What changed in this filing

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Item 1. Financial Statements

2022-10-27 compared with 2022-07-28 · 289 added, 203 removed, 610 unchanged (45% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

June 30, December 31,

September 30, December 31,

Real estate, at cost:

6 unchanged sentences

Assets held for sale 23,985 2,096

Mortgage loan receivables, net 46,435 —

Mortgage loans receivable, net 46,406 —

Cash, cash equivalents and restricted cash 16,190 7,603

3 unchanged sentences

Liabilities and equity

Term loan, net $ 174,442 $ 174,330

Term loans, net $ 373,202 $ 174,330

Revolving credit facility 30,000 64,000

Mortgage note payable, net 7,901 —

Lease intangible liabilities, net 31,438 23,316

5 unchanged sentences

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

50,341,288 and 44,223,050 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

54,876,295 and 44,223,050 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 1,032,634 809,724

8 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(In thousands, except share and per share data)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Rental revenue (including reimbursable) $ 24,339 $ 15,603 $ 67,309 $ 41,333

Interest income on mortgage loan receivables 586 — 997 —

Interest income on mortgage loans receivable 674 — 1,671 —

Total revenues 25,013 15,603 68,980 41,333

11 unchanged sentences

Total other income (expense), net ( 2,874 ) 1,060 ( 3,510 ) ( 241 )

Net income (loss) before income taxes 2,103 ( 2,630 ) 4,160 ( 1,839 )

Net income before income taxes 1,590 2,944 5,751 1,105

Income tax expense ( 171 ) — ( 356 ) ( 50 )

Net income (loss) 2,010 ( 2,630 ) 3,976 ( 1,889 )

Net income (loss) attributable to noncontrolling interests 23 ( 94 ) 47 ( 54 )

Net income (loss) attributable to common stockholders $ 1,987 $ ( 2,536 ) $ 3,929 $ ( 1,835 )

Net income 1,419 2,944 5,395 1,055

Net income attributable to noncontrolling interests 16 96 63 42

Net income attributable to common stockholders $ 1,403 $ 2,848 $ 5,332 $ 1,013

Amounts available to common stockholders per common share:

4 unchanged sentences

Diluted 51,384,758 41,333,579 48,657,049 37,108,425

Other comprehensive income (loss):

Net income (loss) $ 2,010 $ ( 2,630 ) $ 3,976 $ ( 1,889 )

Other comprehensive income:

Net income $ 1,419 $ 2,944 $ 5,395 $ 1,055

Change in value on derivatives, net 13,887 5 21,436 2,063

Total comprehensive income (loss) $ 3,348 $ ( 2,895 ) $ 11,525 $ 169

Comprehensive income (loss) attributable to noncontrolling interests 38 ( 106 ) 138 58

Comprehensive income (loss) attributable to common stockholders $ 3,310 $ ( 2,789 ) $ 11,387 $ 111

Total comprehensive income $ 15,306 $ 2,949 $ 26,831 $ 3,118

Comprehensive income attributable to noncontrolling interests 149 95 287 153

Comprehensive income attributable to common stockholders $ 15,157 $ 2,854 $ 26,544 $ 2,965

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

24 unchanged sentences

Balance at June 30, 2022 50,341,288 $ 503 $ 938,043 $ ( 49,943 ) $ 11,581 $ 900,184 $ 9,668 $ 909,852

Issuance of common stock in public offering, net of issuance costs 4,512,003 45 93,477 — — 93,522 — 93,522

Dividends and distributions declared on common stock and OP Units — — — ( 10,073 ) — ( 10,073 ) ( 103 ) ( 10,176 )

Dividends declared on restricted stock, net — — — ( 141 ) — ( 141 ) — ( 141 )

Vesting of restricted stock units 31,865 1 ( 1 ) — — — — —

Repurchase of common stock for tax withholding obligations ( 8,861 ) — ( 187 ) — — ( 187 ) — ( 187 )

Stock-based compensation, net — — 1,302 7 — 1,309 — 1,309

Other comprehensive income — — — — 13,754 13,754 133 13,887

Net income — — — 1,403 — 1,403 16 1,419

Balance at September 30, 2022 54,876,295 $ 549 $ 1,032,634 $ ( 58,747 ) $ 25,335 $ 999,771 $ 9,714 $ 1,009,485

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

23 unchanged sentences

Balance at June 30, 2021 39,525,978 $ 395 $ 704,269 $ ( 23,140 ) $ 2,181 $ 683,705 $ 25,771 $ 709,476

OP Units converted to common stock 65,840 1 1,246 — — 1,247 ( 1,247 ) —

Dividends and distributions declared on common stock and OP Units — — — ( 7,916 ) — ( 7,916 ) ( 265 ) ( 8,181 )

Dividends declared on restricted stock — — — ( 125 ) — ( 125 ) — ( 125 )

Vesting of restricted stock units 35,000 — — — — — — —

Repurchase of common stock for tax withholding obligations ( 9,013 ) — ( 229 ) — — ( 229 ) — ( 229 )

Stock-based compensation — — 1,026 7 — 1,033 — 1,033

Other comprehensive income — — — — 6 6 ( 1 ) 5

Net income — — — 2,848 — 2,848 96 2,944

Balance at September 30, 2021 39,617,805 $ 396 $ 706,312 $ ( 28,326 ) $ 2,187 $ 680,569 $ 24,354 $ 704,923

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

3 unchanged sentences

(In thousands, except share and per share data)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

Net income (loss) $ 3,976 $ ( 1,889 )

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

Net income $ 5,395 $ 1,055

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 36,137 21,078

7 unchanged sentences

Accounts payable, accrued expenses and other liabilities 676 2,065

Lessee improvement obligations — ( 1 )

Lease incentive payments ( 936 ) ( 4,004 )

3 unchanged sentences

Real estate development and improvements ( 15,492 ) ( 9,512 )

Investment in mortgage loan receivables ( 46,466 ) —

Investment in mortgage loans receivable ( 46,466 ) —

Earnest money deposits ( 3,486 ) ( 789 )

7 unchanged sentences

Payment of restricted stock dividends ( 154 ) ( 29 )

Proceeds under revolving credit facility 245,000 13,000

Repayments under revolving credit facility ( 72,000 ) ( 13,000 )

Proceeds under revolving credit facilities 365,000 30,000

Repayments under revolving credit facilities ( 399,000 ) ( 13,000 )

Proceeds from term loans 200,000 —

Payments of mortgage note payable ( 12 ) —

Proceeds under property development incentives 605 —

1 unchanged sentence

Deferred offering costs ( 1,220 ) ( 704 )

Deferred financing costs ( 3,755 ) —

Net cash provided by financing activities 351,069 187,758

7 unchanged sentences

Dividends declared and unpaid on restricted stock $ 411 $ 382

Deferred offering costs included in accounts payable, accrued expenses and other liabilities $ — $ 88

Cash flow hedge change in fair value $ 21,436 $ 2,063

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

Mortgage note assumed at fair value $ 7,913 $ —

Accrued capital expenditures and real estate development and improvement costs $ 952 $ 345

14 unchanged sentences

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

As of June 30, 2022, the Company owned or had investments in 384 properties, located in 42 states.

As of September 30, 2022, the Company owned or had investments in 409 properties, located in 42 states.

Note 2 – Summary of Significant Accounting Policies

4 unchanged sentences

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

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

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

Interim Unaudited Financial Information

2 unchanged sentences

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

The results of operations for the three and six months ended June 30, 2022 and 2021 are not necessarily indicative of the results for the full year.

The results of operations for the three and nine months ended September 30, 2022 and 2021 are not necessarily indicative of the results for the full year.

Noncontrolling Interests

11 unchanged sentences

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

Further, the uncertainty over the ultimate impact COVID-19 and instability in macroeconomic conditions will have on the global economy and the Company’s business makes any estimates and assumptions as of June 30, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19 and instability in macroeconomic conditions.

Further, the uncertainty over the ultimate impact COVID-19 and instability in macroeconomic conditions will have on the global economy and the Company’s business makes any estimates and assumptions as of September 30, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19 and instability in macroeconomic conditions.

Actual results could differ from those estimates.

3 unchanged sentences

The Company continues to monitor the global outbreak of COVID-19 and to take steps to mitigate the potential risks to us posed by the pandemic, including the identification and spread of variants.

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

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

Real Estate Held for Investment

11 unchanged sentences

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 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;

The Company also considers information and other factors including market conditions, the industry

that the tenant operates in, characteristics of the real estate;

e.g., location, size, demographics, value and comparative rental rates;

10 unchanged sentences

Computer equipment and other corporate assets 3 – 5 years

Total depreciation and amortization expense was $ 11.8 million and $ 7.1 million during the three months ended June 30, 2022 and 2021, respectively.

Total depreciation and amortization expense was $ 22.7 million and $ 13.0 million during the six months ended June 30, 2022 and 2021, respectively.

Depreciation expense on real estate held for investment and computer equipment and other corporate assets was $ 7.9 million and $ 4.9 million during the three months ended June 30, 2022 and 2021, respectively.

Depreciation expense on real estate held for investment and computer equipment and other corporate assets was $ 15.3 million and $ 9.0 million during the six months ended June 30, 2022 and 2021, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets and leasing commission costs were $ 3.8 million and $ 2.2 million during the three months ended June 30, 2022 and 2021, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets and leasing commission costs were $ 7.4 million and $ 4.0 million during the six months ended June 30, 2022 and 2021, respectively.

Total depreciation and amortization expense was $ 13.4 million and $ 8.1 million during the three months ended September 30, 2022 and 2021, respectively.

Total depreciation and amortization expense was $ 36.1 million and $ 21.1 million during the nine months ended September 30, 2022 and 2021, respectively.

Depreciation expense on real estate held for investment and computer equipment and other corporate assets was $ 9.1 million and $ 5.6 million during the three months ended September 30, 2022 and 2021, respectively.

Depreciation expense on real estate held for investment and computer equipment and other corporate assets was $ 24.4 million and $ 14.5 million during the nine months ended September 30, 2022 and 2021, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets and leasing commission costs were $ 4.3 million and $ 2.5 million during the three months ended September 30, 2022 and 2021, respectively.

Amortization expense on acquired in-place lease and assembled workforce intangible assets and leasing commission costs were $ 11.7 million and $ 6.5 million during the nine months ended September 30, 2022 and 2021, respectively.

Repairs and maintenance are charged to property operating expense as incurred;

2 unchanged sentences

Assets Held for Sale

The Company is continually evaluating the portfolio of real estate assets and may elect to dispose of assets considering criteria including, but not limited to, tenant concentration, tenant credit quality, unit financial performance, local market conditions and lease rates, asset location, and tenant operation type (e.g., tenant or retail sector).

Real estate assets held for sale are expected to be sold within twelve months.

Properties classified as held for sale, including the related intangibles, on the condensed consolidated balance sheets include only those properties available for immediate sale in their present condition, which are actively being marketed, and for which management believes that it is probable that a sale of the property will be completed within one year.

2 unchanged sentences

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

Accordingly, we have not reclassified results of operations for properties disposed during the interim period ended June 30, 2022 or held for sale as discontinued operations as of June 30, 2022, 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 June 30, 2022 and December 31, 2021, there were two and one properties, respectively, classified as held for sale.

Accordingly, we have not reclassified results of operations for properties disposed during the interim period ended September 30, 2022 or held for sale as discontinued operations as of September 30, 2022, as these events are a normal part of the Company’s operations and do not represent strategic shifts in the Company’s operations.

As of September 30, 2022 and December 31, 2021, there were twelve and one properties, respectively, classified as held for sale.

Impairment of Long-Lived Assets

6 unchanged sentences

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

9 unchanged sentences

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

The Company had no restricted cash as of June 30, 2022 or December 31, 2021.

The Company’s bank balances as of June 30, 2022 and December 31, 2021 include certain amounts over the Federal Deposit Insurance Corporation limits.

The Company had no restricted cash as of September 30, 2022 or December 31, 2021.

The Company’s bank balances as of September 30, 2022 and December 31, 2021 include certain amounts over the Federal Deposit Insurance Corporation limits.

Revenue Recognition and Related Matters

1 unchanged sentence

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

The difference between rental revenue recognized and the cash rent

due under the provisions of the lease is recorded as deferred rent receivable and included as a component of other assets in the condensed consolidated balance sheets.

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

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

4 unchanged sentences

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

As of June 30, 2022 and December 31, 2021, the Company had an immaterial reserve for uncollectible amounts specific to uncharged reimbursable expenses.

Mortgage Loan Receivables

The Company holds loan receivables, which are mortgage loans secured by real estate, for long-term investment.

Loan receivables are carried at amortized cost.

The Company recognizes interest income on loan receivables using the effective-interest method.

As of September 30, 2022 and December 31, 2021, the Company had an immaterial reserve for uncollectible amounts specific to uncharged reimbursable expenses.

Mortgage Loans Receivable

The Company holds loans receivable, which are mortgage loans secured by real estate, for long-term investment.

Loans receivable are carried at amortized cost.

The Company recognizes interest income on loans receivable using the effective-interest method.

Direct costs associated with originating loans, along with any premium or discount, is deferred and amortized as an adjustment to interest income over the term of the related loan receivable using the effective interest method.

3 unchanged sentences

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

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

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

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

4 unchanged sentences

Forward Equity Sales

The Company occasionally sells shares of common stock through forward sale agreements to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company.

The Company sells shares of common stock through forward sale agreements from time to time to enable the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company.

To account for the forward sale agreements, the Company considers the accounting guidance governing financial instruments and derivatives.

10 unchanged sentences

Transaction Costs

Transaction costs were $ 0.5 million and $ 0.2 million for the three months ended June 30, 2022 and 2021, respectively, and represent acquisition related expenses, including costs associated with abandoned acquisitions.

Transaction costs were $ 0.7 million and $ 0.3 million for the six months ended June, 30, 2022 and 2021.

Transaction costs were $ 0.1 million and $ 0.1 million for the three months ended September 30, 2022 and 2021, respectively, and represent acquisition related expenses, including costs associated with abandoned acquisitions.

Transaction costs were $ 0.7 million and $ 0.5 million for the nine months ended September 30, 2022 and 2021.

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

7 unchanged sentences

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.

The Company recognizes 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 condensed consolidated statements of operations and comprehensive income (loss).

All provisions for federal income taxes in the accompanying condensed 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 condensed consolidated statements of operations and comprehensive income (loss).

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

The 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 June 30, 2022 and December 31, 2021.

Additionally, there were no material accruals for interest or penalties as of September 30, 2022 and December 31, 2021.

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

6 unchanged sentences

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

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

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

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

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

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

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

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

14 unchanged sentences

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

Provisions for impairments recognized in the three and six months ended June 30, 2022 and 2021 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 three and nine months ended September 30, 2022 and 2021 related to assets held for sale and the impairment was determined based on the estimated or negotiated selling price, less costs of disposal, compared to the carrying value of the property.

Concentrations of Credit Risk

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

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

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

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

During the three and six months ended June 30, 2022 and 2021, there were no tenants with rental revenue that exceeded 10% of total rental revenue.

During the three and nine months ended September 30, 2022 and 2021, there were no tenants with rental revenue that exceeded 10% of total rental revenue.

Segment Reporting

2 unchanged sentences

All of the Company’s operating segments meet the aggregation criteria, and thus, the Company reports one segment, rental operations.

There were no intersegment sales during the periods presented.

Recent Accounting Pronouncements Issued But Not Yet Adopted

In addition, there were no intersegment sales during the periods presented.

Recent Accounting Pronouncements Adopted

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

12 unchanged sentences

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 June 30, 2022, the Company had 381 single-tenant retail net leases spanning 42 states, with 75 different tenants represented across 24 retail sectors.

As of June 30, 2022, the remaining terms of leases range from 1 - 21 years, with weighted average lease term of 9.5 years.

As of September 30, 2022, the Company had 406 single-tenant retail net leases spanning 42 states, with 77 different tenants represented across 24 retail sectors.

As of September 30, 2022, the remaining terms of leases range from 1 - 21 years, with weighted average lease term of 9.6 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.

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

There were no material reserves for uncollectible amounts during the three and six months ended June 30, 2022 and 2021.

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

There were no material reserves for uncollectible amounts during the three and nine months ended September 30, 2022 and 2021.

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

10 unchanged sentences

(2) Variable lease income primarily includes tenant reimbursements for real estate taxes, insurance, common area maintenance, and lease termination fees, and the write-off 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 June 30, 2022 are as follows (in thousands):

Future Minimum Base

2 unchanged sentences

Thereafter 503,378

Total $ 886,621

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

9 unchanged sentences

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.

The following table presents the lease expense components for the three and six months ended June 30, 2022 (in thousands):

The following table presents the lease expense components for the three and nine months ended September 30, 2022 (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

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

As of June 30, 2022, the right-of-use asset and operating lease liability were $ 4.4 million and $ 5.5 million, respectively.

As of September 30, 2022, the right-of-use asset and operating lease liability were $ 4.3 million and $ 5.5 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 condensed consolidated balance sheets.

The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for the corporate office lease obligation as of June 30, 2022 (in thousands):

The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for the corporate office lease obligation as of September 30, 2022 (in thousands):

Future Minimum Lease Payments

7 unchanged sentences

Note 4 – Real Estate Investments

As of June 30, 2022, the Company owned or had investments in 384 properties, including six properties currently under development.

As of September 30, 2022, the Company owned or had investments in 409 properties, including six properties currently under development.

The gross real estate investment portfolio, including properties under development, totaled approximately $ 1.4 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 42 states with gross real estate investments in Texas and Illinois representing 10.0 % and 9.5 %, respectively, of the total gross real estate investment of the Company’s entire portfolio.

During the six months ended June 30, 2022, the Company acquired 56 properties for a total purchase price of $ 207.3 million, inclusive of $ 1.9 million of capitalized acquisition costs.

During the six months ended June 30, 2021, the Company acquired 66 properties for a total purchase price of $ 205.2 million, inclusive of $ 2.3 million of capitalized acquisition costs.

The investment portfolio is geographically dispersed throughout 42 states with gross real estate investments in Illinois and Texas representing 9.8 % and 9.4 %, respectively, of the total gross real estate investment of the Company’s entire portfolio.

During the nine months ended September 30, 2022, the Company acquired 82 properties for a total purchase price of $ 329.0 million, inclusive of $ 3.2 million of capitalized acquisition costs.

During the nine months ended September 30, 2021, the Company acquired 92 properties for a total purchase price of $ 292.0 million, inclusive of $ 3.0 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):

Six Months Ended June 30,

Nine Months Ended September 30,

Land $ 84,248 $ 73,600

8 unchanged sentences

Below-market lease intangible liabilities ( 10,734 ) ( 6,552 )

Mortgage note payable ( 7,913 ) —

Accounts payable, accrued expense and other liabilities ( 40 ) —

Purchase price (including acquisition costs) $ 328,986 $ 292,046

As of June 30, 2022, the Company had six property developments under construction.

During the six months ended June, 30, 2022, the Company invested $ 9.6 million in property developments, including the acquisition of one new build-to-suit project with an initial purchase price of $ 1.0 million.

During this period, the Company completed development on four projects and reclassified approximately $ 14.7 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets.

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

The purchase price, including acquisition costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of June 30, 2022.

Additionally, during the first six months of 2022 and 2021, the Company capitalized less than $ 0.1 million of interest expense associated with properties under development.

During the six months ended June, 30, 2021, the Company invested a total of $ 1.9 million in a development project in Yuma, Arizona.

The Company exercised its non-binding purchase option to acquire the property upon completion in 2022 and rent commenced in the second quarter of 2022.

As of September 30, 2022, the Company had six property developments under construction.

During the nine months ended September 30, 2022, the Company invested $ 14.3 million in property developments, including the acquisition of one new build-to-suit project with an initial purchase price of $ 1.0 million.

During this nine-month period, the Company completed development on four projects and reclassified approximately $ 14.7 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets.

The remaining six developments in progress are expected to be substantially completed with rent commencing at various points through the first quarter of 2023.

The purchase price, including acquisition costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of September 30, 2022.

Additionally, during the first nine months of 2022 and 2021, the Company capitalized approximately $ 0.1 million of interest expense associated with properties under development.

During the nine months ended September 30, 2021, the Company invested a total of $ 2.6 million in a development project in Yuma, Arizona.

The Company exercised its non-binding purchase option to acquire the property upon completion and rent commenced in the second quarter of 2022.

This amount, and subsequent development costs, were included in property under development in the accompanying condensed consolidated balance sheets as of December 31, 2021.

During the six months ended June, 30, 2021, the Company also invested a total of $ 3.4 million, including the purchase price of $ 3.2 million, in two properties in Fond Du Lac, Wisconsin.

Upon acquisition, the Company commenced development of two build-to-suit projects, one of which was completed during the fourth quarter of 2021 and the other in the second quarter of 2022.

Rent commenced for both of these developments in 2022.

During the nine months ended September 30, 2021, the Company also invested a total of $ 6.9 million, including the purchase price of $ 5.4 million, in four properties.

Upon acquisition, the Company commenced development of four build-to-suit projects, of which three total properties have been completed during the fourth quarter of 2021, the first quarter of 2022, and the second quarter of 2022, respectively.

Rent commenced for the three completed developments in 2022.

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

During the three months ended June 30, 2022, the Company sold two properties for a total sales price, net of disposal costs, of $ 9.9 million, recognizing a gain of $ 1.9 million on the sales.

During the six months ended June, 30, 2022, the Company sold three properties for a total sales price, net of disposal costs, of $ 12.2 million, recognizing a gain of $ 2.0 million on the sales.

During the three and six months ended June, 30, 2021, the Company sold five properties for a total sales price, net of disposal costs, of $ 12.3 million, recognizing a gain of $ 0.5 on the sales.

Investment in Mortgage Loan Receivables

During the three months ended September 30, 2022, the Company sold one property for a total sales price, net of disposal costs, of $ 1.7 million, recognizing a gain of $ 0.1 million.

During the nine months ended September 30, 2022, the Company sold four properties for a total sales price, net of disposal costs, of $ 13.8 million, recognizing a gain of $ 2.2 million.

During the three months ended September 30, 2021, the Company sold four properties for a total sales price, net of disposal costs, of $ 18.1 million, recognizing a gain on $ 2.0 million.

During the nine months ended September 30, 2021, the Company sold nine properties for a total sales price, net of disposal costs, of $ 30.4 million, recognizing a gain of $ 2.5 million.

Investment in Mortgage Loans Receivable

On January 26, 2022, the Company executed a fully collateralized $ 40.3 million loan receivable with a stated interest rate of 6.0 %.

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The loan receivable is collateralized by real estate that is leased by three separate investment-grade tenants.

The funds provided under the loan, in addition to loan origination costs of $ 0.1 million, are included in loan receivables, net in the accompanying condensed consolidated balance sheets as of June 30, 2022.

The funds provided under the loan, in addition to loan origination costs of $ 0.1 million, are included in loans receivable, net in the accompanying condensed consolidated balance sheets as of September 30, 2022.

On June 30, 2022, the Company executed a fully collateralized $ 6.0 million loan receivable with a stated interest rate of 6.5 %.

The scheduled maturity date is June 30, 2023, however the Company has the right, subject to certain terms and conditions, to purchase the underlying collateralized properties.

The loan receivable is collateralized by real estate that is leased by two separate tenants, one of which is an investment grade profile tenant.

The funds provided under the loan, in addition to loan origination costs of less than $ 0.1 million, are included in loan receivables, net in the accompanying condensed consolidated balance sheets as of June 30, 2022.

The loan receivable is collateralized by real estate that is leased by two separate tenants, one of which has an investment grade profile.

The funds provided under the loan, in addition to loan origination costs of less than $ 0.1 million, are included in loans receivable, net in the accompanying condensed consolidated balance sheets as of September 30, 2022.

Note 5 – Intangible Assets and Liabilities

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amount Accumulated Amortization Net Carrying Amount Gross

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Below-market leases $ 36,143 $ ( 4,705 ) $ 31,438 $ 26,185 $ ( 2,869 ) $ 23,316

The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of June 30, 2022 and as of December 31, 2021 by category were as follows:

The remaining weighted average amortization period of the Company’s intangible assets and liabilities as of September 30, 2022 and as of December 31, 2021 by category were as follows:

Years Remaining

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

In-place leases 9.6 9.7

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

Three Months Ended June 30, Six Months Ended June 30,

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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$ 313 $ 159 $ 644 $ 583

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 June 30, 2022, 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 September 30, 2022, for the next five years and thereafter (in thousands):

Remainder of 2022

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Debt consists of the following (in thousands):

Maturity Date Interest Rate June 30, 2022 December 31, 2021

Maturity Date Interest Rate September 30, 2022 December 31, 2021

Prior Revolver December 23, 2023 — $ — $ 64,000

2024 Term Loan (1)

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

December 23, 2023 2.76 % 237,000 64,000

New Revolver (2)

August 11, 2026 3.95 % 30,000 —

2028 Term Loan (3)

February 11, 2028 3.88 % 200,000 —

Mortgage Note November 1, 2027 4.53 % 8,534 —

Total debt 413,534 239,000

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Total debt, net $ 408,232 $ 237,534

(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 June 30, 2022 of 1.56 %.

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 condensed consolidated balance sheets.

Credit Facility

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

Wells Fargo Securities, LLC is lead arranger and bookrunner and Wells Fargo Bank, National Association is administrative agent under the Credit Facility (the “Administrative Agent”).

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

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

(1) Loan is a floating-rate loan which resets monthly at one-month LIBOR plus the applicable margin which was 1.15 % as of September 30, 2022.

The Company has entered into four interest rate swap agreements that effectively convert the floating rate to the fixed rate noted as of September 30, 2022.

(2) The annual interest rate of the New Revolver assumes one-month SOFR as of September 30, 2022 of 2.85 % plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.00 % as of September 30, 2022.

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

(3) Loan is a floating-rate loan which resets monthly at one-month term SOFR plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.15 % as of September 30, 2022.

The Company has entered into three interest rate swap agreements that effectively convert the floating rate to the fixed rate noted as of September 30, 2022.

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

New Credit Facility

On August 11, 2022, the Company entered into a sustainability-linked senior unsecured credit facility consisting of (i) a $ 200.0 million senior unsecured term loan (the “2028 Term Loan”) and (ii) a $ 400.0 million senior unsecured revolving credit facility (the “New Revolver”, and together with the 2028 Term Loan, the “New Credit Facility”).

The New Credit Facility may be increased by $ 400.0 million in the aggregate.

The New Revolver refinanced and upsized the Company’s existing $ 250.0 million senior unsecured revolving credit facility (the “Prior Revolver”) pursuant to the credit agreement, dated as of December 23, 2019, governing such facility (the “Prior Credit Agreement”).

The Company used the proceeds from the borrowings made on the closing date to repay in full the Prior Revolver.

Remaining and future borrowings under the New Revolver will be used by the Company for general corporate purposes of the Company and its subsidiaries, including acquisitions in the Company’s pipeline.

The Company’s $ 175.0 million senior unsecured term loan (“2024 Term Loan”) under the Prior Credit Agreement, which matures in December 2024, remained outstanding upon the closing of the New Credit Facility.

The 2028 Term Loan matures on February 11, 2028 and the New Revolver matures on August 11, 2026, subject to extension of up to one year .

Borrowings under the New Credit Facility are repayable at the Company’s option in whole or in part without premium or penalty.

Borrowings under the New Revolver may be repaid and reborrowed from time to time prior to the maturity date.

Prior to the date the Company obtains an investment grade rating, interest rates are based on the Company’s consolidated total leverage ratio, and are determined by (A) in the case of the 2028 Term Loan either (i) SOFR, plus a SOFR adjustment of 0.10 %, 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 agreement governing the New Credit Facility (the “New Credit Agreement”)), 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 New Revolver either (i) SOFR, plus a SOFR adjustment of 0.10 %, plus a margin ranging from 1.00 % to 1.45 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the New Credit Agreement), plus a margin ranging from 0.00% to 0.45 %, based on the Company’s consolidated total leverage ratio.

After the date the Company obtains an investment grade rating, interest rates are based on the Company’s investment grade rating, and are determined by (A) in the case of the 2028 Term Loan either (i) SOFR, plus a SOFR adjustment of 0.10 %, plus a margin ranging from 0.80 % to 1.60 %, based on the Company’s investment grade rating, or (ii) a Base Rate (as defined in the New Credit Agreement), plus a margin ranging from 0.00% to 0.60 %, based on the Company’s investment grade rating and (B) in the case of the New Revolver either (i) SOFR, plus a SOFR adjustment of 0.10 %, plus a margin ranging from 0.725 % to 1.40 %, based on the Company’s investment grade rating, or (ii) a Base Rate (as defined in the New Credit Agreement), plus a margin ranging from 0.00% to 0.40 %, based on the Company’s investment grade rating.

Additionally, the Company will incur a facility fee based on the total commitment amount of $ 400.0 million under the New Revolver.

Prior to the date the Company obtains an investment grade rating, the applicable facility fee will range from 0.15 % to 0.30 % based on the Company’s consolidated total leverage ratio.

After the date the Company obtains an investment grade rating, the applicable facility fee will range from 0.125 % to 0.30 % based on the Company’s investment grade rating.

The New Credit Facility also contains a sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions up to 0.025 % based on its performance against a sustainability performance target focused on the portion of the Company’s annualized base rent attributable to tenants with commitments or quantifiable targets for reduced greenhouse gas emission in accordance with the standards of the Science Based Targets initiative (“SBTi”).

The Company has fully hedged the 2028 Term Loan with an all-in interest rate of 3.88 %.

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

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%.

Loans from the Revolver are generally restricted if, among other things, the proposed usage of the proceeds from the loan do not meet certain criteria as outlined in the Credit Facility Agreement, if an event of default exists, or if the requested loan will create an event of default.

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

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

In connection with the New Credit Facility, the Company incurred $ 3.8 million of deferred financing costs which were allocated between the New Revolver and 2028 Term Loan in the amounts of $ 2.4 million and $ 1.3 million, respectively.

Additionally, $ 0.5 million of unamortized deferred financing costs associated with the Prior Revolver were reclassed to the New Revolver.

Deferred financing costs are amortized over the remaining terms of each respective borrowing and are included in interest expense, net on the Company’s condensed consolidated statements of operations and comprehensive income.

Prior Credit Facility

In December 2019, the Company entered into the Prior Credit Agreement for a senior credit facility consisting of the Prior Revolver and the 2024 Term Loan (collectively, the “Prior Credit Facility”).

The 2024 Term Loan matures on December 23, 2024 and the Prior Revolver was set to mature on December 23, 2023, subject to extension up to one year , prior to the Company using the proceeds from the New Credit Facility to repay the Prior Revolver in full.

Interest rates under the Prior Credit Facility are based on the Company’s consolidated total leverage ratio, and are determined by (A) in the case of the 2024 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 Prior 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 Prior 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 Prior 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.

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

Loans from the Prior Revolver were generally restricted if, among other things, the proposed usage of the proceeds from the loan did not meet certain criteria as outlined in the Prior Credit Agreement, if an event of default exists, or if the requested loan will create an event of default.

Effective September 28, 2020, the Company entered into an interest rate derivative contract to fix the base interest rate (one-month LIBOR) on the 2024 Term Loan.

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

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 $ 0.2 million each for the three months ended June 30, 2022 and 2021, respectively, and $ 0.3 million each for the six months ended June, 30, 2022 and 2021, respectively.

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

For the three months ended June 30, 2022 and 2021, the Term Loan had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of the interest rate hedge, of 1.94 % and 1.30 %, respectively.

For the six months ended June, 30, 2022 and 2021, the Term Loan had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of the interest rate hedge, of 1.63 % and 1.28 %, respectively.

The Company incurred interest expense in connection with the Term Loan for both the three and six months ended June 30, 2022 and 2021 of $ 0.6 million and incurred $ 1.2 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.

During the third quarter of 2022, the Company executed an amendment to the Prior Credit Agreement that governs the 2024 Term Loan, which conformed financial covenants and event of default materiality thresholds to align with those under the New Credit Facility, added a carve-out to the derivatives contracts negative covenant to permit forward sale transactions, and added erroneous payment provisions.

Mortgage Note Payable

As of September 30, 2022, the Company had total gross mortgage indebtedness of $ 8.8 million, which was collateralized by related real estate and a tenant’s lease with an aggregate net book value of $ 13.2 million.

The Company incurred debt issuance costs of less than $ 0.1 million and recorded a debt discount of $ 0.6 million, both of which are recorded as a reduction of the principal balance in mortgage note payable, net on the Company’s condensed consolidated balance sheets.

Debt Maturities

Payments on the 2024 and 2028 Term Loan are interest only through maturity.

As of September 30, 2022, scheduled maturities, including balloon payments, are as follows (in thousands):

Scheduled Principal Balloon Payment Total

Remainder of 2022 $ 38 $ — $ 38

2023 155 — 155

2024 162 175,000 175,162

2025 170 — 170

2026 178 30,000 30,178

Thereafter 170 207,663 207,833

Total $ 873 $ 412,663 $ 413,536

Interest Expense

The following table is a summary of the components of interest expense related to the Company’s borrowings (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Revolving credit facilities (1)

$ 1,222 $ 154 $ 2,518 $ 459

Term loans 1,670 608 2,854 1,801

Mortgage note payable 1 — 1 —

Amortization of deferred financing costs 153 101 354 302

Amortization of debt discount, net 86 56 199 169

Capitalized interest ( 115 ) ( 24 ) ( 218 ) ( 38 )

Total interest expense, net $ 3,017 $ 895 $ 5,708 $ 2,693

(1) Includes facility fees and non-utilization fees of approximately $ 0.1 million and $ 0.2 million for the three months ended September 30, 2022 and 2021, and facility fees of $ 0.5 million and $ 0.2 million for the nine months ended September 30, 2022 and 2021.

Deferred financing, discount, and debt issuance costs are amortized over the remaining terms of each respective borrowing and are included in interest expense, net on the Company’s condensed consolidated statements of operations and comprehensive income.

For the three months ended September 30, 2022 and 2021, term loans had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of interest rate hedges, of 3.53 % and 1.26 %, respectively.

For the nine months ended September 30, 2022 and 2021, the term loans had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of interest rate hedges, of 2.49 % and 1.28 %, respectively.

During the three months ended September 30, 2022 and 2021, the Company incurred interest expense on revolving credit facilities with a weighted average interest rate, exclusive of amortization of deferred financing costs, of 3.28 % and 1.26 %, respectively.

During the nine months ended September 30, 2022 and 2021, the Company incurred interest expense on revolving credit facilities with a weighted average interest rate, exclusive of amortization of deferred financing costs, of 2.29 % and 1.24 %, respectively.

The estimated fair values of the Company’s term loans have been derived based on market observable inputs such as interest rates and discounted cash flow analysis using estimates of the amount and timing of future cash flows.

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

The Company determined that the carrying value materially approximated the estimated fair value of the Term Loan as of June 30, 2022 and December 31, 2021.

During the three months ended June 30, 2022 and 2021, the Company incurred interest expenses, exclusive of facility fees for unused capacity, on borrowings under the Revolver of $ 0.8 million and less than $ 0.1 million, respectively, with a weighted average interest rate, exclusive of amortization of deferred financing costs of 2.08 % and 0.33 %, respectively.

During the six months ended June, 30, 2022 and 2021, the Company incurred interest expenses, exclusive of facility fees for unused capacity, on borrowings under the Revolver of $ 1.2 million and less than $ 0.1 million, respectively, with a weighted average interest rate, exclusive of amortization of deferred financing costs of 1.78 % and 1.24 %, respectively.

As of June 30, 2022 and December 31, 2021, the Company had $ 237.0 million and $ 64.0 million in borrowings under the Revolver, respectively.

The Company also incurred interest expense in connection with unused capacity for the three months ended June 30, 2022 and 2021 of less than $0.1 million and $ 0.2 million, respectively and $ 0.1 million and $ 0.3 million for the six months ended June, 30, 2022 and 2021, respectively.

During the three and six months ended June, 30, 2022 and 2021, the Company capitalized less than $ 0.1 million of interest expense associated with properties under development.

The Company was in compliance with all of its debt covenants as of June 30, 2022 and expects to be in compliance for the following twelve-month period.

Debt Maturity

Payments on the Term Loan are interest only through maturity.

All outstanding amounts on the Term Loan and Revolver are due on December 23, 2024 and December 23, 2023, respectively.

The Revolver may be extended up to one year .

The Company determined that the carrying value materially approximated the estimated fair value of the term loans as of September 30, 2022 and December 31, 2021.

The Company was in compliance with all of its debt covenants as of September 30, 2022 and expects to be in compliance for the following twelve-month period.

Note 7 – Derivative Financial Instruments

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

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

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

Accordingly, the interest rate for the variable rate Term Loan is based on the hedged fixed rate (one-month) of 0.21 % compared to the variable Term Loan one-month LIBOR rate as of June 30, 2022 of 1.06 %, plus a margin of 1.15 %.

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

Effective September 28, 2020 and September 1, 2022, such derivatives were initiated to hedge the variable cash flows associated with the 2024 Term Loan and 2028 Term Loan, respectively.

Accordingly, the interest rate for the variable rate 2024 Term Loan is based on the hedged fixed rate of 0.21 % compared to the variable 2024 Term Loan one-month LIBOR rate as of September 30, 2022 of 2.56 %, plus the applicable margin of 1.15 %.

The interest rate for the variable rate 2028 Term Loan is based on the hedged fixed rate of 2.63 % compared to the variable 2028 Term Loan one-month SOFR rate as of September 30, 2022 of 2.51 %, plus a SOFR adjustment of 0.10 % and applicable margin of 1.15 %.

The maturity dates of the interest rate swaps coincide with the respective maturity dates of the 2024 and 2028 Term Loans.

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

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Number of Instruments Notional

Interest Rate Derivatives June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Interest Rate Derivatives September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

Interest rate swaps 7 4 $ 375,000 $ 175,000

The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 (in thousands):

The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021 (in thousands):

Derivative Assets

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Derivatives Designated as Hedging Instruments:

Balance Sheet Location June 30, 2022 December 31, 2021

Balance Sheet Location September 30, 2022 December 31, 2021

Interest rate swaps Other assets, net $ 25,745 $ 4,310

The following table presents the effect of the Company's interest rate swaps on the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021 (in thousands):

The following table presents the effect of the Company's interest rate swaps on the condensed consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

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Derivatives in Cash Flow Hedging Relationships 2022 2021 2022 2021

For the Three Months Ended June 30

For the Three Months Ended September 30

Interest Rate Products $ 14,761 $ ( 47 ) Interest expense, net $ 874 $ ( 52 )

For the Six Months Ended June 30

For the Nine Months Ended September 30

Interest Rate Products $ 22,539 $ 1,932 Interest expense, net $ 1,103 $ ( 131 )

The Company did not exclude any amounts from the assessment of hedge effectiveness for the three and six months ended June 30, 2022 and 2021.

The Company did not exclude any amounts from the assessment of hedge effectiveness for the three and nine months ended September 30, 2022 and 2021.

During the next twelve months, the Company estimates that an additional $ 10.2 million will be reclassified as a decrease to interest expense.

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

However, as of June 30, 2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

However, as of September 30, 2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its

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 June 30, 2022, 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 September 30, 2022, aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands):

Fair Value Hierarchy Level

Description Level 1 Level 2 Level 3 Total Fair Value

June 30, 2022

September 30, 2022

Derivative assets $ — $ 25,745 $ — $ 25,745

3 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Accounts receivable, net $ 5,792 $ 2,801

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Accrued expenses $ 6,898 $ 6,254

3 unchanged sentences

Accounts payable 430 419

Tenant allowances payable 1,825 —

Other liabilities 3,610 1,205

1 unchanged sentence

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

January 2022 Follow-On Offering

On January 13, 2022, the Company completed a registered public offering of 10,350,000 shares of its 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 the 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 may owe cash to the relevant forward counterparty in certain circumstances.

As of June 30, 2022, there were 4,512,003 shares unsettled under forward sale agreements.

As of September 30, 2022, the Company fully physically settled the forward sale agreements (by the delivery of shares of common stock) as follows:

• On September 29, 2022 the Company settled 4,512,003 shares of common stock at a price of $ 22.25 per share in accordance with the forward sale agreements.

The Company received net proceeds from the offering of $ 93.5 million,

net of underwriting discounts and offering costs of $ 6.9 million.

The Company contributed the net proceeds to the Operating Partnership in exchange for 4,512,003 Class A OP Units.

• On June 23, 2022, the Company settled 2,397,035 shares of common stock at a price of $ 22.25 per share in accordance with the forward sale agreements.

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The Company contributed the net proceeds to the Operating Partnership in exchange for 3,440,962 Class A OP Units.

August 2022 Follow-On Offering

On August 8, 2022, the Company completed a registered public offering of 9,000,000 shares of its common stock at a public offering price of $ 20.20 per share which excluded an over-allotment option to the underwriters to purchase an additional 1,350,000 shares, which was exercised on August 10, 2022.

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 sales of shares of common stock by the forward purchasers upon registration of the offering.

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 over the prescribed offering period.

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

As of September 30, 2022, 10,350,000 shares remained unsettled under the August 8, 2022 forward sale agreements.

On September 1, 2021, the Company entered into a $ 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.

For the six months ended June, 30, 2022, the Company issued 163,774 shares of common stock at a weighted average price of $ 22.08 per share in connection with the ATM Program for net proceeds of approximately $ 3.5 million, net of sales commissions and offering costs of less than $ 0.1 million.

For the nine months ended September 30, 2022, the Company issued 163,774 shares of common stock at a weighted average price of $ 22.08 per share in connection with the ATM Program for net proceeds of approximately $ 3.5 million, net of sales commissions and offering costs of less than $ 0.1 million.

The Company contributed the net proceeds to the Operating Partnership in exchange for 163,774 Class A OP Units.

During the six months ended June, 30, 2022, portions of restricted stock unit awards (“RSUs”) granted to certain of the Company’s officers, directors, and employees vested.

Share Repurchase Authorization

Effective September 1, 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 nine months ended September 30, 2022, portions of restricted stock unit awards (“RSUs”) granted to certain of the Company’s officers, directors, and employees vested.

The vesting of these awards, granted pursuant to the NETSTREIT Corp.

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The surrendered RSUs are included in the row entitled “repurchase of shares of common stock” on the condensed consolidated statements of cash flows.

During the six months ended June 30, 2022, the Company declared and paid the following common stock dividends (in thousands, except per share data):

During the nine months ended September 30, 2022, the Company declared and paid the following common stock dividends (in thousands, except per share data):

Declaration Date Dividend Per Share Record Date Total Amount Payment Date

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April 26, 2022 0.20 June 1, 2022 9,588 June 15, 2022

July 26, 2022 0.20 September 1, 2022 10,068 September 15, 2022

$ 0.60 $ 28,544

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

Accordingly, during the six months ended June, 30, 2022 and 2021 the Operating Partnership paid distributions of $ 0.2 million and $ 0.6 million, respectively, to holders of OP Units.

Accordingly, during the nine months ended September 30, 2022 and 2021 the Operating Partnership paid distributions of $ 0.3 million and $ 0.9 million, respectively, to holders of OP Units.

Noncontrolling Interests

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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 June 30, 2022 and December 31, 2021, noncontrolling interests represented 1.0 % and 1.3 %, respectively of OP Units.

During the three months ended June 30, 2022 and 2021, OP Unit holders redeemed 22,265 and 143,173 OP units, respectively, into shares of common stock on a one -for-one basis.

During the six months ended June, 30, 2022 and 2021, OP Unit holders redeemed 47,894 and 396,517 OP units, respectively, into shares of common stock on a one -for-one basis.

As of September 30, 2022 and December 31, 2021, noncontrolling interests represented 0.9 % and 1.3 %, respectively of OP Units.

During the three months ended September 30, 2022, there were no OP Unit redemptions and during the three months ended September 30, 2021, OP Unit holders redeemed 65,840 OP Units, into shares of common stock on a one -for-one basis.

During the nine months ended September 30, 2022 and 2021, OP Unit holders redeemed 47,894 and 462,357 OP Units, respectively, into shares of common stock on a one -for-one basis.

Note 10 – Stock-Based Compensation

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

As of June 30, 2022, the only stock-based compensation granted by the Company were restricted stock units.

The total amount of stock-based compensation costs recognized in general and administrative expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss) was $ 1.3 million and $ 1.0 million for the three months ended June 30, 2022 and 2021, respectively.

Stock-based compensation expense was $ 2.3 million and $ 1.6 million for the six months ended June, 30, 2022 and 2021, respectively.

As of September 30, 2022, the only stock-based compensation granted by the Company were restricted stock units.

The total amount of stock-based compensation costs recognized in general and administrative expense in the accompanying condensed consolidated statements of operations and comprehensive income was $ 1.3 million and $ 1.0 million for the three months ended September 30, 2022 and 2021, respectively.

Stock-based compensation expense was $ 3.6 million and $ 2.6 million for the nine months ended September 30, 2022 and 2021, respectively.

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

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

The following table summarizes performance-based restricted stock unit activity for the period ended June 30, 2022:

The following table summarizes performance-based restricted stock unit activity for the period ended September 30, 2022:

Shares Weighted Average Grant Date Fair Value per Share

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Vested during the period ( 15,823 ) 19.75

Unvested restricted stock grants outstanding as of June 30, 2022 142,190 $ 19.75

For the three and six months ended June 30, 2022, the Company recognized $ 0.2 million and $ 0.4 million, respectively, in stock-based compensation expense associated with performance-based restricted stock units.

As of June 30, 2022 and December 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 1.0 million and $ 1.3 million, respectively and as of June 30, 2022, these awards are expected to be recognized over a remaining weighted average period of 1.8 years.

Unvested restricted stock grants outstanding as of September 30, 2022 141,557 $ 19.75

For the three and nine months ended September 30, 2022, the Company recognized $ 0.2 million and $ 0.6 million, respectively, in stock-based compensation expense associated with performance-based restricted stock units.

As of September 30, 2022 and December 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 0.8 million and $ 1.3 million, respectively and as of September 30, 2022, these awards are expected to be recognized over a remaining weighted average period of 1.7 years.

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

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

The following table summarizes service-based restricted stock unit activity for the period ended June 30, 2022:

The following table summarizes service-based restricted stock unit activity for the period ended September 30, 2022:

Shares Weighted Average Grant Date Fair Value per Share

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Vested during the period ( 101,266 ) 17.68

Unvested restricted stock grants outstanding as of June 30, 2022 362,004 $ 19.63

For the three and six months ended June 30, 2022, the Company recognized $ 0.7 million and $ 1.2 million, respectively, in stock-based compensation expense associated with service-based restricted stock units.

As of June 30, 2022 and December 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 5.3 million and $ 4.1 million, respectively, and as of June 30, 2022, these awards are expected to be recognized over a remaining weighted average period of 2.5 years.

Unvested restricted stock grants outstanding as of September 30, 2022 326,824 $ 19.79

For the three and nine months ended September 30, 2022, the Company recognized $ 0.7 million and $ 1.9 million, respectively, in stock-based compensation expense associated with service-based restricted stock units.

As of September 30, 2022 and December 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 4.6 million and $ 4.1 million, respectively, and as of September 30, 2022, these awards are expected to be recognized over a remaining weighted average period of 2.3 years.

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

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

The following table summarizes market-based restricted stock unit activity for the period ended June 30, 2022:

The following table summarizes market-based restricted stock unit activity for the period ended September 30, 2022:

Shares Weighted Average Grant Date Fair Value per Share

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Vested during the period — —

Unvested restricted stock grants outstanding as of June 30, 2022 239,390 $ 19.82

For the three and six months ended June 30, 2022, the Company recognized $ 0.4 million and $ 0.6 million, respectively, in stock-based compensation expense associated market-based restricted stock units.

As of June 30, 2022 and December 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 3.4 million and $ 1.8 million, respectively, and as of June 30, 2022, these awards are expected to be recognized over a remaining weighted average period of 2.3 years.

Unvested restricted stock grants outstanding as of September 30, 2022 238,296 $ 19.82

For the three and nine months ended September 30, 2022, the Company recognized $ 0.4 million and $ 1.0 million, respectively, in stock-based compensation expense associated market-based restricted stock units.

As of September 30, 2022 and December 31, 2021, the remaining unamortized stock-based compensation expense totaled $ 3.0 million and $ 1.8 million, respectively, and as of September 30, 2022, these awards are expected to be recognized over a remaining weighted average period of 2.1 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 annual bonus in unvested RSUs in the first quarter of the following year that would then vest over a four-year service period beginning in the period that the bonus relates.

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.

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 be classified as equity on grant date), which will be fair-valued and accrued over the applicable service period.

The total estimated fair value of the elections made for 2022 under the Program was approximately $ 0.9 million.

The award will be remeasured to fair value each reporting period until the unvested RSUs are granted.

For the three and six months ended June 30, 2022, the Company recognized approximately $ 0.1 million in stock-based compensation expense associated with these awards.

For the three and nine months ended September 30, 2022, the Company recognized approximately $ 0.1 million and $ 0.2 million, respectively in stock-based compensation expense associated with these awards.

Previous awards under the Program that have been granted are included within service based RSUs above.

Note 11 – Earnings Per Share

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.

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 RSUs and unsettled shares under open forward equity contracts and using the if-converted method to determine the potential dilutive effect of the OP Units.

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

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per common share for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, Six Months Ended June 30,

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per common share for the three and nine months ended September 30, 2022 and 2021.

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except share and per share data) 2022 2021 2022 2021

Net income (loss) $ 2,010 $ ( 2,630 ) $ 3,976 $ ( 1,889 )

Net (income) attributable to noncontrolling interest ( 23 ) 94 ( 47 ) 54

Net income (loss) attributable to common shares, basic 1,987 ( 2,536 ) 3,929 ( 1,835 )

Net income $ 1,419 $ 2,944 $ 5,395 $ 1,055

Net (income) attributable to noncontrolling interest ( 16 ) ( 96 ) ( 63 ) ( 42 )

Net income (loss) attributable to common shares, diluted $ 2,010 $ ( 2,630 ) $ 3,976 $ ( 1,889 )

Net income attributable to common shares, basic 1,403 2,848 5,332 1,013

Net income (loss) attributable to noncontrolling interest 16 96 63 42

Net income attributable to common shares, diluted $ 1,419 $ 2,944 $ 5,395 $ 1,055

Weighted average common shares outstanding, basic 50,449,735 39,559,605 47,679,870 35,359,551

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Weighted average common shares outstanding, diluted 51,384,758 41,333,579 48,657,049 37,108,425

Net income (loss) available to common stockholders per common share, basic $ 0.04 $ ( 0.07 ) $ 0.08 $ ( 0.06 )

Net income (loss) available to common stockholders per common share, diluted $ 0.04 $ ( 0.07 ) $ 0.08 $ ( 0.06 )

For the three and six months ended June, 30, 2021, diluted net income (loss) per common share does not assume the conversion of OP Units or unvested RSUs as such conversion would be antidilutive.

For the three months ended June 30, 2021 diluted net income (loss) per common share does not assume the conversion of 1,438,969 OP Units or 332,781 unvested RSUs.

For the six months ended June 30, 2021 diluted net income (loss) per common share does not assume the conversion of 1,527,160 OP Units or 210,370 unvested RSUs.

As of June 30, 2022 and December 31, 2021, there were 514,890 and 562,784 of OP Units outstanding, respectively.

Net income available to common stockholders per common share, basic $ 0.03 $ 0.07 $ 0.11 $ 0.03

Net income available to common stockholders per common share, diluted $ 0.03 $ 0.07 $ 0.11 $ 0.03

As of September 30, 2022 and December 31, 2021, there were 514,890 and 562,784 of OP Units outstanding, respectively.

Note 12 – Commitments and Contingencies

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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 June 30, 2022, the Company had commitments to fund six properties under development totaling $ 19.1 million which is expected to be funded over the next six months .

Additionally, as of September 30, 2022, the Company had commitments to fund six properties under development totaling $ 11.2 million which is expected to be funded over the next six months .

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

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

As of June 30, 2022, 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.

As of September 30, 2022, 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

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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 three and six months ended June 30, 2021, the Company incurred less than $ 0.1 million in related expenses.

For the three and nine months ended September 30, 2021, the Company incurred less than $ 0.1 million in related expenses.

Note 14 – Subsequent Events

The Company has evaluated all events that occurred subsequent to June 30, 2022 through the date on which these condensed consolidated financial statements were issued to determine whether any of these events required disclosure in the financial statements.

The Company has evaluated all events that occurred subsequent to September 30, 2022 through the date on which these condensed consolidated financial statements were issued to determine whether any of these events required disclosure in the financial statements.

Common Stock Dividend

On July 26, 2022, the Company's Board of Directors declared a cash dividend of $ 0.20 per share for the third quarter of 2022 which will be paid on September 15, 2022 to shareholders of record on September 1, 2022.

Revolver Activity

In July 2022, the Company repaid $ 10.0 million under the Revolver.

On October 25, 2022, the Company's Board of Directors declared a cash dividend of $ 0.20 per share for the fourth quarter of 2022 which will be paid on December 15, 2022 to shareholders of record on December 1, 2022.

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

What changed 10-Q

Item 1. Financial Statements