Derivative Instruments and Hedging Activities

The Company may enter into ~~derivatives~~derivative contracts as part of its overall financing strategy to manage the Company’s exposure to changes in interest rates associated with current and/or future debt issuances. The Company does not use derivatives for trading or speculative purposes. 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 enters into derivative financial instruments only 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.

The Company records its derivatives on the balance sheet at fair value. All derivatives subject to a master netting arrangement in accordance with the associated master International Swap and Derivatives Association agreement have been presented on a net basis by counterparty portfolio for purposes of balance sheet presentation and related disclosures. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives 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. Hedge accounting generally provides for the matching of the earnings effect of the hedged forecasted transactions in a cash flow hedge. The ~~effective portion of~~ changes in the fair value of derivatives designated and that qualify as cash flow hedges isare recorded in accumulated other comprehensive income (loss). Amounts reported in accumulated other comprehensive income (loss) related to cash flow hedges are reclassified to operations as an adjustment to interest expense as interest payments are made on the hedged debt transaction.

As of ~~September 30, 2017,~~March 31, 2023, the Company had ~~one interest rate floor and five~~11 interest rate swap agreements in place. ~~Two of the swaps, with current notional amounts of $11.8 million and $6.2 million, were designated as cash flow~~

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~~hedges associated with the Company’s secured, variable‑rate mortgage note payable due in 2019 (Note 4). One~~Eight of the interest rate swaps has a notional amount of $100 million and was designated as a cash flow hedge of the Company’s $100 million variable-rate bank term loan due in 2019 (Note 4). The remaining two interest rate swaps and related interest rate floor transactionswap agreements have an aggregate notional amount of ~~$100~~$800.0 million and are designated as cash flow hedges of the Company’s $800.0 million floating-rate bank term loan due in April 2027. Of these, one has a notional amount of $200.0 million and matures in April 2029 and seven, with an aggregate notional amount of $600.0 million, mature in April 2027. The remaining three interest rate swap agreements have a notional amount of $250.0 millioneach, or an aggregate notional amount of $750.0 million, and were designated as a cash flow ~~hedge~~hedges of the ~~Company’s $100 million variable-rate bank~~Company's floating-rate secured term loan due in ~~2021~~February 2025 which had an outstanding balance of $1.5 billion as of March 31, 2023 (Note 4). These interest rate swap agreements mature in August 2023, November 2023 and February 2024, respectively.

In May 2023, the Company entered into two interest rate swap agreements with an aggregate notional amount of $325.0 million (Note 4); these swaps were designated as cash flow hedges of the Company’s floating-rate unsecured revolving credit facility which matures in February 2027.

Fair Value Measurement

The Company estimates the fair value of financial and non-financial assets and liabilities based on the framework established in fair value accounting guidance. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows:

●

Level 1—Quoted market prices in active markets for identical assets and liabilities that the Company has the ability to access.

●

Level 2—Significant inputs that are observable, either directly or indirectly. These types of inputs would include quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets in inactive markets and ~~market‑corroborated~~market-corroborated inputs.

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●

Level 3—Inputs that are unobservable and significant to the overall fair value measurement of the assets or liabilities. These types of inputs include the Company’s own assumptions.

Share-based Compensation

~~Share‑based Compensation~~

~~Directors~~Historically, directors and ~~key~~ employees of the Company ~~have~~had been granted ~~long‑term~~long-term incentive awards, including restricted stock awards ~~(RSAs)~~(“RSAs”) and restricted stock unit awards ~~(RSUs)~~(“RSUs”), which ~~provide~~provided such directors and employees with equity interests as an incentive to remain in the Company’s service and ~~to align~~aligned their interests with those of the Company’s stockholders.

~~The Company estimates~~On February 3, 2023, we closed the ~~fair value~~Merger. Under the terms of ~~RSAs~~the Merger Agreement, effective immediately prior to the merger effective time:

●

each outstanding award of restricted stock automatically became fully vested and all restrictions and repurchase rights thereon lapsed, with the result that all shares of common stock represented thereby were considered outstanding for all purposes under the merger agreement and received an amount in cash equal to $32.25 per share (the ‘Merger Consideration”), less required withholding taxes.

●

outstanding awards of performance-based RSUs automatically became earned and vested with (a) approximately 53% of the maximum number of shares of common stock subject to the award vesting for performance-based RSUs granted in 2020, (b) approximately 50% of the maximum number of shares of common stock subject to the award vesting for performance-based RSUs granted in 2021 and (c) approximately 33% of the maximum number of shares of common stock subject to the award vesting for performance-based RSUs granted in 2022, and thereafter were cancelled and, in exchange therefor, each holder of any such cancelled vested performance-based RSUs ceased to have any rights with respect thereto, except the right to receive as of the merger effective time, in consideration for the cancellation of such vested performance unit and in settlement therefor, an amount in cash equal to the product of (1) the Merger Consideration and (2) the number of so-determined earned performance shares subject to such vested performance-based RSUs, without interest, less required withholding taxes. In addition, on the Closing Date, each holder of performance-based RSUs received an amount equivalent to all cash dividends that would have been paid on the number of so-determined earned shares of the Company’s common stock subject to such performance-based RSUs as if they had been issued and outstanding from the date of grant up to, and including, the merger effective time, less required withholding taxes.

In conjunction with the accelerated vesting of outstanding equity awards, the compensation expense for equity-based payments was $16.4 million which was presented “on-the-line” at the ~~date of grant and recognizes that amount in general and administrative expense on the condensed consolidated statements of income ratably over the vesting period at the greater~~closing of the amount amortized on a straight‑line basis or the amount vested. The fair value of the RSAs is based on the per-share price of the common stock on the date of the grant. Prior to the Company’s IPO, the fair value was based on the per‑share price of the common stock issued in the Company’s private equity offerings. During the nine months ended September 30, 2017, the Company granted RSAs representing 120,140 shares of restricted common stock to its directors and key employees. During the same period, RSAs representing 213,233 shares of previously issued restricted stock vested and RSAs representing 9,307 shares of previously issued restricted stock were forfeited. In connection with the vesting of the RSAs, the Company repurchased 56,097 shares as a result of participant elections to surrender common shares to the Company to satisfy statutory tax withholding obligations under the Company’s equity-based compensation plans. As of September 30, 2017, the Company had 357,316 shares of restricted common stock outstanding.Merger.

The Company values the RSUs (which contain both a market condition and a service condition) using a Monte Carlo simulation model on the date of grant and recognizes that amount in general and administrative expense on the condensed consolidated statements of income on a tranche by tranche basis ratably over the vesting periods. During the nine months ended September 30, 2017, the Company awarded 373,719 RSUs to its executive officers. At September 30, 2017, there were 1,093,153 RSUs outstanding.

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Income Taxes

As a REIT, the Company generally will not be subject to federal income tax. It is still subject, however, to state and local income taxes and to federal income and excise tax on its undistributed income. Following the Merger, the Company's new ownership structure and status as a privately held REIT caused multiple state income tax jurisdictions to view the Company as a captive REIT. Within the jurisdictions where the Company is treated as a captive REIT, the dividends paid deduction may be disallowed, resulting in state income tax liabilities to which the Company was not previously subject when it was publicly traded.

STORE Investment Corporation is the Company’s wholly owned taxable REIT subsidiary ~~(TRS)~~(“TRS”) created to engage in ~~non‑qualifying~~non-qualifying REIT activities. The TRS is subject to federal, state and local income taxes.

Management of the Company determines whether any tax positions taken or expected to be taken meet the ~~“more‑likely‑than‑not”~~“more-likely-than-not” threshold of being sustained by the applicable federal, state or local tax authority. Certain state tax returns filed for ~~2012~~2018 and tax returns filed for ~~2013~~2019 through ~~2016~~2022 are subject to examination by these jurisdictions. As of ~~September 30, 2017 and December~~March 31, ~~2016,~~2023, management concluded that there is no tax liability relating to uncertain income tax positions. The Company’s policy is to recognize interest related to any underpayment of income taxes as interest expense and to

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recognize any penalties as general and administrative ~~expenses.~~expense. There was no accrual for interest or penalties at ~~September 30, 2017~~March 31, 2023 or December 31, ~~2016.~~2022.

Net Income Per Common Share

Net income per common share has been computed for STORE Capital Corporation pursuant to the guidance in the FASB ASC Topic 260, Earnings Per Share. The guidance requires the classification of the Company’s unvested restricted common shares, which contain rights to receive ~~non‑forfeitable~~non-forfeitable dividends, as participating securities requiring the ~~two‑class~~two-class method of computing net income per common share. The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per common share (dollars in thousands):


	Predecessor
	Period from January 1, 2023 through February 2, 2023		Three Months Ended March 31, 2022
Numerator:
Net income	$	25,787	$	87,022
Less: Earnings attributable to unvested restricted shares		(41)		(102)
Net income used in basic and diluted income per share	$	25,746	$	86,920
Denominator:
Weighted average common shares outstanding		282,684,998		275,463,866
Less: Weighted average number of shares of unvested restricted stock		(446,847)		(460,593)
Weighted average shares outstanding used in basic income per share		282,238,151		275,003,273
Effects of dilutive securities:
Add: Treasury stock method impact of potentially dilutive securities (a)		100,254		—
Weighted average shares outstanding used in diluted income per share		282,338,405		275,003,273

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Numerator:













Net income

$
28,580

$
36,343

$
121,030

$
91,385

Less: earnings attributable to unvested restricted shares

(105)

(133)

(320)

(380)

Net income used in basic and diluted income per share

$
28,475

$
36,210

$
120,710

$
91,005

Denominator:

Weighted average common shares outstanding

190,015,850

153,602,720

174,856,940

146,967,323

Less: Weighted average number of shares of unvested restricted stock

(359,755)

(458,994)

(375,182)

(475,706)

Weighted average shares outstanding used in basic income per share

189,656,095

153,143,726

174,481,758

146,491,617

Effects of dilutive securities:

Add: Treasury stock method impact of potentially dilutive securities (a)

387,012

318,322

—

255,577

Weighted average shares outstanding used in diluted income per share

190,043,107

153,462,048

174,481,758

146,747,194

(a)

~~(a)~~

For the period from January 1, 2023 to February 2, 2023, excludes 197,026 shares, and for the three months ended ~~September 30, 2017 and 2016,~~March 31, 2022, excludes ~~110,001 shares and 216,141 shares, respectively, and for the nine months ended September 30, 2017 and 2016, excludes 106,265 shares and 196,446~~144,661 shares, respectively, related to unvested restricted shares as the effect would have been antidilutive.

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Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or the SEC. The Company adopts the new pronouncements as of the specified effective date. When permitted, the Company may elect to early adopt the new pronouncements. Unless otherwise discussed, these new accounting pronouncements include technical corrections to existing guidance or introduce new guidance related to specialized industries or entities and, therefore, will have minimal, if any, impact on the Company’s financial position, results of operations or cash flows upon adoption.

In ~~May 2014, with subsequent updates in 2015 and 2016,~~March 2020, the FASB issued ASU ~~2014-09,~~ ~~Revenue from Contracts with Customers~~2020-04, Reference Rate Reform (Topic ~~606),~~ which establishes a principles-based approach for accounting for revenue from contracts with customers. The standard does not apply to revenue recognition for lease contracts or to the interest income recognized from loans receivable, which together represent over 99%848): Facilitation of the ~~Company’s revenue.~~Effects of Reference Rate Reform on Financial Reporting. ASU ~~2014-09~~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 ~~effective for the Company on January 1, 2018 with early adoption permitted~~optional and ~~allows for full retrospective or modified retrospective methods of adoption.~~may be elected over time as reference rate reform activities occur. In accordance with the Company’s implementation plan for adoption, it has evaluated its revenue streams and identified the very few that fall within the scope of this new accounting standard including any impact to the accounting for sales of real estate assets. The Company expects to complete its in-depth review of the revenue contracts and related performance obligations in the fourth quarter of 2017 and finalize the revision of its internal accounting procedures and controls around the revenue recognition process. The Company currently expects to adopt the standard on January 1, 2018 using the modified retrospective method for transition under the standard, in which case the cumulative effect of applying the standard, if any, would be recognized at the date of initial application; the Company currently does not anticipate a material cumulative effect adjustment. This new revenue guidance includes changes to the accounting for sales of real estate properties; however, based on the Company’s analysis, the new standard is not expected to have a material impact on the Company’s recognition of real estate sales and resulting recognition of a gain or loss. The Company will consider whether any additional disclosures required upon the adoption of this standard are applicable to the Company’s financial statements.

~~In February 2016,~~December 2022, the FASB issued ASU ~~2016-02,~~ ~~Leases~~2022-06, Reference Rate Reform (Topic ~~842)~~ ~~to amend~~848): Deferral of the accounting for leases. The new standard requires lessees to classify leases as either finance or operating leases based on certain criteria and record a right-of-use asset and a lease liability for all leases with a termSunset Date of ~~greater than 12 months regardless~~Topic 848, which amended the sunset date of their classification. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The standard also eliminates current real estate-specific provisions and changes the guidance ~~on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. Both lessees and lessors are permitted~~in Topic 848 to ~~make an election~~December 31, 2024 from December 31, 2022. During the first quarter of 2020, the Company elected to apply ~~a package~~the hedge accounting expedients related to probability and the assessments of ~~practical expedients available~~effectiveness for ~~implementation under~~future LIBOR-indexed cash flows to assume that the ~~standard. The accounting applied by a lessor is largely unchanged under ASU 2016-02; however,~~index upon which future hedged transactions will be based matches the ~~standard requires that lessors expense,~~index on ~~an as-incurred basis, certain initial direct costs that are not incremental in negotiating a lease. Under existing standards, certain~~the corresponding derivatives. Application of these ~~costs are capitalizable and, therefore, this new standard may result in these costs being expensed as incurred after adoption; during~~expedients preserves the first nine months of 2017, the Company capitalized $1.5 million of initial direct costs which are included in other assets on the condensed consolidated balance sheet. Although primarily a lessor, the Company is also a lessee under several ground lease arrangements and under its corporate office lease. The Company has completed its initial inventory and evaluation of these leases and expects that it will be required to recognize a right-of-use asset and a lease liability for the present value of the minimum lease payments. The Company is in the process of preparing and reviewing the initial estimates of the amount of its right-of-use assets and lease liabilities; based on the Company’s current list of contracts under which it is a lessee, the Company estimates that its right-of-use assets to be recognized upon adoption will be less than 1% of total assets. Approximately 98% of the Company’s lease contracts (under which the Company is the lessor) are “triple-net” leases, which means that its tenants are responsible for making the payments to third parties for operating expenses such as, property taxes, insurance and common area maintenance (“CAM”) costs associated with the properties the Company leases to them. Under the current lease accounting guidance, these payments made by its tenants to third parties are excluded from lease payments and rental revenue. Upon adoption of the new lease accounting standard in 2019, these lease executory cost payments will be accounted for as activities or costs that are not components of the lease contract. As a result, the Company may be required to show these payments made by its tenants on a gross basis (for example, both as property tax expense and as corresponding revenue from the tenant who makes the payment directly to the third party) in its consolidated statements of income. Although there is not expected to be any impact to net income or cash flows as a result of a gross presentation, it would have the impact of increasing both reported revenues and property expenses. The Company is continuing to quantify the impact of this potential gross up and will evaluate any

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ongoing implementation guidance available on this topic. The standard will also require new disclosures within the notes accompanying the consolidated financial statements. This standard will be effective for the Company on January 1, 2019. The Company has developed a four-phase approach to the implementation of the new leasing standard and expects to complete the first two phases in 2017, which include the initial inventory and evaluation of its lease contracts, as a lessee, and the identification of changes needed to the Company’s processes and systems impacted by the new standard. Future phases to be completed in 2018 include the implementation of updates and enhancements to the Company’s internal control framework, accounting systems and related documentation surrounding its lease accounting processes and preparation of any additional disclosures that will be required.

~~In March 2016, the FASB issued ASU 2016-05,~~ ~~Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships.~~ This new guidance clarifies that the novation of a derivative contract (i.e., a change in the counterparty) in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship, provided that all other hedge criteria continue to be met. The Company adopted the provisions of ASU 2016-05 beginning with the quarter ended March 31, 2017. The adoption of the new guidance did not have an impact on the Company’s consolidated financial statements.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,~~ ~~which is intended to simplify the accounting for and~~ presentation of certain aspects related to share-based payments to employees. The guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted the provisions of ASU 2016-09 beginningderivatives consistent with ~~the quarter ended March 31, 2017. The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements.~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,~~ which changes how entities measure credit losses for most financial assets. This guidance requires an entity to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. This new standard will be effective for the Company on January 1, 2020, with early adoption permitted beginning on January 1, 2019.past presentation. The Company continues to evaluate the impact ~~this new standard will have on its consolidated financial statements.~~

~~In August 2016,~~of the ~~FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts~~guidance and ~~Cash Payments, which is intended to reduce diversity in practice in how certain specified transactions, such~~may apply other elections as particular debt and insurance claim related cash flows, are classified in the statement of cash flows. This new standard will be effective for the Company on January 1, 2018, with early adoption permitted. The Company does not anticipate this standard will have a material impact on its consolidated financial statements.

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash,~~ ~~which clarifies how entities should present restricted cash and restricted cash equivalents in the statement of cash flows. This guidance requires entities to show the~~applicable as additional changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities no longer present transfers between cash and cash equivalents and restricted cash within the statement of cash flows. Upon adoption, the new guidance is required to be adopted retrospectively. As permitted, the Company early adopted the provisions of ASU 2016-18 beginning with the quarter ended December 31, 2016 and has applied the provisions retrospectively. The adoption of the new guidance did not have a material impact on the Company’s financial statements.market occur.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets; if so, the set of transferred assets and activities is not considered to be a business. The Company early adopted the provisions of ASU 2017-01 in the first quarter of 2017, as permitted. For periods prior to the Company’s adoption of this new guidance in 2017, acquisitions of real estate that were subject to an existing lease were accounted for as business combinations where the associated transaction costs were expensed as incurred, whereas the recently adopted guidance generally will treat

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such transactions as the acquisition of property. As a result, beginning in 2017, transaction costs associated with the acquisition of real estate subject to an in-place lease will generally be included as part of the cost of the asset or assets acquired rather than expensed as incurred, as fewer, if any, real estate acquisitions will be accounted for as a business combination.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting~~, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications and is expected to reduce diversity in practice. The standard will be effective for the Company on January 1, 2018 with early adoption permitted. The Company does not anticipate this standard will have a material impact on its consolidated financial statements.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,~~ to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. This new guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The standard will be effective for the Company on January 1, 2019, with early adoption permitted, using a modified retrospective approach. As the Company has not had any ineffectiveness associated with its cash flow hedges, the adoption of this standard will not have a material impact on its consolidated financial statements.

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3. Investments

At ~~September 30, 2017,~~March 31, 2023, STORE Capital had investments in ~~1,826~~3,134 property locations representing ~~1,777~~3,086 owned properties (of which 38105 are accounted for as financing arrangements and 22 are accounted for as sales-type and direct financing receivables), 1924 properties where all the related land is subject to an operating ground lease ~~interests~~ and 3024 properties which secure mortgage loans. The gross investment portfolio totaled ~~$5.91~~$14.38 billion at ~~September 30, 2017~~March 31, 2023 and consisted of ~~the gross acquisition cost of the~~ real estate investments totaling ~~$5.64~~$13.4 billion ~~and~~offset by intangible lease liabilities, totaling $148.7 million, loans and ~~direct~~ financing receivables with an aggregate carrying amount of ~~$273.3~~$958.6 million and operating ground lease assets totaling $52.7 million. As of ~~September 30, 2017,~~March 31, 2023, approximately ~~half~~57% of these investments are assets of consolidated special purpose entity subsidiaries and are pledged as collateral under the ~~non‑recourse~~non-recourse obligations of these special purpose entities (Note 4).

The gross dollar amount of the Company’s investments includes the investment in land, buildings, improvements and lease intangibles related to real estate investments as well as the carrying amount of the loans and financing receivables and operating ground lease assets. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, the Company had the following gross real estate and ~~loan~~other investment activity (dollars in thousands):


	Successor			Predecessor
	Number of		Dollar	Number of	Dollar
	Investment		Amount of	Investment	Amount of
	Locations		Investments	Locations	Investments
Gross investments, December 31, 2022				3,084	$	12,079,843
Acquisition of and additions to real estate (a)				19		42,452
Investment in loans and financing receivables				1		82,112
Sales of real estate				(1)		(760)
Principal collections on loans and financing receivables				(2)		(468)
Net change in operating ground lease assets (c)						(125)
Other						4,430
Gross investments, February 2, 2023				3,101	$	12,207,484
Gross investments, February 3, 2023	3,101	$	14,201,731
Acquisition of and additions to real estate (b)	35		184,156
Investment in loans and financing receivables	2		15,044
Sales of real estate	(4)		(7,148)
Principal collections on loans and financing receivables	—		(558)
Net change in operating ground lease assets (c)			(139)
Provisions for impairment			(5,677)
Other			(3,541)
Gross investments, March 31, 2023 (d)			14,383,868
Less accumulated depreciation and amortization (d)			(93,423)
Net investments, March 31, 2023	3,134	$	14,290,445

Number of

Dollar

Investment

Amount of

Locations

Investments (a)

Gross investments, December 31, 2016

1,660

$
5,124,516

Acquisition of and additions to real estate (b)(c)(d)

204

979,869

Investment in loans and direct financing receivables

3

28,844

Sales of real estate

(40)

(182,198)

Principal collections on loans and direct financing receivables (d)

(1)

(25,099)

Provision for impairment of real estate

—

(11,940)

Other

—

(134)

Gross investments, September 30, 2017

5,913,858

Less accumulated depreciation and amortization

(393,037)

Net investments, September 30, 2017

1,826

$
5,520,821

(a)

~~(a)~~

The dollar amount of investments includes the investment in land, buildings, improvements and lease intangibles related to real estate investments as well as the carrying amount of the loans and direct financing receivables.

~~(b)~~

~~Includes $0.8 million of interest capitalized to properties under construction.~~

~~(c)~~

Excludes ~~$23.4~~$5.2 million of tenant improvement advances disbursed ~~in 2017~~from January 1, 2023 to February 2, 2023 which were accrued as of December 31, ~~2016.~~

2022.

(b)	Excludes $5.8 million of tenant improvement advances disbursed from February 3, 2023 to March 31, 2023 which were accrued as of February 2, 2023.

(c)	Represents amortization recognized on operating ground lease assets during the period from January 1, 2023 through February 2, 2023 and the period from February 3, 2023 through March 31, 2023.

(d)	Includes the below-market lease liabilities ($148.7 million) and the accumulated amortization ($2.6 million) of the liabilities recorded on the condensed consolidated balance sheets as intangible lease liabilities as of March 31, 2023.

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The following table summarizes the revenues the Company recognized from its investment portfolio (in thousands):


	Successor		Predecessor
	Period from February 3, 2023 through March 31, 2023		Period from January 1, 2023 through February 2, 2023		Three Months Ended March 31, 2022
Rental revenues:
Operating leases (a)	$	153,339	$	75,005	$	201,892
Sublease income - operating ground leases (b)		348		234		703
Amortization of lease related intangibles and costs		2,066		(231)		(534)
Total rental revenues	$	155,753	$	75,008	$	202,061

Interest income on loans and financing receivables:
Mortgage and other loans receivable	$	4,803	$	2,434	$	7,879
Sale-leaseback transactions accounted for as financing arrangements		4,897		2,444		5,327
Sales-type and direct financing receivables		2,062		448		1,724
Total interest income on loans and financing receivables	$	11,762	$	5,326	$	14,930

(a)

~~(d)~~

For the period from February 3, 2023 through March 31, 2023, the period from January 1, 2023 through February 2, 2023 and the three months ended March 31, 2022, includes $508,000, $252,000 and $654,000, respectively, of property tax tenant reimbursement revenue and includes $129,000, $24,000 and $447,000, respectively, of variable lease revenue.

(b)

~~One loan receivable was repaid in full through a $2.0 million non-cash transaction in which~~Represents total revenue recognized for the ~~Company acquired the underlying mortgaged property and leased it back~~sublease of properties subject to operating ground leases to the ~~borrower.~~

related tenants; includes both payments made by the tenants to the ground lessors and straight-line revenue recognized for scheduled increases in the sublease rental payments.

The Company has elected to account for the lease and nonlease components in its lease contracts as a single component if the timing and pattern of transfer for the separate components are the same and, if accounted for separately, the lease component would classify as an operating lease.

Significant Credit and Revenue Concentration

STORE Capital’s real estate investments are leased or financed to ~~approximately 380~~592 customers who operate their businesses across 129 industries geographically dispersed throughout 4849 states. The primary sectors of the U.S. economy and their proportionate dollar amount of STORE Capital’s investment portfolio at March 31, 2023 are service at 63%, service-oriented retail at 15% and manufacturing at 22%. Only one industry group, restaurants (11%), and only one state, Texas ~~(12%~~(11%), accounted for 10% or more of the total dollar amount of STORE Capital’s investment portfolio at ~~September 30, 2017.~~March 31, 2023. None of the Company’s customers represented more than 10% of the Company’s ~~real estate~~ investment portfolio at ~~September 30, 2017,~~March 31, 2023, with the largest customer representing ~~approximately 3%~~2.6% of the total investment portfolio. On an annualized basis, as of March 31, 2023, the largest customer ~~also~~ represented approximately 3% of the Company’s total annualized investment portfolio revenues as of September 30, 2017. The Company’s customers operate their businesses across approximately 480 concepts and the largest of these concepts represented approximately 3% of the Company’s total annualized investment portfolio revenues as of September 30, 2017.

~~Table of Contents~~

~~The following table shows information regarding the diversification~~2.7% of the Company’s total investment portfolio ~~among the different industries in which its tenants and borrowers operate as of September 30, 2017 (dollars in thousands):~~revenues.

Percentage of

Number of

Dollar

Total Dollar

Investment

Amount of

Amount of

Locations

Investments (a)

Investments

Restaurants

727

$
1,176,632

20
%
Early childhood education centers

170

379,084

7

Furniture stores

46

371,453

6

Movie theaters

39

355,393

6

Health clubs

67

343,455

6

Family entertainment centers

25

231,893

4

Farm and ranch supply stores

22

198,854

3

All manufacturing industries

156

769,090

13

All other service industries

475

1,487,016

25

All other retail industries

99

600,988

10

1,826

$
5,913,858

100
%

~~(a)~~

~~Intangible Lease Assets~~

~~The following details intangible lease assets and related accumulated amortization (in thousands):~~

September 30,

December 31,

2017

2016

In-place lease assets

$
57,816

$
61,634

Ground lease interest assets

21,363

20,430

Above-market lease assets

9,492

10,273

Total intangible lease assets

88,671

92,337

Accumulated amortization

(23,220)

(19,515)

Net intangible lease assets

$
65,451

$
72,822

Aggregate lease intangible amortization included in expense was $1.5 million and $1.6 million during the three months ended September 30, 2017 and 2016, respectively, and was $4.8 million during both the nine-month periods ended September 30, 2017 and 2016. The amount amortized as a decrease to rental revenue for capitalized above‑market lease intangibles was $0.3 million during both the three months ended September 30, 2017 and 2016 and was $0.9 million during both the nine months ended September 30, 2017 and 2016.

Based on the balance of the intangible assets at September 30, 2017, the aggregate amortization expense is expected to be $1.5 million for the remainder of 2017, $5.8 million in 2018, $5.6 million in 2019, $5.1 million in 2020, $4.7 million in 2021 and $4.5 million in 2022; the amount expected to be amortized as a decrease to rental revenue is expected to be $0.3 million for the remainder of 2017, $1.1 million in each of the years 2018 through 2020, $0.6 million in 2021 and $0.4 million in 2022. The weighted average remaining amortization period is approximately nine years for the in‑place lease intangibles, approximately 46 years for the amortizing ground lease interests and approximately seven years for the above‑market lease intangibles.

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Real Estate Investments

~~The Company’s investment properties are leased to tenants under long‑term operating leases that typically include one or more renewal options.~~ The weighted average remaining noncancelable lease term of the Company’s operating leases with its tenants at ~~September 30, 2017~~March 31, 2023 was approximately 1413.1 years. Substantially all of the leases are triple net, which ~~provide~~means that the lessees are responsible for the payment of all property operating expenses, including property taxes, maintenance and insurance; therefore, ~~STORE Capital~~the Company is generally not responsible for repairs or other capital expenditures related to the properties while the triple-net leases are in effect. At ~~September 30, 2017,~~March 31, 2023, 15 of the ~~Company owned 19~~Company’s properties ~~that~~ were vacant and not subject to a lease.

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Scheduled future minimum rentals to be received under the remaining noncancelable term of the operating leases in place as of ~~September 30, 2017,~~March 31, 2023, are as follows (in thousands):


Remainder of 2023	$	697,269
2024		923,579
2025		919,947
2026		913,541
2027		901,628
2028		881,686
Thereafter		6,788,224
Total future minimum rentals (a)	$	12,025,874

(a)

Excludes future minimum rentals to be received under lease contracts associated with sale-leaseback transactions accounted for as financing arrangements. See Loans and Financing Receivables section below.

Remainder of 2017

$
113,052

2018

452,475

2019

451,699

2020

450,079

2021

449,344

2022

449,466

Thereafter

4,209,774

Total future minimum rentals

$
6,575,889

Substantially all the Company’s leases include one or more renewal options (generally two to four five-year options). Since lease renewal periods are exercisable at the option of the lessee, the preceding table presents future minimum lease payments due during the initial lease term only. In addition, the future minimum lease payments presented above do not include any contingent rentals such as lease escalations based on future changes in CPI.

Intangible Lease Assets

The following details intangible lease assets and related accumulated amortization (in thousands):


	Successor		Predecessor
	March 31,		December 31,
	2023		2022
In-place leases	$	581,884	$	42,519
Ground lease-related intangibles		—		19,449
Above-market leases		38,017		—
Total intangible lease assets		619,901		61,968
Accumulated amortization		(9,544)		(27,278)
Net intangible lease assets	$	610,357	$	34,690

Aggregate lease intangible asset amortization included in expense was $9.0 million, $0.3 million and $0.9 million during the period from February 3, 2023 through March 31, 2023, the period from January 1, 2023 through February 2, 2023 and the three months ended March 31, 2022, respectively. The amount amortized as a decrease to rental revenue for capitalized above-market lease intangibles was $0.5 million during the period from February 3, 2023 through March 31, 2023. For both the period from January 1, 2023 through February 2, 2023 and the three months ended March 31, 2022, there was no amortization of above-market lease intangibles.

Based on the balance of the intangible assets at March 31, 2023, the aggregate amortization expense is expected to be $40.3 million for the remainder of 2023, $52.3 million in 2024, $51.0 million in 2025, $49.4 million in 2026, $47.6 million in 2027, $45.1 million in 2028 and $287.2 million thereafter. The amount expected to be amortized as a decrease to rental revenue is expected to be $2.3 million for the remainder of 2023, $2.9 million in 2024, $2.8 million in 2025, $2.8 million in 2026, $2.8 million in 2027, $2.6 million in 2028 and $21.3 million thereafter. The weighted average remaining amortization period is approximately 13 years for the in-place lease intangibles and approximately 15 years for the above-market lease intangibles.

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Intangible Lease Liabilities

The following details intangible lease liabilities and related accumulated amortization (in thousands) as of March 31, 2023. There were no intangible lease liabilities as of December 31, 2022.


	Successor
	March 31,
	2023
Below-market leases	$	148,660
Accumulated amortization		(2,592)
Net intangible lease liabilities	$	146,068

Lease intangible liabilities are amortized as an increase to rental revenue. For the three months ended March 31, 2023, amortization was $2.6 million. Based on the balance of the intangible liabilities at March 31, 2023, the amortization included in rental revenue is expected to be $5.7 million for the remainder of 2023, $8.9 million in 2024, $8.9 million in 2025, $8.8 million in 2026 and $8.7 million in 2027, $8.4 million in 2028 and $96.7 million thereafter. The weighted average remaining amortization, including extension periods, is approximately 24 years.

Operating Ground Lease Assets

As of March 31, 2023, STORE Capital had operating ground lease assets aggregating $52.7 million. Typically, the lease payment obligations for these leases are the responsibility of the tenants operating on the properties, in accordance with the Company’s leases with those respective tenants. The Company recognized total lease cost for these operating ground lease assets of $571,000, $273,000 and $755,000 during the period from February 3, 2023 through March 31, 2023, the period from January 1, 2023 through February 2, 2023 and the three months ended March 31, 2022, respectively. The Company also recognized, in rental revenues, sublease revenue associated with its operating ground leases of $348,000, $234,000 and $703,000 for the period from February 3, 2023 through March 31, 2023, the period from January 1, 2023 through February 2, 2023 and the three months ended March 31, 2022, respectively.

The future minimum lease payments to be paid under the operating ground leases as of March 31, 2023 were as follows (in thousands):


			Ground
	Ground		Leases
	Leases		Paid by
	Paid by		STORE Capital's
	STORE Capital		Tenants (a)		Total
Remainder of 2023	$	185	$	2,103	$	2,288
2024		55		2,711		2,766
2025		57		2,725		2,782
2026		57		2,731		2,788
2027		57		2,731		2,788
2028		57		2,761		2,818
Thereafter		3,316		100,262		103,578
Total lease payments		3,784		116,024		119,808
Less imputed interest		(3,020)		(70,565)		(73,585)
Total operating lease liabilities - ground leases	$	764	$	45,459	$	46,223

(a)

STORE Capital’s tenants, who are generally sub-tenants under the ground leases, are responsible for paying the rent under these ground leases. In the event the tenant fails to make the required ground lease payments, the Company would be primarily responsible for the payment, assuming the Company does not re-tenant the property or sell the leasehold interest. Of the total $116.0 million commitment, $79.6 million is due for periods beyond the current term of the Company’s leases with the tenants. Amounts exclude contingent rent due under three leases where the ground lease payment, or a portion thereof, is based on the level of the tenant’s sales.

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Loans and ~~Direct~~ Financing Receivables

The Company’s loans and financing receivables are summarized below (dollars in thousands):


				Successor		Predecessor
	Interest		Maturity	March 31,		December 31,
Type	Rate (a)		Date	2023		2022
Three mortgage loans receivable	8.05	%	2023 - 2026	$	101,364	$	104,069
Three mortgage loans receivable	8.81	%	2032 - 2036		9,954		9,967
Seventeen mortgage loans receivable (b)	8.46	%	2042 - 2062		237,774		231,639
Total mortgage loans receivable					349,092		345,675
Equipment and other loans receivable	7.98	%	2023 - 2036		14,121		15,842
Total principal amount outstanding—loans receivable					363,213		361,517
Unamortized loan origination costs					—		1,011
Unamortized loan premium					10,177		—
Sale-leaseback transactions accounted for as financing arrangements (c)	7.58	%	2034 - 2048		448,867		369,604
Sales-type and direct financing receivables					140,759		60,899
Allowance for credit and loan losses (d)					(4,377)		(5,925)
Total loans and financing receivables				$	958,639	$	787,106

(a)	Represents the weighted average interest rate as of the balance sheet date.

(b)	Four of these mortgage loans allow for prepayment in whole, but not in part, with penalties ranging from 20% to 70% depending on the timing of the prepayment.

(c)

In accordance with ASC Topic 842, represents sale-leaseback transactions and accounted for as financing arrangements rather than as investments in real estate subject to operating leases. Interest rate shown is the weighted average initial rental or capitalization rate on the leases; the leases mature between 2034 and 2048 and the purchase options expire between 2024 and 2042.

(d)	Balance includes $4.4 million of credit losses recognized during the period from February 3, 2023 through March 31, 2023.

Loans Receivable

At ~~September 30, 2017,~~March 31, 2023, the Company held 2936 loans receivable with an aggregate carrying amount of ~~$148.8~~$371.4 million. ~~Eighteen~~Twenty-three of the loans are mortgage loans secured by land and/or buildings and improvements on the mortgaged ~~property. Six~~property; the interest rates on 11 of the mortgage loans are subject to increases over the term of the loans. Three of the mortgage loans are shorter-term loans (maturing prior to ~~2023)~~2027) that generally require ~~either~~ monthly interest-only ~~payments with a balloon payment at maturity or monthly interest-only payments for an established period and then monthly principal and interest~~ payments with a balloon payment at maturity. The remaining mortgage loans receivable generally require the borrowers to make monthly principal and interest payments based on a 40-year amortization period with a balloon ~~payments,~~payment, if any, at maturity or earlier upon the occurrence of certain other events. The ~~interest rates on ten of the mortgage loans are subject to increases over the term of the loans. The~~equipment and other loans ~~are primarily loans secured by a tenant’s equipment or other assets and~~ generally require the borrower to make monthly ~~interest‑only~~ payments with a balloon payment at maturity.

~~The Company’s loans and direct financing receivables are summarized below (dollars in thousands):~~

Amount Outstanding

Interest

Maturity

September 30,

December 31,

Type

Rate (a)

Date

2017

2016

Six mortgage loans receivable (b)

8.60
%
2017 - 2022

$
29,171

$
22,599

Five mortgage loans receivable

8.57
%
2032 - 2038

42,863

43,002

Seven mortgage loans receivable (c)

8.70
%
2053 - 2056

64,608

70,173

Total mortgage loans receivable

136,642

135,774

Eleven equipment and other loans receivable

9.29
%
2017 - 2025

10,912

9,233

Total principal amount outstanding—loans receivable

147,554

145,007

Unamortized loan origination costs

1,256

1,205

Direct financing receivables

124,455

122,998

Total loans and direct financing receivables

$
273,265

$
269,210

1922

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~~(a)~~

~~Represents the weighted average interest rate as of the balance sheet date.~~

~~(b)~~

One loan outstanding at December 31, 2016 was repaid in full during the nine months ended September 30, 2017 through a $2.0 million non-cash transaction in which the Company acquired the underlying mortgaged property and leased it back to the borrower.

~~(c)~~

Four of these mortgage loans allow for prepayment in whole, but not in part, with penalties ranging from 20% to 70% depending on the timing of the prepayment. Two loans outstanding at December 31, 2016 were either repaid in full or sold during the nine months ended September 30, 2017 and the Company collected $0.1 million in prepayment penalty fees.

The ~~long‑term~~long-term mortgage loans receivable generally allow for prepayments in whole, but not in part, without penalty or with penalties ranging from 1% to 20%, depending on the timing of the prepayment, except as noted in the table above. All other loans receivable allow for prepayments in whole or in part without penalty. Absent prepayments, scheduled maturities are expected to be as follows (in thousands):

Scheduled




Principal

Balloon

Total

Payments

Payments

Payments

Remainder of 2017

$
238

$
18,056

$
18,294

2018

1,534

850

2,384

2019

2,188

4,374

6,562

2020

2,355

—

2,355

2021

1,301

1,484

2,785

2022

841

8,408

9,249

Thereafter

69,709

36,216

105,925

Total principal payments

$
78,166

$
69,388

$
147,554


	Scheduled
	Principal		Balloon		Total
	Payments		Payments		Payments
Remainder of 2023	$	1,921	$	88,709	$	90,630
2024		2,264		—		2,264
2025		2,071		—		2,071
2026		2,045		20,371		22,416
2027		1,767		548		2,315
2028		1,930		—		1,930
Thereafter		211,735		29,852		241,587
Total principal payments	$	223,733	$	139,480	$	363,213

Sale-Leaseback Transactions Accounted for as Financing Arrangements

As of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, the Company had ~~$124.5~~$448.9 million and ~~$123.0~~$369.6 million, respectively, of investments acquired through sale-leaseback transactions accounted for as financing arrangements rather than as investments in real estate subject to an operating lease; revenue from these arrangements is recognized in interest income rather than as rental revenue. The scheduled future minimum rentals to be received under these agreements (which will be reflected in interest income) as of March 31, 2023, were as follows (in thousands):


Remainder of 2023	$	22,925
2024		30,694
2025		30,863
2026		30,987
2027		31,120
2028		31,262
Thereafter		349,049
Total future scheduled payments	$	526,900

Sales-Type and Direct Financing Receivables

As of March 31, 2023 and December 31, 2022, the Company had $140.8 million and $60.9 million, respectively, of investments accounted for as sales-type leases and as direct financing ~~leases;~~leases under previous accounting guidance; the components of ~~the~~these investments ~~accounted for as direct financing receivables~~ were as follows (in thousands):


	September 30,		December 31,
	2017		2016

					Successor		Predecessor
					March 31,		December 31,
					2023		2022
Minimum lease payments receivable	$	296,280	$	300,832	$	332,733	$	119,839
Estimated residual value of leased assets		14,815		14,500		8,898		6,889
Unearned income		(186,640)		(192,334)		(200,872)		(65,829)
Net investment	$	124,455	$	122,998	$	140,759	$	60,899

As of ~~September 30, 2017,~~March 31, 2023, the future minimum lease payments to be received under the sales-type and direct financing lease receivables are expected to be ~~$3.0~~$9.8 million for the remainder of ~~2017 and~~ 2023, average approximately ~~$12.2~~ $13.4 million for each of the next five ~~years.~~years and $256.1 million thereafter.

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Provision for Credit Losses

~~4. Debt~~

~~Credit Facility~~In accordance with ASC Topic 326, the Company evaluates the collectibility of its loans and financing receivables at the time each financing receivable is issued and subsequently on a quarterly basis utilizing an expected credit loss model based on credit quality indicators. The Company groups individual loans and financing receivables based on the implied credit rating associated with each borrower. Based on credit quality indicators as of March 31, 2023, $230.7 million of loans and financing receivables were categorized as investment grade and $722.1 million were categorized as non-investment grade. During the period from February 3, 2023 through March 31, 2023, there were $4.4 million of provisions for credit losses recognized, no write-offs charged against the allowance and no recoveries of amounts previously written off. There were no provisions for credit losses recognized, no write-offs charged against the allowance and no recoveries of amounts previously written off in the period from January 1, 2023 through February 2, 2023.

As of ~~September 30, 2017,~~March 31, 2023, the year of origination for loans and financing receivables with a credit quality indicator of investment grade was $14.6 million in 2023, $14.8 million in 2022, $46.5 million in 2021, none in 2020, $141.8 million in 2019 and $13.0 million prior to 2019. The year of origination for loans and financing receivables with a credit quality indicator of non-investment grade was $82.7 million in 2023, $148.6 million in 2022, $68.4 million in 2021, $91.2 million in 2020, $143.3 million in 2019 and $187.9 million prior to 2019.

4. Debt

Credit Facility

In connection with the completion of the Merger on February 3, 2023, the Company ~~had a $500 million~~repaid all amounts outstanding and terminated, the previous revolving credit facility agreement. At the time of repayment, the outstanding balance on the previous unsecured revolving credit facility was $600.0 million. Concurrently, the Company entered into a credit agreement (the “Unsecured Credit Agreement”) with a group of ~~lenders. The~~lenders which initially provided for a senior unsecured revolving credit facility of up to $500.0 million (the “Unsecured Revolving Credit Facility”) and an unsecured, variable-rate term loan which ~~was put~~is discussed in ~~place~~more detail in ~~September 2014~~the section titled “Unsecured Notes and ~~amended in September 2015, is used to partially fund real estate acquisitions pending~~Term Loans Payable, net” below. In March 2023, the ~~issuance of long-term, fixed-rate debt and includes~~Company entered into an ~~accordion feature that allows the size~~amendment of the ~~facility~~Unsecured Credit Agreement which increased the Unsecured Revolving Credit Facility by $150.0 million to ~~be increased up to $800~~an immediate borrowing availability of $650.0 million.

The ~~amended~~ facility matures in ~~September 2019~~February 2027 and includes ~~a one-year~~two six-month extension ~~option~~options, subject to certain conditions and the payment of a ~~0.15%~~0.075% extension fee. ~~The facility is recourse to~~At March 31, 2023, the Company ~~and includes a guaranty from STORE Capital Acquisitions, LLC (SCA), one~~had $361.0 million of ~~the Company’s direct wholly owned subsidiaries. Through June 30, 2017,~~ borrowings ~~under this facility required monthly payments of interest at a rate selected by the Company of~~

~~Table of Contents~~

either (1) LIBOR plus a credit spread ranging from 1.35% to 2.15%, or (2) the Base Rate, as defined in the credit agreement, plus a credit spread ranging from 0.35% to 1.15%. The Company was also required to pay a non-use fee of 0.15% or 0.25%outstanding on the unused portion of the facility, depending upon the amount of borrowings outstanding. Subsequent to June 30, 2017, the Company made the election to base the credit spread on the Company’s credit rating as defined in the credit agreement and, as a result, borrowingsfacility.

Borrowings under the facility ~~now~~ require monthly payments of interest at a rate selected by the Company of either (1) ~~LIBOR~~SOFR plus an adjustment of 0.10% plus a ~~credit~~ spread ranging from ~~0.85%~~1.00% to ~~1.55%~~1.45%, or (2) the Base Rate, as defined in the ~~credit agreement,~~Unsecured Credit Agreement, plus a ~~credit~~ spread ranging from 0.00% to ~~0.55%;~~0.45%. The spread used is based on the Company’s consolidated total leverage ratio as defined in ~~addition,~~ the Unsecured Credit Agreement. The Company is ~~now~~ required to pay a facility fee on the total commitment amount ranging from ~~0.125%~~0.15% to 0.30%. based on our consolidated total leverage ratio. Currently, the applicable ~~credit~~ spread for ~~LIBOR-based~~SOFR-based borrowings is ~~1.00%~~1.1% and the facility fee is 0.20%.

~~Borrowing availability under~~ In May 2023, the ~~facility is limited to 50%~~Company entered into two interest rate swap agreements with an aggregate notional amount of $325.0 million that effectively convert a portion of the ~~value~~outstanding borrowings on the Unsecured Revolving Credit Facility to an all-in fixed rate of 4.524%.

Under the terms of the ~~Company’s eligible unencumbered assets at any point in time. At September 30, 2017,~~Unsecured Credit Agreement, the Company had $82 million of borrowings outstanding and a pool of unencumbered assets aggregating approximately $3.0 billion, substantially all of which are eligible unencumbered assets as defined in the credit agreement.

~~The~~ Company is subject to various restrictive financial and nonfinancial covenants ~~under~~which, among other things, require the ~~revolving credit~~Company to maintain certain leverage ratios, cash flow and debt service coverage ratios and secured borrowing ratios. Certain of these ratios are based on the Company’s pool of unencumbered assets, which aggregated approximately $6.1 billion at March 31, 2023. The facility ~~including a maximum total leverage ratio~~is recourse to the Company and, as of 65%, a minimum EBITDA to fixed charges ratio of 1.5 to 1, minimum consolidated net worth of $1.0 billion plus 75% of any additional equity raised after September 2015, a maximum dividend payout ratio limited to 95% of Funds from Operations and a maximum unsecured debt leverage ratio of 50%, all as defined in the credit agreement. As of September 30, 2017,March 31, 2023, the Company was in compliance with ~~these covenants.~~the covenants under the facility.

The Unsecured Credit Agreement also includes capacity for uncommitted incremental term loans and revolving commitments, whether in the form of additional facilities or an increase to the existing facilities, up to an aggregate amount for all revolving commitments and term loans under the Unsecured Credit Agreement of $2.5 billion.

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At ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, unamortized financing costs related to the Company’s credit facility totaled ~~$2.0~~$7.1 million and ~~$2.7~~$2.6 million, respectively, and are included in other assets, net, on the condensed consolidated balance sheets.

Unsecured Notes and Term Loans Payable, net

Prior to the Merger, the Company completed four public offerings of ten-year unsecured notes (“Public Notes”). In March 2018, February 2019 and November 2020, the Company completed public offerings of $350.0 million each in aggregate principal amount. In November 2021, the Company completed a public offering of $375.0 million in aggregate principal amount. The Public Notes have coupon rates of 4.50%, 4.625%, 2.75% and 2.70%, respectively, and interest is payable semi-annually in arrears in March and September of each year for the 2018 and 2019 Public Notes, May and November of each year for the 2020 Public Notes, and June and December of each year for the 2021 Public Notes.

The supplemental indentures governing the Public Notes contain various restrictive covenants, including limitations on the Company’s ability to incur additional secured and unsecured indebtedness. As of March 31, 2023, the Company was in compliance with these covenants. The Public Notes can be redeemed, in whole or in part, at par within three months of their maturity date or at a redemption price equal to the sum of (i) the principal amount of the notes being redeemed plus accrued and unpaid interest and (ii) the make-whole premium, as defined in the supplemental indentures governing these notes.

The Company has entered into Note Purchase Agreements ~~(NPAs)~~(“NPAs”) with institutional purchasers that provided for the private placement of three series of senior unsecured notes initially aggregating ~~$375~~$375.0 million (the ~~Notes)~~“Notes”). In November 2022, the Company repaid its $75.0 million Series A senior unsecured notes at maturity which bore an interest rate of 4.95%. Upon completion of the Merger and pursuant to the NPAs, the Company was required to offer to prepay the remaining $300.0 million in outstanding aggregate principal amounts of Notes. Following the closing of the repurchase offer period in March 2023, the Company repurchased $185.6 million in aggregate principal amounts of such Notes. The Company recognized $4.8 million of accelerated amortization of debt discounts as a result of the repurchases which is included in the loss on extinguishment of debt on the condensed consolidated statements of operations. At March 31, 2023, the Company had $114.4 million of Notes outstanding.

Interest on the Notes is payable semi-annually in arrears in May and November of each year. On each interest payment date, the interest rate on each series of Notes may be increased by 1.0% should the Company’s Applicable Credit Rating (as defined in the NPAs) fail to be an investment-grade credit rating; the increased interest rate would remain in effect until the next interest payment date on which the Company obtains an ~~Applicable Credit Rating that is an~~ investment grade credit rating. The Company may prepay at any time all, or any part, of any series of Notes, in an amount not less than 5% of the aggregate principal amount of the series then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid plus a Make-Whole Amount (as defined in the ~~NPA)~~NPAs). The Notes are senior unsecured obligations of the ~~Company and are guaranteed by SCA.~~Company.

The NPAs contain a number of financial covenants that are similar to the Company’s ~~unsecured credit facility~~Unsecured Revolving Credit Facility as summarized above, including the maximum total leverage ratio, the minimum EBITDA to fixed charges ratio and the minimum consolidated net worth amount, as well as a maximum secured debt leverage ratio, a maximum unsecured debt leverage ratio and a minimum interest coverage ratio on unsecured debt.above. Subject to the terms of the NPAs and the Notes, upon certain events of default, including, but not limited to, (i) a payment default under the Notes, and (ii) a default in the payment of certain other indebtedness by the Company or its subsidiaries, all amounts outstanding under the Notes will become due and payable at the option of the purchasers. As of ~~September 30, 2017,~~March 31, 2023, the Company was in compliance with its covenants under the NPAs.

In April ~~2016,~~2022, the Company entered into a ~~$100~~term loan agreement under which the Company borrowed an aggregate $600.0 million of floating-rate, unsecured term loans; the loans consisted of a $400.0 million five-year ~~term loan;~~loan and a $200.0 million seven-year loan (“April 2022 Term Loans”). On February 3, 2023, in connection with the ~~interest rate~~completion of the Merger, the Company repaid all indebtedness, liabilities and other obligations outstanding under, and terminated, the April 2022 Term Loans. At the time of repayment, the aggregate borrowings under the April 2022 Term Loans were $600.0 million. The Company also incurred a $0.7 million prepayment penalty at the time of repayment which is included in the loss on extinguishment of debt on the ~~loan resets monthly at one-month LIBOR plus a credit spread ranging from 1.35% to 2.15%.~~ condensed consolidated statements of operations.

Table of Contents

In ~~March 2017,~~December 2022, the Company entered into a ~~second $100~~term loan agreement with a total initial commitment of $100.0 million of unsecured, floating-rate, short-term term borrowings (the “December 2022 Term Loan”) The December 2022 Term Loan matured at the earlier of March 31, 2023 or the consummation of the Merger. The term loan agreement included an incremental borrowing feature that allowed the Company to request up to an additional $100.0 million of term borrowings after December 31, 2022. In connection with the completion of the Merger, on February 3, 2023, the Company repaid $130.0 million of outstanding borrowings on the December 2022 Term Loan at maturity.

As discussed above, in connection with the completion of the Merger, the Company entered into the Unsecured Credit Agreement, which provided for the Company’s Unsecured Revolving Credit Facility, as discussed above, and an unsecured, variable-rate term ~~note. This second~~ loan ~~is a two-year~~with initial borrowings of $600.0 million (the “Unsecured Term Loan”). In March 2023, the Company entered into an amendment to the Unsecured Credit Agreement which provided for an increase to the Unsecured Term Loan in an amount of $200.0 million for total term loan ~~which has three one-year extension options~~borrowings of $800.0 million.

The Unsecured Term Loan matures in April 2027 and the interest rate ~~on the loan~~ resets ~~monthly~~daily at ~~one-month LIBOR~~Daily Simple SOFR plus an adjustment of 0.10% plus a ~~credit~~ spread ranging from ~~1.30%~~1.10% to ~~2.15%. Subsequent to June 30, 2017, the Company made the election to base the credit spread~~1.70% based on the Company’s ~~credit rating~~consolidated total leverage ratio as defined in the ~~loan agreements; as a result,~~Unsecured Credit Agreement. At March 31, 2023, the ~~interest rate on both term loans now resets monthly at one-month LIBOR plus a credit~~ spread ~~ranging from 0.90% to 1.75%; the credit spread currently~~ applicable to the Company ~~is 1.10%~~was 1.25%.

~~Table~~ Seven of ~~Contents~~

~~The term loans were arranged with lenders who also participate in~~ the Company’s ~~unsecured revolving credit facility. The financial covenants~~cash flow hedges, with an aggregate notional amount of $600.0 million were redesignated as cash flow hedges of the ~~term loans match~~Unsecured Term Loan and effectively convert the ~~covenants~~initial $600.0 million of borrowings to a fixed rate of 3.88% for the remaining term of the ~~unsecured credit facility.~~loan. In connection with the amendment, the Company entered into one interest rate swap agreement with a notional amount of $200.0 million that effectively converts the incremental borrowings to a fixed interest rate of 5.17% for the remaining term of the loan.

As noted above, under the terms of the Unsecured Credit Agreement, the Company is subject to various restrictive financial and nonfinancial covenants which, among other things, require the Company to maintain certain leverage ratios, cash flow and debt service coverage ratios and secured borrowing ratios. As of March 31, 2023, the Company was in compliance with these covenants. The ~~term loans~~Unsecured Term Loans are senior unsecured obligations of the Company, ~~are guaranteed by SCA~~require monthly interest payments and may be prepaid without premium or penalty at any ~~time without penalty.~~time.

Table of Contents

The Company’s senior unsecured notes and term loans payable are summarized below (dollars in thousands):


				Successor		Predecessor
	Maturity	Interest		March 31,		December 31,
	Date	Rate		2023		2022
Notes Payable:
Series B issued November 2015	Nov. 2024	5.24	%		32,400		100,000
Series C issued April 2016	Apr. 2026	4.73	%		82,000		200,000

Public Notes issued March 2018	Mar. 2028	4.50	%		350,000		350,000
Public Notes issued February 2019	Mar. 2029	4.625	%		350,000		350,000
Public Notes issued November 2020	Nov. 2030	2.75	%		350,000		350,000
Public Notes issued November 2021	Dec. 2031	2.70	%		375,000		375,000
Total notes payable					1,539,400		1,725,000
Term Loans:
Term Loan issued December 2022					—		90,000
Term Loan issued April 2022					—		400,000
Term Loan issued April 2022					—		200,000
Term Loan issued February 2023 (a)	Apr. 2027	4.2042	% (b)		800,000		—
Total term loans					800,000		690,000
Unamortized discount					(224,514)		(4,113)
Unamortized deferred financing costs					(8,538)		(13,481)
Total unsecured notes and term loans payable, net				$	2,106,348	$	2,397,406

Outstanding Balance

Maturity

Interest

September 30,

December 31,

Date

Rate

2017

2016

Notes Payable:

Series A issued November 2015

Nov. 2022

4.95
%

$
75,000

$
75,000

Series B issued November 2015

Nov. 2024

5.24
%

100,000

100,000

Series C issued April 2016

Apr. 2026

4.73
%

200,000

200,000

Total notes payable

375,000

375,000

Term Loans:

Term Loan issued March 2017

Mar. 2019

2.57
% (a)

100,000

—

Term Loan issued April 2016

Apr. 2021

2.44
% (a)

100,000

100,000

Total term loans

200,000

100,000

Unamortized deferred financing costs

(4,624)

(4,810)

Total unsecured notes and term loans payable, net

$
570,376

$
470,190

(a)	~~(a)~~ Term loan was issued in February 2023 with initial borrowings of $600.0 million and amended in March 2023 to increase the total term loan borrowings to $800.0 million.

(b)

Loan is a ~~variable‑rate~~floating-rate loan which resets ~~monthly~~daily at ~~one-month LIBOR~~Daily Simple SOFR + an adjustment of 0.10% + the applicable ~~credit~~ spread which was ~~1.10%~~1.25% at ~~September 30, 2017.~~March 31, 2023. The Company has entered into eight interest rate swap agreements that effectively convert the floating rate to the weighted-average fixed rate noted ~~above~~ as of ~~September 30, 2017.~~

March 31, 2023.

Secured Term Loan Facility, net

On February 3, 2023, in connection with the completion of the Merger, the Company and certain of its consolidated special purpose entities entered into a credit agreement (the “Credit Agreement”) which provided for a secured term loan of $2.0 billion (the “Secured Term Loan Facility”).The Secured Term Loan Facility matures in February 2025 and includes two six-month extension options, subject to certain conditions and the payment of a 0.25% extension fee.

Borrowings outstanding under the Secured Term Loan Facility require monthly payments of interest at a floating-rate equal to one-month Term SOFR, plus a spread of 2.75%. Upon repayment of the Secured Term Loan Facility, the Company is subject to a 1% exit fee of the amount repaid.

In March 2023, the Company paid down $515.0 million in aggregate principal amount of indebtedness under the Credit Agreement. In conjunction with the paydown, the Company paid a $5.2 million exit fee and recognized $3.5 million and $10.4 million of accelerated amortization of deferred financing costs and debt discounts, respectively, associated with the repayment. The exit fee and accelerated amortization are included in the loss on extinguishment of debt on the condensed consolidated statements of operations.

In connection with entering into the Secured Term Loan Facility, the Company entered into three interest rate swap agreements with an aggregate notional amount of $750.0 million that effectively converted a portion of the borrowings to a fixed interest rate of 7.60%.

The Secured Term Loan Facility is secured by a collateral pool of properties owned by consolidated special purpose entities of the Company and is generally non-recourse to the Company, subject to certain customary limited exceptions. Collateral may be released upon repayments made on the Secured Term Loan Facility. As of March 31, 2023, the aggregate collateral pool securing the Secured Term Loan Facility was comprised primarily of single-tenant commercial real estate properties with an aggregate investment amount of approximately $3.5 billion.

~~Non‑recourse~~27

Table of Contents

The consolidated special purpose entities and the Company are subject to certain restrictive covenants under the Credit Agreement, including with respect to the type of business they may conduct and other customary covenants for a bankruptcy-remote special purpose entity. The Credit Agreement permits substitution of real estate collateral from time to time for assets securing the Secured Term Loan Facility, subject to certain conditions and limitations. The Secured Term Loan Facility is guaranteed by the Company.

The Company’s secured term loan facility is summarized below (dollars in thousands):


				Successor
	Maturity	Interest		March 31,
	Date	Rate		2023
Secured Term Loan Facility
Secured Term Loan issued February 2023	Feb. 2025	7.5078	% (a)		1,485,000
Unamortized discount					(28,756)
Unamortized deferred financing costs					(9,586)
Total secured term loan facility, net				$	1,446,658

Loan is a floating-rate loan which resets at one-month Term SOFR + an adjustment of 0.10% + the applicable spread which was 2.75% at March 31, 2023. The Company has entered into three interest rate swap agreements with an aggregate notional amount of $750.0 million that effectively convert a portion of the borrowings to a fixed interest rate of 7.60%.

Non-recourse Debt Obligations of Consolidated Special Purpose Entities, net

During 2012, the Company implemented ~~the~~its STORE Master Funding debt program pursuant to which certain of its consolidated special purpose entities issue multiple series of ~~non‑recourse net‑lease~~non-recourse net-lease mortgage notes from time to time that are collateralized by the assets and related leases (collateral) owned by these entities. One of the principal features of the program is that, as additional series of notes are issued, new collateral is contributed to the collateral pool, thereby increasing the size and diversity of the collateral pool for the benefit of all noteholders, including those who invested in prior series. Another feature of the program is the ability to substitute collateral from time to time subject to meeting certain prescribed conditions and criteria. The notes issued under this program are generally segregated into Class A amortizing notes and Class B ~~non‑amortizing~~non-amortizing notes. The Company has retained ~~each of~~ the Class B notes which aggregate ~~$128.0~~$190.0 million at ~~September 30, 2017.~~March 31, 2023.

The Class A notes require monthly principal and interest payments with a balloon payment due at maturity and these notes may be prepaid at any time, subject to a yield maintenance prepayment premium if prepaid more than 24 or 36 months prior to maturity. In August 2017, the Company prepaid the STORE Master Funding Series 2012-1, Class A notes (issued in August 2012 and scheduled to mature in August 2019), which bore an interest rate of 5.77% and had an outstanding balance of $198.6 million at the time of prepayment and recognized $2.0 million of accelerated amortization of deferred financing costs associated with this debt. As of ~~September 30, 2017,~~March 31, 2023, the aggregate collateral pool securing the ~~net‑lease~~net-lease mortgage notes was comprised primarily of single-tenant commercial real estate properties with an aggregate investment amount of approximately ~~$2.6~~$4.4 billion.

A number of additional consolidated special purpose entity subsidiaries of the Company have financed their real estate properties with traditional first mortgage debt. The notes generally require monthly principal and interest payments with balloon payments due at maturity. In general, these mortgage notes payable can be prepaid in whole or in part upon payment of a yield maintenance premium. The mortgage notes payable are collateralized by real estate properties owned by these consolidated special purpose entity subsidiaries with an aggregate investment amount of approximately ~~$392.0~~$288.6 million at ~~September 30, 2017.~~March 31, 2023.

The mortgage notes payable, which are obligations of the consolidated special purpose entities described in Note 2, contain various covenants customarily found in mortgage notes, including a limitation on the issuing entity’s

~~Table of Contents~~

ability to incur additional indebtedness on the underlying real estate. Although this mortgage debt generally is ~~non‑recourse,~~non-recourse, there are customary limited exceptions to recourse for matters such as fraud, misrepresentation, gross negligence or willful misconduct, misapplication of payments, bankruptcy and environmental liabilities. Certain of the mortgage notes payable also require the posting of cash reserves with the lender or trustee if specified coverage ratios are not maintained by the Company or one of its tenants. ~~The Company did not make the September 1, 2017 through November 1, 2017 scheduled payments~~

Table of interest and principal due on a $12.9 million note scheduled to mature in August 2022 (see table below) because the two properties that secure this note were not generating sufficient cash flow to cover the debt service. The Company is currently in discussions with the lender regarding a resolution of this matter, although no assurances can be made as to the outcome of these discussions. As of the date of this report, the lender has not declared an event of default. Should the lender declare an event of default, the note would bear interest at a default rate equal to 9.95% per annum.Contents

The Company’s non-recourse debt obligations of consolidated special purpose entity subsidiaries are summarized below (dollars in thousands):


				Successor		Predecessor
	Maturity	Interest		March 31,		December 31,
	Date	Rate		2023		2022
Non-recourse net-lease mortgage notes:
$150,000 Series 2018-1, Class A-1	Oct. 2024 (b)	3.96	%	$	140,177	$	140,552
$50,000 Series 2018-1, Class A-3	Oct. 2024 (b)	4.40	%		48,292		48,417
$270,000 Series 2015-1, Class A-2	Apr. 2025 (b)	4.17	%		259,313		259,650
$200,000 Series 2016-1, Class A-1 (2016)	Oct. 2026 (b)	3.96	%		174,751		175,861
$82,000 Series 2019-1, Class A-1	Nov. 2026 (b)	2.82	%		78,078		78,180
$46,000 Series 2019-1, Class A-3	Nov. 2026 (b)	3.32	%		45,233		45,291
$135,000 Series 2016-1, Class A-2 (2017)	Apr. 2027 (b)	4.32	%		119,448		120,182
$228,000 Series 2018-1, Class A-2	Oct. 2027 (c)	4.29	%		213,068		213,638
$164,000 Series 2018-1, Class A-4	Oct. 2027 (c)	4.74	%		158,397		158,807
$168,500 Series 2021-1, Class A-1	Jun. 2028 (b)	2.12	%		167,026		167,236
$89,000 Series 2021-1, Class A-3	Jun. 2028 (b)	2.86	%		88,221		88,333
$168,500 Series 2021-1, Class A-2	Jun. 2033 (c)	2.96	%		167,026		167,236
$89,000 Series 2021-1, Class A-4	Jun. 2033 (c)	3.70	%		88,221		88,333
$244,000 Series 2019-1, Class A-2	Nov. 2034 (c)	3.65	%		232,329		232,634
$136,000 Series 2019-1, Class A-4	Nov. 2034 (c)	4.49	%		133,733		133,903
Total non-recourse net-lease mortgage notes					2,113,313		2,118,253
Non-recourse mortgage notes:
$6,944 notes issued March 2013 (a)		4.50	%		—		5,103
$11,895 note issued March 2013 (a)		4.7315	%		—		8,935
$17,500 note issued August 2013	Sept. 2023 (d)	5.46	%		13,565		13,701
$10,075 note issued March 2014	Apr. 2024 (d)	5.10	%		8,547		8,602
$65,000 note issued June 2016	Jul. 2026 (d)	4.75	%		57,650		57,980
$41,690 note issued March 2019	Mar. 2029 (e)	4.80	%		40,493		40,662
$6,350 notes issued March 2019 (assumed in December 2020)	Apr. 2049 (d)	4.64	%		5,964		5,993
Total non-recourse mortgage notes					126,219		140,976
Unamortized discount					(190,364)		(395)
Unamortized deferred financing costs					—		(20,364)
Total non-recourse debt obligations of consolidated special purpose entities, net				$	2,049,168	$	2,238,470

Outstanding Balance

Maturity

Interest

September 30,

December 31,

Date

Rate

2017

2016

Non-recourse net-lease mortgage notes:











$214,500 Series 2012-1, Class A

$
—

$
200,749

$150,000 Series 2013-1, Class A-1

Mar. 2020

4.16
%

138,663

140,724

$107,000 Series 2013-2, Class A-1

Jul. 2020

4.37
%

99,869

101,265

$77,000 Series 2013-3, Class A-1

Nov. 2020

4.24
%

72,320

73,307

$120,000 Series 2014-1, Class A-1

Apr. 2021

4.21
%

118,000

118,450

$95,000 Series 2015-1, Class A-1

Apr. 2022

3.75
%

93,852

94,208

$102,000 Series 2013-1, Class A-2

Mar. 2023

4.65
%

94,291

95,693

$97,000 Series 2013-2, Class A-2

Jul. 2023

5.33
%

90,536

91,801

$100,000 Series 2013-3, Class A-2

Nov. 2023

5.21
%

93,922

95,204

$140,000 Series 2014-1, Class A-2

Apr. 2024

5.00
%

137,667

138,192

$270,000 Series 2015-1, Class A-2

Apr. 2025

4.17
%

266,737

267,750

$200,000 Series 2016-1, Class A-1 (2016)

Oct. 2026

3.96
%

196,777

199,423

$135,000 Series 2016-1, Class A-2 (2017)

Apr. 2027

4.32
%

134,021

—

Total non-recourse net-lease mortgage notes

1,536,655

1,616,766

Non-recourse mortgage notes payable:

$2,956 note issued June 2013

—

2,663

$7,088 note issued April 2007

—

6,457

$4,400 note issued August 2007

—

3,586

$8,000 note issued January 2012; assumed in December 2013

Jan. 2018

4.778
%

6,740

6,960

$20,530 note issued December 2011; amended February 2012

Jan. 2019

5.275
% (a)

17,970

18,359

$6,500 note issued December 2012

Dec. 2019

4.806
%

5,777

5,900

$16,100 note issued February 2014

Mar. 2021

4.83
%

14,879

15,159

$13,000 note issued May 2012

May 2022

5.195
%

11,500

11,737

$14,950 note issued July 2012

Aug. 2022

4.95
%

12,874

13,135

$26,000 note issued August 2012

Sept. 2022

5.05
%

23,150

23,625

$6,400 note issued November 2012

Dec. 2022

4.707
%

5,707

5,827

$11,895 note issued March 2013

Apr. 2023

4.7315
%

10,712

10,931

$17,500 note issued August 2013

Sept. 2023

5.46
%

16,092

16,380

$10,075 note issued March 2014

Apr. 2024

5.10
%

9,573

9,691

$21,125 note issued July 2015

Aug. 2025

4.36
%

21,099

21,125

$65,000 note issued June 2016

Jul. 2026

4.75
%

63,886

64,614

$7,750 note issued February 2013

Mar. 2038

4.81
% (b)

6,972

7,114

$6,944 notes issued March 2013

Apr. 2038

4.50
% (c)

6,194

6,330

Total non-recourse mortgage notes payable

233,125

249,593

Unamortized net (discount) premium

(399)

(336)

Unamortized deferred financing costs

(28,038)

(32,542)

Total non-recourse debt obligations of consolidated special purpose entities, net

$
1,741,343

$
1,833,481

(a)

~~(a)~~

~~Note is a variable‑rate note which resets monthly at one-month LIBOR + 3.50%. The Company has entered into two interest rate~~

Mortgage notes were repaid, without penalty, in January 2023

~~Table of Contents~~

~~swap agreements that effectively convert the floating rate on an $11.8 million portion and a $6.2 million portion of this mortgage note payable~~(b)

Prepayable, without penalty, 24 months prior to ~~fixed rates of 5.299% and 5.230%, respectively.~~

maturity.

(c)

~~(b)~~

~~Interest rate is effective until March 2023 and will reset~~Prepayable, without penalty, 36 months prior to ~~greater of (1) initial rate plus 400 basis points or (2) Treasury rate plus 400 basis points.~~

maturity.

(d)

~~(c)~~

~~Interest rate is effective until March 2023 and will reset~~Prepayable, without penalty, three months prior to ~~the lender’s then prevailing interest rate.~~

maturity.

(e)	Prepayable, without penalty, four months prior to maturity.

Credit Risk Related Contingent Features

The Company has an agreement with a derivative counterparty which provides that if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company has agreements with ~~other~~ derivative counterparties, which provide generally that the Company could be declared in default on its derivative obligations if ~~repayment of~~the Company defaults on the underlying ~~indebtedness is accelerated by the lender due to the Company's default on the~~ indebtedness.As of ~~September 30, 2017,~~March 31, 2023, the termination value of the Company’s interest rate swaps that were in a liability position was approximately ~~$0.1~~$3.6 million, which includes accrued interest but excludes any adjustment for nonperformance risk.

Table of Contents

Long-term Debt Maturity Schedule

As of ~~September 30, 2017,~~March 31, 2023, the scheduled maturities, including balloon payments, on the Company’s aggregate long-term debt obligations are ~~expected to be~~ as follows (in thousands):

Scheduled




Principal

Balloon

Payments

Payments

Total

Remainder of 2017

$
6,537

$
—

$
6,537

2018

26,432

6,664

33,096

2019

26,953

122,686

149,639

2020

23,860

293,632

317,492

2021

21,016

229,366

250,382

2022

20,506

211,493

231,999

Thereafter

56,436

1,299,199

1,355,635

$
181,740

$
2,163,040

$
2,344,780


	Scheduled
	Principal		Balloon
	Payments		Payments		Total
Remainder of 2023	$	16,872	$	13,343	$	30,215
2024		21,908		226,198		248,106
2025		19,777		1,741,613		1,761,390
2026		17,728		414,142		431,870
2027		9,221		1,260,472		1,269,693
2028		4,711		598,595		603,306
Thereafter		22,097		1,697,255		1,719,352
	$	112,314	$	5,951,618	$	6,063,932

5. Equity

5. Stockholders’ Equity (Predecessor)

In June 2017, the Company completed a private placement of 18,621,674 shares of its common stock to a non-affiliated investor and received aggregate proceeds of $377.1 million. The issuance and sale of the shares were made pursuant to a stock purchase agreement and there were no underwriter discounts or commissions associated with the sale. During the first quarter of 2017, the Company completed a follow-on stock offering in which the Company issued and sold 9,947,500 shares of its common stock. The Company received $220.8 million in proceeds, net of both underwriters’ discount and offering expenses, in connection with this offering.

~~In September 2016,~~November 2020, the Company established anits fifth “at the market” equity distribution program, or ATM program, pursuant to which, from time to time, it ~~offers~~could offer and ~~sells~~sell up to $900.0 million of registered shares of ~~its~~ common stock ~~up to a maximum amount of $400 million~~ through a group of banks acting as its sales ~~agents. During~~agents (the “2020 ATM Program”). For the ~~first quarter~~period from January 1, 2023 to February 2, 2023, there were no common stock issuances under the 2020 ATM Program. Upon closing of ~~2017,~~the Merger, on February 3, 2023, the 2020 ATM Program was terminated.

Pursuant to the terms and conditions of the Merger Agreement, at or immediately prior to, as applicable, the effective time of the Merger, each share of common stock of the Company, par value $0.01 per share (“Common Stock”), other than shares of Common Stock held by STORE Capital, the Parent Parties or any of their respective wholly-owned subsidiaries, issued and outstanding immediately prior to the merger effective time, was automatically cancelled and converted into the right to receive an amount in cash equal to the Merger Consideration, without interest.

Members’ Equity (Successor)

In connection with the Merger, the Company issued 1,000 common units (“Common Units”) to its members for an aggregate cash amount of $8.3 billion. Prior to the Merger, Ivory REIT, LLC issued 125 Series A Preferred Units (the “Preferred Units”) for an aggregate cash amount of $125,000. The issuance of the Preferred Units was made through a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended, and ~~sold 2,047,546 shares~~the rules and regulations promulgated thereunder.

In accordance with the Company’s operating agreement, members holding Preferred Units (“Preferred Members”) receive distributions bi-annually and Members holding Common Units (“Common Members”) may receive distributions monthly. Common Members may be subject to capital calls. Except for their initial capital contribution, no Preferred Members may make any additional capital contributions. Additionally, no Preferred Member has the right to demand a withdrawal, reduction or return of ~~common stock under~~its capital contributions or receive interest thereon.

The Preferred Units rank senior to the ~~program at a weighted average share price~~Common Units of $25.02, raising $51.2 million in gross proceeds, or $50.3 million in net proceeds after the payment of sales agents’ commissions of $0.8 million and offering expenses. Since the program began in 2016, the Company ~~has~~and to all other membership interests and equity securities issued by the Company with respect to distribution and ~~sold an aggregate~~redemption rights and rights upon liquidation, dissolution or winding up of ~~8,132,647 shares of common stock under~~ the program at a weighted average share price of $26.25 and raised approximately $213.5 million in aggregate gross proceeds, or approximately $209.4 million in aggregate net proceeds after the payment of sales agents’ commissions of $3.2 million and offering expenses.Company.

~~The Company declared dividends payable to common stockholders totaling $163.7 million and $124.6 million during the nine months ended September 30, 2017 and 2016, respectively.~~

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6. Commitments and Contingencies

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Management believes that the final outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

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. As of ~~September 30, 2017,~~March 31, 2023, the Company had commitments to its customers to fund improvements to owned or mortgaged real estate properties totaling approximately ~~$108.7~~$138.3 million, of which ~~$101.0~~ $114.0 million is expected to be funded in the next twelve months. These additional investments will generally result in increases to the rental revenue or interest income due under the related contracts.

The Company has employment agreements with each of its executive officers that provide for minimum annual base salaries and annual cash ~~and equity~~ incentive compensation based on the satisfactory achievement of reasonable performance criteria and objectives to be adopted by the Company’s Board of Directors each year. In the event an executive officer’s employment terminates under certain circumstances, the Company would be liable for cash severance and continuation of healthcare benefits ~~and, in some instances, accelerated vesting of equity awards that he or she has been awarded as part~~under the terms of the ~~Company’s incentive compensation program.~~employee agreements.

7. Fair Value of Financial Instruments

The Company’s derivatives are required to be measured at fair value in the Company’s consolidated financial statements on a recurring basis. Derivatives are measured under a market approach, using prices obtained from a nationally recognized pricing service and pricing models with market observable inputs such as interest rates and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy. At ~~September 30, 2017 and December~~March 31, ~~2016,~~2023, the fair value of the Company’s derivative instruments was an asset of ~~$1.7~~$21.2 million and ~~$1.6 million, respectively,~~a liability of $3.4 million. The derivative assets are included in other assets, net, onand the ~~condensed consolidated balance sheets, and a liability of $57,000 and $180,000, respectively,~~derivative liabilities are included in ~~accounts payable,~~ accrued expenses, deferred revenue and other liabilities on the condensed consolidated balance sheets. At December 31, 2022, the aggregate fair value of the Company’s derivative instruments was an asset of $31.4 million.

In addition to the disclosures for assets and liabilities required to be measured at fair value at the balance sheet date, companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair value. The fair values of financial instruments are estimates based ~~upon~~on market conditions and perceived risks at ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016.~~2022. These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities.

Financial assets and liabilities for which the carrying values approximate their fair values include cash and cash equivalents, restricted cash, accounts receivable, accounts payable and tenant deposits. Generally, these assets and liabilities are ~~short‑term~~short-term in duration and are recorded at fair value on the consolidated balance sheets. The Company believes the carrying value of the borrowings on its credit facility approximate fair value based on their nature, terms and variable interest rate. Additionally, the Company believes the current carrying values of its ~~fixed‑rate~~fixed-rate loans receivable approximate fair values based on market quotes for comparable instruments or discounted cash flow analyses using estimates of the amount and timing of future cash flows, market rates and credit spreads.

The estimated fair values of the Company’s aggregate long-term debt obligations have been derived based on market observable inputs such as interest rates and discounted cash flow analyses using estimates of the amount and timing of future cash flows, market rates and credit spreads. These measurements are classified as Level 2 within the fair value hierarchy. At ~~September 30, 2017, these debt obligations had a carrying value of $2,311.7 million and an estimated fair value of $2,415.1 million. At December~~March 31, ~~2016,~~2023, these debt obligations had an aggregate carrying value of ~~$2,303.7 million~~$5.6 billion and an estimated fair value of ~~$2,353.6 million.~~

$5.5 billion. At December 31, 2022, these debt obligations had an aggregate carrying value of $4.6 billion and an estimated fair value of $4.1 billion.

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8. Merger

On February 3, 2023, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, STORE Capital Corporation merged with and into Merger Sub and the separate existence of STORE Capital Corporation ceased. Immediately following the completion of the Merger, the Surviving Entity changed its name to STORE Capital LLC. As a result of the Merger and subsequent delisting of the Company’s Common Stock from the New York Stock Exchange, the common equity of the Company is no longer publicly traded.

Consideration and Purchase Price Allocation

The Merger was accounted for using the asset acquisition method of accounting in accordance with ASC Topic 805 which requires that the cost of an acquisition be allocated on a relative fair value basis to the assets acquired and the liabilities assumed. The following table summarizes the total consideration transferred in the purchase of STORE Capital Corporation (amounts in thousands):


Consideration Type
Cash paid to former shareholders and equity award holders	$	9,142,744
Extinguishment of historical debt		1,331,698
Capitalized transaction costs		110,924
Total consideration	$	10,585,366

The following table summarizes the estimated fair values assigned to the assets acquired and liabilities assumed (amounts in thousands):


Assets acquired:
Land and improvements	$	3,620,509
Buildings and improvements		9,105,004
Intangible lease assets		620,034
Operating ground lease assets		52,805
Loans and financing receivables		952,039
Cash and cash equivalents		33,096
Other assets		71,209
Total assets acquired		14,454,696
Liabilities assumed:
Unsecured notes and term loans payable		1,725,000
Non-recourse debt obligations of consolidated special purpose entities		2,243,323
Below market value of debt		(430,908)
Intangible lease liabilities		148,660
Operating lease liabilities		50,516
Other liabilities		132,739
Total liabilities assumed		3,869,330
Fair value of net assets acquired	$	10,585,366

Fair Value Measurement

The estimated fair values of assets acquired and liabilities assumed were primarily based on information that was available as of the Closing Date. The methodology used to estimate the fair values to apply purchase accounting and the ongoing financial statement impact, if any, are summarized below.

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●

Real estate investments, including sale-leaseback transactions accounted for as financing arrangements, investments in sales-type leases and direct financing receivables – the Company engaged third party valuation specialists to calculate the fair value of the real estate acquired by the Company using standard valuation methodologies, including the cost and market approaches. The remaining useful lives for real estate assets, excluding land, were reset based on the effective age of an asset compared to its overall average life, as determined by the valuation specialists.

●

Intangible lease assets and liabilities – the Company engaged third party valuation specialists to calculate the fair value of in-place lease assets based on estimated costs the Company would incur to replace the lease. In-place lease assets are amortized to expense over the remaining life of the lease. Above-market lease assets and below-market lease liabilities were recorded at the discounted difference between the contractual cash flows and the market cash flows for each lease using a market-based, risk related discount rate. Above-market and below-market lease assets and liabilities are amortized as a decrease and increase to rental revenue, respectively, over the remaining life of the lease.

●

Operating ground lease assets and liabilities – the Company engaged third party valuation specialists to calculate the fair value of operating ground lease assets and liabilities based on the present value of future lease payments and an adjustment for the off-market component by comparing market to contract rent.

●

Loans receivable – the Company engaged third party valuation specialists to calculate the fair value of loans receivable based on the net present value of future payments to be received discounted at a market rate. The above-market value of the loans receivable is recorded as a loan premium and reported as an increase of the related loan balance on the condensed consolidated balance sheets. The premium is amortized as a decrease to interest income over the remaining term of the loan receivable.

●

Assumed debt – the Company engaged third party valuation specialists to calculate the fair value of the outstanding debt assumed using standard valuation methodology, including the market approach. The below-market value of debt is recorded as a debt discount and reported as a reduction of the related debt balance on the condensed consolidated balance sheets. The discount is amortized as an increase to interest expense over the remaining term of the related debt instrument.

●

Other assets and liabilities – the carrying values of cash, restricted cash, accounts receivable, prepaids and other assets, accounts payable, accrued expenses and other liabilities represented the fair values.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In this Quarterly Report on Form 10-Q, ~~we refer~~references to “we,” “us,” “our,” “the Company,” or “STORE Capital,” are references to STORE Capital Corporation, a Maryland corporation, prior to, and to STORE Capital LLC, a Delaware limited liability company, upon and following the completion of the Merger, as ~~“we,” “us,” “our” or “the Company”~~defined below, unless we specifically state otherwise or the context indicates otherwise.

Special Note Regarding Forward-Looking Statements

This quarterly report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the ~~Exchange Act)~~“Exchange Act”). Such forward-looking statements include, without limitation, statements concerning our business and growth strategies, investment, financing and leasing activities and trends in our business, including trends in the market for long-term, triple-net leases of freestanding, single-tenant properties. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this quarterly report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see “Item 1A.Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 filed with the Securities and Exchange Commission on ~~February 24, 2017.~~March 22, 2023.

Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this quarterly ~~report,~~report. New risks and weuncertainties arise over time and it is not possible for us to predict those events or how they may affect us. We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.

The Merger

On September 15, 2022, STORE Capital Corporation, a Maryland corporation, Ivory Parent, LLC, a Delaware limited liability company (“Parent”) and Ivory REIT, LLC, a Delaware limited liability company (“Merger Sub” and, together with Parent, the “Parent Parties”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). The Parent Parties are affiliates of GIC, a global institutional investor, and Oak Street Real Estate Capital, a division of Blue Owl Capital, Inc. On February 3, 2023 (the “Closing Date”), pursuant to the terms and subject to the conditions set forth in the Merger Agreement, STORE Capital Corporation merged with and into Merger Sub (the “Merger”) with Merger Sub surviving (the “Surviving Entity”) and the separate existence of STORE Capital Corporation ceased. Immediately following the completion of the Merger, the Surviving Entity changed its name to STORE Capital LLC. References herein to “we,” “us,” “our,” the “Company,” or “STORE Capital” are references to STORE Capital Corporation prior to the Merger and to STORE Capital LLC upon and following the Merger. As of the Closing Date of the Merger, the common equity of the Company is no longer publicly traded.

Following the Merger, we are a Delaware limited liability company organized as an internally managed real estate investment trust, or REIT. As a REIT, we will generally not be subject to federal income tax to the extent that we distribute all our taxable income to our members and meet other requirements.

For the periods prior to the Merger, we present the results of operations for STORE Capital Corporation and its wholly owned subsidiaries (the “Predecessor”). For the periods after the Merger, we present the results of operations for STORE Capital LLC and its wholly owned subsidiaries (the “Successor”). The three months ended March 31, 2023 (the “Combined Quarterly Period”) include the results of operations for the Predecessor during the period of January 1, 2023

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through February 2, 2023 and the results of operations for the Successor during the period February 3, 2023 through March 31, 2023.

Overview

We ~~were formed in 2011 to~~ invest in ~~and manage~~ Single Tenant Operational Real Estate, or STORE Property, which is our target market and the inspiration for our name. A STORE Property is a property location at which a company operates its business and generates sales and profits, which makes the location a profit center and, therefore, fundamentally important to that business. Due to the long-term nature of our leases, we focus our acquisition activity on properties that operate in industries we believe have long-term relevance, the majority of which are service industries. ~~Examples of single-tenant operational real estate in the service industry sector include restaurants, early childhood education centers, movie theaters and health clubs.~~ By acquiring the real estate from the operators and then leasing the real estate back to them, the operators become our ~~long‑term~~long-term tenants, and we refer to them as our customers. Through the execution of these sale-leaseback transactions, we fill a need for our customers by providing them a source of ~~long‑term~~long-term capital that enables them to avoid the need to incur debt and/or employ equity in order to finance the real estate that is essential to their business.

We are a Maryland corporation organized as an internally managed real estate investment trust, or REIT. As a REIT, we will generally not be subject to federal income tax to the extent that we distribute all of our taxable income to our stockholders and meet other requirements.

The growth of our Company from inception in May 2011 until our IPO in November 2014 was funded by STORE Holding Company, LLC, or STORE Holding, a Delaware limited liability company, substantially all of which was owned, directly or indirectly, by certain investment funds managed by Oaktree Capital Management, L.P. In November 2014, we took the Company public on the New York Stock Exchange and now our common stock trades under the ticker symbol “STOR”. Subsequent to the Company’s IPO, STORE Holding sold all of its shares through a series of public offerings and, as of April 1, 2016, no longer owned any shares of the Company’s common stock.

~~Since our inception in 2011, we have selectively originated real estate investments of approximately~~

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~~$6.4 billion. As of September 30, 2017, our investment portfolio totals approximately $5.9 billion, consisting of investments in 1,826 property locations across 48 states.~~ All of the real estate we acquire is held by our wholly owned subsidiaries, many of which are special purpose bankruptcy remote entities formed to facilitate the financing of our real estate. We predominantly acquire our ~~single‑tenant~~single-tenant properties directly from our customers in ~~sale‑leaseback~~sale-leaseback transactions where our customers sell us their operating properties and then simultaneously enter into ~~long‑term triple‑net~~long-term triple-net leases with us to lease the properties back. Accordingly, our properties are fully occupied and under lease from the moment we acquire them.

We generate our cash from operations primarily through the monthly lease payments, or “base ~~rent”,~~rent,” we receive from our customers under their ~~long‑term~~long-term leases with us. We also receive interest payments on loans receivable, which are a ~~small~~smaller part of our portfolio. We refer to the monthly scheduled lease and interest payments due from our customers as “base rent and ~~interest”.~~interest.” Most of our leases contain lease escalations every year or every several years that are based on the ~~lesser of the~~ increase in the Consumer Price Index or a stated percentage, ~~(if such contracts are expressed on an annual basis, currently averaging approximately 1.8%),~~ which allows the monthly lease payments we receive to increase ~~somewhat in an inflationary economic environment.~~over the life of the lease contracts. As of ~~September 30, 2017,~~March 31, 2023, approximately ~~98%~~99% of our leases (based on ~~annualized~~ base rent) ~~are~~were “triple-net” leases, which means that our customers are responsible for all of the operating costs such as maintenance, insurance and property taxes associated with the properties they lease from us, including any increases in those costs that may occur as a result of inflation. The remaining leases have some landlord responsibilities, generally related to maintenance and structural component replacement that may be required on such properties in the future, although we do not currently anticipate incurring significant capital expenditures or ~~property~~property-level operating costs under such leases. Because our properties are ~~single‑~~single tenant properties, almost all of which are under ~~long‑term~~long-term leases, it is not necessary for us to perform any significant ongoing leasing activities on our properties. As of September 30, 2017, the weighted average remaining term of our leases (calculated based on annualized base rent) was approximately 14 years, excluding renewal options, which are exercisable at the option of our tenants upon expiration of their base lease term. Leases approximating 99% of our base rent as of that date provide for tenant renewal options (generally two to four five‑year options) and leases approximating 9% of our base rent provide our tenants the option, at their election, to purchase the property from us at a specified time or times (generally at the greater of the then‑fair market value or our cost).

We have a dedicated an internal team ~~to review~~that reviews and ~~analyze~~analyzes ongoing ~~tenant~~customer financial performance, both ~~corporately~~at the corporate level and atwith respect to each property we own, in order to identify properties that may no longer be part of our long-term strategic ~~plan. As part of that continuous active-management process,~~plan and as such, we may from time to time decide to sell properties where we believe the property no longer meets our long-term goals. Because generally we have been able to originate assets at lease rates above the online auction market, we have been able to sell these assets on a one-off basis, typically for a gain. This gain acts to partially offset any possible losses we may experience in the real estate portfolio.properties.

Liquidity and Capital Resources

~~At the beginning~~As of ~~2017,~~March 31, 2023, our ~~real estate~~ investment portfolio ~~totaled $5.1~~stood at approximately $14.3 billion, consisting of investments in ~~1,660~~3,134 property locations with base rent and interest due from our customers aggregating approximately $34.9 million per month, excluding future rent payment escalations. By September 30, 2017, our investment portfolio had grown to approximately $5.9 billion, consisting of investments in 1,826 property locations with base rent and interest aggregating approximately $39.5 million per month.locations. Substantially all of our cash from operations is generated by our investment portfolio.

Our primary cash expenditures are the principal and interest payments we make on the debt we use to finance our real estate investment portfolio and the general and administrative expenses of managing the portfolio and operating our business. Since substantially all of our leases are triple net, our tenants are generally responsible for the maintenance, insurance and property taxes associated with the properties they lease from us. When a property becomes vacant through a tenant default or expiration of the lease term with no tenant renewal, we incur the property costs not paid by the tenant, as well as those property costs accruing during the time it takes to locate a substitute ~~tenant. We have no lease contracts due to mature during~~tenant or sell the remainder of 2017 and leases related to just three properties are due to mature in 2018; 91% of our leases have ten years or more remaining in their base lease term. As of September 30, 2017, we owned 19 properties that were vacant and not subject to a lease; subsequent to September 30, 2017, we re-leased eight of these properties and sold one, resulting in an occupancy rate of 99.5%.property. We expect to incur some ~~property~~property-level operating costs from time to time in periods

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during which properties that become vacant are being remarketed. In addition, we may recognize an expense for certain property costs, such as real estate taxes billed in arrears, if we believe the tenant is likely to vacate the property before making payment on those ~~obligations. The~~obligations or may be unable to pay such costs in a timely manner. Property costs are generally not significant to our operations, but the amount of ~~such~~ property costs can vary quarter to quarter based on the timing of property vacancies and the level of underperforming ~~properties; however, we~~properties. We may advance certain property costs on behalf of our tenants but expect that

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the majority of these costs will be reimbursed by the tenant and do not anticipate that ~~such costs~~they will be significant to our operations. Some of our properties are located in the areas impacted by the recent hurricanes that hit Texas and Florida; however, all but 16 suffered no damage or only minor damage from those storms. Seven of these properties have reopened for business, while nine, all located in Texas, remain closed and are under repair. The tenants who operate these nine properties, which represent less than 0.2% of our investment portfolio, are performing under the terms of their lease agreements and, to the extent not covered by their insurance policies, are responsible for the repairs.

We intend to continue to grow through additional real estate investments. To accomplish this objective, we must continue to identify real estate acquisitions that are consistent with our underwriting guidelines and raise future additional capital to make such acquisitions. We acquire real estate with a combination of debt and equity capital, proceeds from the sale of properties and ~~with~~ cash from operations that is not otherwise distributed to our ~~stockholders~~members in the form of ~~dividends. When we sell properties, we will often reinvest the cash proceeds from those sales in new property acquisitions.~~distributions. We also periodically commit to fund the construction of new properties for our customers or to provide them funds to improve and/or renovate properties we lease to them. These additional investments will generally result in increases to the rental revenue or interest income due under the related contracts. As of September 30, 2017, we had commitments to our customers to fund improvements to owned or mortgaged real estate properties totaling approximately $108.7 million, of which $101.0 million is expected to be funded in the next twelve months.

Financing Strategy

Our debt capital is initially provided on a short-term, temporary basis through a multi-year, ~~variable‑~~variable rate unsecured revolving credit facility with a group of banks. We manage our long-term leverage position through the strategic and economic issuance of long-term fixed-rate debt on both a secured and unsecured basis. By matching the expected cash inflows from our ~~long‑term~~long-term real estate leases with the expected cash outflows of our ~~long‑term fixed‑~~long-term fixed rate debt, we “lock in”, for as long as is economically feasible, the expected positive difference between our scheduled cash inflows on the leases and the cash outflows on our debt payments. By ~~“locking in”~~locking in this difference, or ~~“spread”,~~spread, we seek to reduce the risk that increases in interest rates would adversely impact our profitability. In addition, we ~~may~~ use various financial instruments designed to mitigate the impact of interest rate fluctuations on our cash flows and earnings, including hedging strategies such as interest rate swaps and caps, depending on our analysis of the interest rate environment and the costs and risks of such strategies. We also ladder our debt maturities in order to minimize the gap between our free cash flow or(which we define as our cash from operations less ~~dividends,~~distributions plus proceeds from our sale of properties) and our annual debt maturities.

~~As of September 30, 2017, all of our long‑term debt was fixed‑rate debt or was effectively converted to a fixed‑rate for~~Unsecured Revolving Credit Facility

In connection with the ~~term~~completion of the ~~debt~~Merger on February 3, 2023, we repaid all amounts outstanding and terminated our ~~weighted average debt maturity was approximately six years. In conjunction~~previous revolving credit facility agreement. Concurrently, we entered into a new unsecured credit agreement with ~~our investment-grade unsecured debt strategy, we are targeting~~ a ~~level~~group of ~~debt (net of cash and cash equivalents) that approximates 5½ to 6 times our earnings before interest, taxes, depreciation and amortization.~~

Our long-term debt strategy focuses on developing and maintaining broad access to multiple debt sources. We believe that having access to multiple debt markets increases our financing flexibility because different debt markets may attract different kinds of investors, thus expanding our access tolenders, which initially provided for a larger pool of potential debt investors. Also, a particular debt market may be more competitive than another at any particular point in time. To complement our long-term secured borrowing program, we use our investment-grade credit ratings to issue senior unsecured ~~long-term debt.~~revolving credit facility of up to $500.0 million. In ~~June 2017,~~March 2023, we ~~received a rating~~entered into an amendment which increased the unsecured revolving credit facility by $150.0 million to an immediate borrowing availability of ~~Baa2, stable outlook, from Moody’s Investors Service and we are currently rated BBB, stable outlook, by both Standard & Poor’s Ratings Services and Fitch Ratings.~~

Our goal is to employ a prudent blend of secured non-recourse debt paired with senior unsecured debt. By balancing the mix of secured and unsecured debt, we can effectively leverage those properties subject to the secured debt in the range of 60%-70% and, at the same time, target a more conservative level of overall corporate leverage by maintaining a large pool of properties that are unencumbered. Our secured non-recourse borrowings have a current weighted average loan-to-cost ratio of approximately 60% and approximately 50% of our investment portfolio serves as collateral for this long-term debt. The remaining 50% of our portfolio properties, aggregating approximately $3.0 billion at September 30, 2017, are unencumbered and this unencumbered pool of properties provides us the flexibility to access long-term unsecured borrowings. The result is that our growing unencumbered pool of properties can provide higher levels of debt service coverage on the senior unsecured debt than would be the case if we employed only unsecured debt

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~~at our overall corporate leverage level. We believe this debt strategy can lead to a lower cost of capital for the Company.~~$650.0 million.

The ~~long-term debt we have issued to date~~current facility is comprised of both secured non-recourse borrowings and senior unsecured borrowings. Our secured non-recourse borrowings are obtained through multiple debt markets – primarily either the asset-backed or commercial mortgage-backed securities debt markets. To a lesser extent, we may also obtain fixed-rate non‑recourse mortgage financing from banks and insurance companies secured by specific properties we pledge as collateral. The vast majority of our secured non-recourse borrowings were made through our own STORE Master Funding program, which provides flexibility not commonly found in most secured non-recourse debt and which is described further below.

The availability of debt to finance commercial real estate in the United States can, at times, be impacted by economic and other factors that are beyond our control. An example of adverse economic factors occurred during the recession of 2007 to 2009 when availability of debt capital for commercial real estate was significantly curtailed. We seek to reduce the risk that long‑term debt capital may be unavailable to us by maintaining the flexibility to issue long-term debt in multiple debt capital markets, both secured and unsecured, and by limiting the period between the time we acquire our real estate and the time we finance our real estate with long‑term debt. In addition, we have arranged our short‑term credit facility (described below) to have a multi‑year term in order to reduce the risk that short‑term real estate financing would not be available to us. As we grow our real estate portfolio, we also intend to manage our debt maturities to reduce the risk that a significant amount of our debt will mature in any single year in the future. Because our long-term secured debt generally requires monthly payments of principal, in addition to the monthly interest payments, the resulting principal amortization also reduces our refinancing risk upon maturity of the debt. As our outstanding debt matures, we may refinance the maturing debt as it comes due or choose to repay it using cash and cash equivalents or our revolving credit facility. During the nine months ended September 30, 2017, we repaid two maturing secured notes payable which had aggregate balloon payments of $9.9 million. In August 2017, we prepaid, with no prepayment penalty, our first issuance of STORE Master Funding notes (Series 2012-1, Class A notes, issued in August 2012 and scheduled to mature in August 2019), which bore an interest rate of 5.77% and had an outstanding balance of $198.6 million at the time of prepayment. We have one $100 million extendible bank term loan scheduled to mature in 2019 and no other significant debt maturities until 2020, when the STORE Master Funding seven-year notes issued in 2013 are due to mature. Similar to the STORE Master Funding Series 2012-1 prepayment, we may prepay other existing long-term debt in circumstances where we believe it would be economically advantageous to do so.

Typically, we use our $500 million unsecured credit facility to acquire our real estate properties, until those borrowings are sufficiently large to warrant the economic issuance of long-term fixed-rate debt, the proceeds from which we use to repay the amounts outstanding under our revolving credit facility. The facility, which includes an accordion feature that allows the size of the facility to be increased up to $800 million, matures in September 2019February 2027 and includes ~~a one-year~~two six-month extension ~~option~~options, subject to certain conditions and the payment of a ~~0.15%~~0.075% extension fee. ~~Subsequent to June 30, 2017, we made the election to base the credit spread on our credit rating as defined in the credit agreement and, as a result,~~Borrowings under the facility ~~now bears~~require monthly payments of interest at a rate selected by us ~~equal to~~of either (1) ~~LIBOR~~SOFR plus an adjustment of 0.10%, plus a ~~credit~~ spread ranging from ~~0.85%~~1.00% to ~~1.55%~~1.45%, or (2) the Base Rate, as defined in the credit agreement, plus a ~~credit~~ spread ranging from 0.00% to ~~0.55%~~0.45%. The spread used is based on our consolidated total leverage ratio as defined in the credit agreement. We are also required to pay a facility fee on the total commitment amount ranging from ~~0.125%~~0.15% to 0.30%~~. Prior to June 30, 2017,~~ based on our consolidated total leverage ratio. Currently, the applicable spread for SOFR-based borrowings ~~under~~is 1.1% and the facility ~~generally bore~~fee is 0.20%. Our credit agreement allows for a further reduction in the pricing of one basis point if certain environmental sustainability metrics are met. In May 2023, we entered into two interest ~~at one-month LIBOR plus~~rate swap agreements with an aggregate notional amount of $325.0 million that effectively convert a ~~leverage-based credit spread ranging from 1.35% to 2.15%. We were also required to pay a fee of either 0.15% or 0.25% assessed on the average unused~~ portion of the outstanding borrowings on the unsecured revolving credit facility ~~depending upon~~to an all-in fixed rate of 4.524%.

Under the ~~amount~~terms of ~~borrowings outstanding. Availability under~~ the facility, ~~is limited~~we are subject to ~~50%~~various restrictive financial and nonfinancial covenants which, among other things, require us to maintain certain leverage ratios, cash flow and debt service coverage ratios and secured borrowing ratios. Certain of ~~the value of~~these ratios are based on our ~~eligible unencumbered assets at any point in time. At September 30, 2017, we had $82 million of borrowings outstanding on this credit facility and we had a~~ pool of unencumbered assets, ~~aggregating~~which aggregated to approximately ~~$3.0~~$6.1 billion substantially all of which can serve as eligible unencumbered assets under the credit facility. Corporate covenants under this facility include: maximum leverage of 65%, minimum EBITDA to fixed charges ratio of 1.5 to 1, minimum net worth of $1.0 billion plus 75% of new net equity proceeds, and a maximum dividend payout ratio limited to 95% of Funds from Operations, all as defined in the credit agreement.at March 31, 2023. The facility is recourse to us, and, ~~includes a guaranty from~~as of March 31, 2023, we were in compliance with the financial and nonfinancial covenants under the facility.

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Senior Unsecured Term Debt

Upon completion of the Merger, our public senior unsecured notes were assumed by STORE Capital ~~Acquisitions,~~ LLC ~~one~~and as of March 31, 2023, we had an aggregate principal amount of $1.4 billion of underwritten public notes outstanding. These senior unsecured notes bear a weighted average coupon rate of 3.63% and interest on these notes is paid semi-annually. The supplemental indentures governing our ~~direct wholly owned subsidiaries. We remain~~public notes contain various restrictive covenants, including limitations on our ability to incur additional secured and unsecured indebtedness. As of March 31, 2023, we were in compliance with these covenants.

Prior to the inaugural issuance of public debt in March 2018, unsecured long-term debt had been issued through the private placement of notes to institutional investors. The financial covenants of the privately placed notes are similar to our current unsecured revolving credit facility, and, as of March 31, 2023, we were in compliance with these covenants. Upon completion of the Merger, the unsecured private notes were assumed by STORE Capital LLC and we were required to offer to repurchase the remaining $300.0 million in aggregate principal amount of such privately placed notes. Following the closing of the repurchase offer period, in March 2023, we repurchased $185.6 million in aggregate principal amounts of such notes and recognized $4.8 million of accelerated amortization of debt discounts associated with the repurchase which is recorded as loss on extinguishment of debt on the condensed consolidated statements of operations. As ~~summarized below, about 43%~~of March 31, 2023, we had an aggregate principal amount of $114.4 million of privately placed notes outstanding.

In April 2022, we entered into a term loan agreement under which we borrowed an aggregate $600.0 million of floating-rate, unsecured term loans; the loans consisted of a $400.0 million five-year loan and a $200.0 million seven-year loan. In December 2022, we entered into a term loan agreement with an initial commitment of $100.0 million of unsecured, floating-rate, short-term borrowings and an incremental borrowing feature that allowed us to request up to an additional $100.0 million of term loan borrowings after December 31, 2022.

In connection with the completion of the Merger on February 3, 2023, we repaid all amounts outstanding and terminated both April 2022 term loans; we also paid a $0.7 million prepayment penalty at the time of repayment which is recorded as loss on extinguishment of debt on the condensed consolidated statements of operations. In addition, we repaid $130.0 million of outstanding borrowings on the December 2022 term loan at maturity. Concurrently, on February 3, 2023, we entered into an unsecured credit agreement with a group of lenders which provided for an unsecured, variable-rate term loan with initial borrowings of $600.0 million. In March 2023, we entered into an incremental amendment to the unsecured credit agreement, which provides for an increase to the term loan in an amount of $200.0 million.

The term loan matures in April 2027 and the interest rate resets daily at Daily Simple SOFR plus an adjustment of 0.10%, plus a spread ranging from 1.10% to 1.70% based on our consolidated total leverage ratio as defined in the credit agreement. As of March 31, 2023, our spread was 1.25%. Our credit agreement allows for a further reduction in the pricing of one basis point if certain environmental sustainability metrics are met. Our seven existing cash flow hedges were redesignated to the new term loan and effectively convert the initial borrowings of $600.0 million on the variable-rate term loan to a fixed rate of 3.88% for the remaining term of the loan. In connection with the amendment, we entered into one interest rate swap agreement with a notional amount of $200.0 million that effectively converts the incremental borrowings to a fixed interest rate of 5.17% for the remaining term of the loan.

The aggregate outstanding principal amount of our unsecured senior notes and term loans payable was $2.3 billion as of March 31, 2023.

Secured Term Loan Facility

On February 3, 2023, in connection with the completion of the Merger, we along with certain of our consolidated special purpose entities entered into a credit agreement which provided for a secured term loan of $2.0 billion.The Secured Term Loan Facility matures in February 2025 and includes two six-month extension options, subject to certain conditions and the payment of a 0.25% extension fee.

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Borrowings outstanding under the secured term loan facility require monthly payments of interest at a floating-rate equal to one-month Term SOFR, plus a spread of 2.75%. Upon repayment of the secured term loan facility, we are subject to a 1% exit fee. In connection with entering into the secured term loan facility, we entered into three interest rate swap agreements with an aggregate notional amount of $750.0 million that effectively converted a portion of the borrowings on the secured facility to a fixed interest rate of 7.60%.

In March 2023, we paid down $515.0 million in aggregate principal amount of indebtedness under the credit agreement. In conjunction with the paydown, we paid a $5.2 million exit fee and recognized $3.5 million and $10.4 million of accelerated amortization of deferred financing costs and debt discounts, respectively, associated with the repayment. The exit fee and accelerated amortization are recorded as a loss on extinguishment of debt on the condensed consolidated statements of operations.

The secured term loan facility is secured by a collateral pool of properties owned by our consolidated special purpose entities and is generally non-recourse to us, subject to certain customary limited exceptions. Collateral may be released upon repayments made on the secured term loan facility. As of March 31, 2023, the aggregate collateral pool securing the secured term loan facility was comprised primarily of single-tenant commercial real estate properties with an aggregate investment amount of approximately $3.5 billion.

We, along with our consolidated special purpose entities, are subject to certain restrictive covenants under the credit agreement, including with respect to the type of business they may conduct and other customary covenants for a bankruptcy-remote special purpose entity. The credit agreement permits substitution of real estate collateral from time to time for assets securing the secured term loan facility, subject to certain conditions and limitations. The secured term loan facility is guaranteed by the Company.

Non-recourse Secured Debt

As of March 31, 2023, approximately 31% of our real estate investment portfolio ~~serves~~served as collateral for outstanding borrowings under our STORE Master Funding debt program. ~~Through this debt program, we arrange for bankruptcy remote, special purpose entity subsidiaries to issue multiple series of investment‑grade asset‑backed net‑lease mortgage~~

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~~notes, or ABS notes, from time to time as additional collateral is added to the collateral pool.~~ We believe our STORE Master Funding program allows for flexibility not commonly found in ~~nonrecourse~~non-recourse debt, often making it preferable to traditional debt issued in the commercial mortgage-backed securities market. Under the program, STORE Capital serves as both master and special servicer for the collateral pool, allowing for active portfolio monitoring and prompt issue resolution. In addition, features of the program allowing for the sale or substitution of collateral, provided certain criteria are met, facilitate active portfolio management. Through this debt program, we arrange for bankruptcy remote, special purpose entity subsidiaries to issue multiple series of investment grade asset backed net lease mortgage notes, or ABS notes, from time to time as additional collateral is added to the collateral pool and leverage can be added in incremental note issuances based on the value of the collateral pool.

The ABS notes are generally issued by our wholly owned special purpose entity subsidiaries to institutional investors through the ~~asset‑~~asset backed securities market. These ABS notes are typically issued in two classes, Class A and Class B. At the time of issuance, the Class A notes generally represent approximately 70% of the appraised value of the underlying real estate collateral owned by the issuing subsidiaries and are currently rated AAA or A+ by ~~Standard & Poor’s Ratings Services.~~ S&P Global Ratings.

The Class B notes, which are subordinated to the Class A notes as to principal repayment, represent approximately 5% of the appraised value of the underlying real estate collateral and are currently rated BBB by Standard & Poor’s Ratings Services. We have historically retained the Class B notes of each series, which aggregate ~~$128.0 million in~~outstanding principal amount ~~outstanding at September 30, 2017 and are held by one~~ of our bankruptcy remote, special purpose entity subsidiaries. The Class B notes are not reflected in our financial statements because they eliminate in consolidation. Since the Class B notes are considered issued and outstanding, they provide us with additional financial flexibility in that we may sell them to a third party in the future or use them as collateral for short‑term borrowings as we have done from time to time in the past.

~~In March 2017, we sold $135 million of A+ rated notes under the STORE Master Funding~~ secured debt program. These notes, which were originally issued in October 2016 and had been retained by the Company for future sale, have an interest rate of 4.32% and a remaining term at the time of the sale of approximately 10 years.

The ABS notes outstanding at September 30, 2017 totaled $1.5 billion in Class A principal amount, supported by a collateral pool valued at approximately $2.6 billion representing 975 property locations operated by 176 customers. The amount of debt that can be issued in any new series is determined by the structure of the transaction and the amount of collateral that has been added to the pool. In addition, the issuance of each new series of notes is subject to the satisfaction of several conditions, including that there is no event of default on the existing note series and that the issuance will not result in an event of default on, or the credit rating downgrade of, the existing note series.

A significant portion of our cash flows is generated by the special purpose entities comprising our STORE Master Funding debt program. For the nine months ended September 30, 2017, excess cash flow, after payment of debt service and servicing and trustee expenses, totaled $74 million on cash collections of $159 million, which represents an overall ratio of cash collections to debt service, or debt service coverage ratio (as defined in the STORE Master Funding program documents), of greater than 1.85 to 1 on the STORE Master Funding program. If at any time the debt service coverage ratio generated by the collateral pool is less than 1.3 to 1, excess cash flow from the STORE Master Funding entities will be deposited into a reserve account to be used for payments to be made on the net‑lease mortgage notes, to the extent there is a shortfall. We anticipate that the debt service coverage ratio for the STORE Master Funding program will remain well above program minimums.

From time to time, we also may obtain debt in discrete transactions through other bankruptcy remote, special purpose entity subsidiaries, which debt is solely secured by specific real estate assets and is generally non‑recourse to us (subject to certain customary limited exceptions). These discrete borrowings are generally in the form of traditional mortgage notes payable ~~with principal and interest payments due monthly and balloon payments due at their respective maturity dates, which typically range from seven to ten years from the date~~was $2.2 billion as of issuance. We generally obtain discrete secured borrowings from institutional commercial mortgage lenders, who subsequently securitize (that is, sell) the loans within the commercial mortgage‑backed securities, or CMBS, market. We also have occasionally used similar types of financing from insurance companies and commercial banks. Our secured borrowings contain various covenants customarily found in mortgage notes, including a limitation on the issuing entity’s ability to incur additional indebtedness on the underlying real estate. Certain of the notes also require the posting of cash reserves with the lender or trustee if specified coverage ratios are not maintained by the special purpose entity or the tenant. We did not make the September 1, 2017 through November 1, 2017 scheduled payments of interest and principal due on a $12.9 million note, which bears interest at 4.95% and is scheduled to mature in August 2022, because the two properties that secure this note were not generating sufficient cash flow to cover the debt service. We are currently in discussions with the lenderMarch 31, 2023.

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regarding a resolution of this matter, although no assurances can be made as to the outcome of these discussions. As of the date of this report, the lender has not declared an event of default. Should the lender declare an event of default, the note would bear interest at a default rate equal to 9.95% per annum.

To date, our unsecured long-term debt has been issued through the private placement of notes to institutional investors and through groups of lenders who also participate in our unsecured revolving credit facility. In March 2017, we added a $100 million floating-rate, unsecured two-year term loan, which has three one-year extension options. Concurrent with the closing of each of our floating-rate bank term loans, we entered into interest rate swaps that effectively convert the floating rates to fixed rates.Debt Summary

As of ~~September 30, 2017,~~March 31, 2023, our aggregate secured and unsecured ~~long‑~~term debt had an outstanding principal balance of ~~$2.34~~$6.1 billion, a weighted average maturity of ~~6.0~~4.8 years and a weighted average interest rate of ~~4.4%~~just over 4.75%. The following is a summary of the outstanding balance of our borrowings as well as a summary of the portion of our real estate investment portfolio that is either pledged as collateral for these borrowings or is unencumbered as of ~~September 30, 2017:~~March 31, 2023:


			Gross Investment Amount
			Special Purpose
	Outstanding		Entity		All Other

											Gross Investment Portfolio Assets
											Special Purpose
									Outstanding		Entity		All Other
(In millions)	Borrowings		Subsidiaries		Subsidiaries		Total		Borrowings		Subsidiaries		Subsidiaries		Total
STORE Master Funding net-lease mortgage notes payable	$	1,537	$	2,554	$	—	$	2,554	$	2,113	$	4,425	$	—	$	4,425
Other mortgage notes payable		233		392		—		392		126		289		—		289
Total non-recourse debt										2,239		4,714		—		4,714
Secured term loan facility										1,485		3,509		—		3,509
Total secured debt										3,724		8,223		—		8,223
Unsecured notes and term loans payable		575		—		—		—		2,339		—		—		—
Unsecured credit facility		82		—		—		—
Unsecured revolving credit facility										361		—		—		—
Total unsecured debt (including revolving credit facility)										2,700		—		—		—
Unencumbered real estate assets										—		4,669		1,492		6,161
Total debt		2,427		2,946		—		2,946	$	6,424	$	12,892	$	1,492	$	14,384
Unencumbered real estate assets		—		2,322		646		2,968
	$	2,427	$	5,268	$	646	$	5,914

Our decision to use either senior unsecured term debt, STORE Master Funding or other ~~non‑recourse~~non-recourse traditional mortgage loan borrowings depends on our view of the most strategic blend of unsecured versus secured debt that is needed to maintain our targeted level of overall corporate leverage, as well as on borrowing costs, debt terms, debt flexibility and the tenant and industry diversification levels of our real estate assets. ~~As we continue to acquire~~Our acquisition of real estate ~~we expect to balance the overall degree of leverage on our portfolio by growing a pool of portfolio assets that are unencumbered. A growing pool of unencumbered~~ assets will increase our financial flexibility by providing us with additional assets that ~~could~~can support senior unsecured financing or that ~~could~~can serve as substitute collateral for existing debt. Should market factors, which are beyond our control, adversely impact our access to these debt sources at economically feasible rates, our ability to grow through additional real estate acquisitions will be limited to any undistributed amounts available from our operations and ~~any additional~~ equity capital ~~raises.~~raises from our members.

~~We access~~For additional details and terms regarding these debt instruments, see Note 4 to the March 31, 2023 unaudited condensed consolidated financial statements.

Equity

STORE Capital Corporation historically accessed the equity markets in various ways. ~~In June 2017,~~As part of these efforts, we completed a private placement of 18,621,674 shares of our common stock to a wholly owned subsidiary of Berkshire Hathaway at a purchase price of $20.25 per share and received aggregate proceeds of $377.1 million. The issuance and sale of the shares were made pursuant to a stock purchase agreement and there were no underwriter discounts or commissions associated with the sale. We used the proceeds from this offering to prepay the STORE Master Funding Series 2012-1, Class A, indebtedness and to fund real estate acquisitions during the third quarter. In addition, during the first quarter of 2017, we completed a follow-on stock offering in which the Company issued and sold 9,947,500 shares of common stock at a price to the public of $23.10 per share. We raised approximately $220.8 million of proceeds, net of both underwriters’ discount and offering expenses, from this offering, which was used to pay down amounts then outstanding under our credit facility and to fund real estate acquisitions.

~~In September 2016, we~~ established an “at the market” equity distribution ~~program,~~programs, or ATM ~~program, under~~programs, pursuant to which, from time to time, we could offer and sell registered shares of our common stock ~~up to a maximum amount of $400 million~~ through a group of banks acting as our sales agents. ~~During~~Most recently, in November 2020, we established a $900.0 million ATM program (the “2020 ATM Program”). For the ~~first quarter~~period from January 1, 2023 to February 2, 2023, there were no common stock issuances under the 2020 ATM Program. The 2020 ATM Program was terminated upon the closing of ~~2017,~~the Merger.

Pursuant to the terms and conditions of the Merger Agreement, at or immediately prior to the effective time of the Merger, each share of our common stock, par value $0.01 per share, other than shares held by STORE Capital, the Parent Parties or any of their respective wholly-owned subsidiaries, issued and outstanding immediately prior to the merger effective time, were automatically cancelled and converted into the right to receive an amount in cash equal to $32.25 per share, without interest.

In connection with the Merger, we issued ~~and sold 2,047,546 shares under~~1,000 common units to our common members for an aggregate cash amount of $8.3 billion. Prior to the ~~program at a weighted average share price~~Merger, 125 Series A Preferred Units were issued to our preferred members for an aggregate cash amount of $25.02, raising $51.2 million in gross proceeds and $50.3 million in net proceeds after the payment of sales agents’ commissions of $0.8 million and offering expenses. We did not sell any shares under the ATM program during the second or third quarter of 2017. Since the program began$125,000. In accordance with our operating agreement, our common members receive

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~~in 2016, we have issued~~distributions monthly and ~~sold an aggregate of 8,132,647 shares under the program at a weighted average share price of $26.25, raising $213.5 million in aggregate gross proceeds~~are subject to capital calls. Our preferred members receive distributions bi-annually and ~~$209.4 million in aggregate net proceeds after the payment of sales agents’ commissions of $3.2 million and offering expenses. The net proceeds were primarily used~~are not subject to ~~fund real estate acquisitions.~~capital calls.

Cash Flows

Substantially all of our cash from operations is generated by our investment portfolio. As shown in the following table, net cash provided by operating activities ~~increased $46.4 million from~~for the Combined Quarterly Period was comparable to the same period in ~~2016, primarily due to the increase~~2022. Our investments in ~~the size of our~~ real estate, ~~investment portfolio which generated additional rent~~loans and ~~interest revenues. Real~~financing receivables during the Combined Quarterly Period were $185.4 million less than the same period in 2022. During the Combined Quarterly Period, our investments in real estate, ~~investment~~loans and financing receivables were primarily funded with a combination of cash from operations, borrowings on our revolving credit facility and equity capital from our members. The acquisition of STORE Capital was primarily funded with equity from our members and the issuance of the secured term loan facility. Investment activity during the same period in 2022 was primarily funded with a combination of cash from operations, borrowings on our revolving credit facility, proceeds from the issuance of stock and proceeds from the sale of real estate ~~properties, proceeds from the issuance~~properties.

Our financing activities provided $10.7 billion of ~~long-term debt and proceeds from the issuance of stock. The decrease in~~ net cash used in investing activities is primarily due to an increase of $179.7 million in proceeds from the sale of real estate and collections of principal on our loans and direct financing receivables which increased from $45.8 million for 2016 to $225.5 million in 2017. Net proceeds from the issuance of common stock increased $271.9 million to $647.8 million during 2017 from $375.9 million during the ~~first nine months of 2016, whereas net proceeds from the issuance of long-term debt decreased $128.5~~Combined Quarterly Period as compared to $266.5 million ~~from~~during the same period in ~~2016.~~ 2022. Financing activities in 2023 include the $1.4 billion of net secured credit facility borrowings, the aggregate $800.0 million of bank term loans we entered into in February and March 2023 and $185.6 million of aggregate debt repayments on our unsecured privately placed notes. Equity raises from our members totaled $8.4 billion and cash distributions totaled $50.0 million for the period from February 3, 2023 through March 31, 2023.


	Successor			Predecessor
(In thousands)	Period from February 3, 2023 through March 31, 2023			Period from January 1, 2023 through February 2, 2023		Three Months Ended March 31, 2022	Increase (Decrease)(a)
Net cash provided by operating activities	$	104,173	$	59,380	$	160,887	$	2,666
Net cash used in investing activities		(10,737,411)		(129,025)		(456,017)		(10,410,419)
Net cash provided by financing activities		10,681,118		67,988		266,485		10,482,621
Net increase (decrease) in cash, cash equivalents and restricted cash	$	47,880	$	(1,657)	$	(28,645)	$	74,868

(a)	Change represents the Combined Quarterly Period compared to the three months ended March 31, 2022.

As ~~compared to the first nine months~~ of ~~2016,~~March 31, 2023, we ~~repaid $208.7~~had liquidity of $42.9 million ~~more of long-term debt during the same period of 2017 primarily related to the STORE Master Funding Series 2012-1 notes which were prepaid in August 2017. Additionally, we paid dividends to~~on our stockholders totaling $151.0 million and $117.4 million during the first nine months of 2017 and 2016, respectively. Our quarterly dividend was increased by 7.4% during the third quarter of 2016 to an annualized $1.16 per common share. We also increased our quarterly dividend in the third quarter of 2017 by 6.9% to an annualized $1.24 per common share; this increase will impact our cash payments for dividends in future quarters.

Nine Months Ended

September 30,
(In thousands)

2017

2016

Net cash provided by operating activities

$
229,405

$
182,959

Net cash used in investing activities

(782,277)

(834,125)

Net cash provided by financing activities

530,060

639,639

Net decrease in cash, cash equivalents and restricted cash

(22,812)

(11,527)

Cash, cash equivalents and restricted cash, beginning of period

73,166

83,438

Cash, cash equivalents and restricted cash, end of period

$
50,354

$
71,911

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

$
34,986

$
30,044

Restricted cash included in other assets

15,368

41,867

Total cash, cash equivalents and restricted cash

$
50,354

$
71,911

balance sheet. Management believes that our current cash balance, the $289.0 million of immediate borrowing capacity available on our unsecured revolving credit facility and the cash generated by our operations ~~our current borrowing capacity on our revolving credit facility and our access to long‑term debt capital, will be~~is sufficient to fund our operations for the foreseeable future and allow us to acquire the real estate for which we currently have made commitments. In order to continue to grow our real estate portfolio in the future, beyond the excess cash generated by our operations and our ability to borrow, we ~~intend~~would expect to raise additional equity capital ~~through the sale of~~from our ~~common stock.~~members.

~~Off-Balance Sheet Arrangements~~

~~We have no off-balance sheet arrangements as of September 30, 2017.~~

~~Contractual Obligations~~

As summarized in the table of Contractual Obligations in our Annual Report on Form 10-K for the year ended December 31, 2016, we have contractual obligations related to our credit facility and long-term debt obligations, interest on those debt obligations, commitments to fund improvements to real estate properties and operating lease obligations under certain ground leases and our corporate office lease. As disclosed in ~~Liquidity and Capital Resources,~~ during the first nine months of 2017, we entered into two long-term debt obligations: (1) a $100 million two-year bank term loan, which has three one-year extension options, and has been effectively converted to a fixed rate of 2.57% through the use

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of an interest rate swap, and (2) $135 million of STORE Master Funding net-lease mortgage notes, which have an interest rate of 4.32% and a remaining term of approximately 10 years. In the third quarter of 2017, we prepaid the STORE Master Funding Series 2012-1, Class A notes (issued in August 2012 and scheduled to mature in August 2019), which bore an interest rate of 5.77% and had an outstanding balance of $198.6 million at the time of prepayment.

Recently Issued Accounting Pronouncements

See Note 2 to the ~~September 30, 2017~~March 31, 2023 unaudited condensed consolidated financial statements.

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Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires our management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and on various other assumptions believed to be reasonable under the circumstances. These estimates affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, it is possible that different accounting would have been applied, resulting in a different presentation of our condensed consolidated financial statements. From time to time, we reevaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2022 in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ~~We have not made any material changes to these policies during the periods covered by this quarterly report.~~

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Real Estate Portfolio Information

As of ~~September 30, 2017,~~March 31, 2023, our total investment in real estate and loans approximated ~~$5.9~~$14.3 billion, representing investments in ~~1,826~~3,134 property locations, substantially all of which are profit centers for our customers. ~~These investments generate cash flows from approximately 580 contracts predominantly structured as net leases, mortgage loans and combinations of leases and mortgage loans, or hybrid leases.~~ The weighted average ~~non‑cancellable~~non-cancellable remaining term of our leases was approximately 1413.1 years.

~~Our real estate portfolio is highly diversified. As~~Results of September 30, 2017, our 1,826 property locations were operated by over 380 customers across 48 states. Our largest customer represented approximately 3% of our portfolio at September 30, 2017, and our top ten largest customers represented less than 19% of annualized base rent and interest. Our customers operate their businesses across 480 brand names or business concepts in over 100 industries. Our top five concepts as of September 30, 2017 were Art Van Furniture, Ashley Furniture HomeStore, Cabela’s, Mills Fleet Farm and Applebee’s; combined, these concepts represented 12% of annualized base rent and interest. Our top five industries as of September 30, 2017 are restaurants, early childhood education centers, furniture stores, movie theaters and health clubs. Combined, these industries represented 46% of annualized base rent and interest.Operations

The following tables summarize the diversification of our real estate portfolio based on the percentage of base rent and interest, annualized based on rates in effect on September 30, 2017, for all of our leases, loans and direct financing receivables in place as of that date.

~~Diversification by Customer~~Overview

As of ~~September 30, 2017, our 1,826 property locations were operated by over 380 customers and the following table identifies our ten largest customers:~~

% of

Annualized

Base Rent

Number

and

of

Customer

Interest

Properties

AVF Parent, LLC (Art Van Furniture)

2.9
%
17

Bass Pro Group, LLC (Cabela's)

2.8

9

American Multi-Cinema, Inc. (Starplex/Carmike/Showplex/AMC)

2.4

15

Mills Fleet Farm Group, LLC

2.0

6

Cadence Education, Inc. (Early childhood/elementary education)

2.0

32

US LBM Holdings, LLC (Building materials distribution)

1.7

37

RMH Franchise Holdings, Inc. (Applebee's)

1.4

33

O'Charley's LLC

1.2

30

Automotive Remarketing Group, Inc.

1.2

6

Stratford School, Inc. (Elementary and middle schools)

1.1

4

All other (372 customers)

81.3

1,637

Total

100.0
%
1,826

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~~Diversification by Concept~~

~~As of September 30, 2017, our customers operated their businesses across 480 concepts and the following table identifies the top ten concepts:~~

% of


Annualized

Base Rent

Number

and

of

Customer Business Concept

Interest

Properties

Art Van Furniture

2.9
%
17

Ashley Furniture HomeStore

2.7

24

Cabela's

2.6

8

Mills Fleet Farm

2.0

6

Applebee's

2.0

47

Popeyes Louisiana Kitchen

1.4

63

O'Charley's

1.2

30

Stratford School

1.1

4

Starplex Cinemas

1.1

7

Captain D's

1.1

73

All other (470 concepts)

81.9

1,547

Total

100.0
%
1,826

~~Diversification by Industry~~

As of September 30, 2017, our customers’ business concepts were diversified across more than 100 industries within the service, retail and manufacturing sectors of the U.S. economy. The following table summarizes those industries into 75 industry groups:

% of




Annualized

Building

Base Rent

Number

Square

and

of

Footage

Customer Industry Group

Interest

Properties

(in thousands)

Service:

Restaurants—full service

13.1
%
335

2,348

Restaurants—limited service

7.4

392

1,048

Early childhood education centers

6.8

170

1,878

Movie theaters

6.3

39

1,873

Health clubs

6.0

67

1,915

Family entertainment centers

4.2

25

836

Automotive repair and maintenance

3.0

95

460

All other service (31 industry groups)

22.2

380

10,997

Total service

69.0

1,503

21,355

Retail:

Furniture stores

6.3

46

2,980

Farm and ranch supply stores

3.1

22

1,859

All other retail (14 industry groups)

8.2

99

4,743

Total retail

17.6

167

9,582

Manufacturing:

Metal fabrication

3.3

47

4,520

All other manufacturing (20 industry groups)

10.1

109

11,111

Total manufacturing

13.4

156

15,631

Total

100.0
%
1,826

46,568

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~~Diversification by Geography~~

Our portfolio is also highly diversified by geography, as our 1,826 property locations can be found in 48 of the 50 states (excluding Delaware and Rhode Island). The following table details the top ten geographical locations of the properties as of September 30, 2017:

% of

Annualized

Base Rent

and

Number of

State

Interest

Properties

Texas

12.5
%
192

Illinois

7.1

127

Florida

6.5

112

Ohio

5.7

104

Georgia

5.5

114

Tennessee

4.4

89

California

3.9

25

Arizona

3.8

74

Michigan

3.8

64

Minnesota

3.8

60

All other (38 states) (1)

43.0

865

Total

100.0
%
1,826

~~(1)~~

~~Includes two properties in Ontario, Canada which represent 0.5% of annualized base rent and interest.~~

~~Contract Expirations~~

~~The following table sets forth the schedule of our lease, loan and direct financing receivable expirations as of September 30, 2017:~~

% of


Annualized

Base Rent

and

Number of

Year of Lease Expiration or Loan Maturity (1)

Interest

Properties (2)

Remainder of 2017

0.3
%
11

2018

0.3

3

2019

0.7

8

2020

0.4

4

2021

0.8

6

2022

0.5

7

2023

1.4

31

2024

0.9

17

2025

1.9

23

2026

2.6

54

Thereafter

90.2

1,643

Total

100.0
%
1,807

~~(1)~~

~~Expiration year of contracts in place as of September 30, 2017 and excludes any tenant option renewal periods.~~

~~(2)~~

~~Excludes 19 properties which were vacant and not subject to a lease as of September 30, 2017.~~

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~~Results of Operations~~

~~Overview~~

~~As of September 30, 2017,~~March 31, 2023, our real estate investment portfolio had grown to approximately ~~$5.9~~$14.3 billion, consisting of investments in ~~1,826~~3,134 property locations in 4849 states, operated by ~~over 380~~592 customers in various industries. ~~Over 95%~~Approximately 93% of the real estate investment portfolio represents commercial real estate properties subject to ~~long‑term~~long-term leases, 4%approximately 7% represents mortgage loan and ~~direct~~ financing receivables ~~primarily~~ on commercial real estate ~~buildings (located on land we own and lease to our customers)~~properties and a nominal amount represents loans receivable secured by our tenants’ other assets.

~~Three and Nine Months Ended September 30, 2017 Compared~~41

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Combined Quarterly Period compared to ~~Three and Nine Months Ended September 30, 2016~~the three months ended March 31, 2022



	Successor		Predecessor
(In thousands)	Period from February 3, 2023 through March 31, 2023		Period from January 1, 2023 through February 2, 2023		Three Months Ended March 31, 2022		Increase (Decrease)(a)
Total revenues	$	168,754	$	81,184	$	222,116	$	27,822
Expenses:
Interest		67,219		19,080		43,999		42,300
Property costs		2,080		1,348		4,241		(813)
General and administrative		9,226		5,679		17,016		(2,111)
Merger-related		—		895		—		895
Depreciation and amortization		95,603		27,789		72,639		50,753
Provisions for impairment		5,677		—		912		4,765
Total expenses		179,805		54,791		138,807		95,789
Other (loss) income:
(Loss) gain on dispositions of real estate		(213)		97		6,076		(6,192)
Loss on extinguishment of debt		(24,580)		—		—		(24,580)
Loss from non-real estate, equity method investments		—		—		(2,157)		2,157
(Loss) income before income taxes		(35,844)		26,490		87,228		(96,582)
Income tax (benefit) expense		(302)		703		206		195
Net (loss) income	$	(35,542)	$	25,787	$	87,022	$	(96,777)

(a)	Change represents the Combined Quarterly Period compared to the three months ended March 31, 2022.

Revenues

Three Months Ended

Nine Months Ended

September 30,

Increase

September 30,

Increase

(In thousands)

2017

2016

(Decrease)

2017

2016

(Decrease)

Total revenues

$
110,544

$
96,998

$
13,546

$
332,723

$
274,202

$
58,521

Expenses:

Interest

31,379

27,121

4,258

91,938

76,427

15,511

Transaction costs

—

155

(155)

—

490

(490)

Property costs

1,335

807

528

3,272

2,519

753

General and administrative

10,255

8,104

2,151

29,787

25,240

4,547

Selling stockholder costs

—

—

—

—

800

(800)

Depreciation and amortization

37,589

31,112

6,477

110,200

86,626

23,574

Provision for impairment of real estate

7,670

—

7,670

11,940

—

11,940

Total expenses

88,228

67,299

20,929

247,137

192,102

55,035

Income from operations before income taxes

22,316

29,699

(7,383)

85,586

82,100

3,486

Income tax expense

81

89

(8)

334

248

86

Income before gain on dispositions of real estate

22,235

29,610

(7,375)

85,252

81,852

3,400

Gain on dispositions of real estate, net of tax

6,345

6,733

(388)

35,778

9,533

26,245

Net income

$
28,580

$
36,343

$
(7,763)

$
121,030

$
91,385

$
29,645

~~Revenues~~

The increase in revenues period over period was driven primarily by the growth in the size of our real estate investment portfolio, which generated additional rental revenues and interest income. ~~Our~~Excluding fair value adjustments resulting from the Merger, our real estate investment portfolio grew ~~from~~by approximately ~~$4.8~~ $1.2 billion in gross investment amount, representing ~~1,576~~2,965 properties as of ~~September 30, 2016 to approximately $5.9 billion in gross investment amount representing 1,826~~March 31, 2022 and 3,134 properties at September 30, 2017. The weighted average real estate investment amounts outstanding during the three-month periods were approximately $5.7 billion in 2017 and $4.7 billion in 2016. During the nine-month periods, the weighted average real estate investment amounts outstanding were approximately $5.5 billion in 2017 and $4.4 billion in 2016.March 31, 2023. Our real estate investments were made throughout the periods presented and were not all outstanding for the entire period; accordingly, a ~~large~~ portion of the increase in revenues between periods is related to recognizing a full year of revenue in ~~2017~~2023 on acquisitions that were made during ~~2016.~~2022. Similarly, the full revenue impact of acquisitions made during the first ~~nine months~~quarter of ~~2017~~2023 will not be seen until the ~~fourth~~second quarter of ~~2017 and into 2018. Revenues for~~2023. A smaller component of the ~~third quarter~~increase in revenues between periods is related to rent escalations recognized on our lease contracts; over time, these rent increases can provide a strong source of ~~2017 include a~~revenue growth. During the three months ended March 31, 2022, we collected $4.6 million ~~charge~~of lease termination fees primarily related to ~~accelerated~~certain property sales, which are included in other income; we did not recognize any similar revenues during the Combined Quarterly Period. Additionally, in the period from February 3, 2023 through March 31, 2023, amortization from lease intangibles recorded as a result of the Merger represented a net increase in revenue by $2.1 million.

The majority of our investments are made through sale-leaseback transactions in which we acquire the real estate from the owner-operators and then simultaneously lease ~~incentives associated with terminated lease contracts.~~

the real estate back to them through long-term leases based on the tenant’s business needs. The initial rental or capitalization rates we ~~receive~~achieve on ~~sale‑leaseback~~sale-leaseback transactions, calculated as the initial annualized base rent divided by the purchase price of the properties, vary from transaction to transaction based on many factors, such as the terms of the lease, the property type including the property’s real estate fundamentals and the market rents in the area on the various types of properties we target across the United States. ~~The majority of our transactions are sale‑leaseback transactions where we acquire the property and simultaneously negotiate a lease directly with the tenant based on the tenant’s business needs.~~ There are also online commercial real estate auction marketplaces for real estate transactions; properties acquired through these online marketplaces are ~~often~~sometimes subject to existing leases and offered by ~~third‑~~third party sellers. In general, because we provide tailored customer lease solutions in sale-leaseback transactions, our lease rates historically have been higher and subject to less short-term market influences than what we have seen in the

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auction marketplace as a whole. In addition,

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since our real estate ~~leases represent an alternative~~lease contracts are a substitute for both borrowings and equity that our customers would otherwise have to ~~other forms of corporate capitalization,~~commit to their real estate locations, we believe there is a relationship between lease rates ~~can also be influenced by changes in~~and market interest rates and overall capital availability. For the nine months ended September 30, 2017, we experienced a decrease of 0.2% in the weighted average lease rate achieved as compared to the same period in 2016 and, based on our most recent experience, our expectation for the future is that lease rates will remain relatively flat for the near term. The weighted average initial real estate capitalization rate on the properties we acquired during the third quarters of 2017 and 2016 was approximately 7.8% and 8.2%, respectively, and was approximately 7.8% and 8.0% on the properties we acquired during the first nine months of 2017 and 2016, respectively.are also influenced by overall capital availability.

Interest Expense

The increase in interest expense, as summarized in the table below, was due primarily to an increase in long‑term borrowings used to partially fund the acquisition of properties for our growing real estate investment portfolio. We fund the growth in our real estate investment portfolio with ~~long‑term fixed-rate debt, net proceeds from the occasional sales of real estate, net proceeds from equity issuances and~~ excess cash flow from our operations after ~~dividends~~distributions and principal payments on ~~our~~debt, net proceeds from periodic sales of real estate, members’ contributions and proceeds from issuances of debt. ~~We use our credit facility to temporarily finance the properties we acquire.~~

The following table summarizes our interest expense for the periods ~~presented.~~presented:



	Successor			Predecessor
(Dollars in thousands)	Period from February 3, 2023 through March 31, 2023			Period from January 1, 2023 through February 2, 2023			Three Months Ended March 31, 2022
Interest expense - credit facility	$	1,327		$	2,697		$	500
Interest expense - credit facility fees		178			110			300
Interest expense - secured and unsecured debt		50,330			15,799			41,448
Capitalized interest		(498)			(240)			(410)
Amortization of debt discounts, deferred financing costs and other		15,882			714			2,161
Total interest expense	$	67,219		$	19,080		$	43,999
Credit facility:
Average debt outstanding	$	139,947		$	559,848		$	181,044
Average interest rate during the period (excluding facility fees)		6.0	%		5.3	%		1.1	%
Secured and unsecured debt:
Average debt outstanding	$	6,377,061		$	4,670,146		$	4,242,707
Average interest rate during the period		5.0	%		3.7	%		3.9	%

Three Months Ended

Nine Months Ended

September 30,

September 30,

(Dollars in thousands)

2017

2016

2017

2016

Interest expense - credit facility

$
10

$
74


$
959

$
915

Interest expense - credit facility fees

264

323

773

758

Interest expense - long-term debt (secured and unsecured)

27,336

25,105

82,906

70,043

Capitalized interest

(268)

(212)

(827)

(607)

Amortization of deferred financing costs and other

4,037

1,831

8,127

5,318

Total interest expense

$
31,379

$
27,121

$
91,938

$
76,427

Credit facility:

Average debt outstanding

$
1,783

$
13,728

$
56,520

$
60,202

Average interest rate during the period (excluding facility fees)

2.2
%

2.2
%

2.3
%

2.0
%
Long-term debt (secured and unsecured):

Average debt outstanding

$
2,458,229

$
2,152,832

$
2,454,548

$
1,992,639

Average interest rate during the period

4.4
%

4.6
%

4.5
%

4.7
%

~~The average amount~~Interest expense associated with our secured and unsecured debt increased from 2022 as a result of ~~long-term~~the increased debt outstanding ~~was approximately $2.5~~and increased interest rates. During the Combined Quarterly Period, we had average secured and unsecured debt outstanding of $5.8 billion at a weighted average interest rate of 4.6% as compared to $4.2 billion at an average interest rate of 3.9% during the three months ended ~~September 30, 2017, up from approximately $2.2 billion for~~March 31, 2022. The primary driver of the ~~same period~~increases in ~~2016 and, for~~2023 is the ~~nine months ended September 30, 2017, the average amount~~addition of ~~long-term debt outstanding was approximately $2.5 billion, up from approximately~~ $2.0 billion ~~for the same period~~of secured, floating rate term loan facility borrowings in ~~2016.~~February 2023, which we paid down by $515.0 million in March 2023. The ~~increase in long-term debt outstanding is the primary driver for the increase in interest expense on long-term debt. This increase was slightly offset by a decrease in the~~ weighted average interest rate of the ~~long-term debt. Long-term debt added after September 30, 2016 included $100 million of unsecured bank~~secured term debt we issued in March 2017, which bears an interest rate of 2.77%, and the STORE Master Funding net‑lease mortgage notes we sold in October 2016 and March 2017, aggregating $335.0 million, which bear a weighted average interest rate of 4.1%. During the third quarter of 2017, we prepaid approximately $198.6 million of STORE Master Funding Series 2012-1, Class A notes, which were not scheduled to mature until August 2019 and, as a result, recognized a $2.0 million charge to interest expenseloan facility for the ~~accelerated amortization of the related deferred financing costs. As of September 30, 2017, we had $2.3 billion of long-term debt~~period outstanding ~~with a weighted average interest rate of 4.4%~~in 2023 was 7.51%.

~~We use~~Interest expense associated with our revolving credit facility increased from 2022 as a result of the increased interest rate and increased level of average borrowings outstanding on ~~a short-term, temporary basis to acquire real estate properties until those~~the revolver during 2023. As of March 31, 2023, we had $361.0 million of borrowings ~~are sufficiently large to warrant the economic issuance of long-term fixed-rate debt, the proceeds of which~~

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~~we use to repay the amounts~~ outstanding under our revolving credit facility. ~~We entered~~

Amortization of deferred financing costs and other in the ~~third quarter~~Combined Quarterly Period increased relative to the comparable period in 2022 due to the amortization of ~~2017~~deferred financing costs associated with ~~cash available from our private placement stock offering in late June 2017~~new debt issuances and amortization of debt discounts recorded as a result ~~did not have any borrowing activity until late September 2017, generating a nominal amount~~ of interest expense, excluding facility fees, associated with our revolving credit facility for the three months ended September 30, 2017. Similarly, for the three months ended September 30, 2016, we also had a small amount of average borrowings outstanding and incurred $0.1 million of interest expense. For the nine months ended September 30, 2017 and 2016, average borrowings outstanding were $56.5 million and $60.2 million, respectively, and interest expense was $1.0 million and $0.9 million, respectively. The amount and timing of real estate acquisition activity and debt and/or equity transactions will affect the level of borrowing activity on our credit facility.purchase accounting.

From time to time, we may have construction activities on one or more of our real estate properties and interest capitalized as a part of those activities represented $0.3 million and $0.8 million during the three and nine months ended September 30, 2017, respectively, as compared to $0.2 million and $0.6 million, respectively, for the same periods in 2016.

~~Transaction Costs~~

Our real estate acquisitions have been predominantly sale‑leaseback transactions in which acquisition and closing costs are capitalized as part of the investment in the property. We also occasionally acquire properties subject to an existing lease and have historically accounted for those transactions as business combinations in accordance with the then-existing accounting guidance. Accordingly, the costs incurred on properties acquired that were subject to an existing lease have been expensed to operations as incurred. As noted in Note 2 to the condensed consolidated financial statements, we adopted ASU 2017-01 in 2017 and, as a result, expect that fewer, if any, of our real estate acquisitions subject to an existing lease will be accounted for as business combinations under this new accounting guidance and expect that the related closing costs will be capitalized as part of the investment in those properties. Transaction costs expensed during the three and nine months ended September 30, 2016 totaled $0.2 million and $0.5 million, respectively. As expected, there were no transactions costs expensed during the nine months ended September 30, 2017.

Property Costs

Approximately ~~98%~~99% of our leases are triple net, meaning that our tenants are generally responsible for the property-level operating costs such as taxes, insurance and maintenance. Accordingly, we generally do not expect to incur property-level operating costs or capital expenditures, except during any period when one or more of our properties is no longer under ~~lease.~~lease or when our tenant is unable to meet their lease obligations. Our need to expend capital on our

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properties is further reduced due to the fact that some of our tenants will periodically refresh the property at their own expense to meet their business needs or in connection with franchisor requirements. As of ~~September 30, 2017,~~March 31, 2023, we owned 1915 properties that were vacant and not subject to a lease and nothe lease contracts related to just 19 properties we own are ~~expected~~due to ~~mature~~expire during the remainder of ~~2017. Subsequent to September 30, 2017, we re-leased eight of these vacant properties and sold one more.~~2023. We expect to incur some property costs related to the vacant properties until such time as those properties are either leased or sold.

~~Included in~~The amount of property costs ~~for~~can vary quarter to quarter based on the ~~three~~timing of property vacancies and ~~nine months ended September 30, 2017 was approximately $117,000 and $348,000, respectively, related~~the level of underperforming properties.

As of March 31, 2023, we had entered into operating ground leases as part of several real estate investment transactions. The ground lease payments made by our tenants directly to the ~~amortization~~ground lessors are presented on a gross basis in the condensed consolidated statements of ~~ground lease intangibles~~operations, both as ~~compared to $112,000~~rental revenues and ~~$336,000, respectively, for the same periods in 2016. Property costs also include the expense of performing site inspections of our properties from time to time,~~ as ~~well as the~~ property ~~management costs of~~costs. For the few ~~properties~~lease contracts where we ~~own that have specific landlord property-level expense obligations.~~ collect property taxes from our tenants and remit those taxes to governmental authorities, we reflect those payments on a gross basis as both rental revenue and as property costs.

The following is a summary of property costs (in thousands):


	Successor		Predecessor
	Period from February 3, 2023 through March 31, 2023		Period from January 1, 2023 through February 2, 2023		Three Months Ended March 31, 2022
Property-level operating costs (a)	$	962	$	784	$	2,715
Ground lease-related intangibles amortization expense		39		39		117
Operating ground lease payments made by STORE Capital		67		33		33
Operating ground lease payments made by STORE Capital tenants		341		185		526
Operating ground lease straight-line rent expense		163		55		196
Property taxes payable from tenant impounds		508		252		654
Total property costs	$	2,080	$	1,348	$	4,241

(a)	Property-level operating costs primarily include those expenses associated with vacant or nonperforming properties, property management costs for the few properties that have specific landlord obligations and the cost of performing property site inspections from time to time.

General and Administrative Expenses

General and administrative expenses include compensation and benefits; professional fees such as portfolio servicing, legal, accounting and rating agency fees; and general office expenses such as insurance, office rent and travel costs. General and administrative costs totaled ~~$10.3~~$14.9 million ~~and $29.8~~for the Combined Quarterly Period, as compared to $17.0 million for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2022.

We expect that general and administrative expenses will rise in some measure as ~~compared to $8.1 million and $25.2 million, respectively, for the same periods in 2016 with the increase primarily due to the growth of~~ our real estate investment portfolio ~~and related staff additions.~~grows. Certain expenses, such as ~~property‑~~property related insurance costs and the costs of servicing the properties and loans comprising our real estate portfolio, increase in direct proportion to the increase in the size of the portfolio. ~~Compensation and benefits expense increased~~

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partially due to staffing additions to support our growing investment portfolio, as well as an increase in amortization expense related to our stock-based incentive compensation program where our legacy incentive plans are being replaced with public company incentive plans that are more comprehensive and include more of our employees. Our employee base grew from 65 employees at September 30, 2016 to 77 employees as of September 30, 2017. General and administrative expense for the third quarter of 2017 includes a $0.3 million accrued severance payment for an executive officer that announced his resignation in September 2017. We expect thatHowever, general and administrative ~~expenses will continue to rise in some measure as our real estate investment portfolio grows; however, we expect that such~~ expenses as a percentage of the portfolio ~~will decrease~~have decreased over time due to efficiencies and economies of scale.

~~Selling Stockholder Costs~~Merger-related Expenses

~~In connection with our IPO, we entered into~~Merger-related expenses include legal fees and other costs incurred as a registration rights agreement with STORE Holding pursuant to which we agreed to provide certain “demand” registration rights and customary “piggyback” registration rights. The registration rights agreement also provided that we pay certainresult of the Merger. For the period from January 1, 2023 through February 2, 2023, merger-related expenses ~~relating to such registrations and indemnify the registration rights holders against certain liabilities which may arise under securities laws. We incurred approximately $0.8 million~~totaled $0.9 million.

Table of ~~expenses, primarily registration fees, legal and accounting costs, during the first quarter of 2016 on behalf of STORE Holding related to its sale of all of its holdings of our common stock.~~Contents

Depreciation and Amortization Expense

Depreciation and amortization expense, which increases in proportion to the increase in the size of our real estate portfolio, rose from ~~$31.1 million and $86.6~~$72.6 million for the three ~~and nine~~ months ended ~~September 30, 2016, respectively,~~March 31, 2022, to ~~$37.6~~$123.4 million ~~and $110.2 million, respectively,~~ for the ~~comparable periods~~Combined Quarterly Period. Depreciation and amortization also increased as a result of both the increase in ~~2017.~~the value of our real estate portfolio and shorter average remaining useful lives applied to the real estate portfolio as a result the Merger.

~~Provision~~Provisions for Impairment ~~of Real Estate~~

During the ~~nine~~Combined Quarterly Period, we recognized $1.3 million in provisions for the impairment of real estate and $4.4 million in provisions for credit losses related to our loans and financing receivables recorded as a result of the Merger as required by ASU 2016-13, Financial Instruments — Credit Losses: Measurement of Credit Losses on Financial Instruments. During the three months ended ~~September 30, 2017,~~March 31, 2022, we recognized an aggregate ~~provision~~$1.2 million in provisions for the impairment of real estate and had a reduction of ~~$11.9~~$0.3 million ~~representing $7.6 million recognized~~ in ~~the third quarter~~provisions for credit losses related to ~~two properties which became vacant during the quarter~~our loans and ~~$4.3 million recognized in the first quarter associated with a property sold in the second quarter (see below). There was no provision for impairment of real estate recognized in 2016.~~financing receivables.

(Loss) Gain on Dispositions of Real Estate

WeAs part of our ongoing active portfolio management process, we sell properties from time to time in order to enhance the diversity and quality of our real estate portfolio and to take advantage of opportunities to ~~reinvest the~~recycle capital. During the ~~three months ended September 30, 2017,~~Combined Quarterly Period, we recognized a ~~$6.3 million~~$116,000 aggregate ~~gain,~~ net ~~of tax,~~loss on the sale of 12five properties. In comparison, for the three months ended ~~September 30, 2016,~~March 31, 2022, we recognized a ~~$6.7~~ $6.1 million aggregate ~~gain,~~ net ~~of tax,~~gain on the sale of 1611 properties. ~~For~~

Loss on Extinguishment of Debt

During the ~~nine months ended September 30, 2017,~~Combined Quarterly Period, we recognized a ~~$35.8~~loss on extinguishment of debt of $24.6 million ~~aggregate gain, net of tax,~~associated with the partial prepayments made on the ~~sale of 40 properties as compared to a $9.5 million aggregate gain, net of tax, on~~secured term loan facility and unsecured term notes during the ~~sale of 21 properties~~period. No such losses were recorded in ~~the same period in 2016.~~2022.

Net (Loss) Income

For the ~~three months ended September 30, 2017,~~Combined Quarterly Period, our net ~~income~~loss was ~~$28.6~~$9.8 million reflecting a decrease from ~~$36.3~~net income of $87.0 million for the ~~same~~comparable period ~~a year ago. Net~~in 2022. The change in net (loss) income for the ~~third quarter~~Combined Quarterly Period is primarily comprised of ~~2017 includes a $4.6 million non-cash charge to revenue related to the accelerated~~increases in depreciation and amortization, of lease incentives associated with lease contracts that were terminated during the quarter, a $2.0 million accelerated amortization of deferred financing costs associated with the prepayment of our Series 2012-1, Class A, STORE Master Funding debt,interest expense and a ~~$7.6 million provision for impairment~~loss on extinguishment of ~~real estate recognized on two properties which became vacant during the quarter.~~

~~Table of Contents~~

~~For the nine months ended September 30, 2017, our net income rose to $121.0 million~~debt, offset by increases resulting from ~~$91.4 million for the same period in 2016. Our net income rose primarily due to~~ the growth in ~~the size of~~ our real estate investment portfolio, which generated additional rental revenues and interest ~~income, and due to the increase in gains on dispositions of real estate as described above, offset by the impact of property impairments and accelerated amortization as discussed above.~~

~~Non‑GAAP Measures~~

Our reported results are presented in accordance with GAAP. We also disclose Funds from Operations, or FFO, and Adjusted Funds from Operations, or AFFO, both of which are non‑GAAP measures. We believe these two non‑GAAP financial measures are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and AFFO do not represent cash generated from operating activities and are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as reported on our statement of cash flows as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures.

We compute FFO in accordance with the definition adopted by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as GAAP net income, excluding gains (or losses) from extraordinary items and sales of depreciable property, real estate impairment losses and depreciation and amortization expense from real estate assets, including the pro rata share of such adjustments of unconsolidated subsidiaries. To derive AFFO, we modify the NAREIT computation of FFO to include other adjustments to GAAP net income related to certain non‑cash revenues and expenses such as straight‑line rents, amortization of deferred financing costs and stock‑based compensation. In addition, in deriving AFFO, we exclude certain other costs not related to our ongoing operations, such as the amortization of lease-related intangibles and, historically, transaction costs associated with acquiring real estate subject to existing leases.

FFO is used by management, investors and analysts to facilitate meaningful comparisons of operating performance between periods and among our peers primarily because it excludes the effect of real estate depreciation and amortization and net gains on sales, which are based on historical costs and implicitly assume that the value of real estate diminishes predictably over time, rather than fluctuating based on existing market conditions. Management believes that AFFO provides more useful information to investors and analysts because it modifies FFO to exclude certain additional non-cash revenues and expenses such as straight‑line rents, amortization of deferred financing costs and stock‑based compensation as such items may cause short-term fluctuations in net income but have no impact on operating cash flows or long-term operating performance. Additionally, in deriving AFFO, we exclude certain other costs, such as the amortization of lease-related intangibles and, historically, transaction costs associated with acquiring real estate subject to existing leases. We believe that these costs are not an ongoing cost of the portfolio in place at the end of each reporting period and, for these reasons, we add back the portion expensed when computing AFFO. Similarly, in 2016 we excluded the offering expenses incurred on behalf of our selling stockholder, STORE Holding, when it exited all of its holdings of STORE Capital common stock, as those costs are not related to our ongoing operations. As a result, we believe AFFO to be a more meaningful measurement of ongoing performance that allows for greater performance comparability. Therefore, we disclose both FFO and AFFO and reconcile them to the most appropriate GAAP performance metric, which is net income. ~~STORE Capital’s FFO and AFFO may not be comparable to similarly titled measures employed by other companies.~~

4145

Table of Contents

~~The following is a reconciliation of net income (which we believe is the most comparable GAAP measure) to FFO and AFFO.~~

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

2017

2016

2017

2016

Net Income

$
28,580

$
36,343

$
121,030

$
91,385

Depreciation and amortization of real estate assets

37,397

30,956

109,698

86,236

Provision for impairment of real estate

7,670

—

11,940

—

Gain on dispositions of real estate, net of tax

(6,345)

(6,733)

(35,778)

(9,533)

Funds from Operations

67,302

60,566

206,890

168,088

Adjustments:

Straight-line rental revenue, net

(1,185)

(963)

(2,962)

(2,548)

Transaction costs

—

155

—

490

Amortization of:

Equity-based compensation

2,012

1,796

5,880

5,219

Deferred financing costs and other noncash interest expense (a)

4,037

1,831

8,127

5,318

Lease-related intangibles and costs (b)

5,025

418

5,642

1,321

Accrued severance costs

296

—

296

—

Selling stockholder costs

—

—

—

800

Adjusted Funds from Operations

$
77,487

$
63,803

$
223,873

$
178,688

~~(a)~~

~~For the third quarter of 2017, includes $2.0 million of accelerated amortization of deferred financing costs related to the prepayment of STORE Master Funding debt.~~

~~(b)~~

~~For the third quarter of 2017, includes a $4.6 million charge related to accelerated amortization of lease incentives associated with terminated lease contracts.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Our interest rate risk management objective is to limit the impact of future interest rate changes on our earnings and cash flows. We seek to match the cash inflows from our ~~long‑term~~long-term leases with the expected cash outflows on our ~~long‑term~~ debt. To achieve this objective, our consolidated subsidiaries primarily borrow on a ~~fixed‑rate~~fixed-rate basis for ~~longer‑term~~longer-term debt issuances. At ~~September 30, 2017, all~~March 31, 2023, the majority of our ~~long‑term~~ debt carried a fixed interest rate or was effectively converted to a ~~fixed‑~~fixed rate ~~through the use of interest rate swaps~~ for the term of the debt and the weighted average debt maturity was approximately ~~6.0~~4.8 years. We are exposed to interest rate risk between the time we enter into a ~~sale‑leaseback~~sale-leaseback transaction and the time we finance the related real estate with ~~long‑term fixed‑rate~~fixed-rate debt. In addition, when that ~~long‑term~~ debt matures, we may have to refinance the real estate at a higher interest rate. Market interest rates are sensitive to many factors that are beyond our control.

We address interest rate risk by employing the following strategies to help insulate us from any adverse impact of rising interest rates:

●

We seek to minimize the time period between acquisition of our real estate and the ultimate financing of that real estate with ~~long‑term fixed‑rate~~long-term fixed-rate debt.

●

By using serial issuances of long-term debt, we intend to ladder out our debt maturities to avoid a significant amount of debt maturing during any single ~~period.~~

~~We also ladder our debt maturities in order~~period and to minimize the gap between free cash flow orand annual debt maturities; free cash flow includes cash from operations less ~~dividends, and annual debt maturities.~~

member distributions plus proceeds from our sales of properties.

●

Our secured ~~long‑term~~long-term debt generally provides for some amortization of the principal balance over the term of the debt, which serves to reduce the amount of refinancing risk at debt maturity to the extent that we can refinance the reduced debt balance over a revised long-term amortization schedule.

~~Table of Contents~~

●

We seek to maintain a large pool of unencumbered real estate assets to give us the flexibility to choose among various secured and unsecured debt markets when we are seeking to issue new long-term debt.

●

We may also use derivative instruments, such as interest rate swaps, caps and treasury lock agreements, as cash flow hedges to limit our exposure to interest rate movements with respect to various debt instruments.

In July 2017, the Financial Conduct Authority, or FCA (the authority that regulates LIBOR), first announced that it intended to stop compelling banks to submit rates for the calculation of LIBOR. Subsequently, the Alternative Reference Rates Committee, or ARRC, identified the Secured Overnight Financing Rate, or SOFR, as the preferred alternative to LIBOR for use in derivatives and other financial contracts. On March 5, 2021, the FCA announced that U.S. Dollar (USD) LIBOR would no longer be published after June 30, 2023. This latest announcement had several implications, including setting the spread that may be used to automatically convert contracts from USD LIBOR to SOFR. Additionally, banking regulators encouraged banks to discontinue new LIBOR debt issuances by December 31, 2022. At March 31, 2023, the Company does not have any LIBOR-based borrowings outstanding.

See our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 under the heading “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for a more complete discussion of our interest rate sensitive assets and liabilities. As of ~~September 30, 2017,~~March 31, 2023 our market risk has not changed materially from the amounts reported in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2022.

Table of Contents

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief ~~Financial~~Accounting Officer, of the effectiveness as of ~~September 30, 2017~~March 31, 2023 of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and our Chief ~~Financial~~Accounting Officer concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the ~~third~~first fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting of the Company.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of our business, including instances in which we are named as defendants in lawsuits arising out of accidents causing personal injuries or other events that occur on the properties operated by our customers. These matters are generally covered by insurance and/or are subject to our right to be indemnified by our customers that we include in our leases. Management believes that the final outcome of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

Item 1A. Risk Factors.

There have been no material changes to the risk factors as disclosed in the section entitled “Risk Factors” beginning on page 106 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016~~2022 and filed with the Securities and Exchange Commission on ~~February 24, 2017.~~March 22, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended ~~September 30, 2017,~~March 31, 2023, we did not ~~repurchase~~purchase any of our equity securities nor did we sell any equity securities that were not registered under the Securities Act of ~~1933.~~1933, as amended, other than the preferred and common units issued to our members.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

~~Table of Contents~~

Item 5. Other Information.

None.

Table of Contents

Item 6. Exhibits


Exhibit	Description	Location
~~Exhibit~~2.1	~~Description~~Agreement and Plan of Merger, dated as of September 15, 2022, by and among Ivory Parent, LLC, Ivory REIT, LLC and STORE Capital Corporation.	~~Location~~Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K of the Company filed on September 15, 2022.
3.1	Third Amended and Restated Limited Liability Company Agreement of Ivory REIT, LLC, dated as of February 3, 2023.	Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K of the Company filed on February 3, 2023.
3.2	Certificate of Formation of Ivory REIT, LLC, dated August 30, 2022, as amended effective February 3, 2023.	Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K of the Company filed on February 3, 2023.
10.1	Employment Agreement, effective as of February 3, 2023, by and among STORE Capital LLC (formerly known as Ivory REIT, LLC), STORE Capital Advisors, LLC, and Mary B. Fedewa.	Incorporated by reference to Exhibit 10.1 of the Annual Report on Form 10-K of the Company filed on March 22, 2023.
10.2	Employment Agreement, effective as of February 3, 2023, by and among STORE Capital LLC, STORE Capital Advisors, LLC, and Chad A. Freed.	Incorporated by reference to Exhibit 10.2 of the Annual Report on Form 10-K of the Company filed on March 22, 2023.
10.3	Employment Agreement, effective as of February 3, 2023, by and among STORE Capital LLC, STORE Capital Advisors, LLC, and Tyler S. Maertz.	Incorporated by reference to Exhibit 10.3 of the Annual Report on Form 10-K of the Company filed on March 22, 2023.
10.4	Employment Agreement, effective as of February 3, 2023, by and among STORE Capital LLC, STORE Capital Advisors, LLC, and Craig A. Barnett.	Incorporated by reference to Exhibit 10.4 of the Annual Report on Form 10-K of the Company filed on March 22, 2023.
10.5	Credit Agreement, dated as of February 3, 2023, among the Borrowers identified therein, Credit Suisse AG, Cayman Islands Branch, as Administrative Agent, Citibank, N.A., as Payment Agent, and the other lenders identified therein.	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of the Company filed on February 3, 2023.
10.6	Property Management and Servicing Agreement, dated as of February 3, 2023, among the Borrowers identified therein, Ivory REIT, LLC (renamed STORE Capital LLC following the Merger Effective Time), as Property Manager and Special Servicer, KeyBank National Association, as Back-Up Manager, and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent.	Incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K of the Company filed on February 3, 2023.
10.7	Credit Agreement, dated as of February 3, 2023, by and among Ivory REIT, LLC (renamed STORE Capital LLC following the Merger Effective Time), KeyBank National Association, as Administrative Agent, and the other lenders and parties identified therein.	Incorporated by reference to Exhibit 10.3 of the Current Report on Form 8-K of the Company filed on February 3, 2023.
10.8	Incremental Amendment No. 1, dated as of March 8, 2023, by and among STORE Capital LLC, KeyBank National Association, as Administrative Agent, and the other lenders identified therein.	Incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of the Company filed on March 14, 2023.

Table of Contents

31.1	Rule 13a-14(a) Certification of the ~~Chief~~Principal Executive Officer.	Filed herewith.
31.2	Rule 13a-14(a) Certification of the ~~Chief~~Principal Financial Officer.	Filed herewith.
32.1	Section 1350 Certification of the ~~Chief~~Principal Executive Officer.	Furnished herewith.
32.2	Section 1350 Certification of the ~~Chief~~Principal Financial Officer.	Furnished herewith.
101.INS	Inline XBRL Instance ~~Document.~~Document – the instance does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.	Filed herewith.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.	Filed herewith.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)	Filed herewith.

Table of Contents

SIGNATURE

~~SIGNATURE~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			STORE CAPITAL LLC
	~~STORE CAPITAL CORPORATION~~(Registrant)
	~~(Registrant)~~

Date: ~~November 3, 2017~~May 15, 2023	By:	/s/ ~~Catherine Long~~Ashley A. Dembowski
		~~Catherine Long~~Ashley A. Dembowski
		~~Executive~~Senior Vice President – Chief Accounting Officer and ~~Chief Financial Officer~~Corporate Controller
		(Principal Financial Officer and Principal Accounting Officer)

4450


Delaware
~~Maryland~~		~~45-2280254~~88-4051712
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Large accelerated filer ☒☐	Accelerated filer ☐

Non-accelerated filer ☐☒	Smaller reporting company ☐
~~(Do not check if a smaller reporting company)~~
~~(Do not check if a smaller reporting company)~~		Emerging growth company ☐

Part I. - FINANCIAL INFORMATION	Page
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets ~~as of September 30, 2017 (unaudited) and December 31, 2016~~	3
Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016 (unaudited)Operations	4
Condensed Consolidated Statements of Comprehensive Income ~~for the three and nine months ended September 30, 2017 and 2016 (unaudited)~~(Loss)	5
Condensed Consolidated Statement of Members’ Equity	6
Condensed Consolidated Statements of Stockholders’ Equity	7
Condensed Consolidated Statements of Cash Flows ~~for the nine months ended September 30, 2017 and 2016 (unaudited)~~	6 8
Notes to Condensed Consolidated Financial Statements ~~(unaudited)~~	7 9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26 34
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42 46
Item 4. Controls and Procedures	43 47
Part II. - OTHER INFORMATION	43 47
Item 1. Legal Proceedings	43 47
Item 1A. Risk Factors	43 47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43 47
Item 3. Defaults Upon Senior Securities	43 47
Item 4. Mine Safety Disclosures	43 47
Item 5. Other Information	44 47
Item 6. Exhibits	44 48
Signatures	44 50


	September 30,		December 31,
	2017		2016
	(unaudited)		(audited)
Assets
Investments:
Real estate investments:
Land and improvements	$	1,788,412	$	1,536,178
Buildings and improvements		3,763,510		3,226,791
Intangible lease assets		88,671		92,337
Total real estate investments		5,640,593		4,855,306
Less accumulated depreciation and amortization		(393,037)		(298,984)
		5,247,556		4,556,322
Loans and direct financing receivables		273,265		269,210
Net investments		5,520,821		4,825,532
Cash and cash equivalents		34,986		54,200
Other assets, net		58,910		61,936
Total assets	$	5,614,717	$	4,941,668

Liabilities and stockholders’ equity
Liabilities:
Credit facility	$	82,000	$	48,000
Unsecured notes and term loans payable, net		570,376		470,190
Non-recourse debt obligations of consolidated special purpose entities, net		1,741,343		1,833,481
Dividends payable		58,904		46,209
Accrued expenses, deferred revenue and other liabilities		68,888		60,533
Total liabilities		2,521,511		2,458,413
Stockholders’ equity:
Common stock, $0.01 par value per share, 375,000,000 shares authorized, 190,013,411 and 159,341,955 shares issued and outstanding, respectively		1,900		1,593
Capital in excess of par value		3,284,353		2,631,845
Distributions in excess of retained earnings		(194,671)		(151,592)
Accumulated other comprehensive income		1,624		1,409
Total stockholders’ equity		3,093,206		2,483,255
Total liabilities and stockholders’ equity	$	5,614,717	$	4,941,668


	Successor		Predecessor
	March 31,		December 31,
	2023		2022
	(unaudited)		(audited)
Assets
Investments:
Real estate investments:
Land and improvements	$	3,669,596	$	3,455,443
Buildings and improvements		9,231,726		7,743,454
Intangible lease assets		619,901		61,968
Total real estate investments		13,521,223		11,260,865
Less accumulated depreciation and amortization		(96,015)		(1,438,107)
		13,425,208		9,822,758
Operating ground lease assets		52,666		31,872
Loans and financing receivables, net		958,639		787,106
Net investments		14,436,513		10,641,736
Cash and cash equivalents		42,917		35,137
Other assets, net		74,102		158,097
Total assets	$	14,553,532	$	10,834,970

Liabilities and equity
Liabilities:
Credit facility	$	361,000	$	555,000
Unsecured notes and term loans payable, net		2,106,348		2,397,406
Secured term loan facility, net		1,446,658		—
Non-recourse debt obligations of consolidated special purpose entities, net		2,049,168		2,238,470
Intangible lease liabilities, net		146,068		—
Operating lease liabilities		50,414		36,873
Accrued expenses, deferred revenue and other liabilities		141,042		180,903
Total liabilities		6,300,698		5,408,652
Equity:
Members' equity		8,290,585		—
Predecessor common stock, $0.01 par value per share, 375,000,000 shares authorized, 282,684,998 shares issued and outstanding as of December 31, 2022		—		2,827
Capital in excess of par value		—		6,003,331
Distributions in excess of retained earnings		—		(609,361)
Accumulated deficit		(35,542)		—
Accumulated other comprehensive (loss) income		(2,209)		29,521
Total equity		8,252,834		5,426,318
Total liabilities and equity	$	14,553,532	$	10,834,970


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None


	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Revenues:
Rental revenues	$	104,039	$	91,759	$	314,093	$	259,666
Interest income on loans and direct financing receivables		5,502		5,023		16,729		14,101
Other income		1,003		216		1,901		435
Total revenues		110,544		96,998		332,723		274,202
Expenses:
Interest		31,379		27,121		91,938		76,427
Transaction costs		—		155		—		490
Property costs		1,335		807		3,272		2,519
General and administrative		10,255		8,104		29,787		25,240
Selling stockholder costs		—		—		—		800
Depreciation and amortization		37,589		31,112		110,200		86,626
Provision for impairment of real estate		7,670		—		11,940		—
Total expenses		88,228		67,299		247,137		192,102
Income from operations before income taxes		22,316		29,699		85,586		82,100
Income tax expense		81		89		334		248
Income before gain on dispositions of real estate		22,235		29,610		85,252		81,852
Gain on dispositions of real estate, net of tax		6,345		6,733		35,778		9,533
Net income	$	28,580	$	36,343	$	121,030	$	91,385

Net income per share of common stock—basic and diluted	$	0.15	$	0.24	$	0.69	$	0.62
Weighted average common shares outstanding:
Basic		189,656,095		153,143,726		174,481,758		146,491,617
Diluted		190,043,107		153,462,048		174,481,758		146,747,194

Dividends declared per common share	$	0.31	$	0.29	$	0.89	$	0.83


	Successor
									Accumulated
									Other		Total
	Members' Units			Members' Equity			Accumulated		Comprehensive		Members’
	Common	Preferred		Common		Preferred	Deficit		(Loss) Income		Equity
Period from February 3, 2023 through March 31, 2023
Balance at February 3, 2023	—	—	$	—	$	—	$	—	$	—	$	—
Members' contributions	1,000	125		8,351,845		125		—		—		8,351,970
Members' distributions	—	—		(50,000)		—		—		—		(50,000)
Net loss	—	—		—		—		(35,542)		—		(35,542)
Other comprehensive (loss) income	—	—		—		—		—		(2,209)		(2,209)
Non-cash distribution to members	—	—		(11,385)		—		—		—		(11,385)
Balance at March 31, 2023	1,000	125	$	8,290,460	$	125	$	(35,542)	$	(2,209)	$	8,252,834


	Predecessor
						Distributions		Accumulated
				Capital in		in Excess of		Other		Total
	Common Stock			Excess of		Retained		Comprehensive		Stockholders’
	Shares	Par Value		Par Value		Earnings		Income (Loss)		Equity
Period from January 1, 2023 through February 2, 2023
Balance at December 31, 2022	282,684,998	$	2,827	$	6,003,331	$	(609,361)	$	29,521	$	5,426,318
Net income	—		—		—		25,787		—		25,787
Other comprehensive income	—		—		—		—		(11,425)		(11,425)
Common stock issuance costs	—		—		—		—		—		—
Equity-based compensation	—		—		975		—		—		975
Shares repurchased under stock compensation plan	—		—		—		—		—		—
Common dividends declared	—		—		—		—		—		—
Balance at February 2, 2023	282,684,998	$	2,827	$	6,004,306	$	(583,574)	$	18,096	$	5,441,655

	Predecessor
						Distributions		Accumulated
				Capital in		in Excess of		Other		Total
	Common Stock			Excess of		Retained		Comprehensive		Stockholders’
	Shares	Par Value		Par Value		Earnings		(Loss) Income		Equity
Three Months Ended March 31, 2022
Balance at December 31, 2021	273,806,225	$	2,738	$	5,745,692	$	(602,137)	$	(2,164)	$	5,144,129
Net income	—		—		—		87,022		—		87,022
Other comprehensive income	—		—		—		—		61		61
Issuance of common stock, net of costs of $2,269	5,539,138		55		166,107		—		—		166,162
Equity-based compensation	439,314		3		3,065		81		—		3,149
Shares repurchased under stock compensation plan	(188,826)		—		(4,008)		(1,880)		—		(5,888)
Common dividends declared ($0.385 per share)	—		—		—		(107,644)		—		(107,644)
Balance at March 31, 2022	279,595,851	$	2,796	$	5,910,856	$	(624,558)	$	(2,103)	$	5,286,991


	As Previously		As Adjusted		Effect of
	Reported		per ASU 2016-18		Change
Nine Months Ended September 30, 2016
Operating Activities
Change in operating assets: Other assets	$	(3,222)	$	(3,031)	$	191
Net cash provided by operating activities		182,768		182,959		191
Investing Activities
Transfers to restricted deposits		(25,353)		—		25,353
Net cash used in investing activities		(859,478)		(834,125)		25,353
Net decrease in cash, cash equivalents and restricted cash		(37,071)		(11,527)		25,544
Cash, cash equivalents and restricted cash, beginning of period		67,115		83,438		16,323
Cash, cash equivalents and restricted cash, end of period		30,044		71,911		41,867


	Number of	Dollar
	Investment	Amount of
	Locations	Investments (a)
Gross investments, December 31, 2016	1,660	$	5,124,516
Acquisition of and additions to real estate (b)(c)(d)	204		979,869
Investment in loans and direct financing receivables	3		28,844
Sales of real estate	(40)		(182,198)
Principal collections on loans and direct financing receivables (d)	(1)		(25,099)
Provision for impairment of real estate	—		(11,940)
Other	—		(134)
Gross investments, September 30, 2017			5,913,858
Less accumulated depreciation and amortization			(393,037)
Net investments, September 30, 2017	1,826	$	5,520,821


				Percentage of
	Number of	Dollar		Total Dollar
	Investment	Amount of		Amount of
	Locations	Investments (a)		Investments
Restaurants	727	$	1,176,632	20	%
Early childhood education centers	170		379,084	7
Furniture stores	46		371,453	6
Movie theaters	39		355,393	6
Health clubs	67		343,455	6
Family entertainment centers	25		231,893	4
Farm and ranch supply stores	22		198,854	3
All manufacturing industries	156		769,090	13
All other service industries	475		1,487,016	25
All other retail industries	99		600,988	10
	1,826	$	5,913,858	100	%


Remainder of 2017	$	113,052
2018		452,475
2019		451,699
2020		450,079
2021		449,344
2022		449,466
Thereafter		4,209,774
Total future minimum rentals	$	6,575,889


				Amount Outstanding
	Interest		Maturity	September 30,		December 31,
Type	Rate (a)		Date	2017		2016
Six mortgage loans receivable (b)	8.60	%	2017 - 2022	$	29,171	$	22,599
Five mortgage loans receivable	8.57	%	2032 - 2038		42,863		43,002
Seven mortgage loans receivable (c)	8.70	%	2053 - 2056		64,608		70,173
Total mortgage loans receivable					136,642		135,774
Eleven equipment and other loans receivable	9.29	%	2017 - 2025		10,912		9,233
Total principal amount outstanding—loans receivable					147,554		145,007
Unamortized loan origination costs					1,256		1,205
Direct financing receivables					124,455		122,998
Total loans and direct financing receivables				$	273,265	$	269,210


	Scheduled
	Principal		Balloon		Total
	Payments		Payments		Payments
Remainder of 2017	$	238	$	18,056	$	18,294
2018		1,534		850		2,384
2019		2,188		4,374		6,562
2020		2,355		—		2,355
2021		1,301		1,484		2,785
2022		841		8,408		9,249
Thereafter		69,709		36,216		105,925
Total principal payments	$	78,166	$	69,388	$	147,554


				Outstanding Balance
	Maturity	Interest		September 30,		December 31,
	Date	Rate		2017		2016
Notes Payable:
Series A issued November 2015	Nov. 2022	4.95	%	$	75,000	$	75,000
Series B issued November 2015	Nov. 2024	5.24	%		100,000		100,000
Series C issued April 2016	Apr. 2026	4.73	%		200,000		200,000
Total notes payable					375,000		375,000
Term Loans:
Term Loan issued March 2017	Mar. 2019	2.57	% (a)		100,000		—
Term Loan issued April 2016	Apr. 2021	2.44	% (a)		100,000		100,000
Total term loans					200,000		100,000
Unamortized deferred financing costs					(4,624)		(4,810)
Total unsecured notes and term loans payable, net				$	570,376	$	470,190


	Nine Months Ended
	September 30,
(In thousands)	2017		2016
Net cash provided by operating activities	$	229,405	$	182,959
Net cash used in investing activities		(782,277)		(834,125)
Net cash provided by financing activities		530,060		639,639
Net decrease in cash, cash equivalents and restricted cash		(22,812)		(11,527)
Cash, cash equivalents and restricted cash, beginning of period		73,166		83,438
Cash, cash equivalents and restricted cash, end of period	$	50,354	$	71,911

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	34,986	$	30,044
Restricted cash included in other assets		15,368		41,867
Total cash, cash equivalents and restricted cash	$	50,354	$	71,911


	% of
	Annualized
	Base Rent		Number
	and		of
Customer	Interest		Properties
AVF Parent, LLC (Art Van Furniture)	2.9	%	17
Bass Pro Group, LLC (Cabela's)	2.8		9
American Multi-Cinema, Inc. (Starplex/Carmike/Showplex/AMC)	2.4		15
Mills Fleet Farm Group, LLC	2.0		6
Cadence Education, Inc. (Early childhood/elementary education)	2.0		32
US LBM Holdings, LLC (Building materials distribution)	1.7		37
RMH Franchise Holdings, Inc. (Applebee's)	1.4		33
O'Charley's LLC	1.2		30
Automotive Remarketing Group, Inc.	1.2		6
Stratford School, Inc. (Elementary and middle schools)	1.1		4
All other (372 customers)	81.3		1,637
Total	100.0	%	1,826


	% of
	Annualized			Building
	Base Rent		Number	Square
	and		of	Footage
Customer Industry Group	Interest		Properties	(in thousands)
Service:
Restaurants—full service	13.1	%	335	2,348
Restaurants—limited service	7.4		392	1,048
Early childhood education centers	6.8		170	1,878
Movie theaters	6.3		39	1,873
Health clubs	6.0		67	1,915
Family entertainment centers	4.2		25	836
Automotive repair and maintenance	3.0		95	460
All other service (31 industry groups)	22.2		380	10,997
Total service	69.0		1,503	21,355
Retail:
Furniture stores	6.3		46	2,980
Farm and ranch supply stores	3.1		22	1,859
All other retail (14 industry groups)	8.2		99	4,743
Total retail	17.6		167	9,582
Manufacturing:
Metal fabrication	3.3		47	4,520
All other manufacturing (20 industry groups)	10.1		109	11,111
Total manufacturing	13.4		156	15,631
Total	100.0	%	1,826	46,568


	Three Months Ended						Nine Months Ended
	September 30,				Increase		September 30,				Increase
(In thousands)	2017		2016		(Decrease)		2017		2016		(Decrease)
Total revenues	$	110,544	$	96,998	$	13,546	$	332,723	$	274,202	$	58,521
Expenses:
Interest		31,379		27,121		4,258		91,938		76,427		15,511
Transaction costs		—		155		(155)		—		490		(490)
Property costs		1,335		807		528		3,272		2,519		753
General and administrative		10,255		8,104		2,151		29,787		25,240		4,547
Selling stockholder costs		—		—		—		—		800		(800)
Depreciation and amortization		37,589		31,112		6,477		110,200		86,626		23,574
Provision for impairment of real estate		7,670		—		7,670		11,940		—		11,940
Total expenses		88,228		67,299		20,929		247,137		192,102		55,035
Income from operations before income taxes		22,316		29,699		(7,383)		85,586		82,100		3,486
Income tax expense		81		89		(8)		334		248		86
Income before gain on dispositions of real estate		22,235		29,610		(7,375)		85,252		81,852		3,400
Gain on dispositions of real estate, net of tax		6,345		6,733		(388)		35,778		9,533		26,245
Net income	$	28,580	$	36,343	$	(7,763)	$	121,030	$	91,385	$	29,645