10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2012
	OR
o	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: 001-35263

AMERICAN REALTY CAPITAL PROPERTIES, INC.

(Exact name of registrant as specified in its charter) 

Maryland	45-2482685
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
405 Park Ave., 15th Floor, New York, NY	10022
(Address of principal executive offices)	(Zip Code)

(212) 415-6500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class:		Name of each exchange on which registered:
Common Stock, $0.01 par value per share		NASDAQ Stock Market
Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:
	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o No x

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 x No ¨

Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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

Large accelerated filer o		Accelerated filer x
Non-accelerated filer o	(Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Nox

The aggregate market value of the registrant's common stock held by non-affiliates of the registrant as of June 30, 2012 was $88.2 million.

The number of outstanding shares of the registrant’s common stock on February 15, 2013 was 13,134,966 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement to be delivered to stockholders in connection with the registrant’s 2013 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K. The registrant intends to file its proxy statement within 120 days after its fiscal year end.

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		Page
PART I
Item 1.	Business	6
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	40
Item 2.	Properties	41
Item 3.	Legal Proceedings	53
Item 4.	Mine Safety Disclosure	53
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	54
Item 6.	Selected Financial Data	60
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	62
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	82
Item 8.	Financial Statements and Supplementary Data	82
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	82
Item 9A.	Controls and Procedures	82
Item 9B.	Other Information	85
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	86
Item 11.	Executive Compensation	86
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	86
Item 13.	Certain Relationships and Related Transactions, and Director Independence	86
Item 14.	Principal Accounting Fees and Services	86
PART IV
Item 15.	Exhibits and Financial Statement Schedules	87
Signatures		91

Forward-Looking Statements

Certain statements included in this Annual Report on Form 10-K are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of American Realty Capital Properties, Inc. and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. As used herein, the terms “ARCP,” “we,” “our” and “us” refer to American Realty Capital Properties, Inc., a Maryland corporation, together with our consolidated subsidiaries, including ARC Properties Operating Partnership, L.P., a Delaware limited partnership of which we are the sole general partner, which we refer to in this Annual Report on Form 10-K as our “OP”; “our Manager” refers to ARC Properties Advisors, LLC, a Delaware limited liability company, our external manager; “ARC” or “our Sponsor” refers to AR Capital, LLC (formerly known as American Realty Capital II, LLC) and its affiliated companies, our sponsor; and “the Contributor” refers to ARC Real Estate Partners, LLC, an affiliate of our Sponsor, which contributed its 100% indirect ownership interests in the properties contributed to our OP in the formation transactions related to our initial public offering, or our IPO, described elsewhere in this Annual Report on Form 10-K, or the formation transactions.

The following are 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:

• We and our Manager have a limited operating history and our Manager has limited experience operating a public company. This inexperience makes our future performance difficult to predict.

• All of our executive officers are also officers, managers or holders of a direct or indirect controlling interest in our Manager, the affiliated dealer manager of our IPO, Realty Capital Securities, LLC (“RCS” or the “affiliated Dealer Manager”) and other American Realty Capital-affiliated entities. As a result, our executive officers, our Manager and its affiliates face conflicts of interest, including significant conflicts created by our Manager’s compensation arrangements with us and other investors advised by American Realty Capital affiliates and conflicts in allocating time among these investors and us. These conflicts could result in unanticipated actions.

• Because investment opportunities that are suitable for us may also be suitable for other American Realty Capital-advised programs or investors, our Manager and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, meaning that we could invest in less attractive assets, which could reduce the investment return to our stockholders.

• The competition for the type of properties we desire to acquire may cause our dividends and the long-term returns of our investors to be lower than they otherwise would be.

• We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all, which could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for dividends to our stockholders, per share trading price of our common stock and our ability to satisfy our debt service obligations.

• We depend on tenants for our revenue, and, accordingly, our revenue is dependent upon the success and economic viability of our tenants.

• Failure by any major tenant with leases in multiple locations to make rental payments to us, because of a deterioration of its financial condition or otherwise, or the termination or non-renewal of a lease by a major tenant, would have a material adverse effect on us.

• We are subject to tenant industry concentrations that make us more susceptible to adverse events with respect to certain industries.

• Increases in interest rates could increase the amount of our debt payments and limit our ability to pay dividends to our stockholders.

• We may be unable to make scheduled payments on our debt obligations.

• We may not generate cash flows sufficient to pay our dividends to stockholders, and as such we may be forced to borrow at higher rates or depend on our Manager to waive reimbursement of certain expenses and fees to fund our operations.

• We may be unable to pay or maintain cash dividends or increase dividends over time.

• We are obligated to pay substantial fees to our Manager.

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• We may not derive the expected benefits of the Merger with American Realty Capital Trust III, Inc. and Internalization (each as defined herein) or may not derive them in the expected amount of time.

• We may fail to qualify to be treated as a real estate investment trust for U.S. federal income tax purposes (“REIT”).

• We may be deemed to be an investment company under the Investment Company Act of 1940, as amended, (the “Investment Company Act”) and thus subject to regulation under the Investment Company Act.

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of this Annual Report on Form 10-K.

This Annual Report on Form 10-K includes certain unaudited pro forma consolidated financial information. We use the terms “on a combined basis”, “pro forma” and “on a pro forma basis” throughout this Annual Report on Form 10-K. The pro forma consolidated financial information combines the historical financial statements of ARCP and American Realty Capital Trust III, Inc. (“ARCT III”) after giving effect to the Merger, as described in further detail below, using the carryover basis of accounting as ARCP and ARCT III are considered to be entities under common control under United States generally accepted accounting principles (“U.S. GAAP”). The unaudited pro forma consolidated financial information should be read in conjunction with ARCP’s historical consolidated financial statements including the notes thereto, and the notes to the unaudited pro forma consolidated financial statements contained elsewhere in this report.

The unaudited pro forma consolidated financial information is presented for illustrative purposes only and does not purport to be indicative of the results that would actually have occurred if the Merger between ARCP and ARCT III had occurred as presented in such statements or that may be obtained in the future. In addition, future results may vary significantly from the results reflected in such statements.

We use certain defined terms throughout this Annual Report on Form 10-K that have the following meanings:

We use the term “net lease” throughout this Annual Report on Form 10-K. Under a net lease, the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant were the owner of the property. There are various forms of net leases, most typically classified as triple net or double net. Triple net leases typically require the tenant to pay all costs associated with a property, including real estate taxes, insurance, utilities and routine maintenance in addition to the base rent. Double net leases typically require the tenant to pay all the costs as triple net leases, but hold the landlord responsible for capital expenditures, including the repair or replacement of specific structural and/or bearing components of a property, such as the roof or structure of the building. Accordingly, the owner receives the rent “net” of these expenses, rendering the cash flow associated with the lease predictable for the term of the lease. Under a net lease, the tenant generally agrees to lease the property for a significant term and agrees that it will either have no ability or only limited ability to terminate the lease or abate rent prior to the expiration of the term of the lease as a result of real estate driven events such as casualty, condemnation or failure by the landlord to fulfill its obligations under the lease.

We use the term “modified gross lease” throughout this Annual Report on Form 10-K. Under a modified gross lease, the commercial enterprises occupying the leased property pay base rent plus a proportional share of some of the other costs associated with the property, such as property taxes, utilities, insurance and maintenance.

We use the term “credit tenant” throughout this Annual Report on Form10-K. When we refer to a “credit tenant,” we mean a tenant that has entered into a lease that we determine is creditworthy and may include tenants with an investment grade or below investment grade credit rating, as determined by major credit rating agencies, or unrated tenants. To the extent we determine that a tenant is a “credit tenant” even though it does not have an investment grade credit rating, we do so based on our Manager's reasonable determination that a tenant should have the financial wherewithal to honor its obligations under its lease with us. This reasonable determination in on our Manager's substantial experience closing net lease transactions and is made after evaluating all tenants' due diligence materials that are made available to us, including financial statements and operating data.

We use the term “annualized rental income” throughout this Annual Report on Form 10-K. When we refer to “annualized rental income,” we mean the rental income under our leases reflecting straight-line rent adjustments associated with contractual rent increases in the leases as required by U.S. GAAP, which includes the effect of tenant concessions such as free rent, as applicable. We also use the term annualized rental income/net operating income (“NOI”) throughout this Annual Report on Form 10-K. When we refer to “annualized rental income/NOI” for net leases, we mean rental income on a straight-line basis, which includes the effect of tenant concessions such as free rent as applicable. For modified gross leased properties, NOI is rental income on a straight-line basis, which includes the effect of tenant concessions such as free rent, as applicable, plus operating expense reimbursement revenue less property expenses.

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When we refer to properties that are net leased on a “medium-term basis,” we mean properties originally leased long term (10 years or longer) that are currently subject to net leases with remaining primary lease terms of generally three to eight years, on average.

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PART I

Item 1. Business.

Overview

We were incorporated on December 2, 2010, as a Maryland corporation that qualified as a REIT for U.S. federal income tax purposes beginning in the year ended December 31, 2011. On September 6, 2011, we completed our IPO and our shares of common stock began trading on the NASDAQ Stock Market (“NASDAQ”) under the symbol “ARCP” on September 7, 2011.

We were formed to acquire and own single-tenant, freestanding commercial real estate primarily subject to medium-term net leases with high credit quality tenants. Following the Merger discussed below, our long-term business plan will be to acquire a portfolio consisting of approximately 70% long-term leases and 30% medium-term leases, with an average remaining lease term of 10 to 12 years. We expect this investment strategy to develop growth potential from below market leases.  Additionally, following the Merger, we will own a portfolio that uniquely combines ARCT III's portfolio of properties with stable income from high credit quality tenants, with our portfolio, which has substantial growth opportunities.

Substantially all of our business is conducted through the OP. As of December 31, 2012, we are the sole general partner and holder of 92.5% of the equity interest in the OP. The Contributor and an unaffiliated investor are the limited partners and owners of 2.6% and 4.9%, respectively, of the equity interest in the OP. After holding units of limited partner interests (“OP Units”) for a period of one year, holders of OP Units have the right to convert OP Units for the cash value of a corresponding number of shares of our common stock or, at the option of the OP, a corresponding number of shares of our common stock, as allowed by the limited partnership agreement of the OP. The remaining rights of the holders of OP Units are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

We are managed by our Manager. The Sponsor provides certain acquisition and debt capital services to us. These related parties, including the Manager, the Sponsor and the Sponsor's wholly owned broker-dealer, RCS, have received compensation and fees for services provided to us, and will continue to receive compensation and fees and for investing, financing and management services provided to us.

As of December 31, 2012, excluding one vacant property classified as held for sale, we owned 146 properties consisting of 2.4 million square feet, 100% leased with a weighted average remaining lease term of 6.7 years. In constructing our portfolio, we are committed to diversification (industry, tenant and geography). As of December 31, 2012, rental revenues derived from investment grade tenants and tenants affiliated with investment grade entities as determined by a major rating agency approximated 97% (we have attributed the rating of each parent company to its wholly owned subsidiary for purposes of this disclosure). Our strategy encompasses receiving the majority of our revenue from investment grade tenants as we further acquire properties and enter into (or assume) medium-term lease arrangements.

As of December 31, 2012, ARCP and ARCT III on a combined basis, excluding one vacant property classified as held for sale, owned 653 properties consisting of 15.4 million square feet, 100% leased with a weighted average remaining lease term of 11.4 years. As of December 31, 2012, rental revenues derived from investment grade tenants and tenants affiliated with investment grade entities as determined by a major rating agency approximated 78% (we have attributed the rating of each parent company to its wholly owned subsidiary for purposes of this disclosure).

Merger Agreement

On December 14, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ARCT III, and certain subsidiaries of each company. The Merger Agreement provides for the Merger of ARCT III with and into a subsidiary of ours (the “Merger”). The independent members of the boards of directors of both companies have, by unanimous vote, approved the Merger and the other transactions contemplated by the Merger Agreement.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock of ARCT III will be converted into the right to receive (i) 0.95 of a share of our common stock or (ii) $12.00 in cash, but in no event will the aggregate consideration paid in cash be paid on more than 30% of the shares of ARCT III's common stock issued and outstanding as of immediately prior to the closing of the Merger. In addition, each outstanding unit of equity ownership of the ARCT III operating partnership (“ARCT III OP”) will be converted into the right to receive 0.95 of the same class of unit of equity ownership in the OP.

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Upon the consummation of the Merger with ARCT III, ARCT III's advisor, an affiliate of our Sponsor and Manager, will be entitled to subordinated distributions of net sales proceeds from the ARCT III OP estimated to be valued at approximately $59.0 million, assuming an implied price of ARCT III common stock of $12.26 (closing stock price on December 14, 2012) per share in the Merger (which assumes that 70% of the Merger consideration is ARCP common stock based on a per share price of $12.90 and 30% of the Merger consideration is cash). Such subordinated distributions of net sales proceeds, which will be payable in the form of units of equity ownership of the ARCT III OP, which we refer to as ARCT III OP Units, will automatically convert into units of equity ownership of the ARCP OP. The parties have agreed that such ARCP OP Units will be subject to a minimum one-year holding period before being exchangeable into our common stock.

Upon consummation of the Merger, the vesting of the shares of our outstanding restricted stock will be accelerated.

In connection with the Merger, we also have entered into an agreement with ARC and its affiliates to internalize, upon consummation of the Merger, certain functions currently performed by them including acquisition, accounting and portfolio management services (the “Internalization”). In connection with the Internalization, (i) we and our Sponsor have agreed to terminate the acquisition and capital services agreement dated September 6, 2011, between us which will eliminate acquisition and financing fees payable by us (except with respect to certain enumerated properties that were in our pipeline at the time we entered into the Merger Agreement) and (ii) our Manager agreed to reduce asset management fees from an annualized 0.50% of the unadjusted book value of all our assets to 0.50% for up to $3.0 billion of unadjusted book value of assets and 0.40% of unadjusted book value of assets greater than $3.0 billion. In addition, we agreed to pay $5.8 million for certain furniture, fixtures, equipment and other assets as well as certain costs related to the Merger.

We and ARCT III have made certain customary representations and warranties to each other in the Merger Agreement. Each of the companies has agreed, among other things, not to solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer or request from third parties regarding other proposals to acquire us or ARCT III, as applicable, and not to engage in any discussions or negotiations regarding any such proposal, or furnish to any third party non-public information regarding us or ARCT III, as applicable. Each of the companies has also agreed to certain other restrictions on their ability to respond to any such proposals. The Merger Agreement also includes certain termination rights for both us and ARCT III and provides that, in connection with the termination of the Merger Agreement, under specified circumstances, we or ARCT III, as applicable, may be required to pay to the other party reasonable out-of-pocket transaction expenses up to an amount equal to $10.0 million. Note that the Merger Agreement does not provide for the payment of a customary break-up fee by any party thereto in the event of a termination of the Merger Agreement without a closing of the Merger.

The completion of the Merger is subject to certain conditions and is expected to be consummated on February 28, 2013. Complete information on the Merger, including the Merger background, reasons for the Merger, who may vote, how to vote and the time and place of the Company stockholder meeting was included in a definitive joint proxy statement/prospectus filed by ARCP and ARCT III with the SEC on January 18, 2013.

Credit Facility

On February 14, 2013, ARCT III entered into a $875.0 million unsecured credit facility with Wells Fargo Bank, National Association acting as administrative agent (the “New Credit Facility”), which we will assume as of the consummation of the Merger. Capital One, N.A. and JP Morgan Chase Bank, N.A. will participate as documentation agents and RBS Citizens, N.A. and Regions Bank will act as syndication agents for the credit facility. The credit facility provides financing to ARCT III which can be increased, subject to certain conditions and through an additional commitment, to up to $1.0 billion.

The $875.0 million unsecured credit facility includes a $525.0 million term loan facility and a $350.0 million revolving credit facility. Loans under the credit facility will be priced at their applicable rate plus 160 to 220 basis points, based upon ARCT III's current leverage. To the extent that ARCT III or, upon the consummation of the Merger, we receive an investment grade credit rating from a major credit rating agency, borrowings under the facility will be priced at the applicable rate plus 115 to 200 basis points. We or ARCT III will have the ability to make fixed rate borrowings under this facility as well.

Additionally, upon consummation of the Merger, our senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million (the “RBS Facility”) will be paid off in full and terminated. As of December 31, 2012, there was $124.6 million outstanding under this facility.

Additionally, upon consummation of the Merger, we expect to enter into a bridge facility, subject to entering into definitive agreements and customary conditions thereunder, with a lender for up to $200.0 million (which may be reduced by up to $125.0 million  on a dollar for dollar basis to the extent such lender provides a commitment under the New Credit Facility described above). Assuming no such reduction under the bridge facility and an additional commitment to the New Credit Facility, we may have access to up to $1.2 billion in financing through the New Credit Facility and the bridge facility.  

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Accounting Treatment of the Merger

We and ARCT III are considered to be entities under common control. Both entities’ advisors are wholly owned subsidiaries of the Sponsor. The Sponsor and its related parties have significant ownership interests in us and ARCT III through the ownership of shares of common stock and other equity interests. In addition, the advisors of both entities are contractually eligible to charge significant fees for their services to both of the companies including asset management fees, incentive fees and other fees. Due to the significance of these fees, the advisors and ultimately the Sponsor is determined to have a significant economic interest in both companies in addition to having the power to direct the activities of the companies through advisory/management agreements, which qualifies them as affiliated companies under common control in accordance with U.S. GAAP. The acquisition of an entity under common control is accounted for on the carryover basis of accounting whereby the assets and liabilities of the companies are recorded upon the Merger on the same basis as they were carried by the companies on the Merger date.

Merger Status

On February 26, 2013, our stockholders approved the issuance of our common stock in connection with the Merger at a Special Meeting of our stockholders. More than 97 percent of the shares voting at the Special Meeting voted in favor of the issuance of our common stock in connection with the Merger, representing more than 55 percent of all outstanding shares.

On February 26, 2013, ARCT III's stockholders approved the Merger with us and the other transactions contemplated by the Merger Agreement at the Special Meeting of ARCT III's Stockholders. More than 98 percent of the shares voting at the Special Meeting voted in favor of the Merger and the other transactions contemplated by the Merger Agreement, representing more than 68 percent of all outstanding shares.

As a result, the Merger is expected to close on or about February 28, 2013.

Formation Transactions

At the completion of the IPO, the Contributor, an affiliate of the Sponsor, contributed to the OP its indirect ownership interests in certain assets of ARC Income Properties, LLC and ARC Income Properties III, LLC (the “Contributed Companies”). Assets contributed included (1) 59 properties that are presently leased to RBS Citizens Bank, N.A. and Citizens Bank of Pennsylvania, or collectively, Citizens Bank, one property presently leased to Community Bank, N.A, or Community Bank, and one property leased to Home Depot U.S.A., Inc., or Home Depot, and (2) two vacant properties. Additionally, the OP assumed certain liabilities of the Contributed Companies, including $30.6 million of unsecured notes payable and $96.2 million of mortgage notes secured by the contributed properties.

Investment Policies

Our primary business objective is to generate dependable monthly cash dividends from a consistent and predictable level of funds from operations (“FFO”) per share and capital appreciation associated with extending expiring leases or repositioning our properties for lease to new credit tenants upon the expiration of a net lease. Upon consummation of the Merger, we will own a portfolio that uniquely combines ARCT III's portfolio of properties with stable income from high credit quality tenants, with our portfolio, which has substantial growth opportunities. The long-term business plan for the combined company contemplates the combined portfolio consisting of approximately 70% long-term leases and 30% medium-term leases, with an average remaining lease term of 10 to 12 years. The combined portfolio is additionally expected to develop growth potential from below market leases. We expect to achieve these objectives by acquiring net leased properties that either (a) have in-place rental rates below current average asking rents in the applicable submarket and are located in submarkets with stable or improving market fundamentals or (b) provide an essential location or infrastructure that is essential to the business operations of the tenant, which we believe will incent the existing tenant or a new credit tenant to re-lease the property at a higher rental rate upon the expiration of the existing lease. We have also observed that the acquisition opportunities available in the net lease market are predominantly long-term leases.

Primary Investment Focus

We focus on investing in properties that are net leased to (i) credit tenants, which are generally large public companies with investment grade or below investment grade ratings and (ii) governmental, quasi-governmental and not-for-profit entities. We intend to invest in properties with tenants that reflect a diversity of industries, geographies, and sizes. A significant majority of our net lease investments have been and will continue to be in properties net leased to investment grade tenants, although at any particular time our portfolio may not reflect this.

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Investing in Real Property

We invest, and expect to continue to invest, in primarily freestanding, single-tenant retail properties net-leased to investment grade and other creditworthy tenants. When evaluating prospective investments in real property, our management and our Manager will consider relevant real estate and financial factors, including the location of the property, the leases and other agreements affecting the property, the creditworthiness of major tenants, its income-producing capacity, its physical condition, its prospects for appreciation, its prospects for liquidity, tax considerations and other factors. In this regard, our Manager will have substantial discretion with respect to the selection of specific investments, subject to approval of our board of directors.

The following table lists the tenants whose annualized rental income, on a straight-line basis, represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2012 and 2011:

Tenant	2012	2011
Citizens Bank	28.7%	62.9%
GSA	11.6%	*
John Deere	10.0%	*
Home Depot	*	21.1%

_______________________________________________

* The tenants' annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

The following table lists the states where we have concentrations of properties where annual rental income, on a straight-line basis, represented greater than 10% of consolidated annualized rental income, on a straight-line basis, as of December 31, 2012 and 2011:

State	2012	2011
Michigan	15.2%	23.4%
Ohio	10.8%	16.8%
South Carolina	10.6%	23.4%
Iowa	10.0%	*

_______________________________________________

* The state's annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

The following pro forma table lists the tenants whose annualized rental income, on a straight-line basis, represented greater than 10% of pro forma ARCP and ARCT III annualized rental income on a straight-line basis as of December 31, 2012:

Tenant	2012
Dollar General	12.3%
Citizens Bank	11.8%
FedEx	10.2%

The following table lists the states where ARCP and ARCT III have concentrations of properties where annual rental income, on a straight-line basis, represented greater than 10% of pro forma annualized rental income, on a straight-line basis, as of December 31, 2012:

State	2012
Illinois	11.2%

We do not have any specific policy as to the amount or percentage of our assets which will be invested in any specific property, other than the requirements under REIT qualification rules. We currently anticipate that our real estate investments will continue to be diversified in multiple net leased single tenant properties and in multiple geographic markets.

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Purchase and Sale of Investments

We may deliberately and strategically dispose of properties in the future and redeploy funds into new acquisitions that align with our strategic objectives. Further, on a limited and opportunistic basis, we intend to acquire and promptly resell medium-term net lease assets for immediate gain. To the extent we engage in these activities, to avoid adverse U.S. federal income tax consequences, we generally must do so through a taxable REIT subsidiary (“TRS”). In general, a TRS is treated as a regular “C corporation” and therefore must pay corporate-level taxes on its taxable income. Thus, our yield on such activities will be reduced by such taxes borne by the TRS. Depending on the strategic alternative we ultimately decide to pursue, our two properties held by our TRS may be an example of the execution of this strategy.

Investments in Real Estate Mortgages

While our current portfolio consists of, and our business objectives emphasize, equity investments in real estate, we may, at the discretion of our board of directors and without a vote of our stockholders, invest in mortgages and other types of real estate interests consistent with our qualification as a REIT. We do not presently intend to invest in mortgages or deeds of trust, other than in a manner that is ancillary to an equity investment. Investments in real estate mortgages run the risk that one or more borrowers may default under the mortgages and that the collateral securing those mortgages may not be sufficient to enable us to recoup our full investment. Investments in mortgages are also subject to our policy not to be treated as an “investment company” under the Investment Company Act.

Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers

Subject to the asset tests and income tests necessary for REIT qualification, we may invest in securities of other REITs, other entities engaged in real estate activities or securities of other issuers (including partnership interests, limited liability company interests, common stock and preferred stock), where such investment would be consistent with our investment objectives, including for the purpose of exercising control over such entities. We have no current plans to invest in entities that are not engaged in real estate activities. There are no limitations on the amount or percentage of our total assets that may be invested in any one issuer, other than those imposed by the gross income and asset tests we must meet in order to qualify as a REIT under the Code. We do not intend that our investments in securities will require us to register as an “investment company” under the Investment Company Act, and we would generally divest appropriate securities before any such registration would be required.

Joint Ventures

We may enter into joint ventures from time to time, if we determine that doing so would be the most cost-effective and efficient means of raising capital. Equity investments may be subject to existing mortgage financing and other indebtedness or such financing or indebtedness may be incurred in connection with acquiring investments. Any such financing or indebtedness will have priority over our equity interest in such property.

Financing Policies

We rely on leverage to allow us to invest in a greater number of assets and enhance our asset returns. We expect our leverage levels to decrease over time, as a result of one or more of the following factors: scheduled principal amortization on our debt and lower leverage on new asset acquisitions. We expect to continue to strengthen our balance sheet through debt repayment or repurchase and also opportunistically grow our portfolio through new property acquisitions.

We intend to finance future acquisitions with the most advantageous source of capital available to us at the time of the transaction, which may include a combination of public and private offerings of our equity and debt securities, secured and unsecured corporate-level debt, property-level debt and mortgage financing and other public, private or bank debt. In addition, we may acquire properties in exchange for the issuance of common stock or OP units and in many cases we may acquire properties subject to existing mortgage indebtedness.

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We generally seek to finance our properties with or acquire properties subject to long-term, fixed-rate, non-recourse debt, effectively locking in the spread we expect to generate on our properties and isolating the default risk to solely the properties financed. Through non-recourse debt, we seek to limit the overall company exposure in the event we default on the debt to the amount we have invested in the asset or assets financed. We seek to finance our assets with “match-funded” or substantially “match-funded” debt, meaning that we seek to obtain debt whose maturity matches as closely as possible the lease maturity of the asset financed. We expect that over time the leverage on net leased properties with medium-term remaining lease durations will be approximately 45% to 55% of the property value. At December 31, 2012, our corporate leverage ratio (total mortgage notes payable plus outstanding advances under the RBS Facility less on-hand cash and cash equivalents divided by base purchase price of acquired properties) was 58.7%. On a pro forma basis for ARCP and ARCT III combined, our corporate leverage ratio is expected to be approximately 46.8% .

We also may obtain secured debt to acquire properties, and we expect that our financing sources will include banks and life insurance companies. Although we intend to maintain a conservative capital structure, with limited reliance on debt financing, our charter does not contain a specific limitation on the amount of debt we may incur and our board of directors may implement or change target debt levels at any time without the approval of our stockholders.

Lending Policies

We do not have a policy limiting our ability to make loans to other persons, although we may be so limited by applicable law, such as the Sarbanes-Oxley Act. Subject to REIT qualification rules, we may make loans to unaffiliated third parties. For example, we may consider offering purchase money financing in connection with the disposition of properties in instances where the provision of that financing would increase the value to be received by us for the property sold. We have not engaged in any lending activities in the past. We do not expect to engage in any significant lending in the future. We may choose to guarantee debt of certain joint ventures with third parties. Consideration for those guarantees may include, but is not limited to, fees, long-term management contracts, options to acquire additional ownership interests and promoted equity positions. Our board of directors may, in the future, adopt a formal lending policy without notice to or consent of our stockholders.

Dividend Policy

We intend to pay regular monthly dividends to holders of our common stock, Series A convertible preferred stock, Series B convertible preferred stock and OP units. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. Our ability to make dividends may be limited by the New Credit Facility, pursuant to which our dividends may not exceed the greater of (i) 95.0% of our adjusted funds from operations (“AFFO”) or (ii) the amount required for us to qualify and maintain our status as a REIT.

In September 2011, our board of directors authorized, and we began paying dividends in October 2011, on the fifteenth day of each month to common stockholders of record at the close of business on the eighth day of such month. Since October 2011, the board of directors has authorized the following increases in our common stock dividends:

Dividend increase declaration date	Annualized dividend per share	Effective date
September 7, 2011	$0.8750	10/9/2011
February 27, 2012	$0.8800	3/9/2012
March 16, 2012	$0.8850	6/9/2012
June 27, 2012	$0.8900	9/9/2012
September 30, 2012	$0.8950	11/9/2012
November 29, 2012	$0.9000	2/9/2013

Commencing on May 31, 2012, we have been paying cumulative dividends on the Series A convertible preferred stock monthly in arrears at the annualized rate of $0.77 per share. Commencing on August 15, 2012, we have been paying cumulative dividends on the Series B convertible preferred stock monthly in arrears at an annualized rate of $0.74 per share.

We have the ability to fund dividends from any source, including borrowing funds and using the proceeds of equity and debt offerings. Dividends made by us will be authorized by our board of directors in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law and our capital requirements.

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We, our board of directors and our Manager share a similar philosophy with respect to paying our dividend. The dividend should principally be derived from cash flows generated from real estate operations. The management agreement with our Manager, prior to the amendment thereof in connection with the Merger, provided for payment of the asset management fee only if the full amount of the dividends declared by us in respect of our OP units for the six immediately preceding months is equal to or greater than the amount of our AFFO. This condition has been satisfied. Prior to when it was satisfied, our Manager waived such portion of its management fee that, when added to our AFFO, without regard to the waiver of the management fee, increased our AFFO so that it equaled the dividends declared by us in respect of our OP units for the prior six months. For the year ended December 31, 2012, approximately $1.0 million in fees were waived by our Manager.

Pursuant to our administrative support agreement with our Sponsor, which terminated in accordance with its terms on September 6, 2012, our Sponsor had agreed to pay or reimburse us for certain of our general and administrative costs to the extent that the amount of our dividends declared during the one-year period following the closing of this offering exceeded the amount of our AFFO in order that such dividends do not exceed the amount of our AFFO, computed without regard to such general and administrative costs paid for, or reimbursed, by our Sponsor. To the extent these amounts are paid by ARC, they would not be subject to reimbursement by us. For the year ended December 31, 2012, $0.2 million of our general and administrative expenses were paid or reimbursed to our Sponsor pursuant to our administrative support agreement. For the year ended December 31, 2011, none of our general and administrative expenses were absorbed by our Sponsor.

As our real estate portfolio matures and one-time acquisition and transaction expenses are significantly reduced, we expect cash flows from operations to cover a more significant portion of our dividends and over time to cover dividends. As the cash flows from operations become more significant our Manager may discontinue its past practice of forgiving fees and may charge the entire fee in accordance with our management agreements. There can be no assurance that the Manager will continue to waive asset management fees beyond the agreed upon limits in the future.

Tax Status

We elected to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year ended December 31, 2011. We believe that we are organized and operate in such a manner as to qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner to qualify for taxation as a REIT, but no assurance can be given that we will operate in a manner so as to qualify or remain qualified as a REIT. Pursuant to our charter, our board of directors has the authority to make any tax elections on our behalf that, in their sole judgment, are in our best interest. This authority includes the ability to elect not to qualify as a REIT for federal income tax purposes or, after qualifying as a REIT, to revoke or otherwise terminate our status as a REIT. Our board of directors has the authority under our charter to make these elections without the necessity of obtaining the approval of our stockholders. In addition, our board of directors has the authority to waive any restrictions and limitations contained in our charter that are intended to preserve our status as a REIT during any period in which our board of directors has determined not to pursue or preserve our status as a REIT.

Competition

We are subject to competition in the acquisition of properties and intense competition in the leasing of our properties. We compete with a number of developers, owners and operators of retail, industrial and office real estate, many of which own properties similar to ours in the same markets in which our properties are located, in the leasing of our properties. We also may face new competitors and, due to our focus on single-tenant properties located throughout the United States, and because many of our competitors are locally or regionally focused, we will not encounter the same competitors in each region of the United States.

Many of our competitors have greater financial and other resources and may have other advantages over our company. Our competitors may be willing to accept lower returns on their investments and may succeed in buying the properties that we have targeted for acquisition. We may also incur costs on unsuccessful acquisitions that we will not be able to recover.

Regulations

Our investments are subject to various federal, state, local and foreign laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. We believe that we have all permits and approvals necessary under current law to operate our investments.

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Environmental Matters

Under various federal, state and local environmental laws, a current owner of real estate may be required to investigate and clean up contaminated property. Under these laws, courts and government agencies have the authority to impose cleanup responsibility and liability even if the owner did not know of and was not responsible for the contamination. For example, liability can be imposed upon us based on the activities of our tenants or a prior owner. In addition to the cost of the cleanup, environmental contamination on a property may adversely affect the value of the property and our ability to sell, rent or finance the property, and may adversely impact our investment in that property.

Prior to acquisition of a property, we will obtain Phase I environmental reports. These reports will be prepared in accordance with an appropriate level of due diligence based on our standards and generally include a physical site inspection, a review of relevant federal, state and local environmental and health agency database records, one or more interviews with appropriate site-related personnel, review of the property’s chain of title and review of historic aerial photographs and other information on past uses of the property and nearby or adjoining properties. We may also obtain a Phase II investigation which may include limited subsurface investigations and tests for substances of concern where the results of the Phase I environmental reports or other information indicates possible contamination or where our consultants recommend such procedures.

Employees

We currently have no employees. Our chief executive officer, our president, our executive vice president and chief investment officer and our other executive officer are executives of ARC. Once our Merger with ARCT III occurs, we plan to internalize certain accounting and property acquisition and management functions and will have our own staff to perform these functions.

Financial Information About Industry Segments

Our current business consists of owning, managing, operating, leasing, acquiring, investing in and disposing of real estate assets. All of our consolidated revenues are from our consolidated real estate properties. We internally evaluate operating performance on an individual property level and view all of our real estate assets as one industry segment, and, accordingly, all of our properties are aggregated into one reportable segment. Please see Part IV, Item 15 — Exhibits and Financial Statement Schedules included elsewhere in this annual report for more detailed financial information.

Available Information

We electronically file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, and proxy statements, with the SEC. We also filed with the SEC our registration statement in connection with our current offering. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549, or you may obtain information by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet address at http://www.sec.gov that contains reports, proxy statements and information statements, and other information, which you may obtain free of charge. In addition, copies of our filings with the SEC may be obtained from the website maintained for us and our affiliates www.americanrealtycapitalproperties.com or at www.americanrealtycap.com. We are not incorporating our website or any information from the website into this Annual Report on Form 10-K.

Item 1A. Risk Factors

This “Risk Factors” section contains references to our “capital stock” and to our “stockholders.”  Unless expressly stated otherwise, the references to our “capital stock” represent our common stock and any class or series of our preferred stock, while the references to our “stockholders” represent holders of our common stock and any class or series of our preferred stock.

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Risks Related to Our Properties and Operations

Our growth will partially depend upon our ability to successfully acquire future properties, and we may be unable to enter into and consummate property acquisitions on advantageous terms or our property acquisitions may not perform as we expect.

We acquire and intend to continue to acquire primarily freestanding, single tenant retail properties net leased primarily to investment grade and other credit tenants The acquisition of properties entails various risks, including the risks that our investments may not perform as we expect, that we may be unable to quickly and efficiently integrate our new acquisitions into our existing operations and that our cost estimates for bringing an acquired property up to market standards may prove inaccurate. Further, we face significant competition for attractive investment opportunities from other well capitalized real estate investors, including both publicly-traded REITs and private institutional investment funds, including ARC and its affiliates and other REITs and funds sponsored or advised by ARC or its affiliates, and these competitors may have greater financial resources than us and a greater ability to borrow funds and acquire properties. This competition increases as investments in real estate become increasingly attractive relative to other forms of investment. As a result of competition, we may be unable to acquire additional properties as we desire or the purchase price may be significantly elevated. In addition, we expect to finance future acquisitions through a combination of borrowings under our revolving credit facility, proceeds from equity or debt offerings by us or our operating partnership or its subsidiaries and proceeds from property contributions and divestitures which may not be available and which could adversely affect our cash flows. Any of the above risks could adversely affect our financial condition, results of operations, cash flows and ability to pay distributions on, and the market price of, our common stock.

In addition, our growth strategy includes the disciplined acquisition of properties as opportunities arise. Our ability to acquire properties on satisfactory terms and successfully integrate and operate them is subject to the following significant risks:

• we may be unable to acquire desired properties because of competition from other real estate investors with more capital, including other real estate operating companies, REITs and investment funds;

• we may acquire properties that are not accretive to our results upon acquisition, and we may not successfully manage and lease those properties to meet our expectations;

• competition from other potential acquirers may significantly increase the purchase price of a desired property;

• we may be unable to generate sufficient cash from operations, or obtain the necessary debt or equity financing to consummate an acquisition or, if obtainable, financing may not be on satisfactory terms;

• we may need to spend more than budgeted amounts to make necessary improvements or renovations to acquired properties;

• agreements for the acquisition of properties are typically subject to customary conditions to closing, including satisfactory completion of due diligence investigations, and we may spend significant time and money on potential acquisitions that we do not consummate;

• the process of acquiring or pursuing the acquisition of a new property may divert the attention of our Manager from our existing business operations;

• we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations;

• market conditions may result in future vacancies and lower-than-expected rental rates; and

• we may acquire properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as cleanup of environmental contamination, claims by tenants, vendors or other persons against the former owners of the properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.

If we cannot complete property acquisitions on favorable terms, or operate acquired properties to meet our goals or expectations, our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make dividends to our stockholders could be materially and adversely affected.

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We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all, which could have a material adverse effect on our financial condition, results of operations, cash flow, cash available for dividend to our stockholders, per share trading price of our common stock and our ability to satisfy our debt service obligations.

Because we compete with a number of real estate operators in connection with the leasing of our properties, the possibility exists that one or more of our tenants will extend or renew its lease with us when the lease term expires on terms that are less favorable to us than the terms of the then-expiring lease, or that such tenant or tenants will not renew at all. Because we depend, in large part, on rental payments from our tenants, if one or more tenants renews its lease on terms less favorable to us, does not renew its lease or we do not re-lease a significant portion of the space made available, our financial condition, results of operations, cash flow, cash available for dividend to our stockholders, per share trading price of our common stock and ability to satisfy our debt service obligations could be materially adversely affected.

We are dependent on single-tenant leases for our revenue and, accordingly, lease terminations or tenant defaults could have a material adverse effect on our results of operations.

We focus our investment activities on ownership of freestanding, single-tenant commercial properties that are net leased to a single tenant. Therefore, the financial failure of, or other default in payment by, a single tenant under its lease is likely to cause a significant reduction in our operating cash flows from that property and a significant reduction in the value of the property, and could cause a significant reduction in our revenues. If a lease is terminated or defaulted on, we may experience difficulty or significant delay in re-leasing such property, or we may be unable to find a new tenant to re-lease the vacated space, which could result in us incurring a loss. The current economic conditions may put financial pressure on and increase the likelihood of the financial failure of, or other default in payment by, one or more of the tenants to whom we have exposure.

The failure by any major tenant with leases in multiple locations to make rental payments to us, because of a deterioration of its financial condition or otherwise, or the termination or non-renewal of a lease by a major tenant, would have a material adverse effect on us.

Our ability to generate cash from operations is dependent on the rents that we are able to charge and collect from our tenants. While we evaluate the creditworthiness of our tenants by reviewing available financial and other pertinent information, there can be no assurance that any tenant will be able to make timely rental payments or avoid defaulting under its lease. At any time, our tenants may experience an adverse change in their business. For example, the recent downturn in the global economy already may have adversely affected, or may in the future adversely affect, one or more of our tenants. If any of our tenants' business experience significant adverse changes, they may decline to extend or renew leases upon expiration, fail to make rental payments when due, close a number of stores, exercise early termination rights (to the extent such rights are available to the tenant) or declare bankruptcy. If a tenant defaults, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment.

If any of the foregoing were to occur, it could result in the termination of the tenant's leases and the loss of rental income attributable to the terminated leases. If a lease is terminated or defaulted on, we may be unable to find a new tenant to re-lease the vacated space at attractive rents or at all, which would have a material adverse effect on our results of operations and our financial condition. Furthermore, the consequences to us would be exacerbated if one of our major tenants were to experience an adverse development in their business that resulted in them being unable to make timely rental payments or to default under their lease. The occurrence of any of the situations described above would have a material adverse effect on our results of operations and our financial condition.

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We rely significantly on eight major tenants (including, for this purpose, all affiliates of such tenants) and therefore, are subject to tenant credit concentrations that make us more susceptible to adverse events with respect to those tenants.

As of December 31, 2012, the following eight major tenants had annualized rental income on a straight-line basis, which represented 5% or more of our total annualized rental income on a straight-line basis including for this purpose, all affiliates of such tenants:

• Citizens Bank represented 28.7% of total annualized rental income;

• U.S. General Services Administration ("GSA") represented 11.6% of total annualized rental income;

• John Deere represented 10.0% of total annualized rental income;

• Home Depot represented 9.6% of total annualized rental income;

• Advance Auto represented 7.2% of total annualized rental income;

• Dollar General represented 6.8% of total annualized rental income;

• FedEx represented 5.9% of total annualized rental income; and

• Walgreens represented 5.1% of total annualized rental income.

On a pro forma basis, as of December 31, 2012, the following five major tenants had annualized rental income on a straight-line basis, which represented 5% or more of pro forma total annualized rental income on a straight-line basis including for this purpose, all affiliates of such tenants:

• Dollar General represented 12.3% of total annualized rental income;

• Citizens Bank represented 11.8% of total annualized rental income;

• FedEx represented 10.2% of total annualized rental income;

• AON Corporation represented 7.5% of total annualized rental income; and

• Walgreens represented 6.2% of total annualized rental income.

Therefore, the financial failure of a major tenant is likely to have a material adverse effect on the results of operations and financial condition. In addition, the value of the investment is historically driven by the credit quality of the underlying tenant, and an adverse change in a major tenant's financial condition or a decline in the credit rating of such tenant may result in a decline in the value of the investments and have a material adverse effect on the results from operations.

We are subject to tenant geographic concentrations that make us more susceptible to adverse events with respect to certain geographic areas.

We are subject to geographic concentrations, the most significant of which are the following as of December 31, 2012:

• approximately $3.6 million, or 15.2%, of our annualized rental income came from properties located in Michigan;

• approximately $2.5 million, or 10.8%, of our annualized rental income came from properties located in Ohio;

• approximately $2.5 million, or 10.6%, of our annualized rental income came from properties located in South Carolina;

• approximately $2.4 million, or 10.0%, of our annualized rental income came from properties located in Iowa;

• approximately $2.2 million, or 9.5%, of our annualized rental income came from properties located in New York;

• approximately $1.2 million, or 5.2%, of our annualized rental income came from properties located in Missouri; and

• approximately $1.2 million, or 5.1%, of our annualized rental income came from properties located in Illinois.

As of December 31, 2012, our tenants operated in 26 states. Any downturn in one or more of these states, or in any other state in which we may have a significant credit concentration in the future, could result in a material reduction of our cash flows or material losses to the Company.

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On a pro forma basis, we and ARCT III combined are subject to tenant geographic concentrations that make us more susceptible to adverse events with respect to certain geographic areas.

We and ARCT III combined are subject to geographic concentrations, the most significant of which are the following as of December 31, 2012:

• approximately $16.3 million, or 11.2%, of our annualized rental income came from properties located in Illinois;

• approximately $8.8 million, or 6.0%, of our annualized rental income came from properties located in Missouri;

• approximately $7.9 million, or 5.4%, of our annualized rental income came from properties located in Ohio;

• approximately $7.7 million, or 5.3%, of our annualized rental income came from properties located in Michigan; and

• approximately $7.5 million, or 5.2%, of our annualized rental income came from properties located in North Carolina.

As of December 31, 2012, our combined tenants operated in 44 states. Any downturn in one or more of these states, or in any other state in which we and ARCT III may have a significant credit concentration in the future, could result in a material reduction of our combined cash flows or material losses to the Company on a combined basis.

Our net leases may require us to pay property-related expenses that are not the obligations of our tenants.

Under the terms of the majority of our net leases, in addition to satisfying their rent obligations, our tenants are responsible for the payment of real estate taxes, insurance and ordinary maintenance and repairs. However, under the provisions of certain leases and leases we may have in the future with our tenants, we may be required to pay some expenses, such as the costs of environmental liabilities, roof and structural repairs, insurance, certain non-structural repairs and maintenance. If our properties incur significant expenses that must be paid by us under the terms of our leases, our business, financial condition and results of operations will be adversely affected and the amount of cash available to meet expenses and to make dividends to holders of our capital stock may be reduced.

Net leases may not result in fair market lease rates over time, which could negatively impact our income and reduce the amount of funds available to make distributions to you.

The vast majority of our rental income comes from net leases, which generally provide the tenant greater discretion in using the leased property than ordinary property leases, such as the right to freely sublease the property, to make alterations in the leased premises and to terminate the lease prior to its expiration under specified circumstances. Furthermore, net leases typically have longer lease terms and, thus, there is an increased risk that contractual rental increases in future years will fail to result in fair market rental rates during those years. As a result, our income and distributions to our stockholders could be lower than they would otherwise be if we did not engage in net leases.

Long-term leases with tenants may not result in fair value over time.

Long-term leases do not allow for significant changes in rental payments and do not expire in the near term. If we do not accurately judge the potential for increases in market rental rates when negotiating these long-term leases, significant increases in future property operating costs could result in receiving less than fair value from these leases. These circumstances would adversely affect our revenues and funds available for distribution.

Any of our properties that incurs a vacancy could be difficult to sell or re-lease.

One or more of our properties may incur a vacancy either by the continued default of a tenant under its lease or the expiration of one of our leases. Certain of our properties may be specifically suited to the particular needs of a tenant (e.g., a retail bank branch or distribution warehouse) and major renovations and expenditures may be required in order for us to re-lease vacant space for other uses. We may have difficulty obtaining a new tenant for any vacant space we have in our properties, including our presently vacant property. If the vacancy continues for a long period of time, we may suffer reduced revenues resulting in less cash available to be distributed to stockholders. In addition, the resale value of a property could be diminished because the market value of a particular property will depend principally upon the value of the leases of such property.

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We are subject to tenant industry concentrations that make us more susceptible to adverse events with respect to certain industries.

As of December 31, 2012, our tenants operate in eleven industries and on a pro forma basis will operate in 19 industries. Any downturn in one or more of these industries, or in any other industry in which we may have a significant credit concentration in the future, could result in a material reduction of our cash flows or material losses to our company.

Our properties may be subject to impairment charges.

We periodically evaluate our real estate investments for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, tenant performance and legal structure. For example, the early termination of, or default under, a lease by a tenant may lead to an impairment charge. Since our investment focus is on properties net leased to a single tenant, the financial failure of, or other default in payment by, a single tenant under its lease may result in a significant impairment loss. If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the property, which could have a material adverse effect on our results of operations and FFO in the period in which the impairment charge is recorded.

Our real estate investments are relatively illiquid, and therefore we may not be able to dispose of properties when appropriate or on favorable terms.

The real estate investments made, and to be made, by us are relatively difficult to sell quickly. Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinancing of a property. In addition, the Code imposes restrictions on the ability of a REIT to dispose of properties that are not applicable to other types of real estate companies. We may be unable to realize our investment objectives by disposition or refinancing of a property at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. In particular, these risks could arise from weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located.

Our investments in properties backed by below investment grade credits will have a greater risk of default.

As of December 31, 2012, 3% of our annualized rental income come and on a pro forma basis 22% of our annualized rental income is derived from tenants who do not have credit ratings or are rated below investment grade by a major rating agency. We also may invest in other properties in the future where the underlying tenant's credit rating is below investment grade. These investments will have a greater risk of default and bankruptcy than investments in properties leased exclusively to investment grade tenants.

Our investments in properties where the underlying tenant does not have a publicly available credit rating will expose us to certain risks.

When we invest in properties where the underlying tenant does not have a publicly available credit rating, we will rely on our own estimates of the tenant's credit rating and usually subsequently obtain a private rating from a reputable credit rating agency to allow us to finance the property as we had planned. If our lender or a credit rating agency disagrees with our ratings estimates, or our ratings estimates are inaccurate, we may not be able to obtain our desired level of leverage or our financing costs may exceed those that we projected. This outcome could have an adverse impact on our returns on that asset and hence our operating results.

Dividends paid from sources other than our cash flow from operations, particularly from proceeds of financings, will result in us having fewer funds available for the acquisition of properties and other real estate-related investments and may dilute your interests in us, which may adversely affect our ability to fund future dividends with cash flow from operations and may adversely affect your overall return.

Our cash flows provided by operations were $6.1 million for the year ended December 31, 2012. For the year ended December 31, 2012, our dividends paid of $8.4 million was funded from $6.1 million of cash flow provided by operations and $2.5 million from proceeds of financings. Additionally, we may in the future pay dividends from sources other than from our cash flow from operations.

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Until we acquire additional properties or other real estate-related investments, we may not generate sufficient cash flow from operations to pay dividends. Our inability to acquire additional properties or other real estate-related investments may result in a lower return on your investment than you expect. If we have not generated sufficient cash flow from our operations and other sources, such as from borrowings, the sale of additional securities, advances from our Sponsor, and/or our Manager's deferral, suspension and/or waiver of its fees and expense reimbursements, to fund distributions, we may use the proceeds from offerings of securities. Moreover, our board of directors may change our dividend distribution policy, in its sole discretion, at any time. Dividends made from offering proceeds are a return of capital to stockholders, from which we will have already paid offering expenses in connection with the applicable offering. We have not established any limit on the amount of proceeds from an offering that may be used to fund dividends, except that, in accordance with our organizational documents and Maryland law, we may not make dividend distributions that would: (1) cause us to be unable to pay our debts as they become due in the usual course of business; (2) cause our total assets to be less than the sum of our total liabilities plus senior liquidation preferences; or (3) jeopardize our ability to qualify as a REIT.

If we fund dividends from the proceeds of offerings of securities, we will have less funds available for acquiring properties or other real estate-related investments. As a result, the return you realize on your investment may be reduced. Funding dividends from borrowings could restrict the amount we can borrow for investments, which may affect our profitability. Funding dividends with the sale of assets or the proceeds of offerings of securities may affect our ability to generate cash flows. Funding dividends from the sale of additional securities could dilute your interest in us if we sell shares of our common stock or securities convertible or exercisable into shares of our common stock to third party investors. Payment of dividends from the mentioned sources could restrict our ability to generate sufficient cash flow from operations, affect our profitability and/or affect the dividends payable to you upon a liquidity event, any or all of which may have an adverse effect on your investment.

We disclose adjusted funds from operations ("AFFO"), a non-GAAP financial measure, including in documents filed with the SEC; however, AFFO is not equivalent to our net income or loss as determined under GAAP, and you should consider GAAP measures to be more relevant to our operating performance.

We use and disclose to investors AFFO, which is a non-GAAP financial measure. See ''Management's Discussion and Analysis of Financial Condition and Results of Operations - Funds from Operations and Adjusted Funds from Operations.'' AFFO is not equivalent to our net income or loss as determined in accordance with GAAP, and investors should consider GAAP measures to be more relevant to evaluating our operating performance. AFFO and GAAP net income differ because AFFO excludes gains and losses from the sale of property, plus depreciation and amortization, merger related costs, acquisition-related fees and expenses and other non cash charges.

Because of the differences between AFFO and GAAP net income or loss, AFFO may not be an accurate indicator of our operating performance, especially during periods in which we are acquiring properties. In addition, AFFO is not necessarily indicative of cash flow available to fund cash needs and investors should not consider AFFO as an alternative to cash flows from operations, as an indication of our liquidity, or as indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders.

Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate AFFO. Also, because not all companies calculate AFFO the same way, comparisons with other companies may not be meaningful.

Operating expenses of our properties will reduce our cash flow and funds available for future distributions.

For certain of our properties, we are responsible for operating costs of the property. In some of these instances, our leases require the tenant to reimburse us for all or a portion of these costs, either in the form of an expense reimbursement or increased rent. Our reimbursement may be limited to a fixed amount or a specified percentage annually. To the extent operating costs exceed our reimbursement, our returns and net cash flows from the property and hence our overall operating results and cash flows could be materially adversely affected.

We have greater exposure to operating costs when we invest in properties leased to the GSA.

We invest in properties leased to the GSA. As of December 31, 2012, 11.6% of our total annualized rental income was attributable to leases with the GSA. Such leases with the GSA are typical GSA-type leases. These leases do not provide that the GSA is wholly responsible for operating costs of the property, but include an operating cost component within the rent we receive that increases annually by an agreed-upon percentage based upon the Consumer Price Index (the "CPI"). Thus, we will have greater exposure to operating costs on our properties leased to the GSA because if the operating costs of the property increase faster than the CPI, we will bear those excess costs.

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We would face potential adverse effects from tenant defaults, bankruptcies or insolvencies.

The bankruptcy of our tenants may adversely affect the income generated by our properties. If our tenant files for bankruptcy, we generally cannot evict the tenant solely because of such bankruptcy. In addition, a bankruptcy court could authorize a bankrupt tenant to reject and terminate its lease with us. In such a case, our claim against the tenant for unpaid and future rent would be subject to a statutory cap that might be substantially less than the remaining rent actually owed under the lease, and it is unlikely that a bankrupt tenant would pay in full amounts it owes us under the lease. Any shortfall resulting from the bankruptcy of one or more of our tenants could adversely affect our cash flow and results of operations.

The price we paid for the assets we acquired in the formation transactions, all of which were purchased from the Contributor, an affiliate of our Sponsor, may have exceeded their aggregate fair market value.

The amount of consideration we paid the Contributor, an affiliate of our Sponsor, for the 63 properties we acquired in our formation transactions, as determined by an independent third-party investment valuation, may have been greater than the value of such properties, because the amount of consideration for such properties was not determined as a result of arm’s-length negotiations. Further, we have not obtained a recent appraisal of the fair market value of the properties nor solicited third-party bids for the properties for purposes of creating a market check on their value. Conflicts of interest existed in connection with the transaction in which interests in these properties were contributed to our operating partnership. There can be no assurance that the values reflected in the independent third-party investment valuation that we obtained reflect the fair market value of the properties were they to be sold in an arm’s-length transaction. As a result, the price paid by us for the acquisition of the assets in the formation transactions may have exceeded the fair market value of those assets. The aggregate historical combined net book value of the real estate assets acquired by us in the formation transactions was $109.5 million.

We have assumed, and expect in the future to continue to assume, liabilities in connection with our property acquisitions, including unknown liabilities.

As part of the formation transactions, we assumed existing liabilities of our initial property subsidiaries, including, but not limited to, liabilities in connection with our initial properties, some of which may have been unknown or unquantifiable at the time the formation transactions were consummated. In addition, we have assumed existing liabilities related to our subsequent property acquisitions, and expect in the future to continue to assume existing liabilities related to our property acquisitions. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims of tenants or other persons dealing with the sellers prior to our acquisition of the properties, tax liabilities, employment-related issues, and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise. If the magnitude of such unknown liabilities is high, either singly or in the aggregate, they could adversely affect our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make distributions to our stockholders.

We face intense competition, which may decrease or prevent increases in the occupancy and rental rates of our properties.

We compete with numerous developers, owners and operators of retail, industrial and office real estate, many of which own properties similar to ours in the same markets in which our properties are located. If one of our properties becomes vacant and our competitors (which would include ARC or any ARC-sponsored program ("ARC Fund")) offer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we may lose existing or potential tenants and we may be pressured to reduce our rental rates below those we currently charge or to offer substantial rent abatements. As a result, our financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make dividends to our stockholders may be adversely affected.

Our operating performance and value are subject to risks associated with our real estate assets and with the real estate industry.

Our real estate investments are subject to various risks and fluctuations and cycles in value and demand, many of which are beyond our control. Certain events may decrease cash available for dividends, as well as the value of our properties. These events include, but are not limited to:

• adverse changes in international, national or local economic and demographic conditions such as the recent global economic downturn;

• vacancies or our inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or tenant-favorable renewal options;

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• adverse changes in financial conditions of buyers, sellers and tenants of properties;

• inability to collect rent from tenants;

• competition from other real estate investors with significant capital, including other real estate operating companies, REITs and institutional investment funds;

• reductions in the level of demand for commercial space generally, and freestanding net leased properties specifically, and changes in the relative popularity of our properties;

• increases in the supply of freestanding single-tenant properties;

• fluctuations in interest rates, which could adversely affect our ability, or the ability of buyers and tenants of our properties, to obtain financing on favorable terms or at all;

• increases in expenses, including, but not limited to, insurance costs, labor costs, energy prices, real estate assessments and other taxes and costs of compliance with laws, regulations and governmental policies, all of which have an adverse impact on the rent a tenant may be willing to pay us in order to lease one or more of our properties; and

• changes in, and changes in enforcement of, laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning and tax laws, governmental fiscal policies and the Americans with Disabilities Act of 1990.

In addition, periods of economic slowdown or recession, such as the recent global economic downturn, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. If we cannot operate our properties to meet our financial expectations, our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make dividends to our stockholders could be materially and adversely affected. We cannot assure you that we will achieve our return objectives.

A potential change in U.S. accounting standards regarding operating leases may make the leasing of our properties less attractive to our potential tenants, which could reduce overall demand for our leasing services.

Under current authoritative accounting guidance for leases, a lease is classified by a tenant as a capital lease if the significant risks and rewards of ownership are considered to reside with the tenant. Under capital lease accounting for a tenant, both the leased asset and liability are reflected on their balance sheet. If the lease does not meet any of the criteria for a capital lease, the lease is considered an operating lease by the tenant, and the obligation does not appear on the tenant's balance sheet; rather, the contractual future minimum payment obligations are only disclosed in the footnotes thereto. Thus, entering into an operating lease can appear to enhance a tenant's balance sheet in comparison to direct ownership. The Financial Accounting Standards Board, or the FASB, and the International Accounting Standards Board, or the IASB, conducted a joint project to re-evaluate lease accounting. In August 2010, the FASB and the IASB jointly released exposure drafts of a proposed accounting model that would significantly change lease accounting. Based on comments received, it was announced in January 2013 that a revised Exposure is expected to be released in the second quarter of 2013. Changes to the accounting guidance could affect both our accounting for leases as well as that of our current and potential tenants. These changes may affect how our real estate leasing business is conducted. For example, if the accounting standards regarding the financial statement classification of operating leases are revised, then companies may be less willing to enter into leases with us in general or desire to enter into leases with us with shorter terms because the apparent benefits to their balance sheets could be reduced or eliminated. This in turn could make it more difficult for us to enter into leases on terms we find favorable.

We will rely on external sources of capital to fund future capital needs, and if we encounter difficulty in obtaining such capital, we may not be able to make future acquisitions necessary to grow our business or meet maturing obligations.

In order to qualify as a REIT under the Code, we will be required, among other things, to distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with U.S. GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. Because of this dividend requirement, we may not be able to fund, from cash retained from operations, all of our future capital needs, including capital needed to make investments and to satisfy or refinance maturing obligations.

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We expect to rely on external sources of capital, including debt and equity financing, to fund future capital needs. However, the recent U.S. and global economic slowdown has resulted in a capital environment characterized by limited availability, increasing costs and significant volatility. If we are unable to obtain needed capital on satisfactory terms or at all, we may not be able to make the investments needed to expand our business, or to meet our obligations and commitments as they mature.

Any additional debt we incur will increase our leverage. Our access to capital will depend upon a number of factors over which we have little or no control, including:

• general market conditions;

• the market's perception of our growth potential;

• our current debt levels;

• our current and expected future earnings;

• our cash flow and cash dividends; and

• the market price per share of our common stock.

We may not be in a position to take advantage of attractive investment opportunities for growth if we are unable to access the capital markets on a timely basis on favorable terms.

Our ability to sell equity to expand our business will depend, in part, on the market price of our common stock, and our failure to meet market expectations with respect to our business could negatively affect the market price of our common stock and limit our ability to sell equity.

The availability of equity capital to us will depend, in part, on the market price of our common stock, which, in turn, will depend upon various market conditions and other factors that may change from time to time, including:

• the extent of investor interest;

• our ability to satisfy the dividend requirements applicable to REITs;

• the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

• our financial performance and that of our tenants;

• analyst reports about us and the REIT industry;

• general stock and bond market conditions, including changes in interest rates on fixed-income securities, which may lead prospective purchasers of our common stock to demand a higher annual yield from future dividends;

• a failure to maintain or increase our dividend, which is dependent, to a large part, on FFO, which, in turn, depends upon increased revenue from additional acquisitions and rental increases; and

• other factors such as governmental regulatory action and changes in REIT tax laws.

Our failure to meet market expectations with regard to future earnings and cash dividends would likely adversely affect the market price of our common stock and, as a result, the availability of equity capital to us.

We have substantial amounts of indebtedness outstanding, which may affect our ability to make dividends, may expose us to interest rate fluctuation risk and may expose us to the risk of default under our debt obligations.

As of December 31, 2012, our aggregate indebtedness was approximately $160.4 million and on a pro forma basis is expected to be approximately $1.0 billion. We may incur significant additional debt for various purposes including, without limitation, the funding of future acquisitions, capital improvements and leasing commissions in connection with the repositioning of a property.

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Payments of principal and interest on borrowings may leave us with insufficient cash resources to make the dividends currently contemplated or necessary to maintain our REIT qualification. Our substantial outstanding indebtedness, and the limitations imposed on us by our debt agreements, could have other significant adverse consequences, including as follows:

• our cash flow may be insufficient to meet our required principal and interest payments;

• we may be unable to borrow additional funds as needed or on satisfactory terms, which could, among other things, adversely affect our ability to capitalize upon emerging acquisition opportunities or meet needs to fund capital improvements and leasing commissions;

• we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness;

• we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;

• we may violate restrictive covenants in our loan documents, which would entitle the lenders to accelerate our debt obligations;

• certain of the property subsidiaries' loan documents may include restrictions on such subsidiary's ability to make dividends to us;

• we may be unable to hedge floating-rate debt, counterparties may fail to honor their obligations under our hedge agreements, these agreements may not effectively hedge interest rate fluctuation risk, and, upon the expiration of any hedge agreements, we would be exposed to then-existing market rates of interest and future interest rate volatility;

• we may default on our obligations and the lenders or mortgagees may foreclose on our properties that secure their loans and receive an assignment of rents and leases; and

• our default under any of our indebtedness with cross-default provisions could result in a default on other indebtedness.

If any one of these events were to occur, our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make dividends to our stockholders could be materially and adversely affected. In addition, any foreclosure on our properties could create taxable income without accompanying cash proceeds, which could adversely affect our ability to meet the REIT dividend requirements imposed by the Code.

Our existing loan agreements contain, and future financing arrangements will likely contain, restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders.

We are subject to certain restrictions pursuant to the restrictive covenants of our outstanding indebtedness, which may affect our dividend and operating policies and our ability to incur additional debt. Loan documents evidencing our existing indebtedness contain, and loan documents entered into in the future will likely contain, certain operating covenants that limit our ability to further mortgage the property or discontinue insurance coverage. In addition, future agreements may contain, and any future company credit facilities likely will contain, financial covenants, including certain coverage ratios and limitations on our ability to incur secured and unsecured debt, make dividends, sell all or substantially all of our assets, and engage in mergers and consolidations and certain acquisitions. Specifically, our ability to make dividends may be limited by the New Credit Facility, pursuant to which our dividends may not exceed the greater of (i) 95.0% of our AFFO or (ii) the amount required for us to qualify and maintain our status as a REIT. Covenants under any future indebtedness may restrict our ability to pursue certain business initiatives or certain acquisition transactions. In addition, failure to meet any of these covenants, including the financial coverage ratios, could cause an event of default under or accelerate some or all of our indebtedness, which would have a material adverse effect on us.

Increases in interest rates would increase the amount of our variable-rate debt payments and could limit our ability to pay dividends to our stockholders.

Indebtedness under the new credit facility is subject to, and we may incur additional indebtedness in the future subject to, floating interest rates, and as a result, increases in interest rates on such indebtedness would reduce our cash flows and our ability to pay dividends to our stockholders. In addition, if we are required to repay existing debt during periods of higher interest rates, we may need to sell one or more of our investments in order to repay the debt, which might reduce the realization of the return on such investments.

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Our organizational documents have no limitation on the amount of indebtedness that we may incur. As a result, we may become highly leveraged in the future, which could adversely affect our financial condition.

Our business strategy contemplates the use of both secured and unsecured debt to finance long-term growth. While we intend to limit our indebtedness to maintain an overall net debt to gross asset value of approximately 45% to 55%, provided that we may exceed this amount for individual properties in select cases where attractive financing is available, our governing documents contain no limitations on the amount of debt that we may incur, and our board of directors may change our financing policy at any time without stockholder approval. As a result, we may be able to incur substantial additional debt, including secured debt, in the future, which could result in an increase in our debt service and harm our financial condition.

The continued recovery of real estate markets from the recent recession is dependent upon forecasted moderate economic growth, which if significantly slower than expected could have a negative impact on the performance of our investment portfolio.

The U.S. economy is in its third year of recovery from a severe global recession and the commercial real estate markets stabilized and began to recover in 2011. Based on moderate economic growth in the future, and historically low levels of new supply in the commercial real estate pipeline, a stronger recovery is forecasted for all property sectors over the next two years. Nevertheless, this ongoing economic recovery remains fragile, and could be slowed or halted by significant external events. As a result, real estate markets could perform lower than expected as a result of reduced tenant demand. A severe weakening of the economy or a renewed recession could also lead to higher tenancy default and vacancy rates, which could create an oversupply of rentable space, increased property concessions and tenant improvement expenditures and reduced rental rates to maintain occupancies. There can be no assurance that our real estate investments will not be adversely impacted by a severe slowing of the economy or renewed recession. Tenant defaults, fluctuations in interest rates, limited availability of capital and other economic conditions beyond our control could negatively impact  our portfolio, and decrease the value of your investment.

Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and cash flows, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies.

We carry comprehensive liability, fire, extended coverage, business interruption and rental loss insurance covering all of the properties in our portfolio under a blanket insurance policy with policy specifications, limits and deductibles customarily carried for similar properties. In addition, we carry professional liability and directors' and officers' insurance. We have selected policy specifications and insured limits that we believe are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. We do not carry insurance for certain losses, including, but not limited to, losses caused by riots or war. Certain types of losses may be either uninsurable or not economically insurable, such as losses due to earthquakes, riots or acts of war. Should an uninsured loss occur, we could lose both our investment in and anticipated profits and cash flow from a property. If any such loss is insured, we may be required to pay a significant deductible on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. In addition, future lenders may require such insurance, and our failure to obtain such insurance could constitute a default under our loan agreements. In addition, we may reduce or discontinue terrorism, earthquake, flood or other insurance on some or all of our properties in the future if the cost of premiums for any of these policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss. Our title insurance policies may not insure for the current aggregate market value of our portfolio, and we do not intend to increase our title insurance coverage as the market value of our portfolio increases. As a result, our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make dividends to our stockholders may be materially and adversely affected.

If we or one or more of our tenants experiences a loss that is uninsured or which exceeds policy limits, we could lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these properties were irreparably damaged.

If any of our insurance carriers becomes insolvent, we could be adversely affected.

We carry several different lines of insurance, placed with several large insurance carriers. If any one of these large insurance carriers were to become insolvent, we would be forced to replace the existing insurance coverage with another suitable carrier, and any outstanding claims would be at risk for collection. In such an event, we cannot be certain that we would be able to replace the coverage at similar or otherwise favorable terms. Replacing insurance coverage at unfavorable rates and the potential of uncollectible claims due to carrier insolvency could adversely affect our results of operations and cash flows.

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Terrorism and other factors affecting demand for our properties could harm our operating results.

The strength and profitability of our business depends on demand for and the value of our properties. Future terrorist attacks in the United States, such as the attacks that occurred in New York and Washington, D.C. on September 11, 2001, and other acts of terrorism or war could have a negative impact on our operations. Such terrorist attacks could have an adverse impact on our business even if they are not directed at our properties. In addition, the terrorist attacks of September 11, 2001 have substantially affected the availability and price of insurance coverage for certain types of damages or occurrences, and our insurance policies for terrorism include large deductibles and co-payments. The lack of sufficient insurance for these types of acts could expose us to significant losses and could have a negative impact on our operations.

We may be required to make significant capital expenditures to improve our properties in order to retain and attract tenants, causing a decline in operating revenue and reducing cash available for debt service and distributions to stockholders.

Upon expiration of leases at our properties, we may be required to make rent or other concessions to tenants, or accommodate requests for renovations, build-to-suit remodeling and other improvements. As a result, we may have to make significant capital or other expenditures in order to retain tenants whose leases expire and to attract new tenants. Additionally, we may need to raise capital to make such expenditures. If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in non-renewals by tenants upon expiration of their leases, which would result in declines in revenue from operations and reduce cash available for debt service and dividends to stockholders.

Difficult conditions in the commercial real estate markets may cause us to experience market losses related to our holdings, and these conditions may not improve in the near future.

Our results of operations are materially affected by conditions in the real estate markets, the financial markets and the economy generally and may cause commercial real estate values, including the values of our properties, and market rental rates, including rental rates that we are able to charge, to decline significantly. Recent economic and credit market conditions have contributed to increased volatility and diminished expectations for real estate markets, as well as adversely impacted inflation, energy costs, geopolitical issues and the availability and cost of credit, and may continue to do so going forward. The further deterioration of the real estate market may cause us to record losses on our assets, reduce the proceeds we receive upon sale or refinance of our assets or adversely impact our ability to lease our properties. Declines in the market values of our properties may adversely affect our results of operations and credit availability, which may reduce earnings and, in turn, cash available for dividends to our stockholders. Economic and credit market conditions may also cause one or more of the tenants to whom we have exposure to fail or default in their payment obligations, which could cause us to record material losses or a material reduction in our cash flows.

Because we own real property, we are subject to extensive environmental regulation, which creates uncertainty regarding future environmental expenditures and liabilities.

Environmental laws regulate, and impose liability for, releases of hazardous or toxic substances into the environment. Under various provisions of these laws, an owner or operator of real estate, such as us, is or may be liable for costs related to soil or groundwater contamination on, in, or migrating to or from its property. In addition, persons who arrange for the disposal or treatment of hazardous or toxic substances may be liable for the costs of cleaning up contamination at the disposal site. Such laws often impose liability regardless of whether the person knew of, or was responsible for, the presence of the hazardous or toxic substances that caused the contamination. The presence of, or contamination resulting from, any of these substances, or the failure to properly remediate them, may adversely affect our ability to sell or lease our property or to borrow using such property as collateral. In addition, persons exposed to hazardous or toxic substances may sue us for personal injury damages. For example, certain laws impose liability for release of or exposure to asbestos-containing materials and contamination from past operations or from off-site sources. As a result, in connection with our current or former ownership, operation, management and development of real properties, we may be potentially liable for investigation and cleanup costs, penalties, and damages under environmental laws.

Although all of our properties were, at the time they were acquired by our predecessor, subjected to preliminary environmental assessments, known as Phase I assessments, by independent environmental consultants that identify certain liabilities, Phase I assessments are limited in scope, and may not include or identify all potential environmental liabilities or risks associated with the property. Further, any environmental liabilities that arose since the date the studies were done would not be identified in the assessments. Unless required by applicable laws or regulations, we may not further investigate, remedy or ameliorate the liabilities disclosed in the Phase I assessments.

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We cannot assure you that these or other environmental studies identified all potential environmental liabilities, or that we will not incur material environmental liabilities in the future. If we do incur material environmental liabilities in the future, we may face significant remediation costs, and we may find it difficult to sell any affected properties.

As a result of becoming a public company, we implemented additional financial and accounting systems, procedures and controls which are applicable to such companies, which has increased our costs and requires substantial management time and attention.

As a public company, we have incurred, and in the future will continue to incur, significant legal, accounting and other expenses that our predecessor did not incur as a private company, including costs associated with public company reporting requirements and corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. As an example, in order to comply with such reporting requirements, we are evaluating our internal control systems in order to allow management to report on, and, when required, our independent registered public accounting firm to attest to, our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. If we fail to implement proper overall business controls, including as required to integrate the property subsidiaries and support our growth, our results of operations could be harmed or we could fail to meet our reporting obligations. In addition, if we identify significant deficiencies or material weaknesses in our internal control over financial reporting that we cannot remediate in a timely manner, or if we are unable to receive an unqualified report from our independent registered public accounting firm with respect to our internal control over financial reporting when required, investors and others may lose confidence in the reliability of our financial statements and the trading price of our common stock and our ability to obtain any necessary equity or debt financing could suffer.

Furthermore, the design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements, or misrepresentations. Although management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weaknesses, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in the trading price of our common stock, or otherwise materially adversely affect our business, reputation, results of operations, financial condition, or liquidity.

Payment of fees to the Manager reduces cash available for investment and distribution.

Our Manager manages our day to day business and properties. Our Manager is paid substantial fees for these services, which reduce the amount of cash available for investment in properties or distribution to stockholders. Such fees and reimbursements include: (i) a management fee payable equal to 0.50% per annum of our average unadjusted book value of our real estate assets up to $3.0 billion and 0.40% per annum of such average unadjusted book value in excess of $3.0 billion, calculated and payable monthly in advance; (ii) incentive fees equal to the difference between (1) the product of (x) 20% and (y) the difference between (I) our Core Earnings (as defined below) for the previous 12-month period, and (II) the product of (A) the weighted average of the issue price per share of our common stock of all of our public offerings of common stock multiplied by the weighted average number of all shares of our common stock outstanding (including any restricted shares of common stock and other shares of common stock underlying awards granted under one or more of our equity incentive plans) in the previous 12-month period, and (B) 8.00%, and (2) the sum of any incentive fee paid to our Manager with respect to the first three calendar quarters of such previous 12-month period; provided, however, that no incentive fee is payable with respect to any calendar quarter unless Core Earnings for the 12 most recently completed calendar quarters is greater than zero; and (iii) reimbursement for all out-of-pocket costs actually incurred by our Manager in connection with the performance of services under the management agreement, including, without limitation, legal fees and expenses, travel and communications expenses, brokerage fees, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums and the costs of performing due diligence. For the purpose of calculating incentive fees, “Core Earnings” means the net income (loss), computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) incentive compensation, (iii) acquisition fees, (iv) financing fees, (v) depreciation and amortization, (vi) any unrealized gains or losses or other non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and (vii) one-time events pursuant to changes in U.S. GAAP and certain non-cash charges, in each case after discussions between our Manager and the independent members of our board of directors and approved by a majority of such independent members of the board of directors.

We may use some of the proceeds from future equity offerings to repay indebtedness owed to affiliates or incurred pursuant to affiliated debt programs.

To the extent we borrow money from affiliates or pursuant to affiliated debt programs in the future, we may use proceeds from future equity offerings to repay such indebtedness.

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Risks Related to Our Relationship with Our Manager and ARC

We are dependent on ARC and its key personnel, especially Messrs. Schorsch, Budko, Block and Weil, who provide services to us through the management agreement, and we may not find a suitable replacement for our Manager if the management agreement is terminated, or for these key personnel if they leave ARC or otherwise become unavailable to us.

We have no separate facilities and are completely reliant on our Manager and ARC. Our chief executive officer, our president, our executive vice president and chief investment officer and our executive vice president and chief financial officer are executives of ARC. Our Manager and ARC have significant discretion as to the implementation of our investment and operating policies and strategies. Accordingly, we believe that our success will depend to a significant extent upon the efforts, experience, diligence, skill and network of business contacts of the officers and key personnel of our Manager and ARC. The officers and key personnel of our Manager and ARC will evaluate, negotiate, close and monitor our investments; therefore, our success will depend on their continued service. The departure of any of the officers or key personnel of our Manager could have a material adverse effect on our performance and slow our future growth. We have not obtained and do not expect to obtain “key person” life insurance on any of our key personnel.

Neither our Manager nor ARC is obligated to dedicate any specific personnel exclusively to us. In addition, none of our officers or the officers of our Manager or ARC are obligated to dedicate any specific portion of their time to our business.

In addition, we offer no assurance that our Manager will remain our investment manager or that we will continue to have access to ARC to provide us with acquisition and capital services. The initial term of our management agreement with our Manager extends until September 6, 2021, which is the tenth anniversary of the closing of our IPO, with automatic one-year renewals thereafter, subject to a 180-day prior written notice of termination period. The acquisition and capital services agreement with ARC will be terminated concurrently with the consummation of the Merger.If the management agreement is terminated and no suitable replacement is found to provide the services needed by us under such agreement, or our new employees hired in connection with the Internalization are ineffective, we may not be able to execute our business plan.

There are various conflicts of interest in our relationship with ARC and our Manager, which could result in decisions that are not in the best interests of our stockholders.

We are subject to conflicts of interest arising out of our relationship with ARC and our Manager. Specifically, Mr. Schorsch, our chief executive officer and the chairman of our board of directors, Mr. Weil, our president, chief operating officer, secretary and one of our Directors, Mr. Budko, our executive vice president and chief investment officer, and Mr. Block, our executive vice president and chief financial officer, are executives of ARC. Our Manager and executive officers may have conflicts between their duties to us and their duties to, and interests in, ARC and other ARC Funds. ARC and its affiliates sponsor and manage numerous other public REITs that invest in real estate assets, including REITs focused on net leased properties.

Our board of directors has adopted a policy with respect to any proposed investments by our directors or officers or the officers of our Manager, which we refer to as the covered persons, in our target properties. This policy provides that any proposed investment by a covered person for his or her own account in any of our target properties will be permitted if the capital required for the investment does not exceed the lesser of (i) $5 million, or (ii)1% of our total stockholders' equity as of the most recent month end, or the personal investment limit. To the extent that a proposed investment exceeds the personal investment limit, our board of directors will only permit the covered person to make the investment (i) upon the approval of the disinterested directors, or (ii) if the proposed investment otherwise complies with terms of any other related party transaction policy our board of directors may adopt in the future. Subject to compliance with all applicable laws, these individuals may make investments for their own account in our target properties which may present certain conflicts of interest not addressed by our current policies.

We may acquire properties in geographic areas where ARC or other ARC Funds own competing properties. Also, we may acquire properties from, or sell properties to, ARC or other ARC Funds. If ARC or any one of the other ARC-sponsored programs attracts a tenant that we are competing for, we could suffer a loss of revenue due to delays in locating another suitable tenant.

We will pay our Manager substantial management fees, and incentive fees, some of which are payable regardless of the performance of our portfolio. Our Manager's and ARC's entitlement to such fees, which are not based upon performance metrics or goals, might reduce their incentive to devote their time and effort to seeking investments that provide attractive risk-adjusted returns for our portfolio. This in turn could hurt both our ability to make dividends to our stockholders and the market price of our common stock.

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Concurrently with the completion of our IPO, we granted to our Manager 167,400 restricted shares of Manager's Stock, which is equal to 3.0% of the number of shares sold in our IPO. Such shares of Manager's Stock were converted into shares of our common stock, the vesting of which will accelerate upon the consummation of the Merger. To the extent our Manager sells some of the shares, its interests may be less aligned with our interests.

The management agreement with our Manager was not negotiated on an arm's-length basis and may not be as favorable to us as if it had been negotiated with an unaffiliated third party and may be costly and difficult to terminate.

Our executive officers and certain of our directors are executives of ARC. Our management agreement with our Manager was negotiated between related parties and its terms, including amounts payable thereunder and its term, which exceeds the term of most other externally advised REITs, may not be as favorable to us as if it had been negotiated with an unaffiliated third party.

Termination of the management agreement with our Manager without cause is difficult. During the initial term of the management agreement, the management agreement may be terminated by us only for cause. Following the initial ten-year term (which commenced on September 6, 2011), the management agreement may be terminated annually upon the affirmative vote of at least two-thirds of our independent directors based upon: (1) our Manager's unsatisfactory performance that is materially detrimental to us, or (2) a determination that the management fees payable to our Manager are not fair, subject to our Manager's right to prevent termination based on unfair fees by accepting a reduction of management fees agreed to by at least two-thirds of our independent directors. Our Manager will be provided 180 days prior written notice of any such termination. These provisions may adversely affect our ability to terminate our Manager without cause.

Our Manager is only contractually committed to serve us until September 6, 2021, which is the tenth anniversary of the closing of our IPO. Thereafter, the management agreement will be renewable for one-year terms; provided, however, that our Manager may terminate the management agreement annually upon 180 days prior written notice. If the management agreement is terminated and, no suitable replacement is found to manage us, we may not be able to execute our business plan.

Pursuant to the management agreement, our Manager will not assume any responsibility other than to render the services called for thereunder and will not be responsible for any action of our board of directors in following or declining to follow its advice or recommendations. Our Manager maintains a contractual as opposed to a fiduciary relationship with us. Under the terms of the management agreement, none of our Manager, ARC, or any of their respective officers, members or personnel, any person controlling or controlled by our Manager or ARC or any person providing sub-advisory services to our Manager or ARC will be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary's stockholders or partners for acts or omissions performed in accordance with and pursuant to the management agreement, except because of acts constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the management agreement. In addition, we have agreed to indemnify our Manager, ARC and each of their respective officers, stockholders, members, managers, directors and personnel, any person controlling or controlled by our Manager or ARC and any person providing sub-advisory services to our Manager or ARC with respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts or omissions of our Manager or ARC not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties, performed in good faith in accordance with and pursuant to the management agreement.

The incentive fee payable to our Manager under the management agreement is payable quarterly and is based on our Core Earnings and therefore, may cause our Manager to select investments in more risky assets to increase its incentive compensation.

Our Manager is entitled to receive incentive compensation based upon our achievement of targeted levels of Core Earnings. In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on Core Earnings may lead our Manager to place undue emphasis on the maximization of Core Earnings at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our investment portfolio.

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The conflicts of interest policy we have adopted may not adequately address all of the conflicts of interest that may arise with respect to our investment activities and also may limit the allocation of investments to us.

In order to avoid any actual or perceived conflicts of interest with our Manager, ARC or any affiliates thereof, we have adopted a conflicts of interest policy to specifically address some of the conflicts relating to our investment opportunities. Although under this policy the approval of a majority of our independent directors will be required to approve (i) any purchase of our assets by affiliates of ARC and (ii) any purchase by us of any assets of any affiliates of ARC, there is no assurance that this policy will be adequate to address all of the conflicts that may arise or will address such conflicts in a manner that is favorable to us. In addition, as a result of the investment opportunity allocation provisions applicable to us, other ARC Funds may in the future, participate in some of our investments. Participating investments will not be the result of arm's length negotiations and will involve potential conflicts between our interests and those of the other participating ARC Funds in obtaining favorable terms. Since our executives are also executives of ARC, the same personnel may determine the price and terms for the investments for both us and these ARC Funds and there can be no assurance that any procedural protections, such as obtaining market prices or other reliable indicators of fair market value, will prevent the consideration we pay for these investments from exceeding their fair market value or ensure that we receive terms for a particular investment opportunity that are as favorable as those available from an independent third party.

Risks Related to Our Organization and Structure

The supermajority voting requirements applicable to our board of directors in connection with our consolidation, merger, sale of all or substantially all of our assets or our engaging in a share exchange will limit our independent directors' ability to influence such corporate matters.

Our charter provides that we may not consolidate, merge, sell all or substantially all of our assets or engage in a share exchange, unless such actions are approved by the affirmative vote of at least two-thirds of our board of directors. As a result, at least one of our directors who is also an executive of ARC will have to approve such significant corporate transactions. This concentrated control limits the ability of our independent directors to influence such corporate matters and could delay, deter or prevent a change of control transaction that might otherwise involve a premium for our shares of common stock or otherwise be in the best interests of our stockholders. As a result, our directors who are also executive of ARC may block certain transactions that our independent directors otherwise view as being in the best interests of our stockholders. Additionally, the market price of our common stock could be adversely affected because of the imbalance of control.

Our Sponsor exercised significant influence with respect to the terms of the formation transactions, including transactions in which it determined the compensation our principals ultimately received.

We did not conduct arm's length negotiations with our Sponsor with respect to the formation transactions. In the course of structuring the formation transactions, our Sponsor had the ability to influence the type and level of benefits that it, its affiliates (including our principals and our Manager) and our other officers ultimately received from us. In addition, our principals had substantial pre-existing indirect ownership interests in the property subsidiaries that we acquired in the formation transactions and received substantial economic benefits as a result of the formation transactions. In addition, our principals have certain executive management and director positions with us, our Manager and ARC, for which they will receive certain other benefits such as any profits associated with the fees earned by our Manager and ARC and equity based awards.

Our charter, the partnership agreement of our operating partnership and Maryland law contain provisions that may delay or prevent a change of control transaction.

Our charter, subject to certain exceptions, limits any person to actual or constructive ownership of no more than 9.8% in value of the aggregate of our outstanding shares of stock and not more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of our shares of stock. Our board of directors, in its sole discretion and upon receipt of certain representations and undertakings, may exempt a person (prospectively or retroactively) from the ownership limits. However, our board of directors may not, among other limitations, grant an exemption from the ownership limits to any person whose ownership, direct or indirect, in excess of the 9.8% ownership limit would cause us to fail to qualify as a REIT. The ownership limits and the other restrictions on ownership and transfer of our stock contained in our charter may delay or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

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Tax protection provisions on certain properties could limit our operating flexibility.

We have agreed with the Contributor, an affiliate of our Sponsor, to indemnify it against adverse tax consequences if we were to sell, convey, transfer or otherwise dispose of all or any portion of the interests in the continuing properties acquired by us in the formation transactions, in a taxable transaction. However, we can sell these properties in a taxable transaction if we pay the Contributor cash in the amount of its tax liabilities arising from the transaction and tax payments. These tax protection provisions apply until September 6, 2021, which is the tenth anniversary of the closing of our IPO. Although it may be in our stockholders' best interest that we sell a property, it may be economically disadvantageous for us to do so because of these obligations. We have also agreed to make debt available for the Contributor to guarantee. We agreed to these provisions in order to assist the Contributor in preserving its tax position after its contribution of its interests in our initial properties. As a result, we may be required to incur and maintain more debt than we would otherwise.

We may pursue less vigorous enforcement of certain agreements because of conflicts of interest with certain of our directors and officers.

Our principals and certain of our other executive officers and employees had indirect interests in all of the property subsidiaries that we acquired in the formation transactions, which property subsidiaries entered into the contribution agreement and other agreements with us in connection with such acquisitions. We may choose not to enforce, or to enforce less vigorously, our rights under these agreements due to our ongoing relationship with our principals and our other executive officers.

Tax consequences to holders of OP units upon a sale or refinancing of our properties may cause the interests of our principals to differ from the interests of our other stockholders.

As a result of the unrealized built-in gain that may be attributable to one or more of the contributed properties at the time of contribution in connection with the formation transactions, some holders of OP units, including the Contributor, an affiliate of our Sponsor, may experience different tax consequences than holders of our capital stock upon the sale or refinancing of the properties owned by our operating partnership, including disproportionately greater allocations of items of taxable income and gain upon a realization event. As those holders will not receive a correspondingly greater distribution of cash proceeds, they may have different objectives regarding the appropriate pricing, timing and other material terms of any sale or refinancing of certain properties, or whether to sell or refinance such properties at all, than those that would be in the best interests of our stockholders taken as a whole.

Our Sponsor, the Contributor and our principals will have significant influence over our affairs.

Our Sponsor and its affiliates hold a substantial percentage of the shares of our common stock. As of December 31, 2012, the Contributor, an affiliate of our Sponsor, owns 310,000 OP units, which are convertible into 310,000 shares of our common stock; our Manager, which is wholly owned by our Sponsor, owns 167,400 shares of common stock; and, our Sponsor owns 1,630,369 shares of our common stock. As a result, (i) the Contributor owns approximately 2.4% of our outstanding common stock on a fully diluted basis; (ii) our Manager owns approximately 1.3% of our outstanding common stock on a fully diluted basis; and (iii) our Sponsor owns approximately 12.7% of our outstanding common stock on a fully diluted basis. In addition, upon the consummation of the Merger, our Sponsor, as the sole owner of the sponsor of ARCT III, will indirectly receive additional OP units, which could be converted to shares of our common stock upon our Sponsor's exercise of their redemption rights with respect to such OP units. Our Sponsor will have influence over our affairs and could exercise such influence in a manner that is not in the best interests of our other stockholders, including by attempting to delay, defer or prevent a change of control transaction that might otherwise be in the best interests of our stockholders. In addition, our principals serve on our board of directors. These indicia of control are in addition to the control our Sponsor, our executive officers, who also are members of our Sponsor, and our principals will have over our affairs attributable to their direct and indirect ownership interests in our Manager.

We are a holding company with no direct operations. As a result, we rely on funds received from our operating partnership to pay liabilities and dividends, our stockholders' claims will be structurally subordinated to all liabilities of our operating partnership and our stockholders do not have any voting rights with respect to our operating partnership's activities, including the issuance of additional OP units.

We are a holding company and conduct all of our operations through our operating partnership. We do not have, apart from our ownership of our operating partnership, any independent operations. As a result, we rely on distributions from our operating partnership to pay any dividends we might declare on shares of our common stock. We also rely on distributions from our operating partnership to meet any of our obligations, including tax liability on taxable income allocated to us from our operating partnership (which might make distributions to the company not equal to the tax on such allocated taxable income).

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In addition, because we are a holding company, stockholders' claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our operating partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, claims of our stockholders will be satisfied only after all of our and our operating partnership's and its subsidiaries' liabilities and obligations have been paid in full.

As of December 31, 2012, we owned approximately 92.5% of the OP units in our operating partnership. However, our operating partnership may issue additional OP units in the future. Such issuances could reduce our ownership percentage in our operating partnership. Because our stockholders will not directly own any OP units, they will not have any voting rights with respect to any such issuances or other partnership-level activities of our operating partnership.

Our board of directors may create and issue a class or series of common or preferred stock without stockholder approval.

Our board of directors is empowered under our charter to amend our charter from time to time to increase or decrease the aggregate number of shares of our stock or the number of shares of stock of any class or series that we have authority to issue, to designate and issue from time to time one or more classes or series of stock and to classify or reclassify any unissued shares of our common stock or preferred stock without stockholder approval. Our board of directors may determine the relative preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any class or series of stock issued. As a result, we may issue series or classes of stock with voting rights, rights to dividends or other rights, senior to the rights of holders of our capital stock. The issuance of any such stock could also have the effect of delaying or preventing a change of control transaction that might otherwise be in the best interests of our stockholders.

Certain provisions in the partnership agreement of our operating partnership may delay or prevent unsolicited acquisitions of us.

Provisions in the partnership agreement of our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable. These provisions include, among others:

• redemption rights of qualifying parties;

• transfer restrictions on the OP units;

• the ability of the general partner in some cases to amend the partnership agreement without the consent of the limited partners;

• the right of the limited partners to consent to transfers of the general partnership interest of the general partner and mergers or consolidations of our company under specified limited circumstances; and

• restrictions relating to our qualification as a REIT under the Code.

Our charter and bylaws and the partnership agreement of our operating partnership also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

Certain rights which are reserved to our stockholders may allow third parties to enter into business combinations with us that are not in the best interest of the stockholders, without negotiating with our board of directors.

Certain provisions of the Maryland General Corporation Law, or the MGCL, may have the effect of requiring a third party seeking to acquire us to negotiate with our board of directors, including:

• “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of our company who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding stock) or an affiliate of an interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes special appraisal rights and stockholder supermajority voting requirements on these combinations; and

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• “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

As permitted by the MGCL, our board of directors has by resolution exempted business combinations (1) between us and any person, provided that such business combination is first approved by our board of directors (including a majority of directors who are not affiliates or associates of such person) and (2) between us and our Sponsor, our Manager, our operating partnership or any of their respective affiliates. Consequently, the five-year prohibition and the supermajority vote requirements will not apply to such business combinations. As a result, any person described above may be able to enter into business combinations with us that may not be in the best interest of our stockholders without compliance by us with the supermajority vote requirements and other provisions of the statute. This resolution, however, may be altered or repealed in whole or in part at any time by our board of directors. If this resolution is repealed, or our board of directors does not otherwise approve a business combination with a person other than our Sponsor, our Manager, our operating partnership or any of their respective affiliates, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, we may, by amendment to our bylaws, opt in to the control shares provisions of the MGCL in the future.

Additionally, Title 3, Subtitle 8 of the MGCL permits our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain takeover defenses, such as a classified board, some of which we do not yet have. These provisions may have the effect of inhibiting a third-party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide our stockholders with the opportunity to realize a premium over the then current market price.

Our fiduciary duties as sole general partner of our operating partnership could create conflicts of interest.

We are the sole general partner of our operating partnership, and, as such, will have fiduciary duties to our operating partnership and the limited partners in the operating partnership, the discharge of which may conflict with the interests of our stockholders. The limited partnership agreement of our operating partnership provides that, in the event of a conflict between the duties owed by our directors to our company and the duties that we owe, in our capacity as the sole general partner of our operating partnership, to such limited partners, our directors are under no obligation to give priority to the interests of such limited partners. In addition, those persons holding OP units will have the right to vote on certain amendments to the limited partnership agreement (which require approval by a majority in interest of the limited partners, including us) and individually to approve certain amendments that would adversely affect their rights, as well as the right to vote on mergers and consolidations of us in our capacity as sole general partner of the operating partnership in certain limited circumstances. These voting rights may be exercised in a manner that conflicts with the interests of our stockholders. For example, we cannot adversely affect the limited partners' rights to receive distributions, as set forth in the limited partnership agreement, without their consent, even though modifying such rights might be in the best interest of our stockholders generally.

We had never operated as a REIT prior to making our initial REIT election on March 15, 2012 for the year ended December 31, 2011 and have only recently begun operating as a public company and, therefore, we cannot assure you that we will successfully and profitably operate our business in compliance with the regulatory requirements applicable to REITs and to public companies.

We had never operated as a REIT prior to making our initial REIT election on March 15, 2012 for the year ended December 31, 2011. Also, we have only operated as a public company beginning the date of the closing of our IPO on September 6, 2011. In addition, certain members of our board of directors and certain of our executive officers have no experience in operating a publicly traded REIT that is traded on a securities exchange other than in connection with our operations. We cannot assure you that we will be able to successfully operate our company as a REIT or a publicly traded company, including satisfying the requirements to timely meet disclosure requirements and complying with the Sarbanes-Oxley Act, including implementing effective internal controls. Failure to maintain our qualification as a REIT or comply with other regulatory requirements would have an adverse effect on our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make distributions to our stockholders.

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Our board of directors may change significant corporate policies without stockholder approval.

Our investment, financing, borrowing and dividend policies and our policies with respect to other activities, including growth, debt, capitalization and operations, will be determined by our board of directors. These policies may be amended or revised at any time and from time to time at the discretion of the board of directors without a vote of our stockholders. In addition, the board of directors may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements. A change in these policies could have an adverse effect on our business, financial condition, results of operations, cash flow, per share trading price of our common stock and ability to satisfy our debt service obligations and to make distributions to our stockholders.

We are highly dependent on information systems of ARC and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.

Our business is highly dependent on communications and information systems of ARC. Any failure or interruption of ARC's systems could cause delays or other problems in our securities trading activities, which could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders.

Risks Related to the Merger

The Merger of us and ARCT III presents certain risks to our business and operations.

We anticipate closing the Merger on February 28, 2013 in a transaction valued at approximately $2.2 billion, based on the ARCP stock price on December 31, 2012.  Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger, each outstanding share of common stock of ARCT III will be converted into the right to receive (i) 0.95 of a share of our common stock or (ii) $12.00 in cash, but in no event will the aggregate consideration paid in cash be paid on more than 30% of the shares of ARCT III's common stock issued and outstanding as of immediately prior to the closing of the Merger. In addition, each outstanding unit of equity ownership of the ARCT III OP will be converted into the right to receive 0.95 of the same class of unit of equity ownership in our operating partnership. In connection with the Merger, we will add 507 properties to our portfolio and incur indebtedness of approximately $1.0 billion.

The Merger presents certain risks to our business and operations, including, among other things, the following:

• We may encounter difficulties and incur substantial expenses in integrating ARCT III's properties and systems into our operations and systems which may result in the disruption of our ongoing business or inconsistencies in the combined company's operations, services, standards, controls, procedures and policies, any of which could adversely affect the ability of the combined company to maintain relationships with tenants, vendors and employees or to fully achieve the anticipated benefits of the Merger, and, in any event, the integration may require a substantial amount of time on the part of our Manager and our management and employees and therefore divert their attention from other aspects of our business;

• ARCT III's real estate portfolio includes a number of industries which are new to us, including tenants in the Auto Services, Consumer Products, Restaurant, Supermarket, Gas/Convenience, Medical Office, Aerospace and Insurance businesses;

• We may not be able to realize the anticipated benefits of the Merger with ARCT III or those benefits may be less than we had anticipated;

• The market price of our common stock may decline, particularly if we do not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by securities or industry analysts or if the effect of the Merger on our results of operations and financial condition is not consistent with the expectations of these analysts;

• Our level of indebtedness will increase substantially in conjunction with the Merger;

• Our future results will suffer if we do not effectively manage our expanded portfolio;

• We cannot assure you that we will be able to continue paying dividends on our common stock or preferred stock at the current rates;

• If ARCT III failed to qualify as a REIT for U.S. federal income tax purposes, we may inherit significant tax liabilities, and we could lose our REIT status should disqualifying activities continue after the Merger;

• We may incur unanticipated capital expenditures to maintain or improve the properties and businesses of ARCT III;

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• We may encounter difficulties in managing a substantially larger and more complex business with properties in new geographic areas;

• Many of ARCT III's tenants operated in industries where we did not have any prior exposure, and the Merger increased our tenant concentration in certain industries;

• We may need to implement or improve internal controls, procedures, policies and systems with respect to ARCT III's properties and businesses, which may require substantial time and expenditure;

• We may continue to incur substantial expenses related to the Merger, including legal, accounting and financial advisory expenses;

• The transaction and integration expenses associated with the Merger could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses following the completion of the Merger;

• We may be required to recognize write-offs, impairment charges or amortization charges resulting from the Merger; and

• We may encounter unanticipated or unknown liabilities relating to the acquired businesses and properties.

In addition, a lawsuit was filed in conjunction with the Merger.  The action names as defendants ARCT III, the ARCT III operating partnership, the members of the ARCT III board of directors (the “ARCT III Board”), ARCP, our operating partnership and Tiger Acquisition, LLC (“Merger Sub”). The plaintiff alleges, among other things, that the ARCT III Board breached its fiduciary duties in connection with the transactions contemplated under the Merger Agreement by agreeing to an inadequate price and employing a flawed process. The complaint further alleges that ARCP and Merger Sub aided and abetted those alleged breaches of fiduciary duty. The plaintiff further alleges that the definitive joint proxy statement/prospectus filed with the SEC on January 22, 2013 was inadequate and failed to provide ARCT III's stockholders with certain material information in connection with the Merger. The plaintiff seeks injunctive relief, including enjoining or rescinding the Merger, and an award of other unspecified attorneys' and other fees and costs, in addition to other relief. 

In February 2013, the parties agreed to a memorandum of understanding regarding settlement of all claims asserted on behalf of the alleged class of ARCT III stockholders. In connection with the settlement contemplated by that memorandum of understanding, the class action and all claims asserted therein will be dismissed, subject to court approval. The proposed settlement terms required ARCT III to make certain additional disclosures related to the Merger, which were included in a Current Report on Form 8-K filed by ARCT III with the SEC on February 21, 2013. The memorandum of understanding also added that the parties will enter into a stipulation of settlement, which will be subject to customary conditions, including confirmatory discovery and court approval following notice to ARCT III’s stockholders. If the parties enter into a stipulation of settlement, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement. There can be no assurance that the parties will ultimately enter into a stipulation of settlement, that the court will approve any proposed settlement, or that any eventual settlement will be under the same terms as those contemplated by the memorandum of understanding.

Our anticipated level of indebtedness will increase upon completion of the Merger and will increase the related risks we now face.

In connection with the Merger, we will incur additional indebtedness and will assume certain indebtedness of ARCT III, as a result of which will be subject to increased risks associated with such debt financing, including an increased risk that the combined company's cash flow could be insufficient to meet required payments on its debt. As of February 15, 2013, we had indebtedness of $160.4 million. Taking into account our existing indebtedness, the incurrence of additional indebtedness in connection with the Merger, and the assumption of indebtedness in the Merger, our pro forma consolidated indebtedness as of February 28, 2013 would be approximately $1.0 billion.

Our increased indebtedness could have important consequences to holders of our common stock and preferred stock, including:

• increasing our vulnerability to general adverse economic and industry conditions;

• limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;

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• requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures and general corporate operating requirements;

• limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and

• putting us at a disadvantage compared to our competitors with less indebtedness.

If we default under a loan, we may automatically be in default under any other loan that has cross-default provisions, and we may lose the properties securing these loans as a result.

Your ownership position will be diluted by the Merger of us and ARCT III.

The Merger of us and ARCT III will dilute the ownership position of our stockholders. Following the issuance of shares of our common stock to ARCT III stockholders pursuant to the Merger Agreement, assuming 70% of the Merger consideration is paid in the form of shares of our common stock, our stockholders and the former ARCT III stockholders are expected to hold approximately 9% and 91%, respectively, of the combined company's common stock outstanding immediately after the Merger, based on the number of shares of common stock of each of us and ARCT III currently outstanding and various assumptions regarding share issuances by each of us and ARCT III prior to the effective time of the Merger (provided, however, such dilution could be greater than described herein depending on the number of shares of ARCT III common stock with respect to which ARCT III stockholders make stock elections). Consequently, our stockholders, as a general matter, will have less influence over our management and policies after the Merger than they exercise over our management and policies immediately prior to the Merger.

American Realty Capital Advisors III, LLC, or the ARCT III Advisor, will only provide support for a limited period of time under the Second Amended and Restated Advisory Agreement, dated as of November 13, 2012, by and among ARCT III, the ARCT III Advisor and the ARCT III operating partnership, or the ARCT III Advisory Agreement.

The ARCT III Advisory Agreement, which requires the ARCT III Advisor to provide certain services to ARCT III, including asset management, advisory services, and other essential services, has been terminated and will expire 60 days following the consummation of the Merger. To the extent our employees and infrastructure following the Merger and the Internalization cannot adequately provide any such services to us following the Merger after the expiration of the ARCT III Advisory Agreement, our operations and the market price of our common stock would be adversely affected.

U.S. Federal Income Tax Risks

Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and potentially state and local tax, and would adversely affect our operations and the market price of our common stock.

We have qualified to be taxed as a REIT commencing with the taxable year ended December 31, 2011 and intend to operate in a manner that would allow us to continue to qualify as a REIT. However, we may terminate our REIT qualification if our board of directors determines that not qualifying as a REIT is in our best interests, or inadvertently. Our qualification as a REIT depends upon our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. We structured our activities in a manner designed to satisfy all requirements for qualification as a REIT. However, the REIT qualification requirements are extremely complex and interpretation of the U.S. federal income tax laws governing qualification as a REIT is limited. Furthermore, any opinion of our counsel, including tax counsel, as to our eligibility to remain qualified as a REIT is not binding on the IRS and is not a guarantee that we will continue to qualify as a REIT. Accordingly, we cannot be certain that we will be successful in operating so we can remain qualified as a REIT. Our ability to satisfy the asset tests depends on our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income or quarterly asset requirements also depends on our ability to successfully manage the composition of our income and assets on an ongoing basis. Accordingly, if certain of our operations were to be recharacterized by the IRS, such recharacterization would jeopardize our ability to satisfy all requirements for qualification as a REIT. Furthermore, future legislative, judicial or administrative changes to the U.S. federal income tax laws could be applied retroactively, which could result in our disqualification as a REIT.

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If we fail to continue to qualify as a REIT for any taxable year and we do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax on our taxable income at corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT qualification. Losing our REIT qualification would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

Even with our REIT qualification, in certain circumstances, we may incur tax liabilities that would reduce our cash available for distribution to you.

Even with our REIT qualification, we may be subject to U.S. federal, state and local income taxes. For example, net income from the sale of properties that are “dealer” properties sold by a REIT (a “prohibited transaction” under the Code) will be subject to a 100% tax. We may not make sufficient dividends to avoid excise taxes applicable to REITs. We also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also may be subject to state and local taxes on our income or property, including franchise, payroll and transfer taxes, either directly or at the level of our operating partnership or at the level of the other companies through which we indirectly own our assets, such as TRSs, which are subject to full U.S. federal, state, local and foreign corporate-level income taxes. Any taxes we pay directly or indirectly will reduce our cash available for distribution to you.

To qualify as a REIT we must meet annual dividend requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives and reduce your overall return.

In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. We will be subject to U.S. federal income tax on our undistributed taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which dividends we pay with respect to any calendar year are less than the sum of (a) 85% of our ordinary income, (b) 95% of our capital gain net income and (c) 100% of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on investments in real estate assets and it is possible that we might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these dividends. Although we intend to make dividends sufficient to meet the annual dividend requirements and to avoid U.S. federal income and excise taxes on our earnings while we qualify as a REIT, it is possible that we might not always be able to do so.

Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on your investment.

For so long as we qualify as a REIT, our ability to dispose of property during the first few years following acquisition may be restricted to a substantial extent as a result of our REIT qualification. Under applicable provisions of the Code regarding prohibited transactions by REITs, while we qualify as a REIT, we will be subject to a 100% penalty tax on any gain recognized on the sale or other disposition of any property (other than foreclosure property) that we own, directly or through any subsidiary entity, including our operating partnership, but generally excluding our TRSs, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of a trade or business. Whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property. While we qualify as a REIT, we intend to avoid the 100% prohibited transaction tax by (a) conducting activities that may otherwise be considered prohibited transactions through a TRS (but such TRS will incur corporate rate income taxes with respect to any income or gain recognized by it), (b) conducting our operations in such a manner so that no sale or other disposition of an asset we own, directly or through any subsidiary, will be treated as a prohibited transaction or (c) structuring certain dispositions of our properties to comply with the requirements of the prohibited transaction safe harbor available under the Code for properties that, among other requirements have been held for at least two years. However, despite our present intention, no assurance can be given that any particular property we own, directly or through any subsidiary entity, including our operating partnership, but generally excluding our TRSs, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business. Our two vacant properties will be held in a TRS because we are contemplating various strategies including selling them as a means of maximizing our value from those properties.

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Our TRSs are subject to corporate-level taxes and our dealings with our TRSs may be subject to 100% excise tax.

A REIT may own up to 100% of the stock of one or more TRSs. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 25% of the value of a REIT's assets may consist of stock or securities of one or more TRSs.

A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross income from operations pursuant to management contracts. We may use TRSs generally to hold properties for sale in the ordinary course of business or to hold assets or conduct activities that we cannot conduct directly as a REIT. Our TRSs will be subject to applicable U.S. federal, state, local and foreign income tax on its taxable income. In addition, the rules which are applicable to us as a REIT, also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's-length basis.

If our operating partnership failed to qualify as a partnership or was not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT.

We intend to maintain the status of our operating partnership as a partnership or a disregarded entity for U.S. federal income tax purposes. However, if the IRS were to successfully challenge the status of our operating partnership as a partnership or disregarded entity for such purposes, it would be taxable as a corporation. In such event, this would reduce the amount of dividends that our operating partnership could make to us. This also would also result in our failing to qualify as a REIT, and becoming subject to a corporate level tax on our income. This substantially would reduce our cash available to pay dividends and the yield on your investment. In addition, if any of the partnerships or limited liability companies through which our operating partnership owns its properties, in whole or in part, loses its characterization as a partnership and is otherwise not disregarded for U.S. federal income tax purposes, it would be subject to taxation as a corporation, thereby reducing dividends to the operating partnership. Such a recharacterization of an underlying property owner could also threaten our ability to maintain our REIT qualification.

We may choose to make distributions in our own stock, in which case you may be required to pay U.S. federal income taxes in excess of the cash dividends you receive.

In connection with our qualification as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with U.S. GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order to satisfy this requirement, we may make distributions that are payable in cash and/or shares of our common stock (which could account for up to 80% of the aggregate amount of such distributions) at the election of each stockholder. Taxable stockholders receiving such distributions will be required to include the full amount of such distributions as ordinary dividend income to the extent of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, U.S. stockholders may be required to pay U.S. federal income taxes with respect to such distributions in excess of the cash portion of the distribution received. Accordingly, U.S. stockholders receiving a distribution of our shares may be required to sell shares received in such distribution or may be required to sell other stock or assets owned by them, at a time that may be disadvantageous, in order to satisfy any tax imposed on such distribution. If a U.S. stockholder sells the stock that it receives as part of the distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such distribution, including in respect of all or a portion of such distribution that is payable in stock, by withholding or disposing of part of the shares included in such distribution and using the proceeds of such disposition to satisfy the withholding tax imposed. In addition, if a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividend income, such sale may put downward pressure on the market price of our common stock.

Various tax aspects of such a taxable cash/stock distribution are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose requirements in the future with respect to taxable cash/stock distributions, including on a retroactive basis, or assert that the requirements for such taxable cash/stock distributions have not been met.

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The taxation of distributions to our stockholders can be complex; however, dividends that we make to our stockholders generally will be taxable as ordinary income.

Dividends that we make to our taxable stockholders out of current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be taxable as ordinary income. However, a portion of our dividends may (1) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that they are attributable to net capital gain recognized by us, (2) be designated by us as qualified dividend income generally to the extent they are attributable to dividends we receive from our TRSs, or (3) constitute a return of capital generally to the extent that they exceed our accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital is not taxable, but has the effect of reducing the basis of a stockholder's investment in our common stock.

Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.

Currently, the maximum tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for this reduced rate. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock. Tax rates could be changed in future legislation.

If we were considered to actually or constructively pay a “preferential dividend” to certain of our stockholders, our status as a REIT could be adversely affected.

In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with U.S. GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be “preferential dividends.” A dividend is not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class, and in accordance with the preferences among different classes of stock as set forth in our organizational documents. Currently, there is uncertainty as to the IRS’s position regarding whether certain arrangements that REITs have with their stockholders could give rise to the inadvertent payment of a preferential dividend (e.g., the pricing methodology for stock purchased under a distribution reinvestment plan inadvertently causing a greater than 5% discount on the price of such stock purchased). While we believe that our operations have been structured in such a manner that we will not be treated as inadvertently paying preferential dividends, there is no de minimis exception with respect to preferential dividends. Therefore, if the IRS were to take the position that we inadvertently paid a preferential dividend, we may be deemed either to (a) have distributed less than 100% of our REIT taxable income and be subject to tax on the undistributed portion, or (b) have distributed less than 90% of our REIT taxable income and our status as a REIT could be terminated for the year in which such determination is made if we were unable to cure such failure.

Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code may limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRSs would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in a TRS generally will not provide any tax benefit, except for being carried forward against future taxable income of such TRS.

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Complying with REIT requirements may force us to forgo or liquidate otherwise attractive investment opportunities.

To qualify as a REIT, we must ensure that we meet the REIT gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and certain kinds of mortgage-related securities. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% of the value of our total assets can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate assets from our portfolio or not make otherwise attractive investments in order to maintain our qualification as a REIT. These actions could have the effect of reducing our income and amounts available for dividend to our stockholders.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce dividends to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. While we elected to be qualified to be taxed as a REIT, we may terminate our REIT election if we determine that qualifying as a REIT is no longer in the best interests of our stockholders. If we cease to be a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the market price of our common stock.

We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the market price of our common stock.

In recent years, numerous legislative, judicial and administrative changes have been made in the provisions of U.S. federal income tax laws applicable to investments similar to an investment in shares of our common stock. Additional changes to the tax laws are likely to continue to occur, and we cannot assure you that any such changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets. You are urged to consult with your tax advisor with respect to the impact of recent legislation on your investment in our shares and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares. You also should note that our counsel's tax opinion is based upon existing law, applicable as of the date of its opinion, all of which will be subject to change, either prospectively or retroactively.

Although REITs generally receive better tax treatment than entities taxed as regular corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a corporation. As a result, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the vote of our stockholders. Our board of directors has fiduciary duties to us and our stockholders and could only cause such changes in our tax treatment if it determines in good faith that such changes are in the best interest of our stockholders.

The share ownership restrictions of the Code for REITs and the 9.8% share ownership limit in our charter may inhibit market activity in our shares of stock and restrict our business combination opportunities.

In order to qualify as a REIT, five or fewer individuals, as defined in the Code, may not own, actually or constructively, more than 50% in value of our issued and outstanding shares of stock at any time during the last half of each taxable year, other than the first year for which a REIT election is made. Attribution rules in the Code determine if any individual or entity actually or constructively owns our shares of stock under this requirement. Additionally, at least 100 persons must beneficially own our shares of stock during at least 335 days of a taxable year for each taxable year, other than the first year for which a REIT election is made. To help insure that we meet these tests, among other purposes, our charter restricts the acquisition and ownership of our shares of stock.

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Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT while we so qualify. Unless exempted by our board of directors, for so long as we qualify as a REIT, our charter prohibits, among other limitations on ownership and transfer of shares of our stock, any person from beneficially or constructively owning (applying certain attribution rules under the Code) more than 9.8% in value of the aggregate of our outstanding shares of stock and more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of our shares of stock. Our board of directors may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of the 9.8% ownership limit would result in the termination of our qualification as a REIT. These restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interest to continue to qualify as a REIT or that compliance with the restrictions is no longer required in order for us to continue to so qualify as a REIT.

These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of the stockholders.

Non-U.S. stockholders will be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on dividends received from us and upon the disposition of our shares.

Subject to certain exceptions, dividends received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits. Such dividends ordinarily will be subject to U.S. withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, unless the dividends are treated as “effectively connected” with the conduct by the non-U.S. stockholder of a U.S. trade or business. Pursuant to the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, capital gain dividends attributable to sales or exchanges of “U.S. real property interests,” or USRPIs, generally will be taxed to a non-U.S. stockholder as if such gain were effectively connected with a U.S. trade or business. However, a capital gain dividend will not be treated as effectively connected income if (a) the dividend is received with respect to a class of stock that is regularly traded on an established securities market located in the United States; and (b) the non-U.S. stockholder does not own more than 5% of the class of our stock at any time during the one year period ending on the date the dividend is received. We anticipate that our shares will be “regularly traded” on an established securities market for the foreseeable future, although, no assurance can be given that this will be the case.

Gain recognized by a non-U.S. stockholder upon the sale or exchange of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA. Our common stock will not constitute a USRPI so long as we are a “domestically-controlled qualified investment entity.” A domestically-controlled qualified investment entity includes a REIT if at all times during a specified testing period, less than 50% in value of such REIT's stock is held directly or indirectly by non-U.S. stockholders. We believe, but cannot assure you, that we will be a domestically-controlled qualified investment entity, and because our common stock will be publicly traded, no assurance can be given that we will be a domestically-controlled qualified investment entity.

Even if we do not qualify as a domestically-controlled qualified investment entity at the time a non-U.S. stockholder sells or exchanges our common stock, gain arising from such a sale or exchange would not be subject to U.S. taxation under FIRPTA as a sale of a USRPI if: (a) our common stock is “regularly traded,” as defined by applicable Treasury regulations, on an established securities market, and (b) such non-U.S. stockholder owned, actually and constructively, 5% or less of our common stock at any time during the five-year period ending on the date of the sale. We encourage you to consult your tax advisor to determine the tax consequences applicable to you if you are a non-U.S. stockholder.

Potential characterization of dividends or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.

If (a) we are a “pension-held REIT,” (b) a tax-exempt stockholder has incurred (or is deemed to have incurred) debt to purchase or hold our common stock, or (c) a holder of common stock is a certain type of tax-exempt stockholder, dividends on, and gains recognized on the sale of, common stock by such tax-exempt stockholder may be subject to U.S. federal income tax as unrelated business taxable income under the Code.

Item 1B. Unresolved Staff Comments

None.

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Item 2. Properties

General

As of December 31, 2012, we owned 146 properties with an aggregate base purchase price of $268.6 million, comprised of 2.4 million square feet and located in 26 states, excluding one vacant property classified as held for sale. All of these properties are freestanding, single-tenant properties, 100% leased with a weighted average remaining lease term of 6.7 years as of December 31, 2012.

As of December 31, 2012, ARCP and ARCT III on a combined basis owned 653 properties with an aggregate base purchase price of $1.8 billion, comprised of 15.4 million square feet and located in 44 states, excluding one vacant property classified as held for sale. All of these properties are freestanding, single-tenant properties, 100% leased with a weighted average remaining lease term of 11.4 years as of December 31, 2012.

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The following table represents additional information about the properties we own at December 31, 2012 (dollar amounts in thousands):

Portfolio	Contribution or Acquisition Date	Number of Properties	Square Feet	Remaining Lease Term (1)	Base Purchase Price (2)		Capitalization Rate (3)	Annualized Rental Income/ NOI (4)		Annualized Rental Income/NOI per Square Foot
Home Depot	Sept 2011	1	465,600	16.9	$	23,398	9.7%	$	2,258	$	4.85
Citizens Bank	Sept 2011	59	291,920	5.2	95,241		7.1%	6,726		23.04
Community Bank	Sept 2011	1	4,410	3.6	705		5.1%	36		8.16
Dollar General	Nov 2011	20	177,668	6.6	9,981		9.7%	965		5.43
Advance Auto	Nov & Dec 2011	6	42,000	6.8	5,122		8.9%	457		10.88
Walgreens	Dec 2011	1	14,414	8.8	2,426		10.1%	245		17.00
Portfolio - December 31, 2011		88	996,012	7.9	136,873		7.8%	10,687		10.73
GSA (5)	Jan 2012	1	12,009	6.2	4,850		8.2%	396		32.98
Walgreens II	Jan 2012	1	15,120	6.1	3,778		9.2%	346		22.88
FedEx	May 2012	6	93,497	4.0	12,207		9.0%	1,099		11.75
John Deere	May 2012	1	552,960	5.1	26,126		9.0%	2,354		4.26
GSA II (5)	Jun 2012	1	18,640	5.8	5,835		8.6%	499		26.77
GSA III (5)	Jun 2012	1	39,468	4.3	6,350		9.5%	604		15.30
Tractor Supply	Jun 2012	1	38,507	5.8	1,921		9.5%	183		4.75
GSA IV (5)	Jun 2012	1	22,509	5.8	3,890		9.2%	356		15.82
Dollar General II	Jun 2012	16	134,102	4.8	5,993		10.7%	642		4.79
GSA V (5)	Jun 2012	1	11,281	4.2	2,200		9.9%	217		19.24
Mrs Baird's	Jul 2012	1	75,050	4.4	6,213		10.2%	631		8.41
Reckitt Benckiser	Aug 2012	1	32,000	5.3	10,000		9.6%	964		30.13
CVS	Sept 2012	3	31,619	4.4	4,855		9.9%	481		15.21
Iron Mountain	Sept 2012	1	126,664	5.0	4,632		9.6%	443		3.50
Family Dollar	Oct 2012	1	8,085	9.8	982		8.9%	87		10.76
Advance Auto II	Oct 2012	1	6,900	8.4	1,276		8.7%	111		16.09
Family Dollar II	Nov 2012	1	8,000	9.5	1,041		8.7%	91		11.38
FedEx II	Nov 2012	1	41,868	5.4	3,462		8.3%	288		6.88
Fresenius	Nov 2012	1	6,402	5.6	1,854		9.1%	168		26.24
Walgreens III	Nov 2012	1	13,905	6.8	4,202		9.0%	379		27.26
Family Dollar III	Nov 2012	1	9,180	9.1	1,498		8.8%	132		14.38
Advance Auto III	Dec 2012	4	28,000	8.0	4,814		8.7%	420		15.00
Walgreens IV	Dec 2012	1	13,905	7.3	2,205		10.2%	225		16.18
Advance Auto IV	Dec 2012	8	60,861	7.1	6,182		9.0%	557		9.15
Synovus Bank	Dec 2012	1	3,744	8.5	3,629		9.2%	335		89.48
Advance Auto V	Dec 2012	1	11,816	8.4	1,757		8.8%	154		13.03
2012 Acquisitions		58	1,416,092	5.6	131,752		9.2%	12,162		8.59
Portfolio - December 31, 2012(6)		146	2,412,104	6.7	$	268,625	8.5%	$	22,849	$	9.47

The following table represents additional information about the properties ARCT III owns at December 31, 2012 (dollar amounts in thousands):

Portfolio	Contribution or Acquisition Date	Number of Properties	Square Feet	Remaining Lease Term (1)	Base Purchase Price (2)		Capitalization Rate (3)	Annualized Rental Income/ NOI (4)		Annualized Rental Income/NOI per Square Foot
FedEx	Sept 2011	1	45,832	13.7	$	8,939	7.8%	$	697	$	15.21
Advance Auto	Sept 2011	2	13,471	8.8	3,144		8.0%	252		18.71
Walgreens	Oct 2011 & Nov 2011	2	23,527	22.6	12,803		7.0%	895		38.04
Walgreens II	Oct 2011	1	14,820	20.4	4,603		7.1%	327		22.06
Dollar General	Oct 2011	11	109,349	12.7	12,451		8.2%	1,024		9.36
Dollar General II	Nov 2011	5	45,156	13.0	4,503		8.4%	380		8.42

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Portfolio	Contribution or Acquisition Date	Number of Properties	Square Feet	Remaining Lease Term (1)	Base Purchase Price (2)		Capitalization Rate (3)	Annualized Rental Income/ NOI (4)		Annualized Rental Income/NOI per Square Foot
Walgreens III	Nov 2011	1	14,820	19.9	$	4,932	7.4%	$	365	$	24.63
Dollar General III	Dec 2011	1	10,714	13.9	1,311		8.2%	108		10.08
GSA (5)	Dec 2011	1	6,255	7.2	1,973		9.6%	190		30.38
Dollar General IV	Dec 2011	1	9,014	14.0	929		8.3%	77		8.54
FedEx II	Dec 2011	1	11,403	10.3	2,972		7.6%	226		19.82
Family Dollar	Dec 2011	2	16,100	7.9	1,784		9.1%	162		10.06
Dollar General V	Dec 2011	8	74,601	13.3	7,846		8.3%	649		8.70
Dollar General VI	Dec 2011	3	27,439	13.9	2,692		8.6%	231		8.42
GSA II (5)	Dec 2011	1	4,328	7.9	1,570		10.4%	164		37.89
Portfolio - December 31, 2011		41	426,829	13.3	72,452		7.9%	5,747		13.46
Dollar General IV	Feb 2012 & Mar 2012	2	18,049	14.1	2,372.172		8.2%	195		10.80
FedEx II	Feb 2012 & Mar 2012	2	210,434	10.7	42,874.47		7.4%	3,183		15.13
Family Dollar	Jan 2012	5	43,860	7.8	5,105.18		9.1%	464		10.58
Dollar General V	Feb 2012	1	10,765	14.1	1,294.26		8.3%	107		9.94
Express Scripts	Jan 2012	1	227,467	9.0	42,642		7.8%	3,347		14.71
Tractor Supply	Jan 2012	1	19,097	13.3	5,313		8.3%	442		23.14
Dollar General VII	Feb 2012 & Mar 2012	12	109,750	13.6	12,922		8.3%	1,075		9.79
Dollar General VIII	Feb 2012	4	37,870	14.1	4,020		8.3%	335		8.85
Walgreens IV	Feb 2012	6	87,659	18.5	27,990		7.0%	1,959		22.35
FedEx III	Feb 2012	2	227,962	8.8	18,369		7.8%	1,431		6.28
GSA III (5)	Mar 2012	1	35,311	9.8	7,300		8.0%	581		16.45
Family Dollar II	Feb 2012	1	8,000	9.1	860		9.2%	79		9.88
Dollar General IX	Feb 2012	2	19,592	13.8	2,237		8.3%	186		9.49
GSA IV (5)	Mar 2012	1	18,712	8.2	5,214		8.3%	431		23.03
Dollar General X	Mar 2012	2	19,740	14.4	2,297		8.5%	195		9.88
Advance Auto II	Mar 2012	1	8,075	9.0	970		8.2%	80		9.91
Dollar General XI	Mar 2012	4	36,154	14.1	4,205		8.3%	350		9.68
FedEx IV	Mar 2012	1	63,092	9.1	4,175		7.9%	331		5.25
CVS	Mar 2012	1	10,125	7.1	3,414		7.6%	261		25.78
Advance Auto III	Mar 2012	1	7,000	9.3	1,890		8.1%	153		21.86
Family Dollar III	Mar 2012	4	32,960	9.9	3,967		9.0%	359		10.89
Family Dollar IV	Mar 2012 & Apr 2012	8	66,398	8.9	7,505		9.0%	675		10.17
Dollar General XII	Mar 2012	1	10,566	14.3	988		8.3%	82		7.76
FedEx V	Apr 2012	1	142,139	14.1	46,525		7.9%	3,669		25.81
Dollar General XIII	Apr 2012	4	36,567	13.4	3,649		8.4%	306		8.37
Dollar General XIV	Apr 2012	2	18,052	14.3	1,815		8.8%	159		8.81
Dollar General XV	Apr 2012	22	215,905	14.3	27,461		8.2%	2,240		10.37
Dollar General XVI	Apr 2012	3	27,226	14.3	3,123		8.3%	260		9.55
Advanced Auto IV	Apr 2012	1	7,000	9.0	955		8.3%	79		11.29
Shaw's Supermarkets	Apr 2012	1	59,766	8.2	5,750		8.9%	513		8.58
Rubbermaid	Apr 2012	1	660,820	10.0	23,125		7.7%	1,787		2.70
Citizens Bank	Apr 2012	30	83,642	9.5	27,389		7.5%	2,061		24.64
Tire Kingdom	Apr 2012	1	6,656	10.7	1,691		9.2%	155		23.29
Circle K	May 2012	1	2,680	11.3	1,911		7.7%	147		54.85
Family Dollar V	May 2012	4	32,306	8.8	3,934		9.1%	358		11.08
GSA V (5)	May 2012	1	15,915	8.1	5,500		8.0%	442		27.77
GSA VI (5)	May 2012	1	12,187	8.8	3,125		8.2%	257		21.09
General Mills	May 2012	1	359,499	10.8	33,108		7.7%	2,558		7.12

43

Portfolio	Contribution or Acquisition Date	Number of Properties	Square Feet	Remaining Lease Term (1)	Base Purchase Price (2)		Capitalization Rate (3)	Annualized Rental Income/ NOI (4)		Annualized Rental Income/NOI per Square Foot
Walgreens V	May 2012	1	14,736	21.5	$	8,667	7.2%	$	625	$	42.41
NTW & Big O Tires	Jun 2012	2	17,159	11.1	4,025		7.8%	312		18.18
Fresenius Medical	Jun 2012	4	27,307	10.4	7,920		9.0%	713		26.11
Tractor Supply II	Jun 2012	1	15,097	12.3	2,789		8.5%	238		15.76
Dollar General XVII	Jun 2012	1	9,234	14.4	978		8.6%	84		9.10
FedEx VI	Jun 2012	5	307,887	12.7	33,491		7.6%	2,538		8.24
Advance Auto V	Jun 2012	2	14,000	9.9	3,995		7.8%	310		22.14
Walgreens VI	Jun 2012	4	58,410	19.7	20,900		6.6%	1,379		23.61
Advance Auto VI	Jun 2012	1	5,000	10.4	997		8.1%	81		16.20
GSA VII (5)	Jul 2012	1	21,000	13.6	3,520		7.4%	261		12.43
Dollar General XVIII	Jul 2012	3	27,530	13.5	2,703		8.2%	222		8.06
Advance Auto VII	Jul 2012	1	6,759	10.3	1,724		8.0%	138		20.42
Dollar General XIX	Jul 2012	3	27,078	14.4	3,043		8.4%	257		9.49
FedEx VII	Jul 2012	1	74,707	9.6	5,327		7.8%	415		5.56
Dollar General XX	Jul 2012	3	27,355	14.5	2,721		8.3%	227		8.30
Fresenius Medical II	Jul 2012	1	9,304	11.4	3,247		8.2%	265		28.48
Family Dollar VI	Jul 2012	2	16,000	8.8	2,237		9.1%	203		12.69
Dollar General XXI	Jul 2012	7	63,134	14.7	7,966		8.3%	662		10.49
Dollar General XXII	Jul 2012	2	18,114	14.6	1,961		8.3%	162		8.94
Bojangles	Jul 2012	9	33,111	12.6	15,712		8.0%	1,264		38.17
Scotts Company	Jul 2012	3	551,249	10.0	19,050		7.9%	1,512		2.74
Walgreens VII	Jul 2012	1	14,820	19.9	7,848		6.8%	534		36.03
Walgreens VIII	Jul 2012	1	14,490	14.0	4,529		7.0%	317		21.88
West Marine	Jul 2012	1	15,404	9.5	3,210		8.6%	277		17.98
Fresenius Medical III	Jul 2012	2	14,792	10.9	4,811		8.4%	405		27.38
O'Reilly Auto	Aug 2012	1	5,084	14.3	623		7.9%	49		9.64
Tractor Supply III	Aug 2012	1	19,097	13.5	3,123		8.1%	253		13.25
CVS II	Aug 2012	1	8,193	25.1	1,459		7.7%	113		13.79
Advance Auto B	Aug 2012	5	32,155	11.9	8,481		7.4%	626		19.47
Williams Sonoma	Aug 2012	1	1,106,876	10.0	52,424		8.0%	4,179		3.78
Dollar General XXIII	Aug 2012	2	18,126	14.6	2,142		8.1%	174		9.60
Bed Bath & Beyond	Aug 2012	1	1,035,840	11.7	63,000		7.5%	4,717		4.55
Advance Auto VIII	Aug 2012	1	6,779	10.2	1,712		7.8%	134		19.77
CVS III	Aug 2012	1	12,941	11.7	5,072		6.9%	349		26.97
Dollar General XXIV	Aug 2012	38	350,756	14.6	42,479		7.8%	3,324		9.48
Circle K II	Aug 2012	1	3,745	10.3	1,297		8.4%	109		29.11
Dollar General XXV	Aug 2012	5	45,994	14.5	5,055		8.3%	421		9.15
Dollar General XXVI	Aug 2012	24	220,490	12.1	25,195		7.7%	1,940		8.80
Dollar General XXVII	Aug 2012	3	28,618	14.6	3,413		8.5%	290		10.13
Family Dollar VII	Sept 2012	3	25,500	9.9	4,397		9.0%	396		15.53
Dollar General XXVIII	Sept 2012	3	27,078	13.5	3,098		8.0%	247		9.12
Family Dollar VIII	Sept 2012	2	16,033	9.4	2,056		9.0%	185		11.54
FedEx VIII	Sept 2012	1	13,334	14.6	4,326		7.6%	329		24.67
Family Dollar IX	Sept 2012	2	16,640	10.5	2,053		9.1%	186		11.18
Krystal	Sept 2012	22	47,874	19.8	27,613		9.0%	2,492		52.05
Mattress Firm I	Sept 2012	1	24,000	10.9	1,852		8.6%	160		6.67
Price Rite I	Sept 2012	1	42,100	15.2	4,555		7.8%	354		8.41
Circle K III	Sept 2012	1	3,035	11.3	2,131		7.6%	161		53.05
FedEx IX	Sept 2012	3	53,263	9.5	7,576		8.0%	606		11.38
Citizens Bank II	Sept 2012	34	150,854	10.9	55,114		8.0%	4,402		29.18

44

Portfolio	Contribution or Acquisition Date	Number of Properties	Square Feet	Remaining Lease Term (1)	Base Purchase Price (2)		Capitalization Rate (3)	Annualized Rental Income/ NOI (4)		Annualized Rental Income/NOI per Square Foot
Kum & Go	Sept 2012	3	14,867	19.8	$	9,600	7.9%	$	757	$	50.92
Mattress Firm II	Sept 2012	1	7,295	9.6	2,439		8.5%	207		28.38
Mattress Firm III	Sept 2012	1	4,200	9.5	1,194		8.5%	102		24.29
Walgreens IX	Oct 2012	1	14,092	15.1	4,030		6.7%	272		19.30
O'Reilly Auto II	Oct 2012	1	7,000	14.8	1,633		7.2%	117		16.71
General Mills II	Oct 2012	1	1,512,613	9.8	55,775		7.4%	4,112		2.72
Family Dollar X	Oct 2012	1	8,000	9.5	937		9.1%	85		10.63
Krystal II	Oct 2012	1	2,573	19.9	1,025		9.0%	92		35.76
NTB I	Oct 2012	1	12,244	10.9	1,911		7.6%	146		11.92
Rite Aid I	Oct 2012	1	14,564	16.1	4,507		9.9%	446		30.62
Mattress Firm IV	Nov 2012	1	4,446	9.7	1,180		8.2%	97		21.82
CVS IV	Nov 2012	1	10,153	10.1	2,409		7.3%	175		17.24
Walgreens X	Nov 2012	1	14,418	14.5	3,757		7.0%	263		18.24
Cracker Barrel I	Nov 2012	5	50,479	16.6	18,772		8.5%	1,605		31.80
Rite Aid II	Nov 2012	1	14,564	14.1	3,943		9.3%	365		25.06
Rite Aid III	Nov 2012	1	14,564	14.3	3,370		9.3%	312		21.42
Walgreens XI	Nov 2012	1	15,120	9.1	5,457		8.2%	448		29.63
Family Dollar XI	Nov 2012	1	8,320	10.5	889		8.8%	78		9.38
AON Corporation	Nov 2012	1	818,686	12.0	148,000		7.3%	10,820		13.22
7-Eleven I	Nov 2012	1	3,179	2.0	2,825		7.9%	224		70.46
Kum & Go II	Nov 2012	4	15,760	15.9	9,344		8.1%	754		47.84
DaVita Dialysis I	Nov 2012	1	187,612	10.9	27,673		8.8%	2,448		13.05
GE Aviation	Nov 2012	1	303,035	11.9	35,874		7.0%	2,511		8.29
Dollar General XXIX	Nov 2012	1	9,026	14.8	1,031		8.2%	85		9.42
Rubbermaid II	Nov 2012	1	500,000	9.8	18,199		7.4%	1,348		2.70
Advance Auto IX	Nov 2012	2	13,124	10.8	2,904		7.3%	212		16.15
Bojangles II	Nov 2012	3	10,921	12.4	5,253		7.8%	409		37.45
Tractor Supply IV	Nov 2012	1	19,097	13.8	3,258		7.9%	258		13.51
CVS V	Nov 2012	1	13,225	21.1	5,300		7.0%	370		27.98
Rite Aid IV	Nov 2012	7	98,541	15.4	23,857		10.0%	2,381		24.16
Dollar General XXX	Dec 2012	2	18,126	13.6	1,706		7.9%	134		7.39
Mattress Firm V	Dec 2012	1	4,000	11.1	1,491		8.7%	130		32.50
Family Dollar XII	Dec 2012	1	8,000	10.8	1,157		9.1%	105		13.13
Family Dollar XIII	Dec 2012	1	8,000	9.5	844		9.0%	76		9.50
Citizens Bank III	Dec 2012	30	160,672	9.0	44,398		8.8%	3,898		24.26
Hanesbrands I	Dec 2012	1	758,463	11.7	28,500		8.3%	2,366		3.12
Walgreens XII	Dec 2012	1	13,650	23.4	5,152		6.6%	340		24.91
Kum & Go III	Dec 2012	3	14,874	20.0	9,300		7.9%	733		49.28
7-Eleven II	Dec 2012	3	7,347	11.8	2,459		7.6%	188		25.59
Advance Auto X	Dec 2012	1	7,000	10.1	1,615		7.6%	123		17.57
Advance Auto XI	Dec 2012	1	7,000	10.0	1,394		7.7%	107		15.29
Kum & Go IV	Dec 2012	1	4,598	20.0	3,000		7.9%	236		51.33
Academy Sports I	Dec 2012	1	71,680	15.1	10,877		7.8%	847		11.82
DaVita Dialysis II	Dec 2012	1	9,310	11.8	2,390		8.3%	198		21.27
Pantry G&C I	Dec 2012	11	32,393	9.3	33,896		8.1%	2,745		84.74
DaVita Dialysis III	Dec 2012	1	8,621	10.0	2,231		8.4%	187		21.69
2012 Acquisitions		466	12,582,532	12.4	1,457,358		7.9%	114,801		9.12
Portfolio - December 31, 2012(6)		507	13,009,361	12.4	$	1,529,810	7.9%	$	120,548	$	9.27

45

The following table represents information about the pro forma properties of ARCP and ARCT III as of December 31, 2012 (dollar amounts in thousands):

Portfolio	Number of Properties	Square Feet	Remaining Lease Term (1)	Base Purchase Price (2)		Capitalization Rate (3)	Annualized Rental Income/ NOI (4)		Annualized Rental Income/NOI per Square Foot
Pro forma ARCP & ARCT III properties at December 31, 2012 (5)	653	15,424,665	11.4	$	1,798,434	8.0%	$	143,397	$	9.39

_______________________________________________

(1) Remaining lease term as of December 31, 2012, in years. If the portfolio has multiple locations with varying lease expirations, remaining lease term is calculated on a weighted-average basis. Total remaining lease term is an average of the remaining lease term of the total portfolio.

(2) Original purchase price of properties contributed excluding acquisition and transaction-related costs. Acquisition and transaction-related costs include legal costs and closing costs on property.

(3) Annualized rental income/NOI divided by base purchase price.

(4)    Annualized rental income/NOI for net leases is rental income on a straight-line basis as of December 31, 2012, which includes the effect of tenant concessions such as free rent, as applicable. For modified gross leased properties, NOI is rental income on a straight-line basis as of December 31, 2012, which includes the effect of tenant concessions such as free rent, as applicable, plus operating expense reimbursement revenue less property operating expenses.

(5) Lease on property is a modified gross lease. As such, annualized rental income/NOI for this property is rental income on a straight-line basis as of December 31, 2012, which includes the effect of tenant concessions such as free rent plus operating expense reimbursement revenue less property operating expenses.

(6) Total portfolio excludes one vacant property contributed in September 2011 which was classified as held for sale at December 31, 2012. The aggregate square footage and base purchase price of this vacant property was 3,200 and $1.19 million, respectively.

The following table details the industry distribution of our portfolio as of December 31, 2012 (dollars in thousands):

Industry	Number of Buildings	Square Feet	Square Foot %		Annualized Rental Income		Annualized Rental Income %
Auto Retail	20	149,577	6.2	%	$	1,699	7.2	%
Freight	7	135,365	5.6	%	1,387		5.9	%
Healthcare	1	6,402	0.3	%	168		0.7	%
Home Maintenance	1	465,600	19.3	%	2,258		9.6	%
Pharmacy	7	88,963	3.7	%	1,676		7.1	%
Retail Banking	61	300,074	12.4	%	7,097		30.2	%
Specialty Retail	2	591,467	24.5	%	2,536		10.8	%
Discount Retail	39	337,035	14.0	%	1,917		8.2	%
Government Services	5	103,907	4.3	%	2,736		11.6	%
Consumer Goods	2	107,050	4.4	%	1,595		6.8	%
Storage Facility	1	126,664	5.3	%	443		1.9	%
	146	2,412,104	100.0	%	$	23,512	100.0	%

46

The following table details the industry distribution of the pro forma portfolio of ARCP and ARCT III as of December 31, 2012 (dollars in thousands):

Industry	Number of Buildings	Square Feet	Square Foot %		Annualized Rental Income		Annualized Rental Income %
Auto Retail	41	289,024	1.9	%	$	4,161	2.9	%
Auto Services	4	36,059	0.2	%	613		0.4	%
Consumer Products	11	6,517,360	42.3	%	23,543		16.3	%
Freight	25	1,285,418	8.3	%	14,813		10.2	%
Healthcare	4	433,010	2.8	%	6,181		4.3	%
Home Maintenance	1	465,600	3.0	%	2,258		1.6	%
Pharmacy	43	586,395	3.8	%	14,169		9.8	%
Restaurant	40	144,958	0.9	%	5,862		4.0	%
Retail Banking	155	695,242	4.5	%	17,459		12.1	%
Specialty Retail	13	794,880	5.2	%	5,547		3.9	%
Discount Retail	261	2,370,320	15.4	%	21,515		14.9	%
Supermarket	2	101,866	0.7	%	867		0.6	%
Gas/Convenience	29	102,478	0.7	%	6,053		4.2	%
Medical Office	8	57,805	0.4	%	1,551		1.1	%
Government Services	12	217,615	1.4	%	5,833		4.0	%
Consumer Goods	1	75,050	0.5	%	631		0.4	%
Aerospace	1	303,035	2.0	%	2,511		1.7	%
Insurance	1	818,686	5.3	%	10,821		7.4	%
Storage Facility	1	126,664	0.7	%	443		0.2	%
	653	15,421,465	100.0	%	$	144,831	100.0	%

47

The following table details the geographic distribution of our portfolio as of December 31, 2012 (dollars in thousands):

State	Number of Buildings	Square Feet	Square Foot %		Annualized Rental Income		Annualized Rental Income %
Alabama	3	54,104	2.2	%	$	1,007	4.3	%
Arkansas	5	43,786	1.8	%	181		0.8	%
California	1	41,868	1.7	%	288		1.3	%
Connecticut	2	5,592	0.2	%	124		0.5	%
Delaware	1	4,610	0.2	%	91		0.4	%
Florida	2	12,644	0.5	%	392		1.7	%
Georgia	9	75,122	3.1	%	838		3.6	%
Illinois	10	77,777	3.4	%	1,209		5.1	%
Indiana	2	28,285	1.2	%	426		1.9	%
Iowa	1	552,960	22.9	%	2,353		10.0	%
Kansas	1	7,517	0.3	%	30		0.1	%
Kentucky	5	40,625	1.7	%	543		2.3	%
Michigan	25	162,024	6.7	%	3,581		15.2	%
Missouri	26	224,509	9.3	%	1,215		5.2	%
New Hampshire	2	6,872	0.3	%	112		0.5	%
New Jersey	1	32,000	1.3	%	964		4.1	%
New York	13	87,024	3.6	%	2,237		9.5	%
North Carolina	1	6,402	0.3	%	168		0.7	%
Ohio	19	232,691	9.6	%	2,533		10.8	%
Oklahoma	2	18,044	0.7	%	76		0.3	%
Pennsylvania	5	62,682	2.6	%	1,065		4.5	%
South Carolina	2	480,014	19.9	%	2,503		10.6	%
Tennessee	1	10,722	0.5	%	150		0.6	%
Texas	3	120,457	5.0	%	925		3.9	%
Vermont	3	12,492	0.5	%	237		1.0	%
Virginia	1	11,281	0.5	%	264		1.1	%
	146	2,412,104	100.0	%	$	23,512	100.0	%

The following table details the geographic distribution of the pro forma portfolio of ARCP and ARCT III as of December 31, 2012 (dollars in thousands):

State	Number of Buildings	Square Feet	Square Foot %		Annualized Rental Income		Annualized Rental Income %
Alabama	18	459,078	3.0	%	$	5,309	3.7	%
Arizona	3	38,020	0.2	%	722		0.5	%
Arkansas	14	164,308	1.1	%	2,292		1.6	%
California	3	1,092,528	7.0	%	5,332		3.7	%
Colorado	5	199,711	1.3	%	3,454		2.4	%
Connecticut	10	37,126	0.2	%	1,184		0.8	%
Delaware	3	8,891	0.1	%	202		0.1	%
Florida	12	74,454	0.5	%	2,077		1.4	%
Georgia	23	133,239	0.9	%	2,912		2.0	%
Idaho	2	43,311	0.3	%	822		0.6	%
Illinois	25	1,377,196	8.8	%	16,291		11.2	%
Indiana	11	1,670,464	10.8	%	6,281		4.3	%

48

State	Number of Buildings	Square Feet	Square Foot %		Annualized Rental Income		Annualized Rental Income %
Iowa	8	610,065	4.0	%	$	3,215	2.2	%
Kansas	15	1,276,763	8.3	%	4,096		2.8	%
Kentucky	14	185,034	1.2	%	3,128		2.2	%
Louisiana	19	190,646	1.2	%	2,167		1.5	%
Massachusetts	15	115,996	0.8	%	2,148		1.5	%
Michigan	46	430,397	2.8	%	7,695		5.3	%
Minnesota	5	167,582	1.1	%	1,150		0.8	%
Mississippa	29	1,335,566	8.6	%	7,104		4.9	%
Missouri	69	852,021	5.5	%	8,760		6.0	%
Montana	1	45,832	0.3	%	697		0.5	%
Nebraska	1	8,050	0.1	%	82		0.1	%
Nevada	6	59,903	0.4	%	1,366		0.9	%
New Hampshire	10	65,328	0.4	%	1,349		0.9	%
New Jersey	6	79,719	0.5	%	2,475		1.7	%
New Mexico	3	22,506	0.1	%	325		0.2	%
New York	17	292,768	1.9	%	6,766		4.7	%
North Carolina	28	980,732	6.4	%	7,549		5.2	%
North Dakota	4	31,318	0.2	%	572		0.4	%
Ohio	46	1,004,986	6.4	%	7,872		5.4	%
Oklahoma	12	233,639	1.5	%	1,663		1.1	%
Pennsylvania	57	293,139	1.9	%	6,775		4.7	%
Rhode Island	5	23,488	0.2	%	636		0.4	%
South Carolina	15	579,067	3.8	%	5,180		3.6	%
South Dakota	1	9,180	0.1	%	90		0.1	%
Tennessee	12	194,719	1.3	%	2,167		1.5	%
Texas	53	634,743	4.1	%	6,547		4.5	%
Vermont	4	15,432	0.1	%	335		0.2	%
Virginia	12	100,591	0.7	%	1,833		1.3	%
Washington	3	212,756	1.4	%	2,834		2.0	%
West Virginia	3	31,491	0.2	%	790		0.5	%
Wisconsin	3	27,724	0.2	%	226		0.2	%
Wyoming	2	11,958	0.1	%	361		0.4	%
	653	15,421,465	100.0	%	$	144,831	100.0	%

Property Financing

On September 7, 2011, we closed the RBS Facility. The OP is the borrower, and the Company and the OP’s subsidiaries are the guarantors under the RBS Facility. The proceeds of loans made under the credit agreement may be used to finance the acquisition of net leased, investment or non-investment grade occupied properties and for other permitted corporate purposes. Up to $10.0 million of the RBS Facility is available for letter of credits. The initial term of the credit agreement is 36 months.

Any loan made under the RBS Facility shall bear floating interest at per annum rates equal to the one month London Interbank Offered Rate (“LIBOR”) plus 2.15% to 2.90% depending on our loan to value ratio as specified in the agreement. In the event of a default, the lender has the right to terminate its obligations under the credit agreement, including the funding of future loans, and to accelerate the payment on any unpaid principal amount of all outstanding loans. The line of credit requires a fee of 0.15% on the unused balance if amounts outstanding under the RBS Facility are 50% or more of the total facility amount and 0.25% on the unused balance if amounts outstanding under the RBS Facility are 50% or less of the total facility amount.

49

As of December 31, 2012, there was $124.6 million outstanding on the RBS Facility, which bore an interest rate of 3.11%, collateralized by 114 properties. At December 31, 2012, there was $20.4 million available to the Company for future borrowings. As of December 31, 2011, there was $42.4 million outstanding on this facility with an interest rate of 3.17%, collateralized by 59 properties. Upon consummation of the Merger, the RBS Facility will be paid off in full and terminated.

Our mortgage notes payable consist of the following as of December 31, 2012 and 2011 (dollar amounts in thousands):

	Encumbered Properties	Outstanding Loan Amount		Weighted Average Effective Interest Rate(1)		Weighted Average Maturity(2)
December 31, 2012	29	$	35,758	4.52	%	3.52
December 31, 2011	28	$	30,260	4.67	%	4.32

_______________________________________________

(1) Mortgage notes payable have fixed rates. Effective interest rates range from 3.68% to 5.32% at December 31, 2012 and 3.80% to 5.32% at December 31, 2011.

(2) Weighted average remaining years until maturity as of December 31, 2012 and 2011, respectively.

After the Merger on a pro forma basis, we will have mortgage notes payable of $265.1 million encumbering 164 properties with effective interest rates ranging from 3.32% to 6.13%.

Future Minimum Lease Payments

The following table presents future minimum base rental cash payments due to us over the next ten years. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	23,113
2014	23,309
2015	23,153
2016	22,808
2017	18,761
2018	11,963
2019	6,115
2020	5,108
2021	5,273
2022	3,037
Thereafter	18,535
	$	161,175

50

The following table presents future minimum base rental cash payments due to the pro forma portfolio of ARCP and ARCT III over the next ten years. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	140,200
2014	140,941
2015	141,292
2016	141,579
2017	138,411
2018	132,652
2019	125,867
2020	124,637
2021	120,655
2022	105,885
Thereafter	345,861
	$	1,657,980

Future Lease Expirations

The following is a summary of lease expirations for the next ten years at the properties we own as of December 31, 2012 (dollar amounts in thousands):

Year of Expiration	Number of Leases Expiring(1)	Annualized Rental Income Expiring		Percent of Portfolio Annualized Rental Income Expiring		Leased Square Feet Expiring	Percent of Portfolio Leased Square Feet Expiring
2012	—	$	—	—		—	—
2013	—	—		—		—	—
2014	3	91		0.4	%	23,778	1.0	%
2015	14	823		3.5	%	130,726	5.4	%
2016	8	680		2.9	%	74,926	3.1	%
2017	38	5,182		22.0	%	470,392	19.5	%
2018	35	7,605		32.3	%	881,510	36.5	%
2019	21	3,946		16.8	%	146,034	6.0	%
2020	6	804		3.4	%	54,044	2.2	%
2021	8	1,167		5.0	%	64,874	2.7	%
2022	6	522		2.2	%	46,340	1.9	%
Total	139	$	20,820	88.5	%	1,892,624	78.3	%

_______________________________________________

(1) The 139 leases listed above are with the following tenants: Dollar General, Advance Auto, Community Bank, Citizens Bank, GSA, FedEx, John Deere, Tractor Supply, Reckitt Benckiser, Mrs. Baird's, CVS, Iron Mountain, Fresenius , Synovus Bank and Walgreens.

51

The following is a summary of lease expirations for the next ten years at the pro forma properties we and ARCT III own as of December 31, 2012 (dollar amounts in thousands):

Year of Expiration	Number of Leases Expiring(1)	Annualized Rental Income Expiring		Percent of Portfolio Annualized Rental Income Expiring		Leased Square Feet Expiring	Percent of Portfolio Leased Square Feet Expiring
2012	—	$	—	—		—	—
2013	—	—		—		—	—
2014	4	314		0.2	%	26,957	0.2	%
2015	14	823		0.6	%	130,726	0.9	%
2016	8	680		0.5	%	74,926	0.5	%
2017	38	5,182		3.6	%	470,392	3.1	%
2018	49	9,349		6.5	%	955,089	6.2	%
2019	24	4,226		2.9	%	169,299	1.1	%
2020	25	3,390		2.4	%	153,003	1	%
2021	31	9,540		6.6	%	798,418	5.2	%
2022	93	20,294		14.1	%	3,901,523	25.3	%
Total	286	$	53,798	37.4	%	6,680,333	43.5	%

_______________________________________________

(1) The 286 leases listed above are with the following tenants: Advanced Auto, Bojangles, Citizens Bank, Community Bank, CVS, DaVita Dialysis, Dollar General, Express Scripts, Family Dollar, FedEx, Fresenius, General Mills, GSA, Iron Mountain, John Deere, Mattress Firm, Mrs. Baird's, NTW & Big O Tires, Pantry G&C I, Reckitt Benckiser, Rubbermaid, Scotts Company, Shaw's Supermarkets, Synovus Bank, Walgreens, and West Marine.

Tenant Concentration

The following table lists the tenants whose square footage or annualized rental income is greater than 10% of the total portfolio square footage or annualized rental income as of December 31, 2012:

Tenant	Number of Properties Occupied by Tenant	Square Feet	Square Feet as a % of Total Portfolio		Lease Expiration	Average Remaining Lease Term(1)	Renewal Options	Annualized Rental Income		Annualized Rental Income as a % of Total Portfolio		Annualized Rental Income per Square Foot
Citizens Bank	59	291,920	12.1	%	Jan. 2017 - Jan. 2019	5.2	3 five year options	$	6,726	28.7	%	$	23.04
GSA	5	103,907	4.3	%	March 2017 - Feb. 2019	5.3	None for 3 properties; 2 five-year options for one property; tenant has option to terminate after 5 years for one property	$	2,072	11.6	%	$	26.33
John Deere	1	552,960	22.9	%	Jan. 2018	5.1	2 five year options	$	2,354	10.0	%	$	4.26

_______________________________________________

(1) Remaining lease term in years as of December 31, 2012. If the tenant has multiple leases with varying lease expirations, remaining lease term is calculated on a weighted-average basis.

52

The following table lists the tenants whose square footage or annualized rental income is greater than 10% of the total pro forma portfolio square footage or annualized rental income of ARCP and ARCT III as of December 31, 2012:

Tenant	Number of Properties Occupied by Tenant	Square Feet	Square Feet as a % of Total Portfolio		Lease Expiration	Average Remaining Lease Term(1)	Renewal Options	Annualized Rental Income		Annualized Rental Income as a % of Total Portfolio		Annualized Rental Income per Square Foot
Citizens Bank	153	687,088	4.5	%	Jan 2017 - Jun 2025	8.7	Various	$	17,087	11.8	%	$	24.87
Dollar General	221	2,038,938	13.2	%	Nov 202 - Oct 2027	13.5	Various	$	17,795	12.3	%	$	8.73
FedEx	25	1,285,418	8.3	%	Feb 2021 - Sept 2027	10.1	Various	$	14,814	10.2	%	$	11.52
General Mills	2	1,872,112	12.1	%	September 2022 & 2023	10.3	None for one property; 3 five year options for one property.	$	6,670	4.6	%	$	3.56

_______________________________________________

(1) Remaining lease term in years as of December 31, 2012. If the tenant has multiple leases with varying lease expirations, remaining lease term is calculated on a weighted-average basis.

Item 3. Legal Proceedings

The information contained in Note 12 — Commitments and Contingencies — "Litigation" of our notes to consolidated financial statements included in this Annual Report on Form 10-K is incorporated by reference into this Item 3. Except as set forth therein, as of the end of the period covered by this Annual Report on Form 10-K, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.

Item 4. Mine Safety Disclosures

Not applicable.

53

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

On December 14, 2012, we entered into a merger agreement with ARCT III, and certain subsidiaries of each company. The merger agreement provides for the Merger of ARCT III with and into one of our subsidiaries. Upon the effectiveness of the Merger, each outstanding share of common stock of ARCT III will be converted into the right to receive (i) 0.95 of a share of our common stock or (ii) $12.00 in cash, but in no event will the aggregate consideration paid in cash be paid on more than 30% of the shares of ARCT III's common stock issued and outstanding as of immediately prior to the closing of the Merger. In addition, each outstanding unit of equity ownership of the ARCT III Operating Partnership will be converted into the right to receive 0.95 of the same class of unit of equity ownership in the OP. As of December 31, 2012, ARCT III had 177.6 million shares of common stock outstanding.

Our common stock is currently traded on the NASDAQ under the symbol “ARCP”. Set forth below is a line graph comparing the cumulative total stockholder return on our common stock, based on the market price of the common stock and assuming reinvestment of dividends, with the FTSE National Association of Real Estate Investment Trusts Equity Index (“NAREIT”) and the S&P 500 Index (“S&P 500”) for the period commencing September 6, 2011, the date of our IPO, and ending December 31, 2012. The graph assumes an investment of $100 on September 6, 2011.

Comparison to Cumulative Total Return

54

For each calendar quarter indicated, the following table reflects respective high, low and closing sales prices for the common stock as quoted by NASDAQ and the dividends paid per share in each such period:

	Third Quarter 2011		Fourth Quarter 2011		First Quarter 2012		Second Quarter 2012		Third Quarter 2012		Fourth Quarter 2012
High	$	12.75	$	12.00	$	11.65	$	11.34	$	12.50	$	13.48
Low	$	10.10	$	10.05	$	10.39	$	10.00	$	10.43	$	11.94
Close	$	11.65	$	10.40	$	11.34	$	10.40	$	12.50	$	13.24
Dividends paid per share	$	—	$	0.219	$	0.219	$	0.220	$	0.222	$	0.223

Holders

As of February 15, 2013, we had 13,134,966 shares of common stock outstanding held by 116 stockholders. As of February 15, 2013, ARCT III had 178,117,733 shares of common stock held by 38,055 stockholders.

Dividends

We have elected to qualify as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2011. As a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders annually. Our distributions are paid on a monthly basis as directed by our board of directors. Monthly cash distributions are paid based on daily record and distribution declaration dates so our investors will be entitled to be paid distributions beginning on the day that they are admitted as stockholders. All distributions are recorded as a reduction of stockholders' equity. From a tax perspective, 54.5% and 100% of the amounts distributed by us during the years ended December 31, 2012, and 2011, respectively, represented a return of capital, and 45.5% and zero of our dividends represented ordinary income for the years ended December 31, 2012 and 2011, respectively. On a per share basis, dividends of $0.482 and $0.402 were a return of capital and ordinary income, respectively, for the year ended December 31, 2012. Dividends of $0.219 per share were a return of capital for the year ended December 31, 2011. Distributions that are a return of capital are deferred for the purpose of being subject to income tax. During the years ended December 31, 2012 and 2011, monthly distributions totaled $8.0 million and $1.4 million, respectively. As of December 31, 2012, cash used to pay our distributions is generated from cash received from operating activities (as reported on a U.S. GAAP basis). The amount of dividends payable to our common stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, financial condition, capital expenditure requirements, as applicable, and annual dividend requirements needed to qualify and maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). Operating cash flows are expected to increase as additional properties are acquired in our investment portfolio.

55

The following is a chart of quarterly distributions declared and paid in respect of our common stock during the years ended December 31, 2012 and 2011 through the date of this Annual Report of Form 10-K (in thousands):

	Total Distributions Paid
2013:
January and February	$	1,792
2012:
1st Quarter	$	1,566
2nd Quarter	1,575
3rd Quarter	2,413
4th Quarter	2,428
Total 2012	$	7,982
2011:
1st Quarter	$	—
2nd Quarter	—
3rd Quarter	—
4th Quarter	1,448
Total 2011	$	1,448

We, our board of directors and Manager share a similar philosophy with respect to paying our dividends. The dividends should principally be derived from cash flows generated from real estate operations. In order to improve our operating cash flows and our ability to pay dividends from operating cash flows, our Manager agreed to waive certain fees including asset management and incentive fees. Our Manager will determine if a portion or all of such fees will be waived in subsequent periods on a quarter-to-quarter basis. Base asset management fees and incentive fees waived during the year ended December 31, 2012 were $1.0 million and $0.8 million, respectively. The fees that were waived relating to the activity during 2012 are not deferrals and accordingly, will not be paid. Because our Manager waived certain fees that we owed, cash flow from operations that would have been used to pay such fees to our Manager was available to pay dividends to our stockholders. See Note 13 — Related Party Transactions and Arrangements in the consolidated financial statements within this report for further information on fees paid to and forgiven by our Manager.

The management agreement with our Manager provides for payment of the asset management fee only if the full amount of the dividends declared by us for the six immediately preceding months is equal to or greater than the amount of our AFFO. Our Manager will waive such portion of its management fee that, when added to our AFFO, without regard to the waiver of the management fee, would increase our AFFO so that it equals the dividends declared by us for the prior six months. For purposes of this determination, AFFO is FFO (as defined by NAREIT), adjusted to (i) include acquisition fees and related expenses which is deducted in computing FFO; (ii) include non-cash restricted stock grant amortization, if any, which is deducted in computing FFO; and (iii) include impairments of real estate related investments, if any (including properties, loans receivable and equity and debt investments) which are deducted in computing FFO. Our Manager will determine if such fees will be partially or fully waived in subsequent periods on a quarter-to-quarter basis. In connection with the consummation of the Merger, we intend to enter into an amended management agreement with our Manager by which the AFFO hurdle for the calculation of our asset management fee will be eliminated and our Manager will be paid an asset management fee in the amount of  0.50% of the average unadjusted book value of our real estate assets for up to $3.0 billion and 0.40% of the average unadjusted book value of our real assets greater than $3.0 billion.

In addition, pursuant to our administrative support agreement with our Sponsor, our Sponsor had agreed to pay or reimburse us for certain of our general and administrative costs to the extent that the amount of our dividends declared until September 6, 2012, which was one year following the closing of our IPO exceed the amount of our AFFO in order that such dividends do not exceed the amount of our AFFO, computed without regard to such general and administrative costs paid for, or reimbursed, by our Sponsor.

56

As our real estate portfolio matures, we expect cash flows from operations to cover our dividends. As the cash flows from operations become more significant, our Manager may discontinue its past practice of forgiving fees and may charge the entire fee in accordance with the agreement with our Manager. There can be no assurance that our Manager will continue to waive earned asset management or incentive fees in the future. 

57

Our board of directors authorized and we declared the following annualized dividends per share payable monthly, in cash, on the fifteenth day of each month to stockholders of record at the close of business on the eighth day of such month.

Declaration date	Annualized dividend per share	Distribution date	Record date
September 7, 2011	$0.8750	10/15/11	10/8/2011
February 27, 2012	$0.8800	3/15/12	3/8/2012
March 16, 2012	$0.8850	6/15/2012	6/8/2012
June 27, 2012	$0.8900	9/15/2012	9/8/2012
September 30, 2012	$0.8950	11/15/2012	11/8/2012
November 29, 2012	$0.9000	2/15/2013	2/8/2013

Distribution payments are dependent on the availability of funds. Our board of directors may reduce the amount of dividends paid or suspend dividend payments at any time and therefore dividend payments are not assured. The dividends declared and paid in respect of our common stock for the year ended December 31, 2012 were $8.0 million.

Share Based Compensation Plans

Equity Plan

We have adopted the American Realty Capital Properties, Inc. Equity Plan (the "Equity Plan"), which provides for the grant of stock options, restricted shares of common stock, restricted stock units, dividend equivalent rights and other equity-based awards to the Manager, non-executive directors, officers and other employees and independent contractors, including employees or directors of the Manager and its affiliates who are providing services to the Company.

We authorized and reserved a total number of shares equal to 10.0% of the total number of issued and outstanding shares of common stock (on a fully diluted basis assuming the redemption of all OP Units for shares of common stock) to be issued at any time under the Equity Plan for equity incentive awards excluding an initial grant of 167,400 shares of Manager's Stock to the Manager in connection with our IPO. All such awards of shares will vest ratably on a quarterly or annual basis over a three-year period beginning on the first anniversary of the date of grant and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as dividends are paid to the stockholders.

In February 2013, we granted an aggregate of 325,000 shares of our common stock to the Manager and certain employees. These shares will not vest upon the consummation of the Merger but will vest ratably over a three-year period and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as dividends are paid to our common stockholders.

Director Stock Plan

We have adopted the American Realty Capital Properties, Inc. Non-Executive Director Stock Plan (the "Director Stock Plan", which provides for the grant of restricted shares of common stock to each of the Company's three independent directors, each of whom is a non-executive director. Awards of restricted stock will vest ratably over a five-year period following the first anniversary of the date of grant in increments of 20.0% per annum, subject to the director’s continued service on the board of directors, and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as distributions are paid to the stockholders. At December 31, 2012, a total of 99,000 shares of common stock are reserved for issuance under the Director Stock Plan.

58

The following tables detail the restricted shares activity within the Equity Plan and Director Stock Plan during the years ended December 31, 2012 and 2011:

Restricted Share Awards

	Equity Plan				Director Stock Plan
	Number of Common Shares		Weighted-Average Issue Price		Number of Common Shares		Weighted-Average Issue Price
Awarded, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Awarded December 31, 2011	167,400		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Awarded December 31, 2012	259,909		$	11.84	13,200		$	12.30

Unvested Restricted Shares

	Equity Plan				Director Stock Plan
	Number of Common Shares		Weighted-Average Issue Price		Number of Common Shares		Weighted-Average Issue Price
Unvested, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Vested	(13,950	)	12.50		—		—
Unvested, December 31, 2011	153,450		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Vested	(59,556	)	12.42		(1,800	)	12.50
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Unvested, December 31, 2012	186,403		$	11.62	11,400		$	12.27

In conjunction with our Merger with ARCT III, in accordance with the terms of the Equity Plan, the Director Stock Plan and the restricted stock award agreements thereunder, all unvested restricted shares will vest upon the consummation of the Merger.

Multi-Year Performance Plan

Upon consummation of the Merger, we intend to enter into a 2013 Advisor Multi-Year Outperformance Agreement (the “OPP”) with the OP and Manager. Under the final OPP, the  Manager will be granted a certain number of target long term incentive plan units (“LTIP Units”) of the OP which will be earned or forfeited based on the level of achievement of the performance metrics under the OPP.  The performance period under the OPP commenced on December 11, 2012 and will end on December 31, 2015, with interim measurement periods ending on December 31, 2013 and 2014.  Any LTIP Units earned under the OPP will vest .333 on each of December 31, 2015, 2016 and 2017 and within 30 days following each vesting date, the  Manager will be entitled to convert an LTIP Unit into a common unit of equity ownership of the OP.  In addition, the final OPP provides for accelerated earning and vesting of LTIP Units if the Manager is terminated or if we experience a change in control.  The Manager will be entitled to receive a tax gross-up in the event that any amounts paid to it under the OPP constitute “parachute payments” as defined in Section 280G of the Code.

59

Use of Proceeds from Sales of Registered Securities; Unregistered Sales of Equity Securities

The shares of our common stock began trading on the NASDAQ under the symbol “ARCP” on September 7, 2011. We did not use any of the net proceeds from the IPO to fund dividends to our stockholders.

On May 11, 2012, we entered into a securities purchase agreement with an unaffiliated third party that is an “accredited investor” (as defined in Rule 501 of Regulation D as promulgated under the Securities Act of 1933, as amended (the “Securities Act”)) pursuant to which we sold 0.5 million shares of our Series A convertible preferred stock for gross proceeds of $6.0 million and aggregate net proceeds of $5.8 million after offering-related fees and expenses.

On May 31, 2012, through our operating partnership, we issued 576,376 OP Units valued at approximately $6.4 million as partial consideration for the acquisition of the FedEx Freight distribution facilities. The OP Units were issued without registration in reliance on the exemption in Section 4(2) of the Securities Act and Rule 506 of Regulation D thereunder, to an “accredited investor,” as that term is defined in Rule 501 of Regulation D, for transactions not involving a public offering.

On July 24, 2012, we entered into a securities purchase agreement with an unaffiliated third party that is an “accredited investor” (as defined in Rule 501 of Regulation D as promulgated under the Securities Act pursuant to which we sold 0.3 million shares of our Series B convertible preferred stock for proceeds of approximately $3.0 million. After deducting for offering-related fees and expenses, our aggregate net proceeds from the sale of our Series B convertible preferred stock were approximately $3.0 million.

All the net proceeds from our equity offerings were contributed to our OP in exchange for OP units. Our operating partnership has primarily used the net proceeds from our issuance of common and preferred stock to acquire single-tenant, freestanding commercial real estate primarily subject to net leases with high credit quality tenants. As of December 31, 2012, we have used the net proceeds from the issuance of common and preferred stock, revolving credit facility, and debt financings to purchase 146 properties with an aggregate purchase price of $268.6 million.

Item 6. Selected Financial Data.

The following selected financial data as of and for the years ended December 31, 2012 and 2011, and for the period from December 2, 2010 (date of inception) to December 31, 2010 should be read in conjunction with the accompanying consolidated financial statements and related notes thereto and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” below. The pro forma consolidated financial information combines the historical financial statements of ARCP and ARCT III after giving effect to the Merger using the carryover basis of accounting as ARCP and ARCT III are considered to be entities under common control under U.S. GAAP and ARCP’s preliminary estimates, assumptions and pro forma adjustments as described below and in the accompanying notes to the unaudited pro forma consolidated financial information elseware in this report.

Balance sheet data (amounts in thousands):

	Pro Forma ARCP		Historical ARCP
	December 31,
	2012		2012		2011		2010
Total real estate investments, at cost	$	2,239,190	$	268,679	$	136,873	$	—
Total assets	2,290,452		256,069		131,581		279
Mortgage notes payable	265,118		35,758		30,260		—
Senior secured revolving credit facility	—		124,604		42,407		—
Unsecured credit facility	780,068		—		—		—
Total liabilities	1,072,758		164,907		74,249		279
Total equity	908,705		91,162		57,332		—

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Operating data (amounts in thousands except share and per share data):

	Pro Forma ARCP			Historical ARCP						Period from December 2, 2010 (Date of Inception) to December 31, 2010
	Year Ended December 31,
	2012			2012			2011
Revenues:
Rental income	$	178,999		$	16,334		$	3,022		$	—
Operating expense reimbursements	2,002			488			153			—
Total revenues	181,001			16,822			3,175			—
Operating expenses:
Acquisition related	13,631			3,988			1,875			—
Merger and other transaction related	—			2,603			—			—
Property operating	3,484			1,098			153			—
Operating fees to affiliates	11,196			—			—			—
General and administrative	5,092			2,261			440			—
Depreciation and amortization	111,245			9,322			1,612			—
Total operating expenses	144,648			19,272			4,080			—
Operating loss	36,353			(2,450		)	(905		)	—
Other income (expenses):
Interest expense	(30,579		)	(4,356		)	(924		)	—
Other income	960			2			1			—
Total other expenses	(29,619		)	(4,354		)	(923		)	—
Loss from continuing operations	6,734			(6,804		)	(1,828		)	—
Loss from discontinued operations attributable to stockholders	(745		)	(745		)	(852		)	—
Net loss	5,989			(7,549		)	(2,680		)	—
Net loss attributable to non-controlling interest	(585		)	271			105			—
Net loss attributable to stockholders	$	5,404		$	(7,278	)	$	(2,575	)	$	—
Other data:
Cash flows provided by operations				$	6,055		$	920		$	—
Cash flows used in investing activities				$	(124,901	)	$	(17,528	)	$	—
Cash flows provided by financing activities				$	118,433		$	19,756		$	—
Per share data:
Basic and diluted net loss per share from continuing operations attributable to stockholders	$	0.04		$	(0.76	)	$	(0.86	)	$	—
Basic and diluted net loss per share attributable to stockholders	$	0.03		$	(0.84	)	$	(1.26	)	$	—
Annualized distributions declared per common share	$	0.900		$	0.884		$	0.875		NA (1)
Weighted-average number of common shares outstanding, basic	151,733,529			9,150,785			2,045,320			1,000
Weighted-average number of common shares outstanding, fully diluted (2)	159,443,180			9,150,785			2,045,320			1,000

______________________________

(1) NA means not applicable.

(2)For the years ended December 31, 2011, 2010 and the period ended December 31, 2009 the effect of dilutive shares was excluded from the weighted-average share calculation as the effect would be anti-dilutive

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Item 7. 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 financial statements of American Realty Capital Properties, Inc. (the “Company”) and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to American Realty Capital Properties, Inc., a Maryland corporation, and, as required by context, to ARC Properties Operating Partnership, L.P. (the “OP”), a Delaware limited partnership and its subsidiaries. American Realty Capital Properties, Inc. is externally managed by ARC Properties Advisors, LLC (the “Manager”), a Delaware limited liability company, a wholly owned subsidiary of AR Capital, LLC (the “Sponsor”).

Overview

We were incorporated on December 2, 2010, as a Maryland corporation that qualified as a REIT for U.S. federal income tax purposes beginning in the year ended December 31, 2011. On September 6, 2011, we completed our IPO and our shares of common stock began trading on the NASDAQ Stock Market (“NASDAQ”) under the symbol “ARCP” on September 7, 2011.

We were formed to acquire and own single-tenant, freestanding commercial real estate primarily subject to medium-term net leases with high credit quality tenants. Following the Merger discussed below, our long-term business plan will be to acquire a portfolio consisting of approximately 70% long-term leases and 30% medium-term leases, with an average remaining lease term of 10 to 12 years. We expect this investment strategy to develop growth potential from below market leases.  Additionally, following the Merger, we will own a portfolio that uniquely combines American Realty Capital Trust III, Inc.'s (“ARCT III”) portfolio of properties with stable income from high credit quality tenants, with our portfolio, which has substantial growth opportunities.

Substantially all of our business is conducted through the OP. As of December 31, 2012, we are the sole general partner and holder of 92.5% of the equity interest in the OP. ARC Real Estate Partners, LLC (“the Contributor”) and an unaffiliated investor are the limited partners and owners of 2.6% and 4.9%, respectively, of the equity interest in the OP. After holding units of limited partner interests (“OP Units”) for a period of one year, holders of OP Units have the right to convert OP Units for the cash value of a corresponding number of shares of our common stock or, at the option of the OP, a corresponding number of shares of our common stock, as allowed by the limited partnership agreement of the OP. The remaining rights of the holders of OP Units are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

We are managed by our Manager. The Sponsor provides certain acquisition and debt capital services to us. These related parties, including the Manager, the Sponsor and the Sponsor's wholly owned broker-dealer, RCS, have received compensation and fees for services provided to us, and will continue to receive compensation and fees and for investing, financing and management services provided to us.

As of December 31, 2012, excluding one vacant property classified as held for sale, we owned 146 properties consisting of 2.4 million square feet, 100% leased with a weighted average remaining lease term of 6.7 years. In constructing our portfolio, we are committed to diversification (industry, tenant and geography). As of December 31, 2012, rental revenues derived from investment grade tenants and tenants affiliated with investment grade entities as determined by a major rating agency approximated 97% (We have attributed the rating of each parent company to its wholly owned subsidiary for purposes of this disclosure). Our strategy encompasses receiving the majority of our revenue from investment grade tenants as we further acquire properties and enter into (or assume) medium-term lease arrangements.

As of December 31, 2012, ARCP and ARCT III on a combined basis, excluding one vacant property classified as held for sale, owned 653 properties consisting of 15.4 million square feet, 100% leased with a weighted average remaining lease term of 11.4 years. As of December 31, 2012, rental revenues derived from investment grade tenants and tenants affiliated with investment grade entities as determined by a major rating agency approximated 78% (we have attributed the rating of each parent company to its wholly owned subsidiary for purposes of this disclosure).

Merger Agreement

On December 14, 2012, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ARCT III, and certain subsidiaries of each company. The Merger Agreement provides for the merger of ARCT III with and into a subsidiary of ours (the “Merger”). The independent members of the boards of directors of both companies have, by unanimous vote, approved the Merger and the other transactions contemplated by the Merger Agreement.

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Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock of ARCT III will be converted into the right to receive (i) 0.95 of a share of our common stock or (ii) $12.00 in cash, but in no event will the aggregate consideration paid in cash be paid on more than 30% of the shares of ARCT III's common stock issued and outstanding as of immediately prior to the closing of the Merger. In addition, each outstanding unit of equity ownership of the ARCT III operating partnership (“ARCT III OP”) will be converted into the right to receive 0.95 of the same class of unit of equity ownership in the OP.

Upon the consummation of the Merger with ARCT III, ARCT III's advisor, an affiliate of our Sponsor and Manager, will be entitled to subordinated distributions of net sales proceeds from the ARCT III OP estimated to be valued at approximately $59.0 million, assuming an implied price of ARCT III common stock of $12.26 (closing stock price on December 14, 2012) per share in the merger (which assumes that 70% of the merger consideration is ARCP common stock based on a per share price of $12.90 and 30% of the merger consideration is cash). Such subordinated distributions of net sales proceeds, which will be payable in the form of units of equity ownership of the ARCT III OP, which we refer to as ARCT III OP Units, will automatically convert into units of equity ownership of the ARCP OP. The parties have agreed that such ARCP OP Units will be subject to a minimum one-year holding period before being exchangeable into our common stock.

Upon consummation of the Merger, the vesting of the shares of our outstanding restricted stock will be accelerated.

In connection with the Merger, we also have entered into an agreement with ARC and its affiliates to internalize certain functions currently performed by them including acquisition, accounting and portfolio management services (the “Internalization”). In connection with the Internalization, (i) we and our Sponsor have agreed to terminate the acquisition and capital services agreement dated September 6, 2011, between us which will eliminate acquisition and financing fees payable by us (except with respect to certain enumerated properties that were in our pipeline at the time we entered into the Merger Agreement) and (ii) our Manager agreed to reduce asset management fees from an annualized 0.50% of the unadjusted book value of all our assets to 0.50% for up to $3.0 billion of unadjusted book value of assets and 0.40% of unadjusted book value of assets greater than $3.0 billion. In addition, we agreed to pay $5.8 million for certain furniture, fixtures, equipment and other assets as well as certain costs related to the Merger.

We and ARCT III have made certain customary representations and warranties to each other in the Merger Agreement. Each of the companies has agreed, among other things, not to solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer or request from third parties regarding other proposals to acquire us or ARCT III, as applicable, and not to engage in any discussions or negotiations regarding any such proposal, or furnish to any third party non-public information regarding us or ARCT III, as applicable. Each of the companies has also agreed to certain other restrictions on their ability to respond to any such proposals. The Merger Agreement also includes certain termination rights for both us and ARCT III and provides that, in connection with the termination of the Merger Agreement, under specified circumstances, we or ARCT III, as applicable, may be required to pay to the other party reasonable out-of-pocket transaction expenses up to an amount equal to $10.0 million. Note that the Merger Agreement does not provide for the payment of a customary break-up fee by any party thereto in the event of a termination of the Merger Agreement without a closing of the Merger.

The completion of the Merger is subject to certain conditions and is expected to be consummated on February 28, 2013. Complete information on the Merger, including the Merger background, reasons for the Merger, who may vote, how to vote and the time and place of the Company stockholder meeting was included in a definitive proxy statement/prospectus filed by ARCP and ARCT III with the SEC on January 18, 2013.

Credit Facility

On February 14, 2013, ARCT III entered into a $875.0 million unsecured credit facility with Wells Fargo Bank, National Association acting as administrative agent (the “New Credit Facility”), which we will assume as of the consummation of the Merger. Capital One, N.A. and JP Morgan Chase Bank, N.A. will participate as documentation agents and RBS Citizens, N.A. and Regions Bank will act as syndication agents for the credit facility. The credit facility provides financing to ARCT III which can be increased, subject to certain conditions and through an additional commitment, to up to $1.0 billion.

The $875.0 million unsecured credit facility includes a $525.0 million term loan facility and a $350.0 million revolving credit facility. Loans under the credit facility will be priced at their applicable rate plus 160 to 220 basis points, based upon ARCT III's current leverage. To the extent that ARCT III or, upon the consummation of the Merger, we receive an investment grade credit rating from a major credit rating agency, borrowings under the facility will be priced at the applicable rate plus 115 to 200 basis points. We or ARCT III will have the ability to make fixed rate borrowings under this facility as well.

Additionally, upon consummation of the Merger, our senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million (the “RBS Facility”) will be paid off in full and terminated. As of December 31, 2012, there was $124.6 million outstanding under this facility.

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Additionally, upon consummation of the Merger, we expect to enter into a bridge facility, subject to entering into definitive agreements and customary conditions thereunder, with a lender for up to $200.0 million (which may be reduced by up to $125.0 million  on a dollar for dollar basis to the extent such lender provides a commitment under the New Credit Facility described above). Assuming no such reduction under the bridge facility and an additional commitment to the New Credit Facility, we may have access to up to $1.2 billion in financing through the New Credit Facility and the bridge facility.  

Accounting Treatment of the Merger

We and ARCT III are considered to be entities under common control. Both entities’ advisors are wholly owned subsidiaries of the Sponsor. The Sponsor and its related parties have significant ownership interests in us and ARCT III through the ownership of shares of common stock and other equity interests. In addition, the advisors of both entities are contractually eligible to charge significant fees for their services to both of the companies including asset management fees, incentive fees and other fees. Due to the significance of these fees, the advisors and ultimately the Sponsor is determined to have a significant economic interest in both companies in addition to having the power to direct the activities of the companies through advisory/management agreements, which qualifies them as affiliated companies under common control in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The acquisition of an entity under common control is accounted for on the carryover basis of accounting whereby the assets and liabilities of the companies are recorded upon the merger on the same basis as they were carried by the companies on the merger date.

Merger Status

On February 26, 2013, our stockholders approved the issuance of our common stock in connection with the Merger at a Special Meeting of our stockholders. More than 97 percent of the shares voting at the Special Meeting voted in favor of the issuance of our common stock in connection with the Merger, representing more than 55 percent of all outstanding shares.

On February 26, 2013, ARCT III's stockholders approved the Merger with us and the other transactions contemplated by the Merger Agreement at the Special Meeting of ARCT III's Stockholders. More than 98 percent of the shares voting at the Special Meeting voted in favor of the Merger and the other transactions contemplated by the Merger Agreement, representing more than 68 percent of all outstanding shares.

As a result, the Merger is expected to close on or about February 28, 2013.

Formation Transactions

At the completion of the IPO, an affiliate of the Sponsor (the "Contributor"), contributed to the OP its indirect ownership interests in certain assets of ARC Income Properties, LLC and ARC Income Properties III, LLC (the "Contributed Companies"). Assets contributed included (1) 59 properties that are presently leased to RBS Citizens Bank, N.A. and Citizens Bank of Pennsylvania, or collectively, Citizens Bank, one property presently leased to Community Bank, N.A, or Community Bank, and one property leased to Home Depot U.S.A., Inc., or Home Depot, and (2) two vacant properties. Additionally, the OP assumed certain liabilities of the Contributed Companies, including $30.6 million of unsecured notes payable and $96.2 million of mortgage notes secured by the contributed properties.

Significant Accounting Estimates and Critical Accounting Policies

Set forth below is a summary of the significant accounting estimates and critical accounting policies that management believes are important to the preparation of our financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates include:

Revenue Recognition

Our revenues, which will be derived primarily from rental income, 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. Since many leases will provide for rental increases at specified intervals, straight-line basis accounting requires us to record a receivable, and include in revenues, unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. We will defer the revenue related to lease payments received from tenants in advance of their due dates. Cost recoveries from tenants are included in tenant reimbursement income in the period the related costs are incurred, as applicable.

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We review receivables related to rent and unbilled rent receivables and determine 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, as applicable. In the event that the collectability of a receivable is in doubt, we will record an increase in the allowance for uncollectible accounts or record a direct write-off of the receivable in the statement of operations.

Real Estate Investments

Upon the acquisition of properties, we will record acquired real estate at cost and make assessments as to the useful lives of depreciable assets. We will consider the period of future benefit of the asset to determine the appropriate useful lives. Depreciation is computed using a straight-line method over the estimated useful life of 40 years for buildings, five to 15 years for building fixtures and improvements and the remaining lease term for acquired intangible lease assets.

Allocation of Purchase Price of Acquired Assets

Upon the acquisition of real properties, it is our policy to allocate the purchase price of properties to acquired tangible assets, consisting of land, land improvements, buildings, fixtures and tenant improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships, based in each case on their fair values. We utilize independent appraisals and information management obtains on each property as a result of pre-acquisition due diligence, as well as subsequent marketing and leasing activities, as applicable, to determine the fair values of the tangible assets of an acquired property, amongst other market data.

The fair values of above-market and below-market in-place lease values are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (a) the contractual amounts to be paid pursuant to the in-place leases and (b) an estimate of fair market lease rates for the corresponding in-place leases, which is generally obtained from independent appraisals, measured over a period equal to the remaining non-cancelable term of the lease. The above-market and below-market lease values are capitalized as intangible lease assets or liabilities. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease. The capitalized below-market lease intangibles are amortized as an increase to rental income over the remaining term of the lease and any fixed rate renewal periods. In determining the amortization period for below-market lease intangibles, we initially consider, and periodically evaluate on a quarterly basis, the likelihood that a tenant will execute the renewal option. The likelihood that a lessee will execute the renewal option is determined 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.

The fair values of in-place leases include direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals which are avoided by acquiring an in-place lease, and tenant relationships. Direct costs associated with obtaining a new tenant include commissions, tenant improvements, and other direct costs and are estimated based on independent appraisals and management’s consideration of current market costs to execute a similar lease. The value of opportunity costs is calculated using the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Customer relationships are valued based on expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations. These intangibles are included in intangible lease assets in the accompanying consolidated balance sheet and are amortized to depreciation and amortization, a component of operating expense, over the remaining term of the lease.

The determination of the fair values of the assets and liabilities acquired requires the use of significant assumptions with regard to the current market rental rates, rental growth rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of our reported net income. Initial purchase price allocations are subject to change until all information is finalized, which is generally within one year of the acquisition date.

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Derivative Instruments

We may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with our borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks or costs associated with our operating and financial structure as well as to hedge specific anticipated transactions.

We will record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain risks, even though hedge accounting does not apply or we elect not to apply hedge accounting.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements are described in Note 3 to our consolidated financial statements.

Results of Operations

We commenced operations in September 2011 in conjunction with the closing of our IPO. As of December 31, 2011, we owned 61 properties with an aggregate original base purchase price of $119.3 million, comprised of 0.8 million square feet, excluding two vacant properties. As of December 31, 2012, we owned 146 properties with an aggregate original base purchase price of $268.6 million, excluding one vacant property that was classified as held for sale. As of December 31, 2012, in total, the properties comprised 2.4 million square feet and were 100% leased. Prior to our IPO closing date, we did not hold any real estate properties or have any sources of income. Accordingly, our results of operations for the year ended December 31, 2012 as compared to the year ended December 31, 2011 reflect significant increases in most categories, and a comparison of the year ended December 31, 2011 to the period from December 2, 2010 (date of inception) to December 31, 2010 is not presented.

Comparison of the Year Ended December 31, 2012 to Year Ended December 31, 2011

Rental Income

Rental income increased by $13.3 million to $16.3 million for the year ended December 31, 2012 compared to $3.0 million for the year ended December 31, 2011. Rental income was driven by our acquisition of 58 properties since December 31, 2011 for an aggregate purchase price of $131.8 million as well as revenue for a full year from the 88 properties held as of December 31, 2011. The annualized rental income per square foot of the properties at December 31, 2012 was $9.50 with a weighted average remaining lease term of 6.7 years.

Operating Expense Reimbursements

Operating expense reimbursements increased by approximately $0.3 million to $0.5 million for the year ended December 31, 2012 compared to $0.2 million for the year ended December 31, 2011. Operating expense reimbursements represent reimbursements for taxes, property maintenance and other charges contractually due from the tenant per their respective leases. Operating expense reimbursements were driven by our acquisition of 58 properties since December 31, 2011 as well as reimbursements for a full year from the 88 properties held as of December 31, 2011.

Acquisition Related Costs

Acquisition related costs increased by approximately $2.1 million to $4.0 million for the year ended December 31, 2012 compared to $1.9 million for the year ended December 31, 2011. Acquisition and related costs represent the costs related to the acquisition of properties. Acquisition costs mainly consisted of legal costs, deed transfer costs and other costs related to real estate purchase transactions.

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Merger and Other Transaction Related Costs

During the year ended December 31, 2012 costs related to the Merger with ARCT III announced in December 2012 and other transaction costs were $2.6 million. These costs primarily consisted of legal fees, accountants fees and other costs associated with entering into the Merger Agreement.

Property Expenses

Property expenses increased by approximately $0.9 million to $1.1 million for the year ended December 31, 2012 compared to $0.2 million for the year ended December 31, 2011. These costs relate to expenses associated with maintaining certain properties, including real estate taxes, ground lease rent, insurance and repairs and maintenance expenses. The increase in property expenses are mainly due to our acquisition of properties with modified gross leases in 2012.

Asset management and Incentive fees to affiliates

We will pay the Manager an annual base management fee equal to 0.50% per annum of the average unadjusted book value of our real estate assets, calculated and payable monthly in advance, provided that the full amount of the distributions we have declared for the six immediately preceding months is equal to or greater than certain net income thresholds related to our operations. Our Manager will waive such portion of its management fee in excess of such thresholds. For the years ended December 31, 2012 and 2011, the Manager waived all base management fees earned of $1.0 million and $0.2 million, respectively.

We may be required to pay the Manager a quarterly incentive fee, calculated based on 20 percent of the excess our annualized core earnings (as defined in the management agreement with the Manager) over the weighted average number of shares multiplied by the weighted average price per share of common stock. One half of each quarterly installment of the incentive fee will be payable in shares of common stock. The remainder of the incentive fee will be payable in cash. For the year ended December 31, 2012, the Manager waived all incentive fees earned of $0.8 million. No incentive fees were earned for the year ended December 31, 2011.

General and Administrative Expenses

General and administrative expenses increased by $1.9 million to $2.3 million for the year ended December 31, 2012 compared to $0.4 million for the year ended December 31, 2011. General and administrative expenses primarily included the amortization of restricted stock, which increased primarily due to the issuance of additional restricted stock in July 2012, board member compensation, professional fees such as legal fees, accountant fees and financial printer services fees, and insurance expense.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by $7.7 million to $9.3 million for the year ended December 31, 2012 compared to $1.6 million for the year ended December 31, 2011. The increase in depreciation and amortization expense was driven by our acquisition of 58 properties since December 31, 2011 for an aggregate purchase price of $131.8 million as well as depreciation and amortization expense for a full year from the 88 properties held as of December 31, 2011.

Interest Expense

Interest expense increased by approximately $3.5 million to $4.4 million for the year ended December 31, 2012 compared to $0.9 million for the year ended December 31, 2011. The increase primarily related to the RBS Facility with an average monthly balance of $76.2 million and an interest rate of 3.11% at December 31, 2012. Interest expense also related to outstanding mortgage notes payable with an average monthly balance of $32.6 million and a weighted average effective interest rate of 4.52% as of December 31, 2012. Interest expense for the year ended December 31, 2011 of $0.9 million, primarily related to $42.4 million outstanding under the RBS Facility as of December 31, 2011 and a mortgage note payable of $30.3 million, both of which were outstanding as of the closing of our formation transaction in connection with the IPO, which occurred in September 2011.

Our interest expense in future periods will vary based on our level of future borrowings, which will depend on the level of proceeds raised in offerings, the cost of borrowings, and the opportunity to acquire real estate assets which meet our investment objectives.

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Discontinued Operations

Net loss from discontinued operations decreased by approximately $0.2 million to $0.7 million for the year ended December 31, 2012 compared to $0.9 million for the year ended December 31, 2011. As of the year ended December 31, 2012 and 2011, we had one and two vacant properties, respectively, classified as held for sale on the balance sheet and reported in discontinued operations on the statements of operations. The net losses from discontinued operations during each year were primarily due to impairments on the held for sale properties representing the difference between the carrying value and estimated proceeds from the sale of the properties less estimated selling costs. On July 3, 2012, one of the properties was sold for $0.6 million of net proceeds.

Cash Flows for the Year Ended December 31, 2012

During the year ended December 31, 2012, net cash provided by operating activities was $6.1 million. The level of cash flows used in or provided by operating activities is affected by acquisition and transaction costs, the timing of interest payments, as well as the receipt of scheduled rent payments. Cash flows provided by operating activities for the year ended December 31, 2012 included $4.1 million in acquisition related costs. Cash flows provided by operating activities during the year ended December 31, 2012 was mainly due to net income of $4.3 million (net loss of $7.6 million adjusted for non-cash items including depreciation and amortization, amortization of deferred financing costs, share based compensation and loss on held for sale properties of $11.9 million), an increase in accounts payable and accrued expenses of $3.0 million, partially offset by an increase in prepaid and other assets of $1.5 million, primarily due to an increase in unbilled rent receivables in accordance with straight-line basis of accounting .

Net cash used in investing activities for the year ended December 31, 2012 of $124.9 million, primarily related to the acquisition of 58 properties with an aggregate purchase price of $131.8 million, paid for with cash of approximately $125.4 million and the issuance of OP units of $6.4 million. This cash outflow for acquisitions was partially offset by the sale of one vacant property for net proceeds of $0.6 million.

Net cash provided by financing activities of $118.4 million during the year ended December 31, 2012 related to $82.2 million of proceeds net of repayments from our senior secured revolving credit facility, $42.7 million of proceeds net of offering-related costs from the issuance of common and preferred stock, and proceeds from mortgage notes payable of $5.5 million. These inflows were partially offset by distributions paid of $8.4 million, payments related to deferred financing costs of $3.0 million, and distributions to non-controlling interest holders of $0.6 million.

Cash Flows for the Year Ended December 31, 2011

During the year ended December 31, 2011, net cash provided by operating activities was $0.9 million. The level of cash flows used in or provided by operating activities is affected by acquisition and transaction costs, the timing of interest payments and the amount of borrowings outstanding during the period, as well as the receipt of scheduled rent payments. Cash flows provided by operating activities during the year ended December 31, 2011 was mainly due to net loss adjusted for non-cash items of $0.1 million, an increase in deferred rent of $0.7 million and an increase of $0.4 million in accounts payable and accrued expenses, partially offset by an increase in prepaid and other assets of $0.3 million.

Net cash used in investing activities for the year ended December 31, 2011 was $17.5 million related to properties acquired during the year.

Net cash provided by financing activities of $19.8 million during the year ended December 31, 2011 related to proceeds, from the issuance of common stock of $21.8 million, $16.4 million of proceeds from mortgage notes payable and $2.1 million of proceeds from our senior secured revolving credit facility. These inflows were partially offset by $11.2 million of payments on our senior secured revolving credit facility, payments of $5.3 million related to offering costs and payments related to financing costs of $2.5 million.

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American Realty Capital Properties, Inc.

Pro Forma Consolidated Balance Sheet

The following unaudited pro forma Consolidated Balance Sheet is presented as if ARCT III and ARCP had merged in a stock/cash exchange transaction as of December 31, 2012.

ARCT III and ARCP are considered to be entities under common control. Both entities’ advisors are wholly owned subsidiaries of AR Capital, LLC. The sponsor of ARCP and ARCT III and its related parties have significant ownership interests in ARCP through the ownership of shares of common stock and other equity interests. In addition, the advisors of both companies are contractually eligible to charge significant fees for their services to both of the companies including asset management fees, fees for the arrangement of financing and incentive fees and other fees. Due to the significance of these fees, the advisors and ultimately the sponsor is determined to have a significant economic interest in both companies in addition to having the power to direct the activities of the companies through advisory agreement, which qualifies them as affiliated companies under common control in accordance with U.S. GAAP. The acquisition of an entity under common control is accounted for on the carryover basis of accounting whereby the assets and liabilities of the companies are recorded upon the merger on the same basis as they were carried by the companies on the merger date.

The Merger is expected to be consummated on February 28, 2012, shortly after the filing of this Annual Report on Form 10-K. We believe it is important to provide pro forma financial information in this Annual Report do to the significance of the Merger to ARCP's financial statements and in order to present detailed portfolio information on the combined companies.

This financial statement should be read in conjunction with the unaudited Pro Forma Consolidated Statement of Operations and the Company’s historical financial statements and notes thereto in this Annual Report on Form 10-K. The Pro Forma Condensed Consolidated Balance Sheet is unaudited and is not necessarily indicative of what the actual financial position would have been had ARCT III and ARCP merged as of December 31, 2012, nor does it purport to present the future financial position of the Company.

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American Realty Capital Properties, Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

December 31, 2012

(In thousands)	ARCT III Historical (Unaudited) (1)			ARCP Historical (2)			Pro Forma Future Acquisition Adjustments (3)					Pro Forma			Pro Forma Merger Adjustments (4)					ARCP Pro Forma
Assets
Real estate investments, at cost:
Land	$	215,196		$	34,345		$	64,203				$	313,744		$	—				$	313,744
Buildings, fixtures and improvements	1,130,796			205,930			324,416					1,661,142			—					1,661,142
Acquired intangible lease assets	183,819			28,404			52,081					264,304			—					264,304
Total real estate investments, at cost	1,529,811			268,679			440,700					2,239,190			—					2,239,190
Less: accumulated depreciation          and amortization	(31,877		)	(24,233		)	—					(56,110		)	—					(56,110		)
Total real estate investments, net	1,497,934			244,446			440,700					2,183,080			—					2,183,080
Cash and cash equivalents	154,125			2,748			(115,700		)			41,173			(2,085		)	(6	)	39,088
Investment securities, at fair value	41,654			—			—					41,654			—					41,654
Restricted cash	1,108			—			—					1,108			—					1,108
Prepaid expenses and other assets	4,197			3,219			—					7,416			2,085			(6	)	9,501
Deferred costs, net	10,365			4,991			—					15,356			—					15,356
Assets held for sale	—			665			—					665			—					665
Total Assets	$	1,709,383		$	256,069		$	325,000				$	2,290,452		$	—				$	2,290,452
Liabilities and Equity
Mortgage notes payable	$	229,360		$	35,758		$	—				$	265,118		$	—				$	265,118
Derivatives, at fair value	3,830			—			—					3,830			—					3,830
Senior secured revolving credit facility	—			124,604			—					124,604			(124,604		)	(7	)	—
Unsecured credit facility	—			—			325,000			(5	)	325,000			455,068			(8	)	780,068
Accounts payable and accrued expenses	5,677			3,782			—					9,459			—					9,459
Deferred rent	3,574			763			—					4,337			—					4,337
Distributions payable	9,946			—			—					9,946			—					9,946
Total liabilities	252,387			164,907			325,000					742,294			330,464					1,072,758
Series A convertible preferred stock	—			5			—					5			—					5
Series B convertible preferred stock	—			3			—					3			—					3
Convertible equity units	—			—			—					—			—					—
Preferred stock	—			—			—					—			—					—
Common stock	1,776			112			—					1,888			(350		)	(9	)	1,538
Additional paid-in capital	1,552,255			101,548			—					1,653,803			(427,817		)	(10	)	1,225,986
Accumulated other comprehensive loss	(3,923		)	(11		)	—					(3,934		)	—					(3,934		)
Accumulated deficit	(100,367		)	(19,705		)	—					(120,072		)	—					(120,072		)
Total stockholders equity	1,449,741			81,952			—					1,531,693			(428,167		)			1,103,526
Non-controlling interests	7,255			9,210			—					16,465			97,703			(11	)	114,168
Total equity	1,456,996			91,162			—					1,548,158			(330,464		)			1,217,694
Total liabilities and equity	$	1,709,383		$	256,069		$	325,000				$	2,290,452		$	—				$	2,290,452

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American Realty Capital Properties, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet

as of December 31, 2012:

(1) Reflects the unaudited historical Balance Sheet of ARCT III for the period indicated.

(2) Reflects the historical Balance Sheet of ARCP for the period indicated.

(3) Adjustments and pro forma balances represent amounts for properties probable to be acquired by ARCP and ARCT III as if they had been acquired as of the beginning of the period with related financing thereon. All properties probable to be acquired are net leased properties whereby the tenant is responsible for all operating expenses of the property. Allocations of the purchase price of the property between asset categories is based on allocations of similar types of assets acquired previously by the companies.

(4) Adjustments and pro forma balances based on the offering of 0.95 shares of the Company’s common stock for every share of ARCT III’s common stock in addition to other arrangements made with the Company’s advisor in conjunction with the merger.

(5) Property acquisitions will be partially financed with proceeds from the Company’s line of credit. The Company has obtained a facility that permits borrowing of up to $875 million with an expansion feature through additional commitments of up to $1.0 billion for the funding of such purchases.

(6) In conjunction with the merger and internalization of certain functions now performed by the advisor, the Company agreed to acquire certain corporate furniture, fixtures, equipment and other assets for $2.0 million. An additional $3.8 million will be paid for transaction and offering related costs in conjunction with the merger.

(7) Adjustment represents repayment of ARCP's existing secured line of credit with borrowings on the new credit facility obtained prior to the merger.

(8) Adjustment represents repayment of ARCP's existing secured line of credit with borrowings on the new credit facility obtained prior to the merger and borrowings to fund the purchase of ARCT III common stock from shareholders. The merger agreement provides for the purchase of up to 30% of the outstanding shares of ARCT III’s common stock at $12.00 per share. As of the date of the special shareholders meeting of February 26, 2013, which was the deadline for shareholders to elect to redeem shares for cash, shareholders elected to redeem $27.5 million shares. The costs of redeeming these shares will be $330.5 million. The Company has obtained a facility that permits borrowing of up to $875 million with an expansion feature through additional commitments of up to $1.0 billion for the funding of such share re-purchases.

(9) Represents the exchange of 150.1 million shares of ARCT III shares of common stock at an exchange rate of 0.95 to 142.6 million shares of ARCP common stock.

(10)	Purchase of 27.5 million shares of ARCT III at $12.00 per share	$	330,464
	Issuance of OP units to sponsor of ARCT III (a)	97,703
	Less: par value of exchanged shares of ARCT III common stock net of ARCP shares issued	(350		)
		$	427,817
	(a) See note (11) regarding the issuance of OP units to the sponsor of ARCT III.

(11) The sponsor of ARCT III is entitled a fee based on the achievement of certain total return to the ARCT III stockholders. This estimated calculation is based on the number of shares of ARCT III outstanding and the closing common stock price of ARCP shares on February 25, 2013 of $14.23 per share. The actual amount to be paid will not be known until the merger date. The fee will be paid in OP units which represent equity interests in the operations of the Company.

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American Realty Capital Properties, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Operations

for the Year Ended December 31, 2012

	ARCT III Historical (Unaudited) (1)			ARCP Historical (2)			Pro Forma Acquisition Adjustments (3)					Pro Forma Future Acquisition Adjustments (4)					Pro Forma			Pro Forma Merger Adjustments (5)					ARCP Pro Forma
Revenues:
Rental income	$	48,457		$	16,334		$	79,458		(7	)	$	34,750		(7	)	$	178,999		$	—				$	178,999
Operating expense reimbursements	1,514			488			—					—					2,002			—					2,002
Total revenues	49,971			16,822			79,458					34,750					181,001			—					181,001
Operating expenses:
Acquisition related	36,781			3,988			—					—					40,769			(27,138		)	(11	)	13,631
Merger and transaction related	1,992			2,603			—					—					4,595			(4,595		)	(12	)	—
Property operating	2,386			1,098			—					—					3,484			—					3,484
Operating fees to affiliates	212			—			—					1,653					1,865			9,331			(13	)	11,196
General and administrative	2,831			2,261			—					—					5,092			—			(14	)	5,092
Depreciation and amortization	31,378			9,322			56,160			(8	)	14,385			(8	)	111,245			—					111,245
Total operating expenses	75,580			19,272			56,160					16,038					167,050			(22,402		)			144,648
Operating income (loss)	(25,609		)	(2,450		)	23,298					18,712					13,951			22,402					36,353
Other income (expenses):
Interest expense	(7,500		)	(4,356		)	(2,491		)	(9	)	(7,963		)	(9	)	(22,310		)	(8,269		)	(15	)	(30,579		)
Other income, net	958			2			—					—					960			—					960
Total other expenses	(6,542		)	(4,354		)	(2,491		)			(7,963		)			(21,350		)	(8,269		)			(29,619		)
Income (loss) from continuing operations	(32,151		)	(6,804		)	20,807					10,749					(7,399		)	14,133					6,734
Net income (loss) from continuing operations attributable to non-controlling interests	30			225			(1,951		)	(10	)				(10	)	(1,696		)	2,073			(10	)	377
Net income (loss) from continuing operations attributable to stockholders	(32,121		)	(6,579		)	18,856					10,749					(9,095		)	16,206					7,111
Discontinued operations:
Income (loss) from operations of held for sale properties	—			(145		)	—					—					(145		)	—					(145		)
Loss on held for sale properties	—			(600		)	—					—					(600		)	—					(600		)
Net loss from discontinued operations	—			(745		)	—					—					(745		)	—					(745		)
Net from discontinued operations attributable to non-controlling interests	—			46			—					—					46			—					46
Net from discontinued operations attributable to stockholders	—			(699		)	—					—					(699		)	—					(699		)

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	ARCT III Historical (1)				ARCP Historical (2)			Pro Forma Acquisition Adjustments (3)			Pro Forma Future Acquisition Adjustments (4)			Pro Forma			Pro Forma Merger Adjustments (5)		ARCP Pro Forma
Net income (loss)	$	(32,151	)	—	$	(7,549	)	$	20,807		$	10,749		$	(8,144	)	$	14,133	$	5,989
Net income (loss) attributable to non-controlling interests	30				271			(1,951		)	(1,008		)	(2,658		)	2,073		(585		)
Net income (loss) attributable to stockholders	$	(32,121	)		$	(7,278	)	$	18,856		$	9,741		$	(10,802	)	$	16,206	$	5,404
Earnings per share:
Basic	$	(0.33	)		$	(0.84	)												$	0.04
Fully Diluted	$	(0.33	)		$	(0.84	)												$	0.03
Weighted average common shares:
Basic	98,238,281				9,150,785														151,733,529
Fully Diluted	98,238,281				9,150,785														159,443,180

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American Realty Capital Properties, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations

as of December 31, 2012:

(1)	Reflects the unaudited historical Statement of Operations of ARCT III for the period indicated.
(2)	Reflects the historical Statement of Operations of ARCP for the period indicated.
(3)	Adjustments reflect the annualization of certain income and expense items for property acquisitions made in 2011 and up to December 31, 2012 as if they were made at the beginning of each period.
(4)	Adjustments and pro forma balances reflect income and expenses related to properties intended to be acquired by ARCP and ARCT as if they had been acquired as of the beginning of the period with related financing thereon. All properties intended to be acquired are net leased properties whereby the tenant is responsible for all operating expenses of the property.
(5)	Adjustments and pro forma balances based on the offering of 0.95 shares of the Company's common stock for every share of ARCT III's common stock in addition to other arrangements made with the Company's advisor in conjunction with the merger.
(7)	Rental income, operating expense reimbursements and property operating expense adjustments reflect income and expenses for properties as if all properties were acquired during the periods by the Company and ARCT III were acquired at the beginning of each period.
(8)	Depreciation and amortization expense adjustment reflects the expense that would have been recorded if all properties acquired by the Company and ARCT III during each period had been acquired as of the beginning of each period.
(9)	Interest expense adjustment reflects the expense that would have been recognized had the properties for which the funding was used been acquired by the Company and ARCT III during each period had been acquired as of the beginning of each period. Amounts were calculated based on ending period debt balances and average interest rates for lines of credit and mortgage loans.
(10)	Non-controlling interest adjustment reflects interests of operating partnership unit holders including those issued to the sponsor of ARCT III in conjunction with the merger.
(11)	Acquisition and transaction related adjustment relates to contractual charges from the advisor for property acquisitions which will no longer be charged in accordance with the revised advisor agreement. Adjustment does not include approximately $97.7 million of fees to be paid to the sponsor in conjunction with the merger, which are to be paid in operating partnership units and $22.7 million of estimated merger related costs mainly related to investment banker, legal and accounting fees.
(12)	Fees to affiliate adjustment related to contractual asset management fee of 0.50% of real estate held up to total real estate held of $3.0 billion when the fee decreases to 0.40% of real estate held for real estate held of more than $3.0 billion.
(13)	General and administrative expenses exclude certain costs such as salary and benefits for certain property acquisition, accounting and property management personnel which will be borne by ARCP after the merger as well as certain additional costs that may be incurred to manage a larger public company such as legal, accounting, insurance and other costs. Total general and administrative expenses are expected to increase approximately $1.0 million annually.
(14)	Interest expense adjustment reflects interest on an additional $455.1 million borrowing on ARCP's committed line of credit at the expected interest rate of 2.45% reflecting the repurchase of 27.5 million shares of ARCT III's common stock at $12.00 per share as provided for in the merger agreement. The Company has obtained a facility that permits borrowing of up to $875 million with an expansion feature through additional commitments of up to $1.0 billion for the funding of such share purchases and other fundings. This amount is partially offset by a reduction of interest expense for the refinancing of $124.6 million of secured revolving debt at an average interest rate of 3.11% with funds from the committed line of credit.

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Liquidity and Capital Resources

Merger Agreement

On December 14, 2012, we entered into a Merger Agreement with ARCT III and certain subsidiaries of each company. The Merger Agreement provides for the merger of ARCT III with and into a subsidiary of ours. Upon the effectiveness of the merger, each outstanding share of common stock of ARCT III will be converted into the right to receive (i) 0.95 of a share of our common stock or (ii) $12.00 in cash, but in no event will the aggregate consideration paid in cash be paid on more than 30% of the shares of ARCT III's common stock issued and outstanding as of immediately prior to the closing of the Merger. In addition, each outstanding unit of equity ownership of the ARCT III Operating Partnership will be converted into the right to receive 0.95 of the same class of unit of equity ownership in the OP. As of December 31, 2012, ARCT III had 177.6 million shares of common stock outstanding. We intend to fund the cash portion of the stock/cash exchange with financing, consisting of a credit facility under which ARCT III has obtained a commitment for $875.0 million, including a $525.0 million term loan facility and a $350.0 million revolving credit facility. The credit facility provides financing to ARCT III which can be increased, through an additional commitment, to up to $1.0 billion.

Additionally, upon consummation of the Merger, we expect to enter into a bridge facility, subject to entering into definitive agreements and customary conditions thereunder, with a lender for up to $200.0 million (which may be reduced by up to $125.0 million  on a dollar for dollar basis to the extent such lender provides a commitment under the New Credit Facility described above). Assuming no such reduction under the bridge facility and an additional commitment to the New Credit Facility, we may have access to up to $1.2 billion in financing through the New Credit Facility and the bridge facility.  

After the Merger and in the normal course of business, our principal demands for funds will continue to be for property acquisitions, either directly or through investment interests, for the payment of operating expenses, distributions to our investors, and for the payment of principal and interest on our outstanding indebtedness. We expect to meet our future short-term operating liquidity requirements through net cash provided by our current property operations. Management expects that our properties will generate sufficient cash flow to cover all operating expenses and the payment of a monthly distribution. The majority of our long-term, net leases contain contractual rent escalations during the primary term of the lease. Other potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from offerings, proceeds from the sale of properties and undistributed funds from operations. With the stabilization of the investment portfolio, we expect to significantly increase the amount of cash flow generated from operating activities in future periods. Such increased cash flow will positively impact the amount of funds available for dividends. 

As of December 31, 2012, we had $2.7 million of cash and cash equivalents on hand.

Sources of Funds

Funds from Operations and Adjusted Funds from Operations

 Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. ("NAREIT"), an industry trade group, has promulgated a measure known as funds from operations ("FFO"), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income or loss as determined under U.S. GAAP.

We define FFO, a non-GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with U.S. GAAP, excluding gains or losses from sales of property but including asset impairment writedowns, plus depreciation and amortization, after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s policy described above.

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The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of U.S. 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 U.S. GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, 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. We also add back to net income deriving FFO certain costs associated with our Merger and other transactions as these expenses and transactions do not reflect our operations in the current period. However, FFO and adjusted funds from operations ("AFFO"), as described below, should not be construed to be more relevant or accurate than the current U.S. GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under U.S. GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and AFFO measures and the adjustments to U.S. GAAP in calculating FFO and AFFO.

We consider FFO and FFO, as adjusted to exclude acquisition-related fees and expenses, or AFFO, useful indicators of the performance of a REIT. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs in our peer group. Accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.

Additionally, we believe that AFFO, by excluding acquisition-related fees and expenses, provides information consistent with management's analysis of the operating performance of the properties. By providing AFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating performance. Further, we believe AFFO is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies, including exchange-traded and non-traded REITs.

As a result, we believe that the use of FFO and AFFO, together with the required U.S. GAAP presentations, provide a more complete understanding of our performance relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

FFO and AFFO are non-GAAP financial measures and do not represent net income as defined by U.S. GAAP. FFO and AFFO do not represent cash flows from operations as defined by U.S. GAAP, are not indicative of cash available to fund all cash flow needs and liquidity, including our ability to pay distributions and should not be considered as alternatives to net income, as determined in accordance with U.S. GAAP, for purposes of evaluating our operating performance. Other REITs may not define FFO in accordance with the current NAREIT definition (as we do) or may interpret the current NAREIT definition differently than we do and/or calculate AFFO differently than we do. Consequently, our presentation of FFO and AFFO may not be comparable to other similarly titled measures presented by other REITs.

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The below table reflects the items deducted or added to net loss in our calculation of FFO and AFFO for the year ended December 31, 2012 and on a pro forma basis year ended December 31, 2012 (in thousands). Amounts are presented net of any non-controlling interest effect where applicable.

	Three Months Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012			Total			ARCP Pro Forma
Net loss attributable to stockholders (in accordance with U.S. GAAP)	$	(630	)	$	(2,039	)	$	(805	)	$	(3,804	)	$	(7,278	)	$	5,404
Merger & other transaction costs	—			20			—			2,583			2,603			—
Loss on held for sale properties	323			83			47			147			600			600
Depreciation and amortization	1,519			1,756			2,817			3,230			9,322			111,245
FFO	1,212			(180		)	2,059			2,156			5,247			117,249
Acquisition and transaction related costs	342			2,115			820			711			3,988			13,631
Amortization of above-market lease	—			—			56			61			117			202
Amortization of deferred financing costs	141			153			201			276			771			1,523
Straight-line rent	(179		)	(175		)	(236		)	(207		)	(797		)	(7,597		)
Non-cash equity compensation expense	137			183			473			378			1,170			1,191
AFFO	$	1,653		$	2,096		$	3,373		$	3,375		$	10,496		$	126,199

Capital Markets

The following are our public equity offerings of common stock since inceptions (dollar amounts in millions):

Type of offering	Closing Date	Number of Shares	Gross Proceeds
IPO	September 7, 2011	5,574,131	$	67.4
Follow on offering	November 2, 2011	1,497,924	15.8
Underwriters' over allotment	November 7, 2011	74,979	0.8
Follow on offering	June 18, 2012	3,250,000	30.3
Underwriters' over allotment	July 9, 2012	487,500	4.6
Follow on offering	January 29, 2013	2,070,000	26.5
Total		12,954,534	$	145.4

On August 1, 2012, we filed a universal shelf registration statement and a resale registration statement with the SEC. Each registration statement became effective on August 17, 2012. The $500.0 million universal shelf registration statement, as amended, will enable us to grow our capital base over time while providing the flexibility to issue common stock, preferred stock, debt or equity-linked securities. The universal shelf was sized to reflect our current expectation of growth over the next three years. As of December 31, 2012, no common stock, preferred stock, debt or equity-linked security had been issued under the universal shelf registration statement. In January 2013, we commenced an at the market program (“ATM”) to issue shares of common stock as needed in smaller quantities than in a traditional underwritten offering in order to take advantage of favorable stock market conditions as well as providing flexibility in funding property acquisitions. As of February 28, 2013, we had issued 61,000 shares of common stock pursuant to the ATM at a weighted average price per share of $13.48 for net proceeds of $0.8 million. The resale registration statement, as amended, registers the resale of up to 1,882,248 shares of common stock issued in connection with any future conversion of certain currently outstanding restricted shares, convertible preferred stock or OP units, in each case for the benefit of selling stockholders. To date, no common stock has been issued under the resale registration statement.

Availability of Funds from Revolving Credit Facilities

On September 7, 2011, the Company obtained a senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million subject to providing qualified collateral, among other conditions. The proceeds of advances made under the RBS Facility agreement may be used to finance the acquisition of net leased, investment or non-investment grade leased properties and for other permitted corporate purposes. Up to $10.0 million of the facility is available for letters of credit. The credit agreement has a term of 36 months and matures on September 7, 2014, and can be extended at our option for an additional 24 months.

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As of December 31, 2012, there was $124.6 million outstanding on the RBS Facility, which bore an interest rate of 3.11%, collateralized by 114 properties. At December 31, 2012, there was $20.4 million available to us for future borrowings. At December 31, 2011, there was $42.4 million outstanding on the RBS Facility with an interest rate of 3.17%, collateralized by 59 properties. Upon consummation of the Merger, the RBS Facility will be paid off in full and terminated.

On February 14, 2013, ARCT III entered into a $875.0 million unsecured credit facility with Wells Fargo Bank, National Association acting as administrative agent (the “ARCT III Facility”), which we will assume as of the consummation of the Merger. Capital One, N.A. and JP Morgan Chase Bank, N.A. will participate as documentation agents and RBS Citizens, N.A. and Regions Bank will act as syndication agents for the credit facility. The credit facility provides financing to ARCT III which can be increased, through an additional commitment, to up to $1.0 billion.

The $875.0 million unsecured credit facility includes a $525.0 million term loan facility and a $350.0 million revolving credit facility. Loans under the credit facility will be priced at their applicable rate plus 160 to 220 basis points, based upon ARCT III's current leverage. To the extent that ARCT III or, upon the consummation of the Merger, we receive an investment grade credit rating from a major credit rating agency, borrowings under the facility will be priced at the applicable rate plus 115 to 200 basis points. We or ARCT III will have the ability to make fixed rate borrowings under this facility as well.

Additionally, upon consummation of the Merger, we expect to enter into a bridge facility, subject to entering into definitive agreements and customary conditions thereunder, with a lender for up to $200.0 million (which may be reduced by up to $125.0 million  on a dollar for dollar basis to the extent such lender provides a commitment under the New Credit Facility described above). Assuming no such reduction under the bridge facility and an additional commitment to the New Credit Facility, we may have access to up to $1.2 billion in financing through the New Credit Facility and the bridge facility.  

Principal Use of Funds

Acquisitions

Generally, cash needs for property acquisitions will be met through proceeds from the public or private stock offerings and financings. We may also from time to time enter into other agreements with third parties whereby third parties will make equity investments in specific properties or groups of properties that we acquire.

Our Manager evaluates potential acquisitions of real estate and real estate-related assets and engages in negotiations with sellers and borrowers on our behalf. Investors and stockholders should be aware that after a purchase contract is executed that contains specific terms the property will not be purchased until the successful completion of due diligence and negotiation of final binding agreements. During this period, we may decide to temporarily invest any unused proceeds from common stock offerings in certain investments that could yield lower returns than the properties. These lower returns may affect our ability to make distributions.

Dividends

The amount of dividends payable to our stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, financial condition, capital expenditure requirements, as applicable, and annual dividend requirements needed to qualify and maintain our status as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). Operating cash flows are expected to increase as additional properties are acquired in our investment portfolio.

We, our board of directors and Manager share a similar philosophy with respect to paying our dividends. The dividends should principally be derived from cash flows generated from real estate operations. In order to improve our operating cash flows and our ability to pay dividends from operating cash flows, our Manager agreed to waive certain fees including asset management and incentive fees. Our Manager will determine if a portion or all of such fees will be waived in subsequent periods on a quarter-to-quarter basis. Base asset management fees and incentive fees waived during the year ended December 31, 2012 were $1.0 million and $0.8 million, respectively. The fees that were waived relating to the activity during 2012 are not deferrals and accordingly, will not be paid. Because our Manager waived certain fees that we owed, cash flow from operations that would have been used to pay such fees to our Manager was available to pay dividends to our stockholders. See Note 13 — Related Party Transactions and Arrangements in the consolidated financial statements within this report for further information on fees paid to and forgiven by our Manager.

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The management agreement with our Manager provides for payment of the asset management fee only if the full amount of the dividends declared by us for the six immediately preceding months is equal to or greater than the amount of our AFFO. Our Manager will waive such portion of its management fee that, when added to our AFFO, without regard to the waiver of the management fee, would increase our AFFO so that it equals the dividends declared by us for the prior six months. For purposes of this determination, AFFO is FFO (as defined by NAREIT), adjusted to (i) include acquisition fees and related expenses which is deducted in computing FFO; (ii) include non-cash restricted stock grant amortization, if any, which is deducted in computing FFO; and (iii) include impairments of real estate related investments, if any (including properties, loans receivable and equity and debt investments) which are deducted in computing FFO. Our Manager will determine if such fees will be partially or fully waived in subsequent periods on a quarter-to-quarter basis.

In addition, pursuant to our administrative support agreement with our Sponsor, our Sponsor had agreed to pay or reimburse us for certain of our general and administrative costs to the extent that the amount of our dividends declared until September 6, 2012, which was one year following the closing of our IPO exceed the amount of our AFFO in order that such dividends do not exceed the amount of our AFFO, computed without regard to such general and administrative costs paid for, or reimbursed, by our Sponsor.

As our real estate portfolio matures, we expect cash flows from operations to cover our dividends. As the cash flows from operations become more significant, our Manager may discontinue its past practice of forgiving fees and may charge the entire fee in accordance with the agreement with our Manager. There can be no assurance that our Manager will continue to waive earned asset management or incentive fees in the future. 

The following table shows the sources for the payment of dividends to common stockholders for the year ended December 31, 2012 (dollars in thousands):

	Three Months Ended
	March 31, 2012					June 30, 2012					September 30, 2012					December 31, 2012					Total
	Dividends			% of Dividends		Dividends			% of Dividends		Dividends			% of Dividends		Dividends			% of Dividends		Dividends			% of Dividends
Dividends paid in cash	$	1,566				$	1,575				$	2,413				$	2,427				$	7,981
Source of dividends:
Cash flows provided by operations (1)	906			57.9	%	255			16.2	%	2,256			93.5	%	2,427			100.0	%	5,844			73.2	%
Proceeds from financing activities	660			42.1	%	1,320			83.8	%	157			6.5	%	—			—	%	2,137			26.8	%
Total sources of dividends	$	1,566		100.0	%	$	1,575		100.0	%	$	2,413		100.0	%	$	2,427		100.0	%	$	7,981		100.0	%
Net loss attributable to stockholders (in accordance with U.S. GAAP)	$	(630	)			$	(2,040	)			$	(804	)			$	(4,142	)			$	(7,616	)

____________________________________

(1) Dividends paid from cash provided by operations are derived from cash flows from operations (U.S. GAAP basis) for the year ended December 31, 2012. Cash flows provided by operations include $6.9 million of acquisition and transaction related expenses incurred during the year ended December 31, 2012.

Loan Obligations

The payment terms of our loan obligations vary. In general, only interest amounts are payable monthly with all unpaid principal and interest due at maturity. Some of our loan agreements stipulate that we comply with specific reporting and financial covenants mainly related to debt coverage ratios and loan to value ratios. Each loan that has these requirements has specific ratio thresholds that must be met. As of December 31, 2012, we were in compliance with the debt covenants under our loan agreements.

As of December 31, 2012, we had non-recourse mortgage indebtedness secured by real estate of $35.8 million. Our mortgage indebtedness bore interest at weighted average rate of 4.52% per annum and had a weighted average maturity of 3.4 years. We may in the future incur additional mortgage debt on the properties we currently own or use long-term non-recourse financing to acquire additional properties in the future.

On September 7, 2011, we obtained a senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million. The proceeds of advances made under the credit agreement may be used to finance the acquisition of net leased, investment or non-investment grade occupied properties and for other permitted corporate purposes. Up to $10.0 million of the facility is available for letters of credit. The credit agreement has a term of 36 months and matures on September 7, 2014, and can be extended at our option for an additional 24 months.

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Any loan made under the credit facility shall bear floating interest at per annum rates equal to the one month London Interbank Offered Rate (“LIBOR”) plus 2.15% to 2.90% depending on our loan to value ratio as specified in the agreement. In the event of a default, the lender has the right to terminate its obligations under the credit agreement, including the funding of future loans, and to accelerate the payment on any unpaid principal amount of all outstanding loans. The line of credit requires a fee of 0.15% on the unused balance if amounts outstanding under the facility are 50% or more of the total facility amount and 0.25% on the unused balance if amounts outstanding under the facility are 50% or less of the total facility amount.

As of December 31, 2012, there was $124.6 million outstanding on this facility, which bore an interest rate of 3.11%, collateralized by 114 properties. At December 31, 2012, there was $20.4 million available to the Company for future borrowings.

As of December 31, 2012, we had aggregate indebtedness secured by real estate of $160.4 million, which was collateralized by 143 properties. At December 31, 2012, our corporate leverage ratio (total mortgage notes payable plus outstanding advances under our senior secured revolving credit facility less cash and cash equivalents divided by base purchase price of acquired properties) was 58.7%.

Contractual Obligations

The following is a summary of our contractual obligations as of December 31, 2012 (in thousands):

	Total		2013		2014 – 2015		2016 – 2017		Thereafter
Principal payments due on mortgage notes payable	$	35,758	$	74	$	13,956	$	21,728	$	—
Interest payments due on mortgage notes payable	5,538		1,614		2,899		1,025		—
Principal payments due on senior secured revolving credit facility	124,604		—		124,604		—		—
Interest payments due on senior secured revolving credit facility	6,533		3,875		2,658		—		—
Total	$	172,433	$	5,563	$	144,117	$	22,753	$	—

The following is a summary of combined companies of ARCP and ARCT III's contractual obligations as of December 31, 2012 (in thousands):

	Total		2013		2014 – 2015		2016 – 2017		Thereafter
Principal payments due on mortgage notes payable	$	265,118	$	74	$	13,956	$	181,788	$	69,300
Interest payments due on mortgage notes payable	67,164		11,380		22,339		16,396		17,049
Principal payments due on senior secured revolving credit facility	124,604		—		124,604		—		—
Interest payments due on senior secured revolving credit facility	6,533		3,875		2,658		—		—
Total	$	463,419	$	15,329	$	163,557	$	198,184	$	86,349

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Contractual Lease Obligations

The Company entered into a ground lease agreement related to the acquisition of Walgreens Pharmacy - 300 Kings Highway South, Myrtle Beach, South Carolina 29577. The following table reflects the minimum base rental cash payments due from the Company over the next five years and thereafter under this arrangement. These amounts exclude contingent rent payments, as applicable, that may be payable based on provisions related to increases in annual rent based on exceeding certain economic indexes among other items (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	160
2014	160
2015	160
2016	160
2017	160
Thereafter	600
Total	$	1,400

Election as a REIT

We elected to be taxed as a REIT under Sections 856 through 860 of the Code commencing with the taxable year ended December 31, 2011. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax to the extent we distribute our REIT taxable income to our stockholders, and so long as we distribute at least 90% of our REIT taxable income. REITs are subject to a number of other organizational and operational requirements. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and federal income and excise taxes on our undistributed income. We believe we are organized and operating in such a manner as to qualify to be taxed as a REIT for the taxable year ended December 31, 2012.

Inflation

We may be adversely impacted by inflation on any leases that do not contain indexed escalation provisions. In addition, our net leases may require the tenant to pay its allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation.

Related-Party Transactions and Agreements

We have entered into agreements with affiliates, whereby we pay certain fees or reimbursements to our Sponsor, our Manager or their affiliates for acquisition fees and expenses, organization and offering costs, asset management fees and reimbursement of operating costs and have in the past paid sales commissions and dealer manager fees. See Note 13 — Related Party Transactions and Arrangements in our financial statements included in this report for a discussion of the various related-party transactions, agreements and fees.

In addition, the Partnership Agreement was amended as of December 28, 2012, to allow the special allocation, solely for tax purposes, of excess depreciation deductions of up to $10.0 million to ARC Real Estate Partners, LLC, a limited partner of the OP.  In connection with this special allocation, ARC Real Estate Partners, LLC has agreed to restore a deficit balance in its capital account in the event of a liquidation of the OP and has agreed to provide a guaranty or indemnity of indebtedness of the OP.  ARC Real Estate Partners, LLC is directly or indirectly controlled by certain officers and directors of ARCP.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to variable-rate borrowings. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We would not hold or issue these derivative contracts for trading or speculative purposes. We do not have any foreign operations and thus we are not exposed to foreign currency fluctuations.

As of December 31, 2012, our debt included fixed-rate debt, including debt that has interest rates that are fixed with the use of derivative instruments, with a carrying value of $85.8 million and a fair value of $85.8 million. Changes in market interest rates on our fixed rate debt impact fair value of the debt, but they have no impact on interest incurred or cash flow. For instance, if interest rates rise 100 basis points and our fixed rate debt balance remains constant, we expect the fair value of our debt to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed-rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2012 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed rate debt by approximately $0.2 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt by $1.0 million.

As of December 31, 2012, our debt included variable-rate debt with a carrying value of $74.6 million. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their December 31, 2012 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate notes payable would increase or decrease our interest expense by approximately $0.7 million annually.

As the information presented above includes only those exposures that existed as of December 31, 2012, it does not consider exposures or positions arising after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs, and, assume no other changes in our capital structure.

Item 8. Financial Statements and Supplementary Data

The information required by Item 8 is hereby incorporated by reference to our Consolidated Financial Statements beginning on page F-1 of this Annual Report of Form 10-K.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of such period, that our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in our reports that we file or submit under the Exchange Act.

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Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based on our assessment, our management believes that, as of December 31, 2012, our internal control over financial reporting is effective.

The effectiveness of our internal control over financial reporting as of December 31, 2012 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report included in this Annual Report on Form 10-K.

Changes in Internal Control Over Financial Reporting

During the fourth quarter of fiscal year ended December 31, 2012, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

American Realty Capital Properties, Inc.

We have audited the internal control over financial reporting of American Realty Capital Properties, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended December 31, 2012, and our report dated February 28, 2013 expressed an unqualified opinion on those financial statements.

/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

February 28, 2013

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Item9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

We have adopted a Code of Ethics that applies to all of our executive officers and directors, including but not limited to our principal executive officer and principal financial officer. A copy of our Code of Ethics may be obtained, free of charge, by sending a written request to our executive office – 405 Park Avenue, 15th Floor, New York, NY 10022, Attention: Chief Financial Officer.

The other information required by this Item is incorporated by reference to our definitive proxy statement to be filed with the SEC with respect to our 2013 annual meeting of stockholders (the “Proxy Statement”).

Item 11. Executive Compensation.

The information required by this Item is incorporated by reference to the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is incorporated by reference to the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated by reference to the Proxy Statement.

Item 14. Principal Accounting Fees and Services.

The information required by this Item is incorporated by reference to the Proxy Statement.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Financial Statement Schedules

See the Index to Consolidated Financial Statements at page F-1 of this report.

The following financial statement schedule is included herein at page F-31 of this report:

Schedule III -- Real Estate and Accumulated Depreciation

EXHIBIT INDEX

The following documents are filed as part of this Annual Report on Form 10-K:

Exhibit No.	Description
1.1 (1)	Equity Distribution Agreement between Registrant, ARC Properties Operating Partnership, L.P. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated January 22, 2013.
1.2 (1)	Equity Distribution Agreement between Registrant, ARC Properties Operating Partnership, L.P. and JMP Securities LLC, dated January 22, 2013.
1.3 (1)	Equity Distribution Agreement between Registrant, ARC Properties Operating Partnership, L.P. and Ladenburg Thalmann & Co. Inc., dated January 22, 2013.
1.4 (1)	Equity Distribution Agreement between Registrant, ARC Properties Operating Partnership, L.P. and RBS Securities Inc., dated January 22, 2013.
1.5 (1)	Equity Distribution Agreement between Registrant, ARC Properties Operating Partnership, L.P. and Robert W. Baird & Co. Incorporated, dated January 22, 2013.
2.1 (2)	Agreement and Plan of Merger by and among Registrant, ARC Properties Operating Partnership, L.P., Tiger Acquisition LLC, American Realty Capital Trust III, Inc. and American Realty Capital Operating Partnership III, L.P.
3.1 (3)	Articles of Amendment and Restatement of Registrant.
3.2 (4)	Bylaws of Registrant.
3.3 (5)	Articles Supplementary Relating to the Series A Convertible Preferred Stock of the Registrant, dated May 10, 2012.
3.4 (6)	Articles Supplementary Relating to the Series B Convertible Preferred Stock of the Registrant, dated July 24, 2012.
4.1 (3)	Amended and Restated Agreement of Limited Partnership of ARC Properties Operating Partnership, L.P.
4.2 (7)	First Amendment to Amended and Restated Agreement of Limited Partnership of ARC Properties Operating Partnership, L.P., dated May 11, 2012.
4.3 (7)	Second Amendment to Amended and Restated Agreement of Limited Partnership of ARC Properties Operating Partnership, L.P., dated May 31, 2012.
4.4 (7)	Third Amendment to Amended and Restated Agreement of Limited Partnership of ARC Properties Operating Partnership, L.P., dated July 24, 2012.
4.5*	Fourth Amendment to Amended and Restated Agreement of Limited Partnership of ARC Properties Operating Partnership, L.P., dated December 28, 2012.
10.1 (4)	Management Agreement among Registrant, ARC Properties Operating Partnership, L.P. and ARC Properties Advisors, LLC.
10.2 (4)	Acquisition and Capital Services Agreement between Registrant and American Realty Capital II, LLC.
10.3 (4)	Registrant Equity Plan.
10.4 (4)	Registrant Director Stock Plan.
10.5 (4)	Form of Restricted Stock Award Agreement for Non-Executive Directors.
10.6 (4)	Form of Restricted Stock Award Agreement for ARC Properties Advisors, LLC.
10.7 (4)	Registration Rights Agreement among Registrant, ARC Real Estate Partners, LLC and ARC Properties Advisors, LLC.
10.8 (8)	Contribution Agreement, dated February 4, 2011, between ARC Real Estate Partners, LLC and ARC Properties Operating Partnership, L.P.

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Exhibit No.	Description
10.9 (9)	Assignment and Assumption of Membership Interests between ARC Real Estate Partners, LLC and ARC Properties Operating Partnership, L.P.
10.10 (4)	Right of First Offer Agreement between ARC Real Estate Partners, LLC and ARC Properties Operating Partnership, L.P.
10.11 (4)	Tax Protection Agreement, between Registrant, ARC Properties Operating Partnership, L.P. and ARC Real Estate Partners, LLC.
10.12 (4)	Form of Indemnification Agreement between Registrant and its directors and executive officers.
10.13 (10)	Triple Net Lease Agreement, dated as of May 15, 2009, by and between US Real Estate Limited Partnership and Home Depot U.S.A., Inc.
10.14 (10)	First Amendment to Triple Net Lease Agreement, dated as of March 1, 2010, by and between ARC HDCOLSC001, LLC and Home Depot U.S.A., Inc.
10.15 (10)	Assignment and Assumption of Lease, dated November 6, 2009, by and between US Real Estate Limited Partnership and ARC HDCOLSC001, LLC.
10.16 (10)	Mortgage, Assignment of Leases and Rents and Security Agreement, dated as of November 9, 2009, by and between ARC HDCOLSC001, LLC and US Real Estate Limited Partnership.
10.17 (10)	Promissory Note, dated November 9, 2009, made by ARC HDCOLSC001, LLC for the benefit of US Real Estate Limited Partnership.
10.18 (10)	Bill of Sale, delivered as of November 6, 2009, by US Real Estate Limited Partnership.
10.19 (10)	Limited Guaranty, dated as of November 9, 2009, made by American Realty Capital II, LLC for the benefit of US Real Estate Limited Partnership.
10.20 (10)	Administrative Support Agreement between American Realty Capital II, LLC and American Realty Capital Properties, Inc.
10.21 (11)	Credit Agreement, dated as of September 7, 2011, among ARC Properties Operating Partnership, L.P., Registrant and RBS Citizens, N.A.
10.22 (3)	Parent Guaranty Agreement, dated as of September 7, 2011, between Registrant and RBS Citizens, N.A.
10.23 (11)	Subsidiary Guaranty Agreement, dated as of September 7, 2011, among each of the subsidiaries of ARC Properties Operating Partnership, L.P. and RBS Citizens, N.A.
10.24 (11)	Environmental Indemnity Agreement, dated as of September 7, 2011, among Registrant, ARC Properties Operating Partnership, L.P. and each of its subsidiaries and RBS Citizens, N.A.
10.25 (11)	Pledge Agreement, dated as of September 7, 2011, among ARC Properties Operating Partnership, L.P. and each of its subsidiaries and RBS Citizens, N.A.
10.26 (11)	Note, dated September 7, 2011, made by ARC Properties Operating Partnership, L.P. for the benefit of RBS Citizens, N.A.
10.27 (5)	Securities Purchase Agreement, dated as of May 11, 2012.
10.28 (12)	Agreement for Acquisition and Transfer of Real Property dated as of May 5, 2012 between ARC Properties Operating Partnership, L.P. and Setzer Properties, LLC.
10.29 (12)	Agreement for Purchase and Sale of Real Property dated as of February 8, 2012 between American Realty Capital II, LLC and Davenport 1031, L.L.C. and its 36 joint venture partners.
10.30 (12)	First Amendment to Agreement for Purchase and Sale of Real Property dated as of February 28, 2012 between AR Capital, LLC (f/k/a American Realty Capital II, LLC) and Davenport 1031, L.L.C and its 36 joint venture partners.
10.31 (12)	Second Amendment to Agreement for Purchase and Sale of Real Property dated as of March 12, 2012 between AR Capital, LLC (f/k/a American Realty Capital II, LLC) and Davenport 1031, L.L.C and its 36 joint venture partners.
10.32 (12)	Third Amendment to Agreement for Purchase and Sale of Real Property dated as of May 11, 2012 between AR Capital, LLC (f/k/a American Realty Capital II, LLC) and Davenport 1031, L.L.C and its 36 joint venture partners.
10.33 (12)	Fourth Amendment to Agreement for Purchase and Sale of Real Property dated as of May 30, 2012 between AR Capital, LLC (f/k/a American Realty Capital II, LLC) and Davenport 1031, L.L.C and its 36 joint venture partners.
10.34(6)	Securities Purchase Agreement, dated as of July 24, 2012.
10.35(13)	Second Amendment to Credit Agreement dated May 21, 2012.
10.36(13)	Third Amendment to Credit Agreement dated August 16, 2012.

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Exhibit No.	Description
10.37(13)	Fourth Amendment to Credit Agreement dated September 28, 2012.
10.38(2)	Acquisition and Capital Services Agreement and Management Agreement by and between AR Capital, LLC, ARC Properties Advisors, LLC, Registrant and American Realty Capital Trust III, Inc., dated December 14, 2012.
10.39(2)	Side Letter by and between American Realty Capital Trust III, Inc., American Realty Capital Operating Partnership III, L.P., American Realty Capital Advisors III, LLC, American Realty Capital Trust III Special Limited Partner, LLC, American Realty Capital Properties III, LLC and Registrant, dated December 14, 2012.
10.40(2)	Asset Purchase and Sale Agreement, by and between ARC Properties Operating Partnership, L.P. and American Realty Capital Advisors III, LLC, dated December 14, 2012.
10.41*	Indemnity Agreement, by ARC Real Estate Partners, LLC, in favor of Registrant, dated December 28, 2012.
10.42*	Indemnity Agreement, by Indemnitors, in favor of ARC Real Estate Partners, LLC, dated December 28, 2012.
10.43*	Credit Agreement, dated as of February 14, 2013, among American Realty Capital Operating Partnership III, L.P., American Realty Capital Trust III, Inc., Wells Fargo Bank, National Association, RBS Citizens, N.A., and Regions Bank, Capital One, N.A. and JPMorgan Chase Bank, N.A. and the other lenders party hereto.
12.1*	Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
14(14)	Code of Ethics.
21*	List of Subsidiaries.
23.1*	Consent of Grant Thornton LLP.
31.1*	Certification of the Principal Executive Officer of the Registrant 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 Registrant 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 Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	XBRL (eXtensible Business Reporting Language). The following materials from Registrant's Annual Report on Form 10-K for the year ended December 31, 2012, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statements of Changes in Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purpose of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934.

_______________________________________________

*        Filed herewith

(1) Previously filed with Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 22, 2013.

(2) Previously filed with Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2012.

(3) Previously filed with the Pre-Effective Amendment No. 5 to Form S-11 Registration Statement (Registration No. 333-172205) filed by the Registrant with the Securities and Exchange Commission on July 5, 2011.

(4) Previously filed with the Pre-Effective Amendment No. 4 to Form S-11 Registration Statement (Registration No. 333-172205) filed by the Registrant with the Securities and Exchange Commission on June 13, 2011.

(5) Previously filed with the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2012.

(6) Previously filed with the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on July 30, 2012.

(7) Previously filed with the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 filed with the Securities and Exchange Commission on July 31, 2012.

(8) Previously filed with Form S-11 Registration Statement (Registration No. 333-172205) filed by the Registrant with the Securities and Exchange Commission on February 11, 2011.

(9) Previously filed with the Pre-Effective Amendment No. 3 to Form S-11 Registration Statement (Registration No. 333-172205) filed by the Registrant with the Securities and Exchange Commission on May 27, 2011.

89

(10) Previously filed with the Pre-Effective Amendment No. 1 to Form S-11 Registration Statement (Registration No. 333-172205) filed by the Registrant with the Securities and Exchange Commission on March 25, 2011.

(11) Previously filed with Form S-11 Registration Statement (Registration No. 333-176952) filed by the Registrant with the Securities and Exchange Commission on September 22, 2011.

(12) Previously filed with the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 1, 2012.

(13) Previously filed with the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed with the Securities and Exchange Commission on October 29, 2012.

(14) Previously filed with the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2012.

90

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 on this 28th day of February, 2013.

        AMERICAN REALTY CAPITAL PROPERTIES, INC.

By: /s/ NICHOLAS S. SCHORSCH

NICHOLAS S. SCHORSCH

CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD OF DIRECTORS

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this annual report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Capacity	Date
/s/ Nicholas S. Schorsch	Chief Executive Officer and	February 28, 2013
Nicholas S. Schorsch	Chairman of the Board of Directors (Principal Executive Officer)
/s/ Edward M. Weil, Jr.	Chief Operating Officer, President, Secretary,	February 28, 2013
Edward M. Weil, Jr.	Treasurer and Director
/s/ Brian S. Block	Chief Financial Officer and Executive Vice President	February 28, 2013
Brian S. Block	(and Principal Financial Officer and Principal Accounting Officer)
/s/ Leslie D. Michelson	Lead Independent Director	February 28, 2013
Leslie D. Michelson
/s/ Dr. Walter P. Lomax, Jr.	Independent Director	February 28, 2013
Dr. Walter P. Lomax, Jr.
/s/ Robin A. Ferracone	Independent Director	February 28, 2013
Robin A. Ferracone

91

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2012 and 2011	F-3
Consolidated Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2012 and 2011 and the Period from December 2, 2010 (Date of Inception) to December 31, 2010	F-4
Consolidated Statement of Changes in Equity for the Years Ended December 31, 2012 and 2011 and the Period from December 2, 2010 (Date of Inception) to December 31, 2010	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011 and the Period from December 2, 2010 (Date of Inception) to December 31, 2010	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

American Realty Capital Properties, Inc.

We have audited the accompanying consolidated balance sheets of American Realty Capital Properties, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive loss, changes in equity, and cash flows for each of the two years in the period ended December 31, 2012 and for the period from December 2, 2010 (date of inception) to December 31, 2010. Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15(a). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Realty Capital Properties, Inc. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2012 and for the period from December 2, 2010 (date of inception) to December 31, 2010 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 28, 2013 expressedan unqualified opinion.

/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

February 28, 2013

F-2

AMERICAN REALTY CAPITAL PROPERTIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

	December 31,
	2012			2011
ASSETS
Real estate investments, at cost:
Land	$	34,345		$	18,489
Buildings, fixtures and improvements	205,930			107,340
Acquired intangible lease assets	28,404			11,044
Total real estate investments, at cost	268,679			136,873
Less: accumulated depreciation and amortization	(24,233		)	(14,841		)
Total real estate investments, net	244,446			122,032
Cash and cash equivalents	2,748			3,148
Prepaid expenses and other assets	3,219			1,798
Deferred costs, net	4,991			2,785
Assets held for sale	665			1,818
Total assets	$	256,069		$	131,581
LIABILITIES AND EQUITY
Mortgage notes payable	$	35,758		$	30,260
Senior secured revolving credit facility	124,604			42,407
Accounts payable and accrued expenses	3,782			858
Deferred rent	763			724
Total liabilities	164,907			74,249
Series A convertible preferred stock, $0.01 par value, 545,454 and 0 shares (liquidation preference $11.00 per share) authorized, issued and outstanding at December 31, 2012 and 2011, respectively	5			—
Series B convertible preferred stock, $0.01 par value, 283,018 and 0 shares (liquidation preference $10.60 per share) authorized, issued and outstanding at December 31, 2012 and 2011, respectively	3			—
Common stock, $0.01 par value, 240,000,000 shares authorized, 11,157,643 and 7,323,434 issued and outstanding at December 31, 2012 and 2011, respectively	112			73
Additional paid-in capital	101,548			57,582
Accumulated other comprehensive loss	(11		)	—
Accumulated deficit	(19,705		)	(4,025		)
Total stockholders’ equity	81,952			53,630
Non-controlling interests	9,210			3,702
Total equity	91,162			57,332
Total liabilities and equity	$	256,069		$	131,581

The accompanying notes are an integral part of these statements.

F-3

AMERICAN REALTY CAPITAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except for per share data)

	Year Ended December 31,						Period from December 2, 2010 (Date of Inception) to December 31, 2010
	2012			2011
Revenues:
Rental income	$	16,334		$	3,022		$	—
Operating expense reimbursements	488			153			—
Total revenues	16,822			3,175			—
Operating expenses:
Acquisition related	3,988			1,875			—
Merger and other transaction related	2,603			—			—
Property operating	1,098			153			—
General and administrative	2,261			440			—
Depreciation and amortization	9,322			1,612			—
Total operating expenses	19,272			4,080			—
Operating loss	(2,450		)	(905		)	—
Other income (expenses):
Interest expense	(4,356		)	(924		)	—
Other income	2			1			—
Total other expenses, net	(4,354		)	(923		)	—
Loss from continuing operations	(6,804		)	(1,828		)	—
Net loss from continuing operations attributable to non-controlling interests	225			69			—
Net loss from continuing operations attributable to stockholders	(6,579		)	(1,759		)	—
Discontinued operations:
Loss from operations of held for sale properties	(145		)	(37		)	—
Loss on held for sale properties	(600		)	(815		)	—
Net loss from discontinued operations	(745		)	(852		)	—
Net loss from discontinued operations attributable to non-controlling interests	46			36			—
Net loss from discontinued operations attributable to stockholders	(699		)	(816		)	—
Net loss	(7,549		)	(2,680		)	—
Net loss attributable to non-controlling interests	271			105			—
Net loss attributable to stockholders	(7,278		)	(2,575		)	—
Other comprehensive loss:
Designated derivative, fair value adjustment	(11		)	—			—
Comprehensive loss	$	(7,289	)	$	(2,575	)	$	—
Basic and diluted net loss per share from continuing operations attributable to common stockholders	$	(0.76	)	$	(0.86	)	$	—
Basic and diluted net loss per share attributable to common stockholders	$	(0.84	)	$	(1.26	)	$	—

The accompanying notes are an integral part of these statements.

F-4

AMERICAN REALTY CAPITAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data)

	Convertible Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stock-holders' Equity			Non-Controlling Interests			Total Equity
Balance, December 2, 2010	—	$	—	—	$	—	$	—		$	—		$	—		$	—		$	—		$	—
Issuance of common stock	—	—		1,000	—		—			—			—			—			—			—
Balance, December 31, 2010	—	—		1,000	—		—			—			—			—			—			—
Issuance of common stock, net of rescissions	—	—		7,146,034	71		83,860			—			—			83,931			—			83,931
Offering costs, commissions and dealer manager fees	—	—		—	—		(5,812		)	—			—			(5,812		)	—			(5,812		)
Share-based compensation	—	—		176,400	2		180			—			—			182			—			182
Distributions declared	—	—		—	—		—			—			(1,450		)	(1,450		)	—			(1,450		)
Contribution transaction	—	—		—	—		(16,771		)	—			—			(16,771		)	—			(16,771		)
Contributions from non-controlling interest holder	—	—		—	—		(3,875		)	—			—			(3,875		)	3,875			—
Distributions to non-controlling interest holder	—	—		—	—		—			—			—			—			(68		)	(68		)
Net loss	—	—		—	—		—			—			(2,575		)	(2,575		)	(105		)	(2,680		)
Balance, December 31, 2011	—	—		7,323,434	73		57,582			—			(4,025		)	53,630			3,702			57,332
Issuance of preferred stock	828,472	8		—	—		8,992			—			—			9,000			—			9,000
Issuance of common stock	—	—		3,737,500	38		34,897			—			—			34,935			—			34,935
Offering costs	—	—		—	—		(1,092		)	—			—			(1,092		)	—			(1,092		)
Share-based compensation	—	—		96,709	1		1,169			—			—			1,170			—			1,170
Distributions declared	—	—		—	—		—			—			(8,402		)	(8,402		)	—			(8,402		)
OP units issued to acquire real estate investment	—	—		—	—		—			—			—			—			6,352			6,352
Distributions to non-controlling interest holders	—	—		—	—		—			—			—			—			(573		)	(573		)
Designated derivative, fair value adjustment	—	—		—	—		—			(11		)	—			(11		)	—			(11		)
Net loss	—	—		—	—		—			—			(7,278		)	(7,278		)	(271		)	(7,549		)
Balance, December 31, 2012	828,472	$	8	11,157,643	$	112	$	101,548		$	(11	)	$	(19,705	)	$	81,952		$	9,210		$	91,162

The accompanying notes are an integral part of this statement.

F-5

AMERICAN REALTY CAPITAL PROPERTIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,						Period from December 2, 2010 (Date of Inception) to December 31,
	2012			2011			2010
Cash flows from operating activities:
Net loss	$	(7,549	)	$	(2,680	)	$	—
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	7,275			1,465			—
Amortization of intangible lease assets	2,047			159			—
Amortization of deferred costs	817			195			—
Amortization of above-market lease asset	116			—			—
Loss on held for sale properties	600			815			—
Share-based compensation	1,170			182			—
Changes in assets and liabilities:
Prepaid expenses and other assets	(1,467		)	(314		)	—
Accounts payable and accrued expenses	3,020			374			—
Deferred rent	39			724			—
Net cash provided by operating activities	6,068			920			—
Cash flows from investing activities:
Investments in real estate	(125,400		)	(17,528		)	—
Capital expenditures	(54		)	—			—
Proceeds from sale of property held for sale	553			—			—
Net cash used in investing activities	(124,901		)	(17,528		)	—
Cash flows from financing activities:
Proceeds from mortgage notes payable	5,498			16,410			—
Proceeds from senior secured revolving credit facility	82,319			2,066			—
Payments on senior secured revolving credit facility	(122		)	(11,159		)	—
Payments of deferred financing costs	(3,034		)	(2,464		)	—
Proceeds from issuances of preferred shares	9,000			—			—
Proceeds from issuances of common stock	34,935			21,766			—
Payments of offering costs and fees related to stock issuances	(1,194		)	(5,346		)	—
Distributions to non-controlling interest holders	(573		)	(68		)	—
Distributions paid	(8,396		)	(1,449		)	—
Net cash provided by financing activities	118,433			19,756			—
Net change in cash and cash equivalents	(400		)	3,148			—
Cash and cash equivalents, beginning of period	3,148			—			—
Cash and cash equivalents, end of period	$	2,748		$	3,148		$	—
Supplemental Disclosures:
Cash paid for interest	$	3,413		$	590		$	—
Cash paid for income taxes	104			—			—
Non-cash investing and financing activities:
OP units issued to acquire real estate investment	6,352			—			—
Initial proceeds from senior secured revolving credit facility used to pay down mortgages assumed in Formation Transactions	—			51,500			—
Mortgage note payable contributed in Formation Transactions	—			13,850			—
Reclassification of deferred offering costs	—			—			279

The accompanying notes are an integral part of these statements.

F-6

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 1 — Organization

American Realty Capital Properties, Inc. (the “Company”), is a Maryland corporation incorporated on December 2, 2010 that qualified as a real estate investment trust for U.S. federal income tax purposes beginning in the year ended December 31, 2011. On September 6, 2011, the Company completed its initial public offering (the “IPO”) and the shares began trading on the NASDAQ Capital Market under the symbol “ARCP” on September 7, 2011.

The Company was formed to acquire and own single-tenant, freestanding commercial real estate primarily subject to medium-term net leases with high credit quality tenants. The Company considers properties that are net leased on a “medium-term basis” to mean properties originally leased long-term (ten years or longer) that currently have a primary remaining lease duration of generally three to eight years, on average.

Substantially all of the Company's business is conducted through ARC Properties Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The Company is the sole general partner and holder of 92.5% of the equity interest in the OP as of December 31, 2012. ARC Real Estate Partners, LLC (the “Contributor”) and an unaffiliated investor are limited partners and owners of 2.6% and 4.9%, respectively, of the equity interest in the OP. After holding units of limited partner interests in the OP (“OP Units”) for a period of one year, holders of OP Units have the right to convert OP Units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, as allowed by the limited partnership agreement of the OP. The remaining rights of the holders of OP Units are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

The Company, which is externally managed with no employees, has retained ARC Properties Advisors, LLC (the “Manager”), a wholly owned subsidiary of AR Capital, LLC (the “Sponsor”), to manage its affairs on a day to day basis. These affiliated parties, including the Manager, the Sponsor and the Sponsor's wholly owned broker-dealer, Realty Capital Securities, LLC (“RCS” or the “Dealer Manager”), have received compensation and fees for services provided to the Company, and will continue to receive compensation and fees for providing on-going investment oversight, financing and management services to the Company, as applicable, in accordance with the terms of the respective agreements to which such affiliates are party.

Formation Transactions

At the completion of the IPO, the Contributor , an affiliate of the Sponsor, contributed to the OP its indirect ownership interests in certain assets of ARC Income Properties, LLC and ARC Income Properties III, LLC (the "Contributed Companies"). Assets contributed included (1) 59 properties that are presently leased to RBS Citizens Bank, N.A. and Citizens Bank of Pennsylvania, or collectively, Citizens Bank, one property presently leased to Community Bank, N.A, or Community Bank, and one property leased to Home Depot U.S.A., Inc., or Home Depot, and (2) two vacant properties. Additionally, the OP assumed certain liabilities of the Contributed Companies, including $30.6 million of unsecured notes payable and $96.2 million of mortgage notes secured by the contributed properties.

F-7

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Because the contribution was from an affiliate of the Sponsor and deemed to be a transaction between entities under common control, the assets and liabilities were recorded by the Company at the Contributor's carrying amount, or book value, at the time of the contribution. The assets and liabilities of the Contributed Companies are summarized as follows (amounts in thousands):

Assets and liabilities of Contributed Companies, at carryover basis:
Real estate investments, net of accumulated depreciation and amortization of $13,453	$	108,759
Other assets	2,402
Notes payable(1)	(30,626		)
Mortgage notes payable(2)	(96,472		)
Other liabilities	(834		)
Net assets (liabilities) of Contributed Companies	$	(16,771	)

_______________________________________________

⁽¹⁾     Notes payable were repaid from the proceeds of the IPO concurrently with closing.

⁽²⁾   $82.6 million of mortgage notes payable were refinanced with a new $51.5 million revolving credit facility and the remaining balance was repaid from the proceeds of the IPO concurrently with closing of the IPO.

Note 2 — Merger Agreement

On December 14, 2012, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with American Realty Capital Trust III, Inc., a Maryland corporation (“ARCT III”), and certain subsidiaries of each company. The Merger Agreement provides for the merger of ARCT III with and into a subsidiary of the Company (the “Merger”). The independent members of the boards of directors of both Companies have, by unanimous vote, approved the Merger and the other transactions contemplated by the Merger Agreement.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock of ARCT III will be converted into the right to receive (i) 0.95 of a share of the Company's common stock or (ii) $12.00 in cash, but in no event will the aggregate consideration paid in cash be paid on more than 30% of the shares of ARCT III's common stock issued and outstanding as of immediately prior to the closing of the Merger. In addition, each outstanding unit of equity ownership of the ARCT III operating partnership ("ARCT III OP") will be converted into the right to receive 0.95 of the same class of unit of equity ownership in the OP.

Upon the consummation of the Merger with ARCT III, ARCT III's advisor, an affiliate of the Company's Sponsor and Manager, will be entitled to subordinated distributions of net sales proceeds from the ARCT III OP estimated to be valued at approximately $59.0 million, assuming an implied price of ARCT III common stock of $12.26 (closing stock price on December 14, 2012) per share in the merger (which assumes that 70% of the merger consideration is ARCP common stock based on a per share price of $12.90 and 30% of the merger consideration is cash). Such subordinated distributions of net sales proceeds, which will be payable in the form of units of equity ownership of the ARCT III OP, which the Company refers to as ARCT III OP Units, will automatically convert into units of equity ownership of the ARCP OP. The parties have agreed that such ARCP OP Units will be subject to a minimum one-year holding period before being exchangeable into the Company's common stock.

Upon consummation of the Merger, the vesting of the shares of the Company's outstanding restricted stock will be accelerated.

In connection with the Merger, the Company also has entered into an agreement with the Sponsor and its affiliates to internalize certain functions currently performed by them including acquisition, accounting and portfolio management services (the "Internalization"). In connection with the Internalization, (i) the Company and its Sponsor have agreed to terminate the acquisition and capital services agreement dated September 6, 2011, between the two parties, which will eliminate acquisition and financing fees payable by the Company (except with respect to certain enumerated properties that were in the Company's pipeline at the time it entered the Merger Agreement) and (ii) the Manager agreed to reduce asset management fees from an annualized 0.50% of the unadjusted book value of all of the Company's assets to 0.50% for up to $3.0 billion of unadjusted book value of assets and 0.40% of unadjusted book value of assets greater than $3.0 billion. In addition, the Company agreed to pay $5.8 million for certain furniture, fixtures, equipment, other assets and certain costs associated with the Merger.

F-8

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

The Company and ARCT III have made certain customary representations and warranties to each other in the Merger Agreement. Each of the companies has agreed, among other things, not to solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer or request from third parties regarding other proposals to acquire the Company or ARCT III, as applicable, and not to engage in any discussions or negotiations regarding any such proposal, or furnish to any third party non-public information regarding the Company or ARCT III, as applicable. Each of the companies has also agreed to certain other restrictions on their ability to respond to any such proposals. The Merger Agreement also includes certain termination rights for both the Company and ARCT III and provides that, in connection with the termination of the Merger Agreement, under specified circumstances, the Company or ARCT III, as applicable, may be required to pay to the other party reasonable out-of-pocket transaction expenses up to an amount equal to $10.0 million. The Merger Agreement does not provide for the payment of a customary break-up fee by any party thereto in the event of a termination of the Merger Agreement without a closing of the Merger.

The completion of the Merger is subject to certain conditions. Complete information on the Merger, including the Merger background, reasons for the Merger, who may vote, how to vote and the time and place of the Company stockholder meeting was included in a definitive proxy statement/prospectus.

Credit Facility

On February 14, 2013, ARCT III entered into an $875.0 million unsecured credit facility with Wells Fargo Bank, National Association acting as administrative agent (the "New Credit Facility"), which the Company will assume as of the consummation of the Merger. Capital One, N.A. and JP Morgan Chase Bank, N.A. will participate as documentation agents and RBS Citizens, N.A. and Regions Bank will act as syndication agents for the credit facility. The unsecured credit facility provides financing to ARCT III which can be increased, subject to certain conditions and through an additional commitment, to up to $1.0 billion.

The $875.0 million unsecured credit facility includes a $525.0 million term loan facility and a $350.0 million revolving credit facility. Loans under the credit facility will be priced at their applicable rate plus 160 to 220 basis points, based upon ARCT III's current leverage. To the extent that ARCT III or, upon the consummation of the Merger, the Company receives an investment grade credit rating from a major credit rating agency, borrowings under the facility will be priced at the applicable rate plus 115 to 200 basis points. The Company or ARCT III will have the ability to make fixed rate borrowings under this facility as well.

Additionally, upon consummation of the Merger, the Company's senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million will be paid off in full and terminated. As of December 31, 2012, there was $124.6 million outstanding under this facility.

Accounting Treatment for the Merger

The Company and ARCT III are considered to be entities under common control. Both entities’ advisors are wholly owned subsidiaries of the Sponsor. The Sponsor and its related parties have significant ownership interests in the Company and ARCT III through the ownership of shares of common stock and other equity interests. In addition, the advisors of both entities are contractually eligible to charge significant fees for their services to both of the companies including asset management fees, incentive fees and other fees. Due to the significance of these fees, the advisors and ultimately the Sponsor is determined to have a significant economic interest in both companies in addition to having the power to direct the activities of the companies through advisory agreement, which qualifies them as affiliated companies under common control in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The acquisition of an entity under common control is accounted for on the carryover basis of accounting whereby the assets and liabilities of the companies are recorded upon the merger on the same basis as they were carried by the companies on the merger date.

Merger Status

On February 26, 2013, the Company's stockholders approved the issuance of its common stock in connection with the Merger at a Special Meeting of its stockholders. More than 97 percent of the shares voting at the Special Meeting voted in favor of the issuance the Company's common stock in connection with the Merger, representing more than 55 percent of all outstanding shares.

F-9

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

On February 26, 2013, ARCT III's stockholders approved its Merger with the Company and the other transactions contemplated by the Merger Agreement at the Special Meeting of ARCT III's Stockholders. More than 98 percent of the shares voting at the Special Meeting voted in favor of the merger and the other transactions contemplated by the Merger Agreement, representing more than 68 percent of all outstanding shares.

As a result, the merger is expected to close on or about February 28, 2013.

Note 3 — Summary of Significant Accounting Policies

Basis of Accounting

The accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with U.S. GAAP.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been 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 for which the Company is the primary beneficiary.

Use of Estimates

The preparation of financial statements in conformity with U.S. 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, to record investments in real estate, real estate taxes, and derivative financial instruments and hedging activities, as applicable.

Formation Transactions

Upon the effectiveness of the IPO, the Company acquired certain properties from affiliated entities of the Company, as such, the Company was no longer considered to be in the development stage. The contribution of the properties from affiliates in the initial formation of the Company was accounted for as a reorganization of entities under common control and therefore all assets and liabilities related to the contributed properties were accounted for on the carryover basis of accounting whereby the real estate investments were contributed at amortized cost and all assets and liabilities of the predecessor entities became assets and liabilities of the Company.

Real Estate Investments

The Company records acquired real estate at cost and makes assessments as to the useful lives of depreciable assets. The Company considers the period of future benefit of the asset to determine the appropriate useful lives. Depreciation is computed using a straight-line method over the estimated useful life of 40 years for buildings, five to 15 years for building fixtures and improvements and the remaining lease term for acquired intangible lease assets.

Impairment of Long Lived Assets

Operations related to properties that have been sold or properties that are intended to be sold are presented as discontinued operations in the statement of operations for all periods presented, and properties intended to be sold are designated as “held for sale” on the accompanying consolidated balance sheets.

F-10

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, 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 impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded 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 is 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 income. At December 31, 2012, and 2011, the Company had one and two, respectively, vacant properties classified as properties held for sale. See Note 16 — Discontinued Operations and Properties Held for Sale.

Allocation of Purchase Price of Acquired Assets

The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings, equipment 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. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships.

Amounts allocated to land, buildings, equipment and fixtures are based on cost segregation studies performed by independent third-parties or on the Company's analysis of comparable properties in its portfolio. Depreciation is computed using the straight-line method over the estimated lives of forty years for buildings, five to ten years for building equipment and fixtures, and the shorter of the useful life or the remaining lease term for tenant improvements.

The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. Factors considered by the Company in its 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 market rates during the expected lease-up period, which typically ranges from six to 18 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market in-place lease values for owned properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid pursuant to the in-place leases and management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease. The capitalized below-market lease values will be amortized as an increase to rental income over the remaining term and any fixed rate renewal periods provided within the respective leases. In determining the amortization period for below-market lease intangibles, the Company initially will consider, and periodically evaluate on a quarterly basis, the likelihood that a lessee will execute the renewal option. The likelihood that a lessee will execute the renewal option is determined 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.

The aggregate value of intangibles assets related to customer relationships is measured based on the Company's evaluation of the specific characteristics of each tenant's lease and the Company's overall relationship with the tenant. Characteristics considered by the company in determining these values include the nature and extent of the Company's existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals, among other factors.

F-11

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

The value of in-place leases is amortized to expense over the initial term of the respective leases, which range primarily from 2 to 20 years. The value of customer relationship intangibles is amortized to expense over the initial term 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.

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 its pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Intangible lease assets consist of the following as of December 31, 2012 and 2011 (amounts in thousands):

	December 31,
	2012			2011
In-place leases, gross	$	27,140		$	11,044
Accumulated amortization on in-place leases	(5,244		)	(3,197		)
In-place leases, net of accumulated amortization	21,896			7,847
Above market leases, gross	1,264			—
Accumulated amortization on above market leases	(116		)	—
Above market leases, net of accumulated amortization	1,148			—
Total intangible lease assets, net	$	23,044		$	7,847

The following table provides the weighted-average amortization period as of December 31, 2012 for intangible lease assets and the projected amortization expense and adjustments of rental income for the next five years (amounts in thousands):

	Weighted-Average Amortization Period in Years	2013		2014		2015		2016		2017
In-place leases:
Total to be included in amortization expense	7.3	$	3,688	$	3,619	$	3,336	$	3,067	$	2,531
Above market leases:
Total to be included in rental income	5.0	$	252	$	252	$	252	$	252	$	122
Total intangible lease assets	7.2

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less.

The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit. At December 31, 2012 and 2011, the Company had deposits of $2.7 million and $3.1 million, respectively, of which $2.2 million and $2.7 million were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result.

F-12

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Deferred Costs, Net

Deferred costs, net consists of deferred financing costs net of accumulated amortization, deferred leasing costs net of accumulated amortization and deferred offering costs.

Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are 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 the financing will not close. At December 31, 2012 and 2011, the Company had $4.7 million and $2.5 million, respectively, of deferred financing costs net of accumulated amortization.

Deferred leasing costs, consisting primarily of lease commissions and payments made to assume existing leases, are deferred and amortized over the term of the lease. At December 31, 2012 and 2011, the Company had $0.2 million and $0.3 million, respectively, of deferred leasing costs, net of accumulated amortization.

Deferred offering costs represent professional fees, fees paid to various regulatory agencies, and other costs incurred in connection with registering to sell shares of the Company's common stock. As of December 31, 2012, the Company had $0.1 million of deferred offering costs related to its $500.0 million universal shelf and resale registration statements filed with the SEC in August 2012. As of December 31, 2011, the Company had no deferred offering costs.

Derivative Instruments

The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions.

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statement of operations. If the derivative is designated and qualifies for hedge accounting treatment the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.

F-13

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Revenue Recognition

Upon the acquisition of real estate, certain properties will have leases where minimum rent payments increase during the term of the lease. The Company will record rental revenue for the full term of each lease on a straight-line basis. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for the purposes of this calculation. Cost recoveries from tenants are included in tenant reimbursement income in the period the related costs are incurred, as applicable.

The Company's revenues, which are derived primarily from rental income, 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. Since many of the leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. The Company defers the revenue related to lease payments received from tenants in advance of their due dates.

The Company continually reviews receivables related to rent and unbilled rent receivables 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. In the event that the collectability of a receivable is in doubt, the Company will record an increase in the allowance for uncollectible accounts or record a direct write-off of the receivable in the consolidated statements of operations and comprehensive loss. As of December 31, 2012 and 2011, the Company determined that there was no allowance for uncollectible accounts necessary.

Offering and Related Costs

Offering and related costs include costs incurred in connection with the Company's issuance of common stock. These costs include, but are not limited to, (i) legal, accounting, printing, mailing and filing fees; (ii) escrow related fees, and (iii) reimbursement to the Dealer Manager for amount they paid to reimburse the bonified due diligence expenses of broker-dealers.

Share-Based Compensation

The Company has a stock-based incentive award plan for its affiliated Manager, non-executive directors, officers, other employees and independent contractors who are providing services to the company as applicable, and a non-executive director restricted share plan, which are accounted for under the guidance for share based payments. The expense for such awards is included in general and administrative expenses and is recognized over the vesting period or when the requirements for exercise of the award have been met. See Note 11 — Share-Based Compensation for additional information on these plans.

Income Taxes

The Company qualified as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”) commencing with the taxable year ended December 31, 2011. Being qualified for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes its REIT taxable income to its stockholders, and so long as it distributes at least 90% of its REIT taxable income. REITs are subject to a number of other organizational and operational requirements. The Company may still be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income.

Per Share Data

Income (loss) per basic share of common stock is calculated by dividing net income (loss) less dividends on unvested restricted stock and dividends on preferred shares by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted income (loss) per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period.

F-14

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Reportable Segments

The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company's investments in real estate generate rental revenue and other income through the leasing of properties, which comprised 100% of its total consolidated revenues. Although the Company's investments in real estate will be geographically diversified throughout the United States, management evaluates operating performance on an individual property level. The Company's properties have been aggregated into one reportable segment.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (the "FASB") issued guidance that expands the existing disclosure requirements for fair value measurements, primarily for Level 3 measurements, which are measurements based on unobservable inputs such as the Company’s own data. This guidance is largely consistent with current fair value measurement principles with few exceptions that do not result in a change in general practice. The guidance was applied prospectively and was effective for interim and annual reporting periods ending after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations as the guidance relates only to disclosure requirements.

In June 2011, the FASB issued guidance requiring entities to present items of net income and other comprehensive income either in one continuous statement – referred to as the statement of comprehensive income – or in two separate, but consecutive, statements of net income and other comprehensive income. The new guidance does not change which components of comprehensive income are recognized in net income or other comprehensive income, or when an item of other comprehensive income must be reclassified to net income. In December 2011, the FASB deferred certain provisions of this guidance related to the presentation of certain reclassification adjustments out of accumulated other comprehensive income, by component in both the statement and the statement where the reclassification is presented. This guidance was applied prospectively and was effective for interim and annual reporting periods ended after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations but changed the location of the presentation of other comprehensive income to more closely associate the disclosure with net income.

In September 2011, the FASB issued guidance that allows entities to perform a qualitative analysis as the first step in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative analysis for impairment is not required. The guidance was effective for interim and annual impairment tests for fiscal periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company's financial position or results of operations.

In December 2011, the FASB issued guidance which contains new disclosure requirements regarding the nature of and entity's rights of offset and related arrangements associated with its financial instruments and derivative instruments. The new disclosures are designed to make financial statements prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards and will give the financial statement users information about both gross and net exposures. The guidance is effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations.

In July 2012, the FASB issued revised guidance intended to simplify how an entity tests indefinite-lived intangible assets for impairment. The amendments will allow an entity first to assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. An entity will no longer be required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative test unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations.

F-15

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 4 — Real Estate Investments

The following table presents the allocation of the assets acquired and liabilities assumed during the periods presented (amounts in thousands):

	Year Ended December 31,
	2012			2011
Real estate investments, at cost:
Land	15,856			$	18,489
Buildings, fixtures and improvements	98,536			107,340
Total tangible assets	114,392			125,829
Acquired intangibles:
In-place leases	16,096			11,044
Above market leases	1,264			—
Total real estate investments acquired	131,752			136,873
OP Units issued to acquire real estate investments	(6,352		)	—
Cash paid to acquire real estate investments (1)	$	125,400		$	136,873
Number of properties acquired	58			88

______________________________________________

⁽¹⁾  For the year ended December 31, 2011, the amount includes the properties that were contributed in September 2011 in conjunction with the completion of the IPO by the Contributor at amortized cost as well as $17.5 million of properties acquired by the Company following the IPO.

The Company owns and operates commercial properties. As of December 31, 2012, the Company owned 147 properties, one of which was vacant and classified as held for sale. As of December 31, 2011, the Company owned 90 properties, two of which were vacant and classified as held for sale. The Contributor, an affiliate of the Sponsor, contributed 63 properties (the "Contributed Properties") in September 2011 in conjunction with the completion of the IPO at amortized cost.

The following table reflects the number and related purchase prices of properties acquired during the years ended December 31, 2012 and 2011 (amounts in thousands):

	Number of Properties	Base Purchase Price
Year ended December 31, 2011	88	$	136,873
Year ended December 31, 2012	58	131,752
Total portfolio as of December 31, 2012	146	$	268,625

The following table presents unaudited pro forma information as if the acquisitions during the year ended December 31, 2012, had been consummated on December 2, 2010 (date of inception). Additionally, the unaudited pro forma net loss attributable to stockholders was adjusted to reclass acquisition and transaction related expenses of $4.0 million from the year ended December 31, 2012 to the period from December 2, 2010 (date of inception) to December 31, 2010.

	Year Ended December 31,					Period from December 2, 2010 (date of inception) to December 31, 2010
(Amounts in thousands)	2012			2011
Pro forma revenues	$	23,512		$	23,512	$	1,932
Pro forma net income (loss) attributable to stockholders	$	(824	)	$	724	$	(3,776	)

F-16

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Future Lease Payments

The following table presents future minimum base rental cash payments due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	23,113
2014	23,309
2015	23,153
2016	22,808
2017	18,761
Thereafter	50,031
Total	$	161,175

The Company entered into a ground lease agreement related to the acquisition of a Walgreens Pharmacy. The following table reflects the minimum base rental cash payments due from the Company over the next five years and thereafter under this arrangement (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	160
2014	160
2015	160
2016	160
2017	160
Thereafter	600
Total	$	1,400

Tenant Concentration

The following table lists the tenants whose annualized rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2012 and 2011. Annualized rental income for net leases is rental income on a straight-line basis as of December 31, 2012, which includes the effect of tenant concessions such as free rent, as applicable. The Company did not own any properties as of December 31, 2010.

Tenant	2012	2011
Citizens Bank	28.7%	62.9%
GSA	11.6%	*
John Deere	10.0%	*
Home Depot	*	21.1%

_______________________________________________

* The tenants' annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

The termination, delinquency or non-renewal of one or more leases by any of the above tenants may have a material effect on revenues. No other tenant represents more than 10% of the annualized rental income for the periods presented.

F-17

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Geographic Concentration

The following table lists the states where the Company has concentrations of properties where annual rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2012 and 2011:

State	2012	2011
Michigan	15.2%	23.4%
Ohio	10.8%	16.8%
South Carolina	10.6%	23.4%
Iowa	10.0%	*

_______________________________________________

* The state's annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

Note 5 — Senior Secured Revolving Credit Facility

On September 7, 2011, the Company obtained a senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million subject to providing qualified collateral, among other conditions. The proceeds of advances made under the credit agreement may be used to finance the acquisition of net leased, investment or non-investment grade leased properties and for other permitted corporate purposes. Up to $10.0 million of the facility is available for letters of credit. The credit agreement has a term of 36 months and matures on September 7, 2014, and can be extended at the Company's option for an additional 24 months.

Any advance made under the credit facility will bear floating interest at per annum rates equal to the one-month London Interbank Offered Rate (“LIBOR”) plus 2.15% to 2.90% depending on the Company's loan to value ratio as specified in the credit agreement. In the event of a default, the lender has the right to terminate its obligations under the credit agreement, including the funding of future advances, and to accelerate the payment on any unpaid principal amounts outstanding. The credit facility requires a fee of 0.15% on the unused balance if amounts outstanding under the facility are 50% or more of the total facility amount and 0.25% on the unused balance if amounts outstanding under the facility are less than 50% of the total facility amount.

As of December 31, 2012, there was $124.6 million outstanding on this facility, which bore an interest rate of 3.11%, collateralized by 114 properties. At December 31, 2012, there was $20.4 million available to the Company for future borrowings. At December 31, 2011, there was $42.4 million outstanding on this facility with an interest rate of 3.17%, collateralized by 59 properties.

The Company’s sources of recourse financing generally require financial covenants, as well as restrictions on corporate guarantees, the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios) as well as the maintenance of a minimum net worth. At December 31, 2012 and 2011, the Company was in compliance with the debt covenants under the senior secured revolving credit facility agreement.

F-18

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 6 — Mortgage Notes Payable

The Company’s mortgage notes payable consist of the following as of December 31, 2012 and 2011 (dollar amounts in thousands):

	Encumbered Properties	Outstanding Loan Amount		Weighted Average Effective Interest Rate (1)		Weighted Average Maturity (2)
December 31, 2012	29	$	35,758	4.52	%	3.52
December 31, 2011	28	$	30,260	4.67	%	4.32

_______________________________________________

(1) Mortgage notes payable have fixed rates. Effective interest rates range from 3.68% to 5.32% at December 31, 2012 and 3.80% to 5.32% at December 31, 2011.

(2) Weighted average remaining years until maturity as of December 31, 2012 and 2011, respectively.

The following table summarizes the scheduled aggregate principal repayments subsequent to December 31, 2012 (amounts in thousands):

Year	Total
2013	$	74
2014	189
2015	13,767
2016	11,760
2017	9,968
Thereafter	—
Total	$	35,758

The Company’s sources of recourse financing generally require financial covenants as well as restrictions on corporate guarantees, the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios) as well as the maintenance of a minimum net worth. As of December 31, 2012 and 2011, the Company was in compliance with the debt covenants under the mortgage loan agreements.

F-19

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 7 — Fair Value of Financial Instruments

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The guidance defines three levels of inputs that may be used to measure fair value:

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

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

Level 3 — Unobservable inputs 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.

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 those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of December 31, 2012, the Company has assessed 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 derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The Company’s interest rate cap derivative measured at fair value on a recurring basis as of December 31, 2012 was zero and was classified in Level 2 of the fair value hierarchy.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates and accounts payable approximate their carrying value on the accompanying consolidated balance sheets due to their short-term nature.

The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheets are reported below (amounts in thousands):

		Carrying Amount at		Fair Value at		Carrying Amount at		Fair Value at
	Level	December 31, 2012		December 31, 2012		December 31, 2011		December 31, 2011
Mortgage notes payable	3	$	35,758	$	35,793	$	30,260	$	30,626
Senior secured revolving credit facility	3	$	124,604	$	124,604	$	42,407	$	42,407

The fair value of mortgage notes payable are obtained by calculating the present value at current market rates. The terms of the senior secured revolving credit facility and the Company's level ratio are considered commensurate with the market, as such the outstanding balance on the facility approximates fair value.

F-20

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

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/or 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 for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps 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 life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2012, such derivatives were used to hedge the variable cash flows associated with forecasted variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the year ended December 31, 2012, the Company recorded no hedge ineffectiveness in earnings. The Company had no derivative instruments prior to the year ended December 31, 2012.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next twelve months, the Company estimates that an additional $11,000 will be reclassified from other comprehensive income as an increase to interest expense.

As of December 31, 2012, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk (dollar amount in thousands):

Interest Rate Derivative:	Number of Instruments	Notional Amount
Interest rate cap	1	$	50,000

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2012:

	Balance Sheet Location	December 31, 2012
Derivatives designated as hedging instruments:
Interest rate cap	Derivative, at fair value	$	—

F-21

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

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 year ended December 31, 2012 (amounts in thousands):

	Year Ended December 31, 2012
Amount of loss recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)	$	(12	)
Amount of loss reclassified from accumulated other comprehensive loss into income as interest expense (effective portion)	$	(1	)
Amount of gain (loss) recognized in income on derivative instruments (ineffective portion and amounts excluded from effectiveness testing)	$	—

Note 9 — Convertible Preferred Stock

On May 11, 2012, the Company entered into a securities purchase agreement with an unaffiliated third party that is an “accredited investor” (as defined in Rule 501 of Regulation D as promulgated under the Securities Act of 1933, as amended) pursuant to which the Company sold 545,454 shares of the Company's Series A convertible preferred stock for gross proceeds of $6.0 million and aggregate net proceeds of $5.8 million after offering-related fees and expenses.

The Series A convertible preferred stock has a liquidation preference of $11.00 per share, plus accrued and unpaid dividends, and a redemption premium equal to one percent (1%). Commencing on May 31, 2012, the Company has been paying cumulative dividends on the Series A convertible preferred stock monthly in arrears at the annualized rate of $0.77 per share.

The Series A convertible preferred stock is convertible into the Company's common stock, at the option of the holder of the Series A convertible preferred stock, at a conversion price equal to $11.00 per share, beginning one year after the date of issuance. The Company, at its option at any time, may redeem the Series A convertible preferred stock, in whole or in part, at $11.00 per share.

On July 24, 2012, the Company entered into a securities purchase agreement with an unaffiliated third party that is an “accredited investor” (as defined in Rule 501 of Regulation D as promulgated under the Securities Act of 1933, as amended) pursuant to which the Company sold 283,018 shares of the Company's Series B convertible preferred stock for gross proceeds of approximately $3.0 million. After deducting offering-related fees and expenses, the aggregate net proceeds to the Company from the sale of the Series B convertible preferred stock were approximately $3.0 million.

The Series B convertible preferred stock has a liquidation preference of $10.60 per share, plus accrued and unpaid dividends, and a redemption premium equal to one percent (1%). Commencing on August 15, 2012, the Company has been paying cumulative dividends on the Series B convertible preferred stock monthly in arrears at an annualized rate of $0.74 per share.

The Series B convertible preferred stock is convertible into the Company's common stock, at the option of the holder of the Series B convertible preferred stock, at a conversion price equal to $10.60 per share, beginning one year after the date of issuance. The Company, at its option at any time, may redeem the Series B convertible preferred stock, in whole or in part, at $10.60 per share.

The Series A convertible preferred stock and the Series B convertible preferred stock each ranks senior to the Company's common stock and on parity with each other, and junior to any other preferred stock the Company may issue other than additional series of the Series A convertible preferred stock or Series B convertible preferred stock.

F-22

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 10 — Common Stock

The following are the Company's public equity offerings of common stock (dollar amounts in millions):

Type of offering	Closing Date	Number of Shares	Gross Proceeds
IPO	September 7, 2011	5,574,131	$	67.4
Follow on offering	November 2, 2011	1,497,924	15.8
Underwriters' over allotment	November 7, 2011	74,979	0.8
Follow on offering	June 18, 2012	3,250,000	30.3
Underwriters' over allotment	July 9, 2012	487,500	4.6
Total		10,884,534	$	118.9

The common stock issued and outstanding of 11,157,643 at December 31, 2012 includes restricted shares of 273,109.

The Company's board of directors has authorized, and the Company began paying, dividends since October 2011 on the fifteenth day of each month to stockholders of record on the eight day of such month. Since October 2011, the board of directors of the Company has authorized the following increases in dividend.

Dividend increase declaration date	Annualized dividend per share	Effective date
September 7, 2011	$0.8750	10/9/2011
February 27, 2012	$0.8800	3/9/2012
March 16, 2012	$0.8850	6/9/2012
June 27, 2012	$0.8900	9/9/2012
September 30, 2012	$0.8950	11/9/2012
November 29, 2012	$0.9000	2/9/2013

On August 1, 2012, the Company filed a universal shelf registration statement and a resale registration statement with the SEC. Each registration statement became effective on August 17, 2012. As of December 31, 2012, no common stock, preferred stock, debt or equity-linked security had been issued under the universal shelf registration statement. The resale registration statement, as amended, registers the resale of up to 1,882,248 shares of common stock issued in connection with any future conversion of certain currently outstanding restricted shares, convertible preferred stock or limited partnership interests. As of December 31, 2012, no common stock had been issued under the resale registration statement.

Note 11 — Share-Based Compensation

Equity Plan

The Company has adopted the American Realty Capital Properties, Inc. Equity Plan (the "Equity Plan"), which provides for the grant of stock options, restricted shares of common stock, restricted stock units, dividend equivalent rights and other equity-based awards to the Manager, non-executive directors, officers and other employees and independent contractors, including employees or directors of the Manager and its affiliates who are providing services to the Company.

The Company authorized and reserved a total number of shares equal to 10.0% of the total number of issued and outstanding shares of common stock (on a fully diluted basis assuming the redemption of all OP Units for shares of common stock) to be issued at any time under the Equity Plan for equity incentive awards excluding an initial grant of 167,400 shares to the Manager at the IPO. All such awards of shares will vest ratably on a quarterly or annual basis over a three-year period beginning on the first anniversary of the date of grant and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as dividends are paid to the stockholders.

F-23

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

In February 2013, the Company granted 325,000 restricted shares of common stock to the Manager and certain employees. These shares will not vest upon the consummation of the merger but will vest ratably over a three-year period and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as dividends are paid to the stockholders.

Director Stock Plan

The Company has adopted the American Realty Capital Properties, Inc. Non-Executive Director Stock Plan (the Director Stock Plan), which provides for the grant of restricted shares of common stock to each of the Company's three independent directors, each of whom is a non-executive director. Awards of restricted stock will vest ratably over a five-year period following the first anniversary of the date of grant in increments of 20.0% per annum, subject to the director’s continued service on the board of directors, and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as distributions are paid to the stockholders. At December 31, 2012, a total of 99,000 shares of common stock are reserved for issuance under the Director Stock Plan.

The fair value of restricted common stock awards under the Equity Plan and Director Stock Plan is determined on the grant date using the closing stock price on NASDAQ that day. The fair value of restricted common stock under the Equity Plan is updated at the end of each quarter based on the quarter end closing stock price through the final vesting date.

    For the years ended December 31, 2012 and 2011, compensation expense for restricted shares was $1.2 million and $0.2 million, respectively. There was $0.1 million compensation expense for restricted shares for the year ended December 31, 2010.

The following tables detail the restricted shares activity within the Equity Plan and Director Stock Plan during the years ended December 31, 2012 and 2011:

Restricted Share Awards

	Equity Plan				Director Stock Plan
	Number of Restricted Common Shares		Weighted-Average Issue Price		Number of Restricted Common Shares		Weighted-Average Issue Price
Awarded, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Awarded December 31, 2011	167,400		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Awarded December 31, 2012	259,909		$	11.84	13,200		$	12.30

Unvested Restricted Shares

	Equity Plan				Director Stock Plan
	Number of Restricted Common Shares		Weighted-Average Issue Price		Number of Restricted Common Shares		Weighted-Average Issue Price
Unvested, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Vested	(13,950	)	12.50		—		—
Unvested, December 31, 2011	153,450		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Vested	(59,556	)	12.42		(1,800	)	12.50
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Unvested, December 31, 2012	186,403		$	11.62	11,400		$	12.27

F-24

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Pursuant to, and as further described in the Merger agreement, each share of restricted stock outstanding as of immediately prior to the effective date of the Merger will become fully vested.

Note 12 — Commitments and Contingencies

Litigation

In the ordinary course of business, the Company may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against the Company, except for the following:

Since the announcement of the Merger Agreement on December 17, 2012, one putative class action lawsuit had been filed against the Company, the OP, ARCT III, ARCT III OP, the members of the board of directors of ARCT III and certain subsidiaries of the Company in the Supreme Court for the State of New York. In February 2013, the parties agreed to a memorandum of understanding regarding settlement of all claims asserted on behalf of the alleged class of ARCT III stockholders. In connection with the settlement contemplated by that memorandum of understanding, the class action and all claims asserted therein will be dismissed, subject to court approval. The proposed settlement terms required ARCT III to make certain additional disclosures related to the merger, which were included in a Current Report on Form 8-K filed by ARCT III with the SEC on February 21, 2013. The memorandum of understanding also added that the parties will enter into a stipulation of settlement, which will be subject to customary conditions, including confirmatory discovery and court approval following notice to ARCT III’s stockholders. If the parties enter into a stipulation of settlement, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement. There can be no assurance that the parties will ultimately enter into a stipulation of settlement, that the court will approve any proposed settlement, or that any eventual settlement will be under the same terms as those contemplated by the memorandum of understanding.

The Company maintains directors and officers liability insurance which the Company believes should provide coverage to the Company and its officers and directors for most or all of any costs, settlements or judgments resulting from the lawsuit.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect on the results of operations.

Note 13 — Related Party Transactions and Arrangements

Common Stock Ownership

Certain affiliates of the Company have purchased shares of the Company's common stock. As of December 31, 2012 and 2011, certain affiliates owned 20.7% and 31.3%, respectively, of the Company's common stock outstanding on a fully diluted basis, including the Contributor's 310,000 OP Units owned by the Company's Sponsor.

The Company has issued restricted stock to the Manager and non-executive directors in conjunction with a share-based compensation plan. See Note 11 — Share-Based Compensation.

Fees Paid in Connection with Common Stock Offerings

RCS received selling commissions of 6% of the gross offering proceeds from the sale of the Company’s common stock in the IPO. In addition, RCS received dealer manager fees of 2% of the gross offering proceeds before reallowance to participating broker-dealers in the IPO. RCS was permitted to re-allow all or a portion of its dealer manager fee to participating broker-dealers.

F-25

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

The following table details the results of such activities related to RCS (amounts in thousands):

	Year Ended December 31,
	2012			2011
Total commissions and fees paid to affiliated Dealer Manager	$	14	(1)	$	1,601

_______________________________________________

(1) In connection with the Company's follow-on offering in June 2012, the underwriters paid RCS a fee of $13,500 for providing advisory services to the Company.

The Company reimbursed the Manager for services relating to the IPO and the follow-on offerings. The following table details the results of such activities related to offering costs reimbursed to the Manager (amounts in thousands):

	Year Ended December 31,
	2012		2011
Offering expense reimbursements	$	183	$	—

Fees Paid in Connection With the Operations of the Company

The Company will pay the Sponsor an acquisition fee equal to 1.0% of the contract purchase price (including assumed indebtedness) of each property the Company acquires which is originated by the Sponsor. The acquisition fee is payable in cash at the closing of each acquisition.

The Company will pay the Sponsor a financing fee equal to 0.75% of the amount available under any secured mortgage financing or refinancing that the Company obtains and uses for the acquisition of properties that is arranged by the Sponsor. The financing coordination fee is payable in cash at the closing of each financing.

The Company will pay the Manager an annual base management fee equal to 0.50% per annum of the average unadjusted book value of the Company's real estate assets, calculated and payable monthly in advance, provided that the full amount of the distributions declared by the Company for the six immediately preceding months is equal to or greater than certain net income thresholds related to our operations. Our Manager will waive such portion of its management fee in excess of such thresholds. The management fee is payable in cash. No such management fees have been paid to the Manager since inception.

The Company may be required to pay the Manager a quarterly incentive fee, calculated based on 20 percent of the excess Company annualized core earnings (as defined in the management agreement with the Manager) over the weighted average number of shares multiplied by the weighted average price per share of common stock. One half of each quarterly installment of the incentive fee will be payable in shares of common stock. The remainder of the incentive fee will be payable in cash. No such incentive fees have been paid to the Manager since inception.

The Company is required to reimburse the Sponsor for all out-of-pocket costs actually incurred by the Sponsor, including without limitation, legal fees and expenses, due diligence fees and expenses, other third party fees and expenses, costs of appraisals, travel expenses, nonrefundable option payments and deposits on properties not acquired, accounting fees and expenses, title insurance premiums and other closing costs, personnel costs and miscellaneous expenses relating to the selection, acquisition and due diligence of properties. The Company's reimbursement obligation is not subject to any dollar limitation. Expenses will be reimbursed in cash on a monthly basis following the end of each month. However, the Company will not reimburse the Sponsor for the salaries and other compensation of its personnel.

F-26

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

The following table details amounts incurred by the Company and contractually due to the Sponsor and the Manager and forgiven in connection with the operations related services described above (amounts in thousands):

	Year Ended December 31,								Payable as of
	2012				2011				December 31,
	Incurred		Forgiven		Incurred		Forgiven		2012		2011
One-time fees:
Acquisition fees and related cost reimbursements	$	2,353	$	—	$	400	$	—	$	364	$	—
Financing fees and related cost reimbursements	845		—		131		—		—		—
Other expense reimbursements	132		—		135		—		18		—
On-going fees:
Base management fees	975		975		202		202		—		—
Incentive fees	771		771		—		—		—		—
Total operational fees and reimbursements	$	5,076	$	1,746	$	868	$	202	$	382	$	—

Under an administrative support agreement between the Company and the Sponsor, the Sponsor was to pay or reimburse the Company for its general administrative expenses, including, without limitation, legal fees, audit fees, board of directors fees, insurance, marketing and investor relation fees, until September 6, 2012, which was one year after the closing of the IPO, to the extent the amount of certain net earnings from operations thresholds, as specified in the agreement, were less than the amount of the distributions declared by the Company during this one-year period. To the extent these amounts were paid by the Sponsor, they would not be subject to reimbursement by the Company. These costs are presented net in the accompanying consolidated statements of operations and comprehensive loss.

The following table details general and administrative expenses absorbed by the Sponsor and paid to the Company during the years ended December 31, 2012 and 2011 (amounts in thousands):

	Year Ended December 31,				Receivable as of December 31,
	2012		2011		2012		2011
General and administrative expenses absorbed	$	164	$	—	$	—	$	—

Note 14 — Economic Dependency

Under various agreements, the Company has engaged or will engage the Manager and its affiliates 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, the sale of shares of the Company’s common stock, as well as other administrative responsibilities for the Company including accounting services and investor relations.

As a result of these relationships, the Company is dependent upon the Manager, the Sponsor and their affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services. As a result of the pending merger with ARCT III, the Company will internalize certain accounting and property acquisition services currently performed by the Manager and its affiliates. The Company may from time to time engage the former Advisor for legal, information technology or other support services for which it will pay market rates.

F-27

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 15 — Net Loss Per Share 

The following is a summary of the basic and diluted net loss per share computation for the years ended December 31, 2012 and 2011. The Company had no income or loss for the period from December 2, 2010 (date of inception) to December 31, 2010 (dollars in thousands, expect for shares and per share data):  

	Year Ended December 31,
	2012			2011
Net loss from continuing operations attributable to stockholders	$	(6,579	)	$	(1,759	)
Less: dividends declared on preferred shares	(368		)	—
Net loss from continuing operations attributable to common stockholders	(6,947		)	(1,759		)
Net loss from discontinued operations attributable to common stockholders	(699		)	(816		)
Net loss attributable to common stockholders	$	(7,646	)	$	(2,575	)
Weighted average common shares outstanding	9,150,785			2,045,320
Basic and diluted net loss per share from continuing operations attributable to common stockholders	$	(0.76	)	$	(0.86	)
Basic and diluted net loss per share from discontinued operations attributable to common stockholders	$	(0.07	)	$	(0.40	)
Basic and diluted net loss per share attributable to common stockholders	$	(0.84	)	$	(1.26	)

As of December 31, 2012, the Company had 886,376 OP Units issued, which are convertible to an equal number of shares of the Company's common stock, 197,803 shares of unvested restricted stock outstanding, 545,454 shares of the Company's Series A preferred convertible stock outstanding and 283,018 shares of the Company's Series B preferred convertible stock outstanding, which were excluded from the calculation of diluted loss per share as the effect would have been antidilutive.

Note 16 — Discontinued Operations and Properties Held for Sale

The Company separately classifies properties held for sale in the accompanying consolidated balance sheets and operating results for those properties as discontinued operations in the accompanying consolidated statements of operations and comprehensive loss. In the normal course of business, changes in the market may compel the Company to decide to classify a property as held for sale or reclassify a property that is designated as held for sale back to held for investment. In these situations, the property is transferred to held for sale or back to held for investment at the lesser of fair value or depreciated cost. As of December 31, 2012 and 2011, the Company held one and two vacant properties, respectively, which were classified as held for sale on the accompanying respective balance sheets.

On July 1, 2012, the Company sold one of the vacant properties, which was located in Havertown, PA, for net proceeds of $0.6 million and recorded a loss on held for sale properties of $0.5 million. Additionally, in 2012, the Company recorded an impairment on assets held for sale of $0.1 million on its remaining property classified as held for sale.

F-28

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 17 — Quarterly Results (Unaudited)

Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2012 and 2011 (in thousands, except share and per share amounts):

	Quarters Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
Revenues	$	2,944		$	3,348		$	4,880		$	5,650
Net loss from continuing operations attributable to stockholders	$	(308	)	$	(1,963	)	$	(763	)	$	(3,545	)
Less: dividends declared on preferred shares	$	—		$	(70	)	$	(140	)	$	(158	)
Net loss from continuing operations attributable to common stockholders	$	(308	)	$	(2,033	)	$	(903	)	$	(3,703	)
Net loss from discontinued operations attributable to stockholders	$	(322	)	$	(77	)	$	(41	)	$	(259	)
Net loss attributable to common stockholders, net of dividends on preferred shares	$	(630	)	$	(2,110	)	$	(944	)	$	(3,962	)
Weighted average shares outstanding	7,174,934			7,653,170			10,846,432			10,959,840
Basic and diluted loss per share from continuing operations attributable to common stockholders	$	(0.04	)	$	(0.27	)	$	(0.08	)	$	(0.34	)
Basic and diluted loss per share from discontinued operations attributable to common stockholders	$	(0.05	)	$	(0.01	)	$	—		$	(0.02	)
Basic and diluted loss per share attributable to common stockholders	$	(0.09	)	$	(0.28	)	$	(0.09	)	$	(0.36	)

	Quarters Ended
	March 31, 2011			June 30, 2011		September 30, 2011			December 31, 2011
Revenues	$	—		$	—	$	576		$	2,599
Net loss from continuing operations attributable to common stockholders	$	(16	)	$	—	$	(626	)	$	(1,117	)
Net loss from discontinued operations attributable to stockholders	$	—		$	—	$	(8	)	$	(808	)
Net loss attributable to common stockholders	$	(16	)	$	—	$	(634	)	$	(1,925	)
Weighted average shares outstanding	1,000			1,000		1,515,710			6,596,908
Basic and diluted loss per share from continuing operations attributable to stockholders	NM			$	—	$	(0.41	)	$	(0.17	)
Basic and diluted loss per share from discontinued operations attributable to common stockholders	NM			$	—	$	(0.01	)	$	(0.12	)
Basic and diluted loss per share attributable to stockholders	NM			$	—	$	(0.42	)	$	(0.29	)

______________________________

NM - Not meaningful.

F-29

AMERICAN REALTY CAPITAL PROPERTIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012

Note 18 — Subsequent Events

The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements except for the following:

Public Equity Offering

On January 24, 2013, the Company priced an underwritten public follow-on offering of 1,800,000 shares of its common stock, par value $0.01 per share. The offering price to the public in the offering was $13.47 per share (before underwriting discounts and commissions). The underwriters fully exercised their option to purchase an additional 270,000 shares of common stock at the public offering price, less underwriting discounts and commissions. The offering closed on January 29, 2013 for a total of 2,070,000 shares of common stock. As a result, the Company received total net proceeds of approximately $26.5 million, after deducting underwriting discounts, commissions and related expenses.

ATM Program

In January 2013, the Company commenced its "at the market" equity offering ("ATM") program in which it may from time to time offer and sell shares of its common stock having an aggregate offering proceeds of up to $60.0 million. The shares will be issued pursuant to the Company's $500.0 million universal shelf registration statement. As of February 27, 2013, the Company had issued 61,000 shares at a weighted average price per share of $13.48 for net proceeds of $0.8 million. As of February 27, 2013, $59.2 million of shares of common stock remained available for issuance under the ATM program.

Completion of Acquisition of Assets

The following table presents certain information about the properties that the Company acquired from January 1, 2013 to February 22, 2013 (dollar amounts in thousands):

	No. of Buildings	Square Feet	Base Purchase Price (1)
Total Portfolio – December 31, 2012 (2)	146	2,412,104	$	268,625
Acquisitions	5	59,034	21,910
Total portfolio – February 22, 2013 (2)	151	2,471,138	$	290,535

____________________________

(1) Contract purchase price, excluding acquisition and transaction related costs.

(2) Total portfolio excludes one vacant property contributed in September 2011 which was classified as held for sale at December 31, 2012.

F-30

Real Estate and Accumulated Depreciation

Schedule III

December 31, 2012

(in thousands)

					Initial Costs						Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012		Land		Buildings, Fixtures and Improvements		Adjustment to Basis				Accumulated Depreciation
Advance Auto	Caro	MI		(2)	$	117	$	665	$	—	$	782	$	40
Advance Auto	Charlotte	MI		(2)	123		697		—		820		42
Advance Auto	Flint	MI		(1)	133		534		—		667		32
Advance Auto	Livonia	MI		(2)	210		629		—		839		38
Advance Auto	SS Marie	MI		(2)	75		671		—		746		41
Advance Auto	Ypsilanti	MI		(1)	85		483		—		568		29
Advance Auto II	Alton	TX		(1)	169		958		—		1,127		9
Advance Auto III	Bardstown	KY		(1)	272		1,090		—		1,362		5
Advance Auto III	Brandenburg	KY		(1)	186		742		—		928		3
Advance Auto III	Hardinsburg	KY		(1)	94		845		—		939		4
Advance Auto III	Leitchfield	KY		(1)	104		939		—		1,043		4
Advance Auto IV	Albany	GA		(1)	210		629		—		839		—
Advance Auto IV	Hazlehurst	GA		(1)	113		451		—		564		—
Advance Auto IV	Hinesville	GA		(1)	352		430		—		782		—
Advance Auto IV	Thomasville	GA		(1)	251		377		—		628		—
Advance Auto IV	Dothan	AL		(1)	326		326		—		652		—
Advance Auto IV	Enterprise	AL		(1)	280		420		—		700		—
Advance Auto IV	Perry	GA		(1)	209		487		—		696		—
Advance Auto IV	Cairo	GA		(1)	140		325		—		465		—
Advance Auto V	Springfield	OH			460		1,074		—		1,534		—
Citizens I	Higganum	CT		(3)	171		971		—		1,142		178
Citizens I	New London	CT		(1)	94		534		—		628		98
Citizens I	Smyrna	DE		(3)	183		1,036		—		1,219		171
Citizens I	Wilmington	IL		(1)	330		1,872		—		2,202		268
Citizens I	Chicago	IL		(1)	267		1,511		—		1,778		276
Citizens I	Chicago	IL		(1)	191		1,082		—		1,273		198
Citizens I	Lyons	IL		(1)	214		1,212		—		1,426		222
Citizens I	Elmwood Park	IL		(1)	431		2,441		—		2,872		376
Citizens I	Alsip	IL		(1)	226		1,280		—		1,506		234
Citizens I	Evergreen Park	IL		(1)	167		944		—		1,111		173
Citizens I	Clinton Township	MI		(1)	574		3,250		—		3,824		606
Citizens I	Southfield	MI		(1)	283		1,605		—		1,888		299
Citizens I	Richmond	MI		(1)	168		951		—		1,119		181
Citizens I	St. Clair Shores	MI		(1)	309		1,748		—		2,057		332
Citizens I	Lathrup Village	MI		(1)	283		1,602		—		1,885		293
Citizens I	Warren	MI		(1)	178		1,009		—		1,187		184
Citizens I	Dearborn	MI		(1)	434		2,461		—		2,895		353
Citizens I	Dearborn	MI		(1)	385		2,184		—		2,569		313
Citizens I	Detroit	MI		(1)	112		636		—		748		121
Citizens I	Highland Park	MI		(1)	150		848		—		998		161

F-31

Real Estate and Accumulated Depreciation

Schedule III

December 31, 2012

(in thousands)

					Initial Costs			Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012		Land	Buildings, Fixtures and Improvements	Adjustment to Basis		Accumulated Depreciation
Citizens I	Livonia	MI		(1)	261	1,476	—	1,737	281
Citizens I	Detroit	MI		(1)	204	1,159	—	1,363	220
Citizens I	Harper Woods	MI		(1)	207	1,171	—	1,378	222
Citizens I	Grosse Pointe	MI		(1)	410	2,322	—	2,732	408
Citizens I	Utica	MI		(1)	376	2,133	—	2,509	375
Citizens I	Pittsfield	NH		(1)	160	908	—	1,068	166
Citizens I	Rollinsford	NH		(1)	78	444	—	522	81
Citizens I	Albany	NY		(3)	232	1,315	—	1,547	189
Citizens I	Johnstown	NY		(3)	163	923	—	1,086	132
Citizens I	Schenectady	NY		(3)	292	1,655	—	1,947	237
Citizens I	Vails Gate	NY		(3)	284	1,610	—	1,894	231
Citizens I	Whitehall	NY		(3)	106	600	—	706	86
Citizens I	Greene	NY		(3)	216	1,227	—	1,443	176
Citizens I	Whitesboro	NY		(3)	130	739	—	869	106
Citizens I	Amherst (Buffalo)	NY		(3)	238	1,348	—	1,586	208
Citizens I	East Aurora	NY		(3)	162	919	—	1,081	142
Citizens I	Rochester	NY		(3)	166	943	—	1,109	145
Citizens I	Port Jervis	NY		(3)	143	811	—	954	134
Citizens I	Mentor	OH		(1)	178	1,011	—	1,189	185
Citizens I	Northfield	OH		(1)	317	1,797	—	2,114	329
Citizens I	Willoughby	OH		(1)	395	2,239	—	2,634	409
Citizens I	Cleveland	OH		(1)	239	1,357	—	1,596	263
Citizens I	Cleveland	OH		(1)	210	1,190	—	1,400	230
Citizens I	Cleveland	OH		(1)	182	1,031	—	1,213	200
Citizens I	Lakewood	OH		(1)	196	1,111	—	1,307	159
Citizens I	Rocky River	OH		(1)	283	1,602	—	1,885	230
Citizens I	Broadview Heights	OH		(1)	201	1,140	—	1,341	188
Citizens I	Boardman	OH		(1)	280	1,589	—	1,869	308
Citizens I	Brunswick	OH		(1)	186	1,057	—	1,243	205
Citizens I	Wadsworth	OH		(1)	158	893	—	1,051	173
Citizens I	Alliance	OH		(1)	204	1,156	—	1,360	224
Citizens I	Louisville	OH		(1)	191	1,080	—	1,271	209
Citizens I	Massillon	OH		(1)	287	1,624	—	1,911	314
Citizens I	Massillon	OH		(1)	212	1,202	—	1,414	233
Citizens I	Ambridge	PA		(3)	215	1,217	—	1,432	175
Citizens I	Monesson	PA		(3)	198	1,123	—	1,321	161
Citizens I	Narberth	PA		(3)	420	2,381	—	2,801	341
Citizens I	Poultney	VT		(1)	149	847	—	996	140
Citizens I	St. Albans	VT		(1)	141	798	—	939	132
Citizens I	White River Junction	VT		(1)	183	1,039	—	1,222	171

F-32

Real Estate and Accumulated Depreciation

Schedule III

December 31, 2012

(in thousands)

					Initial Costs			Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012		Land	Buildings, Fixtures and Improvements	Adjustment to Basis		Accumulated Depreciation
CVS	Alpharetta	GA		(1)	572	858	—	1,430	13
CVS	Vidalia	GA		(1)	368	1,105	—	1,473	17
CVS	Nashville	TN		(1)	203	1,148	—	1,351	17
Dollar General	Bella Vista	AR		(1)	129	302	—	431	20
Dollar General	Carlisle	AR		(1)	13	245	—	258	16
Dollar General	Green Forest	AR		(1)	52	293	—	345	19
Dollar General	Jonesboro	IL		(1)	77	309	—	386	20
Dollar General	Appleton City	MO		(1)	22	124	—	146	8
Dollar General	Ash Grove	MO		(1)	35	315	—	350	21
Dollar General	Ashland	MO		(1)	70	398	—	468	26
Dollar General	Bernie	MO		(1)	35	314	—	349	21
Dollar General	Bloomfield	MO		(1)	23	209	—	232	14
Dollar General	Carterville	MO		(2)	10	192	—	202	13
Dollar General	Clarkton	MO		(1)	19	354	—	373	23
Dollar General	Diamond	MO		(1)	44	175	—	219	11
Dollar General	Ellsinore	MO		(2)	30	579	—	609	38
Dollar General	Hallsville	MO		(2)	29	263	—	292	17
Dollar General	Lawson	MO		(1)	29	162	—	191	11
Dollar General	Lilbourne	MO		(2)	62	554	—	616	36
Dollar General	Qulin	MO		(2)	30	573	—	603	38
Dollar General	Steele	MO		(2)	31	598	—	629	39
Dollar General	Strafford	MO		(2)	51	461	—	512	30
Dollar General	Commerce	OK		(1)	38	341	—	379	22
Dollar General II	Ash Flat	AR		(1)	44	132	—	176	4
Dollar General II	Flippin	AR		(1)	53	64	—	117	2
Dollar General II	Panama City	FL		(1)	139	258	—	397	7
Dollar General II	Caney	KS		(1)	31	178	—	209	5
Dollar General II	Clever	MO		(1)	136	542	—	678	15
Dollar General II	Concordia	MO		(1)	40	161	—	201	5
Dollar General II	Greenfield	MO		(1)	42	378	—	420	11
Dollar General II	Humansville	MO		(1)	69	277	—	346	8
Dollar General II	Oak Grove	MO		(1)	27	106	—	133	3
Dollar General II	Palmyra	MO		(1)	40	225	—	265	6
Dollar General II	Senath	MO		(1)	61	552	—	613	16
Dollar General II	Seneca	MO		(1)	47	189	—	236	5
Dollar General II	St James	MO		(1)	81	244	—	325	7
Dollar General II	Willow Springs	MO		(1)	24	213	—	237	6
Dollar General II	Winona	MO		(1)	52	155	—	207	4
Dollar General II	Nowata	OK		(1)	43	128	—	171	4
Family Dollar	Brookston	IN		(1)	126	715	—	841	10

F-33

Real Estate and Accumulated Depreciation

Schedule III

December 31, 2012

(in thousands)

						Initial Costs						Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012			Land		Buildings, Fixtures and Improvements		Adjustment to Basis				Accumulated Depreciation
Family Dollar II	Lenox	GA			(1)	90		809		—		899		8
Family Dollar III	Detroit	MI				130		1,169		—		1,299		5
FedEx I	Chillicothe	OH			(1)	143		1,284		—		1,427		46
FedEx I	Evansville	IN			(1)	665		2,661		—		3,326		95
FedEx I	Kankakee	IL			(1)	195		1,103		—		1,298		39
FedEx I	London	KY			(1)	191		1,081		—		1,272		38
FedEx I	Mt. Vernon	IL			(1)	222		1,259		—		1,481		45
FedEx I	Mt. Pleasant	PA			(1)	454		1,814		—		2,268		65
FedEx II	Chico	CA			(1)	308		2,776		—		3,084		28
Fresenius	Warsaw	NC			(1)	75		1,428		—		1,503		11
GSA I	Freeport	NY			(1)	843		3,372		—		4,215		185
GSA II	Plattsburg	NY			(1)	508		4,572		—		5,080		126
GSA III	Mobile	AL			(1)	268		5,095		—		5,363		140
GSA IV	Warren	PA			(1)	341		3,066		—		3,407		84
GSA V	Gloucester	VA			(1)	287		1,628		—		1,915		45
Home Depot	Columbia	SC	13,850			2,911		15,463		—		18,374		2,088
Iron Mountain	Columbus	OH			(1)	405		3,642		—		4,047		56
John Deere	Davenport	IA			(1)	1,161		22,052		—		23,213		785
Mrs. Baird's	Dallas	TX			(1)	453		4,077		—		4,530		124
Reckitt Benckiser	Chester	NJ	5,500			886		7,972		—		8,858		128
Synovus Bank	Tampa	FL			(1)	985		2,297		—		3,282		—
Tractor Supply	Rio Grande City	TX			(1)	469		1,095		—		1,564		26
Walgreens	Myrtle Beach	SC			(1)	—		2,077		—		2,077		125
Walgreens II	Eastpointe	MI			(1)	668		2,672		—		3,340		147
Walgreens III	Warren	MI			(1)	748		2,991		—		3,739		15
Walgreens IV	Troy	MI				—		1,896		—		1,896		9
Encumbrances allocated based on notes below			141,012
Total			$	160,362		$	34,345	$	205,876	$	—	$	240,221	$	18,873

_______________________________________________

(1) These properties collateralize a senior secured revolving credit facility of up to $150.0 million, which had $124.6 million outstanding as of December 31, 2012.

(2) These properties collateralize a $4.5 million mortgage note payable of which $4.5 million was outstanding as of December 31, 2012.

(3) These properties collateralize an $11.9 million mortgage note payable of which $11.9 million was outstanding as of December 31, 2012.

Each location is a single-tenant, freestanding property. Each of the properties has a depreciable life of 40 years. Acquired intangible lease assets in the amount of $17.4 million allocated to individual properties are not reflected in the table above. The accumulated depreciation column excludes $5.4 million of amortization associated with acquired intangible lease assets. The table above also excludes one vacant property located in Worth, IL contributed in September 2011, which was classified as held for sale at December 31, 2012. The aggregate base purchase price of this vacant properties was $1.2 million.

F-34

Real Estate and Accumulated Depreciation

Schedule III

December 31, 2012

(in thousands)

A summary of activity for real estate and accumulated depreciation for the year ended December 31, 2012 (amounts in thousands):

	Year Ended December 31, 2012
Real estate investments, at cost:
Balance at beginning of year	$	125,829
Additions - acquisitions and improvements	114,392
Balance at end of the year	$	240,221
Accumulated depreciation:
Balance at beginning of year	$	11,648
Depreciation expense	7,225
Balance at end of the year	$	18,873

F-35

EX-4.5

FOURTH AMENDMENT

TO

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF

ARC PROPERTIES OPERATING PARTNERSHIP, L.P.

This FOURTH AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARC PROPERTIES OPERATING PARTNERSHIP, L.P. (this “Amendment”), is made as of December 28, 2012 by and among American Realty Capital Properties, Inc., a Maryland corporation (the “REIT”), in its capacity as the general partner (the “General Partner”) of ARC Properties Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”). Capitalized terms used but not otherwise defined in this Amendment shall have the meanings given to such terms in the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of September 6, 2011, as amended (the “Partnership Agreement”).

RECITALS:

WHEREAS, pursuant to Section 11.01 of the Partnership Agreement, the parties hereto desire to make certain amendments to the Partnership Agreement to specially allocate depreciation deductions to ARC Real Estate Partners, LLC, a Delaware limited liability company and a limited partner of the Partnership, who has agreed to bear the economic risk of loss with respect to such depreciation;

WHEREAS, pursuant to Section 11.01(c) of the Partnership Agreement, an amendment that alters the Partnership’s allocation of Profits and Loss to the Limited Partners, requires the written consent of a Majority in Interest (other than the Percentage Interests held by the REIT in its capacity as a Limited Partner of the Partnership);

NOW THEREFORE, in consideration of the premises made hereunder, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. The defined term “Limited Partner” in the preamble of the Partnership Agreement is hereby changed to “Contributing Limited Partner” and all corresponding references to “the Limited Partner” throughout the Partnership Agreement are hereby changed to references to “the Contributing Limited Partner.”

2. Article I of the Partnership Agreement is hereby amended to insert the following new defined terms in the appropriate alphabetical order:

““Contributing Limited Partner” has the meaning set forth in the preamble.”

““Depreciation” means, for each fiscal year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable for federal income tax purposes with respect to an asset for such fiscal year or other period, except that (a) with respect to any asset the Gross Asset Value of which differs from its adjusted tax basis for federal income tax purposes at the beginning of such fiscal year or other period and which difference is being eliminated by use of the “remedial method” as defined by Section 1.704-3(d) of the Regulations, Depreciation for such fiscal year or other period shall be the amount of book basis recovered for such fiscal year or other period under the rules prescribed by Section 1.704-3(d)(2) of the Regulations, and (b) with respect to any other asset the Gross Asset Value of which differs from its adjusted tax basis for federal income tax purposes at the beginning of such fiscal year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such fiscal year or other period bears to such beginning adjusted tax basis; provided, however, that in the case of clause (b) above, if the adjusted tax basis for federal income tax purposes of an asset at the beginning of such fiscal year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.”

““Gross Asset Value” means, with respect to any asset of the Partnership, such asset’s adjusted basis for federal income tax purposes, except as follows:

(a) the initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, without reduction for liabilities, as determined by the contributing Partner and the Partnership on the date of contribution thereof;

(b) if the General Partner determines that an adjustment is necessary or appropriate to reflect the relative economic interests of the Partners, the Gross Asset Values of all Partnership assets shall be adjusted in accordance with Sections 1.704-1(b)(2)(iv)(f) and (g) of the Regulations to equal their respective gross fair market values, without reduction for liabilities, as reasonably determined by the General Partner, as of the following times:

(i) a Capital Contribution (other than a de minimis Capital Contribution) to the Partnership by a new or existing Partner as consideration for a Partnership Interest;

(ii) the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership assets as consideration for the repurchase or redemption of a Partnership Interest;

(iii) the liquidation of the Partnership within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations; and

(iv) the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner;

(c) the Gross Asset Values of Partnership assets distributed to any Partner shall be the gross fair market values of such assets (taking Section 7701(g) of the Code into account) without reduction for liabilities, as determined by the General Partner as of the date of distribution; and

(d) the Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations; provided, however, that Gross Asset Values shall not be adjusted pursuant to this paragraph (d) to the extent that the General Partner determines that an adjustment pursuant to paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (d).

At all times, Gross Asset Values shall be adjusted by any Depreciation taken into account with respect to the Partnership’s assets for purposes of computing Net Income and Net Loss.”

““Property Profit” means for each fiscal year or other applicable period, an amount equal to the Partnership’s Profit for such year or period from the disposition of Property.”

3. Section 2.04 of the Partnership Agreement is hereby amended by adding the following subsection (d) at the end thereof:

“(d) If the Contributing Limited Partner’s Capital Account has a deficit balance (after giving effect to all contributions, distributions and allocations under Article V for all taxable years, including the year in which such liquidation occurs), the Contributing Limited Partner shall restore and contribute to the capital of the Partnership, the amount necessary to restore such deficit balance to zero but not to exceed the excess of (i) the cumulative amount of Depreciation specially allocated to the Contributing Limited Partner under Section 5.01(g) over (ii) the cumulative chargeback allocation of Property Profit pursuant to Section 5.01(h). This deficit restoration obligation is intended to comply with Section 1.704-1(b)(2)(ii)(b)(3) of the Regulations and shall be satisfied before the later to occur of (i) the end of the taxable year in which the Partnership (or the Contributing Limited Partner’s interest in the Partnership) is liquidated or (ii) ninety (90) days after of the liquidation of the Partnership (or the Contributing Limited Partner’s interest in the Partnership), which amount shall be paid to creditors of the Partnership or, if the amount contributed exceeds the amount due to creditors, shall be distributed to Partners with positive Capital Account balances.”

4. Section 5.01 of the Partnership Agreement is hereby amended by adding the following subsections (g) and (h) at the end thereof:

“(g) Special Allocations of Depreciation. Depreciation shall be allocated first to the Contributing Limited Partner until the cumulative amount of Depreciation allocated to the Contributing Limited Partner pursuant to this Section 5.01(g) for all years equals $10,000,000.

(h) Special Allocation of Property Profit. After giving effect to the allocation in Section 5.01(b) and to the extent not previously allocated pursuant to Section 5.01(b), Property Profit shall be allocated first to the Contributing Limited Partner to the extent of the cumulative amount of Depreciation allocated to the Contributing Limited Partner pursuant to section 5.01(g).”

5. The first sentence of Section 5.01(f) of the Partnership Agreement is hereby deleted in its entirety and the following sentence is substituted in its place:

““Profit” means any item of income or gain of the Partnership, and “Loss” means any item of loss, expense, deduction or credit; in each case determined in accordance with federal income tax accounting principles, as modified by Regulations Section 1.704-1(b)(2)(iv), provided, that neither Profit nor Loss shall include items of income, gain and expense that are specially allocated pursuant to Sections 5.01(b), (c), (d), (g) or (h) hereof.”

6. Section 8.04(a) of the Partnership Agreement is hereby amended by inserting the following sentence as the penultimate sentence thereof:

“The Contributing Limited Partner shall not be permitted to exercise the OP Unit Redemption Right unless and until it does not have a deficit balance in its Capital Account.”

7. The effectiveness of the amendments, changes, deletions and substitutions to the Partnership Agreement contained in this Amendment are conditioned upon the receipt of the written consent of a Majority in Interest pursuant to the written consent included as Exhibit A hereto.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Agreement as of the date and year first aforesaid.

GENERAL PARTNER:
AMERICAN REALTY CAPITAL PROPERTIES, INC.
By:	/s/ Nicholas S. Schorsch
Name:	Nicholas S. Schorsch
Title:	Chairman and Chief Executive Officer

[Signature Page to Fourth Amendment to Amended and Restated Agreement of Limited Partnership]

EXHIBIT A

WRITTEN CONSENT

IN WITNESS WHEREOF, the undersigned, constituting a Majority in Interest of ARC Properties Operating Partnership, L.P., a Delaware limited partnership (the “Partnership”) within the meaning of Section 11.01 of the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of September 6, 2011, as amended (the “Partnership Agreement”), hereby consent to the foregoing Fourth Amendment to the Partnership Agreement, effective as of December 28, 2012.

This Written Consent may be executed (including by facsimile or other electronic transmission) with counterpart signature pages or in several counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

LIMITED PARTNERS:
ARC REAL ESTATE PARTNERS, LLC
By:
Name:	Nicholas S. Schorsch
Title:	Manager
By:
Name:	William M. Kahane
Title:	Manager

[Signature Page to Exhibit A Written Consent]

EX-10.41

INDEMNITY AGREEMENT

This INDEMNITY AGREEMENT (this “Agreement”) is made and entered into as of December 28, 2012, by ARC Real Estate Partners, LLC, a Delaware limited liability company (the “Indemnitor”), in favor of American Realty Capital Properties, Inc., a Maryland corporation (the “Company”).

RECITALS

WHEREAS, in connection with that certain Credit Agreement, dated as of September 7, 2011, by and among ARC Properties Operating Partnership, L.P., a Delaware limited partnership, as borrower (the “OP”), the Company, and RBS Citizens, N.A., a national banking association (“RBS Citizens”), Capital One, National Association, and Bank of America, N.A., as lenders (the “Lenders”), and RBS Citizens in its respective capacities as “Administrative Agent” for itself and the other Lenders and as “L/C Issuer” and “Lead Arranger” (as such terms are defined in the Credit Agreement, and the Lenders, Administrative Agent, L/C Issuer and Lead Arranger, together with their respective successors and assigns, are collectively the “Credit Parties”), as amended by that certain First Amendment to Credit Agreement, dated as of December 6, 2011 (the “First Amendment”), as further amended by that certain Second Amendment to Credit Agreement, dated as of May 21, 2012 (the “Second Amendment”), as further amended by that certain Third Amendment to Credit Agreement, dated as of August 16, 2012 (the “Third Amendment”), as further amended by that certain Fourth Amendment to Credit Agreement, dated as of September 28, 2012 (the “Fourth Amendment”), as further amended by that certain Fifth Amendment to Credit Agreement, dated as of December 7, 2012 (the “Fifth Amendment”) (said Credit Agreement, as so amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, and as from time to time may be further amended, modified, or restated, the “Credit Agreement”), the Lenders have agreed to provide the OP a revolving credit loan facility in the amount of up to $145,000,000, pursuant to which the OP has borrowed at least $111,750,000 (the “Loan”).

WHEREAS, in connection with that certain Parent Guaranty Agreement, executed as of September 7, 2011, by the Company for the benefit of the Credit Parties, the Company guaranteed, as a guaranty of payment and not merely as a guaranty of collection, the prompt payment when due of all obligations under the Credit Agreement, including the Loan (the “Parent Guaranty”).

WHEREAS, in connection with that certain Subsidiary Guaranty Agreement, executed as of September 7, 2011, by each subsidiary identified therein (collectively, the “Subsidiary Guarantors”; the Company and the Subsidiary Guarantors, each a “Guarantor” and collectively, the “Guarantors”) for the benefit of the Credit Parties, the Subsidiary Guarantors guaranteed, as a guaranty of payment and not merely as a guaranty of collection, the prompt payment when due of all obligations under the Credit Agreement, including the Loan (the “Subsidiary Guaranty”).

WHEREAS, the Indemnitor is a limited partner of the OP and has obtained direct or indirect benefits from the Lenders making the Loan to the OP.

NOW, THEREFORE, in consideration of the promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Indemnitor and Company hereby agree as follows:

1. Subject to Section 3 hereof, if any of the Guarantors shall make a payment (or be required to make a payment) pursuant to the Parent Guaranty or the Subsidiary Guaranty (any such payment, a “Payment”), the Company shall promptly deliver written notice thereof (a “Payment Notice”) to the Indemnitor, which Payment Notice shall (a) state the amount of such Payment (the “Payment Amount”) and (b) provide evidence of payment of same (or, provide evidence of obligation to make such payment).

2. Subject to Section 3 hereof, the Indemnitor shall be required, within fifteen (15) days after receipt of a Payment Notice, to reimburse the Company for the Payment Amount; provided, that the Indemnitor’s obligation to reimburse the Company for the Payment Amount shall not exceed $10,000,000 (the “Indemnity Amount”), and; provided further, that to the extent a Payment is made (or is required to be made) by a Subsidiary Guarantor (a “Subsidiary Payment”), the Company shall (a) pay the Indemnity Amount paid by the Indemnitor to the Company with respect to such Subsidiary Payment to the OP and (b) cause the OP to pay such amount to the Subsidiary Guarantor.

3. Notwithstanding anything to the contrary contained in this Agreement:

(a) in the event that any of the Guarantors shall make (or be required to make) a Payment at a time when the OP has assets (including the assets of the Subsidiary Guarantors) available to satisfy the Loan, no payment shall be required under this Agreement to the extent of the fair market value (“FMV”) of such assets determined at the time such Payment is made (or required to be made); and

(b) The Indemnity Amount, at any time, shall be limited to the excess of (i) the cumulative amount allocated to the Indemnitor pursuant to Section 5.01(g) of the Amended and Restated Agreement of Limited Partnership of the OP, dated as of September 6, 2011, as amended from time to time (the “OP Agreement”) over (ii) the cumulative amount allocated to the Indemnitor pursuant to Section 5.01(h) of the OP Agreement.

4. If the Indemnitor shall fail to make a payment of any amount due under this Agreement within the period set forth herein, the Indemnitor shall indemnify and hold harmless the Guarantors from and against any actual cost or actual damage or liability suffered by the Guarantors in connection therewith (including, without limitation, reasonable legal fees and expenses). Any amount paid by the Indemnitor under this Section 4 that relates to the Payment Amount set forth in the Payment Notice delivered to the Indemnitor (and not to other damages, costs, etc.) shall be applied as a reduction to the Indemnity Amount owed by the Indemnitor under this Agreement.

5. The obligations of the Indemnitor under this Agreement are independent of the obligations of the Guarantors under the Parent Guaranty and the Subsidiary Guaranty. The Indemnitor’s liability for any amount payable hereunder shall be limited to the Indemnity Amount, subject to Section 3 hereof.

6. The Indemnitor hereby warrants and represents to the Company and agrees with the Company that this Agreement constitutes the legal, valid and binding obligation of the Indemnitor, and is fully enforceable against the Indemnitor in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to principles of equity.

7. The Indemnitor waives notice of acceptance of this Agreement and all presentment, demand, protest, notice of protest and notices of default or dishonor of any obligation indemnified hereby and all other suretyship defenses generally. Except as otherwise provided herein, no extensions of time or other indulgence by the Company granted to the Indemnitor will release or affect the obligations of the Indemnitor hereunder and no act, omission or delay on the part of the Company in exercising any rights hereunder or in taking any action to collect or enforce this Agreement shall be a waiver of any such right or affect the obligation of the Indemnitor hereunder.

The obligations under this Agreement shall not be impaired by any bankruptcy, insolvency, arrangement, assignment for the benefit of creditors, reorganization or other debtor relief proceedings under any federal or state law, whether now existing or hereafter enacted with respect to the Company.

8. (a) Unless terminated sooner, as provided in this Section 8, this Agreement shall terminate on the tenth (10^th) anniversary of the date hereof (the “Termination Date”) unless prior to such date the Company has made a claim hereunder, in which event this Agreement shall be extended until the resolution of such claim, but only to the extent and to the amount of such claim. The Indemnitor may terminate its obligations under this Agreement on (a) the thirteen (13) month anniversary of the date hereof (the “Initial Electoral Period”) and (b) again on each subsequent twelve (12) month anniversary of the Initial Election Period by providing written notice to the Company within 60 days of the Initial Election Period or each expiration of the subsequent twelve (12) month term. The Termination Date shall be accelerated to the time the Indemnitor disposes, directly or indirectly, of its entire interest in the OP in a taxable transaction.

(b) If, as of the Termination Date, the FMV of the assets of the OP, including the assets of the Subsidiary Guarantors (in the aggregate, the “Entity Assets”), available for satisfaction of the Loan shall be less than the amount of the Indemnitor’s obligation under this Agreement (the “Obligation”), the Indemnitor shall pay the Company the amount by which the Obligation exceeds the FMV of the Entity Assets.

(c) For purposes of this Agreement, any dispute respecting the FMV of the Entity Assets shall be resolved as follows: the Company and the Indemnitor each shall pick an appraiser qualified to value the Entity Assets. If the lower of the two appraisals is at least 90% of the higher appraisal, then (i) the two appraisers shall select a third appraiser qualified to value the Entity Assets, (ii) such third appraiser shall select from the two existing appraisals the one that is closer to the third appraiser’s determination of the FMV of the Entity Assets, and (iii) the FMV of the Entity Assets shall equal the amount of such selected appraisal.

(d) Notwithstanding anything in this Agreement to the contrary, the termination of this Agreement pursuant to this Section 8 shall not release the Indemnitor from any payment obligations it incurred under this Agreement prior to the Termination Date.

(e) The Indemnitor’s liability under this Agreement shall be extinguished upon the payment in full of all obligations under this Agreement.

9. If the Indemnitor is required to pay any amount hereunder, the Indemnitor shall have no, and hereby waives any, (a) rights of subrogation that it might otherwise have at law or in equity or otherwise on account of such payment, and (b) rights of contribution or other rights it might have at law or in equity or otherwise on account of such payment.

10. The Company shall have all rights available to it in law or in equity. No delay or failure by the Company to exercise any right or remedy against the Indemnitor will be construed as a waiver of that right or remedy. All remedies of the Company against the Indemnitor are cumulative.

11. The whole of this Agreement is set forth herein, and there is no verbal or other written agreement, and no understanding or custom affecting the terms hereof. This Agreement can be modified only by a written instrument signed by the parties with respect to whom the modification is made.

12. This Agreement may be executed in multiple counterparts, and each such counterpart shall be considered an original, but all of which together shall constitute one and the same instrument.

13. If any provision of this Agreement shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement shall be governed and construed pursuant to laws of the State of New York and shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties acknowledge their agreement with the foregoing by executing this Agreement in the space provided below.

INDEMNITOR:
ARC REAL ESTATE PARTNERS, LLC
By:	/s/ Nicholas S. Schorsch
Name:	Nicholas S. Schorsch
Title:	Manager
By:	/s/
Name:	William M. Kahane
Title:	Manager

INDEMNITEE:
AMERICAN REALTY CAPITAL PROPERTIES, INC.
By:	/s/ Nicholas S. Schorsch
Name:	Nicholas S. Schorsch
Title:	Chairman and Chief Executive Officer

[Signature Page to Indemnity Agreement by ARC Real Estate Partners, LLC]

EX-10.42

INDEMNITY AGREEMENT

This INDEMNITY AGREEMENT (this “Agreement”) is made and entered into as of December 28, 2012, by and among the individuals set forth on the signature page attached hereto (each an “Indemnitor”), in favor of ARC Real Estate Partners, LLC, a Delaware limited liability company (the “Company”).

RECITALS

WHEREAS, in connection with that certain Credit Agreement, dated as of September 7, 2011, by and among ARC Properties Operating Partnership, L.P., a Delaware limited partnership, as borrower (the “OP”), American Realty Capital Properties, Inc., a Maryland corporation (the “REIT”), RBS Citizens, N.A., a national banking association (“RBS Citizens”), Capital One, National Association, and Bank of America, N.A., as lenders (the “Lenders”), and RBS Citizens in its respective capacities as “Administrative Agent” for itself and the other Lenders and as “L/C Issuer” and “Lead Arranger” (as such terms are defined in the Credit Agreement, with the Lenders, Administrative Agent, L/C Issuer and Lead Arranger, together with their respective successors and assigns, are collectively the “Credit Parties”), as amended by that certain First Amendment to Credit Agreement, dated as of December 6, 2011 (the “First Amendment”), as further amended by that certain Second Amendment to Credit Agreement, dated as of May 21, 2012 (the “Second Amendment”), as further amended by that certain Third Amendment to Credit Agreement, dated as of August 16, 2012 (the “Third Amendment”), as further amended by that certain Fourth Amendment to Credit Agreement, dated as of September 28, 2012 (the “Fourth Amendment”), as further amended by that certain Fifth Amendment to Credit Agreement, dated as of December 7, 2012 (the “Fifth Amendment”) (said Credit Agreement, as so amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, and as from time to time may be further amended, modified, or restated, the “Credit Agreement”), the Lenders have agreed to provide the OP a revolving credit loan facility in the amount of up to $145,000,000, pursuant to which the OP has borrowed at least $111,750,000 (the “Loan”).

WHEREAS, in connection with that certain Parent Guaranty Agreement, executed as of September 7, 2011, by the REIT for the benefit of the Credit Parties, the REIT guaranteed, as a guaranty of payment and not merely as a guaranty of collection, the prompt payment when due of all obligations under the Credit Agreement, including the Loan (the “Parent Guaranty”).

WHEREAS, in connection with that certain Subsidiary Guaranty Agreement, executed as of September 7, 2011, by each subsidiary identified therein (collectively, the “Subsidiary Guarantors”; the REIT and the Subsidiary Guarantors, each a “Guarantor” and collectively, the “Guarantors”) for the benefit of the Credit Parties, the Subsidiary Guarantors guaranteed, as a guaranty of payment and not merely as a guaranty of collection, the prompt payment when due of all obligations under the Credit Agreement, including the Loan (the “Subsidiary Guaranty”).

WHEREAS, in connection with that certain Indemnity Agreement, made and entered into as of December 28, 2012, by the Company in favor of the REIT, the Company has agreed to indemnify the Guarantors for their obligations with respect to the collectability of the Loan (the “Company Indemnity”) pursuant to the terms therein.

WHEREAS, in connection with that certain Fourth Amendment to Amended and Restated Agreement of Limited Partnership of the OP, dated as of December 28, 2012, the Company agreed to restore a deficit balance in its capital account with respect to its interest in the OP, if any, upon a liquidation of the OP (a “DRO”) as set forth in that certain Amended and Restated Agreement of Limited Partnership of the OP, dated as of September 6, 2011, as amended.

WHEREAS, the Indemnitors are the members of the Company and have received substantial economic benefits from the Company.

NOW, THEREFORE, in consideration of the promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Indemnitors and Company hereby agree as follows:

1. Subject to Section 4 hereof, if the Company shall make a payment (or be required to make a payment) pursuant to the Company Indemnity (any such payment, a “Payment”), the Company shall promptly deliver written notice thereof (a “Payment Notice”) to each Indemnitor, which Payment Notice shall (a) state the amount of such Payment (the “Payment Amount”) and (b) provide evidence of payment of same (or, provide evidence of obligation to make such payment).

2. Subject to Section 5 hereof, if the Company shall be required to make a payment pursuant to the DRO (any such payment, a “DRO Payment”), the Company shall promptly deliver written notice thereof (a “DRO Payment Notice”) to each Indemnitor, which DRO Payment Notice shall (a) state the amount of such DRO Payment (the “DRO Payment Amount”) and (b) provide evidence of obligation to make such DRO Payment.

3. Subject to Section 4 hereof, each Indemnitor shall be required, within fifteen (15) days after receipt of a Payment Notice or a DRO Payment Notice, as the case may be, (i) in the case of a Payment Notice, to reimburse the Company for such Indemnitor’s proportionate share, as set forth in Schedule A attached hereto, of the Payment Amount (such proportionate amount, each Indemnitor’s “Indemnity Amount”), or (ii) in the case of a DRO Payment Notice, to the extent the assets of the Company are insufficient to satisfy the DRO Payment Amount, to pay to the Company such Indemnitor’s proportionate share, as set forth in Schedule A attached hereto, of the amount by which the DRO Payment Amount exceeds the fair market value (the “FMV”) of the assets of the Company (the “DRO Indemnity Amount”).

4. Notwithstanding anything in this Agreement to the contrary, in the event that the Company shall make (or be required to make) a Payment at a time when the OP has assets available to satisfy the Loan, no payment of the Indemnity Amount shall be required under this Agreement to the extent of the FMV of such assets determined at the time such Payment is made (or required to be made).

5. Any Indemnity Amount or DRO Indemnity Amount paid pursuant to this Agreement shall be treated as a capital contribution by the Indemnitor to the Company under the Company’s operating agreement. Any DRO Indemnity Amount paid to the Company pursuant to Paragraph 3 shall be paid to the OP immediately after receipt thereof by the Company.

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6. Each Indemnitor’s obligation hereunder is several and not joint and, if any Indemnitor shall at any time make payments to the Company in excess of such Indemnitor’s Indemnity Amount, the other Indemnitors shall reimburse such Indemnitor proportionately in respect of such excess.

7. If any Indemnitor shall fail to make a payment of any amount due under this Agreement within the period set forth herein, such Indemnitor shall indemnify and hold harmless the Company from and against any actual cost or actual damage or liability suffered by the Company in connection therewith (including, without limitation, reasonable legal fees and expenses). Any amount paid by an Indemnitor under this Section 7 that relates to the Payment Amount set forth in the Payment Notice delivered to the Indemnitor (and not to other damages, costs, etc.) shall be applied as a reduction to the Indemnity Amount owed by the Indemnitor under this Agreement.

8. The obligations of each Indemnitor under this Agreement are independent of the obligations of the Company under the Company Indemnity and the DRO. Each Indemnitor’s liability for any amount payable hereunder shall be limited to such Indemnitor’s Indemnity Amount, subject to Section 4 hereof, and the DRO Indemnity Amount, respectively.

9. Each Indemnitor hereby warrants and represents to the Company and agrees with the Company that this Agreement constitutes the legal, valid and binding obligation of each Indemnitor, and is fully enforceable against such Indemnitor in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to principles of equity.

10. Each Indemnitor waives notice of acceptance of this Agreement and all presentment, demand, protest, notice of protest and notices of default or dishonor of any obligation indemnified hereby and all other suretyship defenses generally. Except as otherwise provided herein, no extensions of time or other indulgence by the Company granted to an Indemnitor will release or affect the obligations of such Indemnitor hereunder and no act, omission or delay on the part of the Company in exercising any rights hereunder or in taking any action to collect or enforce this Agreement shall be a waiver of any such right or affect the obligation of an Indemnitor hereunder.

The obligations under this Agreement shall not be impaired by any bankruptcy, insolvency, arrangement, assignment for the benefit of creditors, reorganization or other debtor relief proceedings under any federal or state law, whether now existing or hereafter enacted with respect to the Company.

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11. (a) Unless terminated sooner, as provided in this Section 11, this Agreement shall terminate upon the termination of the Company Indemnity (the “Termination Date”) pursuant to the terms therein. The Termination Date shall be accelerated, with respect to an individual Indemnitor, to the time such Indemnitor disposes, directly or indirectly, of its entire interest in the Company in a taxable transaction.

(b) If, as of the Termination Date, the FMV of the Entity Assets (as defined in the Company Indemnity) available for satisfaction of the Loan shall be less than the amount of the Company’s obligation under the Company Indemnity (the “Obligation”), each Indemnitor shall pay the Company its proportionate share, as set forth in Schedule A attached hereto, of the amount by which the Obligation exceeds the FMV of the Entity Assets.

(c) For purposes of this Agreement, any dispute respecting the FMV of the Entity Assets shall be resolved as follows: the Company and such Indemnitor each shall pick an appraiser qualified to value the Entity Assets. If the lower of the two appraisals is at least 90% of the higher appraisal, then (i) the two appraisers shall select a third appraiser qualified to value the Entity Assets, (ii) such third appraiser shall select from the two existing appraisals the one that is closer to the third appraiser’s determination of the FMV of the Entity Assets, and (iii) the FMV of the Entity Assets shall equal the amount of such selected appraisal.

(d) Notwithstanding anything in this Agreement to the contrary, the termination of this Agreement pursuant to this Section 11 shall not release such Indemnitor from any payment obligations it incurred under this Agreement prior to the Termination Date.

(e) Each Indemnitor’s liability under this Agreement shall be extinguished upon the payment in full of all obligations under this Agreement.

12. If an Indemnitor is required to pay any amount hereunder, such Indemnitor shall have no, and hereby waives any, (a) rights of subrogation that it might otherwise have at law or in equity or otherwise on account of such payment, and (b) rights of contribution or other rights it might have at law or in equity or otherwise on account of such payment.

13. The Company shall have all rights available to it in law or in equity. No delay or failure by the Company to exercise any right or remedy against any Indemnitor will be construed as a waiver of that right or remedy. All remedies of the Company against any Indemnitor are cumulative.

14. The whole of this Agreement is set forth herein, and there is no verbal or other written agreement, and no understanding or custom affecting the terms hereof. This Agreement can be modified only by a written instrument signed by the parties with respect to whom the modification is made.

15. This Agreement may be executed in multiple counterparts, and each such counterpart shall be considered an original, but all of which together shall constitute one and the same instrument.

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16. If any provision of this Agreement shall be held to be prohibited or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement shall be governed and construed pursuant to laws of the State of New York and shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties acknowledge their agreement with the foregoing by executing this Agreement in the space provided below.

INDEMNITORS:

/s/ Nicholas S. Schorsch

Nicholas S. Schorsch, individually and as attorney-in-fact for his immediate family members

/s/ William M. Kahane

William M. Kahane

/s/ Peter M. Budko

Peter M. Budko

/s/ Edward M. Weil, Jr.

Edward M. Weil, Jr.

/s/ Brian S. Block

Brian S. Block

INDEMNITEE:

ARC REAL ESTATE PARTNERS, LLC

By: /s/ Nicholas S. Schorsch

Name: Nicholas S. Schorsch

Title: Manager

By: /s/ William M. Kahane

Name: William M. Kahane

Title: Manager

[Signature Page to Indemnity Agreement by Members of ARC Real Estate Partners, LLC]

EX-10.43

EXECUTION COPY

Loan Number 1008843-0

CREDIT AGREEMENT

Dated as of February 14, 2013

among

AMERICAN REALTY CAPITAL OPERATING PARTNERSHIP III, L.P.,
as Borrower,

AMERICAN REALTY CAPITAL TRUST III, INC.,
as a Guarantor,

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent,

RBS CITIZENS, N.A. and REGIONS BANK,
as Syndication Agents,

CAPITAL ONE, N.A. AND JPMORGAN CHASE BANK, N.A.,
as Documentation Agents,

and

The Other Lenders Party Hereto

WELLS FARGO SECURITIES, LLC, RBS CITIZENS, N.A., REGIONS CAPITAL MARKETS, CAPITAL ONE, N.A. AND J.P. MORGAN SECURITIES, LLC,
as Joint Lead Arrangers

and

WELLS FARGO SECURITIES, LLC, RBS CITIZENS, N.A. and REGIONS CAPITAL MARKETS, as Joint Bookrunners

Table of Contents

Section		Page
Article I. Definitions and Accounting Terms		1
1.01	Defined Terms	1
1.02	Other Interpretive Provisions	39
1.03	Accounting Terms	40
1.04	Financial Standards	40
1.05	Rounding	41
1.06	Times of Day	41
1.07	Financial Attributes of Non-Wholly Owned Subsidiaries	41
Article II. Credit Facility		41
2.01	Revolving Loans and Term Loans	41
2.02	Borrowings, Conversions and Continuations of Loans	42
2.03	Letters of Credit	43
2.04	Swingline Loans	48
2.05	Prepayments	50
2.06	Reduction and Termination of Commitments	52
2.07	Repayment of Loans	53
2.08	Interest	53
2.09	Fees	54
2.10	Computation of Interest; Retroactive Adjustments of Applicable Margin	56
2.11	Evidence of Debt	56
2.12	Payments Generally; Administrative Agent’s Clawback	57
2.13	Sharing of Payments by Lenders	59
2.14	Amount Limitations	60
2.15	Incremental Loans	60
2.16	Extension of Revolving Termination Date	61
2.17	Extension Offers	62
2.18	Defaulting Lenders	63
2.19	Guaranties	67
2.20	Letter of Credit Collateral Account	67
Article III. Taxes, Yield Protection and Illegality		68
3.01	Taxes	68
3.02	Illegality	73
3.03	Inability to Determine Rates	73
3.04	Increased Costs; Reserves on Eurodollar Loans	74
3.05	Compensation for Losses	75
3.06	Mitigation Obligations; Replacement of Lenders	76
3.07	Survival	76
Article IV. Borrowing Base		76
4.01	Initial Borrowing Base	76
4.02	Changes in Borrowing Base Calculation	77

i

4.03	Requests for Admission into Borrowing Base	77
4.04	Eligibility	77
4.05	Approval of Borrowing Base Properties	78
4.06	Liens on Borrowing Base Properties	79
4.07	Notice of Admission of New Borrowing Base Properties	79
4.08	RESERVED	79
4.09	Release of Borrowing Base Property	79
4.10	Exclusion Events	79
4.11	Documentation Required with Respect to Borrowing Base Properties	80
Article V. Conditions Precedent to Credit Extensions		80
5.01	Conditions to Effectiveness	80
5.02	Conditions to all Credit Extensions	82
Article VI. Representations and Warranties		83
6.01	Existence, Qualification and Power; Compliance with Laws	83
6.02	Authorization; No Contravention	83
6.03	Governmental Authorization; Other Consents	83
6.04	Binding Effect	84
6.05	Financial Statements; No Material Adverse Effect	84
6.06	Litigation	85
6.07	No Default	85
6.08	Ownership of Property; Liens; Equity Interests	85
6.09	Environmental Compliance	85
6.10	Insurance	86
6.11	Taxes	86
6.12	ERISA Compliance	86
6.13	Subsidiaries; Equity Interests	87
6.14	Margin Regulations; Investment Company Act	88
6.15	Disclosure	88
6.16	Compliance with Laws	88
6.17	Taxpayer Identification Number	88
6.18	Intellectual Property; Licenses, Etc	88
6.19	Representations Concerning Leases	89
6.20	Solvency	89
6.21	REIT Status of Parent	89
6.22	Labor Matters	89
6.23	Ground Lease Representation	89
6.24	Borrowing Base Properties	90
6.25	Patriot Act and Other Specified Laws	90
Article VII. Affirmative Covenants		91
7.01	Financial Statements	91
7.02	Certificates; Other Information	92
7.03	Notices	94
7.04	Payment of Obligations	95
7.05	Preservation of Existence, Etc	95

ii

7.06	Maintenance of Properties	95
7.07	Maintenance of Insurance	96
7.08	Compliance with Laws	96
7.09	Books and Records	96
7.10	Inspection Rights	96
7.11	Use of Proceeds	97
7.12	Environmental Matters	97
7.13	Maintenance of Status	97
7.14	Ground Leases	97
7.15	Borrowing Base Properties	98
7.16	Subsidiary Guarantor Organizational Documents	99
Article VIII. Negative Covenants		99
8.01	Liens	99
8.02	Investments	100
8.03	Fundamental Changes	101
8.04	Dispositions	102
8.05	Restricted Payments	102
8.06	Change in Nature of Business	103
8.07	Transactions with Affiliates	104
8.08	Burdensome Agreements	104
8.09	Use of Proceeds	105
8.10	Borrowing Base Properties; Ground Leases	105
8.11	Merger Agreement	106
8.12	Environmental Matters	106
8.13	Negative Pledge; Indebtedness	107
8.14	Financial Covenants	107
Article IX. Events of Default and Remedies		108
9.01	Events of Default	108
9.02	Remedies Upon Event of Default	111
9.03	Application of Funds	112
Article X. Administrative Agent		113
10.01	Appointment and Authority	113
10.02	Rights as a Lender	113
10.03	Exculpatory Provisions	113
10.04	Reliance by Administrative Agent	114
10.05	Delegation of Duties	115
10.06	Successor Administrative Agent	115
10.07	Non-Reliance on Administrative Agent and Other Lenders	116
10.08	No Other Duties, Etc	116
10.09	Administrative Agent May File Proofs of Claim	116
10.10	Collateral and Guaranty Matters	117
10.11	Funds Transfer Disbursements	119
10.12	Requests for Approval	120
10.13	Exercise of Rights by Lenders	120

iii

Article XI. Miscellaneous		120
11.01	Amendments, Etc	120
11.02	Notices; Effectiveness; Electronic Communication	122
11.03	No Waiver; Cumulative Remedies; Enforcement	124
11.04	Expenses; Indemnity; Damage Waiver	125
11.05	Payments Set Aside	130
11.06	Successors and Assigns	130
11.07	Treatment of Certain Information; Confidentiality	136
11.08	Right of Setoff	136
11.09	Interest Rate Limitation	137
11.10	Counterparts; Integration; Effectiveness	137
11.11	Survival of Representations and Warranties	137
11.12	Severability	138
11.13	Replacement of Lenders	138
11.14	Governing Law; Jurisdiction; Etc.	138
11.15	Waiver of Jury Trial	140
11.16	No Advisory or Fiduciary Responsibility	140
11.17	Electronic Execution of Assignments and Certain Other Documents	140
11.18	USA PATRIOT Act	141
11.19	ENTIRE AGREEMENT	141

Schedules
Schedule 2.01 – Commitments
Schedule 4.01 – Initial Borrowing Base Properties
Schedule 6.06 – Litigation
Schedule 6.09 – Environmental Matters
Schedule 6.13 – Subsidiaries and Other Equity Investments
Schedule 6.18 – Intellectual Property Matters
Schedule 8.01 – Existing Liens
Schedule 8.13 – Indebtedness
Schedule 11.02 – Addresses for Notices
Exhibits
Exhibit A-1	Form of Loan Notice
Exhibit A-2	Form of Notice of Swingline Borrowing
Exhibit B-1	Form of Revolving Note
Exhibit B-2	Form of Swingline Note
Exhibit B-3	Form of Term Note
Exhibit C	Form of Compliance Certificate
Exhibit D-1	Assignment and Assumption
Exhibit D-2	Form of Administrative Questionnaire
Exhibit E	Form of Borrowing Base Report
Exhibit F	List of Closing Documents

iv

Exhibit G-1	U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit G-2	U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships for U.S. Federal Income Tax Purposes)
Exhibit G-3	U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships for U.S. Federal Income Tax Purposes)
Exhibit G-4	U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)

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CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of February 14, 2013, among AMERICAN REALTY CAPITAL OPERATING PARTNERSHIP III, L.P., a Delaware limited partnership (“ARCOP”), AMERICAN REALTY CAPITAL TRUST III, INC., a Maryland corporation and the sole general partner of Borrower (“ARCT”), each Lender from time to time party hereto, WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo Bank”), as Administrative Agent (in such capacity, “Administrative Agent”), CAPITAL ONE, N.A. and JPMORGAN CHASE BANK, N.A., as Documentation Agents, and RBS CITIZENS, N.A. and REGIONS BANK, as Syndication Agents.

WHEREAS, Administrative Agent, Issuing Bank and the Lenders desire to make available to Borrower a credit facility in the initial amount of $875,000,000, which will include a $525,000,000 term loan facility and a $350,000,000 revolving credit facility, with a $25,000,000 swingline subfacility and a $25,000,000 letter of credit subfacility, on the terms and conditions contained herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto agree as follows:

Article I.
Definitions and Accounting Terms

1.01         Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

“Acceptable Environmental Report” means, with respect to any Real Property, an environmental report reasonably acceptable to Administrative Agent.

“Acceptable Ground Lease” means a ground lease with respect to an Acceptable Property executed by a Property Owner, as lessee, that has a remaining lease term (including extension or renewal rights) of at least thirty-five (35) years, calculated as of the date such Acceptable Property is admitted into the Borrowing Base, and that Administrative Agent determines, in its commercial reasonable discretion, is a financeable ground lease.

“Acceptable Property” means a Property (a) that is approved by Administrative Agent and meets the following requirements, or (b) that is approved by Administrative Agent and the Required Lenders:

(i)          such Property is wholly-owned by, or ground leased pursuant to an Acceptable Ground Lease to, Borrower or a Subsidiary Guarantor free and clear of any Liens (other than Liens permitted by Section 8.01);

(ii)         such Property is a retail, industrial and/or office property located within the United States which is one hundred percent (100%) leased and occupied by a single tenant, with any Property which is leased to a single tenant having a lease expiration no earlier than December 31, 2015, with any Property which is solely a gas station being expressly excluded as an Acceptable Property; and

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(iii)        if such Property is owned by, or ground leased pursuant to an Acceptable Ground Lease to, a Subsidiary Guarantor, then the Equity Interests of such Subsidiary Guarantor are owned, directly or indirectly by Borrower, free and clear of any Liens other than Liens permitted by Section 8.01.

“Adjusted Borrowing Base NOI” means, with respect to any Borrowing Base Property for the prior quarter, annualized, Borrowing Base NOI for such Borrowing Base Property less the Capital Reserve for such Borrowing Base Property.

“Administrative Agent” means Wells Fargo Bank, in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

“Administrative Agent’s Office” means Administrative Agent’s address and, as appropriate, account as set forth on Schedule 11.02, or such other address or account as Administrative Agent may from time to time notify Borrower and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit D-2 or any other form approved by Administrative Agent.

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided that in no event shall Administrative Agent or any Lender be deemed to be an Affiliate of Borrower.

“Agreement” means this Credit Agreement.

“Applicable Facility Fee” means the percentage set forth in the table below corresponding to the Level at which the “Applicable Margin” is determined in accordance with the definition thereof upon the occurrence of a Credit Rating Election Event:

Pricing Level	Facility Fee
1		0.12	%
2		0.15	%
3		0.15	%
4		0.20	%
5		0.30	%
6		0.35	%

Any change in the applicable Level at which the Applicable Margin is determined shall result in a corresponding and simultaneous change in the Applicable Facility Fee.

“Applicable Margin” means the following percentages per annum, based upon the Consolidated Leverage Ratio as set forth in the most-recent Compliance Certificate received by Administrative Agent pursuant to Section 7.02(a):

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Applicable Margin

Pricing Level	Consolidated Leverage Ratio	Applicable Margin
1	< 40%	1.60%
2	≥ 40% but < 45%	1.75%
3	≥ 45% but < 50%	1.90%
4	≥ 50% but < 55%	2.05%
5	≥ 55%	2.20%

Any increase or decrease in the Applicable Margin resulting from a change in the Consolidated Leverage Ratio shall become effective as of the first (1^st) Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 7.02(a) provided that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of Required Lenders, Pricing Level 5 shall apply as of the first (1^st) Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered. The Applicable Margin in effect from the Effective Date until adjusted as set forth above with respect to a Compliance Certificate delivered pursuant to Section 7.02(a) for the first full fiscal quarter of Borrower completed after the Effective Date shall be set at Pricing Level 1 (unless any Compliance Certificate delivered prior to such date shall reflect a lower applicable Pricing Level).

Upon the occurrence of a Credit Rating Election Event and thereafter, the Applicable Margin shall vary from time to time in accordance with the then effective Ratings as follows (such that the Applicable Margin shall change from time to time when the Rating changes):

Applicable Margin

Pricing Level		Rating		Applicable Margin for Revolving Loans		Applicable Margin for Term Loans
	1		≥ A/A2		0.90%		1.15%
	2		A-/A3		0.95%		1.15%
	3		BBB+/Baa1		1.05%		1.20%
	4		BBB/Baa2		1.15%		1.35%
	5		BBB-/Baa3		1.40%		1.65%
	6		< BBB-/Baa3		1.75%		2.00%

The Applicable Margin shall be determined by the higher of the two Ratings from S&P or Moody’s; provided that (i) in the event that the two Ratings are two tiers apart, the tier corresponding to the midpoint of the Ratings shall apply and (ii) in the event that the Ratings are more than two tiers apart, the tier that is two tiers below the higher of the two Ratings shall apply. If only one of S&P and Moody’s shall have assigned a Rating, the Applicable Margin shall be determined by the sole Rating in effect. If neither S&P nor Moody’s shall have assigned a Rating, and provided that a Credit Rating Election Event shall have occurred, the Applicable Margin shall be determined based on Level 6 of the table above.

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Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Margin for any period shall be subject to the provisions of Section 2.10(b).

“Applicable Revolving Percentage” means, as to each Revolving Lender, the ratio, expressed as a percentage of (a) the amount of such Lender’s Revolving Commitment to (b) the aggregate amount of the Revolving Commitments of all Lenders; provided, however, that if at the time of determination the Revolving Commitments have terminated or been reduced to zero, the “Applicable Revolving Percentage” of each Lender shall be the ratio, expressed as a percentage of (A) the sum of the unpaid principal amount of all outstanding Revolving Loans, Swingline Loans and Letter of Credit Liabilities owing to such Revolving Lender as of such date to (B) the sum of the aggregate unpaid principal amount of all outstanding Revolving Loans, Swingline Loans and Letter of Credit Liabilities of all Revolving Lenders as of such date.

“Applicable Term Loan Percentage” means, as to each Term Loan Lender, the ratio, expressed as a percentage of (a) during the Availability Period, (i) (x) the amount of such Lender’s Term Loan Commitment plus (y) the amount of such Lender’s outstanding Term Loans to (ii) (x) the aggregate amount of the Term Loan Commitments of all Term Loan Lenders plus (y) aggregate amount of all outstanding Term Loans and (b) upon the termination of the Availability Period, (i) the amount of such Lender’s outstanding Term Loans to (ii) the aggregate amount of all outstanding Term Loans.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ARCOP” has the meaning specified in the introductory paragraph hereto.

“ARCP” means American Realty Capital Properties, Inc., a Maryland corporation.

“ARCPOP” means ARC Properties Operating Partnership, L.P., a Delaware limited partnership.

“ARCT” has the meaning specified in the introductory paragraph hereto.

“Assignee Group” means two (2) or more Eligible Assignees that are Affiliates of one another or two (2) or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 11.06(c)(iii)), and accepted by Administrative Agent, in substantially the form of Exhibit D-1 or any other form approved by Administrative Agent and Borrower.

“Attributable Indebtedness” means, on any date, in respect of any Capital Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP.

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“Audited Financial Statements” means initially, the financial statements of Parent required for the fiscal year ending December 31, 2011, then after the delivery of the financial statements of Parent required pursuant to Section 7.01(a) for the fiscal year ending December 31, 2012, the most-recent financial statements furnished pursuant to Section 7.01(a).

“Availability Period” means, with respect to Term Loans, the period from and including the Effective Date to the earlier of (a) the date of termination of the Term Loan Commitments pursuant to Section 2.06(b), and (b) the date of termination of the commitment of each Lender to make Loans pursuant to Section 9.02.

“Balloon Payments” shall mean with respect to any loan constituting Indebtedness, any required principal payment of such loan which is payable at the maturity of such Indebtedness, provided, however, that the final payment of a fully amortized loan shall not constitute a Balloon Payment.

“Base LIBOR Rate” means, with respect to any Eurodollar Loan, for any Interest Period, the rate of interest obtained by dividing (i) the rate of interest, rounded upward to the nearest whole multiple of one-hundredth of one percent (0.01%), referred to as the BBA (British Bankers’ Association) LIBOR rate as set forth by any service selected by Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rate for deposits in U.S. Dollars at approximately 11:00 a.m. (Eastern Time), two (2) Business Days prior to the date of commencement of such Interest Period for purposes of calculating effective rates of interest for loans or obligations making reference thereto, for an amount approximately equal to the applicable Eurodollar Loan and for a period of time approximately equal to such Interest Period by (ii) a percentage equal to 1 minus the stated maximum rate (stated as a decimal) of all reserves, if any, required to be maintained with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities”) as specified in Regulation D of the Board of Governors of the Federal Reserve System (or against any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined or any applicable category of extensions of credit or other assets which includes loans by an office of any Lender outside of the United States of America). Any change in such maximum rate shall result in a change in the Base LIBOR Rate on the date on which such change in such maximum rate becomes effective.

“Borrower” means, prior to the occurrence of the Borrower Merger, ARCOP and, from and after the occurrence of the Borrower Merger, ARCPOP, as survivor of the Borrower Merger.

“Borrower Materials” has the meaning specified in Section 7.02.

“Borrower Merger” has the meaning specified in the definition of Permitted Merger Transaction.

“Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, (b) Term Loans made on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, and (c) a Swingline Loan.

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“Borrowing Base” means, as of any date of determination, the lesser of (a) the amount of Total Outstandings such that the Borrowing Base Asset Value Ratio shall not be less than 1.67 to 1.0, and (b) the Implied Loan Amount. Notwithstanding the foregoing, (1) the amount of the Borrowing Base attributable to all Dark Properties in the aggregate shall not exceed five percent (5%) of the Borrowing Base, (2) the amount of the Borrowing Base attributable to any individual Borrowing Base Property shall not exceed twenty percent (20%) of the Borrowing Base and (3) the amount of the Borrowing Base attributable to any single tenant shall not exceed twenty percent (20%) of the Borrowing Base.

“Borrowing Base Asset Value” means, as of any date of determination, the sum of (a) (i) the aggregate Adjusted Borrowing Base NOI from Borrowing Base Properties owned for the entire prior quarter divided by (ii) the Capitalization Rate, plus (b) the aggregate acquisition cost of all Borrowing Base Properties owned for a period less than the entire prior quarter; provided that (a) the aggregate Borrowing Base Asset Value from Borrowing Base Properties owned pursuant to an Acceptable Ground Lease shall not exceed twenty percent (20%) of the aggregate Borrowing Base Asset Value, and (b) the aggregate Borrowing Base Asset Value from Borrowing Base Properties which are convenience stores shall not exceed five percent (5.0%) of the aggregate Borrowing Base Asset Value.

“Borrowing Base Asset Value Ratio” means, as of any date of determination, the ratio of (a) Borrowing Base Asset Value to (b) the sum of (x) the Total Outstandings plus (y) from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the Total Bridge Facility Outstandings plus (z) the aggregate unsecured Indebtedness of the Consolidated Group.

“Borrowing Base Interest Coverage Ratio” means, as of any date of determination, the ratio of (a) the aggregate Adjusted Borrowing Base NOI with respect to the Borrowing Base Properties for the quarter most-recently ended for which financial statements are available divided by (b) pro forma annual interest on an amount equal to the sum of (x) Total Outstandings plus (y) from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the Total Bridge Facility Outstandings plus (z) the aggregate unsecured Indebtedness of the Consolidated Group assuming an interest rate equal to the greater of (i) seven percent (7.0%) per annum, or (ii) the sum of (A) the most-recent rate published on such date in the United States Federal Reserve Statistical Release (H.15) for ten (10) year Treasury Constant Maturities plus (B) three percent (3.0%).

“Borrowing Base NOI” means, as of any date, the sum of (a) the aggregate NOI for the most recent fiscal quarter for which financial results have been reported attributable to all Borrowing Base Properties owned for the entirety of such fiscal quarter as of the last day of such fiscal quarter plus, (b) in the case of any Borrowing Base Property that was owned as of the last day of such fiscal quarter by a Subsidiary Guarantor, but not so owned for the full fiscal quarter, the additional amount of NOI that would have been earned if such Borrowing Base Property had been so owned for the full fiscal quarter.

“Borrowing Base Properties” means each Acceptable Property that either (a) is an Initial Borrowing Base Property or (b) becomes a Borrowing Base Property pursuant to Section 4.03, but excluding any Acceptable Properties that have been released from the Borrowing Base pursuant to Section 4.09, and “Borrowing Base Property” means any one of the Borrowing Base Properties, provided that after the date that is six (6) months after a Borrowing Base Property becomes a Dark Property, said Property shall no longer constitute a Borrowing Base Property and its Borrowing Base Asset Value and Adjusted Borrowing Base NOI shall be excluded when calculating the Borrowing Base.

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“Borrowing Base Report” means a report in substantially the form of Exhibit E (or such other form approved by Administrative Agent) certified by a Responsible Officer of Borrower.

“Bridge Credit Agreement” means that certain credit agreement, to be entered into substantially concurrently with or after the consummation of the Permitted Merger Transaction, among Borrower, as borrower, the lenders party thereto and Bank of America, N.A., as administrative agent, including any refinancing, extension, renewal, defeasance, amendment, increase, modification, supplement, restructuring, refunding, replacement or repayment of the obligations thereunder, or the issuance of other indebtedness or entry into alternative financing arrangements in exchange therefor, to the extent permitted by the Intercreditor Agreement; provided that the representations and warranties, covenants and events of default of such credit agreement shall be in form and substance no more restrictive than the representations and warranties, covenants and events of default of this Agreement and such credit agreement shall otherwise be on terms and conditions reasonably acceptable to Administrative Agent and the Required Lenders, it being acknowledged and agreed that if such credit agreement is substantially identical to this Agreement (other than agency and administrative provisions), it shall be satisfactory to Administrative Agent and the Required Lenders.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Administrative Agent’s Office is located or the State of New York, and, if such day relates to any Eurodollar Loan, means any such day that is also a London Banking Day.

“Capital Lease” means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP.

“Capital Lease Obligations” means, with respect to any Person for any period, the capitalized amount of obligations under Capital Leases for such Person for such period as determined in accordance with GAAP.

“Capital Reserve” means a capital reserve of $0.20 per weighted average gross leasable square foot for each Property.

“Capitalization Rate” means seven and 3/4 percent (7.75%).

“Cash Collateralize” means, to pledge and deposit with or deliver to Administrative Agent, for the benefit of Issuing Bank or the Lenders, as collateral for Letter of Credit Liabilities or obligations of Lenders to fund participations in respect of Letter of Credit Liabilities, cash or deposit account balances or, if Administrative Agent and Issuing Bank shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to Administrative Agent and Issuing Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

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“Cash Equivalents” means any of the following types of Investments, to the extent owned by Guarantor, Borrower or any of their Subsidiaries free and clear of all Liens (other than Liens created under the Security Documents and other Liens permitted hereunder):

(a)          readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

(b)          demand or time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (A) is a Lender or (B) (i) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c)    of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 90 days from the date of acquisition thereof;

(c)          commercial paper in an aggregate amount of no more than $5,000,000 per issuer outstanding at any time issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and

(d)          Investments, classified in accordance with GAAP as current assets of the REIT or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, rule, regulation or treaty; (b) any change in any Law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority; or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; without limiting the foregoing, Change in Law shall include the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 12 U.S.C. 5301 et seq., enacted July 21, 2010, as well as all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, regardless of the date enacted, adopted, issued or implemented.

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“Change of Control” means an event or series of events by which:

(a)          any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all Equity Interests that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of thirty-five percent (35%) or more of the Equity Interests of Parent entitled to vote for members of the board of directors or equivalent governing body of Parent on a fully-diluted basis (and taking into account all such Equity Interests that such person or group has the right to acquire pursuant to any option right);

(b)          during any period of twelve consecutive months ending after the Effective Date (or, if the Permitted Merger Transaction occurs, after the date the Permitted Merger Transaction is consummated), individuals who at the beginning of any such twelve-month period constituted the Board of Directors of Borrower (together with any new directors whose election by such Board or whose nomination for election by the shareholders of Borrower was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved but excluding any director whose initial nomination for, or assumption of office as, a director occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the Board of Directors) cease for any reason to constitute a majority of the Board of Directors of Borrower then in office; or

(c)          Parent shall cease to (i) either be the sole general partner of, or wholly own and control the general partner of, Borrower or (ii) own, directly or indirectly, greater than fifty percent (50%) of the Equity Interests of Borrower; or

(d)          Borrower shall cease to own, directly or indirectly, one hundred percent (100%) of the Equity Interests of any Subsidiary Guarantor that owns a Borrowing Base Property free and clear of any Liens (other than Liens in favor of Administrative Agent) unless Borrower removes the Borrowing Base Property owned by such Subsidiary Guarantor from the Borrowing Base in accordance with Section 4.09.

Notwithstanding the foregoing, the Permitted Merger Transaction shall not constitute a Change of Control.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” means the Equity Interest Collateral, and all other property of the Companies on which Liens have been granted to Administrative Agent, for the benefit of the Lenders, to secure the Obligations.

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“Commitment” means, as to a Lender, such Lender’s Revolving Commitment or such Lender’s Term Loan Commitment.

“Companies” means, without duplication, Parent and its Consolidated Subsidiaries (including Borrower), and “Company” means any one of the Companies.

“Compliance Certificate” means a certificate substantially in the form of Exhibit C.

“Condemnation” means a temporary or permanent taking by any Governmental Authority as the result, in lieu, or in anticipation, of the exercise of the right of condemnation or eminent domain of all or any part of any Borrowing Base Property, or any interest therein or right accruing thereto, including any right of access thereto or any change of grade affecting any Borrowing Base Property or any part thereof.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“Consolidated Adjusted EBITDA” means (a) three (3) month trailing Consolidated EBITDA of the Consolidated Group, less the Capital Reserve, multiplied by (b) four (4).

“Consolidated EBITDA” means, for any Person for any period, an amount equal to (a) Consolidated Net Income for the trailing three months, plus (b) the sum of the following (without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period): (i) income tax expense; (ii) interest expense, amortization or write-off of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness; (iii) depreciation and amortization expense; (iv) amortization of intangibles (including goodwill) and organization costs; (v) any extraordinary, unusual or non-recurring expenses or losses (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside of the ordinary course of business and costs and expenses incurred during such period with respect to acquisitions consummated); (vi) any other non-cash charges, (vii) all commissions, guaranty fees, discounts and other fees and charges owed by such Person with respect to letters of credit and bankers’ acceptance financing and net costs of such Person under Swap Contracts in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP; and (viii) fees, expenses and charges incurred during such period, in an aggregate amount during the term of this Agreement not to exceed $35,000,000, directly relating to (A) the Permitted Merger Transaction or the Permitted Bridge Credit Agreement Transaction or (B) the negotiation of and entry into the Loan Documents and any future amendments to the Loan Documents or the Bridge Credit Agreement or any agreement entered into in connection therewith, minus (c) the sum of the following (to the extent included in the statement of such Consolidated Net Income for such period): (i) interest income (except to the extent deducted in determining such Consolidated Net Income); (ii) any extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside of the ordinary course of business); (iii) any other non-cash income; and (iv) any cash payments made during such period in respect of items described in clause (b)(v) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of Consolidated Net Income.

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“Consolidated Fixed Charges” means, on a consolidated basis annualized, for the Consolidated Group for any period, the sum (without duplication) of (a) Consolidated Interest Expense (excluding amortization or write-off of debt issuance costs and commissions), (b) provision for cash income taxes made by such Person on a consolidated basis in respect of such period, (c) scheduled principal amortization payments due during such period on account of Indebtedness of such Person (excluding Balloon Payments), and (d) Restricted Payments paid in cash with respect to preferred Equity Interests of such Person during such period.

“Consolidated Group” means Parent and all Persons whose financial results are consolidated with Parent for financial reporting purposes under GAAP.

“Consolidated Interest Expense” means, for any Person for any period, the total interest expense (including that attributable to Capital Lease Obligations) of such Person for such period with respect to all outstanding Total Funded Debt (including all commissions, discounts and other fees and charges owed by such Person with respect to letters of credit and bankers’ acceptance financing and net costs of such Person under Swap Contracts in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP). Consolidated Interest Expenses shall exclude interest rate hedge termination payments or receipts, loan prepayment costs, and upfront loan fees, interest expense covered by an interest reserve established under a loan facility and any interest expense under any construction loan or construction activity that under GAAP is required to be capitalized.

“Consolidated Leverage Ratio” means, as of any date of determination, the quotient (expressed as a percentage) of (a) Consolidated Total Debt, divided by (b) Total Asset Value.

“Consolidated Net Income” means, for any Person for any period, the consolidated net income (or loss) of such Person for such period, determined on a consolidated basis in accordance with GAAP; provided that in calculating Consolidated Net Income of Parent for any period, there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with Parent or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Company) in which any Company has an ownership interest, except to the extent that any such income is actually received by such Company in the form of dividends or similar distributions, and (c) the undistributed earnings of any Subsidiary of any Company to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than under any Loan Document) or requirement of Law applicable to such Subsidiary.

“Consolidated Subsidiary” means any Person in which Parent or Borrower has a direct or indirect Equity Interest and whose financial results would be consolidated under GAAP with the financial results of Parent on the consolidated financial statements of Parent.

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“Consolidated Total Debt” means, as of any date of determination, (1) Parent’s consolidated pro rata share of Indebtedness which includes all GAAP Indebtedness (adjusted to eliminate increases or decreases arising from ASC-805) including recourse and non-recourse mortgage debt, letters of credit, net obligations under uncovered interest rate contracts, contingent obligations to the extent the obligations are binding, unsecured debt, capitalized lease obligations (including ground leases), guarantees of indebtedness (excluding traditional carve-outs relating to non-recourse debt obligations), subordinated debt, (2) Parent’s pro rata share of preferred obligations that are structurally senior to the Obligations and (3) Parent’s Ownership Share of Consolidated Total Debt of its Unconsolidated Affiliates (calculated on a basis consistent with clauses (1) and (2) above).

“Construction in Progress” means each Property that is either (a) new ground up construction which has commenced or is intended to be under construction within twelve (12) months or (b) under renovation in which (i) greater than thirty percent (30%) of the square footage of such Property is unavailable for occupancy due to renovation and (ii) no rents are being paid on such square footage. A Property will cease to be classified as “Construction in Progress” on the earlier to occur of (A) the time that such Property has an Occupancy Rate of greater than ninety percent (90%), or (B) one hundred eighty (180) days after completion of construction or renovation of such Property, as applicable.

“Contamination” means the presence of Hazardous Materials in amounts exceeding regulatory action levels.

“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. The terms “Controlling” and “Controlled” have meanings correlative thereto.

“Credit Extension” means each of the following: (a) a Borrowing, and (b) with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

“Credit Rating Election Event” has the meaning given that term in Section 2.08(c).

“Customary Recourse Exceptions” means, with respect to any Indebtedness, personal recourse that is limited to fraud, misrepresentation, misapplication of cash, waste, environmental claims and liabilities, prohibited transfers, and violations of single purpose entity covenants.

“Dark Property” shall mean a Borrowing Base Property where one or more of the tenants previously occupying the Borrowing Base Property has vacated the Borrowing Base Property, but the Borrowing Base Property remains 100% leased (without regard to any subleases) to a tenant maintaining a rating of BBB-/Baa3 or better, which tenant is current on payments, has a minimum of eight (8) years left on the applicable lease and does not have any right to terminate its lease.

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“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Default Rate” means an interest rate equal to (i) in respect to Obligations other than fees payable pursuant to Section 2.09(d), the Floating Rate plus two percent (2.0%) per annum and (ii) in respect of fees payable pursuant to Section 2.09(d), the rate otherwise applicable to such fees plus two percent (2.0%) per annum.

“Defaulting Lender” means, subject to Section 2.18(f), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies Administrative Agent and Borrower in writing that such failure is the result of such Lender’s good-faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Administrative Agent, Issuing Bank, Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) within two (2) Business Days of the date when due, (b) has notified Borrower, Administrative Agent, Issuing Bank or Swingline Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s good-faith determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after request by Administrative Agent or Borrower, to confirm in writing to Administrative Agent and Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Administrative Agent and Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States of America or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.18(f)) upon delivery of written notice of such determination to Borrower, Issuing Bank, Swingline Lender and each other Lender by Administrative Agent, and Administrative Agent hereby agrees to promptly provide such notice.

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“Disposition” or “Dispose” means the sale, transfer, license, lease (other than a real estate lease entered into in the ordinary course of business as part of Property leasing operations) or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith but excluding any arrangement constituting a Lien.

“Dollar” and “$” mean lawful money of the United States.

“Effective Date” means the first date all the conditions precedent in Section 5.01 are satisfied or waived in accordance with Section 11.01.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund and (d) any other Person (other than a natural person) approved by Administrative Agent (such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include Borrower or any of Borrower’s Affiliates or Subsidiaries.

“Environmental Assessment” means a report of an environmental assessment of any or all Borrowing Base Properties and of such scope so as to be compliant with the guidelines established by the ASTM (including the taking of soil borings and air and groundwater samples and other above and below ground testing) as Administrative Agent may reasonably request to be performed by a licensed environmental consulting firm reasonably acceptable to Administrative Agent.

“Environmental Claim” means any investigative, enforcement, cleanup, removal, containment, remedial, or other private or governmental or regulatory action at any time instituted or completed pursuant to any applicable Environmental Requirement against any Company or against or with respect to any Real Property or any condition, use, or activity on any Real Property (including any such action against Administrative Agent or any Lender), and any claim at any time made by any Person against any Company or against or with respect to any Real Property or any condition, use, or activity on any Real Property (including any such claim against Administrative Agent or any Lender), relating to damage, contribution, cost recovery, compensation, loss, or injury resulting from or in any way arising in connection with any Hazardous Material or any Environmental Requirement.

“Environmental Damages” means all liabilities (including strict liability), losses, damages (excluding consequential, special, exemplary or punitive damages except to the extent such damages were imposed upon an Indemnitee as a result of any claims made against such Indemnitee by a governmental entity or any other third party), judgments, penalties, fines, costs and expenses (including fees, costs and expenses of attorneys, consultants, contractors, experts and laboratories), of any and every kind or character, at law or in equity, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, made, incurred, suffered, brought, or imposed at any time and from time to time, whether before or after the Release Date and arising in whole or in part from:

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(a)          the presence of any Hazardous Material on any Borrowing Base Property in violation of any Environmental Requirement, or any escape, seepage, leakage, spillage, emission, release, discharge or disposal of any Hazardous Material on or from any Borrowing Base Property, or the migration or release or threatened migration or release of any Hazardous Material to, from or through any Borrowing Base Property, on or before the Release Date; or

(b)          any act, omission, event or circumstance existing or occurring in connection with the handling, treatment, containment, removal, storage, decontamination, clean up, transport or disposal of any Hazardous Material which is at any time on or before the Release Date present on any Borrowing Base Property; or

(c)          the breach, in any material respect, of any representation, warranty, covenant or agreement contained in this Agreement relating to the presence of any Hazardous Material on any Borrowing Base Property because of any event or condition occurring or existing on or before the Release Date; or

(d)          any violation on or before the Release Date, of any Environmental Requirement in connection with any Borrowing Base Property in effect on or before the Release Date, regardless of whether any act, omission, event or circumstance giving rise to the violation constituted a violation at the time of the occurrence or inception of such act, omission, event or circumstance; or

(e)          any Environmental Claim, or the filing or imposition of any environmental Lien against any Borrowing Base Property, because of, resulting from, in connection with, or arising out of any of the matters referred to in subparagraphs (a) through (d) preceding;

and regardless of whether any of the foregoing was caused by Borrower, any other Loan Party or their respective tenant or subtenant, or a prior owner of a Borrowing Base Property or its tenant or subtenant, or any third party including (i) injury or damage to any person, property or natural resource occurring on or off of a Borrowing Base Property including the cost of demolition and rebuilding of any improvements on any Real Property; (ii) the investigation or remediation of any such Hazardous Material or violation of Environmental Requirement including the preparation of any feasibility studies or reports and the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration, monitoring or similar work required by any Environmental Requirement or necessary to have full use and benefit of Borrowing Base Properties as contemplated by the Loan Documents (including any of the same in connection with any foreclosure action or transfer in lieu thereof); (iii) all liability to pay or indemnify any Person or Governmental Authority for costs expended in connection with any of the foregoing; (iv) the investigation and defense of any claim, whether or not such claim is ultimately withdrawn or defeated; and (v) the settlement of any claim or judgment. “Costs” as used in this definition shall also include any diminution in the value of the security afforded by the Borrowing Base Property (or the Equity Interests therein) or any future reduction of the sales price of any Borrowing Base Property (or the Equity Interests therein) by reason of any matter set forth in Section 7.12 or Section 8.12.

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“Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement executed by Borrower and Parent (if required by Administrative Agent), and each Property Owner, in favor of Administrative Agent and the Lenders.

“Environmental Laws” means any and all applicable Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“Environmental Requirement” means any Environmental Law, agreement or restriction, as the same now exists or may be changed or amended or come into effect in the future, which pertains to any Hazardous Material or the environment including ground or air or water or noise pollution or contamination, and underground or aboveground tanks.

“Equity Interest Collateral” means (i) one hundred percent (100%) of the Equity Interests owned by Borrower or any Subsidiary in each Property Owner, and (ii) one hundred percent (100%) of the Equity Interests in each Company, other than Borrower and Parent, that owns a direct or indirect interest in a Property Owner.

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

“Equity Issuance” means the issuance or sale by any Person of any of its Equity Interests or any capital contribution to such Person by the holders of its Equity Interests.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

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“ERISA Event” means: (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of Parent or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Parent or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042(a)(1) or (2) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or notification that a Multiemployer Plan is in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Parent or any ERISA Affiliate.

“Eurodollar” means, when used in reference to any Loan or Borrowing, that such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Base LIBOR Rate.

“Eurodollar Rate” means the Base LIBOR Rate or the LIBOR Market Index Rate, as the context requires.

“Event of Default” has the meaning specified in Section 9.01.

“Excluded Taxes” means, any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by its overall net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the Laws of, or having its principal office, or, in the case of any Lender, its applicable Lending Office, located in the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) any backup withholding Tax that is required by the Code to be withheld from amounts payable to a Recipient that has failed to comply with clause (A) of Section 3.01(e)(ii), (c) any withholding Taxes imposed under FATCA, and (d) in the case of a Foreign Lender (other than an assignee pursuant to a request by Borrower under Section 11.13), any withholding Tax that (i) is required to be imposed on amounts payable to such Foreign Lender pursuant to the Laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or (ii) is attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with clause (B) of Section 3.01(e)(ii), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts with respect to such withholding Tax pursuant to Section 3.01(a)(ii) or (c).

“Exclusion Event” has the meaning specified in Section 4.10.

“Exclusion Notice” has the meaning specified in Section 4.10.

“Existing Advisor” means American Realty Capital Advisors III, LLC.

“Existing Advisory Agreement” means the Second Amended and Restated Advisory Agreement, dated as of November 12, 2012, among ARCT, ARCOP and the Existing Advisor, as modified by the Existing Management Agreements Side Letter.

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“Existing Lenders” has the meaning specified in the Preamble to this Agreement.

“Existing Management Agreements Side Letter” means the Letter Agreement, dated as of December 14, 2012, by and among ARCT, ARCOP, American Realty Capital Trust III Special Limited Partner, LLC, the Existing Advisor, the Existing Property Manager and ARCP.

“Existing Property Manager” means American Realty Capital Properties III, LLC, a Delaware limited liability company.

“Existing Property Management Agreement” means the Property Management and Leasing Agreement, dated as of March 31, 2011, among ARCT, ARCOP and the Existing Property Manager, as modified by the Existing Management Agreements Side Letter.

“Existing Revolving Credit Agreement” means that certain Credit Agreement dated as of July 20, 2012 among Borrower as borrower thereunder, Parent, RBS Citizens, N.A., as Administrative Agent and certain lenders from time to time party thereto.

“Extending Lender” has the meaning specified in Section 2.17(a).

“Extension Agreement” means an Extension Agreement, in form and substance reasonably satisfactory to Administrative Agent, among Borrower, Administrative Agent and one or more Extending Lenders, effecting one or more Extension Permitted Amendments and such other amendments hereto and to the other Loan Documents as are contemplated by Section 2.17.

“Extension Offer” has the meaning specified in Section 2.17(a).

“Extension Permitted Amendment” means an amendment to this Agreement and the other Loan Documents, effected in connection with an Extension Offer pursuant to Section 2.17, providing for an extension of the Revolving Termination Date and/or Term Loan Maturity Date, as applicable, applicable to the Extending Lenders’ Loans (such Loans being referred to as the “Extended Loans”) and, in connection therewith, (a) an increase or decrease in the rate of interest accruing on such Extended Loans, (b) in the case of Term Loans, a modification of the scheduled amortization applicable thereto, provided that the weighted average life to maturity of such Extended Loans shall be no shorter than the remaining weighted average life to maturity (determined at the time of such Extension Offer) of the Term Loans, (c) a modification of voluntary or mandatory prepayments (including prepayment premiums and other restrictions thereon) applicable thereto, provided that such requirements may provide that such Extended Loans may participate in any mandatory prepayments on a pro rata basis (or on a basis that is less than a pro rata basis) with the Loans, but may not provide for prepayment requirements that are more favorable to the Extending Lenders than those applicable to the Loans, (d) an increase in the fees payable to, or the inclusion of new fees to be payable to, the Extending Lenders in respect of such Extension Offer or their Extended Loans and/or (e) provision for material additional or different financial or other covenants or prepayment requirements applicable only during periods after the latest Revolving Termination Date and/or Term Loan Maturity Date, as applicable, in effect immediately prior to such Extension Permitted Amendment.

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“Extension Request” as defined in Section 2.16.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (and any amended or successor version that is substantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

“Federal Funds Rate” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:00 a.m. (Eastern Time) on such day on such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by Administrative Agent in its sole discretion.

“Fee Letter” means that certain amended and restated fee letter dated as of December 19, 2012, by and between Parent, and Administrative Agent, Wells Fargo Securities, LLC and RBS Citizens, N.A.

“FFO Percentage” means (i) for the period commencing on the Effective Date through and including December 31, 2013, one hundred ten percent (110%), (ii) for the period commencing on January 1, 2014 through and including December 31, 2014, one hundred five percent (105%) and (iii) at any time thereafter, ninety-five percent (95%).

“Fixed Rate” means, with respect to a Eurodollar Borrowing for the relevant Interest Period, a rate per annum equal to the sum of (i) the Base LIBOR Rate applicable to such Interest Period plus (ii) the Applicable Margin in effect from time to time during such Interest Period.

“Fixed Rate Borrowing” means a Borrowing which bears interest at the Fixed Rate.

“Fixed Rate Loan” means a Revolving Loan or a Term Loan which bears interest at the Fixed Rate.

“Floating Rate” means, for any day, a floating interest rate per annum equal to the sum of (i) the LIBOR Market Index Rate for such day plus (ii) Applicable Margin for such day.

“Floating Rate Borrowing” means a Borrowing which bears interest at the Floating Rate.

“Floating Rate Loan” means a Revolving Loan or a Term Loan which bears interest at the Floating Rate.

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“Foreign Lender” means any Lender that is organized under the Laws of a jurisdiction other than that in which Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to Issuing Bank, such Defaulting Lender’s Revolving Commitment Percentage of the outstanding Letter of Credit Liabilities other than Letter of Credit Liabilities as to which such Defaulting Lender’s participation obligation has been reallocated to other Revolving Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to Swingline Lender, such Defaulting Lender’s Revolving Commitment Percentage of outstanding Swingline Loans other than Swingline Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Revolving Lenders.

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

“Funds From Operations” shall have the meaning promulgated by the National Association of Real Estate Investment Trusts at the time of closing (or, if approved by Borrower and Administrative Agent, as such meaning may be updated from time to time) which is the basis of Parent’s publicly filed financial statements, as adjusted by (a) real estate acquisition costs and expenses for acquisitions that were consummated and impairment of real estate assets for the Consolidated Group.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

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“Guarantee” means, as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing person that guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, Equity Interests or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided that the term Guarantee shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee of any guaranteeing person shall be deemed to be the lesser of (y) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (z) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by Borrower in good faith. The term “Guarantee” as a verb has a corresponding meaning.

“Guaranties” means Parent Guaranty and the Subsidiary Guaranties, and “Guaranty” means any one of the Guaranties.

“Guarantors” means, collectively, Parent and each Subsidiary Guarantor, and “Guarantor” means any one of the Guarantors.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants regulated pursuant to any Environmental Law, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Implied Loan Amount” means, as of any date of determination and without duplication, an amount equal to the sum of (x) the Outstanding Amount plus (y) from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the Total Bridge Facility Outstandings plus (z) the aggregate unsecured Indebtedness of the Consolidated Group that would result, on a pro forma basis, in a Borrowing Base Interest Coverage Ratio as of such date of determination equal to 1.65 to 1.0.

“Improvements” means any Property Owner’s interest in and to all on site improvements to the Borrowing Base Properties, together with all fixtures, tenant improvements, and appurtenances now or later to be located on the Borrowing Base Properties and/or in such improvements.

“Incremental Amendment” has the meaning specified in Section 2.15.

“Incremental Term Loan” has the meaning specified in Section 2.15.

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“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

(a)          all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

(b)          all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

(c)          all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and, in each case, either (i) not past due for more than one hundred and eighty (180) days or (ii) being contested in good faith by appropriate proceedings diligently conducted);

(d)          Capital Lease Obligations;

(e)          all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest (excluding perpetual preferred Equity Interests) in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus (without duplication and only to the extent required to be paid) accrued and unpaid dividends;

(f)          all Guarantees of such Person in respect of any of the foregoing;

(g)          all obligations of the kind referred to in clauses (a) through (f) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on Property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, but limited to the lesser of (i) the fair market value of the property subject to such Lien and (ii) the aggregate amount of the obligations so secured; and

(h)          for purposes of Section 9.01(f) only, all obligations of such Person under Swap Contracts.

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any Capital Lease Obligations on any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. All Loans and Letter of Credit Liabilities shall constitute Indebtedness of Borrower.

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“Indemnified Taxes” means Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of Borrower under any Loan Document.

“Indemnitees” has the meaning specified in Section 11.04(b).

“Individual Asset Value” means, as applicable for any particular Property, (a) except as otherwise provided in this definition, the Consolidated Group’s pro rata share of NOI for the most recent quarter from such Property, multiplied by four, and divided by the Capitalization Rate, (b) the acquisition price paid for any Property acquired during the prior quarter, (c) vacant land at cost, (d) mortgage notes receivable at GAAP, and (e) Construction In Progress at cost.

“Information” has the meaning specified in Section 11.07.

“Initial Borrowing Base Properties” means the Acceptable Properties listed on Schedule 4.01, and “Initial Borrowing Base Property” means any one of the Initial Borrowing Base Properties.

“Intercreditor Agreement” means an intercreditor agreement, in form and substance reasonably satisfactory to Administrative Agent and the Required Lenders (the consent to which shall not be unreasonably withheld or delayed), reflecting the pari passu status of Liens securing the Obligations and the obligations under the Bridge Credit Agreement and such other terms and conditions that shall be customary for similar transactions, to be entered into substantially concurrently with the entry by Borrower into the Bridge Credit Agreement, among Administrative Agent, the applicable agent under the Bridge Credit Agreement, Borrower, Parent and the other Loan Parties.

“Interest Payment Date” means the last Business Day of each month.

“Interest Period” means, with respect to a Eurodollar Borrowing, a period commencing on the date such Eurodollar Borrowing is made (or in the case of the continuation of a Eurodollar Loan the last day of the preceding Interest Period for such Loan) and ending on the numerically corresponding day in the first, second, third or sixth calendar month thereafter, as Borrower may select in the applicable Loan Notice, except that each Interest Period that commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month. Notwithstanding the foregoing or anything in this Agreement to the contrary: (i) if any Interest Period for any Eurodollar Borrowing of Revolving Loans would otherwise end after the Revolving Termination Date, such Interest Period shall end on the Revolving Termination Date; (ii) if any Interest Period for any Eurodollar Borrowing of Term Loans would otherwise end after the Term Loan Maturity Date, such Interest Period shall end on the Term Loan Maturity Date; and (iii) each Interest Period that would otherwise end on a day which is not a Business Day shall end on the immediately following Business Day (provided that if such immediately following Business Day falls in the next calendar month, such Interest Period shall end on the immediately preceding Business Day).

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“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

“Investment Grade Rating” means a Rating of BBB-/Baa3 (or the equivalent) or higher from S&P and/or Moody’s, as applicable.

“IP Rights” has the meaning specified in Section 6.18.

“IRS” means the United States Internal Revenue Service.

“Issuing Bank” means Wells Fargo Bank in its capacity as an issuer of Letters of Credit pursuant to Section 2.03.

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“L/C Commitment Amount” has the meaning given to that term in Section 2.03(a).

“L/C Disbursement” has the meaning given to that term in Section 2.18(b).

“Lead Arrangers” means Wells Fargo Securities, LLC, RBS Citizens, N.A., Regions Capital Markets, Capital One, N.A. and J.P. Morgan Securities, LLC in their capacities as joint lead arrangers and joint bookrunners.

“Lease” means each existing or future lease, sublease (to the extent of any Property Owner’s rights thereunder), license, or other agreement (other than an Acceptable Ground Lease) under the terms of which any Person has or acquires any right to occupy or use any Property, or any part thereof, or interest therein, and each existing or future guaranty of payment or performance thereunder.

“Lender” means each financial institution from time to time party hereto as a “Lender”, together with its respective successors and permitted assigns, and, as the context requires, includes Swingline Lender.

“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify Borrower and Administrative Agent.

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“Letter of Credit” has the meaning given that term in Section 2.03(a).

“Letter of Credit Collateral Account” means a special deposit account maintained by Administrative Agent, for the benefit of Administrative Agent, Issuing Bank and the Lenders, and under the sole dominion and control of Administrative Agent.

“Letter of Credit Documents” means, with respect to any Letter of Credit, collectively, any application therefor, any certificate or other document presented in connection with a drawing under such Letter of Credit and any other agreement, instrument or other document governing or providing for (a) the rights and obligations of the parties concerned or at risk with respect to such Letter of Credit or (b) any collateral security for any of such obligations.

“Letter of Credit Liabilities” means, without duplication, at any time and in respect of any Letter of Credit (a) the Stated Amount of such Letter of Credit plus (b) the aggregate unpaid principal amount of all Reimbursement Obligations of Borrower at such time due and payable in respect of all drawings made under such Letter of Credit. For purposes of this Agreement, a Lender (other than the Lender then acting as Issuing Bank) shall be deemed to hold a Letter of Credit Liability in an amount equal to its participation interest under Section 2.03 in the related Letter of Credit, and the Lender then acting as Issuing Bank shall be deemed to hold a Letter of Credit Liability in an amount equal to its retained interest in the related Letter of Credit after giving effect to the acquisition by the Lenders (other than the Lender then acting as Issuing Bank) of their participation interests under such Section.

“LIBOR Market Index Rate” means, for any day, the Base LIBOR Rate as of that day for a Eurodollar Borrowing having a one month interest period determined at approximately 11:00 a.m. (Eastern Time) for such day (or if such day is not a Business Day, the immediately preceding Business Day). The LIBOR Market Index Rate shall be determined on a daily basis.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement and any Capital Lease having substantially the same economic effect as any of the foregoing).

“Loan” means a Revolving Loan, a Term Loan, or a Swingline Loan; provided that to the extent there shall be any Incremental Term Loans made pursuant to Section 2.15, from and after the date of the making of any such Incremental Term Loans, the term “Loans” shall include such Incremental Term Loans.

“Loan Availability Overadvance” has the meaning specified in Section 2.05(b).

“Loan Documents” means this Agreement, each Note, the Security Documents, the Fee Letter, any Extension Agreements, any Incremental Amendments, any Revolving Commitment Increase Amendments, the Guaranties, from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the Intercreditor Agreement, each Letter of Credit Document, the Transfer Authorizer Designation Form and each other document or instrument now or hereafter executed and delivered by a Loan Party in connection with, pursuant to or relating to this Agreement.

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“Loan Notice” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other, or (c) a continuation of Eurodollar Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A-1.

“Loan Parties” means, collectively, Borrower, each Guarantor, and each Pledgor, and “Loan Party” means any one of the Loan Parties.

“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

“Management Fees” means, with respect to each Property for any period, an amount equal to the greater of (i) actual management fees payable with respect thereto or (ii) three percent (3.0%) per annum on the aggregate base rent and percentage rent due and payable under leases at such Property.

“Material Adverse Effect” means: (a) a material adverse change in, or a material adverse effect upon, the business, assets, operations, or financial condition of the Companies, taken as a whole; (b) a material impairment of the ability of the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents; or (c) a material adverse effect upon the legality, validity, binding effect, or enforceability against any Loan Party of any Loan Document to which it is a party.

“Material Environmental Event” means, with respect to any Borrowing Base Property, (a) a violation of any Environmental Law with respect to such Borrowing Base Property, or (b) the presence of any Hazardous Materials on, about, or under such Borrowing Base Property that, under or pursuant to any Environmental Law, would require remediation, if in the case of either (a) or (b), such event or circumstance could reasonably be expected to have a Material Property Event.

“Material Property Event” means, with respect to any Borrowing Base Property, the occurrence of any event or circumstance occurring or arising after the date of this Agreement that could reasonably be expected to have a (a) material adverse effect with respect to the financial condition or the operations of such Borrowing Base Property, (b) material adverse effect on the Borrowing Base Asset Value of such Borrowing Base Property, or (c) material adverse effect on the ownership of such Borrowing Base Property.

“Material Title Defects” means, with respect to any Borrowing Base Property, defects, Liens (other than Liens for local real estate taxes and similar local governmental charges), and other encumbrances in the nature of easements, servitudes, restrictions, and rights-of-way that would customarily be deemed unacceptable title exceptions for a prudent lender (i.e., a prudent lender would reasonably determine that such exceptions, individually or in the aggregate, materially impair the value or operations of such Borrowing Base Property, would prevent such Borrowing Base Property from being used in the manner in which it is currently being used, or would result in a violation of any Law which would have a material and adverse effect on such Borrowing Base Property); provided that Material Title Defects shall not include any Liens or other encumbrances that existed as of the date of this Agreement and that are reflected in the Title Insurance Commitments or that are listed on Schedule 8.01.

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“Merger Agreement” means that certain Agreement and Plan of Merger, dated as of December 14, 2012 by and among American Realty Capital Properties, Inc., ARCPOP, Tiger Acquisition, LLC, ARCT and Borrower, as amended by that certain Consent and Waiver, dated as of January 28, 2013, among American Realty Capital Properties, Inc., ARCPOP, Tiger Acquisition, LLC, ARCT and Borrower.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Multiemployer Plan” means any employee benefit plan described in Section 4001(a)(3) of ERISA, to which Parent or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five (5) plan years, has made or been obligated to make contributions.

“Multiple Employer Plan” means a Plan which has two (2) or more contributing sponsors (including Parent or any ERISA Affiliate) at least two (2) of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

“NOI” means, with respect to any Property for any period, property rental and other income (as determined by GAAP) attributable to such Property accruing for such period (adjusted to eliminate the straight lining of rents) minus the amount of all expenses (as determined in accordance with GAAP) incurred in connection with and directly attributable to the ownership and operation of such Property for such period, including, without limitation, Management Fees and amounts accrued for the payment of real estate taxes and insurance premiums, but excluding any general and administrative expenses related to the operation of Borrower or the Guarantors, any interest expense or other debt service charges and any non-cash charges such as depreciation or amortization of financing costs.

“Non-Consenting Lender” means any Lender that does not approve any consent, waiver, amendment, modification or termination that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.01 and (ii) has been approved by the Required Lenders.

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

“Non-Recourse Indebtedness” means, for any Person, any Indebtedness of such Person for the repayment of which neither Parent or Borrower has any personal liability (other than for Customary Recourse Exceptions) or, if such Person is Parent or Borrower, in which recourse of the applicable holder of such Indebtedness for non-payment is limited to such holder’s Liens on a particular asset or group of assets (other than for Customary Recourse Exceptions). For the avoidance of doubt, if any Indebtedness is partially guaranteed by Parent or Borrower, then the portion of such Indebtedness that is not so guaranteed shall still be Non-Recourse Indebtedness if it otherwise satisfies the requirements in this definition.

“Note” means a Revolving Note, Term Note or a Swingline Note.

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“Notice of Swingline Borrowing” means a notice substantially in the form of Exhibit A-2 (or such other form reasonably acceptable to Administrative Agent and containing the information required in such Exhibit) to be delivered to Swingline Lender pursuant to Section 2.04(b) evidencing Borrower’s request for a Swingline Loan.

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that all references to the “Obligations” in the Subsidiary Guaranty and the Security Documents, and any other Guaranties, security agreements, or pledge agreements delivered to Administrative Agent to Guarantee, or create or evidence Liens securing, the Obligations shall, in addition to the foregoing, include all present and future indebtedness, liabilities, and obligations now or hereafter owed to Administrative Agent, any Lender, or any Affiliate of Administrative Agent or any Lender arising from, by virtue of, or pursuant to any Swap Contract that relates solely to the Obligations (the “Specified Swap Obligations”).

“Occupancy Rate” means, for any Property, the percentage of the rentable area of such Property leased and occupied by bona fide tenants of such Property pursuant to bona fide tenant Leases, in each case, which tenants are not more than 30 days past due in the payment of all rent or other similar payments due under such Leases.

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction), (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement, and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document)

“Other Taxes” means all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment pursuant to Section 11.13).

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“Outstanding Amount” means (a) with respect to Revolving Loans or Term Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Loans occurring on such date, (b) with respect to Swingline Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Swingline Loans occurring on such date, and (c) with respect to any Letter of Credit Liabilities on any date, the amount of such Letter of Credit Liabilities on such date after giving effect to any drawings made under any Letter of Credit occurring on such date and any other changes in the aggregate amount of the Letter of Credit Liabilities as of such date, including as a result of any reimbursements by Borrower of the aggregate unpaid principal amount of Reimbursement Obligations.

“Ownership Share” means, with respect to any Subsidiary of a Person (other than a wholly owned Subsidiary) or any Unconsolidated Affiliate of a Person, the greater of (a) such Person’s relative nominal direct and indirect ownership interest (expressed as a percentage) in such Subsidiary or Unconsolidated Affiliate or (b) such Person’s relative direct and indirect economic interest (calculated as a percentage) in such Subsidiary or Unconsolidated Affiliate determined in accordance with the applicable provisions of the declaration of trust, articles or certificate of incorporation, articles of organization, partnership agreement, joint venture agreement or other applicable organizational document of such Subsidiary or Unconsolidated Affiliate.

“Parent” means, prior to the occurrence of the Parent Merger, ARCT and, from and after the occurrence of the Parent Merger, ARCP, the ultimate parent of the survivor(s) of the Parent Merger.

“Parent Guaranty” means Parent Guaranty Agreement executed by Parent in favor of Administrative Agent, for the benefit of the Lenders, in form and substance acceptable to Administrative Agent.

“Parent Merger” has the meaning specified in the definition of Permitted Merger Transaction.

“Parent Share” means a share of common stock, par value $0.01 per share, of Parent.

“Participant” has the meaning specified in Section 11.06(b)(i).

“Participant Register” has the meaning specified in Section 11.06(b)(i)(iii).

“Patriot Act” has the meaning specified in Section 11.18.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Act” means the Pension Protection Act of 2006.

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“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

“Permitted Distributions” means (a) for Parent for any fiscal year of Parent, Restricted Payments in an amount not to exceed in the aggregate the greater of (i) the then applicable FFO Percentage of Funds from Operations of Parent, and (ii) the amount of distributions required to be paid by Parent in order for Parent to qualify as a REIT, and (b) for Borrower for any fiscal year of Borrower, Restricted Payments in an amount not to exceed in the aggregate the greater of (i) the then applicable FFO Percentage of Funds from Operations of Borrower and its Subsidiaries thereafter, and (ii) the amount of distributions required to be paid by Borrower directly to Parent, or indirectly to Parent via a distribution to a wholly–owned subsidiary of Parent, in order for Parent to qualify as a REIT.

“Permitted Bridge Credit Agreement Transaction” means the entry by Parent, the Borrower and the other Loan Parties into the Bridge Credit Agreement and all documents to be entered into in connection therewith, and the incurrence of the obligations and the granting of any liens thereunder, subject to the following conditions precedent (a) no Default shall have occurred and be continuing at the time of the proposed transaction or would result therefrom, (b) after giving effect thereto, Parent and Borrower shall be in pro forma compliance with the covenants set forth in Section 8.14 for the most recent determination period for which financial statements are available (after giving effect to such transaction and the mandatory prepayment of indebtedness of ARCP and its subsidiaries (other than non-recourse indebtedness of subsidiaries of ARCP)), (c) all representations and warranties shall be true and correct in all material respects immediately prior to, and after giving effect to, such transaction (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date); provided, that any representation or warranty which is qualified by materiality or “material adverse effect” or similar language shall be true and correct in all respects, (d) any Liens granted thereunder shall rank pari passu with the Liens under this Agreement, (e) after giving effect to such transaction, the sum of the Lenders’ aggregate Commitments under this Agreement and the aggregate commitments of the lenders under the Bridge Credit Agreement shall not exceed $1,075,000,000 and (f) the Intercreditor Agreement shall have been executed and delivered by Parent, the Borrower, the other Loan Parties and the applicable agent under the Bridge Credit Agreement.

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“Permitted Merger Transaction” means a merger of Parent with and into Tiger Acquisition, LLC, a Delaware limited liability company and a wholly-owned subsidiary of ARCP (the “Parent Merger”), and the substantially concurrent merger of Borrower with and into ARCPOP, a wholly-owned subsidiary of ARCP (the “Borrower Merger”), in each case pursuant to the terms of the Merger Agreement as in effect as of the date of this Agreement and subject to the following conditions precedent (a) no Default shall have occurred and be continuing at the time of the proposed transaction or would result therefrom, (b) after giving effect thereto, Parent and Borrower shall be in pro forma compliance with the covenants set forth in Section 8.14 for the most recent determination period for which financial statements are available (after giving effect to such transaction and the mandatory prepayment of indebtedness of ARCP and its subsidiaries (other than non-recourse indebtedness of subsidiaries of ARCP)), (c) all representations and warranties shall be true and correct in all material respects immediately prior to, and after giving effect to, such transaction (except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date); provided, that any representation or warranty which is qualified by materiality or “material adverse effect” or similar language shall be true and correct in all respects, (d) all guaranty and collateral requirements under the Loan Documents, including, without limitation, pursuant to Sections 2.19 and 4.06, shall have been satisfied, (e) the owners of the Equity Interests of Parent immediately prior to giving effect to such transaction shall own not less than 65% of the aggregate Equity Interests of the survivor of such transaction, (f) Administrative Agent shall have received fully executed assumption documentation in connection therewith and opinions of counsel, in each case, as reasonably requested by Administrative Agent, (g) Administrative Agent and each Lender shall have received all documentation and other information with respect to ARCP, ARCPOP and their respective Subsidiaries required by regulatory authorities or Administrative Agent’s and/or such Lender’s internal policies under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act, and (h) Parent and Borrower shall have delivered a duly executed certificate signed by the chief executive officer or chief financial officer of each of Parent and Borrower, in each case after giving effect to such transaction, certifying that the conditions set forth in clauses (a) through (e) shall have been satisfied as of the date of such certificate.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of Parent or any ERISA Affiliate or any such Plan to which Parent or any ERISA Affiliate is required to contribute on behalf of any of its employees.

“Platform” has the meaning specified in Section 7.02.

“Pledge Agreement” means the Pledge Agreement dated as of the Effective Date and each Pledge Agreement or similarly titled document, in each case executed by a Pledgor, to or for the benefit of Administrative Agent, for the benefit of the Lenders, covering the Equity Interest Collateral.

“Pledgors” means, collectively, Borrower and each Subsidiary Guarantor that is a Subsidiary of Borrower; “Pledgor” means any one of the Pledgors.

“Post-Merger Advisor” means ARC Properties Advisors, LLC, a Delaware limited liability company.

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“Post-Merger Management Agreement” means the Amended and Restated Management Agreement, to be entered into substantially concurrently with the consummation of the Permitted Merger Transaction, between ARCP and the Post-Merger Advisor, substantially in the form attached as Exhibit E to the Merger Agreement.

“Principal Office” means the office of Administrative Agent located at 608 Second Avenue S., 11th Floor, Minneapolis, Minnesota 55402 1916, or any other subsequent office that Administrative Agent shall have specified as the Principal Office by written notice to Borrower and the Lenders.

“Pro Forma Financial Statements” has the meaning specified in Section 6.05(c).

“Property” means any Real Property which is owned or ground leased, directly or indirectly, by a Company.

“Property Owners” means, collectively, each Subsidiary which owns a Borrowing Base Property, and “Property Owner” means any one of the Property Owners.

“Property Information” has the meaning specified in Section 4.03.

“Public Lender” has the meaning specified in Section 7.02.

“Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, (a) in respect of any class of non-credit enhanced long-term senior unsecured debt issued by Borrower or Parent or (b) if no rating in respect of any class of non-credit enhanced long-term senior unsecured debt issued by Borrower or Parent exists at such time, an issuer rating in respect of Borrower or Parent; provided that if any such rating agency shall have issued more than one such rating in effect at such time, the lowest such rating issued by such rating agency shall apply.

“Real Property” of any Person means all of the right, title, and interest of such Person in and to land, improvements, and fixtures.

“Recipient” means a Lender, an Issuing Bank or the Administrative Agent, as applicable.

“Recourse Indebtedness” means Indebtedness that is not Non-Recourse Indebtedness; provided that personal recourse for Customary Recourse Exceptions shall not, by itself, cause such Indebtedness to be characterized as Recourse Indebtedness.

“Reimbursement Obligation” means the absolute, unconditional and irrevocable obligation of Borrower to reimburse Issuing Bank for any drawing honored by Issuing Bank under a Letter of Credit.

“REIT” means a “real estate investment trust” in accordance with Section 856 of the Code.

“Register” has the meaning specified in Section  11.06(d).

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“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

“Release Condition” means that, after giving effect to any requested release of a Borrowing Base Property, the Borrowing Base Asset Value shall be at least Two Hundred Million Dollars ($200,000,000.00).

“Release Date” means the earlier of: (a) the date on which the Obligations have been paid in full and the Equity Collateral been released; and (b) the date on which the Liens of the Equity Collateral are fully and finally foreclosed or a conveyance by deed in lieu of such foreclosure is fully and finally effective and control of the Equity Interests of each Property Owner has been given to and accepted by the purchaser or Administrative Agent free of occupancy and claims to occupancy by the Companies and their respective heirs, devisees, representatives, successors, and assigns; provided that if such payment, performance, release, foreclosure, or conveyance is challenged, in bankruptcy proceedings or otherwise, the Release Date shall be deemed not to have occurred until such challenge is validly released, dismissed with prejudice, or otherwise barred by Law from further assertion.

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period has been waived.

“Required Lenders” means, as of any date of determination, (a) Lenders having more than fifty percent (50%) of the aggregate amount of the Revolving Commitments, the Term Loan Commitments and the outstanding Term Loans of all Lenders, or (b) if the Revolving Commitments and the Term Loan Commitments have been terminated or reduced to zero, Lenders holding more than fifty percent (50%) of the principal amount of the aggregate outstanding Loans and Letter of Credit Liabilities; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and (ii) at all times when two or more Lenders (excluding Defaulting Lenders) are party to this Agreement, the term “Required Lenders” shall in no event mean less than two Lenders unless only two Lenders are party to this Agreement and one of such Lenders is a Defaulting Lender. For purposes of this definition, a Lender shall be deemed to hold a Swingline Loan or a Letter of Credit Liability to the extent such Lender has acquired a participation therein under the terms of this Agreement and has not failed to perform its obligations in respect of such participation.

“Required Revolving Lenders” means, as of any date, (a) Revolving Lenders having more than fifty percent (50%) of the aggregate amount of the Revolving Commitments of all Revolving Lenders, or (b) if the Revolving Commitments have been terminated or reduced to zero, the Revolving Lenders holding more than fifty percent (50%) of the principal amount of the aggregate outstanding Revolving Loans and Swingline Loans and Letter of Credit Liabilities; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and (ii) at all times when two or more Revolving Lenders (excluding Defaulting Lenders) are party to this Agreement, the term “Required Revolving Lenders” shall in no event mean less than two Revolving Lenders. For purposes of this definition, a Revolving Lender (other than Swingline Lender) shall be deemed to hold a Swingline Loan and a Revolving Lender (other than Issuing Bank) shall be deemed to hold a Letter of Credit Liability, in each case, to the extent such Revolving Lender has acquired a participation therein under the terms of this Agreement and has not failed to perform its obligations in respect of such participation.

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“Required Term Loan Lenders” means, as of any date, (a) Term Loan Lenders having more than fifty percent (50%) of the aggregate amount of the Term Loan Commitments and the outstanding Term Loans of all Term Loan Lenders, or (b) if the Term Loan Commitments have been terminated or reduced to zero, the Term Loan Lenders holding more than fifty percent (50%) of the principal amount of the aggregate outstanding Term Loans; provided that (i) in determining such percentage at any given time, all then existing Defaulting Lenders will be disregarded and excluded, and (ii) at all times when two or more Term Loan Lenders (excluding Defaulting Lenders) are party to this Agreement, the term “Required Term Loan Lenders” shall in no event mean less than two Term Loan Lenders.

“Responsible Officer” means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer, assistant treasurer or controller of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 5.01, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer of the applicable Loan Party so designated by any of the foregoing officers in a notice to Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

“Restricted Payment” means any dividend or other distribution (whether in cash, Equity Interests or other property) with respect to any capital stock or other Equity Interest of Borrower or any Subsidiary, or any payment (whether in cash, Equity Interests or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to Borrower’s stockholders, partners or members (or the equivalent Person thereof).

“Revolving Commitment” means, as to each Lender (other than Swingline Lender), such Lender’s obligation to make Revolving Loans pursuant to Section 2.01(a), to issue (in the case of Issuing Bank) and to participate (in the case of the other Lenders) in Letters of Credit pursuant to Section 2.03(i), and to participate in Swingline Loans pursuant to Section 2.04(e), in an amount up to, but not exceeding the amount set forth for such Lender on Schedule I as such Lender’s “Revolving Commitment Amount” or as set forth in any applicable Assignment and Assumption, or agreement executed by a Person becoming a Lender in accordance with Section 2.15, as the same may be reduced from time to time pursuant to Section 2.06 or increased or reduced as appropriate to reflect any assignments to or by such Lender effected in accordance with Section 11.06(c) or increased as appropriate to reflect any increase effected in accordance with Section 2.15.

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“Revolving Commitment Percentage” means, as to each Lender with a Revolving Commitment, the ratio, expressed as a percentage, of (a) the amount of such Lender’s Revolving Commitment to (b) the aggregate amount of the Revolving Commitments of all Revolving Lenders; provided, however, that if at the time of determination the Revolving Commitments have been terminated or been reduced to zero, the “Revolving Commitment Percentage” of each Lender with a Revolving Commitment shall be the “Revolving Commitment Percentage” of such Lender in effect immediately prior to such termination or reduction.

“Revolving Credit Exposure” means, as to any Revolving Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans and such Revolving Lender’s participation in Letter of Credit Liabilities and Swingline Loans at such time.

“Revolving Lender” means a Lender having a Revolving Commitment, or if the Revolving Commitments have terminated, holding any Revolving Loans.

“Revolving Loan” means a loan made by a Revolving Lender to Borrower pursuant to Section 2.01(a).

“Revolving Note” means a promissory note of Borrower substantially in the form of Exhibit B-1, payable to the order of a Revolving Lender in a principal amount equal to the amount of such Lender’s Revolving Commitment.

“Revolving Termination Date” means February 14, 2017, or such later date to which the Revolving Termination Date may be extended pursuant to Section 2.16.

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, and any successor thereto.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“Secured Debt” means, as of any date of determination, that portion of Consolidated Total Debt which is secured by a lien on any real property owned or leased by Borrower or any Subsidiary or Unconsolidated Affiliate, as applicable.

“Secured Leverage Ratio” means, as of any date of determination, the quotient (expressed as a percentage) of (a) Secured Debt, divided by (b) Total Asset Value.

“Security Documents” means:

(a)          the Pledge Agreements;

(b)          financing statements to be filed with the appropriate state and/or county offices for the perfection of a security interest in any of the Collateral; and

(c)          all other agreements, documents, and instruments securing the Obligations or any part thereof, as shall from time to time be executed and delivered by Borrower, Subsidiary Guarantors, or any other Person in favor of Administrative Agent for the benefit of itself and the other Lenders.

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“Share” means Borrower’s and Parent’s direct or indirect share of a Consolidated Subsidiary or an Unconsolidated Affiliate as reasonably determined by Borrower based upon Borrower’s and Parent’s economic interest (whether direct or indirect) in such Consolidated Subsidiary or Unconsolidated Affiliate, as of the date of such determination.

“Specified Swap Obligations” has the meaning specified in the definition of “Obligations.”

“Stated Amount” means the amount available to be drawn by a beneficiary under a Letter of Credit from time to time, as such amount may be increased or reduced from time to time in accordance with the terms of such Letter of Credit.

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the Equity Interests having ordinary voting power for the election of directors or other governing body (other than Equity Interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Parent.

“Subsidiary Guarantors” means, as of any date, all Subsidiaries of Parent owning a direct or indirect interest in Borrower or in any Borrowing Base Property (including each Property Owner), and the general partner of each Subsidiary that is a limited partnership and “Subsidiary Guarantor” means any one of the Subsidiary Guarantors.

“Subsidiary Guaranty” means the Subsidiary Guaranty Agreement executed by each Subsidiary Guarantor in favor of Administrative Agent, for the benefit of the Lenders, in form and substance acceptable to Administrative Agent.

“Substitute Rate” means, with respect to any Borrowing, a floating rate of interest equal to (a) the Federal Funds Rate from time to time plus one and one-half of one percent (1.50%) plus (b) the Applicable Margin.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

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“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

“Swingline Commitment” means Swingline Lender’s obligation to make Swingline Loans pursuant to Section 2.04 in an amount up to, but not exceeding the amount set forth in the first sentence of Section 2.04(a), as such amount may be reduced from time to time in accordance with the terms hereof.

“Swingline Lender” means Wells Fargo Bank, National Association, together with its respective successors and assigns.

“Swingline Loan” means a loan made by Swingline Lender to Borrower pursuant to Section 2.04.

“Swingline Maturity Date” means the date which is 7 Business Days prior to the Revolving Termination Date.

“Swingline Note” means the promissory note of Borrower substantially in the form of Exhibit B-2, payable to the order of Swingline Lender in a principal amount equal to the amount of the Swingline Commitment as originally in effect and otherwise duly completed.

“Tangible Net Worth” means, as of any date, the stockholders’ equity of Parent and its Subsidiaries on a consolidated basis, plus accumulated depreciation and amortization, minus (to the extent included when determining stockholders’ equity): (a) the amount of any write-up in the book value of any assets reflected in any balance sheet resulting from revaluation thereof or any write up in excess of the cost of such assets acquired, and (b) the aggregate of all amounts appearing on the assets side of any such balance sheet for franchises, licenses, permits, patents, patent applications, copyrights, trademarks, service marks, trade names, goodwill, treasury stock, experimental or organizational expenses and other like assets which would be classified as intangible assets under GAAP (excluding amortization in respect of acquired intangible lease assets), all determined on a consolidated basis.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Term Loan” means a loan made by a Term Loan Lender to Borrower pursuant to Section 2.01(b).

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“Term Loan Commitment” means, as to each Term Loan Lender, such Lender’s obligation to make Term Loans on the Effective Date pursuant to Section 2.01(b), in an amount up to, but not exceeding, the amount set forth for such Lender on Schedule I as such Lender’s “Term Loan Commitment Amount”.

“Term Loan Lender” means a Lender having a Term Loan Commitment, or if the Term Loan Commitments have terminated, a Lender holding a Term Loan.

“Term Loan Maturity Date” means February 14, 2018.

“Term Note” means a promissory note of Borrower substantially in the form of Exhibit B-3, payable to the order of a Term Loan Lender in a principal amount equal to the amount of such Term Loan Lender’s Term Loan.

“Threshold Amount” means $20,000,000 for any Non-Recourse Indebtedness and $0 for any Recourse Indebtedness.

“Title Company” means Chicago Title Insurance Company or such other title insurance company reasonably acceptable to Administrative Agent.

“Total Asset Value” means the sum of (a) Consolidated Group’s pro rata share of NOI for the most recent quarter, multiplied by four, and divided by the Capitalization Rate (excluding the Consolidated Group’s pro rata share of the NOI for any Property not owned for the entire prior quarter), (b) the acquisition price paid for any Property acquired during the prior quarter, (c) cash and Cash Equivalents at quarter end, (d) vacant land at cost (e) mortgage notes receivable at GAAP, and (f) Construction In Progress at cost. Borrower’s Ownership Share of assets held by Unconsolidated Affiliates (excluding assets of the type described in the immediately preceding clause (c)) will be included in the calculation of Total Asset Value consistent with the above described treatment for wholly owned assets.

“Total Bridge Facility Outstandings” means, as of any date from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the amount equal to the aggregate outstanding principal amount of any loans under the Bridge Credit Agreement after giving effect to any borrowings and prepayments or repayments of such loans occurring on such date as of such date.

“Total Funded Debt” means, as of any date, Consolidated Total Debt excluding intracompany Indebtedness, deferred income taxes, security deposits, accounts payable and accrued liabilities, and any prepaid rents, in each case determined in accordance with GAAP.

“Total Outstandings” means, as of any date, the aggregate Outstanding Amount of all Loans and all Letter of Credit Liabilities.

“Total Revolving Outstandings” means, as of any date, the aggregate Outstanding Amount of all Revolving Loans, Swingline Loans and all Letter of Credit Liabilities.

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“Transfer Authorizer Designation Form” means a transfer authorizer designation delivered to Administrative Agent pursuant to Section 10.11, as the same may be amended, restated or modified from time to time with the prior written approval of Administrative Agent.

“Type” when used in reference to any Revolving Loan, Term Loan or Borrowing of Revolving Loans or Term Loans, refers to the rate by reference to which interest on such Loan, or on the Loans comprising such Borrowing, is determined. For purposes hereof, “rate” shall include the Base LIBOR Rate and the LIBOR Market Index Rate.

“Unconsolidated Affiliate” means any Person in which a Company has an Equity Interest and whose financial results would not be consolidated under GAAP with the financial results of Parent on the consolidated financial statements of Parent.

“United States” and “U.S.” mean the United States of America.

“Variable Rate Indebtedness” means any Indebtedness that bears interest at a variable rate without the benefit of a Swap Contract.

“Wells Fargo Bank” means Wells Fargo Bank, National Association, in its individual capacity and its successors.

1.02         Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)          The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, Equity Interests, accounts and contract rights.

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(b)          In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(c)          Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

1.03         Accounting Terms.

(a)          Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Pro Forma Financial Statements or the Audited Financial Statements, as applicable, except as otherwise specifically prescribed herein.

(b)          Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or Required Lenders shall so request, Administrative Agent, the Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of Required Lenders); provided that until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

(c)          Consolidation of Variable Interest Entities. All references herein to consolidated financial statements of the Companies or to the determination of any amount for the Companies on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that Parent is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein, provided further that for all purposes in calculating consolidated covenants hereunder Parent shall be deemed to own one hundred percent (100%) of the equity interests in Borrower.

1.04         Financial Standards. All financial computations required of a Person under this Agreement shall be calculated without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Borrower or any Subsidiary at “fair value”, as defined therein.

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1.05         Rounding. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.06         Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

1.07         Financial Attributes of Non-Wholly Owned Subsidiaries. When determining the Applicable Margin and compliance by Parent or Borrower with any financial covenant contained in any of the Loan Documents (a) only the Ownership Share of Parent or Borrower, as applicable, of the financial attributes of a Subsidiary that is not a Wholly Owned Subsidiary shall be included and (b) Parent’s Ownership Share of Borrower shall be deemed to be 100.0%.

Article II.
Credit Facility

2.01         Revolving Loans and Term Loans.

(a)          Revolving Loans. Subject to the terms and conditions set forth in this Agreement, including without limitation, Section 2.14, each Revolving Lender severally and not jointly agrees to make Revolving Loans to Borrower during the period from and including the Effective Date to but excluding the Revolving Termination Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, such Lender’s Revolving Commitment. The Borrowings of Revolving Loans may be ratable Floating Rate Borrowings or ratable Fixed Rate Borrowings. Subject to the terms and conditions of this Agreement, Borrower may borrow, repay and reborrow Revolving Loans.

(b)          Term Loans. Subject to the terms and conditions set forth herein, including without limitation, Section 2.14, each Term Loan Lender severally and not jointly agrees to make Term Loans to Borrower from time to time, on any Business Day during the Availability Period (each such date, a “Term Loan Borrowing Date”) in an aggregate amount not to exceed such Term Loan Lender’s Term Loan Commitment; provided that Borrower shall not be permitted to request a Borrowing of Term Loans on more than three (3) occasions during the Availability Period. The Borrowings of Term Loans may be ratable Floating Rate Borrowings or ratable Fixed Rate Borrowings. Amounts repaid or prepaid in respect of the Term Loan Loans may not be reborrowed.

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2.02         Borrowings, Conversions and Continuations of Loans.

(a)          Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Loans shall be made upon Borrower’s irrevocable notice to Administrative Agent, which may be given by telephone. Each such notice must be received by Administrative Agent not later than 10:00 a.m. (i) three (3) Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Loans or of any conversion of Eurodollar Loans to Floating Rate Loans, and (ii) one (1) Business Day prior to the requested date of any Borrowing of Floating Rate Loans. Each telephonic notice by Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Loans shall be in a principal amount of $2,500,000 or a whole multiple of $500,000 in excess thereof. Except as provided in Section 2.03(e) and Section 2.04(e), each Borrowing of or conversion to Floating Rate Loans shall be in a principal amount of $250,000 or a whole multiple of $50,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of Eurodollar Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) in the case of a Eurodollar Borrowing, the duration of the initial Interest Period with respect thereto. If Borrower fails to specify a Type of Loan in a Loan Notice or if Borrower fails to give a timely notice requesting a conversion or continuation, then (I) so long as no Event of Default exists, the applicable Loans shall be made as, or continued to, a Eurodollar Loan with an Interest Period of one (1) month and (II) if an Event of Default exists, then the applicable Loans shall be made as, or converted to, Floating Rate Loans. If Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Loans in any such Loan Notice, but fails to specify an Interest Period, then it will be deemed to have specified an Interest Period of one (1) month.

(b)          Following receipt of a Loan Notice, Administrative Agent shall promptly notify each Lender of the amount of its Applicable Revolving Percentage or Applicable Term Loan Percentage, as applicable, of the applicable Loans, and if no timely notice of a conversion or continuation is provided by Borrower, Administrative Agent shall notify each Lender of the details of any automatic continuation described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to Administrative Agent in immediately available funds at Administrative Agent’s Office not later than 12:00 noon on the Business Day specified in the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Sections 5.02 and Section 5.01, Administrative Agent shall make all funds so received available to Borrower by 1:00 p.m. in like funds as received by Administrative Agent either by (i) crediting the account of Borrower on the books of Wells Fargo Bank with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) Administrative Agent by Borrower.

(c)          Except as otherwise provided herein, a Eurodollar Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Loan. During the existence of an Event of Default, no Loans may be converted to or continued as Eurodollar Loans without the consent of Required Lenders.

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(d)          Administrative Agent shall promptly notify Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Loans upon determination of such interest rate.

(e)          After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than six (6) Interest Periods in effect with respect to Loans.

2.03         Letters of Credit.

(a)          Letters of Credit. Subject to the terms and conditions of this Agreement, including without limitation, Section 2.14, Issuing Bank, on behalf of the Revolving Lenders, agrees to issue for the account of Borrower during the period from and including the Effective Date to, but excluding, the date 30 days prior to the Revolving Termination Date, one or more standby letters of credit (each a “Letter of Credit”) in Dollars up to a maximum aggregate Stated Amount at any one time outstanding not to exceed $25,000,000 as such amount may be reduced from time to time in accordance with the terms hereof (the “L/C Commitment Amount”).

(b)          Terms of Letters of Credit. At the time of issuance, the amount, form, terms and conditions of each Letter of Credit, and of any drafts or acceptances thereunder, shall be subject to approval by Issuing Bank and Borrower. Notwithstanding the foregoing, in no event may (i) the expiration date of any Letter of Credit extend beyond the date that is five (5) Business Days prior to the Revolving Termination Date, or (ii) any Letter of Credit have an initial duration in excess of one year; provided, however, a Letter of Credit may contain a provision providing for the automatic extension of the expiration date in the absence of a notice of non-renewal from Issuing Bank for a period not to exceed one year but in no event shall any such provision permit the extension of the expiration date of such Letter of Credit beyond the date that is five (5) Business Days prior to the Revolving Termination Date. The initial Stated Amount of each Letter of Credit shall be at least $100,000 (or such lesser amount as may be acceptable to Issuing Bank, Administrative Agent and Borrower).

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(c)          Requests for Issuance of Letters of Credit. Borrower shall give Issuing Bank and Administrative Agent written notice at least five (5) Business Days prior to the requested date of issuance of a Letter of Credit (or such shorter period consented to by Issuing Bank), such notice to describe in reasonable detail the proposed terms of such Letter of Credit and the nature of the transactions or obligations proposed to be supported by such Letter of Credit, and in any event shall set forth with respect to such Letter of Credit the proposed (i) initial Stated Amount, (ii) beneficiary, and (iii) expiration date. Borrower shall also execute and deliver such customary applications and agreements for standby letters of credit and other forms, together with such additional information, as requested from time to time by Issuing Bank or Administrative Agent. Provided Borrower has given the notice prescribed by the first sentence of this subsection and delivered such applications and agreements referred to in the preceding sentence, subject to the other terms and conditions of this Agreement, including the satisfaction of any applicable conditions precedent set forth in Section 5.02, Issuing Bank shall issue the requested Letter of Credit on the requested date of issuance for the benefit of the stipulated beneficiary but in no event prior to the date five (5) Business Days (or such shorter period consented to by Issuing Bank) following the date after which Issuing Bank has received all of the items required to be delivered to it under this subsection. Issuing Bank shall not at any time be obligated to issue any Letter of Credit if such issuance would conflict with, or cause Issuing Bank or any Revolving Lender to exceed any limits imposed by, any Applicable Law. References herein to “issue” and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any outstanding Letters of Credit, unless the context otherwise requires. Upon the written request of Borrower, Issuing Bank shall deliver to Borrower a copy of each issued Letter of Credit within a reasonable time after the date of issuance thereof. To the extent any term of a Letter of Credit Document is inconsistent with a term of any Loan Document, the term of such Loan Document shall control.

(d)          Reimbursement Obligations. Upon receipt by Issuing Bank from the beneficiary of a Letter of Credit of any demand for payment under such Letter of Credit, Issuing Bank shall promptly notify Borrower and Administrative Agent of the amount to be paid by Issuing Bank as a result of such demand and the date on which payment is to be made by Issuing Bank to such beneficiary in respect of such demand; provided, however, that Issuing Bank’s failure to give, or delay in giving, such notice shall not discharge Borrower in any respect from the applicable Reimbursement Obligation. Borrower hereby absolutely, unconditionally and irrevocably agrees to pay and reimburse Issuing Bank for the amount of each demand for payment under such Letter of Credit within one (1) Business Day of the date on which payment is to be made by Issuing Bank to the beneficiary thereunder, without presentment, demand, protest or other formalities of any kind. Upon receipt by Issuing Bank of any payment in respect of any Reimbursement Obligation, Issuing Bank shall promptly pay to each Revolving Lender that has acquired a participation therein under the second sentence of the immediately following subsection (i) such Lender’s Revolving Commitment Percentage of such payment.

(e)          Manner of Reimbursement. Upon its receipt of a notice referred to in the immediately preceding subsection (d), Borrower shall advise Administrative Agent and Issuing Bank whether or not Borrower intends to borrow hereunder to finance its obligation to reimburse Issuing Bank for the amount of the related demand for payment and, if it does, Borrower shall submit a timely request for such Borrowing as provided in the applicable provisions of this Agreement. If Borrower fails to so advise Administrative Agent and Issuing Bank, or if Borrower fails to reimburse Issuing Bank for a demand for payment under a Letter of Credit within one (1) Business Day of the date of such payment, the failure of which Issuing Bank shall promptly notify Administrative Agent, then (i) if the applicable conditions contained in Section 5.02(a), (b) and (d) would permit the making of Revolving Loans, Borrower shall be deemed to have requested a borrowing of Revolving Loans (which shall be Floating Rate Loans) in an amount equal to the unpaid Reimbursement Obligation and Administrative Agent shall give each Revolving Lender prompt notice of the amount of the Revolving Loan to be made available to Administrative Agent not later than 12:00 noon and (ii) if such conditions would not permit the making of Revolving Loans, the provisions of subsection (j) of this Section shall apply.

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(f)          Effect of Letters of Credit on Revolving Commitments. Upon the issuance by Issuing Bank of any Letter of Credit and until such Letter of Credit shall have expired or been cancelled, the Revolving Commitment of each Revolving Lender shall be deemed to be utilized for all purposes of this Agreement in an amount equal to the product of (i) such Lender’s Revolving Commitment Percentage and (ii) (A) the Stated Amount of such Letter of Credit plus (B) any related Reimbursement Obligations then outstanding.

(g)          Issuing Bank’s Duties Regarding Letters of Credit; Unconditional Nature of Reimbursement Obligations. In examining documents presented in connection with drawings under Letters of Credit and making payments under such Letters of Credit against such documents, Issuing Bank shall only be required to use the same standard of care as it uses in connection with examining documents presented in connection with drawings under Letters of Credit in which it has not sold participations and making payments under such Letters of Credit. Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, none of Issuing Bank, Administrative Agent or any of the Lenders shall be responsible for, and Borrower’s obligations in respect of Letters of Credit shall not be affected in any manner by, (i) the form, validity, sufficiency, accuracy, genuineness or legal effects of any document submitted by any party in connection with the application for and issuance of or any drawing honored under any Letter of Credit even if such document should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit, or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any Letter of Credit to comply fully with conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telex, telecopy, electronic mail or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit, or of the proceeds thereof; (vii) the misapplication by the beneficiary of any Letter of Credit, or of the proceeds of any drawing under any Letter of Credit; or (viii) any consequences arising from causes beyond the control of Issuing Bank, Administrative Agent or the Lenders. None of the above shall affect, impair or prevent the vesting of any of Issuing Bank’s or Administrative Agent’s rights or powers hereunder. Any action taken or omitted to be taken by Issuing Bank under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final, non-appealable judgment), shall not create against Issuing Bank any liability to Borrower, Administrative Agent or any Lender. In this connection, the obligation of Borrower to reimburse Issuing Bank for any drawing made under any Letter of Credit, and to repay any Revolving Loan made pursuant to the second sentence of the immediately preceding subsection (e), shall be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement and any other applicable Letter of Credit Document under all circumstances whatsoever, including without limitation, the following circumstances: (A) any lack of validity or enforceability of any Letter of Credit Document or any term or provisions therein; (B) any amendment or waiver of or any consent to departure from all or any of the Letter of Credit Documents; (C) the existence of any claim, setoff, defense or other right which Borrower may have at any time against Issuing Bank, Administrative Agent, any Lender, any beneficiary of a Letter of Credit or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or in the Letter of Credit Documents or any unrelated transaction; (D) any breach of contract or dispute between Borrower, Issuing Bank, Administrative Agent, any Lender or any other Person; (E) any demand, statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein or made in connection therewith being untrue or inaccurate in any respect whatsoever; (F) any non-application or misapplication by the beneficiary of a Letter of Credit or of the proceeds of any drawing under such Letter of Credit; (G) payment by Issuing Bank under any Letter of Credit against presentation of a draft or certificate which does not strictly comply with the terms of such Letter of Credit; and (H) any other act, omission to act, delay or circumstance whatsoever that might, but for the provisions of this Section, constitute a legal or equitable defense to or discharge of Borrower’s Reimbursement Obligations. Notwithstanding anything to the contrary contained in this Section or Section 11.04, but not in limitation of Borrower’s unconditional obligation to reimburse Issuing Bank for any drawing made under a Letter of Credit as provided in this Section and to repay any Revolving Loan made pursuant to the second sentence of the immediately preceding subsection (e), Borrower shall have no obligation to indemnify Administrative Agent, Issuing Bank or any Lender in respect of any liability incurred by Administrative Agent, Issuing Bank or such Lender arising solely out of the gross negligence or willful misconduct of Administrative Agent, Issuing Bank or such Lender in respect of a Letter of Credit as determined by a court of competent jurisdiction in a final, non-appealable judgment. Except as otherwise provided in this Section, nothing in this Section shall affect any rights Borrower may have with respect to the gross negligence or willful misconduct of Administrative Agent, Issuing Bank or any Lender with respect to any Letter of Credit.

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(h)          Amendments, Etc. The issuance by Issuing Bank of any amendment, supplement or other modification to any Letter of Credit shall be subject to the same conditions applicable under this Agreement to the issuance of new Letters of Credit (including, without limitation, that the request therefor be made through Issuing Bank), and no such amendment, supplement or other modification shall be issued unless either (i) the respective Letter of Credit affected thereby would have complied with such conditions had it originally been issued hereunder in such amended, supplemented or modified form or (ii) Administrative Agent and, if applicable, the Revolving Lenders required by Section 11.01, shall have consented thereto. In connection with any such amendment, supplement or other modification, Borrower shall pay the fees, if any, payable under the last sentence of Section 2.09(d).

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(i)          Revolving Lenders’ Participation in Letters of Credit. Immediately upon the issuance by Issuing Bank of any Letter of Credit each Revolving Lender shall be deemed to have absolutely, irrevocably and unconditionally purchased and received from Issuing Bank, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Revolving Commitment Percentage of the liability of Issuing Bank with respect to such Letter of Credit and each Revolving Lender thereby shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and shall be unconditionally obligated to Issuing Bank to pay and discharge when due, such Lender’s Revolving Commitment Percentage of Issuing Bank’s liability under such Letter of Credit. In addition, upon the making of each payment by a Revolving Lender to Administrative Agent for the account of Issuing Bank in respect of any Letter of Credit pursuant to the immediately following subsection (j), such Lender shall, automatically and without any further action on the part of Issuing Bank, Administrative Agent or such Lender, acquire (i) a participation in an amount equal to such payment in the Reimbursement Obligation owing to Issuing Bank by Borrower in respect of such Letter of Credit and (ii) a participation in a percentage equal to such Lender’s Revolving Commitment Percentage in any interest or other amounts payable by Borrower in respect of such Reimbursement Obligation (other than the fees payable to Issuing Bank pursuant to the second and the last sentences of Section 2.09(d)).

(j)          Payment Obligation of Revolving Lenders. Each Revolving Lender severally agrees to pay to Administrative Agent, for the account of Issuing Bank, on demand in immediately available funds in Dollars the amount of such Lender’s Revolving Commitment Percentage of each drawing paid by Issuing Bank under each Letter of Credit to the extent such amount is not reimbursed by Borrower pursuant to the immediately preceding subsection (d); provided, however, that in respect of any drawing under any Letter of Credit, the maximum amount that any Revolving Lender shall be required to fund, whether as a Revolving Loan or as a participation, shall not exceed such Lender’s Revolving Commitment Percentage of such drawing except as otherwise provided in Section 2.18(d). If the notice referenced in the second sentence of Section 2.03(e) is received by a Revolving Lender not later than 11:00 a.m., then such Lender shall make such payment available to Administrative Agent not later than 2:00 p.m. on the date of demand therefor; otherwise, such payment shall be made available to Administrative Agent not later than 1:00 p.m. on the next succeeding Business Day. Each Revolving Lender’s obligation to make such payments to Administrative Agent under this subsection, and Administrative Agent’s right to receive the same for the account of Issuing Bank, shall be absolute, irrevocable and unconditional and shall not be affected in any way by any circumstance whatsoever, including without limitation, (i) the failure of any other Revolving Lender to make its payment under this subsection, (ii) the financial condition of Borrower or any other Loan Party, (iii) the existence of any Default or Event of Default, including any Event of Default described in Section 9.01(g) or (iv) the termination of the Revolving Commitments. Each such payment to Administrative Agent for the account of Issuing Bank shall be made without any offset, abatement, withholding or deduction whatsoever.

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(k)          Information to Lenders. Promptly following any change in Letters of Credit outstanding, Issuing Bank shall deliver to Administrative Agent, which shall promptly deliver the same to each Revolving Lender and Borrower, a notice describing the aggregate amount of all Letters of Credit outstanding at such time. Upon the request of any Revolving Lender from time to time, Issuing Bank shall deliver any other information reasonably requested by such Lender with respect to each Letter of Credit then outstanding. Other than as set forth in this subsection, Issuing Bank shall have no duty to notify the Lenders regarding the issuance or other matters regarding Letters of Credit issued hereunder. The failure of Issuing Bank to perform its requirements under this subsection shall not relieve any Revolving Lender from its obligations under the immediately preceding subsection (j).

2.04         Swingline Loans.

(a)          Swingline Loans. Subject to the terms and conditions hereof, including without limitation Section 2.14, Swingline Lender agrees to make Swingline Loans to Borrower, during the period from the Effective Date to but excluding the Swingline Maturity Date, in an aggregate principal amount at any one time outstanding up to, but not exceeding, $25,000,000, as such amount may be reduced from time to time in accordance with the terms hereof. If at any time the aggregate principal amount of the Swingline Loans outstanding at such time exceeds the Swingline Commitment in effect at such time, Borrower shall immediately pay Administrative Agent for the account of Swingline Lender the amount of such excess. Subject to the terms and conditions of this Agreement, Borrower may borrow, repay and reborrow Swingline Loans hereunder. The borrowing of a Swingline Loan shall not constitute usage of any Revolving Lender’s Revolving Commitment for purposes of calculation of the fee payable under Section 2.09(b).

(b)          Procedure for Borrowing Swingline Loans. Borrower shall give Administrative Agent and Swingline Lender notice pursuant to a Notice of Swingline Borrowing or telephonic notice of each borrowing of a Swingline Loan. Each Notice of Swingline Borrowing shall be delivered to Swingline Lender no later than 11:00 a.m. on the proposed date of such Borrowing. Any telephonic notice shall include all information to be specified in a written Notice of Swingline Borrowing and shall be promptly confirmed in writing by Borrower pursuant to a Notice of Swingline Borrowing sent to Swingline Lender by telecopy on the same day of the giving of such telephonic notice. Not later than 3:00 p.m. on the date of the requested Swingline Loan and subject to satisfaction of the applicable conditions set forth in Section 5.2 for such Borrowing, Swingline Lender will make the proceeds of such Swingline Loan available to Borrower in Dollars, in immediately available funds, at the account specified by Borrower in the Notice of Swingline Borrowing.

(c)          Interest. Swingline Loans shall bear interest at a per annum rate equal to the Floating Rate as in effect from time to time plus the then effective Applicable Margin or at such other rate or rates as Borrower and Swingline Lender may agree from time to time in writing. Interest on Swingline Loans is solely for the account of Swingline Lender (except to the extent a Revolving Lender acquires a participating interest in a Swingline Loan pursuant to the immediately following subsection (e)). All accrued and unpaid interest on Swingline Loans shall be payable on the dates and in the manner provided in Section 2.08 with respect to interest on Floating Rate Loans (except as Swingline Lender and Borrower may otherwise agree in writing in connection with any particular Swingline Loan).

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(d)          Swingline Loan Amounts, Etc. Each Swingline Loan shall be in the minimum amount of $500,000 and integral multiples of $100,000 in excess thereof, or such other minimum amounts agreed to by Swingline Lender and Borrower. Any voluntary prepayment of a Swingline Loan must be in integral multiples of $100,000 or the aggregate principal amount of all outstanding Swingline Loans (or such other minimum amounts upon which Swingline Lender and Borrower may agree) and in connection with any such prepayment, Borrower must give Swingline Lender and Administrative Agent prior written notice thereof no later than 12:00 noon on the day prior to the date of such prepayment. The Swingline Loans shall, in addition to this Agreement, be evidenced by the Swingline Note.

(e)          Repayment and Participations of Swingline Loans. Borrower agrees to repay each Swingline Loan within one Business Day of demand therefor by Swingline Lender and, in any event, within 5 Business Days after the date such Swingline Loan was made; provided, that the proceeds of a Swingline Loan may not be used to pay a Swingline Loan. Notwithstanding the foregoing, Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Swingline Loans on the Swingline Maturity Date (or such earlier date as Swingline Lender and Borrower may agree in writing). In lieu of demanding repayment of any outstanding Swingline Loan from Borrower, Swingline Lender may, on behalf of Borrower (which hereby irrevocably directs Swingline Lender to act on its behalf), request a Borrowing of Revolving Loans that are Floating Rate Loans from the Revolving Lenders in an amount equal to the principal balance of such Swingline Loan. Swingline Lender shall give notice to Administrative Agent of any such borrowing of Revolving Loans not later than 11:00 a.m. at least one Business Day prior to the proposed date of such borrowing. Promptly after receipt of such notice of borrowing of Revolving Loans from Swingline Lender under the immediately preceding sentence, Administrative Agent shall notify each Revolving Lender of the proposed Borrowing. Not later than 12:00 noon on the proposed date of such Borrowing, each Revolving Lender will make available to Administrative Agent at the Principal Office for the account of Swingline Lender, in immediately available funds, the proceeds of the Revolving Loan to be made by such Lender. Administrative Agent shall pay the proceeds of such Revolving Loans to Swingline Lender, which shall apply such proceeds to repay such Swingline Loan. If the Revolving Lenders are prohibited from making Revolving Loans required to be made under this subsection for any reason whatsoever, including without limitation, the existence of any of the Defaults or Events of Default described in Section 9.01(g), each Revolving Lender shall purchase from Swingline Lender, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Revolving Commitment Percentage of such Swingline Loan, by directly purchasing a participation in such Swingline Loan in such amount and paying the proceeds thereof to Administrative Agent for the account of Swingline Lender in Dollars and in immediately available funds. A Revolving Lender’s obligation to purchase such a participation in a Swingline Loan shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including without limitation, (i) any claim of setoff, counterclaim, recoupment, defense or other right which such Lender or any other Person may have or claim against Administrative Agent, Swingline Lender or any other Person whatsoever, (ii) the existence of a Default or Event of Default (including without limitation, any of the Defaults or Events of Default described in Section 9.01(g)), or the termination of any Revolving Lender’s Revolving Commitment, (iii) the existence (or alleged existence) of an event or condition which has had or could have a Material Adverse Effect, (iv) any breach of any Loan Document by Administrative Agent, any Lender, Borrower or any other Loan Party, or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. If such amount is not in fact made available to Swingline Lender by any Revolving Lender, Swingline Lender shall be entitled to recover such amount on demand from such Lender, together with accrued interest thereon for each day from the date of demand thereof, at the Federal Funds Rate. If such Lender does not pay such amount forthwith upon Swingline Lender’s demand therefor, and until such time as such Lender makes the required payment, Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount of such unpaid participation obligation for all purposes of the Loan Documents (other than those provisions requiring the other Revolving Lenders to purchase a participation therein). Further, such Lender shall be deemed to have assigned any and all payments made of principal and interest on its Revolving Loans, and any other amounts due it hereunder, to Swingline Lender to fund Swingline Loans in the amount of the participation in Swingline Loans that such Lender failed to purchase pursuant to this Section until such amount has been purchased (as a result of such assignment or otherwise).

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2.05         Prepayments.

(a)          Optional Prepayments.

(i)          Borrower may, upon notice to Administrative Agent, at any time or from time to time voluntarily prepay any Revolving Loans or Term Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by Administrative Agent not later than 11:00 a.m. (A) three (3) Business Days prior to any date of prepayment of Fixed Rate Loans and (B) one (1) Business Day prior to any date of prepayment of Floating Rate Loans or, in each case, in connection with a prepayment of the Loans in full, upon such shorter notice as shall be approved by Administrative Agent in writing; (ii) any prepayment of Fixed Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof; and (iii) any prepayment of Floating Rate Loans shall be in a principal amount of $100,000 or a whole multiple of $25,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if Eurodollar Loans are to be prepaid, the Interest Period(s) of such Loans. Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Revolving Percentage or Applicable Term Loan Percentage, as applicable, of such prepayment. If such notice is given by Borrower, then Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, provided that such notice may state that it is conditioned upon the effectiveness of other credit facilities or other events. Any prepayment of a Eurodollar Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section 2.18, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Revolving Percentages or Applicable Term Loan Percentages, as the case may be.

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(ii)         Prepayments of Swingline Loans shall be made in accordance with Section 2.04(d).

(b)          Mandatory Prepayments.

(i)          Revolving Commitment Overadvance. If at any time the Total Revolving Outstandings exceed the aggregate amount of the Revolving Commitments, Borrower shall immediately upon demand pay to Administrative Agent for the account of the Lenders then holding Revolving Commitments (or if the Revolving Commitments have been terminated, then holding outstanding Revolving Loans, Swingline Loans and/or Letter of Credit Liabilities), the amount of such excess.

(ii)         Maximum Loan Availability Overadvance. If at any time the sum of (x) Total Outstandings plus (y) from and after the occurrence of the Permitted Bridge Agreement Transaction, Total Bridge Facility Outstandings exceeds the Borrowing Base (the amount of such excess, the “Loan Availability Overadvance”), Borrower shall, subject to clause (iv) below, immediately upon demand pay to Administrative Agent for the account of the Lenders, the amount of such Loan Availability Overadvance.

(iii)        Application of Mandatory Prepayments. Amounts paid under (1) the preceding subsection (b)(i) shall be applied (A) first, to repay any outstanding Revolving Loans (provided that such repayment shall not cause a reduction in the Revolving Commitments) and (B) second, to Cash Collateralize the existing Letter of Credit Liabilities, and (2) the preceding subsection (b)(ii) shall be applied (A) first, to repay any outstanding Revolving Loans (provided that such repaying shall not cause a reduction in the Revolving Commitments), (B) second, to repay the outstanding Term Loans and (C) third, to Cash Collateralize the existing Letter of Credit Liabilities, in each case, (x) pro rata in respect of each Lender and (y) in respect of clauses (1)(A), (2)(A) and 2(B) above, first to Floating Rate Loans outstanding and then, to the Fixed Rate Loans outstanding. If Borrower is required to pay any outstanding Fixed Rate Loans by reason of this Section prior to the end of the applicable Interest Period therefor, Borrower shall pay all amounts due under Section 3.05.

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(iv)        Prepayments of Obligations under Bridge Credit Agreement. If any mandatory prepayment is required under clause (ii) above, Borrower may (and, if required by the Bridge Credit Agreement, shall) prepay the obligations under the Bridge Credit Agreement, in an amount not to exceed the product of (x) the Loan Availability Overadvance and (y) the ratio of the Total Bridge Facility Outstandings to the sum of the Total Outstandings and the Total Bridge Facility Outstandings. Any prepayment made by Borrower in compliance with this clause (iv) shall result in a dollar-for-dollar reduction in the amount of the mandatory prepayment required under clause (ii) above.

2.06         Reduction and Termination of Commitments.

(a)          Revolving Commitments. Borrower shall have the right to terminate or reduce the aggregate unused amount of the Revolving Commitments (for which purpose use of the Revolving Commitments shall be deemed to include the aggregate amount of all Letter of Credit Liabilities and the aggregate principal amount of all outstanding Swingline Loans) at any time and from time to time without penalty or premium upon not less than five (5) Business Days prior written notice to Administrative Agent of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction (which in the case of any partial reduction of the Revolving Commitments shall not be less than $25,000,000 and integral multiples of $5,000,000 in excess of that amount in the aggregate) and shall be irrevocable once given and effective only upon receipt by Administrative Agent (“Commitment Reduction Notice”); provided, however, Borrower may not reduce the aggregate amount of the Revolving Commitments below $100,000,000 unless Borrower is terminating the Revolving Commitments in full. Promptly after receipt of a Commitment Reduction Notice Administrative Agent shall notify each Lender of the proposed termination or Revolving Commitment reduction. The Revolving Commitments, once reduced or terminated pursuant to this Section, may not be increased or reinstated. Borrower shall pay all interest and fees on the Revolving Loans accrued to the date of such reduction or termination of the Revolving Commitments to Administrative Agent for the account of the Revolving Lenders, including but not limited to any applicable compensation due to each Revolving Lender in accordance with Section 3.05.

(b)          Term Loan Commitments. The Term Loan Commitment of each Term Loan Lender shall be immediately and permanently reduced on each Term Loan Borrowing Date upon such Term Loan Lender making a Term Loan to Borrower on such Term Loan Borrowing Date in an amount corresponding to such Term Loan Lender’s Applicable Term Loan Percentage of the aggregate principal amount of the Term Loan Loans made by the Term Loan Lenders to Borrower on such Term Loan Borrowing Date. The aggregate remaining Term Loan Commitments shall terminate at 5:00 p.m. on the sixth (6^th) month anniversary of the Effective Date.

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2.07         Repayment of Loans.

(a)          Revolving Loans. Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Revolving Loans on the Revolving Termination Date.

(b)          Term Loans. Borrower shall repay the entire outstanding principal amount of, and all accrued but unpaid interest on, the Term Loans on the Term Loan Maturity Date.

(c)          Swingline Loans. Swingline Loans shall be repaid in accordance with Section 2.04(e).

2.08         Interest.

(a)          Subject to the provisions of subsection (b) below, (i) each Eurodollar Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Fixed Rate and (ii) each Floating Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Floating Rate.

(i)          If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(ii)         If any amount (other than principal of any Loan) payable by Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iii)        Upon the request of Required Lenders, while any Event of Default exists, Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iv)        Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

(b)          Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

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(c)          In the event Parent or Borrower obtains an Investment Grade Rating during the term of this Agreement, Borrower may make a one-time irrevocable election upon written notice to Administrative Agent (and Administrative Agent shall promptly notify the Lenders thereof) to utilize the Rating of Parent or Borrower, as applicable, in determining the Applicable Margin (a “Credit Rating Election Event”), pursuant to the relevant table set forth in the definition of Applicable Margin.

2.09         Fees.

(a)          Closing Fee. On the Effective Date, Borrower agrees to pay to Administrative Agent and each Lender all loan fees as have been agreed to in writing by Borrower and Administrative Agent.

(b)          Revolving Facility Fees.

(i)          During the period from the Effective Date to but excluding the Revolving Termination Date (or, if earlier, the occurrence of a Credit Rating Election Event), Borrower agrees to pay to Administrative Agent for the account of the Revolving Lenders an unused revolving facility fee equal to (x) the amount by which the aggregate amount of the Revolving Commitments exceeds the average daily amount of the aggregate outstanding principal balance of Revolving Loans and Letter of Credit Liabilities (the “Unused Amount”) multiplied by (y) the corresponding per annum rate set forth in the table below:

Unused Amount	Unused Fee (percent per annum)
Greater than or equal to 50.0% of the aggregate amount of Revolving Commitments		0.25	%
Less than 50.0% of the aggregate amount of Revolving Commitments		0.15	%

Such fee shall be computed on a daily basis and payable quarterly in arrears on the last day of each March, June, September and December during the term of this Agreement and on the Revolving Termination Date or any earlier date of termination of the Revolving Commitments or reduction of the Revolving Commitments to zero. For the avoidance of doubt, for purposes of calculating an unused facility fee, the outstanding principal balance of Swingline Loans shall not be factored into the computation.

(ii)         Upon the occurrence of the Credit Rating Election Event until the Revolving Termination Date, and so long as the Applicable Margin shall be determined by reference to the Rating, Borrower agrees to pay to Administrative Agent for the account of the Revolving Lenders a facility fee equal to the average daily aggregate amount of the Revolving Commitments (whether or not utilized) times a rate per annum equal to the Applicable Facility Fee. Such fee shall be payable quarterly in arrears on the last day of each March, June, September and December during the term of this Agreement and on the Revolving Termination Date or any earlier date of termination of the Revolving Commitments or reduction of the Revolving Commitments to zero.

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(c)          Term Loan Facility Fees. During the period from the Effective Date and until the termination of the Availability Period, Borrower agrees to pay to Administrative Agent for the account of the Term Loan Lenders an unused term loan facility fee equal to the (x) the amount by which the aggregate amount of the Term Loan Commitments exceeds the average daily amount of the aggregate outstanding principal balance of Term Loans (the “Unused Term Amount”) multiplied by (y) a rate per annum equal to 0.25%. Such fee shall be computed on a daily basis and payable monthly in arrears on the last Business Day of each calendar month ending after the Effective Date during the term of the Availability Period and on the last day of the Availability Period (or, if earlier, on the date the Term Loan Commitments shall have been reduced to zero in accordance with Section 2.06(b) or otherwise terminated).

(d)          Letter of Credit Fees. Borrower agrees to pay to Administrative Agent for the account of each Revolving Lender a Letter of Credit fee at a rate per annum equal to the Applicable Margin for Base LIBOR Rate times the daily average Stated Amount of each Letter of Credit for the period from and including the date of issuance of such Letter of Credit (x) to and including the date such Letter of Credit expires or is cancelled or terminated or (y) to but excluding the date such Letter of Credit is drawn in full. In addition to such fees, Borrower shall pay to Issuing Bank solely for its own account, a fronting fee in respect of each Letter of Credit equal to 0.125% of the initial Stated Amount of such Letter of Credit; provided, however, in no event shall the aggregate amount of such fee in respect of any Letter of Credit be less than $1,000. The fees provided for in this subsection shall be nonrefundable and payable, in the case of the fee provided for in the first sentence, in arrears (i) quarterly on the last day of March, June, September and December, (ii) on the Revolving Termination Date, (iii) on the date the Revolving Commitments are terminated or reduced to zero and (iv) thereafter from time to time on demand of Administrative Agent and in the case of the fee provided for in the second sentence, at the time of issuance of such Letter of Credit. Borrower shall pay directly to Issuing Bank from time to time on demand all commissions, charges, costs and expenses in the amounts customarily charged or incurred by Issuing Bank from time to time in like circumstances with respect to the issuance, administration, amendment, renewal or extension of any Letter of Credit or any other transaction relating thereto.

(e)          Revolving Credit Extension Fee. If Borrower exercises its right to extend the Revolving Termination Date in accordance with Section 2.16, Borrower agrees to pay to Administrative Agent for the account of each Revolving Lender a fee equal to 0.20% of the amount of such Revolving Lender’s Revolving Commitment (whether or not utilized). Such fee shall be due and payable in full on the effective date of the extension of the Revolving Termination Date pursuant to such Section.

(f)          Administrative and Other Fees. Borrower agrees to pay the administrative and other fees of Administrative Agent as provided in the Fee Letter and as may be otherwise agreed to in writing from time to time by Borrower and Administrative Agent.

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2.10         Computation of Interest; Retroactive Adjustments of Applicable Margin.

(a)          All computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed, except that computations of interest in respect of Floating Rate Borrowings shall be made on the basis of a 365-day year (or 366-day year in a leap year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid. Each determination by Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

(b)          If, as a result of any restatement of or other adjustment to the financial statements of Parent or for any other reason, then Parent, Borrower, Administrative Agent or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by Parent and Borrower as of any applicable date was inaccurate at any time during which the Applicable Margin is determined by reference to the Consolidated Leverage Ratio, and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, then Borrower shall be obligated to pay to Administrative Agent for the account of the applicable Lenders or Issuing Bank, as the case may be, within three (3) Business Days after demand by Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to any Loan Party under the Bankruptcy Code of the United States, automatically and without further action by Administrative Agent, any Lender or any Issuing Bank), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of Administrative Agent, any Lender or any Issuing Bank, as the case may be, under this Agreement. Borrower’s obligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder.

2.11         Evidence of Debt.

(a)          The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Administrative Agent in the ordinary course of business. The accounts or records maintained by Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of Administrative Agent in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through Administrative Agent, Borrower shall execute and deliver to such Lender (through Administrative Agent) a Revolving Note, in the case of any Revolving Lender, or a Term Note, in the case of any Term Loan Lender, which shall evidence such Lender’s Loans in addition to such accounts or records. The Swingline Loans made by Swingline Lender to Borrower shall, in addition to this Agreement, also be evidenced by a Swingline Note payable to the order of Swingline Lender. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

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(b)          In addition to the accounts and records referred to in subsection (a), each Lender and Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swingline Loans. In the event of any conflict between the accounts and records maintained by Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error.

2.12         Payments Generally; Administrative Agent’s Clawback.

(a)          General. All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Administrative Agent, for the account of the respective Lenders to which such payment is owed, at Administrative Agent’s Office in Dollars and in immediately available funds not later than 1:00 p.m. on the date specified herein. Administrative Agent will promptly distribute to each Lender its Applicable Revolving Percentage and/or Applicable Term Loan Percentage, as the case may be (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. If and to the extent Administrative Agent shall not make such payments to a Lender when due as set forth in the preceding sentence, then such unpaid amounts shall accrue interest, payable by Administrative Agent, at the Federal Funds Rate from the due date until (but not including) the date on which Administrative Agent makes such payments to such Lender. All payments received by Administrative Agent after 1:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

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(b)          Clawback.

(i)          Funding by Lenders; Presumption by Administrative Agent. Unless Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to Administrative Agent such Lender’s share of such Borrowing, Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 and may, in reliance upon such assumption, make available to Borrower a corresponding amount. Administrative Agent shall use its best efforts to provide Borrower with notice (but failure to provide such notice shall not act as a waiver or limitation of any of Administrative Agent’s rights under this Section 2.12(b)) of its intent to so fund to Borrower without having received all Lenders’ share of such Borrowing. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to Administrative Agent, then the applicable Lender and Borrower severally agree to pay to Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by Borrower, the interest rate applicable to Floating Rate Loans. If Borrower and such Lender shall pay such interest to Administrative Agent for the same or an overlapping period, then Administrative Agent shall promptly remit to Borrower the amount of such interest paid by Borrower for such period. If such Lender pays its share of the applicable Borrowing to Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by Borrower shall be without prejudice to any claim Borrower may have against a Lender that shall have failed to make such payment to Administrative Agent.

(ii)         Payments by Borrower; Presumptions by Administrative Agent. Unless Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to Administrative Agent for the account of the Lenders or Issuing Bank hereunder that Borrower will not make such payment, Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or Issuing Bank, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of the Lenders or Issuing Bank, as the case may be severally agrees to repay to Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation, within one (1) Business Day. If and to the extent such Lender or Issuing Bank shall not return such funds to Administrative Agent when due as set forth in the preceding sentence, then such unpaid amounts shall accrue interest, payable to Administrative Agent, at the Federal Funds Rate from the due date until (but not including) the date on which Administrative Agent receives such funds from such Lender or Issuing Bank.

A notice of Administrative Agent to any Lender, Issuing Bank or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

(c)          Failure to Satisfy Conditions Precedent. If any Lender makes available to Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to Borrower by Administrative Agent because the conditions to the applicable Credit Extension set forth in Article V are not satisfied or waived in accordance with the terms hereof, then Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

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(d)          Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans, to fund participations in Swingline Loans and/or in Letters of Credit and to make payments pursuant to Section 11.04(d) are several and not joint. The failure of any Lender to make any Loan, to fund any participation or to make any payment under Section 11.04(d) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan, to purchase its participation or to make its payment under Section 11.04(d).

(e)          Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

2.13         Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, or the participations in Swingline Loans or Letter of Credit Liabilities held by it, resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and subparticipations in Swingline Loans or Letter of Credit Liabilities of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:

(i)          if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price immediately restored to the extent of such recovery, without interest;

(ii)         the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or subparticipations in Swingline Loans or Letter of Credit Liabilities to any assignee or participant, other than an assignment to Borrower or any Affiliate thereof (as to which the provisions of this Section shall apply); and

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(iii)        the provisions of this Section shall be disregarded to the extent necessary to conform to the intended treatment of the Loans in connection with any Extension Permitted Amendment or Incremental Amendment.

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

2.14         Amount Limitations.

Notwithstanding any other term of this Agreement or any other Loan Document, no Lender shall be required to make a Loan, Issuing Bank shall not be required to issue a Letter of Credit and no reduction of the Revolving Commitments pursuant to Section 2.06(a) shall take effect, if immediately after the making of such Loan, the issuance of such Letter of Credit or such reduction in the Revolving Commitments:

(a)          the aggregate principal amount of all outstanding Revolving Loans and Swingline Loans, together with the aggregate amount of all Letter of Credit Liabilities, would exceed the aggregate amount of the Revolving Commitments at such time; or

(b)          the sum of (x) Total Outstandings plus (y) Total Bridge Facility Outstandings would exceed the Borrowing Base at such time.

2.15         Incremental Loans.     Borrower may, from time to time, on up to four (4) occasions during the term of this Agreement, by written notice to Administrative Agent, elect to increase the Revolving Commitments or enter into one or more tranches of incremental term loans (each an “Incremental Term Loan”), in each case in minimum increments of $25,000,000 (or such other amount as may be acceptable to Issuing Bank, Administrative Agent and Borrower), so long as, after giving effect thereto, the aggregate amount of such increases and all such Incremental Term Loans does not exceed $125,000,000. Any such election must be made by the Borrower during the period from the Effective Date to the date that is 30 days prior to the Revolving Termination Date (or such later date to which the Revolving Commitments have been extended pursuant to any Extension Permitted Amendment entered into in accordance with Section 2.18) in the case of any election to increase the Revolving Commitments, or the Term Loan Maturity Date (or such later date to which the maturity of the Term Loans has been extended pursuant to any Extension Permitted Amendment entered into in accordance with Section 2.18), in the case of any election to incur Incremental Term Loans. Administrative Agent and/or its Affiliates shall use commercially reasonable efforts, with the assistance of Borrower, to arrange a syndicate of Lenders willing to increase their existing Revolving Commitments, or to participate in such Incremental Term Loans, or extend Revolving Commitments, as the case may be (each existing Lender so agreeing to an increase in its Revolving Commitment, or to participate in such Incremental Term Loans, an “Increasing Lender” and each new bank, financial institution or other entity, an “Augmenting Lender”). Each Increasing Lender and each Augmenting Lender increasing or extending a Revolving Commitment shall be acceptable to Issuing Bank and Swingline Lender. No consent of any Lender (other than the Lenders participating in the increase or any Incremental Term Loan) shall be required for any increase in Revolving Commitments or Incremental Term Loan pursuant to this Section 2.15. Increases and new Revolving Commitments and Incremental Term Loans created pursuant to this Section 2.15 shall become effective on the date agreed by Borrower, Administrative Agent and the relevant Increasing Lenders or Augmenting Lenders, and Administrative Agent shall notify each Lender thereof. Such Incremental Term Loans and increases in the Revolving Commitments shall be evidenced by the execution and delivery Borrower, Administrative Agent and Increasing Lender or Augmenting Lender (and, in the case of any increase or extension of a Revolving Commitment, Issuing Bank and Swingline Lender), as the case may be, of documentation acceptable to Administrative Agent. Notwithstanding the foregoing, no increase in the Revolving Commitments (or in the Revolving Commitment of any Lender) or tranche of Incremental Term Loans shall become effective under this Section 2.15 unless, (i) on the date of such effectiveness, (x) Administrative Agent shall have received such customary certificates, documents and opinion letters as it may reasonably request (it being understood and agreed that the forms of certificates, documents and opinion letters delivered pursuant to Section 5.01(a)(ii) through (vi) shall be acceptable), (y)(A) the conditions set forth in Section 5.02(a) and (b) shall be satisfied and (B) after giving effect to the increase in the Revolving Commitments and the Incremental Term Loans to be made on such date, the sum of (1) Total Outstandings plus (2) Total Bridge Facility Outstandings shall not exceed the Borrowing Base, and (z) Borrower shall be in pro forma compliance with the covenants set forth in Section 8.14 after giving effect to any Loans to be made on such date and the application of the proceeds therefrom as if made and applied on such date, and, Administrative Agent shall have received a certificate certifying as to the satisfaction of each of clauses (x), (y) and (z) dated such date (including calculations in reasonable detail showing pro forma compliance with the covenants in Section 8.14) and executed by a Responsible Officer of Borrower, which certificate can be incorporated into and constitute a part of an Incremental Amendment executed by Borrower pursuant to this Section 2.15. On the Effective Date of any increase in the Revolving Commitments or any Incremental Term Loans being made, (i) each relevant Increasing Lender and Augmenting Lender shall make available to Administrative Agent such amounts in immediately available funds as Administrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase and the use of such amounts to make payments to such other Lenders, each Lender’s portion of the outstanding Revolving Loans of all the Lenders to equal its Revolving Commitment Percentage of such outstanding Revolving Loans, and (ii) except in the case of any Incremental Term Loans, Borrower shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase in the Revolving Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related Interest Periods if applicable, specified in a notice delivered by Borrower, in accordance with the requirements of Section 2.01(a)). The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Eurodollar Loan, shall be subject to indemnification by Borrower pursuant to the provisions of Section 3.05 if the deemed payment occurs other than on the last day of the related Interest Periods. Revolving Loans made pursuant to any increased Revolving Commitment and the Incremental Term Loans (a) shall rank pari passu in right of payment with the Revolving Loans and the initial Term Loans, (b) in the case of Incremental Term Loans, (x) shall not mature earlier than the Term Loan Maturity Date (but may have amortization prior to such date) and (y) shall have the weighted average life to maturity no shorter than the weighted average life to maturity of the initial Term Loans, and (c) shall be treated substantially the same as (and in any event no more favorably than) the Revolving Loans and the initial Term Loans, as applicable; provided that (i) the terms and conditions applicable to any tranche of Incremental Term Loans maturing after the Term Loan Maturity Date may provide for material additional or different financial or other covenants or prepayment requirements applicable only during periods after the Term Loan Maturity Date and (ii) the Incremental Term Loans may be priced differently than the Revolving Loans and the initial Term Loans. Increases in Revolving Commitments and Incremental Term Loans may be made hereunder pursuant to an amendment or restatement (an “Incremental Amendment”) of this Agreement and, as appropriate, the other Loan Documents, executed by Borrower, each Increasing Lender participating in such tranche, each Augmenting Lender participating in such tranche, if any, Administrative Agent, and, in the case of increases in Revolving Commitment, Issuing Bank and Swingline Lender. The Incremental Amendment may, without the consent of any other Lenders (except as expressly required pursuant to Section 11.01), effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of Administrative Agent, to effect the provisions of this Section 2.15. Nothing contained in this Section 2.15 shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Revolving Commitment hereunder, or provide Incremental Term Loans, at any time.

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2.16         Extension of Revolving Termination Date.

Borrower shall have the right, exercisable one time, to extend the Revolving Termination Date by one year. Borrower may exercise such right only by executing and delivering to Administrative Agent at least sixty (60) days but not more than one hundred eighty (180) days prior to the current Revolving Termination Date, a written request for such extension (an “Extension Request”). Administrative Agent shall notify the Revolving Lenders if it receives an Extension Request promptly upon receipt thereof. Subject to satisfaction of the following conditions, the Revolving Termination Date shall be extended for one year effective upon receipt by Administrative Agent of the Extension Request and payment of the fee referred to in the following clause (y): (x) immediately prior to such extension and immediately after giving effect thereto, (A) no Default or Event of Default shall exist and (B) the representations and warranties made or deemed made by Borrower and each other Loan Party in the Loan Documents to which any of them is a party, shall be true and correct in all material respects on and as of the date of such extension with the same force and effect as if made on and as of such date (except to the extent that any such representation and warranty is qualified as to “materiality,” “Material Adverse Effect” or similar language, in which case it shall be true and correct in all respects (after giving effect to any such qualification)) on and as of such date; provided, if any such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects (except to the extent that any such representation and warranty is qualified as to “materiality,” “Material Adverse Effect” or similar language, in which case it shall be true and correct in all respects (after giving effect to any such qualification)) as of such earlier date; and except for changes in factual circumstances not expressly prohibited under the Loan Documents and (y) Borrower shall have paid the fees payable under Section 2.09(e). At any time prior to the effectiveness of any such extension, upon Administrative Agent’s request, Borrower shall deliver to Administrative Agent a certificate from the chief executive officer or chief financial officer certifying the matters referred to in the immediately preceding clauses (x)(A) and (x)(B).

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2.17         Extension Offers.

(a)          Borrower may on one or more occasions, by written notice to Administrative Agent, make one or more offers (each, an “Extension Offer”) to all the Revolving Lenders and/or Term Loan Lenders to make one or more Extension Permitted Amendments pursuant to procedures reasonably specified by Administrative Agent and reasonably acceptable to Borrower. Such notice shall set forth (i) the terms and conditions of the requested Extension Permitted Amendment and (ii) the date on which such Extension Permitted Amendment is requested to become effective (which shall not be less than ten (10) Business Days nor more than thirty (30) Business Days after the date of such notice, unless otherwise agreed to by Administrative Agent). Extension Permitted Amendments shall become effective (x) in the case of Revolving Loans, only with respect to the Revolving Loans of the Revolving Lenders that accept the applicable Extension Offer and (y) in the case of Term Loans, only to the Term Loans of the Term Loan Lenders that accept the applicable Extension Offer or (such Revolving Lenders and/or Term Lenders, as applicable, the “Extending Lenders”).

(b)          An Extension Permitted Amendment shall be effected pursuant to an Extension Agreement executed and delivered by Parent, Borrower, each applicable Extending Lender and Administrative Agent; provided that no Extension Permitted Amendment shall become effective unless (i) no Event of Default shall have occurred and be continuing on the date of effectiveness thereof; (ii) on the date of effectiveness thereof, the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects (except to the extent that any such representation and warranty is qualified as to “materiality,” “Material Adverse Effect” or similar language, in which case it shall be true and correct in all respects (after giving effect to any such qualification)) on and as of such date; provided, if any such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects (except to the extent that any such representation and warranty is qualified as to “materiality,” “Material Adverse Effect” or similar language, in which case it shall be true and correct in all respects (after giving effect to any such qualification)) as of such earlier date; and (iii) Parent and Borrower shall have delivered to Administrative Agent such legal opinions, board resolutions, secretary’s certificates, officer’s certificates and other documents as shall reasonably be requested by Administrative Agent in connection therewith. Administrative Agent shall promptly notify each Lender as to the effectiveness of each Extension Agreement. Each Extension Agreement may, without the consent of any Lender other than the applicable Extending Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of Administrative Agent, to give effect to the provisions of this Section.

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(c)          In the case of Extension Offers in respect of Revolving Loans, unless otherwise agreed to by the applicable Extending Lenders, including any Lender in its separate capacity as an Issuing Bank or Swingline Lender, Borrower and Administrative Agent, (x) no Extension Permitted Amendment shall have any affect on the provisions set forth in Sections 2.03, 2.04 and 2.20, (y) Issuing Bank shall not have any obligation to issue, amend, modify, renew or extend any Letter of Credit pursuant to any Extension Permitted Amendment unless it shall have expressly consented thereto in its capacity as an Issuing Bank and (z) Swingline Lender shall have no obligation to make Swingline Loans pursuant to any Extension Permitted Amendment unless it shall have expressly consented thereto in its capacity as Swingline Lender and, in the case of the foregoing clauses (y) and (z), the Extending Lenders shall have expressly consented to participation provisions in respect of Letter of Credit Liabilities and Swingline Loans consistent with the provisions set forth in Sections 2.03 and 2.04.

2.18         Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then to the extent permitted by applicable Law, the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)          Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of Required Lenders.

(b)          Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 9.02 or otherwise) or received by Administrative Agent from a Defaulting Lender pursuant to Section 2.13 shall be applied at such time or times as may be determined by Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to Issuing Bank or Swingline Lender hereunder; third, to Cash Collateralize Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender in accordance with subsection (e) below; fourth, as Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Administrative Agent; fifth, if so determined by Administrative Agent and Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize Issuing Bank’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with subsection (e) below; sixth, to the payment of any amounts owing to the Lenders, Issuing Bank or Swingline Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, Issuing Bank or Swingline Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to Borrower as a result of any judgment of a court of competent jurisdiction obtained by Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or amounts owing by such Defaulting Lender under Section 2.03(j) in respect of Letters of Credit (such amounts “L/C Disbursements”), in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Article V were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in Letter of Credit Liabilities and Swingline Loans are held by the Revolving Lenders pro rata in accordance with their respective Revolving Commitment Percentages (determined without giving effect to the immediately following subsection (d)). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this subsection shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

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(c)          Certain Fees.

(i)          No Defaulting Lender shall be entitled to receive any fee payable under Sections 2.09(b) or 2.09(c) for any period during which that Lender is a Defaulting Lender (and Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(ii)         Each Defaulting Lender shall be entitled to receive the fee payable under Section 2.09(d) for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Revolving Commitment Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to the immediately following subsection (e).

(iii)        With respect to any fee not required to be paid to any Defaulting Lender pursuant to the immediately preceding clauses (i) or (ii), Borrower shall (x) pay to each Revolving Lender that is Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in Letter of Credit Liabilities or Swingline Loans that has been reallocated to such Revolving Lender that is Non-Defaulting Lender pursuant to the immediately following subsection (d), (y) pay to each Issuing Bank and Swingline Lender, as applicable, the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’s or Swingline Lender’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(d)          Reallocation of Participations to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in Letter of Credit Liabilities and Swingline Loans shall be reallocated among the Revolving Lenders that are Non-Defaulting Lenders in accordance with their respective Revolving Commitment Percentages (determined without regard to such Defaulting Lender’s Revolving Commitment) but only to the extent that (x) no Default shall exist at such time and (y) such reallocation does not cause the aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Revolving Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Revolving Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

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(e)          Cash Collateral, Repayment of Swingline Loans.

(i)          If the reallocation described in the immediately preceding subsection (d) above cannot, or can only partially, be effected, Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to Swingline Lender’s Fronting Exposure and (y) second, Cash Collateralize Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in this subsection.

(ii)         At any time that there shall exist a Defaulting Lender, within one (1) Business Day following the written request of Administrative Agent or Issuing Bank (with a copy to Administrative Agent), Borrower shall Cash Collateralize Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to the immediately preceding subsection (d) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the aggregate Fronting Exposure of Issuing Bank with respect to Letters of Credit issued and outstanding at such time.

(iii)        Borrower, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grant to Administrative Agent, for the benefit of Issuing Bank, and agree to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lenders’ obligation to fund participations in respect of Letter of Credit Liabilities, to be applied pursuant to the immediately following clause (iv). If at any time Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than Administrative Agent and Issuing Bank as herein provided, or that the total amount of such Cash Collateral is less than the aggregate Fronting Exposure of Issuing Bank with respect to Letters of Credit issued and outstanding at such time, Borrower will, promptly upon demand by Administrative Agent, pay or provide to Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any Cash Collateral provided by the Defaulting Lender).

(iv)        Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of Letter of Credit Liabilities (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.

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(v)         Cash Collateral (or the appropriate portion thereof) provided to reduce Issuing Bank’s Fronting Exposure shall no longer be required to be held as Cash Collateral pursuant to this subsection following (x) the elimination of the applicable Fronting Exposure (including by the termination of Defaulting Lender status of the applicable Revolving Lender), or (y) the determination by Administrative Agent and Issuing Bank that there exists excess Cash Collateral; provided that, subject to the immediately preceding subsection (b), the Person providing Cash Collateral and Issuing Bank may (but shall not be obligated to) agree that Cash Collateral shall be held to support future anticipated Fronting Exposure or other obligations and provided further that to the extent that such Cash Collateral was provided by Borrower, such Cash Collateral shall remain subject to the security interest granted pursuant to the Loan Documents.

(f)          Defaulting Lender Cure. If Borrower, Administrative Agent, Swingline Lender and Issuing Bank agree in writing that a Lender is no longer a Defaulting Lender, Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that such Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions as Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders in accordance with their respective Commitment Percentages (determined without giving effect to the immediately preceding subsection (d)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

(g)          New Swingline Loans/Letters of Credit. So long as any Revolving Lender is a Defaulting Lender, (i) Swingline Lender shall not be required to fund any Swingline Loans unless it is satisfied that it will have no Fronting Exposure after giving effect to such Swingline Loan and (ii) Issuing Bank shall not be required to issue, extend, renew or increase any Letter of Credit unless it is satisfied that it will have no Fronting Exposure after giving effect thereto.

(h)          Purchase of Defaulting Lender’s Commitment. During any period that a Lender is a Defaulting Lender, Borrower may, by Borrower giving written notice thereof to Administrative Agent, such Defaulting Lender and the other Lenders, demand that such Defaulting Lender assign its Commitment and Loans to an Eligible Assignee subject to and in accordance with the provisions of Section 13.5(b). No party hereto shall have any obligation whatsoever to initiate any such replacement or to assist in finding an Eligible Assignee. In addition, any Lender who is not a Defaulting Lender may, but shall not be obligated, in its sole discretion, to acquire the face amount of all or a portion of such Defaulting Lender’s Commitment and Loans via an assignment subject to and in accordance with the provisions of Section 11.06(c). In connection with any such assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment and Assumption and, notwithstanding Section 11.06(c), shall pay to Administrative Agent an assignment fee in the amount of $4,500. The exercise by Borrower of its rights under this Section shall be at Borrower’s sole cost and expense and at no cost or expense to Administrative Agent or any of the Lenders.

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2.19         Guaranties. Pursuant to Parent Guaranty, Parent shall unconditionally Guarantee in favor of Administrative Agent and Lenders the full payment and performance of the Obligations. Pursuant to the Subsidiary Guaranty or an addendum thereto in the form attached to the Subsidiary Guaranty, Parent and Borrower shall cause each Subsidiary Guarantor to execute a Subsidiary Guaranty unconditionally guarantying in favor of Administrative Agent and Lenders the full payment and performance of the Obligations.

2.20         Letter of Credit Collateral Account.

(a)          As collateral security for the prompt payment in full when due of all Letter of Credit Liabilities and the other Obligations, Borrower hereby pledges and grants to Administrative Agent, for the ratable benefit of Administrative Agent, Issuing Bank and the Lenders as provided herein, a security interest in all of its right, title and interest in and to the Letter of Credit Collateral Account and the balances from time to time in the Letter of Credit Collateral Account (including the investments and reinvestments therein provided for below). The balances from time to time in the Letter of Credit Collateral Account shall not constitute payment of any Letter of Credit Liabilities until applied by Issuing Bank as provided herein. Anything in this Agreement to the contrary notwithstanding, funds held in the Letter of Credit Collateral Account shall be subject to withdrawal only as provided in this Section.

(b)          Amounts on deposit in the Letter of Credit Collateral Account shall be invested and reinvested by Administrative Agent in such Cash Equivalents as Administrative Agent shall determine in its sole discretion. All such investments and reinvestments shall be held in the name of and be under the sole dominion and control of Administrative Agent for the ratable benefit of Administrative Agent, Issuing Bank and the Lenders; provided, that all earnings on such investments will be credited to and retained in the Letter of Credit Collateral Account. Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Letter of Credit Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which Administrative Agent accords other funds deposited with Administrative Agent, it being understood that Administrative Agent shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any funds held in the Letter of Credit Collateral Account.

(c)          If a drawing pursuant to any Letter of Credit occurs on or prior to the expiration date of such Letter of Credit, Borrower and the Lenders authorize Administrative Agent to use the monies deposited in the Letter of Credit Collateral Account to reimburse Issuing Bank for the payment made by Issuing Bank to the beneficiary with respect to such drawing.

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(d)          If an Event of Default exists, Administrative Agent may (and, if instructed by the Required Lenders, shall) in its (or their) discretion at any time and from time to time elect to liquidate any such investments and reinvestments and apply the proceeds thereof to the Obligations in accordance with Section 11.5.

(e)          So long as no Default or Event of Default exists, and to the extent amounts on deposit in or credited to the Letter of Credit Collateral Account exceed the aggregate amount of the Letter of Credit Liabilities then due and owing, Administrative Agent shall, from time to time, at the request of Borrower, deliver to Borrower within ten (10) Business Days after Administrative Agent’s receipt of such request from Borrower, against receipt but without any recourse, warranty or representation whatsoever, such amount of the credit balances in the Letter of Credit Collateral Account as exceeds the aggregate amount of Letter of Credit Liabilities at such time. When all of the Obligations shall have been indefeasibly paid in full and no Letters of Credit remain outstanding, Administrative Agent shall deliver to Borrower, against receipt but without any recourse, warranty or representation whatsoever, the balances remaining in the Letter of Credit Collateral Account.

(f)          Borrower shall pay to Administrative Agent from time to time such fees as Administrative Agent normally charges for similar services in connection with Administrative Agent’s administration of the Letter of Credit Collateral Account and investments and reinvestments of funds therein.

Article III.
Taxes, Yield Protection and Illegality

3.01         Taxes.

(a)          Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.

(i)          Any and all payments by or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Taxes, except as required by applicable Laws. If applicable Laws require Borrower or Administrative Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such Laws as determined by Borrower or Administrative Agent, as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

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(ii)         If Borrower or Administrative Agent shall be required to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding Taxes, from any payment, then (A) Administrative Agent or Borrower, as applicable, shall withhold or make such deductions as are determined by Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) Administrative Agent or Borrower, as applicable, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with applicable Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the applicable Recipient, as the case may be, receives an amount equal to the sum it would have received had no such withholding or deduction been made.

(b)          Payment of Other Taxes by Borrower. Without limiting the provisions of subsection (a) above, Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Laws.

(c)          Tax Indemnifications.

(i)          Without limiting the provisions of subsection (a) or (b) above, Borrower shall, and does hereby, indemnify each Recipient, without duplication, and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) withheld or deducted by Borrower or Administrative Agent or paid by Administrative Agent, such Lender or Issuing Bank, as the case may be, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of any such payment or liability delivered to Borrower by a Lender or (with a copy to Administrative Agent), or by Administrative Agent on its own behalf or on behalf of a Lender or Issuing Bank, shall be conclusive absent manifest error.

(iii)        Each Lender shall severally indemnify Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified Administrative Agent for such Indemnified Taxes or Other Taxes and without limiting the obligation of Borrower to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of Section 11.06(b)(iii)(B) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by Administrative Agent to Lender from any other source against any amount due to Administrative Agent under this subparagraph (ii).

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(d)          Evidence of Payments. Upon request by Borrower or Administrative Agent, as the case may be, after any payment of Taxes by Borrower or by Administrative Agent to a Governmental Authority as provided in this Section 3.01, Borrower shall deliver to Administrative Agent or Administrative Agent shall deliver to Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to Borrower or Administrative Agent, as the case may be.

(e)          Status of Lenders; Tax Documentation.

(i)          Each Lender shall deliver to Borrower and to Administrative Agent, at the time or times prescribed by applicable Laws or when reasonably requested by Borrower or Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit Borrower or Administrative Agent, as the case may be, to determine (A) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Lender by Borrower pursuant to this Agreement or otherwise to establish such Lender’s status for withholding Tax purposes in the applicable jurisdiction.

(ii)         Without limiting the generality of the foregoing, if Borrower is resident for tax purposes in the United States,

(A)         any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall deliver to Borrower and Administrative Agent executed originals of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable Laws or reasonably requested by Borrower or Administrative Agent as will enable Borrower or Administrative Agent, as the case may be, to determine whether or not such Lender is subject to backup withholding or information reporting requirements; and

(B)         each Foreign Lender that is entitled under the Code or any applicable treaty to an exemption from or reduction of withholding Tax with respect to payments hereunder or under any other Loan Document shall deliver to Borrower and Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of Borrower or Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

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(1)         executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

(2)         executed originals of Internal Revenue Service Form W-8ECI,

(3)         executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation,

(4)         in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1, G-2, G-3 or G-4, as applicable, to the effect that such Foreign Lender, or beneficial owner thereof, is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service Form W-8BEN, or

(5)         executed originals of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable Laws to permit Borrower or Administrative Agent to determine the withholding or deduction required to be made.

(iii)        Each Lender shall promptly (A) notify Borrower and Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (B) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws of any jurisdiction that Borrower or Administrative Agent make any withholding or deduction for Taxes from amounts payable to such Lender. Notwithstanding anything to the contrary in clauses (i) and (ii), the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(e)(ii)(A), (e)(ii)(B)(1)-(4) and (e)(iii) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

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(iv)        If a payment made to a Lender by or on account of any obligation of Borrower hereunder or under any other Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to Borrower and Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by Borrower or Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by Borrower or Administrative Agent as may be necessary for Borrower and Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this subparagraph (iv), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(f)          Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender, or have any obligation to pay to any Lender or Issuing Bank, any refund of Taxes withheld or deducted from funds paid for the account of such Lender. If Administrative Agent, any Lender or Issuing Bank determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by Administrative Agent, such Lender or Issuing Bank , as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that Borrower, upon the request of Administrative Agent, such Lender or Issuing Bank, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Administrative Agent, such Lender or Issuing Bank in the event Administrative Agent, such Lender or Issuing Bank is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (f), in no event will the Administrative Agent, such Lender or Issuing Bank be required to pay any amount to Borrower pursuant to this paragraph (f) the payment of which would place the Administrative Agent, such Lender or Issuing Bank in a less favorable net after-Tax position than the Administrative Agent, such Lender or Issuing Bank would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require Administrative Agent, any Lender or Issuing Bank to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to Borrower or any other Person.

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3.02         Illegality.  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Borrower through Administrative Agent, (i) any obligation of such Lender to make or continue Loans based on the Eurodollar Rate or to convert Floating Rate Loans to Eurodollar Loans shall be suspended, and (ii) if such notice asserts the illegality of, or material restriction on, such Lender making or maintaining Loans based on the Eurodollar Rate, the Loans of such Lender shall, if necessary to avoid such illegality or material restriction, bear interest at the Substitute Rate, in each case until such Lender notifies Administrative Agent and Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) Borrower shall, upon demand from such Lender (with a copy to Administrative Agent), convert all Eurodollar Loans of such Lender to Floating Rate Loans (the interest rate on which Floating Rate Loans of such Lender shall, if necessary to avoid such illegality, accrue at the Substitute Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, Administrative Agent shall during the period of such suspension compute the interest rate applicable to such Lender by referencing the Substitute Rate until Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate. Upon any such conversion, Borrower shall also pay accrued interest on the amount so converted.

3.03         Inability to Determine Rates.     If Required Lenders determine that for any reason in connection with any request for a Eurodollar Loan or a Floating Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate, for any requested Interest Period with respect to a proposed Eurodollar Loan or in connection with an existing or proposed Floating Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Loan or the LIBOR Market Index Rate, as applicable, does not adequately and fairly reflect the cost to such Lenders of funding such Loan, then Administrative Agent will promptly so notify Borrower and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Loans shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the LIBOR Market Index Rate, the Floating Rate Loans shall accrue interest at the Substitute Rate, in each case until Administrative Agent (upon the instruction of Required Lenders) revokes such notice. Upon receipt of such notice, Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Loans that will bear interest at the Substitute Rate in the amount specified therein.

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3.04         Increased Costs; Reserves on Eurodollar Loans.

(a)          Increased Costs Generally. If any Change in Law shall:

(i)          impose, modify or deem applicable any reserve, assessment, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e));

(ii)         subject Administrative Agent, any Lender or Issuing Bank to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes, (C) Connection Income Taxes and (D) Other Taxes) on its loans, loan principal, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or

(iii)        impose on any Lender or Issuing Bank or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost or increase liquidity requirements to Administrative Agent, such Lender or Issuing Bank of making or maintaining any Loan or of participating in, issuing or maintain any Letter of Credit, or to reduce the amount of any sum received or receivable by Administrative Agent, such Lender or Issuing Bank hereunder (whether of principal, interest or any other amount) then, upon request of Administrative Agent, such Lender or Issuing Bank, then Borrower will pay to Administrative Agent, such Lender or Issuing Bank, as the case may be, such additional amount or amounts as will compensate Administrative Agent, such Lender or Issuing Bank, as the case may be, for such additional costs or expenses related to such liquidity requirements incurred or reduction suffered.

(b)          Capital Requirements. If any Lender or Issuing Bank determines that any Change in Law affecting such Lender or Issuing Bank or any Lending Office of such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or Issuing Bank’s capital or on the capital of such Lender’s or Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or Issuing Bank or the Loans made by, or participations in Letters of Credit held by, such Lender to a level below that which such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or Issuing Bank’s policies and the policies of such Lender’s or Issuing Bank’s holding company with respect to capital adequacy), then from time to time Borrower will pay to such Lender or Issuing Bank such additional amount or amounts as will compensate such Lender or Issuing Bank or such Lender’s or Issuing Bank’s holding company for any such reduction suffered.

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(c)          Certificates for Reimbursement. A certificate of a Lender or Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or Issuing Bank or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay such Lender or Issuing Bank, as the case may be, the amount shown as due on any such certificate within fifteen (15) days after receipt thereof.

(d)          Delay in Requests. Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’ or Issuing Bank’s s right to demand such compensation, provided that Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender or Issuing Bank, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-(9-)month period referred to above shall be extended to include the period of retroactive effect thereof).

(e)          Reserves on Eurodollar Loans. Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided that Borrower shall have received at least ten (10) days’ prior notice (with a copy to Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice ten (10) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten (10) days from receipt of such notice.

3.05         Compensation for Losses.   Upon demand of any Lender (with a copy to Administrative Agent) from time to time, Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a)          any continuation, conversion, payment or prepayment of any Eurodollar Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b)          any failure by Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Eurodollar Loan on the date or in the amount notified by Borrower; or

(c)          any assignment of a Eurodollar Loan on a day other than the last day of the Interest Period therefor as a result of a request by Borrower pursuant to Section 11.13;

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excluding any loss of anticipated profits and including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Loan made by it at the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Loan was in fact so funded.

3.06         Mitigation Obligations; Replacement of Lenders.

(a)          Designation of a Different Lending Office. If any Lender requests compensation under Section 3.04, or Borrower is required to pay any additional amount to any Lender, Issuing Bank or any Governmental Authority for the account of any Lender or Issuing Bank pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender or Issuing Bank shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender or Issuing Bank, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or Issuing Bank, as the case may be, to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to such Lender or Issuing Bank, as the case may be. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or Issuing Bank in connection with any such designation or assignment.

(b)          Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, then Borrower may replace such Lender in accordance with Section 11.13.

3.07         Survival.   All of Borrower’s, each Lender’s, Issuing Bank’s and Administrative Agent’s obligations under this Article III shall survive termination of the Commitments, repayment of all other Obligations hereunder, and resignation of Administrative Agent.

Article IV.
Borrowing Base

4.01         Initial Borrowing Base.     As of the Effective Date, the Borrowing Base shall consist of the Initial Borrowing Base Properties.

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4.02         Changes in Borrowing Base Calculation.    Each change in the Borrowing Base shall be effective upon receipt of a new Borrowing Base Report pursuant to Section 7.02(b); provided that any increase in the Borrowing Base reflected in such Borrowing Base Report shall not become effective until (a) the first (1^st) Business Day following admission of any new Borrowing Base Property, and (b) the fifth (5^th) Business Day following delivery of the new Borrowing Base Report in all other instances, and provided, further, that any change in the Borrowing Base as a result of the admission of an Acceptable Property into the Borrowing Base pursuant to Section 4.03 shall be effective upon the date that such Acceptable Property is admitted into the Borrowing Base.

4.03         Requests for Admission into Borrowing Base.   Borrower shall provide Administrative Agent with a written request for an Acceptable Property to be admitted into the Borrowing Base. Such request shall be accompanied by the following information regarding such Acceptable Property (the “Property Information”) including the following, in each case reasonably acceptable to Administrative Agent: (a) a general description of such Acceptable Property’s location, market, and amenities; (b) a property description; (c) UCC searches related to the applicable Property Owner and the owners of the Equity Interests of such Property Owner; (d) the documents and information with respect to such Acceptable Property listed in Section 4.11; (e) a Borrowing Base Report setting forth in reasonable detail the calculations required to establish the amount of the Borrowing Base with such Acceptable Property included in the Borrowing Base; (f) a Compliance Certificate setting forth in reasonable detail the calculations required to show that Parent and Borrower will be in compliance with the terms of this Agreement with the inclusion of such Acceptable Property included the calculation of the Borrowing Base; and (g) such other customary information reasonably requested by Administrative Agent as shall be necessary in order for Administrative Agent to determine whether such Acceptable Property is eligible to be a Borrowing Base Property.

4.04         Eligibility. In order for an Acceptable Property to be eligible for inclusion in the Borrowing Base, such Acceptable Property shall satisfy the following unless otherwise approved by the Required Lenders:

(a)          all Property Information with respect to such Acceptable Property shall be reasonably acceptable to Administrative Agent;

(b)          no Material Title Defect with respect to such Acceptable Property shall exist;

(c)          such Acceptable Property shall have reasonably satisfactory access to public utilities;

(d)          the admission of such Acceptable Property into the Borrowing Base shall not breach any obligation of Borrower under any Contractual Obligation;

(e)          the Acceptable Environmental Report with respect to such Acceptable Property shall not reveal any Material Environmental Event; and

(f)          the property condition report with respect to such Acceptable Property shall not reveal any material defects.

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4.05         Approval of Borrowing Base Properties. Each Acceptable Property shall be subject to Administrative Agent’s approval for admission into the Borrowing Base. Administrative Agent hereby approves all Initial Borrowing Base Properties for admission into the Borrowing Base.

4.06         Liens on Borrowing Base Properties. An Acceptable Property shall not be admitted into the Borrowing Base until: (a) Borrower and any applicable Pledgors shall have executed and delivered (or caused to be executed and delivered) a Subsidiary Guaranty and a Pledge Agreement covering the Equity Interests with respect to the applicable Property Owner and such Property Owner’s general partner, if such Property Owner is a limited partnership; and (b) Borrower shall have delivered to Administrative Agent all of the Property Information listed in Section 4.11.

4.07         Notice of Admission of New Borrowing Base Properties. If, after the date of this Agreement, an Acceptable Property meets all the requirements to be included in the Borrowing Base set forth in this Article IV, then Administrative Agent shall notify Borrower and Lenders in writing (a) that such Acceptable Property is admitted into the Borrowing Base, and (b) of any changes to the Borrowing Base as a result of the admission of such Acceptable Property into the Borrowing Base.

4.08         RESERVED.

4.09         Release of Borrowing Base Property. Borrower shall provide Administrative Agent with no less than five (5) Business Days written notice of any proposed sale, refinancing or other permanent disposition of any Borrowing Base Property, and in connection therewith, Administrative Agent shall release such Borrowing Base Property from the Borrowing Base and any and all Liens in the Equity Interests of the applicable Property Owner or individually related to such Property Owner granted pursuant to the Security Documents and, where appropriate, release such Property Owner from the Subsidiary Guaranty; provided that no Default exists before and after giving effect thereto (other than Defaults solely with respect to such Borrowing Base Property that would no longer exist after giving effect to the release of such Borrowing Base Property from the Borrowing Base) and the Release Condition shall be satisfied; provided, further, that Administrative Agent shall have no obligation to release any such Liens or obligations without a Borrowing Base Report setting forth in reasonable detail the calculations required to establish the amount of the Borrowing Base without such Borrowing Base Property and a Compliance Certificate setting forth in reasonable detail the calculations required to show that Parent and Borrower are in compliance with the terms of this Agreement without the inclusion of such Borrowing Base Property in the calculation of the Borrowing Base and the various financial covenants set forth herein, in each case as of the date of such release and after giving effect to any such release. In addition, to the extent Administrative Agent has received a Subsidiary Guaranty and/or Equity Interest collateral with respect to any Company or Property which does not own, directly or indirectly, a Borrowing Base Property, provided no Default is then in existence, Administrative Agent will release such Subsidiary Guaranty and/or Equity Interest collateral upon the request of Borrower in connection with any sale or financing not prohibited under this Agreement or the creation of any joint venture Investment not prohibited hereunder.

4.10         Exclusion Events. Each of the following events shall be an “Exclusion Event” with respect to a Borrowing Base Property:

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(a)          a Material Environmental Event shall exist in respect of such Borrowing Base Property, regardless of the time when such Material Environmental Event arose, which Administrative Agent determines, acting reasonably and in good faith, materially impairs the Borrowing Base Asset Value or marketability of such Borrowing Base Property;

(b)          Administrative Agent determines that such Borrowing Base Property has suffered a Material Property Event after the date such Property was admitted into the Borrowing Base (or in the case of an uninsured Casualty, in respect of such Borrowing Base Property, is reasonably likely to become a Material Property Event) which Administrative Agent determines, acting reasonably and in good faith, materially impairs the Borrowing Base Asset Value or marketability of such Borrowing Base Property;

(c)          (i) any default by any Property Owner, as tenant under any applicable Acceptable Ground Lease, in the observance or performance of any material term, covenant, or condition of any applicable Acceptable Ground Lease on the part of such Property Owner to be observed or performed and said default is not cured following the expiration of any applicable grace and notice periods therein provided, or (ii) the leasehold estate created by any applicable Acceptable Ground Lease shall be surrendered or (iii) any applicable Acceptable Ground Lease shall cease to be in full force and effect or (iv) any applicable Acceptable Ground Lease shall be terminated or canceled for any reason or under any circumstances whatsoever, or any of the material terms, covenants or conditions of any applicable Acceptable Ground Lease shall be modified, changed, supplemented, altered, or amended in any manner not otherwise permitted hereunder without the consent of Administrative Agent; and

(d)          The Improvements have been damaged (ordinary wear and tear excepted) and not repaired or are the subject of any pending or, to any Loan Party’s knowledge, threatened Condemnation or adverse zoning proceeding, except as could not reasonably be expected to cause a Material Property Event.

After the occurrence of any Exclusion Event, Administrative Agent, at the direction of Required Lenders in their sole discretion, shall have the right at any time and from time to time to notify Borrower (the “Exclusion Notice”) that, effective ten (10) Business Days after the giving of such notice and for so long as such circumstance exists, such Property shall no longer be considered a Borrowing Base Property for purposes of determining the Borrowing Base. Borrowing Base Properties which have been subject to an Exclusion Event may, at Borrower’s request, be released from the Borrowing Base; provided that such release shall be subject to the conditions for release set forth in Section 4.09.

If Administrative Agent delivers an Exclusion Notice and such Exclusion Event no longer exists, then Borrower may give Administrative Agent written notice thereof (together with reasonably detailed evidence of the cure of such condition) and such Borrowing Base Property shall, effective with the delivery by Borrower of the next Borrowing Base Report, be considered a Borrowing Base Property for purposes of calculating the Borrowing Base as long as such Borrowing Base Property meets all the requirements to be included in the Borrowing Base set forth in this Article IV. Any Property that is excluded from the Borrowing Base pursuant to this Section 4.10 may subsequently be reinstated as a Borrowing Base Property, even if an Exclusion Event exists, upon such terms and conditions as Required Lenders may approve.

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4.11         Documentation Required with Respect to Borrowing Base Properties. Borrower shall deliver, or shall cause the applicable Property Owner to deliver, each of the following with respect to each Acceptable Property to be admitted to the Borrowing Base:

(a)          UCC-1 financing statements which shall have been furnished for filing in all filing offices that Administrative Agent may reasonably require;

(b)          if such Acceptable Property is held pursuant to an Acceptable Ground Lease, true and correct copies of such Acceptable Ground Lease and any Guarantees thereof; and (ii) to the extent required by Administrative Agent or the Required Lenders in their reasonable discretion, recognition agreements and estoppel certificates executed by the lessor under such Acceptable Ground Lease, in form and content reasonably satisfactory to Administrative Agent or the Required Lenders, as applicable;

(c)          a true and correct rent roll for such Acceptable Property; and

(d)          a current property conditions report performed by an engineer reasonably satisfactory to Administrative Agent.

Article V.
Conditions Precedent to Credit Extensions

5.01         Conditions to Effectiveness. The effectiveness of this Agreement is subject to satisfaction of the following conditions precedent:

(a)          Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Effective Date (or, in the case of certificates of governmental officials, a recent date before the Effective Date) and each in form and substance satisfactory to Administrative Agent:

(i)          executed counterparts of this Agreement, Parent Guaranty, the Subsidiary Guaranty and the applicable Pledge Agreements;

(ii)         Revolving Notes and Term Notes executed by Borrower in favor of each Lender who has requested a Note on or prior to the date that is two Business Days prior to the Effective Date and the Swingline Note executed by Borrower;

(iii)        such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

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(iv)        such documents and certifications as Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so would not have a Material Adverse Effect;

(v)         a favorable opinion of legal counsel to the Loan Parties and local counsel to the Loan Parties in the jurisdictions in which the Property Owners of the Initial Borrowing Base Properties are organized, in each case, addressed to Administrative Agent and each Lender, addressing such matters with respect to the Loan Parties as Administrative Agent may reasonably request;

(vi)        a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

(vii)       a certificate signed by a Responsible Officer of Borrower certifying (A) that the conditions specified in Sections 5.02(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Pro Forma Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;

(viii)      a duly completed Borrowing Base Report and Compliance Certificate as of the Effective Date, signed by a Responsible Officer of Borrower;

(ix)         to the extent requested by the Administrative Agent with respect to any Initial Borrowing Base Property, the Property Information with respect to such Initial Borrowing Base Property (which Property Information may be made available through an electronic database);

(x)          evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect;

(xi)         evidence that all indebtedness, liabilities or obligations owing by the Loan Parties under the Existing Revolving Credit Agreement shall have been paid in full and all guarantees in respect of, and Liens securing, such indebtedness, liabilities or other obligations have been released; and

(xii)        such other certificates, documents, consents or opinions as Administrative Agent shall reasonably request as further described in the list of closing documents attached hereto as Exhibit F.

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(b)          Any fees required to be paid on or before the Effective Date shall have been paid.

(c)          Unless waived by Administrative Agent, Borrower shall have paid all fees, charges and disbursements of counsel to Administrative Agent (directly to such counsel if requested by Administrative Agent) to the extent invoiced at least two days prior to the Effective Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between Borrower and Administrative Agent).

Without limiting the generality of the provisions of the last paragraph of Section 10.03, for purposes of determining compliance with the conditions specified in this Section 5.01, each Lender that has signed this Agreement or an Assignment and Assumption shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Administrative Agent shall have received notice from such Lender prior to the proposed Effective Date specifying its objection thereto.

5.02        Conditions to all Credit Extensions. The obligation of each Lender to honor any request for a Credit Extension is subject to the following conditions precedent:

(a)          The representations and warranties of Borrower and each other Loan Party contained in Article VI or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (except to the extent that any such representation and warranty is qualified as to “materiality,” “Material Adverse Effect” or similar language, in which case it shall be true and correct in all respects (after giving effect to any such qualification)) on and as of the date of such Credit Extension; provided, if any such representations and warranties specifically refer to an earlier date, they shall be true and correct in all material respects (except to the extent that any such representation and warranty is qualified as to “materiality,” “Material Adverse Effect” or similar language, in which case it shall be true and correct in all respects (after giving effect to any such qualification)) as of such earlier date; provided, further, that, for purposes of this Section 5.02, the representations and warranties contained in Section 6.05(b) shall be deemed to refer to the most recent statements furnished pursuant to Section 7.01(b).

(b)          No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

(c)          In the case of the borrowing of Loans, the Administrative Agent shall have received a timely Loan Notice, in the case of a Swingline Loan, Swingline Lender shall have received a timely Notice of Swingline Borrowing, and in the case of the issuance of a Letter of Credit Issuing Bank and the Administrative Agent shall have received a timely request for the issuance of such Letter of Credit.

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(d)          After giving effect to such proposed Credit Extension, (x) the Total Revolving Outstandings do not exceed the aggregate Revolving Commitments and (y) the sum of Total Outstandings plus Total Bridge Facility Outstandings does not exceed the Borrowing Base.

Each request for a Credit Extension described in clause (c) above submitted by Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 5.02(a), (b), and (d) have been satisfied on and as of the date of the applicable Credit Extension.

Article VI.
Representations and Warranties

Each of Parent and Borrower represents and warrants to Administrative Agent, the Lenders and Issuing Bank that:

6.01         Existence, Qualification and Power; Compliance with Laws. Parent, Borrower and each Subsidiary Guarantor (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) in the case of the Loan Parties, execute, deliver, and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c) to the extent that failure to do so would not have a Material Adverse Effect.

6.02         Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.

6.03         Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document except for those that have been obtained, taken or made, as the case may be, and those specified herein.

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6.04         Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as enforcement may be limited by Debtor Relief Laws or general equitable principles relating to or limiting creditors’ rights generally.

6.05         Financial Statements; No Material Adverse Effect.

(a)          The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of Parent as of the date thereof and their results of operations for each period covered thereby in accordance with GAAP consistently applied throughout the each period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of Parent as of the date thereof, including liabilities for Taxes, material commitments and Indebtedness.

(b)          The most recent unaudited consolidated and consolidating balance sheets of Parent delivered pursuant to Section 7.01(b) (it being acknowledged that, as of the Effective Date, no such balance sheets or statements have been so delivered), and the related consolidated and consolidating statements of income or operations, consolidated shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of Parent as of the date thereof and its results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

(c)          The consolidated and consolidating pro forma balance sheets of Parent as of the Effective Date, and the related consolidated and consolidating pro forma statements of income for the portion of the fiscal year then ended (the “Pro Forma Financial Statements”), certified by the chief financial officer or treasurer of Parent, copies of which have been furnished to each Lender, fairly present the consolidated and consolidating pro forma financial condition of Parent as of such date, and the consolidated and consolidating pro forma results of operations of Parent for the period ended on such date, all in accordance with GAAP.

(d)          From and after the date of the Audited Financial Statements, and thereafter, from and after the date of the most recent financial statements delivered pursuant to Section 7.01(a) or 7.01(b), there has been no event or circumstance, either individually or in the aggregate, that has had or would have a Material Adverse Effect.

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6.06         Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the actual knowledge of any Company without independent investigation, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against any Company or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in Schedule 6.06, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and there has been no adverse change in the status, or financial effect on any Company, of the matters described on Schedule 6.06.

6.07         No Default. No Company is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing.

6.08         Ownership of Property; Liens; Equity Interests. Each Property Owner has good record and marketable title in fee simple to, or valid leasehold interests in, all Borrowing Base Properties necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each applicable Property Owner has good record and marketable fee simple title (or, in the case of Acceptable Ground Leases, a valid leasehold) to the Borrowing Base Property owned by such Property Owner, subject only to Liens permitted by Section 8.01. All of the outstanding Equity Interests in each Property Owner have been validly issued, are fully paid and nonassessable and are owned by the applicable Pledgors free and clear of all Liens (other than Liens permitted by Section 8.01).

6.09         Environmental Compliance.

(a)          The Companies conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof Parent and Borrower have reasonably concluded that, except as specifically disclosed in Schedule 6.09, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b)          To the best of Borrower’s knowledge, without independent investigation, and except as otherwise may be disclosed in any Environmental Assessment, or as may be indicated in an Environmental Report delivered to Administrative Agent and except, in each case, to the extent the same could not reasonably be expected to have a Material Adverse Effect or constitute a Material Environmental Event: (i) no Borrowing Base Property has been used (A) for landfilling, dumping, or other waste or Hazardous Material disposal activities or operations in violation of Environmental Laws, or (B) for generation, storage, use, sale, treatment, processing, or recycling of any Hazardous Material, in violation of Environmental Laws, or for any other use that has resulted in Contamination; (ii) there is no Hazardous Material, storage tank (or similar vessel) whether underground or otherwise, sump or well currently on any Property; (iii) no Company has received any written notice of, or has actual knowledge of, any Environmental Claim or any completed, pending, proposed or threatened investigation or inquiry concerning the presence or release of any Hazardous Material on any Property or concerning whether any condition, use or activity on any Property is in violation of any Environmental Requirement; (iv) the present conditions, uses, and activities on each Property do not violate any Environmental Requirement and the use of any Property which any Company (and each tenant and subtenant) makes and intends to make of any Property complies and will comply with all applicable Environmental Requirements; (v) no Property appears on the National Priorities List, any federal or state “superfund” or “superlien” list, or any other list or database of properties maintained by any local, state, or federal agency or department showing properties which are known to contain or which are suspected of containing a Hazardous Material; (vi) no Company has ever applied for and been denied environmental impairment liability insurance coverage relating to any Property; (vii) no Company has, nor, to any Company’s knowledge, have any tenants or subtenants, obtained any permit or authorization to construct, occupy, operate, use, or conduct any activity on any Property by reason of any Environmental Requirement; and (viii) to any Company’s knowledge, there are no underground or aboveground storage tanks on such Property.

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(c)          Even though a Loan Party may have provided Administrative Agent with an Environmental Report or other environmental report or assessment together with other relevant information regarding the environmental condition of the Borrowing Base Properties, Borrower acknowledges and agrees that Administrative Agent is not accepting the Borrowing Base Properties hereunder based solely on that report, assessment, or information. Rather Administrative Agent has relied on the assessments, reports, and representations and warranties of Borrower in this Agreement and Administrative Agent is not waiving any of its rights and remedies in the environmental provisions of this Agreement, or any other Loan Document.

6.10         Insurance. The properties of the Loan Parties are insured with financially sound and reputable insurance companies not Affiliates of any Loan Party, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Loan Parties operate.

6.11         Taxes. The Companies have filed all material Federal, state and other Tax returns and reports required to be filed, and have paid all material Federal, state and other Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP or which would not result in a Material Adverse Effect. There is no proposed tax assessment against any Company that would, if made, have a Material Adverse Effect.

6.12         ERISA Compliance.

(a)          Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the Internal Revenue Service. To the best knowledge of Parent and Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status. Parent and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

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(b)          There are no pending or, to the best knowledge of Parent and Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or would have a Material Adverse Effect.

(c)          (i)          No ERISA Event has occurred, and neither Parent nor any ERISA Affiliate is aware of any fact, event or circumstance that would constitute or result in an ERISA Event with respect to any Pension Plan; (ii) Parent and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most-recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither Parent nor any ERISA Affiliate knows of any facts or circumstances that would cause the funding target attainment percentage for any such plan to drop below 60% as of the most-recent valuation date; (iv) neither Parent nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither Parent nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, in each case, that would result in a liability, individually, or in the aggregate, in excess of $20,000,000.

(d)          None of the assets of Parent, Borrower or Guarantor constitutes or will constitute “plan assets” within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA, and none of the transactions by or with Parent, Borrower or Guarantor are or will be subject to state statutes applicable to Parent, Borrower or Guarantor regulating fiduciary obligations with respect to, governmental plans which are substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code currently in effect.

6.13         Subsidiaries; Equity Interests. As of the Effective Date, Parent and Borrower have no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 6.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Company in the amounts specified on Part (a) of Schedule 6.13 free and clear of all Liens (other than Liens permitted by Section 8.01). As of the Effective Date, neither Parent nor Borrower has any direct or indirect Equity Interests in any other Person other than those specifically disclosed in Part (b) of Schedule 6.13. All of the outstanding Equity Interests in each Property Owner have been validly issued, are fully paid and nonassessable and are owned by the applicable holders in the amounts specified on Part (c) of Schedule 6.13 free and clear of all Liens (other than Liens permitted by Section 8.01).

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6.14         Margin Regulations; Investment Company Act.

(a)          Neither Parent nor Borrower is engaged and will not engage, principally or as one of their important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

(b)          None of Parent, Borrower, any Person Controlling Borrower, or any other Company is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

6.15         Disclosure. Parent and Borrower have disclosed to Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which any Company is subject, and all other matters known to them, that, individually or in the aggregate, would have a Material Adverse Effect. The reports, financial statements, certificates or other information furnished (whether in writing or orally) by or on behalf of any Company to Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished), taken as a whole, do not contain any material misstatement of fact or fail to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that with respect to projected financial information, Parent and Borrower represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time made.

6.16         Compliance with Laws. Each Company is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not have a Material Adverse Effect.

6.17         Taxpayer Identification Number. As of the date hereof, each Loan Party’s true and correct U.S. taxpayer identification number is set forth on Schedule 11.02.

6.18         Intellectual Property; Licenses, Etc. Each Loan Party owns, or possesses the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person except, in each case, where the failure to do so would not have a Material Adverse Effect. To the best knowledge of each Loan Party, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party infringes upon any rights held by any other Person except where such infringement would not have a Material Adverse Effect. Except as specifically disclosed in Schedule 6.18, no claim or litigation regarding any of the foregoing is pending or, to the best knowledge of each Loan Party, threatened, which, either individually or in the aggregate, would have a Material Adverse Effect.

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6.19         Representations Concerning Leases. Borrower and the applicable Property Owners have delivered true and correct copies of each rent roll as required by Section 4.11(c).

6.20         Solvency.  No Loan Party (a) has entered into the transaction or executed this Agreement or any other Loan Document with the actual intent to hinder, delay or defraud any creditor and (b) has not received reasonably equivalent value in exchange for its obligations under the Loan Documents. After giving effect to any Loan, the fair saleable value of each Loan Party’s assets exceeds and will, immediately following the making of any such Loan, exceed such Loan Party’s total liabilities, including subordinated, unliquidated, disputed and contingent liabilities. No Loan Party’s assets constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted, nor will its assets constitute unreasonably small capital immediately following the making of any Loan. No Loan Party intends to incur debt and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debt and liabilities as they mature (taking into account the timing and amounts of cash to be received by such Loan Party and the amounts to be payable on or in respect of obligations of such Loan Party). No petition under any Debtor Relief Laws has been filed against any Loan Party in the last seven (7) years, and neither Borrower nor any other Loan Party in the last seven (7) years has ever made an assignment for the benefit of creditors or taken advantage of any insolvency act for the benefit of debtors. No Loan Party is contemplating either the filing of a petition by it under any Debtor Relief Laws or the liquidation of all or a major portion of its assets or property, and no Loan Party has knowledge of any Person contemplating the filing of any such petition against it or any other Loan Party.

6.21         REIT Status of Parent.   ARCT has elected to qualify as a REIT commencing with its taxable year ending December 31, 2011 through the time of effectiveness of the Permitted Merger Transaction.

6.22         Labor Matters.   There is (a) no significant unfair labor practice complaint pending against any Company or, to the best of each Company’s knowledge, threatened in writing against any Company, before the National Labor Relations Board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is pending on the date hereof against any Company or, to best of any Company’s knowledge, threatened in writing against any Company which, in either case, would result in a Material Adverse Effect, and (b) no significant strike, labor dispute, slowdown or stoppage is pending against any Company or, to the best of any Company’s knowledge, threatened in writing against any Company which would result in a Material Adverse Effect.

6.23         Ground Lease Representation.

(a)          The applicable Property Owner has delivered to Administrative Agent true and correct copies of each Acceptable Ground Lease as required by Section 4.11(b).

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(b)          Each Acceptable Ground Lease is in full force and effect.

6.24         Borrowing Base Properties. To Borrower’s knowledge and except where the failure of any of the following to be true and correct would not have a Material Adverse Effect:

(a)          Each Borrowing Base Property complies with all Laws, including all subdivision and platting requirements, without reliance on any adjoining or neighboring property. No Loan Party has received any notice or claim from any Person that a Borrowing Base Property, or any use, activity, operation, or maintenance thereof or thereon, is not in compliance with any Law, and has no actual knowledge of any such noncompliance except as disclosed in writing to Administrative Agent;

(b)          The Loan Parties have not directly or indirectly conveyed, assigned, or otherwise disposed of, or transferred (or agreed to do so) any development rights, air rights, or other similar rights, privileges, or attributes with respect to a Borrowing Base Property, including those arising under any zoning or property use ordinance or other Laws;

(c)          All utility services necessary for the use of each Borrowing Base Property and the operation thereof for their intended purpose are available at each Borrowing Base Property;

(d)          The current use of each Borrowing Base Property complies in all material respects with all applicable zoning ordinances, regulations, and restrictive covenants affecting such Borrowing Base Property, all use restrictions of any Governmental Authority having jurisdiction have been satisfied;

(e)          No Borrowing Base Property is the subject of any pending or, to any Loan Party’s knowledge, threatened Condemnation or material adverse zoning proceeding; and

(f)          There exists no Material Environmental Event in respect of any Borrowing Base Property.

6.25         Patriot Act and Other Specified Laws.

(i)          To the extent applicable, each Loan Party is in compliance with the (i) Trading with the Enemy Act, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V) and any other enabling legislation or executive order relating thereto, and (ii) the Patriot Act. No part of the proceeds of the Loans will be used, directly or indirectly, in violation of the United States Foreign Corrupt Practices Act of 1977. No Loan Party is engaged in or has engaged in any course of conduct that could subject any of its properties to any Lien, seizure or other forfeiture under any criminal law, racketeer influenced and corrupt organizations or other similar criminal laws. No Loan Party is named on the list of Specially Designated Nationals and Blocked Persons maintained by the United States Department of Treasury Office of Foreign Assets Control.

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(ii)         No Loan Party (i) is a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii)  engages in any dealings or transactions prohibited by Section 2 of such Executive Order, or, to the knowledge of Borrower after due inquiry, is otherwise associated with any such Person in any manner that violates such Section 2 and (iii) is a Person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.

Article VII.
Affirmative Covenants

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder (excluding contingent indemnification obligations to the extent no unsatisfied claim giving rise thereto has been asserted) shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding:

7.01         Financial Statements. Each of Parent and Borrower shall deliver to Administrative Agent and each Lender, in form and detail reasonably satisfactory to Administrative Agent and the Required Lenders:

(a)          as soon as available, but in any event within ninety (90) days after the end of each fiscal year of Parent (or, if earlier, fifteen (15) days after the date required to be filed with the SEC) (commencing with the fiscal year ended December 31, 2012), a consolidated and consolidating balance sheet of Parent as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, consolidated changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of Grant Thornton LLP or another independent certified public accountant of nationally recognized standing reasonably acceptable to Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and such consolidating statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Parent;

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(b)          as soon as available, but in any event within forty five (45) days after the end of each of the first three (3) fiscal quarters of each fiscal year of Parent (or, if earlier, five (5) days after the date required to be filed with the SEC) (commencing with the fiscal quarter ended March 31, 2013), a consolidated and consolidating balance sheet of Parent as at the end of such fiscal quarter, the related consolidated and consolidating statements of income or operations for such fiscal quarter and for the portion of Parent’s fiscal year then ended, and the related consolidated changes in shareholders’ equity, and cash flows for the portion of Parent’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of Parent as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of Parent in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Parent; and

(c)          concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), (i) a statement of all income and expenses in connection with each Borrowing Base Property, and (ii) for any Borrowing Base Property subject to more than one (1) Lease Agreement, a rent roll, each certified in writing as true and correct by Responsible Officer of Parent together with a status report regarding the leasing activities with respect to the Borrowing Base Properties and copies of any leases executed during the prior calendar quarter.

As to any information contained in materials furnished pursuant to Section 7.02, Parent and Borrower shall not be separately required to furnish such information under clause (a) or (b) above, but the foregoing shall not be in derogation of the obligation of Parent and Borrower to furnish the information and materials described in clauses (a) and (b) above at the times specified therein.

7.02         Certificates; Other Information. Each of Parent and Borrower shall deliver to Administrative Agent and each Lender, in form and detail reasonably satisfactory to Administrative Agent and the Required Lenders:

(a)          concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of Borrower (which delivery may, unless Administrative Agent or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

(b)          concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), upon the admission of an Acceptable Property into the Borrowing Base, and upon the removal of any Property from the Borrowing Base, a duly completed Borrowing Base Report signed by the chief executive officer, chief financial officer, treasurer or controller of Borrower (which delivery may, unless Administrative Agent or a Lender requests executed originals, be by electronic communication including fax or email and shall be deemed to be an original authentic counterpart thereof for all purposes);

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(c)          promptly after any request by Administrative Agent, copies of any detailed audit opinions or review reports submitted to the board of directors (or the audit committee of the board of directors) of Parent by independent accountants in connection with the accounts or books of Parent;

(d)          promptly, and in any event within five (5) Business Days, after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Parent, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to Administrative Agent pursuant hereto;

(e)         concurrently with the delivery of the financial statements referred to in Sections 7.01(a), an annual budget for Parent, on a consolidated basis prepared by Parent in the ordinary course of its business;

(f)          promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of Parent or Borrower pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 7.01 or any other clause of this Section 7.02;

(g)         promptly, and in any event within five (5) Business Days after receipt thereof by Parent or Borrower, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any material investigation or other material inquiry by such agency regarding financial or other operational results of any Company unless restricted from doing so by such agency;

(h)         simultaneously with any Disposition, notice of such Disposition; and

(i)          promptly, such additional information regarding the business, financial or corporate affairs of Parent or Borrower or any Borrowing Base Property, or compliance with the terms of the Loan Documents, as Administrative Agent or any Lender may from time to time reasonably request.

Documents required to be delivered pursuant to Section 7.01(a) or (b) or Section 7.02(d) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which Parent and Borrower posts such documents, or provides a link thereto on Parent and Borrower’s website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such documents are posted on Parent and Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and Administrative Agent have access (whether a commercial, third-party website or whether sponsored by Administrative Agent). Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by Parent and Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

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Parent and Borrower hereby acknowledge that (a) Administrative Agent and/or the Lead Arrangers will make available to the Lenders and Issuing Bank materials and/or information provided by or on behalf of Parent and Borrower hereunder (collectively, “Borrower Materials”) by posting Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to Parent, Borrower or their Affiliates, or the respective Equity Interests of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ Equity Interests. Parent and Borrower hereby agree that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” Parent and Borrower shall be deemed to have authorized Administrative Agent, Lead Arrangers, Issuing Bank and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Parent and Borrower or their Equity Interests for purposes of United States Federal and state securities laws (provided that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) Administrative Agent and the Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”

7.03         Notices. Each of Parent and Borrower shall, upon becoming aware of same, promptly notify Administrative Agent who shall notify each Lender:

(a)          of the occurrence of any Default;

(b)          of any matter that has resulted or could reasonably be expected to have a Material Adverse Effect;

(c)          of the occurrence of any ERISA Event which has resulted or would result in liabilities of any Company in an aggregate amount in excess of $20,000,000;

(d)          of any material litigation, arbitration or governmental investigation or proceeding instituted or threatened in writing against any Borrowing Base Property, and which could reasonably be expected to have a Material Adverse Effect;

(e)          of any actual or threatened in writing Condemnation of any portion of any Borrowing Base Property, and which could reasonably be expected to have a Material Adverse Effect;

(f)          of any Casualty with respect to any Borrowing Base Property to the extent such notice is required pursuant to Section 7.13(b);

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(g)          of any material permit, license, certificate or approval required with respect to any Borrowing Base Property lapses or ceases to be in full force and effect or claim from any person that any Borrowing Base Property, or any use, activity, operation or maintenance thereof or thereon, is not in compliance with any Law except to the extent that the same would not result in a Material Adverse Effect; and

(h)          of any material change in accounting policies or financial reporting practices by any Company, including any determination by Borrower referred to in Section 2.10(b).

Each notice pursuant to this Section 7.03 shall be accompanied by a statement of a Responsible Officer of Parent and Borrower setting forth details of the occurrence referred to therein and stating what action Parent and/or Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 7.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

7.04         Payment of Obligations. Each of Parent and Borrower shall, and shall cause each other Loan Party to, pay and discharge as the same shall become due and payable, all its obligations and liabilities, including: (a) all Tax liabilities, assessments and governmental charges or levies upon a Loan Party or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by such Loan Party; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property other than Liens of the type permitted under Sections 8.01(a) through (g); and (c) all Indebtedness, as and when due and payable except, in each case, where the failure to do so would not result in a Material Adverse Effect.

7.05         Preservation of Existence, Etc. Each of Parent and Borrower shall, and shall cause each other Loan Party to (a) preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 8.03; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so would not have a Material Adverse Effect; and (c) preserve or renew all of its IP Rights, the non-preservation of which would have a Material Adverse Effect.

7.06         Maintenance of Properties. Each of Parent and Borrower shall, and shall cause each other Company to (a) maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition except to the extent the failure to do so would not result in a Material Adverse Effect; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so would not have a Material Adverse Effect; (c) use the standard of care typical in the industry in the operation and maintenance of its (i) Borrowing Base Properties, and, (ii) as to its other Properties except where the failure to do so would not have a Material Adverse Effect; and (d) keep the Borrowing Base Properties in good order, repair, operating condition, and appearance, causing all necessary repairs, renewals, replacements, additions, and improvements to be promptly made, and not allow any of the Borrowing Base Properties to be misused, abused or wasted or to deteriorate (ordinary wear and tear excepted) except where the failure to do so would not have a Material Adverse Effect.

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7.07         Maintenance of Insurance. Each of Parent and Borrower shall, and shall cause each other Company to, maintain with financially sound and reputable insurance companies not Affiliates of any Company, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

7.08         Compliance with Laws. Each of Parent and Borrower shall, and shall cause each other Subsidiary Guarantor to, comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith would not have a Material Adverse Effect.

7.09         Books and Records. Each of Parent and Borrower shall, and shall cause each other Company to: (a) maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of each Company, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over any Company, as the case may be.

7.10         Inspection Rights. Subject to the rights of tenants, each of Parent and Borrower shall, and shall cause each other Loan Party to, permit representatives and independent contractors of Administrative Agent (which may be accompanied by representatives and independent contractors of one or more Lenders) and, if an Event of Default has occurred and is continuing, representatives and independent contractors of any Lender to visit and inspect and photograph any Borrowing Base Property and any of its other properties, to examine its corporate, financial and operating records, and all recorded data of any kind or nature, regardless of the medium of recording including all software, writings, plans, specifications and schematics, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its officers all at the expense of Borrower and at such reasonable times during normal business hours, upon reasonable advance notice to the applicable Loan Party and no more often than once in any period of twelve (12) consecutive months unless an Event of Default has occurred and is continuing; provided that when an Event of Default has occurred and is continuing Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice, subject to the rights of tenants. Any inspection or audit of the Borrowing Base Properties or the books and records, including recorded data of any kind or nature, regardless of the medium of recording including software, writings, plans, specifications and schematics of any Loan Party, or the procuring of documents and financial and other information, by Administrative Agent on behalf of itself or on behalf of Lenders shall be for Administrative Agent’s and Lenders’ protection only, and shall not constitute any assumption of responsibility to any Loan Party or anyone else with regard to the condition, construction, maintenance or operation of the Borrowing Base Properties nor Administrative Agent’s approval of any certification given to Administrative Agent nor relieve any Loan Party of Borrower’s or any other Loan Party’s obligations.

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7.11         Use of Proceeds. Each of Parent and Borrower shall, and shall cause each other Company to, use the proceeds of the Credit Extensions (a)  to finance the acquisition of Properties; (b) to replace and refinance in full Borrower’s existing $100,000,000 revolving credit facility evidenced by the Existing Revolving Credit Agreement; (c) to pay and finance any cash distributions or other cash payments to equity holders of ARCT in connection with the Permitted Merger Transaction as set forth in the Merger Agreement as in effect as of the date of this Agreement; and (d) for general corporate purposes, in each case, not in contravention of any Law or of any Loan Document.

7.12         Environmental Matters. Each of Parent and Borrower shall, and shall cause each other Loan Party to:

(a)          Violations; Notice to Administrative Agent. Use reasonable efforts to:

(i)          Keep the Borrowing Base Properties free of Contamination;

(ii)         Promptly deliver to Administrative Agent a copy of each report pertaining to any Property or to any Loan Party prepared by or on behalf of such Loan Party pursuant to a material violation of any Environmental Requirement; and

(iii)        As soon as practicable advise Administrative Agent in writing of any Environmental Claim or of the discovery of any Contamination on any Borrowing Base Property, as soon as any Loan Party first obtains knowledge thereof, including a description of the nature and extent of the Environmental Claim and/or Hazardous Material and all relevant circumstances.

7.13         Maintenance of Status. From and after the consummation of the Permitted Merger Transaction, Parent shall maintain at least one class of common shares which is subject to price quotations on The NASDAQ Stock Market or having trading privileges on the New York Stock Exchange or any other national securities exchange.

7.14         Ground Leases. Solely with respect to Borrowing Base Property, each of Parent and Borrower shall, and shall cause each other Loan Party to:

(a)          Diligently perform and observe in all material respects all of the terms, covenants, and conditions of any Acceptable Ground Lease as tenant under such Acceptable Ground Lease; and

(b)          Promptly notify Administrative Agent of (i) the giving to the applicable Property Owner of any notice of any default by such Property Owner under any Acceptable Ground Lease and deliver to Administrative Agent a true copy of each such notice within five (5) Business Days of such Property Owner’s receipt thereof, and (ii) the obtaining of any knowledge of any bankruptcy, reorganization, or insolvency of the landlord under any Acceptable Ground Lease or of the receipt of any notice thereof, and deliver to Administrative Agent a true copy of such notice within five (5) Business Days of the applicable Property Owner’s receipt;

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(c)          Exercise any individual option to extend or renew the term of an Acceptable Ground Lease upon demand by Administrative Agent made at any time within thirty (30) days prior to the last day upon which any such option may be exercised, and each applicable Property Owner hereby expressly authorizes and appoints Administrative Agent as its attorney-in-fact to exercise any such option in the name of and upon behalf of such Property Owner, which power of attorney shall be irrevocable and shall be deemed to be coupled with an interest.

If the applicable Property Owner shall default in the performance or observance of any term, covenant, or condition of any Acceptable Ground Lease on the part of such Property Owner and shall fail to cure the same prior to the expiration of any applicable cure period provided thereunder, then Administrative Agent shall have the right, but shall be under no obligation, to pay any sums and to perform any act or take any action as may be appropriate to cause all of the terms, covenants, and conditions of such Acceptable Ground Lease on the part of such Property Owner to be performed or observed on behalf of such Property Owner, to the end that the rights of such Property Owner in, to, and under such Acceptable Ground Lease shall be kept unimpaired and free from default. If the landlord under any Acceptable Ground Lease shall deliver to Administrative Agent a copy of any notice of default under such Acceptable Ground Lease, then such notice shall constitute full protection to Administrative Agent for any action taken or omitted to be taken by Administrative Agent, in good faith, in reliance thereon.

7.15         Borrowing Base Properties.

(a)          Except where the failure to comply with any of the following would not have a Material Adverse Effect, each of Parent and Borrower shall, and shall use commercially reasonable efforts to cause each other Loan Party or the applicable tenant, to:

(b)          Pay all real estate and personal property taxes, assessments, water rates or sewer rents, ground rents, maintenance charges, impositions, and any other charges, including vault charges and license fees for the use of vaults, chutes and similar areas adjoining any Borrowing Base Property, now or hereafter levied or assessed or imposed against any Borrowing Base Property or any part thereof (except those which are being contested in good faith by appropriate proceedings diligently conducted).

(c)          Promptly pay (or cause to be paid) when due all bills and costs for labor, materials, and specifically fabricated materials incurred in connection with any Borrowing Base Property (except those which are being contested in good faith by appropriate proceedings diligently conducted), and in any event never permit to be created or exist in respect of any Borrowing Base Property or any part thereof any other or additional Lien or security interest other than Liens permitted by Section 8.01.

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(d)          Operate the Borrowing Base Properties in a good and workmanlike manner and in all material respects in accordance with all Laws in accordance with such Loan Party’s prudent business judgment.

(e)          Cause each other Loan Party to, to the extent owned and controlled by a Loan Party, preserve, protect, renew, extend and retain all material rights and privileges granted for or applicable to each Borrowing Base Property.

7.16         Subsidiary Guarantor Organizational Documents. Each of Parent and Borrower shall, and shall cause each other Pledgor to, at its expense, maintain the Organization Documents of each Subsidiary Guarantor in full force and effect, without any cancellation, termination, amendment, supplement, or other modification of such Organization Documents, except as explicitly required by their terms (as in effect on the date hereof), except for amendments, supplements, or other modifications that do not adversely affect the interests of the Lenders under the applicable Pledge Agreement in any material respect, and except for Organization Documents in respect of Equity Interests of partnerships or limited liability companies that have been released from the applicable Pledgor’s Pledge Agreement.

Article VIII.
Negative Covenants

So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder (excluding contingent indemnification obligations to the extent no unsatisfied claim giving rise thereto has been asserted) shall remain unpaid or unsatisfied:

8.01         Liens. Each of Parent and Borrower shall not, nor shall it permit any other Loan Party to, directly or indirectly, create, incur, assume or suffer to exist any Lien upon any Collateral other than, with respect to the Borrowing Base Properties, the following:

(a)          Liens pursuant to any Loan Document or, from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the Bridge Credit Agreement or any agreements entered into in connection therewith;

(b)          Liens existing on the date hereof and listed on Schedule 8.01;

(c)          Liens for Taxes not yet due and payable or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(d)          carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

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(e)          easements, rights-of-way, restrictions, restrictive covenants, encroachments, protrusions and other similar encumbrances affecting real property disclosed in the Title Insurance Policies and which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(f)           Liens securing judgments for the payment of money not constituting an Event of Default under Section 9.01(i);

(g)          the rights of tenants under leases or subleases not interfering with the ordinary conduct of business of such Person;

(h)          Liens securing obligations in the nature of personal property financing leases for furniture, furnishings or similar assets, Capital Lease Obligations and other purchase money obligations for fixed or capital assets; provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (ii) the obligations secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition, and (iii) with respect to Capital Leases, such Liens do not at any time extend to or cover any assets other than the assets subject to such Capital Leases;

(i)          Liens securing obligations in the nature of the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(j)          such other title and survey exceptions as Administrative Agent has approved in writing in Administrative Agent’s reasonable discretion; and

(k)          with respect to all other Collateral, Liens described in clauses (a) and (c) above.

8.02         Investments. Neither Parent nor Borrower shall have and shall not permit the Companies to have any Investments other than:

(a)          Investments in the form of cash or Cash Equivalents;

(b)          Investments existing on the date hereof and set forth on Schedule 6.13;

(c)          advances to officers, directors and employees of Borrower and Subsidiaries for travel, entertainment, relocation and analogous ordinary business purposes;

(d)          Investments of the Guarantors and Borrower in the form of Equity Interests and investments of Borrower in any wholly-owned Subsidiary, and Investments of Borrower directly in, or of any wholly-owned Subsidiary in another wholly-owned Subsidiary which owns, real property assets which are functional retail, industrial, manufacturing, warehouse/distribution and/or office properties located within the United States, provided in each case the Investments held by Borrower or Subsidiary are in accordance with the provisions of this Section 8.02 other than this Section 8.02(d);

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(e)          Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business;

(f)           Investments in non-wholly owned Subsidiaries and Unconsolidated Affiliates not to at any time exceed twenty (20.0%) of Total Asset Value;

(g)          Investments in mortgages and mezzanine loans not to at any time exceed ten percent (10.0%) of Total Asset Value;

(h)          Investments in unimproved land holdings not to at any time exceed ten percent (10.0%) of Total Asset Value;

(i)           Investments in Construction in Progress not to at any time exceed ten percent (10.0%) of Total Asset Value;

(j)           Investments by Parent for the redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any Equity Interests of Parent or Borrower now or hereafter outstanding to the extent permitted under Section 8.05 below; and

(k)          Investments permitted under applicable Law in the publicly-traded Equity Interests of REITs or other real estate companies conducting business, services or activities substantially similar or related to those engaged in by Parent and its Subsidiaries on the Effective Date not to at any time exceed two and one half percent (2.5%) of Total Asset Value;

provided, that the aggregate Investments of the types described in clauses (f) through (k) above shall not at any time exceed twenty five percent (25%) of Total Asset Value.

8.03         Fundamental Changes. Each of Parent and Borrower shall not, nor shall it permit any other Loan Party to, directly or indirectly, merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Event of Default has occurred and is continuing or would result therefrom:

(a)          any Loan Party (other than Parent or Borrower) may merge with (i) Parent or Borrower, provided that Parent or Borrower, as applicable, shall be the continuing or surviving Person, or (ii) any other Loan Party, or (iii) any other Person provided that, if it owns a Borrowing Base Property and is not the surviving entity, then Borrower has complied with Section 4.09 to remove such Borrowing Base Property from the Borrowing Base;

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(b)          any Loan Party (other than Parent or Borrower) may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to another Loan Party;

(c)          any Loan Party may Dispose of a Property owned by such Loan Party in the ordinary course of business and for fair value; provided that if such Property is a Borrowing Base Property, then Borrower shall have complied with Section 4.09;

(d)          Parent or Borrower may merge or consolidate with another Person so long as either Parent or Borrower, as the case may be, is the surviving entity, shall remain in pro forma compliance with the covenants set forth in Section 8.14 below after giving effect to such transaction, and Borrower obtains the prior written consent in writing of the Required Lenders in their sole discretion; and

(e)          Parent and Borrower may consummate the Permitted Merger Transaction.

Nothing in this Section shall be deemed to prohibit the sale or leasing of Property or portions of Property in the ordinary course of business.

8.04         Dispositions. Each of Parent, Borrower or any Loan Party shall not make any Disposition or enter into any agreement to make any Disposition, except:

(a)          Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

(b)          Dispositions of inventory in the ordinary course of business;

(c)          Any other Dispositions of Properties or other assets in an arm’s length transaction; provided that (i) if such Property is a Borrowing Base Property, then Borrower shall have complied with Section 4.09 and (ii) Borrower and Parent will remain in pro forma compliance with the covenants set forth in Section 8.14 after giving effect to such transaction; and

(d)          Dispositions permitted by Section 8.03.

8.05         Restricted Payments. Each of Parent and Borrower shall not, nor shall it permit any other Company to, directly or indirectly, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:

(a)          each Subsidiary may make Restricted Payments to Parent, Borrower, and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

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(b)          any Company may declare and make dividend payments or other distributions payable solely in the common Equity Interests or other Equity Interests of such Company including (i) “cashless exercises” of options granted under any share option plan adopted by Parent, (ii) distributions of rights or equity securities under any rights plan adopted by Borrower or Parent, and (iii) distributions (or effect stock splits or reverse stock splits) with respect to its Equity Interests payable solely in additional shares of its Equity Interests;

(c)          Borrower and Parent may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common Equity Interests or other Equity Interests;

(d)          Parent may and Borrower may make any Permitted Distributions;

(e)          Parent or Borrower may issue or sell Equity Interests; provided that they remain in compliance with clause (a), in the case of Parent, and clause (c), in the case of Borrower, of the definition of Change of Control;

(f)           Parent, Borrower and each Subsidiary may make cash payments in lieu of the issuance of fractional shares representing insignificant interests in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of Parent, Borrower or any Subsidiary;

(g)          Parent, Borrower and each Subsidiary may make Restricted Payments in connection with the implementation of or pursuant to any retirement, health, stock option and other benefit plans, bonus plans, performance-based incentive plans, and other similar forms of compensation for the benefit of the directors, officers and employees of Parent, Borrower and the Subsidiaries;

(h)          Concurrently with the effectiveness of the Permitted Merger Transaction, Parent may, and Borrower may make dividends or distributions to Parent to allow Parent to pay the “Cash Consideration” under and as defined in the Merger Agreement as in effect as of the date of this Agreement in an aggregate amount not to exceed $640,000,000; and

(i)           Parent may, and Borrower may make dividends or distributions to Parent to allow Parent to, make payments in connection with share repurchase programs, to the extent not otherwise prohibited by the terms of this Agreement.

Notwithstanding the foregoing, notwithstanding the existence of any Default or Event of Default, any Company may make such dividends and payments to Parent required in order for Parent to be able to make, and Parent shall be permitted to make, any Permitted Distributions described in clause (a)(ii) and (b)(ii) of the definition of Permitted Distributions.

8.06         Change in Nature of Business. Except for Investments permitted under Section 8.02, each of Parent and Borrower shall not, nor shall it permit any other Loan Party to, directly or indirectly, engage in any material line of business substantially different from those lines of business conducted by the Companies on the date hereof or any business substantially related or incidental thereto.

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8.07         Transactions with Affiliates. Each of Parent and Borrower shall not, nor shall it permit any other Loan Party to, directly or indirectly, enter into any transaction of any kind with any Affiliate of a Company, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to such Loan Party as would be obtainable by such Company at the time in a comparable arm’s length transaction with a Person other than an Affiliate, except:

(a)          reasonable and customary fees paid to, and indemnification arrangements with, members of the board of directors (or similar governing body) of any of the Loan Parties or the issuance of directors’ or nominees’ qualifying shares;

(b)          compensation and indemnification arrangements for directors (or equivalent), officers and employees of Parent, Borrower and the Subsidiaries, including retirement, health, option and other benefit plans, bonuses, performance-based incentive plans, and other similar forms of compensation, the granting of Equity Interests to directors (or equivalent), officers and employees of Parent, Borrower and the Subsidiaries in connection with the implementation of any such arrangement, and the funding of any such arrangement;

(c)          Restricted Payments permitted under Section 8.05;

(d)          Investments permitted under Section 8.02(F);

(e)          transactions between or among Borrower and the Subsidiaries permitted under Section 8.03 not involving any other Affiliate;

(f)          (i) the performance of obligations under the Existing Advisory Agreement, the Existing Property Management Agreement, the Existing Management Agreements Side Letter, and (ii) the entry into, and performance of obligations under, any amendment to, so long as any such amendment is not adverse in any material respect to Administrative Agent, any Lender or Borrower, or extension of, the Existing Advisory Agreement or the Existing Property Management Agreement providing for transition services in connection with the termination thereof or, from and after the effectiveness of the Permitted Merger Transaction, the Post-Merger Management Agreement; and

(g)          the Permitted Merger Transaction.

8.08         Burdensome Agreements. Each of Parent and Borrower shall not, nor shall it permit any other Loan Party to, directly or indirectly, enter into any Contractual Obligation (other than this Agreement or any other Loan Document or, from and after the occurrence of the Permitted Bridge Credit Agreement transaction, the Bridge Credit Agreement or any agreements entered into in connection therewith) that directly or indirectly prohibits any Company from (a) creating or incurring any Lien on any Borrowing Base Property unless simultaneously therewith, such Borrowing Base Property is released from the Borrowing Base pursuant to Section 4.09, or (b) subject to rights of tenants under leases (i) that are approved in writing by Administrative Agent, or (ii) that do not materially and adversely affect Administrative Agent’s Liens on the applicable Borrowing Base Property or Administrative Agent’s ability to exercise its rights and remedies with respect to such Liens, transferring ownership of any Borrowing Base Property.

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8.09         Use of Proceeds. Each of Parent and Borrower shall not, nor shall it permit any other Company to, directly or indirectly, use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

8.10         Borrowing Base Properties; Ground Leases. Each of Parent and Borrower shall not, nor shall it permit any other Loan Party to, directly or indirectly:

(a)          Use or occupy or conduct any activity on, or knowingly permit the use or occupancy of or the conduct of any activity on any Borrowing Base Properties by any tenant, in any manner which violates any Law or which constitutes a public or private nuisance in any manner which would have a Material Adverse Effect or which makes void, voidable, or cancelable any insurance then in force with respect thereto or makes the maintenance of insurance in accordance with Section 7.07 commercially unreasonable (including by way of increased premium);

(b)          Without the prior written consent of Administrative Agent (which consent shall not be unreasonably withheld or delayed), initiate or permit any zoning reclassification of any Borrowing Base Property or seek any variance under existing zoning ordinances applicable to any Borrowing Base Property or use or knowingly permit the use of any Borrowing Base Property in such a manner which would result in such use becoming a nonconforming use under applicable zoning ordinances or other Laws;

(c)          Without the prior written consent of Administrative Agent (which consent shall not be unreasonably withheld or delayed), (i) impose any material easement, restrictive covenant, or encumbrance upon any Borrowing Base Property, (ii) execute or file any subdivision plat or condominium declaration affecting any Borrowing Base Property, or (iii) consent to the annexation of any Borrowing Base Property to any municipality;

(d)          Do any act, or suffer to be done any act by any Company or any of its Affiliates, which would reasonably be expected to materially decrease the value of any Borrowing Base Property (including by way of negligent act);

(e)          Without the prior written consent of the Required Lenders (which consent shall not be unreasonably withheld or delayed), permit any drilling or exploration for or extraction, removal or production of any mineral, hydrocarbon, gas, natural element, compound or substance (including sand and gravel) from the surface or subsurface of any Borrowing Base Property regardless of the depth thereof or the method of mining or extraction thereof;

(f)          Allow there to be less than twenty (20) Borrowing Base Properties;

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(g)          Allow Borrowing Base Properties leased to tenants maintaining a rating of BBB-/Baa3 or better to be less than forty percent (40%) of the aggregate Borrowing Base;

(h)          Without the prior consent of the Required Lenders (which consent shall not be unreasonably withheld or delayed), surrender the leasehold estate created by any Acceptable Ground Lease or terminate or cancel any Acceptable Ground Lease or materially modify, change, supplement, alter, or amend any Acceptable Ground Lease, either orally or in writing; or

(i)          Enter into any Contractual Obligations related to any Borrowing Base Property providing for the payment of a management fee (or any other similar fee) to anyone other than a Company if, with respect thereto, Administrative Agent has reasonably required that such fee be subordinated to the Obligations in a manner satisfactory to Administrative Agent, and an acceptable subordination agreement has not yet been obtained.

8.11         Merger Agreement. Neither Parent nor Borrower shall agree to amend, waive or otherwise modify, nor consent to any amendment, waiver or other modification, of the Merger Agreement if the effect of such amendment, waiver or other modification is materially adverse to the Lenders (as reasonably determined by Administrative Agent).

8.12         Environmental Matters. Each of Parent and Borrower shall not knowingly directly or indirectly:

(a)          Cause, commit, permit, or allow to continue (i) any violation of any Environmental Requirement by or with respect to any Borrowing Base Property or any use of or condition or activity on any Borrowing Base Property, or (ii) the attachment of any environmental Liens on any Borrowing Base Property, in each case, that could reasonably be expected to have a Material Adverse Effect; and

(b)          Place, install, dispose of, or release, or cause, permit, or allow the placing, installation, disposal, spilling, leaking, dumping, or release of, any Hazardous Material on any Borrowing Base Property in any manner that could reasonably be expected to have a Material Adverse Effect. Any Hazardous Material disclosed in the Acceptable Environmental Report or otherwise permitted pursuant to any Lease affecting any Borrowing Base Property shall be permitted on any Borrowing Base Property so long as such Hazardous Material is maintained in compliance in all material respects with all applicable Environmental Requirements.

(c)          Place or install, or allow the placing or installation of any storage tank (or similar vessel) on any Borrowing Base Property except that any storage tank (or similar vessel or any replacement thereof) disclosed in the Acceptable Environmental Report or otherwise permitted pursuant to any Lease affecting any Borrowing Base Property shall be permitted on any Borrowing Base Property so long as such storage tank (or similar vessel) is maintained in compliance in all material respects with all applicable Environmental Requirements.

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(d)          Use any Hazardous Material on any Borrowing Base Property except: (i) as reasonably necessary in the ordinary course of business; (ii) in compliance with applicable Environmental Requirements; and (iii) in such a manner which could not reasonably be expected to have a Material Adverse Effect.

8.13         Negative Pledge; Indebtedness. Each of Parent and Borrower shall not permit:

(a)          The Equity Interests of Borrower held by Parent to be subject to any Lien.

(b)          Any Subsidiary (other than Parent or Borrower) that directly or indirectly owns Equity Interests in any Subsidiary Guarantor to (i) incur any Indebtedness (whether Recourse Indebtedness or Non-Recourse Indebtedness) (other than Indebtedness listed on Schedule 8.13), (ii) provide Guarantees to support Indebtedness (other than Indebtedness listed on Schedule 8.13), or (iii) have its Equity Interests subject to any Lien or other encumbrance (other than in favor of the Administrative Agent or, from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the administrative agent (or equivalent person) under the Bridge Credit Agreement).

(c)          Any Property Owner that owns a Borrowing Base Property to (i) incur any Indebtedness (whether Recourse Indebtedness or Non-Recourse Indebtedness) or (ii) provide Guarantees to support Indebtedness (other than, in each case, Indebtedness secured by Liens permitted by Section 8.01).

(d)          Borrower to incur any Indebtedness (other than pursuant to this Agreement or in connection with the Permitted Bridge Credit Agreement Transaction) secured by any Lien on any Borrowing Base Property or Equity Interest Collateral.

(e)          From and after the occurrence of the Permitted Bridge Credit Agreement Transaction, any Subsidiary to provide Guarantees to support obligations under the Bridge Credit Agreement, unless such Subsidiary shall promptly, and in any event no later than the tenth (10th) day following providing such Guarantee in respect of the Bridge Credit Agreement, become party to a Subsidiary Guaranty unconditionally guarantying in favor of Administrative Agent and Lenders the full payment and performance of the Obligations.

8.14         Financial Covenants. Parent shall not, directly or indirectly, permit:

(a)          Maximum Leverage Ratio. The Consolidated Leverage Ratio to exceed sixty percent (60%).

(b)          Maximum Recourse Indebtedness. Recourse Indebtedness of Parent and Borrower (excluding Indebtedness under this Agreement and, from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, the Bridge Credit Agreement) to exceed ten percent (10%) of Total Asset Value of the Companies.

(c)          Minimum Fixed Charge Ratio. The ratio of Parent’s Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges, for the fiscal quarter then ended, to be equal to or less than 1.50 to 1.0.

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(d)          Minimum Borrowing Base Interest Ratio. The Borrowing Base Interest Coverage Ratio, for the fiscal quarter then ended, to be less than 1.65 to 1.0.

(e)          Secured Leverage Ratio. The Secured Leverage Ratio to exceed forty percent (40%).

(f)           Borrowing Base Asset Value Ratio. The Borrowing Base Asset Value Ratio to be less than 1.67 to 1.0.

(g)          Minimum Tangible Net Worth. Tangible Net Worth of Parent, on a consolidated basis, to be less than (i) for the period commencing on the Effective Date to but not including the effective date of the Permitted Merger Transaction, the sum of (x) $1,180,000,000 plus (y) eighty-five percent (85%) of net cash proceeds of any Equity Issuances received by Parent or Borrower after the Effective Date (other than proceeds received within ninety (90) days after the redemption, retirement or repurchase of ownership or equity interests in Borrower or Parent, up to the amount paid by Borrower or Parent in connection with such redemption, retirement or repurchase, where, for the avoidance of doubt, the net effect is that neither Borrower nor Parent shall have increased its Tangible Net Worth as a result of any such proceeds) and (ii) from and after the effective date of the Permitted Merger Transaction, the sum of (x) eighty percent (80%) of the Tangible Net Worth of the Parent calculated on a pro forma basis acceptable to Administrative Agent after giving effect to such transaction and such other pro forma adjustments as shall be acceptable to the Administrative Agent (which amount shall be determined by Borrower on or prior to the effective date of the Permitted Merger Transaction and promptly notified to the Lenders) plus (y) eighty-five percent (85%) of net cash proceeds of any Equity Issuances received by Parent or Borrower after the effective date of the Permitted Merger Transaction (other than proceeds received within ninety (90) days after the redemption, retirement or repurchase of ownership or equity interests in Borrower or Parent, up to the amount paid by Borrower or Parent in connection with such redemption, retirement or repurchase, where, for the avoidance of doubt, the net effect is that neither Borrower nor Parent shall have increased its Tangible Net Worth as a result of any such proceeds).

(h)          Variable Rate Indebtedness. The aggregate pro rata amount of the Indebtedness (including the Obligations) of the Consolidated Group which is Variable Rate Indebtedness shall not exceed twenty percent (20%) of the Total Asset Value.

Article IX.
Events of Default and Remedies

9.01         Events of Default. Any of the following shall constitute an Event of Default:

(a)          Non-Payment. Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any Reimbursement Obligation, or (ii) within five (5) days after the same becomes due, any interest on any Loan or any Reimbursement Obligation due hereunder, except that there shall be no grace period for interest due on the Revolving Termination Date or the Term Loan Maturity Date, or (iii) within ten (10) days after notice from Administrative Agent, any other amount payable to Administrative Agent, any Lender or Issuing Bank hereunder or under any other Loan Document except that there shall be no grace period for any amount due the Revolving Termination Date or the Term Loan Maturity Date; or

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(b)          Specific Covenants. Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Sections 7.05(a) or 7.11 or Article VIII (other than Sections 8.10 (a), (b), and (d), or 8.12) or Parent fails to perform or observe any term, covenant or agreement contained in Parent Guaranty or any Subsidiary Guarantor fails to perform or observe any term, covenant or agreement contained in the Subsidiary Guaranty; or

(c)          Other Covenants. Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 7.01, 7.02, 7.03, or 7.10 and such failure continues unremedied for ten (10) Business Days after such failure has occurred; or

(d)          Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not otherwise specified in this Section) contained in any Loan Document on its part to be performed or observed and such failure continues unremedied for thirty (30) days after the earlier of notice from Administrative Agent or the actual knowledge of the Loan Party, and in the case of a default that cannot be cured within such thirty (30) day period despite Borrower’s diligent efforts but is susceptible of being cured within ninety (90) days of Borrower’s receipt of Administrative Agent’s original notice, then Borrower shall have such additional time as is reasonably necessary to effect such cure, but in no event in excess of ninety (90) days from Borrower’s receipt of Administrative Agent’s original notice; or

(e)          Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made and shall not be cured or remedied so that such representation, warranty, certification or statement of fact is no longer incorrect or misleading in any material respect within ten (10) days after the earlier of notice from Administrative Agent or the actual knowledge of any Loan Party thereof; or

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(f)          Cross-Default. (i) Any Company (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise), after the expiration of any applicable grace periods, in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which any Company is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which any Company is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Company as a result thereof is greater than the Threshold Amount; or

(g)          Insolvency Proceedings, Etc. Any Loan Party institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

(h)          Inability to Pay Debts; Attachment. (i) Parent or Borrower becomes unable to pay its debts as they become due, or any Loan Party admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Loan Party and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or

(i)           Judgments. There is entered against any one or more Loan Party (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding $35,000,000.00 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or would have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of sixty (60) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

(j)           ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would result in liability of any Company under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $20,000,000, or (ii) Parent or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $20,000,000; or

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(k)          Invalidity of Loan Documents. Any Loan Document at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect in all material respects, or any Lien on a material portion of the Collateral granted under any Security Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document or any Lien granted under any Security Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document or any Lien granted under any Security Document; or

(l)           Environmental Matters. The failure by the Consolidated Group to remediate within the time period permitted by law or governmental order (or within a reasonable time give the nature of the problem if no specific time period has been given) material environmental problems related to properties whose aggregate book values are in excess of $10,000,000 after all administrative hearings and appeals have been concluded; or

(m)         REIT Status of Parent. Parent ceases to be treated as a REIT in any taxable year; or

(n)         Change of Control. There occurs any Change of Control.

9.02         Remedies Upon Event of Default. If any Event of Default occurs and is continuing, Administrative Agent shall, at the request of, or may, with the consent of, Required Lenders, take any or all of the following actions:

(a)          declare the commitment of each Lender (including Swingline Lender) to make Loans and any obligation of Issuing Bank to issue or extend any Letters of Credit hereunder to be terminated, whereupon such commitments and obligation shall be terminated;

(b)          declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower;

(c)          require that Borrower Cash Collateralize all outstanding Letters of Credit (in an amount equal to 105% of the Stated Amount thereof); and

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(d)          exercise on behalf of itself, the Lenders and Issuing Bank all rights and remedies available to it, the Lenders and Issuing Bank under the Loan Documents;

provided that upon the occurrence of an actual or deemed entry of an order for relief with respect to Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of Issuing Bank to issue or extend Letter of Credit shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of Borrower to Cash Collateralize the Letters of Credit as aforesaid shall automatically become effective, in each case without further act of Administrative Agent or any Lender.

9.03         Application of Funds. After the exercise of remedies provided for in Section 9.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 9.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.18, be applied by Administrative Agent in the following order:

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including reasonable fees, charges and disbursements of counsel to Administrative Agent and amounts payable under Article III) payable to Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and fees payable pursuant to Section 2.09(d)) payable to the Lenders, Swingline Lender and Issuing Bank (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, Reimbursement Obligations, fees payable pursuant to Section 2.09(d) and other Obligations, ratably among the Lenders, Swingline Lender and Issuing Bank in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, Swingline Loans, Reimbursement Obligations and Specified Swap Obligations constituting the Swap Termination Value thereof ratably among the Lenders or Affiliates thereof, Swingline Lender and Issuing Bank in proportion to the respective amounts described in this clause Fourth held by them;

Fifth, for deposit into the Letter of Credit Collateral Account to Cash Collateralize that portion of Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by Borrower; and

Last, the balance, if any, after all of the Obligations have been paid in full, to Borrower or as otherwise required by Law.

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Subject to Section 2.03 and Section 2.20, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be promptly applied to the other Obligations, if any, in the order set forth above.

Article X.
Administrative Agent

10.01         Appointment and Authority. Each of the Lenders, Swingline Lender and Issuing Bank hereby irrevocably appoints Wells Fargo Bank, National Association, as its contractual representative (herein referred to as the “Administrative Agent”) hereunder and under the other Loan Documents and authorizes Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. In its capacity as the Lenders’ contractual representative, Administrative Agent (i) does not hereby assume any fiduciary duties to any of the Lenders and (ii) is acting as an independent contractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against Administrative Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives. The provisions of this Article are solely for the benefit of Administrative Agent, Swingline Lender, Issuing Bank and the Lenders, and neither Borrower nor any other Company shall have rights as a third party beneficiary of any of such provisions other than with respect to Section 10.06.

10.02         Rights as a Lender. The Person serving as Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Company or other Affiliate thereof as if such Person were not Administrative Agent hereunder and without any duty to account therefor to the Lenders.

10.03         Exculpatory Provisions. Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, Administrative Agent:

(a)          shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

(b)          shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Administrative Agent is required to exercise as directed in writing by Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Administrative Agent to liability or that is contrary to any Loan Document or applicable Law; and

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(c)          shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Parent, Borrower or any of their respective Affiliates that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity.

Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 9.02) or (ii) in the absence of its own gross negligence or willful misconduct. Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default unless Administrative Agent has received notice from a Lender or Borrower referring to this Agreement, describing with reasonable specificity such Default and stating that such notice is a “notice of default.” If a Lender becomes aware of a Default, such Lender shall notify Administrative Agent of such fact. Upon receipt of such notice that a Default has occurred, Administrative Agent shall notify each of the Lenders of such fact.

Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article V or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Administrative Agent.

10.04         Reliance by Administrative Agent. Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or Issuing Bank, Administrative Agent may presume that such condition is satisfactory to such Lender unless Administrative Agent shall have received notice to the contrary from such Lender or Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. Administrative Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Administrative Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

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10.05         Delegation of Duties. Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

10.06         Successor Administrative Agent. Administrative Agent may resign at any time as Administrative Agent under the Loan Documents by giving written notice thereof to the Lenders, Parent and Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent which appointment shall, provided no Event of Default exists, be subject to Borrower’s approval, which approval shall not be unreasonably withheld or delayed. If no successor Administrative Agent shall have been so appointed in accordance with the immediately preceding sentence, and shall have accepted such appointment, within 30 days after the current Administrative Agent’s giving of notice of resignation, then the current Administrative Agent may, on behalf of the Lenders and Issuing Bank, appoint a successor Administrative Agent, which shall be a Lender, if any Lender shall be willing to serve, and otherwise shall be an Eligible Assignee which appointment shall, provided no Event of Default exists, be subject to Borrower’s approval, which approval shall not be unreasonably withheld or delayed; provided that, if no such successor Administrative Agent shall accept such appointment, such resignation shall be effective in accordance with Administrative Agent’s resignation notice and the Required Lenders shall be deemed to constitute Administrative Agent for all determinations hereunder. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the current Administrative Agent, and the current Administrative Agent shall be discharged from its duties and obligations under the Loan Documents. Any resignation by an Administrative Agent shall also constitute the resignation as Issuing Bank and as Swingline Lender by the Lender then acting as Administrative Agent (“Resigning Lender”). Upon the acceptance of a successor’s appointment as Administrative Agent hereunder (i)  Resigning Lender shall be discharged from all duties and obligations of Issuing Bank and Swingline Lender hereunder and under the other Loan Documents and (ii) the successor Issuing Bank shall issue letters of credit in substitution for all Letters of Credit issued by Resigning Lender as Issuing Bank outstanding at the time of such succession (which letters of credit issued in substitutions shall be deemed to be Letters of Credit issued hereunder) or make other arrangements satisfactory to the Resigning Lender to effectively assume the obligations of the Resigning Lender with respect to such Letters of Credit. After any Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article X shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents. Notwithstanding anything contained herein to the contrary, Administrative Agent may assign its rights and duties under the Loan Documents to any of its Affiliates by giving Borrower, Parent and each Lender prior written notice. Administrative Agent may be removed as administrative agent by all of the Lenders (excluding the Lender then serving as Administrative Agent) and Borrower upon 30 days’ prior written notice if Administrative Agent is found by a court of competent jurisdiction in a final, non-appealable judgment to have committed gross negligence or willful misconduct in the course of performing its duties hereunder.

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10.07         Non-Reliance on Administrative Agent and Other Lenders. Each Lender and Issuing Bank acknowledges that it has, independently and without reliance upon Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and Issuing Bank also acknowledges that it will, independently and without reliance upon Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. Each of the Syndication Agents and Documentation Agents (each a “Titled Agent”) in each such respective capacity, assumes no responsibility or obligation hereunder, including, without limitation, for servicing, enforcement or collection of any of the Loans, nor any duties as an agent hereunder for the Lenders. The titles given to the Titled Agents are solely honorific and imply no fiduciary responsibility on the part of the Titled Agents to Administrative Agent, any Lender, Issuing Bank, Borrower or any other Loan Party and the use of such titles does not impose on the Titled Agents any duties or obligations greater than those of any other Lender or entitle the Titled Agents to any rights other than those to which any other Lender is entitled.

10.08         No Other Duties, Etc. Anything herein to the contrary notwithstanding, the Lead Arrangers listed on the cover page hereof shall not have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents.

10.09         Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, Administrative Agent (irrespective of whether the principal of any Loan or Letter of Credit Liabilities shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Administrative Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a)          to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, or Letter of Credit Liabilities and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, Issuing Bank and Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, Issuing Bank and Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, Issuing Bank and Administrative Agent under Sections 2.09 and 11.04) allowed in such judicial proceeding; and

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(b)          to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender, Issuing Bank and Swingline Lender to make such payments to Administrative Agent and, in the event that Administrative Agent shall consent to the making of such payments directly to the Lenders, Issuing Bank and Swingline Lender, to pay to Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Administrative Agent and its agents and counsel, and any other amounts due Administrative Agent under Sections 2.09 and 11.04.

Nothing contained herein shall be deemed to authorize Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender, Issuing Bank or Swingline Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender, Issuing Bank or Swingline Lender to authorize Administrative Agent to vote in respect of the claim of any Lender, Issuing Bank or Swingline Lender in any such proceeding.

10.10         Collateral and Guaranty Matters. The Lenders, Issuing Bank and Swingline Lender irrevocably authorize Administrative Agent, at its option and in its discretion,

(a)          to transfer or release any Lien on any Collateral (i) upon termination of the Commitments and payment and satisfaction in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit (other than Letters of Credit as to which other arrangements satisfactory to Administrative Agent, Swingline Lender and Issuing Bank shall have been made), (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, (iii) subject to Section 11.01, if approved, authorized or ratified in writing by Required Lenders, (iv) in accordance with the provisions of Section 4.09, (v) from and after the occurrence of the Permitted Bridge Credit Agreement Transaction, in accordance with the Intercreditor Agreement, (vi) concurrently with Parent or Borrower obtaining Investment Grade Ratings from both S&P and Moody’s or, if earlier, following the occurrence of a Credit Rating Election Event upon the written request of Borrower or (vii) after foreclosure or other acquisition of title if approved by Required Lenders;

(b)          to release any Subsidiary Guarantor from its obligations under any Subsidiary Guaranty if such Person, or the limited partnership in which such Person is the general partner, ceases to own a Borrowing Base Property; and

(c)          if all or any portion of the Collateral is acquired by foreclosure or by deed in lieu of foreclosure, Administrative Agent shall take title to the collateral in its name or by an Affiliate of Administrative Agent, but for the benefit of all Lenders in their Applicable Revolving Percentages and/or Applicable Term Loan Percentages, as applicable, on the date of the foreclosure sale or recordation of the deed in lieu of foreclosure. Administrative Agent and all Lenders hereby expressly waive and relinquish any right of partition with respect to any Collateral so acquired.

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In its capacity, Administrative Agent is a “representative” of the Lenders, Swingline Lender and Issuing Bank within the meaning of the term “secured party” as defined in the New York Uniform Commercial Code.  Each Lender, Swingline Lender and Issuing Bank authorizes Administrative Agent to enter into each of the Security Documents to which it is a party and , concurrently with the consummation of the Permitted Bridge Credit Agreement Transaction, enter into the Intercreditor Agreement, and to take all action contemplated by such documents. Each Lender, Swingline Lender and Issuing Bank agrees that no Lender (other than Administrative Agent), Swingline Lender or Issuing Bank shall have the right individually to seek to realize upon the security granted by any Security Document, it being understood and agreed that such rights and remedies may be exercised solely by Administrative Agent for the benefit of the Lenders, Swingline Lender and Issuing Bank upon the terms of the Security Documents. In the event that any Collateral is hereafter pledged by any Person as collateral security for the Obligations, Administrative Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Lenders, Swingline Lender and Issuing Bank any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of Administrative Agent on behalf of the Lenders, Swingline Lender and Issuing Bank. 

Upon request by Administrative Agent at any time, Required Lenders will confirm in writing Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 10.10. Upon any sale or transfer of assets constituting Collateral which is permitted pursuant to Section 10.10(a)(ii), or consented to in writing by the Required Lenders or all of the Lenders, as applicable, and upon at least five (5) Business Days’ prior written request by Borrower to Administrative Agent, Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Liens granted to Administrative Agent for the benefit of the Lenders herein or pursuant hereto upon the Collateral that was sold or transferred; provided, however, that (i) Administrative Agent shall not be required to execute any such document on terms which, in Administrative Agent’s opinion, would expose Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower or any Subsidiary in respect of) all interests retained by Borrower or any Subsidiary, including (without limitation) the proceeds of the sale, all of which, if applicable, shall continue to constitute part of the Collateral.

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10.11         Funds Transfer Disbursements.

(a)          Generally. Borrower hereby authorizes Administrative Agent to disburse the proceeds of any Loan made by the Lenders or any of their Affiliates pursuant to the Loan Documents as requested by an authorized representative of Borrower to any of the accounts designated in the Transfer Authorizer Designation Form. Borrower agrees to be bound by any transfer request: (i) authorized or transmitted by Borrower; or (ii) made in Borrower’s name and accepted by Administrative Agent in good faith and in compliance with these transfer instructions, even if not properly authorized by Borrower. Borrower further agrees and acknowledges that Administrative Agent may rely solely on any bank routing number or identifying bank account number or name provided by Borrower to effect a wire or funds transfer even if the information provided by Borrower identifies a different bank or account holder than named by Borrower. Administrative Agent is not obligated or required in any way to take any actions to detect errors in information provided by Borrower. If Administrative Agent takes any actions in an attempt to detect errors in the transmission or content of transfer requests or takes any actions in an attempt to detect unauthorized funds transfer requests, Borrower agrees that no matter how many times Administrative Agent takes these actions Administrative Agent will not in any situation be liable for failing to take or correctly perform these actions in the future and such actions shall not become any part of the transfer disbursement procedures authorized under this provision, the Loan Documents, or any agreement between Administrative Agent and Borrower. Borrower agrees to notify Administrative Agent of any known errors in the transfer of any funds or of any unauthorized or improperly authorized transfer requests within fourteen (14) days after Administrative Agent’s confirmation to Borrower of such transfer.

(b)          Funds Transfer. Administrative Agent will, in its sole discretion, determine the funds transfer system and the means by which each transfer will be made. Administrative Agent may delay or refuse to accept a funds transfer request if the transfer would: (i) violate the terms of this authorization, (ii) require use of a bank unacceptable to Administrative Agent in its reasonable discretion or any Lender or prohibited by any Governmental Authority, (iii) cause Administrative Agent or any Lender to violate any Federal Reserve or other regulatory risk control program or guideline or (iv) otherwise cause Administrative Agent or any Lender to violate any applicable law or regulation.

(c)          Limitation of Liability. None of Administrative Agent, Issuing Bank, Swingline Lender or any Lender shall be liable to Borrower or any other parties for (i) errors, acts or failures to act of others, including other entities, banks, communications carriers or clearinghouses, through which Borrower’s transfers may be made or information received or transmitted, and no such entity shall be deemed an agent of the Administrative Agent, Issuing Bank, Swingline Lender or any Lender, (ii) any loss, liability or delay caused by fires, earthquakes, wars, civil disturbances, power surges or failures, acts of government, labor disputes, failures in communications networks, legal constraints or other events beyond Administrative Agent’s, Issuing Bank’s, Swingline Lender’s or any Lender’s control, or (iii) any special, consequential, indirect or punitive damages, whether or not (x) any claim for these damages is based on tort or contract or (y) Administrative Agent, Issuing Bank, Swingline Lender, any Lender or Borrower knew or should have known the likelihood of these damages in any situation. Neither Administrative Agent, Issuing Bank, Swingline Lender nor any Lender makes any representations or warranties other than those expressly made in this Agreement.

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10.12         Requests for Approval. If Administrative Agent requests in writing the consent or approval of a Lender, such Lender shall, or, in the case of any request for consent or approval that is subject to clauses (a) through (h) of Section 11.01, shall use commercially reasonable efforts to, respond and either approve or disapprove definitively in writing to Administrative Agent within ten (10) Business Days (or sooner if such notice specifies a shorter period, but in no event less than five (5) Business Days for responses based on Administrative Agent’s good faith determination that circumstances exist warranting its request for an earlier response) after such written request from Administrative Agent provided that the request for approval states the time by which a response is needed before approval is deemed given. Solely with respect to any request for consent or approval requiring only the consent of the Required Lenders pursuant to Section 11.01, if the Lender does not so respond, that Lender shall be deemed to have approved the request.

10.13         Exercise of Rights by Lenders. Each Lender hereby agrees that, except as otherwise provided in any Loan Documents or with the written consent of Administrative Agent and the Required Lenders, it will not take any enforcement action, accelerate obligations under any Loan Documents, or exercise any right that it might otherwise have under applicable law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral.

Article XI.
Miscellaneous

11.01         Amendments, Etc. Subject to (x) the right of Borrower, solely with the agreement of Administrative Agent and such Increasing Lenders or Augmenting Lenders as may provide or increase Revolving Commitments or Incremental Term Loans, to enter into a Incremental Amendment as described in Section 2.15 above and any necessary and appropriate amendments in connection therewith to the other Loan Documents and (y) the provisions of Section 2.17 above, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by Required Lenders and Borrower or the applicable Loan Party, as the case may be, and acknowledged by Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that no such amendment, waiver or consent shall:

(a)          waive any condition set forth in Section 5.01(a) without the written consent of each Lender;

(b)          extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 9.02) without the written consent of such Lender;

(c)          postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest, fees or other amounts due to a Lender or any scheduled or mandatory reduction or termination of the Commitments hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

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(d)          reduce or forgive the principal of, or the rate of interest specified herein on, any Loan or Letter of Credit Liability, or (subject to clause (iv) of the second proviso to this Section 11.01) any fees or other amounts payable hereunder or under any other Loan Document, or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Margin that would result in a reduction of any interest rate on any Loan or any fee payable hereunder without the written consent of each Lender directly affected thereby; provided that only the consent of Required Revolving Lenders or Required Term Lenders, as applicable, shall be necessary to amend the definition of “Default Rate” or to waive any obligation of Borrower to pay interest or fees payable pursuant to Section 2.09(d) at the Default Rate with respect to the Revolving Credit Exposure or the Term Loans, respectively;

(e)          change Section 9.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

(f)          change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender (it being understood that, solely with the consent of the parties prescribed by Section 2.15 to be parties to an Incremental Amendment, Incremental Term Loans may be included in the determination of Required Lenders on substantially the same basis as the Commitments and the initial Loans are included following satisfaction of the conditions set forth in Section 2.15);

(g)          release all or substantially all of the value of the Collateral without the written consent of each Lender, except to the extent the release of such Collateral is permitted pursuant to Sections 4.09 or 10.10 (in which case such release may be made by Administrative Agent acting alone); or

(h)          release all or substantially all of the value of the Guaranties without the written consent of each Lender, except to the extent the release of any Guarantor is permitted pursuant to Sections 4.09 or 10.10 (in which case such release may be made by Administrative Agent acting alone);

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and, provided, further, that (i) no amendment, waiver or consent shall, unless in writing and signed by Issuing Bank in addition to the Lenders required above, affect the rights or duties of Issuing Bank under this Agreement or any Letter of Credit Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by Swingline Lender in addition to the Lenders required above, affect the rights or duties of Swingline Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by Administrative Agent in addition to the Lenders required above, affect the rights or duties of Administrative Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, only in a writing executed by all of the parties thereto. Notwithstanding anything to the contrary herein, (A) any term of this Agreement or of any other Loan Document relating to the rights or obligations of the Revolving Lenders, and not any other Lenders, may be amended, and the performance or observance by Borrower or any other Loan Party or any Subsidiary of any such terms may be waived (either generally or in a particular instance and either retroactively or prospectively) with, and only with, the written consent of the Required Revolving Lenders (and, in the case of an amendment to any Loan Document, the written consent of each Loan Party a party thereto) (it being understood that, solely with the consent of the parties prescribed by Section 2.15 to be parties to an Incremental Amendment, increased Revolving Commitments provided by Increasing Lender or Augmenting Lenders may be included in the determination of Required Revolving Lenders on substantially the same basis as the Commitments and initial Loans are included following satisfaction of the conditions set forth in Section 2.15); (B) any term of this Agreement or of any other Loan Document relating to the rights or obligations of the Term Loan Lenders, and not any other Lenders, may be amended, and the performance or observance by Borrower or any other Loan Party or any Subsidiary of any such terms may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Required Term Loan Lenders (and, in the case of an amendment to any Loan Document, the written consent of each Loan Party a party thereto) (it being understood that, solely with the consent of the parties prescribed by Section 2.15 to be parties to an Incremental Amendment, Incremental Term Loans may be included in the determination of Required Term Loan Lenders on substantially the same basis as the initial Loans are included following satisfaction of the conditions set forth in Section 2.15); and (C) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender. Notwithstanding anything herein to the contrary, Administrative Agent shall provide copies of all proposed amendments or waivers and all related materials to each Lender.

11.02         Notices; Effectiveness; Electronic Communication.

(a)          Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i)          if to Borrower, Administrative Agent, Swingline Lender or Issuing Bank, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 11.02; and

(ii)         if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to Borrower).

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Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

(b)          Electronic Communications. Notices and other communications to the Lenders and Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and, other than notices to Issuing Bank, Internet or intranet websites) pursuant to procedures approved by Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or Issuing Bank pursuant to Article II if such Lender or Issuing Bank, as applicable, has notified Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. Administrative Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

(c)          The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to Borrower, any Lender, Issuing Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of Borrower’s or Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided that in no event shall any Agent Party have any liability to Borrower, any Lender, Issuing Bank or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages) resulting therefrom. 

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(d)          Change of Address, Etc. Each of Borrower, Administrative Agent, Swingline Lender and Issuing Bank may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to Borrower, Administrative Agent, Swingline Lender and Issuing Bank. In addition, each Lender agrees to notify Administrative Agent from time to time to ensure that Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one (1) individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to Borrower or its Equity Interests for purposes of United States Federal or state securities laws.

(e)          Reliance by Administrative Agent, Issuing Bank, Swingline Lender and Lenders. Administrative Agent, Issuing Bank, Swingline Lender and the Lenders shall be entitled to rely and act upon any notices (including telephonic Loan Notices and Notices of Swingline Borrowing) purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Borrower shall indemnify Administrative Agent, Issuing Bank, Swingline Lender, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower. All telephonic notices to and other telephonic communications with Administrative Agent may be recorded by Administrative Agent, and each of the parties hereto hereby consents to such recording.

11.03   No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender, Issuing Bank or Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.

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Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, Administrative Agent in accordance with Section 9.02 for the benefit of all the Lenders and Issuing Bank; provided that the foregoing shall not prohibit (a) Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) Issuing Bank or Swingline Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Bank or Swingline Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.13), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) Required Lenders shall have the rights otherwise ascribed to Administrative Agent pursuant to Section 9.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of Required Lenders, enforce any rights and remedies available to it and as authorized by Required Lenders.

11.04      Expenses; Indemnity; Damage Waiver.

(a)          Costs and Expenses. Each Loan Party shall jointly and severally pay (i) all reasonable out-of-pocket expenses incurred by Administrative Agent and its Affiliates (including (a) the reasonable fees, charges and disbursements of counsel for Administrative Agent; (b) fees and charges of each consultant, inspector, and engineer; (c) title search or examination costs, including abstracts, abstractors’ certificates and uniform commercial code searches; (d) judgment and tax lien searches for Borrower and each Guarantor; (e) escrow fees; (f) recordation taxes, documentary taxes and transfer taxes; and (g) filing and recording fees), in connection with the initial syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by Administrative Agent, any Lender (including Swingline Lender) or Issuing Bank (including the reasonable fees, charges and disbursements of any counsel for Administrative Agent, any Lender (only if a Default shall be in existence, or Issuing Bank), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

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(b)          Indemnification. Parent and Borrower shall jointly and severally indemnify Administrative Agent (and any sub-agent thereof), each Lender, Issuing Bank, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party resulting from any action, suit, or proceeding relating to (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of Administrative Agent (and any subagent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by Borrower or any of its Subsidiaries, or any Environmental Damages related in any way to Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (w) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (x) result from a claim brought by Borrower or any other Loan Party against an Indemnitee for material breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if Borrower or such other Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (y) for which an Indemnitee has been compensated pursuant to the terms of this Agreement or the Fee Letter. This Section 11.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses or damages arising from any non-Tax claim.

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(c)          Environmental Indemnity. Each Loan Party hereby, jointly and severally, assumes liability for, and covenants and agrees at its sole cost and expense to protect, defend (at trial and appellate levels), indemnify and hold the Indemnitees harmless from and against, and, if and to the extent paid, reimburse them on demand for, any and all Environmental Damages. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNITEE WITH RESPECT TO ENVIRONMENTAL DAMAGES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF, OR ARE CLAIMED TO BE CAUSED BY OR ARISE OUT OF, THE NEGLIGENCE OR STRICT LIABILITY OF SUCH (AND/OR ANY OTHER) INDEMNITEE. HOWEVER, SUCH INDEMNITY SHALL NOT APPLY TO A PARTICULAR INDEMNITEE TO THE EXTENT THAT THE SUBJECT OF THE INDEMNIFICATION IS (W) CAUSED BY OR ARISES OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THAT PARTICULAR INDEMNITEE OR ANY RELATED PARTY OF SUCH INDEMNITEE AS DETERMINED IN A NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION, (X) INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES UNLESS SUCH DAMAGES WERE IMPOSED UPON SUCH INDEMNITEE AS A RESULT OF ANY CLAIMS MADE AGAINST SUCH INDEMNITEE BY A GOVERNMENTAL ENTITY OR ANY OTHER THIRD PARTY (Y) RESULTS FROM ANY CLAIMS RELATED TO ANY REMEDIAL WORK PERFORMED BY OR ON BEHALF OF ANY PERSON (OTHER THAN BORROWER OR ANOTHER LOAN PARTY) SO INDEMNIFIED TO THE EXTENT THAT SUCH REMEDIAL WORK WAS NOT REQUIRED UNDER ANY APPLICABLE ENVIRONMENTAL LAW OR (Z) AFTER THE RELEASE DATE, ANY ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL CLAIM THAT ARE (A) BASED ON AN EVENT THAT OCCURS SOLELY AFTER SUCH RELEASE DATE, AND (B) THAT IS IN NO WAY RESULTING FROM ANY STATE OF FACTS OR CONDITION THAT EXISTED ON OR BEFORE SUCH RELEASE DATE. Upon demand by Administrative Agent, Issuing Bank or any Lender, the applicable Loan Party shall diligently defend any Environmental Claim which affects a Borrowing Base Property or is made or commenced against Administrative Agent, Issuing Bank or Lenders, whether alone or together with any other Loan Party or any other person, all at the Loan Parties’ own cost and expense and by counsel to be approved by Administrative Agent in the exercise of its reasonable judgment which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, if the defendants in a claim include any Loan Party and any Indemnitee shall have reasonably concluded that (a) there are legal defenses available to it that are materially different from those available to such Loan Party, (b) the use of the counsel engaged by Parent and Borrower would present such counsel with a conflict of interest, or (c) the counsel engaged by Parent and Borrower are not properly representing the Indemnitee’s interests or were not promptly provided, any Indemnitee may, at the sole cost and expense of Parent and Borrower, engage its own counsel to assume its legal defenses and to defend or assist it, and, at the option of such Indemnitee, its counsel may act as co-counsel in connection with the resolution of any Indemnified Claim; provided, however, that no compromise or settlement, which would impose upon any Loan Party any liabilities, obligations, losses, damages, and/or penalties, shall be entered into without the consent of Parent and Borrower, which consent shall not be unreasonably withheld and, provided, further, that Parent and Borrower shall not be liable for the expenses of more than one separate counsel for all Indemnitees unless an Indemnitee shall have reasonably concluded that there may be legal defenses available to it that are different from or additional to those available to another Indemnitee and which legal defenses raise ethical and/or legal considerations which warrant separate counsel, provided that such Indemnitee shall make reasonable attempts to ensure that any environmental disbursements and legal expenses are not duplicative. Notwithstanding anything to the contrary contained above:

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(i)          The Indemnitees will endeavor to give Borrower notice of any Environmental Damage within thirty (30) days after an Indemnitee receives written notice of that Environmental Damage. However, if the Indemnitees fail to give Borrower timely notice of such Environmental Damage or otherwise default in their obligations under this Section 11.04(c) or Section 7.12, the Indemnitees shall retain the right to defend and control the settlement of the Environmental Damage. The Loan Parties’ sole remedy for such a default by the Indemnitees shall be to offset against the indemnification liability otherwise payable by the Loan Parties to the Indemnitees the amount of damages actually suffered by the Loan Parties as a result of the late notice or other default by the Indemnitees under this Section 11.04(c).

(ii)         The Loan Parties shall have the right to elect to defend and control the settlement of any Environmental Damage if each of the following conditions is satisfied:

(A)        The Environmental Damage seeks only monetary damages and does not seek any injunction or other equitable relief against the Indemnitees;

(B)         The Loan Parties unconditionally acknowledge in writing, in a notice of election to contest or defend the Environmental Damage given to the Indemnitees within ten (10) days after the Indemnitees give Borrower notice of the Environmental Damage, that the Loan Parties are obligated to indemnify the Indemnitees in full, but subject to the limitations, as set forth in this Section 11.04(c) above with respect to the Environmental Damage;

(C)         No Event of Default is then in existence under the Loan Documents;

(D)         The counsel chosen by the Loan Parties to defend the Environmental Damage is reasonably satisfactory to the Administrative Agent; and

(E)         If reasonably requested by the Administrative Agent, the Loan Parties furnish the Indemnitees with a letter of credit, surety bond, or similar security in form and substance satisfactory to the Indemnitees in an amount sufficient to secure the Loan Parties’ potential indemnity liability to the Indemnitees in the full amount of the Environmental Damage.

(iii)        If the Loan Parties elect to defend against an Environmental Damage, the Indemnitees shall, at their own expense, be entitled to participate in (but not control) the defense of, and receive copies of all pleadings and other papers in connection with, such Environmental Damage. If the Loan Parties do not, or are not entitled to, elect to defend an Environmental Damage in conformity with the requirements of this Section, the Indemnitees shall be entitled to defend or settle (or both), with the reasonable approval of Borrower unless an Event of Default is in existence, that Environmental Damage on such terms as the Indemnitees for that Environmental Damage shall be satisfied in the manner provided for in this Section 11.04(c).

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(iv)        The Indemnitees will permit the Loan Parties to control the settlement of an Environmental Damage only if: (A) the terms of the settlement require no more than the payment of money - that is, the settlement does not require the Indemnitees to admit any wrongdoing or take or refrain from taking any action; (B) the full amount of the monetary settlement will be paid by the Loan Parties; and (C) the Indemnitees receive, as part of the settlement, a legally binding and enforceable unconditional satisfaction or release, which is in form and substance reasonably satisfactory to the Indemnitees, providing that the Environmental Damage and any claimed liability of the Indemnitees with respect to it being fully satisfied because of the settlement and that the Indemnitees are being released from any and all obligations or liabilities they may have with respect to the Environmental Damage.

(d)          Reimbursement by Lenders. To the extent that the Loan Parties for any reason fails to indefeasibly pay any amount required under subsection (a), (b) or (c) of this Section to be paid by the Loan Parties to Administrative Agent (or any sub-agent thereof), Issuing Bank or any Related Party of any of the foregoing (and without limiting their obligation to do so), each Lender severally agrees to pay to Administrative Agent (or any such sub-agent), Issuing Bank or such Related Party, as the case may be, such Lender’s Applicable Revolving Percentage and/or Applicable Term Loan Percentage, as applicable (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against Administrative Agent (or any such sub-agent) or Issuing Bank in its capacity as such, or against any Related Party of any of the foregoing acting for Administrative Agent (or any such sub-agent) or Issuing Bank in connection with such capacity. The obligations of the Lenders under this subsection (d) are subject to the provisions of Section 2.12(d).

(e)          Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, no Loan Party shall assert, and each Loan Party hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

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(f)           Payments. All amounts due under this Section shall be payable not later than thirty (30) days after demand therefor.

(g)          Survival. The agreements in this Section shall survive the resignation of Administrative Agent, Swingline Lender and Issuing Bank, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations.

11.05      Payments Set Aside. To the extent that any payment by or on behalf of Borrower is made to Administrative Agent, Issuing Bank or any Lender, or Administrative Agent, Issuing Bank or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Administrative Agent, Issuing Bank or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and Issuing Bank severally agrees to pay to Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and Issuing Bank under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

11.06      Successors and Assigns.

(a)          Successors and Assigns Generally. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of Borrower and the Lenders and their respective successors and assigns, except that (i) other than pursuant to the Permitted Merger Transaction, Borrower shall not have the right to assign its rights or obligations under the Loan Documents without the prior written consent of all Lenders (and any such assignment or other transfer to which all of the Lenders have not so consented shall be null and void) and (ii) any assignment by any Lender must be made in compliance with Section 11.06(c). Notwithstanding clause (ii) of this Section, any Lender may at any time, without the consent of Borrower or Administrative Agent, (x) pledge or assign all or any portion of its rights under this Agreement and any Notes to a Federal Reserve Bank or other central banking authority and (y) in the case of a Lender which is a Fund, pledge or assign all or any portion of its rights under this Agreement and any Note to its trustee in support of its obligations to its trustee; provided, however, that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties hereto have complied with the provisions of Section 11.06(c). Administrative Agent may treat the payee of any Loan or any Note as the owner thereof for all purposes hereof unless and until such payee complies with Section 11.06(c) in the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with Administrative Agent. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan.

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(b)          Participations.

(i)       Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell, without the consent of Borrower or Administrative Agent, to one or more banks, financial institutions, pension funds, or any other funds or entities other than Borrower or its Affiliates (“Participants”) participating interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Loans and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by Borrower under this Agreement shall be determined as if such Lender had not sold such participating interests, and Borrower and Administrative Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under the Loan Documents.

(ii)     Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Loan or Commitment in which such Participant has an interest which increases such Commitment or Loan or forgives principal, interest or fees or reduces the interest rate or fees payable with respect to any such Loan or Commitment or postpones any date fixed for any regularly-scheduled payment of principal of, or interest or fees on, any such Loan or Commitment or releases all or substantially all of the value of the Guaranties (subject to Sections 4.09 or 10.10).

(iii)    Benefit of Certain Provisions; Participant Register.

(A)         Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.08 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents. Each Lender shall retain the right of setoff provided in Section 11.08 with respect to the amount of participating interests sold to each Participant, provided that such Lender and Participant may not each setoff amounts against the same portion of the Obligations, so as to collect the same amount from Borrower twice. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.08, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 2.13 as if each Participant were a Lender. Borrower further agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.06(c), provided that (i) a Participant shall not be entitled to receive any greater payment under Section 3.01, 3.04 or 3.05 than the Lender who sold the participating interest to such Participant would have received had it retained such interest for its own account, unless the sale of such interest to such Participant is made with the prior written consent of Borrower, (ii) any Participant not incorporated under the laws of the United States of America or any State thereof agrees to comply with the provisions of Section 3.01 to the same extent as if it were a Lender and (iii) such Participant agrees to comply with Section 3.06 as if it were a Lender.

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(B)         Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans or its other obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(c)          Assignments. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (c), participations in Letter of Credit Liabilities or Swingline Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i)          Minimum Amounts.

(A)         in the case of an assignment of the entire remaining amount of an assigning Lender’s Commitment and the Loans at the time owing to it, or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

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(B)         in any case not described in the immediately preceding clause (A), the aggregate amount of the Commitments (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (in each case, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000 unless each of Administrative Agent and, so long as no Event of Default shall exist, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met and provided, further, that if, after giving effect to such assignment, the amount of the Commitment held by such assigning Lender or the outstanding principal balance of the Loans of such assigning Lender, as applicable, would be less than $5,000,000, then such assigning Lender shall assign the entire amount of its Commitment and the Loans at the time owing to it.

(ii)         Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.

(iii)        Required Consents. No consent shall be required for any assignment except to the extent required by clause (B) of this Section 11.06(c)(i) and, in addition:

(A)         the consent of Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default shall exist at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to Administrative Agent within ten (10) Business Days after having received notice thereof;

(B)         the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of (x) a Commitment if such assignment is to a Person that is not already a Lender with a Commitment, an Affiliate of such a Lender or an Approved Fund with respect to such a Lender or (y) a Term Loan to a Person who is not a Lender, an Affiliate of a Lender or an Approved Fund; and

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(C)         the consent of Issuing Bank and Swingline Lender shall be required for any assignment in respect of a Revolving Commitment.

(iv)        Assignment and Assumption; Notes. The parties to each assignment shall execute and deliver to Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $4,500 for each assignment, and the assignee, if it is not a Lender, shall deliver to Administrative Agent an Administrative Questionnaire. If requested by the transferor Lender or the assignee, upon the consummation of any assignment, the transferor Lender, Administrative Agent and Borrower shall make appropriate arrangements so that new Notes requested pursuant to Section 2.11 are issued to the assignee and such transferor Lender, as appropriate.

(v)         No Assignment to Certain Persons. No such assignment shall be made (A) to Parent or Borrower or any of their Affiliates or Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.

(vi)        Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of Borrower and Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to Administrative Agent, Issuing Bank, Swingline Lender and each other Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swingline Loans in accordance with its Applicable Revolving Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

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Subject to acceptance and recording thereof by Administrative Agent pursuant to clause (iv) above, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05 and 11.04 and the other provisions of this Agreement and the other Loan Documents that expressly survive the termination hereof with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 11.06(b).

(d)          Register. Administrative Agent, acting solely for this purpose as an agent of Borrower (and such agency being solely for tax purposes), shall maintain at Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and Letter of Credit Liabilities owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and Borrower, Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. In addition, Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register shall be available for inspection by Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(e)          It is intended that any Loans issued pursuant to this Agreement or any Loan Document shall be maintained at all times in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code, and Section 5(f).103-1(c) of the United States Treasury Regulations, and the provisions of this Agreement shall be construed in accordance with this intention.

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11.07      Treatment of Certain Information; Confidentiality. Each of Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and representatives actively involved in the origination, syndication, closing, administration or enforcement of the Loans, (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners) or in connection with an examination of such Person by any such authority or at the request of any self-regulated body, (c) at the express direction of any other governmental authority, with jurisdiction over Administrative Agent and/or the Lenders, of any State of the United States of America or of any other jurisdiction in which such Person conducts its business, (d) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) to such Person’s independent auditors, attorneys, agents and other professional advisors, (g) to bank trade publications, such customary information to consist of the name of Borrower, size, tenor and type of facility, and the identity of titled banks, (h) to any other party hereto, (i) subject to an agreement containing provisions substantially the same or at least as restrictive as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations hereunder, (j) with the consent of Borrower or (k) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than Borrower provided that the source of such information was not at the time known by Administrative Agent, any Lender, Issuing Bank or any of their respective Affiliates to be bound by a confidentiality agreement or other legal or contractual obligation of confidentiality with respect to such Information. For purposes of this Section, “Information” means all information received from any Company relating to any Company or any of their respective businesses, other than any such information that is available to Administrative Agent, any Lender or Issuing Bank on a nonconfidential basis prior to disclosure by any Company, provided that in the case of information received from any Company after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

Each of Administrative Agent, the Lenders and Issuing Bank acknowledges that (a) the Information may include material non-public information concerning Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.

11.08      Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and Issuing Bank is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Required Lenders exercised in their sole discretion, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or Issuing Bank to or for the credit or the account of Borrower or any other Loan Party against any and all of the obligations of Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or Issuing Bank, irrespective of whether or not such Lender or Issuing Bank shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or Issuing Bank different from the branch or office holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to Administrative Agent for further application in accordance with the provisions of Section 2.18 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and Issuing Bank under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender and Issuing Bank may have. Each Lender and Issuing Bank agrees to notify Borrower and Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

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11.09      Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to Borrower. In determining whether the interest contracted for, charged, or received by Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

11.10      Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 5.01, this Agreement shall become effective when it shall have been executed by Administrative Agent and when Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

11.11      Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by Administrative Agent and each Lender, regardless of any investigation made by Administrative Agent or any Lender or on their behalf and notwithstanding that Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

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11.12      Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 11.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by Administrative Agent or Issuing Bank or Swingline Lender, then such provisions shall be deemed to be in effect only to the extent not so limited.

11.13      Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, if any Lender is a Defaulting Lender or a Non-Consenting Lender or if any other circumstance exists hereunder that gives Borrower the right to replace a Lender as a party hereto, then Borrower may, at its sole expense and effort, upon notice to such Lender and Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.06, other than the consent of any Lender being so replaced), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

(a)          Borrower shall have paid to Administrative Agent the assignment fee specified in Section 11.06(c)(iv);

(b)          such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (excluding, in the case of any Defaulting Lender, any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower (in the case of all other amounts);

(c)          in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and

(d)          such assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower to require such assignment and delegation cease to apply.

11.14      Governing Law; Jurisdiction; Etc.

(a)          GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

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(b)          SUBMISSION TO JURISDICTION. EACH OF PARENT, BORROWER, AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE AGENT, ANY LENDER OR ISSUING BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION AS NECESSARY TO ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER.

(c)          WAIVER OF VENUE. EACH OF PARENT, BORROWER, AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d)          SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

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11.15      Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

11.16      No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), Parent, Borrower, and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i)(A) the arranging and other services regarding this Agreement provided by Administrative Agent and Lead Arrangers are arm’s-length commercial transactions between Parent, Borrower, each other Loan Party and their respective Affiliates, on the one hand, and Administrative Agent and Lead Arrangers, on the other hand, (B) each of Parent, Borrower, and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii)(A) Administrative Agent, each Lender and each Lead Arranger is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for Parent, Borrower, any other Loan Party, or any of their respective Affiliates, or any other Person and (B) neither Administrative Agent, any Lender nor any Lead Arranger has any obligation to Parent, Borrower, any other Loan Party, or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) Administrative Agent, each Lender and each Lead Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of Parent, Borrower, the other Loan Parties, and their respective Affiliates, and neither Administrative Agent, any Lender nor any Lead Arranger has any obligation to disclose any of such interests to Parent, Borrower, any other Loan Party, or any of their respective Affiliates. To the fullest extent permitted by Law, each of Parent, Borrower, and the other Loan Parties hereby waives and releases any claims that it may have against Administrative Agent, each Lender and each Lead Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

11.17      Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

140

11.18      USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 10756 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or Administrative Agent, as applicable, to identify each Loan Party in accordance with the Patriot Act. Borrower or such Loan Party shall, promptly following a request by Administrative Agent or any Lender, provide all documentation and other information that Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.

11.19      ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[SIGNATURE PAGES FOLLOW]

141

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

BORROWER:
AMERICAN REALTY CAPITAL
OPERATING PARTNERSHIP III, L.P., a Delaware limited partnership
By:	/s/ Jesse C. Galloway
	Name: Jesse C. Galloway
	Title: Authorized Signatory
PARENT:
AMERICAN REALTY CAPITAL TRUST III,
INC., a Maryland corporation
By:	/s/ Jesse C. Galloway
	Name: Jesse C. Galloway
	Title: Authorized Signatory

Signature Page to

Credit Agreement

Wells Fargo Bank, National Association, as Administrative Agent, a Lender, Swingline Lender and Issuing Bank
By:	/s/ D. Bryan Gregory
	Name: D. Bryan Gregory
	Title: Director

Signature Page to

Credit Agreement

RBS CITIZENS, N.A., as a Lender
	By:	/s/ Donald Woods
	Name: Donald Woods
	Title: Senior Vice President

Signature Page to

Credit Agreement

Regions Bank, as a Lender
	By:	/s/ Michael R. Mellot
	Name: Michael R. Mellot
	Title: Director

Signature Page to

Credit Agreement

CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender
	By:	/s/ Frederick H. Denecke
	Name: Frederick H. Denecke
	Title: Vice President

Signature Page to

Credit Agreement

JPMORGAN CHASE BANK, N.A., as a Lender
	By:	/s/ Rita Lai
	Name: Rita Lai
	Title: Senior Credit Banker

Signature Page to

Credit Agreement

TD BANK, N.A., as a Lender
	By:	/s/ Aaron C. Miller
	Name: Aaron C. Miller
	Title: Vice President

Signature Page to

Credit Agreement

U.S. BANK NATIONAL ASSOCIATION as a Lender
	By:	/s/ Gordon J. Clough
	Name: Gordon J. Clough
	Title: Vice President

Signature Page to

Credit Agreement

UNION BANK, N.A., as a Lender
	By:	/s/ Gregory A. Conner
	Name: Gregory A. Conner
	Title: Assistant Vice President

Signature Page to

Credit Agreement

UBS AG, STAMFORD BRANCH, as a Lender
	By:	/s/ Lana Gifas
	Name: Lana Gifas
	Title: Director
	By:	/s/ David Urban
	Name: David Urban
	Title: Associate Director

Signature Page to

Credit Agreement

COMERICA BANK, as a Lender
	By:	/s/ Charles Weddell
	Name: Charles Weddell
	Title: Vice President

Signature Page to

Credit Agreement

FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as a Lender
	By:	/s/ Matthew Mathis
	Name: Matthew Mathis
	Title: Vice President

Signature Page to

Credit Agreement

EX-12.1

Exhibit 12.1

RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

		American Realty Capital Properties, Inc.								ARC Predecessor Companies
		Year Ended				September 6, 2011 to				January 1, 2011 to				Year Ended								June 5, 2008 to
Period:		December 31, 2012				December 31, 2011				September 5, 2011				December 31, 2010				December 31, 2009				December 31, 2008
Earnings
Pre-tax loss from continuing operations		$	(6,579	)		$	(1,759	)		$	(5,302	)		$	(7,421	)		$	(8,614	)		$	(1,182	)
Add:
	Fixed charges	4,720				924				7,941				10,805				6,963				1,608
Total Earnings		$	(1,859	)		$	(835	)		$	2,639			$	3,384			$	(1,651	)		$	426
Fixed charges
	Interest expensed and capitalized (1)	$	4,356			$	924			$	7,941			$	10,805			$	6,963			$	1,608
	Preference security dividend requirements	364				-				-				-				-				-
Total Fixed Charges		$	4,720			$	924			$	7,941			$	10,805			$	6,963			$	1,608
Ratio of Earnings to fixed charges calculation		-0.39			x	-0.90			x	0.33			x	0.31			x	-0.24			x	0.26			x
Deficiency		$	6,579			$	1,759			NA				NA				$	8,614			NA

___________________

⁽¹⁾  Interest expensed includes amortization of premiums and discounts on borrowings and amortization of capitalized expenses related to indebtedness.

EX-21

Exhibit 21

Subsidiaries of American Realty Capital Properties, Inc.

Name	Jurisdiction of Formation./Incorporation
ARC Properties Operating Partnership, L.P.	Delaware
ARCP TRS Corp.	Delaware
ARC Income Properties, LLC	Delaware
ARC Income Properties III, LLC	Delaware
American Realty Capital Partners, LLC	Delaware
CRE JV Mixed Five CT Branch Holdings LLC	Delaware
CRE JV Mixed Five DE Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 6 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 7 Branch Holdings LLC	Delaware
CRE JV Mixed Five NH Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 6 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 7 Branch Holdings LLC	Delaware
CRE JV Mixed Five PA Branch Holdings LLC	Delaware
CRE JV Mixed Five VT Branch Holdings LLC	Delaware
CRE JV Mixed Five CT Branch Holdings LLC	Delaware
CRE JV Mixed Five CT Branch Holdings LLC	Delaware
CRE JV Mixed Five DE Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five IL 5 Branch Holdings LLC	Delaware

CRE JV Mixed Five IL 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 6 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 6 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 7 Branch Holdings LLC	Delaware
CRE JV Mixed Five MI 7 Branch Holdings LLC	Delaware
CRE JV Mixed Five NH Branch Holdings LLC	Delaware
CRE JV Mixed Five NH Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five NY 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 1 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 2 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 3 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 4 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 5 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 6 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 6 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 7 Branch Holdings LLC	Delaware
CRE JV Mixed Five OH 7 Branch Holdings LLC	Delaware
CRE JV Mixed Five PA Branch Holdings LLC	Delaware

CRE JV Mixed Five PA Branch Holdings LLC	Delaware
CRE JV Mixed Five PA Branch Holdings LLC	Delaware
CRE JV Mixed Five PA Branch Holdings LLC	Delaware
CRE JV Mixed Five VT Branch Holdings LLC	Delaware
CRE JV Mixed Five VT Branch Holdings LLC	Delaware
CRE JV Mixed Five VT Branch Holdings LLC	Delaware
ARC HDCOLSC001, LLC	Delaware
ARCP DGBLVAR001, LLC	Delaware
ARCP DGCRLAR001, LLC	Delaware
ARCP DGGRFAR001, LLC	Delaware
ARCP DGJNBIL001, LLC	Delaware
ARCP DGAPCMO001, LLC	Delaware
ARCP DGASGMO001, LLC	Delaware
ARCP DGASDMO001, LLC	Delaware
ARCP DGBRNMO001, LLC	Delaware
ARCP DGBLFMO001, LLC	Delaware
ARCP DGCVLMO001, LLC	Delaware
ARCP DGCTNMO001, LLC	Delaware
ARCP DGDMDMO001, LLC	Delaware
ARCP DGESNMO001, LLC	Delaware
ARCP DGHLVMO001, LLC	Delaware
ARCP DGLSNMO001, LLC	Delaware
ARCP DGLBNMO001, LLC	Delaware
ARCP DGPMRMO001, LLC	Delaware
ARCP DGQLNMO001, LLC	Delaware
ARCP DGSTLMO001, LLC	Delaware
ARCP DGSFDMO001, LLC	Delaware
ARCP DGCMROK001, LLC	Delaware
ARCP AACROMI001, LLC	Delaware
ARCP AACLTMI001, LLC	Delaware
ARCP AAFNTMI001, LLC	Delaware
ARCP AALVNMI001, LLC	Delaware
ARCP AASSMMI001, LLC	Delaware
ARCP AAYLNMI001, LLC	Delaware
ARCP WGMRBSC001, LLC	Delaware
ARCP GSFRENY001, LLC	Delaware
ARCP WGEPTMI001, LLC	Delaware
ARCP JDDPTIA01, LLC	Delaware
ARC FECCTOH001, LLC	Delaware
ARC FEEVLIN001, LLC	Delaware
ARC FEKKEIL001, LLC	Delaware
ARC FELNDKY002, LLC	Delaware
ARC  FEMTVIL001, LLC	Delaware
ARC FEMTPPA001, LLC	Delaware
ARCP GSPLTNY01, LLC	Delaware
ARC GSMOBAL001, LLC	Delaware

ARCP TSRGCTX01, LLC	Delaware
ARCP GSWARPA01, LLC	Delaware
ARCP DGAFTAR01, LLC	Delaware
ARCP DGFPNAR01, LLC	Delaware
ARCP DGPCYFL01., LLC	Delaware
ARCP DGCNYKS01, LLC	Delaware
ARCP DGCVRMO01, LLC	Delaware
ARCP DGCCDMO01, LLC	Delaware
ARCP DGGFDMO01, LLC	Delaware
ARCP DGHVLMO01, LLC	Delaware
ARCP DGOGVMO01, LLC	Delaware
ARCP DGPMRMO01, LLC	Delaware
ARCP DGSNTMO01, LLC	Delaware
ARCP DGSNCMO01, LLC	Delaware
ARCP DGSJSMO01, LLC	Delaware
ARCP DGWSGMO01, LLC	Delaware
ARCP DGWNAMO01, LLC	Delaware
ARCP DGNWTOK01, LLC	Delaware
ARC GSGLOVA001, LLC	Delaware
ARCP MBDLSTX01, LLC	Delaware
ARC RBCSRNJ001, LLC	Delaware
ARC CVAPAGA001, LLC	Delaware
ARC CVVDAGA001, LLC	Delaware
ARC CVNVLTN001, LLC	Delaware
ARC IMCLBOH001, LLC	Delaware
ARC FDBKNIN001, LLC	Delaware
ARC AAATNTX001, LLC	Delaware

ARC FDLNXGA001, LLC             Delaware

ARC FECCOCA001, LLC             Delaware

ARC FMWSWNC001, LLC             Delaware

ARC WGWRNMI001, LLC             Delaware

ARC FDDRTMI002, LLC                 Delaware

ARC AABDNKY001, LLC             Delaware

ARC AABNBKY001, LLC             Delaware

ARC AAHNBKY001, LLC             Delaware

ARC AALFDKY001, LLC             Delaware

ARC WGTRYMI001, LLC             Delaware

ARC AADTNAL001, LLC             Delaware

ARC AAEPSAL001, LLC                 Delaware

ARC AAABYGA001, LLC             Delaware

ARC AACROGA001, LLC             Delaware

ARC AAHZHGA001, LLC             Delaware

ARC AAHVLGA001, LLC             Delaware

ARC AAPRYGA001, LLC             Delaware

ARC AATVLGA001, LLC             Delaware

ARC SBTPAFL001, LLC                 Delaware    

ARC AASPDOH001, LLC             Delaware

ARC WGCGOIL001, LLC             Delaware

ARC FDCMONM001, LLC             Delaware

ARC FMBSRLA001, LLC             Delaware

ARC WGCGOIL002, LLC             Delaware

ARC PFCNLGA001, LLC                 Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reports dated February 28, 2013, with respect to the consolidated financial statements, schedule and internal control over financial reporting included in the Annual Report of American Realty Capital Properties, Inc. on Form 10-K for the year ended December 31, 2012.  We hereby consent to the incorporation by reference of said reports in the Registration Statements of American Realty Capital Properties, Inc. on Forms S-3 (File No. 333-182971 and File No. 333-182972) and on Form S-4 (File No. 333-185935).

/s/ GRANT THORNTON LLP

Philadelphia, Pennsylvania

February 28, 2013

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Nicholas S. Schorsch, certify that:

1. I have reviewed this Annual Report on Form 10-K of American Realty Capital Properties, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this	28th day of February, 2013	/s/ Nicholas S. Schorsch
		Nicholas S. Schorsch
		Chief Executive Officer and
		Chairman of the Board of Directors (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER

THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Brian S. Block, certify that:

1. I have reviewed this Annual Report on Form 10-K of American Realty Capital Properties Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated this	28th day of February, 2013	/s/ Brian S. Block
		Brian S. Block Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Act of 1934, as amended.

The undersigned, who are the Chief Executive Officer and Chief Financial Officer of American Realty Capital Properties, Inc. (the “Company”), each hereby certify as follows:

The annual report on Form 10-K of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and all information contained in this annual report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated this	28th day of February, 2013
		/s/ Nicholas S. Schorsch
		Nicholas S. Schorsch
		Chief Executive Officer and Chairman of the Board of Directors
		(Principal Executive Officer)
		/s/ Brian S. Block
		Brian S. Block
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

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Organization (Details) (USD $)	1 Months Ended	12 Months Ended										12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Sep. 07, 2011	Sep. 30, 2012 Contributor [Member] ARC Real Estate Partners, LLC [Member] property	Dec. 31, 2012 Common Stock	Jul. 09, 2012 Common Stock	Jun. 18, 2012 Common Stock	Nov. 07, 2011 Common Stock	Nov. 02, 2011 Common Stock	Sep. 07, 2011 Common Stock	Dec. 31, 2012 General Partner [Member] ARC Properties Operating Partnership, L.P. [Member]	Dec. 31, 2012 Affiliated Entity [Member] Contributor [Member] ARC Real Estate Partners, LLC [Member]	Dec. 31, 2012 Unaffiliated Third Party [Member]	Sep. 07, 2011 Citizens Bank [Member] Contributor [Member] ARC Real Estate Partners, LLC [Member] property	Dec. 31, 2011 Vacant [Member] Contributor [Member] ARC Real Estate Partners, LLC [Member] property	Sep. 07, 2011 Home Depot [Member] Contributor [Member] ARC Real Estate Partners, LLC [Member] property	Sep. 07, 2011 Mortgage Notes Payable [Member]	Sep. 07, 2011 Unsecured Debt [Member]	Sep. 07, 2011 Secured Debt [Member]		Sep. 07, 2011 Other Assets [Member]	Sep. 07, 2011 Other Liabilities [Member]	Sep. 07, 2011 Loans Payable [Member]		Sep. 07, 2011 Real Estate [Member]
Operations [Line Items]
Real Estate Investments, Net				$ (16,771,000)																$ (96,472,000)	[1]	$ 2,402,000	$ (834,000)	$ 30,626,000	[2]	$ 108,759,000
Common Stock, Shares, Issued		11,157,643	7,323,434			10,884,534	487,500	3,250,000	74,979	1,497,924	5,574,131
Common Stock, Shares, Outstanding		11,157,643	7,323,434
Proceeds from Issuance of Common Stock		118,900,000
Proceeds from issuances of preferred shares	0	9,000,000	0
Maximum Amount of Offering from Universal Shelf Registration Statement		500,000,000
General partner ownership interest in OP, Percent												92.50%
Limited partner ownership interest in OP, Percent													2.60%	4.90%
Number Of Properties Contributed By Affiliate					63										59	2	1
Business Acquisition, Purchase Price Allocation, Liabilities Assumed																		$ (96,200,000)	$ (30,600,000)

[1] (2) $82.6 million of mortgage notes payable were refinanced with a new $51.5 million revolving credit facility and the remaining balance was repaid from the proceeds of the IPO concurrently with closing of the IPO.

[2] 1) Notes payable were repaid from the proceeds of the IPO concurrently with closing.

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Common Stock (Details) (USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended						12 Months Ended									16 Months Ended	6 Months Ended	14 Months Ended	6 Months Ended	14 Months Ended
	Nov. 30, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 17, 2012	Feb. 27, 2012	Sep. 07, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Restricted Common Stock [Member]	Dec. 31, 2012 Common Stock	Jul. 09, 2012 Common Stock	Jun. 18, 2012 Common Stock	Nov. 07, 2011 Common Stock	Nov. 02, 2011 Common Stock	Sep. 07, 2011 Common Stock	Dec. 31, 2012 IPO [Member]	Dec. 31, 2012 Follow on Offering [Member]	Dec. 31, 2012 Follow on Offering [Member]	Dec. 31, 2012 Underwriters' over allotment [Member]	Dec. 31, 2012 Underwriters' over allotment [Member]	Dec. 31, 2012 Registration Payment Arrangement, Arrangement [Domain]
Class of Stock [Line Items]
Common Stock, Shares, Issued							11,157,643	7,323,434		10,884,534	487,500	3,250,000	74,979	1,497,924	5,574,131						1,882,248
Proceeds from Issuance of Common Stock							$ 118.9									$ 67.4	$ 30.3	$ 15.8	$ 4.6	$ 0.8
Common Stock, Shares, Outstanding							11,157,643	7,323,434	0
Dividends declared, in dollars per share	$ 0.9000	$ 0.8950	$ 0.8900	$ 0.8850	$ 0.8800	$ 0.8750

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Mortgage Note Payable (Schedule Of Aggregate Future Principal Payments On Mortgage Notes Payable) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Secured Debt	$ 35,758	$ 30,260
Mortgages [Member]
Debt Instrument [Line Items]
2013	74
2014	189
2015	13,767
2016	11,760
2017	9,968
Thereafter	0
Secured Debt	$ 35,758	$ 30,260

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Share-Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	12 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	1 Months Ended	12 Months Ended		12 Months Ended			12 Months Ended			12 Months Ended				12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010 Restricted Stock [Member] Equity Plan [Member]	Dec. 31, 2011 Restricted Stock [Member] Equity Plan [Member]	Dec. 31, 2012 Restricted Stock [Member] Equity Plan [Member]	Sep. 30, 2012 Restricted Stock [Member] Equity Plan [Member] Manager [Member]	Feb. 28, 2013 Restricted Stock [Member] Equity Plan [Member] ARC Properties Advisors, LLC [Member] Manager [Member]	Dec. 31, 2012 Restricted Stock [Member] Equity Plan [Member] ARC Properties Advisors, LLC [Member] Manager [Member]	Sep. 30, 2012 Restricted Stock [Member] Director Stock Plan [Member]	Dec. 31, 2012 Restricted Common Stock [Member] Equity Plan [Member]	Dec. 31, 2011 Restricted Common Stock [Member] Equity Plan [Member]	Dec. 31, 2010 Restricted Common Stock [Member] Equity Plan [Member]	Dec. 31, 2012 Restricted Common Stock [Member] Director Stock Plan [Member]	Dec. 31, 2011 Restricted Common Stock [Member] Director Stock Plan [Member]	Dec. 31, 2010 Restricted Common Stock [Member] Director Stock Plan [Member]	Dec. 31, 2012 Restricted Unvested Common Stock [Member] Equity Plan [Member]	Dec. 31, 2011 Restricted Unvested Common Stock [Member] Equity Plan [Member]	Sep. 30, 2012 Restricted Unvested Common Stock [Member] Equity Plan [Member]	Dec. 31, 2010 Restricted Unvested Common Stock [Member] Equity Plan [Member]	Dec. 31, 2012 Restricted Unvested Common Stock [Member] Director Stock Plan [Member]	Dec. 31, 2011 Restricted Unvested Common Stock [Member] Director Stock Plan [Member]	Dec. 31, 2010 Restricted Unvested Common Stock [Member] Director Stock Plan [Member]	Feb. 28, 2013 Performance Shares [Member] Outperformance Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Periodic Vesting Percentage										20.00%														33.30%
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number										11,400	259,909	167,400	0	13,200	9,000	0		153,450	186,403	0		9,000	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price											$ 11.84	$ 12.50	$ 0.00	$ 12.30	$ 12.50	$ 0.00	$ 11.62	$ 12.50		$ 0.00	$ 12.27	$ 12.50	$ 0.00
Shares issued in lieu of cash for services, in shares								325,000	167,400
Share-based compensation	$ 0	$ 1,170	$ 182	$ 100	$ 200	$ 1,200
Maximum authorized amount as a percentage of shares authorized							10.00%
Number of shares authorized, in shares										99,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period											93,683	167,400		9,000	9,000		93,683	167,400			9,000	9,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price											$ 10.65	$ 12.50			$ 12.50		$ 10.65	$ 12.50			$ 12.21	$ 12.50
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period											(1,174)			(4,800)			(1,174)				(4,800)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price											$ 10.65			$ 12.50			$ 10.65				$ 12.50
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period																	(59,556)	(13,950)			(1,800)	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value																	$ 12.42	$ 12.50			$ 12.50	$ 0.00

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Senior Secured Revolving Credit Facility (Details) (USD $)			4 Months Ended	12 Months Ended				0 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2011 Revolving Credit Facility [Member] property	Dec. 31, 2012 Revolving Credit Facility [Member] property	Sep. 07, 2011 Revolving Credit Facility [Member] LIBOR Plus [Member] Minimum [Member]	Sep. 07, 2011 Revolving Credit Facility [Member] LIBOR Plus [Member] Maximum [Member]	Sep. 07, 2011 Letter of Credit [Member] Maximum [Member]	Sep. 07, 2011 Above Threshold [Member] Revolving Credit Facility [Member] Option 1 [Member]	Sep. 07, 2011 Below Threshold [Member] Revolving Credit Facility [Member] Option 2 [Member]	Dec. 31, 2012 Line of Credit [Member]	Sep. 07, 2011 Line of Credit [Member] Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Debt to be Extinguished Upon Consummation of Merger											$ 150,000,000
Line of Credit Facility, Maximum Borrowing Capacity							10,000,000			150,000,000
Debt Instrument, Basis Spread on Variable Rate					2.15%	2.90%
Unused capacity fee percentage								0.15%	0.25%
Debt, fair value			42,400,000
Interest rate during period			3.17%	3.11%
Properties collateralized, in properties			59	114
Line of Credit Facility, Remaining Borrowing Capacity			20,400,000
Long-term Line of Credit	$ 124,604,000	$ 42,407,000

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Common Stock Common Stock (Tables)

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Schedule of Common Stock Offerings [Table Text Block]

The following are the Company's public equity offerings of common stock (dollar amounts in millions):

Type of offering	Closing Date	Number of Shares	Gross Proceeds
IPO	September 7, 2011	5,574,131	$	67.4
Follow on offering	November 2, 2011	1,497,924	15.8
Underwriters' over allotment	November 7, 2011	74,979	0.8
Follow on offering	June 18, 2012	3,250,000	30.3
Underwriters' over allotment	July 9, 2012	487,500	4.6
Total		10,884,534	$	118.9

The common stock issued and outstanding of 11,157,643 at December 31, 2012 includes restricted shares of 273,109.

Schedule of Dividends Authorized and Paid [Table Text Block]

The Company's board of directors has authorized, and the Company began paying, dividends since October 2011 on the fifteenth day of each month to stockholders of record on the eight day of such month. Since October 2011, the board of directors of the Company has authorized the following increases in dividend.

Dividend increase declaration date	Annualized dividend per share	Effective date
September 7, 2011	$0.8750	10/9/2011
February 27, 2012	$0.8800	3/9/2012
March 16, 2012	$0.8850	6/9/2012
June 27, 2012	$0.8900	9/9/2012
September 30, 2012	$0.8950	11/9/2012
November 29, 2012	$0.9000	2/9/2013

On August 1, 2012, the Company filed a universal shelf registration statement and a resale registration statement with the SEC. Each registration statement became effective on August 17, 2012. As of December 31, 2012, no common stock, preferred stock, debt or equity-linked security had been issued under the universal shelf registration statement. The resale registration statement, as amended, registers the resale of up to 1,882,248 shares of common stock issued in connection with any future conversion of certain currently outstanding restricted shares, convertible preferred stock or limited partnership interests. As of December 31, 2012, no common stock had been issued under the resale registration statement.

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Related Party Transactions and Arrangements (Schedule of Selling Commissions and Dealer Manager Fees) (Details) (Dealer Manager [Member], Realty Capital Securities, LLC [Member], Sales Commissions and Fees [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2012
Dealer Manager [Member] | Realty Capital Securities, LLC [Member] | Sales Commissions and Fees [Member]
Schedule of Selleing Commission and Dealer Manager Fees [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	$ 1,601	$ 14

XML

Schedule III Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2012

Real Estate and Accumulated Depreciation Disclosure [Abstract]

Real Estate and Accumulated Depreciation Disclosure [Text Block]

					Initial Costs						Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012		Land		Buildings, Fixtures and Improvements		Adjustment to Basis				Accumulated Depreciation
Advance Auto	Caro	MI		(2)	$	117	$	665	$	—	$	782	$	40
Advance Auto	Charlotte	MI		(2)	123		697		—		820		42
Advance Auto	Flint	MI		(1)	133		534		—		667		32
Advance Auto	Livonia	MI		(2)	210		629		—		839		38
Advance Auto	SS Marie	MI		(2)	75		671		—		746		41
Advance Auto	Ypsilanti	MI		(1)	85		483		—		568		29
Advance Auto II	Alton	TX		(1)	169		958		—		1,127		9
Advance Auto III	Bardstown	KY		(1)	272		1,090		—		1,362		5
Advance Auto III	Brandenburg	KY		(1)	186		742		—		928		3
Advance Auto III	Hardinsburg	KY		(1)	94		845		—		939		4
Advance Auto III	Leitchfield	KY		(1)	104		939		—		1,043		4
Advance Auto IV	Albany	GA		(1)	210		629		—		839		—
Advance Auto IV	Hazlehurst	GA		(1)	113		451		—		564		—
Advance Auto IV	Hinesville	GA		(1)	352		430		—		782		—
Advance Auto IV	Thomasville	GA		(1)	251		377		—		628		—
Advance Auto IV	Dothan	AL		(1)	326		326		—		652		—
Advance Auto IV	Enterprise	AL		(1)	280		420		—		700		—
Advance Auto IV	Perry	GA		(1)	209		487		—		696		—
Advance Auto IV	Cairo	GA		(1)	140		325		—		465		—
Advance Auto V	Springfield	OH			460		1,074		—		1,534		—
Citizens I	Higganum	CT		(3)	171		971		—		1,142		178
Citizens I	New London	CT		(1)	94		534		—		628		98
Citizens I	Smyrna	DE		(3)	183		1,036		—		1,219		171
Citizens I	Wilmington	IL		(1)	330		1,872		—		2,202		268
Citizens I	Chicago	IL		(1)	267		1,511		—		1,778		276
Citizens I	Chicago	IL		(1)	191		1,082		—		1,273		198
Citizens I	Lyons	IL		(1)	214		1,212		—		1,426		222
Citizens I	Elmwood Park	IL		(1)	431		2,441		—		2,872		376
Citizens I	Alsip	IL		(1)	226		1,280		—		1,506		234
Citizens I	Evergreen Park	IL		(1)	167		944		—		1,111		173
Citizens I	Clinton Township	MI		(1)	574		3,250		—		3,824		606
Citizens I	Southfield	MI		(1)	283		1,605		—		1,888		299
Citizens I	Richmond	MI		(1)	168		951		—		1,119		181
Citizens I	St. Clair Shores	MI		(1)	309		1,748		—		2,057		332
Citizens I	Lathrup Village	MI		(1)	283		1,602		—		1,885		293
Citizens I	Warren	MI		(1)	178		1,009		—		1,187		184
Citizens I	Dearborn	MI		(1)	434		2,461		—		2,895		353
Citizens I	Dearborn	MI		(1)	385		2,184		—		2,569		313
Citizens I	Detroit	MI		(1)	112		636		—		748		121
Citizens I	Highland Park	MI		(1)	150		848		—		998		161

					Initial Costs			Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012		Land	Buildings, Fixtures and Improvements	Adjustment to Basis		Accumulated Depreciation
Citizens I	Livonia	MI		(1)	261	1,476	—	1,737	281
Citizens I	Detroit	MI		(1)	204	1,159	—	1,363	220
Citizens I	Harper Woods	MI		(1)	207	1,171	—	1,378	222
Citizens I	Grosse Pointe	MI		(1)	410	2,322	—	2,732	408
Citizens I	Utica	MI		(1)	376	2,133	—	2,509	375
Citizens I	Pittsfield	NH		(1)	160	908	—	1,068	166
Citizens I	Rollinsford	NH		(1)	78	444	—	522	81
Citizens I	Albany	NY		(3)	232	1,315	—	1,547	189
Citizens I	Johnstown	NY		(3)	163	923	—	1,086	132
Citizens I	Schenectady	NY		(3)	292	1,655	—	1,947	237
Citizens I	Vails Gate	NY		(3)	284	1,610	—	1,894	231
Citizens I	Whitehall	NY		(3)	106	600	—	706	86
Citizens I	Greene	NY		(3)	216	1,227	—	1,443	176
Citizens I	Whitesboro	NY		(3)	130	739	—	869	106
Citizens I	Amherst (Buffalo)	NY		(3)	238	1,348	—	1,586	208
Citizens I	East Aurora	NY		(3)	162	919	—	1,081	142
Citizens I	Rochester	NY		(3)	166	943	—	1,109	145
Citizens I	Port Jervis	NY		(3)	143	811	—	954	134
Citizens I	Mentor	OH		(1)	178	1,011	—	1,189	185
Citizens I	Northfield	OH		(1)	317	1,797	—	2,114	329
Citizens I	Willoughby	OH		(1)	395	2,239	—	2,634	409
Citizens I	Cleveland	OH		(1)	239	1,357	—	1,596	263
Citizens I	Cleveland	OH		(1)	210	1,190	—	1,400	230
Citizens I	Cleveland	OH		(1)	182	1,031	—	1,213	200
Citizens I	Lakewood	OH		(1)	196	1,111	—	1,307	159
Citizens I	Rocky River	OH		(1)	283	1,602	—	1,885	230
Citizens I	Broadview Heights	OH		(1)	201	1,140	—	1,341	188
Citizens I	Boardman	OH		(1)	280	1,589	—	1,869	308
Citizens I	Brunswick	OH		(1)	186	1,057	—	1,243	205
Citizens I	Wadsworth	OH		(1)	158	893	—	1,051	173
Citizens I	Alliance	OH		(1)	204	1,156	—	1,360	224
Citizens I	Louisville	OH		(1)	191	1,080	—	1,271	209
Citizens I	Massillon	OH		(1)	287	1,624	—	1,911	314
Citizens I	Massillon	OH		(1)	212	1,202	—	1,414	233
Citizens I	Ambridge	PA		(3)	215	1,217	—	1,432	175
Citizens I	Monesson	PA		(3)	198	1,123	—	1,321	161
Citizens I	Narberth	PA		(3)	420	2,381	—	2,801	341
Citizens I	Poultney	VT		(1)	149	847	—	996	140
Citizens I	St. Albans	VT		(1)	141	798	—	939	132
Citizens I	White River Junction	VT		(1)	183	1,039	—	1,222	171

					Initial Costs			Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012		Land	Buildings, Fixtures and Improvements	Adjustment to Basis		Accumulated Depreciation
CVS	Alpharetta	GA		(1)	572	858	—	1,430	13
CVS	Vidalia	GA		(1)	368	1,105	—	1,473	17
CVS	Nashville	TN		(1)	203	1,148	—	1,351	17
Dollar General	Bella Vista	AR		(1)	129	302	—	431	20
Dollar General	Carlisle	AR		(1)	13	245	—	258	16
Dollar General	Green Forest	AR		(1)	52	293	—	345	19
Dollar General	Jonesboro	IL		(1)	77	309	—	386	20
Dollar General	Appleton City	MO		(1)	22	124	—	146	8
Dollar General	Ash Grove	MO		(1)	35	315	—	350	21
Dollar General	Ashland	MO		(1)	70	398	—	468	26
Dollar General	Bernie	MO		(1)	35	314	—	349	21
Dollar General	Bloomfield	MO		(1)	23	209	—	232	14
Dollar General	Carterville	MO		(2)	10	192	—	202	13
Dollar General	Clarkton	MO		(1)	19	354	—	373	23
Dollar General	Diamond	MO		(1)	44	175	—	219	11
Dollar General	Ellsinore	MO		(2)	30	579	—	609	38
Dollar General	Hallsville	MO		(2)	29	263	—	292	17
Dollar General	Lawson	MO		(1)	29	162	—	191	11
Dollar General	Lilbourne	MO		(2)	62	554	—	616	36
Dollar General	Qulin	MO		(2)	30	573	—	603	38
Dollar General	Steele	MO		(2)	31	598	—	629	39
Dollar General	Strafford	MO		(2)	51	461	—	512	30
Dollar General	Commerce	OK		(1)	38	341	—	379	22
Dollar General II	Ash Flat	AR		(1)	44	132	—	176	4
Dollar General II	Flippin	AR		(1)	53	64	—	117	2
Dollar General II	Panama City	FL		(1)	139	258	—	397	7
Dollar General II	Caney	KS		(1)	31	178	—	209	5
Dollar General II	Clever	MO		(1)	136	542	—	678	15
Dollar General II	Concordia	MO		(1)	40	161	—	201	5
Dollar General II	Greenfield	MO		(1)	42	378	—	420	11
Dollar General II	Humansville	MO		(1)	69	277	—	346	8
Dollar General II	Oak Grove	MO		(1)	27	106	—	133	3
Dollar General II	Palmyra	MO		(1)	40	225	—	265	6
Dollar General II	Senath	MO		(1)	61	552	—	613	16
Dollar General II	Seneca	MO		(1)	47	189	—	236	5
Dollar General II	St James	MO		(1)	81	244	—	325	7
Dollar General II	Willow Springs	MO		(1)	24	213	—	237	6
Dollar General II	Winona	MO		(1)	52	155	—	207	4
Dollar General II	Nowata	OK		(1)	43	128	—	171	4
Family Dollar	Brookston	IN		(1)	126	715	—	841	10

						Initial Costs						Gross Amount Carried at December 31, 2012
Property	City	State	Encumbrances at December 31, 2012			Land		Buildings, Fixtures and Improvements		Adjustment to Basis				Accumulated Depreciation
Family Dollar II	Lenox	GA			(1)	90		809		—		899		8
Family Dollar III	Detroit	MI				130		1,169		—		1,299		5
FedEx I	Chillicothe	OH			(1)	143		1,284		—		1,427		46
FedEx I	Evansville	IN			(1)	665		2,661		—		3,326		95
FedEx I	Kankakee	IL			(1)	195		1,103		—		1,298		39
FedEx I	London	KY			(1)	191		1,081		—		1,272		38
FedEx I	Mt. Vernon	IL			(1)	222		1,259		—		1,481		45
FedEx I	Mt. Pleasant	PA			(1)	454		1,814		—		2,268		65
FedEx II	Chico	CA			(1)	308		2,776		—		3,084		28
Fresenius	Warsaw	NC			(1)	75		1,428		—		1,503		11
GSA I	Freeport	NY			(1)	843		3,372		—		4,215		185
GSA II	Plattsburg	NY			(1)	508		4,572		—		5,080		126
GSA III	Mobile	AL			(1)	268		5,095		—		5,363		140
GSA IV	Warren	PA			(1)	341		3,066		—		3,407		84
GSA V	Gloucester	VA			(1)	287		1,628		—		1,915		45
Home Depot	Columbia	SC	13,850			2,911		15,463		—		18,374		2,088
Iron Mountain	Columbus	OH			(1)	405		3,642		—		4,047		56
John Deere	Davenport	IA			(1)	1,161		22,052		—		23,213		785
Mrs. Baird's	Dallas	TX			(1)	453		4,077		—		4,530		124
Reckitt Benckiser	Chester	NJ	5,500			886		7,972		—		8,858		128
Synovus Bank	Tampa	FL			(1)	985		2,297		—		3,282		—
Tractor Supply	Rio Grande City	TX			(1)	469		1,095		—		1,564		26
Walgreens	Myrtle Beach	SC			(1)	—		2,077		—		2,077		125
Walgreens II	Eastpointe	MI			(1)	668		2,672		—		3,340		147
Walgreens III	Warren	MI			(1)	748		2,991		—		3,739		15
Walgreens IV	Troy	MI				—		1,896		—		1,896		9
Encumbrances allocated based on notes below			141,012
Total			$	160,362		$	34,345	$	205,876	$	—	$	240,221	$	18,873

_______________________________________________

(1) These properties collateralize a senior secured revolving credit facility of up to $150.0 million, which had $124.6 million outstanding as of December 31, 2012.

(2) These properties collateralize a $4.5 million mortgage note payable of which $4.5 million was outstanding as of December 31, 2012.

(3) These properties collateralize an $11.9 million mortgage note payable of which $11.9 million was outstanding as of December 31, 2012.

Each location is a single-tenant, freestanding property. Each of the properties has a depreciable life of 40 years. Acquired intangible lease assets in the amount of $17.4 million allocated to individual properties are not reflected in the table above. The accumulated depreciation column excludes $5.4 million of amortization associated with acquired intangible lease assets. The table above also excludes one vacant property located in Worth, IL contributed in September 2011, which was classified as held for sale at December 31, 2012. The aggregate base purchase price of this vacant properties was $1.2 million.

A summary of activity for real estate and accumulated depreciation for the year ended December 31, 2012 (amounts in thousands):

	Year Ended December 31, 2012
Real estate investments, at cost:
Balance at beginning of year	$	125,829
Additions - acquisitions and improvements	114,392
Balance at end of the year	$	240,221
Accumulated depreciation:
Balance at beginning of year	$	11,648
Depreciation expense	7,225
Balance at end of the year	$	18,873

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Derivatives and Hedging Activities (Details) (Cash Flow Hedging [Member], USD $)	12 Months Ended
	Dec. 31, 2012
Interest Rate Cap [Member]
Derivatives, Fair Value [Line Items]
Amount of gain (loss) recognized in accumulated other comprehensive income on interest rate derivatives (effective portion)	$ (12,000)
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net	0
Interest Rate Cap [Member] | Interest Expense [Member]
Derivatives, Fair Value [Line Items]
Derivative Instruments, Gain (Loss) Reclassified from Accumulated OCI into Income, Effective Portion, Net	(1,000)
Interest Rate Cap [Member] | Designated as Hedging Instrument [Member] | Interest Expense [Member]
Derivatives, Fair Value [Line Items]
Reclassified from other comprehensive income as an increase to interest expense	11,000
Interest Rate Cap [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Number of Interest Rate Derivatives Held	1
Notional Amount of Interest Rate Derivatives	50,000,000
Derivative Financial Instruments, Liabilities [Member] | Interest Rate Cap [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Interest Rate Derivative Liabilities, at Fair Value	$ 0

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Real Estate Investments (Assets And Liabilities Assumed) (Details) (USD $)	1 Months Ended	12 Months Ended		25 Months Ended	12 Months Ended				0 Months Ended						12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012 property	Dec. 31, 2011 property	Dec. 31, 2012	Dec. 31, 2012 Leases, Acquired-in-Place [Member]	Dec. 31, 2011 Leases, Acquired-in-Place [Member]	Dec. 31, 2012 Above Market Leases [Member]	Dec. 31, 2011 Above Market Leases [Member]	Jul. 03, 2012 Property in Havertown, PA [Member]	Sep. 30, 2012 Contributor [Member] ARC Real Estate Partners, LLC [Member] property	Dec. 31, 2012 Occupied [Member] property	Dec. 31, 2011 Occupied [Member] property	Dec. 31, 2012 Vacant [Member] Real Estate [Member] property	Dec. 31, 2011 Vacant [Member] Real Estate [Member] property	Dec. 31, 2012 GSA [Member]	Dec. 31, 2012 John Deere [Member]	Dec. 31, 2012 Citizens Bank [Member]	Dec. 31, 2011 Citizens Bank [Member]	Dec. 31, 2011 Home Depot [Member]	Dec. 31, 2012 IOWA	Dec. 31, 2012 SOUTH CAROLINA	Dec. 31, 2011 SOUTH CAROLINA	Dec. 31, 2012 MICHIGAN	Dec. 31, 2011 MICHIGAN	Dec. 31, 2012 OHIO	Dec. 31, 2011 OHIO	Dec. 31, 2012 Cash [Member]		Dec. 31, 2011 Cash [Member]
Real Estate Properties [Line Items]
Business Acquisition, Cost of Acquired Entity, Cash Paid		$ 17,500,000		$ 17,500,000
Operating Leases, Future Minimum Payments Receivable, Current		23,113,000		23,113,000
Acquisition related	0	3,988,000	1,875,000
Entity Wide Revenue, Major State, Percentage																				10.00%	10.60%	23.40%	15.20%	23.40%	10.80%	16.80%
Entity-Wide Revenue, Major Customer, Percentage															11.60%	10.00%	28.70%	62.90%	21.10%
Operating Leases, Future Minimum Payments Due, Next Twelve Months		160,000		160,000
Operating Leases, Future Minimum Payments Receivable, in Two Years		23,309,000		23,309,000
Business Acquisition, Pro Forma Revenue	1,932,000	23,512,000	23,512,000
Land		15,856,000	18,489,000
Buildings, fixtures and improvements		98,536,000	107,340,000
Total tangible assets		114,392,000	125,829,000
Acquired intangibles					16,096,000	11,044,000	1,264,000	0
Purchase proce of acquired real estate investments		131,752,000	136,873,000
OP units issued to acquire real estate investments	0	(6,352,000)	0
Cash paid for acquired real estate investments	0	125,400,000	17,528,000																								125,400,000	[1]	136,873,000	[1]
Number of Businesses Acquired		58	88	146
Business Acquisition, Cost of Acquired Entities Throughout Period, Purchase Price		131,752,000	136,873,000	268,625,000
Number Of Properties Contributed By Affiliate										63
Number of Real Estate Properties											147	90	1	2
Proceeds from sale of property held for sale	0	553,000	0						600,000
Business Acquisition, Pro Forma Net Income (Loss)	(3,776,000)	(824,000)	724,000
Operating Leases, Future Minimum Payments Receivable, in Three Years		23,153,000		23,153,000
Operating Leases, Future Minimum Payments Receivable, in Four Years		22,808,000		22,808,000
Operating Leases, Future Minimum Payments Receivable, in Five Years		18,761,000		18,761,000
Operating Leases, Future Minimum Payments, Due Thereafter		50,031,000		50,031,000
Total		161,175,000		161,175,000
Operating Leases, Future Minimum Payments, Due in Two Years		160,000		160,000
Operating Leases, Future Minimum Payments, Due in Three Years		160,000		160,000
Operating Leases, Future Minimum Payments, Due in Four Years		160,000		160,000
Operating Leases, Future Minimum Payments, Due in Five Years		160,000		160,000
Operating Leases, Future Minimum Payments, Due Thereafter		600,000		600,000
Operating Leases, Future Minimum Payments Due		$ 1,400,000		$ 1,400,000

[1] (1) For the year ended December 31, 2011, the amount includes the properties that were contributed in September 2011 in conjunction with the completion of the IPO by the Contributor at amortized cost as well as $17.5 million of properties acquired by the Company following the IPO.

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Quarterly Financial Information (Tables)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2012 and 2011 (in thousands, except share and per share amounts):

	Quarters Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
Revenues	$	2,944		$	3,348		$	4,880		$	5,650
Net loss from continuing operations attributable to stockholders	$	(308	)	$	(1,963	)	$	(763	)	$	(3,545	)
Less: dividends declared on preferred shares	$	—		$	(70	)	$	(140	)	$	(158	)
Net loss from continuing operations attributable to common stockholders	$	(308	)	$	(2,033	)	$	(903	)	$	(3,703	)
Net loss from discontinued operations attributable to stockholders	$	(322	)	$	(77	)	$	(41	)	$	(259	)
Net loss attributable to common stockholders, net of dividends on preferred shares	$	(630	)	$	(2,110	)	$	(944	)	$	(3,962	)
Weighted average shares outstanding	7,174,934			7,653,170			10,846,432			10,959,840
Basic and diluted loss per share from continuing operations attributable to common stockholders	$	(0.04	)	$	(0.27	)	$	(0.08	)	$	(0.34	)
Basic and diluted loss per share from discontinued operations attributable to common stockholders	$	(0.05	)	$	(0.01	)	$	—		$	(0.02	)
Basic and diluted loss per share attributable to common stockholders	$	(0.09	)	$	(0.28	)	$	(0.09	)	$	(0.36	)

	Quarters Ended
	March 31, 2011			June 30, 2011		September 30, 2011			December 31, 2011
Revenues	$	—		$	—	$	576		$	2,599
Net loss from continuing operations attributable to common stockholders	$	(16	)	$	—	$	(626	)	$	(1,117	)
Net loss from discontinued operations attributable to stockholders	$	—		$	—	$	(8	)	$	(808	)
Net loss attributable to common stockholders	$	(16	)	$	—	$	(634	)	$	(1,925	)
Weighted average shares outstanding	1,000			1,000		1,515,710			6,596,908
Basic and diluted loss per share from continuing operations attributable to stockholders	NM			$	—	$	(0.41	)	$	(0.17	)
Basic and diluted loss per share from discontinued operations attributable to common stockholders	NM			$	—	$	(0.01	)	$	(0.12	)
Basic and diluted loss per share attributable to stockholders	NM			$	—	$	(0.42	)	$	(0.29	)

______________________________

NM - Not meaningful.

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Derivatives and Hedging Activities (Schedule of Derivative Instruments in Statement of Financial Position, Fair Value) (Details) (Interest Rate Cap [Member], Cash Flow Hedging [Member], Designated as Hedging Instrument [Member], Derivative Financial Instruments, Liabilities [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Interest Rate Cap [Member] | Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Derivative Financial Instruments, Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative, at fair value	$ 0

XML

Net Loss Per Share (Schedule of Earnings Per Share, Basic and Diluted)(Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	3 Months Ended								12 Months Ended		9 Months Ended	0 Months Ended	1 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 30, 2011	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2011 Restricted Unvested Common Stock [Member]	Jul. 24, 2012 Series B Preferred Stock [Member]	May 31, 2012 Series A Preferred Stock [Member]
Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]
Net loss from continuing operations attributable to stockholders	$ 0	$ (3,545)	$ (763)	$ (1,963)	$ (308)					$ (6,579)	$ (1,759)
Less: dividends declared on Preferred shares		158	140	70	0					(368)	0
Net loss attributable to common stockholders, net of distributions		(3,703)	(903)	(2,033)	(308)	(1,117)	(626)	0	(16)	(6,947)	(1,759)
Net loss from discontinued operations attributable to stockholders	0	(259)	(41)	(77)	(322)	(808)	(8)	0	0	(699)	(816)
Net loss from continuing operations attributable to common stockholders		$ (3,962)	$ (944)	$ (2,110)	$ (630)	$ (1,925)	$ (634)	$ 0	$ (16)	$ (7,646)	$ (2,575)
Weighted average common shares outstanding		10,959,840	10,846,432	7,653,170	7,174,934	6,596,908	1,515,710	1,000	1,000	9,150,785	2,045,320
Basic and diluted net loss per share from continuing operations attributable to common stockholders	$ 0.00	$ (0.34)	$ (0.08)	$ (0.27)	$ (0.04)	$ (0.17)	$ (0.41)	$ 0.00		$ (0.76)	$ (0.86)
Basic and diluted net loss per share from discontinued operations attributable to stockholders		$ (0.02)	$ 0.00	$ (0.01)	$ (0.05)	$ (0.12)	$ (0.01)	$ 0.00		$ (0.07)	$ (0.40)
Basic and diluted net loss per share attributable to common stockholders	$ 0.00	$ (0.36)	$ (0.09)	$ (0.28)	$ (0.09)	$ (0.29)	$ (0.42)	$ 0.00		$ (0.84)	$ (1.26)
Antidilutive securtities excluded from computation of earnings per share										886,376		197,803
Shares Issued (in shares)													283,018	545,454

XML

Mortgage Note Payable (Schedule of Mortgage Notes Payable) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011
Debt Instrument [Line Items]
Outstanding Loan Amount	$ 35,758		$ 30,260
Mortgages [Member]
Debt Instrument [Line Items]
Encumbered Properties, in properties	29		28
Outstanding Loan Amount	$ 35,758		$ 30,260
Weighted Average Effective Interest Rate	4.52%	[1]	4.67%	[1]
Weighted Average Maturity Term	3 years 6 months 7 days	[2]	4 years 3 months 26 days	[2]
Minimum [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Effective Interest Rate	3.68%		3.80%
Maximum [Member] | Mortgages [Member]
Debt Instrument [Line Items]
Effective Interest Rate	5.32%		5.32%

[1] (1)Mortgage notes payable have fixed rates. Effective interest rates range from 3.68% to 5.32% at December 31, 2012 and 3.80% to 5.32% at December 31, 2011.

[2] (2)Weighted average remaining years until maturity as of December 31, 2012 and 2011, respectively.

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Summary of Significant Accounting Policies (Notes)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Accounting

The accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with U.S. GAAP.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been 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 for which the Company is the primary beneficiary.

Use of Estimates

The preparation of financial statements in conformity with U.S. 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, to record investments in real estate, real estate taxes, and derivative financial instruments and hedging activities, as applicable.

Formation Transactions

Upon the effectiveness of the IPO, the Company acquired certain properties from affiliated entities of the Company, as such, the Company was no longer considered to be in the development stage. The contribution of the properties from affiliates in the initial formation of the Company was accounted for as a reorganization of entities under common control and therefore all assets and liabilities related to the contributed properties were accounted for on the carryover basis of accounting whereby the real estate investments were contributed at amortized cost and all assets and liabilities of the predecessor entities became assets and liabilities of the Company.

Real Estate Investments

The Company records acquired real estate at cost and makes assessments as to the useful lives of depreciable assets. The Company considers the period of future benefit of the asset to determine the appropriate useful lives. Depreciation is computed using a straight-line method over the estimated useful life of 40 years for buildings, five to 15 years for building fixtures and improvements and the remaining lease term for acquired intangible lease assets.

Impairment of Long Lived Assets

Operations related to properties that have been sold or properties that are intended to be sold are presented as discontinued operations in the statement of operations for all periods presented, and properties intended to be sold are designated as “held for sale” on the accompanying consolidated balance sheets.

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, 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 impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded 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 is 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 income. At December 31, 2012, and 2011, the Company had one and two, respectively, vacant properties classified as properties held for sale. See Note 16 — Discontinued Operations and Properties Held for Sale.

Allocation of Purchase Price of Acquired Assets

The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings, equipment 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. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships.

Amounts allocated to land, buildings, equipment and fixtures are based on cost segregation studies performed by independent third-parties or on the Company's analysis of comparable properties in its portfolio. Depreciation is computed using the straight-line method over the estimated lives of forty years for buildings, five to ten years for building equipment and fixtures, and the shorter of the useful life or the remaining lease term for tenant improvements.

The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. Factors considered by the Company in its 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 market rates during the expected lease-up period, which typically ranges from six to 18 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market in-place lease values for owned properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid pursuant to the in-place leases and management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease. The capitalized below-market lease values will be amortized as an increase to rental income over the remaining term and any fixed rate renewal periods provided within the respective leases. In determining the amortization period for below-market lease intangibles, the Company initially will consider, and periodically evaluate on a quarterly basis, the likelihood that a lessee will execute the renewal option. The likelihood that a lessee will execute the renewal option is determined 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.

The aggregate value of intangibles assets related to customer relationships is measured based on the Company's evaluation of the specific characteristics of each tenant's lease and the Company's overall relationship with the tenant. Characteristics considered by the company in determining these values include the nature and extent of the Company's existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals, among other factors.

The value of in-place leases is amortized to expense over the initial term of the respective leases, which range primarily from 2 to 20 years. The value of customer relationship intangibles is amortized to expense over the initial term 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.

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 its pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Intangible lease assets consist of the following as of December 31, 2012 and 2011 (amounts in thousands):

	December 31,
	2012			2011
In-place leases, gross	$	27,140		$	11,044
Accumulated amortization on in-place leases	(5,244		)	(3,197		)
In-place leases, net of accumulated amortization	21,896			7,847
Above market leases, gross	1,264			—
Accumulated amortization on above market leases	(116		)	—
Above market leases, net of accumulated amortization	1,148			—
Total intangible lease assets, net	$	23,044		$	7,847

The following table provides the weighted-average amortization period as of December 31, 2012 for intangible lease assets and the projected amortization expense and adjustments of rental income for the next five years (amounts in thousands):

	Weighted-Average Amortization Period in Years	2013		2014		2015		2016		2017
In-place leases:
Total to be included in amortization expense	7.3	$	3,688	$	3,619	$	3,336	$	3,067	$	2,531
Above market leases:
Total to be included in rental income	5.0	$	252	$	252	$	252	$	252	$	122
Total intangible lease assets	7.2

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less.

The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit. At December 31, 2012 and 2011, the Company had deposits of $2.7 million and $3.1 million, respectively, of which $2.2 million and $2.7 million were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result.

Deferred Costs, Net

Deferred costs, net consists of deferred financing costs net of accumulated amortization, deferred leasing costs net of accumulated amortization and deferred offering costs.

Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are 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 the financing will not close. At December 31, 2012 and 2011, the Company had $4.7 million and $2.5 million, respectively, of deferred financing costs net of accumulated amortization.

Deferred leasing costs, consisting primarily of lease commissions and payments made to assume existing leases, are deferred and amortized over the term of the lease. At December 31, 2012 and 2011, the Company had $0.2 million and $0.3 million, respectively, of deferred leasing costs, net of accumulated amortization.

Deferred offering costs represent professional fees, fees paid to various regulatory agencies, and other costs incurred in connection with registering to sell shares of the Company's common stock. As of December 31, 2012, the Company had $0.1 million of deferred offering costs related to its $500.0 million universal shelf and resale registration statements filed with the SEC in August 2012. As of December 31, 2011, the Company had no deferred offering costs.

Derivative Instruments

The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions.

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statement of operations. If the derivative is designated and qualifies for hedge accounting treatment the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.

Revenue Recognition

Upon the acquisition of real estate, certain properties will have leases where minimum rent payments increase during the term of the lease. The Company will record rental revenue for the full term of each lease on a straight-line basis. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for the purposes of this calculation. Cost recoveries from tenants are included in tenant reimbursement income in the period the related costs are incurred, as applicable.

The Company's revenues, which are derived primarily from rental income, 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. Since many of the leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. The Company defers the revenue related to lease payments received from tenants in advance of their due dates.

The Company continually reviews receivables related to rent and unbilled rent receivables 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. In the event that the collectability of a receivable is in doubt, the Company will record an increase in the allowance for uncollectible accounts or record a direct write-off of the receivable in the consolidated statements of operations and comprehensive loss. As of December 31, 2012 and 2011, the Company determined that there was no allowance for uncollectible accounts necessary.

Offering and Related Costs

Offering and related costs include costs incurred in connection with the Company's issuance of common stock. These costs include, but are not limited to, (i) legal, accounting, printing, mailing and filing fees; (ii) escrow related fees, and (iii) reimbursement to the Dealer Manager for amount they paid to reimburse the bonified due diligence expenses of broker-dealers.

Share-Based Compensation

The Company has a stock-based incentive award plan for its affiliated Manager, non-executive directors, officers, other employees and independent contractors who are providing services to the company as applicable, and a non-executive director restricted share plan, which are accounted for under the guidance for share based payments. The expense for such awards is included in general and administrative expenses and is recognized over the vesting period or when the requirements for exercise of the award have been met. See Note 11 — Share-Based Compensation for additional information on these plans.

Income Taxes

The Company qualified as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”) commencing with the taxable year ended December 31, 2011. Being qualified for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes its REIT taxable income to its stockholders, and so long as it distributes at least 90% of its REIT taxable income. REITs are subject to a number of other organizational and operational requirements. The Company may still be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income.

Per Share Data

Income (loss) per basic share of common stock is calculated by dividing net income (loss) less dividends on unvested restricted stock and dividends on preferred shares by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted income (loss) per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period.

Reportable Segments

The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company's investments in real estate generate rental revenue and other income through the leasing of properties, which comprised 100% of its total consolidated revenues. Although the Company's investments in real estate will be geographically diversified throughout the United States, management evaluates operating performance on an individual property level. The Company's properties have been aggregated into one reportable segment.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (the "FASB") issued guidance that expands the existing disclosure requirements for fair value measurements, primarily for Level 3 measurements, which are measurements based on unobservable inputs such as the Company’s own data. This guidance is largely consistent with current fair value measurement principles with few exceptions that do not result in a change in general practice. The guidance was applied prospectively and was effective for interim and annual reporting periods ending after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations as the guidance relates only to disclosure requirements.

In June 2011, the FASB issued guidance requiring entities to present items of net income and other comprehensive income either in one continuous statement – referred to as the statement of comprehensive income – or in two separate, but consecutive, statements of net income and other comprehensive income. The new guidance does not change which components of comprehensive income are recognized in net income or other comprehensive income, or when an item of other comprehensive income must be reclassified to net income. In December 2011, the FASB deferred certain provisions of this guidance related to the presentation of certain reclassification adjustments out of accumulated other comprehensive income, by component in both the statement and the statement where the reclassification is presented. This guidance was applied prospectively and was effective for interim and annual reporting periods ended after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations but changed the location of the presentation of other comprehensive income to more closely associate the disclosure with net income.

In September 2011, the FASB issued guidance that allows entities to perform a qualitative analysis as the first step in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative analysis for impairment is not required. The guidance was effective for interim and annual impairment tests for fiscal periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company's financial position or results of operations.

In December 2011, the FASB issued guidance which contains new disclosure requirements regarding the nature of and entity's rights of offset and related arrangements associated with its financial instruments and derivative instruments. The new disclosures are designed to make financial statements prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards and will give the financial statement users information about both gross and net exposures. The guidance is effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations.

In July 2012, the FASB issued revised guidance intended to simplify how an entity tests indefinite-lived intangible assets for impairment. The amendments will allow an entity first to assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. An entity will no longer be required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative test unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations.

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Discontinued Operations and Properties Held for Sale (Details) (USD $)	1 Months Ended	3 Months Ended								12 Months Ended		0 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 30, 2011	Dec. 31, 2012	Dec. 31, 2011	Jul. 03, 2012 Property in Havertown, PA [Member]	Dec. 31, 2012 Vacant [Member] Real Estate [Member] property	Dec. 31, 2011 Vacant [Member] Real Estate [Member] property
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on held for sale properties	$ 0									$ 100,000	$ (815,000)
Number of Real Estate Properties													1	2
Proceeds from sale of property held for sale	0									553,000	0	600,000
Gain (Loss) on Sale of Property										500,000
Assets held for sale		665,000				1,818,000				665,000	1,818,000
Operating Loss for Properties Held for Sale	$ 0	$ 259,000	$ 41,000	$ 77,000	$ 322,000	$ 808,000	$ 8,000	$ 0	$ 0	$ 699,000	$ 816,000

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Real Estate Investments (Schedule of Future Minimum Rental Payments for Operating Leases) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Real Estate [Abstract]
Operating Leases, Future Minimum Payments Receivable, in Two Years	$ 23,309
Operating Leases, Future Minimum Payments Receivable, in Three Years	23,153
Operating Leases, Future Minimum Payments Receivable, in Four Years	22,808
Operating Leases, Future Minimum Payments Receivable, in Five Years	18,761
Operating Leases, Future Minimum Payments, Due Thereafter	50,031
Total	$ 161,175

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Real Estate Investments (Tables)

12 Months Ended

25 Months Ended

Dec. 31, 2012

Dec. 31, 2012

Real Estate [Abstract]

Assets and Liabilities Assumed

The following table presents the allocation of the assets acquired and liabilities assumed during the periods presented (amounts in thousands):

	Year Ended December 31,
	2012			2011
Real estate investments, at cost:
Land	15,856			$	18,489
Buildings, fixtures and improvements	98,536			107,340
Total tangible assets	114,392			125,829
Acquired intangibles:
In-place leases	16,096			11,044
Above market leases	1,264			—
Total real estate investments acquired	131,752			136,873
OP Units issued to acquire real estate investments	(6,352		)	—
Cash paid to acquire real estate investments (1)	$	125,400		$	136,873
Number of properties acquired	58			88

______________________________________________

⁽¹⁾  For the year ended December 31, 2011, the amount includes the properties that were contributed in September 2011 in conjunction with the completion of the IPO by the Contributor at amortized cost as well as $17.5 million of properties acquired by the Company following the IPO.

Purchase Price of Acquired Properties [Table Text Block]

The Company owns and operates commercial properties. As of December 31, 2012, the Company owned 147 properties, one of which was vacant and classified as held for sale. As of December 31, 2011, the Company owned 90 properties, two of which were vacant and classified as held for sale. The Contributor, an affiliate of the Sponsor, contributed 63 properties (the "Contributed Properties") in September 2011 in conjunction with the completion of the IPO at amortized cost.

The following table reflects the number and related purchase prices of properties acquired during the years ended December 31, 2012 and 2011 (amounts in thousands):

	Number of Properties	Base Purchase Price
Year ended December 31, 2011	88	$	136,873
Year ended December 31, 2012	58	131,752
Total portfolio as of December 31, 2012	146	$	268,625

Business Acquisition, Pro Forma Information [Table Text Block]

The following table presents unaudited pro forma information as if the acquisitions during the year ended December 31, 2012, had been consummated on December 2, 2010 (date of inception). Additionally, the unaudited pro forma net loss attributable to stockholders was adjusted to reclass acquisition and transaction related expenses of $4.0 million from the year ended December 31, 2012 to the period from December 2, 2010 (date of inception) to December 31, 2010.

	Year Ended December 31,					Period from December 2, 2010 (date of inception) to December 31, 2010
(Amounts in thousands)	2012			2011
Pro forma revenues	$	23,512		$	23,512	$	1,932
Pro forma net income (loss) attributable to stockholders	$	(824	)	$	724	$	(3,776	)

Schedule of Future Minimum Rental Payments for Operating Leases

The following table presents future minimum base rental cash payments due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	23,113
2014	23,309
2015	23,153
2016	22,808
2017	18,761
Thereafter	50,031
Total	$	161,175

Schedule of Future Minimum Rental Payments for Operating Leases, Ground Lease [Table Text Block]

The Company entered into a ground lease agreement related to the acquisition of a Walgreens Pharmacy. The following table reflects the minimum base rental cash payments due from the Company over the next five years and thereafter under this arrangement (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	160
2014	160
2015	160
2016	160
2017	160
Thereafter	600
Total	$	1,400

Schedule of Annualized Rental Income by Major Tenants [Table Text Block]

The following table lists the tenants whose annualized rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2012 and 2011. Annualized rental income for net leases is rental income on a straight-line basis as of December 31, 2012, which includes the effect of tenant concessions such as free rent, as applicable. The Company did not own any properties as of December 31, 2010.

Tenant	2012	2011
Citizens Bank	28.7%	62.9%
GSA	11.6%	*
John Deere	10.0%	*
Home Depot	*	21.1%

_______________________________________________

* The tenants' annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

The termination, delinquency or non-renewal of one or more leases by any of the above tenants may have a material effect on revenues. No other tenant represents more than 10% of the annualized rental income for the periods presented.

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

The following table lists the states where the Company has concentrations of properties where annual rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2012 and 2011:

State	2012	2011
Michigan	15.2%	23.4%
Ohio	10.8%	16.8%
South Carolina	10.6%	23.4%
Iowa	10.0%	*

_______________________________________________

* The state's annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Schedule of Intangible Assets and Goodwill [Table Text Block]

	December 31,
	2012			2011
In-place leases, gross	$	27,140		$	11,044
Accumulated amortization on in-place leases	(5,244		)	(3,197		)
In-place leases, net of accumulated amortization	21,896			7,847
Above market leases, gross	1,264			—
Accumulated amortization on above market leases	(116		)	—
Above market leases, net of accumulated amortization	1,148			—
Total intangible lease assets, net	$	23,044		$	7,847

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

	Weighted-Average Amortization Period in Years	2013		2014		2015		2016		2017
In-place leases:
Total to be included in amortization expense	7.3	$	3,688	$	3,619	$	3,336	$	3,067	$	2,531
Above market leases:
Total to be included in rental income	5.0	$	252	$	252	$	252	$	252	$	122
Total intangible lease assets	7.2

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Related Party Transactions and Arrangements (Details) (USD $) In Thousands, except Share data, unless otherwise specified				12 Months Ended		3 Months Ended	12 Months Ended
	Dec. 31, 2012 Operating Partnership Unit [Member] ARC Real Estate Partners, LLC [Member]	Dec. 31, 2011 Operating Partnership Unit [Member] ARC Real Estate Partners, LLC [Member]	Dec. 31, 2012 Operating Partnership Unit [Member] ARC Real Estate Partners, LLC [Member] Contributor [Member]	Dec. 31, 2012 Fees and Expense Reimbursement, Stock Offering [Member] ARC Properties Advisors, LLC [Member] Manager [Member]	Dec. 31, 2011 Fees and Expense Reimbursement, Stock Offering [Member] ARC Properties Advisors, LLC [Member] Manager [Member]	Dec. 31, 2011 Sales Commissions and Fees [Member] Realty Capital Securities, LLC [Member] Dealer Manager [Member]	Dec. 31, 2012 Sales Commissions and Fees [Member] Realty Capital Securities, LLC [Member] Dealer Manager [Member]	Sep. 07, 2011 Gross Proceeds, Initial Public Offering [Member] Realty Capital Securities, LLC [Member] Dealer Manager [Member]	Sep. 07, 2011 Gross Proceeds, Common Stock [Member] Realty Capital Securities, LLC [Member] Dealer Manager [Member]	Dec. 31, 2012 Contract Purchase Price [Member] ARC Properties Advisors, LLC [Member] Manager [Member]	Sep. 30, 2012 Amount Available or Outstanding Under Financing Arrangement [Member] ARC Properties Advisors, LLC [Member] Manager [Member]	Sep. 30, 2012 Average Invested Assets [Member] ARC Properties Advisors, LLC [Member] Manager [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Acquisition Fees Earned by Related Party, Percentage of Benchmark										1.00%
Related Party Transaction, Expenses from Transactions with Related Party				$ 183	$ 0	$ 1,601	$ 14
Common stock held by related party, percent	20.70%	31.30%
Operating Partnership Units Held By Related Party			310,000
Sales commissions as a percentage of benchmark								6.00%	2.00%
Financing coordination as a percentage of benchmark											0.75%
Asset management fees as a percentage of benchmark												0.50%

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Real Estate Investments (Schedule of Annualized Rental Income by Major Tenants) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Citizens Bank [Member]
Revenue, Major Customer [Line Items]
Entity-Wide Revenue, Major Customer, Percentage	28.70%	62.90%
John Deere [Member]
Revenue, Major Customer [Line Items]
Entity-Wide Revenue, Major Customer, Percentage	10.00%
Home Depot [Member]
Revenue, Major Customer [Line Items]
Entity-Wide Revenue, Major Customer, Percentage		21.10%
GSA [Member]
Revenue, Major Customer [Line Items]
Entity-Wide Revenue, Major Customer, Percentage	11.60%

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Mortgage Note Payable (Tables)

12 Months Ended

Dec. 31, 2012

Notes Payable [Abstract]

Schedule of Mortgage Notes Payable

The Company’s mortgage notes payable consist of the following as of December 31, 2012 and 2011 (dollar amounts in thousands):

	Encumbered Properties	Outstanding Loan Amount		Weighted Average Effective Interest Rate (1)		Weighted Average Maturity (2)
December 31, 2012	29	$	35,758	4.52	%	3.52
December 31, 2011	28	$	30,260	4.67	%	4.32

_______________________________________________

(1) Mortgage notes payable have fixed rates. Effective interest rates range from 3.68% to 5.32% at December 31, 2012 and 3.80% to 5.32% at December 31, 2011.

(2) Weighted average remaining years until maturity as of December 31, 2012 and 2011, respectively.

Schedule Of Aggregate Principal Payments Of Mortgages

The following table summarizes the scheduled aggregate principal repayments subsequent to December 31, 2012 (amounts in thousands):

Year	Total
2013	$	74
2014	189
2015	13,767
2016	11,760
2017	9,968
Thereafter	—
Total	$	35,758

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheets are reported below (amounts in thousands):

		Carrying Amount at		Fair Value at		Carrying Amount at		Fair Value at
	Level	December 31, 2012		December 31, 2012		December 31, 2011		December 31, 2011
Mortgage notes payable	3	$	35,758	$	35,793	$	30,260	$	30,626
Senior secured revolving credit facility	3	$	124,604	$	124,604	$	42,407	$	42,407

The fair value of mortgage notes payable are obtained by calculating the present value at current market rates. The terms of the senior secured revolving credit facility and the Company's level ratio are considered commensurate with the market, as such the outstanding balance on the facility approximates fair value.

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Merger Agreement

12 Months Ended

Dec. 31, 2012

Merger Agreement [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Merger Agreement

On December 14, 2012, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with American Realty Capital Trust III, Inc., a Maryland corporation (“ARCT III”), and certain subsidiaries of each company. The Merger Agreement provides for the merger of ARCT III with and into a subsidiary of the Company (the “Merger”). The independent members of the boards of directors of both Companies have, by unanimous vote, approved the Merger and the other transactions contemplated by the Merger Agreement.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock of ARCT III will be converted into the right to receive (i) 0.95 of a share of the Company's common stock or (ii) $12.00 in cash, but in no event will the aggregate consideration paid in cash be paid on more than 30% of the shares of ARCT III's common stock issued and outstanding as of immediately prior to the closing of the Merger. In addition, each outstanding unit of equity ownership of the ARCT III operating partnership ("ARCT III OP") will be converted into the right to receive 0.95 of the same class of unit of equity ownership in the OP.

Upon the consummation of the Merger with ARCT III, ARCT III's advisor, an affiliate of the Company's Sponsor and Manager, will be entitled to subordinated distributions of net sales proceeds from the ARCT III OP estimated to be valued at approximately $59.0 million, assuming an implied price of ARCT III common stock of $12.26 (closing stock price on December 14, 2012) per share in the merger (which assumes that 70% of the merger consideration is ARCP common stock based on a per share price of $12.90 and 30% of the merger consideration is cash). Such subordinated distributions of net sales proceeds, which will be payable in the form of units of equity ownership of the ARCT III OP, which the Company refers to as ARCT III OP Units, will automatically convert into units of equity ownership of the ARCP OP. The parties have agreed that such ARCP OP Units will be subject to a minimum one-year holding period before being exchangeable into the Company's common stock.

Upon consummation of the Merger, the vesting of the shares of the Company's outstanding restricted stock will be accelerated.

In connection with the Merger, the Company also has entered into an agreement with the Sponsor and its affiliates to internalize certain functions currently performed by them including acquisition, accounting and portfolio management services (the "Internalization"). In connection with the Internalization, (i) the Company and its Sponsor have agreed to terminate the acquisition and capital services agreement dated September 6, 2011, between the two parties, which will eliminate acquisition and financing fees payable by the Company (except with respect to certain enumerated properties that were in the Company's pipeline at the time it entered the Merger Agreement) and (ii) the Manager agreed to reduce asset management fees from an annualized 0.50% of the unadjusted book value of all of the Company's assets to 0.50% for up to $3.0 billion of unadjusted book value of assets and 0.40% of unadjusted book value of assets greater than $3.0 billion. In addition, the Company agreed to pay $5.8 million for certain furniture, fixtures, equipment, other assets and certain costs associated with the Merger.

The Company and ARCT III have made certain customary representations and warranties to each other in the Merger Agreement. Each of the companies has agreed, among other things, not to solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, discussion, offer or request from third parties regarding other proposals to acquire the Company or ARCT III, as applicable, and not to engage in any discussions or negotiations regarding any such proposal, or furnish to any third party non-public information regarding the Company or ARCT III, as applicable. Each of the companies has also agreed to certain other restrictions on their ability to respond to any such proposals. The Merger Agreement also includes certain termination rights for both the Company and ARCT III and provides that, in connection with the termination of the Merger Agreement, under specified circumstances, the Company or ARCT III, as applicable, may be required to pay to the other party reasonable out-of-pocket transaction expenses up to an amount equal to $10.0 million. The Merger Agreement does not provide for the payment of a customary break-up fee by any party thereto in the event of a termination of the Merger Agreement without a closing of the Merger.

The completion of the Merger is subject to certain conditions. Complete information on the Merger, including the Merger background, reasons for the Merger, who may vote, how to vote and the time and place of the Company stockholder meeting was included in a definitive proxy statement/prospectus.

Credit Facility

On February 14, 2013, ARCT III entered into an $875.0 million unsecured credit facility with Wells Fargo Bank, National Association acting as administrative agent (the "New Credit Facility"), which the Company will assume as of the consummation of the Merger. Capital One, N.A. and JP Morgan Chase Bank, N.A. will participate as documentation agents and RBS Citizens, N.A. and Regions Bank will act as syndication agents for the credit facility. The unsecured credit facility provides financing to ARCT III which can be increased, subject to certain conditions and through an additional commitment, to up to $1.0 billion.

The $875.0 million unsecured credit facility includes a $525.0 million term loan facility and a $350.0 million revolving credit facility. Loans under the credit facility will be priced at their applicable rate plus 160 to 220 basis points, based upon ARCT III's current leverage. To the extent that ARCT III or, upon the consummation of the Merger, the Company receives an investment grade credit rating from a major credit rating agency, borrowings under the facility will be priced at the applicable rate plus 115 to 200 basis points. The Company or ARCT III will have the ability to make fixed rate borrowings under this facility as well.

Additionally, upon consummation of the Merger, the Company's senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million will be paid off in full and terminated. As of December 31, 2012, there was $124.6 million outstanding under this facility.

Accounting Treatment for the Merger

The Company and ARCT III are considered to be entities under common control. Both entities’ advisors are wholly owned subsidiaries of the Sponsor. The Sponsor and its related parties have significant ownership interests in the Company and ARCT III through the ownership of shares of common stock and other equity interests. In addition, the advisors of both entities are contractually eligible to charge significant fees for their services to both of the companies including asset management fees, incentive fees and other fees. Due to the significance of these fees, the advisors and ultimately the Sponsor is determined to have a significant economic interest in both companies in addition to having the power to direct the activities of the companies through advisory agreement, which qualifies them as affiliated companies under common control in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The acquisition of an entity under common control is accounted for on the carryover basis of accounting whereby the assets and liabilities of the companies are recorded upon the merger on the same basis as they were carried by the companies on the merger date.

Merger Status

On February 26, 2013, the Company's stockholders approved the issuance of its common stock in connection with the Merger at a Special Meeting of its stockholders. More than 97 percent of the shares voting at the Special Meeting voted in favor of the issuance the Company's common stock in connection with the Merger, representing more than 55 percent of all outstanding shares.

On February 26, 2013, ARCT III's stockholders approved its Merger with the Company and the other transactions contemplated by the Merger Agreement at the Special Meeting of ARCT III's Stockholders. More than 98 percent of the shares voting at the Special Meeting voted in favor of the merger and the other transactions contemplated by the Merger Agreement, representing more than 68 percent of all outstanding shares.

As a result, the merger is expected to close on or about February 28, 2013.

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Derivatives and Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Interest Rate Derivatives [Table Text Block]

As of December 31, 2012, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk (dollar amount in thousands):

Interest Rate Derivative:	Number of Instruments	Notional Amount
Interest rate cap	1	$	50,000

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2012:

	Balance Sheet Location	December 31, 2012
Derivatives designated as hedging instruments:
Interest rate cap	Derivative, at fair value	$	—

Derivative Instruments and Hedging Activities Disclosure [Text Block]

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 year ended December 31, 2012 (amounts in thousands):

	Year Ended December 31, 2012
Amount of loss recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)	$	(12	)
Amount of loss reclassified from accumulated other comprehensive loss into income as interest expense (effective portion)	$	(1	)
Amount of gain (loss) recognized in income on derivative instruments (ineffective portion and amounts excluded from effectiveness testing)	$	—

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Merger Agreement Merger Agreement (Details) (USD $)			18 Months Ended							12 Months Ended				1 Months Ended			18 Months Ended
	Feb. 28, 2013	Dec. 31, 2012	Feb. 28, 2013 ARCT III Merger [Member]	Dec. 14, 2012 ARCT III Merger [Member]	Sep. 06, 2011 ARCT III Merger [Member]	Feb. 14, 2013 Unsecured Debt [Member] ARCT III [Member]	Feb. 14, 2013 Term Loan [Member] ARCT III [Member]	Dec. 31, 2011 Revolving Credit Facility [Member]	Feb. 14, 2013 Revolving Credit Facility [Member] ARCT III [Member]	Dec. 31, 2012 Option Two [Member] ARCT III Merger [Member]	Dec. 31, 2012 Common Stock Option One [Member] ARCT III Merger [Member]	Dec. 31, 2012 Cash [Member] Option Two [Member] ARCT III Merger [Member]	Feb. 26, 2013 ARCP [Member]	Dec. 31, 2012 ARCP [Member] ARCT III Merger [Member]	Feb. 14, 2013 ARCP [Member] ARCT III Merger [Member]	Feb. 26, 2013 ARCT III [Member]	Feb. 28, 2013 ARCT III [Member] ARCT III Merger [Member]	Dec. 14, 2012 Subordinated Participation Fees [Member] ARCT III Merger [Member]	Dec. 31, 2011 Maximum [Member] ARCT III [Member] ARCT III Merger [Member]	Dec. 31, 2011 Minimum [Member] ARCT III Merger [Member]	Dec. 14, 2012 Net Sale Proceeds, after Return of Capital Contributions and Annual Targeted Investor Return [Member] American Realty Capital Advisors III LLC [Member] ARCT III Merger [Member]	Feb. 28, 2013 External Credit Rating, Non Investment Grade [Member] Maximum [Member]	Feb. 28, 2013 External Credit Rating, Non Investment Grade [Member] Minimum [Member]	Feb. 28, 2013 External Credit Rating, Investment Grade [Member] Maximum [Member]	Feb. 28, 2013 External Credit Rating, Investment Grade [Member] Minimum [Member]	Feb. 28, 2013 Reduction of Credit Facility [Member]	Dec. 31, 2012 Line of Credit [Member]	Sep. 07, 2011 Line of Credit [Member] Revolving Credit Facility [Member]
Business Acquisition [Line Items]
Convertible stock issued during period, shares											0.95
Convertible stock issued during period, value												$ 12.00
Percentage of Consideration Paid in Stock										30.00%				30.00%
Subordinated Participation Fee Earned by Related Party																					$ 59,000,000
Percentage of Consideration Paid in Shares														70.00%
Share Price, ARCP Common Stock Assumption															$ 12.90			$ 12.26
Asset Management Fee Percentage, Option 1																	0.50%
Unadjusted Book Value of Assets																			3,000,000,000	3,000,000,000
Asset Management Fee Percentage, Option 2			0.40%
Purchase Price of Furniture, Fixtures and all Other Assets		1,200,000			5,800,000
Maximum out of pocket transaction expenses				10,000,000
Line of Credit Facility, Current Borrowing Capacity						875,000,000	525,000,000		350,000,000
Debt Instrument, Basis Spread on Variable Rate																						22000.00%	16000.00%	20000.00%	11500.00%
Debt to be Extinguished Upon Consummation of Merger																												150,000,000
Real Estate and Accumulated Depreciation, Amount of Encumbrances		141,000																									124,600,000
Bridge Loan	200,000,000																									125,000,000
Debt Instrument, Maximum Borrowing Capacity	1,200,000,000
Line of Credit Facility, Maximum Borrowing Capacity						1,000,000,000																					150,000,000
Real Estate and Accumulated Depreciation, Amount of Encumbrances								$ 42,400,000
Percentage of the Shares Voting, in Favor of the Merger													97.00%			98.00%
Percentage of Total Outstanding Shares Voting, in Favor of the Merger													100.00%			68.00%

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Convertible Preferred Stock (Details) (USD $)	1 Months Ended			0 Months Ended
	May 31, 2012 Series A Preferred Stock [Member]	Dec. 31, 2012 Series A Preferred Stock [Member]	Dec. 31, 2011 Series A Preferred Stock [Member]	Jul. 24, 2012 Series B Preferred Stock [Member]	Dec. 31, 2012 Series B Preferred Stock [Member]	Dec. 31, 2011 Series B Preferred Stock [Member]
Class of Stock [Line Items]
Shares Issued (in shares)	545,454			283,018
Proceeds from Issuance of stock	$ 6,000,000			$ 3,000,000
Proceeds from Issuance of stock, net	$ 5,800,000			$ 3,000,000
Liquidation Preference Per Share	$ 11.00	$ 11.00	$ 11.00	$ 10.60	$ 10.60	$ 10.60
Annualized rate of dividend (per share)	$ 0.77			$ 0.74
Redemption price per share	$ 11.00			$ 10.60

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Real estate investments, at cost:
Land	$ 34,345	$ 18,489
Buildings, fixtures and improvements	205,930	107,340
Acquired intangible lease assets	28,404
Finite-Lived Intangible Assets, Gross		11,044
Total real estate investments, at cost	268,679	136,873
Less: accumulated depreciation and amortization	(24,233)	(14,841)
Total real estate investments, net	244,446	122,032
Cash and cash equivalents	2,748	3,148
Prepaid expenses and other assets	3,219	1,798
Deferred costs, net	4,991	2,785
Assets held for sale	665	1,818
Total assets	256,069	131,581
LIABILITIES AND EQUITY
Mortgage notes payable	35,758	30,260
Senior secured revolving credit facility	124,604	42,407
Accounts payable and accrued expenses	3,782	858
Deferred rent	763	724
Total liabilities	164,907	74,249
Common stock, $0.01 par value, 240,000,000 shares authorized, 11,157,643 and 7,323,434 issued and outstanding at December 31, 2012 and 2011, respectively	112	73
Additional paid-in capital	101,548	57,582
Accumulated other comprehensive loss	(11)	0
Accumulated deficit	(19,705)	(4,025)
Stockholders' Equity Attributable to Parent	81,952	53,630
Total stockholders’ equity	91,162	57,332
Non-controlling interests	9,210	3,702
Total liabilities and equity	256,069	131,581
Series A Preferred Stock [Member]
LIABILITIES AND EQUITY
Series A convertible preferred stock, $0.01 par value, 545,454 and 0 shares (liquidation preference $11.00 per share) authorized, issued and outstanding at December 31, 2012 and 2011, respectively	5	0
Series B Preferred Stock [Member]
LIABILITIES AND EQUITY
Series A convertible preferred stock, $0.01 par value, 545,454 and 0 shares (liquidation preference $11.00 per share) authorized, issued and outstanding at December 31, 2012 and 2011, respectively	$ 3	$ 0

XML

Real Estate Investments (Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
MICHIGAN
Revenues from External Customers and Long-Lived Assets [Line Items]
Entity Wide Revenue, Major State, Percentage	15.20%	23.40%
SOUTH CAROLINA
Revenues from External Customers and Long-Lived Assets [Line Items]
Entity Wide Revenue, Major State, Percentage	10.60%	23.40%
IOWA
Revenues from External Customers and Long-Lived Assets [Line Items]
Entity Wide Revenue, Major State, Percentage	10.00%
OHIO
Revenues from External Customers and Long-Lived Assets [Line Items]
Entity Wide Revenue, Major State, Percentage	10.80%	16.80%

XML

CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	1 Months Ended	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011
Cash flows from operating activities:
Net loss	$ 0	$ (7,549)	$ (2,680)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	0	7,275	1,465
Amortization of intangible lease assets	0	2,047	159
Amortization of deferred costs	0	817	195
Amortization of above-market lease asset	0	116	0
Loss on held for sale properties	0	(600)	(815)
Loss on held for sale properties	0	(100)	815
Share-based compensation	0	1,170	182
Changes in assets and liabilities:
Prepaid expenses and other assets	0	(1,467)	(314)
Accounts payable and accrued expenses	0	3,020	374
Deferred rent	0	39	724
Net cash provided by operating activities	0	6,068	920
Cash flows from investing activities:
Investments in real estate	0	(125,400)	(17,528)
Payments for Capital Improvements	0	(54)	0
Proceeds from sale of property held for sale	0	553	0
Net cash used in investing activities	0	(124,901)	(17,528)
Cash flows from financing activities:
Proceeds from mortgage notes payable	0	5,498	16,410
Proceeds from senior secured revolving credit facility	0	82,319	2,066
Payments on senior secured revolving credit facility	0	(122)	(11,159)
Proceeds from issuances of preferred shares	0	9,000	0
Proceeds from issuances of common stock	0	34,935	21,766
Payments of offering costs and fees related to stock issuances	0	(1,194)	(5,346)
Payments of deferred financing costs	0	(3,034)	(2,464)
Distributions to non-controlling interest holders	0	(573)	(68)
Distributions paid	0	(8,396)	(1,449)
Net cash provided by financing activities	0	118,433	19,756
Net change in cash and cash equivalents	0	(400)	3,148
Cash and cash equivalents, beginning of period	0	3,148	0
Cash and cash equivalents, end of period	0	2,748	3,148
Supplemental Disclosures:
Cash paid for interest	0	3,413	590
Cash paid for income taxes	0	104	0
OP units issued to acquire real estate investment	0	6,352	0
Initial proceeds from senior secured revolving credit facility used to pay down mortgages assumed in Formation Transactions	0	0	51,500
Mortgage note payable contributed in Formation Transactions	0	0	13,850
Reclassification of deferred offering costs	$ 279	$ 0	$ 0

XML

Related Party Transactions and Arrangements (Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Incurred [Member] | Total operation fees and reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	$ 5,076	$ 868
Forgiven [Member] | Total operation fees and reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	1,746	202
Payable [Member] | Total operation fees and reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	382	0
Nonrecurring Fees [Member] | Incurred [Member] | Acquisition and Related Expenses [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	2,353	400
Nonrecurring Fees [Member] | Incurred [Member] | Financing fees and related cost reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	845	131
Nonrecurring Fees [Member] | Incurred [Member] | Other expense reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	132	135
Nonrecurring Fees [Member] | Forgiven [Member] | Acquisition and Related Expenses [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	0	0
Nonrecurring Fees [Member] | Forgiven [Member] | Financing fees and related cost reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	0	0
Nonrecurring Fees [Member] | Forgiven [Member] | Other expense reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	0	0
Nonrecurring Fees [Member] | Payable [Member] | Acquisition and Related Expenses [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	364	0
Nonrecurring Fees [Member] | Payable [Member] | Financing fees and related cost reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	0	0
Nonrecurring Fees [Member] | Payable [Member] | Other expense reimbursements [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	18	0
Recurring Fees [Member] | Incurred [Member] | Base management fees [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	975	202
Recurring Fees [Member] | Incurred [Member] | Incentive fees [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	771	0
Recurring Fees [Member] | Forgiven [Member] | Base management fees [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	975	202
Recurring Fees [Member] | Forgiven [Member] | Incentive fees [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	771	0
Recurring Fees [Member] | Payable [Member] | Base management fees [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	0	0
Recurring Fees [Member] | Payable [Member] | Incentive fees [Member]
Related Party Transaction [Line Items]
Related party operation fees and reimbursements	$ 0	$ 0

XML

Related Party Transactions and Arrangements (Tables)

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Schedule of Selling Commissions and Dealer Manager Fees Payable to Affiliate [Table Text Block]

The following table details the results of such activities related to RCS (amounts in thousands):

	Year Ended December 31,
	2012			2011
Total commissions and fees paid to affiliated Dealer Manager	$	14	(1)	$	1,601

_______________________________________________

(1) In connection with the Company's follow-on offering in June 2012, the underwriters paid RCS a fee of $13,500 for providing advisory services to the Company.

Schedule Of Offering Costs Reimbursements to Related Party [Table Text Block]

The Company reimbursed the Manager for services relating to the IPO and the follow-on offerings. The following table details the results of such activities related to offering costs reimbursed to the Manager (amounts in thousands):

	Year Ended December 31,
	2012		2011
Offering expense reimbursements	$	183	$	—

Schedule of Amount Contractually Due and Forgiven in Connection With Operation Related Services [Table Text Block]

The following table details amounts incurred by the Company and contractually due to the Sponsor and the Manager and forgiven in connection with the operations related services described above (amounts in thousands):

	Year Ended December 31,								Payable as of
	2012				2011				December 31,
	Incurred		Forgiven		Incurred		Forgiven		2012		2011
One-time fees:
Acquisition fees and related cost reimbursements	$	2,353	$	—	$	400	$	—	$	364	$	—
Financing fees and related cost reimbursements	845		—		131		—		—		—
Other expense reimbursements	132		—		135		—		18		—
On-going fees:
Base management fees	975		975		202		202		—		—
Incentive fees	771		771		—		—		—		—
Total operational fees and reimbursements	$	5,076	$	1,746	$	868	$	202	$	382	$	—

Schedule of General and Administrative Expenses Absorbed by Affiliate [Table Text Block]

The following table details general and administrative expenses absorbed by the Sponsor and paid to the Company during the years ended December 31, 2012 and 2011 (amounts in thousands):

	Year Ended December 31,				Receivable as of December 31,
	2012		2011		2012		2011
General and administrative expenses absorbed	$	164	$	—	$	—	$	—

XML

Schedule III Real Estate and Accumulated Depreciation Schedule III Real Estate and Accumulated Depreciation (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	$ 18,873,000	$ 11,648,000
Real Estate and Accumulated Depreciation, Amount of Encumbrances	141,000
Land	34,345,000	18,489,000
Buildings, fixtures and improvements	205,930,000	107,340,000
Real Estate, Federal Income Tax Basis	0
Real Estate, Gross	240,221,000
Gains (Losses) on Sales of Other Real Estate	114,392,000
Business Acquisition, Purchase Price Allocation, Tangible Assets	240,221,000	125,829,000
Real Estate Accumulated Depreciation, Depreciation Expense	7,225,000
Real Estate Investments, Acquired Intangible Assets, Total	17,400,000
Finite-Lived Intangible Assets, Accumulated Amortization	5,400,000
Business Acquisition, Cost of Acquired Entity, Purchase Price	1,200,000
Caro, Mi [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	40,000
Real Estate, Gross	782,000
Charlotte, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	42,000
Real Estate, Federal Income Tax Basis	0
Real Estate, Gross	820,000
Flint, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	32,000
Real Estate, Gross	667,000
Livonia, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	38,000
Real Estate, Gross	839,000
Livonia, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	281,000
Real Estate, Gross	1,737,000
SS Marie, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	41,000
Real Estate, Gross	746,000
Ypsilanti, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	29,000
Real Estate, Gross	568,000
Alton, TX [Member] | Advance Auto II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	9,000
Real Estate, Gross	1,127,000
Bardstown, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	5,000
Real Estate, Gross	1,362,000
Brandenburg, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	3,000
Real Estate, Gross	928,000
Hardinsburg, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	4,000
Real Estate, Gross	939,000
Leitchfield, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	4,000
Real Estate, Gross	1,043,000
Albany, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	839,000
Hazlehurst, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	564,000
Hinesville, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	782,000
Thomasville, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	628,000
Dothan, AL [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	652,000
Enterprise, AL [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	700,000
Perry, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	696,000
Cairo, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	465,000
Springfield, OH [Member] | Advance Auto V [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	1,534,000
Higganum, CT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	178,000
Real Estate, Gross	1,142,000
New London, CT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	98,000
Real Estate, Gross	628,000
Smyrna, DE [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	171,000
Real Estate, Gross	1,219,000
Wilmington, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	268,000
Real Estate, Gross	2,202,000
Chicago, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	276,000
Real Estate, Gross	1,778,000
Chicago II, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	198,000
Real Estate, Gross	1,273,000
Lyons, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	222,000
Real Estate, Gross	1,426,000
Elmwood Park, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	376,000
Real Estate, Gross	2,872,000
Alsip, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	234,000
Real Estate, Gross	1,506,000
Evergreen Park, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	173,000
Real Estate, Gross	1,111,000
Clinton Township, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	606,000
Real Estate, Gross	3,824,000
Southfield, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	299,000
Real Estate, Gross	1,888,000
Richmond, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	181,000
Real Estate, Gross	1,119,000
St. Clair Shores, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	332,000
Real Estate, Gross	2,057,000
Lathrup Village, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	293,000
Real Estate, Gross	1,885,000
Warren, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	184,000
Real Estate, Gross	1,187,000
Warren, MI [Member] | Walgreens III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	15,000
Real Estate, Gross	3,739,000
Dearborn, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	353,000
Real Estate, Gross	2,895,000
Dearborn II, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	313,000
Real Estate, Gross	2,569,000
Detroit, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	121,000
Real Estate, Gross	748,000
Detroit, MI [Member] | Family Dollar III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	5,000
Real Estate, Gross	1,299,000
Highland Park, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	161,000
Real Estate, Gross	998,000
Detroit II, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	220,000
Real Estate, Gross	1,363,000
Harper Woods, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	222,000
Real Estate, Gross	1,378,000
Grosse Pointe, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	408,000
Real Estate, Gross	2,732,000
Utica, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	375,000
Real Estate, Gross	2,509,000
Pittsfield, NH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	166,000
Real Estate, Gross	1,068,000
Rollinsford, NH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	81,000
Real Estate, Gross	522,000
Albany, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	189,000
Real Estate, Gross	1,547,000
Johnstown, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	132,000
Real Estate, Gross	1,086,000
Schenectady, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	237,000
Real Estate, Gross	1,947,000
Vails Gate, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	231,000
Real Estate, Gross	1,894,000
Whitehall, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	86,000
Real Estate, Gross	706,000
Greene, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	176,000
Real Estate, Gross	1,443,000
Whitesboro, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	106,000
Real Estate, Gross	869,000
Amherst (Buffalo), NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	208,000
Real Estate, Gross	1,586,000
East Aurora, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	142,000
Real Estate, Gross	1,081,000
Rochester, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	145,000
Real Estate, Gross	1,109,000
Port Jervis, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	134,000
Real Estate, Gross	954,000
Mentor, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	185,000
Real Estate, Gross	1,189,000
Northfield, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	329,000
Real Estate, Gross	2,114,000
Willoughby, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	409,000
Real Estate, Gross	2,634,000
Cleveland, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	263,000
Real Estate, Gross	1,596,000
Cleveland II, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	230,000
Real Estate, Gross	1,400,000
Cleveland III, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	200,000
Real Estate, Gross	1,213,000
Lakewood, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	159,000
Real Estate, Gross	1,307,000
Rocky River, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	230,000
Real Estate, Federal Income Tax Basis	0
Real Estate, Gross	1,885,000
Broadview Heights, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	188,000
Real Estate, Gross	1,341,000
Boardman, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	308,000
Real Estate, Gross	1,869,000
Brunswick, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	205,000
Real Estate, Gross	1,243,000
Wadsworth, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	173,000
Real Estate, Gross	1,051,000
Alliance, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	224,000
Real Estate, Gross	1,360,000
Louisville, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	209,000
Real Estate, Gross	1,271,000
Massillon, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	314,000
Real Estate, Gross	1,911,000
Massillon II, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	233,000
Real Estate, Gross	1,414,000
Ambridge, PA [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	175,000
Real Estate, Gross	1,432,000
Monesson, PA [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	161,000
Real Estate, Gross	1,321,000
Narberth, PA [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	341,000
Real Estate, Gross	2,801,000
Poultney, VT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	140,000
Real Estate, Gross	996,000
St. Albans, VT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	132,000
Real Estate, Gross	939,000
White River Junction, VT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	171,000
Real Estate, Gross	1,222,000
Alpharetta, GA [Member] | CVS [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	13,000
Real Estate, Gross	1,430,000
Vidalia, GA [Member] | CVS [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	17,000
Real Estate, Gross	1,473,000
Nashville, TN [Member] | CVS [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	17,000
Real Estate, Gross	1,351,000
Bella Vista, AR [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	20,000
Real Estate, Gross	431,000
Carlisle, AR [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	16,000
Real Estate, Gross	258,000
Green Forest, AR [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	19,000
Real Estate, Gross	345,000
Jonesboro, IL [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	20,000
Real Estate, Gross	386,000
Appleton City, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	8,000
Real Estate, Gross	146,000
Ash Grove, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	21,000
Real Estate, Gross	350,000
Ashland, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	26,000
Real Estate, Gross	468,000
Bernie, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	21,000
Real Estate, Gross	349,000
Bloomfield, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	14,000
Real Estate, Gross	232,000
Carterville, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	13,000
Real Estate, Gross	202,000
Clarkton, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	23,000
Real Estate, Gross	373,000
Diamond, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	11,000
Real Estate, Gross	219,000
Ellisnore, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	38,000
Real Estate, Gross	609,000
Hallsville, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	17,000
Real Estate, Gross	292,000
Lawson, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	11,000
Real Estate, Gross	191,000
Linbourne, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	36,000
Real Estate, Gross	616,000
Qulin, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	38,000
Real Estate, Gross	603,000
Steele, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	39,000
Real Estate, Gross	629,000
Strafford, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	30,000
Real Estate, Gross	512,000
Commerce, OK [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	22,000
Real Estate, Gross	379,000
Ash Flat, AR [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	4,000
Real Estate, Gross	176,000
Flippin, AZ [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	2,000
Real Estate, Gross	117,000
Panama City [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	7,000
Real Estate, Gross	397,000
Caney, KS [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	5,000
Real Estate, Gross	209,000
Clever, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	15,000
Real Estate, Gross	678,000
Concordia, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	5,000
Real Estate, Gross	201,000
Greenfield, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	11,000
Real Estate, Gross	420,000
Humansville, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	8,000
Real Estate, Gross	346,000
Oak Grove, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	3,000
Real Estate, Gross	133,000
Palmya, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	6,000
Real Estate, Federal Income Tax Basis	0
Real Estate, Gross	265,000
Senath, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	16,000
Real Estate, Gross	613,000
Seneca, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	5,000
Real Estate, Gross	236,000
St. James, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	7,000
Real Estate, Gross	325,000
Willow Springs, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	6,000
Real Estate, Gross	237,000
Winona, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	4,000
Real Estate, Gross	207,000
Nowata, OK [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	4,000
Real Estate, Gross	171,000
Brookston, IN [Member] | Family Dollar [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	10,000
Real Estate, Gross	841,000
Lenox, GA [Member] | Family Dollar II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	8,000
Real Estate, Gross	899,000
Chillicothe, OH [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	46,000
Real Estate, Gross	1,427,000
Evansville, IN [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	95,000
Real Estate, Gross	3,326,000
Kankakee, IL [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	39,000
Real Estate, Gross	1,298,000
London, KY [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	38,000
Real Estate, Gross	1,272,000
Mt. Vernon, IL [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	45,000
Real Estate, Gross	1,481,000
Mt. Pleasant, PA [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	65,000
Real Estate, Gross	2,268,000
Chico, CA [Member] | Fedex II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	28,000
Real Estate, Gross	3,084,000
Warsaw, NC [Member] | Frensenius [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	11,000
Real Estate, Gross	1,503,000
Freeport, NY [Member] | GSA I [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	185,000
Real Estate, Gross	4,215,000
Plattsburg, NY [Member] | GSA, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	126,000
Real Estate, Gross	5,080,000
Mobile, AL [Member] | GSA III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	140,000
Real Estate, Gross	5,363,000
Warren, PA [Member] | GSA IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	84,000
Real Estate, Gross	3,407,000
Gloucester, VA [Member] | GSA V [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	45,000
Real Estate, Gross	1,915,000
Columbia, SC [Member] | Home Depot [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	2,088,000
Real Estate and Accumulated Depreciation, Amount of Encumbrances	13,850
Real Estate, Federal Income Tax Basis	0
Real Estate, Gross	18,374,000
Columbus, OH [Member] | Iron Mountian [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	56,000
Real Estate, Gross	4,047,000
Davenport, IA [Member] | John Deere [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	785,000
Real Estate, Gross	23,213,000
Dallas, TX [Member] | Mrs. Baird's [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	124,000
Real Estate, Gross	4,530,000
Chester, NJ [Member] | Reckitt Benckiser [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	128,000
Real Estate, Gross	8,858,000
Tampa, FL [Member] | Reckitt Benckiser [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate and Accumulated Depreciation, Amount of Encumbrances	5,500
Tampa, FL [Member] | Synovus Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	0
Real Estate, Gross	3,282,000
Rio Grande City, TX [Member] | Tractor Supply [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	26,000
Real Estate, Gross	1,564,000
Myrtle Beach, SC [Member] | Walgreens [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	125,000
Real Estate, Gross	2,077,000
Eastpointe, MI [Member] | Walgreens II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	147,000
Real Estate, Gross	3,340,000
Troy, MI [Member] | Walgreens IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate Accumulated Depreciation	9,000
Real Estate, Gross	1,896,000
Assets at cost [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	34,345,000
Buildings, fixtures and improvements	205,876,000
Assets at cost [Member] | Caro, Mi [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	117,000
Buildings, fixtures and improvements	665,000
Assets at cost [Member] | Charlotte, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	123,000
Buildings, fixtures and improvements	697,000
Assets at cost [Member] | Flint, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	133,000
Buildings, fixtures and improvements	534,000
Assets at cost [Member] | Livonia, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	210,000
Buildings, fixtures and improvements	629,000
Assets at cost [Member] | Livonia, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	261,000
Buildings, fixtures and improvements	1,476,000
Assets at cost [Member] | SS Marie, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	75,000
Buildings, fixtures and improvements	671,000
Assets at cost [Member] | Ypsilanti, MI [Member] | Advance Auto [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	85,000
Buildings, fixtures and improvements	483,000
Assets at cost [Member] | Alton, TX [Member] | Advance Auto II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	169,000
Buildings, fixtures and improvements	958,000
Assets at cost [Member] | Bardstown, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	272,000
Buildings, fixtures and improvements	1,090,000
Assets at cost [Member] | Brandenburg, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	186,000
Buildings, fixtures and improvements	742,000
Assets at cost [Member] | Hardinsburg, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	94,000
Buildings, fixtures and improvements	845,000
Assets at cost [Member] | Leitchfield, KY [Member] | Advance Auto III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	104,000
Buildings, fixtures and improvements	939,000
Assets at cost [Member] | Albany, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	210,000
Buildings, fixtures and improvements	629,000
Assets at cost [Member] | Hazlehurst, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	113,000
Buildings, fixtures and improvements	451,000
Assets at cost [Member] | Hinesville, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	352,000
Buildings, fixtures and improvements	430,000
Assets at cost [Member] | Thomasville, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	251,000
Buildings, fixtures and improvements	377,000
Assets at cost [Member] | Dothan, AL [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	326,000
Buildings, fixtures and improvements	326,000
Assets at cost [Member] | Enterprise, AL [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	280,000
Buildings, fixtures and improvements	420,000
Assets at cost [Member] | Perry, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	209,000
Buildings, fixtures and improvements	487,000
Assets at cost [Member] | Cairo, GA [Member] | Advance Auto IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	140,000
Buildings, fixtures and improvements	325,000
Assets at cost [Member] | Springfield, OH [Member] | Advance Auto V [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	460,000
Buildings, fixtures and improvements	1,074,000
Assets at cost [Member] | Higganum, CT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	171,000
Buildings, fixtures and improvements	971,000
Assets at cost [Member] | New London, CT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	94,000
Buildings, fixtures and improvements	534,000
Assets at cost [Member] | Smyrna, DE [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	183,000
Buildings, fixtures and improvements	1,036,000
Assets at cost [Member] | Wilmington, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	330,000
Buildings, fixtures and improvements	1,872,000
Assets at cost [Member] | Chicago, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	267,000
Buildings, fixtures and improvements	1,511,000
Assets at cost [Member] | Chicago II, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	191,000
Buildings, fixtures and improvements	1,082,000
Assets at cost [Member] | Lyons, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	214,000
Buildings, fixtures and improvements	1,212,000
Assets at cost [Member] | Elmwood Park, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	431,000
Buildings, fixtures and improvements	2,441,000
Assets at cost [Member] | Alsip, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	226,000
Buildings, fixtures and improvements	1,280,000
Assets at cost [Member] | Evergreen Park, IL [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	167,000
Buildings, fixtures and improvements	944,000
Assets at cost [Member] | Clinton Township, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	574,000
Buildings, fixtures and improvements	3,250,000
Assets at cost [Member] | Southfield, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	283,000
Buildings, fixtures and improvements	1,605,000
Assets at cost [Member] | Richmond, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	168,000
Buildings, fixtures and improvements	951,000
Assets at cost [Member] | St. Clair Shores, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	309,000
Buildings, fixtures and improvements	1,748,000
Assets at cost [Member] | Lathrup Village, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	283,000
Buildings, fixtures and improvements	1,602,000
Assets at cost [Member] | Warren, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	178,000
Buildings, fixtures and improvements	1,009,000
Assets at cost [Member] | Warren, MI [Member] | Walgreens III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	748,000
Buildings, fixtures and improvements	2,991,000
Assets at cost [Member] | Dearborn, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	434,000
Buildings, fixtures and improvements	2,461,000
Assets at cost [Member] | Dearborn II, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	385,000
Buildings, fixtures and improvements	2,184,000
Assets at cost [Member] | Detroit, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	112,000
Buildings, fixtures and improvements	636,000
Assets at cost [Member] | Detroit, MI [Member] | Family Dollar III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	130,000
Buildings, fixtures and improvements	1,169,000
Assets at cost [Member] | Highland Park, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	150,000
Buildings, fixtures and improvements	848,000
Assets at cost [Member] | Detroit II, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	204,000
Buildings, fixtures and improvements	1,159,000
Assets at cost [Member] | Harper Woods, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	207,000
Buildings, fixtures and improvements	1,171,000
Assets at cost [Member] | Grosse Pointe, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	410,000
Buildings, fixtures and improvements	2,322,000
Assets at cost [Member] | Utica, MI [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	376,000
Buildings, fixtures and improvements	2,133,000
Assets at cost [Member] | Pittsfield, NH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	160,000
Buildings, fixtures and improvements	908,000
Assets at cost [Member] | Rollinsford, NH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	78,000
Buildings, fixtures and improvements	444,000
Assets at cost [Member] | Albany, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	232,000
Buildings, fixtures and improvements	1,315,000
Assets at cost [Member] | Johnstown, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	163,000
Buildings, fixtures and improvements	923,000
Assets at cost [Member] | Schenectady, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	292,000
Buildings, fixtures and improvements	1,655,000
Assets at cost [Member] | Vails Gate, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	284,000
Buildings, fixtures and improvements	1,610,000
Assets at cost [Member] | Whitehall, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	106,000
Buildings, fixtures and improvements	600,000
Assets at cost [Member] | Greene, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	216,000
Buildings, fixtures and improvements	1,227,000
Assets at cost [Member] | Whitesboro, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	130,000
Buildings, fixtures and improvements	739,000
Assets at cost [Member] | Amherst (Buffalo), NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	238,000
Buildings, fixtures and improvements	1,348,000
Assets at cost [Member] | East Aurora, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	162,000
Buildings, fixtures and improvements	919,000
Assets at cost [Member] | Rochester, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	166,000
Buildings, fixtures and improvements	943,000
Assets at cost [Member] | Port Jervis, NY [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	143,000
Buildings, fixtures and improvements	811,000
Assets at cost [Member] | Mentor, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	178,000
Buildings, fixtures and improvements	1,011,000
Assets at cost [Member] | Northfield, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	317,000
Buildings, fixtures and improvements	1,797,000
Assets at cost [Member] | Willoughby, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	395,000
Buildings, fixtures and improvements	2,239,000
Assets at cost [Member] | Cleveland, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	239,000
Buildings, fixtures and improvements	1,357,000
Assets at cost [Member] | Cleveland II, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	210,000
Buildings, fixtures and improvements	1,190,000
Assets at cost [Member] | Cleveland III, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	182,000
Buildings, fixtures and improvements	1,031,000
Assets at cost [Member] | Lakewood, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	196,000
Buildings, fixtures and improvements	1,111,000
Assets at cost [Member] | Rocky River, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	283,000
Buildings, fixtures and improvements	1,602,000
Assets at cost [Member] | Broadview Heights, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	201,000
Buildings, fixtures and improvements	1,140,000
Assets at cost [Member] | Boardman, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	280,000
Buildings, fixtures and improvements	1,589,000
Assets at cost [Member] | Brunswick, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	186,000
Buildings, fixtures and improvements	1,057,000
Assets at cost [Member] | Wadsworth, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	158,000
Buildings, fixtures and improvements	893,000
Assets at cost [Member] | Alliance, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	204,000
Buildings, fixtures and improvements	1,156,000
Assets at cost [Member] | Louisville, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	191,000
Buildings, fixtures and improvements	1,080,000
Assets at cost [Member] | Massillon, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	287,000
Buildings, fixtures and improvements	1,624,000
Assets at cost [Member] | Massillon II, OH [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	212,000
Buildings, fixtures and improvements	1,202,000
Assets at cost [Member] | Ambridge, PA [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	215,000
Buildings, fixtures and improvements	1,217,000
Assets at cost [Member] | Monesson, PA [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	198,000
Buildings, fixtures and improvements	1,123,000
Assets at cost [Member] | Narberth, PA [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	420,000
Buildings, fixtures and improvements	2,381,000
Assets at cost [Member] | Poultney, VT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	149,000
Buildings, fixtures and improvements	847,000
Assets at cost [Member] | St. Albans, VT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	141,000
Buildings, fixtures and improvements	798,000
Assets at cost [Member] | White River Junction, VT [Member] | Citizens Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	183,000
Buildings, fixtures and improvements	1,039,000
Assets at cost [Member] | Alpharetta, GA [Member] | CVS [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	572,000
Buildings, fixtures and improvements	858,000
Assets at cost [Member] | Vidalia, GA [Member] | CVS [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	368,000
Buildings, fixtures and improvements	1,105,000
Assets at cost [Member] | Nashville, TN [Member] | CVS [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	203,000
Buildings, fixtures and improvements	1,148,000
Assets at cost [Member] | Bella Vista, AR [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	129,000
Buildings, fixtures and improvements	302,000
Assets at cost [Member] | Carlisle, AR [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	13,000
Buildings, fixtures and improvements	245,000
Assets at cost [Member] | Green Forest, AR [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	52,000
Buildings, fixtures and improvements	293,000
Assets at cost [Member] | Jonesboro, IL [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	77,000
Buildings, fixtures and improvements	309,000
Assets at cost [Member] | Appleton City, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	22,000
Buildings, fixtures and improvements	124,000
Assets at cost [Member] | Ash Grove, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	35,000
Buildings, fixtures and improvements	315,000
Assets at cost [Member] | Ashland, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	70,000
Buildings, fixtures and improvements	398,000
Assets at cost [Member] | Bernie, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	35,000
Buildings, fixtures and improvements	314,000
Assets at cost [Member] | Bloomfield, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	23,000
Buildings, fixtures and improvements	209,000
Assets at cost [Member] | Carterville, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	10,000
Buildings, fixtures and improvements	192,000
Assets at cost [Member] | Clarkton, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	19,000
Buildings, fixtures and improvements	354,000
Assets at cost [Member] | Diamond, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	44,000
Buildings, fixtures and improvements	175,000
Assets at cost [Member] | Ellisnore, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	30,000
Buildings, fixtures and improvements	579,000
Assets at cost [Member] | Hallsville, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	29,000
Buildings, fixtures and improvements	263,000
Assets at cost [Member] | Lawson, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	29,000
Buildings, fixtures and improvements	162,000
Assets at cost [Member] | Linbourne, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	62,000
Buildings, fixtures and improvements	554,000
Assets at cost [Member] | Qulin, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	30,000
Buildings, fixtures and improvements	573,000
Assets at cost [Member] | Steele, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	31,000
Buildings, fixtures and improvements	598,000
Assets at cost [Member] | Strafford, MO [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	51,000
Buildings, fixtures and improvements	461,000
Assets at cost [Member] | Commerce, OK [Member] | Dollar General [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	38,000
Buildings, fixtures and improvements	341,000
Assets at cost [Member] | Ash Flat, AR [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	44,000
Buildings, fixtures and improvements	132,000
Assets at cost [Member] | Flippin, AZ [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	53,000
Buildings, fixtures and improvements	64,000
Assets at cost [Member] | Panama City [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	139,000
Buildings, fixtures and improvements	258,000
Assets at cost [Member] | Caney, KS [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	31,000
Buildings, fixtures and improvements	178,000
Assets at cost [Member] | Clever, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	136,000
Buildings, fixtures and improvements	542,000
Assets at cost [Member] | Concordia, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	40,000
Buildings, fixtures and improvements	161,000
Assets at cost [Member] | Greenfield, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	42,000
Buildings, fixtures and improvements	378,000
Assets at cost [Member] | Humansville, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	69,000
Buildings, fixtures and improvements	277,000
Assets at cost [Member] | Oak Grove, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	27,000
Buildings, fixtures and improvements	106,000
Assets at cost [Member] | Palmya, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	40,000
Buildings, fixtures and improvements	225,000
Assets at cost [Member] | Senath, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	61,000
Buildings, fixtures and improvements	552,000
Assets at cost [Member] | Seneca, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	47,000
Buildings, fixtures and improvements	189,000
Assets at cost [Member] | St. James, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	81,000
Buildings, fixtures and improvements	244,000
Assets at cost [Member] | Willow Springs, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	24,000
Buildings, fixtures and improvements	213,000
Assets at cost [Member] | Winona, MO [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	52,000
Buildings, fixtures and improvements	155,000
Assets at cost [Member] | Nowata, OK [Member] | Dollar General, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	43,000
Buildings, fixtures and improvements	128,000
Assets at cost [Member] | Brookston, IN [Member] | Family Dollar [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	126,000
Buildings, fixtures and improvements	715,000
Assets at cost [Member] | Lenox, GA [Member] | Family Dollar II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	90,000
Buildings, fixtures and improvements	809,000
Assets at cost [Member] | Chillicothe, OH [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	143,000
Buildings, fixtures and improvements	1,284,000
Assets at cost [Member] | Evansville, IN [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	665,000
Buildings, fixtures and improvements	2,661,000
Assets at cost [Member] | Kankakee, IL [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	195,000
Buildings, fixtures and improvements	1,103,000
Assets at cost [Member] | London, KY [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	191,000
Buildings, fixtures and improvements	1,081,000
Assets at cost [Member] | Mt. Vernon, IL [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	222,000
Buildings, fixtures and improvements	1,259,000
Assets at cost [Member] | Mt. Pleasant, PA [Member] | FedEx [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	454,000
Buildings, fixtures and improvements	1,814,000
Assets at cost [Member] | Chico, CA [Member] | Fedex II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	308,000
Buildings, fixtures and improvements	2,776,000
Assets at cost [Member] | Warsaw, NC [Member] | Frensenius [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	75,000
Buildings, fixtures and improvements	1,428,000
Assets at cost [Member] | Freeport, NY [Member] | GSA I [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	843,000
Buildings, fixtures and improvements	3,372,000
Assets at cost [Member] | Plattsburg, NY [Member] | GSA, II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	508,000
Buildings, fixtures and improvements	4,572,000
Assets at cost [Member] | Mobile, AL [Member] | GSA III [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	268,000
Buildings, fixtures and improvements	5,095,000
Assets at cost [Member] | Warren, PA [Member] | GSA IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	341,000
Buildings, fixtures and improvements	3,066,000
Assets at cost [Member] | Gloucester, VA [Member] | GSA V [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	287,000
Buildings, fixtures and improvements	1,628,000
Assets at cost [Member] | Columbia, SC [Member] | Home Depot [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	2,911,000
Buildings, fixtures and improvements	15,463,000
Assets at cost [Member] | Columbus, OH [Member] | Iron Mountian [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	405,000
Buildings, fixtures and improvements	3,642,000
Assets at cost [Member] | Davenport, IA [Member] | John Deere [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	1,161,000
Buildings, fixtures and improvements	22,052,000
Assets at cost [Member] | Dallas, TX [Member] | Mrs. Baird's [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	453,000
Buildings, fixtures and improvements	4,077,000
Assets at cost [Member] | Chester, NJ [Member] | Reckitt Benckiser [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	886,000
Buildings, fixtures and improvements	7,972,000
Assets at cost [Member] | Tampa, FL [Member] | Synovus Bank [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	985,000
Buildings, fixtures and improvements	2,297,000
Assets at cost [Member] | Rio Grande City, TX [Member] | Tractor Supply [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	469,000
Buildings, fixtures and improvements	1,095,000
Assets at cost [Member] | Myrtle Beach, SC [Member] | Walgreens [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	0
Buildings, fixtures and improvements	2,077,000
Assets at cost [Member] | Eastpointe, MI [Member] | Walgreens II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	668,000
Buildings, fixtures and improvements	2,672,000
Assets at cost [Member] | Troy, MI [Member] | Walgreens IV [Member]
Real Estate and Accumulated Depreciation [Line Items]
Land	0
Buildings, fixtures and improvements	1,896,000
Line of Credit [Member]
Real Estate and Accumulated Depreciation [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	150,000,000
Real Estate and Accumulated Depreciation, Amount of Encumbrances	124,600,000
Mortgage Notes Payable [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate and Accumulated Depreciation, Amount of Encumbrances	160,000
Mortgage Notes Payable [Member] | Multi Tenant [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate and Accumulated Depreciation, Amount of Encumbrances	4,500,000
Mortgage Notes Payable [Member] | Multi Tenant II [Member]
Real Estate and Accumulated Depreciation [Line Items]
Real Estate and Accumulated Depreciation, Amount of Encumbrances	$ 11,900,000

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Discontinued Operations and Properties Held for Sale

12 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Properties Held for Sale

Discontinued Operations and Properties Held for Sale

The Company separately classifies properties held for sale in the accompanying consolidated balance sheets and operating results for those properties as discontinued operations in the accompanying consolidated statements of operations and comprehensive loss. In the normal course of business, changes in the market may compel the Company to decide to classify a property as held for sale or reclassify a property that is designated as held for sale back to held for investment. In these situations, the property is transferred to held for sale or back to held for investment at the lesser of fair value or depreciated cost. As of December 31, 2012 and 2011, the Company held one and two vacant properties, respectively, which were classified as held for sale on the accompanying respective balance sheets.

On July 1, 2012, the Company sold one of the vacant properties, which was located in Havertown, PA, for net proceeds of $0.6 million and recorded a loss on held for sale properties of $0.5 million. Additionally, in 2012, the Company recorded an impairment on assets held for sale of $0.1 million on its remaining property classified as held for sale.

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Net Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following is a summary of the basic and diluted net loss per share computation for the years ended December 31, 2012 and 2011. The Company had no income or loss for the period from December 2, 2010 (date of inception) to December 31, 2010 (dollars in thousands, expect for shares and per share data):  

	Year Ended December 31,
	2012			2011
Net loss from continuing operations attributable to stockholders	$	(6,579	)	$	(1,759	)
Less: dividends declared on preferred shares	(368		)	—
Net loss from continuing operations attributable to common stockholders	(6,947		)	(1,759		)
Net loss from discontinued operations attributable to common stockholders	(699		)	(816		)
Net loss attributable to common stockholders	$	(7,646	)	$	(2,575	)
Weighted average common shares outstanding	9,150,785			2,045,320
Basic and diluted net loss per share from continuing operations attributable to common stockholders	$	(0.76	)	$	(0.86	)
Basic and diluted net loss per share from discontinued operations attributable to common stockholders	$	(0.07	)	$	(0.40	)
Basic and diluted net loss per share attributable to common stockholders	$	(0.84	)	$	(1.26	)

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Subsequent Events

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements except for the following:

Public Equity Offering

On January 24, 2013, the Company priced an underwritten public follow-on offering of 1,800,000 shares of its common stock, par value $0.01 per share. The offering price to the public in the offering was $13.47 per share (before underwriting discounts and commissions). The underwriters fully exercised their option to purchase an additional 270,000 shares of common stock at the public offering price, less underwriting discounts and commissions. The offering closed on January 29, 2013 for a total of 2,070,000 shares of common stock. As a result, the Company received total net proceeds of approximately $26.5 million, after deducting underwriting discounts, commissions and related expenses.

ATM Program

In January 2013, the Company commenced its "at the market" equity offering ("ATM") program in which it may from time to time offer and sell shares of its common stock having an aggregate offering proceeds of up to $60.0 million. The shares will be issued pursuant to the Company's $500.0 million universal shelf registration statement. As of February 27, 2013, the Company had issued 61,000 shares at a weighted average price per share of $13.48 for net proceeds of $0.8 million. As of February 27, 2013, $59.2 million of shares of common stock remained available for issuance under the ATM program.

Completion of Acquisition of Assets

The following table presents certain information about the properties that the Company acquired from January 1, 2013 to February 22, 2013 (dollar amounts in thousands):

	No. of Buildings	Square Feet	Base Purchase Price (1)
Total Portfolio – December 31, 2012 (2)	146	2,412,104	$	268,625
Acquisitions	5	59,034	21,910
Total portfolio – February 22, 2013 (2)	151	2,471,138	$	290,535

____________________________

(1) Contract purchase price, excluding acquisition and transaction related costs.

(2) Total portfolio excludes one vacant property contributed in September 2011 which was classified as held for sale at December 31, 2012.

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Organization

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

American Realty Capital Properties, Inc. (the “Company”), is a Maryland corporation incorporated on December 2, 2010 that qualified as a real estate investment trust for U.S. federal income tax purposes beginning in the year ended December 31, 2011. On September 6, 2011, the Company completed its initial public offering (the “IPO”) and the shares began trading on the NASDAQ Capital Market under the symbol “ARCP” on September 7, 2011.

The Company was formed to acquire and own single-tenant, freestanding commercial real estate primarily subject to medium-term net leases with high credit quality tenants. The Company considers properties that are net leased on a “medium-term basis” to mean properties originally leased long-term (ten years or longer) that currently have a primary remaining lease duration of generally three to eight years, on average.

Substantially all of the Company's business is conducted through ARC Properties Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The Company is the sole general partner and holder of 92.5% of the equity interest in the OP as of December 31, 2012. ARC Real Estate Partners, LLC (the “Contributor”) and an unaffiliated investor are limited partners and owners of 2.6% and 4.9%, respectively, of the equity interest in the OP. After holding units of limited partner interests in the OP (“OP Units”) for a period of one year, holders of OP Units have the right to convert OP Units for the cash value of a corresponding number of shares of the Company's common stock or, at the option of the OP, a corresponding number of shares of the Company's common stock, as allowed by the limited partnership agreement of the OP. The remaining rights of the holders of OP Units are limited, however, and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP’s assets.

The Company, which is externally managed with no employees, has retained ARC Properties Advisors, LLC (the “Manager”), a wholly owned subsidiary of AR Capital, LLC (the “Sponsor”), to manage its affairs on a day to day basis. These affiliated parties, including the Manager, the Sponsor and the Sponsor's wholly owned broker-dealer, Realty Capital Securities, LLC (“RCS” or the “Dealer Manager”), have received compensation and fees for services provided to the Company, and will continue to receive compensation and fees for providing on-going investment oversight, financing and management services to the Company, as applicable, in accordance with the terms of the respective agreements to which such affiliates are party.

Formation Transactions

At the completion of the IPO, the Contributor , an affiliate of the Sponsor, contributed to the OP its indirect ownership interests in certain assets of ARC Income Properties, LLC and ARC Income Properties III, LLC (the "Contributed Companies"). Assets contributed included (1) 59 properties that are presently leased to RBS Citizens Bank, N.A. and Citizens Bank of Pennsylvania, or collectively, Citizens Bank, one property presently leased to Community Bank, N.A, or Community Bank, and one property leased to Home Depot U.S.A., Inc., or Home Depot, and (2) two vacant properties. Additionally, the OP assumed certain liabilities of the Contributed Companies, including $30.6 million of unsecured notes payable and $96.2 million of mortgage notes secured by the contributed properties.

Because the contribution was from an affiliate of the Sponsor and deemed to be a transaction between entities under common control, the assets and liabilities were recorded by the Company at the Contributor's carrying amount, or book value, at the time of the contribution. The assets and liabilities of the Contributed Companies are summarized as follows (amounts in thousands):

Assets and liabilities of Contributed Companies, at carryover basis:
Real estate investments, net of accumulated depreciation and amortization of $13,453	$	108,759
Other assets	2,402
Notes payable(1)	(30,626		)
Mortgage notes payable(2)	(96,472		)
Other liabilities	(834		)
Net assets (liabilities) of Contributed Companies	$	(16,771	)

_______________________________________________

⁽¹⁾     Notes payable were repaid from the proceeds of the IPO concurrently with closing.

⁽²⁾   $82.6 million of mortgage notes payable were refinanced with a new $51.5 million revolving credit facility and the remaining balance was repaid from the proceeds of the IPO concurrently with closing of the IPO.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Series A Preferred Stock [Member]	Dec. 31, 2011 Series A Preferred Stock [Member]	Dec. 31, 2012 Series B Preferred Stock [Member]	Dec. 31, 2011 Series B Preferred Stock [Member]
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	240,000,000	240,000,000
Common Stock, Shares, Issued	11,157,643	7,323,434
Common Stock, Shares, Outstanding	11,157,643	7,323,434
Preferred stock, par value			$ 0.01	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized			545,454	0	283,018	0
Preferred stock, shares issued			545,454	0	283,018	0
Preferred Stock, Shares Outstanding			545,454	0	283,018	0
Liquidation Preference Per Share			$ 11.00	$ 11.00	$ 10.60	$ 10.60

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Share-Based Compensation

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

Equity Plan

The Company has adopted the American Realty Capital Properties, Inc. Equity Plan (the "Equity Plan"), which provides for the grant of stock options, restricted shares of common stock, restricted stock units, dividend equivalent rights and other equity-based awards to the Manager, non-executive directors, officers and other employees and independent contractors, including employees or directors of the Manager and its affiliates who are providing services to the Company.

The Company authorized and reserved a total number of shares equal to 10.0% of the total number of issued and outstanding shares of common stock (on a fully diluted basis assuming the redemption of all OP Units for shares of common stock) to be issued at any time under the Equity Plan for equity incentive awards excluding an initial grant of 167,400 shares to the Manager at the IPO. All such awards of shares will vest ratably on a quarterly or annual basis over a three-year period beginning on the first anniversary of the date of grant and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as dividends are paid to the stockholders.

In February 2013, the Company granted 325,000 restricted shares of common stock to the Manager and certain employees. These shares will not vest upon the consummation of the merger but will vest ratably over a three-year period and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as dividends are paid to the stockholders.

Director Stock Plan

The Company has adopted the American Realty Capital Properties, Inc. Non-Executive Director Stock Plan (the Director Stock Plan), which provides for the grant of restricted shares of common stock to each of the Company's three independent directors, each of whom is a non-executive director. Awards of restricted stock will vest ratably over a five-year period following the first anniversary of the date of grant in increments of 20.0% per annum, subject to the director’s continued service on the board of directors, and shall provide for “distribution equivalents” with respect to this restricted stock, whether or not vested, at the same time and in the same amounts as distributions are paid to the stockholders. At December 31, 2012, a total of 99,000 shares of common stock are reserved for issuance under the Director Stock Plan.

The fair value of restricted common stock awards under the Equity Plan and Director Stock Plan is determined on the grant date using the closing stock price on NASDAQ that day. The fair value of restricted common stock under the Equity Plan is updated at the end of each quarter based on the quarter end closing stock price through the final vesting date.

    For the years ended December 31, 2012 and 2011, compensation expense for restricted shares was $1.2 million and $0.2 million, respectively. There was $0.1 million compensation expense for restricted shares for the year ended December 31, 2010.

The following tables detail the restricted shares activity within the Equity Plan and Director Stock Plan during the years ended December 31, 2012 and 2011:

Restricted Share Awards

	Equity Plan				Director Stock Plan
	Number of Restricted Common Shares		Weighted-Average Issue Price		Number of Restricted Common Shares		Weighted-Average Issue Price
Awarded, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Awarded December 31, 2011	167,400		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Awarded December 31, 2012	259,909		$	11.84	13,200		$	12.30

Unvested Restricted Shares

	Equity Plan				Director Stock Plan
	Number of Restricted Common Shares		Weighted-Average Issue Price		Number of Restricted Common Shares		Weighted-Average Issue Price
Unvested, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Vested	(13,950	)	12.50		—		—
Unvested, December 31, 2011	153,450		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Vested	(59,556	)	12.42		(1,800	)	12.50
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Unvested, December 31, 2012	186,403		$	11.62	11,400		$	12.27

Pursuant to, and as further described in the Merger agreement, each share of restricted stock outstanding as of immediately prior to the effective date of the Merger will become fully vested.

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Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Feb. 15, 2013	Jun. 30, 2012
Entity Information [Line Items]
Entity Registrant Name	AMERICAN REALTY CAPITAL PROPERTIES, INC.
Entity Central Index Key	0001507385
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q4
Amendment Flag	false
Entity Common Stock, Shares Outstanding		13,134,966
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 88.2

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

In the ordinary course of business, the Company may become subject to litigation or claims. There are no material legal proceedings pending or known to be contemplated against the Company, except for the following:

Since the announcement of the Merger Agreement on December 17, 2012, one putative class action lawsuit had been filed against the Company, the OP, ARCT III, ARCT III OP, the members of the board of directors of ARCT III and certain subsidiaries of the Company in the Supreme Court for the State of New York. In February 2013, the parties agreed to a memorandum of understanding regarding settlement of all claims asserted on behalf of the alleged class of ARCT III stockholders. In connection with the settlement contemplated by that memorandum of understanding, the class action and all claims asserted therein will be dismissed, subject to court approval. The proposed settlement terms required ARCT III to make certain additional disclosures related to the merger, which were included in a Current Report on Form 8-K filed by ARCT III with the SEC on February 21, 2013. The memorandum of understanding also added that the parties will enter into a stipulation of settlement, which will be subject to customary conditions, including confirmatory discovery and court approval following notice to ARCT III’s stockholders. If the parties enter into a stipulation of settlement, a hearing will be scheduled at which the court will consider the fairness, reasonableness and adequacy of the settlement. There can be no assurance that the parties will ultimately enter into a stipulation of settlement, that the court will approve any proposed settlement, or that any eventual settlement will be under the same terms as those contemplated by the memorandum of understanding.

The Company maintains directors and officers liability insurance which the Company believes should provide coverage to the Company and its officers and directors for most or all of any costs, settlements or judgments resulting from the lawsuit.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect on the results of operations.

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $)	1 Months Ended	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011
Revenues:
Rental income	$ 0	$ 16,334,000	$ 3,022,000
Operating expense reimbursements	0	488,000	153,000
Total revenues	0	16,822,000	3,175,000
Operating expenses:
Acquisition related	0	3,988,000	1,875,000
Merger and other transaction related	0	2,603,000	0
Property operating	0	1,098,000	153,000
General and administrative	0	2,261,000	440,000
Depreciation and amortization	0	9,322,000	1,612,000
Total operating expenses	0	19,272,000	4,080,000
Operating loss	0	(2,450,000)	(905,000)
Interest expense	0	(4,356,000)	(924,000)
Other income	0	2,000	1,000
Total other expenses, net	0	(4,354,000)	(923,000)
Loss from continuing operations	0	(6,804,000)	(1,828,000)
Net loss from continuing operations attributable to non-controlling interests	0	225,000	69,000
Net loss from continuing operations attributable to stockholders	0	(6,579,000)	(1,759,000)
Discontinued operations:
Loss from operations of held for sale properties	0	(145,000)	(37,000)
Loss on held for sale properties	0	100,000	(815,000)
Loss on held for sale properties	0	(600,000)	(815,000)
Net loss from discontinued operations attributable to non-controlling interests	0	(745,000)	(852,000)
Net loss from discontinued operations attributable to non-controlling interests	0	46,000	36,000
Net loss from discontinued operations attributable to stockholders	0	(699,000)	(816,000)
Net loss	0	(7,549,000)	(2,680,000)
Net loss attributable to non-controlling interests	0	(271,000)	(105,000)
Net loss attributable to stockholders	0	(7,278,000)	(2,575,000)
Designated derivative, fair value adjustment	0	(11,000)	0.00
Comprehensive loss	$ 0.00	$ (7,289,000)	$ (2,575,000)
Basic and diluted net loss per share from continuing operations attributable to common stockholders	$ 0.00	$ (0.76)	$ (0.86)
Basic and diluted net loss per share attributable to common stockholders	$ 0.00	$ (0.84)	$ (1.26)

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Mortgage Note Payable Notes

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Mortgage Note Payable

Mortgage Notes Payable

The Company’s mortgage notes payable consist of the following as of December 31, 2012 and 2011 (dollar amounts in thousands):

	Encumbered Properties	Outstanding Loan Amount		Weighted Average Effective Interest Rate (1)		Weighted Average Maturity (2)
December 31, 2012	29	$	35,758	4.52	%	3.52
December 31, 2011	28	$	30,260	4.67	%	4.32

_______________________________________________

(1) Mortgage notes payable have fixed rates. Effective interest rates range from 3.68% to 5.32% at December 31, 2012 and 3.80% to 5.32% at December 31, 2011.

(2) Weighted average remaining years until maturity as of December 31, 2012 and 2011, respectively.

The following table summarizes the scheduled aggregate principal repayments subsequent to December 31, 2012 (amounts in thousands):

Year	Total
2013	$	74
2014	189
2015	13,767
2016	11,760
2017	9,968
Thereafter	—
Total	$	35,758

The Company’s sources of recourse financing generally require financial covenants as well as restrictions on corporate guarantees, the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios) as well as the maintenance of a minimum net worth. As of December 31, 2012 and 2011, the Company was in compliance with the debt covenants under the mortgage loan agreements.

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Senior Secured Revolving Credit Facility

12 Months Ended

Dec. 31, 2012

Line of Credit Facility [Abstract]

Senor Secured Revolving Credit Facility [Text Block]

Senior Secured Revolving Credit Facility

On September 7, 2011, the Company obtained a senior secured revolving credit facility with RBS Citizens, N.A. of up to $150.0 million subject to providing qualified collateral, among other conditions. The proceeds of advances made under the credit agreement may be used to finance the acquisition of net leased, investment or non-investment grade leased properties and for other permitted corporate purposes. Up to $10.0 million of the facility is available for letters of credit. The credit agreement has a term of 36 months and matures on September 7, 2014, and can be extended at the Company's option for an additional 24 months.

Any advance made under the credit facility will bear floating interest at per annum rates equal to the one-month London Interbank Offered Rate (“LIBOR”) plus 2.15% to 2.90% depending on the Company's loan to value ratio as specified in the credit agreement. In the event of a default, the lender has the right to terminate its obligations under the credit agreement, including the funding of future advances, and to accelerate the payment on any unpaid principal amounts outstanding. The credit facility requires a fee of 0.15% on the unused balance if amounts outstanding under the facility are 50% or more of the total facility amount and 0.25% on the unused balance if amounts outstanding under the facility are less than 50% of the total facility amount.

As of December 31, 2012, there was $124.6 million outstanding on this facility, which bore an interest rate of 3.11%, collateralized by 114 properties. At December 31, 2012, there was $20.4 million available to the Company for future borrowings. At December 31, 2011, there was $42.4 million outstanding on this facility with an interest rate of 3.17%, collateralized by 59 properties.

The Company’s sources of recourse financing generally require financial covenants, as well as restrictions on corporate guarantees, the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios) as well as the maintenance of a minimum net worth. At December 31, 2012 and 2011, the Company was in compliance with the debt covenants under the senior secured revolving credit facility agreement.

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Quarterly Financial Information (Notes)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Text Block]

Quarterly Results (Unaudited)

Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2012 and 2011 (in thousands, except share and per share amounts):

	Quarters Ended
	March 31, 2012			June 30, 2012			September 30, 2012			December 31, 2012
Revenues	$	2,944		$	3,348		$	4,880		$	5,650
Net loss from continuing operations attributable to stockholders	$	(308	)	$	(1,963	)	$	(763	)	$	(3,545	)
Less: dividends declared on preferred shares	$	—		$	(70	)	$	(140	)	$	(158	)
Net loss from continuing operations attributable to common stockholders	$	(308	)	$	(2,033	)	$	(903	)	$	(3,703	)
Net loss from discontinued operations attributable to stockholders	$	(322	)	$	(77	)	$	(41	)	$	(259	)
Net loss attributable to common stockholders, net of dividends on preferred shares	$	(630	)	$	(2,110	)	$	(944	)	$	(3,962	)
Weighted average shares outstanding	7,174,934			7,653,170			10,846,432			10,959,840
Basic and diluted loss per share from continuing operations attributable to common stockholders	$	(0.04	)	$	(0.27	)	$	(0.08	)	$	(0.34	)
Basic and diluted loss per share from discontinued operations attributable to common stockholders	$	(0.05	)	$	(0.01	)	$	—		$	(0.02	)
Basic and diluted loss per share attributable to common stockholders	$	(0.09	)	$	(0.28	)	$	(0.09	)	$	(0.36	)

	Quarters Ended
	March 31, 2011			June 30, 2011		September 30, 2011			December 31, 2011
Revenues	$	—		$	—	$	576		$	2,599
Net loss from continuing operations attributable to common stockholders	$	(16	)	$	—	$	(626	)	$	(1,117	)
Net loss from discontinued operations attributable to stockholders	$	—		$	—	$	(8	)	$	(808	)
Net loss attributable to common stockholders	$	(16	)	$	—	$	(634	)	$	(1,925	)
Weighted average shares outstanding	1,000			1,000		1,515,710			6,596,908
Basic and diluted loss per share from continuing operations attributable to stockholders	NM			$	—	$	(0.41	)	$	(0.17	)
Basic and diluted loss per share from discontinued operations attributable to common stockholders	NM			$	—	$	(0.01	)	$	(0.12	)
Basic and diluted loss per share attributable to stockholders	NM			$	—	$	(0.42	)	$	(0.29	)

______________________________

NM - Not meaningful.

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Related Party Transactions and Arrangements

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions and Arrangements

Related Party Transactions and Arrangements

Common Stock Ownership

Certain affiliates of the Company have purchased shares of the Company's common stock. As of December 31, 2012 and 2011, certain affiliates owned 20.7% and 31.3%, respectively, of the Company's common stock outstanding on a fully diluted basis, including the Contributor's 310,000 OP Units owned by the Company's Sponsor.

The Company has issued restricted stock to the Manager and non-executive directors in conjunction with a share-based compensation plan. See Note 11 — Share-Based Compensation.

Fees Paid in Connection with Common Stock Offerings

RCS received selling commissions of 6% of the gross offering proceeds from the sale of the Company’s common stock in the IPO. In addition, RCS received dealer manager fees of 2% of the gross offering proceeds before reallowance to participating broker-dealers in the IPO. RCS was permitted to re-allow all or a portion of its dealer manager fee to participating broker-dealers.

The following table details the results of such activities related to RCS (amounts in thousands):

	Year Ended December 31,
	2012			2011
Total commissions and fees paid to affiliated Dealer Manager	$	14	(1)	$	1,601

_______________________________________________

(1) In connection with the Company's follow-on offering in June 2012, the underwriters paid RCS a fee of $13,500 for providing advisory services to the Company.

The Company reimbursed the Manager for services relating to the IPO and the follow-on offerings. The following table details the results of such activities related to offering costs reimbursed to the Manager (amounts in thousands):

	Year Ended December 31,
	2012		2011
Offering expense reimbursements	$	183	$	—

Fees Paid in Connection With the Operations of the Company

The Company will pay the Sponsor an acquisition fee equal to 1.0% of the contract purchase price (including assumed indebtedness) of each property the Company acquires which is originated by the Sponsor. The acquisition fee is payable in cash at the closing of each acquisition.

The Company will pay the Sponsor a financing fee equal to 0.75% of the amount available under any secured mortgage financing or refinancing that the Company obtains and uses for the acquisition of properties that is arranged by the Sponsor. The financing coordination fee is payable in cash at the closing of each financing.

The Company will pay the Manager an annual base management fee equal to 0.50% per annum of the average unadjusted book value of the Company's real estate assets, calculated and payable monthly in advance, provided that the full amount of the distributions declared by the Company for the six immediately preceding months is equal to or greater than certain net income thresholds related to our operations. Our Manager will waive such portion of its management fee in excess of such thresholds. The management fee is payable in cash. No such management fees have been paid to the Manager since inception.

The Company may be required to pay the Manager a quarterly incentive fee, calculated based on 20 percent of the excess Company annualized core earnings (as defined in the management agreement with the Manager) over the weighted average number of shares multiplied by the weighted average price per share of common stock. One half of each quarterly installment of the incentive fee will be payable in shares of common stock. The remainder of the incentive fee will be payable in cash. No such incentive fees have been paid to the Manager since inception.

The Company is required to reimburse the Sponsor for all out-of-pocket costs actually incurred by the Sponsor, including without limitation, legal fees and expenses, due diligence fees and expenses, other third party fees and expenses, costs of appraisals, travel expenses, nonrefundable option payments and deposits on properties not acquired, accounting fees and expenses, title insurance premiums and other closing costs, personnel costs and miscellaneous expenses relating to the selection, acquisition and due diligence of properties. The Company's reimbursement obligation is not subject to any dollar limitation. Expenses will be reimbursed in cash on a monthly basis following the end of each month. However, the Company will not reimburse the Sponsor for the salaries and other compensation of its personnel.

The following table details amounts incurred by the Company and contractually due to the Sponsor and the Manager and forgiven in connection with the operations related services described above (amounts in thousands):

	Year Ended December 31,								Payable as of
	2012				2011				December 31,
	Incurred		Forgiven		Incurred		Forgiven		2012		2011
One-time fees:
Acquisition fees and related cost reimbursements	$	2,353	$	—	$	400	$	—	$	364	$	—
Financing fees and related cost reimbursements	845		—		131		—		—		—
Other expense reimbursements	132		—		135		—		18		—
On-going fees:
Base management fees	975		975		202		202		—		—
Incentive fees	771		771		—		—		—		—
Total operational fees and reimbursements	$	5,076	$	1,746	$	868	$	202	$	382	$	—

Under an administrative support agreement between the Company and the Sponsor, the Sponsor was to pay or reimburse the Company for its general administrative expenses, including, without limitation, legal fees, audit fees, board of directors fees, insurance, marketing and investor relation fees, until September 6, 2012, which was one year after the closing of the IPO, to the extent the amount of certain net earnings from operations thresholds, as specified in the agreement, were less than the amount of the distributions declared by the Company during this one-year period. To the extent these amounts were paid by the Sponsor, they would not be subject to reimbursement by the Company. These costs are presented net in the accompanying consolidated statements of operations and comprehensive loss.

The following table details general and administrative expenses absorbed by the Sponsor and paid to the Company during the years ended December 31, 2012 and 2011 (amounts in thousands):

	Year Ended December 31,				Receivable as of December 31,
	2012		2011		2012		2011
General and administrative expenses absorbed	$	164	$	—	$	—	$	—

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Convertible Preferred Stock

12 Months Ended

Dec. 31, 2012

Convertible Preferred Stock [Abstract]

Preferred Stock [Text Block]

Convertible Preferred Stock

On May 11, 2012, the Company entered into a securities purchase agreement with an unaffiliated third party that is an “accredited investor” (as defined in Rule 501 of Regulation D as promulgated under the Securities Act of 1933, as amended) pursuant to which the Company sold 545,454 shares of the Company's Series A convertible preferred stock for gross proceeds of $6.0 million and aggregate net proceeds of $5.8 million after offering-related fees and expenses.

The Series A convertible preferred stock has a liquidation preference of $11.00 per share, plus accrued and unpaid dividends, and a redemption premium equal to one percent (1%). Commencing on May 31, 2012, the Company has been paying cumulative dividends on the Series A convertible preferred stock monthly in arrears at the annualized rate of $0.77 per share.

The Series A convertible preferred stock is convertible into the Company's common stock, at the option of the holder of the Series A convertible preferred stock, at a conversion price equal to $11.00 per share, beginning one year after the date of issuance. The Company, at its option at any time, may redeem the Series A convertible preferred stock, in whole or in part, at $11.00 per share.

On July 24, 2012, the Company entered into a securities purchase agreement with an unaffiliated third party that is an “accredited investor” (as defined in Rule 501 of Regulation D as promulgated under the Securities Act of 1933, as amended) pursuant to which the Company sold 283,018 shares of the Company's Series B convertible preferred stock for gross proceeds of approximately $3.0 million. After deducting offering-related fees and expenses, the aggregate net proceeds to the Company from the sale of the Series B convertible preferred stock were approximately $3.0 million.

The Series B convertible preferred stock has a liquidation preference of $10.60 per share, plus accrued and unpaid dividends, and a redemption premium equal to one percent (1%). Commencing on August 15, 2012, the Company has been paying cumulative dividends on the Series B convertible preferred stock monthly in arrears at an annualized rate of $0.74 per share.

The Series B convertible preferred stock is convertible into the Company's common stock, at the option of the holder of the Series B convertible preferred stock, at a conversion price equal to $10.60 per share, beginning one year after the date of issuance. The Company, at its option at any time, may redeem the Series B convertible preferred stock, in whole or in part, at $10.60 per share.

The Series A convertible preferred stock and the Series B convertible preferred stock each ranks senior to the Company's common stock and on parity with each other, and junior to any other preferred stock the Company may issue other than additional series of the Series A convertible preferred stock or Series B convertible preferred stock.

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Related Party Transactions and Arrangements (Schedule of General and Administrative Expenses Absorbed) (Details) (Manager [Member], ARC Properties Advisors, LLC [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Absorbed General and Administrative Expenses [Member]
Schedule of General and Administrative Expenses Absorbed [Line Items]
Related Party Transaction, Amounts of Transaction	$ 164	$ 0
Absorbed General and Administrative Expenses, Receivable [Member]
Schedule of General and Administrative Expenses Absorbed [Line Items]
Related Party Transaction, Amounts of Transaction	$ 0	$ 0

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The guidance defines three levels of inputs that may be used to measure fair value:

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

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

Level 3 — Unobservable inputs 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.

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 those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of December 31, 2012, the Company has assessed 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 derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The Company’s interest rate cap derivative measured at fair value on a recurring basis as of December 31, 2012 was zero and was classified in Level 2 of the fair value hierarchy.

The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate that value. The fair value of short-term financial instruments such as cash and cash equivalents, due to affiliates and accounts payable approximate their carrying value on the accompanying consolidated balance sheets due to their short-term nature.

The fair values of the Company’s financial instruments that are not reported at fair value on the consolidated balance sheets are reported below (amounts in thousands):

		Carrying Amount at		Fair Value at		Carrying Amount at		Fair Value at
	Level	December 31, 2012		December 31, 2012		December 31, 2011		December 31, 2011
Mortgage notes payable	3	$	35,758	$	35,793	$	30,260	$	30,626
Senior secured revolving credit facility	3	$	124,604	$	124,604	$	42,407	$	42,407

The fair value of mortgage notes payable are obtained by calculating the present value at current market rates. The terms of the senior secured revolving credit facility and the Company's level ratio are considered commensurate with the market, as such the outstanding balance on the facility approximates fair value.

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Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

 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/or 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 for speculative or other purposes other than interest rate risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterparties to these contractual arrangements are not able to perform under the agreements. To mitigate this risk, the Company only enters into derivative financial instruments with counterparties with high credit ratings and with major financial institutions with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any of the counterparties will fail to meet their obligations.

Cash Flow Hedges of Interest Rate Risk

The Company's objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and caps 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 life of the agreements without exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of variable-rate amounts if interest rates rise above the cap strike rate on the contract.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2012, such derivatives were used to hedge the variable cash flows associated with forecasted variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the year ended December 31, 2012, the Company recorded no hedge ineffectiveness in earnings. The Company had no derivative instruments prior to the year ended December 31, 2012.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next twelve months, the Company estimates that an additional $11,000 will be reclassified from other comprehensive income as an increase to interest expense.

As of December 31, 2012, the Company had the following outstanding interest rate derivative that was designated as a cash flow hedge of interest rate risk (dollar amount in thousands):

Interest Rate Derivative:	Number of Instruments	Notional Amount
Interest rate cap	1	$	50,000

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2012:

	Balance Sheet Location	December 31, 2012
Derivatives designated as hedging instruments:
Interest rate cap	Derivative, at fair value	$	—

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 year ended December 31, 2012 (amounts in thousands):

	Year Ended December 31, 2012
Amount of loss recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)	$	(12	)
Amount of loss reclassified from accumulated other comprehensive loss into income as interest expense (effective portion)	$	(1	)
Amount of gain (loss) recognized in income on derivative instruments (ineffective portion and amounts excluded from effectiveness testing)	$	—

Derivative Instruments and Hedging Activities Disclosure [Text Block]

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 year ended December 31, 2012 (amounts in thousands):

	Year Ended December 31, 2012
Amount of loss recognized in accumulated other comprehensive loss on interest rate derivatives (effective portion)	$	(12	)
Amount of loss reclassified from accumulated other comprehensive loss into income as interest expense (effective portion)	$	(1	)
Amount of gain (loss) recognized in income on derivative instruments (ineffective portion and amounts excluded from effectiveness testing)	$	—

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Common Stock

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

Common Stock

Common Stock

The following are the Company's public equity offerings of common stock (dollar amounts in millions):

Type of offering	Closing Date	Number of Shares	Gross Proceeds
IPO	September 7, 2011	5,574,131	$	67.4
Follow on offering	November 2, 2011	1,497,924	15.8
Underwriters' over allotment	November 7, 2011	74,979	0.8
Follow on offering	June 18, 2012	3,250,000	30.3
Underwriters' over allotment	July 9, 2012	487,500	4.6
Total		10,884,534	$	118.9

The common stock issued and outstanding of 11,157,643 at December 31, 2012 includes restricted shares of 273,109.

The Company's board of directors has authorized, and the Company began paying, dividends since October 2011 on the fifteenth day of each month to stockholders of record on the eight day of such month. Since October 2011, the board of directors of the Company has authorized the following increases in dividend.

Dividend increase declaration date	Annualized dividend per share	Effective date
September 7, 2011	$0.8750	10/9/2011
February 27, 2012	$0.8800	3/9/2012
March 16, 2012	$0.8850	6/9/2012
June 27, 2012	$0.8900	9/9/2012
September 30, 2012	$0.8950	11/9/2012
November 29, 2012	$0.9000	2/9/2013

On August 1, 2012, the Company filed a universal shelf registration statement and a resale registration statement with the SEC. Each registration statement became effective on August 17, 2012. As of December 31, 2012, no common stock, preferred stock, debt or equity-linked security had been issued under the universal shelf registration statement. The resale registration statement, as amended, registers the resale of up to 1,882,248 shares of common stock issued in connection with any future conversion of certain currently outstanding restricted shares, convertible preferred stock or limited partnership interests. As of December 31, 2012, no common stock had been issued under the resale registration statement.

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Subsequent Events (Details) (USD $)	2 Months Ended	12 Months Ended		25 Months Ended					0 Months Ended			0 Months Ended		2 Months Ended
	Feb. 27, 2013	Dec. 31, 2012 property	Dec. 31, 2011 property	Dec. 31, 2012	Dec. 31, 2012 2012 Acquisitons [Member] sqft property	Feb. 22, 2013 2013 Acquisitons [Member] sqft property	Dec. 31, 2012 Vacant [Member] Real Estate [Member] property	Dec. 31, 2011 Vacant [Member] Real Estate [Member] property	Jan. 29, 2013 Follow on Offering, Underwriter [Member] [Member]	Jan. 29, 2013 Follow on Offering, Public [Member] [Member]	Jan. 24, 2013 Follow on Offering, Public [Member] [Member]	Jan. 29, 2013 Follow on Offering [Member]	Jan. 24, 2013 Follow on Offering [Member]	Feb. 27, 2013 At the Market Offering [Member]	Feb. 22, 2013 Property Acquisition [Member] property
Subsequent Event [Line Items]
Shares Issued (in shares)									270,000	1,800,000		2,070,000		61,000
Maximum Amount of Offering from Universal Shelf Registration Statement		$ 500,000,000		$ 500,000,000
Weighted Average Price per Share											13.47			0
Proceeds from Issuance of Common Stock		118,900,000										26,500,000		800,000
Remaining Equity Offering, At the Market Offering														59,200,000
Maximum Equity Offering, At the Market Offering [Line Items]	60,000,000
Common Stock, Par or Stated Value Per Share		$ 0.01	$ 0.01	$ 0.01									$ 0.01
Number of Real Estate Properties					146	151	1	2
Square feet of acquired property					2,412,104	2,471,138
Business Acquisition, Cost of Acquired Entity, Purchase Price		1,200,000		1,200,000	268,625,000	290,535,000
Number of Businesses Acquired		58	88	146											5
Area of Real Estate Property, Acquisitions															59,034
Real Estate Investment Property, at Cost, Acquisitions															$ 21,910,000

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Quarterly Financial Information Quarterly Financial Information (Details) (USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	3 Months Ended								12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 30, 2011	Dec. 31, 2012	Dec. 31, 2011
Revenues	$ 0	$ 5,650	$ 4,880	$ 3,348	$ 2,944	$ 2,599	$ 576	$ 0	$ 0	$ 16,822	$ 3,175
Dividends, Preferred Stock		(158)	(140)	(70)	0					368	0
Net Income (Loss) Before Discontinued operations After Adjustments for Dividends on Preferred Stock, Available to Common Stockholders, Basic		(3,703)	(903)	(2,033)	(308)	(1,117)	(626)	0	(16)	(6,947)	(1,759)
Net loss from discontinued operations attributable to stockholders	0	(259)	(41)	(77)	(322)	(808)	(8)	0	0	(699)	(816)
Net loss from continuing operations attributable to common stockholders		$ (3,962)	$ (944)	$ (2,110)	$ (630)	$ (1,925)	$ (634)	$ 0	$ (16)	$ (7,646)	$ (2,575)
Weighted average common shares outstanding		10,959,840	10,846,432	7,653,170	7,174,934	6,596,908	1,515,710	1,000	1,000	9,150,785	2,045,320
Basic and diluted net loss per share from continuing operations attributable to common stockholders	$ 0.00	$ (0.34)	$ (0.08)	$ (0.27)	$ (0.04)	$ (0.17)	$ (0.41)	$ 0.00		$ (0.76)	$ (0.86)
Basic and diluted net loss per share from discontinued operations attributable to stockholders		$ (0.02)	$ 0.00	$ (0.01)	$ (0.05)	$ (0.12)	$ (0.01)	$ 0.00		$ (0.07)	$ (0.40)
Basic and diluted net loss per share attributable to common stockholders	$ 0.00	$ (0.36)	$ (0.09)	$ (0.28)	$ (0.09)	$ (0.29)	$ (0.42)	$ 0.00		$ (0.84)	$ (1.26)

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Share-Based Compensation (Schedule of Share-Based Compensation, Activity) (Tables)

24 Months Ended

Dec. 31, 2012

Share-based Compensation [Abstract]

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

The following tables detail the restricted shares activity within the Equity Plan and Director Stock Plan during the years ended December 31, 2012 and 2011:

Restricted Share Awards

	Equity Plan				Director Stock Plan
	Number of Restricted Common Shares		Weighted-Average Issue Price		Number of Restricted Common Shares		Weighted-Average Issue Price
Awarded, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Awarded December 31, 2011	167,400		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Awarded December 31, 2012	259,909		$	11.84	13,200		$	12.30

Unvested Restricted Shares

	Equity Plan				Director Stock Plan
	Number of Restricted Common Shares		Weighted-Average Issue Price		Number of Restricted Common Shares		Weighted-Average Issue Price
Unvested, January 1, 2011	—		$	—	—		$	—
Granted	167,400		12.50		9,000		12.50
Vested	(13,950	)	12.50		—		—
Unvested, December 31, 2011	153,450		12.50		9,000		12.50
Granted	93,683		10.65		9,000		12.21
Vested	(59,556	)	12.42		(1,800	)	12.50
Forfeited	(1,174	)	10.65		(4,800	)	12.50
Unvested, December 31, 2012	186,403		$	11.62	11,400		$	12.27

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Derivatives and Hedging Activities (Schedule of Interest Rate Derivatives) (Details) (Cash Flow Hedging [Member], Designated as Hedging Instrument [Member], Interest Rate Cap [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012 derivative
Cash Flow Hedging [Member] | Designated as Hedging Instrument [Member] | Interest Rate Cap [Member]
Derivative [Line Items]
Number of Interest Rate Derivatives Held	1
Notional Amount of Interest Rate Derivatives	$ 50,000

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Net Loss Per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share 

The following is a summary of the basic and diluted net loss per share computation for the years ended December 31, 2012 and 2011. The Company had no income or loss for the period from December 2, 2010 (date of inception) to December 31, 2010 (dollars in thousands, expect for shares and per share data):  

	Year Ended December 31,
	2012			2011
Net loss from continuing operations attributable to stockholders	$	(6,579	)	$	(1,759	)
Less: dividends declared on preferred shares	(368		)	—
Net loss from continuing operations attributable to common stockholders	(6,947		)	(1,759		)
Net loss from discontinued operations attributable to common stockholders	(699		)	(816		)
Net loss attributable to common stockholders	$	(7,646	)	$	(2,575	)
Weighted average common shares outstanding	9,150,785			2,045,320
Basic and diluted net loss per share from continuing operations attributable to common stockholders	$	(0.76	)	$	(0.86	)
Basic and diluted net loss per share from discontinued operations attributable to common stockholders	$	(0.07	)	$	(0.40	)
Basic and diluted net loss per share attributable to common stockholders	$	(0.84	)	$	(1.26	)

As of December 31, 2012, the Company had 886,376 OP Units issued, which are convertible to an equal number of shares of the Company's common stock, 197,803 shares of unvested restricted stock outstanding, 545,454 shares of the Company's Series A preferred convertible stock outstanding and 283,018 shares of the Company's Series B preferred convertible stock outstanding, which were excluded from the calculation of diluted loss per share as the effect would have been antidilutive.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Accounting

The accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with U.S. GAAP.

Deferred Charges, Policy [Policy Text Block]

Deferred Costs, Net

Deferred costs, net consists of deferred financing costs net of accumulated amortization, deferred leasing costs net of accumulated amortization and deferred offering costs.

Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are 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 the financing will not close. At December 31, 2012 and 2011, the Company had $4.7 million and $2.5 million, respectively, of deferred financing costs net of accumulated amortization.

Deferred leasing costs, consisting primarily of lease commissions and payments made to assume existing leases, are deferred and amortized over the term of the lease. At December 31, 2012 and 2011, the Company had $0.2 million and $0.3 million, respectively, of deferred leasing costs, net of accumulated amortization.

Deferred offering costs represent professional fees, fees paid to various regulatory agencies, and other costs incurred in connection with registering to sell shares of the Company's common stock. As of December 31, 2012, the Company had $0.1 million of deferred offering costs related to its $500.0 million universal shelf and resale registration statements filed with the SEC in August 2012. As of December 31, 2011, the Company had no deferred offering costs.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (the "FASB") issued guidance that expands the existing disclosure requirements for fair value measurements, primarily for Level 3 measurements, which are measurements based on unobservable inputs such as the Company’s own data. This guidance is largely consistent with current fair value measurement principles with few exceptions that do not result in a change in general practice. The guidance was applied prospectively and was effective for interim and annual reporting periods ending after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations as the guidance relates only to disclosure requirements.

In June 2011, the FASB issued guidance requiring entities to present items of net income and other comprehensive income either in one continuous statement – referred to as the statement of comprehensive income – or in two separate, but consecutive, statements of net income and other comprehensive income. The new guidance does not change which components of comprehensive income are recognized in net income or other comprehensive income, or when an item of other comprehensive income must be reclassified to net income. In December 2011, the FASB deferred certain provisions of this guidance related to the presentation of certain reclassification adjustments out of accumulated other comprehensive income, by component in both the statement and the statement where the reclassification is presented. This guidance was applied prospectively and was effective for interim and annual reporting periods ended after December 15, 2011. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations but changed the location of the presentation of other comprehensive income to more closely associate the disclosure with net income.

In September 2011, the FASB issued guidance that allows entities to perform a qualitative analysis as the first step in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then a quantitative analysis for impairment is not required. The guidance was effective for interim and annual impairment tests for fiscal periods beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company's financial position or results of operations.

In December 2011, the FASB issued guidance which contains new disclosure requirements regarding the nature of and entity's rights of offset and related arrangements associated with its financial instruments and derivative instruments. The new disclosures are designed to make financial statements prepared under U.S. GAAP more comparable to those prepared under International Financial Reporting Standards and will give the financial statement users information about both gross and net exposures. The guidance is effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations.

In July 2012, the FASB issued revised guidance intended to simplify how an entity tests indefinite-lived intangible assets for impairment. The amendments will allow an entity first to assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. An entity will no longer be required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative test unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments are effective for annual and interim indefinite-lived intangible asset impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial position or results of operations.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been 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 for which the Company is the primary beneficiary.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in conformity with U.S. 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, to record investments in real estate, real estate taxes, and derivative financial instruments and hedging activities, as applicable.

Formation Transactions [Policy Text Block]

Formation Transactions

Upon the effectiveness of the IPO, the Company acquired certain properties from affiliated entities of the Company, as such, the Company was no longer considered to be in the development stage. The contribution of the properties from affiliates in the initial formation of the Company was accounted for as a reorganization of entities under common control and therefore all assets and liabilities related to the contributed properties were accounted for on the carryover basis of accounting whereby the real estate investments were contributed at amortized cost and all assets and liabilities of the predecessor entities became assets and liabilities of the Company.

Real Estate, Policy [Policy Text Block]

Real Estate Investments

The Company records acquired real estate at cost and makes assessments as to the useful lives of depreciable assets. The Company considers the period of future benefit of the asset to determine the appropriate useful lives. Depreciation is computed using a straight-line method over the estimated useful life of 40 years for buildings, five to 15 years for building fixtures and improvements and the remaining lease term for acquired intangible lease assets.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of Long Lived Assets

Operations related to properties that have been sold or properties that are intended to be sold are presented as discontinued operations in the statement of operations for all periods presented, and properties intended to be sold are designated as “held for sale” on the accompanying consolidated balance sheets.

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, 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 impairment exists, due to the inability to recover the carrying value of a property, an impairment loss is recorded 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 is 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 income. At December 31, 2012, and 2011, the Company had one and two, respectively, vacant properties classified as properties held for sale. See Note 16 — Discontinued Operations and Properties Held for Sale.

Allocation of Purchase Price of Acquired Assets [Policy Text Block]

Allocation of Purchase Price of Acquired Assets

The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, buildings, equipment 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. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships.

Amounts allocated to land, buildings, equipment and fixtures are based on cost segregation studies performed by independent third-parties or on the Company's analysis of comparable properties in its portfolio. Depreciation is computed using the straight-line method over the estimated lives of forty years for buildings, five to ten years for building equipment and fixtures, and the shorter of the useful life or the remaining lease term for tenant improvements.

The aggregate value of intangible assets related to in-place leases is primarily the difference between the property valued with existing in-place leases adjusted to market rental rates and the property valued as if vacant. Factors considered by the Company in its 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 market rates during the expected lease-up period, which typically ranges from six to 18 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.

Above-market and below-market in-place lease values for owned properties are recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid pursuant to the in-place leases and management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The capitalized above-market lease intangibles are amortized as a decrease to rental income over the remaining term of the lease. The capitalized below-market lease values will be amortized as an increase to rental income over the remaining term and any fixed rate renewal periods provided within the respective leases. In determining the amortization period for below-market lease intangibles, the Company initially will consider, and periodically evaluate on a quarterly basis, the likelihood that a lessee will execute the renewal option. The likelihood that a lessee will execute the renewal option is determined 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.

The aggregate value of intangibles assets related to customer relationships is measured based on the Company's evaluation of the specific characteristics of each tenant's lease and the Company's overall relationship with the tenant. Characteristics considered by the company in determining these values include the nature and extent of the Company's existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant's credit quality and expectations of lease renewals, among other factors.

The value of in-place leases is amortized to expense over the initial term of the respective leases, which range primarily from 2 to 20 years. The value of customer relationship intangibles is amortized to expense over the initial term 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.

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 its pre-acquisition due diligence, as well as subsequent marketing and leasing activities, in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Intangible lease assets consist of the following as of December 31, 2012 and 2011 (amounts in thousands):

	December 31,
	2012			2011
In-place leases, gross	$	27,140		$	11,044
Accumulated amortization on in-place leases	(5,244		)	(3,197		)
In-place leases, net of accumulated amortization	21,896			7,847
Above market leases, gross	1,264			—
Accumulated amortization on above market leases	(116		)	—
Above market leases, net of accumulated amortization	1,148			—
Total intangible lease assets, net	$	23,044		$	7,847

The following table provides the weighted-average amortization period as of December 31, 2012 for intangible lease assets and the projected amortization expense and adjustments of rental income for the next five years (amounts in thousands):

	Weighted-Average Amortization Period in Years	2013		2014		2015		2016		2017
In-place leases:
Total to be included in amortization expense	7.3	$	3,688	$	3,619	$	3,336	$	3,067	$	2,531
Above market leases:
Total to be included in rental income	5.0	$	252	$	252	$	252	$	252	$	122
Total intangible lease assets	7.2

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less.

The Company deposits cash with high quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Company (“FDIC”) up to an insurance limit. At December 31, 2012 and 2011, the Company had deposits of $2.7 million and $3.1 million, respectively, of which $2.2 million and $2.7 million were in excess of the amount insured by the FDIC. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result.

Derivatives, Policy [Policy Text Block]

Derivative Instruments

The Company may use derivative financial instruments to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the techniques used to hedge exposure to interest rate fluctuations may also be used to protect against declines in the market value of assets that result from general trends in debt markets. The principal objective of such agreements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions.

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.

The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statement of operations. If the derivative is designated and qualifies for hedge accounting treatment the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a derivative's change in fair value will be immediately recognized in earnings.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

Upon the acquisition of real estate, certain properties will have leases where minimum rent payments increase during the term of the lease. The Company will record rental revenue for the full term of each lease on a straight-line basis. When the Company acquires a property, the term of existing leases is considered to commence as of the acquisition date for the purposes of this calculation. Cost recoveries from tenants are included in tenant reimbursement income in the period the related costs are incurred, as applicable.

The Company's revenues, which are derived primarily from rental income, 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. Since many of the leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. The Company defers the revenue related to lease payments received from tenants in advance of their due dates.

The Company continually reviews receivables related to rent and unbilled rent receivables 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. In the event that the collectability of a receivable is in doubt, the Company will record an increase in the allowance for uncollectible accounts or record a direct write-off of the receivable in the consolidated statements of operations and comprehensive loss. As of December 31, 2012 and 2011, the Company determined that there was no allowance for uncollectible accounts necessary.

Offering and Related Costs Policy [Policy Text Block]

Offering and Related Costs

Offering and related costs include costs incurred in connection with the Company's issuance of common stock. These costs include, but are not limited to, (i) legal, accounting, printing, mailing and filing fees; (ii) escrow related fees, and (iii) reimbursement to the Dealer Manager for amount they paid to reimburse the bonified due diligence expenses of broker-dealers.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Share-Based Compensation

The Company has a stock-based incentive award plan for its affiliated Manager, non-executive directors, officers, other employees and independent contractors who are providing services to the company as applicable, and a non-executive director restricted share plan, which are accounted for under the guidance for share based payments. The expense for such awards is included in general and administrative expenses and is recognized over the vesting period or when the requirements for exercise of the award have been met. See Note 11 — Share-Based Compensation for additional information on these plans.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company qualified as a REIT under Sections 856 through 860 of the Internal Revenue Code (the “Code”) commencing with the taxable year ended December 31, 2011. Being qualified for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes its REIT taxable income to its stockholders, and so long as it distributes at least 90% of its REIT taxable income. REITs are subject to a number of other organizational and operational requirements. The Company may still be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income.

Earnings Per Share, Policy [Policy Text Block]

Per Share Data

Income (loss) per basic share of common stock is calculated by dividing net income (loss) less dividends on unvested restricted stock and dividends on preferred shares by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted income (loss) per share of common stock considers the effect of potentially dilutive shares of common stock outstanding during the period.

Segment Reporting, Policy [Policy Text Block]

Reportable Segments

The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company's investments in real estate generate rental revenue and other income through the leasing of properties, which comprised 100% of its total consolidated revenues. Although the Company's investments in real estate will be geographically diversified throughout the United States, management evaluates operating performance on an individual property level. The Company's properties have been aggregated into one reportable segment.

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Fair Value of Financial Instruments (Fair Value, by Balance Sheet Grouping) (Details) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Mortgages Notes Payable [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, fair value	$ 35,758	$ 30,260
Mortgages Notes Payable [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, fair value	35,793	30,626
Senior Secured Revolving Credit Facility [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, fair value	124,604	42,407
Senior Secured Revolving Credit Facility [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt, fair value	$ 124,604	$ 42,407

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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Narrative) (Details) (USD $)	1 Months Ended	12 Months Ended			12 Months Ended
	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 01, 2010	Dec. 31, 2012 Minimum [Member]	Dec. 31, 2012 Maximum [Member]	Dec. 31, 2012 Leases, Acquired-in-Place [Member]	Dec. 31, 2012 Above Market Leases [Member]	Dec. 31, 2012 One Year [Member] Leases, Acquired-in-Place [Member]	Dec. 31, 2012 One Year [Member] Above Market Leases [Member]	Dec. 31, 2012 Two Years [Member] Leases, Acquired-in-Place [Member]	Dec. 31, 2012 Two Years [Member] Above Market Leases [Member]	Dec. 31, 2012 Three Years [Member] Leases, Acquired-in-Place [Member]	Dec. 31, 2012 Three Years [Member] Above Market Leases [Member]	Dec. 31, 2012 Four Years [Member] Leases, Acquired-in-Place [Member]	Dec. 31, 2012 Four Years [Member] Above Market Leases [Member]	Dec. 31, 2012 Five Years [Member] Leases, Acquired-in-Place [Member]	Dec. 31, 2012 Five Years [Member] Above Market Leases [Member]	Dec. 31, 2012 Occupied [Member] property	Dec. 31, 2011 Occupied [Member] property	Dec. 31, 2012 Real Estate [Member] Vacant [Member] property	Dec. 31, 2011 Real Estate [Member] Vacant [Member] property	Sep. 30, 2012 Contributor [Member] ARC Real Estate Partners, LLC [Member] property
Summary of Significant Accounting Policies [Line Items]
Finite-Lived Intangible Assets, Gross			$ 11,044,000				$ 27,140,000
Period of Amortization for Intangible Asset		7 years 2 months 12 days					7 years 4 months 2 days	5 years 0 months 10 days
Acquisition related	0	3,988,000	1,875,000
Deferred Finance Costs, Current, Net		4,700,000	2,500,000
Cash and cash equivalents	0	2,748,000	3,148,000	0
Number of Real Estate Properties																			147	90	1	2
Amortization of intangible lease assets	0	2,047,000	159,000						3,688,000	252,000	3,619,000	252,000	3,336,000	252,000	3,067,000	252,000	2,531,000	122,000
Accumulated Amortization, Finite-Lived Intangible Asset, Acquired-in-Place-Leases		(5,244,000)	(3,197,000)
Cash in excess of FDIC limit		2,200,000	2,700,000
Real Estate Property, Weighted Average Remaining Lease Term					2 years	20 years
Finite-Lived Intangible Asset, Acquired-in-Place Leases, Net of Accumulated Amortization		21,896,000	7,847,000
Finite-Lived Intangible Asset, Off-market Lease, Favorable, Gross		1,264,000	0
Accumulated Amortization, Finite-Lived Intangible Asset, Off-Market Lease, Favorable		(116,000)	0
Off Market Leases, Unfavorable, Net of Accumulated Amortization		1,148,000	0
Finite-Lived Intangible Assets, Net		23,044,000	7,847,000
Deferred Costs, Leasing, Net		200,000	300,000
Deferred Offering Costs		100,000
Number Of Properties Contributed By Affiliate																							63
Maximum Amount of Offering from Universal Shelf Registration Statement		$ 500,000,000

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Total USD ($)	Common Stock USD ($)	Additional Paid-In Capital USD ($)	Accumulated Deficit USD ($)	Total Stock-holders' Equity USD ($)	Non-Controlling Interests USD ($)	Accumulated Other Comprehensive Loss USD ($)	Convertible Preferred Stock USD ($)	Preferred Stock [Member] USD ($)	Common Stock USD ($)	Common Stock USD ($)	Common Stock Additional Paid-In Capital USD ($)	Common Stock Total Stock-holders' Equity USD ($)	Convertible Preferred Stock Additional Paid-In Capital USD ($)	Convertible Preferred Stock Total Stock-holders' Equity USD ($)	Convertible Preferred Stock
Balance at Dec. 31, 2010
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares Issued (in shares)		7,146,034
Stock Issued During Period, Value, New Issues		$ 71	$ 83,860							$ 83,931			$ 83,931
Offering costs, commissions and dealer manager fees	(5,812)		5,812		(5,812)
Share based compensation (in shares)		176,400
Share-based compensation	182	2	180		182
Distributions Declared	1,450			(1,450)	1,450
Distributions to non-controlling interest holders	(68)					(68)
Net Income (Loss) Attributable to Parent	(2,575)
Net loss	(2,680)				(2,575)	(105)
Adjustments to Additional Paid in Capital, Other	(16,771)		(16,771)
Contributions From Non-Controlling Interest Holders			(3,875)			3,875
Balance at Dec. 31, 2011	57,332	73	57,582	(4,025)	53,630	3,702
Balance, (in shares) at Dec. 31, 2011		7,323,434
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares Issued (in shares)											3,737,500					828,472
Stock Issued During Period, Value, New Issues								8	9,000	34,935	38	34,897	34,935	8,992	9,000
Offering costs, commissions and dealer manager fees	(1,092)		(1,092)		(1,092)
Share based compensation (in shares)		96,709
Share-based compensation	1,170	1	1,169		1,170
Distributions Declared	8,402			(8,402)	(8,402)
Contribution from non-controlling interest holder	6,352					6,352
Distributions to non-controlling interest holders	(573)					(573)
Accumulated other comprehensive income (loss) - derivatives	(11)						(11)
Net Income (Loss) Attributable to Parent	(7,278)
Net loss	(7,549)					(271)
Balance at Dec. 31, 2012	$ 91,162	$ 112	$ 101,548	$ (19,705)	$ 81,952	$ 9,210	$ (11)	$ 8
Balance, (in shares) at Dec. 31, 2012		11,157,643						828,472

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Real Estate Investments - Notes

12 Months Ended

Dec. 31, 2012

Real Estate [Abstract]

Real Estate Investments

Real Estate Investments

The following table presents the allocation of the assets acquired and liabilities assumed during the periods presented (amounts in thousands):

	Year Ended December 31,
	2012			2011
Real estate investments, at cost:
Land	15,856			$	18,489
Buildings, fixtures and improvements	98,536			107,340
Total tangible assets	114,392			125,829
Acquired intangibles:
In-place leases	16,096			11,044
Above market leases	1,264			—
Total real estate investments acquired	131,752			136,873
OP Units issued to acquire real estate investments	(6,352		)	—
Cash paid to acquire real estate investments (1)	$	125,400		$	136,873
Number of properties acquired	58			88

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⁽¹⁾  For the year ended December 31, 2011, the amount includes the properties that were contributed in September 2011 in conjunction with the completion of the IPO by the Contributor at amortized cost as well as $17.5 million of properties acquired by the Company following the IPO.

The Company owns and operates commercial properties. As of December 31, 2012, the Company owned 147 properties, one of which was vacant and classified as held for sale. As of December 31, 2011, the Company owned 90 properties, two of which were vacant and classified as held for sale. The Contributor, an affiliate of the Sponsor, contributed 63 properties (the "Contributed Properties") in September 2011 in conjunction with the completion of the IPO at amortized cost.

The following table reflects the number and related purchase prices of properties acquired during the years ended December 31, 2012 and 2011 (amounts in thousands):

	Number of Properties	Base Purchase Price
Year ended December 31, 2011	88	$	136,873
Year ended December 31, 2012	58	131,752
Total portfolio as of December 31, 2012	146	$	268,625

The following table presents unaudited pro forma information as if the acquisitions during the year ended December 31, 2012, had been consummated on December 2, 2010 (date of inception). Additionally, the unaudited pro forma net loss attributable to stockholders was adjusted to reclass acquisition and transaction related expenses of $4.0 million from the year ended December 31, 2012 to the period from December 2, 2010 (date of inception) to December 31, 2010.

	Year Ended December 31,					Period from December 2, 2010 (date of inception) to December 31, 2010
(Amounts in thousands)	2012			2011
Pro forma revenues	$	23,512		$	23,512	$	1,932
Pro forma net income (loss) attributable to stockholders	$	(824	)	$	724	$	(3,776	)

Future Lease Payments

The following table presents future minimum base rental cash payments due to the Company over the next five years and thereafter. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	23,113
2014	23,309
2015	23,153
2016	22,808
2017	18,761
Thereafter	50,031
Total	$	161,175

The Company entered into a ground lease agreement related to the acquisition of a Walgreens Pharmacy. The following table reflects the minimum base rental cash payments due from the Company over the next five years and thereafter under this arrangement (amounts in thousands):

	Future Minimum Base Rent Payments
2013	$	160
2014	160
2015	160
2016	160
2017	160
Thereafter	600
Total	$	1,400

Tenant Concentration

The following table lists the tenants whose annualized rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2012 and 2011. Annualized rental income for net leases is rental income on a straight-line basis as of December 31, 2012, which includes the effect of tenant concessions such as free rent, as applicable. The Company did not own any properties as of December 31, 2010.

Tenant	2012	2011
Citizens Bank	28.7%	62.9%
GSA	11.6%	*
John Deere	10.0%	*
Home Depot	*	21.1%

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* The tenants' annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

The termination, delinquency or non-renewal of one or more leases by any of the above tenants may have a material effect on revenues. No other tenant represents more than 10% of the annualized rental income for the periods presented.

Geographic Concentration

The following table lists the states where the Company has concentrations of properties where annual rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2012 and 2011:

State	2012	2011
Michigan	15.2%	23.4%
Ohio	10.8%	16.8%
South Carolina	10.6%	23.4%
Iowa	10.0%	*

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* The state's annualized rental income was not greater than 10% of total annualized rental income for all portfolio properties as of the period specified.

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Related Party Transactions and Arrangements (Schedule of Offering Costs Reimbursements to Related Parties) (Details) (Manager [Member], ARC Properties Advisors, LLC [Member], Fees and Expense Reimbursement, Stock Offering [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Manager [Member] | ARC Properties Advisors, LLC [Member] | Fees and Expense Reimbursement, Stock Offering [Member]
Schedule of Offering Costs Reimbursements to Related Parties [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party	$ 183	$ 0

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Organization Organization (Tables)

12 Months Ended

Dec. 31, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Assets and Liabilities of Contributed Companies, at carryover basis [Table Text Block]

The assets and liabilities of the Contributed Companies are summarized as follows (amounts in thousands):

Assets and liabilities of Contributed Companies, at carryover basis:
Real estate investments, net of accumulated depreciation and amortization of $13,453	$	108,759
Other assets	2,402
Notes payable(1)	(30,626		)
Mortgage notes payable(2)	(96,472		)
Other liabilities	(834		)
Net assets (liabilities) of Contributed Companies	$	(16,771	)

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⁽¹⁾     Notes payable were repaid from the proceeds of the IPO concurrently with closing.

⁽²⁾   $82.6 million of mortgage notes payable were refinanced with a new $51.5 million revolving credit facility and the remaining balance was repaid from the proceeds of the IPO concurrently with closing of the IPO.

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Subsequent Events (Schedule of Acquisition Subequent to Period End) (Tables)

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

Schedule of Subsequent Events [Table Text Block]

The following table presents certain information about the properties that the Company acquired from January 1, 2013 to February 22, 2013 (dollar amounts in thousands):

	No. of Buildings	Square Feet	Base Purchase Price (1)
Total Portfolio – December 31, 2012 (2)	146	2,412,104	$	268,625
Acquisitions	5	59,034	21,910
Total portfolio – February 22, 2013 (2)	151	2,471,138	$	290,535

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(1) Contract purchase price, excluding acquisition and transaction related costs.

(2) Total portfolio excludes one vacant property contributed in September 2011 which was classified as held for sale at December 31, 2012.

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Economic Dependency

12 Months Ended

Dec. 31, 2012

Economic Dependency [Abstract]

Economic Dependency

Economic Dependency

Under various agreements, the Company has engaged or will engage the Manager and its affiliates 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, the sale of shares of the Company’s common stock, as well as other administrative responsibilities for the Company including accounting services and investor relations.

As a result of these relationships, the Company is dependent upon the Manager, the Sponsor and their affiliates. In the event that these companies were unable to provide the Company with the respective services, the Company would be required to find alternative providers of these services. As a result of the pending merger with ARCT III, the Company will internalize certain accounting and property acquisition services currently performed by the Manager and its affiliates. The Company may from time to time engage the former Advisor for legal, information technology or other support services for which it will pay market rates.