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For the transition period from                      to                     

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 the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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 August 2, 2024, there were 55,018,168 shares of common stock of Sila Realty Trust, Inc. outstanding.

(in thousands, except share data and per share amounts)
(Unaudited)

			Common Stock
			No. of Shares(1)						Par Value(1)						Additional Paid-in Capital(1)						Distributions in Excess of Accumulated Earnings						Accumulated Other Comprehensive Income						Total Stockholders’ Equity
Balance, March 31, 2024			57,223,648						$	572					$	2,047,457					$	(574,993)					$	19,471					$	1,492,507
Issuance of common stock under the distribution reinvestment plan			133,059						1						3,981						—						—						3,982
Stock-based compensation			—						—						1,163						—						—						1,163
Repurchase of common stock			(140,229)						(1)						(4,195)						—						—						(4,196)
Distributions to common stockholders			—						—						—						(23,058)						—						(23,058)
Other comprehensive loss			—						—						—						—						(2,115)						(2,115)
Net income			—						—						—						4,628						—						4,628
Balance, June 30, 2024			57,216,478						$	572					$	2,048,406					$	(593,423)					$	17,356					$	1,472,911

(in thousands)
(Unaudited)

Sila Realty Trust, Inc., or the Company, is a Maryland corporation, headquartered in Tampa, Florida, that has elected, and currently qualifies, to be taxed as a real estate investment trust, or a REIT, under the Internal Revenue Code of 1986, as amended, or the Code, for federal income tax purposes. The Company is primarily focused on investing in high quality healthcare facilities across the continuum of care, which the Company believes typically generate predictable, durable and growing income streams. The Company may also make other real estate-related investments, which may include equity or debt interests in other real estate entities.

Substantially all of the Company’s business is conducted through Sila Realty Operating Partnership, LP, a Delaware limited partnership, or the Operating Partnership. The Company is the sole general partner of the Operating Partnership and directly and indirectly owns 100% of the Operating Partnership. Except as the context otherwise requires, the “Company” refers to Sila Realty Trust, Inc., the Operating Partnership and their wholly-owned subsidiaries.

On June 13, 2024, the Company's common stock, par value $0.01 per share, or the Common Stock, was listed and began trading on the New York Stock Exchange, or the NYSE, under the ticker symbol "SILA", or the Listing. Upon the Listing, all outstanding shares of Class I Common Stock and Class T Common Stock were automatically converted into shares of Class A Common Stock on a one-for-one basis and authorized but unissued shares of Class I Common Stock, Class T Common Stock and Class T2 Common Stock were reclassified into additional shares of Class A Common Stock. Class A Common Stock was then immediately renamed “Common Stock” and is the sole class of stock traded on the NYSE.

On April 8, 2024, in anticipation of the Listing, the Company amended its charter to effect a one-for-four reverse stock split, or the Reverse Stock Split, of each issued and outstanding share of each class of Common Stock of the Company, effective May 1, 2024, and the Company also amended its charter to decrease the par value of each issued and outstanding share of the Company's Common Stock from $0.04 par value per share to $0.01 par value per share immediately after the Reverse Stock Split. In addition, equitable adjustments were made to the maximum number of shares of the Company's Common Stock that may be issued pursuant to the Company’s Amended and Restated 2014 Restricted Share Plan, or the A&R Incentive Plan, and the maximum number of shares of the Company's Common Stock that may be granted under incentive stock awards under the A&R Incentive Plan, in each case, to reflect the Reverse Stock Split. The number of shares of the Company's Common Stock subject to outstanding awards under the A&R Incentive Plan were also equitably adjusted to reflect the Reverse Stock Split. The Reverse Stock Split affected all record holders of the Company’s Common Stock uniformly and did not affect any record holder’s percentage ownership interest. The Reverse Stock Split did not affect the number of the Company’s authorized shares of Common Stock. All references made to share or per share amounts in the accompanying condensed consolidated financial statements and applicable disclosures have been retroactively adjusted as though the Reverse Stock Split had been effected prior to all periods presented.

On June 13, 2024, in conjunction with the Listing, the Company commenced a modified "Dutch Auction" tender offer, or the Tender Offer, to purchase shares of its Common Stock for cash at a price per share of not greater than $24.00 nor less than $22.60, net to the seller in cash, less any applicable withholding taxes and without interest, for a maximum aggregate purchase price of no more than $50,000,000. The Company incurred deferred costs of $1,863,000 related to the Tender Offer as of June 30, 2024, which are included in other assets on the accompanying condensed consolidated balance sheets, and will be applied as a component of additional paid-in capital upon the successful completion of the Tender Offer. The Tender Offer was successfully completed subsequent to June 30, 2024. See Note 16—"Subsequent Events" for additional information.

The accompanying condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2023, and related notes thereto set forth in the Company’s Annual Report on Form 10-K, filed with the SEC on March 6, 2024. In the opinion of management, all adjustments, consisting of a normal and recurring nature considered for a fair presentation, have been included.

Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, and their wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of the condensed consolidated financial statements and accompanying notes in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates are made and evaluated on an ongoing basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Cash consists of demand deposits at commercial banks. Cash equivalents consist of highly liquid investments in money market funds with original maturities of three months or less at the time of purchase. Restricted cash consists of cash held in an escrow account in accordance with a tenant's lease agreement. Restricted cash is reported in other assets in the accompanying condensed consolidated balance sheets.

The following table presents a reconciliation of the beginning of period and end of period cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the totals shown in the condensed consolidated statements of cash flows (amounts in thousands):

						Six Months Ended June 30,
						2024						2023
Beginning of period:
Cash and cash equivalents						$	202,019					$	12,917
Restricted cash						166						166
Cash, cash equivalents and restricted cash						$	202,185					$	13,083
End of period:
Cash and cash equivalents						$	86,971					$	21,497
Restricted cash						166						166
Cash, cash equivalents and restricted cash						$	87,137					$	21,663

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, or ASU 2023-07, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption of ASU 2023-07 is permitted. The Company is evaluating the disclosure requirements of ASU 2023-07 and does not anticipate that this update will have a material impact on its condensed consolidated financial statements.

During the six months ended June 30, 2024, the Company purchased seven real estate properties in three separate transactions, which were determined to be asset acquisitions. The Company allocated the purchase price to tangible assets, consisting of land, building and improvements, tenant improvements; intangible assets, consisting of in-place leases and right-of-use assets; and lease liabilities, based on the relative fair value method of allocating all accumulated costs.

The following table summarizes the consideration transferred, including acquisition costs, and the purchase price allocation for acquisitions during the six months ended June 30, 2024 (amounts in thousands):

Property Description						Date Acquired						Ownership Percentage						Consideration Transferred (amount in thousands)
Brownsburg Healthcare Facility						02/26/2024						100%						$	39,115
Cave Creek Healthcare Facility						03/20/2024						100%						19,355
Marana Healthcare Facility						03/20/2024						100%						16,156
Surprise Healthcare Facility						03/20/2024						100%						18,602
Tucson Healthcare Facility V						03/20/2024						100%						15,994
Weslaco Healthcare Facility						03/20/2024						100%						15,713
Reading Healthcare Facility						05/21/2024						100%						10,754
Total																		$	135,689

The Company capitalized acquisition costs of $603,000, which are included in the allocation of the real estate acquisitions presented above.

On January 31, 2024, the Company sold one property for a sales price of $1,500,000, generating net proceeds of $1,439,000. The property was leased to a tenant under the common control of Vibra Healthcare, LLC, or Vibra. The Company was recognizing revenue from Vibra on a cash basis due to payment uncertainty. As a result of the property sale and lease termination, rental revenue from Vibra for the six months ended June 30, 2024, included $4,098,000 of lease termination income received from the former tenant, in addition to deferred rent from prior periods.

As of June 30, 2024, the Company did not have exposure to geographic concentration that accounted for at least 10.0% of rental revenue for the six months ended June 30, 2024.

As of June 30, 2024, the Company had one exposure to tenant concentration that accounted for at least 10.0% of rental revenue for the six months ended June 30, 2024. The leases with tenants at properties under the common control of Post Acute Medical, LLC and its affiliates accounted for 14.5% of rental revenue for the six months ended June 30, 2024.

The Company recorded impairment losses on real estate of $418,000 for both the three and six months ended June 30, 2024, as a result of triggering events that occurred at certain properties. The fair values of these properties were determined based on the guidance in Accounting Standards Codification, or ASC, 820, Fair Value Measurement. These impairments were allocated to the asset groups, for each respective property, on a pro-rata basis, which included land and buildings and improvements.

During the three months ended June 30, 2024, the Company recorded accelerated amortization of in-place lease intangible assets, above-market lease intangible assets and below-market lease intangible liabilities of $2,564,000, $2,667,000, and $1,025,000, respectively, as a result of lease terminations and amendments. During the six months ended June 30, 2024, the Company recorded accelerated amortization of in-place lease intangible assets, above-market lease intangible assets and below-market lease intangible liabilities of $4,646,000, $2,825,000, and $2,038,000, respectively, as a result of lease terminations and amendments.

The Company recorded impairment losses on real estate of $6,364,000 and $6,708,000 (including goodwill impairments of $1,238,000 and $1,582,000), for the three and six months ended June 30, 2023, respectively, as a result of tenant related triggering events that occurred at certain properties. The fair values of these properties were determined based on the guidance in ASC 820, Fair Value Measurement. These impairments were allocated to the asset groups, for each respective property, on a pro-rata basis, which included land, buildings and improvements, and their related intangible assets. In addition, during both the three and six months ended June 30, 2023, the Company recorded an impairment of in-place lease and above-market lease intangible assets of $592,000 and $260,000, respectively.

Impairment losses on real estate and goodwill impairments, if any, are recorded as impairment losses in the accompanying condensed consolidated statements of comprehensive income. Impairments and accelerated amortization of in-place leases are included in depreciation and amortization in the accompanying condensed consolidated statements of comprehensive income. Impairments and accelerated amortization of above-market leases are recorded as a reduction to rental revenue in the accompanying condensed consolidated statements of comprehensive income. Impairments and accelerated amortization of below-market leases are recorded as an increase to rental revenue in the accompanying condensed consolidated statements of comprehensive income.

Intangible assets, net, consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands, except weighted average remaining life amounts):

			June 30, 2024						December 31, 2023
In-place leases, net of accumulated amortization of $105,036 and $95,325, respectively (with a weighted average remaining life of 7.6 years and 7.8 years, respectively)			$	126,960					$	125,188
Above-market leases, net of accumulated amortization of $7,033 and $7,131, respectively (with a weighted average remaining life of 6.2 years and 6.7 years, respectively)			6,111						9,811
			$	133,071					$	134,999

The aggregate weighted average remaining life of the intangible assets was 7.6 years and 7.7 years as of June 30, 2024 and December 31, 2023, respectively.

Amortization of intangible assets was $10,594,000 and $6,466,000 for the three months ended June 30, 2024 and 2023, respectively, and $18,072,000 and $12,206,000 for the six months ended June 30, 2024 and 2023, respectively. Amortization of in-place leases is included in depreciation and amortization, and amortization of above-market leases is recorded as a reduction to rental revenue in the accompanying condensed consolidated statements of comprehensive income.

Intangible liabilities, net, consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands, except weighted average remaining life amounts):

Amortization of below-market leases was $1,366,000 and $373,000 for the three months ended June 30, 2024 and 2023, respectively, and $2,753,000 and $747,000 for the six months ended June 30, 2024 and 2023, respectively. Amortization of below-market leases is recorded as an increase to rental revenue in the accompanying condensed consolidated statements of comprehensive income.

The Company’s real estate properties are leased to tenants under operating leases with varying terms. Typically, the leases have provisions to extend the terms of the lease agreements. The Company retains substantially all of the risks and benefits of ownership of the real estate properties leased to tenants.

Future rent to be received from the Company's investments in real estate assets under the terms of non-cancellable operating leases in effect as of June 30, 2024, for the period ending December 31, 2024, and for each of the next four years ending December 31, and thereafter, are as follows (amounts in thousands):

(1)The table includes payments from tenants who have been moved to the cash basis of accounting for revenue recognition purposes that have continued to make rental payments as of June 30, 2024.

The Company is subject to various non-cancellable operating lease agreements on which certain of its properties reside (ground leases) and for its corporate office.

The Company's operating leases do not provide implicit interest rates. In order to calculate the present value of the remaining operating lease payments, the Company used incremental borrowing rates, or IBRs, adjusted for a number of factors. The determination of an appropriate IBR involves multiple inputs and judgments. The Company determined its IBRs considering the general economic environment, term of the underlying leases, and various financing and asset specific adjustments to ensure the IBRs are appropriate for the intended use of the underlying operating leases.

The effects of the Company's operating leases are recorded in right-of-use assets and lease liabilities on the condensed consolidated balance sheets.

As of June 30, 2024, the Company's weighted average IBR for its operating leases was 5.5%. The weighted average remaining lease term for the Company's operating leases was 35.9 years as of June 30, 2024.

The future rent payments, discounted by the Company's IBRs, under non-cancellable operating leases in effect as of June 30, 2024, for the period ending December 31, 2024, and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

The following table provides details of the Company's total lease costs for the three and six months ended June 30, 2024 and 2023 (amounts in thousands):

												Three Months Ended June 30,															Six Months Ended June 30,
						Location in Condensed Consolidated Statements of Comprehensive Income						2024						2023									2024						2023
Operating lease costs:
Ground lease costs (1)						Rental expenses						$	681					$	681								$	1,363					$	1,363
Corporate operating lease costs						General and administrative expenses						187						189									376						376
Supplemental disclosure of cash flows information:
Operating cash outflows for operating leases(2)												$	176					$	165								$	419					$	398
Right-of-use assets obtained in exchange for new lease liabilities												$	28					$	—								$	28					$	—

(1)The Company receives reimbursements from tenants for certain operating ground leases, which are recorded as rental revenue in the accompanying condensed consolidated statements of comprehensive income.

(2)Amounts are net of reimbursements the Company receives from tenants for certain operating ground leases.

Other assets consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands):

			June 30, 2024						December 31, 2023
Deferred financing costs, related to the revolver portion of the credit facility, net of accumulated amortization of $2,452 and $1,917, respectively			$	1,738					$	2,271
Leasing commissions, net of accumulated amortization of $236 and $191, respectively			1,822						593
Restricted cash			166						166
Tenant receivables			2,655						2,398
Straight-line rent receivable			55,548						53,248
Real estate deposits			250						—
Prepaid and other assets			5,593						4,089
Derivative assets			17,356						17,060
			$	85,128					$	79,825

Accounts payable and other liabilities consisted of the following as of June 30, 2024 and December 31, 2023 (amounts in thousands):

The Company's outstanding credit facility as of June 30, 2024 and December 31, 2023 consisted of the following (amounts in thousands):

Significant activities regarding the credit facility during the six months ended June 30, 2024 include:

•On March 20, 2024 the Company, the Operating Partnership, and certain of the Company's subsidiaries, entered into a senior unsecured amended and restated term loan agreement, or the 2027 Term Loan Agreement, with Truist Bank, as Administrative Agent for the lenders, for aggregate commitments of $250,000,000, which may be increased, subject to lender approval, to an aggregate amount not to exceed $500,000,000. The maturity date for the 2027 Term Loan is March 20, 2027 and, at the Company's election, may be extended for a period of one year on no more than two occasions, subject to the satisfaction of certain conditions, including the payment of an extension fee. The 2027 Term Loan Agreement was entered into to replace the Company's prior term loan agreement, which was paid off in its entirety upon closing of the 2027 Term Loan Agreement.

•In connection with the pay-off of our prior term loan agreement and entering into the 2027 Term Loan Agreement, the Company recognized a loss on extinguishment of debt of $228,000 during the six months ended June 30, 2024. The loss on extinguishment of debt was recognized in interest expense in the accompanying condensed consolidated statements of comprehensive income.

The principal payments due on the credit facility as of June 30, 2024, for the period ending December 31, 2024, and for each of the next four years ending December 31 and thereafter, are as follows (amounts in thousands):

Cash and cash equivalents, restricted cash, tenant receivables, prepaid and other assets, accounts payable and other liabilities—The Company considers the carrying values of these financial instruments, assets and liabilities, to approximate fair value because of the short period of time between origination of the instruments and their expected realization.

Credit facility—The outstanding principal of the credit facility was $525,000,000 and $525,000,000, which approximated its fair value due to the variable nature of the terms as of June 30, 2024 and December 31, 2023, respectively.

The fair value of the Company's credit facility is estimated based on the interest rates currently offered to the Company by its financial institutions.

Derivative instruments—The Company’s derivative instruments consist of interest rate swaps. These swaps are carried at fair value to comply with the provisions of ASC 820. The fair value of these instruments is determined using interest rate market pricing models. The Company incorporated credit valuation adjustments to appropriately reflect the Company’s nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. The Company determined that the inputs used to value its interest rate swaps, with the exception of the credit valuation adjustment, fall within Level 2 of the fair value hierarchy. The credit valuation adjustments associated with these instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the respective counterparty.

However, as of June 30, 2024, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its interest rate swaps. As a result, the Company determined that its interest rate swaps valuation in its entirety is classified in Level 2 of the fair value hierarchy.

Considerable judgment is necessary to develop estimated fair values of financial assets and liabilities. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize or be liable for on disposition of the financial assets and liabilities.

The following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 (amounts in thousands):

			June 30, 2024
			Fair Value Hierarchy
			Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total Fair Value
Assets:
Derivative assets			$	—					$	17,356					$	—					$	17,356
Total assets at fair value			$	—					$	17,356					$	—					$	17,356

Derivative assets and liabilities are reported in the condensed consolidated balance sheets as other assets and accounts payable and other liabilities, respectively.

Real Estate Assets— As of June 30, 2024, two real estate assets were measured at an aggregate fair value of $15,500,000 and resulted in the recognition of an impairment loss of $418,000 for the six months ended June 30, 2024. The fair value was measured based on a third-party purchase offer for the assets, which resides within Level 2 of the fair value hierarchy.

As of December 31, 2023, six real estate assets were measured at an aggregate fair value of $37,600,000 and resulted in the recognition of an impairment loss of $20,758,000 for the year ended December 31, 2023. The fair value of three real estate assets of $21,400,000 were measured based on third-party purchase offers for the assets, which reside within Level 2 of the fair value hierarchy. One of the real estate assets was sold in 2024. The fair value of three real estate assets of $16,200,000 were measured using a direct capitalization method or comparable sales information, which reside within Level 3 of the fair value hierarchy.

The significant unobservable inputs for the Level 3 measurements include:

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

For derivatives designated and qualifying as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest is incurred on the Company’s variable rate debt. During the next twelve months, the Company estimates that an additional $10,944,000 will be reclassified from accumulated other comprehensive income as a reduction to interest expense.

The following table summarizes the notional amount and fair value of the Company’s derivative instruments (amounts in thousands):

Derivatives Designated as Hedging Instruments						Balance Sheet Location						Effective Dates						Maturity Dates						June 30, 2024																		December 31, 2023
																								Outstanding Notional Amount						Fair Value of												Outstanding Notional Amount						Fair Value of
																														Assets						(Liabilities)												Assets						(Liabilities)
Interest rate swaps						(1)						05/01/2022 to 05/01/2023						12/31/2024 to 01/31/2028						$	525,000					$	17,356					$	—					$	525,000					$	17,060					$	(457)

(1)     Derivative assets and liabilities are reported in the condensed consolidated balance sheets as other assets and accounts payable and other liabilities, respectively.

The notional amount under the agreements is an indication of the extent of the Company’s involvement in each instrument at the time, but does not represent exposure to credit, interest rate or market risks.

The table below summarizes the amount of income and loss recognized on the interest rate derivatives designated as cash flow hedges for the three and six months ended June 30, 2024 and 2023 (amounts in thousands):

The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations. The Company records credit risk valuation adjustments on its interest rate swaps based on the respective credit quality of the Company and the counterparty. The Company believes it mitigates its credit risk by entering into agreements with creditworthy counterparties. As of both June 30, 2024 and December 31, 2023, the Company had no derivatives with fair value in a net liability position, inclusive of accrued interest but excluding any adjustment for nonperformance risk related to the agreement. As of both June 30, 2024 and December 31, 2023, there were no termination events or events of default related to the interest rate swaps.

The Company has elected not to offset derivative positions in its condensed consolidated financial statements. The following tables present the effect on the Company’s financial position had the Company made the election to offset its derivative positions as of June 30, 2024 and December 31, 2023 (amounts in thousands):

On April 8, 2024, the Company amended its charter to effect a one-for-four reverse stock split, effective May 1, 2024. On June 13, 2024, authorized but unissued shares of Class I Common Stock, Class T Common Stock and Class T2 Common Stock were reclassified into additional shares of Class A Common Stock. Class A Common Stock was then immediately renamed “Common Stock” and is the sole class of stock traded on the NYSE. See Note 1—"Organization and Business Operations" for further details.

As of June 30, 2024, the Company had distributions payable of $7,663,000, which were paid in cash on July 15, 2024.

On April 5, 2024, the board of directors, or the Board, approved the termination of the distribution reinvestment plan, effective May 1, 2024.

The Company’s Amended and Restated Share Repurchase Program, or the SRP, allowed for repurchases of shares of the Company’s Common Stock upon meeting certain criteria. On April 5, 2024, the Board approved the suspension of the SRP, effective immediately, and the termination of the SRP, effective upon the Listing.

During the six months ended June 30, 2024, the Company repurchased 283,512 Class A shares, Class I shares and Class T shares of Common Stock, after giving effect to the Reverse Stock Split (246,024 Class A shares, 7,574 Class I shares and 29,914 Class T shares), for an aggregate purchase price of $8,482,000 (an average of $29.92 per share). During the six months ended June 30, 2023, the Company repurchased 182,298 Class A shares, Class I shares and Class T shares of Common Stock, after giving effect to the Reverse Stock Split (140,021 Class A shares, 10,986 Class I shares and 31,291 Class T shares), for an aggregate purchase price of $5,994,000 (an average of $32.88 per share).

The following table presents a rollforward of amounts recognized in accumulated other comprehensive income by component for the six months ended June 30, 2024 and 2023 (amounts in thousands):

						Unrealized Income on Derivative Instruments
Balance as of December 31, 2023						$	16,603
Other comprehensive income before reclassification						9,786
Amount of income reclassified from accumulated other comprehensive income to net income						(9,033)
Other comprehensive income						753
Balance as of June 30, 2024						$	17,356

						Unrealized Loss on Derivative Instruments
Balance as of December 31, 2022						$	27,990
Other comprehensive income before reclassification						6,770
Amount of income reclassified from accumulated other comprehensive income to net income						(7,652)
Other comprehensive loss						(882)
Balance as of June 30, 2023						$	27,108

The following table presents reclassifications out of accumulated other comprehensive income for the six months ended June 30, 2024 and 2023 (amounts in thousands):

The Company calculates basic earnings per share by dividing net income attributable to common stockholders for the period by the weighted average shares of its Common Stock outstanding for that period. Diluted earnings per share is computed based on the weighted average number of shares outstanding and all potentially dilutive securities, which include non-vested shares of restricted Common Stock and performance-based deferred stock unit awards, or Performance DSUs. The non-vested shares of restricted Common Stock contain non-forfeitable dividend distribution rights. The Performance DSUs also have dividend distribution rights which are paid to the grantee only in the event that the applicable performance criteria is achieved and the Performance DSUs vest. For the three and six months ended June 30, 2024, diluted earnings per share reflected the effect of 371,000 and 403,000, respectively, of non-vested shares of restricted Common Stock and Performance DSUs that were outstanding after giving effect to the Reverse Stock Split. For the three and six months ended June 30, 2023, diluted earnings per share reflected the effect of 464,000 and 463,000, respectively, of non-vested shares of restricted Common Stock and Performance DSUs that were outstanding after giving effect to the Reverse Stock Split.

On March 6, 2020, the Board approved the A&R Incentive Plan pursuant to which the Company has the authority and power to grant awards of restricted shares of its Common Stock to its directors, executive officers, and employees.

The Company recognized no accelerated stock-based compensation expense for the three months ended June 30, 2024. The Company recognized accelerated stock-based compensation expense of $863,000 for the six months ended June 30, 2024, as a result of the acceleration of awards pursuant to severance agreements with two departed executive officers. The Company recognized total stock-based compensation expense of $1,163,000 and $1,251,000, respectively, for the three months ended June 30, 2024 and 2023, and $2,487,000 and $2,493,000, respectively, for the six months ended June 30, 2024 and 2023. Stock-based compensation expense is reported in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive income, and forfeitures are recorded as they occur.

In the ordinary course of business, the Company may become subject to litigation or claims. As of June 30, 2024, there were, and currently there are, no material pending legal proceedings to which the Company is a party. While the resolution of a lawsuit or proceeding may have an impact to the Company's financial results for the period in which it is resolved, the Company believes that the final resolution of the lawsuits or proceedings in which it is currently involved, either individually or in the aggregate, will not have a material adverse effect on its financial position, results of operations or liquidity.

On July 15, 2024, the Company paid cash distributions of $7,663,000 to the Company's stockholders of record as of the close of business on July 1, 2024.

On July 16, 2024, the Board approved and authorized a distribution payable on August 15, 2024, to the Company's stockholders of record as of the close of business on July 31, 2024. The distribution will be equal to $0.1333 per share of Common Stock, representing an annualized amount of $1.60 per share.

On June 13, 2024, in conjunction with the Listing, the Company commenced the Tender Offer to purchase shares of its Common Stock for cash at a price per share of not greater than $24.00 nor less than $22.60, net to the seller in cash, less any applicable withholding taxes and without interest, for a maximum aggregate purchase price of no more than $50,000,000. The Tender Offer expired on July 19, 2024. As a result of the Tender Offer, the Company accepted for purchase 2,212,389 shares of Common Stock (which represented approximately 3.9% of the total number of shares of Common Stock outstanding as of July 19, 2024) at a purchase price of $22.60 per share, for an aggregate purchase price of approximately $50,000,000, excluding related fees and expenses. The Company funded the Tender Offer, and will fund all related costs, with its available cash.

On July 25, 2024, the Company purchased 100% of the ownership interests in a healthcare property in Fort Smith, Arkansas, or the Fort Smith Healthcare Facility, for a contract purchase price of $28,250,000.

On July 24, 2024, the Company borrowed $20,000,000 on its revolving line of credit to fund the acquisition of the Fort Smith Healthcare Facility.

On July 2, 2024, the Company granted its employees an aggregate of 87,269 time-based vesting restricted shares of Common Stock, which, subject to each employee's continuous employment through the applicable vesting dates, will vest 25% annually commencing on July 2, 2025. As of July 2, 2024, there was $1,802,000 of total unrecognized stock-based compensation expense related to these awards, which will be recognized over the vesting period. These awards were granted under and subject to the terms of the A&R Incentive Plan and an award agreement.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements, and the notes thereto, and the other financial information appearing elsewhere in this Quarterly Report on Form 10-Q.

The following discussion should also be read in conjunction with our audited consolidated financial statements, and the notes thereto, Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission, or the SEC, on March 6, 2024, or the 2023 Annual Report on Form 10-K.

The terms “we,” “our,” “us,” and the “Company” refer to Sila Realty Trust, Inc., Sila Realty Operating Partnership, LP, or our Operating Partnership, and all wholly-owned subsidiaries.

Certain statements contained in this Quarterly Report on Form 10-Q, other than historical facts, include forward-looking statements that reflect our expectations and projections about our future results, performance, prospects and opportunities. Such statements include, in particular, our liquidity and capital resources, capital expenditures, material cash requirements, debt service requirements, term loan requirements, plans, leases, dividends, distributions, strategies, and prospects and are subject to certain risks and uncertainties, including 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. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Forward-looking statements are subject to various risks and uncertainties, and factors that could cause actual results to differ materially from our expectations, and investors should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect our results of operations, financial condition, cash flows, performance or future achievements or events.

Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. We make no representation or warranty (express or implied) about the accuracy of any such forward-looking statements contained in this Quarterly Report on Form 10-Q, and we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. See Part I, Item 1A. “Risk Factors” of our 2023 Annual Report on Form 10-K, for a discussion of some, although not all, of the risks and uncertainties that could cause actual results to differ materially from those presented in our forward-looking statements.

Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles, or GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We evaluate these estimates on a regular basis. 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.

We use any of the following to comply with our disclosure obligations under Regulation FD: SEC filings; press releases; public conference calls; or our website. We routinely post important information on our website at www.silarealtytrust.com, including information that may be deemed material. We encourage our shareholders and others interested in our company to monitor these distribution channels for material disclosures. The contents of our website address referenced herein is included in this Quarterly Report on Form 10-Q as a textual reference only and is not incorporated by reference into this Quarterly Report on Form 10-Q.

We invest in high quality properties leased to tenants capitalizing on critical and structural economic growth drivers. We are primarily focused on investing in healthcare facilities across the continuum of care, which we believe typically generate predictable, durable and growing income streams. We may also make other real estate-related investments, which may include equity or debt interests in other real estate entities.

As of June 30, 2024, we owned 137 real estate properties and two undeveloped land parcels.

On June 13, 2024, our common stock, par value $0.01 per share, or the Common Stock, was listed and began trading on the New York Stock Exchange, or the NYSE, under the ticker symbol "SILA", or the Listing. Upon the Listing, all outstanding shares of Class I Common Stock and Class T Common Stock were automatically converted into shares of Class A Common Stock on a one-for-one basis and authorized but unissued shares of Class I Common Stock, Class T Common Stock and Class T2 Common Stock were reclassified into additional shares of Class A Common Stock. Class A Common Stock was then immediately renamed “Common Stock” and is the sole class of stock traded on the NYSE.

On April 8, 2024, in anticipation of the Listing, we amended our charter to effect a one-for-four reverse stock split, or the Reverse Stock Split, of each issued and outstanding share of each class of our Common Stock, $0.01 par value per share, effective May 1, 2024, and we also amended our charter to decrease the par value of each issued and outstanding share of our Common Stock from $0.04 par value per share to $0.01 par value per share immediately after the Reverse Stock Split. In addition, equitable adjustments were made to the maximum number of shares of our Common Stock that may be issued pursuant to our Amended and Restated 2014 Restricted Share Plan, or the A&R Incentive Plan, and the maximum number of shares of our Common Stock that may be granted under incentive stock awards under the A&R Incentive Plan, in each case, to reflect the Reverse Stock Split. The number of shares of our Common Stock subject to outstanding awards under the A&R Incentive Plan were also equitably adjusted to reflect the Reverse Stock Split. The Reverse Stock Split affected all record holders of our Common Stock uniformly and did not affect any record holder’s percentage ownership interest. The Reverse Stock Split did not affect the number of our authorized shares of Common Stock.

In light of our intention to pursue the Listing, on April 5, 2024, our board of directors, or the Board, approved the suspension of our Amended and Restated Share Repurchase Program, or the SRP, effective immediately, and the termination of the SRP, effective upon the Listing. On April 5, 2024, the Board also approved the termination of our distribution reinvestment plan, or the DRIP, effective May 1, 2024.

On June 13, 2024, in conjunction with the Listing, we commenced a modified "Dutch Auction" tender offer, or the Tender Offer, to purchase shares of our Common Stock for cash at a price per share of not greater than $24.00 nor less than $22.60, net to the seller in cash, less any applicable withholding taxes and without interest, for a maximum aggregate purchase price of no more than $50.0 million. The Tender Offer expired on July 19, 2024. As a result of the Tender Offer, we accepted for purchase 2,212,389 shares of our Common Stock (which represented approximately 3.9% of the total number of shares of Common Stock outstanding as of July 19, 2024) at a purchase price of $22.60 per share, for an aggregate purchase price of approximately $50,000,000, excluding related fees and expenses. We funded the Tender Offer, and will fund all related costs, with our available cash.

Our critical accounting estimates were disclosed in our 2023 Annual Report on Form 10-K. There have been no material changes to our critical accounting estimates as disclosed therein.

Our accompanying condensed consolidated financial statements have been prepared by us in accordance with GAAP in conjunction with the 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, our accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. Our accompanying condensed consolidated financial statements reflect all adjustments, which are, in our view, of a normal recurring nature and necessary for a fair presentation of our financial position, results of operations and cash flows for the interim period. Interim results of operations are not necessarily indicative of the results to be expected for the full year; such full year results may be less favorable. Our accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our 2023 Annual Report on Form 10-K.

We elected, and qualify, to be taxed as a REIT for federal income tax purposes, and we intend to continue to be taxed as a REIT. To maintain our qualification as a REIT, we must continue to meet certain organizational and operational requirements, including a requirement to distribute at least 90.0% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gain, to our stockholders. As a REIT, we generally will not be subject to federal income tax on taxable income that we distribute to our stockholders.

If we fail to maintain our qualification as a REIT in any taxable year, we would then be subject to federal income taxes on our taxable income at regular corporate rates and would 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 grants us relief under certain statutory provisions. Such an event could have a material adverse effect on our net income and net cash available for distribution to our stockholders.

We are not aware at this time of any material trends or uncertainties, other than national economic conditions and those discussed below, affecting our real estate properties, that may reasonably be expected to have a material impact, favorable or unfavorable, on revenues or income, management and operation of our properties other than those set forth in our 2023 Annual Report on Form 10-K.

Our operating results have been and will continue to be generally impacted by global and national economic and market conditions and by the local economic conditions where our real estate properties are located. Increased interest rates, persistent inflation, ongoing geopolitical tensions, and increased volatility in public and private equity and fixed income markets have led to increased costs and have limited the availability of capital. In response to inflationary pressures, the Federal Reserve began raising interest rates in 2022. Higher interest rates imposed by the Federal Reserve to address inflation may adversely impact our borrowing costs and real estate asset values generally, including our real estate properties.

To the extent our tenants have also experienced difficulties due to the foregoing economic and market conditions, they may be unable or unwilling to make payments or perform their obligations when due. Most of our lease agreements contain provisions designed to mitigate the adverse impact of inflation, including annual rent increases based on stated increases or consumer price index (CPI) increases.

The amount of rental revenue generated by our properties depends principally on our ability to maintain the occupancy rates of leased space and to lease available space at existing rental rates. Negative trends in one or more of these factors could adversely affect our rental revenue in future periods. We continually monitor our tenants' ability to meet their lease obligations to pay us rent to determine if any adjustments should be reflected currently. As of June 30, 2024, our real estate properties were 97.5% leased.

On May 6, 2024, Steward Health Care System LLC, or Steward, the sponsor and owner of a tenant at one of our real estate properties, announced that it filed for Chapter 11 bankruptcy protection under the United States Bankruptcy Code. Steward is seeking U.S. bankruptcy court approval to reject certain unexpired real property leases. Steward's lease obligations with us have not been included in any legal motions filed to date.

During the three months ended December 31, 2023, due to the ongoing operational and liquidity challenges faced by Steward, we determined the collectability of amounts owed under the contractual terms of Steward's lease were no longer reasonably assured. As a result, we ceased recognizing rent on a straight-line basis and have only recorded rent for Steward to the extent we have received cash. We recorded a write-off of straight-line rent receivables related to Steward of $1,604,000 during the three months ended December 31, 2023, as a reduction in rental revenue, because the amounts were determined to be uncollectible. In addition, we recorded $10,945,000 of impairment losses (including goodwill impairments of $350,000) on the real estate property leased to Steward during the three months ended December 31, 2023. There were no further impairment losses recorded on the real estate property leased to Steward for both the three and six months ended June 30, 2024. Bankruptcy proceedings are subject to uncertainty and there can be no assurance how the bankruptcy court's or other parties' actions or decisions may impact Steward or its future impact to us.

As disclosed in the Current Report on Form 8-K that the Company filed with the SEC on June 5, 2023, GenesisCare USA, Inc. and its affiliates, or GenesisCare, the sponsor and owner of the tenant in certain of our real estate properties announced that it filed for Chapter 11 bankruptcy protection under the United States Bankruptcy Code on June 1, 2023. During the bankruptcy proceedings, GenesisCare sought U.S. bankruptcy court approval to reject certain unexpired real property leases. GenesisCare's lease obligations with us were not included in any motions.

During the six months ended June 30, 2024, the Company entered into a second amendment to the second amended and restated master lease, or the GenesisCare Amended Master Lease, with GenesisCare in connection with its emergence from bankruptcy on February 16, 2024. Prior to the GenesisCare Amended Master Lease, GenesisCare was a tenant at 17 of our real estate properties pursuant to a first amendment to the second amended and restated master lease, or the GenesisCare Master Lease. The GenesisCare Amended Master Lease removed 10 of our properties from the GenesisCare Master Lease, or the Severed Properties. The seven remaining properties will continue to be leased to GenesisCare and had no material changes in lease terms pursuant to the GenesisCare Master Lease. As a result of the GenesisCare Amended Master Lease, we entered into lease agreements with new tenants at six of the Severed Properties during the six months ended June 30, 2024. We are currently in the process of negotiating a lease with a new tenant at one of the Severed Properties and three of the Severed Properties are currently being marketed for lease or sale. In exchange for the Severed Properties, we received a $2,000,000 severance fee from GenesisCare during the six months ended June 30, 2024, which will be recognized in rental revenues over the remaining GenesisCare Amended Master Lease term.

Due to GenesisCare filing for bankruptcy, we determined the collectability of amounts owed under the contractual terms of GenesisCare's lease were no longer reasonably assured. As a result, we ceased recognizing rent on a straight-line basis and have only recorded rent for GenesisCare to the extent we have received cash. We recorded a write-off of straight-line rent receivables related to GenesisCare of $1,630,000, for both the three and six months ended June 30, 2023, respectively, as a reduction in rental revenue, because the amounts were determined to be uncollectible. GenesisCare continues to make its lease payments due to us in accordance with the GenesisCare Amended Master Lease and made its lease payments throughout its bankruptcy pursuant to the GenesisCare Master Lease.

We recorded impairment losses on certain real estate properties formerly leased to GenesisCare of $418,000, for both the three and six months ended June 30, 2024, respectively, as a result of triggering events. During the three months ended June 30, 2024, the Company recorded accelerated amortization of in-place lease intangible assets, above-market lease intangible assets and below-market lease intangible liabilities of $2,564,000, $2,667,000, and $1,025,000, respectively, as a result of the GenesisCare Amended Master Lease. During the six months ended June 30, 2024, we recorded accelerated amortization of in-place lease intangible assets, above-market lease intangible assets and below-market lease intangible liabilities of $4,646,000, $2,667,000, and $2,038,000, respectively, as a result of the GenesisCare Amended Master Lease.

We recorded impairment losses on certain real estate properties leased or formerly leased to GenesisCare of $6,364,000 (including goodwill impairments of $1,238,000), for both the three and six months ended June 30, 2023, respectively, as a result of GenesisCare announcing it had filed bankruptcy. In addition, during both the three and six months ended June 30, 2023, we recorded an impairment of in-place lease and above-market lease intangible assets on certain real estate properties formerly leased to GenesisCare of $592,000 and $260,000, respectively. We recorded impairment losses on a real estate property formerly leased to GenesisCare of $3,115,000 for the three months ended December 31, 2023. In addition, during the three months ended December 31, 2023, we recorded an impairment of in-place lease intangible assets on a real estate property formerly leased to GenesisCare of $538,000.

Our results of operations are influenced by the timing of acquisitions and the performance of our real estate properties.

The following table shows the property statistics of our real estate properties as of June 30, 2024 and 2023:

			June 30,
			2024						2023
Number of real estate properties (1)			137						132
Leased square feet			5,155,000						5,400,000
Weighted average percentage of rentable square feet leased			97.5		%				99.6		%

(1)As of June 30, 2024, we owned 137 real estate properties and two undeveloped land parcels. As of June 30, 2023, we owned 132 real estate properties and two undeveloped land parcels.

The following table summarizes our real estate activity for the three and six months ended June 30, 2024 and 2023:

(1)Includes capitalized acquisition costs associated with transactions determined to be asset acquisitions.

This section describes and compares our results of operations for the three and six months ended June 30, 2024 and 2023. We generate substantially all of our revenue from property operations. In order to evaluate our overall portfolio, management analyzes the results of our same store properties. We define "same store properties" as properties that were owned and operated for the entirety of both calendar periods being compared and exclude properties under development, re-development, or classified as held for sale.

By evaluating the results 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 readily observe the expected effects of our new acquisitions and dispositions on net income.

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

The following table allocates total rental revenue for the three months ended June 30, 2024 compared to the comparable period in 2023 (amounts in thousands).

•Same store rental revenue decreased primarily due to a $2,407,000 increase in accelerated amortization of above-market lease intangible assets as a result of lease terminations and renewals, a $977,000 decrease due to lease terminations, a $506,000 decrease primarily related to rent recognized on a cash basis as a result of certain tenants with payment uncertainty who were paying their rent in the prior period being compared, and a $230,000 decrease as a result of amended leases with lower rental rates in exchange for longer lease terms, partially offset by a $1,630,000 increase due to the write-off of straight-line rent receivables in the prior period as a result of tenant uncertainty, a $1,025,000 increase in accelerated amortization of below-market lease intangible liabilities as a result of lease terminations, and a $180,000 increase in annual base rent escalations for leases indexed to CPI.

•Same store tenant reimbursements increased $255,000 primarily due to higher reimbursable operating costs in the current period, which are generally passed along to our tenants.

•Non-same store rental revenue decreased primarily due to a $4,607,000 decrease due to property dispositions since April 1, 2023, partially offset by an increase of $3,720,000 attributable to properties acquired since April 1, 2023.

•Non-same store tenant reimbursements increased $541,000 primarily due to properties acquired since April 1, 2023, partially offset by a $35,000 decrease primarily related to property dispositions since April 1, 2023.

•There were no significant changes in other operating income.

•Same store rental expenses increased primarily due to a $245,000 increase in non-reimbursable expenses as a result of lease terminations and a $227,000 increase in expenses, certain of which are subject to reimbursement by our tenants, due to higher operating costs in the current period.

•Non-same store rental expenses, certain of which are subject to reimbursement by our tenants, increased primarily due to a $599,000 increase attributable to properties acquired since April 1, 2023, partially offset by a $95,000 decrease due to property dispositions since April 1, 2023.

•Listing-related expenses of $2,924,000 were recorded during the three months ended June 30, 2024, consisting of advisory fees for legal, banking, and other advisory services, related to the Listing on June 13, 2024.

•General and administrative expenses decreased primarily due to a $225,000 decrease in personnel costs, and a $186,000 decrease in professional fees related to third-party valuation services for our estimated per share net asset value, partially offset by a $212,000 increase in audit and tax fees.

•Depreciation and amortization increased primarily due to a $1,972,000 increase in accelerated amortization of in-place lease intangible assets as a result of lease terminations, a $1,978,000 increase due to properties acquired since April 1, 2023, partially offset by a $2,027,000 decrease from property dispositions, a $266,000 decrease attributable to fully amortized in-place lease intangible assets and tenant improvements, and a $245,000 decrease related to properties impaired in prior periods.

•Impairment losses were recorded in the aggregate amount of $418,000 during the three months ended June 30, 2024, compared to impairment losses recorded in the aggregate amount of $6,364,000 during the three months ended June 30, 2023, as a result of tenant related triggering events that occurred at certain properties.

Changes in interest and other expenses, net, are summarized in the following table (amounts in thousands):

•Interest and other income increased primarily due to an $861,000 increase in dividend income from investments in money market funds and a $140,000 increase in interest income from cash deposits, partially offset by a decrease of $120,000 in interest income related to a note receivable in the prior period.

•Interest expense decreased primarily due to a $346,000 decrease related to a reduction in the weighted average outstanding principal balance on our credit facility of $41,429,000 and a decrease of $276,000 related to a reduction in the weighted average interest rate on our credit facility, partially offset by a $165,000 increase in amortization of deferred financing costs.

The following table allocates total rental revenue for the six months ended June 30, 2024 compared to the comparable period in 2023 (amounts in thousands):

•Same store rental revenue decreased primarily due to a $2,565,000 increase in accelerated amortization of above-market lease intangible assets as a result of lease terminations and renewals, a $1,139,000 decrease due to lease terminations, a $289,000 decrease as a result of amended leases with lower rental rates in exchange for longer lease terms, and a $107,000 decrease primarily related to rent recognized on a cash basis as a result of tenants with payment uncertainty who were paying their rent in the prior period being compared, partially offset by a $2,038,000 increase in accelerated amortization of below-market lease intangible liabilities, a $1,770,000 increase due to the write-off of straight-line rent receivables in the prior period as a result of tenant uncertainty, and a $290,000 increase in annual base rent escalations for leases indexed to CPI.

•Same store tenant reimbursements increased $592,000 primarily due to higher operating costs in the current period, which are generally passed along to our tenants.

•Non-same store rental revenue decreased primarily due to a $9,041,000 decrease from properties sold since January 1, 2023, partially offset by a $5,447,000 increase attributable to properties acquired since January 1, 2023 and a $1,109,000 increase related to rent recognized on a cash basis from a tenant at a property that was sold during the six months ended June 30, 2024. In addition, we recognized lease termination income of $4,098,000 during the six months ended June 30, 2024 and $4,000,000 of lease termination income during the six months ended June 30, 2023.

•Non-same store tenant reimbursements increased primarily due to a $1,064,000 increase attributable to properties acquired since January 1, 2023.

•There were no significant changes in other operating income.

•Same store rental expenses increased primarily due to a $362,000 increase in non-reimbursable expenses as a result of lease terminations, and a $433,000 increase in expenses, certain of which are subject to reimbursement by our tenants, due to higher operating costs in the current period.

•Non-same store rental expenses, certain of which are subject to reimbursement by our tenants, increased primarily due to a $1,104,000 increase from properties acquired since January 1, 2023, partially offset by a $219,000 decrease due to properties sold since January 1, 2023.

•Listing-related expenses of $2,980,000 were recorded during the six months ended June 30, 2024, consisting of advisory fees for legal, banking, and other advisory services, related to the Listing on June 13, 2024.

•General and administrative expenses increased primarily due to a $1,822,000 increase in separation pay primarily related to the departure of our former chief accounting officer and former chief investment officer and a $863,000 increase in stock-based compensation as a result of accelerated awards due to severance, partially offset by a $869,000 decrease in stock-based compensation primarily due to a cumulative catch-up adjustment for changes in our probability assessment for performance-based deferred stock unit awards during the period.

•Depreciation and amortization increased primarily due to a $4,054,000 increase in accelerated amortization of in-place lease intangible assets as a result of lease terminations, a $3,010,000 increase due to properties acquired since January 1, 2023, partially offset by a $4,161,000 decrease from property dispositions, a $598,000 decrease attributable to fully amortized in-place lease intangible assets and tenant improvements and a $578,000 decrease related to properties impaired in prior periods.

•Impairment losses were recorded in the aggregate amount of $418,000 during the six months ended June 30, 2024, compared to impairment losses recorded in the aggregate amount of $6,708,000 during the six months ended June 30, 2023, as a result of tenant related triggering events that occurred at certain properties.

Changes in interest expense and interest and other income are summarized in the following table (amounts in thousands):

•Interest and other income increased primarily due to a $3,043,000 increase in dividend income from investments in money market funds and a $306,000 increase in interest income from cash deposits, partially offset by $120,000 in interest income recognized on a note receivable in the prior year, and a loss on the sale of a permanent easement of $111,000.

•Interest expense decreased primarily due to a $825,000 decrease related to a reduction in the weighted average outstanding principal balance on our credit facility of $48,652,000 and a decrease of $406,000 related to a reduction in the weighted average interest rate on our credit facility, partially offset by a $228,000 increase in loss on extinguishment of debt and a $204,000 increase in amortization of deferred financing costs.