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Item 8. Financial Statements and Supplementary Data

2022-02-24 compared with 2021-03-04 · 416 added, 281 removed, 601 unchanged (54% of the section changed)

Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2021 and 2020

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

To the the Stockholders and Board of Directors

NETSTREIT Corp.:

Opinion on Internal Control Over Financial Reporting

We have audited NETSTREIT Corp.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2021 (successor), for the period from December 23, 2019 to December 31, 2019 (successor), and the period from January 1, 2019 to December 22, 2019 (predecessor) and the related notes and financial statement Schedule III (collectively, the consolidated financial statements), and our report dated February 24, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Dallas, Texas

February 24, 2022

Report of Independent Registered Public Accounting Firm

To the the Stockholders and the Board of Directors

NETSTREIT Corp.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of NETSTREIT Corp.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for the year ended December 31, 2020 (successor), for the period from December 23, 2019 to December 31, 2019 (successor), and the period from January 1, 2019 to December 22, 2019 (predecessor), and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the year ended December 31, 2020 (successor), for the period from December 23, 2019 to December 31, 2019 (successor), and the period from January 1, 2019 to December 22, 2019 (predecessor), in conformity with U.S.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2021 (successor), for the period from December 23, 2019 to December 31, 2019 (successor), and the period from January 1, 2019 to December 22, 2019 (predecessor) and the related notes and financial statement Schedule III (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021 (successor), for the period from December 23, 2019 to December 31, 2019 (successor), and the period from January 1, 2019 to December 22, 2019 (predecessor), in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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We believe that our audits provide a reasonable basis for our opinion.

(signed) KPMG LLP

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of indicators for potential impairment of long-lived asset groups

As discussed in Note 2 to the consolidated financial statements, the Company evaluates its long-lived asset groups for potential impairment whenever events or changes in circumstances indicate that the carrying amount of the asset group is no longer recoverable.

As of December 31, 2021 the Company has $913.6 million of real estate held for investment, net.

The evaluation of the indicators of potential impairment relies upon certain management assumptions, including the anticipated holding period for a real estate investment property.

We identified the evaluation of indicators for potential impairment of long-lived asset groups as a critical audit matter.

Subjective and challenging auditor judgment was required to evaluate the reasonableness of Company’s intent and ability to hold long-lived asset groups for particular periods of time.

A shortening of the anticipated holding period could indicate a potential impairment.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s long-lived asset impairment process, including a control related to the identification of indicators of potential impairment.

We inquired of and obtained representations from Company officials and inspected documents, such as meeting minutes of the board of trustees and its sub-committees and asset management meeting summaries to evaluate the Company’s intent and ability to hold long-lived asset groups for particular periods of time.

We read external communications with investors to identify information regarding potential sales of the Company’s long-lived asset groups.

Evaluation of the fair value of land and building in certain real estate asset acquisitions

As discussed in Notes 2 and 4 to the consolidated financial statements, the Company acquired real estate properties in asset acquisitions during 2021 for a total purchase price of $441.3 million, of which $116.1 million and $241.9 million were allocated to land and buildings, respectively.

The purchase price of an asset acquisition is allocated to tangible and identifiable intangible assets or liabilities based on their relative fair values.

In estimating fair values, the Company utilizes a number of sources, including real estate valuations prepared by an independent valuation firm.

We identified the evaluation of the fair value of land and building in certain real estate asset acquisitions as a critical audit matter.

Subjective auditor judgment was required to evaluate the assumptions used in the Company’s estimates of fair value of land and building, including comparable land sales and estimated replacement cost of the building for certain real estate asset acquisitions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s asset acquisition valuation process, including controls related to the assumptions noted above.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the relevance of the comparable land sales and replacement cost of the building used by the Company to estimate fair values, by comparing them to our independently developed ranges of comparable land sales and estimated replacement cost of the building for a selection of real estate asset acquisitions.

We have served as the Company’s auditor since 2019.

Dallas, Texas

March 4, 2021

February 24, 2022

NETSTREIT CORP.

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Less accumulated depreciation ( 30,669 ) ( 10,111 )

Property under development 17,896 —

Real estate held for investment, net 913,619 537,622

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Cash, cash equivalents and restricted cash 7,603 92,643

Acquired lease intangible assets, net 75,024 28,846

Lease intangible assets, net 124,772 75,024

Other assets, net 20,351 5,724

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Term loan, net $ 174,330 $ 174,105

Revolving credit facility 64,000 —

Lease intangible liabilities, net 23,316 16,930

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Additional paid-in capital 809,724 501,045

Retained (loss) earnings ( 7,464 ) 28

Distributions in excess of retained earnings ( 35,119 ) ( 7,464 )

Accumulated other comprehensive income 4,123 235

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January 1 to December 22,

2021 2020 2019

Rental revenue (including reimbursable) $ 59,140 $ 33,727 $ 513 $ 19,805

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Total other income (expense), net ( 272 ) 1,712 ( 173 ) ( 5,066 )

Net income (loss) before income tax expense 3,209 212 42 ( 8,072 )

Income tax expense ( 59 ) — — —

Net income (loss) 3,150 212 42 ( 8,072 )

Net (loss) income attributable to noncontrolling interests ( 518 ) 14 —

Preferred stock dividends and redemption premium 42 — —

Net income (loss) attributable to noncontrolling interests 104 ( 518 ) 14 —

Preferred stock dividends — 42 — —

Net income (loss) attributable to common stockholders $ 3,046 $ 688 $ 28 $ ( 8,072 )

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Diluted $ 0.08 $ 0.01 $ — N/A

Weighted average common shares outstanding:

Weighted average common shares:

Basic 36,999,459 17,322,182 8,860,760 N/A

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Net income (loss) $ 3,150 $ 212 $ 42 $ ( 8,072 )

Change in unrealized gain on derivatives, net 253 — 55

Change in value on derivatives, net 4,057 253 — 55

Total comprehensive income (loss) $ 7,207 $ 465 $ 42 $ ( 8,017 )

Comprehensive (loss) income attributable to noncontrolling interests ( 500 ) 14 —

Comprehensive income (loss) attributable to noncontrolling interests 273 ( 500 ) 14 —

Comprehensive income (loss) attributable to common stockholders $ 6,934 $ 965 $ 28 $ ( 8,017 )

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Shares Par Value Shares Par Value Additional

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

Paid-in Capital Distributions in Excess of Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ Equity Partners’ Capital Noncontrolling Interests Total Equity

Balance at December 31, 2018 — $ — — $ — $ — $ — $ — $ — $ 82,748 $ — $ 82,748

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Issuance of OP Units — — — — — — — — — 87,885 87,885

Issuance of common stock — — 8,860,760 89 174,911 — — 175,000 — — 175,000

Offering and related costs — — — — ( 10,495 ) — — ( 10,495 ) — — ( 10,495 )

Issuance of common stock, net of issuance costs — — 8,860,760 89 164,416 — — 164,505 — — 164,505

Net income — — — — — 28 — 28 — 14 42

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

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 )

Issuance of preferred stock, net of issuance costs 125 104 — — — — — 104 — — 104

Issuance of common stock in private offering, net of issuance costs — — 2,936,885 29 54,530 — — 54,559 — — 54,559

Dividends declared and paid on preferred stock — — — — — ( 8 ) — ( 8 ) — — ( 8 )

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 — — — — ( 18,967 ) — — ( 18,967 ) — — ( 18,967 )

Issuance of common stock in initial public offering, net of issuance costs — — 13,681,561 136 227,165 — — 227,301 — — 227,301

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

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

Issuance of common stock in public offering, net of issuance costs — — 14,768,124 148 282,997 — — 283,145 — — 283,145

OP Units converted to common stock — — 1,189,098 12 22,482 — — 22,494 — ( 22,494 ) —

Dividends and distributions declared on common stock and OP Units — — — — — ( 30,195 ) — ( 30,195 ) — ( 1,109 ) ( 31,304 )

Dividends declared on restricted stock — — — — — ( 513 ) — ( 513 ) — — ( 513 )

Vesting of restricted stock units — — 84,790 — — — — — — — —

Repurchase of common stock for tax withholding obligations — — ( 22,507 ) — ( 504 ) — — ( 504 ) — — ( 504 )

Stock-based compensation, net — — — — 3,704 7 — 3,711 — — 3,711

Other comprehensive income — — — — — — 3,888 3,888 — 169 4,057

Net income — — — — — 3,046 — 3,046 — 104 3,150

Balance at December 31, 2021 — $ — 44,223,050 $ 442 $ 809,724 $ ( 35,119 ) $ 4,123 $ 779,170 $ — $ 10,645 $ 789,815

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

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January 1 to December 22,

2021 2020 2019

Cash flows from operating activities

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Stock-based compensation expense 3,704 2,452 — —

Gain on sale of real estate, net ( 6,213 ) — ( 5,646 )

Gain on sales of real estate, net ( 2,997 ) ( 6,213 ) — ( 5,646 )

Gain on forfeited earnest money deposit — ( 250 ) — —

Provisions for impairment 3,539 2,690 — 7,186

Gain on involuntary conversion of building and improvements ( 438 ) — — —

Changes in assets and liabilities, net of assets acquired and liabilities assumed:

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Lessee improvement obligations ( 1 ) ( 1,893 ) — —

Lease incentive payments ( 5,821 ) — — —

Net cash provided by operating activities 31,478 12,749 89 5,989

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Acquisitions of real estate ( 441,328 ) ( 408,584 ) ( 1,112 ) ( 1,232 )

Real estate improvements ( 2,033 ) — ( 450 )

Real estate development and improvements ( 19,896 ) ( 2,033 ) — ( 450 )

Earnest money deposits ( 219 ) 466 — —

Purchase of computer equipment ( 51 ) — —

Purchase of computer equipment and other corporate assets ( 732 ) ( 51 ) — —

Proceeds from sale of real estate 31,119 48,069 — 77,616

Proceeds from the settlement of property-related insurance claims 928 — — —

Net cash (used in) provided by investing activities ( 430,128 ) ( 362,133 ) ( 167,844 ) 75,934

Cash flows from financing activities

Issuance of common stock in initial public offering, net 227,301 — —

Issuance of common stock in public offerings, net 283,145 227,301 — —

Issuance of common stock in private offering, net — 54,559 164,727 —

Issuance of preferred stock, net — 104 — —

Payment of preferred stock dividends ( 8 ) — —

Payment of common stock dividends ( 8,057 ) — —

Payment of common and preferred stock dividends ( 30,195 ) ( 8,065 ) — —

Payment of OP unit distributions ( 1,109 ) ( 777 ) — —

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Repurchase of common stock for tax withholding obligations ( 504 ) ( 137 ) — —

Deferred offering costs ( 1,693 ) — — —

Deferred financing costs — ( 129 ) ( 2,653 ) ( 199 )

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Supplemental disclosures of non-cash investing and financing activities:

OP units issued as consideration for the acquisition of the Predecessor $ — $ 87,885 $ —

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 $ 4,191 $ — $ —

OP units converted into common stock $ 47,617 $ — $ —

Dividends declared and unpaid on restricted stock $ 506 $ 113 $ — $ —

Cash flow hedge change in fair value $ 4,057 $ 253 $ — $ —

Reclassification from construction in progress upon project completion $ 1,954 $ — $ —

Accrued construction and development costs $ 375 $ — $ —

Accrued capital expenditures and real estate development and improvements costs $ 2,962 $ 375 $ — $ —

Involuntary conversion of building and improvements and change in related insurance proceeds receivable $ 490 $ — $ — $ —

Operating lease right-of-use asset and liability added for corporate office, excluding $0.9 million non-cash lease incentive received $ 4,493 $ — $ — $ —

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

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The Company conducts its operations through NETSTREIT, L.P., a Delaware limited partnership (the “Operating Partnership”).

Concurrently with a series of transactions completed on December 23, 2019 (collectively 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.

NETSTREIT GP, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company, is the sole general partner of the Operating Partnership.

The Company elected to be treated and to qualify as a real estate investment trust (“REIT”) for U.S.

federal income tax purposes beginning with its short taxable year ended December 31, 2019 upon the filing of its U.S.

federal income tax return for such taxable year.

federal income tax purposes beginning with its short taxable year ended December 31, 2019.

Additionally, the Operating Partnership formed NETSTREIT Management TRS, LLC (“NETSTREIT TRS”), which together with the Company jointly elected to be treated as a taxable REIT subsidiary under Section 856(a) of the Internal Revenue Code of 1986, as amended, (the “Code”) for U.S.

federal income tax purposes.

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 December 31, 2020, the Company owned 203 properties, located in 38 states.

Private Offering and Formation Transactions

On December 23, 2019, the Company completed a series of transactions (collectively the “Private Offering”) pursuant to which the Company sold 8,860,760 shares of common stock at $ 19.75 per share in a private placement under Rule 144A and Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).

In connection with the Private Offering, the Company completed the formation transactions described below.

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 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.

In connection with the internalization, EBA EverSTAR Management, LLC was re-domiciled in Delaware and its name was changed to NETSTREIT Management, LLC.

A 0.01 % interest in NETSTREIT Management, LLC was issued to NETSTREIT TRS.

Concurrently with the consummation of the Private Offering, the Company entered into a $ 175.0 million term loan and $ 250.0 million revolving credit facility.

On December 23, 2019, in connection with the acquisition of the Predecessor, the Company fully drew down on its term loan and used the proceeds to acquire the Predecessor, which concurrently settled its outstanding debt facilities.

As part of the acquisition, the Company did not assume any obligations under the Predecessor’s then outstanding debt facilities.

Series A Preferred Stock

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 (“Series A Preferred Stock”), 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.

See “Note 9 - Stockholders’ Equity, Partners’ Capital and Preferred Equity.”

Initial Public Offering

On August 17, 2020, the Company completed the initial public offering of its common stock.

The Company sold 12,244,732 shares of common stock and selling stockholders sold 255,268 shares of common stock at a price of $ 18.00 per share.

The Company's common stock began trading on the New York Stock Exchange under the symbol “NTST” on August 13, 2020.

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 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.

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 December 31, 2021, the Company owned or had investments in 328 properties, located in 41 states, including eight properties under development, with a non-binding option to purchase one additional property under development.

Note 2 – Summary of Significant Accounting Policies

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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.

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

For the periods prior to December 23, 2019, the accompanying consolidated financial statements represent the historical financial information of EverSTAR Income and Value Fund V, LP, the Predecessor.

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

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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 stockholders’ equity.

The Company presents noncontrolling interests, which represent limited partnership units in the operating partnership (the “OP Units”) not owned by the Company, 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.

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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

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These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances.

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.

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 December 31, 2021 inherently less certain than they would be absent the current and potential impacts of COVID-19.

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

Transactions costs within the consolidated financial statements were previously included within the caption “general and administrative” and real estate improvements within the consolidated statements of cash flows were previously included within the caption “acquisitions of real estate.”

Transaction costs within the consolidated financial statements were previously included within the caption “general and administrative” and real estate improvements within the consolidated statements of cash flows were previously included within the caption “acquisitions of real estate.”

Risk and Uncertainties

On March 11, 2020, the World Health Organization announced a new strain of coronavirus (“COVID-19”) was reported worldwide, resulting in COVID-19 being declared a pandemic, and on March 13, 2020 the U.S.

President announced a National Emergency relating to the disease.

COVID-19 and the measures taken to limit its spread are negatively impacting the economy across many industries, including industries in which our tenants operate.

The impacts may continue and increase in severity as the duration of the pandemic lengthens.

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.

During 2020, we provided rent deferral and rent abatement to 12 and 15 of our properties, respectively, representing 0.5 %, and 1.7 % of annualized base rent as of December 31, 2020, respectively.

All tenants with rent relief agreements in place paid in accordance with the terms of their new lease agreements, and as of year end, the Company had collected 100.0 % of all 2020 contractual rent payments.

The Company has not provided for any abatements or deferrals after August 1, 2020.

Accordingly, the Company’s operations and cash flows for the year ended December 31, 2020 were not materially impacted by COVID-19.

The Company also adopted an optional remote-work policy and other physical distancing policies for its corporate office.

The Company does not anticipate these policies to have any adverse impact on its ability to continue to operate its business.

Transitioning to a remote-work environment has not had a material adverse impact on the Company's general ledger system, internal controls or controls and procedures related to its financial reporting process.

The ongoing COVID-19 pandemic and the measures taken to limit its spread have negatively impacted the economy across many industries, including industries in which our tenants operate.

The impacts may continue and/or increase in severity as the duration of the pandemic lengthens.

However, the Company’s operations and cash flows during the years presented in the consolidated financial statements were not materially impacted by COVID-19.

Specifically, during 2020, a number of our tenants across various industries announced temporary closures of their locations and requested rent deferral or rent abatement.

During 2020, we granted rent deferral and rent abatement to 12 and 15 of our properties, respectively, representing 0.5 %, and 1.7 % of ABR as of December 31, 2020, respectively.

The Company has not granted any abatements or deferrals since August 1, 2020.

The Company also adopted an optional remote-work policy and other physical distancing policies for its corporate office during the pandemic.

These policies have not had any adverse effect on its ability to continue to operate its business or on the Company's general ledger system, internal controls or processes related to financial reporting.

Real Estate Held for Investment

Real estate is recorded and stated at cost less any provision for impairment.

Assets are recognized at fair value at acquisition date.

At acquisition date, the purchase price of an acquired property is allocated to tangible and identifiable intangible assets or liabilities based on their relative fair values.

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.

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The fair value of in-place leases is determined by considering estimates of carrying costs during the expected lease-up periods, current market conditions, as well as costs to execute similar leases based on the specific characteristics of each tenant’s lease.

The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-

place leases, including leasing commissions, legal and other related expenses.

The Company estimates the cost to execute leases with terms similar to the remaining lease terms of the in-place leases, including leasing commissions, legal and other related expenses.

The fair value of above-market or below-market leases is recorded based on the net present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between the contractual amount to be paid pursuant to the in-place lease and the Company’s estimate of the fair market lease rate for the corresponding in-place lease, measured over the remaining non-cancelable term of the lease including any below-market fixed rate renewal options for below-market leases.

In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including real estate valuations prepared by independent valuation firms.

In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including real estate valuations prepared by an independent valuation firm.

The Company also considers information and other factors including market conditions, the industry that the tenant operates in, characteristics of the real estate;

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Tenant improvements Shorter of the term of the related lease or useful life

Acquired in-place leases Remaining terms of the respective leases

Acquired in-place leases or leasing commissions Remaining terms of the respective leases

Assembled workforce 3 years

Computer equipment 3 years

Total depreciation and amortization expense was $ 15.5 million, $ 0.2 million and $ 10.4 million for the year ended December 31, 2020 and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

Depreciation expense on real estate held for investment and computer equipment was $ 10.7 million, $ 0.1 million and $ 8.4 million for the year ended December 31, 2020 and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets, and leasing commission costs were $ 4.8 million, $ 0.1 million and $ 2.0 million for the year ended December 31, 2020 and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

Computer equipment and other corporate assets 3 – 5 years

Total depreciation and amortization expense was $ 30.8 million, $ 15.5 million, $ 0.2 million, and $ 10.4 million for the years ended December 31, 2021 and 2020, and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

Depreciation expense on real estate held for investment and computer equipment and other corporate assets was $ 21.1 million, $ 10.7 million, $ 0.1 million, and $ 8.4 million for the years ended December 31, 2021 and 2020, and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets and leasing commissions was $ 9.7 million, $ 4.8 million, $ 0.1 million, and $ 2.0 million for the years ended December 31, 2021 and 2020, and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

Repairs and maintenance are charged to operations as incurred;

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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 December 31, 2020 and 2019 , there were three and two properties, respectively, classified as held for sale.

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

Impairment of Long-Lived Assets

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.

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

An example of an event or changed circumstance is a reduction in the expected holding period of a property.

When a carrying amount is not recoverable, an impairment loss is recognized to the extent that the carrying amount of the asset group 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 estimated or negotiated selling price, less estimated costs of disposal.

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January 1 to December 22,

2021 2020 2019

Total provision for impairment $ 3,539 $ 2,690 $ — $ 7,186

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Disposed within the period 3 3 — 4

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

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

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

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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 had $ 14.8 million of restricted cash as of December 31, 2020, which was included in cash, cash equivalents, and restricted cash on the consolidated balance sheets.

The Company did not have restricted cash as of December 31, 2019.

Restricted cash is included in cash, cash equivalents, and restricted cash on the consolidated balance sheets.

The Company had no restricted cash as of December 31, 2021 and had $ 14.8 million of restricted cash as of December 31, 2020.

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

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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 consolidated statements of operations and comprehensive income (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 December 31, 2020 and 2019, there was no allowance for doubtful accounts.

Reserves for uncollectible amounts are provided against the portion of accounts receivable, net including straight-line rents, which are estimated to be uncollectible, which include a portfolio-based reserve and reserves for specific disputed amounts.

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

As of December 31, 2021, the Company had an immaterial reserve for uncollectible amounts specific to uncharged reimbursable expenses and as of December 31, 2020, there were no reserves for uncollectible amounts.

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 consolidated statements of operations and comprehensive income (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.

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

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

The Company classifies 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

Transaction costs represent costs incurred by the Company to facilitate the private offering and formation transactions and the initial public offering in addition to costs associated with abandoned acquisitions and other acquisition related activity.

Offering costs were $ 2.2 million and $ 0.5 million for the year ended December 31, 2020 and for the period from January 1, 2019 to December 22, 2019, respectively.

There were no such costs incurred for the period from December 23, 2019 to December 31, 2019.

Acquisition related expenses were $ 1.0 million and less than $ 0.1 million for the year ended December 31, 2020 and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

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

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

There were no offering costs expensed for the year ended December 31, 2021 or for the period from December 23, 2019 to December 31, 2019, however, there were $ 2.2 million and $ 0.5 million of offering costs expensed for the year ended December 31, 2020 and for the period from January 1, 2019 to December 22, 2019, respectively.

Acquisition related expenses were $ 0.7 million and $ 1.0 million for the years ended December 31, 2021 and 2020 and $ 0.1 million, for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively.

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

federal income tax purposes beginning with its short taxable year ended December 31, 2019 upon the filing of its U.S.

federal income tax return for such taxable year.

federal income tax purposes beginning with its short taxable year ended December 31, 2019.

To qualify as a REIT, the Company must meet certain organizational, income, asset and distribution tests.

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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 stockholders 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 dividends in the second half of 2020 which were inclusive of the $ 0.2 million obligation for 2019.

See “Note 9 – Stockholders’ Equity, Partners’ Capital and Preferred Equity.”

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.

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

NETSTREIT TRS is treated as a taxable REIT subsidiary which may be subject to U.S.

federal, state, and local income taxes on its taxable income.

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 December 31, 2020 and 2019, the Company had no provision for state, local or federal income taxes in its consolidated financial statements.

During the years ended December 31, 2021 and 2020 and for the periods from December 23, 2019 to December 31, 2019, and from January 1, 2019 to December 22, 2019, respectively, the Company recognized franchise and other state and local tax expenses in general and administrative and recognized state and federal income tax expense in income tax expense in the accompanying consolidated statements of operations and comprehensive income (loss).

All provisions for federal income taxes in the accompanying consolidated financial statements are attributable to NETSTREIT TRS.

Deferred income tax expense and its ending balance in deferred tax assets and liabilities were immaterial for the years and periods presented.

The Company has elected to record related interest and penalties, if any, as general and administrative expense or as income tax expense based on the nature of the tax on the consolidated statements of operations and comprehensive income (loss).

Company had no material interest or penalties relating to income, franchise, and other state and local taxes for the years and periods presented.

Additionally, there were no material accruals for interest or penalties as of December 31, 2021 and 2020.

The Company files federal, state and local income tax returns.

The Company regularly analyzes its various federal and state filing positions and only recognizes the income tax effect in its financial statements when certain criteria regarding uncertain income tax positions have been met.

The Company believes that its income tax positions would more likely than not be sustained upon examination by all relevant taxing authorities.

Therefore, no provisions for uncertain income tax positions have been recorded in the consolidated financial statements.

All federal tax returns for years prior to 2018 are no longer subject to examination.

Additionally, state tax returns for years prior to 2016 are generally no longer subject to examination.

Earnings Per Share

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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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– 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 - Acquisition and Disposition of Real Estate.”

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 during the year ended December 31, 2020 and 2019 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.

Provisions for impairments recognized in the years ended December 31, 2021, 2020, and 2019 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

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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.

During 2020, the Company’s rental revenues were derived from 63 separate tenants leasing 219 total properties.

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

During 2021, the Company’s rental revenues were derived from 70 separate tenants leasing 328 total properties and there was no tenant with rental revenue that exceeded 10% of total rental revenue.

During 2020, the Company’s rental revenues were derived from 63 separate tenants leasing 219 total properties and there was no tenant with rental revenue that exceeded 10% of total rental revenue.

During 2019, the Company and the Predecessor’s rental revenues were derived from 48 separate tenants leasing 123 total properties.

During this period, one tenant, CVS, accounted for 12.6 % of rental revenue.

During this period, one tenant, CVS, accounted for 12.6 % of total rental revenue.

Segment Reporting

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Recent Accounting Pronouncements Adopted

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (ASC 606)" ("ASU 2014-09") ("Topic 606"), that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance.

Topic 606 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

As amended by ASU 2015-14, "Revenue from Contracts with Customers:

Deferral of the Effective Date" ("ASU 2015-14"), Topic 606 is effective for fiscal years beginning after December 15, 2018.

The Predecessor adopted Topic 606 on January 1, 2019, but as the primary revenue stream stems from leasing arrangements and tenant reimbursements, these fall outside the scope of ASC 606.

The Company and its Predecessor did not have non-rental related revenue that would need to be considered for ASC 606 assessment.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which replaces the existing guidance in Topic 840, “Leases” (“ASC 842”).

ASC 842 is effective for fiscal years, and interim periods within those years, beginning

after December 15, 2018.

ASC 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018.

The Predecessor adopted ASC 842 on January 1, 2019 utilizing the modified retrospective transition method.

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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.

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 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 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 consolidated financial statements.

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

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Application of these expedients preserves the presentation of derivatives consistent with past presentation.

The Company determined these elections have not materially impacted the Company's consolidated financial

The Company determined these elections have not materially impacted the Company's consolidated financial statements.

The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Recent Accounting Pronouncements Issued But Not Yet Adopted

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.

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.

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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.

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.

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Note 3 – Leases

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 December 31, 2020, the Company owned 203 single-tenant retail net leased properties spanning 38 states, with tenants representing 56 different brands or concepts across 23 retail sectors.

Tenant Leases

The Company acquires, owns and manages single-tenant, retail commercial real estate 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 December 31, 2021, the Company had investments in 327 single-tenant retail net leased properties spanning 41 states, with 67 different tenants represented across 23 retail sectors.

As of December 31, 2021, the remaining terms of leases range from 1 - 32 years.

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

The Company’s leases typically provide the tenant one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term.

On January 1, 2019, the Predecessor adopted the new accounting guidance in Accounting Standards Codification (“ASC”) Topic 842, Leases, including all related ASUs.

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

Effective January 1, 2019, with the adoption of ASC 842, rental revenues are presented net of provision for doubtful accounts.

Effective January 1, 2019, with the adoption of ASC 842, rental revenues are presented net of reserves for uncollectible amounts.

Fixed lease income includes stated amounts per the lease contract, which are primarily related to base rent and straight-line lease adjustments.

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January 1 to December 22,

2021 2020 2019

Rental revenue

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Other rental revenue:

Above/below market lease amortization 504 ( 2 ) ( 564 )

Above/below market lease amortization, net 808 504 ( 2 ) ( 564 )

Lease incentives ( 122 ) — — —

Uncollectible amounts in lease income ( 23 ) — — ( 222 )

Rental revenue (including reimbursables) $ 33,727 $ 513 $ 19,805

Rental revenue (including reimbursable) $ 59,140 $ 33,727 $ 513 $ 19,805

(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.

There were no write-offs of doubtful accounts during 2020.

During 2019 there were $ 0.2 million of write-offs of doubtful accounts.

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

There were immaterial write-offs of uncollectible amounts during 2021 with no write-offs during 2020.

During 2019, there were $ 0.2 million of write-offs of uncollectible amounts.

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 December 31, 2021 are as follows (in thousands):

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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 – Acquisition and Disposition of Real Estate

During the year ended December 31, 2020, the Company acquired 124 properties for a total purchase price of $ 408.6 million, inclusive of $ 4.7 million of capitalized acquisition costs.

For the period from December 23, 2019 to December 31, 2019, the Company acquired one property for a total purchase price of $ 1.1 million, inclusive of less than $ 0.1 million of capitalized acquisition costs.

For the period from January 1, 2019 to December 22, 2019, the Company acquired one property for a total purchase price of $ 1.2 million, inclusive of less than $ 0.1 million of capitalized acquisition costs.

Corporate Office Lease

In August 2021, the Company entered into a lease agreement on a new corporate office space, which is classified as an operating lease.

The Company began operating out of the new office in February 2022.

The Company expects to incur approximately $ 2.2 million of total costs, including costs related to improvements, furniture and fixtures, and computer and computer related equipment.

The Company capitalized $ 1.6 million as of December 31, 2021.

Tenant allowances in the amount of $ 0.9 million were utilized in accordance with the lease agreement.

The lease has an initial noncancellable term of 10.5 years that expires on July 31, 2032, with a one-time option to terminate in 2029 exercisable by the Company.

The lease is also renewable at the Company’s option for two additional periods of five years .

Annual rent expense, excluding variable costs, is expected to be approximately $ 0.5 million during the initial term.

The corporate office lease contains variable lease costs related to the lease of parking spaces and non-lease components related to the reimbursement of property operating expenses and certain common area maintenance expenses, all of which are recognized as incurred.

The Company elected to use the component practical expedient, which permits the Company to not separate non-lease components from lease components if timing and pattern of transfer is the same.

Rent expense, including variable costs, will be recorded beginning January 2022.

The Company recorded a right-of-use asset and operating lease liability of approximately $ 4.5 million at lease commencement.

As of December 31, 2021, the right-of-use asset and operating lease liability was $ 4.6 million and $ 5.4 million, respectively.

The right-of-use asset is included in other assets, net and the operating lease liability is included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.

Scheduled future minimum base rental payments as of December 31, 2021 are as follows (in thousands):

Future Minimum Base

Rental Payments

Thereafter 3,982

Total lease payments 6,576

amount representing interest (1)

Present value of operating lease liabilities $ 5,442

(1) Imputed interest was calculated using a discount rate of 3.25 %.

The discount rate is based on the estimated incremental borrowing rate, calculated as the treasury rate for the same period as the underlying lease term, plus a spread determined using factors including the Company’s credit rating and REIT industry performance.

Note 4 – Real Estate Investments

As of December 31, 2021, the Company owned or had investments in 328 properties, including nine properties under development.

The gross real estate investment portfolio, including properties under development, totaled approximately $ 1.05 billion and consisted of the gross acquisition cost of land, buildings, improvements, and lease intangible assets and liabilities.

The investment portfolio is geographically dispersed throughout 41 states with gross real estate investments in Illinois and Texas representing 11.3 % and 11.2 %, respectively, of the total gross real estate investment of the Company’s entire portfolio.

During the year ended December 31, 2021, the Company acquired 124 properties, for a total purchase price of $ 441.3 million, including $ 4.2 million of capitalized acquisition costs.

During the year ended December 31, 2020, the Company acquired 124 properties, for a total purchase price of $ 408.6 million, including $ 4.7 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):

Successor Predecessor

Year Ended December 31, For the Period from

December 23 to December 31, For the Period from

January 1 to December 22,

Year Ended December 31,

Land $ 116,056 $ 124,998

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Above-market lease intangible assets 7,904 5,673

Assumed receivables 44

Construction-in-progress assets 52 270

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On December 23, 2019, the Company contributed the proceeds of the Private Offering to the Operating Partnership, and the Operating Partnership acquired the Predecessor for a combination of OP Units and $ 256.3 million in cash.

The Operating Partnership issued 8,860,760 Class A OP Units to the Company for its contribution and 4,449,019 OP Units ( 3,652,149 Class A and 796,870 Class B) to the Predecessor's owners for the acquisition.

The Operating Partnership issued 8,860,760 Class A OP Units to the Company for its contribution and 4,449,019 OP Units ( 3,652,149 Class A OP Units and 796,870 Class B OP Units) to the Predecessor's owners for the acquisition.

The acquisition was accounted for as an asset acquisition and included $ 0.5 million of acquisition fees incurred in connection with the acquisition.

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Purchase price (including acquisition costs) $ 256,285

During the year ended December 31, 2020, the Company sold 15 properties for a total sales price, net of disposal costs, of $ 48.1 million, recognizing a gain on sale of $ 6.2 million.

During the year ended December 31, 2021, the Company invested a total of $ 20.8 million, including total purchase price of $ 12.0 million, in ten properties, including one that contains a non-binding purchase option to acquire the property upon completion.

Upon acquisition or investment in these properties, the Company commenced or assumed development of build-to-suit projects.

As of December 31, 2021, the Company completed development on one of the projects and reclassified approximately $ 2.9 million from property under development to land, building, and improvements in the accompanying consolidated balance sheets.

The remaining developments are expected to be substantially completed with rent commencing at various points throughout 2022.

The purchase price, including acquisitions costs, and subsequent development are included in property under development in the accompanying consolidated balance sheets as of December 31, 2021.

During the year ended December 31, 2020, the Company invested a total of $ 5.4 million, including the purchase price of $ 3.5 million, in two properties.

Upon acquisition in these properties, the Company commenced development of build-to-suit projects which were completed in July and December 2020, respectively.

Rent commenced in July 2020 and January 2021, respectively.

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

During the year ended December 31, 2021, the Company sold nine properties for a total sales price, net of disposal costs of $ 31.1 million, recognizing a net gain of $ 3.0 million on the sales.

During the year ended December 31, 2020, the Company sold 15 properties for a total sales price, net of disposal costs of $ 48.1 million, recognizing a net gain of $ 6.2 million on the sales.

For the period from December 23, 2019 to December 31, 2019, the Company had no dispositions.

For the period from January 1, 2019 to December 22, 2019, the Company sold 30 properties for a total sales price, net of disposal costs, of $ 77.6 million, recognizing a gain on sale of $ 5.6 million.

For the period from January 1, 2019 to December 22, 2019, the Company sold 30 properties for a total sales price, net of disposal costs of $ 77.6 million, recognizing a net gain of $ 5.6 million on the sales.

Loss on Damages and Other Items

The Company incurred significant damages to a property in Houma, Louisiana as a result of Hurricane Ida making landfall in August 2021.

As of December 31, 2021, the Company recorded a loss based on estimated damages of $ 0.5 million in the accompanying consolidated statements of operations and comprehensive income (loss), which has been fully offset by insurance proceeds specific to capitalized building and improvement costs of $ 0.9 million.

Total repair and replacement costs are expected to be approximately $ 1.1 million which is covered by insurance, less the Company’s $ 0.1 million deductible.

The Company expects construction to be completed in the first quarter of 2022.

During the construction period, customer rental payments will continue to be abated, with the lost rent covered by the Company’s insurance policy.

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.

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Assembled workforce 873 ( 592 ) 281 873 ( 299 ) 574

Lease incentives 5,821 ( 122 ) 5,699 — — —

Total Intangible assets $ 140,410 $ ( 15,638 ) $ 124,772 $ 79,950 $ ( 4,926 ) $ 75,024

Below-market leases $ 26,185 $ ( 2,869 ) $ 23,316 $ 17,951 $ ( 1,021 ) $ 16,930

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

Years Remaining

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Assembled workforce 1.0 2.0

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.

Lease incentives 12.7 —

The Company records amortization of in-place lease assets and assembled workforce intangible assets to amortization expense, and records net amortization of above-market and below-market lease intangibles as well as amortization of lease incentives to rental revenue.

The following amounts in the accompanying 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):

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January 1 to December 22,

2021 2020 2019

Amortization:

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Below-market lease liabilities 1,858 1,064 11 403

Lease incentives ( 122 ) — — —

$ 686 $ 504 $ ( 2 ) $ ( 563 )

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 December 31, 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, below-market, and lease incentive lease intangibles to rental revenue as of December 31, 2021, for the next five years and thereafter (in thousands):

2022 2023 2024 2025 2026 Thereafter Total

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Below-market lease liabilities 2,220 2,213 2,193 2,169 2,049 12,472 23,316

Lease incentives ( 473 ) ( 473 ) ( 473 ) ( 473 ) ( 473 ) ( 3,334 ) ( 5,699 )

Net adjustment to rental revenue $ 431 $ 424 $ 408 $ 385 $ 266 $ ( 129 ) $ 1,785

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Debt consists of the following (in thousands):

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

Maturity Date Interest Rate 2021 2020

Term Loan (1)

December 23, 2024 1.36 % $ 175,000 $ 175,000

December 23, 2023 1.31 % 64,000 —

Total debt 239,000 175,000

Unamortized discount and debt issuance costs ( 670 ) ( 895 )

Unamortized deferred financing costs, net (3)

( 796 ) ( 1,198 )

Successor Credit Facility

Total debt, net $ 237,534 $ 172,907

(1) Interest rate includes the effect of a variable interest rate that has been swapped to a fixed interest rate.

(2) The annual interest rate of the Revolver assumes one-month LIBOR as of December 31, 2021 of 0.10 %.

Additionally, the Revolver may be extended up to one year.

(3) The Company records deferred financing costs for the Revolver in other assets, net on its 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 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 the 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 the Revolver 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.

The Credit Facility, effective during the fourth quarter of 2020, is unsecured as the Administrative Agent released the collateral in connection with the Company’s satisfaction of the collateral release requirements.

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 the 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 the Revolver 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.

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 were 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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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.

The Company further amended and redefined its debt covenant calculation during the third quarter of 2021 through the execution of two separate amendments.

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.”

On December 23, 2019, in connection with the acquisition of the Predecessor, the Company fully drew down on its Term Loan and used the proceeds to acquire the Predecessor who then concurrently settled its outstanding debt facilities of $ 168.3 million, including incremental legal and tax costs of $ 0.4 million, excluding unamortized deferred financing costs of $ 0.5 million.

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The residual amount of $ 4.3 million was held in cash, cash equivalents and restricted cash on December 31, 2019 on the Successor's consolidated balance sheet.

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 $ 0.9 million and $ 1.1 million is unamortized as of December 31, 2020 and 2019, respectively, is included within term loan, net on the consolidated balance sheets.

Revolver deferred financing costs of $ 1.6 million, of which $ 1.2 million and $ 1.6 million is unamortized as of December 31, 2020 and 2019, respectively, is included within other assets, net on the consolidated balance sheets.

Total deferred financing costs amortized on the Term Loan and Revolver were $ 0.6 million and less than $ 0.1 million for the year ended December 31, 2020 and for the period from December 23, 2019 to December 31, 2019, respectively.

Deferred financing, discount and debt issuance costs are being amortized over the remaining terms of each respective loan.

Total costs amortized on the Term Loan and Revolver were $ 0.6 million for both years ended December 31, 2021 and 2020 and less than $ 0.1 million for the period from December 23, 2019 to December 31, 2019.

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

As of December 31, 2020, and 2019, the Term Loan had a weighted average interest rate, exclusive of amortization of deferred financing costs, of 1.97 % and 3.28 %, respectively, which as of September 28, 2020, is inclusive of the interest rate hedge as described in “Note 7 - Derivative Financial Instruments.”

The Company incurred interest expense in connection with the Term Loan for the year ended December 31, 2020 and for the period from December 23, 2019 to December 31, 2019 of $ 3.5 million and $ 0.2 million, respectively.

As of December 31, 2021, and 2020, the Term Loan had a weighted average interest rate, exclusive of amortization of discount and deferred financing costs and the effects of the interest rate hedge, of 1.27 % and 1.97 %, respectively, and 3.28 % for the period from December 23, 2019 to December 31, 2019.

The Company incurred interest expense in connection with the Term Loan for the year ended December 31, 2021, 2020, and for the period from December 23, 2019 to December 31, 2019 of $ 2.2 million, $ 3.5 million, and $ 0.2 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 assessed that the carrying value materially approximated the estimated fair value of the Term Loan as of December 31, 2020 and 2019.

During 2020, the Company incurred interest expense, exclusive of facility fees for unused capacity, on borrowings under the Revolver of $ 0.1 million, with a weighted average interest rate, exclusive of amortization of deferred financing costs, of 1.54 %.

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

The Company also incurred interest expense in connection with unused capacity for the year ended December 31, 2020 and for the period from December 23, 2019 to December 31, 2019 of $ 0.6 million and less than $ 0.1 million, respectively.

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

During 2021 and 2020, the Company incurred interest expense, exclusive of facility fees for unused capacity, on borrowings under the Revolver of $ 0.2 million and $ 0.1 million, respectively, with a weighted average interest rate, exclusive of amortization of deferred financing costs, of 1.31 % and 1.54 %, respectively.

As of December 31, 2021, the Company had $ 64.0 million of borrowings under the Revolver and as of December 31, 2020, had no borrowings outstanding.

The Company also incurred approximately $ 0.6 million of interest expense in connection with unused capacity during both 2021 and 2020.

Additionally, for the period from December 23, 2019 to December 31, 2019, the Company incurred interest expense in connection with unused capacity of less than $ 0.1 million.

During 2021, the Company capitalized less than $ 0.1 million of interest expense associated with properties under development.

No interest expense was capitalized in 2020.

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

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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 December 31, 2021 of 0.10 %, 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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The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the consolidated balance sheets as of December 31, 2021 and December 31, 2020 (in thousands):

Derivative Assets Derivative Liabilities

Fair Value as of December 31, Fair Value as of December 31,

Derivative Assets

Fair Value as of December 31,

Derivatives Designated as Hedging Instruments:

Balance Sheet Location 2020 2019 Balance Sheet Location 2020 2019

Interest rate swaps Other assets, net $ 253 $ — Accounts payable, accrued expenses and other liabilities $ — $ —

Balance Sheet Location 2021 2020

Interest rate swaps Other assets, net $ 4,310 $ 253

The following table presents the effect of the Company's interest rate swaps on the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2021, 2020, and 2019 (in thousands):

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The Company did not exclude any amounts from the assessment of hedge effectiveness for the year ended December 31, 2021, 2020, and 2019.

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

During the next twelve months, the Company estimates that an additional $ 0.5 million will be reclassified as a decrease 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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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 assets measured at fair value on a recurring basis as of December 31, 2020, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

The table below presents the Company’s derivative assets measured at fair value on a recurring basis as of December 31, 2021 and 2020, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

Fair Value Hierarchy Level

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Derivative assets $ — $ 4,310 $ — $ 4,310

There were no derivative assets or liabilities as of December 31, 2019.

December 31, 2020

Derivative assets $ — $ 253 $ — $ 253

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

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

Earnest money deposits $ 634 $ 1,100

Deferred financing costs, net 1,198 1,552

Accounts receivable, net $ 2,801 $ 1,489

Deferred rent receivable 2,263 1,407

Other assets 996 12

Prepaid assets 1,473 356

Earnest money deposits 853 634

Fair value of interest rate swaps 4,309 253

Deferred offering costs 615 —

Deferred financing costs, net 796 1,198

Right-of-use asset 4,581 —

Leasehold improvements and other corporate assets 1,657 38

Other assets, net 1,003 349

$ 20,351 $ 5,724

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Prepaid rent 1,918 1,551

Operating lease liability 5,442 —

Accounts payable 419 916

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

Total net proceeds to the Company from the Company's initial public offering in August 2020 were $ 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 noncontrolling interest conversion of 255,268 of operating partnership units into common stock.

During the year ended December 31, 2020, 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 seven thousand shares of common stock valued at $ 0.1 million, solely to pay the associated statutory tax withholding during the year ended December 31, 2020.

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

Total net proceeds to the Company from the Company's Private Offering in December 2019 and January 2020 were $ 219.0 million which is net of initial purchaser’s discount and placement fees of $ 13.9 million.

The Private Offering resulted in net proceeds to the Company of $ 219.0 million, net of initial purchaser’s discount and placement fees of $ 13.9 million.

The Private Offering resulted in the issuance of 11,797,645 shares of common stock.

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 OP Units.

On August 17, 2020, the Company completed the initial public offering of its common stock.

The Company sold 12,244,732 shares of common stock and selling stockholders sold 255,268 shares of common stock at a price of $ 18.00 per share.

On September 16, 2020, the Company issued an additional 1,436,829 shares of its common stock pursuant to the underwriters' over-allotment option.

The net proceeds to the Company from the initial public offering were $ 227.3 million, net of underwriting discounts and transaction costs of $ 18.9 million.

The Company contributed the net proceeds 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 to the Company for the 255,268 shares sold by selling stockholders.

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.

The Company received net proceeds of $ 194.2 million, net of underwriting discounts and transaction costs of $ 9.4 million.

The Company contributed the net proceeds to the Operating Partnership in exchange for 10,915,688 Class A OP Units.

On September 1, 2021, the Company entered into a new $ 250.0 million at-the-market equity program (the “ATM Program”) through which, from time to time, it may sell shares of its common stock in registered transactions.

From October 1, 2021 through November 12, 2021, the Company issued 3,852,436 shares of common stock at a weighted average price of $ 23.36 per share in connection with the ATM Program for net proceeds of approximately $ 89.0 million, net of underwriting discounts and transaction costs of $ 1.0 million.

The Company contributed the net proceeds to the Operating Partnership in exchange for 3,852,436 Class A OP Units.

In September 2021, the Board of Directors of the Company (the “Board”) authorized a repurchase program for up to $ 150.0 million of common stock.

Repurchases of common stock may be made at management’s discretion from time to time in open market transactions, privately negotiated transactions or by other means (including through Rule 10b5-1 trading plans or one or more accelerated stock repurchase programs).

The timing of share repurchases and the number of shares of common stock to be repurchased will depend upon prevailing market conditions and other factors and there can be no assurances that the Company will make any purchases under the common stock repurchase program.

During the year ended December 31, 2021, portions of restricted stock unit awards granted to certain of the Company’s officers, directors and employees vested.

The vesting of these awards, granted pursuant to the Omnibus Incentive Plan (as defined in “Note 10 - Stock-Based Compensation”), 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 and employees elected to surrender a total of 23 thousand shares of common stock valued at $ 0.5 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 consolidated statements of cash flows.

Preferred Equity

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The preferred dividend was settled in cash on June 30, 2020.

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, which included the payment of accrued dividends for the period from July 1, 2020 to August 18, 2020 and a redemption premium of $ 100 per share.

As of December 31, 2020, there are no shares of preferred stock outstanding.

During the year ended December 31, 2020, the Company declared and paid the following common stock dividends (in thousands, except per share data):

The Company redeemed all 125 outstanding shares of Series A Preferred Stock upon the completion of the initial public offering for approximately $ 0.1 million, which included the payment of accrued dividends for the period from July 1, 2020 to August 18, 2020 and a redemption premium of $ 100 per share.

As of December 31, 2020, there were no shares of preferred stock outstanding.

During the years ended December 31, 2021 and 2020, the Company declared and paid the following common stock dividends (in thousands, except per share data):

Year Ended December 31, 2021

Declaration Date Dividend Per Share Record Date Total Amount Payment Date

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

April 27, 2021 0.20 June 1, 2021 7,890 June 15, 2021

July 27, 2021 0.20 September 1, 2021 7,916 September 15, 2021

October 26, 2021 0.20 December 1, 2021 8,702 December 15, 2021

$ 0.80 $ 30,195

Year Ended December 31, 2020

Declaration Date Dividend Per Share Record Date Total Amount Payment Date

August 18, 2020 $ 0.10 September 15, 2020 $ 2,430 September 25, 2020

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$ 0.30 $ 8,057

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 $ 0.4 million and $ 0.4 million to holders of OP Units as of September 25, 2020 and December 15, 2020, respectively.

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

Accordingly, during the years ended December 31, 2021 and 2020, the Operating Partnership paid distributions of $ 1.1 million and $ 0.8 million, respectively, to holders of OP Units.

For federal income tax purposes, distributions to stockholders are characterized as ordinary dividends, capital gain distributions, or nondividend distributions.

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stockholders’ basis (but not below zero) in their shares.

The following table shows the character of the Company’s common stock distributions paid on a percentage basis for the year ended December 31, 2020.

The following table shows the character of the Company’s common stock distributions paid on a percentage basis for the years ended December 31, 2021 and 2020.

Year Ended December 31,

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Noncontrolling Interests

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

Noncontrolling interests represent third party holders of OP Units.

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 December 31, 2020 and 2019, noncontrolling interest represented 5.8 % and 33.4 %, respectively.

During the year ended December 31, 2020, OP Unit holders converted 2,441,869 OP Units into shares of common stock on a one-for-one basis.

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.

Effective with the Company’s Private Offering, the Company contributed $ 219.0 million of the Private Offering proceeds to the Operating Partnership, and the Operating Partnership acquired the Predecessor for a combination of OP Units and cash.

The Operating Partnership issued 11,797,645 Class A OP Units to the Company for its contribution and 4,449,019 OP Units ( 3,652,149 Class A and 796,870 Class B) to the Predecessor's owners for the acquisition.

As of December 31, 2021 and 2020, noncontrolling interests represented 1.3 % and 5.9 %, respectively of OP Units.

During the years ended December 31, 2021 and 2020, OP Unit holders redeemed 1,189,098 and 2,441,869 OP units, respectively, into shares of common stock on a one-for-one basis.

Effective with the Company’s Private Offering, the Operating Partnership issued 11,797,645 Class A OP Units to the Company for its contribution and 4,449,019 OP Units ( 3,652,149 Class A and 796,870 Class B) to the Predecessor's owners for the acquisition.

Class A OP Units and Class B OP Units have identical rights and preferences, except that the Class A OP Units will, and the Class B OP Units will not, be entitled to receive the special stock dividend, if applicable.

Note 10 – Stock-Based Compensation

Under the NETSTREIT Corp.

2019 Omnibus Incentive Compensation Plan (the “Omnibus Incentive Plan”), which became effective on December 23, 2019, 2,094,976 shares of common stock are reserved for issuance.

The Omnibus Incentive Plan

provides for the grant of stock options, stock appreciation rights, restricted shares, restricted stock units, long-term incentive plan units, dividend equivalent rights, and other share-based, share-related or cash-based awards, including performance-based awards, to employees, directors and consultants, with each grant evidenced by an award agreement providing the terms of the award.

2019 Omnibus Incentive Compensation Plan (the “Omnibus Incentive Plan”), 2,094,976 shares of common stock are reserved for issuance.

The Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted shares, restricted stock units, long-term incentive plan units, dividend equivalent rights, and other share-based, share-related or cash-based awards, including performance-based awards, to employees, directors and consultants, with each grant evidenced by an award agreement providing the terms of the award.

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

As of December 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 on our consolidated statements of operations and comprehensive income (loss) was $ 2.5 million for the year ended December 31, 2020.

The total amount of stock-based compensation costs recognized in general and administrative expense in the accompanying consolidated statements of operations and comprehensive income (loss) was $ 3.7 million and $ 2.5 million for the years ended 2021 and 2020.

No stock-based compensation expense was recognized in 2019.

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.

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

Performance-Based Restricted Stock Units (effectiveness of shelf registration)

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

The performance condition required the Company to effectively file a shelf registration statement.

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As a result of the Company's initial public offering in August 2020, the performance condition was satisfied and the Company recorded a stock-based compensation expense catch-up adjustment of $ 1.4 million.

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 December 31, 2020 and 2019:

Shares Weighted Average Grant Date Fair Value per Share Shares Weighted Average Grant Date Fair Value per Share

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

The following table summarizes performance-based restricted stock unit activity for the period ended December 31, 2021, 2020, and 2019:

2021 2020 2019

Shares Weighted Average Grant Date Fair Value per Share Shares Weighted Average Grant Date Fair Value per Share Shares Weighted Average Grant Date Fair Value per Share

Unvested restricted stock grants outstanding, beginning of year 207,803 $ 19.75 168,353 $ 19.75 — $ —

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Unvested restricted stock grants outstanding, end of year 157,380 $ 19.75 207,803 $ 19.75 168,353 $ 19.75

For the year ended December 31, 2020, the Company recognized $ 2.2 million in stock-based compensation expense associated with performance-based restricted stock units.

For the years ended 2021 and 2020, the Company recognized $ 1.2 million and $ 2.2 million, respectively, in stock-based compensation expense associated with performance-based restricted stock units.

No stock-based compensation expense was recognized in 2019.

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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 August 2020.

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 December 31, 2020:

Shares Weighted Average Grant Date Fair Value per Share

Pursuant to the Omnibus Incentive Plan, the Company has granted service-based restricted stock units 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 two to five years .

The following table summarizes service-based restricted stock unit activity for the period ended December 31, 2021 and 2020:

Shares Weighted Average Grant Date Fair Value per Share Shares Weighted Average Grant Date Fair Value per Share

Unvested restricted stock grants outstanding, beginning of year 169,793 $ 18.00 — $ —

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Unvested restricted stock grants outstanding, end of year 295,207 $ 17.84 169,793 $ 18.00

For the year ended December 31, 2020, the Company recognized $ 0.2 million in stock-based compensation expense associated with service-based restricted stock units.

For the years ended 2021 and 2020, the Company recognized $ 1.6 million and $ 0.2 million, respectively, in stock-based compensation expense associated with service-based restricted stock units.

No stock-based compensation expense was recognized in 2019.

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Amortization is recognized on a straight-line basis over the total requisite service period for the entire 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.

The grant date fair value of service based unvested restricted units was 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.

Performance-Based Restricted Stock Units (total shareholder return)

Pursuant to the Omnibus Incentive Plan, the Company granted performance-based restricted stock units 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 performance-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 performance-based share awards is recognized on a straight-line basis over the minimum required service period, which is three years .

The following table summarizes performance-based restricted stock unit activity for the period ended December 31, 2021 and 2020:

Shares Weighted Average Grant Date Fair Value per Share Shares Weighted Average Grant Date Fair Value per Share

Unvested restricted stock grants outstanding, beginning of year — $ — — $ —

Granted during the period 135,766 17.77 — —

Forfeited during the period ( 1,299 ) 17.77 — —

Vested during the period — — — —

Unvested restricted stock grants outstanding, end of year 134,467 $ 17.77 — $ —

For the year ended 2021, the Company recognized $ 0.6 million in stock-based compensation expense associated with performance-based restricted stock units.

No stock-based compensation expense was recognized in 2020 or 2019.

As of December 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 1.8 million and as of December 31, 2021, these awards are expected to be recognized over a remaining weighted average period of 2.2 years.

Alignment of Interest Program

During March 2021, the Company adopted 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 that would vest over a four-year service period beginning April 1, 2021.

The Program is deemed to be a liability-classified award (accounted for as an equity-classified award as the service date precedes the grant date and the award would otherwise by classified as equity on grant date), 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 December 31, 2021 was approximately $ 1.0 million.

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

For the year ended December 31, 2021, the Company recognized approximately $ 0.2 million in stock-based compensation expense associated with this award.

Note 11 – Earnings Per Share

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.

Net income (loss) 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 (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period.

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 year ended December 31, 2020 and for the period from December 23, 2019 to December 31, 2019.

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income (loss) per common share for the years ended December 31, 2021 and 2020 and for the period from December 23, 2019 to December 31, 2019.

Net income per share information is not applicable for the reporting periods prior to December 23, 2019.

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(in thousands, except share and per share data) 2021 2020 2019

Net income $ 212 $ 42

Net loss (income) attributable to noncontrolling interest 518 ( 14 )

Cumulative preferred stock dividends and redemption premium ( 42 ) —

Net income attributable to common shares, basic 688 28

Net loss (income) attributable to noncontrolling interest 518 ( 14 )

Net income attributable to common shares, diluted $ 170 $ 42

Net income (loss) $ 3,150 $ 212 $ 42

Net (income) loss attributable to noncontrolling interests ( 104 ) 518 ( 14 )

Preferred stock dividends — ( 42 ) —

Net income (loss) attributable to common shares, basic 3,046 688 28

Net income (loss) attributable to noncontrolling interest ( 104 ) 518 ( 14 )

Net income (loss) attributable to common shares, diluted $ 3,150 $ 170 $ 42

Weighted average common shares outstanding, basic 36,999,459 17,322,182 8,860,760

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Weighted average common shares outstanding, diluted 38,672,565 21,157,996 8,860,760

Net income available to common stockholders per common share, basic $ 0.04 $ —

Net income available to common stockholders per common share, diluted $ 0.01 $ —

Net income (loss) available to common stockholders per common share, basic $ 0.08 $ 0.04 $ —

Net income (loss) loss available to common stockholders per common share, diluted $ 0.08 $ 0.01 $ —

As of December 31, 2021 and 2020, there were 562,784 and 1,751,882 of OP Units outstanding, respectively.

Subsequent to December 31, 2020, 182,418 of OP Units converted into shares of common stock on a one-for-one basis.

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 consolidated financial statements when the fair value of such liability can be reasonably estimated and is required to be recognized.

As of December 31, 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.

Additionally, as of December 31, 2021, the Company had commitments to fund nine properties under development totaling $ 21.6 million, all of which is expected to be funded over the next 12 months.

In August 2021, the Company entered into a lease agreement on a new corporate office space, which is classified as an operating lease.

The Company began operating out of the new office in February 2022.

The Company expects to incur approximately $ 0.5 million of additional improvement, furniture and fixtures, and computer and computer related equipment costs in the first quarter of 2022.

The lease has an initial noncancellable term of 10.5 years that expires on July 31, 2032 and is renewable at the Company’s option for two additional periods of five years .

Future minimum base rental payments under the lease are outlined in “Note - 3 - Leases.” Annual rent expense, excluding operating expenses, is expected to be approximately $ 0.5 million during the initial term.

The Company incurred significant damages to a property in Houma, Louisiana as a result of Hurricane Ida making landfall in August 2021.

Repair and replacement costs are expected to be approximately $ 1.1 million which is covered by insurance, less the Company’s $ 0.1 million deductible.

The Company has incurred approximately $ 0.9 million of costs as of December 31, 2021.

As of December 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.

Note 13 – Related-Party Transactions

Successor Transactions

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 year ended December 31, 2020 and 2019, the Company incurred $ 0.2 million and less than $ 0.1 million, respectively, in related expenses.

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 Holdings, LLC, which was subsequently amended in April 2021 and ultimately terminated in July 2021.

Under the facilities agreement, the Company shared in office rent by paying a fixed monthly rate and office related expenses based on employee headcount.

For the years ended 2021, 2020, and 2019, the Company incurred approximately $ 0.1 million, $ 0.2 million, and less than $ 0.1 million, respectively, in related expenses.

Predecessor Transactions

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

Real Estate Investment Activity

The Company acquired eight properties for a total purchase price, including transaction costs, of $ 17.4 million.

Additionally, on February 8, 2021, the Company invested $ 1.3 million in a development project in Yuma, Arizona.

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

OP Unit Conversions to Common Stock

There were 182,418 OP Units that converted into shares of common stock on a one-for-one basis subsequent to December 31, 2020.

Common Stock Dividend

On March 3, 2021, the Company's Board of Directors declared a cash dividend of $ 0.20 per share for the first quarter of 2021.

On February 22, 2022, the Company's Board of Directors declared a cash dividend of $ 0.20 per share for the first quarter of 2022.

The dividend will be paid on March 30, 2022 to stockholders of record on March 15, 2022.

Alignment of Interest Program

On March 3, 2021, pursuant to the Omnibus Incentive Plan, the Compensation Committee of the Company’s Board of Directors adopted the Alignment of Interest Program (the “Program”).

The Program allows individuals who are eligible to receive awards under the Omnibus Incentive Plan, as selected by the Committee from time to time, to elect to receive restricted stock units (“RSUs”) under the Omnibus Plan in lieu of a specified percentage of cash compensation.

For 2020, eligible participants elected to receive an aggregate of $ 0.7 million in the form of RSUs in lieu of cash compensation.

The number of RSUs will be determined on March 8, 2021, the second business day following the release of the Company’s fourth quarter earnings.

Awarded RSUs will vest over three years , in substantially equal annual installments, generally subject to continued provision of services.

2021 Restricted Stock Unit Grants

On March 3, 2021, pursuant to the Omnibus Incentive Plan, the Company made performance and service-based restricted stock unit grants to certain employees.

The Company issued an aggregate of $ 4.0 million of RSUs of which 60 % will be earned over a service period of three years and be based on the Company’s total shareholder return (“TSR”) as compared to the TSR of 33 peer companies and total absolute TSR over the cumulative three year period.

The remaining 40 % of the award will vest over a period of three years from the date of grant, subject to the individual recipient’s continued provision of service to the Company through the vesting date.

The number of RSUs will be determined on March 8, 2021, the second business day following the release of the Company’s fourth quarter earnings.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

Real Estate Investment Activity

Since December 31, 2021, the Company acquired or provided funding to seven properties for $ 60.6 million, which includes capitalized transaction costs.

Public Offering and Forward Sale of the Company’s Common Stock

On January 13, 2022, the Company completed a public offering of 10,350,000 shares of common stock at a public offering price of $ 22.25 per share.

In connection with the offering, the Company entered into forward sale agreements for 10,350,000 shares of its common stock.

The Company did not initially receive any proceeds from the sale of shares of common stock by the forward purchasers.

The Company expects to physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares upon one or more forward settlement dates, which shall occur no later than January 10, 2023.

The Company may also elect to cash settle or net share settle all or a portion of its obligations under a forward sale agreement if it concludes it is in its best interest to do so.

If the Company elects to cash settle a forward sale agreement, it may not receive any proceeds and it may owe cash to the relevant counterparty in certain circumstances.

No physical settlement has occurred through the date on which these consolidated financial statements were issued.

Revolver Borrowing

In January 2022, the Company borrowed $ 53.0 million on the Revolver which will be used for general corporate purposes, including the acquisition of properties in the Company’s pipeline.

OP Unit Conversions to Common Stock

There were 11,391 OP Units redeemed for shares of common stock on a one-for-one basis subsequent to December 31, 2021.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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What changed 10-K

Item 8. Financial Statements and Supplementary Data