What changed in this filing

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Item 1. Financial Statements

2024-04-29 compared with 2023-10-25 · 263 added, 316 removed, 511 unchanged (53% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

September 30, December 31,

March 31, 2024 December 31, 2023

Real estate, at cost:

19 unchanged sentences

Total liabilities 756,390 672,804

Commitments and contingencies

Commitments and contingencies (Note 12)

Stockholders’ equity

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

68,701,223 and 58,031,879 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

73,328,411 and 73,207,080 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,368,312 1,367,505

8 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share data)

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Rental revenue (including reimbursable) $ 35,189 $ 28,474

Interest income on loans receivable 2,484 978

Other revenue 550 — 550 —

Total revenues 37,673 29,452

6 unchanged sentences

Total operating expenses 31,141 23,903

Other income (expense)

Other (expense) income

Interest expense, net ( 6,180 ) ( 3,944 )

Gain on sales of real estate, net 373 143 669 2,162

Loss on debt extinguishment — — ( 128 ) —

Other income, net 367 — 586 36

Total other income (expense), net ( 3,206 ) ( 2,874 ) ( 12,285 ) ( 3,510 )

Gain (loss) on sales of real estate, net 997 ( 319 )

Other (expense) income, net ( 280 ) 152

Total other (expense) income, net ( 5,463 ) ( 4,111 )

Net income before income taxes 1,069 1,438

12 unchanged sentences

Change in value on derivatives, net 9,128 ( 5,979 )

Total comprehensive income $ 10,705 $ 15,306 $ 11,803 $ 26,831

Comprehensive income attributable to noncontrolling interests 78 149 86 287

Comprehensive income attributable to common stockholders $ 10,627 $ 15,157 $ 11,717 $ 26,544

Total comprehensive income (loss) 10,180 ( 4,498 )

Comprehensive income (loss) attributable to noncontrolling interests 58 ( 40 )

Comprehensive income (loss) attributable to common stockholders $ 10,122 $ ( 4,458 )

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

6 unchanged sentences

Balance at December 31, 2023 73,207,080 $ 732 $ 1,367,505 $ ( 112,276 ) $ 8,943 $ 1,264,904 $ 8,528 $ 1,273,432

Issuance of common stock in public offering, net of issuance costs 2,759,481 28 52,875 — — 52,903 — 52,903

OP Units converted to common stock 7,119 — 126 — — 126 ( 126 ) —

4 unchanged sentences

Stock-based compensation, net — — 1,751 135 1,886 — 1,886

Other comprehensive loss — — — — ( 5,930 ) ( 5,930 ) ( 49 ) ( 5,979 )

Net income — — — 1,472 — 1,472 9 1,481

Balance at March 31, 2023 60,862,466 $ 609 $ 1,145,160 $ ( 77,237 ) $ 17,743 $ 1,086,275 $ 9,347 $ 1,095,622

Issuance of common stock in public offering, net of issuance costs 6,128,135 61 114,475 — — 114,536 — 114,536

Dividends and distributions declared on common stock and OP Units — — — ( 12,173 ) — ( 12,173 ) ( 102 ) ( 12,275 )

Dividends declared on restricted stock, net — — — ( 128 ) — ( 128 ) — ( 128 )

Vesting of restricted stock units 1,416 — — — — — — —

Repurchase of common stock for tax withholding obligations ( 420 ) — ( 8 ) — — ( 8 ) — ( 8 )

Stock-based compensation, net — — 1,252 — — 1,252 — 1,252

Other comprehensive income — — — — 9,077 9,077 51 9,128

Net loss — — — ( 791 ) — ( 791 ) ( 1 ) ( 792 )

Balance at June 30, 2023 66,991,597 $ 670 $ 1,260,879 $ ( 90,329 ) $ 24,082 $ 1,195,302 $ 9,293 $ 1,204,595

Issuance of common stock in public offering, net of issuance costs 1,672,242 17 27,401 — — 27,418 — 27,418

OP Units converted to common stock 19,932 — 362 — — 362 ( 362 ) —

Dividends and distributions declared on common stock and OP Units — — — ( 13,768 ) — ( 13,768 ) ( 104 ) ( 13,872 )

Dividends declared on restricted stock, net — — — ( 126 ) — ( 126 ) — ( 126 )

Vesting of restricted stock units 24,088 — — — — — — —

Repurchase of common stock for tax withholding obligations ( 6,636 ) — ( 112 ) — — ( 112 ) — ( 112 )

Stock-based compensation, net — — 1,280 2 — 1,282 — 1,282

Other comprehensive income — — — — 6,412 6,412 54 6,466

Net income — — — 1,045 — 1,045 7 1,052

Balance at September 30, 2023 68,701,223 $ 687 $ 1,289,810 $ ( 100,006 ) $ 30,494 $ 1,220,985 $ 8,905 $ 1,229,890

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

NETSTREIT CORP.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Balance at March 31, 2024 73,328,411 $ 733 $ 1,368,312 $ ( 126,270 ) $ 18,020 $ 1,260,795 $ 8,362 $ 1,269,157

Shares Par Value Additional

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Balance at December 31, 2022 58,031,879 $ 580 $ 1,091,514 $ ( 66,937 ) $ 23,673 $ 1,048,830 $ 9,593 $ 1,058,423

Issuance of common stock in public offering, net of issuance costs 3,604,736 36 75,461 — — 75,497 — 75,497

Issuance of common stock in public offerings, net of issuance costs 2,759,481 28 52,875 — — 52,903 — 52,903

OP Units converted to common stock 5,694 — 105 — — 105 ( 105 ) —

4 unchanged sentences

Stock-based compensation, net — — 1,027 — 1,027 — 1,027

Other comprehensive income — — — — 6,135 6,135 76 6,211

Other comprehensive loss — — — — ( 5,930 ) ( 5,930 ) ( 49 ) ( 5,979 )

Net income — — — 1,472 — 1,472 9 1,481

Balance at March 31, 2023 60,862,466 $ 609 $ 1,145,160 $ ( 77,237 ) $ 17,743 $ 1,086,275 $ 9,347 $ 1,095,622

Issuance of common stock in public offering, net of issuance costs 2,397,035 24 49,976 — — 50,000 — 50,000

OP Units converted to common stock 22,265 — 418 — — 418 ( 418 ) —

Dividends and distributions declared on common stock and OP Units — — — ( 9,588 ) — ( 9,588 ) ( 104 ) ( 9,692 )

Dividends declared on restricted stock, net — — — ( 149 ) — ( 149 ) — ( 149 )

Stock-based compensation, net — — 1,298 — — 1,298 — 1,298

Other comprehensive income — — — — 1,323 1,323 15 1,338

Net income — — — 1,987 — 1,987 23 2,010

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.

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(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

7 unchanged sentences

Stock-based compensation expense 1,751 1,027

Gain on sales of real estate, net ( 669 ) ( 2,162 )

(Gain) loss on sales of real estate, net ( 997 ) 319

Provisions for impairment 3,662 —

Loss on debt extinguishment 128 —

Gain on involuntary conversion of building and improvements ( 47 ) —

Loss (gain) on involuntary conversion of buildings and improvements 414 ( 12 )

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

7 unchanged sentences

Investment in mortgage loans receivable ( 10,191 ) ( 45,917 )

Principal collections on mortgage loans receivable 7 —

Earnest money deposits ( 42 ) ( 1,773 )

12 unchanged sentences

Proceeds from term loans 100,000 —

Proceeds under property development incentives — 605

Repurchase of common stock for tax withholding obligations ( 1,069 ) ( 360 )

Deferred offering costs ( 423 ) ( 15 )

Deferred financing costs ( 3,271 ) ( 3,755 )

Net cash provided by financing activities 77,956 23,659

3 unchanged sentences

Supplemental disclosures of cash flow information:

Cash paid for interest, net $ 12,779 $ 4,345

Cash paid for income taxes $ 575 $ 45

Cash paid for interest $ 6,536 $ 3,641

Supplemental disclosures of non-cash investing and financing activities:

Dividends declared and unpaid on restricted stock $ 375 $ 411

Dividends declared and unpaid on restricted stock, net $ 7 $ 122

Deferred offering costs included in accounts payable, accrued expenses and other liabilities $ 107 $ —

Cash flow hedge change in fair value $ 10,107 $ ( 5,979 )

Mortgage loan receivable settled in exchange for acquisition of real estate $ 4,673 $ —

Increase in mortgage loan receivable in exchange for disposition of real estate $ 1,837 $ —

Refinancing of mortgage loan receivable $ 1,327 $ —

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

Accrued capital expenditures and real estate development and improvement costs $ 1,110 $ 2,516

Accrued lease incentives $ 23 $ 1,690

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

11 unchanged sentences

federal income tax purposes.

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

The Company also invests in property developments and mortgage loans secured by real estate.

As of September 30, 2023, the Company owned or had investments in 547 properties, located in 45 states, excluding 32 property developments where rent has yet to commence.

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, invests in 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 March 31, 2024, the Company owned or had investments in 628 properties, located in 45 states, excluding 16 property developments where rent has yet to commence.

Note 2 – Summary of Significant Accounting Policies

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

The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results for the full year.

The results of operations for the three months ended March 31, 2024 and 2023 are not necessarily indicative of the results for the full year.

Use of Estimates

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

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

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

Based on these unobservable inputs, the Company determined that its valuations of impaired real estate and intangible assets fall within Level 2 and Level 3 of the fair value hierarchy under ASC Topic 820.

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Total provision for impairment $ 3,662 $ —

3 unchanged sentences

(1) Includes the number of properties that were either (i) impaired during the period on the held for sale classification date and remained as held for sale as of period-end or (ii) impaired and disposed of during the respective period.

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

Of the total provision for impairment during the three and nine months ended September 30, 2023, the Company recorded $ 0.7 million of additional impairment expense on properties that were classified as held for sale in prior periods.

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

Of the total provision for impairment during the three months ended March 31, 2024, the Company recorded $ 0.3 million of additional impairment expense on two properties that were classified as held for sale in prior periods, and $ 2.2 million of impairment expense on four properties held for investment.

Cash, Cash Equivalents and Restricted Cash

2 unchanged sentences

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

The Company had less than $ 0.1 million of restricted cash as of September 30, 2023, and $ 4.7 million of restricted cash as of December 31, 2022.

The Company’s bank balances as of September 30, 2023 and December 31, 2022 included certain amounts over the Federal Deposit Insurance Corporation limits.

The Company had $ 0.7 million restricted cash as of March 31, 2024, and $ 11.5 million of restricted cash as of December 31, 2023.

The Company’s bank balances as of March 31, 2024 and December 31, 2023 included certain amounts over the Federal Deposit Insurance Corporation limits.

Fair Value Measurement

Companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair value.

The fair values of the Company’s financial instruments are estimates based on market conditions and perceived risks as of September 30, 2023 and December 31, 2022.

These estimates require management’s judgement and may not be indicative of the future fair values of the assets and liabilities.

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

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

The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities.

This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available.

The hierarchy is broken down into three levels based on the reliability of inputs as follows:

Level 1 inputs, such as quoted prices in an active market;

Level 2 inputs, which are observable inputs for similar assets;

or Level 3 inputs, which are unobservable inputs.

The Company uses the following inputs in its fair value measurements:

– Level 2 and Level 3 inputs for its debt and derivative financial instrument fair value disclosures.

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

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

See “Note 4 - Real Estate Investments.”

Additionally, companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair value.

The fair values of financial instruments are estimates based on market conditions and perceived risks as of March 31, 2024 and December 31, 2023.

These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities.

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.

Additionally, the Company believes the following financial instruments have carrying values that approximate their fair values as of September 30, 2023:

Additionally, the Company believes the following financial instruments have carrying values that approximate their fair values as of March 31, 2024:

• Borrowings under the Company’s Revolver (as defined in “Note 6 - Debt”) approximate fair value based on their nature, terms and variable interest rates.

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• Carrying value of the Company’s mortgage note payable approximates fair value based on a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads.

The following table discloses fair value information for the Company’s 2024 Term Loan, 2027 Term Loan, 2028 Term Loan, and 2029 Term Loan (each as defined in “Note 6 - Debt”) (in thousands):

September 30, 2023 December 31, 2022

Provisions for impairment recognized during the three months ended March 31, 2024 partially related to assets held for sale where impairment was determined based on the estimated or negotiated selling price, less costs of disposal, compared to the carrying value of the property.

Of the total provision for impairment during the three months ended March 31, 2024, the Company also recorded $ 2.2 million of impairment expense on four properties held for investment.

These properties were accounted for at fair value on a nonrecurring basis using a cash flow model (Level 3 inputs) with adjusted carrying values ranging from $ 0.6 million to $ 1.6 million.

The Company estimated the fair value using capitalization rates ranging from 9.0 % to 12.1 % which it believes is reasonable based on current market rates.

As of December 31, 2023, there were two real estate assets held for investment accounted for at fair value.

Of these properties, one was accounted for at fair value on a nonrecurring basis using a cash flow model (Level 3 inputs) with an adjusted carrying value of $ 1.5 million.

The following table discloses estimated fair value information for the Company’s 2027 Term Loan, 2028 Term Loan, and 2029 Term Loan (each as defined in “Note 6 - Debt”) which is derived based primarily on unobservable market inputs such as interest rates and discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates and credit spreads (in thousands):

March 31, 2024 December 31, 2023

Carrying Value (1)

2 unchanged sentences

2027 Term Loan $ 174,155 $ 172,770 $ 174,037 $ 175,641

$ — $ — $ 174,532 $ 175,382

2028 Term Loan 199,066 198,101 199,006 201,396

173,919 175,713 — —

2029 Term Loan 248,279 247,002 148,869 150,666

198,945 201,465 198,764 201,108

2029 Term Loan

148,749 150,727 — —

(1) The carrying value of the debt instruments are net of unamortized debt issuance and discount costs.

(2) On June 15, 2023, the Company amended and restated its 2024 Term Loan, providing for a $ 175.0 million senior unsecured term loan (the “2027 Term Loan”).

Concentrations of Credit Risk

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

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

The Company is exposed to credit risk with respect to cash held at various financial institutions, access to its credit facilities, 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 nine months ended September 30, 2023 and 2022, there were no tenants or borrowers with rental revenue or interest income on loans receivable, respectively, that exceeded 10% of total rental revenue.

During the three months ended March 31, 2024, one tenant, Dollar General, accounted for 10.43 % of total revenues.

During the three months ended March 31, 2023, there were no tenants or borrowers with rental revenue or interest income on loans receivable that exceeded 10% of total rental revenue.

Segment Reporting

3 unchanged sentences

Therefore, the Company aggregates these investments for reporting purposes and operates in one reportable segment.

Recent Accounting Pronouncements Issued But Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 is intended to improve reportable segment disclosures by requiring disclosure of incremental segment information on an annual and interim basis such as, annual and interim disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, interim disclosure of a reportable segment’s profit or loss and assets, and the requirement that a public entity that has a single reportable segment provide all the disclosures required by ASU 2023-07 and all existing segment disclosures in Topic 280.

The amendments in ASU 2023-07 do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The disclosures are applied retrospectively to all periods presented and early adoption is permitted.

The Company has one reportable segment and continues to evaluate additional disclosures that may be required for entities with a single reportable segment.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 requires annual disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold within the rate reconciliation.

In addition, the amendments require annual disclosure of income taxes paid disaggregated by federal, state and foreign jurisdictions as well as individual jurisdictions in which income taxes paid is equal to or greater than 5 percent of total income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis, however early adoption and retrospective application is permitted.

The Company continues to evaluate the potential impact of the guidance and potential additional disclosures required.

Note 3 – Leases

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

As of September 30, 2023, the Company’s weighted average remaining lease term was 9.3 years.

As of March 31, 2024, exclusive of mortgage loans receivable, the Company’s weighted average remaining lease term was 9.2 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 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, 2023 and 2022.

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, write-offs, or recoveries for uncollectible amounts.

Fixed lease income includes stated amounts per the lease contract, which include base rent, fixed common area maintenance charges, and straight-line lease adjustments.

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Rental revenue

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Variable lease income (2)

3,047 2,086 9,299 7,004

Other rental revenue:

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(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.

There were immaterial write-offs of uncollectible amounts during the three and nine months ended September 30, 2023 and 2022.

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 September 30, 2023 are as follows (in thousands):

There were no material reserves, write-offs, or recoveries of uncollectible amounts during the three months ended March 31, 2024 and March 31, 2023.

Future Minimum Base

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

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

Corporate Office Lease

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

The lease has a remaining noncancellable lease term of 8.8 years that expires on July 31, 2032, with a one-time option to terminate in 2029 exercisable by the Company.

The following table presents the lease expense components for the three and nine months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Operating lease cost $ 135 $ 135 $ 406 $ 406

Variable lease cost $ 83 $ 33 $ 217 $ 42

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

As of September 30, 2023, the right-of-use asset and operating lease liability was $ 4.0 million and $ 5.2 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 September 30, 2023 (in thousands):

Future Minimum Lease Payments

Remainder of 2023 $ 146

Thereafter 3,311

Total lease payments 6,033

amount representing interest (1)

Present value of operating lease liabilities $ 5,208

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

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

Note 4 – Real Estate Investments

As of September 30, 2023, the Company owned or had investments in 547 properties, excluding 32 property developments where rent has yet to commence.

The gross real estate investment portfolio, including properties under development, totaled approximately $ 1.8 billion and consisted of the gross acquisition cost of land, buildings, improvements, and lease intangible assets and liabilities.

As of March 31, 2024, the Company owned or had investments in 628 properties, excluding 16 property developments where rent has yet to commence.

The gross real estate investment portfolio, including properties under development, totaled approximately $ 1.9 billion and consisted of the gross acquisition cost of land, buildings, improvements, lease intangible assets and liabilities, and property development costs.

The investment portfolio is geographically dispersed throughout 45 states with gross real estate investments in Illinois and Texas representing 9.4 % and 8.8 %, respectively, of the total gross real estate investment of the Company’s investment portfolio.

During the three months ended September 30, 2023, the Company acquired 21 properties for a total purchase price of $ 95.3 million, inclusive of $ 0.8 million of capitalized acquisition costs.

During the nine months ended September 30, 2023, the Company acquired 69 properties for a total purchase price of $ 259.2 million, inclusive of $ 2.4 million of capitalized acquisition costs.

During the three months ended September 30, 2022, the Company acquired 26 properties for a total purchase price of $ 121.7 million, inclusive of $ 1.3 million of capitalized acquisition costs.

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 three months ended March 31, 2024, the Company acquired 28 properties for a total purchase price of $ 95.2 million, inclusive of $ 1.2 million of capitalized acquisition costs.

During the three months ended March 31, 2023, the Company acquired 20 properties for a total purchase price of $ 67.7 million, inclusive of $ 0.7 million of capitalized acquisition costs.

The acquisitions were all accounted for as asset acquisitions.

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Land $ 16,608 $ 14,304

3 unchanged sentences

In-place lease intangible assets 11,293 6,410

Above-market lease intangible assets 479 2,323 2,022 2,676

95,311 134,044 259,245 347,673

Liabilities assumed

Below-market lease intangible liabilities — ( 4,418 ) — ( 10,734 )

Mortgage note payable — ( 7,913 ) — ( 7,913 )

Accounts payable, accrued expense and other liabilities — ( 16 ) — ( 40 )

Purchase price (including acquisition costs) $ 95,153 $ 67,717

As of September 30, 2023, the Company had 27 property developments under construction.

During the three months ended September 30, 2023, the Company invested $ 33.2 million in property developments, including the land acquisition of 14 new developments with a combined initial purchase price of $ 9.6 million.

During the nine months ended September 30, 2023, the Company invested $ 55.5 million in property developments, including the land acquisition of 34 new developments with a combined initial purchase price of $ 21.6 million.

During the nine months ended September 30, 2023, the Company completed development on 12 projects and reclassified approximately $ 38.8 million from property under development to land, building, and improvements in the accompanying condensed consolidated balance sheets.

Rent commenced for seven of the 12 completed developments during the nine months ended September 30, 2023, while rent is expected to commence for the other five completed developments in the fourth quarter of 2023.

The remaining 27 developments in progress are expected to be substantially completed with rent commencing at various points throughout the next twelve months.

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, 2023.

During the three months ended September 30, 2022, the Company invested $ 4.7 in property developments.

During the nine months ended September 30, 2022, the Company invested $ 14.3 million in property developments, including the land acquisition of one new development 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.

Additionally, during the three months ended September 30, 2023 and 2022, the Company capitalized approximately $ 0.4 million and $ 0.1 million, respectively, of interest expense associated with properties under development.

During the nine months ended September 30, 2023 and 2022, the Company capitalized approximately $ 0.7 million and $ 0.2 million, respectively, of interest expense associated with properties under development.

During the three months ended September 30, 2023, the Company sold four properties for a total sales price, net of disposal costs, of $ 7.2 million, recognizing a gain of $ 0.4 million.

During the nine months ended September 30, 2023, the Company sold fourteen properties for a total sales price, net of disposal costs, of $ 26.5 million, recognizing a gain of $ 0.7 million.

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.

As of March 31, 2024, the Company had 13 property developments under construction.

During the three months ended March 31, 2024, the Company invested $ 11.0 million in property developments, including the land acquisition of two new developments with a combined initial purchase price of $ 0.8 million.

During the three months ended March 31, 2024, the Company completed development on seven projects and reclassified approximately $ 18.4 million from property under development to land, buildings and improvements, and other assets (leasing commissions) in the accompanying condensed consolidated balance sheets.

Rent commenced for four of the seven completed developments in the first quarter of 2024, while rent is expected to commence for the other three completed developments in the second quarter of 2024.

The remaining 13 developments are expected to be substantially completed with rent commencing at various points throughout 2024.

The purchase price, including acquisition costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of March 31, 2024.

During the three months ended March 31, 2023, the Company invested $ 4.5 million in property developments.

During the three months ended March 31, 2023, the Company completed development on two projects and reclassified approximately $ 14.8 million from property under development to land, buildings and improvements in the accompanying condensed consolidated balance sheets.

Rent commenced for the completed developments in the first quarter of 2023.

The purchase price, including acquisitions costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of March 31, 2023.

Additionally, during the three months ended March 31, 2024 and 2023, the Company capitalized approximately $ 0.4 million and $ 0.1 million, respectively, of interest expense associated with properties under development.

During the three months ended March 31, 2024, the Company sold 12 properties for a total sales price, net of disposal costs, of $ 20.5 million, recognizing a net gain of $ 1.0 million.

During the three months ended March 31, 2023, the Company sold eight properties for a total sales price, net of disposal costs, of $ 15.5 million, recognizing a net loss of $ 0.3 million.

Investment in Mortgage Loans Receivable

The Company’s mortgage loans receivable portfolio as of September 30, 2023 and December 31, 2022 is summarized below (in thousands):

Loan Type Number of Secured Properties Effective Interest Rate (4)

Stated Interest Rate Maturity Date September 30, 2023 December 31, 2022

1 6.46 % 7.00 % 4/8/2024 $ 43,612 $ 40,316

The Company’s mortgage loans receivable portfolio as of March 31, 2024 and December 31, 2023 is summarized below (in thousands):

Loan Type Monthly Payment (1)

Number of Secured Properties Effective Interest Rate (2)

Stated Interest Rate Maturity Date March 31, 2024 December 31, 2023

Mortgage (3) (4) (5)

I/O 1 6.74 % 7.00 % 4/8/2024 $ 43,612 $ 43,612

I/O 46 9.55 % 9.55 % 3/10/2026 41,940 41,940

Mortgage (4) (6)

3 8.10 % 6.89 % 4/10/2026 4,132 —

I/O 3 8.10 % 6.89 % 4/10/2026 4,132 4,132

Mortgage (3) (4) (6)

I/O 9 7.59 % 7.59 % 6/10/2025 14,023 14,024

Mortgage None (7)

1 8.50 % 8.50 % 12/29/2024 660 660

P+I 1 7.50 % 7.50 % 1/8/2025 3,239 3,246

Mortgage (3) (4) (8)

I/O 11 10.22 % 10.25 % 3/19/2025 14,209 5,007

Mortgage (3) (4)

1 7.50 % 7.50 % 3/8/2024 3,246 —

I/O 2 10.25 % 10.25 % 12/22/2024 2,915 1,909

Total 124,730 114,530

Unamortized loan origination costs 124 62

Unamortized loan origination costs and fees, net ( 10 ) 58

Unamortized discount ( 103 ) ( 116 )

Total mortgage loans receivable, net $ 124,617 $ 114,472

(1) The Company has the right, subject to certain terms and conditions, to purchase all or a portion of the underlying collateralized property.

(2) The stated interest rate is variable up to 15.0 % and is calculated based on contractual rent for existing collateralized properties subject to the loan agreement.

(3) Requires monthly payments of both interest and principal.

Interest Only;

Principal and Interest.

(2) Includes amortization of discount and loan origination costs, as applicable.

All of the Company’s mortgage loans receivable, excluding the $ 3.2 million mortgage loan with a maturity of March 8, 2024 noted above, require monthly payments of interest only with principal payments occurring as borrower disposes of underlying properties, limited to the Company’s allocated investment by property.

(3) The Company has the right, subject to certain terms and conditions, to acquire all or a portion of the underlying collateralized properties.

(4) Loans require monthly payments of interest only with principal payments occurring as borrower disposes of underlying properties, limited to the Company’s allocated investment by property.

Any remaining principal balance will be repaid at or before the maturity date.

(5) The $ 43.6 million mortgage note receivable was scheduled to mature on April 8, 2024, however, the Company executed an amendment in April 2024 that extended the maturity date to January 8, 2025.

(6) The stated interest rate is variable up to 15.0 % and is calculated based on contractual rent for existing collateralized properties subject to the loan agreement.

(7) Payments of both interest and principal are due at maturity.

(8) The collateralized properties are in process developments with varying maturity dates dependent upon initial funding.

Maturity dates range from December 5, 2024 to March 19, 2025.

Assets Held for Sale

As of September 30, 2023 and December 31, 2022, there were fifteen and eleven properties, respectively, classified as held for sale.

As of March 31, 2024 and December 31, 2023, there were 23 properties classified as held for sale.

Provisions for Impairment

The Company recorded provisions for impairment of $ 1.5 million on seven properties for the three months ended September 30, 2023, and provisions for impairment of $ 4.4 million on ten properties for the nine months ended September 30, 2023.

The Company recorded no provisions for impairment for the three months ended September 30, 2022, and provisions for impairment of $ 1.1 million on one property for the nine months ended September 30, 2022.

The Company recorded provisions for impairment of $ 3.7 million on 12 properties for the three months ended March 31, 2024.

The Company recorded no provisions for impairment for the three months ended March 31, 2023.

Note 5 – Intangible Assets and Liabilities

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Amount Accumulated Amortization Net Carrying Amount Gross

2 unchanged sentences

Above-market leases 21,635 ( 4,749 ) 16,886 21,661 ( 4,361 ) 17,300

Assembled workforce 873 ( 873 ) — 873 ( 873 ) —

Lease incentives 8,577 ( 1,422 ) 7,155 8,996 ( 1,296 ) 7,700

1 unchanged sentence

Below-market leases $ 33,170 $ ( 8,531 ) $ 24,639 $ 33,196 $ ( 7,843 ) $ 25,353

The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of September 30, 2023 and as of December 31, 2022 by category were as follows:

The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of March 31, 2024 and as of December 31, 2023 by category were as follows:

Years Remaining

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

In-place leases 8.9 8.8

2 unchanged sentences

Lease incentives 10.8 11.1

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 related to the amortization of intangible assets and liabilities for all property and ground leases (in thousands):

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

2023 2022 2023 2022

The Company records amortization of in-place lease 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 intangible assets and liabilities for all property and ground leases (in thousands):

Three Months Ended March 31,

Amortization:

6 unchanged sentences

Lease incentives ( 191 ) ( 199 )

$ 121 $ 313 $ 517 $ 644

The following table provides the projected amortization of in-place lease 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, 2023, for the next five years and thereafter (in thousands):

The following table provides the projected amortization of in-place lease assets to amortization expense and the net amortization of above-market, below-market, and lease incentive lease intangible assets and liabilities to rental revenue as of March 31, 2024, for the next five years and thereafter (in thousands):

Remainder of 2024

8 unchanged sentences

Amounts Outstanding as of

Maturity Date Fully Extended Maturity Date (1)

Interest Rate September 30, 2023 December 31, 2022

2024 Term Loan (2)

December 23, 2024 — 1.37 % $ — $ 175,000

Contractual Maturity Date Fully Extended Maturity Date (1)

Interest Rate (2)

March 31, 2024 December 31, 2023

2027 Term Loan (3)

January 15, 2026 January 15, 2027 3.12 % $ 175,000 $ 175,000

August 11, 2026 August 11, 2027 6.42 % 42,000 113,000

2028 Term Loan (4)

February 11, 2028 — 3.88 % 200,000 200,000

Mortgage Note November 1, 2027 — 4.53 % 8,399 8,498

2029 Term Loan (5)

July 3, 2026 January 3, 2029 4.99 % 250,000 150,000

August 11, 2026 August 11, 2027 6.42 % 75,000 80,000

Mortgage Note November 1, 2027 — 4.53 % 8,322 8,361

Total debt 708,322 613,361

3 unchanged sentences

Total debt, net $ 702,619 $ 607,853

(1) Date represents the fully extended maturity date available to the Company under each related debt instrument.

(2) On June 15, 2023, the Company amended and restated its 2024 Term Loan, providing for a $ 175.0 million senior unsecured term loan (the “2027 Term Loan”).

(3) Loan is a floating-rate loan which resets daily at daily SOFR plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.15 % as of September 30, 2023.

(1) Date represents the fully extended maturity date available to the Company, subject to certain conditions, under each related debt instrument.

(2) Rate represents the effective interest rate as of March 31, 2024 and includes the effect of interest rate swap agreements, as described further in “Note 6 - Debt” and “Note 7 - Derivative Financial Instruments.”

(3) Loan is a floating-rate loan which resets daily at daily SOFR plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.15 % as of March 31, 2024.

The Company has entered into five interest rate swap agreements that effectively convert the floating rate to a fixed rate.

The hedged fixed rate will reset effective November 27, 2023 to 1.87 % and December 23, 2024 to 2.40 %.

(4) The annual interest rate of the Revolver assumes daily SOFR as of September 30, 2023 of 5.32 % plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.00 % as of September 30, 2023.

(5) 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, 2023.

The hedged fixed rate reset effective November 27, 2023 to 1.87 % and will reset again effective December 23, 2024 to 2.40 %.

(4) 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 March 31, 2024.

The Company has entered into three interest rate swap agreements that effectively convert the floating rate to a fixed rate.

(6) Loan is a floating-rate loan which resets daily at daily SOFR plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.15 % as of September 30, 2023.

(5) Loan is a floating-rate loan which resets daily at daily SOFR plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.15 % as of March 31, 2024.

The Company has entered into four interest rate swap agreements that effectively convert the floating rate to a fixed rate.

(7) The Company records deferred financing costs associated with the Revolver and loan commitment fees associated with the 2029 Term Loan in other assets, net on its condensed consolidated balance sheets.

(6) The annual interest rate of the Revolver assumes daily SOFR as of March 31, 2024 of 5.32 % plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.00 % as of March 31, 2024.

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

The Company reclassed the net amount of loan commitment fees associated with the 2029 Term Loan from other assets, net to debt issuance costs upon the $ 100.0 million draw under the 2029 Term Loan.

2029 Term Loan

3 unchanged sentences

The 2029 Term Loan matures on July 3, 2026, subject to extension options at the Company’s election on two occasions, by one year and, on one occasion, by six months (subject to certain conditions).

Subject to the terms of the 2029 Term Loan Agreement, the Company drew an additional $ 100.0 million under the 2029 Term Loan on March 1, 2024.

The interest rate applicable to the 2029 Term Loan is determined by the Company’s Investment Grade Rating (as defined in the 2029 Term Loan Agreement).

Prior to the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 1.15 % to 1.60 % or (ii) Base Rate (as defined in the 2029 Term Loan Agreement), plus a margin ranging from 0.15 % to 0.60 %, in each case based on the Company’s consolidated total leverage ratio.

After the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 0.80 % to

1.60 % or (ii) Base Rate, plus a margin ranging from 0.00% to 0.60 %, in each case based on the Company’s Investment Grade Rating.

The Company has hedged the entire $ 250.0 million of the 2029 Term Loan at an all-in fixed interest rate of 4.99 %, through January 2029, which consists of the fixed rate SOFR swap of 3.74 %, plus a credit spread adjustment of 0.10 % and, at current leverage levels, a borrowing spread of 1.15 %.

Prior to the date the Company obtains an Investment Grade Rating, interest shall accrue at either

(i) SOFR, plus a margin ranging from 1.15 % to 1.60 % or (ii) Base Rate (as defined in the 2029 Term Loan Agreement), plus a margin ranging from 0.15 % to 0.60 %, in each case based on the Company’s consolidated total leverage ratio.

After the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 0.80 % to 1.60 % or (ii) Base Rate, plus a margin ranging from 0.00% to 0.60 %, in each case based on the Company’s Investment Grade Rating.

The Company has hedged the entire $ 250.0 million of the 2029 Term Loan at an all-in fixed interest rate of 4.99 %, through January 2029, which consists of a fixed SOFR rate of 3.74 %, plus a credit spread adjustment of 0.10 % and, at current leverage levels, a borrowing spread of 1.15 %.

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

The 2029 Term Loan also contains 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 based rent attributable to tenants with commitments or quantifiable targets for reduced GHG emission is accordance with the standards of the Science Based Targets initiative (“SBTi”).

The 2029 Term Loan also contains 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 based rent attributable to tenants with commitments or quantifiable targets for reduced GHG emission in accordance with the standards of the Science Based Targets initiative (“SBTi”).

In connection with the 2029 Term Loan, the Company incurred $ 1.4 million of deferred financing costs.

Additionally, the Company incurred $ 0.9 million of loan commitment fees which has been capitalized to other assets, net on the condensed consolidated balance sheets.

The deferred financing costs and capitalized loan commitment fees are both amortized over the term of the loan and are included in interest expense, net on the Company’s condensed consolidated statements of operations and comprehensive income.

Additionally, the Company incurred $ 0.9 million of loan commitment fees associated with the 2029 Term Loan, which were capitalized to other assets, net on the condensed consolidated balance sheets and subsequently reclassed to debt issuance costs upon the $ 100.0 million draw under the 2029 Term Loan.

Deferred financing costs are amortized over the term of the loan and are included in interest expense, net on the Company’s condensed consolidated statements of operations and comprehensive income (loss).

Credit Facility

10 unchanged sentences

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 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 SBTi.

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 SBTi.

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

1 unchanged sentence

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

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

In connection with the Credit Facility, the Company incurred approximately $ 3.8 million of deferred financing costs which were allocated between the 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 Company’s previous revolving credit facility were reclassed to the Revolver.

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

2027 Term Loan

9 unchanged sentences

Mortgage Note Payable

As of September 30, 2023, the Company had total gross mortgage indebtedness of $ 8.4 million, which was collateralized by related real estate and a tenant’s lease with an aggregate net book value of $ 12.7 million.

As of March 31, 2024, the Company had total gross mortgage indebtedness of $ 8.3 million, which was collateralized by related real estate and a tenant’s lease with an aggregate net book value of $ 12.5 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 in the Company’s condensed consolidated balance sheets.

2 unchanged sentences

Payments on the 2027 Term Loan, 2028 Term Loan, and 2029 Term Loan are interest only through maturity.

As of September 30, 2023, scheduled debt maturities, including balloon payments, are as follows (in thousands):

As of March 31, 2024, scheduled debt maturities, including balloon payments, are as follows (in thousands):

Scheduled Principal Balloon Payment (1)

4 unchanged sentences

2028 — 200,000 200,000

Thereafter — 200,000 200,000

Total $ 641 $ 707,681 $ 708,322

(1) Does not assume the exercise of any extension options available to the Company.

I nterest Expense

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,

2023 2022 2023 2022

Three Months Ended March 31,

Revolving credit facilities (1)

1 unchanged sentence

Term loans (2)

4,428 1,670 9,597 2,854

Mortgage note payable 95 93

4 unchanged sentences

Total interest expense, net $ 6,180 $ 3,944

(1) Includes facility fees and non-utilization fees of approximately $ 0.2 million and $ 0.1 million for the three months ended September 30, 2023 and 2022, respectively, and facility fees of $ 0.5 million and $ 0.2 million for the nine months ended September 30, 2023 and 2022, respectively.

(1) Includes facility fees and non-utilization fees of approximately $ 0.2 million for both the three months ended March 31, 2024 and 2023.

(2) Includes the effects of interest rate hedges in place as of such date.

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

During the three months ended September 30, 2023 and 2022, the term loans had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of interest rate hedges, of 6.53 % and 3.53 %, respectively.

During the nine months ended September 30, 2023 and 2022, term loans had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of interest rate hedges, of 5.09 % and 2.49 %, respectively.

During the three months ended September 30, 2023 and 2022, the Company incurred interest expense on revolving credit facilities with a weighted average interest rate, exclusive of amortization of deferred financing costs and facility fees, of 7.05 % and 3.28 %, respectively.

During the nine months ended September 30, 2023 and 2022, the Company incurred interest expense on revolving credit facilities with a weighted average interest rate, exclusive of amortization of deferred financing costs and facility fees, of 5.98 % and 2.29 %, respectively.

During the three months ended March 31, 2024 and 2023, term loans had a weighted average interest rate, exclusive of amortization of deferred financing costs and the effects of interest rate hedges, of 6.69 % and 5.77 %, respectively.

During the three months ended March 31, 2024 and 2023, the Company incurred interest expense on revolving credit facilities with a weighted average interest rate, exclusive of amortization of deferred financing costs and facility fees, of 6.54 % and 5.86 %, 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.

1 unchanged sentence

Refer to “Note 2 - Summary of Significant Accounting Policies” for additional detail on fair value measurements.

The Company was in compliance with all of its debt covenants as of September 30, 2023 and expects to be in compliance for the twelve-month period ending December 31, 2023.

The Company was in compliance with all of its debt covenants as of March 31, 2024 and expects to be in compliance for the twelve-month period ending December 31, 2024.

Note 7 – Derivative Financial Instruments

4 unchanged sentences

Effective July 3, 2023, such derivatives were initiated to hedge the variable cash flows associated with the 2029 Term Loan.

The interest rate for the variable rate 2029 Term Loan is based on the hedged fixed rate of 3.64% compared to the variable 2029 Term Loan daily SOFR rate as of September 30, 2023 of 5.32 %, plus a SOFR adjustment of 0.10 % and applicable margin of 1.15 %.

The interest rate for the variable rate 2029 Term Loan is based on the hedged fixed rate of 3.74 % compared to the variable 2029 Term Loan daily SOFR rate as of March 31, 2024 of 5.32 %, plus a SOFR adjustment of 0.10 % and applicable margin of 1.15 %.

The maturity dates of the interest rate swaps coincide with the fully extended maturity date of the 2029 Term Loan.

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

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, 2023 of 5.33 %, plus a SOFR adjustment of 0.10 % and 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 March 31, 2024 of 5.33 %, plus a SOFR adjustment of 0.10 % and applicable margin of 1.15 %.

The maturity dates of the interest rate swaps coincide with the maturity date of the 2028 Term Loan.

Effective January 27, 2023, the Company converted its four existing LIBOR swap agreements associated with the 2024 Term Loan into four new SOFR swaps that convert the SOFR variable rate to a fixed rate of 0.12 % and on June 15, 2023, the Company amended and restated its 2024 Term Loan, providing for a $ 175.0 million senior unsecured term loan (the “2027 Term Loan”).

The interest rate on the variable 2027 Term Loan includes a daily SOFR rate as of September 30, 2023 of 5.30 %, plus a SOFR adjustment of 0.10 % and applicable margin of 1.15 %.

In anticipation of the amendment and restatement of the 2024 Term Loan, additional derivatives, effective November 27, 2023 and December 23, 2024 at hedged fixed rates of 1.87 % and 2.40 %, respectively, were initiated to hedge the variable cash flows associated with the 2027 Term Loan through the fully extended maturity date.

The interest rate on the variable 2027 Term Loan includes a daily SOFR rate as of March 31, 2024 of 5.31 %, plus a SOFR adjustment of 0.10 % and applicable margin of 1.15 %.

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

5 unchanged sentences

Number of Instruments Notional

Interest Rate Derivatives September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Interest Rate Derivatives March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Interest rate swaps 12 12 $ 650,000 $ 650,000

The following table presents the fair value of the Company's derivative financial instruments as well as their classification on the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 (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 March 31, 2024 and December 31, 2023 (in thousands):

Derivative Assets

Fair Value at

Fair Value as of March 31,

Derivatives Designated as Hedging Instruments:

Balance Sheet Location September 30, 2023 December 31, 2022

Balance Sheet Location 2024 2023

Interest rate swaps Other assets, net $ 21,476 $ 14,442

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, 2023 and 2022 (in thousands):

Derivative Liabilities

Fair Value as of March 31,

Derivatives Designated as Hedging Instruments:

Balance Sheet Location 2024 2023

Interest rate swaps Accounts payable, accrued expenses and other liabilities $ — $ 3,073

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 months ended March 31, 2024 and 2023 (in thousands):

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

1 unchanged sentence

Derivatives in Cash Flow Hedging Relationships 2024 2023 2024 2023

For the Three Months Ended September 30

Interest Rate Products $ 13,761 $ ( 3,141 ) Interest expense, net $ 4,633 $ 2,837

For the Nine Months Ended September 30

Interest Rate Products $ 18,388 $ 22,539 Interest expense, net $ 11,513 $ 1,103

The Company did not exclude any amounts from the assessment of hedge effectiveness for the three and nine months ended September 30, 2023 and 2022.

The Company did not exclude any amounts from the assessment of hedge effectiveness for the three months ended March 31, 2024 and 2023.

During the next twelve months, the Company estimates that an additional $ 14.5 million will be reclassified as a decrease to interest expense.

4 unchanged sentences

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

However, as of September 30, 2023, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

However, as of March 31, 2024, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives.

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

The table below presents the Company’s derivative assets measured at fair value on a recurring basis as of September 30, 2023 and December 31, 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 March 31, 2024 and December 31, 2023, 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

September 30, 2023

March 31, 2024

Derivative assets $ — $ 21,476 $ — $ 21,476

1 unchanged sentence

Derivative assets $ — $ 14,442 $ — $ 14,442

Derivative liabilities $ — $ 3,073 $ — $ 3,073

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

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Accounts receivable, net $ 10,813 $ 10,074

11 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Accrued expenses $ 8,176 $ 8,826

5 unchanged sentences

Accounts payable 622 4,691

Fair value of interest rate swaps — 3,073

Other liabilities 1,974 2,155

1 unchanged sentence

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

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.

The Company has issued or committed to issue shares of common stock in connection with the ATM Program for the periods presented as follows:

• On September 14, 2023, the Company entered into a forward confirmation with respect to 7,500,000 shares of its common stock under the ATM Program.

On September 28, 2023, the Company partially physically settled 1,516,289 shares of common stock at a price of $ 16.49 per share under such forward confirmation for net proceeds of approximately $ 24.8 million, net of sales commissions and offering costs of $ 0.2 million.

The Company contributed the net proceeds to the Operating Partnership in exchange for 1,516,289 Class A OP Units.

5,983,711 shares remain unsettled under the forward confirmation as of September 30, 2023.

• In September 2023, the Company issued 46,228 shares of common stock at a weighted average price of $ 17.09 per share for net proceeds of approximately $ 0.8 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 46,228 Class A OP Units.

• In August 2023, the Company issued 109,725 shares of common stock at a weighted average price of $ 17.18 per share for net proceeds of approximately $ 1.8 million, net of sales commissions and offering costs of $ 0.1 million.

The Company contributed the net proceeds to the Operating Partnership in exchange for 109,725 Class A OP Units.

• In June 2023, the Company issued 1,364,815 shares of common stock at a weighted average price of $ 17.53 per share for net proceeds of approximately $ 23.4 million, net of sales commissions and offering costs of $ 0.3 million.

The Company contributed the net proceeds to the Operating Partnership in exchange for 1,364,815 Class A OP Units.

• In March 2023, the Company issued 146,745 shares of common stock at a weighted average price of $ 20.22 per share for net proceeds of approximately $ 2.9 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 146,745 Class A OP Units.

• In March 2022, the Company issued 163,774 shares of common stock at a weighted average price of $ 22.08 per share for net proceeds of approximately $ 3.5 million, net of sales commissions and offering costs of less than $ 0.1 million.

On September 1, 2021, the Company entered into a $ 250.0 million at-the-market equity program (the “2021 ATM Program”).

In March 2023, the Company issued 146,745 shares of common stock under the 2021 ATM Program at a weighted average price of $ 20.22 per share for net proceeds of approximately $ 2.9 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 146,745 Class A OP Units.

As of September 30, 2023, the Company has $ 99.6 million remaining gross proceeds available for future issuances of shares of common stock under the ATM Program, inclusive of 5,983,711 shares remaining unsettled under the outstanding forward confirmation.

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 up to an additional 1,350,000 shares, which was exercised in full 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.

As of June 30, 2023, the Company had fully physically settled the forward sale agreements (by the delivery of shares of common stock).

On October 25, 2023, the Company entered into a $ 300.0 million at-the-market equity program (the “2023 ATM Program”) through which, from time to time, it may sell shares of its common stock in registered transactions.

Effective October 24, 2023, in connection with the establishment of the new at-the-market offering program, the 2021 ATM Program was terminated.

On March 28, 2024, the Company entered into a forward confirmation with respect to 107,500 shares of its common stock under the 2023 ATM Program, at a public offering price of $ 18.29 per share.

107,500 shares remain unsettled under the forward confirmation as of March 31, 2024.

The Company may physically settle this forward confirmation (by the delivery of shares of common stock) and receive proceeds from the sale of those shares on one or more forward settlement dates, which shall occur no later than April 12, 2025.

The following table presents information about the 2023 ATM Program and the 2021 ATM Program (in thousands):

Maximum Sales Authorization Gross Sales through March 31, 2024

Program Name Date Established Date Terminated

2021 ATM Program (1)

September 2021 October 2023 $ 250,000 $ 150,391

2023 ATM Program (2)

October 2023 — 0 $ 300,000 $ 77,323

(1) Includes 1,516,289 shares of common stock partially physically settled at a price of $ 16.49 per share under the forward confirmation with respect to the 2021 ATM Program.

5,983,711 shares remain unsettled under the forward confirmation as of March 31, 2024 at the available net settlement price of $ 16.46 .

(2) 107,500 shares remain unsettled under the forward confirmation as of March 31, 2024 at the available net settlement price of $ 18.12 .

January 2024 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 January 2024, the Company completed a registered public offering of 11,040,000 shares of its common stock at a public offering price of $ 18.00 per share.

In connection with the offering, the Company entered into forward sale agreements for 11,040,000 shares of its common stock.

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

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

The Company expects to physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares upon one or more forward settlement dates, which shall occur no later than January 9, 2025.

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

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

As of March 31, 2024, 11,040,000 shares remain unsettled under the January 2024 forward sale agreements.

Surrendered Shares on Vested Stock Unit Awards

During the nine months ended September 30, 2023 and 2022, portions of restricted stock unit awards (“RSUs”) granted to certain of the Company’s officers, directors, and employees vested.

During the three months ended March 31, 2024 and 2023, 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.

2019 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), resulted in federal and state income tax liabilities for the recipients.

During the nine months ended September 30, 2023 and 2022, as permitted by the terms of the Omnibus Incentive Plan and the award grants, certain executive officers and employees elected to surrender a total of 25 thousand and 26 thousand RSUs, respectively, both valued at approximately $ 0.5 million, solely to pay the associated statutory tax withholding.

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 nine months ended September 30, 2023, the Company declared and paid the following common stock dividends (in thousands, except per share data):

Nine Months Ended September 30, 2023

During the three months ended March 31, 2024 and 2023, as permitted by the terms of the Omnibus Incentive Plan and the award grants, certain executive officers and employees elected to surrender an approximate total of 62 thousand and 18 thousand RSUs, respectively, valued at approximately $ 1.1 million and $ 0.4 million, respectively, solely to pay the associated statutory tax withholding.

The surrendered RSUs are included in the row entitled “repurchase of common stock for tax withholding obligations” in the condensed consolidated statements of cash flows.

During the three months ended March 31, 2024, the Company declared and paid the following common stock dividends (in thousands, except per share data):

Three Months Ended March 31, 2024

Declaration Date Dividend Per Share Record Date Total Amount Payment Date

February 13, 2024 $ 0.205 March 15, 2024 $ 15,031 March 28, 2024

April 25, 2023 0.200 June 1, 2023 12,173 June 15, 2023

July 24, 2023 0.205 September 1, 2023 13,768 September 15, 2023

$ 0.605 $ 37,591

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

Nine Months Ended September 30, 2022

During the three months ended March 31, 2023, the Company declared and paid the following common stock dividends (in thousands, except per share data):

Three Months Ended March 31, 2023

Declaration Date Dividend Per Share Record Date Total Amount Payment Date

February 21, 2023 $ 0.200 March 15, 2023 $ 11,650 March 30, 2023

April 26, 2022 0.200 June 1, 2022 9,588 June 15, 2022

July 26, 2022 0.200 September 1, 2022 10,073 September 15, 2022

$ 0.600 $ 28,549

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

Accordingly, during the nine months ended September 30, 2023 and 2022, the Operating Partnership paid distributions of $ 0.3 million and $ 0.3 million, respectively, to holders of OP Units.

Accordingly, during each of the three months ended March 31, 2024 and 2023, the Operating Partnership paid distributions of $ 0.1 million to holders of OP Units.

Noncontrolling Interests

1 unchanged sentence

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 September 30, 2023 and December 31, 2022, noncontrolling interests represented 0.7 % and 0.9 %, respectively, of OP Units.

During the three months ended September 30, 2023, OP Unit holders redeemed 19,932 OP Units into shares of common stock on a one -for-one basis and during the three months ended September 30, 2022, no OP Units were converted.

During the nine months ended September 30, 2023 and 2022, OP Unit holders redeemed 25,626 and 47,894 OP Units, respectively, into shares of common stock on a one -for-one basis.

As of March 31, 2024 and December 31, 2023, noncontrolling interests represented 0.6 % and 0.7 %, respectively, of OP Units.

During the three months ended March 31, 2024 and 2023, OP Unit holders redeemed 7,119 and 5,694 and OP units, respectively, into shares of common stock on a one -for-one basis.

Note 10 – Stock-Based Compensation

2 unchanged sentences

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

As of September 30, 2023, the only stock-based compensation granted by the Company were RSUs.

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 for both the three months ended September 30, 2023 and 2022.

Stock-based compensation expense was $ 3.6 million for both the nine months ended September 30, 2023 and 2022.

As of March 31, 2024, the only stock-based compensation granted by the Company were RSUs.

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 $ 1.8 million and $ 1.0 for the three months ended March 31, 2024 and 2023, respectively.

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

1 unchanged sentence

Pursuant to the Omnibus Incentive Plan, the Company made performance-based RSUs to certain employees and non-employee directors.

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

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

Up until the point of filing the registration statement, performance was not deemed probable and accordingly, no RSUs had the capability of vesting and no stock-based compensation expense was recorded.

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

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

The following table summarizes performance-based RSU activity for the period ended September 30, 2023:

The vesting terms of these grants are specific to the individual grant and are expected to fully vest during the current year.

The following table summarizes performance-based RSU activity for the period ended March 31, 2024:

Shares Weighted Average Grant Date Fair Value per Share

Unvested RSU grants outstanding as of December 31, 2023 30,379 $ 19.75

Granted during the period — —

Forfeited during the period — —

Vested during the period — —

Unvested RSU grants outstanding as of September 30, 2023 60,759 $ 19.75

For the three and nine months ended September 30, 2023, the Company recognized $ 0.1 million and $ 0.2 million, respectively, in stock-based compensation expense associated with performance-based RSUs.

As of September 30, 2023 and December 31, 2022, the remaining unamortized stock-based compensation expense totaled $ 0.2 million and $ 0.4 million, respectively, and as of September 30, 2023, these awards are expected to be recognized over a remaining weighted average period of 1.0 year.

Unvested RSU grants outstanding as of March 31, 2024 30,379 $ 19.75

For the three months ended March 31, 2024, the Company recognized less than $ 0.1 million in stock-based compensation expense associated with performance-based RSUs.

As of March 31, 2024 and December 31, 2023, the remaining unamortized stock-based compensation expense totaled $ 0.1 million and $ 0.1 million, respectively, and as of March 31, 2024, these awards are expected to be recognized over a remaining weighted average period of 0.7 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.

2 unchanged sentences

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

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

The following table summarizes service-based RSU activity for the period ended September 30, 2023:

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 RSU activity for the period ended March 31, 2024:

Shares Weighted Average Grant Date Fair Value per Share

3 unchanged sentences

Vested during the period ( 130,220 ) 19.85

Unvested RSU grants outstanding as of September 30, 2023 298,909 $ 19.79

For the three and nine months ended September 30, 2023, the Company recognized $ 0.7 million and $ 2.0 million, respectively, in stock-based compensation expense associated with service-based RSUs.

As of September 30, 2023 and December 31, 2022, the remaining unamortized stock-based compensation expense totaled $ 4.1 million and $ 3.0 million, respectively, and as of September 30, 2023, these awards are expected to be recognized over a remaining weighted average period of 2.0 years.

Unvested RSU grants outstanding as of March 31, 2024 368,028 $ 18.50

For the three months ended March 31, 2024, the Company recognized $ 1.0 million in stock-based compensation expense associated with service-based RSUs.

As of March 31, 2024 and December 31, 2023, the remaining unamortized stock-based compensation expense totaled $ 5.4 million and $ 3.4 million, respectively, and as of March 31, 2024, these awards are expected to be recognized over a remaining weighted average period of 2.2 years.

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

3 unchanged sentences

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

The performance period of these grants runs through March 8, 2024, February 28, 2025, and February 28, 2026.

The performance period of these grants runs through February 28, 2025, February 28, 2026, and December 31, 2026.

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

2 unchanged sentences

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 RSU activity for the period ended September 30, 2023:

The following table summarizes market-based RSU activity for the period ended March 31, 2024:

Shares Weighted Average Grant Date Fair Value per Share

Unvested RSU grants outstanding as of December 31, 2023 258,558 $ 20.38

177,350 $ 19.83

Granted during the period 169,002 16.05

Forfeited during the period ( 69,959 ) 16.92

Unvested RSU grants outstanding as of September 30, 2023

Vested during the period

( 45,977 ) 20.29

For the three and nine months ended September 30, 2023, the Company recognized $ 0.4 million and $ 1.2 million, respectively, in stock-based compensation expense associated with market-based RSUs.

As of September 30, 2023 and December 31, 2022, the remaining unamortized stock-based compensation expense totaled $ 2.5 million and $ 2.0 million, respectively, and as of September 30, 2023, these awards are expected to be recognized over a remaining weighted average period of 1.9 years.

Unvested RSU grants outstanding as of March 31, 2024 311,624 $ 18.82

For the three months ended March 31, 2024, the Company recognized $ 0.6 million in stock-based compensation expense associated with market-based RSUs.

As of March 31, 2024, the remaining unamortized stock-based compensation expense totaled $ 4.0 million and as of March 31, 2024, these awards are expected to be recognized over a remaining weighted average period of 2.4 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.

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 RSUs in the first quarter of the following year, that vests from one to four years based on the terms of the grant agreement.

Stock-based compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award, which begins in the period 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 be classified as equity on grant date), which will be fair-valued and accrued over the applicable service period.

1 unchanged sentence

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

For both the three and nine months ended September 30, 2023, the Company recognized approximately $ 0.1 million in stock-based compensation expense associated with these awards.

For the three months ended March 31, 2024, the Company recognized approximately $ 0.1 million 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.

4 unchanged sentences

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 nine months ended September 30, 2023 and 2022.

Three Months Ended September 30, Nine Months Ended September 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 months ended March 31, 2024 and 2023.

Three Months Ended March 31,

(In thousands, except share and per share data) 2024 2023

12 unchanged sentences

Net income available to common stockholders per common share, diluted $ 0.01 $ 0.03

As of September 30, 2023 and December 31, 2022, there were 487,841 and 513,467 of OP Units outstanding, respectively.

As of March 31, 2024 and December 31, 2023, there were 472,179 and 479,298 of OP Units outstanding, respectively.

Note 12 – Commitments and Contingencies

5 unchanged sentences

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

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

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

As of September 30, 2023, the Company had tenant improvement allowance commitments totaling approximately $ 4.1 million, all of which is expected to be funded over the next two years .

Additionally, as of September 30, 2023, the Company had commitments to fund 27 properties under development totaling $ 37.9 million, which is expected to be funded over the next two years .

In the normal course of business, the Company enters into various types of commitments to purchase real estate properties, fund development projects, or extend funds under mortgage notes receivable.

As of March 31, 2024, the Company had tenant improvement allowance commitments totaling approximately $ 4.1 million, which is expected to be funded over the next two years .

Additionally, as of March 31, 2024, the Company had commitments to fund 13 properties under development totaling $ 25.0 million, all of which is expected to be funded throughout the remainder of 2024.

The Company also had commitments to extend funds under mortgage notes receivable of $ 12.4 million as of March 31, 2024, which is expected to occur throughout 2024.

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

1 unchanged sentence

The lease has a remaining noncancellable term of 8.3 years that expires on July 31, 2032 and is renewable at the Company’s option for two additional periods of five years .

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

As of September 30, 2023, 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.

Annual rent expense, excluding operating expenses, is approximately $ 0.5 million during the initial term.

As of March 31, 2024, 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 – Subsequent Events

The Company has evaluated all events that occurred subsequent to September 30, 2023 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 March 31, 2024 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 October 24, 2023, the Company's Board of Directors declared a cash dividend of $ 0.205 per share for the fourth quarter of 2023 which will be paid on December 15, 2023 to shareholders of record on December 1, 2023.

On April 23, 2024, the Company's Board of Directors declared a cash dividend of $ 0.205 per share for the second quarter of 2024.

The dividend will be paid on June 14, 2024 to stockholders of record on June 3, 2024.

Revolver Activity

In October 2023, the Company borrowed $ 35.0 million under the Revolver which will be used for general corporate purposes, including the acquisition of properties in the Company’s pipeline.

In April 2024, the Company paid $ 12.0 million, net of borrowings, on the 2026 Revolver.

2023 ATM Program

In April 2024, the Company entered into forward sale agreements with respect to an aggregate 1,635,600 shares of its common stock under the 2023 ATM Program at a weighted average price of $ 17.63 per share.

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

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

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

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

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