INLAND REAL ESTATE INCOME TRUST, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-K)

Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Annual Report on Form
10-K constitute "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"). Words such as "may," "could," "should," "expect," "intend," "plan,"
"goal," "seek," "anticipate," "believe," "estimate," "predict," "variables,"
"potential," "continue," "expand," "maintain," "create," "strategies," "likely,"
"will," "would" and variations of these terms and similar expressions, or the
negative of these terms or similar expressions, are intended to identify
forward-looking statements.

These forward-looking statements are not historical facts but reflect the
intent, belief or current expectations of our management based on their
knowledge and understanding of the business and industry, the economy and other
future conditions. These statements are not guarantees of future performance,
and we caution stockholders not to place undue reliance on forward-looking
statements. Actual results may differ materially from those expressed or
forecasted in the forward-looking statements due to a variety of risks,
uncertainties and other factors, including but not limited to the factors listed
and described under "Risk Factors" in this Annual Report on Form 10-K and the
factors described below:

• We are subject to risks associated with a pandemic, epidemic or outbreak

a contagious disease, such as the current global COVID-19 pandemic,

including negative impacts on our tenants and their respective businesses,

and we have agreed to defer a significant amount of rent owed to us, which

tenants will be obligated to pay over time in addition to their

rent but which they cannot or do not want to do, in particular those

whose results of operations or future prospects have been materially

affected by or becoming affected by the COVID-19 pandemic;

• Market disruptions resulting from the economic effects of COVID-19

pandemic have negatively impacted many aspects of our operating results and

the financial situation and current or future disruptions due to the pandemic

or otherwise could again have an impact on our results and our financial situation,

including our ability to service our debts, borrow

cash or pay distributions;

• We incurred net losses on a we GAAP basis for the financial years ended

        December 31, 2021, 2020 and 2019;


    •   There is no established public trading market for our shares, our

shareholders cannot currently sell their shares under our share buyback program

program (as amended, “PRS”), which has been suspended during COVID-19

        pandemic and may be suspended again, amended or terminated in our sole
        discretion, and even when repurchases are made pursuant to the SRP, the

The SRP is subject to limits and shareholders may not be able to sell all of

the shares they would like to sell;

• Even if our shareholders are able to sell their shares under the SRP, or

otherwise, they may not be able to recover their investment amount

in our actions;

• There is no assurance that our Board of Directors will pursue a listing or

other liquidity event at any time in the future, particularly in light of

the COVID-19 pandemic;

• Our sponsor may face a conflict of interest in the assignment of personnel and

resources between its affiliates, our Business Manager and our Real Estate

Director;

• We do not have arm’s length agreements with our Business Manager, our Real

Estate Manager or any other affiliate of our Sponsor;

• We pay fees, which may be significant, to our commercial director, Real

Domain manager and other affiliates of our sponsor;

• Our Business Manager and its affiliates face conflicts of interest caused

by, among other things, their compensation agreements with us, which

could result in actions that are not in the long-term interest of

our shareholders;

• Our properties may compete with properties belonging to other programs

sponsored by our sponsor or IPCC for, among others, tenants;

• Our Business Manager is under no obligation, and may not agree, to

        continue to forgo or defer its business management fee;


    •   If we fail to continue to qualify as a REIT, our operations and
        distributions to stockholders, if any, will be adversely affected;

• Our strategic plan, which is discussed further below, may evolve or change

over time, and there is no guarantee that we will be able to succeed

        achieve our board's objectives under the Strategic Plan, including making
        strategic sales or purchases of properties or listing our common stock,
        within the timeframe we expect or would prefer or at all;


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• Consumers’ use of the Internet for shopping is expected to continue to grow.

expand, and this expansion was probably accelerated by the effects of

the COVID-19 pandemic, which would lead to a further decline in the

the activity of our current tenants in their “bricks and mortar” locations and

could affect their ability to pay rent and their demand for space at our

commercial properties; and

• We are subject to the risks associated with any dislocation or liquidity

        disruptions that may exist or occur in credit markets of the United States
        from time to time, including disruptions and dislocations caused by the
        ongoing COVID-19 pandemic.


Forward-looking statements in this Annual Report on Form 10-K reflect our
management's view only as of the date of this Report and may ultimately prove to
be incorrect or false. We undertake no obligation to update or revise
forward-looking statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results except as required
by applicable law. We intend for these forward-looking statements to be covered
by the applicable safe harbor provisions created by Section 27A of the
Securities Act and Section 21E of the Exchange Act.

The following discussion and analysis is based on the consolidated financial
statements for the years ended December 31, 2021, 2020 and 2019. Our
stockholders should read the following discussion and analysis along with our
consolidated financial statements and the related notes thereto.

Unless otherwise indicated, all amounts are expressed in thousands, with the exception of share data.


Overview

We were formed as a Maryland corporation on August 24, 2011 and elected to be
taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code,
commencing with the year ended December 31, 2013. We have no employees. We are
managed by our business manager, IREIT Business Manager & Advisor, Inc.

We are primarily focused on acquiring and owning retail properties and intend to
target a portfolio substantially all of which would be comprised of
grocery-anchored properties as described below. We have invested in joint
ventures and may continue to invest in additional joint ventures or acquire
other real estate assets such as office and medical office buildings,
multi-family properties and industrial/distribution and warehouse facilities if
management believes the expected returns from those investments exceed that of
retail properties. We also may invest in real estate-related equity securities
of both publicly traded and private real estate companies, as well as commercial
mortgage-backed securities.

At December 31, 2021, we had total assets of $1.1 billion and owned 44
properties located in 21 states containing 6.5 million square feet. A majority
of our properties are multi-tenant, necessity-based retail shopping centers
primarily located in major regional markets and growing secondary markets
throughout the United States. At December 31, 2021, grocery-anchored or grocery
shadow-anchored shopping center properties represented 87% of our annualized
base rent. A grocery shadow-anchored shopping center is a shopping center near a
grocery store that generates traffic for the shopping center but is not a part
of the shopping center. The portfolio properties have a weighted average
economic occupancy of 93.9% and staggered lease maturity dates.


We commenced the Offering on October 18, 2012, and concluded it on October 16,
2015. We sold 33,534,022 shares of common stock in the Offering generating gross
proceeds of $834.4 million. On March 4, 2022, our board of directors determined
an Estimated Per Share NAV of our common stock as of December 31, 2021 of
$20.20. The previously estimated per share net asset value as of December 31,
2020 equal to $18.08 was established on March 5, 2021.

Covid-19 pandemic

We continue to monitor the impact of the novel coronavirus ("COVID-19") pandemic
on all aspects of our business and locations, including how it is impacting our
tenants and vendors. The Company's deferrals, modifications and rent abatements
have proven effective helping our tenants endure the economic impacts of the
pandemic. As of December 31, 2021, our deferred rent balance was $0.4 million,
down from $4.5 million at December 31, 2020 due primarily to collections during
the year. We recognized bad debt recoveries of $2.0 million during the year
ended December 31, 2021, based on favorable trends in collections from our
tenants impacted by the pandemic. Tenants with which we have agreed to defer
rent have generally been paying both their regular rental obligations as well as
the amounts of deferred rent. See Note 13 - "Leases" for additional information.

However, we are unable to predict with certainty the future impact that the
COVID-19 pandemic will have on our financial condition, results of operations
and cash flows due to numerous uncertainties, including the effects of the
Omicron variant or of the emergence and potential and actual spreading of any
other variant of COVID-19 in the U.S or any place from which our tenants may
receive goods or services.

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We rely on the Business Manager to manage our day-to-day operations. Though many
people have been able to work remotely effectively, the business and operations
of our Business Manager and its affiliates may also be adversely impacted by
further coronavirus outbreaks, including illness or quarantine of members of its
workforce, which may negatively impact its ability to provide us services to the
same degree as it had prior to the outbreak.

For more information regarding the potential impact of COVID-19 on the Company, see Part I, Section 1A entitled “Risk Factors”.

Company Update – Strategic Plan

The Company has a strategic plan that includes the goals of providing a future
liquidity event to investors and creating long-term stockholder value. The
strategic plan centered around owning a portfolio of grocery-anchored properties
with lower exposure to big box retailers. As part of this strategy, our
management team continually evaluates possibilities for the opportunistic sale
of certain assets with the goal of redeploying capital into the acquisition of
strategically located grocery-anchored centers. Of the Company's 824 leasable
spaces, there are 111 occupied non-grocery big box (anchor spaces of at least
10,000 square feet) and five vacant big box spaces in the portfolio as of
February 28, 2022. As part of the strategic plan, we sold three properties in
the first quarter of 2020. We used the proceeds to pay down the Revolving Credit
Facility. We are not actively marketing any properties as of the date of this
annual report on Form 10-K. We believe increasing the size and profitability of
the Company would enhance our ability to complete a successful liquidity event,
and to that end we seek and evaluate potential acquisitions and may, for
example, opportunistically acquire a portfolio of retail properties that we
believe complements our existing portfolio in terms of relevant characteristics
such as tenant mix, demographics and geography and is consistent with our plan
to own a portfolio substantially all of which is comprised of grocery-anchored
or shadow-anchored properties. We may also consider other transactions, such as
redeveloping certain of our properties or portions of certain of our properties,
for example, big-box spaces, to repurpose them for alternative commercial or
multifamily residential uses. We expect to consider liquidity events, including
listing our common stock on a national securities exchange, but given our
intention to opportunistically grow the portfolio, execute redevelopment
opportunities, and execute strategic sales and acquisitions in the context of
(i) fluid and changing retail market conditions resulting from the effects of
the COVID-19 pandemic and other complex factors such as (ii) competition with
our tenants from evolving internet businesses, (iii) the state of the commercial
real estate market and financial markets, (iv) our ability to raise capital on
terms that are acceptable to the Company in light of the use of the proceeds and
(v) general economic conditions, we do not know when we will complete a
liquidity event. The timing of the execution of the Strategic Plan has already
extended beyond our original expectations and cannot be predicted with
certainty. There is no assurance, particularly in light of the uncertainties
inherent in the unpredictable nature of the effects of the COVID-19 pandemic,
that the Company will be able to successfully implement its strategic plan, for
example by making strategic sales or purchases of properties or listing the
Company's common stock, within the timeframe we would prefer or at all.

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CASH AND CAPITAL RESOURCES

General

Our main uses and sources of cash are:

                  Uses                                    Sources
•   Interest & principal payments on       •   Cash receipts from our tenants
mortgage loans and Credit Facility         •   Sale of shares through the DRP
•   Property operating expenses            •   Proceeds from new or 

refinanced

•   General and administrative expenses    mortgage loans
•   Distributions to stockholders          •   Borrowing on our Credit Facility
•   Fees payable to our Business Manager   •   Proceeds from sales of real estate
and Real Estate Manager                    (if any)*

• Share repurchases under the SRP • Proceeds from the issuance of • Capital expenditures, tenant

           securities (if any) other than 

by

improvements and leasing commissions       the DRP*
•Acquisitions of real estate directly or
through joint ventures*
•   Redevelopments of entire properties
or certain spaces within our properties*



*We cannot provide any assurance that we will be able to sell properties or
issue new securities to raise capital when we would like, for example, to
increase the proportion of grocery-anchored or shadow-anchored properties or
increase the size of our portfolio of properties, or under terms that would be
acceptable to us considering factors such as the anticipated use of the
proceeds.

During January 2020, we sold three properties generating net proceeds of $37.3
million. We are not currently actively marketing any properties and do not
expect any strategic sales to occur until we believe the effects of the COVID-19
pandemic on retail commercial real estate have subsided.

At December 31, 2021, we had $129 million outstanding under the Revolving Credit
Facility and $150 million outstanding under the Term Loan. At December 31, 2021
the interest rate on the Revolving Credit Facility and the Term Loan was 1.75%
and 4.13%, respectively. On February 3, 2022, we extended the Revolving Credit
Facility maturity date to February 3, 2026 plus a twelve month extension option.
We also increased the Term Loan outstanding balance to $275 million which now
matures on February 3, 2027. As of March 15, 2022, we had $121 million available
for borrowing under the Revolving Credit Facility, subject to the terms and
conditions, and assuming compliance with the covenants, of the Amended and
Restated Credit Agreement that governs the Credit Facility. The properties
comprising the borrowing base for the Credit Facility are not available to be
used as collateral for other debt unless removed from the borrowing base, which
would shrink availability under the Credit Facility. Our leverage ratio
generally cannot exceed 60%, provided however that two times during the term of
our Revolving Credit Facility our leverage ratio may be 65% for two consecutive
quarters. Our leverage ratio was 49.0% as of December 31, 2021, as defined in
the Revolving Credit Facility's agreement.

As of December 31, 2021, we had total debt outstanding of $597 million,
excluding mortgage premiums and unamortized debt issuance costs, which bore
interest at a weighted average interest rate of 3.33% per annum. As of December
31, 2021, the weighted average years to maturity for our debt was 1.7 years. As
of December 31, 2021 and December 31, 2020, our borrowings were 44% and 47%,
respectively, of the purchase price of our investment properties. At December
31, 2021 our cash and cash equivalents balance was $8.2 million.

In the next twelve months, we have two mortgage loans maturing with an aggregate
principal balance of $26.8 million, which we intend to refinance or repay by
drawing on the Credit Facility, which was amended on February 3, 2022 as noted
above.

Two of our mortgage loans, Marketplace at Tech Center and Coastal North Town
Center, each have covenants that required us to calculate an assumed debt
service coverage ratio (the "Assumed DSCR") and make principal paydowns or
deposit additional collateral to achieve a minimum Assumed DSCR of at least
0.975 to 1.00. The minimum assumed debt service coverage ratio was calculated by
dividing (1) adjusted net cash flow by (2) the aggregate principal and interest
projected to be due and payable over the twelve month period subsequent to the
date of the calculation based upon an imputed interest rate equal to ten percent
(10%). On September 30, 2021, we drew on the Credit Facility and used cash on
hand to pay a combined total of $13.8 million to achieve the minimum Assumed
DSCR at the two properties. For information related to our debt maturities
reference is made to Note 6 - "Debt and Derivative Instruments" which is
included in our December 31, 2021 Notes to Consolidated Financial Statements in
Item 15.

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To preserve cash for the payment of operating and other expenses, such as debt
payments, during the second quarter of 2020 our board of directors rescinded the
distribution that was declared in the first quarter of 2020, and we did not
declare another distribution until June 29, 2021. We also suspended our DRP and
SRP. The suspension of the DRP was effective on June 6, 2020 and the suspension
of the SRP was effective on June 26, 2020. On June 29, 2021, we reinstated the
DRP and the SRP and declared a distribution on our common stock in the amount of
$0.135600 per share to stockholders of record as of June 30, 2021, that was paid
on or about July 26, 2021. The effective date of the DRP reinstatement was July
22, 2021 and was available for this distribution. The first share repurchases
following the reinstatement of the SRP were on August 16, 2021 and totaled $1.9
million. On or about October 7, 2021, we paid a distribution on our common stock
in the amount of $0.135600 per share to stockholders of record as of September
30, 2021. On or about January 7, 2022, we paid a distribution on our common
stock in the amount of $0.135600 per share to stockholders of record as of
December 31, 2021. See "Share Repurchase Program" under "Item 5. Market for
Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities" above for the number of shares requested for repurchase and
other information regarding our SRP.

We have delayed making non-essential capital improvements and other
non-essential capital expenditures at our properties since the onset of the
pandemic, where possible, to preserve cash and expect to continue to delay
non-essential capital expenditures until they become essential or until the risk
of adverse effects of the COVID-19 pandemic on our tenants subside and there is
more clarity on our tenants' ability and willingness to pay rent and meet other
lease obligations and, ultimately, on the performance of our shopping centers.
As we have seen rent collections increasing during 2021, we have been gradually
funding capital expenditures at our properties, and we do not expect the delay
in making these capital expenditures to have any material effect on our tenants
or our ability to lease space. In the year ended December 31, 2021, we spent
$5.9 million on capital expenditures, which is approximately $1.9 million more
(46% more), than we did in the year ended December 31, 2020. Although we expect
the total spending on tenant improvements, leasing commissions and other capital
expenditures to double in 2022 relative to 2021 as a result of an expected
return to spending at pre-pandemic levels and a relatively large number of
tenant leases expiring over the next few years, we expect to maintain sufficient
liquidity, assuming the businesses of our tenants that have been negatively
affected by the COVID-19 pandemic continue to improve or they otherwise pay
their rent.

As of December 31, 2021, we have paid all interest and principal amounts when
due and are in compliance with all financial covenants related to the Credit
Facility as amended.

Cash Flow Analysis

                                          For the year ended December 31,                     Change
                                                                                                       2020 vs.
                                         2021            2020          2019         2021 vs. 2020        2019
                                                            (Dollar amounts in thousands)
Net cash flows provided by
operating activities                  $    48,150      $  37,140     $  46,763     $        11,010     $  (9,623 )
Net cash flows (used in) provided
by investing activities               $    (5,883 )    $  33,234     $   4,860     $       (39,117 )   $  28,374
Net cash flows used in
financing activities                  $   (42,869 )    $ (61,922 )   $ (62,330 )   $        19,053     $     408




Operating activities

Cash provided by operating activities increased $11 million during 2021 compared
to 2020 and decreased $9.6 million during 2020 compared to 2019. The increase
from 2020 to 2021 was due to increased collections from tenants during 2021.The
decrease from 2019 to 2020 was due to reduced collections in 2020 due to
COVID-19 and the sale of properties in 2019 and 2020.

Investing activities

                                          For the year ended December 31,                     Change
                                                                                                       2020 vs.
                                         2021             2020         2019         2021 vs. 2020        2019
                                                            (Dollar amounts in thousands)
Proceeds from the sale of
investment properties                           -         37,255        14,872             (37,255 )      22,383
Capital expenditures                       (5,883 )       (4,021 )     (10,012 )            (1,862 )       5,991
Net cash (used in) provided by
investing activities                  $    (5,883 )     $ 33,234     $   4,860     $       (39,117 )   $  28,374




During the year ended December 31, 2021, cash was used by investing activities
compared to cash provided in 2020 primarily due to the sale of investment
properties in 2020 which did not occur in 2021. During the year ended December
31, 2020, cash provided by investing activities was higher than 2019 primarily
due to higher proceeds from the sale of investment properties and lower capital
expenditures in 2020.


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Financing activities

                                            For the year ended December 31,                     Change
                                                                                     2021 vs.
                                           2021            2020          2019          2020         2020 vs. 2019
                                                              (Dollar amounts in thousands)
Total net changes related to debt       $   (34,074 )    $ (53,223 )   $ (25,161 )   $  19,149     $       (28,062 )
Proceeds from DRP                             3,749          4,547        19,642          (798 )           (15,095 )
Shares repurchased                           (2,777 )       (2,405 )     (12,566 )        (372 )            10,161
Distributions paid                           (9,767 )      (10,841 )     (44,245 )       1,074              33,404

Net cash used in financing activities ($42,869) ($61,922) ($62,330) $19,053 $

           408




During 2021, cash expended on debt decreased $19.0 million from 2020, primarily
due to lower net debt paydowns in 2021 compared to 2020. During 2020, cash
expended on debt increased $28.1 million from 2019, primarily due to paydowns of
the line of credit. During the years ended December 31, 2021, 2020 and 2019, we
generated proceeds from the sale of shares pursuant to the DRP of $3.7 million,
$4.5 million and $19.6 million, respectively. For the years ended December 31,
2021, 2020 and 2019, share repurchases were $2.8 million, $2.4 million and $12.6
million, respectively. During the years ended December 31, 2021, 2020 and 2019,
we paid $9.8 million, $10.8 million and $44.2 million, respectively, in
distributions.


Distributions

A summary of distributions declared, distributions paid and cash flows generated from operations during the years ended December 31, 20212020 and 2019 follow (amounts in thousands of dollars, except per share amounts):

                                                                                                                                                                               Cash
                                                           Distributions                                     Cash            Cash Distributions                               Flows
                                       Distributions       Declared Per           Distributions          Distributions           Reinvested             Total Cash             From
    Year Ended December 31, (1)          Declared              Share                Rescinded                Paid                 via DRP          

Distributions Transactions paid

               2021                   $        14,655     $          0.41   (2) $               -      $           6,018     $            3,749     $            9,767     $     48,150
               2020                   $         8,173     $          0.23   (3) $          (8,173 )    $           6,294     $            4,547     $           10,841     $     37,140
               2019                   $        43,162     $          1.21   (4) $               -      $          24,603     $           19,642     $           44,245     $     46,763


(1) For completed fiscal years December 31, 20212020 and 2019, the distributions were

financed by operating cash flow. Note that some distributions may be

declared in one year but will only be paid the following year, so for everything

given year, the total distributions reported will often not add up to the total

distributions paid, even if all distributions declared have been

paid at the time of disclosure.

(2) This amount represents an annualized rate of 3% based on the

estimated net asset value per share of our common stock at December 31, 2020 equal to

$18.08 which was established on March 5, 2021. The declared distributions

during the year ended December 31, 2021 started with second trimester

distribution following the reinstatement of distributions.

(3) This amount represents the first quarter statement on an annualized rate of

5% based on the previously estimated net asset value per share of our common stock as of

December 31, 2019 equal to $18.15 which was established on March 3, 2020.

This distribution was canceled during the second quarter of 2020 and

distributions have been suspended by our Board of Directors.

(4) This amount represents an annualized rate of 6% based on the

estimated net asset value per share of our common stock at December 31, 2018 equal to

$20.12 which was established on March 5, 2019.


See "Distributions" under "Item 5. Market for Registrant's Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities" above for
the number of shares requested for repurchase and other information regarding
our distributions to stockholders.

Operating results

The following discussion is based on our consolidated financial statements for the years ended December 31, 20212020 and 2019.

This section describes and compares our results of operations for the years
ended December 31, 2021, 2020 and 2019. We generate primarily all of our net
operating income from property operations. In order to evaluate our overall
portfolio, management analyzes the net operating income of properties that we
have owned and operated for the periods presented, in their entirety, referred
to herein as "same store" properties. By evaluating the property net operating
income of our "same store" properties, management is able to monitor the
operations of our existing properties for comparable periods to measure the
performance of our current portfolio and determine the effects of any
acquisitions or dispositions on net income. (Dollar amounts in thousands)

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Comparison of years ended December 31, 2021 and 2020

We consider property net operating income an important financial measure because
it reflects only those income and expense items that are incurred at the
property level, and when compared across periods, reflects the impact on
operations from trends in occupancy rates, rental rates and operating expenses.
Although property net operating income is a widely used measure among REITs,
there can be no assurance that property net operating income presented by us is
comparable to similarly titled metrics used by other REITs.

We calculate property net operating income using net income and excluding
adjustments to straight-line income (expense) on operating leases, amortization
of intangibles and lease incentives, general and administrative expenses,
acquisition related costs, the business management fee, provisions for
impairment, depreciation and amortization, interest expense, gains on sale of
investment properties, gains on termination of interest rate swap agreements,
losses on extinguishment of debt, and interest or other income.

A total of 44 investment properties (which are all of the properties we
currently own) that were acquired on or before January 1, 2020 and classified as
held and used at December 31, 2021 represent our "same store" properties during
the years ended December 31, 2021 and 2020. "Non-same store," as reflected in
the table below, consists of properties sold after January 1, 2020. For the
years ended December 31, 2021 and 2020, three properties that were sold
constituted non-same store properties.

The following table presents the property net operating income broken out
between same store and non-same store, prior to straight-line income, net,
amortization of intangibles, interest, and depreciation and amortization for the
years ended December 31, 2021 and 2020, along with a reconciliation to net loss,
calculated in accordance with U.S. GAAP.

                                       Total                                 Same Store                          Non-Same Store
                                 For the year ended                      For the year ended                    For the year ended
                                    December 31,                            December 31,                          December 31,
                          2021          2020         Change        2021          2020        Change       2021         2020      Change
Rental income           $ 117,846     $ 111,782     $  6,064     $ 117,846  

$111,599 $6,247 $- $183 $ (183 )
Other property income 183

           162           21           183           162          21           -           -           -
Total income            $ 118,029     $ 111,944     $  6,085     $ 118,029  

$111,761 $6,268 $- $183 $ (183 )

Property operating
expenses                $  20,845     $  18,613     $  2,232     $  20,845  

$18,575 $2,270 $- $38 $ (38 )
Property tax expense 14,388 14,505 (117) 14,388

14,467 (79 ) – 38 (38 ) Total building operating expenses $35,233 $33,118 $2,115 $35,233

$33,042 $2,191 $- $76 $ (76 )

Property net operating
income                  $  82,796     $  78,826     $  3,970     $  82,796     $  78,719     $ 4,077     $     -      $  107     $  (107 )

Straight-line income,
net                     $    (362 )   $     965     $ (1,327 )
Amortization of
intangibles and
  lease incentives            669         1,977       (1,308 )
General and
administrative
  expenses                 (4,784 )      (5,206 )        422
Business management fee    (8,950 )      (8,924 )        (26 )
Depreciation and
amortization              (48,906 )     (52,834 )      3,928
Interest expense          (23,240 )     (25,349 )      2,109
Interest and other
income                        274           157          117
Net loss                $  (2,503 )   $ (10,388 )   $  7,885



Net loss. The net loss was $2,503 and $10,388 for the years ended December 31, 2021
and 2020, respectively.


Total property net operating income. On a "same store" basis, comparing the
results of operations of investment properties owned during the year ended
December 31, 2021 with the results of the same investment properties owned
during the year ended December 31, 2020, property net operating income increased
$4,077, total property income increased $6,268, and total property operating
expenses including real estate tax expense increased $2,191.


The increase in "same store" total property income is primarily due to lower bad
debt in 2021. See Note 13 - "Leases" for additional information regarding the
effects of deferred rent and bad debt on rental income.


"Non-same store" total property net operating income decreased $107 during 2021
as compared to 2020. The decrease was due to three properties sold in the first
quarter of 2020. On a "non-same store" basis, total property income decreased
$183 and total property operating expenses decreased $76 during the year ended
December 31, 2021.

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Straight-line income, net. Straight-line rent income decreased $1,327 in 2021
compared to 2020. This decrease is primarily due to scheduled rent increases and
a decrease in rent abatements in 2021.

Intangible amortization. Intangible amortization income decreased $1,308 in 2021
compared to 2020. The decrease is primarily attributable to lower below market
lease intangible write-offs in 2021.

General and administrative expenses. General and administrative expenses decreased $422 in 2021 compared to 2020 mainly due to the reduction in legal costs.

Business management fees. Business management fees have increased $26 in 2021 compared to 2020.

Depreciation and amortization. Depreciation and amortization decreased $3,928 in
2021 compared to 2020. The decrease is primarily due to fully amortized assets
and properties sold in January 2020.

Interest expense. Interest expense decreased $2,109 in 2021 compared to 2020.
The decrease is primarily due to lower average interest rates and a decrease in
average debt outstanding in 2021 compared to 2020.

Interest and other income. Interest and other income increased $117 in 2021 compared to 2020.

Comparison of years ended December 31, 2020 and 2019

A total of 44 investment properties that were acquired on or before January 1,
2019 and classified as held and used at December 31, 2020 represent our "same
store" properties during the years ended December 31, 2020 and 2019. "Non-same
store," as reflected in the table below, consists of properties sold after
January 1, 2019 or classified as held for sale at December 31, 2020. For the
years ended December 31, 2020 and 2019, 15 properties constituted non-same store
properties.

The following table presents the property net operating income broken out
between same store and non-same store, prior to straight-line income, net,
amortization of intangibles, interest, and depreciation and amortization for the
years ended December 31, 2020 and 2019, along with a reconciliation to net loss,
calculated in accordance with U.S. GAAP.

                                           Total                                      Same Store                                 Non-Same Store
                              For the year ended December 31,              For the year ended December 31,              For the year ended December 31,
                             2020            2019         Change           2020            2019         Change        2020            2019           Change
Rental income             $   111,782      $ 125,673     $ (13,891 )   $   

111,599 $120,031 ($8,432) $183 $5,642 ($5,459)
Other property income

             162            254           (92 )            162            254          (92 )          -                 -         

Total income              $   111,944      $ 125,927     $ (13,983 )   $    

111,761 $120,285 ($8,524) $183 $5,642 ($5,459)

Property operating
expenses                  $    18,613      $  22,279     $  (3,666 )   $     18,575      $  21,642     $ (3,067 )   $     38       $       637      $   (599 )
Real estate tax expense        14,505         15,869        (1,364 )         14,467         14,760         (293 )         38             1,109        (1,071 )
Total property operating
expenses                  $    33,118      $  38,148     $  (5,030 )   $     33,042      $  36,402     $ (3,360 )   $     76       $     1,746      $ (1,670 )

Property net operating
income                    $    78,826      $  87,779     $  (8,953 )   $     78,719      $  83,883     $ (5,164 )   $    107       $     3,896      $ (3,789 )

Straight-line income, net $       965      $     840     $     125
Amortization of
intangibles and
  lease incentives              1,977          1,337           640
General and
administrative
  expenses                     (5,206 )       (5,040 )        (166 )
Business management fee        (8,924 )       (9,342 )         418
Provision for asset
impairment                          -         (4,420 )       4,420
Depreciation and
amortization                  (52,834 )      (57,691 )       4,857
Interest expense              (25,349 )      (28,305 )       2,956
Gain on sale of
investment
  properties                        -          3,279        (3,279 )
Interest and other income         157            143            14
Net loss                  $   (10,388 )    $ (11,420 )   $   1,032



Net loss. The net loss was $10,388 and $11,420 for the years ended December 31, 2020
and 2019, respectively.

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Total property net operating income. On a "same store" basis, comparing the
results of operations of investment properties owned during the year ended
December 31, 2020 with the results of the same investment properties owned
during the year ended December 31, 2019, property net operating income decreased
$5,164, total property income decreased $8,524, and total property operating
expenses including real estate tax expense decreased $3,360.


The decrease in "same store" total property income is primarily due to an
increase in bad debt and lower reimbursements billed to tenants resulting from
lower expenses during the year ended December 31, 2020, both primarily caused by
the COVID-19 pandemic. See Note 13 - "Leases" for additional information
regarding the effects of the deferred rent and bad debt on rental income.


"Non-same store" total property net operating income decreased $3,789 during
2020 compared to 2019. The decrease was due to 12 properties sold in the fourth
quarter of 2019 and an additional three properties sold during the first quarter
of 2020. On a "non-store" basis, total property income decreased $5,459 and
total property operating expenses decreased $1,670 during the year ended
December 31, 2020.

Linear, net income. Linear rental income increased $125 in 2020 compared to 2019. This increase is mainly due to the increase in rent abatements in 2020.

Intangible amortization. Intangible amortization income increased $640 in 2020
compared to 2019. The increase is primarily attributable to higher below market
lease intangible write-offs during 2020 due to early tenant move-outs.

General and administrative expenses. General and administrative expenses increased $166 in 2020 compared to 2019 mainly due to the increase in legal fees in 2020.

Business management fees. Business management fees have decreased $418 in 2020 compared to 2019. The decrease is mainly attributable to 15 properties sold, including 12 in the fourth quarter of 2019 and three during January 2020.

Provision for asset impairment. During the year ended December 31, 2019, we
recorded $4,420 of impairment charges for our investment properties that were
classified as held for sale at December 31, 2019, because these properties had a
carrying value that exceeded the fair value less selling costs. No asset
impairment charges were recorded during the year ended December 31, 2020.

Depreciation and amortization. Depreciation and amortization decreased $4,857 in
2020 compared to 2019. The decrease is primarily due to properties sold in the
fourth quarter 2019 and January 2020.

Interest expense. Interest expense decreased $2,956 in 2020 compared to 2019.
The decrease is primarily due to lower average interest rates and a decrease in
average debt outstanding in 2020 compared to 2019.


Gain on sale of investment properties. During the year ended December 31, 2019we recorded a gain of $3,279 related to the sale of 12 investment properties.

Interest and other income. Interest and other income increased $14 in 2020 compared to 2019.

rental activity

The following table sets forth leasing activity during the year ended
December 31, 2021. Leases with terms of less than 12 months have been excluded
from the table.

                                                               New              Prior          % Change       Weighted         Tenant
                              Number          Gross        Contractual       Contractual      over Prior       Average      Improvements
                             of Leases      Leasable        Rent per          Rent per        Annualized        Lease        per Square
                              Signed          Area         Square Foot       Square Foot       Base Rent        Term            Foot
Comparable Renewal Leases            68       476,909     $       16.75     $       17.06            -1.8 %         4.8     $        0.07
Comparable New Leases                13        39,879     $       23.09     $       20.02            15.3 %         7.9     $       15.61
Non-Comparable New and
  Renewal Leases (a)                 47       221,316     $       14.12               N/A             N/A           4.1     $        6.84
Total                               128       738,104


(a) Includes leases signed on lots vacant for more than 12 months, leases

signed without fixed rental amounts and signed leases where the previous and

the current lease does not have a similar lease structure

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Lease extensions are treated as renewals and included in the above table only if
the lease extension period exceeds any abatement period. Seven leases comprising
33,373 square feet (5.9% of total renewal square footage) renewed during the
year ended December 31, 2021 were extended early in connection with COVID-19
related abatement or deferral agreements.

Non-GAAP Financial Measures

Accounting for real estate assets in accordance with U.S. GAAP assumes the value
of real estate assets is reduced over time due primarily to non-cash
depreciation and amortization expense. Because real estate values may rise and
fall with market conditions, operating results from real estate companies that
use U.S. GAAP accounting may not present a complete view of their performance.
We use Funds from Operations, or "FFO", a widely accepted metric to evaluate our
performance. FFO provides a supplemental measure to compare our performance and
operations to other REITs. Due to certain unique operating characteristics of
real estate companies, the National Association of Real Estate Investment
Trusts, or "NAREIT", has promulgated a standard known as FFO, which it believes
more accurately reflects the operating performance of a REIT. On November 7,
2018, NAREIT's Executive Board approved the White Paper restatement, effective
December 15, 2018. The purpose of the restatement was not to change the
fundamental definition of FFO but to clarify existing guidance. The restated
definition of FFO by NAREIT is net income (loss) computed in accordance with
U.S. GAAP, excluding depreciation and amortization related to real estate,
excluding gains (or losses) from sales of certain real estate assets, excluding
impairment write-downs of certain real estate assets and investments in entities
when the impairment is directly attributable to decreases in the value of
depreciable real estate and excluding gains and losses from change in control.
We have adopted the restated NAREIT definition for computing FFO. Previously
presented periods were not impacted.

Under U.S. GAAP, acquisition related costs are treated differently if the
acquisition is a business combination or an asset acquisition. An acquisition of
a single property will likely be treated as an asset acquisition as opposed to a
business combination and acquisition related costs will be capitalized rather
than expensed when incurred. Publicly registered, non-listed REITs typically
engage in a significant amount of acquisition activity in the early years of
their operations, and thus incur significant acquisition related costs, during
these initial years. Although other start up entities may engage in significant
acquisition activity during their initial years, publicly registered, non-listed
REITs are unique in that they typically have a limited timeframe during which
they acquire a significant number of properties and thus incur significant
acquisition related costs. Due to the above factors and other unique features of
publicly registered, non-listed REITs, the Institute for Portfolio Alternatives,
or "IPA", an industry trade group, published a standardized measure known as
Modified Funds from Operations, or "MFFO", which the IPA has promulgated as a
supplemental measure for publicly registered non-listed REITs and which may be
another appropriate supplemental measure to reflect the operating performance of
a non-listed REIT. We believe it is appropriate to use MFFO as a supplemental
measure of operating performance because we believe that, when compared
year-over-year, both before and after we have deployed all of our Offering
proceeds and are no longer incurring a significant amount of acquisition fees or
other related costs, it reflects the impact on our operations from trends in
occupancy rates, rental rates, operating costs, general and administrative
expenses, and interest costs, which may not be immediately apparent from net
income.

MFFO excludes expensed costs associated with investing activities, some of which
are acquisition related costs that affect our operations only in periods in
which properties are acquired, and other non-operating items that are included
in FFO, such as straight-lining of rents as required by U.S. GAAP. By excluding
costs that we consider more reflective of acquisition activities and other
non-operating items, the use of MFFO provides another measure of our operating
performance once our portfolio is stabilized. Because MFFO may be a recognized
measure of operating performance within the non-listed REIT industry, MFFO and
the adjustments used to calculate it may be useful in order to evaluate our
performance against other non-listed REITs. Like FFO, MFFO is not equivalent to
our net income or loss as determined under U.S. GAAP, as detailed in the table
below, and MFFO may not be a useful measure of the impact of long-term operating
performance on value if we continue to acquire a significant amount of
properties. MFFO should only be used as a measurement of our operating
performance while we are acquiring a significant amount of properties because it
excludes, among other things, acquisition costs incurred during the periods in
which properties were acquired.

We believe our definition of MFFO, a non-U.S. GAAP measure, is consistent with
the IPA's Guideline 2010-01, Supplemental Performance Measure for Publicly
Registered, Non-Listed REITs: Modified Funds from Operations, or the "Practice
Guideline," issued by the IPA in November 2010. The Practice Guideline defines
MFFO as FFO further adjusted for the following items, as applicable, included in
the determination of U.S. GAAP net income: acquisition fees and expenses;
amounts relating to straight-line rents and amortization of above and below
market lease assets and liabilities, accretion of discounts and amortization of
premiums on debt investments; mark-to-market adjustments included in net income;
nonrecurring gains or losses included in net income from the extinguishment or
sale of debt, hedges, foreign exchange, derivatives or securities holdings where
trading of such holdings is not a fundamental attribute of the business plan,
unrealized gains or losses resulting from consolidation from, or deconsolidation
to, equity accounting, and after adjustments for consolidated and unconsolidated
partnerships and joint ventures, with such adjustments calculated to reflect
MFFO on the same basis.

Our presentation of FFO and MFFO may not be comparable to other similarly titled
measures presented by other REITs. We believe that the use of FFO and MFFO
provides a more complete understanding of our operating performance to
stockholders and to management, and when compared year over year, reflects the
impact on our operations from trends in occupancy rates, rental rates, operating
costs, general and administrative expenses, and interest costs. Neither FFO nor
MFFO is intended to be an alternative to "net

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income" or to "cash flows from operating activities" as determined by U.S. GAAP
as a measure of our capacity to pay distributions. Management uses FFO and MFFO
to compare our operating performance to that of other REITs and to assess our
operating performance.

Our FFO and MFFO for the past years December 31, 20212020 and 2019 are calculated as follows (amounts in thousands of dollars):

For the year ended the 31st of December,

                                                                            2021            2020          2019
        Net loss                                                         $   (2,503 )     $ (10,388 )   $ (11,420 )
Add:    Depreciation and amortization related to investment properties      

48,906 52,834 57,691

        Provision for asset impairment                                            -               -         4,420
Less:   Gain on sale of investment properties                                     -               -        (3,279 )
        Funds from operations (FFO)                                         

46,403 42,446 47,412

Less:   Amortization of acquired market lease intangibles, net              

(773 ) (2,073 ) (1,405 )

        Straight-line income, net                                               362            (965 )        (840 )
        Modified funds from operations (MFFO)                            $   45,992       $  39,408     $  45,167




Critical Accounting Estimates

Our accounting policies have been established to conform with U.S. GAAP. The
preparation of financial statements in conformity with U.S. GAAP requires
management to use judgment in the application of accounting policies, including
making estimates and assumptions. Our significant accounting policies are
described in Note 2 - "Summary of Significant Accounting Policies" which is
included in our December 31, 2021 Notes to Consolidated Financial Statements in
Item 15. We have identified Impairment of Investment Properties and
Collectability of Accounts and Rents Receivable as critical accounting policies.

We consider these policies to be critical because it requires our management to
use judgment in the application of accounting policy, 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 consolidated financial statements and the reported amounts of revenue and
expenses during the reporting periods. If management's 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.

Impairment of investment properties

We assess the carrying values of the respective long-lived assets, whenever
events or changes in circumstances indicate that the carrying amounts of these
assets may not be fully recoverable. If it is determined that the carrying value
is not recoverable because the undiscounted cash flows do not exceed the
carrying value, we will be required to record an impairment loss to the extent
that the carrying value exceeds fair value. The valuation and possible
subsequent impairment of investment properties will be a significant estimate
that can change based on our continuous process of analyzing each property and
reviewing assumptions about inherently uncertain factors, as well as the
economic condition of the property at a particular point in time.

Collection of accounts and rents receivable

We make estimates and take into consideration certain factors that require
judgments to be made as to the collectability of accounts and rents receivable.
Collectability factors taken into consideration are the amounts outstanding,
tenant credit worthiness, current economic trends and payment history of the
tenant. We include both billed and accrued charges in our evaluation of the
collectability of a tenant's receivable balance. For tenant receivables that are
considered not probable of being collected, we record an offset for
uncollectable tenant revenues directly to rental income. Although we estimate
uncollectible receivables and provide for them through a direct write-off
against rental income, actual experience may differ from those estimates.

Recent accounting pronouncements

For information related to recently issued accounting pronouncements, reference
is made to Note 2 - "Summary of Significant Accounting Policies" which is
included in our December 31, 2021 Notes to Consolidated Financial Statements in
Item 15.

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Off-balance sheet arrangements

We currently have no off-balance sheet arrangements that are reasonably likely
to have a material current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.

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