Document

December 31, 2018

Interest Rate Derivative

Number of
Instruments

Notional Amount

(In thousands)

Interest Rate “Pay Fixed” Swaps

(In thousands, except share and per share data)



	September 30, 2019			December 31, 2018
ASSETS	(Unaudited)
Real estate investments, at cost:
Land	$	669,879		$	629,190
Buildings, fixtures and improvements	2,637,538			2,441,659
Acquired intangible lease assets	443,468			413,948
Total real estate investments, at cost	3,750,885			3,484,797
Less: accumulated depreciation and amortization	(502,215		)	(454,614		)
Total real estate investments, net	3,248,670			3,030,183
Cash and cash equivalents	76,838			91,451
Restricted cash	19,665			18,180
Deposits for real estate investments	115			3,037
Goodwill	—			1,605
Deferred costs, net	17,063			16,222
Straight-line rent receivable	44,253			37,911
Operating lease right-of-use assets	19,083			—
Prepaid expenses and other assets	21,267			19,439
Assets held for sale	10,108			44,519
Total assets	$	3,457,062		$	3,262,547

LIABILITIES AND EQUITY
Mortgage notes payable, net	$	1,309,852		$	1,196,113
Credit facility	317,700			324,700
Below market lease liabilities, net	83,308			89,938
Accounts payable and accrued expenses (including $958 and $2,634 due to related parties as of September 30, 2019 and December 31, 2018, respectively)	28,452			28,383
Operating lease liabilities	19,315			—
Derivative liabilities, at fair value	—			531
Deferred rent and other liabilities	9,952			13,067
Dividends payable	2,830			80
Total liabilities	1,771,409			1,652,812

7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 6,796,000 shares authorized, 6,036,056 issued and outstanding as of September 30, 2019 and no shares issued and outstanding as of December 31, 2018	60			—
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 106,677,866 and 106,230,901 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	1,067			1,063
Additional paid-in capital	2,567,059			2,412,915
Accumulated other comprehensive loss	—			(531		)
Distributions in excess of accumulated earnings	(898,493		)	(812,047		)
Total stockholders’ equity	1,669,693			1,601,400
Non-controlling interests	15,960			8,335
Total equity	1,685,653			1,609,735
Total liabilities and equity	$	3,457,062		$	3,262,547

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue from tenants	$	72,863		$	74,888		$	223,513		$	216,115

Operating expenses:
Asset management fees to related party	6,545			5,849			18,918			17,295
Property operating expense	12,398			13,497			38,371			40,009
Impairment of real estate investments	—			1,172			827			10,057
Acquisition, transaction and other costs	489			1,549			3,235			5,941
Listing fees	—			4,988			—			4,988
Vesting and conversion of Class B Units	—			15,786			—			15,786
Equity-based compensation	3,217			2,240			9,506			2,331
General and administrative	3,573			6,086			16,075			16,857
Depreciation and amortization	29,901			35,332			92,911			107,269
Goodwill impairment	—			—			1,605			—
Total operating expenses	56,123			86,499			181,448			220,533
Operating income before gain on sale of real estate investments	16,740			(11,611		)	42,065			(4,418		)
Gain on sale of real estate investments	1,933			1,328			19,171			29,590
Operating income	18,673			(10,283		)	61,236			25,172
Other (expense) income:
Interest expense	(18,569		)	(17,017		)	(59,004		)	(49,166		)
Other income	48			9			3,260			69
Total other expense, net	(18,521		)	(17,008		)	(55,744		)	(49,097		)
Net income (loss)	152			(27,291		)	5,492			(23,925		)
Net (income) loss attributable to non-controlling interests	(4		)	46			(15		)	40
Preferred stock dividends	(3,079		)	—			(3,751		)	—
Net (loss) income attributable to common stockholders	(2,931		)	(27,245		)	1,726			(23,885		)

Other comprehensive (loss) income:
Change in unrealized loss on derivatives	—			269			531			127
Comprehensive (loss) income attributable to common stockholders	$	(2,931	)	$	(26,976	)	$	2,257		$	(23,758	)

Weighted-average shares outstanding — Basic and Diluted	106,139,668			105,905,281			106,097,597			105,379,306
Net (loss) income per share attributable to common stockholders — Basic and Diluted	$	(0.03	)	$	(0.26	)	$	0.01		$	(0.23	)



	Nine Months Ended September 30, 2019
	Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares		Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive income (loss)			Distributions in excess of accumulated earnings			Total Stockholders’ Equity			Non-controlling Interests			Total Equity
Balance, December 31, 2018	—	$	—	106,230,901		$	1,063		$	2,412,915		$	(531	)	$	(812,047	)	$	1,601,400		$	8,335		$	1,609,735
Impact of adoption of new accounting pronouncement for leases (Note 2)	—	—		—		—			—			—			(170		)	(170		)	—			(170		)
Issuance of Common Stock, net	—	—		432,247		4			5,732			—			—			5,736			—			5,736
Issuance of Preferred Stock, net	6,036,056	60		—		—			146,900			—			—			146,960			—			146,960
Common stock repurchases	—	—		(19,870	)	(1		)	(273		)	—			—			(274		)	—			(274		)
Equity-based compensation	—	—		34,588		1			825			—			—			826			8,681			9,507
Dividends declared on Common Stock, $0.28 per share	—	—		—		—			—			—			(87,632		)	(87,632		)	—			(87,632		)
Dividends declared on Preferred Stock, $0.38 per share	—	—		—		—			—			—			(3,751		)	(3,751		)	—			(3,751		)
Dividends to non-controlling interest holders	—	—		—		—			—			—			(370		)	(370		)	(111		)	(481		)
Net income	—	—		—		—			—			—			5,477			5,477			15			5,492
Other comprehensive loss	—	—		—		—			—			531			—			531			—			531
Rebalancing of ownership percentage	—	—		—		—			960			—			—			960			(960		)	—
Balance, September 30, 2019	6,036,056	$	60	106,677,866		$	1,067		$	2,567,059		$	—		$	(898,493	)	$	1,669,693		$	15,960		$	1,685,653



	Three Months Ended September 30, 2019
	Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive income (loss)		Distributions in excess of accumulated earnings			Total Stockholders’ Equity			Non-controlling Interests			Total Equity
Balance, June 30, 2019	1,652,600	$	17	106,245,619	$	1,063	$	2,453,814	$	—	$	(866,226	)	$	1,588,668		$	13,182		$	1,601,850
Issuance of Common Stock, net	—	—		432,247	4		5,732		—		—			5,736			—			5,736
Issuance of Preferred Stock, net	4,383,456	43		—	—		107,143		—		—			107,186			—			107,186
Common stock repurchases	—	—		—	—		—		—		—			—			—			—
Equity-based compensation	—	—		—	—		253		—		—			253			2,964			3,217
Dividends declared on Common Stock, $0.28 per share	—	—		—	—		—		—		(29,212		)	(29,212		)	—			(29,212		)
Dividends declared on Preferred Stock, $0.38 per share	—	—		—	—		—		—		(3,079		)	(3,079		)	—			(3,079		)
Dividends to non-controlling interest holders	—	—		—	—		—		—		(124		)	(124		)	(73		)	(197		)
Net income	—	—		—	—		—		—		148			148			4			152
Rebalancing of ownership percentage	—	—		—	—		117		—		—			117			(117		)	—
Balance, September 30, 2019	6,036,056	$	60	106,677,866	$	1,067	$	2,567,059	$	—	$	(898,493	)	$	1,669,693		$	15,960		$	1,685,653



	Nine Months Ended September 30, 2018
	Common Stock
	Number of Shares		Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive income (loss)		Distributions in excess of accumulated earnings			Total Stockholders' Equity			Non-controlling Interests			Total Equity
Balance, December 31, 2017	105,172,185		$	1,052		$	2,393,237		$	95	$	(657,874	)	$	1,736,510		$	4,546		$	1,741,056
Common stock issued through distribution reinvestment plan	990,393		10			23,238			—		—			23,248			—			23,248
Common stock repurchases	(1,122,245	)	(11		)	(20,226		)	—		—			(20,237		)	—			(20,237		)
Vesting and conversion of Class B Units	1,052,420		11			15,775			—		—			15,786			—			15,786
Redemption of Class A Units	30,691		—			736			—		—			736			(736		)	—
Equity-based compensation, net of forfeitures	127,402		1			180			—		—			181			2,150			2,331
Distributions declared on Common Stock, $0.32 per share	—		—			—			—		(97,052		)	(97,052		)	—			(97,052		)
Distributions to non-controlling interest holders	—		—			—			—		(101		)	(101		)	(182		)	(283		)
Net income	—		—			—			—		(23,885		)	(23,885		)	(40		)	(23,925		)
Other comprehensive loss	—		—			—			127		—			127			—			127
Balance, September 30, 2018	106,250,846		$	1,063		$	2,412,940		$	222	$	(778,912	)	$	1,635,313		$	5,738		$	1,641,051



	Three Months Ended September 30, 2018
	Common Stock
	Number of Shares		Par Value		Additional Paid-in Capital			Accumulated Other Comprehensive income (loss)			Distributions in excess of accumulated earnings			Total Stockholders' Equity			Non-controlling Interests			Total Equity
Balance, June 30, 2018	105,058,793		$	1,051	$	2,396,775		$	(47	)	$	(722,247	)	$	1,675,532		$	4,421		$	1,679,953
Common stock issued through distribution reinvestment plan	—		—		—			—			—			—			—			—
Common stock repurchases	(18,460	)	—		(435		)	—			—			(435		)	—			(435		)
Vesting and conversion of Class B Units	1,052,420		11		15,775			—			—			15,786			—			15,786
Redemption of Class A Units	30,691		—		736			—			—			736			(736		)	—
Equity-based compensation, net of forfeitures	127,402		1		89			—			—			90			2,150			2,240
Distributions declared on Common Stock, $0.32 per share	—		—		—			—			(29,319		)	(29,319		)	—			(29,319		)
Distributions to non-controlling interest holders	—		—		—			—			(101		)	(101		)	(51		)	(152		)
Net income	—		—		—			—			(27,245		)	(27,245		)	(46		)	(27,291		)
Other comprehensive loss	—		—		—			269			—			269			—			269
Balance, September 30, 2018	106,250,846		$	1,063	$	2,412,940		$	222		$	(778,912	)	$	1,635,313		$	5,738		$	1,641,051



	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities:
Net income (loss)	$	5,492		$	(23,925	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	57,920			65,522
Amortization of in-place lease assets	33,887			41,084
Amortization of deferred leasing costs	1,104			663
Amortization (including accelerated write-off) of deferred financing costs	5,972			4,253
Accretion of mortgage discounts (premiums) on borrowings	(2,472		)	(2,693		)
Amortization (accretion) of market lease intangibles, net	(6,065		)	(9,444		)
Equity-based compensation	9,506			2,331
Vesting and conversion of Class B Units	—			15,786
Mark-to-market adjustments	—			(72		)
Gain on sale of real estate investments	(19,171		)	(29,590		)
Impairment of real estate investments and goodwill impairment	2,432			10,057
Payments of prepayment costs on mortgages	2,235			3,421
Changes in assets and liabilities:
Straight-line rent receivable	(6,591		)	(7,454		)
Straight-line rent payable	1,113			73
Prepaid expenses and other assets	(3,445		)	(3,723		)
Accounts payable and accrued expenses	(612		)	9,478
Deferred rent and other liabilities	(3,115		)	(2,006		)
Net cash, cash equivalents and restricted cash provided by operating activities	78,190			73,761
Cash flows from investing activities:
Capital expenditures	(9,194		)	(7,783		)
Acquisitions of investments in real estate and other assets	(365,431		)	(192,630		)
Proceeds from sale of real estate investments	25,772			37,177
Deposits	2,923			(85		)
Net cash, cash equivalents and restricted cash used in investing activities	(345,930		)	(163,321		)
Cash flows from financing activities:
Proceeds from mortgage notes payable	241,930			29,887
Payments on mortgage notes payable	(32,173		)	(46,586		)
Proceeds from credit facility	198,000			260,700
Payments on credit facility	(205,000		)	(95,000		)
Payments of financing costs	(9,865		)	(7,031		)
Payments of prepayment costs on mortgages	(2,235		)	(3,421		)
Common stock repurchases	(274		)	(20,237		)
Distributions on LTIP Units and Class A Units	(316		)	(101		)
Dividends paid on common stock	(87,875		)	(75,580		)
Dividends paid on preferred stock	(921		)	—
Proceeds from issuance of common stock, net	5,736			—
Proceeds from issuance of preferred stock, net	147,605			—
Net cash, cash equivalents and restricted cash provided by (used in) financing activities	254,612			42,631
Net change in cash, cash equivalents and restricted cash	(13,128		)	(46,929		)
Cash, cash equivalents and restricted cash beginning of period	109,631			127,254
Cash, cash equivalents and restricted cash end of period	$	96,503		$	80,325



	Nine Months Ended September 30,
	2019			2018
Cash and cash equivalents, end of period	$	76,838		$	60,265
Restricted cash, end of period	19,665			20,060
Cash, cash equivalents and restricted cash end of period	$	96,503		$	80,325

Supplemental Disclosures:
Cash paid for interest, net of amounts capitalized	$	54,888		$	46,580
Cash paid for income taxes	145			925

Non-Cash Investing and Financing Activities:
Accrued Preferred Stock offering costs	$	645		$	—
Preferred dividend declared	$	3,751		$	—
Proceeds from real estate sales used to pay off related mortgage notes payable	$	88,636		$	74,546
Mortgage notes payable released in connection with disposition of real estate	$	(88,636	)	$	(74,546	)
Common stock issued through distribution reinvestment plan	$	—		$	23,248
Accrued capital expenditures	$	1,192		$	2,192

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

We are a diversified REIT focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S. We own a diversified portfolio of commercial properties comprised primarily of freestanding single-tenant properties that are net leased to investment grade and other creditworthy tenants and a portfolio of multi-tenant retail properties consisting primarily of power centers and lifestyle centers. We intend to focus our future acquisitions primarily on net leased service retail properties, defined as single-tenant retail properties leased to tenants in the retail banking, restaurant, grocery, pharmacy, gas, convenience, fitness, and auto services sectors. As of September 30, 2019, we owned 771 properties, comprised of 18.2 million rentable square feet, which were 95.2% leased, including 738 single-tenant net leased commercial properties (700 of which are retail properties) and 33 multi-tenant retail properties.

On July 19, 2018 (the “Listing Date”), we listed shares of our common stock, which had been renamed “Class A common stock” in connection with a series of corporate actions effected earlier in July 2018, on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “AFIN” (the “Listing”). To effect the Listing, and to address the potential for selling pressure that may have existed at the outset of listing, we listed only shares of Class A common stock, which represented approximately 50% of our outstanding shares of common stock, on Nasdaq on the Listing Date. Our two other classes of outstanding stock at the time of the Listing were Class B-1 common stock, which comprised approximately 25% of our outstanding shares of common stock at that time, and Class B-2 common stock, which comprised approximately 25% of our outstanding shares of common stock at that time. In accordance with their terms, all shares of Class B-1 common stock automatically converted into shares of Class A common stock and were listed on Nasdaq on October 10, 2018 and all shares of Class B-2 common stock automatically converted into shares of Class A common stock and were listed on Nasdaq on January 9, 2019. As of September 30, 2019, we had 106.7 million shares of Class A common stock outstanding, representing all shares of common stock outstanding. For additional information, see Note 8 — Stockholders’ Equity to our consolidated financial statements in this Quarterly Report on Form 10-Q.

We have no employees. We have retained the Advisor to manage our affairs on a day-to-day basis. American Finance Properties, LLC (the “Property Manager”) serves as our property manager. The Advisor and the Property Manager are under common control with AR Global, and these related parties of ours receive compensation, fees and expense reimbursements for services related to managing our business. Lincoln and its affiliates provide services to the Advisor in connection with our multi-tenant retail properties that are not net leased. The Advisor has informed us that the Advisor has agreed to pass through to Lincoln a portion of the fees and other expense reimbursements otherwise payable to the Advisor or its affiliates by us for services rendered by Lincoln. We are not a party to any contract with, and have no obligation to Lincoln.



Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term⁽¹⁾	Percentage Leased
Dollar General I	Apr 2013; May 2013	2	18	8.6	100.0%
Walgreens I	Jul 2013	1	11	18.0	100.0%
Dollar General II	Jul 2013	2	18	8.7	100.0%
AutoZone I	Jul 2013	1	7	7.8	100.0%
Dollar General III	Jul 2013	5	46	8.6	100.0%
BSFS I	Jul 2013	1	9	4.3	100.0%
Dollar General IV	Jul 2013	2	18	6.4	100.0%
Tractor Supply I	Aug 2013	1	19	8.2	100.0%
Dollar General V	Aug 2013	1	12	8.3	100.0%
Mattress Firm I	Aug 2013; Nov 2013; Feb 2014; Mar 2014; Apr 2014	5	24	7.4	100.0%
Family Dollar I	Aug 2013	1	8	1.8	100.0%
Lowe's I	Aug 2013	5	671	9.6	100.0%
O'Reilly Auto Parts I	Aug 2013	1	11	10.8	100.0%
Food Lion I	Aug 2013	1	45	10.1	100.0%
Family Dollar II	Aug 2013	1	8	3.8	100.0%
Walgreens II	Aug 2013	1	14	13.5	100.0%
Dollar General VI	Aug 2013	1	9	6.4	100.0%
Dollar General VII	Aug 2013	1	9	8.5	100.0%
Family Dollar III	Aug 2013	1	8	3.0	100.0%
Chili's I	Aug 2013	2	13	6.2	100.0%
CVS I	Aug 2013	1	10	6.3	100.0%
Joe's Crab Shack I	Aug 2013	1	8	7.5	100.0%
Dollar General VIII	Sep 2013	1	9	8.8	100.0%
Tire Kingdom I	Sep 2013	1	7	5.5	100.0%
AutoZone II	Sep 2013	1	7	3.7	100.0%
Family Dollar IV	Sep 2013	1	8	3.8	100.0%
Fresenius I	Sep 2013	1	6	5.8	100.0%
Dollar General IX	Sep 2013	1	9	5.6	100.0%
Advance Auto I	Sep 2013	1	11	3.8	100.0%
Walgreens III	Sep 2013	1	15	6.5	100.0%
Walgreens IV	Sep 2013	1	14	5.0	100.0%
CVS II	Sep 2013	1	14	17.4	100.0%
Arby's I	Sep 2013	1	3	8.8	100.0%
Dollar General X	Sep 2013	1	9	8.5	100.0%
AmeriCold I	Sep 2013	9	1,407	8.0	100.0%
Home Depot I	Sep 2013	2	1,315	7.3	100.0%
New Breed Logistics I	Sep 2013	1	390	2.1	100.0%
SunTrust Bank I	Sep 2013	19	102	8.6	100.0%
National Tire & Battery I	Sep 2013	1	11	4.2	100.0%
Circle K I	Sep 2013	19	55	9.1	100.0%
Walgreens V	Sep 2013	1	14	7.9	100.0%
Walgreens VI	Sep 2013	1	15	9.6	100.0%
FedEx Ground I	Sep 2013	1	22	3.7	100.0%
Walgreens VII	Sep 2013	8	113	9.8	100.0%
O'Charley's I	Sep 2013	20	136	12.1	100.0%
Krystal I	Sep 2013	6	13	10.0	100.0%
1st Constitution Bancorp I	Sep 2013	1	5	4.3	100.0%



Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term⁽¹⁾	Percentage Leased
American Tire Distributors I	Sep 2013	1	125	4.3	100.0%
Tractor Supply II	Oct 2013	1	24	4.0	100.0%
United Healthcare I	Oct 2013	1	400	1.8	100.0%
National Tire & Battery II	Oct 2013	1	7	12.7	100.0%
Tractor Supply III	Oct 2013	1	19	8.6	100.0%
Mattress Firm II	Oct 2013	1	4	10.0	100.0%
Dollar General XI	Oct 2013	1	9	7.6	100.0%
Talecris Plasma Resources I	Oct 2013	1	22	3.5	100.0%
Amazon I	Oct 2013	1	79	3.8	100.0%
Fresenius II	Oct 2013	2	16	7.9	100.0%
Dollar General XII	Nov 2013; Jan 2014	2	18	9.2	100.0%
Dollar General XIII	Nov 2013	1	9	6.5	100.0%
Advance Auto II	Nov 2013	2	14	3.6	100.0%
FedEx Ground II	Nov 2013	1	49	3.8	100.0%
Burger King I	Nov 2013	41	168	14.2	100.0%
Dollar General XIV	Nov 2013	3	27	8.7	100.0%
Dollar General XV	Nov 2013	1	9	9.1	100.0%
FedEx Ground III	Nov 2013	1	24	3.9	100.0%
Dollar General XVI	Nov 2013	1	9	6.2	100.0%
Family Dollar V	Nov 2013	1	8	3.5	100.0%
CVS III	Dec 2013	1	11	4.3	100.0%
Mattress Firm III	Dec 2013	1	5	8.8	100.0%
Arby's II	Dec 2013	1	3	8.6	100.0%
Family Dollar VI	Dec 2013	2	17	4.3	100.0%
SAAB Sensis I	Dec 2013	1	91	5.5	100.0%
Citizens Bank I	Dec 2013	9	35	4.3	100.0%
SunTrust Bank II	Jan 2014	19	94	9.1	100.0%
Mattress Firm IV	Jan 2014	1	5	4.9	100.0%
FedEx Ground IV	Jan 2014	1	59	3.8	100.0%
Mattress Firm V	Jan 2014	1	6	4.1	100.0%
Family Dollar VII	Feb 2014	1	8	4.8	100.0%
Aaron's I	Feb 2014	1	8	3.9	100.0%
AutoZone III	Feb 2014	1	7	3.5	100.0%
C&S Wholesale Grocer I	Feb 2014	1	360	2.8	100.0%
Advance Auto III	Feb 2014	1	6	4.9	100.0%
Family Dollar VIII	Mar 2014	3	25	3.8	100.0%
Dollar General XVII	Mar 2014; May 2014	3	27	8.5	100.0%
SunTrust Bank III⁽²⁾	Mar 2014	81	464	10.1	91.6%
SunTrust Bank IV	Mar 2014	12	67	9.8	100.0%
Dollar General XVIII	Mar 2014	1	9	8.5	100.0%
Sanofi US I	Mar 2014	1	737	13.3	100.0%
Family Dollar IX	Apr 2014	1	8	4.5	100.0%
Stop & Shop I	May 2014	7	492	7.3	100.0%
Bi-Lo I	May 2014	1	56	6.3	100.0%
Dollar General XIX	May 2014	1	12	8.9	100.0%
Dollar General XX	May 2014	5	49	7.6	100.0%
Dollar General XXI	May 2014	1	9	8.9	100.0%
Dollar General XXII	May 2014	1	11	7.6	100.0%
FedEx Ground V	Feb 2016	1	46	5.8	100.0%
FedEx Ground VI	Feb 2016	1	121	5.9	100.0%
FedEx Ground VII	Feb 2016	1	42	6.0	100.0%



Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term⁽¹⁾	Percentage Leased
FedEx Ground VIII	Feb 2016	1	79	6.1	100.0%
Liberty Crossing	Feb 2017	1	106	4.0	90.9%
San Pedro Crossing	Feb 2017	1	202	3.1	59.9%
Tiffany Springs MarketCenter	Feb 2017	1	265	5.9	87.6%
The Streets of West Chester	Feb 2017	1	237	9.9	93.8%
Prairie Towne Center	Feb 2017	1	289	5.9	40.8%
Southway Shopping Center	Feb 2017	1	182	3.6	88.5%
Stirling Slidell Centre	Feb 2017	1	134	2.8	48.5%
Northwoods Marketplace	Feb 2017	1	236	2.8	96.5%
Centennial Plaza	Feb 2017	1	234	3.9	77.8%
Northlake Commons	Feb 2017	1	109	2.4	86.6%
Shops at Shelby Crossing	Feb 2017	1	236	3.3	97.6%
Shoppes of West Melbourne	Feb 2017	1	144	2.6	97.3%
The Centrum	Feb 2017	1	271	4.5	58.4%
Shoppes at Wyomissing	Feb 2017	1	103	3.2	89.4%
Southroads Shopping Center	Feb 2017	1	438	4.1	71.2%
Parkside Shopping Center	Feb 2017	1	182	3.9	96.1%
Colonial Landing	Feb 2017	1	264	6.2	81.9%
The Shops at West End	Feb 2017	1	382	7.2	73.0%
Township Marketplace	Feb 2017	1	299	3.7	86.5%
Cross Pointe Centre	Feb 2017	1	226	9.4	100.0%
Towne Centre Plaza	Feb 2017	1	94	3.6	100.0%
Village at Quail Springs	Feb 2017	1	100	7.7	100.0%
Pine Ridge Plaza	Feb 2017	1	239	3.5	97.5%
Bison Hollow	Feb 2017	1	135	5.1	100.0%
Jefferson Commons	Feb 2017	1	206	7.0	93.7%
Northpark Center	Feb 2017	1	318	5.8	99.2%
Anderson Station	Feb 2017	1	244	3.7	99.5%
Patton Creek	Feb 2017	1	491	3.5	85.9%
North Lakeland Plaza	Feb 2017	1	171	3.1	96.3%
Riverbend Marketplace	Feb 2017	1	143	4.4	91.6%
Montecito Crossing	Feb 2017	1	180	4.1	92.9%
Best on the Boulevard	Feb 2017	1	205	3.6	91.0%
Shops at RiverGate South	Feb 2017	1	141	6.1	100.0%
Dollar General XXIII	Mar 2017; May 2017; Jun 2017	8	72	9.9	100.0%
Jo-Ann Fabrics I	Apr 2017	1	18	5.3	100.0%
Bob Evans I	Apr 2017	23	117	17.6	100.0%
FedEx Ground IX	May 2017	1	54	6.7	100.0%
Chili's II	May 2017	1	6	8.1	100.0%
Sonic Drive In I	Jun 2017	2	3	12.8	100.0%
Bridgestone HOSEPower I	Jun 2017	2	41	9.9	100.0%
Bridgestone HOSEPower II	Jul 2017	1	25	10.1	100.0%
FedEx Ground X	Jul 2017	1	142	7.8	100.0%
Chili's III	Aug 2017	1	6	8.1	100.0%
FedEx Ground XI	Sep 2017	1	29	7.8	100.0%
Hardee's I	Sep 2017	4	13	18.0	100.0%
Tractor Supply IV	Oct 2017	2	51	7.1	100.0%
Circle K II	Nov 2017	6	20	17.8	100.0%
Sonic Drive In II	Nov 2017	20	31	18.2	100.0%
Bridgestone HOSEPower III	Dec 2017	1	21	10.8	100.0%
Sonny's BBQ I	Jan 2018	3	19	14.3	100.0%



Portfolio	Acquisition Date	Number of Properties	Rentable Square Feet (In thousands)	Remaining Lease Term⁽¹⁾	Percentage Leased
Mountain Express I	Jan 2018	9	30	18.3	100.0%
Kum & Go I	Feb 2018	1	5	8.7	100.0%
DaVita I	Feb 2018	2	13	6.4	100.0%
White Oak I	Mar 2018	9	22	18.5	100.0%
Mountain Express II	Jun 2018	15	59	18.6	100.0%
Dialysis I	Jul 2018	7	65	8.6	100.0%
Children of America I	Aug 2018	2	33	13.9	79.7%
Burger King II	Aug 2018	1	3	13.9	100.0%
White Oak II	Aug 2018	9	18	18.1	100.0%
Bob Evans II	Aug 2018	22	112	17.6	100.0%
Mountain Express III	Sep 2018	14	47	18.8	100.0%
Taco John's	Sep 2018	7	15	14.1	100.0%
White Oak III	Oct 2018	1	4	19.1	100.0%
DaVita II	Oct 2018	1	10	8.0	100.0%
Pizza Hut I	Oct 2018	9	23	14.0	100.0%
Little Caesars I	Dec 2018	11	19	19.3	100.0%
Caliber Collision I	Dec 2018	3	48	12.5	100.0%
Tractor Supply V	Dec 2018; Mar 2019	5	97	11.9	100.0%
Fresenius III	Jan 2019	6	44	7.7	100.0%
Pizza Hut II	Jan 2019	31	90	19.4	100.0%
Mountain Express IV	Feb 2019	8	28	19.4	100.0%
Mountain Express V	Feb 2019; Mar 2019; Apr 2019	18	96	19.4	93.6%
Fresenius IV	Mar 2019	1	9	12.2	100.0%
Mountain Express VI	Jun 2019	1	3	19.4	100.0%
IMTAA	May 2019	11	37	19.7	100.0%
Pizza Hut III	May 2019; Jun 2019	13	45	19.7	100.0%
Fresenius V	Jun 2019	2	19	12.6	100.0%
Fresenius VI	Jun 2019	1	10	7.3	100.0%
Fresenius VII	Jun 2019	3	59	11.0	50.1%
Caliber Collision II	Aug 2019	1	19	9.5	100.0%
Dollar General XXV	Sep 2019	5	44	11.2	100.0%
Dollar General XXIV	Sep 2019	8	72	14.8	100.0%
Mister Carwash I	Sep 2019	3	13	20.0	100.0%
Checkers I	Sep 2019	1	1	19.8	100.0%
DaVita III	Sep 2019	1	13	9.7	100.0%
Dialysis II	Sep 2019	50	433	8.2	100.0%

		771	18,247	8.9	95.2%

________

Revenue from tenants decreased $2.0 million to $72.9 million for the three months ended September 30, 2019, compared to $74.9 million for the three months ended September 30, 2018. This decrease was due to a $4.7 million decrease in our Three Month Same Store properties, the result of the write off of a below market lease liability, which is recognized in revenue, during the three months ended September 30, 2018 in excess of similar activity during the three months ended September 30, 2019, and a decrease of $4.2 million from our Disposals Since July 1, 2018, partially offset by incremental income from our Acquisitions Since July 1, 2018 of approximately $6.8 million. We acquired 69 properties during the three months ended September 30, 2019. Based upon leases in place at acquisition, we expect these acquisitions to result in rent revenue of approximately $3.3 million on a quarterly basis.

We pay asset management fees to the Advisor for managing our day-to-day operations. These fees, which include a base management fee, which has a fixed and variable portion and a variable incentive management fee, increased $0.7 million to $6.5 million for the three months ended September 30, 2019, compared to $5.8 million for the three months ended September 30, 2018, primarily due to an increase in the variable portion of the base management fee due to our issuances of equity securities during 2019. The variable portion of the base management fee is calculated on a monthly basis as an amount equal to one-twelfth of 1.25% of the cumulative net proceeds of any equity raised by us, which includes common stock, preferred stock, certain convertible debt, and proceeds from the Post-Listing DRIP (if any). The variable portion of the base management fee will increase in connection with future issuances of equity securities. Additionally, the fixed portion of the base management fee increased by $0.4 million pursuant to an increase in the fixed portion of the base management fee in February 2019 in accordance with the terms of the advisory agreement.

Interest expense increased $1.6 million to $18.6 million for the three months ended September 30, 2019, compared to $17.0 million for the three months ended September 30, 2018. This increase is primarily due to higher average balance on our revolving Credit Facility when compared to the average balance for the three months ended September 30, 2018. As of September 30, 2018, $260.7 million was outstanding under our Credit Facility, and as of September 30, 2019, $317.7 million was outstanding under our Credit Facility. Also contributing to the higher interest expense was an increase in mortgage notes payable. For the three months ended September 30, 2019 and 2018, the weighted-average interest rates on our Credit Facility were 4.16% and 4.04%, respectively, and the weighted average interest rates on our mortgage notes payable were 4.55% and 4.65%, respectively.

Revenue from tenants increased $7.4 million to $223.5 million for the nine months ended September 30, 2019, compared to $216.1 million for the nine months ended September 30, 2018. This increase was due to incremental income from our Acquisitions Since January 1, 2018 of approximately $19.8 million, partially offset by decreases in revenue from our Disposals Since January 1, 2018 of $12.1 million and from our Nine Month Same Store properties of $0.3 million. The decrease in our Nine Month Same Store Revenue from tenants was primarily due to a decrease in the balances of below market lease liabilities written off and recognized as revenue during the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2019. This decrease was nearly offset by the recording of a termination fee, net of related adjustments, as a result of us entering into a termination agreement with a tenant at one of our multi-tenant properties. The termination agreement required the tenant to pay us a termination fee of approximately $8.0 million. As a result we recorded termination income, net, of $7.6 million in revenue from tenants during the nine months ended September 30, 2019. We have entered into two leases to replace the tenant, with payment of rent on these replacement leases expected to commence during early 2020. We also estimate we will be required to fund an estimated $6.6 million in build out costs for these tenants, which are expected to be completed in the fourth quarter 2019.

We expect to fund our future short-term operating liquidity requirements through a combination of cash on hand, net cash provided by our property operations and proceeds from our Credit Facility. We may also generate additional liquidity through property dispositions and, to the extent available, secured or unsecured borrowings, our Class A Common Stock ATM Program our Series A Preferred Stock ATM Program or other offerings of debt or equity securities. As of September 30, 2019 and December 31, 2018, we had cash and cash equivalents of $76.8 million and $91.5 million, respectively. Our principal demands for funds are for payment of our operating and administrative expenses, property acquisitions, capital expenditures, debt service obligations, cash dividends to our stockholders and share repurchases, if any, as authorized by our board of directors.

On May 30, 2019, certain of our subsidiaries completed the issuance of $242.0 million aggregate principal amount of Net Lease Mortgage Notes in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The Net Lease Mortgage Notes were issued in two classes, Class A-1 (the “Class A-1 Net Lease Mortgage Notes”) and Class A-2 (the “Class A-2 Net Lease Mortgage Notes”). The Class A-1 Net Lease Mortgage Notes are rated AAA (sf) by Standard & Poors and are comprised of $121.0 million initial principal amount with an anticipated repayment date in May 2026 and an interest rate of 3.78%. The Class A-2 Net Lease Mortgage Notes are rated A (sf) by Standard & Poors comprised of $121.0 million initial principal amount with an anticipated repayment date in May 2029 and an interest rate of 4.46%. Please see Note 4 — Mortgage Notes Payable to our consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

The collateral pool for the Net Lease Mortgage Notes is comprised of 202 of our double- and triple-net leased single tenant properties that were transferred to our issuer subsidiaries in connection with the issuance of the Net Lease Mortgage Notes, together with the related leases and certain other rights and interests. The net proceeds from the sale of the Net Lease Mortgage Notes were used to repay $204.9 million in indebtedness related to 192 of the properties in the collateral pool securing the Net Lease Mortgage Notes, and approximately $37.1 million of the remaining net proceeds were available to us for general corporate purposes, including to fund acquisitions. At closing, we repaid mortgage notes of $29.9 million previously secured by 39 individual properties and repaid $175.0 million in outstanding borrowings under our Credit Facility. We removed 153 of our properties from the borrowing base under our Credit Facility to serve as part of the collateral pool for the Net Lease Mortgage Notes in connection with this repayment and we added ten recently acquired properties to the collateral pool securing the Net Lease Mortgage Notes.

On April 26, 2018, we repaid our prior credit facility and entered into our Credit Facility, which provides for commitments for aggregate revolving loan borrowings. Our Credit Facility includes an uncommitted “accordion feature” whereby, upon the request of the OP, but at the sole discretion of the participating lenders, the commitments under our Credit Facility may be increased from the initial level of $415.0 million by up to an additional $500.0 million, subject to obtaining commitments from new lenders or additional commitments from participating lenders and certain customary conditions. As of September 30, 2019, we had increased our commitments through this accordion feature by $125.0 million, bringing total aggregate commitments to $540.0 million, and leaving $375.0 million of potential increase remaining.

The amount available for future borrowings under our Credit Facility is based on the lesser of (1) a percentage of the value of the pool of eligible unencumbered real estate assets comprising the borrowing base, and (2) a maximum amount permitted to maintain a minimum debt service coverage ratio with respect to the borrowing base, in each case, as of the determination date. As of September 30, 2019, exclusive of the $2.7 million in letters of credit posted, we had a total borrowing capacity under our Credit Facility of $496.3 million based on the value of the borrowing base under our Credit Facility. Of this amount, $317.7 million was outstanding under our Credit Facility as of September 30, 2019 and $178.6 million remained available for future borrowings. As of December 31, 2018, $324.7 million was outstanding under our Credit Facility.

Subsequent to September 30, 2019, and through October 15, 2019, we acquired no additional properties. We have entered into PSAs to acquire an additional 31 properties for an aggregate contract purchase price of approximately $46.0 million and an LOI to acquire an additional 17 properties for approximately $11.9 million. The PSAs are subject to conditions, and the LOI is non-binding. There can be no assurance we will complete any of these acquisitions on their contemplated terms, or at all. We anticipate using proceeds from future dispositions of properties, proceeds from borrowings (including mortgage borrowings and borrowings under our Credit Facility) and net proceeds received from our Class A Common Stock ATM Program and Series A Preferred Stock ATM Program to fund the consideration required to complete these acquisitions.

Effective at the Listing, our board of directors authorized, repurchase, from time to time, of up to $200.0 million of Class A common stock we may implement through open market repurchases or in privately negotiated transaction based on our board of directors’ and management’s assessment of, among other things, market conditions prevailing at the particular time. We will have the ability to repurchase shares of Class A common stock up to this amount at its discretion, subject to authorization by our board of directors prior to any such repurchase. As of September 30, 2019 the total of our remaining availability for future borrowings and cash and cash equivalents was $255.4 million. In accordance with the Credit Facility, in order for us to make payments required to fund certain share repurchases, which would include payments for this authorized repurchase program, we would be required to satisfy a maximum leverage ratio after giving effect to the payments and also have a combination of cash, cash equivalents and amounts available for future borrowings under the Credit Facility of not less than $40.0 million. Accordingly, if we decide to purchase shares under this program, the ultimate amount repurchased would depend on the amount of cash and availability for future borrowings at that time. There have not been any repurchases authorized, through open market purchases or otherwise, under this program through the date of this Quarterly Report on Form 10-Q.

Our Pre-Listing DRIP was suspended on June 29, 2018 in anticipation of the Listing, and reinstated, amended and restated, effective on the Listing Date with the Post-Listing DRIP. Participants in the Pre-Listing DRIP prior to this amendment and restatement continued to be participants in the Post-Listing DRIP. Commencing with the dividend paid on August 3, 2018 (the first dividend paid following the Listing Date), our stockholders that have elected to participate in the Post-Listing DRIP may have dividends payable with respect to all or a portion of their shares of each class of our common stock reinvested in shares of Class A common stock. Shares issued pursuant to the Post-Listing DRIP are, at our election, either (i) acquired directly from us, by issuing new shares, at a price based on the average of the high and low sales prices of Class A common stock on Nasdaq on the date of reinvestment, or (ii) acquired through open market purchases by the plan administrator at a price based on the weighted-average of the actual prices paid for all of the shares of Class A common stock purchased by the plan administrator with all participants’ reinvested dividends for the related quarter, less a per share processing fee. During the nine months ended September 30, 2019 and the year ended December 31, 2018, all shares acquired by participants pursuant to the Post-Listing DRIP were acquired through open market purchases by the plan administrator and not issued directly to stockholders by us.

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

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

In calculating AFFO, we start with FFO, then we exclude certain income or expense items from AFFO that we consider to be more reflective of investing activities, such as fees related to the Listing, non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our day to day operating business plan, such as amounts related to litigation arising out of the Merger. These amounts include legal costs incurred as a result of the litigation, portions of which have been and may in the future be reimbursed under insurance policies maintained by us. Insurance reimbursements are deducted from AFFO in the period of reimbursement. We believe that excluding the litigation costs and subsequent insurance reimbursements related to litigation arising out the Merger helps to provide a better understanding of the operating performance of our business. Other income and expense items also include early extinguishment of debt and unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains and losses on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market leases intangibles, amortization of deferred financing costs, straight-line rent, vesting and conversion of the Class B Units and share-based compensation related to restricted shares and the 2018 OPP from AFFO, we believe we provide useful information regarding those income and expense items which have a direct impact on our ongoing operating performance. By providing AFFO, we believe we are presenting useful information that can be used to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently.

In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income (loss). All paid and accrued merger, acquisition and transaction related fees and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired will also have negative effects on returns to investors, but are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss). In addition, as discussed above, we view gains and losses from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the



	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018
Net (loss) income attributable to common stockholders (in accordance with GAAP)	$	(2,931	)	$	(27,245	)	$	1,726		$	(23,885	)
Impairment charges	—			1,172			827			10,057
Depreciation and amortization	29,901			35,332			92,911			107,269
Gain on sale of real estate investments	(1,933		)	(1,328		)	(19,171		)	(29,590		)
Proportionate share of adjustments for non-controlling interests to arrive at FFO	(45		)	(59		)	(121		)	(161		)
FFO (as defined by NAREIT) attributable to common stockholders^[5]	24,992			7,872			76,172			63,690
Acquisition, transaction and other costs ^[1]	489			1,549			3,235			5,941
Litigation cost reimbursements related to the Merger ^[2]	—			—			(1,948		)	—
Listing fees	—			4,988			—			4,988
Vesting and conversion of Class B Units	—			15,786			—			15,786
Amortization (accretion) of market lease and other intangibles, net	(2,503		)	(5,766		)	(6,065		)	(9,444		)
Straight-line rent	(2,716		)	(2,589		)	(5,478		)	(7,382		)
Amortization of mortgage discounts (premiums) on borrowings	(839		)	(857		)	(2,472		)	(2,693		)
Mark-to-market adjustments	—			—			—			(72		)
Equity-based compensation^[3]	3,217			2,240			9,506			2,331
Amortization of deferred financing costs, net and change in accrued interest	725			1,734			5,116			5,279
Goodwill impairment^[4]	—			—			1,605			—
Proportionate share of adjustments for non-controlling interests to arrive at AFFO	3			(29		)	(3		)	(25		)
AFFO attributable to common stockholders^[5]	$	23,368		$	24,928		$	79,668		$	78,399

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



(In thousands)	Same Store			Acquisitions			Disposals		Non-Property Specific			Total
Net income (loss) attributable to common stockholders (in accordance with GAAP)	$	11,364		$	4,781		$	21	$	(19,097	)	$	(2,931	)
Asset management fees to related party	—			—			—		6,545			6,545
Acquisition, transaction and other costs	266			—			—		223			489
Equity-based compensation	—			—			—		3,217			3,217
General and administrative	307			2			1		3,263			3,573
Depreciation and amortization	27,098			2,803			—		—			29,901
Interest expense	15,800			—			—		2,769			18,569
Gain on sale of real estate investments	(1,933		)	—			—		—			(1,933		)
Other income	(10		)	(35		)	—		(3		)	(48		)
Preferred Stock dividends	—			—			—		3,079			3,079
Net loss attributable to non-controlling interests	—			—			—		4			4
NOI	$	52,892		$	7,551		$	22	$	—		$	60,465



(In thousands)	Same Store			Acquisitions		Disposals			Non-Property Specific			Total
Net income (loss) attributable to common stockholders (in accordance with GAAP)	$	8,786		$	561	$	1,329		$	(37,921	)	$	(27,245	)
Asset management fees to related party	—			—		—			5,849			5,849
Impairment charges	—			—		1,172			—			1,172
Acquisition, transaction and other costs	489			—		15			1,045			1,549
Listing fees	—			—		—			4,988			4,988
Vesting and conversion of Class B Units	—			—		—			15,786			15,786
Equity-based compensation	—			—		—			2,240			2,240
General and administrative	307			—		15			5,764			6,086
Depreciation and amortization	32,747			303		2,282			—			35,332
Interest expense	14,722					—			2,295			17,017
Gain on sale of real estate investments	—			—		(1,328		)	—			(1,328		)
Other income	(9		)	—		—			—			(9		)
Net loss attributable to non-controlling interests	—			—		—			(46		)	(46		)
NOI	$	57,042		$	864	$	3,485		$	—		$	61,391



(In thousands)	Same Store			Acquisitions			Disposals			Non-Property Specific			Total
Net (loss) income attributable to stockholders (in accordance with GAAP)	$	29,912		$	15,128		$	17,906		$	(61,220	)	$	1,726
Asset management fees to related party	—			—			—			18,918			18,918
Impairment charges	700			—			127			—			827
Acquisition and transaction related	2,291			3			—			941			3,235
Equity-based compensation	—			—			—			9,506			9,506
General and administrative	1,012			39			7			15,017			16,075
Depreciation and amortization	83,549			8,005			1,357			—			92,911
Goodwill impairment	—			—			—			1,605			1,605
Interest expense	45,551			—			—			13,453			59,004
Gain on sale of real estate investments	(1,933		)	—			(17,238		)	—			(19,171		)
Other income	(1,235		)	(36		)	(3		)	(1,986		)	(3,260		)
Preferred Stock dividends	—			—			—			3,751			3,751
Net income attributable to non-controlling interests	—			—			—			15			15
NOI ^[1]	$	159,847		$	23,139		$	2,156		$	—		$	185,142



(In thousands)	Same Store			Acquisitions		Disposals			Non-Property Specific			Total
Net income (loss) attributable to stockholders (in accordance with GAAP)	$	12,603		$	2,555	$	23,273		$	(62,316	)	$	(23,885	)
Asset management fees to related party	—			—		—			17,295			17,295
Impairment charges	—			—		10,057			—			10,057
Acquisition and transaction related	3,529			171		17			2,224			5,941
Listing fees	—			—		—			4,988			4,988
Vesting and conversion of Class B Units	—			—		—			15,786			15,786
Equity-based compensation	—			—		—			2,331			2,331
General and administrative	1,134			13		52			15,658			16,857
Depreciation and amortization	97,638			1,206		8,425			—			107,269
Interest expense	45,073			—		—			4,093			49,166
Gain on sale of real estate investments	—			—		(29,590		)	—			(29,590		)
Other income	(28		)	—		(22		)	(19		)	(69		)
Net income attributable to non-controlling interests	—			—		—			(40		)	(40		)
NOI	$	159,949		$	3,945	$	12,212		$	—		$	176,106

In connection with the Listing, our board of directors changed the rate at which we pay dividends on our common stock from an annualized rate equal to $1.30 per share to an annualized rate equal to $1.10 per share, or $0.0916667 per share on a monthly basis, effective as of July 1, 2018. Also, effective July 1, 2018, we transitioned to declaring dividends on our common stock based on monthly, rather than daily, record dates and will generally pay dividends on the 15th day of each month (or, if not a business day, the next succeeding business day) to common stock holders of record on the applicable record date of such month. Prior to July 1, 2018, dividends were payable by the fifth day following each month end to stockholders of record at the close of business each day during the prior month. Dividends are paid on shares of Class A common stock, Class B-1 common stock (which automatically converted to Class A common stock in accordance with their terms on October 10, 2018) and Class B-2 common stock (which automatically converted to Class A common stock in accordance with their terms on January 9, 2019) at the same rate. The first dividends declared on our common stock under the new rate were paid in August 2018. The amount of dividends payable on our common stock to our common stock holders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT.

Pursuant to the Credit Facility, we may not pay distributions, including cash dividends on equity securities (including the Series A Preferred Stock) in an aggregate amount exceeding 95% of Modified FFO (as defined in the Credit Facility) for any look-back period of four consecutive fiscal quarters subject to three limited exceptions. The third limited exception was added to the Credit Facility pursuant to an amendment entered into on November 4, 2019 (the “November Amendment”). We have elected to rely on all three of these exceptions during 2019. First we exercised our one-time right to elect to pay cash dividends or redeem or repurchase equity securities in an aggregate amount equal to no more than 110% of Modified FFO for each of three consecutive fiscal quarters and we relied on this exception for the quarters ended December 31, 2018 and March 31, 2019 but subsequently revoked its election and did not rely on this exception for the quarter ended June 30, 2019. Next, we exercised our one-time right to elect to reset the look-back period such that (i) for the quarter ended June 30, 2019, we could not pay distributions in an aggregate

amount exceeding 95% of Modified FFO for that fiscal quarter, (ii) for the two-quarter period ended September 30, 2019, we could not pay distributions in an aggregate amount exceeding 95% of Modified FFO for that fiscal quarter and the prior fiscal quarter, and (iii) for the three-quarter period ending December 31, 2019, we may not pay distributions in an aggregate amount exceeding 95% of Modified FFO for that fiscal quarter and the prior two fiscal quarters. As a result, commencing with the quarter ending March 31, 2020, we will again not be able to pay distributions in an aggregate amount exceeding 95% of Modified FFO for any look-back period of four consecutive fiscal quarters and will not be able to rely on any of these exceptions again without seeking consent from the lenders under the Credit Facility. Pursuant to the November Amendment, we are now permitted to pay distributions in an aggregate amount not exceeding 105% of Modified FFO for any applicable period (commencing with the period of two consecutive fiscal quarters ended on September 30, 2019) if, as of the last day of the period, we are able to satisfy a maximum leverage ratio after giving effect to the payments and also have a combination of cash, cash equivalents and amounts available for future borrowings under the Credit Facility of not less than $60.0 million. As of September 30, 2019, we satisfied the maximum leverage ratio requirement and the total of the remaining availability for future borrowings and cash and cash equivalents was $255.4 million. We were therefore able to rely on this exception for the period of two consecutive fiscal quarters ended on September 30, 2019. We also expect to will rely on this exception in future periods. There is no assurance that the lenders will consent to any additional amendments to the Credit Facility that may become necessary to maintain compliance with the Credit Facility. Moreover, our ability, to maintain compliance with the Credit Facility depends on our ability, and the time needed, to invest in new cash flow generating acquisitions. There is no assurance we will complete pending or future acquisitions. If we are not able to increase the amount of cash we have available to pay dividends, including through additional cash flows we expect to generate from completing acquisitions, our ability to comply with the Credit Facility or the terms of the Series A Preferred Stock in future periods may be adversely affected. Further, we may have to identify other financing sources to fund dividends. There can be no assurance that other sources will be available on favorable terms, or at all.

We have not generated, and in the future may not generate, operating cash flows sufficient to fund all of the dividends we pay to our stockholders. If we do not generate sufficient cash flows from our operations in the future we may have to reduce our dividend rate on the Class A common stock or continue to fund dividends from other sources, such as from borrowings or the sale of properties, loans or securities, and available cash on hand, which consists of proceeds from sale of real estate investments and proceeds from financings. Moreover, our board of directors may change our dividend policy, in its sole discretion, at any time to either reduce the amount of dividends that we pay or use other sources to fund dividends such as borrowing monies, using the proceeds from asset sales or using the proceeds from the sale of shares, including shares we sold under our Post-Listing DRIP, if any. Funding dividends from borrowings could restrict the amount that we can borrow for investments. Funding dividends with the sale of assets may affect our ability to generate additional operating cash flows. Funding dividends from the sale of additional securities could dilute each stockholder’s interest in us if we sell shares of our common stock or securities that are convertible or exercisable into shares of our common stock to third-party investors. Payment of dividends from these sources could restrict our ability to generate sufficient cash flows from operations, affect our profitability or affect the dividends payable to stockholders upon a liquidity event, any or all of which may have an adverse effect on an investment in our shares.



	Three Months Ended														Nine Months Ended September 30, 2019
	March 31, 2019					June 30, 2019				September 30, 2019					Nine Months Ended September 30, 2019
(In thousands)	$			Percentage of Dividends		$		Percentage of Dividends					Percentage of Dividends		$		Percentage of Dividends
Dividends and other cash distributions:
Cash dividends paid to common stockholders	$	29,248				$	29,207			$	29,420				$	87,875
Cash dividends paid to preferred stockholders	—					—				921					921
Cash distributions on LTIP Units	84					161				115					360
Cash distributions on Class A Units	47					48				16					111
Total dividends and other cash distributions paid	$	29,379				$	29,416			$	30,472				$	89,267

Source of dividend coverage:
Cash flows provided by operations^[1]	$	20,395		69.4	%	$	29,416	100.0	%	$	26,603		87.3	%	$	78,190	87.6	%
Available cash on hand^[2]	8,984			30.6	%	—		—	%	3,869			12.7	%	11,077		12.4	%
Total source of dividend coverage	$	29,379		100.0	%	$	29,416	100.0	%	$	30,472		100.0	%	$	89,267	100.0	%

Cash flows provided by operations (GAAP basis) ^[1]	$	20,395				$	31,192			$	26,603				$	78,190
Net (loss) income (in accordance with GAAP)	$	(3,227	)			$	7,884			$	(2,931	)			$	1,726

We elected to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year ended December 31, 2013. We believe that, commencing with such taxable year, we have been organized and have operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to remain qualified as a REIT. In order to continue to qualify for taxation as a REIT, we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on that portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties, as well as federal income and excise taxes on our undistributed income.

On January 13, 2017, four affiliated stockholders of RCA filed in the United States District Court for the District of Maryland a putative class action lawsuit against us, RCA, Edward M. Weil, Jr., Leslie D. Michelson, Edward G. Rendell (Weil, Michelson and Rendell, the “Director Defendants”), and AR Global, alleging violations of Sections 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) by RCA and the Director Defendants, violations of Section 20(a) of the Exchange Act by AR Global and the Director Defendants, breaches of fiduciary duty by the Director Defendants, and aiding and abetting breaches of fiduciary duty by AR Global and us in connection with the negotiation of and proxy solicitation for a shareholder vote on what was at the time proposed Merger and an amendment to RCA’s charter. The complaint sought on behalf of the putative class rescission of the Merger, which was voted on and approved by RCA stockholders on February 13, 2017, and closed on February 16, 2017, together with unspecified rescissory damages, unspecified actual damages, and costs and disbursements of the action. RCA was sponsored and advised by affiliates of the Advisor. On April 26, 2017, the Court appointed a lead plaintiff. Lead plaintiff, along with other stockholders of RCA, filed an amended complaint on June 19, 2017. The amended complaint named additional individuals and entities as defendants (David Gong, Stanley Perla, Lisa Kabnick, all of whom were independent directors of ours at the time of the merger (“Additional Director Defendants”), Nicholas Radesca, our chief financial officer at the time of the Merger, and RCA’s advisor), added counts alleging violations of Sections 11, 12(a)(2) and 15 of the Securities Act in connection with the Registration Statement for the proposed merger, under Section 13(e) of the Exchange Act, and counts for breach of contract and unjust enrichment. We, in addition to RCA, the Director Defendants, the Additional Director Defendants and Nicholas Radesca deny wrongdoing and liability and intend to vigorously defend the action. On August 14, 2017, defendants moved to dismiss the amended complaint. On March 29, 2018, the Court granted defendants’ motion to dismiss and dismissed the amended complaint. On April 26, 2018, the plaintiffs filed a notice of appeal of the court’s order. On March 11, 2019, the United States Court of Appeals for the Fourth Circuit affirmed the judgment of the district court dismissing the complaint. On March 25, 2019, the plaintiffs filed a Petition for Rehearing and Rehearing En Banc, which was subsequently denied on April 9, 2019. Due to the stage of the litigation, no estimate of a probable loss or any reasonable possible losses are determinable at this time. No provisions for such losses have been recorded in the accompanying consolidated financial statements for the nine months ended September 30, 2019 or 2018.

On February 8, 2018, Carolyn St. Clair-Hibbard, a purported stockholder of ours, filed a putative class action complaint in the United States District Court for the Southern District of New York against us, AR Global, the Advisor, Nicholas S. Schorsch and William M. Kahane. On February 23, 2018, the complaint was amended to, among other things, assert some claims on the plaintiff’s own behalf and other claims on behalf of herself and other similarly situated shareholders of ours as a class. On April 26, 2018, defendants moved to dismiss the amended complaint. On May 25, 2018, plaintiff filed a second amended complaint. The second amended complaint alleges that the proxy materials used to solicit stockholder approval of the Merger at our 2017 annual meeting were materially incomplete and misleading. The complaint asserts violations of Section 14(a) of the Exchange Act against us, as well as control person liability against the Advisor, AR Global, and Messrs. Schorsch and Kahane under 20(a). It also asserts state law claims for breach of fiduciary duty against the Advisor, and claims for aiding and abetting such breaches, of fiduciary duty against the Advisor, AR Global and Messrs. Schorsch and Kahane. The complaint seeks unspecified damages, rescission of our advisory agreement (or severable portions thereof) which became effective when the Merger became effective, and a declaratory judgment that certain provisions of our advisory agreement are void. We believe the second amended complaint is without merit and intend to defend vigorously. On June 22, 2018, defendants moved to dismiss the second amended complaint. On August 1, 2018, plaintiff filed an opposition to defendants’ motions to dismiss. Defendants filed reply papers on August 22, 2018, and oral argument was held on September 26, 2018. On September 23, 2019, the Court granted defendants’ motions and dismissed the complaint with prejudice. The plaintiff has filed a notice of appeal from that order. Due to the early stage of the litigation, no estimate of a probable loss or any reasonably possible losses are determinable at this time.

On October 26, 2018, Terry Hibbard, a purported stockholder of ours, filed a putative class action complaint in New York State Supreme Court, New York County, against us, AR Global, the Advisor, Nicholas S. Schorsch, William M. Kahane, Edward M. Weil, Jr., Nicholas Radesca, David Gong, Stanley R. Perla, and Lisa D. Kabnick. The complaint alleges that the registration statement pursuant to which RCA shareholders acquired shares of our common stock during the Merger contained materially incomplete and misleading information. The complaint asserts violations of Section 11 of the Securities Act against Messrs. Weil, Radesca, Gong, and Perla, and Ms. Kabnick, violations of Section 12(a)(2) of the Securities Act against us and Mr. Weil, and control person liability against the Advisor, AR Global, and Messrs. Schorsch and Kahane under Section 15 of the Securities Act. The complaint seeks unspecified damages and rescission of our sale of stock pursuant to the registration statement. We believe the complaint is without merit and intend to defend vigorously. Due to the early stage of the litigation, no estimate of a probable loss or any reasonably possible losses are determinable at this time.

complaint alleges that the April and December 2016 registration statements pursuant to which class members purchased shares contained materially incomplete and misleading information. The complaint asserts violations of Section 11 of the Securities Act against us, Messrs. Weil, Radesca, Gong and Perla, and Ms. Kabnick, violations of Section 12(a)(2) of the Securities Act against us and Mr. Weil, and control person liability against the Advisor, AR Global, and Messrs. Schorsch and Kahane under Section 15 of the Securities Act. The complaint seeks unspecified damages and either rescission of our sale of stock or rescissory damages. We believe the complaint is without merit and intend to defend vigorously. Due to the early stage of the litigation, no estimate of a probable loss or any reasonably possible losses are determinable at this time.

On April 30, 2019, Lynda Callaway, a purported stockholder of ours, filed a putative class action complaint in New York State Supreme Court, New York County, against us, AR Global, the Advisor, Nicholas S. Schorsch, William M. Kahane, Edward M. Weil, Jr., Nicholas Radesca, David Gong, Stanley R. Perla, and Lisa D. Kabnick. The complaint alleges that the registration statement pursuant to which plaintiff and other class members acquired our shares during the Merger contained materially incomplete and misleading information. The complaint asserts violations of Section 11 of the Securities Act against us, Messrs. Weil, Radesca, Gong, and Perla, and Ms. Kabnick, violations of Section 12(a)(2) of the Securities Act against us and Mr. Weil, and control person liability under Section 15 of the Securities Act against the Advisor, AR Global, and Messrs. Schorsch and Kahane. The complaint seeks unspecified damages and rescission of our sale of stock pursuant to the registration statement. Due to the early stage of the litigation, no estimate of a probable loss or any reasonably possible losses are determinable at this time.

Pursuant to our Credit Facility and subject to limited exceptions, we may not pay distributions, including cash dividends on equity securities (including the Series A Preferred Stock) in an aggregate amount exceeding 95% of Modified FFO (as defined in our Credit Facility) for periods that will vary over the upcoming fiscal quarters, such that (i) for the quarter ended June 30, 2019, we could not pay distributions in an aggregate amount exceeding 95% of Modified FFO for that fiscal quarter, (ii) for the two-quarter period ended September 30, 2019, we could not pay distributions in an aggregate amount exceeding 95% of Modified FFO for that fiscal quarter and the prior fiscal quarter, (iii) for the three-quarter period ending December 31, 2019, we may not pay distributions in an aggregate amount exceeding 95% of Modified FFO for that fiscal quarter and the prior two fiscal quarters, and (iv) commencing with the quarter ending March 31, 2020, we will not be able to pay distributions in an aggregate amount exceeding 95% of Modified FFO for any look-back period of four consecutive fiscal quarters. During the fiscal quarters ended December 31, 2018 and March 31, 2019, we relied on an exception under our Credit Facility permitting us to pay distributions in an aggregate amount exceeding 110% of Modified FFO for each of those fiscal quarters. We will not be able to rely on this exception again without seeking consent from the lenders under our Credit Facility. Commencing with the period of two consecutive fiscal quarters ended on September 30, 2019, we are also permitted to pay distributions in an aggregate amount exceeding 105% of Modified FFO for any applicable period if, as of the last day of the period, we are able to satisfy a maximum leverage ratio after giving effect to the payments and also have a combination of cash, cash equivalents and amounts available for future borrowings under our Credit Facility of not less than $60.0 million. We were able to rely on this exception for the period of two consecutive fiscal quarters ended on September 30, 2019, and we expect we will continue to rely on this exception in future periods. There is no assurance that the lenders will consent to any additional amendments to our Credit Facility that may become necessary to maintain compliance with our Credit Facility. Moreover, our ability to maintain compliance with our Credit Facility depends on our ability,

Under United States Treasury regulations promulgated under Code Section 7701(1) (the “Fast-Pay Stock Regulations”), if stock of a corporation is structured such that dividends paid with respect to the stock are economically (in whole or in part) a return of such stockholder’s investment (rather than a return on such stockholder’s investment), then the stock is characterized as “fast-pay stock,” and is subject to adverse tax treatment, described below. We did not structure the Series A Preferred Stock such that dividends paid by us are economically a return of our stockholders’ investment. However, under the Fast Pay Stock Regulations, unless clearly demonstrated otherwise, stock is presumed to be fast-pay stock if it is issued for an amount that exceeds (by more than a de minimis amount, as determined under certain other Treasury regulations), the amount at which the stockholder can be compelled to dispose of the stock. Shares of the Series A Preferred Stock could be issued with a premium that is more than a de minimis amount.

If shares of the Series A Preferred Stock are determined to be fast-pay stock, then the treatment of the holders of shares of the Series A Preferred Stock would be treated for United States federal income tax purposes as having purchased a financial instrument from our other stockholders that has the same terms (other than the issuer) as the Series A Preferred Stock. Payments on the Series A Preferred Stock would be deemed to be made to our other stockholders and those stockholders would be deemed to pay equal amounts to the holders of the Series A Preferred Stock under the deemed financial instrument. However, because payments would be deemed to be made to the holders of Series A Preferred Stock under the deemed financial instrument rather than on the shares of the Series A Preferred Stock, dividends received by the holders of the Series A Preferred Stock generally would be treated as ordinary income (and no portion of those dividends would be treated as a capital gain distribution). In addition, if any Series A Preferred Stock we issue in an offering is determined to be fast-pay stock, it would not be fungible with previously issued shares of the Series A Preferred Stock.

Transactions involving fast-pay stock arrangements are treated as “listed transactions” for United Stated federal income tax purposes. If any Series A Preferred Stock is treated as fast-pay stock, we and all holders of such Series A Preferred Stock would be required to report our and their participation in the transaction on Internal Revenue Service Form 8886 on an annual basis with our and their United States federal income tax returns and would also be required to mail a copy of that form to the Internal Revenue Service Office of Tax Shelter Analysis. Failure to comply with those disclosure requirements could result in the assessment by the Internal Revenue Service of interest, additions to tax and onerous penalties. In addition, an accuracy-related penalty applies under the Internal Revenue Code to any reportable transaction understatement attributable to a listed transaction if a significant purpose of the transaction is the avoidance or evasion of United States federal income tax. Additionally, certain of our material advisors would also be required to file a disclosure statement with the Internal Revenue Service.

On November 4, 2019, we entered into the November Amendment with BMO Harris Bank N.A., the agent under our Credit Facility, and the other lenders thereto. Pursuant to the November Amendment, effective for the fiscal period ended September 30, 2019, we are now permitted to pay distributions in an aggregate amount exceeding 105% of Modified FFO for any applicable period (commencing with the period of two consecutive fiscal quarters ended on September 30, 2019) if, as of the last day of the period, we are able to satisfy a maximum leverage ratio after giving effect to the payments and also have a combination of cash, cash equivalents and amounts available for future borrowings under the Credit Facility of not less than $60.0 million. The November Amendment also included revisions to the provisions governing the composition of the borrowing base, as well as other administrative revisions.



Exhibit No.		Description
3.1 ⁽¹⁾		Articles of Amendment and Restatement
3.2 ⁽²⁾		Fourth Amended and Restated Bylaws
3.3 ⁽³⁾		Articles Supplementary relating to election to be subject to Section 3-803 of MGCL
3.4 ⁽⁴⁾		Articles of Amendment relating to reverse stock split, dated July 3, 2018
3.5 ⁽⁴⁾		Articles of Amendment relating to par value decrease, dated July 3, 2018
3.6 ⁽⁴⁾		Articles of Amendment relating to common stock name change, dated July 3, 2018
3.7 ⁽⁴⁾		Articles Supplementary relating to reclassification of common stock, dated July 3, 2018
3.8 ⁽⁵⁾		Certification of Notice of American Finance Trust, Inc. filed with the State Department of Assessments and Taxation of Maryland on September 18, 2018
3.9 ⁽⁶⁾		Certification of Notice of American Finance Trust, Inc. filed with the State Department of Assessments and Taxation of Maryland on December 20, 2018
3.10 ⁽⁷⁾		Articles Supplementary designating 7.50% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share
3.11 ⁽⁸⁾		Articles Supplementary designating additional shares of 7.50% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share, dated May 8, 2019.
3.12 ⁽⁹⁾		Articles Supplementary classifying additional shares of 7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share, dated September 6, 2019
3.13 ⁽¹⁰⁾		Articles Supplementary designating additional shares of 7.50% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share, dated October 4, 2019
10.1 ⁽⁹⁾		Underwriting Agreement, dated September 4, 2019, by and among American Finance Trust, Inc., American Finance Operating Partnership, L.P. and the underwriters listed on Schedule I attached thereto, for whom BMO Capital Markets Corp. acted as representative.
10.2 ⁽⁹⁾		Fourth Amendment, dated September 6, 2019, to the Second Amended and Restated Agreement of Limited Partnership of American Finance Operating Partnership, L.P., dated July 19, 2018.
10.3 ⁽¹⁰⁾		Amendment No. 2, dated as of October 4, 2019, to Equity Distribution Agreement, dated May 8, 2019, among American Finance Trust, Inc., American Finance Operating Partnership, L.P., BMO Capital Markets Corp., BBVA Securities Inc., B. Riley FBR, Inc., Citizens Capital Markets, Inc., KeyBanc Capital Markets Inc., Ladenburg Thalmann & Co. Inc., SunTrust Robinson Humphrey, Inc. and D.A. Davidson & Co.
10.4 ⁽¹⁰⁾		Fifth Amendment, dated October 4, 2019, to the Second Amended and Restated Agreement of Limited Partnership of American Finance Operating Partnership, L.P., dated July 19, 2018.
31.1 *		Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 *		Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32 *		Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS *		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *		XBRL Taxonomy Extension Schema Document.
101.CAL *		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *		XBRL Taxonomy Extension Presentation Linkbase Document.
104 *		Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.



Maryland							90-0929989
(State or other jurisdiction of incorporation or organization)							(I.R.S. Employer Identification No.)
405 Park Ave.	,	3rd Floor	,	New York	,	New York	10022
(Address of principal executive offices)							(Zip Code)



Securities registered pursuant to section 12(b) of the Act:
Title of each class	Trading Symbols	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	AFIN	The Nasdaq Global Select Market
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value	AFINP	The Nasdaq Global Select Market



Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐



	Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 (Unaudited)	3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited)	4
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2019 (Unaudited)	5
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2018 (Unaudited)	6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited)	7
Notes to Consolidated Financial Statements September 30, 2019 (Unaudited)	9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	44

Item 3. Quantitative and Qualitative Disclosures About Market Risk.	66

Item 4. Controls and Procedures.	66

PART II - OTHER INFORMATION	67

Item 1. Legal Proceedings.	67

Item 1A. Risk Factors.	68

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	69

Item 3. Defaults Upon Senior Securities.	69

Item 4. Mine Safety Disclosures.	69

Item 5. Other Information.	70

Item 6. Exhibits.	70

Signatures	71



(In thousands)	Future Base Rent Payments
2019 (remainder)	$	62,146
2020	247,664
2021	239,127
2022	228,306
2023	215,826
2024	197,069
Thereafter	1,208,313
	$	2,398,451



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



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


•	The Company currently presents Straight-line rent receivable on its own line item in the consolidated statement of cash flows, which was previously included within prepaid expenses and other assets.


•	The Company separated amortization of deferred leasing costs presented in the consolidated statement of cash flows onto its own line item with prior presentation of these costs included in amortization (including accelerated write-off) of deferred financing costs.


•	Gain on sale of real estate investments is now included as part of operating income.


•	The Company has aggregated revenue from its lease components and non-lease components (tenant operating expense reimbursements) into one line (see additional information in the “Recently Issued Accounting Pronouncements” section below.


•	Since the Company elected the practical expedient noted above to not separate non-lease component revenue from the associated lease component, the Company has aggregated revenue from its lease components and non-lease components (tenant operating expense reimbursements) into one line. The prior period has been conformed to this new presentation.


•	Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. Under prior accounting guidance, the recognition would have been deferred.


•	Upon adoption of the standard, the Company recorded ROU assets and lease liabilities equal to $19.3 million for the present value of the lease payments related to its ground leases. These amounts are included in operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheet.



	Nine Months Ended September 30,
(Dollar amounts in thousands)	2019			2018
Real estate investments, at cost:
Land	$	59,942		$	54,132
Buildings, fixtures and improvements	248,628			106,560
Total tangible assets	308,570			160,692
Acquired intangible assets and liabilities: ⁽¹⁾
In-place leases	56,929			32,451
Above-market lease assets	1,974			644
Below-market lease liabilities	(2,042		)	(1,157		)
Total intangible assets, net	56,861			31,938
Consideration paid for acquired real estate investments, net of liabilities assumed	$	365,431		$	192,630
Number of properties purchased	165			101



		Outstanding Loan Amount as of						Effective Interest Rate as of
Portfolio	Encumbered Properties	September 30, 2019			December 31, 2018			September 30, 2019			Interest Rate	Maturity	Anticipated Repayment
		(In thousands)			(In thousands)
Class A-1 Net Lease Mortgage Notes		$	120,597		$	—		3.83	%		Fixed	May 2049	May 2026
Class A-2 Net Lease Mortgage Notes		121,000			—			4.52	%		Fixed	May 2049	May 2029
Total Net Lease Mortgage Notes	202	241,597			—

SAAB Sensis I	1	6,766			7,077			5.93	%		Fixed	Apr. 2025	Apr. 2025
SunTrust Bank II	12	6,626			13,412			5.50	%		Fixed	Jul. 2031	Jul. 2021
SunTrust Bank III	81	65,722			68,080			5.50	%		Fixed	Jul. 2031	Jul. 2021
SunTrust Bank IV	19	13,671			18,113			5.50	%		Fixed	Jul. 2031	Jul. 2021
Sanofi US I	1	125,000			125,000			5.16	%		Fixed	Jul. 2026	Jan. 2021
Stop & Shop I	4	36,222			36,812			5.63	%		Fixed	Jun. 2041	Jun. 2021
Mortgage Loan I⁽¹⁾	244	497,150			572,199			4.36	%		Fixed	Sep. 2020	Sep. 2020
Shops at Shelby Crossing	1	22,252			22,581			4.97	%		Fixed	Mar. 2024	Mar. 2024
Patton Creek	1	39,373			40,027			5.76	%		Fixed	Dec. 2020	Dec. 2020
Bob Evans I	23	23,950			23,950			4.71	%		Fixed	Sep. 2037	Sep. 2027
Mortgage Loan II	12	210,000			210,000			4.25	%		Fixed	Jan. 2028	Jan. 2028
Mortgage Loan III	22	33,400			33,400			4.12	%		Fixed	Jan. 2028	Jan. 2028
Mortgage Loan IV⁽²⁾	—	—			29,887			—	%		—	N/A	N/A
Gross mortgage notes payable	623	1,321,729			1,200,538			4.55	%	⁽³⁾
Deferred financing costs, net of accumulated amortization ⁽⁴⁾		(16,273		)	(11,363		)
Mortgage premiums, net ⁽⁵⁾		4,396			6,938
Mortgage notes payable, net		$	1,309,852		$	1,196,113


⁽¹⁾	Weighted-average remaining amortization periods for in-place leases, above-market lease assets and below-market lease liabilities acquired during the nine months ended September 30, 2019 were 15.0 years, 11.6 years and 16.9 years, respectively, as of each property’s respective acquisition date.



(In thousands)	September 30, 2019			December 31, 2018
Real estate investments held for sale, at cost:
Land	$	6,122		$	6,113
Buildings, fixtures and improvements	4,775			39,343
Acquired lease intangible assets	—			12,517
Total real estate assets held for sale, at cost	10,897			57,973
Less accumulated depreciation and amortization	(789		)	(11,278		)
Total real estate investments held for sale, net	10,108			46,695
Impairment charges related to properties reclassified as held for sale ⁽¹⁾	—			(2,176		)
Assets held for sale	$	10,108		$	44,519
Number of properties	5			7


⁽¹⁾	In connection with repayment a portion of this mortgage note, the Company paid prepayment penalties of $1.6 million in the second quarter of 2019, which are included in the acquisition, transaction and other costs on the consolidated statement of operations and comprehensive (loss) income.


⁽³⁾	Calculated on a weighted-average basis for all mortgages outstanding as of September 30, 2019.


⁽⁵⁾	Mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.



(In thousands)	Future Principal Payments
2019 (remainder)	$	952
2020	539,245
2021	248,371
2022	2,311
2023	2,643
2024	22,287
Thereafter	505,920
	$	1,321,729



(In thousands)	Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2			Significant Unobservable Inputs Level 3		Total
December 31, 2018
Interest rate “Pay - Fixed” swaps - liabilities	—		(531		)	—		(531		)
Total	$	—	$	(531	)	$	—	$	(531	)



(In thousands)	Balance Sheet Location	December 31, 2018
Derivatives designated as hedging instruments:
Interest Rate “Pay-fixed” Swaps	Derivative liabilities, at fair value	$	(531	)
Total		$	(531	)



											Gross Amounts Not Offset on the Balance Sheet
(In thousands)	Gross Amounts of Recognized Assets		Gross Amounts of Recognized (Liabilities)			Gross Amounts Offset on the Balance Sheet		Net Amounts of Assets (Liabilities) Presented on the Balance Sheet			Financial Instruments		Cash Collateral Received (Posted)		Net Amount
December 31, 2018	$	—	$	(531	)	$	—	$	(531	)	$	—	$	—	(531	)



	Three Months Ended September 30,				Nine Months Ended September 30,				Payable as of
(In thousands)	2019		2018		2019		2018		September 30, 2019			December 31, 2018
Non-recurring fees and reimbursements:
Acquisition cost reimbursements⁽¹⁾	$	38	$	77	$	188	$	248	$	38		$	70
Vesting and conversion of Class B Units	—		15,786		—		15,786		—			—
Ongoing fees:
Asset management fees to related party	6,545		5,849		18,918		17,295		—			95
Property management and leasing fees⁽²⁾	2,089		1,966		7,407		6,571		640			1,272
Professional fees and other reimbursements ⁽³⁾	2,209		2,347		7,703		6,746		280		^{(4) (5)}	1,197		⁽⁴⁾
Distributions on Class B Units ^{(3) (6)}	—		58		—		736		—			—
Total related party operating fees and reimbursements	$	10,881	$	26,083	$	34,216	$	47,382	$	958		$	2,634


•	the sum of (i) the market value (as defined in the A&R OP Agreement) of the Company’s common stock plus (ii) the sum of all distributions or dividends (from any source) paid by the Company to its stockholders prior to the Listing; and


•	the sum of (i) the gross proceeds (“Gross Proceeds”) of all public and private offerings, including issuance of the Company’s common stock pursuant to a merger (including the Merger)or business combination (an “Offering”) as of the Listing Date



	Number of Shares of Common Stock		Weighted-Average Issue Price
Unvested, December 31, 2018	136,234		$	16.51
Granted	34,588		9.82
Vested	(59,401	)	16.37
Forfeited	—		—
Unvested, September 30, 2019	111,421		$	14.51



Performance Level	Absolute TSR				Percentage of Award LTIPs Earned
Below Threshold	Less than	24	%		—	%
Threshold		24	%		25	%
Target		30	%		50	%
Maximum		36	%	or higher	100	%



Performance Level	Relative TSR Excess			Percentage of Relative TSR Award LTIPs Earned
Below Threshold	Less than	-600	basis points	—	%
Threshold		-600	basis points	25	%
Target		—	basis points	50	%
Maximum		+600	basis points	100	%


⁽¹⁾	Weighted-average number of shares of unvested restricted shares outstanding for the periods presented. There were 111,430 and 136,238 unvested restricted shares outstanding as of September 30, 2019 and 2018, respectively.


⁽²⁾	Weighted-average number of OP Units outstanding for the periods presented. There were 172,921 and 172,921 Class A Units outstanding as of September 30, 2019 and 2018, respectively.


⁽³⁾	Weighted-average number of Class B Units outstanding for the periods presented. There were no Class B Units outstanding as of September 30, 2019 and 1,052,420 Class B Units outstanding as of September 30, 2018.


⁽⁴⁾	Weighted-average number of LTIP Units outstanding for the periods presented. There were 4,496,796 LTIP Units outstanding as of September 30, 2019 and 4,496,796 outstanding as of September 30, 2018.