UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20192020
 OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _________ to __________
Commission file numbers: 001-35263 and 333-197780
VEREIT, Inc.
VEREIT Operating Partnership, L.P.
(Exact name of registrant as specified in its charter)
Maryland(VEREIT, Inc.) 45-2482685
Delaware(VEREIT Operating Partnership, L.P.) 45-1255683
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
     
2325 E. Camelback Road, 9th FloorPhoenixAZ 85016
(Address of principal executive offices) (Zip Code)
800(800)606-3610
(Registrant’s telephone number, including area code)
     
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class:Trading symbol(s)Symbol(s):Name of each exchange on which registered:
Common Stock$0.01 par value per share (VEREIT, Inc.)VERNew York Stock Exchange
6.70% Series F Cumulative Redeemable Preferred Stock$0.01 par value per share (VEREIT, Inc.)VER PFPRFNew York Stock Exchange
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. VEREIT, Inc. Yes x No o VEREIT Operating Partnership, L.P. Yes x No o
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). VEREIT, Inc. Yes x No o VEREIT Operating Partnership, L.P. Yes x No o

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.
VEREIT, Inc.Large accelerated filer☒ Accelerated filer☐ Non-accelerated filer☐
        
 Smaller reporting company☐ Emerging growth company☐  
VEREIT Operating Partnership, L.P.Large accelerated filer☐ Accelerated filer☐ Non-accelerated filer☒
        
 Smaller reporting company☐ Emerging growth company☐  
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 pursuant to Section 13(a) of the Exchange Act. VEREIT, Inc. ¨ VEREIT Operating Partnership, L.P. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
VEREIT, Inc. Yes ☐ No x VEREIT Operating Partnership, L.P. Yes ☐ No x
There were 1,067,688,8871,077,942,488 shares of common stock of VEREIT, Inc. outstanding as of November 1, 2019.July 31, 2020.



EXPLANATORY NOTE

This report combines the Quarterly Reports on Form 10-Q for the three and ninesix months ended SeptemberJune 30, 20192020 of VEREIT, Inc., a Maryland corporation, and VEREIT Operating Partnership, L.P., a Delaware limited partnership, of which VEREIT, Inc. is the sole general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “VEREIT,” the “Company” or the “General Partner” mean VEREIT, Inc. together with its consolidated subsidiaries, including VEREIT Operating Partnership, L.P., and all references to the “Operating Partnership” or “OP” mean VEREIT Operating Partnership, L.P. together with its consolidated subsidiaries.
As the sole general partner of VEREIT Operating Partnership, L.P., VEREIT, Inc. has the full, exclusive and complete responsibility for the Operating Partnership’s day-to-day management and control.
We believe combining the Quarterly Reports on Form 10-Q of VEREIT, Inc. and VEREIT Operating Partnership, L.P. into this single report results in the following benefits:
enhancing investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.
There are a few differences between the Company and the Operating Partnership, which are reflected in the disclosure in this report. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how we operate as an interrelated consolidated company. VEREIT, Inc. is a real estate investment trust whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, VEREIT, Inc. does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity or debt from time to time and guaranteeing certain unsecured debt of the Operating Partnership and certain of its subsidiaries. The Operating Partnership holds substantially all of the assets of the Company and holds the ownership interests in the Company’s joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity or debt issuances by VEREIT, Inc., which are generally contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s direct or indirect incurrence of indebtedness or through the issuance of partnership units. To help investors understand the significant differences between VEREIT, Inc. and the Operating Partnership, there are separate sections in this report that separately discuss VEREIT, Inc. and the Operating Partnership, including the consolidated financial statements and certain notes to the consolidated financial statements as well as separate disclosures in Item 4. Controls and Procedures and Exhibit 31 and Exhibit 32 certifications. As sole general partner with control of the Operating Partnership, VEREIT, Inc. consolidates the Operating Partnership for financial reporting purposes. Therefore, the assets and liabilities of VEREIT, Inc. and VEREIT Operating Partnership, L.P. are the same on their respective consolidated financial statements. The separate discussions of VEREIT, Inc. and VEREIT Operating Partnership, L.P. in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.


VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
For the quarterly period ended SeptemberJune 30, 20192020



 Page
PART I
Item 1. Unaudited Financial Statements
4
Consolidated Balance Sheets of VEREIT, Inc. as of SeptemberJune 30, 20192020 and December 31, 20182019
4
Consolidated Statements of Operations of VEREIT, Inc. for the Three and NineSix Months Ended SeptemberJune 30, 20192020 and 20182019
5
Consolidated Statements of Comprehensive Income (Loss) of VEREIT, Inc. for the Three and NineSix Months Ended SeptemberJune 30, 20192020 and 20182019
6
Consolidated Statements of Changes in Equity of VEREIT, Inc. for the NineThree and Six Months Ended SeptemberJune 30, 20192020 and 20182019
7
Consolidated Statements of Cash Flows of VEREIT, Inc. for the NineSix Months Ended SeptemberJune 30, 20192020 and 20182019
109
Consolidated Balance Sheets of VEREIT Operating Partnership, L.P. as of SeptemberJune 30, 20192020 and December 31, 20182019
1211
Consolidated Statements of Operations of VEREIT Operating Partnership, L.P. for the Three and NineSix Months Ended SeptemberJune 30, 20192020 and 20182019
1312
Consolidated Statements of Comprehensive Income (Loss) of VEREIT Operating Partnership, L.P. for the Three and NineSix Months Ended SeptemberJune 30, 20192020 and 20182019
1413
Consolidated Statements of Changes in Equity of VEREIT Operating Partnership, L.P. for the NineThree and Six Months Ended SeptemberJune 30, 20192020 and 20182019
1514
Consolidated Statements of Cash Flows of VEREIT Operating Partnership, L.P. for the NineSix Months Ended SeptemberJune 30, 20192020 and 20182019
1916
Notes to Consolidated Financial Statements
2118
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
5040
Item 3. Quantitative and Qualitative Disclosures About Market Risk
6855
Item 4. Controls and Procedures
7057
PART II
Item 1. Legal Proceedings
7158
Item 1A. Risk Factors
7158
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
7159
Item 3. Defaults Upon Senior Securities
7159
Item 4. Mine Safety Disclosures
7159
Item 5. Other Information
7159
Item 6. Exhibits
7260
Signatures
7463


Table of Contents
VEREIT, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data) (Unaudited)

PART I — FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
 September 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
ASSETS        
Real estate investments, at cost:        
Land $2,728,560
 $2,843,212
 $2,705,149
 $2,738,679
Buildings, fixtures and improvements 10,287,047
 10,749,228
 10,117,636
 10,200,550
Intangible lease assets 1,909,932
 2,012,399
 1,891,831
 1,904,641
Total real estate investments, at cost 14,925,539
 15,604,839
 14,714,616
 14,843,870
Less: accumulated depreciation and amortization 3,559,403
 3,436,772
 3,756,132
 3,594,247
Total real estate investments, net 11,366,136
 12,168,067
 10,958,484
 11,249,623
Operating lease right-of-use assets 218,393
 —
 208,037
 215,227
Investment in unconsolidated entities 69,025
 35,289
 86,300
 68,825
Cash and cash equivalents 1,029,315
 30,758
 278,883
 12,921
Restricted cash 20,742
 22,905
 21,203
 20,959
Rent and tenant receivables and other assets, net 347,455
 366,092
 382,409
 348,395
Goodwill 1,337,773
 1,337,773
 1,337,773
 1,337,773
Real estate assets held for sale, net 66,684
 2,609
 48,093
 26,957
Total assets $14,455,523

$13,963,493
 $13,321,182

$13,280,680
        
LIABILITIES AND EQUITY        
Mortgage notes payable, net $1,717,817
 $1,922,657
 $1,393,652
 $1,528,134
Corporate bonds, net 2,622,320
 3,368,609
 3,404,935
 2,813,739
Convertible debt, net 397,726
 394,883
 270,152
 318,183
Credit facility, net 895,351
 401,773
 896,314
 1,045,669
Below-market lease liabilities, net 147,997
 173,479
 130,208
 143,583
Accounts payable and accrued expenses 1,125,703
 145,611
 112,551
 126,320
Deferred rent and other liabilities 101,828
 69,714
Derivative, deferred rent and other liabilities 161,538
 90,349
Distributions payable 201,451
 186,623
 85,231
 150,364
Operating lease liabilities 223,288
 —
 215,322
 221,061
Total liabilities 7,433,481

6,663,349
 6,669,903

6,437,402
Commitments and contingencies (Note 10) 

 


 

 


Preferred stock, $0.01 par value, 100,000,000 shares authorized and 38,871,246 and 42,834,138 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 389
 428
Common stock, $0.01 par value, 1,500,000,000 shares authorized and 1,067,688,887 and 967,515,165 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 10,677
 9,675
Preferred stock, $0.01 par value, 100,000,000 shares authorized and 30,871,246 issued and outstanding as of each of June 30, 2020 and December 31, 2019, respectively 309
 309
Common stock, $0.01 par value, 1,500,000,000 shares authorized and 1,077,848,554 and 1,076,845,984 issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 10,779
 10,768
Additional paid-in capital 13,360,675
 12,615,472
 13,256,288
 13,251,962
Accumulated other comprehensive loss (47,886) (1,280) (106,109) (27,670)
Accumulated deficit (6,306,590) (5,467,236) (6,517,303) (6,399,626)
Total stockholders’ equity 7,017,265
 7,157,059
 6,643,964
 6,835,743
Non-controlling interests 4,777
 143,085
 7,315
 7,535
Total equity 7,022,042
 7,300,144
 6,651,279
 6,843,278
Total liabilities and equity $14,455,523

$13,963,493
 $13,321,182

$13,280,680

The accompanying notes are an integral part of these statements.

4
Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data) (Unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Rental revenue $302,985
 $313,866
 $931,871
 $944,604
Operating expenses:        
Acquisition-related 1,199
 810
 3,169
 2,496
Litigation and non-routine costs, net 832,024
 138,595
 806,763
 267,422
Property operating 30,822
 31,893
 95,703
 93,894
General and administrative 14,483
 15,186
 45,745
 46,713
Depreciation and amortization 115,111
 157,181
 369,688
 487,568
Impairments 3,944
 18,382
 24,240
 36,082
Restructuring 783
 —
 10,149
 —
Total operating expenses 998,366
 362,047
 1,355,457

934,175
Other (expenses) income:        
Interest expense (67,889) (69,310) (208,946) (210,055)
Gain (loss) on extinguishment and forgiveness of debt, net 975
 90
 (497) 5,339
Other income (loss), net 2,737
 (947) 5,510
 8,082
Equity in income and gain on disposition of unconsolidated entities 677
 252
 1,682
 1,644
Gain on disposition of real estate and real estate assets held for sale, net 18,520
 45,295
 251,106
 68,451
Total other expenses, net (44,980)
(24,620)
48,855

(126,539)
Loss before taxes (740,361)
(72,801)
(374,731)
(116,110)
Provision for income taxes (1,168) (1,141) (3,543) (3,487)
Loss from continuing operations (741,529) (73,942) (378,274)
(119,597)
Income from discontinued operations, net of income taxes —
 —
 —
 3,725
Net loss (741,529) (73,942) (378,274) (115,872)
Net loss attributable to non-controlling interests (1)
 15,089
 1,825
 6,796
 2,880
Net loss attributable to the General Partner $(726,440) $(72,117) $(371,478)
$(112,992)
         
Basic and diluted net loss per share from continuing operations attributable to common stockholders $(0.76) $(0.09) $(0.43) $(0.18)
Basic and diluted net income per share from discontinued operations attributable to common stockholders $—
 $—
 $—
 $0.00
Basic and diluted net loss per share attributable to common stockholders (2)
 $(0.76) $(0.09) $(0.43) $(0.17)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Revenues:        
Rental $278,576
 $312,043
 $577,162
 $628,886
Fees from managed partnerships 421
 145
 1,017
 182
Total revenues 278,997
 312,188
 578,179

629,068
Operating expenses:        
Acquisition-related 1,169
 985
 2,692
 1,970
Litigation and non-routine costs, net (118) (3,769) (8,682) (25,261)
Property operating 29,098
 32,503
 59,588
 64,881
General and administrative 16,120
 16,416
 31,176
 31,262
Depreciation and amortization 110,599
 118,022
 234,679
 254,577
Impairments 12,094
 8,308
 20,474
 20,296
Restructuring —
 290
 —
 9,366
Total operating expenses 168,962
 172,755
 339,927

357,091
Other (expenses) income:        
Interest expense (65,613) (69,803) (130,309) (141,057)
Loss on extinguishment and forgiveness of debt, net (200) (1,472) (1,480) (1,472)
Other income, net 778
 3,030
 953
 2,591
Equity in income of unconsolidated entities 1,497
 505
 1,743
 1,005
Gain on disposition of real estate and real estate assets held for sale, net 8,795
 221,755
 34,044
 232,586
Total other (expenses) income, net (54,743)
154,015

(95,049)
93,653
Income before taxes 55,292

293,448

143,203

365,630
Provision for income taxes (1,053) (1,164) (2,101) (2,375)
Net income 54,239
 292,284
 141,102
 363,255
Net income attributable to non-controlling interests (1)
 (31) (6,626) (86) (8,293)
Net income attributable to the General Partner $54,208
 $285,658
 $141,016

$354,962
         
Basic and diluted net income per share attributable to common stockholders $0.04
 $0.27
 $0.11
 $0.33

(1)Represents loss attributable to limited partners and a consolidated joint venture partner.
(2)Amounts may not total due to rounding.

The accompanying notes are an integral part of these statements.

5
Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands) (Unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Net loss $(741,529) $(73,942) $(378,274) $(115,872)
Other comprehensive (loss) income:        
Unrealized loss on interest rate derivatives (20,927) —
 (48,539) —
Reclassification of previous loss on interest rate derivatives into net loss 656
 53
 870
 214
Unrealized gain (loss) on investment securities, net —
 828
 —
 (71)
Reclassification of previous unrealized loss on investment securities into net loss as other income, net —
 2,457
 —
 2,457
Total other comprehensive (loss) income (20,271)
3,338

(47,669)
2,600
         
Total comprehensive loss (761,800) (70,604) (425,943) (113,272)
Comprehensive loss attributable to non-controlling interests (1)
 15,500
 1,746
 7,859
 2,818
Total comprehensive loss attributable to the General Partner $(746,300) $(68,858) $(418,084) $(110,454)

(1)Represents comprehensive lossnet income attributable to limited partners and a consolidated joint venture partner.

The accompanying notes are an integral part of these statements.

5
Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands) (Unaudited)


  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Net income $54,239
 $292,284
 $141,102
 $363,255
Total other comprehensive loss        
Unrealized loss on interest rate derivatives (6,497) (16,308) (85,047) (27,594)
Reclassification of previous unrealized loss on interest rate derivatives into net income 4,604
 99
 6,552
 196
Total other comprehensive loss (1,893)
(16,209)
(78,495)
(27,398)
         
Total comprehensive income 52,346
 276,075
 62,607
 335,857
Comprehensive income attributable to non-controlling interests(1)
 (30) (6,241) (30) (7,641)
Total comprehensive income attributable to the General Partner $52,316
 $269,834
 $62,577
 $328,216

(1)
Represents comprehensive income attributable to limited partners and a consolidated joint venture partner.

The accompanying notes are an integral part of these statements.

6
Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for share data) (Unaudited)

 Preferred Stock Common Stock             Preferred Stock Common Stock            
 Number
of Shares		 Par
Value		 Number
of Shares		 Par
Value		 Additional Paid-In Capital 
Accumulated Other Comprehensive
 Income
 Accumulated
Deficit		 Total Stock-holders’ Equity Non-Controlling Interests Total Equity Number
of Shares		 Par
Value		 Number
of Shares		 Par
Value		 Additional Paid-In Capital Accumulated Other Comprehensive
Income		 Accumulated
Deficit		 Total Stock-holders’ Equity Non-Controlling Interests Total Equity
Balance, January 1, 2019 42,834,138
 $428
 967,515,165
 $9,675
 $12,615,472
 $(1,280) $(5,467,236) $7,157,059
 $143,085
 $7,300,144
Issuance of Common Stock, net —
 —
 3,309,808
 33
 27,511
 —
 —
 27,544
 —
 27,544
Balance, January 1, 2020 30,871,246
 $309
 1,076,845,984
 $10,768
 $13,251,962
 $(27,670) $(6,399,626) $6,835,743
 $7,535
 $6,843,278
Conversion of OP Units to Common Stock —
 —
 —
 —
 (26) —
 —
 (26) 26
 —
 —
 —
 4,549
 1
 44
 —
 —
 45
 (45) —
Conversion of Series F Preferred Units to Series F Preferred Stock 37,108
 1
 —
 —
 922

—

—
 923
 (923) —
Redemption of Series F Preferred Stock —
 —
 —
 —
 (27) —
 —
 (27) —
 (27)
Repurchases of Common Stock to settle tax obligation —
 —
 (199,083) (2) (1,593) —
 —
 (1,595) —
 (1,595) —
 —
 (241,092) (2) (2,376) —
 —
 (2,378) —
 (2,378)
Equity-based compensation, net —
 —
 950,487
 10
 2,862
 —
 —
 2,872
 —
 2,872
 —
 —
 1,172,038
 11
 2,844
 —
 —
 2,855
 —
 2,855
Contributions from non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 64
 64
Distributions declared on Common Stock —
$0.1375 per common share		 —
 —
 —
 —
 —
 —
 (133,480) (133,480) —
 (133,480) —
 —
 —
 —
 —
 —
 (148,194) (148,194) —
 (148,194)
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 (3,262) (3,262) —
 —
 —
 —
 —
 —
 —
 —
 (105) (105)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 —
 (1,222) (1,222) —
 (1,222) —
 —
 —
 —
 —
 —
 (1,628) (1,628) —
 (1,628)
Distributions to preferred shareholders and unitholders —
 —
 —
 —
 —
 —
 (17,940) (17,940) (33) (17,973) —
 —
 —
 —
 —
 —
 (12,928) (12,928) (19) (12,947)
Net income —
 —
 —
 —
 —
 —
 69,304
 69,304
 1,667
 70,971
 —
 —
 —
 —
 —
 —
 86,808
 86,808
 55
 86,863
Other comprehensive loss —
 —
 —
 —
 —
 (10,922) —
 (10,922) (267) (11,189) —
 —
 —
 —
 —
 (76,547) —
 (76,547) (55) (76,602)
Balance, March 31, 2019 42,871,246

$429

971,576,377

$9,716

$12,645,148

$(12,202)
$(5,550,574)
$7,092,517

$140,357

$7,232,874
Issuance of Common Stock, net —
 —
 1,773,456
 18
 14,516
 —
 —
 14,534
 —
 14,534
Repurchases of Common Stock to settle tax obligation —
 —
 —
 —
 (9) —
 —
 (9) —
 (9)
Balance, March 31, 2020 30,871,246
 $309
 1,077,781,479
 $10,778
 $13,252,447
 $(104,217) $(6,475,568) $6,683,749
 $7,366
 $6,691,115
Redemption of Series F Preferred Stock —
 —
 —
 —
 (25) —
 —
 (25) —
 (25)
Equity-based compensation, net —
 —
 36,066
 —
 3,883
 —
 —
 3,883
 —
 3,883
 —
 —
 67,075
 1
 4,070
 —
 —
 4,071
 —
 4,071
Distributions declared on Common Stock —
$0.1375 per common share		 —
 —
 —
 —
 —
 —
 (133,841) (133,841) —
 (133,841)
Distributions declared on Common Stock —
$0.077 per common share		 —
 —
 —
 —
 —
 —
 (82,997) (82,997) —
 (82,997)
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 (3,264) (3,264) —
 —
 —
 —
 —
 —
 —
 —
 (61) (61)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 —
 (44) (44) —
 (44) —
 —
 —
 —
 —
 —
 (18) (18) —
 (18)
Distributions to preferred shareholders and unitholders —
 —
 —
 —
 —
 —
 (17,958) (17,958) (15) (17,973) —
 —
 —
 —
 —
 —
 (12,928) (12,928) (20) (12,948)
Distributions payable relinquished —
 —
 —
 —
 —
 —
 —
 —
 6,429
 6,429
Surrender of Limited Partner OP Units —
 —
 —
 —
 (8,520) —
 —
 (8,520) (18,017) (26,537)
Repurchase of convertible notes —
—
—
—
—
—
—
—
(204)—
—
—
—
—
(204)—
—
—
(204)
Net income —
 —
 —
 —
 —
 —
 285,658
 285,658
 6,626
 292,284
 —
 —
 —
 —
 —
 —
 54,208
 54,208
 31
 54,239
Other comprehensive loss —
 —
 —
 —
 —
 (15,824) —
 (15,824) (385) (16,209) —
 —
 —
 —
 —
 (1,892) —
 (1,892) (1) (1,893)
Balance, June 30, 2019 42,871,246

$429

973,385,899

$9,734

$12,655,018

$(28,026)
$(5,416,759)
$7,220,396

$131,731

$7,352,127
Issuance of Common Stock, net —
 —
 94,300,000
 943
 885,983
 —
 —
 886,926
 —
 886,926
Redemption of Series F Preferred Stock (4,000,000) (40) —
 —
 (100,056) —
 —
 (100,096) —
 (100,096)
Repurchases of Common Stock to settle tax obligation —
 —
 (1,248) —
 (14) —
 —
 (14) —
 (14)
Equity-based compensation, net —
 —
 4,236
 —
 3,144
 —
 —
 3,144
 —
 3,144
Distributions declared on Common Stock —
$0.1375 per common share		 —
 —
 —
 —
 —
 —
 (146,808) (146,808) —
 (146,808)
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 (2,859) (2,859)
Balance, June 30, 2020 30,871,246
 $309
 1,077,848,554
 $10,779
 $13,256,288
 $(106,109) $(6,517,303) $6,643,964
 $7,315
 $6,651,279


7
Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for share data) (Unaudited)

  Preferred Stock Common Stock            
  Number
of Shares		 Par
Value		 Number
of Shares		 Par
Value		 Additional Paid-In Capital 
Accumulated Other Comprehensive
 Income
 Accumulated
Deficit		 Total Stock-holders’ Equity Non-Controlling Interests Total Equity
Dividend equivalents on awards granted under the Equity Plan —
 $—
 —
 $—
 $—
 $—
 $(26) $(26) $—
 $(26)
Distributions to preferred shareholders and unitholders —
 —
 —
 —
 —
 —
 (16,557) (16,557) (21) (16,578)
Surrender of Limited Partner OP Units —
 —
 —
 —
 (83,400) —
 —
 (83,400) (108,574) (191,974)
Net loss —
 —
 —
 —
 —
 —
 (726,440) (726,440) (15,089) (741,529)
Other comprehensive loss —
 —
 —
 —
 —
 (19,860) —
 (19,860) (411) (20,271)
Balance, September 30, 2019 38,871,246

$389

1,067,688,887

$10,677

$13,360,675

$(47,886)
$(6,306,590)
$7,017,265

$4,777

$7,022,042






8
Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for share data) (Unaudited)

 Preferred Stock Common Stock             Preferred Stock Common Stock            
 Number
of Shares		 Par
Value		 Number
of Shares		 Par
Value		 Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated
Deficit		 Total Stock-holders’ Equity Non-Controlling Interests Total Equity Number
of Shares		 Par
Value		 Number
of Shares		 Par
Value		 Additional Paid-In Capital 
Accumulated Other Comprehensive
 Income
 Accumulated
Deficit		 Total Stock-holders’ Equity Non-Controlling Interests Total Equity
Balance, January 1, 2018 42,834,138
 $428
 974,208,583
 $9,742
 $12,654,258
 $(3,569) $(4,776,581) $7,884,278
 $158,598
 $8,042,876
Repurchases of Common Stock under share repurchase programs —
 —
 (6,399,666) (64) (44,521) —
 —
 (44,585) —
 (44,585)
Repurchases of Common Stock to settle tax obligation —
 —
 (230,436) (2) (1,658) —
 —
 (1,660) —
 (1,660)
Equity-based compensation, net —
 —
 576,005
 5
 2,927
 —
 —
 2,932
 —
 2,932
Distributions declared on Common Stock —
$0.1375 per common share		 —
 —
 —
 —
 —
 —
 (133,104) (133,104) —
 (133,104)
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 (3,264) (3,264)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 —
 (522) (522) —
 (522)
Distributions to preferred shareholders and unitholders —
 —
 —
 —
 —
 —
 (17,937) (17,937) (36) (17,973)
Net income —
 —
 —
 —
 —
 —
 31,795
 31,795
 742
 32,537
Other comprehensive loss —
 —
 —
 —
 —
 (715) —
 (715) (17) (732)
Balance, March 31, 2018 42,834,138

$428

968,154,486
 $9,681
 $12,611,006
 $(4,284) $(4,896,349)
$7,720,482

$156,023

$7,876,505
Balance, January 1, 2019 42,834,138
 $428
 967,515,165
 $9,675
 $12,615,472
 $(1,280) $(5,467,236) $7,157,059
 $143,085
 $7,300,144
Issuance of Common Stock, net —
 —
 3,309,808
 33
 27,511
 —
 —
 27,544
 —
 27,544
Conversion of OP Units to Common Stock —
 —
 32,439
 —
 241
 —
 —
 241
 (241) —
 —
 —
 —
 —
 (26) —
 —
 (26) 26
 —
Repurchases of Common Stock under share repurchase programs —
 —
 (807,210) (8) (5,561) —
 —
 (5,569) —
 (5,569)
Repurchases of Common Stock to settle tax obligation —
 —
 (69,931) (1) (487) —
 —
 (488) —
 (488)
Equity-based compensation, net —
 —
 184,011
 2
 3,946
 —
 —
 3,948
 —
 3,948
Distributions declared on Common Stock —
$0.1375 per common share		 —
 —
 —
 —
 —
 —
 (133,010) (133,010) —
 (133,010)
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 (3,262) (3,262)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 —
 (274) (274) —
 (274)
Distributions to preferred shareholders and unitholders —
 —
 —
 —
 —
 —
 (17,937) (17,937) (36) (17,973)
Net loss —
 —
 —
 —
 —
 —
 (72,670) (72,670) (1,797) (74,467)
Other comprehensive loss —
 —
 —
 —
 —
 (6) —
 (6) —
 (6)
Balance, June 30, 2018 42,834,138

$428

967,493,795
 $9,674
 $12,609,145
 $(4,290) $(5,120,240)
$7,494,717

$150,687

$7,645,404
Conversion of Series F Preferred Units to Series F Preferred Stock 37,108
 1
 —
 —
 922

—

—
 923
 (923) —
Repurchases of Common Stock to settle tax obligation —
 —
 (7,597) —
 (61) —
 —
 (61) —
 (61) —
 —
 (199,083) (2) (1,593) —
 —
 (1,595) —
 (1,595)
Equity-based compensation, net —
 —
 35,915
 —
 3,323
 —
 —
 3,323
 —
 3,323
 —
 —
 950,487
 10
 2,862
 —
 —
 2,872
 —
 2,872
Contributions from non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 120
 120
 —
 —
 —
 —
 —
 —
 —
 —
 64
 64
Distributions declared on Common Stock —
$0.1375 per common share		 —
 —
 —
 —
 —
 —
 (133,015) (133,015) —
 (133,015) —
 —
 —
 —
 —
 —
 (133,480) (133,480) —
 (133,480)
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 (3,261) (3,261) —
 —
 —
 —
 —
 —
 —
 —
 (3,262) (3,262)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 —
 (59) (59) —
 (59) —
 —
 —
 —
 —
 —
 (1,222) (1,222) —
 (1,222)
Distributions to preferred shareholders and unitholders —
 —
 —
 —
 —
 —
 (17,937) (17,937) (36) (17,973) —
 —
 —
 —
 —
 —
 (17,940) (17,940) (33) (17,973)
Net loss —
 —
 —
 —
 —
 —
 (72,117) (72,117) (1,825) (73,942)
Other comprehensive income —
 —
 —
 —
 —
 3,259
 —
 3,259
 79
 3,338
Balance, September 30, 2018 42,834,138

$428

967,522,113
 $9,674
 $12,612,407
 $(1,031) $(5,343,368)
$7,278,110

$145,764

$7,423,874
Net income —
 —
 —
 —
 —
 —
 69,304
 69,304
 1,667
 70,971
Other comprehensive loss —
 —
 —
 —
 —
 (10,922) —
 (10,922) (267) (11,189)
Balance, March 31, 2019 42,871,246

$429

971,576,377

$9,716

$12,645,148

$(12,202)
$(5,550,574)
$7,092,517

$140,357

$7,232,874
Issuance of Common Stock, net —
 —
 1,773,456
 18
 14,516
 —
 —
 14,534
 —
 14,534
Repurchases of Common Stock to settle tax obligation —
 —
 —
 —
 (9) —
 —
 (9) —
 (9)
Equity-based compensation, net —
 —
 36,066
 —
 3,883
 —
 —
 3,883
 —
 3,883
Distributions declared on Common Stock —
$0.1375 per common share		 —
 —
 —
 —
 —
 —
 (133,841) (133,841) —
 (133,841)
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 (3,264) (3,264)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 —
 (44) (44) —
 (44)
Distributions to preferred shareholders and unitholders —
 —
 —
 —
 —
 —
 (17,958) (17,958) (15) (17,973)
Distributions payable relinquished —
 —
 —
 —
 —
 —
 —
 —
 6,429
 6,429
Surrender of Limited Partner OP Units —
 —
 —
 —
 (8,520) —
 —
 (8,520) (18,017) (26,537)
Net income —
 —
 —
 —
 —
 —
 285,658
 285,658
 6,626
 292,284
Other comprehensive loss —
 —
 —
 —
 —
 (15,824) —
 (15,824) (385) (16,209)
Balance, June 30, 2019 42,871,246
 $429
 973,385,899
 $9,734
 $12,655,018
 $(28,026) $(5,416,759) $7,220,396
 $131,731
 $7,352,127

The accompanying notes are an integral part of these statements.

98
Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)

 Nine Months Ended September 30, Six Months Ended June 30,
 2019 2018 2020 2019
Cash flows from operating activities:    
    
Net loss $(378,274) $(115,872)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Net income $141,102
 $363,255
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 379,133
 503,529
 240,902
 260,771
Gain on real estate assets, net (251,106) (70,188) (34,303) (232,597)
Impairments 24,240
 36,082
 20,474
 20,296
Equity-based compensation 9,899
 10,203
 6,926
 6,755
Equity in income of unconsolidated entities and gain on joint venture (1,682) (1,644)
Equity in income of unconsolidated entities (1,743) (1,005)
Distributions from unconsolidated entities 130
 1,365
 861
 —
Loss (gain) on investments 492
 (2,302)
Loss (gain) on derivative instruments 58
 (447)
Loss on investments 683
 464
Loss on derivative instruments —
 58
Non-cash restructuring expense 3,999
 —
 —
 4,048
Loss (gain) on extinguishment and forgiveness of debt, net 497
 (5,339)
Loss on extinguishment and forgiveness of debt, net 1,480
 1,472
Surrender of Limited Partner OP Units (26,536) —
 —
 (26,536)
Changes in assets and liabilities:        
Investment in direct financing leases 1,230
 1,524
 736
 821
Rent and tenant receivables, operating lease right-of-use and other assets, net (17,234) (28,520) (30,158) (9,596)
Assets held for sale classified as discontinued operations —
 (2,492)
Accounts payable and accrued expenses 786,839
 132,686
 (13,870) (13,104)
Deferred rent, operating lease and other liabilities (26,460) (11,001) (12,138) (27,084)
Due to affiliates —
 (66)
Liabilities related to discontinued operations —
 (13,861)
Net cash provided by operating activities 505,225
 433,657
 320,952
 348,018
Cash flows from investing activities:        
Investments in real estate assets (251,804) (278,385) (147,121) (191,550)
Capital expenditures and leasing costs (27,309) (13,116) (15,665) (19,695)
Real estate developments (17,274) (7,477) (6,469) (10,537)
Principal repayments received on investment securities and mortgage notes receivable 106
 5,555
Principal repayments received on mortgage notes receivable —
 88
Investments in unconsolidated entities (2,767) —
 (10,066) (2,767)
Return of investment from unconsolidated entities 154
 48
 970
 —
Proceeds from disposition of real estate and joint venture 846,023
 358,443
Proceeds from disposition of discontinued operations —
 123,925
Payments related to disposition of discontinued operations —
 (1,010)
Proceeds from disposition of real estate 204,114
 739,873
Investment in leasehold improvements and other assets (1,417) (616) (314) (798)
Deposits for real estate assets (5,238) (11,957) (1,420) (3,072)
Investments in mezzanine position (9,959) —
Proceeds from sale of investments and other assets 9,837
 10,880
 —
 8,199
Uses and refunds of deposits for real estate assets 3,562
 8,552
 4,036
 2,946
Proceeds from the settlement of property-related insurance claims 473
 1,354
 48
 334
Line of credit advances to Cole REITs —
 (2,200)
Line of credit repayments from Cole REITs —
 3,800
Net cash provided by investing activities 554,346
 197,796
 18,154
 523,021
Cash flows from financing activities:        
Proceeds from mortgage notes payable —
 182
 1,032
 —
Payments on mortgage notes payable and other debt, including debt extinguishment costs (182,648) (125,418) (135,036) (175,962)
Proceeds from credit facility 1,061,000
 1,558,000
 902,000
 1,034,000
Payments on credit facility (564,000) (950,000) (1,052,000) (537,000)
Payments on corporate bonds, including extinguishment costs (750,000) —
Repayment of convertible notes —
 (597,500)
Proceeds from corporate bonds 594,864
 —
Redemptions of corporate bonds, including extinguishment costs (26) (750,000)
Repurchases of convertible notes, including extinguishment costs (50,326) —
Payments of deferred financing costs (181) (20,719) (6,946) (182)
Repurchases of Common Stock under the Share Repurchase Programs —
 (50,154)
Repurchases of Common Stock to settle tax obligations (1,618) (2,209) (2,378) (1,604)
Proceeds from the issuance of Common Stock, net of underwriters’ discount and offering expenses 929,004
 —
 —
 42,078
Redemption of Series F Preferred Stock (100,096) —
Series F Preferred Stock redemption expenses (52) —
Contributions from non-controlling interest holders —
 64
Distributions paid (324,032) (303,894)
Net cash used in financing activities (72,900) (692,500)
Net change in cash and cash equivalents and restricted cash $266,206
 $178,539
    

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Table of Contents
VEREIT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)
(In thousands) (Unaudited)


 Nine Months Ended September 30, Six Months Ended June 30,
 2019 2018 2020 2019
Contributions from non-controlling interest holders $64
 $120
Distributions paid (454,702) (455,078)
Net cash used in financing activities (63,177) (642,776)
Net change in cash and cash equivalents and restricted cash 996,394
 (11,323)
Cash and cash equivalents and restricted cash, beginning of period $33,880
 $53,663
        
Cash and cash equivalents and restricted cash, beginning of period 53,663
 64,036
Less: cash and cash equivalents of discontinued operations —
 (2,198)
Cash and cash equivalents and restricted cash from continuing operations, beginning of period 53,663
 61,838
Cash and cash equivalents and restricted cash, end of period $300,086
 $232,202
        
Cash and cash equivalents and restricted cash from continuing operations, end of period $1,050,057
 $52,713
Reconciliation of Cash and Cash Equivalents and Restricted Cash        
Cash and cash equivalents at beginning of period $30,758
 $34,176
 $12,921
 $30,758
Restricted cash at beginning of period 22,905
 27,662
 20,959
 22,905
Cash and cash equivalents and restricted cash at beginning of period 53,663
 61,838
 33,880
 53,663
        
Cash and cash equivalents at end of period 1,029,315
 25,264
 278,883
 211,510
Restricted cash at end of period 20,742
 27,449
 21,203
 20,692
Cash and cash equivalents and restricted cash at end of period $1,050,057
 $52,713
 $300,086
 $232,202

The accompanying notes are an integral part of these statements.

1110
Table of Contents
VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED BALANCE SHEETS
(In thousands, except for unit data) (Unaudited)

 September 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
ASSETS        
Real estate investments, at cost:        
Land $2,728,560
 $2,843,212
 $2,705,149
 $2,738,679
Buildings, fixtures and improvements 10,287,047
 10,749,228
 10,117,636
 10,200,550
Intangible lease assets 1,909,932
 2,012,399
 1,891,831
 1,904,641
Total real estate investments, at cost 14,925,539

15,604,839
 14,714,616

14,843,870
Less: accumulated depreciation and amortization 3,559,403
 3,436,772
 3,756,132
 3,594,247
Total real estate investments, net 11,366,136

12,168,067
 10,958,484

11,249,623
Operating lease right-of-use assets 218,393
 —
 208,037
 215,227
Investment in unconsolidated entities 69,025
 35,289
 86,300
 68,825
Cash and cash equivalents 1,029,315
 30,758
 278,883
 12,921
Restricted cash 20,742
 22,905
 21,203
 20,959
Rent and tenant receivables and other assets, net 347,455
 366,092
 382,409
 348,395
Goodwill 1,337,773
 1,337,773
 1,337,773
 1,337,773
Real estate assets held for sale, net 66,684
 2,609
 48,093
 26,957
Total assets $14,455,523

$13,963,493
 $13,321,182

$13,280,680
        
LIABILITIES AND EQUITY    
    
Mortgage notes payable, net $1,717,817
 $1,922,657
 $1,393,652
 $1,528,134
Corporate bonds, net 2,622,320
 3,368,609
 3,404,935
 2,813,739
Convertible debt, net 397,726
 394,883
 270,152
 318,183
Credit facility, net 895,351
 401,773
 896,314
 1,045,669
Below-market lease liabilities, net 147,997
 173,479
 130,208
 143,583
Accounts payable and accrued expenses 1,125,703
 145,611
 112,551
 126,320
Deferred rent and other liabilities 101,828
 69,714
Derivative, deferred rent and other liabilities 161,538
 90,349
Distributions payable 201,451
 186,623
 85,231
 150,364
Operating lease liabilities 223,288
 —
 215,322
 221,061
Total liabilities 7,433,481

6,663,349
 6,669,903

6,437,402
Commitments and contingencies (Note 10) 


 


 


 


General Partner's preferred equity, 38,871,246 and 42,834,138 General Partner Series F Preferred Units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 595,781
 710,325
General Partner's common equity, 1,067,688,887 and 967,515,165 General Partner OP Units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 6,421,484
 6,446,734
Limited Partner's preferred equity, 49,766 and 86,874 Limited Partner Series F Preferred Units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 1,891
 2,883
Limited Partner's common equity, 20,793,463 and 23,715,908 Limited Partner OP Units issued and outstanding as of September 30, 2019 and December 31, 2018, respectively 1,634
 138,931
General Partner's preferred equity, 30,871,246 General Partner Series F Preferred Units issued and outstanding as of each of June 30, 2020 and December 31, 2019, respectively 434,596
 460,504
General Partner's common equity, 1,077,848,554 and 1,076,845,984 General Partner OP Units issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 6,209,368
 6,375,239
Limited Partner's preferred equity, 49,766 Limited Partner Series F Preferred Units issued and outstanding as of each of June 30, 2020 and December 31, 2019, respectively 1,830
 1,869
Limited Partner's common equity, 782,170 and 786,719 Limited Partner OP Units issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 4,267
 4,433
Total partners’ equity 7,020,790

7,298,873
 6,650,061

6,842,045
Non-controlling interests 1,252
 1,271
 1,218
 1,233
Total equity 7,022,042

7,300,144
 6,651,279

6,843,278
Total liabilities and equity $14,455,523

$13,963,493
 $13,321,182

$13,280,680

The accompanying notes are an integral part of these statements.

1211
Table of Contents
VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per unit data) (Unaudited)

 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018 2020 2019 2020 2019
Rental revenue $302,985
 $313,866
 $931,871
 $944,604
Revenues:        
Rental $278,576
 $312,043
 $577,162
 $628,886
Fees from managed partnerships 421
 145
 1,017
 182
Total revenues 278,997
 312,188
 578,179
 629,068
Operating expenses:                
Acquisition-related 1,199
 810
 3,169
 2,496
 1,169
 985
 2,692
 1,970
Litigation and non-routine costs, net 832,024
 138,595
 806,763
 267,422
 (118) (3,769) (8,682) (25,261)
Property operating 30,822
 31,893
 95,703
 93,894
 29,098
 32,503
 59,588
 64,881
General and administrative 14,483
 15,186
 45,745
 46,713
 16,120
 16,416
 31,176
 31,262
Depreciation and amortization 115,111
 157,181
 369,688
 487,568
 110,599
 118,022
 234,679
 254,577
Impairments 3,944
 18,382
 24,240
 36,082
 12,094
 8,308
 20,474
 20,296
Restructuring 783
 —
 10,149
 —
 —
 290
 —
 9,366
Total operating expenses 998,366

362,047

1,355,457

934,175
 168,962

172,755

339,927

357,091
Other (expenses) income:                
Interest expense (67,889) (69,310) (208,946) (210,055) (65,613) (69,803) (130,309) (141,057)
Gain (loss) on extinguishment and forgiveness of debt, net 975
 90
 (497) 5,339
Other income (loss), net 2,737
 (947) 5,510
 8,082
Equity in income and gain on disposition of unconsolidated entities 677
 252
 1,682
 1,644
Loss on extinguishment and forgiveness of debt, net (200) (1,472) (1,480) (1,472)
Other income, net 778
 3,030
 953
 2,591
Equity in income of unconsolidated entities 1,497
 505
 1,743
 1,005
Gain on disposition of real estate and real estate assets held for sale, net 18,520
 45,295
 251,106
 68,451
 8,795
 221,755
 34,044
 232,586
Total other expenses, net (44,980)
(24,620)
48,855

(126,539)
Loss before taxes (740,361)
(72,801)
(374,731)
(116,110)
Total other (expenses) income, net (54,743)
154,015

(95,049)
93,653
Income before taxes 55,292

293,448

143,203

365,630
Provision for income taxes (1,168) (1,141) (3,543) (3,487) (1,053) (1,164) (2,101) (2,375)
Loss from continuing operations (741,529) (73,942) (378,274) (119,597)
Income from discontinued operations, net of income taxes —
 —
 —
 3,725
Net loss (741,529)
(73,942)
(378,274)
(115,872)
Net income 54,239

292,284

141,102

363,255
Net loss attributable to non-controlling interests (1)
 25
 57
 83
 113
 8
 30
 15
 58
Net loss attributable to the OP $(741,504)
$(73,885)
$(378,191)
$(115,759)
Net income attributable to the OP $54,247

$292,314

$141,117

$363,313
                
Basic and diluted net loss per unit from continuing operations attributable to common unitholders $(0.76) $(0.09) $(0.43) $(0.18)
Basic and diluted net income per unit from discontinued operations attributable to common unitholders $—
 $—
 $—
 $0.00
Basic and diluted net loss per unit attributable to common unitholders (2)
 $(0.76) $(0.09) $(0.43) $(0.17)
Basic and diluted net income per unit attributable to common unitholders
 $0.04
 $0.27
 $0.11
 $0.33

(1)Represents net loss attributable to a consolidated joint venture partner.
(2)Amounts may not total due to rounding.

The accompanying notes are an integral part of these statements.


1312
Table of Contents
VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands) (Unaudited)

  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Net loss $(741,529) $(73,942) $(378,274) $(115,872)
Other comprehensive (loss) income:        
Unrealized loss on interest rate derivatives (20,927) —
 (48,539) —
Reclassification of previous loss on interest rate derivatives into net loss 656
 53
 870
 214
Unrealized gain (loss) on investment securities, net —
 828
 —
 (71)
Reclassification of previous unrealized loss on investment securities into net loss as other income, net —
 2,457
 —
 2,457
Total other comprehensive (loss) income (20,271)
3,338

(47,669)
2,600
         
Total comprehensive loss (761,800) (70,604)
(425,943)
(113,272)
Comprehensive loss attributable to non-controlling interests (1)
 25
 57
 83
 113
Total comprehensive loss attributable to the OP $(761,775) $(70,547)
$(425,860)
$(113,159)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Net income $54,239
 $292,284
 $141,102
 $363,255
Total other comprehensive loss        
Unrealized loss on interest rate derivatives (6,497) (16,308) (85,047) (27,594)
Reclassification of previous unrealized loss on interest rate derivatives into net income 4,604
 99
 6,552
 196
Total other comprehensive loss (1,893)
(16,209)
(78,495)
(27,398)
         
Total comprehensive income 52,346
 276,075

62,607

335,857
Comprehensive loss attributable to non-controlling interests(1)
 8
 30
 15
 58
Total comprehensive income attributable to the OP $52,354
 $276,105

$62,622

$335,915

(1)Represents comprehensive loss attributable to a consolidated joint venture partner.

The accompanying notes are an integral part of these statements.


1413
Table of Contents
VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for unit data) (Unaudited)

 Preferred Units Common Units       Preferred Units Common Units      
 General Partner Limited Partner General Partner Limited Partner       General Partner Limited Partner General Partner Limited Partner      
 Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital
Balance, January 1, 2019 42,834,138
 $710,325
 86,874
 $2,883
 967,515,165
 $6,446,734
 23,715,908
 $138,931
 $7,298,873
 $1,271
 $7,300,144
Issuance of common OP Units, net —
 —
 —
 —
 3,309,808
 27,544
 —
 —
 27,544
 —
 27,544
Balance, January 1, 2020 30,871,246
 $460,504
 49,766
 $1,869
 1,076,845,984
 $6,375,239
 786,719
 $4,433
 $6,842,045
 $1,233
 $6,843,278
Conversion of Limited Partners' Common OP Units to General Partner's Common OP Units —
 —
 —
 —
 —
 (26) —
 26
 —
 —
 —
 —
 —
 —
 —
 4,549
 45
 (4,549) (45) —
 —
 —
Conversion of Limited Partner Series F Preferred Units to Series F Preferred Stock 37,108
 923
 (37,108) (923) —
 —
 —
 —
 —
 —
 —
Redemption of Series F Preferred Stock —
 (27) —
 —
 —
 —
 —
 —
 (27) —
 (27)
Repurchases of common OP Units to settle tax obligation —
 —
 —
 —
 (199,083) (1,595) —
 —
 (1,595) —
 (1,595) —
 —
 —
 —
 (241,092) (2,378) —
 —
 (2,378) —
 (2,378)
Equity-based compensation, net —
 —
 —
 —
 950,487
 2,872
 —
 —
 2,872
 —
 2,872
 —
 —
 —
 —
 1,172,038
 2,855
 —
 —
 2,855
 —
 2,855
Contributions from non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 —
 64
 64
Distributions to Common OP Units and non-controlling interests —$0.1375 per common unit —
 —
 —
 —
 —
 (133,480) —
 (3,262) (136,742) —
 (136,742) —
 —
 —
 —
 —
 (148,194) —
 (105) (148,299) —
 (148,299)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 (1,222) —
 —
 (1,222) —
 (1,222) —
 —
 —
 —
 —
 (1,628) —
 —
 (1,628) —
 (1,628)
Distributions to Series F Preferred Units —
 (17,940) —
 (33) —
 —
 —
 —
 (17,973) —
 (17,973) —
 (12,928) —
 (19) —
 —
 —
 —
 (12,947) —
 (12,947)
Net income (loss) —
 —
 —
 —
 —
 69,304
 —
 1,695
 70,999
 (28) 70,971
 —
 —
 —
 —
 —
 86,808
 —
 62
 86,870
 (7) 86,863
Other comprehensive loss —
 —
 —
 —
 —
 (10,922) —
 (267) (11,189) —
 (11,189) —
 —
 —
 —
 —
 (76,547) —
 (55) (76,602) —
 (76,602)
Balance, March 31, 2019 42,871,246
 $693,308
 49,766
 $1,927
 971,576,377
 $6,399,209
 23,715,908
 $137,123
 $7,231,567
 $1,307
 $7,232,874
Issuance of common OP Units, net —
 —
 —
 —
 1,773,456
 14,534
 —
 —
 14,534
 —
 14,534
Repurchases of common OP Units to settle tax obligation —
 —
 —
 —
 —
 (9) —
 —
 (9) —
 (9)
Balance, March 31, 2020 30,871,246
 $447,549
 49,766
 $1,850
 1,077,781,479
 $6,236,200
 782,170
 $4,290
 $6,689,889
 $1,226
 $6,691,115
Redemption of Series F Preferred Stock —
 (25) —
 —
 —
 —
 —
 —
 (25) —
 (25)
Equity-based compensation, net —
 —
 —
 —
 36,066
 3,883
 —
 —
 3,883
 —
 3,883
 —
 —
 —
 —
 67,075
 4,071
 —
 —
 4,071
 —
 4,071
Distributions to Common OP Units and non-controlling interests —$0.1375 per common unit —
 —
 —
 —
 —
 (133,841) —
 (3,264) (137,105) —
 (137,105)
Distributions to Common OP Units and non-controlling interests —$0.077 per common unit —
 —
 —
 —
 —
 (82,997) —
 (61) (83,058) —
 (83,058)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 (44) —
 —
 (44) —
 (44) —
 —
 —
 —
 —
 (18) —
 —
 (18) —
 (18)
Distributions to Series F Preferred Units —
 (17,958) —
 (15) —
 —
 —
 —
 (17,973) —
 (17,973) —
 (12,928) —
 (20) —
 —
 —
 —
 (12,948) —
 (12,948)
Distributions payable relinquished —
 —
 —
 —
 —
 —
 —
 6,429
 6,429
 —
 6,429
Surrender of Limited Partner OP Units —
 —
 —
 —
 —
 (8,520) (2,922,445) (18,017) (26,537) —
 (26,537)
Repurchase of convertible notes —
 —
 —
 —
 —
 (204) —
 —
 (204) —
 (204)
Net income (loss) —
 —
 —
 —
 —
 285,658
 —
 6,656
 292,314
 (30) 292,284
 —
 —
 —
 —
 —
 54,208
 —
 39
 54,247
 (8) 54,239
Other comprehensive income —
 —
 —
 —
 —
 (15,824) —
 (385) (16,209) —
 (16,209)
Balance, June 30, 2019 42,871,246
 $675,350
 49,766
 $1,912
 973,385,899
 $6,545,046
 20,793,463
 $128,542
 $7,350,850
 $1,277
 $7,352,127
Issuance of common OP Units, net —
 —
 —
 —
 94,300,000
 886,926
 —
 —
 886,926
 —
 886,926
Redemption of Series F Preferred Stock (4,000,000) (63,012) —
 —
 —
 (37,084) —
 —
 (100,096) —

(100,096)
Repurchases of common OP Units to settle tax obligation —
 —
 —
 —
 (1,248) (14) —
 —
 (14) —
 (14)
Equity-based compensation, net —
 —
 —
 —
 4,236
 3,144
 —
 —
 3,144
 —
 3,144
Other comprehensive loss —
 —
 —
 —
 —
 (1,892) —
 (1) (1,893) —
 (1,893)
Balance, June 30, 2020 30,871,246
 $434,596
 49,766
 $1,830
 1,077,848,554
 $6,209,368
 782,170
 $4,267
 $6,650,061
 $1,218
 $6,651,279

1514
Table of Contents
VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for unit data) (Unaudited)

  Preferred Units Common Units      
  General Partner Limited Partner General Partner Limited Partner      
  Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital
Distributions to Common OP Units and non-controlling interests —$0.1375 per common unit —
 $—
 —
 $—
 —
 $(146,808) —
 $(2,859) $(149,667) $—
 $(149,667)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 (26) —
 —
 (26) —
 (26)
Distributions to Series F Preferred Units —
 (16,557) —
 (21) —
 —
 —
 —
 (16,578) —
 (16,578)
Surrender of Limited Partner OP Units —
 —
 —
 —
 —
 (83,400) —
 (108,574) (191,974) —
 (191,974)
Net loss —
 —
 —
 —
 —
 (726,440) —
 (15,064) (741,504) (25) (741,529)
Other comprehensive loss —
 —
 —
 —
 —
 (19,860) —
 (411) (20,271) —
 (20,271)
Balance, September 30, 2019 38,871,246
 $595,781
 49,766
 $1,891
 1,067,688,887
 $6,421,484
 20,793,463
 $1,634
 $7,020,790
 $1,252
 $7,022,042






16
Table of Contents
VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for unit data) (Unaudited)

 Preferred Units Common Units       Preferred Units Common Units      
 General Partner Limited Partner General Partner Limited Partner       General Partner Limited Partner General Partner Limited Partner      
 Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital
Balance, January 1, 2018 42,834,138
 $782,073
 86,874
 $3,027
 974,208,583
 $7,102,205
 23,748,347
 $154,266
 $8,041,571
 $1,305
 $8,042,876
Repurchases of common OP Units under share repurchase programs —
 —
 —
 —
 (6,399,666) (44,585) —
 —
 (44,585) —
 (44,585)
Balance, January 1, 2019 42,834,138
 $710,325
 86,874
 $2,883
 967,515,165
 $6,446,734
 23,715,908
 $138,931
 $7,298,873
 $1,271
 $7,300,144
Issuance of common OP Units, net —
 —
 —
 —
 3,309,808
 27,544
 —
 —
 27,544
 —
 27,544
Conversion of Limited Partners' Common OP Units to General Partner's Common OP Units —
 —
 —
 —
 —
 (26) —
 26
 —
 —
 —
Conversion of Limited Partner Series F Preferred Units to Series F Preferred Stock 37,108
 923
 (37,108) (923) —
 —
 —
 —
 —
 —
 —
Repurchases of common OP Units to settle tax obligation —
 —
 —
 —
 (230,436) (1,660) —
 —
 (1,660) —
 (1,660) —
 —
 —
 —
 (199,083) (1,595) —
 —
 (1,595) —
 (1,595)
Equity-based compensation, net —
 —
 —
 —
 576,005
 2,932
 —
 —
 2,932
 —
 2,932
 —
 —
 —
 —
 950,487
 2,872
 —
 —
 2,872
 —
 2,872
Distributions to common OP Units and non-controlling interests —$0.1375 per common unit —
 —
 —
 —
 —
 (133,104) —
 (3,264) (136,368) —
 (136,368)
Contributions from non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 —
 64
 64
Distributions to Common OP Units and non-controlling interests —$0.1375 per common unit —
 —
 —
 —
 —
 (133,480) —
 (3,262) (136,742) —
 (136,742)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 (522) —
 —
 (522) —
 (522) —
 —
 —
 —
 —
 (1,222) —
 —
 (1,222) —
 (1,222)
Distributions to Series F Preferred Units —
 (17,937) —
 (36) —
 —
 —
 —
 (17,973) —
 (17,973) —
 (17,940) —
 (33) —
 —
 —
 —
 (17,973) —
 (17,973)
Net income (loss) —
 —
 —
 —
 —
 31,795
 —
 782
 32,577
 (40) 32,537
 —
 —
 —
 —
 —
 69,304
 —
 1,695
 70,999
 (28) 70,971
Other comprehensive loss —
 —
 —
 —
 —
 (715) —
 (17) (732) —
 (732) —
 —
 —
 —
 —
 (10,922) —
 (267) (11,189) —
 (11,189)
Balance, March 31, 2018 42,834,138

$764,136

86,874

$2,991

968,154,486

$6,956,346

23,748,347

$151,767

$7,875,240

$1,265

$7,876,505
Conversion of Limited Partners' Common OP Units to General Partner's Common OP Units —
 —
 —
 —
 32,439
 241
 (32,439) (241) —
 —
 —
Repurchases of common OP Units under share repurchase programs —
 —
 —
 —
 (807,210) (5,569) —
 —
 (5,569) —
 (5,569)
Balance, March 31, 2019 42,871,246
 $693,308
 49,766
 $1,927
 971,576,377
 $6,399,209
 23,715,908
 $137,123
 $7,231,567
 $1,307
 $7,232,874
Issuance of common OP Units, net —
 —
 —
 —
 1,773,456
 14,534
 —
 —
 14,534
 —
 14,534
Repurchases of common OP Units to settle tax obligation —
 —
 —
 —
 (69,931) (488) —
 —
 (488) —
 (488) —
 —
 —
 —
 —
 (9) —
 —
 (9) —
 (9)
Equity-based compensation, net —
 —
 —
 —
 184,011
 3,948
 —
 —
 3,948
 —
 3,948
 —
 —
 —
 —
 36,066
 3,883
 —
 —
 3,883
 —
 3,883
Distributions to common OP Units and non-controlling interests —$0.1375 per common unit —
 —
 —
 —
 —
 (133,010) —
 (3,262) (136,272) —
 (136,272)
Distributions to Common OP Units and non-controlling interests —$0.1375 per common unit —
 —
 —
 —
 —
 (133,841) —
 (3,264) (137,105) —
 (137,105)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 (274) —
 —
 (274) —
 (274) —
 —
 —
 —
 —
 (44) —
 —
 (44) —
 (44)
Distributions to Series F Preferred Units —
 (17,937) —
 (36) —
 —
 —
 —
 (17,973) —
 (17,973) —
 (17,958) —
 (15) —
 —
 —
 —
 (17,973) —
 (17,973)
Net loss —
 —
 —
 —
 —
 (72,670) —
 (1,781) (74,451) (16) (74,467)
Distributions payable relinquished —
 —
 —
 —
 —
 —
 —
 6,429
 6,429
 —
 6,429
Surrender of Limited Partner OP Units —
 —
 —
 —
 —
 (8,520) (2,922,445) (18,017) (26,537) —
 (26,537)
Net income (loss) —
 —
 —
 —
 —
 285,658
 —
 6,656
 292,314
 (30) 292,284
Other comprehensive loss —
 —
 —
 —
 —
 (6) —
 —
 (6) —
 (6) —
 —
 —
 —
 —
 (15,824) —
 (385) (16,209) —
 (16,209)
Balance, June 30, 2018 42,834,138

$746,199

86,874

$2,955

967,493,795

$6,748,518

23,715,908

$146,483

$7,644,155

$1,249

$7,645,404
Repurchases of common OP Units under share repurchase programs —
 —
 —
 —
 (7,597) (61) —
 —
 (61) —
 (61)
Equity-based compensation, net —
 —
 —
 —
 35,915
 3,323
 —
 —
 3,323
 —
 3,323
Contributions from non-controlling interest holders —
 —
 —
 —
 —
 —
 —
 —
 —
 120
 120
Distributions to common OP Units and non-controlling interests —$0.1375 per common unit —
 —
 —
 —
 —
 (133,015) —
 (3,261) (136,276) —
 (136,276)
Dividend equivalents on awards granted under the Equity Plan —
 —
 —
 —
 —
 (59) —
 —
 (59) —
 (59)
Distributions to Series F Preferred Units —
 (17,937) —
 (36) —
 —
 —
 —
 (17,973) —
 (17,973)
Balance, June 30, 2019 42,871,246
 $675,350
 49,766
 $1,912
 973,385,899
 $6,545,046
 20,793,463
 $128,542
 $7,350,850
 $1,277
 $7,352,127

The accompanying notes are an integral part of these statements.

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VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except for unit data) (Unaudited)

  Preferred Units Common Units      
  General Partner Limited Partner General Partner Limited Partner      
  Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital
 Net loss —
 $—
 —
 $—
 —
 $(72,117) —
 $(1,768) $(73,885) $(57) $(73,942)
 Other comprehensive income —
 —
 —
 —
 —
 3,259
 —
 79
 3,338
 —
 3,338
Balance, September 30, 2018 42,834,138

$728,262

86,874

$2,919

967,522,113

$6,549,848

23,715,908

$141,533

$7,422,562

$1,312

$7,423,874

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VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)

 Nine Months Ended September 30, Six Months Ended June 30,
 2019 2018 2020 2019
Cash flows from operating activities:        
Net loss $(378,274) $(115,872)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Net income $141,102
 $363,255
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 379,133
 503,529
 240,902
 260,771
Gain on real estate assets, net (251,106) (70,188) (34,303) (232,597)
Impairments 24,240
 36,082
 20,474
 20,296
Equity based compensation 9,899
 10,203
 6,926
 6,755
Equity in income of unconsolidated entities (1,682) (1,644) (1,743) (1,005)
Distributions from unconsolidated entities 130
 1,365
 861
 —
Loss (gain) on investments 492
 (2,302)
Loss (gain) on derivative instruments 58
 (447)
Loss on investments 683
 464
Loss on derivative instruments —
 58
Non-cash restructuring expense 3,999
 —
 —
 4,048
Loss (gain) on extinguishment and forgiveness of debt, net 497
 (5,339)
Loss on extinguishment and forgiveness of debt, net 1,480
 1,472
Surrender of Limited Partner OP Units (26,536) —
 —
 (26,536)
Changes in assets and liabilities:        
Investment in direct financing leases 1,230
 1,524
 736
 821
Rent and tenant receivables, operating lease right-of-use and other assets, net (17,234) (28,520) (30,158) (9,596)
Assets held for sale classified as discontinued operations —
 (2,492)
Accounts payable and accrued expenses 786,839
 132,686
 (13,870) (13,104)
Deferred rent, operating lease and other liabilities (26,460) (11,001) (12,138) (27,084)
Due to affiliates —
 (66)
Liabilities related to discontinued operations —
 (13,861)
Net cash provided by operating activities 505,225

433,657
 320,952

348,018
Cash flows from investing activities:        
Investments in real estate assets (251,804) (278,385) (147,121) (191,550)
Capital expenditures and leasing costs (27,309) (13,116) (15,665) (19,695)
Real estate developments (17,274) (7,477) (6,469) (10,537)
Principal repayments received on investment securities and mortgage notes receivable 106
 5,555
Principal repayments received on mortgage notes receivable —
 88
Investments in unconsolidated entities (2,767) —
 (10,066) (2,767)
Return of investment from unconsolidated entities 154
 48
 970
 —
Proceeds from disposition of real estate and joint venture 846,023
 358,443
Proceeds from disposition of discontinued operations —
 123,925
Payments related to disposition of discontinued operations —
 (1,010)
Proceeds from disposition of real estate 204,114
 739,873
Investment in leasehold improvements and other assets (1,417) (616) (314) (798)
Deposits for real estate assets (5,238) (11,957) (1,420) (3,072)
Investments in mezzanine position (9,959) —
Proceeds from sale of investments and other assets 9,837
 10,880
 —
 8,199
Uses and refunds of deposits for real estate assets 3,562
 8,552
 4,036
 2,946
Proceeds from the settlement of property-related insurance claims 473
 1,354
 48
 334
Line of credit advances to Cole REITs —
 (2,200)
Line of credit repayments from Cole REITs —
 3,800
Net cash provided by investing activities 554,346
 197,796
 18,154
 523,021
Cash flows from financing activities:        
Proceeds from mortgage notes payable —
 182
 1,032
 —
Payments on mortgage notes payable and other debt, including debt extinguishment costs (182,648) (125,418) (135,036) (175,962)
Proceeds from credit facility 1,061,000
 1,558,000
 902,000
 1,034,000
Payments on credit facility (564,000) (950,000) (1,052,000) (537,000)
Payments on corporate bonds, including extinguishment costs (750,000) —
Repayment of convertible notes —
 (597,500)
Proceeds from corporate bonds 594,864
 —
Redemptions of corporate bonds, including extinguishment costs (26) (750,000)
Repurchases of convertible notes, including extinguishment costs (50,326) —
Payments of deferred financing costs (181) (20,719) (6,946) (182)
Repurchases of Common Stock under the Share Repurchase Programs —
 (50,154)
Repurchases of Common Stock to settle tax obligations (1,618) (2,209) (2,378) (1,604)
Proceeds from the issuance of Common Stock, net of underwriters’ discount and offering expenses 929,004
 —
 —
 42,078
Redemption of Series F Preferred Stock (100,096) —
Series F Preferred Stock redemption expenses (52) —
Contributions from non-controlling interest holders —
 64
Distributions paid (324,032) (303,894)
Net cash used in financing activities (72,900)
(692,500)
Net change in cash and cash equivalents and restricted cash $266,206
 $178,539

1916
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VEREIT OPERATING PARTNERSHIP, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)
(In thousands) (Unaudited)

 Nine Months Ended September 30, Six Months Ended June 30,
 2019 2018 2020 2019
Contributions from non-controlling interest holders $64
 $120
Distributions paid (454,702) (455,078)
Net cash used in financing activities (63,177)
(642,776)
Net change in cash and cash equivalents and restricted cash 996,394
 (11,323)
Cash and cash equivalents and restricted cash, beginning of period $33,880
 $53,663
        
Cash and cash equivalents and restricted cash, beginning of period 53,663
 64,036
Less: cash and cash equivalents of discontinued operations —
 (2,198)
Cash and cash equivalents and restricted cash from continuing operations, beginning of period 53,663
 61,838
Cash and cash equivalents and restricted cash, end of period $300,086
 $232,202
        
Cash and cash equivalents and restricted cash from continuing operations, end of period $1,050,057
 $52,713
Reconciliation of Cash and Cash Equivalents and Restricted Cash        
Cash and cash equivalents at beginning of period $30,758
 $34,176
 $12,921
 $30,758
Restricted cash at beginning of period 22,905
 27,662
 20,959
 22,905
Cash and cash equivalents and restricted cash at beginning of period 53,663
 61,838
 33,880
 53,663
        
Cash and cash equivalents at end of period 1,029,315
 25,264
 278,883
 211,510
Restricted cash at end of period 20,742
 27,449
 21,203
 20,692
Cash and cash equivalents and restricted cash at end of period $1,050,057
 $52,713
 $300,086
 $232,202

The accompanying notes are an integral part of these statements.

2017
Table of Contents
VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited)


Note 1 – Organization
VEREIT is a Maryland corporation, incorporated on December 2, 2010, that qualified as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning in the taxable year ended December 31, 2011. The OP is a Delaware limited partnership of which the General Partner is the sole general partner. VEREIT’s common stock, par value $0.01 per share (“Common Stock”), and its 6.70% Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share (“Series F Preferred Stock”) trade on the New York Stock Exchange (“NYSE”) under the trading symbols, “VER” and “VER PFPRF,” respectively. As used herein, the terms the “Company,” “we,” “our” and “us” refer to VEREIT, together with its consolidated subsidiaries, including the OP.
VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. VEREIT’s business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. The Company actively manages its portfolio considering a number of metrics including property type, concentration and key economic factors for appropriate balance and diversity.
Substantially all of the Company’s operations are conducted through the OP. VEREIT is the sole general partner and holder of 98.1%99.9% of the common equity interests in the OP as of SeptemberJune 30, 2019 with the remaining 1.9% of the common equity interests owned by unaffiliated investors and the Company's former external manager, ARC Properties Advisors, LLC, and its principals (the “Former Manager”).2020. Under the limited partnership agreement of the OP, as amended (the “LPA”), after holding common units of limited partner interests in the OP (“OP Units”) or Series F Preferred Units of limited partnership interests in the OP (“Series F Preferred Units”), for a period of one year and meeting the other requirements in the LPA, unless we otherwise consent to an earlier redemption, holders have the right to redeem the units for the cash value of a corresponding number of shares of Common Stock or Series F Preferred Stock, as applicable, or, at our option, a corresponding number of shares of Common Stock or Series F Preferred Stock, as applicable, subject to adjustment pursuant to the terms of the LPA. The remaining rights of the holders of OP Units are limited, however, and do not include the ability to replace the General Partner or to approve the sale, purchase or refinancing of the OP’s assets.
The actions of the OP and its relationship with the General Partner are governed by the LPA. The General Partner does not have any significant assets other than its investment in the OP. Therefore, the assets and liabilities of the General Partner and the OP are the same. Additionally, pursuant to the LPA, all administrative expenses and expenses associated with the formation, continuity, existence and operation of the General Partner incurred by the General Partner on the OP’s behalf shall be treated as expenses of the OP. Further, when the General Partner issues any equity instrument that has been approved by the General Partner’s Board of Directors, the LPA requires the OP to issue to the General Partner equity instruments with substantially similar terms, to protect the integrity of the Company’s umbrella partnership REIT structure, pursuant to which each holder of interests in the OP has a proportionate economic interest in the OP reflecting its capital contributions thereto. OP Units and Series F Preferred Units issued to the General Partner are referred to as “General Partner OP Units” and “General Partner Series F Preferred Units,” respectively. OP Units and Series F Preferred Units issued to parties other than the General Partner are referred to as “Limited Partner OP Units” and “Limited Partner Series F Preferred Units,” respectively. The LPA also provides that the OP issue debt with terms and provisions consistent with debt issued by the General Partner. The LPA will be amended to provide for the issuance of any additional class of equivalent equity instruments to the extent the General Partner’s Board of Directors authorizes the issuance of any new class of equity securities.
Note 2 – Summary of Significant Accounting Policies
Basis of Accounting
The consolidated financial statements of the Company presented herein include the accounts of the General Partner and its consolidated subsidiaries, including the OP. All intercompany transactions have been eliminated upon consolidation. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. The results of operations for the three and ninesix months ended SeptemberJune 30, 20192020 are not necessarily indicative of the results for the entire year or any subsequent interim period.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 20182019 of the Company, which are included in the Company’s Annual Report on Form 10-K filed on February 21, 2019. There have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2019, except any policies impacted by the adoption of the Leasing ASUs, as defined in the “Recent Accounting Pronouncements” section herein.26, 2020. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and U.S. GAAP.

18
Table of Contents
VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and a consolidated joint venture. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in VEREIT’s and the OP’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of changes in equity. In addition, as described in Note 1 – Organization and Note 12 – Equity, certain third parties have been issued OP Units and Series F Preferred Units. Holders of OP Units are considered to be non-controlling interest holders in the OP and their ownership interest in the limited partner’s share is presented as non-controlling interests in VEREIT’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of changes in equity. Further, a portion of the earnings and losses of the OP are allocated to non-controlling interest holders based on their respective ownership percentages. Upon conversion of OP Units to Common Stock or Series F Preferred Units to Series F Preferred Stock, any differenceEquity is reallocated between the fair value of shares of Common Stock or Series F Preferred Stock, as applicable, issuedcontrolling and the carrying value ofnoncontrolling interests in the OP Units or Series F Preferred Units,upon a change in ownership. At the end of each annual reporting period, noncontrolling interests in the OP are adjusted to reflect their ownership percentage in the OP through a reallocation between controlling and noncontrolling interests in the OP, as applicable, converted is recorded as a component of equity.applicable. As of Septembereach of June 30, 20192020 and December 31, 2018,2019, there were approximately 20.8 million and 23.70.8 million Limited Partner OP Units issued and outstanding, respectively, and 49,766 and 86,874 Limited Partner Series F Preferred Units issued and outstanding, respectively.

outstanding.
For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity.
The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates any VIEs when the Company is determined to be the primary beneficiary of the VIE and the difference between consolidating the VIE and accounting for it using the equity method could be material to the Company’s consolidated financial statements. The Company continually evaluates the need to consolidate these VIEs based on standards set forth in U.S. GAAP.
Reclassification
As described below,The fees from managed partnerships, which are fees earned from the following itemsCompany’s unconsolidated joint venture entities, previously reported have been reclassified to conform with the current period’s presentation.
The operating expense reimbursements line item has been combined into rental revenue for prior periods presented to be consistent with the current year presentation. The (loss) gain on derivative instruments, net line item has been combined intoincluded in other income (loss), net have been presented in its own line item for prior periods presented to be consistent with the current year presentation.
The distributions declared on Common Stock line item from prior periods has been updated to exclude distributions on restricted stock units (“Restricted Stock Units”) and deferred stock units (“Deferred Stock Units”) on the consolidated statements of changes in equity for all periods presented. These amounts are now included in the line item dividend equivalents on awards granted under the Equity Plan (as defined below), which also includes dividend equivalents on restricted share awards (“Restricted Shares”). The dividend equivalents on Restricted Shares were previously included in the line item distributions to participating securities in the consolidated statements of changes in equity.

2219
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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Revenue Recognition - Real Estate
Rental Revenue
The Company continually reviews receivables related to rent, straight-line rent and unbilled rent receivablesproperty operating expense reimbursements and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Upon adoptionThe review includes a binary assessment of Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), effective January 1, 2019,whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term and the Company recognizes a general allowance on a portfolio-wide basis. For leases that are deemed not probable of collection, revenue is recorded as cash is received and the Company reduces rental revenue for any straight-line rent receivables. The Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue. During the three and six months ended June 30, 2020, rental revenue was reduced by $13.2 million and $18.5 million, respectively, which included (i) $2.1 million and $1.5 million, respectively, of an increase to the general allowance, (ii) $7.4 million and $9.4 million, respectively, for amounts not probable of collection, and (iii) $3.7 million and $7.6 million, respectively, for straight-line rent receivables. Of the $13.2 million reduction to rental revenue for the three months ended June 30, 2020, $8.4 million was related to the impact of the novel coronavirus (“COVID-19”) pandemic, of which $0.9 million represented an increase to the general allowance, $3.8 million represented amounts not probable of collection, and $3.7 million was for straight-line rent receivables.
Rental revenue also includes lease termination income collected from tenants to allow for the tenant to vacate their space prior to their scheduled termination dates, as well as amortization of above and below-market leases.
Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic
The FASB issued a question-and-answer document, Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic for concessions related to the effects of COVID-19 that provide a deferral of payments with no substantive changes to the consideration of the original contract allows an entity to elect to not analyze each contract to determine whether enforceable rights and obligations for concessions exist in the contract and to elect to apply or not apply the lease modification guidance in Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), to those contracts (the “COVID-19 Lease Concessions Relief”). For eligible concessions, the Company has elected not to apply the lease modification guidance in ASC 842. As such, the Company accounts for eligible deferral concessions as if there were no changes made to the lease agreement and, accordingly, continues to recognize income and doesincreases the lease receivable. Ineligible concessions are accounted for as a lease modification under ASC 842, which requires the Company to reevaluate the lease classification and remeasure and reallocate the consideration over the remaining lease term, and include any prepaid rent liabilities and accrued rent assets relating to the original lease as part of the lease payments for the modified lease. 
During the three months ended June 30, 2020, the Company had $3.6 million of rental revenue related to deferral agreements executed through June 30, 2020 and $5.3 million related to deferral agreements executed from July 1, 2020 through July 27, 2020, which qualify for the COVID-19 Lease Concessions Relief. The Company did not record an allowancerental revenue for uncollectible accounts.$11.2 million of second quarter rental revenue abated pursuant to lease amendments executed through June 30, 2020, which increased the weighted average lease term for the related properties.
Fees from Managed Partnerships
The Company provides various services to our unconsolidated joint venture entities in exchange for fees. Total asset and property management and acquisition fees earned in connection with these entities was $0.4 million and $0.1 million for the three months ended June 30, 2020 and 2019, respectively, and $1.0 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

Litigation and Non-Routine Costs, Netnon-routine costs, net
The Company has incurred legal fees and other costs associated with litigations and investigations resulting from the Audit Committee Investigation (defined below), which are considered non-routine. The Company’s insurance carriers have paid certain defense costs subject to standard reservation of rights under the respective policies.
Litigation and non-routine costs, net include the following costs and recoveries (amounts in(in thousands):
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018 2020 2019 2020 2019
Litigation and non-routine costs, net:                
Audit Committee Investigation and related matters (1)
 $32,051
 $13,009
 $69,509
 $51,969
Audit Committee Investigation and related matters (1) (2)
 $(118) $22,767
 $(6,211) $37,458
Legal fees and expenses (2)
 —
 386
 2
 521
 —
 —
 —
 2
Litigation settlements (3)
 799,973
 127,500
 812,208
 217,500
 —
 —
 —
 12,235
Total costs 832,024

140,895

881,719

269,990
 (118)
22,767

(6,211)
49,695
Insurance recoveries (4)
 —
 (2,300) (48,420) (2,568) —
 —
 (2,471) (48,420)
Other recoveries (5)(3)
 —
 —
 (26,536) —
 —
 (26,536) —
 (26,536)
Total $832,024
 $138,595
 $806,763
 $267,422
 $(118) $(3,769) $(8,682) $(25,261)
___________________________________
(1)Includes all fees and costs associated with various litigations and investigations prompted by the results of the 2014 investigation conducted by the audit committee (the “Audit Committee”) of the Company’s Board of Directors (the “Audit Committee Investigation”), including fees and costs incurred pursuant to the Company’s advancement obligations, litigation related thereto and in connection with related insurance recovery matters, net of accrual reversals.
(2)Includes legal fees and expenses associated with litigation resulting from prior mergers and excludes amounts presented in income from discontinued operations, net of income taxes in the consolidated statements of operationsThe negative balance for the ninethree and six months ended SeptemberJune 30, 2018.2020 is a result of estimated costs accrued in prior periods that exceeded actual expenses incurred.
(3)Refer to Note 10 – Commitments and Contingencies for additional information.
(4)$2.3 million during the three months ended September 30, 2018 relates to litigation resulting from prior mergers.
(5)
Represents the surrender of 2.9 million Limited Partner OP Units. Refer to Note 12 – Equity for additional information.Units in connection with an SEC settlement entered into by principals of the Company’s former external manager.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

Equity-based Compensation
The Company has an equity-based incentive award plan (the “Equity Plan”) for non-executive directors, officers, other employees and advisors or consultants who provide services to the Company, as applicable, and a non-executive director restricted share plan, which are accounted for under U.S. GAAP for share-based payments. The expense for such awards is recognized over the vesting period or when the requirements for exercise of the award have been met. As of SeptemberJune 30, 2019,2020, the General Partner had cumulatively awarded under its Equity Plan approximately 16.618.0 million shares of Common Stock, which was comprised of 4.0 million restricted share awards (“Restricted Shares,Shares”), net of the forfeiture of 3.7 million Restricted Shares through that date, 6.67.9 million restricted stock units (“Restricted Stock Units,Units”), net of the forfeiture/cancellation of 1.82.0 million Restricted Stock Units through that date, 0.60.8 million deferred stock units (“Deferred Stock Units,Units”), and 5.45.3 million stock options (“Stock Options”), net of forfeiture/cancellation of 0.20.3 million stock optionsStock Options through that date. Accordingly, as of such date, approximately 97.695.1 million additional shares were available for future issuance, excluding the effect of the 5.45.3 million stock options.Stock Options. At SeptemberJune 30, 2019,2020, a total of 45,000 shares were awarded under the non-executive director restricted share plan out of the 99,000 shares reserved for issuance.
The following is a summary of equity-based compensation expense for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019 (in thousands):
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Restricted Shares $—
 $—
 $—
 $77
Time-Based Restricted Stock Units (1)
 1,397
 1,234
 2,782
 2,484
Long-Term Incentive-Based Restricted Stock Units 1,401
 1,383
 2,500
 2,612
Deferred Stock Units 947
 947
 1,019
 1,018
Stock Options 326
 319
 625
 564
Total $4,071
 $3,883
 $6,926
 $6,755
___________________________________
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Restricted Shares $—
 $149
 $77
 $466
Time-Based Restricted Stock Units (1)
 1,272
 1,338
 3,748
 3,931
Long-Term Incentive-Based Restricted Stock Units 1,455
 1,564
 4,074
 4,270
Deferred Stock Units 82
 72
 1,101
 1,087
Stock Options 335
 200
 899
 449
Total $3,144
 $3,323
 $9,899
 $10,203

(1)Includes stock compensation expense attributable to awards for which the requisite service period begins prior to the assumed future grant date.
As of SeptemberJune 30, 2019,2020, total unrecognized compensation expense related to these awards was approximately $17.3$21.9 million, with an aggregate weighted-average remaining term of 2.12.5 years.
Restructuring
On February 1, 2018, the Company completed the sale of its investment management segment and entered into a services agreement (the “Services Agreement”) with the purchaser, pursuant to which the Company continued to provide certain investment management and other services through March 31, 2019. See Note 13 —Discontinued Operations for further discussion. During the nine months ended September 30, 2019, in connection with the cessation of services under the Services Agreement, the Company recorded $10.1 million of restructuring expenses related to the reorganization of its business, of which $9.0 million related to office lease terminations and modifications and $1.6 million related to the cessation of services under the Services Agreement, including severance, net of ASC 842 operating lease adjustments of $0.5 million. NaN restructuring expenses were recorded prior to January 1, 2019. The Company expects to incur an additional $0.9 million of restructuring expenses during 2019.
Recent Accounting Pronouncements
Adopted Accounting Standards
The Company adopted ASC 842, effective January 1, 2019. The adoption did not have a material impact on the Company’s consolidated statements of operations. The most significant impact was the recognition of operating lease right-of-use (“ROU”) assets and operating lease liabilities for operating leases pursuant to which the Company is the lessee. The Company’s impairment assessment for ROU assets will be consistent with the impairment analysis for the Company's other long-lived assets and is reviewed quarterly, which is discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. The lessor accounting model under ASC 842 is similar to existing guidance, however, it limits the capitalization of initial direct leasing costs, such as internally generated costs.
The Company elected all practical expedients permitted under ASC 842, other than the hindsight practical expedient. Accordingly, the Company will retain distinction between a finance lease (i.e., capital leases under existing guidance) and an operating lease and account for its existing operating leases as operating leases under the new guidance, which did not require the reassessment of lease arrangements, lease classification or initial direct costs. The Company does not have a cumulative effect adjustment to retained earnings upon adoption.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Restructuring
During the six months ended June 30, 2020, there were 0 restructuring expenses recorded. During the six months ended June 30, 2019, the Company’s obligation to provide certain transition services for CCA Acquisition, LLC (the “Cole Purchaser”) terminated in accordance with the terms of a services agreement (the “Services Agreement”) with the Cole Purchaser and the Company recorded $9.4 million of restructuring expenses related to the reorganization of its business.
Recent Accounting Pronouncements
Financial Instruments - Credit Losses
The Company as lessor, identified three separate lease components as follows: 1) land lease component, 2) single property lease component comprised of building, land improvements and tenant improvements, and 3) furniture and fixtures. The nonlease components relate to service obligations under certain lease contracts for service of the building, land improvements or tenant improvements. The Company determined the nonlease components are eligible to be combined under the practical expedient in ASU 2018-11, Leases (Topic 842) (“ASU 2018-11,” combined with ASC 842, “Leasing ASUs”) and the nonlease components will be included with the single property lease component as the predominant component. Therefore, the Company will account for the combined component as a lease component under ASC 842. Refer to Note 11 - Leases for the related disclosures.
Accounting Standards Not Yet Adopted
In June 2016, the U.S. Financial Accounting Standards Board (“FASB”) issuedadopted ASU 2016-13, Financial Instruments – Credit Losses (Topicand subsequent amendments (collectively Topic 326) (“ASU 2016-13”). ASU 2016-13 is, effective January 1, 2020. Topic 326 was intended to improve financial reporting by requiring more timely recognition of credit losses on loans and other financial instruments that are not accounted for at fair value through net income and requiresrequired that financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that iswas deducted from the amortized cost basis. The amendments in ASU 2016-13 requireTopic 326 required the Company to measure all expected credit losses based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets and eliminateseliminated the “incurred loss” methodology under current U.S. GAAP. The effective date for ASU 2016-13 is for fiscal years (including the interim periods therein) beginning after December 15, 2019. While
Upon adoption, the Company is still evaluatingdetermined the effectfollowing to be within the scope of Topic 326: (i) investments in direct financing leases and (ii) other immaterial miscellaneous short term receivables. Due to the short term nature and collection history of the direct financing leases and management fee receivables and the creditworthiness of the direct financing lease tenants, the adoption of ASU 2016-13 will have on its consolidated financial statements, it doesthis guidance did not expect it will have a material impact.impact on the Company’s consolidated financial statements.
Reference Rate Reform
During the first quarter of 2020, the Financial Accounting Standards Board (the “FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Inter-Bank Offer Rate (“LIBOR”)-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
Note 3–3 – Real Estate Investments and Related Intangibles
Property Acquisitions
During the ninesix months ended SeptemberJune 30, 2020, the Company acquired controlling financial interests in 25 commercial properties for an aggregate purchase price of $147.1 million (the “2020 Acquisitions”), which includes 1 land parcel for build-to-suit development, further discussed below and $0.9 million of external acquisition-related expenses that were capitalized.
During the six months ended June 30, 2019, the Company acquired controlling financial interests in 4033 commercial properties for an aggregate purchase price of $260.7$200.5 million (the “2019 Acquisitions”), which includes $1.4$1.0 million of external acquisition-related expenses that were capitalized. During the nine months ended September

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2018, the Company acquired a controlling interest in 42 commercial properties for an aggregate purchase price of $280.4 million (the “2018 Acquisitions”), which includes $2.1 million related to an outstanding tenant improvement allowance and $1.6 million of external acquisition-related expenses that were capitalized.2020 (Unaudited) – (Continued)

The following table presents the allocation of the fair values of the assets acquired and liabilities assumed during the periods presented (in thousands):
 Nine Months Ended September 30, Six Months Ended June 30,
 2019 2018 2020 2019
Real estate investments, at cost:        
Land $47,749
 $54,732
 $19,953
 $40,460
Buildings, fixtures and improvements 181,904
 181,011
 95,728
 135,182
Total tangible assets 229,653
 235,743
 115,681
 175,642
Acquired intangible assets:        
In-place leases and other intangibles (1)
 31,062
 42,050
 15,739
 24,817
Above-market leases (2)
 —
 2,750
 15,701
 —
Assumed intangible liabilities:    
Below-market leases (3)
 —
 (116)
Total purchase price of assets acquired $260,715
 $280,427
 $147,121
 $200,459

(1)The weighted average amortization period for acquired in-place leases and other intangibles is 15.218.1 years and 15.715.8 years for 20192020 Acquisitions and 20182019 Acquisitions, respectively.
(2)The weighted average amortization period for acquired above-market leases is 10.820.1 years for 2018 Acquisitions.
(3)The weighted average amortization period for assumed intangible lease liabilities is 9.9 years for 20182020 Acquisitions.
As of SeptemberJune 30, 2019,2020, the Company invested $27.6$23.4 million, including $0.7$0.3 million of external acquisition-related expenses and interest that were capitalized, in 1 build-to-suit development project. The Company does not have anyCompany’s estimated remaining committed investments relatedinvestment is $21.4 million, and the project is expected to be completed within the project.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

next 12 months.
Property Dispositions and Real Estate Assets Held for Sale
During the ninesix months ended SeptemberJune 30, 2019,2020, the Company disposed of 10747 properties, including the sale of 62 consolidated properties to 2 newly-formed joint ventures in which the Company owns a 20% equity interest (the “Industrial Partnership”) and 1 property sold through a foreclosure as discussed in Note 6 –Debt,office partnership, for an aggregate gross sales price of $926.0$219.2 million, of which our share was $905.9$216.7 million after the profit participation payments related to the disposition of 333 Red Lobster properties. The dispositions resulted in proceeds of $846.0$204.1 million after closing costs, and contributionsincluding proceeds from the contribution of properties to the Industrial Partnership.office partnership. The Company recorded a gain of $251.9$34.2 million related to the dispositions, which is included in gain on disposition of real estate and real estate assets held for sale, net in the accompanying consolidated statements of operations.
During the ninesix months ended SeptemberJune 30, 2018,2019, the Company disposed of 11275 properties, including 1 property conveyedthe sale of 6 consolidated properties to a lender in a deed-in-lieu of foreclosure transaction,the industrial partnership for an aggregate gross sales price of $371.0$809.2 million, of which our share was $356.6$796.4 million after the profit participation payment related to the disposition of 2223 Red Lobster properties. The dispositions resulted in proceeds of $352.8$739.9 million after closing costs.costs and contributions to the industrial partnership. The Company recorded a gain of $70.3$233.4 million related to the sales which is included in gain on disposition of real estate and real estate assets held for sale, net in the accompanying consolidated statements of operations.
During the nine months ended September 30, 2018, the Company also disposed of 1 property owned by an unconsolidated joint venture for a gross sales price of $34.1 million, of which our share was $17.1 million based on our ownership interest in the joint venture, resulting in proceeds of $5.6 million after debt repayments of $20.4 million and closing costs. The Company recorded a gain of $0.7 million related to the sale and liquidation of the joint venture, which is included in equity in income and gain on disposition of unconsolidated entities in the accompanying consolidated statements of operations.
As of SeptemberJune 30, 2019,2020, there were 578 properties classified as held for sale with a carrying value of $66.7$48.1 million, included in real estate assets held for sale, net, primarily comprised of land of $20.4$2.5 million and building, fixtures and improvements, net of $43.4$41.7 million, in the accompanying consolidated balance sheets, whichand are expected to be sold in the next 12 months as part of the Company’s portfolio management strategy. As of December 31, 2018,2019, there were 5 properties classified as held for sale. During the ninesix months ended SeptemberJune 30, 2019 and 2018,2020, the Company recorded lossesa loss of $0.8$0.2 million and $1.9 million, respectively, related to held for sale properties. During the six months ended June 30, 2019 the Company recorded a loss of $0.8 million related to held for sale properties.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

Intangible Lease Assets and Liabilities
Intangible lease assets and liabilities of the Company consisted of the following as of SeptemberJune 30, 20192020 and December 31, 20182019 (amounts in thousands, except weighted-average useful life):
  Weighted-Average Useful Life September 30, 2019 December 31, 2018
Intangible lease assets:      
In-place leases and other intangibles, net of accumulated amortization of $741,320 and $703,909, respectively 14.1 $867,642
 $980,971
Leasing commissions, net of accumulated amortization of $5,313 and $4,048, respectively 10.2 15,058
 15,660
Above-market lease assets and deferred lease incentives, net of accumulated amortization of $108,256 and $105,936, respectively 13.6 172,343
 201,875
Total intangible lease assets, net   $1,055,043
 $1,198,506
       
Intangible lease liabilities:      
Below-market leases, net of accumulated amortization of $96,911 and $89,905, respectively 19.2 $147,997
 $173,479
  Weighted-Average Useful Life June 30, 2020 December 31, 2019
Intangible lease assets:      
In-place leases and other intangibles, net of accumulated amortization of $787,231 and $748,689, respectively 16.1 $788,686
 $854,196
Leasing commissions, net of accumulated amortization of $6,409 and $6,027, respectively 7.5 18,790
 17,808
Above-market lease assets and deferred lease incentives, net of accumulated amortization of $120,510 and $112,438, respectively 16.8 170,205
 165,483
Total intangible lease assets, net   $977,681
 $1,037,487
       
Intangible lease liabilities:      
Below-market leases, net of accumulated amortization of $106,116 and $99,315, respectively 19.2 $130,208
 $143,583

The aggregate amount of amortization of above‑ and below-market leases and deferred lease incentives included as a net decrease to rental revenue was $2.0$1.5 million and $3.2$1.3 million for the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, respectively. The aggregate amount of in-place leases, leasing commissions and other lease intangibles amortized and included in depreciation and amortization expense was $96.9$73.3 million and $104.5$65.8 million for the ninesix months ended SeptemberJune 30, 2020 and 2019, and 2018, respectively.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

The following table provides the projected amortization expense and adjustments to rental revenue related to the intangible lease assets and liabilities for the next five years as of SeptemberJune 30, 2019 (amounts in2020 (in thousands):
 Remainder of 2019 2020 2021 2022 2023 Remainder of 2020 2021 2022 2023 2024 2025
In-place leases and other intangibles:                      
Total projected to be included in amortization expense $31,015
 $115,891
 $108,723
 $95,161
 $84,677
 $57,571
 $107,490
 $93,814
 $83,671
 $73,403
 $61,429
Leasing commissions:                      
Total projected to be included in amortization expense 571
 2,154
 1,997
 1,906
 1,725
 1,317
 2,461
 2,360
 2,085
 1,867
 1,599
Above-market lease assets and deferred lease incentives:Above-market lease assets and deferred lease incentives:        Above-market lease assets and deferred lease incentives:          
Total projected to be deducted from rental revenue 5,063
 19,426
 19,000
 18,189
 17,245
 9,962
 19,519
 18,708
 17,764
 16,393
 14,921
Below-market lease liabilities:                      
Total projected to be included in rental revenue 4,432
 15,778
 14,637
 13,796
 13,073
 8,320
 14,947
 13,255
 12,533
 10,686
 9,467

Consolidated Joint VenturesVenture
The Company had an interest in 1 consolidated joint venture that owned 1 property as of SeptemberJune 30, 20192020 and December 31, 2018.2019. As of SeptemberJune 30, 20192020 and December 31, 2018,2019, the consolidated joint venture had total assets of $32.0$33.6 million and $32.5 million, respectively, of which $29.6$30.0 million and $29.9$29.6 million, respectively, were real estate investments, net of accumulated depreciation and amortization at each of the respective dates. The property is secured by a mortgage note payable, which is non-recourse to the Company and had a balance of $13.7$15.2 million and $14.0$14.3 million as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively. The Company has the ability to control operating and financing policies of the consolidated joint venture. There are restrictions on the use of these assets as the Company wouldis generally be required to obtain the approval of the joint venture partner in accordance with the joint venture agreement for any major transactions. The Company and the joint venture partner are subject to the provisions of the joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls.
Unconsolidated Joint Ventures
The Company’s investment in unconsolidated joint venture arrangements (the “Unconsolidated Joint Ventures”) consisted of interests in the Industrial Partnership and 1 joint venture as of September 30, 2019 and an interest in 1 joint venture as of December 31, 2018.
During the nine months ended September 30, 2018, the Company disposed of 1 property owned by an unconsolidated joint venture as previously discussed in the “Property Dispositions and Real Estate Assets Held for Sale” section herein.
The Unconsolidated Joint Ventures had total aggregate debt outstanding of $269.3 million as of September 30, 2019, which is non-recourse to the Company, as discussed in Note 6 –Debt. There was 0 debt outstanding related to the Unconsolidated Joint Venture as of December 31, 2018.
The Company and the respective unconsolidated joint venture partners are subject to the provisions of the applicable joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls, including the Company’s share of expansion project capital expenditures.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Unconsolidated Joint Ventures
The following is a summary of the Company’s investments in unconsolidated joint ventures as of SeptemberJune 30, 20192020 and December 31, 20182019 and for the ninesix months ended SeptemberJune 30, 20192020 and 20182019 (dollar amounts in thousands):
 
Carrying Amount of Investment (2)
 Equity in Income 
Carrying Amount of
Investment
 Equity in Income
 Nine Months Ended Six Months Ended
Investment 
Ownership % (1)
 Number of Properties September 30, 2019 December 31, 2018 September 30, 2019 September 30, 2018 
Ownership % (1)
 Number of Properties June 30, 2020 December 31, 2019 June 30, 2020 June 30, 2019
Faison JV Bethlehem GA(2) 90% 1 $39,633
 $35,289
 $1,583
 $993
 90% 1 $41,076
 $40,416
 $1,197
 $1,035
Industrial Partnership(3) 20% 6 29,392
 —
 99
 —
 20% 6 35,257
 28,409
 347
 (30)
 $69,025
 $35,289
 $1,682
 $993
Office Partnership (4)
 20% 3 9,967

—
 199
 —

(1)The Company’s ownership interest reflects its legal ownership interest. Legal ownership may, at times, not equal the Company’s economic interest in the listed properties because of various provisions in certain joint venture agreements regarding capital contributions, distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.
(2)The total carrying amount of the investmentsinvestment was greater than the underlying equity in net assets by $4.6 million and $4.7 million as of SeptemberJune 30, 20192020 and December 31, 2018.2019, respectively. This difference relates to a purchase price allocation of goodwill and a step up in fair value of the investment assetsasset acquired in connection with mergers. The step up in fair value was allocated to the individual investment assetsasset and is being amortized in accordance with the Company’s depreciation policy.
(3)During the six months ended June 30, 2020, the Company made a capital contribution to the industrial partnership, in anticipation of the acquisition of a property.
(4)During the six months ended June 30, 2020, the office partnership acquired 1 property from a third party for a purchase price of $33.1 million.
The unconsolidated joint ventures had total aggregate debt outstanding of $341.8 million as of June 30, 2020, which is non-recourse to the Company, as discussed in Note 6 –Debt. There was $269.3 million of debt outstanding related to the unconsolidated joint ventures as of December 31, 2019.
The Company and the respective unconsolidated joint venture partners are subject to the provisions of the applicable joint venture agreements, which include provisions for when additional contributions may be required to fund certain cash shortfalls, including the Company’s share of expansion project capital expenditures.
Note 4 –Rent–Rent and Tenant Receivables and Other Assets, Net
Rent and tenant receivables and other assets, net consisted of the following as of SeptemberJune 30, 20192020 and December 31, 20182019 (in thousands):
  September 30, 2019 December 31, 2018
Straight-line rent receivable, net (1)
 $261,074
 $259,106
Accounts receivable, net (1)
 38,732
 36,939
Deferred costs, net (2)
 10,359
 17,515
Investment in direct financing leases, net 9,914
 13,254
Investment in Cole REITs (3)
 7,552
 7,844
Prepaid expenses 6,662
 5,022
Leasehold improvements, property and equipment, net (4)
 5,042
 9,754
Other assets, net 8,120
 16,658
Total $347,455

$366,092
  June 30, 2020 December 31, 2019
Straight-line rent receivable $266,823
 $266,195
Accounts receivable 64,791
 41,556
Mezzanine position 9,959
 —
Deferred costs, net (1)
 6,927
 7,208
Investment in direct financing leases, net 8,579
 9,341
Investment in Cole REITs (2)
 6,867
 7,552
Prepaid expenses 6,538
 3,453
Leasehold improvements, property and equipment, net (3)
 4,317
 4,809
Other assets, net 7,608
 8,281
Total $382,409

$348,395
___________________________________
(1)
As ofDecember 31, 2018, allowance for uncollectible accounts included in straight-line rent receivable, net and accounts receivable, net was $1.0 million and $5.3 million, respectively. Upon adoption of ASC 842, the Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue and does not record an allowance for uncollectible accounts. Any recoveries for those receivables reserved prior to adoption of ASC 842 will be recorded as an adjustment to rental revenue.
(2)Amortization expense for deferred costs related to the revolving credit facilities totaled $0.9$0.8 million and $1.3$0.9 million for the three months ended SeptemberJune 30, 20192020 and 2018,2019, respectively, and $2.9$1.5 million and $6.0$2.0 million for the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, respectively. Accumulated amortization for deferred costs related to the revolving credit facilities was $50.6$51.2 million and $47.6$49.8 million as of SeptemberJune 30, 20192020 and December 31, 2018,2019, respectively.
(3)(2)
On February 1, 2018, theThe Company completed the sale of Cole Capital (as described in Note 13 —Discontinued Operations), retaininghas interests in Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”), Cole Office & Industrial REIT (CCIT III), Inc. (“CCIT III”) and Cole Credit Property Trust V, Inc. (“CCPT V”).
(4)
Amortization expense for leasehold improvements totaled $0.1 million, (collectively, the “Cole REITs”) and $0.3 million forcarries these investments at fair value. During the threesix months ended SeptemberJune 30, 2019 and 2018, respectively, and $0.62020, the Company recognized a loss of $0.7 million and $0.9 million forrelated to the nine months ended September 30, 2019 and 2018, respectively, with 0 related write-offs. Accumulated amortization was $2.7 million and $5.9 million as of September 30, 2019 and December 31, 2018, respectively. Depreciation expense for property and equipment totaled $0.3 million for each of the three months ended September 30, 2019 and 2018, with 0 related write-offs. Depreciation expense for property and equipment totaled $1.0 million for the nine months ended September 30, 2019, inclusive of write-offs of less than $0.1 million and $1.2 million for the nine months ended September 30, 2018, with 0 related write-offs. Accumulated depreciation was $5.1 million and $7.0 million as of September 30, 2019 and December 31, 2018, respectively. The Company disposed of $4.1 million, net, of leasehold improvements, property and equipment,change in fair value, which is included in restructuringother income, net in the accompanying consolidated statements of operations for the nine months ended September 30, 2019.
operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

(3)
Amortization expense for leasehold improvements totaled $0.1 million for each of the three months ended June 30, 2020 and 2019, and $0.3 million and $0.4 million for the six months ended June 30, 2020 and 2019, respectively, with 0 related write-offs. Accumulated amortization was $3.1 million and $2.8 million as of June 30, 2020 and December 31, 2019, respectively. Depreciation expense for property and equipment totaled $0.3 million for each of the three months ended June 30, 2020 and 2019, with no related write-offs. Depreciation expense for property and equipment totaled $0.6 million and $0.7 million for the six months ended June 30, 2020 and 2019, respectively, inclusive of write-offs of less than $0.1 million for six months ended June 30, 2019. Accumulated depreciation was $6.0 million and $5.4 million as of June 30, 2020 and December 31, 2019, respectively.    
Note 5 – Fair Value Measures
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. U.S. GAAP guidance defines three levels of inputs that may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.
Level 3 – Unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. Changes in the type of inputs may result in a reclassification for certain assets. The Company does not expect that changes in classifications between levels will be frequent.
Items Measured at Fair Value on a Recurring Basis
The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of SeptemberJune 30, 20192020 and December 31, 2018,2019, aggregated by the level in the fair value hierarchy within which those instruments fall (in thousands):


Level 1
Level 2
Level 3
Balance as of September 30, 2019
Level 1
Level 2
Level 3
Balance as of June 30, 2020
Assets:















Investment in Cole REITs $—
 $—
 $7,552
 $7,552
 $—
 $—
 $6,867
 $6,867
Liabilities:                
Derivative liabilities
$—
 $(47,964) $—

$(47,964)
$—
 $(106,520) $—

$(106,520)



Level 1
Level 2
Level 3
Balance as of December 31, 2018
Level 1
Level 2
Level 3
Balance as of December 31, 2019
Assets:                
Derivative assets $—
 $544
 $—
 $544
 $—
 $250
 $—
 $250
Investment in Cole REITs —
 —
 7,844
 7,844
 —
 —
 7,552
 7,552
Total assets $—
 $544
 $7,844
 $8,388
 $—
 $250
 $7,552
 $7,802
Liabilities:        
Derivative liabilities $—
 $(28,081) $—
 $(28,081)

Derivative Assets and Liabilities – The Company’s derivative financial instruments relate to interest rate swaps. The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

Although the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of SeptemberJune 30, 20192020 and December 31, 2018,2019, 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 the Company’s derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

Investment in Cole REITs – The fair values of CCIT II, CCIT III and CCPT V were estimated using the net asset value per share.share, as most recently disclosed by each applicable REIT. Each of the Cole REIT’s share redemption programs includes restrictions that limit the number of shares redeemed by the respective Cole REIT.
The following are reconciliations of the changes in assets and liabilities with Level 3 inputs in the fair value hierarchy for the ninesix months ended SeptemberJune 30, 2020 and 2019 (in thousands):
 Investment in Cole REITs Investment in Cole REITs
Beginning balance, January 1, 2020 $7,552
Unrealized loss included in other income, net (685)
Ending Balance, June 30, 2020 $6,867
  
Beginning balance, January 1, 2019 $7,844
 $7,844
Unrealized loss included in other income, net (292) (292)
Ending Balance, September 30, 2019 $7,552
Ending Balance, June 30, 2019 $7,552
The following are reconciliations of the changes in assets and liabilities with Level 3 inputs in the fair value hierarchy for the nine months ended September 30, 2018 (in thousands):
  CMBS Investment in Cole REITs
Beginning balance, January 1, 2018 $40,974
 $3,264
Total gains and losses    
Unrealized loss included in other comprehensive income, net (71) —
Realized loss included in other income, net (34) —
Unrealized gain included in other income, net —
 5,102
Purchases, issuance, settlements    
Return of principal received (4,864) —
Amortization included in net income, net 157
 —
Sale of investments (9,880) (522)
Transfers out of Level 3 into Level 1 (1)
 (12,756) —
Ending Balance, September 30, 2018 $13,526
 $7,844

(1)As of December 31, 2017, the Company’s commercial mortgage backed securities (“CMBS”) were carried at fair value and valued using Level 3 inputs. Subsequent to September 30, 2018, the Company sold 2 of its CMBS. This resulted in transfers out of Level 3 into Level 1, as the Company used trade confirmations to determine the fair value as of September 30, 2018.
Items Measured at Fair Value on a Non-Recurring Basis
Certain financial and nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.
Real Estate Investments – The Company performs quarterly impairment review procedures for real estate investments and investments in unconsolidated entities, primarily through continuous monitoring of events and changes in circumstances that could indicate the carrying value of its real estate assets may not be recoverable.
As part of the Company’s quarterly impairment review procedures, net real estate assets representing 5338 properties were deemed to be impaired resulting in impairment charges of $24.2$20.5 million during the ninesix months ended SeptemberJune 30, 2019.2020. The impairment charges relate to certain retail and restaurant properties whose tenants filed for Chapter 11 bankruptcy during the six months ended June 30, 2020, were identified by management for potential sale or were determined would not be re-leased by the tenant.
As a result of the COVID-19 pandemic, the Company considered whether there was any indication of impairment for properties that did not otherwise have potential impairment indicators and did not identify additional properties as of June 30, 2020. Based on the Company’s expected holding period for the properties and the economic conditions as of June 30, 2020, the Company believes that their carrying values are recoverable. However, the COVID-19 pandemic has negatively impacted the businesses of certain of our tenants so the Company continues to monitor for circumstances and events in future periods, which may result in impairment charges.
During the six months ended June 30, 2019, net real estate assets related to 42 properties, were deemed to be impaired resulting in impairment charges of $20.3 million. The impairment charges related to certain office, retail and restaurant properties that, during the six months ended June 30, 2019, management identified for potential sale or determined, based on discussions with the current tenants, would not be re-leased. Duringre-leased by the nine months ended September 30, 2018, net real estate assets relatedtenant and the Company believed the property would not be leased to 53 properties were deemed to be impaired, resulting in impairment charges of $36.1 million.another tenant at a rental rate that supports the current book value.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

The Company estimates fair values using Level 3 inputs and uses a combined income and market approach, specifically using discounted cash flow analysis and recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and make certain key assumptions, including, but not limited to, the following: (1) capitalization rate; (2) discount rates; (3) number of years property will be held; (4) property operating expenses; and (5) re-leasing assumptions including number of months to re-lease, market rental revenue and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and performance and sustainability of the Company’s tenants. For the Company’s impairment tests for the real estate assets during the ninesix months ended SeptemberJune 30, 2019,2020, the Company used a range of discount rates from 7.9% to 8.3%8.4% with a weighted-average rate of 8.0%8.2% and capitalization rates from 7.4% to 7.8%7.9% with a weighted-average rate of 7.5%7.7%.
Goodwill –The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable.
As a result of a decrease in the Company’s stock price during the six months ended June 30, 2020, the Company assessed its goodwill for impairment as of June 30, 2020, which resulted in 0 impairments. The Company continues to monitor factors that may impact the fair value of goodwill including, but not limited to, market comparable company multiples, interest rates, and global economic conditions.
Fair Value of Financial Instruments
The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash and accounts payable approximate their carrying value in the accompanying consolidated balance sheets due to their short-term nature and are classified as Level 1 under the fair value hierarchy. The fair values of the Company’s financial instruments are reported below (dollar amounts in thousands):
 Level Carrying Amount at September 30, 2019 Fair Value at September 30, 2019 Carrying Amount at December 31, 2018 Fair Value at December 31, 2018 Level Carrying Amount at June 30, 2020 Fair Value at June 30, 2020 Carrying Amount at December 31, 2019 Fair Value at December 31, 2019
Liabilities (1):
                
Mortgage notes payable and other debt, net 2 $1,726,620
 $1,787,529
 $1,933,209
 $1,961,496
 2 $1,400,317
 $1,446,194
 $1,535,918
 $1,590,915
Corporate bonds, net 2 2,646,348
 2,848,669
 3,395,885
 3,368,928
 2 3,435,016
 3,575,898
 2,839,581
 3,022,087
Convertible debt, net 2 400,053
 409,419
 398,591
 396,905
 2 270,872
 269,512
 319,947
 327,237
Credit facility 2 900,000
 900,000
 403,000
 403,000
 2 900,000
 900,000
 1,050,000
 1,050,000
Total liabilities $5,673,021
 $5,945,617
 $6,130,685
 $6,130,329
 $6,006,205
 $6,191,604
 $5,745,446
 $5,990,239

_______________________________________________

(1)Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.
Debt – The fair value is estimated by an independent third party using a discounted cash flow analysis, based on management’s estimates of observable market interest rates. Corporate bonds and convertible debt are valued using quoted market prices in active markets with limited trading volume when available.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Note 6 – Debt
As of SeptemberJune 30, 2019,2020, the Company had $5.6$6.0 billion of debt outstanding, including net premiums and net deferred financing costs, with a weighted-average years to maturity of 4.24.8 years and a weighted-average interest rate of 4.49%4.20%. The following table summarizes the carrying value of debt as of SeptemberJune 30, 20192020 and December 31, 2018,2019, and the debt activity for the ninesix months ended SeptemberJune 30, 20192020 (in thousands):
   Nine Months Ended September 30, 2019      Six Months Ended June 30, 2020  
 Balance as of December 31, 2018 Debt Issuances Repayments, Extinguishment and Assumptions Accretion and Amortization Balance as of September 30, 2019  Balance as of December 31, 2019 Debt Issuances Repayments, Extinguishment and Assumptions Accretion and Amortization Balance as of June 30, 2020
Mortgage notes payable:Mortgage notes payable:           Mortgage notes payable:          
Outstanding balance $1,917,132
 $—
 $(200,933)
$—
 $1,716,199
 Outstanding balance $1,529,057
 $1,032
 $(133,657)
$—
 $1,396,432
Net premiums (1)
 16,077
 —
 107
 (5,763) 10,421
 
Net premiums (1)
 6,861
 —
 (216) (2,760) 3,885
Deferred costs (10,552) —
 125
 1,624
 (8,803) Deferred costs (7,784) —
 65
 1,054
 (6,665)
Mortgages notes payable, netMortgages notes payable, net 1,922,657

—

(200,701)
(4,139)
1,717,817
 Mortgages notes payable, net 1,528,134

1,032

(133,808)
(1,706)
1,393,652
                      
Corporate bonds:Corporate bonds:         

 Corporate bonds:         

Outstanding balance 3,400,000
 —
 (750,000) —
 2,650,000
 Outstanding balance 2,850,000
 600,000
 —
 —
 3,450,000
Discount (2)
 (4,115) —
 —
 463
 (3,652) 
Discount (2)
 (10,419) (5,136) —
 571
 (14,984)
Deferred costs (27,276) —
 —
 3,248
 (24,028) Deferred costs (25,842) (5,908) —
 1,669
 (30,081)
Corporate bonds, netCorporate bonds, net 3,368,609

—

(750,000)
3,711

2,622,320
 Corporate bonds, net 2,813,739

588,956

—

2,240

3,404,935
                      
Convertible debt:Convertible debt:         

 Convertible debt:         

Outstanding balance 402,500
 —
 —
 —
 402,500
 Outstanding balance 321,802
 —
 (50,169) —
 271,633
Discount (2)
 (3,909) —
 —
 1,462
 (2,447) 
Discount (2)
 (1,855) —
 140
 954
 (761)
Deferred costs (3,708) —
 —
 1,381
 (2,327) Deferred costs (1,764) —
 133
 911
 (720)
Convertible debt, netConvertible debt, net 394,883

—

—

2,843

397,726
 Convertible debt, net 318,183

—

(49,896)
1,865

270,152
                     
Credit facility:Credit facility:         

 Credit facility:         

Outstanding balance 403,000
 1,061,000
 (564,000) —
 900,000
 Outstanding balance 1,050,000
 902,000
 (1,052,000) —
 900,000
Deferred costs (3)
 (1,227) (4,280) —
 858
 (4,649) 
Deferred costs (3)
 (4,331) —
 —
 645
 (3,686)
Credit facility, netCredit facility, net 401,773

1,056,720

(564,000)
858

895,351
 Credit facility, net 1,045,669

902,000

(1,052,000)
645

896,314
         

          

Total debtTotal debt $6,087,922

$1,056,720

$(1,514,701)
$3,273

$5,633,214
 Total debt $5,705,725

$1,491,988

$(1,235,704)
$3,044

$5,965,053

(1)Net premiums on mortgage notes payable were recorded upon the assumption of the respective mortgage notes in relation to the various mergers and acquisitions. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective mortgage notes using the effective-interest method.
(2)Discounts on the corporate bonds and convertible debt were recorded based upon the fair value of the respective debt instruments as of the respective issuance dates. Amortization of these discounts is recorded as an increase to interest expense over the remaining term of the respective debt instruments using the effective-interest method.
(3)Deferred costs relate to the Credit Facility Term Loan, as defined in the “Credit Facility” section below.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Mortgage Notes Payable
The Company’s mortgage notes payable consisted of the following as of SeptemberJune 30, 20192020 (dollar amounts in thousands):
 Encumbered Properties 
Gross Carrying Value of Collateralized Properties (1)
 Outstanding Balance 
Weighted-Average
Interest Rate (2)
 
Weighted-Average Years to Maturity (3)
 Encumbered Properties 
Net Carrying Value of Collateralized Properties (1)
 Outstanding Balance 
Weighted-Average
Interest Rate (2)
 
Weighted-Average Years to Maturity (3)
Fixed-rate debt 411
 $3,421,417
 $1,702,425
 5.05% 2.9 313
 $1,877,744
 $1,381,184
 5.02% 2.5
Variable-rate debt 1
 34,004
 13,774
 5.29%
(4) 
0.9 1
 30,018
 15,248
 3.50%
(4) 
0.1
Total (5)
 412
 $3,455,421
 $1,716,199
 5.05% 2.9 314
 $1,907,762
 $1,396,432
 5.00% 2.5

(1)GrossNet carrying value is gross real estate assets, including investment in direct financing leases, net of gross real estate liabilities.
(2)Weighted average interest rate is computed using the interest rate in effect until the anticipated repayment date. Should the loan not be repaid at the anticipated repayment date, the applicable interest rate will increase as specified in the respective loan agreement until the extended maturity date.
(3)Weighted average years remaining to maturity is computed using the anticipated repayment date as specified in each loan agreement, where applicable.
(4)Weighted-average interest rate for variable-rate debt represents the interest rate in effect as of SeptemberJune 30, 2019.2020.
(5)The table above does not include mortgage notes associated with Unconsolidated Joint Venturesunconsolidated joint ventures of $269.3$341.8 million, which isare non-recourse to the Company. The mortgage notes have a weighted-average fixed interest rate of 3.57% and mature on June 6, 2024.
The Company’s mortgage loan agreements generally restrict corporate guarantees and require the maintenance of financial covenants, including maintenance of certain financial ratios (such as debt service coverage ratios and minimum net operating income). The mortgage loan agreements contain no dividend restrictions except in the event of default or when a distribution would drive liquidity below the applicable thresholds. At SeptemberJune 30, 2019,2020, the Company believes that it was in compliance with the financial covenants under the mortgage loan agreements and had no restrictions on the payment of dividends.
On June 6, 2019, the Company received a notice of default from the lender of a non-recourse loan secured by one property, which had an outstanding balance of $19.5 millionon the notice date, due to intentional non-payment of amounts due in accordance with the loan documents. On July 2, 2019, a foreclosure sale occurred to settle the mortgage note obligation.
The following table summarizes the scheduled aggregate principal repayments due on mortgage notes subsequent to SeptemberJune 30, 20192020 (in thousands):
 Total Total
October 1, 2019 - December 31, 2019 $2,458
2020 278,391
July 1, 2020 - December 31, 2020 $78,261
2021 352,259
 299,015
2022 290,728
 266,951
2023 125,537
 124,217
2024 621,021
2025 1,078
Thereafter 666,826
 5,889
Total $1,716,199
 $1,396,432

Corporate Bonds
As of SeptemberJune 30, 2019,2020, the OP had $2.65$3.45 billion aggregate principal amount of senior unsecured notes (the “Senior Notes”) outstanding comprised of the following (dollar amounts in thousands):
 Outstanding Balance September 30, 2019 Interest Rate Maturity Date Outstanding Balance June 30, 2020 Interest Rate Maturity Date
2021 Senior Notes $400,000
 4.125% June 1, 2021
2024 Senior Notes 500,000
 4.600% February 6, 2024 $500,000
 4.600% February 6, 2024
2025 Senior Notes 550,000
 4.625% November 1, 2025 550,000
 4.625% November 1, 2025
2026 Senior Notes 600,000
 4.875% June 1, 2026 600,000
 4.875% June 1, 2026
2027 Senior Notes 600,000
 3.950% August 15, 2027 600,000
 3.950% August 15, 2027
2028 Senior Notes 600,000
 3.400% January 15, 2028
2029 Senior Notes 600,000
 3.100% December 15, 2029
Total balance and weighted-average interest rate $2,650,000
 4.449%  $3,450,000
 4.069% 

On June 29, 2020, the Company closed a senior note offering, consisting of $600.0 million aggregate principal amount of the Operating Partnership’s 3.40% Senior Notes due 2028 (the “2028 Senior Notes”).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

On February 6, 2019, $750.0 million of senior notes (the “2019 Senior Notes”) matured and the principal plus accrued and unpaid interest thereon, were repaid, utilizing borrowings under the Credit Facility.
The Senior Notes are guaranteed by the General Partner. The OP may redeem all or a part of any series of the Senior Notes at any time, at its option, for the redemption prices set forth in the indenture governing the Senior Notes. If the redemption date is 30 or fewer days prior to the maturity date with respect to the 2021 Senior Notes, is 60 or fewer days prior to the maturity date with respect to the 2025 Senior Notes, or is 90 or fewer days prior to the maturity date with respect to the 2024 Senior Notes, the 2026 Senior Notes, the 2027 Senior Notes and the 2029 Senior Notes, or on or after November 15, 2027, with respect to the 2028 Senior Notes, the redemption price will equal 100% of the principal amount of the Senior Notes of the applicable series to be redeemed, plus accrued and unpaid interest on the amount being redeemed to, but excluding, the applicable redemption date. The Senior Notes are registered under the Securities Act of 1933, as amended (the “Securities Act”) and are freely transferable.
The indenture governing our Senior Notes requires us to maintain financial ratios which include maintaining (i) a maximum limitation on incurrence of total debt less than or equal to 65% of Total Assets (as defined in the indenture), (ii) maximum limitation on incurrence of secured debt less than or equal to 40% of Total Assets (as defined in the indenture), (iii) a minimum debt service coverage ratio of at least 1.5x and (iv) a minimum unencumbered asset value of at least 150% of the aggregate principal amount of all of the outstanding Unsecured Debt (as defined in the indenture). As of SeptemberJune 30, 2019,2020, the Company believes that it was in compliance with the financial covenants of our Senior Notes based on the covenant limits and calculations in place at that time.
Convertible Debt
On June 25, 2020, the Company repurchased $50.2 million of its 3.75% Convertible Senior Notes due 2020. As of SeptemberJune 30, 2019,2020, the CompanyCompany’s 2020 Convertible Notes had convertible senior notes due December 15, 2020 (the “2020 Convertible Notes”) with a balance of $402.5$271.6 million outstanding, which excludes the carrying value of the conversion options recorded within additional paid-in capital of $12.8$12.1 million and the unamortized discount of $2.4$0.8 million. The discount will be amortized over the remaining term of 1.20.5 years. The 2020 Convertible Notes bear interest at an annual rate of 3.75%.
The 2020 Convertible Notes may be converted into cash, shares of the Company’s Common Stock or a combination thereof, in limited circumstances prior to June 15, 2020, and may be converted into such consideration at any time on or after June 15, 2020. As of SeptemberJune 30, 2019,2020, the conversion rate was 66.7249 shares of the Company’s Common Stock per $1,000 principal amount of 2020 Convertible Notes, which reflects adjustments to the initial conversion rate pursuant to the terms of the applicable indenture as a result of cash dividend payments. There were no changes to the terms of the 2020 Convertible Notes during the ninesix months ended SeptemberJune 30, 20192020 and the Company believes that it was in compliance with the financial covenants pursuant to the indenture governing the 2020 Convertible Notes as of SeptemberJune 30, 2019.2020.
Credit Facility
On May 23, 2018, the General Partner, as guarantor, and the OP, as borrower, entered into a credit agreement with Wells Fargo Bank, National Association as administrative agent and other lenders party thereto (the “Credit Agreement”). The Credit Agreement providesprovided for maximum borrowings of $2.9 billion, originally consisting of a $2.0 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $900.0 million unsecured term loan facility (the “Credit Facility Term Loan,” together with the Revolving Credit Facility, the “Credit Facility”). Effective December 27, 2019, the Company reduced the amount available under its Revolving Credit Facility from $2.0 billion to $1.5 billion. On May 27, 2020, the Operating Partnership and the Company, entered into Amendment No. 1 to the Credit Agreement (the “Amendment”) which, among other things, modifies the measurement period for certain financial covenants (and relevant associated definitions) from either the prior quarterly period annualized or the prior six month period to the four consecutive fiscal quarter period most recently ending.
As of SeptemberJune 30, 2019, there was2020, 0 amounts were outstanding balance under the Revolving Credit Facility. As of September 30, 2019,Facility and the full $900.0 million had beenwas drawn on the Credit Facility Term Loan. The maximum aggregate dollar amount of letters of credit that may be outstanding at any one time under the Credit Facility is $50.0 million. As of SeptemberJune 30, 2019,2020, there were 0 letters of credit outstanding were $3.9 million.outstanding.
As discussed in Note 7 –Derivatives and Hedging Activities, on January 24, 2019, the Company entered into interest rate swap agreements with an aggregate $900.0 million notional amount, effective on February 6, 2019 and maturing on January 31, 2023, to hedge interest rate volatility. The swap agreements effectively fixed the Credit Facility Term Loan interest rate, including the spread which can vary based on our credit rating, at approximately 3.84%.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

The Revolving Credit Facility generally bears interest at an annual rate of London Interbank Offered Rate (“LIBOR”)LIBOR plus 0.775% to 1.55% or Base Rate plus 0.00% to 0.55% (based upon the General Partner’s then current credit rating). “Base Rate” is defined as the highest of the prime rate, the federal funds rate plus 0.50% or a floating rate based on one month LIBOR plus 1.0%, determined on a daily basis. The Credit Facility Term Loan generally bears interest at an annual rate of LIBOR plus 0.85% to 1.75%, or Base Rate plus 0.00% to 0.75% (based upon the General Partner’s then current credit rating). In addition, the Credit Agreement provides the flexibility for interest rate auctions, pursuant to which, at the Company’s election, the Company may request that lenders make competitive bids to provide revolving loans, which competitive bids may be at pricing levels that differ from the foregoing interest rates. The Credit Facility Term Loan interest rate was 3.59% as of June 30, 2020, pursuant to the terms of the related swap agreements discussed in Note 7 –Derivatives and Hedging Activities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

In the event of default, at the election of a majority of the lenders (or automatically upon a bankruptcy event of default with respect to the OP or the General Partner), the commitments of the lenders under the Credit Facility will terminate, and payment of any unpaid amounts in respect of the Credit Facility will be accelerated. The Revolving Credit Facility terminates on May 23, 2022, unless extended in accordance with the terms of the Credit Agreement. The Credit Agreement provides for two2 six-month extension options with respect to the Revolving Credit Facility, exercisable at the OP’s election and subject to certain customary conditions, as well as certain customary “amend and extend” provisions. Any term loansThe outstanding under the Credit Facility Term Loan maturematures on May 23, 2023. At any time, upon timely notice by the OP and subject to any breakage fees, the OP may prepay borrowings under the Credit Facility (subject to certain limitations applicable to the prepayment of any loans obtained through an interest rate auction, as described above). The OP incurs a facility fee equal to 0.10% to 0.30% per annum (based upon the General Partner’s then current credit rating) multiplied by the commitments (whether or not utilized) in respect of the Revolving Credit Facility. The OP also incurs customary administrative agent, letter of credit issuance, letter of credit fronting, extension and other fees.
The Credit Facility requires restrictions on corporate guarantees, as well as the maintenance of financial covenants, including the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios). The key financial covenants in the Credit Facility, as defined and calculated per the terms of the Credit Agreement, include maintaining (i) a maximum leverage ratio less than or equal to 60%, (ii) a minimum fixed charge coverage ratio of at least 1.5x, (iii) a secured leverage ratio less than or equal to 45%, (iv) a total unencumbered asset value ratio less than or equal to 60% and (v) a minimum unencumbered interest coverage ratio of at least 1.75x. The Company believes that it was in compliance with the financial covenants pursuant to the Credit Agreement and is not restricted from accessing any borrowing availability under the Credit Facility as of SeptemberJune 30, 2019.
In connection with entering into the Credit Agreement, the Company capitalized an aggregate $20.7 million in lender fees and third-party costs in respect of the Revolving Credit Facility and the Credit Facility Term Loan, which is being amortized over the respective terms. Deferred financing costs, net of accumulated amortization, related to the Revolving Credit Facility are included in rent and tenant receivables and other assets, net in the accompanying consolidated balance sheets. Deferred financing costs, net of accumulated amortization, related to the Credit Facility Term Loan outstanding balance are included in credit facility, net in the accompanying consolidated balance sheets.2020.
Note 7 – Derivatives and Hedging Activities
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The Company’s interest rate management objectives are intended to limit the impact of interest rate fluctuations on earnings and cash flows and to manage the Company’s overall borrowing costs. To accomplish this objective, the Company primarily uses interest rate swaps as part of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges are used to hedge forecasted issuances of fixed rate debt and the variable cash flows associated with floating rate debt. The Company does not intend to utilize derivatives for purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

The Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in other income (loss), net in the consolidated statements of operations and consolidated statements of comprehensive income (loss). If the derivative is designated and qualifies for hedge accounting treatment, the change in fair value of the derivative is recorded in other comprehensive income (loss). Unrealized gains and losses in other comprehensive income (loss) are reclassified to interest expense when the related hedged items impact earnings.
Cash Flow Hedges of Interest Rate Risk
During the nine months ended September 30, 2019, theThe Company entered intohas interest rate swap agreements with an aggregate $900.0 million notional amount, effective on February 6, 2019 and maturing on January 31, 2023, which were designated as cash flow hedges. Based on the General Partner’s then credit rating and interest rate of LIBOR + 1.35%, the swap agreements effectively fixed the Credit Facility Term Loan interest rate at approximately 3.84%.
During the three months ended September 30, 2019, theThe Company entered intoalso has forward starting interest rate swaps with a total notional amount of $400.0 million, which were designated as cash flow hedges to hedge the risk of changes in the interest-related cash outflows associated with the potentialanticipated issuance of long-term debt.
The Company is hedging its exposure totable below presents the variability in future cash flows for forecasted transactions over a maximum period of 120 months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments), with potential issuance of 10-year public debt between May 1, 2020 and December 31, 2021.
As of September 30, 2019, the cash flow hedges were in a liability position with a fair value of $48.0 million, which is included in deferred rent and other liabilities in the accompanying consolidated balance sheets. As of December 31, 2018, the Company had 0 interest rate derivatives that wereCompany’s derivative financial instruments designated as cash flow hedges as well as their classification in the consolidated balance sheets as of interest rate risk. June 30, 2020 and December 31, 2019 (in thousands):
Derivatives Designated as Hedging Instruments Balance Sheet Location June 30, 2020 December 31, 2019
Interest rate swaps Rent and tenant receivables and other assets, net $—
 $250
Interest rate swaps Derivative, deferred rent and other liabilities $(106,520) $(28,081)

During the three and six months ended June 30, 2020, the Company recorded unrealized losses of $6.5 million and $85.0 million, respectively, and losses of $16.3 million and $27.6 million, respectively, for the three and six months ended June 30, 2019 for changes in the fair value of the cash flow hedges in accumulated other comprehensive income.
The Company reclassified previous losses of $0.7$4.6 million and $0.9$6.6 million for the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, and losses of $0.1 million and $0.2 million for the three and ninesix months ended SeptemberJune 30, 2018,2019, respectively, from accumulated other comprehensive income into interest expense as a result of the hedged transactions impacting earnings.
During the three and nine months ended September 30, 2019, the Company recorded unrealized losses of $20.9 million and $48.5 million, respectively, for changes in the fair value of the cash flow hedges in accumulated other comprehensive income. There were 0 similar amounts during the three and nine months ended September 30, 2018.
During the next twelve months, the Company estimates that an additional $8.0$24.4 million will be reclassified from other comprehensive income as an increase to interest expense.
Derivatives Not Designated as Hedging Instruments
As of September 30, 2019, the Company had 0 interest rate swaps that were not designated as qualifying hedging relationships. As of December 31, 2018, the Company had 1 interest rate swap that was not designated as a qualifying hedging relationship, with a notional amount of $50.7 million and was in an asset position with an estimated fair value of $0.5 million, which is included in rent and tenant receivables and other assets, net in the accompanying consolidated balance sheet.
A loss of $0.1 million for the nine months ended September 30, 2019 and a gain of $0.1 million and $0.4 million for the three and nine months ended September 30, 2018, respectively, related to the change in the fair value of derivatives not designated as hedging instruments were recorded in other income (loss), net in the accompanying consolidated statements of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Tabular Disclosure of Offsetting Derivatives
The table below details a gross presentation, the effects of offsetting and a net presentation of the Company’s derivatives as of June 30, 2020 and December 31, 2019 (in thousands). The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value.
  Offsetting of Derivative Assets and Liabilities
  Gross Amounts of Recognized Assets Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheets Net Amounts of Assets Presented in the Consolidated Balance Sheets Net Amounts of Liabilities Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received Net Amount
June 30, 2020 $—
 $(106,520) $—
 $—
 $(106,520) $—
 $—
 $(106,520)
December 31, 2019 $250
 $(28,081) $—
 $250
 $(28,081) $—
 $—
 $(27,831)

Credit Risk Related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision specifying that if the Company either defaults or is capable of being declared in default on any of its indebtedness, the Company could also be declared in default on its derivative obligations.
As of June 30, 2020, the Company has not posted any collateral related to these agreements and was not in breach of any provisions in these agreements. If the Company had breached any of these agreements, it could have been required to settle its obligations under the agreements at their aggregate termination value of $107.3 million at June 30, 2020.
Note 8 – Supplemental Cash Flow Disclosures
Supplemental cash flow information was as follows for the ninesix months ended SeptemberJune 30, 20192020 and 20182019 (in thousands):
 Nine Months Ended September 30, Six Months Ended June 30,
 2019 2018 2020 2019
Supplemental disclosures:        
Cash paid for interest $203,438
 $204,366
 $126,173
 $147,317
Cash paid for income taxes 4,474
 5,346
 $3,885
 $3,962
Non-cash investing and financing activities:        
Accrued capital expenditures, tenant improvements and real estate developments $13,670
 $5,762
 $13,513
 $8,551
Accrued deferred financing costs —
 169
Real estate contributions to Industrial Partnership 29,577
 —
Real estate contributions to industrial partnership and office partnership $7,494
 $29,577
Distributions declared and unpaid 150,970
 145,673
 $85,231
 $143,306
Distributions payable relinquished 7,799
 —
 $—
 $6,429
Surrender of Limited Partner OP Units 191,974
 —
Mortgage note payable relieved by foreclosure or a deed-in-lieu of foreclosure 19,525
 16,200
Real estate investments received from lease related transactions $259
 $—
Exchange of real estate investments 8,900
 1,386
 $—
 $8,900

Note 9 – Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted of the following as of SeptemberJune 30, 20192020 and December 31, 20182019 (in thousands):
 September 30, 2019 December 31, 2018 June 30, 2020 December 31, 2019
Accrued legal fees and litigation settlements
 $1,002,396
 $32,715
Accrued interest 43,224
 43,916
 $31,695
 $31,925
Accrued real estate and other taxes 34,762
 25,208
 28,174
 25,320
Accrued legal fees and litigation settlements 8,586
 25,571
Accounts payable 2,521
 2,673
 5,697
 1,779
Accrued other 42,800
 41,099
 38,399
 41,725
Total $1,125,703
 $145,611
 $112,551

$126,320


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

Note 10 – Commitments and Contingencies
Litigation
The Company is involved in various routine legal proceedings and claims incidental to the ordinary course of its business. There are no material legal proceedings pending against the Company, except as follows:
Government Investigations and Litigation Relating to the Audit Committee Investigation
As previously reported, on October 29, 2014, the Company filed a Current Report on Form 8-K (the “October 29 8-K”) reporting the Audit Committee’s conclusion, based on the preliminary findings of its investigation, that certain previously issued consolidated financial statements of the Company, including those included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014, and related financial information should no longer be relied upon. The Company also reported that the Audit Committee had based its conclusion on the preliminary findings of its investigation into concerns regarding accounting practices and other matters that were first reported to the Audit Committee in early September 2014 and that the Audit Committee believed that an error in the calculation of adjusted funds from operations for the first quarter of 2014 had been identified but intentionally not corrected when the Company reported its financial results for the three and six months ended June 30, 2014. Prior to the filing of the October 29 8-K, the Audit Committee previewed for the SEC the information contained in the filing. Subsequent to that filing, the SEC provided notice that it had commenced a formal investigation and issued subpoenas calling for the production of various documents. In addition, the United States Attorney’s Office for the Southern District of New York contacted counsel for the Audit Committee and counsel for the Company with respect to this matter, and the Secretary of the Commonwealth of Massachusetts issued a

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

subpoena calling for the production of various documents. The Company has been cooperatingcooperated with these regulators inthroughout their investigations.
In connection with these investigations, on September 8, 2016, the United States The U.S. Attorney’s Office for the Southern District of New York announced the filing of criminal charges against the Company’s former Chief Financial Officer (the “Former CFO”) and former Chief Accounting Officer (the “Criminal Action”), as well as the fact that the former Chief Accounting Officer pleaded guilty to the charges filed. Also on September 8, 2016, the SEC announced the filing of a civil complaint against the same 2 individuals in the United States District Court for the Southern District of New York. On June 30, 2017, following a jury trial, the Former CFO was convicted of the charges filed. Both the former Chief Accounting Officer and the Former CFO have entered into settlement agreements with the SEC resolving the charges brought against them.
The United States Attorney’s Office has indicatedconcluded that it doesdid not intend to bring any criminal charges against the Company arising from its investigation. In addition,investigation and the Company has not been in contactbelieves that the investigation by the Secretary of the Commonwealth of Massachusetts is no longer pending.
On November 18, 2019, the Company announced it had reached agreement with the Massachusetts regulator since June 2015 and believes the investigation is concluded. In March 2018, investigative staff of the SEC’s enforcement division inquired whether the Company wished to discuss a resolutionEnforcement Division of potential civil charges the SEC may bring with respecton the material terms of a negotiated resolution relating to certainthe SEC's investigation of the matters investigated bydisclosed in the staff stemming from the announcement made onCompany's October 29 2014.8-K. The Company has been cooperatingagreement with the SEC staff’s investigation since its inception and is engaged in such discussions with the staff. The timing and substance of the ultimate resolution of these discussions is unknown.
As discussed below, the Company and certain of its former officers and directors have been named as defendants in a number of lawsuits filed following the October 29 8-K, including class actions, individual actions and derivative actions seeking money damages and other relief under the federal securities laws and state laws in both federal and state courts in New York, Maryland and Arizona.
Between October 30, 2014 and January 20, 2015, the Company and certain of its former officers and directors, among other individuals and entities, were named as defendants in 10 securities class action complaints filed in the United States District Court for the Southern District of New York. The court consolidated these actions under the caption In re American Realty Capital Properties, Inc. Litigation, No. 15-MC-00040 (AKH) (the “Class Action”). The plaintiffs filed a second amended class action complaint on December 11, 2015,staff, which asserted claims for violations of Sections 11, 12(a)(2) and 15 of the Securities Act and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. On September 30, 2016, plaintiffs filed a third amended complaint to reflect certain prior rulingswas approved by the court in connection with various motions to dismiss. On August 31, 2017, the court issued an order granting plaintiffs’ motion for class certification. Defendants’ petitions seeking leave to appeal the court’s order granting class certification were deniedSEC's Commissioners on January 24, 2018. Trial was scheduled to begin on January 21, 2020. On September 8, 2019, the Company, along with the other parties to the Class Action, signed a MemorandumJune 23, 2020, required payment of Understanding (“MOU”) providing for the settlement of the Class Action, and on September 30, 2019, the parties entered into a Stipulation of Settlement (the “Class Action Settlement”) consistent with the terms of the MOU. Pursuant to the proposed Class Action Settlement, certain defendants agreed to pay in the aggregate $1.025 billion, comprised of contributions from the Company’s Former Manager totaling $225.0$8.0 million $12.5 million from the Company’s Former CFO, $49.0 million from the Company’s former auditor, and the balance of $738.5 million from the Company, which is included in litigation and non-routine costs, net in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2019. The contribution from the Company’s Former Manager is inclusive of the value of substantially all of the Limited Partner OP Units and dividends surrendered to the Company in July 2019 as a result of a settlement by the Former Manager and certain of its principals with the SEC, totaling approximately $32.0 million,civil penalty, which is included in litigation and non-routine costs, net in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2019. As discussed in Note 12 - Equity, the Company recorded the surrender of such Limited Partner OP Units in July 2019 in its quarterly report on Form 10-Q for the quarter ended June 30, 2019 as a reduction to litigation and non-routine costs, net and recorded the surrendered dividends as a reduction to distributions payable, additional paid-in capital and non-controlling interests in the consolidated balance sheet as of June 30, 2019. The Class Action Settlement does not contain any admission of liability, wrongdoing or responsibility by any of the parties. The Class Action Settlement is subject to court approval and is contingent on final approval of the Derivative Settlement discussed herein. On October 4, 2019, the court issued an order granting preliminary approval of the Class Action Settlement and setting a hearing date for January 21, 2020 to consider final approval of the settlement.
The Company, certain of its former officers and directors, and the OP, among others, were also named as defendants in 13 individual securities fraud actions filed in the United States District Court for the Southern District of New York: Jet Capital Master Fund, L.P. v. American Realty Capital Properties, Inc., et al., No. 15-cv-307 (the “Jet Capital Action”); Twin Securities, Inc. v. American Realty Capital Properties, Inc., et al., No. 15-cv-1291; HG Vora Special Opportunities Master Fund, Ltd v. American Realty Capital Properties, Inc., et al., No. 15-cv-4107; BlackRock ACS US Equity Tracker Fund, et al. v. American Realty Capital Properties, Inc. et al., No. 15-cv-08464; PIMCO Funds: PIMCO Diversified Income Fund, et al. v. American Realty Capital

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

Properties, Inc. et al., No. 15-cv-08466; Clearline Capital Partners LP, et al. v. American Realty Capital Properties, Inc. et al., No. 15-cv-08467; Pentwater Equity Opportunities Master Fund Ltd., et al. v. American Realty Capital Properties, Inc. et al., No. 15-cv-08510; Archer Capital Master Fund, et al. v. American Realty Capital Properties, Inc. et al, No. 16-cv-05471; Atlas Master Fund et al. v. American Realty Capital Properties, Inc. et al., No. 16-cv-05475; Eton Park Fund, L.P. v. American Realty Capital Properties, Inc., et al., No. 16-cv-09393; Reliance Standard Life Insurance Company, et al, v. American Realty Capital Properties, Inc. et al, No. 17-cv-02796; Fir Tree Capital Opportunity Master Fund, L.P. et al. v. American Realty Capital Properties, Inc. et al., No. 17-cv-04975; and Cohen & Steers Institutional Realty Shares, Inc. et al v. American Realty Capital Properties, Inc. et al., No. 18-cv-06770, (collectively, the “Opt-Out Actions”). The Opt-Out Actions assert claims arising out of allegedly false and misleading statements in connection with the purchase or sale of the Company’s securities. The Company entered into a series of agreements dated September 30 through October 26, 2018, to settle 12 of the 13 pending Opt-Out Actions (the “Opt-Out Settlement Agreements”) brought by plaintiffs holding shares of common stock and swaps referencing common stock representing approximately 18.0% of VEREIT’s outstanding shares of common stock held at the end of the period covered by the litigations, for an aggregate payment of $127.5 million. The Opt-Out Settlement Agreements contain mutual releases by both plaintiffs and the Company, although the Company retains the right to pursue any and all claims against the other defendants in each Opt-Out Action and/or third parties, including claims for contribution for amounts paid in the settlement. The Opt-Out Settlement Agreements do not contain any admission of liability, wrongdoing or responsibility by any of the parties.
On October 27, 2015, the Company and certain of its former officers, among others, were also named as defendants in an individual securities fraud action filed in the United States District Court for the District of Arizona, captioned Vanguard Specialized Funds, et al. v. VEREIT, Inc. et al., No. 15-cv-02157 (the “Vanguard Action”). The Vanguard Action asserted claims arising out of allegedly false and misleading statements in connection with the purchase or sale of the Company’s securities. On June 7, 2018, the Company entered into a Settlement Agreement and Release (the “Vanguard Settlement Agreement”) to settle the Vanguard Action for a payment of $90.0 million. The Vanguard Settlement Agreement contains mutual releases by Plaintiffs and the Company, although the Company retains the right to pursue any and all claims against the other defendants in the Vanguard Action and/or third parties, including claims for contribution for amounts paid in the settlement. The Vanguard Settlement Agreement does not contain any admission of liability, wrongdoing or responsibility by any of the parties. Vanguard’s holdings accounted for approximately 13.0% of the Company’s outstanding shares of common stock held at the end of the period covered by the various pending shareholder actions.
In addition to the settlement of the Opt-Out actions and the Vanguard Action discussed above, between February 5, 2019 and April 5, 2019, the Company entered into a series of agreements to settle claims with shareholders who decided not to participate as class members in the Class Action. Pursuant to the terms of these settlement agreements, the shareholders released all claims that were the subject matter of the Class Action and the Companywas made payments totaling $27.9 million.
On June 24, 2019, the Company and certain of its former officers were named as defendants in an individual action filed in the Supreme Court of the State of New York captioned Lakewood Capital Partners, L.P. v. American Realty Capital Properties, Inc., et al., Index No. 653676/2019 (the “Lakewood Action”), alleging claims of common law fraud arising out of allegedly false and misleading statements similar to those that are the subject of the Class Action.
On September 6 and September 9, 2019, the Company entered into settlement agreements and releases similar to the Opt-Out Settlement Agreements to settle the only 2 remaining opt-out actions - the Jet Capital Action and the Lakewood Action - for a total of $27.0 million, which is included in litigation and non-routine costs, net in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2019.
The Company was also named as a nominal defendant, and certain of its former officers and directors were named as defendants, in shareholder derivative actions filed in the United States District Court for the Southern District of New York: Witchko v. Schorsch, et al., No. 15-cv-06043 (the “Witchko Action”); and Serafin, et al. v. Schorsch, et al., No. 15-cv-08563 (the “Serafin Action”). The court consolidated the Witchko Action and the Serafin Action (together the “SDNY Derivative Action”) and the plaintiffs designated the complaint filed in the Witchko Action as the operative complaint in the SDNY Derivative Action. The SDNY Derivative Action seeks money damages and other relief on behalf of the Company for alleged breaches of fiduciary duty, among other claims. In conjunction with entering into the Class Action Settlement, the Company entered into an agreement to resolve the SDNY Derivative Action (the “Derivative Settlement”). The Derivative Settlement is also subject to court approval and is contingent on final approval of the Class Action Settlement discussed herein. On October 4, 2019, the court issued an order granting preliminary approval of the Derivative Settlement and setting a hearing date for January 21, 2020 to consider final approval of the settlement.
On December 3, 2015, the Company was named as a nominal defendant and certain of its former officers and directors were named as defendants in a shareholder derivative action filed in the Circuit Court for Baltimore City in Maryland, Frampton v. Schorsch, et al., No. 24-C-15-006269 (the “Frampton Action”). The Frampton Action seeks money damages and other relief on

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

behalf of the Company for, among other things, alleged breaches of fiduciary duty and contribution and indemnification. By order dated November 4, 2016, the Frampton Action was stayed pending resolution of the SDNY Derivative Action.
On June 10, 2016, the Company was named as a nominal defendant, and certain of its former officers and directors, among others, were named as defendants, in a shareholder derivative action filed in the Supreme Court of the State of New York, Kosky v. Schorsch, et al., No. 653093/2016 (the “Kosky Action”). The Kosky Action seeks money damages and other relief on behalf of the Company for, among other things, alleged breaches of fiduciary duty, negligence, and breach of contract. On October 6, 2016, the parties filed a stipulation staying the Kosky Action until resolution of the Class Action.
On October 6, 2016, the Company was named as a nominal defendant, and certain of its former officers and directors, among others, were named as defendants, in a shareholder derivative action filed in the United States District Court for the District of Maryland, captioned Meloche v. Schorsch, et al., 16-cv-03366 (the “Meloche Action”). An amended complaint was filed on January 17, 2017. The Meloche Action seeks money damages and other relief on behalf of the Company for alleged breaches of fiduciary duty and negligence. By order dated May 16, 2017, the Meloche Action was stayed until resolution of the SDNY Derivative Action, and by order dated October 25, 2019, the stay was continued.
There can be no assurance as to the timing of the court’s final approval of the Class Action Settlement and the Derivative Settlement, whether such approvals will be obtained, or how these settlements may affect any potential future resolution of the remaining derivative lawsuits, the SEC investigation or the timing of any such resolutions. The Company has not reserved an amount for the SEC investigation because it believes that any probable loss or reasonably possible range of loss is not reasonably estimable at this time. The ultimate resolution of all of these matters, the timing and/or substance of which is unknown, may materially impact the Company’s business, financial condition, liquidity and results of operations.
Cole Litigation Matter
In December 2013, Realistic Partners filed a putative class action lawsuit against the Company and the then-members of its board of directors in the Supreme Court for the State of New York, captioned Realistic Partners v. American Realty Capital Partners, et al., No. 654468/2013. The plaintiff alleged, among other things, that the board of the Company breached its fiduciary duties in connection with the transactions contemplated under the agreement and plan of merger with Cole Real Estate Investments, Inc. In January 2014, the parties entered into a memorandum of understanding regarding settlement of all claims asserted on behalf of the alleged class of the Company’s stockholders. The proposed settlement terms required the Company to make certain additional disclosures related to this merger, which were included in a Current Report on Form 8-K filed by the Company with the SEC on January 17, 2014. The memorandum of understanding also contemplated that the parties would enter into a stipulation of settlement, which would be subjectsubsequent to customary conditions, including confirmatory discovery and court approval following notice to the Company’s stockholders, and provided that the defendants would not object to a payment of up to $625,000 for attorneys’ fees. If the parties enter into a stipulation of settlement, which has not occurred, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement. There can be no assurance that the parties will enter into a stipulation of settlement, that the court will approve any proposed settlement, or that any eventual settlement will be under the same terms as those contemplated by the memorandum of understanding.quarter end.
Purchase Commitments
In the normal course of business, the Company enters into various types of commitments to purchase real estate properties. These commitments are generally subject to the Company’s customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated to purchase the properties.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect on the results of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Note 11 -– Leases
Lessor
The Company is the lessor for its 3,9263,836 retail, restaurant, office and industrial properties. The Company’s operating and direct financing leases have non-cancelable lease terms of 0.060.03 years to 25.324.6 years. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying asset. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index (“CPI”) or LIBOR). The Company believes the residual value risk is not a primary risk because of the long-lived nature of the assets.
The components of rental revenue from the Company’s operating and direct financing leases were as follows (in thousands):
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018 2020 2019 2020 2019
Fixed:                
Cash rent(1) $272,032
 $281,079
 $831,931
 $841,629
 $253,117
 $277,324
 $522,702
 $559,899
Straight-line rent(2) 5,470
 8,780
 20,925
 31,167
 3,404
 8,043
 5,458
 15,455
Lease intangible amortization (692) (1,058) (2,034) (3,233) (788) (611) (1,536) (1,342)
Sub-lease (1)
 5,328
 4,090
 16,099
 12,099
Property operating cost reimbursements 1,363
 1,422
 2,791
 2,886
Sub-lease (3)
 5,279
 5,282
 10,543
 10,771
Total fixed 282,138

292,891

866,921

881,662
 262,375

291,460

539,958
 587,669
                
Variable (2)
 20,637

20,743

64,312

62,200
Variable (4)
 16,039
 20,372
 36,852
 40,789
Income from direct financing leases 210
 232
 638
 742
 162
 211
 352
 428
Total rental revenue $302,985

$313,866

$931,871

$944,604
 $278,576

$312,043

$577,162

$628,886
____________________________________
(1)For the three months ended June 30, 2020, includes rental revenue that represents deferred rent of $3.6 million related to deferral agreements executed through June 30, 2020, and $5.3 million related to deferral agreements executed from July 1, 2020 through July 27, 2020, which qualify for the COVID-19 Lease Concessions Relief. For the three months ended June 30, 2020, cash rent was negatively impacted by (i) $11.2 million of abated rental revenue pursuant to lease amendments executed through June 30, 2020, which increased the weighted average lease term for the related properties and (ii) a reduction to rental revenue of $4.7 million that was related to the impact of the COVID-19 pandemic, of which $0.9 million represented an increase to the general allowance for rental revenue that the Company believes it may abate as a result of lease amendments and $3.8 million represented amounts not probable of collection at June 30, 2020 and rental revenue will be recognized as cash is received.
(2)For the three months ended June 30, 2020, was negatively impacted by a reduction to rental revenue that was related to the impact of the COVID-19 pandemic of $3.7 million of straight-line rent receivables.
(3)The Company’s tenants are generally sub-tenants under certain ground leases and are responsible for paying the rent under these leases.
(2)(4)Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent, including these costs reimbursed by ground lease sub-tenants.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

The following table presents future minimum operating lease payments due to the Company over the next five years and thereafter as of June 30, 2020 (in thousands). These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes.
 Future Minimum Operating Lease Payments 
Future Minimum
Direct Financing Lease Payments (1)
 
Future Minimum
Operating Lease Payments
 
Future Minimum
Direct Financing Lease Payments (1)
October 1, 2019 - December 31, 2019 $238,289
 $586
2020 1,064,654
 2,215
July 1, 2020 - December 31, 2020 $509,142
 $1,068
2021 1,029,745
 2,095
 1,046,102
 2,014
2022 959,964
 2,006
 984,711
 1,925
2023 882,138
 1,622
 920,421
 1,565
2024 848,833
 510
2025 743,217
 169
Thereafter 5,298,715
 788
 4,556,368
 655
Total $9,473,505
 $9,312
 $9,608,794
 $7,906

(1)
Related to 2419 properties which are subject to direct financing leases and, therefore, revenue is recognized as rental income on the discounted cash flows of the lease payments. Amounts reflect undiscounted cash flows to be received by the Company under the lease agreements on these respective properties.
Lessee
The Company is the lessee under ground lease arrangements and corporate office leases. All leases for which the Company is the lessee meet the criteria of an operating lease. The Company’s leases have remaining lease terms of 0.30.1 years to 79.979.1 years, some of which include options to extend. The weighted average remaining lease term for the Company’s operating leases was 16.516.1 years as of SeptemberJune 30, 2019.2020. Under certain ground lease arrangements, the Company pays variable costs, including property operating expenses and common area maintenance, which are generally reimbursed by the ground lease sub-tenants. The weighted average discount rate for the Company’s operating leases was 4.91%4.99% as of SeptemberJune 30, 2019.2020. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

The Company incorporated renewal periods in the calculation of the majority of ground lease right-of-use assets and lease liabilities. Pursuant to certain leases, the Company is required to execute renewal options available under the ground lease through the building lease term. No renewals were incorporated in the calculation of the corporate lease right-of-use assets and liabilities, as it is not reasonably certain that the Company will exercise the options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The following table presents the lease expense components for the three and ninesix months ended SeptemberJune 30, 2020 and 2019 (in thousands):
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Operating lease cost (1)
 $6,135
 $5,418
 $13,710
 $12,396
Sublease income (2)
 $(5,279) $(5,282) $(10,543) $(10,771)
  Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating lease cost (1)
 $5,794
 $18,190
Sublease income (2)
 $(5,328) $(16,099)


___________________________________
(1)NaNNo cash paid for operating lease liabilities was capitalized.
(2)The Company’s tenants are generally sub-tenants under certain ground leases and are responsible for paying the rent under these leases.
Subsequent to initial measurement of $233.3 million and $236.3 million, respectively, the Company reduced the right-of-use assets by $2.5$2.8 million and operating lease liabilities by $3.0$3.1 million, for non-cash activity related to additions, dispositions and lease modifications during the ninesix months ended SeptemberJune 30, 2019. During the six months ended June 30, 2020, the Company increased the right-of-use assets and operating lease liabilities each by less than $0.1 million.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 (Unaudited) – (Continued)

The following table reflects the future minimum lease payments due from the Company over the next five years and thereafter for ground lease obligations, which are substantially reimbursable by our tenants, and office lease obligations as of SeptemberJune 30, 20192020 (in thousands).
 Future Minimum Lease Payments Future Minimum Lease Payments
October 1, 2019 - December 31, 2019 $5,357
2020 22,286
July 1, 2020 - December 31, 2020 $10,751
2021 22,283
 22,092
2022 22,121
 21,936
2023 21,679
 21,590
2024 21,048
2025 20,569
Thereafter 246,051
 206,547
Total
339,777
 324,533
Less: imputed interest 116,489
 109,211
Total
$223,288
 $215,322

The following table reflects the future minimum lease payments due from the Company over the five years subsequent to December 31, 2018, as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 (in thousands), which excluded certain ground leases under which the Company's sub-tenants are responsible for paying the rent under these leases directly to the ground lessor.
  Future Minimum Lease Payments
2019 $18,479
2020 18,191
2021 17,929
2022 18,118
2023 17,772
Thereafter 196,670
Total $287,159


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

Note 12 – Equity
Common Stock and General Partner OP Units
The General Partner is authorized to issue up to 1.5 billion shares of Common Stock. As of SeptemberJune 30, 2019,2020, the General Partner had approximately 1.1 billion shares of Common Stock issued and outstanding. Additionally, the Operating Partnership had approximately 1.1 billion General Partner OP Units issued and outstanding as of SeptemberJune 30, 2019,2020, corresponding to the General Partner’s outstanding shares of Common Stock.
Common Stock Continuous Offering Program
On September 26, 2019, the Company completed a public equity offering (the "Offering"), selling a total of 94.3 million shares of Common Stock, which included the full exercise of the underwriters' option to purchase additional shares, for net proceeds, after underwriting discounts and offering expenses, of $886.9 million. The Company contributed the net proceeds from this offering to the OP in exchange for additional General Partner OP Units, which have substantially identical economic terms as the Company’s common stock. Subsequent to September 30, 2019, the net proceeds of the Offering were used to pay amounts owed in connection with the settlement of certain litigation, as described in Note 10 – Commitments and Contingencies, and for general corporate purposes.
Common Stock Continuous Offering Programs
On September 19, 2016, the Company registeredhas a continuous equity offering program (the “Prior Program”) pursuant to which the Company could offer and sell, from time to time, in “at-the-market” offerings or certain other transactions, shares of Common Stock with an aggregate gross sales price of up to $750.0 million, through its sales agents. As of and during the nine months ended September 30, 2019, the Company had issued 5.0 million shares under the Prior Program, at a weighted average price per share of $8.42, for gross proceeds of $42.5 million. The weighted average price per share, net of offering costs, was $8.30, for net proceeds of $41.8 million.
On April 15, 2019, the Company established a new continuous equity offering program pursuant to which the Company may sell shares of Common Stock having an aggregate offering price of up to $750.0 million from time to time through April 15, 2022 in “at-the-market” offerings or certain other transactions ( the “Current ATM(the “ATM Program”). The Current ATM Program replaced the Prior Program. The proceeds from any sale of shares under the Prior Program or the Current ATM Program have been or will be used for general corporate purposes, which may include funding potential acquisitions and repurchasing or repaying outstanding indebtedness. NaN shares have been issued
There were 0 issuances under the Current ATM Program asduring the six months ended June 30, 2020. As of SeptemberJune 30, 2019.2020, the Company had $663.3 million available to be sold under the ATM Program.
Series F Preferred Stock and Series F Preferred OP Units
The Series F Preferred Stock pays cumulative cash dividends at the rate of 6.70% per annum on their liquidation preference of $25.00 per share (equivalent to $1.675 per share on an annual basis). The Series F Preferred Stock was not redeemable by the Company before January 3, 2019, the fifth anniversary of the date on which such Series F Preferred Stock was issued (the “Initial Redemption Date”), except under circumstances intended to preserve the General Partner’s status as a REIT for federal and/or state income tax purposes and except upon the occurrence of a change of control. On and after the Initial Redemption Date, the General Partner may, at its option, redeem shares of the Series F Preferred Stock, in whole or from time to time in part, at a redemption price of $25.00 per share plus, subject to exceptions, any accrued and unpaid dividends thereon to the date fixed for redemption. The shares of Series F Preferred Stock have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless the General Partner redeems or otherwise repurchases them or they become convertible and are converted into Common Stock (or, if applicable, alternative consideration). The Series F Preferred Stock trades on the NYSE under the symbol VER PF.PRF. The Series F Preferred Units contain the same terms as the Series F Preferred Stock.
On July 5, 2019, the Company redeemed 4.0As of June 30, 2020, there were approximately 30.9 million shares of Series F Preferred Stock, representing approximately 9.33% of the issued and outstanding preferred shares. The shares of Series F Preferred Stock were redeemed at a redemption price of $25.00 per share.
As of September 30, 2019, there were approximately 38.9 million shares of Series F Preferred Stock (and approximately 38.930.9 million corresponding General Partner Series F Preferred Units)Units and 49,766 Limited Partner Series F Preferred Units issued and outstanding. On June 22, 2020, the Company issued notice that it would redeem $150.0 million of Series F Preferred Stock, plus accrued and unpaid dividends thereon.
Limited Partner OP Units
As of June 30, 2020 the Operating Partnership had approximately 0.8 million Limited Partner OP Units outstanding.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 20192020 (Unaudited) – (Continued)

Limited Partner OP Units
As of September 30, 2019 the Operating Partnership had approximately 20.8 million Limited Partner OP Units outstanding.
On July 16, 2019, the SEC filed a complaint in United States District Court for the Southern District of New York charging the Company’s Former Manager (including certain of its principals) with securities law violations for, among other things, wrongfully obtaining certain incentive fees in connection with mergers entered into by the Company in 2013 and 2014. Simultaneously with the filing of the complaint, the parties entered into proposed settlement agreements, without admitting or denying the allegations of the complaint, pursuant to which 2.9 million Limited Partner OP Units were surrendered by the Former Manager and the Former CFO to the Company. The Company recorded the surrender of the Limited Partner OP Units as a reduction to litigation and non-routine costs, net, of $26.5 million, using a per share price of $9.08, during the second quarter of 2019. In addition to surrendering the 2.9 million Limited Partner OP Units, the Former Manager and the Former CFO relinquished any rights to $6.4 million of dividends on those units, which the Company had withheld payment of since October 2015. During the second quarter of 2019, the Company reduced additional paid-in capital, distributions payable and non–controlling interests in the accompanying financial statements of VEREIT, Inc. and made a corresponding reduction in distributions payable in the General Partner's common equity and Limited Partner's common equity in the accompanying financial statements of the OP. The court approved the settlements on July 17, 2019 and the Limited Partner OP Units were subsequently canceled on July 26, 2019. As discussed in Note 10 – Commitments and Contingencies, the contribution to the Class Action Settlement by the Company’s Former Manager included the value of substantially all of these surrendered Limited Partner OP Units and dividends.
Subsequent to September 30, 2019, the Former Manager and Former CFO surrendered an aggregate of 19.9 million Limited Partner OP Units to the Company to fund a portion of their contributions toward the Class Action Settlement. As of September 30, 2019, the surrendered Limited Partner OP Units were outstanding and the Company recorded a payable of $192.0 million, using a per unit price of $9.66. The Company reduced additional paid-in capital and non-controlling interests in the accompanying financial statements of VEREIT, Inc. and reduced the General Partner’s common equity and Limited Partner’s common equity in the accompanying financial statements of the OP. On October 15, 2019, the Company contributed cash to the settlement fund equal to the value of the surrendered Limited Partner OP Units and the surrendered Limited Partner OP Units were canceled. Refer to Note 10 – Commitments and Contingencies for additional information.
Common Stock Dividends
On August 5, 2019,May 18, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.1375$0.077 per share of Common Stock (equaling an annualized dividend rate of $0.55 per share) for the thirdsecond quarter of 20192020 to stockholders of record as of SeptemberJune 30, 2019,2020, which was paid on OctoberJuly 15, 2019.2020. An equivalent distribution by the Operating Partnership is applicable per OP Unit.
Share Repurchase ProgramsProgram
On May 3, 2018, the Company’s Board of Directors terminated its prior share repurchase program and authorizedThe Company has a new program (the “2018 Share Repurchase Program”) that permitted the Company to repurchase up to $200.0 million of its outstanding Common Stock through May 3, 2019, as market conditions warranted. On May 6, 2019, the Company’s Board of Directors authorized a new share repurchase program (the “2019 Share Repurchase Program”) that permits the Company to repurchase up to $200.0 million of its outstanding Common Stock through May 6, 2022. Under the programs,2019 Share Repurchase Program, repurchases can be made through open market purchases, privately negotiated transactions, structured or derivative transactions, including accelerated stock repurchase transactions, or other methods of acquiring shares in accordance with applicable securities laws and other legal requirements. The share repurchase programs do2019 Share Repurchase Program does not obligate the Company to make any repurchases at a specific time or in a specific situation and repurchases are subject toinfluenced by prevailing market conditions, the trading price of the Common Stock, the Company’s financial performance and other conditions. Shares of Common Stock repurchased by the Company under the share repurchase programs,2019 Share Repurchase Program, if any, will be returned to the status of authorized but unissued shares of Common Stock.
There were 0 share repurchases under the 2018 Share Repurchase Program or 2019 Share Repurchase Program during the ninesix months ended SeptemberJune 30, 2019.2020. As of SeptemberJune 30, 2019,2020, the Company had $200.0 million available for share repurchases under the 2019 Share Repurchase Program and had repurchased 0.8 million shares of Common Stock in multiple open market transactions, at a weighted average share price of $6.95 for an aggregate purchase price of $5.6 million under the 2018 Share Repurchase Program.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

Note 13 —Discontinued Operations
On November 13, 2017, the Company entered into a purchase and sale agreement (as amended by that certain First Amendment to the Purchase and Sale Agreement, dated as of February 1, 2018, the “Cole Capital Purchase and Sale Agreement”). On February 1, 2018, the Company completed the sale of its investment management segment, Cole Capital, under the terms of the Cole Capital Purchase and Sale Agreement. Substantially all of the Cole Capital segment operations were conducted through Cole Capital Advisors, Inc. (“CCA”), an Arizona corporation and a wholly owned subsidiary of the OP. The OP sold all of the issued and outstanding shares of common stock of CCA and certain of CCA’s subsidiaries to CCA Acquisition, LLC (the “Cole Purchaser”), an affiliate of CIM Group, LLC for approximately $120.0 million paid in cash at closing. The Company could also receive up to an aggregate of $80.0 million of additional fees over the next five years if future revenues of Cole Capital exceed a specified dollar threshold (the “Net Revenue Payments”). There were 0 Net Revenue Payments received or earned since the sale. Substantially all of the Cole Capital segment financial results are reflected in the financial statements as discontinued operations. There were no discontinued operations or cash flows for the three and nine months ended September 30, 2019 and the three months ended September 30, 2018.
The following is a summary of the financial information for discontinued operations for the nine months ended September 30, 2018 (in thousands):
  Nine Months Ended September 30, 2018
Revenues:  
Offering-related fees and reimbursements $1,027
Transaction service fees and reimbursements 334
Management fees and reimbursements 6,452
Total revenues
7,813
Operating expenses:  
Cole Capital reallowed fees and commissions 602
Transaction costs (1)
 (654)
General and administrative 4,450
Total operating expenses
4,398
Operating income
3,415
Loss on disposition and assets held for sale (1,785)
Income before taxes
1,630
Benefit from income taxes 2,095
Income from discontinued operations, net of income taxes
$3,725

(1)The negative balance for the nine months ended September 30, 2018 is a result of estimated costs accrued in prior periods that exceeded actual expenses incurred.
The following is a summary of cash flows related to discontinued operations for the nine months ended September 30, 2018 (in thousands):
  Nine Months Ended September 30, 2018
Cash flows related to discontinued operations:  
Cash flows used in operating activities $(10,438)
Cash flows from investing activities $122,915


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

Note 14 –Related Party Transactions and Arrangements
Cole Capital
Through February 1, 2018, the Company was contractually responsible for managing CCIT II, CCIT III, Cole Credit Property Trust IV, Inc. (“CCPT IV”), CCPT V, and CIM Income NAV, Inc. (formerly known as Cole Real Estate Income Strategy (Daily NAV), Inc.) (“INAV” and collectively with CCIT II, CCIT III, CCPT IV, CCPT V, the “Cole REITs”) affairs on a day-to-day basis, identifying and making acquisitions and investments on the Cole REITs’ behalf, and recommending to the respective board of directors of each of the Cole REITs an approach for providing investors with liquidity. In addition, the Company was responsible for raising capital for certain Cole REITs, advised them regarding offerings, managed relationships with participating broker-dealers and financial advisors, and provided assistance in connection with compliance matters relating to the offerings. The Company received compensation and reimbursement for services relating to the Cole REITs’ offerings and the investment, management and disposition of their respective assets, as applicable. As discussed in Note 13 —Discontinued Operations, on February 1, 2018, the Company completed the sale of Cole Capital. The Cole Capital financial results are reflected in the consolidated statements of operations as discontinued operations for all periods presented. As a result of the sale of Cole Capital, the Cole REITs are no longer affiliated with the Company.
During the three and nine months ended September 30, 2018, the Company earned less than $0.1 million and $8.0 million, respectively of offering-related, transaction services and management fees and reimbursements from the Cole REITs. NaN such fees were earned during the three and nine months ended September 30, 2019.
Investment in the Cole REITs
On February 1, 2018, the Company sold certain of its equity investments, recognizing a gain of $0.6 million, which is included in other income (loss), net in the accompanying consolidated statement of operations for the nine months ended September 30, 2018, to the Cole Purchaser, retaining interests in CCIT II, CCIT III and CCPT V. As of September 30, 2019 and December 31, 2018, the Company owned aggregate equity investments of $7.6 million and $7.8 million, respectively, in CCIT II, CCIT III and CCPT V. During the nine months ended September 30, 2018, the Company recognized a gain of $5.1 million related to the change in fair value from the carrying value at December 31, 2017, which is included in other income (loss), net in the accompanying consolidated statement of operations. During the nine months ended September 30, 2019, the Company recognized a loss of $0.3 million related to the change in fair value from the carrying value at December 31, 2018, which is included in other income (loss), net in the accompanying consolidated statements of operations.
Note 1513 – Net Income (Loss) Per Share/Unit
Net Income (Loss) Per Share
The General Partner’s unvested Restricted Shares contain non-forfeitable rights to dividendsfollowing is a summary of the basic and are considered to be participating securities in accordance with U.S. GAAP and, therefore, are included in the computation of earningsdiluted net income per share under the two-class computation method. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. The unvested Restricted Shares are not allocated losses as the awards do not have a contractual obligation to share in losses offor the General Partner. The two-class computation method is an earnings allocation formula that determines earnings per sharePartner for each class of shares of Common Stockthe three and participating securities according to dividends declared (or accumulated)six months ended June 30, 2020 and participation rights2019 (dollar amounts in undistributed earnings.thousands):
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020
2019
Net income $54,239
 $292,284
 $141,102
 $363,255
Net income attributable to non-controlling interests (31) (6,626) (86) (8,293)
Net income attributable to the General Partner 54,208

285,658

141,016
 354,962
Dividends to preferred shares and units (12,948) (17,973) (25,896) (35,946)
Net income available to common stockholders used in basic net income per share 41,260

267,685

115,120
 319,016
Income attributable to limited partners 39
 6,656
 101
 8,351
Net income used in diluted net income per share $41,299

$274,341

$115,221
 $327,367
         
Weighted average number of Common Stock outstanding - basic 1,078,366,566
 973,723,139
 1,078,152,183
 971,106,256
Effect of Limited Partner OP Units and dilutive securities 1,186,500
 26,054,596
 1,370,957
 25,636,664
Weighted average number of common shares - diluted 1,079,553,066

999,777,735

1,079,523,140

996,742,920
         
Basic and diluted net income per share attributable to common stockholders $0.04
 $0.27

$0.11
 $0.33


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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SeptemberJune 30, 2019 (Unaudited) – (Continued)

Net Income (Loss) Per Share
The following is a summary of the basic and diluted net loss per share computation for the General Partner for the three and nine months ended September 30, 2019 and 2018 (dollar amounts in thousands):
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019
2018
Loss from continuing operations $(741,529) $(73,942) $(378,274) $(119,597)
Noncontrolling interests’ loss from continuing operations 15,089
 1,825
 6,796
 2,969
Net loss from continuing operations attributable to the General Partner (726,440)
(72,117)
(371,478) (116,628)
Dividends to preferred shares and units (16,578) (17,973) (52,524) (53,919)
Net loss from continuing operations available to the General Partner (743,018) (90,090) (424,002) (170,547)
Earnings allocated to participating securities —
 (11) —
 (33)
Income from discontinued operations, net of income taxes —
 —
 —
 3,725
Income from discontinued operations attributable to limited partners —
 —
 —
 (89)
Net loss used in basic and diluted net loss per share $(743,018)
$(90,101)
$(424,002) $(166,944)
         
Weighted average number of Common Stock outstanding - basic and diluted 978,982,729
 967,798,401
 973,760,599
 969,521,946
         
Basic and diluted net loss per share from continuing operations attributable to common stockholders $(0.76) $(0.09) $(0.43) $(0.18)
Basic and diluted net income per share from discontinued operations attributable to common stockholders $—
 $—
 $—
 $0.00
Basic and diluted net loss per share attributable to common stockholders (1)
 $(0.76) $(0.09)
$(0.43) $(0.17)

(1)Amounts may not total due to rounding.
The following were excluded from diluted net loss per share attributable to common stockholders, as the effect would have been antidilutive:
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Weighted average unvested Restricted Shares and Restricted Stock Units (1)
 2,350,536
 354,882
 1,782,311
 165,353
Weighted average stock options (1)
 772,924
 54,827
 433,849
 —
Limited Partner OP Units 20,793,463
 23,715,908
 22,720,350
 23,728,741
_______________________________________________
(1)Net of assumed repurchases in accordance with the treasury stock method.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020 (Unaudited) – (Continued)

Net Income (Loss) Per Unit
The following is a summary of the basic and diluted net lossincome per unit attributable to common unitholders, which includes all common General Partner unitholders and limited partner unitholders, for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019 (dollar amounts in thousands):
  Three Months Ended September 30, Nine Months Ended September 30,

 2019 2018 2019 2018
Loss from continuing operations $(741,529) $(73,942) $(378,274) $(119,597)
Noncontrolling interests’ loss from continuing operations 25
 57
 83
 113
Net loss from continuing operations attributable to the Operating Partnership (741,504) (73,885) (378,191) (119,484)
Dividends to preferred units (16,578) (17,973) (52,524) (53,919)
Net loss from continuing operations available to the Operating Partnership (758,082)
(91,858)
(430,715) (173,403)
Earnings allocated to participating units —
 (11) —
 (33)
Income from discontinued operations, net of income taxes —
 —
 —
 3,725
Net loss used in basic and diluted net loss per unit $(758,082) $(91,869) $(430,715) $(169,711)
         
Weighted average number of common units outstanding - basic and diluted 999,776,192
 991,514,309
 996,480,948
 993,250,687
         
Basic and diluted net loss per unit from continuing operations attributable to common unitholders $(0.76) $(0.09) $(0.43) $(0.18)
Basic and diluted net income per unit from discontinued operations attributable to common unitholders $—
 $—
 $—
 $0.00
Basic and diluted net loss per unit attributable to common unitholders (1)
 $(0.76)
$(0.09)
$(0.43)
$(0.17)
  Three Months Ended June 30, Six Months Ended June 30,

 2020 2019 2020 2019
Net income $54,239
 $292,284
 $141,102
 $363,255
Net loss attributable to non-controlling interests 8
 30
 15
 58
Net income attributable to the Operating Partnership 54,247
 292,314
 141,117
 363,313
Dividends to preferred units (12,948) (17,973) (25,896) (35,946)
Net income used in basic and diluted net income per unit $41,299
 $274,341
 $115,221
 $327,367
         
Weighted average number of common units outstanding - basic 1,079,148,736
 997,406,933
 1,078,934,928
 994,806,018
Effect of dilutive securities 404,330
 2,370,802
 588,212
 1,936,902
Weighted average number of common units - diluted 1,079,553,066
 999,777,735
 1,079,523,140
 996,742,920
         
Basic and diluted net income per unit attributable to common unitholders $0.04

$0.27

$0.11

$0.33

(1)Amounts may not total due to rounding.
The following were excluded from diluted net loss per unit attributable to common unitholders, as the effect would have been antidilutive:
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Weighted average unvested Restricted Shares and Restricted Stock Units (1)
 2,350,536
 354,882
 1,782,311
 165,353
Weighted average stock options (1)
 772,924
 54,827
 433,849
 —
_______________________________________________
(1)Net of assumed repurchases in accordance with the treasury stock method.
Note 1614 – Subsequent Events
The following events occurred subsequent to September 30, 2019:
Real Estate Investment Activity
From OctoberJuly 1, 20192020 through October 23, 2019July 22, 2020 the Company disposed of 23 properties, for an aggregate gross sales price of $7.3$1.1 million, both of which 2 properties were held for sale with an aggregate carrying value of $5.2$1.1 million as of SeptemberJune 30, 20192020, and an estimated gainloss of $1.8$0.4 million.

There were 0 acquisitions from July 1, 2020 through July 22, 2020.
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Table of ContentsSeries F Preferred Stock Redemption
VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019 (Unaudited) – (Continued)

Class Action Settlement
In connection with the Class Action Settlement, on October 15, 2019,On July 22, 2020, the Company funded $966.3redeemed 6.0 million which included the Company’s contributionshares of $738.5 million. The contribution from the Company’s Former Manager and Former CFO was satisfied with a combination of (i) Limited Partner OP Units held by the Former Manager and Former CFO, (ii) amounts due related to dividends on certain of such Limited Partner OP Units previously withheld from distribution, (iii) the value of substantially allSeries F Preferred Stock, representing approximately 19.44% of the Limited Partner OP Unitsissued and dividends surrendered to the Company in July 2019 asoutstanding shares of Series F Preferred Stock. The shares of Series F Preferred Stock were redeemed at a resultredemption price of a settlement by the Former Manager with the SEC,$25.00 per share plus accrued and (iv) cash paid by the Former Manager and Former CFO. On October 15, 2019, the Company contributed $227.8 million for such OP Units and dividends and canceled the19.9 million Limited Partner OP Units surrendered by the Former Manager and Former CFO to the Company.unpaid dividends.
Common Stock Dividend
On NovemberAugust 5, 2019,2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.1375$0.077 per share of Common Stock (equaling an annualized dividend rate of $0.55 per share) for the fourththird quarter of 20192020 to stockholders of record as of December 31, 2019,September 30, 2020, which will be paid on JanuaryOctober 15, 2020. An equivalent distribution by the Operating Partnership is applicable per OP Unit.
Preferred Stock Dividend
On NovemberAugust 5, 2019,2020, the Company’s Board of Directors declared a monthly cash dividend to holders of the Series F Preferred Stock for JanuaryOctober 2020 through MarchDecember 2020 with respect to the periods included in the table below. The corresponding record and payment dates for each month's Series F Preferred Stock dividend are also shown in the table below. The dividend for the Series F Preferred Stock accrues daily on a 360-day annual basis equal to an annualized dividend rate of $1.675 per share, or $0.1395833 per 30-day month.
Period Record Date Payment Date
DecemberSeptember 15, 20192020 - JanuaryOctober 14, 2020 JanuaryOctober 1, 2020 JanuaryOctober 15, 2020
JanuaryOctober 15, 2020 - FebruaryNovember 14, 2020 FebruaryNovember 1, 2020 February 18,November 16, 2020
FebruaryNovember 15, 2020 - MarchDecember 14, 2020 MarchDecember 1, 2020 March 16,December 15, 2020





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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. We make statements in this section that are forward-looking statements within the meaning of the federal securities laws.statements. Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a complete discussion of such risk factors, see "Risk Factors" in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2019, as supplemented in Part II, Item 1A. of this Quarterly Report on Form 10-Q. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in the “Part I – Financial Information,” including the notes to the consolidated financial statements contained therein.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” (within the meaning of the federal securities laws, Section 27A of the Securities Act, and Section 21E of the Exchange Act) thatwhich reflect our expectations and projections aboutregarding future events and plans, future financial condition, results of operations, liquidity and business, including acquisitions, rent receipts, rent relief requests and rent relief granted, debt levels, maturities and refinancings, liquidity, the payment of future dividends and the impact of the coronavirus (COVID-19) on our future results, performance, prospects and opportunities. We have attempted to identify these forward-looking statements bybusiness. Generally, the use of words such as“anticipates,” “assumes,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “targets,” “will,” “seek,” “expects,” “anticipates,” “believes,” “targets,” “intends,” “should,” “estimates,” “could,” “continue,” “assume,” “projects,” “plans” orvariations of such words and similar expressions.expressions identify forward-looking statements. These forward-looking statements are based on information currently available to us and are subject toinvolve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company’s control, that maycould cause actual events and plans or could cause our actualbusiness, financial condition, liquidity and results performance or achievementsof operations to bediffer materially different from any future results, performance or achievementsthose expressed or implied by thesein the forward-looking statements. Further, information regarding historical rent collections should not serve as an indication of future rent collection. These factors include, among other things, those discussed below. We intend for all such forward-looking statementsdisclaim any obligation to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act, as applicable by law. We do not undertake publicly to update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as may be required to satisfy our obligations under federal securitiesby law.
The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those presented in our forward-looking statements:
The uncertain duration and extent of the impact of COVID-19 on our business and the businesses of our tenants (including their ability to timely make rental payments) and the economy generally.
Federal, state or local legislation or regulation that could impact the timely payment of rent by tenants in light of COVID-19.
We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.
We are subject to risks associated with tenant, geographic and industry concentrations with respect to our properties.
We may be subject to risks accompanying the management of our industrial and office partnerships.
Our properties may be subject to impairment charges.
We could be subject to unexpected costs or liabilities that may arise from potential dispositions, including related to limited partnership, tenant-in-common and Delaware statutory trust real estate programs (“1031 real estate programs”) and VEREIT’sour management with respect toof such programs.
We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties andincluding that we may be unable to acquire, dispose of, or lease properties on advantageous terms.terms or at all.
We could beare subject to risks associated with bankruptcies or insolvencies of tenants, from tenant defaults generally or from the unpredictability of the business plans and financial condition of our tenants.
Wetenants, which are subject to risks associated with the pending SEC investigation and civil litigation relating to the findingsheightened as a result of the Audit Committee Investigation, including whether recent settlements in the civil litigation will receive final approval from the court.COVID-19 pandemic.
We have substantial indebtedness, which may affect our ability to pay dividends, and expose us to interest rate fluctuation risk and the risk of default under our debt obligations.
We may be subject to increases in our borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of LIBORLondon Inter-Bank Offer Rate (“LIBOR”) after 2021.
Our overall borrowing and operating flexibility may be adversely affected by the terms and restrictions within the indenture governing the Senior Notes,senior unsecured notes (the “Senior Notes”), and the Credit Agreement governing the terms of the Credit Facility.Facility (as both terms are defined in Liquidity and Capital Resources), and compliance with such covenants may be more difficult as a result of the impact of COVID-19.
Our access to capital and terms of future financings may be affected by adverse changes to our credit rating.
We may be affected by the incurrence of additional secured or unsecured debt.
We may not be able to achieve and maintain profitability.
We may not generate cash flows sufficient to pay our dividends to stockholders or meet our debt service obligations.

We may be affected by risks resulting from losses in excess of insured limits.
We may fail to remain qualified as a REITreal estate investment trust (“REIT”) for U.S. federal income tax purposes.
Compliance with the REIT annual distribution requirements may limit our operating flexibility.
We may be unable to retain or hire key personnel.

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All forward-looking statements should be read in light of the risks identified in Part I, Item 1A. Risk Factors within our Annual Report on Form 10-K for the year ended December 31, 2018.2019, as supplemented in Part II, Item 1A. of this Quarterly Report on Form 10-Q.
We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings:
When we refer to “annualized rental income,” we mean the rental revenue under our leases on operating properties on a straight-line basis, which includes the effect of rent escalations and any tenant concessions, such as free rent, and our pro rata share of such revenues from properties owned by unconsolidated joint ventures. Annualized rental income excludes any adjustments to rental income due to changes in the collectability assessment, contingent rent, such as percentage rent, and operating expense reimbursements. Management uses annualized rental income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized rental income is not indicative of future performance.
When we refer to a “creditworthy tenant,” we mean a tenant that has entered into a lease that we determine is creditworthy and may include tenants with an investment grade or below investment grade credit rating, as determined by major credit rating agencies, or unrated tenants. To the extent we determine that a tenant is a “creditworthy tenant” even though it does not have an investment grade credit rating, we do so based on our management’s determination that a tenant should have the financial wherewithal to honor its obligations under its lease with us. As explained further below, this determination is based on our management’s substantial experience performing credit analysis and is made after evaluating all of a tenant’s due diligence materials that are made available to us, including financial statements and operating data.
When we refer to a “direct financing lease,” we mean a lease that requires specific treatment due to the significance of the lease payments from the inception of the lease compared to the fair value of the property, term of the lease, a transfer of ownership, or a bargain purchase option. These leases are recorded as a net asset on the balance sheet. The amount recorded is calculated as the fair value of the remaining lease payments on the leases and the estimated fair value of any expected residual property value at the end of the lease term.
When we refer to properties that are net leased on a “long term basis,” we mean properties with remaining primary lease terms of generally seven to 10 years or longer on average, depending on property type.
Under a “net lease,” the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant were the owner of the property. There are various forms of net leases, most typically classified as triple net or double net. Triple net leases typically require that the tenant pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs). Double net leases typically require that the tenant pay all operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance), but excludes some or all major repairs (e.g., roof, structure and parking lot). Accordingly, the owner receives the rent “net” of these expenses, rendering the cash flow associated with the lease predictable for the term of the lease. Under a net lease, the tenant generally agrees to lease the property for a significant term and agrees that it will either have no ability or only limited ability to terminate the lease or abate rent prior to the expiration of the term of the lease as a result of real estate driven events such as casualty, condemnation or failure by the landlord to fulfill its obligations under the lease.
When we refer to “operating properties” we mean properties owned and consolidated by the Company, omitting properties (the “Excluded Properties”) for which (i) the related mortgage loan is in default, and (ii) management decides to transfer the properties to the lender in connection with settling the mortgage note obligation. At Septemberand during the three and six months ended June 30, 2019 and 2018,2020, there were no Excluded Properties. At and during the three months ended June 30, 2019, there was one Excluded Property which was an office property comprising 145,186 square feet, of which 6,926 square feet was vacant, with an outstanding principal balance of $19.5 million.

Effective April 1, 2019, the Company determined that the real estate portfolio and economic metrics of operating properties should include the Company's pro rata share of square feet and annualized rental income from the Company's unconsolidated joint ventures, based upon the Company's legal ownership percentage, which may, at times, not equal the Company's economic interest because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. The Company did not update data presented for prior periods as the impact on prior period metrics was immaterial.
As of SeptemberJune 30, 2019,2020, our portfolio was comprised of 3,9263,836 retail, restaurant, office and industrial real estate properties with an aggregate 88.789.2 million square feet, of which 98.9%98.7% was leased, with a weighted-average remaining lease term of 8.48.5 years. Omitting the square feet of one redevelopment property and including the pro rata share of square feet and annualized rental income from the Company’s unconsolidated joint ventures, we owned 3,926 retail, restaurant, office and industrial operating properties with an aggregate of 90.788.9 million square feet, of which 99.0%98.8% was leased, with a weighted-average remaining lease term of 8.48.5 years as of SeptemberJune 30, 2019.2020.

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Overview
VEREIT is a full-service real estate operating company thatwhich owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. The Company has 3,9263,836 retail, restaurant, office and industrial operating properties with an aggregate 90.788.9 million rentable square feet, and economic occupancy rate of 99.0%which 98.8% was leased as of SeptemberJune 30, 2019,2020, with a weighted-average remaining lease term of 8.4 years, omitting the square feet of one redevelopment property and including the pro rata share of square feet and annualized rental income from the Company’s unconsolidated joint ventures.8.5 years.
Operating Highlights and Key Performance Indicators
2019 Activity through June 30, 2020
Operations
Acquired controlling financial interests in 4025 commercial properties for an aggregate purchase price of $260.7$147.1 million, which includes $1.4one land parcel for build-to-suit development and $0.9 million of external acquisition-related expenses that were capitalized. During the three months ended June 30, 2020, the Company acquired a mezzanine position in two last-mile distribution facilities for $10.0 million.
Disposed of 10747 properties, including the sale of sixtwo consolidated properties to two newly-formed joint ventures in which the Company owns a 20% equity interest and one property sold through a foreclosure,office partnership, for an aggregate gross sales price of $926.0$219.2 million, of which the Company’sour share was $905.9$216.7 million, resulting in proceeds of $846.0$204.1 million after closing costs.costs and contributions to the office partnership. The Company recorded a gain of $251.9$34.2 million related to the sales.
CompletedDebt
Closed a public equitysenior note offering, consisting of 94.3$600.0 million sharesaggregate principal amount of Common Stock for net proceeds, after underwriting discounts and offering expenses,the Operating Partnership’s 3.40% Senior Notes due 2028 (the “2028 Senior Notes”).
Repurchased $50.2 million of $886.9 million.the Company’s 3.75% Convertible Senior Notes due 2020.
Redeemed 4.0Repaid $871.3 million shareson our Revolving Credit Facility. As of June 30, 2020, no amounts were outstanding under the Revolving Credit Facility.
•
Total secured debt decreased by$132.6 million, from $1.5 billion to $1.4 billion.
Equity
Issued notice that we would redeem $150.0 million of Series F Preferred Stock representing approximately 9.33% of the issued and outstanding preferred shares. The shares of Series F Preferred Stock were redeemed at a redemption price of $25.00 per share.
Entered into agreements to settle certain outstanding litigation, including the pending Class Action litigation, the SDNY Derivative Action and the remaining Opt-Out Actions.
Entered into forward starting interest rate swaps with a total notional amount of $400.0 million. The swaps are structured to hedge the 10-year Treasury interest rate risk component associated with potential issuance of 10-year public debt.
The Company’s 2019 Senior Notes matured and the principal outstanding of $750.0 million,on July 22, 2020, plus accrued and unpaid interest thereon, was repaid utilizing borrowings under the Credit Facility.dividends thereon.
Declared a quarterly dividend of $0.1375$0.077 per share of Common Stock for the thirdsecond quarter of 2019, representing an annualized dividend rate of $0.55 per share.2020.
Aggregate shares issued under the Prior Program through September 30, 2019 totaled 5.0 million at a weighted average price per share of $8.42, for gross proceeds of $42.5 million. The weighted average price per share, net of offering costs, was $8.30 for net proceeds of $41.8 million. No shares have been issued under the Current ATM Program as of September 30, 2019.





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Real Estate Portfolio Metrics
In managing our portfolio, we are committed to diversification by property type, tenant, geography and industry. Below is a summary of our operating property type diversification and our top ten concentrations as of SeptemberJune 30, 2019,2020, based on annualized rental income of $1.1 billion.
chart-79a824d51fa65099960.jpgchart-b0419152fedc5d20aa9.jpg
chart-923063af6cc15e838d0.jpgchart-c95abece0de35a168a4.jpg
chart-a0252716b48d5eee833.jpgchart-c02fb06a3254513fac6.jpg
(1)Includes redevelopment property, billboards, construction in progress, land and parking lots.

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chart-c37a25199e4b58498ac.jpgchart-a1479162e80152fbb28.jpg

chart-9a33c892de6d53aba0a.jpgchart-bda526ce29ee5e65b74.jpg

Our financial performance is influenced by the timing of acquisitions and dispositions and the operating performance of our real estateoperating properties. The following table shows the property statistics of our operating properties as of SeptemberJune 30, 20192020 and 2018:2019:
 September 30, 2019 September 30, 2018 June 30, 2020 June 30, 2019
Portfolio Metrics  
Operating properties 3,926 4,021 3,836 3,950
Rentable square feet (in millions) (1)
 90.7 93.9 88.9 90.6
Economic occupancy rate (1)(2)
 99.0% 99.1% 98.8% 99.0%
Investment-grade tenants (3)
 39.5% 42.7%
Investment-grade tenants (1)(3)
 37.0% 39.6%

(1)As of SeptemberJune 30, 2020, rentable square feet, economic occupancy rate and annualized rental income include the Company’s pro rata share of square feet and annualized rental income from the Company’s unconsolidated joint ventures. As of June 30, 2019, rentable square feet and economic occupancy rate exclude one redevelopment property and include the Company's pro rata share of square feet from the Company's unconsolidated joint ventures.property.
(2)Economic occupancy rate equals the sum of square feet leased (including space subject to month-to-month agreements) divided by rentable square feet.
(3)Based on annualized rental income of our real estate portfolio as of SeptemberJune 30, 20192020 and 2018,2019, respectively. Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. The ratings may reflect those assigned by Standard & Poor’s Financial Services LLC or Moody’s Investor Service, Inc. to the lease guarantor or the parent company, as applicable. As of September 30, 2019, includes the Company’s pro rata share of annualized rental income from the Company’s unconsolidated joint ventures.
The following table shows the economic metrics of our operating properties as of SeptemberJune 30, 20192020 and 2018:2019:
 September 30, 2019 September 30, 2018 June 30, 2020 June 30, 2019
Economic Metrics  
Weighted-average lease term (in years) (1)
 8.4 8.9 8.5 8.6
Lease rollover: (2)(1)
  
Annual average 6.3% 5.4% 6.0% 5.8%
Maximum for a single year 8.7% 8.0% 10.9% 7.7%

(1)Based on annualized rental income of our real estate portfolio as of September 30, 2019.
(2)Through the end of the next five years as of the respective reporting date.


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Operating Performance
In addition, management uses the following financial metrics to assess our operating performance (dollar amounts in thousands, except per share amounts). Data presented includes both continuing operations, which primarily represent the Company's real estate operations, and discontinued operations, which represent substantially all of Cole Capital, except as otherwise indicated.
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 2018
Financial Metrics        
Revenues (1)
 $302,985
 $313,866
 $931,871
 $944,604
Loss from continuing operations $(741,529) $(73,942) $(378,274) $(119,597)
Income from discontinued operations, net of income taxes $—
 $—
 $—
 $3,725
         
Loss from continuing operations attributable to common stockholders per diluted share(2)
 $(0.76) $(0.09) $(0.43) $(0.18)
Income from discontinued operations attributable to common stockholders per diluted share(2)
 $—
 $—
 $—
 $0.00
Net loss attributable to common stockholders per diluted share(2)(4)
 $(0.76) $(0.09) $(0.43) $(0.17)
         
FFO attributable to common stockholders and limited partners from continuing operations(3)
 $(657,147) $38,055
 $(287,805) $279,765
FFO attributable to common stockholders and limited partners from discontinued operations(3)
 —
 —
 —
 3,725
FFO attributable to common stockholders and limited partners(3)
 $(657,147) $38,055
 $(287,805) $283,490
         
AFFO attributable to common stockholders and limited partners from continuing operations(3)
 $177,580
 $178,529
 $533,082
 $538,177
AFFO attributable to common stockholders and limited partners from discontinued operations(3)
 —
 —
 —
 3,202
AFFO attributable to common stockholders and limited partners(3)
 $177,580
 $178,529
 $533,082
 $541,379
         
AFFO attributable to common stockholders and limited partners from continuing operations per diluted share(3)
 $0.18
 $0.18
 $0.53
 $0.54
AFFO attributable to common stockholders and limited partners from discontinued operations per diluted share(3)
 $—
 $—
 $—
 $0.00
AFFO attributable to common stockholders and limited partners per diluted share(3)
 $0.18
 $0.18
 $0.53
 $0.54
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
Financial Metrics        
Total revenues $278,997
 $312,188
 $578,179
 $629,068
         
Net income $54,239
 $292,284
 $141,102
 $363,255
Basic and diluted net income per share attributable to common stockholders $0.04
 $0.27
 $0.11
 $0.33
         
FFO attributable to common stockholders and limited partners (1)

$155,943
 $179,038
 $337,765
 $369,342
AFFO attributable to common stockholders and limited partners (1)

$161,083
 $177,099
 $342,057
 $355,502
AFFO attributable to common stockholders and limited partners per diluted share (1)
 $0.15
 $0.18
 $0.32
 $0.36

(1)Represents continuing operations as presented on the statements of operations in accordance with U.S. GAAP.
(2)
See Note 15 –Net Income (Loss) Per Share/Unit for calculation of net income (loss) per share.
(3)
See the “Non-GAAP Measures” section below for descriptions of our non-GAAP measures and reconciliations to the most comparable measure in accordance with generally accepted accounting principles in the United States (“U.S. GAAP measure.GAAP”).


Results of Operations
COVID-19 has impacted all states where our tenants operate their businesses or where our properties are located, and measures taken to prevent or remediate COVID-19, including “shelter-in-place” or “stay-at-home” orders, other quarantine mandates and restriction on the operations of certain types of businesses issued by local, state or federal authorities, have had an adverse effect on our business and the businesses of our tenants. While our business was not materially impacted during the six months ended June 30, 2020 from the COVID-19 pandemic, our rent collection was impacted and for the second quarter was 85% of rental revenue on an annualized basis. The full extent of the future impact of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations is uncertain.
Our dedicated property type asset management teams have been in discussion with tenants to understand the impact of COVID-19 on their businesses. As of July 27, 2020, we received rent relief requests, most often in the form of rent deferral requests, from tenants representing approximately 33% of rental revenue on an annualized basis, including some tenants that paid April, May, June and/ or July rent. These rent relief requests vary in timeframes, but are concentrated within the two to four month range. We evaluate each tenant request on a case-by-case basis, including by analyzing metrics such as industry segment, corporate financial health, rent coverage, and the tenant's liquidity. As of July 27, 2020, we collected the following percent of rent, which included contractual rent and recoveries paid by tenants to cover estimated tax, insurance and common area maintenance expenses, including our pro rata share of such amounts related to properties owned by unconsolidated joint ventures:
 April May June 
July (1)
Rent collection86% 85% 86% 91%

(4)(1)Amounts may not total dueIncludes approximately 2% to rounding.be paid in arrears by a Government agency tenant.

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TableDuring the three months ended June 30, 2020, we had $3.6 million of Contents

Resultsrental revenue related to deferral agreements executed through June 30, 2020 and $5.3 million related to deferral agreements executed from July 1, 2020 through July 27, 2020, which qualify for the COVID-19 Lease Concessions Relief. We abated $11.2 million of Operations
On February 1, 2018,second quarter rental revenue pursuant to lease amendments executed through June 30, 2020, which increased the Company sold substantially all of Cole Capital, which is presented as discontinued operationsweighted average lease term for all periods presented. The Company’s continuing operations represent primarily thosethe related properties, pursuant to the terms of the real estate investment segment. The operating expense reimbursements line item has been combined intoamendments. During the three months ended June 30, 2020, rental revenue was reduced by $13.2 million (4.5% of gross rental revenue), which included (i) $2.1 million of an increase to the general allowance, (ii) $7.4 million for amounts not probable of collection, and (iii) $3.7 million for straight-line rent receivables. Of the $13.2 million reduction to rental revenue for prior periods presentedthe three months ended June 30, 2020, $8.4 million (2.9% of gross rental revenue) was related to be consistent with the current year presentation.impact of the COVID-19 pandemic, of which $0.9 million represented an increase to the general allowance, $3.8 million represented amounts not probable of collection, and $3.7 million was for straight-line rent receivables.
Rental RevenueRevenues
The table below sets forth, for the periods presented, rental revenue information and the dollar amount change year over year (dollar amounts in(in thousands):
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 vs 2018
Increase/(Decrease)		 2019 2018 2019 vs 2018
Increase/(Decrease)
Rental revenue $302,985
 $313,866
 $(10,881) $931,871
 $944,604
 $(12,733)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 vs 2019
Increase/(Decrease)		 2020 2019 2020 vs 2019
Increase/(Decrease)
Revenues:            
Rental $278,576
 $312,043
 $(33,467) $577,162
 $628,886
 $(51,724)
Fees from managed partnerships 421
 145
 276
 1,017
 182
 835
Total revenues $278,997
 $312,188
 $(33,191) $578,179
 $629,068
 $(50,889)
Rental
The decrease in rental revenue of $33.5 million and $51.7 million during the three and ninesix months ended SeptemberJune 30, 20192020, respectively, as compared to the same periods in 20182019 was primarily due to real estate dispositions and rent abatements and reserves related to COVID-19, partially offset by real estate acquisitions. Subsequent to January 1, 2019, the Company acquired 91 occupied properties for an aggregate purchase price of $550.7 million and disposed of 248 consolidated properties for an aggregate sales price of $1.4 billion.

Fees from Managed Partnerships
Fees from managed partnerships consist of fees earned for providing various services to the Company’s unconsolidated joint venture entities. The increase of $0.3 million and $0.8 million during the three and six months ended June 30, 2020, respectively, as compared to the same periods in 2019 was due to fees earned from the industrial partnership and office partnership, which were formed subsequent to January 1, 2019.
Operating Expenses
The table below sets forth, for the periods presented, certain operating expense information and the dollar amount change year over year (dollar amounts in(in thousands):
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 vs 2018
Increase/(Decrease)		 2019 2018 2019 vs 2018
Increase/(Decrease)		 2020 2019 2020 vs 2019
Increase/(Decrease)		 2020 2019 2020 vs 2019
Increase/(Decrease)
Acquisition-related $1,199
 $810
 $389
 $3,169
 $2,496
 $673
 $1,169
 $985
 $184
 $2,692
 $1,970
 $722
Litigation and non-routine costs, net 832,024
 138,595
 693,429
 806,763
 267,422
 539,341
 (118) (3,769) 3,651
 (8,682) (25,261) 16,579
Property operating 30,822
 31,893
 (1,071) 95,703
 93,894
 1,809
 29,098
 32,503
 (3,405) 59,588
 64,881
 (5,293)
General and administrative 14,483
 15,186
 (703) 45,745
 46,713
 (968) 16,120
 16,416
 (296) 31,176
 31,262
 (86)
Depreciation and amortization 115,111
 157,181
 (42,070) 369,688
 487,568
 (117,880) 110,599
 118,022
 (7,423) 234,679
 254,577
 (19,898)
Impairments 3,944
 18,382
 (14,438) 24,240
 36,082
 (11,842) 12,094
 8,308
 3,786
 20,474
 20,296
 178
Restructuring 783
 —
 783
 10,149
 —
 10,149
 —
 290
 (290) —
 9,366
 (9,366)
Total operating expenses $998,366
 $362,047
 $636,319
 $1,355,457
 $934,175
 $421,282
 $168,962
 $172,755
 $(3,793) $339,927
 $357,091
 $(17,164)
Acquisition-Related Expenses
Acquisition-related expenses which consist of allocated internal salaries related to time spent on acquiring commercial properties and costs associated with unconsummated deals, remained relatively constant during the three and nine months ended September 30, 2019, as compared to the same periods in 2018.deals.
Litigation and Non-Routine Costs, Net
Litigation and non-routine costs, net increased $693.4$3.7 million during the three months ended SeptemberJune 30, 2019,2020, as compared to the same period in 2018, which was primarily due to $800.0 million of litigation settlement costs recorded during2019. During the three months ended SeptemberJune 30, 2020, the Company reversed estimated costs accrued in 2019 related to litigation filed as a result ofwhich exceeded actual expenses incurred. During the findings of the Audit Committee Investigation, as discussed in Note 10 – Commitments and Contingencies, as compared to $127.5 million of litigation settlement costs recorded during the same period in 2018.
Litigation and non-routine costs, net increased $539.3 million during the ninethree months ended SeptemberJune 30, 2019, as compared to the same period in 2018. During the nine months ended September 30, 2019, the Company recorded $812.2 million of litigation settlement costs, offset by $48.4 million of insurance recoveries received related to a settlement and release agreement with certain insurance carriers, related to litigation filed as a result of the findings of the Audit Committee Investigation. In addition, the Company recorded $26.5 million of other recoveries related to the surrender of Limited Partner OP Units by principals of the Former ManagerCompany’s former external manager, offset by $22.8 million of fees and certain of its principalscosts associated with litigations.
Litigation and non-routine costs, net increased $16.6 million during the six months ended June 30, 2020, as describedcompared to the same period in Note 12 – Equity.2019. During the ninesix months ended SeptemberJune 30, 2018,2020, the Company reversed $6.8 million of estimated costs accrued in 2019, which exceeded actual expenses incurred of $0.6 million, and recorded $2.5 million of insurance recoveries. During the six months ended June 30, 2019, the Company recorded $217.5$48.4 million of insurance recoveries and $26.5 million of other recoveries related to the surrender of Limited Partner OP Units by principals of the Company’s former external manager, offset by $37.5 million of fees and costs associated with litigations and $12.2 million of litigation settlements related to litigation filed as a result of the findings of the Audit Committee Investigation.settlements.

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Property Operating Expenses
Property operating expenses such as taxes, insurance, ground rent and maintenance include both reimbursable and non-reimbursable property expenses. The decrease in property operating expenses of $1.1$3.4 million and $5.3 million during the three and six months ended SeptemberJune 30, 20192020, respectively, as compared to the same periodperiods in 20182019 was primarily due to real estate dispositions, offset by additional reimbursable ground rent recorded in conjunction with the adoptionimpact of ASC 842 on January 1, 2019.
The increase in property operating expenses of $1.8 million during the nine months ended September 30, 2019 as compared to the same period in 2018 was primarily due to additional reimbursable ground rent recorded in conjunction with the adoption of ASC 842 on January 1, 2019.dispositions.
General and Administrative Expenses
General and administrative expenses remained relatively constant during the three and ninesix months ended SeptemberJune 30, 2019,2020 as compared to the same periods in 2018.2019.

Depreciation and Amortization Expenses
The decrease in depreciation and amortization expenses of $42.1$7.4 million and $117.9$19.9 million during the three and ninesix months ended SeptemberJune 30, 2019,2020, respectively, as compared to the same periods in 20182019 was primarily due to real estate dispositions and furniture and fixtures that were fully depreciated during 2018,2019, as they had reached the end of their useful lives, and real estate dispositions, partially offset by real estate acquisitions.
Impairments
The decreaseImpairments of $14.4$12.1 million and $11.8$8.3 million in impairmentswere recorded during the three months ended June 30, 2020 and 2019, respectively. Impairments of $20.5 million and $20.3 million were recorded during the six months ended June 30, 2020 and 2019, respectively. During the three and six months ended June 30, 2020, certain retail and restaurant properties whose tenants filed for Chapter 11 bankruptcy were identified by management for potential sale or were determined would not be re-leased by the tenant.
Restructuring Expenses
There were no restructuring expenses recorded during the three and ninesix months ended SeptemberJune 30, 2019, respectively, as compared to the same periods in 2018 was primarily due to the various types of properties impaired. The Company impaired 11 and 53 properties during the three and nine months ended September 30, 2019, respectively, as compared to 22 and 53 properties during the same periods in 2018.
Restructuring Expenses
2020. During the three and ninesix months ended SeptemberJune 30, 2019, the Company recorded $0.8$0.3 million and $10.1$9.4 million, respectively, of restructuring expenses related to the reorganization of the business after the sale of its investment management segment and cessation of services performed pursuant to the Services Agreement.terms of a services agreement (the “Services Agreement”) with CCA Acquisition, LLC (the “Cole Purchaser”).
Other (Expense) Income (Loss),and Provision for Income Taxes and Income from Discontinued Operations
The table below sets forth, for the periods presented, certain financial information and the dollar amount change year over year (dollar amounts in(in thousands):
  Three Months Ended September 30, Nine Months Ended September 30,
  2019 2018 2019 vs 2018
Increase/(Decrease)		 2019 2018 2019 vs 2018
Increase/(Decrease)
Interest expense $(67,889) $(69,310) $(1,421) $(208,946) $(210,055) $(1,109)
Gain (loss) on extinguishment and forgiveness of debt, net 975
 90
 885
 (497) 5,339
 (5,836)
Other income (loss), net 2,737
 (947) 3,684
 5,510
 8,082
 (2,572)
Equity in income and gain on disposition of unconsolidated entities 677
 252
 425
 1,682
 1,644
 38
Gain on disposition of real estate and real estate assets held for sale, net 18,520
 45,295
 (26,775) 251,106
 68,451
 182,655
Provision for income taxes (1,168) (1,141) 27
 (3,543) (3,487) 56
Income from discontinued operations, net of income taxes —
 —
 —
 —
 3,725
 (3,725)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 vs 2019
Increase/(Decrease)		 2020 2019 2020 vs 2019
Increase/(Decrease)
Interest expense $(65,613) $(69,803) $(4,190) $(130,309) $(141,057) $(10,748)
Loss on extinguishment and forgiveness of debt, net $(200) $(1,472) $(1,272) $(1,480) $(1,472) $8
Other income, net $778
 $3,030
 $(2,252) $953
 $2,591
 $(1,638)
Equity in income of unconsolidated entities $1,497
 $505
 $992
 $1,743
 $1,005
 $738
Gain on disposition of real estate and real estate assets held for sale, net $8,795
 $221,755
 $(212,960) $34,044
 $232,586
 $(198,542)
Provision for income taxes $(1,053) $(1,164) $(111) $(2,101) $(2,375) $(274)
Interest Expense
InterestThe decrease in interest expense remained relatively constantof $4.2 million and $10.7 million during the three and ninesix months ended SeptemberJune 30, 20192020, respectively, as compared to the same periods in 2018.

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2019 was primarily due to decreases in average debt outstanding and weighted average interest rates. At June 30, 2020, the weighted average interest rate was 4.20%, as compared to 4.52% at June 30, 2019.
Gain (Loss)Loss on Extinguishment and Forgiveness of Debt, Net
The increase of $0.9 milliondecrease in gain (loss)loss on extinguishment and forgiveness of debt, net of $1.3 million during the three months ended SeptemberJune 30, 20192020, as compared to the same period in 2018,2019 was relateddue to a foreclosure saleprepayments of one property, resulting in a gain on forgiveness of debt of $1.0 millionmortgage notes payable during the three months ended SeptemberJune 30, 2019.
Gain (loss)2019 with minimal activity during the same period in 2020. Loss on extinguishment and forgiveness of debt, net decreased $5.8 millionremained relatively constant during the ninesix months ended SeptemberJune 30, 20192020, as compared to the same period in 2018. During the nine months ended September 30, 2019, the Company sold one property through foreclosure, resulting in a gain on forgiveness of debt of $1.0 million. During the nine months ended September 30, 2018, the Company entered into a deed-in-lieu of foreclosure agreement with the lender of a mortgage loan, which was secured by one property, resulting in a gain on forgiveness of debt of $5.2 million.2019.
Other Income, (Loss), Net
The increasedecrease of $3.7$2.3 million and $1.6 million in other income, (loss), net during the three and six months ended SeptemberJune 30, 2019,2020, respectively, as compared to the same periodperiods in 20182019 was primarily due to the loss of $2.4a $2.5 million related to the sale of three CMBS during the three months ended September 30, 2018, with no comparable activity during the same periodpayment received in 2019 and $1.7 million of payments received related to the Company’s bankruptcy claim related to a prior tenant.tenant, with no comparable payments received during in 2020.

Equity in Income of Unconsolidated Entities
The decreaseincrease in equity in income of $2.6$1.0 million in other income (loss), netand $0.7 million during the ninethree and six months ended SeptemberJune 30, 2019,2020, respectively, as compared to the same periodperiods in 20182019, was primarily due to a $5.1 million gain in 2018 from measuring the Company’s investments in CCIT II, CCIT III and CCPT V at fair value after the investments were no longer accounted for using the equity method, a $2.4 million decrease in interest income related to the Company’s investment securities and mortgage notes receivable and a $0.6 million gain recognized upon the sale of certain investments in the Cole REITs with no comparable gains in the same period in 2019, offset by $4.2 million of payments received related to the Company’s bankruptcy claims related to two prior tenants and the loss of $2.4 million related to the sale of three CMBS during the nine months ended September 30, 2018.
Equity in Income and Gain on Disposition of Unconsolidated Entities
The increase of $0.4 million inincreased equity in income from the industrial partnership and gain on disposition of unconsolidated entities during the three months ended September 30, 2019, as compared to the same period in 2018 was primarily due to two newly-formed joint ventures during the nine months ended September 30, 2019, in which the Company owns a 20% equity interest.
Equity in income and gain on disposition of unconsolidated entities remained relatively constant during the nine months ended September 30, 2019, as compared to the same period in 2018.office partnership.
Gain on Disposition of Real Estate and Real Estate Assets Held for Sale, Net
The decrease in gain on disposition of real estate and real estate assets held for sale, net of $26.8$213.0 million during the three months ended SeptemberJune 30, 2019,2020, as compared to the same period in 20182019 was primarily due to the Company’s disposition of 3117 properties excluding one property conveyed to a lender in a deed-in-lieu of foreclosure transaction, for an aggregate sales price of $116.8$67.0 million which resulted in a gain of $18.5$9.0 million during the three months ended SeptemberJune 30, 2019,2020, as compared to the disposition of 3553 properties for an aggregate sales price of $189.5$743.2 million during the same period in 2018,2019, which resulted in a gain of $46.1$222.5 million. During the three months ended SeptemberJune 30, 2019,2020, the Company also recognized a lossrecorded $0.2 million of less than $0.1 millionlosses related to assets classified as held for sale properties, as compared to a loss$0.8 million of $0.8 millionlosses during the same period in 2018.2019.
The increasedecrease in gain on disposition of real estate and real estate assets held for sale, net of $182.7$198.5 million during the ninesix months ended SeptemberJune 30, 2019,2020, as compared to the same period in 2018,2019 was due to the Company’s disposition of 10647 properties excluding one property conveyed to a lender in a deed-in-lieu of foreclosure transaction, for an aggregate sales price of $926.0$219.2 million which resulted in a gain of $251.9$34.2 million during the ninesix months ended SeptemberJune 30, 2019,2020, as compared to the disposition of 11175 properties excluding one property conveyed to a lender in a deed-in-lieu of foreclosure transaction, for an aggregate sales price of $371.0$809.2 million during the same period in 2018,2019, which resulted in a gain of $70.3$233.4 million. During the ninesix months ended SeptemberJune 30, 2019,2020, the Company also recognized a lossrecorded $0.2 million of $0.8 millionlosses related to assets classified as held for sale properties, as compared to a loss of $1.9$0.8 million during the same period in 2018.2019.
Provision for Income Taxes
The provision for income taxes remained relatively constant during the threeconsists of certain state and nine months ended September 30, 2019 as compared to the same periods in 2018.local income and franchise taxes.

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Income from Discontinued Operations, Net of Income Taxes
The decrease in income from discontinued operations, net of income taxes of $3.7 million during the nine months ended September 30, 2019 was due to the completion of the sale of Cole Capital on February 1, 2018.


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Non-GAAP Measures
Our results are presented in accordance with U.S. GAAP. We also disclose certain non-GAAP measures, as discussed further below. Management uses these non-GAAP financial measures in our internal analysis of results and believes these measures are useful to investors for the reasons explained below. These non-GAAP financial measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP.
Funds from Operations and Adjusted Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. (“Nareit”), an industry trade group, has promulgated a supplemental performance measure known as funds from operations (“FFO”), which we believe to be an appropriate supplemental performance measure to reflect the operating performance of a REIT. FFO is not equivalent to our net income or loss as determined under U.S. GAAP.
Nareit defines FFO as net income or loss computed in accordance with U.S. GAAP adjusted for gains or losses from disposition of property, depreciation and amortization of real estate assets, impairment write-downs on real estate, and our pro rata share of FFO adjustments related to unconsolidated partnerships and joint ventures. We calculate FFO in accordance with Nareit’s definition described above.
In addition to FFO, we use adjusted funds from operations (“AFFO”) as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition-related expenses, litigation and non-routine costs, net, loss on disposition of discontinued operations, net revenue or expense earned or incurred that is related to the Services Agreement,services agreement associated with a discontinued operation, gains or losses on sale of investment securities or mortgage notes receivable, payments on fully reserved loan receivables and restructuring expenses. We also exclude certain non-cash items such as impairments of goodwill and intangible assets, straight-line rent, net of bad debt expense related to straight-line rent, net direct financing lease adjustments, gains or losses on derivatives, reserves for loan loss, gains or losses on the extinguishment or forgiveness of debt, non-current portion of the tax benefit or expense, equity-based compensation and amortization of intangible assets, deferred financing costs, premiums and discounts on debt and investments, above-market lease assets and below-market lease liabilities. We omit the impact of the Excluded Properties and related non-recourse mortgage notes from FFO to calculate AFFO. Management believes that excluding these costs from FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. AFFO allows for a comparison of the performance of our operations with other publicly-traded REITs, as AFFO, or an equivalent measure, is routinely reported by publicly-traded REITs, and we believe often used by analysts and investors for comparison purposes.
For all of these reasons, we believe FFO and AFFO, in addition to net income (loss), as defined by U.S. GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC,U.S. Securities and Exchange Commission (the “SEC”), Nareit, nor any other regulatory body has evaluated the acceptability of the exclusions used to adjust FFO in order to calculate AFFO and its use as a non-GAAP financial performance measure.

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The table below presents FFO and AFFO for the three and ninesix months ended SeptemberJune 30, 20192020 and 20182019 (in thousands, except share and per share data) and includes both continuing operations, which primarily represent the Company's real estate operations, and discontinued operations, which represent substantially all of Cole Capital.:
 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018 2020 2019 2020 2019
Net loss $(741,529) $(73,942) $(378,274) $(115,872)
Dividends on non-convertible preferred stock (16,578) (17,973) (52,524) (53,919)
Net income $54,239
 $292,284
 $141,102
 $363,255
Dividends on Series F Preferred Stock (12,948) (17,973) (25,896) (35,946)
Gain on disposition of real estate assets and interests in unconsolidated joint ventures, net (18,520) (45,226) (251,113) (69,083) (8,795) (221,762) (34,044) (232,593)
Depreciation and amortization of real estate assets 114,695
 156,527
 368,172
 485,260
 110,207
 117,616
 233,852
 253,477
Impairment of real estate 3,944
 18,382
 24,240
 36,082
 12,094
 8,308
 20,474
 20,296
Proportionate share of adjustments for unconsolidated entities 841
 287
 1,694
 1,022
 1,146
 565
 2,277
 853
FFO attributable to common stockholders and limited partners (657,147) 38,055
 (287,805) 283,490
 155,943
 179,038
 337,765
 369,342
Acquisition-related expenses 1,199
 810
 3,169
 2,496
 1,169
 985
 2,692
 1,970
Litigation and non-routine costs, net 832,024
 138,595
 806,763
 266,768
 (118) (3,769) (8,682) (25,261)
Loss on disposition of discontinued operations —
 —
 —
 1,785
Loss (gain) on investment securities and mortgage notes receivable 28
 3,336
 493
 (2,302)
(Gain) loss on derivative instruments, net —
 (69) 58
 (447)
Loss (gain) on investments 142
 (5) 683
 465
Loss on derivative instruments, net —
 24
 —
 58
Amortization of premiums and discounts on debt and investments, net (1,177) (1,123) (3,833) (2,332) (362) (1,392) (1,051) (2,656)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities 692
 1,058
 2,034
 3,233
 788
 611
 1,536
 1,342
Net direct financing lease adjustments 411
 483
 1,230
 1,525
 372
 410
 737
 819
Amortization and write-off of deferred financing costs 3,319
 3,926
 10,159
 15,451
 2,898
 3,346
 5,739
 6,840
Deferred and other tax benefit (1)
 —
 —
 —
 (1,855)
(Gain) loss on extinguishment and forgiveness of debt, net (975) (90) 497
 (5,339)
Straight-line rent, net of bad debt expense related to straight-line rent (2)
 (5,470) (8,720) (20,925) (31,382)
Loss on extinguishment and forgiveness of debt, net 200
 1,472
 1,480
 1,472
Straight-line rent (3,404) (8,043) (5,458) (15,455)
Equity-based compensation 2,924
 3,003
 9,317
 9,493
 3,857
 3,706
 6,459
 6,393
Restructuring expenses 783
 —
 10,149
 —
 —
 290
 —
 9,366
Other amortization and non-cash charges, net 1,138
 (726) 2,324
 354
Other adjustments, net 441
 617
 669
 1,186
Proportionate share of adjustments for unconsolidated entities (128) (9) (512) (24) (843) (196) (512) (384)
Adjustments for Excluded Properties (41) —
 (36) 465
 —
 5
 —
 5
AFFO attributable to common stockholders and limited partners $177,580
 $178,529
 $533,082
 $541,379
AFFO attributable to common stockholders and limited partners (1)
 $161,083
 $177,099
 $342,057

$355,502
                
Weighted-average shares of Common Stock outstanding - basic 978,982,729
 967,798,401
 973,760,599
 969,521,946
 1,078,366,566
 973,723,139
 1,078,152,183
 971,106,256
Effect of Limited Partner OP Units and dilutive securities (3)
 23,916,923
 24,125,616
 24,936,510
 23,894,095
Weighted-average shares of Common Stock outstanding - diluted (4)
 1,002,899,652
 991,924,017
 998,697,109
 993,416,041
Effect of weighted-average Limited Partner OP Units and dilutive securities (2)
 1,186,500
 26,054,596
 1,370,957
 25,636,664
Weighted-average shares of Common Stock outstanding - diluted (3)
 1,079,553,066
 999,777,735
 1,079,523,140
 996,742,920
                
AFFO attributable to common stockholders and limited partners per diluted share
 $0.18
 $0.18
 $0.53
 $0.54
 $0.15
 $0.18
 $0.32

$0.36

(1)This adjustment
AFFO for the three months ended June 30, 2020, includes rental revenue that represents deferred rent of $3.6 million related to deferral agreements executed through June 30, 2020, and $5.3 million related to deferral agreements executed from July 1, 2020 through July 27, 2020, which qualify for the non-current portion of the benefit from income taxes in order to show only the current portion of the benefit from income taxes as an impact to AFFO. COVID-19 Lease Concessions Relief.
(2)Upon adoptionDilutive securities include unvested restricted share awards (“Restricted Shares”), unvested restricted stock units (“Restricted Stock Units”) and stock options (“Stock Options”). During the first quarter of ASC 842, the Company recognizes2019, all changes in the collectability assessment for an operating lease as an adjustment to rental revenue and does not record bad debt expense for uncollectible accounts.Restricted Shares vested.
(3)Limited Partner OP Units includes 19.9 million Limited Partner OP Units surrendered to the Company by the Former Manager and the Former CFO in connection with the Class Action Settlement and subsequently canceled on October 15, 2019. Dilutive securities include unvested Restricted Shares, unvested Restricted Stock Units and stock options.

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(4)Weighted-average shares for all periods presented exclude the effect of the convertible debt as the Company would expect to settle the debt with cash and any shares underlying Restricted Stock Units that are not issuable based on the Company’s level of achievement of certain performance targets through the respective reporting period.

Liquidity and Capital Resources
General
Our principal liquidity needs for the next twelve months and beyond are to:
fund normal operating expenses;
fund potential capital expenditures, tenant improvements and leasing costscosts;
meet debt service and principal repayment obligations, including balloon payments on maturing debt;
pay dividends;
pay litigation costs and expenses (including any settlements and judgments); and
fund property acquisitions.
We expect to be able to satisfy these obligations using one or more of the following sources:
cash flow from operations;
proceeds from real estate dispositions;
utilization of the existing Revolving Credit Facility;
cash and cash equivalents balance; and
issuance of VEREIT debt and equity securities.
Common Stock OfferingCOVID-19
On September 26, 2019,In light of COVID-19, we have taken certain steps to preserve and ensure adequate access to liquidity including (i) temporarily ceased property acquisitions, and monitoring necessary capital expenditures and planned build-to-suit development projects, (ii) reduced the quarterly cash dividend beginning the second quarter of 2020, (iii) closed on the senior note offering, consisting of $600.0 million aggregate principal amount of 3.40% Senior Notes due 2028, and (iv) amended the Credit Agreement. As a result of measures undertaken by the Company, completedwe do not currently expect liquidity constraints. However, the financial impact of COVID-19 could still have a public equity offering (the "Offering"), selling a totalmaterial and adverse effect on our results of 94.3 million shares of Common Stock, which included the full exercise of the underwriters' optionoperations, liquidity and cash flows subsequent to purchase additional shares, for net proceeds, after underwriting discounts and offering expenses, of $886.9 million. The Company contributed the net proceeds from this offeringJune 30, 2020, in particular due to the OP in exchange for additional General Partner OP Units, which have substantially identical economic terms as the Company’s common stock. Subsequentpotential inability of our tenants to September 30, 2019, the net proceedssatisfy their rent obligations and inability of the Offering were used to pay amounts owed in connection with the settlement of certain litigation, as described in Note 10 – Commitments and Contingencies, and for general corporate purposes.
Common Stock Continuous Offering Programs
On September 19, 2016, the Company registered the Prior Program pursuant to which the Company could offer and sell, from time to time, in “at-the-market” offerings or certain other transactions, shares of Common Stock with an aggregate gross sales price of up to $750.0 million, through its sales agents. As of and during the nine months ended September 30, 2019, the Company had issued 5.0 million shares under the Prior Program, at a weighted average price per share of $8.42, for gross proceeds of $42.5 million. The weighted average price per share, net of offering costs, was $8.30, for net proceeds of $41.8 million. The proceeds from the sale of shares were used for general corporate purposes, which may include funding potential acquisitions and repurchasing or repaying outstanding indebtedness.
On April 15, 2019, the Company established the Current ATM Program, which replaced the Company’s Prior Program. The proceeds from any sale of shares in the Current ATM Program will be used for general corporate purposes, which may include funding potential acquisitions and repurchasing or repaying outstanding indebtedness. No shares have been issued under the Current ATM Program as of September 30, 2019, and an aggregate gross sales price of up to $750.0 million, through its sales agents, is available.
Share Repurchase Programs
On May 3, 2018, the Company’s Board of Directors terminated its prior share repurchase program and authorized the 2018 Share Repurchase Program, which permitted the Company to repurchase uprenew leases, lease vacant space or re-let space as leases expire on favorable terms, or at all. The effect of COVID-19 may also negatively impact our future compliance with financial covenants in our Credit Facility, indentures governing our Senior Notes and other debt agreements and result in a default and acceleration of indebtedness which could negatively impact our ability to $200.0 millionmake additional borrowings under our Credit Facility. The financial impact of its outstanding Common Stock through May 3, 2019, as market conditions warranted. On May 6, 2019,COVID-19 could also negatively affect our ability to pay dividends or fund acquisitions in the Company’s Board of Directors authorized the 2019 Share Repurchase Program that permits the Company to repurchase up to $200.0 million of its outstanding Common Stock through May 6, 2022.
There were no share repurchases under the 2018 Share Repurchase Program or 2019 Share Repurchase Program during the nine months ended September 30, 2019. As of September 30, 2019, the Company had $200.0 million available for share repurchases

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under the 2019 Share Repurchase Program through the program’s expiration date of May 6, 2022. Shares of Common Stock repurchased by the Company, if any, will be returned to the status of authorized but unissued shares of Common Stock.
Series F Preferred Stock and Series F Preferred OP Units
On July 5, 2019, the Company redeemed 4.0 million shares of its Series F Preferred Stock, representing approximately 9.33% of its issued and outstanding shares. The shares of Series F Preferred Stock were redeemed at a redemption price of $25.00 per share. As of September 30, 2019, there were approximately 38.9 million shares of Series F Preferred Stock (and approximately 38.9 million corresponding Series F Preferred Units that were issued to the General Partner) and 49,766 Limited Partner Series F Preferred Units that were issued and outstanding.future.
Disposition Activity
As part of our effort to optimize our real estate portfolio by focusing on holding core assets, during the ninesix months ended SeptemberJune 30, 2019,2020, the Company disposed of 10747 properties, including the sale of sixtwo consolidated properties to the Industrial Partnership in which the Company owns a 20% equity interest and one property sold through foreclosure,office partnership, for an aggregate gross sales price of $926.0$219.2 million, of which the Company’sour share was $905.9$216.7 million, resulting in consolidated proceeds of $846.0$204.1 million after closing costs.costs and contributions to the office partnership. We expect to continue to explore opportunities to sell additional properties to provide us further financial flexibility, andhowever, due to fund property acquisitions.current economic circumstances, we may not be able to dispose of properties on advantageous terms or at all.
Credit Facility
Summary and Obligations
On May 23, 2018, the Company,General Partner, as guarantor, and the Operating Partnership,OP, as borrower, entered into a Credit Agreementcredit agreement with Wells Fargo Bank, National Association as administrative agent and the other lenders party thereto that allows(the “Credit Agreement”). The Credit Agreement provided for maximum borrowings of $2.9 billion, originally consisting of a $2.0 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $900.0 million unsecured term loan facility (the “Credit Facility Term Loan,” together with the Revolving Credit Facility, the “Credit Facility”). Effective December 27, 2019, the Company reduced the amount available under its Revolving Credit Facility from $2.0 billion to $1.5 billion. On May 27, 2020, the Operating Partnership and the Company, entered into Amendment No. 1 to the Credit Agreement (the “Amendment”) which, among other things, modifies the measurement period for certain financial covenants (and relevant associated definitions) from either the prior quarterly period annualized or the prior six month period to the four consecutive fiscal quarter period most recently ending.
As of June 30, 2020, no amounts were outstanding under the Revolving Credit Facility and athe full $900.0 million Credit Facility Term Loan. As of September 30, 2019, the Revolving Credit Facility had no outstanding balance and $900.0 million had beenwas drawn on the Credit Facility Term Loan. The maximum aggregate dollar amount of letters of credit that may be outstanding at any one time under the Credit Facility is $50.0 million. As of SeptemberJune 30, 2019,2020, there were no letters of credit outstanding were $3.9 million.outstanding.

The Revolving Credit Facility generally bears interest at an annual rate of LIBOR plus 0.775% to 1.55% or Base Rate plus 0.00% to 0.55% (based upon ourthe General Partner’s then current credit rating). “Base Rate” is defined as the highest of the prime rate, the federal funds rate plus 0.50% or a floating rate based on one month LIBOR plus 1.0%, determined on a daily basis. The Credit Facility Term Loan generally bears interest at an annual rate of LIBOR plus 0.85% to 1.75%, or Base Rate plus 0.00% to 0.75% (based upon ourthe General Partner’s then current credit rating). In addition, the Credit Agreement provides the flexibility for interest rate auctions, pursuant to which, at the Company’s election, the Company may request that lenders make competitive bids to provide revolving loans, which competitive bids may be at pricing levels that differ from the foregoing interest rates.
Credit Facility Covenants
The Credit Facility requires restrictions on corporate guarantees, as well as the maintenance of certain financial covenants. The key financial covenants in the Credit Facility, as defined and calculated per the terms of the Credit Agreement include maintaining the following:
Unsecured Credit Facility Key Covenants Required
Ratio of total indebtedness to total asset value ≤ 60%
Ratio of adjusted EBITDA to fixed charges ≥ 1.5x
Ratio of secured indebtedness to total asset value ≤ 45%
Ratio of unsecured indebtedness to unencumbered asset value ≤ 60%
Ratio of unencumbered adjusted NOI to unsecured interest expense ≥ 1.75x
The Company believes that it was in compliance with the financial covenants pursuant to the Credit Agreement and is not restricted from accessing any borrowing availability under the Credit Facility as of SeptemberJune 30, 2019.

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2020.
Corporate Bonds
Summary and Obligations
On February 6, 2019,June 29, 2020, the Company’s 2019Company closed a senior note offering, consisting of $600.0 million aggregate principal amount of 3.40% Senior Notes matured anddue 2028. The OP used the principal outstandingnet proceeds from the offering of $750.0$591.1 million plus accrued and unpaid interest thereon, were repaid, utilizingafter underwriting discounts, before offering expenses, for the following: (i) to repay borrowings under its Revolving Credit Facility, (ii) for the Credit Facility.repurchase of $50.2 million of its 3.75% Convertible Senior Notes due 2020 and (iii) for the redemption of 6.0 million shares Series F Preferred Stock subsequent to June 30, 2020, as discussed in Note 14 – Subsequent Events.
As of SeptemberJune 30, 2019,2020, the OPOperating Partnership had $2.65$3.45 billion aggregate principal amount of Senior Notes outstanding. The indenture governing the Senior Notes requires that the Company be in compliance with certain key financial covenants, including maintaining the following:
Corporate Bond Key Covenants Required
Limitation on incurrence of total debt ≤ 65%
Limitation on incurrence of secured debt ≤ 40%
Debt service coverage ratio ≥ 1.5x
Maintenance of total unencumbered assets ≥ 150%
As of SeptemberJune 30, 2019,2020, the Company believes that it was in compliance with these financial covenants based on the covenant limits and calculations in place at that time.
Convertible Debt
Summary and Obligations
On June 25, 2020, the Company repurchased $50.2 million of its 3.75% Convertible Senior Notes due 2020. As of SeptemberJune 30, 2019,2020, the Company had $402.5$271.6 million aggregate principal amount of the 2020 Convertible Notes outstanding. The OP has issued corresponding identical convertible notes to the General Partner. There were no changes to the terms of the 2020 Convertible Notes during the ninesix months ended SeptemberJune 30, 20192020 and the Company believes that it was in compliance with the financial covenants pursuant to the indenture governing the 2020 Convertible Notes as of SeptemberJune 30, 2019.2020.

Mortgage Notes Payable
Summary and Obligations
As of SeptemberJune 30, 2019,2020, the Company had non-recourse mortgage indebtednessnotes payable of $1.7$1.4 billion, which was collateralized by 412314 properties, reflecting a decrease from December 31, 20182019 of $200.9$132.6 million derived primarily from our disposition activity during the ninesix months ended SeptemberJune 30, 2019.2020, primarily related to prepayments of mortgage notes payable. Our mortgage indebtedness bore interest at the weighted-average rate of 5.05%5.00% per annum and had a weighted-average maturity of 2.92.5 years. We may in the future incur additional mortgage debt on the properties we currently own or use long-term non-recourse financing to acquire additional properties and had no restrictions on the payment of dividends.properties.
The payment terms of our loan obligations vary. In general, only interest amounts are payable monthly with all unpaid principal and interest due at maturity. Some of our loan agreements require that we comply with specific reporting and financial covenants mainly related to debt coverage ratios and loan-to-value ratios. Each loan that has these requirements has specific ratio thresholds that must be met.
Restrictions on Loan Covenants
Our mortgage loan obligations generally restrict corporate guarantees and require the maintenance of financial covenants, including maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios), as well as the maintenance of a minimum net worth. The mortgage loan agreements contain no dividend restrictions except in the event of default or when a distribution would drive liquidity below the applicable thresholds. The Company believes that it was in compliance with the financial covenants under the mortgage loan agreements and had no restrictions on the payment of dividends as of SeptemberJune 30, 2019.

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Derivative Activity
As discussed in Note 6 –Debt and Note 7 –Derivatives and Hedging Activities, during the nine months ended September 30, 2019, the Company entered into interest rate swap agreements with an aggregate $900.0 million notional amount, effective on February 6, 2019 and maturing on January 31, 2023, to hedge interest rate volatility. The swap agreements effectively fixed the Credit Facility Term Loan interest rate, including the spread which can vary based on our credit rating, at approximately 3.84%.
During the three months ended September 30, 2019, the Company entered into forward starting interest rate swaps with a total notional amount of $400.0 million, which were designated as cash flow hedges to hedge the risk of changes in the interest-related cash outflows associated with the potential issuance of long-term debt. The Company is hedging its exposure to the variability in future cash flows for forecasted transactions over a maximum period of 120 months (excluding forecasted transactions related to the payment of variable interest on existing financial instruments), with potential issuance of 10-year public debt.
Litigation
During the nine months ended September 30, 2019, the Company recorded $69.5 million of litigation costs in connection with litigations and investigations that arose from the findings of the Audit Committee Investigation and related matters. The Company also entered into agreements to settle certain outstanding litigation, including the pending class action litigation. In accordance with the terms of the agreements, certain defendants agreed to pay in the aggregate $1.025 billion, comprised of contributions from the Former Manager totaling $225.0 million, $12.5 million from the Company’s Former CFO, $49.0 million from the Company’s former auditor, and the balance of $738.5 million from the Company. The contribution from the Company’s Former Manager and Former CFO were subsequently satisfied with a combination of (i) Limited Partner OP Units held by the Former Manager and the Former CFO, (ii) amounts due related to dividends on certain of such Limited Partner OP Units previously withheld from distribution, (iii) the value of substantially all of the Limited Partner OP Units and dividends surrendered to the Company in July 2019 as a result of a settlement by the Former Manager with the SEC, and (iv) cash paid by the Former Manager and Former CFO. On October 15, 2019, the Company paid $966.3 million to fund its contribution and a portion of the Former Manager and Former CFO’s contributions in connection with their 19.9 million surrendered Limited Partner OP Units and dividends related to certain of such Limited Partner OP Units.2020.
Dividends
On August 5, 2019,May 18, 2020, the Company’s Board of Directors declared areduced the quarterly cash dividend in the second quarter of $0.13752020 to $0.077 per share of Common Stock (equaling an annualized dividend rate of $0.55 per share) for the third quarter of 2019 to stockholders of record as of SeptemberJune 30, 2019,2020, which was paid on OctoberJuly 15, 2019.2020 in an effort to minimize debt due to current economic uncertainty. An equivalent distribution by the Operating Partnership is applicable per OP Unit.
Our Series F Preferred Stock, as discussed in Note 12 – Equity to our consolidated financial statements, will pay cumulative cash dividends at the rate of 6.70% per annum on their liquidation preference of $25.00 per share (equivalent to $1.675 per share on an annual basis).

Common Stock Continuous Offering Program
65
TableThe Company has a continuous equity offering program pursuant to which the Company may sell shares of Contents
Common Stock having an aggregate offering price of up to $750.0 million from time to time through April 15, 2022 in “at-the-market” offerings or certain other transactions (the “ATM Program”). The proceeds from any sale of shares under the ATM Program have been or will be used for general corporate purposes, which may include funding potential acquisitions and repurchasing or repaying outstanding indebtedness.

There were no issuances under the ATM Program during the six months ended June 30, 2020. As of June 30, 2020, the Company had $663.3 million available to be sold under the ATM Program.
Share Repurchase Program
The Company has a share repurchase program (the “2019 Share Repurchase Program”) that permits the Company to repurchase up to $200.0 million of its outstanding Common Stock through May 6, 2022. Under the 2019 Share Repurchase Program, repurchases can be made through open market purchases, privately negotiated transactions, structured or derivative transactions, including accelerated stock repurchase transactions, or other methods of acquiring shares in accordance with applicable securities laws and other legal requirements. The 2019 Share Repurchase Program program does not obligate the Company to make any repurchases at a specific time or in a specific situation and repurchases are influenced by prevailing market conditions, the trading price of the Common Stock, the Company’s financial performance and other conditions. Shares of Common Stock repurchased by the Company under the 2019 Share Repurchase Program program, if any, will be returned to the status of authorized but unissued shares of Common Stock.
There were no share repurchases under the 2019 Share Repurchase Program during the six months ended June 30, 2020. As of June 30, 2020, the Company had $200.0 million available for share repurchases under the 2019 Share Repurchase Program.

Contractual Obligations
The following is a summary of our contractual obligations as of SeptemberJune 30, 20192020 (in thousands):
   Payments due by period
 Total Less than 1 year 1-3 years 4-5 years More than 5 years Total Less than 1 year 1-3 years 4-5 years More than 5 years
Principal payments - mortgage notes $1,716,199
 $2,458
 $630,650
 $416,265
 $666,826
 $1,396,432
 $78,261
 $565,966
 $745,238
 $6,967
Interest payments - mortgage notes (1) (2)
 244,983
 22,098
 141,439
 79,065
 2,381
Interest payments - mortgage notes (1)
 170,026
 35,200
 100,545
 33,154
 1,127
Principal payments - Credit Facility 900,000
 —
 —
 900,000
 —
 900,000
 —
 —
 900,000
 —
Interest payments - Credit Facility (1) (2)
 123,906
 8,827
 70,136
 44,943
 —
 88,217
 16,504
 65,479
 6,234
 —
Principal payments - corporate bonds 2,650,000
 —
 400,000
 —
 2,250,000
 3,450,000
 —
 —
 500,000
 2,950,000
Interest payments - corporate bonds 663,872
 29,472
 226,151
 202,776
 205,473
 890,167
 70,194
 280,776
 260,012
 279,185
Principal payments - convertible debt 402,500
 —
 402,500
 —
 —
 271,633
 271,633
 —
 —
 —
Interest payments - convertible debt 18,196
 3,773
 14,423
 —
 —
 4,640
 4,640
 —
 —
 —
Operating and ground lease commitments 339,777
 5,357
 44,569
 43,800
 246,051
 324,533
 10,751
 44,028
 42,638
 227,116
Other commitments (3)
 5,007
 5,007
 —
 —
 —
Build-to-suit commitments 21,421
 21,421
 —
 —
 —
Total $7,064,440
 $76,992
 $1,929,868
 $1,686,849
 $3,370,731
 $7,517,069
 $508,604
 $1,056,794
 $2,487,276
 $3,464,395
____________________________________
(1)As of September 30, 2019, we had no variable rate mortgage notes and $900.0 million of variable rate debt on the Credit Facility effectively fixed through the use of interest rate swap agreements. We used the effective interest rates fixed under our swap agreements to calculate the debt payment obligations in future periods.
(2)Interest payments due in future periods on the $13.8$15.2 million of variable rate debt were calculated using a forward LIBOR curve.
(3)(2)IncludesAs of June 30, 2020, we had $900.0 million of variable rate debt on the Company’s shareCredit Facility Term Loan effectively fixed through the use of capital expenditures relatedinterest rate swap agreements. We used the interest rates effectively fixed under our swap agreements to an expansion project ofcalculate the property held within an unconsolidated joint venture and letters of credit outstanding.debt payment obligations in future periods.
Cash Flow Analysis for the ninesix months ended SeptemberJune 30, 20192020
Operating Activities – During the ninesix months ended SeptemberJune 30, 2019,2020, net cash provided by operating activities increased $71.5decreased $27.0 million to $505.2$321.0 million from $433.7$348.0 million during the same period in 2018.2019. The increasedecrease was primarily due to a decrease in cash insurance recoveries received of $45.9 million, an increase of $23.2 million in tenant receivables, net of reserves and the $90.0abatement of $11.2 million of rental revenue, offset by a decrease in cash interest payments of $21.1 million, a decrease in litigation settlement payments of $27.9 million and a decrease in restructuring expenses paid during the nine months ended September 30, 2018, as compared to the $54.9 million paid during the same period in 2019, and the receipt of an insurance settlement of $48.4$5.3 million during the ninesix months ended SeptemberJune 30, 2019.2020.
Investing Activities – Net cash provided by investing activities for the ninesix months ended SeptemberJune 30, 2019 increased $356.52020 decreased $504.8 million to $554.3$18.2 million from net cash provided by investing activities of $197.8$523.0 million during the same period in 2018.2019. The increasedecrease was primarily related to an increase of $487.6 milliona decrease in netcash proceeds from the dispositiondispositions of real estate investments during the nine months ended September 30, 2019, as compared to the same period in 2018,and joint ventures of $535.8 million, offset by a decreasean increase in proceeds from the dispositioninvestments in real estate assets of discontinued operations of $123.9$44.4 million.
Financing Activities – Net cash used in financing activities of $63.2$72.9 million decreased $579.6$619.6 million during the ninesix months ended SeptemberJune 30, 20192020 from $642.8$692.5 million during the same period in 2018.2019. The decrease was primarily relateddue to $929.0 million of proceeds received from the issuance of Common Stock in 2019, offset by the repayment$600.0 million of the 2019 Senior Notes of $750.0 million in 2019, a decrease of $111.0 million in net borrowings onduring the Credit Facility from 2018 to 2019 and the redemption of $100.1 million of Series F Preferred Stock in 2019. The decrease is also due to the repayment of convertible notes of $597.5 million in 2018.six months ended June 30, 2020.
Election as a REIT
The General Partner elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2011. As a REIT, except as discussed below, the General Partner generally is not subject to federal income tax on taxable income that it distributes to its stockholders so long as it distributes at least 90% of its annual taxable income (computed without regard to the deduction for dividends paid and excluding net capital gains). REITs are subject to a number of other organizational and operational requirements. Even if the General Partner maintains its qualification for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, federal income taxes on certain income and excise taxes on its undistributed income. We believe we are organized and operating in such a manner as to qualify to be taxed as a REIT for the taxable year ended December 31, 2019.2020.
The Operating Partnership is classified as a partnership for U.S. federal income tax purposes. As a partnership, the Operating Partnership is not a taxable entity for U.S. federal income tax purposes. Instead, each partner in the Operating Partnership is required to take into account its allocable share of the Operating Partnership’s income, gains, losses, deductions and credits for each taxable year. However, the Operating Partnership may be subject to certain state and local taxes on its income and property.

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Under the LPA,limited partnership agreement of the OP, as amended (the “LPA”), the Operating Partnership is required to conduct business in such a manner as to permit the General Partner at all times to qualify as a REIT.
As discussed in Note 13 —Discontinued Operations, on February 1, 2018, the Company completed the sale of its investment management segment, Cole Capital. The Company conducted substantially all of the Cole Capital business activities through a taxable REIT subsidiary (“TRS”). A TRS is a subsidiary of a REIT that is subject to corporate federal, state and local income taxes, as applicable. The Company’s use of a TRS enables it to engage in certain business activities while complying with the REIT qualification requirements and to retain any income generated by these businesses for reinvestment without the requirement to distribute those earnings.
The Company conducts all of its business in the United States and Puerto Rico and, as a result, it files income tax returns in the U.S. federal jurisdiction, Puerto Rico, and various state and local jurisdictions. Certain of the Company’s inter-company transactions that have been eliminated in consolidation for financial accounting purposes are also subject to taxation.
Inflation
We may be adversely impacted by inflation on any leases that do not contain indexed escalation provisions. However, net leases that require the tenant to pay its allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance, may reduce our exposure to increases in costs and operating expenses resulting from inflation.
Related Party Transactions and Agreements
Through the closing of the Cole Capital sale, we were contractually responsible for managing the Cole REITs’ affairs on a day-to-day basis, identifying and making acquisitions and investments on the Cole REITs’ behalf, and recommending to each of the Cole REIT’s respective board of directors an approach for providing investors with liquidity. In addition, we distributed the shares of common stock for certain of the Cole REITs and advised them regarding offerings, managed relationships with participating broker-dealers and financial advisors, and provided assistance in connection with compliance matters relating to the offerings. We received compensation and reimbursement for services relating to the Cole REITs’ offerings and the investment, management and disposition of their respective assets, as applicable. See Note 14 –Related Party Transactions and Arrangements to our consolidated financial statements in this report for a further explanation of the various related party transactions, agreements and fees.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies and Significant Accounting Estimates
Our accounting policies have been established to conform with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the following critical accounting policies govern the significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in our Annual Report on Form 10-K for the year ended December 31, 2018:
•Loss Contingencies;2019:
•Goodwill Impairment;
•Real Estate Investment Impairment; and
•Allocation of Purchase Price of Real Estate Assets

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Market Risk
The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to variable-rate borrowings. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars, treasury locks, options and treasury lock agreementsforwards in order to mitigate our interest rate risk with respect to various debt instruments. We would not hold or issue these derivative contracts for trading or speculative purposes.
Interest Rate Risk
As of SeptemberJune 30, 2019,2020, our debt included fixed-rate debt, including debt that has interest rates that are fixed with the use of derivative instruments, with a fair value and carrying value of $5.9$6.2 billion and $5.7$6.0 billion, respectively. Changes in market interest rates on our fixed rate debt impact the fair value of the debt, but they have no impact on interest incurred or cash flow. For instance, if interest rates rise 100 basis points, and the fixed rate debt balance remains constant, we expect the fair value of our debt to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed-rate debt assumes an immediate 100 basis point move in interest rates from their SeptemberJune 30, 20192020 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed rate debt of $154.2$231.2 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt of $243.6$247.0 million.
As of SeptemberJune 30, 2019,2020, our debt included variable-rate debt with a fair value and carrying value of $13.9$15.3 million and $13.8 $15.2

million, respectively. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their SeptemberJune 30, 20192020 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate debt would increase or decrease our interest expense by $0.1$0.2 million annually. See Note 6 – Debt to our consolidated financial statements.
As of SeptemberJune 30, 2019,2020, our interest rate swaps had a fair value that resulted in liabilities of $48.0$106.5 million. See Note 7 – Derivatives and Hedging Activities to our consolidated financial statements for further discussion.
As the information presented above includes only those exposures that existed as of September��June 30, 2019,2020, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.
These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs and assume no other changes in our capital structure.
In July 2017, the Financial Conduct Authority (“FCA”) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the Secured Overnight Financing Rate (“SOFR”) markets. The Company has contracts that are indexed to LIBOR and is monitoring and evaluating the related risks, which include interest amounts on our variable rate debt as discussed in Note 6 –Debt and the swap rate for our interest rate swaps, as discussed in Note 7 –Derivatives and Hedging Activities. See Item 1A. Risk Factors included in the Company’s Annual Report on Form 10-K for further discussion on risks related to changes in LIBOR reporting practices, the method in which LIBOR is determined, or the use of alternative reference rates.
Credit Risk
Concentrations of credit risk arise when a number of tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company is subject to tenant, geographic and industry concentrations. Any downturn of the economic conditions in one or more of these tenants, geographies or industries could result in a material reduction of our cash flows or material losses to us.
The factors considered in determining the credit risk of our tenants include, but are not limited to: payment history; credit status and change in status (credit ratings for public companies are used as a primary metric); change in tenant space needs (i.e., expansion/downsize); tenant financial performance; economic conditions in a specific geographic region; and industry specific credit considerations. We believe that the credit risk of our portfolio is reduced by the high quality of our existing tenant base, reviews of prospective tenants’ risk profiles prior to lease execution and consistent monitoring of our portfolio to identify potential problem tenants. However, we continue to monitor this in light of the effects of the COVID-19 pandemic.
In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Company is not able to predict when

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LIBOR will cease to be published or precisely how SOFR will be calculated and published. Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payments could change. In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.
The Company has contracts that are indexed to LIBOR and is monitoring and evaluating the related risks, which include interest amounts on the majority of our variable rate debt as discussed in Note 6 –Debt and the swap rate for the majority of our interest rate swaps, as discussed in Note 7 –Derivatives and Hedging Activities. In the event that LIBOR is discontinued, the interest rates will be based on an alternative variable rate as specified in the applicable documentation governing such debt or swaps or as otherwise agreed upon. Such an event would not affect the Company's ability to borrow or maintain already outstanding borrowings or swaps, but the alternative variable rate could be higher and more volatile than LIBOR prior to its discontinuance. Certain risks arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur. The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued. For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.
If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact is likely to vary by contract. If LIBOR is discontinued or if the method of calculating LIBOR changes from its current form, interest rates on our current or future indebtedness may be adversely affected.
While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point. This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.








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Item 4. Controls and Procedures.
I. Discussion of Controls and Procedures of the General Partner
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act)Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of SeptemberJune 30, 20192020 and determined that the disclosure controls and procedures were effective at a reasonable assurance level as of that date.
Changes in Internal Control Over Financial Reporting
No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d -15(f) of the Exchange Act) during the three months ended SeptemberJune 30, 20192020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
II. Discussion of Controls and Procedures of the Operating Partnership
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of SeptemberJune 30, 20192020 and determined that the disclosure controls and procedures were effective at a reasonable assurance level as of that date.
Changes in Internal Control Over Financial Reporting
No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d -15(f) of the Exchange Act) during the three months ended SeptemberJune 30, 20192020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
The information contained under the heading “Litigation” in Note 10 – Commitments and Contingencies to our consolidated financial statements contained herein is incorporated by reference into this Part II, Item 1. Except as set forth therein, as of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.
Item 1A. Risk Factors.Factors.
There have been no material changes fromThe Company is supplementing the risk factors set forthpreviously disclosed in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 2019 with the following risk factor, which should be read in conjunction with the other risk factors presented in the Annual Report on Form 10-K:

The ongoing pandemic of the novel coronavirus (COVID-19) has negatively affected and will likely continue to negatively affect our business, financial condition, liquidity and results of operations and those of our tenants.
The current COVID-19 pandemic has had, and likely will continue to have, repercussions across local, national and global economies and financial markets. COVID-19 has impacted all states where our tenants operate their businesses or where our properties are located and measures taken to control the COVID-19 outbreak, including “shelter-in-place” or “stay-at-home” orders, density limitations and social distancing orders, and other mandates issued by local, state or federal authorities, have had and are continuing to have an adverse effect on our business and the businesses of our tenants. The full extent of the adverse impact on our results of operations, liquidity (including our ability to access capital markets), and our ability to acquire, dispose of, or lease properties for our portfolio, our joint venture partners’ portfolios and/or for the tenant-in-common and Delaware statutory trust real estate programs’ properties that we manage is unknown and will depend on future developments, which are highly uncertain and cannot be predicted. Our results of operations, liquidity and cash flows could be materially affected.
Many of our tenants operate in industries that depend on in-person interactions with their customers to be profitable and to fund their obligations under lease agreements with us. Measures taken to control the COVID-19 outbreak, including “shelter-in-place” or “stay-at-home” orders, density limitations and social distancing orders, and other mandates have, with respect to some portion of our tenants, (i) decreased or prevented our tenants’ customers’ willingness or ability to frequent their businesses, and/or (ii) impacted supply chains from local, national and international suppliers or otherwise delayed the delivery of inventory or other materials necessary for our tenants’ operations, which has adversely affected, and is likely to continue to adversely affect, their ability to maintain profitability and make rental payments to us under their leases. Further, places that have seen increased cases of COVID-19 have reinstituted and/or may in the future reinstitute measures to control and decrease the spread of COVID-19, which may prolong the adverse effect on our business and/or the business of our tenants. In light of the spread of COVID-19 and the resulting economic downturn, tenants have and may in the future, request rent deferrals, rent abatement or early termination of their leases as well as may be forced to temporarily or permanently close or declare bankruptcy which could reduce our cash flows and negatively affect our ability to pay dividends at current levels or at all. Specifically, as a result of COVID-19 and various governmental orders currently in place or reinstituted, a number of our tenants have closed their businesses, are operating with limited operations and/or have submitted requests for rent relief or failed to pay rent. While the Company has worked with tenants requesting rent relief, there can be no guarantee that future rent collections will be received at the same level as historical rent collections. In addition, state, local or industry-initiated efforts, such as tenant rent freezes or suspension of a landlord’s ability to enforce evictions, may continue to affect our ability to collect rent or enforce remedies for the failure to pay rent. We believe our tenants generally do not have a clear contractual right to cease paying rent due to government-mandated closures and we intend to enforce our rights under the lease agreements. However, the ongoing COVID-19 pandemic and the related governmental orders continue to present novel situations for which the ultimate legal outcome cannot be assured and it is possible future governmental action could impact our rights under the lease agreements. The extent of tenant requests and actions and the impact to the Company’s results of operations and cash flows is uncertain and cannot be predicted.
The spread of COVID-19 has caused and is continuing to cause significant financial market volatility and an economic downturn, and the length and extent of such volatility and downturn are unknown and cannot be predicted with any certainty. The financial impact of COVID-19 could have a material and adverse effect on our results of operations, liquidity and cash flows, in particular due to the potential (i) inability of our tenants to satisfy their rent obligations, (ii) inability of the Company to renew leases, lease vacant space or re-let space as leases expire on favorable terms, or at all, and (iii) difficulty for the Company accessing debt and equity capital on attractive terms, or at all. The effect of COVID-19 may also negatively impact our future compliance with financial covenants in our credit facility, indentures governing our senior notes and other debt agreements and result in a

default and acceleration of indebtedness which could negatively impact our ability to make additional borrowings under our credit facility. The financial impact of COVID-19 could also negatively affect our ability to pay dividends or fund acquisitions.
As a result of COVID-19, the Company implemented and is continuing its work-from-home policy to protect its employees. The COVID-19 pandemic and other epidemics, pandemics or other public health crises in the future may also impact the continued service and availability of our personnel, including our executive officers, and our ability to recruit, attract and retain skilled personnel. Operationally, although we have implemented a work-from-home policy, if significant portions of our workforce, including key personnel, are unable to work effectively because of illness, government actions or other restrictions implemented or reinstituted in connection with COVID-19, the impact on our business could be exacerbated.
The full extent of the adverse impact of COVID-19 on our business, financial condition, liquidity and results of operations cannot be predicted and may be material. The magnitude will depend on factors beyond our control including actions taken by local, state, federal and international governments, non-governmental organizations, the medical community, our tenants, and the public in general. Moreover, risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 and filed with the SEC on February 26, 2020 could be heightened as a result of the impact of COVID-19 or any other public health crisis.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Repurchases of Equity Securities
Period 
Total Number of Shares/ Units Redeemed (1)
 Redemption Price Per Share/Unit
July 1, 2019 - July 31, 2019 4,000,000
 $25.00
August 1, 2019 - August 31, 2019 —
 —
September 1, 2019 - September 30, 2019 —
 —
Total 4,000,000
 $25.00

(1)During the three months ended September 30, 2019, the Company redeemed an aggregate of 4.0 million shares of its Series F Preferred Stock.

We are authorized to repurchase shares of the General Partner’s Common Stock to satisfy employee withholding tax obligations related to stock-based compensation. During the second quarter of 2020, there were no repurchased shares of Common Stock or corresponding OP Units made in order to satisfy the minimum tax withholding obligation for state and federal payroll taxes. There were also no share repurchases under the 2018 Share Repurchase Program or 2019 Share Repurchase Program during the third quarter of 2019.Program. See Note 12 – Equity for further discussiondiscussion.
As discussed in Note 14 – Subsequent Events, on July 22, 2020, the company redeemed 6.0 million shares of Series F Preferred Stock, representing approximately 19.44% of the issued and outstanding preferred shares. The shares of Series F Preferred Stock were redeemed at a redemption price of $25.00 per share repurchase programs.plus accrued and unpaid dividends.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.


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Item 6. Exhibits
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended SeptemberJune 30, 20192020 (and are numbered in accordance with Item 601 of Regulation S-K):
Exhibit No. Description
3.1 
Articles of Amendment and Restatement of VEREIT, Inc. (Incorporated by reference to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (Registration No. 333-172205), filed with the SEC on July 5, 2011).
3.2 
Articles Supplementary Relating to the Series A Convertible Preferred Stock of VEREIT, Inc., dated May 10, 2012 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on May 15, 2012).
3.3 
Articles Supplementary Relating to the Series B Convertible Preferred Stock of VEREIT, Inc., dated July 24, 2012 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on July 30, 2012).
3.4 
Articles Supplementary for the Series C Convertible Preferred Stock of VEREIT, Inc., dated June 6, 2013 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on June 12, 2013).
3.5 
Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., effective July 2, 2013 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on July 9, 2013).
3.6 
Articles Supplementary for the Series D Cumulative Convertible Preferred Stock of VEREIT, Inc., filed November 8, 2013 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on November 15, 2013).
3.7 
Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., effective December 9, 2013 (Incorporated by reference to the Company’s Amended Current Report on Form 8-K/A (File No. 001-35263), filed with the SEC on December 20, 2013).
3.8 
Articles Supplementary Relating to the 6.70% Series F Cumulative Redeemable Preferred Stock of VEREIT, Inc., dated January 2, 2014 (Incorporated by reference to the Company’s Registration Statement on Form 8-A (File No. 333-190056), filed with the SEC on January 3, 2014).
3.9 
Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., dated July 28, 2015 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on July 28, 2015).
3.10 
Articles Supplementary to Articles of Amendment and Restatement of VEREIT, Inc., dated August 5, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
3.11 
Amended and Restated Bylaws of VEREIT, Inc., effective as of January 1, 2016 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended September 30, 2015 filed with the SEC on November 5, 2015).
3.12 
Certificate of Limited Partnership of VEREIT Operating Partnership, L.P. (Incorporated by reference to the Company’s Registration Statement on Form S-4 (Registration No. 333-197780-01), filed with the SEC on August 1, 2014).
3.13 
Amendment to Certificate of Limited Partnership of VEREIT Operating Partnership, L.P., effective July 28, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
4.1 
Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., effective January 3, 2014 (Incorporated by reference to the Company’s Amendment No. 2 to its Annual Report on Form 10-K/A (File No. 001-35263), for the year ended December 31, 2013 filed with the SEC on March 2, 2015).
4.2 
First Amendment to Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., dated January 26, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
4.3 
Second Amendment to Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., dated July 28, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
4.4 
Indenture, dated as of July 29, 2013, between American Realty Capital Properties, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on July 29, 2013).
4.5 
First Supplemental Indenture, dated as of July 29, 2013, between American Realty Capital Properties, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on July 29, 2013).
4.6 
Second Supplemental Indenture, dated as of December 10, 2013, between American Realty Capital Properties, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 11, 2013).
4.7 
Form of 3.75% Convertible Senior Notes due 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 11, 2013).
4.8 
Indenture, dated as of February 6, 2014, among ARC Properties Operating Partnership, L.P., Clark Acquisition, LLC, the guarantors named therein and U.S. Bank National Association, as trustee (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 7, 2014).

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Exhibit No. Description
4.9 
Officers’ Certificate, dated as of February 6, 2014 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 7, 2014).
4.10 
First Supplemental Indenture, dated as of February 9, 2015, by and among ARC Properties Operating Partnership, L.P., American Realty Capital Properties, Inc. and U.S. Bank National Association (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 13, 2015).
4.11 
Officer’s Certificate, dated as of June 2, 2016 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).
4.12 
Form of 4.125% Senior Notes due 2021 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).
4.13 
Form of 4.875% Senior Notes due 2026 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).
4.14 
Officers’ Certificate, dated as of August 11, 2017 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on August 11, 2017).
4.15 
Form of 3.950% Senior Notes due 2027 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on August 11, 2017).
4.16 
Officer’s Certificate, dated as of October 16, 2018 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on October 16, 2018).
4.17 
Form of 4.625% Senior Notes due 2025 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on October 16, 2018).
10.1*4.18 
Class Action Stipulation of Settlement,Officer’s Certificate, dated as of September 30,December 4, 2019 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 4, 2019).
4.19
Form of 3.10% Senior Notes due 2029 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 4, 2019).
4.20
Officer’s Certificate, dated as of June 29, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 29, 2020).
4.21
Form of 3.400% Senior Notes due 2028 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 29, 2020).
10.1
Amendment No. 1 to Credit Agreement dated as of May 27, 2020 by and among VEREIT Inc., VEREIT Operating Partnership, L.P., VEREIT, Inc., the lenders parties thereto and Wells Fargo Bank, National Association, as the other parties named therein.
10.2*
Derivative Action Stipulation and Agreementadministrative agent (Incorporated by reference to the Company’s Current Report of Settlement, dated as of September 27, 2019, by and among VEREIT, Inc. andForm 8-K (File No. 001-35263), filed with the other parties named therein.SEC on May 28, 2020).
31.1* 
Certification of the Chief Executive Officer of VEREIT, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* 
Certification of the Chief Financial Officer of VEREIT, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3* 
Certification of the Chief Executive Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4* 
Certification of the Chief Financial Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** 
Written statements of the Chief Executive Officer of VEREIT, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2** 
Written statements of the Chief Financial Officer of VEREIT, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3** 
Written statements of the Chief Executive Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4** 
Written statements of the Chief Financial Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104* Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

_____________________________
*Filed herewith
**In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, each registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
 VEREIT, INC.
 By:/s/ Michael J. Bartolotta
 Michael J. Bartolotta
 
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
 VEREIT OPERATING PARTNERSHIP, L.P.
 By: VEREIT, Inc., its sole general partner
 By:/s/ Michael J. Bartolotta
 Michael J. Bartolotta
 
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Dated: NovemberAugust 5, 20192020

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