What changed in this filing

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Item 1. Financial Statements

2024-07-29 compared with 2024-04-29 · 243 added, 184 removed, 590 unchanged (42% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Real estate, at cost:

22 unchanged sentences

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

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

77,377,679 and 73,207,080 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,435,577 1,367,505

8 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except share and per share data)

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Rental revenue (including reimbursable) $ 36,864 $ 29,707 $ 72,053 $ 58,180

10 unchanged sentences

Interest expense, net ( 7,604 ) ( 5,521 ) ( 13,784 ) ( 9,465 )

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

Gain on sales of real estate, net 8 615 1,006 296

Loss on debt extinguishment — ( 128 ) — ( 128 )

Other (expense) income, net ( 2,588 ) 68 ( 2,868 ) 220

Total other (expense) income, net ( 10,184 ) ( 4,966 ) ( 15,646 ) ( 9,077 )

Net income before income taxes 1,069 1,438

Net (loss) income before income taxes ( 2,294 ) ( 824 ) ( 1,225 ) 614

Income tax (expense) benefit ( 12 ) 32 ( 29 ) 75

Net income 1,052 1,481

Net income attributable to noncontrolling interests 7 9

Net income attributable to common stockholders $ 1,045 $ 1,472

Net (loss) income ( 2,306 ) ( 792 ) ( 1,254 ) 689

Net (loss) income attributable to noncontrolling interests ( 15 ) ( 1 ) ( 8 ) 8

Net (loss) income attributable to common stockholders $ ( 2,291 ) $ ( 791 ) $ ( 1,246 ) $ 681

Amounts available to common stockholders per common share:

5 unchanged sentences

Other comprehensive income:

Net income $ 1,052 $ 1,481

Net (loss) income $ ( 2,306 ) $ ( 792 ) $ ( 1,254 ) $ 689

Change in value on derivatives, net ( 420 ) 6,388 8,708 409

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 )

Total comprehensive (loss) income $ ( 2,726 ) $ 5,596 $ 7,454 $ 1,098

Comprehensive (loss) income attributable to noncontrolling interests ( 15 ) 48 43 8

Comprehensive (loss) income attributable to common stockholders $ ( 2,711 ) $ 5,548 $ 7,411 $ 1,090

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

15 unchanged sentences

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

Issuance of common stock in public offerings, net of issuance costs 4,000,000 40 65,284 — — 65,324 — 65,324

OP Units converted to common stock 35,121 — 611 — — 611 ( 611 ) —

Dividends and distributions declared on common stock and OP Units — — — ( 15,042 ) — ( 15,042 ) ( 90 ) ( 15,132 )

Dividends declared on restricted stock, net — — — ( 139 ) — ( 139 ) — ( 139 )

Vesting of restricted stock units 23,510 — — — — — — —

Repurchase of common stock for tax withholding obligations ( 9,363 ) — ( 160 ) — — ( 160 ) — ( 160 )

Stock-based compensation, net — — 1,530 8 — 1,538 — 1,538

Other comprehensive loss — — — — ( 420 ) ( 420 ) — ( 420 )

Net loss — — — ( 2,291 ) — ( 2,291 ) ( 15 ) ( 2,306 )

Balance at June 30, 2024 77,377,679 $ 773 $ 1,435,577 $ ( 143,734 ) $ 17,600 $ 1,310,216 $ 7,646 $ 1,317,862

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)

Shares Par Value Additional

11 unchanged sentences

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 offerings, 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 — — — — 6,339 6,339 49 6,388

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

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

3 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

Net income $ 1,052 $ 1,481

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

Net (loss) income $ ( 1,254 ) $ 689

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

Depreciation and amortization 36,084 30,795

4 unchanged sentences

Stock-based compensation expense 3,281 2,279

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

Gain on sales of real estate, net ( 1,006 ) ( 296 )

Provisions for impairment 7,498 2,836

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

Loss on debt extinguishment — 128

Loss (gain) on involuntary conversion of building and improvements 905 ( 47 )

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

24 unchanged sentences

Deferred offering costs ( 614 ) ( 185 )

Deferred financing costs — ( 977 )

Net cash provided by financing activities 150,702 134,727

3 unchanged sentences

Supplemental disclosures of cash flow information:

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

Cash paid for interest, net $ 13,437 $ 8,045

Cash (received) paid for income taxes $ ( 8 ) $ 477

Supplemental disclosures of non-cash investing and financing activities:

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

Dividends declared and unpaid on restricted stock $ 139 $ 250

Deferred offering costs included in accounts payable, accrued expenses and other liabilities $ 22 $ 121

Accrued loan origination fees on mortgage loans receivable $ 200 $ —

Cash flow hedge change in fair value $ 10,666 $ 409

13 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, 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.

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 June 30, 2024, the Company owned or had investments in 649 properties, located in 45 states, excluding 12 property developments where rent has yet to commence.

Note 2 – Summary of Significant Accounting Policies

4 unchanged sentences

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

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

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

Interim Unaudited Financial Information

2 unchanged sentences

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

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

The results of operations for the three and six months ended June 30, 2024 and 2023 are not necessarily indicative of the results for the full year.

Use of Estimates

13 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Total provision for impairment $ 3,836 $ 2,836 $ 7,498 $ 2,836

4 unchanged sentences

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.

Of the total provision for impairment during the three months ended June 30, 2024, the Company recorded $ 1.1 million of additional impairment expense on four properties that were classified as held for sale in prior periods, and $ 1.9 million of impairment expense on two properties held for investment.

Of the total provision for impairment during the six months ended June 30, 2024, the Company recorded $ 1.4 million of additional impairment expense on five properties that were classified as held for sale in prior periods and $ 4.1 million of impairment expense on six 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 $ 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.

The Company had $ 0.5 million of restricted cash as of June 30, 2024, and $ 11.5 million of restricted cash as of December 31, 2023.

The Company’s bank balances as of June 30, 2024 and December 31, 2023 included certain amounts over the Federal Deposit Insurance Corporation limits.

Fair Value Measurement

13 unchanged sentences

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.

The fair values of financial instruments are estimates based on market conditions and perceived risks as of June 30, 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 March 31, 2024:

Additionally, the Company believes the following financial instruments have carrying values that approximate their fair values as of June 30, 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.

1 unchanged sentence

• 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.

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.

Provisions for impairment recognized during the three and six months ended June 30, 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.

The Company also recorded $ 1.9 million and $ 4.1 million of impairment expense on two and six properties held for investment, respectively, during the three and six months ended June 30, 2024.

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 $ 0.2 million to $ 4.8 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.

The Company estimated the fair value using a capitalization rates ranging from 7.6 % 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.

1 unchanged sentence

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

June 30, 2024 December 31, 2023

Carrying Value (1)

6 unchanged sentences

Concentrations of Credit Risk

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 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.

During the three months ended June 30, 2024, one tenant, Dollar General, accounted for 11.3 % of total revenues.

During the three months ended June 30, 2023, there were no other tenants or borrowers with rental or interest income on loans receivable that exceeded 10% of total revenues.

During the six months ended June 30, 2024, one tenant, Dollar General, accounted for 11.5 % of total revenues.

During the six months ended June 30, 2023, there were no other tenants or borrowers with rental or interest income on loans receivable that exceeded 10% of total revenues.

Other financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash held at various financial institutions, access to the Company’s credit facilities, and amounts due or payable under derivative contracts.

These credit risk exposures are spread among a diversified group of investment grade financial institutions.

Segment Reporting

11 unchanged sentences

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

Tenant Leases

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

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

As of June 30, 2024, exclusive of mortgage loans receivable, the Company’s weighted average remaining lease term was 9.5 years.

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

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

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

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

2 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Rental revenue

2 unchanged sentences

Variable lease income (2)

2,978 2,715 6,207 6,252

Other rental revenue:

3 unchanged sentences

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

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

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

Scheduled future minimum base rental payments (excluding base rental payments from properties classified as held for sale and straight-line rent adjustments for all properties) due to be received under the remaining non-cancelable term of the operating leases in place as of March 31, 2024 are as follows (in thousands):

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

There were no material reserves, write-offs, or recoveries of uncollectible amounts during the three and six months ended June 30, 2024 and 2023.

Scheduled future minimum base rental payments (excluding base rental payments from properties classified as held for sale and straight line rent adjustments for all properties) due to be received under the remaining non-cancelable term of the operating leases in place as of June 30, 2024 are as follows (in thousands):

Future Minimum Base

6 unchanged sentences

Note 4 – Real Estate Investments

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

As of June 30, 2024, the Company owned or had investments in 649 properties, excluding 12 property developments where rent has yet to commence.

The gross real estate investment portfolio, including properties under development, totaled approximately $ 2.0 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 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 investment portfolio is geographically dispersed throughout 45 states with gross real estate investments in Texas and Illinois representing 10.6 % and 9.0 %, respectively, of the total gross real estate investment of the Company’s investment portfolio.

During the three months ended June 30, 2024, the Company acquired 18 properties for a total purchase price of $ 95.6 million, inclusive of $ 0.6 million of capitalized acquisition costs.

During the six months ended June 30, 2024, the Company acquired 46 properties for a total purchase price of $ 190.8 million, inclusive of $ 1.8 million of capitalized acquisition costs.

During the three months ended June 30, 2023, the Company acquired 28 properties for a total purchase price of $ 96.2 million, inclusive of $ 1.0 million of capitalized acquisition costs.

During the six months ended June 30, 2023, the Company acquired 48 properties for a total purchase price of $ 163.9 million, inclusive of $ 1.7 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 March 31,

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

2024 2023 2024 2023

Land $ 28,264 $ 19,748 $ 44,872 $ 34,052

3 unchanged sentences

In-place lease intangible assets 4,479 11,399 15,772 17,809

Above-market lease intangible assets — 1,543 — 1,543

Purchase price (including acquisition costs) $ 95,611 $ 96,217 $ 190,764 $ 163,934

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.

As of June 30, 2024, the Company had eight property developments under construction.

During the three months ended June 30, 2024, the Company invested $ 12.0 million in property developments, including the land acquisition of two new developments with a combined initial purchase price of $ 1.2 million.

During the six months ended June 30, 2024, the Company invested $ 23.0 million in property developments, including the land acquisition of four new developments with a combined initial purchase price of $ 2.0 million.

During the six months ended June 30, 2024, the Company completed development on 14 projects and reclassified approximately $ 35.3 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 10 of the completed developments during the six months ended June 30, 2024, while rent is expected to commence for the other four completed developments in the third quarter of 2024.

The remaining eight 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 June 30, 2024.

During the three months ended June 30, 2023, the Company invested $ 17.7 million in property developments.

During the six months ended June 30, 2023, the Company invested $ 22.2 million in property developments, including the land acquisition of 20 new developments with an initial purchase price of $ 11.9 million.

During the six months ended June 30, 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.

The purchase price, including acquisitions costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of June 30, 2023.

Additionally, during the three months ended June 30, 2024 and 2023, the Company capitalized approximately $ 0.2 million and $ 0.1 million, respectively, of interest expense associated with properties under development.

During the six months ended June 30, 2024 and 2023, the Company capitalized approximately $ 0.6 million and $ 0.3 million, respectively, of interest expense associated with properties under development.

During the three months ended June 30, 2024, the Company sold six properties for a total sales price, net of disposal costs, of $ 12.1 million, recognizing a net gain of less than $ 0.1 million.

During the three months ended June 30, 2023, the Company sold two properties for a total sales price, net of disposal costs, of $ 3.8 million, recognizing a net gain of $ 0.6 million.

During the six months ended June 30, 2024, the Company sold 18 properties for a total sales price, net of disposal costs, of $ 32.5 million, recognizing a net gain of $ 1.0 million.

During the six months ended June 30, 2023, the Company sold 10 properties for a total sales price, net of disposal costs, of $ 19.3 million, recognizing a net gain of $ 0.3 million.

Investment in Mortgage Loans Receivable

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

The Company’s mortgage loans receivable portfolio as of June 30, 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

Stated Interest Rate Maturity Date June 30, 2024 December 31, 2023

Mortgage (3) (4)

12 unchanged sentences

I/O 2 14.10 % 10.25 % 12/22/2024 4,149 1,909

Mortgage (3) (4)

I/O 1 10.25 % 10.25 % 4/26/2025 819 —

Mortgage (3) (4)

I/O 1 10.25 % 10.25 % 5/15/2025 784 —

Total 130,174 114,530

4 unchanged sentences

Principal and Interest.

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

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

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

1 unchanged sentence

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.

(5) 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.

1 unchanged sentence

(7) 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.

Maturity dates range from December 5, 2024 to June 18, 2025.

Assets Held for Sale

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

As of June 30, 2024 and December 31, 2023, there were 25 and 23 properties, respectively, classified as held for sale.

Provisions for Impairment

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.

The Company recorded provisions for impairment of $ 3.8 million and $ 2.8 million on 12 properties and six properties for the three months ended June 30, 2024 and 2023, respectively.

The Company recorded provisions for impairment of $ 7.5 million and $ 2.8 million on 23 properties and six properties for the six months ended June 30, 2024 and 2023, respectively .

Note 5 – Intangible Assets and Liabilities

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Amount Accumulated Amortization Net Carrying Amount Gross

5 unchanged sentences

Below-market leases $ 33,062 $ ( 9,186 ) $ 23,876 $ 33,196 $ ( 7,843 ) $ 25,353

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:

The remaining weighted average amortization period for the Company’s intangible assets and liabilities as of June 30, 2024 and as of December 31, 2023 by category were as follows:

Years Remaining

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

In-place leases 8.9 8.8

3 unchanged sentences

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,

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

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

2024 2023 2024 2023

Amortization:

Amortization of in-place leases $ 5,196 $ 4,809 $ 10,071 $ 9,479

Amortization of assembled workforce — —

$ 4,875 $ 4,670

Net adjustment to rental revenue:

2 unchanged sentences

Lease incentives ( 189 ) ( 193 ) ( 380 ) ( 392 )

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):

$ 98 $ 184 $ 193 $ 397

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 June 30, 2024, for the next five years and thereafter (in thousands):

Remainder of 2024

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Amounts Outstanding as of

Contractual Maturity Date Fully Extended Maturity Date (1)

Interest Rate (2)

March 31, 2024 December 31, 2023

Maturity Date Fully Extended Maturity Date (1)

June 30, 2024 December 31, 2023

2027 Term Loan (3)

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(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.

( 2 ) Rate represents the effective interest rate as of June 30, 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 June 30, 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 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.

(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 June 30, 2024.

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

(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.

(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 June 30, 2024.

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

(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.

(6) The annual interest rate of the Revolver assumes daily SOFR as of June 30, 2024 of 5.34 % plus a SOFR adjustment of 0.10 % plus the applicable margin which was 1.00 % as of June 30, 2024.

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

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The 2029 Term Loan is prepayable at the Company’s option in whole or in part without premium or penalty.

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).

The 2029 Term Loan matures on July 3, 2026, subject to two one-year extension options and one six-month extension option with a final, extended maturity date of January 3, 2029.

The extension options are at the Company’s election and are 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.

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.

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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

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

The Credit Facility may be increased by $ 400.0 million in the aggregate for total availability of up to $ 800.0 million.

The Credit Facility may be increased by $ 400.0 million in the aggregate for total availability of up to $ 1.0 billion.

The 2028 Term Loan matures on February 11, 2028.

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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.

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 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.

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

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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 (loss).

2027 Term Loan

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Mortgage Note Payable

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.

As of June 30, 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 $ 12.4 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.

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

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

As of June 30, 2024, scheduled debt maturities, including balloon payments, are as follows (in thousands):

Scheduled Principal Balloon Payment (1)

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

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Revolving credit facilities (1)

1 unchanged sentence

Term loans (2)

6,491 2,668 12,200 5,168

Mortgage note payable 95 100 190 193

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Total interest expense, net $ 7,604 $ 5,521 $ 13,784 $ 9,465

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

(1) Includes facility fees and non-utilization fees of approximately $ 0.2 million and $ 0.1 million for the three months ended June 30, 2024 and 2023, respectively, and facility fees of $ 0.3 million and $ 0.3 million for the six months ended June 30, 2024 and 2023, respectively.

(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 (loss).

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.

During the three months ended June 30, 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 6.66 % and 6.41 %, respectively.

During the six months ended June 30, 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 6.09 %, respectively.

During the three months ended June 30, 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 6.49 % and 5.94 %, respectively.

During the six months ended June 30, 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 6.51 % and 5.92 %, 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.

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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 March 31, 2024 and expects to be in compliance for the twelve-month period ending December 31, 2024.

The Company was in compliance with all of its debt covenants as of June 30, 2024 and expects to be in compliance for the twelve-month period ending December 31, 2024.

Note 7 – Derivative Financial Instruments

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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 3.74 % 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 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 June 30, 2024 of 5.34 %, 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 March 31, 2024 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 June 30, 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.

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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 %.

The interest rate on the variable 2027 Term Loan includes a daily SOFR rate as of June 30, 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 March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Interest Rate Derivatives June 30, 2024 December 31, 2023 June 30, 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 March 31, 2024 and December 31, 2023 (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 June 30, 2024 and December 31, 2023 (in thousands):

Derivative Assets

Fair Value as of March 31,

Fair Value as of

Derivatives Designated as Hedging Instruments:

Balance Sheet Location 2024 2023

Balance Sheet Location June 30, 2024 December 31, 2023

Interest rate swaps Other assets, net $ 22,035 $ 14,442

Derivative Liabilities

Fair Value as of March 31,

Fair Value as of

Derivatives Designated as Hedging Instruments:

Balance Sheet Location 2024 2023

Balance Sheet Location June 30, 2024 December 31, 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

The following table presents the effect of the Company's interest rate swaps on the condensed consolidated statements of operations and comprehensive (loss) income for the three and six months ended June 30, 2024 and 2023 (in thousands):

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

(Effective Portion)

Derivatives in Cash Flow Hedging Relationships 2024 2023 2024 2023

For the Three Months Ended June 30

Interest Rate Products $ 4,446 $ 9,714 Interest expense, net $ 4,866 $ 3,326

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

For the Six Months Ended June 30

Interest Rate Products $ 18,207 $ 6,572 Interest expense, net $ 9,499 $ 6,163

The Company did not exclude any amounts from the assessment of hedge effectiveness for the three and six months ended June 30, 2024 and 2023.

During the next twelve months, the Company estimates that an additional $ 12.6 million will be reclassified as a decrease to interest expense.

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

However, as of 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.

However, as of June 30, 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 March 31, 2024 and December 31, 2023, 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 June 30, 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

March 31, 2024

June 30, 2024

Derivative assets $ — $ 22,035 $ — $ 22,035

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Accounts receivable, net $ 11,143 $ 10,074

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Accrued expenses $ 8,753 $ 8,826

11 unchanged sentences

• 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 units of limited partnership of the Operating Partnership (“Class A OP Units”).

• In June 2023, the Company issued 1,364,815 shares of common stock under the 2021 ATM Program 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.

On September 14, 2023, the Company entered into a forward confirmation with respect to 7,500,000 shares of its common stock under the 2021 ATM Program.

• On June 26, 2024, the Company partially physically settled 4,000,000 shares of common stock at a price of $ 16.43 per share under such forward confirmation for net proceeds of approximately $ 65.3 million, net of sales commissions and offering costs of $ 0.7 million.

As of June 30, 2024, 1,983,711 shares remain unsettled under the forward confirmation.

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.

1 unchanged sentence

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.

107,500 shares remain unsettled under the forward confirmation as of June 30, 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.

During 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 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 April 12, 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.

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

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 June 30, 2024, the Company has $ 222.7 million remaining gross proceeds available for future issuances of shares of common stock under the 2023 ATM Program, inclusive of unsettled shares under forward confirmation.

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

Maximum Sales Authorization Gross Sales through June 30, 2024

Program Name Date Established Date Terminated

3 unchanged sentences

October 2023 — $ 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 .

(1) As of June 30, 2024, 1,983,711 shares remain unsettled under the forward confirmation at the available net settlement price of $ 16.44 .

(2) As of June 30, 2024, 1,743,100 shares remain unsettled under the forward confirmation as of June 30, 2024 at the available net settlement price of $ 17.54 .

January 2024 Follow-On Offering

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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.

As of June 30, 2024, 11,040,000 shares remain unsettled under the January 2024 forward sale agreements.

Surrendered Shares on Vested Stock Unit Awards

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.

During the six months ended June 30, 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 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.

During the six months ended June 30, 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 71 thousand and 18 thousand RSUs, respectively, valued at approximately $ 1.2 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

During the six months ended June 30, 2024, the Company declared and paid the following common stock dividends (in thousands, except per share data):

Six Months Ended June 30, 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

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

April 23, 2024 0.205 June 3, 2024 15,042 June 14, 2024

$ 0.410 $ 30,073

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

Six Months Ended June 30, 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 25, 2023 0.200 June 1, 2023 12,173 June 15, 2023

$ 0.400 $ 23,823

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

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.

Accordingly, during each of the six months ended June 30, 2024 and 2023, the Operating Partnership paid distributions of $ 0.2 million to holders of OP Units.

Noncontrolling Interests

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

As of 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.

As of June 30, 2024 and December 31, 2023, noncontrolling interests represented 0.6 % and 0.7 %, respectively, of OP Units.

During the three months ended June 30, 2024 and 2023, OP Unit holders redeemed 35,121 and no OP Units, respectively, into shares of common stock on a one -for-one basis.

During the six months ended June 30, 2024 and 2023, OP Unit holders redeemed 42,240 and 5,694 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 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.

As of June 30, 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 (loss) income was $ 1.5 million for the three months ended June 30, 2024 and $ 1.3 million for the three months ended June 30, 2023.

Stock-based compensation expense was $ 3.3 million for the six months ended June 30, 2024 and $ 2.3 million for the six months ended June 30, 2023.

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

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

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

The following table summarizes performance-based RSU activity for the period ended June 30, 2024:

Shares Weighted Average Grant Date Fair Value per Share

3 unchanged sentences

Vested during the period — —

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.

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

For both the three and six months ended June 30, 2024, the Company recognized less than $ 0.1 million in stock-based compensation expense associated with performance-based RSUs.

As of June 30, 2024 and December 31, 2023, the remaining unamortized stock-based compensation expense totaled less than $ 0.1 million, and as of June 30, 2024, these awards are expected to be recognized over a remaining weighted average period of 0.5 years.

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

3 unchanged sentences

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:

The following table summarizes service-based RSU activity for the period ended June 30, 2024:

Shares Weighted Average Grant Date Fair Value per Share

3 unchanged sentences

Vested during the period ( 153,047 ) 19.72

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.

Unvested RSU grants outstanding as of June 30, 2024 344,167 $ 18.39

For the three and six months ended June 30, 2024, the Company recognized $ 0.9 million and $ 1.9 million, respectively, in stock-based compensation expense associated with service-based RSUs.

As of June 30, 2024 and December 31, 2023, the remaining unamortized stock-based compensation expense totaled $ 4.8 million and $ 3.4 million, respectively, and as of June 30, 2024, these awards are expected to be recognized over a remaining weighted average period of 2.1 years.

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

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

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

The following table summarizes market-based RSU activity for the period ended June 30, 2024:

Shares Weighted Average Grant Date Fair Value per Share

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Vested during the period ( 46,660 ) 20.36

( 45,977 ) 20.29

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.

Unvested RSU grants outstanding as of June 30, 2024 305,671 $ 18.76

For the three and six months ended June 30, 2024, the Company recognized $ 0.5 million and $ 1.1 million, respectively, in stock-based compensation expense associated with market-based RSUs.

As of June 30, 2024 and December 31, 2023, the remaining unamortized stock-based compensation expense totaled $ 3.4 million and $ 2.1 million, respectively, and as of June 30, 2024, these awards are expected to be recognized over a remaining weighted average period of 2.2 years.

Alignment of Interest Program

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

For the three months ended March 31, 2024, the Company recognized approximately $ 0.1 million in stock-based compensation expense associated with these awards.

For the three and six months ended June 30, 2024, the Company recognized approximately $ 0.1 million and $ 0.2 million, respectively, in stock-based compensation expense associated with these awards.

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

Note 11 – Earnings Per Share

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

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

Note 11 – (Loss) Earnings Per Share

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

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

Diluted earnings per share is similarly calculated except that the denominator is increased by using the treasury stock method to determine the potential dilutive effect of the Company’s outstanding unvested RSUs and unsettled shares under open forward equity contracts and using the if-converted method to determine the potential dilutive effect of the OP Units.

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

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per common share for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31,

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net (loss) income per common share for the three and six months ended June 30, 2024 and 2023.

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

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

Net income $ 1,052 $ 1,481

Net (income) attributable to noncontrolling interest ( 7 ) ( 9 )

Net income attributable to common shares, basic 1,045 1,472

Net income attributable to noncontrolling interest 7 9

Net income attributable to common shares, diluted $ 1,052 $ 1,481

Net (loss) income $ ( 2,306 ) $ ( 792 ) $ ( 1,254 ) $ 689

Net loss (income) attributable to noncontrolling interest 15 1 8 ( 8 )

Net (loss) income attributable to common shares, basic ( 2,291 ) ( 791 ) ( 1,246 ) 681

Net (loss) income attributable to noncontrolling interest ( 15 ) ( 1 ) ( 8 ) 8

Net (loss) income attributable to common shares, diluted $ ( 2,306 ) $ ( 792 ) $ ( 1,254 ) $ 689

Weighted average common shares outstanding, basic 73,588,605 61,043,531 73,419,198 59,600,630

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Weighted average common shares outstanding, diluted 73,588,605 61,043,531 73,419,198 60,294,734

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

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

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

Net (loss) income available to common stockholders per common share, basic $ ( 0.03 ) $ ( 0.01 ) $ ( 0.02 ) $ 0.01

Net (loss) income available to common stockholders per common share, diluted $ ( 0.03 ) $ ( 0.01 ) $ ( 0.02 ) $ 0.01

For the three months ended June 30, 2024 and 2023, diluted net loss per common share does not assume the conversion of 440,654 and 507,773 OP Units, respectively, 69,023 and 152,785 unvested RSUs, respectively, and 254,299 unsettled shares under open forward equity contracts for the three months ended June 30, 2024, as such conversion would be antidilutive.

For the six months ended June 30, 2024, diluted net loss per common share does not assume the conversion of 459,520 OP Units, 118,790 unvested RSUs, or 462,103 unsettled shares under open forward equity contracts, as such conversion would be antidilutive.

As of June 30, 2024 and December 31, 2023, there were 437,058 and 479,298 of OP Units outstanding, respectively.

Note 12 – Commitments and Contingencies

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

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.

As of June 30, 2024, the Company had tenant improvement allowance commitments totaling approximately $ 4.1 million, which is expected to be funded within the next two years .

Additionally, as of June 30, 2024, the Company had commitments to fund properties under development totaling $ 16.1 million, which is expected to be funded over the next 18 months.

The Company also had commitments to extend funds under mortgage notes receivable of $ 15.3 million as of June 30, 2024, which is expected to occur over the next 12 months.

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

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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.

As of June 30, 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 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.

The Company has evaluated all events that occurred subsequent to June 30, 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 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.

On July 23, 2024, the Company's Board of Directors declared a cash dividend of $ 0.21 per share for the third quarter of 2024.

The dividend will be paid on September 13, 2024 to stockholders of record on September 3, 2024.

Revolver Activity

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.

In July 2024, the Company borrowed $ 6.0 million under the Revolver which will be used for general corporate purposes, including the acquisition of properties in the Company’s pipeline.

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