The following discussion and analysis should be read in conjunction with the accompanying financial statements of KBS Growth & Income REIT, Inc. and the notes thereto. As used herein, the terms "we," "our" and "us" refer to KBS Growth & Income REIT, Inc., a Maryland corporation, and, as required by context, KBS Growth & Income Limited Partnership, a Delaware limited partnership, which we refer to as the "Operating Partnership," and to their subsidiaries.



Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are
forward-looking statements. Those statements include statements regarding the
intent, belief or current expectations of KBS Growth & Income REIT, Inc. and
members of our management team, as well as the assumptions on which such
statements are based, and generally are identified by the use of words such as
"may," "will," "seeks," "anticipates," "believes," "estimates," "expects,"
"plans," "intends," "should" or similar expressions. Actual results may differ
materially from those contemplated by such forward-looking statements. Further,
forward-looking statements speak only as of the date they are made, and 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 over time, unless required by law. Moreover, you
should interpret many of the risks identified in this report, as well as the
risks set forth below, as being heightened as a result of the ongoing and
numerous adverse impacts of the COVID-19 pandemic.
The following are some of the risks and uncertainties, although not all of the
risks and uncertainties, that could cause our actual results to differ
materially from those presented in our forward-looking statements:
•The COVID-19 pandemic, together with the resulting measures imposed to contain
the virus, has had a negative impact on the economy and business activity
globally. The extent to which the COVID-19 pandemic impacts our operations and
those of our tenants remains uncertain and cannot be predicted with confidence,
and will depend on the ultimate scope, severity and duration of the pandemic,
the actions taken to contain the pandemic or mitigate its impact, and the direct
and indirect economic effects of the pandemic and containment measures, among
others.
•We depend on our advisor and its affiliates to conduct our operations. We pay
fees to our advisor and its affiliates in connection with the management of our
investments that are based on the cost of the investment, not on the quality of
the investment or services rendered to us. These fees decrease the amount of
cash available for distribution to our stockholders.
•All of our executive officers, our affiliated director and other key real
estate and debt finance professionals are also officers, directors, managers,
key professionals and/or holders of a direct or indirect controlling interest in
our advisor, and/or other KBS-affiliated entities. As a result, our executive
officers, our affiliated director, some of our key real estate and debt finance
professionals, our advisor and its affiliates face conflicts of interest,
including significant conflicts created by our advisor's and its affiliates'
compensation arrangements with us and other KBS-sponsored programs and
KBS-advised investors and conflicts in allocating time among us and these other
programs and investors. Although we have adopted corporate governance measures
to ameliorate some of the risks posed by these conflicts, these conflicts could
result in action or inaction that is not in the best interests of our
stockholders.
•As of June 30, 2021, we had a limited portfolio of four real estate
investments, which may cause the value of an investment in us to vary more
widely with the performance of specific assets in our portfolio and cause our
general and administrative expenses to constitute a greater percentage of our
revenue.
•We may fund distributions from any source, including, without limitation,
offering proceeds or borrowings. Distributions paid through June 30, 2021 have
been funded in part with debt financing, including advances from our advisor,
and cash resulting from a waiver of asset management fees by our advisor.
Distributions funded from sources other than our cash flow from operations will
result in dilution to subsequent investors, reduce funds available for
investment in assets and may reduce the overall return to our stockholders.
•Our advisor waived its asset management fee for the second and third quarters
of 2017 and deferred its asset management fee related to the periods from
October 2017 through June 2021. If our advisor determines to no longer waive or
defer certain fees owed to them, our ability to fund our operations and
distributions may be adversely affected.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
•Our policies do not limit us from incurring debt until our aggregate borrowings
would exceed 75% of the cost (before deducting depreciation or other non-cash
reserves) of our tangible assets, and we may exceed this limit with the approval
of the conflicts committee of our board of directors. High debt levels could
limit the amount of cash we have available to distribute and could result in a
decline in the value of our stockholders' investment.
•We have debt obligations with variable interest rates. The interest and related
payments will vary with the movement of LIBOR or other indexes. Increases in the
indexes could increase the amount of our debt payments and limit our ability to
pay distributions to our stockholders.
•We depend on tenants for the revenue generated by our real estate investments
and, accordingly, the revenue generated by our real estate investments is
dependent upon the success and economic viability of our tenants. Revenues from
our properties could decrease due to a reduction in occupancy and/or lower
rental rates, making it more difficult for us to meet any debt service
obligations we have incurred and limiting our ability to pay distributions to
our stockholders.
•Our real estate investments may be affected by unfavorable real estate market
and general economic conditions, which could decrease the value of those assets
and reduce the investment return to our stockholders. These events could make it
more difficult for us to meet debt service obligations and limit our ability to
pay distributions to our stockholders.
•Our share redemption program only provides for redemptions sought upon a
stockholder's death, "qualifying disability" or "determination of incompetence"
(each as defined in the share redemption program, and collectively "special
redemptions"). The dollar amounts available for such redemptions are determined
by the board of directors and may be adjusted from time to time. The dollar
amount limitation for such redemptions for the calendar year 2021 was $250,000
in the aggregate, of which $67,000 was used for such special redemptions from
January through July 2021. Our share redemption program does not provide for
ordinary redemptions and can provide no assurances, when, if ever, we will
provide for redemptions other than special redemptions.
•In August 2021, our board of directors, including all of the independent
directors, determined to resume development of a formal plan of liquidation.
Although we are actively developing a formal plan of liquidation, there can be
no assurance of the ultimate timing of our liquidation.
All forward-looking statements should be read in light of the risks identified
herein and in Part I, Item 1A of our Annual Report on Form 10-K for the year
ended December 31, 2020 and in Part II, Item 1A of our Quarterly Report on Form
10-Q for the period ended March 31, 2021, each as filed with the Securities and
Exchange Commission (the "SEC").

Overview


We were formed on January 12, 2015 as a Maryland corporation that elected to be
taxed as a real estate investment trust ("REIT") beginning with the taxable year
ended December 31, 2015 and we intend to continue to operate in such a manner.
Substantially all of our business is conducted through our Operating
Partnership, of which we are the sole general partner. Subject to certain
restrictions and limitations, our business is externally managed by our advisor
pursuant to an advisory agreement. KBS Capital Advisors manages our operations
and our portfolio of core real estate properties. KBS Capital Advisors also
provides asset-management, marketing, investor-relations and other
administrative services on our behalf. Our advisor acquired 20,000 shares of our
Class A common stock for an initial investment of $200,000. We have no paid
employees.
We commenced a private placement offering exempt from registration pursuant to
Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the
"Securities Act"), on June 11, 2015, pursuant to which we offered a maximum of
$105,000,000 of shares of our Class A common stock for sale to accredited
investors, of which $5,000,000 of Class A shares were offered pursuant to our
distribution reinvestment plan. We ceased offering shares in the primary portion
of our private offering on April 27, 2016 and processed subscriptions for the
primary portion of the private offering dated on or prior to April 27, 2016
through May 30, 2016. KBS Capital Markets Group LLC, an affiliate of our
advisor, served as the dealer manager of the offering pursuant to a dealer
manager agreement.
We sold 8,548,972 shares of our Class A common stock for gross offering proceeds
of $76.8 million in our initial private offering, including 74,744 shares of our
Class A common stock under our distribution reinvestment plan for gross offering
proceeds of $0.7 million.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
On February 4, 2015, we filed a registration statement on Form S-11 with the SEC
to register an initial public offering to offer a maximum of $1,500,000,000 in
shares of common stock for sale to the public in the primary offering,
consisting of two classes of shares: Class A and Class T and a maximum of
$800,000,000 in both classes of shares of our common stock pursuant to our
distribution reinvestment plan. The SEC declared our registration statement
effective on April 28, 2016 and we retained KBS Capital Markets Group LLC to
serve as the dealer manager of the initial public offering. We terminated our
primary initial public offering effective June 30, 2017. We terminated our
distribution reinvestment plan offering effective August 20, 2020.
We sold 122,721 and 270,415 shares of Class A and Class T common stock in the
initial primary public offering, respectively, for aggregate gross offering
proceeds of $3.9 million. We sold 883,256 and 41,030 shares of Class A and Class
T common stock under our distribution reinvestment plan, respectively, for
aggregate gross offering proceeds of $8.5 million.
On October 3, 2017, we launched a second private placement offering exempt from
registration pursuant to Rule 506(c) of Regulation D of the Securities Act
pursuant to which offered a maximum of $1,000,000,000 in shares of our Class A
common stock to accredited investors. Prior to the launch of the second private
placement offering, on September 29, 2017, we entered into a dealer manager
agreement (the "NCPS Dealer Agreement") with KBS Capital Advisors and North
Capital Private Securities Corporation ("NCPS") in connection with the second
private placement offering. In December 2019, in connection with its
consideration of strategic alternatives for us, our board of directors
determined to suspend the second private offering and terminated the second
private offering on August 5, 2020. We sold 612,272 shares of Class A common
stock in the second private offering for aggregate gross offering proceeds of
$5.5 million.
As of June 30, 2021, we had redeemed 460,441 and 2,245 Class A and Class T
shares, respectively, for $3.8 million.
We have used substantially all of the net proceeds from our offerings to invest
in a portfolio of core real estate properties. We consider core properties to be
existing properties with at least 80% occupancy. As of June 30, 2021, we owned
four office buildings.
In August 2020, the special committee directed KBS Capital Advisors, with the
assistance of the independent financial advisor of the special committee, to
develop a plan of liquidation for approval by our board of directors and
submission to our stockholders. We initially expected to present a plan of
liquidation for a vote of our stockholders within six months from our
determination to pursue a liquidation strategy. However, as a result of the
adverse market conditions caused by the civil unrest and disruption in Portland
and Chicago, where several of our properties are located, and the uncertainty
and business disruptions related to the COVID-19 pandemic, in November 2020, our
board of directors determined to delay any proposal to liquidate until market
conditions improve.
In August 2021, our board of directors, including all of the independent
directors, determined to resume development of a formal plan of liquidation.
Although we are actively developing a formal plan of liquidation, there can be
no assurance of the ultimate timing of our liquidation.
We elected to be taxed as a REIT under the Internal Revenue Code, beginning with
the taxable year ended December 31, 2015. If we meet the REIT qualification
requirements, we generally will not be subject to federal income tax on the
income that we distribute to our stockholders each year. If we fail to qualify
for taxation as a REIT in any year after electing REIT status, our income will
be taxed at regular corporate rates, and we may be precluded from qualifying for
treatment as a REIT for the four-year period following our failure to qualify.
Such an event could materially and adversely affect our net income and cash
available for distribution to our stockholders. However, we are organized and
will operate in a manner that will enable us to qualify for treatment as a REIT
for federal income tax purposes beginning with our taxable year ended
December 31, 2015, and we will continue to operate so as to remain qualified as
a REIT for federal income tax purposes thereafter.

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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Market Outlook - Real Estate and Real Estate Finance Markets
Volatility in global financial markets, changing political environments and
civil unrest can cause fluctuations in the performance of the U.S. commercial
real estate markets.  Possible future declines in rental rates, slower or
potentially negative net absorption of leased space and expectations of future
rental concessions, including free rent to renew tenants early, to retain
tenants who are up for renewal or to attract new tenants, may result in
decreases in cash flows from investment properties. Further, revenues from our
properties could decrease due to a reduction in occupancy (caused by factors
including, but not limited to, tenant defaults, tenant insolvency, early
termination of tenant leases and non-renewal of existing tenant leases), rent
deferrals or abatements, tenants being unable to pay their rent and/or lower
rental rates. To the extent there are increases in the cost of financing due to
higher interest rates, this may cause difficulty in refinancing debt obligations
at terms as favorable as the terms of existing indebtedness. Market conditions
can change quickly, potentially negatively impacting the value of real estate
investments. Management continuously reviews our investment and debt financing
strategies to optimize our portfolio and the cost of our debt exposure. Most
recently, the outbreak of COVID-19 has had a negative impact on the real estate
market as discussed below.
COVID-19 Pandemic and Portfolio Outlook
As of June 30, 2021, the novel coronavirus, or COVID-19, pandemic is ongoing.
During 2020, the COVID-19 pandemic created disruption in the U.S. and global
economies, adversely impacting many industries, including the U.S. office real
estate industry and the industries of our tenants, directly or indirectly. In
2021, the global economy has, with certain setbacks, begun reopening and wider
distribution of vaccines will likely encourage greater economic activity.
Nonetheless, the recovery could remain uneven, particularly given uncertainty
with respect to the distribution and acceptance of the vaccines and their
effectiveness with respect to new variants of the virus.
The outbreak of COVID-19 and its impact on the current financial, economic,
capital markets and real estate market environment, and future developments in
these and other areas present uncertainty and risk with respect to our financial
condition, results of operations, liquidity, and ability to pay distributions.
Although a recovery is partially underway, it continues to be gradual, uneven
and characterized by meaningful dispersion across sectors and regions, and could
be hindered by persistent or resurgent infection rates. The most recent round of
U.S. fiscal stimulus could provide meaningful support, along with continued
accommodative monetary policy and wider distribution of vaccines. Issues with
respect to the distribution and acceptance of vaccines or the spread of new
variants of the virus could adversely impact the recovery. Overall, there
remains significant uncertainty regarding the timing and duration of the
economic recovery, which precludes any prediction as to the ultimate adverse
impact COVID-19 may have on our business.
During the year ended December 31, 2020 and the six months ended June 30, 2021,
we did not experience significant disruptions in our operations from the
COVID-19 pandemic. Many of our tenants have suffered reductions in revenue since
March 2020. Rent collections for the quarter ended June 30, 2021 were
approximately 98%. We have granted a number of lease concessions related to the
effects of the COVID-19 pandemic but these lease concessions did not have a
material impact on our consolidated balance sheet as of June 30, 2021 or
consolidated statement of operations for the three and six months ended June 30,
2021. As of June 30, 2021, we had entered into lease amendments related to the
effects of the COVID-19 pandemic, granting approximately $0.2 million of rent
deferrals for the period from April 2020 through April 2021 and granting
approximately $0.7 million in rental abatements. As of June 30, 2021, eleven
tenants were granted rental deferrals, rental abatements and/or rent
restructures, of which six of these tenants have begun to pay rent in accordance
with their lease agreements subsequent to the deferral and/or abatement period
and two of these tenant leases were modified at lower rental rates. One of the
eleven tenants continue to be in the rental abatement periods as granted in
accordance with their agreements.
In addition to the direct impact on our rental income, we may also need to
recognize additional impairment charges at our properties to the extent rental
projections continue to decline at our properties. In response to a decrease in
cash flow projections as a result of changes in leasing projections due in part
to the impact of COVID-19 on our leasing efforts and perceived ability to
collect rent from tenants, during the six months ended June 30, 2020, we
recognized impairment charges of $5.8 million at the Institute Property and
$0.4 million of equity in loss of unconsolidated joint venture, which included a
$0.5 million impairment charge related to the 210 W. Chicago property then-owned
by the joint venture.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
The extent to which the COVID-19 pandemic or any other pandemic, epidemic or
disease impacts our operations and those of our tenants remains uncertain and
cannot be predicted with confidence and will depend on the scope, severity and
duration of the pandemic, the actions taken to contain the pandemic or mitigate
its impact, and the direct and indirect economic effects of the pandemic and
containment measures, among others. Nevertheless, the COVID-19 pandemic (or a
future pandemic, epidemic or disease) presents material uncertainty and risk
with respect to our business, financial condition, results of operations and
cash flows. In response to the uncertainty caused by the ongoing COVID-19
pandemic and its uncertain impact on our operations and those of our tenants,
our board of directors adjusted our distribution policy commencing with the
fourth quarter of 2020 and expects to consider and declare quarterly
distributions based on a single quarterly record date.
Our business, like all businesses, is being impacted by the uncertainty
regarding the COVID-19 pandemic, the effectiveness of policies introduced to
neutralize the disease, and the impact of those policies on economic activity.
We believe the current challenging economic circumstances will be a difficult
environment in which to continue to create value in our portfolio consistent
with our core-plus investment strategy. The properties in our portfolio were
acquired to provide an opportunity for us to achieve more significant capital
appreciation by increasing occupancy, negotiating new leases with higher rental
rates and/or executing enhancement projects, all of which we believe will be
more difficult as a result of the impacts of COVID-19 on the economy. While the
majority of our tenants have continued to pay rent, the weakening macroeconomic
conditions have negatively impacted many of our tenants. As of June 30, 2021,
our portfolio was 82.1% occupied with a weighted-average lease term of 3.4
years. As of June 30, 2021, three tenants at our Commonwealth Building, or 14%
of the rentable square footage at the property, have given notice of non-renewal
of their leases and two tenants at the Institute Property, or 3% of the rentable
square footage at the property, early terminated their leases. Due to the impact
of COVID-19, we believe the leasing environment will be challenged in the
short-term and the time to lease up and stabilize a property will be extended.
More specifically, our office properties in Chicago will likely take more time
to stabilize than previously anticipated. In addition, the timing in which we
may be able to implement a liquidation strategy will be affected.

Liquidity and Capital Resources
Our principal demands for funds during the short and long-term are and will be
for operating expenses, capital expenditures and general and administrative
expenses; payments under debt obligations; redemptions of common stock; capital
commitments; and payments of distributions to stockholders. Our primary sources
of capital for meeting our cash requirements are as follows:
•Cash flow generated by our real estate investments;
•Debt financings (including amounts currently available under an existing term
loan); and
•Proceeds from the sale of our real estate properties.
Our investments in real estate generate cash flow in the form of rental revenues
and tenant reimbursements, which are reduced by operating expenditures, capital
expenditures, debt service payments, the payment of asset management fees and
corporate general and administrative expenses. Cash flow from operations from
real estate investments will be primarily dependent upon the occupancy level of
our portfolio, the net effective rental rates on our leases, the collectibility
of rent and operating recoveries from our tenants and how well we manage our
expenditures.
Our advisor advanced funds to us, which are non-interest bearing, for
distribution record dates through the period ended May 31, 2016. We are only
obligated to repay our advisor for its advance if and to the extent that:
(i)Our modified funds from operations ("MFFO"), as such term is defined by the
Institute for Portfolio Alternatives and interpreted by us, for the immediately
preceding quarter exceeds the amount of distributions declared for record dates
of such prior quarter (an "MFFO Surplus"), and we will pay our advisor the
amount of the MFFO Surplus to reduce the principal amount outstanding under the
advance, provided that such payments shall only be made if management in its
sole discretion expects an MFFO Surplus to be recurring for at least the next
two calendar quarters, determined on a quarterly basis;
(ii)Excess proceeds from third-party financings are available ("Excess
Proceeds"), provided that the amount of any such Excess Proceeds that may be
used to repay the principal amount outstanding under the advance shall be
determined by the conflicts committee in its sole discretion; or
(iii)Net sales proceeds from the sale of our real estate portfolio are
available.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
In determining whether Excess Proceeds are available to repay the advance, our
conflicts committee will consider whether cash on hand could have been used to
reduce the amount of third-party financing provided to us. If such cash could
have been used instead of third-party financing, the third-party financing
proceeds will be available to repay the advance.
Our advisor may defer repayment of the advance notwithstanding that we would
otherwise be obligated to repay the advance.
We expect that our debt financing and other liabilities will be between 45% and
65% of the cost of our tangible assets (before deducting depreciation and other
non-cash reserves). Though this is our target leverage, our charter does not
limit us from incurring debt until our aggregate borrowings would exceed 300% of
our net assets (before deducting depreciation and other non-cash reserves),
which is effectively 75% of the cost of our tangible assets (before deducting
depreciation and other non-cash reserves), though we may exceed this limit under
certain circumstances. To the extent financing in excess of this limit is
available at attractive terms, the conflicts committee may approve debt in
excess of this limit. As of June 30, 2021, we had mortgage debt obligations in
the aggregate principal amount of $99.0 million and our aggregate borrowings
were approximately 61% of our net assets before deducting depreciation and other
non-cash reserves. As of June 30, 2021, we had $2.7 million of revolving debt
available for immediate future disbursement, subject to certain conditions set
forth in the loan agreements. As of June 30, 2021, we had $49.6 million of debt
maturing during the 12 months ending June 30, 2022, all of which is under our
term loan and may be extended beyond such time subject to certain terms and
conditions set forth in the loan agreement. Reductions in property values
related to the impact of the COVID-19 pandemic have reduced our availability to
draw on the revolving commitment and may limit our ability to exercise our
extension option under our term loan due to covenants described in the loan
agreement.
In addition to making investments in accordance with our investment objectives,
we have used a portion of our capital resources to make certain payments to our
advisor, the affiliated dealer manager of our initial private offering and
initial public offering and our affiliated property manager. These payments
include payments to our dealer manager for selling commissions, the dealer
manager fee and the stockholder servicing fee, and payments to the dealer
manager and our advisor for reimbursement of certain organization and other
offering expenses. See "-Organization and Offering Costs" below.
We make payments to our advisor in connection with the management of our assets
and costs incurred by our advisor in providing certain services to us. The asset
management fee is a monthly fee payable to our advisor in an amount equal to
one-twelfth of 1.0% of the cost of our investments including the portion of the
investment that is debt financed. The cost of our real property investments is
calculated as the amount paid or allocated to acquire the real property, plus
budgeted capital improvement costs for the development, construction or
improvements to the property once such funds are disbursed pursuant to a final
approved budget and fees and expenses related to the acquisition, but excluding
acquisition fees paid or payable to our advisor. In the case of investments made
through joint ventures, the asset management fee is determined based on our
proportionate share of the underlying investment. Our advisor waived asset
management fees for the second and third quarters of 2017 and deferred payment
of asset management fees related to the periods from October 2017 through
June 30, 2021. Our advisor's waiver and deferral of its asset management fees
resulted in additional cash being available to fund our operations. If our
advisor chooses to no longer waive or defer such fees, our ability to fund our
operations may be adversely affected.
We also pay fees to KBS Management Group, LLC (the "Co-Manager"), an affiliate
of our advisor, pursuant to property management agreements with the Co-Manager,
for certain property management services at our properties.
We elected to be taxed as a REIT and to operate as a REIT beginning with our
taxable year ended December 31, 2015. To maintain our qualification as a REIT,
we will be required to make aggregate annual distributions to our stockholders
of at least 90% of our REIT taxable income (computed without regard to the
dividends-paid deduction and excluding net capital gain). Our board of directors
may authorize distributions in excess of those required for us to maintain REIT
status depending on our financial condition and such other factors as our board
of directors deems relevant. Provided we have sufficient available cash flow, we
intend to authorize and declare cash distributions based on quarterly record
dates and pay cash distributions on a quarterly basis. We have not established a
minimum distribution level.
Under our charter, we are required to limit our total operating expenses to the
greater of 2% of our average invested assets or 25% of our net income for the
four most recently completed fiscal quarters, as these terms are defined in our
charter, unless the conflicts committee has determined that such excess expenses
were justified based on unusual and non-recurring factors. Operating expenses
for the four fiscal quarters ended June 30, 2021 exceeded the charter-imposed
limitation; however, the conflicts committee determined that the relationship of
our operating expenses to our average invested assets was justified given that
our board of directors and the conflicts committee consider us to be in our
liquidation stage.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Cash Flows from Operating Activities
As of June 30, 2021, we owned four office properties. During the six months
ended June 30, 2021 and 2020, net cash provided by operating activities was
$0.6 million and $0.8 million, respectively . We expect cash flows provided by
operating activities to decrease in future periods to the extent our tenants are
impacted by COVID-19 and defer rent payments or are unable to pay rent or to the
extent we are unable to re-lease space vacated by our current tenants.
Cash Flows from Investing Activities
During the six months ended June 30, 2021, net cash used in investing activities
was $0.4 million due to improvements to real estate.
Cash Flows from Financing Activities
During the six months ended June 30, 2021, net cash provided by financing
activities was $1.0 million and primarily consisted of the following:
•$2.0 million of proceeds from notes payable; offset by
•$0.9 million of net cash distributions; and
•$0.1 million of payments to redeem common stock.

Contractual Obligations
The following is a summary of our contractual obligations as of June 30, 2021
(in thousands).
                                                                            

Payments Due During the Years Ending December 31, Contractual Obligations

                                Total             Remainder of 2021           2022-2023           2024-2025
Outstanding debt obligations (1)                    $  98,994          $           49,652          $   46,102          $    3,240
Interest payments on outstanding debt
obligations (2)                                     $   3,474          $            1,605          $    1,826          $       43


_____________________
(1) Amounts include principal payments only.
(2) Projected interest payments are based on the outstanding principal amount,
maturity date and contractual interest rate in effect as of June 30, 2021
(consisting of the contractual interest rate and the effect of interest rate
swaps). We incurred interest expense of $2.0 million, excluding amortization of
deferred financing costs totaling $0.1 million and unrealized gains on
derivative instruments of $0.9 million during the six months ended June 30,
2021.

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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Results of Operations
Overview
As of June 30, 2020, we owned three office properties and an investment in an
unconsolidated joint venture. Subsequent to June 30, 2020, we purchased the
joint venture partner's 50% equity interest and consolidated 210 W. Chicago. As
a result, as of June 30, 2021, we owned four office properties. The following
table provides summary information about our results of operations for the three
and six months ended June 30, 2021 and 2020 (dollar amounts in thousands):
Comparison of the three months ended June 30, 2021 versus the three months ended
June 30, 2020
                                                                                                                                                    $ Change Due
                                                                                                                                                   to Properties
                                                                                                                                                        Held
                                        For the Three Months Ended                                                            $ Change               Throughout
                                                 June 30,                     Increase                                       Due to JV              Both Periods
                                           2021              2020            (Decrease)         Percentage Change        Consolidation (1)              (2)
Rental income                          $   4,081          $ 4,624          $      (543)                    (12) %       $             179          $      (722)
Other operating income                        48               44                    4                       9  %                       3               

1


Operating, maintenance and management
costs                                        935              908                   27                       3  %                      25               

2


Property management fees and expenses
to affiliate                                  28               35                   (7)                    (20) %                       -               

(7)


Real estate taxes and insurance              728              706                   22                       3  %                      39               

(17)


Asset management fees to affiliate           434              426                    8                       2  %                      12               

(4)


General and administrative expenses          445              660                 (215)                    (33) %                        n/a           

n/a


Depreciation and amortization              1,896            1,990                  (94)                     (5) %                      55                 (149)
Interest expense                             608              849                 (241)                    (28) %                      26                 (267)

Interest and other income                      -                1                   (1)                   (100) %                        n/a                  n/a

Equity in income of unconsolidated
joint venture                                  -               34                  (34)                   (100) %                     (34)                   -


_____________________
(1) Represents the dollar amount increase (decrease) for the three months ended
June 30, 2021 compared to the three months ended June 30, 2020 related to real
estate acquired through joint venture consolidation on or after April 1, 2020.
(2) Represents the dollar amount increase (decrease) for the three months ended
June 30, 2021 compared to the three months ended June 30, 2020 related to real
estate investments owned by us throughout both periods presented.
Rental income decreased from $4.6 million for the three months ended June 30,
2020 to $4.1 million for the three months ended June 30, 2021, primarily due to
a decrease in occupancy rate as a result of lease expirations and a decrease in
operating and property tax recoveries at properties held throughout both
periods, partially offset by the consolidation of 210 W. Chicago. We expect
rental income to fluctuate based on the occupancy at our existing properties and
uncertainty and business disruptions as a result of the COVID-19 pandemic. See
"Market Outlook - Real Estate and Real Estate Finance Markets - COVID-19
Pandemic and Portfolio Outlook" for a discussion on the impact of the COVID-19
pandemic on our business.
Operating, maintenance, and management costs remained consistent at $0.9 million
for the three months ended June 30, 2020 and 2021. We expect operating,
maintenance, and management costs to increase in future periods as a result of
general inflation and as physical occupancy increases as employees return to the
office.
Real estate taxes and insurance remained consistent at $0.7 million for the
three months ended June 30, 2020 and 2021. We expect real estate taxes and
insurance to increase in future periods as a result of general inflation and
general increases due to future property tax reassessments.
Asset management fees to affiliate remained consistent at $0.4 million for the
three months ended June 30, 2021 and 2020. We expect asset management fees to
increase in future periods as a result of any improvements we make to our
properties. As of June 30, 2021, we had accrued and deferred payment of
$6.8 million of asset management fees related to the periods from October 2017
through June 30, 2021.
General and administrative expenses decreased from $0.7 million for the three
months ended June 30, 2020 to $0.4 million for the three months ended June 30,
2021, primarily due to pre-development costs which did not meet the criteria for
capitalization for a real estate project and were expensed during three months
ended June 30, 2020. General and administrative costs consisted primarily of
portfolio legal fees, printer costs, internal audit compensation expense, errors
and omissions insurance and board of directors fees.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Depreciation and amortization decreased slightly from $2.0 million for the three
months ended June 30, 2020 to $1.9 million for the three months ended June 30,
2021, primarily due to lease expirations and early lease terminations related to
properties held throughout both periods, partially offset by an increase in
depreciation and amortization as a result of the consolidation of 210 W.
Chicago. We expect depreciation and amortization to increase in future periods
as a result of additional capital improvements, offset by a decrease in
amortization related to fully amortized tenant origination and absorption costs.
Interest expense decreased from $0.8 million for the three months ended June 30,
2020 to $0.6 million for the three months ended June 30, 2021. Included in
interest expense is the amortization of deferred financing costs of $0.1 million
and $0.1 million for the three months ended June 30, 2021 and 2020,
respectively. During the three months ended June 30, 2021 and 2020, interest
expense (including gains and losses) incurred as a result of our derivative
instruments, increased interest expense by $28,000 and $0.2 million,
respectively. The decrease in interest expense is primarily due to a decrease in
one-month LIBOR and its impact on interest expense related to our variable rate
debt and a decrease in interest expense due to changes in fair values with
respect to our interest rate swaps that are not accounted for as cash flow
hedges, offset by an increase in interest expense related to a mortgage loan
assumed in connection with the consolidation of 210 W. Chicago. In general, we
expect interest expense to vary based on fluctuations in one-month LIBOR (for
our unhedged variable rate debt) and our level of future borrowings, which will
depend on the availability and cost of debt financing, draws on our debt and any
debt repayments we make.

Comparison of the six months ended June 30, 2021 versus the six months ended
June 30, 2020
                                                                                                                                                  $ Change Due
                                                                                                                                                 to Properties
                                                                                                                                                      Held
                                       For the Six Months Ended June                                                     $ Change Due to           Throughout
                                                    30,                       Increase                                   Dispositions/JV          Both Periods
                                           2021              2020            (Decrease)         Percentage Change       Consolidation (1)             (2)
Rental income                          $   8,375          $ 9,207          $      (832)                     (9) %       $           241          $    (1,073)
Other operating income                        69               78                   (9)                    (12) %                     6                 

(15)


Operating, maintenance and management
costs                                      1,765            1,862                  (97)                     (5) %                     2                 

(99)


Property management fees and expenses
to affiliate                                  59               70                  (11)                    (16) %                    (1)                

(10)


Real estate taxes and insurance            1,494            1,439                   55                       4  %                    62                 

(7)


Asset management fees to affiliate           862              861                    1                       -  %                    14                 

(13)


General and administrative expenses          922            1,133                 (211)                    (19) %                      n/a                  n/a
Depreciation and amortization              3,878            4,156                 (278)                     (7) %                   101                 (379)
Interest expense                           1,181            3,737               (2,556)                    (68) %                    18               (2,574)
Impairment charges on real estate              -            5,750               (5,750)                   (100) %                     -               

(5,750)


Interest and other income                      -               13                  (13)                   (100) %                      n/a              

n/a


Gain on sale of real estate, net               -            5,245               (5,245)                   (100) %                (5,245)               

-


Equity in loss of unconsolidated joint
venture                                        -             (435)                 435                    (100) %                   435                 

-


Loss from extinguishment of debt               -              (29)                  29                    (100) %                    29                    -


_____________________
(1) Represents the dollar amount increase (decrease) for the six months ended
June 30, 2021 compared to the six months ended June 30, 2020 related to real
estate investments disposed of and real estate acquired through joint venture
consolidation on or after January 1, 2020.
(2) Represents the dollar amount increase (decrease) for the six months ended
June 30, 2021 compared to the six months ended June 30, 2020 related to real
estate investments owned by us throughout both periods presented.
Rental income decreased from $9.2 million for the six months ended June 30, 2020
to $8.4 million for the six months ended June 30, 2021, primarily due to a
decrease in occupancy rate as a result of lease expirations and a decrease in
operating and property tax recoveries at properties held throughout both
periods, partially offset by the consolidation of 210 W. Chicago. We expect
rental income to fluctuate based on the occupancy at our existing properties and
uncertainty and business disruptions as a result of the outbreak of COVID-19.
See "Market Outlook - Real Estate and Real Estate Finance Markets - COVID-19
Pandemic and Portfolio Outlook" for a discussion on the impact of the COVID-19
pandemic on our business.
                                       33

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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Operating, maintenance, and management costs decreased slightly from $1.9
million for the six months ended June 30, 2020 to $1.8 million for the six
months ended June 30, 2021, primarily due to the sale of Von Karman on January
17, 2020 and a decrease in certain repair and maintenance costs at properties
held throughout both periods, partially offset by the consolidation of 210 W.
Chicago. We expect operating, maintenance, and management costs to increase in
future periods as a result of general inflation and as physical occupancy
increases as employees return to the office.
Real estate taxes and insurance increased slightly from $1.4 million for the six
months ended June 30, 2020 to $1.5 million for the six months ended June 30,
2021, primarily due the consolidation of 210 W. Chicago. We expect real estate
taxes and insurance to increase in future periods as a result of general
inflation and general increases due to future property tax reassessments.
Asset management fees to affiliate remained consistent at $0.9 million for the
six months ended June 30, 2020 and 2021. We expect asset management fees to
increase in future periods as a result of any improvements we make to our
properties. As of June 30, 2021, we had accrued and deferred payment of
$6.8 million of asset management fees related to October 2017 through June 30,
2021.
General and administrative expenses decreased from $1.1 million for the six
months ended June 30, 2020 to $0.9 million for the six months ended June 30,
2021, primarily due to pre-development costs which did not meet the criteria for
capitalization for a real estate project and were expensed during the six months
ended June 30, 2020. General and administrative costs consisted primarily of
portfolio legal fees, printer costs, internal audit compensation expense, errors
and omissions insurance and board of directors fees.
Depreciation and amortization decreased from $4.2 million for the six months
ended June 30, 2020 to $3.9 million for the six months ended June 30, 2021,
primarily due to lease expirations and early lease terminations related to
properties held throughout both periods, partially offset by an increase in
depreciation and amortization as a result of the consolidation of 210 W.
Chicago. We expect depreciation and amortization to increase in future periods
as a result of additional capital improvements, offset by a decrease in
amortization related to fully amortized tenant origination and absorption costs.
Interest expense decreased from $3.7 million for the six months ended June 30,
2020 to $1.2 million for the six months ended June 30, 2021. Included in
interest expense is the amortization of deferred financing costs of $0.1 million
and $0.2 million for the six months ended June 30, 2021 and 2020, respectively.
During the six months ended June 30, 2021 and 2020, interest expense (including
gains and losses) incurred as a result of our derivative instruments, increased
interest expense by $31,000 and $2.1 million, respectively. The decrease in
interest expense is primarily due to a decrease in one-month LIBOR and its
impact on interest expense related to our variable rate debt and a decrease in
interest expense due to changes in fair values with respect to our interest rate
swaps that are not accounted for as cash flow hedges, offset by an increase in
interest expense related to a mortgage loan assumed in connection with the
consolidation of 210 W. Chicago. In general, we expect interest expense to vary
based on fluctuations in one-month LIBOR (for our unhedged variable rate debt)
and our level of future borrowings, which will depend on the availability and
cost of debt financing, draws on our debts and any debt repayments we make.
During the six months ended June 30, 2020, we recorded non-cash impairment
charges of $5.8 million to write down the carrying value of the Institute
Property, an office property located in Chicago, Illinois, to its estimated fair
value as a result of changes in cash flow estimates including a change in
leasing projections, which triggered the future estimated undiscounted cash
flows to be lower than the net carrying value of the property. The decrease in
cash flow projections was primarily due to reduced demand for the office space
at the property resulting in longer lease-up periods and a decrease in projected
rental rates and was further impacted by the COVID-19 pandemic which we believe
will result in additional challenges to release the vacant space. We did not
record any impairment charges on our real estate properties during the six
months ended June 30, 2021.
We recognized a gain on sale of real estate of $5.2 million related to
disposition of Von Karman Tech Center during the six months ended June 30, 2020.
We did not recognize any gain on sale of real estate during the six months ended
June 30, 2021.
During the six months ended June 30, 2020, we recognized $0.4 million of equity
in loss of unconsolidated joint venture, which included a $0.5 million of
impairment charge related to the 210 W. Chicago property then-owned by the joint
venture. The impairment was a result of the decline in fair value of the
underlying 210 W. Chicago property due to changes in cash flow estimates
including a change in leasing projections, which triggered future estimated
undiscounted cash flows to be lower than the net carrying value of the property.
The decrease in cash flow projections was primarily due to reduced demand for
the office space at the property resulting in a decrease in projected rental
rates as leases mature.
                                       34

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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Funds from Operations and Modified Funds from Operations
We believe that funds from operations ("FFO") is a beneficial indicator of the
performance of an equity REIT. We compute FFO in accordance with the current
National Association of Real Estate Investment Trusts ("NAREIT") definition. FFO
represents net income, excluding gains and losses from sales of operating real
estate assets (which can vary among owners of identical assets in similar
conditions based on historical cost accounting and useful-life estimates), gains
and losses from change in control, impairment losses on real estate assets,
depreciation and amortization of real estate assets, and adjustments for
unconsolidated partnerships and joint ventures. We believe FFO facilitates
comparisons of operating performance between periods and among other REITs.
However, our computation of FFO may not be comparable to other REITs that do not
define FFO in accordance with the NAREIT definition or that interpret the
current NAREIT definition differently than we do. Our management believes that
historical cost accounting for real estate assets in accordance with U.S.
generally accepted accounting principles ("GAAP") implicitly assumes that the
value of real estate assets diminishes predictably over time. Since real estate
values have historically risen or fallen with market conditions, many industry
investors and analysts have considered the presentation of operating results for
real estate companies that use historical cost accounting to be insufficient by
themselves. As a result, we believe that the use of FFO, together with the
required GAAP presentations, provides a more complete understanding of our
performance relative to our competitors and provides a more informed and
appropriate basis on which to make decisions involving operating, financing, and
investing activities.
Changes in accounting rules have resulted in a substantial increase in the
number of non-operating and non-cash items included in the calculation of FFO.
As a result, our management also uses MFFO as an indicator of our ongoing
performance as well as our dividend sustainability. MFFO excludes from FFO:
acquisition fees and expenses (to the extent that such fees and expenses have
been recorded as operating expenses); adjustments related to contingent purchase
price obligations; amounts relating to straight-line rents and amortization of
above and below market intangible lease assets and liabilities; accretion of
discounts and amortization of premiums on debt investments; amortization of
closing costs relating to debt investments; impairments of real estate-related
investments; mark-to-market adjustments included in net income; and gains or
losses included in net income for the extinguishment or sale of debt or hedges.
We compute MFFO in accordance with the definition of MFFO included in the
practice guideline issued by the IPA in November 2010 as interpreted by
management. Our computation of MFFO may not be comparable to other REITs that do
not compute MFFO in accordance with the current IPA definition or that interpret
the current IPA definition differently than we do.
We believe that MFFO is helpful as a measure of ongoing operating performance
because it excludes costs that management considers more reflective of investing
activities and other non-operating items included in FFO.  Management believes
that, by excluding acquisition costs (to the extent such costs have been
recorded as operating expenses) as well as non-cash items such as straight line
rental revenue, MFFO provides investors with supplemental performance
information that is consistent with the performance indicators and analysis used
by management, in addition to net income and cash flows from operating
activities as defined by GAAP, to evaluate the sustainability of our operating
performance.  MFFO provides comparability in evaluating the operating
performance of our portfolio with other non-traded REITs which typically have
limited lives with short and defined acquisition periods and targeted exit
strategies.  MFFO, or an equivalent measure, is routinely reported by non-traded
REITs, and we believe often used by analysts and investors for comparison
purposes.
FFO and MFFO are non-GAAP financial measures and do not represent net income as
defined by GAAP. Net income as defined by GAAP is the most relevant measure in
determining our operating performance because FFO and MFFO include adjustments
that investors may deem subjective, such as adding back expenses such as
depreciation and amortization and the other items described above. Accordingly,
FFO and MFFO should not be considered as alternatives to net income as an
indicator of our current and historical operating performance. In addition, FFO
and MFFO do not represent cash flows from operating activities determined in
accordance with GAAP and should not be considered an indication of our
liquidity. We believe FFO and MFFO, in addition to net income and cash flows
from operating activities as defined by GAAP, are meaningful supplemental
performance measures.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Although MFFO includes other adjustments, the exclusion of adjustments for
straight-line rent, the amortization of above- and below-market leases,
unrealized (gains) losses on derivative instruments and loss from extinguishment
of debt are the most significant adjustments for the periods presented.  We have
excluded these items based on the following economic considerations:
•Adjustments for straight-line rent.  These are adjustments to rental revenue as
required by GAAP to recognize contractual lease payments on a straight-line
basis over the life of the respective lease.  We have excluded these adjustments
in our calculation of MFFO to more appropriately reflect the current economic
impact of our in-place leases, while also providing investors with a useful
supplemental metric that addresses core operating performance by removing rent
we expect to receive in a future period or rent that was received in a prior
period;
•Amortization of above- and below-market leases.  Similar to depreciation and
amortization of real estate assets and lease related costs that are excluded
from FFO, GAAP implicitly assumes that the value of intangible lease assets and
liabilities diminishes predictably over time and requires that these charges be
recognized currently in revenue.  Since market lease rates in the aggregate have
historically risen or fallen with local market conditions, management believes
that by excluding these charges, MFFO provides useful supplemental information
on the realized economics of the real estate;
•Unrealized (gains) losses on derivative instruments.  These adjustments include
unrealized (gains) losses from mark-to-market adjustments on interest rate
swaps. The change in fair value of interest rate swaps not designated as a hedge
are non-cash adjustments recognized directly in earnings and are included in
interest expense.  We have excluded these adjustments in our calculation of MFFO
to more appropriately reflect the economic impact of our interest rate swap
agreements; and
•Loss from extinguishment of debt. A loss from extinguishment of debt, which
includes prepayment fees related to the extinguishment of debt, represents the
difference between the carrying value of any consideration transferred to the
lender in return for the extinguishment of a debt and the net carrying value of
the debt at the time of settlement. We have excluded the loss from
extinguishment of debt in our calculation of MFFO because these losses do not
impact the current operating performance of our investments and do not provide
an indication of future operating performance.
Our calculation of FFO, which we believe is consistent with the calculation of
FFO as defined by NAREIT, is presented in the following table, along with our
calculation of MFFO, for the three and six months ended June 30, 2021 and 2020,
respectively (in thousands). No conclusions or comparisons should be made from
the presentation of these periods.
                                               For the Three Months Ended June
                                                             30,                      For the Six Months Ended June 30,
                                                   2021                2020                2021                2020
Net loss                                      $      (945)         $    (871)         $    (1,717)         $  (4,929)
Depreciation of real estate assets                  1,141              1,096                2,309              2,241
Amortization of lease-related costs                   755                894                1,569              1,915
Impairment charges on real estate                       -                  -                    -              5,750
Gain on sale of real estate, net                        -                  -                    -             (5,245)
Adjustment for investment in
unconsolidated joint venture (1)                        -                 28                    -                594

FFO                                                   951              1,147                2,161                326
Straight-line rent and amortization of
above- and below-market leases, net                  (133)              (336)                (216)              (423)
Unrealized (gain) loss on derivative
instruments                                          (417)              (185)                (850)             1,581
Loss from extinguishment of debt                        -                  -                    -                 29
Adjustment for investment in
unconsolidated joint venture (1)                        -                 (4)                   -                 (8)
MFFO                                          $       401          $     622          $     1,095          $   1,505


_____________________
(1) Reflects adjustments to add back our noncontrolling interest share of the
adjustments to convert our net loss attributable to common stockholders to FFO
and MFFO for our equity investment in unconsolidated joint venture for the three
and six months ended June 30, 2020. In October 2020, we purchased our joint
venture partner's membership interest and consolidated the entity that owns 210
W. Chicago.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
FFO and MFFO may also be used to fund all or a portion of certain capitalizable
items that are excluded from FFO and MFFO, such as tenant improvements, building
improvements and deferred leasing costs.

Organization and Offering Costs
Offering costs include all expenses incurred in connection with our offerings of
securities. Organization costs include all expenses incurred in connection with
our formation, including but not limited to legal fees and other costs to
incorporate.
The Advisor or its affiliates have paid some of the offering costs related to
our distribution reinvestment plan offering (the "DRP"), including, but not
limited to, our legal, accounting, printing, mailing and filing fees. We were
responsible for reimbursing the Advisor for these costs. No reimbursements made
by us to the Advisor may cause total organization and offering expenses incurred
by us to exceed 15% of the aggregate gross offering proceeds of the DRP as of
the date of reimbursement. Subject to the limitations described above, we were
also responsible for reimbursing the Dealer Manager or its affiliates for
organization and offering expenses that they incurred on our behalf. On August
5, 2020, our board of directors approved the termination of the DRP effective
August 20, 2020. From January 1, 2020 through August 20, 2020, with respect to
the DRP, neither the Advisor nor the Dealer Manager incurred any organization
and offering expenses on our behalf.
The Advisor agreed to pay all organization and offering expenses related to the
Second Private Offering, including selling commissions, directly on our behalf
without reimbursement by us. From the inception of the Second Private Offering
through August 5, 2020, the Advisor incurred approximately $5.5 million of
organization and offering expenses related to the Second Private Offering on our
behalf. On August 5, 2020, our board of directors terminated the Second Private
Offering.

Distributions


During our offering stage, and from time to time during our operational stage,
we may not pay distributions solely from our cash flows from operations, in
which case distributions may be paid in whole or in part from debt financing,
including advances from our advisor, if necessary. Distributions declared,
distributions paid and cash flows from operations were as follows for the first
and second quarters of 2021 (in thousands, except per share amounts):
                                                                                                                                              Cash Flows
                                                          Distribution Declared       Distribution Declared                                   provided by
                                  Distributions           Per Class A Share (1)       Per Class T Share (1)         Distributions              Operating
         Period                    Declared (1)                    (2)                         (2)                      Paid                  Activities
First Quarter 2021             $             437          $            0.043          $            0.043          $          437          $           (469)
Second Quarter 2021                          436                       0.043                       0.043                     436                     1,050

                               $             873          $            0.086          $            0.086          $          873          $            581


_____________________
(1) Distributions for the period from January 1, 2021 through June 30, 2021 were
calculated at a quarterly rate of $0.04287500 per share based on a single
quarterly record date.
(2) Assumes Class A and Class T shares were issued and outstanding each day that
was a record date for distributions during the period presented.
For the six months ended June 30, 2021, we paid aggregate distributions of
$0.9 million, all of which were paid in cash. Our net loss for the six months
ended June 30, 2021 was $1.7 million. FFO for the six months ended June 30, 2021
was $2.2 million and cash flows provided by operations for the six months ended
June 30, 2021 was $0.6 million. See the reconciliation of FFO to net loss above.
We funded our total distributions paid with $0.5 million of cash flow from
current operating activities and $0.4 million of cash flows from operations in
excess of distributions paid from prior periods. In addition, our advisor waived
and deferred certain of its asset management fees which resulted in more cash
being available for distribution. To the extent that we pay distributions from
sources other than our cash flows from operations, the overall return to our
stockholders may be reduced.
Cash distributions will be determined by our board of directors based on our
financial condition and such other factors as our board of directors deems
relevant. Our board of directors has not pre-established a percentage rate of
return for cash distributions to stockholders. We have not established a minimum
distribution level, and our charter does not require that we make distributions
to our stockholders. Commencing with the fourth quarter of 2020, our board of
directors adjusted our distribution policy in response to the ongoing
uncertainty caused by the COVID-19 pandemic and its uncertain impact on our
operations and those of our tenants. Our board of directors expects to consider
and declare quarterly distributions based on a single quarterly record date. We
expect any such distributions for a quarter to be authorized by the end of the
following quarter.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
Our operating performance cannot be accurately predicted and may deteriorate in
the future due to numerous factors, including those discussed under Part II,
Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020
and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the period
ended March 31, 2021, each as filed with the SEC. Those factors include: the
future operating performance of our current real estate investments in the
existing real estate and financial environment; the success and economic
viability of our tenants; our ability to refinance existing indebtedness at
comparable terms; and changes in interest rates on any variable rate debt
obligations we incur. In the event our FFO and/or cash flow from operations
decrease in the future, the level of our distributions may also decrease. In
addition, future distributions declared and paid may exceed FFO and/or cash flow
from operations.

Critical Accounting Policies
Our consolidated interim financial statements and condensed notes thereto have
been prepared in accordance with GAAP and in conjunction with the rules and
regulations of the SEC. The preparation of our financial statements requires
significant management judgments, assumptions and estimates about matters that
are inherently uncertain. These judgments affect the reported amounts of assets
and liabilities and our disclosure of contingent assets and liabilities as of
the dates of the financial statements and the reported amounts of revenue and
expenses during the reporting periods. With different estimates or assumptions,
materially different amounts could be reported in our financial statements.
Additionally, other companies may utilize different estimates that may impact
the comparability of our results of operations to those of companies in similar
businesses. A discussion of the accounting policies that management considers
critical in that they involve significant management judgments, assumptions and
estimates is included in our Annual Report on Form 10-K for the year ended
December 31, 2020 filed with the SEC. There have been no significant changes to
our accounting policies during 2021.

Subsequent Events
We evaluate subsequent events up until the date the consolidated financial
statements are issued.
Distributions Authorized
On August 11, 2021 our board of directors authorized a quarterly distribution in
the amount of $0.04287500 per share of common stock to stockholders of record as
of the close of business on September 3, 2021, which we expect to pay in
September 2021.
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  Table of Contents
PART I. FINANCIAL INFORMATION (CONTINUED)

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