MODIV INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

You should read the following discussion and analysis of our financial
condition, results of operations and cash flows together with the unaudited
condensed consolidated financial statements and related notes that are included
elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated
financial statements and notes thereto and management's discussion and analysis
of financial condition and results of operations for the fiscal year
ended December 31, 2021 included in our Annual Report on Form 10-K filed with
the U.S. Securities and Exchange Commission (the "SEC") on March 23, 2022. This
discussion contains forward-looking statements based upon current expectations
that involve risks and uncertainties. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of
various factors. See "Forward-Looking Statements" above.

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

Insight

We are an internally-managed real estate investment trust ("REIT") with publicly
traded shares of common stock and Series A Preferred Stock (defined below). We
acquire, own and manage a diversified portfolio of predominantly single-tenant
net-lease industrial, retail and office properties throughout the United States,
with a focus on strategically important and mission critical properties. We were
formed on May 15, 2015 as a Maryland corporation that elected to be taxed as a
REIT for federal income tax purposes beginning with our taxable year ended
December 31, 2016 and we intend to continue to operate so as to remain qualified
as a REIT for federal income tax purposes.

We have been internally managed since our December 31, 2019 acquisition of the
business of BrixInvest, LLC, a Delaware limited liability company and our former
sponsor ("BrixInvest"), and our merger with Rich Uncles Real Estate Investment
Trust I ("REIT I") on December 31, 2019. Through the merger with REIT I and
acquisitions, we created one of the largest non-listed real estate investment
funds to be raised via crowdfunding technology and the first real estate
crowdfunding platform to be completely investor-owned.

Our Series A Preferred Stock is listed on the New York Stock Exchange (the
"NYSE") under the symbol "MDV.PA" and has been trading since September 17, 2021.
Our Class C common stock is listed on the NYSE under the symbol "MDV" and has
been trading since February 11, 2022. Prior to that date, there was no public
trading market for our Class C common stock. In connection with and upon listing
on the NYSE, each share of our Class S common stock converted into one share of
Class C common stock (see details of the Listed Offering as defined below).

We have the authority to issue 450,000,000 shares of stock, consisting of
50,000,000 shares of preferred stock, $0.001 par value per share, 300,000,000
shares of Class C common stock, $0.001 par value per share, and 100,000,000
shares of Class S common stock, $0.001 par value per share. Our five-year
emerging growth company registration with the SEC ended on December 31, 2021 but
we continue to report with the SEC as a smaller reporting company under
Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").

Although we are not limited as to the form our investments may take, our
investments in real estate will generally constitute acquiring fee title or
interests in entities that own and operate real estate. We will make
substantially all acquisitions of our real estate investments directly through
Modiv Operating Partnership, LP, a Delaware limited partnership (the "Operating
Partnership"), or indirectly through limited liability companies or limited
partnerships, including through other REITs, or through investments in joint
ventures, partnerships, tenants-in-common, co-tenancies or other co-ownership
arrangements with other owners of properties, some of which may be affiliated
with us or our executive officers or directors. The Operating Partnership was
formed on January 28, 2016. We are the sole general partner of, and owned an
approximate 73% partnership interest in the Operating Partnership on March 31,
2022. The Operating Partnership limited partners include holders of several
classes of units with various vesting and enhancement terms as further described
in Note 12 to our accompanying unaudited condensed consolidated financial
statements.
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  Table of Contents


Common Stock Offerings

Since our initial registered offering of common stock was declared effective by
the SEC in 2016, we have raised an aggregate of $289,839,103 pursuant to
offerings of common stock registered with the SEC (collectively, the "Registered
Offering"), offerings of common stock exempt from registration pursuant to
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), distribution reinvestment plan ("DRP") offerings of common stock
registered with the SEC, a private offering of common stock pursuant to
Regulation D under the Securities Act, a qualified offering of common stock
pursuant to Regulation A under the Securities Act and an offering of common
stock listed on the NYSE.

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 in share value of Class C
common stock to be issued pursuant to the DRP (the "Registered DRP Offering").
We commenced offering shares of Class C common stock pursuant to the Registered
DRP Offering upon termination of the Registered Offering described below.

On December 8, 2021, we filed with the SEC a Registration Statement on Form S-11
(File No. 333-261529), and, on February 9, 2022, we filed with the SEC Amendment
No. 1 to the Registration Statement on Form S-11, in connection with the listing
of our Class C common stock, which became effective on February 10, 2022 (the
"Listed Offering"). In connection with and upon listing on the NYSE, each share
of our Class S common stock converted into one share of Class C common stock.
The Listed Offering of our Class C common stock closed on February 15, 2022. In
connection with the Listed Offering, we sold 40,000 shares of our Class C common
stock at $25.00 per share to a major stockholder who was formerly a related
party.

On March 30, 2022, we filed a registration statement on Form S-3 (File No.
333-263985) to issue and sell from time to time, together or separately, the
following securities at an aggregate public offering price that will not exceed
$200,000,000: Class C common stock, preferred stock, warrants, rights and units.

Preferred Share Offering

On September 14, 2021, we and the Operating Partnership entered into an
underwriting agreement (the "Preferred Stock Underwriting Agreement") with B.
Riley Securities, Inc., as representative of the underwriters listed on Schedule
I thereto (collectively, the "Underwriters"), pursuant to which we agreed to
issue and sell 1,800,000 shares of our 7.375% Series A Cumulative Redeemable
Perpetual Preferred Stock, $0.001 par value per share (the "Series A Preferred
Stock") in an underwritten public offering (the "Preferred Offering") at a price
per share of $25.00. In addition, we granted the Underwriters a 30-day option to
purchase up to an additional 200,000 shares of the Series A Preferred Stock,
which the Underwriters exercised in full on September 16, 2021. The issuance and
sale of the shares of Series A Preferred Stock, including the Underwriters' full
exercise of their option to purchase additional shares, closed on September 17,
2021. The shares of Series A Preferred Stock trade on the NYSE under the symbol
"MDV.PA" (see Note 9 to our accompanying unaudited condensed consolidated
financial statements for additional information).

The company

We believe we continue to qualify and operate as a REIT, which requires us to
annually distribute at least 90% of our taxable income (excluding net capital
gains) in the form of distributions to our stockholders.

Our primary business consists of acquiring, financing and owning predominantly
single-tenant net-lease industrial, retail and office real estate properties
throughout the United States leased to creditworthy tenants on long-term leases,
with a focus on strategically important and mission critical properties. We
primarily generate revenues by leasing properties to tenants pursuant to net
leases. As of March 31, 2022, our real estate investment portfolio consisted of
36 properties as further described below. The net book value of our real estate
investments as of March 31, 2022 was $381,159,581.

Details of our diversified portfolio of 36 properties in operation, including a common tenant interest of approximately 72.7% in a Santa Clara, California
property (the “TIC Interest”), from March 31, 2022 are the following:

•12 industrial properties, including the TIC Interest, which represent
approximately 40% of the portfolio, 13 retail properties which represent
approximately 21% of the portfolio, and 11 office properties which represent
approximately 39% of the portfolio (expressed as a percentage of annualized base
rent ("ABR") as of March 31, 2022);

•Occupancy rate of 100.0%;

•Located in 14 states;

•Leased to 29 different commercial tenants doing business in 15 different industries;

• Approximately 2.3 million square feet of total leasable space, including TIC’s participation;

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•An average leasable space per property of approximately 64,000 square feet;
approximately 121,000 square feet per industrial property; approximately 18,000
square feet per retail property and approximately 57,000 square feet per office
property; and

• Balance of outstanding mortgage notes payable from $44,734,220balance of the credit facility term loan of $100,000,000 and revolving balance of the credit facility of
$20,775,000.

As of March 31, 2022, all 36 operating properties in our portfolio are
single-tenant net-lease properties and all 36 properties were leased, with a
weighted average remaining lease term ("WALT"), excluding rights to extend a
lease at the option of the tenant, of approximately 9.1 years.

Following the April 2022 acquisition of eight industrial properties leased to
Lindsay Precast, LLC ("Lindsay") as described in Note 14 to our accompanying
unaudited condensed consolidated financial statements, we now own 44 operating
properties located in 16 states. On a pro forma basis, after giving effect to
the Lindsay acquisition as if it was completed on March 31, 2022, our real
estate portfolio is comprised of 20 industrial properties, including the TIC
Interest, which represent approximately 46% of the portfolio, 13 retail
properties which represent approximately 19% of the portfolio, and 11 office
properties which represent approximately 35% of the portfolio (expressed as a
percentage of ABR as of March 31, 2022), and has a pro forma WALT of 10.6 years.

As of March 31, 2022, we held an approximate 72.7% TIC Interest in a 91,740
square foot industrial property located in Santa Clara, California. The
remaining approximately 27.3% of undivided interest in the Santa Clara property
is held by Hagg Lane II, LLC (an approximate 23.4% interest) and Hagg Lane III,
LLC (an approximate 3.9% interest). The manager of Hagg Lane II, LLC and Hagg
Lane III, LLC was an independent member of our board of directors ("Board") from
December 2019 to December 2021.

Main investment objectives

Our main investment objectives are:

•deliver attractive growth in adjusted funds from operations (“AFFO”) and sustainable cash distributions;

•realize added value through proactive investment selection and asset management;

•offer future opportunities for growth and value creation; and

•to offer an investment alternative to shareholders wishing to allocate part of their long-term investment portfolio to business real estate.

While future purchases of properties will be partially funded with cash on hand
and funds received from the future sale of shares of Class C common stock, we
anticipate incurring mortgage or borrowing base debt (not to exceed 55% of the
total value of all of our properties) against pools of individual properties,
and pledging such properties as security for that debt to obtain funds to
acquire additional properties. Over the near term we are targeting leverage of
40% of the aggregate fair value of our real estate properties plus our cash and
cash equivalents, with a long-term goal of lower leverage, although our maximum
leverage as defined and approved by our Board is 55% of the aggregate fair value
of our real estate properties, plus our cash and cash equivalents. We may exceed
the targeted leverage of 40% if we identify attractive acquisition opportunities
in advance of raising additional equity or completing dispositions. We are
striving to improve the composition of our portfolio by acquiring industrial
properties and disposing of office properties, subject to market conditions and
prices that we consider attractive. We make no assurance that we will achieve
our investment objectives. See the Part I, Item 1A. Risk Factors section of our
Annual Report on Form 10-K filed with the SEC on March 23, 2022 and the Part II,
Item 1A. Risk Factors of the Quarterly Report on Form 10-Q included herein.

Investment strategy

Commercial real estate

In pursuit of our primary investment objectives, we maintain the ability to
expand beyond our traditional single-tenant portfolio of predominantly net
leased properties, and seek to acquire a diversified portfolio of
income-generating commercial real estate investments throughout the United
States diversified by corporate credit, physical geography, product type, and
lease duration. We are primarily focused on acquiring industrial properties, but
we may also acquire other assets, including, without limitation, retail
properties, data centers and storage properties. We may also invest in
commercial real estate properties outside the United States. We intend to
acquire assets consistent with our acquisition philosophy by focusing primarily
on properties located in primary, secondary and certain select tertiary markets
and leased to tenants, at the time we acquire them, with strong financial
statements and typically subject to long-term leases with defined rental rate
increases.
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We may also acquire assets with short-term leases or that require some amount of
capital investment in order to be renovated or repositioned. We generally will
limit investment in new developments on a standalone basis, but may consider
development that is ancillary to an overall investment. We do not designate
specific geography or sector allocations for the portfolio; rather we intend to
invest in regions or asset classes where we see the best opportunities that
support our investment objectives. We are in the process of increasing our asset
allocations to the industrial sector and decreasing our allocations to the
office sector.

To a lesser extent, we may also invest in real estate debt and equity securities
and other real estate-related investments to provide current income, portfolio
diversification and a source of liquidity for distributions to stockholders,
cash management and other purposes.

SCPIs and Unlisted Real Estate Products or Managers

We believe there may be opportunities to acquire non-listed REITs and real
estate products or managers given the current fragmented nature of the industry.
There are many smaller non-listed REITs that have not been able to raise
sufficient capital to grow their investment portfolio and provide liquidity to
their stockholders. Given their limited alternatives, some of these non-listed
REITs may be receptive to potential acquisitions by us.

We cannot assure our shareholders that any of the properties we acquire will result in the benefits described above.

Cash and capital resources

Generally, our cash requirements for property acquisitions, debt payments,
capital expenditures and other investments will be funded by offerings of shares
of our common stock, bank borrowings from financial institutions, mortgage
indebtedness on our properties, asset sales and internally generated funds. Our
cash requirements for operating and interest expenses, dividends on our Series A
Preferred Stock and distributions on our common stock will generally be funded
by internally generated funds.

On January 18, 2022, our Operating Partnership entered into a $250,000,000
credit agreement (''Credit Agreement'') providing for a $100,000,000 four-year
revolving line of credit, which may be extended by up to 12 months subject to
certain conditions (the ''Revolver''), and a $150,000,000 five-year term loan
(the ''Term Loan'' and together with the ''Revolver,'' the ''Credit Facility'')
with KeyBank National Association (''KeyBank'') and the other lending
institutions party thereto (collectively, the ''Lenders''), including KeyBank as
Agent for the Lenders (in such capacity, the ''Agent''), BMO Capital Markets,
Truist Bank and The Huntington National Bank as Co-Syndication Agents (the
"Co-Syndication Agents") and KeyBanc Capital Markets Inc., BMO Capital Markets,
Inc., Truist Securities, Inc. and The Huntington National Bank as Joint-Lead
Arrangers (the "Lead Arrangers"). The Credit Facility is available for general
corporate purposes, including, but not limited to, acquisitions, repayment of
existing indebtedness and capital expenditures.

The Credit Facility is priced on a leverage-based pricing grid that fluctuates
based on our actual leverage ratio. If our leverage ratio is between 45% to 50%,
the interest rate on the Revolver will be 185 basis points over the Secured
Overnight Financing Rate (''SOFR'') including a 10 basis points credit
adjustment, which resulted in a floating interest rate of 2.1625% based on the
pro forma leverage ratio of 46% as of September 30, 2021 when the Credit
Facility closed and after reflecting the January 2022 acquisition of the KIA
auto dealership property. With our leverage ratio at 34% as of March 31, 2022,
the spread over SOFR, including the credit adjustment, is 165 basis points and
the interest rate on the Revolver was 1.9625% as of April 30, 2022. Following
the Federal Reserve Bank's May 4, 2022 increase in the target range for federal
funds by 50 basis points, the interest rate on the Revolver is 2.4625%. See Note
14 to our accompanying unaudited condensed consolidated financial statements
regarding our entry into a swap agreement to hedge the interest rate on our
$150,000,000 Term Loan. The Credit Facility includes customary covenants,
including minimum fixed charge coverage of 1.50x, minimum tangible net worth of
$208,629,727 plus 85% of net offering proceeds and maximum leverage of 60% of
our borrowing base. We were in compliance with these covenants as of March 31,
2022.

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 we indirectly own, and various cash collateral
owned by the Operating Partnership and the Subsidiary Guarantors. In connection
with the Credit Facility, we and each of the Subsidiary Guarantors entered into
an Unconditional Guaranty of Payment and Performance in favor of the Agent,
pursuant to which we and each of the Subsidiary Guarantors agreed to guarantee
the full and prompt payment of the Operating Partnership's obligations under the
Credit Agreement.
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While the Credit Facility allows for borrowings up to 60% of our borrowing base
and our Board has approved a maximum leverage ratio of 55% of the aggregate fair
value of our real estate properties plus our cash and cash equivalents, over the
near term, we are targeting leverage of 40% with a long-term goal of lower
leverage. However, we may exceed the targeted leverage if we identify attractive
acquisition opportunities in advance of raising additional equity or completing
dispositions. We also have the right to increase the Credit Facility to a
maximum of $500,000,000, subject to customary conditions, including the receipt
of new commitments from the Lenders.

Drawdown on credit facility

On January 18, 2022we borrowed $155,775,000 of our credit facility consisting of $100,000,000 under the term loan and $55,775,000 under the gun. We used a portion of the proceeds from the credit facility to pay an aggregate commitment and arrangement fee of $2,020,000 to the Agent, Lenders, Lead Arrangers and Co-Syndication Agents.

We used a portion of the additional proceeds from the Credit Facility to repay
20 property mortgages, and related interest aggregating $153,428,764, including
the $36,465,449 mortgage on the KIA auto dealership property which was acquired
on January 18, 2022, as discussed in Note 3 to our accompanying unaudited
condensed consolidated financial statements, and our prior line of credit
outstanding balance of $8,022,000. The 20 mortgages that were paid off were for
the following 27 properties: eight Dollar Generals, Northrop Grumman, exp
Maitland, Wyndham, Williams Sonoma, EMCOR, Husqvarna, AvAir, 3M, Cummins,
Levins, Labcorp, GSA (MHSA), PreK Education, ITW Rippey, Solar Turbines, Wood
Group, Gap, L3Harris and Walgreens. After the 20 property mortgages were
paid-off, seven property mortgages as of December 31, 2021 remained outstanding,
including four property mortgages related to assets held for sale. Those four
mortgages were paid-off pursuant to sales of the properties in February 2022 as
discussed above.

On March 8, 2022, we prepaid $35,000,000 of the outstanding balance on the
Revolver with cash on hand in order to reduce interest expense. As of March 31,
2022, following this prepayment, we had availability under the Credit Facility
of $80,800,000 which can be drawn for general corporate purposes, including
pending and future acquisitions. In April 2022, we borrowed $44,000,000 to fund
the acquisition of the eight-property portfolio of industrial properties leased
to Lindsay as further described in Note 14 to our accompanying unaudited
condensed consolidated financial statements, drew the remaining $50,000,000
available under the Term Loan commitment and reduced the Revolver to $14,775,000
in connection with the swap agreement as further described in Note 14 to our
accompanying unaudited condensed consolidated financial statements. Following
these transactions, there is $36,800,000 available to be drawn on the Revolver,
based on the value of our properties included in the borrowing base.

Our aggregate borrowings, secured and unsecured, must be reasonable in relation
to our tangible assets. Our maximum leverage as defined and approved by our
Board is 55% of the aggregate fair value of our real estate properties, plus our
cash and cash equivalents. We use available leverage based on the relative cost
of debt and equity capital, and to address strategic borrowing advantages
potentially available to us. Our borrowings on one or more individual properties
may exceed 55% of their individual cost, so long as our overall leverage does
not exceed 55% of the aggregate fair value of our real estate properties, plus
our cash and cash equivalents. There is no limitation on the amount we may
borrow for the purchase of any single asset. As of March 31, 2022, our leverage
ratio was 34%.

We may borrow amounts from our affiliates including directors and executive
officers if such loan is approved by a majority of our directors, including a
majority of our independent directors, not otherwise interested in the
transaction, as being fair, competitive, commercially reasonable and no less
favorable to us than comparable loans between unaffiliated parties under the
circumstances.

While we intend for the Credit Facility to be our primary source of financing,
we may continue to use mortgage debt financing for certain real estate
investments and acquisitions. This financing may be obtained at the time an
asset is acquired or an investment is made or at such later time as determined
to be appropriate. In addition, debt financing may be used from time-to-time for
property improvements, lease inducements, tenant improvements and other working
capital needs.

See Note 7 to our accompanying unaudited condensed consolidated financial statements for loan maturities of our three remaining mortgage notes payable at March 31, 2022.

As of March 31, 2022, the outstanding principal balance of our mortgage notes
payable on our operating properties and our Credit Facility were $44,734,220 and
$120,775,000, respectively. As of March 31, 2022, our approximately 72.7%
pro-rata share of the TIC Interest's mortgage note payable was $9,653,689, which
is not included in our accompanying unaudited condensed consolidated balance
sheets.
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Acquisitions and disposals of real estate investments

During the three months ended March 31, 2022, we acquired the following real
estate properties:

                                                                                                                   Tenant
                                                                                                                Origination
                                                                                       Buildings and           and Absorption
    Property and Location              Acquisition Date              Land               Improvements               Costs                Equipment            Acquisition Price
KIA, Carson, CA                           1/18/2022             $

32,741,781 $36,544,663 $118,606 $

   -          $       69,405,050
Kalera, St. Paul, MN                      1/31/2022                  562,356              3,127,653                        -            4,429,000                   8,119,009
                                                                $ 33,304,137          $  39,672,316          $       118,606          $ 4,429,000          $       77,524,059

In the three months ended March 31, 2022we sold the following three office real estate investments and one industrial property (Omnicare):

                                                                                                                     Contract Sale
        Property                     Location               Disposition Date           Rentable Square Feet              Price              Net Proceeds          Gain on Sale
Bon Secours (1)                Richmond, VA                     2/11/2022                     72,890                $   8,760,000          $          -          $    179,404
Omnicare (1)                   Richmond, VA                     2/11/2022                     51,800                   10,200,000                     -             2,062,890
Texas Health (1)               Dallas, TX                       2/11/2022                     38,794                    7,040,000            11,883,639               160,377
Accredo                        Orlando, FL                      2/24/2022                     63,000                   14,000,000             5,000,941             4,998,106
Total                                                                                        226,484                $  40,000,000          $ 16,884,580          $  7,400,777

(1) Combined net proceeds from February 11, 2022 sale, net of commissions, closing costs paid and repayment of outstanding mortgages.

Listed offer – Class C Common Store

On November 2, 2021, our Board terminated our offering of Class C common stock
pursuant to a Regulation A Offering Statement on Form 1-A (the "Reg A Offering")
effective upon the close of business on November 24, 2021 and directed
management to seek the listing of our Class C common stock on a national
securities exchange in early 2022. Our Board also terminated our Class C and
Class S share repurchase programs.

On December 8, 2021, we filed with the SEC a Registration Statement on Form S-11
(File No. 333-261529), and, on February 9, 2022, we filed with the SEC Amendment
No. 1 to the Registration Statement on Form S-11, in connection with the Listed
Offering of our Class C common stock, which became effective on February 10,
2022. In connection with and upon listing on the NYSE, each share of our Class S
common stock converted into one share of Class C common stock. The Listed
Offering of our Class C common stock closed on February 15, 2022. In connection
with the Listed Offering, we sold 40,000 shares of our Class C common stock at
$25.00 per share to a major stockholder who was formerly a related party (see
Note 9 to our accompanying unaudited condensed consolidated financial statements
for additional information), for aggregate net proceeds to us of $114,500, after
deducting the underwriting discount of $70,000 and other offering costs of
$815,500.

On March 30, 2022, we filed a registration statement on Form S-3 (File No.
333-263985) to issue and sell from time to time, together or separately, the
following securities at an aggregate public offering price that will not exceed
$200,000,000: Class C common stock, preferred stock, warrants, rights and units.

Share buybacks

On February 15, 2022, our Board authorized up to $20,000,000 in repurchases of
our outstanding shares of common stock through December 31, 2022. Purchases made
pursuant to the program will be 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. The timing, manner, price and
amount of any repurchases will be determined by us in our discretion and will be
subject to economic and market conditions, stock price, applicable legal
requirements and other factors. The program may be suspended or discontinued at
any time.

From the beginning of the program until May 12, 2022we bought back 151,324 shares for a total of $2,690,586.

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Class C OP Units

On January 18, 2022, we completed the acquisition of a KIA auto dealership
property in an "UPREIT" transaction pursuant to a contribution agreement whereby
an affiliate of the seller received 1,312,382 units of Class C limited
partnership interest in the Operating Partnership (the "Class C OP Units") based
on an agreed upon value of $25.00 per unit, representing approximately 47% of
the property's value. Following expiration of the lock-up period ending on
August 11, 2022, the holder of the Class C OP Units may require the redemption
of all or a portion of these units and we have the option to redeem the units
for cash or shares of Class C common stock. The Class C OP Units received
$251,539 in distributions during the three months ended March 31, 2022 (also see
the "Distributions" section below).

Cash flow summary

The following table summarizes our cash flow activity for the three months ended
March 31, 2022 and 2021:

                                                          Three Months Ended March 31,
                                                            2022                2021
Net cash (used in) provided by operating activities   $    (1,083,310)     $     100,625
Net cash (used in) provided by investing activities   $    (8,857,451)     $   8,391,095
Net cash used in financing activities                 $   (23,122,696)     

$(11,333,970)

Cash flow from operating activities

The cash used in operating activities of $1,083,310 during the three months
ended March 31, 2022 primarily reflects adjustments to our net loss of
$12,073,164 to exclude net non-cash losses of $13,745,954 related to
depreciation and amortization, impairment of goodwill, stock compensation
expense, amortization of deferred financing costs and premium, amortization of
deferred lease incentives and amortization of above market lease intangibles,
which were partially offset by gain on sale of real estate investments,
unrealized gain on interest rate swap valuation, amortization of below-market
lease intangibles, amortization of deferred rents and undistributed income from
our unconsolidated investment in a real estate property. Cash used in operations
also included cash used in changes in operating assets and liabilities of
$2,851,467 during the three months ended March 31, 2022 due to increases in
tenant receivables and prepaid and other assets and a decrease in accounts
payable, accrued and other liabilities. These cash uses were partially offset by
distributions received from our unconsolidated investment in a real estate
property of $95,367.

The cash provided by operating activities of $100,625 during the three months
ended March 31, 2021 primarily reflects adjustments to our net loss of $903,648
to exclude net non-cash charges of $2,877,547 related to depreciation and
amortization, stock compensation expense, amortization of deferred financing
costs, amortization of deferred lease incentives and amortization of above
market leases, which were partially offset by amortization of below-market lease
intangibles, gain on forgiveness of economic relief note payable, unrealized
gain on interest rate swap valuation, gain on sale of real estate investments,
amortization of deferred rents and undistributed income from an unconsolidated
investment in a real estate property. Cash used in operations also included net
use of cash for changes in operating assets and liabilities of $1,952,653 during
the three months ended March 31, 2021, due to increases in tenant receivables,
prepaid and other assets and a decrease in accounts payable, accrued and other
liabilities. These cash uses were partially offset by distributions from our
unconsolidated investment in real estate property of $79,379.

Cash flows from operating activities for the three months ended March 31, 2022
were disproportionately affected by annual costs paid during the first quarter.
We expect that cash flows will be positive in the next twelve months, in part
due to an increase in our investments in operating assets as a result of our
recent acquisitions; however, there can be no assurance that this expectation
will be realized.
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Cash flow from investing activities

Net cash used in investing activities was $8,857,451 for the three months ended
March 31, 2022 and mainly consisted of the following:

•$44,714,508 for acquisition of the Kalera and Kia real estate investments and
refinancing the KIA mortgage;
•$749,481 of additions to existing real estate investments;
•$2,000,000 payment of a lease incentive for the PreK Education property; and
•$500,000 payment of a refundable purchase deposit for the Lindsay acquisition.

These uses were partially offset by:

•Proceeds of $38,911,538 from the sale of four real estate investments; and • Receipt of $195,000 of notes receivable.

Net cash from investing activities was $8,391,095 for the three months ended March 31, 2021 and mainly consisted of the following:

•$13,221,509 net proceeds from the sale of three real estate investments.

These products were partially offset by:

•$4,500,000 of deposit for investment in special purpose acquisition company;
and
•$330,414 of additions to existing real estate investments.

Cash flow from financing activities

Net cash used in financing activities was $23,122,696 for the three months ended
March 31, 2022 and consisted of the following:

•$130,277,534 of mortgage note principal payments upon entering the Credit
Facility and sale of four properties;
•$2,186,468 of deferred financing cost payments to third parties;
•$1,418,783 of cash distributions paid to common stockholders;
•$1,065,278 of cash dividends paid to preferred stockholders;
•$852,721 used for repurchases of common shares; and
•$189,412 for payments of offering costs.

These uses were partially offset by:

•$100,000,000 in proceeds from borrowings on our Credit Facility Term Loan;
•$20,775,000 of net proceeds from our Credit Facility Revolver, partially offset
by repayment of $8,022,000 on the prior credit facility with Banc of California
(the "Prior Credit Facility"); and
•$114,500 in net proceeds from issuance of common stock in the Listed Offering.

Net cash used in financing activities was $11,333,970 for the three months ended
March 31, 2021 and mainly consisted of the following:

• $13,198,773 principal repayments of mortgage notes; •$10,375,063 used for common share repurchases; • $867,410 in cash distributions paid to common shareholders; •$409,844 for the payment of placement fees and commissions; and • $246,587 of deferred financing fee payments to third parties.

These uses were partially offset by:

•$12,136,000 of proceeds from mortgage notes payable; and • $1,627,707 of proceeds from the issuance of common shares.

                                       45
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Funds from operations and adjusted funds from operations

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

Additionally, we use AFFO as a non-GAAP financial measure to evaluate our
operating performance. AFFO excludes non-routine and certain non-cash items such
as revenues in excess of cash received, amortization of stock-based
compensation, deferred rent, amortization of in-place lease valuation
intangibles, acquisition-related costs, deferred financing fees, gain or loss
from the extinguishment of debt, unrealized gains (losses) on derivative
instruments, write-offs of transaction costs and other one-time transactions. 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.
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. 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.

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. However, a material limitation associated with FFO and AFFO is
that they are not indicative of our cash available to fund distributions since
other uses of cash, such as capital expenditures at our properties and principal
payments of debt, are not deducted when calculating FFO and AFFO. AFFO is useful
in assisting management and investors in assessing our ongoing ability to
generate cash flow from operations and continue as a going concern in future
operating periods. However, FFO and AFFO are not useful measures in evaluating
net asset value ("NAV") because impairments are taken into account in
determining NAV but not in determining FFO and AFFO. 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.

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. In the future, the
SEC or Nareit may decide to standardize the allowable exclusions across the REIT
industry, and we may have to adjust the calculation and characterization of this
non-GAAP measure. Furthermore, as described in Note 12 to our accompanying
unaudited condensed consolidated financial statements, the conversion ratios for
units of Class M limited partnership interest in the Operating Partnership
("Class M OP Units"), units of Class P limited partnership interest in the
Operating Partnership ("Class P OP Units") and units of Class R limited
partnership interest in the Operating Partnership ("Class R OP Units") can
increase if the specified performance hurdles are achieved, which would increase
the fully-diluted weighted average shares outstanding.
                                       46
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The following are the calculations of FFO and AFFO for the three months ended
March 31, 2022 and 2021:

                                                                          Three Months Ended March 31,
                                                                            2022                     2021
Net loss (in accordance with GAAP)                                 $    (12,073,164)            $  (903,648)
Preferred stock dividends                                                  (921,875)                      -

Net loss attributable to common shareholders and Class C OP units

                                                                   (12,995,039)               (903,648)
FFO adjustments:
Add: Depreciation and amortization                                        3,300,492               3,564,560
Amortization of lease incentives                                             71,394                  65,301

Depreciation allowances for unconsolidated investment in real estate

                                                   190,468                 181,786
Less: Gain on sale of real estate investments, net                       (7,400,777)               (289,642)
FFO attributable to common stockholders and Class C OP Units            (16,833,462)              2,618,357
AFFO adjustments:
Add: Amortization of corporate intangibles                                        -                 460,143
Impairment of goodwill                                                   17,320,857                       -
Stock compensation                                                          511,865                 604,645
Deferred financing costs                                                  1,266,725                  99,069
Non-recurring loan prepayment penalties                                     615,336                       -
Swap termination costs                                                      733,000                  23,900
Amortization of above-market intangible leases                               32,456                  32,455

Acquisition costs and due diligence costs, including discontinued lawsuit costs

                                                     586,669                  10,744
Less: Deferred rents                                                       (110,505)               (274,823)
Unrealized gains on interest rate swaps                                    (788,016)               (427,119)
Amortization of below-market intangible leases                             (363,074)               (367,575)
Gain on forgiveness of economic relief note payable                               -                (517,000)

Other adjustments for unconsolidated investment in real estate

                                                                (188)                (32,194)

AFFO Attributable to Common Shareholders and Class C OP Units

                                                              $      2,971,663             $ 2,230,602

Weighted average shares outstanding:
Basic                                                                     7,533,158               7,706,621
Fully diluted (1)                                                        10,193,498               8,926,585

FFO Per Share:
Basic                                                              $          (2.23)            $      0.34
Fully Diluted                                                      $          (2.23)            $      0.29

AFFO Per Share:
Basic                                                              $           0.39             $      0.29
Fully Diluted                                                      $           0.29             $      0.25

(1) Includes Class M, Class P and Class R OP units to calculate the weighted average number of shares.

                                       47
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Operating results

As of March 31, 2022, we owned 36 operating properties, including the TIC
Interest. We acquired two properties (one industrial and one retail) during the
first three of months 2022 compared with no real estate acquisitions during the
first three of months 2021. Four properties (three office and one industrial,
which were classified as held for sale as of December 31, 2021) were sold during
the first three months of 2022. Three retail properties were sold during the
first three months of 2021, which were classified as held for sale as of
December 31, 2020. The operating results of such properties that were classified
as held for sale are included in our continuing results of operations.

We expect that rental income, tenant reimbursements, depreciation and
amortization expense, and interest expense will increase for the full year of
2022 as compared with the full year of 2021, as a result of the two property
acquisitions during the first quarter of 2022, the acquisition of an eight
property industrial portfolio on April 19, 2022 and our plan to acquire
additional properties during the remainder of 2022, partially offset by five
dispositions in 2021 (three during the first quarter and one each during the
third and fourth quarters) and four dispositions in February 2022. Our results
of operations for the three months ended March 31, 2022 may not be indicative of
those expected for the full year of 2022 or in future periods.

Due to the continuing COVID-19 pandemic, including the recent spread of its
variants, in the United States and globally, our tenants and operating partners
continue to be impacted. The continued impact of the COVID-19 pandemic and its
variants on our future results will largely depend on future developments, which
are highly uncertain and cannot be predicted, including new information
regarding mutations of COVID-19, the success of actions taken to contain or
treat COVID-19, the effectiveness of the current vaccines to contain the
COVID-19 variants, and reactions by consumers, companies, governmental entities
and capital markets. We, including our tenants, may also by impacted by the
worsening inflation, interest rate environment and disruption of supply chains
in the U.S. and globally. The effects of these challenging economic factors may
be mitigated by the number of credit tenants in our portfolio and the diversity
of our property locations and tenant industries.

Comparison of the three months ended March 31, 2022 at the end of three months
March 31, 2021

Rental Income

Rental income, including tenant reimbursements, for the three months ended
March 31, 2022 and 2021 was $9,648,649 and $8,974,870, respectively. The
increase of $673,779, or 8%, as compared with the first quarter of 2021
primarily reflects the rental income contribution from our acquisition of a KIA
auto dealership property in Carson, California on January 18, 2022, which
contributed approximately 12.9% of our total rental income during the first
quarter of 2022 (see Note 3 to our accompanying unaudited condensed consolidated
financial statements for more details). This increase together with the rental
income contributions of three other property acquisitions (one industrial
property acquired at the end of January 2022 and two properties acquired during
the second half of 2021 (one industrial and one retail)) were partially offset
by the decrease in rental income from the sale of six properties (four
properties sold in February 2022 (one industrial and three office) and two
properties sold during the second half of 2021 (one industrial and one retail)).
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
operating properties owned as of March 31, 2022 was $30,624,617, which increased
to $34,358,758 with the April 2022 acquisition of eight properties leased to
Lindsay which is described in Note 14 to our accompanying unaudited condensed
consolidated financial statements.

General and administrative

General and administrative expenses were $2,106,183 and $2,678,239 for the three
months ended March 31, 2022 and 2021, respectively. The decrease of $572,056, or
21%, as compared with the first quarter of 2021 primarily reflects decreases in
marketing, legal and consulting fees and technology services in the current year
quarter compared to the prior year quarter.

Stock compensation expense

Stock compensation expense was $511,865 and $604,645 for the three months ended
March 31, 2022 and 2021, respectively. The decrease of $92,780, or 15%, as
compared with the first quarter of 2021 primarily reflects forfeitures due to
employee terminations during the second half of 2021 through the first quarter
of 2022.
                                       48
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Depreciation and amortization

Depreciation and amortization expense was $3,300,492 and $4,024,703 for the
three months ended March 31, 2022 and 2021, respectively. The purchase price of
properties acquired is allocated to tangible assets, identifiable intangibles
and assumed liabilities, if any, and depreciated or amortized over their
estimated useful lives. The decrease of $724,211, or 18%, as compared with the
first quarter of 2021 primarily reflects the absence of amortization of
corporate intangibles, which were impaired during the fourth quarter of 2021,
and the absence of depreciation and amortization expenses related to the sale of
four properties (three office and one industrial) held for sale during the
current year quarter and two properties (one industrial and one retail) sold
during the second half of 2021, offset in part by the depreciation and
amortization of two properties (one industrial and one retail) acquired during
the current year quarter and two properties (one industrial and one retail)
acquired during the second half of 2021.

Interest charges

Interest expense was $1,568,175 and $1,781,136 for the three months ended
March 31, 2022 and 2021, respectively (see Note 7 to our accompanying unaudited
condensed consolidated financial statements for details of the components of
interest expense). On January 18, 2022, we used funds from our initial borrowing
from our Credit Facility to pay off 20 existing property mortgages for 27
properties, the $36,465,449 mortgage on the KIA auto dealership property which
we acquired and repayment of our Prior Credit Facility and related interest,
aggregating $153,428,764 (see Note 7 to our accompanying unaudited condensed
consolidated financial statements for more details). In addition, four interest
rate swap agreements related to four property mortgages were terminated in
connection with the prepayment of the property mortgages. The decrease of
$212,961, or 12%, as compared with the first quarter of 2021 primarily reflects
a decrease in interest expense of approximately $537,000 due to the pay-off of
mortgage notes and the Prior Credit Facility discussed above. This decrease in
interest expense was partially offset by the absence of unrealized gains on the
valuation of interest rate swaps of approximately $304,000 (net of swap
termination costs of $23,900 in 2021) and an increase in amortization of
deferred financing costs and other costs of approximately $20,000 during the
first quarter of 2022 compared with the first quarter of 2021.

Real estate expenses

Property expenses were $2,764,592 and $1,754,947 for the three months ended
March 31, 2022 and 2021, respectively. These expenses primarily relate to
property taxes and repairs and maintenance expenses, the majority of which are
reimbursed by tenants. The increase of $1,009,645, or 58%, as compared with the
first quarter of 2021 reflects increases in property and other taxes during the
current year quarter and approximately $587,000 in write-offs of costs related
to our proposed acquisition of 10 properties leased to Walgreens which we
abandoned due to inability to obtain the mortgage servicer's approval prior to
the February 18, 2022 contract termination date and changes in market
conditions. These write-offs included legal and due diligence costs and
forfeiture of $375,000 of our $1,000,000 earnest money deposit.

Impairment of Good will

The impairment of goodwill of $17,320,857 for the three months ended March 31,
2022 reflects the significant decline in the market value of our common stock
since it began trading on the NYSE in February 2022. Our stock price is
materially below both our historical net asset value and the book value of our
equity, reflecting the negative impacts of rising inflation and interest rates,
declining office occupancy rates affecting owners of real estate properties and
fears of a potential recession. We, therefore, reduced the carrying value of
goodwill to zero (see Note 5 to our accompanying unaudited condensed
consolidated financial statements for additional details).

Gain on sale of real estate investments

The gain on sale of investments of $7,400,777 and $289,642 for the three months
ended March 31, 2022 and 2021, respectively, relates to the sale of four
properties (three office and one industrial) during the current year quarter and
three retail properties during the prior year quarter (see Note 3 to our
accompanying unaudited condensed consolidated financial statements for more
details).

Other (expenses) income

Interest income was $13,435 and $50 for the three months ended March 31, 2022
and 2021, respectively.

Income from unconsolidated investment in a real estate property was $95,464 and
$72,467 for the three months ended March 31, 2022 and 2021, respectively. This
reflects our approximate 72.7% TIC Interest in the Santa Clara property's
results of operations for the first quarters of 2022 and 2021, respectively.
                                       49
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Loss on early extinguishment of debt of $1,725,318 for the three months ended
March 31, 2022 reflects non-cash charges of $1,164,998 for deferred financing
costs and prepayment penalties of $615,336 upon repayment of 20 mortgages for 27
properties, full repayment of our Prior Credit Facility and mortgage repayments
related to four asset sales, as well as $733,000 of swap termination fees
related to the four mortgage refinancings and the related recognition of
termination gains of $788,016 (see Notes 7 and 8 to our accompanying unaudited
condensed consolidated financial statements for more details).

Other income of $65,993 and $85,993 for the three months ended March 31, 2022
and 2021, respectively, primarily reflects our monthly management fee from the
entities that own the TIC Interest property which is equal to 0.1% of the total
investment value of the property.

Organizing and offering costs

Organizational and offering costs include all costs incurred in connection with
the offerings prior to the Listed Offering, including investor relations'
payroll costs and other costs incurred in connection with the offerings of our
stock, including, but not limited to legal fees, federal and state filing fees,
and other costs. Through November 24, 2021, the termination date of the Reg A
Offering, we had recorded cumulative organizational and offering costs of
$8,298,499, including $5,429,105 paid to our former sponsor or affiliates
through December 31, 2019.

In connection with our Listed Offering of Class C common stock, we incurred
organizational and offering costs in the aggregate of $885,500 through March 31,
2022. We also incurred additional organizational and offering costs of $189,412
during the three months ended March 31, 2022 related to our registration
statement on Form S-3 (File No. 333-263985) that we filed on March 30, 2022 to
issue and sell from time to time, together or separately, the following
securities at an aggregate public offering price that will not exceed
$200,000,000: Class C common stock, preferred stock, warrants, rights and units.

Distributions

Preferred Dividends

On March 18, 2022, our Board declared Series A Preferred Stock dividends payable
of $921,875 for the first quarter of 2022. This amount was accrued as of March
31, 2022 and paid on April 15, 2022 (see Note 14 to our accompanying unaudited
condensed consolidated financial statements for more details).

Common stock distributions

We intend to pay distributions on a monthly basis, and we paid our first
distribution on August 10, 2016. The distribution rate is determined by the
Board based on our financial condition and such other factors as the Board deems
relevant. The Board 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.

Distributions declared, distributions paid out, cash flows from operations and
our sources of distribution payments were as follows for the first quarter of
2022 and the four quarters of 2021:

                                                                                                                           Cash Flows (Used
                                   Total                                                Distributions Paid                  in) Provided by                                                               Quarter End
                               Distributions             Distributions                                                         Operating               Net Rental                                           Accrued
      Period (1)                  Declared            Declared Per Share             Cash              Reinvested             Activities            Income Received          Offering Proceeds            Distribution
2022 (2)
First Quarter                $     2,907,122          $       0.387499          $ 1,418,783          $ 1,492,404          $     (1,083,310)         $   2,907,122          $                -          $       854,599
2021
First Quarter                $     1,991,676          $       0.258903          $   891,202          $ 1,130,949          $        102,091          $   1,991,676          $                -          $       675,221
Second Quarter                     1,976,511                  0.261780              835,381            1,131,281                 2,981,262              1,976,511                           -                  650,167
Third Quarter                      1,981,725                  0.264656              838,868            1,137,501                 3,299,330              1,981,725                           -                  643,025
Fourth Quarter                     2,160,966                  0.289864              907,927            1,200,880                 3,346,002              2,160,966                           -                  730,445
2021 Totals                  $     8,110,878          $       1.075203          $ 3,473,378          $ 4,600,611          $      9,728,685          $   8,110,878          $                -


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(1) The distribution paid per Class S common share was net of deferred selling commissions.

(2) Includes the 13th distribution for 2021 declared on January 5, 2022 for Class C ordinary shares only and distributions to Class C OP shares.

Prior to 2022, distributions to stockholders were declared and paid based on
daily record dates at rates per share per day. The distribution details are as
follows:

                                                   Rate Per Share Per Day
            Distribution Period                              (1)                       Declaration Date                    Payment Date
2021
January 1-31                                       $         0.00287670                December 9, 2020                 February 25, 2021
February 1-28                                      $         0.00287670                January 27, 2021                   March 25, 2021
March 1-31                                         $         0.00287670                January 27, 2021                   April 26, 2021
April 1-30                                         $         0.00287670                 March 25, 2021                     May 25, 2021
May 1-31                                           $         0.00287670                 March 25, 2021                    June 25, 2021
June 1-30                                          $         0.00287670                 March 25, 2021                    July 26, 2021
July 1-31                                          $         0.00287670                 June 16, 2021                    August 25, 2021
August 1-31                                        $         0.00287670                 June 16, 2021                   September 27, 2021
September 1-30                                     $         0.00287670                 June 16, 2021                    October 25, 2021
October 1-31                                       $         0.00315070                August 12, 2021                  November 24, 2021
November 1-30                                      $         0.00315070                August 12, 2021                  December 21, 2021
December 1-31                                      $         0.00315070                August 12, 2021                   January 5, 2022
13th Distribution (2)                              $         0.00027397                January 5, 2022                   January 18, 2022

                                                     Rate Per Share Per
            Distribution Period                             Month                      Declaration Date                    Payment Date
2022
January 1-31                                       $         0.09583300                January 27, 2022                 February 25, 2022
February 1-28                                      $         0.09583300               February 17, 2022                   March 25, 2022
March 1-31                                         $         0.09583300               February 17, 2022                   April 25, 2022
April 1-30                                         $         0.09583300                 March 18, 2022                   May 25, 2022 (3)
May 1-31                                           $         0.09583300                 March 18, 2022                  June 27, 2022 (3)
June 1-30                                          $         0.09583300                 March 18, 2022                  July 25, 2022 (3)

(1) Distributions paid per Class S common share were net of deferred selling commissions.

(2)  On January 5, 2022, our Board declared a 13th distribution to our common
stockholders since our AFFO exceeded 110% of distributions declared for the year
ended December 31, 2021. The 13th distribution was based on the outstanding
shares of common stock held by stockholders on the record date of January 6,
2022 using the following formula: (i) the daily amount of the 13th distribution
divided by 365 days (ii) multiplied by the number of days such shares of common
stock were held by such stockholder from January 1, 2021 through December 31,
2021. Stockholders were only eligible for the 13th distribution if they held
such shares as of the close of business on the record date.

(3) Reflects the expected date of payment since the distribution has not been paid as of the date of filing of this Quarterly Report on Form 10-Q.

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Properties

Wallet Information

Our wholly-owned investments in real estate properties as of March 31, 2022,
December 31, 2021 and March 31, 2021, and the 91,740 square foot industrial
property underlying the TIC Interest for all balance sheet dates presented were
as follows:

                                                                                      As of
                                                         March 31,                                             March 31,
                                                            2022                December 31, 2021                 2021
Number of properties:                                                                  (1)                        (2)
Industrial, including TIC Interest                                   12                   12                          12
Retail                                                               13                   12                          12
Office                                                               11                   14                          14
Total operating properties and properties held for
sale                                                                 36                   38                          38
Land                                                                  1                    1                           1
Total properties                                                     37                           39                       39

Leasable square feet:
Industrial                                               1,450,193                 1,514,876                   1,145,519
Retail                                                     234,029                   161,406                     291,513
Office                                                     625,352                   800,036                     853,963
Total                                                    2,309,574                 2,476,318                   2,290,995

(1) Includes four buildings (three office and one industrial) held for sale to the December 31, 2021.

(2) Includes a commercial building intended for sale to March 31, 2021.

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

We completed the following dispositions during the first three months of 2022
and 2021 as follows:

                                                                                                                                               Contract Sales
Property                             Location               Disposition Date          Property Type              Rentable Square Feet              Price              Net Proceeds
2022
Bon Secours                     Richmond, VA                    2/11/2022                   Office                      72,890                $   8,760,000          $          -
Omnicare                        Richmond, VA                    2/11/2022                 Industrial                    51,800                   10,200,000                     -
Texas Health                    Dallas, TX                      2/11/2022                   Office                      38,794                    7,040,000            11,883,639      (1)
Accredo                         Orlando, FL                     2/24/2022                   Office                      63,000                   14,000,000             5,000,941
                                                                                                                       226,484                $  40,000,000          $ 16,884,580
2021
Chevron Gas Station             Roseville, CA                   1/7/2021                    Retail                       3,300                $   4,050,000          $  3,914,909
EcoThrift                       Sacramento, CA                  1/29/2021                   Retail                      38,536                    5,375,300             2,684,225
Chevron Gas Station             San Jose, CA                    2/12/2021                   Retail                       1,060                    4,288,888             4,054,327
                                                                                                                        42,896                $  13,714,188          $ 10,653,461


(1)  Combined net proceeds for the February 11, 2022 disposition are net of
commissions, closing costs and repayment of the outstanding mortgages, except
there were no outstanding mortgages on the two Chevron properties at the time of
sale.
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Extension of leases

Effective January 12, 2022, we extended the lease term of our Cummins property
located in Nashville, Tennessee from March 1, 2023 to February 28, 2024 with a
2% increase in annual rent commencing March 1, 2023. Cummins accepted the
extension of the lease terms and possession of the property on an "AS-IS" basis.
We also granted to Cummins an option to extend the lease term for an additional
five years commencing March 1, 2024 and paid a leasing commission of $30,000 in
connection with this extension.

Effective January 26, 2022, we extended the lease term of our ITW Rippey
property located in El Dorado Hills, California from August 1, 2022 to July 31,
2029 with a 6% increase in annual rent commencing August 1, 2022 and 3% annual
escalations thereafter. We also agreed to provide a tenant improvements
allowance of $481,250 in connection with this extension and granted ITW Rippey
an option to extend the lease term for an additional five years commencing
August 1, 2029.

Effective March 4, 2022, we extended the lease term of our Williams Sonoma
property located in Summerlin, Nevada from October 31, 2022 to October 31, 2025
with a 4% increase in annual rent commencing November 1, 2022 and 2.7% annual
escalations thereafter. We also agreed to provide the tenant with one month of
free rent, an inducement payment of $100,000 and tenant improvements allowance
of $166,450 and will pay a leasing commission of $90,383 in connection with this
extension.

We continue to explore possible lease extensions for some of our other properties.

Other than as discussed below, we do not have other plans to incur any
significant costs to renovate, improve or develop the properties. We believe
that our properties are adequately insured. Pursuant to lease agreements, as of
March 31, 2022 and December 31, 2021, we had obligations to pay approximately
$128,538 and $189,136, respectively, for on-site and tenant improvement to be
incurred by tenants. We expect that the related improvements will be completed
during the 2022 calendar year and will be funded from cash on hand, operating
cash flow, borrowings under our Revolver or offering proceeds.

In addition, we have identified approximately $1,959,000 of roof replacement,
exterior painting and sealing and parking lot repairs/restriping that are
expected to be completed in the next 12 months, including approximately $452,000
of building improvements at the Northrop Grumman property which we have agreed
to complete in a timely manner. Approximately $994,000 of these improvements are
expected to be recoverable from the tenant through operating expense
reimbursements. We will initially pay for the improvements, and the recoveries
will be billed over an extended period of time according to the terms of the
leases. The remaining costs of approximately $965,000 are not recoverable from
tenants. These improvements will be funded from cash on hand, operating cash
flows, borrowings under our Revolver or proceeds from the sale of shares of our
common stock.

Recent Market Conditions

The continuing developments in the Russian war against Ukraine and sanctions
which have been announced by the United States and other countries against
Russia have caused significant uncertainty in the market, adding to continuing
concerns about supply chain disruptions, inflation and increases in interest
rates. Volatility in stock and bond markets, particularly the rapid rise in
yields on U.S. Treasury securities, may negatively impact our operating results.

In addition, we continue to face significant uncertainties due to the COVID-19
pandemic, including any future variants thereof, although the impacts of the
COVID-19 pandemic on the economy appear to have diminished and the general
commercial real estate market appears to be recovering from such impacts. Both
the investing and leasing environments are currently highly competitive. The
COVID-19 pandemic has resulted in significant disruptions in utilization of
office and retail properties and uncertainty over how tenants will respond when
their leases are scheduled to expire.

Possible future declines in rental rates and expectations of future rental
concessions, including free rent to renew tenants early, to retain tenants who
are up for renewal or to attract new tenants, may result in decreases in cash
flows from investment properties. Furthermore, rent abatements for tenants
severely impacted by the COVID-19 pandemic, inflation or international business
interests, particularly if affected by the Russian war against Ukraine, may also
result in decreases in cash flows from investment properties. We have no leases
scheduled to expire in 2022 and three leases (two office and one industrial)
scheduled to expire in 2023, which comprise an aggregate of 142,146 leasable
square feet and represent approximately 4.1% of projected 2022 ABR from
properties. The tenants of these properties could reevaluate their use of such
properties in light of the impacts of the COVID-19 pandemic, including their
ability to have workers succeed in working at home, and determine not to renew
these leases or to seek rent or other concessions as a condition of renewing
their leases.
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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. However, we have successfully negotiated lease
extensions for nine properties during 2021 and the first quarter of 2022. We are
in the process of negotiating potential lease extensions with other tenants.

The debt market remains sensitive to the macro environment, such as inflation,
impacts of the COVID-19 pandemic, Federal Reserve policy, market sentiment or
regulatory factors affecting the banking and commercial mortgage-backed
securities industries. Increases in interest rates on our floating rate debt
will reduce our net income (loss) and cash flows. In January 2022, we refinanced
all but four of our properties (including the TIC Interest) with proceeds from
the $250,000,000 Credit Facility which includes floating rates based on SOFR and
our leverage ratio as described above. The mortgage on our Sutter Health
property does not mature until March 9, 2024 and the other three mortgages do
not mature until after September 2027. All four of these mortgages are at fixed
rates. Our Revolver does not mature until January 18, 2026 and can be extended
for an additional 12 months thereafter, while our Term Loan does not mature
until January 18, 2027. 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 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. We
continuously review our investment and debt financing strategies to optimize our
portfolio and the cost of our debt exposure. On May 10, 2022, we purchased a
five-year swap at 2.258% on our $150,000,000 Term Loan that results in a fixed
interest rate of 3.858% on the Term Loan when our leverage ratio is less than or
equal to 40%. As part of this transaction, we sold a one-time option to
terminate the swap on December 31, 2024, which reduced the swap rate. Under the
Credit Facility, the interest rate will continue to vary based on our leverage
ratio.

Election as a REIT

We elected to be taxed as a REIT for U.S. federal income tax purposes under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. We
intend to continue to qualify as a REIT. To continue to qualify and maintain
status as a REIT, we must meet certain requirements relating to our
organization, sources of income, nature of assets, distributions of income to
our stockholders and recordkeeping. As a REIT, we generally would not be subject
to federal income tax on taxable income that we distribute to our stockholders
so long as we distribute at least 90% of our annual taxable income (computed
without regard to the distributions paid deduction and excluding net capital
gains).

If we fail to maintain our qualification as a REIT in any taxable year, we will
be subject to tax, including any applicable alternative minimum tax, on our
taxable income at regular corporate rates. We will not be able to deduct
distributions paid to our stockholders in any year in which we fail to qualify
as a REIT. We also will be disqualified for the four taxable years following the
year during which qualification is lost, unless we are entitled to relief under
specific statutory provisions. Such an event could materially adversely affect
our net income (loss) and net cash available for distribution to stockholders.
However, we believe that we are organized and operate in such a manner as to
continue to qualify for treatment as a REIT for federal income tax purposes. No
provision for federal income taxes has been made in our accompanying unaudited
condensed consolidated financial statements. We will be subject to certain state
and local taxes related to the operations of properties in certain locations. We
are subject to certain state and local taxes related to the operations of
properties in certain locations, which have been provided for in our
accompanying unaudited condensed consolidated financial statements.

Significant Accounting Policies and Estimates

Our accounting policies have been established to conform with GAAP. The
preparation of financial statements in conformity with GAAP requires us to use
judgment in the application of accounting policies, including making estimates
and assumptions. These judgments affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. If our judgment or interpretation of the facts and
circumstances relating to various transactions had been different, it is
possible that different accounting policies would have been applied, thus
resulting in a different presentation of the financial statements. Additionally,
other companies may utilize different estimates that may impact comparability of
our results of operations to those of companies in similar businesses. A
discussion of the accounting policies that management considers critical in that
they involve significant management judgments, assumptions and estimates is
included under "Critical Accounting Policies" in Part II, Item 7, Management's
Discussion and Analysis of Financial Condition and Results of Operations, of our
Annual Report on Form 10-K, filed with the SEC on March 23, 2022. There have
been no significant changes to our policies during the three months ended
March 31, 2022.
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Commitments and contingencies

We may be subject to certain covenants and contingencies with respect to certain transactions (see Note 11 to our accompanying unaudited condensed consolidated financial statements for a covenant and contingency discussion).

Transactions and agreements with related parties

See Note 10 to our accompanying unaudited condensed consolidated financial statements for more details on the various related party transactions and agreements.

Subsequent events

See Note 14 to our accompanying unaudited condensed consolidated financial statements for events occurring after March 31, 2022 until the date of filing of this report.

Recent accounting pronouncements

See Note 2 to our accompanying unaudited condensed consolidated financial statements for recent accounting pronouncements.

Off-balance sheet arrangements

We have no off-balance sheet arrangements that had or are reasonably likely to
have a material current or future effect on our financial condition, results of
operations, liquidity, or capital resources as of March 31, 2022.

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