GLADSTONE COMMERCIAL CORP

Previous wording

All statements contained herein, other than historical facts, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our business, financial condition, liquidity, results of operations, funds from operations or prospects to be materially different from any future business, financial condition, liquidity, results of operations, funds from operations or prospects expressed or implied by such forward-looking statements. For further information about these and other factors that could affect our future results, please see the captions titled “Forward-Looking Statements” and “Risk Factors” in this report and/or in our Annual Report on Form 10-K for the year ended December 31, 2024. We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

Current wording

All statements contained herein, other than historical facts, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provide,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our business, financial condition, liquidity, results of operations, funds from operations or prospects to be materially different from any future business, financial condition, liquidity, results of operations, funds from operations or prospects expressed or implied by such forward-looking statements. For further information about these and other factors that could affect our future results, please see the captions titled “Forward-Looking Statements” and “Risk Factors” in this report and/or in our Annual Report on Form 10-K for the year ended December 31, 2024. We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

Previous wording

•we owned 139 properties totaling 16.5 million square feet of rentable space, located in 27 states;

Current wording

•we owned 143 properties totaling 17.0 million square feet of rentable space, located in 27 states;

Previous wording

•the weighted average remaining term of our mortgage debt was 3.3 years and the weighted average interest rate was 4.23%; and

Current wording

•the weighted average remaining term of our mortgage debt was 3.0 years and the weighted average interest rate was 4.22%; and

Previous wording

•the average remaining lease term of the portfolio was 6.9 years.

Current wording

•the average remaining lease term of the portfolio was 7.0 years.

Previous wording

We collected 100% of all outstanding base rents for the three months ended March 31, 2025. This is a testament to the strength of our credit underwriting and asset management teams. We believe that we have a diverse tenant base, and specifically, we do not have significant exposure to tenants in the retail, hospitality, airlines, and oil and gas industries. Additionally, our properties are located across 27 states, which we believe mitigates our exposure to regional economic and weather-related issues, including regulations or laws implemented by state and local governments in any one geographic market or area. In the past, we have received rent modification requests from certain of our tenants, and it is possible we may receive additional requests in the future.

Current wording

We collected 100% of all outstanding base rents for the six months ended June 30, 2025. This is a testament to the strength of our credit underwriting and asset management teams. We believe that we have a diverse tenant base, and specifically, we do not have significant exposure to tenants in the retail, hospitality, airlines, and oil and gas industries. Additionally, our properties are located across 27 states, which we believe mitigates our exposure to regional economic and weather-related issues, including regulations or laws implemented by state and local governments in any one geographic market or area. In the past, we have received rent modification requests from certain of our tenants, and it is possible we may receive additional requests in the future.

Previous wording

We believe we currently have adequate liquidity in the near term, and believe that our cash on hand combined with the availability on our Credit Facility is sufficient to cover all near-term debt obligations and operating expenses and to continue our industrial growth strategy. We are in compliance with all of our debt covenants as of March 31, 2025. Based on market observations and conversations we routinely have with lenders, we believe that credit continues to be available for well-capitalized borrowers, as demonstrated by the Operating Partnership’s issuance, on December 18, 2024, of $75.0 million of senior unsecured notes in a private placement. We continue to monitor our portfolio and intend to maintain a reasonably conservative liquidity position for the foreseeable future.

Current wording

We believe we currently have adequate liquidity in the near term, and believe that our cash on hand combined with the availability under our Credit Facility is sufficient to cover all near-term debt obligations and operating expenses and to continue our industrial property-focused growth strategy. We are in compliance with all of our debt covenants as of June 30, 2025. Based on market observations and conversations we routinely have with lenders, we believe that credit continues to be available for well-capitalized borrowers, as demonstrated by the Operating Partnership’s issuance, on December 18, 2024, of $75.0 million of senior unsecured notes in a private placement and the Operating Partnership’s entry on May 30, 2025 into a new $20.0 million unsecured term loan (“Term Loan D”). We continue to monitor our portfolio and intend to maintain a reasonably conservative liquidity position for the foreseeable future.

Previous wording

The geopolitical landscape remains fractured due to recent world events. Many domestic manufacturing businesses seek to limit supply chain disruptions by bringing their operations back to the United States. During the first quarter of 2025, the United States began a “reciprocal tariff” plan in an effort to increase the competitiveness of domestic manufacturing. The short- and long-term impacts of such tariffs are yet to be known, but we feel we are well positioned in our industrial portfolio as we monitor the broader market conditions. We expect that industrial demand will be further buoyed by government investment in infrastructure and advanced manufacturing operations. On the office side, a level of work-from-home trends appears to be here to stay, but many employees are returning to the office, particularly following the presidential transition.

Current wording

The geopolitical landscape remains fractured due to recent world events. Many domestic manufacturing businesses seek to limit supply chain disruptions by bringing their operations back to the United States. During the first quarter of 2025, the United States began a “reciprocal tariff” plan in an effort to increase the competitiveness of domestic manufacturing. The full impact of such tariffs is yet to be known, but we believe we are well positioned in our industrial portfolio as we monitor the broader market conditions. We expect that industrial demand will be further buoyed by government investment in infrastructure and advanced manufacturing operations. On the office side, a level of work-from-home trends appears to be here to stay, but many employees are returning to the office, particularly following the presidential transition.

Previous wording

These uncertain times create both risks and opportunities for us and our tenants, and we believe we are well-capitalized and positioned to take advantage. The environmental landscape remains unpredictable due to the increase in intensity of weather patterns, including hurricanes. We continue to monitor our properties and have not seen any significant impact to our properties in Florida, Georgia, North Carolina, South Carolina, Tennessee, and Texas from the recent hurricane season.

Current wording

These uncertain times create both risks and opportunities for us and our tenants, and we believe we are well-capitalized and positioned to take advantage. The environmental landscape remains unpredictable due to the increase in intensity of weather patterns, including hurricanes. We continue to monitor our properties and have not seen any significant impact to our properties in Florida, Georgia, North Carolina, South Carolina, Tennessee, and Texas from the recently begun hurricane season.

Previous wording

We continue to focus on re-leasing vacant space, renewing upcoming lease expirations, re-financing upcoming loan maturities, and acquiring additional properties with associated long-term leases. Currently, we have four partially vacant buildings and one fully vacant building. Our available vacant space at March 31, 2025 represented 1.6% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $2.0 million. We continue to actively seek new tenants for these properties.

Current wording

We continue to focus on re-leasing vacant space, renewing upcoming lease expirations, re-financing upcoming loan maturities, and acquiring additional properties with associated long-term leases. Currently, we have four partially vacant buildings and one fully vacant building. Our available vacant space at June 30, 2025 represented 1.3% of our total square footage and the annual carrying costs on the vacant space, including real estate taxes and property operating expenses, are approximately $1.9 million. We continue to actively seek new tenants for these properties.

Previous wording

We believe our lease expiration schedule for the remainder of 2025 is manageable, as it equates to 2.5% of our lease revenue at March 31, 2025. Property acquisitions since the beginning of 2020 have totaled $472.7 million and all but one transaction was industrial in nature, with a weighted average lease term of 13.6 years and a weighted average lease term of 10.4 years at the time of this filing.

Current wording

We believe our lease expiration schedule for the remainder of 2025 is manageable, as it equates to 1.5% of our lease revenue at June 30, 2025. Property acquisitions since the beginning of 2020 have totaled $551.6 million and all but one acquisition transaction was industrial in nature, with a weighted average lease term of 14.1 years and a weighted average lease term of 11.2 years at the time of this filing.

Previous wording

Our ability to make new investments is highly dependent upon our ability to procure financing. Our principal sources of financing generally include the issuance of equity securities, long-term unsecured notes in the private placement market, long-term mortgage loans secured by properties, borrowings under our $125.0 million senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“KeyBank”), which matures in August 2026, our $160.0 million term loan facility (“Term Loan A”), which matures in August 2027, our $60.0 million term loan facility (“Term Loan B”), which matures in February 2026, our $150.0 million term loan facility (“Term Loan C”) which matures in February 2028, and our Operating Partnership’s $75.0 million senior unsecured notes (the “2029 Notes”) which mature in December 2029. As of March 31, 2025, there was $40.0 million outstanding under Term Loan B. We refer to the Revolver, Term Loan A, Term Loan B, and Term Loan C collectively herein as the “Credit Facility”. While lenders’ credit standards have tightened, we continue to look to private credit institutions, national and regional banks, insurance companies and non-bank lenders to finance our real estate activities.

Current wording

Our ability to make new investments is highly dependent upon our ability to procure financing. Our principal sources of financing generally include the issuance of equity securities, long-term unsecured notes in the private placement market, long-term mortgage loans secured by properties, borrowings under our $125.0 million senior unsecured revolving credit facility (“Revolver”), with KeyBank National Association (“KeyBank”), which matures in August 2026, our $160.0 million term loan facility (“Term Loan A”), which matures in August 2027, our $60.0 million term loan facility (“Term Loan B”), which matures in February 2026, our $150.0 million term loan facility (“Term Loan C”) which matures in February 2028, our Operating Partnership’s Term Loan D, a $20.0 million unsecured term loan which matures in May 2027, and our Operating Partnership’s $75.0 million senior unsecured notes (the “2029 Notes”) which mature in December 2029. As of June 30, 2025, there was $40.0 million outstanding under Term Loan B. We refer to the Revolver, Term Loan A, Term Loan B, and Term Loan C collectively herein as the “Credit Facility”. While lenders’ credit standards have tightened, we continue to look to private credit institutions, national and regional banks, insurance companies and non-bank lenders to finance our real estate activities.

Previous wording

On April 30, 2025, we completed the transaction to sell our 676,031 square foot property in Tifton, Georgia for $18.5 million, incurring $0.4 million in closing costs. During the year ended December 31, 2024, werecorded a sales-type lease receivable relatedand derecognized the carry value of this property, recognizing a $3.9 million selling profit from sales-type lease, net, that was included in the gain on sale of real estate, net, in the consolidated statement of operations.

Current wording

On April 30, 2025, we completed the transaction to sell our 676,031 square foot property in Tifton, Georgia for $18.5 million, incurring $0.3 million in closing costs, which are included in other income in the condensed consolidated statement of operations for the three and six months ended June 30, 2025. During the year ended December 31, 2024, werecorded a sales-type lease receivableand derecognized the carrying value of this property, recognizing a $3.9 million selling profit from sales-type lease, net, that was included in the gain on sale of real estate, net, in the consolidated statement of operations.

Previous wording

During the three months ended March 31, 2025, we acquired six industrial properties located in Houston, Texas and Dallas-Fort Worth, Texas, which are summarized below (dollars in thousands):

Current wording

During the six months ended June 30, 2025, we acquired ten industrial properties located in Houston, Texas; Dallas-Fort Worth, Texas; Germantown, Wisconsin; and Harrison Township, Michigan, which are summarized below (dollars in thousands):

Previous wording

During and subsequent to the three months ended March 31, 2025, we executed one lease, which is summarized below (dollars in thousands):

Current wording

During the six months ended June 30, 2025, we executed two leases, which are summarized below (dollars in thousands):

Previous wording

On March 3, 2023, we entered into an At-the-Market Equity Offering Sales Agreement (the “2023 Common Stock Sales Agreement”), with BofA Securities, Inc. (“BofA”), Goldman Sachs, Baird, KeyBanc Capital Markets Inc. (“KeyBanc”), and Fifth Third (collectively the “Common Stock Sales Agents”). In connection with the 2023 Common Stock Sales Agreement, we filed prospectus supplements with the SEC dated March 3, 2023 and March 7, 2023, to the prospectus dated November 23, 2022, for the offer and sale of an aggregate offering amount of $250.0 million of common stock. During the three months ended March 31, 2025, we did not sell any shares of common stock under the 2023 Common Stock Sales Agreement.

Current wording

On March 3, 2023, we entered into an At-the-Market Equity Offering Sales Agreement (the “2023 Common Stock Sales Agreement”), with BofA Securities, Inc. (“BofA”), Goldman Sachs, Baird, KeyBanc Capital Markets Inc. (“KeyBanc”), and Fifth Third (collectively, the “Common Stock Sales Agents”). In connection with the 2023 Common Stock Sales Agreement, we filed prospectus supplements with the SEC dated March 3, 2023 and March 7, 2023, to the prospectus dated November 23, 2022, for the offer and sale of an aggregate offering amount of $250.0 million of common stock. During the six months ended June 30, 2025, we did not sell any shares of common stock under the 2023 Common Stock Sales Agreement.

Previous wording

On March 26, 2024, we entered into Amendment No. 1 to the 2023 Common Stock Sales Agreement (the “2024 Common Stock Sales Agreement”). The amendment permitted shares of common stock to be issued pursuant to the 2024 Common Stock Sales Agreement under the Company’s Registration Statement on Form S-3 (File No. 333-277877) (the “2024 Registration Statement”), and future registration statements on Form S-3. In connection with the 2024 Common Stock Sales Agreement, we filed a prospectus supplement with the SEC dated March 26, 2024, to the prospectus dated March 21, 2024, for the offer and sale of an aggregate offering amount of $250.0 million of common stock. During the three months ended March 31, 2025, we sold 1,770,581 shares of common stock, raising approximately $27.7 million in net proceeds under the 2024 Common Stock Sales Agreement.

Current wording

On March 26, 2024, we entered into Amendment No. 1 to the 2023 Common Stock Sales Agreement (the “2024 Common Stock Sales Agreement”). The amendment permitted shares of common stock to be issued pursuant to the 2024 Common Stock Sales Agreement under the Company’s Registration Statement on Form S-3 (File No. 333-277877) (the “2024 Registration Statement”), and future registration statements on Form S-3. In connection with the 2024 Common Stock Sales Agreement, we filed a prospectus supplement with the SEC dated March 26, 2024, to the prospectus dated March 21, 2024, for the offer and sale of an aggregate offering amount of $250.0 million of common stock. During the six months ended June 30, 2025, we sold 2,521,007 shares of common stock, raising approximately $38.0 million in net proceeds under the 2024 Common Stock Sales Agreement.

Previous wording

On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary (i) setting forth the rights, preferences and terms of the 6.00% Series F Cumulative Redeemable Preferred Stock, par value $0.001 per share, (the “Series F Preferred Stock”) and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series F Preferred Stock. The reclassification decreased the number of shares classified as common stock from 86,290,000 shares immediately prior to the reclassification to 60,290,000 shares immediately after the reclassification. We sold 13,500 shares of our Series F Preferred Stock, raising $0.3 million in net proceeds, during the three months ended March 31, 2025.

Current wording

On February 20, 2020, we filed with the Maryland Department of Assessments and Taxation Articles Supplementary (i) setting forth the rights, preferences and terms of the 6.00% Series F Cumulative Redeemable Preferred Stock, par value $0.001 per share, (the “Series F Preferred Stock”) and (ii) reclassifying and designating 26,000,000 shares of our authorized and unissued shares of common stock as shares of Series F Preferred Stock. The reclassification decreased the number of shares classified as common stock from 86,290,000 shares immediately prior to the reclassification to 60,290,000 shares immediately after the reclassification. We sold 15,700 shares of our Series F Preferred Stock, raising $0.4 million in net proceeds, during the six months ended June 30, 2025.

Previous wording

Gladstone Management Corporation, a Delaware corporation (our “Adviser”), seeks to diversify our portfolio to avoid dependence on any one particular tenant, industry or geographic market. By diversifying our portfolio, our Adviser intends to reduce the adverse effect on our portfolio of a single under-performing investment or a downturn in any particular industry or geographic market. For the three months ended March 31, 2025, our largest tenant comprised only 5.4% of total lease revenue. The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three months ended March 31, 2025 and 2024 (dollars in thousands):

Current wording

Gladstone Management Corporation, a Delaware corporation (our “Adviser”), seeks to diversify our portfolio to avoid dependence on any one particular tenant, industry or geographic market. By diversifying our portfolio, our Adviser intends to reduce the adverse effect on our portfolio of a single under-performing investment or a downturn in any particular industry or geographic market. For the six months ended June 30, 2025, our largest tenant comprised only 5.3% of total lease revenue. The table below reflects the breakdown of our total lease revenue by tenant industry classification for the three and six months ended June 30, 2025 and 2024 (dollars in thousands):

Previous wording

The tables below reflect the breakdown of total lease revenue by state for the three months ended March 31, 2025 and 2024 (dollars in thousands):

Current wording

The tables below reflect the breakdown of total lease revenue by state for the three and six months ended June 30, 2025 and 2024 (dollars in thousands):

Previous wording

Our Adviser is led by a management team with extensive experience purchasing real estate and originating mortgage loans. Our Adviser and Gladstone Administration, LLC, a Delaware limited liability company (our “Administrator”) are controlled by Mr. David Gladstone, who is also our chairman and chief executive officer. Mr. Gladstone also serves as the chairman and chief executive officer of both our Adviser and Administrator, as well as president and chief investment officer of our Adviser. Mr. Arthur “Buzz” Cooper, our president, also serves as executive vice president of commercial and industrial real estate of our Adviser. Our Administrator employs our chief financial officer, treasurer, chief compliance officer, general counsel and secretary, Mr. Michael LiCalsi (who also serves as our Administrator’s president, general counsel, and secretary, as well as executive vice president of administration of our Adviser) and their respective staffs.

Current wording

Our Adviser is led by a management team with extensive experience purchasing real estate and originating mortgage loans. Our Adviser and Gladstone Administration, LLC, a Delaware limited liability company (our “Administrator”) are controlled by Mr. David Gladstone, who is also our chairman and chief executive officer. Mr. Gladstone also serves as the chairman and chief executive officer of both our Adviser and Administrator, as well as president and chief investment officer of our Adviser. Mr. Arthur “Buzz” Cooper, our president, also serves as executive vice president of commercial and industrial real estate of our Adviser. Our Administrator employs our chief financial officer, treasurer, chief compliance officer, chief administrative officer, co-general counsels, co-secretaries, and their respective staffs. Mr. Michael LiCalsi, our chief administrative officer, co-general counsel, and co-secretary, also serves in the same roles for our Adviser and Administrator (in addition to serving as president of our Administrator). Mr. Erich Hellmold, our co-general counsel and co-secretary, also serves in the same roles for our Adviser and Administrator.

Previous wording

On July 14, 2020, we amended and restated the Advisory Agreement, which replaced the previous calculation of the base management fee with a calculation based on Gross Tangible Real Estate. The revised base management fee is payable quarterly in arrears and calculated at an annual rate of 0.425% (0.10625% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined in the Advisory Agreement as the current gross value of our property portfolio (meaning the aggregate of each property’s original acquisition price plus the cost of any subsequent capital improvements thereon). The calculations of the other fees in the Amended Agreement was unchanged.

Current wording

The base management fee is payable quarterly in arrears and calculated at an annual rate of 0.425% (0.10625% per quarter) of the prior calendar quarter’s “Gross Tangible Real Estate,” defined in the Advisory Agreement as the current gross value of our property portfolio (meaning the aggregate of each property’s original acquisition price plus the cost of any subsequent capital improvements thereon).

Previous wording

Under the Advisory Agreement, we will pay to the Adviser a capital gain-based incentive fee that will be calculated and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement). In determining the capital gain fee, we will calculate aggregate realized capital gains and aggregate realized capital losses for the applicable time period. For this purpose, aggregate realized capital gains and losses, if any, equals the realized gain or loss calculated by the difference between the sales price of the property, less any costs to sell the property and the current gross value of the property (equal to the property’s original acquisition price plus any subsequent non-reimbursed capital improvements) of the disposed property. At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0% of such amount. No capital gain fee was recognized during the three months ended March 31, 2025 or 2024.

Current wording

Under the Advisory Agreement, we will pay to the Adviser a capital gain-based incentive fee that will be calculated and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement). In determining the capital gain fee, we will calculate aggregate realized capital gains and aggregate realized capital losses for the applicable time period. For this purpose, aggregate realized capital gains and losses, if any, equals the realized gain or loss calculated by the difference between the sales price of the property, less any costs to sell the property and the current gross value of the property (equal to the property’s original acquisition price plus any subsequent non-reimbursed capital improvements) of the disposed property. At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0% of such amount. No capital gain fee was recognized during the three and six months ended June 30, 2025 or 2024.

Previous wording

Under the terms of the Administration Agreement, we pay separately for our allocable portion of our Administrator’s overhead expenses in performing its obligations to us including, but not limited to, rent and our allocable portion of the salaries and benefits expenses of our Administrator’s employees, including, but not limited to, our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president, general counsel and secretary), and their respective staffs. Our allocable portion of the Administrator’s expenses are generally derived by multiplying our Administrator’s total expenses by the appropriate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements.

Current wording

Under the terms of the Administration Agreement, we pay separately for our allocable portion of our Administrator’s overhead expenses in performing its obligations to us including, but not limited to, rent and our allocable portion of the salaries and benefits expenses of our Administrator’s employees, including, but not limited to, our chief financial officer, treasurer, chief compliance officer, co-general counsels and co-secretaries (Mr. LiCalsi also serves as our Administrator’s president, co-general counsel and co-secretary), and their respective staffs. Our allocable portion of the Administrator’s expenses are generally derived by multiplying our Administrator’s total expenses by the appropriate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements.

Previous wording

The preparation of our financial statements in accordance with GAAP requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could materially differ from these estimates. A summary of all of our significant accounting policies is provided in Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024, filed by us with the U.S. Securities and Exchange Commission (the “SEC”) on February 18, 2025 (our “2024 Form 10-K”). There were no material changes to our critical accounting policies or estimates during the three months ended March 31, 2025.

Current wording

The preparation of our financial statements in accordance with GAAP requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could materially differ from these estimates. A summary of all of our significant accounting policies is provided in Note 1 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024, filed by us with the U.S. Securities and Exchange Commission (the “SEC”) on February 18, 2025 (our “2024 Form 10-K”). There were no material changes to our critical accounting policies or estimates during the six months ended June 30, 2025.

Previous wording

The weighted average yield on our total portfolio, which was 8.5% and 8.5% as of March 31, 2025 and 2024, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements. The weighted average yield does not account for the interest expense incurred on the mortgages placed on our properties or other types of existing indebtedness.

Current wording

The weighted average yield on our total portfolio, which was 8.5% and 8.6% as of June 30, 2025 and 2024, respectively, is calculated by taking the annualized straight-line rents plus operating expense recoveries, reflected as lease revenue on our condensed consolidated statements of operations and other comprehensive income, less property operating expenses, of each acquisition since inception, as a percentage of the acquisition cost plus subsequent capital improvements. The weighted average yield does not account for the interest expense incurred on the mortgages placed on our properties or other types of existing indebtedness.

Previous wording

A comparison of our operating results for the three months ended March 31, 2025 and 2024 is below (dollars in thousands, except per share amounts):

Current wording

A comparison of our operating results for the three and six months ended June 30, 2025 and 2024 is below (dollars in thousands, except per share amounts):

Previous wording

Lease revenues consist of rental income and operating expense recoveries earned from our tenants. Lease revenues from same store properties increased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to an increase in recovery revenue from property expenses and an increase in rental rates from leasing activity subsequent to the three months ended March 31, 2024. Lease revenues decreased for acquired and disposed of properties for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to the loss of rental and variable lease payments from the seven property sales during and subsequent to March 31, 2024, minimally offset by lease revenue from the 13 properties acquired subsequent to March 31, 2024. Lease revenues decreased for our properties with vacancy for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, mainly due to a loss of rental revenue from increased vacancy, partially offset by an increase in variable lease payments.

Current wording

Lease revenues consist of rental income and operating expense recoveries earned from our tenants. Lease revenues from same store properties increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to an increase in recovery revenue from property expenses and an increase in rental rates from leasing activity subsequent to the three months ended June 30, 2024. Lease revenues increased for acquired and disposed of properties for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to an increase in recovery revenue from property expenses and an increase in rental rates on the 12 properties acquired subsequent to June 30, 2024, partially offset by accelerated rent on a lease termination during the three and six months ended June 30, 2024. Lease revenues decreased for our properties with vacancy for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, mainly due to a loss of rental revenue from increased vacancy, partially offset by an increase in variable lease payments.

Previous wording

Depreciation and amortization expense decreased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to the reduced depreciation and amortization expense from the four property sales subsequent to March 31, 2024, partially offset by an increase in depreciation and amortization expense on the 13 properties acquired subsequent to March 31, 2024.

Current wording

Depreciation and amortization expense decreased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to the reduced depreciation and amortization expense from the five property sales subsequent to June 30, 2024, partially offset by an increase in depreciation and amortization expense on the 12 properties acquired subsequent to June 30, 2024.

Previous wording

Property operating expenses consist of franchise taxes, property management fees, insurance, ground lease payments, property maintenance and repair expenses paid on behalf of certain of our properties. The increase in property operating expenses for same store properties for the three months ended March 31, 2025, from the comparable 2024 period, was a result of general cost increases due to the inflationary environment during the three months ended March 31, 2025. The decrease in property operating expenses for acquired and disposed of properties for the three months ended March 31, 2025, from the comparable 2024 period, is a result of a decrease in property operating expenses from the seven property sales during and subsequent to March 31, 2024, minimally offset by the property operating expense from the 13 properties acquired subsequent to March 31, 2024. The increase in property operating expenses for properties with vacancy for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, is a result of increased maintenance expense.

Current wording

Property operating expenses consist of franchise taxes, property management fees, insurance, ground lease payments, property maintenance and repair expenses paid on behalf of certain of our properties. The increase in property operating expenses for same store properties for the three and six months ended June 30, 2025, from the comparable 2024 period, was a result of general cost increases due to the inflationary environment during the three and six months ended June 30, 2025. The decrease in property operating expenses for acquired and disposed of properties for the three and six months ended June 30, 2025, from the comparable 2024 period, is a result of a decrease in property operating expenses from the seven property sales during and subsequent to June 30, 2024, minimally offset by the property operating expense from the 12 properties acquired subsequent to June 30, 2024. The increase in property operating expenses for properties with vacancy for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, is primarily a result of increased real estate expense and other general cost increases due to the inflationary environment.

Previous wording

The base management fee paid to the Adviser increased slightly for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to an increase in Gross Tangible Real Estate over the three months ended March 31, 2025 from property acquisitions as compared to Gross Tangible Real Estate during the three months ended March 31, 2024. The calculation of the base management fee is described in detail above in subheading “Advisory and Administration Agreements.”

Current wording

The base management fee paid to the Adviser increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to an increase in Gross Tangible Real Estate over the three and six months ended June 30, 2025 from property acquisitions as compared to Gross Tangible Real Estate during the three and six months ended June 30, 2024. The calculation of the base management fee is described in detail above under the subheading “Advisory and Administration Agreements.”

Previous wording

The net incentive fee paid to the Adviser increased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to the Adviser waiving a portion of the incentive fee for the three months ended March 31, 2024. The Adviser did not wave the incentive fee during the three months ended March 31, 2025. The calculation of the incentive fee is described in detail above in subheading “Advisory and Administration Agreements.”

Current wording

The net incentive fee paid to the Adviser decreased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to the Adviser waiving a larger portion of the incentive fee for the three and six months ended June 30, 2025. The calculation of the incentive fee is described in detail above under the subheading “Advisory and Administration Agreements.”

Previous wording

The administration fee paid to the Administrator decreased slightly for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to our Administrator allocating a smaller portion of expenses to us. The calculation of the administration fee is described in detail above in subheading“Advisory and Administration Agreements.”

Current wording

The administration fee paid to the Administrator decreased slightly for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, due to our Administrator allocating a smaller portion of expenses to us. The calculation of the administration fee is described in detail above under the subheading“Advisory and Administration Agreements.”

Previous wording

General and administrative expenses decreased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, mainly due to a reduction in legal expenses.

Current wording

General and administrative expenses increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, mainly due to higher audit expenses and expensing Series F Preferred Stock prepaid offering costs due to the termination of the primary offering.

Previous wording

Interest expense decreased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. This decrease was primarily the result of decreased costs associated with the maturity of several interest rate caps in the previous period as well as reduced interest expense on mortgage debt that was repaid in during and subsequent to March 31, 2024.

Current wording

Interest expense increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024. This increase was primarily the result of increased interest costs on variable rate debt, as a result of larger amounts drawn on the Revolver, as well as new interest expense on the 2029 Notes.

Previous wording

We did not sell any properties during the three months ended March 31, 2025. We sold three non-core office properties during the three months ended March 31, 2024, and as a result, incurred a gain on sale of real estate, net, and a gain on debt extinguishment, net.

Current wording

We sold one non-core office property during the six months ended June 30, 2025, and as a result, incurred a gain on sale of real estate, net. We sold four non-core office properties during the six months ended June 30, 2024, and as a result, incurred a gain on sale of real estate, net, and a gain on debt extinguishment, net.

Previous wording

Other income increased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, due to interest income earned from sales-types leases and nonrecurring income items that occurred in the three months ended March 31, 2025.

Current wording

Other income decreased for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, due to incurring $0.3 million in closing costs associated with the completion of the sale transaction at our Tifton, Georgia property. Other income increased for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, due to interest income earned from sales-types leases and nonrecurring income items.

Previous wording

Net income available to common stockholders and Non-controlling OP Unitholders increased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to an increase in recovery revenue from property expenses, an increase in rental rates from leasing activity, no impairment charge in the current period, and lower interest expense in the period. This was partially offset by a higher net incentive fee payable to the Adviser accrued in the current period and no gain on sale, net, and gain on debt extinguishment, net.

Current wording

Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders increased for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, primarily due to an increase in recovery revenue from property expenses, an increase in rental rates from leasing activity, a decrease in the net incentive fee payable to the Adviser, and lower depreciation expense. This was partially offset by higher general and administrative fees during the period.

Previous wording

Our sources of liquidity include cash flows from operations, cash and cash equivalents, borrowings under our Credit Facility, and additional issuances of equity and/or debt securities. Our available liquidity as of March 31, 2025 was $80.5 million, consisting of approximately $10.4 million in cash and cash equivalents and available borrowing capacity of $70.1 million under our Credit Facility. Our available borrowing capacity under the Credit Facility increased to $80.6 million as of May 7, 2025.

Current wording

Our sources of liquidity include cash flows from operations, cash and cash equivalents, borrowings under our Credit Facility, and additional issuances of equity and/or debt securities. Our available liquidity as of June 30, 2025 was $38.7 million, consisting of approximately $11.7 million in cash and cash equivalents and available borrowing capacity of $27.0 million under our Credit Facility. Our available borrowing capacity under the Credit Facility decreased to $25.1 million as of August 6, 2025.

Previous wording

During the three months ended March 31, 2025, we raised net proceeds of $27.7 million of common equity under the 2024 Common Stock Sales Agreement. We raised net proceeds of $0.3 million from sales of our Series F Preferred Stock during the three months ended March 31, 2025.

Current wording

During the six months ended June 30, 2025, we raised net proceeds of $38.0 million of common equity under the 2024 Common Stock Sales Agreement. We raised net proceeds of $0.4 million from sales of our Series F Preferred Stock during the six months ended June 30, 2025.

Previous wording

As of March 31, 2025, we had 40 mortgage notes payable in the aggregate principal amount of $269.1 million, collateralized by a total of 45 properties with a remaining weighted average maturity of 3.3 years. The weighted-average interest rate on the mortgage notes payable as of March 31, 2025 was 4.29%.

Current wording

As of June 30, 2025, we had 39 mortgage notes payable in the aggregate principal amount of $259.5 million, collateralized by a total of 44 properties with a remaining weighted average maturity of 3.1 years. The weighted-average interest rate on the mortgage notes payable as of June 30, 2025 was 4.22%.