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What changed in MODIV INDUSTRIAL, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MODIV INDUSTRIAL, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+319 added−373 removedSource: 10-K (2025-03-04) vs 10-K (2024-03-07)

Top changes in MODIV INDUSTRIAL, INC.'s 2024 10-K

319 paragraphs added · 373 removed · 208 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

104 edited+35 added−93 removed190 unchanged
Biggest changeHowever, investments in real estate are illiquid, and it may not be possible to dispose of assets in a timely manner or on favorable terms, which could adversely affect our financial condition, operating results and cash flows. • Disruptions in the financial markets and uncertain economic conditions could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing at interest rates acceptable to us or at all, to service future debt obligations, or to pay distributions to our stockholders. • Our real estate properties and related intangible assets may be subject to impairment charges. • Downturns relating to certain geographic regions, industries or business sectors may have a more significant adverse impact on our assets and our ability to pay distributions than if we had a more diversified investment portfolio. • We are subject to risks related to tenant concentration, and an adverse development with respect to a large tenant could materially and adversely affect us. • We may change our targeted investments or investment strategy. • We have incurred losses in the past and we may experience additional losses in the future. • Our charter and bylaws contain provisions that may delay, defer or prevent an acquisition of our common stock or a change in control. • We are subject to risks relating to litigation and regulatory liability. • Inflation and rising interest rates may adversely affect our financial condition and results of operations or result in a decrease in the value of our Class C Common Stock. • Our current properties depend upon a single-tenant for their rental income, and our financial condition and ability to make distributions may be adversely affected by the bankruptcy or insolvency of a tenant, a downturn in the business of a tenant or a tenant’s lease termination in bankruptcy, or otherwise. • We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations. • Increases in mortgage rates or changes in underwriting standards may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash available for distribution to our stockholders. • We may be subject to adverse legislative or regulatory tax changes. 4 Tabl e of Contents PART I ITEM 1.
Biggest changeHowever, investments in real estate are illiquid, and it may not be possible to dispose of assets in a timely manner or on favorable terms or at all, which could adversely affect our financial condition, operating results and cash flows. • Disruptions in the financial markets and uncertain economic conditions could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing at interest rates acceptable to us or at all, to service future debt obligations, or to pay distributions to our stockholders. • Our real estate properties and related intangible assets may be subject to impairment charges. • Downturns relating to certain geographic regions, industries or business sectors may have a more significant adverse impact on our assets and our ability to pay distributions than if we had a more diversified investment portfolio. • We are subject to risks related to tenant concentration, and an adverse development with respect to a large tenant could materially and adversely affect us. • We may change our targeted investments or investment strategy. • We have incurred losses in the past and we may experience additional losses in the future. • Our charter and bylaws contain provisions that may delay, defer or prevent an acquisition of our common stock or a change in control. • Certain provisions in the Partnership Agreement of our Operating Partnership may delay, make more difficult, or prevent unsolicited acquisitions of us. • We are subject to risks from natural disasters, such as hurricanes, tornados and flooding, and changes in weather patterns. • We are subject to risks relating to litigation and regulatory liability. • Inflation and rising interest rates may adversely affect our financial condition and results of operations or result in a decrease in the market price of our Class C Common Stock. • Each of our current properties depends upon a single-tenant for its rental income, and our financial condition and ability to make distributions may be adversely affected by the bankruptcy or insolvency of a tenant, a downturn in the business of a tenant or a tenant’s lease termination in bankruptcy, or otherwise. • We have a substantial amount of indebtedness outstanding, which may expose us to the risk of default under our debt obligations. • Increases in mortgage rates or changes in underwriting standards may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash available for distribution to our stockholders. • We may be subject to adverse legislative or regulatory tax changes. 4 Table of Contents PART I ITEM 1A.
If market interest rates rise, prospective purchasers of shares of our Class C Common Stock may expect a higher distribution rate. Higher interest rates would not, however, result in more funds being available for distribution and, in fact, would likely increase our borrowing costs and might decrease our funds available for distribution.
If market interest rates rise, prospective purchasers of shares of our Class C Common Stock may expect a higher distribution rate. Higher interest rates would not, however, result in more funds being available for distribution and, in fact, would likely increase our borrowing costs and might decrease our funds available for distribution.
Our ownership of and relationship with our TRSs will be limited and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax. We may own one or more TRSs. A TRS may earn income that would not be qualifying income if earned directly by the parent REIT.
Our ownership of and relationship with our TRSs will be limited and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax. We may own one or more TRSs. A TRS may earn income that would not be qualifying income if earned directly by the REIT.
The U.S. federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale to tenants in the ordinary course of business is treated as income from a “prohibited transaction” that is subject to a 100% excise tax.
The U.S. federal income tax provisions applicable to REITs provide that any gain realized by a REIT on the sale of property held as inventory or other property held primarily for sale in the ordinary course of business is treated as income from a “prohibited transaction” subject to a 100% excise tax.
If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on a property, we run the risk of being unable to refinance part or all of the debt when it becomes due or of being unable to refinance on favorable terms.
If debt is unavailable at reasonable interest rates, we may not be able to finance the purchase of properties. If we place mortgage debt on a property, we run the risk of being unable to refinance part or all of the debt when it becomes due or of being unable to refinance on favorable terms.
For example, the COVID-19 pandemic has resulted in significant disruptions in financial markets, supply chains, sustained elevated inflation and interest rate levels, uncertainty about how the economy will perform and the extent to which employees working from home will return to the office.
For example, the COVID-19 pandemic resulted in significant disruptions in financial markets, supply chains, sustained elevated inflation and interest rate levels, uncertainty about how the economy will perform and the extent to which employees working from home will return to the office.
Moreover, even security measures that are deemed appropriate, reasonable, and/or in accordance with applicable legal requirements may not be able to protect the information we maintain. 12 Tabl e of Contents A cybersecurity incident or other significant disruption involving IT networks and related systems we use could: • disrupt the proper functioning of our networks and systems and therefore our operations; • result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines to the regulators; • result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; • result in the unauthorized access to, or destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us, or which could expose us to damage claims by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes; • require significant management attention and resources to remedy any damages that result or improve our security; • subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; • result in litigation or increased regulatory oversight, including governmental investigations, enforcement actions, regulatory fines, and/or criminal prosecution; and/or • damage our reputation among investors.
Moreover, even security measures that are deemed appropriate, reasonable, and/or in accordance with applicable legal requirements may not be able to protect the information we maintain. 7 Table of Contents A cybersecurity incident or other significant disruption involving IT networks and related systems we use could: • disrupt the proper functioning of our networks and systems and therefore our operations; • result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines to the regulators; • result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT; • result in the unauthorized access to, or destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could use to compete against us, or which could expose us to damage claims by third-parties for disruptive, destructive or otherwise harmful purposes and outcomes; • require significant management attention and resources to remedy any damages that result or improve our security; • subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; • result in litigation or increased regulatory oversight, including governmental investigations, enforcement actions, regulatory fines, and/or criminal prosecution; and/or • damage our reputation among investors.
The U.S. Federal Reserve has significantly raised interest rates to combat inflation and restore price stability. To the extent our exposure to increases in interest rates is not eliminated through interest rate swaps or other protection agreements, such increases may result in higher debt service costs, which will adversely affect our cash flows.
Federal Reserve has significantly raised interest rates to combat inflation and restore price stability. To the extent our exposure to increases in interest rates is not eliminated through interest rate swaps or other protection agreements, such increases may result in higher debt service costs, which will adversely affect our cash flows.
However, our inability to renew or re-lease space in 2025 and beyond could adversely impact our financial condition, results of operations, cash flow and our ability to pay distributions to our stockholders. Actions of our potential future tenants-in-common could reduce the returns on tenants-in-common investments and decrease our stockholders’ overall return.
Our inability to renew or re-lease space in 2025, 2026 and beyond could adversely impact our financial condition, results of operations, cash flow and our ability to pay distributions to our stockholders. Actions of our potential future tenants-in-common could reduce the returns on tenants-in-common investments and decrease our stockholders’ overall return.
Our operating results and the performance of the properties we acquire are subject to the risks typically associated with real estate, any of which could decrease the value of our investments and could weaken our operating results, including: • downturns in national, regional and local economic conditions; • competition from other commercial developments; • adverse local conditions, such as oversupply or reduction in demand for commercial buildings and changes in real estate zoning laws that may reduce the desirability of real estate in an area; • vacancies, changes in market rental rates and the need to periodically repair, renovate and re-let space; • changes in interest rates and the availability of permanent mortgage financing, which may render the sale of a property or loan difficult or unattractive; • changes in tax (including real and personal property tax), real estate, environmental and zoning laws; • material failures, inadequacy, interruptions or security failures of the technology on which our operations rely; • natural disasters such as hurricanes, earthquakes and floods; • acts of war or terrorism, including the consequences of terrorist attacks or the ongoing war between Russia and Ukraine and the economic sanctions and other restrictive actions taken against Russia by the U.S. and other countries in response thereto; • a pandemic or other public health crisis (such as the COVID-19 virus outbreak); • the potential for uninsured or underinsured property losses; and • periods of high inflation, high interest rates and tight money supply.
Our operating results and the performance of the properties we acquire are subject to the risks typically associated with real estate, any of which could decrease the value of our investments and could weaken our operating results, including: • downturns in national, regional and local economic conditions; • competition from other commercial developments; • adverse local conditions, such as oversupply or reduction in demand for commercial buildings and changes in real estate zoning laws that may reduce the desirability of real estate in an area; • vacancies, changes in market rental rates and the need to periodically repair, renovate and re-let space; • changes in interest rates and the availability of permanent mortgage financing, which may render the sale of a property or loan difficult or unattractive; • changes in tax (including real and personal property tax), real estate, environmental and zoning laws; • potential tariffs and trade wars; • material failures, inadequacy, interruptions or security failures of the technology on which our operations rely; • natural disasters such as hurricanes, earthquakes and floods; • acts of war or terrorism, including the consequences of terrorist attacks or the ongoing war between Russia and Ukraine and the economic sanctions and other restrictive actions taken against Russia by the U.S. and other countries in response thereto; • a pandemic or other public health crisis; • the potential for uninsured or underinsured property losses; and • periods of high inflation, high interest rates and tight money supply.
A change in our targeted investments or investment guidelines may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the value of our Class C Common Stock and our ability to make distributions to our stockholders.
A change in our targeted investments or investment guidelines may increase our exposure to interest rate risk, default risk and real estate market fluctuations, all of which could adversely affect the market price of our Class C Common Stock and our ability to make distributions to our stockholders.
A default by a tenant, the failure of a guarantor to fulfill its obligations or other premature termination of a lease, or a tenant’s election not to extend a lease upon its expiration, and other limitations, could have an adverse effect on our financial condition and our ability to pay distributions.
A default by a tenant, the failure of a guarantor to fulfill its obligations or other premature termination of a lease, or a tenant’s election not to extend a lease upon its expiration, and other limitations, could have an adverse effect on our financial condition, results of operations and our ability to pay distributions.
Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. A domestic TRS will pay federal, state and local income tax at regular corporate rates on any income that it earns.
Overall, no more than 20% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. A domestic TRS will pay U.S. federal, state and local income tax at regular corporate rates on any income that it earns.
Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks: • our co-owner in an investment could become insolvent or bankrupt; • our co-owner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals; 19 Tabl e of Contents • our co-owner may be in a position to block or take action contrary to our instructions or requests or contrary to our policies or objectives; or • disputes between us and our co-owner may result in litigation, arbitration, buyout or partition that would increase our expenses and prevent our officers and directors from focusing their time and effort on our operations.
Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks: • our co-owner in an investment could become insolvent or bankrupt; • our co-owner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals; • our co-owner may be in a position to block or take action contrary to our instructions or requests or contrary to our policies or objectives; or • disputes between us and our co-owner may result in litigation, arbitration, buyout or partition that would increase our expenses and prevent our officers and directors from focusing their time and effort on our operations.
Increases in mortgage rates or changes in underwriting standards may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash available for distribution to our stockholders.
Increases in interest rates or changes in underwriting standards may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash available for distribution to our stockholders.
Except as otherwise required by federal securities laws, we undertake no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, whether as a result of new information, future events or otherwise. 3 Tabl e of Contents RISK FACTOR SUMMARY Our business, financial condition and results of operations are subject to numerous risks and uncertainties.
Except as otherwise required by federal securities laws, we undertake no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, whether as a result of new information, future events or otherwise. 3 Table of Contents RISK FACTOR SUMMARY Our business, financial condition and results of operations are subject to numerous risks and uncertainties.
In addition, the violence and unrest in the Middle East, the ongoing war between Russia and Ukraine, and the economic sanctions and other restrictive actions taken against Russia by the U.S. and other countries in response thereto has further disrupted global financial markets and affected macroeconomic conditions.
In addition, the violence and unrest in the Middle East, the ongoing war between Russia and Ukraine, and the economic sanctions and other restrictive actions taken against Russia, China and Iran by the U.S. and other countries in response thereto has further disrupted global financial markets and affected macroeconomic conditions.
To the extent that our portfolio is concentrated in limited geographic regions, industries or business sectors, downturns relating generally to such region, industry or business sector may result in defaults on a number of our investments within a short time period, which may reduce our net income and the value of our Class C Common Stock and accordingly limit our ability to pay distributions to our stockholders.
To the extent that our portfolio is concentrated in limited geographic regions, industries or business sectors, downturns relating generally to such region, industry or business sector may result in defaults on a number of our investments within a short time period, which may reduce our net income and the market price of our Class C Common Stock and accordingly limit our ability to pay distributions to our stockholders.
As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property. Either of these outcomes could adversely affect our cash flow and the amount available for distributions to stockholders. Net leases may not result in fair market lease rates over time.
As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property. Either of these outcomes could adversely affect our cash flow and the amount available for distributions to stockholders. 17 Table of Contents Net leases may not result in fair market lease rates over time.
The trading price for our Class C Common Stock may be influenced by many factors, including: • general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate-related companies including the potential impact of inflation; • low trading volume in our Class C Common Stock, which makes it difficult to attract institutional investors; • our financial condition and performance; • our ability to grow through property acquisitions or real estate-related investments, the terms and pace of any acquisitions we may make and the availability and terms of financing for those acquisitions; • the financial condition of our tenants, including tenant bankruptcies or defaults; • actual or anticipated quarterly fluctuations in our operating results and financial condition; • the amount and frequency of our payment of dividends and other distributions; • additional sales of equity securities, including Series A Preferred Stock, Class C Common Stock or any other equity interests, or the perception that additional sales may occur; • the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, and fixed income debt securities; • uncertainty and volatility in the equity and credit markets; • fluctuations in interest rates and exchange rates; • changes in revenue or earnings estimates, if any, or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs; • failure to meet analysts’ revenue or earnings estimates; • strategic actions by us or our competitors, such as acquisitions or restructurings; • the extent of investment in our Class C Common Stock by institutional investors; • the extent of short-selling of our Class C Common Stock; • failure to maintain our REIT status; • changes in tax laws; • additions and departures of key personnel; • domestic and international economic factors unrelated to our performance including uncertainty and volatility resulting from global pandemics such as COVID-19, the violence and unrest in the Middle East, the ongoing war between Russia and Ukraine, and the economic sanctions and other restrictive actions taken against Russia by the U.S. and other countries in response thereto, all of which have added to continuing concerns about supply chain disruptions, inflation and increased interest rates in the markets in which we operate; and • the occurrence of any of the other risk factors presented in this Annual Report on Form 10-K, including in this “Part I, Item 1A .
The trading price for our Class C Common Stock may be influenced by many factors, including: • general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate-related companies including the potential impact of inflation; • low trading volume in our Class C Common Stock, which makes it difficult to attract institutional investors; • our operating results and financial condition, including actual or anticipated quarterly fluctuations therein; • our ability to grow through property acquisitions or real estate-related investments, the terms and pace of any acquisitions we may make and the availability and terms of financing for those acquisitions; • the financial condition of our tenants, including tenant bankruptcies or defaults; • the amount and frequency of our payment of dividends and other distributions; • additional sales of equity securities, including Series A Preferred Stock, Class C Common Stock or any other equity interests, or the perception that additional sales may occur; • the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, and fixed income debt securities; • uncertainty and volatility in the equity and credit markets; • fluctuations in interest rates and exchange rates; • changes in revenue or earnings estimates, if any, or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs; • failure to meet analysts’ revenue or earnings estimates; • strategic actions by us or our competitors, such as acquisitions or restructurings; • the extent of investment in our Class C Common Stock by institutional investors; • the extent of short-selling of our Class C Common Stock; • failure to maintain our REIT status; • changes in tax laws; • additions and departures of key personnel; • potential tariffs which could impact our manufacturing tenants; • domestic and international economic factors unrelated to our performance including uncertainty and volatility resulting from public health crises, the violence and unrest in the Middle East, the ongoing war between Russia and Ukraine, the economic sanctions and other restrictive actions taken against Russia, China and Iran by the U.S. and other countries in response thereto, all of which have added to continuing concerns about supply chain disruptions, inflation and increased interest rates in the markets in which we operate; and • the occurrence of any of the other risk factors presented in this Annual Report on Form 10-K, including in this “Part I, Item 1A .
In particular, prepayment provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control even though that disposition or change in control might be in our stockholders' best interests.
In particular, prepayment provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control even though that disposition or change in control might be in our stockholders' best interests. U.S.
Therefore, as a result of the foregoing events or circumstances, we may not be able to achieve our targeted industrial composition of our portfolio promptly, on favorable terms or at all in response to changing economic, financial and investment conditions, which may adversely affect our cash flows and our ability to make distributions to stockholders. 13 Tabl e of Contents Disruptions in the financial markets and uncertain economic conditions could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing at interest rates acceptable to us or at all, to service future debt obligations, or to pay distributions to our stockholders.
Therefore, as a result of the foregoing events or circumstances, we may not be able to achieve our targeted industrial composition of our portfolio promptly, on favorable terms or at all in response to changing economic, financial and investment conditions, which may adversely affect our cash flows and our ability to make distributions to stockholders. 8 Table of Contents Disruptions in the financial markets and uncertain economic conditions could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing at interest rates acceptable to us or at all, to service future debt obligations, or to pay distributions to our stockholders.
We would characterize such a sale-leaseback transaction as a “true lease,” which treats the lessor as the owner of the property for U.S. federal income tax purposes.
We generally characterize such a sale-leaseback transaction as a “true lease,” which treats the lessor as the owner of the property for U.S. federal income tax purposes.
The failure of a counterparty that holds collateral that we post in connection with an interest rate swap agreement could result in the loss of that collateral. Variable rate indebtedness would subject us to interest rate risk, and could cause our debt service obligations to increase significantly.
The failure of a counterparty that holds collateral that we post in connection with an interest rate swap agreement could result in the loss of that collateral. 19 Table of Contents Variable rate indebtedness would subject us to interest rate risk, and could cause our debt service obligations to increase significantly.
Aaron Halfacre, Ray Pacini, Bill Broms and John Raney, our Chief Executive Officer, Chief Financial Officer, Chief Investment Officer and Chief Operating Officer and General Counsel, respectively, each of whom would be difficult to replace. Neither we nor our affiliates have employment agreements with these individuals.
Aaron Halfacre, Ray Pacini and John Raney, our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer and General Counsel, respectively, each of whom would be difficult to replace. Neither we nor our affiliates have employment agreements with these individuals.
If any of our properties are foreclosed upon due to a default, our ability to pay cash distributions to our stockholders may be adversely affected. Covenants in the Credit Facility and our mortgages may restrict our operating activities and adversely affect our financial condition.
If any of our properties are foreclosed upon due to a default, our ability to pay cash distributions to our stockholders may be adversely affected. 18 Table of Contents Covenants in the Credit Facility and our mortgages may restrict our operating activities and adversely affect our financial condition.
Further, some of our assets may be outfitted to suit the particular needs of the tenants. We may have difficulty replacing the tenants of these properties if the outfitted space limits the types of businesses that could lease that space without major renovation.
Further, some of 14 Table of Contents our assets may be outfitted to suit the particular needs of the tenants. We may have difficulty replacing the tenants of these properties if the outfitted space limits the types of businesses that could lease that space without major renovation.
Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we may not obtain independent appraisals.
Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair market values of our 20 Table of Contents assets, some of which are not susceptible to a precise determination, and for which we may not obtain independent appraisals.
Volatility in global markets and changing political environments can cause fluctuations in the performance of the U.S. commercial real estate markets. Economic slowdowns of large economies outside the United States are likely to negatively impact growth of the U.S. economy. Political uncertainties both home and abroad may discourage business investment in real estate and other capital spending.
Volatility in global markets and changing political environments can cause fluctuations in the performance of the U.S. commercial real estate markets. Economic slowdowns of large economies outside the United States could negatively impact growth of the U.S. economy. Political uncertainties both home and abroad may discourage business investment in real estate and other capital spending.
This could subject us to more recourse indebtedness and the risk that debt service on less efficient forms of financing would require a larger portion of our cash 23 Tabl e of Contents flow, thereby reducing cash available for distribution to our stockholders and funds available for operations as well as for future business opportunities.
This could subject us to more recourse indebtedness and the risk that debt service on less efficient forms of financing would require a larger portion of our cash flow, thereby reducing cash available for distribution to our stockholders and funds available for operations as well as for future business opportunities.
Such a bankruptcy filing would bar all efforts by us to collect pre-bankruptcy debts from these entities or their properties, including any work performed by contactors that could result in mechanics liens on our property, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be 21 Tabl e of Contents paid currently.
Such a bankruptcy filing would bar all efforts by us to collect pre-bankruptcy debts from these entities or their properties, including any work performed by contactors that could result in mechanics liens on our property, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be paid currently.
Risk Factors” section. 10 Tabl e of Contents Our Class C Common Stock is subordinate to our Series A Preferred Stock and our existing and future debt, and our common stockholders' interests could be diluted by the issuance of additional preferred stock, future offerings of debt securities, which could be senior to our common stock, or equity securities, and by other transactions.
Risk Factors” section. Our Class C Common Stock is subordinate to our Series A Preferred Stock and our existing and future debt, and our common stockholders' interests could be diluted by the issuance of additional preferred stock, future offerings of debt securities, which could be senior to our common stock, or equity securities, and by other transactions.
We may finance properties which have debt with prepayment penalties, which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
We may finance properties with debt that has prepayment penalties, which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
As discussed above, if we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of our TRSs or the sale met certain “safe harbor” requirements under the Internal Revenue Code.
As discussed above, if we sell an asset, other than foreclosure property (described below), that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of our TRSs or the sale met certain “safe harbor” requirements under the Internal Revenue Code of 1986, as amended (the “Code”). 4.
We are targeting leverage, over the long-term once we achieve scale, of 40% or lower of the aggregate fair value of our real estate properties plus our cash and cash equivalents; however, we increased our borrowing during 2023 in order to execute attractive acquisition opportunities, resulting in leverage of 48% as of December 31, 2023.
We are targeting leverage, over the long-term once we achieve scale, of 40% or lower of the aggregate fair value of our real estate properties plus our cash and cash equivalents; however, we increased our borrowing during 2024 in order to execute attractive acquisition opportunities, resulting in leverage of 47.6% as of December 31, 2024.
If we elect to treat property that we acquire in connection with certain leasehold terminations as “foreclosure property,” we may avoid the 100% tax on the gain from a resale of that property, but the income from the sale or operation of that property may be subject to corporate income tax at the highest applicable rate. 4.
If we elect to treat property that we acquire in connection with foreclosures or certain leasehold terminations as “foreclosure property,” we may avoid the 100% prohibited transaction tax on the gain from a resale of that property, but the income from the sale or operation of that property may be subject to corporate income tax at the highest applicable rate. 5.
This summary does not address all of the risks that we face and should be read in conjunction with the full risk factors contained below in this “Risk Factors” section in this Annual Report on Form 10-K. • Our listing on the NYSE does not guarantee an active and liquid market for our Class C Common Stock, and the market price and trading volume of the shares of our Class C Common Stock may fluctuate significantly. • Our Class C Common Stock is subordinate to our Series A Preferred Stock and our existing and future debt, and our common stockholders' interests could be diluted by the issuance of additional preferred stock, future offerings of debt securities, which could be senior to our common stock, or equity securities, and by other transactions. • We are focused on future acquisitions of industrial manufacturing properties and have reduced the number of non-core properties in our portfolio, and therefore the prior performance of our real estate investments may not be comparable to our ongoing results. • We face risks associated with cybersecurity incidents through cyber-attacks, cyber intrusions or otherwise, as well as failures of systems on which we rely and other significant disruptions of our information technology networks and related systems. • We face significant competition for real estate investment opportunities, which may limit our ability to acquire suitable investments and achieve our investment objectives or pay distributions. • We plan to sell our remaining non-core properties as we seek to pursue growth through our investment strategy.
Risk Factors section in this Annual Report on Form 10-K. • Our listing on the NYSE does not guarantee an active and liquid market for our Class C Common Stock, and the market price and trading volume of the shares of our Class C Common Stock may fluctuate significantly. • Our Class C Common Stock is subordinate to our Series A Preferred Stock and our existing and future debt, and our common stockholders' interests could be diluted by the issuance of additional preferred stock, future offerings of debt securities, which could be senior to our common stock, or equity securities, and by other transactions. • We are focused on future acquisitions of industrial manufacturing properties and have reduced the number of non-core properties in our portfolio, and therefore the prior performance of our real estate investments may not be comparable to our ongoing results. • We face risks associated with cybersecurity incidents through cyber-attacks, cyber intrusions or otherwise, as well as failures of systems on which we rely and other significant disruptions of our information technology networks and related systems. • We face significant competition for real estate investment opportunities, which may limit our ability to acquire suitable investments and achieve our investment objectives or pay distributions. • We are gradually reducing our remaining non-core properties as we seek to pursue growth through our investment strategy.
For example, 76% of our ABR as of December 31, 2023, is concentrated in industrial property assets and we expect that percentage to continue to increase as we target acquisitions of additional industrial property assets and dispose of our remaining legacy retail and office assets.
For example, 78% of our ABR as of December 31, 2024, is concentrated in industrial property assets and we expect that percentage to continue to increase as we target acquisitions of additional industrial property assets and dispose of our remaining legacy retail and office assets.
Further, our Credit Facility allows for borrowings up to 60% of our borrowing base; however, we are targeting leverage of 40% over the long-term and do not currently plan to allow our leverage ratio to exceed 55% in order to minimize the interest rate payable on the Revolver and Term Loan.
Further, our Credit Facility allows for borrowings up to 60% of our borrowing base; however, we are targeting leverage of 40% over the long term and do not currently plan to allow our leverage ratio to exceed 50% in order to minimize the interest rate payable on the Revolver and Term Loan (each as defined below).
If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. 22 Tabl e of Contents Our use of indebtedness could have important consequences to us.
If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. Our use of indebtedness could have important consequences to us.
Inflation and rising interest rates may adversely affect our financial condition and results of operations or result in a decrease in the value of our Class C Common Stock. Rising inflation may have an adverse impact on our Credit Facility and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue.
Inflation and rising interest rates may adversely affect our financial condition and results of operations or result in a decrease in the market price of our Class C Common Stock. Rising inflation may have an adverse impact on our general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue. The U.S.
As of February 29, 2024, amounts outstanding under the Credit Facility, as adjusted by swap agreements, bear interest at fixed rates. However, in the future, we may incur additional indebtedness that bears interest at variable rates or be unable to enter into new swap agreements to fix interest rates.
As of February 28, 2025, amounts outstanding under the Credit Facility, as adjusted by swap agreements, bear interest at fixed rates through December 31, 2025. However, in the future, we may incur additional indebtedness that bears interest at variable rates or be unable to enter into new swap agreements to fix interest rates.
If such events occur, our stockholders may experience a lower return on their investment. We plan to sell our remaining non-core properties as we seek to pursue growth through our investment strategy.
If such events occur, our stockholders may experience a lower return on their investment. We are gradually reducing our remaining non-core properties as we seek to pursue growth through our investment strategy.
In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total assets can be represented by securities of one or more TRSs.
In addition, no more than 5% of the value of our assets (other than government securities and securities issued by REITs) can consist of the securities of any one issuer, and no more than 20% of the value of our total assets can be represented by securities of one or more TRSs.
Our portfolio has two tenants that in the aggregate contribute approximately 23% of our ABR as of December 31, 2023, with Lindsay (which is comprised of nine properties in six states) representing 13% of our ABR and Trophy of Carson representing 10% of our ABR.
Our portfolio has two tenants that in the aggregate contribute approximately 23% of our ABR as of December 31, 2024, with Lindsay (which is comprised of nine properties in six states) representing approximately 13% of our ABR and the KIA retail property in Carson, California representing approximately 10% of our ABR.
Our Credit Facility includes, and our future debt may include, restrictions on our ability to pay dividends to common stockholders, including holders of Class C Common Stock. As of December 31, 2023, there were 2,000,000 shares of Series A Preferred Stock issued and outstanding.
Our Credit Facility includes, and our future debt may include, restrictions on our ability to pay dividends to common 5 Table of Contents stockholders, including holders of Class C Common Stock. As of December 31, 2024, there were 2.0 million shares of Series A Preferred Stock issued and outstanding.
While we intend that any co-ownership investment that we enter into will be subject to a co-ownership contractual arrangement that will address some or all of the above issues, any of the above might still subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of stockholders' investment in us.
While we intend that any co-ownership investment that we enter into will be subject to a co-ownership contractual arrangement that will address some or all of the above issues, any of the above might still subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the market price of our Class C Common Stock.
Any of the above factors, or a combination thereof, could result in a decrease in our cash flow from operations and a decrease in the value of our investments, which would have an adverse effect on our operations, on our ability to pay distributions to stockholders and on the value of stockholders’ investment.
Any of the above factors, or a combination thereof, could result in a decrease in our cash flow from operations and a decrease in the value of our investments, which would have an adverse effect on our operations, on our ability to pay distributions to stockholders and on the market price of our Class C Common Stock.
As of December 31, 2023, three of our 44 properties, including the TIC Interest, were encumbered with mortgages, representing $43,930,664, or 15% of our total debt. Incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions.
As of December 31, 2024, three of our 43 properties, including the TIC Interest, were encumbered with mortgages. Incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions.
As of December 31, 2023, we owned 44 properties, including one tenant-in-common real estate investment (an approximate 72.7% interest in a 91,740 square foot industrial property located in Santa Clara, California).
As of December 31, 2024, we owned 43 properties, including one property held for sale and a tenant-in-common real estate investment (an approximate 72.7% interest in a 91,740 square foot industrial property located in Santa Clara, California).
If we do not have other funds available in these situations we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirements and to avoid corporate income tax and the 4% excise tax in a particular year.
If we do not have other funds available, we may be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to satisfy the REIT distribution requirements and to avoid corporate income tax and the 4% excise tax in a particular year.
These holders of the Class C OP Units may request the redemption of all or a portion of these units for shares of Class C Common Stock or, at our option as the general partner of the Operating Partnership, for cash (the “Class C OP Unit Redemption”).
These holders of the Class C OP Units that have been outstanding for at least one year may require the redemption of all or a portion of these units for shares of Class C Common Stock or, at our option as the general partner of the Operating Partnership, for cash (the “Class C OP Unit Redemption”).
Our failure to meet the market’s expectations with regard to future cash distributions likely would adversely affect the market price of our Class C Common Stock. 11 Tabl e of Contents Increases in market interest rates may result in a decrease in the value of our Class C Common Stock.
Our failure to meet the market’s expectations with regard to future cash distributions could adversely affect the market price of our Class C Common Stock. 6 Table of Contents Increases in market interest rates may result in a decrease in the market price of our Class C Common Stock.
We may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution.
In order to qualify as a REIT and avoid such taxes, we may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution.
Currently, the maximum tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates is 20%.
Currently, the maximum U.S. federal income tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates is 20% plus a 3.8% “Medicare tax”.
When making an acquisition, we will analyze the performance and risk characteristics of that investment, how that investment will fit with our portfolio-level performance objectives, the other assets in our portfolio and how the returns and risks of that investment compare to the returns and risks of available investment alternatives. Thus, our portfolio composition may vary from our initial expectations.
When making an acquisition, we will 10 Table of Contents analyze the performance and risk characteristics of that investment, how that investment will fit with our portfolio-level performance objectives, the other assets in our portfolio and how the returns and risks of that investment compare to the returns and risks of available investment alternatives.
As a result, our board of directors may establish a class or series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our shares of Class C Common Stock or otherwise be in the best interests of our stockholders.
As a result, our board of directors may establish a class or series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our shares of Class C Common Stock or otherwise be in the best interests of our stockholders. 11 Table of Contents Our rights and the rights of our stockholders to take action against our directors and officers are limited.
In the event that any sale-leaseback transaction is challenged by the IRS and re-characterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed.
In the event that any sale-leaseback transaction is challenged by the IRS and re-characterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed. As a result, the amount of our REIT taxable income may increase, resulting in additional taxes and/or required distributions.
Our payment of income tax would decrease the amount of our income available for distribution to our stockholders. Furthermore, if we fail to maintain our qualification as a REIT, we no longer would be required to distribute substantially all of our REIT taxable income to our stockholders.
Furthermore, if we fail to maintain our qualification as a REIT, we no longer would be required to distribute substantially all of our REIT taxable income to our stockholders.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws. We intend to make distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws.
Even if we qualify as a REIT for U.S. federal income tax purposes, we may nonetheless be subject to tax in certain circumstances that reduce our cash flow and our ability to make distributions to our stockholders.
Even if we qualify as a REIT, we may nonetheless be subject to tax in certain circumstances that reduce our cash flow and our ability to make distributions to our stockholders. Even if we qualify as a REIT, we may be subject to some federal, state and local taxes. For example: 1.
However, we will 15 Tabl e of Contents attempt to continue to construct a portfolio that produces stable and attractive returns by spreading risk across different real estate investments. We have incurred losses in the past and we may experience additional losses in the future .
Thus, our portfolio composition may vary from our initial expectations. However, we will attempt to continue to construct a portfolio that produces stable and attractive returns by spreading risk across different real estate investments. We have incurred losses in the past and we may experience additional losses in the future .
This would also likely result in our losing REIT status, and, if so, becoming subject to a corporate level tax on our own income. This would substantially reduce any cash available to pay distributions.
In such event, this would reduce the amount of distributions that the Operating Partnership could make to us. This would also likely result in our losing REIT status, and, if so, becoming subject to a corporate level tax on our own income. This would substantially reduce any cash available to pay distributions.
The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
The remainder of our investment in securities (other than government securities and securities issued by REITs) generally cannot constitute more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
Our ability to dispose of a property during the first few years following its acquisition is restricted to a substantial extent as a result of these rules. Whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property.
Our ability to dispose of a property during the first few years following its acquisition is restricted to a substantial extent as a result of these rules. Whether a sale is a “prohibited transaction” depends on the particular facts and circumstances surrounding each property and its sale.
Complying with REIT requirements may limit our ability to hedge effectively. The REIT provisions of the Internal Revenue Code may limit our ability to hedge our assets and operations.
The REIT provisions of the Code may limit our ability to hedge our assets and operations.
Accordingly, we may not generate cash flows sufficient to pay distributions to stockholders or meet our debt service obligations. Risks Related to Our Corporate Structure Our charter and bylaws contain provisions that may delay, defer or prevent an acquisition of our Class C Common Stock or a change in control.
Risks Related to Our Corporate Structure Our charter and bylaws contain provisions that may delay, defer or prevent an acquisition of our Class C Common Stock or a change in control.
Significant litigation costs could impact our ability to comply with certain financial covenants under our Credit Agreement. We are generally obliged, to the extent permitted by law, to indemnify our current and former directors and officers who are named as defendants in these types of lawsuits.
We are generally obliged, to the extent permitted by law, to indemnify our current and former directors and officers who are named as defendants in these types of lawsuits.
Unless we were to qualify for certain statutory relief provisions, we would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost.
Unless we were to qualify for certain statutory relief provisions, we would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost. Certain of our business activities are potentially subject to the prohibited transaction tax, which could decrease the value of our stockholders’ investment in us.
Risks Related to Investments in Single-Tenant Real Estate Our current properties depend upon a single-tenant for their rental income, and our financial condition and ability to make distributions may be adversely affected by the bankruptcy or insolvency of a tenant, a downturn in the business of a tenant or a tenant’s lease termination in bankruptcy or otherwise.
As a result, prospective purchasers may decide to purchase other securities rather than our Class C Common Stock, which would reduce the demand for, and result in a decline in the market price of, our Class C Common Stock. 16 Table of Contents Risks Related to Investments in Single-Tenant Real Estate Our current properties depend upon a single-tenant for their rental income, and our financial condition and ability to make distributions may be adversely affected by the bankruptcy or insolvency of a tenant, a downturn in the business of a tenant or a tenant’s lease termination in bankruptcy or otherwise.
If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both, which would limit our ability to make distributions to our stockholders and could reduce the value of our stockholders’ investment in us. 16 Tabl e of Contents Our rights and the rights of our stockholders to take action against our directors and officers are limited.
These sources of funding may not be available on attractive terms, or at all. If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both, which would limit our ability to make distributions to our stockholders and could reduce the value of our stockholders’ investment in us.
In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.
In addition, certain tax laws may limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation.
We expect to operate in a manner that will allow us to continue to qualify as a REIT for U.S. federal income tax purposes. However, the U.S. federal income tax laws governing REITs are extremely complex, and interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited.
However, the U.S. federal income tax laws governing REITs are extremely complex, and interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited.
The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property or of paying personal injury or other damage claims could reduce our cash available for distribution to our stockholders.
Any material expenditures, fines, penalties or damages we must pay will reduce our ability to pay distributions to our stockholders and could seriously harm our operating results and financial condition. 15 Table of Contents The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property or of paying personal injury or other damage claims could reduce our cash available for distribution to our stockholders.
These provisions would affect our ability to turn our investments into cash and thus affect cash available for distributions to stockholders. 18 Tabl e of Contents Prepayment provisions may prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties.
Prepayment provisions may prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties.
If 26 Tabl e of Contents a sale-leaseback transaction were so re-characterized, we might fail to satisfy the REIT qualification “asset tests” or the “income tests” and, consequently, lose our REIT status.
In addition, if a sale-leaseback transaction were so re-characterized, we might fail to satisfy the “asset tests” or the “income tests” for REIT qualification and, consequently, lose our REIT status. Complying with REIT requirements may force us to liquidate otherwise attractive investments.
Characterization of any repurchase agreements we enter into to finance our investments as sales for tax purposes rather than as secured lending transactions would adversely affect our ability to qualify as a REIT. We may enter into repurchase agreements with a variety of counterparties to achieve our desired amount of leverage for the assets in which we invest.
We may be required to liquidate from our portfolio otherwise attractive investments in order to meet these REIT requirements. Characterization of any repurchase agreements we enter into to finance our investments as sales for tax purposes rather than as secured lending transactions would adversely affect our ability to qualify as a REIT.
Our business and/or operations and the businesses of our tenants could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic or other health crisis, such as the COVID-19 pandemic and the emergence of any future variants.
Pandemics or other health crises may adversely affect our business and/or operations, our tenants’ financial condition and the profitability of our properties. Our business and/or operations and the businesses of our tenants could be materially and adversely affected by the risks, or the public perception of the risks, related to a new pandemic or other health crisis.
We face legal risks in our businesses, including risks related to the securities laws and regulations across various state and federal jurisdictions. We may in the future become subject to claims and litigation alleging violations of the securities laws or other related claims, which could harm our business and require us to incur significant costs.
We may in the future become subject to claims and litigation alleging violations of the securities laws or other related claims, which could harm our business and require us to incur significant costs. Significant litigation costs could impact our ability to comply with certain financial covenants under our Credit Agreement.
If our Operating Partnership fails to maintain its status as a partnership, its income may be subject to taxation, which would reduce the cash available for distribution to stockholders and likely result in a loss of our REIT status . We intend to maintain the status of our Operating Partnership as a partnership for U.S. federal income tax purposes.
Each of our stockholders that is not a tax-exempt entity may have to use funds from other sources to pay such tax liability. 23 Table of Contents If our Operating Partnership fails to maintain its status as a partnership, its income may be subject to taxation, which would reduce the cash available for distribution to stockholders and likely result in a loss of our REIT status .

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeProcesses for Assessing, Identifying and Managing Material Risks from Cybersecurity Threats The principal objectives of our cybersecurity program (“Cybersecurity Program”) are to minimize the risks associated with cybersecurity threats to our business operations, financial performance and financial condition, and protect confidential information, our intellectual property and other assets, and those of our investors, tenants, vendors, partners and employees that may be at risk due to our cybersecurity threats.
Biggest changeIn addition, our cybersecurity program includes engagement of other Company management and employees and outside service providers to oversee or perform specific roles in connection with cybersecurity risk assessment and management, and incident management. 29 Table of Contents Processes for Assessing, Identifying and Managing Material Risks from Cybersecurity Threats The principal objectives of our cybersecurity program (“Cybersecurity Program”) are to minimize the risks associated with cybersecurity threats to our business operations, financial performance and financial condition, and protect confidential information, our intellectual property and other assets, and those of our investors, tenants, vendors, partners and employees that may be at risk due to our cybersecurity threats.
When cybersecurity incidents occur, our actions are guided by an incident response plan to (i) detect, contain and eradicate threats, (ii) notify the executive management and the Audit Committee Chairman as appropriate based on the severity level of the cybersecurity incident, (iii) recover compromised data and information systems, (iv) limit impacts of any such incident on our operations and (v) report any such incident as required by law or as otherwise appropriate.
When cybersecurity incidents occur, our actions are guided by an incident response plan to (i) detect, contain and eradicate threats, (ii) notify executive management and the Chairman of the audit committee as appropriate based on the severity level of the cybersecurity incident, (iii) recover compromised data and information systems, (iv) limit impacts of any such incident on our operations and (v) report any such incident as required by law or as otherwise appropriate.
Cybersecurity Risks As of December 31, 2023, we are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents that have materially affected the business strategy, results of operations or financial condition of the Company or are reasonably likely to have such a material effect.
Cybersecurity Risks We are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents that have materially affected the business strategy, results of operations or financial condition of the Company or are reasonably likely to have such a material effect.
The full board of directors also periodically reviews our cybersecurity risks with management and the actions we are taking to mitigate such risks. The CAO or their designee reports to the audit committee on a periodic basis on the status of our cybersecurity program.
The full board of directors also periodically reviews our cybersecurity risks with management and the actions we are taking to mitigate such risks. The Chief Accounting Officer (“CAO”) or their designee reports to the audit committee on a periodic basis on the status of our cybersecurity program.
Our information technology team is comprised of our Chief Accounting Officer (“CAO”) and other knowledgeable employees, and is responsible for management of our cybersecurity programs. Our information technology team consists of individuals with experience in assessing and addressing cybersecurity risk and is responsible for executing our cybersecurity programs as well as communicating regularly with senior management.
Our information technology team is comprised of our CAO and other knowledgeable employees, and is responsible for management of our cybersecurity programs. Our information technology team consists of individuals with experience in assessing and addressing cybersecurity risk and is responsible for executing our cybersecurity programs as well as communicating regularly with senior management.
However, any future potential risks from cybersecurity threats, including but not limited to exploitation of vulnerabilities, ransomware, unauthorized transactions, or other similar threats may materially affect us, including our execution of business strategy, reputation, results of operations and/or financial condition. See Item 1A, “Risk Factors - Risks Related to Our Business - Cybersecurity.” 29 Tabl e of Contents
However, any future potential risks from cybersecurity threats, including but not limited to exploitation of vulnerabilities, ransomware, unauthorized transactions, or other similar threats may materially affect us, including our execution of business strategy, reputation, results of operations and/or financial condition.
These actions include implementing industry-recognized practices for protecting systems, third-party monitoring of certain systems and cybersecurity training for employees. 28 Tabl e of Contents With oversight from our audit committee and our board of directors, our management team including our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Chief Operating Officer and General Counsel (“COO/GC”), is responsible for managing all cybersecurity risks and overseeing our security programs.
With oversight from our audit committee and our board of directors, our management team including our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Chief Operating Officer and General Counsel (“COO/GC”), is responsible for managing all cybersecurity risks and overseeing our security programs.
Removed
In addition, our cybersecurity program includes engagement of other Company management and employees and outside service providers to oversee or perform specific roles in connection with cybersecurity risk assessment and management, and incident management.
Added
These actions include implementing industry-recognized practices for protecting systems, third-party monitoring of certain systems and cybersecurity training for employees.
Added
See Item 1A, “Risk Factors - Risks Related to Our Business - We face risks associated with cybersecurity incidents through cyber-attacks, cyber intrusions or otherwise, as well as failures of systems on which we rely and other significant disruptions of our information technology (“IT”) networks and related systems.” 30 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following tables provide summary information regarding the Company’s real estate portfolio as of December 31, 2023, excluding ABR for periods subsequent to the sales of the two properties held for sale which were sold in January and February 2024: Tenant Industry Diversification: Industry Number of Properties ABR ABR as a Percentage of Total Portfolio Area (Square Feet) Square Feet as a Percentage of Total Portfolio Infrastructure 18 $ 10,237,187 26 % 1,459,535 32 % Automotive 5 6,230,572 17 % 664,463 14 % Aerospace/Defense 3 4,542,814 11 % 316,347 7 % Industrial Products 3 4,361,052 11 % 694,324 15 % Metals 5 2,451,001 6 % 450,263 10 % Retailer 1 2,435,849 6 % 97,191 2 % Technology 2 2,281,148 6 % 130,240 3 % Energy 2 2,040,133 5 % 249,118 5 % Other 5 5,006,955 12 % 570,988 12 % Total 44 $ 39,586,711 100 % 4,632,469 100 % Tenant Geographic Diversification: State Number of Properties ABR ABR as a Percentage of Total Portfolio Area (Square Feet) Square Feet as a Percentage of Total Portfolio California 9 $ 11,580,695 30 % 515,954 11 % Ohio 6 4,749,720 12 % 1,016,742 22 % Arizona 2 4,028,408 10 % 379,441 8 % Illinois 2 3,439,624 9 % 629,687 14 % Washington 1 2,435,849 6 % 97,191 2 % Pennsylvania 2 2,083,596 5 % 253,646 5 % South Carolina 3 2,063,223 5 % 343,422 7 % Florida 2 1,888,772 5 % 204,211 4 % Texas 2 1,652,296 4 % 255,969 6 % Minnesota 5 1,625,769 4 % 377,450 8 % North Carolina 2 1,538,571 4 % 134,576 3 % Other 8 2,500,188 6 % 424,180 10 % Total 44 39,586,711 100 % 4,632,469 100 % 30 Tabl e of Contents Lease Expirations: We completed extensions of existing leases with five of our tenants during 2022 and 2023 and we are continuing to explore potential lease extensions for certain of our other properties.
Biggest changeTenant Geographic Diversification State Number of Properties ABR ABR as a Percentage of Total Portfolio Leased Area (Square Feet) Square Feet as a Percentage of Total Portfolio California 8 $ 11,925 30 % 439,954 10 % Ohio 6 4,866 12 % 1,016,742 23 % Arizona 2 4,100 10 % 379,441 8 % Illinois 2 3,463 9 % 629,687 14 % Florida 3 2,341 6 % 233,910 5 % Pennsylvania 2 2,135 6 % 253,646 6 % South Carolina 3 2,115 5 % 343,422 8 % Texas 2 1,698 4 % 255,969 6 % Minnesota 5 1,671 4 % 377,450 8 % North Carolina 2 1,574 4 % 134,576 3 % Washington 1 1,446 4 % 97,191 2 % Other (1) 7 2,304 6 % 336,950 7 % Total 43 $ 39,638 100 % 4,498,938 100 % (1) Includes states with ABR of less than 4% of total portfolio. 31 Table of Contents Lease Expirations: We completed extensions of existing leases with six of our tenants during 2023 and 2024 and we are continuing to explore potential lease extensions for certain of our other properties.
See Notes 3 and 4 t o our accompanying consolidated financial statements included in this Annual Report on Form 10-K for further details of our real estate investments.
See Notes 3 and 4 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for further details of our real estate investments.
PROPERTIES Properties and Investment: As of December 31, 2023, we owned a real estate investment portfolio consisting of 44 operating properties, comprised of 39 industrial properties, including one held for sale and our approximate 72.7% TIC Interest in an industrial property in Santa Clara, California, one retail property and four office properties, including one property held for sale, with an overall occupancy rate of 98%.
ITEM 2. PROPERTIES Properties and Investment: As of December 31, 2024, we owned a real estate investment portfolio consisting of 43 operating properties, comprised of 39 industrial properties, including our approximate 72.7% TIC Interest in an industrial property in Santa Clara, California, and four non-core properties, including one property held for sale, with an overall occupancy rate of 98%.
We also entered into a new lease with the State of California's Office of Emergency Services (“OES”) effective January 4, 2023, for 12 years through December 31, 2034. OES has a purchase option which OES can exercise any time from May 1, 2024, through December 31, 2026.
We also entered into a new lease with the State of California’s Office of Emergency Services (“OES”) effective January 4, 2023, for 12 years through December 31, 2034.
(2) These properties were sold in January and February 2024. Investments: As of December 31, 2023, we had the following other real estate investment: TIC Interest Investment Balance Santa Clara, CA Property – an approximate 72.7% TIC Interest (1) $ 10,053,931 (1) This industrial property was acquired in 2017 and has approximately 91,740 rentable square feet.
The exercise of these options was not determined to be probable. Investment: As of December 31, 2024, we had the following other real estate investment (dollars in thousands): TIC Interest Investment Balance Santa Clara, CA Property – an approximate 72.7% TIC Interest (1) $ 9,324 (1) This industrial property was acquired in 2017 and has approximately 91,740 rentable square feet.
Additional information about our other real estate investments is included in Note 4 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K. 31 Tabl e of Contents
Additional information about our other real estate investment is included in Note 4 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K. 32 Table of Contents ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
The TIC Interest ABR is $1,678,944. The tenant's lease expiration date is March 16, 2026, the mortgage matures on October 1, 2027, and the lease provides for three five-year renewal options.
Our TIC Interest ABR is approximately $1.7 million. The tenant's lease expiration date is March 16, 2026, the mortgage bears interest at a fixed rate of 3.86% and matures on October 1, 2027, and the lease provides for two seven-year renewal options.
The following tables reflect lease expirations with respect to our properties as of December 31, 2023, including the TIC Interest and excluding ABR for periods subsequent to the sales of the two properties held for sale which were sold in January and February 2024: Year Number of Leases Expiring Leased Square Footage Expiring Percentage of Leased Square Footage Expiring Cumulative Percentage of Leased Square Footage Expiring ABR Expiring (1) Percentage of ABR Expiring Cumulative Percentage of ABR Expiring 2024 (2) 2 163,230 3.5 % 3.5 % 258,519 0.7 % 0.7 % 2025 3 144,027 3.1 % 6.6 % 3,711,525 9.4 % 10.1 % 2026 3 236,608 5.1 % 11.7 % 3,729,789 9.4 % 19.5 % 2027 1 64,637 1.4 % 13.1 % 921,428 2.3 % 21.8 % 2028 1 148,012 3.2 % 16.3 % 551,323 1.4 % 23.2 % 2029 2 84,714 1.8 % 18.1 % 1,480,307 3.7 % 26.9 % 2030 — — — % 18.1 % — — % 26.9 % 2031 — — — % 18.1 % — — % 26.9 % 2032 1 162,714 3.5 % 21.6 % 2,364,941 6.0 % 32.9 % 2033 1 216,727 4.7 % 26.3 % 1,663,467 4.2 % 37.1 % Thereafter 30 3,411,800 73.7 % 100.0 % 24,905,412 62.9 % 100.0 % Total 44 4,632,469 100.0 % $ 39,586,711 100.0 % (1) ABR is calculated based on the next 12 months of contractual monthly base rent as of December 31, 2023.
The following tables reflect lease expirations with respect to our properties as of December 31, 2024, including the TIC Interest and one held for sale property (dollars in thousands): Year Number of Leases Expiring ABR Expiring Percentage of ABR Expiring Cumulative Percentage of ABR Expiring Leased Area Expiring (Square Feet) Percentage of Leased Area Expiring (Square Feet) Cumulative Percentage of Leased Area Expiring (Square Feet) 2025 2 $ 1,812 5 % 5 % 123,227 3 % 3 % 2026 2 3,053 8 % 13 % 199,159 4 % 7 % 2027 1 944 2 % 15 % 64,637 1 % 8 % 2028 1 568 1 % 16 % 148,012 3 % 11 % 2029 2 1,525 4 % 20 % 84,714 2 % 13 % 2030 1 673 2 % 22 % 20,800 1 % 14 % 2031 — — — % 22 % — — % 14 % 2032 1 2,412 6 % 28 % 162,714 4 % 18 % 2033 1 1,688 4 % 32 % 216,727 5 % 23 % 2034 (1) 3 5,295 13 % 45 % 554,441 12 % 35 % Thereafter 29 21,668 55 % 100 % 2,924,507 65 % 100 % Total 43 $ 39,638 100 % 4,498,938 100 % (1) Includes OES that has a purchase option that can be exercised any time through December 31, 2026 and an early termination option that can be exercised any time on or after December 31, 2028.
Removed
OES also has an early termination option which OES can exercise any time on or after December 31, 2028, by giving written notice at least 120 days prior to the date of early termination. The exercise of tenant’s right to cancel the lease on or after December 31, 2028, was not determined to be probable for financial accounting purposes.
Added
The following tables provide summary information regarding our real estate portfolio as of December 31, 2024 (dollars in thousands): Tenant Industry Diversification Industry Number of Properties ABR ABR as a Percentage of Total Portfolio Leased Area (Square Feet) Square Feet as a Percentage of Total Portfolio Infrastructure 17 $ 9,284 23 % 1,246,022 28 % Automotive 3 6,015 15 % 501,233 11 % Industrial Products 4 5,603 14 % 907,837 20 % Aerospace/Defense 4 5,057 13 % 346,046 8 % Government 1 2,618 7 % 106,592 2 % Metals 5 2,509 6 % 450,263 10 % Technology 2 2,347 6 % 130,240 3 % Energy 2 1,830 5 % 249,118 6 % Agriculture/Food Production 2 1,688 4 % 295,584 7 % Retail 1 1,446 4 % 97,191 2 % Other (1) 2 1,241 3 % 168,812 3 % Total 43 $ 39,638 100 % 4,498,938 100 % (1) Includes industries with ABR of less than 4% of total portfolio.
Added
As part of our continued effort to increase balance sheet simplicity, management is currently exploring opportunities to acquire the minority interests in the property in which we hold the TIC Interest, which would result in consolidation of the asset, or to sell the TIC Interest.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

14 edited+10 added−5 removed6 unchanged
Biggest changeThe distribution rate details are as follows: Distribution Period Rate Per Share Per Month Declaration Date Payment Date 2023: January 1-31 $ 0.095833 November 7, 2022 February 24, 2023 February 1-28 $ 0.095833 November 7, 2022 March 24, 2023 March 1-31 $ 0.095833 November 7, 2022 April 25, 2023 April 1-30 $ 0.095833 March 9, 2023 May 25, 2023 May 1-31 $ 0.095833 March 9, 2023 June 26, 2023 June 1-30 $ 0.095833 March 9, 2023 July 25, 2023 July 1-31 $ 0.095833 June 15, 2023 August 25, 2023 August 1-31 $ 0.095833 June 15, 2023 September 25, 2023 September 1-30 $ 0.095833 June 15, 2023 October 25, 2023 October 1-31 $ 0.095833 October 10, 2023 November 27, 2023 November 1-30 $ 0.095833 October 10, 2023 December 26, 2023 December 1-31 $ 0.095833 October 10, 2023 January 25, 2024 On December 29, 2023, our board of directors declared a distribution of 0.28 shares of Generation Income Properties, Inc.
Biggest changeThe 2024 cash distribution details are as follows: Distribution Period Amount Per Share and Unit Per Month Declaration Date Payment Date 2024: January 1-31 $ 0.09583 November 6, 2023 February 28, 2024 February 1-28 $ 0.09583 November 6, 2023 March 25, 2024 March 1-31 $ 0.09583 November 6, 2023 April 25, 2024 April 1-30 $ 0.09583 March 1, 2024 May 28, 2024 May 1-31 $ 0.09583 March 1, 2024 June 25, 2024 June 1-30 $ 0.09583 March 1, 2024 July 25, 2024 July 1-31 $ 0.09583 May 1, 2024 August 26, 2024 August 1-31 $ 0.09583 May 1, 2024 September 25, 2024 September 1-30 $ 0.09583 May 1, 2024 October 25, 2024 October 1-31 $ 0.09583 July 31, 2024 November 25, 2024 November 1-30 $ 0.09583 July 31, 2024 December 24, 2024 December 1-31 $ 0.09583 July 31, 2024 January 27, 2025 On January 31, 2024, we distributed 2,623,153 shares of common stock of Generation Income Properties, Inc.
For the year ended December 31, 2023, distributions paid to our stockholders were approximately 71% return of capital and 29% ordinary income and for the year ended December 31, 2022, distributions paid to our stockholders were approximately 66% return of capital and 34% ordinary income.
For the year ended December 31, 2024, distributions paid to our stockholders were approximately 84% return of capital and 16% ordinary income and for the year ended December 31, 2023, distributions paid to our stockholders were approximately 71% return of capital and 29% ordinary income.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stockholder Information As of February 29, 2024, there were approximately 4,800 holders of record of our Class C Common Stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Stockholder Information As of February 28, 2025, there were approximately 3,900 holders of record of our Class C Common Stock.
Unregistered Sales of Equity Securities to Independent Board Members During the years ended December 31, 2023 and 2022, we issued 22,153 and 21,791 shares of Class C Common Stock, respectively, to our independent directors for their services as board members. Such issuances were made in reliance on the exemption from registration under Rule 4(a)(2) of the Securities Act.
Unregistered Sales of Equity Securities During the three months ended December 31, 2024, we issued 4,369 shares of Class C Common Stock to our independent directors for their services as board members. Such issuances were made in reliance on the exemption from registration under Rule 4(a)(2) of the Securities Act.
Our board of directors has not pre-established a percentage range of return for distributions to stockholders. We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders other than as necessary to meet REIT qualification requirements.
We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders other than as necessary to meet REIT qualification requirements.
The following presents the U.S. federal income tax characterization of the distributions paid in 2023 and 2022: Years Ended December 31, 2023 2022 Ordinary taxable income $ 0.33 $ 0.42 Capital gain $ — $ — Non-taxable distribution $ 0.82 $ 0.83 Total $ 1.15 $ 1.25 32 Tabl e of Contents Beginning with distributions in 2022 when we listed our Class C Common Stock, distributions generally are declared during the month or two prior to the beginning of a quarter and paid based on a month end record date and a monthly rate per share.
The following presents the U.S. federal income tax characterization of the distributions paid in 2024 and 2023: Years Ended December 31, 2024 2023 Ordinary taxable income $ 0.37 $ 0.33 Capital gain — — Non-taxable distribution 1.94 0.82 Total $ 2.31 $ 1.15 33 Table of Contents Distributions generally are declared during the month or two prior to the beginning of a quarter and paid based on a month end record date and a monthly rate per share.
Market Information Our Class C Common Stock is listed on the NYSE under the symbol “MDV” and has been trading since February 11, 2022, in connection with our Listed Offering which closed on February 15, 2022 (see Note 9 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details).
Market Information Our Class C Common Stock is listed on the NYSE under the symbol “MDV” (see Note 9 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details).
Distribution Reinvestment Plan On January 22, 2021, we filed a Registration Statement on Form S-3 (File No. 333-252321) to register a maximum of $100,000,000 of additional shares of Class C Common Stock to be issued pursuant to the DRP (the “Registered DRP Offering”).
In the event our cash flow from operations decreases in the future, the level of our distributions may also decrease. 34 Table of Contents Distribution Reinvestment Plan On January 22, 2021, we filed a Registration Statement on Form S-3 (File No. 333-252321) to register a maximum of $100 million of additional shares of Class C Common Stock to be issued pursuant to the DRP (the “Registered DRP Offering”).
On February 15, 2022, our board of directors amended and restated the DRP (the “Second Amended and Restated DRP”) with respect to the Class C Common Stock to change the purchase price at which the Class C Common Stock is issued to stockholders who elect to participate in the DRP, and we filed a Post-Effective Amendment to our Registration Statement on Form S-3 (File No. 333-252321).
On February 15, 2022, our board of directors amended and restated our distribution reinvestment plan (the “Second Amended and Restated DRP”) with respect to the Class C Common Stock to change the purchase price at which the Class C Common Stock is issued to stockholders who elect to participate in our DRP.
As more fully described in the Second Amended and Restated DRP, the purchase price for our Class C Common Stock under the DRP depends on whether we issue new shares to DRP participants or we or any third-party administrator obtains shares to be issued to DRP participants by purchasing them in the open market or in privately negotiated transactions. 33 Tabl e of Contents Share Repurchase Program 2023 Share Repurchase Program On December 31, 2022, our board of directors authorized up to $15,000,000 in repurchases of our outstanding shares of Class C Common Stock and Series A Preferred Stock from January 1, 2023, through December 31, 2023 (the “2023 SRP”).
As more fully described in the Second Amended and Restated DRP, the purchase price for the Class C Common Stock under the DRP depends on whether we issue new shares to DRP participants or we or any third-party administrator obtains shares to be issued to DRP participants by purchasing them in the open market or in privately negotiated transactions.
The purpose of this change was to reflect the fact that our Class C Common Stock is now listed on the NYSE.
The purpose of this change was to reflect the fact that our Class C Common Stock was listed on the NYSE and no longer priced based on net asset value (“NAV”) per share.
Distribution Information We have historically paid distributions on a monthly basis, and we paid our first distribution on August 10, 2016. The distribution rate is determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant.
The distribution rate is determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant. Our board of directors has not pre-established a percentage range of return for distributions to stockholders.
These shares are held as treasury stock and presented as a component of equity in the accompanying consolidated balance sheet and consolidated statement of equity included in this Annual Report on Form 10-K. We did not repurchase any Class C Common Stock for the three months ended December 31, 2023, under our 2023 SRP.
The transaction closed on August 1, 2024 at a price of $14.80 per share/unit, for total consideration of $11.5 million. The repurchased shares of Class C Common Stock are held as treasury stock and presented as a component of equity in the accompanying consolidated balance sheet and consolidated statement of equity included in this Annual Report on Form 10-K.
(NASDAQ: GIPR) (“GIPR”) common stock for each share or unit of our common stock or Class C OP Units held as of the record date of January 17, 2024 and distributed on January 31, 2024.
The shares were distributed to holders of record on January 17, 2024, based on the distribution ratio of 0.28 GIPR common shares for each share of our Class C Common Stock or Class C OP Unit which represented $1.1648 for each share of our Class C Common Stock or Class C OP Unit based on the closing price of GIPR common stock on January 31, 2024 (see Note 5 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details).
Removed
In the event our cash flow from operations decreases in the future, the level of our distributions may also decrease.
Added
During the year ended December 31, 2024, we issued a total of 1,675,219 shares of Class C Common Stock to holders of Class C OP Units who requested an exchange, including 199,924 shares of Class C Common Stock to employees who exchanged their Class C OP Units upon vesting in March 2024.
Removed
Purchases made pursuant to the 2023 SRP have been made from time-to-time in the open market, in privately negotiated transactions or in any other manner as permitted by federal securities laws and other legal requirements.
Added
Such issuances were made in reliance on the exemption from registration under Rule 4(a)(2) of the Securities Act. Distribution Information We have historically paid distributions on a monthly basis, and we paid our first distribution on August 10, 2016.
Removed
The timing, manner, price and amount of any repurchases were determined by us in our discretion and were subject to economic and market conditions, stock price, applicable legal requirements and other factors.
Added
(NASDAQ: GIPR) (“GIPR”) to our stockholders and holders of Class C OP Units, which we received in exchange for shares of GIPR Preferred Stock that were originally received as partial proceeds for the sale of property on August 10, 2023.
Removed
From January 1, 2023, through December 31, 2023, we repurchased a total of 93,357 shares of our Class C Common Stock for a total of $1,129,162 at an average cost of approximately $12.10 per share.
Added
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.
Removed
We did not repurchase any Series A Preferred Stock during 2023. ITEM 6. [RESERVED]
Added
For the years ended December 31, 2024 and 2023, the purchase price for the Class C Common Stock issued directly by us is 97% of the market price (as defined in the Second Amended and Restated DRP) of the Class C Common Stock, reflecting a 3% discount.
Added
On November 4, 2024, we, with the authorization of our board of directors, increased the discount for the purchase price of shares of Class C Common Stock under our DRP from 3% to 5%, which went into effect on December 7, 2024 and applies to distributions payable on January 27, 2025 and thereafter.
Added
The purchase price for the Class C Common Stock that we or any third-party administrator purchases from parties other than us, either in the open market or in privately negotiated transactions, will be 100% of the “average price per share” (as described in the Second Amended and Restated DRP) actually paid for such shares of Class C Common Stock, excluding any processing fees.
Added
The Second Amended and Restated DRP also reflects the $0.05 per share processing fee that will be paid to our transfer agent by DRP participants for each share of Class C Common Stock purchased through the DRP. The Second Amended and Restated DRP was effective beginning with distributions paid in February 2022.
Added
Issuer Purchases of Equity Securities We did not have a share repurchase program in place for the year ended December 31, 2024.
Added
Private Repurchase Transaction On July 31, 2024, we entered into an agreement with First City Investment Group, LLC (“First City”) to purchase the remaining 656,191 Class C OP Units held by First City and to repurchase 123,809 shares of Class C Common Stock also held by First City.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

75 edited+62 added−65 removed23 unchanged
Biggest changeIn 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. 40 Tabl e of Contents The following are the calculations of FFO and AFFO for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 Net loss (in accordance with GAAP) $ (8,696,261) $ (4,511,318) Preferred stock dividends (3,687,500) (3,687,500) Net loss attributable to common stockholders and Class C OP Unit holders (12,383,761) (8,198,818) FFO adjustments: Depreciation and amortization of real estate properties 15,551,173 14,929,574 Amortization of deferred lease incentives 153,581 412,098 Depreciation and amortization for unconsolidated investment in a real estate property 756,610 777,041 Impairment of real estate investment property 4,387,624 2,080,727 Loss (gain) on sale of real estate investments, net 1,708,801 (12,196,371) FFO attributable to common stockholders and Class C OP Unit holders 10,174,028 (2,195,749) Stock compensation for performance units expense 8,555,529 — FFO excluding performance units expense 18,729,557 (2,195,749) AFFO adjustments: Impairment of goodwill — 17,320,857 Non-recurring corporate relocation costs — 500,000 Stock compensation excluding performance units expense 2,615,678 2,401,022 Deferred financing costs 766,738 484,931 Loss on early extinguishment of debt — 1,725,318 Due diligence expenses, including abandoned pursuit costs 347,598 661,222 Amortization of deferred rents (6,232,257) (3,237,482) Unrealized loss (gain) on valuation of interest rate swaps, net 618,301 (25,733) Amortization of (below) above market lease intangibles, net (807,794) (1,005,487) Unrealized gain on investment in preferred stock (1,418,658) — Other adjustments for unconsolidated investment in a real estate property 53,278 5,251 AFFO attributable to common stockholders and Class C OP Unit holders $ 14,672,441 $ 16,634,150 Weighted Average Shares Outstanding: Basic 7,558,833 7,487,204 Fully diluted excluding performance units (1) 10,593,160 10,225,850 Fully diluted (2) 11,067,675 10,225,850 FFO Per Share: Basic $ 1.35 $ (0.29) Fully diluted $ 0.92 $ (0.29) FFO Per Share Excluding Performance Units Expense: Basic $ 2.48 $ (0.29) Fully diluted $ 1.77 $ (0.29) AFFO Per Share: Basic $ 1.94 $ 2.22 Fully diluted $ 1.33 $ 1.63 (1) Excludes 474,515 performance units in accordance with the terms of the Operating Partnership Agreement.
Biggest changeIn 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. 41 The following are the calculations of FFO and AFFO for the years ended December 31, 2024 and 2023 (in thousands, except shares outstanding and per share data): Year Ended December 31, 2024 2023 Net income (loss) (in accordance with GAAP) $ 6,493 $ (8,696) Preferred stock dividends (3,688) (3,688) Net income (loss) attributable to common stockholders and Class C OP Unit holders 2,805 (12,384) FFO adjustments: Depreciation and amortization of real estate properties 16,601 15,551 Amortization of deferred lease incentives — 154 Depreciation and amortization for unconsolidated investment in a real estate property 756 757 Impairment of real estate investment property — 4,388 (Gain) loss on sale of real estate investments, net (3,360) 1,709 FFO attributable to common stockholders and Class C OP Unit holders 16,802 10,175 AFFO adjustments: Stock compensation expense 1,586 11,171 Amortization and write-off of deferred financing costs 1,192 767 Abandoned pursuit costs 240 348 Amortization of deferred rents (5,716) (6,232) Unrealized loss on interest rate swap valuation 1,479 618 Amortization of (below) above market lease intangibles, net (847) (808) Loss on equity investments 151 — Increase in fair value of investment in preferred stock — (1,419) Other adjustments for unconsolidated investment in a real estate property 101 53 AFFO attributable to common stockholders and Class C OP Unit holders $ 14,988 $ 14,673 Weighted Average Shares/Units Outstanding: Fully diluted (1) 11,188,974 11,067,725 FFO Per Share/Unit: Fully diluted $ 1.50 $ 0.92 AFFO Per Share/Unit: Fully diluted $ 1.34 $ 1.33 (1) Fully diluted weighted average number of shares for 2023 includes the Class M OP Units which automatically converted to Class C OP Units on January 30, 2024, and Class P and Class R OP Units which automatically converted to Class C OP Units as of March 31, 2024, to compute the fully diluted weighted average number of shares. 42 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.
Therefore, FFO and AFFO should not be viewed as a more prominent measure of performance than income (loss) from operations, net income (loss) or cash flows from operating activities and each should be reviewed in connection with GAAP measurements.
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.
Management evaluates these estimates based upon information currently available and on various assumptions that it believes are reasonable 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.
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.
For all of these reasons, we believe the non-GAAP measures of FFO and AFFO, in addition to income (loss) from operations, net income (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.
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.
Neither the SEC, Nareit, nor any other applicable regulatory 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.
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.
Compliance with All Debt Agreements Pursuant to the terms of our Credit Facility and our two 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, 2023.
Compliance with All Debt Agreements Pursuant to the terms of our Credit Facility and our two 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, 2024.
We expect that the related improvements will be completed during the 2024 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.
We expect that the related improvements will be completed during the 2025 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.
Primary Investment Objectives Our primary investment objectives are: • to provide attractive growth in AFFO 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.
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.
Our cash requirements for operating and interest expenses, dividends on our Series A Preferred Stock and distributions on our Class C Common Stock 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.
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.
We are targeting leverage, over the long-term once we achieve scale, of 40% or lower of the aggregate fair value of our real estate properties plus our cash and cash equivalents; however, we increased our borrowing during 2023 in order to execute attractive acquisition opportunities resulting in leverage of 48% as of December 31, 2023.
We are targeting leverage, over the long-term once we achieve scale, of 40% or lower of the aggregate fair value of our real estate properties plus our cash and cash equivalents; however, we increased our borrowing during 2023 in order to execute attractive acquisition opportunities resulting in leverage of 47.6% as of December 31, 2024.
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.
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 addition, we have identified approximately $664,611 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.
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.
We have $150 million of borrowing capacity available under our Credit Facility (defined below) 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 have $30.0 million of borrowing capacity available under our Credit Facility 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.
FFO is defined as net income or loss computed in accordance with GAAP, excluding extraordinary items, as defined by GAAP, and 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 partnerships, joint ventures, preferred dividends and real estate impairments.
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.
Depending on the future course of inflation, the Federal Reserve may refrain from reducing interest rates to try to rein in inflation, which could lead to a recession and will negatively impact our future results due to higher borrowing costs on any future floating rate borrowing.
The Federal Reserve may continue to refrain from reducing interest rates to try to rein in inflation, which could lead to a recession and will negatively impact our future results due to higher borrowing costs on any future borrowing.
We also believe that AFFO is a recognized measure of sustainable operating performance of 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.
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.
The operating results of each property that was classified as held for sale as of December 31, 2023 and 2022, and the 14 and eight properties that were sold during 2023 and 2022, respectively, were included in the continuing results of operations in our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
The operating results of properties that were classified as held for sale as of December 31, 2024 and 2023 and the properties that were sold during 2024 and 2023 were included in the continuing results of operations in our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
The loss includes the $2,380,000 difference between the $12,000,000 48 Tabl e of Contents liquidation value and the $9,620,000 fair value of our investment in GIPR's newly-created Series A Redeemable Preferred Stock received on August 10, 2023 as a portion of the sale proceeds (see Note 5 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details).
The loss included the $2.4 million difference between the $12.0 million liquidation value and the $9.6 million fair value of our investment in GIPR’s newly-created Series A Redeemable Preferred Stock received on August 10, 2023 as a portion of the sale proceeds (see Note 5 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details).
AFFO excludes non-routine and certain non-cash items such as revenues in excess of cash received, stock-based compensation, deferred rent, amortization of in-place lease valuation intangibles, deferred financing fees, gain or loss from the extinguishment of debt, unrealized gains (losses) on derivative instruments, and write-offs of due diligence expenses for abandoned pursuits.
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, amortization of deferred financing costs, gain or loss from the extinguishment of debt, unrealized gains (losses) on derivative instruments, and write-offs of due diligence expenses for abandoned pursuits.
Interest expense, including unrealized loss on interest rate swaps and net of derivative settlements was $13,806,838 and $8,106,658 for the years December 31, 2023 and 2022, respectively (see Note 7 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for details of the components of interest expense, net).
Interest expense, including unrealized gain or loss on interest rate swaps and net of derivative settlements, was $16.2 million and $13.8 million for the years ended December 31, 2024 and 2023, respectively (see Note 7 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for details of the components of interest expense, net).
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, mortgage indebtedness on our properties, real estate property sales, internally generated funds or offerings of shares of our Class C Common Stock.
Market conditions can change quickly, potentially negatively impacting the value of real estate investments. 37 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.
We believe that we have operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes.
We believe that we have operated in conformity with the requirements for qualification as a REIT for U.S. federal income tax purposes. Since December 31, 2019, we have been internally managed.
In addition, debt financing may be used from time-to-time for property improvements, lease inducements, tenant improvements and other working capital needs. 37 Tabl e of Contents The $150,000,000 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.
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.
On May 10, 2022, we entered into a swap agreement, effective from May 31, 2022 to January 17, 2027, subject to our counterparty’s one-time cancellation option on December 31, 2024, to fix SOFR at 2.258% with respect to our original $150,000,000 Term Loan. We granted the cancellation option because it reduced the swap rate by approximately 50 basis points.
On May 10, 2022, we entered into a swap agreement, effective from May 31, 2022 to January 17, 2027, subject to our counterparty’s one-time cancellation option on December 31, 2024, to fix SOFR at 2.258% with respect to our original $150.0 million Term Loan.
Following the January and February 2024 sales of the two properties held for sale leased by Levins and Cummins, respectively, we have no leases expiring in the next 12 months. 35 Tabl e of Contents Potential future declines in economic conditions could negatively impact commercial real estate fundamentals and result in lower occupancy, lower rental rates and 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.
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.
Recent Events and Uncertainties There are continuing significant uncertainties in the market in which we operate related to inflation and interest rates, supply chain disruptions, and negative impacts associated with the violence and unrest in the Middle East, the ongoing Russian war against Ukraine and sanctions which have been implemented by the United States and other countries against Russia.
Risk Factors section of this Annual Report on Form 10-K for additional information. 36 Recent Events and Uncertainties There are continuing significant uncertainties in the market in which we operate related to inflation and interest rates, supply chain disruptions, potential tariffs and negative impacts associated with the violence and unrest in the Middle East, the ongoing Russian war against Ukraine and sanctions which have been implemented by the United States and other countries against Russia, China and Iran.
On October 26, 2022, we entered into a swap agreement, effective from November 30, 2022 to November 30, 2027, subject to our counterparty’s one-time cancellation option on December 31, 2024, to fix SOFR at 3.44% with respect to our expanded Term Loan. We granted the cancellation option because it reduced the swap rate by approximately 50 basis points.
On October 26, 2022, we entered into a swap agreement, effective from November 30, 2022 to November 30, 2027, subject to our counterparty’s one-time cancellation option on December 31, 2024, to fix SOFR at 3.44% with respect to the $100.0 million expansion of our Term Loan.
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 paid total unused fees of $378,816 and $200,578 for the years ended December 31, 2023 and 2022, respectively.
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 total unused fees of $0.4 million for each of the years ended December 31, 2024 and 2023.
Income from unconsolidated investment in a real estate property, which reflects our approximate 72.7% TIC Interest in the Santa Clara, California property's results of operations, was $279,549 and $278,002 for the years ended December 31, 2023 and 2022, respectively.
Income from unconsolidated investment in a real estate property, which reflects our approximate 72.7% TIC Interest in the Santa Clara, California property’s results of operations, remained relatively constant at $0.3 million for the years ended December 31, 2024 and 2023.
As of December 31, 2023, our approximate 72.7% pro-rata share of the TIC Interest’s mortgage note payable of $12,730,664 was $9,256,466, which is not included in our consolidated balance sheets in this Annual Report on Form 10-K.
As of December 31, 2024, our approximate 72.7% pro-rata share of the TIC Interest’s mortgage note payable of $12.4 million was $9.0 million, which is not included in our consolidated balance sheets in this Annual Report on Form 10-K. The Credit Facility includes customary representations, warranties and covenants.
We are the sole general partner of, and owned an approximate 68% partnership interest in the Operating Partnership on December 31, 2023. The Operating Partnership’s limited partners include holders of several classes of units with various vesting and enhancement terms as further described in Note 12 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
We are the sole general partner of, and owned an approximate 89% and 83% interest in the Operating Partnership as of December 31, 2024 and February 28, 2025, respectively. The Operating Partnership’s limited partners are further described in Note 12 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
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.
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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable as we are a smaller reporting company. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements at page F-1 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements at page F-1 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Pursuant to our lease agreements, as of December 31, 2023 and 2022, we had obligations to reimburse $2,439,098 and $1,789,027, respectively, for future on-site and tenant improvements expected to be incurred by tenants.
We believe that our properties are adequately insured. Pursuant to our lease agreements, as of December 31, 2024 and 2023, we had obligations to reimburse $3.0 million and $2.4 million, respectively, for future on-site and tenant improvements expected to be incurred by tenants.
We successfully negotiated lease extensions for three and two properties during 2022 and 2023, respectively; however, changing circumstances may make future lease extensions more difficult.
We successfully negotiated lease extensions for six properties during the years ended December 31, 2024 and 2023; however, changing circumstances may make future lease extensions more difficult.
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.
Depreciation and Amortization Depreciation and amortization expense was $16.6 million and $15.6 million for the years ended December 31, 2024 and 2023, 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.
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 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.
The debt market remains sensitive to the macro environment, such as inflation, Federal Reserve policy, bank failures in the first half of 2023, the impacts of the COVID-19 pandemic on office properties, market sentiment and regulatory factors affecting the banking and commercial mortgage-backed securities industries.
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.
With our leverage ratio at 48% as of September 30, 2023, the spread over SOFR, including a 10-basis point credit adjustment, is 185 basis points for the Revolver. Therefore, the interest rate on the Revolver was 7.1625% as of February 29, 2024; although there was no outstanding balance on the Revolver.
With our leverage ratio of 47.6% as of December 31, 2024, the spread over SOFR, including a 10-basis point credit adjustment, is 185 basis points and the interest rate on the Revolver was 6.2250% as of February 28, 2025; however, there was no outstanding balance on the Revolver.
(Loss) Gain on Sale of Real Estate Investments, Net The loss on sale of real estate investments of $1,708,801 for the year ended December 31, 2023 includes the $1,887,040 loss on sale of the 13 properties (11 retail and two office) sold to GIPR on August 10, 2023, partially offset by the $178,239 gain on sale of the flex property sold on August 31, 2023.
The loss on sale of real estate investments of $1.7 million for the year ended December 31, 2023 includes the $1.9 million loss on sale of the 13 non-core properties sold to GIPR on August 10, 2023, partially offset by the $0.2 million gain on sale of the office property sold on August 31, 2023.
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 We record acquisitions that meet the definition of a business as a business combination.
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.
Volatility in stock and bond markets and particularly the rapid rise in yields on U.S. Treasury securities during 2022 and 2023, the ripple effect of bank failures in the first half of 2023 and increasing bank regulations, may negatively impact our operating results, liquidity and sources of borrowings.
Volatility in stock and bond markets and particularly the rapid rise in yields on U.S. Treasury securities during 2023 and 2024 may negatively impact our operating results, liquidity and sources of borrowings. We, our tenants and operating partners are impacted by inflation and interest rates.
The gain on sale of real estate investments of $12,196,371 for the year ended December 31, 2022 relates to the gain on sale of eight properties (six office, one retail and one flex) sold during 2022 (see Note 3 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details).
Gain (Loss) on Sale of Real Estate Investments, Net The gain on sale of real estate investments of $3.4 million for the year ended December 31, 2024 relates 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), which were sold during the first quarter of 2024 and the gain on sale of a land parcel in September 2024 (see Note 3 to our accompanying consolidated financial statements included in this this Annual Report on Form 10-K for more details).
The decrease of $1,386,374, or 21%, year-over-year primarily reflects decreases in property taxes and repairs and maintenance related to assets sold, which included double-net and modified gross leases, offset in part by increases in property management fees associated with acquired properties during the current year.
The decrease of $1.5 million, or 30%, year-over-year primarily reflects decreases in repairs and maintenance and property taxes related to 14 properties sold during August 2023, which included modified gross leases and double-net leases, offset in part by an increase in non-recoverable environmental insurance expenses.
The increase of $621,599, or 4%, year-over-year primarily reflects an increase in depreciation of real estate properties acquired, partially offset by reductions due to properties sold in the second half of 2022 and August 2023, along with reductions in amortization of intangible lease assets for the year ended December 31, 2023, due to the disposition of properties with acquired leases rather than leases initiated by us.
The increase of $1.0 million, or 7%, year-over-year primarily reflects a full year of depreciation of real estate properties acquired in the first seven months of 2023, and an increase due to an industrial manufacturing property acquired on July 15, 2024, partially offset by reductions due to properties sold in August 2023 and the first quarter of 2024, along with reductions in amortization of intangible lease assets for the year ended December 31, 2024, due to the disposition of properties with acquired leases rather than leases initiated by us. 46 Property Expenses Property expenses were $3.6 million and $5.2 million for the years ended December 31, 2024 and 2023, respectively.
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. 50 Tabl e of Contents Recent Accounting Pronouncements See Note 2 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
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.
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 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. On December 31, 2024, the counterparties to the swap agreements exercised their one-time options to cancel the swap agreements (see Note 8 for more details).
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.
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.
More information on our properties and investments can be found in Note 3 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K. 39 Tabl e of Contents 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”).
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”).
No such charges were incurred in 2023. 46 Tabl e of Contents Results of Operations Portfolio Information Our wholly-owned investments in real estate properties as of December 31, 2023 and 2022, including two and one properties held for sale as of the years ended December 31, 2023 and 2022, respectively, and the 91,740 square foot industrial property underlying the TIC Interest for all balance sheet dates presented were as follows: December 31, 2023 2022 Number of properties: (b) (c) Industrial (a) 39 27 Retail 1 12 Office 4 7 Total operating properties 44 46 Leasable square feet: Industrial 4,242,797 2,541,792 Retail 72,623 230,176 Office 317,049 401,291 Total leasable square feet 4,632,469 3,173,259 (a) Includes the TIC Interest.
Results of Operations Portfolio Information Our wholly-owned investments in real estate properties as of December 31, 2024 and 2023, including one and two properties held for sale as of the years ended December 31, 2024 and 2023, respectively, and the 91,740 square foot industrial property underlying the TIC Interest for all balance sheet dates presented were as follows: December 31, 2024 2023 Number of properties: Industrial (1) (2) 39 39 Non-core properties (2) 4 5 Total operating properties 43 44 Leasable square feet: Industrial properties (1) (2) 4,196,496 4,242,797 Non-core properties (2) 302,442 389,672 Total leasable square feet 4,498,938 4,632,469 (1) Includes the TIC Interest. 45 (2) Includes one office property held for sale as of December 31, 2024 and two properties (one industrial and one office) held for sale as of December 31, 2023, which were sold on January 10, 2024 and February 28, 2024.
Our results of operations for the year ended December 31, 2023, may not be comparable to those expected for 2024 or in future periods. Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Rental Income Rental income, including tenant reimbursements, for the years ended December 31, 2023 and 2022 was $46,936,599 and $43,822,032, respectively.
Our results of operations for the year ended December 31, 2024, may not be comparable to those expected for 2025 or in future periods.
Management believes that AFFO is a beneficial indicator of our ongoing portfolio performance and ability to sustain our current distribution level. 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.
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.
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.
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.
The use of inappropriate assumptions would result in an incorrect valuation of our acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of our net income (loss). 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.
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.
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.
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.
The increase of $8,770,185 reflects a catch-up adjustment of $8,555,529 related to our achievement of management’s performance target for FFO of $1.05 per diluted share for the year ended December 31, 2023, exclusive of the dilutive effect of the performance units and related stock compensation expense.
Stock compensation expense in 2024 includes $1.2 million for our Class P OP Units and Class R OP Units for the first quarter, of which $0.7 million related to our achievement of management’s performance target for FFO of $1.05 per diluted share for the year ended December 31, 2023.
Further, since the measure is based on historical financial information, AFFO for the period presented may not be indicative of future results or our future ability to pay our dividends. By providing FFO and AFFO, we present information that assists investors in aligning their analysis with management’s analysis of long-term operating activities.
By providing FFO and AFFO, we present information that assists investors in aligning their analysis with management’s analysis of long-term operating activities.
Other (Expense) Income Interest income was $325,888 and $21,910 for the years ended December 31, 2023 and 2022, respectively, reflecting interest earned on cash proceeds from April 2023 draws on the Term Loan prior to utilizing such cash to acquire industrial manufacturing properties in May 2023 and higher interest rates earned on available cash and cash equivalents during 2023.
Interest income for 2023 primarily reflects interest earned on cash proceeds from the April 2023 draws on the Term Loan, prior to utilizing such cash to acquire industrial manufacturing properties.
See Note 3 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for further details of these dispositions. Capital Expenditures and Tenant Improvements Other than as discussed below, we do not have other plans to incur any significant costs to renovate, improve or develop our properties. We believe that our properties are adequately insured.
See Note 3 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for further details of these dispositions.
Credit Facility and Mortgages Our Operating Partnership entered into an agreement for a line of credit (the “Credit Agreement”) on January 18, 2022 which was amended on October 21, 2022, and currently provides a $400,000,000 line of credit comprised of a $150,000,000 four-year Revolver, which may be extended by up to 12 months subject to certain conditions, and a $250,000,000 five-year Term Loan with KeyBank and the other lending institutions party thereto (collectively, the “Lenders”), including KeyBank as Agent for the Lenders (in such capacity, the “Agent”), as further described in Note 7 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
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”).
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, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment.
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.
As of December 31, 2023 and 2022, the outstanding principal balance of our mortgage notes payable on our operating properties was $31,200,000 and $44,515,009, respectively, our Revolver outstanding principal balance was zero and $3,000,000, respectively, and our Term Loan outstanding principal balance was $250,000,000 and $150,000,000, respectively.
As of December 31, 2024 and 2023, the Term Loan outstanding principal balance was $250.0 million and there was no outstanding balance on the Revolver.
(2) Other non-core assets include (1) one legacy office property leased to Cummins classified as held for sale beginning September 30, 2023, and sold on February 28, 2024 (see Notes 3 and 14 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for additional details), and (2) one additional legacy office property leased to Solar Turbines.
(see Note 14 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details). As of December 31, 2024 and 2023, the outstanding principal balance of our mortgage notes payable secured by two properties, including one held for sale property, was $30.9 million and $31.2 million, respectively.
The Credit Facility is available for general corporate purposes, including, but not limited to, acquisitions, repayment of existing indebtedness and capital expenditures. 36 Tabl e of Contents The Credit Facility includes an accordion option that allows us to request additional Revolver and Term Loan lender commitments up to a total of $750,000,000 subject to customary conditions, including the receipt of new commitments from the Lenders.
The Credit Facility is available for general corporate purposes, including, but not limited to, acquisitions, repayment of existing indebtedness, capital expenditures and general corporate purposes.
On January 11, 2024, we entered into a contingent purchase and sale agreement with a national homebuilder for the sale of this property as further described in Note 14 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
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 7 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
In January 2022, we refinanced all but four of our properties (including the TIC Interest) with proceeds from our Credit Facility (as defined below), which includes floating rates based on the Secured Overnight Financing Rate (“SOFR”) and our leverage ratio as described below.
Our Credit Facility (as defined below), includes floating interest rates based on SOFR and our leverage ratio as described below and although our swaps entered into in 2022 were cancelled on December 31, 2024, we entered into new swaps for 2025 which fix the rate of our Term Loan for one year.
Acquisitions and Sale of Real Estate Investments We acquired a total of 12 industrial manufacturing properties for an aggregate of $129,753,499 (including closing costs) during the year ended December 31, 2023, at a blended initial cap rate of 7.8% and a weighted average cap rate of 10.3%.
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. 39 Acquisitions The details of the one property and 12 properties we acquired during the years ended December 31, 2024 and 2023, respectively, are as follows (dollars in thousands): Location Property Type Leased Area (Square Feet) Lease Terms (Years) Annual Rent Increase Acquisition Price Initial Cap Rate 2024 Torrent Photonics LLC Tampa, FL Industrial 29,699 20 2.85 % $ 5,183 8.00 % During the year ended December 31, 2023, we acquired 12 industrial manufacturing real estate properties for an aggregate of $129.8 million, including closing costs, at a blended initial cap rate of 7.8% and a weighted average cap rate of 10.3%.
Pursuant to most of our lease agreements, tenants are required to pay or reimburse all or a portion of the property operating expenses. The ABR of the 44 operating properties owned as of December 31, 2023, was $40,114,613 and December 31, 2023 ABR, excluding periods subsequent to the sales of Levins and Cummins, was $39,586,711.
Pursuant to most of our current lease agreements, tenants are required to pay property operating expenses directly; however, some tenants reimburse all or a portion of the property operating expenses that they do not pay directly. General and Administrative General and administrative expenses were $6.3 million and $6.6 million for the years ended December 31, 2024 and 2023, respectively.
The increase of $5,700,180 year-over-year primarily reflects the increase in interest expense incurred on our Credit Facility due to larger balances outstanding and net unrealized loss on interest rate swap valuations, partially offset by an increase in derivative settlements.
The increase of $2.4 million, year-over-year primarily reflects (i) a $0.9 million increase in unrealized losses, net on valuation of interest rate swaps, and (ii) a $2.2 million net increase in interest expense and unused commitment fees incurred on our Credit Facility due to larger balances outstanding during 2024, since the Term Loan was not fully drawn until April 2023.
The total management fee was $263,971 for each of the years ended December 31, 2023 and 2022, of which our portion of expense relating to the TIC Interest was $191,933 for each year and is reflected as a component of income from unconsolidated investment in a real estate property in our accompanying consolidated statements of operations included in this Annual Report on Form 10-K. 49 Tabl e of Contents 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.
The year ended December 31, 2023 includes a gain of $1.4 million for the fair value adjustment of the GIPR preferred stock for the period from August 10, 2023 (when the GIPR preferred stock was acquired) through December 31, 2023. 47 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 sold 14 properties (11 retail, two office and one flex) during 2023 and eight properties (six office, one retail and one flex) during 2022.
We acquired one operating property during 2024 and 12 operating properties during 2023, respectively. We sold two and 14 non-core properties during 2024 and 2023, respectively.
The Revolver’s maturity is in January 2026, with options to extend for a total of 12 months, and the Term Loan’s maturity is in January 2027. 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.
On February 26, 2025, we entered into an agreement with the Lenders to amend the Credit Agreement by (a) extending the maturity of the Revolver to January 18, 2027, which is coterminous with the maturity of the Term Loan, and (b) changing the definition of “Distributions” to exclude any repurchases of our Series A Preferred Stock that are funded by proceeds from the sale of our Class C Common Stock. 38 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.
As of December 31, 2023, 100% of our $281,200,000 outstanding debt is at fixed rates with a weighted average rate of 4.52% as a result of the swap agreements entered into in May 2022 and October 2022.
Our two mortgages with fixed rates do not mature until after September 2027. As a result of the interest rate swap agreements entered into for the year ending December 31, 2025, 100% of our consolidated indebtedness held a weighted average fixed interest rate of 4.27% as long as our leverage ratio is less than 50%.
Stock Compensation Stock compensation expense was $11,171,207 and $2,401,022 for the years December 31, 2023 and 2022, respectively.
Other (Expense) Income Interest income was $0.5 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.
This swap agreement resulted in a fixed interest rate of 4.058% on our original $150,000,000 Term Loan based on our leverage ratio of 48% as of December 31, 2023, as described in Note 8 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
On the December 31, 2024, the counterparties to both swap agreements exercised their one-time options to cancel their respective swap agreements (see Note 8 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K for more details).
Removed
Since December 31, 2019, we have been internally managed, as further described below in Note 12 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K. 34 Tabl e of Contents Following the January and February 2024 sales of the two properties that were held for sale as of December 31, 2023, our real estate investment portfolio consists of 42 properties, including the TIC Interest, as further described in Notes 3 and 4 to our accompanying consolidated financial statements included in this Annual Report on Form 10-K.
Added
While the rate of inflation has declined from historic highs, inflation remains somewhat elevated and there is continued uncertainty over the future rate of inflation. In January 2025, the Federal Reserve maintained the current federal funds rate after reducing rates three times in 2024.
Removed
Our portfolio is distributed across 15 states and consists of 38 industrial properties which represent approximately 76% of the portfolio by ABR, one retail property which represents approximately 11% of the portfolio by ABR, and three office properties which represent approximately 13% of the portfolio by ABR.
Added
In January 2025, we entered into two new swap agreements, effective December 31, 2024, for $125.0 million each, for an aggregate of $250.0 million, corresponding to the Term Loan (as defined below), which fixed the Secured Overnight Financing Rate (“SOFR”) for the year ending December 31, 2025 to 2.45%, resulting in a fixed rate of 4.25% based on our leverage ratio of 47.6% as of December 31, 2024.
Removed
As of December 31, 2023, excluding the two properties that were held for sale, our ABR was $39,328,192 with a WALT of 14.1 years and 33% of our tenants by ABR are investment grade.

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