Note 11 – Subsequent Events

COVID-19 Related Rent Deferrals

Since its discovery in December 2019, a new strain of coronavirus, which causes the viral disease known as COVID-19, has spread to many countries, including the U.S. The outbreak has been declared a pandemic by the World Health Organization, and the Secretary of Health and Human Services has declared a public health emergency in the U.S. in response to the outbreak. In response to the COVID-19 pandemic, local, state and federal agencies have instituted stay-at-home or shelter-in-place orders, which resulted in closure of many businesses deemed to be non-essential, and with respect to many of the Company’s tenants, significantly reduced volumes.

The Company has been working with certain of its tenants that are experiencing significant disruptions in their businesses to help them navigate these uncertain times, including assisting the Company’s tenants in applying for government financial relief and, in certain limited circumstances, entering into rent deferral agreements. As of April 30, 2020, the Company estimates that 2 million of rent that ordinarily would have been collected over the months of April through July 2020 will be deferred and is now expected to be collected primarily over the period from July through December 2020. Pursuant to the Lease Modification Q&A, the Company did not analyze each lease to determine if the concession was negotiated outside of the lease agreement and elected to apply the modification guidance under ASC Topic 842. We do not expect the rent payment deferrals to have a significant impact on the Company’s rental revenue amount over time and the Company expects to collect substantially all the payments deferred.

The Company has also entered into, or expects to enter into, other agreements with certain tenants whereby the Company has either (i) agreed to short-term rent reductions in exchange for extended lease terms or (ii) agreed to apply certain deposits or committed tenant improvement funds towards rent, the net effect of which is immaterial to the Company’s financial results.

Because the extent of the impact of COVID-19 on the Company’s tenants will depend on future developments, there can be no assurance that the Company’s tenants will be able meet the requirements of these agreements, or that these tenants, or other tenants, may not seek additional relief in the future.  The extent of the impact of COVID-19 on the Company’s income, expenses and ability to pay distributions will depend on certain developments, including the duration, spread and potential resurgences of the outbreak and its impact on the Company’s tenants, all of which are uncertain and cannot be predicted. At this time, the Company is unable to estimate the impact of this event on its operations.

OP Unit Redemptions for Shares of Common Stock

On April 9, 2020, the Company issued an aggregate of 735,000 shares of its common stock to two OP Unit holders in connection with their redemption of OP Units issued by the Operating Partnership in connection with their contribution of certain assets to the Operating Partnership.