attributable to noncontrolling interests 164 ( 425 )

Comprehensive income (loss) attributable to common shareholders $ 2,900 $ ( 1,127 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

Shares Par Value Shares Par Value Additional

Paid-in Capital (Deficit)/ Retained Earnings Accumulated Other Comprehensive Income (Loss) Shareholders’ Equity Partners’ Capital Noncontrolling Interests Total Equity

Paid-in Capital Retained (Loss) Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Noncontrolling Interests Total Equity

Balance at December 31, 2019 — $ — 8,860,760 $ 89 $ 164,416 $ 28 $ — $ 164,533 $ 87,899 $ 252,432

Partners’ contribution — — — — — — — — 537 — 537

Partners’ distribution — — — — — — — — ( 3,600 ) — ( 3,600 )

Issuance of preferred stock 125 125 — — — — — 125 — 125

Offering and related costs of preferred stock — ( 21 ) — — — — — ( 21 ) — ( 21 )

Issuance of common stock in private offering — — 2,936,885 29 57,974 — — 58,003 — 58,003

Offering and related costs of common stock — — — — ( 3,444 ) — — ( 3,444 ) — ( 3,444 )

Net loss — — — — — ( 1,127 ) — ( 1,127 ) ( 425 ) ( 1,552 )

Other comprehensive income — — — — — — — — 24 — 24

Balance at March 31, 2020 125 $ 104 11,797,645 $ 118 $ 218,946 $ ( 1,099 ) $ — $ 218,069 $ 87,474 $ 305,543

Partners’ contribution — — — — — — — — — — —

Partners’ distribution — — — — — — — — ( 1,926 ) — ( 1,926 )

Net income — — — — — — — — 1,266 — 1,266

Other comprehensive income — — — — — — — — 31 — 31

Balance at June 30, 2019 — $ — — $ — $ — $ — $ — $ — $ 76,004 $ — $ 76,004

Partners’ contribution — — — — — — — — — — —

Partners’ distribution — — — — — — — — — — —

Net loss — — — — — — — — ( 2,740 ) — ( 2,740 )

Other comprehensive income — — — — — — — — — — —

Balance at September 30, 2019 — $ — — $ — $ — $ — $ — $ — $ 73,264 $ — $ 73,264

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

Shares Par Value Shares Par Value Additional

Paid-in Capital (Deficit)/ Retained Earnings Accumulated Other Comprehensive Loss Shareholders’ Equity Partners’ Capital Noncontrolling Interests Total Equity

Paid-in Capital Retained (Loss) Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Noncontrolling Interests Total Equity

Balance at December 31, 2020 — $ — 28,203,545 $ 282 $ 501,045 $ ( 7,464 ) $ 235 $ 494,098 $ 33,975 $ 528,073

Issuance of preferred stock 125 125 — — — — — 125 — — 125

Offering and related costs of preferred stock — ( 21 ) — — — — — ( 21 ) — — ( 21 )

Issuance of common stock in private offering — — 2,936,885 29 57,974 — — 58,003 — — 58,003

Offering and related costs of common stock — — — — ( 3,444 ) — — ( 3,444 ) — — ( 3,444 )

Net loss — — — — — ( 1,127 ) — ( 1,127 ) — ( 425 ) ( 1,552 )

Balance at March 31, 2020 125 $ 104 11,797,645 $ 118 $ 218,946 $ ( 1,099 ) $ — $ 218,069 $ — $ 87,474 $ 305,543

Dividends declared and paid on preferred stock — — — — — ( 6 ) — ( 6 ) — — ( 6 )

Net loss — — — — — ( 294 ) — ( 294 ) — ( 111 ) ( 405 )

Balance at June 30, 2020 125 $ 104 11,797,645 $ 118 $ 218,946 $ ( 1,399 ) $ — $ 217,769 $ — $ 87,363 $ 305,132

Issuance of common stock in initial public offering — — 13,681,561 136 246,132 — — 246,268 — — 246,268

Offering and related costs of common stock — — — — ( 18,947 ) — — ( 18,947 ) — — ( 18,947 )

Dividends declared on preferred stock — — — — — ( 2 ) — ( 2 ) — — ( 2 )

OP Units converted to common stock — — 253,344 3 4,920 — — 4,923 ( 4,923 ) —

Dividends and distributions declared on common stock and OP units — — — — — ( 5,687 ) — ( 5,687 ) ( 307 ) ( 5,994 )

Dividends declared on restricted stock — — — — — ( 132 ) — ( 132 ) — ( 132 )

Redemption of preferred stock upon initial public offering ( 125 ) ( 104 ) — — — ( 34 ) — ( 138 ) — — ( 138 )

Redemption of OP Units and issuance of common stock in initial public offering — — 255,268 3 5,027 — — 5,030 — ( 5,030 ) —

Vesting of restricted stock units — — 15,190 — — — — — — —

Repurchase of common stock for tax withholding obligations — — ( 4,962 ) — ( 90 ) — — ( 90 ) — ( 90 )

Stock-based compensation — — — — 557 — 557 — 557

Other comprehensive loss — — — — — — ( 110 ) ( 110 ) — ( 18 ) ( 128 )

Net loss — — — — — ( 2,078 ) — ( 2,078 ) — ( 263 ) ( 2,341 )

Balance at September 30, 2020 — $ — 25,734,474 $ 257 $ 452,911 $ ( 5,984 ) $ ( 110 ) $ 447,074 $ — $ 81,633 $ 528,707

Other comprehensive income — — — — — — 2,199 2,199 124 2,323

Net income — — — — — 701 — 701 40 741

Balance at March 31, 2021 — $ — 28,467,117 $ 285 $ 506,432 $ ( 12,582 ) $ 2,434 $ 496,569 $ 28,909 $ 525,478

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

(in thousands, except share and per share data)

Successor Predecessor

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

Net loss $ ( 4,298 ) $ ( 4,550 )

Adjustments to reconcile net loss to net cash from operating activities:

Net income (loss) $ 741 $ ( 1,552 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 5,929 2,346

Amortization of deferred financing costs 157 152

Amortization of above/below-market assumed debt — ( 13 )

Noncash revenue adjustments ( 430 ) ( 146 )

Stock-based compensation expense 557 —

Gain on sale of real estate ( 1,070 ) ( 5,773 )

Gain on forfeited earnest money deposit — ( 250 )

3 unchanged sentences

Accounts payable, accrued expenses and other liabilities ( 1,644 ) 1,024

Lessee improvement obligations ( 1,893 ) —

Net cash provided by operating activities 4,270 891

1 unchanged sentence

Acquisitions of real estate ( 88,225 ) ( 74,166 )

Real estate improvements ( 1,268 ) ( 450 )

Real estate development ( 1,346 ) —

Earnest money deposits ( 451 ) ( 1,091 )

Purchase of computer equipment ( 51 ) —

Proceeds from sale of real estate — 548

Net cash (used in) provided by investing activities ( 316,922 ) 68,671

Net cash used in investing activities ( 90,022 ) ( 74,709 )

Cash flows from financing activities

Issuance of common stock in initial public offering, net 227,321 —

Issuance of common stock in private offering, net — 54,559

Issuance of preferred stock, net — 104

Payment of preferred stock dividends ( 8 ) —

Payment of common stock dividends ( 5,687 ) —

Payment of OP unit distributions ( 307 ) —

Redemption of preferred stock, net ( 138 ) —

Proceeds from term loans — 708

Principal payments on term loans — ( 53,811 )

Principal payments on mortgages payable — ( 14,756 )

Payment of restricted stock dividends ( 5 ) —

Proceeds under revolving credit facility 13,000 —

Repayments under revolving credit facility ( 50,000 ) —

Deferred financing costs ( 75 ) ( 199 )

Partners’ contributions — 537

Partners’ distributions — ( 5,526 )

Net cash provided by (used in) financing activities 278,914 ( 73,047 )

Net change in cash and cash equivalents ( 32,309 ) 922

Repurchase of common stock for tax withholding obligations ( 90 ) —

Deferred offering costs ( 86 ) ( 287 )

Net cash provided by financing activities 6,825 54,376

Net change in cash, cash equivalents and restricted cash ( 78,927 ) ( 19,442 )

Cash, cash equivalents and restricted cash at beginning of the period 92,643 169,319

3 unchanged sentences

Supplemental disclosures of non-cash investing and financing activities:

Redemption of OP units and issuance of common stock upon initial public offering $ 5,030 $ —

Reclassification of deferred offering expenses to additional paid-in capital upon initial public offering $ 4,171 $ —

Dividends declared on restricted stock $ 41 $ —

OP units converted into common stock $ 4,923 $ —

Dividends declared and unpaid on restricted stock $ 132 $ —

Deferred offering costs included in accounts payable, accrued expenses and other liabilities $ 526 $ 371

Cash flow hedge change in fair value $ 2,323 $ —

14 unchanged sentences

The Company is structured as an umbrella partnership real estate investment trust (commonly referred to as an “UPREIT”) and is an internally managed real estate company that acquires, owns and manages a diversified portfolio of single-tenant, retail commercial real estate leased on a long-term basis to high credit quality tenants across the United States.

As of September 30, 2020, the Company owned 189 properties, located in 37 states.

As of March 31, 2021, the Company owned 234 properties, located in 39 states with a non-binding option to purchase one property currently under development.

Private Offering and Formation Transactions

2 unchanged sentences

On January 30, 2020, the initial purchaser in the Private Offering exercised its over-allotment option to purchase 2,936,885 shares of the Company’s common stock, which were delivered on February 6, 2020.

The Company contributed the net proceeds of $ 219.0 million from the Private Offering to the Operating Partnership in exchange for 11,797,645 Class A Operating Partnership Units (“OP Units”).

Upon completion of the Private Offering and the over-allotment option, non-controlling interest holders owned approximately 27.4 % of the Operating Partnership (the Operating Partnership issued total Class A and Class B OP Units of 15,449,794 and 796,870 , respectively).

Concurrently with the closing of the Private Offering, EverSTAR Income and Value Fund V, LP, a Delaware limited partnership (the “Predecessor”), was merged with and into the Operating Partnership, with the Operating Partnership surviving, and the continuing investors in the Operating Partnership receiving an aggregate of 3,652,149 Class A OP Units, other than the Chief Executive Officer of the Company, who received 8,884 Class B OP Units, and an affiliate of the Predecessor’s general partner, which received 287,234 Class B OP Units.

The Company contributed the net proceeds of $ 219.0 million from the Private Offering to the Operating Partnership in exchange for 11,797,645 Class A units of limited partnership of the Operating Partnership (“Class A OP Units”).

Upon completion of the Private Offering and the over-allotment option, noncontrolling interest holders owned approximately 27.4 % of the Operating Partnership (the Operating Partnership issued total Class A and Class B OP Units of 15,449,794 and 796,870 , respectively).

Concurrently with the closing of the Private Offering, EverSTAR Income and Value Fund V, LP, a Delaware limited partnership (the “Predecessor”), was merged with and into the Operating Partnership, with the Operating Partnership surviving, and the continuing investors in the Operating Partnership receiving an aggregate of 3,652,149 Class A OP Units, other than the Chief Executive Officer of the Company, who received 8,884 Class B units of limited partnership of the Operating Partnership (“Class B OP Units,” and collectively with Class A OP Units, “OP Units”), and an affiliate of the Predecessor’s general partner, which received 287,234 Class B OP Units.

The Operating Partnership entered into a contribution agreement with EBA EverSTAR LLC, a Texas limited liability company, to internalize the Company’s management infrastructure, whereby EBA EverSTAR LLC contributed 100 % of the membership interests in EBA EverSTAR Management, LLC, a Texas limited liability company and the manager of the Predecessor, to the Operating Partnership in exchange for 500,752 Class B OP Units.

8 unchanged sentences

The Company redeemed all 125 outstanding shares of Series A Preferred Stock upon the completion of the initial public offering.

See "Note 9 - Shareholders’ Equity, Partners’ Capital and Preferred Equity."

Initial Public Offering

3 unchanged sentences

On September 16, 2020, the Company issued an additional 1,436,829 shares of its common stock pursuant to the underwriters' over-allotment option in connection with the Company's initial public offering.

The net proceeds to the Company from the initial public offering was $ 227.3 million, which is net of transaction costs and

underwriter fees of $ 18.9 million.

The net proceeds to the Company from the initial public offering was $ 227.3 million, which is net of transaction costs and underwriter fees of $ 18.9 million.

The Company contributed the net proceeds of the initial public offering and related over-allotment option to the Operating Partnership in exchange for 13,681,561 Class A OP Units.

In addition, an equivalent number of Class A OP Units were issued for the 255,268 shares sold by selling stockholders.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying interim condensed consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (GAAP) and the rules and regulations of the U.S.

Securities and Exchange Commission (SEC).

The accompanying condensed consolidated financial statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest.

All intercompany accounts and transactions have been eliminated in consolidation and the Company’s net loss is reduced by the portion of net loss attributable to non-controlling interests.

For the periods prior to December 23, 2019, the accompanying condensed consolidated financial statements represent the historical financial information of the Predecessor.

For the periods after December 23, 2019, the accompanying consolidated financial statements represent the historical financial information of the Successor.

As a result of the Company’s formation transactions, the consolidated financial statements after December 23, 2019 are presented on a new basis of accounting pursuant to Accounting Standards Codification 805, Business Combinations.

All intercompany accounts and transactions have been eliminated in consolidation and the Company’s net income (loss) is reduced by the portion of net income (loss) attributable to noncontrolling interests.

Interim Unaudited Financial Information

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

These unaudited condensed consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements included in the Company's registration statement on Form S-11 and notes thereto as of and for the year ended December 31, 2019, which provide a more complete understanding of the Company’s accounting policies, financial position, operating results, business properties, and other matters.

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

These unaudited interim condensed consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto on the Annual Report on Form 10-K as of and for the year ended December 31, 2020, which provide a more complete understanding of the Company’s accounting policies, financial position, operating results, business properties, and other matters.

In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation have been included.

The results of operations for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results for the full year.

The results of operations for the three months ended March 31, 2021 and 2020 are not necessarily indicative of the results for the full year.

Noncontrolling Interests

The Company presents noncontrolling interests, which represents OP Units, and classifies such interests as a component of permanent equity, separate from the Company's common stock shareholders' equity.

The Company presents noncontrolling interests, which represents OP Units, and classifies such interests as a component of permanent equity, separate from the Company's stockholders’ equity.

Noncontrolling interests were created as part of an asset acquisition and recognized at fair value as of the date of the transaction.

1 unchanged sentence

The election to pay cash or issue common stock is solely within the control of the Company to satisfy a noncontrolling interest holder's redemption request.

Net income or loss of the Operating Partnership is allocated to its noncontrolling interests based on the noncontrolling interests' ownership percentages in the Operating Partnership.

Ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units outstanding at the balance sheet date.

Net income or loss of the Operating Partnership is allocated to its noncontrolling interests based on the noncontrolling interests’ ownership percentages in the Operating Partnership throughout the period.

Ownership percentage is calculated by dividing the number of OP Units held by the noncontrolling interests by the total OP Units outstanding.

Use of Estimates

4 unchanged sentences

The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known.

Further, the uncertainty over the ultimate impact COVID-19 will have on the global economy and the Company’s business makes any estimates and assumptions as of September 30, 2020 inherently less certain than they would be absent the current and potential impacts of COVID-19.

Further, the uncertainty over the ultimate impact COVID-19 will have on the global economy and the Company’s business makes any estimates and assumptions as of March 31, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19.

Actual results could differ from those estimates.

Reclassifications

Certain reclassifications have been made to conform with current period presentation of transactions costs within the condensed consolidated financial statements.

Transaction costs were previously included within the caption "general and administrative".

Certain reclassifications have been made to conform with current period presentation.

Transaction costs within the condensed consolidated statements of operations and comprehensive income (loss) were previously included within the caption “general and administrative.”

Risk and Uncertainties

4 unchanged sentences

As a result, the Company is not yet able to determine the full impact of COVID-19 on its operations, and therefore, whether any such impact will be material.

However, the Company’s operations and cash flows during the three and nine months ended September 30, 2020 were not materially impacted by COVID-19.

As of October 29, 2020, the Company has collected 100.0 % of October rent payments.

However, the Company’s operations and cash flows during the three months ended March 31, 2021 and 2020 were not materially impacted by COVID-19.

The Company has collected 100.0 % of all rent payments for the three months ended March 31, 2021.

In addition, the Company has not provided for any abatements or deferrals after August 1, 2020.

5 unchanged sentences

Assets are recognized at fair value at acquisition date.

For properties developed by the Company, all direct and indirect costs related to planning, development and construction, including interest, real estate taxes and other miscellaneous costs incurred during the construction period, are capitalized for financial reporting purposes and recorded as property under development until construction has been completed.

The Company evaluates each acquisition transaction to determine whether the acquired asset meets the definition of a business and therefore accounted for as a business combination or if the acquisition transaction should be accounted for as an asset acquisition.

Under Accounting Standards Update (“ASU”) 2017-01, “Business Combinations (Topic 805):

Clarifying the Definition of a Business” (“ASU 2017-01”), an acquisition does not qualify as a business when substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets or the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort or delay.

effort or delay.

Transaction costs related to acquisitions that qualify as asset acquisitions are capitalized as part of the cost basis of the acquired assets, while transaction costs for acquisitions that are deemed to be acquisitions of a business are expensed as incurred.

11 unchanged sentences

Additionally, the Company considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets and liabilities acquired.

Based on these inputs for measuring and allocating the fair value of real estate acquisitions, the Company utilizes both observable market data (categorized as level 2 on the three-level valuation hierarchy of Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement), and unobservable inputs that reflect the Company’s own internal assumptions (categorized as level 3 under ASC Topic 820).

Depreciation and Amortization

6 unchanged sentences

Computer equipment 3 years

Total depreciation and amortization expense was $ 4.7 million and $ 2.7 million during the three months ended September 30, 2020 and 2019, respectively.

Total depreciation and amortization expense was $ 10.2 million and $ 8.1 million during the nine months ended September 30, 2020 and 2019, respectively.

Depreciation expense on real estate held for investment and computer equipment was $ 3.2 million and $ 2.2 million during the three months ended September 30, 2020 and 2019, respectively.

Depreciation expense on real estate held for investment and computer equipment was $ 7.0 million and $ 6.5 million during the nine months ended September 30, 2020 and 2019, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets, and leasing commission costs were $ 1.4 million and $ 0.5 million during the three months ended September 30, 2020 and 2019.

Amortization expense on acquired in-place lease and assembled workforce intangible assets, and leasing commission costs were $ 3.1 million and $ 1.6 million during the nine months ended September 30, 2020 and 2019.

Total depreciation and amortization expense was $ 5.9 million and $ 2.3 million during the three months ended March 31, 2021 and 2020, respectively.

Depreciation expense on real estate held for investment and computer equipment was $ 4.1 million and $ 1.6 million during the three months ended March 31, 2021 and 2020, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets, and leasing commission costs were $ 1.8 million and $ 0.7 million during the three months ended March 31, 2021 and 2020, respectively.

Repairs and maintenance are charged to operations as incurred;

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Only disposals representing a strategic shift in operations are presented as discontinued operations.

Accordingly, we have not reclassified results of operations for properties disposed during the year or held for sale as discontinued operations, as these events are a normal part of the Company’s operations and do not represent strategic shifts in the Company’s operations.

As of September 30, 2020 and December 31, 2019, there were eight and two properties, respectively, classified as held for sale.

Accordingly, we have not reclassified results of operations for properties disposed during the interim period ended March 31, 2021 or held for sale as discontinued operations, as these events are a normal part of the Company’s operations and do not represent strategic shifts in the Company’s operations.

As of March 31, 2021 and December 31, 2020, there were five and three properties, respectively, classified as held for sale.

Impairment of Long-Lived Assets

The Company reviews for impairment whenever indicators of impairment exist, including giving consideration to factors related to the COVID-19 outbreak.

Fair value measurement of an asset occurs when events or changes in circumstances related to an asset indicate that the carrying amount of the asset is no longer recoverable.

If indicators are present, the Company will prepare a projection of the undiscounted future cash flows of the property, excluding interest charges, and determine if the carrying amount of the real estate is recoverable.

When a carrying amount is not recoverable, an impairment loss is recognized to the extent that the carrying amount of the asset exceeds its fair market value.

The Company estimates fair value using data such as operating income, estimated capitalization rates or multiples, leasing prospects, local market information, and with regard to assets held for sale, based on the negotiated selling price, less estimated costs of disposal.

The Company estimates fair value using data such as operating income, estimated capitalization rates or multiples, leasing prospects, local market information, and with regard to assets held for sale, based on the estimated or negotiated selling price, less estimated costs of disposal.

Based on these unobservable inputs, the Company determined that its valuations of impaired real estate and intangible assets fall within Level 3 of the fair value hierarchy under ASC Topic 820.

The following table summarizes the provision for impairment during the periods indicated below (in thousands):

Successor Predecessor Successor Predecessor

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Three Months Ended

Total provision for impairment $ 69 $ —

2 unchanged sentences

Disposed within the period — —

(1) Includes properties that are impaired and/(or) impaired and held for sale as of the end of the respective periods.

(1) Includes the number of properties that were impaired and classified as held for sale or impaired and disposed of during the respective periods.

Excludes properties that did not have impairment recorded during the year.

Cash, Cash Equivalents and Restricted Cash

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Restricted cash includes cash restricted for property tenant improvements and cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Code.

The Company’s bank balances as of September 30, 2020 and December 31, 2019 include certain amounts over the Federal Deposit Insurance Corporation limits.

The Company had less than $ 0.1 million of restricted cash as of March 31, 2021, which was included in cash, cash equivalents, and restricted cash on the condensed consolidated balance sheets.

The Company had $ 14.8 million of restricted cash as of December 31, 2020.

The Company’s bank balances as of March 31, 2021 and December 31, 2020 include certain amounts over the Federal Deposit Insurance Corporation limits.

Revenue Recognition and Related Matters

The Company’s rental revenue is primarily related to rent received from tenants under leases accounted for as operating leases.

Rent from leases that have fixed and determinable rent increases is recognized on a straight-line basis over the non-cancellable initial term of the lease and reasonably certain renewal periods, from the later of the date of the commencement of the lease or the date of acquisition of the property subject to the lease.

The difference between rental revenue recognized and the cash rent due under the provisions of the lease is recorded as deferred rent receivable and included as a component of other assets in the consolidated balance sheets.

the date of acquisition of the property subject to the lease.

Variable lease revenues include tenant reimbursements, lease termination fees, changes in the index or market-based indices after the inception of the lease or percentage rents.

Variable lease revenues are not recognized until the specific events that trigger the variable payments have occurred.

The Company and its Predecessor recognized variable lease revenue related to tenant reimbursements and lease termination fees for the periods presented.

The Company recognized variable lease revenue related to tenant reimbursements and lease termination fees for the periods presented.

Capitalized above-market and below-market lease values are amortized on a straight-line basis as a reduction or increase of rental revenue as appropriate over the remaining non-cancellable terms of the respective leases.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2014-09, “Revenue from Contracts with Customers”, which was added to the ASC under Topic 606 (“ASC 606”) (“ASU 2014-09”).

ASC 606 outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers.

As the Company’s revenues are primarily generated through leasing arrangements, and the Company has elected the lessor practical expedient to report income on one line within its condensed consolidated statements of operations and comprehensive loss from the associated lease for all existing and new leases under ASU 2016-02, “Leases (ASC 842)”, the Company’s revenues fall outside the scope of this standard.

An allowance for doubtful accounts is provided against the portion of accounts receivable, net including straight-line rents, which is estimated to be uncollectible, which includes a portfolio-based reserve and reserves for specific disputed amounts.

Such allowances are reviewed each period based upon recovery experience and the specific facts of each outstanding amount.

As of March 31, 2021 and December 31, 2020, there was no allowance for doubtful accounts.

Stock-Based Compensation

The Company has a share-based compensation award program for our employees and directors.

Stock-based compensation expense associated with these awards is recognized in general and administrative expenses in our condensed consolidated statements of operations and comprehensive loss.

We measure stock-based compensation at the estimated fair value on the grant date and recognize the amortization of stock-based compensation expense over the requisite service or performance period.

Stock-based compensation expense associated with these awards is recognized in general and administrative expenses in our condensed consolidated statements of operations and comprehensive income (loss).

We classify stock-based payment awards either as equity awards or liability awards based upon an analysis of ASC 718 and ASC 480.

Equity classified awards are measured based on the fair value on the date of grant.

Liability classified awards are remeasured to fair value each reporting period.

Stock-based compensation expense is recognized over the requisite service or performance period.

The Company recognizes forfeitures as they occur.

Transaction Costs

Represents costs incurred by the Company to facilitate the private offering and formation transactions and the initial public offering.

These costs were $ 0.9 million and $ 2.2 million during the three and nine months ended September 30, 2020, respectively, with no costs in 2019.

In addition, transaction costs include expenses associated with abandoned acquisitions and other acquisition related activity.

Acquisition related expenses were $ 0.3 million and $ 0.8 million for the three and nine months ended September 30, 2020, respectively, and $ 0.1 million for both the three and nine months ended September 30, 2019.

Transaction costs represent costs incurred by the Company to facilitate the private offering, formation transactions and the initial public offering.

In addition, transaction costs include the costs associated with abandoned acquisitions and other acquisition related activity.

There were no offering costs incurred during the three months ended March 31, 2021.

Offering costs for the three months ended March 31, 2020 were $ 0.7 million.

Acquisition related expenses were $ 0.2 million and $ 0.4 million for the three months ended March 31, 2021 and 2020, respectively.

The Company elected to be treated and qualify as a REIT for U.S.

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federal or state income tax to the extent that it makes qualifying distributions of all of its taxable income to its shareholders and provided it satisfies on a continuing basis, through actual investment and operating results, the REIT requirements, including certain asset, income, distribution and share ownership tests.

To maintain the status of a REIT, the Company is required to declare and pay a dividend of $ 0.2 million relating to its 2019 fiscal period by December 31, 2020.

Accordingly, the Company declared and paid a $ 2.8 million dividend in the second half of 2020 which was inclusive of the $ 0.2 million obligation for 2019.

The Company intends to make sufficient distributions during 2021 to receive a full dividends paid deduction.

The Company made a joint election with NETSTREIT TRS for it to be treated as a taxable REIT subsidiary which may be subject to U.S.

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In general, NETSTREIT TRS may perform services for tenants of the Company, hold assets that the Company cannot hold directly and may engage in any real estate or non-real estate-related business.

As of September 30, 2020, the Company has no provision for state, local or federal income taxes in its condensed consolidated financial statements.

During three months ended March 31, 2021, the Company recognized state and local and franchise tax expense which is included in income tax expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss).

Earnings Per Share

Earnings per common share has been computed pursuant to the guidance in FASB ASC Topic 260, Earnings per Share.

Basic earnings per share (“EPS”) are computed by dividing net loss allocated to common shareholders by the weighted-average number of common shares outstanding for the reporting period.

Basic earnings per share (“EPS”) is computed by dividing net income (loss) allocated to common stockholders by the weighted-average number of common shares outstanding for the reporting period.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.

No effect is shown for any securities that are anti-dilutive.

Net loss allocated to common shareholders represents net loss less income allocated to participating securities and non-controlling interests.

Net income (loss) allocated to common stockholders represents net income (loss) less income allocated to participating securities and noncontrolling interests.

None of the Company’s equity awards are participating securities.

Fair Value Measurement

Fair value measurements are utilized in the accounting of the Company’s assets acquired and liabilities acquired in an asset acquisition and also affect the Company’s accounting for certain of its financial assets and liabilities.

Fair value measurements are utilized in the accounting of the Company’s assets acquired and liabilities assumed in an asset acquisition and also affect the Company’s accounting for certain of its financial assets and liabilities.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).

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See “Note 6 - Debt” and “Note 7 - Derivative Financial Instruments,” respectively;

– Level 2 and Level 3 inputs when assessing the fair value of assets and liabilities acquired in connection with real estate acquisitions.

See "Note 4 - Acquisition and Disposition of Real Estate."

– Level 2 and Level 3 inputs when assessing the fair value of assets and liabilities in connection with real estate acquisitions and impairment.

See “Note 4 - Real Estate Investments.”

The fair value of the Company’s cash, cash equivalents and restricted cash (including money market accounts), other assets and accounts payable, accrued expenses and other liabilities approximate their carrying value because of the short-term nature of these instruments.

Provisions for impairments recognized in the three and nine months ended September 30, 2020 and 2019 related to assets held for sale and the impairment was determined based on the negotiated selling price, less costs of disposal, compared to the carrying value of the property.

Provisions for impairments recognized in the three months ended March 31, 2021 and 2020 related to assets held for sale and the impairment was determined based on the estimated or negotiated selling price, less costs of disposal, compared to the carrying value of the property.

Concentrations of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents.

The Company is exposed to credit risk with respect to cash held at various financial institutions, access to its credit facilities, and amounts due or payable under derivative contracts.

The Company is exposed to credit risk with respect to cash held at various financial institutions, access to its Credit Facility, and amounts due or payable under derivative contracts.

The credit risk exposure with regard to the Company’s cash, credit facilities, and derivative instruments is spread among a diversified group of investment grade financial institutions.

The Company’s rental revenues are derived from 56 separate tenants leasing 190 total properties for the three and nine months ended September 30, 2020.

For the three months ended September 30, 2020, one tenant, 7-Eleven, accounted for 12.2 % of rental revenue.

For the nine months ended September 30, 2020, there were no tenants with rental revenue that exceeded 10%.

The Predecessor’s rental revenues are derived from 41 separate tenants leasing 104 total properties and 47 separate tenants leasing 124 total properties for the three and nine months ended September 30, 2019, respectively.

For the three months ended September 30, 2019, two tenants, CVS and Dollar General, accounted for 11.5 % and 10.8 % of rental revenue, respectively.

For the nine months ended September 30, 2019, one tenant, CVS, accounted for 13.1 % of the rental revenue.

During the three months ended March 31, 2021, the Company’s rental revenues were derived from 63 separate tenants leasing 234 total properties.

During this period there were no tenants with rental revenue that exceeded 10% of total rental revenue.

During the three months ended March 31, 2020, the Company’s rental revenues were derived from 48 separate tenants leasing 117 total properties.

During this period there were no tenants with rental revenue that exceeded 10% of total rental revenue.

Segment Reporting

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There were no intersegment sales during the periods presented.

Recent Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”) which changes the model for the measurement of credit losses on financial instruments.

Specifically, the amendments in the ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

In November 2018, the FASB issued ASU 2018-19 “Codification Improvements to Topic 326, Financial Instruments - Credit Losses”, which clarifies that receivables arising from operating leases are not within the scope of this new guidance.

On January 1, 2020, the Company adopted ASU 2016-13.

The adoption of this standard has not materially impacted the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”).

This new guidance modified the disclosure requirements on fair value measurements.

Public entities are required to disclose the following:

(i) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

In addition, public entities will no longer be required to disclose the following:

(i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements.

The new pronouncement also clarifies and modifies certain existing provisions, including eliminating "at a minimum" from the phrase "an entity shall disclose at a minimum" to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures and clarifying that materiality is an appropriate consideration when evaluating disclosure requirements.

On January 1, 2020, the Company adopted ASU 2018-13.

The adoption of this standard has not materially impacted the Company's condensed consolidated financial statements.

In October 2018, the FASB issued ASU 2018-17, “Consolidation (Topic 810):

Targeted Improvements to Related Party Guidance for Variable Interest Entities” (“ASU 2018-17”).

ASU 2018-17 is intended to improve the accounting when considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests.

On January 1, 2020, the Company adopted ASU 2018-17.

The adoption of this standard has not materially impacted the Company’s condensed consolidated financial statements.

In April 2020, the FASB issued a question and answer document, “Topic 842 and Topic 840:

Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic” focused on the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 global pandemic.

Under existing lease guidance, the entity would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant, which would be accounted for under the lease modification framework, or if a lease concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework.

Entities can elect to not evaluate whether certain concessions provided by lessors to mitigate the effects of COVID-19 on lessees are lease modifications.

Entities that make this election can then elect to apply the lease modification guidance in ASC 842 or account for the concession as if it were contemplated as part of the existing contract.

For all leases when

the Company is a lessor, the Company elected to not evaluate whether certain concessions that do not result in a substantial increase in the Company’s rights as the lessor or the obligations of the lessee provided to mitigate the effects of COVID-19 on tenants are lease modifications, further electing to account for the concession as if it were contemplated as part of the existing contract.

On April 1, 2020, the Company adopted this guidance and determined that it has not materially impacted the Company's condensed consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”.

ASU 2020-06 simplifies accounting for convertible instruments by removing major separation models currently required.

Consequently, more convertible debt instruments will be reported as a single liability instrument and more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features.

ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it.

ASU 2020-06 also simplifies the diluted earnings per share calculation in certain areas.

ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption will be permitted.

The adoption of this standard will not materially impact the Company's consolidated financial statements.

Recent Accounting Pronouncements Issued But Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04 “Topic 848:

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The Company acquires, owns and manages commercial single-tenant lease properties, with the majority being long-term triple-net leases where the tenant is generally responsible for all improvements and contractually obligated to pay all operating costs (such as real estate taxes, utilities and repairs and maintenance costs).

As of September 30, 2020, the Company owned 189 single-tenant retail net leased properties spanning 37 states, with tenants representing 55 different brands or concepts across 23 retail sectors.

As of September 30, 2020, the remaining terms of leases range from 2 - 35 years.

As of March 31, 2021, the Company owned 234 single-tenant retail net leased properties spanning 39 states, with tenants representing 59 different brands or concepts across 23 retail sectors.

As of March 31, 2021, the remaining terms of leases range from 2 - 33 years.

The Company’s property leases have been classified as operating leases and some have scheduled rent increases throughout the lease term.

All lease-related income is reported as a single line item, rental revenue (including reimbursable), in the condensed consolidated statements of operations and comprehensive loss and is presented net of provision for doubtful accounts.

All lease-related income is reported as a single line item, rental revenue (including reimbursable), in the condensed consolidated statements of operations and comprehensive income (loss) and is presented net of provision for doubtful accounts.

There were no provisions for doubtful accounts during the three months ended March 31, 2021 and 2020.

The following table provides a disaggregation of lease income recognized under ASC 842 (in thousands):

Successor Predecessor Successor Predecessor

Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Three Months Ended

Rental revenue

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Variable lease income (2)

458 167 1,104 555

Other rental revenue:

Above/below market lease amortization 219 ( 105 ) 340 ( 486 )

Above/below market lease amortization, net 190 ( 8 )

Rental revenue (including reimbursables) $ 11,932 $ 5,508

(1) Fixed lease income includes contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term.

(2) Variable lease income primarily includes tenant reimbursements for real estate taxes, insurance, common area maintenance, lease termination fees, and the write-off of doubtful accounts.

Note 4 – Acquisition and Disposition of Real Estate

During the nine months ended September 30, 2020, the Company acquired 98 properties for a total purchase price of $ 327.3 million, inclusive of $ 3.6 million of capitalized acquisition costs.

(2) Variable lease income primarily includes tenant reimbursements for real estate taxes, insurance, common area maintenance, and lease termination fees.

Scheduled future minimum base rental payments (excluding base rental payments from properties classified as held for sale and straight line rent adjustments for all properties) due to be received under the remaining non-cancelable term of the operating leases in place as of March 31, 2021 are as follows (in thousands):

Future Minimum Base

Rental Receipts

Remainder of 2021 $ 35,206

Thereafter 261,749

Future minimum rentals exclude amounts that may be received from tenants for reimbursements of operating costs and property taxes.

In addition, the future minimum rents do not include any contingent rents based on a percentage of the lessees' gross sales or lease escalations based on future changes in the Consumer Price Index (“CPI”) or other stipulated reference rate.

Note 4 – Real Estate Investments

During the three months ended March 31, 2021, the Company acquired 31 properties for a total purchase price of $ 88.2 million, inclusive of $ 1.1 million of capitalized acquisition costs.

During the three months ended March 31, 2020, the Company acquired 24 properties for a total purchase price of $ 74.2 million, inclusive of $ 0.7 million of capitalized acquisition costs.

The acquisitions were all accounted for as asset acquisitions.

An allocation of the purchase price and acquisition costs paid for the completed acquisitions is as follows (in thousands):

For the Nine Months Ended September 30, 2020

Three Months Ended

Land $ 21,490 $ 30,261

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Tenant improvements 1,587 479

Lease in-place intangible assets 44,708

Lease above-market intangible assets 4,172

In-place lease intangible assets 10,942 8,741

Above-market lease intangible assets — 507

Construction-in-progress assets — 49

Fuel equipment 156

90,563 80,146

Liabilities assumed

Lease below-market intangible liabilities ( 13,484 )

Below-market lease intangible liabilities ( 2,338 ) ( 4,257 )

Accounts payable, accrued expense and other liabilities — ( 1,723 )

Purchase price (including acquisition costs) $ 88,225 $ 74,166

During the nine months ended September 30, 2019, the Company acquired one property for a total purchase price of $ 1.2 million, inclusive of $ 0.1 million of capitalized acquisition costs.

The acquisition was accounted for as an asset acquisition.

During the three months ended September 30, 2020, the Company sold one property for a total sales price, net of disposal costs, of $ 1.9 million, recognizing a gain on sale of $ 0.1 million.

During the nine months ended September 30, 2020, the Company sold three properties for a total sales price, net of disposal costs, of $ 11.8 million, recognizing a gain on sale of $ 1.1 million.

During 2019, the Company entered into an agreement to sell one property to a third-party and received a nonrefundable $ 0.3 million earnest money deposit, which upon termination of the agreement in the first quarter of 2020, was recognized as a gain.

During the three months ended September 30, 2019, the Predecessor sold five properties for a total sales price, net of disposal costs, of $ 11.4 million, recognizing a gain on sale of $ 1.7 million.

During the nine months ended September 30, 2019, the Predecessor sold 24 properties for a total sales price, net of disposal costs, of $ 70.4 million, recognizing a gain on sale of $ 5.8 million.

During the three months ended March 31, 2021, the Company invested a combined total of $ 1.3 million in a development project in Yuma, Arizona.

The Company has a non-binding purchase option to acquire the property upon completion.

The Company’s total investment is expected to be $ 4.4 million with the sole tenant in the property commencing lease payments in 2022.

These amounts are included in property under development in the accompanying condensed consolidated balance sheets as of March 31, 2021.

During the three months ended March 31, 2020, the Company acquired a property in North Little Rock, Arkansas and commenced development of a build-to-suit project.

The total cost for the project was $ 1.6 million which was completed in December 2020.

Rent commenced in January 2021.

These amounts were included in buildings and improvements in the accompanying condensed consolidated balance sheets as of December 31, 2020.

There were no dispositions for the three months ended March 31, 2021.

During the three months ended March 31, 2020, the Company sold one property for a total sales price, net of disposal costs, of $ 0.5 million, recognizing no gain or loss on the sale.

During 2019, the Company entered into an agreement to sell one property to a third-party and received a nonrefundable $ 0.3 million earnest money deposit, which upon the third-party’s failure to perform under the purchase and sale agreement in the first quarter of 2020, was recognized as a gain.

Note 5 – Intangible Assets and Liabilities

Intangible assets and liabilities consisted of the following (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Amount Accumulated Amortization Net Carrying Amount Gross

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Below-market leases $ 20,289 $ ( 1,394 ) $ 18,895 $ 17,951 $ ( 1,021 ) $ 16,930

The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of September 30, 2020 and as of December 31, 2019 by category and in total, were as follows:

The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of March 31, 2021 and as of December 31, 2020 by category were as follows:

Years Remaining

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

In-place leases 10.5 11.1

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The Company records amortization of in-place lease assets to amortization expense, and records net amortization of above-market and below-market lease intangibles to rental revenue.

The following amounts in the accompanying condensed consolidated statements of operations and comprehensive loss related to the amortization of intangibles assets and liabilities for all property and ground leases (in thousands):

Successor Predecessor Successor Predecessor

Three months ended September 30, 2020 Three months ended September 30, 2019 Nine months ended September 30, 2020 Nine months ended September 30, 2019

The following amounts in the accompanying condensed consolidated statements of operations and comprehensive income (loss) related to the amortization of intangibles assets and liabilities for all property and ground leases (in thousands):

Three Months Ended March 31,

Amortization:

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$ 190 $ ( 8 )

The following table provides the projected amortization of in-place lease assets and assembled workforce intangible assets to amortization expense, and the net amortization of above-market and below-market lease intangibles to rental revenue as of September 30, 2020, for the next five years and thereafter (in thousands):

The following table provides the projected amortization of in-place lease assets and assembled workforce intangible assets to amortization expense, and the net amortization of above-market and below-market lease intangibles to rental revenue as of March 31, 2021, for the next five years and thereafter (in thousands):

Remainder of 2021

2021 2022 2023 2024 Thereafter

2022 2023 2024 2025 Thereafter Total

In-place leases $ 6,068 $ 8,091 $ 7,969 $ 7,789 $ 7,633 $ 36,716 $ 74,266

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Debt consists of the following (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Term Loan (due December 23, 2024) $ 175,000 $ 175,000

Revolver (due December 23, 2023) 13,000 —

Total debt 188,000 175,000

Unamortized discount and debt issuance costs ( 839 ) ( 895 )

Unamortized deferred financing costs, net (1)

( 1,098 ) ( 1,198 )

Total debt, net $ 186,063 $ 172,907

(1) The Company records deferred financing costs for the Revolver in other assets, net on its condensed consolidated balance sheets.

Credit Facility

In December 2019, the Company entered into a senior credit facility consisting of (i) a $ 175.0 million senior secured term loan (“Term Loan”) and (ii) a $ 250.0 million senior secured revolving credit facility (“Revolver”, and collectively with the Term Loan, the “Credit Facility”).

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The Term Loan matures on December 23, 2024 and the Revolver matures on December 23, 2023, subject to extension up to one year .

The Credit Facility is secured by a first priority perfected security interest in and lien on all existing and future equity interests of the Company’s direct and indirect subsidiaries of any Eligible Property (as defined in the Credit Facility) owned by the Company or any of the Company’s subsidiaries.

The Credit Facility also provides that the Administrative Agent has the option to release the collateral securing the Credit Facility upon delivery of satisfactory evidence from the Company that Collateral Release Requirements (as defined in the Credit Facility) have been met, which requirements include, among others, conditions related to the unencumbered asset value and asset diversification of the Company.

The Administrative Agent released the collateral in connection with the Company’s satisfaction of the Collateral Release Requirements in the fourth quarter of 2020, therefore interest rates under the Credit Facility are based on the Company’s consolidated total leverage ratio, and are determined by (A) in the case of Term Loan either (i) LIBOR, plus a margin ranging from 1.15 % to 1.60 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.15 % to 0.60 %, based on the Company’s consolidated total leverage ratio and (B) in the case of Revolving Loans either (i) LIBOR, plus a margin ranging from 1.20 % to 1.80 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.20 % to 0.80 %, based on the Company’s consolidated total leverage ratio.

Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings.

For so long as the Credit Facility is secured, the interest rates under the Credit Facility are based on the Company’s consolidated total leverage ratio, and are determined by (A) in the case of Term Loan either (i) LIBOR, plus a margin ranging from 1.25 % to 2.25 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.25 % to 1.25 %, based on the Company’s consolidated total leverage ratio and (B) in the case of Revolving Loans either (i) LIBOR, plus a margin ranging from 1.35 % to 2.30 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.35 % to 1.30 %, based on the Company’s consolidated total leverage ratio.

To the extent the Administrative Agent releases the collateral in connection with the Company’s satisfaction of the Collateral Release Requirements, the interest rates under the Credit Facility will be based

on the Company’s consolidated total leverage ratio, and are determined by (A) in the case of Term Loan either (i) LIBOR, plus a margin ranging from 1.15 % to 1.60 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.15 % to 0.60 %, based on the Company’s consolidated total leverage ratio and (B) in the case of Revolving Loans either (i) LIBOR, plus a margin ranging from 1.20 % to 1.80 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.20 % to 0.80 %, based on the Company’s consolidated total leverage ratio.

Prior to the collateral release, the Credit Facility was secured by a first priority perfected security interest in and lien on all existing and future equity interests of the Company’s direct and indirect subsidiaries of any Eligible Property (as defined in the Credit Facility) owned by the Company or any of the Company’s subsidiaries.

The Credit Facility also provided that the Administrative Agent has the option to release the collateral securing the Credit Facility upon delivery of satisfactory evidence from the Company that Collateral Release Requirements (as defined in the Credit Facility) have been met, which requirements include, among others, conditions related to the unencumbered asset value and asset diversification of the Company.

For so long as the Credit Facility was secured, which was through the period ended September 30, 2020, the interest rates under the Credit Facility were based on the Company’s consolidated total leverage ratio, and are determined by (A) in the case of Term Loan either (i) LIBOR, plus a margin ranging from 1.25 % to 2.25 %, based on the Company’s consolidated total leverage

ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.25 % to 1.25 %, based on the Company’s consolidated total leverage ratio and (B) in the case of Revolving Loans either (i) LIBOR, plus a margin ranging from 1.35 % to 2.30 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the Credit Facility), plus a margin ranging from 0.35 % to 1.30 %, based on the Company’s consolidated total leverage ratio.

The Company is required to pay a Revolver facility fee at an annual rate of 0.15 % of the unused capacity if usage exceeds 50% of the total available facility, or 0.25 % of the unused facility if usage does not exceed 50%.

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Loans from the Revolver may not exceed the total revolving commitments.

During the second quarter, the Company entered into an amendment to the Credit Facility to amend and redefine its debt covenant calculations.

During the second quarter of 2020, the Company entered into an amendment to the Credit Facility to amend and redefine its debt covenant calculations.

The Company incurred and capitalized less than $ 0.1 million of financing costs relating to this amendment, which has been pro-rated to the Term Loan and Revolver based on their respective borrowing capacities.

Effective September 28, 2020, the Company entered into an interest rate derivative contract to fix the interest rate on the Term Loan.

The interest rate is effectively fixed to 1.36 % which includes the fixed rate (one-month LIBOR) of 0.21 % plus a margin of 1.15 %.

The interest rate hedge is further described in “Note 7 - Derivative Financial Instruments.”

Deferred financing costs are being amortized over the remaining terms of each respective loan.

Term Loan deferred financing costs of $ 1.1 million, of which $ 1.0 million and $ 1.1 million is unamortized at September 30, 2020 and December 31, 2019, respectively, is included within Term Loan, net on the condensed consolidated balance sheets.

Revolver deferred financing costs of $ 1.6 million, of which $ 1.3 million and $ 1.6 million is unamortized at September 30, 2020 and December 31, 2019, respectively, is included within other assets on the condensed consolidated balance sheets.

Total deferred financing costs amortized on the Term Loan and Revolver for the three and nine months ended September 30, 2020 were $ 0.2 million and $ 0.5 million, respectively.

This is included in Interest expense on the Company’s condensed consolidated statements of operations and comprehensive loss.

Total deferred financing costs amortized on the Predecessor’s debt facilities for the three and nine months ended September 30, 2019 were $ 0.3 million and $ 0.8 million, respectively.

This is included in interest expense on the Predecessor’s condensed consolidated statements of operations and comprehensive loss.

As of September 30, 2020, and December 31, 2019, the Term Loan had an effective interest rate of 1.46 % and 3.28 %, respectively, which is reflective of the interest rate hedge as described in "Note 7 - Derivative Financial Instruments."

The weighted average interest rate on the Term Loan was 2.17 % for the nine months ended September 30, 2020.

The Company incurred interest expense in connection with the Term Loan for the three and nine months ended September 30, 2020 of $ 0.6 million and $ 2.9 million, respectively.

The Predecessor incurred interest expense of $ 2.2 million and $ 7.6 million in connection with its debt facilities for the three and nine months ended September 30, 2019, respectively.

The fair value of the Company’s Term Loan is determined based on the expected future payments discounted at risk-adjusted rates.

The Company assessed that the carrying value materially approximates the estimated fair value of the Term Loan at September 30, 2020 and December 31, 2019.

The Company incurred interest expense on the Revolver for the three and nine months ended September 30, 2020 of $ 0.1 million, with a weighted average interest rate of 1.53 %.

As of September 30, 2020 and December 31, 2019, the Company had no borrowings under the Revolver.

The Company also incurred interest expense in connection with unused capacity for the three and nine months ended September 30, 2020 of $ 0.1 million and $ 0.4 million, respectively.

The Company was in compliance with all of its debt covenants as of September 30, 2020 and expects to be in compliance for the following twelve-month period.

Term Loan deferred financing costs of $ 1.1 million, of which $ 0.8 million and $ 0.9 million is unamortized at March 31, 2021 and December 31, 2020, respectively, is included within Term Loan, net on the condensed consolidated balance sheets.

Revolver deferred financing costs of $ 1.6 million, of which $ 1.1 million and $ 1.2 million is unamortized at March 31, 2021 and December 31, 2020, respectively, is included within other assets, net on the condensed consolidated balance sheets.

Total deferred financing costs amortized on the Term Loan and Revolver for the three months ended March 31, 2021 and 2020 were $ 0.2 million and $ 0.2 million, respectively.

This is included in interest expense, net on the Company’s condensed consolidated statements of operations and comprehensive income (loss).

For the three months ended March 31, 2021 and 2020, the Term Loan had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of the interest rate hedge, of 1.30 % and 3.23 %, respectively.

The Company incurred interest expense in connection with the Term Loan for the three months ended March 31, 2021 and 2020 of $ 0.6 million and $ 1.4 million, respectively.

The estimated fair value of the Company’s Term Loan has been derived based on market observable inputs such as interest rates and discounted cash flow analysis using estimates of the amount and timing of future cash flows.

These measurements are classified as Level 2 within the fair value hierarchy.

The Company determined that the carrying value materially approximated the estimated fair value of the Term Loan as of March 31, 2021 and December 31, 2020.

The Company incurred interest expense, exclusive of facility fees for unused capacity, on borrowings under the Revolver of less than $ 0.1 million for the three months ended March 31, 2021, with a weighted average interest rate of 1.29 %.

As of December 31, 2020, the Company had no borrowings under the Revolver.

The Company also incurred interest expense in connection with unused capacity for the three months ended March 31, 2021 and 2020 of $ 0.2 million and $ 0.1 million, respectively.

The Company was in compliance with all of its debt covenants as of March 31, 2021 and expects to be in compliance for the following twelve-month period.

Debt Maturity

Payments on the Term Loan are interest only through maturity.

All outstanding amounts on the Term Loan are due on December 23, 2024.

Note 7 – Derivative Financial Instruments

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Assessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach.

The Company recognizes the entire change in the fair value in Accumulated Other Comprehensive Loss ("AOCL") and the change is reflected as cash flow hedge changes in fair value in the supplemental disclosures of non-cash investing and financing activities in the condensed consolidated statement of cash flows.

Effective September 28, 2020, such derivatives were used to hedge the variable cash flows associated with Term Loan.

The Company recognizes the entire change in the fair value in Accumulated Other Comprehensive Income (“AOCI”) and the change is reflected as cash flow hedge changes in fair value in the supplemental disclosures of non-cash investing and financing activities in the consolidated statement of cash flows.

Effective September 28, 2020, such derivatives were initiated to hedge the variable cash flows associated with Term Loan.

Accordingly, the interest rate for the variable rate Term Loan is based on the hedged fixed rate (one-month) of 0.21 % compared to the variable Term Loan one-month LIBOR rate as of March 31, 2021 of 0.11 %, plus a margin of 1.15 %.

The maturity date of the interest rate swaps coincide with the maturity date of the Term Loan.

Amounts will subsequently be reclassified to earnings when the hedged item affects earnings.

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Number of Instruments Notional

Interest Rate Derivatives September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019

Interest Rate Derivatives March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020

Interest rate swaps 4 4 $ 175,000 $ 175,000

The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019 (in thousands):

Derivative Assets Derivative Liabilities

Fair Value at Fair Value at

The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020 (in thousands):

Derivative Assets

Fair Value at

Derivatives Designated as Hedging Instruments:

Balance Sheet Location September 30, 2020 December 31, 2019 Balance Sheet Location September 30, 2020 December 31, 2019

Interest rate swaps Other assets, net $ — $ — Accounts payable, accrued expenses and other liabilities $ 128 $ —

Total $ — $ — $ 128 $ —

The following table presents the effect of the Company's interest rate swaps on the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Total Amount of Interest Expense, Net, Presented in the Consolidated Statements of Operations and Comprehensive Loss

Balance Sheet Location March 31, 2021 December 31, 2020

Interest rate swaps Other assets, net $ 2,577 $ 253

The following table presents the effect of the Company's interest rate swaps on the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and 2020 (in thousands):

Amount of Gain Recognized in OCI on Derivative (Effective Portion) Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) Amount of (Loss) Reclassified from Accumulated OCI into Income

(Effective Portion)

Derivatives in Cash Flow Hedging Relationships 2021 2020 2021 2020

For the Three Months Ended September 30

Interest Rate Products $ ( 129 ) $ — Interest expense, net $ ( 1 ) $ — $ ( 1,018 ) $ ( 2,449 )

Total $ ( 129 ) $ — $ ( 1 ) $ — $ ( 1,018 ) $ ( 2,449 )

For the Nine Months Ended September 30

For the Three Months Ended March 31

Interest Rate Products $ 2,290 $ — Interest expense, net $ ( 34 ) $ —

Total $ ( 129 ) $ 55 $ ( 1 ) $ 55 $ ( 3,815 ) $ ( 8,349 )

The Company did not exclude any amounts from the assessment of hedge effectiveness for the three months ended March 31, 2021 and 2020.

During the next twelve months, the Company estimates that an additional $ 0.1 million will be reclassified as an increase to interest expense.

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative.

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Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties.

However, as of September 30, 2020, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

However, as of March 31, 2021, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The table below presents the Company’s derivative liabilities measured at fair value on a recurring basis as of September 30, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

Level 1 Level 2 Level 3 Total Fair Value

September 30, 2020

Derivative liabilities $ — $ 128 $ — $ 128

The table below presents the Company’s derivative liabilities measured at fair value on a recurring basis as of March 31, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

Fair Value Hierarchy Level

Description Level 1 Level 2 Level 3 Total Fair Value

March 31, 2021

Derivative assets $ — $ 2,577 $ — $ 2,577

December 31, 2020

Derivative assets — 253 — 253

Note 8 – Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets

Other assets, net consist of the following (in thousands):

September 30, 2020 December 31, 2019

Earnest money deposit $ 1,143 $ 1,100

March 31, 2021 December 31, 2020

Earnest money deposits $ 1,085 $ 634

Deferred offering costs 526 —

Deferred financing costs, net 1,098 1,198

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Deferred rent receivable 1,647 1,407

Fair value of interest rate swaps 2,577 253

Other assets 1,400 743

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Accounts payable, accrued expenses and other liabilities consists of the following (in thousands):

September 30, 2020 December 31, 2019

March 31, 2021 December 31, 2020

Accrued expenses $ 2,685 $ 2,035

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Note 9 – Shareholders’ Equity, Partners’ Capital and Preferred Equity

Total net proceeds to the Company from the Company's initial public offering was $ 227.3 million which is net of underwriting discounts and offering costs of $ 18.9 million.

The initial public offering resulted in the issuance of 13,681,561 shares of common stock.

The Company's initial public offering also resulted in the non-controlling interest conversion of 255,236 of operating partnership units into common stock.

During the three months ended March 31, 2021, portions of restricted stock unit awards granted to certain of the Company’s officers and directors vested.

The vesting of these awards, granted pursuant to the Omnibus Incentive Plan, resulted in federal and state income tax liabilities for the recipients.

As permitted by the terms of the Omnibus Incentive Plan and the award grants, certain executive officers elected to surrender approximately five thousand shares of common stock valued at approximately $ 0.1 million, solely to pay the associated statutory tax withholding during the year ended December 31, 2021.

The surrendered shares are included in repurchase of shares of common stock on the condensed consolidated statements of cash flows.

Net proceeds to the Company from the over-allotment option exercise were $ 54.6 million which was net of initial purchaser’s discount and placement fees of $ 3.4 million.

The over-allotment option exercise resulted in the issuance of 2,936,885 shares of common stock.

The Company contributed the net proceeds to the Operating Partnership in exchange for 2,936,885 Class A OP Units.

Preferred Equity

The Company redeemed all 125 outstanding shares of Series A Preferred Stock upon the completion of the initial public offering in August 2020 for approximately $ 0.1 million.

As of September 30, 2020, there are no shares of preferred stock outstanding.

The Company declared and paid a cash dividend of $ 0.10 per share for the third quarter of 2020.

The dividend totaled $ 2.8 million and was paid on September 25, 2020 to shareholders of record as of September 15, 2020.

Non-controlling Interest

Non-controlling interest represent non-controlling holders of OP Units in the Operating Partnership.

As of September 30, 2020 and December 31, 2019, non-controlling interest represents 14.0 % and 33.4 %, respectively.

Effective with the Company's initial public offering, 13,681,561 OP Units were issued to the Company in exchange for $ 227.3 million and 255,268 of OP Unit holders converted their units into common stock of the Company.

To maintain the Company’s status as a REIT, on January 27, 2020, the Company issued and sold 125 shares of 12.0 % Series A Cumulative Non-Voting Preferred Stock, par value $ 0.01 per share, for $ 1,000 per share to accredited investors pursuant to Regulation D under the Securities Act.

The shares of Series A Preferred Stock may be redeemed solely at the Company’s option for consideration equal to $ 1,000 per share, plus accrued and unpaid dividends thereon to and including the date fixed for redemption, plus a redemption premium as follows (i) until December 31, 2021, $ 100 and (ii) thereafter, no redemption premium.

The Company redeemed all 125 outstanding shares of Series A Preferred Stock upon the completion of the initial public offering.

During the three months ended March 31, 2021, the Company declared and paid the following common stock dividends (in thousands, except per share data):

Declaration Date Dividend Per Share Record Date Total Amount Payment Date

March 3, 2021 $ 0.20 March 15, 2021 $ 5,687 March 30, 2021

The holders of OP Units are entitled to an equal distribution per Class A and B OP Unit held as of each record date.

Accordingly, the Operating Partnership paid distributions of $ 0.3 million to holders of OP Units as of March 30, 2021.

There were no dividends or distributions declared or paid for the three months ended March 31, 2020

Noncontrolling Interests

Noncontrolling interests represent noncontrolling holders of OP Units in the Operating Partnership.

OP Units are convertible into common stock as the OP Units may be redeemed for cash or, at the Company’s election, exchanged for shares of the Company’s common stock on a one-for-one basis.

As of March 31, 2021 and December 31, 2020, noncontrolling interests represented 5.0 % and 5.9 %, respectively of OP Units.

During the three months ended March 31, 2021, OP Unit holders redeemed 253,344 OP units into shares of common stock on a one-for-one basis.

There were no redemptions for the three months ended March 31, 2020.

Note 10 – Stock-Based Compensation

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The Omnibus Incentive Plan is administered by the Compensation Committee of the Board of Directors.

As of September 30, 2020, the only stock-based compensation granted by the Company were restricted stock units.

Performance and Service Based Restricted Stock Units

As of March 31, 2021, the only stock-based compensation granted by the Company were restricted stock units.

The total amount of stock-based compensation costs recognized in general and administrative expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss) was $ 0.6 million for the three months ended March 31, 2021.

No stock-based compensation expense was recognized for the three months ended March 31, 2020.

All awards of unvested restricted stock units are expected to fully vest over the next one to five years .

Performance-Based Restricted Stock Units

Pursuant to the Omnibus Incentive Plan, the Company made performance-based restricted stock unit grants to certain employees and non-employee directors.

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The vesting terms of these grants are specific to the individual grant and vest in equal annual installments over the next three to five years .

The following table summarizes performance and service based restricted stock unit activity for the period ended September 30, 2020:

The following table summarizes performance-based restricted stock unit activity for the period ended March 31, 2021:

Shares Weighted Average Grant Date Fair Value per Share

Unvested restricted stock grants outstanding as of December 31, 2020 207,803 $ 19.75

Granted during the period 85,441 19.75

Forfeited during the period ( 11,391 ) 19.75

Vested during the period ( 15,190 ) 19.75

Unvested restricted stock grants outstanding as of September 30, 2020 242,403 $ 19.75

For the three and nine months ended September 30, 2020, the Company recognized $ 1.7 million in stock-based compensation expense.

No stock-based compensation expense was recognized in 2019.

These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

As of September 30, 2020 and December 31, 2019, the remaining unamortized stock-based compensation expense totaled $ 3.1 million and $ 3.3 million, respectively.

These units are subject to graded vesting and amortization is recognized ratably for each vesting tranche over the service period of each applicable award.

The weighted average grant date fair value of unvested restricted units is calculated as the per share price determined in the Private Offering.

Unvested restricted stock grants outstanding as of March 31, 2021 192,613 $ 19.75

For the three months ended March 31, 2021, the Company recognized $ 0.3 million in stock-based compensation expense associated with performance-based restricted stock units.

As of March 31, 2021 and December 31, 2020, the remaining unamortized stock-based compensation expense totaled $ 2.2 million and $ 2.6 million, respectively and as of March 31, 2021, these awards are expected to be recognized over a remaining weighted average period of 2.5 years.

These units are subject to graded vesting and stock-based compensation expense is recognized ratably over the requisite service period for each vesting tranche in the award.

The grant date fair value of unvested restricted units is calculated as the per share price determined in the Private Offering.

Service-Based Restricted Stock Units

Pursuant to the Omnibus Incentive Plan, the Company made service-based restricted stock unit grants to certain employees and non-employee directors in connection with the initial public offering.

The vesting terms of these grants are specific to the individual grant and vest in equal annual installments over the next three to five years .

The following table summarizes service based restricted stock unit activity for the period ended September 30, 2020:

Pursuant to the Omnibus Incentive Plan, the Company has made service-based restricted stock unit grants to certain employees and non-employee directors.

The vesting terms of these grants are specific to the individual grant and vest in equal annual installments over the next one to five years .

The following table summarizes service-based restricted stock unit activity for the period ended March 31, 2021:

Shares Weighted Average Grant Date Fair Value per Share

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Granted during the period 161,185 17.47

Forfeited during the period — —

Vested during the period — —

Unvested restricted stock grants outstanding as of September 30, 2020 169,793 $ 18.00

For the three and nine months ended September 30, 2020, the Company recognized less than $ 0.1 million in stock-based compensation expense.

No stock-based compensation expense was recognized in 2019.

These amounts are included in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

As of September 30, 2020, the remaining unamortized stock-based compensation expense totaled $ 3.0 million.

There was no unamortized stock-based compensation expense as of the end of December 31, 2019.

Amortization is recognized on a straight-line basis over the service period of each applicable award.

The weighted average grant date fair value of service based unvested restricted units is calculated as the per share price determined in the initial public offering.

Unvested restricted stock grants outstanding as of March 31, 2021 330,978 $ 17.74

For the three months ended March 31, 2021, the Company recognized $ 0.2 million in stock-based compensation expense associated with service-based restricted stock units.

As of March 31, 2021 and December 31, 2020, the remaining unamortized stock-based compensation expense totaled $ 5.4 million and $ 2.8 million, respectively and as of March 31, 2021, these awards are expected to be recognized over a remaining weighted average period of 3.5 years.

Stock-based compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award.

The grant date fair value of service based unvested restricted units is calculated as the per share price determined in the initial public offering for awards granted in 2020 and as the per share price of the Company’s stock on the date of grant for those granted in 2021.

Market-Based Restricted Stock Units

Pursuant to the Omnibus Incentive Plan, the Company has made market-based restricted stock unit grants to certain employees.

These grants are subject to the participant’s continued service over a three year period with 40 % of the award based on the Company’s total shareholder return (“TSR”) as compared to the TSR of 33 peer companies and 60 % of the award based on total absolute TSR over the cumulative three year period.

The performance period of these grants runs through March 8, 2024.

Grant date fair value of the market-based share awards was calculated using the Monte Carlo simulation model, which incorporated stock price volatility of the Company and each of the Company’s peers and other variables over the performance period.

Significant inputs for the calculation were expected volatility of the Company of 42.8 % and expected volatility of the Company's peers, ranging from 28.7 % to 90.7 %, with an average volatility of 46.3 % and a risk-free interest rate of 0.34 %.

The fair value per share on the grant date specific to the target TSR relative to the Company’s peers was $ 20.18 and the target absolute TSR was $ 16.46 for a weighted average grant date fair value of $ 17.77 per share.

Stock-based compensation expense associated with unvested market-based share awards is recognized on a straight-line basis over the minimum required service period, which is three years .

The following table summarizes market-based restricted stock unit activity for the period ended March 31, 2021:

Shares Weighted Average Grant Date Fair Value per Share

Unvested restricted stock grants outstanding as of December 31, 2020 — $ —

Granted during the period 135,766 17.77

Unvested restricted stock grants outstanding as of March 31, 2021 135,766 $ 17.77

For the three months ended March 31, 2021, the Company recognized less than $ 0.1 million in stock-based compensation expense associated market-based restricted stock units.

As of March 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 2.4 million and as of March 31, 2021, these awards are expected to be recognized over a remaining weighted average period of 2.9 years.

Note 11 – Earnings Per Share

The table below provides net loss and the number of weighted average common shares and common share equivalents used in the computations of “basic” net loss per share and "dilutive" net loss per share for the three and nine months ended September 30, 2020.

(in thousands, except share and per share data) Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020

Net loss from continuing operations $ ( 2,341 ) $ ( 4,298 )

Net loss from continuing operations, attributable to noncontrolling interest 263 799

Net income per common share has been computed pursuant to the guidance in the FASB ASC Topic 260, Earnings per Share.

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period.

Diluted earnings per share is similarly calculated except that the denominator is increased by using the treasury stock method to determine the potential dilutive effect of the Company’s outstanding unvested restricted stock units and using the if-converted method to determine the potential dilutive effect of the Company’s Class A and B OP Units.

The Company has noncontrolling interests in the form of OP Units which are convertible into common stock and represent potentially dilutive securities, as the OP Units may be redeemed for cash or, at the Company’s election, exchanged for shares of the Company’s common stock on a one-for-one basis.

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per common share for the three months ended March 31, 2021 and 2020.

Three Months Ended March 31,

(in thousands, except share and per share data) 2021 2020

Net income (loss) $ 741 $ ( 1,552 )

Net (income) loss attributable to noncontrolling interest ( 40 ) 425

Cumulative preferred stock dividends and redemption premium — ( 4 )

Net loss from continuing operations attributable to common shares, basic and diluted $ ( 2,114 ) $ ( 3,541 )

Net income attributable to common shares, basic 701 ( 1,131 )

Net (income) loss attributable to noncontrolling interest ( 40 ) 425

Net income (loss) attributable to common shares, diluted $ 741 $ ( 1,556 )

Weighted average common shares outstanding, basic 28,348,975 11,797,645

Effect of dilutive shares for diluted net income per common share:

OP Units 1,616,005 —

Unvested RSUs 87,960 —

Weighted average common shares outstanding, diluted 30,052,940 11,797,645

Net loss available to common shareholders per common share, basic and diluted $ ( 0.11 ) $ ( 0.26 )

For the three and nine months ended September 30, 2020, diluted net loss per share attributable to common shareholders excludes approximately 24,302 and 8,101 weighted average unvested restricted shares, respectively, as these shares are anti-dilutive.

In addition, the Company has non-controlling interest in the form of operating partnership units which are convertible into common stock.

As of September 30, 2020 and December 31, 2019, there were 4,193,751 and 4,449,019 of OP Units outstanding, respectively.

Subsequent to September 30, 2020, 2,244,702 of OP Units converted into shares of common stock on a one-for-one basis.

Net income available to common stockholders per common share, basic $ 0.02 $ ( 0.10 )

Net income available to common stockholders per common share, diluted $ 0.02 $ ( 0.10 )

For the the three months ended March 31, 2020, diluted net loss per common share does not assume the conversion of the OP Units as such conversion would be antidilutive.

Additionally, unvested RSUs for the three months ended March 31, 2020 are excluded as they were considered contingently issuable shares.

As of March 31, 2021 and December 31, 2020, there were 1,498,538 and 1,751,882 of OP Units outstanding, respectively.

Note 12 – Commitments and Contingencies

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The Company is subject to environmental regulations related to the ownership of real estate.

The cost of complying with the environmental regulations was not material to the Company or Predecessor’s results of operations for any of the periods presented.

The cost of complying with the environmental regulations was not material to the Company’s results of operations for any of the periods presented.

The Company is not aware of any environmental condition on any of its properties that is likely to have a material adverse effect on the condensed consolidated financial statements when the fair value of such liability can be reasonably estimated and is required to be recognized.

At September 30, 2020, the Company did not have any commitments for re-leasing costs, recurring capital expenditures, non-recurring building improvements, or similar types of costs.

In the normal course of business, the Company enters into various types of commitments to purchase real estate properties or fund development projects.

These commitments are generally subject to the Company’s customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated or receives an option to purchase the properties.

As of March 31, 2021, the Company had commitments to fund properties under development totaling $ 4.4 million, of which $ 1.3 million has been funded to date and the remaining is expected to be funded over the next twelve months.

As of March 31, 2021, the Company did not have any other material commitments for re-leasing costs, recurring capital expenditures, non-recurring building improvements, or similar types of costs.

During the period ended March 31, 2021, the Company executed the Alignment of Interest Program (the “Program”) which allows employees to elect to receive a portion of their 2021 bonus in unvested restricted stock units in the first quarter of 2022 and would vest over a four-year service period beginning April 1, 2021.

The Program is deemed to be a liability-classified award which will be fair valued and accrued over the applicable service period beginning April 1, 2021.

The total estimated fair value of the Program as of March 31, 2021 is approximately $ 1.0 million.

The award will be remeasured to fair value each reporting period.

Note 13 – Related-Party Transactions

The Company did not enter into any related-party transactions during the three and nine months ended September 30, 2020.

The Predecessor’s fees paid and accrued to the benefit of related parties for the three and nine months ended September 30, 2019 are as follows (amounts in thousands):

Transaction Type

For the Three Months Ended September 30, 2019 For the Nine Months Ended September 30, 2019

EverSTAR IVF V GP, LLC Asset management fees $ 693 $ 2,162

EBA EverSTAR, LLC Disposition fees 154 840

EBA EverSTAR, LLC Acquisition fees — 18

Effective with the Private Offering and commencement of the Company’s operations on December 23, 2019, the Company executed a facilities agreement with a subsidiary of EB Arrow.

Under the facilities agreement, the Company shares in office rent and office related expenses primarily based on employee headcount.

For the three months ended March 31, 2021 and 2020, the Company incurred less than $ 0.1 million in related expenses.

Note 14 – Subsequent Events

Subsequent events have been evaluated through October 29, 2020, the date these condensed consolidated financial statements were issued:

Acquisition and Disposition of Real Estate

Subsequent to September 30, 2020, the Company acquired five properties for a total purchase price, including transaction costs, of $ 8.8 million.

In addition, the Company disposed of two properties classified as held for sale as of September 30, 2020 for a total sales price, net of disposal costs, of $ 4.4 million with a net gain on sale of assets of $ 1.1 million.

The Company has evaluated all events that occurred subsequent to March 31, 2021 through the date on which these condensed consolidated financial statements were issued to determine whether any of these events required disclosure in the financial statements.

Public Offering

On April 12, 2021, the Company completed a public offering of 10,915,688 shares of common stock, which included the full exercise of the underwriters’ option to purchase an additional 1,423,785 shares of common stock.

Upon closing of the offering, the Company issued 10,915,688 shares of common stock and received net proceeds of $ 194.3 million after deducting the underwriting discount and estimated transaction costs.

The Company contributed the net proceeds of the offering and related underwriters’ option to the Operating Partnership in exchange for 10,915,688 Class A OP Units.

On April 12, 2021, the Company used the net proceeds from the public offering to pay down $ 13.0 million of outstanding borrowings under the Revolver.

OP Unit Conversions to Common Stock

There were 2,244,702 OP Units that converted into shares of common stock on a one-for-one basis subsequent to September 30, 2020.

There were 22,605 OP Units redeemed for shares of common stock on a one-for-one basis subsequent to March 31, 2021.

Common Stock Dividend

On October 27, 2020, the Company's Board of Directors declared a cash dividend of $ 0.20 per share for the fourth quarter of 2020.

The dividend will be paid on December 15, 2020 to shareholders of record on December 1, 2020.

On April 27, 2021, the Company's Board of Directors declared a cash dividend of $ 0.20 per share for the second quarter of 2021.

The dividend will be paid on June 15, 2021 to shareholders of record on June 1, 2021.

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

What changed 10-Q

Item 1. Financial Statements