10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____________to____________

Commission file number: 001-40814

MODIV INC.

(Exact name of registrant as specified in its charter)

Maryland	47-4156046
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
120 Newport Center Drive, Newport Beach, CA	92660
(Address of principal executive offices)	(Zip Code)

(888) 686-6348

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class C Common Stock, $0.001 par value per share	MDV	New York Stock Exchange
7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share	MDV.PA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2022, there were 7,456,830 shares of Class C common stock outstanding.

Modiv Inc.

FORM 10-Q

INDEX

PART I -	FINANCIAL INFORMATION		4
	Item 1.	Financial Statements (Unaudited)	4
		Condensed Consolidated Balance Sheets – June 30, 2022 and December 31, 2021	4
		Condensed Consolidated Statements of Operations – Three and Six Months Ended June 30, 2022 and 2021	5
		Condensed Consolidated Statements of Equity – Three Months Ended June 30, 2022 and 2021	6
		Condensed Consolidated Statements of Equity – Six Months Ended June 30, 2022 and 2021	7
		Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021	8
		Notes to Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
	Item 4.	Controls and Procedures	61
PART II -	OTHER INFORMATION		61
	Item 1.	Legal Proceedings	61
	Item 1A.	Risk Factors	61
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
	Item 6.	Exhibits	62
SIGNATURES			64

2

FORWARD-LOOKING STATEMENTS

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

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

Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time-to-time and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual future results to be materially different from those expressed or implied by any forward-looking statements. The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from our forward-looking statements:

•We have only a limited operating history, and the prior performance of our real estate investments or real estate programs sponsored by us or our affiliates may not be indicative of our future results.

•We are subject to disruptions in the financial markets and uncertain economic conditions that could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing at interest rates acceptable to us or at all, to service future debt obligations, or to pay distributions to our stockholders.

•The current COVID-19 pandemic, including the emergence of any future variants of COVID-19, and any future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance.

•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 and may continue to cause significant uncertainty in the market, adding to continuing concerns about supply chain disruptions, inflation and increases in interest rates in the market in which we operate.

•Volatility in stock and bond markets, particularly the rapid rise in yields on U.S. Treasury securities, may negatively impact our operating results.

•Listing on the New York Stock Exchange (the “NYSE”) does not guarantee an active and liquid market for our Class C common stock, and the market price and trading volume of our Class C common stock may fluctuate significantly.

•Our 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share (“Series A Preferred Stock”), is senior to our Class C common stock, and the interests of our common stockholders could be diluted by the issuance of additional preferred stock and by other transactions in the future.

•We may fail to continue to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, which could adversely affect our operations and our ability to make distributions.

•We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.

•If we fail to diversify our investment portfolio, downturns relating to certain geographic regions, industries or business sectors may have a more significant adverse impact on our assets and our ability to pay distributions than if we had a diversified investment portfolio.

•We are subject to risks related to tenant concentration, and an adverse development with respect to a large tenant could materially and adversely affect us.

•Our properties may be subject to further impairment charges.

•We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties, and we may be unable to acquire or dispose of, or lease, our properties on advantageous terms.

•We could be subject to risks associated with bankruptcies or insolvencies of tenants, or from tenant defaults generally.

•We have substantial indebtedness, and may incur additional secured or unsecured debt, which may affect our ability to pay distributions, expose us to interest rate fluctuation risk, impose limitations on how we operate and expose us to the risk of default under our debt obligations.

•We may not be able to extend or refinance existing indebtedness before it becomes due.

•Cost inflation may adversely affect our financial condition and results of operations.

•Restrictions on share ownership contained in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.

•We may not be able to attain or maintain profitability and we may not generate cash flows sufficient to pay distributions to stockholders or meet our debt service obligations.

•We may be affected by risks resulting from losses in excess of insured limits.

•Risks of security breaches through cyber-attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology networks and related systems, could adversely affect our business and results of operations.

Our forward-looking statements contained in this Quarterly Report on Form 10-Q should be read in light of the risk factors identified above and the additional risks and uncertainties described in Item 1A., Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2021.

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

3

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

Modiv Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	June 30, 2022		December 31, 2021
Assets
Real estate investments:
Land	$	107,569,641	$	61,005,402
Buildings and improvements	327,472,940		251,246,290
Equipment	4,429,000		—
Tenant origination and absorption costs	21,384,224		21,504,210
Total investments in real estate property	460,855,805		333,755,902
Accumulated depreciation and amortization	(43,728,520)		(37,611,133)
Total investments in real estate property, net	417,127,285		296,144,769
Unconsolidated investment in a real estate property	9,956,517		9,941,338
Total real estate investments, net	427,083,802		306,086,107
Real estate investments held for sale, net	—		31,510,762
Total real estate investments	427,083,802		337,596,869
Cash and cash equivalents	11,705,449		55,965,550
Restricted cash	—		2,441,970
Receivable from early termination of lease	1,446,767		1,836,767
Tenant receivables	8,059,635		5,996,919
Above-market lease intangibles, net	626,107		691,019
Prepaid expenses and other assets	6,766,867		5,856,255
Interest rate swap derivative	589,997		—
Assets related to real estate investments held for sale	—		788,296
Goodwill, net	—		17,320,857
Total assets	$	456,278,624	$	428,494,502
Liabilities and Equity
Mortgage notes payable, net	$	44,608,815	$	152,223,579
Mortgage notes payable related to real estate investments held for sale, net	—		21,699,912
Total mortgage notes payable, net	44,608,815		173,923,491
Credit facility revolver	6,775,000		8,022,000
Credit facility term loan, net	148,850,050		—
Accounts payable, accrued and other liabilities	8,733,757		11,844,881
Below-market lease intangibles, net	10,175,284		11,102,940
Interest rate swap derivatives	—		788,016
Liabilities related to real estate investments held for sale	—		383,282
Total liabilities	219,142,906		206,064,610
Commitments and contingencies (Note 11)
7.375% Series A cumulative redeemable perpetual preferred stock, $0.001 par value, 2,000,000 shares authorized, issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	2,000		2,000
Class C common stock, $0.001 par value, 300,000,000 shares authorized; 7,643,992 shares issued and 7,456,562 shares outstanding as of June 30, 2022 and 7,426,636 shares issued and outstanding as of December 31, 2021	7,644		7,427
Class S common stock, $0.001 par value, 100,000,000 shares authorized; no shares and 63,768 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	—		64
Additional paid-in-capital	275,922,227		273,441,831
Treasury stock, at cost, 187,430 shares and no shares held as of June 30, 2022 and December 31, 2021, respectively	(3,253,902)		—
Cumulative distributions and net losses	(116,491,382)		(101,624,430)
Total Modiv Inc. equity	156,186,587		171,826,892
Noncontrolling interests in the Operating Partnership	80,949,131		50,603,000
Total equity	237,135,718		222,429,892
Total liabilities and equity	$	456,278,624	$	428,494,502

See accompanying notes to condensed consolidated financial statements.

4

Modiv Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Rental income	$	10,394,118	$	9,107,008	$	20,042,767	$	18,081,878
Expenses:
General and administrative	1,615,182		1,932,635		3,721,365		4,618,621
Stock compensation expense	679,747		767,087		1,191,612		1,371,732
Depreciation and amortization	3,682,681		3,978,323		6,983,173		8,003,026
Interest expense	1,197,154		2,098,649		2,765,329		3,879,785
Property expenses	1,965,885		1,874,033		4,730,477		3,621,233
Reversal of impairment of real estate investment property	—		(400,999)		—		(400,999)
Impairment of goodwill	—		—		17,320,857		—
Total expenses	9,140,649		10,249,728		36,712,813		21,093,398
Other operating loss:
Gain on sale of real estate investments	1,002,101		—		8,402,878		289,642
Operating income (loss)	2,255,570		(1,142,720)		(8,267,168)		(2,721,878)
Other income (expense):
Interest income	1,763		51		15,198		100
Income from unconsolidated investment in a real estate property	66,868		74,834		162,332		147,302
Gain on forgiveness of economic relief note payable	—		—		—		517,000
Loss on early extinguishment of debt	—		—		(1,725,318)		—
Other	66,143		65,992		132,136		151,985
Other income (expense), net	134,774		140,877		(1,415,652)		816,387
Net income (loss)	2,390,344		(1,001,843)		(9,682,820)		(1,905,491)
Less: net income (loss) attributable to noncontrolling interest in Operating Partnership	219,214		—		(1,708,815)		—
Net income (loss) attributable to Modiv Inc.	2,171,130		(1,001,843)		(7,974,005)		(1,905,491)
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders	$	1,249,255	$	(1,001,843)	$	(9,817,755)	$	(1,905,491)
Net income (loss) per share attributable to common stockholders
Basic	$	0.17	$	(0.13)	$	(1.31)	$	(0.25)
Diluted	$	0.14	$	(0.13)	$	(1.31)	$	(0.25)
Weighted-average number of common shares outstanding
Basic	7,478,973		7,614,196		7,505,673		7,630,401
Diluted	10,221,490		7,614,196		7,505,673		7,630,401
Distributions declared per common share	$	0.2875	$	0.2625	$	0.6750	$	0.5250

See accompanying notes to condensed consolidated financial statements.

5

Modiv Inc.

Condensed Consolidated Statements of Equity

Three Months Ended June 30, 2022 and 2021

(Unaudited)

	Preferred Stock			Class C			Additional Paid-in Capital					Cumulative Distributions and Net (Losses) Income		Total Modiv Inc. Equity		Noncontrolling Interests in the Operating Partnership		Total Equity
				Common Stock					Treasury Stock
	Shares	Amounts		Shares	Amounts				Shares	Amounts
Balance, March 31, 2022	2,000,000	$	2,000	7,601,081	$	7,601	$	275,371,078	(50,863)	$	(852,721)	$	(115,598,562)	$	158,929,396	$	81,107,213	$	240,036,609
Issuance of common stock - distribution reinvestments	—	—		42,911	43		711,180		—	—		—		711,223		—		711,223
OP Units compensation expense	—	—		—	—		597,247		—	—		—		597,247		—		597,247
Offering costs	—	—		—	—		(757,278)		—	—		—		(757,278)		—		(757,278)
Repurchase of common stock	—	—		—	—		—		(136,567)	(2,401,181)		—		(2,401,181)		—		(2,401,181)
Dividends declared, preferred stock	—	—		—	—		—		—	—		(921,875)		(921,875)		—		(921,875)
Distributions declared, common stock	—	—		—	—		—		—	—		(2,142,075)		(2,142,075)		—		(2,142,075)
Distributions declared, Class C OP Units	—	—		—	—		—		—	—		—		—		(377,296)		(377,296)
Net income	—	—		—	—		—		—	—		2,171,130		2,171,130		219,214		2,390,344
Balance, June 30, 2022	2,000,000	$	2,000	7,643,992	$	7,644	$	275,922,227	(187,430)	$	(3,253,902)	$	(116,491,382)	$	156,186,587	$	80,949,131	$	237,135,718

	Preferred Stock			Common Stock						Additional Paid-in Capital		Cumulative Distributions and Net Losses		Total Modiv Inc. Equity		Noncontrolling Interests in the Operating Partnership		Total Equity
				Class C			Class S
	Shares	Amounts		Shares	Amounts		Shares	Amounts
Balance, March 31, 2021	—	$	—	7,524,210	$	7,524	63,101	$	63	$	216,444,117	$	(94,908,010)	$	121,543,694	$	50,603,000	$	172,146,694
Issuance of common stock	—	—		75,600	76		230	—		1,804,469		—		1,804,545		—		1,804,545
Stock compensation expense	—	—		4,470	4		—	—		109,996		—		110,000		—		110,000
OP Units compensation expense	—	—		—	—		—	—		657,087		—		657,087		—		657,087
Offering costs	—	—		—	—		—	—		(400,788)		—		(400,788)		—		(400,788)
Reclassification of common stock	—	—		—	—		—	—		(626,133)		—		(626,133)		—		(626,133)
Repurchase of common stock	—	—		(113,866)	(114)		—	—		(2,671,650)		—		(2,671,764)		—		(2,671,764)
Distributions declared, common stock	—	—		—	—		—	—		—		(1,976,511)		(1,976,511)		—		(1,976,511)
Net loss	—	—		—	—		—	—		—		(1,001,843)		(1,001,843)		—		(1,001,843)
Balance, June 30, 2021	—	$	—	7,490,414	$	7,490	63,331	$	63	$	215,317,098	$	(97,886,364)	$	117,438,287	$	50,603,000	$	168,041,287

See accompanying notes to condensed consolidated financial statements.

6

Modiv Inc.

Condensed Consolidated Statements of Equity

Six Months Ended June 30, 2022 and 2021

(Unaudited)

	Preferred Stock			Common Stock			Additional Paid-in Capital					Cumulative Distributions and Net Losses		Total Modiv Inc. Equity		Noncontrolling Interests in the Operating Partnership		Total Equity
				Class C and Class S					Treasury Stock
	Shares	Amounts		Shares	Amounts				Shares	Amounts
Balance, December 31, 2021	2,000,000	$	2,000	7,490,404	$	7,491	$	273,441,831	—	$	—	$	(101,624,430)	$	171,826,892	$	50,603,000	$	222,429,892
Issuance of common stock -distribution reinvestments	—	—		108,989	109		2,203,518		—	—		—		2,203,627		—		2,203,627
Listed offering of common stock, net	—	—		40,000	40		114,460		—	—		—		114,500		—		114,500
Issuance of Class C OP Units for property acquisition	—	—		—	—		—		—	—		—		—		32,809,551		32,809,551
Stock compensation expense	—	—		4,599	4		82,496		—	—		—		82,500		—		82,500
OP Units compensation expense	—	—		—	—		1,026,612		—	—		—		1,026,612		—		1,026,612
Offering costs	—	—		—	—		(946,690)		—	—		—		(946,690)		—		(946,690)
Repurchase of common stock	—	—		—	—		—		(187,430)	(3,253,902)		—		(3,253,902)		—		(3,253,902)
Dividends declared, preferred stock	—	—		—	—		—		—	—		(1,843,750)		(1,843,750)		—		(1,843,750)
Distributions declared, common stock	—	—		—	—		—		—	—		(5,049,197)		(5,049,197)		—		(5,049,197)
Distributions declared, Class C OP Units	—	—		—	—		—		—	—		—		—		(754,605)		(754,605)
Net loss	—	—		—	—		—		—	—		(7,974,005)		(7,974,005)		(1,708,815)		(9,682,820)
Balance, June 30, 2022	2,000,000	$	2,000	7,643,992	$	7,644	$	275,922,227	(187,430)	$	(3,253,902)	$	(116,491,382)	$	156,186,587	$	80,949,131	$	237,135,718

	Preferred Stock			Common Stock						Additional Paid-in Capital		Cumulative Distributions and Net Losses		Total Modiv Inc. Equity		Noncontrolling Interests in the Operating Partnership		Total Equity
				Class C			Class S
	Shares	Amounts		Shares	Amounts		Shares	Amounts
Balance, December 31, 2020	—	$	—	7,874,541	$	7,874	62,860	$	63	$	224,288,417	$	(92,012,686)	$	132,283,668	$	50,603,000	$	182,886,668
Issuance of common stock	—	—		203,157	203		471	—		4,561,408		—		4,561,611		—		4,561,611
Stock compensation expense	—	—		8,521	9		—	—		201,241		—		201,250		—		201,250
OP Units compensation expense	—	—		—	—		—	—		1,191,732		—		1,191,732		—		1,191,732
Offering costs	—	—		—	—		—	—		(810,632)		—		(810,632)		—		(810,632)
Reclassification of common stock	—	—		—	—		—	—		(1,068,807)		—		(1,068,807)		—		(1,068,807)
Repurchase of common stock	—	—		(595,805)	(596)		—	—		(13,046,261)		—		(13,046,857)		—		(13,046,857)
Distributions declared, common stock	—	—		—	—		—	—		—		(3,968,187)		(3,968,187)		—		(3,968,187)
Net loss	—	—		—	—		—	—		—		(1,905,491)		(1,905,491)		—		(1,905,491)
Balance, June 30, 2021	—	$	—	7,490,414	$	7,490	63,331	$	63	$	215,317,098	$	(97,886,364)	$	117,438,287	$	50,603,000	$	168,041,287

See accompanying notes to condensed consolidated financial statements.

7

Modiv Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2022		2021
Cash Flows from Operating Activities:
Net loss	$	(9,682,820)	$	(1,905,491)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	6,983,173		8,003,026
Stock compensation expense	1,191,612		1,371,732
Amortization of deferred rents	(809,558)		(702,978)
Amortization of deferred lease incentives	147,049		105,541
Write-offs and amortization of deferred financing costs and premium/discount	1,368,507		199,693
Amortization of above-market lease intangibles	64,912		64,913
Amortization of below-market lease intangibles	(712,885)		(735,150)
Reversal of impairment of real estate investment property	—		(400,999)
Impairment of goodwill	17,320,857		—
Gain on forgiveness of economic relief note payable	—		(517,000)
Gain on sale of real estate investments	(8,402,878)		(289,642)
Unrealized gain on interest rate swap valuation	(589,997)		(517,719)
Write-off of unrealized gain on interest rate swaps	(788,016)		—
Income from unconsolidated investment in a real estate property	(162,332)		(147,302)
Distributions from unconsolidated investment in a real estate property	147,153		161,967
Change in operating assets and liabilities:
(Increase) decrease in tenant receivables	(549,248)		569,375
Decrease (increase) in prepaid and other assets	572,422		(229,695)
Decrease in accounts payable, accrued and other liabilities	(1,021,479)		(1,946,918)
Net cash provided by operating activities	5,076,472		3,083,353
Cash Flows from Investing Activities:
Acquisitions of real estate investments	(99,691,164)		—
Additions to existing real estate investments	(1,546,131)		(309,717)
Additions to intangible assets	—		(111,750)
Collection of note receivable	390,000		—
Collection of receivable from sale of real estate property	—		1,824,383
Net proceeds from sale of real estate investments	45,257,181		13,221,509
Refundable purchase deposit	(730,780)		—
Payment of lease incentives	(2,100,000)		—
Net cash (used in) provided by investing activities	(58,420,894)		14,624,425
Cash Flows from Financing Activities:
Borrowings from credit facility term loan	150,000,000		—
Borrowings from credit facility revolver, net	6,775,000		—
Repayments of prior year credit facility revolver, net	(8,022,000)		(3,000,000)
Proceeds from mortgage notes payable	—		25,436,000
Principal payments on mortgage notes payable	(130,361,583)		(24,399,915)
Refundable loan deposits	—		(81,196)
Payments of deferred financing costs	(2,186,468)		(381,076)
Proceeds from listed offering of common stock, net	114,500		2,299,380
Payments of offering costs	(946,690)		(810,632)
Repurchases of common stock	(3,253,902)		(13,046,857)
Dividends paid to preferred stockholders	(1,987,153)		—
Distributions paid to common stockholders	(2,860,513)		(1,726,567)
Distributions paid to Class C OP Units holder	(628,840)		—
Net cash provided by (used in) financing activities	6,642,351		(15,710,863)
Net (decrease) increase in cash, cash equivalents and restricted cash	(46,702,071)		1,996,915
Cash, cash equivalents and restricted cash, beginning of period	58,407,520		8,377,530
Cash, cash equivalents and restricted cash, end of period	$	11,705,449	$	10,374,445
Modiv Inc.
Condensed Consolidated Statements of Cash Flows (continued)
(Unaudited)
	Six Months Ended June 30,
	2022		2021
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest for the six months ended June 30, 2022 and 2021	$	2,874,272	$	4,147,114
Supplemental Schedule of Noncash Investing and Financing Activities:
Issuance of Class C OP Units in the acquisition of a real estate investment	$	32,809,551	$	—
Reclassification from redeemable common stock	$	—	$	(1,068,807)
Reinvested distributions from common stockholders	$	2,203,627	$	2,262,231
Unpaid real estate improvements	$	522,845	$	—
Reclassification of tenant improvements from other assets to real estate investments	$	73,323	$	—
Decrease in share repurchase payable	$	—	$	(1,979,316)
Deferred lease incentive	$	—	$	(2,128,538)
Accrued distributions	$	(32,581)	$	23,256
Supplemental disclosure related to real estate investment held for sale, net:
Real estate investments held for sale, net	$	31,510,762	$	19,209,993
Other assets related to real estate investments held for sale	$	788,296	$	408,096
Decrease in above-market lease intangibles, net	$	—	$	(50,549)
Mortgage notes payable related to real estate investments held for sale, net	$	(21,699,912)	$	(4,707,012)
Other liabilities related to real estate investments held for sale	$	(383,282)	$	(573,904)
Increase in below-market lease intangibles, net	$	—	$	324,734
Increase in interest swap derivatives	$	—	$	14,166

See accompanying notes to condensed consolidated financial statements.

8

Modiv Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1. BUSINESS AND ORGANIZATION

Modiv Inc. (the “Company”) was incorporated on May 15, 2015 as a Maryland corporation. The Company has 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, of which 2,000,000 shares are designated as 7.375% Series A cumulative redeemable perpetual preferred stock (“Series A Preferred Stock”), 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. The Company's five-year emerging growth company registration with the Securities and Exchange Commission (the “SEC”) ended on December 31, 2021 and the Company continues to report with the SEC as a smaller reporting company under Rule 12b-2 of the Securities Exchange Act of 1934, as amended. The Company's 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. The Company's 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 the Company's Class C common stock. In connection with and upon listing on the NYSE, each share of the Company's Class S common stock converted into Class C common stock (see details of the initial listed offering (the “Listed Offering”) below).

The Company has been internally managed since its December 31, 2019 acquisition of the business of BrixInvest, LLC, a Delaware limited liability company and the Company’s former sponsor (“BrixInvest”), and the Company’s merger with Rich Uncles Real Estate Investment Trust I (“REIT I”) on December 31, 2019.

The Company holds its investments in real property primarily through special purpose limited liability companies which are wholly-owned subsidiaries of Modiv Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership was formed on January 28, 2016. The Company is the sole general partner of, and owned an approximately 72% and 83% partnership interest in, the Operating Partnership as of June 30, 2022 and December 31, 2021, respectively. The Operating Partnership's limited partners include holders of several classes of units with various vesting and enhancement terms as further described in Note 12.

As of June 30, 2022, the Company's portfolio of approximately 2.9 million square feet of aggregate leasable space consisted of investments in 43 real estate properties, comprised of: 20 industrial properties, including an approximate 72.7% tenant-in-common interest in a Santa Clara, California property (the “TIC Interest”), which represent approximately 48% of the portfolio, 13 retail properties, which represent approximately 19% of the portfolio, and 10 office properties, which represent approximately 33% of the portfolio (expressed as a percentage of annual base rent (“ABR”) as of June 30, 2022).

Common Stock Offerings

Since the Company’s initial registered offering of common stock was declared effective by the SEC in 2016, the Company has raised an aggregate of $210,800,151 pursuant to non-listed 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, the Company 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 its DRP (the “Registered DRP Offering”). The Company commenced offering shares of Class C common stock pursuant to the Registered DRP Offering upon termination of the Registered Offering.

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

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

On March 30, 2022, the Company filed a Registration Statement on Form S-3 (File No. 333-263985), and on May 27, 2022, the Company filed Amendment No. 1 to the Registration Statement on Form S-3, 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. The Form S-3, as amended, became effective on June 2, 2022 and the Company filed a prospectus supplement for the Company's at-the-market offering of up to $50,000,000 of its Class C common stock (the “ATM Offering”) on June 6, 2022. As of June 30, 2022, no shares were issued in connection with the Company's ATM Offering.

Preferred Stock Offering

On September 17, 2021, the Company and the Operating Partnership completed the issuance and sale of 2,000,000 shares of the Company’s Series A Preferred Stock in an underwritten public offering (the “Preferred Offering”) at a price per share of $25.00 (see Note 9 for additional information).

Distribution Reinvestment Plan

On February 15, 2022, the Company's board of directors amended and restated the DRP (the “Second Amended and Restated DRP”) with respect to the Class C common stock to change the purchase price at which the Class C common stock is issued to stockholders who elect to participate in the DRP. The purpose of this change was to reflect the fact that the Company's Class C common stock is now listed on the NYSE and no longer priced based on net asset value (“NAV”) per share. As more fully described in the Second Amended and Restated DRP, the purchase price for the Class C common stock under the DRP depends on whether the Company issues new shares to DRP participants or the Company or any third-party administrator obtains shares to be issued to DRP participants by purchasing them in the open market or in privately negotiated transactions. The purchase price for the Class C common stock issued directly by the Company is 97% (or such other discount as may then be in effect) of the Market Price (as defined in the Second Amended and Restated DRP) of the Class C common stock. This discount is subject to change from time to time, in the Company’s sole discretion, but will be between 0% to 5% of the Market Price. The purchase price for the Class C common stock that the Company or any third-party administrator purchases from parties other than the Company, either in the open market or in privately negotiated transactions, will be 100% of the “average price per share” (as described in the Second Amended and Restated DRP) actually paid for such shares of Class C common stock, excluding any processing fees. The Second Amended and Restated DRP also reflects the $0.05 per share processing fee that will be paid to the Company's transfer agent by DRP participants for each share of Class C common stock purchased through the DRP. The Second Amended and Restated DRP was effective beginning with distributions paid in February 2022.

Share Repurchase Program

On February 15, 2022, the Company's board of directors authorized up to $20,000,000 in repurchases of the Company's outstanding shares of common stock through December 31, 2022. Repurchases 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 the Company in its 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 February 15, 2022 through June 30, 2022, the Company repurchased a total of 187,430 shares of its common stock for a total of $3,253,902 and an average cost of $17.36 per share under this share repurchase program and these shares are held as treasury stock.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Such unaudited condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, which is responsible for their integrity and objectivity. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 23, 2022.

The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which are normal and recurring, necessary to fairly state the Company's financial position, results of operations and cash flows. All significant intercompany balances and transactions are eliminated in consolidation. The unaudited condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements.

Variable Interest Entities

The FASB provides guidance for determining whether an entity is a variable interest entity (a “VIE”). VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance; and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE.

As of June 30, 2022, the Company holds an interest in a VIE, which was incorporated under a qualified exchange accommodation arrangement to temporarily hold replacement real estate properties, for which the Company was determined to be the primary beneficiary. As a result, the Company has consolidated this entity. The Company's investment related to this VIE aggregated $31,406,864, or 7.4% of total assets, and no liabilities which relate to four real estate properties the VIE holds as of June 30, 2022 and represents the Company's maximum exposure to loss.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience. Actual results may differ from those estimates.

Noncontrolling Interests in the Operating Partnership

The Company accounts for the noncontrolling interests in its Operating Partnership in accordance with the related accounting guidance. Due to the Company's control of the Operating Partnership through its general partnership interest therein and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company, and the limited partner interests not held by the Company are reflected as noncontrolling interests in the accompanying unaudited condensed consolidated balance sheets and statements of equity. Other than the noncontrolling interests related to an “UPREIT” transaction as discussed in Note 12, all other noncontrolling interests currently represent non-voting, non-distribution accruing interests with no allocation of profits or losses, but have various conversion rights to obtain future rights to distributions and allocation of profits and losses as discussed in Note 12.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Business Combinations

The Company accounts for business combinations in accordance with FASB ASC 805, Business Combinations (“ASC 805”), and applicable Accounting Standards Updates (each, an “ASU”), whereby the total consideration transferred is allocated to the assets acquired and liabilities assumed, including amounts attributable to any non-controlling interests, when applicable, based on their respective estimated fair values as of the date of acquisition. Goodwill represents the excess of consideration transferred over the estimated fair value of the net assets acquired in a business combination.

ASC 805 defines a business as an integrated set of activities and assets (collectively, a “set”) that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. To be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. ASC 805 provides a practical screen to determine when a set would not be considered a business. If the screen is not met and further assessment determines that the set is not a business, then the set is an asset acquisition. The primary difference between a business combination and an asset acquisition is that an asset acquisition requires cost accumulation and allocation at relative fair value whereas in a business combination the total consideration transferred is allocated among the fair value of the identifiable tangible and intangible assets and liabilities assumed. Acquisition costs are capitalized for an asset acquisition and expensed for a business combination.

Revenue Recognition

The Company accounts for revenue in accordance with FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), which includes revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. Such revenues are recognized when the services are provided and the performance obligations are satisfied. Tenant reimbursements, consisting of amounts due from tenants for common area maintenance, property taxes and other recoverable costs, are recognized in rental income subsequent to the adoption of Topic 842, as discussed below, in the period the recoverable costs are incurred. Tenant reimbursements, for which the Company pays the associated costs directly to third-party vendors and is reimbursed by the tenants, are recognized and recorded on a gross basis.

The Company accounts for leases in accordance with FASB ASU No. 2016-02, Leases (“Topic 842”), and the related FASB ASU Nos. 2018-10, 2018-11, 2018-20 and 2019-01, which provide practical expedients, technical corrections and improvements for certain aspects of ASU No. 2016-02 (collectively “Topic 842”). Topic 842 established a single comprehensive model for entities to use in accounting for leases. Topic 842 applies to all entities that enter into leases. Lessees are required to report assets and liabilities that arise from leases. Lessor accounting has largely remained unchanged; however, certain refinements were made to conform with revenue recognition guidance, specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. Topic 842 impacts the Company's accounting for leases primarily as a lessor. Topic 842 also impacts the Company's accounting as a lessee; however, such impact is considered not material.

As a lessor, the Company's leases with tenants generally provide for the lease of real estate properties, as well as common area maintenance, property taxes and other recoverable costs. To reflect recognition as one lease component, rental income and tenant reimbursements and other lease related property income that meet the requirements of the practical expedient provided by ASU No. 2018-11 have been combined under rental income in the Company's unaudited condensed consolidated statements of operations. For the three months ended June 30, 2022 and 2021, tenant reimbursements included in rental income amounted to $1,400,428 and $1,540,380, respectively, and for the six months ended June 30, 2022 and 2021, tenant reimbursements included in rental income amounted to $3,450,799 and $3,068,172, respectively.

The Company recognizes rental income from tenants under operating leases on a straight-line basis over the noncancelable term of the lease when collectability of such amounts is reasonably assured. Recognition of rental income on a straight-line basis includes the effects of rental abatements, lease incentives and fixed and determinable increases in lease payments over the lease term. If the lease provides for tenant improvements, management of the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or by the Company.

12

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:

•whether the lease stipulates how a tenant improvement allowance may be spent;

•whether the amount of a tenant improvement allowance is in excess of market rates;

•whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

•whether the tenant improvements are unique to the tenant or general-purpose in nature; and

•whether the tenant improvements are expected to have any residual value at the end of the lease.

Tenant reimbursements of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred and presented gross if the Company is the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. In instances where the operating lease agreement has an early termination option, the termination penalty is based on a predetermined termination fee or based on the unamortized tenant improvements and leasing commissions.

The Company evaluates the collectability of rents and other receivables on a regular basis based on factors including, among others, payment history, credit rating, the asset type, and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides an allowance against the portion of the receivable that it estimates may not be recovered. This analysis requires the Company to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected.

Bad Debts and Allowances for Tenant and Deferred Rent Receivables

The Company's determination of the adequacy of its allowances for tenant receivables includes a binary assessment of whether or not the amounts due under a tenant’s lease agreement are probable of collection. For such amounts that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For such amounts that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. In addition, for tenant and deferred rent receivables deemed probable of collection, the Company also may record an allowance under other authoritative GAAP depending upon the Company's evaluation of the individual receivables, specific credit enhancements, current economic conditions, and other relevant factors. Such allowances are recorded as increases or decreases through rental income in the Company's unaudited condensed consolidated statements of operations.

With respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt allowance for the tenant’s receivable balance and generally will not recognize subsequent rental income until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Gain or Loss on Sale of Real Estate Investments

The Company recognizes gain or loss on sale of real estate property when the Company has executed a contract for sale of the property, transferred controlling financial interest in the property to the buyer and determined that it is probable that the Company will collect substantially all of the consideration for the property. The Company's real estate property sale transactions during the three and six months ended June 30, 2022 and 2021 met these criteria at closing. When properties are sold, operating results of the properties remain in continuing operations, and any associated gain or loss from the disposition is included in gain or loss on sale of real estate investments in the Company’s accompanying unaudited condensed consolidated statements of operations.

13

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Impairment of Investment in Real Estate Properties

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset.

Other Comprehensive Income (Loss)

For all periods presented, other comprehensive income (loss) is the same as net income (loss).

Treasury Stock

Effective on the date of the Listed Offering, the Company accounts for repurchased shares of its Class C common stock as treasury stock. Treasury shares are recorded at cost and are included as a component of equity in the Company's unaudited condensed consolidated balance sheet as of June 30, 2022.

Per Share Data

The Company reports a dual presentation of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS excludes dilution and is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted EPS uses the treasury stock method or the if-converted method, where applicable, to compute for the potential dilution that would occur if dilutive securities or commitments to issue common stock were exercised. For the three and six months ended June 30, 2022 and 2021, the Company presented both Basic EPS and Diluted EPS reflecting its reported net income (loss) attributable to common stockholders for each period.

As discussed in Note 1, in connection with and upon listing on the NYSE, each share of the Company's Class S common stock converted into a share of Class C common stock. Prior to the conversion of the Company's Class S common stock into Class C common stock, application of the two-class method for allocating net loss attributable to common stockholders in accordance with the provisions of ASC 260, Earnings per Share, would have resulted in basic and diluted net loss of $0.13 per share of Class C common stock for the three months ended June 30, 2021 and basic and diluted net loss of $0.13 per share of Class S common stock for the three months ended June 30, 2021. The two-class method would have resulted in a basic and diluted net loss of $0.25 per share of Class C common stock for the six months ended June 30, 2021 and basic and diluted net loss of $0.25 per share of Class S common stock for the six months ended June 30, 2021.

Fair Value Disclosures

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an existing price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

14

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value:

Cash and cash equivalents, restricted cash, receivable from early termination of lease, tenant receivables, prepaid expenses and other assets and accounts payable, accrued and other liabilities: These balances approximate their fair values due to their short maturities.

Derivative Instruments: The Company’s derivative instruments are presented at fair value in the accompanying unaudited condensed consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk.

Goodwill: The fair value measurement of goodwill is considered a Level 3 nonrecurring fair value measurement. For goodwill, fair value measurement involves the determination of fair value of a reporting unit.

Credit facilities: The fair values of the Company’s credit facilities approximate their carrying values as their interest rates and other terms are comparable to those available in the marketplace for similar credit facilities.

Mortgage notes payable: The fair values of the Company’s mortgage notes payable are estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.

Related party transactions: The Company has concluded that it is not practical to determine the estimated fair value of related party transactions. Disclosure rules for fair value measurements require that for financial instruments for which it is not practicable to estimate fair value, information pertinent to those instruments be disclosed. Further information as to these financial transactions with related parties is included in Note 10.

Restricted Cash

Restricted cash as of December 31, 2021 amounted to $2,441,970 for the mortgages related to properties discussed below and other lender reserves. There were no restricted cash balances as of June 30, 2022.

Under the terms of the Company’s June 2021 refinancing of mortgages on its properties leased to Northrop Grumman and L3Harris Technologies, Inc. (“L3Harris”) with Banc of California as described in Note 7, the Company established restricted cash accounts at Banc of California with $1,400,000 and $1,000,000 held for the Northrop Grumman and L3Harris properties, respectively, to fund building improvements, tenant improvements and leasing commissions. Subsequent to the origination of the loans, $128,538 was released to fund a leasing commission, resulting in $2,271,462 remaining as aggregate restricted cash as of December 31, 2021. Pursuant to the refinancing of the Northrop Grumman and L3Harris mortgages on January 18, 2022 as further discussed in Note 7, these funds became unrestricted. Additional restricted cash balances of $170,508 as of December 31, 2021 were also released during the first three months of 2022 due to refinancing.

15

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Real Estate Investments Held for Sale

The Company generally considers a real estate investment to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate investments held for sale, net” and “assets related to real estate investment held for sale,” respectively, in the accompanying unaudited condensed consolidated balance sheets. Mortgage notes payable and other liabilities related to real estate investments held for sale are classified as “mortgage notes payable related to real estate investments held for sale, net” and “liabilities related to real estate investments held for sale,” respectively, in the accompanying unaudited condensed consolidated balance sheets. Real estate investments classified as held for sale are no longer depreciated and are reported at the lower of their carrying value or their estimated fair value less estimated costs to sell. Operating results of properties that were classified as held for sale in the ordinary course of business are included in continuing operations in the Company’s accompanying unaudited condensed consolidated statements of operations.

Goodwill

The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired. The Company evaluates goodwill and other intangible assets for possible impairment in accordance with ASC 350, Intangibles–Goodwill and Other, on an annual basis, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit has declined below its carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized.

In assessing goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macro-economic, industry-specific and company-specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of such reporting unit is less than its carrying amount, then a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if it elects to bypass the qualitative analysis, then it is required to perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit.

Restricted Stock and Restricted Stock Unit Awards

The fair values of the Operating Partnership's units or restricted stock unit awards issued or granted by the Company are based on an estimated NAV per share of the Company’s common stock on the date of issuance or grant, adjusted for an illiquidity discount due to the illiquid nature of the underlying equity prior to the listing of the Company's Class C common stock on the NYSE. The fair value of future grants of the Operating Partnership's units or restricted stock unit awards will be determined based on the NYSE's market closing price of the Company's Class C common stock on the date of grant. Operating Partnership units issued as purchase consideration in connection with the Self-Management Transaction and UPREIT Transaction defined and discussed in Note 12 are recorded in equity under noncontrolling interests in the Operating Partnership in the Company's unaudited condensed consolidated balance sheets and statements of equity. For units granted to employees of the Company that are not included in the purchase consideration, the fair value of the award is amortized using the straight-line method over the requisite service period of the award, which is generally the vesting period (see Note 12). The Company has elected to record forfeitures as they occur.

16

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

The Company determines the accounting classification of equity instruments (e.g. restricted stock units) that are issued as purchase consideration or part of the purchase consideration in a business combination, as either liability or equity, by first assessing whether the equity instruments meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”), and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). Under ASC 480-10, equity instruments are classified as liabilities if the equity instruments are mandatorily redeemable, obligate the issuer to settle the equity instruments or the underlying shares by paying cash or other assets, or must or may require an unconditional obligation that must be settled by issuing a variable number of shares.

If equity instruments do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the equity instruments do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the equity instruments are indexed to its common stock and whether the equity instruments are classified as equity under ASC 815-40 or other applicable GAAP guidance. After all relevant assessments are made, the Company concludes whether the equity instruments are classified as liability or equity. Liability classified equity instruments are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss. Equity classified equity instruments are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

Reclassifications

Certain prior year balance sheet, statement of operations and statement of cash flows accounts have been reclassified to conform with the current year presentation. The reclassification did not affect net loss in the prior year unaudited condensed consolidated statement of operations.

Recent Accounting Pronouncements

New Accounting Standards Recently Issued and Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 eases the potential burden in accounting for recognizing the effects of reference rate reform on financial reporting. Such challenges include the accounting and operational implications for contract modifications and hedge accounting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to loan and lease agreements, contracts, hedging relationships, and other transactions affected by reference rate reform. These provisions apply to contract modifications that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discounted because of reference rate reform.

Qualifying modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate, and the modification would be considered “minor” so that any existing unamortized deferred loan origination fees and costs would carry forward and continue to be amortized. Qualifying modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for hedge accounting. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022, with adoption permitted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected, the amendments must be applied prospectively for all eligible contract modifications. The Company implemented ASU 2020-04 effective January 1, 2022 and the impact of such implementation was not material to the Company’s consolidated financial statements. On January 18, 2022, the Company repaid the four remaining loans existing as of December 31, 2021 which had LIBOR reference rates.

17

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 3. REAL ESTATE INVESTMENTS, NET

As of June 30, 2022, the Company’s real estate investment portfolio consisted of 43 operating properties located in 16 states comprised of: 20 industrial properties (including the TIC Interest in an industrial property not reflected in the table below but discussed in Note 4), 13 retail properties and 10 office properties, and one parcel of land, which currently serves as an easement to one of the Company’s office properties.

The following table provides summary information regarding the Company’s operating properties as of June 30, 2022:

Property	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
Dollar General	Litchfield, ME	11/4/2016	Retail	$	1,281,812	$	—	$	116,302	$	(226,371)	$	1,171,743
Dollar General	Wilton, ME	11/4/2016	Retail	1,543,776		—		140,653		(289,706)		1,394,723
Dollar General	Thompsontown, PA	11/4/2016	Retail	1,199,860		—		106,730		(217,502)		1,089,088
Dollar General	Mt. Gilead, OH	11/4/2016	Retail	1,174,188		—		111,847		(208,535)		1,077,500
Dollar General	Lakeside, OH	11/4/2016	Retail	1,112,872		—		100,857		(214,022)		999,707
Dollar General	Castalia, OH	11/4/2016	Retail	1,102,086		—		86,408		(207,944)		980,550
Dollar General	Bakersfield, CA	12/31/2019	Retail	4,899,714		—		261,630		(367,831)		4,793,513
Dollar General	Big Spring, TX	12/31/2019	Retail	1,281,683		—		76,351		(127,422)		1,230,612
Dollar Tree	Morrow, GA	12/31/2019	Retail	1,320,367		—		73,298		(177,276)		1,216,389
Northrop Grumman	Melbourne, FL	3/7/2017	Office	13,571,660		—		1,469,737		(3,777,982)		11,263,415
Northrop Grumman Parcel	Melbourne, FL	6/21/2018	Land	329,410		—		—		—		329,410
exp US Services	Maitland, FL	3/27/2017	Office	6,069,180		—		388,248		(1,169,541)		5,287,887
Wyndham	Summerlin, NV	6/22/2017	Office	10,406,483		—		669,232		(1,701,960)		9,373,755
Williams Sonoma	Summerlin, NV	6/22/2017	Office	8,137,571		—		640,868		(1,524,998)		7,253,441
Husqvarna	Charlotte, NC	11/30/2017	Industrial	11,840,200		—		1,013,948		(1,649,292)		11,204,856
AvAir	Chandler, AZ	12/28/2017	Industrial	27,357,899		—		—		(3,152,243)		24,205,656
3M	DeKalb, IL	3/29/2018	Industrial	14,762,819		—		3,037,057		(5,330,050)		12,469,826
Cummins	Nashville, TN	4/4/2018	Office	14,538,528		—		1,566,997		(3,358,591)		12,746,934
Costco	Issaquah, WA	12/20/2018	Office	27,346,695		—		2,765,136		(4,611,675)		25,500,156
Taylor Fresh Foods	Yuma, AZ	10/24/2019	Industrial	34,194,369		—		2,894,017		(3,579,532)		33,508,854
Levins	Sacramento, CA	12/31/2019	Industrial	4,429,390		—		221,927		(551,521)		4,099,796
Labcorp	San Carlos, CA	12/31/2019	Industrial	9,672,174		—		408,225		(510,802)		9,569,597
GSA (MSHA)	Vacaville, CA	12/31/2019	Office	3,112,076		—		243,307		(346,287)		3,009,096
PreK Education	San Antonio, TX	12/31/2019	Retail	12,447,287		—		555,767		(1,251,024)		11,752,030
Solar Turbines	San Diego, CA	12/31/2019	Office	7,133,241		—		284,026		(680,451)		6,736,816
Wood Group	San Diego, CA	12/31/2019	Industrial	9,869,520		—		539,633		(1,004,879)		9,404,274
ITW Rippey	El Dorado, CA	12/31/2019	Industrial	7,071,143		—		304,387		(761,590)		6,613,940
Gap	Rocklin, CA	12/31/2019	Office	8,433,744		—		360,377		(1,209,435)		7,584,686
L3Harris	San Diego, CA	12/31/2019	Industrial	11,690,952		—		662,101		(1,148,834)		11,204,219
Sutter Health	Rancho Cordova, CA	12/31/2019	Office	29,587,023		—		1,616,610		(2,705,794)		28,497,839
Walgreens	Santa Maria, CA	12/31/2019	Retail	5,223,442		—		335,945		(332,402)		5,226,985
Raising Cane's	San Antonio, TX	7/26/2021	Retail	3,430,224		—		213,997		(111,417)		3,532,804
Arrow-TruLine	Archbold, OH	12/3/2021	Industrial	11,518,084		—		—		(224,513)		11,293,571
KIA	Carson, CA	1/18/2022	Retail	69,286,444		—		118,606		(486,687)		68,918,363
Kalera	Saint Paul, MN	1/31/2022	Industrial	3,690,009		4,429,000		—		(155,804)		7,963,205
Lindsay	Colorado Springs 1, CO	4/19/2022	Industrial	2,311,934		—		—		(12,150)		2,299,784
Lindsay	Colorado Springs 2, CO	4/19/2022	Industrial	3,314,406		—		—		(7,231)		3,307,175
Lindsay	Dacano, CO	4/19/2022	Industrial	5,558,622		—		—		(17,529)		5,541,093
Lindsay	Alachua, FL	4/19/2022	Industrial	8,518,123		—		—		(75,544)		8,442,579
Lindsay	Franklinton, NC	4/19/2022	Industrial	7,181,113		—		—		(33,306)		7,147,807
Lindsay	Canal Fulton 1, OH	4/19/2022	Industrial	11,345,533		—		—		(71,634)		11,273,899
Lindsay	Canal Fulton 2, OH	4/19/2022	Industrial	10,190,942		—		—		(102,162)		10,088,780
Lindsay	Rock Hill, SC	4/19/2022	Industrial	6,555,983		—		—		(35,051)		6,520,932
				$	435,042,581	$	4,429,000	$	21,384,224	$	(43,728,520)	$	417,127,285

18

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Acquisitions

Six Months Ended June 30, 2022

During the six months ended June 30, 2022, the Company acquired the following real estate properties:

Property and Location	Acquisition Date	Land		Buildings and Improvements		Equipment		Tenant Origination and Absorption Costs		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
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 $1,330,780 for funding ongoing building construction at the Lindsay property in Dacono, CO. This deposit is included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets.

The Company recognized $2,706,422 and $4,105,592 of total revenue related to the above-acquired properties during the three and six months ended June 30, 2022, respectively.

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

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

Six Months Ended June 30, 2021

The Company did not acquire any real estate property during the six months ended June 30, 2021.

Dispositions

The dispositions during the six months ended June 30, 2022 and 2021 were as follows:

Six Months Ended June 30, 2022

Property	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sale Price		Gain on Sale
Bon Secours	Richmond, VA	2/11/2022	Office	72,890	$	10,200,000	$	179,404
Omnicare	Richmond, VA	2/11/2022	Flex	51,800	8,760,000		2,062,890
Texas Health	Dallas, TX	2/11/2022	Office	38,794	7,040,000		160,377
Accredo	Orlando, FL	2/24/2022	Office	63,000	14,000,000		4,998,106
EMCOR	Cincinnati, OH	6/29/2022	Office	39,385	6,525,000		1,002,101
				265,869	$	46,525,000	$	8,402,878

19

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

On February 11, 2022, the Company completed the sale of two medical office properties in Dallas, Texas and Richmond, Virginia leased to Texas Health and Bon Secours, respectively, and one flex property in Richmond, Virginia leased to Omnicare for an aggregate sales price of $26,000,000, which generated net proceeds of $11,883,639 after payment of commissions, closing costs and existing mortgages.

On February 24, 2022, the Company completed the sale of a medical office property in Orlando, Florida leased to Accredo for a sales price of $14,000,000, which generated net proceeds of $5,000,941 after payment of commissions, closing costs and repayment of the existing mortgage.

On June 29, 2022, the Company completed the sale of an office property in Cincinnati, Ohio leased to EMCOR for a sales price of $6,525,000, which generated net proceeds of $6,345,642 after payment of commissions and closing costs.

Six Months Ended June 30, 2021

Property	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sale Price		Gain on Sale
Chevron Gas Station	Roseville, CA	1/7/2021	Retail	3,300	$	4,050,000	$	228,769
EcoThrift	Sacramento, CA	1/29/2021	Retail	38,536	5,375,300		51,415
Chevron Gas Station	San Jose, CA	2/12/2021	Retail	1,060	4,288,888		9,458
Total				42,896	$	13,714,188	$	289,642

On January 7, 2021, the Company completed the sale of its Roseville, California retail property, which was leased to the operator of a Chevron gas station, for $4,050,000, which generated net proceeds of $3,914,909 after payment of commissions and closing costs.

On January 29, 2021, the Company completed the sale of its Sacramento, California retail property, which was leased to EcoThrift, for $5,375,300, which generated net proceeds of $2,684,225 after repayment of the existing mortgage, commissions and closing costs.

On February 12, 2021, the Company completed the sale of its San Jose, California retail property, which was leased to the operator of a Chevron gas station, for $4,288,888, which generated net proceeds of $4,054,327 after payment of commissions and closing costs.

Asset Concentration

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

	June 30, 2022
Property and Location	Net Carrying Value		Percentage of Total Assets
KIA, Carson, CA	$	68,918,363	15.1	%
Lindsay, eight properties acquired in Colorado (three), Ohio (two), North Carolina, South Carolina and Florida	54,622,049		12.0	%
Total	$	123,540,412	27.1	%

The Company held no real estate property with a net book value that was greater than 10% of its total assets as of December 31, 2021.

20

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Rental Income Concentration

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

	Three Months Ended June 30, 2022				Six Months Ended June 30, 2022
Property and Location	Rental Income		Percentage of Total Rental Income		Rental Income		Percentage of Total Rental Income
KIA, Carson, CA	$	1,459,745	14.0	%	$	2,725,006	13.6	%
Lindsay, eight properties acquired in Colorado (three), Ohio (two), North Carolina, South Carolina and Florida	$	1,058,443	10.2	%	(1)		(1)

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

No tenant represented the source of 10% of total rental income during the three and six months ended June 30, 2021.

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.

During the six months ended June 30, 2022, the Company executed lease extensions for three properties, including the properties leased to Cummins in Nashville, Tennessee for an additional one year through February 28, 2024, ITW Rippey in El Dorado, California for an additional seven years through July 31, 2029 and Williams Sonoma in Summerlin, Nevada for an additional three years through October 31, 2025. These three lease extensions resulted in an average increase in lease term of 3.7 years and an average annual increase in rents of 1.9%.

As discussed above, the Company also acquired 10 properties and sold five properties during the six months ended June 30, 2022.

As of June 30, 2022, 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 2022	$	16,377,113
2023	33,059,460
2024	31,759,477
2025	30,260,027
2026	24,057,552
2027	21,901,312
Thereafter	267,177,203
	$	424,592,144

21

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Real Estate Intangible Assets, Net

As of June 30, 2022 and December 31, 2021, the Company’s real estate intangible assets were as follows:

	June 30, 2022						December 31, 2021
	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	$	21,384,224	$	1,128,549	$	(14,811,570)	$	21,504,210	$	1,128,549	$	(15,097,132)
Accumulated amortization	(12,312,635)		(502,442)		4,636,286		(11,009,997)		(437,530)		3,994,192
Net	$	9,071,589	$	626,107	$	(10,175,284)	$	10,494,213	$	691,019	$	(11,102,940)

The intangible assets acquired in connection with the acquisitions have a weighted average amortization period of approximately 9.5 years as of June 30, 2022. As of June 30, 2022, the amortization of intangible assets for the remaining six months ending December 31, 2022 and for each of the next five 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 2022	$	1,062,439	$	64,911	$	(496,178)
2023	1,682,755		127,174		(906,522)
2024	1,545,468		122,543		(903,104)
2025	1,218,652		115,996		(903,104)
2026	620,229		78,557		(897,701)
2027	343,917		22,272		(887,789)
Thereafter	2,598,129		94,654		(5,180,886)
	$	9,071,589	$	626,107	$	(10,175,284)
Weighted-average remaining amortization period	7.7 years		6.0 years		11.3 years

Real Estate Investments Held For Sale

As of June 30, 2022, the Company did not classify any properties as held for sale. As of December 31, 2021, the Company classified four healthcare related properties as held for sale and presented the properties in the Company’s unaudited condensed consolidated balance sheet as real estate investments held for sale. These properties were all sold in February 2022, as discussed above. These four healthcare related properties consisted of three office properties (the property leased to Accredo Health through December 31, 2024 located in Orlando, Florida; the property leased to Bon Secours Health through August 31, 2026 located in Richmond, Virginia; and the property leased to Texas Health through December 31, 2025 located in Dallas, Texas) and one flex property leased to Omnicare through May 31, 2026 located in Richmond, Virginia.

22

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

As of June 30, 2022, no assets were classified as real estate investments held for sale. The following table summarizes the major components of assets and liabilities related to the four real estate investments held for sale as of December 31, 2021:

	December 31, 2021
Assets related to real estate investments held for sale:
Land, buildings and improvements	$	34,507,485
Tenant origination and absorption costs	3,064,371
Accumulated depreciation and amortization	(6,061,094)
Real estate investments held for sale, net	31,510,762
Other assets, net	788,296
Total assets related to real estate investments held for sale:	$	32,299,058
Liabilities related to real estate investments held for sale:
Mortgage notes payable, net	$	21,699,912
Other liabilities, net	383,282
Total liabilities related to real estate investments held for sale:	$	22,083,194

The following table summarizes the major components of rental income and expenses related to one real estate investment held for sale as of June 30, 2021 which was leased to Dana located in Cedar Park, Texas, and was included in continuing operations for the three and six months ended June 30, 2021:

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Total revenues	$	342,198	$	716,160
Expenses:
Interest expense	63,207		138,629
Depreciation and amortization	49,108		122,769
Other expenses	78,857		145,797
Total expenses	191,172		407,195
Net income	$	151,026	$	308,965

23

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 4. UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY

The Company’s investment in unconsolidated entity as of June 30, 2022 and December 31, 2021 is as follows:

	June 30, 2022		December 31, 2021
The TIC Interest	$	9,956,517	$	9,941,338

The Company’s income from investment in unconsolidated entity for the three and six months ended June 30, 2022 and 2021 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
The TIC Interest	$	66,868	$	74,834	$	162,332	$	147,302

TIC Interest

During 2017, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired an approximate 72.7% interest in a 91,740 square foot industrial property in Santa Clara, California. The remaining approximate 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 both Hagg Lane II, LLC and Hagg Lane III, LLC was a member of the Company's board of directors from December 2019 to December 2021. The Santa Clara property does not qualify as a variable interest entity and consolidation is not required as the Company’s TIC Interest does not control the property. Therefore, the Company accounts for the TIC Interest using the equity method. The Company receives approximately 72.7% of the cash flow distributions and recognizes approximately 72.7% of the results of operations.

During the three months ended June 30, 2022 and 2021, the Company received $51,786 and $82,588 in cash distributions, respectively, and $147,153 and $161,967 during the six months ended June 30, 2022 and 2021, respectively.

The following is summarized financial information for the Santa Clara property as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021:

	June 30, 2022		December 31, 2021
Assets:
Real estate investments, net	$	28,883,609	$	29,403,232
Cash and cash equivalents	805,057		690,470
Other assets	29,975		134,049
Total assets	$	29,718,641	$	30,227,751
Liabilities:
Mortgage note payable, net	$	13,078,689	$	13,218,883
Below-market lease, net	2,587,393		2,660,586
Other liabilities	52,609		369,209
Total liabilities	15,718,691		16,248,678
Total equity	13,999,950		13,979,073
Total liabilities and equity	$	29,718,641	$	30,227,751

24

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Total revenues	$	676,780	$	676,936	$	1,391,758	$	1,350,912
Expenses:
Interest expense	134,968		138,036		269,262		275,642
Depreciation and amortization	261,956		250,015		523,912		500,030
Other expenses	187,890		185,964		375,324		372,652
Total expenses	584,814		574,015		1,168,498		1,148,324
Net income	$	91,966	$	102,921	$	223,260	$	202,588

NOTE 5. GOODWILL, NET

The carrying values of goodwill as of June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022		December 31, 2021
Carrying value, beginning	$	17,320,857	$	17,320,857
Impairment of goodwill	(17,320,857)		—
Carrying value, ending	$	—	$	17,320,857

The Company conducted its annual impairment analysis as of December 31, 2021 using qualitative factors and concluded that no impairment to goodwill was necessary. For the quarter ended March 31, 2022, management considered the decline of the recent trading price of the Company’s Class C common stock following its listing on the NYSE in February 2022, causing the Company's market capitalization to be below the book value of the Company’s equity as of March 31, 2022, to be a triggering event. Management performed a quantitative impairment assessment considering expected future cash flows, market conditions and expectations of increases in interest rates and concluded that there was an impairment of goodwill that was not expected to be temporary as of March 31, 2022. Events subsequent to March 31, 2022 and prior to the Company's filing of its Quarterly Report on Form 10-Q for the three months ended March 31, 2022, including rising inflation and interest rates, and declining office occupancy rates affecting owners of real estate properties, further supported such conclusion. Based on the quantitative analysis, the value of goodwill was written off, resulting in a non-cash expense of $17,320,857 for the three months ended March 31, 2022.

25

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 6. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS

Tenant Receivables, Net

As of June 30, 2022 and December 31, 2021, tenant receivables consisted of the following:

	June 30, 2022		December 31, 2021
Straight-line rent	$	5,753,512	$	4,417,065
Tenant rent and billed reimbursements	541,561		81,079
Unbilled tenant reimbursements	1,764,562		1,498,775
Total	$	8,059,635	$	5,996,919

Prepaid Expenses and Other Assets

As of June 30, 2022 and December 31, 2021, prepaid expenses and other assets were comprised of the following:

	June 30, 2022		December 31, 2021
Deferred tenant allowance	$	2,353,762	$	2,400,811
Miscellaneous receivables	59,888		681,369
Prepaid expenses	1,387,121		1,253,751
Deposits	2,151,099		1,420,244
Deferred financing costs on credit facility revolver	814,997		100,080
Total	$	6,766,867	$	5,856,255

Accounts Payable, Accrued and Other Liabilities

As of June 30, 2022 and December 31, 2021, accounts payable, accrued and other liabilities were comprised of the following:

	June 30, 2022		December 31, 2021
Accounts payable	$	1,194,736	$	1,767,657
Accrued expenses	2,883,690		3,864,222
Accrued distributions	1,762,722		1,795,303
Accrued interest payable	706,920		548,564
Unearned rent	2,051,994		1,735,440
Lease incentive obligation	133,695		2,133,695
Total	$	8,733,757	$	11,844,881

26

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 7. DEBT

Mortgage Notes Payable, Net

As of June 30, 2022 and December 31, 2021, the Company’s mortgage notes payable consisted of the following:

Collateral	2022 Principal Amount		2021 Principal Amount		Contractual Interest Rate (1)	Effective Interest Rate (2)	Loan Maturity
Costco property	$	18,850,000	$	18,850,000	4.85%	4.85%	01/01/30
Taylor Fresh Foods	12,350,000		12,350,000		3.85%	3.85%	11/01/29
Sutter Health property	13,450,173		13,597,120		4.50%	4.50%	03/09/24
Six Dollar General properties	—		3,674,327		—%	4.69%	(3)
Dollar General, Bakersfield property	—		2,224,418		—%	3.65%	(3)
Dollar General, Big Spring property	—		587,961		—%	4.69%	(3)
Northrop Grumman property	—		6,925,915		—%	3.35%	(3)
exp US Services property	—		3,255,313		—%	4.25%	(3)
Wyndham property	—		5,493,000		—%	4.34%	(3)
Williams Sonoma property	—		4,344,000		—%	4.05%	(3)
EMCOR property	—		2,757,943		—%	4.36%	(3)
Husqvarna property	—		6,379,182		—%	4.60%	(3)
AvAir property	—		19,950,000		—%	3.80%	(3)
3M property	—		8,025,200		—%	5.09%	(3)
Cummins property	—		8,188,800		—%	5.16%	(3)
Levins property	—		2,654,405		—%	3.75%	(3)
Labcorp property	—		5,308,810		—%	3.75%	(3)
GSA (MSHA) property	—		1,713,196		—%	3.65%	(3)
PreK Education property	—		4,930,217		—%	4.25%	(3)
Solar Turbines, Amec Foster, ITW Rippey properties	—		8,986,222		—%	3.35%	(3)
Gap property	—		3,492,775		—%	4.15%	(3)
L3Harris property	—		6,219,524		—%	3.35%	(3)
Walgreens property	—		3,067,109		—%	4.25%	(3)
Total mortgage notes payable	44,650,173		152,975,437
Plus unamortized mortgage premium, net (4)	171,810		204,281
Less unamortized deferred financing costs	(213,168)		(956,139)
Mortgage notes payable, net	$	44,608,815	$	152,223,579

(1)Contractual interest rate represents the interest rate in effect under the mortgage note payable as of June 30, 2022 for the three mortgages that were not refinanced through a drawdown from the Credit Facility (defined and discussed below) with KeyBank National Association (“KeyBank”) given their prepayment penalties.

(2)Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2022 consisting of the contractual interest rate, and as of December 31, 2021, consisting of the contractual interest rate and the effect of the interest rate swap, if applicable (see Note 8 for further information regarding the Company’s derivative instruments as of December 31, 2021).

(3)The loan was fully repaid on January 18, 2022 through a drawdown from the Credit Facility.

(4)Represents unamortized net mortgage premium acquired through the merger with REIT I.

27

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

The following summarizes the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of June 30, 2022 and December 31, 2021:

	June 30, 2022						December 31, 2021
	Face Value		Carrying Value		Fair Value		Face value		Carrying Value		Fair Value
Mortgage notes payable	$	44,650,173	$	44,608,815	$	41,493,296	$	152,975,437	$	152,223,579	$	159,241,815
Less: full repayments of mortgages on January 18, 2022							(108,178,317)		(107,429,721)		*
							$	44,797,120	$	44,793,858	$	46,296,445

*    The payoff values of the loans refinanced on January 18, 2022 approximate their face values as of December 31, 2021.

Disclosures of the fair values of financial instruments are based on pertinent information available to the Company as of the period end and require a significant amount of judgment. The actual value could be materially different from the Company’s estimate of fair value.

Mortgage Notes Payable Related to Real Estate Investments Held For Sale, Net

As discussed in detail in Note 3, the Company classified four properties as real estate held for sale as of December 31, 2021, which were collateral for mortgage notes payable. No property was classified as held for sale as of June 30, 2022. The following table summarizes the Company's mortgage notes payable related to real estate investments held for sale as of December 31, 2021:

Collateral	December 31, 2021
Accredo property	$	8,538,000
Omnicare property	4,109,167
Texas Health property	4,284,335
Bon Secours property	5,104,817
Total	22,036,319
Less deferred financing costs	(336,407)
Mortgage notes payable, net	$	21,699,912

Credit Facility

On January 18, 2022, the Company's 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 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 grid that fluctuates based on the Company’s actual leverage ratio at the end of the prior quarter. With the Company's leverage ratio at 34% as of March 31, 2022 and 38% as of June 30, 2022, the spread over the Secured Overnight Financing Rate (‘‘SOFR’’), including a 10 basis point credit adjustment, is 165 basis points and the interest rate on the Revolver was 3.150% as of June 30, 2022. Following the Federal Reserve Bank’s July 27, 2022 increase in the target range for federal funds by 75 basis points, the interest rate on the Revolver is approximately 3.96%. The Company also pays an annual unused fee of up to 25 basis points on the Revolver, depending on the daily amount of the unused commitment, and paid total unused fees of $50,047 and $72,280 for the three and six months ended June 30, 2022, respectively. The Company entered into a swap agreement to fix the interest rate on the Term Loan at 3.858% effective May 31, 2022 as described in Note 8.

28

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

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 the Company's borrowing base. The Company was in compliance with these covenants as of June 30, 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 are indirectly owned by the Company, and various cash collateral owned by the Operating Partnership and the Subsidiary Guarantors. In connection with the Credit Facility, the Company and each of the Subsidiary Guarantors entered into an Unconditional Guaranty of Payment and Performance in favor of the Agent, pursuant to which the Company and each of the Subsidiary Guarantors agreed to guarantee the full and prompt payment of the Operating Partnership’s obligations under the Credit Agreement.

While the Credit Facility allows for borrowings up to 60% of the Company's borrowing base and the Company's board of directors has approved a maximum leverage ratio of 55% of the aggregate fair value of the Company's real estate properties plus its cash and cash equivalents, the Company is targeting leverage of 40% or lower over the long-term once it achieves scale; however, the Company will consider higher leverage in the near-term if it identifies attractive acquisition opportunities in advance of completing dispositions or raising additional equity. The Company also has 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.

Credit Facility Drawdown

On January 18, 2022, the Company borrowed $155,775,000 from its Credit Facility consisting of $100,000,000 under the Term Loan and $55,775,000 under the Revolver. The Company used a portion of the proceeds from the Credit Facility to pay total commitment and arrangement fees of $2,020,000 to the Agent, the Lenders, the Lead Arrangers and Co-Syndication Agents.

The Company used a portion of the 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 above, and the Company's 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, the Company prepaid $35,000,000 of the outstanding balance on the Revolver with cash on hand in order to reduce interest expense and on April 25, 2022, the Company drew the remaining $50,000,000 on the Term Loan for a repayment of the Revolver. The Company also repaid $8,000,000 on the Revolver on June 22, 2022. As of June 30, 2022, the Company had availability under the Credit Facility of approximately $60,000,000 which can be drawn for general corporate purposes, including pending and future acquisitions (see Note 14 for transactions subsequent to the second quarter of 2022).

The details of the Company's Term Loan as of June 30, 2022 follow:

	June 30, 2022
Term loan	$	150,000,000
Less unamortized deferred financing costs	(1,149,950)
Net term loan	$	148,850,050

Prior Credit Facility

On March 29, 2021, the Company entered into a credit facility with Banc of California (the “Prior Credit Facility”) for an aggregate line of credit of $22,000,000 with a maturity date of March 30, 2023. Under the terms of the Prior Credit Facility, the Company paid a variable rate of interest on outstanding amounts equal to one percentage point over the prime rate published in The Wall Street Journal, provided that the interest rate in effect on any one day was not less than 4.75% per annum. The Company paid Banc of California origination fees of $77,000 in connection with the Prior Credit Facility in March 2021 and paid an unused commitment fee of 0.15% per annum of the unused portion of the Prior Credit Facility, charged quarterly in arrears based on the average unused commitment available under the Prior Credit Facility.

29

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

The Revolver's and Prior Credit Facility's unamortized deferred financing costs of $814,997 and $100,079 as of June 30, 2022 and December 31, 2021, respectively, are presented under prepaid and other assets in the Company's unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively.

Compliance with All Debt Agreements

Pursuant to the terms of mortgage notes payable on certain of the Company’s properties and the Credit Facility, the Company and/or the subsidiary borrowers are subject to certain financial loan covenants. The Company and/or the subsidiary borrowers were in compliance with such financial loan covenants as of June 30, 2022.

The following summarizes the future principal repayments of the Company’s mortgage notes payable and Credit Facility as of June 30, 2022:

	Mortgage Notes		Credit Facility
	Payable		Revolver		Term Loan		Total
July through December 2022	$	141,575	$	—	$	—	$	141,575
2023	317,575		—		—		317,575
2024	12,991,023		—		—		12,991,023
2025	—		—		—		—
2026	—		6,775,000		—		6,775,000
2027	—		—		150,000,000		150,000,000
Thereafter	31,200,000		—		—		31,200,000
Total principal	44,650,173		6,775,000		150,000,000		201,425,173
Plus unamortized mortgage premium, net of unamortized discount	171,810		—		—		171,810
Less deferred financing costs	(213,168)		—		(1,149,950)		(1,363,118)
Net principal	$	44,608,815	$	6,775,000	$	148,850,050	$	200,233,865

Interest Expense

The following is a reconciliation of the components of interest expense for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Mortgage notes payable:
Interest expense	$	460,886	$	1,992,812	$	1,273,605	$	3,826,636
Amortization of deferred financing costs	7,235		103,383		14,459		214,426
Swap termination costs	—		—		—		23,900
Unrealized gain on interest rate swap valuation (1)	—		(92,200)		—		(420,243)
Credit facility:
Interest expense	1,098,435		63,333		1,688,665		142,085
Amortization of deferred financing costs	120,830		22,139		221,520		43,863
Unrealized gain on interest rate swap valuation (2)	(589,997)		—		(589,997)		—
Other	99,765		9,182		157,077		49,118
Total interest expense	$	1,197,154	$	2,098,649	$	2,765,329	$	3,879,785

(1)    Includes unrealized gain on interest rate swaps of $90,600 and $517,719 for the three and six months ended June 30, 2021 (see Note 8 for more details). Accrued interest receivable of $56,114 as of December 31, 2021 represented the unsettled portion of the interest rate swaps for the period from origination of the interest rate swap through the balance sheet date.

30

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

(2)    The Company entered into a swap transaction for its Credit Facility Term Loan effective May 31, 2022 which is further described in Note 8.

NOTE 8. INTEREST RATE SWAP DERIVATIVES

The Company, through its Operating Partnership, entered into a five-year swap agreement to fix SOFR at 2.258% related to its variable interest rate Term Loan effective May 31, 2022. The Company designated the pay-fixed, receive-floating interest rate swap with the terms described in the table below. The swap agreement matures on January 15, 2027 and the financial institution counterparty has a one-time option to cancel the swap on December 31, 2024.

In prior years, the Company, through its limited liability company subsidiaries, entered into interest rate swap agreements with amortizing notional amounts relating to four of its mortgage notes payable. These swap agreements, which were in place as of December 31, 2021, were terminated during the three months ended March 31, 2022 in connection with refinancings discussed in Note 7. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks. During the three months ended March 31, 2022, the Company terminated the swap agreements related to mortgages on the 3M, Cummins, Wyndham and Williams Sonoma properties at aggregate costs of $733,000 and during the three months ended March 31, 2021, the Company terminated the swap agreements related to mortgages on the GSA and Eco-Thrift properties at aggregate costs of $23,900.

The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of June 30, 2022 and December 31, 2021:

June 30, 2022

December 31, 2021

Derivative Instruments

Number of Instruments

Notional Amount (i)

Reference Rate (ii)

Fixed Pay Rate (iii)

Remaining Non-Cancellable Term

Number of Instruments

Notional Amount (i)

Reference Rate (iv)

Weighted Average Fixed Pay Rate

Weighted Average Remaining Term

Interest Rate Swap Derivatives

1

$

150,000,000

Indexed to USD - SOFR - COMPOUND

3.858

%

2.5 years

4

$

26,051,000

One-month LIBOR + applicable spread/Fixed at 4.05%-5.16%

4.51

%

2.0 years

(i)The notional amount of the Company’s swaps decreased each month to correspond to the outstanding principal balance on the related mortgage. The minimum notional amounts (outstanding principal balance at the maturity date) as of June 30, 2022 and December 31, 2021 were $150,000,000 and $24,935,999, respectively.

(ii)The reference rate was as of June 30, 2022.

(iii)Based on the terms of the Credit Facility, the fixed pay rate increases if the Company's leverage ratio increases.

(iv)The reference rate was as of December 31, 2021.

The following table sets forth the fair value of the Company’s derivative instruments (Level 2 measurement), as well as their classification in the unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021:

		June 30, 2022			December 31, 2021
Derivative Instrument	Balance Sheet Location	Number of Instruments	Fair Value		Number of Instruments	Fair Value
Interest Rate Swaps	Asset - Interest rate swap derivatives, at fair value	1	$	589,997	—	$	—
Interest Rate Swaps	Liability - Interest rate swap derivatives, at fair value	—	$	—	4	$	(788,016)

The changes in fair value of these derivative instruments that were not designated as a cash flow hedge for financial accounting purposes were recorded as interest expense in the unaudited condensed consolidated statements of operations. None of the Company’s derivatives as of December 31, 2021 were designated as hedging instruments; therefore, the net gains recognized were recorded as reductions in the loss on early extinguishment of debt for the three months ended March 31, 2022 and the net unrealized gain recognized on interest rate swaps of $90,600 and $517,719 were recorded as decreases in interest expense for the three and six months ended June 30, 2021, respectively. The loss on early extinguishment of debt for the three months ended March 31, 2022 includes the actual cost of terminating the interest rate swap derivatives in January 2022 for $733,000, which was offset by a corresponding reversal of the liability of $788,016 for interest rate swap derivatives as of December 31, 2021.

31

MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 9. PREFERRED STOCK AND COMMON STOCK

Preferred Stock

The Company is authorized to issue up to 50,000,000 shares of preferred stock. In connection with an underwritten public offering in September 2021 (discussed below in detail), the Company classified and designated 2,000,000 shares of its authorized preferred stock as authorized shares of Series A Preferred Stock. As of June 30, 2022 and December 31, 2021, 2,000,000 shares of authorized Series A Preferred Stock were issued and outstanding.

Underwritten Offering - Series A Preferred Stock

On September 14, 2021, the Company and the Operating Partnership entered into an underwriting agreement (the “Underwriting Agreement”) with B. Riley Securities, Inc., as representative of the underwriters listed on Schedule I thereto (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell 1,800,000 shares of the Company’s Series A Preferred Stock, with a liquidation preference of $25.00 per share, in the Preferred Offering at a price per share of $25.00. In addition, the Company 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.

In the Underwriting Agreement, the Company and the Operating Partnership made certain customary representations, warranties and covenants and agreed to indemnify the Underwriters against certain liabilities. The issuance and sale of the shares of Series A Preferred Stock, including the issuance and sale of 200,000 shares pursuant to the Underwriters’ full exercise of their option to purchase additional shares, closed and the Series A Preferred Stock began trading on the NYSE on September 17, 2021.

The gross proceeds from the Preferred Offering were $50,000,000 and the net proceeds were $47,607,309, after deducting the underwriting discount of $1,575,000 and other offering costs of $817,691.

The Company contributed $48,425,000 of the net proceeds from the Preferred Offering prior to other offering costs to the Operating Partnership in exchange for a new class of 7.375% Series A Cumulative Redeemable Perpetual Preferred Units of the Operating Partnership (the “Series A Preferred Units”), which have economic interests that are substantially similar to the designations, preferences and other rights of Series A Preferred Stock. The Company, acting through the Operating Partnership, used the net proceeds from such contribution for general corporate purposes, including purchases of additional properties and other real estate and real estate-related assets.

Series A Preferred Stock - Terms

Holders of Series A Preferred Stock are entitled to cumulative dividends in the amount of $1.84375 per share each year, which is equivalent to the rate of 7.375% of the $25.00 liquidation preference per share per annum. The Series A Preferred Stock has no stated maturity and will remain outstanding indefinitely unless redeemed, converted or otherwise repurchased. Except in limited circumstances relating to the Company's qualification as a REIT for U.S. federal income tax purposes, and as described in the articles supplementary governing the terms of the Series A Preferred Stock (the “Articles Supplementary”), the Series A Preferred Stock is not redeemable prior to September 17, 2026.

On and after September 17, 2026, at any time and from time to time, the Series A Preferred Stock will be redeemable in whole or in part, at the Company's option, at a cash redemption price of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date. In addition, upon the occurrence of a Delisting Event or a Change of Control (each as defined in the Articles Supplementary), the Company may, subject to certain conditions, at its option, redeem the Series A Preferred Stock, in whole or in part, (i) after the first date on which the Delisting Event occurred or (ii) on, or within 120 days after, the first date on which the Change of Control occurred, as applicable, by paying the liquidation preference of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Upon the occurrence of a Change of Control during a continuing Delisting Event, unless the Company has elected to exercise its redemption right, holders of the Series A Preferred Stock will have certain rights to convert the Series A Preferred Stock into shares of the Company’s Class C common stock. In addition, upon the occurrence of a Delisting Event, the dividend rate will be increased on the day after the occurrence of the Delisting Event by 2.00% per annum to the rate of 9.375% of the $25.00 liquidation preference per share per annum (equivalent to $2.34375 per share each year) from and after the date of the Delisting Event. Following the cure of such Delisting Event, the dividend rate will revert to the rate of 7.375% of the $25.00 liquidation preference per share per annum. The necessary conditions to convert the Series A Preferred Stock into the Company's Class C common stock have not been met as of June 30, 2022.

The Series A Preferred Stock ranks senior to the Company's Class C common stock with respect to dividend rights and rights upon the Company’s voluntary or involuntary liquidation, dissolution or winding up.

Voting rights for holders of Series A Preferred Stock exist primarily with respect to the ability to elect two additional directors to the board of directors if six or more quarterly dividends (whether or not authorized or declared or consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s charter (which includes the Articles Supplementary) that materially and adversely affect the rights of the Series A Preferred Stock or create additional classes or series of shares of the Company’s capital stock that are senior to the Series A Preferred Stock. Other than the limited circumstances described above and in the Articles Supplementary, holders of Series A Preferred Stock do not have any voting rights.

Series A Preferred Stock Dividend

Dividends on the Company's Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to holders of Series A Preferred Stock, which is equivalent to 7.375% of the $25.00 liquidation preference per share per annum. Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not a business day, the next succeeding business day) to holders of record on the applicable record date. Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock become part of the liquidation preference thereof.

On November 11, 2021, the Company’s board of directors declared Series A Preferred Stock distributions payable of $1,065,278 for the fourth quarter of 2021, including the $143,403 of accrued dividends as of September 30, 2021, all of which were paid on January 18, 2022. On March 18, 2022, the Company’s board of directors declared Series A Preferred Stock dividends payable of $921,875 for the first quarter of 2022, which was paid on April 15, 2022. On June 15, 2022, the Company’s board of directors declared Series A Preferred Stock dividends payable of $921,875 for the second quarter of 2022. This amount was accrued as of June 30, 2022 and paid on July 15, 2022 (see Note 14).

Common Stock Listed Offering

On February 10, 2022, the Company and the Operating Partnership entered into an underwriting agreement (the “Class C Common Stock Underwriting Agreement”) with B. Riley Securities, Inc., as the underwriter listed on Schedule I thereto, pursuant to which the Company agreed to issue and sell 40,000 shares of the Company’s Class C common stock in an underwritten Listed Offering at a price per share of $25.00. On February 15, 2022, the Company completed the Listed Offering of its Class C common stock, and in connection with the Listed Offering, the Company sold to Mr. Wirta, the Company’s former Chairman, all 40,000 shares of its Class C common stock at $25.00 per share for aggregate net proceeds of $114,500, after deducting the underwriting discount of $70,000, and other offering costs of $815,500. The primary purpose of the Listed Offering was to provide liquidity to the Company’s existing stockholders. The shares of Class C common stock began trading on the NYSE on February 11, 2022. In connection with the Listed Offering and upon the listing on the NYSE, each share of the Company's Class S common stock was converted into a share of Class C common stock.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 10. RELATED PARTY TRANSACTIONS

The Company pays the members of its board of directors who are not executive officers for services rendered through cash payments and by issuing shares of Class C common stock to them. Total fees incurred and paid or accrued for board services by the Company for the three and six months ended June 30, 2022 and 2021, are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Board of Directors Compensation	2022		2021		2022		2021
Payments for services rendered	$	67,500	$	60,000	$	135,000	$	60,000
Value of shares issued for services rendered	82,500		110,000		165,000		180,000
Total	$	150,000	$	170,000	$	300,000	$	240,000
Number of shares issued for services rendered	4,666		4,470		9,265		7,510

Fees incurred for board services for the three months ended June 30, 2022 were paid in cash and shares were issued on July 7, 2022 based on the closing price of the Company’s Class C common stock on June 30, 2022.

Transactions with Other Related Parties

As discussed in Note 3, on January 31, 2022, the Company acquired an industrial property in Saint Paul, Minnesota, which is leased to Kalera, Inc. The acquisition of the Kalera, Inc. property was introduced to the Company by Curtis B. McWilliams, one of the Company's independent directors. Since Mr. McWilliams was serving as the Interim Chief Executive Officer of Kalera, Inc. at the time of the transaction, all of the disinterested members of the Company's board of directors approved this transaction.

Related Party Transactions with Unconsolidated Investment in a Real Estate Property

The Company's taxable REIT subsidiary serves as the asset manager of the TIC Interest property and earned asset management fees of $65,993, including the Company's share which was $47,984 for both of the three months ended June 30, 2022 and 2021, respectively, and $131,986, including the Company's share which was $95,967 for both of the six months ended June 30, 2022 and 2021, respectively.

NOTE 11. COMMITMENTS AND CONTINGENCIES

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities.

Tenant Improvements

Pursuant to lease agreements, as of June 30, 2022 and December 31, 2021, the Company had obligations to pay $609,788 and $189,136, respectively, for on-site and tenant improvements to be incurred by tenants. As of June 30, 2022 and December 31, 2021, the Company had no restricted cash and $2,271,462 of restricted cash, respectively, held to fund other building improvements and leasing commissions. Pursuant to the refinancing of the related mortgage notes payable on January 18, 2022 as discussed in Note 7, the restricted cash as of December 31, 2021 was released.

Legal Matters

From time-to-time, the Company may become party to legal proceedings that arise in the ordinary course of its business. The Company, including its subsidiaries, is not a party to any legal proceeding, nor is the Company aware of any pending or threatened litigation that could have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

NOTE 12. OPERATING PARTNERSHIP UNITS

Class M OP Units

On September 19, 2019, the Company, the Operating Partnership, BrixInvest and Daisho OP Holdings, LLC, a formerly wholly owned subsidiary of BrixInvest (“Daisho”) which was spun off from BrixInvest on December 31, 2019, entered into the Contribution Agreement pursuant to which the Company agreed to acquire substantially all of the net assets of BrixInvest in exchange for 657,949.5 units of Class M limited partnership interest in the Operating Partnership (“Class M OP Units”) and assumed certain liabilities (the “Self-Management Transaction”). As a result of the Self-Management Transaction, the Company became self-managed and eliminated all fees for acquisitions, dispositions and management of its properties, which were previously paid to its former external advisor. The consideration transferred as of December 31, 2019 was determined to have a fair value of $50,603,000 based on a probability weighted analysis of achieving the requisite assets under management (“AUM”) and adjusted funds from operations (“AFFO”) hurdles.

The Class M OP Units were issued to Daisho on December 31, 2019 in connection with the Self-Management Transaction and are non-voting, non-dividend accruing, and were not able to be converted or exchanged prior to the one-year anniversary of the Self-Management Transaction. Investors holding units in BrixInvest received Daisho units in a ratio of 1:1 for an aggregate of 657,949.5 Daisho units. During 2020, Daisho distributed the Class M OP Units to its members. The Class M OP Units are convertible into units of Class C limited partnership interest in the Operating Partnership (“Class C OP Units”) at a conversion ratio of 1.6667 Class C OP Units for each one Class M OP Unit, subject to a reduction in the conversion ratio (which reduction will vary depending upon the amount of time held) if the exchange occurs prior to the four-year anniversary of the completion of the Self-Management Transaction.

In the event that the Class M OP Units are converted into Class C OP Units prior to December 31, 2023, such Class M OP Units shall be exchanged at the rate indicated below:

Date of Exchange	Early Conversion Rate
From December 31, 2020 to December 30, 2021	50% of the Class M conversion ratio
From December 31, 2021 to December 30, 2022	60% of the Class M conversion ratio
From December 31, 2022 to December 30, 2023	70% of the Class M conversion ratio

As of June 30, 2022, no Class M OP Units had been converted to Class C OP Units.

The Class M OP Units are eligible for an increase in the conversion ratio (conversion ratio enhancement) if the Company achieves both of the targets for AUM and AFFO in a given year as set forth below:

	Hurdles
	AUM		AFFO		Class M
	($ in billions)		Per Share ($)		Conversion Ratio
Initial Conversion Ratio					1:1.6667
Fiscal Year 2021	$	0.860	$	1.77	1:1.9167
Fiscal Year 2022	$	1.175	$	1.95	1:2.5000
Fiscal Year 2023	$	1.551	$	2.10	1:3.0000

The AUM and AFFO per share hurdles for the Class M OP Units were not met for fiscal year 2021.

Based on the current conversion ratio of 1.6667 Class C OP Units for each one Class M OP Unit, if a Class M OP Unit is converted on or after December 31, 2023, and based on the NYSE closing share price of $17.68 as of June 30, 2022, a Class M OP Unit would be valued at $29.47. This value does not reflect the early conversion rate or the future conversion enhancement ratio of the Class M OP Units, as discussed above, and the units of Class P limited partnership interest in the Operating Partnership (“Class P OP Units”), as discussed below.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Class P OP Units

The Company issued the Class P OP Units described below in connection with the Self-Management Transaction. The Class P OP Units are intended to be treated as “profits interests” in the Operating Partnership, which are non-voting, non-dividend accruing, and are not able to be transferred or exchanged prior to the earlier of (1) March 31, 2024, (2) a change of control (as defined in the Third Amended and Restated Limited Partnership Agreement of the Operating Partnership (as amended, the “Operating Partnership Agreement”)), or (3) the date of the recipient's involuntary termination (as defined in the relevant award agreement for the Class P OP Units) (collectively, the “Lockup Period”). Following the expiration of the Lockup Period, the Class P OP Units are convertible into Class C OP Units at a conversion ratio of 1.6667 Class C OP Units for each one Class P OP Unit; provided, however, that the foregoing conversion ratio shall be subject to increase on generally the same terms and conditions as the Class M OP Units, as set forth above.

The AUM and AFFO per share hurdles for the Class P OP Units were not met for fiscal year 2021. The Company will adjust stock compensation expense prospectively if the future conversion enhancement ratio is achieved during fiscal 2022 or 2023.

The Company issued a total of 56,029 Class P OP Units to Aaron S. Halfacre, the Company’s Chief Executive Officer and President, and Raymond J. Pacini, the Company’s Chief Financial Officer, including 26,318 Class P OP Units issued in exchange for Messrs. Halfacre's and Pacini's agreements to forfeit a similar number of restricted units in BrixInvest in connection with the Self-Management Transaction. The remaining 29,711 Class P OP Units were issued to these executives as signing bonuses and as a portion of their incentive compensation for 2020 in connection with their entry into restrictive covenant agreements. The 29,711 Class P OP Units were valued based on the estimated NAV per share of $30.48 (unaudited) when issued on December 31, 2019 and the expected minimum conversion ratio of 1.6667 Class C OP Units for each one Class P OP Unit, which resulted in a valuation of $1,509,319. This amount is amortized on a straight-line basis over 51 months through March 31, 2024, the expected vesting date of the units, as a periodic charge to stock compensation expense. The Company concluded that as of each quarter end, including June 30, 2022, achieving the performance target for the Class P OP Units is not deemed probable and will adjust compensation expense prospectively if achieving the enhancement is deemed probable through the remainder of the vesting period.

During the three months ended June 30, 2022 and 2021, the Company amortized and charged $88,784 and $88,783, respectively, to stock compensation expense and during the six months ended June 30, 2022 and 2021, the Company amortized and charged $177,567 and $177,567, respectively, to stock compensation expense. The unamortized value of these units was $621,483 as of June 30, 2022.

Under the Operating Partnership Agreement, once the Class M OP Units or Class P OP Units are converted into Class C OP Units, they will be exchangeable for the Company’s shares of Class C common stock on a 1-for-1 basis, or for cash at the sole and absolute discretion of the Company. The Company recorded the ownership interests of the Class M OP Units and Class P OP Units as noncontrolling interests in the Operating Partnership, representing a combined total of approximately 13% of the equity in the Operating Partnership on December 31, 2019. As of June 30, 2022, these interests represent a combined total of approximately 11.6% of the equity in the Operating Partnership.

Class R OP Units

On January 25, 2021, the compensation committee of the Company's board of directors recommended, and the board of directors approved, the grant of 40,000 units of Class R limited partnership interest in the Operating Partnership (“Class R OP Units”) to Mr. Halfacre in recognition of his voluntary reduction in his 2020 compensation plus 170,667 Class R OP Units to Mr. Halfacre as equity incentive compensation for the next three years, and the grant of 33,333 Class R OP Units to Mr. Pacini as equity incentive compensation for the next three years. An additional 116,000 Class R OP Units were granted to the remainder of the employees of the Company for a total of 360,000 Class R OP Units granted. All Class R OP Units granted vest and are mandatorily convertible into Class C OP Units on March 31, 2024 at a conversion ratio of 1:1, which conversion ratio can increase to 1:2.5 Class C OP Units if the Company generates funds from operations of $1.05, or more, per weighted average fully-diluted share outstanding for the year ending December 31, 2023. The Company concluded that as of each quarter end, including June 30, 2022, achieving the performance target to trigger the increased conversion ratio for the Class R OP Units is not deemed probable. The Company will adjust compensation expense prospectively if achieving the enhancement is deemed probable through the remainder of the vesting period.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Stock compensation expense related to the Class R OP Units is based on the estimated value per share, including a discount for the illiquid nature of the underlying equity, and is being recognized over the vesting period. Of the 360,000 Class R OP Units granted, due to the departure of employees, 26,657 units were forfeited as of December 31, 2021 and an additional 4,333 units were forfeited during the three and six months ended June 30, 2022. The cumulative number of units forfeited through June 30, 2022 aggregated 30,990 units.

During the three months ended June 30, 2022 and 2021, the Company amortized and charged to stock compensation expense $508,463 and $568,304, respectively, and during the six months ended June 30, 2022 and 2021, the Company amortized and charged to stock compensation expense $849,045 and $1,014,165, respectively, for the Class R OP Units. The unamortized value of the remaining 329,010 units was $3,559,243 as of June 30, 2022.

Class C OP Units

On January 18, 2022, the Company completed the acquisition of a KIA auto dealership property in an “UPREIT” transaction pursuant to a contribution agreement whereby the seller received 1,312,382 Class C OP Units based on the terms of the Operating Partnership Agreement and an agreed upon value of $25.00 per unit, representing approximately 47% of the property’s value (the “UPREIT Transaction”). 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 the Company has the option to redeem the units for cash or shares of Class C common stock. The Class C OP Units received $377,301 and $628,840 in distributions during the three and six months ended June 30, 2022, respectively, and were allocated $219,214 and $(1,708,815) of the net income (loss) for the three and six months ended June 30, 2022, respectively.

NOTE 13. EARNINGS (LOSS) PER SHARE

The following table presents the computation of the Company's basic and diluted net income (loss) per share attributable to common stockholders for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator - Basic:
Net income (loss)	$	2,390,344	$	(1,001,843)	$	(9,682,820)	$	(1,905,491)
Net (income) loss attributable to noncontrolling interest in Operating Partnership	(219,214)		—		1,708,815		—
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders	$	1,249,255	$	(1,001,843)	$	(9,817,755)	$	(1,905,491)
Numerator - Diluted:
Net income (loss)	$	2,390,344	$	(1,001,843)	$	(9,682,820)	$	(1,905,491)
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders	$	1,468,469	$	(1,001,843)	$	(11,526,570)	$	(1,905,491)
Denominator:
Weighted average shares outstanding - basic	7,478,973		7,614,196		7,505,673		7,630,401
Operating Partnership Units - Class C	1,312,382		—		—		—
Operating Partnership Units - Classes M, P and R	1,430,135		—		—		—
Weighted average shares outstanding - diluted	10,221,490		7,614,196		7,505,673		7,630,401
Earnings (loss) per share attributable to common stockholders:
Basic	$	0.17	$	(0.13)	$	(1.31)	$	(0.25)
Diluted	$	0.14	$	(0.13)	$	(1.31)	$	(0.25)

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

During the three months ended June 30, 2021, the weighted average dilutive effect of 1,219,789 shares and during the six months ended June 30, 2022 and 2021, the weighted average dilutive effect of 2,735,350 shares and 1,249,964 shares, respectively, related to units of limited partnership interest in the Operating Partnership as discussed in Notes 12 and 13 were excluded from the computation of Diluted EPS because their effect would be anti-dilutive. There were no other outstanding securities or commitments to issue common stock that would have a dilutive effect for the periods then ended.

NOTE 14. SUBSEQUENT EVENTS

The Company evaluates subsequent events until the date the unaudited condensed consolidated financial statements are issued. Significant subsequent events are described below:

Preferred Dividends

On July 15, 2022, the Company paid its Series A Preferred Stock dividends of $921,875 for the second quarter of 2022, which were declared by the Company’s board of directors on June 15, 2022.

Common Stock and Class C OP Unit Distributions

On March 18, 2022, the Company's board of directors authorized monthly distributions payable to common stockholders and the Class C OP Unit holder of record as of June 30, 2022, which were paid on July 25, 2022. The current monthly distribution amount of $0.09583 per share represents an annualized distribution rate of $1.15 per share of common stock.

On June 15, 2022, the Company’s board of directors authorized monthly distributions of $0.09583 per share payable to common stockholders and the Class C OP Unit holder of record as of July 29, 2022, August 31, 2022 and September 30, 2022, which will be paid on or about August 25, 2022, September 26, 2022 and October 25, 2022, respectively.

Share Repurchase Program

Between July 1, 2022 and August 9, 2022, the Company repurchased an additional 32,713 shares of its Class C common stock for a total of $503,885 under its share repurchase program and these shares are held as treasury stock. Since inception of the Company’s share repurchase program in February 2022 through August 9, 2022, the Company has repurchased a total of 220,143 shares for a total of $3,757,744, for an average cost of $17.07 per share.

Real Estate Investment Acquisitions

On July 15, 2022, the Company acquired two industrial properties leased to New Vision Industries, LLC and Juniper Ring Acquisitions, LLC in a sale and leaseback transaction (the “Producto Acquisition”), with newly executed 20-year leases and 2.00% annual rent increases. The leases are guaranteed by the parent company of the lessees, Producto Holdings, LLC. These companies specialize in manufacturing, machining and engineering of precision tools for very diverse product sectors including medical, semiconductor, aerospace, ammunition and defense markets. These properties are located in upstate New York and the aggregate purchase price was $5,343,862, which reflects an initial capitalization rate of 7.21%. The initial capitalization rate is calculated by dividing the initial annual cash rent by the purchase price. The Company funded the purchase and related closing costs with a $5,000,000 draw on the Company’s Credit Facility and available cash on hand.

On July 26, 2022 and August 4, 2022, the Company acquired an aggregate of four industrial properties leased to Valtir, LLC (formerly known as Trinity Highway Products, LLC) in a sale and leaseback transaction, with a newly executed 25-year master lease for two of the properties, a newly executed 15-year master lease for the other two properties and 2.25% annual rent increases (the “Valtir Acquisition”). Valtir, LLC is an industry-leading manufacturer of commercial highway products with a 49-year operating history. These properties are used in manufacturing and distribution, and are located in South Carolina, Ohio, Texas and Utah. The aggregate purchase price was $23,375,000, which reflects an initial capitalization rate of 7.70%. The Company funded the purchase and related closing costs with a $23,000,000 draw on the Company’s Credit Facility and available cash on hand.

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MODIV INC.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Pending Real Estate Disposition

On July 12, 2022, the Company entered into a purchase and sale agreement to sell its property in Las Vegas, Nevada that is leased to Williams Sonoma for $9,300,000. The buyer submitted a non-refundable deposit of $500,000 into escrow on July 15, 2022 and the sale is scheduled to close by August 26, 2022, although there can be no assurances that this transaction will be completed on schedule or at all.

Credit Facility

On July 14, 2022, the Company drew $5,000,000 on its Revolver in connection with the Producto Acquisition and on July 23, 2022, the Company drew $23,000,000 on its Revolver in connection with the Valtir Acquisition, resulting in a balance of $34,775,000 on the Revolver as of July 31, 2022. As a result of the addition of these properties to the borrowing base and the July 2022 draws on the Revolver, approximately $52,000,000 is available to be drawn on the Revolver based on the value of the Company’s properties included in the borrowing base as of the filing date of this Quarterly Report on Form 10-Q. The Revolver can be drawn for general corporate purposes, including pending and future acquisitions, subject to compliance with covenants.

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

You should read the following discussion and analysis of our financial condition, results of operations and cash flows together with the 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.

Overview

We are an internally-managed real estate investment trust (“REIT”) with publicly traded shares of Class C common stock (defined below) 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 and elected to be taxed as a REIT for federal income tax purposes beginning with our taxable year ended December 31, 2016. 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 (defined below) 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 (“Class C common stock”), and 100,000,000 shares of Class S common stock, $0.001 par value per share (“Class S common stock”). Our five-year emerging growth company registration with the SEC ended on December 31, 2021 and 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 72% partnership interest in the Operating Partnership on June 30, 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.

40

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 $210,800,151 pursuant to non-listed 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.

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), and on May 27, 2022, we filed Amendment No. 1 to the Registration Statement on Form S-3, 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. The Form S-3, as amended, became effective on June 2, 2022 and we filed a prospectus supplement for our at-the-market offering of up to $50,000,000 of our Class C common stock (the “ATM Offering”) on June 6, 2022. As of June 30, 2022, no shares were issued in connection with our ATM Offering.

Preferred Stock 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 (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 June 30, 2022, our real estate investment portfolio consisted of 43 properties as further described below. The net book value of our real estate investments as of June 30, 2022 was $427,083,802.

Details of our diversified portfolio of 43 operating properties, including an approximate 72.7% tenant-in-common interest in a Santa Clara, California property (the “TIC Interest”), as of June 30, 2022 are as follows:

•20 industrial properties, including the TIC Interest, which represent approximately 48% of the portfolio, 13 retail properties which represent approximately 19% of the portfolio and 10 office properties which represent approximately 33% of the portfolio (expressed as a percentage of annualized base rent (“ABR”) as of June 30, 2022);

•Occupancy rate of 100%;

•Located in 16 states;

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

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•Approximately 2.9 million square feet of aggregate leasable space, including the TIC Interest;

•An average leasable space per property of approximately 67,000 square feet; approximately 103,000 square feet per industrial property; approximately 18,000 square feet per retail property and approximately 59,000 square feet per office property; and

•Outstanding mortgage notes payable balance of $44,650,173 for three properties, a credit facility term loan balance of $150,000,000 and credit facility revolver balance of $6,775,000.

As of June 30, 2022, all 43 operating properties in our portfolio are single-tenant net-lease properties and all 43 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 10.5 years.

Following the July 2022 acquisitions of two industrial properties leased to New Vision Industries, LLC and Juniper Ring Acquisitions, LLC (the “Producto Acquisition”) and the July 2022 and August 2022 acquisitions of an aggregate of four industrial properties leased to Valtir, LLC (the “Valtir Acquisition”), along with the pending disposition of an office property that is scheduled to close by August 26, 2022, as described in Note 14 to our accompanying unaudited condensed consolidated financial statements, we would own 48 operating properties located in 19 states. On a pro forma basis, after giving effect to the Producto Acquisition and Valtir Acquisition and the disposition of the office property as if they were completed on June 30, 2022, our real estate portfolio is comprised of 26 industrial properties, including the TIC Interest, which represent approximately 52% of the portfolio, 13 retail properties which represent approximately 18% of the portfolio, and 9 office properties which represent approximately 30% of the portfolio (expressed as a percentage of ABR as of June 30, 2022), and has a pro forma WALT of 11.6 years.

As of June 30, 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.

Primary Investment Objectives

Our primary investment objectives are:

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

•to realize appreciation from proactive investment selection and asset management;

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

•to provide an investment alternative for stockholders seeking to allocate a portion of their long-term investment portfolios to commercial 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. We are targeting leverage of 40% or lower over the long-term once we achieve scale; however, we will consider incurring higher leverage in the near-term if we identify attractive acquisition opportunities in advance of completing dispositions or raising additional equity. 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 are striving to improve the composition of our portfolio by acquiring industrial manufacturing properties and disposing of office properties, subject to market conditions and prices that we consider attractive. We can provide no assurance that we will achieve our investment objectives. See the Part I, Item 1A. Risk Factors section of 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.

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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 manufacturing properties, but we may also acquire other assets, including, without limitation, other industrial properties, 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.

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.

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

Liquidity and Capital Resources

Generally, our cash requirements for property acquisitions, debt payments, capital expenditures and other investments will be funded by bank borrowings from financial institutions, mortgage indebtedness on our properties, asset sales, internally generated funds or offerings of shares of our common stock. Our cash requirements for operating and interest expenses, dividends on our Series A Preferred Stock and distributions on our common stock will 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 grid that fluctuates based on our actual leverage ratio at the end of the prior quarter. With our leverage ratio at 34% as of March 31, 2022 and 38% as of June 30, 2022, the spread over the Secured Overnight Financing Rate (‘‘SOFR’’), including a 10 basis points credit adjustment, is 165 basis points and the interest rate on the Revolver was 3.150% as of June 30, 2022. Following the Federal Reserve Bank’s July 27, 2022 increase in the target range for federal funds by 75 basis points, the interest rate on the Revolver is approximately 3.96%. We also pay an annual unused fee of up to 25 basis points on the Revolver, depending on the daily amount of the unused commitment, and paid total unused fees of $50,047 and $72,280 for the three and six months ended June 30, 2022, respectively. We entered into a swap agreement to fix the interest rate on our Term Loan at 3.858% effective May 31, 2022 as described in detail in Note 8 to our accompanying unaudited condensed consolidated financial statements. 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 June 30, 2022.

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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.

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. We are targeting leverage of 40% or lower over the long-term once we achieve scale; however, we will consider incurring higher leverage in the near-term if we identify attractive acquisition opportunities in advance of completing dispositions or raising additional equity. 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.

Credit Facility Drawdown

On January 18, 2022, we borrowed $155,775,000 from our Credit Facility consisting of $100,000,000 under the Term Loan and $55,775,000 under the Revolver. We used a portion of the proceeds from the Credit Facility to pay total commitment and arrangement fees of $2,020,000 to the Agent, the Lenders, the 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 to repay 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 and on April 25, 2022, we drew the remaining $50,000,000 on the Term Loan for a repayment of the Revolver. We also repaid $8,000,000 on the Revolver on June 22, 2022. As of June 30, 2022, we had availability under the Credit Facility of approximately $60,000,000 which can be drawn for general corporate purposes, including pending and future acquisitions.

On July 14, 2022, we drew $5,000,000 on our Revolver in connection with the Producto Acquisition and on July 23, 2022, we drew $23,000,000 on our Revolver in connection with the Valtir Acquisition resulting in a balance of $34,775,000 on the Revolver as of July 31, 2022. As a result of the addition of these properties to the borrowing base and the July 2022 draws on the Revolver, approximately $52,000,000 is available to be drawn on the Revolver based on the value of our properties included in the borrowing base as of the filing date of this Quarterly Report on Form 10-Q.

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 June 30, 2022, our leverage ratio was 38%.

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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 as of June 30, 2022.

As of June 30, 2022, the outstanding principal balance of our mortgage notes payable on our operating properties and our Credit Facility were $44,650,173 and $156,775,000, respectively. As of June 30, 2022, our approximately 72.7% pro-rata share of the TIC Interest’s mortgage note payable was $9,599,182, which is not included in our accompanying unaudited condensed consolidated balance sheets.

Acquisitions and Dispositions of Real Estate Investments

During the six months ended June 30, 2022, we acquired the following nine industrial and one retail (KIA) real estate investments:

Property and Location	Acquisition Date	Land		Buildings and Improvements		Equipment		Tenant Origination and Absorption Costs		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
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)    In connection with the April 2022 Lindsay acquisition, we advanced a non-refundable deposit of $2,800,000 for funding ongoing building construction at the Lindsay property in Dacono, CO. The remaining balance of this deposit was $1,330,780 as of June 30, 2022 which is not included in the acquisition price above.

During the six months ended June 30, 2022, we sold the following three office and one flex (Omnicare) real estate investments:

Property	Location	Disposition Date	Rentable Square Feet	Contract Sale Price		Net Proceeds		Gain on Sale
Bon Secours (1)	Richmond, VA	2/11/2022	72,890	$	10,200,000	$	—	$	179,404
Omnicare (1)	Richmond, VA	2/11/2022	51,800	8,760,000		—		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
Emcor	Cincinnati, OH	6/29/2022	39,385	6,525,000		6,345,642		1,002,101
Total			265,869	$	46,525,000	$	23,230,222	$	8,402,878

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

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Listed Offering - Class C Common Stock

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), and on May 27, 2022, we filed Amendment No. 1 to the Registration Statement on Form S-3, 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. The Form S-3, as amended, became effective on June 2, 2022 and we filed a prospectus supplement for our $50,000,000 ATM Offering on June 6, 2022. As of June 30, 2022, no shares were issued in connection with our ATM Offering.

Share Repurchases

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. Since the inception of the program in February 2022 through August 9, 2022, we have repurchased 220,143 shares for a total of $3,757,744, for an average repurchase price of $17.07 per share.

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 $377,301 and $628,840 in distributions during the three and six months ended June 30, 2022, respectively (also see the “Distributions” section below).

Cash Flow Summary

The following table summarizes our cash flow activity for the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,
	2022		2021
Net cash provided by operating activities	$	5,076,472	$	3,083,353
Net cash (used in) provided by investing activities	$	(58,420,894)	$	14,624,425
Net cash provided by (used in) financing activities	$	6,642,351	$	(15,710,863)

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Cash Flows from Operating Activities

The cash provided by operating activities of $5,076,472 during the six months ended June 30, 2022 primarily reflects adjustments to our net loss of $9,682,820 to exclude net non-cash losses of $15,610,444 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 a gain on sale of real estate investment, write-off and recognition of unrealized gain on interest rate swaps, amortization of below-market lease intangibles, amortization of deferred rents and undistributed income from our unconsolidated investment in a real estate property. Cash provided by operating activities also included cash used for changes in operating assets and liabilities of $998,305 during the six months ended June 30, 2022 due to increases in tenant receivables and prepaid and other assets, along with 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 $147,153.

The cash provided by operating activities of $3,083,353 during the six months ended June 30, 2021 primarily reflects adjustments to our net loss of $1,905,491 to exclude net non-cash charges of $6,434,115 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, reversal of impairment of real estate property, amortization of deferred rents and undistributed income from our 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 $1,607,238 during the six months ended June 30, 2021, due to an increase in prepaid and other assets and a decrease in accounts payable, accrued and other liabilities, partially offset by a decrease in tenant receivables. These cash uses were partially offset by distributions from our unconsolidated investment in real estate property of $161,967.

We expect our cash flows will continue to be positive in the next twelve months 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.

Cash Flows from Investing Activities

Net cash used in investing activities was $58,420,894 for the six months ended June 30, 2022 and consisted primarily of the following:

•$99,691,164 for acquisition of the Kia, Kalera and Lindsay portfolio real estate investments;

•$1,546,131 of additions to existing real estate investments;

•$2,100,000 payment of a lease incentive for the PreK Education property; and

•$730,780 of net payments of purchase deposits for pending acquisitions.

These uses were partially offset by:

•$45,257,181 in proceeds from sale of five real estate investments; and

•$390,000 collection of note receivable.

Net cash provided by investing activities was $14,624,425 for the six months ended June 30, 2021 and consisted primarily of the following:

•$13,221,509 in net proceeds from sale of three real estate investments; and

•$1,824,383 in collection of a note receivable from sale of real estate property.

These proceeds were partially offset by:

•$309,717 of additions to existing real estate investments; and

•$111,750 of additions to intangibles assets.

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Cash Flows from Financing Activities

Net cash provided by financing activities was $6,642,351 for the six months ended June 30, 2022 and consisted of the following:

•$130,361,583 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;

•$2,860,513 of cash distributions paid to common stockholders;

•$628,840 of cash distributions paid to the Class C OP Unit holder;

•$1,987,153 of cash dividends paid to preferred stockholders;

•$3,253,902 used for repurchases of common stock; and

•$946,690 for payments of offering costs.

These uses were partially offset by:

•$150,000,000 in proceeds from borrowings on our Credit Facility Term Loan;

•$6,775,000 in 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 $15,710,863 for the six months ended June 30, 2021 and consisted primarily of the following:

•$24,399,915 of mortgage notes principal payments;

•$3,000,000 of net repayments on the Prior Credit Facility revolver;

•$13,046,857 used for repurchases of common stock;

•$1,726,567 of cash distributions paid to common stockholders;

•$810,632 for payments of offering costs;

•$381,076 of deferred financing cost payments to third parties; and

•$81,196 of refundable loan deposits.

These uses were partially offset by:

•$25,436,000 in proceeds from mortgage notes payable; and

•$2,299,380 in proceeds from issuance of common stock.

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.

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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.

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The following are the calculations of FFO and AFFO for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income (loss) (in accordance with GAAP)	$	2,390,344	$	(1,001,843)	$	(9,682,820)	$	(1,905,491)
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders and Class C OP Units	1,468,469		(1,001,843)		(11,526,570)		(1,905,491)
FFO adjustments:
Add: Depreciation and amortization	3,682,681		3,512,727		6,983,173		7,077,287
Amortization of lease incentives	75,655		40,240		147,049		105,541
Depreciation and amortization for unconsolidated investment in a real estate property	190,468		181,786		380,936		363,572
Less: Gain on sale of real estate investments, net	(1,002,101)		—		(8,402,878)		(289,642)
Reversal of impairment of real estate investments	—		(400,999)		—		(400,999)
FFO attributable to common stockholders and Class C OP Units	4,415,172		2,331,911		(12,418,290)		4,950,268
AFFO adjustments:
Add: Amortization of corporate intangibles	—		—		—		925,739
Impairment of goodwill	—		465,596		17,320,857		—
Stock compensation	679,747		767,087		1,191,612		1,371,732
Deferred financing costs	101,781		100,624		1,368,506		199,693
Non-recurring loan prepayment penalties	—		—		615,336		—
Swap termination costs	—		—		733,000		23,900
Amortization of above-market intangible leases	32,456		32,458		64,912		64,913
Acquisition fees and due diligence expenses, including abandoned pursuit costs	4,639		238,496		591,308		249,240
Less: Deferred rents	(699,053)		(428,155)		(809,558)		(702,978)
Unrealized gains on interest rate swaps	(589,997)		(90,600)		(1,378,013)		(517,719)
Amortization of below-market intangible leases	(349,810)		(367,575)		(712,884)		(735,150)
Gain on forgiveness of economic relief note payable	—		—		—		(517,000)
Other adjustments for unconsolidated investment in a real estate property	(188)		(12,196)		(376)		(44,390)
AFFO attributable to common stockholders and Class C OP Units	$	3,594,747	$	3,037,646	$	6,566,410	$	5,268,248
Weighted average shares outstanding:
Basic	7,478,973		7,614,196		7,505,673		7,630,401
Fully diluted (1)	10,221,490		8,833,985		10,241,023		8,880,365
FFO Per Share:
Basic	$	0.59	$	0.31	$	(1.65)	$	0.65
Fully Diluted	$	0.43	$	0.26	$	(1.65)	$	0.56
AFFO Per Share:
Basic	$	0.48	$	0.40	$	0.87	$	0.69
Fully Diluted	$	0.35	$	0.34	$	0.64	$	0.59

(1)    Includes the Class C, Class M, Class P and Class R OP Units to compute the weighted average number of shares.

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Results of Operations

As of June 30, 2022, we owned 43 operating properties, including the TIC Interest. We acquired 10 properties (nine industrial and one retail) during the first six months of 2022 compared with no real estate acquisitions during the first six months of 2021. We sold five properties (four office and one industrial) during the first six months of 2022 and three retail properties during the first six months of 2021. The operating results of the four properties that were classified as held for sale at December 31, 2021, including three properties that were sold during the three months ended March 31, 2021, were 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 in January 2022, the acquisition of an eight property industrial portfolio in April 2022, the acquisition of five industrial properties in July 2022, the acquisition of one industrial property in August 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), four dispositions in February 2022 and one disposition in June 2022. Our results of operations for the three and six months ended June 30, 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, many of 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, are also being impacted by increases in inflation and interest rates, along with disruptions in 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 June 30, 2022 to the Three Months Ended June 30, 2021

Rental Income

Rental income, including tenant reimbursements, for the three months ended June 30, 2022 and 2021 was $10,394,118 and $9,107,008, respectively. The increase of $1,287,110, or 14%, as compared with the second quarter of 2021 primarily reflects the rental income contributions from our acquisition of the KIA auto dealership property in Carson, California on January 18, 2022, and our acquisition of eight industrial properties leased by Lindsay Precast which contributed approximately 14.0% and 10.2% of our total rental income during the second quarter of 2022, respectively (see Note 3 to our accompanying unaudited condensed consolidated financial statements for more details). These increases together with the rental income contributions of three other property acquisitions (one industrial property acquired in January 2022 and two properties (one industrial and one retail) acquired during the second half of 2021) 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. Rental income includes tenant reimbursements of $1,400,428 and $1,540,380 for the three months ended June 30, 2022 and 2021, respectively. The ABR of the operating properties owned as of June 30, 2022 was $34,145,008 which increases to $35,649,730 with the July 2022 acquisitions of two properties in the Producto Acquisition, the July 2022 and August 2022 acquisitions of an aggregate of four properties in the Valtir Acquisition and the pending disposal of one office property which are described in Note 14 to our accompanying unaudited condensed consolidated financial statements.

General and Administrative

General and administrative expenses were $1,615,182 and $1,932,635 for the three months ended June 30, 2022 and 2021, respectively. The decrease of $317,453, or 16%, as compared with the second quarter of 2021 primarily reflects decreases in compensation to employees due to headcount reductions during the second half of 2021 and first quarter of 2022, as well as decreases in due diligence costs, which were partially offset by an increase in professional services during the second quarter of 2022 compared to the second quarter of 2021.

Stock Compensation Expense

Stock compensation expense was $679,747 and $767,087 for the three months ended June 30, 2022 and 2021, respectively. The decrease of $87,340, or 11%, as compared with the second quarter of 2021 primarily reflects forfeitures related to employee terminations during the second half of 2021 through the second quarter of 2022.

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Depreciation and Amortization

Depreciation and amortization expense was $3,682,681 and $3,978,323 for the three months ended June 30, 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 $295,642, or 7%, as compared with the second quarter of 2021 primarily reflects the absence of amortization of corporate intangibles, which were impaired during the fourth quarter of 2021 in connection with our decision to exit the crowdfunding business.

Interest Expense

Interest expense includes amortization of deferred financing costs and unrealized gains and losses on swap valuations in addition to interest paid or payable to lenders. Total interest expense was $1,197,154 and $2,098,649 for the three months ended June 30, 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 on 27 properties, the $36,465,449 mortgage on the KIA auto dealership property which we acquired on January 18, 2022 and repayment of our Prior Credit Facility and related interest, aggregating $153,428,764. In addition, four interest rate swap agreements related to four property mortgages were terminated in connection with the prepayment of the property mortgages. The $901,495, or 43%, decrease in interest expense as compared with the second quarter of 2021 primarily reflects an approximately $497,000 decrease in interest expense paid or payable to lenders and an approximately $498,000 increase in unrealized gains on the valuation of interest rate swaps.

Property Expenses

Property expenses were $1,965,885 and $1,874,033 for the three months ended June 30, 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 $91,852, or 5%, as compared with the second quarter of 2021 reflects increases in repairs and maintenance, property taxes and other taxes during the second quarter of 2022.

Reversal of Impairment of Investment in Real Estate Property

Reversal of impairment of investment in real estate property of $400,999 for the three months ended June 30, 2021 reflects an adjustment to reduce the impairment charge recorded in December 2020 for the property located in Bedford, Texas due to its reclassification from held for sale to held for investment and use in June 2021.

Gain on Sale of Real Estate Investment

The gain on sale of real estate investment of $1,002,101 for the three months ended June 30, 2022 relates to the sale of one office property in June 2022.

Other (Expense) Income

Interest income was $1,763 and $51 for the three months ended June 30, 2022 and 2021, respectively.

Income from unconsolidated investment in a real estate property was $66,868 and $74,834 for the three months ended June 30, 2022 and 2021, respectively. This reflects our approximate 72.7% TIC Interest in the Santa Clara property's results of operations for the second quarters of 2022 and 2021, respectively.

Other income of $66,143 and $65,992 for the three months ended June 30, 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.

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Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Rental Income

Rental income, including tenant reimbursements, for the six months ended June 30, 2022 and 2021 was $20,042,767 and $18,081,878, respectively. The increase of $1,960,889, or 11%, as compared with the first six months of 2021 primarily reflects the rental income contribution from our acquisition of the KIA auto dealership property in Carson, California on January 18, 2022, and our acquisition of eight industrial properties leased to Lindsay Precast on April 19, 2022, which contributed approximately 13.6% and 5.3% of our total rental income during the first six months of 2022, respectively (see Note 3 to our accompanying unaudited condensed consolidated financial statements for more details). These increases, together with the rental income contributions of three other property acquisitions (one industrial property acquired in 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. Rental income includes tenant reimbursements of $3,450,799 and $3,068,172 for the six months ended June 30, 2022 and 2021, respectively. The ABR of the operating properties owned as of June 30, 2022 was $34,145,008 which increases to $35,649,730 with the July 2022 acquisitions of two properties in the Producto Acquisition, the July 2022 and August 2022 acquisitions of an aggregate of four properties in the Valtir Acquisition and the pending disposal of one office property which are described in Note 14 to our accompanying unaudited condensed consolidated financial statements.

General and Administrative

General and administrative expenses were $3,721,365 and $4,618,621 for the six months ended June 30, 2022 and 2021, respectively. The decrease of $897,256, or 19%, as compared with the first six months of 2021 reflects decreases in compensation to employees due to headcount reductions, professional and technology services, due diligence costs, business taxes and licenses during the first six months of 2022.

Stock Compensation Expense

Stock compensation expense was $1,191,612 and $1,371,732 for the six months ended June 30, 2022 and 2021, respectively. The decrease of $180,120, or 13%, as compared with the first six months of 2021 primarily reflects forfeitures related to employee terminations during the second half of 2021 through the first quarter of 2022.

Depreciation and Amortization

Depreciation and amortization expense was $6,983,173 and $8,003,026 for the six months ended June 30, 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 $1,019,853, or 13%, as compared with the first six months of 2021 primarily reflects the absence of amortization of corporate intangibles, which were impaired during the fourth quarter of 2021 in connection with our decision to exit the crowdfunding business.

Interest Expense

Interest expense includes amortization of deferred financing costs and unrealized gains and losses on swap valuations in addition to interest paid or payable to lenders. Total interest expense was $2,765,329 and $3,879,785 for the six months ended June 30, 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 on 27 properties, the $36,465,449 mortgage on the KIA auto dealership property which we acquired on January 18, 2022 and repayment of our Prior Credit Facility and related interest, aggregating $153,428,764. 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 in interest expense of $1,114,456, or 29%, as compared with the first six months of 2021 primarily reflects an approximately $1,006,000 decrease in interest expense paid or payable to lenders and approximately $170,000 increase in unrealized gains on the valuation of interest rate swaps.

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Property Expenses

Property expenses were $4,730,477 and $3,621,233 for the six months ended June 30, 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 $1,109,244, or 31%, as compared with the first six months of 2021 reflects increases in property and other taxes during the first six months of 2022 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.

Reversal of Impairment of Investment in Real Estate Property

Reversal of impairment of investment in real estate property of $400,999 for the six months ended June 30, 2021 reflects an adjustment to reduce the impairment charge recorded in December 2020 for the property located in Bedford, Texas due to its reclassification from held for sale to held for investment and use in June 2021.

Impairment of Goodwill

The impairment of goodwill of $17,320,857 for the six months ended June 30, 2022 reflects the significant decline in the market value of our common stock since it began trading on the NYSE in February 2022. For the quarter ended March 31, 2022, management considered the fact that the recent trading price of our common stock caused our market capitalization to be below the book value of our equity as of March 31, 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 as of March 31, 2022 (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 $8,402,878 and $289,642 for the six months ended June 30, 2022 and 2021, respectively, relates to the sale of five properties (four office and one industrial) during the first six months of 2022 and three retail properties during the first six months of 2021 (see Note 3 to our accompanying unaudited condensed consolidated financial statements for more details).

Other (Expense) Income

Interest income was $15,198 and $100 for the six months ended June 30, 2022 and 2021, respectively.

Income from unconsolidated investment in a real estate property was $162,332 and $147,302 for the six months ended June 30, 2022 and 2021, respectively. This reflects our approximate 72.7% TIC Interest in the Santa Clara property's results of operations for the first six months of 2022 and 2021, respectively.

Gain on forgiveness of economic relief note payable of $517,000 for the six months ended June 30, 2021 reflects the Small Business Administration’s forgiveness in February 2021 of our economic relief note payable obtained in April 2020 under the terms of the Paycheck Protection Program.

Loss on early extinguishment of debt of $1,725,318 for the six months ended June 30, 2022 reflects non-cash charges of $1,164,998 for deferred financing costs and prepayment penalties of $615,336 upon repayment of 20 mortgages on 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 $132,136 and $151,985 for the six months ended June 30, 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.

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Organizational 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 June 30, 2022. We also incurred additional organizational and offering costs of $757,278 and $946,690 during the three and six months ended June 30, 2022, respectively, related to our Registration Statement on Form S-3 (File No. 333-263985) that we filed on March 30, 2022, and Amendment No. 1 to the Registration Statement on Form S-3 that we filed on May 27, 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. The Form S-3, as amended, became effective on June 2, 2022 and we filed a prospectus supplement for our $50,000,000 ATM Offering on June 6, 2022. As of June 30, 2022, no shares were issued in connection with our ATM Offering.

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, which was paid on April 15, 2022. On June 15, 2022, our Board declared Series A Preferred Stock dividends payable of $921,875 for the second quarter of 2022. This amount was accrued as of June 30, 2022 and was paid on July 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 half of 2022 and the four quarters of 2021:

Period (1)	Total Distributions Declared		Distributions Declared Per Share		Distributions Paid				Cash Flows (Used in) Provided by Operating Activities		Net Rental Income Received		Offering Proceeds		Quarter End Accrued Distribution
					Cash		Reinvested
2022 (2)
First Quarter	$	2,907,122	$	0.387499	$	1,418,783	$	1,492,404	$	(1,083,310)	$	2,907,122	$	—	$	854,599
Second Quarter	2,145,534		0.287500		2,070,570		711,223		6,159,782		2,145,534		—		844,183
2022 Totals	$	5,052,656	$	0.674999	$	3,489,353	$	2,203,627	$	5,076,472	$	5,052,656	$	—
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	$	—

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

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

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

Distribution Period	Rate Per Share Per Day (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
Distribution Period	Rate Per Share Per 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
May 1-31	$	0.09583300	March 18, 2022	June 27, 2022
June 1-30	$	0.09583300	March 18, 2022	July 25, 2022
July 1-31	$	0.09583300	June 15, 2022	August 25, 2022 (3)
August 1-31	$	0.09583300	June 15, 2022	September 26, 2022 (3)
September 1-30	$	0.09583300	June 15, 2022	October 25, 2022 (3)

(1)    Distributions paid per share of Class S common stock 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 payment date since the distribution has not been paid as of the filing date of this Quarterly Report on Form 10-Q.

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Properties

Portfolio Information

Our wholly-owned investments in real estate properties as of June 30, 2022, December 31, 2021 and June 30, 2021, and the 91,740 square foot industrial property underlying the TIC Interest for all balance sheet dates presented were as follows:

	As of
	June 30, 2022	December 31, 2021	June 30, 2021
Number of properties:	(1)	(1)	(2)
Industrial, including TIC Interest	20	12	12
Retail	13	12	12
Office	10	14	14
Total operating properties and properties held for sale	43	38	38
Land	1	1	1
Total properties	44	39	39
Leasable square feet:
Industrial	2,068,388	1,514,876	1,145,519
Retail	234,029	161,406	291,513
Office	585,967	800,036	853,963
Total	2,888,384	2,476,318	2,290,995

(1)    Includes four properties (three office and one industrial) held for sale as of December 31, 2021.

(2)    Includes one retail property held for sale as of June 30, 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 acquisitions during the six months ended June 30, 2022 as follows:

Property and Location	Acquisition Date	Property Type	Rentable Square Feet	Acquisition Price
KIA, Carson, CA	1/18/2022	Retail	72,623	$	69,405,050
Kalera, St. Paul, MN	1/31/2022	Industrial	78,857	8,119,009
Lindsay, Colorado Springs 1, CO	4/19/2022	Industrial	23,452	2,311,934
Lindsay, Colorado Springs 2, CO	4/19/2022	Industrial	36,454	3,314,406
Lindsay, Dacono, CO (1)	4/19/2022	Industrial	39,088	5,558,622
Lindsay, Alachua, FL	4/19/2022	Industrial	96,792	8,518,123
Lindsay, Franklinton, NC	4/19/2022	Industrial	69,939	7,181,113
Lindsay, Fulton 1, OH	4/19/2022	Industrial	147,998	11,345,533
Lindsay, Fulton 2, OH	4/19/2022	Industrial	129,112	10,190,942
Lindsay, Rock Hill, SC	4/19/2022	Industrial	75,360	6,555,983
			769,675	$	132,500,715

(1)    As of June 30, 2022, buildings and improvements exclude non-refundable deposit of $1,330,780 for funding of ongoing building construction. This deposit is included in prepaid expenses and other assets in our accompanying unaudited condensed consolidated balance sheet as of June 30, 2022.

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There were no acquisitions during the six months ended June 30, 2021.

We completed the following dispositions during the six months ended June 30, 2022 and 2021 as follows:

Property	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sales Price		Net Proceeds
2022
Bon Secours	Richmond, VA	2/11/2022	Office	72,890	$	10,200,000	$	—
Omnicare	Richmond, VA	2/11/2022	Flex	51,800	8,760,000		—
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
EMCOR	Cincinnati, OH	6/29/2022	Office	39,385	6,525,000		6,345,642
				265,869	$	46,525,000	$	23,230,222
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.

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 are continuing to explore potential lease extensions for certain 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 June 30, 2022 and December 31, 2021, we had obligations to pay approximately $609,788 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 $1,070,000 of roof and HVAC replacement, exterior painting and sealing and parking lot repairs/restriping that are expected to be completed in the next 12 months. Approximately $462,000 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 $608,000 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.

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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 3.7% 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.

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 agreed to 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.

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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.

Critical 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 six months ended June 30, 2022.

Commitments and Contingencies

We may be subject to certain commitments and contingencies with regard to certain transactions (see Note 11 to our accompanying unaudited condensed consolidated financial statements for discussion of commitment and contingencies).

Related-Party Transactions and Agreements

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

Subsequent Events

See Note 14 to our accompanying unaudited condensed consolidated financial statements for events that occurred subsequent to June 30, 2022 through the filing date of this report.

Recent Accounting Pronouncements

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

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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 June 30, 2022.

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

Not applicable as we are a smaller reporting company.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms, and that such information is accumulated and communicated to us, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating whether the benefits of the controls and procedures that we adopt outweigh their costs.

As required by Rules 13a-15(b) and 15d-15(b) of the Exchange Act, an evaluation as of June 30, 2022 was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of June 30, 2022, were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) that occurred during the three months ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are continually monitoring and assessing the COVID-19 pandemic and the worsening inflation and the impact both may have on our operations, including our internal control.

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

The information disclosed under Legal Matters in Note 11 to our accompanying unaudited condensed consolidated financial statements is incorporated herein by reference.

Item 1A.  Risk Factors

There have been no material changes to the risk factors set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 23, 2022.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

No unregistered shares were issued during the three months ended June 30, 2022. An aggregate of 4,666 shares of Class C common stock were issued in July 2022 to non-employee members of the Board for their service as directors during the second quarter of 2022. Such issuances were made in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act.

Our Stock Repurchases

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 April 1, 2022 through June 30, 2022, we repurchased a total of 136,567 shares of our common stock for a total of $2,401,181 under this share repurchase program for an average cost of $17.58 per share. Since inception of our share repurchase program in February 2022 through August 9, 2022, we have repurchased a total of 220,143 shares for a total of $3,757,744, for an average cost of $17.07 per share.

The following table summarizes our repurchase activity under our share repurchase program for our Class C common stock for the three months ended June 30, 2022.

	Total Number of Shares Repurchased During the Quarter	Average Price Paid Per Share
April 1-30, 2022	86,252	$	18.45
May 1-31, 2022	22,775	$	16.81
June 1-30, 2022	27,540	$	15.51
Total	136,567	$	17.58

Item 6.  Exhibits

The exhibits listed on the Exhibit Index below are included herewith or incorporated herein by reference.

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EXHIBIT INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit	Description
3.1	Articles of Amendment and Restatement of Modiv Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K (File No. 000-55776) filed with the Securities and Exchange Commission on July 8, 2021)
3.2	Amended and Restated Bylaws of Modiv Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K (File No. 000-55776) filed with the Securities and Exchange Commission on August 2, 2021)
3.3	Articles Supplementary designating 7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K (File No. 001-40814) filed with the Securities and Exchange Commission on September 17, 2021)
4.1	Second Amended and Restated Distribution Reinvestment Plan (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K (File No. 001-40814) filed with the Securities and Exchange Commission on February 15, 2022)
10.1	At Market Issuance Sales Agreement by and among Modiv Inc., Modiv Operating Partnership LP, B. Riley Securities, Inc., Robert W. Baird & Co. Incorporated, BMO Capital Markets Corp., Colliers Securities LLC, EF Hutton, division of Benchmark Investments, LLC, Janney Montgomery Scott LLC, Ladenburg Thalmann & Co. Inc. and Truist Securities, Inc., dated June 6, 2022 (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K (File No. 001-40814) filed with the Securities and Exchange Commission on June 6, 2022)
31.1*	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	INLINE XBRL INSTANCE DOCUMENT
101.SCH*	INLINE XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL*	INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*	INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*	INLINE XBRL TAXONOMY EXTENSION LABELS LINKBASE
101.PRE*	INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
104*	COVER PAGE INTERACTIVE DATA FILE (FORMATTED AS INLINE XBRL AND CONTAINED IN EXHIBIT 101)
*	Filed herewith.
**	In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

Modiv Inc.
(Registrant)
By:	/s/ AARON S. HALFACRE
Name:	Aaron S. Halfacre
Title:	Chief Executive Officer (principal executive officer)
By:	/s/ RAYMOND J. PACINI
Name:	Raymond J. Pacini
Title:	Chief Financial Officer (principal financial officer)

Date: August 11, 2022

64

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Aaron S. Halfacre, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of the registrant, Modiv Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2022	/s/ AARON S. HALFACRE
	Name:	Aaron S. Halfacre
	Title:	Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Raymond J. Pacini, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of the registrant, Modiv Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2022	/s/ RAYMOND J. PACINI
	Name:	Raymond J. Pacini
	Title:	Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. § 1350)

Each of the undersigned officers of Modiv Inc. (the “Company”) hereby certifies, for purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(i)the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and

(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ AARON S. HALFACRE
	Name:	Aaron S. Halfacre
	Title:	Chief Executive Officer
		(Principal Executive Officer)
	/s/ RAYMOND J. PACINI
	Name:	Raymond J. Pacini
Date: August 11, 2022	Title:	Chief Financial Officer
		(Principal Financial Officer)

The foregoing certification is being furnished with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 pursuant to 18 U.S.C. § 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and it is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except to the extent the Company specifically incorporates this certification by reference.

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Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Jul. 31, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-40814
Entity Registrant Name	MODIV INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	47-4156046
Entity Address, Address Line One	120 Newport Center Drive
Entity Address, City or Town	Newport Beach
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92660
City Area Code	888
Local Phone Number	686-6348
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		7,456,830
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001645873
Current Fiscal Year End Date	--12-31
Class C
Document Information [Line Items]
Title of 12(b) Security	Class C Common Stock, $0.001 par value per share
Trading Symbol	MDV
Security Exchange Name	NYSE
Series A Cumulative Redeemable Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	7.375% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.001 par value per share
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Security Exchange Name	NYSE

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Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Real estate investments:
Land	$ 107,569,641	$ 61,005,402
Buildings and improvements	327,472,940	251,246,290
Equipment	4,429,000	0
Tenant Origination and Absorption Costs	21,384,224	21,504,210
Total investments in real estate property	460,855,805	333,755,902
Accumulated depreciation and amortization	(43,728,520)	(37,611,133)
Total investments in real estate property, net	417,127,285	296,144,769
Unconsolidated investment in a real estate property	9,956,517	9,941,338
Total real estate investments, net	427,083,802	306,086,107
Real estate investments held for sale, net	0	31,510,762
Total real estate investments	427,083,802	337,596,869
Cash and cash equivalents	11,705,449	55,965,550
Restricted cash	0	2,441,970
Receivable from early termination of lease	1,446,767	1,836,767
Tenant receivables	8,059,635	5,996,919
Above-market lease intangibles, net	626,107	691,019
Prepaid expenses and other assets	6,766,867	5,856,255
Interest rate swap derivative	589,997	0
Assets related to real estate investments held for sale	0	788,296
Goodwill, net	0	17,320,857
Total assets	456,278,624	428,494,502
Liabilities and Equity
Mortgage notes payable, net	44,608,815	152,223,579
Mortgage notes payable related to real estate investments held for sale, net	0	21,699,912
Total mortgage notes payable, net	44,608,815	173,923,491
Credit facility revolver	6,775,000	8,022,000
Credit facility term loan, net	148,850,050	0
Accounts payable, accrued and other liabilities	8,733,757	11,844,881
Below-market lease intangibles, net	10,175,284	11,102,940
Interest rate swap derivatives	0	788,016
Liabilities related to real estate investments held for sale	0	383,282
Total liabilities	219,142,906	206,064,610
Commitments and contingencies (Note 11)
Additional paid-in-capital	275,922,227	273,441,831
Treasury stock, at cost, 187,430 shares and no shares held as of June 30, 2022 and December 31, 2021, respectively	(3,253,902)	0
Cumulative distributions and net losses	(116,491,382)	(101,624,430)
Total Modiv Inc. equity	156,186,587	171,826,892
Noncontrolling interests in the Operating Partnership	80,949,131	50,603,000
Total equity	237,135,718	222,429,892
Total liabilities and equity	456,278,624	428,494,502
Series A cumulative redeemable perpetual preferred stock
Liabilities and Equity
7.375% Series A cumulative redeemable perpetual preferred stock, $0.001 par value, 2,000,000 shares authorized, issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	2,000	2,000
Class C common stock
Liabilities and Equity
Common stock, value outstanding	7,644	7,427
Class S common stock
Liabilities and Equity
Common stock, value outstanding	$ 0	$ 64

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Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Rental income	$ 10,394,118	$ 9,107,008	$ 20,042,767	$ 18,081,878
Expenses:
General and administrative	1,615,182	1,932,635	3,721,365	4,618,621
Stock compensation expense	679,747	767,087	1,191,612	1,371,732
Depreciation and amortization	3,682,681	3,978,323	6,983,173	8,003,026
Interest expense	1,197,154	2,098,649	2,765,329	3,879,785
Property expenses	1,965,885	1,874,033	4,730,477	3,621,233
Reversal of impairment of real estate investment property	0	(400,999)	0	(400,999)
Impairment of goodwill	0	0	17,320,857	0
Total expenses	9,140,649	10,249,728	36,712,813	21,093,398
Other operating loss:
Gain on sale of real estate investments	1,002,101	0	8,402,878	289,642
Operating income (loss)	2,255,570	(1,142,720)	(8,267,168)	(2,721,878)
Other income (expense):
Interest income	1,763	51	15,198	100
Income from unconsolidated investment in a real estate property	66,868	74,834	162,332	147,302
Gain on forgiveness of economic relief note payable	0	0	0	517,000
Loss on early extinguishment of debt	0	0	(1,725,318)	0
Other	66,143	65,992	132,136	151,985
Other income (expense), net	134,774	140,877	(1,415,652)	816,387
Net income (loss)	2,390,344	(1,001,843)	(9,682,820)	(1,905,491)
Less: net income (loss) attributable to noncontrolling interest in Operating Partnership	219,214	0	(1,708,815)	0
Net income (loss) attributable to Modiv Inc.	2,171,130	(1,001,843)	(7,974,005)	(1,905,491)
Preferred stock dividends	(921,875)	0	(1,843,750)	0
Net income (loss) attributable to common stockholders, basic	$ 1,249,255	$ (1,001,843)	$ (9,817,755)	$ (1,905,491)
Net income (loss) per share attributable to common stockholders
Net income (loss) per share attributable to common stockholders, basic (in usd per share)	$ 0.17	$ (0.13)	$ (1.31)	$ (0.25)
Net income (loss) per share attributable to common stockholders, diluted (in usd per share)	$ 0.14	$ (0.13)	$ (1.31)	$ (0.25)
Net income (loss) per share attributable to common stockholders
Weighted-average number of common shares outstanding, basic (in shares)	7,478,973	7,614,196	7,505,673	7,630,401
Weighted-average number of common shares outstanding, diluted (in shares)	10,221,490	7,614,196	7,505,673	7,630,401
Distributions declared per common share (in usd per share)	$ 0.2875	$ 0.2625	$ 0.6750	$ 0.5250

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Condensed Consolidated Statements of Equity - USD ($)	Total	Common Stock	Class C	Class S	Class C OP Units	Total Modiv Inc. Equity	Total Modiv Inc. Equity Common Stock	Preferred Stock	Common Stock Common Stock	Common Stock Class C	Common Stock Class S	Additional Paid-in Capital	Additional Paid-in Capital Common Stock	Treasury Stock	Cumulative Distributions and Net (Losses) Income	Noncontrolling Interests in the Operating Partnership	Noncontrolling Interests in the Operating Partnership Class C OP Units
Beginning balance (in shares) at Dec. 31, 2020								0
Beginning balance at Dec. 31, 2020	$ 182,886,668					$ 132,283,668		$ 0		$ 7,874	$ 63	$ 224,288,417			$ (92,012,686)	$ 50,603,000
Beginning balance (in shares) at Dec. 31, 2020										7,874,541	62,860
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock (in shares)										203,157	471
Issuance of stock		$ 4,561,611					$ 4,561,611			$ 203			$ 4,561,408
Stock compensation expense (in shares)										8,521
Stock compensation expense	201,250					201,250				$ 9		201,241
OP Units compensation expense	1,191,732					1,191,732						1,191,732
Offering costs	(810,632)					(810,632)						(810,632)
Reclassification of common stock	(1,068,807)					(1,068,807)						(1,068,807)
Repurchase of common stock (in shares)										(595,805)
Repurchase of common stock	(13,046,857)					(13,046,857)				$ (596)		(13,046,261)
Distributions declared	(3,968,187)					(3,968,187)									(3,968,187)
Net income (loss)	(1,905,491)					(1,905,491)									(1,905,491)
Ending balance (in shares) at Jun. 30, 2021								0
Ending balance at Jun. 30, 2021	168,041,287					117,438,287		$ 0		$ 7,490	$ 63	215,317,098			(97,886,364)	50,603,000
Ending balance (in shares) at Jun. 30, 2021										7,490,414	63,331
Beginning balance (in shares) at Mar. 31, 2021								0
Beginning balance at Mar. 31, 2021	172,146,694					121,543,694		$ 0		$ 7,524	$ 63	216,444,117			(94,908,010)	50,603,000
Beginning balance (in shares) at Mar. 31, 2021										7,524,210	63,101
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock (in shares)										75,600	230
Issuance of stock		1,804,545					1,804,545			$ 76			1,804,469
Stock compensation expense (in shares)										4,470
Stock compensation expense	110,000					110,000				$ 4		109,996
OP Units compensation expense	657,087					657,087						657,087
Offering costs	(400,788)					(400,788)						(400,788)
Reclassification of common stock	(626,133)					(626,133)						(626,133)
Repurchase of common stock (in shares)										(113,866)
Repurchase of common stock	(2,671,764)					(2,671,764)				$ (114)		(2,671,650)
Distributions declared	(1,976,511)					(1,976,511)									(1,976,511)
Net income (loss)	(1,001,843)					(1,001,843)									(1,001,843)
Ending balance (in shares) at Jun. 30, 2021								0
Ending balance at Jun. 30, 2021	$ 168,041,287					117,438,287		$ 0		$ 7,490	$ 63	215,317,098			(97,886,364)	50,603,000
Ending balance (in shares) at Jun. 30, 2021										7,490,414	63,331
Beginning balance (in shares) at Dec. 31, 2021	2,000,000							2,000,000
Beginning balance at Dec. 31, 2021	$ 222,429,892					171,826,892		$ 2,000	$ 7,491			273,441,831		$ 0	(101,624,430)	50,603,000
Beginning balance (in shares) at Dec. 31, 2021			7,426,636	63,768					7,490,404
Beginning balance (in shares) at Dec. 31, 2021														0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock (in shares)									108,989
Issuance of stock	2,203,627				$ 32,809,551	2,203,627			$ 109			2,203,518					$ 32,809,551
Listed offering of common stock (in shares)									40,000
Listed offering of common stock, net	114,500					114,500			$ 40			114,460
Stock compensation expense (in shares)									4,599
Stock compensation expense	82,500					82,500			$ 4			82,496
OP Units compensation expense	1,026,612					1,026,612						1,026,612
Offering costs	(946,690)					(946,690)						(946,690)
Repurchase of common stock (in shares)														(187,430)
Repurchase of common stock	(3,253,902)					(3,253,902)								$ (3,253,902)
Dividends declared, preferred stock	(1,843,750)					(1,843,750)									(1,843,750)
Distributions declared	(5,049,197)				(754,605)	(5,049,197)									(5,049,197)		(754,605)
Net income (loss)	$ (9,682,820)					(7,974,005)									(7,974,005)	(1,708,815)
Ending balance (in shares) at Jun. 30, 2022	2,000,000							2,000,000
Ending balance at Jun. 30, 2022	$ 237,135,718					156,186,587		$ 2,000	$ 7,644			275,922,227		$ (3,253,902)	(116,491,382)	80,949,131
Ending balance (in shares) at Jun. 30, 2022			7,456,562	0					7,643,992
Ending balance (in shares) at Jun. 30, 2022														(187,430)
Beginning balance (in shares) at Mar. 31, 2022								2,000,000
Beginning balance at Mar. 31, 2022	240,036,609					158,929,396		$ 2,000	$ 7,601			275,371,078		$ (852,721)	(115,598,562)	81,107,213
Beginning balance (in shares) at Mar. 31, 2022									7,601,081
Beginning balance (in shares) at Mar. 31, 2022														(50,863)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of stock (in shares)									42,911
Issuance of stock		$ 711,223					$ 711,223		$ 43				$ 711,180
OP Units compensation expense	597,247					597,247						597,247
Offering costs	(757,278)					(757,278)						(757,278)
Repurchase of common stock						(2,401,181)								$ (2,401,181)
Dividends declared, preferred stock	(921,875)					(921,875)									(921,875)
Distributions declared	(2,142,075)				$ (377,296)	(2,142,075)									(2,142,075)		$ (377,296)
Net income (loss)	$ 2,390,344					2,171,130									2,171,130	219,214
Ending balance (in shares) at Jun. 30, 2022	2,000,000							2,000,000
Ending balance at Jun. 30, 2022	$ 237,135,718					$ 156,186,587		$ 2,000	$ 7,644			$ 275,922,227		$ (3,253,902)	$ (116,491,382)	$ 80,949,131
Ending balance (in shares) at Jun. 30, 2022			7,456,562	0					7,643,992
Ending balance (in shares) at Jun. 30, 2022														(187,430)

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Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash Flows from Operating Activities:
Net loss	$ (9,682,820)	$ (1,905,491)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	6,983,173	8,003,026
Stock compensation expense	1,191,612	1,371,732
Amortization of deferred rents	(809,558)	(702,978)
Amortization of deferred lease incentives	147,049	105,541
Write-offs and amortization of deferred financing costs and premium/discount	1,368,507	199,693
Amortization of above-market lease intangibles	64,912	64,913
Amortization of below-market lease intangibles	(712,885)	(735,150)
Reversal of impairment of real estate investment property	0	(400,999)
Impairment of goodwill	17,320,857	0
Gain on forgiveness of economic relief note payable	0	(517,000)
Gain on sale of real estate investments	(8,402,878)	(289,642)
Unrealized gain on interest rate swap valuation	(589,997)	(517,719)
Write-off of unrealized gain on interest rate swaps	(788,016)	0
Income from unconsolidated investment in a real estate property	(162,332)	(147,302)
Distributions from unconsolidated investment in a real estate property	147,153	161,967
Change in operating assets and liabilities:
(Increase) decrease in tenant receivables	(549,248)	569,375
Decrease (increase) in prepaid and other assets	572,422	(229,695)
Decrease in accounts payable, accrued and other liabilities	(1,021,479)	(1,946,918)
Net cash provided by operating activities	5,076,472	3,083,353
Cash Flows from Investing Activities:
Acquisitions of real estate investments	(99,691,164)	0
Additions to existing real estate investments	(1,546,131)	(309,717)
Additions to intangible assets	0	(111,750)
Collection of note receivable	390,000	0
Collection of receivable from sale of real estate property	0	1,824,383
Net proceeds from sale of real estate investments	45,257,181	13,221,509
Refundable purchase deposit	(730,780)	0
Payment of lease incentives	(2,100,000)	0
Net cash (used in) provided by investing activities	(58,420,894)	14,624,425
Cash Flows from Financing Activities:
Borrowings from credit facility term loan	150,000,000	0
Borrowings from credit facility revolver, net	6,775,000	0
Repayments of prior year credit facility revolver, net	(8,022,000)	(3,000,000)
Proceeds from mortgage notes payable	0	25,436,000
Principal payments on mortgage notes payable	(130,361,583)	(24,399,915)
Refundable loan deposits	0	(81,196)
Payments of deferred financing costs	(2,186,468)	(381,076)
Proceeds from listed offering of common stock, net	114,500	2,299,380
Payments of offering costs	(946,690)	(810,632)
Repurchases of common stock	(3,253,902)	(13,046,857)
Dividends paid to preferred stockholders	(1,987,153)	0
Net cash provided by (used in) financing activities	6,642,351	(15,710,863)
Net (decrease) increase in cash, cash equivalents and restricted cash	(46,702,071)	1,996,915
Cash, cash equivalents and restricted cash, beginning of period	58,407,520	8,377,530
Cash, cash equivalents and restricted cash, end of period	11,705,449	10,374,445
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest for the six months ended June 30, 2022 and 2021	2,874,272	4,147,114
Supplemental Schedule of Noncash Investing and Financing Activities:
Issuance of Class C OP Units in the acquisition of a real estate investment	32,809,551	0
Reclassification from redeemable common stock	0	(1,068,807)
Reinvested distributions from common stockholders	2,203,627	2,262,231
Unpaid real estate improvements	522,845	0
Reclassification of tenant improvements from other assets to real estate investments	73,323	0
Decrease in share repurchase payable	0	(1,979,316)
Deferred lease incentive	0	(2,128,538)
Accrued distributions	(32,581)	23,256
Real estate investments held for sale, net	31,510,762	19,209,993
Other assets related to real estate investments held for sale	788,296	408,096
Decrease in above-market lease intangibles, net	0	(50,549)
Mortgage notes payable related to real estate investments held for sale, net	(21,699,912)	(4,707,012)
Other liabilities related to real estate investments held for sale	(383,282)	(573,904)
Increase in below-market lease intangibles, net	0	324,734
Increase in interest swap derivatives	0	14,166
Class C OP Units
Cash Flows from Financing Activities:
Distributions paid	(628,840)	0
Common Stock
Cash Flows from Financing Activities:
Distributions paid	$ (2,860,513)	$ (1,726,567)

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Preferred Stock
Preferred stock, shares outstanding (in shares)	2,000,000	2,000,000
Treasury Stock
Treasury stock (in shares)	(187,430)	0
Series A cumulative redeemable perpetual preferred stock
Preferred Stock
Preferred stock, dividend rate, percentage	7.375%	7.375%
Preferred stock, par value (in usd per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares outstanding (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	2,000,000	2,000,000
Class C common stock
Common Stock
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	7,643,992	7,426,636
Common stock, shares outstanding (in shares)	7,456,562	7,426,636
Class S common stock
Common Stock
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	0	63,768
Common stock, shares outstanding (in shares)	0	63,768

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BUSINESS AND ORGANIZATION

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS AND ORGANIZATION

BUSINESS AND ORGANIZATION

Modiv Inc. (the “Company”) was incorporated on May 15, 2015 as a Maryland corporation. The Company has 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, of which 2,000,000 shares are designated as 7.375% Series A cumulative redeemable perpetual preferred stock (“Series A Preferred Stock”), 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. The Company's five-year emerging growth company registration with the Securities and Exchange Commission (the “SEC”) ended on December 31, 2021 and the Company continues to report with the SEC as a smaller reporting company under Rule 12b-2 of the Securities Exchange Act of 1934, as amended. The Company's 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. The Company's 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 the Company's Class C common stock. In connection with and upon listing on the NYSE, each share of the Company's Class S common stock converted into Class C common stock (see details of the initial listed offering (the “Listed Offering”) below).

The Company has been internally managed since its December 31, 2019 acquisition of the business of BrixInvest, LLC, a Delaware limited liability company and the Company’s former sponsor (“BrixInvest”), and the Company’s merger with Rich Uncles Real Estate Investment Trust I (“REIT I”) on December 31, 2019.

The Company holds its investments in real property primarily through special purpose limited liability companies which are wholly-owned subsidiaries of Modiv Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”). The Operating Partnership was formed on January 28, 2016. The Company is the sole general partner of, and owned an approximately 72% and 83% partnership interest in, the Operating Partnership as of June 30, 2022 and December 31, 2021, respectively. The Operating Partnership's limited partners include holders of several classes of units with various vesting and enhancement terms as further described in Note 12.

As of June 30, 2022, the Company's portfolio of approximately 2.9 million square feet of aggregate leasable space consisted of investments in 43 real estate properties, comprised of: 20 industrial properties, including an approximate 72.7% tenant-in-common interest in a Santa Clara, California property (the “TIC Interest”), which represent approximately 48% of the portfolio, 13 retail properties, which represent approximately 19% of the portfolio, and 10 office properties, which represent approximately 33% of the portfolio (expressed as a percentage of annual base rent (“ABR”) as of June 30, 2022).

Common Stock Offerings

Since the Company’s initial registered offering of common stock was declared effective by the SEC in 2016, the Company has raised an aggregate of $210,800,151 pursuant to non-listed 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, the Company 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 its DRP (the “Registered DRP Offering”). The Company commenced offering shares of Class C common stock pursuant to the Registered DRP Offering upon termination of the Registered Offering.

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

On March 30, 2022, the Company filed a Registration Statement on Form S-3 (File No. 333-263985), and on May 27, 2022, the Company filed Amendment No. 1 to the Registration Statement on Form S-3, 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. The Form S-3, as amended, became effective on June 2, 2022 and the Company filed a prospectus supplement for the Company's at-the-market offering of up to $50,000,000 of its Class C common stock (the “ATM Offering”) on June 6, 2022. As of June 30, 2022, no shares were issued in connection with the Company's ATM Offering.

Preferred Stock Offering

On September 17, 2021, the Company and the Operating Partnership completed the issuance and sale of 2,000,000 shares of the Company’s Series A Preferred Stock in an underwritten public offering (the “Preferred Offering”) at a price per share of $25.00 (see Note 9 for additional information).

Distribution Reinvestment Plan

On February 15, 2022, the Company's board of directors amended and restated the DRP (the “Second Amended and Restated DRP”) with respect to the Class C common stock to change the purchase price at which the Class C common stock is issued to stockholders who elect to participate in the DRP. The purpose of this change was to reflect the fact that the Company's Class C common stock is now listed on the NYSE and no longer priced based on net asset value (“NAV”) per share. As more fully described in the Second Amended and Restated DRP, the purchase price for the Class C common stock under the DRP depends on whether the Company issues new shares to DRP participants or the Company or any third-party administrator obtains shares to be issued to DRP participants by purchasing them in the open market or in privately negotiated transactions. The purchase price for the Class C common stock issued directly by the Company is 97% (or such other discount as may then be in effect) of the Market Price (as defined in the Second Amended and Restated DRP) of the Class C common stock. This discount is subject to change from time to time, in the Company’s sole discretion, but will be between 0% to 5% of the Market Price. The purchase price for the Class C common stock that the Company or any third-party administrator purchases from parties other than the Company, either in the open market or in privately negotiated transactions, will be 100% of the “average price per share” (as described in the Second Amended and Restated DRP) actually paid for such shares of Class C common stock, excluding any processing fees. The Second Amended and Restated DRP also reflects the $0.05 per share processing fee that will be paid to the Company's transfer agent by DRP participants for each share of Class C common stock purchased through the DRP. The Second Amended and Restated DRP was effective beginning with distributions paid in February 2022.

Share Repurchase Program

On February 15, 2022, the Company's board of directors authorized up to $20,000,000 in repurchases of the Company's outstanding shares of common stock through December 31, 2022. Repurchases 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 the Company in its 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 February 15, 2022 through June 30, 2022, the Company repurchased a total of 187,430 shares of its common stock for a total of $3,253,902 and an average cost of $17.36 per share under this share repurchase program and these shares are held as treasury stock.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Such unaudited condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, which is responsible for their integrity and objectivity. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 23, 2022.

The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which are normal and recurring, necessary to fairly state the Company's financial position, results of operations and cash flows. All significant intercompany balances and transactions are eliminated in consolidation. The unaudited condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements.

Variable Interest Entities

The FASB provides guidance for determining whether an entity is a variable interest entity (a “VIE”). VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance; and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE.

As of June 30, 2022, the Company holds an interest in a VIE, which was incorporated under a qualified exchange accommodation arrangement to temporarily hold replacement real estate properties, for which the Company was determined to be the primary beneficiary. As a result, the Company has consolidated this entity. The Company's investment related to this VIE aggregated $31,406,864, or 7.4% of total assets, and no liabilities which relate to four real estate properties the VIE holds as of June 30, 2022 and represents the Company's maximum exposure to loss.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience. Actual results may differ from those estimates.

Noncontrolling Interests in the Operating Partnership

The Company accounts for the noncontrolling interests in its Operating Partnership in accordance with the related accounting guidance. Due to the Company's control of the Operating Partnership through its general partnership interest therein and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company, and the limited partner interests not held by the Company are reflected as noncontrolling interests in the accompanying unaudited condensed consolidated balance sheets and statements of equity. Other than the noncontrolling interests related to an “UPREIT” transaction as discussed in Note 12, all other noncontrolling interests currently represent non-voting, non-distribution accruing interests with no allocation of profits or losses, but have various conversion rights to obtain future rights to distributions and allocation of profits and losses as discussed in Note 12.

Business Combinations

The Company accounts for business combinations in accordance with FASB ASC 805, Business Combinations (“ASC 805”), and applicable Accounting Standards Updates (each, an “ASU”), whereby the total consideration transferred is allocated to the assets acquired and liabilities assumed, including amounts attributable to any non-controlling interests, when applicable, based on their respective estimated fair values as of the date of acquisition. Goodwill represents the excess of consideration transferred over the estimated fair value of the net assets acquired in a business combination.

ASC 805 defines a business as an integrated set of activities and assets (collectively, a “set”) that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. To be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. ASC 805 provides a practical screen to determine when a set would not be considered a business. If the screen is not met and further assessment determines that the set is not a business, then the set is an asset acquisition. The primary difference between a business combination and an asset acquisition is that an asset acquisition requires cost accumulation and allocation at relative fair value whereas in a business combination the total consideration transferred is allocated among the fair value of the identifiable tangible and intangible assets and liabilities assumed. Acquisition costs are capitalized for an asset acquisition and expensed for a business combination.

Revenue Recognition

The Company accounts for revenue in accordance with FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), which includes revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. Such revenues are recognized when the services are provided and the performance obligations are satisfied. Tenant reimbursements, consisting of amounts due from tenants for common area maintenance, property taxes and other recoverable costs, are recognized in rental income subsequent to the adoption of Topic 842, as discussed below, in the period the recoverable costs are incurred. Tenant reimbursements, for which the Company pays the associated costs directly to third-party vendors and is reimbursed by the tenants, are recognized and recorded on a gross basis.

The Company accounts for leases in accordance with FASB ASU No. 2016-02, Leases (“Topic 842”), and the related FASB ASU Nos. 2018-10, 2018-11, 2018-20 and 2019-01, which provide practical expedients, technical corrections and improvements for certain aspects of ASU No. 2016-02 (collectively “Topic 842”). Topic 842 established a single comprehensive model for entities to use in accounting for leases. Topic 842 applies to all entities that enter into leases. Lessees are required to report assets and liabilities that arise from leases. Lessor accounting has largely remained unchanged; however, certain refinements were made to conform with revenue recognition guidance, specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. Topic 842 impacts the Company's accounting for leases primarily as a lessor. Topic 842 also impacts the Company's accounting as a lessee; however, such impact is considered not material.

As a lessor, the Company's leases with tenants generally provide for the lease of real estate properties, as well as common area maintenance, property taxes and other recoverable costs. To reflect recognition as one lease component, rental income and tenant reimbursements and other lease related property income that meet the requirements of the practical expedient provided by ASU No. 2018-11 have been combined under rental income in the Company's unaudited condensed consolidated statements of operations. For the three months ended June 30, 2022 and 2021, tenant reimbursements included in rental income amounted to $1,400,428 and $1,540,380, respectively, and for the six months ended June 30, 2022 and 2021, tenant reimbursements included in rental income amounted to $3,450,799 and $3,068,172, respectively.

The Company recognizes rental income from tenants under operating leases on a straight-line basis over the noncancelable term of the lease when collectability of such amounts is reasonably assured. Recognition of rental income on a straight-line basis includes the effects of rental abatements, lease incentives and fixed and determinable increases in lease payments over the lease term. If the lease provides for tenant improvements, management of the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or by the Company.

When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:

•whether the lease stipulates how a tenant improvement allowance may be spent;

•whether the amount of a tenant improvement allowance is in excess of market rates;

•whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

•whether the tenant improvements are unique to the tenant or general-purpose in nature; and

•whether the tenant improvements are expected to have any residual value at the end of the lease.

Tenant reimbursements of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred and presented gross if the Company is the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. In instances where the operating lease agreement has an early termination option, the termination penalty is based on a predetermined termination fee or based on the unamortized tenant improvements and leasing commissions.

The Company evaluates the collectability of rents and other receivables on a regular basis based on factors including, among others, payment history, credit rating, the asset type, and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides an allowance against the portion of the receivable that it estimates may not be recovered. This analysis requires the Company to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected.

Bad Debts and Allowances for Tenant and Deferred Rent Receivables

The Company's determination of the adequacy of its allowances for tenant receivables includes a binary assessment of whether or not the amounts due under a tenant’s lease agreement are probable of collection. For such amounts that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For such amounts that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. In addition, for tenant and deferred rent receivables deemed probable of collection, the Company also may record an allowance under other authoritative GAAP depending upon the Company's evaluation of the individual receivables, specific credit enhancements, current economic conditions, and other relevant factors. Such allowances are recorded as increases or decreases through rental income in the Company's unaudited condensed consolidated statements of operations.

With respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt allowance for the tenant’s receivable balance and generally will not recognize subsequent rental income until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Gain or Loss on Sale of Real Estate Investments

The Company recognizes gain or loss on sale of real estate property when the Company has executed a contract for sale of the property, transferred controlling financial interest in the property to the buyer and determined that it is probable that the Company will collect substantially all of the consideration for the property. The Company's real estate property sale transactions during the three and six months ended June 30, 2022 and 2021 met these criteria at closing. When properties are sold, operating results of the properties remain in continuing operations, and any associated gain or loss from the disposition is included in gain or loss on sale of real estate investments in the Company’s accompanying unaudited condensed consolidated statements of operations.

Impairment of Investment in Real Estate Properties

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset.

Other Comprehensive Income (Loss)

For all periods presented, other comprehensive income (loss) is the same as net income (loss).

Treasury Stock

Effective on the date of the Listed Offering, the Company accounts for repurchased shares of its Class C common stock as treasury stock. Treasury shares are recorded at cost and are included as a component of equity in the Company's unaudited condensed consolidated balance sheet as of June 30, 2022.

Per Share Data

The Company reports a dual presentation of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS excludes dilution and is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted EPS uses the treasury stock method or the if-converted method, where applicable, to compute for the potential dilution that would occur if dilutive securities or commitments to issue common stock were exercised. For the three and six months ended June 30, 2022 and 2021, the Company presented both Basic EPS and Diluted EPS reflecting its reported net income (loss) attributable to common stockholders for each period.

As discussed in Note 1, in connection with and upon listing on the NYSE, each share of the Company's Class S common stock converted into a share of Class C common stock. Prior to the conversion of the Company's Class S common stock into Class C common stock, application of the two-class method for allocating net loss attributable to common stockholders in accordance with the provisions of ASC 260, Earnings per Share, would have resulted in basic and diluted net loss of $0.13 per share of Class C common stock for the three months ended June 30, 2021 and basic and diluted net loss of $0.13 per share of Class S common stock for the three months ended June 30, 2021. The two-class method would have resulted in a basic and diluted net loss of $0.25 per share of Class C common stock for the six months ended June 30, 2021 and basic and diluted net loss of $0.25 per share of Class S common stock for the six months ended June 30, 2021.

Fair Value Disclosures

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an existing price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value:

Cash and cash equivalents, restricted cash, receivable from early termination of lease, tenant receivables, prepaid expenses and other assets and accounts payable, accrued and other liabilities: These balances approximate their fair values due to their short maturities.

Derivative Instruments: The Company’s derivative instruments are presented at fair value in the accompanying unaudited condensed consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk.

Goodwill: The fair value measurement of goodwill is considered a Level 3 nonrecurring fair value measurement. For goodwill, fair value measurement involves the determination of fair value of a reporting unit.

Credit facilities: The fair values of the Company’s credit facilities approximate their carrying values as their interest rates and other terms are comparable to those available in the marketplace for similar credit facilities.

Mortgage notes payable: The fair values of the Company’s mortgage notes payable are estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.

Related party transactions: The Company has concluded that it is not practical to determine the estimated fair value of related party transactions. Disclosure rules for fair value measurements require that for financial instruments for which it is not practicable to estimate fair value, information pertinent to those instruments be disclosed. Further information as to these financial transactions with related parties is included in Note 10.

Restricted Cash

Restricted cash as of December 31, 2021 amounted to $2,441,970 for the mortgages related to properties discussed below and other lender reserves. There were no restricted cash balances as of June 30, 2022.

Under the terms of the Company’s June 2021 refinancing of mortgages on its properties leased to Northrop Grumman and L3Harris Technologies, Inc. (“L3Harris”) with Banc of California as described in Note 7, the Company established restricted cash accounts at Banc of California with $1,400,000 and $1,000,000 held for the Northrop Grumman and L3Harris properties, respectively, to fund building improvements, tenant improvements and leasing commissions. Subsequent to the origination of the loans, $128,538 was released to fund a leasing commission, resulting in $2,271,462 remaining as aggregate restricted cash as of December 31, 2021. Pursuant to the refinancing of the Northrop Grumman and L3Harris mortgages on January 18, 2022 as further discussed in Note 7, these funds became unrestricted. Additional restricted cash balances of $170,508 as of December 31, 2021 were also released during the first three months of 2022 due to refinancing.

Real Estate Investments Held for Sale

The Company generally considers a real estate investment to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate investments held for sale, net” and “assets related to real estate investment held for sale,” respectively, in the accompanying unaudited condensed consolidated balance sheets. Mortgage notes payable and other liabilities related to real estate investments held for sale are classified as “mortgage notes payable related to real estate investments held for sale, net” and “liabilities related to real estate investments held for sale,” respectively, in the accompanying unaudited condensed consolidated balance sheets. Real estate investments classified as held for sale are no longer depreciated and are reported at the lower of their carrying value or their estimated fair value less estimated costs to sell. Operating results of properties that were classified as held for sale in the ordinary course of business are included in continuing operations in the Company’s accompanying unaudited condensed consolidated statements of operations.

Goodwill

The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired. The Company evaluates goodwill and other intangible assets for possible impairment in accordance with ASC 350, Intangibles–Goodwill and Other, on an annual basis, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit has declined below its carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized.

In assessing goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macro-economic, industry-specific and company-specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of such reporting unit is less than its carrying amount, then a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if it elects to bypass the qualitative analysis, then it is required to perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit.

Restricted Stock and Restricted Stock Unit Awards

The fair values of the Operating Partnership's units or restricted stock unit awards issued or granted by the Company are based on an estimated NAV per share of the Company’s common stock on the date of issuance or grant, adjusted for an illiquidity discount due to the illiquid nature of the underlying equity prior to the listing of the Company's Class C common stock on the NYSE. The fair value of future grants of the Operating Partnership's units or restricted stock unit awards will be determined based on the NYSE's market closing price of the Company's Class C common stock on the date of grant. Operating Partnership units issued as purchase consideration in connection with the Self-Management Transaction and UPREIT Transaction defined and discussed in Note 12 are recorded in equity under noncontrolling interests in the Operating Partnership in the Company's unaudited condensed consolidated balance sheets and statements of equity. For units granted to employees of the Company that are not included in the purchase consideration, the fair value of the award is amortized using the straight-line method over the requisite service period of the award, which is generally the vesting period (see Note 12). The Company has elected to record forfeitures as they occur.

The Company determines the accounting classification of equity instruments (e.g. restricted stock units) that are issued as purchase consideration or part of the purchase consideration in a business combination, as either liability or equity, by first assessing whether the equity instruments meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”), and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). Under ASC 480-10, equity instruments are classified as liabilities if the equity instruments are mandatorily redeemable, obligate the issuer to settle the equity instruments or the underlying shares by paying cash or other assets, or must or may require an unconditional obligation that must be settled by issuing a variable number of shares.

If equity instruments do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the equity instruments do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the equity instruments are indexed to its common stock and whether the equity instruments are classified as equity under ASC 815-40 or other applicable GAAP guidance. After all relevant assessments are made, the Company concludes whether the equity instruments are classified as liability or equity. Liability classified equity instruments are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss. Equity classified equity instruments are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

Reclassifications

Certain prior year balance sheet, statement of operations and statement of cash flows accounts have been reclassified to conform with the current year presentation. The reclassification did not affect net loss in the prior year unaudited condensed consolidated statement of operations.

Recent Accounting Pronouncements

New Accounting Standards Recently Issued and Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 eases the potential burden in accounting for recognizing the effects of reference rate reform on financial reporting. Such challenges include the accounting and operational implications for contract modifications and hedge accounting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to loan and lease agreements, contracts, hedging relationships, and other transactions affected by reference rate reform. These provisions apply to contract modifications that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discounted because of reference rate reform.

Qualifying modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate, and the modification would be considered “minor” so that any existing unamortized deferred loan origination fees and costs would carry forward and continue to be amortized. Qualifying modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for hedge accounting. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022, with adoption permitted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected, the amendments must be applied prospectively for all eligible contract modifications. The Company implemented ASU 2020-04 effective January 1, 2022 and the impact of such implementation was not material to the Company’s consolidated financial statements. On January 18, 2022, the Company repaid the four remaining loans existing as of December 31, 2021 which had LIBOR reference rates.

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REAL ESTATE INVESTMENTS, NET

6 Months Ended

Jun. 30, 2022

Real Estate [Abstract]

REAL ESTATE INVESTMENTS, NET

REAL ESTATE INVESTMENTS, NET

As of June 30, 2022, the Company’s real estate investment portfolio consisted of 43 operating properties located in 16 states comprised of: 20 industrial properties (including the TIC Interest in an industrial property not reflected in the table below but discussed in Note 4), 13 retail properties and 10 office properties, and one parcel of land, which currently serves as an easement to one of the Company’s office properties.

The following table provides summary information regarding the Company’s operating properties as of June 30, 2022:

Property	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
Dollar General	Litchfield, ME	11/4/2016	Retail	$	1,281,812	$	—	$	116,302	$	(226,371)	$	1,171,743
Dollar General	Wilton, ME	11/4/2016	Retail	1,543,776		—		140,653		(289,706)		1,394,723
Dollar General	Thompsontown, PA	11/4/2016	Retail	1,199,860		—		106,730		(217,502)		1,089,088
Dollar General	Mt. Gilead, OH	11/4/2016	Retail	1,174,188		—		111,847		(208,535)		1,077,500
Dollar General	Lakeside, OH	11/4/2016	Retail	1,112,872		—		100,857		(214,022)		999,707
Dollar General	Castalia, OH	11/4/2016	Retail	1,102,086		—		86,408		(207,944)		980,550
Dollar General	Bakersfield, CA	12/31/2019	Retail	4,899,714		—		261,630		(367,831)		4,793,513
Dollar General	Big Spring, TX	12/31/2019	Retail	1,281,683		—		76,351		(127,422)		1,230,612
Dollar Tree	Morrow, GA	12/31/2019	Retail	1,320,367		—		73,298		(177,276)		1,216,389
Northrop Grumman	Melbourne, FL	3/7/2017	Office	13,571,660		—		1,469,737		(3,777,982)		11,263,415
Northrop Grumman Parcel	Melbourne, FL	6/21/2018	Land	329,410		—		—		—		329,410
exp US Services	Maitland, FL	3/27/2017	Office	6,069,180		—		388,248		(1,169,541)		5,287,887
Wyndham	Summerlin, NV	6/22/2017	Office	10,406,483		—		669,232		(1,701,960)		9,373,755
Williams Sonoma	Summerlin, NV	6/22/2017	Office	8,137,571		—		640,868		(1,524,998)		7,253,441
Husqvarna	Charlotte, NC	11/30/2017	Industrial	11,840,200		—		1,013,948		(1,649,292)		11,204,856
AvAir	Chandler, AZ	12/28/2017	Industrial	27,357,899		—		—		(3,152,243)		24,205,656
3M	DeKalb, IL	3/29/2018	Industrial	14,762,819		—		3,037,057		(5,330,050)		12,469,826
Cummins	Nashville, TN	4/4/2018	Office	14,538,528		—		1,566,997		(3,358,591)		12,746,934
Costco	Issaquah, WA	12/20/2018	Office	27,346,695		—		2,765,136		(4,611,675)		25,500,156
Taylor Fresh Foods	Yuma, AZ	10/24/2019	Industrial	34,194,369		—		2,894,017		(3,579,532)		33,508,854
Levins	Sacramento, CA	12/31/2019	Industrial	4,429,390		—		221,927		(551,521)		4,099,796
Labcorp	San Carlos, CA	12/31/2019	Industrial	9,672,174		—		408,225		(510,802)		9,569,597
GSA (MSHA)	Vacaville, CA	12/31/2019	Office	3,112,076		—		243,307		(346,287)		3,009,096
PreK Education	San Antonio, TX	12/31/2019	Retail	12,447,287		—		555,767		(1,251,024)		11,752,030
Solar Turbines	San Diego, CA	12/31/2019	Office	7,133,241		—		284,026		(680,451)		6,736,816
Wood Group	San Diego, CA	12/31/2019	Industrial	9,869,520		—		539,633		(1,004,879)		9,404,274
ITW Rippey	El Dorado, CA	12/31/2019	Industrial	7,071,143		—		304,387		(761,590)		6,613,940
Gap	Rocklin, CA	12/31/2019	Office	8,433,744		—		360,377		(1,209,435)		7,584,686
L3Harris	San Diego, CA	12/31/2019	Industrial	11,690,952		—		662,101		(1,148,834)		11,204,219
Sutter Health	Rancho Cordova, CA	12/31/2019	Office	29,587,023		—		1,616,610		(2,705,794)		28,497,839
Walgreens	Santa Maria, CA	12/31/2019	Retail	5,223,442		—		335,945		(332,402)		5,226,985
Raising Cane's	San Antonio, TX	7/26/2021	Retail	3,430,224		—		213,997		(111,417)		3,532,804
Arrow-TruLine	Archbold, OH	12/3/2021	Industrial	11,518,084		—		—		(224,513)		11,293,571
KIA	Carson, CA	1/18/2022	Retail	69,286,444		—		118,606		(486,687)		68,918,363
Kalera	Saint Paul, MN	1/31/2022	Industrial	3,690,009		4,429,000		—		(155,804)		7,963,205
Lindsay	Colorado Springs 1, CO	4/19/2022	Industrial	2,311,934		—		—		(12,150)		2,299,784
Lindsay	Colorado Springs 2, CO	4/19/2022	Industrial	3,314,406		—		—		(7,231)		3,307,175
Lindsay	Dacano, CO	4/19/2022	Industrial	5,558,622		—		—		(17,529)		5,541,093
Lindsay	Alachua, FL	4/19/2022	Industrial	8,518,123		—		—		(75,544)		8,442,579
Lindsay	Franklinton, NC	4/19/2022	Industrial	7,181,113		—		—		(33,306)		7,147,807
Lindsay	Canal Fulton 1, OH	4/19/2022	Industrial	11,345,533		—		—		(71,634)		11,273,899
Lindsay	Canal Fulton 2, OH	4/19/2022	Industrial	10,190,942		—		—		(102,162)		10,088,780
Lindsay	Rock Hill, SC	4/19/2022	Industrial	6,555,983		—		—		(35,051)		6,520,932
				$	435,042,581	$	4,429,000	$	21,384,224	$	(43,728,520)	$	417,127,285

Acquisitions

Six Months Ended June 30, 2022

During the six months ended June 30, 2022, the Company acquired the following real estate properties:

Property and Location	Acquisition Date	Land		Buildings and Improvements		Equipment		Tenant Origination and Absorption Costs		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
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 $1,330,780 for funding ongoing building construction at the Lindsay property in Dacono, CO. This deposit is included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets.

The Company recognized $2,706,422 and $4,105,592 of total revenue related to the above-acquired properties during the three and six months ended June 30, 2022, respectively.

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

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

Six Months Ended June 30, 2021

The Company did not acquire any real estate property during the six months ended June 30, 2021.

Dispositions

The dispositions during the six months ended June 30, 2022 and 2021 were as follows:

Six Months Ended June 30, 2022

Property	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sale Price		Gain on Sale
Bon Secours	Richmond, VA	2/11/2022	Office	72,890	$	10,200,000	$	179,404
Omnicare	Richmond, VA	2/11/2022	Flex	51,800	8,760,000		2,062,890
Texas Health	Dallas, TX	2/11/2022	Office	38,794	7,040,000		160,377
Accredo	Orlando, FL	2/24/2022	Office	63,000	14,000,000		4,998,106
EMCOR	Cincinnati, OH	6/29/2022	Office	39,385	6,525,000		1,002,101
				265,869	$	46,525,000	$	8,402,878

On February 11, 2022, the Company completed the sale of two medical office properties in Dallas, Texas and Richmond, Virginia leased to Texas Health and Bon Secours, respectively, and one flex property in Richmond, Virginia leased to Omnicare for an aggregate sales price of $26,000,000, which generated net proceeds of $11,883,639 after payment of commissions, closing costs and existing mortgages.

On February 24, 2022, the Company completed the sale of a medical office property in Orlando, Florida leased to Accredo for a sales price of $14,000,000, which generated net proceeds of $5,000,941 after payment of commissions, closing costs and repayment of the existing mortgage.

On June 29, 2022, the Company completed the sale of an office property in Cincinnati, Ohio leased to EMCOR for a sales price of $6,525,000, which generated net proceeds of $6,345,642 after payment of commissions and closing costs.

Six Months Ended June 30, 2021

Property	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sale Price		Gain on Sale
Chevron Gas Station	Roseville, CA	1/7/2021	Retail	3,300	$	4,050,000	$	228,769
EcoThrift	Sacramento, CA	1/29/2021	Retail	38,536	5,375,300		51,415
Chevron Gas Station	San Jose, CA	2/12/2021	Retail	1,060	4,288,888		9,458
Total				42,896	$	13,714,188	$	289,642

On January 7, 2021, the Company completed the sale of its Roseville, California retail property, which was leased to the operator of a Chevron gas station, for $4,050,000, which generated net proceeds of $3,914,909 after payment of commissions and closing costs.

On January 29, 2021, the Company completed the sale of its Sacramento, California retail property, which was leased to EcoThrift, for $5,375,300, which generated net proceeds of $2,684,225 after repayment of the existing mortgage, commissions and closing costs.

On February 12, 2021, the Company completed the sale of its San Jose, California retail property, which was leased to the operator of a Chevron gas station, for $4,288,888, which generated net proceeds of $4,054,327 after payment of commissions and closing costs.

Asset Concentration

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

	June 30, 2022
Property and Location	Net Carrying Value		Percentage of Total Assets
KIA, Carson, CA	$	68,918,363	15.1	%
Lindsay, eight properties acquired in Colorado (three), Ohio (two), North Carolina, South Carolina and Florida	54,622,049		12.0	%
Total	$	123,540,412	27.1	%

The Company held no real estate property with a net book value that was greater than 10% of its total assets as of December 31, 2021.

Rental Income Concentration

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

	Three Months Ended June 30, 2022				Six Months Ended June 30, 2022
Property and Location	Rental Income		Percentage of Total Rental Income		Rental Income		Percentage of Total Rental Income
KIA, Carson, CA	$	1,459,745	14.0	%	$	2,725,006	13.6	%
Lindsay, eight properties acquired in Colorado (three), Ohio (two), North Carolina, South Carolina and Florida	$	1,058,443	10.2	%	(1)		(1)

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

No tenant represented the source of 10% of total rental income during the three and six months ended June 30, 2021.

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.

During the six months ended June 30, 2022, the Company executed lease extensions for three properties, including the properties leased to Cummins in Nashville, Tennessee for an additional one year through February 28, 2024, ITW Rippey in El Dorado, California for an additional seven years through July 31, 2029 and Williams Sonoma in Summerlin, Nevada for an additional three years through October 31, 2025. These three lease extensions resulted in an average increase in lease term of 3.7 years and an average annual increase in rents of 1.9%.

As discussed above, the Company also acquired 10 properties and sold five properties during the six months ended June 30, 2022.

As of June 30, 2022, 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 2022	$	16,377,113
2023	33,059,460
2024	31,759,477
2025	30,260,027
2026	24,057,552
2027	21,901,312
Thereafter	267,177,203
	$	424,592,144

Real Estate Intangible Assets, Net

As of June 30, 2022 and December 31, 2021, the Company’s real estate intangible assets were as follows:

	June 30, 2022						December 31, 2021
	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	$	21,384,224	$	1,128,549	$	(14,811,570)	$	21,504,210	$	1,128,549	$	(15,097,132)
Accumulated amortization	(12,312,635)		(502,442)		4,636,286		(11,009,997)		(437,530)		3,994,192
Net	$	9,071,589	$	626,107	$	(10,175,284)	$	10,494,213	$	691,019	$	(11,102,940)

The intangible assets acquired in connection with the acquisitions have a weighted average amortization period of approximately 9.5 years as of June 30, 2022. As of June 30, 2022, the amortization of intangible assets for the remaining six months ending December 31, 2022 and for each of the next five 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 2022	$	1,062,439	$	64,911	$	(496,178)
2023	1,682,755		127,174		(906,522)
2024	1,545,468		122,543		(903,104)
2025	1,218,652		115,996		(903,104)
2026	620,229		78,557		(897,701)
2027	343,917		22,272		(887,789)
Thereafter	2,598,129		94,654		(5,180,886)
	$	9,071,589	$	626,107	$	(10,175,284)
Weighted-average remaining amortization period	7.7 years		6.0 years		11.3 years

Real Estate Investments Held For Sale

As of June 30, 2022, the Company did not classify any properties as held for sale. As of December 31, 2021, the Company classified four healthcare related properties as held for sale and presented the properties in the Company’s unaudited condensed consolidated balance sheet as real estate investments held for sale. These properties were all sold in February 2022, as discussed above. These four healthcare related properties consisted of three office properties (the property leased to Accredo Health through December 31, 2024 located in Orlando, Florida; the property leased to Bon Secours Health through August 31, 2026 located in Richmond, Virginia; and the property leased to Texas Health through December 31, 2025 located in Dallas, Texas) and one flex property leased to Omnicare through May 31, 2026 located in Richmond, Virginia.

As of June 30, 2022, no assets were classified as real estate investments held for sale. The following table summarizes the major components of assets and liabilities related to the four real estate investments held for sale as of December 31, 2021:

	December 31, 2021
Assets related to real estate investments held for sale:
Land, buildings and improvements	$	34,507,485
Tenant origination and absorption costs	3,064,371
Accumulated depreciation and amortization	(6,061,094)
Real estate investments held for sale, net	31,510,762
Other assets, net	788,296
Total assets related to real estate investments held for sale:	$	32,299,058
Liabilities related to real estate investments held for sale:
Mortgage notes payable, net	$	21,699,912
Other liabilities, net	383,282
Total liabilities related to real estate investments held for sale:	$	22,083,194

The following table summarizes the major components of rental income and expenses related to one real estate investment held for sale as of June 30, 2021 which was leased to Dana located in Cedar Park, Texas, and was included in continuing operations for the three and six months ended June 30, 2021:

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Total revenues	$	342,198	$	716,160
Expenses:
Interest expense	63,207		138,629
Depreciation and amortization	49,108		122,769
Other expenses	78,857		145,797
Total expenses	191,172		407,195
Net income	$	151,026	$	308,965

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UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY

UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY

The Company’s investment in unconsolidated entity as of June 30, 2022 and December 31, 2021 is as follows:

	June 30, 2022		December 31, 2021
The TIC Interest	$	9,956,517	$	9,941,338

The Company’s income from investment in unconsolidated entity for the three and six months ended June 30, 2022 and 2021 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
The TIC Interest	$	66,868	$	74,834	$	162,332	$	147,302

TIC Interest

During 2017, the Company, through a wholly-owned subsidiary of the Operating Partnership, acquired an approximate 72.7% interest in a 91,740 square foot industrial property in Santa Clara, California. The remaining approximate 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 both Hagg Lane II, LLC and Hagg Lane III, LLC was a member of the Company's board of directors from December 2019 to December 2021. The Santa Clara property does not qualify as a variable interest entity and consolidation is not required as the Company’s TIC Interest does not control the property. Therefore, the Company accounts for the TIC Interest using the equity method. The Company receives approximately 72.7% of the cash flow distributions and recognizes approximately 72.7% of the results of operations.

During the three months ended June 30, 2022 and 2021, the Company received $51,786 and $82,588 in cash distributions, respectively, and $147,153 and $161,967 during the six months ended June 30, 2022 and 2021, respectively.

The following is summarized financial information for the Santa Clara property as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021:

	June 30, 2022		December 31, 2021
Assets:
Real estate investments, net	$	28,883,609	$	29,403,232
Cash and cash equivalents	805,057		690,470
Other assets	29,975		134,049
Total assets	$	29,718,641	$	30,227,751
Liabilities:
Mortgage note payable, net	$	13,078,689	$	13,218,883
Below-market lease, net	2,587,393		2,660,586
Other liabilities	52,609		369,209
Total liabilities	15,718,691		16,248,678
Total equity	13,999,950		13,979,073
Total liabilities and equity	$	29,718,641	$	30,227,751

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Total revenues	$	676,780	$	676,936	$	1,391,758	$	1,350,912
Expenses:
Interest expense	134,968		138,036		269,262		275,642
Depreciation and amortization	261,956		250,015		523,912		500,030
Other expenses	187,890		185,964		375,324		372,652
Total expenses	584,814		574,015		1,168,498		1,148,324
Net income	$	91,966	$	102,921	$	223,260	$	202,588

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GOODWILL, NET

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL, NET

GOODWILL, NET

The carrying values of goodwill as of June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022		December 31, 2021
Carrying value, beginning	$	17,320,857	$	17,320,857
Impairment of goodwill	(17,320,857)		—
Carrying value, ending	$	—	$	17,320,857

The Company conducted its annual impairment analysis as of December 31, 2021 using qualitative factors and concluded that no impairment to goodwill was necessary. For the quarter ended March 31, 2022, management considered the decline of the recent trading price of the Company’s Class C common stock following its listing on the NYSE in February 2022, causing the Company's market capitalization to be below the book value of the Company’s equity as of March 31, 2022, to be a triggering event. Management performed a quantitative impairment assessment considering expected future cash flows, market conditions and expectations of increases in interest rates and concluded that there was an impairment of goodwill that was not expected to be temporary as of March 31, 2022. Events subsequent to March 31, 2022 and prior to the Company's filing of its Quarterly Report on Form 10-Q for the three months ended March 31, 2022, including rising inflation and interest rates, and declining office occupancy rates affecting owners of real estate properties, further supported such conclusion. Based on the quantitative analysis, the value of goodwill was written off, resulting in a non-cash expense of $17,320,857 for the three months ended March 31, 2022.

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS

Tenant Receivables, Net

As of June 30, 2022 and December 31, 2021, tenant receivables consisted of the following:

	June 30, 2022		December 31, 2021
Straight-line rent	$	5,753,512	$	4,417,065
Tenant rent and billed reimbursements	541,561		81,079
Unbilled tenant reimbursements	1,764,562		1,498,775
Total	$	8,059,635	$	5,996,919

Prepaid Expenses and Other Assets

As of June 30, 2022 and December 31, 2021, prepaid expenses and other assets were comprised of the following:

	June 30, 2022		December 31, 2021
Deferred tenant allowance	$	2,353,762	$	2,400,811
Miscellaneous receivables	59,888		681,369
Prepaid expenses	1,387,121		1,253,751
Deposits	2,151,099		1,420,244
Deferred financing costs on credit facility revolver	814,997		100,080
Total	$	6,766,867	$	5,856,255

Accounts Payable, Accrued and Other Liabilities

As of June 30, 2022 and December 31, 2021, accounts payable, accrued and other liabilities were comprised of the following:

	June 30, 2022		December 31, 2021
Accounts payable	$	1,194,736	$	1,767,657
Accrued expenses	2,883,690		3,864,222
Accrued distributions	1,762,722		1,795,303
Accrued interest payable	706,920		548,564
Unearned rent	2,051,994		1,735,440
Lease incentive obligation	133,695		2,133,695
Total	$	8,733,757	$	11,844,881

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DEBT

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

Mortgage Notes Payable, Net

As of June 30, 2022 and December 31, 2021, the Company’s mortgage notes payable consisted of the following:

Collateral	2022 Principal Amount		2021 Principal Amount		Contractual Interest Rate (1)	Effective Interest Rate (2)	Loan Maturity
Costco property	$	18,850,000	$	18,850,000	4.85%	4.85%	01/01/30
Taylor Fresh Foods	12,350,000		12,350,000		3.85%	3.85%	11/01/29
Sutter Health property	13,450,173		13,597,120		4.50%	4.50%	03/09/24
Six Dollar General properties	—		3,674,327		—%	4.69%	(3)
Dollar General, Bakersfield property	—		2,224,418		—%	3.65%	(3)
Dollar General, Big Spring property	—		587,961		—%	4.69%	(3)
Northrop Grumman property	—		6,925,915		—%	3.35%	(3)
exp US Services property	—		3,255,313		—%	4.25%	(3)
Wyndham property	—		5,493,000		—%	4.34%	(3)
Williams Sonoma property	—		4,344,000		—%	4.05%	(3)
EMCOR property	—		2,757,943		—%	4.36%	(3)
Husqvarna property	—		6,379,182		—%	4.60%	(3)
AvAir property	—		19,950,000		—%	3.80%	(3)
3M property	—		8,025,200		—%	5.09%	(3)
Cummins property	—		8,188,800		—%	5.16%	(3)
Levins property	—		2,654,405		—%	3.75%	(3)
Labcorp property	—		5,308,810		—%	3.75%	(3)
GSA (MSHA) property	—		1,713,196		—%	3.65%	(3)
PreK Education property	—		4,930,217		—%	4.25%	(3)
Solar Turbines, Amec Foster, ITW Rippey properties	—		8,986,222		—%	3.35%	(3)
Gap property	—		3,492,775		—%	4.15%	(3)
L3Harris property	—		6,219,524		—%	3.35%	(3)
Walgreens property	—		3,067,109		—%	4.25%	(3)
Total mortgage notes payable	44,650,173		152,975,437
Plus unamortized mortgage premium, net (4)	171,810		204,281
Less unamortized deferred financing costs	(213,168)		(956,139)
Mortgage notes payable, net	$	44,608,815	$	152,223,579

(1)Contractual interest rate represents the interest rate in effect under the mortgage note payable as of June 30, 2022 for the three mortgages that were not refinanced through a drawdown from the Credit Facility (defined and discussed below) with KeyBank National Association (“KeyBank”) given their prepayment penalties.

(2)Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2022 consisting of the contractual interest rate, and as of December 31, 2021, consisting of the contractual interest rate and the effect of the interest rate swap, if applicable (see Note 8 for further information regarding the Company’s derivative instruments as of December 31, 2021).

(3)The loan was fully repaid on January 18, 2022 through a drawdown from the Credit Facility.

(4)Represents unamortized net mortgage premium acquired through the merger with REIT I.

The following summarizes the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of June 30, 2022 and December 31, 2021:

	June 30, 2022						December 31, 2021
	Face Value		Carrying Value		Fair Value		Face value		Carrying Value		Fair Value
Mortgage notes payable	$	44,650,173	$	44,608,815	$	41,493,296	$	152,975,437	$	152,223,579	$	159,241,815
Less: full repayments of mortgages on January 18, 2022							(108,178,317)		(107,429,721)		*
							$	44,797,120	$	44,793,858	$	46,296,445

*    The payoff values of the loans refinanced on January 18, 2022 approximate their face values as of December 31, 2021.

Disclosures of the fair values of financial instruments are based on pertinent information available to the Company as of the period end and require a significant amount of judgment. The actual value could be materially different from the Company’s estimate of fair value.

Mortgage Notes Payable Related to Real Estate Investments Held For Sale, Net

As discussed in detail in Note 3, the Company classified four properties as real estate held for sale as of December 31, 2021, which were collateral for mortgage notes payable. No property was classified as held for sale as of June 30, 2022. The following table summarizes the Company's mortgage notes payable related to real estate investments held for sale as of December 31, 2021:

Collateral	December 31, 2021
Accredo property	$	8,538,000
Omnicare property	4,109,167
Texas Health property	4,284,335
Bon Secours property	5,104,817
Total	22,036,319
Less deferred financing costs	(336,407)
Mortgage notes payable, net	$	21,699,912

Credit Facility

On January 18, 2022, the Company's 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 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 grid that fluctuates based on the Company’s actual leverage ratio at the end of the prior quarter. With the Company's leverage ratio at 34% as of March 31, 2022 and 38% as of June 30, 2022, the spread over the Secured Overnight Financing Rate (‘‘SOFR’’), including a 10 basis point credit adjustment, is 165 basis points and the interest rate on the Revolver was 3.150% as of June 30, 2022. Following the Federal Reserve Bank’s July 27, 2022 increase in the target range for federal funds by 75 basis points, the interest rate on the Revolver is approximately 3.96%. The Company also pays an annual unused fee of up to 25 basis points on the Revolver, depending on the daily amount of the unused commitment, and paid total unused fees of $50,047 and $72,280 for the three and six months ended June 30, 2022, respectively. The Company entered into a swap agreement to fix the interest rate on the Term Loan at 3.858% effective May 31, 2022 as described in Note 8.

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 the Company's borrowing base. The Company was in compliance with these covenants as of June 30, 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 are indirectly owned by the Company, and various cash collateral owned by the Operating Partnership and the Subsidiary Guarantors. In connection with the Credit Facility, the Company and each of the Subsidiary Guarantors entered into an Unconditional Guaranty of Payment and Performance in favor of the Agent, pursuant to which the Company and each of the Subsidiary Guarantors agreed to guarantee the full and prompt payment of the Operating Partnership’s obligations under the Credit Agreement.

While the Credit Facility allows for borrowings up to 60% of the Company's borrowing base and the Company's board of directors has approved a maximum leverage ratio of 55% of the aggregate fair value of the Company's real estate properties plus its cash and cash equivalents, the Company is targeting leverage of 40% or lower over the long-term once it achieves scale; however, the Company will consider higher leverage in the near-term if it identifies attractive acquisition opportunities in advance of completing dispositions or raising additional equity. The Company also has 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.

Credit Facility Drawdown

On January 18, 2022, the Company borrowed $155,775,000 from its Credit Facility consisting of $100,000,000 under the Term Loan and $55,775,000 under the Revolver. The Company used a portion of the proceeds from the Credit Facility to pay total commitment and arrangement fees of $2,020,000 to the Agent, the Lenders, the Lead Arrangers and Co-Syndication Agents.

The Company used a portion of the 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 above, and the Company's 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, the Company prepaid $35,000,000 of the outstanding balance on the Revolver with cash on hand in order to reduce interest expense and on April 25, 2022, the Company drew the remaining $50,000,000 on the Term Loan for a repayment of the Revolver. The Company also repaid $8,000,000 on the Revolver on June 22, 2022. As of June 30, 2022, the Company had availability under the Credit Facility of approximately $60,000,000 which can be drawn for general corporate purposes, including pending and future acquisitions (see Note 14 for transactions subsequent to the second quarter of 2022).

The details of the Company's Term Loan as of June 30, 2022 follow:

	June 30, 2022
Term loan	$	150,000,000
Less unamortized deferred financing costs	(1,149,950)
Net term loan	$	148,850,050

Prior Credit Facility

On March 29, 2021, the Company entered into a credit facility with Banc of California (the “Prior Credit Facility”) for an aggregate line of credit of $22,000,000 with a maturity date of March 30, 2023. Under the terms of the Prior Credit Facility, the Company paid a variable rate of interest on outstanding amounts equal to one percentage point over the prime rate published in The Wall Street Journal, provided that the interest rate in effect on any one day was not less than 4.75% per annum. The Company paid Banc of California origination fees of $77,000 in connection with the Prior Credit Facility in March 2021 and paid an unused commitment fee of 0.15% per annum of the unused portion of the Prior Credit Facility, charged quarterly in arrears based on the average unused commitment available under the Prior Credit Facility.

The Revolver's and Prior Credit Facility's unamortized deferred financing costs of $814,997 and $100,079 as of June 30, 2022 and December 31, 2021, respectively, are presented under prepaid and other assets in the Company's unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively.

Compliance with All Debt Agreements

Pursuant to the terms of mortgage notes payable on certain of the Company’s properties and the Credit Facility, the Company and/or the subsidiary borrowers are subject to certain financial loan covenants. The Company and/or the subsidiary borrowers were in compliance with such financial loan covenants as of June 30, 2022.

The following summarizes the future principal repayments of the Company’s mortgage notes payable and Credit Facility as of June 30, 2022:

	Mortgage Notes		Credit Facility
	Payable		Revolver		Term Loan		Total
July through December 2022	$	141,575	$	—	$	—	$	141,575
2023	317,575		—		—		317,575
2024	12,991,023		—		—		12,991,023
2025	—		—		—		—
2026	—		6,775,000		—		6,775,000
2027	—		—		150,000,000		150,000,000
Thereafter	31,200,000		—		—		31,200,000
Total principal	44,650,173		6,775,000		150,000,000		201,425,173
Plus unamortized mortgage premium, net of unamortized discount	171,810		—		—		171,810
Less deferred financing costs	(213,168)		—		(1,149,950)		(1,363,118)
Net principal	$	44,608,815	$	6,775,000	$	148,850,050	$	200,233,865

Interest Expense

The following is a reconciliation of the components of interest expense for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Mortgage notes payable:
Interest expense	$	460,886	$	1,992,812	$	1,273,605	$	3,826,636
Amortization of deferred financing costs	7,235		103,383		14,459		214,426
Swap termination costs	—		—		—		23,900
Unrealized gain on interest rate swap valuation (1)	—		(92,200)		—		(420,243)
Credit facility:
Interest expense	1,098,435		63,333		1,688,665		142,085
Amortization of deferred financing costs	120,830		22,139		221,520		43,863
Unrealized gain on interest rate swap valuation (2)	(589,997)		—		(589,997)		—
Other	99,765		9,182		157,077		49,118
Total interest expense	$	1,197,154	$	2,098,649	$	2,765,329	$	3,879,785

(1)    Includes unrealized gain on interest rate swaps of $90,600 and $517,719 for the three and six months ended June 30, 2021 (see Note 8 for more details). Accrued interest receivable of $56,114 as of December 31, 2021 represented the unsettled portion of the interest rate swaps for the period from origination of the interest rate swap through the balance sheet date.

(2)    The Company entered into a swap transaction for its Credit Facility Term Loan effective May 31, 2022 which is further described in Note 8.

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INTEREST RATE SWAP DERIVATIVES

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

INTEREST RATE SWAP DERIVATIVES

INTEREST RATE SWAP DERIVATIVES

The Company, through its Operating Partnership, entered into a five-year swap agreement to fix SOFR at 2.258% related to its variable interest rate Term Loan effective May 31, 2022. The Company designated the pay-fixed, receive-floating interest rate swap with the terms described in the table below. The swap agreement matures on January 15, 2027 and the financial institution counterparty has a one-time option to cancel the swap on December 31, 2024.

In prior years, the Company, through its limited liability company subsidiaries, entered into interest rate swap agreements with amortizing notional amounts relating to four of its mortgage notes payable. These swap agreements, which were in place as of December 31, 2021, were terminated during the three months ended March 31, 2022 in connection with refinancings discussed in Note 7. The notional amount is an indication of the extent of the Company’s involvement in each instrument at that time, but does not represent exposure to credit, interest rate or market risks. During the three months ended March 31, 2022, the Company terminated the swap agreements related to mortgages on the 3M, Cummins, Wyndham and Williams Sonoma properties at aggregate costs of $733,000 and during the three months ended March 31, 2021, the Company terminated the swap agreements related to mortgages on the GSA and Eco-Thrift properties at aggregate costs of $23,900.

The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of June 30, 2022 and December 31, 2021:

June 30, 2022

December 31, 2021

Derivative Instruments

Number of Instruments

Notional Amount (i)

Reference Rate (ii)

Fixed Pay Rate (iii)

Remaining Non-Cancellable Term

Number of Instruments

Notional Amount (i)

Reference Rate (iv)

Weighted Average Fixed Pay Rate

Weighted Average Remaining Term

Interest Rate Swap Derivatives

1

$

150,000,000

Indexed to USD - SOFR - COMPOUND

3.858

%

2.5 years

4

$

26,051,000

One-month LIBOR + applicable spread/Fixed at 4.05%-5.16%

4.51

%

2.0 years

(i)The notional amount of the Company’s swaps decreased each month to correspond to the outstanding principal balance on the related mortgage. The minimum notional amounts (outstanding principal balance at the maturity date) as of June 30, 2022 and December 31, 2021 were $150,000,000 and $24,935,999, respectively.

(ii)The reference rate was as of June 30, 2022.

(iii)Based on the terms of the Credit Facility, the fixed pay rate increases if the Company's leverage ratio increases.

(iv)The reference rate was as of December 31, 2021.

The following table sets forth the fair value of the Company’s derivative instruments (Level 2 measurement), as well as their classification in the unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021:

		June 30, 2022			December 31, 2021
Derivative Instrument	Balance Sheet Location	Number of Instruments	Fair Value		Number of Instruments	Fair Value
Interest Rate Swaps	Asset - Interest rate swap derivatives, at fair value	1	$	589,997	—	$	—
Interest Rate Swaps	Liability - Interest rate swap derivatives, at fair value	—	$	—	4	$	(788,016)

The changes in fair value of these derivative instruments that were not designated as a cash flow hedge for financial accounting purposes were recorded as interest expense in the unaudited condensed consolidated statements of operations. None of the Company’s derivatives as of December 31, 2021 were designated as hedging instruments; therefore, the net gains recognized were recorded as reductions in the loss on early extinguishment of debt for the three months ended March 31, 2022 and the net unrealized gain recognized on interest rate swaps of $90,600 and $517,719 were recorded as decreases in interest expense for the three and six months ended June 30, 2021, respectively. The loss on early extinguishment of debt for the three months ended March 31, 2022 includes the actual cost of terminating the interest rate swap derivatives in January 2022 for $733,000, which was offset by a corresponding reversal of the liability of $788,016 for interest rate swap derivatives as of December 31, 2021.

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PREFERRED STOCK AND COMMON STOCK

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

PREFERRED STOCK AND COMMON STOCK

PREFERRED STOCK AND COMMON STOCK

Preferred Stock

The Company is authorized to issue up to 50,000,000 shares of preferred stock. In connection with an underwritten public offering in September 2021 (discussed below in detail), the Company classified and designated 2,000,000 shares of its authorized preferred stock as authorized shares of Series A Preferred Stock. As of June 30, 2022 and December 31, 2021, 2,000,000 shares of authorized Series A Preferred Stock were issued and outstanding.

Underwritten Offering - Series A Preferred Stock

On September 14, 2021, the Company and the Operating Partnership entered into an underwriting agreement (the “Underwriting Agreement”) with B. Riley Securities, Inc., as representative of the underwriters listed on Schedule I thereto (collectively, the “Underwriters”), pursuant to which the Company agreed to issue and sell 1,800,000 shares of the Company’s Series A Preferred Stock, with a liquidation preference of $25.00 per share, in the Preferred Offering at a price per share of $25.00. In addition, the Company 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.

In the Underwriting Agreement, the Company and the Operating Partnership made certain customary representations, warranties and covenants and agreed to indemnify the Underwriters against certain liabilities. The issuance and sale of the shares of Series A Preferred Stock, including the issuance and sale of 200,000 shares pursuant to the Underwriters’ full exercise of their option to purchase additional shares, closed and the Series A Preferred Stock began trading on the NYSE on September 17, 2021.

The gross proceeds from the Preferred Offering were $50,000,000 and the net proceeds were $47,607,309, after deducting the underwriting discount of $1,575,000 and other offering costs of $817,691.

The Company contributed $48,425,000 of the net proceeds from the Preferred Offering prior to other offering costs to the Operating Partnership in exchange for a new class of 7.375% Series A Cumulative Redeemable Perpetual Preferred Units of the Operating Partnership (the “Series A Preferred Units”), which have economic interests that are substantially similar to the designations, preferences and other rights of Series A Preferred Stock. The Company, acting through the Operating Partnership, used the net proceeds from such contribution for general corporate purposes, including purchases of additional properties and other real estate and real estate-related assets.

Series A Preferred Stock - Terms

Holders of Series A Preferred Stock are entitled to cumulative dividends in the amount of $1.84375 per share each year, which is equivalent to the rate of 7.375% of the $25.00 liquidation preference per share per annum. The Series A Preferred Stock has no stated maturity and will remain outstanding indefinitely unless redeemed, converted or otherwise repurchased. Except in limited circumstances relating to the Company's qualification as a REIT for U.S. federal income tax purposes, and as described in the articles supplementary governing the terms of the Series A Preferred Stock (the “Articles Supplementary”), the Series A Preferred Stock is not redeemable prior to September 17, 2026.

On and after September 17, 2026, at any time and from time to time, the Series A Preferred Stock will be redeemable in whole or in part, at the Company's option, at a cash redemption price of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date. In addition, upon the occurrence of a Delisting Event or a Change of Control (each as defined in the Articles Supplementary), the Company may, subject to certain conditions, at its option, redeem the Series A Preferred Stock, in whole or in part, (i) after the first date on which the Delisting Event occurred or (ii) on, or within 120 days after, the first date on which the Change of Control occurred, as applicable, by paying the liquidation preference of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not authorized or declared), if any, to, but not including, the redemption date.

Upon the occurrence of a Change of Control during a continuing Delisting Event, unless the Company has elected to exercise its redemption right, holders of the Series A Preferred Stock will have certain rights to convert the Series A Preferred Stock into shares of the Company’s Class C common stock. In addition, upon the occurrence of a Delisting Event, the dividend rate will be increased on the day after the occurrence of the Delisting Event by 2.00% per annum to the rate of 9.375% of the $25.00 liquidation preference per share per annum (equivalent to $2.34375 per share each year) from and after the date of the Delisting Event. Following the cure of such Delisting Event, the dividend rate will revert to the rate of 7.375% of the $25.00 liquidation preference per share per annum. The necessary conditions to convert the Series A Preferred Stock into the Company's Class C common stock have not been met as of June 30, 2022.

The Series A Preferred Stock ranks senior to the Company's Class C common stock with respect to dividend rights and rights upon the Company’s voluntary or involuntary liquidation, dissolution or winding up.

Voting rights for holders of Series A Preferred Stock exist primarily with respect to the ability to elect two additional directors to the board of directors if six or more quarterly dividends (whether or not authorized or declared or consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s charter (which includes the Articles Supplementary) that materially and adversely affect the rights of the Series A Preferred Stock or create additional classes or series of shares of the Company’s capital stock that are senior to the Series A Preferred Stock. Other than the limited circumstances described above and in the Articles Supplementary, holders of Series A Preferred Stock do not have any voting rights.

Series A Preferred Stock Dividend

Dividends on the Company's Series A Preferred Stock accrue in an amount equal to $1.84375 per share each year ($0.460938 per share per quarter) to holders of Series A Preferred Stock, which is equivalent to 7.375% of the $25.00 liquidation preference per share per annum. Dividends on the Series A Preferred Stock are cumulative and payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not a business day, the next succeeding business day) to holders of record on the applicable record date. Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock become part of the liquidation preference thereof.

On November 11, 2021, the Company’s board of directors declared Series A Preferred Stock distributions payable of $1,065,278 for the fourth quarter of 2021, including the $143,403 of accrued dividends as of September 30, 2021, all of which were paid on January 18, 2022. On March 18, 2022, the Company’s board of directors declared Series A Preferred Stock dividends payable of $921,875 for the first quarter of 2022, which was paid on April 15, 2022. On June 15, 2022, the Company’s board of directors declared Series A Preferred Stock dividends payable of $921,875 for the second quarter of 2022. This amount was accrued as of June 30, 2022 and paid on July 15, 2022 (see Note 14).

Common Stock Listed Offering

On February 10, 2022, the Company and the Operating Partnership entered into an underwriting agreement (the “Class C Common Stock Underwriting Agreement”) with B. Riley Securities, Inc., as the underwriter listed on Schedule I thereto, pursuant to which the Company agreed to issue and sell 40,000 shares of the Company’s Class C common stock in an underwritten Listed Offering at a price per share of $25.00. On February 15, 2022, the Company completed the Listed Offering of its Class C common stock, and in connection with the Listed Offering, the Company sold to Mr. Wirta, the Company’s former Chairman, all 40,000 shares of its Class C common stock at $25.00 per share for aggregate net proceeds of $114,500, after deducting the underwriting discount of $70,000, and other offering costs of $815,500. The primary purpose of the Listed Offering was to provide liquidity to the Company’s existing stockholders. The shares of Class C common stock began trading on the NYSE on February 11, 2022. In connection with the Listed Offering and upon the listing on the NYSE, each share of the Company's Class S common stock was converted into a share of Class C common stock.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

The Company pays the members of its board of directors who are not executive officers for services rendered through cash payments and by issuing shares of Class C common stock to them. Total fees incurred and paid or accrued for board services by the Company for the three and six months ended June 30, 2022 and 2021, are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Board of Directors Compensation	2022		2021		2022		2021
Payments for services rendered	$	67,500	$	60,000	$	135,000	$	60,000
Value of shares issued for services rendered	82,500		110,000		165,000		180,000
Total	$	150,000	$	170,000	$	300,000	$	240,000
Number of shares issued for services rendered	4,666		4,470		9,265		7,510

Fees incurred for board services for the three months ended June 30, 2022 were paid in cash and shares were issued on July 7, 2022 based on the closing price of the Company’s Class C common stock on June 30, 2022.

Transactions with Other Related Parties

As discussed in Note 3, on January 31, 2022, the Company acquired an industrial property in Saint Paul, Minnesota, which is leased to Kalera, Inc. The acquisition of the Kalera, Inc. property was introduced to the Company by Curtis B. McWilliams, one of the Company's independent directors. Since Mr. McWilliams was serving as the Interim Chief Executive Officer of Kalera, Inc. at the time of the transaction, all of the disinterested members of the Company's board of directors approved this transaction.

Related Party Transactions with Unconsolidated Investment in a Real Estate Property

The Company's taxable REIT subsidiary serves as the asset manager of the TIC Interest property and earned asset management fees of $65,993, including the Company's share which was $47,984 for both of the three months ended June 30, 2022 and 2021, respectively, and $131,986, including the Company's share which was $95,967 for both of the six months ended June 30, 2022 and 2021, respectively.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Environmental

As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities.

Tenant Improvements

Pursuant to lease agreements, as of June 30, 2022 and December 31, 2021, the Company had obligations to pay $609,788 and $189,136, respectively, for on-site and tenant improvements to be incurred by tenants. As of June 30, 2022 and December 31, 2021, the Company had no restricted cash and $2,271,462 of restricted cash, respectively, held to fund other building improvements and leasing commissions. Pursuant to the refinancing of the related mortgage notes payable on January 18, 2022 as discussed in Note 7, the restricted cash as of December 31, 2021 was released.

Legal Matters

From time-to-time, the Company may become party to legal proceedings that arise in the ordinary course of its business. The Company, including its subsidiaries, is not a party to any legal proceeding, nor is the Company aware of any pending or threatened litigation that could have a material adverse effect on the Company’s business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

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OPERATING PARTNERSHIP UNITS

6 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

OPERATING PARTNERSHIP UNITS

OPERATING PARTNERSHIP UNITS

Class M OP Units

On September 19, 2019, the Company, the Operating Partnership, BrixInvest and Daisho OP Holdings, LLC, a formerly wholly owned subsidiary of BrixInvest (“Daisho”) which was spun off from BrixInvest on December 31, 2019, entered into the Contribution Agreement pursuant to which the Company agreed to acquire substantially all of the net assets of BrixInvest in exchange for 657,949.5 units of Class M limited partnership interest in the Operating Partnership (“Class M OP Units”) and assumed certain liabilities (the “Self-Management Transaction”). As a result of the Self-Management Transaction, the Company became self-managed and eliminated all fees for acquisitions, dispositions and management of its properties, which were previously paid to its former external advisor. The consideration transferred as of December 31, 2019 was determined to have a fair value of $50,603,000 based on a probability weighted analysis of achieving the requisite assets under management (“AUM”) and adjusted funds from operations (“AFFO”) hurdles.

The Class M OP Units were issued to Daisho on December 31, 2019 in connection with the Self-Management Transaction and are non-voting, non-dividend accruing, and were not able to be converted or exchanged prior to the one-year anniversary of the Self-Management Transaction. Investors holding units in BrixInvest received Daisho units in a ratio of 1:1 for an aggregate of 657,949.5 Daisho units. During 2020, Daisho distributed the Class M OP Units to its members. The Class M OP Units are convertible into units of Class C limited partnership interest in the Operating Partnership (“Class C OP Units”) at a conversion ratio of 1.6667 Class C OP Units for each one Class M OP Unit, subject to a reduction in the conversion ratio (which reduction will vary depending upon the amount of time held) if the exchange occurs prior to the four-year anniversary of the completion of the Self-Management Transaction.

In the event that the Class M OP Units are converted into Class C OP Units prior to December 31, 2023, such Class M OP Units shall be exchanged at the rate indicated below:

Date of Exchange	Early Conversion Rate
From December 31, 2020 to December 30, 2021	50% of the Class M conversion ratio
From December 31, 2021 to December 30, 2022	60% of the Class M conversion ratio
From December 31, 2022 to December 30, 2023	70% of the Class M conversion ratio

As of June 30, 2022, no Class M OP Units had been converted to Class C OP Units.

The Class M OP Units are eligible for an increase in the conversion ratio (conversion ratio enhancement) if the Company achieves both of the targets for AUM and AFFO in a given year as set forth below:

	Hurdles
	AUM		AFFO		Class M
	($ in billions)		Per Share ($)		Conversion Ratio
Initial Conversion Ratio					1:1.6667
Fiscal Year 2021	$	0.860	$	1.77	1:1.9167
Fiscal Year 2022	$	1.175	$	1.95	1:2.5000
Fiscal Year 2023	$	1.551	$	2.10	1:3.0000

The AUM and AFFO per share hurdles for the Class M OP Units were not met for fiscal year 2021.

Based on the current conversion ratio of 1.6667 Class C OP Units for each one Class M OP Unit, if a Class M OP Unit is converted on or after December 31, 2023, and based on the NYSE closing share price of $17.68 as of June 30, 2022, a Class M OP Unit would be valued at $29.47. This value does not reflect the early conversion rate or the future conversion enhancement ratio of the Class M OP Units, as discussed above, and the units of Class P limited partnership interest in the Operating Partnership (“Class P OP Units”), as discussed below.

Class P OP Units

The Company issued the Class P OP Units described below in connection with the Self-Management Transaction. The Class P OP Units are intended to be treated as “profits interests” in the Operating Partnership, which are non-voting, non-dividend accruing, and are not able to be transferred or exchanged prior to the earlier of (1) March 31, 2024, (2) a change of control (as defined in the Third Amended and Restated Limited Partnership Agreement of the Operating Partnership (as amended, the “Operating Partnership Agreement”)), or (3) the date of the recipient's involuntary termination (as defined in the relevant award agreement for the Class P OP Units) (collectively, the “Lockup Period”). Following the expiration of the Lockup Period, the Class P OP Units are convertible into Class C OP Units at a conversion ratio of 1.6667 Class C OP Units for each one Class P OP Unit; provided, however, that the foregoing conversion ratio shall be subject to increase on generally the same terms and conditions as the Class M OP Units, as set forth above.

The AUM and AFFO per share hurdles for the Class P OP Units were not met for fiscal year 2021. The Company will adjust stock compensation expense prospectively if the future conversion enhancement ratio is achieved during fiscal 2022 or 2023.

The Company issued a total of 56,029 Class P OP Units to Aaron S. Halfacre, the Company’s Chief Executive Officer and President, and Raymond J. Pacini, the Company’s Chief Financial Officer, including 26,318 Class P OP Units issued in exchange for Messrs. Halfacre's and Pacini's agreements to forfeit a similar number of restricted units in BrixInvest in connection with the Self-Management Transaction. The remaining 29,711 Class P OP Units were issued to these executives as signing bonuses and as a portion of their incentive compensation for 2020 in connection with their entry into restrictive covenant agreements. The 29,711 Class P OP Units were valued based on the estimated NAV per share of $30.48 (unaudited) when issued on December 31, 2019 and the expected minimum conversion ratio of 1.6667 Class C OP Units for each one Class P OP Unit, which resulted in a valuation of $1,509,319. This amount is amortized on a straight-line basis over 51 months through March 31, 2024, the expected vesting date of the units, as a periodic charge to stock compensation expense. The Company concluded that as of each quarter end, including June 30, 2022, achieving the performance target for the Class P OP Units is not deemed probable and will adjust compensation expense prospectively if achieving the enhancement is deemed probable through the remainder of the vesting period.

During the three months ended June 30, 2022 and 2021, the Company amortized and charged $88,784 and $88,783, respectively, to stock compensation expense and during the six months ended June 30, 2022 and 2021, the Company amortized and charged $177,567 and $177,567, respectively, to stock compensation expense. The unamortized value of these units was $621,483 as of June 30, 2022.

Under the Operating Partnership Agreement, once the Class M OP Units or Class P OP Units are converted into Class C OP Units, they will be exchangeable for the Company’s shares of Class C common stock on a 1-for-1 basis, or for cash at the sole and absolute discretion of the Company. The Company recorded the ownership interests of the Class M OP Units and Class P OP Units as noncontrolling interests in the Operating Partnership, representing a combined total of approximately 13% of the equity in the Operating Partnership on December 31, 2019. As of June 30, 2022, these interests represent a combined total of approximately 11.6% of the equity in the Operating Partnership.

Class R OP Units

On January 25, 2021, the compensation committee of the Company's board of directors recommended, and the board of directors approved, the grant of 40,000 units of Class R limited partnership interest in the Operating Partnership (“Class R OP Units”) to Mr. Halfacre in recognition of his voluntary reduction in his 2020 compensation plus 170,667 Class R OP Units to Mr. Halfacre as equity incentive compensation for the next three years, and the grant of 33,333 Class R OP Units to Mr. Pacini as equity incentive compensation for the next three years. An additional 116,000 Class R OP Units were granted to the remainder of the employees of the Company for a total of 360,000 Class R OP Units granted. All Class R OP Units granted vest and are mandatorily convertible into Class C OP Units on March 31, 2024 at a conversion ratio of 1:1, which conversion ratio can increase to 1:2.5 Class C OP Units if the Company generates funds from operations of $1.05, or more, per weighted average fully-diluted share outstanding for the year ending December 31, 2023. The Company concluded that as of each quarter end, including June 30, 2022, achieving the performance target to trigger the increased conversion ratio for the Class R OP Units is not deemed probable. The Company will adjust compensation expense prospectively if achieving the enhancement is deemed probable through the remainder of the vesting period.

Stock compensation expense related to the Class R OP Units is based on the estimated value per share, including a discount for the illiquid nature of the underlying equity, and is being recognized over the vesting period. Of the 360,000 Class R OP Units granted, due to the departure of employees, 26,657 units were forfeited as of December 31, 2021 and an additional 4,333 units were forfeited during the three and six months ended June 30, 2022. The cumulative number of units forfeited through June 30, 2022 aggregated 30,990 units.

During the three months ended June 30, 2022 and 2021, the Company amortized and charged to stock compensation expense $508,463 and $568,304, respectively, and during the six months ended June 30, 2022 and 2021, the Company amortized and charged to stock compensation expense $849,045 and $1,014,165, respectively, for the Class R OP Units. The unamortized value of the remaining 329,010 units was $3,559,243 as of June 30, 2022.

Class C OP Units

On January 18, 2022, the Company completed the acquisition of a KIA auto dealership property in an “UPREIT” transaction pursuant to a contribution agreement whereby the seller received 1,312,382 Class C OP Units based on the terms of the Operating Partnership Agreement and an agreed upon value of $25.00 per unit, representing approximately 47% of the property’s value (the “UPREIT Transaction”). 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 the Company has the option to redeem the units for cash or shares of Class C common stock. The Class C OP Units received $377,301 and $628,840 in distributions during the three and six months ended June 30, 2022, respectively, and were allocated $219,214 and $(1,708,815) of the net income (loss) for the three and six months ended June 30, 2022, respectively.

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EARNINGS (LOSS) PER SHARE

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

(LOSS) PER SHARE

The following table presents the computation of the Company's basic and diluted net income (loss) per share attributable to common stockholders for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator - Basic:
Net income (loss)	$	2,390,344	$	(1,001,843)	$	(9,682,820)	$	(1,905,491)
Net (income) loss attributable to noncontrolling interest in Operating Partnership	(219,214)		—		1,708,815		—
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders	$	1,249,255	$	(1,001,843)	$	(9,817,755)	$	(1,905,491)
Numerator - Diluted:
Net income (loss)	$	2,390,344	$	(1,001,843)	$	(9,682,820)	$	(1,905,491)
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders	$	1,468,469	$	(1,001,843)	$	(11,526,570)	$	(1,905,491)
Denominator:
Weighted average shares outstanding - basic	7,478,973		7,614,196		7,505,673		7,630,401
Operating Partnership Units - Class C	1,312,382		—		—		—
Operating Partnership Units - Classes M, P and R	1,430,135		—		—		—
Weighted average shares outstanding - diluted	10,221,490		7,614,196		7,505,673		7,630,401
Earnings (loss) per share attributable to common stockholders:
Basic	$	0.17	$	(0.13)	$	(1.31)	$	(0.25)
Diluted	$	0.14	$	(0.13)	$	(1.31)	$	(0.25)

During the three months ended June 30, 2021, the weighted average dilutive effect of 1,219,789 shares and during the six months ended June 30, 2022 and 2021, the weighted average dilutive effect of 2,735,350 shares and 1,249,964 shares, respectively, related to units of limited partnership interest in the Operating Partnership as discussed in Notes 12 and 13 were excluded from the computation of Diluted EPS because their effect would be anti-dilutive. There were no other outstanding securities or commitments to issue common stock that would have a dilutive effect for the periods then ended.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company evaluates subsequent events until the date the unaudited condensed consolidated financial statements are issued. Significant subsequent events are described below:

Preferred Dividends

On July 15, 2022, the Company paid its Series A Preferred Stock dividends of $921,875 for the second quarter of 2022, which were declared by the Company’s board of directors on June 15, 2022.

Common Stock and Class C OP Unit Distributions

On March 18, 2022, the Company's board of directors authorized monthly distributions payable to common stockholders and the Class C OP Unit holder of record as of June 30, 2022, which were paid on July 25, 2022. The current monthly distribution amount of $0.09583 per share represents an annualized distribution rate of $1.15 per share of common stock.

On June 15, 2022, the Company’s board of directors authorized monthly distributions of $0.09583 per share payable to common stockholders and the Class C OP Unit holder of record as of July 29, 2022, August 31, 2022 and September 30, 2022, which will be paid on or about August 25, 2022, September 26, 2022 and October 25, 2022, respectively.

Share Repurchase Program

Between July 1, 2022 and August 9, 2022, the Company repurchased an additional 32,713 shares of its Class C common stock for a total of $503,885 under its share repurchase program and these shares are held as treasury stock. Since inception of the Company’s share repurchase program in February 2022 through August 9, 2022, the Company has repurchased a total of 220,143 shares for a total of $3,757,744, for an average cost of $17.07 per share.

Real Estate Investment Acquisitions

On July 15, 2022, the Company acquired two industrial properties leased to New Vision Industries, LLC and Juniper Ring Acquisitions, LLC in a sale and leaseback transaction (the “Producto Acquisition”), with newly executed 20-year leases and 2.00% annual rent increases. The leases are guaranteed by the parent company of the lessees, Producto Holdings, LLC. These companies specialize in manufacturing, machining and engineering of precision tools for very diverse product sectors including medical, semiconductor, aerospace, ammunition and defense markets. These properties are located in upstate New York and the aggregate purchase price was $5,343,862, which reflects an initial capitalization rate of 7.21%. The initial capitalization rate is calculated by dividing the initial annual cash rent by the purchase price. The Company funded the purchase and related closing costs with a $5,000,000 draw on the Company’s Credit Facility and available cash on hand.

On July 26, 2022 and August 4, 2022, the Company acquired an aggregate of four industrial properties leased to Valtir, LLC (formerly known as Trinity Highway Products, LLC) in a sale and leaseback transaction, with a newly executed 25-year master lease for two of the properties, a newly executed 15-year master lease for the other two properties and 2.25% annual rent increases (the “Valtir Acquisition”). Valtir, LLC is an industry-leading manufacturer of commercial highway products with a 49-year operating history. These properties are used in manufacturing and distribution, and are located in South Carolina, Ohio, Texas and Utah. The aggregate purchase price was $23,375,000, which reflects an initial capitalization rate of 7.70%. The Company funded the purchase and related closing costs with a $23,000,000 draw on the Company’s Credit Facility and available cash on hand.

Pending Real Estate Disposition

On July 12, 2022, the Company entered into a purchase and sale agreement to sell its property in Las Vegas, Nevada that is leased to Williams Sonoma for $9,300,000. The buyer submitted a non-refundable deposit of $500,000 into escrow on July 15, 2022 and the sale is scheduled to close by August 26, 2022, although there can be no assurances that this transaction will be completed on schedule or at all.

Credit Facility

On July 14, 2022, the Company drew $5,000,000 on its Revolver in connection with the Producto Acquisition and on July 23, 2022, the Company drew $23,000,000 on its Revolver in connection with the Valtir Acquisition, resulting in a balance of $34,775,000 on the Revolver as of July 31, 2022. As a result of the addition of these properties to the borrowing base and the July 2022 draws on the Revolver, approximately $52,000,000 is available to be drawn on the Revolver based on the value of the Company’s properties included in the borrowing base as of the filing date of this Quarterly Report on Form 10-Q. The Revolver can be drawn for general corporate purposes, including pending and future acquisitions, subject to compliance with covenants.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial statements as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC. Accordingly, they do not contain all information and footnotes required by GAAP for annual financial statements pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Such unaudited condensed consolidated financial statements and accompanying notes are the representations of the Company’s management, which is responsible for their integrity and objectivity. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 23, 2022.

The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which are normal and recurring, necessary to fairly state the Company's financial position, results of operations and cash flows. All significant intercompany balances and transactions are eliminated in consolidation. The unaudited condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements.

Variable Interest Entities

Variable Interest EntitiesThe FASB provides guidance for determining whether an entity is a variable interest entity (a “VIE”). VIEs are defined as entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A VIE is required to be consolidated by its primary beneficiary, which is the party that (i) has the power to control the activities that most significantly impact the VIE’s economic performance; and (ii) has the obligation to absorb losses, or the right to receive benefits, of the VIE that could potentially be significant to the VIE.

Use of Estimates

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements and the accompanying notes thereto in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. These estimates are based on historical experience and, in some cases, assumptions based on current and future market experience. Actual results may differ from those estimates.

Noncontrolling Interests in the Operating Partnership

Noncontrolling Interests in the Operating Partnership

The Company accounts for the noncontrolling interests in its Operating Partnership in accordance with the related accounting guidance. Due to the Company's control of the Operating Partnership through its general partnership interest therein and the limited rights of the limited partners, the Operating Partnership, including its wholly-owned subsidiaries, are consolidated with the Company, and the limited partner interests not held by the Company are reflected as noncontrolling interests in the accompanying unaudited condensed consolidated balance sheets and statements of equity. Other than the noncontrolling interests related to an “UPREIT” transaction as discussed in Note 12, all other noncontrolling interests currently represent non-voting, non-distribution accruing interests with no allocation of profits or losses, but have various conversion rights to obtain future rights to distributions and allocation of profits and losses as discussed in Note 12.

Business Combinations

Business Combinations

The Company accounts for business combinations in accordance with FASB ASC 805, Business Combinations (“ASC 805”), and applicable Accounting Standards Updates (each, an “ASU”), whereby the total consideration transferred is allocated to the assets acquired and liabilities assumed, including amounts attributable to any non-controlling interests, when applicable, based on their respective estimated fair values as of the date of acquisition. Goodwill represents the excess of consideration transferred over the estimated fair value of the net assets acquired in a business combination.

ASC 805 defines a business as an integrated set of activities and assets (collectively, a “set”) that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants. To be considered a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. ASC 805 provides a practical screen to determine when a set would not be considered a business. If the screen is not met and further assessment determines that the set is not a business, then the set is an asset acquisition. The primary difference between a business combination and an asset acquisition is that an asset acquisition requires cost accumulation and allocation at relative fair value whereas in a business combination the total consideration transferred is allocated among the fair value of the identifiable tangible and intangible assets and liabilities assumed. Acquisition costs are capitalized for an asset acquisition and expensed for a business combination

Revenue Recognition

Revenue Recognition

The Company accounts for revenue in accordance with FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”), which includes revenue generated by sales of real estate, other operating income and tenant reimbursements for substantial services earned at the Company’s properties. Such revenues are recognized when the services are provided and the performance obligations are satisfied. Tenant reimbursements, consisting of amounts due from tenants for common area maintenance, property taxes and other recoverable costs, are recognized in rental income subsequent to the adoption of Topic 842, as discussed below, in the period the recoverable costs are incurred. Tenant reimbursements, for which the Company pays the associated costs directly to third-party vendors and is reimbursed by the tenants, are recognized and recorded on a gross basis.

The Company accounts for leases in accordance with FASB ASU No. 2016-02, Leases (“Topic 842”), and the related FASB ASU Nos. 2018-10, 2018-11, 2018-20 and 2019-01, which provide practical expedients, technical corrections and improvements for certain aspects of ASU No. 2016-02 (collectively “Topic 842”). Topic 842 established a single comprehensive model for entities to use in accounting for leases. Topic 842 applies to all entities that enter into leases. Lessees are required to report assets and liabilities that arise from leases. Lessor accounting has largely remained unchanged; however, certain refinements were made to conform with revenue recognition guidance, specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. Topic 842 impacts the Company's accounting for leases primarily as a lessor. Topic 842 also impacts the Company's accounting as a lessee; however, such impact is considered not material.

As a lessor, the Company's leases with tenants generally provide for the lease of real estate properties, as well as common area maintenance, property taxes and other recoverable costs. To reflect recognition as one lease component, rental income and tenant reimbursements and other lease related property income that meet the requirements of the practical expedient provided by ASU No. 2018-11 have been combined under rental income in the Company's unaudited condensed consolidated statements of operations. For the three months ended June 30, 2022 and 2021, tenant reimbursements included in rental income amounted to $1,400,428 and $1,540,380, respectively, and for the six months ended June 30, 2022 and 2021, tenant reimbursements included in rental income amounted to $3,450,799 and $3,068,172, respectively.

The Company recognizes rental income from tenants under operating leases on a straight-line basis over the noncancelable term of the lease when collectability of such amounts is reasonably assured. Recognition of rental income on a straight-line basis includes the effects of rental abatements, lease incentives and fixed and determinable increases in lease payments over the lease term. If the lease provides for tenant improvements, management of the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or by the Company.

When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical use of the leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance (including amounts that the tenant can take in the form of cash or a credit against its rent) that is funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. Tenant improvement ownership is determined based on various factors including, but not limited to:

•whether the lease stipulates how a tenant improvement allowance may be spent;

•whether the amount of a tenant improvement allowance is in excess of market rates;

•whether the tenant or landlord retains legal title to the improvements at the end of the lease term;

•whether the tenant improvements are unique to the tenant or general-purpose in nature; and

•whether the tenant improvements are expected to have any residual value at the end of the lease.

Tenant reimbursements of real estate taxes, insurance, repairs and maintenance, and other operating expenses are recognized as revenue in the period the expenses are incurred and presented gross if the Company is the primary obligor and, with respect to purchasing goods and services from third-party suppliers, has discretion in selecting the supplier and bears the associated credit risk. In instances where the operating lease agreement has an early termination option, the termination penalty is based on a predetermined termination fee or based on the unamortized tenant improvements and leasing commissions.

The Company evaluates the collectability of rents and other receivables on a regular basis based on factors including, among others, payment history, credit rating, the asset type, and current economic conditions. If the Company’s evaluation of these factors indicates it may not recover the full value of the receivable, it provides an allowance against the portion of the receivable that it estimates may not be recovered. This analysis requires the Company to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected.

Bad Debts and Allowances for Tenant and Deferred Rent Receivables, Gain or Loss on Sale of Real Estate Investments

Bad Debts and Allowances for Tenant and Deferred Rent Receivables

The Company's determination of the adequacy of its allowances for tenant receivables includes a binary assessment of whether or not the amounts due under a tenant’s lease agreement are probable of collection. For such amounts that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For such amounts that are deemed not probable of collection, revenue is recorded as the lesser of (i) the amount which would be recognized on a straight-line basis or (ii) cash that has been received from the tenant, with any tenant and deferred rent receivable balances charged as a direct write-off against rental income in the period of the change in the collectability determination. In addition, for tenant and deferred rent receivables deemed probable of collection, the Company also may record an allowance under other authoritative GAAP depending upon the Company's evaluation of the individual receivables, specific credit enhancements, current economic conditions, and other relevant factors. Such allowances are recorded as increases or decreases through rental income in the Company's unaudited condensed consolidated statements of operations.

With respect to tenants in bankruptcy, management makes estimates of the expected recovery of pre-petition and post-petition claims in assessing the estimated collectability of the related receivable. In some cases, the ultimate resolution of these claims can exceed one year. When a tenant is in bankruptcy, the Company will record a bad debt allowance for the tenant’s receivable balance and generally will not recognize subsequent rental income until cash is received or until the tenant is no longer in bankruptcy and has the ability to make rental payments.

Gain or Loss on Sale of Real Estate Investments

The Company recognizes gain or loss on sale of real estate property when the Company has executed a contract for sale of the property, transferred controlling financial interest in the property to the buyer and determined that it is probable that the Company will collect substantially all of the consideration for the property. The Company's real estate property sale transactions during the three and six months ended June 30, 2022 and 2021 met these criteria at closing. When properties are sold, operating results of the properties remain in continuing operations, and any associated gain or loss from the disposition is included in gain or loss on sale of real estate investments in the Company’s accompanying unaudited condensed consolidated statements of operations.

Impairment of Investment in Real Estate Properties

Impairment of Investment in Real Estate Properties

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of real estate assets may not be recoverable. When indicators of potential impairment are present that indicate that the carrying amounts of real estate assets may not be recoverable, management assesses whether the carrying value of the assets will be recovered through the future undiscounted operating cash flows expected from the use of and eventual disposition of the property. If, based on the analysis, the Company does not believe that it will be able to recover the carrying value of the asset, the Company records an impairment charge to the extent the carrying value exceeds the estimated fair value of the asset.

Other Comprehensive Income (Loss)

Other Comprehensive Income (Loss)

For all periods presented, other comprehensive income (loss) is the same as net income (loss).

Treasury Stock

Treasury Stock

Effective on the date of the Listed Offering, the Company accounts for repurchased shares of its Class C common stock as treasury stock. Treasury shares are recorded at cost and are included as a component of equity in the Company's unaudited condensed consolidated balance sheet as of June 30, 2022.

Per Share Data

Per Share Data

The Company reports a dual presentation of basic earnings per share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic EPS excludes dilution and is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted EPS uses the treasury stock method or the if-converted method, where applicable, to compute for the potential dilution that would occur if dilutive securities or commitments to issue common stock were exercised. For the three and six months ended June 30, 2022 and 2021, the Company presented both Basic EPS and Diluted EPS reflecting its reported net income (loss) attributable to common stockholders for each period.

As discussed in Note 1, in connection with and upon listing on the NYSE, each share of the Company's Class S common stock converted into a share of Class C common stock. Prior to the conversion of the Company's Class S common stock into Class C common stock, application of the two-class method for allocating net loss attributable to common stockholders in accordance with the provisions of ASC 260, Earnings per Share, would have resulted in basic and diluted net loss of $0.13 per share of Class C common stock for the three months ended June 30, 2021 and basic and diluted net loss of $0.13 per share of Class S common stock for the three months ended June 30, 2021. The two-class method would have resulted in a basic and diluted net loss of $0.25 per share of Class C common stock for the six months ended June 30, 2021 and basic and diluted net loss of $0.25 per share of Class S common stock for the six months ended June 30, 2021.

Fair Value Disclosures

Fair Value Disclosures

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an existing price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy, which is based on three levels of inputs, the first two of which are considered observable and the last unobservable, that may be used to measure fair value, is as follows:

Level 1: quoted prices in active markets for identical assets or liabilities;

Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value:

Cash and cash equivalents, restricted cash, receivable from early termination of lease, tenant receivables, prepaid expenses and other assets and accounts payable, accrued and other liabilities: These balances approximate their fair values due to their short maturities.

Derivative Instruments: The Company’s derivative instruments are presented at fair value in the accompanying unaudited condensed consolidated balance sheets. The valuation of these instruments is determined using a proprietary model that utilizes observable inputs. As such, the Company classifies these inputs as Level 2 inputs. The proprietary model uses the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and volatility. The fair values of interest rate swaps are estimated using the market standard methodology of netting the discounted fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of interest rates (forward curves) derived from observable market interest rate curves. In addition, credit valuation adjustments, which consider the impact of any credit risks to the contracts, are incorporated in the fair values to account for potential nonperformance risk.

Goodwill: The fair value measurement of goodwill is considered a Level 3 nonrecurring fair value measurement. For goodwill, fair value measurement involves the determination of fair value of a reporting unit.

Credit facilities: The fair values of the Company’s credit facilities approximate their carrying values as their interest rates and other terms are comparable to those available in the marketplace for similar credit facilities.

Mortgage notes payable: The fair values of the Company’s mortgage notes payable are estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs.

Related party transactions: The Company has concluded that it is not practical to determine the estimated fair value of related party transactions. Disclosure rules for fair value measurements require that for financial instruments for which it is not practicable to estimate fair value, information pertinent to those instruments be disclosed. Further information as to these financial transactions with related parties is included in Note 10.

Restricted Cash

Restricted Cash

Restricted cash as of December 31, 2021 amounted to $2,441,970 for the mortgages related to properties discussed below and other lender reserves. There were no restricted cash balances as of June 30, 2022.

Under the terms of the Company’s June 2021 refinancing of mortgages on its properties leased to Northrop Grumman and L3Harris Technologies, Inc. (“L3Harris”) with Banc of California as described in Note 7, the Company established restricted cash accounts at Banc of California with $1,400,000 and $1,000,000 held for the Northrop Grumman and L3Harris properties, respectively, to fund building improvements, tenant improvements and leasing commissions. Subsequent to the origination of the loans, $128,538 was released to fund a leasing commission, resulting in $2,271,462 remaining as aggregate restricted cash as of December 31, 2021. Pursuant to the refinancing of the Northrop Grumman and L3Harris mortgages on January 18, 2022 as further discussed in Note 7, these funds became unrestricted. Additional restricted cash balances of $170,508 as of December 31, 2021 were also released during the first three months of 2022 due to refinancing.

Real Estate Investments Held for Sale

Real Estate Investments Held for Sale

The Company generally considers a real estate investment to be “held for sale” when the following criteria are met: (i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value, (iv) the sale of the property within one year is considered probable and (v) significant changes to the plan to sell are not expected. Real estate that is held for sale and its related assets are classified as “real estate investments held for sale, net” and “assets related to real estate investment held for sale,” respectively, in the accompanying unaudited condensed consolidated balance sheets. Mortgage notes payable and other liabilities related to real estate investments held for sale are classified as “mortgage notes payable related to real estate investments held for sale, net” and “liabilities related to real estate investments held for sale,” respectively, in the accompanying unaudited condensed consolidated balance sheets. Real estate investments classified as held for sale are no longer depreciated and are reported at the lower of their carrying value or their estimated fair value less estimated costs to sell. Operating results of properties that were classified as held for sale in the ordinary course of business are included in continuing operations in the Company’s accompanying unaudited condensed consolidated statements of operations.

Goodwill

Goodwill

The Company records goodwill when the purchase price of a business combination exceeds the estimated fair value of net identified tangible and intangible assets acquired. The Company evaluates goodwill and other intangible assets for possible impairment in accordance with ASC 350, Intangibles–Goodwill and Other, on an annual basis, or more frequently when events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting unit has declined below its carrying value. If the carrying amount of the reporting unit exceeds its fair value, an impairment charge is recognized.

In assessing goodwill impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that the fair value of a reporting unit is less than its carrying amount. The Company’s qualitative assessment of the recoverability of goodwill considers various macro-economic, industry-specific and company-specific factors. These factors include: (i) severe adverse industry or economic trends; (ii) significant company-specific actions, including exiting an activity in conjunction with restructuring of operations; (iii) current, historical or projected deterioration of the Company’s financial performance; or (iv) a sustained decrease in the Company’s market capitalization below its net book value. If, after assessing the totality of events or circumstances, the Company determines it is unlikely that the fair value of such reporting unit is less than its carrying amount, then a quantitative analysis is unnecessary. However, if the Company concludes otherwise, or if it elects to bypass the qualitative analysis, then it is required to perform a quantitative analysis that compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered impaired; otherwise, a goodwill impairment loss is recognized for the lesser of: (a) the amount that the carrying amount of a reporting unit exceeds its fair value; or (b) the amount of the goodwill allocated to that reporting unit.

Restricted Stock and Restricted Stock Unit Awards

Restricted Stock and Restricted Stock Unit Awards

The fair values of the Operating Partnership's units or restricted stock unit awards issued or granted by the Company are based on an estimated NAV per share of the Company’s common stock on the date of issuance or grant, adjusted for an illiquidity discount due to the illiquid nature of the underlying equity prior to the listing of the Company's Class C common stock on the NYSE. The fair value of future grants of the Operating Partnership's units or restricted stock unit awards will be determined based on the NYSE's market closing price of the Company's Class C common stock on the date of grant. Operating Partnership units issued as purchase consideration in connection with the Self-Management Transaction and UPREIT Transaction defined and discussed in Note 12 are recorded in equity under noncontrolling interests in the Operating Partnership in the Company's unaudited condensed consolidated balance sheets and statements of equity. For units granted to employees of the Company that are not included in the purchase consideration, the fair value of the award is amortized using the straight-line method over the requisite service period of the award, which is generally the vesting period (see Note 12). The Company has elected to record forfeitures as they occur.

The Company determines the accounting classification of equity instruments (e.g. restricted stock units) that are issued as purchase consideration or part of the purchase consideration in a business combination, as either liability or equity, by first assessing whether the equity instruments meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“ASC 480-10”), and then in accordance with ASC 815-40, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock (“ASC 815-40”). Under ASC 480-10, equity instruments are classified as liabilities if the equity instruments are mandatorily redeemable, obligate the issuer to settle the equity instruments or the underlying shares by paying cash or other assets, or must or may require an unconditional obligation that must be settled by issuing a variable number of shares.

If equity instruments do not meet liability classification under ASC 480-10, the Company assesses the requirements under ASC 815-40, which states that contracts that require or may require the issuer to settle the contract for cash are liabilities recorded at fair value, irrespective of the likelihood of the transaction occurring that triggers the net cash settlement feature. If the equity instruments do not require liability classification under ASC 815-40, in order to conclude equity classification, the Company assesses whether the equity instruments are indexed to its common stock and whether the equity instruments are classified as equity under ASC 815-40 or other applicable GAAP guidance. After all relevant assessments are made, the Company concludes whether the equity instruments are classified as liability or equity. Liability classified equity instruments are required to be accounted for at fair value both on the date of issuance and on subsequent accounting period ending dates, with all changes in fair value after the issuance date recorded in the statements of operations as a gain or loss. Equity classified equity instruments are accounted for at fair value on the issuance date with no changes in fair value recognized after the issuance date.

Reclassifications

Reclassifications

Certain prior year balance sheet, statement of operations and statement of cash flows accounts have been reclassified to conform with the current year presentation. The reclassification did not affect net loss in the prior year unaudited condensed consolidated statement of operations.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

New Accounting Standards Recently Issued and Adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 eases the potential burden in accounting for recognizing the effects of reference rate reform on financial reporting. Such challenges include the accounting and operational implications for contract modifications and hedge accounting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to loan and lease agreements, contracts, hedging relationships, and other transactions affected by reference rate reform. These provisions apply to contract modifications that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate expected to be discounted because of reference rate reform.

Qualifying modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate, and the modification would be considered “minor” so that any existing unamortized deferred loan origination fees and costs would carry forward and continue to be amortized. Qualifying modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for hedge accounting. ASU 2020-04 is effective as of March 12, 2020 through December 31, 2022, with adoption permitted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected, the amendments must be applied prospectively for all eligible contract modifications. The Company implemented ASU 2020-04 effective January 1, 2022 and the impact of such implementation was not material to the Company’s consolidated financial statements. On January 18, 2022, the Company repaid the four remaining loans existing as of December 31, 2021 which had LIBOR reference rates.

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REAL ESTATE INVESTMENTS, NET (Tables)

6 Months Ended

Jun. 30, 2022

Real Estate [Abstract]

Schedule of Real Estate Properties

The following table provides summary information regarding the Company’s operating properties as of June 30, 2022:

Property	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
Dollar General	Litchfield, ME	11/4/2016	Retail	$	1,281,812	$	—	$	116,302	$	(226,371)	$	1,171,743
Dollar General	Wilton, ME	11/4/2016	Retail	1,543,776		—		140,653		(289,706)		1,394,723
Dollar General	Thompsontown, PA	11/4/2016	Retail	1,199,860		—		106,730		(217,502)		1,089,088
Dollar General	Mt. Gilead, OH	11/4/2016	Retail	1,174,188		—		111,847		(208,535)		1,077,500
Dollar General	Lakeside, OH	11/4/2016	Retail	1,112,872		—		100,857		(214,022)		999,707
Dollar General	Castalia, OH	11/4/2016	Retail	1,102,086		—		86,408		(207,944)		980,550
Dollar General	Bakersfield, CA	12/31/2019	Retail	4,899,714		—		261,630		(367,831)		4,793,513
Dollar General	Big Spring, TX	12/31/2019	Retail	1,281,683		—		76,351		(127,422)		1,230,612
Dollar Tree	Morrow, GA	12/31/2019	Retail	1,320,367		—		73,298		(177,276)		1,216,389
Northrop Grumman	Melbourne, FL	3/7/2017	Office	13,571,660		—		1,469,737		(3,777,982)		11,263,415
Northrop Grumman Parcel	Melbourne, FL	6/21/2018	Land	329,410		—		—		—		329,410
exp US Services	Maitland, FL	3/27/2017	Office	6,069,180		—		388,248		(1,169,541)		5,287,887
Wyndham	Summerlin, NV	6/22/2017	Office	10,406,483		—		669,232		(1,701,960)		9,373,755
Williams Sonoma	Summerlin, NV	6/22/2017	Office	8,137,571		—		640,868		(1,524,998)		7,253,441
Husqvarna	Charlotte, NC	11/30/2017	Industrial	11,840,200		—		1,013,948		(1,649,292)		11,204,856
AvAir	Chandler, AZ	12/28/2017	Industrial	27,357,899		—		—		(3,152,243)		24,205,656
3M	DeKalb, IL	3/29/2018	Industrial	14,762,819		—		3,037,057		(5,330,050)		12,469,826
Cummins	Nashville, TN	4/4/2018	Office	14,538,528		—		1,566,997		(3,358,591)		12,746,934
Costco	Issaquah, WA	12/20/2018	Office	27,346,695		—		2,765,136		(4,611,675)		25,500,156
Taylor Fresh Foods	Yuma, AZ	10/24/2019	Industrial	34,194,369		—		2,894,017		(3,579,532)		33,508,854
Levins	Sacramento, CA	12/31/2019	Industrial	4,429,390		—		221,927		(551,521)		4,099,796
Labcorp	San Carlos, CA	12/31/2019	Industrial	9,672,174		—		408,225		(510,802)		9,569,597
GSA (MSHA)	Vacaville, CA	12/31/2019	Office	3,112,076		—		243,307		(346,287)		3,009,096
PreK Education	San Antonio, TX	12/31/2019	Retail	12,447,287		—		555,767		(1,251,024)		11,752,030
Solar Turbines	San Diego, CA	12/31/2019	Office	7,133,241		—		284,026		(680,451)		6,736,816
Wood Group	San Diego, CA	12/31/2019	Industrial	9,869,520		—		539,633		(1,004,879)		9,404,274
ITW Rippey	El Dorado, CA	12/31/2019	Industrial	7,071,143		—		304,387		(761,590)		6,613,940
Gap	Rocklin, CA	12/31/2019	Office	8,433,744		—		360,377		(1,209,435)		7,584,686
L3Harris	San Diego, CA	12/31/2019	Industrial	11,690,952		—		662,101		(1,148,834)		11,204,219
Sutter Health	Rancho Cordova, CA	12/31/2019	Office	29,587,023		—		1,616,610		(2,705,794)		28,497,839
Walgreens	Santa Maria, CA	12/31/2019	Retail	5,223,442		—		335,945		(332,402)		5,226,985
Raising Cane's	San Antonio, TX	7/26/2021	Retail	3,430,224		—		213,997		(111,417)		3,532,804
Arrow-TruLine	Archbold, OH	12/3/2021	Industrial	11,518,084		—		—		(224,513)		11,293,571
KIA	Carson, CA	1/18/2022	Retail	69,286,444		—		118,606		(486,687)		68,918,363
Kalera	Saint Paul, MN	1/31/2022	Industrial	3,690,009		4,429,000		—		(155,804)		7,963,205
Lindsay	Colorado Springs 1, CO	4/19/2022	Industrial	2,311,934		—		—		(12,150)		2,299,784
Lindsay	Colorado Springs 2, CO	4/19/2022	Industrial	3,314,406		—		—		(7,231)		3,307,175
Lindsay	Dacano, CO	4/19/2022	Industrial	5,558,622		—		—		(17,529)		5,541,093
Lindsay	Alachua, FL	4/19/2022	Industrial	8,518,123		—		—		(75,544)		8,442,579
Lindsay	Franklinton, NC	4/19/2022	Industrial	7,181,113		—		—		(33,306)		7,147,807
Lindsay	Canal Fulton 1, OH	4/19/2022	Industrial	11,345,533		—		—		(71,634)		11,273,899
Lindsay	Canal Fulton 2, OH	4/19/2022	Industrial	10,190,942		—		—		(102,162)		10,088,780
Lindsay	Rock Hill, SC	4/19/2022	Industrial	6,555,983		—		—		(35,051)		6,520,932
				$	435,042,581	$	4,429,000	$	21,384,224	$	(43,728,520)	$	417,127,285

Acquisitions

During the six months ended June 30, 2022, the Company acquired the following real estate properties:

Property and Location	Acquisition Date	Land		Buildings and Improvements		Equipment		Tenant Origination and Absorption Costs		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
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 $1,330,780 for funding ongoing building construction at the Lindsay property in Dacono, CO. This deposit is included in prepaid expenses and other assets in the accompanying unaudited condensed consolidated balance sheets.

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

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

Dispositions and Real Estate Investments Held for Sale

The dispositions during the six months ended June 30, 2022 and 2021 were as follows:

Six Months Ended June 30, 2022

Property	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sale Price		Gain on Sale
Bon Secours	Richmond, VA	2/11/2022	Office	72,890	$	10,200,000	$	179,404
Omnicare	Richmond, VA	2/11/2022	Flex	51,800	8,760,000		2,062,890
Texas Health	Dallas, TX	2/11/2022	Office	38,794	7,040,000		160,377
Accredo	Orlando, FL	2/24/2022	Office	63,000	14,000,000		4,998,106
EMCOR	Cincinnati, OH	6/29/2022	Office	39,385	6,525,000		1,002,101
				265,869	$	46,525,000	$	8,402,878

Six Months Ended June 30, 2021

Property	Location	Disposition Date	Property Type	Rentable Square Feet	Contract Sale Price		Gain on Sale
Chevron Gas Station	Roseville, CA	1/7/2021	Retail	3,300	$	4,050,000	$	228,769
EcoThrift	Sacramento, CA	1/29/2021	Retail	38,536	5,375,300		51,415
Chevron Gas Station	San Jose, CA	2/12/2021	Retail	1,060	4,288,888		9,458
Total				42,896	$	13,714,188	$	289,642

The following table summarizes the major components of assets and liabilities related to the four real estate investments held for sale as of December 31, 2021:

	December 31, 2021
Assets related to real estate investments held for sale:
Land, buildings and improvements	$	34,507,485
Tenant origination and absorption costs	3,064,371
Accumulated depreciation and amortization	(6,061,094)
Real estate investments held for sale, net	31,510,762
Other assets, net	788,296
Total assets related to real estate investments held for sale:	$	32,299,058
Liabilities related to real estate investments held for sale:
Mortgage notes payable, net	$	21,699,912
Other liabilities, net	383,282
Total liabilities related to real estate investments held for sale:	$	22,083,194

The following table summarizes the major components of rental income and expenses related to one real estate investment held for sale as of June 30, 2021 which was leased to Dana located in Cedar Park, Texas, and was included in continuing operations for the three and six months ended June 30, 2021:

	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Total revenues	$	342,198	$	716,160
Expenses:
Interest expense	63,207		138,629
Depreciation and amortization	49,108		122,769
Other expenses	78,857		145,797
Total expenses	191,172		407,195
Net income	$	151,026	$	308,965

Schedules of Asset and Rental Income Concentration

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

	June 30, 2022
Property and Location	Net Carrying Value		Percentage of Total Assets
KIA, Carson, CA	$	68,918,363	15.1	%
Lindsay, eight properties acquired in Colorado (three), Ohio (two), North Carolina, South Carolina and Florida	54,622,049		12.0	%
Total	$	123,540,412	27.1	%

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

	Three Months Ended June 30, 2022				Six Months Ended June 30, 2022
Property and Location	Rental Income		Percentage of Total Rental Income		Rental Income		Percentage of Total Rental Income
KIA, Carson, CA	$	1,459,745	14.0	%	$	2,725,006	13.6	%
Lindsay, eight properties acquired in Colorado (three), Ohio (two), North Carolina, South Carolina and Florida	$	1,058,443	10.2	%	(1)		(1)

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

Rental Payments for Operating Leases

As of June 30, 2022, 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 2022	$	16,377,113
2023	33,059,460
2024	31,759,477
2025	30,260,027
2026	24,057,552
2027	21,901,312
Thereafter	267,177,203
	$	424,592,144

Intangible Assets

As of June 30, 2022 and December 31, 2021, the Company’s real estate intangible assets were as follows:

	June 30, 2022						December 31, 2021
	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	$	21,384,224	$	1,128,549	$	(14,811,570)	$	21,504,210	$	1,128,549	$	(15,097,132)
Accumulated amortization	(12,312,635)		(502,442)		4,636,286		(11,009,997)		(437,530)		3,994,192
Net	$	9,071,589	$	626,107	$	(10,175,284)	$	10,494,213	$	691,019	$	(11,102,940)

Intangible Assets Amortization

As of June 30, 2022, the amortization of intangible assets for the remaining six months ending December 31, 2022 and for each of the next five 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 2022	$	1,062,439	$	64,911	$	(496,178)
2023	1,682,755		127,174		(906,522)
2024	1,545,468		122,543		(903,104)
2025	1,218,652		115,996		(903,104)
2026	620,229		78,557		(897,701)
2027	343,917		22,272		(887,789)
Thereafter	2,598,129		94,654		(5,180,886)
	$	9,071,589	$	626,107	$	(10,175,284)
Weighted-average remaining amortization period	7.7 years		6.0 years		11.3 years

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UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY (Tables)

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

Investments

The Company’s investment in unconsolidated entity as of June 30, 2022 and December 31, 2021 is as follows:

	June 30, 2022		December 31, 2021
The TIC Interest	$	9,956,517	$	9,941,338

Entities Equity In Earnings

The Company’s income from investment in unconsolidated entity for the three and six months ended June 30, 2022 and 2021 is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
The TIC Interest	$	66,868	$	74,834	$	162,332	$	147,302

Summarized Financial Information

The following is summarized financial information for the Santa Clara property as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021:

	June 30, 2022		December 31, 2021
Assets:
Real estate investments, net	$	28,883,609	$	29,403,232
Cash and cash equivalents	805,057		690,470
Other assets	29,975		134,049
Total assets	$	29,718,641	$	30,227,751
Liabilities:
Mortgage note payable, net	$	13,078,689	$	13,218,883
Below-market lease, net	2,587,393		2,660,586
Other liabilities	52,609		369,209
Total liabilities	15,718,691		16,248,678
Total equity	13,999,950		13,979,073
Total liabilities and equity	$	29,718,641	$	30,227,751

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Total revenues	$	676,780	$	676,936	$	1,391,758	$	1,350,912
Expenses:
Interest expense	134,968		138,036		269,262		275,642
Depreciation and amortization	261,956		250,015		523,912		500,030
Other expenses	187,890		185,964		375,324		372,652
Total expenses	584,814		574,015		1,168,498		1,148,324
Net income	$	91,966	$	102,921	$	223,260	$	202,588

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GOODWILL, NET (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Net Carrying Amount of Goodwill

The carrying values of goodwill as of June 30, 2022 and December 31, 2021 are as follows:

	June 30, 2022		December 31, 2021
Carrying value, beginning	$	17,320,857	$	17,320,857
Impairment of goodwill	(17,320,857)		—
Carrying value, ending	$	—	$	17,320,857

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS (Tables)

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Supplemental Detail Disclosures for Consolidated Balance Sheet

As of June 30, 2022 and December 31, 2021, tenant receivables consisted of the following:

	June 30, 2022		December 31, 2021
Straight-line rent	$	5,753,512	$	4,417,065
Tenant rent and billed reimbursements	541,561		81,079
Unbilled tenant reimbursements	1,764,562		1,498,775
Total	$	8,059,635	$	5,996,919

As of June 30, 2022 and December 31, 2021, prepaid expenses and other assets were comprised of the following:

	June 30, 2022		December 31, 2021
Deferred tenant allowance	$	2,353,762	$	2,400,811
Miscellaneous receivables	59,888		681,369
Prepaid expenses	1,387,121		1,253,751
Deposits	2,151,099		1,420,244
Deferred financing costs on credit facility revolver	814,997		100,080
Total	$	6,766,867	$	5,856,255

As of June 30, 2022 and December 31, 2021, accounts payable, accrued and other liabilities were comprised of the following:

	June 30, 2022		December 31, 2021
Accounts payable	$	1,194,736	$	1,767,657
Accrued expenses	2,883,690		3,864,222
Accrued distributions	1,762,722		1,795,303
Accrued interest payable	706,920		548,564
Unearned rent	2,051,994		1,735,440
Lease incentive obligation	133,695		2,133,695
Total	$	8,733,757	$	11,844,881

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DEBT (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Debt

As of June 30, 2022 and December 31, 2021, the Company’s mortgage notes payable consisted of the following:

Collateral	2022 Principal Amount		2021 Principal Amount		Contractual Interest Rate (1)	Effective Interest Rate (2)	Loan Maturity
Costco property	$	18,850,000	$	18,850,000	4.85%	4.85%	01/01/30
Taylor Fresh Foods	12,350,000		12,350,000		3.85%	3.85%	11/01/29
Sutter Health property	13,450,173		13,597,120		4.50%	4.50%	03/09/24
Six Dollar General properties	—		3,674,327		—%	4.69%	(3)
Dollar General, Bakersfield property	—		2,224,418		—%	3.65%	(3)
Dollar General, Big Spring property	—		587,961		—%	4.69%	(3)
Northrop Grumman property	—		6,925,915		—%	3.35%	(3)
exp US Services property	—		3,255,313		—%	4.25%	(3)
Wyndham property	—		5,493,000		—%	4.34%	(3)
Williams Sonoma property	—		4,344,000		—%	4.05%	(3)
EMCOR property	—		2,757,943		—%	4.36%	(3)
Husqvarna property	—		6,379,182		—%	4.60%	(3)
AvAir property	—		19,950,000		—%	3.80%	(3)
3M property	—		8,025,200		—%	5.09%	(3)
Cummins property	—		8,188,800		—%	5.16%	(3)
Levins property	—		2,654,405		—%	3.75%	(3)
Labcorp property	—		5,308,810		—%	3.75%	(3)
GSA (MSHA) property	—		1,713,196		—%	3.65%	(3)
PreK Education property	—		4,930,217		—%	4.25%	(3)
Solar Turbines, Amec Foster, ITW Rippey properties	—		8,986,222		—%	3.35%	(3)
Gap property	—		3,492,775		—%	4.15%	(3)
L3Harris property	—		6,219,524		—%	3.35%	(3)
Walgreens property	—		3,067,109		—%	4.25%	(3)
Total mortgage notes payable	44,650,173		152,975,437
Plus unamortized mortgage premium, net (4)	171,810		204,281
Less unamortized deferred financing costs	(213,168)		(956,139)
Mortgage notes payable, net	$	44,608,815	$	152,223,579

(1)Contractual interest rate represents the interest rate in effect under the mortgage note payable as of June 30, 2022 for the three mortgages that were not refinanced through a drawdown from the Credit Facility (defined and discussed below) with KeyBank National Association (“KeyBank”) given their prepayment penalties.

(2)Effective interest rate is calculated as the actual interest rate in effect as of June 30, 2022 consisting of the contractual interest rate, and as of December 31, 2021, consisting of the contractual interest rate and the effect of the interest rate swap, if applicable (see Note 8 for further information regarding the Company’s derivative instruments as of December 31, 2021).

(3)The loan was fully repaid on January 18, 2022 through a drawdown from the Credit Facility.

(4)Represents unamortized net mortgage premium acquired through the merger with REIT I.

Mortgage Notes Payable

The following summarizes the face value, carrying amount and fair value of the Company’s mortgage notes payable (Level 3 measurement) as of June 30, 2022 and December 31, 2021:

	June 30, 2022						December 31, 2021
	Face Value		Carrying Value		Fair Value		Face value		Carrying Value		Fair Value
Mortgage notes payable	$	44,650,173	$	44,608,815	$	41,493,296	$	152,975,437	$	152,223,579	$	159,241,815
Less: full repayments of mortgages on January 18, 2022							(108,178,317)		(107,429,721)		*
							$	44,797,120	$	44,793,858	$	46,296,445

*    The payoff values of the loans refinanced on January 18, 2022 approximate their face values as of December 31, 2021.

The following table summarizes the Company's mortgage notes payable related to real estate investments held for sale as of December 31, 2021:

Collateral	December 31, 2021
Accredo property	$	8,538,000
Omnicare property	4,109,167
Texas Health property	4,284,335
Bon Secours property	5,104,817
Total	22,036,319
Less deferred financing costs	(336,407)
Mortgage notes payable, net	$	21,699,912

Schedule of Term Loan

The details of the Company's Term Loan as of June 30, 2022 follow:

	June 30, 2022
Term loan	$	150,000,000
Less unamortized deferred financing costs	(1,149,950)
Net term loan	$	148,850,050

Maturities of Long-term Debt

The following summarizes the future principal repayments of the Company’s mortgage notes payable and Credit Facility as of June 30, 2022:

	Mortgage Notes		Credit Facility
	Payable		Revolver		Term Loan		Total
July through December 2022	$	141,575	$	—	$	—	$	141,575
2023	317,575		—		—		317,575
2024	12,991,023		—		—		12,991,023
2025	—		—		—		—
2026	—		6,775,000		—		6,775,000
2027	—		—		150,000,000		150,000,000
Thereafter	31,200,000		—		—		31,200,000
Total principal	44,650,173		6,775,000		150,000,000		201,425,173
Plus unamortized mortgage premium, net of unamortized discount	171,810		—		—		171,810
Less deferred financing costs	(213,168)		—		(1,149,950)		(1,363,118)
Net principal	$	44,608,815	$	6,775,000	$	148,850,050	$	200,233,865

Interest Expense

The following is a reconciliation of the components of interest expense for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Mortgage notes payable:
Interest expense	$	460,886	$	1,992,812	$	1,273,605	$	3,826,636
Amortization of deferred financing costs	7,235		103,383		14,459		214,426
Swap termination costs	—		—		—		23,900
Unrealized gain on interest rate swap valuation (1)	—		(92,200)		—		(420,243)
Credit facility:
Interest expense	1,098,435		63,333		1,688,665		142,085
Amortization of deferred financing costs	120,830		22,139		221,520		43,863
Unrealized gain on interest rate swap valuation (2)	(589,997)		—		(589,997)		—
Other	99,765		9,182		157,077		49,118
Total interest expense	$	1,197,154	$	2,098,649	$	2,765,329	$	3,879,785

(1)    Includes unrealized gain on interest rate swaps of $90,600 and $517,719 for the three and six months ended June 30, 2021 (see Note 8 for more details). Accrued interest receivable of $56,114 as of December 31, 2021 represented the unsettled portion of the interest rate swaps for the period from origination of the interest rate swap through the balance sheet date.

(2)    The Company entered into a swap transaction for its Credit Facility Term Loan effective May 31, 2022 which is further described in Note 8.

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INTEREST RATE SWAP DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of the Notional Amount and Other Information Related to Interest Rate Swaps

The following table summarizes the notional amount and other information related to the Company’s interest rate swaps as of June 30, 2022 and December 31, 2021:

June 30, 2022

December 31, 2021

Derivative Instruments

Number of Instruments

Notional Amount (i)

Reference Rate (ii)

Fixed Pay Rate (iii)

Remaining Non-Cancellable Term

Number of Instruments

Notional Amount (i)

Reference Rate (iv)

Weighted Average Fixed Pay Rate

Weighted Average Remaining Term

Interest Rate Swap Derivatives

1

$

150,000,000

Indexed to USD - SOFR - COMPOUND

3.858

%

2.5 years

4

$

26,051,000

One-month LIBOR + applicable spread/Fixed at 4.05%-5.16%

4.51

%

2.0 years

(i)The notional amount of the Company’s swaps decreased each month to correspond to the outstanding principal balance on the related mortgage. The minimum notional amounts (outstanding principal balance at the maturity date) as of June 30, 2022 and December 31, 2021 were $150,000,000 and $24,935,999, respectively.

(ii)The reference rate was as of June 30, 2022.

(iii)Based on the terms of the Credit Facility, the fixed pay rate increases if the Company's leverage ratio increases.

(iv)The reference rate was as of December 31, 2021.

Summary of the Fair Value of Derivative Instruments and Their Classification

The following table sets forth the fair value of the Company’s derivative instruments (Level 2 measurement), as well as their classification in the unaudited condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021:

		June 30, 2022			December 31, 2021
Derivative Instrument	Balance Sheet Location	Number of Instruments	Fair Value		Number of Instruments	Fair Value
Interest Rate Swaps	Asset - Interest rate swap derivatives, at fair value	1	$	589,997	—	$	—
Interest Rate Swaps	Liability - Interest rate swap derivatives, at fair value	—	$	—	4	$	(788,016)

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RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Total fees incurred and paid or accrued for board services by the Company for the three and six months ended June 30, 2022 and 2021, are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Board of Directors Compensation	2022		2021		2022		2021
Payments for services rendered	$	67,500	$	60,000	$	135,000	$	60,000
Value of shares issued for services rendered	82,500		110,000		165,000		180,000
Total	$	150,000	$	170,000	$	300,000	$	240,000
Number of shares issued for services rendered	4,666		4,470		9,265		7,510

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OPERATING PARTNERSHIP UNITS (Tables)

6 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

Class M OP Units Conversion

In the event that the Class M OP Units are converted into Class C OP Units prior to December 31, 2023, such Class M OP Units shall be exchanged at the rate indicated below:

Date of Exchange	Early Conversion Rate
From December 31, 2020 to December 30, 2021	50% of the Class M conversion ratio
From December 31, 2021 to December 30, 2022	60% of the Class M conversion ratio
From December 31, 2022 to December 30, 2023	70% of the Class M conversion ratio

As of June 30, 2022, no Class M OP Units had been converted to Class C OP Units.

The Class M OP Units are eligible for an increase in the conversion ratio (conversion ratio enhancement) if the Company achieves both of the targets for AUM and AFFO in a given year as set forth below:

	Hurdles
	AUM		AFFO		Class M
	($ in billions)		Per Share ($)		Conversion Ratio
Initial Conversion Ratio					1:1.6667
Fiscal Year 2021	$	0.860	$	1.77	1:1.9167
Fiscal Year 2022	$	1.175	$	1.95	1:2.5000
Fiscal Year 2023	$	1.551	$	2.10	1:3.0000

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EARNINGS (LOSS) PER SHARE (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents the computation of the Company's basic and diluted net income (loss) per share attributable to common stockholders for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Numerator - Basic:
Net income (loss)	$	2,390,344	$	(1,001,843)	$	(9,682,820)	$	(1,905,491)
Net (income) loss attributable to noncontrolling interest in Operating Partnership	(219,214)		—		1,708,815		—
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders	$	1,249,255	$	(1,001,843)	$	(9,817,755)	$	(1,905,491)
Numerator - Diluted:
Net income (loss)	$	2,390,344	$	(1,001,843)	$	(9,682,820)	$	(1,905,491)
Preferred stock dividends	(921,875)		—		(1,843,750)		—
Net income (loss) attributable to common stockholders	$	1,468,469	$	(1,001,843)	$	(11,526,570)	$	(1,905,491)
Denominator:
Weighted average shares outstanding - basic	7,478,973		7,614,196		7,505,673		7,630,401
Operating Partnership Units - Class C	1,312,382		—		—		—
Operating Partnership Units - Classes M, P and R	1,430,135		—		—		—
Weighted average shares outstanding - diluted	10,221,490		7,614,196		7,505,673		7,630,401
Earnings (loss) per share attributable to common stockholders:
Basic	$	0.17	$	(0.13)	$	(1.31)	$	(0.25)
Diluted	$	0.14	$	(0.13)	$	(1.31)	$	(0.25)

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BUSINESS AND ORGANIZATION - Narrative (Details)					3 Months Ended	5 Months Ended	6 Months Ended		12 Months Ended
	Jun. 06, 2022 USD ($)	Mar. 30, 2022 USD ($)	Feb. 15, 2022 USD ($) $ / shares shares	Sep. 14, 2021 $ / shares shares	Jun. 30, 2021 USD ($) ft² shares	Jun. 30, 2022 USD ($) property ft² $ / shares shares	Jun. 30, 2022 USD ($) property ft² $ / shares shares	Jun. 30, 2021 USD ($) ft² shares	Dec. 31, 2021 $ / shares shares	Mar. 31, 2022 shares	Sep. 30, 2021 shares	Mar. 31, 2021 shares	Jan. 22, 2021 USD ($)	Dec. 31, 2020 shares	Dec. 31, 2016 USD ($)
Business And Organization [Line Items]
Issued common stock (in shares)						450,000,000	450,000,000
Preferred stock, shares authorized (in shares)											50,000,000
Number of square feet of aggregate leasable space (in square foot) | ft²						2,900,000	2,900,000
Number of real estate properties | property						43	43
Preferred stock, shares outstanding (in shares)						2,000,000	2,000,000		2,000,000
Repurchase of common stock | $					$ (2,671,764)	$ (2,401,181)	$ (3,253,902)	$ (13,046,857)
Maximum
Business And Organization [Line Items]
Authorized offering amount | $		$ 200,000,000
Primary Offering
Business And Organization [Line Items]
Common stock subscription, including additional paid-in capital | $															$ 210,800,151
Real Estate Investment | Tenant-in-common
Business And Organization [Line Items]
Ownership percentage						72.70%	72.70%
Retail
Business And Organization [Line Items]
Number of square feet of aggregate leasable space (in square foot) | ft²					42,896			42,896
Number of real estate properties | property						13	13
Retail | Real Estate Investment
Business And Organization [Line Items]
Investment allocation, percentage						19.00%	19.00%
Office
Business And Organization [Line Items]
Number of real estate properties | property						10	10
Office | Real Estate Investment
Business And Organization [Line Items]
Investment allocation, percentage						33.00%	33.00%
Industrial
Business And Organization [Line Items]
Number of real estate properties | property						20	20
Industrial Property Including Tenant-In-Common Interest | Real Estate Investment
Business And Organization [Line Items]
Investment allocation, percentage						48.00%	48.00%
Operating Partnership
Business And Organization [Line Items]
Ownership interest (as a percent)							72.00%		83.00%
Class S
Business And Organization [Line Items]
Common stock, shares authorized (in shares)						100,000,000	100,000,000		100,000,000
Common stock, par value (in usd per share) | $ / shares						$ 0.001	$ 0.001		$ 0.001
Common stock, shares issued (in shares)						0	0		63,768
Class C
Business And Organization [Line Items]
Common stock, shares authorized (in shares)						300,000,000	300,000,000		300,000,000
Common stock, par value (in usd per share) | $ / shares						$ 0.001	$ 0.001		$ 0.001
Common stock, shares issued (in shares)						7,643,992	7,643,992		7,426,636
Purchase price of common stock, percent			97.00%
Purchase price of common stock, average price per share, percent			100.00%
Per share processing fee | $ / shares			$ 0.05
Class C | Maximum
Business And Organization [Line Items]
Purchase price as a percentage of market price			5.00%
Class C | Minimum
Business And Organization [Line Items]
Purchase price as a percentage of market price			0.00%
Class C | 2021 Distribution Reinvestment Plan Offering
Business And Organization [Line Items]
Common stock subscriptions | $													$ 100,000,000
Class C | Listed Offering
Business And Organization [Line Items]
Shares sold in offering (in shares)			40,000
Sale of stock, price per share | $ / shares			$ 25.00
Class C | ATM Offering
Business And Organization [Line Items]
Common stock, shares issued (in shares)						0	0
Class C | Prospectus Supplement
Business And Organization [Line Items]
Prospectus supplement, common stock offering | $	$ 50,000,000
Series A Preferred Stock
Business And Organization [Line Items]
Preferred stock, shares authorized (in shares)						2,000,000	2,000,000
Preferred stock, dividend rate, percentage							7.375%
Sale of stock, price per share | $ / shares				$ 25.00
Preferred stock, shares issued (in shares)						2,000,000	2,000,000		2,000,000
Series A Preferred Stock | Maximum
Business And Organization [Line Items]
Preferred stock, dividend rate, percentage							9.375%
Series A Preferred Stock | Primary Offering
Business And Organization [Line Items]
Shares sold in offering (in shares)				1,800,000
Preferred Stock
Business And Organization [Line Items]
Preferred stock, shares authorized (in shares)						50,000,000	50,000,000
Preferred stock, par value (in usd per share) | $ / shares						$ 0.001	$ 0.001
Preferred stock, shares outstanding (in shares)					0	2,000,000	2,000,000	0	2,000,000	2,000,000		0		0
Common Stock
Business And Organization [Line Items]
Authorized amount | $			$ 20,000,000
Common Stock | Class C
Business And Organization [Line Items]
Repurchase of common stock (in shares)					(113,866)			(595,805)
Repurchase of common stock | $					$ (114)			$ (596)
Treasury Stock
Business And Organization [Line Items]
Repurchase of common stock (in shares)						(187,430)
Repurchase of common stock | $						$ (3,253,902)
Average cost per share of stock shares repurchased (in usd per share) | $ / shares						$ 17.36

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022 USD ($) property $ / shares	Jun. 30, 2021 USD ($) $ / shares	Jun. 30, 2022 USD ($) property $ / shares	Jun. 30, 2021 USD ($) $ / shares	Dec. 31, 2021 USD ($)	Jan. 18, 2022 loan
Accounting Policies [Line Items]
Assets	$ 456,278,624		$ 456,278,624		$ 428,494,502
Liabilities	$ 219,142,906		$ 219,142,906		206,064,610
Number of real estate properties | property	43		43
Rental income from tenant reimbursements	$ 1,400,428	$ 1,540,380	$ 3,450,799	$ 3,068,172
Net income (loss) per share attributable to common stockholders, basic (in usd per share) | $ / shares	$ 0.17	$ (0.13)	$ (1.31)	$ (0.25)
Net income (loss) per share attributable to common stockholders, diluted (in usd per share) | $ / shares	$ 0.14	(0.13)	$ (1.31)	(0.25)
Restricted cash	$ 0		$ 0		2,441,970
Restricted cash released					170,508
Number of loans repaid | loan						4
Variable Interest Entity, Primary Beneficiary
Accounting Policies [Line Items]
Assets	31,406,864		31,406,864
Liabilities	$ 0		$ 0
VIE percentage of total assets (in percent)	7.40%		7.40%
Number of real estate properties | property	4		4
Lease Agreements
Accounting Policies [Line Items]
Restricted cash					2,271,462
Restricted Cash, Leasing Commission
Accounting Policies [Line Items]
Restricted cash released					128,538
Northrop Grumman property
Accounting Policies [Line Items]
Restricted cash					1,400,000
L3Harris
Accounting Policies [Line Items]
Restricted cash					$ 1,000,000
Class C
Accounting Policies [Line Items]
Net income (loss) per share attributable to common stockholders, basic (in usd per share) | $ / shares		(0.13)		(0.25)
Net income (loss) per share attributable to common stockholders, diluted (in usd per share) | $ / shares		(0.13)		(0.25)
Class S
Accounting Policies [Line Items]
Net income (loss) per share attributable to common stockholders, basic (in usd per share) | $ / shares		(0.13)		(0.25)
Net income (loss) per share attributable to common stockholders, diluted (in usd per share) | $ / shares		$ (0.13)		$ (0.25)

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REAL ESTATE INVESTMENTS, NET - Narrative (Details)							3 Months Ended		6 Months Ended
	Jun. 29, 2022 USD ($)	Feb. 24, 2022 USD ($)	Feb. 11, 2022 USD ($) property	Feb. 12, 2021 USD ($)	Jan. 29, 2021 USD ($)	Jan. 07, 2021 USD ($)	Jun. 30, 2022 USD ($) property state	Dec. 31, 2021 property	Jun. 30, 2022 USD ($) property lease state	Jun. 30, 2021 USD ($) property
Real Estate [Line Items]
Number of real estate properties | property							43		43
Number of states in which entity operates | state							16		16
Number of real estate properties sold | property								5
Operating leases extension							3 years 8 months 12 days		3 years 8 months 12 days
Renewal term, increase in rent (percent)							1.90%		1.90%
Weighted-average remaining amortization period									9 years 6 months
Number of real estate properties, held-for-sale | property							0	4	0	1
Kia and Kalera
Real Estate [Line Items]
Number of real estate properties | property							10		10
Revenue related to acquisition							$ 2,706,422		$ 4,105,592
Omnicare
Real Estate [Line Items]
Number of real estate properties sold | property			1
Cummins, ITW Rippey, and Willams Sonoma
Real Estate [Line Items]
Properties with an extension | lease									3
Texas Health and Bon Secours
Real Estate [Line Items]
Number of real estate properties sold | property			2
ITW Rippey
Real Estate [Line Items]
Operating leases extension							7 years		7 years
Williams Sonoma
Real Estate [Line Items]
Operating leases extension							3 years		3 years
Cummins
Real Estate [Line Items]
Operating leases extension							1 year		1 year
Retail
Real Estate [Line Items]
Number of real estate properties | property							13		13
Disposal group, including discontinued operation, consideration										$ 13,714,188
Retail | Chevron Gas Station, Roseville property
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration						$ 4,050,000
Proceeds from sale of real estate investments						$ 3,914,909
Retail | EcoThrift
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration					$ 5,375,300
Proceeds from sale of real estate investments					$ 2,684,225
Retail | Chevron Gas Station, San Jose property
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration				$ 4,288,888
Proceeds from sale of real estate investments				$ 4,054,327
Office
Real Estate [Line Items]
Number of real estate properties | property							10		10
Land used as an easement for an office | property							1		1
Office | Accredo
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration		$ 14,000,000
Proceeds from sale of real estate investments		$ 5,000,941
Office | Bon Secours, Omnicare, and Texas Health
Real Estate [Line Items]
Number of real estate properties, held-for-sale | property								3
Office | EMCOR
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration	$ 6,525,000
Proceeds from sale of real estate investments	$ 6,345,642
Industrial
Real Estate [Line Items]
Number of real estate properties | property							20		20
Industrial | Omnicare
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration			$ 8,760,000
Number of real estate properties, held-for-sale | property								1
Office and Industrial
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration							$ 46,525,000		$ 46,525,000
Number of real estate properties, held-for-sale | property								4
Office and Industrial | Bon Secours, Omnicare, and Texas Health
Real Estate [Line Items]
Disposal group, including discontinued operation, consideration			26,000,000
Proceeds from sale of real estate investments			$ 11,883,639
Land
Real Estate [Line Items]
Number of real estate properties | property							1		1

XML

REAL ESTATE INVESTMENTS, NET - Summary of Real Estate Properties (Details) - USD ($)	Jun. 30, 2022	Apr. 19, 2022	Jan. 31, 2022	Jan. 18, 2022	Dec. 31, 2021
Real Estate [Line Items]
Land, Buildings and Improvements	$ 435,042,581
Equipment	4,429,000				$ 0
Tenant Origination and Absorption Costs	21,384,224				21,504,210
Accumulated Depreciation and Amortization	(43,728,520)				(37,611,133)
Total investments in real estate property, net	417,127,285				$ 296,144,769
Dollar General One | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,281,812
Equipment	0
Tenant Origination and Absorption Costs	116,302
Accumulated Depreciation and Amortization	(226,371)
Total investments in real estate property, net	1,171,743
Dollar General Two | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,543,776
Equipment	0
Tenant Origination and Absorption Costs	140,653
Accumulated Depreciation and Amortization	(289,706)
Total investments in real estate property, net	1,394,723
Dollar General Three | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,199,860
Equipment	0
Tenant Origination and Absorption Costs	106,730
Accumulated Depreciation and Amortization	(217,502)
Total investments in real estate property, net	1,089,088
Dollar General Four | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,174,188
Equipment	0
Tenant Origination and Absorption Costs	111,847
Accumulated Depreciation and Amortization	(208,535)
Total investments in real estate property, net	1,077,500
Dollar General Five | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,112,872
Equipment	0
Tenant Origination and Absorption Costs	100,857
Accumulated Depreciation and Amortization	(214,022)
Total investments in real estate property, net	999,707
Dollar General Six | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,102,086
Equipment	0
Tenant Origination and Absorption Costs	86,408
Accumulated Depreciation and Amortization	(207,944)
Total investments in real estate property, net	980,550
Dollar General Seven | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	4,899,714
Equipment	0
Tenant Origination and Absorption Costs	261,630
Accumulated Depreciation and Amortization	(367,831)
Total investments in real estate property, net	4,793,513
Dollar General Eight | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,281,683
Equipment	0
Tenant Origination and Absorption Costs	76,351
Accumulated Depreciation and Amortization	(127,422)
Total investments in real estate property, net	1,230,612
Dollar Tree | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	1,320,367
Equipment	0
Tenant Origination and Absorption Costs	73,298
Accumulated Depreciation and Amortization	(177,276)
Total investments in real estate property, net	1,216,389
Northrop Grumman | Office
Real Estate [Line Items]
Land, Buildings and Improvements	13,571,660
Equipment	0
Tenant Origination and Absorption Costs	1,469,737
Accumulated Depreciation and Amortization	(3,777,982)
Total investments in real estate property, net	11,263,415
Northrop Grumman Parcel | Land
Real Estate [Line Items]
Land, Buildings and Improvements	329,410
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	0
Total investments in real estate property, net	329,410
exp US Services | Office
Real Estate [Line Items]
Land, Buildings and Improvements	6,069,180
Equipment	0
Tenant Origination and Absorption Costs	388,248
Accumulated Depreciation and Amortization	(1,169,541)
Total investments in real estate property, net	5,287,887
Wyndham | Office
Real Estate [Line Items]
Land, Buildings and Improvements	10,406,483
Equipment	0
Tenant Origination and Absorption Costs	669,232
Accumulated Depreciation and Amortization	(1,701,960)
Total investments in real estate property, net	9,373,755
Williams Sonoma | Office
Real Estate [Line Items]
Land, Buildings and Improvements	8,137,571
Equipment	0
Tenant Origination and Absorption Costs	640,868
Accumulated Depreciation and Amortization	(1,524,998)
Total investments in real estate property, net	7,253,441
Husqvarna | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	11,840,200
Equipment	0
Tenant Origination and Absorption Costs	1,013,948
Accumulated Depreciation and Amortization	(1,649,292)
Total investments in real estate property, net	11,204,856
AvAir | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	27,357,899
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(3,152,243)
Total investments in real estate property, net	24,205,656
3M | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	14,762,819
Equipment	0
Tenant Origination and Absorption Costs	3,037,057
Accumulated Depreciation and Amortization	(5,330,050)
Total investments in real estate property, net	12,469,826
Cummins | Office
Real Estate [Line Items]
Land, Buildings and Improvements	14,538,528
Equipment	0
Tenant Origination and Absorption Costs	1,566,997
Accumulated Depreciation and Amortization	(3,358,591)
Total investments in real estate property, net	12,746,934
Costco | Office
Real Estate [Line Items]
Land, Buildings and Improvements	27,346,695
Equipment	0
Tenant Origination and Absorption Costs	2,765,136
Accumulated Depreciation and Amortization	(4,611,675)
Total investments in real estate property, net	25,500,156
Taylor Fresh Foods | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	34,194,369
Equipment	0
Tenant Origination and Absorption Costs	2,894,017
Accumulated Depreciation and Amortization	(3,579,532)
Total investments in real estate property, net	33,508,854
Levins | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	4,429,390
Equipment	0
Tenant Origination and Absorption Costs	221,927
Accumulated Depreciation and Amortization	(551,521)
Total investments in real estate property, net	4,099,796
Labcorp | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	9,672,174
Equipment	0
Tenant Origination and Absorption Costs	408,225
Accumulated Depreciation and Amortization	(510,802)
Total investments in real estate property, net	9,569,597
GSA (MSHA) | Office
Real Estate [Line Items]
Land, Buildings and Improvements	3,112,076
Equipment	0
Tenant Origination and Absorption Costs	243,307
Accumulated Depreciation and Amortization	(346,287)
Total investments in real estate property, net	3,009,096
PreK Education | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	12,447,287
Equipment	0
Tenant Origination and Absorption Costs	555,767
Accumulated Depreciation and Amortization	(1,251,024)
Total investments in real estate property, net	11,752,030
Solar Turbines | Office
Real Estate [Line Items]
Land, Buildings and Improvements	7,133,241
Equipment	0
Tenant Origination and Absorption Costs	284,026
Accumulated Depreciation and Amortization	(680,451)
Total investments in real estate property, net	6,736,816
Wood Group | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	9,869,520
Equipment	0
Tenant Origination and Absorption Costs	539,633
Accumulated Depreciation and Amortization	(1,004,879)
Total investments in real estate property, net	9,404,274
ITW Rippey | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	7,071,143
Equipment	0
Tenant Origination and Absorption Costs	304,387
Accumulated Depreciation and Amortization	(761,590)
Total investments in real estate property, net	6,613,940
Gap | Office
Real Estate [Line Items]
Land, Buildings and Improvements	8,433,744
Equipment	0
Tenant Origination and Absorption Costs	360,377
Accumulated Depreciation and Amortization	(1,209,435)
Total investments in real estate property, net	7,584,686
L3Harris | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	11,690,952
Equipment	0
Tenant Origination and Absorption Costs	662,101
Accumulated Depreciation and Amortization	(1,148,834)
Total investments in real estate property, net	11,204,219
Sutter Health | Office
Real Estate [Line Items]
Land, Buildings and Improvements	29,587,023
Equipment	0
Tenant Origination and Absorption Costs	1,616,610
Accumulated Depreciation and Amortization	(2,705,794)
Total investments in real estate property, net	28,497,839
Walgreens | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	5,223,442
Equipment	0
Tenant Origination and Absorption Costs	335,945
Accumulated Depreciation and Amortization	(332,402)
Total investments in real estate property, net	5,226,985
Raising Cane's [Member] | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	3,430,224
Equipment	0
Tenant Origination and Absorption Costs	213,997
Accumulated Depreciation and Amortization	(111,417)
Total investments in real estate property, net	3,532,804
Arrow-TruLine | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	11,518,084
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(224,513)
Total investments in real estate property, net	11,293,571
KIA
Real Estate [Line Items]
Equipment				$ 0
Tenant Origination and Absorption Costs				$ 118,606
KIA | Retail
Real Estate [Line Items]
Land, Buildings and Improvements	69,286,444
Equipment	0
Tenant Origination and Absorption Costs	118,606
Accumulated Depreciation and Amortization	(486,687)
Total investments in real estate property, net	68,918,363
Kalera
Real Estate [Line Items]
Equipment			$ 4,429,000
Tenant Origination and Absorption Costs			$ 0
Kalera | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	3,690,009
Equipment	4,429,000
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(155,804)
Total investments in real estate property, net	7,963,205
Lindsay One
Real Estate [Line Items]
Equipment		$ 0
Tenant Origination and Absorption Costs		0
Lindsay One | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	2,311,934
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(12,150)
Total investments in real estate property, net	2,299,784
Lindsay Two
Real Estate [Line Items]
Equipment		0
Tenant Origination and Absorption Costs		0
Lindsay Two | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	3,314,406
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(7,231)
Total investments in real estate property, net	3,307,175
Lindsay Three
Real Estate [Line Items]
Equipment		0
Tenant Origination and Absorption Costs		0
Lindsay Three | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	5,558,622
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(17,529)
Total investments in real estate property, net	5,541,093
Lindsay Four
Real Estate [Line Items]
Equipment		0
Tenant Origination and Absorption Costs		0
Lindsay Four | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	8,518,123
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(75,544)
Total investments in real estate property, net	8,442,579
Lindsay Five
Real Estate [Line Items]
Equipment		0
Tenant Origination and Absorption Costs		0
Lindsay Five | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	7,181,113
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(33,306)
Total investments in real estate property, net	7,147,807
Lindsay Six
Real Estate [Line Items]
Equipment		0
Tenant Origination and Absorption Costs		0
Lindsay Six | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	11,345,533
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(71,634)
Total investments in real estate property, net	11,273,899
Lindsay Seven
Real Estate [Line Items]
Equipment		0
Tenant Origination and Absorption Costs		0
Lindsay Seven | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	10,190,942
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(102,162)
Total investments in real estate property, net	10,088,780
Lindsay Eight
Real Estate [Line Items]
Equipment		0
Tenant Origination and Absorption Costs		$ 0
Lindsay Eight | Industrial
Real Estate [Line Items]
Land, Buildings and Improvements	6,555,983
Equipment	0
Tenant Origination and Absorption Costs	0
Accumulated Depreciation and Amortization	(35,051)
Total investments in real estate property, net	$ 6,520,932

XML

REAL ESTATE INVESTMENTS, NET - Acquisition (Details)	Jun. 30, 2022 USD ($) property	Apr. 19, 2022 USD ($)	Jan. 31, 2022 USD ($)	Jan. 18, 2022 USD ($)	Dec. 31, 2021 USD ($)
Real Estate [Line Items]
Land	$ 107,569,641				$ 61,005,402
Equipment	4,429,000				0
Tenant Origination and Absorption Costs	21,384,224				21,504,210
Acquisition Price	460,855,805				$ 333,755,902
Non-refundable deposit	$ 1,330,780
Number of real estate properties | property	43
KIA
Real Estate [Line Items]
Land				$ 32,741,781
Buildings and Improvements				36,544,663
Equipment				0
Tenant Origination and Absorption Costs				118,606
Acquisition Price				$ 69,405,050
Kalera
Real Estate [Line Items]
Land			$ 562,356
Buildings and Improvements			3,127,653
Equipment			4,429,000
Tenant Origination and Absorption Costs			0
Acquisition Price			$ 8,119,009
Lindsay One
Real Estate [Line Items]
Land		$ 1,195,178
Buildings and Improvements		1,116,756
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		2,311,934
Lindsay Two
Real Estate [Line Items]
Land		2,239,465
Buildings and Improvements		1,074,941
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		3,314,406
Lindsay Three
Real Estate [Line Items]
Land		2,263,982
Buildings and Improvements		3,294,640
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		5,558,622
Lindsay Four
Real Estate [Line Items]
Land		966,192
Buildings and Improvements		7,551,931
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		8,518,123
Lindsay Five
Real Estate [Line Items]
Land		2,843,811
Buildings and Improvements		4,337,302
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		7,181,113
Lindsay Six
Real Estate [Line Items]
Land		726,877
Buildings and Improvements		10,618,656
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		11,345,533
Lindsay Seven
Real Estate [Line Items]
Land		635,865
Buildings and Improvements		9,555,077
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		10,190,942
Lindsay Eight
Real Estate [Line Items]
Land		2,816,322
Buildings and Improvements		3,739,661
Equipment		0
Tenant Origination and Absorption Costs		0
Acquisition Price		$ 6,555,983
Kia, Kalera, And Lindsay
Real Estate [Line Items]
Land	$ 46,991,829
Buildings and Improvements	80,961,280
Equipment	4,429,000
Tenant Origination and Absorption Costs	118,606
Acquisition Price	$ 132,500,715
Lindsay Precast, LLC
Real Estate [Line Items]
Number of real estate properties | property	8

XML

REAL ESTATE INVESTMENTS, NET - Dispositions (Details)							3 Months Ended		6 Months Ended
	Jun. 29, 2022 USD ($) ft²	Feb. 24, 2022 USD ($) ft²	Feb. 11, 2022 USD ($) ft²	Feb. 12, 2021 USD ($) ft²	Jan. 29, 2021 USD ($) ft²	Jan. 07, 2021 USD ($) ft²	Jun. 30, 2022 USD ($) ft²	Jun. 30, 2021 USD ($) ft²	Jun. 30, 2022 USD ($) ft²	Jun. 30, 2021 USD ($) ft²
Real Estate [Line Items]
Rentable Square Feet | ft²							2,900,000		2,900,000
Gain on Sale							$ 1,002,101	$ 0	$ 8,402,878	$ 289,642
Office | Bon Secours
Real Estate [Line Items]
Rentable Square Feet | ft²			72,890
Contract Sale Price			$ 10,200,000
Gain on Sale			$ 179,404
Office | Texas Health
Real Estate [Line Items]
Rentable Square Feet | ft²			38,794
Contract Sale Price			$ 7,040,000
Gain on Sale			$ 160,377
Office | Accredo
Real Estate [Line Items]
Rentable Square Feet | ft²		63,000
Contract Sale Price		$ 14,000,000
Gain on Sale		$ 4,998,106
Office | EMCOR
Real Estate [Line Items]
Rentable Square Feet | ft²	39,385
Contract Sale Price	$ 6,525,000
Gain on Sale	$ 1,002,101
Industrial | Omnicare
Real Estate [Line Items]
Rentable Square Feet | ft²			51,800
Contract Sale Price			$ 8,760,000
Gain on Sale			$ 2,062,890
Office and Industrial
Real Estate [Line Items]
Rentable Square Feet | ft²							265,869		265,869
Contract Sale Price							$ 46,525,000		$ 46,525,000
Gain on Sale									$ 8,402,878
Retail
Real Estate [Line Items]
Rentable Square Feet | ft²								42,896		42,896
Contract Sale Price								$ 13,714,188		$ 13,714,188
Gain on Sale										$ 289,642
Retail | Chevron Gas Station, Roseville property
Real Estate [Line Items]
Rentable Square Feet | ft²						3,300
Contract Sale Price						$ 4,050,000
Gain on Sale						$ 228,769
Retail | EcoThrift
Real Estate [Line Items]
Rentable Square Feet | ft²					38,536
Contract Sale Price					$ 5,375,300
Gain on Sale					$ 51,415
Retail | Chevron Gas Station, San Jose property
Real Estate [Line Items]
Rentable Square Feet | ft²				1,060
Contract Sale Price				$ 4,288,888
Gain on Sale				$ 9,458

XML

REAL ESTATE INVESTMENTS, NET - Concentration Risk (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) property	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) property	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Concentration Risk [Line Items]
Net Carrying Value	$ 417,127,285		$ 417,127,285		$ 296,144,769
Rental income	$ 10,394,118	$ 9,107,008	$ 20,042,767	$ 18,081,878
Number of real estate properties | property	43		43
Lindsay Precast, LLC
Concentration Risk [Line Items]
Number of real estate properties | property	8		8
Lindsay Colorado Properties
Concentration Risk [Line Items]
Number of real estate properties | property	3		3
Lindsay Ohio Properties
Concentration Risk [Line Items]
Number of real estate properties | property	2		2
Asset | Real Estate Property | KIA Dealership in Carson, California
Concentration Risk [Line Items]
Net Carrying Value	$ 68,918,363		$ 68,918,363
Percentage of Total Assets			15.10%
Asset | Real Estate Property | Lindsay
Concentration Risk [Line Items]
Net Carrying Value	54,622,049		$ 54,622,049
Percentage of Total Assets			12.00%
Asset | Real Estate Property | Kia and Lindsay
Concentration Risk [Line Items]
Net Carrying Value	$ 123,540,412		$ 123,540,412
Percentage of Total Assets			27.10%
Rental Income | Real Estate Property | KIA Dealership in Carson, California
Concentration Risk [Line Items]
Percentage of Total Assets	14.00%		13.60%
Rental income	$ 1,459,745		$ 2,725,006
Rental Income | Real Estate Property | Lindsay
Concentration Risk [Line Items]
Percentage of Total Assets	10.20%
Rental income	$ 1,058,443

XML

REAL ESTATE INVESTMENTS, NET - Rental Payments for Operating Leases (Details)	Jun. 30, 2022 USD ($)
Real Estate [Abstract]
July through December 2022	$ 16,377,113
2023	33,059,460
2024	31,759,477
2025	30,260,027
2026	24,057,552
2027	21,901,312
Thereafter	267,177,203
Total	$ 424,592,144

XML

REAL ESTATE INVESTMENTS, NET - Intangible Assets (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Tenant Origination and Absorption Costs
Real Estate [Line Items]
Cost	$ 21,384,224	$ 21,504,210
Accumulated amortization	(12,312,635)	(11,009,997)
Net	9,071,589	10,494,213
Above-Market Lease Intangibles
Real Estate [Line Items]
Cost	1,128,549	1,128,549
Accumulated amortization	(502,442)	(437,530)
Net	626,107	691,019
Below-Market Lease Intangibles
Below-Market Lease Intangibles
Cost	(14,811,570)	(15,097,132)
Accumulated amortization	4,636,286	3,994,192
Net	$ (10,175,284)	$ (11,102,940)

XML

REAL ESTATE INVESTMENTS, NET - Intangible Assets Amortization (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Below-Market Lease Intangibles
Weighted-average remaining amortization period	9 years 6 months
Tenant Origination and Absorption Costs
Real Estate [Line Items]
July through December 2022	$ 1,062,439
2023	1,682,755
2024	1,545,468
2025	1,218,652
2026	620,229
2027	343,917
Thereafter	2,598,129
Net	$ 9,071,589	$ 10,494,213
Below-Market Lease Intangibles
Weighted-average remaining amortization period	7 years 8 months 12 days
Above-Market Lease Intangibles
Real Estate [Line Items]
July through December 2022	$ 64,911
2023	127,174
2024	122,543
2025	115,996
2026	78,557
2027	22,272
Thereafter	94,654
Net	$ 626,107	691,019
Below-Market Lease Intangibles
Weighted-average remaining amortization period	6 years
Below-Market Lease Intangibles
Below-Market Lease Intangibles
July through December 2022	$ (496,178)
2023	(906,522)
2024	(903,104)
2025	(903,104)
2026	(897,701)
2027	(887,789)
Thereafter	(5,180,886)
Net	$ (10,175,284)	$ (11,102,940)
Weighted-average remaining amortization period	11 years 3 months 18 days

XML

REAL ESTATE INVESTMENTS, NET - Real Estate Investments Held for Sale (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2022	Dec. 31, 2021
Assets related to real estate investments held for sale:
Real estate investments held for sale, net			$ 0	$ 31,510,762
Other assets, net			0	788,296
Liabilities related to real estate investments held for sale:
Mortgage notes payable, net			0	21,699,912
Other liabilities, net			$ 0	383,282
Disposal Group, Held-for-sale, Not Discontinued Operations
Assets related to real estate investments held for sale:
Land, buildings and improvements				34,507,485
Tenant origination and absorption costs				3,064,371
Accumulated depreciation and amortization				(6,061,094)
Real estate investments held for sale, net				31,510,762
Other assets, net				788,296
Total assets related to real estate investments held for sale:				32,299,058
Liabilities related to real estate investments held for sale:
Mortgage notes payable, net				21,699,912
Other liabilities, net				383,282
Total liabilities related to real estate investments held for sale:				$ 22,083,194
Rental income, expenses and impairment related to real estate investments held for sale:
Total revenues	$ 342,198	$ 716,160
Expenses:
Interest expense	63,207	138,629
Depreciation and amortization	49,108	122,769
Other expenses	78,857	145,797
Total expenses	191,172	407,195
Net income	$ 151,026	$ 308,965

XML

UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY - Investments (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
The TIC Interest
Schedule of Equity Method Investments [Line Items]
Investment in unconsolidated entity	$ 9,956,517	$ 9,941,338

XML

UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY - Entities Equity in Earnings (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Schedule of Equity Method Investments [Line Items]
The TIC Interest	$ 66,868	$ 74,834	$ 162,332	$ 147,302
The TIC Interest
Schedule of Equity Method Investments [Line Items]
The TIC Interest	$ 66,868	$ 74,834	$ 162,332	$ 147,302

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UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2022 USD ($) ft²	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) ft²	Jun. 30, 2021 USD ($)	Dec. 31, 2017 ft²
Schedule of Equity Method Investments [Line Items]
Number of square feet of aggregate leasable space (in square foot)	2,900,000		2,900,000
Rich Uncles Real Estate Investment Trust
Schedule of Equity Method Investments [Line Items]
Ownership percentage					72.70%
Number of square feet of aggregate leasable space (in square foot)					91,740
Ownership percentage by noncontrolling owners					27.30%
Dividends | $	$ 51,786	$ 82,588	$ 147,153	$ 161,967
Rich Uncles Real Estate Investment Trust | Hagg Lane II, LLC
Schedule of Equity Method Investments [Line Items]
Ownership percentage by noncontrolling owners					23.40%
Rich Uncles Real Estate Investment Trust | Hagg Lane III, LLC
Schedule of Equity Method Investments [Line Items]
Ownership percentage by noncontrolling owners					3.90%

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UNCONSOLIDATED INVESTMENT IN REAL ESTATE PROPERTY - Summarized Financial Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021	Dec. 31, 2020
Assets
Total assets	$ 456,278,624		$ 456,278,624			$ 428,494,502
Liabilities:
Total liabilities	219,142,906		219,142,906			206,064,610
Total equity	237,135,718	$ 168,041,287	237,135,718	$ 168,041,287	$ 240,036,609	222,429,892	$ 172,146,694	$ 182,886,668
Total liabilities and equity	456,278,624		456,278,624			428,494,502
Expenses:
Net income (loss)	2,390,344	(1,001,843)	(9,682,820)	(1,905,491)
The TIC Interest
Assets
Real estate investments, net	28,883,609		28,883,609			29,403,232
Cash and cash equivalents	805,057		805,057			690,470
Other assets	29,975		29,975			134,049
Total assets	29,718,641		29,718,641			30,227,751
Liabilities:
Mortgage note payable, net	13,078,689		13,078,689			13,218,883
Below-market lease, net	2,587,393		2,587,393			2,660,586
Other liabilities	52,609		52,609			369,209
Total liabilities	15,718,691		15,718,691			16,248,678
Total equity	13,999,950		13,999,950			13,979,073
Total liabilities and equity	29,718,641		29,718,641			$ 30,227,751
Total revenues	676,780	676,936	1,391,758	1,350,912
Expenses:
Interest expense	134,968	138,036	269,262	275,642
Depreciation and amortization	261,956	250,015	523,912	500,030
Other expenses	187,890	185,964	375,324	372,652
Total expenses	584,814	574,015	1,168,498	1,148,324
Net income (loss)	$ 91,966	$ 102,921	$ 223,260	$ 202,588

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GOODWILL, NET - Net Carrying Amount of Goodwill (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Goodwill [Roll Forward]
Carrying value, beginning	$ 17,320,857			$ 17,320,857		$ 17,320,857
Impairment of goodwill	0	$ (17,320,857)	$ 0	(17,320,857)	$ 0
Carrying value, ending	$ 0			$ 0		$ 17,320,857

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GOODWILL, NET - Narrative (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment of goodwill	$ 0	$ (17,320,857)	$ 0	$ (17,320,857)	$ 0

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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Accounts Receivable, after Allowance for Credit Loss [Abstract]
Straight-line rent	$ 5,753,512	$ 4,417,065
Tenant rent and billed reimbursements	541,561	81,079
Unbilled tenant reimbursements	1,764,562	1,498,775
Total	8,059,635	5,996,919
Prepaid Expense and Other Assets [Abstract]
Deferred tenant allowance	2,353,762	2,400,811
Miscellaneous receivables	59,888	681,369
Prepaid expenses	1,387,121	1,253,751
Deposits	2,151,099	1,420,244
Deferred financing costs on credit facility revolver	814,997	100,080
Total	6,766,867	5,856,255
Accounts Payable and Accrued Liabilities [Abstract]
Accounts payable	1,194,736	1,767,657
Accrued expenses	2,883,690	3,864,222
Accrued distributions	1,762,722	1,795,303
Accrued interest payable	706,920	548,564
Unearned rent	2,051,994	1,735,440
Lease incentive obligation	133,695	2,133,695
Total	$ 8,733,757	$ 11,844,881

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DEBT - Schedule of Debt (Details) - USD ($)	Jun. 30, 2022	Jan. 18, 2022	Dec. 31, 2021
Short Term Debt [LineItems]
Mortgage notes payable	$ 201,425,173
Plus unamortized mortgage premium, net	171,810
Less unamortized deferred financing costs	(1,363,118)
Net principal	200,233,865
Mortgages
Short Term Debt [LineItems]
Mortgage notes payable	44,650,173	$ 44,797,120	$ 152,975,437
Plus unamortized mortgage premium, net	171,810		204,281
Less unamortized deferred financing costs	(213,168)		(956,139)
Net principal	44,608,815		152,223,579
Costco property
Short Term Debt [LineItems]
Mortgage notes payable	$ 18,850,000		18,850,000
Contractual interest rate	4.85%
Debt instrument, effective interest rate	4.85%
Taylor Fresh Foods
Short Term Debt [LineItems]
Mortgage notes payable	$ 12,350,000		12,350,000
Contractual interest rate	3.85%
Debt instrument, effective interest rate	3.85%
Sutter Health property
Short Term Debt [LineItems]
Mortgage notes payable	$ 13,450,173		13,597,120
Contractual interest rate	4.50%
Debt instrument, effective interest rate	4.50%
Six Dollar General properties
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		3,674,327
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.69%
Dollar General, Bakersfield property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		2,224,418
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.65%
Dollar General, Big Spring property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		587,961
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.69%
Northrop Grumman property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		6,925,915
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.35%
exp US Services
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		3,255,313
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.25%
Wyndham property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		5,493,000
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.34%
Williams Sonoma property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		4,344,000
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.05%
EMCOR
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		2,757,943
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.36%
Husqvarna
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		6,379,182
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.60%
AvAir
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		19,950,000
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.80%
3M property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		8,025,200
Contractual interest rate	0.00%
Debt instrument, effective interest rate	5.09%
Cummins
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		8,188,800
Contractual interest rate	0.00%
Debt instrument, effective interest rate	5.16%
Levins property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		2,654,405
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.75%
Labcorp
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		5,308,810
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.75%
GSA (MSHA)
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		1,713,196
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.65%
PreK Education property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		4,930,217
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.25%
Solar Turbines, Amec Foster, ITW Rippey properties
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		8,986,222
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.35%
Gap property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		3,492,775
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.15%
L3Harris
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		6,219,524
Contractual interest rate	0.00%
Debt instrument, effective interest rate	3.35%
Walgreens property
Short Term Debt [LineItems]
Mortgage notes payable	$ 0		$ 3,067,109
Contractual interest rate	0.00%
Debt instrument, effective interest rate	4.25%

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DEBT - Summary of Mortgage Notes Payable (Details) - USD ($)	12 Months Ended
	Dec. 31, 2021	Jun. 30, 2022	Jan. 18, 2022
Debt Instrument [Line Items]
Total		$ 201,425,173
Carrying Value	$ 152,223,579	44,608,815
Fair Value	159,241,815	41,493,296
Mortgages
Debt Instrument [Line Items]
Total	152,975,437	$ 44,650,173	$ 44,797,120
Less: full repayments of mortgages on January 18, 2022, face value	(108,178,317)
Less: full repayments of mortgages on January 18, 2022, carrying value	(107,429,721)
Remaining balance, carrying value	44,793,858
Remaining balance, fair value	$ 46,296,445

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DEBT - Mortgage Notes Payable Related to Real Estate Investments Held For Sale, Net (Details) - USD ($)	Jun. 30, 2022	Jan. 18, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total	$ 201,425,173
Less deferred financing costs	(1,363,118)
Net principal	200,233,865
Mortgages
Debt Instrument [Line Items]
Total	44,650,173	$ 44,797,120	$ 152,975,437
Less deferred financing costs	(213,168)		(956,139)
Net principal	$ 44,608,815		152,223,579
Mortgages | Secured Notes Payable, Real Estate Held-for-sale
Debt Instrument [Line Items]
Total			22,036,319
Less deferred financing costs			(336,407)
Net principal			21,699,912
Mortgages | Secured Notes Payable, Real Estate Held-for-sale | Accredo | Retail
Debt Instrument [Line Items]
Total			8,538,000
Mortgages | Secured Notes Payable, Real Estate Held-for-sale | Omnicare | Retail
Debt Instrument [Line Items]
Total			4,109,167
Mortgages | Secured Notes Payable, Real Estate Held-for-sale | Texas Health | Retail
Debt Instrument [Line Items]
Total			4,284,335
Mortgages | Secured Notes Payable, Real Estate Held-for-sale | Bon Secours | Retail
Debt Instrument [Line Items]
Total			$ 5,104,817

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DEBT - Schedule of Term Loan (Details)	Jun. 30, 2022 USD ($)
Line of Credit Facility [Line Items]
Less unamortized deferred financing costs	$ (1,363,118)
Net principal	200,233,865
Term Loan
Line of Credit Facility [Line Items]
Less unamortized deferred financing costs	(213,168)
Net principal	44,608,815
Term Loan | Credit Facility
Line of Credit Facility [Line Items]
Term loan	150,000,000
Less unamortized deferred financing costs	(1,149,950)
Net principal	$ 148,850,050

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DEBT - Narrative (Details)							1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jul. 27, 2022	Jun. 22, 2022 USD ($)	Apr. 25, 2022 USD ($)	Mar. 08, 2022 USD ($)	Jan. 18, 2022 USD ($) mortgage property	Mar. 29, 2021 USD ($)	Jan. 31, 2022 USD ($)	Jun. 30, 2022 USD ($) property	Mar. 31, 2022	Jun. 30, 2022 USD ($) property	Jun. 30, 2021 USD ($) property	Dec. 31, 2021 USD ($) property	Jul. 31, 2022 USD ($)	Jul. 14, 2022 USD ($)	May 31, 2022
Debt Instrument [Line Items]
Number of real estate properties, held-for-sale | property								0		0	1	4
Leverage ratio, target								40.00%		40.00%
Repayments of prior year credit facility revolver, net										$ (8,022,000)	$ (3,000,000)
Current borrowing capacity								$ 60,000,000		60,000,000
Deferred financing costs								$ 814,997		$ 814,997		$ 100,079
KIA Dealership in Carson, California | KIA
Debt Instrument [Line Items]
Repayments of assumed debt					$ 36,465,449
Line of Credit
Debt Instrument [Line Items]
Line of credit, current					$ 155,775,000
Commitment fee amount							$ 2,020,000
Repayment of debt, number of mortgages | mortgage					20
Principal repayments of mortgage					$ 153,428,764
Number of properties | property					27
Number of mortgages | property												7
Line of Credit | Dollar General
Debt Instrument [Line Items]
Number of properties | property					8
Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Prepayment of debt		$ 8,000,000		$ 35,000,000
Draw on line of credit			$ 50,000,000
Line of Credit | Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Line of credit, current													$ 34,775,000	$ 5,000,000
Mortgage Notes Payable
Debt Instrument [Line Items]
Debt instrument, term					5 years
Minimum | Credit Facility | Unsecured Credit Facility
Debt Instrument [Line Items]
Line of credit facility, interest rate during period						4.75%
Prime Rate | Credit Facility | Unsecured Credit Facility
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate						100.00%
New Credit Facility | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity						$ 22,000,000
Payments of debt issuance costs						$ 77,000
Unused commitment fee percentage						0.15%
Credit Agreement
Debt Instrument [Line Items]
Debt service coverage ratio, minimum								0.0150		0.0150
Proceeds from issuance of debt (percent)										85.00%
Maximum percentage of current borrowing capacity								60.00%		60.00%
Credit Agreement | Interest Rate Cap
Debt Instrument [Line Items]
Reference Rate															3.858%
Credit Agreement | Line of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity					$ 250,000,000
Expiration period					4 years
Expiration period, option to extend					12 months
Covenant compliance, leverage ratio, actual									34.00%	38.00%
Unused borrowing capacity fee								$ 50,047		$ 72,280
Minimum tangible net worth								$ 208,629,727		$ 208,629,727
Maximum leverage ratio								0.55		0.55
Option to extend					$ 500,000,000
Credit Agreement | Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity					100,000,000
Line of credit, current					55,775,000
Credit Agreement | Mortgage Notes Payable
Debt Instrument [Line Items]
Debt instrument, face amount					150,000,000
Line of credit, current					$ 100,000,000
Credit Agreement | SOFR
Debt Instrument [Line Items]
Line of credit facility, interest rate at period end								3.15%		3.15%
Credit Agreement | SOFR | Subsequent Event
Debt Instrument [Line Items]
Line of credit facility, interest rate at period end	3.96%
Credit Agreement | SOFR | Line of Credit
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate										1.65%
Credit Agreement | Adjusted Base Rate
Debt Instrument [Line Items]
Variable rate, unused fee, maximum										0.0025
Credit Agreement | Adjusted Base Rate | Subsequent Event
Debt Instrument [Line Items]
Variable rate, increase in period	0.0075
Credit Agreement | Adjusted Base Rate | Line of Credit
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate										0.10%

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DEBT - Maturities of Long-term Debt (Details)	Jun. 30, 2022 USD ($)
Debt Instrument [Line Items]
July through December 2022	$ 141,575
2023	317,575
2024	12,991,023
2025	0
2026	6,775,000
2027	150,000,000
Thereafter	31,200,000
Total principal	201,425,173
Plus unamortized mortgage premium, net of unamortized discount	171,810
Less unamortized deferred financing costs	(1,363,118)
Net principal	200,233,865
Mortgage Notes Payable
Debt Instrument [Line Items]
July through December 2022	141,575
2023	317,575
2024	12,991,023
2025	0
2026	0
2027	0
Thereafter	31,200,000
Total principal	44,650,173
Plus unamortized mortgage premium, net of unamortized discount	171,810
Less unamortized deferred financing costs	(213,168)
Net principal	44,608,815
Mortgage Notes Payable | Credit Facility
Debt Instrument [Line Items]
July through December 2022	0
2023	0
2024	0
2025	0
2026	0
2027	150,000,000
Thereafter	0
Total principal	150,000,000
Plus unamortized mortgage premium, net of unamortized discount	0
Less unamortized deferred financing costs	(1,149,950)
Net principal	148,850,050
Revolving Credit Facility | Credit Facility
Debt Instrument [Line Items]
July through December 2022	0
2023	0
2024	0
2025	0
2026	6,775,000
2027	0
Thereafter	0
Total principal	6,775,000
Plus unamortized mortgage premium, net of unamortized discount	0
Less unamortized deferred financing costs	0
Net principal	$ 6,775,000

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DEBT - Interest Expense (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Debt Instrument [Line Items]
Interest expense	$ 1,197,154	$ 2,098,649	$ 2,765,329	$ 3,879,785
Unrealized gain on interest rate swap valuation		(90,600)		(517,719)	$ (788,016)
Other	99,765	9,182	157,077	49,118
Accrued interest payable (receivable)					$ 56,114
Credit Facility
Debt Instrument [Line Items]
Interest expense	1,098,435	63,333	1,688,665	142,085
Amortization of deferred financing costs	120,830	22,139	221,520	43,863
Unrealized gain on interest rate swap valuation	(589,997)	0	(589,997)	0
Mortgage Notes Payable
Debt Instrument [Line Items]
Interest expense	460,886	1,992,812	1,273,605	3,826,636
Amortization of deferred financing costs	7,235	103,383	14,459	214,426
Swap termination costs	0	0	0	23,900
Unrealized gain on interest rate swap valuation	$ 0	$ (92,200)	$ 0	$ (420,243)

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INTEREST RATE SWAP DERIVATIVES - Narrative (Details)		3 Months Ended			6 Months Ended	12 Months Ended
	May 31, 2022	Mar. 31, 2022 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)	Jun. 30, 2022 instrument
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Write-off of unrealized gain on interest rate swaps			$ 90,600		$ 517,719	$ 788,016
Rite Aid and Island Pacific | Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, aggregate cost of hedge		$ 733,000
Dinan Cars | Swap
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative, aggregate cost of hedge				$ 23,900
Interest Rate Swaps
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Term of swap agreement	5 years
Debt instrument, stated interest rate	2.258%
Number of mortgage notes payable | instrument							4

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INTEREST RATE SWAP DERIVATIVES - Derivative Instruments (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2022 USD ($) instrument	Dec. 31, 2021 USD ($) instrument
Interest Rate Swaps
Receivables with Imputed Interest [Line Items]
Number of Instruments | instrument	1	4
Notional Amount	$ 150,000,000	$ 26,051,000
Fixed Pay Rate	3.858%	4.51%
Remaining Maturity	2 years 6 months	2 years
Minimum
Receivables with Imputed Interest [Line Items]
Notional Amount	$ 150,000,000	$ 24,935,999
LIBOR | Minimum | Interest Rate Swaps
Receivables with Imputed Interest [Line Items]
Reference Rate		4.05%
LIBOR | Maximum | Interest Rate Swaps
Receivables with Imputed Interest [Line Items]
Reference Rate		5.16%

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INTEREST RATE SWAP DERIVATIVES - Statement of Financial Position (Details)	Jun. 30, 2022 USD ($) instrument	Dec. 31, 2021 USD ($) instrument
Derivatives, Fair Value [Line Items]
Fair Value	$ 589,997	$ 0
Fair Value	$ 0	$ (788,016)
Interest Rate Swaps
Derivatives, Fair Value [Line Items]
Number of Instruments | instrument	1	4
Interest Rate Swaps | Liability
Derivatives, Fair Value [Line Items]
Number of Instruments | instrument	0	4
Fair Value	$ 0	$ (788,016)
Interest Rate Swaps | Asset
Derivatives, Fair Value [Line Items]
Number of Instruments | instrument	1	0
Fair Value	$ 589,997	$ 0

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PREFERRED STOCK AND COMMON STOCK (Details)							3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 15, 2022 USD ($)	Mar. 18, 2022 USD ($)	Feb. 15, 2022 USD ($) $ / shares shares	Jan. 18, 2022 USD ($)	Sep. 17, 2021 USD ($)	Sep. 14, 2021 $ / shares shares	Mar. 31, 2022 USD ($)	Jun. 30, 2022 USD ($) director $ / shares shares	Jun. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) shares	Sep. 30, 2021 shares
Subsidiary, Sales of Stock [Line Items]
Preferred stock, shares authorized (in shares) | shares											50,000,000
Preferred stock, shares outstanding (in shares) | shares								2,000,000		2,000,000
Payments of stock issuance costs								$ (946,690)	$ (810,632)
Proceeds from listed offering of common stock, net								114,500	$ 2,299,380
Debt issuance costs								$ 1,363,118
Series A Preferred Stock
Subsidiary, Sales of Stock [Line Items]
Preferred stock, shares authorized (in shares) | shares								2,000,000
Preferred stock, shares issued (in shares) | shares								2,000,000		2,000,000
Preferred stock, liquidation preference per share | $ / shares						$ 25.00
Sale of stock, price per share | $ / shares						$ 25.00
Discount on shares					$ (1,575,000)
Payments of stock issuance costs					(817,691)
Preferred stock, dividend rate, percentage								7.375%
Preferred stock, dividends per share, declared | $ / shares								$ 1.84375
Preferred stock, redemption price per share | $ / shares								25.00
Number of days after change of control						120 days
Preferred stock, dividend rate, per-dollar-amount | $ / shares								$ 2.34375
Number of additional board of directors that can be elected | director								2
Cumulative dividends per quarter | $ / shares								$ 0.460938
Dividends, preferred stock	$ 921,875	$ 921,875
Series A Preferred Stock | Fourth Quarter 2021
Subsidiary, Sales of Stock [Line Items]
Dividends, preferred stock							$ 1,065,278
Series A Preferred Stock | Third Quarter 2021
Subsidiary, Sales of Stock [Line Items]
Dividends, preferred stock				$ 143,403
Accrued dividends										$ 143,403
Series A Preferred Stock | Maximum
Subsidiary, Sales of Stock [Line Items]
Preferred stock, dividend rate, percentage								9.375%
Series A Preferred Stock | Dividend Rate
Subsidiary, Sales of Stock [Line Items]
Preferred stock, dividend rate, percentage								2.00%
Series A Preferred Stock | Primary Offering
Subsidiary, Sales of Stock [Line Items]
Shares sold in offering (in shares) | shares						1,800,000
Common stock issued, consideration received on transaction					50,000,000
Net proceeds from the Preferred Offering								$ 47,607,309
Proceeds from issuance of preferred stock and preference stock, prior to other offering costs					$ 48,425,000
Series A Preferred Stock | Over-Allotment Option
Subsidiary, Sales of Stock [Line Items]
Shares sold in offering (in shares) | shares						200,000
Offering period						30 days
Class C
Subsidiary, Sales of Stock [Line Items]
Debt issuance costs			$ 815,500
Class C | Listed Offering
Subsidiary, Sales of Stock [Line Items]
Shares sold in offering (in shares) | shares			40,000
Sale of stock, price per share | $ / shares			$ 25.00
Proceeds from listed offering of common stock, net			$ 114,500
Unamortized discount			$ 70,000

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RELATED PARTY TRANSACTIONS - Board of Directors Compensation (Details) - Director - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Related Party Transaction [Line Items]
Value of shares issued for services rendered	$ 82,500	$ 110,000	$ 165,000	$ 180,000
Total	$ 150,000	$ 170,000	$ 300,000	$ 240,000
Number of shares issued for services rendered (in shares)	4,666	4,470	9,265	7,510
Payments for services rendered
Related Party Transaction [Line Items]
Payments for services rendered	$ 67,500	$ 60,000	$ 135,000	$ 60,000

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RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Related Party Transaction [Line Items]
Asset management fee	$ 65,993	$ 65,993	$ 131,986	$ 131,986
Santa Clara | Advisor fees
Related Party Transaction [Line Items]
Amount paid for related party transactions	$ 47,984	$ 47,984	$ 95,967	$ 95,967

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
COMMITMENTS AND CONTINGENCIES [Line Items]
Tenant reimbursements	$ 609,788	$ 189,136
Restricted cash	0	2,441,970
Building Improvements, Tenant Improvements and Leasing Commissions
COMMITMENTS AND CONTINGENCIES [Line Items]
Restricted cash	$ 0	$ 2,271,462

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OPERATING PARTNERSHIP UNITS - Narrative (Details)			3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 18, 2022 $ / shares shares	Jan. 25, 2021 $ / shares shares	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) $ / shares shares	Jun. 30, 2021 USD ($)	Dec. 31, 2021 shares	Dec. 31, 2019 USD ($) $ / shares shares	Feb. 01, 2021 shares
Business Acquisition [Line Items]
Anniversary of completion of the Self-Management Transaction			4 years		4 years
Net asset value (in usd per share) | $ / shares								$ 30.48
KIA
Business Acquisition [Line Items]
Payments of ordinary dividends | $			$ 377,301		$ 628,840
KIA Dealership in Carson, California
Business Acquisition [Line Items]
Net income (loss) allocated to limited partners | $			$ 219,214		$ (1,708,815)
KIA Dealership in Carson, California | KIA | KIA Dealership in Carson, California
Business Acquisition [Line Items]
Shares received, percent of property value	47.00%
Class C
Business Acquisition [Line Items]
Conversion ratio					1
Class C | KIA Dealership in Carson, California | KIA
Business Acquisition [Line Items]
Equity interest issued and issuable, number of shares (in shares)	1,312,382
Equity interest issued and issuable (in usd per share) | $ / shares	$ 25.00
Class C and Class S
Business Acquisition [Line Items]
Net asset value (in usd per share) | $ / shares			$ 17.68		$ 17.68
Class M OP Units
Business Acquisition [Line Items]
Conversion ratio					1.6667			1
Net asset value (in usd per share) | $ / shares			$ 29.47		$ 29.47
Class P OP Units
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)								56,029
Stock compensation expense | $			$ 88,784	$ 88,783	$ 177,567	$ 177,567
Class P OP Units | Messrs. Halfacre and Pacini
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)								29,711
Other ownership interests, capital account | $			$ 621,483		$ 621,483			$ 1,509,319
Other ownership interests, amortization period					51 months
Class M OP Units and Class P OP Units | Operating Partnership
Business Acquisition [Line Items]
Noncontrolling interest (as a percent)			11.60%		11.60%			13.00%
Class R OP Units
Business Acquisition [Line Items]
Conversion ratio		1
Other ownership interests, capital account | $			$ 3,559,243		$ 3,559,243
Stock compensation expense | $			$ 508,463	$ 568,304	$ 849,045	$ 1,014,165
Other ownership interests, units outstanding (in shares)									360,000
Other ownership interests, earnings per share, diluted, threshold (in usd per share) | $ / shares		$ 1.05
Potential future conversion ratio		0.4000
Units forfeited (in shares)			4,333		4,333		26,657
Cumulative units forfeited (in shares)					30,990
Class R OP Units | Mr. Halfacre
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)		40,000
Other ownership interests, units issued, period		3 years
Class R OP Units | Mr. Pacini
Business Acquisition [Line Items]
Other ownership interests, units issued, period		3 years
Class R OP Units | Employees of Company
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)		116,000
Class R OP Units, Future Compensation | Mr. Halfacre
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)		170,667
Class R OP Units, Future Compensation | Mr. Pacini
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)		33,333
BrixInvest
Business Acquisition [Line Items]
Contribution of Class M OP Units and Class P OP Units | $								$ 50,603,000
BrixInvest | Class M OP Units
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)								657,949.5
BrixInvest | Class P OP Units
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)								26,318
BrixInvest | Class R OP Units
Business Acquisition [Line Items]
Other ownership interests, units issued (in shares)			329,010		329,010

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OPERATING PARTNERSHIP UNITS - Class M OP Units Conversion (Details) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2022 USD ($) $ / shares
Fiscal Year 2021
Conversion of Stock [Line Items]
Early conversion ratio	0.50
AUM conversion threshold | $	$ 860
AFFO conversion threshold (in usd per share) | $ / shares	$ 1.77
Conversion ratio	1.9167
Fiscal Year 2022
Conversion of Stock [Line Items]
Early conversion ratio	0.60
AUM conversion threshold | $	$ 1,175
AFFO conversion threshold (in usd per share) | $ / shares	$ 1.95
Conversion ratio	2.5000
Fiscal Year 2023
Conversion of Stock [Line Items]
Early conversion ratio	0.70
AUM conversion threshold | $	$ 1,551
AFFO conversion threshold (in usd per share) | $ / shares	$ 2.10
Conversion ratio	3.0000
Initial Period
Conversion of Stock [Line Items]
Conversion ratio	1.6667

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EARNINGS (LOSS) PER SHARE - Schedule of Computation of EPS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator - Basic:
Net income (loss)	$ 2,390,344	$ (1,001,843)	$ (9,682,820)	$ (1,905,491)
Net (income) loss attributable to noncontrolling interest in Operating Partnership	(219,214)	0	1,708,815	0
Preferred stock dividends	(921,875)	0	(1,843,750)	0
Net income (loss) attributable to common stockholders, basic	1,249,255	(1,001,843)	(9,817,755)	(1,905,491)
Numerator - Diluted:
Net income (loss)	2,390,344	(1,001,843)	(9,682,820)	(1,905,491)
Preferred stock dividends	(921,875)	0	(1,843,750)	0
Net income (loss) attributable to common stockholders, diluted	$ 1,468,469	$ (1,001,843)	$ (11,526,570)	$ (1,905,491)
Denominator:
Weighted average shares outstanding - basic (in shares)	7,478,973	7,614,196	7,505,673	7,630,401
Weighted average shares outstanding - diluted (in shares)	10,221,490	7,614,196	7,505,673	7,630,401
Earnings (loss) per share - basic (in usd per share)	$ 0.17	$ (0.13)	$ (1.31)	$ (0.25)
Earnings (loss) per share - diluted (in usd per share)	$ 0.14	$ (0.13)	$ (1.31)	$ (0.25)
Class C OP Units
Denominator:
Operating Partnership Units (in shares)	1,312,382	0	0	0
Operating Partnership Units - Classes M, P and R
Denominator:
Operating Partnership Units (in shares)	1,430,135	0	0	0

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EARNINGS (LOSS) PER SHARE - Narrative (Details) - shares	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Abstract]
Securities excluded from the computation of earnings per share (in shares)	1,219,789	2,735,350	1,249,964

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SUBSEQUENT EVENTS - Narrative (Details)				1 Months Ended	6 Months Ended
	Aug. 04, 2022 USD ($) property	Jul. 23, 2022 USD ($)	Jul. 15, 2022 USD ($) property $ / shares	Aug. 09, 2022 USD ($) shares	Aug. 09, 2022 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) $ / shares	Jun. 30, 2021 USD ($)	Jul. 31, 2022 USD ($)	Jul. 25, 2022 $ / shares	Jul. 14, 2022 USD ($)	Jul. 12, 2022 USD ($)	Jun. 15, 2022 USD ($)	Jan. 18, 2022 USD ($)	Dec. 31, 2021 USD ($)
Subsequent Event [Line Items]
Accrued distributions						$ 1,762,722								$ 1,795,303
Annualized distribution rate (in usd per share) | $ / shares						$ 1.15
Borrowings from credit facility revolver, net						$ 6,775,000	$ 0
Series A Preferred Stock
Subsequent Event [Line Items]
Accrued distributions												$ 921,875
Line of Credit
Subsequent Event [Line Items]
Line of credit, current													$ 155,775,000
Subsequent Event
Subsequent Event [Line Items]
Daily distribution rate (in usd per share) | $ / shares									$ 0.09583
Dividends payable, amount per share per month (in usd per share) | $ / shares			$ 0.09583
Stock repurchased during period (in shares) | shares				32,713	220,143
Share value repurchased				$ 503,885	$ 3,757,744
Average cost per share of stock shares repurchased (in usd per share) | $ / shares					$ 17.07
Subsequent Event | Series A Preferred Stock
Subsequent Event [Line Items]
Dividends paid			$ 921,875
Subsequent Event | Valtir, LLC
Subsequent Event [Line Items]
Operating history of company	49 years
Revolving Credit Facility | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Borrowings from credit facility revolver, net		$ 23,000,000
Line of credit, current								$ 34,775,000		$ 5,000,000
Amount available								$ 52,000,000
New Vision Industries, LLC and Juniper Ring Acquisitions, LLC | Subsequent Event
Subsequent Event [Line Items]
Asset acquisition, consideration transferred, liabilities incurred			$ 5,343,862
Property cap rate			7.21%
New Vision Industries, LLC and Juniper Ring Acquisitions, LLC | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Proceeds from credit facility			$ 5,000,000
New Vision Industries, LLC and Juniper Ring Acquisitions, LLC | Subsequent Event | Industrial
Subsequent Event [Line Items]
Properties acquired | property			2
Term of contract			20 years
Annual rent escalations (percent)			2.00%
Valtir, LLC | Subsequent Event
Subsequent Event [Line Items]
Asset acquisition, consideration transferred, liabilities incurred	$ 23,375,000
Property cap rate	7.70%
Valtir, LLC | Subsequent Event | Line of Credit
Subsequent Event [Line Items]
Proceeds from credit facility	$ 23,000,000
Valtir, LLC | Subsequent Event | Industrial
Subsequent Event [Line Items]
Properties acquired | property	4
Annual rent escalations (percent)	2.25%
Valtir, LLC, properties 1 and 2 | Subsequent Event | Industrial
Subsequent Event [Line Items]
Properties acquired | property	2
Term of contract	25 years
Valtir, LLC, properties 3 and 4 | Subsequent Event | Industrial
Subsequent Event [Line Items]
Properties acquired | property	2
Term of contract	15 years
Williams Sonoma | Subsequent Event
Subsequent Event [Line Items]
Disposal group, including discontinued operation, consideration											$ 9,300,000
Escrow deposit			$ 500,000

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Label	Element	Value
Treasury Stock, Common [Member]
Stock Repurchased During Period, Shares	us-gaap_StockRepurchasedDuringPeriodShares	136,567