Related Party Transactions

As of June 30, 2017 and December 31, 2016, the Former Parent of the Sponsor, AR Global, the Special Limited Partner and a subsidiary of the Service Provider owned, in the aggregate, 258,504 and 81,481 shares of outstanding Common Stock, respectively. The Advisor, the Service Provider, and their affiliates may incur costs and fees on behalf of the Company. As of June 30, 2017 and December 31, 2016, the Company had $1.3 million and $5.2 million of receivables from related parties and $1.4 million and $2.2 million of payables to related parties, respectively.

As of June 30, 2017, AR Global indirectly owned 90% of the membership interests in the Advisor and Scott J. Bowman, the Company's outgoing chief executive officer and president, directly owned the other 10% of the membership interests in the Advisor. In connection with Mr. Bowman’s resignation as chief executive officer and president of the Company, Mr. Bowman will directly own 5% of the membership interests in the Advisor and AR Global will indirectly own the other 95% of the membership interests in the Advisor. James L. Nelson, the Company’s incoming chief executive officer and president, will hold a non-controlling profit interest in the Advisor and Property Manager. Mr. Nelson will become the Company's chief executive officer and president, effective on or about August 15, 2017, or as of such earlier date as the Company's board of directors may request (see Note 15 — Subsequent Events for further discussion).

The Company is the sole general partner of the OP. At Listing, the Advisor held a total of 487,252 OP Units and the Service Provider held a total of 115,967 OP Units. Subsequent to the Listing, all OP Units issued to the Advisor were transferred to individual members and employees of AR Global. On September 2, 2016, 421,378 of the OP Units were converted into Common Stock, of which 305,411 were issued to individual members and employees of AR Global and 115,967 were issued to the Service Provider. On April 3, 2017, the remaining 181,841 of OP Units were converted into Common Stock which were held by individual members and employees of AR Global. As of June 30, 2017, the Company holds all of the OP Units.

On June 2, 2015, the Advisor and the Service Provider exchanged 575,438 previously-issued Class B Units for 575,438 OP Units pursuant to the OP Agreement. These OP Units were redeemable for shares of Common Stock of the Company on a one-for-one basis, or the cash value of shares of Common Stock (at the option of the Company), 12 months from the Listing Date subject to the terms of the limited partnership agreement of the OP. The Advisor and the OP also entered into a Contribution and Exchange Agreement pursuant to which the Advisor contributed $0.8 million in cash to the OP in exchange for 27,776 OP Units. Subsequent to the Listing, such OP Units were transferred to individual members and employees of AR Global. The OP made cash distributions to partners other than the Company of $0.1 million during the six months ended June 30, 2017. There were no cash distributions paid to holders of OP Units during the three months ended June 30, 2017. The OP made cash distributions with respect to partnership interests other than those of the Company of $0.3 million and $0.6 million during the three and six months ended June 30, 2016, respectively.

In addition, in connection with the OPP, the Company paid $0.2 million and $0.3 million in distributions related to LTIP Units (as defined in Note 13 — Share-Based Compensation) during the three and six months ended June 30, 2017, respectively, which are included in non-controlling interest in the consolidated statement of changes in equity. As of June 30, 2017 and December 31, 2016, the Company had no unpaid distributions relating to LTIP Units.

A holder of OP Units, other than the Company, has the right to convert OP Units for a corresponding number of shares of Common Stock, or the cash value equivalent of those corresponding shares, at the Company's option, in accordance with the limited partnership agreement of the OP. The 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.

Realty Capital Securities, LLC (the "Former Dealer Manager") served as the dealer manager of the Company's IPO, which was ongoing from October 2012 to June 2014 and, together with its affiliates, continued to provide the Company with various services through December 31, 2015. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Global, the parent of the Sponsor. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc. On March 8, 2017, the creditor trust established in connection with the RCAP bankruptcy filed suit against AR Global, the Advisor, advisors of other entities sponsored by AR Global, and AR Global's principals. The suit alleges, among other things, certain breaches of duties to RCAP. The Company is not named in the suit, nor are there any allegations related to the services the Advisor provides to the Company. On May 26, 2017, the defendants moved to dismiss. The Advisor has informed the Company that it believes that the suit is without merit and intends to defend against it vigorously.

Acquired Related Party Receivable

As more fully described in Note 3 — Merger Transaction, the Company acquired a $5.1 million receivable due from an affiliate of the Advisor which is payable in eight equal monthly installments beginning on January 15, 2017. As of June 30, 2017, the Company has been paid $3.9 million of this receivable which has a remaining balance of $1.3 million as of June 30, 2017.

Fees Paid in Connection With the Operations of the Company

Until the Listing Date, the Advisor was paid an acquisition fee of 1.0% of the contract purchase price of each acquired property and 1.0% of the amount advanced for a loan or other investment and a finance fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations. Solely with respect to investment activities in Europe, the Advisor paid the Service Provider the acquisition fees and financing coordination fees. Until the Listing Date, the Advisor was also reimbursed for insourced expenses incurred in the process of acquiring properties, which were limited to 0.5% of the contract purchase price and 0.5% of the amount advanced for a loan or other investment. Additionally, the Company paid third party acquisition expenses.

In addition, until the Listing Date, the Company compensated the Advisor for its asset management services in an amount equal to 0.75% per annum of the total of: the cost of the Company's assets (cost includes the purchase price, acquisition expenses, capital expenditures and other customarily capitalized costs, but excluding acquisition fees) plus costs and expenses incurred by the Advisor in providing asset management services, less the excess, if any, of dividends over FFO plus acquisition fees expenses and restricted share grant amortization. Until April 1, 2015, as compensation for this arrangement, the Company caused the OP to issue (subject to periodic approval by the board of directors) to the Advisor and Service Provider performance-based restricted partnership units of the OP ("Class B Units"). An aggregate of 575,438 Class B Units were issued to the Advisor and the Service Provider in connection with this arrangement, all of which vested on the Listing Date at a cost of $14.5 million. Concurrently, the Class B Units were converted to OP Units on a one-to-one basis. The vested value was calculated based, in part, on the closing price of Company's Common Stock on June 2, 2015 less an estimated discount for the one year lock-out period of transferability or liquidity of the OP Units. The Advisor and the Service Provider received distributions on unvested Class B Units equal to the dividend rate received on Common Stock. The Company records OP Unit distributions in the consolidated statement of changes in equity. Since April 1, 2015, the Advisor has been paid for its asset management services in cash. The performance condition related to these Class B Units was satisfied upon completion of the Listing, and the Class B Units vested.

On the Listing Date, the Company entered into the Advisory Agreement. Under the terms of the Advisory Agreement, the Company pays the Advisor:


(i)	a base fee of $18.0 million per annum payable in cash monthly in advance (“Minimum Base Management Fee”);

(ii)

plus a variable fee, payable monthly in advance in cash, equal to 1.25% of the cumulative net proceeds realized by the Company from the issuance of any common equity, including any common equity issued in exchange for or conversion of preferred stock or exchangeable notes, as well as, from any other issuances of common, preferred, or other forms of equity of the Company, including units of any operating partnership (“Variable Base Management Fee”); and

(iii)

an incentive fee (“Incentive Compensation”), 50% payable in cash and 50% payable in shares of Common Stock (which shares are subject to certain lock up restrictions), equal to: (a) 15% of the Company’s Core AFFO (as defined in the Advisory Agreement) per weighted average share outstanding for the applicable period (“Core AFFO Per Share”)(1) in excess of an incentive hurdle based on an annualized Core AFFO Per Share of $2.37, plus (b) 10% of the Core AFFO Per Share in excess of an incentive hurdle of an annualized Core AFFO Per Share of $3.08. The $2.37 and $3.08 incentive hurdles are subject to annual increases of 1% to 3%. The Base Management Fee and the Incentive Compensation are each subject to an annual adjustment.

The annual aggregate amount of the Minimum Base Management Fee and Variable Base Management Fee (collectively, the “Base Management Fee”) that may be paid under the Advisory Agreement are subject to varying caps based on assets under management (“AUM”)⁽²⁾, as defined in the Advisory Agreement.

_______________________________

⁽¹⁾

For purposes of the Advisory Agreement, Core AFFO per share means (i) net income adjusted for the following items (to the extent they are included in net income): (a) real estate related depreciation and amortization; (b) net income from unconsolidated partnerships and joint ventures; (c) one-time costs that the Advisor deems to be non-recurring; (d) non-cash equity compensation (other than any Restricted Share Payments); (e) other non-cash income and expense items; (f) non-cash dividends related to the Class B Units of the OP and certain non-cash interest expenses related to securities that are convertible to Common Stock; (g) gains (or losses) from the sale of investments; (h) impairment losses on real estate; (i) acquisition and transaction related costs; (j) straight-line rent; (k) amortization of above and below market leases assets and liabilities; (l) amortization of deferred financing costs; (m) accretion of discounts and amortization of premiums on debt investments; (n) marked-to-market adjustments included in net income; (o) unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and (p) consolidated and unconsolidated partnerships and joint ventures. (ii) divided by the weighted average outstanding shares of Common Stock on a fully diluted basis for such period.

⁽²⁾

For purposes of the Advisory Agreement, "AUM" means, for a specified period, an amount equal to (A) (i) the aggregate costs of the Company's investments (including acquisition fees and expenses) at the beginning of such period (before reserves for depreciation of bad debts, or similar non-cash reserves) plus (ii) the aggregate cost of the Company's investment at the end of such period (before reserves from depreciation or bad debts, or similar non-cash reserves) divided by (B) two (2).

Specifically, the per annum aggregate amount of the Base Management Fee and the Incentive Compensation to be paid under the Advisory Agreement is capped at (a) 1.25% of the AUM for the previous year if AUM is less than or equal to $5.0 billion; (b) 0.95% if the AUM is equal to or exceeds $15.0 billion; or (c) a percentage equal to: (A) 1.25% less (B) (i) a fraction, (x) the numerator of which is the AUM for such specified period less $5.0 billion and (y) the denominator of which is $10.0 billion multiplied by (ii) 0.30% if AUM is greater than $5.0 billion but less than $15.0 billion. The Variable Base Management Fee is also subject to reduction if there is a sale or sales of one or more Investments in a single or series of related transactions exceeding $200.0 million and a special dividend(s) related thereto is paid to stockholders.

The Property Manager provides property management and leasing services for properties owned by the Company, for which the Company pays fees equal to: (i) with respect to stand-alone, single-tenant net leased properties which are not part of a shopping center, 2.0% of gross revenues from the properties managed and (ii) with respect to all other types of properties, 4.0% of gross revenues from the properties managed.

For services related to overseeing property management and leasing services provided by any person or entity that is not an affiliate of the Property Manager, the Company pays the Property Manager an oversight fee equal to 1.0% of gross revenues of the property managed.

Solely with respect to the Company's investments in properties located in Europe, the Service Provider receives a portion of the fees payable to the Advisor equal to: (i) with respect to single-tenant net leased properties which are not part of a shopping center, 1.75% of the gross revenues from such properties and (ii) with respect to all other types of properties, 3.5% of the gross revenues from such properties. The Property Manager is paid 0.25% of the gross revenues from European single-tenant net leased properties which are not part of a shopping center and 0.5% of the gross revenues from all other types of properties, reflecting a split of the oversight fee with the Service Provider.

The following table reflects related party fees incurred, forgiven and contractually due as of and for the periods presented:



	Three Months Ended June 30,									Six Months Ended June 30,
	2017					2016				2017					2016				(Receivable) Payable as of
(In thousands)	Incurred			Forgiven		Incurred		Forgiven		Incurred			Forgiven		Incurred		Forgiven		June 30, 2017				December 31, 2016
One-time fees and reimbursements:
Related party notes receivable acquired in Merger⁽¹⁾	$	—		$	—	$	—	$	—	$	—		$	—	$	—	$	—	$	(1,285	)		$	(5,138	)
Fees on gain from sale of investments	—			—		—		—		—			—		—		—		323			⁽⁵⁾	923			⁽⁵⁾
Financing coordination fees ⁽²⁾	—			—		—		—		—			—		—		—		—			⁽⁵⁾	16			⁽⁵⁾
Ongoing fees:
Asset management fees ⁽³⁾	5,207			—		4,500		—		10,397			—		9,000		—		233			⁽⁵⁾	447			⁽⁵⁾
Property management fees ⁽⁴⁾	1,126			620		1,022		563		2,223			1,177		1,935		1,159		352			^{(5) (8)}	252			^{(5) (8)}
Total related party operational fees and reimbursements	$	6,333	⁽⁷⁾	$	620	$	5,522	$	563	$	12,620	⁽⁷⁾	$	1,177	$	10,935	$	1,159	$	(377	)	⁽⁶⁾	$	(3,500	)	⁽⁹⁾

___________________________________________________________________________


⁽¹⁾	Balance included within related party notes receivable acquired in the Merger on the consolidated balance sheets as of June 30, 2017 and December 31, 2016. In addition, the $16,000 due from related parties as of June 30, 2017 and December 31, 2016 relating to RCS Advisory (as defined below) is not included in the table above.


⁽²⁾	These related party fees are recorded as deferred financing costs and amortized over the term of the respective financing arrangement.

⁽³⁾

The Advisor, in accordance with the Advisory Agreement, received asset management fees in cash equal to one quarter of the annual Minimum Base Management Fee for the three and six months ended June 30, 2017, and, the Variable Base Management Fee of $0.7 million and $1.4 million for the three and six months ended June 30, 2017, respectively. There were no Variable Base Management Fee for the three and six months ended June 30, 2016. No Incentive Compensation was earned for the three and six months ended June 30, 2017 and 2016.


⁽⁴⁾	The Advisor waived 100% of fees from U.S. assets and its allocated portion of fees from European assets.


⁽⁵⁾	Balance included within due to related parties on the consolidated balance sheets as of June 30, 2017 and December 31, 2016.


⁽⁶⁾	In addition, as of June 30, 2017, due to related parties include $0.3 million of costs accrued for Global II Advisor and transfer agent fees which were assumed through the Merger, $36,000 of costs accrued for transfer agent fees and $0.2 million of costs relating to RCS Advisory (as defined below), all accrued in 2016 and are not reflected in the table above.


⁽⁷⁾	The Company incurred general and administrative costs and other expense reimbursements of $48,000 for the three and six months ended June 30, 2017 which are recorded within general and administrative expenses on the consolidated statements of operations and are not reflected in the table above.


⁽⁸⁾	Prepaid property management fees of $0.1 million as of June 30, 2017 and December 31, 2016 are not included in the table above and are included in the prepaid expenses and other assets on the consolidated balance sheets.


⁽⁹⁾	In addition, as of December 31, 2016 due to related parties includes $0.5 million of accruals, of which $0.2 million of costs accrued for transfer agent and personnel services received from the Company's related parties including ANST and $0.3 million to Advisor and RCS.

The Company reimburses the Advisor's costs of providing certain administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company's operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income. Additionally, the Company reimburses the Advisor for certain expenses of the Advisor and its affiliates incurred on behalf of the Company. The Company does not reimburse the Advisor for those expenses that are specifically the responsibility of the Advisor under the Advisory Agreement, including fees and compensation paid to the Service Provider and the Advisor's overhead expenses, rent and travel expenses, professional services fees incurred with respect to the Advisor for the operation of its business, insurance expenses (other than with respect to the Company's directors and officers) and information technology expenses. No reimbursement was due by the Company to the Advisor during the three and six months ended June 30, 2017 and 2016.

In order to improve operating cash flows and the ability to pay dividends from operating cash flows, the Advisor may forgive certain fees including asset management and property management fees. Because the Advisor may forgive certain fees, cash flow from operations that would have been paid to the Advisor may be available to pay dividends to stockholders. The fees that may be forgiven are not deferrals and accordingly, will not be paid to the Advisor. During the three and six months ended June 30, 2017 and 2016, the Advisor elected to forgive $0.6 million and $1.2 million of the property management fees, respectively.

The predecessor to the parent of the Sponsor was party to a services agreement with RCS Advisory Services, LLC, a subsidiary of the parent company of the Former Dealer Manager ("RCS Advisory"), pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by the Sponsor with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessor to the parent of the Sponsor instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.

The Company was also party to a transfer agency agreement with American National Stock Transfer, LLC ("ANST"), a subsidiary of the parent company of the Former Dealer Manager, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by DST Systems, Inc. ("DST"), a third-party transfer agent. The Sponsor received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. On February 26, 2016, the Company entered into a definitive agreement with DST to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). On April 22, 2016, the Company terminated its agreement with DST and entered into a definitive agreement American Stock Transfer and Trust Company, LLC ("AST") appointing AST as the Company's transfer agent and registrar.

Fees Paid in Connection with the Liquidation of the Company's Real Estate Assets

In connection with any sale or transaction involving any investment, subject to the terms of the Advisory Agreement, the Company will pay to the Advisor a fee in connection with net gain recognized by the Company in connection with the sale or transaction (the "Gain Fee") unless the proceeds of such transaction or series of transaction are reinvested in one or more investments within 180 days thereafter. The Gain Fee is calculated at the end of each month and paid, to the extent due, with the next installment of the Base Management Fee. The Gain Fee is calculated by aggregating all of the Gains and Losses from the preceding month. During the six months ended June 30, 2017, the Company reinvested proceeds of $30.3 million and sold one property which resulted in a reduction to the Gain Fee of $0.6 million. As of June 30, 2017 and December 31, 2016, the Gain Fee due to the Advisor was $0.3 million and $0.9 million, respectively. There was no Gain Fee for the three months ended June 30, 2017 and three and six months ended June 30, 2016.