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Item 2. Management’s Discussion and Analysis

2025-04-28 compared with 2024-11-04 · 159 added, 242 removed, 218 unchanged (65% of the section changed)

13 unchanged sentences

Business Overview

We are an internally managed real estate company that acquires, owns, and manages a diversified portfolio of single-tenant, retail commercial real estate subject to long-term net leases with high credit quality tenants across the United States.

We are an internally managed real estate company that acquires, owns, and manages a diversified portfolio of single-tenant retail commercial properties, subject to long-term net leases with high-credit-quality tenants across the United States.

We also invest in property developments and mortgage loans secured by real estate.

As of September 30, 2024, we owned or had investments in 671 single-tenant retail net leased properties that were diversified by tenant, industry and geography, including 93 different tenants, across 26 retail sectors in 45 states.

This excludes eight property developments where rent has yet to commence.

As of March 31, 2025, we owned or had investments in 695 properties diversified by tenant, industry, and geography, including 101 different tenants, across 26 retail sectors in 45 states.

This excludes four property developments where rent has not yet commenced.

We focus on tenants in industries where a physical location is critical to the generation of sales and profits, with a focus on necessity goods and essential services in the retail sector, including home improvement, auto parts, drug stores and pharmacies, general retail, grocers, convenience stores, discount stores, and quick-service restaurants, all of which we refer to as defensive retail industries.

As of September 30, 2024, our investments generated ABR 1 of $157.0 million.

As of March 31, 2025, our investments generated ABR 1 of $168.7 million.

Approximately 55% of our ABR is from investment grade 2 credit rated tenants and an additional 16% of our ABR is derived from tenants with an investment grade profile 3 .

Exclusive of mortgage loans receivable, our portfolio was 100% occupied with a weighted average remaining lease term (“WALT”) of 9.5 years, which we believe provides us with a strong stable source of recurring cash flow from our portfolio.

January Follow-On Offering

In January 2024, we completed a registered public offering of 11,040,000 shares of our common stock at a public offering price of $18.00 per share.

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

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

On September 26, 2024, we partially physically settled 2,200,000 shares of common stock at a price of $17.22 per share in accordance with the forward sale agreements.

We received net proceeds from the settlement of $37.8 million, net of underwriting discounts and offering costs of $1.8 million.

As of September 30, 2024, 8,840,000 shares remain unsettled under the January 2024 forward sale agreements.

2024 ATM Program

On August 12, 2024, we entered into a $300.0 million at-the-market equity program (the “2024 ATM Program”) through which, from time to time, we may sell shares of our common stock in registered transactions.

During August and September 2024, we entered into forward sale agreements with respect to 152,547 shares of our common stock under the 2024 ATM Program, at a public offering price of $17.13 per share.

As of September 30, 2024, 152,547 shares remain unsettled under the forward sale agreements.

We may physically settle these forward sale agreements (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 October 20, 2025.

2023 ATM Program

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

During 2024, we entered into forward sale agreements for an aggregate of 1,743,100 shares of our common stock under the 2023 ATM Program at a weighted average price of $17.67 per share, none of which have been physically settled as of September 30, 2024.

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

1 Annualized base rent (“ABR”) is annualized base rent as of September 30, 2024, for all leases that commenced, and annualized cash interest on mortgage loans receivable in place as of that date.

Our portfolio was 99.9% occupied and, excluding mortgage loans receivable, had a weighted average remaining lease term (“WALT”) of 9.7 years, which we believe provides a strong, stable source of recurring cash flow.

( 1 ) Annualized base rent (“ABR”) is annualized base rent for all leases that commenced and annualized cash interest for all executed mortgage loans as of March 31, 2025.

(2) We define “investment grade” tenants as tenants, or tenants that are subsidiaries of a parent entity, with a credit rating of BBB- (S&P/Fitch), Baa3 (Moody’s) or NAIC2 (National Association of Insurance Commissioners) or higher.

(3) We define “investment grade profile” tenants as tenants with metrics of more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x but do not carry a published rating from S&P, Moody’s or NAIC.

2021 ATM Program

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

On September 14, 2023, we entered into a forward sale agreement with respect to 7,500,000 shares of our common stock under the 2021 ATM Program.

On September 26, 2024, we physically settled 1,983,711 shares of common stock at a price of $16.41 per share under such forward sale agreement for net proceeds of approximately $32.3 million, net of sales commissions and offering costs of $0.4 million.

As of September 30, 2024, we had fully settled the forward sale agreement.

January 2025 Debt Transactions

On January 15, 2025, we amended our existing credit agreements agented by PNC Bank, National Association (the “PNC Credit Agreement”), Wells Fargo Bank, National Association (the “Wells Fargo Credit Agreement”) and Truist Bank (the “Truist Credit Agreement”).

The PNC Credit Agreement was amended and restated and provides for:

a new $175.0 million senior unsecured term loan (the “2030 Term Loan B”);

an existing $200.0 million senior unsecured term loan, which was fully funded under the existing PNC Credit Agreement (the “2028 Term Loan”);

and an upsized $500.0 million senior unsecured revolving credit facility (increased from $400 million under the existing PNC Credit Agreement) (the “Revolver”).

The 2030 Term Loan B and the upsized Revolver initially mature in January 2029 and include, at our election, a one-year option to extend the maturity to January 2030.

The 2030 Term Loan B was fully funded on the closing date and we have hedged the entire $175.0 million 2030 Term Loan B at an all-in fixed interest rate of 5.12% through January 2030.

The Wells Fargo Credit Agreement was amended and restated to extend the maturity date of the existing $175.0 million senior unsecured term loan (the “2030 Term Loan A”) thereunder from January 2027 to January 2029 with an option, at our election, to extend the maturity to January 2030.

The Truist Credit Agreement governs existing term loans thereunder (the “2029 Term Loan”).

Among other changes, each of the PNC Credit Agreement, Wells Fargo Credit Agreement, and Truist Credit Agreement were also amended to remove certain financial covenants and provide for revised, improved pricing when we meet certain investment grade rating and leverage targets.

Results of Operations

We continued to grow our assets during the nine months ended September 30, 2024 through the acquisition of properties, property developments, and investment in mortgage loans receivable.

This growth was financed through a $100.0 million draw on our $250.0 million sustainably-linked senior unsecured term loan (the “2029 Term Loan”), settlement of shares of common stock through our forward sale agreements in an amount of $135.4 million, the usage of cash balances as a result of borrowings on our Revolver, the usage of restricted cash balances as a result of tax-free exchanges under Section 1031 of the Internal Revenue Code of 1986, and cash flows from operations during the nine months ended September 30, 2024.

During the three months ended September 30, 2024, we acquired 22 properties for a total purchase price of $111.5 million, inclusive of $1.1 million of capitalized acquisition costs.

The acquisitions were all accounted for as asset acquisitions.

These properties are located in 10 states with a WALT of approximately 12.1 years.

The underwritten weighted-average capitalization rate on our second quarter acquisitions was approximately 7.3%.

During the nine months ended September 30, 2024, we acquired 68 properties for a total purchase price of $302.3 million, inclusive of $2.8 million of capitalized acquisition costs.

We continued to grow our assets held for investment during the three months ended March 31, 2025 through the acquisition of properties, property developments, and investment in mortgage loans receivable, with an underwritten weighted-average capitalization rate of approximately 7.7%.

This growth was financed through the amendment of our PNC Credit Agreement and receipt of proceeds of $175.0 million under the 2030 Term Loan B, the usage of cash balances as a result of borrowings on our Revolver, the usage of restricted cash balances as a result of tax-free exchanges under Section 1031 of the Internal Revenue Code of 1986, and cash flows from operations during the three months ended March 31, 2025.

During the three months ended March 31, 2025, we acquired 18 properties for a total purchase price of $77.5 million, inclusive of $0.9 million of capitalized acquisition costs.

The acquisitions were all accounted for as asset acquisitions.

These properties are located in 14 states with a WALT of approximately 9.0 years.

The underwritten weighted-average capitalization rate on our year to date acquisitions was approximately 7.3%.

As of September 30, 2024, we had six property developments under construction.

During the three months ended September 30, 2024, we invested $5.0 million in property developments.

During the nine months ended September 30, 2024, we invested $27.9 million in property developments, including the land acquisition of four new developments with a combined initial purchase price of $2.0 million.

During the nine months ended September 30, 2024, we completed development on 16 projects and reclassified approximately $47.8 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 14 of the completed developments during the nine months ended September 30, 2024, while rent is expected to commence for the other two completed developments in the fourth quarter of 2024.

The remaining six developments are expected to be substantially completed with rent commencing at various points throughout the fourth quarter of 2024 and the first quarter of 2025.

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, 2024.

During the three months ended September 30, 2024, we sold eight properties for a total sales price, net of disposal costs, of $23.0 million, recognizing a net loss of $0.1 million.

During the nine months ended September 30, 2024, we sold 26 properties for a total sales price, net of disposal costs, of $55.6 million, recognizing a net gain of $0.9 million.

As of March 31, 2025, we had three property developments under construction.

During the three months ended March 31, 2025, we invested $0.7 million in our property developments.

During the three months ended March 31, 2025, we completed development on one project and reclassified approximately $3.8 million from property under development to land, buildings and improvements, and other assets (leasing commissions) in the accompanying condensed consolidated balance sheets.

Rent is expected to commence for the completed development in the second quarter of 2025.

The remaining three developments are expected to be substantially completed with rent commencing at various points throughout 2025.

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, 2025.

During the three months ended March 31, 2025, we sold 16 properties for a total sales price, net of disposal costs, of $38.6 million, recognizing a net gain of $2.1 million.

Investment in Mortgage Loans Receivable

During the three and nine months ended September 30, 2024, we invested an additional $21.0 million and $39.0 million, respectively, in fully collateralized mortgage loans receivable with stated interest rates ranging from 6.9% to 13.1%, inclusive of $12.7 million provided through seller financing transactions for both periods presented.

In addition, during the three and nine months ended September 30, 2024, we collected $8.9 million and $11.3 million, respectively, in principal on our mortgage loans receivable.

During the three months ended March 31, 2025, we invested an additional $10.5 million in fully collateralized mortgage loans receivable with stated interest rates ranging from 9.75% to 10.25%.

In addition, during the three months ended March 31, 2025, we collected $4.8 million in principal on our mortgage loans receivable.

The mortgage loans receivable are collateralized by real estate, primarily leased by investment grade credit rated tenants.

The funds provided under the loans, in addition to discount and loan origination costs, net of loan origination fees of less than $0.2 million, are included in mortgage loans receivable, net in the accompanying condensed consolidated balance sheets as of September 30, 2024.

See “Note 4 - Real Estate Investments” in “Item 1 - Financial Statements (unaudited)” for further discussion on our mortgage loans receivable portfolio.

The funds provided under the loans, in addition to discount and loan origination costs, net of loan origination fees of less than $0.1 million, are included in mortgage loans receivable, net in the accompanying condensed consolidated balance sheets as of March 31, 2025.

See discussion of our mortgage loans receivable portfolio included in “Note 4 – Real Estate Investments” of our condensed consolidated financial statements, included in “Item 1 – Financial Statements (unaudited)”.

Economic and Financial Environment

The annual inflation rate for the nine months ended September 30, 2024 and 2023 was 2.4% and 3.7%, respectively.

While the Federal Reserve raised interest rates in an effort to lower inflation throughout 2022 and the first half of 2023, rates had remained unchanged for nearly a year until the first rate cut occurred in September 2024.

There continues to be uncertainty in 2024 as to whether rates will be maintained or further cut, and the timing of potential cuts, leading to uncertainties in the financing market and broader economy.

In the commercial real estate market, property prices generally continue to fluctuate, which may impact our investment capitalization rates and operating costs.

Likewise, during certain periods, including the current market, the credit markets have experienced significant price volatility, dislocations, and liquidity disruptions, which may impact our access to and cost of capital.

Changes in global or national market and economic conditions, such as global economic and financial market volatility and global geopolitical conflict, have caused, and may continue to cause, among other things, tightening in the credit markets, lower levels of liquidity, fluctuating interest rates and inflation, increases in the rate of default and bankruptcy, and lower consumer and business spending, which could materially and adversely affect us.

For example, the current and continuing macro-economic conditions of fluctuating inflation and fluctuating interest rates have increased the costs associated with acquiring new properties and decreased the availability of financing on terms that we find attractive, which has reduced our ability to acquire properties at our historical rate with attractive terms.

Additionally, other macroeconomic pressures in the U.S.

and the global economy, including new and proposed tariffs on imports into the United States and current and potential countermeasures by foreign governments and recession fears, may impact our tenants as consumers reduce discretionary spending.

A decline in consumer spending has had and may continue to have an adverse effect on tenants which, in turn, could impact our performance if tenants terminate leases or otherwise fail to pay rents.

Other potential consequences of changes in economic and financial conditions include:

changes in the performance of our tenants, which may result in lower rent and lower recoverable expenses, and tenant defaults under the lease;

current or potential tenants may delay or postpone entering into long-term leases with us;

continuing increased costs of acquiring new properties on attractive terms;

inability to borrow on terms and conditions that we find to be acceptable, which could continue to reduce our ability to pursue acquisition opportunities or increase future interest expense;

and the recognition of impairment charges on or reduced values of our properties, which may adversely affect our results of operations or limit our ability to dispose of assets at attractive prices and may reduce the availability of buyer financing.

We are also limited in our ability to reduce costs to offset the results of a prolonged or severe economic downturn given certain fixed costs and commitments associated with our operations.

We continually monitor the commercial real estate and credit markets carefully and, if required, will make decisions to adjust our business strategy accordingly.

Three Months Ended September 30, 2024 Compared with Three Months Ended September 30, 2023

Three Months Ended March 31, 2025 Compared with Three Months Ended March 31, 2024

The following table sets forth our operating results for the periods indicated (in thousands):

Three Months Ended

September 30,

Rental revenue (including reimbursable) $ 42,590 $ 35,189

11 unchanged sentences

Interest expense, net (11,460) (6,180)

(Loss) gain on sales of real estate, net (132) 373

Other income, net

Gain on sales of real estate, net 2,075 997

Loss on debt extinguishment (46) —

Other expense, net (205) (280)

Total other expense, net (9,636) (5,463)

(7,681) (3,206)

Net (loss) income before income taxes (5,320) 4,254

Net income before income taxes 1,716 1,069

Income tax expense (16) (17)

Net (loss) income $ (5,322) $ 4,239

Revenue for the three months ended September 30, 2024 increased by $7.4 million to $41.4 million from $34.0 million for the three months ended September 30, 2023, which is attributed to an increase in the number of our operating leases and properties securing our mortgage loans.

The increase includes additional cash rental receipts of $6.8 million, an increase of $1.0 million related to interest income on mortgage loans receivable, and an increase of $0.5 million in straight-line rental revenue.

The increase in revenue is offset by $0.6 million in other revenue recognized in the prior year related to the receipt of legal settlement proceeds associated with a lease termination, combined with net decreases of property expense reimbursements of $0.4 million.

Net income $ 1,700 $ 1,052

Revenue for the three months ended March 31, 2025 increased by $8.2 million to $45.9 million from $37.7 million for the three months ended March 31, 2024, which is attributed to an increase in the number of our operating leases and properties securing our mortgage loans.

The increase includes additional cash rental receipts of $6.8 million, an increase of $0.6 million related to interest income on mortgage loans receivable, combined net increases of property expense reimbursements of $0.3 million, and an increase of $0.4 million in straight-line rental revenue.

Total operating expenses.

Total expenses increased by $12.6 million to $39.1 million for the three months ended September 30, 2024 as compared to $26.5 million for the three months ended September 30, 2023.

The increase is primarily attributed to an increase in the number of operating properties, with the most significant increases being depreciation and amortization expense, provisions for impairment, and property-specific reimbursable expenses.

The increase is offset by a decrease in payroll related costs.

Total expenses increased by $3.5 million to $34.6 million for the three months ended March 31, 2025 as compared to $31.1 million for the three months ended March 31, 2024.

The increase is primarily attributed to an increase in the number of operating properties, with the most significant increases being depreciation and amortization expense and property-specific reimbursable expenses.

Total operating expenses include the following:

• Property expenses.

Property expenses increased $0.6 million to $4.5 million for the three months ended September 30, 2024 from $3.9 million for the three months ended September 30, 2023.

The increase is primarily attributed to the increase in the number of operating properties, including combined net increases of reimbursable property expenses of $0.6 million, of which $0.3 million, $0.1 million, and $0.2 million were related to reimbursable common area maintenance costs, reimbursable property insurance, and reimbursable property taxes, respectively.

Property expenses increased $0.7 million to $4.8 million for the three months ended March 31, 2025 from $4.1 million for the three months ended March 31, 2024.

The increase is primarily attributed to an increase in the number of operating properties, including combined net increases of reimbursable property expenses of $0.5 million, of which $0.4 million and $0.2 million were related to reimbursable property taxes and reimbursable common area maintenance costs, respectively, partially offset by a decrease of $0.1 million of reimbursable insurance costs, and combined net increases of non-reimbursable property expenses of $0.2 million primarily related to property insurance and property taxes.

• General and administrative expenses.

General and administrative expenses decreased $0.8 million to $4.3 million for the three months ended September 30, 2024 from $5.1 million for the three months ended September 30, 2023.

The decreases within general and administrative expense were primarily related to decreases of $0.3 million of payroll expenses and $0.7 million of bonus expenses, offset by other combined net increases of $0.2 million.

General and administrative expenses decreased $0.5 million to $5.2 million for the three months ended March 31, 2025 from $5.7 million for the three months ended March 31, 2024.

The decrease is primarily related to a decrease in employee severance of $0.8 million, including cash severance of $0.5 million and expense associated with the accelerated vesting of stock-based compensation of $0.3 million, and a decrease of $0.1 million of payroll expense.

The decrease is partially offset by a $0.2 million increase in bonus expense and other combined increases of $0.2 million.

While our general and administrative expenses will continue to rise in some measure as our portfolio grows, we expect that such expenses as a percentage of our portfolio will decrease over time due to efficiencies and economies of scale.

• Depreciation and amortization.

Depreciation and amortization expense increased $4.6 million to $20.4 million for the three months ended September 30, 2024 from $15.8 million for the three months ended September 30, 2023.

Depreciation and amortization expense increased $3.4 million to $20.9 million for the three months ended March 31, 2025 from $17.5 million for the three months ended March 31, 2024.

The increase in depreciation and amortization is proportionate to the increase in the size of the portfolio over the comparable period with associated increases primarily in building depreciation expense of $1.8 million, building improvements depreciation expense of $0.9 million, and in-place lease amortization expense of $0.7 million.

• Provision for impairment.

For the three months ended September 30, 2024, we recorded provisions for impairment of $9.8 million on 18 properties, the majority of which were newly classified as held-for-sale or disposed of during the three months ended September 30, 2024.

Three of the properties were held for investment as of September 30, 2024.

For the three months ended September 30, 2023, we recorded provisions for impairment of $1.5 million on seven properties, which were either previously classified as held-for-sale, newly classified as held-for-sale, or disposed of during the three months ended September 30, 2023.

These disposals relate to management’s continuous assessment of our portfolio in an effort to improve returns and manage risk exposure.

Interest expense, net.

Interest expense increased by $4.1 million to $8.0 million for the three months ended September 30, 2024 from $3.9 million for the three months ended September 30, 2023.

The increase is primarily attributed to an increase of $1.2 million of interest incurred under our $250.0 million senior unsecured term loan (the “2029 Term Loan”), an increase of $1.0 million of interest incurred under our $175.0 million senior unsecured term loan (the “2027 Term Loan”), an increase of $1.5 million of interest incurred under our Revolver primarily due to a increase in average borrowings outstanding during the respective periods, and a decrease of $0.3 million of interest capitalized on our property developments.

(Loss) gain on sales of real estate, net.

Net loss on sales of real estate increased by $0.5 million to $0.1 million for the three months ended September 30, 2024 from a $0.4 million net gain for the three months ended September 30, 2023.

The table below summarizes the properties sold for the periods indicated (dollars in thousands):

Three Months Ended

September 30,

Number of properties sold 8 4

Sales price, net of disposal costs $ 23,018 $ 7,224

(Loss) gain on sales of real estate, net $ (132) $ 373

Other income (expense), net.

The change in other income (expense), net is primarily related to a $0.2 million decrease in interest income earned on our cash, cash equivalents and restricted cash balances as presented in the condensed consolidated balance sheets, offset by a $0.3 million increase in insurance proceeds associated with property damages related to flooding.

Net (loss) income.

Net (loss) income decreased $9.5 million to a net loss of $5.3 million for the three months ended September 30, 2024 from net income of $4.2 million for the three months ended September 30, 2023.

Net (loss) income decreased primarily due to increases in interest expense, depreciation and amortization expense, and provisions for impairment, as set forth above.

These decreases are offset by increases in additional rental revenues primarily due to the growth in the size of our real estate investment portfolio, in addition to increased interest income associated with our mortgage loans receivable.

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

The following table sets forth our operating results for the periods indicated (in thousands):

Nine Months Ended

September 30,

Rental revenue (including reimbursable) $ 110,226 $ 89,347

Interest income on loans receivable 8,458 5,145

Other revenue — 550

Total revenues 118,684 95,042

Operating expenses

Property 12,578 11,350

General and administrative 15,266 15,299

Depreciation and amortization 56,522 46,599

• Provisions for impairment.

Transaction costs 201 267

Total operating expenses 101,903 77,889

Other (expense) income

Interest expense, net (21,749) (13,412)

Gain on sales of real estate, net

Loss on debt extinguishment — (128)

Other (expense) income, net

Total other expense, net

(23,326) (12,285)

Net (loss) income before income taxes (6,545) 4,868

Income tax (expense) benefit (31) 60

Net (loss) income

$ (6,576) $ 4,928

Revenue for the nine months ended September 30, 2024 increased by $23.7 million to $118.7 million from $95.0 million for the nine months ended September 30, 2023, which is attributed to an increase in the number of our operating leases and properties securing our mortgage loans.

The increase includes additional cash rental receipts of $20.2 million, an increase of $3.3 million related to interest income on mortgage loans receivable, and an increase of $1.0 million in straight-line rental revenue, offset by $0.6 million of combined net decreases of property expense reimbursements.

Total operating expenses.

Total expenses increased by $24.0 million to $101.9 million for the nine months ended September 30, 2024 as compared to $77.9 million for the nine months ended September 30, 2023.

Total operating expenses include the following:

• Property expenses.

Property expenses increased $1.2 million to $12.6 million for the nine months ended September 30, 2024 from $11.4 million for the nine months ended September 30, 2023.

The increase is primarily attributed to the increase in the number of operating properties, including combined net increases of reimbursable property expenses of $0.8 million, of which $0.7 million was related to reimbursable property taxes, and combined net increases of non-reimbursable property expenses of $0.4 million, of which $0.2 million, $0.1 million, and $0.1 million were related to common area maintenance costs, property insurance, and property taxes, respectively.

• General and administrative expenses.

General and administrative expenses were $15.3 million for both the nine months ended September 30, 2024 and 2023.

The net changes within general and administrative expense were primarily related to decreases of $0.7 million of payroll expenses and $1.1 million of bonus expenses, and decreases of $0.3 million of corporate insurance premiums, offset by increases in employee severance of $1.5 million, including cash severance of $1.0 million and the expense associated with the accelerated vesting of stock-based compensation of $0.5 million, and an increase of $0.6 million of stock-based compensation.

• Depreciation and amortization.

Depreciation and amortization expense increased $9.9 million to $56.5 million for the nine months ended September 30, 2024 from $46.6 million for the nine months ended September 30, 2023.

The increase in depreciation and amortization is proportionate to the increase in the size of the portfolio over the comparable period with associated increases primarily in building depreciation expense of $5.9 million, building improvements depreciation expense of $1.9 million, in-place lease amortization expense of $1.5 million, leasehold improvements depreciation expense of $0.3 million, and amortization of leasing commissions of $0.3 million.

• Provision for impairment.

For the nine months ended September 30, 2024, we recorded provisions for impairment of $17.3 million on 40 properties, the majority of which were either previously classified as held-for-sale, newly classified as held-for-sale or disposed of during the nine months ended September 30, 2024.

Nine of the properties were held for investment as of September 30, 2024.

For the nine months ended September 30, 2023, we recorded provisions for impairment of $4.4 million on 10 properties, which were either previously classified as held-for-sale, newly classified as held-for-sale, or disposed of during the nine months ended September 30, 2023.

For the three months ended March 31, 2025, we recorded provisions for impairment of $3.6 million on 13 properties, the majority of which were newly classified as held-for-sale during the three months ended March 31, 2025.

Of those properties impaired, one property was held for investment as of March 31, 2025.

For the three months ended March 31, 2024, we recorded provisions for impairment of $3.7 million on 12 properties, the majority of which were either previously classified as held-for-sale, newly classified as held-for-sale, or disposed of during three months ended March 31, 2024.

These disposals relate to management’s continuous assessment of our portfolio in an effort to improve returns and manage risk exposure.

Interest expense, net.

Interest expense increased by $8.3 million to $21.7 million for the nine months ended September 30, 2024 from $13.4 million for the nine months ended September 30, 2023.

The increase is primarily attributed to an increase of $6.6 million of interest incurred under our 2029 Term Loan, an increase of $2.5 million of interest incurred under our 2027 Term Loan, an increase of $0.5 million of interest incurred under our Revolver primarily due to an increase in average borrowings outstanding during the respective periods, and an increase of $0.5 million of loan fee amortization.

This is offset by $1.8 million in amortization of deferred gains on interest rate swaps.

Interest expense.

Interest expense increased by $5.3 million to $11.5 million for the three months ended March 31, 2025 from $6.2 million for the three months ended March 31, 2024.

The increase is primarily attributed to an increase of $1.9 million of interest incurred on our new 2030 Term Loan B, an increase of $0.8 million of interest incurred on our 2029 Term Loan, a $1.7 million increase in amortization of deferred losses on interest rate swaps, a decrease of $0.3 million of capitalized interest on our property developments, and an increase of $0.3 million of interest incurred on our Revolver primarily due to an increase in average borrowings outstanding during the respective periods.

Gain on sales of real estate, net.

Net gain on sales of real estate increased by $0.2 million to $0.9 million for the nine months ended September 30, 2024 from $0.7 million for the nine months ended September 30, 2023.

Net gain on sales of real estate increased by $1.1 million to $2.1 million for the three months ended March 31, 2025 from $1.0 million for the three months ended March 31, 2024.

The table below summarizes the properties sold for the periods indicated (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Number of properties sold 16 12

1 unchanged sentence

Gain on sales of real estate, net

Other (expense) income, net.

Other (expense) income, net increased by $3.1 million to $2.5 million for the nine months ended September 30, 2024 from $0.6 million for the nine months ended September 30, 2023.

The net increase to expense is primarily related to a transfer fraud loss of $2.8 million, net of insurance recoveries, $0.9 million of losses associated with property damages related to flooding and foundation issues, offset by $0.5 million of proceeds received from the settlement of a lease escrow agreement.

Net (loss) income.

Net (loss) income decreased $11.5 million to a net loss of $6.6 million for the nine months ended September 30, 2024 from net income of $4.9 million for the nine months ended September 30, 2023.

Net (loss) income decreased primarily due to increases in interest expense, depreciation and amortization expense, provisions for impairment, and net expense associated with the transfer fraud loss, as set forth above.

$ 2,075 $ 997

Other expense, net.

The change in other expense, net is primarily related to a $0.4 million decrease in losses associated with property damages on one property with foundation issues in 2024.

The decrease is offset by a $0.4 million increase in third-party debt issuance costs expensed during the three months ended March 31, 2025 as a result of the January 2025 debt transaction.

Net income increased by $0.6 million to $1.7 million for the three months ended March 31, 2025 from $1.1 million for the three months ended March 31, 2024.

Net income increased primarily due to increased gains on sales of real estate, decreased general and administrative expenses, and additional rental revenues, primarily due to the growth in the size of our real estate investment portfolio, in addition to increased interest income associated with our mortgage loans receivable, partially offset by increases in interest expense, depreciation and amortization expense, and property expenses.

Liquidity and Capital Resources

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Our capital resources primarily consist of cash from operations, sales of equity securities, and available borrowing facilities.

As of September 30, 2024, we had $175.0 million outstanding principal amount under the senior unsecured term loan (the “2027 Term Loan”), $200.0 million outstanding principal amount under the senior unsecured term loan (the “2028 Term Loan”), $250.0 million outstanding principal amount under the 2029 Term Loan, and $150.0 million of borrowings outstanding under our $400.0 million senior unsecured revolving credit facility (the “Revolver”).

Additionally, as of September 30, 2024, we had $30.6 million and $2.6 million of unsettled forward equity under the 2023 ATM Program and 2024 ATM Program, respectively.

As of September 30, 2024, $300.0 million of remaining gross proceeds were available for future issuances of shares of our common stock under the 2024 ATM Program, inclusive of unsettled shares under forward sale agreements.

Lastly, we had $152.3 million of unsettled forward equity under the January 2024 forward sale agreements as of September 30, 2024.

As of March 31, 2025, we had $175.0 million outstanding principal amount under the 2030 Term Loan A, $200.0 million outstanding principal amount under the 2028 Term Loan, $250.0 million outstanding principal amount under the 2029 Term Loan, $175.0 million outstanding principal amount under the 2030 Term Loan B, and $114.5 million of borrowings outstanding under the Revolver.

Additionally, as of March 31, 2025, we had $30.4 million and $2.6 million of unsettled forward equity under our prior at-the-market equity program and our $300.0 million at-the-market equity program entered into in August 2024 (the “2024 ATM Program”), respectively.

As of March 31, 2025, $300.0 million of remaining gross proceeds were available for future issuances of shares of our common stock under the 2024 ATM Program, inclusive of unsettled shares under forward sale agreements.

Lastly, we had $151.5 million of unsettled forward equity under the January 2024 follow-on offering forward sale agreements as of March 31, 2025.

On January 15, 2025, we amended our PNC Credit Agreement to provide for:

a new $175.0 million 2030 Term Loan B and an upsized $500.0 million Revolver.

The 2030 Term Loan B and the upsized Revolver initially mature in January 2029 and include, at our election, a one-year option to extend the maturity to January 2030.

The 2030 Term Loan B was fully funded on the closing date and we have hedged the entire $175.0 million 2030 Term Loan B at an all-in fixed interest rate of 5.12% through January 2030.

The Wells Fargo Credit Agreement was amended and restated to extend the maturity date of the existing $175.0 million 2030 Term Loan A from January 2027 to January 2029 with an option, at our election, to extend the maturity to January 2030.

We believe the availability of proceeds from the settlement of unsettled outstanding forward sale agreements, future issuances of shares of our common stock under the 2024 ATM Program, or subsequent at-the-market sale programs, as well as our cash flows from operations and available borrowing capacity under the Revolver, will be adequate to support our ongoing operations and to fund our debt service requirements, capital expenditures and working capital requirements for at least the next 12 months.

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Contractual Obligations and Commitments

As of September 30, 2024, our contractual debt obligations primarily include the maturity of our 2027 Term Loan with the scheduled principal payment due on January 15, 2026, the maturity of our 2028 Term Loan with the scheduled principal payment due on February 11, 2028, the maturity of our 2029 Term Loan with the scheduled principal payment due on July 3, 2026, and the repayment of borrowings on our Revolver with a contractual maturity of August 11, 2026.

During the nine months ended September 30, 2024, we borrowed $251.0 million at a weighted average interest rate of 6.49% and also repaid $181.0 million on our Revolver.

The following table provides information with respect to our commitments as of September 30, 2024 (in thousands):

As of March 31, 2025, our contractual debt obligations primarily include the maturities of our 2030 Term Loan A and 2030 Term Loan B with the scheduled principal payments due on January 15, 2029, the maturity of our 2028 Term Loan with the scheduled principal payment due on February 11, 2028, the maturity of our 2029 Term Loan with the scheduled principal payment due on July 3, 2026, and the repayment of borrowings on our Revolver with a contractual maturity of January 15, 2029.

During the three months ended March 31, 2025, we borrowed $89.5 million at a weighted average interest rate of 5.36% and also repaid $214.0 million on our Revolver.

The following table provides information with respect to our commitments as of March 31, 2025 (in thousands):

Payment Due by Period

Total Remainder of 2024 2025 - 2026 2027 - 2028 Thereafter

Total From April 1, 2025 to December 31, 2025 2026 - 2027 2028 - 2029 Thereafter

Contractual Obligations

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15,674 9,391 6,283 — —

2029 Term Loan – Principal 250,000 — 250,000 — —

2029 Term Loan – Variable interest (3)

2030 Term Loan A – Principal 175,000 — — 175,000 —

2030 Term Loan A – Variable interest (3)

24,212 4,807 12,762 6,643 —

2030 Term Loan B – Principal 175,000 — — 175,000 —

2030 Term Loan B – Variable interest (4)

34,025 6,756 17,934 9,335

Revolver – Borrowings

114,500 — — 114,500 —

Revolver – Variable interest

23,680 4,702 12,481 6,497 —

Facility Fee (5)

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Property development under contract 7,025 7,025 — — —

Additional principal under mortgage notes receivable 13,534 1,265 12,269 — —

Additional principal under mortgage loans receivable

10,893 9,673 1,220 — —

Tenant improvement allowances 4,089 1,349 2,740 — —

Corporate office lease obligations

5,113 479 1,323 1,396 1,915

Total $ 1,073,436 $ 51,002 $ 330,476 $ 690,043 $ 1,915

(1) We entered into five interest rate hedges to fix the base interest rate (daily SOFR) on our 2027 Term Loan.

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

Accordingly, the projected interest rate obligations for the variable rate 2027 Term Loan are based on the hedged fixed rate of 1.87% through December 23, 2024, and 2.40% thereafter, compared to the variable 2027 Term Loan daily SOFR rate as of September 30, 2024 of 4.83%, plus a SOFR adjustment of 0.10%, and applicable margin of 1.15% based on the $175.0 million 2027 Term Loan outstanding through the contractual maturity date of January 15, 2026.

(2) We entered into three interest rate hedges to fix the base interest rate (one-month SOFR) on our 2028 Term Loan.

Accordingly, the projected interest rate obligations for the variable rate 2028 Term Loan are based on the hedged fixed rate of 2.63% compared to the variable 2028 Term Loan one-month SOFR rate as of September 30, 2024 of 5.20%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% based on the $200.0 million 2028 Term Loan outstanding through the maturity date of February 11, 2028.

(3) We entered into four interest rate hedges to fix the base interest rate (daily SOFR) on our 2029 Term Loan.

Accordingly, the projected interest rate obligations for the variable rate 2029 Term Loan are based on the hedged fixed rate of 3.74% compared to the variable 2029 Term Loan daily SOFR rate as of September 30, 2024 of 4.83%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% based on the $250.0 million 2029 Term Loan outstanding through the contractual maturity date of July 3, 2026.

(1) We have three interest rate derivative contracts to fix the base interest rate (daily simple SOFR) on our 2028 Term Loan.

Accordingly, the projected interest rate obligations for the variable rate 2028 Term Loan are based on the hedged fixed rate of 2.63% compared to the variable 2028 Term Loan daily simple SOFR rate as of March 31, 2025 of 4.32%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% based on the $200.0 million 2028 Term Loan outstanding through the maturity date of February 11, 2028.

(2) We have four interest rate derivative contracts to fix the base interest rate (daily simple SOFR) on our 2029 Term Loan.

Accordingly, the projected interest rate obligations for the variable rate 2029 Term Loan are based on the hedged fixed rate of 3.74% compared to the variable 2029 Term Loan daily simple SOFR rate as of March 31, 2025 of 4.36%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% based on the $250.0 million of the 2029 Term Loan outstanding through the contractual maturity date of July 3, 2026.

(3) We have four interest rate derivative contracts to fix the base interest rate (daily simple SOFR) on our 2030 Term Loan A.

Accordingly, the projected interest rate obligations for the variable rate 2030 Term Loan A are based on the hedged fixed rate of 2.40%, compared to the variable 2030 Term Loan A daily simple SOFR rate as of March 31, 2025 of 4.31%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% based on the $175.0 million 2030 Term Loan A outstanding through the contractual maturity date of January 15, 2029.

(4) We have seven interest rate derivative contracts to fix the base interest rate (daily simple SOFR) on our 2030 Term Loan B.

Accordingly, the projected interest rate obligations for the variable rate 2030 Term Loan B are based on the hedged fixed rate of 3.87%, compared to the variable 2030 Term Loan B daily simple SOFR rate as of March 31, 2025 of 4.35%, plus a SOFR adjustment of 0.10% and applicable margin of 1.15% based on the $175.0 million 2030 Term Loan B outstanding through the contractual maturity date of January 15, 2029.

(5) We are subject to a facility fee of 0.15% on our Revolver.

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

We began operating out of the new office in February 2022.

In August 2021, we entered into a lease agreement related to our corporate office space, which is classified as an operating lease.

We began operating out of the office in February 2022.

The lease has a remaining noncancellable term of 7.3 years that expires on July 31, 2032 and is renewable at our option for two additional periods of five years.

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

Additionally, in the normal course of business, we enter into various types of commitments to purchase real estate properties, fund development projects, or extend funds under mortgage notes receivable.

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

As of September 30, 2024, we had commitments to fund properties under development and extend funds under mortgage notes receivable totaling $11.2 million and $13.5 million, respectively.

Funding of properties under development is expected to occur over the next 9 months and funding of mortgage notes receivable is expected to occur throughout 2024 and 2025.

As of March 31, 2025, we had commitments to fund properties under development and extend funds under mortgage loans receivable totaling $7.0 million and $10.9 million, respectively, which is expected to be funded over the next 12 months.

See discussion of our debt and interest rate hedges included in “Note 6 – Debt,” and “Note 7 – Derivative Financial Instruments” in “Item 1 – Financial Statements (unaudited).”

Historical Cash Flow Information

Nine Months Ended September 30, 2024 Compared with Nine Months Ended September 30, 2023

Nine Months Ended

September 30,

Three Months Ended March 31, 2025 Compared with Three Months Ended March 31, 2024

Three Months Ended

(In thousands) (Unaudited)

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Cash Flows Provided By Operating Activities.

Net cash provided by operating activities increased by $10.6 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The increase was largely attributed to the increase in the size of our real estate investment portfolio with an increase in rental receipts of $20.2 million, additional interest received under our mortgage loans receivable, offset primarily by an increase in cash interest paid of $10.0 million, increases in operating and general and administrative expenses paid associated with our larger portfolio, and further offset by changes in working capital accounts.

Net cash provided by operating activities increased by $10.4 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The increase was largely attributed to the increase in the size of our real estate investment portfolio with an increase in rental receipts of $6.8 million, additional interest received under our mortgage loans receivable, partially offset by an increase in cash interest paid of $3.5 million, increases in operating and general and administrative expenses paid associated with our larger portfolio, and changes in working capital accounts.

Cash Flows Used In Investing Activities.

Net cash used in investing activities decreased by $26.3 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The decrease was primarily due to a decrease in cash invested in mortgage loans receivable of $39.3 million, an increase of $18.1 million from proceeds from the sale of real estate, an increase of $11.3 million in principal collections on mortgage loans receivable, and a decrease of $10.4 million in real estate development and improvements, offset by an increase of $5.4 million of earnest money deposits and an increase of $47.6 million in acquisitions of real estate.

Net cash used in investing activities decreased by $48.9 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The decrease was primarily due to an increase of $18.1 million in proceeds from the sale of real estate, a decrease of $17.7 million in acquisitions of real estate, a decrease of $9.5 million in real estate development and improvements, and an increase of $4.8 million in principal collections on mortgage loans receivable, partially offset by an increase of $0.9 million in earnest money deposits.

Cash Flows Provided By Financing Activities.

Net cash provided by financing activities increased by $24.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The increase was primarily attributed to an increase in net borrowings of $141.0 million under our Revolver during the nine months ended September 30, 2024, and a $3.3 million decrease in deferred financing costs.

This increase is offset by a decrease in proceeds received of $50.0 million from term loans during the nine months ended September 30, 2024, $59.4 million of less proceeds received in 2024 due to fewer issuances of common stock in connection with our 2021 ATM Program and settlements of common stock under forward sale agreements.

Lastly, the increase is further offset by $8.7 million of additional common stock dividends paid during the nine months ended September 30, 2024, and a $0.8 million increase in the repurchase of common stock for tax withholding obligations.

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

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

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

Accordingly, the Company will generally not be subject to corporate U.S.

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

The Company intends to make sufficient distributions during 2024 to receive a full dividends paid deduction.

Net cash provided by financing activities decreased by $51.9 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The decrease was primarily attributed to an increase in net repayments of $119.5 million under our Revolver, an increase in payments of common stock dividends of $2.2 million, and an increase in deferred financing costs of $6.3 million.

The decrease is partially offset by an increase in net term loan proceeds of $75.0 million, a decrease in the repurchase of common stock for tax withholding obligations of $0.5 million, a decrease in payment of restricted stock dividends of $0.2 million, and a decrease in deferred offering costs of $0.3 million.

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

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

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

Accordingly, we will generally not be subject to corporate U.S.

federal or state income tax to the extent that we make qualifying distributions of all of our taxable income to our stockholders and provided we satisfy on a continuing basis, through actual investment and operating results, the REIT requirements, including certain asset, income, distribution and share ownership tests.

We intend to make sufficient distributions during 2025 to receive a full dividends paid deduction.

We maintain a taxable REIT subsidiary (“TRS”) which may be subject to U.S.

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

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

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

Recent Accounting Pronouncements

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We also disclose the following non-GAAP financial measures:

Funds From Operations (“FFO”), Core FFO, Adjusted FFO (“AFFO”), earnings before interest expense, income tax expense, and depreciation and amortization (“EBITDA”), EBITDA further adjusted to exclude gains (or losses) from the sales of depreciable property and real estate impairment losses (“EBITDAre”), Adjusted EBITDAre, Annualized Adjusted EBITDAre, Net Debt, Adjusted Net Debt, property-level net operating income (“Property-Level NOI”), property-level cash net operating income (“Property-Level Cash NOI”), property-level cash net operating income estimated run rate (“Property-Level Cash NOI Estimated Run Rate”), and total property-level cash net operating income estimated run rate (“Total Property-Level Cash NOI Estimated Run Rate”), all of which are detailed below.

Funds From Operations (“FFO”), Core FFO, Adjusted FFO (“AFFO”), earnings before interest expense, income tax expense, and depreciation and amortization (“EBITDA”), EBITDA further adjusted to exclude gains (or losses) from the sales of depreciable property and real estate impairment losses (“EBITDA re ”), Adjusted EBITDA re , Annualized Adjusted EBITDA re , Net Debt, Adjusted Net Debt, property-level net operating income (“Property-Level NOI”), property-level cash net operating income (“Property-Level Cash NOI”), property-level cash net operating income estimated run rate (“Property-Level Cash NOI Estimated Run Rate”), and total property-level cash net operating income estimated run rate (“Total Property-Level Cash NOI Estimated Run Rate”), all of which are detailed below.

We believe these non-GAAP financial measures are industry measures used by analysts and investors to compare the operating performance of REITs.

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The following table sets forth a reconciliation of FFO, Core FFO, and AFFO for the periods presented to net income before allocation to noncontrolling interests, as computed in accordance with GAAP (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(Unaudited) (Unaudited)

Net (loss) income $ (5,322) $ 4,239 $ (6,576) $ 4,928

Three Months Ended March 31,

Net income $ 1,700 $ 1,052

Depreciation and amortization of real estate 20,850 17,462

Provisions for impairment 3,616 3,662

Loss (gain) on sales of real estate, net

132 (373) (874) (669)

Gain on sales of real estate, net (2,075) (997)

FFO 24,091 21,179

1 unchanged sentence

Loss on debt extinguishment and other related costs 403 —

Other non-recurring (gain) loss, net (115) (1) 3,077 (47)

Other non-recurring loss, net — 414

Core FFO 24,570 22,450

6 unchanged sentences

Capitalized interest expense (50) (353)

Non-cash interest expense (990) (1,134) (2,948) (1,134)

Non-cash interest expense (income) 705 (979)

Non-cash compensation expense 1,388 1,424

5 unchanged sentences

NAREIT defines EBITDA re as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and impairment charges on depreciable real property.

Adjusted EBITDA re is a non-GAAP financial measure defined as EBITDA re further adjusted to exclude straight-line rent, non-cash compensation expense, non-recurring executive transition costs, severance and related charges, loss on debt extinguishment and other related costs, other non-recurring loss (gain), net, other non-recurring expenses (income), lease termination fees, adjustment for construction in process, and adjustment for intraquarter activities.

Adjusted EBITDA re is a non-GAAP financial measure defined as EBITDA re further adjusted to exclude straight-line rent, non-cash compensation expense, non-recurring executive transition costs, severance and related charges, loss on debt extinguishment and other related costs, transaction costs, other non-recurring loss (gain), net, other non-recurring expenses (income) including lease termination fees, as well as adjustments for construction in process and for intraquarter activities.

Annualized Adjusted EBITDA re is Adjusted EBITDA re multiplied by four.

1 unchanged sentence

We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs.

We use EBITDA, EBITDAre, Adjusted EBITDA re and Annualized Adjusted EBITDA re as measures of our operating performance and not as measures of liquidity.

We use EBITDA, EBITDA re , Adjusted EBITDA re , and Annualized Adjusted EBITDA re as measures of our operating performance and not as measures of liquidity.

EBITDA, EBITDA re , Adjusted EBITDA re , and Annualized Adjusted EBITDA re do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements;

2 unchanged sentences

The following table sets forth a reconciliation of EBITDA and EBITDA re for the periods presented to net income before allocation to noncontrolling interests, as computed in accordance with GAAP (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(Unaudited) (Unaudited)

Net (loss) income $ (5,322) $ 4,239 $ (6,576) $ 4,928

Three Months Ended March 31,

Net income $ 1,700 $ 1,052

Depreciation and amortization of real estate 20,850 17,462

2 unchanged sentences

Interest expense, net 11,460 6,180

Income tax expense (benefit) 2 15 31 (60)

Income tax expense 16 17

Amortization of loan origination costs and discounts (77) 39

1 unchanged sentence

Provisions for impairment 3,616 3,662

Loss (gain) on sales of real estate, net

132 (373) (874) (669)

Gain on sales of real estate, net (2,075) (997)

$ 35,493 $ 27,399

The following table sets forth a reconciliation of EBITDA, EBITDA re , Adjusted EBITDA re and Annualized Adjusted EBITDAre for the period presented to net loss income before allocation to noncontrolling interests, as computed in accordance with GAAP (in thousands):

Three Months Ended September 30, 2024

The following table sets forth a reconciliation of EBITDA, EBITDA re , Adjusted EBITDA re, and Annualized Adjusted EBITDA re for the period presented to net income before allocation to noncontrolling interests, as computed in accordance with GAAP (in thousands):

Three Months Ended March 31, 2025

Net income $ 1,700

Depreciation and amortization of real estate 20,850

6 unchanged sentences

Provisions for impairment 3,616

Loss on sales of real estate, net

Gain on sales of real estate, net (2,075)

Straight-line rent adjustments (954)

Loss on debt extinguishment and other related costs 403

Non-recurring executive transition costs, severance and related charges 76

Other non-recurring gain, net

Other non-recurring expenses, net 364

Transaction costs 47

Non-cash compensation expense 1,388

4 unchanged sentences

Adjusted Net Debt / Annualized Adjusted EBITDA re

(1) Adjustment reflects the estimated cash yield on developments in process as of September 30, 2024.

(2) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended September 30, 2024, had occurred on July 1, 2024.

(3) We calculate Annualized Adjusted EBITDAre by multiplying Adjusted EBITDAre by four.

(1) Adjustment reflects the estimated cash yield on developments in process as of March 31, 2025.

(2) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended March 31, 2025, had occurred on January 1, 2025.

(3) We calculate Annualized Adjusted EBITDA re by multiplying Adjusted EBITDA re by four.

Net Debt and Adjusted Net Debt

4 unchanged sentences

The following table reconciles the principal amount of total debt to Net Debt and Adjusted Net Debt (in thousands):

September 30, 2024

March 31, 2025

Principal amount of total debt $ 922,664

1 unchanged sentence

Net Debt 908,459

Value of unsettled forward equity (1)

Net value of unsettled forward equity (1)

Adjusted Net Debt $ 723,978

(1) There were 10,735,647 unsettled shares under forward equity contracts as of September 30, 2024 at the available weighted-average net settlement price of $17.28.

(1) There were 10,735,647 unsettled shares under forward sale agreements as of March 31, 2025 at the available weighted-average net settlement price of $17.18.

Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate

Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate are non-GAAP financial measures which we use to assess our operating results.

We compute Property-Level NOI as net income (computed in accordance with GAAP), excluding general and administrative expenses, interest expense (or income), income tax expense, transaction costs, depreciation and amortization, gains (or losses) on sales of depreciable property, real estate impairment losses, interest income on mortgage loans receivable, loss on debt extinguishment, lease termination fees and other expense (income), net.

We compute Property-Level NOI as net income (computed in accordance with GAAP), excluding general and administrative expenses, interest expense (or income), income tax expense, amortization of loan origination costs and discounts, transaction costs, depreciation and amortization, gains (or losses) on sales of depreciable property, real estate impairment losses, interest income on mortgage loans receivable, loss on debt extinguishment, and other expense (income), net, including lease termination fees.

We further adjust Property-Level NOI for non-cash revenue components of straight-line rent and amortization of lease-intangibles to derive Property-Level Cash NOI.

4 unchanged sentences

You should not consider our measures as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.

The following table sets forth a reconciliation of Property-Level NOI and Property-Level Cash NOI for the periods presented (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

(Unaudited) (Unaudited)

Net (loss) income $ (5,322) $ 4,239 $ (6,576) $ 4,928

The following table sets forth a reconciliation of Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate for the period presented (in thousands):

Three Months Ended March 31, 2025

Net income $ 1,700

General and administrative 5,169

3 unchanged sentences

Interest expense, net 11,460

Loss (gain) on sales of real estate, net

132 (373) (874) (669)

Income tax expense (benefit) 2 15 31 (60)

Gain on sales of real estate, net (2,075)

Income tax expense 16

Amortization of loan origination costs and discounts (77)

Loss on debt extinguishment 46

Interest income on mortgage loans receivable (3,075)

Lease termination fees — (550) — (550)

Other expense (income), net

107 (367) 2,451 (586)

Other expense, net 495

Property-Level NOI 38,245

2 unchanged sentences

Property-Level Cash NOI $ 37,221

Adjustment for intraquarter acquisitions, dispositions and completed developments (1)

Adjustment for intraquarter acquisitions, dispositions, and completed development (1)

Property-Level Cash NOI Estimated Run Rate 38,299

2 unchanged sentences

Total Cash NOI - Estimated Run Rate $ 41,458

(1) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended September 30, 2024, had occurred on July 1, 2024.

(2) Adjustment assumes all loan activity completed during the three months ended September 30, 2024 had occurred on July 1, 2024.

(1) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended March 31, 2025, had occurred on January 1, 2025.

(2) Adjustment assumes all loan activity completed during the three months ended March 31, 2025 had occurred on January 1, 2025.

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 2. Management’s Discussion and Analysis