REAL ESTATE INVESTMENTS, NET

6 Months Ended

Jun. 30, 2023

As of June 30, 2023, the Company’s real estate investment portfolio consisted of 56 operating properties located in 18 states comprised of: 38 industrial properties (including the Company's approximate 72.7% TIC Interest in a Santa Clara, California industrial property which is not reflected in the table below but discussed in Note 4), 12 retail properties (including the 11 held for sale properties not reflected in the table below) and six office properties (including the three held for sale properties not reflected in the table below).

The following table provides summary information regarding the Company’s 41 operating properties held for investment and use as of June 30, 2023:


Property Tenant	Location	Acquisition Date	Property Type	Land, Buildings and Improvements		Equipment		Tenant Origination and Absorption Costs		Accumulated Depreciation and Amortization		Total Investment in Real Estate Property, Net
Northrop Grumman	Melbourne, FL	3/7/2017	Industrial	$	13,608,084	$	—	$	1,469,737	$	(4,244,244)	$	10,833,577
Northrop Grumman	Melbourne, FL	6/21/2018	Land	329,410		—		—		—		329,410
Husqvarna	Charlotte, NC	11/30/2017	Industrial	11,840,200		—		1,013,948		(2,006,386)		10,847,762
AvAir	Chandler, AZ	12/28/2017	Industrial	27,357,899		—		—		(3,846,315)		23,511,584
3M	DeKalb, IL	3/29/2018	Industrial	14,762,819		—		3,037,057		(5,857,614)		11,942,262
Taylor Fresh Foods	Yuma, AZ	10/24/2019	Industrial	34,194,369		—		2,894,017		(4,901,205)		32,187,181
Levins	Sacramento, CA	12/31/2019	Industrial	4,429,390		—		221,927		(772,130)		3,879,187
Labcorp	San Carlos, CA	12/31/2019	Industrial	9,672,174		—		408,225		(715,123)		9,365,276
WSP USA	San Diego, CA	12/31/2019	Industrial	9,869,520		—		539,633		(1,269,640)		9,139,513
ITW Rippey	El Dorado, CA	12/31/2019	Industrial	7,071,143		—		304,387		(958,596)		6,416,934
L3Harris	San Diego, CA	12/31/2019	Industrial	11,690,952		—		662,101		(1,463,070)		10,889,983
EMC Shop (1)	Rocklin, CA	12/31/2019	Industrial	6,357,172		—		464,592		(1,474,375)		5,347,389
Arrow-TruLine	Archbold, OH	12/3/2021	Industrial	11,518,084		—		—		(638,998)		10,879,086
Kalera	Saint Paul, MN	1/31/2022	Industrial	3,690,009		4,429,000		—		(495,740)		7,623,269
Lindsay	Colorado Springs 1, CO	4/19/2022	Industrial	2,311,934		—		—		(70,473)		2,241,461
Lindsay	Colorado Springs 2, CO	4/19/2022	Industrial	3,314,406		—		—		(41,938)		3,272,468
Lindsay	Dacano, CO	4/19/2022	Industrial	6,561,054		—		—		(101,671)		6,459,383
Lindsay	Alachua, FL	4/19/2022	Industrial	8,518,123		—		—		(438,155)		8,079,968
Lindsay	Franklinton, NC	4/19/2022	Industrial	7,181,113		—		—		(193,176)		6,987,937
Lindsay	Canal Fulton 1, OH	4/19/2022	Industrial	11,345,533		—		—		(415,480)		10,930,053
Lindsay	Canal Fulton 2, OH	4/19/2022	Industrial	10,190,942		—		—		(380,675)		9,810,267
Lindsay	Rock Hill, SC	4/19/2022	Industrial	6,555,983		—		—		(203,295)		6,352,688
Lindsay	Gap, PA	4/13/2023	Industrial	16,580,044		—		—		(155,413)		16,424,631
Producto	Endicott, NY	7/15/2022	Industrial	2,362,310		—		—		(74,894)		2,287,416
Producto	Jamestown, NY	7/15/2022	Industrial	3,073,686		—		—		(91,688)		2,981,998
Valtir	Centerville, UT	7/26/2022	Industrial	4,685,355		—		—		(112,231)		4,573,124
Valtir	Orangeburg, SC	7/26/2022	Industrial	4,243,308		—		—		(133,535)		4,109,773
Valtir	Fort Worth, TX	7/26/2022	Industrial	3,278,522		—		—		(59,525)		3,218,997
Valtir	Lima, OH	8/4/2022	Industrial	9,921,943		—		—		(323,528)		9,598,415
Plastic Products	Princeton, MN	1/26/2023	Industrial	6,118,411		—		553,780		(267,875)		6,404,316
Stealth Manufacturing	Savage, MN	3/31/2023	Industrial	5,526,310		—		—		(49,478)		5,476,832
Summit Steel	Reading, PA	4/13/2023	Industrial	11,397,091		—		—		(83,086)		11,314,005
PBC Linear	Roscoe, IL	4/20/2023	Industrial	20,023,978		—		—		(153,451)		19,870,527
Cameron Tool	Lansing, MI	5/3/2023	Industrial	5,776,590		—		—		(28,679)		5,747,911
S.J. Electro Systems	Detroit Lakes, MN	5/5/2023	Industrial	6,314,057		—		—		(23,026)		6,291,031
S.J. Electro Systems	Plymouth, MN	5/5/2023	Industrial	2,225,635		—		—		(11,509)		2,214,126
S.J. Electro Systems	Ashland, OH	5/5/2023	Industrial	7,555,211		—		—		(26,924)		7,528,287
Titan	Alleyton, TX	5/11/2023	Industrial	17,146,503		—		—		(111,460)		17,035,043


(Operating properties table continued)
Property Tenant	Location	Acquisition Date	Property Type	Land, Buildings and Improvements		Equipment		Tenant Origination and Absorption Costs		Accumulated Depreciation and Amortization		Total Investment in Real Estate Property, Net
KIA/Trophy of Carson	Carson, CA	1/18/2022	Retail	$	69,286,444	$	—	$	118,606	$	(1,548,550)	$	67,856,500
Costco	Issaquah, WA	12/20/2018	Office	27,585,942		—		2,765,136		(5,950,867)		24,400,211
Solar Turbines	San Diego, CA	12/31/2019	Office	7,162,087		—		324,221		(839,020)		6,647,288
OES (2)	Rancho Cordova, CA	12/31/2019	Office	29,632,580		—		1,616,610		(4,441,744)		26,807,446
				$	482,266,320	$	4,429,000	$	16,393,977	$	(44,974,782)	$	458,114,515

(1) On June 29, 2023, the Company entered into a lease with The EMC Shop, LLC (“EMC Shop”) for the property formerly leased to Gap, Inc. The lease term is for 11.5 years through December 31, 2034 and EMC Shop has a purchase option which it can exercise any time through March 31, 2024.

(2) Effective December 31, 2022, the Company and Sutter Health agreed to the early termination of the Sutter Health lease. The property was then leased to 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. 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.

Impairment Charge

In March 2023, the Company recorded an impairment charge of $3,499,438 related to its property located in Nashville, Tennessee leased to Cummins Inc. through February 29, 2024. The Company determined that an impairment charge was triggered by expectations of a shortened holding period and estimated the property's fair value based upon current market comparables.

Acquisitions:

Six Months Ended June 30, 2023

During the six months ended June 30, 2023, the Company acquired 10 industrial real estate properties as follows:


Property Tenant	Location	Acquisition Date	Land		Buildings and Improvements		Tenant Origination and Absorption Costs		Below- Market Lease Intangibles		Acquisition Price
Plastic Products	Princeton, MN	1/26/2023	$	421,997	$	5,696,414	$	553,780	$	(285,139)	$	6,387,052
Stealth Manufacturing	Savage, MN	3/31/2023	770,752		4,755,558		—		—		5,526,310
Lindsay	Gap, PA	4/13/2023	2,125,604		14,454,440		—		—		16,580,044
Summit Steel	Reading, PA	4/13/2023	1,517,782		9,879,309		—		—		11,397,091
PBC Linear	Roscoe, IL	4/20/2023	699,198		19,324,780		—		—		20,023,978
Cameron Tool	Lansing, MI	5/03/2023	246,355		5,530,235		—		—		5,776,590
S.J. Electro Systems	Detroit Lakes, MN	5/05/2023	1,736,976		4,577,081		—		—		6,314,057
S.J. Electro Systems	Plymouth, MN	5/05/2023	627,903		1,597,732		—		—		2,225,635
S.J. Electro Systems	Ashland, OH	5/05/2023	251,233		7,303,978		—		—		7,555,211
Titan	Alleyton, TX	5/11/2023	2,056,161		15,090,342		—		—		17,146,503
			$	10,453,961	$	88,209,869	$	553,780	$	(285,139)	$	98,932,471

In addition, the Company provided a $1,800,000 deposit to fund improvements to the previously acquired Lindsay property in Franklinton, North Carolina.

During the three and six months ended June 30, 2023, the Company recognized $1,831,121 and $1,946,695, respectively, of total revenue related to the above-acquired properties.

Acquired Properties Lease Expirations:

The noncancellable lease terms of the properties acquired during the six months ended June 30, 2023 are as follows:


Property Tenant						Lease Expiration
Plastic Products						10/31/2028
Stealth Manufacturing						3/31/2043
Lindsay						4/30/2047
Summit Steel						4/30/2043
PBC Linear						4/30/2043
Cameron Tool						5/31/2043
S.J. Electro Systems, for all three properties acquired						5/31/2040
Titan						5/31/2043

Six Months Ended June 30, 2022

During the six months ended June 30, 2022, the Company acquired 10 retail and industrial real estate properties as follows:


Property Tenant	Location	Acquisition Date	Land		Buildings and Improvements		Equipment		Tenant Origination and Absorption Costs		Acquisition Price
KIA/Trophy of Carson	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
Lindsay	Colorado Springs 1, CO	4/19/2022	1,195,178		1,116,756		—		—		2,311,934
Lindsay	Colorado Springs 2, CO	4/19/2022	2,239,465		1,074,941		—		—		3,314,406
Lindsay	Dacono, CO (1)	4/19/2022	2,263,982		3,294,640		—		—		5,558,622
Lindsay	Alachua, FL	4/19/2022	966,192		7,551,931		—		—		8,518,123
Lindsay	Franklinton, NC	4/19/2022	2,843,811		4,337,302		—		—		7,181,113
Lindsay	Fulton 1, OH	4/19/2022	726,877		10,618,656		—		—		11,345,533
Lindsay	Fulton 2, OH	4/19/2022	635,865		9,555,077		—		—		10,190,942
Lindsay	Rock Hill, SC	4/19/2022	2,816,322		3,739,661		—		—		6,555,983
			$	46,991,829	$	80,961,280	$	4,429,000	$	118,606	$	132,500,715

(1) As of June 30, 2022, buildings and improvements exclude a non-refundable deposit of $1,330,782 for funding ongoing building construction at the Lindsay property in Dacono, Colorado. This deposit and the remaining deposit of $328,348 as of June 30,2023 are included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets.

During the three and six months ended June 30, 2022, the Company recognized $2,490,498 and $3,631,748, respectively, of total revenue related to the above-acquired properties.

Acquired Properties Lease Expirations:

The noncancellable lease terms of the properties acquired during the six months ended June 30, 2022 are as follows:


Property Tenant						Lease Expiration
KIA/Trophy of Carson						1/17/2047
Kalera (1)						2/28/2042
Lindsay, for all eight properties acquired						4/30/2047

(1) See Note 9 regarding Kalera’s pending business sale in connection with its Chapter 11 bankruptcy proceeding.

Dispositions:

Six Months Ended June 30, 2023 and 2022

There were no properties sold during the six months ended June 30, 2023.

During the six months ended June 30, 2022, the Company sold five real estate properties as follows:


Property Tenant	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sale Price		Gain on Sale		Net Proceeds
Bon Secours	Richmond, VA	2/11/2022	Office	72,890	$	10,200,000	$	28,595	$	—	(1)
Omnicare	Richmond, VA	2/11/2022	Flex	51,800	8,760,000		1,890,624		—		(1)
Texas Health	Dallas, TX	2/11/2022	Office	38,794	7,040,000		87,480		11,892,305		(1)
Accredo	Orlando, FL	2/24/2022	Office	63,000	14,000,000		4,868,387		5,012,724
EMCOR	Cincinnati, OH	6/29/2022	Office	39,385	6,525,000		720,071		6,345,642
				265,869	$	46,525,000	$	7,595,157	$	23,250,671

(1) Combined net proceeds for the February 11, 2022 disposition are net of commissions, closing costs and repayment of the outstanding mortgages.

Asset Concentration:

As of June 30, 2023 and December 31, 2022, the Company’s real estate portfolio asset concentration (greater than 10% of total assets) was as follows:


	June 30, 2023				December 31, 2022
Property Tenant and Location	Net Carrying Value		Percentage of Total Assets		Net Carrying Value		Percentage of Total Assets
KIA, Carson, CA	$	67,856,500	12.4	%	$	68,387,431	15.0	%
Lindsay, nine properties acquired in: Colorado (three), Ohio (two), Pennsylvania, North Carolina, South Carolina and Florida	70,558,856		12.8	%	54,661,221		12.0	%
Total	$	138,415,356	25.2	%	$	123,048,652	27.0	%

Rental Income Concentration:

During the three and six months ended June 30, 2023 and 2022, the Company’s rental income concentration (greater than 10% of rental income) was as follows:


	Three Months Ended June 30,
	2023				2022
Property Tenant and Location	Rental Income		Percentage of Total Rental Income		Rental Income		Percentage of Total Rental Income
KIA, Carson, CA	$	1,298,205	11.0	%	$	1,341,536	13.2	%
Lindsay, nine properties acquired in: Colorado (three), Ohio (two), Pennsylvania, North Carolina, South Carolina and Florida	$	1,609,584	13.6	%	(1)		(1)


	Six Months Ended June 30,
	2023				2022
Property Tenant and Location	Rental Income		Percentage of Total Rental Income		Rental Income		Percentage of Total Rental Income
KIA, Carson, CA	$	2,590,056	11.7	%	$	2,359,781	12.0	%
Lindsay, nine properties acquired in: Colorado (three), Ohio (two), Pennsylvania, North Carolina, South Carolina and Florida	$	2,822,448	12.7	%	(1)		(1)

(1) The Lindsay properties represented the source of greater than 10% of total rental income during the three and six months ended June 30, 2023 but not the three and six months ended June 30, 2022 since the Lindsay properties were acquired on April 19, 2022.

Operating Leases:

The Company’s real estate properties are primarily leased to tenants under net leases for which terms and expirations vary. The Company monitors the credit of all tenants to stay abreast of any material changes in credit quality. The Company monitors tenant credit by (1) reviewing the credit ratings of tenants (or their parent companies or lease guarantors) that are rated by nationally recognized rating agencies; (2) reviewing financial statements and related metrics and information that are publicly available or that are required to be provided pursuant to the lease; (3) monitoring news reports and press releases regarding the tenants (or their parent companies or lease guarantors), and their underlying business and industry; and (4) monitoring the timeliness of rent collections.

On January 23, 2023, the Company executed a lease extension for the property leased to Solar Turbines for an additional two years through July 31, 2025 with a 14.0% increase in rent effective August 1, 2023 and a 3.0% increase in rent effective August 1, 2024. This is the third lease extension executed by Solar Turbines, which has occupied the Company's property located in San Diego, California since 2008.

On June 29, 2023, the Company leased its property in Rocklin, California (the “Rocklin Property”), which was previously leased to Gap, Inc., to EMC Shop for an initial base annual rent of $441,210, which will be adjusted to fair market value annually beginning on July 1, 2024 for increases only. The lease term is 11.5 years through December 31, 2034. The lease includes a purchase option which EMC Shop can exercise any time through March 31, 2024. EMC Shop is engaged with consultants and other engineers involved in frontline experimentation of electromagnetic effects on emerging technologies. An ISO 17025 accredited company and registered government contractor, EMC Shop manufactures and stocks solutions including non-conductive tables, preamplifiers, line impedance stabilization networks, antenna measurements, automotive radar, and millimeter wave solutions for 5G testing. Its calibration laboratories includes three areas: electrostatic discharge, radio frequency and conducted immunity/susceptibility.

As of June 30, 2023, the future minimum contractual rent payments due to the Company under the Company’s non-cancellable operating leases, including lease amendments executed though the date of this report, if any, are as follows:


July through December 2023	$	20,184,537
2024	40,651,896
2025	39,604,759
2026	36,173,918
2027	34,762,044
Thereafter	494,897,231
	$	666,274,385

Intangible Assets, Net Related to the Company's Real Estate

As of June 30, 2023 and December 31, 2022, intangible assets, net related to the Company's real estate were as follows:


	June 30, 2023						December 31, 2022
	Tenant Origination and Absorption Costs		Above-Market Lease Intangibles		Below-Market Lease Intangibles		Tenant Origination and Absorption Costs		Above-Market Lease Intangibles		Below-Market Lease Intangibles
Cost	$	16,393,977	$	1,586,015	$	(14,860,880)	$	19,499,749	$	2,485,510	$	(14,378,808)
Accumulated amortization	(10,767,795)		(234,066)		5,532,079		(12,722,558)		(634,754)		4,703,122
Net	$	5,626,182	$	1,351,949	$	(9,328,801)	$	6,777,191	$	1,850,756	$	(9,675,686)

The intangible assets acquired in connection with the acquisitions have a weighted average amortization period of approximately 10.7 years as of June 30, 2023.

As of June 30, 2023, the amortization of intangible assets for the remaining six months of the current year ending December 31, 2023 and for each of the next four years and thereafter is expected to be as follows:


	Tenant Origination and Absorption Costs		Above-Market Lease Intangibles		Below-Market Lease Intangibles
July through December 2023	$	532,584	$	37,990	$	(460,198)
2024	1,022,678		73,999		(920,395)
2025	822,121		70,712		(920,395)
2026	476,147		54,278		(920,395)
2027	459,475		54,278		(920,395)
Thereafter	2,313,177		1,060,692		(5,187,023)
	$	5,626,182	$	1,351,949	$	(9,328,801)

Weighted-average remaining amortization period	8.7 years		23.3 years		10.3 years

Real Estate Investments Held For Sale

As of June 30, 2023, the Company classified the following 14 real estate investment properties as held for sale:

Property Tenant

Location

Property Type

Dollar General

Litchfield, ME

Retail

Dollar General

Wilton, ME

Retail

Dollar General

Thompsontown, PA

Retail

Dollar General

Mt. Gilead, OH

Retail

Dollar General

Lakeside, OH

Retail

Dollar General

Castalia, OH

Retail

Dollar General

Bakersfield, CA

Retail

Dollar General

Big Spring, TX

Retail

Dollar Tree

Morrow, GA

Retail

PreK Education

San Antonio, TX

Retail

Walgreens

Santa Maria, CA

Retail

exp US Services

Maitland, FL

Office

GSA (MSHA)

Vacaville, CA

Office

Cummins

Nashville, TN

Office

In May 2023, the Company listed the Nashville, Tennessee property leased to Cummins for sale with a national real estate broker with the intent to sell the property within the next 12 months. However, the Company can provide no assurance that such sale will occur in that timeframe, or at all.

On June 21, 2023, the Company entered into a letter of intent to sell all of the properties listed above, except for the Cummins property, to Generation Income Properties, Inc. (NASDAQ: GIPR) for $42,000,000 comprised of $30,000,000 in cash and $12,000,000 of GIPR’s newly created Series A Redeemable Preferred Stock. On August 10, 2023, a purchase and sale agreement (“PSA”) was executed, and the sale closed.

The Company’s Rocklin Property formerly leased to Gap, Inc. through February 28, 2023 was the only property held for sale as of December 31, 2022, and was reclassified as held for investment and use during the second quarter of 2023 (see discussion in Change in Plan of Sale below for more details).

Change in Plan of Sale

On December 29, 2022, the Company entered into a PSA to sell the Rocklin Property for $5,466,960. The Company recorded an impairment of investment in real estate property of $2,080,727 for the year ended December 31, 2022 based on the expected net proceeds from a sale of the property compared to the property's net book value (“NBV”), reclassified the property’s adjusted NBV of $5,255,725 to real estate held for sale as of December 31, 2022 and suspended recording depreciation for the property as of that date. During the first four months of 2023, the prospective buyer made non-refundable deposits to the Company totaling $195,000 in exchange for various extensions to the PSA through May 31, 2023. Following the prospective buyer’s delay in obtaining financing for a purchase of the property, the Company entered into a lease for the property with an affiliate of the prospective buyer on June 29, 2023 and reclassified the Rocklin Property to real estate investment held for investment and use. The lease agreement includes an option for the tenant to purchase the property for $5,466,960 which expires on March 31, 2024.

At the time of the decision to reclassify the property to real estate investment held for investment and use in June 2023, the adjusted carrying value of the property would have been $5,238,050 if continuously depreciated since December 31, 2022. The estimated fair value of the property as of the June 2023 determination was $5,420,000, based on management’s value for the property in the December 31, 2022 net asset value analysis (the most recent valuation).

As provided by ASC 360-10, since the adjusted carrying value of the property was lower than its fair value of $5,420,000, the Company recorded the property at its adjusted carrying value of $5,238,050 as of June 30, 2023. The recording of the property at its adjusted carrying value resulted in an adjustment to reduce the carrying value of the property by $17,675 during the three months ended June 30, 2023. In addition, the Company capitalized a leasing commission of $109,339 related to the new lease as of June 30, 2023.

The following table summarizes the major components of assets and liabilities related to the real estate investments held for sale as of June 30, 2023 and December 31, 2022:


	June 30, 2023		December 31, 2022
Assets related to real estate investments held for sale:
Land, buildings and improvements	$	53,061,881	$	6,357,172
Tenant origination and absorption costs	5,055,575		355,252
Accumulated depreciation and amortization	(10,947,867)		(1,456,699)
Real estate investments held for sale, net	47,169,589		5,255,725
Other assets, net	2,337,517		12,765
Total assets related to real estate investments held for sale:	$	49,507,106	$	5,268,490

Liabilities related to real estate investments held for sale:
Other liabilities, net	$	465,252	$	117,881
Total liabilities related to real estate investments held for sale:	$	465,252	$	117,881