MODIV INDUSTRIAL, INC. (MDV)

CIK: 0001645873. SIC: 6798 Real Estate Investment Trusts. Latest 10-K as of: 2026-03-25.

SIC breadcrumb: Finance, Insurance, And Real Estate > Holding And Other Investment Offices > SIC 6798 Real Estate Investment Trusts

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1645873. Latest filing source: 0001645873-26-000040.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001645873.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001645873.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001645873-26-000061.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition, results of operations and cash flows together with the accompanying unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2026.

Management’s discussion and analysis of financial condition and results of operations are based upon our accompanying unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such forward-looking statements be subject to the safe harbor provisions created thereby. For this purpose, any statements made that are not historical or current facts may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “anticipates,” “believes,” “seeks,” “estimates,” “expects,” “intends,” “continue,” “can,” “may,” “plans,” “potential,” “projects,” “should,” “could,” “will,” “would” or similar expressions are intended to identify forward-looking statements. Such statements include, but are not limited to, any statements about the timing and completion of the proposed Merger (as defined below), our plans, strategies, and prospects and are subject to certain risks and uncertainties, as well as known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not intended to be a guarantee of our performance in future periods.

The forward-looking statements included herein represent our management’s current expectations and assumptions based on information available as of the date of this report. These statements involve numerous known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Readers should carefully review these risks, as well as the additional risks described in other documents we file from time to time with the SEC, including the risks and uncertainties described in Item 1A., Risk Factors, of this Quarterly Report on Form 10-Q and Item IA,. Risk Factors, of our Annual Report on Form 10-K. In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information, which speak only as of the date of this report.

New risks and uncertainties emerge from time-to-time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Overview

We are a Maryland corporation with issued and outstanding stock consisting of 7.375% Series A cumulative redeemable perpetual preferred stock (“Series A Preferred Stock”), listed on the NYSE under the symbol “MDV.PA,” and Class C common stock (“Class C Common Stock”), $0.001 par value per share, listed on the NYSE under the symbol “MDV.” We currently own and manage single-tenant net-lease properties throughout the United States, which are primarily, but not exclusively, industrial properties. Our focus for future acquisitions is on critical industrial manufacturing properties with long-term leases to tenants that fuel the national economy and strengthen the nation’s supply chains. We elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2016. We believe that we have operated in conformity with the

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requirements for qualification as a REIT for U.S. federal income tax purposes. Since December 31, 2019, we have been internally managed.

The Company

We primarily generate revenues by leasing properties to industrial manufacturing tenants pursuant to net leases. As of March 31, 2026, our real estate investment portfolio consisted of 41 properties as further described below. The net book value of our real estate investments as of March 31, 2026 was $449.4 million.

Details of our diversified portfolio of 41 operating properties, including one property held for sale, as of March 31, 2026 are as follows:

•    Annual base rent (“ABR”) aggregating $40.1 million, which is calculated based on the next 12 months of contractual monthly base rent as of March 31, 2026;

•    38 industrial properties, which represent approximately 82% of the portfolio (expressed as a percentage of ABR), including one property held for sale, and three non-core properties which represent approximately 18% of the portfolio by ABR;

•Occupancy rate of 99% based on square footage;

•    Located in 14 states;

•    Leased to 27 different commercial tenants doing business in 12 separate industries;

•    Approximately 4.3 million square feet of aggregate leasable space;

•    An average leasable space per property of approximately 105,000 square feet (approximately 108,000 square feet per industrial property and approximately 68,000 square feet per non-core property); and

•    Outstanding mortgage notes payable balance of $24.0 million for two properties and a credit facility term loan balance of $250.0 million.

During the three months ended March 31, 2026, we acquired the 27.3% remaining TIC interest in the Santa Clara, California property leased to Fujifilm Dimatix, Inc.(the “Santa Clara Property”), giving us 100% ownership and control of the Santa Clara Property, and completed the sale of our vacant industrial property located in Saint Paul, Minnesota for $4.1 million.

Agreement and Plan of Merger with Global Net Lease, Inc.

On May 3, 2026, we and Modiv Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Global Net Lease, Inc. (“GNL”), GNL Motion Merger Sub, LLC (“GNL Merger Sub”), Global Net Lease Operating Partnership, L.P. (the “GNL Operating Partnership”) and GNL Motion OpCo Merger Sub, LLC (“Opco Merger Sub”). Under the terms of the Merger Agreement and subject to the satisfaction or waiver of certain conditions, including approval of the Company’s stockholders, the Company will merge with and into GNL Merger Sub with GNL Merger Sub being the surviving entity (such merger transaction, the “Company Merger”) and OpCo Merger Sub will merge with and into the Operating Partnership with the Operating Partnership being the surviving entity (such merger transaction, the “OpCo Merger” and, together with the Company Merger, the “Merger”).

Under the terms of the Merger Agreement, holders of Class C Common Stock and units of limited partnership interest (the “OP Units”) in the Operating Partnership will have the right to receive 1.975 shares of common stock, par value $0.01 per share, of GNL (the “GNL Common Stock”) or units of limited partnership interest in the GNL Operating Partnership designated as OP Units (as defined in the agreement of limited partnership of GNL Operating Partnership, “GNL OP Units”), plus the right to receive cash in lieu of any fractional shares of GNL Common Stock or GNL OP Units, as applicable, and holders of Series A Preferred Stock will have the right to receive $25.00 in cash, plus any accrued and unpaid dividends. Following the closing of the Merger, our Class C Common Stock and Series A Preferred Stock will be delisted from the NYSE and deregistered under the Exchange Act. The Merger Agreement and the transactions contemplated thereby were unanimously approved by our board of directors. The Merger is expected to close in the third quarter of 2026, subject to customary closing conditions, including the approval of our stockholders.

For additional information on the Merger Agreement, see our Current Report on Form 8-K filed with the SEC on May 4, 2026 and Note 12 to our accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Recent Events and Uncertainties

There are continuing significant uncertainties in the market in which we operate related to inflation and interest rates, tariffs, supply chain disruptions and negative impacts associated with foreign policy actions implemented by the United States. Volatility in stock and bond markets, and particularly yields on U.S. Treasury securities, may negatively impact our operating results, liquidity and sources of borrowings.

We, our tenants and operating partners are impacted by inflation and interest rates. While the rate of inflation has declined from historic highs, inflation remains elevated and there is continued uncertainty over the future rate of inflation and interest rates. While the Federal Reserve reduced rates in September, October and December 2025, the Federal Reserve may refrain from reducing interest rates further to try to rein in inflation, which could lead to a recession, and would negatively impact our future operating results due to higher borrowing costs. In addition, sustained elevated inflation rates may negatively impact our longer term leases if contractual rent increases are not sufficient to keep up with market leases.

In January 2026, we entered into three new swap agreements, effective December 31, 2025, for $83.3 million each, for an aggregate of $250.0 million, corresponding to the Term Loan (as defined below), which will fix the Secured Overnight Financing Rate (“SOFR”) for the year ending December 31, 2026 to 2.45%, resulting in a fixed rate of 4.15% based on our leverage ratio of 45.1% as of December 31, 2025. We paid aggregate premiums of $2.7 million, including accrued interest receivable of $0.1 million, to buy down the fixed rate below the prevailing market rate. The buydown premium is a derivative that is recorded as an asset on our balance sheet and amortized over the 12 months ending December 31, 2026, increasing interest expense by approximately $0.6 million per quarter. We designated these pay-fixed, receive-floating interest

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-03-25. Report date: 2025-12-31.

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition, results of operations and cash flows together with the consolidated financial statements and related notes included in this Annual Report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors. Also, see “Cautionary Note Regarding Forward-Looking Statements” preceding Part I of this Annual Report on Form 10-K and Part I, Item 1A. Risk Factors herein.

Management’s discussion and analysis of financial condition and results of operations are based upon our accompanying audited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Although we are not limited as to the form our investments may take, our investments in real estate will generally constitute acquiring fee title or interests in entities that own and operate real estate. We will make substantially all acquisitions of our real estate investments directly through the Operating Partnership or indirectly through limited liability companies or limited partnerships, including through other REITs, or through investments in joint ventures, partnerships, tenants-in-common, co-tenancies or other co-ownership arrangements with other owners of properties. We are the sole general partner of, and owned an approximate 81% interest in the Operating Partnership as of both December 31, 2025 and March 20, 2026. The Operating Partnership’s limited partnership interests are further described in Note 11 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K. We report with the SEC as a smaller reporting company under Rule 12b-2 of the Exchange Act.

Primary Investment Objectives

Our primary investment objectives are:

•to provide attractive growth in AFFO (as defined below) and sustainable cash distributions;

•to realize appreciation from proactive investment selection and management;

•to provide future opportunities for growth and value creation; and

•to provide an investment alternative for stockholders seeking to allocate a portion of their long-term investment portfolios to industrial manufacturing real estate.

We expect the trend of onshoring manufacturing to accelerate and we will continue to focus future acquisitions on industrial manufacturing properties, subject to market conditions and the availability of prices that we consider attractive. We can provide no assurance that we will achieve our investment objectives. See the Part I, Item 1A. Risk Factors section of this Annual Report on Form 10-K for additional information.

Recent Events and Uncertainties

There are continuing significant uncertainties in the market in which we operate related to inflation and interest rates, tariffs, supply chain disruptions and negative impacts associated with foreign policy actions implemented by the United States. Volatility in stock and bond markets, and particularly yields on U.S. Treasury securities, may negatively impact our operating results, liquidity and sources of borrowings.

We, our tenants and operating partners are impacted by inflation and interest rates. While the rate of inflation has declined from historic highs, inflation remains elevated and there is continued uncertainty over the future rate of inflation and interest rates. While the Federal Reserve reduced rates in September, October and December 2025, the Federal Reserve may refrain from reducing interest rates further to try to rein in inflation, which could lead to a recession, and would negatively impact our future operating results due to higher borrowing costs. In addition, sustained elevated inflation rates may negatively impact our longer term leases if contractual rent increases are not sufficient to keep up with market leases.

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In January 2026, we entered into three new swap agreements, effective December 31, 2025, for $83.3 million each, for an aggregate of $250.0 million, corresponding to the Term Loan (as defined below), which will fix the Secured Overnight Financing Rate (“SOFR”) for the year ending December 31, 2026 to 2.45%, resulting in a fixed rate of 4.15% based on our leverage ratio of 45.1% as of December 31, 2025. We paid aggregate premiums of $2.7 million, including accrued interest receivable of $0.1 million, to buy down the fixed rate below the prevailing market rate. The buydown premium is a derivative that will be recorded as an asset on our balance sheet as of January 31, 2026 and amortized over the 12 months ending December 31, 2026, increasing interest expense by approximately $0.6 million per quarter. We designated these pay-fixed, receive-floating interest rate swaps as cash flow hedges, which are expected to be effective through December 31, 2026. The derivatives will be marked to fair value each reporting period with any change in fair value recorded through accumulated other comprehensive income as long as the derivatives are deemed effective.

Possible future declines in rental rates and expectations of future rental concessions, including free rent to renew tenants early, to retain tenants who are up for renewal or to attract new tenants, may result in decreases in cash flows . There are no leases scheduled to expire within the next 12 months. We have one lease scheduled to expire in 2027: our property in Charlotte, North Carolina leased to Husqvarna that expires on June 30, 2027.

Potential future declines in economic conditions could negatively impact commercial real estate fundamentals and result in lower occupancy and rental rates and cause declining values in our real estate portfolio, which could have the following negative effects on us: the values of our investments in commercial properties could decrease below the amounts paid for such investments; and/or revenues from our properties could decrease due to fewer tenants and/or lower rental rates, making it more difficult for us to make distributions or meet our debt service obligations. We obtained two lease extensions during 2025, with Fujifilm Dimatix, Inc. extending its lease for ten years from March 17, 2026 to March 16, 2036, and Northrop Grumman Systems Corporation extending its lease for five years from June 1, 2026 to May 31, 2031; however, changing circumstances may make future lease extensions more difficult.

The debt market remains sensitive to the macro environment, such as inflation, Federal Reserve policy, the impacts of increases in tariffs by the U.S. and other countries, market sentiment and regulatory factors affecting the banking and commercial mortgage-backed securities industries. Our Credit Facility (as defined below) includes floating interest rates based on SOFR and our leverage ratio as described below. We entered into new swaps for 2026 that fix the rate of our Term Loan for one year. Our mortgages with fixed rates, including the mortgage on the Santa Clara, California property leased to Fujifilm Dimatix, Inc., mature after September 2027. As a result of the interest rate swap agreements entered into for the year ending December 31, 2026, 100% of our indebtedness has a weighted average fixed interest rate of 4.14% as long as our leverage ratio is less than 50%.

Any future uncertainties in the capital markets may cause difficulty in refinancing debt obligations prior to maturity at terms as favorable as the terms of existing indebtedness. If we are not able to refinance our indebtedness on attractive terms, or at all, at the various maturity dates, we may be forced to dispose of some of our assets. Market conditions can change quickly, potentially negatively impacting the value of real estate investments.

Liquidity and Capital Resources

Generally, our cash requirements for property acquisitions, debt payments and refinancings, capital expenditures and other investments will be funded by bank borrowings through our Credit Facility (as defined below), mortgage indebtedness on our properties, real estate property sales, internally generated funds or offerings of shares of our Class C Common Stock.

Purchases of properties in the near-term will be funded primarily with proceeds from dispositions of certain legacy assets, bank borrowing through our Credit Facility, proceeds from our ATM Offering and cash on hand. We have $30.0 million of borrowing capacity available under our Credit Facility as of March 25, 2026, which we may utilize in the near or medium-term if we identify attractive investment opportunities in advance of completing dispositions or raising additional equity, which could result in temporary increases in leverage.

We expect that our cash requirements for operating and interest expenses, dividends on our Series A Preferred Stock and distributions on our Class C Common Stock and OP Units will be funded by internally generated funds. We expect to have adequate liquidity to meet our cash requirements for the next 12 months and beyond.

ATM Offering

During the year ended December 31, 2025, we sold 212,791 shares of Class C Common Stock in the ATM Offering at an average price of $15.66 per share for proceeds of $3.3 million, net of sale commissions. From November 15, 2023 through December 31, 2025, an aggregate of 819,700 shares have been sold in the ATM Offering at an average price of $15.95 per share for aggregate net proceeds of $11.3 million after legal, accounting, investor relations and other offering costs of $1.4 million. As

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of December 31, 2025, we had $36.9 million of shares of Class C Common Stock available for future issuance under the ATM Offering. No shares of Class C Common Stock were sold in the ATM Offering subsequent to December 31, 2025.

Credit Facility and Mortgages

Our Operating Partnership entered into an agreement for a line of credit (the “Credit Agreement”) on January 18, 2022 with KeyBank and the other lending institutions party thereto (the “Lenders”), with KeyBank acting as agent for the Lenders (in such capacity, the “Agent”). The Credit Agreement currently provides a $280.0 million line of credit comprised of a $30.0 million revolving line of credit (“Revolver”), and a $250.0 million term loan (“Term Loan” and together with the Revolver, the “Credit Facility”), as further described in Note 6 to our accompanying audited consolidated financial statements included in this Annual Report on Form 10-K. The Credit Facility is available for general corporate purposes, including, but not limited to, acquisitions, repayment of existing indebtedness, and capital expenditures.

On January 16, 2026, we entered into an agreement with the Lenders to amend the Credit Agreement to (i) extend the maturity date of the credit facility eighteen months to July 18, 2028, (ii) remove the 10 basis point SOFR Adjustment and (iii) allow repurchases of shares of the Series A Preferred Stock, by amending certain distribution covenants so long as such repurchases are funded by proceeds from the issuance of preferred or common stock or asset sales, in each case, occurring within the trailing twelve month period of such repurchase.

The Credit Facility is priced on a leverage-based grid that fluctuates based on our actual leverage ratio at the end of the prior quarter. With our leverage ratio of 45.1% as of December 31, 2025, the spread over SOFR was 175 basis points and the interest rate on the Revolver was 5.4375% as of February 26, 2026. As of March 25, 2026, there were no amounts outstanding on the Revolver. We also pay an annual unused fee of up to 25 basis points on the Revolver, depending on the daily amount of the unused commitment, and incurred $0.1 million and $0.4 million of unused fees for the years ended December 31, 2025 and 2024, respectively.

In January 2025, we entered into two swap agreements, effective December 31, 2024, for $125.0 million each, for an aggregate of $250.0 million, corresponding to the Term Loan, which fixed SOFR for the year ending December 31, 2025 at 2.45%, resulting in a fixed rate of 4.25%. We paid aggregate premiums of $4.2 million, including accrued interest receivable of $0.3 million, to buy down the fixed rate below the prevailing market rate. We designated the two pay-fixed, receive-floating interest rate swaps as cash flow hedges (see Note 7 to our accompanying audited consolidated financial statements included in this Annual Report on Form 10-K for more details). The interest rate on the Term Loan was 5.4875% as of December 31, 2025, which was partially offset by the interest rate swaps.

In January 2026, we entered into three new swap agreements, effective December 31, 2025, for $83.3 million each, for an aggregate of $250.0 million, corresponding to the Term Loan, which will fix SOFR for the year ending December 31, 2026 to 2.45%, resulting in a fixed rate of 4.15% based on our leverage ratio of 45.1% as of December 31, 2025. We paid aggregate premiums of $2.7 million, including accrued interest receivable of $0.1 million, to buy down the fixed rate below the prevailing market rate. The buydown premium is a derivative that will be recorded as an asset on our balance sheet as of January 31, 2026 and amortized over the 12 months ending December 31, 2026, increasing interest expense by approximately $0.6 million per quarter. We designated these pay-fixed, receive-floating interest rate swaps as cash flow hedges, which are expected to be effective through December 31, 2026.

As of December 31, 2025 the outstanding principal balance of our mortgage note payable secured by one property was $12.1 million. As of December 31, 2025, the Term Loan outstanding principal balance was $250.0 million and there was no outstanding balance on the Revolver. As of December 31, 2025, our approximate 72.7% pro-rata share of the TIC Interest’s mortgage note payable of $12.1 million was $8.8 million, which is not included in our audited consolidated balance sheets in this Annual Report on Form 10-K.

The Credit Facility includes customary representations, warranties and covenants. The Credit Facility is secured by a pledge of all of the Operating Partnership’s equity interests in certain of the single-purpose, property-owning entities (the “Subsidiary Guarantors”) that are indirectly owned by us, and various cash collateral owned by the Operating Partnership and the Subsidiary Guarantors. In connection with the Credit Facility, we and each of our Subsidiary Guarantors entered into an Unconditional Guaranty of Payment and Performance in favor of the Agent, pursuant to which we and each of our Subsidiary Guarantors agreed to guarantee the full and prompt payment of the Operating Partnership’s obligations under the Credit Agreement.

While we intend for the Credit Facility to be an important source of financing, we may continue to use mortgage debt financing for certain real estate investments and acquisitions. This financing may be obtained at the time an asset is acquired or an investment is made or at such later time as determined to be appropriate. In addition, debt financing may be used from time-to-

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time for property improvements, lease inducements, tenant improvements and other working capital needs.

The $30.0 million unused capacity on our Revolver as of the date of this Annual Report on Form 10-K, subject to our borrowing base covenant, along with proceeds from any future offerings of shares of Class C Common Stock, can be used to invest in real estate and real estate-related investments or to re-lease and reposition our properties in accordance with our investment strategy and policies, including costs and fees associated with such investments, such as capital expenditures, tenant improvement costs and leasing costs. We also may use a portion of the funds for payment of principal on our outstanding indebtedness and for general corporate purposes.

Compliance with All Debt Agreements

Pursuant to the terms of our Credit Facility and our mortgage notes payable secured by certain of our properties, we and/or our subsidiary borrowers are subject to certain financial loan covenants. We and/or our subsidiary borrowers were in compliance with such financial loan covenants as of December 31, 2025.

Acquisitions and Dispositions of Real Estate Investments

We define “initial cap rate” for property acquisitions as the initial annual cash rent divided by the purchase price of the property. We define “weighted average cap rate” for property acquisitions as the average annual cash rent including rent escalations over the lease term, divided by the purchase price of the property.

Acquisitions

On March 7, 2025, we acquired an industrial property for $6.1 million, consisting of $0.3 million in cash and 344,119 Class C OP Units valued at $5.9 million, based on an estimated fair value of $17.00 per Class C OP Unit. The property with a leasable area of 48,589 square feet is located in the Jacksonville, Florida metropolitan statistical area and is subject to an existing lease that expires on December 31, 2032, with annual rent escalations based on the consumer price index. The property contains an adjacent land parcel that has the potential to be developed into additional industrial space.

In evaluating the above properties as potential acquisitions, including the determination of an appropriate purchase price to be paid for the properties, we considered a variety of factors, including the condition and financial performance of the properties, the terms of the existing leases and the creditworthiness of the tenants, property location, visibility and access, age of the properties, physical condition and curb appeal, neighboring property uses, local market conditions, including vacancy rates, area demographics, including trade area population and average household income and neighborhood growth patterns and economic conditions.

Dispositions

On February 26, 2025, we completed the sale of our property that is located in Endicott, New York and is leased to New Vision Industries, LLC, a subsidiary of Producto Holdings LLC (“Producto”), for a sales price of $2.4 million. In connection with this sale, the lease for our property in Jamestown, New York with another Producto subsidiary was amended to increase the base rent by $2,500 per month.

On December 15, 2025, we completed the sale of our office property in Issaquah, Washington formerly leased to Costco Wholesale Corporation (“Costco”) for $26.0 million, which included the sale price of $25.6 million and $0.4 million of extension fees. In conjunction with the sale, we repaid the $18.3 million mortgage note secured by the property and a $0.7 million loan prepayment fee.

We have received $2.0 million of non-refundable deposits under the terms of an amended purchase and sale agreement for our industrial property in Saint Paul, Minnesota and this sale is scheduled to close on March 30, 2026.

We are under contract to sell our industrial property that is leased to Northrop Grumman Systems Corporation in Melbourne, Florida during the second quarter of 2026, although there can be no assurances that the transaction will be completed.

Capital Expenditures and Tenant Improvements

Other than as discussed below, we do not have plans to incur any significant costs to renovate, improve or develop our properties. We believe that our properties are adequately insured. Pursuant to our lease agreements, as of December 31, 2025, we had obligations to reimburse $2.0 million for future on-site and tenant improvements expected to be incurred by tenants. We expect that the related improvements will be completed during the 2026 calendar year and will be funded from cash on hand, operating cash flow, offerings of shares of our Class C Common Stock or borrowings under our Credit Facility.

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In addition, we have identified approximately $0.5 million of capital expenditures that are expected to be completed in the next 12 months which are not recoverable from tenants with double-net leases. These improvements will be funded from cash on hand or operating cash flows. More information on our properties and investments can be found in Note 3 to our accompanying audited consolidated financial statements included in this Annual Report on Form 10-K.

Funds from Operations and Adjusted Funds from Operations

In order to provide a more complete understanding of the operating performance of a REIT, the National Association of Real Estate Investment Trusts (“Nareit”) promulgated a measure known as Funds from Operations (“FFO”). FFO is defined as net income or loss computed in accordance with GAAP, excluding gains and losses from sales of depreciable operating property, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated investments, preferred dividends and real estate impairments. Because FFO calculations adjust for such items as depreciation and amortization of real estate assets and gains and losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. It should be noted, however, that other REITs may not define FFO in accordance with the current Nareit definition or may interpret the current Nareit definition differently than we do, making comparisons less meaningful.

Additionally, we use Adjusted Funds from Operations (“AFFO”) as a non-GAAP financial measure to evaluate our operating performance. AFFO excludes non-routine and certain non-cash items such as stock-based compensation, amortization of deferred rent, amortization of below/above market lease intangibles, proceeds from the settlement of property-related insurance claims, amortization of deferred financing costs, gain or loss from the extinguishment of debt, unrealized gains (losses) on derivative instruments, amortization of off-market interest rate derivatives and reduction for accrued interest, and write-offs of due diligence expenses for abandoned pursuits. We also believe that AFFO is a recognized measure of sustainable operating performance in the REIT industry. Further, we believe AFFO is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies. Management believes that AFFO is a beneficial indicator of our ongoing portfolio performance. More specifically, AFFO isolates the financial results of our operations. AFFO, however, is not considered an appropriate measure of historical earnings as it excludes certain significant costs that are otherwise included in reported earnings. Further, since the measure is based on historical financial information, AFFO for the period presented may not be indicative of future results. By providing FFO and AFFO, we present information that assists investors in aligning their analysis with management’s analysis of long-term operating activities.

For all of these reasons, we believe the non-GAAP measures of FFO and AFFO, in addition to income or loss from operations, net income or loss and cash flows from operating activities, as defined by GAAP, are helpful supplemental performance measures and useful to investors in evaluating the performance of our real estate portfolio. AFFO is useful in assisting management and investors in assessing our ongoing ability to generate cash flow from operations and continue as a going concern in future operating periods. However, a material limitation associated with FFO and AFFO is that they are not indicative of our cash available to fund distributions since other uses of cash, such as capital expenditures at our properties and principal payments of debt, are not deducted when calculating FFO and AFFO. Therefore, FFO and AFFO should not be viewed as a more prominent measure of performance than income or loss from operations, net income (loss) or cash flows from operating activities and each should be reviewed in connection with GAAP measurements.

Neither the SEC, Nareit, nor any other applicable body has opined on the acceptability of the adjustments contemplated to adjust FFO in order to calculate AFFO and its use as a non-GAAP performance measure. In the future, the SEC or Nareit may decide to standardize the allowable exclusions across the REIT industry, and we may have to adjust the calculation and characterization of this non-GAAP measure.

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The following are the calculations of FFO and AFFO for the year ended December 31, 2025 and 2024 (in thousands, except shares outstanding and per share data):

Year Ended December 31,

2025

2024

Net income (in accordance with GAAP)

$

554 

$

6,493 

Preferred stock dividends

(3,202)

(3,688)

Net (loss) income attributable to common stockholders and OP Unit holders

(2,648)

2,805 

FFO adjustments:

Depreciation and amortization of real estate properties

15,087 

16,601 

Depreciation and amortization for unconsolidated investment in a real estate property

756 

756 

Impairment of real estate investment property

5,814 

— 

Gain on sale of real estate investments, net

(2,520)

(3,360)

FFO attributable to common stockholders and OP Unit holders

16,489 

16,802 

AFFO adjustments:

Stock compensation expense

2,915 

1,586 

Amortization of deferred financing costs

629 

1,192 

Abandoned pursuit costs

143 

240 

Amortization of deferred rents

(5,048)

(5,716)

Amortization of unrealized holding gain, net of unrealized loss on non-designated or ineffective interest rate derivative instruments

(1,015)

1,479 

Amortization of off-market interest rate derivatives and reduction for accrued interest

4,200 

— 

Loss on early extinguishment of debt

768 

— 

Amortization of (below) above market lease intangibles, net

(854)

(847)

Proceeds from the settlement of property-related insurance claims

(684)

— 

Loss on equity investments

— 

151 

Other adjustments for unconsolidated investment in a real estate property

(305)

101 

AFFO attributable to common stockholders and OP Unit holders

$

17,238 

$

14,988 

Weighted Average Shares/Units Outstanding:

Fully diluted (1)

12,480,553 

11,188,974 

FFO Per Share/Unit:

Fully diluted

$

1.32 

$

1.50 

AFFO Per Share/Unit:

Fully diluted

$

1.38 

$

1.34 

(1)     Fully diluted shares/units outstanding includes the weighted average dilutive effect of 1,532,047 Class C OP Units and 803,715 Class X OP Units for the year ended December 31, 2025, and 1,895,871 Class C OP Units for the year ended December 31, 2024. Class X OP Units were excluded from the weighted average shares/units outstanding in calculating earnings (loss) per share for the year ended December 31, 2025 in the audited consolidated statements of operations since they were anti-dilutive.

Property Portfolio Information

Following the issuance of our publicly listed Series A Preferred Stock in September 2021, we began to significantly transform our portfolio in furtherance of our strategic plan to reduce our exposure to office properties and increase our WALT. The following is a summary of how we have transformed the composition of our real estate portfolio over time, resulting in a majority of our ABR produced by industrial properties, including the TIC Interest, as shown and described below .

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The following is a breakdown of our ABR by property type as of December 31, 2025, 2024, 2023, 2022 and 2021.

December 31,

2021

2022

2023

2024

2025

Industrial core

41 

%

59 

%

76 

%

78 

%

82 

%

Non-core

59 

%

41 

%

24 

%

22 

%

18 

%

WALT (years)

6.1

11.9

14.1

13.8

14.0

Since the public listing of our Class C Common Stock in February 2022, we have repositioned the composition of our portfolio toward a primary focus of industrial assets, specifically those supporting domestic manufacturing. The implementation of this recycling incorporated both the reduction of our non-core properties and the active acquisition of industrial manufacturing properties. We have identified certain assets that we plan to recycle over the next two years, including our two office assets and certain legacy industrial assets that have shorter lease durations and do not fit our long-term strategy. We define legacy assets as those that were acquired by different management teams utilizing different investment objectives and underwriting criteria.

The following is a breakdown of our revenue by property type for the year ended December 31, 2025 (in thousands):

Industrial Core (1)

Non-Core (2)

Total

Rental

$

35,841 

$

9,982 

$

45,823 

Other property

$

564 

$

— 

$

564 

(1)    Industrial core properties include an approximate 72.7% TIC interest in the Santa Clara, California property. Subsequent to December 31, 2025, we acquired the 27.3% remaining TIC interest for $9.6 million, giving us 100% ownership of the property.

(2)    Non-core properties include the following:

(i)    our non-core acquisition of a leading KIA retail property located in a prime location in Los Angeles County acquired in January 2022, which was structured as an OP Unit transaction resulting in a favorable equity issuance of $32.8 million represented by 1,312,382 Class C OP Units at a cost basis of $25 per share. We repurchased 656,191 of those units and 123,809 shares of Class C Common Stock from an affiliate of the seller at $14.80 per share on August 1, 2024;

(ii)    our 12-year lease with OES executed in January 2023 for one of our legacy assets located in Rancho Cordova, California that includes a purchase option which OES may exercise until December 31, 2026; and

(iii) one legacy office property formerly leased to Solar Turbines in San Diego, California, that we expect to sell after we complete a parcel split to maximize its value.

The following is a breakdown of our assets by property type as of December 31, 2025 (in thousands):

Industrial Core (1)

Non-Core (2)

Total investments in real estate property

$

386,975 

$

108,378 

Accumulated depreciation and amortization

(61,261)

(11,947)

Total real estate investments, net, excluding unconsolidated investment in real estate property

325,714 

96,431 

Unconsolidated investment in a real estate property

9,437 

— 

Total real estate investments, net

$

335,151 

$

96,431 

Real estate investments held for sale, net (3)

$

3,901 

$

— 

Tenant deferred rent and other receivables

$

17,293 

$

6,143 

Above-market lease intangibles, net

$

1,169 

$

— 

(1)    See footnote (1) above

(2)    See footnote (2) above.

(3)     In December 2025, we entered into a purchase and sale agreement for our industrial property in Saint Paul, Minnesota for $4.0 million and the buyer deposited a $0.3 million non-refundable deposit. In January 2026, the parties amended the purchase and sale agreement, extending the closing date to February 11, 2026 with the buyer depositing a $1.2 million non-refundable deposit, which we received on January 12, 2026, and allowing for an option to further extend the closing date to March 31, 2026 with a $0.5 million non-refundable deposit,which we received on February 6, 2026.

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We have one mortgage secured by an industrial core property. The equity of each special purpose subsidiary that owns our other properties is pledged as collateral under our Credit Facility or the properties are unencumbered. See details of mortgage debt in Note 6 to our accompanying audited consolidated financial statements included in this Annual Report on Form 10-K.

Distributions

The source of cash used to pay our distributions has been and is expected to continue to be internally generated funds from operations.

A table of distributions declared and paid is disclosed in Part II, Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Distribution Information.

We expect that our board of directors will continue to declare distributions based on a single record date as of the end of each month and to pay these distributions on a monthly basis. Distributions will be determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant. We have not established a minimum dividend or distribution level, and our charter does not require that we make dividends or distributions to our stockholders other than as necessary to meet REIT qualification standards. On November 4, 2024, our board of directors authorized a 1.7% increase in the annual distribution rate from $1.15 per share to $1.17 per share commencing with monthly distributions payable to common stockholders and Class C OP Unit holders of record beginning as of January 31, 2025. On January 16, 2026, our board of directors authorized a 2.6% increase in the annual distribution rate from $1.17 per share to $1.20 per share commencing with monthly distributions payable to common stockholders and Class C OP Unit holders of record beginning as of January 30, 2026.

Cash Flow Summary

The following table summarizes our cash flow activity for the years ended December 31, 2025 and 2024 (in thousands):

Year Ended December 31,

2025

2024

Net cash provided by operating activities

$

14,967 

$

18,241 

Net cash provided by investing activities

$

27,801 

$

8,395 

Net cash used in financing activities

$

(39,917)

$

(18,235)

Cash Flows from Operating Activities

The decrease in cash provided by operating activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 is due to excluding derivative cash settlements received during the year ended December 31, 2025 from cash provided from operating activities since they are included in cash provided by investing activities, as described in Note 2, while derivative cash settlements received during the year ended December 31, 2024 are included in cash provided by operating activities. This decrease was partially offset by reduced general and administrative expenses for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Cash Flows from Investing Activities

The increase in net cash provided by investing activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily reflects (i) net proceeds from the sale of two real estate properties of $27.1 million during the year ended December 31, 2025 compared to net proceeds from the sale of two real estate properties and a land parcel aggregating $15.0 million during the year ended December 31, 2024, and (ii) a property acquired during the year ended December 31, 2025 primarily for Class C OP Units compared to a property acquisition for $5.2 million of cash during the year ended December 31, 2024. The change also reflects derivative cash settlements of $4.6 million, partially offset by the payment of aggregate premiums of $4.2 million during the year ended December 31, 2025 to buy down the swaps fixed rate below the prevailing market rate.

Cash Flows from Financing Activities

The increase in net cash used in financing activities for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily reflects an aggregate of $18.6 million for the repayment of the mortgage note secured by the office property in Issaquah, Washington formerly leased to Costco in conjunction with the property sale and monthly principal payments, the repurchase of Series A Preferred Stock for $7.1 million, and an increase in distributions paid to common stockholders and OP Unit holders during the year ended December 31, 2025, partially offset by the repurchase of Class C Common Stock and Class C OP Units for $11.5 million during the year ended December 31, 2024.

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Results of Operations

Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

Rental Revenue

Rental revenue was $45.8 million and $46.5 million for the years ended December 31, 2025 and 2024, respectively, which included tenant reimbursements of $1.7 million and $2.0 million, respectively. The decrease of $0.7 million is primarily due to Costco’s lease expiration on July 31, 2025 and Solar Turbines lease expiration on September 30, 2025.

General and Administrative

General and administrative expenses were $5.8 million and $6.3 million for the years ended December 31, 2025 and 2024, respectively. The decrease of $0.5 million, or 8%, was primarily due to our reduced headcount from 12 employees to nine employees in April 2025, our CEO no longer receiving a salary effective April 1, 2025 in connection with his grant of Class X OP Units, which vest over five years, and decreases in professional services and insurance expenses, partially offset by $0.2 million in non-recurring separation pay.

Stock Compensation

Stock compensation expense was $2.9 million and $1.6 million for the years ended December 31, 2025 and 2024, respectively. The increase of $1.3 million, or 84%, compared to 2024 was due to the Class X OP Units awarded in the first quarter of the year ended December 31, 2025, as described in Note 11 to our accompanying audited consolidated financial statements included in this Annual Report on Form 10-K. Stock compensation expense in 2024 included $1.3 million for our Class P OP Units and Class R OP Units, which vested and automatically converted to Class C OP Units on the last business day of March 2024.

Depreciation and Amortization

Depreciation and amortization expense was $15.1 million and $16.6 million for the years ended December 31, 2025 and 2024, respectively. The purchase price of properties acquired is allocated to tangible assets, identifiable intangibles and assumed liabilities, if any, and depreciated or amortized over their estimated useful lives. The decrease of $1.5 million, or 9%, period-over-period was primarily due to no longer recognizing depreciation and amortization expense for the real estate investments of our office property in Issaquah, Washington formerly leased to Costco upon classifying the property as held for sale as of December 31, 2024.

Property Expenses

Property expenses remained relatively constant at $3.5 million and $3.6 million for the years ended December 31, 2025 and 2024, respectively. These expenses primarily relate to property taxes and repairs and maintenance expenses, the majority of which are reimbursed by tenants and included in rental income.

Impairment of real estate investment property

We recorded an impairment charge of $5.8 million related to our property and equipment located in Saint Paul, Minnesota during the year ended December 31, 2025. We determined that an impairment charge was required based on current market conditions and represented the excess of the assets' carrying value over the assets’ estimated sale price less estimated selling costs. No impairment charges were recorded during the year ended December 31, 2024.

Gain on Sale of Real Estate Investments, Net

The gain on sale of real estate investments of $2.5 million for the year ended December 31, 2025 primarily related to the sale of our office property in Issaquah, Washington formerly leased to Costco. The gain on sale of real estate investments of $3.4 million for the year ended December 31, 2024 related to the aggregate gain on sale of two properties (one industrial property with a lease expiration at the end of 2024 and one office property).

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Other (Expense) Income

Other expense was $15.3 million and $15.5 million for the years ended December 31, 2025 and 2024, respectively. The decrease was primarily due to $0.7 million of proceeds from the settlement of property-related insurance claims received during the year ended December 31, 2025 and an increase of $0.5 million in income from unconsolidated investment in a real estate property due to an increase in straight-line rent related to the execution of the lease extension. These decreases were partially offset by an increase of $0.7 million in interest expense during the year ended December 31, 2025 as compared to the prior year. The increase in interest expense was primarily due to the amortization of off-market interest rate derivatives of $3.9 million and a $0.7 million prepayment fee incurred upon repayment of the mortgage loan secured by the office property in Issaquah, Washington formerly leased to Costco that was sold during the year ended December 31, 2025. The increase was partially offset by the $2.5 million of losses on non-designated or ineffective interest rate derivative instruments for the year ended December 31, 2024 related to swap agreements that were terminated on December 31, 2024. No such losses were recorded during year ended December 31, 2025. The decrease was also due to a decrease in the weighted average fixed rate as set by the respective swap agreements in place from 4.53% during the year ended December 31, 2024 to 4.25% during the year ended December 31, 2025.

Critical Accounting Policies and Estimates

The policies and estimates discussed below reflect those that management believes are or will be critical in affecting the preparation of our consolidated financial statements. We consider these policies critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our consolidated financial statements. Management evaluates these estimates based upon information currently available and on various assumptions that it believes are reasonable on an ongoing basis. Additionally, other companies may have utilized different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. See “Note 2 – Summary of Significant Accounting Policies” to our consolidated financial statements of this report on Form 10-K for additional discussion of our significant accounting policies.

Real Estate Investments

Real Estate Acquisition Valuation

In connection with our acquisition of properties, we allocate the purchase price, including transaction costs, to the tangible and intangible assets and liabilities acquired based on their respective estimated fair values. Tangible assets consist of land, buildings, fixtures and tenant improvements. Intangible assets consist of above- and below- market lease values and the value of in-place leases. Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require us to make significant assumptions to estimate market lease rates, market land and building values, discount and capitalization rates, and future cash flows. The use of different assumptions could impact the timing of recognition of related revenues and expenses.

Impairment of Investment in Real Estate Properties

We monitor events and changes in circumstances that could indicate that the carrying amounts of real estate properties may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, our ability to re-lease properties that are vacant, reclassification of properties to held for sale, and tenants in bankruptcy. Identification of such events may involve certain assumptions, estimates, and significant judgment. When indicators of potential impairment are present that indicate that the carrying amounts of real estate and related intangible assets may not be recoverable, management assesses whether the carrying value of the real estate properties will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. The undiscounted operating cash flows are based on estimated market lease rates, property-operating expenses, carrying costs during lease-up periods, estimated hold periods, discount rates, and capitalization rates. If, based on the analysis, we do not believe that we will be able to recover the carrying value of the real estate properties, we will record an impairment charge to the extent the carrying value exceeds the estimated fair value of the real estate properties. The use of different assumptions could have a material impact on our results of operations.

Recent Accounting Pronouncements

See Note 2 to our accompanying audited consolidated financial statements included in this Annual Report on Form 10-K for any recent accounting pronouncements.

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Commitments and Contingencies

We may be subject to certain commitments and contingencies with regard to certain transactions (see Note 10 to our accompanying audited consolidated financial statements included in this Annual Report on Form 10-K for discussion of commitments and contingencies).