UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, ~~2022~~2023


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

For the transition period from _________ to __________

Commission file number: 001-38597

The Necessity Retail REIT, Inc.

(Exact name of registrant as specified in its charter)

Maryland

90-0929989

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

650 Fifth Ave., 30th Floor, New York, NY 10019 ____________________________________________________ _________________________________________________

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 415-6500

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading ~~Symbols~~Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.01 par value per share

RTL

The Nasdaq Global Select Market

7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

RTLPP

The Nasdaq Global Select Market

7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

RTLPO

The Nasdaq Global Select Market

Preferred Stock Purchase Rights

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth ~~company”~~company,” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August 1, 2022,~~July 31, 2023, the registrant had ~~133,268,193~~134,533,574 shares of common stock outstanding.

THE NECESSITY RETAIL REIT, INC.

TABLE OF CONTENTS

FORM 10-Q


			Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Consolidated Balance Sheets as of ~~June~~June 30 ~~2022~~, 2023 and December 31, ~~2021~~2022 (Unaudited)			3
Consolidated Statements of Operations ~~and Comprehensive (Loss) Income~~ for the Three and Six Months Ended June 30 , ~~2022~~2023 and ~~2021~~2022 (Unaudited)			4
Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30 , ~~2022~~2023 ~~(Unaudited~~(Unaudited)			5
Consolidated Statements of Changes in Equity for the Three and S ixSix Months Ended June 30 , 202 12 (Unaudited)			6
Consolidated Statements of Cash Flows for the Six Months Ended June 30 , ~~2022~~2023 and ~~2021~~2022 (Unaudited)			7
Notes to Consolidated Financial Statements (Unaudited)			9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.			4548

Item 3. Quantitative and Qualitative Disclosures About Market Risk.			7884

Item 4. Controls and Procedures.			7884

PART II - OTHER INFORMATION			7985

Item 1. Legal Proceedings.			7985

Item 1A. Risk Factors.			7986

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			7996

Item 3. Defaults Upon Senior Securities.			8096

Item 4. Mine Safety Disclosures.			8096

Item 5. Other Information.			8096

Item 6. Exhibits.			8096

Signatures			8299

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

THE NECESSITY RETAIL REIT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

June 30,
2022 December 31,
2021
ASSETS
Real estate investments, at cost:
Land $ 1,000,884 $ 729,048
Buildings, fixtures and improvements 3,450,564 2,729,719
Acquired intangible lease assets 616,870 402,673
Total real estate investments, at cost 5,068,318 3,861,440
Less: accumulated depreciation and amortization (697,288) (654,667)
Total real estate investments, net 4,371,030 3,206,773
Cash and cash equivalents 69,431 214,853
Restricted cash 17,619 21,996
Deposits for real estate investments 16,250 41,928
Deferred costs, net 19,565 25,587
Straight-line rent receivable 65,307 70,789
Operating lease right-of-use assets 17,946 18,194
Prepaid expenses and other assets 33,666 26,877
Assets held for sale 80,779 187,213
Total assets $ 4,691,593 $ 3,814,210
LIABILITIES, MEZZANINE EQUITY AND EQUITY
Mortgage notes payable, net $ 1,768,025 $ 1,464,930
Credit facility 488,000 —
Senior notes, net 491,651 491,015
Below market lease liabilities, net 132,523 78,073
Accounts payable and accrued expenses (including $2,394 and $1,016 due to related parties as of June 30, 2022 and December 31, 2021, respectively) 58,700 32,907
Operating lease liabilities 19,164 19,195
Derivative liabilities, at fair value — 2,250
Deferred rent and other liabilities 8,075 9,524
Dividends payable 5,836 6,038
Total liabilities 2,971,974 2,103,932
Mezzanine Equity:
Shares subject to repurchase 53,388 —
7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 12,796,000 shares authorized, 7,933,711 issued and outstanding as of June 30, 2022 and December 31, 2021 79 79
7.375% Series C cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,536,000 shares authorized, 4,595,175 and 4,594,498 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 46 46
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 133,272,305(1) and 123,783,060 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
1,268 1,238
Additional paid-in capital 2,937,395 2,915,926
Distributions in excess of accumulated earnings (1,289,400) (1,217,435)
Total stockholders’ equity 1,649,388 1,699,854
Non-controlling interests 16,843 10,424
Total equity 1,666,231 1,710,278
Total liabilities, mezzanine equity and total equity $ 4,691,593 $ 3,814,210

~~______~~

~~(1)Includes 6,450,107 shares subject to repurchase issued to the Seller of the CIM Portfolio Acquisition.~~


	June 30, 2023		December 31, 2022
ASSETS
Real estate investments, at cost:
Land	$	956,506	$	996,293
Buildings, fixtures and improvements	3,369,177		3,467,463
Acquired intangible lease assets	567,722		644,553
Total real estate investments, at cost	4,893,405		5,108,309
Less: accumulated depreciation and amortization	(810,727)		(784,946)
Total real estate investments, net	4,082,678		4,323,363
Cash and cash equivalents	59,172		70,795
Restricted cash	23,373		17,956


Deferred costs, net	25,050		22,893
Straight-line rent receivable	59,890		66,657
Operating lease right-of-use assets	17,587		17,839
Prepaid expenses and other assets (including $2,651 of prepayments to related parties as of June 30, 2023)	67,510		66,551

Total assets	$	4,335,260	$	4,586,054

LIABILITIES AND EQUITY
Mortgage notes payable, net	$	1,553,688	$	1,808,433
Credit facility	604,000		458,000
Senior notes, net	492,987		492,319
Below market lease liabilities, net	123,900		133,876
Accounts payable and accrued expenses (including $901 and $1,838 due to related parties as of June 30, 2023 and December 31, 2022, respectively)	54,804		64,169
Operating lease liabilities	19,088		19,132

Deferred rent and other liabilities	16,531		16,815
Dividends payable	5,837		5,837
Total liabilities	2,870,835		2,998,581

7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 12,796,000 shares authorized, 7,933,711 shares issued and outstanding as of June 30, 2023 and December 31, 2022	79		79
7.375% Series C cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,536,000 shares authorized, 4,595,175 shares issued and outstanding as of June 30, 2023 and December 31, 2022	46		46
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 134,535,442 and 134,224,313 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	1,345		1,342
Additional paid-in capital	2,999,565		2,999,163

Distributions in excess of accumulated earnings	(1,565,425)		(1,435,794)
Total stockholders’ equity	1,435,610		1,564,836
Non-controlling interests	28,815		22,637
Total equity	1,464,425		1,587,473
Total liabilities and equity	$	4,335,260	$	4,586,054

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

THE NECESSITY RETAIL REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS ~~AND COMPREHENSIVE LOSS~~

(In thousands, except per share data)

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
Revenue from tenants $ 116,929 $ 81,577 $ 211,872 $ 160,764
Operating expenses:
Asset management fees to related party 8,296 7,922 16,122 15,243
Property operating expense 27,520 13,329 46,659 26,768
Impairment of real estate investments 58,954 91 64,896 91
Acquisition, transaction and other costs 206 136 485 178
Equity-based compensation 3,523 5,283 7,021 9,630
General and administrative 8,390 3,540 15,223 9,989
Depreciation and amortization 46,573 32,428 84,261 64,747
Total operating expenses 153,462 62,729 234,667 126,646
Operating (loss) income before gain on sale of real estate investments (36,533) 18,848 (22,795) 34,118
Gain on sale of real estate investments 13,438 11 67,007 297
Operating (loss) income (23,095) 18,859 44,212 34,415
Other (expense) income:
Interest expense (28,329) (20,361) (52,069) (39,695)
Other income 944 20 962 44
Gain on non-designated derivatives — — 2,250 —
Total other expense, net (27,385) (20,341) (48,857) (39,651)
Net loss (50,480) (1,482) (4,645) (5,236)
Net loss (income) attributable to non-controlling interests 58 2 (6) 8
Allocation for preferred stock (5,837) (5,925) (11,674) (11,588)
Net loss attributable to common stockholders (1)
(56,259) (7,405) (16,325) (16,816)
Other comprehensive income (loss):
Change in unrealized income on derivatives — (431) — 2,053
Comprehensive loss attributable to common stockholders (1)
$ (56,259) $ (7,836) $ (16,325) $ (14,763)
Weighted-average shares outstanding — Basic (2)
132,629,704 110,898,056 130,646,294 109,674,113
Weighted-average shares outstanding — Diluted (2)
132,629,704 110,898,056 130,646,294 109,674,113
Net loss per share attributable to common stockholders — Basic and Diluted $ (0.43) $ (0.07) $ (0.13) $ (0.16)

~~______~~

~~(1)Holders of shares subject to repurchase are considered common stockholders.~~

~~(2)Includes 6,450,107 shares subject to repurchase issued to the Seller of the CIM Portfolio Acquisition for the three and six months ended June 30, 2022.~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue from tenants	$	106,700	$	116,929	$	220,294	$	211,872

Operating expenses:
Asset management fees to related parties	7,972		8,296		15,928		16,122
Property operating expenses	25,082		27,520		51,995		46,659
Impairments of real estate investments	—		58,954		—		64,896
Merger, transaction and other costs	4,931		206		5,496		485
Settlement costs	8,800		—		8,800		—
Equity-based compensation	3,519		3,523		7,086		7,021
General and administrative	14,744		8,390		25,236		15,223
Depreciation and amortization	59,466		46,573		113,648		84,261
Total operating expenses	124,514		153,462		228,189		234,667
Operating loss before gains on sales of real estate investments	(17,814)		(36,533)		(7,895)		(22,795)
Gains on sales of real estate investments	5,471		13,438		17,263		67,007
Operating (loss) income	(12,343)		(23,095)		9,368		44,212
Other (expense) income:
Interest expense	(35,945)		(28,329)		(70,620)		(52,069)
Other income	596		944		623		962
Gain on non-designated derivatives	—		—		—		2,250
Total other expense, net	(35,349)		(27,385)		(69,997)		(48,857)
Net loss	(47,692)		(50,480)		(60,629)		(4,645)
Net loss (income) attributable to non-controlling interests	61		58		78		(6)
Allocation for preferred stock	(5,837)		(5,837)		(11,674)		(11,674)
Net loss attributable to common stockholders	$	(53,468)	$	(56,259)	$	(72,225)	$	(16,325)





Weighted-average shares outstanding — Basic and Diluted	133,800,130		132,629,704		133,758,112		130,646,294


Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.40)	$	(0.43)	$	(0.54)	$	(0.13)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

THE NECESSITY RETAIL REIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

(Unaudited)


		Six Months Ended June 30, 2022																												Six Months Ended June 30, 2023
		Mezzanine Equity				Total Equity																													Total Equity
					Series A Preferred Stock					Series C Preferred Stock					Common Stock																							Series A Preferred Stock							Series C Preferred Stock						Common Stock
				Shares Subject to Repurchase			Number of Shares			Par Value		Number of Shares			Par Value		Number of Shares (1)			Par Value			Additional Paid-in Capital			Distributions in excess of accumulated earnings				Total Stockholders’ Equity				Non-controlling Interests					Total Equity			Number of Shares			Par Value			Number of Shares			Par Value		Number of Shares			Par Value			Additional Paid-in Capital					Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2021		$	—			7,933,711		$	79		4,594,498		$	46		123,783,060		$	1,238		$	2,915,926		$	(1,217,435)			$	1,699,854		$	10,424				$	1,710,278
Balance, December 31, 2022																											Balance, December 31, 2022		7,933,711			$	79				4,595,175				$	46		134,224,313			$	1,342		$	2,999,163				$	(1,435,794)		$	1,564,836	$	22,637		$	1,587,473
Issuance of Common Stock, net	Issuance of Common Stock, net	—				—		—			—		—			2,765,329		27			24,600			—				24,627			—					24,627			Issuance of Common Stock, net	—			—			—			—			—		—			(66)					—			(66)		—		(66)
Issuance of Shares subject to repurchase, at fair market value upon closing		49,965				—		—			—		—			6,450,107		—			—			—				—			—					—
Adjustments to redemption value		3,423				—		—			—		—			—		—			(3,423)			—				(3,423)			—					(3,423)
Issuance of Series A Preferred Stock, net	Issuance of Series A Preferred Stock, net	—				—		—			—		—			—		—			(122)			—				(122)			—					(122)			Issuance of Series A Preferred Stock, net	—			—			—			—			—		—			(56)					—			(56)		—		(56)
Issuance of Series C Preferred Stock, net	Issuance of Series C Preferred Stock, net	—				—		—			677		—			—		—			(118)			—				(118)			—					(118)			Issuance of Series C Preferred Stock, net	—			—			—			—			—		—			(61)					—			(61)		—		(61)
Equity-based compensation (2)		—				—		—			—		—			273,809		3			666			—				669			6,352					7,021

Dividends declared on Common Stock,$0.43 per share		—				—		—			—		—			—		—			—			(55,276)				(55,276)			—					(55,276)
Equity-based compensation (1)																											Equity-based compensation (1)		—			—					—				—			343,056			3			731					—			734		6,352			7,086
Common stock shares withheld upon vesting of restricted stock																											Common stock shares withheld upon vesting of restricted stock		—			—					—				—			(31,927)			—			(169)					—			(169)		—			(169)
Dividends declared on Common Stock, $0.43 per share																											Dividends declared on Common Stock, $0.43 per share		—			—					—				—			—			—			—					(57,044)			(57,044)		—			(57,044)
Dividends declared on Series A Preferred Stock, $0.94 per share	Dividends declared on Series A Preferred Stock, $0.94 per share	—				—		—			—		—			—		—			—			(7,438)				(7,438)			—					(7,438)			Dividends declared on Series A Preferred Stock, $0.94 per share	—			—			—			—			—		—			—					(7,438)			(7,438)		—		(7,438)
Dividends declared on Series C Preferred Stock, $0.92 per share	Dividends declared on Series C Preferred Stock, $0.92 per share	—				—		—			—		—			—		—			—			(4,236)				(4,236)			—					(4,236)			Dividends declared on Series C Preferred Stock, $0.92 per share	—			—			—			—			—		—			—					(4,236)			(4,236)		—		(4,236)
Distributions to non-controlling interest holders	Distributions to non-controlling interest holders	—				—		—			—		—			—		—			—			(364)				(364)			(73)					(437)			Distributions to non-controlling interest holders	—			—			—			—			—		—			—					(362)			(362)		(73)		(435)
Net income (loss)		—				—		—			—		—			—		—			—			(4,651)				(4,651)			6					(4,645)
Net loss																											Net loss		—			—					—				—			—			—			—					(60,551)			(60,551)		(78)			(60,629)

Rebalancing of ownership percentage	Rebalancing of ownership percentage	—				—		—			—		—			—		—			(134)			—				(134)			134					—			Rebalancing of ownership percentage	—			—			—			—			—		—			23					—			23		(23)		—
Balance, June 30, 2022		$	53,388			7,933,711		$	79		4,595,175		$	46		133,272,305		$	1,268		$	2,937,395		$	(1,289,400)			$	1,649,388		$	16,843				$	1,666,231
Balance, June 30, 2023																											Balance, June 30, 2023		7,933,711			$	79				4,595,175				$	46		134,535,442			$	1,345		$	2,999,565				$	(1,565,425)		$	1,435,610	$	28,815		$	1,464,425

_______

(1)~~Includes shares of Class A common stock subject to repurchase.~~

~~(2)~~Presented net of forfeitures. During the six months ended June 30, ~~2022, 275~~2023, 1,269 restricted shares with a fair value of approximately ~~$3,000~~$11,000 were forfeited.

Three Months Ended June 30, 2022
Mezzanine Equity Total Equity
Series A Preferred Stock Series C Preferred Stock Common Stock
Shares Subject to Repurchase Number of
Shares Par Value Number of
Shares Par Value
Number of
Shares (1)
Par Value Additional Paid-in
Capital Distributions in excess of accumulated earnings Total Stockholders’ Equity Non-controlling Interests Total Equity
Balance, March 31, 2022 $ 53,388 7,933,711 $ 79 4,594,498 $ 46 132,994,603 $ 1,265 $ 2,937,262 $ (1,204,337) $ 1,734,315 $ 13,590 $ 1,747,905
Issuance of Common Stock, net — — — — — 3,618 — 133 — 133 — 133
Issuance of Series A Preferred Stock, net — — — — — — — (103) — (103) — (103)
Issuance of Series C Preferred Stock, net — — — 677 — — — (82) — (82) — (82)
Equity-based compensation — — — — — 274,084 3 356 — 359 3,176 3,535
Dividends declared on Common Stock,$0.21 per share — — — — — — — — (28,599) (28,599) — (28,599)
Dividends declared on Series A Preferred Stock, $0.47 per share — — — — — — — — (3,719) (3,719) — (3,719)
Dividends declared on Series C Preferred Stock, $0.46 per share — — — — — — — — (2,118) (2,118) — (2,118)
Distributions to non-controlling interest holders — — — — — — — — (205) (205) (36) (241)
Net loss — — — — — — — — (50,422) (50,422) (58) (50,480)
Rebalancing of ownership percentage — — — — — — — (171) — (171) 171 —
Balance, June 30, 2022 $ 53,388 7,933,711 $ 79 4,595,175 $ 46 133,272,305 $ 1,268 $ 2,937,395 $ (1,289,400) $ 1,649,388 $ 16,843 $ 1,666,231


	Three Months Ended June 30, 2023
		Total Equity
		Series A Preferred Stock			Series C Preferred Stock			Common Stock
		Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, March 31, 2023		7,933,711	$	79	4,595,175	$	46	134,224,313	$	1,342	$	2,999,417	$	(1,483,255)	$	1,517,629	$	25,789	$	1,543,418
Issuance of Common Stock, net		—	—		—	—		—	—		(24)		—		(24)		—		(24)
Issuance of Series A Preferred Stock, net		—	—		—	—		—	—		(26)		—		(26)		—		(26)
Issuance of Series C Preferred Stock, net		—	—		—	—		—	—		(26)		—		(26)		—		(26)
Equity-based compensation (1)		—	—		—	—		343,056	3		340		—		343		3,176		3,519
Common stock shares withheld upon vesting of restricted stock		—	—		—	—		(31,927)	—		(169)		—		(169)		—		(169)
Dividends declared on Common Stock, $0.21 per share		—	—		—	—		—	—		—		(28,521)		(28,521)		—		(28,521)
Dividends declared on Series A Preferred Stock, $0.47 per share		—	—		—	—		—	—		—		(3,719)		(3,719)		—		(3,719)
Dividends declared on Series C Preferred Stock, $0.46 per share		—	—		—	—		—	—		—		(2,118)		(2,118)		—		(2,118)
Distributions to non-controlling interest holders		—	—		—	—		—	—		—		(181)		(181)		(36)		(217)
Net loss		—	—		—	—		—	—		—		(47,631)		(47,631)		(61)		(47,692)

Rebalancing of ownership percentage		—	—		—	—		—	—		53		—		53		(53)		—
Balance, June 30, 2023		7,933,711	$	79	4,595,175	$	46	134,535,442	$	1,345	$	2,999,565	$	(1,565,425)	$	1,435,610	$	28,815	$	1,464,425

(1)~~Includes~~Presented net of forfeitures. During the three months ended June 30, 2023, 1,269 restricted shares with a fair value of ~~Class A common stock subject to repurchase.~~approximately $11,000 were forfeited.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

THE NECESSITY RETAIL REIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

(Unaudited)


		Six Months Ended June 30, 2021																						Six Months Ended June 30, 2022
		Series A Preferred Stock			Series C Preferred Stock			Common Stock																						Total Equity
		Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive income (loss)		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests					Total Equity			Mezzanine Equity			Series A Preferred Stock				Series C Preferred Stock				Common Stock
Balance, December 31, 2020		7,842,008	$	79	3,535,700	$	35	108,837,209	$	1,088	$	2,723,678	$	(123)	$	(1,055,680)	$	1,669,077	$	30,522				$	1,699,599
																						Shares Subject to Repurchase						Number of Shares	Par Value		Number of Shares		Par Value		Number of Shares (1)		Par Value		Additional Paid-in Capital			Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, December 31, 2021																					Balance, December 31, 2021	$	—					7,933,711	$	79	4,594,498		$	46	123,783,060		$	1,238	$	2,915,926		$	(1,217,435)	$	1,699,854	$	10,424	$	1,710,278
Issuance of Common Stock, net	Issuance of Common Stock, net	—	—		—	—		8,634,223	86		76,913		—		—		76,999		—					76,999		Issuance of Common Stock, net	—			—		—		—		—		2,765,329		27	24,600				—		24,627		—	24,627
Issuance of Shares subject to repurchase, at fair market value upon closing																					Issuance of Shares subject to repurchase, at fair market value upon closing	49,965						—	—		—		—		6,450,107		—		—			—		—		—		—
Adjustments to redemption value																					Adjustments to redemption value	3,423						—	—		—		—		—		—		(3,423)			—		(3,423)		—		(3,423)
Issuance of Series A Preferred Stock, net	Issuance of Series A Preferred Stock, net	91,703	—		—	—		—	—		2,156		—		—		2,156		—					2,156		Issuance of Series A Preferred Stock, net	—			—		—		—		—		—		—	(122)				—		(122)		—	(122)
Issuance of Series C Preferred Stock, net	Issuance of Series C Preferred Stock, net	—	—		1,058,798	11		—	—		25,596		—		—		25,607		—					25,607		Issuance of Series C Preferred Stock, net	—			—		—		677		—		—		—	(118)				—		(118)		—	(118)
Equity-based compensation (1)		—	—		—	—		293,599	3		1,763		—		(154)		1,612		5,928					7,540
Common stock shares withheld upon vesting of restricted shares		—	—		—	—		(58,445)	—		(559)		—		—		(559)		—					(559)
Dividends declared on Common Stock, $0.42 per share		—	—		—	—		—	—		—		—		(46,097)		(46,097)		—					(46,097)
Equity-based compensation (2)																					Equity-based compensation (2)	—						—	—		—		—		273,809		3		666			—		669		6,352		7,021

Dividends declared on Common Stock, $0.43 per share																					Dividends declared on Common Stock, $0.43 per share	—						—	—		—		—		—		—		—			(55,276)		(55,276)		—		(55,276)
Dividends declared on Series A Preferred Stock, $0.94 per share	Dividends declared on Series A Preferred Stock, $0.94 per share	—	—		—	—		—	—		—		—		(7,453)		(7,453)		—					(7,453)		Dividends declared on Series A Preferred Stock, $0.94 per share	—			—		—		—		—		—		—	—				(7,438)		(7,438)		—	(7,438)
Dividends declared on Series C Preferred Stock, $0.99 per share		—	—		—	—		—	—		—		—		(4,380)		(4,380)		—					(4,380)
Dividends declared on Series C Preferred Stock, $0.92 per share																					Dividends declared on Series C Preferred Stock, $0.92 per share	—						—	—		—		—		—		—		—			(4,236)		(4,236)		—		(4,236)
Distributions to non-controlling interest holders	Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		(190)		(190)		(73)					(263)		Distributions to non-controlling interest holders	—			—		—		—		—		—		—	—				(364)		(364)		(73)	(437)
Net loss	Net loss	—	—		—	—		—	—		—		—		(5,228)		(5,228)		(8)					(5,236)		Net loss	—			—		—		—		—		—		—	—				(4,651)		(4,651)		6	(4,645)
Other comprehensive loss		—	—		—	—		—	—		—		2,053		—		2,053		—					2,053

Rebalancing of ownership percentage	Rebalancing of ownership percentage	—	—		—	—		—	—		(57)		—		—		(57)		57					—		Rebalancing of ownership percentage	—			—		—		—		—		—		—	(134)				—		(134)		134	—
Balance, June 30, 2021		7,933,711	$	79	4,594,498	$	46	117,706,586	$	1,177	$	2,829,490	$	1,930	$	(1,119,182)	$	1,713,540	$	36,426				$	1,749,966
Balance, June 30, 2022																					Balance, June 30, 2022	$	53,388					7,933,711	$	79	4,595,175		$	46	133,272,305		$	1,268	$	2,937,395		$	(1,289,400)	$	1,649,388	$	16,843	$	1,666,231

(1)Includes shares of Class A common stock subject to repurchase.

(2)Presented net of forfeitures. During the six months ended June 30, ~~2021, 19,875~~2022, 275 restricted shares with a fair value of approximately ~~$136,000~~$3,000 were forfeited.


		Three Months Ended June 30, 2021																						Three Months Ended June 30, 2022
		Series A Preferred Stock			Series C Preferred Stock			Common Stock																					Total Equity
		Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive income (loss)		Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests					Total Equity			Mezzanine Equity				Series A Preferred Stock				Series C Preferred Stock				Common Stock
Balance, March 31, 2021		7,933,711	$	79	4,099,801	$	41	108,872,337	$	1,089	$	2,740,648	$	2,361	$	(1,088,559)	$	1,655,659	$	33,440				$	1,689,099
																						Shares Subject to Repurchase						Number of Shares		Par Value		Number of Shares		Par Value		Number of Shares (1)		Par Value		Additional Paid-in Capital			Distributions in excess of accumulated earnings		Total Stockholders’ Equity		Non-controlling Interests		Total Equity
Balance, March 31, 2022																					Balance, March 31, 2022	$	53,388					7,933,711		$	79	4,594,498		$	46	132,994,603		$	1,265	$	2,937,262		$	(1,204,337)	$	1,734,315	$	13,590	$	1,747,905
Issuance of Common Stock, net	Issuance of Common Stock, net	—	—		—	—		8,634,223	86		77,002		—		—		77,088		—					77,088		Issuance of Common Stock, net	—				—		—		—		—		3,618		—	133				—		133		—	133
Issuance of Series A Preferred Stock, net	Issuance of Series A Preferred Stock, net	—	—		—	—		—	—		(46)		—		—		(46)		—					(46)		Issuance of Series A Preferred Stock, net	—				—		—		—		—		—		—	(103)				—		(103)		—	(103)
Issuance of Series C Preferred Stock, net	Issuance of Series C Preferred Stock, net	—	—		494,697	5		—	—		12,125		—		—		12,130		—					12,130		Issuance of Series C Preferred Stock, net	—				—		—		677		—		—		—	(82)				—		(82)		—	(82)
Equity-based compensation	Equity-based compensation	—	—		—	—		258,471	2		380		—		(68)		314		2,964					3,278		Equity-based compensation	—				—		—		—		—		274,084		3	356				—		359		3,176	3,535
Common stock shares withheld upon vesting of restricted shares	Common stock shares withheld upon vesting of restricted shares	—	—		—	—		—	—		—		—		(23,054)		(23,054)		—					(23,054)		Common stock shares withheld upon vesting of restricted shares	—				—		—		—		—		—		—	—				—		—		—	—
Dividends declared on Common Stock, $0.21 per share	Dividends declared on Common Stock, $0.21 per share	—	—		—	—		(58,445)	—		(559)		—		—		(559)		—					(559)		Dividends declared on Common Stock, $0.21 per share	—				—		—		—		—		—		—	—				(28,599)		(28,599)		—	(28,599)
Dividends declared on Series A Preferred Stock, $0.47 per share	Dividends declared on Series A Preferred Stock, $0.47 per share	—	—		—	—		—	—		—		—		(3,719)		(3,719)		—					(3,719)		Dividends declared on Series A Preferred Stock, $0.47 per share	—				—		—		—		—		—		—	—				(3,719)		(3,719)		—	(3,719)
Dividends declared on Series C Preferred Stock, $0.53 per share		—	—		—	—		—	—		—		—		(2,206)		(2,206)		—					(2,206)
Dividends declared on Series C Preferred Stock, $0.46 per share																					Dividends declared on Series C Preferred Stock, $0.46 per share	—						—		—		—		—		—		—		—			(2,118)		(2,118)		—		(2,118)
Distributions to non-controlling interest holders	Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		(96)		(96)		(36)					(132)		Distributions to non-controlling interest holders	—				—		—		—		—		—		—	—				(205)		(205)		(36)	(241)
Net loss	Net loss	—	—		—	—		—	—		—		—		(1,480)		(1,480)		(2)					(1,482)		Net loss	—				—		—		—		—		—		—	—				(50,422)		(50,422)		(58)	(50,480)
Other comprehensive loss		—	—		—	—		—	—		—		(431)		—		(431)		—					(431)

Rebalancing of ownership percentage	Rebalancing of ownership percentage	—	—		—	—		—	—		(60)		—		—		(60)		60					—		Rebalancing of ownership percentage	—				—		—		—		—		—		—	(171)				—		(171)		171	—
Balance, June 30, 2021		7,933,711	$	79	4,594,498	$	46	117,706,586	$	1,177	$	2,829,490	$	1,930	$	(1,119,182)	$	1,713,540	$	36,426				$	1,749,966
Balance, June 30, 2022																					Balance, June 30, 2022	$	53,388					7,933,711		$	79	4,595,175		$	46	133,272,305		$	1,268	$	2,937,395		$	(1,289,400)	$	1,649,388	$	16,843	$	1,666,231

_______

(1)Includes shares of Class A common stock subject to repurchase.

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

THE NECESSITY RETAIL REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(4,645)	$	(5,236)	Net loss	$	(60,629)	$	(4,645)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:						Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	Depreciation	52,127		44,511		Depreciation	55,419		52,127
Amortization of in-place lease assets	Amortization of in-place lease assets	31,023		19,208		Amortization of in-place lease assets	56,896		31,023
Amortization of deferred leasing costs	Amortization of deferred leasing costs	1,111		1,028		Amortization of deferred leasing costs	1,333		1,111
Amortization (including accelerated write-off) of deferred financing costs	Amortization (including accelerated write-off) of deferred financing costs	6,129		5,368		Amortization (including accelerated write-off) of deferred financing costs	7,367		6,129
Amortization of mortgage (premiums) and discounts on borrowings, net		161		(644)
Amortization of mortgage discounts (premiums) on borrowings, net						Amortization of mortgage discounts (premiums) on borrowings, net	800		161
Accretion of market lease and other intangibles, net	Accretion of market lease and other intangibles, net	(2,680)		(1,976)		Accretion of market lease and other intangibles, net	(4,256)		(2,680)
Equity-based compensation	Equity-based compensation	7,021		9,630		Equity-based compensation	7,085		7,021
Gain on non-designated derivatives	Gain on non-designated derivatives	(2,250)		—		Gain on non-designated derivatives	—		(2,250)
Gain on sale/exchange of real estate investments		(67,007)		(297)
Gains on sales of real estate investments						Gains on sales of real estate investments	(17,263)		(67,007)
Impairment of real estate investments	Impairment of real estate investments	64,896		91		Impairment of real estate investments	—		64,896
Payments of prepayment costs on mortgages	Payments of prepayment costs on mortgages	—		—		Payments of prepayment costs on mortgages	905		—
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Straight-line rent receivable	Straight-line rent receivable	(2,758)		(3,627)		Straight-line rent receivable	183		(2,758)
Straight-line rent payable	Straight-line rent payable	135		141		Straight-line rent payable	125		135
Prepaid expenses and other assets	Prepaid expenses and other assets	4,354		(3,753)		Prepaid expenses and other assets	196		4,354
Accounts payable and accrued expenses	Accounts payable and accrued expenses	18,438		682		Accounts payable and accrued expenses	(4,221)		18,438
Deferred rent and other liabilities	Deferred rent and other liabilities	(1,449)		231		Deferred rent and other liabilities	(269)		(1,449)
Net cash provided by operating activities	Net cash provided by operating activities	104,606		65,357		Net cash provided by operating activities	43,671		104,606
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(4,848)		(4,169)		Capital expenditures	(20,863)		(4,848)
Investments in real estate and other assets	Investments in real estate and other assets	(954,747)		(65,987)		Investments in real estate and other assets	(12,260)		(954,747)
Proceeds from sale of real estate investments	Proceeds from sale of real estate investments	273,345		2,929		Proceeds from sale of real estate investments	66,192		273,345
Deposits for real estate investments	Deposits for real estate investments	(103)		(2,846)		Deposits for real estate investments	—		(103)
Net cash used in investing activities		(686,353)		(70,073)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	33,069		(686,353)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from mortgage notes payable		—		239,928

Payments on mortgage notes payable	Payments on mortgage notes payable	(10,054)		(109,582)		Payments on mortgage notes payable	(193,076)		(10,054)
Proceeds from credit facility	Proceeds from credit facility	513,000		—		Proceeds from credit facility	201,000		513,000
Payments on credit facility	Payments on credit facility	(25,000)		(125,114)		Payments on credit facility	(20,000)		(25,000)
Payments of financing costs and deposits		(2,896)		(10,013)

Payments of financing costs						Payments of financing costs	(469)		(2,896)
Payments of prepayment costs on mortgages						Payments of prepayment costs on mortgages	(905)		—
Common stock repurchases	Common stock repurchases	—		(560)		Common stock repurchases	(170)		—
Distributions on LTIP Units and Class A Units	Distributions on LTIP Units and Class A Units	(437)		(263)		Distributions on LTIP Units and Class A Units	(435)		(437)
Dividends paid on Class A common stock	Dividends paid on Class A common stock	(55,276)		(46,250)		Dividends paid on Class A common stock	(57,045)		(55,276)
Dividends paid on Series A preferred stock	Dividends paid on Series A preferred stock	(7,438)		(7,410)		Dividends paid on Series A preferred stock	(7,438)		(7,438)
Dividends paid on Series C preferred stock	Dividends paid on Series C preferred stock	(4,236)		(2,263)		Dividends paid on Series C preferred stock	(4,236)		(4,236)
Series A preferred stock offering costs	Series A preferred stock offering costs	(85)		—		Series A preferred stock offering costs	(52)		(85)
Series C preferred stock offering costs	Series C preferred stock offering costs	(102)		—		Series C preferred stock offering costs	(55)		(102)
Class A common stock offering costs	Class A common stock offering costs	(491)		—		Class A common stock offering costs	(65)		(491)
Proceeds from issuance of Series A preferred stock, net		—		2,215

Proceeds from issuance of Series C preferred stock, net	Proceeds from issuance of Series C preferred stock, net	17		25,605		Proceeds from issuance of Series C preferred stock, net	—		17
Proceeds from issuance of Class A common stock, net	Proceeds from issuance of Class A common stock, net	24,946		76,980		Proceeds from issuance of Class A common stock, net	—		24,946
Net cash provided by financing activities		431,948		43,273
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(82,946)		431,948
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(149,799)		38,557		Net change in cash, cash equivalents and restricted cash	(6,206)		(149,799)
Cash, cash equivalents and restricted cash beginning of period	Cash, cash equivalents and restricted cash beginning of period	236,849		113,397		Cash, cash equivalents and restricted cash beginning of period	88,751		236,849
Cash, cash equivalents and restricted cash end of period	Cash, cash equivalents and restricted cash end of period	$	87,050	$	151,954	Cash, cash equivalents and restricted cash end of period	$	82,545	$	87,050

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

THE NECESSITY RETAIL REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

~~The accompanying notes are an integral part of these consolidated financial statements.~~


		Six Months Ended June 30,					Six Months Ended June 30,
		2022		2021			2023		2022
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	69,431	$	137,138	Cash and cash equivalents, end of period	$	59,172	$	69,431
Restricted cash, end of period	Restricted cash, end of period	17,619		14,816		Restricted cash, end of period	23,373		17,619
Cash, cash equivalents and restricted cash end of period	Cash, cash equivalents and restricted cash end of period	$	87,050	$	151,954	Cash, cash equivalents and restricted cash end of period	$	82,545	$	87,050

Supplemental Disclosures:	Supplemental Disclosures:					Supplemental Disclosures:
Cash paid for interest, net of amounts capitalized		$	43,895	$	35,510
Cash paid for interest						Cash paid for interest	$	64,180	$	43,895
Cash paid for income and franchise taxes	Cash paid for income and franchise taxes	1,100		1,063		Cash paid for income and franchise taxes	1,372		1,100

Non-Cash Investing and Financing Activities:	Non-Cash Investing and Financing Activities:					Non-Cash Investing and Financing Activities:
Accrued Series A preferred stock offering costs	Accrued Series A preferred stock offering costs	$	37	$	8	Accrued Series A preferred stock offering costs	$	4	$	37
Accrued Series C preferred stock offering costs	Accrued Series C preferred stock offering costs	33		14		Accrued Series C preferred stock offering costs	6		33
Accrued Class A common stock offering costs	Accrued Class A common stock offering costs	38		8		Accrued Class A common stock offering costs	1		38
Series A preferred stock dividend declared	Series A preferred stock dividend declared	3,719		3,719		Series A preferred stock dividend declared	3,719		3,719
Series C preferred stock dividend declared	Series C preferred stock dividend declared	2,118		2,118		Series C preferred stock dividend declared	2,118		2,118
Shares subject to repurchase issued in acquisition		49,965		—
Adjustments to value of shares subject to repurchase		3,423		—
Shares issued in acquisition						Shares issued in acquisition	—		49,965
Adjustments to value of shares						Adjustments to value of shares	—		3,423
Proceeds from real estate sales used to pay off related mortgage notes payable	Proceeds from real estate sales used to pay off related mortgage notes payable	940		—		Proceeds from real estate sales used to pay off related mortgage notes payable	67,731		940
Mortgage notes payable released in connection with disposition of real estate		(940)		—
Mortgages assumed in acquisition (including net discounts of $1,466)		312,246		—
Mortgage notes payable released in connection with dispositions of real estate						Mortgage notes payable released in connection with dispositions of real estate	(67,731)		(940)
Proceeds from real estate sales used to repay amounts outstanding under the Credit Facility						Proceeds from real estate sales used to repay amounts outstanding under the Credit Facility	35,000		—
Amounts under the Credit Facility repaid in connection with dispositions of real estate						Amounts under the Credit Facility repaid in connection with dispositions of real estate	(35,000)		—
Mortgages assumed in acquisition (including premiums of $276)						Mortgages assumed in acquisition (including premiums of $276)	—		312,246
Application of deposits for real estate acquisitions	Application of deposits for real estate acquisitions	23,750		—		Application of deposits for real estate acquisitions	—		23,750
Increase in accounts payable related to 2021 OPP		—		1,936
Accrued estimate of settlement with CIM for contingent consideration and other claims						Accrued estimate of settlement with CIM for contingent consideration and other claims	4,374		—
Accrued contingent consideration on acquired properties in the CIM Portfolio Acquisition	Accrued contingent consideration on acquired properties in the CIM Portfolio Acquisition	10,840		—		Accrued contingent consideration on acquired properties in the CIM Portfolio Acquisition	—		10,840
Accrued capital expenditures	Accrued capital expenditures	371		2,642		Accrued capital expenditures	—		371

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

Note 1 — Organization

The Necessity Retail REIT, Inc. (the “Company”), is an externally managed real estate investment trust for U.S. federal income tax purposes (“REIT”) focusing on acquiring and managing a diversified portfolio of primarily ~~service-oriented~~necessity-based retail single-tenant and ~~traditional retail and distribution-related commercial real estate~~multi-tenant properties ~~located primarily~~ in the United States. ~~The Company’s assets consist primarily~~As of ~~freestanding~~June 30, 2023, the Company owned 991 properties, comprised of 27.3 million rentable square feet, which were 92.7% leased, including 882 single-tenant net-leased commercial properties ~~that~~(845 of which are ~~net leased to “investment grade”~~retail properties) and ~~other creditworthy tenants and a portfolio of~~109 multi-tenant retail ~~properties consisting primarily~~properties.

Substantially all of ~~power centers~~the Company’s business is conducted through The Necessity Retail REIT Operating Partnership, L.P. (the “OP”), a Delaware limited partnership, and ~~lifestyle centers.~~

its wholly-owned subsidiaries. Necessity Retail Advisors, LLC (the “Advisor”) manages the Company’s day-to-day business with the assistance of the Company’s property manager, Necessity Retail Properties, LLC, (the “Property Manager”). The Advisor and the Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to the Company. The Company ~~has historically focused its acquisitions primarily on net leased, single-tenant service retail properties, defined as properties leased~~also reimburses these entities for certain expenses they incur in providing these services to ~~tenants in~~ the ~~retail banking, restaurant, grocery, pharmacy, gas, convenience, fitness, and auto services sectors.~~Company.

CIM Portfolio Acquisition

On December 17, 2021, the Company signed a purchase and sale agreement to acquire 79 multi-tenant retail centers and 2two single-tenant properties for aan aggregate contract purchase price of $1.3 billion (the “CIM Portfolio Acquisition”). The ~~Company determined that the~~ CIM Portfolio Acquisition was accounted for as an asset acquisition. The acquisition closed in multiple transactions from February 2022 through July 2022, and the consideration included cash (including cash sourced from borrowings under the Credit Facility, as defined below), assumption of existing mortgage debt securing certain of the properties and the issuance of shares of the Company’s Class A common stock.

The Company closed on the properties of the CIM Portfolio Acquisition in multiple stages as follows:

•In the three months ended March 31, 2022, the Company closed on the acquisition of 56 properties of the CIM Portfolio Acquisition for an aggregate contract purchase price of $801.1 million which was funded by $728.4 million in cash, including $378.0 million of borrowings under the Company’s Credit Facility, the assumption of $19.3 million of existing mortgage debt and the issuance of $50.0 million in fair value at issuance ($53.4 million ~~of value subject to repurchase)~~in contractual value) of the Company’s Class A common stock to certain subsidiaries of the CIM Real Estate Finance Trust, Inc. (the “Sellers”), at its closing value on the respective closing dates on which the common stock was issued.

•In the three months ended June 30, 2022, the Company closed on 24 additional properties from the CIM Portfolio Acquisition for an aggregate contract purchase price of $452.8 million in 3three closings. The acquisitions were funded with the assumption of $294.5 million of fixed-rate mortgage debt, $128.2 million of $135.0 million of borrowings under the Credit Facility, the application of $23.8 million of the Company’s $40.0 million deposit and the remainder with cash on hand. ~~The assumed mortgages bear stated interest rates between 3.65% and 4.62% and mature between April 2023 and September 2033.~~

•~~The~~In the three months ended September 30, 2022, the Company closed on the 1one remaining property from the CIM Portfolio Acquisition ~~on July 7, 2022~~ for a contract purchase price of $71.1 million. The acquisition was funded with the assumption of $39.0 million of fixed-rate mortgage debt, the application of the remaining $16.2 million of the Company’s $40.0 million deposit, and the remainder with cash on hand (including $6.8 million of previous borrowings under the Credit Facility). ~~The assumed mortgage bears a stated interest rate of 4.05% and matures in May 2024 (see~~ ~~Note~~ 16 ~~— Subsequent Events~~).

•The aggregate contract purchase prices above do not include contingent consideration relating to leasing activity at each respective acquired property for a six-month period subsequent to the respective closing dates of each acquired property. ~~The~~During the year ended December 31, 2022, the Company paid ~~$10.2 million and $13.3~~$59.3 million for such contingent consideration ~~in the three months ended March 31, 2022 and three months ended June 30, 2022, respectively.~~with cash on hand. As of ~~June 30,~~December 31, 2022, the Company had accrued ~~$10.8~~$6.7 million of contingent consideration based on leases executed ~~as of June 30,~~prior to December 31, 2022. ~~The Company paid $16.1 million in July 2022, which includes~~During the accrual for $10.8 million, and additional amounts may be due for leases executed through January 2023 (six months following the acquisition date of the final property of the CIM Portfolio Acquisition).

~~The CIM Portfolio Acquisition represented a strategic shift away from a primary focus on single-tenant retail properties.~~

~~In addition, the Company acquired 8 additional single-tenant properties in the three~~six months ended June 30, ~~2022 for~~2023, the Company accrued an ~~aggregate contract purchase price of $17.5 million. The Company acquired 10~~ additional ~~single-tenant properties and 1 additional multi-tenant retail property~~$5.5 million based on leases executed after December 31, 2022. All previously accrued amounts were paid in the six months ended June 30, ~~2022~~2023.

•During the three months ended June 30, 2023, the Company accrued an estimate of $4.4 million to settle remaining claims with CIM for ~~an aggregate contract~~contingent consideration and other matters. The claims relate to (i) disputes that had arisen under the purchase ~~price of $58.4 million.~~and sale agreement, (ii) a related contingent consideration letter agreement for leasing activities and (iii) a related escrow agreement.

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

~~As of June 30, 2022,~~Proposed Merger and Internalization

On May 23, 2023, the Company, owned 1,056 properties, comprised of 28.9 million rentable square feet, which were 90.8% leased, including 944 single-tenant net leased commercial properties (906 of which are retail properties) and 112 multi-tenant retail properties.

~~Substantially all of~~ the ~~Company’s business is conducted through The Necessity Retail REIT~~OP, Global Net Lease, Inc., a Maryland corporation (“GNL”), Global Net Lease Operating Partnership, L.P. ~~(the “OP”)~~, a Delaware limited partnership (“GNL OP”), Osmosis Sub I, LLC, a Maryland limited liability company and ~~its~~ wholly-owned ~~subsidiaries. Necessity Retail Advisors,~~subsidiary of GNL (“REIT Merger Sub”), and Osmosis Sub II, LLC, a Delaware limited liability company and wholly-owned subsidiary of GNL OP (“OP Merger Sub”), entered into an Agreement and Plan of Merger (the ~~“Advisor”~~“REIT Merger Agreement”) ~~manages~~. Subject to the ~~Company’s day-to-day business~~terms and conditions of the REIT Merger Agreement, and subject to the approval of holders of common stock of each RTL and GNL, at the effective time of the merger (the “REIT Merger Effective Time”), the Company will merge with and into REIT Merger Sub, with REIT Merger Sub continuing as the surviving entity and a wholly-owned subsidiary of GNL (the “REIT Merger”), and OP Merger Sub will merge with and into the OP, with the ~~assistance~~OP continuing as the surviving entity (the “OP Merger” and, together with the REIT Merger, the “Merger”). The Company also entered into an agreement to internalize the advisory and property management functions of the combined companies through a series of mergers with the advisors and property managers for each of GNL and the Company (the “Internalization Merger”, and, together with the REIT Merger and the OP Merger, the “Proposed Transactions”).The Proposed Transactions are conditional upon one another and accordingly are considered “related” and treated as a single transaction for accounting and reporting purposes. The Proposed Transactions are considered a business combination for accounting purposes with GNL as both the legal and accounting acquiror.

As one of the acquirees in a business combination, the Company has expensed costs related to the Proposed Transaction as incurred. Accordingly, $4.2 million is included in merger, transaction and other costs associated with the Proposed Transaction in the three and six months ended June 30, 2023.

Truist Securities, Inc. (“Truist”), the financial advisor to the Company with respect to the Proposed Transactions will be paid an aggregate fee of $11.0 million, $1.5 million of which was accrued in the second quarter 2023 upon delivery of Truist’s opinion regarding the REIT Merger and the remainder of which is payable upon consummation of the Proposed Transactions. The Company has also agreed to reimburse Truist for certain of its expenses and to indemnify Truist and certain related parties against certain potential liabilities arising out of or in connection with its engagement.

The REIT Merger

Subject to the approval of holders of RTL Common Stock as of August 8, 2023, at a special meeting of shareholders on September 8, 2023, at the REIT Merger Effective Time, each issued and outstanding share of the Company’s ~~property manager,~~Class A common stock, par value $0.01 per share (“Class A Common Stock”) (or fraction thereof), will be converted into the right to receive 0.670 shares (the “Exchange Ratio”) of validly issued, fully paid and nonassessable shares of GNL’s Common Stock, par value $0.01 per share (“GNL Common Stock”). From and after the REIT Merger Effective Time, all shares of Class A Common Stock will no longer be outstanding and will automatically be cancelled and cease to exist, and each holder of a share of Class A Common Stock will cease to have any rights with respect thereto, except for the right to receive the consideration as provided in the REIT Merger Agreement.

At the REIT Merger Effective Time, each issued and outstanding share of the Company’s 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”) and each issued and outstanding share of the Company’s 7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), will automatically be converted into the right to receive from GNL one share of newly created 7.50% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, and one share of newly created 7.375% Series E Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, respectively, which will have substantially identical powers, preferences, privileges, and rights as the Series A Preferred Stock and the Series C Preferred Stock, respectively. From and after the REIT Merger Effective Time, all shares of Series A Preferred Stock and Series C Preferred Stock will no longer be outstanding and will automatically be cancelled and cease to exist, and each holder of a share of Series A Preferred Stock and Series C Preferred Stock will cease to have any rights with respect thereto, except for the right to receive the consideration as provided in the REIT Merger Agreement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

partner of the OP other than the Company or any subsidiary of the Company issued and outstanding immediately prior to the OP Merger Effective Time will automatically be converted into new GNL OP Units in an amount equal to (x) one (1), multiplied by (y) the Exchange Ratio, and each holder of new GNL OP Units will be admitted as a limited partner of GNL OP in accordance with the terms of the partnership agreement of GNL OP. Immediately after the OP Merger Effective Time, Newco GP, LLC will be the general partner and GNL OP will be the limited partner of the OP.

As part of the REIT Merger, GNL would also issue common shares (adjusted for the Exchange Ratio) for RTL RSU's and LTIP Units outstanding at the time of the REIT Merger (See further discussion in “Restricted Shares and LTIP Units” below).

The Company’s Loan and Financing Agreements

As required by the REIT Merger Agreement, GNL will assume all the Company’s indebtedness and repay all amounts outstanding under the Company’s Credit Facility (as defined in Note 5 — Credit Facility). The Company’s indebtedness includes, in particular:

•The Company’s Mortgage Notes Payable: The Company’s mortgage notes payable totaled nearly $1.6 billion in principal amounts, and had a total fair value of $1.4 billion, as of June 30, 2023. These mortgage notes bear fixed annual interest rates between 2.2% and 4.7%, with a weighted average annual interest rate of 3.82% as of June 30, 2023. The Company’s mortgage notes payable mature between September 2023 and May 2031, and the Company has $96.5 million and $65.2 million of its mortgage notes payable scheduled for repayment for the remainder of 2023 and the year ended December 31, 2024, respectively, as of June 30, 2023. For additional information about the Company’s mortgage notes payable and their fair value, see Note 4 — Mortgage Notes Payable, Net and Note 7 — Fair Value Measurements.

•The Company’s Senior Notes: The Company’s Senior Notes (as defined in Note 6 — Senior Notes, Net), were issued at par for an aggregate principal amount of $500.0 million, mature on September 30, 2028 and accrue interest at a rate of 4.50% per year. Interest is payable semi-annually in arrears on March 30 and September 30 of each year. The Company’s Senior Notes do not require any principal payments prior to maturity. The fair value of the Company’s Senior Notes was $385.0 million as of June 30, 2023 (see Note 7 — Fair Value Measurements for additional information).

•The Company’s Credit Facility: The total amount outstanding under the Company’s Credit Facility totaled $604.0 million and the Company’s borrowings thereunder bore interest at weighted-average annual rate of 7.20% as of June 30, 2023.

In addition, prior to the REIT Merger Effective Time, the Company is required to seek lender consents with respect to the applicable terms of the following agreements: (i) the Loan Agreement, dated as of December 8, 2017, among Société Générale and UBS AG, as lenders, and certain subsidiaries of the OP, as borrowers, as amended to date (the “SocGen and UBS Loan Agreement”) and (ii) the Loan Agreement, dated as of July 24, 2020, by and among the entities listed on Schedule I thereto, as borrowers, and Column Financial, Inc., as lender, as amended to date (the “Column Loan Agreement” and, together with the SocGen and UBS Loan Agreement, the “CMBS”) to the extent required to permit the Company and the OP to perform their respective obligations pursuant to the REIT Merger Agreement and the Internalization Merger Agreement.

The Internalization Merger

Concurrently with the execution of the REIT Merger Agreement, on May 23, 2023, the Company entered into a merger agreement for a transaction known as an “Internalization” (the “Internalization Merger Agreement”) with GNL Advisor Merger Sub LLC, a Delaware limited liability company, GNL PM Merger Sub LLC, a Delaware limited liability company, Advisor Merger Sub LLC, a Delaware limited liability company, RTL PM Merger Sub LLC, a Delaware limited liability company, the OP, GNL and GNL OP, on the one hand, and AR Global, Global Net Lease Special Limited Partnership, LLC, a Delaware limited liability company (“GNL SLP”), Necessity Retail Space Limited Partner, LLC, (“RTL SLP”) a Delaware limited company, Global Net Lease Advisors, LLC, a Delaware limited liability company (“GNL Advisor”), the Advisor, Global Net Lease Properties, LLC, ~~(the “Property~~a Delaware limited liability company (“GNL Property Manager”)~~. The~~, and the Company’s Property Manager, on the other hand.

Consummation of the transactions contemplated by the Internalization Merger Agreement will result in the internalization of the management of the combined company immediately following consummation of the REIT Merger, including by terminating (i) GNL’s existing arrangement for advisory management services provided by GNL Advisor pursuant to the Fourth Amended and Restated Advisory Agreement, dated as of June 2, 2015, among GNL, GNL OP and GNL Advisor (as amended pursuant to First Amendment, dated as of August 14, 2018, Second Amendment, dated as of November 6, 2018, Third Amendment, dated as of May 6, 2020, and Fourth Amendment, dated as of May 6, 2021, the “GNL Advisory Agreement”), (ii)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

GNL’s existing arrangement for property management services provided by GNL Property Manager pursuant to the Property Management and Leasing Agreement, dated as of April 20, 2012, by and among GNL, GNL OP and GNL Property Manager (as amended pursuant to First Amendment, dated as of October 27, 2017, Second Amendment, dated as of February 27, 2018, and Third Amendment, dated as of February 27, 2019, the “GNL Property Management Agreement”), (iii) the Company’s existing arrangement for advisory management services provided by the Advisor pursuant to the Third Amended and Restated Advisory Agreement, dated as of September 6, 2016, by and among the Company, the OP and American Finance Advisors LLC (now known as the Advisor) (as amended pursuant to Amendment No. 1, dated as of July 19, 2018, Amendment No. 2, dated as of March 18, 2019, Amendment No. 3, dated as of March 30, 2020, and Amendment No. 4, dated as of January 13, 2021, the “Advisory Agreement”), and (iv) the Company’s existing arrangement for property management services provided by the Property Manager ~~are under common control with~~pursuant to the Amended and Restated Property Management and Leasing Agreement, dated as of September 6, 2016, by and among the Company, the OP and American Finance Properties, LLC (now known as the Property Manager) (as amended pursuant to First Amendment, dated as of December 8, 2017, and Second Amendment, dated November 4, 2020, the “Property Management Agreement”). All assets and contracts (including leases) necessary or desirable in the judgment of both GNL and the Company to conduct the business of GNL and the Company and all desired employees will be placed into subsidiaries of AR Global ~~Investments, LLC~~that will be merged with subsidiaries of GNL upon the effective time of the Internalization Merger.

Following the completion of the Internalization Merger, the Advisory Agreement and Property Management Agreement will be terminated.

Restricted Shares and LTIP Units

Except with respect to the Company’s restricted shares of Class A common stock (“~~AR Global”~~restricted shares”) granted between the execution of the REIT Merger Agreement and ~~these related~~the REIT Merger Effective Time, as of one business day immediately prior to the REIT Merger Effective Time, each restricted share granted to a member of the Company’s board of directors under the 2018 Equity Plan that is outstanding as of immediately prior to the REIT Merger Effective Time (whether or not then vested) will automatically become fully vested, and all restrictions with respect thereto will lapse. Each share of Class A Common Stock resulting from the vesting of the restricted shares will be treated the same as other shares of Class A Common Stock issued and outstanding immediately prior to the REIT Merger Effective Time, and will be converted into the right to receive shares of GNL Common Stock based on the Exchange Ratio. After completing the Company’s annual meeting of stockholders, each of the Company’s independent directors was granted $85,000 of restricted shares as part of the annual grant, with such restricted shares to be subject to one-year vesting. The restricted shares will convert into shares of GNL Common Stock at the REIT Merger Effective Time in the same manner as the unvested restricted shares held by non-directors of the Company (as described below).

Also as of one business day immediately prior to the REIT Merger Effective Time, all other restricted shares outstanding as of immediately prior to the REIT Merger Effective Time including any restricted shares issued on conversion of LTIP Units will cease to relate to or represent any right to receive Class A Common Stock and will be assumed by GNL and automatically converted, at the REIT Merger Effective Time, into GNL Restricted Stock with respect to a number of shares of GNL Common Stock equal to the product of (x) the number of shares of Class A Common Stock underlying the applicable award of restricted shares as of immediately prior to such conversion, multiplied by (y) the Exchange Ratio, with each such award of restricted shares so converted into GNL Restricted Stock otherwise subject to the same terms and conditions as were applicable to the corresponding award of restricted shares, including any applicable vesting, acceleration, and payment timing provisions, except (i) as expressly adjusted by the REIT Merger Agreement, (ii) all of the outstanding equity or equity-based awards of the Company held by Jason Doyle, the Company’s Chief Financial Officer, and other key employees of the Advisor or its affiliates (including any incremental grants made to them prior to the REIT Merger Effective Time) will fully vest as of immediately prior to the REIT Merger Effective Time, and (iii) all of the outstanding equity or equity-based awards of the Company held by any employee of the Advisor who is not offered employment by GNL on the terms and conditions set forth in the Internalization Merger Agreement will fully vest as of immediately prior to the REIT Merger Effective Time.

In connection with the Internalization Merger Agreement, the parties ~~receive compensation~~agreed to modify the terms of the existing 2021 Advisor Multi-Year Outperformance Award (the “2021 OPP”) to accelerate the timing for determining whether the award is vested and ~~fees for providing services~~earned. Specifically, as modified, prior to ~~us.~~the Internalization Effective Time, the Advisor will distribute a new award of LTIP Units that are outstanding under the terms of the 2021 OPP to RTL SLP. The Company ~~also reimburses these entities for certain expenses they incur in providing these services~~and the OP will modify the LTIP Units so that the award may be converted, upon the election of AR Global, into 8,528,885 restricted shares of the Company’s Common Stock (the “Converted Restricted Shares”). Any restricted shares that are not earned will be forfeited. As modified, upon AR Global’s exercising the election, the Company will immediately issue RTL SLP the Converted Restricted Shares, subject to an award agreement which is substantially identical to the ~~Company.~~2021 OPP, except as modified by the terms of the

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Internalization Merger Agreement. All conditions regarding vesting and whether the shares are earned, whether based on time or performance, will remain in full effect, except as modified by the Internalization Merger Agreement. Each of the earned LTIP Units will be entitled to a priority catch-up distribution paid in cash at the Internalization Effective Time (the “RTL Catch Up”). If AR Global elects to convert LTIP Units into Converted Restricted Shares, other than with respect to the RTL Catch Up, any dividend or distribution will be paid on the Converted RTL Restricted Shares in accordance with the provisions of the 2021 OPP. All Converted Restricted Shares (or, if not converted, the LTIP Units) will vest and may be earned based on the achievement of performance as calculated on or prior to the closing of the Proposed Transactions and any vested and earned Converted Restricted Shares upon release of restrictions which will occur prior to the REIT Merger Effective Time, will be treated as a share of Class A Common Stock issued and outstanding immediately prior to the REIT Merger Effective Time and will be converted into the right to receive shares of GNL Common Stock based on the Exchange Ratio. Fewer shares than the maximum may be issued based on the measurement provisions in the 2021 OPP, which are based on total shareholder returns over the measurement period. The end of the measurement period will occur prior to the closing of the Proposed Transactions. It is expected that the LTIP Units (following conversion to shares of Class A Common Stock) will be converted or exchanged into shares of GNL Common Stock at or near closing of the Proposed Transactions.

Note 2 — Summary of Significant Accounting Policies

Basis of Accounting

The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six month periods ended June 30, ~~2022~~2023 and ~~2021~~2022 are not necessarily indicative of the results for the entire year or any subsequent interim periods.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of, and for the year ended December 31, ~~2021,~~2022, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on February ~~24, 2022.~~23, 2023. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, ~~2022.~~2023.

Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company has determined the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP. Except for the OP, as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had no interests in entities that were not wholly owned.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, and fair value measurements, as applicable.

~~Impacts of the COVID-19 Pandemic~~Out-of-Period Adjustment

During the ~~first quarter of 2020,~~three months ended September 30, 2022, the ~~global COVID-19 pandemic~~Company concluded that ~~has spread around the world and to every state~~it had understated amortization by $1.2 million in the ~~United States commenced. The pandemic has had~~three months ended March 31, 2022, and ~~could continue to have an adverse impact on economic~~$2.5 million and ~~market conditions, including a global economic slowdown, recession, or period of slow growth. The continued rapid development~~$3.7 million, respectively, for the three and fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company believes the estimates and assumptions underlying its consolidated financial statements are reasonable and supportable based on the information available as ofsix month periods ended June 30, 2022, ~~however uncertainty over~~for certain in-place lease intangibles associated with certain leases with below market rents that were acquired as part of the ~~ultimate impact COVID-19 will have on~~CIM Portfolio Acquisition in the ~~global economy generally,~~first and second quarters of 2022. The Company has concluded that this adjustment was not material to the ~~Company’s business in particular, makes~~financial position or results of operations for any estimates and assumptions as of June 30, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19. Actual results may ultimately differ from those estimates.prior quarterly periods

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

~~The financial stability~~ and, ~~overall health~~accordingly, the Company recorded the cumulative adjustment to increase depreciation by $3.7 million in the three and nine month periods ended September 30, 2022.

Impacts of ~~tenants is critical to~~ the ~~Company’s business. The negative effects that~~COVID-19 Pandemic

During the first quarter of 2020, the global COVID-19 pandemic ~~has had on~~that spread around the economy includes the closure or reduction in activity for many retail operations such as some of those operated by the Company’s tenants (e.g., restaurants). This has impacted the ability of some of the Company’s tenantsworld and to ~~pay their monthly rent either temporarily or~~every state in the ~~long-term. The~~United States commenced. As a result, the Company experienced delays in rent collections in the second, third and fourth quarters of 2020 and the first quarter of 2021. The Company ~~has~~did not ~~experienced~~experience any material delays in the receipt of rental payments during the year ended December 31, 2022 or the six months ended June 30, ~~2022.~~2023. The Company took a proactive approach to achieve mutually agreeable solutions with its tenants and in some cases, in the second, third and fourth quarters of 2020 and throughout 2021, the Company executed several types of lease amendments. These ~~agreements~~amendments included deferrals and abatements and also ~~may have~~ included extensions to the term of the leases. The Company ~~has~~did not ~~executed~~execute any COVID-19-related deferrals or abatements induring the year ended December 31, 2022 or the six months ended June 30, ~~2022.~~2023. The Company has substantially collected all amounts of previously deferred rent.

For accounting purposes, in accordance with ASC 842: Leases, normally a company would be required to assess a lease modification to determine if the lease modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (including leases for which the prior classification under ASC 840 was retained as part of the election to apply the package of practical expedients allowed upon the adoption of ASC 842, which does not apply to leases subsequently modified). However, in light of the COVID-19 pandemic in which many leases ~~are~~were being modified, the Financial Accounting Standards Board (“FASB”) and the ~~U.S. Securities and Exchange Commission (“SEC”)~~SEC provided relief that allowed companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the pre-concession arrangement, and therefore, not a lease modification, or to treat the lease amendment as a modification. In order to be considered COVID-19 related, cash flows must be substantially the same or less than those prior to the concession. For COVID-19 relief qualified changes, there are two methods to potentially account for such rent deferrals or abatements under the relief, ~~(1)~~(i) as if the changes were originally contemplated in the lease contract or ~~(2)~~(ii) as if the deferred payments are variable lease payments contained in the lease contract. For all other lease changes that did not qualify for FASB relief, the Company is required to apply modification accounting including assessing classification under ASC 842.

Some, but not all of the Company’s lease modifications qualify for the FASB relief. In accordance with the relief provisions, instead of treating these qualifying leases as modifications, the Company has elected to treat the modifications as if previously contained in the lease and recast rents receivable prospectively (if necessary). Under that accounting, for modifications that were deferrals only, there would be no impact on overall rental revenue and for any abatement amounts that reduced total rent to be received, the impact would be recognized ratably over the remaining life of the lease.

For leases not qualifying for this relief, the Company has applied modification accounting and determined that there were no changes in the current classification of its leases impacted by negotiations with its tenants.

Revenue Recognition

The Company’s revenues, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the initial term of the lease. As of June 30, ~~2022,~~2023, these leases had an average remaining lease term of approximately ~~7.2~~6.9 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable for, and include in revenue from tenants, unbilled rents receivable that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. For new leases after acquisition, the commencement date is considered to be the date the tenant takes control of the space. For lease modifications, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. Pursuant to certain of the Company’s lease agreements, tenants are required to reimburse the Company for certain property operating expenses, in addition to paying base rent, whereas under certain other lease agreements, the tenants are directly responsible for all operating costs of the respective properties. Under ASC 842, the Company elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, the Company also elected to reflect prior revenue and reimbursements reported under ASC 842 on a single line. For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

Future Base Rent Payments

The following table presents future base rent payments on a cash basis due to the Company over the next five years and ~~thereafter.~~thereafter as of June 30, 2023. These amounts exclude tenant reimbursements and contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items:

~~As of June 30, 2022:~~


(In thousands)	Future Base Rent Payments
2023 (remainder)	$	171,304
2024	338,416
2025	313,653
2026	285,021
2027	246,173
2028	197,012
Thereafter	1,045,985
	$	2,597,564

(In thousands) Future Base Rent Payments
2022 (remainder) $ 183,939
2023 353,069
2024 323,368
2025 293,652
2026 264,890
2027 222,655
Thereafter 1,184,148
$ 2,825,721
Contingent Rental Income

The Company owns certain properties with leases that include provisions for the tenant to pay contingent rental income based on a percent of the tenant’s sales upon the achievement of certain sales thresholds or other targets which may be monthly, quarterly or annual targets. As the lessor to the aforementioned leases, the Company defers the recognition of contingent rental income, until the specified target that triggered the contingent rental income is achieved, or until such sales upon which percentage rent is based are known. For the three and six months ended June 30, ~~2022~~2023 such amounts were ~~$0.3~~$0.9 million and ~~$0.7~~$1.5 million, respectively, and for the three and six months ended June 30, ~~2021~~2022 such amounts were ~~$0.4~~$0.3 million and ~~$0.6~~$0.7 million, respectively.

Collectability and Reductions to Revenue

The Company continually reviews receivables related to rent and unbilled rents receivable and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under the leasing standard adopted on January 1, 2019 (see the ~~“Recently~~“Recently Issued Accounting ~~Pronouncements”~~Pronouncements” section below), the Company is required to assess, based on credit risk only, if it is probable that the Company will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. Partial reserves, or the ability to assume partial recovery are not permitted. If the Company determines that ~~it’s~~it is probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines ~~it’s~~it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and a full reserve would be recorded on previously accrued amounts in cases where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in operating revenue from tenants beginning on January 1, 2019, in accordance with new accounting rules, on the accompanying consolidated statements of operations ~~and comprehensive income (loss)~~ in the period the related costs are incurred, as applicable. In the second, third and fourth quarters of 2020 and throughout 2021 and 2022, this assessment included consideration of the impacts of the COVID-19 pandemic on the ability of the Company’s tenants to pay rents in accordance with their contracts. The assessment included all of the Company’s tenants with a focus on the Company’s multi-tenant retail properties which have been more negatively impacted by the COVID-19 pandemic than the Company’s single-tenant properties.

In accordance with the lease accounting rules, the Company records uncollectable amounts as reductions in revenue from tenants. During the three and six months ended June 30, 2023, uncollectable amounts were $6.4 million and $9.8 million, respectively, and for the three and six months ended June 30, 2022 ~~uncollectable~~such amounts were $0.3 million and $0.5 million, respectively. ~~During~~Included in the uncollectable amounts for the three months ended June 30, 2021 the Company recorded $0.5 million of uncollectable amounts during the period, not including a recovery of $0.8 million relating to a lease settlement fee from a tenant in one of the Company’s multi-tenant properties that terminated its lease. During theand six months ended June 30, ~~2021, uncollectable amounts~~2023, were ~~$1.4~~$5.4 million ~~not including~~and $8.3 million, respectively, of revenue reductions associated with 48 and 64 leases, respectively, which were terminated in bankruptcy proceedings.

Lease Termination Income

During the three and six months ended June 30, 2023, the Company entered into two and four lease termination agreements, respectively, for a ~~recovery~~total of ~~$0.8~~$0.5 million ~~relating to a lease settlement fee from a tenant~~and $0.6 million, which were recognized and received in ~~one of~~ the ~~Company’s multi-tenant properties that terminated its lease.~~three and six months ended June 30, 2023, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

The Company entered into lease termination agreements at 2two and 6six of its single-tenant properties in the first quarter of 2022 and the fourth quarter of 2021, respectively. Since these leases ~~have~~had short-term remaining occupancy periods for the tenant, these lease termination agreements ~~are~~were treated as lease modifications, and their termination fee income iswas recognized over the remaining occupancy periods of the respective leases on a straight-line basis. In addition, the Company recognized and received $5.0 million in lease termination income from 5five vacant properties formerly leased to Truist Bank in the three months ended June 30, 2022. The Company recorded additional lease revenue of $5.7 million and $10.2 million in the three and six months ended June 30, 2022, respectively, related to these agreements. As of June 30, 2022, the occupancy periods for these ~~amended leases have all~~agreements expired and the tenants ~~have~~ vacated.

~~During~~ Accordingly, no related revenue was recognized on these leases in the three and six months ended June 30, ~~2021, the Company recorded $0.8 million and $1.3 million of lease termination income, respectively.~~2023.

Investments in Real Estate

Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. At the time an asset is acquired, the Company evaluates the inputs, processes and outputs of the asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of ~~operations and comprehensive loss.~~operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets. See the Purchase Price Allocation section ~~in this Note~~below for a discussion of the initial accounting for investments in real estate.

Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company's operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations. No properties were presented as discontinued operations during the ~~quarters~~three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022. Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale, most significantly that the sale is probable within one year. The Company evaluates the probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of June 30, 2023 and December 31, 2022, 5no properties were considered ~~held for sale, and as of December 31, 2021, the Company had 1 property classified as~~ held for sale.

Purchase Price Allocation

In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. Intangible assets may include the value of in-place leases and above- and ~~below- market~~below-market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either ~~above~~above- or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. All acquisitions during the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were asset acquisitions.

For acquired properties with leases classified as operating leases, the Company allocates the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Tangible assets include land, land improvements, buildings, fixtures, and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. The Company estimates fair value using data from appraisals, comparable sales, discounted cash flow analysis and other methods. Fair value estimates are also made using significant assumptions such as capitalization rates, fair market lease rates, discount rates, and land values per square foot.

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

Identifiable intangible assets include amounts allocated to acquired leases for above- and below-market lease rates and the value of in-place leases. Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from six to 24 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining initial term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases.

Accounting for Leases

Lessor Accounting

In accordance with the lease accounting standard, all of the Company’s leases as lessor prior to adoption of ASC 842 were accounted for as operating leases and the Company continued to account for them as operating leases under the transition guidance. The Company evaluates new leases originated after the adoption date (by the Company or by a predecessor lessor/owner) pursuant to the new guidance where a lease for some or all of a building is classified by a lessor as a sales-type lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, there is an automatic transfer of title during the lease, a bargain purchase option, the non-cancelable lease term is for more than a major part of the remaining economic useful life of the asset (e.g., equal to or greater than 75%), if the present value of the minimum lease payments represents substantially all (e.g., equal to or greater than 90%) of the leased property’s fair value at lease inception, or if the asset is so specialized in nature that it provides no alternative use to the lessor (and therefore would not provide any future value to the lessor) after the lease term. Further, such new leases would be evaluated to consider whether they would be failed sale-leaseback transactions and accounted for as financing transactions by the lessor.

Generally, all the Company’s leases as lessor ~~have~~had historically qualified as operating ~~leases. The~~leases including land leases for which such accounting has been grandfathered. However, as of June 30, 2023 and December 31, 2022, the Company ~~has one~~had two parcels of land ~~lease~~leased to ~~a tenant~~tenants that ~~qualifies~~qualify as a financing ~~lease~~leases which ~~was~~were entered into during the year ended December 31, 2022 (subsequent to the three months ended June 30, ~~2022.~~2022). The carrying value of ~~this lease is $2.0~~these leases were $5.8 million and $5.7 million as of June 30, 2023 and December 31, 2022, respectively, and isthe amounts are included in prepaid expenses and other assets on the Company’s consolidated balance sheets. For the three and six months ended June 30, 2023, income of $0.2 million and $0.3 million relating to these two leases is included in revenue from tenants in the Company’s consolidated statement of operations. As of June 30, 2023 and December 31, ~~2021,~~2022, the Company had no leases as a lessor that were considered as sales-type ~~or financing~~ leases under sales leaseback rules.

As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed.

Lessee Accounting

For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 109 — Commitments and Contingencies.

The Company is the lessee under certain land leases which were previously classified prior to adoption of lease accounting and will continue to be classified as operating leases under transition elections unless subsequently modified. These leases are ~~reflected on the Company’s consolidated balance sheets and the rent expense is reflected on a straight-line basis over the lease term.~~

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

reflected on the Company’s consolidated balance sheets and the rent expense is reflected on a straight-line basis over the lease term.

Gain on Sale of Real Estate Investments

Gains on sales of rental real estate are not considered sales to customers and are generally recognized pursuant to the provisions included in ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”).

In accordance with ASC 845-10, Accounting for Non-Monetary Transactions, if a nonmonetary exchange has commercial substance, the cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered to obtain it, and a gain or loss shall be recognized on the exchange.

Impairment of Long-Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. This review is based on an estimate of the future undiscounted cash flows expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If an impairment exists, due to the inability to recover the carrying value of a property, the Company would recognize an impairment loss on its consolidated statements of operations to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss recorded would equal the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings.

~~Shares Subject to Repurchase~~

The Company does not reflect shares subject to repurchase as part of its permanent equity if their repurchase is conditional on events that are outside of the Company’s control. Currently, the shares of Class A common stock issued in connection with the CIM Portfolio Acquisition are reflected as shares subject to repurchase outside of permanent equity. See ~~Note 9~~ ~~— Stockholder’s Equity~~ ~~for additional information.~~

Reportable Segments

As of June 30, ~~2022 and December 31, 2021,~~2023, the Company has determined that it has 2two reportable segments, with activities related to investing in single-tenant properties and multi-tenant properties.

Depreciation and Amortization

Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.

The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the initial remaining ~~periods~~lease terms of the respective leases.

The value of customer relationship intangibles, if any, is amortized to expense over the initial term of the lease and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.

Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.

~~Above~~Above- and Below-Market Lease Amortization

Capitalized above-market lease values are amortized as a reduction of revenue from tenants over the remaining terms of the respective leases and the capitalized below-market lease values are amortized as an increase to revenue from tenants over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below-market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.

Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.

Upon termination of an ~~above~~above- or below-market lease, any unamortized amounts would be recognized in the period of termination.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

Equity-Based Compensation

The Company has stock-based plans under which its directors, officers, and ~~other~~employees (if the Company ever has employees), employees of the Advisor orand its affiliates, ~~who are involved in providing~~employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, and certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company are eligible to receive awards. Awards granted thereunder are accounted for under the guidance for employee share-based payments. The cost of services received in exchange for these stock awards is measured at the grant date fair value of the award and the expense for such an award is included in the equity-based compensation line item of the consolidated statements of operations and is recognized in accordance with the service period (i.e., vesting) required or when the requirements for exercise of the award have been met.

Effective at the listing of the Company’s Class A Common Stock, $0.01 par value per share (“Class A common stock”) on The Nasdaq Global Select Market (“Nasdaq”) on July 19, 2018 (the “Listing Date”), the Company entered into a multi-year outperformance agreement with the Advisor (the “2018 OPP”) under which a new class of units of the limited partnership designated as “LTIP Units” (“LTIP Units”) were issued to the Advisor. These awards were market-based awards with a related required service period. In accordance with ASC 718, the LTIP Units were valued at their grant date and that value was reflected as a charge to earnings evenly over the service period. The cumulative expense was reflected as part of non-controlling interest in the Company’s balance sheets and statements of equity until the end of the service period. Following the end of the performance period under the 2018 OPP on July 19, 2021, the compensation committee of the board of directors of the Company determined that none of the 4,496,796 of the LTIP Units subject to the 2018 OPP had been earned, and these LTIP Units were thus automatically forfeited. On that date, the Company reclassified amounts reflected in non-controlling interest for these LTIP Units to additional paid in capital on its consolidated balance sheets and statements of equity.

On May 4, 2021, the Company’s independent directors authorized the issuance of a new award of LTIP Units effective after the performance period under the 2018 OPP expired on July 19, 2021, with the number of LTIP Units to be issued to the Advisor to be equal to the quotient of $72.0 million divided by the 10-trading day trailing average closing stock price of the Company’s Class A common stock for the 10 trading days up to and including July 19, 2021. On July 21, 2021, the Company entered into the multi-year outperformance agreement with the Advisor (the “2021 OPP”) pursuant to which the Advisor was granted an award of 8,528,885 units of limited partnership (“LTIP ~~Units,~~Units”), representing the quotient of $72.0 million divided by $8.4419. ~~As a result, the~~The LTIP Units issued under the 2021 OPP were reclassified as an equity award with the cumulative expense reflected as part of non-controlling interest in the Company’s consolidated balance sheets and equity statements. ~~For additional information, see~~ ~~Note 13~~ ~~— Equity-Based Compensation~~.

In the event of a modification of any of the awards discussed above, any incremental increase in the value of the instrument measured on the date of the modification both before and after the modification, will result in an incremental amount to be reflected prospectively as a charge to earnings over the remaining service period.

The Company and the other parties to the Internalization Merger Agreement agreed to modify the terms of the 2021 OPP to accelerate the timing for determining whether the award is vested and earned. See Note 1 — Organization – Proposed Merger and Internalization – Restricted Shares and LTIP Units.

For additional information on ~~these awards,~~all of the Company’s equity-based compensation arrangements, including modifications, see Note 1312 — Equity-Based Compensation.

Recently Issued Accounting Pronouncements

Adopted as of ~~January 1, 2021:~~June 30, 2023:

~~In August 2020, the FASB issued ASU 2020-06,~~ ~~Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815)~~. The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The Company adopted the new standard as required on January 1, 2021 and its adoption did not have a material impact on the Company’s financial statements.

~~Pending Adoption:~~

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). Topic 848 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through ~~December 31, 2022~~June 30, 2023 as reference rate reform activities occur. During the year ended December 31, 2020, the Company elected to apply the hedge accounting expedients related to (i) the assertion that ~~our~~the Company’s hedged forecasted transactions remain probable and (ii) the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients ~~preserves~~would preserve the presentation of ~~our~~the Company’s derivatives, if any, which ~~will~~would be consistent with ~~our~~the Company’s past presentation. As of June 30, 2023, the Company did not have any outstanding derivative instruments. The Company will continue to evaluate the impact of the guidance and may apply other elections, as applicable, as additional changes in the market occur.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

Note 3 — Real Estate Investments

Property Acquisitions

The following table presents the allocation of real estate assets acquired and liabilities assumed during the periods presented. All acquisitions ~~in both periods~~ were considered asset acquisitions for accounting purposes.


		Six Months Ended June 30,					Six Months Ended June 30,
(Dollar amounts in thousands)	(Dollar amounts in thousands)	2022		2021		(Dollar amounts in thousands)	2023 (2)		2022
Real estate investments, at cost:	Real estate investments, at cost:					Real estate investments, at cost:
Land	Land	$	302,478	$	13,331	Land	$	—	$	302,478
Buildings, fixtures and improvements	Buildings, fixtures and improvements	865,992		49,968		Buildings, fixtures and improvements	4,374		865,992
Total tangible assets	Total tangible assets	1,168,470		63,299		Total tangible assets	4,374		1,168,470
Acquired intangible assets and liabilities: (1)	Acquired intangible assets and liabilities: (1)					Acquired intangible assets and liabilities: (1)
In-place leases	In-place leases	218,454		8,281		In-place leases	5,535		218,454
Above-market lease assets	Above-market lease assets	24,066		—		Above-market lease assets	—		24,066
Below-market lease liabilities	Below-market lease liabilities	(59,442)		(5,593)		Below-market lease liabilities	—		(59,442)

Total intangible assets, net	Total intangible assets, net	183,078		2,688		Total intangible assets, net	5,535		183,078
Assets Reduced, Liabilities Assumed and Mezzanine Equity Issued:
Mortgage notes payable assumed in acquisitions (including net discounts of $1,466)		(312,246)		—
Shares subject to repurchase issued in acquisitions		(49,965)		—
Assets Reduced, Liabilities Assumed and Equity Issued:						Assets Reduced, Liabilities Assumed and Equity Issued:
Mortgage notes payable assumed in acquisitions (including premiums of $276)						Mortgage notes payable assumed in acquisitions (including premiums of $276)	—		(312,246)
Shares issued in acquisitions						Shares issued in acquisitions	—		(49,965)
Application of deposit	Application of deposit	(23,750)		—		Application of deposit	—		(23,750)
Accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition	Accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition	(10,840)				Accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition	—		(10,840)
Accrued estimate of settlement with CIM for contingent consideration and other claims						Accrued estimate of settlement with CIM for contingent consideration and other claims	(4,374)		—
Payment of previously accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition						Payment of previously accrued contingent consideration on acquired properties from the CIM Portfolio Acquisition	6,725		—
Cash paid for real estate investments	Cash paid for real estate investments	$	954,747	$	65,987	Cash paid for real estate investments	$	12,260	$	954,747
Number of properties purchased from the CIM Portfolio Acquisition		80		—
Number of properties purchased from the CIM Portfolio Acquisition (See Note 1 — Organization for additional information)						Number of properties purchased from the CIM Portfolio Acquisition (See Note 1 — Organization for additional information)	—		80
Number of other properties purchased	Number of other properties purchased	11		24		Number of other properties purchased	—		11

________

(1)Weighted-average remaining amortization periods for in-place ~~leases,~~lease assets, above-market lease assets and below-market lease liabilities acquired during the six months ended June 30, 2022 were 10.3 years, 7.6 years and 20.2 years, respectively, as of each property’s respective acquisition date.

(2)Real estate assets acquired during the six months ended June 30, 2023 were comprised entirely of contingent consideration relating to the CIM Portfolio Acquisition, $6.7 million of which was accrued as of December 31, 2022. See Note 1 — Organization for additional information. All previously accrued amounts were paid in the six months ended June 30, 2023. During the three months ended June 30, 2023, the Company accrued an estimate of $4.4 million to settle remaining claims by CIM for contingent consideration and other matters.

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

The following table presents amortization expense and adjustments to revenue from tenants and property operating expenses for intangible assets and liabilities during the periods presented:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	(In thousands)	2022		2021		2022		2021		(In thousands)	2023		2022		2023		2022
In-place leases, included in depreciation and amortization(1)	In-place leases, included in depreciation and amortization(1)	$	18,278	$	9,558	$	31,023	$	19,208	In-place leases, included in depreciation and amortization(1)	$	31,353	$	18,278	$	56,896	$	31,023

Above-market lease intangibles	Above-market lease intangibles	$	(1,374)	$	(601)	$	(2,281)	$	(1,290)	Above-market lease intangibles	$	(1,712)	$	(1,374)	$	(3,340)	$	(2,281)
Below-market lease liabilities	Below-market lease liabilities	2,971		1,657		4,991		3,296		Below-market lease liabilities	3,500		2,971		7,612		4,991
Total included in revenue from tenants	Total included in revenue from tenants	$	1,597	$	1,056	$	2,710	$	2,006	Total included in revenue from tenants	$	1,788	$	1,597	$	4,272	$	2,710

Below-market ground lease asset ~~(1)~~(2)	Below-market ground lease asset ~~(1)~~(2)	$	8	$	8	$	16	$	16	Below-market ground lease asset ~~(1)~~(2)	$	8	$	8	$	16	$	16
Above-market ground lease liability ~~(1)~~(2)	Above-market ground lease liability ~~(1)~~(2)	—		—		—		—		Above-market ground lease liability ~~(1)~~(2)	—		—		—		—
Total included in property operating expenses	Total included in property operating expenses	$	8	$	8	$	16	$	16	Total included in property operating expenses	$	8	$	8	$	16	$	16

______

~~Table of Contents~~(1)

~~THE NECESSITY RETAIL REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

During the three months and six ended June 30, ~~2022~~

~~(Unaudited)~~

2023, the Company recorded additional in-place lease amortization of $11.2 million and $14.5 million, respectively, associated with 48 and 64 leases, respectively, with tenants which were terminated in bankruptcy proceedings.

~~(1)~~(2)Intangible balances related to ground leases are included as part of the operating lease right-of-use assets presented on the consolidated balance sheets and the amortization expense of such balances is included in property operating expenses on the consolidated statements of operations.

The following table provides the projected amortization expense and adjustments to revenue from tenants for intangible assets and liabilities for the next five years:


(In thousands)	(In thousands)	2022 (remainder)		2023		2024		2025		2026		(In thousands)	2023 (remainder)		2024		2025		2026		2027
In-place leases, to be included in depreciation and amortization	In-place leases, to be included in depreciation and amortization	$	38,604	$	64,595	$	51,476	$	41,998	$	34,070	In-place leases, to be included in depreciation and amortization	$	34,095	$	54,904	$	43,268	$	33,589	$	25,217

Above-market lease intangibles	Above-market lease intangibles	$	3,055	$	5,790	$	4,962	$	4,137	$	3,243	Above-market lease intangibles	$	3,010	$	5,357	$	4,518	$	3,289	$	2,684
Below-market lease liabilities	Below-market lease liabilities	(5,149)		(10,165)		(9,580)		(9,151)		(8,692)		Below-market lease liabilities	(5,136)		(9,814)		(9,470)		(9,010)		(8,583)
Total to be included in revenue from tenants	Total to be included in revenue from tenants	$	(2,094)	$	(4,375)	$	(4,618)	$	(5,014)	$	(5,449)	Total to be included in revenue from tenants	$	(2,126)	$	(4,457)	$	(4,952)	$	(5,721)	$	(5,899)

Deposits for Real Estate Investments

~~As of June 30, 2022 and December 31, 2021, the~~The Company ~~had $16.3 million and $41.9 million, respectively, in~~did not have any deposits for future acquisitions of real estate investments ~~of which $16.3 million and $40.0 million~~ as of June 30, ~~2022 and~~2023 or December 31, ~~2021 related to the deposit on the CIM Portfolio Acquisition, respectively.~~2022.

Real Estate Held for Sale

When assets are identified by management as held for sale, the Company ceases depreciation and amortization of the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company’s estimate of the net sales price of the assets. For additional information on impairment charges, see the section “Impairment Charges” ~~section~~ below.

As of June 30, 2023 and December 31, 2022, there were 5no properties under contract to be disposed that have been classified as held for sale, which included 3 vacant single-tenant properties formerly leased to Truist Bank and 2 multi-tenant properties, 1 of which was recently acquired in the CIM Portfolio Acquisition.

~~As of December 31, 2021, there was 1 property, the Company’s Sanofi property,~~ classified as held for sale. ~~This property was disposed on January 6, 2022.~~

The sales of ~~these properties and~~ other properties sold during their respective periods dodid not represent a strategic shift in the Company’s operations or strategy. ~~Accordingly, the operating results of these properties remain classified within continuing operations for all periods presented.~~

~~The following table details the major classes of assets associated with the properties that have been reclassified as held for sale as of June 30, 2022 and December 31, 2021:~~

(In thousands) June 30, 2022 December 31, 2021
Real estate investments held for sale, at cost:
Land $ 17,658 $ 16,009
Buildings, fixtures and improvements 123,054 194,288
Acquired intangible lease assets 19,619 46,980
Total real estate assets held for sale, at cost 160,331 257,277
Less accumulated depreciation and amortization (24,951) (70,064)
Total real estate investments held for sale, net 135,380 187,213
Impairment charges related to properties reclassified as held for sale (54,601) —
Assets held for sale $ 80,779 $ 187,213

~~Real Estate Sales~~

During the three months ended June 30, 2022, the Company sold 5 properties for an aggregate contract price of $30.4 million. These property sales resulted in an aggregate gain of $13.4 million, which is reflected in gain on sale of real

1821

Table of Contents

THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

Real Estate Sales

During the three months ended June 30, 2023, the Company sold 48 properties for an aggregate contract price of $100.8 million, resulting in an aggregate gain of $5.5 million, which is reflected in gain on sale of real estate investments in the consolidated statement of operations for the three months ended June 30, 2023. During the six months ended June 30, 2023, the Company sold 53 properties for an aggregate contract price of $172.2 million. These property sales resulted in an aggregate gain of $17.3 million, which is reflected in gain on sale of real estate investments in the consolidated statement of operations for the six months ended June 30, 2023.

During the three months ended June 30, 2022, the Company sold five properties for an aggregate contract price of $30.4 million. These dispositions resulted in an aggregate gain of $13.4 million, which is reflected in gain on sale of real estate investments on the consolidated statement of operations for the three months ended June 30, 2022. During the six months ended June 30, 2022, the Company sold 11 properties, including the Company’s Sanofi property which was held for sale as of December 31, 2021, for an aggregate contract price of $295.6 million. These property sales resulted in an aggregate gain of $67.0 million, which is reflected in gain on sale of real estate investments on the consolidated statement of operations for the six months ended June 30, 2022.

During the three months ended June 30, 2021, the Company sold 3 properties for an aggregate contract price of $2.5 million, resulting in a nominal gain, which is reflected in gain on sale of real estate investments in the consolidated statement of operations for the three months ended June 30, 2021. During the six months ended June 30, 2021, the Company sold 5 properties for an aggregate contract price of $3.1 million, resulting in a gain of $0.3 million, which is reflected in gain on sale of real estate investments in the consolidated statement of operations for the six months ended June 30, 2021.

Real Estate Held for Use

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the property for impairment. For the Company, the most common triggering events are (i) concerns regarding the tenant (i.e., credit or expirations) in the Company’s single-tenant properties, (ii) significant or sustained vacancy in the Company’s multi-tenant properties and (iii) changes to the Company’s expected holding period as a result of business decisions or non-recourse debt maturities. For all of its held for use properties, the Company had reconsidered the projected cash flows due to various performance indicators and, where appropriate, the Company evaluated the impact on its ability to recover the carrying value of such properties based on the expected cash flows over the intended holding period. See “Impairment Charges” below for discussion of specific charges taken.

If a triggering event for held for use single-tenant properties is identified, the Company uses either a market approach or an income approach to estimate the future cash flows expected to be generated.

The market approach involves evaluating comparable sales of properties in the same geographic region as the held for use properties in order to determine an estimated sale price. The Company makes certain assumptions including, among others, that the properties in the comparable sales used in the analysis share similar characteristics to the held for use properties, and that market and economic conditions at the time of any potential sales of these properties, such as discount rates; demand for space; competition for tenants; changes in market rental rates; and costs to operate the property, would be similar to those in the comparable sales analyzed.

Under the income approach, the Company evaluates the impact on its ability to recover the carrying value of such properties based on the expected cash flows over its intended holding period. The Company makes certain assumptions in this approach including, among others, the market and economic conditions, expected cash flow projections, intended holding periods and assessments of terminal values.

Where more than one possible scenario exists, the Company uses a probability weighted approach. As these factors are difficult to predict and are subject to future events that may alter management’s assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses or additional impairment may be realized in the future.

~~Impairment Charges~~

The Company recorded impairment charges of $59.0 million for the three months ended June 30, 2022, $49.6 million of which related to a multi-tenant property located in Minnesota, $5.9 million of which related to five vacant single-tenant properties formerly leased to Truist Bank and $3.5 million of which related to a multi-tenant property acquired in the CIM Portfolio Acquisition. The Company recorded impairment charges of $64.9 million for the six months ended June 30, 2022, $49.6 million of which related to a multi-tenant property located in Minnesota, $8.0 million of which related to seven vacant single-tenant properties formerly leased to Truist Bank, $3.8 million of which related to one vacant single-tenant property formerly leased to United Healthcare and $3.5 million of which related to a multi-tenant property acquired in the CIM Portfolio Acquisition. The United Healthcare property has been vacant since June 30, 2021 when the tenant did not renew its lease. The Company previously impaired the United Healthcare property by $26.9 million during the three months ended December 31, 2021. All of the impaired properties were impaired to adjust the properties’ carrying values to their fair values as determined by their respective purchase and sales agreements if under a contract to be disposed, or their estimated fair values if not under a contract to be disposed. NaN vacant single-tenant properties formerly leased to Truist Bank and 2 multi-tenant properties, one of which was recently acquired in the CIM Portfolio Acquisition, are under contract to be disposed and are classified as assets held for sale on our consolidated balance sheets as of June 30, 2022.

1922

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

Impairment Charges

There were no impairment charges recorded in the three and six months ended June 30, 2023. The ~~Company~~following table details the impairment charges recorded ~~an impairment charge of $0.1 million~~by segment for the three and six months ended June 30, ~~2021 related to a vacant single-tenant property~~2022:


	Three Months Ended June 30,		Six Months Ended June 30,
(In thousands)	2022		2022
Single-tenant properties:
Various vacant single-tenant properties (1)	$	5,856	$	8,032
United Healthcare (2)	—		3,766
Total single-tenant impairment charges	5,856		11,798

Multi-tenant properties:
Blankenbaker Plaza (3) (4)	3,539		3,539
The Shoppes at West End (4)	49,559		49,559
Total multi-tenant impairment charges	53,098		53,098

Total impairment charges	$	58,954	$	64,896

(1)For the three and six months ended June 30, 2022, five and eight properties were impaired, all of which were formerly leased to Truist ~~Bank, which~~Bank. All properties in the three and six months ended June 30, 2022 were impaired to their fair values as determined by their respective purchase and sale agreements and were sold in the year ended December 31, 2022.

(2)This property was ~~recorded to adjust the~~vacant since June 30, 2021 when a tenant did not renew its lease. This property was impaired to its fair value as determined by athe income approach in both the year ended December 31, 2022 and 2021 and disposed of in the year ended December 31, 2022.

(3)This property was acquired in the CIM Portfolio Acquisition (seeNote 1 — Organization for additional information).

(4)These properties were impaired to their fair values as determined by their respective purchase and sale ~~agreement which was terminated prior to~~ agreements and were disposed of in the year ended December 31, 2022.

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2021.~~2023

(Unaudited)

Note 4 — Mortgage Notes Payable, Net

The Company’s mortgage notes payable, net as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 consisted of the following:


			Outstanding Loan Amount as of				Effective Interest Rate as of								Outstanding Loan Amount as of				Effective Interest Rate as of
Portfolio	Portfolio	Encumbered Properties	June 30, 2022		December 31, 2021		June 30, 2022			Interest Rate	Maturity	Anticipated Repayment	Portfolio	Encumbered Properties	June 30, 2023		December 31, 2022		June 30, 2023			Interest Rate	Maturity	Anticipated Repayment (4)
			(In thousands)		(In thousands)										(In thousands)		(In thousands)
2019 Class A-1 Net Lease Mortgage Notes		102	$	117,931	$	118,231	3.83	%		Fixed	May 2049	May 2026
2019 Class A-2 Net Lease Mortgage Notes		108	120,338		120,644		4.52	%		Fixed	May 2049	May 2029
2019 Class A-1 Net-Lease Mortgage Notes													2019 Class A-1 Net-Lease Mortgage Notes	98	$	117,220	$	117,620	3.83	%		Fixed	May 2049	May 2026
2019 Class A-2 Net-Lease Mortgage Notes													2019 Class A-2 Net-Lease Mortgage Notes	102	119,715		120,020		4.52	%		Fixed	May 2049	May 2029
2021 Class A-1 Net-Lease Mortgage Notes	2021 Class A-1 Net-Lease Mortgage Notes	49	54,047		54,487		2.24	%		Fixed	May 2051	May 2028	2021 Class A-1 Net-Lease Mortgage Notes	45	53,198		53,601		2.24	%		Fixed	May 2051	May 2028
2021 Class A-2 Net-Lease Mortgage Notes	2021 Class A-2 Net-Lease Mortgage Notes	47	93,353		94,113		2.83	%		Fixed	May 2051	May 2031	2021 Class A-2 Net-Lease Mortgage Notes	44	91,888		92,584		2.83	%		Fixed	May 2051	May 2031
2021 Class A-3 Net-Lease Mortgage Notes	2021 Class A-3 Net-Lease Mortgage Notes	33	35,000		35,000		3.07	%		Fixed	May 2051	May 2028	2021 Class A-3 Net-Lease Mortgage Notes	33	34,997		34,997		3.07	%		Fixed	May 2051	May 2028
2021 Class A-4 Net-Lease Mortgage Notes	2021 Class A-4 Net-Lease Mortgage Notes	35	55,000		55,000		3.65	%		Fixed	May 2051	May 2031	2021 Class A-4 Net-Lease Mortgage Notes	35	54,995		54,995		3.65	%		Fixed	May 2051	May 2031
Total Net Lease Mortgage Notes		374	475,669		477,475
Total Net-Lease Mortgage Notes (7)													Total Net-Lease Mortgage Notes (7)	357	472,013		473,817

Stop & Shop(5)	Stop & Shop(5)	4	45,000		45,000		3.50	%		Fixed	Jan. 2030	Jan. 2030	Stop & Shop(5)	—	—		45,000		3.50	%		Fixed	Jan. 2030	Jan. 2030
Column Financial Mortgage Notes(8)	Column Financial Mortgage Notes(8)	365	706,197		715,000		3.79	%		Fixed	Aug. 2025	Aug. 2025	Column Financial Mortgage Notes(8)	363	705,567		705,567		3.79	%		Fixed	Aug. 2025	Aug. 2025
Bob Evans I(5)	Bob Evans I(5)	22	22,842		22,842		4.71	%		Fixed	Sep. 2037	Sep. 2027	Bob Evans I(5)	—	—		22,740		4.71	%		Fixed	Sep. 2037	Sep. 2027
Mortgage Loan II	Mortgage Loan II	12	210,000		210,000		4.25	%		Fixed	Jan. 2028	Jan. 2028	Mortgage Loan II	12	210,000		210,000		4.25	%		Fixed	Jan. 2028	Jan. 2028
Mortgage Loan III	Mortgage Loan III	22	33,400		33,400		4.12	%		Fixed	Jan. 2028	Jan. 2028	Mortgage Loan III	22	33,400		33,400		4.12	%		Fixed	Jan. 2028	Jan. 2028
Cottonwood Commons ~~(4)~~	Cottonwood Commons ~~(4)~~	1	19,250		—		4.52	%		Fixed	Sep. 2023	Sep. 2023	Cottonwood Commons ~~(4)~~	1	19,250		19,250		4.52	%		Fixed	Sep. 2023	Sep. 2023
The Marquis ~~(4)~~(6)	The Marquis ~~(4)~~(6)	1	8,556		—		3.95	%		Fixed	May 2023	May 2023	The Marquis ~~(4)~~(6)	—	—		8,556		3.95	%		Fixed	May 2023	May 2023
Assumed Multi-Tenant Mortgage I ~~(4)~~	Assumed Multi-Tenant Mortgage I ~~(4)~~	3	16,700		—		4.68	%		Fixed	Sep. 2033	Sep. 2023	Assumed Multi-Tenant Mortgage I ~~(4)~~	3	16,700		16,700		4.68	%		Fixed	Sep. 2033	Sep. 2023
Assumed Multi-Tenant Mortgage II ~~(4)~~	Assumed Multi-Tenant Mortgage II ~~(4)~~	4	25,000		—		4.54	%		Fixed	Feb. 2024	Feb. 2024	Assumed Multi-Tenant Mortgage II ~~(4)~~	4	25,000		25,000		4.54	%		Fixed	Feb. 2024	Feb. 2024
Assumed Multi-Tenant Mortgage III ~~(4)~~(6)	Assumed Multi-Tenant Mortgage III ~~(4)~~(6)	3	31,300		—		3.70	%		Fixed	Apr. 2023	Apr. 2023	Assumed Multi-Tenant Mortgage III ~~(4)~~(6)	—	—		30,719		3.70	%		Fixed	Apr. 2023	Apr. 2023
Assumed Multi-Tenant Mortgage IV ~~(4)~~(6)	Assumed Multi-Tenant Mortgage IV ~~(4)~~(6)	4	28,387		—		3.90	%		Fixed	Apr. 2023	Apr. 2023	Assumed Multi-Tenant Mortgage IV ~~(4)~~(6)	—	—		28,387		3.90	%		Fixed	Apr. 2023	Apr. 2023
Assumed Multi-Tenant Mortgage V ~~(4)~~	Assumed Multi-Tenant Mortgage V ~~(4)~~	7	61,134		—		3.70	%		Fixed	Sep. 2023	Sep. 2023	Assumed Multi-Tenant Mortgage V ~~(4)~~	7	59,942		60,544		3.70	%		Fixed	Sep. 2023	Sep. 2023
The Plant ~~(4)~~(6)	The Plant ~~(4)~~(6)	1	123,000		—		3.87	%		Fixed	May 2033	May 2023	The Plant ~~(4)~~(6)	—	—		123,000		3.87	%		Fixed	May 2033	May 2023
McGowin Park													McGowin Park	1	39,025		39,025		4.11	%		Fixed	May 2024	May 2024
Gross mortgage notes payable	Gross mortgage notes payable	823	1,806,435		1,503,717		3.82	%	(1)				Gross mortgage notes payable	770	1,580,897		1,841,705		3.82	%	(1)
Deferred financing costs, net of accumulated amortization (2)	Deferred financing costs, net of accumulated amortization (2)		(36,990)		(38,672)								Deferred financing costs, net of accumulated amortization (2)		(26,685)		(31,948)
Mortgage premiums and (discounts), net (3)			(1,419)		(115)
Mortgage premiums and discounts, net (3)													Mortgage premiums and discounts, net (3)		(524)		(1,324)
Mortgage notes payable, net	Mortgage notes payable, net		$	1,768,026	$	1,464,930							Mortgage notes payable, net		$	1,553,688	$	1,808,433

__________

(1)Calculated on a weighted-average basis for all mortgages outstanding as of June 30, ~~2022.~~2023.

(2)Deferred financing costs represent commitment fees, legal fees and other costs associated with obtaining financing. These costs are amortized to interest expense over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are generally expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that it is probable the financing will not close.

(3)Mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.

(4)The Company ~~assumed this fixed-rate~~determines an anticipated repayment date when the terms of a debt obligation provide for earlier repayment than the legal maturity and when the Company expects to repay such debt obligations earlier due to factors such as elevated interest rates or additional principal payment requirements.

(5)These mortgage ~~when it acquired a property~~notes were fully repaid in ~~the CIM Portfolio Acquisition during~~ the six months ended June 30, ~~2022~~2023 in connection with ~~net discounts~~the dispositions of ~~$1.5 million.~~the formerly encumbered properties.

(6)These mortgage notes were fully repaid in the three months ended June 30, 2023 with proceeds of $183.0 million drawn from the Credit Facility and the remainder with cash on hand. Of the nine total properties formerly encumbered under these mortgage notes, eight were added to the asset pool comprising the borrowing base under the Credit Facility.

(7)Subsequent to June 30, 2023, the Company repaid $1.8 million of amounts outstanding on these mortgage notes. See Note 15 — Subsequent Events for additional information.

(8)Subsequent to June 30, 2023, the Company repaid$2.8 million of amounts outstanding on this mortgage note. See Note 15 — Subsequent Events for additional information.

Table of Contents

THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had pledged ~~$3.0 billion and $2.4~~$2.6 billion in real estate investments, ~~respectively,~~ at cost as collateral for its mortgage notes payable. This real estate is not available to satisfy other debts and obligations unless first satisfying the mortgage notes payable on the properties. In addition, as of June 30, ~~2022, $2.0~~2023, $2.2 billion in real estate investments, at cost were included in the unencumbered asset pool comprising the borrowing base under the Company’s revolving unsecured corporate credit facility (see Note 5 — Credit Facility for more details). The asset pool comprising the borrowing base under the credit facility is only available to serve as collateral or satisfy other debts and obligations if it is first removed from the borrowing base under the credit facility.

~~Table of Contents~~

~~THE NECESSITY RETAIL REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2022~~

~~(Unaudited)~~

Subsequent to June 30, 2022, the Company assumed $39.0 million of fixed-rate mortgage debt to partially fund the acquisition of the final property from the CIM Portfolio Acquisition. The mortgage bears stated interest of 4.05% and matures in May 2024. See ~~Note 16~~ — ~~Subsequent Events~~ ~~for additional information.~~

In connection with refinancing certain properties, the Company may incur prepayment penalties relating to its prior debt obligations. During the three and six months ended June 30, ~~2022~~2023, the Company incurred $0.5 million and ~~2021, no such amounts were incurred.~~$0.9 million, respectively, of prepayment penalties. These prepayment penalties, when incurred, are included in acquisition, transaction, and other costs in the consolidated statements of operations.

~~The following table summarizes the scheduled aggregate principal payments on mortgage notes payable based on anticipated maturity dates for the five years subsequent to June 30, 2022 and thereafter:~~

Future Principal Payments
(In thousands) Mortgage Notes
Credit Facility (1)
Senior Notes (2)
Total
2022 (remainder) $ 3,078 $ — $ — $ 3,078
2023 289,784 — — 289,784
2024 26,646 — — 26,646
2025 707,867 — — 707,867
2026 116,929 488,000 — 604,929
2027 21,553 — — 21,553
Thereafter 640,578 — 500,000 1,140,578
$ 1,806,435 $ 488,000 $ 500,000 $ 2,794,435

~~________~~

~~(1)The Credit Facility matures on April 1, 2026, subject to the Company’s right, subject to customary conditions, to extend the maturity date by up to 2 additional six-month terms. See~~ ~~Note 5~~ ~~— Credit Facility~~ ~~for additional information.~~

~~(2)The Senior Notes will mature on September 30, 2028. See~~ ~~Note 6~~ ~~— Senior Notes, Net~~ ~~for additional information.~~

The Company’s mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of June 30, ~~2022,~~2023, the Company was in compliance with ~~all operating and~~ financial covenants under ~~these~~its mortgage notes payable agreements.

In connection with the REIT Merger, GNL is required to assume all of the Company’s mortgage notes payable, net. See Note 1 — Organization – Proposed Merger and Internalization – The Company’s Loan and Financing Agreements for further details.

Combined Debt Obligation Principal Payments

The following table summarizes the scheduled aggregate principal payments (based on anticipated repayment dates) on mortgage notes payable and the Company’s other debt based on anticipated repayment dates for the remainder of the year ended December 31, 2023, the five years subsequent to December 31, 2023 and thereafter:


	Future Principal Payments
(In thousands)	Mortgage Notes		Credit Facility (1)		Senior Notes (2)		Total (4)
2023 (remainder) (3)	$	96,498	$	—	$	—	$	96,498
2024	65,235		—		—		65,235
2025	706,777		—		—		706,777
2026	116,334		604,000		—		720,334
2027	611		—		—		611
2028	332,206		—		500,000		832,206
Thereafter	263,236		—		—		263,236
	$	1,580,897	$	604,000	$	500,000	$	2,684,897

________

(1)The Credit Facility matures on April 1, 2026, but the Company reserves its right, subject to customary conditions, to extend the maturity date by up to two additional six-month terms. See Note 5 — Credit Facility for additional information.

(2)The Senior Notes mature on September 30, 2028. See Note 6 — Senior Notes, Net for additional information.

(3)The Company intends to repay these principal amounts scheduled for repayment during the year ended December 31, 2023 with (i) proceeds from the Credit Facility by transferring some or all of the encumbered properties to the asset pool comprising the borrowing base thereunder (as defined in Note 5 — Credit Facility) and (ii) cash on hand, a portion of which may be generated from future property sales.

(4)If the REIT Merger is consummated, GNL is required to assume all of the Company’s Senior Notes and mortgage notes payable. In addition, GNL is required to repay all amounts outstanding under the Company’s Credit Facility and then terminate the Credit Facility. See Note 1 — Organization – Proposed Merger and Internalization – The Company’s Loan and Financing Agreements for further details.

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Note 5 — Credit Facility

~~On April 26, 2018, the~~The Company ~~repaid its prior revolving unsecured corporate credit facility in full and entered into~~has a credit facility (the “Credit Facility”) with BMO Harris Bank, N.A. (“BMO Bank”) as administrative agent, Citizens Bank, N.A. and SunTrust Robinson Humphrey, Inc., as joint lead arrangers, and the other lenders from time to time as party thereto. On October 1, 2021, the Company entered into an amendment and restatement of the Credit ~~Facility with the parties thereto.~~Facility. Also, upon the closing of the Senior Notes (as defined in Note 6 — Senior Notes, Net) on October 7, 2021, the Company used a portion of the proceeds to repay all outstanding borrowings under the Credit Facility at the time. The Company also amended the Credit Facility on April 17, 2023, which transitioned borrowings under the Credit Facility from LIBOR to SOFR. The aggregate total commitments after the amendment and restatement of the Credit Facility were increased from $540.0 million to $815.0 million including a $50.0 million sublimit for letters of credit and a $55.0 million sublimit for swingline loans. The Credit Facility includes an uncommitted “accordion feature” permitting the Company, subject to certain exceptions, to increase the commitments under the Credit Facility by up to an additional $435.0 million, subject to obtaining commitments from new lenders or additional commitments from participating lenders and certain customary conditions. The Credit Facility matures on April 1, 2026 ~~subject to~~but the ~~Company’s~~Company reserves its right, subject to customary conditions, to extend the maturity date by up to 2two additional six-month terms. Borrowings under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary ~~LIBOR~~ breakage costs.

The Credit Facility is supported by a pool of eligible unencumbered properties that are owned by the subsidiaries of the OP that serve as Guarantors. The Company may add or remove properties to or from this pool so long as at any time there are at least 15 eligible unencumbered properties with a value of at least $300.0 million, among other things. The amount available for future borrowings under the Credit Facility depends on the amount outstanding thereunder relative to the aggregate commitments; however, the amount the Company may borrow is limited by the financial maintenance covenants described below.

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2022~~

~~(Unaudited)~~

The amount available for future borrowings under the Credit Facility is based on the maximum amount of total unsecured indebtedness that could be incurred while maintaining a minimum unsecured interest coverage ratio with respect to the borrowing base, in each case, as of the determination date.

~~During the six months ended June 30, 2022, the Company borrowed~~ ~~$513.0 million~~ ~~to fund a portion of the 80 properties~~ ~~acquired from the CIM Portfolio Acquisition, $25.0 million of which the Company repaid during the six months ended June 30, 2022 using proceeds from its dispositions.~~ As of June 30, ~~2022, the~~2023, the Company had a total borrowing capacity under the Credit Facility of ~~$526.6~~$646.3 million based on the value of the borrowing base under the Credit Facility, and of this amount, ~~$488.0~~$604.0 million was outstanding under the Credit Facility as of June 30, ~~2022~~2023 and ~~$38.6~~$42.3 million ~~remain~~ed remained available for future borrowings.

The Credit Facility currently requires payments of interest only prior to maturity. ~~Following the amendment and restatement of~~Borrowings under the Credit Facility ~~borrowings~~ bear interest at either (i) the Base Rate (as defined in the Credit Facility) plus an applicable spread ranging from 0.45% to ~~1.05%~~1.45%, or (ii) ~~LIBOR~~SOFR plus an applicable spread ranging from 1.45% to 2.05%, in each case depending on the Company’s consolidated leverage ratio. ~~These spreads reflect a reduction from the previously applicable spreads.~~ In addition, ~~pursuant to the amendment to the Credit Facility,~~ (i) if the Company or the OP achieves an investment grade credit rating, the OP can elect for the spread to be based on the credit rating of the Company or the OP, and (ii) the ~~prior~~ “floor” on ~~LIBOR of 0.25% was removed.~~SOFR is 0%.

As of June 30, ~~2022~~2023, the Company elected to use SOFR for all of its borrowings under the Credit Facility, and as of December 31, ~~2021,~~2022 the Company had elected to use LIBOR for all of its borrowings under the Credit Facility. The weighted-average interest rate under the Credit Facility was ~~3.43%~~7.20% and ~~2.79%~~6.51%, respectively.

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021. The remaining USD LIBOR settings will continue to be published through June 30, 2023. The Company is not able to predict when there will be sufficient liquidity in the SOFR market. The Company is monitoring and evaluating the risks related to changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps. In addition, the value of debt or derivative instruments tied to LIBOR will also be impacted as LIBOR is limited and discontinued and contracts must be transitioned to a new alternative rate. While the Company expects LIBOR to be available in substantially its current form until at least June 30, 2023, it is possible that LIBOR will become unavailable prior to that time. This could occur, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator. The Credit Facility contains language governing the establishment of a replacement benchmark index to serve as an alternative to LIBOR, when necessary.

Any subsidiary owning property that is included in the borrowing base is required to guarantee the OP’s obligations under the Credit Facility. This includes any wholly-owned domestic subsidiary of the OP that directly or indirectly owns or leases a real estate asset added to the pool of eligible unencumbered properties. For any Guarantor subsidiary of the OP, this guarantee will be released if the Company or the OP achieves an investment grade credit rating, but will again be required (i) if either the Company or the OP loses its investment grade credit rating, or (ii) with respect to any Guarantor subsidiary of the OP, for so long as the subsidiary is the primary obligor under or provides a guaranty to any holder of unsecured indebtedness.

The Credit Facility contains various customary operating covenants, including covenants restricting, among other things, restricted payments (including dividends and share repurchases), the incurrence of liens, the types of investments the Company may make, fundamental changes, agreements with affiliates and changes in nature of business. The amended and restated Credit Facility also (i) continues to have financial maintenance covenants with respect to maximum consolidated leverage, maximum consolidated secured leverage, minimum fixed charge coverage, and minimum net worth, (ii) amended the maximum recourse debt to total asset value covenant to refer instead to secured recourse debt, and (iii) added new financial maintenance covenants with respect to maximum consolidated unsecured leverage and adjusted net operating income for the pool of eligible unencumbered properties required to be maintained under the Credit Facility to debt service paid on unsecured indebtedness.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Under the Credit Facility, subject to certain exceptions, the Company is not permitted to pay distributions, including cash dividends on equity securities, ~~(including~~including the Company’s 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) and 7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series C Preferred Stock”)), in an aggregate amount exceeding 95% of AFFO (as defined in the

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~~THE NECESSITY RETAIL REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2022~~

~~(Unaudited)~~

Credit Facility) for any look-back period of four consecutive fiscal quarters without seeking consent from the lenders under the Credit Facility. However, the Credit Facility also permits the Company to pay distributions in an aggregate amount not exceeding 105% of AFFO for any applicable period if, as of the last day of the period, the Company was able to satisfy a maximum leverage ratio after giving effect to the payments and ~~also has~~maintain a combination of cash, cash equivalents and amounts available for future borrowings under the Credit Facility of not less than $60.0 million. Moreover, if applicable, during the continuance of an event of default under the Credit Facility, the Company could not pay dividends or other distributions in excess of the amount necessary for the Company to maintain its status as a REIT.

As of June 30, ~~2022,~~2023, the Company was in compliance with the operating and financial covenants under the Credit Facility.

In connection with the REIT Merger, GNL is required to fully repay the outstanding balance of the Credit Facility (see Note 1 — Organization – Proposed Merger and Internalization – The Company’s Loan and Financing Agreements for additional information.

LIBOR Transition

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intended to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On March 5, 2021, the Financial Conduct Authority confirmed a partial extension of this deadline, announcing that it will cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021. The remaining USD LIBOR settings were published through June 30, 2023. In addition, the value of debt or derivative instruments tied to LIBOR were impacted as LIBOR was limited and discontinued, and contracts were transitioned to a new alternative rate. During the three months ended June 30, 2023, the Company transitioned all of its borrowings under the Credit Facility from LIBOR to SOFR. As of June 30, 2023, the Company had no LIBOR-based contracts.

Note 6 — Senior Notes, Net

On October 7, 2021, the Company and the OP issued $500.0 million aggregate principal amount of 4.50% Senior Notes due 2028 (the “Senior Notes”). The Company, the OP and their subsidiaries that guarantee the Senior Notes entered into an indenture with U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee. As of June 30, ~~2022~~2023 and December 31, ~~2021~~2022, the ~~amount~~carrying value of the Senior Notes on the Company’s consolidated balance sheets totaled ~~$491.7~~$493.0 million and ~~$491.0~~$492.3 million, respectively, which is net of ~~$8.3~~$7.0 million and $~~9.0~~7.7 million of deferred financing costs, respectively.

The Senior Notes, which were issued at par, will mature on September 30, 2028 and accrue interest at a rate of 4.500% per year. Interest on the Senior Notes, which began to accrue on October 7, 2021, is payable semi-annually in arrears on March 30 and September 30 of each year. The Senior Notes do not require any principal payments prior to maturity. ~~The first semi-annual interest payment was made on March 30, 2022.~~

As of June 30, ~~2022,~~2023, the Company was in compliance with the covenants under the Indenture governing the Senior Notes. ~~Additional information on~~

In connection with the ~~terms~~REIT Merger, GNL is required to assume all of the Company’s outstanding Senior Notes ~~can be found in~~under the indenture at the closing of the REIT Merger (see Note 1 — Organization – Proposed Merger and Internalization – The Company’s ~~2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022.~~Loan and Financing Agreements for additional information).

Note 7 — Fair Value Measurements

Fair Value Hierarchy

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring assets and liabilities at fair value. GAAP establishes market-based or observable inputs as the preferred sources of values, followed by valuation models using management assumptions in the absence of market inputs. The three levels of the hierarchy are described below:

Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

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Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 — Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.

A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets and liabilities. The Company’s policy with respect to transfers between levels of the fair value hierarchy is to recognize transfers into and out of each level as of the end of the reporting period. There were no transfers between levels of the fair value hierarchy during the three months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

Financial Instruments Measured at Fair Value on a Recurring Basis

Derivative Instruments

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2022~~

~~(Unaudited)~~

The Company’s derivative instruments are measured at fair value on a recurring basis. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with this derivative utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparty. However, as of June 30, ~~2022,~~2023, the Company ~~has assessed~~does not have any derivatives, but would assess the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivatives valuation in its entirety is classified in Level 2 of the fair value hierarchy.if it had any.

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

Real Estate Investments Measured at Fair Value on a Non-Recurring Basis

Real Estate Investments - Held for Sale

The Company has had impaired real estate investments classified as held for sale (see Note 3 — Real Estate Investments for additional information on impairment charges recorded by the Company). ~~There were 4 impaired real estate investments held for sale as of June 30, 2022 and~~However, there were no impaired real estate investments held for sale as of June 30, 2023 and December 31, ~~2021.~~2022. The carrying value of impaired real estate investments held for sale on the consolidated balance sheets represents their estimated fair value less cost to sell. Impaired real estate investments held for sale are generally classified in Level 3 of the fair value hierarchy.

Real Estate Investments - Held for Use

The Company has had impaired real estate investments classified as held for use at the time of impairment (see Note 3 — Real Estate Investments for additional information on impairment charges recorded by the Company). The carrying value of these held for use impaired real estate investments ~~held for use~~ on the consolidated balance sheets represents their estimated fair value at the time of impairment. The Company primarily uses a market approach to estimate the future cash flows expected to be generated. Impaired real estate investments which are held for use are generally classified in Level 3 of the fair value hierarchy.

Financial Instruments that are not Reported at Fair Value

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The carrying value of short-term financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other assets, accounts payable and accrued expenses and dividends payable approximates their fair value due to their short-term nature.

As of June 30, 2022, the carrying value of advances to the Company under the Credit Facility was $488.0 million and as of December 31, 2021 there were no amounts outstanding under the Credit Facility. The fair ~~value of the advances to the Company under the Credit Facility was $486.8 million as of June 30, 2022, due to the widening of the credit spreads during the period.~~

~~The carrying~~ values of the Company’s ~~mortgage notes payable as of June 30, 2022 and December 31, 2021 were $1.8 billion~~ ~~and~~ ~~$1.5 billion, respectively,~~ ~~and the fair values were $1.7 billion and $1.5 billion, respectively. The~~remaining financial instruments that are not reported at fair value ~~of gross mortgage notes payable is based~~ on ~~estimates of market interest rates. This approach relies on unobservable inputs and therefore is classified as Level 3 in~~ the ~~fair value hierarchy.~~

As of June 30, 2022 and December 31, 2021, the Company’s Senior Notes had a gross carrying value of $500.0 million in each period and fair values of $395.0 million and $504.4 million, respectively.

~~Note 8 — Derivatives and Hedging Activities~~

~~Risk Management Objective of Using Derivatives~~

The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. The principal objective of such arrangements is to minimize the risks and costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives forconsolidated balance sheets are reported below:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

~~speculative or other purposes other than interest rate risk management.~~


		June 30, 2023				December 31, 2022
(In thousands)	Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Gross mortgage notes payable and mortgage premiums and discounts, net (1)	3	$	1,580,897	$	1,418,266	$	1,841,705	$	1,648,505
Senior Notes	2	$	500,000	$	385,000	$	500,000	$	376,250
Credit Facility	3	$	604,000	$	601,988	$	458,000	$	456,635

The ~~use of derivative~~ financial instruments ~~carries certain risks, including the risk that the counterparties~~noted above had lower fair values as compared to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its related parties may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their ~~obligations.~~

The Company entered into an interest rate swap on September 1, 2020 in a notional amount of $125.0 million. The interest rate swap became effective on October 13, 2020, and fixed the interest rate on a mortgage loan that was refinanced on September 4, 2020. The interest rate swap fixed interest on the mortgage at an effective interest rate of 3.27% and was to expire in July 2026. This interest rate swap was terminated in the fourth quarter of 2021 when the mortgage loan was repaid and the Company received $2.1 million as a result of the termination. Following the termination, the Company reclassified approximately $2.1 million from AOCI (as defined below) as a reduction to interest expense in the Company’s consolidated statement of operations in the fourth quarter of 2021. As a result, the Company had no derivative financial instruments outstandingrespective carrying values as of June 30, ~~2022~~2023 and December 31, ~~2021~~

~~Cash Flow Hedges~~2022 primarily because of ~~Interest Rate Risk~~

~~As of June 30, 2022~~increasing interest rates and ~~December 31, 2021~~widening credit spreads since the Company did not have any derivatives that were designated as cash flow hedges of interest rate risk, however, the Company did have derivative activity (see table below) during the three and six months ended June 30, 2021.

The Company’s objectives in using interest rate derivatives have historically been to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the lifeorigination of the agreements without exchange of the underlying notional amount. The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive loss (“AOCI”) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

~~The table below details the location in the~~ financial ~~statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and six months ended June 30, 2022 and 2021:~~

Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2022 2021 2022 2021
Amount of (loss) gain recognized in AOCI on interest rate derivatives $ — $ (502) $ — $ 1,919
Amount of (loss) reclassified from AOCI into income as interest expense $ — $ (71) $ — $ (134)
Total amount of interest expense presented in the consolidated income statements $ 28,329 $ 20,361 $ 52,069 $ 39,695

~~Non-Designated Derivatives~~

~~As of June 30, 2022 and December 31, 2021, the Company did not have any outstanding derivatives that were not designated as hedges under qualifying hedging relationships.~~

~~These derivatives have historically been used to manage the Company’s exposure to interest rate movements, but do not meet the strict hedge accounting requirements to be classified as hedging~~ instruments. These derivatives also include other instruments that do not qualify for hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

The Company recorded an immaterial loss on non-designated hedging relationships during the three and six months ended June 30, 2021. The Company did not record any gains or losses during the three and six months ended June 30, 2022 since the Company did not have any derivatives that were not designated as hedges in qualifying hedging relationships.

~~Embedded Derivative~~

~~The purchase and sale agreement for the CIM Portfolio Acquisition (see~~ ~~Note 3~~ ~~— Real Estate Investments~~ ~~for more information) included the planned issuance of shares of the Company’s Class A common stock or Class A Units in the OP of~~

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~~THE NECESSITY RETAIL REIT, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2022~~

~~(Unaudited)~~

$50.0 million in value at issuance ($53.4 million of value subject to repurchase). The Company ultimately issued 6,450,107 shares of Class A common stock to the Seller in the first and second closings of the CIM Portfolio Acquisition during the three months ended March 31, 2022.

The number of shares issued at the applicable closing were based on the value of the shares or units that may be issued at such closing divided by the per-share volume weighted average price of the Company’s Class A common stock measured over a five-day consecutive trading period immediately preceding (but not including) the date on which written notice for the closing was delivered, indicating the seller’s election to receive either shares or units, to the OP (the price of which was to be limited by a 7.5% collar in either direction from the per share volume weighted-average price of the Company’s Class A common stock measured over a ten-day consecutive trading period immediately preceding (but not including) the effective date of the purchase and sale agreement), which was $8.34 per share. The Company had concluded that as of December 31, 2021, this arrangement constituted an embedded derivative which required separate accounting. The initial value of the embedded derivative was an asset upon the signing of the purchase and sale agreement of $1.7 million, and was a liability of $2.3 million as of December 31, 2021. The shares were issued in two closings in the three months ending March 31, 2022 at contract prices within the collar. Accordingly, the value of the embedded derivative was considered to be zero immediately prior to closing. During the three months ended March 31, 2022, the Company reduced the prior liability at December 31, 2021 to zero at closing and recorded a gain on non-designated derivatives of $2.3 million in the consolidated statements of operations.

Note 98 — Mezzanine Equity and Total Equity

Mezzanine Equity

Shares Formerly Subject to Repurchase

During the three months ended March 31, 2022, as part of the CIM Portfolio Acquisition, the Company issued a total of 6,450,107 shares of its Class A common stock to the Seller which had a value of $50.0 million, for accounting purposes, using the stock prices at the respective dates of issuance. The Company was required to register the resale of these shares, which it did in April 2022, and iswas required to subsequently maintain the effectiveness of that resale registration orthrough the termination of the repurchase right. Otherwise, the Company could behave been required to repurchase the securities for $53.4 million. If the Seller sells these securities pursuant to the Registration Statement or under Rule 144 under the Securities Act of 1933, as amended, or if the resale of the securities otherwise becomes qualified for exemption from registration under federal securities law, theirThe Seller’s repurchase ~~rights terminate. If not yet sold by the Seller, the resale of all of these shares will become qualified for exemption from registration under federal securities law~~right terminated on August 25, 2022 (six months ~~from~~following the date of the final ~~purchase) and~~issuance). Accordingly, during the ~~repurchase right would then terminate. Accordingly, as of June~~three months ended September 30, 2022, ~~since~~these securities were reclassified from mezzanine equity to permanent equity.

The number of shares issued at the ability to maintain the resale registration is not solely in the Company’s control, the securities are reflected as shares subject to repurchase outside of permanent equity until the repurchase rights terminate. Upon termination of the repurchase right,applicable closing was based on the value of ~~these~~the shares ~~will~~or units that were issuable at such closing divided by the per-share volume weighted average price of the Company’s Class A common stock measured over a five-day consecutive trading period immediately preceding (but not including) the date on which written notice for the closing was delivered, indicating the seller’s election to receive either shares or units, to the OP (the price of which was to be ~~reclassified into permanent equity.~~limited by a 7.5% collar in either direction from the per share volume weighted-average price of the Company’s Class A common stock measured over a ten-day consecutive trading period immediately preceding (but not including) the effective date of the purchase and sale agreement), which was $8.34 per share. The Company had concluded that as of December 31, 2021, this arrangement constituted an embedded derivative which required separate accounting. The initial value of the embedded derivative was an asset upon the signing of the purchase and sale agreement of $1.7 million, and was a liability of $2.3 million as of December 31, 2021. The shares were issued in two closings in the three months ending March 31, 2022 at contract prices within the collar. Accordingly, the value of the embedded derivative was considered to be zero immediately prior to closing. During the three months ended March 31, 2022, the Company reduced the prior liability at December 31, 2021 to zero at closing and recorded a gain on non-designated derivatives of $2.3 million in the consolidated statements of operations.

Total Equity

Common Stock

As of both June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had ~~133.3~~134.5 million and ~~123.8~~134.2 million shares, ~~(including the shares subject to repurchase discussed above), respectively,~~ of Class A common stock outstanding including restricted shares of Class A common stock (“restricted shares”) and excluding LTIP Units. LTIP Units may ultimately be convertible into shares of Class A common stock in the future if certain conditions are met.

~~As more fully discussed in~~ ~~Note 8~~ ~~– Derivative Financial Instruments, the Company issued 6,450,107shares aggregating to $53.4 million in Class A Common Stock in~~In connection with the ~~CIM Portfolio Acquisition during~~REIT Merger, each issued and outstanding share of the ~~three months ended March 31, 2022.~~Company’s Class A common stock will be converted into the right to receive 0.670 shares of validly issued, fully paid and nonassessable shares of GNL’s Common Stock. Following the REIT Merger, all shares of the Company’s Class A common stock will no longer be outstanding and will automatically be cancelled and cease to exist. Holders of these securities will cease to have any rights with respect thereto, except for the right to receive the consideration and any dividends as provided in the REIT Merger Agreement.

Distribution Reinvestment Plan

Effective on the ~~Listing Date,~~listing of the Company’s Class A common stock on the Nasdaq Global Select Market (the “Nasdaq”) on July 19, 2018 (the “Listing Date”), an amendment and restatement of the then effective distribution reinvestment plan approved by the Company’s board of directors became effective (the “DRIP”). The DRIP allows stockholders who have elected to participate in the DRIP to have dividends payable with respect to all or a portion of their shares of Class A common stock reinvested in additional shares of Class A common stock. Shares issued pursuant to the DRIP represent shares that are, at the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(Unaudited)

election of the Company, either (i) acquired directly from the Company, which would issue new shares, at a price based on the average of the high and low sales prices of Class A common stock on Nasdaq on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with all participants’ reinvested dividends for the related quarter, less a per share processing fee.

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~~June 30, 2022~~

~~(Unaudited)~~

Shares issued pursuant to the DRIP are recorded within stockholders’ equity in the accompanying consolidated balance sheets in the period dividends are declared. During the three ~~and six~~ months ended June 30, ~~2022~~2023 and ~~2021~~2022, all shares acquired by participants pursuant to the DRIP were acquired through open market purchases by the plan administrator and not acquired directly from the Company.

ATM Program — Class A Common Stock

In May 2019, the Company established an “at the market” equity offering program for its Class A common stock (the “Class A Common Stock ATM Program”), which was last updated in August 2022, pursuant to which the Company may from time to time, offer, issue and sell to the public up to $450.0 million in shares of Class A common stock, through sales agents. As of June 30, 2023, $254.0 million of issuable value remains available under the Class A Common Stock ATM Program.

The Company did not sell any shares of Class A common stock through its Class A Common Stock ATM Program during the three and six months ended June 30, 2023.

The Company sold 3,618 shares of Class A common stock through its Class A Common Stock ATM Program during the three months ended June 30, 2022, which did not generate material proceeds. The Company sold 2,765,329 shares of Class A common stock through its Class A Common Stock ATM Program during the six months ended June 30, 2022, which generated $24.9 million of gross proceeds, and net proceeds of $24.5 million after commissions, fees and other offering costs incurred of $0.4 million.

The Company sold 8,634,223 shares of Class A common stock through its Class A Common Stock ATM Program during the three and six months ended June 30, 2021, which generated $78.3 million of gross proceeds, and net proceeds of $77.0 million after commissions and fees of $1.3 million.

Preferred Stock

The Company is authorized to issue up to 50,000,000 shares of preferred stock, of which it has classified and designated 12,796,000 as authorized shares of its Series A Preferred Stock, 120,000 as authorized shares of its Series B Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”) and 11,536,000 as authorized shares of its Series C Preferred Stock as of June 30, ~~2022.~~2023.

•The Company had 7,933,711 shares of its Series A Preferred Stock issued and outstanding as of both June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

•No shares of Series B Preferred Stock were issued or outstanding as of June 30, ~~2022~~2023 or December 31, ~~2021.~~2022.

•The Company had 4,595,175 ~~and 4,594,498~~ shares of its Series C Preferred Stock issued and outstanding as of both June 30, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022.

~~ATM Program~~ —In connection with the REIT Merger, each issued and outstanding share of the Company’s (i) Series A Preferred Stock will automatically be converted into the right to receive from GNL one share of newly created GNL Series D Preferred Stock, and (ii) Series C Preferred Stock will automatically be converted into the right to receive from GNL one share of newly created GNL Series E Preferred Stock. The GNL Series D Preferred Stock and GNL Series E Preferred Stock will have substantially identical powers, preferences, privileges, and rights as the Company’s Series A Preferred Stock and Series C Preferred Stock, respectively. Following the REIT Merger, all shares of the Company’s Series A Preferred Stock and Series C Preferred Stock will no longer be outstanding and will automatically be cancelled and cease to exist. Holders of these securities will cease to have any rights with respect thereto, except for the right to receive the consideration and any dividends as provided in the REIT Merger Agreement.

ATM Program — Series A Preferred Stock

In May 2019, the Company established an “at the market” equity offering program for its Series A Preferred Stock (the “Series A Preferred Stock ATM Program”), which was last updated in August 2021, pursuant to which the Company may, from time to time, offer, issue and sell to the public, through sales agents, shares of the Series A Preferred Stock having an aggregate offering price of up to ~~$50.0 million which was subsequently increased to $100.0 million in October 2019 and was then increased again to~~ $200.0 ~~million in January 2021.~~million.

•The Company did not sell any shares of its Series A Preferred Stock under the Series A Preferred Stock ATM Program during the three and six months ended June 30, 2023 or 2022.

•The Company did not sell any shares of Series A Preferred Stock during the three months ended June 30, 2021. During the six months ended June 30, 2021, the Company sold 91,703 shares of Series A Preferred Stock through the Series A Preferred Stock ATM Program ~~for gross proceeds of $2.3 million and net proceeds of $2.2 million, after commissions, fees, and other costs incurred of approximately $0.1 million.~~

~~ATM Program~~ — Series C Preferred Stock

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In January 2021, the Company established an “at the market” equity offering program for its Series C Preferred Stock (the “Series C Preferred Stock ATM Program”), which was last updated in August 2021, pursuant to which the Company may, from time to time, offer, issue and sell to the public, through sales agents, shares of the Series C Preferred Stock having an aggregate offering price of up to $200.0 million.

•The Company did not sell any shares of its Series C Preferred Stock under the Series C Preferred Stock ATM Program during the three and six months ended June 30, 2023. The Company sold 677 shares of Series C Preferred Stock under the Series C Preferred Stock ATM Program during the three and six months ended June 30, 2022, which did not generate material proceeds.

•During the three months ended June 30, 2021, the Company sold 494,697 shares of Series C Preferred Stock under the Series C Preferred Stock ATM Program for gross proceeds of $12.3 million and net proceeds of $11.7 million, after commissions and fees paid of approximately $0.6 million. During the six months ended June 30, 2021, the Company

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sold 1,058,798 shares of Series C Preferred Stock under the Series C Preferred Stock ATM Program for gross proceeds of $26.5 million and net proceeds of $25.6 million, after commissions and fees paid of approximately $0.9 million.

Stockholder Rights Plan

In April 2020, the Company announced that its board of directors approved a stockholder rights plan (the “Plan”) to protect the long-term interests of the Company. The Company adopted the Plan due to the substantial volatility in the trading of the Company’s Class A common stock that ~~has~~ resulted from the ~~ongoing~~ COVID-19 pandemic. The adoption of the Plan is intended to allow the Company to realize the long-term value of the Company’s assets by protecting the Company from the actions of third parties that the Company’s board of directors determines are not in the best interest of the Company. The Company’s Plan is designed to reduce the likelihood that any person or group (including a group of persons that are acting in concert with each other) would gain control of the Company through open market accumulation of stock by imposing significant penalties upon any person or group that acquires 4.9% or more of the outstanding shares of Class A common stock without the approval of the Company’s board of directors. In connection with the adoption of the Plan, the Company’s board of directors authorized a dividend of 1one preferred share purchase right for each outstanding share of Class A common stock to stockholders of record on April 23, 2020 to purchase from the Company one one-thousandth of a share of Series B Preferred Stock for an exercise price of $35.00 per one-thousandth of a share, once the rights become exercisable, subject to adjustment as provided in the related rights agreement. By the terms of the Plan, the rights will initially trade with Class A common stock and will generally only become exercisable on the 10th business day after the Company’s board of directors becomes aware that a person or entity has become the owner of 4.9% or more of the shares of Class A common stock or the commencement of a tender or exchange offer which would result in the offeror becoming an owner of 4.9% or more of the Class A common stock. In February 2021, the expiration date of these rights was extended to April 12, 2024 unless earlier exercised, exchanged, amended, redeemed or terminated.

Non-Controlling Interest

Non-controlling interests resulted from the issuance of 172,921 OP Units to an external party in conjunction with the ~~merger~~Merger with American Realty Capital-Retail Centers of America, Inc. (“RCA”) in February 2017 (the ~~“Merger”~~“RCA Merger”) and were originally recognized at fair value as of the effective time of the RCA Merger on February 16, 2017.

In addition, under the 2021 OPP, the OP issued LTIP Units, which are also reflected as part of non-controlling ~~interest as of June 30, 2022 and December 31, 2021.~~interest. See Note 1312 — Equity Based Compensation - Multi-Year Outperformance Agreement for more information regarding the LTIP Units and related accounting.

On May 4, 2021, the Company’s independent directors, acting as a group, authorized the issuance of a new award of LTIP Units pursuant to the 2021 OPP to the Advisor after the performance period under the 2018 OPP expired on July 19, 2021. Accordingly, these new LTIP Units are reflected in non-controlling interest on the Company’s balance sheet or statement of equity as of June 30, 2022. For additional information, see ~~Note 13— Equity-Based Compensation~~ relating to the accounting impacts of (i) the end of the performance period under the 2018 OPP and the forfeiture of all LTIP Units awarded thereunder, and (ii) the beginning of the performance period under the 2021 OPP and the grant of an award of LTIP Units thereunder.

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, non-controlling interest was comprised of the following components:


(In thousands)	(In thousands)	June 30, 2022		December 31, 2021		(In thousands)	June 30, 2023		December 31, 2022
Non-controlling interest attributable to LTIP Units	Non-controlling interest attributable to LTIP Units	$	14,720	$	8,368	Non-controlling interest attributable to LTIP Units	$	27,424	$	21,072
Non-controlling interest attributable to Class A Units	Non-controlling interest attributable to Class A Units	2,123		2,056		Non-controlling interest attributable to Class A Units	1,391		1,565
Total non-controlling interest	Total non-controlling interest	$	16,843	$	10,424	Total non-controlling interest	$	28,815	$	22,637

Following the end of the performance period under the 2018 OPP on July 19, 2021, the compensation committee of the board of directors of the Company determined that none of the 4,496,796 of the LTIP Units subject to the 2018 OPP had been earned, and these LTIP Units were thus automatically forfeited. On that date, the Company reclassified $34.8 million of amounts reflected in non-controlling interest for these LTIP Units to additional paid in capital on its consolidated balance sheet and consolidated statement of changes in equity.

Note 109 — Commitments and Contingencies

Lessee Arrangements - Ground Leases

The Company is a lessee in ground lease agreements for 7seven of its properties. The ground leases have lease durations, including assumed renewals, ranging from ~~15.5~~14.5 years to ~~33.2~~32.2 years as of June 30, ~~2022.~~2023. The classification of these leases were grandfathered in by adoption of ASU 842, whereby they will continue to be classified as operating leases unless modified.

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As of June 30, ~~2022,~~2023, the Company’s balance sheet includes operating lease right-of-use assets and operating lease liabilities of ~~$17.9~~$17.6 million and ~~$19.2~~$19.1 million, respectively. In determining operating ROU assets and lease liabilities for the Company’s existing operating leases upon the initial adoption of the new lease guidance in 2019, as well as for new operating leases entered into after adoption, the Company estimated an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. Because the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment. The Company did not enter into any additional ground leases during the ~~three and~~ six months ended June 30, ~~2022.~~2023.

The Company’s operating ground leases have a weighted-average remaining lease term, including assumed renewals, of ~~26.6~~25.6 years and a weighted-average discount rate of 7.5% as of June 30, ~~2022.~~2023. For the three and six months ended June 30, ~~2022~~2023, the Company paid cash of $0.4 million and ~~2021,~~$0.7 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $0.5 million and $0.9 million, respectively. For the three and six months ended June 30, 2022, the Company paid cash of $0.3 million and $0.7 million, respectively, for amounts included in the measurement of lease liabilities and recorded expense of $0.5 million and $0.9 million, respectively.

The lease expense is recorded on a straight-line basis in property operating expenses in the consolidated statements of ~~operations and comprehensive loss.~~operations.

The following table reflects the base cash rental payments due from the Company as of June 30, ~~2022:~~2023:


(In thousands)	(In thousands)	Future Base Rent Payments		(In thousands)	Future Base Rent Payments
2022 (remainder)		$	837
2023		1,549
2023 (remainder)				2023 (remainder)	$	844
2024	2024	1,560		2024	1,560
2025	2025	1,598		2025	1,598
2026	2026	1,628		2026	1,628
2027				2027	1,647
Thereafter	Thereafter	42,730		Thereafter	41,083
Total lease payments	Total lease payments	49,902		Total lease payments	48,360
Less: Effects of discounting	Less: Effects of discounting	(30,738)		Less: Effects of discounting	(29,272)
Total present value of lease payments	Total present value of lease payments	$	19,164	Total present value of lease payments	$	19,088

Litigation and Regulatory Matters

On February 8, 2018, Carolyn St. Clair-Hibbard, a purported stockholder of the Company, filed a putative class action complaint in the United States District Court for the Southern District of New York against the Company, AR Global, the Advisor, and both individuals who previously served as the Company’s chief executive officer and chair of the board of directors (the “Former Chairmen”). On February 23, 2018, the complaint was amended to, among other things, assert some claims on the plaintiff’s own behalf and other claims on behalf of herself and other similarly situated stockholders of the Company as a class. On April 26, 2018, defendants moved to dismiss the amended complaint. On May 25, 2018, the plaintiff filed a second amended complaint. The second amended complaint alleged that the proxy materials used to solicit stockholder approval of theRCA Merger at the Company’s 2017 annual meeting were materially incomplete and misleading. The complaint asserted violations of Section 14(a) of the Exchange Act against the Company, as well as control person liability against the Advisor, AR Global, and the Former Chairmen under 20(a). It also asserted state law claims for breach of fiduciary duty against the Advisor, and claims for aiding and abetting such breaches, of fiduciary duty against the Advisor, AR Global and the Former Chairmen. The complaint sought unspecified damages, rescission of the Company’s advisory agreement with the Advisor (the “Advisory Agreement”) (or severable portions thereof) which became effective when the Merger became effective, and a declaratory judgment that certain provisions of the Advisory Agreement were void. The Company believed the second amended complaint was without merit and defended it vigorously. On June 22, 2018, the defendants moved to dismiss the second amended complaint. On August 1, 2018, the plaintiff filed an opposition to the defendants’ motions to dismiss. The defendants filed reply papers on August 22, 2018, and oral argument was held on September 26, 2018. On September 23, 2019, the Court granted defendants’ motions and dismissed the complaint with prejudice, and the plaintiff appealed. On May 5, 2020, the United States Court of Appeals for the Second Circuit affirmed the lower court’s dismissal of the complaint.Litigation

On October 26, 2018, Terry Hibbard, a purported stockholder of the Company, filed a putative class action complaint in New York State Supreme Court, New York County, against the Company, AR Global, the Advisor, both individuals who previously served as the ~~Former Chairmen,~~Company’s chief executive officer and chair of the board of directors (the “Former Chairmen”), the Company’s chief financial officer at the time of the RCA Merger in 2017 and each of the Company’s directors immediately prior to the

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~~Merger.~~ RCA Merger (the “Hibbard Action”). All of the directors immediately prior to the RCA Merger, except for David Gong, ~~currently serve~~served as directors of the Company. The complaint alleged that the registration statement pursuant to which RCA shareholders acquired shares of the Company during the RCA Merger contained materially incomplete and misleading information. The complaint asserted violations of Section 11 of the Securities Act of 1933, as amended (the “Securities Act”) against the Company’s chief financial officer at the time of the RCA Merger and each of the Company’s directors immediately prior to the RCA Merger, violations of Section 12(a)(2) of the Securities Act against the Company and the Company’s current chief executive officer, president and chair of the board of directors, and control person liability against the Advisor, AR Global and the Former Chairmen under Section 15 of the Securities Act. The complaint sought unspecified damages and rescission of the Company’s sale of stock pursuant to the registration statement.

On March 6, 2019, Susan Bracken, Michael P. Miller and Jamie Beckett, purported stockholders of the Company, filed a putative class action complaint in New York State Supreme Court, New York County, on behalf of themselves and others who purchased shares of common stock through the Company’s then effective distribution reinvestment plan, against the Company, AR Global, the Advisor, the Former Chairmen, the Company’s chief financial officer at the time of the RCA Merger and each of the Company’s directors immediately prior to the RCA Merger. The ~~complaint alleged that~~allegations, causes of action and remedies sought were similar to those in the ~~April and December 2016 registration statements pursuant to which class members purchased shares contained materially incomplete and misleading information. The complaint asserted violations~~Hibbard Action.

Table of Section 11 of the Securities Act against the Company, the Company’s chief financial officer at the time of the Merger and each of the Company’s directors immediately prior to the Merger, violations of Section 12(a)(2) of the Securities Act against the Company and the Company’s current chief executive officer, president and chair of the board of directors, and control person liability against the Advisor, AR Global and the Former Chairmen under Section 15 of the Securities Act. The complaint sought unspecified damages and either rescission of the Company’s sale of stock or rescissory damages.Contents

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On April 30, 2019, Lynda Callaway, a purported stockholder of the Company, filed a putative class action complaint in New York State Supreme Court, New York County, against the Company, AR Global, the Advisor, the Former Chairmen, the Company’s chief financial officer at the time of the RCA Merger and each of the Company’s directors immediately prior to the RCA Merger. The ~~complaint alleged that~~allegations, causes of action and remedies sought were similar to those in the registration statement pursuant to which the plaintiff and other class members acquired shares of the Company during the Merger contained materially incomplete and misleading information. The complaint asserted violations of Section 11 of the Securities Act against the Company, the Company’s chief financial officer at the time of the Merger and each of the Company’s directors immediately prior to the Merger, violations of Section 12(a)(2) of the Securities Act against the Company and the Company’s current chief executive officer, president and chair of the board of directors, and control person liability under Section 15 of the Securities Act against the Advisor, AR Global, and the Former Chairmen. The complaint sought unspecified damages and rescission of the Company’s sale of stock pursuant to the registration statement.Hibbard Action.

On July 11, 2019, the New York State Supreme Court issued an order consolidating the three above-mentioned cases: Terry Hibbard, Bracken, and Callaway (the “Consolidated Cases”). The Court also stayed the Consolidated Cases pending a decision on the motions to dismiss in ~~the St. Clair-Hibbard litigation~~an action involving similar claims pending in the United States District Court for the Southern District of New York. Following the federal court’s decision ~~on the St. Clair-Hibbard motions to dismiss,~~dismissing that action on October 31, 2019, the plaintiffs filed an amended consolidated class action complaint in the Consolidated Cases seeking substantially similar remedies from the same defendants. The Company moved to dismiss the amended consolidated complaint on December 16, 2019. After the parties completed briefing on this motion, the United States Court of Appeals for the Second Circuit issued its decision affirming dismissal of the ~~St. Clair-Hibbard~~federal action. The plaintiffs moved to amend their complaint, purportedly to limit it to claims still viable in spite of the results of the federal action. The proposed second amended complaint no longer contains direct claims against the Company. Instead, the plaintiffs seek to pursue state law claims derivatively against the Advisor, AR Global, the Company’s initial chief executive officer and chair of the board of directors, the Company’s current directors and David Gong, a former director, with the Company as a nominal defendant. On December 20, 2021, the Court denied the plaintiffs’ motion to amend and dismissed the litigation. On January 26, 2022, the plaintiffs filed a notice of appeal from the Court’s decision. ~~That appeal is pending.~~

~~There are no other material legal or regulatory proceedings pending or known to be contemplated against~~In a decision and order entered on March 9, 2023, the ~~Company.~~Supreme Court of the State of New York, Appellate Division, First Department, affirmed the dismissal of the complaint.

During the six months ended June 30, 2023, the Company incurred $0.1 million in litigation costs related to the above matters. No such amounts were incurred in the three months ended June 30, 2023 nor the three and six months ended June 30, 2022 the Company did not incur any litigation costs related to the above matters. During the three and six months ended June 30, 2021, the Company incurred litigation costs of approximately $4,000 and $30,000, respectively.2022. A portion of these litigation costs were subject to a claim for reimbursement under the insurance policies maintained by the Company (the “Policies”). There were no such reimbursements recorded during the three and six months ended June 30, ~~2022~~2023 or ~~2021.~~2022. The Policies were subject to other claims that had priority over the Company’s claim for reimbursement, and have been exhausted.

Blackwells Litigation

On December 19, 2022, the Company filed a complaint against Blackwells Capital LLC (“Blackwells Capital”), an affiliate of Blackwells Onshore (together with Blackwells Capital, “Blackwells”), and certain others involved with Blackwells’ proxy solicitation (collectively and, together with Blackwells, the “Blackwells/Related Parties”), captioned Global Net Lease, Inc. v. Blackwells Capital LLC, et al., No. 1:22-cv-10702 (Dec. 19, 2022), in the United States District Court for the Southern District of New York. The complaint alleged that the Blackwells/Related Parties violated section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by omitting or misstating material information in materials filed by the Blackwells/Related Parties. The complaint sought, among other things, to (i) declare that the proxy materials filed by Blackwells violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, (ii) order the Blackwells/Related Parties to publicly correct their material misstatements or omissions, (iii) enjoin the Blackwells/Related Parties from publishing any soliciting materials until each of them filed corrective statements to address the material misstatements or omissions, and (iv) preliminarily and permanently enjoin the Blackwells/Related Parties from committing any further violations of federal securities law.

In addition, on December 19, 2022, Blackwells Onshore filed a complaint against the Company and another defendant captioned Blackwells Onshore I LLC v. Global Net Lease, Inc., et al., No. 24C22005195, in the Circuit Court of Maryland for Baltimore City. The complaint alleged that the Company committed a breach of contract and violated its duties under Maryland law by rejecting the purported nomination of two persons to the Company’s board proposed by Blackwells and various proposals which Blackwells sought to have considered at the Company’s 2023 annual meeting of stockholders. The complaint sought, among other things, (i) to enjoin the Company from interpreting its bylaws in a fashion that would preclude Blackwells from nominating two candidates for election to the Company’s board, (ii) to declare that the Company’s bylaws do not preclude Blackwells’ nominees or business proposals, (iii) to declare the previously announced Second Amendment to the Company’s bylaws void and unenforceable, (iv) to enjoin the Company from taking any steps to reject the nominations made by Blackwells and require the Company to count votes cast in favor of any of the persons nominated by Blackwells, and (v) unspecified damages for purported breach of the bylaws.

On June 4, 2023, the Company and GNL entered into a Cooperation Agreement and Release with the Blackwells/Related Parties (the “Cooperation Agreement”). Under the terms of the Cooperation Agreement: (i) all litigation pending in Maryland state court and in federal court in the Southern District of New York, including the appeal of certain decisions in the U.S. Court of Appeals for the Second Circuit, between the parties was dismissed with prejudice and the parties are prohibited from

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(Unaudited)

initiating any future claims except to enforce the terms of the Cooperation Agreement; (ii) all demands made by the Blackwells/Related Parties for investigations by the board of directors of the Company (the “Board”) and the board of directors of GNL were withdrawn, as were any requests for books and records of the Company; (iii) the proxy contest initiated by the Blackwells/Related Parties including the nomination of a dissident slate of directors and various advisory proposals for stockholder consideration at the Company’s 2023 annual meeting of stockholders were terminated or withdrawn; (iv) the Blackwells/Related Parties are prohibited from (a) selling any of the shares of Common Stock prior to completion or earlier termination of the REIT Merger and the Internalization Merger and then generally may only sell their shares in open market transactions subject to further limits; (b) engaging in, or acting in concert with any third party in connection with, among other things, any proxy contest or solicitation in opposition to any matter not recommended by the Board, any other activist campaign or unsolicited takeover bids between signing of the Cooperation Agreement until June 4, 2033 otherwise referred to as the “Standstill Period;” (v) the Blackwells/Related Parties agreed to appear in person or by proxy at the Company’s 2023 annual meeting of stockholders and each subsequent annual meeting during the Standstill Period and any special meeting of the Company’s stockholders regarding the appointment, election or removal of directors, the REIT Merger and the Internalization Merger and to vote at such meeting in accordance with the recommendation of the Board with respect to any proposal at those meetings; and (vi) the Blackwells/Related Parties agreed to issue, at the time of the filing by the Company and GNL of the joint proxy statement/prospectus relating to the REIT Merger and Internalization Merger (the “Joint Proxy Statement/Prospectus”), a press release announcing their support of each transaction. In the event that the Blackwells/Related Parties fail to fulfil their obligations under clause (v), they will grant an irrevocable proxy to the benefit of the Company to vote at the Company’s 2023 annual meeting of stockholders and any meeting called by the Company to vote on the REIT Merger and Internalization Merger.

Additionally, the Company agreed to reimburse one-half of the reasonable, documented, out-of-pocket expenses (including legal fees) incurred by the Blackwells/Related Parties in connection with the proxy contest and related litigation described herein and the Cooperation Agreement.

GNL was responsible for reimbursing the other half of these expenses. As a result, the Company reimbursed Blackwells $8.8 million of expenses in June 2023, which is recorded in settlement costs in the consolidated statements of operations for the three and six months ended June 30, 2023.

Litigation Related to the Proposed Transactions

On July 26, 2023, Elaine Wang, a purported stockholder of the Company, filed a complaint in the United States District Court for the Southern District of New York against the Company and each of the Company’s directors (the “Wang Action”). The complaint alleges that the registration statement in connection with the Proposed Transactions, which was filed on Form S-4 with the SEC on July 6, 2023 (as amended on July 17, 2023 and declared effective by the SEC on July 18, 2023), was materially incomplete and misleading. The complaint asserts violations of Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against all defendants, and violations of Section 20(a) of the Exchange Act against the Company’s directors. The complaint seeks to enjoin defendants from consummating the REIT Merger unless the allegedly omitted material information is disclosed, rescission of the REIT Merger Agreement and unspecified damages, including attorneys’ fees. The Company and its directors believe these claims are without merit and intend to vigorously defend against them.

Other Litigation

There are no other material legal or regulatory proceedings pending or known to be contemplated against the Company.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company maintains environmental insurance for its properties that provides coverage for potential environmental liabilities, subject to the policy’s coverage conditions and limitations. ~~The~~As of June 30, 2023, the Company ~~has~~had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on its financial position or results of operations.

Note 1110 — Related Party Transactions and Arrangements

Fees and Participations Incurred in Connection with the Operations of the Company

Summary of Advisory Agreement

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The initial term of the Advisory Agreement expires on April 29, 2035. This term is automatically renewed for successive 20-year terms upon expiration unless the Advisory Agreement is terminated (1) in accordance with an Internalization (as defined below), (2) by the Company or the Advisor with cause, without penalty, with 60 days’ notice, (3) by the Advisor for (a) a failure to obtain a satisfactory agreement for any successor to the Company to assume and agree to perform obligations under the Advisory Agreement or (b) any material breach of the Advisory Agreement of any nature whatsoever by the Company, or (4) by the Advisor in connection with a change of control of the Company. Upon the termination of the Advisory Agreement, the Advisor will be entitled to receive from the Company all amounts due to the Advisor, as well as the then-present fair market value of the Advisor’s interest in the Company. Consummation of the transactions contemplated by the Internalization Merger Agreement will result in the internalization of the management of the combined company immediately following consummation of the REIT Merger, including by terminating the Advisory Agreement. For additional information, see Note 1 — Organization - Proposed Merger and Internalization - The Internalization Merger.

The Advisory Agreement grants the Company the right to internalize the services provided under the Advisory Agreement (“Internalization”) and to terminate the Advisory Agreement pursuant to a notice received by the Advisor as long as (i) more than 67% of the Company’s independent directors have approved the Internalization; and (ii) the Company pays the Advisor an Internalization fee equal to (1) $15.0 million plus (2) either (x) if the Internalization occurs on or before December 31, 2028, the Subject Fees (as defined below) multiplied by 4.5 or (y) if the Internalization occurs on or after January 1, 2029, the Subject Fees multiplied by 3.5 plus (3) 1.0% multiplied by (x) the purchase price of properties or other investments acquired after the end of the fiscal quarter in which the notice of Internalization is received by the Advisor and prior to the Internalization and (y) without duplication, the cumulative net proceeds of any equity raised by the Company during the period following the end of the fiscal quarter in which notice is received and the Internalization. The “Subject Fees” are equal to (i) the product of 4four multiplied by the sum of (A) the actual base management fee (including both the fixed and variable portion thereof) plus (B) the actual variable management fee, in each of clauses (A) and (B), payable for the fiscal quarter in which the notice of Internalization is received by the Advisor, plus, (ii) without duplication, the annual increase in the base management fee resulting from the cumulative net proceeds of any equity raised in respect of the fiscal quarter in which the notice of Internalization is received by the Advisor. Up to 10% of the Internalization fee may be payable in shares of Class A common stock subject to certain conditions.

~~2020 Advisory Agreement Amendment~~

~~On March 30, 2020,~~ As noted herein, the Company has entered into ~~Amendment No. 3 to~~ the ~~Advisory~~Internalization Merger Agreement, ~~by and among~~which, if completed, will result in the ~~OP and the Advisor. Amendment No. 3 revised the section~~internalization of the ~~Advisory~~Combined Company. See Note 1 — Organization - Proposed Merger and Internalization - The Internalization Merger for additional details. If the Internalization Merger Agreement ~~to temporarily lower the quarterly thresholds of Core Earnings Per Adjusted Share (as defined in the Advisory Agreement)~~is not completed or is terminated, the Company ~~must reach on a quarterly basis for~~will continue to have the ~~Advisor~~rights to ~~receive the Variable Management Fee (as defined in the Advisory Agreement). For additional information, see the~~ ~~“Asset Management Fees and Variable Management/Incentive Fees”~~ ~~section below.~~

~~2021 Advisory Agreement Amendment~~

On January 13, 2021, the Company entered into Amendment No. 4 to the Advisory Agreement, by and among the OP and the Advisor, to extend the expiration of the modified quarterly thresholds established by Amendment No. 3 to the Advisory Agreement. The Company had to reach these thresholds on a quarterly basis for the Advisor to receive the variable management fee from the end of the fiscal quarter ended December 31, 2020 to the end of the fiscal quarter ended December 31, 2021. For additional information, see the ~~“Asset Management Fees and Variable Management/Incentive Fees”~~ ~~section below.~~an internalization described herein.

In-Sourced Expenses

The Advisor is reimbursed for costs it incurs in providing investment-related services, or “in-sourced expenses.” These in-sourced expenses may not exceed 0.5% of the contract purchase price of each acquired property or 0.5% of the amount advanced for a loan or other investment. Additionally, the Company has paid and may continue to pay third party acquisition expenses. The aggregate amount of acquisition expenses, including in-sourced expenses, may not exceed 4.5% of the contract

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purchase price of the Company’s portfolio or 4.5% of the amount advanced for all loans or other investments and this threshold has not been exceeded through June 30, ~~2022.~~2023.

The Company did not incur any acquisition expenses and related cost reimbursements for the three and six months ended June 30, 2023 and incurred $0.2 million and $0.4 million of acquisition expenses and related cost reimbursements for the three and six months ended June 30, 2022, ~~respectively, and $5,000 and $19,000 for the three and six months ended June 30, 2021,~~ respectively.

Asset Management Fees and Incentive ~~Variable~~ Management Fees

The Company pays the Advisor a base management fee, which includes a fixed and variable portion, and, if certain performance thresholds are met, an incentive variable management fee. Under the Advisory Agreement, the fixed portion of the base management fee is $24.0 million annually. If the Company acquires (whether by merger, consolidation or otherwise) any other REIT, that is advised by an entity that is wholly-owned, directly or indirectly, by AR Global, other than any joint venture, (a “Specified Transaction”), the fixed portion of the base management fee will be increased by an amount equal to the consideration paid for the acquired company’s equity multiplied by 0.0031 for the first year following the Specified Transaction, 0.0047 for the second year and 0.0062 thereafter. The variable portion of the base management fee is a monthly fee equal to one-twelfth of 1.25% of the cumulative net proceeds of any equity raised by the Company and its subsidiaries from and after the initial effective date of the Advisory Agreement on February 16, 2017. Base management fees, including the variable portion, are included in asset management fees to related party on the consolidated statements of operations. The Company incurred ~~$8.3~~$8.0 million and ~~$16.1~~$15.9 million during the three and six months ended June 30, ~~2022,~~2023, respectively, and ~~$7.9~~ $8.3

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million and ~~$15.2~~$16.1 million ~~during~~for the three and six months ended June 30, ~~2021,~~2022., respectively, in ~~base~~asset management fees (including both the fixed and variable ~~portion)~~portions) and incentive management fees.

In addition, under the Advisory Agreement, the Company is required to pay the Advisor an incentive ~~variable~~ management fee equal to the product of (1) the fully diluted shares of common stock outstanding multiplied by (2) (x) 15.0% of the applicable quarter’s Core Earnings (as defined below) per share in excess of $0.275 per share plus (y) 10.0% of the applicable quarter’s Core Earnings per share in excess of $0.3125 per share, in each case as adjusted for changes in the number of shares of common stock outstanding. The definition of Adjusted Outstanding Shares (as defined in the Advisory Agreement), which is used to calculate Core Earnings per share, is based on the Company’s reported diluted weighted-average shares outstanding. In accordance with Amendment No. 3 to the Advisory Agreement, for the quarters ending June 30, 2020, September 30, 2020 and December 31, 2020, the low and high thresholds were reduced from $0.275 and $0.3125, respectively, to $0.23 and $0.27, respectively. On January 13, 2021, the Company entered into Amendment No. 4 to the Advisory Agreement to extend the expiration of these thresholds from the fiscal quarter ended December 31, 2020 to the fiscal quarter ended December 31, 2021 in light of the continued economic impact of the COVID-19 pandemic.

Core Earnings is defined as, for the applicable period, net income or loss computed in accordance with GAAP excluding non-cash equity compensation expense, the incentive management fee, acquisition and transaction related fees and expenses, financing related fees and expenses, depreciation and amortization, realized gains and losses on the sale of assets, any unrealized gains or losses or other non-cash items recorded in net income or loss for the applicable period, regardless of whether such items are included in other comprehensive loss, or in net income, one-time events pursuant to changes in GAAP and certain non-cash charges, impairment losses on real estate related investments and other than temporary impairments of securities, amortization of deferred financing costs, amortization of tenant inducements, amortization of straight-line rent, amortization of market lease intangibles, provision for loss loans, and other non-recurring revenue and expenses (in each case after discussions between the Advisor and the independent directors and the approval of a majority of the independent directors). The incentive management fee is payable to the Advisor or its assignees in cash or shares, or a combination of both, the form of payment to be determined in the sole discretion of the Advisor and the value of any share to be determined by the Advisor acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. The Company ~~incurred $0.4 million of~~did not incur any incentive management fees for the three and six months ended June 30, ~~2022. During~~2023. The Company incurred $0.4 million of incentive management fees in the three and six months ended June 30, ~~2021,~~2022.

In June 2023, the Board approved a prepayment to the Advisor of the July 2023 asset management fees totaling $2.7 million (including both the fixed and variable portions), which was paid on June 29, 2023. The amount of this prepayment is presented within prepaid expenses and other assets on the Company’s consolidated balance sheet as of June 30, 2023.

Consummation of the transactions contemplated by the Internalization Merger Agreement will result in the internalization of the management of the Combined Company immediately following consummation of the REIT Merger, including by terminating the Company’s existing agreements with the Advisor and discontinuing the fees paid by the Company ~~incurred $0.6 million~~to the Advisor described herein. For additional information, see No t e 1 — Organization – Proposed Merger and ~~$0.7 million of incentive management fees, respectively.~~Internalization – The Internalization Merger.

Property Management Fees

The Company has a property management agreement (the “Multi-Tenant Property Management Agreement”), a leasing agreement (the “Multi-Tenant Leasing Agreement”) and a net lease property management and leasing agreement (the “Net Lease Property Management Agreement”) with the Property Manager. The Multi-Tenant Property Management Agreement, the Multi-Tenant Leasing Agreement and the Net Lease Property Management Agreement each became effective on February 16, 2017. In connection with the Net Lease Mortgage Notes, the Issuers have entered into the Property Management and Servicing

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Agreement (as amended from time to time, the “ABS Property Management Agreement”), with the Property Manager, KeyBank National Association (“KeyBank”), as back-up property manager, and Citibank, N.A. as indenture trustee. ~~See~~Consummation of the transactions contemplated by the Internalization Merger Agreement will result in the internalization of the management of the combined company immediately following consummation of the REIT Merger, including by terminating the Company’s existing agreements with the Property Manager and discontinuing the fees paid by the Company to the Property Manager described herein. For additional information, see Note 41— ~~Mortgage Notes Payable, Net~~Organization – Proposed Merger and Internalization – The Internalization Merger ~~for additional information regarding the Notes.~~..

The Multi-Tenant Property Management Agreement provides that, unless a property is subject to a separate property management agreement with the Property Manager, the Property Manager is the sole and exclusive property manager for the Company’s multi-tenant properties, which are generally anchored, retail properties, such as power centers and lifestyle centers. In December 2017, in connection with a $210.0 million mortgage loan secured by 12 of the Company’s retail properties, the Company entered into 12 identical property management agreements with the Property Manager, the substantive terms of which are substantially identical to the terms of the Multi-Tenant Property Management Agreement, except they do not provide for the transition fees described below.

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The Multi-Tenant Property Management Agreement entitles the Property Manager to a management fee equal to 4.0% of the gross rental receipts from the multi-tenant properties, including common area maintenance reimbursements, tax and insurance reimbursements, percentage rental payments, utility reimbursements, late fees, vending machine collections, service charges, rental interruption insurance, and a 15.0% administrative charge for common area expenses.

In addition, the Property Manager is entitled to a one-time transition fee of up to $2,500 for each multi-tenant property managed, a construction fee equal to 6.0% of construction costs incurred, if any, and reimbursement of all expenses specifically related to the operation of a multi-tenant property, including compensation and benefits of property management, accounting, lease administration, executive and supervisory personnel of the Property Manager, and excluding expenses of the Property Manager’s corporate and general management office and excluding compensation and other expenses applicable to time spent on matters other than the multi-tenant properties.

Pursuant to the Multi-Tenant Leasing Agreement, the Company may, under certain circumstances and subject to certain conditions, pay the Property Manager a leasing fee for services in leasing multi-tenant properties to third parties.

The Company’s double- and triple-net leased single-tenant properties are managed by the Property Manager pursuant to the Net Lease Property Management Agreement, unless they are subject to a separate agreement with the Property Manager. The Net Lease Property Management Agreement permits the Property Manager to subcontract its duties to third parties and provides that the Company is responsible for all costs and expenses of managing the properties, except for general overhead and administrative expenses of the Property Manager. In December 2019, in connection with a loan secured by four properties leased to Stop & Shop, the Company entered into a property management and leasing agreement with the Property Manager with respect to the 4 properties, the substantive terms of which are substantially identical to the terms of the Net Lease Property Management Agreement, except that it limits the fees payable to the Property Manager and any subcontractor to 3.0% of operating income in the event that the Property Manager subcontracts its duties under the agreement.

In July 2020, in connection with the loan agreement with Column Financial, Inc., all but one of the Company’s borrower subsidiaries entered into a new property management and leasing agreement with the Property Manager with respect to all but one of the mortgaged properties, all of which are double- and triple-net leased single-tenant properties. The Company’s other double- and triple-net leased single-tenant properties, including the one mortgaged property excluded from the new property management and leasing agreement, are managed by the Property Manager pursuant to the Net Lease Property Management Agreement. The new property management and leasing agreement is identical to the Net Lease Property Management Agreement, except that the new property management and leasing agreement does not permit the Property Manager to subcontract its duties to third parties.

The initial term of the Net Lease Property Management Agreement ended on October 1, 2021, and has been and will be automatically renewed for successive one-year terms unless terminated 60 days prior to the end of a term or terminated for cause. On November 4, 2020, in light of the investment to be made by the Property Manager and its affiliates in property management infrastructure for the benefit of the Company and its subsidiaries, the Company amended each of theThe Multi-Tenant Property Management Agreement and the Multi-Tenant Leasing Agreement ~~to reflect that~~ each ~~agreement will~~ expire on the later of (i) November 4, 2025 and (ii) the termination date of the Advisory Agreement. These agreements with the Property Manager may only be terminated for cause prior to the end of the term. Prior to the amendments, the term of these agreements would have ended on October 1, 2021, with automatic renewals for successive one-year terms unless terminated 60 days prior to the end of a term or terminated for cause.

Additionally, during the ~~six months ended June 30,~~second quarter of 2022, certain subsidiaries of the OP each entered into a property management agreement with the Property Manager in connection with debt assumptions related to the acquisition of the properties of the CIM Portfolio Acquisition. Each property management agreement entitles the Property Manager to a

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management fee equal to 4.0% of the gross rental receipts from the properties, including common area maintenance reimbursements, tax and insurance reimbursements, percentage rental payments, utility reimbursements, late fees, vending machine collections, service charges, rental interruption insurance, and a 15.0% administrative charge for common area expenses. In addition, under these property management agreements, the Property Manager is entitled to a construction fee equal to 6.0% of construction costs incurred, if any, and reimbursement of all expenses specifically related to the operation of a multi-tenant property, including compensation and benefits of property management, accounting, lease administration, executive and supervisory personnel of the Property Manager, and excluding expenses of the Property Manager’s corporate and general management office and excluding compensation and other expenses applicable to time spent on matters other than the properties.

Property Management and Services Agreement - Net Lease Mortgage Notes

Under the ABS Property Management Agreement, the Property Manager is responsible for servicing and administering the properties and leases securing the Net Lease Mortgage Notes under ordinary and special circumstances, and KeyBank, as the back-up property manager, is responsible for, among other things, maintaining current servicing records and systems for the assets securing the Net Lease Mortgage Notes in order to enable it to assume the responsibilities of the Property Manager in the event the Property Manager is no longer the property manager and special servicer. Pursuant to the ABS Property Management Agreement, the Property Manager may also be required to advance principal and interest payments on the Net Lease Mortgage Notes to preserve and protect the value of the applicable assets. The Issuers are required to reimburse any of these payments or advances.

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Pursuant to the ABS Property Management Agreement, as amended and restated in connection with the issuance of the 2021 Net Lease Mortgage Notes in June 2021, for all properties that are not specially serviced, the Issuers are required to pay the Property Manager a monthly fee equal to the product of (i) one-twelfth of 0.25% and (ii) the lower of (a) the aggregate allocated loan amounts and (b) the aggregate collateral value of the properties that are a part of the collateral pool. Prior to the amendment and restatement of the ABS Property Management Agreement, for all properties that were not specially serviced, the Issuers were required to pay the Property Manager a monthly fee equal to the product of (i) one-twelfth of 0.25%, and (ii) the aggregate allocated loan amounts of all the properties that serve as part of the collateral for the Net Lease Mortgage Notes. With respect to the specially serviced properties, the Property Manager is entitled to receive a workout fee or liquidation fee under certain circumstances based on 0.50% of applicable amounts recovered, as well as a monthly fee equal to the product of (i) one-twelfth of 0.75% and (ii) the lower of (a) the aggregate allocated loan amounts and (b) the aggregate collateral value of all the specially serviced properties that are part of the collateral pool. Prior to the amendment and restatement of the ABS Property Management Agreement, the monthly fee for specially serviced properties was equal to the product of (i) one-twelfth of 0.75%, and (ii) the aggregate allocated loan amounts of all the specially serviced properties that serve as part of the collateral pool for the Net Lease Mortgage Notes. The Property Manager has retained KeyBank as a sub-manager pursuant to a separate sub-management agreement pursuant to which KeyBank provides certain services that the Property Manager is required to provide as property manager under the ABS Property Management Agreement. Under the ABS Property Management Agreement, the Property Manager has agreed to waive (i) the portion of the monthly fee related to the properties that are not specially serviced that is in excess of the amount to be paid to KeyBank as sub-manager pursuant to the sub-management agreement, (ii) the workout fee, (iii) the liquidation fee and (iv) the monthly fee related to the properties that are specially serviced, although the Property Manager retains the right to revoke these waivers at any time. The Property Manager is also entitled to receive additional servicing compensation related to certain fees and penalties under the leases it is responsible for under the ABS Property Management Agreement.

The services provided by the Property Manager with respect to the double- and triple-net leased single-tenant properties in the collateral pool and related property management fees are separate and independent from the property management services the Property Manager has provided and will continue to provide with respect to those properties pursuant to the Net Lease Property Management Agreement.

Professional Fees and Other Reimbursements

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The Company reimburses the Advisor’s costs of providing administrative services, including among other things, reasonable allocation of salaries and wages, benefits and overhead of employees of the Advisor or its affiliates, except for costs to the extent that the employees perform services for which the Advisor receives a separate fee. The reimbursement includes reasonable overhead expenses, including the reimbursement of an allocated portion of rent expense at certain properties that are both occupied by employees of the Advisor or its affiliates and owned by affiliates of the Advisor. These reimbursements are exclusive of fees and other expense reimbursements incurred from and due to the Advisor that were passed through and ultimately paid to Lincoln Retail REIT Services, LLC (“Lincoln”) as a result of the Advisor’s prior arrangements with Lincoln to provide services to the Advisor in connection with the Company’s multi-tenant retail properties that are not net leased. The Advisor’s agreement with Lincoln expired in February 2021 and was not renewed. The expiration of the agreement with Lincoln did not affect the responsibilities and obligations of the Advisor or the Property Manager to the Company under the Company’s agreements with them.

These reimbursements are included as part of ~~Professional~~professional fees and other reimbursements in the table below and in general and administrative expense onin the consolidated statements of operations. During the three and six months ended June 30, ~~2022,~~2023, the Company incurred ~~$3.9~~$3.8 million and ~~$6.7~~$7.4 million , respectively, (which includes $1.1 million and $2.0 million, respectively, of compensation and ~~$1.9 million and $4.2 million during~~overhead costs related to the ~~three and six months ended June 30, 2021, respectively,~~Multi-Tenant Property Management Agreement which is not subject to the Capped Reimbursement Amount under the Advisory Agreement, discussed below) of reimbursement expenses to the Advisor for providing administrative services. For the three and six months ended June 30, 2022, these amounts were $3.9 million and $6.7 million, respectively, (which includes $0.8 million and $1.3 million, respectively, of compensation and overhead costs related to the Multi-Tenant Property Management Agreement which is not subject to the Capped Reimbursement Amount under the Advisory Agreement, discussed below).

Under the ~~agreement,~~Advisory Agreement, the Company is required to reimburse the Advisor for a portion of the salary, wages, and benefits paid to the Company’s chief financial officer as part of the aggregate reimbursement for salaries, wages and benefits of employees of the Advisor or its affiliates, excluding any executive officer who is also a partner, member or equity owner of AR Global and subject to a limit on certain limitations.

The aggregate amount that may be reimbursed under the Advisory Agreement in each fiscal year for salaries, wages and benefits (excluding overhead) of employees of the Advisor or its affiliates (the “Capped Reimbursement Amount”) for each fiscal year is subject to a limit that is equal to the greater of: (a) a fixed component (the “Fixed Component”); and (b) a variable component (the “Variable Component”).

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Both the Fixed Component and the Variable Component increase by an annual cost of living adjustment equal to the greater of (x) 3.0% and (y) the CPI as(as defined in the ~~amendment~~Advisory Agreement) for the prior year ended December 31. Initially, for the year ended December 31, 2019: (a) the annual Fixed Component was equal to $7.0 million; and (b) the Variable Component was equal to: (i) the sum of the total real estate investments, at cost as recorded on the balance sheet dated as of the last day of each fiscal quarter (the “Real Estate Cost”) in the year divided by 4,four, which amount is then (ii) multiplied by 0.20%. As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the annual Fixed Component was ~~$7.7~~$8.1 million and ~~$7.4~~$7.7 million, respectively.

If the Company sells real estate investments aggregating an amount equal to or more than 25% of Real Estate Cost in one or a series of related dispositions in which the proceeds of the disposition(s) are not reinvested in Investments (as defined in the Advisory Agreement), then within 12 months following the disposition(s), the Advisory Agreement requires the Advisor and the Company to negotiate in good faith to reset the Fixed Component; provided that if the proceeds of the disposition(s) are paid to stockholders of the Company as a special distribution or used to repay loans with no intent of subsequently refinancing and reinvesting the proceeds thereof in Investments, the Advisory Agreement requires these negotiations within 90 days thereof, in each case taking into account reasonable projections of reimbursable costs in light of the reduced assets of the Company.

During the three months ended June 30, 2021, the Advisor finalized the amounts and form of the 2020 bonuses previously estimated to be paid to the employees of the Advisor or its affiliates who provided administrative services during such calendar year, prorated for the time spent working on matters relating to the Company (the “2020 Bonus Awards”). The 2020 Bonus Awards were paid by the Advisor over an eleven-month period from June 2021 to April 2022. The final amounts awarded exceeded the amounts previously paid by the Company to the Advisor for estimated 2020 bonuses by approximately $1.4 million for the following reasons (i) forfeitures of bonuses related to employees of the Advisor or its affiliates who were terminated or resigned prior to payment (including the Company’s former chief financial officer), (ii) payment of a portion of bonuses in the form of restricted shares (which is recorded as equity-based compensation expense) and (iii) a general reduction in final bonuses for remaining personnel of the Advisor or its affiliates due to on-going negative impacts of the COVID-19 pandemic. As a result, during the three months ended June 30, 2021, the Company recorded a receivable from the Advisor of $1.4 million, which was recorded in prepaid expenses and other assets on the consolidated balance sheet and a corresponding reduction in general and administrative expenses. The Advisor paid the $1.4 million receivable to the Company in August 2021.

Reimbursements for the cash portion of 2021 and 2022 bonuses to employees of the Advisor or its affiliates were expensed and reimbursed and continue to be expensed and reimbursed on a monthly basis during 2021 and 2022 in accordance with the

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cash bonus estimates provided by the Advisor. Generally, prior to the 2020 Bonus Awards, employee bonuses had been formally awarded to employees of the Advisor or its affiliates in March as an all-cash award and paid out by the Advisor in the year subsequent to the year in which services were rendered to the Company.

Summary of Fees, Expenses and Related Payables

The following table details amounts incurred and payable to related parties in connection with the operations-related services described above as of and for the periods presented. Amounts below are inclusive of fees and other expense reimbursements incurred from and due to the Advisor that were passed through and ultimately paid to Lincoln as a result of the Advisor’s former arrangements with Lincoln:presented:


		Three Months Ended June 30,				Six Months Ended June 30,			Payable (Receivable) as of				Three Months Ended June 30,						Six Months Ended June 30,			Payable (Prepayment/Receivable) as of
(In thousands)	(In thousands)	2022		2021			2022		2021		June 30, 2022			December 31, 2021		(In thousands)	2023			2022		2023		2022		June 30, 2023		December 31, 2022
Non-recurring fees and reimbursements:	Non-recurring fees and reimbursements:															Non-recurring fees and reimbursements:
Acquisition cost reimbursements (1)	Acquisition cost reimbursements (1)	$	167	$	5		$	371	$	19	$	97		$	32	Acquisition cost reimbursements (1)	$	—		$	167	$	—	$	371	$	—	$	9
Ongoing fees:	Ongoing fees:															Ongoing fees:
Asset management fees to related party(2)	Asset management fees to related party(2)	8,296		7,918			16,122		15,243		367			—		Asset management fees to related party(2)	7,972			8,296		15,928		16,122		(2,651)		—
Property management and leasing fees ~~(2)~~(3)	Property management and leasing fees ~~(2)~~(3)	2,942		1,631			4,924		6,075		874			901		Property management and leasing fees ~~(2)~~(3)	4,016			2,942		8,530		4,924		497		1,302
Professional fees and other reimbursements ~~(3)~~(4)	Professional fees and other reimbursements ~~(3)~~(4)	4,367		2,302			7,662		5,167		1,056			83		Professional fees and other reimbursements ~~(3)~~(4)	4,288			4,367		8,407		7,662		404		527
Professional fee credit due from Advisor and its affiliates		—		(1,444)			—		(1,444)		—			—

Total related party operating fees and reimbursements	Total related party operating fees and reimbursements	$	15,772	$	10,412		$	29,079	$	25,060	$	2,394		$	1,016	Total related party operating fees and reimbursements	$	16,276		$	15,772	$	32,865	$	29,079	$	(1,750)	$	1,838

______

(1)Amounts ~~for the three and six months ended June 30, 2022 and 2021 are~~ included in acquisition and transaction related expenses in the consolidated statements of ~~operations and comprehensive loss.~~operations.

(2)~~Amounts for~~The three and six months ended June 30, 2022 included $0.4 million of incentive management fees. No incentive management fees were incurred in the three and six months ended June 30, ~~2022 and 2021 are~~2023.

(3)Amounts included in property operating expenses in the consolidated statements of operations, ~~and comprehensive loss~~ with the exception of approximately ~~$0.4~~$0.9 million and ~~$0.8~~$2.5 million of leasing fees incurred in the three and six months ended June 30, ~~2022,~~2023, respectively, and ~~$0.3~~approximately $0.4 million and ~~$1.7~~$0.8 million ~~incurred~~ in the three and six months ended June 30, ~~2021,~~2022, respectively, which were capitalized and are included in deferred costs, net in the consolidated balance ~~sheet.~~sheets. A portion of leasing fees are ultimately paid to a third party. Property management fees increased significantly throughout the year ended December 31, 2022, related to fees on the CIM Portfolio Acquisition for each property acquired.

~~(3)~~(4)Amounts ~~for the three and six months ended June 30, 2022 and 2021 are~~ included in general and administrative expense in the consolidated statements of ~~operations and comprehensive loss.~~operations. Includes amounts for directors’ and officers’ insurance.

Note 1211 — Economic Dependency

Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting and legal services, human resources and information technology.

As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

Upon the Internalization, the Company will no longer be receiving these essential services from the Advisor (see Note 1 — Organization – Proposed Merger and Internalization – The Internalization Merger for additional information).

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Note 1312 — Equity-Based Compensation

Equity Plans

2018 Equity Plan

Effective at the Listing, the Company’s board of directors adopted an equity plan for the Advisor (the “Advisor Plan”) and an equity plan for individuals (the “Individual Plan” and together with the Advisor Plan, the “2018 Equity Plan”). The Advisor Plan is substantially similar to the Individual Plan, except with respect to the eligible participants. Under the Individual Plan, the Company may only make awards to its directors, officers and employees (if the Company ever has employees), employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company. By contrast, under the Advisor Plan the Company may only make awards to the Advisor.

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The 2018 Equity Plan succeeded and replaced the existing employee and director restricted share plan (the “RSP”). Following the effectiveness of the 2018 Equity Plan at the Listing, no further awards ~~will be~~were issued under the RSP; provided, however, that any outstanding awards under the RSP, such as unvested restricted shares held by the Company’s independent directors, remained outstanding in accordance with their terms and the terms of the RSP until all those awards are vested, forfeited, canceled, expired or otherwise terminated in accordance with their terms. The Company accounts for forfeitures when they occur. The 2018 Equity Plan permits awards of restricted shares, restricted stock units (“RSUs”), options, stock appreciation rights, stock awards, LTIP Units and other equity awards. The 2018 Equity Plan has a term of 10 years, expiring on July 19, 2028. Identical to the RSP, the number of shares of the Company’s capital stock available for awards under the 2018 Equity Plan, in the aggregate, is equal to 10.0% of the Company’s outstanding shares of common stock on a fully diluted basis at any time. Shares subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a one-for-one basis and vice versa. If any awards granted under the 2018 Equity Plan are forfeited for any reason, the number of forfeited shares is again available for purposes of granting awards under the 2018 Equity Plan.

Restricted Shares

Restricted shares are shares of common stock awarded under terms that provide for vesting over a specified period of time. Holders of restricted shares may receive non-forfeitable cash dividends prior to the time that the restrictions on the restricted shares have lapsed. Any dividends to holders of restricted shares payable in shares of common stock are subject to the same restrictions as the underlying restricted shares. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.

~~Prior~~In addition to ~~June 30, 2020, the Company only granted restricted shares~~grants to the Company’s ~~directors. However, during the years ended December 31, 2021 and 2020,~~directors, the Company has granted ~~278,278 and 309,475~~ restricted shares ~~respectively,~~ to employees of the Advisor or its affiliates who are involved in providing services to the Company, including the Company’s chief financial ~~officer. In~~officer, and certain consultants to the ~~six months ended June 30, 2022, 249,700 restricted shares were granted to employees of~~Company and the Advisor or its affiliates. No awards may be made to anyone who is also a partner, member or equity owner of the parent of the Advisor. During the three and six months ended June 30, 2023, the Company granted 50,220 shares to the members of the board of directors and 294,105 shares to employees of the Advisor or its affiliates.

The restricted shares granted to the Company’s directors vest on a straight-line basis over periods of 1one year to 5five years from the date of grant and provide for accelerated vesting of the portion of the unvested restricted shares scheduled to vest in the year of the recipient’s termination of his or her position as a director of the Company due to a voluntary resignation or failure to be re-elected to the Company’s board of directors following nomination therefor. All unvested restricted shares held by the Company’s directors also vest in the event of a Change of Control (as defined in the RSP or the Individual Plan) or a termination of a directorship without cause or as a result of death or disability.

The restricted shares granted to employees of the Advisor or its affiliates vest in 25% increments on each of the first four anniversaries of the grant date. Except in connection with a change in control (as defined in the award agreement) of the Company, any unvested restricted shares will be forfeited if the holder’s employment with the Advisor terminates for any reason. Upon a change in control of the Company, 50% of the unvested restricted shares will immediately vest and the remaining unvested restricted shares will be forfeited.

For a discussion of the impact of the Proposed Transaction on the treatment of restricted shares granted by the Company, see Note 1 — Organization – Proposed Merger and Internalization – Restricted Shares and LTIP Units.

The following table reflects the activity of restricted shares for the six months ended June 30, ~~2022:~~2023:

Number of Shares of Common Stock Weighted-Average Grant Price
Unvested, December 31, 2021 422,869 $ 8.26
Granted 292,572 7.86
Vested (92,770) 9.78
Forfeited (275) 9.48
Unvested, June 30, 2022 622,396 7.84

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(Unaudited)


	Number of Shares of Common Stock	Weighted-Average Grant Price
Unvested, December 31, 2022	508,677	$	7.93
Granted	344,325	6.74
Vested	(148,845)	8.41
Forfeited	(1,269)	8.84
Unvested, June 30, 2023	702,888	$	7.24

As of June 30, ~~2022,~~2023, the Company had ~~$4.3~~$3.9 million of unrecognized compensation cost related to unvested restricted share awards granted, which is expected to be recognized over a weighted-average period of ~~3.1~~3.3 years.

The fair value of ~~the~~ restricted shares ~~is being~~are expensed in accordance with the service period required. Compensation expense related to restricted shares is included in equity-based compensation on the accompanying consolidated statements of ~~operations and comprehensive loss.~~operations. Compensation expense related to restricted shares was approximately $0.3 million and $0.7 million for the three and six months ended June 30, 2023, respectively, and $0.4 million and $0.7 million for the three and six months ended June 30, ~~2022, respectively. Compensation expense related to restricted shares~~2022.

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was approximately $0.4 million and $1.8 million for the three and six months ended June 30, 2021, respectively. The higher expense recorded in the six months ended June 30, 2021 was due to the accelerated vesting of restricted shares previously awarded to the Company’s former chief financial officer, as well as expense from an additional grant of restricted shares awarded to the Company’s former chief financial officer in February 2021 (see additional discussion below).

On February 26, 2021, the Company’s board of directors approved an amendment to the award agreement for 69,875 restricted shares previously awarded to the Company’s former chief financial officer. These restricted shares had been scheduled to vest in 25% increments on each of the first ~~four~~ anniversaries of the grant date (September 15, 2020), however, in accordance with the amendment, these shares fully vested upon the effectiveness of the resignation of the Company’s former chief financial officer on April 9, 2021. This was treated as a modification of the award of these restricted shares and, in addition to accelerating the original expense, the Company was also required to calculate the excess of the new value of those awards on the date of modification over the fair value of the awards immediately prior to the amendment and record such excess as expense through April 9, 2021. In addition, also on February 26, 2021, the Company’s board of directors granted the Company’s former chief financial officer an additional award of 52,778 restricted shares that also fully vested upon the effectiveness of her resignation on April 9, 2021. The acceleration of vesting of the prior grant and the new grant resulted in approximately $1.1 million of increased equity-based compensation expense recorded during the six months ended June 30, 2021.

Restricted Stock Units

RSUs represent a contingent right to receive shares of common stock at a future settlement date, subject to satisfaction of applicable vesting conditions and other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the rights to the shares of common stock have vested. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are generally credited with dividend or other distribution equivalents which are subject to the same vesting conditions and other restrictions as the underlying RSUs and only paid at the time such RSUs are settled in shares of common stock. The Company has not granted any RSUs, and no unvested RSUs were outstanding for the three and six months ended June 30, ~~2022~~2023 or ~~2021.~~2022.

Multi-Year Outperformance Agreements

2021 OPP

On May 4, 2021, the Company’s independent directors authorized an award of LTIP Units under the 2021 OPP ~~after the performance period under the 2018 OPP expired on July 19, 2021, and,~~which was entered into on July 21, ~~2021, the Company, the OP and the Advisor entered into the 2021 OPP (see below for additional information on the 2018 OPP, including information on the LTIP Units granted and earned thereunder).~~

~~On July 21, 2021, the Company and the Advisor entered into the 2021 OPP.~~2021. Based on a maximum award value of $72.0 million and the Initial Share Price of $8.4419, which was determined on July 20, 2021, the Advisor was granted a total of 8,528,885 LTIP Units pursuant to the 2021 OPP. These LTIP Units may be earned and become vested based on the Company’s total shareholder return (“TSR”), including both share price appreciation and reinvestment of Class A common stock dividends, compared to the Initial Share Price over a performance period commencing on July 20, 2021 and ending on the earliest of (i) July 20, 2024, (ii) the effective date of any Change of Control (as defined in the Advisor Plan) and (iii) the effective date of any termination of the Advisor’s services as the Company’s advisor.

The amortization of the fair value of the LTIP Units that were granted will be recorded evenly over the requisite service period which is approximately 38.5 months from May 4, 2021, the date that the Company’s independent board of directors approved the award of LTIP Units under the 2021 OPP, through July 20, 2024, the end of the performance period.

The Company recorded $1.9 million in additional equity-based compensation expense during the year ended December 31, 2021 which represented the pro rata share of the 2021 OPP’s service period from May 4, 2021 (the date of the grant) to July 20, 2024 (the end of the performance period). As of July 20, 2021, the Initial Share Price and the number of LTIP Units to be granted under the 2021 OPP became known and the fair value of the award as of July 20, 2021 was determined to be $40.8 million. As a result, the award of LTIP Units under the 2021 OPP was reclassified as an equity award on July 20, 2021, with any change in value and cumulative effect thereof, reflected in income and equity statements on that date.

~~2018 OPP~~

On the Listing Date, the Company granted a performance-based equity award to the Advisor in the form of a Master LTIP Unit pursuant to the 2018 OPP. The Master LTIP Unit was automatically converted on August 30, 2018 (the “Effective Date”),

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~~(Unaudited)~~

the 30th trading day following the Listing Date, into 4,496,796 LTIP Units equal to the quotient of $72.0 million divided by $16.0114, the ten-day trailing average closing price of the Company’s Class A common stock on Nasdaq over the 10 consecutive trading days immediately prior to the Effective Date. The Effective Date was the grant date for accounting purposes. In accordance with accounting rules, the total fair value of the LTIP Units of $32.0 million was calculated and fixed as of the grant date, and was recorded over the requisite service period of three years. In March 2019, the Company entered into an amendment to the 2018 OPP to reflect a change in the peer group resulting from the merger of one member of the peer group, Select Income REIT, with Government Properties Income Trust, with the entity surviving the merger renamed as Office Properties Income Trust. Under the accounting rules, the Company was required to calculate any excess of the new value of LTIP Units in accordance with the provisions of the amendment ($10.9 million) over the fair value immediately prior to the amendment ($8.1 million). This excess of approximately $2.8 million was expensed over the period from March 4, 2019, the date the Company’s compensation committee approved the amendment, through July 19, 2021.

The LTIP Units issued pursuant to the 2018 OPP could potentially have been earned by the Advisor based on the Company’s achievement of threshold, target and maximum performance goals based on the Company’s absolute and relative TSR over a three-year performance period that ended on July 19, 2021. Prior to the issuance of LTIP Units pursuant to the 2021 OPP, the compensation committee of the board of directors of the Company determined that none of the 4,496,796 of the LTIP Units subject to the 2018 OPP had been earned under either the absolute or relative thresholds. These LTIP Units were thus automatically forfeited effective as of July 19, 2021, without the payment of any consideration by the Company or the OP. On that date, the Company reclassified amounts reflected in non-controlling interest for these LTIP Units to additional paid in capital on its consolidated balance sheet and consolidated statement of equity.

Compensation Expense - 2021 OPP ~~and 2018 OPP~~

During the three ~~and six~~ months ended June 30, 2023 and 2022, the Company recorded equity-based compensation expense related to the LTIP Units of $3.2 million, and ~~$6.4 million, respectively, and during~~for the ~~three and~~ six months ended June 30, ~~2021~~2023 and 2022 the Company recorded equity-based compensation expense related to the LTIP Units of ~~$4.9 million and $7.9 million, respectively.~~$6.4 million. These expenses are recorded in equity-based compensation in the unaudited consolidated statements of ~~operations and comprehensive loss.~~operations. As of June 30, ~~2022,~~2023, the Company had ~~$26.1~~$13.4 million of unrecognized compensation expense related to the LTIP Units awarded under the 2021 OPP which is expected to be recognized over a period of ~~2.1~~1.1 years.

LTIP Units Distributions/Redemptions

The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units set forth in the agreement of limited partnership of the OP. Holders of LTIP Units are entitled to distributions on the LTIP Units equal to 10% of the distributions made per Class A Unit (other than distributions of sale proceeds) until the LTIP Units are earned. Distributions paid on a Class A Unit are equal to dividends paid on a share of Class A common stock. Distributions paid on

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LTIP Units are not subject to forfeiture, even if the LTIP Units are ultimately forfeited. The Advisor is entitled to a priority catch-up distribution on each earned LTIP Unit equal to 90% of the aggregate distributions paid on Class A Units during the applicable performance period. Any LTIP Units that are earned become entitled to receive the same distributions paid on Class A Units. If and when the Advisor’s capital account with respect to an earned LTIP Unit is equal to the capital account balance of a Class A Unit, the Advisor, as the holder of the earned LTIP Unit, in its sole discretion, is entitled to convert the LTIP Unit into a Class A Unit, which may in turn be redeemed on a ~~1-for-one~~one-for-one basis for, at the Company’s election, a share of Class A common stock or the cash equivalent thereof.

The Company paid distributions on LTIP Units of ~~$0.4 million and~~ $0.2 million for both the three months ended June 30, 2023 and 2022, and the Company paid distributions on LTIP Units of $0.4 million for both the six months ended June 30, ~~2022~~2023 and ~~2021, respectively.~~2022. These amounts are recorded in the Company’s consolidated statements of changes in equity.

Performance Measures

As indicated above, on July 19, 2021, at the end of the performance period, the compensation committee of the Company’s board of directors determined that none of the 4,496,796 LTIP Units under the 2018 OPP had been earned. These LTIP Units were thus automatically forfeited effective as of July 19, 2021, without the payment of any consideration by the Company or the OP.

With respect to one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the Company’s achievement of absolute TSR levels as shown in the table below.

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~~(Unaudited)~~


Performance Level	Absolute TSR				Percentage of LTIP Units Earned		Number of LTIP Units Earned
Below Threshold	Less than	18	%		0	%	0
Threshold		18	%		25	%	1,066,110.625
Target		24	%		50	%	2,132,221.250
Maximum		36	%	or higher	100	%	4,264,442.500

If the Company’s absolute TSR is more than 18% but less than 24%, or more than 24% but less than 36%, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.

With respect to the remaining one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the difference (expressed in terms of basis points, whether positive or negative, as shown in the table below) between the Company’s absolute TSR on the last day of the performance period relative to the average TSR of a peer group (consisting of Broadstone Net Lease, Inc., Office Properties Income Trust, RPT Realty and Spirit Realty Capital, Inc.) as of the last day of the performance period as follows:


Performance Level	Relative TSR Excess			Percentage of LTIP Units Earned		Number of LTIP Units Earned
Below Threshold	Less than	-600	Basis points	0	%	0
Threshold		-600	Basis points	25	%	1,066,110.625
Target		0	Basis points	50	%	2,132,221.250
Maximum		+600	Basis points	100	%	4,264,442.500

If the relative TSR excess is more than -600 basis points but less than zero basis points, or more than zero basis points but less than +600 basis points, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.

Other Terms

In the case of a Change of Control or a termination of the Advisor without Cause (as defined in the Advisory Agreement), the number of LTIP Units that become earned will be calculated based on actual performance through the last trading day prior to the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR prorated to reflect a performance period of less than three years but without prorating the number of LTIP Units that may become earned to reflect the shortened performance period.

In the case of a termination of the Advisor for Cause, the number of LTIP Units that become earned will be calculated based on actual performance through the last trading day prior to the effective date of the termination, with the hurdles for calculating absolute TSR and the number of LTIP Units that may become earned each prorated to reflect a performance period of less than three years.

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(Unaudited)

Pursuant to the terms of the Advisor Plan, the LTIP Units will be administered by the Company’s board or a committee thereof, defined as the “Committee” in the Advisor Plan. Promptly following the performance period, the Committee will, except in certain circumstances, determine the number of LTIP Units earned (if any) based on calculations prepared by an independent consultant engaged by the Committee and as approved by the Committee in its reasonable and good faith discretion. The Committee also must approve the transfer of any LTIP Units or any Class A Units into which LTIP Units may be converted in accordance with the terms of the agreement of limited partnership of the OP. Any LTIP Units that are not earned will automatically be forfeited effective as of the end of the performance period and neither the Company nor the OP will be required to pay any future consideration in respect thereof.

In connection with the Internalization Merger Agreement, if consummated, the parties agreed to modify the terms of the existing 2021 OPP to accelerate the timing for determining whether the award is vested and earned. See Note 1 — Organization – Proposed Merger and Internalization – Restricted Shares and LTIP Units for further details.

Director Compensation

Under the current director compensation program, on a regular basis, each independent director receives an annual cash retainer of $60,000 and, in connection with each of the Company’s annual meetings of stockholders, a grant of $85,000 in restricted shares, vesting on the one-year anniversary of the annual meeting.

The lead independent director receives an additional annual cash retainer of $100,000, the chair of the audit committee of the Company’s board of directors receives an additional annual cash retainer of $30,000, each other member of the audit

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~~(Unaudited)~~

committee receives an additional annual cash retainer of $15,000, the chair of each of the compensation committee and the nominating and corporate governance committee of the Company’s board of directors receives an additional annual cash retainer of $15,000, and each other member of each of the compensation committee and the nominating and corporate governance committee receives an additional annual cash retainer of $10,000.

Other Equity-Based Compensation

The Company may issue common stock in lieu of cash to pay fees earned by the Company’s directors at each director’s election. If the Company did so, there would be no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were no shares of common stock issued to directors in lieu of cash compensation during the six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

Note 1413 — Net (Loss) Income Per Share

The following table sets forth the basic and diluted net loss per share computations:

Three Months Ended June 30, Six Months Ended June 30,
(In thousands, except share and per share amounts) 2022 2021 2022 2021
Net loss attributable to common stockholders $ (56,259) $ (7,405) $ (16,325) $ (16,816)
Adjustments to net loss for common share equivalents (309) (200) (617) (417)
Adjusted net loss attributable to common stockholders $ (56,568) $ (7,605) $ (16,942) $ (17,233)
Weighted-average shares outstanding — Basic 132,629,704 110,898,056 130,646,294 109,674,113
Weighted-average shares outstanding — Diluted 132,629,704 110,898,056 130,646,294 109,674,113
Net loss per share attributable to common stockholders — Basic and Diluted $ (0.43) $ (0.07) $ (0.13) $ (0.16)


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands, except share and per share amounts)	2023		2022		2023		2022
Net (loss) income attributable to common stockholders	$	(53,468)	$	(56,259)	$	(72,225)	$	(16,325)
Adjustments to net (loss) income for common share equivalents	(326)		(309)		(652)		(617)
Adjusted net (loss) income attributable to common stockholders	$	(53,794)	$	(56,568)	$	(72,877)	$	(16,942)

Weighted-average shares outstanding — Basic	133,800,130		132,629,704		133,758,112		130,646,294
Weighted-average shares outstanding — Diluted	133,800,130		132,629,704		133,758,112		130,646,294
Net (loss) income per share attributable to common stockholders — Basic and Diluted	$	(0.40)	$	(0.43)	$	(0.54)	$	(0.13)

Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested restricted shares, Class A Units and

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unearned LTIP Units contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above excludes the distributions to the unvested restricted shares, Class A Units and the unearned LTIP Units that were issued under the 2021 OPP from the numerator.

Diluted net income per share assumes the conversion of all ~~Common Stock~~common stock share equivalents into an equivalent number of shares of ~~Common Stock,~~common stock, unless the effect is antidilutive. The Company considers unvested restricted shares, Class A Units and unvested LTIP Units to be common share equivalents. The following table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted earnings per share as their effect would have been antidilutive for the periods presented:


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended June 30,		Six Months Ended June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
Unvested restricted shares (1)	Unvested restricted shares (1)	579,965	403,999	501,450	402,354	Unvested restricted shares (1)	463,293	579,965	485,232	501,450
Class A Units (2)	Class A Units (2)	172,921	172,921	172,921	172,921	Class A Units (2)	172,921	172,921	172,921	172,921
2018 LTIP Units (3)		—	4,496,796	—	4,496,796
2021 LTIP Units (3)	2021 LTIP Units (3)	8,528,885	—	8,528,885	—	2021 LTIP Units (3)	8,528,885	8,528,885	8,528,885	8,528,885
Total	Total	9,281,771	5,073,716	9,203,256	5,072,071	Total	9,165,099	9,281,771	9,187,038	9,203,256

_______

(1)Weighted-average number ~~of shares~~ of unvested restricted shares outstanding for the periods presented. There were ~~622,396~~702,889 and ~~517,334~~622,396 unvested restricted shares outstanding as of June 30, 2023 and 2022, ~~and 2021,~~ respectively.

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(2)Weighted-average number of Class A Units outstanding for the periods presented. There were 172,921 Class A Units outstanding as of June 30, ~~2022~~2023 and ~~2021.~~2022.

(3)Weighted-average number of ~~2018 and~~ 2021 LTIP Units outstanding for the periods presented. There were 8,528,885 2021 LTIP Units outstanding as of June 30, ~~2022~~2023 and ~~4,496,796 2018 LTIP Units outstanding as of June 30, 2021.~~2022. For more information see Note 1312 — Equity-Based Compensation.

If dilutive, conditionally issuable shares relating to the 2021 OPP award ~~and 2018 OPP award~~ would be included, as applicable, in the computation of fully diluted ~~EPS~~earnings per share on a weighted-average basis for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 based on shares that would be issued if the applicable balance sheet date was the end of the measurement period.

No LTIP Unit share equivalents were included in the computation for the three and six months ended June 30, ~~2022 and 2021~~2023 because (i) no LTIP Units would have been earned based on the trading price of Class A common stock including any cumulative dividends paid (since inception of the 2021 ~~OPP and 2018~~ OPP) at June 30, ~~2022 and 2021~~2023 or (ii) the Company recorded a net loss attributable to common stockholders for the period, thus any shares conditionally issuable under the LTIP Units would be antidilutive.

Note ~~15 -~~14 — Segment Reporting

As of June 30, ~~2022 and December 31, 2021, as a result of the CIM Portfolio Acquisition and the related strategic shift in the Company’s operations,~~2023, the Company concluded it operates in 2two reportable segments consistent with its current management internal financial reporting purposes: single-tenant properties and multi-tenant properties. The Company ~~will evaluate~~evaluates performance and make resource allocations based on its 2two business segments.

Previously, before the CIM Portfolio Acquisition (for which the purchase and sale agreement was signed on December 17, 2021), the Company concluded it was operating in 1 segment. Upon concluding that a change in its reporting segments has occurred, the Company retroactively restated the historical segment reporting presentation for the three years ended December 31, 2021 as presented in its Annual Report on Form 10-K for the year ended December 31, 2021. Below, the Company has restated the prior period to conform to its current segment reporting structure for comparative purposes. Hereafter, the Company will restate other prior quarterly periods for 2021 when they are subsequently reported in later filings for comparative purposes.

Net Operating Income

The Company evaluates the performance of the combined properties in each segment based on net operating income (“NOI”). NOI is defined as total revenues from tenants, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net ~~income~~ (loss). income. The Company uses NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. The Company believes that NOI is useful as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net ~~income~~ (loss). income.

NOI excludes certain components from net (loss) income ~~(loss)~~ in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by the Company may not be comparable to NOI reported by other REITs that define NOI differently. The Company believes that in order to facilitate a clear understanding of the Company’s operating results, NOI should be compared with net (loss) income ~~(loss)~~ prepared in accordance with GAAP and as

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presented in the Company’s consolidated financial statements. NOI should not be considered as an alternative to net (loss) income ~~(loss)~~ as an indication of the Company’s performance or to cash flows as a measure of the Company’s liquidity or ability to pay distributions.

~~The following tables reconcile the segment activity to consolidated net loss for the three and six months ended June 30, 2022 and 2021:~~

4245

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(Unaudited)

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021
(In thousands) Single-Tenant Properties Multi-Tenant Properties Consolidated Single-Tenant Properties Multi-Tenant Properties Consolidated
Revenue from tenants $ 55,886 $ 61,043 $ 116,929 $ 51,653 $ 29,924 $ 81,577
Property operating expense 4,049 23,471 27,520 2,522 10,807 13,329
NOI $ 51,837 $ 37,572 89,409 $ 49,131 $ 19,117 68,248
Asset management fees to related party (8,296) (7,922)
Impairment of real estate investments (58,954) (91)
Acquisition, transaction and other costs (206) (136)
Equity-based compensation (3,523) (5,283)
General and administrative (8,390) (3,540)
Depreciation and amortization (46,573) (32,428)
Gain on sale of real estate investments 13,438 11
Interest expense (28,329) (20,361)
Other income 944 20
Net loss attributable to non-controlling interests 58 2
Allocation for preferred stock (5,837) (5,925)
Net loss attributable to common stockholders $ (56,259) $ (7,405)
The following tables reconcile the segment activity to consolidated net loss attributable to common stockholders for the three and six months ended June 30, 2023 and 2022:


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
(In thousands)	Single-Tenant Properties		Multi-Tenant Properties		Consolidated		Single-Tenant Properties		Multi-Tenant Properties		Consolidated
Revenue from tenants	$	41,124	$	65,576	$	106,700	$	55,886	$	61,043	$	116,929
Property operating expense	4,007		21,075		25,082		4,049		23,471		27,520
NOI	$	37,117	$	44,501	81,618		$	51,837	$	37,572	89,409
Asset management fees to related parties					(7,972)						(8,296)
Impairments of real estate investments					—						(58,954)
Merger, transaction and other costs					(4,931)						(206)
Equity-based compensation					(3,519)						(3,523)
Settlement costs					(8,800)						—
General and administrative					(14,744)						(8,390)
Depreciation and amortization					(59,466)						(46,573)
Gains on sales of real estate investments					5,471						13,438
Interest expense					(35,945)						(28,329)
Other income					596						944

Net loss attributable to non-controlling interests					61						58
Allocation for preferred stock					(5,837)						(5,837)
Net loss attributable to common stockholders					$	(53,468)					$	(56,259)

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021
(In thousands) Single-Tenant Properties Multi-Tenant Properties Consolidated Single-Tenant Properties Multi-Tenant Properties Consolidated
Revenue from tenants $ 109,169 $ 102,703 $ 211,872 $ 102,309 $ 58,455 $ 160,764
Property operating expense 7,974 38,685 46,659 5,115 21,653 26,768
NOI $ 101,195 $ 64,018 165,213 $ 97,194 $ 36,802 133,996
Asset management fees to related party (16,122) (15,243)
Impairment of real estate investments (64,896) (91)
Acquisition, transaction and other costs (485) (178)
Equity-based compensation (7,021) (9,630)
General and administrative (15,223) (9,989)
Depreciation and amortization (84,261) (64,747)
Gain on sale of real estate investments 67,007 297
Interest expense (52,069) (39,695)
Other income 962 44
Gain on non-designated derivatives 2,250 —
Net (income) loss attributable to non-controlling interests (6) 8
Allocation for preferred stock (11,674) (11,588)
Net loss attributable to common stockholders $ (16,325) $ (16,816)


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
(In thousands)	Single-Tenant Properties		Multi-Tenant Properties		Consolidated		Single-Tenant Properties		Multi-Tenant Properties		Consolidated
Revenue from tenants	$	87,289	$	133,005	$	220,294	$	109,169	$	102,703	$	211,872
Property operating expense	8,457		43,538		51,995		7,974		38,685		46,659
NOI	$	78,832	$	89,467	168,299		$	101,195	$	64,018	165,213
Asset management fees to related parties					(15,928)						(16,122)
Impairments of real estate investments					—						(64,896)
Merger, transaction and other costs					(5,496)						(485)
Settlement costs					(8,800)						—
Equity-based compensation					(7,086)						(7,021)
General and administrative					(25,236)						(15,223)
Depreciation and amortization					(113,648)						(84,261)
Gains on sales of real estate investments					17,263						67,007
Interest expense					(70,620)						(52,069)
Other income					623						962
Gain on non-designated derivatives					—						2,250
Net loss (income) attributable to non-controlling interests					78						(6)
Allocation for preferred stock					(11,674)						(11,674)
Net loss attributable to common stockholders					$	(72,225)					$	(16,325)

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THE NECESSITY RETAIL REIT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, ~~2022~~2023

(Unaudited)

The following table reconciles ~~the~~real estate investments, net by segment ~~activity~~ to consolidated total assets as of the periods presented:


(In thousands)	(In thousands)	June 30, 2022		December 31, 2021		(In thousands)	June 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Investments in real estate, net:	Investments in real estate, net:					Investments in real estate, net:
Single-tenant properties	Single-tenant properties	$	1,942,458	$	1,973,743	Single-tenant properties	$	1,682,118	$	1,880,418
Multi-tenant properties	Multi-tenant properties	2,428,572		1,233,030		Multi-tenant properties	2,400,560		2,442,945
Total investments in real estate, net	Total investments in real estate, net	4,371,030		3,206,773		Total investments in real estate, net	4,082,678		4,323,363
Cash and cash equivalents	Cash and cash equivalents	69,431		214,853		Cash and cash equivalents	59,172		70,795
Restricted cash	Restricted cash	17,619		21,996		Restricted cash	23,373		17,956
Deposits for real estate investments		16,250		41,928

Deferred costs, net	Deferred costs, net	19,565		25,587		Deferred costs, net	25,050		22,893
Straight-line rent receivable	Straight-line rent receivable	65,307		70,789		Straight-line rent receivable	59,890		66,657
Operating lease right-of-use assets	Operating lease right-of-use assets	17,946		18,194		Operating lease right-of-use assets	17,587		17,839
Prepaid expenses and other assets	Prepaid expenses and other assets	33,666		26,877		Prepaid expenses and other assets	67,510		66,551
Assets held for sale		80,779		187,213

Total assets	Total assets	$	4,691,593	$	3,814,210	Total assets	$	4,335,260	$	4,586,054

The following table reconciles capital expenditures by reportable business segment, excluding corporate non-real estate expenditures, for the periods presented:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	(In thousands)	2022		2021		2022		2021		(In thousands)	2023 (1)		2022		2023 (1)		2022
Single-tenant properties	Single-tenant properties	$	467	$	14	$	675	$	1,881	Single-tenant properties	$	628	$	467	$	668	$	675
Multi-tenant properties	Multi-tenant properties	1,295		4,378		4,544		4,930		Multi-tenant properties	10,365		1,295		12,898		4,544
Total capital expenditures	Total capital expenditures	$	1,762	$	4,392	$	5,219	$	6,811	Total capital expenditures	$	10,993	$	1,762	$	13,566	$	5,219

(1)Excludes $6.4 million of accrued capital expenditures as of December 31, 2022, which was paid in the six months ended June 30, 2023.

Note 1615 — Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there were not any material events that have occurred that would require adjustments to, or disclosures in, the consolidated financial statements except those stated below:

~~CIM Portfolio Acquisition~~

On July 7, 2022, the Company closed on the 1 remaining property of the CIM Portfolio Acquisition for an aggregate contract purchase price of $71.1 million. The acquisition was funded with the assumption of $39.0 million of fixed rate mortgage debt, the application of the remaining $16.2 million of the Company’s $40 million deposit, and the remainder with cash on hand (including $6.8 million of previous borrowings under the Credit Facility). The assumed mortgage bears stated interest of 4.05% and matures in May 2024. The contract purchase price does not include contingent consideration relating to leasing activity at the property subsequent to the closing date of the acquired properties. The Company paid $16.1 million of additional contingent consideration in July 2022 ($10.8 million of which was accrued as of June 30, 2022) relating to the final property and previously acquired properties.

~~Dispositions Subsequent to June 30, 2022~~Mortgage Repayments

Subsequent to June 30, ~~2022,~~2023, the Company ~~disposed~~repaid $1.8 million of ~~3 properties for an aggregate contract sales price~~outstanding amounts on its Net Lease Mortgage Notes, as well as $2.8 million of ~~$3.9 million. These properties were classified as assets held for sale~~amounts outstanding on ~~the Company’s consolidated balance sheets as of~~its Column Financial Mortgage Notes.

Lease Terminations

Subsequent to June 30, ~~2022.~~2023, five leases in our multi-tenant segment with Bed Bath & Beyond and its subsidiaries were terminated in bankruptcy proceedings, and 43 leases in our single-tenant segment with Mountain Express were terminated in bankruptcy proceedings.

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

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of The Necessity Retail REIT, Inc. and the notes thereto. As used herein, the terms “Company,” “we,” “our” and “us” refer to The Necessity Retail REIT, Inc., a Maryland corporation, including, as required by context, The Necessity Retail REIT Operating Partnership, L.P., a Delaware limited partnership, which we refer to as the “OP,” and its subsidiaries. We are externally managed by The Necessity Retail Advisors, LLC (our “Advisor”), a Delaware limited liability company.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements, including statements regarding the intent, belief or current expectations of us, our Advisor and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth under “Risk Factors” and “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the SEC on February 23, 2023, as well as under Part II — Item 1A. ~~Risk Factors~~ “Risk Factors” below.

Overview

We are an externally managed real estate investment trust for U.S. federal income tax purposes (“REIT”) focusing on acquiring and managing a diversified portfolio of primarily ~~service-oriented~~necessity-based retail single-tenant and ~~traditional retail and distribution-related commercial real estate~~multi-tenant properties ~~located primarily~~ in the United States. Our assets consist primarily of freestanding single-tenant properties that are net leased to “investment grade” and other creditworthy tenants and a portfolio of multi-tenant retail properties consisting primarily of power centers and lifestyle centers. We historically focused our acquisitions primarily on net leased, single-tenant service retail properties, defined as properties leased to tenants in the retail banking, restaurant, grocery, pharmacy, gas, convenience, fitness, and auto services sectors.

On December 17, 2021, we signed a purchase and sale agreement to acquire 79 multi-tenant retail centers and two single-tenant properties for $1.3 billion (the “CIM Portfolio Acquisition”). The CIM Portfolio Acquisition was accounted for as an asset acquisition. The acquisition closed in multiple transactions in 2022 and the consideration included cash (including cash sourced from borrowings under the Credit Facility, as defined below), assumption of existing mortgage debt securing certain of the properties and the issuance of shares of our Class A common stock.

~~We closed on the properties of the CIM Portfolio Acquisition in multiple stages as follows:~~

•In the three months ended March 31, 2022, we closed on the acquisition of 56 properties of the CIM Portfolio Acquisition for an aggregate contract purchase price of $801.1 million which was funded by $728.4 million in cash, including $378.0 million of borrowings under our Credit Facility, the assumption of $19.3 million of existing mortgage debt and the issuance of $50.0 million in value at issuance ($53.4 million of value subject to repurchase) of the Company’s Class A common stock to certain subsidiaries of the CIM Real Estate Finance Trust, Inc. (the “Sellers”), at its closing value on the respective closing dates on which the common stock was issued.

•In the three months ended June 30, 2022, we closed on 24 additional properties from the CIM Portfolio for an aggregate contract purchase price of $452.8 million in three closings. The acquisitions were funded with the assumption of $294.5 million of fixed-rate mortgage debt, $128.2 million of $135.0 million of borrowings under the Credit Facility, the application of $23.8 million of the Company’s $40.0 million deposit and the remainder with cash on hand. The assumed mortgages bear stated interest rates between 3.65% and 4.62% and mature between April 2023 and September 2033.

•We closed on the one remaining property from the CIM Portfolio Acquisition on July 7, 2022 for a contract purchase price of $71.1 million. The acquisition was funded with the assumption of $39.0 million of fixed-rate mortgage debt, the application of the remaining $16.2 million of our $40.0 million deposit, and the remainder with cash on hand (including $6.8 million of previous borrowings under the Credit Facility). The assumed mortgage bears a stated interest rate of 4.05% and matures in May 2024 (see ~~Note 16~~ ~~— Subsequent Events~~).

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•The aggregate contract purchase prices above do not include contingent consideration relating to leasing activity at each respective acquired property for a six-month period subsequent to the respective closing dates of each acquired property. We paid $10.2 million and $13.3 million for such contingent consideration in the three months ended March 31, 2022 and three months ended June 30, 2022, respectively. As of June 30, 2022, we accrued for $10.8 million of contingent consideration based on leases executed as of June 30, 2022. We paid $16.1 million in July 2022, which includes the accrual $10.8 million, and additional amounts may be due for leases executed through January 2023, ~~(six months following the acquisition date of the final property of the CIM Portfolio Acquisition).~~

~~For additional information on the closing of the CIM Portfolio Acquisition, including funding details, see~~ ~~“Liquidity and Capital Resources”~~ ~~herein and see~~ ~~Note 3~~ ~~— Real Estate Investments~~ ~~to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.~~

In addition, we acquired eight additional single-tenant properties in the three months ended June 30, 2022 for an aggregate contract purchase price of $17.5 million. We acquired 10 additional single-tenant properties and one additional multi-tenant retail property in the six months ended June 30, 2022 for an aggregate contract purchase price of $58.4 million.

~~As of June 30, 2022,~~ we owned ~~1,056~~991 properties, comprised of ~~28.9~~27.3 million rentable square feet, which were ~~90.8%~~92.7% leased, including ~~944~~882 single-tenant net-leased commercial properties ~~(906~~(845 of which are retail properties) and ~~112~~109 multi-tenant retail properties. Based on annualized rental income on a straight-line basis as of June 30, ~~2022,~~2023, the total single-tenant properties comprised ~~48%~~45% of our total portfolio and were 66% leased to service retail tenants, and the total multi-tenant properties comprised ~~52%~~55% of our portfolio, and were ~~44%~~42% leased to experiential retail tenants, defined as tenants in the restaurant, discount retail, entertainment, salon/beauty and grocery store sectors, among others.

Substantially all of our business is conducted through ~~the~~our OP and its wholly-owned subsidiaries. ~~The~~Our Advisor manages our day-to-day business with the assistance of our property manager, Necessity Retail Properties, LLC (the “Property Manager”). ~~The~~Our Advisor and ~~the~~our Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.

For our purposes, tenants that are considered “investment grade” ~~includes~~include both tenants (or lease guarantors) with actual investment grade ratings or tenants with “implied” investment grade ratings. Implied investment grade may include the actual rating of a tenant’s parent or the guarantor of the parent (regardless of whether the parent has guaranteed the tenant’s obligation under the lease) or tenants that are identified as investment grade by using a proprietary Moody’s analytical tool which generates an implied rating by measuring an entity’s probability of default. Based on annualized rental income on a straight-line basis as of June 30, ~~2022,~~2023, approximately ~~52.2%~~65.9% of the tenants in our single-tenant portfolio were considered “investment grade” consisting of ~~39.6%~~45.8% with actual investment grade ratings and ~~12.6%~~20.1% with implied investment grade ratings, and approximately ~~41.1%~~36.5% of the anchor tenants in our multi-tenant portfolio were considered “investment grade” consisting of ~~30.7%~~29.7% with actual investment grade ratings and ~~10.4%~~6.8% with implied investment grade ratings.

~~Management Update on the Impacts of the COVID-19 Pandemic~~CIM Portfolio Acquisition

The COVID-19 global pandemic has created several risks and uncertainties that may impact our business, including our future results of operations and our liquidity. The ultimate impact on our results of operations, our liquidity and the ability of our tenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the COVID-19 pandemic. For a further discussion of the risks and uncertainties associated with the impact of the COVID-19 pandemic on us, see Item ~~1A. Risk Factors~~ ~~in our Annual Report on Form 10-K for the year ended~~On December ~~31, 2021.~~

We have taken several steps to mitigate the impact of the pandemic on our business. We have been in direct contact with our tenants since the crisis began, cultivating open dialogue and deepening the fundamental relationships that we have carefully developed through prior transactions and historic operations. Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our cash rent collections during this pandemic. We have collected 99% of the original cash rent due for the second quarter of 2022 across our entire portfolio, (based on the total of second quarter 2022 cash rent due across our portfolio). This was consistent with the quarterly collections during the first quarter of 2021 and the year ended December 31, 2021 and reflects the expiration of rent deferral agreements where tenants have resumed paying full rent as well as collections of deferred rent paid during the period.

“Original cash rent” refers to contractual rents on a cash basis due from tenants as stipulated in their originally executed lease agreement at inception or as amended, prior to any rent deferral agreement. We calculate “original cash rent collections” by comparing the total amount of rent collected during the period to the original cash rent due. Total rent collected during the period includes both original cash rent due and payments made by tenants pursuant to rent deferral agreements. Eliminating the impact of deferred rent paid, we collected 98% of original cash rent collections for the second quarter of 2022.

~~A deferral agreement is an executed or approved amendment to an existing lease to defer a certain portion of cash rent due to a future period. During the year ended December 31,~~17, 2021, we ~~granted rent deferrals~~signed a purchase and sale agreement to acquire 79 multi-tenant retail centers and two single-tenant properties for an aggregate contract purchase price of ~~$0.4 million or~~$1.3 billion (the “CIM Portfolio Acquisition”). The CIM Portfolio Acquisition was accounted for as an asset acquisition. The acquisition closed in multiple transactions from February 2022 through July 2022, and the consideration included cash (including cash sourced from borrowings under the Credit Facility, as defined below), assumption of existing mortgage debt securing certain of the properties and the issuance of shares of our Class A common stock.

We closed on the properties of the CIM Portfolio Acquisition in multiple stages as follows:

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~~approximately 1%~~•In the three months ended March 31, 2022, we closed on the acquisition of ~~original~~56 properties of the CIM Portfolio Acquisition for an aggregate contract purchase price of $801.1 million which was funded by $728.4 million in cash, ~~rent due~~including $378.0 million of borrowings under our Credit Facility, the assumption of $19.3 million of existing mortgage debt and the issuance of $50.0 million in fair value at issuance ($53.4 million in contractual value) of our Class A common stock to certain subsidiaries of the CIM Real Estate Finance Trust, Inc. (the “Sellers”), at its closing value on the respective closing dates on which the common stock was issued.

•In the three months ended June 30, 2022, we closed on 24 additional properties from the CIM Portfolio Acquisition for an aggregate contract purchase price of $452.8 million in three closings. The acquisitions were funded with the ~~year. Nearly all amounts deferred are scheduled~~assumption of $294.5 million of fixed-rate mortgage debt, $128.2 million of $135.0 million of borrowings under the Credit Facility, the application of $23.8 million of our $40.0 million deposit and the remainder with cash on hand.

•In the three months ended September 30, 2022, we closed on the one remaining property from the CIM Portfolio Acquisition for ~~repayment during various times through~~a contract purchase price of $71.1 million. The acquisition was funded with the ~~end~~assumption of $39.0 million of fixed-rate mortgage debt, the application of the remaining $16.2 million of our $40.0 million deposit, and the remainder with cash on hand (including $6.8 million of previous borrowings under the Credit Facility).

•The aggregate contract purchase prices above do not include contingent consideration relating to leasing activity at each respective acquired property for a six-month period subsequent to the respective closing dates of each acquired property. During the year ended December 31, 2022, we paid $59.3 million for such contingent consideration with cash on hand. As of December 31, 2022, we had accrued $6.7 million of contingent consideration based on leases executed prior to December 31, 2022. During the six months ended June 30, 2023, we accrued an additional $5.5 million based on leases executed after December 31, 2022. All previously accrued amounts were paid in the six months ended June 30, 2023, and no further contingent consideration is expected to be paid under the terms of the contract.

•During the three months ended June 30, 2023, we accrued an estimate of $4.4 million to settle remaining claims with CIM for contingent consideration and other matters. The claims relate to (i) disputes that had arisen under the purchase and sale agreement, (ii) a related contingent consideration letter agreement for leasing activities and (iii) a related escrow agreement.

Proposed Merger and Internalization

On May 23, 2023, we, our OP, Global Net Lease, Inc., a Maryland corporation (“GNL”), Global Net Lease Operating Partnership, L.P., a Delaware limited partnership (“GNL OP”), Osmosis Sub I, LLC, a Maryland limited liability company and wholly-owned subsidiary of GNL (“REIT Merger Sub”), and Osmosis Sub II, LLC, a Delaware limited liability company and wholly-owned subsidiary of GNL OP (“OP Merger Sub”), entered into an Agreement and Plan of Merger (the “REIT Merger Agreement”). Subject to the terms and conditions of the REIT Merger Agreement, at the effective time of the merger (the “REIT Merger Effective Time”), we will merge with and into REIT Merger Sub, with REIT Merger Sub continuing as the surviving entity and a wholly-owned subsidiary of GNL (the “REIT Merger”), and OP Merger Sub will merge with and into the OP, with the OP continuing as the surviving entity (the “OP Merger” and, together with the REIT Merger, the “Merger”). We also entered into an agreement to internalize the advisory and property management functions of the combined companies through a series of mergers with the advisors and property managers for each of GNL and our company (the “Internalization Merger”, and, together with the REIT Merger and the OP Merger, the “Proposed Transactions”).The Proposed Transactions are conditional upon one another and accordingly are considered “related” and treated as a single transaction for accounting and reporting purposes. The Proposed Transactions are considered a business combination for accounting purposes with GNL as both the legal and accounting acquiror.

As one of the acquirees in a business combination, we have expensed costs related to the Proposed Transaction as incurred. Accordingly, $4.2 million is included in merger, transaction and other costs associated with the Proposed Transaction in the three and six months ended June 30, ~~2022,~~2023.

The REIT Merger

At the REIT Merger Effective Time, each issued and outstanding share of our Class A common stock, par value $0.01per share (“Class A Common Stock”) (or fraction thereof), will be converted into the right to receive 0.670 shares (the “Exchange Ratio”) of validly issued, fully paid and nonassessable shares of GNL’s Common Stock, par value $0.01 per share (“GNL Common Stock”). From and after the REIT Merger Effective Time, all shares of Class A Common Stock will no longer be outstanding and will automatically be cancelled and cease to exist, and each holder of a share of Class A Common Stock will cease to have any rights with respect thereto, except for the right to receive the consideration as provided in the REIT Merger Agreement.

At the REIT Merger Effective Time, each issued and outstanding share of our 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”) and each issued and outstanding share of our

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7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), will automatically be converted into the right to receive from GNL one share of newly created 7.50% Series D Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, and one share of newly created 7.375% Series E Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, respectively, which will have substantially identical powers, preferences, privileges, and rights as the Series A Preferred Stock and the Series C Preferred Stock, respectively. From and after the REIT Merger Effective Time, all shares of Series A Preferred Stock and Series C Preferred Stock will no longer be outstanding and will automatically be cancelled and cease to exist, and each holder of a share of Series A Preferred Stock and Series C Preferred Stock will cease to have any rights with respect thereto, except for the right to receive the consideration as provided in the REIT Merger Agreement.

Following the REIT Merger Effective Time and prior to the OP Merger, REIT Merger Sub will distribute its general partnership interests in the OP to GNL. GNL, in turn, will contribute its general partnership interest to GNL OP and, in turn, GNL OP will contribute the general partnership interests to a newly formed limited liability company that will be wholly owned by GNL OP (“Newco GP, LLC”). At the effective time of the OP Merger (the “OP Merger Effective Time”), by virtue of the OP Merger and without any further action on the part of GNL OP, (i) Newco GP, LLC will be the sole general partner of the surviving company with respect to the OP Merger; (ii) all the preferred units of the OP (the “RTL OP Preferred Units”) held by REIT Merger Sub immediately after the REIT Merger Effective Time will be cancelled and no payment will be made with respect thereto; (iii) GNL OP will continue as the sole limited partner of the OP; and (iv) each GNL OP Unit held by a limited partner of the OP other than us or any subsidiary of ours issued and outstanding immediately prior to the OP Merger Effective Time will automatically be converted into new GNL OP Units in an amount equal to (x) one (1), multiplied by (y) the Exchange Ratio, and each holder of new GNL OP Units will be admitted as a limited partner of GNL OP in accordance with the terms of the partnership agreement of GNL OP. Immediately after the OP Merger Effective Time, Newco GP, LLC will be the general partner and GNL OP will be the limited partner of the OP.

As part of the REIT Merger, GNL would also issue common shares (adjusted for the Exchange Ratio) for our RSU's and LTIP Units outstanding at the time of the REIT Merger (See further discussion in “Restricted Shares and LTIP Units” below).

Our Loans and Financing Agreements

As required by the REIT Merger Agreement, GNL will assume all our indebtedness and repay all amounts outstanding under our Credit Facility (as defined in Note 5 — Credit Facility). Our indebtedness includes, in particular:

•Our Mortgage Notes Payable: Our mortgage notes payable totaled nearly $1.6 billion in principal amounts, and had a total fair value of $1.4 billion, as of June 30, 2023. These mortgage notes bear fixed annual interest rates between 2.2% and 4.7%, with a weighted average annual interest rate of 3.82% as of June 30, 2023. Our mortgage notes payable mature between September 2023 and May 2031, and we ~~did~~have $96.5 million and $65.2 million of its mortgage notes payable scheduled for repayment for the remainder of 2023 and the year ended December 31, 2024, respectively, as of June 30, 2023. For additional information about our mortgage notes payable and their fair value, see Note 4 — Mortgage Notes Payable, Net and Note 7 — Fair Value Measurements.

•Our Senior Notes: Our Senior Notes (as defined in Note 6 — Senior Notes, Net) were issued at par for an aggregate principal amount of $500.0 million, mature on September 30, 2028 and accrue interest at a rate of 4.50% per year. Interest is payable semi-annually in arrears on March 30 and September 30 of each year. Our Senior Notes do not ~~defer~~require any principal payments prior to maturity. The fair value of our Senior Notes were $385.0 million as of June 30, 2023 (see Note 7 — Fair Value Measurements for additional ~~rents. As~~information).

•Our Credit Facility: The total amount outstanding under our Credit Facility totaled $604.0 million as of June 30, 2023 and our borrowings thereunder bore interest at weighted-average annual rate of 7.20% as of June 30, 2023.

In addition, prior to the REIT Merger Effective Time, we are required to seek lender consents with respect to the applicable terms of the following agreements: (i) the Loan Agreement, dated as of December 8, 2017, among Société Générale and UBS AG, as lenders, and certain subsidiaries of the OP, as borrowers, as amended to date (the “SocGen and UBS Loan Agreement”) and (ii) the Loan Agreement, dated as of July ~~31, 2022, we have collected approximately 97%~~24, 2020, by and among the entities listed on Schedule I thereto, as borrowers, and Column Financial, Inc., as lender, as amended to date (the “Column Loan Agreement” and, together with the SocGen and UBS Loan Agreement, the “CMBS”) to the extent required to permit us and the OP to perform their respective obligations pursuant to the REIT Merger Agreement and the Internalization Merger Agreement.

The Internalization Merger

Concurrently with the execution of the REIT Merger Agreement, on May 23, 2023, we entered into a merger agreement for a transaction known as an “Internalization” (the “Internalization Merger Agreement”) with GNL Advisor Merger Sub LLC, a Delaware limited liability company, GNL PM Merger Sub LLC, a Delaware limited liability company, Advisor Merger Sub LLC, a Delaware limited liability company, RTL PM Merger Sub LLC, a Delaware limited liability company, the OP, GNL and GNL OP, on the one hand, and AR Global, Global Net Lease Special Limited Partnership, LLC, a Delaware limited liability company (“GNL SLP”), Necessity Retail Space Limited Partner, LLC, (“RTL SLP”) a Delaware limited company,

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Global Net Lease Advisors, LLC, a Delaware limited liability company (“GNL Advisor”), the Advisor, Global Net Lease Properties, LLC, a Delaware limited liability company (“GNL Property Manager”), and the Company’s Property Manager, on the other hand.

Consummation of the transactions contemplated by the Internalization Merger Agreement will result in the internalization of the management of GNL immediately following the consummation of the Proposed Transactions (the “Combined Company”) immediately following consummation of the REIT Merger, including by terminating (i) GNL’s existing arrangement for advisory management services provided by GNL Advisor pursuant to the Fourth Amended and Restated Advisory Agreement, dated as of June 2, 2015, among GNL, GNL OP and GNL Advisor (as amended pursuant to First Amendment, dated as of August 14, 2018, Second Amendment, dated as of November 6, 2018, Third Amendment, dated as of May 6, 2020, and Fourth Amendment, dated as of May 6, 2021, the “GNL Advisory Agreement”), (ii) GNL’s existing arrangement for property management services provided by GNL Property Manager pursuant to the Property Management and Leasing Agreement, dated as of April 20, 2012, by and among GNL, GNL OP and GNL Property Manager (as amended pursuant to First Amendment, dated as of October 27, 2017, Second Amendment, dated as of February 27, 2018, and Third Amendment, dated as of February 27, 2019, the “GNL Property Management Agreement”), (iii) our existing arrangement for advisory management services provided by our Advisor pursuant to the Third Amended and Restated Advisory Agreement, dated as of September 6, 2016, by and among us, our OP and American Finance Advisors LLC (now known as the Advisor) (as amended pursuant to Amendment No. 1, dated as of July 19, 2018, Amendment No. 2, dated as of March 18, 2019, Amendment No. 3, dated as of March 30, 2020, and Amendment No. 4, dated as of January 13, 2021, the “Advisory Agreement”), and (iv) our existing arrangement for property management services provided by our Property Manager pursuant to the Amended and Restated Property Management and Leasing Agreement, dated as of September 6, 2016, by and among us, our OP and American Finance Properties, LLC (now known as the Property Manager) (as amended pursuant to First Amendment, dated as of December 8, 2017, and Second Amendment, dated November 4, 2020, the “Property Management Agreement”). All assets and contracts (including leases) necessary or desirable in the judgment of both GNL and us to conduct our business and the business of GNL and all desired employees will be placed into subsidiaries of AR Global that will be merged with subsidiaries of GNL upon the effective time of the Internalization Merger.

As consideration for the transactions contemplated by the Internalization Merger Agreement, GNL will issue 29,614,825 shares of GNL Common Stock valued in the aggregate at $325.0 million to AR Global (the “Advisor Parent Shares”) and cash in an amount equal to $50.0 million. The number of Advisor Parent Shares issued in respect of the Internalization Merger was valued based on GNL’s five-day volume-weighted average price as of market close on May 11, 2023. We intend to agree, pursuant to the Registration Rights and Stockholder Agreement, to register the Advisor Parent Shares for resale under the Securities Act, pursuant to the terms and conditions (including limitations) thereof. Following the completion of the Internalization Merger, the GNL Advisory Agreement, GNL Property Management Agreement, Advisory Agreement and Property Management Agreement will be terminated.

Restricted Shares and LTIP Units

Except with respect to our restricted shares of Class A common stock (“restricted shares”) granted between the execution of the REIT Merger Agreement and the REIT Merger Effective Time, as of one business day immediately prior to the REIT Merger Effective Time, each restricted share granted to a member of our board of directors under the 2018 Equity Plan that is outstanding as of immediately prior to the REIT Merger Effective Time (whether or not then vested) will automatically become fully vested, and all restrictions with respect thereto will lapse. Each share of Class A Common Stock resulting from the vesting of the restricted shares will be treated the same as other shares of Class A Common Stock issued and outstanding immediately prior to the REIT Merger Effective Time, and will be converted into the right to receive shares of GNL Common Stock based on the Exchange Ratio. After completing our annual meeting of stockholders, each of our independent directors was granted $85,000 of restricted shares as part of their annual grant, with such restricted shares to be subject to one-year vesting. The restricted shares will convert into shares of GNL Common Stock at the REIT Merger Effective Time in the same manner as the unvested restricted shares held by non-directors of us (as described below).

Also as of one business day immediately prior to the REIT Merger Effective Time, all other restricted shares outstanding as of immediately prior to the REIT Merger Effective Time including any restricted shares issued on conversion of LTIP Units will cease to relate to or represent any right to receive Class A Common Stock and will be assumed by GNL and automatically converted, at the REIT Merger Effective Time, into GNL Restricted Stock with respect to a number of shares of GNL Common Stock equal to the product of (x) the number of shares of Class A Common Stock underlying the applicable award of restricted shares as of immediately prior to such conversion, multiplied by (y) the Exchange Ratio, with each such award of restricted shares so converted into GNL Restricted Stock otherwise subject to the same terms and conditions as were applicable to the corresponding award of restricted shares, including any applicable vesting, acceleration, and payment timing provisions, except (i) as expressly adjusted by the REIT Merger Agreement, (ii) all of the outstanding equity or equity-based awards of ours held by Jason Doyle, our Chief Financial Officer, and other key employees of the Advisor or its affiliates (including any incremental grants made to them prior to the REIT Merger Effective Time) will fully vest as of immediately prior to the REIT Merger Effective Time, and (iii) all of the outstanding equity or equity-based awards of ours held by any employee of the Advisor who

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is not offered employment by GNL on the terms and conditions set forth in the Internalization Merger Agreement will fully vest as of immediately prior to the REIT Merger Effective Time.

In connection with the Internalization Merger Agreement, the parties agreed to modify the terms of the existing 2021 Advisor Multi-Year Outperformance Award (the “2021 OPP”) to accelerate the timing for determining whether the award is vested and earned. Specifically, as modified, prior to the Internalization Effective Time, the Advisor will distribute a new award of LTIP Units that are outstanding under the terms of the 2021 OPP to RTL SLP. RTL and the OP will modify the LTIP Units so that the award may be converted, upon the election of AR Global, into 8,528,885 of our restricted shares (the “Converted Restricted Shares”). Any restricted shares that are not earned will be forfeited. As modified, upon AR Global’s exercising the election, we will immediately issue RTL SLP the Converted Restricted Shares, subject to an award agreement which is substantially identical to the 2021 OPP, except as modified by the terms of the Internalization Merger Agreement. All conditions regarding vesting and whether the shares are earned, whether based on time or performance, will remain in full effect, except as modified by the Internalization Merger Agreement. Each of the earned LTIP Units will be entitled to a priority catch-up distribution paid in cash at the Internalization Effective Time (the “RTL Catch Up”). If AR Global elects to convert LTIP Units into Converted Restricted Shares, other than with respect to the RTL Catch Up, any dividend or distribution will be paid on the Converted RTL Restricted Shares in accordance with the provisions of the 2021 OPP. All Converted Restricted Shares (or, if not converted, the LTIP Units) will vest and may be earned based on the achievement of performance as calculated on or prior to the closing of the Proposed Transactions and any vested and earned Converted Restricted Shares upon release of restrictions which will occur prior to the REIT Merger Effective Time, will be treated as a share of Class A Common Stock issued and outstanding immediately prior to the REIT Merger Effective Time and will be converted into the right to receive shares of GNL Common Stock based on the Exchange Ratio. Fewer shares than the maximum may be issued based on the measurement provisions in the 2021 OPP, which are based on total ~~$7.4 million rents we previously deferred.~~shareholder returns over the measurement period. The end of the measurement period will occur prior to the closing of the Proposed Transactions. It is expected that the LTIP Units (following conversion to shares of Class A Common Stock) will be converted or exchanged into shares of GNL Common Stock at or near closing of the Proposed Transactions.

Impacts of the COVID-19 Pandemic

During the first quarter of 2020, the global COVID-19 pandemic that spread around the world and to every state in the United States commenced. As a result, we experienced delays in rent collections in the second, third and fourth quarters of ~~2022, we~~2020 and the first quarter of 2021. We did not ~~grant~~experience any ~~rent abatements. The most common arrangements granted provide deferral~~material delays in the receipt of rental payments during the year ended December 31, 2022 or the six months ended June 30, 2023. We took a proactive approach to achieve mutually agreeable solutions with our tenants and in some ~~or all~~cases, in the second, third and fourth quarters of ~~the rent due for the period in which the arrangement was granted with such amounts to be paid in 2022. The terms~~2020 and throughout 2021, we executed several types of ~~these~~ lease amendments. These amendments ~~providing for rent~~included deferrals and abatements ~~differ by tenant in terms of length~~ and ~~amount~~also included extensions to the term of the ~~deferral~~leases. We did not execute any COVID-19-related deferrals or ~~abatement, although~~abatements during the ~~deferrals and abatements are generally coupled with an extension of~~year ended December 31, 2022 or the ~~lease.~~

The cash rent collections for the second quarter of 2022 includes cash receipts collected through July 31, 2022. Cash receipts received in July are not, however, included in cash and cash equivalents on oursix months ended June 30, ~~2022 consolidated balance sheet. The below cash rent status may not be indicative~~2023. We have substantially collected all amounts of any future period and remains subject to changes based on ongoing collection efforts and negotiation of additional agreements. Moreover, there is no assurance that we will be able to collect the cash rent that is due in future months including amounts previously ~~deferred. The impact of the COVID-19 pandemic on our tenants and thus our ability to collect rents in future periods cannot be determined at present.~~

The table below shows the percentage of original cash rent for our single-tenant portfolio, our multi-tenant portfolio, and our total portfolio we collected in each fiscal quarter of 2020, 2021 and 2022:

Total Collections Without Deferred Rents
Period Single-Tenant Multi-Tenant Total Portfolio Single-Tenant Multi-Tenant Total Portfolio
First Quarter 2020 98 % 100 % 99 % 98 % 100 % 99 %
Second Quarter 2020 96 % 72 % 88 % 96 % 72 % 88 %
Third Quarter 2020 98 % 85 % 94 % 98 % 85 % 94 %
Fourth Quarter 2020 100 % 91 % 97 % 100 % 91 % 97 %
First Quarter 2021 100 % 99 % 100 % 99 % 95 % 98 %
Second Quarter 2021 100 % 100 % 100 % 99 % 97 % 99 %
Third Quarter 2021 98 % 100 % 99 % 98 % 96 % 97 %
Fourth Quarter 2021 99 % 100 % 100 % 99 % 97 % 98 %
First Quarter 2022 98 % 100 % 99 % 97 % 98 % 98 %
Second Quarter 2022 98 % 99 % 99 % 98 % 97 % 98 %
deferred rent.

Significant Accounting Estimates and Critical Accounting Policies

For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our ~~2021~~2022 Annual Report on Form 10-K. Except for those required by new accounting pronouncements discussed below, there have been no material changes from these significant accounting estimates and critical accounting policies.

Recently Issued Accounting Pronouncements

Please see Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

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Properties

The following table represents certain additional information about the properties we ~~own~~owned at June 30, ~~2022:~~2023:


Portfolio	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased
Dollar General I	Dollar General I	Single-Tenant	Apr 2013; May 2013	2	18	5.8	100.0%	Dollar General I	Single-Tenant	Apr 2013; May 2013	2	18	4.8	100.0%
Walgreens I	Walgreens I	Single-Tenant	Jul 2013	1	10	15.3	100.0%	Walgreens I	Single-Tenant	Jul 2013	1	10	14.3	100.0%
Dollar General II	Dollar General II	Single-Tenant	Jul 2013	2	18	5.9	100.0%	Dollar General II	Single-Tenant	Jul 2013	2	18	4.9	100.0%
AutoZone I	AutoZone I	Single-Tenant	Jul 2013	1	8	5.1	100.0%	AutoZone I	Single-Tenant	Jul 2013	1	8	4.1	100.0%
Dollar General III	Dollar General III	Single-Tenant	Jul 2013	5	46	5.9	100.0%	Dollar General III	Single-Tenant	Jul 2013	5	46	4.9	100.0%
BSFS I	BSFS I	Single-Tenant	Jul 2013	1	9	1.6	100.0%	BSFS I	Single-Tenant	Jul 2013	1	9	0.6	100.0%
Dollar General IV	Dollar General IV	Single-Tenant	Jul 2013	2	18	6.6	100.0%	Dollar General IV	Single-Tenant	Jul 2013	2	18	5.6	100.0%
Tractor Supply I	Tractor Supply I	Single-Tenant	Aug 2013	1	19	5.4	100.0%	Tractor Supply I	Single-Tenant	Aug 2013	1	19	4.4	100.0%
Dollar General V	Dollar General V	Single-Tenant	Aug 2013	1	12	5.6	100.0%	Dollar General V	Single-Tenant	Aug 2013	1	12	4.6	100.0%
Mattress Firm I	Mattress Firm I	Single-Tenant	Aug 2013; Nov 2013; Feb 2014; Mar 2014; Apr 2014	5	24	4.5	100.0%	Mattress Firm I	Single-Tenant	Aug 2013; Nov 2013; Feb 2014; Mar 2014; Apr 2014	5	24	3.5	100.0%
Family Dollar I	Family Dollar I	Single-Tenant	Aug 2013	1	8	—	100.0%	Family Dollar I	Single-Tenant	Aug 2013	1	8	—	100.0%
Lowe's I	Lowe's I	Single-Tenant	Aug 2013	5	671	7.0	100.0%	Lowe's I	Single-Tenant	Aug 2013	5	671	19.1	100.0%
O'Reilly Auto Parts I	O'Reilly Auto Parts I	Single-Tenant	Aug 2013	1	11	8.0	100.0%	O'Reilly Auto Parts I	Single-Tenant	Aug 2013	1	11	7.0	100.0%
Food Lion I	Food Lion I	Single-Tenant	Aug 2013	1	45	7.3	100.0%	Food Lion I	Single-Tenant	Aug 2013	1	45	6.3	100.0%
Family Dollar II	Family Dollar II	Single-Tenant	Aug 2013	1	8	1.0	100.0%	Family Dollar II	Single-Tenant	Aug 2013	1	8	—	—%
Walgreens II	Walgreens II	Single-Tenant	Aug 2013	1	14	10.8	100.0%	Walgreens II	Single-Tenant	Aug 2013	1	14	9.8	100.0%
Dollar General VI	Dollar General VI	Single-Tenant	Aug 2013	1	9	3.7	100.0%	Dollar General VI	Single-Tenant	Aug 2013	1	9	2.7	100.0%
Dollar General VII	Dollar General VII	Single-Tenant	Aug 2013	1	9	5.8	100.0%	Dollar General VII	Single-Tenant	Aug 2013	1	9	4.8	100.0%
Family Dollar III	Family Dollar III	Single-Tenant	Aug 2013	1	8	0.3	100.0%	Family Dollar III	Single-Tenant	Aug 2013	1	8	4.3	100.0%
Chili's I	Chili's I	Single-Tenant	Aug 2013	2	13	3.4	100.0%	Chili's I	Single-Tenant	Aug 2013	2	13	2.4	100.0%
CVS I	CVS I	Single-Tenant	Aug 2013	1	10	3.6	100.0%	CVS I	Single-Tenant	Aug 2013	1	10	2.6	100.0%
Joe's Crab Shack I	Joe's Crab Shack I	Single-Tenant	Aug 2013	1	8	4.8	100.0%	Joe's Crab Shack I	Single-Tenant	Aug 2013	1	8	3.8	100.0%
Dollar General VIII	Dollar General VIII	Single-Tenant	Sep 2013	1	9	6.1	100.0%	Dollar General VIII	Single-Tenant	Sep 2013	1	9	5.1	100.0%
Tire Kingdom I	Tire Kingdom I	Single-Tenant	Sep 2013	1	7	2.8	100.0%	Tire Kingdom I	Single-Tenant	Sep 2013	1	7	1.8	100.0%
AutoZone II	AutoZone II	Single-Tenant	Sep 2013	1	7	0.9	100.0%	AutoZone II	Single-Tenant	Sep 2013	1	7	9.9	100.0%
Family Dollar IV	Family Dollar IV	Single-Tenant	Sep 2013	1	8	1.0	100.0%	Family Dollar IV	Single-Tenant	Sep 2013	1	8	—	100.0%
Fresenius I	Fresenius I	Single-Tenant	Sep 2013	1	6	3.0	100.0%	Fresenius I	Single-Tenant	Sep 2013	1	6	2.0	100.0%
Dollar General IX	Dollar General IX	Single-Tenant	Sep 2013	1	9	2.8	100.0%	Dollar General IX	Single-Tenant	Sep 2013	1	9	1.8	100.0%
Advance Auto I	Advance Auto I	Single-Tenant	Sep 2013	1	11	9.1	100.0%	Advance Auto I	Single-Tenant	Sep 2013	1	11	8.1	100.0%
Walgreens III	Walgreens III	Single-Tenant	Sep 2013	1	15	3.8	100.0%	Walgreens III	Single-Tenant	Sep 2013	1	15	2.8	100.0%
Walgreens IV	Walgreens IV	Single-Tenant	Sep 2013	1	14	2.3	100.0%	Walgreens IV	Single-Tenant	Sep 2013	1	14	1.3	100.0%
CVS II	CVS II	Single-Tenant	Sep 2013	1	16	14.6	100.0%	CVS II	Single-Tenant	Sep 2013	1	16	13.6	100.0%
Arby's I	Arby's I	Single-Tenant	Sep 2013	1	3	6.0	100.0%	Arby's I	Single-Tenant	Sep 2013	1	3	5.0	100.0%
Dollar General X	Dollar General X	Single-Tenant	Sep 2013	1	9	5.8	100.0%	Dollar General X	Single-Tenant	Sep 2013	1	9	4.8	100.0%
AmeriCold I	AmeriCold I	Single-Tenant	Sep 2013	9	1,407	5.2	100.0%	AmeriCold I	Single-Tenant	Sep 2013	9	1,407	4.2	100.0%
Home Depot I	Home Depot I	Single-Tenant	Sep 2013	2	1,315	4.6	100.0%	Home Depot I	Single-Tenant	Sep 2013	2	1,315	3.6	100.0%
New Breed Logistics I	New Breed Logistics I	Single-Tenant	Sep 2013	1	390	3.8	100.0%	New Breed Logistics I	Single-Tenant	Sep 2013	1	390	3.5	100.0%
Truist Bank I ~~(2)~~	Truist Bank I ~~(2)~~	Single-Tenant	Sep 2013	17	90	5.9	93.4%	Truist Bank I ~~(2)~~	Single-Tenant	Sep 2013	16	86	4.9	94.0%
National Tire & Battery I		Single-Tenant	Sep 2013	1	11	1.4	100.0%
Circle K I	Circle K I	Single-Tenant	Sep 2013	19	55	6.3	100.0%	Circle K I	Single-Tenant	Sep 2013	19	55	5.3	100.0%
Walgreens V	Walgreens V	Single-Tenant	Sep 2013	1	14	5.2	100.0%	Walgreens V	Single-Tenant	Sep 2013	1	14	4.2	100.0%
Walgreens VI	Walgreens VI	Single-Tenant	Sep 2013	1	15	6.8	100.0%	Walgreens VI	Single-Tenant	Sep 2013	1	15	5.8	100.0%
FedEx Ground I	FedEx Ground I	Single-Tenant	Sep 2013	1	22	0.9	100.0%	FedEx Ground I	Single-Tenant	Sep 2013	1	22	4.9	100.0%
Walgreens VII	Walgreens VII	Single-Tenant	Sep 2013	8	113	7.0	100.0%	Walgreens VII	Single-Tenant	Sep 2013	8	113	6.0	100.0%
O'Charley's I	O'Charley's I	Single-Tenant	Sep 2013	20	135	9.3	100.0%	O'Charley's I	Single-Tenant	Sep 2013	20	135	8.3	100.0%
Krystal I	Krystal I	Single-Tenant	Sep 2013	5	11	7.2	100.0%	Krystal I	Single-Tenant	Sep 2013	5	11	6.2	100.0%
1st Constitution Bancorp I	1st Constitution Bancorp I	Single-Tenant	Sep 2013	1	3	1.6	100.0%	1st Constitution Bancorp I	Single-Tenant	Sep 2013	1	3	0.6	100.0%
Tractor Supply II	Tractor Supply II	Single-Tenant	Oct 2013	1	23	1.3	100.0%	Tractor Supply II	Single-Tenant	Oct 2013	1	23	5.3	100.0%
National Tire & Battery II								National Tire & Battery II	Single-Tenant	Oct 2013	1	7	8.9	100.0%

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Portfolio	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased
United Healthcare I (5)		Single-Tenant	Oct 2013	1	400	—	—%
National Tire & Battery II		Single-Tenant	Oct 2013	1	7	9.9	100.0%
Tractor Supply III	Tractor Supply III	Single-Tenant	Oct 2013	1	19	5.8	100.0%	Tractor Supply III	Single-Tenant	Oct 2013	1	19	4.8	100.0%
Verizon Wireless	Verizon Wireless	Single-Tenant	Oct 2013	1	4	7.3	100.0%	Verizon Wireless	Single-Tenant	Oct 2013	1	4	6.3	100.0%
Dollar General XI	Dollar General XI	Single-Tenant	Oct 2013	1	9	4.8	100.0%	Dollar General XI	Single-Tenant	Oct 2013	1	9	3.8	100.0%
Talecris Plasma Resources I	Talecris Plasma Resources I	Single-Tenant	Oct 2013	1	22	0.8	100.0%	Talecris Plasma Resources I	Single-Tenant	Oct 2013	1	22	4.8	100.0%
Amazon I	Amazon I	Single-Tenant	Oct 2013	1	79	1.1	100.0%	Amazon I	Single-Tenant	Oct 2013	1	79	0.1	100.0%
Fresenius II	Fresenius II	Single-Tenant	Oct 2013	2	16	5.1	100.0%	Fresenius II	Single-Tenant	Oct 2013	2	16	4.1	100.0%
Dollar General XII	Dollar General XII	Single-Tenant	Nov 2013; Jan 2014	2	18	6.5	100.0%	Dollar General XII	Single-Tenant	Nov 2013; Jan 2014	2	18	5.5	100.0%
Dollar General XIII	Dollar General XIII	Single-Tenant	Nov 2013	1	9	9.4	100.0%	Dollar General XIII	Single-Tenant	Nov 2013	1	9	8.4	100.0%
Advance Auto II	Advance Auto II	Single-Tenant	Nov 2013	2	14	9.1	100.0%	Advance Auto II	Single-Tenant	Nov 2013	2	14	8.1	100.0%
FedEx Ground II	FedEx Ground II	Single-Tenant	Nov 2013	1	49	1.1	100.0%	FedEx Ground II	Single-Tenant	Nov 2013	1	49	5.1	100.0%
Burger King I		Single-Tenant	Nov 2013	41	169	15.3	100.0%
Burger King I (3)								Burger King I (3)	Single-Tenant	Nov 2013	41	169	15.0	69.6%
Dollar General XIV	Dollar General XIV	Single-Tenant	Nov 2013	3	27	5.9	100.0%	Dollar General XIV	Single-Tenant	Nov 2013	3	27	4.9	100.0%
Dollar General XV	Dollar General XV	Single-Tenant	Nov 2013	1	9	6.3	100.0%	Dollar General XV	Single-Tenant	Nov 2013	1	9	5.3	100.0%
FedEx Ground III		Single-Tenant	Nov 2013	1	24	1.2	100.0%
Dollar General XVI	Dollar General XVI	Single-Tenant	Nov 2013	1	9	3.4	100.0%	Dollar General XVI	Single-Tenant	Nov 2013	1	9	2.4	100.0%
Family Dollar V	Family Dollar V	Single-Tenant	Nov 2013	1	8	0.8	100.0%	Family Dollar V	Single-Tenant	Nov 2013	1	8	4.8	100.0%
CVS III	CVS III	Single-Tenant	Dec 2013	1	11	1.6	100.0%	CVS III	Single-Tenant	Dec 2013	1	11	0.6	100.0%
Mattress Firm III	Mattress Firm III	Single-Tenant	Dec 2013	1	5	6.0	100.0%	Mattress Firm III	Single-Tenant	Dec 2013	1	5	5.0	100.0%
Arby's II	Arby's II	Single-Tenant	Dec 2013	1	4	5.8	100.0%	Arby's II	Single-Tenant	Dec 2013	1	4	4.8	100.0%
Family Dollar VI	Family Dollar VI	Single-Tenant	Dec 2013	2	17	1.6	100.0%	Family Dollar VI	Single-Tenant	Dec 2013	2	17	2.7	100.0%
SAAB Sensis I	SAAB Sensis I	Single-Tenant	Dec 2013	1	91	2.8	100.0%	SAAB Sensis I	Single-Tenant	Dec 2013	1	91	6.3	100.0%
Citizens Bank I	Citizens Bank I	Single-Tenant	Dec 2013	9	31	8.9	100.0%	Citizens Bank I	Single-Tenant	Dec 2013	9	31	7.9	100.0%
Truist Bank II (2)		Single-Tenant	Jan 2014	13	74	6.7	66.4%
Truist Bank II								Truist Bank II	Single-Tenant	Jan 2014	8	49	5.7	100.0%
Mattress Firm IV	Mattress Firm IV	Single-Tenant	Jan 2014	1	5	2.2	100.0%	Mattress Firm IV	Single-Tenant	Jan 2014	1	5	1.2	100.0%
FedEx Ground IV	FedEx Ground IV	Single-Tenant	Jan 2014	1	59	6.0	100.0%	FedEx Ground IV	Single-Tenant	Jan 2014	1	59	5.0	100.0%
Mattress Firm V	Mattress Firm V	Single-Tenant	Jan 2014	1	6	1.3	100.0%	Mattress Firm V	Single-Tenant	Jan 2014	1	6	0.3	100.0%
Family Dollar VII	Family Dollar VII	Single-Tenant	Feb 2014	1	8	2.0	100.0%	Family Dollar VII	Single-Tenant	Feb 2014	1	8	1.0	100.0%
Aaron's I	Aaron's I	Single-Tenant	Feb 2014	1	8	1.2	100.0%	Aaron's I	Single-Tenant	Feb 2014	1	8	0.2	100.0%
AutoZone III	AutoZone III	Single-Tenant	Feb 2014	1	7	0.8	100.0%	AutoZone III	Single-Tenant	Feb 2014	1	7	9.8	100.0%
C&S Wholesale Grocer I (6)		Single-Tenant	Feb 2014	1	360	—	100.0%
Advance Auto III	Advance Auto III	Single-Tenant	Feb 2014	1	6	9.5	100.0%	Advance Auto III	Single-Tenant	Feb 2014	1	6	8.5	100.0%
Family Dollar VIII	Family Dollar VIII	Single-Tenant	Mar 2014	3	25	1.1	100.0%	Family Dollar VIII	Single-Tenant	Mar 2014	3	25	3.3	100.0%
Dollar General XVII	Dollar General XVII	Single-Tenant	Mar 2014; May 2014	3	27	5.8	100.0%	Dollar General XVII	Single-Tenant	Mar 2014; May 2014	3	27	4.8	100.0%
Truist Bank III (2)		Single-Tenant	Mar 2014	60	294	7.3	89.7%
Truist Bank III								Truist Bank III	Single-Tenant	Mar 2014	55	268	6.4	97.7%
Truist Bank IV	Truist Bank IV	Single-Tenant	Mar 2014	6	33	7.5	100.0%	Truist Bank IV	Single-Tenant	Mar 2014	6	33	6.5	100.0%
First Horizon Bank	First Horizon Bank	Single-Tenant	Mar 2014	8	40	6.8	100.0%	First Horizon Bank	Single-Tenant	Mar 2014	8	40	5.8	100.0%
Draper Aden Associates	Draper Aden Associates	Single-Tenant	Mar 2014	1	78	8.5	100.0%	Draper Aden Associates	Single-Tenant	Mar 2014	1	78	7.5	100.0%
Church of Jesus Christ	Church of Jesus Christ	Single-Tenant	Mar 2014	1	3	1.3	100.0%	Church of Jesus Christ	Single-Tenant	Mar 2014	1	3	0.3	100.0%
Dollar General XVIII	Dollar General XVIII	Single-Tenant	Mar 2014	1	9	5.8	100.0%	Dollar General XVIII	Single-Tenant	Mar 2014	1	9	4.8	100.0%
Family Dollar IX	Family Dollar IX	Single-Tenant	Apr 2014	1	8	1.8	100.0%	Family Dollar IX	Single-Tenant	Apr 2014	1	8	0.8	100.0%
Stop & Shop I	Stop & Shop I	Single-Tenant	May 2014	7	492	4.5	100.0%	Stop & Shop I	Single-Tenant	May 2014	3	219	3.5	100.0%
Bi-Lo I	Bi-Lo I	Single-Tenant	May 2014	1	56	—	—%	Bi-Lo I	Single-Tenant	May 2014	1	56	14.1	100.0%
Dollar General XIX	Dollar General XIX	Single-Tenant	May 2014	1	12	6.2	100.0%	Dollar General XIX	Single-Tenant	May 2014	1	12	5.2	100.0%
Dollar General XX	Dollar General XX	Single-Tenant	May 2014	5	49	4.8	100.0%	Dollar General XX	Single-Tenant	May 2014	5	49	3.8	100.0%
Dollar General XXI	Dollar General XXI	Single-Tenant	May 2014	1	9	6.2	100.0%	Dollar General XXI	Single-Tenant	May 2014	1	9	5.2	100.0%
Dollar General XXII	Dollar General XXII	Single-Tenant	May 2014	1	11	4.8	100.0%	Dollar General XXII	Single-Tenant	May 2014	1	11	3.8	100.0%
FedEx Ground V	FedEx Ground V	Single-Tenant	Feb 2016	1	46	3.1	100.0%	FedEx Ground V	Single-Tenant	Feb 2016	1	46	2.1	100.0%
FedEx Ground VI	FedEx Ground VI	Single-Tenant	Feb 2016	1	121	3.2	100.0%	FedEx Ground VI	Single-Tenant	Feb 2016	1	121	2.2	100.0%
FedEx Ground VII	FedEx Ground VII	Single-Tenant	Feb 2016	1	42	3.3	100.0%	FedEx Ground VII	Single-Tenant	Feb 2016	1	42	2.3	100.0%
FedEx Ground VIII	FedEx Ground VIII	Single-Tenant	Feb 2016	1	79	3.3	100.0%	FedEx Ground VIII	Single-Tenant	Feb 2016	1	79	2.3	100.0%
Liberty Crossing								Liberty Crossing	Multi-Tenant	Feb 2017	1	106	4.1	93.2%
San Pedro Crossing								San Pedro Crossing	Multi-Tenant	Feb 2017	1	207	7.0	97.4%
Tiffany Springs MarketCenter								Tiffany Springs MarketCenter	Multi-Tenant	Feb 2017	1	265	3.3	86.6%
The Streets of West Chester								The Streets of West Chester	Multi-Tenant	Feb 2017	1	237	7.7	92.1%

4954

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Portfolio	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased
Liberty Crossing		Multi-Tenant	Feb 2017	1	106	3.4	91.6%
San Pedro Crossing		Multi-Tenant	Feb 2017	1	207	4.0	87.8%
Tiffany Springs MarketCenter		Multi-Tenant	Feb 2017	1	265	3.4	86.5%
The Streets of West Chester		Multi-Tenant	Feb 2017	1	237	8.4	87.0%
Prairie Towne Center	Prairie Towne Center	Multi-Tenant	Feb 2017	1	264	8.3	78.6%	Prairie Towne Center	Multi-Tenant	Feb 2017	1	264	6.1	92.5%
Southway Shopping Center	Southway Shopping Center	Multi-Tenant	Feb 2017	1	182	4.7	100.0%	Southway Shopping Center	Multi-Tenant	Feb 2017	1	182	4.5	100.0%
Stirling Slidell Centre		Multi-Tenant	Feb 2017	1	208	1.1	63.5%
Stirling Slidell Centre (8)								Stirling Slidell Centre (8)	Multi-Tenant	Feb 2017	1	208	3.0	56.6%
Northwoods Marketplace	Northwoods Marketplace	Multi-Tenant	Feb 2017	1	236	3.1	98.3%	Northwoods Marketplace	Multi-Tenant	Feb 2017	1	236	4.7	97.8%
Centennial Plaza	Centennial Plaza	Multi-Tenant	Feb 2017	1	234	1.4	99.5%	Centennial Plaza	Multi-Tenant	Feb 2017	1	234	3.7	100.0%
Northlake Commons	Northlake Commons	Multi-Tenant	Feb 2017	1	109	4.2	90.3%	Northlake Commons	Multi-Tenant	Feb 2017	1	109	3.5	93.3%
Shops at Shelby Crossing	Shops at Shelby Crossing	Multi-Tenant	Feb 2017	1	236	4.2	95.1%	Shops at Shelby Crossing	Multi-Tenant	Feb 2017	1	236	4.5	87.7%
Shoppes of West Melbourne		Multi-Tenant	Feb 2017	1	144	6.3	96.3%
The Centrum		Multi-Tenant	Feb 2017	1	274	9.6	82.0%
Shoppes of West Melbourne (7)								Shoppes of West Melbourne (7)	Multi-Tenant	Feb 2017	1	144	5.6	78.2%
The Centrum (8)								The Centrum (8)	Multi-Tenant	Feb 2017	1	274	8.9	86.4%
Shoppes at Wyomissing	Shoppes at Wyomissing	Multi-Tenant	Feb 2017	1	103	3.0	58.7%	Shoppes at Wyomissing	Multi-Tenant	Feb 2017	1	103	2.5	58.7%
Southroads Shopping Center	Southroads Shopping Center	Multi-Tenant	Feb 2017	1	409	3.8	82.6%	Southroads Shopping Center	Multi-Tenant	Feb 2017	1	409	4.7	83.3%
Parkside Shopping Center	Parkside Shopping Center	Multi-Tenant	Feb 2017	1	183	3.6	79.6%	Parkside Shopping Center	Multi-Tenant	Feb 2017	1	183	2.8	83.8%
Colonial Landing		Multi-Tenant	Feb 2017	1	264	6.8	93.3%
The Shops at West End (3)		Multi-Tenant	Feb 2017	1	382	6.6	80.6%
Colonial Landing (7)								Colonial Landing (7)	Multi-Tenant	Feb 2017	1	264	6.2	95.1%
Township Marketplace	Township Marketplace	Multi-Tenant	Feb 2017	1	299	4.5	85.1%	Township Marketplace	Multi-Tenant	Feb 2017	1	289	4.1	89.9%
Cross Pointe Centre		Multi-Tenant	Feb 2017	1	226	9.0	98.6%
Towne Centre Plaza		Multi-Tenant	Feb 2017	1	94	3.7	100.0%
Cross Pointe Centre (7)								Cross Pointe Centre (7)	Multi-Tenant	Feb 2017	1	226	14.5	98.6%
Towne Centre Plaza (7)								Towne Centre Plaza (7)	Multi-Tenant	Feb 2017	1	94	3.9	100.0%
Village at Quail Springs	Village at Quail Springs	Multi-Tenant	Feb 2017	1	100	5.0	100.0%	Village at Quail Springs	Multi-Tenant	Feb 2017	1	100	4.0	100.0%
Pine Ridge Plaza		Multi-Tenant	Feb 2017	1	239	2.7	95.8%
Bison Hollow		Multi-Tenant	Feb 2017	1	135	2.4	100.0%
Pine Ridge Plaza (7)								Pine Ridge Plaza (7)	Multi-Tenant	Feb 2017	1	239	4.1	85.8%
Bison Hollow (7)								Bison Hollow (7)	Multi-Tenant	Feb 2017	1	135	1.3	100.0%
Jefferson Commons	Jefferson Commons	Multi-Tenant	Feb 2017	1	206	4.9	97.0%	Jefferson Commons	Multi-Tenant	Feb 2017	1	206	4.0	97.9%
Northpark Center	Northpark Center	Multi-Tenant	Feb 2017	1	318	4.3	97.2%	Northpark Center	Multi-Tenant	Feb 2017	1	318	3.8	98.3%
Anderson Station		Multi-Tenant	Feb 2017	1	244	4.8	100.0%
Patton Creek		Multi-Tenant	Feb 2017	1	491	3.0	73.7%
Anderson Station (7)								Anderson Station (7)	Multi-Tenant	Feb 2017	1	244	3.9	99.5%
Patton Creek (7)								Patton Creek (7)	Multi-Tenant	Feb 2017	1	491	2.4	68.9%
North Lakeland Plaza	North Lakeland Plaza	Multi-Tenant	Feb 2017	1	171	3.1	98.0%	North Lakeland Plaza	Multi-Tenant	Feb 2017	1	171	2.3	97.1%
Riverbend Marketplace	Riverbend Marketplace	Multi-Tenant	Feb 2017	1	143	3.1	89.5%	Riverbend Marketplace	Multi-Tenant	Feb 2017	1	143	2.2	93.1%
Montecito Crossing	Montecito Crossing	Multi-Tenant	Feb 2017	1	180	3.9	83.8%	Montecito Crossing	Multi-Tenant	Feb 2017	1	180	5.2	81.3%
Best on the Boulevard	Best on the Boulevard	Multi-Tenant	Feb 2017	1	205	3.4	93.3%	Best on the Boulevard	Multi-Tenant	Feb 2017	1	205	3.6	94.9%
Shops at RiverGate South	Shops at RiverGate South	Multi-Tenant	Feb 2017	1	145	4.1	93.4%	Shops at RiverGate South	Multi-Tenant	Feb 2017	1	145	3.1	93.4%
Dollar General XXIII	Dollar General XXIII	Single-Tenant	Mar 2017; May 2017; Jun 2017	8	71	7.1	100.0%	Dollar General XXIII	Single-Tenant	Mar 2017; May 2017; Jun 2017	8	71	6.1	100.0%
Jo-Ann Fabrics I	Jo-Ann Fabrics I	Single-Tenant	Apr 2017	1	18	2.6	100.0%	Jo-Ann Fabrics I	Single-Tenant	Apr 2017	1	18	1.6	100.0%
Bob Evans I		Single-Tenant	Apr 2017	22	111	14.8	100.0%
FedEx Ground IX	FedEx Ground IX	Single-Tenant	May 2017	1	54	3.9	100.0%	FedEx Ground IX	Single-Tenant	May 2017	1	54	2.9	100.0%
Chili's II	Chili's II	Single-Tenant	May 2017	1	6	5.3	100.0%	Chili's II	Single-Tenant	May 2017	1	6	4.3	100.0%
Sonic Drive In I	Sonic Drive In I	Single-Tenant	Jun 2017	2	3	10.0	100.0%	Sonic Drive In I	Single-Tenant	Jun 2017	2	3	9.0	100.0%
Bridgestone HOSEPower I	Bridgestone HOSEPower I	Single-Tenant	Jun 2017	2	41	7.1	100.0%	Bridgestone HOSEPower I	Single-Tenant	Jun 2017	2	41	6.1	100.0%
Bridgestone HOSEPower II	Bridgestone HOSEPower II	Single-Tenant	Jul 2017	1	25	7.3	100.0%	Bridgestone HOSEPower II	Single-Tenant	Jul 2017	1	25	6.3	100.0%
FedEx Ground X	FedEx Ground X	Single-Tenant	Jul 2017	1	142	5.0	100.0%	FedEx Ground X	Single-Tenant	Jul 2017	1	142	4.0	100.0%
Chili's III	Chili's III	Single-Tenant	Aug 2017	1	6	5.3	100.0%	Chili's III	Single-Tenant	Aug 2017	1	6	4.3	100.0%
FedEx Ground XI	FedEx Ground XI	Single-Tenant	Sep 2017	1	29	5.0	100.0%	FedEx Ground XI	Single-Tenant	Sep 2017	1	29	4.0	100.0%
Hardee's I	Hardee's I	Single-Tenant	Sep 2017	1	4	—	—%	Hardee's I	Single-Tenant	Sep 2017	1	4	—	—%
Tractor Supply IV	Tractor Supply IV	Single-Tenant	Oct 2017	2	51	4.4	100.0%	Tractor Supply IV	Single-Tenant	Oct 2017	2	51	3.4	100.0%
Circle K II	Circle K II	Single-Tenant	Nov 2017	6	20	15.0	100.0%	Circle K II	Single-Tenant	Nov 2017	6	20	14.2	100.0%
Sonic Drive In II	Sonic Drive In II	Single-Tenant	Nov 2017	20	31	15.4	100.0%	Sonic Drive In II	Single-Tenant	Nov 2017	20	31	14.4	100.0%
Bridgestone HOSEPower III	Bridgestone HOSEPower III	Single-Tenant	Dec 2017	1	21	8.0	100.0%	Bridgestone HOSEPower III	Single-Tenant	Dec 2017	1	21	7.0	100.0%
Sonny's BBQ I	Sonny's BBQ I	Single-Tenant	Jan 2018	3	19	11.6	100.0%	Sonny's BBQ I	Single-Tenant	Jan 2018	3	19	10.6	100.0%
Mountain Express I		Single-Tenant	Jan 2018	9	30	15.5	100.0%
Mountain Express I (6)								Mountain Express I (6)	Single-Tenant	Jan 2018	9	30	14.6	100.0%
Kum & Go I	Kum & Go I	Single-Tenant	Feb 2018	1	5	5.9	100.0%	Kum & Go I	Single-Tenant	Feb 2018	1	5	4.9	100.0%
DaVita I								DaVita I	Single-Tenant	Feb 2018	2	13	2.7	100.0%
Imperial I								Imperial I	Single-Tenant	Mar 2018	9	22	17.4	100.0%
Mountain Express II (6)								Mountain Express II (6)	Single-Tenant	Jun 2018	15	59	14.9	100.0%
Dialysis I								Dialysis I	Single-Tenant	Jul 2018	7	65	6.0	100.0%
Children of America I								Children of America I	Single-Tenant	Aug 2018	2	33	10.2	79.7%
Burger King II								Burger King II	Single-Tenant	Aug 2018	1	3	10.2	100.0%

5055

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Portfolio	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased	Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased
DaVita I		Single-Tenant	Feb 2018	2	13	3.7	100.0%
Imperial I		Single-Tenant	Mar 2018	9	22	18.4	100.0%
Mountain Express II		Single-Tenant	Jun 2018	15	59	15.8	100.0%
Dialysis I		Single-Tenant	Jul 2018	7	65	5.8	100.0%
Children of America I		Single-Tenant	Aug 2018	2	33	11.2	79.7%
Burger King II		Single-Tenant	Aug 2018	1	3	11.2	100.0%
Imperial II	Imperial II	Single-Tenant	Aug 2018	9	18	18.4	100.0%	Imperial II	Single-Tenant	Aug 2018	9	18	17.4	100.0%
Bob Evans II		Single-Tenant	Aug 2018	22	112	14.8	100.0%
Mountain Express III		Single-Tenant	Sep 2018	14	47	16.1	100.0%
Mountain Express III (6)								Mountain Express III (6)	Single-Tenant	Sep 2018	14	47	15.1	100.0%
Taco John's	Taco John's	Single-Tenant	Sep 2018	7	15	11.3	100.0%	Taco John's	Single-Tenant	Sep 2018	7	15	10.3	100.0%
HIFZA Trading	HIFZA Trading	Single-Tenant	Oct 2018	1	4	18.5	100.0%	HIFZA Trading	Single-Tenant	Oct 2018	1	4	17.5	100.0%
DaVita II	DaVita II	Single-Tenant	Oct 2018	1	10	5.2	100.0%	DaVita II	Single-Tenant	Oct 2018	1	10	4.2	100.0%
Pizza Hut I	Pizza Hut I	Single-Tenant	Oct 2018	9	23	11.3	100.0%	Pizza Hut I	Single-Tenant	Oct 2018	9	23	10.3	100.0%
Little Caesars I	Little Caesars I	Single-Tenant	Dec 2018	11	19	16.5	100.0%	Little Caesars I	Single-Tenant	Dec 2018	11	19	15.5	100.0%
Caliber Collision I	Caliber Collision I	Single-Tenant	Dec 2018	3	48	9.8	100.0%	Caliber Collision I	Single-Tenant	Dec 2018	3	48	8.8	100.0%
Tractor Supply V	Tractor Supply V	Single-Tenant	Dec 2018; Mar 2019	5	97	9.2	100.0%	Tractor Supply V	Single-Tenant	Dec 2018; Mar 2019	5	97	8.2	100.0%
Fresenius III	Fresenius III	Single-Tenant	Jan 2019	6	44	5.5	100.0%	Fresenius III	Single-Tenant	Jan 2019	6	44	5.9	100.0%
Pizza Hut II	Pizza Hut II	Single-Tenant	Jan 2019	30	86	16.6	100.0%	Pizza Hut II	Single-Tenant	Jan 2019	30	86	15.6	100.0%
Mountain Express IV		Single-Tenant	Feb 2019	8	28	16.6	100.0%
Mountain Express V		Single-Tenant	Feb 2019; Mar 2019; Apr 2019	18	96	16.7	100.0%
Mountain Express IV (6)								Mountain Express IV (6)	Single-Tenant	Feb 2019	8	28	15.5	100.0%
Mountain Express V (6)								Mountain Express V (6)	Single-Tenant	Feb 2019; Mar 2019; Apr 2019	18	96	15.0	100.0%
Fresenius IV	Fresenius IV	Single-Tenant	Mar 2019	1	9	9.4	100.0%	Fresenius IV	Single-Tenant	Mar 2019	1	9	8.4	100.0%
Mountain Express VI		Single-Tenant	Jun 2019	1	3	16.6	100.0%
IMTAA		Single-Tenant	May 2019; Jan 2020	12	40	17.0	100.0%
Mountain Express VI (6)								Mountain Express VI (6)	Single-Tenant	Jun 2019	1	3	15.6	100.0%
IMTAA (4)								IMTAA (4)	Single-Tenant	May 2019; Jan 2020	12	40	14.6	100.0%
Pizza Hut III	Pizza Hut III	Single-Tenant	May 2019; Jun 2019	13	47	16.9	100.0%	Pizza Hut III	Single-Tenant	May 2019; Jun 2019	13	47	15.9	100.0%
Fresenius V	Fresenius V	Single-Tenant	Jun 2019	2	19	9.9	100.0%	Fresenius V	Single-Tenant	Jun 2019	2	19	8.9	100.0%
Fresenius VI	Fresenius VI	Single-Tenant	Jun 2019	1	10	4.5	100.0%	Fresenius VI	Single-Tenant	Jun 2019	1	10	3.5	100.0%
Fresenius VII	Fresenius VII	Single-Tenant	Jun 2019	3	59	8.2	50.1%	Fresenius VII	Single-Tenant	Jun 2019	3	59	7.2	50.1%
Caliber Collision II	Caliber Collision II	Single-Tenant	Aug 2019	1	19	6.8	100.0%	Caliber Collision II	Single-Tenant	Aug 2019	1	19	5.8	100.0%
Dollar General XXV	Dollar General XXV	Single-Tenant	Sep 2019	5	44	8.5	100.0%	Dollar General XXV	Single-Tenant	Sep 2019	5	44	7.5	100.0%
Dollar General XXIV	Dollar General XXIV	Single-Tenant	Sep 2019; Oct 2019	9	82	12.1	100.0%	Dollar General XXIV	Single-Tenant	Sep 2019; Oct 2019	9	82	11.1	100.0%
Mister Carwash I	Mister Carwash I	Single-Tenant	Sep 2019	3	13	17.3	100.0%	Mister Carwash I	Single-Tenant	Sep 2019	3	13	16.3	100.0%
Checkers I	Checkers I	Single-Tenant	Sep 2019	1	1	17.2	100.0%	Checkers I	Single-Tenant	Sep 2019	1	1	16.2	100.0%
DaVita III	DaVita III	Single-Tenant	Sep 2019; Mar 2020	2	20	7.1	100.0%	DaVita III	Single-Tenant	Sep 2019; Mar 2020	2	20	6.1	100.0%
Dialysis II	Dialysis II	Single-Tenant	Sep 2019	50	426	6.6	100.0%	Dialysis II	Single-Tenant	Sep 2019	50	426	6.1	100.0%
Mister Carwash II	Mister Carwash II	Single-Tenant	Nov 2019	2	8	17.4	100.0%	Mister Carwash II	Single-Tenant	Nov 2019	2	8	16.4	100.0%
Advance Auto IV	Advance Auto IV	Single-Tenant	Dec 2019; Jan 2020	14	96	7.0	100.0%	Advance Auto IV	Single-Tenant	Dec 2019; Jan 2020	14	96	6.0	100.0%
Advance Auto V	Advance Auto V	Single-Tenant	Dec 2019	11	73	7.9	100.0%	Advance Auto V	Single-Tenant	Dec 2019	11	73	6.9	100.0%
Dollar General XXVI	Dollar General XXVI	Single-Tenant	Dec 2019	12	114	9.9	100.0%	Dollar General XXVI	Single-Tenant	Dec 2019	12	114	8.9	100.0%
Pizza Hut IV	Pizza Hut IV	Single-Tenant	Dec 2019; Mar 2020	16	50	17.5	100.0%	Pizza Hut IV	Single-Tenant	Dec 2019; Mar 2020	16	50	16.5	100.0%
American Car Center I		Single-Tenant	Mar 2020	16	178	17.8	100.0%
American Car Center I (5)								American Car Center I (5)	Single-Tenant	Mar 2020	14	163	—	—%
BJ's Wholesale Club	BJ's Wholesale Club	Single-Tenant	Mar 2020	1	110	8.3	100.0%	BJ's Wholesale Club	Single-Tenant	Mar 2020	1	110	7.3	100.0%
Mammoth Car Wash	Mammoth Car Wash	Single-Tenant	Mar 2020	9	56	17.8	100.0%	Mammoth Car Wash	Single-Tenant	Mar 2020	9	56	16.8	100.0%
Mammoth Car Wash	Mammoth Car Wash	Single-Tenant	Apr 2020	1	18	17.8	100.0%	Mammoth Car Wash	Single-Tenant	Apr 2020	1	18	16.8	100.0%
Mammoth Car Wash	Mammoth Car Wash	Single-Tenant	Apr 2020	1	4	17.8	100.0%	Mammoth Car Wash	Single-Tenant	Apr 2020	1	4	16.8	100.0%
DaVita IV	DaVita IV	Single-Tenant	Apr 2020	1	10	9.0	100.0%	DaVita IV	Single-Tenant	Apr 2020	1	10	8.0	100.0%
GPM	GPM	Single-Tenant	Jul. 2020	30	112	13.9	100.0%	GPM	Single-Tenant	Jul. 2020	30	112	12.9	100.0%
IMTAA II		Single-Tenant	Aug 2020; Dec 2020	10	54	13.2	100.0%
IMTAA II (4)								IMTAA II (4)	Single-Tenant	Aug 2020; Dec 2020	10	54	14.6	100.0%
Fresenius IX	Fresenius IX	Single-Tenant	Nov 2020	6	46	8.7	100.0%	Fresenius IX	Single-Tenant	Nov 2020	6	46	7.7	100.0%
Kalma Kaur	Kalma Kaur	Single-Tenant	Dec 2020	10	37	18.5	100.0%	Kalma Kaur	Single-Tenant	Dec 2020	10	37	17.5	100.0%
Dialysis III	Dialysis III	Single-Tenant	Dec 2020	16	139	4.0	100.0%	Dialysis III	Single-Tenant	Dec 2020	16	139	4.5	100.0%
National Convenience Distributors	National Convenience Distributors	Single-Tenant	Mar 2021	5	385	18.8	100.0%	National Convenience Distributors	Single-Tenant	Mar 2021	5	385	17.8	100.0%
Advance Auto VI	Advance Auto VI	Single-Tenant	Mar 2021	2	14	5.0	100.0%	Advance Auto VI	Single-Tenant	Mar 2021	2	14	4.0	100.0%
Dollar General XXVII								Dollar General XXVII	Single-Tenant	May 2021; Sept 2021	17	162	4.6	100.0%
Pick N'Save								Pick N'Save	Single-Tenant	Jun 2021	1	61	5.5	100.0%
Tidal Wave I								Tidal Wave I	Single-Tenant	Jul 2021	14	54	18.0	100.0%
Imperial Reliance								Imperial Reliance	Single-Tenant	Jul 2021	2	4	18.1	100.0%
Aaron's II								Aaron's II	Single-Tenant	Aug 2021	16	139	3.9	100.0%
Heritage I								Heritage I	Single-Tenant	Dec 2021; Jan 2022	6	51	18.5	100.0%
Fidelity I								Fidelity I	Single-Tenant	Dec 2021; Sept 2022	7	82	19.4	100.0%

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Table of Contents

Portfolio Segment Acquisition Date Number of
Properties
Rentable Square Feet
(In thousands)
Remaining Lease Term (1)
Percentage Leased
Dollar General XXVII Single-Tenant May 2021; Sept 2021 17 162 5.6 100.0%
Pick N'Save Single-Tenant Jun 2021 1 61 6.5 100.0%
Tidal Wave I Single-Tenant Jul 2021 14 54 19.0 100.0%
Imperial Reliance Single-Tenant Jul 2021 2 4 19.1 100.0%
Aaron's II Single-Tenant Aug 2021 16 139 5.0 100.0%
Heritage I Single-Tenant Dec 2021; Jan 2022 6 51 19.5 100.0%
Fidelity I Single-Tenant Dec 2021 6 55 19.5 100.0%
BJ's Wholesale Club II Single-Tenant Jan 2022 1 68 6.3 100.0%
McCain Plaza Multi-Tenant Jan 2022 1 308 4.3 96.6%
Ventura Place (4)
Multi-Tenant Feb. 2022 1 67 5.6 92.5%
Market at Clifty Crossing (4)
Multi-Tenant Feb. 2022 1 198 2.3 77.1%
Crosspoint Shopping Center (4)
Multi-Tenant Feb. 2022 1 170 4.7 88.7%
Melody Mountain (4)
Multi-Tenant Feb. 2022 1 66 1.5 100.0%
Owensboro Town Center (4)
Multi-Tenant Feb. 2022 1 165 2.9 91.8%
Plainfield Marketplace (4)
Multi-Tenant Feb. 2022 1 125 1.1 85.0%
Pecanland Plaza (4)
Multi-Tenant Feb. 2022 1 112 3.5 93.6%
Mattress Firm & Aspen Dental (4)
Multi-Tenant Feb. 2022 1 10 2.1 34.9%
Mattress Firm & Five Guys (4)
Multi-Tenant Feb. 2022 1 8 5.5 100.0%
Shoppes at Stroud (4)
Multi-Tenant Feb. 2022 1 141 4.6 94.3%
FreshThyme & DSW (4)
Multi-Tenant Feb. 2022 1 49 1.9 100.0%
Carlisle Crossing (4)
Multi-Tenant Feb. 2022 1 152 2.9 76.2%
Shippensburg Marketplace (4)
Multi-Tenant Feb. 2022 1 60 5.7 84.3%
Shouthwest Plaza (4)
Multi-Tenant Feb. 2022 1 368 3.5 68.5%
Lord Salisbury Center (4)
Multi-Tenant Feb. 2022 1 114 3.9 81.2%
Derby Marketplace (4)
Multi-Tenant Feb. 2022 1 100 6.0 100.0%
Fairlane Green (4)
Multi-Tenant Feb. 2022 1 95 5.1 100.0%
Shoe Carnival & Buffalo Wild Wings (4)
Multi-Tenant Feb. 2022 1 15 5.3 100.0%
Tellico Village (4)
Multi-Tenant Feb. 2022 1 41 5.7 100.0%
Triangle Town Place (4)
Multi-Tenant Feb. 2022 1 149 4.3 93.9%
Mattress Firm & Panera Bread (4)
Multi-Tenant Feb. 2022 1 9 5.6 100.0%
Enid Crossing (4)
Multi-Tenant Feb. 2022 1 48 3.5 100.0%
Dick's PetSmart Center (4)
Multi-Tenant Feb. 2022 1 52 3.6 100.0%
Rolling Acres (4)
Multi-Tenant Feb. 2022 1 189 3.7 89.3%
Mattress Firm & Kay Jewelers (4)
Multi-Tenant Feb. 2022 1 7 3.4 100.0%
Fountain Square (4)
Multi-Tenant Feb. 2022 1 166 3.4 77.2%
Shops at Abilene (4)
Multi-Tenant Feb. 2022 1 176 3.3 97.3%
Shoppes of Gary Farms (4)
Multi-Tenant Feb. 2022 1 100 1.6 95.5%
Brynwood Square (4)
Multi-Tenant Feb. 2022 1 121 1.9 18.3%
PetSmart & Old Navy (4)
Multi-Tenant Feb. 2022 1 29 7.9 100.0%
Crossroads Annex (4)
Multi-Tenant Feb. 2022 1 41 2.1 100.0%
Crossroads Commons (4)
Multi-Tenant Feb. 2022 1 47 3.0 100.0%
Sutters Creek (4)
Multi-Tenant Feb. 2022 1 80 6.7 100.0%
Darien Towne Center (4)
Multi-Tenant Feb. 2022 1 177 2.5 93.1%
Westover Market (4)
Multi-Tenant Feb. 2022 1 61 6.0 100.0%
Summerfield Crossing (4)
Multi-Tenant Feb. 2022 1 114 6.5 100.0%
University Marketplace (4)
Multi-Tenant Feb. 2022 1 86 4.3 100.0%
The Market at Polaris (4)
Multi-Tenant Feb. 2022 1 111 5.3 64.8%
Beaver Creek Shopping Center (4)
Multi-Tenant Feb. 2022 1 284 4.2 88.0%
Wallace Commons (4)
Multi-Tenant Feb. 2022 1 111 4.6 100.0%
Plaza San Mateo (4)
Multi-Tenant Feb. 2022 1 63 2.6 98.1%
Turfway Crossing (4)
Multi-Tenant Feb. 2022 1 100 0.9 95.0%
Nordstrom Rack (4)
Multi-Tenant Feb. 2022 1 45 8.5 97.7%


Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased
BJ's Wholesale Club II	Single-Tenant	Jan 2022	1	68	5.3	100.0%
McCain Plaza (7)	Multi-Tenant	Jan 2022	1	308	3.1	88.4%
Ventura Place (2)	Multi-Tenant	Feb. 2022	1	67	5.3	96.1%
Market at Clifty Crossing (2)	Multi-Tenant	Feb. 2022	1	198	3.8	77.1%
Crosspoint Shopping Center (2) (8) (9)	Multi-Tenant	Feb. 2022	1	170	4.1	91.6%
Melody Mountain (2)	Multi-Tenant	Feb. 2022	1	66	1.5	100.0%
Owensboro Town Center (2)	Multi-Tenant	Feb. 2022	1	165	4.2	90.5%
Plainfield Marketplace (2)	Multi-Tenant	Feb. 2022	1	125	4.1	89.4%
Pecanland Plaza (2)	Multi-Tenant	Feb. 2022	1	112	4.2	98.1%
Mattress Firm & Aspen Dental (2)	Multi-Tenant	Feb. 2022	1	10	1.1	34.9%
Mattress Firm & Five Guys (2)	Multi-Tenant	Feb. 2022	1	8	4.5	100.0%
Shoppes at Stroud (2) (7)	Multi-Tenant	Feb. 2022	1	141	5.0	94.3%
FreshThyme & DSW (2)	Multi-Tenant	Feb. 2022	1	49	2.7	100.0%
Carlisle Crossing (2)	Multi-Tenant	Feb. 2022	1	152	4.7	90.4%
Shippensburg Marketplace (2)	Multi-Tenant	Feb. 2022	1	60	5.1	84.3%
Southwest Plaza (2) (7) (8)	Multi-Tenant	Feb. 2022	1	368	6.1	80.9%
Lord Salisbury Center (2)	Multi-Tenant	Feb. 2022	1	114	4.3	100.0%
Derby Marketplace (2)	Multi-Tenant	Feb. 2022	1	100	5.0	100.0%
Fairlane Green (2)	Multi-Tenant	Feb. 2022	1	95	7.1	52.6%
Shoe Carnival & Buffalo Wild Wings (2)	Multi-Tenant	Feb. 2022	1	15	4.3	100.0%
Tellico Village (2)	Multi-Tenant	Feb. 2022	1	42	4.9	97.2%
Triangle Town Place (2) (7)	Multi-Tenant	Feb. 2022	1	149	3.3	93.9%
Mattress Firm & Panera Bread (2)	Multi-Tenant	Feb. 2022	1	9	4.6	100.0%
Enid Crossing (2)	Multi-Tenant	Feb. 2022	1	48	2.5	100.0%
Dick's PetSmart Center (2)	Multi-Tenant	Feb. 2022	1	52	2.6	100.0%
Rolling Acres (2)	Multi-Tenant	Feb. 2022	1	189	3.2	94.4%
Mattress Firm & Kay Jewelers (2)	Multi-Tenant	Feb. 2022	1	7	2.4	100.0%
Fountain Square (2) (7)	Multi-Tenant	Feb. 2022	1	166	2.4	73.4%
Shops at Abilene (2) (7)	Multi-Tenant	Feb. 2022	1	176	2.4	97.3%
Shoppes of Gary Farms (2) (7)	Multi-Tenant	Feb. 2022	1	100	3.9	71.9%
PetSmart & Old Navy (2)	Multi-Tenant	Feb. 2022	1	29	6.9	100.0%
Crossroads Annex (2)	Multi-Tenant	Feb. 2022	1	41	6.3	100.0%
Crossroads Commons (2) (7)	Multi-Tenant	Feb. 2022	1	47	4.7	100.0%
Sutters Creek (2)	Multi-Tenant	Feb. 2022	1	80	5.7	100.0%
Darien Towne Center (2)	Multi-Tenant	Feb. 2022	1	177	1.1	93.1%
Summerfield Crossing (2)	Multi-Tenant	Feb. 2022	1	114	7.5	100.0%
University Marketplace (2)	Multi-Tenant	Feb. 2022	1	86	4.5	100.0%
The Market at Polaris (2)	Multi-Tenant	Feb. 2022	1	111	4.4	68.4%
Beaver Creek Shopping Center (2)	Multi-Tenant	Feb. 2022	1	284	5.3	88.7%
Wallace Commons (2)	Multi-Tenant	Feb. 2022	1	111	4.5	100.0%
Plaza San Mateo (2) (7)	Multi-Tenant	Feb. 2022	1	63	1.6	96.2%
Turfway Crossing (2) (9)	Multi-Tenant	Feb. 2022	1	100	4.1	95.0%
Nordstrom Rack (2)	Multi-Tenant	Feb. 2022	1	45	7.5	97.7%
Evergreen Marketplace (2)	Multi-Tenant	Feb. 2022	1	50	4.3	100.0%
Lawton Marketplace (2)	Multi-Tenant	Feb. 2022	1	197	6.1	81.1%
Cottonwood Commons (2)	Multi-Tenant	Feb. 2022	1	192	5.3	86.1%
Houma Crossing (2)	Multi-Tenant	Feb. 2022	1	181	6.5	84.0%
Target Center (2)	Multi-Tenant	Feb. 2022	1	84	3.3	43.2%
The Center at Hobbs Brook (2)	Multi-Tenant	Feb. 2022	1	231	3.8	87.4%
Fourth Creek Landing (2)	Multi-Tenant	Feb. 2022	1	68	4.8	100.0%
Lafayette Pavillion (2) (8)	Multi-Tenant	Feb. 2022	1	382	6.6	85.7%
North Lake Square (2)	Multi-Tenant	Feb. 2022	1	140	5.7	99.0%

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Portfolio Segment Acquisition Date Number of
Properties
Rentable Square Feet
(In thousands)
Remaining Lease Term (1)
Percentage Leased
Evergreen Marketplace (4)
Multi-Tenant Feb. 2022 1 50 2.5 100.0%
Lawton Marketplace (4)
Multi-Tenant Feb. 2022 1 188 6.1 83.8%
Blankenbaker Plaza (3) (4)
Multi-Tenant Feb. 2022 1 88 3.9 81.6%
Cottonwood Commons (4)
Multi-Tenant Feb. 2022 1 192 5.8 86.5%
Houma Crossing (4)
Multi-Tenant Feb. 2022 1 181 5.5 56.3%
Target Center (4)
Multi-Tenant Feb. 2022 1 84 0.9 100.0%
The Center at Hobbs Brook (4)
Multi-Tenant Feb. 2022 1 231 4.1 89.5%
Fourth Creek Landing (4)
Multi-Tenant Feb. 2022 1 68 4.0 100.0%
Lafayette Pavillion (4)
Multi-Tenant Feb. 2022 1 382 5.7 71.7%
North Lake Square (4)
Multi-Tenant Feb. 2022 1 140 6.6 100.0%
Western Crossing (4)
Multi-Tenant Feb. 2022 1 68 6.9 100.0%
Almeda Crossing (4)
Multi-Tenant Mar. 2022 1 223 3.5 79.9%
Boston Commons (4)
Multi-Tenant Mar. 2022 1 103 5.9 95.5%
Wallace Commons (4)
Single-Tenant Apr. 2022 1 99 4.8 100.0%
Academy Sports (4)
Single-Tenant Apr. 2022 1 72 8.6 100.0%
Walgreens (4)
Multi-Tenant Apr. 2022 1 15 3.9 100.0%
Parkway Centre South (4)
Multi-Tenant Apr. 2022 1 132 4.2 85.0%
The Marquis (4)
Multi-Tenant Apr. 2022 1 135 5.6 66.6%
HEB Center (4)
Multi-Tenant Apr. 2022 1 115 4.6 95.8%
Bed Bath & Beyond/Golfsmith (4)
Multi-Tenant Apr. 2022 1 101 2.5 100.0%
Walgreens & KeyBank (4)
Multi-Tenant Apr. 2022 1 18 11.6 100.0%
Terrell Mill Village (4)
Multi-Tenant Apr. 2022 1 75 6.3 92.7%
Fresh Market Center (4)
Multi-Tenant Apr. 2022 1 32 3.5 88.8%
Decatur Commons (4)
Multi-Tenant Apr. 2022 1 126 3.2 65.7%
Stoneridge Village (4)
Multi-Tenant Apr. 2022 1 72 3.5 100.0%
Albany Square (4)
Multi-Tenant Apr. 2022 1 118 2.1 94.8%
Coventry Crossing (4)
Multi-Tenant Apr. 2022 1 21 9.5 94.9%
Springfield Commons (4)
Multi-Tenant Apr. 2022 1 207 6.3 95.3%
Waterford Park South (4)
Multi-Tenant Apr. 2022 1 92 5.4 87.5%
The Ridge at Turtle Creek (4)
Multi-Tenant Apr. 2022 1 99 9.8 94.4%
Tire Kingdom & Starbucks (4)
Multi-Tenant Apr. 2022 1 7 7.7 100.0%
Walmart Neighborhood Market (4)
Multi-Tenant Apr. 2022 1 51 9.6 100.0%
Harbor Town Center (4)
Multi-Tenant Apr. 2022 1 139 4.7 100.0%
East West Commons (4)
Multi-Tenant Apr. 2022 1 173 4.6 77.3%
Morganton Heights (4)
Multi-Tenant Apr. 2022 1 285 2.7 96.2%
Poplar Springs (4)
Multi-Tenant Apr. 2022 1 64 1.2 96.7%
The Plant (4)
Multi-Tenant May 2022 1 509 6.3 73.7%
Imperial Reliance II Single-Tenant May 2022 8 32 19.9 100.0%
1,056 28,907 7.2 90.8%


Portfolio	Segment	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term (1)	Percentage Leased
Western Crossing (2)	Multi-Tenant	Feb. 2022	1	68	6.5	100.0%
Almeda Crossing (2)	Multi-Tenant	Mar. 2022	1	223	4.1	88.5%
Boston Commons (2)	Multi-Tenant	Mar. 2022	1	103	4.9	95.5%
Wallace Commons (2)	Single-Tenant	Apr. 2022	1	99	4.3	100.0%
Academy Sports (2)	Single-Tenant	Apr. 2022	1	72	7.6	100.0%
Walgreens (2)	Multi-Tenant	Apr. 2022	1	15	2.9	100.0%
Parkway Centre South (2)	Multi-Tenant	Apr. 2022	1	132	4.1	100.0%
The Marquis (2)	Multi-Tenant	Apr. 2022	1	135	4.6	66.6%
HEB Center (2)	Multi-Tenant	Apr. 2022	1	135	14.4	96.4%
Golf Road Center (2)	Multi-Tenant	Apr. 2022	1	101	8.9	100.0%
Walgreens & KeyBank (2)	Multi-Tenant	Apr. 2022	1	18	10.6	100.0%
Terrell Mill Village (2)	Multi-Tenant	Apr. 2022	1	75	5.7	100.0%
Roosevelt Road Center (2)	Multi-Tenant	Apr. 2022	1	32	11.8	75.8%
Decatur Commons (2)	Multi-Tenant	Apr. 2022	1	126	3.1	87.6%
Stoneridge Village (2)	Multi-Tenant	Apr. 2022	1	72	11.4	100.0%
Albany Square (2)	Multi-Tenant	Apr. 2022	1	118	2.9	77.1%
Coventry Crossing (2)	Multi-Tenant	Apr. 2022	1	21	8.4	100.0%
Springfield Commons (2)	Multi-Tenant	Apr. 2022	1	207	5.3	95.3%
Waterford Park South (2)	Multi-Tenant	Apr. 2022	1	92	4.8	93.4%
The Ridge at Turtle Creek (2)	Multi-Tenant	Apr. 2022	1	99	9.2	100.0%
Tire Kingdom & Starbucks (2)	Multi-Tenant	Apr. 2022	1	7	6.7	100.0%
Walmart Neighborhood Market (2)	Multi-Tenant	Apr. 2022	1	51	8.6	100.0%
Harbor Town Center (2)	Multi-Tenant	Apr. 2022	1	139	3.9	97.8%
East West Commons (2)	Multi-Tenant	Apr. 2022	1	173	4.7	99.4%
Morganton Heights (2)	Multi-Tenant	Apr. 2022	1	285	2.4	96.6%
Poplar Springs (2)	Multi-Tenant	Apr. 2022	1	64	3.9	100.0%
The Plant (2)	Multi-Tenant	May 2022	1	509	7.1	75.5%
Imperial Reliance II	Single-Tenant	May 2022	8	32	18.9	100.0%
McGowin Park (2)	Multi-Tenant	July 2022	1	375	3.0	98.2%
Fidelity II	Single-Tenant	Nov. 2022	2	22	19.4	100.0%
			991	27,338	6.9	92.7%

________

(1)Remaining lease term in years as of June 30, ~~2022.~~2023. If the portfolio has multiple properties with varying lease expirations, remaining lease term is calculated on a weighted-average basis.

(2)Includes nine properties leased to Truist Bank (one, four and four in Truist I, II, and III, respectively) which were unoccupied as of June 30, 2022 and are being marketed for sale, three of which are under contract to be disposed and are included in assets held for sale on the consolidated balance sheets. Please see ~~Note 3~~ ~~— Real Estate Investments~~ ~~to our consolidated financial statements in this Quarterly Report on Form 10-Q for further details.~~

~~(3)These properties are under contract to be disposed and are included in assets held for sale on the on the consolidated balance sheets. Please see~~ ~~Note 3~~ ~~— Real Estate Investments~~ ~~to our consolidated financial statements in this Quarterly Report on Form 10-Q for further details.~~

~~(4)~~Acquired in the CIM Portfolio Acquisition. See Note 1 — Organization to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information.

~~(5)~~(3)The ~~tenant’s lease~~tenant at ~~this property expired effective July 1, 2021.~~these 41 single-tenant properties filed for Chapter 11 bankruptcy protection in January 2023, and 13 of the 41 leases were terminated in bankruptcy proceedings during the six months ended June 30, 2023. We accounted for nine of these leases as terminations as of December 31, 2022 and four of these leases as terminations as of June 30, 2023.

(4)The former tenant at these 22 single-tenant properties reassigned its leases in January 2023 to another tenant in the single-tenant segment.

(5)American Car Center filed for Chapter 7 bankruptcy protection in March 2023, and these 16 leases were terminated in bankruptcy proceedings in April 2023. We accounted for these leases as terminations as of March 31, 2023.

(6)Mountain Express Oil Company filed for Chapter 11 bankruptcy protection in March 2023, and 28 leases were terminated in bankruptcy proceedings, which we accounted for as of June 30, 2023. These 28 leases were reassigned to another tenant in the single-tenant segment. The ~~tenant’s~~remaining 43 leases were terminated in bankruptcy proceedings subsequent to June 30, 2023.

(7)Bed Bath & Beyond and their subsidiaries filed for Chapter 11 bankruptcy protection in April 2023, and five leases were terminated in the three months ended June 30, 2023. Bed Bath & Beyond and their subsidiaries had 14 leases at these 12 multi-tenant properties as of June 30, 2023, totaling approximately 384,000 square feet. Subsequent to June 30, 2023, five leases were terminated in bankruptcy proceedings.

(8)David’s Bridal filed for Chapter 11 bankruptcy protection in April 2023, and two leases were terminated in the three months ended June 30, 2023. David’s Bridal had three leases at these three multi-tenant properties as of June 30, 2023, totaling approximately 30,000 square feet.

(9)Christmas Tree Shops filed for Chapter 11 bankruptcy protection in May 2023. Bankruptcy proceedings are ongoing and we have not yet been notified of any lease rejections. Accordingly, we have not accounted for any lease terminations at this ~~property expired effective July 1, 2022, which reduced the portfolio’s occupancy to 89.6%.~~time. Christmas Tree Shops had two leases at these two multi-tenant properties as of June 30, 2023, totaling 67,000 square feet.

5358

Table of Contents

The following table details the classification of our properties by segment:


Segment	Segment	Number of Properties	Rentable Square Feet	Remaining Lease Term (1)	Percentage Leased		Segment	Number of Properties	Rentable Square Feet	Remaining Lease Term (1)	Percentage Leased
			(In thousands)						(In thousands)
Single-Tenant ~~(2)~~	Single-Tenant ~~(2)~~	944	12,354	9.9	95.5	%	Single-Tenant ~~(2)~~	882	10,956	9.3	97.5	%
Multi-Tenant	Multi-Tenant	112	16,553	4.6	87.4	%	Multi-Tenant	109	16,382	4.9	89.5	%
Total	Total	1,056	28,907	7.2	90.8	%	Total	991	27,338	6.9	92.7	%

___________

(1)Remaining lease term in years as of June 30, ~~2022.~~2023. If the portfolio has multiple properties with varying lease expirations, remaining lease term is calculated as a weighted-average based on annualized rental income on a straight-line basis.

~~(2)After giving effect to the C&S Grocery lease expiration on July 1, 2022 representing approximately 360,000 square feet, the single-tenant segment would be 92.5% occupied.~~

Leasing Activity

The following ~~tables summarize~~table summarizes our leasing activity by segment during the ~~periods~~period indicated:


		Three Months Ended June 30, 2022											Three Months Ended June 30, 2023
				(In thousands)											(In thousands)
Single-Tenant Properties	Single-Tenant Properties	Number of Leases	Rentable Square Feet	Annualized SLR (1) prior to Lease Execution/Renewal		Annualized SLR (1) after Lease Execution/Renewal		Costs to execute lease		Costs to execute lease per square foot		Single-Tenant Properties	Number of Leases	Rentable Square Feet	Annualized SLR (1) prior to Lease Execution/Renewal		Annualized SLR (1) after Lease Execution/Renewal		Costs to execute lease		Costs to execute lease per square foot
New leases (2)	New leases (2)	—	—	$	—	$	—	$	—	$	—	New leases (2)	28	137,284	$	—	$	5,966	$	—	$	—
Lease renewals/amendments (2)	Lease renewals/amendments (2)	13	116,269	$	2,814	$	2,824	$	—	$	—	Lease renewals/amendments (2)	17	248,686	$	3,689	$	3,357	$	—	$	—
Lease terminations (3)	Lease terminations (3)	—	—	$	—	$	—	$	—	$	—	Lease terminations (3)	34	116,268	$	6,990	$	—	$	—	$	—

Multi-Tenant Properties												Multi-Tenant Properties
New leases (2)												New leases (2)	26	245,668	$	—	$	2,955	$	1,472	$	5.99
Lease renewals/amendments (2)												Lease renewals/amendments (2)	41	465,094	$	6,740	$	7,050	$	1,026	$	2.21
Lease terminations (3)												Lease terminations (3)	8	151,047	$	1,524	$	—	$	—	$	—

______

(1)Annualized rental income on a straight-line basis as of June 30, ~~2022.~~2023. Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.

(2)New leases reflect leases in which a new tenant took possession of the space during the three months ended June 30, ~~2022,~~2023, excluding new property acquisitions. Lease renewals/amendments reflect leases in which an existing tenant executed terms to extend the term or change the rental terms of the lease during the three months ended June 30, ~~2022. This excludes leases modifications for deferrals/abatements in response to COVID-19 negotiations which qualify for FASB relief. For more information — see~~ ~~Management Update on the Impacts of the COVID-19 Pandemic.~~2023.

(3)Represents leases that were terminated prior to their contractual lease expiration ~~dates.~~dates, including leases terminated in bankruptcy proceedings.


		Three Months Ended June 30, 2022											Six Months Ended June 30, 2023
															(In thousands)
Single-Tenant Properties												Single-Tenant Properties	Number of Leases	Rentable Square Feet	Annualized SLR (1) prior to Lease Execution/Renewal		Annualized SLR (1) after Lease Execution/Renewal		Costs to execute lease		Costs to execute lease per square foot
New leases (2)												New leases (2)	28	137,284	$	—	$	5,966	$	—	$	—
Lease renewals/amendments (2)												Lease renewals/amendments (2)	40	351,574	$	10,290	$	9,686	$	—	$	—
Lease terminations (3)												Lease terminations (3)	50	294,515	$	10,788	$	—	$	—	$	—
				(In thousands)
Multi-Tenant Properties	Multi-Tenant Properties	Number of Leases	Rentable Square Feet	Annualized SLR (1) prior to Lease Execution/Renewal		Annualized SLR (1) after Lease Execution/Renewal		Costs to execute lease		Costs to execute lease per square foot		Multi-Tenant Properties
New leases (2)	New leases (2)	22	197,495	$	—	$	2,025	$	1,154	$	5.84	New leases (2)	52	519,474	$	—	$	6,994	$	3,070	$	5.91
Lease renewals/amendments (2)	Lease renewals/amendments (2)	38	420,402	$	5,066	$	5,410	$	708	$	1.68	Lease renewals/amendments (2)	85	1,187,136	$	13,313	$	14,455	$	2,353	$	1.98
Lease terminations (3)	Lease terminations (3)	3	70,001	$	439	$	—	$	—	$	—	Lease terminations (3)	20	218,614	$	2,469	$	—	$	—	$	—

______

(1)Annualized rental income on a straight-line basis as of June 30, ~~2022. Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.~~

~~(2)~~New leases reflect leases in which a new tenant took possession of the space during the three months ended June 30, 2022, excluding new property acquisitions. Lease renewals/amendments reflect leases in which an existing tenant executed terms to extend the term or change the rental terms of the lease during the three months ended June 30, 2022. This excludes leases modifications for deferrals/abatements in response to COVID-19 negotiations which qualify for FASB relief. For more information — see ~~Management Update on the Impacts of the COVID-19 Pandemic.~~

~~(3)Represents leases that were terminated prior to their contractual lease expiration dates.~~

Six Months Ended June 30, 2022
(In thousands)
Single-Tenant Properties Number of Leases Rentable Square Feet
Annualized SLR (1) prior to Lease Execution/Renewal
Annualized SLR (1) after Lease Execution/Renewal
Costs to execute lease Costs to execute lease per square foot
New leases (2)
— — $ — $ — $ — $ —
Lease renewals/amendments (2)
15 134,538 $ 2,978 $ 2,982 $ 45 $ 0.33
Lease terminations (3)
7 87,947 $ 1,799 $ — $ — $ —

~~Table of Contents~~

~~______~~

~~(1)Annualized rental income on a straight-line basis as of June 30, 2022.~~2023. Represents the GAAP basis annualized straight-line rent that is recognized over the term on the respective leases, which includes free rent, periodic rent increases, and excludes recoveries.

(2)New leases reflect leases in which a new tenant took possession of the space during the six months ended June 30, ~~2022,~~2023, excluding new property acquisitions. Lease renewals/amendments reflect leases in which an existing tenant executed terms to extend the term or change the rental terms of the lease during the six months ended June 30, ~~2022. This excludes leases modifications for deferrals/abatements in response to COVID-19 negotiations which qualify for FASB relief. For more information — see~~ ~~Management Update on the Impacts of the COVID-19 Pandemic.~~2023.

(3)Represents leases that were terminated prior to their contractual lease expiration ~~dates.~~dates, including leases terminated in bankruptcy proceedings.

Six Months Ended June 30, 2022
(In thousands)
Multi-Tenant Properties Number of Leases Rentable Square Feet
Annualized SLR (1) prior to Lease Execution/Renewal
Annualized SLR (1) after Lease Execution/Renewal
Costs to execute lease Costs to execute lease per square foot
New leases (2)
29 257,126 $ — $ 3,059 $ 1,461 $ 5.68
Lease renewals/amendments (2)
56 599,322 $ 7,681 $ 8,166 $ 1,109 $ 1.85
Lease terminations (3)
3 70,001 $ 439 $ — $ — $ —

~~______~~

~~(1)Annualized rental income~~Since the CIM Portfolio Acquisition, the amounts we have paid for leasing commissions has increased relative to the period of time before the CIM Acquisition, primarily due to the natural frequency of leasing activity in our multi-tenant properties. Leasing commissions are capitalized within prepaid expenses and other assets on ~~a straight-line basis as of June 30, 2022. Represents the GAAP basis annualized straight-line rent that is recognized~~our consolidated balance sheets, and are amortized over the term onof the respective ~~leases, which includes free rent, periodic rent increases, and excludes recoveries.~~lease.

~~(2)~~New leases reflect leases in which a new tenant took possession of the space during the six months ended June 30, 2022, excluding new property acquisitions. Lease renewals/amendments reflect leases in which an existing tenant executed terms to extend the term or change the rental terms of the lease during the six months ended June 30, 2022. This excludes leases modifications for deferrals/abatements in response to COVID-19 negotiations which qualify for FASB relief. For more information — see ~~Management Update on the Impacts of the COVID-19 Pandemic.~~

~~(3)Represents leases that were terminated prior to their contractual lease expiration dates.~~

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Results of Operations

In December 2021, we signed a purchase and sale agreement to acquire 79 multi-tenant retail centers and two single-tenant properties (the “CIM Portfolio Acquisition”), representing a strategic shift away from a sole focus on single-tenant retail properties. Accordingly, as of December 31, 2021, we began operatingWe operate in two reportable business segments for management and internal financial reporting purposes. In our single-tenant operating segment, we own, manage and lease single-tenant properties where tenants are required to pay for property operating expenses, which may be subject to expense exclusions and floors, in addition to base rent. In our multi-tenant operating segment, we own, manage and lease multi-tenant properties where we generally pay for the property operating expenses for those properties and most of our tenants are required to pay their pro rata share of property operating expenses.

As more fully discussed in Note 1 — Organization to our consolidated financial statements included in this Quarterly Report on Form 10-Q, during the year ended December 31, 2022, we completed the CIM Portfolio Acquisition and other property acquisitions which significantly affected and will continue to affect the comparable results from operations until they have been held for all periods presented. Accordingly, we discuss financial results on a same-store basis (details below) and the related impacts of acquisitions and dispositions.

Upon the approval and closing of the Proposed Transactions, the Combined Company will no longer pay asset management fees to our Advisor or fees to our Property Manager and we will internalize our management. Although the Combined Company will no longer effectively bear the costs of the various fees, expense reimbursements and equity compensation under the OPP Plan previously paid to our Advisor, our Property Manager, the GNL Advisor and the GNL Property Manager after the Internalization Merger, the Combined Company’s general and administrative expenses will include the compensation and benefits of our officers, employees, and consultants, as well as overhead expenses, previously paid by those entities in managing ours and GNL’s business and operations. There is no assurance that these expenses will be less than the fees we and GNL currently pay to the Advisor, Property Manager, GNL Advisor and GNL Property Manager for their services. Please see “Risk Factors—Risks Related to the Proposed Transactions—The Combined Company’s net income, FFO and AFFO may decrease in the near term as a result of the Proposed Transactions” below and Note 1 — Organization —Proposed Merger and Internalization to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional details.

In addition to the comparative period-over-period discussion below, please see the ~~“Overview —~~Inflation section below (as well as Part 1, Item 1A “~~Management Update~~Risk Factors” in our Annual Report on Form 10-K for the ~~Impacts of the COVID-19 Pandemic”~~ ~~section above~~year ended December 31, 2022) for additional information on the risks and uncertainties associated with ~~the COVID-19 pandemic~~inflation, rising interest rates and ~~management’s actions taken to mitigate those risks~~labor shortages and ~~uncertainties.~~

costs.

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Comparison of the Three Months Ended June 30, ~~2022~~2023 and ~~2021~~2022

Three Months Ended June 30, Increase (Decrease)
2022 2021 $
Revenue from tenants $ 116,929 $ 81,577 $ 35,352
Operating expenses:
Asset management fees to related party 8,296 7,922 374
Property operating expense 27,520 13,329 14,191
Impairment of real estate investments 58,954 91 58,863
Acquisition, transaction and other costs 206 136 70
Equity-based compensation 3,523 5,283 (1,760)
General and administrative 8,390 3,540 4,850
Depreciation and amortization 46,573 32,428 14,145
Total operating expenses 153,462 62,729 90,733
Operating (loss) income before gain on sale of real estate investments (36,533) 18,848 (55,381)
Gain on sale of real estate investments 13,438 11 13,427
Operating (loss) income (23,095) 18,859 (41,954)
Other (expense) income:
Interest expense (28,329) (20,361) (7,968)
Other income 944 20 924
Total other expense, net (27,385) (20,341) (7,044)
Net loss (50,480) (1,482) (48,998)
Net loss attributable to non-controlling interests 58 2 56
Allocation for preferred stock (5,837) (5,925) 88
Net loss attributable to common stockholders $ (56,259) $ (7,405) $ (48,854)

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	Three Months Ended June 30,				Increase (Decrease)
	2023		2022		$
Revenue from tenants	$	106,700	$	116,929	$	(10,229)

Operating expenses:
Asset management fees to related parties	7,972		8,296		(324)
Property operating expenses	25,082		27,520		(2,438)
Impairments of real estate investments	—		58,954		(58,954)
Merger, transaction and other costs	4,931		206		4,725
Settlement costs	8,800		—		8,800
Equity-based compensation	3,519		3,523		(4)
General and administrative	14,744		8,390		6,354
Depreciation and amortization	59,466		46,573		12,893
Total operating expenses	124,514		153,462		(28,948)
Operating loss before gains on sales of real estate investments	(17,814)		(36,533)		18,719
Gains on sales of real estate investments	5,471		13,438		(7,967)
Operating loss	(12,343)		(23,095)		10,752
Other (expense) income:
Interest expense	(35,945)		(28,329)		(7,616)
Other income	596		944		(348)

Total other expense, net	(35,349)		(27,385)		(7,964)
Net loss	(47,692)		(50,480)		2,788
Net loss attributable to non-controlling interests	61		58		3
Allocation for preferred stock	(5,837)		(5,837)		—
Net loss attributable to common stockholders	$	(53,468)	$	(56,259)	$	2,791

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders was $53.5 million for the three months ended June 30, 2023, as compared to $56.3 million for the three months ended June 30, ~~2022, as compared to a loss of $7.4 million for the three months ended June 30, 2021.~~2022. The change in net loss attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Three Month Same Store Properties

Information based on Same Store ~~Acquisitions~~Properties, Acquired Properties and ~~Dispositions~~Disposed Properties (as each are defined below) allows us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered. As of June 30, ~~2022,~~2023, we owned ~~1,056~~991 properties. There were ~~903~~955 properties owned for the entire three months ended June 30, 2023 and 2022 ~~and 2021~~ (our ~~“Three Month Same~~“Same Store Properties”) which were ~~92.6%~~92.8% leased as of June 30, ~~2022, and 90.7% leased after giving effect to the C&S Grocery lease expiration on July 1, 2022 representing approximately 360,000 square feet.~~2023. Since April 1, ~~2021~~2022 and through June 30, ~~2022,~~2023, we acquired ~~153~~36 properties (our ~~“Acquisitions Since April 1, 2021”~~“Acquired Properties”) which were ~~87.5%~~91.9% leased as of June 30, ~~2022,~~2023, and disposed of 2248 properties (our ~~“Dispositions Since April 1, 2021”~~“Disposed Properties”).

Single-Tenant Properties Multi-Tenant Properties Total Properties
Number of properties, March 31, 2021 892 33 925
Acquisition activity during the nine months ended December 31, 2021 62 — 62
Disposition activity during the nine months ended December 31, 2021 (11) — (11)
Number of properties, December 31, 2021 943 33 976
Acquisition activity during the six months ended June 30, 2022 12 79 91
Disposition activity during the six months ended June 30, 2022 (11) — (11)
Number of properties, June 30, 2022 944 112 1,056
Number of Same Store Properties 870 33 903

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	Single-Tenant Properties	Multi-Tenant Properties	Total Properties
Number of properties, March 31, 2022	939	90	1,029
Acquisition activity during the nine months ended December 31, 2022 (1)	13	23	36
Disposition activity during the nine months ended December 31, 2022 (2)	(17)	(4)	(21)
Number of properties, December 31, 2022	935	109	1,044
Acquisition activity during the six months ended June 30, 2023	—	—	—
Disposition activity during the six months ended June 30, 2023	(53)	—	(53)
Number of properties, June 30, 2023	882	109	991

Number of Same Store Properties	869	89	958
Number of Acquired Properties (3)	13	20	33
Number of Disposed Properties (3)	70	4	74

_______

(1)Acquisition activity during the nine months ended December 31, 2022 includes two single-tenant properties and 23 multi-tenant properties acquired in the CIM Portfolio Acquisition.

(2)Disposition activity during the nine months ended December 31, 2022 includes three multi-tenant properties acquired in the CIM Portfolio Acquisition.

(3)The three multi-tenant properties acquired in the CIM Portfolio Acquisition and disposed in the nine months ended December 31, 2022 have been excluded from Acquired Properties and are included in Disposed Properties.

Net Operating Income

Net operating income (“NOI”) is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate portfolio. NOI is equal to revenue from tenants less property operating expense. NOI excludes all other financial statement amounts included in net loss attributable to common stockholders. We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unlevered basis. See “Non-GAAP Financial Measures” included elsewhere in this Quarterly Report on Form 10-Q for additional disclosure and a reconciliation to our net loss attributable to common stockholders.

Segment Results — Single-Tenant Properties

The following table presents the components of NOI and the period change within the single-tenant segment for the three months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


																								Same Store (1)								Acquisitions (2)							Disposals (3)							Segment Total (4)
																												Three Months Ended June 30,					Increase (Decrease)		Three Months Ended June 30,					Increase (Decrease)		Three Months Ended June 30,					Increase (Decrease)		Three Months Ended June 30,				Increase (Decrease)
		Same Store (1)						Acquisitions (2)						Disposals (3)						Segment Total (4)								2023		2022			$		2023		2022			$		2023		2022			$		2023		2022		$
		Three Months Ended June 30,				Increase (Decrease)		Three Months Ended June 30,				Increase (Decrease)		Three Months Ended June 30,				Increase (Decrease)		Three Months Ended June 30,					Increase (Decrease)
		2022		2021		$		2022		2021		$		2022		2021		$		2022		2021			$
Revenue from tenants	Revenue from tenants	$	50,911	$	46,321	$	4,590	$	3,582	$	150	$	3,432	$	1,393	$	5,182	$	(3,789)	$	55,886	$	51,653		$	4,233	Revenue from tenants	$	38,101	$	45,785		$	(7,684)	$	996	$	468		$	528	$	2,027	$	9,633		$	(7,606)	$	41,124	$	55,886	$	(14,762)
Less: Property operating	Less: Property operating	3,705		2,433		1,272		334		2		332		10		87		(77)		4,049		2,522			1,527		Less: Property operating	3,808		3,766			42		86		11			75		113		272			(159)		4,007		4,049		(42)
NOI	NOI	$	47,206	$	43,888	$	3,318	$	3,248	$	148	$	3,100	$	1,383	$	5,095	$	(3,712)	$	51,837	$	49,131		$	2,706	NOI	$	34,293	$	42,019		$	(7,726)	$	910	$	457		$	453	$	1,914	$	9,361		$	(7,447)	$	37,117	$	51,837	$	(14,720)

______

(1)Our single-tenant segment included ~~870 Three Month~~869 Same Store Properties.

(2)Our single-tenant segment included ~~74 Acquisitions Since April 1, 2021.~~13 Acquired Properties.

(3)Our single-tenant segment included ~~22 Dispositions Since April 1, 2021.~~70 Disposed Properties.

(4)Our single-tenant segment included ~~944~~882 total properties.

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Revenue from Tenants

Revenue from tenants ~~increased $4.2~~decreased $14.8 million to $41.1 million for the three months ended June 30, 2023, compared to $55.9 million for the three months ended June 30, ~~2022, compared to $51.7 million for the three months ended June 30, 2021.~~2022. This ~~increase~~decrease in revenue from tenants was due to ~~incremental~~decreases in revenue of $7.6 million from our ~~Acquisitions Since April 1, 2021 of approximately $3.4~~Disposed Properties and $7.7 million ~~and~~ from our Same Store Properties, partially offset by an increase in ~~our Three Month Same Store Properties~~ revenue of ~~approximately $4.6 million, partially offset by a decrease of $3.8~~$0.5 million from our ~~Dispositions Since April 1, 2021.~~Acquired Properties.

The ~~increase~~decrease in our ~~Three Month~~ Same Store Properties revenue was ~~mainly~~primarily due to ~~an additional $4.6~~$5.5 million of ~~tenant~~increased reductions of revenue ~~recognized under termination agreements signed since December 2021 (some of which had occupancy periods that expired during the three months ended June 30, 2022, see~~ ~~Note 2~~ ~~— Summary of Significant Accounting Policies – Revenue Recognition~~ ~~for additional information), an increase of $1.2 million of operating expense reimbursement revenue and a decrease of $0.5 million of bad debt expense, which is recorded as a reduction to revenue.~~

These increases were partially offset by $1.4 million of lower revenue from our United Healthcare property, which had annual rents of $5.4 million prior to its tenant vacating effective on June 30, 2021, as well as $0.5 million of lower revenue from other properties which were vacant in the three months ended June 30, 2023 as compared to June 30, 2022, ~~but~~mainly related to tenant bankruptcies and $2.2 million of decreased revenue in the three months ended June 30, 2023 from vacant properties which were occupied in the three months ended June 30, ~~2021.~~2022.

For additional information on our exposure to tenant bankruptcies, please see Liquidity — Tenant Bankruptcies.

Property Operating Expenses

Property operating expenses primarily consist of the costs associated with maintaining our properties including real estate taxes, utilities, and repairs and maintenance. Property operating expenses ~~increased $1.5 million to~~were each $4.0 million for the three months ended June 30, ~~2022 compared to $2.5 million for the three months ended~~2023 and June 30, ~~2021. This increase was driven by an increase of approximately $1.3 million in our Three Month Same Store Properties and by an increase of $0.3 million from our Acquisitions Since April 1, 2021.~~2022.

Segment Results — Multi-Tenant Properties

The following table presents the components of NOI and the period change within the multi-tenant segment for the three months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


																								Same Store (1)								Acquisitions (2)							Disposals (3)							Total (4)
																												Three Months Ended June 30,					Increase (Decrease)		Three Months Ended June 30,					Increase (Decrease)		Three Months Ended June 30,					Increase (Decrease)		Three Months Ended June 30,				Increase (Decrease)
		Same Store (1)						Acquisitions (2)						Disposals (3)						Total (4)								2023		2022			$		2023		2022			$		2023		2022			$		2023		2022		$
		Three Months Ended June 30,				Increase (Decrease)		Three Months Ended June 30,				Increase (Decrease)		Three Months Ended June 30,				Increase (Decrease)		Three Months Ended June 30,					Increase (Decrease)
		2022		2021		$		2022		2021		$		2022		2021		$		2022		2021			$
Revenue from tenants	Revenue from tenants	$	28,054	$	29,924	$	(1,870)	$	32,989	$	—	$	32,989	$	—	$	—	$	—	$	61,043	$	29,924		$	31,119	Revenue from tenants	$	51,237	$	50,819		$	418	$	14,604	$	6,883		$	7,721	$	(265)	$	3,341		$	(3,606)	$	65,576	$	61,043	$	4,533
Less: Property operating	Less: Property operating	11,513		10,807		706		11,958		—		11,958		—		—		—		23,471		10,807			12,664		Less: Property operating	16,741		19,706			(2,965)		4,433		2,095			2,338		(99)		1,670			(1,769)		21,075		23,471		(2,396)
NOI	NOI	$	16,541	$	19,117	$	(2,576)	$	21,031	$	—	$	21,031	$	—	$	—	$	—	$	37,572	$	19,117		$	18,455	NOI	$	34,496	$	31,113		$	3,383	$	10,171	$	4,788		$	5,383	$	(166)	$	1,671		$	(1,837)	$	44,501	$	37,572	$	6,929

______

(1)Our multi-tenant segment included ~~33 Three Month~~89 Same Store Properties.

(2)Our multi-tenant segment included ~~79 Acquisitions Since~~20 Acquired Properties, excluding three properties recently acquired in the CIM Portfolio Acquisition that were disposed since April 1, ~~2021.~~2022.

(3) Our multi-tenant segment included ~~0 Dispositions Since~~four Disposed Properties, including three properties recently acquired in the CIM Portfolio Acquisition that were disposed since April 1, ~~2021.~~2022.

(4)Our multi-tenant segment included ~~112~~109 total properties.

Revenue from Tenants

Revenue from tenants increased ~~$31.1~~$4.5 million to $65.6 million for the three months ended June 30, 2023, compared to $61.0 million for the three months ended June 30, ~~2022, compared to $29.9 million for the three months ended June 30, 2021.~~2022. This increase in revenue from tenants was due to ~~incremental~~increases in revenue of $7.7 million from our ~~Acquisitions Since April 1, 2021 of approximately $33.0~~Acquired Properties and $0.4 million ~~$32.7 million of which was attributable to the CIM Portfolio Acquisition,~~from our Same Store Properties, partially offset by a decrease in ~~our Three Month Same Store Properties~~ revenue of ~~approximately $1.9 million. Please see~~ ~~Note 1~~ ~~— Organization~~ to$3.6 million from our ~~consolidated financial statements in this Quarterly Report on Form 10-Q for further details on the CIM Portfolio Acquisition.~~Disposed Properties.

The ~~decrease~~increase in our ~~Three Month~~ Same Store Properties revenue was ~~mainly~~primarily due to ~~a decrease~~the acceleration of below-market lease amortization of $0.8 million ~~of termination fee income, a recovery of $0.8 million relating~~due to ~~a lease settlement fee from a tenant~~tenants which ~~was recorded~~terminated their leases in bankruptcy proceedings during the three months ended June 30, ~~2021, $0.1 million~~2023, partially offset by less operating expense reimbursement revenue of ~~less contingent rental income and $0.1 million of less amortization of below market lease intangibles in the three months ended June 30, 2022 as compared~~$0.4 million.

For information on our exposure to ~~the three months ended June 30, 2021.~~tenant bankruptcies, please see Liquidity — Tenant Bankruptcies.

Property Operating Expenses

Property operating expenses primarily consist of ~~the~~ costs associated with maintaining our properties including real estate taxes, utilities, and repairs and maintenance. Property operating expenses ~~increased $12.7~~decreased $2.4 million to $21.1 million for the three months ended June 30, 2023 compared to $23.5 million for the three months ended June 30, ~~2022 compared~~2022. This decrease in property operating expenses was due to ~~$10.8~~decreases of $3.0 million ~~for the three months ended June 30, 2021. This increase was driven~~from our Same Store Properties and $1.8 million from our Disposed Properties, partially offset by an increase of ~~approximately $0.7~~$2.3 million from our Acquired Properties.

The decrease in our ~~Three Month~~ Same Store Properties property operating expense was primarily due to: (i) $2.1 million of less repairs and ~~by an increase~~maintenance, (ii) $0.5 million of ~~$12.0~~less snow removal expense and (iii) $0.4 million ~~from~~of less other expenses.

Other Results of Operations

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~~our Acquisitions Since April 1, 2021, $11.7 million of which was attributable to the CIM Portfolio Acquisition. Please see~~ ~~Note 1~~ ~~— Organization~~ ~~to our consolidated financial statements in this Quarterly Report on Form 10-Q for further details on the CIM Portfolio Acquisition.~~

~~Other Results of Operations~~

Asset Management Fees to Related ~~Party~~Parties

Asset management fees paid to related parties decreased $0.3 million to $8.0 million for the ~~Advisor increased $0.4 million~~three months ended June 30, 2023, compared to $8.3 million for the three months ended June 30, 2022, ~~compared to $7.9 million for the three months ended June 30, 2021, primarily~~ due to ~~an increase of $0.6 million in~~ the ~~variable portion of the base~~incentive management fee ~~due to our increased equity issuances in 2022 over the comparable period in 2021, partially offset by a decrease of $0.2 million of incentive variable management fees~~ incurred in the three months ended June 30, 2022 ~~as compared to~~of $0.4 million. No incentive management fees were incurred in the three months ended June 30, ~~2021.~~2023.

~~The variable portion~~Impairments of ~~the base management fee is calculated on a monthly basis and is equal to one-twelfth~~Real Estate Investments

We did not record any impairments of 1.25% of the cumulative net proceeds of any equity raised by us (including, among other things, common stock, including shares subject to repurchase, preferred stock and certain convertible debt but excluding among other things, equity-based compensation). The variable portion of the base management fee will increase in connection with future issuances of equity securities.

In light of the unprecedented market disruption resulting from the COVID-19 pandemic, in March 2020, we agreed with the Advisor to amend the advisory agreement to temporarily lower the quarterly thresholds we must reach on a quarterly basisreal estate investments for the Advisor to receive the variable incentive management fee through the end of 2020, and in January 2021, we agreed with the Advisor to further amend the advisory agreement to extend the expiration of these thresholds through the end of 2021, at which point it was not renewed. Please see ~~Note 11~~ ~~— Related Party Transactions and Arrangements~~ ~~to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding fees incurred from the Advisor.~~

~~Impairment Charges~~three months ended June 30, 2023.

We recorded ~~impairment charges~~impairments of real estate investments totaling $59.0 million for the three months ended June 30, 2022, $49.6 million of which related to a multi-tenant property located in Minnesota, $5.9 million of which related to five vacant single-tenant properties formerly leased to Truist Bank and $3.5 million of which related to a multi-tenant property acquired in the CIM Portfolio Acquisition.

All of the impaired properties were impaired to adjust the ~~properties’~~ carrying values of the properties to their fair values as determined by their respective purchase and ~~sales~~sale agreements if under a contract to be disposed, or their estimated fair values if not under a contract to be disposed. Please see Note 3 — Real Estate Investments to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding impairments of real estate investments.

~~We recorded $0.1~~Merger, Transaction and Other Costs

Merger and other transaction costs increased by $4.7 million ~~of impairment charges~~to $4.9 million for the three months ended June 30, ~~2021 related to a vacant single-tenant held-for-use property which was recorded to adjust the property to its fair value as determined by the income approach.~~

~~Acquisition, Transaction and Other Costs~~

~~Acquisition, transaction and other costs increased by $0.1 million~~2023, compared to $0.2 million for the three months ended June 30, ~~2022, compared~~2022. The increase was primarily due to ~~$0.1~~$4.2 million ~~for~~of costs directly related to the Proposed Transaction incurred during the three months ended June 30, ~~2021. The increase was primarily due to increased acquisition activity~~2023, as well as $0.5 million of prepayment penalties on mortgage note repayments during the three months ended June 30, 2023.

Settlement Costs

Settlement costs incurred in the three months ended June 30, ~~2022 as compared to~~2023 totaled $8.8 million. No such amounts were incurred in the three months ended June 30, ~~2021.~~2022. Settlement costs relate entirely to the Cooperation Agreement with Blackwells in which we agreed to reimburse Blackwells for one-half of the reasonable, documented, out-of-pocket expenses (including legal fees) incurred by the Blackwells/Related Parties in connection with the proxy contest and related litigation. See Note 9 — Commitments and Contingencies for additional information.

Equity-Based Compensation

Equity-based compensation ~~decreased by $1.8 million to~~was $3.5 million during the three months ended June 30, ~~2022 compared to $5.3 million during the three months ended June 30, 2021.~~2023 and 2022. Equity-based compensation expenses relate to restricted shares of Class A common stock (“restricted shares”) granted to our board of directors and employees of ~~the~~our Advisor or its affiliates who are involved in providing services to us and the units of limited partnership interests in our OP designated as “LTIP Units” (“LTIP ~~Units (as defined below)~~Units”) that were granted to our Advisor in 2021 pursuant to the 2021 ~~OPP (as defined below) or granted~~multi-year outperformance agreement with our Advisor (the “2021 OPP”). For additional information on the impact of the Proposed Transactions on the treatments of our equity-based compensation, see Note 1 — Organization – Proposed Merger and Internalization to our consolidated financial statements included in ~~2018 pursuant~~this Quarterly Report on Form 10-Q.

General and Administrative Expenses

General and administrative expense increased $6.4 million to ~~the 2018 OPP (as defined below).~~

~~The higher expense recorded in~~$14.7 million for the three months ended June 30, 2021 was due to $1.9 million of additional non-cash equity-based compensation expense from the 2021 multi-year outperformance agreement with the Advisor (the “2021 OPP”) in the form of a new award of units of limited partnership in the OP designated as “LTIP Units” (“LTIP Units”) authorized by our independent directors on May 4, 2021 to be issued to the Advisor under the 2021 OPP after the performance period of the multi-year outperformance agreement previously entered into with the Advisor in 2018 (the “2018 OPP”) expired on July 19, 2021. The three months ended June 30, 2021 includes expenses for both the 2018 OPP and the 2021 OPP (see ~~Note 13~~ ~~— Equity-Based Compensation)~~.

~~General and Administrative Expense~~

~~Table of Contents~~

~~General and administrative expense increased $4.9 million~~2023, compared to $8.4 million for the three months ended June 30, ~~2022, compared~~2022. The increase was primarily due to ~~$3.5~~$7.2 million of legal and other costs incurred in the three months ended June 30, 2023 which were attributable to the proxy contest and related litigation with Blackwells described herein. There were no similar costs in the three months ended June 30, 2022. This increase was partially offset by decreased legal expenses of $0.7 million, as well as, $0.1 million of decreased professional expense reimbursements.

We anticipate our fees for legal and other costs to continue at a rate higher than our historical expenses due to, among other things, the Proposed Transactions and related litigation for the foreseeable future in 2023. See Note 9 — Commitments and Contingencies for additional information.

Depreciation and Amortization Expenses

Depreciation and amortization expense increased $12.9 million to $59.5 million for the three months ended June 30, 2021. The increase was primarily due to $2.1 million of increased professional expense reimbursements, as well as a $1.4 million professional fee credit in the three months ended June 30, 2021 which did not occur in the three months ended June 30, 2022. The increased professional expense reimbursements are due to additional staffing needed by the Advisor as a result of the CIM Portfolio Acquisition. Additionally, legal expenses increased $0.6 million, accounting fees increased $0.6 million and miscellaneous fees increased $0.2 million in the three months ended June 30, 2022 as2023, compared ~~to the three months ended June 30, 2021.~~

~~Depreciation and Amortization Expense~~

~~Depreciation and amortization expense increased $14.1 million~~ to $46.6 million for the three months ended June 30, ~~2022, compared to $32.4 million for the three months ended June 30, 2021.~~2022. Depreciation and amortization expense was impacted by ~~an increase~~increases of ~~$17.5~~$4.5 million ~~related to~~from our ~~Acquisitions Since April 1, 2021~~Acquired Properties (including, most notably, the CIM Portfolio Acquisition), and $11.2 million from our Same Store Properties, partially offset by a decrease in depreciation and amortization of ~~$0.9~~$2.8 million from our ~~Three Month~~Disposed Properties.

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The increase to our Same Store Properties depreciation and amortization was due to $11.2 million of intangible lease asset write-offs as ~~well as by~~ a ~~decrease~~result of ~~$2.5 million from~~tenant bankruptcies and lease terminations which occurred in the three months ended June 30, 2023.

For additional information on our ~~Dispositions Since April 1, 2021.~~exposure to tenant bankruptcies, please see Liquidity — Tenant Bankruptcies.

~~Gain~~Gains on ~~Sale~~Sales of Real Estate Investments

During the three months ended June 30, 2023, we sold 48 properties. These properties sold for an aggregate contract price of $100.8 million, resulting in an aggregate gain on sale of $5.5 million. During the three months ended June 30, 2022, we sold five properties. These properties sold for an aggregate contract price of $30.4 million, resulting in aggregate gains on sale of $13.4 million. ~~During~~

Interest Expense

Interest expense increased $7.6 million to $35.9 million for the three months ended June 30, ~~2021 we sold three properties for an aggregate contract price of $2.5 million, resulting in aggregate gains on sale of $11,000.~~

~~Interest Expense~~

~~Interest expense increased $8.0 million~~2023, compared to $28.3 million for the three months ended June 30, ~~2022, compared~~2022. This increase was mainly due to ~~$20.4~~(i) increased interest expense on our borrowings under the Credit Facility due to (a) increased borrowings on the Credit Facility, which were used primarily to partially fund the CIM Portfolio Acquisition and repay maturing indebtedness therefrom, as well as (b) higher variable rates on these borrowings and (ii) higher interest expense from assumed mortgage debt from the CIM Portfolio Acquisition. We also recorded $0.3 million ~~for~~of additional deferred financing cost amortization in the three months ended June 30, ~~2021. This increase was mainly~~2023 due to ~~interest expense~~the early repayment of ~~$5.6 million on our $500.0 million of 4.50% per annum Senior Notes issued in 2021, as well as higher average balances on our~~the Bob Evans I mortgage and Credit Facility debt (resulting largely from the assumption of mortgage debt and borrowings under our Credit Facility to finance the CIM Portfolio Acquisition), partially offset by lower average interest rates. Please see ~~Note 1~~ ~~— Organization~~ ~~to our consolidated financial statements in this Quarterly Report on Form 10-Q for further details on the CIM Portfolio Acquisition.~~note.

During the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the average outstanding balances on our mortgage notes payable were ~~$1.8~~$1.6 billion and ~~$1.6~~$1.8 billion, respectively, and ~~our~~the average outstanding ~~balance~~balances under our ~~revolving, unsecured corporate credit facility (the “Credit Facility”) was $464.4~~Credit Facility were $593.2 million and ~~$255.7~~$464.4 million, respectively. For the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the weighted-average interest rates on our mortgage notes payable were ~~3.82%~~3.83% and ~~3.94%~~3.82%, respectively, and the weighted-average interest rates on our Credit Facility were ~~2.69%~~7.10% and ~~2.79%~~2.69%, respectively.

The ~~reduction of~~increase in the weighted-average interest rate on our Credit Facility during the three months ended June 30, ~~2022~~2023 as compared to ~~the three months ended June 30, 2021 is primarily due to lower credit spreads to LIBOR on our Credit Facility after the amendment which occurred on October 1, 2021.~~

We anticipate that the interest rate on our Credit Facility will increase throughout 2022 as a result of, among other things, recent actions taken by the Federal Reserve Board to increase interest rates and its intention to reduce the amount of assets on its balance sheet. See ~~Item 1.A Risk Factors~~ ~~for additional information.~~

~~Other Income~~

~~Other income was $0.9 million and $20,000 for the three months ended June 30, 2022 and 2021, respectively. The increase in other income during~~ the three months ended June 30, 2022 was primarily due to increases in interest rates during the ~~settlement of $0.9 million of liens incurred on our Prairie Towne property in~~year ended December 31, 2022 and the ~~three~~six months ended June 30, ~~2020 as a result of a settlement with~~2023. The increase in the ~~lien holder~~weighted-average balance on our Credit Facility was primarily due to draws on the Credit Facility to repay maturing mortgage notes payable during the three months ended June 30, 2023.

As of June 30, 2023 the weighted-average annual interest rate on our Credit Facility was 7.20%. In light of recent increases to variable rates, we expect to experience further increases to our interest expense in future periods when compared to respective prior periods. We expect that these increases will be material.

Other Income

Other income was $0.6 million and $0.9 million for the three months ended June 30, 2023 and 2022, respectively. Other income during the three months ended June 30, 2023 and 2022 were primarily due to the settlement of liens incurred on certain of our properties, in the respective periods, at amounts lower amounts than what were previously accrued for.

Allocation for Preferred Stock

Allocation for preferred stock was $5.8 million for the three months ended June 30, 2023 and 2022. These amounts represent the allocation of our net loss that is attributable to holders of Series A Preferred Stock and holders of Series C Preferred Stock.

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Comparison of the Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022


		Six Months Ended June 30,				Increase (Decrease)			Six Months Ended June 30,				Increase (Decrease)
		2022		2021		$			2023		2022		$
Revenue from tenants	Revenue from tenants	$	211,872	$	160,764	$	51,108	Revenue from tenants	$	220,294	$	211,872	$	8,422

Operating expenses:	Operating expenses:							Operating expenses:
Asset management fees to related party		16,122		15,243		879
Property operating expense		46,659		26,768		19,891
Impairment of real estate investments		64,896		91		64,805
Acquisition, transaction and other costs		485		178		307
Asset management fees to related parties								Asset management fees to related parties	15,928		16,122		(194)
Property operating expenses								Property operating expenses	51,995		46,659		5,336
Impairments of real estate investments								Impairments of real estate investments	—		64,896		(64,896)
Merger, transaction and other costs								Merger, transaction and other costs	5,496		485		5,011
Settlement costs								Settlement costs	8,800		—		8,800
Equity-based compensation	Equity-based compensation	7,021		9,630		(2,609)		Equity-based compensation	7,086		7,021		65
General and administrative	General and administrative	15,223		9,989		5,234		General and administrative	25,236		15,223		10,013
Depreciation and amortization	Depreciation and amortization	84,261		64,747		19,514		Depreciation and amortization	113,648		84,261		29,387
Total operating expenses	Total operating expenses	234,667		126,646		108,021		Total operating expenses	228,189		234,667		(6,478)
Operating (loss) income before gain on sale of real estate investments		(22,795)		34,118		(56,913)
Gain on sale of real estate investments		67,007		297		66,710
Operating loss before gains on sales of real estate investments								Operating loss before gains on sales of real estate investments	(7,895)		(22,795)		14,900
Gains on sales of real estate investments								Gains on sales of real estate investments	17,263		67,007		(49,744)
Operating income	Operating income	44,212		34,415		9,797		Operating income	9,368		44,212		(34,844)
Other (expense) income:	Other (expense) income:							Other (expense) income:
Interest expense	Interest expense	(52,069)		(39,695)		(12,374)		Interest expense	(70,620)		(52,069)		(18,551)
Other income	Other income	962		44		918		Other income	623		962		(339)
Gain on non-designated derivatives	Gain on non-designated derivatives	2,250		—		2,250		Gain on non-designated derivatives	—		2,250		(2,250)
Total other expense, net	Total other expense, net	(48,857)		(39,651)		(9,206)		Total other expense, net	(69,997)		(48,857)		(21,140)
Net loss	Net loss	(4,645)		(5,236)		591		Net loss	(60,629)		(4,645)		(55,984)
Net (income) loss attributable to non-controlling interests		(6)		8		(14)
Net loss (income) attributable to non-controlling interests								Net loss (income) attributable to non-controlling interests	78		(6)		84
Allocation for preferred stock	Allocation for preferred stock	(11,674)		(11,588)		(86)		Allocation for preferred stock	(11,674)		(11,674)		—
Net loss attributable to common stockholders	Net loss attributable to common stockholders	$	(16,325)	$	(16,816)	$	491	Net loss attributable to common stockholders	$	(72,225)	$	(16,325)	$	(55,900)

Net Loss Attributable to Common Stockholders

Net loss attributable to common stockholders was $72.2 million for the six months ended June 30, 2023, as compared to $16.3 million for the six months ended June 30, ~~2022, as compared to net loss attributable to common stockholders of $16.8 million for the six months ended June 30, 2021.~~2022. The change in net loss attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations ~~and comprehensive loss~~ in the sections that follow.

Six Month Same Store Properties

Information based on Same Store ~~Acquisitions~~Properties, Acquired Properties and ~~Dispositions~~Disposed Properties (as each are defined below) ~~allows~~allow us to evaluate the performance of our portfolio based on a consistent population of properties owned for the entire period of time covered. As of June 30, ~~2022,~~2023, we owned ~~1,056~~991 properties. There were ~~896~~899 properties owned for the entire six months ended June 30, 2023 and 2022 ~~and 2021~~ (our ~~“Six Month Same~~“Same Store Properties”) which were ~~92.6%~~94.2% leased as of June 30, ~~2022, and 90.5% leased after giving effect to the C&S Grocery lease expiration on July 1, 2022 representing approximately 360,000 square feet.~~2023. Since January 1, ~~2021~~2022 and through June 30, ~~2022,~~2023, we acquired ~~160~~92 properties (our ~~“Acquisitions Since January 1, 2021”~~“Acquired Properties”) which were ~~87.5%~~89.9% leased as of June 30, ~~2022,~~2023, and disposed of 2453 properties (our ~~“Dispositions Since January 1, 2021”~~“Disposed Properties”).

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Single-Tenant Properties Multi-Tenant Properties Total Properties
Number of properties, December 31, 2020 887 33 920
Acquisition activity during the year ended December 31, 2021 69 — 69
Disposition activity during the year ended December 31, 2021 (13) — (13)
Number of properties, December 31, 2021 943 33 976
Acquisition activity during the six months ended June 30, 2022 12 79 91
Disposition activity during the six months ended June 30, 2022 (11) — (11)
Number of properties, June 30, 2022 944 112 1,056
Number of Same Store Properties 863 33 896


	Single-Tenant Properties	Multi-Tenant Properties	Total Properties
Number of properties, December 31, 2021	943	33	976
Acquisition activity during the year ended December 31, 2022 (1)	15	80	95
Disposition activity during the year ended December 31, 2022 (2)	(23)	(4)	(27)
Number of properties, December 31, 2022	935	109	1,044
Acquisition activity during the six months ended June 30, 2023	—	—	—
Disposition activity during the six months ended June 30, 2023	(53)	—	(53)
Number of properties, June 30, 2023	882	109	991

Number of Same Store Properties	867	32	899
Number of Acquired Properties (3)	15	77	92
Number of Disposed Properties (3)	76	4	80

_______

(1)Acquisition activity during the year ended December 31, 2022 includes two single-tenant property and 76 multi-tenant properties acquired in the CIM Portfolio Acquisition.

(2)Disposition activity during the year ended December 31, 2022 includes three multi-tenant properties acquired in the CIM Portfolio Acquisition.

(3)The three multi-tenant properties acquired in the CIM Portfolio Acquisition and disposed in the year ended December 31, 2022 have been excluded from Acquired Properties and are included in Disposed Properties.

Net Operating Income

Segment Results — Single-Tenant Properties

The following table presents the components of NOI and the period change within the single-tenant segment for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


																								Same Store (1)								Acquisitions (2)							Disposals (3)							Total (4)
																												Six Months Ended June 30,					Increase (Decrease)		Six Months Ended June 30,					Increase (Decrease)		Six Months Ended June 30,					Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)
		Same Store (1)						Acquisitions (2)						Disposals (3)						Total (4)								2023		2022			$		2023		2022			$		2023		2022			$		2023		2022		$
		Six Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,					Increase (Decrease)
		2022		2021		$		2022		2021		$		2022		2021		$		2022		2021			$
Revenue from tenants	Revenue from tenants	$	98,506	$	90,711	$	7,795	$	8,396	$	978	$	7,418	$	2,267	$	10,620	$	(8,353)	$	109,169	$	102,309		$	6,860	Revenue from tenants	$	80,002	$	90,624		$	(10,622)	$	2,443	$	935		$	1,508	$	4,844	$	17,610		$	(12,766)	$	87,289	$	109,169	$	(21,880)
Less: Property operating	Less: Property operating	7,170		4,935		2,235		705		11		694		99		169		(70)		7,974		5,115			2,859		Less: Property operating	8,035		7,171			864		228		110			118		194		693			(499)		8,457		7,974		483
NOI	NOI	$	91,336	$	85,776	$	5,560	$	7,691	$	967	$	6,724	$	2,168	$	10,451	$	(8,283)	$	101,195	$	97,194		$	4,001	NOI	$	71,967	$	83,453		$	(11,486)	$	2,215	$	825		$	1,390	$	4,650	$	16,917		$	(12,267)	$	78,832	$	101,195	$	(22,363)

______

(1)Our single-tenant segment included ~~863 Six Month~~867 Same Store Properties.

(2)Our single-tenant segment included ~~81 Acquisitions Since January 1, 2021.~~15 Acquired Properties.

(3)Our single-tenant segment included ~~24 Dispositions Since January 1, 2021.~~76 Disposed Properties.

(4)Our single-tenant segment included ~~944~~882 total properties.

Revenue from Tenants

Revenue from tenants ~~increased $6.9~~decreased $21.9 million to $87.3 million for the six months ended June 30, 2023, compared to $109.2 million for the six months ended June 30, ~~2022, compared to $102.3 million for the six months ended June 30, 2021.~~2022. The ~~increase~~decrease in revenue was ~~primarily~~ due to ~~incremental income~~decreased revenue from our ~~Acquisitions Since January 1, 2021~~Disposed Properties of ~~approximately $7.4~~$12.8 million and ~~an increase in~~decreased revenue from our ~~Six Month~~ Same Store Properties ~~revenue~~ of ~~approximately $7.8~~$10.6 million, partially offset by ~~a decrease in~~increased revenue from our ~~Dispositions Since January 1, 2021~~Acquired Properties of ~~$8.4 million, most significantly from the disposition of our Sanofi property on January 6, 2022, which had annual rents of approximately $17.2~~$1.5 million.

The ~~increase~~decrease in our ~~Six Month~~ Same Store Properties revenue was ~~mainly~~primarily due to ~~an additional $8.8~~$8.2 million of ~~tenant~~increased reductions of revenue ~~recognized under termination agreements signed since December 2021 (some of which had occupancy periods that expired during the six months ended June 30, 2022, see~~ ~~Note 2~~ ~~— Summary of Significant Accounting Policies – Revenue Recognition~~ ~~for additional information) recorded~~ in the six months ended June 30, ~~2022, an increase of $2.3 million of operating expense reimbursement revenue and a decrease of $0.6 million of bad debt expense, which is recorded~~2023 as ~~a reduction~~compared to ~~revenue.~~

~~These increases were partially offset by $2.7 million of lower revenue from our United Healthcare property, which had annual rents of $5.4 million prior to its vacancy on~~ June 30, ~~2021,~~2022, mainly related to tenant bankruptcies, as well as by $1.4 million

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of decreased lease termination income and $1.0 million decreased revenue ~~from other properties which were vacant~~ in the six months ended June 30, ~~2022 but~~2023 from vacant properties which were occupied in the six months ended June 30, ~~2021.~~2022.

~~Table of Contents~~For additional information on our exposure to tenant bankruptcies, please see

Liquidity — Tenant Bankruptcies.

Property Operating Expenses

Property operating ~~expense~~expenses increased ~~$2.9~~$0.5 million to $8.5 million for the six months ended June 30, 2023, compared to $8.0 million for the six months ended June 30, ~~2022, compared to $5.1 million for the six months ended June 30, 2021.~~2022. This increase was ~~primarily~~ driven by ~~an increase of $0.7 million~~increased property operating expenses from our ~~Acquisitions Since January 1, 2021, and by an increase from our Six Month~~ Same Store Properties of ~~$2.2~~$0.9 million and increased property operating expenses of $0.1 million from our Acquired Properties, partially offset by increased property operating expenses from our Disposed Properties of $0.5 million.

Segment Results — Multi-Tenant Properties

The following table presents the components of NOI and the period change within the multi-tenant segment for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:


																								Same Store (1)								Acquisitions (2)							Disposals (3)							Total (4)
																												Six Months Ended June 30,					Increase (Decrease)		Six Months Ended June 30,					Increase (Decrease)		Six Months Ended June 30,					Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)
		Same Store (1)						Acquisitions (2)						Disposals (3)						Total (4)								2023		2022			$		2023		2022			$		2023		2022			$		2023		2022		$
		Six Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,				Increase (Decrease)		Six Months Ended June 30,					Increase (Decrease)
		2022		2021		$		2022		2021		$		2022		2021		$		2022		2021			$
Revenue from tenants	Revenue from tenants	$	57,201	$	58,455	$	(1,254)	$	45,502	$	—	$	45,502	$	—	$	—	$	—	$	102,703	$	58,455		$	44,248	Revenue from tenants	$	55,733	$	51,974		$	3,759	$	77,279	$	44,579		$	32,700	$	(7)	$	6,150		$	(6,157)	$	133,005	$	102,703	$	30,302
Less: Property operating	Less: Property operating	22,505		21,653		852		16,180		—		16,180		—		—		—		38,685		21,653			17,032		Less: Property operating	18,991		19,524			(533)		24,470		15,659			8,811		77		3,502			(3,425)		43,538		38,685		4,853
NOI	NOI	$	34,696	$	36,802	$	(2,106)	$	29,322	$	—	$	29,322	$	—	$	—	$	—	$	64,018	$	36,802		$	27,216	NOI	$	36,742	$	32,450		$	4,292	$	52,809	$	28,920		$	23,889	$	(84)	$	2,648		$	(2,732)	$	89,467	$	64,018	$	25,449

______

(1)Our multi-tenant segment included ~~33 Six Month~~32 Same Store Properties.

(2)Our multi-tenant segment included ~~79 Acquisitions Since January 1, 2021.~~77 Acquired Properties, excluding three properties recently acquired in the CIM Portfolio Acquisition that were disposed in the year ended December 31, 2022.

(3)Our multi-tenant segment included ~~0 Dispositions Since January 1, 2021.~~four Disposed Properties, including three properties recently acquired in the CIM Portfolio Acquisition that were disposed in the year ended December 31, 2022.

(4)Our multi-tenant segment included ~~112~~109 total properties.

Revenue from Tenants

Revenue from tenants increased ~~$44.2~~$30.3 million to $133.0 million for the six months ended June 30, 2023, compared to $102.7 million for the six months ended June 30, ~~2022, compared to $58.5 million for the six months ended June 30, 2021.~~2022. This increase in revenue from tenants was due to ~~incremental~~increases in revenue of $32.7 million form our Acquired Properties and $3.8 million from our ~~Acquisitions Since January 1, 2021 of approximately $45.5 million ($44.1 million of which was attributable to the CIM Portfolio Acquisition),~~Same Store Properties, partially offset by ~~a decrease~~$6.2 million from our Disposed Properties.

The increase in our ~~Six Month Same Store Properties revenue of approximately $1.3 million. Please see~~ ~~Note 1~~ ~~— Organization~~ ~~to our consolidated financial statements in this Quarterly Report on Form 10-Q for further details on the CIM Portfolio Acquisition.~~

~~The decrease in our Six Month~~ Same Store Properties revenue was primarily due to ~~$0.9~~$2.9 million of ~~decreased termination fee income, $0.8 million of decreased operating expense reimbursement revenue~~higher occupancy and ~~a recovery of $0.8 million relating to a lease settlement fee from a tenant which was recorded~~leasing rates in the six months ended June 30, ~~2021. These decreases were partially offset by an increase of $0.7 million due to marginally higher occupancy in the six months ended June 30, 2022~~2023 as compared to the six months ended June 30, ~~2021 and by $0.5~~2022, as well as $0.9 million of ~~decreased bad debt expense,~~accelerated below-market lease amortization due to tenants which ~~is recorded as a reduction~~terminated their leases in bankruptcy proceedings during the six months ended June 30, 2023.

For additional information on our exposure to ~~revenue.~~tenant bankruptcies, please see Liquidity — Tenant Bankruptcies.

Property Operating Expenses

~~Property operating expenses primarily consist of the costs associated with maintaining our properties including real estate taxes, utilities, and repairs and maintenance.~~ Property operating expenses increased ~~$17.0~~$4.9 million to $43.5 million for the six months ended June 30, 2023, compared to $38.7 million for the six months ended June 30, ~~2022, compared to $21.7 million for the six months ended June 30, 2021.~~2022. This increase was ~~driven by~~due to an increase in expenses of ~~approximately $0.9 million in our Six Month Same Store Properties, and by an increase of $16.2~~$8.8 million from our ~~Acquisitions Since January 1, 2021 ($15.7~~Acquired Properties, partially offset by decreases in expenses of $3.4 million ~~of which was attributable to the CIM Portfolio Acquisition). Please see~~ ~~Note 1~~ ~~— Organization~~ tofrom our ~~consolidated financial statements in this Quarterly Report on Form 10-Q for further details on the CIM Portfolio Acquisition.~~Disposed Properties and $0.5 million from our Same Store Properties.

Other Results of Operations

Asset Management Fees to Related ~~Party~~Parties

Asset management fees paid to the Advisor ~~increased $0.9~~decreased $0.2 million to $15.9 million for the six months ended June 30, 2023, compared to $16.1 million for the six months ended June 30, 2022, ~~compared~~primarily due to ~~$15.2 million for~~the incentive management fee incurred in the six months ended June 30, ~~2021, primarily due to~~2022 of $0.4 million. No incentive management fees were incurred in the six months ended June 30, 2023. The decrease was partially offset by an increase of ~~$1.2~~$0.2 million in the variable portion of the base management fee ~~during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021~~ due to our ~~increased~~ equity issuances in the year ended December 31, 2022, ~~over~~including shares issued in connection with the ~~comparable period in 2021, partially offset by a decrease of $0.3 million of incentive variable management fees.~~CIM Portfolio Acquisition.

The variable portion of the base management fee is calculated on a monthly basis and is equal to one-twelfth of 1.25% of the cumulative net proceeds of any equity raised by us (including, among other things, common stock, including shares subject

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to repurchase, preferred stock and certain convertible debt but excluding, among other things, equity-based compensation). The variable portion of the base management fee will increase in connection with future issuances of equity securities.

~~Table~~Impairments of ~~Contents~~

Real Estate Investments

~~In light of~~We did not record any impairment charges during the unprecedented market disruption resulting from the COVID-19 pandemic, in March 2020, we agreed with the Advisor to amend the advisory agreement to temporarily lower the quarterly thresholds we must reach on a quarterly basis for the Advisor to receive the variable incentive management fee through the end of 2020, and in January 2021, we agreed with the Advisor to further amend the advisory agreement to extend the expiration of these thresholds through the end of 2021, at which point it was not renewed. Please see ~~Note 11~~ — ~~Related Party Transactions and Arrangements~~ ~~to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on fees incurred from the Advisor.~~

~~Impairment Charges~~six months ended June 30, 2023.

We recorded impairment charges of $64.9 million ~~for~~during the six months ended June 30, 2022, $49.6 million of which related to a multi-tenant property located in Minnesota, $8.0 million of which related to seven vacant single-tenant properties formerly leased to Truist Bank, $3.8 million of which related to one vacant single-tenant property formerly leased to United Healthcare and $3.5 million of which related to a multi-tenant property acquired in the CIM Portfolio Acquisition. The United Healthcare property has been vacant since June 30, 2021 when the tenant did not renew its lease. We previously impaired the United Healthcare property by $26.9 million during the three months ended December 31, 2021. All of the impaired properties were impaired to adjust the properties’ carrying values to their fair values as determined by their respective purchase and sales agreements if under a contract to be disposed, or their estimated fair values if not under a contract to be disposed.

We recorded impairment charges of $0.1 million during the six months ended June 30, 2021 related to a vacant single-tenant held-for-use property which was recorded to adjust the property to its fair value as determined by the income approach. Please see Note 3 — Real Estate Investments to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding impairment charges.

~~Acquisition,~~Merger, Transaction and Other Costs

~~Acquisition,~~Merger, transaction and other costs increased ~~$0.3~~$5.0 million to $5.5 million for the six months ended June 30, 2023, compared to $0.5 million for the six months ended June 30, ~~2022, compared~~2022. The increase was primarily due to ~~$0.2~~$4.2 million of costs directly related to the Proposed Transaction incurred during the six months ended June 30, 2023, as well as $0.9 million of prepayment penalties on mortgage note repayments during the six months ended June 30, 2023.

Settlement Costs

Settlement costs incurred in the six months ended June 30, 2023 totaled $8.8 million, and no such amounts were incurred in the six months ended June 30, 2022. Settlement costs relate entirely to the Cooperation Agreement with Blackwells in which we agreed to reimburse Blackwells for one-half of the reasonable, documented, out-of-pocket expenses (including legal fees) incurred by the Blackwells/Related Parties in connection with the proxy contest and related litigation. See Note 9 — Commitments and Contingencies to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Equity-Based Compensation

Equity-based compensation increased by approximately $0.1 million to $7.1 million for the six months ended June 30, ~~2021. The increase was primarily due to increased acquisition activity in the six months ended June 30, 2022 as~~2023, compared ~~to the six months ended June 30, 2021.~~

~~Equity-Based Compensation~~

~~Equity-based compensation decreased by approximately $2.6 million~~ to $7.0 million for the six months ended June 30, ~~2022 compared~~2022. Equity-based compensation expenses relate to ~~$9.6~~restricted shares granted to our board of directors and employees of the Advisor or its affiliates who are involved in providing services to us and the units of limited partnership interests in the OP designated as LTIP Units that were granted to our Advisor in 2021 pursuant to the 2021 OPP. For additional information on the impact of the Proposed Transactions on the treatments of our equity-based compensation, see Note 1 — Organization – Proposed Merger and Internalization to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

General and Administrative Expenses

General and administrative expense increased $10.0 million to $25.2 million for the six months ended June 30, 2021. This decrease was primarily due to additional non-cash equity-based compensation expense from the 2021 OPP and additional non-cash equity-based compensation expense from a new grant of restricted shares in the second quarter of 2021 as well as an amendment to the original award agreement on February 26, 2021 for restricted shares previously issued to our former chief financial officer (see additional details below).

Our independent directors, acting as a group, authorized the issuance of a new award of LTIP Units on May 4, 2021 which was subsequently issued to the Advisor under the 2021 OPP after the performance period under the 2018 OPP expired on July 19, 2021. The six months ended June 30, 2021 includes expenses for both the 2018 OPP and the 2021 OPP (see ~~Note 13— Equity-Based Compensation). The performance period for the 2018 OPP ended on July 19, 2021 and therefore no further expense has been recorded for the 2018 OPP after the third quarter of 2021.~~

In addition, there were higher equity-based compensation expenses for restricted shares recorded in the first six months of 2021 which was due to new grants as well as an amendment to the original award agreement on February 26, 2021 for restricted shares previously issued to our former chief financial officer which accelerated the vesting of those restricted shares on April 9, 2021 upon the effectiveness of her resignation. These restricted shares were scheduled to vest in 25% increments on each of the first four anniversaries of the grant date (September 15, 2020). Also, we recorded additional expense for the e~~xcess of the new value of those awards on the date of modification over the fair value of the awards immediately prior to the amendment.In addition, we granted our~~ former chief financial officer an additional award of restricted shares that also fully vested upon the effectiveness of her resignation on April 9, 2021, contributing to the increase to equity-based compensation expense recorded during the six months ended June 30, 2021. The acceleration of vesting of the prior grant and the new grant resulted in approximately $1.1 million of increased equity-based compensation expense recorded during the six months ended June 30, 2021.

~~General and Administrative Expense~~

~~General and administrative expense increased $5.2 million~~2023, compared to $15.2 million for the six months ended June 30, ~~2022, compared to $10.0 million for the six months ended June 30, 2021.~~2022. The increase was primarily due to ~~$2.5~~$9.4 million of ~~increased professional expense reimbursements, as well as a $1.4 million professional fee credit~~legal and other costs incurred in the six months ended June 30, ~~2021~~2023, which ~~did not occur~~were attributable to the proxy contest and related litigation with Blackwells described herein. There were no similar costs in the six months ended June 30, 2022. The increase was also due to $0.7 million of increased professional expense reimbursements, ~~are due to additional staffing needed by the Advisor~~(primarily as a result of the CIM Portfolio Acquisition, all of which was related to increased compensation and overhead costs related to the Multi-Tenant Property Management Agreement not subject to the Capped Reimbursement Amount under the Advisory Agreement). The increased professional expense reimbursements were primarily due to additional staffing needed by our Advisor and our Property Manager as a result of the CIM Portfolio Acquisition. ~~Additionally, accounting~~

Depreciation and Amortization Expenses

Depreciation and amortization expense increased ~~$0.4~~$29.4 million ~~legal fees increased $0.2~~to $113.6 million ~~and miscellaneous fees increased $0.8 million in~~for the six months ended June 30, ~~2022 as~~2023, compared ~~to the six months ended June 30, 2021.~~

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~~Depreciation and Amortization Expense~~

~~Depreciation and amortization expense increased $19.5 million~~ to $84.3 million for the six months ended June 30, ~~2022, compared to $64.7 million for the six months ended June 30, 2021.~~2022. Depreciation and amortization expense was impacted by an increase of ~~$26.5~~$21.2 million related to our ~~Acquisitions Since January 1, 2021~~Acquired Properties (including, most notably, the CIM Portfolio Acquisition), and $12.9 million from our Same Store Properties, partially offset by a decrease in depreciation and amortization expense of ~~$1.8~~$4.7 million from our ~~Six Month~~Disposed Properties.

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The increase to our Same Store Properties depreciation and amortization was primarily due to $14.5 million of intangible lease asset write-offs as a ~~decrease~~result of ~~$5.2 million~~tenant bankruptcies and lease terminations which occurred in the three months ended June 30, 2023, partially offset by less depreciation and amortization from fully depreciated real estate assets.

For additional information on our ~~Dispositions Since January 1, 2021.~~exposure to tenant bankruptcies, please see Liquidity — Tenant Bankruptcies.

~~Gain~~Gains on ~~Sale~~Sales of Real Estate Investments

During the six months ended June 30, 2023, we sold 53 properties for an aggregate contract price of $172.2 million, resulting in aggregate gains on sale of $17.3 million. During the six months ended June 30, 2022, we sold 11 properties for an aggregate contract price of $295.6 million, resulting in aggregate gains on sale of $67.0 million. ~~During~~

Interest Expense

Interest expense increased $18.6 million to $70.6 million for the six months ended June 30, ~~2021, we sold five properties for an aggregate contract price of $3.1 million, resulting in aggregate gains on sale of $0.3 million.~~

~~Interest Expense~~

~~Interest expense increased $12.4 million~~2023, compared to $52.1 million for the six months ended June 30, ~~2022, compared~~2022. This increase was mainly due to ~~$39.7~~(i) increased interest expense on our borrowings under the Credit Facility due to (a) increased borrowings on the Credit Facility, which were used primarily to partially fund the CIM Portfolio Acquisition and repay maturing indebtedness therefrom, as well as (b) higher variable rates on these borrowings and (ii) higher interest expense from assumed mortgage debt from the CIM Portfolio Acquisition. We also recorded $0.6 million ~~for~~of additional deferred financing cost amortization in the six months ended June 30, ~~2021. This increase was mainly~~2023 due to ~~interest~~the early repayment of ~~$11.3 million on our $500.0~~the Stop & Shop and Bob Evans I mortgage notes, and $0.6 million of ~~4.50% per annum Senior Notes which were issued~~increased deferred financing cost amortization from mortgage notes assumed in ~~2021, as well as higher average balances on our mortgage and Credit Facility debt (resulting largely from the assumption of mortgage debt and borrowings under our Credit Facility to finance~~ the CIM Portfolio ~~Acquisition), partially offset by lower average interest rates. Please see~~ ~~Note 1~~ ~~— Organization~~ ~~to our consolidated financial statements in this Quarterly Report on Form 10-Q for further details on the CIM Portfolio~~ Acquisition.

During the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the average outstanding balances on our mortgage notes payable were ~~$1.6~~$1.7 billion and $~~1.5~~1.6 billion, respectively, and ~~our~~the average outstanding ~~balance~~balances under our Credit Facility ~~was $315.9~~were $522.9 million and ~~$268.2~~$315.9 million, respectively. For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, the weighted-average interest rates on our mortgage notes payable were ~~3.81%~~3.83% and ~~3.98%~~3.81%, respectively, and the weighted-average interest rates on our Credit Facility were ~~2.51%~~6.92% and ~~2.79%~~2.51%, respectively.

The ~~reduction of~~increase in the weighted-average interest rate on our Credit Facility during the six months ended June 30, ~~2022~~2023 as compared to the six months ended June 30, ~~2021~~2022 is primarily due to ~~lower credit spreads to LIBOR~~increases in interest rates during the year ended December 31, 2022 and the six months ended June 30, 2023. The increase in the weighted-average balance on our Credit Facility ~~after~~was primarily due to draws on the ~~amendment which occurred on October 1, 2021.~~Credit Facility to repay maturing mortgage notes payable during the six months ended June 30, 2023.

~~We anticipate that~~As of June 30, 2023, the weighted-average annual interest rate on our Credit Facility was 7.20%. In light of recent increases to variable rates, we expect to experience further increases to our interest expense in future periods when compared to respective prior periods. We expect that these increases will increase throughout 2022 as a result of, among other things, recent actions taken by the Federal Reserve Board to increase interest rates and its intention to reduce the amount of assets on its balance sheet. See ~~Item 1.A Risk Factors~~ ~~for additional information.~~be material.

Other Income

Other income was $0.6 million for the six months ended June 30, 2023, compared to $1.0 million for the six months ended June 30, ~~2022, compared to $44,000 for the six months ended June 30, 2021. The increase in other~~2022. Other income during ~~the six months ended June 30, 2022 was primarily due to the settlement of $0.9 million of liens incurred on our Prairie Towne property in~~ the three months ended June 30, ~~2020 as a result~~2023 and 2022 primarily relate to the settlement of ~~a settlement with~~liens incurred on certain of our properties, in the ~~lien holder during the six months ended June 30, 2022.~~respective periods, at amounts lower amounts than what were previously accrued for.

Gain on Non-Designated Derivative

No gain on non-designated derivatives was recorded in the six months ended June 30, 2023.

Gain on non-designated derivatives for the six months ended June 30, 2022 was $2.3 million, and was related to an embedded derivative on the common stock issued in connection with the CIM Portfolio Acquisition. The stock was issued in the three months ended March 31, 2022. ~~No gain on non-designated derivatives~~

Allocation for Preferred Stock

Allocation for preferred stock was ~~recorded in~~$11.7 million for the six months ended June 30, ~~2021. For additional information, see~~ ~~Note 8~~ ~~— Derivatives~~2023 and ~~Hedging Activities~~2022. These amounts represent the allocation of our net loss that is attributable to ~~our consolidated financial statements included in this Quarterly Report on Form 10-Q.~~holders of Series A Preferred Stock and holders of Series C Preferred Stock.

Cash Flows from Operating Activities

Our cash flows provided by ~~or used in~~ operating activities isare affected by, among other things; (i) the rental income generated from leasing ~~activity, including~~activities as well as payments for leasing ~~activity due to acquisitions~~commissions, (ii) the timing and ~~dispositions, restricted cash we are required to maintain, the timing~~amounts of interest payments (which have increased due to recent increases in market rates), (iii) the ~~receipt~~receipts of scheduled rent payments and (iv) the ~~level~~timing and amounts of property operating ~~expenses.~~ expense payments and related cash reimbursements from tenants over time.

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Our cash flows provided by operating activities were $43.7 million during the six months ended June 30, 2023 and consisted of a net loss of $60.6 million adjusted for non-cash items of $107.4 million, including (i) depreciation and amortization of tangible and intangible real estate assets, (ii) amortization of deferred financing costs, (iii) amortization of mortgage premiums on borrowings, (iv) share-based compensation and (v) gains on sales of real estate investments. In addition, cash flows from operating activities were impacted by (i) a decrease in the straight-line rent receivable of $0.3 million, (ii) a decrease in deferred rent of $0.3 million, (iii) a decrease in accounts payable and accrued expenses of $4.2 million, (iv) a decrease in prepaid expenses and other assets of $0.2 million and (v) expenses incurred from prepayment penalties on mortgage repayments of $0.9 million, which are included in financing activities.

Our cash flows provided by operating activities were $104.6 million during the six months ended June 30, 2022 and consisted of net loss of $4.6 million adjusted for non-cash items of $90.5 million, including (i) depreciation and amortization of tangible and intangible real estate assets, (ii) amortization of deferred financing costs, (iii) amortization of mortgage premiums on borrowings, (iv) share-based compensation, (v) gain on non-designated derivatives, (vi) gain on sale of real estate investments and (vii) impairment charges. In addition, cash flows from operating activities were impacted by ~~a decrease~~(i) an increase in the straight-line rent receivable of $2.6 million, (ii) a decrease in deferred rent of $1.4 million, (iii) an increase in accounts payable and accrued expenses of $18.4 million and (iv) a decrease in prepaid expenses and other assets of $4.4 million.

Cash Flows from Investing Activities

Our cash flows ~~from operating~~provided by investing activities ~~were $65.4 million~~ during the six months ended June 30, ~~2021 and~~2023 of $33.1 million consisted of net loss of $5.2 million, adjusted for non-cash items of $76.9 million, including depreciation and amortization of tangible and intangible real estate assets, amortization of deferred financing costs, amortization of mortgage premiums on borrowings, share-

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~~based compensation, gain on~~cash received from the sale of real estate investments ~~and impairment charges. In addition,~~of $66.2 million, partially offset by cash ~~flows from operating activities were impacted by an increase~~payments for investments in ~~the straight-line rent receivable of $3.5 million, a decrease in deferred rent of $0.2 million, an increase in accounts payable and accrued expenses of $0.7 million and an increase in prepaid expenses~~real estate and other assets of ~~$3.8~~$12.3 million and capital expenditures of $20.9 million.

~~Cash Flows from Investing Activities~~

~~The net~~Our cash flows used in investing activities during the six months ended June 30, 2022 of $686.4 million consisted primarily of cash payments for investments in real estate and other assets of $954.7 million (including, most notably, the CIM Portfolio Acquisition), capital expenditures of $4.8 million and deposits for real estate acquisitions of $0.1 ~~million,~~million. These cash outflows were partially offset by cash received from the sale of real estate investments of $273.3 million.

~~The net~~Cash Flows from Financing Activities

Our cash flows used in ~~investing~~financing activities of $82.9 million during the six months ended June 30, ~~2021~~2023 consisted of ~~$70.1~~cash outflows for (i) payments on our mortgage notes of $193.1 million, ~~consisted primarily~~(ii) dividends paid to holders of ~~investments in real estate and other assets~~our Class A common stock of ~~$66.0~~$57.0 million, ~~capital expenditures~~(iii) payments on our Credit Facility of $20.0 million, (iv) cash dividends paid to holders of our Series A Preferred Stock (as defined below) of $7.4 million, (v) cash dividends paid to holders of our Series C Preferred Stock (as defined below) of $4.2 million, (vi) cash paid for prepayment penalties on mortgage repayments of $0.9 million, (vii) cash paid for financing costs of $0.5 million, (viii) cash paid to holders of LTIP Units and ~~deposits~~Class A Units of $0.4 million (ix) cash paid for ~~real estate acquisitions~~various equity offering costs of ~~$2.8~~$0.2 million and (x) repurchases of common stock of $0.2 million. These cash outflows were partially offset by ~~cash received~~proceeds from ~~the sale~~our Credit Facility of ~~real estate investments of $2.9~~$201.0 million.

~~Cash Flows from Financing Activities~~

~~The net~~Our cash flows provided by financing activities of $431.9 million during the six months ended June 30, 2022 consisted primarily of proceeds from our Credit Facility of $513.0 million and net proceeds from the issuance of Class A common stock of $24.9 million. These cash inflows were partially offset by (i) cash dividends paid to holders of our Class A common stock of $55.3 million, (ii) payments on our Credit Facility of $25.0 million, (iii) payments on our mortgages of $10.1 million, (iv) cash dividends paid to holders of our Series A Preferred Stock (as defined below) of $7.4 million, (v) cash dividends paid to holders of our Series C Preferred Stock (as defined below) of $4.2 million, ~~and~~(vi) payments of deferred financing costs of $2.9 ~~million.~~

~~The net cash provided by financing activities was $43.3~~ million, ~~during the six months ended June 30, 2021. Cash inflows consisted primarily~~(vii) various equity offering costs of net proceeds from mortgage notes payable, primarily resulting from the issuance of net lease mortgage notes and related mortgage payoffs, of $130.3 million, net proceeds from the issuance of Class A common stock of $77.0 million, net proceeds from the issuance of 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”) of $2.2$0.7 million and ~~net proceeds from the issuance of 7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series C Preferred Stock”) of $25.6 million. These~~(viii) cash ~~inflows were partially offset by payments on our Credit Facility of $125.1 million, cash dividends~~ paid to holders of ~~our~~LTIP Units and Class A ~~common stock~~Units of ~~$46.3 million, cash dividends paid to holders of our Series A Preferred Stock of $7.4 million and cash dividends paid to holders of our Series C Preferred Stock of $2.3~~$0.4 million.

Liquidity and Capital Resources

Our principal demands for cash are to fund operating and administrative expenses, debt service obligations, dividends on our Class A common stock, ~~(including our shares subject to repurchase),~~ dividends on our Series A Preferred Stock, dividends on our Series C Preferred Stock, distributions on our LTIP Units and distributions for limited partnership units owned by third parties that correspond to shares of our Class A common stock, and capital expenditures. In addition, ~~our demand for~~we may also use cash ~~includes the~~to purchase of additional properties.

~~CIM Portfolio Acquisition~~

In December 2021, we signed a purchase and sale agreement for the CIM Portfolio Acquisition, which consists of 79 multi-tenant retail centers and two single-tenant properties, for a contract purchase price of $1.3 billion. We closed on the properties of the CIM Portfolio Acquisition in multiple stages as follows:Material Cash Requirements

•As ~~In the three months ended March~~of June 30, 2023 and December 31, 2022, we ~~closed on the acquisition~~had cash and cash equivalents of ~~56 of these properties for an aggregate contract purchase price of $801.1 million. We funded the closing of these properties with cash of $728.4~~$59.2 million ~~including $378.0~~and $70.8 million, of borrowings under our Credit Facility, the assumption of $19.3 million of existing mortgage debt and the issuance of 6,450,107 shares of our Class A common stock, representing consideration of $50.0 million, for accounting purposes, in value at issuance ($53.4 million of value subject to repurchase), which were issued at a weighted-average price of $7.75 per share in value at issuance ($8.28 per share of value subject to repurchase).

•In the three months ended June 30, 2022, we closed on 24 additional properties from the CIM Portfolio Acquisition for an aggregate contract purchase price of $452.8 million in three closings. The acquisitions were funded with the assumption of $294.5 million of fixed-rate mortgage debt, $128.2 million of $135.0 million of borrowings under the Credit Facility, the application of $23.8 million of the Company’s $40.0 million deposit and the remainder with cash on hand. The assumed mortgages bear stated interest rates between 3.65% and 4.62% and mature between April 2023 and September 2033.respectively.

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•The aggregate contract purchase prices above do not include contingent consideration relating to leasing activity at each respective acquired property for a six-month period subsequent to the respective closing dates of each acquired property. We paid $10.2 million and $13.3 million for such contingent consideration in the three months ended March 31, 2022 and three months ended June 30, 2022, respectively. As of June 30, 2022, we accrued $10.8 million of contingent consideration based on leases executed as of June 30, 2022. We paid $16.1 million in July 2022, which includes the accrual for $10.8 million, and additional amounts may be due for leases executed through January 2023 (six months following the acquisition date of the final property of the CIM Portfolio Acquisition).

The cash used in the CIM Portfolio Acquisition, including the one closing subsequent to June 30, 2022, consisted of $420.5 million, which included net proceeds from the approximately $260.7 million sale of our Sanofi property, the remaining proceeds from our Senior Notes offering, and $513.0 million from borrowings under our Credit Facility. In addition, we acquired 10 additional single-tenant properties and one additional multi-tenant property in the six months ended June 30, 2022 for an aggregate contract purchase price of $58.4 million, which was funded entirely with cash on hand. Of the 91 properties acquired in the six months ended June 30, 2022, 60 properties were added to the borrowing base of the Credit Facility.

~~Short-Term Material Cash Requirements~~

As ~~of June 30, 2022 and December 31, 2021, we had cash and cash equivalents of $69.4 million and $214.9 million, respectively.~~

We expect to fund our ~~future short-term~~ material cash requirements through the effectiveness of the Proposed Transactions, or, if they are not approved, over the next year through a combination of cash on hand, net cash provided by our property operations and borrowings under our Credit ~~Facility.~~Facility (see Credit Facility section below for more information). We may also generate additional liquidity through property dispositions and, to the extent available, secured or unsecured borrowings including the issuance of additional Senior Notes or similar securities, issuances under our “at the market” equity offering program for Class A common stock (the “Class A Common Stock ATM Program”), our “at the market” equity offering program for Series A Preferred Stock (the “Series A Preferred Stock ATM Program”), our “at the market” equity offering program for Series C Preferred Stock (the “Series C Preferred Stock ATM Program”), as well as other offerings of debt or equity securities. See Mortgage Notes Payable below for a discussion of the $96.5 million of debt scheduled for repayment in the remainder of 2023 and the potential methods to repay or refinance the debt.

Deleveraging Initiative

In May 2021, we began ~~a deleveraging~~an initiative to reduce the ratio of our net debt ~~relative~~ to ~~our earnings.~~adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”). We hope to achieve this initiative by:

•reducing outstanding debt over time;

•funding acquisitions through cash on hand rather than proceeds from debt, or at lower debt-to-equity ratios;

•raising equity to fund acquisitions and pay down debt; and

•increasing revenues through external and internal growth factors such as property acquisitions and multi-tenant leasing activity.

~~The~~We decided, however, to increase our leverage to complete the CIM Portfolio Acquisition, has increased our leverage in the six months ended June 30, 2022 as compared to prior periods. We expect that our leverage will further increase in the third quarter of 2022 as a result of assuming an additional mortgage to finance the remainder of the CIM Portfolio Acquisition. Webut we plan to opportunistically continue ~~with our~~focusing on this deleveraging strategy now that the CIM Portfolio Acquisition is complete. We may, however, issue additional Senior Notes or similar securities in the future particularly as we revise our capital structure following the CIM Portfolio Acquisition in a similar fashion as we may add or refinance existing mortgage debt or indebtedness under our Credit Facility. We ~~have additionally identified certain~~are evaluating other assets in our portfolio for potential sale, including assets recently acquired in the CIM Portfolio Acquisition, and ~~other properties in our portfolio, that~~if we are able to sell these assets, we intend to ~~market for sale,~~use the net proceeds ~~of which, after taxes and selling costs, will be used~~primarily to repay ~~debt. We~~indebtedness. Below is a summary of asset sales (including properties which we have entered into ~~an agreement~~agreements to ~~dispose~~sell) since the completion of ~~one such multi-tenant property acquired in~~ the CIM Portfolio Acquisition as part of this initiative, however there can be no assurance that the future sales of any properties will be completed on favorable terms, or at all.

The following lists our dispositions and debt repayments beginning with the completion of the CIM Portfolio Acquisition in July 2022:

•From the completion of the CIM Portfolio Acquisition in July 2022 through December 31, 2022, we disposed of 16 properties (three properties from the CIM Portfolio Acquisition, one other multi-tenant property and 12 single-tenant properties). A portion of the funds received from these dispositions was used to repay $75.0 million of amounts outstanding under our Credit Facility in the year ended December 31, 2022 (including $40.0 million repaid at the closing of certain property dispositions).

•During the three months ended March 31, 2023, we sold five properties for aan aggregate contract ~~sales~~ price of ~~$10.4~~$71.3 million. A portion of the funds received was used to repay $20.0 million of amounts outstanding under our Credit Facility in the three months ended March 31, 2023 (excluding $10.0 million of borrowings). We also fully repaid $45.0 million of mortgages at the closings of these dispositions.

•During the three months ended June 30, ~~2022,~~2023, we ~~recorded $3.5~~disposed of 48 properties for an aggregate contract sales price of $100.8 million. A portion of the funds received was used to repay $35.0 million of ~~impairment charges on this property. There is~~amounts outstanding under our Credit Facility in the three months ended June 30, 2023 (excluding $191.0 million of borrowings). We also fully repaid $22.6 million of mortgages at the closings of these dispositions.

•We have also entered into five purchase and sale agreements to dispose of five properties for an aggregate contract sales price of $11.6 million, and we have entered into five non-binding letters of intent to dispose of five properties for an aggregate contract sales price of $7.3 million. We anticipate using a portion of the net proceeds generated from these dispositions to repay indebtedness, although there can be no assurance that the sales of these properties will close on their contemplated terms, or at all.

Tenant Bankruptcies

Below is a summary of certain recent tenant bankruptcies:

•A Burger King franchisee at 41 of our single-tenant properties filed for Chapter 11 bankruptcy protection in January 2023, and 13 of the 41 leases were terminated in bankruptcy proceedings. We accounted for these leases as terminations as of December 31, 2022. During the six months ended June 30, 2023, four additional leases were

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rejected in bankruptcy proceedings. The 41 leases had aggregate annual rents of $5.5 million, and the 13 terminated leases had aggregate annual rents of $1.8 million. We recorded $0.9 million of revenue reductions associated with these properties in the three and six months ended June 30, 2023. We are actively marketing to re-lease or dispose of some or all of the 13 vacant properties. The remaining 28 leases were reassigned to Burger King or its franchisees.

•American Car Center filed for Chapter 7 bankruptcy protection in March 2023, and all 16 leases were terminated in bankruptcy proceedings. The 16 leases had aggregate annual rents of $3.8 million. We accounted for these terminations as of March 31, 2023 and we ~~will be able~~recorded $2.9 million of revenue reductions associated with these terminations in the six months ended June 30, 2023. We disposed of two of these vacant properties in the three months ended June 30, 2023 and are actively marketing to ~~enter into further agreements~~re-lease or dispose of some or all of the remaining 14 vacant properties.

•Mountain Express Oil Company filed for Chapter 11 bankruptcy protection in March 2023, and 28 leases were terminated in bankruptcy proceedings, which we accounted for as of June 30, 2023. We recorded $4.3 million of revenue reductions associated with these leases in the three and six months ended June 30, 2023. Mountain Express Oil Company leased 43 of our single-tenant properties as of June 30, 2023, totaling $6.8 million of annual rents. The 28 rejected leases were re-leased to ~~sell other assets on acceptable~~another tenant in our single-tenant segment at substantially similar terms and ~~conditions, or~~rental rates to the rejected leases in the three months ended June 30, 2023. The leases with the remaining 43 properties were terminated in bankruptcy proceedings subsequent to June 30, 2023.

•Bed Bath & Beyond and their subsidiaries filed for Chapter 11 bankruptcy protection in April 2023, and five leases were terminated in the three months ended June 30, 2023. These five leases had aggregate annual rents of $1.1 million. Bed Bath & Beyond and their subsidiaries had 14 leases at ~~all.~~12 of our multi-tenant properties as of June 30, 2023, totaling approximately 384,000 square feet and $4.1 million of annual rents. Subsequent to June 30, 2023, five additional leases were terminated, which had annual rents of $1.1 million and occupied 127,000 square feet as of June 30, 2023. We are actively marketing to re-lease these properties.

•David’s Bridal filed for Chapter 11 bankruptcy protection in April 2023 and two leases were terminated in the three months ended June 30, 2023. The two leases had aggregate annual rents of $0.3 million. David’s Bridal had three leases at three of our multi-tenant properties as of June 30, 2023, totaling 30,000 square feet and $0.4 million of annual rents. We are actively marketing to re-lease these properties.

•Christmas Tree Shops filed for Chapter 11 bankruptcy protection in May 2023. Bankruptcy proceedings are ongoing and we have not yet been notified of any lease rejections. Accordingly, we have not accounted for any lease terminations at this time. Christmas Tree Shops had two leases at two of our multi-tenant properties as of June 30, 2023, totaling 67,000 square feet and $0.8 million of annual rents. We are actively marketing to re-lease these properties.

Please see Part II — Item 1A. “Risk Factors” below (as well as Part I — Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022) for additional information on the risks and uncertainties associated with tenant bankruptcies.

Total Borrowings

As of June 30, 2023, we had total gross debt outstanding of $2.7 billion, bearing interest at a weighted-average interest rate per annum equal to 4.7%, and the weighted average maturity of our indebtedness was 3.9 years as of June 30, 2023. As of June 30, 2023, $96.5 million and $65.2 million of our fixed-rate mortgage debt is scheduled for repayment in the remainder of 2023 and the year ended December 31, 2024, respectively (see Mortgage Notes Payable below for more information).

During the six months ended June 30, 2023, we fully repaid $258.4 million of mortgage notes ($190.7 million of which were scheduled for repayment during the year ended December 31, 2023) using (i) $183.0 million of borrowings funded by draws under our Credit Facility, (ii) $67.7 million of net proceeds from our real estate dispositions and (iii) the remainder with cash on hand. We also separately drew $18.0 million on our Credit Facility for general corporate purposes. We had $604.0 million of outstanding borrowings under our Credit Facility and ~~Senior Notes — June 30, 2022~~$42.3 million remained available for future borrowings.

As of June 30, ~~2022, we had $1.8 billion~~2023, 77.5% of our total gross ~~mortgage notes payable~~debt outstanding ~~$500.0 million~~was fixed-rate, which bore interest at a weighted average annual rate of ~~gross Senior Notes outstanding~~4.0%, and ~~$488.0 million~~22.5% was variable-rate, consisting solely of amounts outstanding under our Credit ~~Facility. Of~~Facility, which bore interest at a weighted average annual rate of 7.2%. As of June 30, 2023, we had $4.9 billion in gross real estate assets, at cost, and we had pledged approximately $2.6 billion in gross real estate assets, at cost, as collateral for our ~~total~~mortgage notes payable. In addition, approximately $2.2 billion of these gross ~~debt, 82.5%~~real estate assets, at cost, were included in the unencumbered asset pool comprising the borrowing base under the Credit Facility and therefore, this real estate is ~~fixed-rate~~only available to serve as collateral or satisfy other debts and ~~17.5%~~obligations if it is ~~variable-rate.~~first removed from the borrowing base under the Credit Facility, which would reduce the amount available to us on the Credit Facility.

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As of June 30, ~~2022,~~2023, our net debt to gross asset value ratio was ~~50.6%~~51.0%. We define net debt as the principal amount of our outstanding debt (excluding the effect of deferred financing costs, net and mortgage premiums and discounts, net) less cash and cash equivalents. Gross asset value is defined as total assets plus accumulated depreciation and amortization.

If the REIT Merger Agreement is consummated, GNL is required to assume all of our indebtedness and repay all amounts outstanding under our Credit Facility. See Note 4 — Mortgage Notes Payable, Net, Note 5 — Credit Facility and Note 6— Senior Notes, Net to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion of GNL’s assumption of our indebtedness in connection with the REIT Merger.

Mortgage Notes Payable

As of June 30, ~~2022, the weighted-average effective interest rates on the~~2023, we had $1.6 billion of gross mortgage notes payable ~~Credit Facility and Senior Notes were 3.82%, 3.43% and 4.50%, respectively.~~

~~We assumed $313.8 million in fixed~~outstanding, bearing interest at a weighted-average interest rate per annum equal to 3.8%. As of June 30, 2023 all of our existing mortgage debt in the six months ended June 30, 2022 related to the closing of 80 properties of the CIM Portfolio Acquisition, which bear interest at stated rates between 3.65% and 4.62%, maturing between April 2023 and September 2033. In addition, we assumed $39.0 million of mortgage debt secured by the final property of the CIM Portfolio Acquisition on July 7, 2022.was fixed-rate.

Based on debt outstanding as of June 30, ~~2022,~~2023, future anticipated principal payments on our mortgage notes payable for the remainder of ~~2022~~2023 and the year ended December 31, ~~2023~~2024 are ~~$3.1~~$96.5 million and ~~$289.8~~$65.2 million, respectively. We ~~do not anticipate~~intend to repay the ~~need to make any significant additional~~ principal ~~payments~~amounts scheduled for ~~the remainder of 2022, but for~~repayment during the year ended December 31, 2023 ~~we anticipate~~with (i) proceeds from the ~~need to repay~~Credit Facility by transferring some or ~~refinance $288.3 million~~all of the ~~total $352.8 million we have assumed from~~encumbered properties to the ~~CIM Portfolio Acquisition in 2022 (including the additional $39.0 million fixed-rate mortgage assumed subsequent to June 30, 2022, see~~ ~~Note 16~~ ~~— Subsequent Events~~ ~~for additional information). In light of the current direction of interest rates, the rates we pay on debt which we refinance may be higher than the rates on debt we assume.~~

As of June 30, 2022, we had $5.1 billion in gross real estate assets, at cost, and we had pledged approximately $3.0 billion in gross real estate assets, at cost, as collateral for our mortgage notes payable. In addition, approximately $2.0 billion of these gross real estate investments, at cost, were included in the unencumbered asset pool comprising the borrowing base ~~under the~~thereunder (as defined in Note 5— Credit Facility) and (ii) cash on hand, a portion of which had a total borrowing capacity thereunder of $526.6 million. Therefore, this real estate is only available to serve as collateral or satisfy other debts and obligations if it is first removed from the borrowing base under the Credit Facility, which would reduce the amount available to us on the Credit Facility.

~~Net Lease Mortgage Notes~~

On June 3, 2021, through subsidiaries, we issued $318.0 million aggregate principal amount of Net Lease Mortgage Notes (the “2021 Net Lease Mortgage Notes”). The 2021 Net Lease Mortgage Notes are cross-collateralized with the $242.0 million in aggregate principal amount of Net Lease Mortgage Notes issued through subsidiaries in 2019 (the “2019 Net Lease Mortgage Notes” and, together with the 2021 Net Lease Mortgage Notes, the “Notes”). The Notes were issued using a master trust structure, which enables additional series of notes to be issued upon the contribution of additional properties to the collateral pool without the need to structure a new securitization transaction. Any new notes that are so issued will be cross-collateralized with the Notes.

The 2021 Net Lease Mortgage Notes were issued in six classes: Class A-1 (AAA), Class A-2 (AAA), Class A-3 (A), Class A-4 (A), Class B-1 (BBB) and Class B-2 (BBB). The Class A-1 (AAA) Notes are rated AAA (sf) by Standard & Poors and are comprised of $55.0 million initial principal amount of 2021 Net Lease Mortgage Notes with an anticipated repayment date in May 2028 and an interest rate of 2.21%. The Class A-2 (AAA) Notes are rated AAA (sf) by Standard & Poors and are comprised of $95.0 million initial principal amount of 2021 Net Lease Mortgage Notes with an anticipated repayment date in May 2031 and an interest rate of 2.79%. The Class A-3 (A) Notes are rated A (sf) by Standard & Poors and are comprised of $35.0 million initial principal amount of 2021 Net Lease Mortgage Notes with an anticipated repayment date in May 2028 and an interest rate of 3.03%. The Class A-4 (A) Notes are rated A (sf) by Standard & Poors and are comprised of $55.0 million initial principal amount of 2021 Net Lease Mortgage Notes with an anticipated repayment date in May 2031 and an interest rate of 3.60%.

~~The Class B Notes are currently retained by the OP and are eliminated upon consolidation, and are therefore not presented in our consolidated financial statements. The Class B Notes~~ may be sold to unaffiliated third parties in the future. The Class B-1 (BBB) Notes are rated BBB (sf) by Standard & Poors and are comprised of $30.0 million initial principal amount of 2021 Net Lease Mortgage Notesgenerated from future property sales.

Our mortgage notes payable agreements require compliance with an anticipated repayment date in May 2028 and an interest rate of 4.02%. The Class B-2 (BBB) Notes are rated BBB (sf) by Standard & Poors and are comprised of $48.0 million initial principal amount of 2021 Net Lease Mortgage Notes with an anticipated repayment date in May 2031 and an interest rate of 4.58%. The 2021 Net Lease Mortgage Notes have a rated final payment date in May 2051.

The 2019 Net Lease Mortgage Notes were issued in two classes, Class A-1 (AAA) and Class A-2 (A). The Class A-1 (AAA) Notes are rated AAA (sf) by Standard & Poors and are comprised of $121.0 million initial principal amount of 2019 Net Lease Mortgage Notes with an anticipated repayment date in May 2026 and an interest rate of 3.78%. The Class A-2 (A) Notes are rated A (sf) by Standard & Poors and are comprised of $121.0 million initial principal amount of 2019 Net Lease Mortgage Notes with an anticipated repayment date in May 2029 and an interest rate of 4.46%. The 2019 Net Lease Mortgage Notes have a rated final payment date in May 2049.

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The Notes may be redeemed at any time prior to their anticipated repayment date subject to payment of a make-whole premium. If any class of Notes is not paid in full at its respective anticipated repayment date, additional interest will begin to accrue on those Notes.

~~Senior Notes~~

The Senior Notes were issued on October 7, 2021 and are fully and unconditionally guaranteed (the “Senior Note Guarantees”) on a joint and several basis by the subsidiaries of the Company and the OP that are guarantors under the Credit Facility. Subject to certain exceptions, each future subsidiary of these entities that subsequently guarantees indebtedness under the Credit Facility, any other syndicated loan facility or certain capital markets indebtedness, in each case, will be required to execute a Senior Note Guarantee.

property-level financial covenants including debt service coverage ratios. As of June 30, ~~2022,~~2023, we were in compliance with ~~all the operating and~~ financial covenants under our mortgage notes payable agreements.

If the ~~Senior~~REIT Merger is consummated, GNL is required to assume all of our mortgage notes payable. See Note 4 — Mortgage Notes ~~and mortgages.~~Payable, Net to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Credit Facility ~~— Terms and Capacity~~

As of June 30, ~~2022~~2023 we had ~~$488.0~~$604.0 million outstanding under ~~the Credit Facility. We did not have any amounts outstanding under the~~our Credit Facility aswhich had a weighted average annual interest rate of ~~December 31, 2021.~~7.2%.

~~On October 1, 2021, we entered into an amendment and restatement of the Credit Facility with BMO Harris Bank N.A., as administrative agent, and the other lenders party thereto.~~ The aggregate total commitments under the Credit Facility ~~were increased to~~are $815.0 million, including a $50.0 million sublimit for letters of credit and a $55.0 million sublimit for swingline loans. The Credit Facility includes an uncommitted “accordion feature” permitting us to increase the commitments under the Credit Facility by up to an additional $435.0 million, subject to obtaining commitments from new lenders or additional commitments from participating lenders and certain customary conditions.

The Credit Facility is supported by a pool of eligible unencumbered properties that are owned by the subsidiaries of the OP that serve as Guarantors. We may add or remove properties to or from this pool so long as at any time there are at least 15 eligible unencumbered properties with a value of at least $300.0 million, among other things. The amount available for future borrowings under the Credit Facility depends on the amount outstanding thereunder relative to the aggregate commitments; however, the amount we may borrow under the Credit Facility will be limited by financial maintenance covenants. At the execution of the amendment and restatement of the Credit Facility, $186.2 million was outstanding under the Credit Facility. This amount was subsequently repaid with a portion of the net proceeds of the Senior Notes.

The Credit Facility requires payments of interest only prior to maturity. ~~At the execution of the amendment and restatement of the~~The Credit Facility ~~the~~bears interest at a rate ~~was LIBOR plus 1.90% per annum. Following the amendment of the Credit Facility, borrowings bear interest at~~equal to either (i) the Base Rate (as defined in the Credit Facility) plus an applicable spread ranging from 0.45% to 1.05%, or (ii) LIBOR plus an applicable spread ranging from 1.45% to 2.05%, in each case depending on our consolidated leverage ratio. ~~These spreads reflect a reduction from the previously applicable spreads.~~ In addition, ~~pursuant to the amendment to the Credit Facility,~~ (i) if either we or the OP achieves an investment grade credit rating, the OP can elect for the spread to be based on the credit rating of ours or the OP, and (ii) the “floor” on ~~LIBOR was decreased from 0.25% to~~SOFR is 0%. ~~The Credit Facility includes provisions related to the anticipated transition from LIBOR to an alternative benchmark rate.~~ As of June 30, ~~2022,~~2023, we ~~have~~ elected to use ~~LIBOR~~SOFR for all our borrowings under the Credit ~~Facility.~~Facility.

The Credit Facility matures on April 1, 2026, subject to our right, subject to customary conditions, to extend the maturity date by up to two additional six-month terms. Borrowings under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary ~~LIBOR~~ breakage costs.

As of June 30, ~~2022~~2023, we were in compliance with the operating and financial covenants under the Credit Facility.

OfAs of June 30, 2023, we had $42.3 million available for future borrowings under the 91Credit Facility based on the asset pool comprising the borrowing base. We may increase this available amount, up to the maximum total commitments of the Credit Facility, by transferring additional unencumbered properties ~~acquired in~~to the asset pool comprising the borrowing base. During the six months ended June 30, ~~2022, 60~~2023, we (i) disposed of two properties ~~were added to~~formerly part of the asset pool comprising the borrowing base ofunder the Credit ~~Facility.~~ ~~As of June 30, 2022 we had~~ ~~$38.6~~Facility, (ii) added eight properties formerly encumbered under mortgage notes to the asset pool comprising the borrowing base under the Credit Facility, (iii) borrowed $183.0 million ~~available~~to fully repay certain mortgage notes and (iv) borrowed $18.0 million for ~~future borrowings.~~general corporate purposes.

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If the REIT Merger is consummated, GNL is required to repay all amounts outstanding under our Credit Facility, and terminate our Credit Facility. To do so, GNL expects, subject to obtaining commitments from new lenders or additional commitments from participating lenders, to exercise the “accordion feature” on its credit facility to increase the commitments thereunder to facilitate the repayment of our Credit Facility and to create additional availability after the Proposed Transactions are completed. See Note 5 — Credit Facility to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our Credit Facility.

Senior Notes

The $500.0 million aggregate principal amount of 4.50% Senior Notes due 2028 (the “Senior Notes”) were issued on October 7, 2021 and are fully and unconditionally guaranteed (the “Senior Note Guarantees”) on a joint and several basis by our subsidiaries and the OP that are guarantors under the Credit Facility. Subject to certain exceptions, each future subsidiary of these entities that subsequently guarantees indebtedness under the Credit Facility, any other syndicated loan facility or certain capital markets indebtedness, in each case, will be required to execute a Senior Note Guarantee.

As of June 30, 2023, the amount of the Senior Notes on our consolidated balance sheet totaled $493.0 million, which is net of $7.0 million of deferred financing costs. The Senior Notes require interest-only payments at an annual rate of 4.50% with the principal due at maturity. As of June 30, 2023, we were in compliance with the covenants under the Senior Notes.

If the REIT Merger is consummated, GNL is required to assume all of our outstanding Senior Notes under the indenture.See Note 6 — Senior Notes, Net to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion on the Senior Notes and related covenants.

LIBOR Exposure

In July 2017, the Financial Conduct Authority (which regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to LIBOR in derivatives and other financial contracts. On November 30, 2020, the Financial Conduct Authority announced a partial extension of this deadline, indicating its intention to cease the publication of the one-week and two-month USD LIBOR settings immediately following December 31, 2021, and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023.

~~Table~~During the second quarter of ~~Contents~~

~~While~~2023, we expect LIBOR to be available in substantially its current form until at least the end of June 2023, it is possible that LIBOR will become unavailable prior to that time. To transition from LIBOR under theamended our Credit Facility to utilize a SOFR-based interest rate for all of our borrowings thereunder. After completing the amendment, we will either utilize the Base Rate (as defined in the Credit Facility) or an alternative benchmark established by the agent in accordance with the terms of the Credit Facility, which will be SOFR if available or an alternate benchmark that is being widely used in the market at that time as selected by the agent.have no further exposure to LIBOR-based contracts.

Acquisitions and Dispositions — Three and Six Months Ended June 30, ~~2022~~2023

~~One of our primary uses of cash during~~During the three and six months ended June 30, ~~2022~~ ~~was for acquisitions of~~2023, we did not acquire any properties.

~~During the three months ended~~ ~~June 30, 2022 we acquired 32~~ properties for an aggregate purchase price of $495.7 million, including capitalized acquisition costs. The acquisitions during the three months ended June 30, 2022 include 24 properties from the CIM Portfolio Acquisition. The acquisition of the 24 properties from the CIM Portfolio Acquisition were funded with the assumption of $294.5 million of fixed-rate mortgage debt, $128.2 million of $135.0 million of borrowings under the Credit Facility, the application of $23.8 million of our $40 million deposit, $10.8 million of contingent consideration to be paid in the second half of 2022 and the remainder with cash on hand. The remaining eight properties acquired in the three months ended June 30, 2022 were funded entirely with cash on hand.

~~During the six months ended~~ ~~June 30, 2022, we acq~~uired 91 properties for an aggregate purchase price of $1.4 billion, including capitalized acquisition costs. The acquisitions during the six months ended June 30, 2022 include 80 properties from the CIM Portfolio Acquisition. The acquisition of the 80 properties from the CIM Portfolio Acquisition was funded with the assumption of $313.7 million of existing mortgage debt, $513.0 million of borrowings under the Credit Facility, the application of $23.8 million of our $40 million deposit, the issuance of 6,450,107 shares of our Class A common stock, representing consideration of $50.0 million in value at issuance ($53.4 million of value subject to repurchase), which were issued at a weighted-average price of $7.75 per share in value at issuance ($8.28 per share of value subject to repurchase), $10.8 million of contingent consideration to be paid in the second half of 2022 and the remainder with cash on hand. The remaining 11 properties acquired in the six months ended June 30, 2022 were funded entirely with cash on hand.

During the three months ended June 30, ~~2022,~~2023, we sold 48 properties for an aggregate contract sales price of $100.8 million, excluding disposition related costs. Of the 48 properties sold in the three months ended June 30, 2023, 22 were encumbered under the former Bob Evans I mortgage note, which totaled $22.6 million prior to its full repayment, 12 were encumbered under the 2019 Class A-1 Net-Lease Mortgage Notes, 10 were encumbered under the 2019 Class A -2 Net-Lease Mortgage Note, two were encumbered under the 2021 Class A-2 Net Lease Mortgage Notes, one was encumbered under the Column Financial Mortgage Notes and one was a part of the asset pool comprising the borrowing base under the Credit Facility.

During the six months ended June 30, 2023, we sold 53 properties for an aggregate contract price of $172.2 million. excluding disposition related costs. Of the 53 properties sold in the six months ended June 30, 2023, 22 were formerly encumbered under the former Bob Evans I mortgage note, which totaled $22.6 million prior to its full repayment, 12 were formerly encumbered under the 2019 Class A-1 Net-Lease Mortgage Notes, 10 were formerly encumbered under the 2019 Class A -2 Net-Lease Mortgage Notes, four were formerly encumbered under the Stop & Shop mortgage note, which totaled $45.0 million prior to its full repayment, two were formerly encumbered under the 2021 Class A-2 Net Lease Mortgage Notes, one was formerly encumbered under the Column Financial Mortgage Notes and two were formerly a part of the asset pool comprising the borrowing base under the Credit Facility.

Acquisitions and Dispositions — Subsequent to June 30, 2023

Subsequent to June 30, 2023, we did not acquire any properties.

Subsequent to June 30, 2023, we have not disposed of any properties. However, we have entered into five purchase and sale agreements to dispose of five properties for an aggregate contract sales price of ~~$30.4 million, excluding disposition related costs. Of the~~$11.6 million. We have also entered into five ~~properties sold in the three months ended June 30, 2022, two were formerly encumbered under the 2021 Net Lease Mortgage Notes and two were formerly part~~non-binding letters of ~~the unencumbered asset pool comprising the Credit Facility. The proceeds from these dispositions were used~~intent to ~~fund the repayment~~dispose of ~~$25.0 million of amounts outstanding under our Credit Facility.~~

~~During the six months ended~~ ~~June 30, 2022, we sold~~ 11five properties for an aggregate contract sales price of ~~$295.6 million~~excluding disposition related costs. These dispositions included the sale of three office buildings leased to Sanofi S.A. for a contract purchase price of $260.7 million (the “Sanofi Sale”). The net proceeds of $254.5 million from the Sanofi Sale were used to partially fund the closing of the first tranche of the CIM Portfolio Acquisition as discussed above. Of the 10 other properties sold in the six months ended June 30, 2022, one was formerly encumbered under the CMBS 2020 mortgage, two were formerly encumbered under the 2021 Net Lease Mortgage Notes and four were formerly part of the unencumbered asset pool comprising the Credit Facility. The proceeds from these dispositions were used to fund the repayment of $25.0 million of amounts outstanding under our Credit Facility.

~~Acquisitions and Dispositions — Subsequent to June 30, 2022~~

Subsequent to June 30, 2022 we acquired the final property of the CIM Portfolio Acquisition, with a contract purchase price of $71.1 million, excluding acquisition costs. We have entered into a definitive purchase and sale agreement to acquire an additional single-tenant property for a contract purchase price of approximately $0.3$7.3 million. The purchase and sale agreement is subject to conditions, and there can be no assurance we will complete this acquisition on its contemplated terms, or at all. We anticipate primarily using cash on hand, which may include proceeds from our ATM Programs, and, if necessary, proceeds from borrowings under our Credit Facility, to fund the consideration required to complete this acquisition.

Subsequent to June 30, 2022, we disposed of three properties for an aggregate contract sales price of $3.9 million. We have entered into six purchase and sale agreements to dispose of six properties for an aggregate contract sales price of $97.8 million. We have also entered into four non-binding letters of intent to dispose of four properties for an aggregate contract sales price of $1.7 million. The purchase and sales agreements and non-binding letters of intent are subject to conditions, and there can be no assurance we will complete any of these dispositions on their contemplated terms, or at all. ~~Two of the purchase and sale agreements relate to properties acquired in the CIM Portfolio Acquisition, one of which was impaired in the three months ended June 30, 2022 for $3.5 million.~~

ATM Programs

We sold 3,618 shares of Class A common stock through our Class A Common Stock ATM Program during the three months ended June 30, 2022, which did not generate material proceeds. We sold 2,765,329 shares of Class A common stock

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~~through our~~We did not sell any shares of Class A ~~Common~~common stock, Series A Preferred Stock or Series C Preferred Stock through their respective ATM ~~Program~~Programs during the six months ended June 30, ~~2022, which generated $24.9 million of gross proceeds, and net proceeds of $24.6 million after commissions, fees and other offering costs incurred of $0.4 million.~~

~~During the six months ended June 30, 2022, we did not sell any shares of Series A Preferred Stock under the Series A Preferred Stock Program.~~

~~During the six months ended June 30, 2022, we sold 677 shares of Series C Preferred Stock under the Series C Preferred Stock Program.~~2023.

Distribution Reinvestment Plan

Our distribution reinvestment plan (“DRIP”) allows stockholders who have elected to participate in the DRIP to have dividends payable with respect to all or a portion of their shares of Class A common stock reinvested in additional shares of Class A common stock. Shares issued pursuant to the DRIP are, at our election, either (i) acquired directly from us, by issuing new shares, at a price based on the average of the high and low sales prices of Class A common stock on Nasdaq on the date of reinvestment, or (ii) acquired through open market purchases for each participant by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with all participants’ reinvested dividends for the related quarter, less a per share processing fee. During the six months ended June 30, ~~2022~~2023 and the year ended December 31, ~~2021~~2022, all shares acquired by participants pursuant to the DRIP were acquired through open market purchases by the plan administrator and not issued ~~directly~~ to stockholders by us.

Capital Expenditures and Construction in Progress

We invest in capital expenditures to enhance and maintain the value of our properties. We anticipate that, in light of the additional properties acquired in 2022 from the CIM Portfolio Acquisition, capital expenditures in 2023 will be approximately $35.0 million. Actual amounts could differ from this estimate.

We have historically been able to fund our capital expenditures with available cash on hand or through borrowings under our Credit Facility. We define revenue enhancing capital expenditures as improvements to our properties that we believe will result in higher income generation over time. Capital expenditures for maintenance are generally necessary, non-revenue generating improvements that extend the useful life of the property and are less frequent in nature. By providing this metric, we believe we are presenting useful information for investors that can help them assess the components of our capital expenditures that are expected to either grow or maintain our current revenue. Detail related to our capital expenditures during the six months ended June 30, ~~2022~~2023 is as follows:


		Six Months Ended June 30, 2022							Six Months Ended June 30, 2023 (1)
(In thousands)	(In thousands)	Single-Tenant Properties		Multi-Tenant Properties		Total		(In thousands)	Single-Tenant Properties		Multi-Tenant Properties		Total
Capital Expenditures	Capital Expenditures							Capital Expenditures
Revenue enhancing	Revenue enhancing	$	136	$	3,424	$	3,560	Revenue enhancing	$	—	$	10,358	$	10,358
Maintenance	Maintenance	539		1,120		1,659		Maintenance	668		2,540		3,208
Total Capital Expenditures	Total Capital Expenditures	675		4,544		5,219		Total Capital Expenditures	668		12,898		13,566
Leasing commissions	Leasing commissions	7		367		374		Leasing commissions	210		4,375		4,585
Total	Total	$	682	$	4,911	$	5,593	Total	$	878	$	17,273	$	18,151

(1)Excludes $6.4 million of accrued capital expenditures as of December 31, 2022 which was paid in the six months ended June 30, 2023.

Also, as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had ~~$2.2~~$9.4 million and ~~$1.5~~$8.3 million, respectively, of construction in progress which is included in the prepaid expenses and other assets on the consolidated balance sheets.

Non-GAAP Financial Measures

This section discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Adjusted Funds from Operations (“AFFO”) and NOI. While NOI is a property-level measure, AFFO is based on our total performance and therefore reflects the impact of other items not specifically associated with NOI such as interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined herein, does not reflect an adjustment for straight-line rent but AFFO does include this adjustment. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net (loss) income, ~~(loss), is~~are provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, AFFO and NOI attributable to stockholders.

Funds from Operations and Adjusted Funds from Operations

Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.

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We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from sales of certain real estate assets, ~~gain~~gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our OP) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Adjusted Funds from Operations

In calculating AFFO, we start with FFO, then we exclude certain income or expense items from AFFO that we consider to be more reflective of investing activities, such as non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our day to day operating business ~~plan, such as~~plan. These excluded amounts ~~related to litigation arising out of the merger with American Realty Capital-Retail Centers of America, Inc. in February 2017 (the “RCA Merger”). These amounts~~ include certain legal costs incurred as a result of the litigation, portions of which have been and may in the future be reimbursed under insurance policies maintained by us. Insurance reimbursements are deducted from AFFO in the period of reimbursement.litigation. We believe that excluding ~~the~~certain litigation costs ~~arising out of the RCA Merger~~ helps to provide a better understanding of the operating performance of our business. Other income and expense items also include early extinguishment of debt and unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains and losses on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market ~~leases~~lease intangibles, amortization of deferred financing costs, straight-line rent, and share-based compensation related to restricted shares and the ~~2018 OPP and~~ 2021 OPP from AFFO, we believe we provide useful information regarding those income and expense items which have a direct impact on our ongoing operating performance.

In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining ~~operating~~ net (loss) income, ~~(loss). All paid~~such as (i) merger, transaction and ~~accrued merger, acquisition and transaction~~other costs, (ii) settlement costs related to the Blackwells litigation (as described herein) (iii) legal fees and expenses associated with COVID-19-related lease disputes involving certain tenants and (iv) certain other expenses, including general and administrative expenses incurred for the 2023 proxy that were specifically related to our 2023 proxy contest and related Blackwells litigation (as described herein). These expenses negatively impact our operating performance during the period in which ~~expenses~~they are incurred ~~or properties are acquired~~ and ~~will also~~thus have negative effects on returns to investors, but are not reflective of our on-going performance. In addition, legal fees and expense associated with COVID-19-related lease disputes involving certain tenants negatively impact our operating performance butexcluded by us as we believe they are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net ~~income~~ (loss). income. In addition, as discussed above, we view gains and losses from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe AFFO provides useful supplemental information. By providing AFFO, we believe we are presenting useful information that can be used, among other things, to assess our performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net (loss) income ~~(loss)~~ as presented in our consolidated financial statements. AFFO should not be considered as an alternative to net (loss) income ~~(loss)~~ as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay dividends. FFO and AFFO may include income from lease termination fees, which is recorded in revenue from tenants in the consolidated statements of operations.

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Accounting Treatment of Rent Deferrals/Abatements

The majority of the concessions granted to our tenants as a result of the COVID-19 pandemic have been rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable (see the

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““Overview ~~- Management Update on the~~— Impacts of the COVID-19 ~~Pandemic”~~Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information). As a result of relief granted by the FASB and SEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO ~~has~~was not ~~been, and we do not expect it to be,~~ significantly impacted by these types of deferrals. In addition, since ~~we currently believe that~~ these deferral amounts ~~are collectable,~~were substantially collected, we have excluded from the increase in straight-line rent for AFFO purposes the amounts recognized under GAAP relating to these types of rent deferrals. Conversely, for abatements where contractual rent ~~has been~~was reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and we have, accordingly, reduced our AFFO. For a detailed discussion of our revenue recognition policy, including details related to the relief granted by the FASB and SEC, see Note 2 — Significant Accounting Polices to our consolidated financial statements included in ~~this~~the Quarterly Report on Form 10-Q.

The table below reflects the items deducted from or added to net income or loss in our calculation of FFO and AFFO for the periods presented:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	(In thousands)	2022		2021		2022		2021		(In thousands)	2023		2022		2023		2022
Net loss attributable to common stockholders (in accordance with GAAP)	Net loss attributable to common stockholders (in accordance with GAAP)	$	(56,259)	$	(7,405)	$	(16,325)	$	(16,816)	Net loss attributable to common stockholders (in accordance with GAAP)	$	(53,468)	$	(56,259)	$	(72,225)	$	(16,325)
Impairment of real estate investments		58,954		91		64,896		91
Impairments of real estate investments										Impairments of real estate investments	—		58,954		—		64,896
Depreciation and amortization	Depreciation and amortization	46,573		32,428		84,261		64,747		Depreciation and amortization	59,466		46,573		113,648		84,261
Gain on sale of real estate investments		(13,438)		(11)		(67,007)		(297)
Gains on sales of real estate investments										Gains on sales of real estate investments	(5,471)		(13,438)		(17,263)		(67,007)
Proportionate share of adjustments for non-controlling interests to arrive at FFO	Proportionate share of adjustments for non-controlling interests to arrive at FFO	(113)		(50)		(100)		(101)		Proportionate share of adjustments for non-controlling interests to arrive at FFO	(69)		(113)		(124)		(100)
FFO (as defined by NAREIT) attributable to common stockholders (1)	FFO (as defined by NAREIT) attributable to common stockholders (1)	35,717		25,053		65,725		47,624		FFO (as defined by NAREIT) attributable to common stockholders (1)	458		35,717		24,036		65,725
Acquisition, transaction and other costs (2)		206		136		485		178

Merger, transaction and other costs (2)										Merger, transaction and other costs (2)	4,931		206		5,496		485
Settlement costs (3)										Settlement costs (3)	8,800		—		8,800		—
Legal fees and expenses — COVID-19 lease disputes ~~(3)~~(4)	Legal fees and expenses — COVID-19 lease disputes ~~(3)~~(4)	58		109		50		178		Legal fees and expenses — COVID-19 lease disputes ~~(3)~~(4)	—		58		(12)		50
Accretion of market lease and other intangibles, net	Accretion of market lease and other intangibles, net	(1,582)		(1,041)		(2,680)		(1,976)		Accretion of market lease and other intangibles, net	(1,780)		(1,582)		(4,256)		(2,680)
Straight-line rent	Straight-line rent	(1,509)		(1,759)		(2,623)		(3,486)		Straight-line rent	1,429		(1,509)		308		(2,623)
Straight-line rent (rent deferral agreements) ~~(4)~~(5)	Straight-line rent (rent deferral agreements) ~~(4)~~(5)	(446)		(1,124)		(888)		(2,099)		Straight-line rent (rent deferral agreements) ~~(4)~~(5)	(4)		(446)		(8)		(888)
Amortization of mortgage (premiums) and discounts on borrowings, net	Amortization of mortgage (premiums) and discounts on borrowings, net	174		(323)		161		(644)		Amortization of mortgage (premiums) and discounts on borrowings, net	329		174		800		161
Gain on non-designated derivatives ~~(5)~~(6)	Gain on non-designated derivatives ~~(5)~~(6)	—		—		(2,250)		—		Gain on non-designated derivatives ~~(5)~~(6)	—		—		—		(2,250)
Equity-based compensation ~~(6)~~(7)	Equity-based compensation ~~(6)~~(7)	3,523		5,283		7,021		9,630		Equity-based compensation ~~(6)~~(7)	3,518		3,523		7,085		7,021
Amortization of deferred financing costs, net ~~(7)~~	Amortization of deferred financing costs, net ~~(7)~~	3,236		2,896		6,129		5,370		Amortization of deferred financing costs, net ~~(7)~~	3,607		3,236		7,367		6,129
Gain on settlement of Prairie Towne liens (8)		(887)		—		(887)		—
Gain on settlement of liens (8)										Gain on settlement of liens (8)	(545)		(887)		(545)		(887)
Expenses attributable to 2023 proxy contest and related litigation (9)										Expenses attributable to 2023 proxy contest and related litigation (9)	7,205		—		9,386		—
Proportionate share of adjustments for non-controlling interests to arrive at AFFO	Proportionate share of adjustments for non-controlling interests to arrive at AFFO	(5)		(6)		(7)		(11)		Proportionate share of adjustments for non-controlling interests to arrive at AFFO	(25)		(5)		(33)		(7)
AFFO attributable to common stockholders (1)	AFFO attributable to common stockholders (1)	$	38,485	$	29,224	$	70,236	$	54,764	AFFO attributable to common stockholders (1)	$	27,923	$	38,485	$	58,424	$	70,236

___________

(1)FFO and AFFO for the three and six months ended June 30, 2023 includes income from lease modification/termination revenue of $0.5 million and $0.6 million, respectively, and the three and six months ended June 30, 2022 includes income from lease modification/termination revenue of $5.7 million and $10.2 million, respectively, ~~and the three and six months ended June 30, 2021 includes income from lease modification/termination revenue of $0.8 million and $1.3 million, respectively,~~ which isare recorded in revenue from tenants in the consolidated statements of operations. See Note 2 — Summary of Significant Accounting Policies – Revenue Recognitionto our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

(2)~~Includes primarily~~Primarily includes costs associated with the proposed merger with GNL, prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the RCA Merger.

(3)In the three and six months ended June 30, 2023, we recognized a settlement cost of $8.8 million, representing one-half of the reasonable, documented, out-of-pocket expenses (including legal fees) incurred by the Blackwells/Related Parties in connection with the proxy contest and related litigation described herein and the Cooperation Agreement, for which we agreed to reimburse the Blackwells/Related Parties. GNL was responsible for reimbursing the other half of these expenses.

(4)Reflects legal costs incurred related to disputes with tenants due to store closures or other challenges resulting from COVID-19. The tenants involved in these disputes had not recently defaulted on their rent and, prior to the second and third quarters of 2020, had recently exhibited a pattern of regular payment. Based on the tenants involved in these matters, their history of rent payments, and the impact of the pandemic on current economic conditions, we view these costs as COVID-19-related and separable from our ordinary general and administrative expenses related to tenant defaults. We engaged counsel in connection with these issues separate and distinct from counsel we typically engage for tenant defaults. The amount reflects what we believe to be only those incremental legal costs above what we typically incur for tenant-related dispute issues. We may continue to incur these COVID-19 related legal costs in the future.

~~(4)~~(5)Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on our consolidated balance sheet but are considered to be earned revenue attributed to the current period for which rent was deferred for purposes of AFFO as they are expected to be collected. Accordingly, when the deferred amounts are collected, the amounts reduce AFFO. For rent abatements (including those qualified for FASB relief), where contractual rent has been reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and we have, accordingly reduced our AFFO. As of March 31, 2023, we have substantially collected all previously deferred rents.

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(6)In the six months ended June 30, 2022, we recognized a gain of $2.3 million related to the change in fair value of an embedded derivative within the purchase and sale agreement of the CIM Portfolio Acquisition. We do not consider non-cash gains or losses for embedded derivative fair value

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adjustments to be capital in nature, nor do we consider them a part of recurring operations. Accordingly, such amounts are excluded for AFFO purposes. ~~See~~ ~~Note 8~~ ~~— Derivatives and Hedging Activities~~ ~~to our consolidated financial statements included in this Quarterly Report on Form 10-Q for more information.~~

~~(6)~~(7)Includes expense related to the amortization of our restricted common shares and LTIP Units related to our multi-year outperformance agreements for all periods presented.

~~(7)~~We issued $500.0 million in Senior Notes in October 2021. The Senior Notes pay semiannual interest which we accrue interest over time for GAAP purposes. Accordingly, to better reflect our operating performance, beginning with the year ended December 31, 2021 and for all periods thereafter, we have elected to remove the impact of the change in accrued interest from the calculation of AFFO, which was previously included in this line item. The impact to AFFO for the removal of the change in accrued interest included in this line for the three and six months ended June 30, 2021 was an increase to AFFO of $535,000 and $540,000, respectively.

(8)Included in other income, ~~for~~these amounts relate to the ~~three and six months ended June 30, 2022 was a gain~~release or settlement of ~~$0.9 million on prior~~ liens ~~incurred on our Prairie Towne property as a result of a settlement with the lien holder during the three months ended June 30, 2022.~~below amounts previously accrued for. Management does not consider ~~this gain~~these amounts to be part of our normal operating performance and has, accordingly, reduced our AFFO for these amounts.

(9)Amount relates to general and administrative expenses incurred for our 2023 proxy contest and related Blackwells litigation. We do not consider these expenses to be part of our normal operating performance and have, accordingly, increased AFFO for this amount. See Note 9 — Commitments and Contingencies — Litigation and Regulatory Matters — Blackwells Litigation to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

Net Operating Income

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net ~~income~~ (loss). income. We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operation of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net ~~income~~ (loss). income.

NOI excludes certain items included in calculating net (loss) income ~~(loss)~~ in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net (loss) income ~~(loss)~~ as presented in our consolidated financial statements. NOI should not be considered as an alternative to net (loss) income ~~(loss)~~ as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay dividends.

~~The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the three months ended June 30, 2022:~~

Same Store Acquisitions Disposals Non-Property Specific Total
(In thousands) Single-Tenant Multi-Tenant Single-Tenant Multi-Tenant Single-Tenant Multi-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 6,337 $ (44,854) $ 1,704 $ 456 $ 14,743 $ — $ (34,645) $ (56,259)
Asset management fees to related party — — — — — — 8,296 8,296
Impairment of real estate investments 5,856 49,559 — 3,539 — — — 58,954
Acquisition, transaction and other costs 17 — — — — — 189 206
Equity-based compensation — — — — — — 3,523 3,523
General and administrative 86 240 — 84 — — 7,980 8,390
Depreciation and amortization 17,938 10,976 1,544 16,040 75 — — 46,573
Interest expense 16,992 1,547 — 912 — — 8,878 28,329
Gain on sale of real estate investments (3) — — — (13,435) — — (13,438)
Other income (17) (927) — — — — — (944)
Allocation for preferred stock — — — — — — 5,837 5,837
Net loss attributable to non-controlling interests — — — — — — (58) (58)
NOI $ 47,206 $ 16,541 $ 3,248 $ 21,031 $ 1,383 $ — $ — $ 89,409

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The following table reflects the items deducted from or added to net ~~loss~~income (loss) attributable to common stockholders in our calculation of NOI for the three months ended June 30, ~~2021:~~2023:


		Same Store				Acquisitions				Disposals				Non-Property Specific				Total					Same Store						Acquisitions						Disposals						Non-Property Specific			Total
(In thousands)	(In thousands)	Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant				(In thousands)				Single-Tenant				Multi-Tenant			Single-Tenant			Multi-Tenant			Single-Tenant			Multi-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP)	Net income (loss) attributable to common stockholders (in accordance with GAAP)	$	7,196	$	7,313	$	90	$	—	$	2,408	$	—			$	(24,412)				$	(7,405)	Net income (loss) attributable to common stockholders (in accordance with GAAP)		$	(9,635)		$	8,254		$	582		$	1,400		$	5,689		$	(287)		$	(59,471)		$	(53,468)
Asset management fees to related party		—		—		—		—		—		—		7,922				7,922
Impairment of real estate investments		—		—		—		—		91		—		—				91
Acquisition, transaction and other costs		27		—		—		—		—		—		109				136
Asset management fees to related parties																				Asset management fees to related parties			—			—			—			—			—			—			7,972			7,972

Merger, transaction and other costs																				Merger, transaction and other costs			—			191			—			4			483			—			4,253			4,931
Settlement costs																				Settlement costs			—			—			—			—			—			—			8,800			8,800
Equity-based compensation	Equity-based compensation	—		—		—		—		—		—		5,283				5,283		Equity-based compensation			—			—			—			—			—			—			3,519			3,519
General and administrative	General and administrative	134		279		—		—		4		—		3,123				3,540		General and administrative			49			1,639			—			106			2			—			12,948			14,744
Depreciation and amortization	Depreciation and amortization	18,484		11,283		58		—		2,603		—		—				32,428		Depreciation and amortization			27,590			23,396			328			7,419			733			—			—			59,466
Interest expense	Interest expense	18,067		242		—		—		—		—		2,052				20,361		Interest expense			16,303			1,598			—			1,242			599			—			16,203			35,945
Gain on sale of real estate investments		—		—		—		—		(11)		—		—				(11)
(Gains) losses on sales of real estate investments																				(Gains) losses on sales of real estate investments			—			—			—			—			(5,592)			121			—			(5,471)
Other income	Other income	(20)		—		—		—		—		—		—				(20)		Other income			(14)			(582)			—			—			—			—			—			(596)

Allocation for preferred stock	Allocation for preferred stock	—		—		—		—		—		—		5,925				5,925		Allocation for preferred stock			—			—			—			—			—			—			5,837			5,837
Net loss attributable to non-controlling interests	Net loss attributable to non-controlling interests	—		—		—		—		—		—		(2)				(2)		Net loss attributable to non-controlling interests			—			—			—			—			—			—			(61)			(61)
NOI	NOI	$	43,888	$	19,117	$	148	$	—	$	5,095	$	—	$	—			$	68,248	NOI			$	34,293		$	34,496		$	910		$	10,171		$	1,914		$	(166)		$	—		$	81,618

The following table reflects the items deducted from or added to net income (loss) attributable to common stockholders in our calculation of NOI for the three months ended June 30, 2022:


	Same Store				Acquisitions				Disposals				Non-Property Specific		Total
(In thousands)	Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP)	$	7,451	$	7,552	$	300	$	937	$	15,033	$	(52,887)	$	(34,645)	$	(56,259)
Asset management fees to related parties	—		—		—		—		—		—		8,296		8,296
Impairments of real estate investments	458		—		—		—		5,398		53,098		—		58,954
Merger, transaction and other costs	17		—		—		—		—		—		189		206
Equity-based compensation	—		—		—		—		—		—		3,523		3,523
General and administrative	85		263		—		18		1		43		7,980		8,390
Depreciation and amortization	17,323		22,468		157		3,131		2,077		1,417		—		46,573
Interest expense	16,705		1,757		—		702		287		—		8,878		28,329
Gains on sales of real estate investments	(3)		—		—		—		(13,435)		—		—		(13,438)
Other income	(17)		(927)		—		—		—		—		—		(944)

Allocation for preferred stock	—		—		—		—		—		—		5,837		5,837
Net loss attributable to non-controlling interests	—		—		—		—		—		—		(58)		(58)
NOI	$	42,019	$	31,113	$	457	$	4,788	$	9,361	$	1,671	$	—	$	89,409

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The following table reflects the items deducted from or added to net income (loss) attributable to common stockholders in our calculation of NOI for the six months ended June 30, 2023:


	Same Store				Acquisitions				Disposals				Non-Property Specific		Total
(In thousands)	Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP)	$	(9,448)	$	10,987	$	1,370	$	5,241	$	18,684	$	(368)	$	(98,691)	$	(72,225)
Asset management fees to related parties	—		—		—		—		—		—		15,928		15,928

Merger, transaction and other costs	451		194		—		4		483		—		4,364		5,496
Settlement costs	—		—		—		—		—		—		8,800		8,800
Equity-based compensation	—		—		—		—		—		—		7,086		7,086
General and administrative	114		2,849		—		722		4		—		21,547		25,236
Depreciation and amortization	47,911		19,240		845		43,608		2,044		—		—		113,648
Interest expense	33,069		3,507		—		3,792		882		—		29,370		70,620
(Gains) losses on sales of real estate investments	(100)		—		—		—		(17,447)		284		—		(17,263)
Other income	(30)		(35)		—		(558)		—		—		—		(623)

Allocation for preferred stock	—		—		—		—		—		—		11,674		11,674
Net loss attributable to non-controlling interests	—		—		—		—		—		—		(78)		(78)
NOI	$	71,967	$	36,742	$	2,215	$	52,809	$	4,650	$	(84)	$	—	$	168,299

The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the six months ended June 30, 2022:

Same Store Acquisitions Disposals Non-Property Specific Total
(In thousands) Single-Tenant Multi-Tenant Single-Tenant Multi-Tenant Single-Tenant Multi-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 11,185 $ (38,140) $ 4,240 $ 1,383 $ 68,094 $ — $ (63,087) $ (16,325)
Asset management fees to related party — — — — — — 16,122 16,122
Impairment of real estate investments 10,884 49,559 — 3,539 914 — — 64,896
Acquisition, transaction and other costs 77 — — — — — 408 485
Equity-based compensation — — — — — — 7,021 7,021
General and administrative 143 515 — 84 5 — 14,476 15,223
Depreciation and amortization 35,182 22,142 3,451 23,324 162 — — 84,261
Interest expense 33,899 1,548 — 992 — — 15,630 52,069
Gain on sale of real estate investments — — — — (67,007) — — (67,007)
Other income (34) (928) — — — — — (962)
Gain on non-designated derivatives — — — — — — (2,250) (2,250)
Allocation for preferred stock — — — — — — 11,674 11,674
Net income attributable to non-controlling interests — — — — — — 6 6
NOI $ 91,336 $ 34,696 $ 7,691 $ 29,322 $ 2,168 $ — $ — $ 165,213

~~The following table reflects the items deducted from or added to net loss attributable to common stockholders in our calculation of NOI for the six months ended June 30, 2021:~~


	Same Store				Acquisitions				Disposals				Non-Property Specific		Total
(In thousands)	Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant		Single-Tenant		Multi-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP)	$	15,088	$	11,538	$	482	$	4,925	$	67,949	$	(53,220)	$	(63,087)	$	(16,325)
Asset management fees to related party	—		—		—		—		—		—		16,122		16,122
Impairment of real estate investments	458		—		—		—		11,340		53,098		—		64,896
Merger, transaction and other costs	77		—		—		—		—		—		408		485
Equity-based compensation	—		—		—		—		—		—		7,021		7,021
General and administrative	139		437		—		76		9		86		14,476		15,223
Depreciation and amortization	34,398		19,855		343		22,927		4,054		2,684		—		84,261
Interest expense	33,327		1,548		—		992		572		—		15,630		52,069
Gains on sales of real estate investments	—		—		—		—		(67,007)		—		—		(67,007)
Other income	(34)		(928)		—		—		—		—		—		(962)
Gain on non-designated derivatives	—		—		—		—		—		—		(2,250)		(2,250)
Allocation for preferred stock	—		—		—		—		—		—		11,674		11,674
Net income attributable to non-controlling interests	—		—		—		—		—		—		6		6
NOI	$	83,453	$	32,450	$	825	$	28,920	$	16,917	$	2,648	$	—	$	165,213

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Same Store Acquisitions Disposals Non-Property Specific Total
(In thousands) Single-Tenant Multi-Tenant Single-Tenant Multi-Tenant Single-Tenant Multi-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP) $ 14,443 $ 13,114 $ 647 $ — $ 5,327 $ — $ (50,347) $ (16,816)
Asset management fees to related party — — — — — — 15,243 15,243
Impairment of real estate investments — — — — 91 — — 91
Acquisition, transaction and other costs 27 — — — — — 151 178
Equity-based compensation — — — — — — 9,630 9,630
General and administrative 185 539 — — 6 — 9,259 9,989
Depreciation and amortization 36,433 22,670 320 — 5,324 — — 64,747
Interest expense 34,723 482 — — — — 4,490 39,695
Gain on sale of real estate investments — — — — (297) — — (297)
Other income (35) (3) — — — — (6) (44)
Allocation for preferred stock — — — — — — 11,588 11,588
Net loss attributable to non-controlling interests — — — — — — (8) (8)
NOI $ 85,776 $ 36,802 $ 967 $ — $ 10,451 $ — $ — $ 133,996

Dividends and Distributions

~~We pay dividends~~Dividends on our Class A common stock have been declared on a quarterly basis atin an ~~annual~~amount equal to $0.85 per share each year. This dividend rate ~~of $0.85.~~has been in effect since our April 1, 2020 dividend declaration. The amount of dividends payable on our Class A common stock to our common stock holders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, provisions in our Credit Facility or other agreements that may restrict our ability to pay dividends, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT. We anticipate dividends will continue to be paid on a quarterly basis in arrears on or around the 15th day of the first month following the end of each fiscal quarter (unless otherwise specified) to Class A common stockholders of record on the record date for such ~~payment.~~payment, although there can be no assurance that the board will declare dividends in future periods.

Dividends on our Series A Preferred Stock ~~accrue~~have been declared quarterly in an amount equal to $1.875 per share each year, which is equivalent to the rate of 7.50% of the $25.00 liquidation preference per share per annum. Dividends on the Series A Preferred Stock are payable quarterly in arrears on the 15th day of each of January, April, July and October of each year (or, if not a business day, the next succeeding business day) to holders of record on the applicable record date.

Dividends on our Series C Preferred Stock ~~accrue~~have been declared quarterly in an amount equal to $1.844 per share each year, which is equivalent to the rate of 7.375% of the $25.00 liquidation preference per share per annum. Dividends on the Series C Preferred Stock are payable quarterly in arrears on the 15th day of each of January, April, July and October of each year (or, if not a business day, the next succeeding business day) to holders of record on the applicable record date. ~~The first dividend for the Series C Preferred Stock was paid on April 15, 2021 and represented an accrual for more than a full quarter, covering the period from December 18, 2020 to March 31, 2021.~~

Our Credit Facility contains provisions restricting our ability to pay distributions, including paying cash dividends on equity securities (including the Series A Preferred Stock and Series C Preferred Stock). We are generally permitted to pay dividends on the Series A Preferred Stock, Series C Preferred Stock, and Class A common stock and other distributions for any fiscal quarter in an aggregate amount of up to 105% of annualized ~~Modified~~Adjusted Funds from Operations (“~~MFFO”~~AFFO”, as defined in the Credit Facility) for a look-back period of four consecutive fiscal quarters but only if, as of the last day of the period, after giving effect to the payment of those dividends and distributions, we are able to satisfy a maximum leverage ratio and maintain a combination of cash, cash equivalents and amounts available for future borrowings under the Credit Facility of not less than ~~$60~~$60.0 million. If these conditions are not satisfied, the applicable threshold percentage of ~~MFFO~~AFFO will be 95% instead of 105%. If applicable, during the continuance of an event of default under the Credit Facility, we may not pay dividends or other distributions in excess of the amount necessary for us to maintain our status as a REIT.

We may repurchase shares if we satisfy a maximum leverage ratio after giving effect to the repurchase and also have a combination of cash, cash equivalents and amounts available for future borrowings under the Credit Facility of not less than $40.0 million.

Notwithstanding the previous amendments, there is no assurance that the lenders will consent to any additional amendments to the Credit Facility that may become necessary to maintain compliance with the Credit Facility.

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During the three and six months ended June 30, ~~2022,~~2023, cash used to pay dividends on our Class A common stock, dividends on our Series A Preferred Stock, dividends on our Series C Preferred Stock, distributions on our LTIP Units and distributions for our limited partnership units that correspond to shares of our Class A common stock was generated from cash flows provided by ~~operations.~~operations as well as cash on hand. We have, in prior periods, funded dividends from other sources. If we need to identify financing sources other than operating cash flows to fund dividends at their current level, there can be no assurance that other sources will be available on favorable terms, or at all.

Complying with the restriction on the payment of dividends and other distributions in our Credit Facility may limit our ability to incur additional indebtedness and use cash that would otherwise be available to us. Funding dividends from borrowings restricts the amount we can borrow for property acquisitions and investments. Using proceeds from the sale of assets or the issuance of our Class A common stock, Series A Preferred Stock, Series C Preferred Stock or other equity securities to fund dividends rather than invest in assets will likewise reduce the amount available to invest. Funding dividends from the sale of additional securities could also dilute our stockholders.

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The following table shows the sources for the payment of dividends to stockholders, including dividends on unvested restricted shares and other dividends and distributions for the ~~periods~~period indicated:


		Three Months Ended								Six Months Ended June 30, 2022			Three Months Ended												Six Months Ended June 30, 2023
		March 31, 2022				June 30, 2022								March 31, 2023						June 30, 2023			Six Months Ended June 30, 2023
(In thousands)	(In thousands)	Amount		Percentage of Dividends		Amount		Percentage of Dividends			Amount				Percentage of Dividends		(In thousands)	Amount			Percentage of Dividends					Amount		Percentage of Dividends	Amount		Percentage of Dividends
Dividends and other cash distributions:	Dividends and other cash distributions:																Dividends and other cash distributions:
Cash dividends paid to common stockholders	Cash dividends paid to common stockholders	$	26,677	81.5	%	$	28,599	82.5	%		$	55,276			82.0	%	Cash dividends paid to common stockholders	$	28,523		82.5	%	$	28,522		82.5	%		$	57,045	82.5	%
Cash dividends paid to Series A preferred stockholders	Cash dividends paid to Series A preferred stockholders	3,719		11.4	%	3,719		10.7	%		7,438				11.0	%	Cash dividends paid to Series A preferred stockholders	3,719			10.8	%	3,719			10.8	%		7,438		10.8	%
Cash dividends paid to Series C preferred stockholders	Cash dividends paid to Series C preferred stockholders	2,118		6.5	%	2,118		6.1	%		4,236				6.3	%	Cash dividends paid to Series C preferred stockholders	2,118			6.1	%	2,118			6.1	%		4,236		6.1	%
Cash distributions on LTIP Units	Cash distributions on LTIP Units	182		0.6	%	182		0.5	%		364				0.5	%	Cash distributions on LTIP Units	181			0.5	%	181			0.5	%		362		0.5	%
Cash distributions on Class A Units	Cash distributions on Class A Units	37		0.1	%	36		0.1	%		73				0.1	%	Cash distributions on Class A Units	37			0.1	%	36			0.1	%		73		0.1	%
Total dividends and other cash distributions paid	Total dividends and other cash distributions paid	$	32,733	100.0	%	$	34,654	100.0	%		$	67,387			100.0	%	Total dividends and other cash distributions paid	$	34,578		100.0	%	$	34,576		100.0	%		$	69,154	100.0	%

Source of dividend and other cash distributions coverage:	Source of dividend and other cash distributions coverage:																Source of dividend and other cash distributions coverage:
Cash flows provided by operations	Cash flows provided by operations	$	32,733	100.0	%	$	34,654	100.0	%		$	67,387			100.0	%	Cash flows provided by operations	$	18,085		52.3	%	$	25,586		74.0	%		$	43,671	63.2	%
Available cash on hand	Available cash on hand	—		—	%	—		—	%		—				—	%	Available cash on hand	16,493			47.7	%	8,990			26.0	%		25,483		36.8	%
Total sources of dividend and other cash distributions coverage	Total sources of dividend and other cash distributions coverage	$	32,733	100.0	%	$	34,654	100.0	%		$	67,387			100.0	%	Total sources of dividend and other cash distributions coverage	$	34,578		100.0	%	$	34,576		100.0	%		$	69,154	100.0	%

Cash flows provided by operations (GAAP basis)	Cash flows provided by operations (GAAP basis)	$	45,103			$	59,503				$	104,606					Cash flows provided by operations (GAAP basis)	$	18,085				$	25,586					$	43,671
Net income (loss) (in accordance with GAAP)		$	45,835			$	(50,480)				$	(4,645)
Net loss (in accordance with GAAP)																	Net loss (in accordance with GAAP)	$	(12,937)				$	(47,692)					$	(60,629)

Loan Obligations

The payment terms of certain of our mortgage loan obligations require principal and interest payments monthly, with all unpaid principal and interest due at maturity. Our loan agreements stipulate that we comply with specific reporting covenants. As of June 30, ~~2022,~~2023, we were in compliance with the debt covenants under our loan agreements, including our Senior Notes and Credit Facility.

Election as a REIT

We elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), effective for our taxable year ended December 31, 2013. We believe that, commencing with such taxable year, we have been organized and have operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner, but can provide no assurances that we will operate in a manner so as to remain qualified as a REIT. To continue to qualify for taxation as a REIT, we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on the portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties, as well as federal income and excise taxes on our undistributed income.

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Inflation

We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. As of June 30, ~~2022,~~2023, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was ~~9.1%~~3.0%. To help mitigate the adverse impact of inflation, approximately ~~61.6%~~64.9% of our leases with our tenants contain rent escalation provisions which increase the cash that is due under these leases over time by an average of 1.0% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). Approximately ~~59.3%~~61.1% are fixed-rate, ~~2.3%~~3.8% are based on the Consumer Price Index and ~~38.4%~~35.1% do not contain any escalation provisions.

In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation. However, our net leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation. As the costs of general goods and services continue to rise, we may be adversely impacted by increases in general and administrative costs due to overall inflation.

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Related-Party Transactions and Agreements

Please see Note 111 — Organization – Proposed Merger and Internalization – The Internalization Merger and Note 10 — Related Party Transactions and Arrangements to our consolidated financial statements in this Quarterly Report on Form 10-Q for a discussion of the various related party transactions, agreements and fees.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There has been no material change in our exposure to market risk during the three months ended June 30, ~~2022.~~2023. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended June 30, ~~2022~~2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

Refer to “Litigation and Regulatory Matters” in Part I -— Item 1 -— Note 109 -— Commitments and Contingencies, in our accompanying Consolidated Financial Statements.

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Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, and we direct your attention to those risk factors, ~~other than~~except for those ~~disclosed~~listed below:

~~Actual or threatened terrorist attacks~~We are subject to risks associated with proxy contests and other ~~acts~~actions of ~~violence, civilian unrest~~activist stockholders.

We have been the subject of proxy contests, including the proxy contest initiated by the Blackwells/Related Parties on October 24, 2022 and related litigation, which we resolved pursuant to the Cooperation Agreement. Furthermore, in connection with the Proposed Transactions, two complaints have been filed against us, each alleging that the registration statement, which was filed on Form S-4 with the U.S. Securities and Exchange Commission (“SEC”) on July 6, 2023 (as amended on July 17, 2023 and declared effective by the SEC on July 18, 2023) (the “Joint Proxy Statement/Prospectus”), was materially incomplete and misleading. While we believe that these claims are without merit and intend to vigorously defend against them, this litigation could be costly, time consuming and distracting.

In addition, we may face future proxy contests, unsolicited takeovers or ~~war~~other forms of stockholder activism or related activities that could adversely affect our business for a number of reasons, including, without limitation, the following:

•responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting our operations and diverting the attention of management and our Advisor;

•stockholder activism or actual or potential changes to the composition of our board of directors may lead to the perception of a change in the direction of our business, instability or lack of continuity, which may be exploited by our competitors, cause concern to current or potential sellers of properties, clients and financing sources. If potential or existing sellers of properties, clients or financing sources choose to delay, defer or reduce transactions with us or transact with our competitors instead of us because of any such issues, then our results of operations could be adversely affected;

•we may suffer damage to our reputation or brand by way of actions taken or statements made by outside constituents, including activist investors and shareholder advisory firms, which could adversely affect the ~~markets~~trading price of our securities; and

•if the nominees advanced by an activist stockholder were to be elected to our board of directors with a specific agenda, it could adversely affect our ability to effectively and timely run our business or to realize long-term value from our assets, and this could in turn have an adverse effect on our business and on our results of operations and financial condition.

Proxy contests and related litigation may also cause our stock price to experience periods of volatility based upon temporary or speculative market perceptions or other factors that do not necessarily reflect our underlying fundamentals and prospects.

If a tenant or lease guarantor declares bankruptcy or becomes insolvent, we may be unable to collect balances due under relevant leases.

A bankruptcy filing of our other tenants or any guarantor of one of our tenant’s lease obligations would result in a stay of all efforts by us to collect pre-bankruptcy debts from these entities or their assets, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be required to be paid currently. If a lease is assumed by one of our other tenants, all pre-bankruptcy balances owing under it must be paid in full. In the event of additional bankruptcies by our other tenants, we cannot assure our stockholders that the debtor in possession or the bankruptcy trustee will assume our lease and that our cash flow and the amounts available for dividends or other distributions to our stockholders will not be adversely affected.

Tenants with leases representing approximately 8% of our annualized SLR as of December 31, 2022, have recently filed or become subject to bankruptcy proceedings including: (i) the tenant at 16 properties known as the American Car Center I portfolio which has terminated the master lease for all of the properties; (ii) the tenant known as the Burger King I portfolio which leased 41 properties but terminated 13 of the leases; (iii) Mountain Express Oil Company which leased 71 properties and has terminated all of these leases; (iv) Bed Bath & Beyond and its subsidiaries which leased 19 suites at 17 multi-tenant properties and has terminated 10 of these leases; (v) David’s Bridal which leased five suites at five of our multi-tenant properties and has terminated two of these leases; and (vi) Christmas Tree Shops which leases two suites at two of our multi-tenant properties. With respect to those leases that have been rejected, we have a general unsecured claim for damages, but our claim is capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid as of the date of the bankruptcy filing. This claim could be paid only if funds were available, and then only in the same percentage as that realized on other unsecured claims. There is no assurance we will be able to release the vacated space at rental rates comparable to the rates on the rejected leases, if at all.

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Further deterioration in the economy could lead to additional losses or defaults from space leased to these or other tenants which may result in additional filings by tenants seeking eject or modify leases through the bankruptcy process all of which could cause us to incur material losses and may have a material adverse impact on our financial condition and results of operations.

Risks Related to the Proposed Transactions

The Exchange Ratio is fixed and will not be adjusted in the event of any change in the relative values of the shares of our Class A Common Stock or GNL Common Stock.

At the REIT Merger Effective Time, each issued and outstanding share of Class A Common Stock (or fraction thereof) will be converted into the right to receive 0.670 validly issued, fully paid and non-assessable shares of GNL Common Stock. On May 22, 2023, the last trading day before we and GNL announced the REIT Merger Agreement, the closing price of GNL Common Stock on the NYSE was $10.38 per share and the closing price of Class A Common Stock on Nasdaq was $4.69 per share. This Exchange Ratio is fixed pursuant to the REIT Merger Agreement and will not be adjusted to reflect events or circumstances or other developments of which GNL or we become aware or which occur after the date of the REIT Merger Agreement, or any changes in the relative values of GNL and us, including:

• changes in our or GNL’s respective businesses, operations, assets, liabilities, or prospects;

•changes in general market and economic conditions, and other factors generally affecting the relative values of our and GNL’s assets;

•market reaction to the announcement of the REIT Merger or the Internalization Merger and the prospects of GNL immediately following the consummation of the Proposed Transactions (the “Combined Company”) (including changes to the mix of real estate assets to be managed by the Combined Company and changes to the capital structure of the Combined Company);

•market assessments of the perceived value of the Internalization Merger and related transactions, including changes to GNL’s board of directors, changes resulting from the Internalization Merger (including changes resulting from hiring persons previously employed by our Advisor, our Property Manager, GNL Advisor and GNL Property Manager (together, the “Internalization Parties”)), and the perceived value of the Internalization Merger Consideration paid by GNL to AR Global;

•market assessments of the likelihood that the REIT Merger will close;

•changes to GNL’s distribution policy following the REIT Merger and the Internalization Merger;

•interest rates (including changes or anticipated changes in interest rates), general market and economic conditions and other factors generally affecting the market prices of GNL Common Stock and Class A Common Stock;

•federal, state and local legislation, governmental regulation, and legal developments in the businesses in which we ~~operate~~and GNL operate; or

•other factors beyond our ~~business~~ and ~~our profitability.~~GNL’s control, including those described or referred to elsewhere in this “Risk Factors” section.

~~We own properties in major metropolitan areas as well as densely populated sub-markets that are susceptible to terrorist attack or damage. Because many~~The market price of shares of GNL Common Stock at the REIT Merger Effective Time may vary from the price on the date the REIT Merger Agreement was executed, on the date the Joint Proxy Statement/Prospectus (as defined below) was filed, on the date of our ~~properties are open~~2023 special meeting of stockholders to be held on September 8, 2023 (the “Special Meeting) and on the date of GNL’s special meeting of stockholders to be held on September 8, 2023 (the “GNL Special Meeting”). As a result, the market value of the REIT Merger consideration represented by the Exchange Ratio will also vary.

If the market price of shares of GNL Common Stock increases between the date the REIT Merger Agreement was signed and the REIT Merger Effective Time, our stockholders could receive shares of GNL Common Stock that have a market value upon completion of the REIT Merger that is greater than the market value of the shares calculated pursuant to the ~~public, they~~Exchange Ratio on the date the REIT Merger Agreement was signed. Conversely, if the market price of shares of GNL Common Stock declines between the date the REIT Merger Agreement was signed and the REIT Merger Effective Time, our stockholders could receive shares of GNL Common Stock that have a market value upon the REIT Merger Effective Time that is less than the market value of the shares calculated pursuant to the Exchange Ratio on the date the REIT Merger Agreement was signed. Furthermore, at the time of our Special Meeting and the GNL Special Meeting, our stockholders and GNL’s stockholders will not know with certainty the value of the GNL Common Stock that our stockholders will receive at the REIT Merger Effective Time.

Therefore, while the number of shares of GNL Common Stock to be issued per share of Class A Common Stock is fixed, our stockholders and GNL’s stockholders cannot be sure of the market value of the REIT Merger consideration our stockholders will receive at the REIT Merger Effective Time.

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The REIT Merger and Internalization Merger are ~~exposed~~both subject to a number of ~~incidents~~conditions, and if these conditions are not satisfied or waived, the Proposed Transactions will not be completed, which could result in the requirement that we pay certain termination fees or, in certain circumstances, that we pay expenses to GNL.

The REIT Merger Agreement is subject to conditions which must be satisfied or waived in order to complete the REIT Merger, including the satisfaction of all of the conditions set forth in the Internalization Merger Agreement. The Internalization Merger is subject to conditions which must be satisfied or waived to complete the Internalization Merger, including the completion of the REIT Merger.

The consummation of the REIT Merger is subject to certain conditions, including: (i) approval of the REIT Merger by our stockholders; (ii) approval of the issuance of GNL Common Stock in connection with the Proposed Transactions (the “GNL Common Stock Proposal”) by GNL’s stockholders; (iii) the listing of the GNL Common Stock issuable pursuant to the GNL Common Stock Proposal on the NYSE and the listing of the GNL Series D Preferred Stock and GNL Series E Preferred Stock on the NYSE; (iv) all of the conditions set forth in the Internalization Merger Agreement, will have been satisfied or waived so that the Internalization Merger will occur substantially contemporaneously with the REIT Merger; (v) GNL’s continued maintenance of a decreased Aggregate Share Ownership Limit (as defined in GNL’s Charter) of 8.9% in value of the aggregate of the outstanding shares of our stock and 8.9% (in value or in number of shares, whichever is more restrictive) of any class or series of GNL’s stock; (vi) the assumption of certain of our debt, the payoff of certain our debt and refinancing of certain of GNL’s debt; (vii) receipt of certain legal opinions by us and GNL; (viii) all consents of applicable counterparties to certain lending agreements identified in the REIT Merger Agreement will have been obtained and (ix) other customary conditions specified in the REIT Merger Agreement.

The consummation of the Internalization Merger is subject to certain conditions, including: (i) the absence of injunctions or legal orders restraining the consummation of the Internalization Merger; (ii) the closing of the REIT Merger; (iii) the approval of the GNL Common Stock Proposal; (iv) the listing of the GNL Common Stock issued pursuant to the GNL Common Stock Proposal; (v) each of Edward M. Weil Jr., James L. Nelson, Christopher Masterson, Jason Slear, J.P. Eckler and Judith Beaton-Rennie and at least 60% of the additional key employees identified in the Internalization Merger Agreement having accepted offers of employment by GNL; and (vi) GNL’s adoption of employee benefit plans applicable to employees that commence employment with GNL as of the closing of the Internalization Merger (“Transferred Employees”).

There can be no assurance that the conditions to closing the REIT Merger or the Internalization Merger will be satisfied or waived or that the REIT Merger or the Internalization Merger will be completed. Failure to consummate the REIT Merger or the Internalization Merger may adversely affect our or GNL’s results of operations and business prospects and may adversely affect the price of our Class A Common Stock and our Series A Preferred Stock and Series C Preferred Stock (collectively, the “Preferred Stock”).

If the REIT Merger Agreement is terminated under certain circumstances specified in the REIT Merger Agreement, we may be required to pay GNL a termination fee of $40 million and reimburse GNL’s transaction expenses up to an amount equal to $3 million. Pursuant to the Internalization Merger Agreement, if a termination fee is paid pursuant to the REIT Merger Agreement, if we pay a termination fee to GNL, then we will also be required to reimburse AR Global for up to $1.5 million in out-of-pocket expenses related to the Internalization Merger.

Failure to complete the Proposed Transactions could negatively impact our stock price and our future business and financial results.

If the Proposed Transactions are not completed, our ongoing business could be materially adversely affected without realizing any of the benefits of having completed the Proposed Transactions. We are subject to a variety of risks associated with the failure to complete the Proposed Transactions, including the following:

•the market price our Class A Common Stock and Preferred Stock could decline;

•we may be required to pay termination fees or reimburse expenses;

•there is no certainty we would be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that GNL agreed to in the REIT Merger Agreement;

•there is no assurance that the Internalization Parties would be willing to consummate a transaction similar to the Internalization Merger;

•we may experience negative reactions from the financial markets or our respective tenants and vendors;

•we have to pay costs relating to the Proposed Transactions, such as legal, accounting, financial advisor, filing, printing and mailing fees whether or not the Proposed Transactions are completed; and

•diversion of our management’s focus and resources from operational matters and other strategic opportunities while working to implement the Proposed Transactions.

If the Proposed Transactions, including the REIT Merger and the Internalization Merger, are not completed, these risks could materially affect our business, financial results and share price. In addition, if the Proposed Transactions are not

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completed, we or GNL could be subject to litigation related to any failure to complete the Proposed Transactions or related to any enforcement proceeding commenced against us to perform the obligations under the REIT Merger Agreement or the Internalization Merger Agreement.

Holders of Class A Common Stock will have a reduced ownership and voting interest in the Combined Company after the Proposed Transactions and will exercise less influence over management of the Combined Company.

The Proposed Transactions will result in our stockholders having an ownership stake in the Combined Company that is smaller than their current stake in us prior to the REIT Merger, compared to immediately following the completion of the Proposed Transactions, based on the number of shares of GNL Common Stock and Class A Common Stock outstanding on June 30, 2023, and assuming that GNL would issue a maximum of approximately:

•(A) 95,967,705 shares of GNL Common Stock in the REIT Merger (including up to 5,714,353 shares of GNL Common Stock that may ~~take place within~~be issued to an affiliate of AR Global if all 8,525,885 of our LTIP Units currently held by AR Global and its affiliates are earned, (B) 7,933,711 shares of GNL Series D Preferred Stock, and (C) 4,595,175 shares of GNL Series E Preferred Stock to our stockholders;

•29,614,825 shares of GNL Common Stock to AR Global in the Internalization Merger;

•up to an additional 2,500,000 shares of GNL Common Stock to AR Global if all GNL LTIP Units (or GNL’s Restricted Shares, if GNL LTIP Units are converted) held by AR Global and its affiliates are earned; and

•495,000 shares of GNL Common Stock to the Blackwells/Related Parties in a private placement exempt from registration, and, assuming that the Proposed Transactions are completed, an additional 1,600,000 shares of GNL Common Stock to the Blackwells/Related Parties in a private placement exempt from registration.

Fewer shares than the maximum may be issued based on the measurement provisions in the 2021 OPP and the GNL 2021 Award, which are based on total shareholder returns over the measurement period. The end of the measurement period will occur prior to the closing of the Proposed Transactions. Both the LTIP Units (following conversion to shares of Class A Common Stock) and GNL LTIP Units are expected to be converted or ~~around~~exchanged into shares of GNL Common Stock at or near closing of the Proposed Transactions. Based on the price of GNL Common Stock of $10.28 per share at June 30, 2023, on a pro forma basis, 2,857,042 shares of GNL Common Stock would be issued exchange for the LTIP Units (that would convert to shares of Class A Common Stock prior to the closing) and 375,000 shares of GNL Common Stock would be issued in respect of GNL LTIP Units.

Based on the above issuances, our current stockholders would own approximately 39%, current GNL stockholders would own approximately 45%, the owners of AR Global and their ~~premises~~affiliates (including the direct owner of AR Global and its wholly-owned subsidiaries (including AR Global) would own approximately 14% (and will be permitted to own up to 16.8%), and the Blackwells/Related Parties would own approximately 2% of the issued and outstanding shares of common stock of the Combined Company, which assumes 50% of outstanding LTIP Units and 15% of outstanding GNL LTIP Units held by AR Global and its affiliates are earned. Consequently, our stockholders, as a general matter, will have less influence over the management and policies of the Combined Company after the closing of the Proposed Transactions than they currently exercise.

The Merger Agreements contain provisions that could discourage a potential competing acquiror or could result in any competing proposal being at a lower price than it might otherwise be.

Pursuant to the REIT Merger Agreement, we agreed not to (i) solicit proposals relating to certain alternative business combination transactions, (ii) engage in discussions or negotiations or provide non-public information in connection with any proposal for an alternative business combination transaction with a third party or (iii) approve or enter into any agreements providing for any such alternative business combination transaction, in each case, subject to certain exceptions to permit members of our board of directors to comply with their duties under applicable law. Notwithstanding these “no-shop” restrictions, prior to obtaining our stockholder approval or GNL’s stockholder approval, as applicable, under specified circumstances our board of directors or GNL’s board of directors, respectively, may change their recommendation with respect to the Proposed Transactions, and we may also terminate the REIT Merger Agreement to accept a Superior Proposal (as defined in the REIT Merger Agreement) upon payment of the termination fee described below.

The REIT Merger Agreement provides, that if the REIT Merger Agreement is terminated under certain circumstances specified in the REIT Merger Agreement, we may be required to pay GNL a termination fee of $40.0 million and reimburse GNL’s transaction expenses up to an amount equal to $3.0 million. Pursuant to the Internalization Merger Agreement, if a termination fee is paid pursuant to the REIT Merger Agreement, we may also be required to reimburse AR Global for up to $1.5 million in out-of-pocket expenses related to the Internalization Merger Agreement.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us from considering or proposing an acquisition, even if the potential competing acquirer was prepared to pay consideration with a higher per share value than the value proposed to be received or realized in the Proposed Transactions, or might result in a potential competing acquirer proposing to pay a lower per share value than it might otherwise have proposed to

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pay because of the added expense of the termination fee that may become payable in certain circumstances under the REIT Merger Agreement.

If the REIT Merger Agreement and Internalization Merger Agreement are terminated and we determine to seek another business combination, we may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Proposed Transactions contemplated by the REIT Merger Agreement and Internalization Merger Agreement.

There may be unexpected delays in completing either of the Proposed Transactions.

Closing of the Proposed Transactions may not occur when anticipated subject to all of the conditions in the REIT Merger Agreement and the Internalization Merger Agreement being satisfied or waived. The Internalization Merger Agreement provides, among other things, that either party may terminate the Internalization Merger Agreement if the REIT Merger has not occurred in accordance with the REIT Merger Agreement. The REIT Merger Agreement provides, among other things, that either we or GNL may terminate the REIT Merger Agreement if the REIT Merger has not occurred by June 1, 2024. Certain events may delay closing, including difficulties in obtaining the approval of GNL’s stockholders and our stockholders or any stockholder litigation in connection with the Proposed Transactions.

Some of our directors and executive officers have interests in the REIT Merger that are different from, or in addition to, those of our other stockholders.

In considering whether to approve the REIT Merger and the other transactions contemplated by the REIT Merger Agreement, including the RTL Merger Proposal, our stockholders should recognize that members of our management and our board of directors have interests in the REIT Merger that differ from, or are in addition to, the interests of our other stockholders. In particular, Edward M. Weil, Jr. has been the chief executive officer of AR Global since January 2016 and owns a non-controlling interest in the parent of AR Global. Some of our directors and executive officers have arrangements that provide them with interests in the REIT Merger that are different from, or in addition to, those generally of our stockholders. These interests, among other things, may influence or may have influenced our directors and executive officers to support or approve the REIT Merger and the other transactions contemplated by the REIT Merger Agreement.

An adverse outcome in any litigation or other legal proceedings relating to the REIT Merger Agreement, the Internalization Merger Agreement, or the transactions contemplated thereby, could have a material adverse impact on our businesses or our ability to consummate the transactions contemplated by the REIT Merger Agreement and Internalization Merger Agreement.

Transactions like the REIT Merger and Internalization Merger may result in litigation, stockholder demands, or other legal proceedings, including actions alleging that either party’s board of directors breached their respective duties to their stockholders or other equity holders by entering into the REIT Merger Agreement or Internalization Merger Agreement, by failing to obtain a greater value in the transaction for their stockholders or other equity holders or otherwise, or any other claims (contractual or otherwise) arising out of the REIT Merger or Internalization Merger or any of the transactions related thereto, including such proceedings described herein. For example, a complaint has been filed against us alleging that the Joint Proxy Statement/Prospectus was materially incomplete and misleading. While we believe that this complaint is without merit and we intend to vigorously defend against it, this litigation could be costly, time consuming and distracting.

With respect to these proceedings, and any other litigation or other legal proceedings that are brought against us, GNL or our respective boards of directors or subsidiaries in connection with the REIT Merger Agreement or the Internalization Merger Agreement, or the transactions contemplated thereby, the respective parties may not successfully defend against the claims. Additionally, defending against the claims could be a costly and protracted process that may distract our management from our day-to-day operations. An adverse outcome, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on the parties’ ability to consummate the Proposed Transactions in a timely manner, or at all, or their respective business, results of operation or financial position, including through the possible diversion of either company’s resources or distraction of key personnel.

The opinions of our and GNL’s financial advisors will not reflect changes in circumstances between the date of the opinions and completion of the Proposed Transactions.

We and GNL received opinions from our respective financial advisors, each dated May 23, 2023, regarding the fairness of the Exchange Ratio in connection with the REIT Merger, with the opinion to us opining on the fairness of the Exchange Ratio after giving effect to the Internalization Merger, treating the REIT Merger and the Internalization Merger as a single, unitary transaction. In addition, GNL received an opinion from its financial advisor, dated May 23, 2023, regarding the fairness of the 53% of the Internalization Merger Consideration allocated to GNL in the Internalization Merger.

We and GNL have not, and do not intend to obtain, updated opinions from our respective financial advisors as of the date of this Quarterly Report on Form 10-Q, including for any shares issued after the signing of the Merger Agreements including the shares issued or issuable to the Blackwells/Related Parties. Changes in the operations and prospects of us or GNL, general market and economic conditions and other factors that may be beyond our or GNL’s control, and on which the opinions of the financial advisors were based, may significantly alter our or GNL’s value or the prices of shares of Class A Common Stock or GNL Common Stock by the time the Proposed Transactions are completed. The opinions do not speak as of the time the

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Proposed Transactions will be completed or as of any date other than the date of the opinions. Because our and GNL’s financial advisors will not be updating their opinions, the opinions will not address the fairness of the Exchange Ratio in the REIT Merger, or the Internalization Merger Consideration paid by GNL in connection with the Internalization Merger, as the case may be, from a financial point of view at the time the Proposed Transactions are completed.

The Internalization Merger was negotiated between the RTL Special Committee and the GNL Special Committee on the one hand (each of which being comprised solely of independent and disinterested members of our and GNL’s boards of directors, respectively) and AR Global on the other hand, which is affiliated with certain of our and GNL’s officers and directors.

The Internalization Merger was negotiated with AR Global, which is affiliated with certain of our and GNL’s officers and directors. As a result, those officers and directors may have different interests than us or GNL as a whole. In addition, during the pendency of the Proposed Transactions, we and GNL will continue to be parties to advisory and property management agreements with the Internalization Parties and will continue to rely upon the Internalization Parties for key advisory and property management functions, while continuing to pay AR Global for the services provided by the Internalization Parties. These potential conflicts would not exist in the case of a transaction negotiated with unaffiliated third parties. Moreover, if AR Global or any of its affiliates breaches any of the representations, warranties or covenants made by it in the Internalization Merger Agreement, we may choose not to enforce, or to enforce less vigorously, our rights under the Internalization Merger Agreement because of our desire to maintain our ongoing relationship with AR Global and the Internalization Parties and the interests of certain of our directors and officers. Moreover, the representations, warranties, covenants and indemnities in the Internalization Merger Agreement are subject to limitations and qualifiers, which may also limit our ability to enforce any remedy under the Internalization Merger Agreement.

There can be no assurance that we could become “internalized” or “self-managed” without the Internalization Merger.

Our ability to internalize management under the Advisory Agreement is subject to the payment of certain fees and other conditions, which would make our internalization independent of the Internalization Merger Agreement expensive and cumbersome. The Advisory Agreement provides us with the right to internalize the services provided by our Advisor, subject to two-thirds approval of the independent directors of our board of directors, a nine months’ notice period, and the payment of cash fees equaling an amount equal to (i) $15.0 million, plus (ii) 4.5 multiplied by the annualized management and services fees (including variable management fees), plus (iii) 1% multiplied by the amount paid for the purchase, development or construction of any property acquired after the end of the fiscal quarter in which the internalization notice is provided. In addition, the Advisory Agreement provides limited cooperation covenants on the part of AR Global and does not include any cooperation with respect to hiring personnel. Further, the Advisory Agreement does not provide us the right to solicit persons employed by AR Global or its affiliates (including all the person presently providing services to us) to become our employees. AR Global would also be under no obligation to transfer any assets or licenses that we may need to internalize their respective management functions. Lastly, some of the loan agreements governing the indebtedness of our subsidiaries require lender consents to replace the property manager. There is no assurance the applicable parties would consent.

The representations, warranties, covenants and indemnities in each of the REIT Merger Agreement and Internalization Merger Agreement are subject to limitations and qualifiers, which may limit our ability to enforce any remedy under these agreements (including with respect to enforcement of the provisions related to AR Global in connection with the Internalization Merger Agreement). These include, without limitation, limitations on liability and materiality qualifiers on certain representations and warranties.

The pendency of the REIT Merger and the Internalization Merger could adversely affect our business and operations.

Prior to the REIT Merger Effective Time and the Internalization Merger Effective Time, some our vendors or tenants may delay or defer decisions or rental payments, which could negatively affect our or GNL’s revenues, earnings, cash flows, and expenses, regardless of whether the Proposed Transactions are completed. In addition, due to operating restrictions in the REIT Merger Agreement, subject to certain exclusions, we may be unable, during the pendency of the REIT Merger, to undertake significant capital projects, undertake certain significant financing transactions, and otherwise pursue other actions, even if such actions would prove beneficial.

Risks Related to the Combined Company Following the Proposed Transactions

The Combined Company expects to incur substantial expenses related to the Proposed Transactions.

The Combined Company expects to incur substantial expenses in connection with completing the Proposed Transactions, managing the larger and more mixed real estate asset portfolio provided by the REIT Merger, and integrating the operations and systems of the Internalization Parties, previously owned and operated by AR Global prior to the Internalization Merger. While we have assumed that a certain level of expenses would be incurred, there are several factors beyond our control that could affect the total amount or the timing of the Combined Company’s expenses relating to the Proposed Transactions and the Combined

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Company’s operations. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, the expenses associated with the Proposed Transactions could, particularly in the near term, reduce the savings that the Combined Company expects to achieve from realizing economies of scale in connection with the Proposed Transactions and eliminating duplicative expenses and cost savings related to the integration of the operations of the surviving entity after GNL Advisor Sub merges with and into GNL Advisor, the surviving entity after GNL PM Sub merges with and into GNL Property Manager, the surviving entity after RTL Advisor Sub merges with and into our Advisor, the surviving entity after RTL PM Sub merges with and into our Property Manager (collectively, the “Acquired Entities”) in connection with the Internalization Merger.

Following the Proposed Transactions, GNL may be unable to integrate our operations and operations of the Acquired Entities successfully and may not realize the anticipated synergies and other benefits of the Proposed Transactions or do so within the anticipated time frame.

The REIT Merger involves the combination of two companies that currently operate as independent public companies and their respective operating partnerships. The Combined Company may encounter difficulties and unexpected costs in the integration process, including: the inability to sell our assets, economic or industry downturns, including interest rate increases, potential unknown liabilities, negative market perception of the Combined Company’s revised plan for investment, delays or regulatory conditions associated with the REIT Merger and performance shortfalls as a result of the diversion of management’s attention by completing the REIT Merger and executing the Combined Company’s business plan.

The Internalization Merger involves a series of transactions and activities to internalize business operations within the Combined Company. Following the Internalization Merger, the Combined Company will bear the expenses of the compensation and benefits of its officers, employees, and consultants, as well as overhead expenses associated with employing its own workforce. There is no assurance that the Combined Company will realize all, or any, of the anticipated cost saving synergies. Specifically, the Combined Company will be subject to potential liabilities that are commonly faced by employers, such as workers’ disability and compensation claims, potential labor disputes, and other employee-related liabilities and grievances, and the Combined Company will bear the cost of establishing and maintaining employee compensation plans. In addition, as neither we nor GNL have ever previously operated as a self-managed REIT, the Combined Company may encounter unforeseen costs, expenses, and difficulties associated with providing these services on a self-advised basis. If the Combined Company incurs unexpected expenses as a result of its self-management, its results of operations could be lower than they otherwise would have been. In addition, pursuant to the Internalization Merger Agreement, the indemnification obligations provided under the Advisory Agreement, GNL Advisory Agreement, Property Management Agreement, and GNL Property Management Agreement that each are to be terminated in connection with the Proposed Transactions, will continue as obligations of the Combined Company following the Proposed Transactions.

The Combined Company’s net income, FFO and AFFO may decrease in the near term as a result of the Proposed Transactions.

There is no assurance that the Proposed Transactions will result in increased net income, FFO and AFFO. The Combined Company will expense all cash and non-cash costs involved in the Proposed Transactions. As a result, the Combined Company’s statement of operations and FFO may be negatively impacted, because of the non-cash charges related to the issuance of shares of Common Stock as consideration in each of the REIT Merger and the Internalization Merger and, to a lesser extent, other transaction-related costs. In addition, while the Combined Company will no longer effectively bear the costs of the various fees and expense reimbursements previously paid to Acquired Entities after the Internalization Merger, the Combined Company’s expenses will include the compensation and benefits of our officers, employees, and consultants, as well as overhead expenses, previously paid by the Acquired Entities in managing its business and operations. If the expenses of the Combined Company assumed as a result of the Proposed Transactions may be higher than the fees that we and GNL currently pay to the Acquired Entities, or otherwise higher than anticipated, the Combined Company may not realize the anticipated cost savings and other benefits from the Internalization Merger and its net income, FFO and AFFO could decrease.

The Combined Company will have substantial indebtedness.

GNL will assume all of our outstanding indebtedness under our 4.50% Senior Notes due 2028 (the “Senior Notes”) and expects to borrow approximately $604.0 million (based on amounts outstanding on the Credit Facility as June 30, 2023) under the GNL Credit Facility to repay all amounts outstanding under our Credit Facility. Taking into account GNL’s existing indebtedness, borrowing under the GNL Credit Facility to repay our Credit Facility and the assumption of our other indebtedness, the Combined Company’s pro forma consolidated indebtedness as of March 31, 2023, after giving effect to the Proposed Transactions, was approximately $5.3 billion, including $3.1 billion of secured indebtedness, $1.2 billion outstanding under the GNL Credit Facility, $500.0 million of GNL’s Senior Notes and $500.0 million of our Senior Notes.

There is no assurance that the Combined Company’s cash flow will be sufficient to pay principal and interest when due on the Combined Company’s consolidated indebtedness. The Combined Company’s indebtedness could have important consequences to holders of its common stock, including:

•vulnerability to general adverse economic and industry conditions;

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•limits on the Combined Company’s ability to ~~prevent. If an act~~obtain additional financing for uses such as to fund future working capital, capital expenditures, acquisitions, and other general corporate requirements;

•requiring the use of ~~terror,~~ a ~~mass shooting~~substantial portion of the Combined Company’s cash flow from operations to pay principal and interest reducing cash flow available to pay distributions, fund working capital, acquisitions, capital expenditures, and general corporate requirements;

•limiting the Combined Company’s flexibility in planning for, or reacting to, changes in the real estate market generally or our properties specifically;

•requiring the Combined Company to maintain certain debt coverage and other ~~violence were~~financial ratios at specified levels, thereby reducing our financial flexibility;

•exposing the Combined Company to ~~occur, we may lose tenants~~increases in interest rates including to the extent variable rate debt is reset and not otherwise capped by use of a swap or ~~be forced~~interest rate hedge;

•requiring the Combined Company to ~~close~~sell one or more of ~~our~~its properties ~~for some time.~~at disadvantageous prices in order to pay interest or principal on the Combined Company’s indebtedness;

•increasing the risk of an event of default if the Combined Company fails to comply with the terms of its debt agreements including timely paying principal and interest when due or failing to comply with the financial and other restrictive covenants contained in the agreements governing the debt obligations which could result in acceleration of the debt and foreclosure by lenders on assets securing the debt; and

•putting the Combined Company at a disadvantage compared to its competitors with less indebtedness.

The Combined Company’s ability to make scheduled payments on and to refinance its indebtedness depends on and is subject to its future financial and operating performance, which in turn is affected by general and regional economic, financial, competitive, business and other factors beyond its control. The Combined Company’s business may fail to generate sufficient cash flow from operations or future borrowings may be unavailable to it under the GNL Credit Facility or from other sources in an amount sufficient to enable the Combined Company to service its debt, to refinance its debt or to fund its other liquidity needs. If the Combined Company is unable to meet its debt obligations or to fund its other liquidity needs, the Combined Company will need to restructure or refinance all or a portion of its debt. The Combined Company may be unable to refinance any of its debt, including the GNL Credit Facility, the GNL Senior Notes or our Senior Notes, on commercially reasonable terms or at all. If the Combined Company is unable to make payments or refinance its debt or obtain new financing under these ~~incidents were~~circumstances, the Combined Company would have to ~~occur,~~consider other options, such as asset sales, equity issuances or negotiations with its lenders to restructure the ~~relevant property could face material damage to its image~~applicable debt. The GNL Credit Facility, the indenture governing the GNL Senior Notes and the ~~revenues generated therefrom.~~indenture governing our Senior Notes restrict, and market or business conditions may limit, the Combined Company’s ability to take some or all of these actions.

Any restructuring or refinancing of the Combined Company’s indebtedness could be at higher interest rates and may require it to comply with more onerous covenants that could further restrict its business operations. In addition, ~~we may~~the GNL Credit Facility, the indenture governing the GNL Senior Notes and the indenture governing our Senior Notes permit the Combined Company or its consolidated subsidiaries to incur additional debt, including secured debt, and the amount of additional indebtedness incurred could be ~~exposed to civil liability and be required to indemnify~~substantial.

As of March 31, 2023, a total of $538.2 million of the ~~victims, and our insurance premiums could rise~~Combined Company’s indebtedness matures in calendar year 2023. The indebtedness maturing in calendar year 2023 bears interest at a ~~material amount.~~

~~On February 24, 2022, Russian troops invaded Ukraine starting~~weighted rate of 3.6% per annum as of March 31, 2023. As of March 31, 2023, a ~~military conflict,~~total of $401.6 million of the ~~length and breadth~~Combined Company’s indebtedness matures in calendar year 2024. The indebtedness maturing in calendar year 2024 bears interest at a weighted rate of ~~which is highly unpredictable. Coupled with existing supply disruptions and changes~~3.8% per annum as of March 31, 2023. Interest rates have increased considerably in ~~Federal Reserve policies on interest rates, this war has exacerbated,~~the last twelve months and may continue to ~~exacerbate, inflation~~increase. The interest rate on any indebtedness the Combined Company refinances will likely be higher than the rate on the maturing indebtedness. If the Combined Company needs to repay existing debt during periods of rising interest rates, it may need to post additional collateral or sell one or more of its investments in properties even though it would not otherwise choose to do so. There is no assurance that the Combined Company will be able to refinance any of its indebtedness as it comes due, especially indebtedness secured by mortgages, on favorable terms, or at all. Increases in interest rates or changes in underwriting standards imposed by lenders may require the Combined Company to use either cash on hand or raise additional equity to repay or refinance any indebtedness or for that matter to incur new indebtedness. If the Combined Company is unable to repay or refinance any indebtedness secured by mortgages, it may lose the property secured by the mortgage in a foreclosure action.

We and ~~significant volatility~~GNL have incurred, and the Combined Company or its consolidated subsidiaries may continue to incur, variable-rate debt. As of March 31, 2023, a total of 24% of the Combined Company’s debt bore interest at variable rates which averaged 5.9% on a weighted average basis as of March 31, 2023. Increases in ~~commodity prices, credit~~interest rates on the Combined Company’s variable-rate debt or any new indebtedness it may incur either as part of a refinancing or a new property acquisition would increase its interest cost. If the Combined Company needs to repay existing debt during periods of rising interest rates, it may need to post additional collateral or sell one or more of its investments in properties even though it would not otherwise choose to do so. We and ~~capital markets,~~GNL

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have historically entered into, and the Combined Company expects to continue to enter into, these types of transactions in order to manage or mitigate its interest rate risk on variable rate debt, but there is no assurance these arrangements will be available on terms and conditions acceptable to us, if at all.

Counterparties to certain of our debt agreements may exercise contractual rights under such agreements in connection with the REIT Merger.

We and our consolidated subsidiaries are parties to certain debt agreements that give the counterparty certain rights following a “change in control” or a prohibited transfer, including in some cases the right to terminate the agreement or to require us or our applicable subsidiaries (or GNL following the close of the Proposed Transactions) to offer to redeem or to repay certain or all outstanding indebtedness under the applicable debt facility of ours or our consolidated subsidiaries. The Credit Facility will be paid off concurrently with the closing of the REIT Merger as ~~well~~required under the terms of the Credit Facility. Prior to the close of the Proposed Transactions, we intend to seek and obtain lender consents to the extent necessary or desirable, with respect to the applicable terms of the Loan Agreement, dated as ~~supply chain disruptions.~~

~~Additionally,~~of July 24, 2020, by and among the ~~U.S.~~entities listed on Schedule I thereto, as borrowers, and Column Financial, Inc., as lender, as amended to date and the ~~European Union,~~Loan Agreement, dated as of December 8, 2017, among Société Générale and ~~other countries,~~UBS AG, as ~~well~~lenders, and certain subsidiaries of the OP, as ~~other public~~borrowers, as amended to date. Under such agreements, the REIT Merger may constitute a change in control or a prohibited transfer, and ~~private actors and companies have imposed sanctions and other penalties on Russia including removing Russian-based financial institutions~~therefore, without the required consent from the ~~Society~~counterparty to such agreements, the counterparty may exercise certain rights under the agreement upon the closing of the REIT Merger, which could result in an acceleration of the obligation to repay such debt obligations by our applicable subsidiaries. Any such counterparty may request modifications of their respective agreements as a condition to granting a waiver or consent under their agreement. There can be no assurances that such counterparties will not exercise their rights under these agreements, including termination rights or rights to require the repayment of our indebtedness where available, or that the exercise of any such rights under, or modification of, these agreements will not adversely affect the Combined Company.

Future sales of GNL Common Stock, by AR Global or its affiliates or the Blackwells/Related Parties or other stockholders, may adversely affect the market price of GNL Common Stock.

As consideration for ~~Worldwide Interbank Financial Telecommunication payment system and restricted imports~~the Internalization Merger, GNL will issue 29,614,825 shares of ~~Russian oil, liquefied natural gas and coal. The sanctions have caused supply disruptions~~GNL Common Stock to AR Global initially valued in the ~~oil~~aggregate at $325.0 million, $85.0 million of which will be registered for resale immediately and ~~gas markets~~will not be subject to a lock-up. In addition, GNL may issue (i) up to 2,500,000 shares of GNL Common Stock if all GNL LTIP Units (or GNL Restricted Shares, if such GNL LTIP Units are converted) held by AR Global and ~~could continue~~its affiliates are earned; (ii) up to ~~cause significant increases~~5,714,353 shares of GNL Common Stock if all assumed LTIP Units (or Converted Restricted Shares) held by AR Global and its affiliates are earned; and (iii) up to 115,857 shares of GNL Common Stock in ~~energy prices, which could have a material effect on inflation and may trigger a recession in the U.S. and Europe, among other areas.~~

~~These and other sanctions~~exchange for up to 172,921 shares of Class A Common Stock that may be ~~imposed as well as~~issued by us in exchange for outstanding commons units of the ~~ongoing conflict could further~~OP held by an unaffiliated third party that may be converted into shares of Class A Common Stock prior to, or at any time after, the REIT Merger Effective Time. In addition, GNL may issue up to an aggregate of 2,095,000 shares of GNL Common Stock to the Blackwells/Related Parties if the Proposed Transactions are completed, 495,000 shares of which have already been issued, and GNL may issue up to a maximum of 95,967,705 shares of GNL Common Stock to our stockholders in the REIT Merger. Fewer shares than the maximum may be issued based on the measurement provisions in the 2021 OPP and the GNL 2021 Award, which are based on total shareholder returns over the measurement period. The end of the measurement period will occur prior to the closing of the Proposed Transactions. Both the LTIP Units (following conversion to shares of Class A Common Stock) and the GNL LTIP Units are expected to be converted or exchanged into shares of GNL Common Stock at or near closing of the Proposed Transactions.

Future sales of GNL Common Stock by AR Global, the Blackwells/Related Parties and other stockholders of GNL may adversely affect the ~~global economy and financial markets and cause further instability negatively impacting liquidity in~~market price of the ~~capital markets and potentially making~~GNL Common Stock. These sales also might make it more difficult for usthe Combined Company to ~~access additional debt or~~sell equity ~~financing on attractive terms~~securities in the ~~future.~~future at a time and price the Combined Company deems appropriate.

The ~~United States government has warned~~occurrence of a Ratings Decline in connection with the Proposed Transactions may require the Combined Company to redeem the Senior Notes under the indenture governing the Senior Notes, and the Combined Company may not have the funds necessary to finance such a redemption.

Under the indenture governing the Senior Notes, which GNL will assume in connection with the REIT Merger, the Combined Company will be required to make an offer to repurchase all outstanding Senior Notes at 101% of the ~~potential risk~~principal amount thereof, plus accrued and unpaid interest, upon the occurrence of ~~Russian cyberattacks,~~a “Change of Control Triggering Event”, which ~~may create market volatility~~means the occurrence of both (i) a change of control and ~~economic uncertainty particularly if these attacks occur and spread~~(ii) a ratings downgrade on the Senior Notes by at least two out of three applicable rating agencies within 60 days following the change of control, as compared to ~~a broad array~~the applicable ratings of ~~countries and networks.~~

~~In addition, any actual~~the Senior Notes 60 days prior to either the date of the change of control or ~~threatened terrorist activity or violent criminal acts, including terrorist acts against public institutions or buildings or modes~~the date of public ~~transportation (including airlines, trains~~notice thereof, in each case subject to certain terms and conditions.

We and GNL believe the Proposed Transactions constitute a change of control under the indenture governing the Senior Notes. In the event the Proposed Transactions do in fact constitute a change of control under the indenture, the Combined

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Company would be required to redeem the Senior Notes at 101% of the principal amount thereof in the event there was a subsequent ratings decline, as described above.

If required to make an offer, the Combined Company may not have sufficient funds, or ~~buses) could~~the ability to raise sufficient funds, to redeem the notes at the time it is required to do so. A failure by the Combined Company to redeem the Senior Notes as required under the indenture would constitute an event of default thereunder, which in turn would constitute a default under the Credit Facility.

The historical and unaudited pro forma combined financial information included in the Joint Proxy Statement/Prospectus may not be representative of our results following the Proposed Transactions.

The unaudited pro forma combined financial information included in the Joint Proxy Statement/Prospectus was presented for informational purposes only and is neither indicative of the financial position or results of operations that actually would have ~~a negative effect on~~occurred had the Proposed Transactions been completed as of the date indicated, nor is it indicative of the future operating results or financial position of us. The unaudited pro forma condensed consolidated financial information reflects adjustments, which are based upon preliminary estimates, to allocate the purchase price to our ~~business,~~assets and liabilities. The purchase price allocation reflected in the unaudited pro forma condensed consolidated financial information included in the Joint Proxy Statement/Prospectus is preliminary, and the final allocation of the purchase price will be based upon the actual purchase price and the fair value of ~~our properties~~the assets and ~~our results~~liabilities of ~~operations. More generally, any terrorist attack, other act~~us as of ~~violence or war,~~the dates of the completion of the Proposed Transactions. The unaudited pro forma combined financial information does not reflect future events that may occur after the REIT Merger Effective Time, including ~~armed conflicts, could result in increased volatility in, or damage~~the costs related to the ~~worldwide~~planned integration of the two companies and any future nonrecurring charges resulting from the Proposed Transactions, and does not consider potential impacts of current market conditions on revenues or expense efficiencies. The unaudited pro forma combined financial ~~markets~~information presented in the Joint Proxy Statement/Prospectus is based in part on certain assumptions regarding the Proposed Transactions that we and ~~economy, including demand for properties~~GNL believe are reasonable under the circumstances. We and ~~availability~~GNL cannot assure you that the assumptions will prove to be accurate over time.

Because the Combined Company’s board of ~~financing. Increased economic volatility could adversely affect our tenants’ abilities to conduct their operations profitably~~directors will not be fully declassified until 2025, the classified board may have the effect of delaying, deferring, or ~~our ability to access capital markets.~~

~~Certain provisions in our bylaws and agreements may deter, delay or prevent~~preventing a change ~~in our~~of control of the Combined Company until then.

~~Provisions contained in our bylaws~~The Combined Company’s board of directors will not be fully declassified until 2025. Having a partially classified board of directors may ~~deter, delay~~have the effect of delaying, deferring or ~~prevent~~preventing a change in control of the Combined Company, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might result in a premium price for its stockholders.

The Beneficial Ownership Limit may discourage a third party from acquiring the Combined Company in a manner that might result in a premium price to our stockholders

GNL’s Articles of Restatement effective February 24, 2021, as amended or supplemented (the “GNL Charter”), with certain exceptions, authorizes GNL’s board of directors ~~including, for example, provisions requiring qualifications for an individual~~ to ~~serve~~take such actions as are necessary and desirable to preserve GNL’s qualification as a ~~director~~REIT. Unless exempted (prospectively or retroactively) by GNL’s board of directors, no person may own more than the Aggregate Share Ownership Limit (as defined in the GNL Charter). In connection with the Internalization Merger Agreement, pursuant to the GNL Charter, GNL’s board of directors adopted resolutions decreasing the Aggregate Share Ownership Limit from 9.8% to 8.9% in value of the aggregate of the outstanding shares of GNL’s stock and 8.9% (in value or in number of shares, whichever is more restrictive) of any class or series of GNL’s stock. This Revised Beneficial Ownership Limit may further cause the delay, deferral, or prevention of a ~~requirement that certain~~change in control of the Combined Company, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our ~~directors be “Managing Directors” and other directors be “Independent Directors”, as defined in our governing documents. As changes occur in~~assets) that might provide a premium price for holders of the ~~marketplace for corporate governance policies, the provisions may change, be removed or new ones may be added.~~Combined Company’s common stock.

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

Recent Sale of Unregistered Equity Securities

There were no sales of unregistered equity securities by the Company and affiliated purchasers during the three months ended June 30, ~~2022.~~2023.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

There were no purchases of equity securities by the Company and affiliated purchasers during the three months ended June 30, ~~2022.~~2023.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

8096

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EXHIBITS INDEX

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2022~~2023 (and are numbered in accordance with Item 601 of Regulation S-K).


Exhibit No.						Description
3.1 (1)						Articles of Restatement
3.2 (2)						Articles Supplementary relating to reclassification of common stock, classification of additional shares of 7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share, and classification of additional shares of 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.01 per share, filed on January 13, ~~2021.~~2021
3.3 ~~(4)~~(3)						Fifth Amended and Restated Bylaws
3.4 ~~(6)~~(4)						Amendment to Fifth Amended and Restated Bylaws
3.5 ~~(3)~~(5)						Articles of Amendment to the Articles of Restatement of American Finance Trust, Inc. as filed with the State Department of Assessments and Taxation of Maryland on February 10, 2022
10.1 ~~(5)~~(6)						~~Form~~Amendment No. 1, dated as of ~~Property Management~~April 17, 2023, to Amended and Restated Credit Agreement, dated as of October 1, 2021, by and ~~between~~among American Finance Operating Partnership, L.P., American Finance Trust, Inc. and the other guarantors party thereto, BMO Harris Bank, N.A., as administrative agent, and the other lender parties thereto
1 0.2(6)						Agreement and Plan of Merger, dated as of May 23, 2023, by and among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., Osmosis Sub I, LLC, Osmosis Sub II, LLC, The Necessity Retail ~~Properties, LLC~~REIT, Inc., and ~~certain subsidiaries of~~ The Necessity Retail REIT Operating Partnership, L.P.
~~10.2~~1 0.3 *(7)						~~Eighth Amendment to~~Internalization Agreement, dated as of ~~Purchase and Sale, dated March 9, 2022,~~May 23, 2023, by and ~~between the Sellers identified therein and~~among GNL Advisor Merger Sub LLC, GNL PM Merger Sub LLC, RTL Advisor Merger Sub LLC, RTL PM Merger Sub LLC, Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., The Necessity Retail REIT, Inc., The Necessity Retail REIT Operating Partnership, L.P., on the one hand, and AR Global Investments, LLC, Global Net Lease Special Limited Partnership, LLC, Necessity Retail Special Limited Partnership, LLC, Global Net Lease Advisors, LLC, Global Net Lease Properties, LLC, Necessity Retail Advisors, LLC, Necessity Retail Properties, LLC, on the other hand
~~10.3~~1 0.4 *(8)						~~Ninth Amendment to~~ Cooperation Agreement and Release dated as of ~~Purchase and Sale, dated July 26, 2022,~~June 4, 2023, by and ~~between the Sellers identified therein and~~among Global Net Lease, Inc., The Necessity Retail REIT, ~~Operating Partnership~~Inc., Global Net Lease Advisors, LLC, Global Net Lease Properties, LLC, Necessity Retail Advisors, LLC, Necessity Retail Properties, LLC, AR Global Investments, LLC, Blackwells Capital LLC, Blackwells Onshore I LLC, Jason Aintabi, Related Fund Management, LLC, Jim Lozier, and Richard O’Toole
31.1 *						Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 *						Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 *						Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS *						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *						Inline XBRL Taxonomy Extension Schema Document.
101.CAL *						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 *						Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

_________

* Filed herewith.

(1)Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 25, 2021 and incorporated herein by reference.

(2)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on January 13, 2021 and incorporated herein by reference.

(3)Filed as an exhibit to our ~~Current Report on Form 8-K filed with the SEC on February 14, 2022 and incorporated herein by reference.~~

~~(4)Filed as an exhibit to our~~ Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022 and incorporated herein by reference.

~~(5)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on April 25, 2022 and incorporated herein by reference.~~

~~(6)~~(4)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 19, 2022 and incorporated herein by reference.

(5)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on February 14, 2022 and incorporated herein by reference.

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EXHIBITS INDEX

(6)Filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 filed with the SEC on May 10, 2023 and incorporated herein by reference.

(7)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 26, 2023 and incorporated herein by reference.

(8)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 5, 2023 and incorporated herein by reference.

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SIGNATURES

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


			The Necessity Retail REIT, Inc.

			By:			/s/ Edward M. Weil, Jr.
						Edward M. Weil, Jr.
						Chief Executive Officer and President (Principal Executive Officer)

			By:			/s/ Jason F. Doyle
						Jason F. Doyle
						Chief Financial Officer, Treasurer and Secretary (Principal Financial Officer and Principal Accounting Officer)

Dated: August ~~4, 2022~~3, 2023

8299


	Number of Shares of Common Stock	Weighted-Average Grant Price
Unvested, December 31, 2021	422,869	$	8.26
Granted	292,572	7.86
Vested	(92,770)	9.78
Forfeited	(275)	9.48
Unvested, June 30, 2022	622,396	7.84


	Total Collections						Without Deferred Rents
Period	Single-Tenant		Multi-Tenant		Total Portfolio		Single-Tenant		Multi-Tenant		Total Portfolio
First Quarter 2020	98	%	100	%	99	%	98	%	100	%	99	%
Second Quarter 2020	96	%	72	%	88	%	96	%	72	%	88	%
Third Quarter 2020	98	%	85	%	94	%	98	%	85	%	94	%
Fourth Quarter 2020	100	%	91	%	97	%	100	%	91	%	97	%
First Quarter 2021	100	%	99	%	100	%	99	%	95	%	98	%
Second Quarter 2021	100	%	100	%	100	%	99	%	97	%	99	%
Third Quarter 2021	98	%	100	%	99	%	98	%	96	%	97	%
Fourth Quarter 2021	99	%	100	%	100	%	99	%	97	%	98	%
First Quarter 2022	98	%	100	%	99	%	97	%	98	%	98	%
Second Quarter 2022	98	%	99	%	99	%	98	%	97	%	98	%