Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2025

Basis of Presentation and Summary of Significant Accounting Policies

There have been no significant changes to the Company’s accounting policies since the Company filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2024. For further information about the Company’s accounting policies, refer to the Company’s filed Annual Report on Form 10-K for the year ended December 31, 2024 with the Securities and Exchange Commission (the “SEC”).

The accompanying unaudited consolidated financial statements of the Company are prepared by management on the accrual basis of accounting and in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited consolidated financial statements include accounts and related adjustments, which are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim period. Operating results for the nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. In addition, see the risk factors identified in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

The consolidated financial statements of the Company include all accounts of the Company, the Operating Partnership, and its consolidated subsidiaries. Intercompany transactions are shown on the consolidated statements if and to the extent required pursuant to GAAP. Each property-owning entity is a wholly-owned subsidiary which is a special purpose entity (“SPE”).

Segment Information

As of September 30, 2025, the Company has two reportable segments: Industrial and Office. The Industrial segment consists of i) IOS properties which have a low building-to-land ratio, or low coverage, maximizing yard space for the display, movement, and storage of materials and equipment and ii) traditional industrial assets, which include distribution, warehouse and light manufacturing properties. All properties within the Office segment as of September 30, 2025 were classified as held for sale and included within Office Discontinued Operations Properties for all periods presented.

Prior to December 31, 2024, the Company presented a third reportable segment, Other, which consisted of vacant and non-core properties, together with other properties in the same cross-collateralized loan pools. On December 31, 2024, the Company sold the final property in its Other segment, and as a result, the Other segment was eliminated. The Company presented the results of the Other segment through the year ended December 31, 2024.

See Note 14, Segment Reporting, for details regarding each of the Company’s segments.

Assets Held for Sale

The Company generally classifies real estate assets that are subject to operating leases as held for sale when it believes it is probable that the disposition will occur within one year. When the Company classifies an asset as held for sale, it compares the asset’s fair value less estimated cost to sell to its carrying value, and if the fair value less estimated cost to sell is less than the property’s carrying value, the Company reduces the carrying value to the fair value less estimated cost to sell. The Company will continue to review the property for subsequent changes in the fair value, and may recognize an additional impairment charge, if warranted. Assets classified as held for sale are further evaluated for classification as discontinued operations (as described under Discontinued Operations below).

Discontinued Operations

A component or group of components is classified as discontinued operations, (i) when it has been disposed of or meets the criteria to be classified as held for sale and (ii) the disposal or intended disposal represents a strategic shift that has or is expected to have, a major effect on the Company’s operations and financial results. A discontinued operation includes components that comprise operations and cash flows that can be clearly distinguished from the Company’s continuing operations.

As described in Note 1, Organization, the Company’s plan to dispose of its Office segment properties represents a strategic shift in the Company’s business, which met the criteria for classification as discontinued operations as of September 30, 2025.

As discussed in Note 3, Real Estate, the Company has completed the sale of 11 Office Discontinued Operations Properties during the nine months ended September 30, 2025. The remaining 16 Office Discontinued Operations Properties were determined to be probable of disposition within one year through individual property sales or, in certain cases, sales of combined properties. All such dispositions are part of a single plan that was established to exit the Office segment.

Accordingly, during the third quarter of 2025, the Company began to separately report the results of the Office Discontinued Operations Properties in the consolidated financial statements and notes for all periods presented, and has reclassified prior-period amounts to conform to the discontinued operations classification All previously disposed Office segment properties not included within Office Discontinued Operations Properties are included within continuing operations for all periods presented.

Below is a summary of assets and liabilities related to the Office Discontinued Operations Properties as of September 30, 2025 and December 31, 2024:


	Office Discontinued Operations Properties
ASSETS	September 30, 2025		December 31, 2024
Land	$	38,149	$	108,515
Building and improvements	403,273		943,456
In-place lease intangible assets	107,590		239,406
Construction in progress	—		55
Total real estate	549,012		1,291,432
Less: accumulated depreciation	(145,473)		(296,280)
Total real estate, net	403,539		995,152
Above-market lease and other intangible assets, net	11,756		25,614
Deferred rent receivable	22,429		37,413
Deferred leasing costs, net	5,030		8,852
Right-of-use lease assets	31,427		32,212
Other assets	1,705		2,113
Total real estate and other assets held for sale	$	475,886	$	1,101,356

LIABILITIES

Below-market lease and other intangible liabilities, net	$	4,564	$	7,144
Right-of-use lease liabilities	46,316		46,143
Accrued expenses and other liabilities	15,376		14,939
Liabilities of real estate assets held for sale	$	66,256	$	68,226

The following table summarizes income (loss) from Office Discontinued Operations Properties for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Revenue:
Rental income	$	25,225	$	28,229	$	82,030	$	83,570
Expenses:
Property operating expense	3,207		3,432		9,614		9,273
Property tax expense	1,384		1,676		5,464		5,755
Real estate impairment provision(1)	25,604		—		345,492		—
Depreciation and amortization	7,135		12,012		30,218		35,465
Total expenses	37,330		17,120		390,788		50,493
Interest expense(2)	(1,178)		(1,527)		(4,360)		(4,545)
Other income, net	34		1		34		1
Extinguishment of debt(3)	(705)		—		(705)		—

(Loss) income from discontinued operations	(13,954)		9,583		(313,789)		28,533
Gain from disposition of assets(1)	24,767		—		23,456		—
Net income (loss) from discontinued operations	$	10,813	$	9,583	$	(290,333)	$	28,533

(1)Refer to Note 3, Real Estate for further details.

(2)Interest expense is directly related to the portion of the Company’s BOA II Loan that is secured by certain Office Discontinued Operations Properties as described in Note 5, Debt.

(3)Refer to Note 5, Debt for further details.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Earnings Per Share

Basic earnings per share is computed by dividing net (loss) income attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net (loss) income attributable to common shareholders by the weighted-average number of outstanding common shares plus the potential effect of any dilutive securities (e.g. unvested time-based restricted share units and unvested time-based restricted shares (together, “Unvested Restricted Shares”), OP Units, etc.), using the more dilutive of either the two-class method or the treasury stock method.

For all periods presented, (a) OP Units were excluded from the dilutive earnings per share computation because they were not dilutive, and (b) using the treasury stock method, Unvested Restricted Shares were excluded from dilutive earnings per share because the inclusion would have been anti-dilutive or insignificant to the potential dilutive effect of the computation.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2025	2024	2025	2024
Unvested Restricted Shares(1)	274,163	257,064	398,654	462,136

(1) Unvested Restricted Shares that contain non-forfeitable rights to dividends are participating securities and are included in the computation of earnings per share pursuant to either the two-class method or treasury stock method, as applicable.

Restricted Cash

Restricted cash is presented on the consolidated balance sheets and consists primarily of reserves that the Company funded as required by the applicable governing documents with certain lenders in conjunction with debt financing or transactions. The table below summarizes the Company’s restricted cash:


	Balance as of
	September 30, 2025		December 31, 2024
Cash reserves	$	6,718	$	4,092
Restricted lockbox	1,387		3,604
Total restricted cash	$	8,105	$	7,696

Reclassifications

As applicable, certain amounts in the prior period consolidated financial statements have been reclassified to conform to the current period presentation, solely related to classification of certain properties as discontinued operations.

Income Taxes

The Company has elected to be taxed as a REIT under the Internal Revenue Code (“Code”). To qualify as a REIT, the Company must meet certain organizational and operational requirements. The Company intends to adhere to these requirements and maintain its REIT status for the current year and subsequent years. As a REIT, the Company generally will not be subject to federal income taxes on taxable income that is distributed to shareholders. However, the Company may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed taxable income, if any. If the Company fails to qualify as a REIT in any taxable year, the Company will then be subject to federal income taxes on the taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost unless the Internal Revenue Service (“IRS”) grants the Company relief under certain statutory provisions. Such an event could materially adversely affect net income and net cash available to pay dividends to shareholders. As of September 30, 2025, the Company believes it has satisfied the REIT requirements.

Pursuant to the Code, the Company has elected to treat its corporate subsidiary as a taxable REIT subsidiary (“TRS”). In general, the TRS may perform non-customary services for the Company’s tenants and may engage in any real estate or non-real estate-related business. The TRS will be subject to corporate federal and state income tax.

Recently Issued Accounting Pronouncements

On November 4, 2024, the FASB issued ASU 2024-03, which requires public business entities to provide disaggregated disclosures of certain expense categories that are included in the income statement. The guidance does not change the presentation of expenses on the face of the income statement but mandates additional tabular disclosures for line items in continuing operations. Expenses that are already disclosed under existing U.S. GAAP should be incorporated into these disaggregated disclosures, while any remaining amounts should be described qualitatively. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The disclosures will be required on both an annual and interim basis. The Company is currently evaluating the potential impact of adopting ASU 2024-03 on our consolidated financial statements and related disclosures.