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Dynamic quotes 
OFFON

SPIRIT REALTY CAPITAL, INC.

(SRC)
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SPIRIT REALTY CAPITAL, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/02/2021 | 03:10pm EST

Special Note Regarding Forward-looking Statements


This quarterly report contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. When used
in this quarterly report, the words "estimate," "anticipate," "expect,"
"believe," "intend," "may," "will," "should," "seek," "approximately" or "plan,"
or the negative of these words or similar words or phrases that are predictions
of or indicate future events or trends and which do not relate solely to
historical matters are intended to identify forward-looking statements. You can
also identify forward-looking statements by discussions of strategy, plans or
intentions of management.

Forward-looking statements involve numerous risks and uncertainties and you
should not rely on them as predictions of future events. Forward-looking
statements depend on assumptions, data or methods which may be incorrect or
imprecise and we may not be able to realize them. We do not guarantee that the
transactions and events described will happen as described (or that they will
happen at all).

The following risks and uncertainties, among others, could cause actual results
and future events to differ materially from those set forth or contemplated in
the forward-looking statements:

• industry and economic conditions;

• volatility and uncertainty in the financial markets, including potential

fluctuations in the CPI;

• our success in implementing our business strategy and our ability to

identify, underwrite, finance, consummate, integrate and manage diversifying

acquisitions or investments;

• the financial performance of our retail tenants and the demand for retail

      space;


  • our ability to diversify our tenant base;


  • the nature and extent of future competition;

• increases in our costs of borrowing as a result of changes in interest rates

      and other factors;


  • our ability to access debt and equity capital markets;


   •  our ability to pay down, refinance, restructure and/or extend our
      indebtedness as it becomes due;

• our ability and willingness to renew our leases upon expiration and to

reposition our properties on the same or better terms upon expiration in the

event such properties are not renewed by tenants or we exercise our rights

to replace existing tenants upon default;

• the impact of any financial, accounting, legal or regulatory issues or

      litigation that may affect us or our major tenants;


  • our ability to manage our expanded operations;


  • our ability and willingness to maintain our qualification as a REIT;


   •  the impact on our business and those of our tenants from epidemics,
      pandemics or other outbreaks of illness, disease or virus (such as the
      strain of coronavirus known as COVID-19); and

• other risks inherent in the real estate business, including tenant defaults,

      potential liability relating to environmental matters, illiquidity of real
      estate investments and potential damages from natural disasters.


The factors included in this quarterly report, including the documents
incorporated by reference, and documents we subsequently file with the SEC and
incorporate by reference, are not exhaustive and additional factors could
adversely affect our business and financial performance. Additional factors that
may cause risks and uncertainties include those discussed in the sections
entitled "Business", "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report on Form 10-K
for the year ended December 31, 2020 and this report and subsequent filings with
the SEC. All forward-looking statements are based on information that was
available, and speak only, to the date on which they were made. We disclaim any
obligation to publicly update or revise any forward-looking statement to reflect
changes in underlying assumptions or factors, new information, data or methods,
future events or other changes, except as required by law.

                                       26

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Overview


Spirit Realty Capital, Inc. is a New York Stock Exchange listed company under
the ticker symbol "SRC." We are a self-administered and self-managed REIT with
in-house capabilities including acquisition, credit research, asset management,
portfolio management, real estate research, legal, finance and accounting
functions. We primarily invest in single-tenant, operationally essential real
estate assets throughout the United States, which are generally acquired through
sale-leaseback transactions and subsequently leased on a long-term, triple-net
basis to high quality tenants operating in retail, industrial and other property
types. Single-tenant, operationally essential real estate consists of properties
that are free-standing, commercial real estate facilities where our tenants
conduct activities that are essential to the generation of their sales and
profits. Under a triple-net lease, the tenant is typically responsible for all
improvements and is contractually obligated to pay all property operating
expenses, such as real estate taxes, insurance premiums and repair and
maintenance costs.

As of September 30, 2021, our diverse portfolio consisted of 1,915 owned
properties across 48 states, which were leased to 312 tenants operating in over
35 industries. As of September 30, 2021, our properties were approximately 99.7%
occupied.

Our operations are carried out through the Operating Partnership. OP Holdings,
one of our wholly-owned subsidiaries, is the sole general partner and owns
approximately 1% of the Operating Partnership. We and one of our wholly-owned
subsidiaries are the only limited partners, and together own the remaining 99%
of the Operating Partnership. As of September 30, 2021, our assets, liabilities,
and results of operations are materially the same as those of the Operating
Partnership. Although the Operating Partnership is wholly-owned by us, we may,
in the future, issue partnership interests in the Operating Partnership to third
parties in exchange for property owned by such third parties. In general, any
such partnership interests would be exchangeable for cash or, at our election,
shares of our common stock at specified ratios set when such partnership
interests are issued.

We have elected to be taxed as a REIT for federal income tax purposes and believe we have been organized and have operated in a manner that allows us to qualify as a REIT for federal income tax purposes.

Business Impact of the COVID-19 Pandemic


At the onset of the COVID-19 pandemic in 2020, many of our tenants requested
rent deferrals or other forms of relief. Our discussions with tenants requesting
relief substantially focused on industries that have been directly disrupted by
the COVID-19 pandemic and restrictions intended to prevent its spread,
particularly movie theaters, casual dining restaurants, entertainment, health
and fitness and hotels. Since the beginning of 2021, we have seen a reduction in
the impact of the COVID-19 pandemic and we expect that trend to continue. For
the three and nine months ended September 30, 2021, we deferred $1.0 million and
$7.8 million of rent, respectively, and had net reversals of previous reserves
against deferred rent of $5.0 million during the first half of 2021, resulting
in $1.0 million and $12.8 million, respectively, recognized in rental income.
Additionally, for the three and nine months ended September 30, 2021, we abated
$0.4 million and $1.5 million, respectively, of rent.

As of September 30, 2021, we had an accounts receivable balance of $16.8 million
related to deferred rent. For rent deferrals, the deferral periods range
generally from one to six months, with an average deferral period of three
months and an average repayment period of 12 months. Currently, we have granted
maximum rent deferrals of $0.9 million for periods after September 30, 2021 and
no further abatements. Although we are and will continue to be actively engaged
in rent collection efforts related to uncollected rent, we can provide no
assurance that such efforts or our efforts in future periods will be successful,
particularly in the event that the COVID-19 pandemic and restrictions intended
to prevent its spread continue for a prolonged period. Even after such
restrictions are lifted or reduced, the willingness of customers to visit our
tenants' businesses may be reduced due to lingering concerns regarding the
continued risk of COVID-19 transmission and heightened sensitivity to risks
associated with the transmission of diseases.

Critical Accounting Policies and Estimates


The preparation of financial statements in conformity with GAAP requires
management to use judgment in the application of accounting policies, including
making estimates and assumptions. We base estimates on the best information
available to us at the time, our experience and various other assumptions deemed
reasonable under the circumstances. From time to time, we re-evaluate our
estimates and assumptions. In the event estimates or assumptions prove to be
different from actual results, adjustments are made in subsequent periods to
reflect more current estimates and assumptions about matters that are inherently
uncertain. A summary of our critical accounting policies is included in the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of our Annual Report on Form 10-K for the year ended
December 31, 2020. We have not made any material changes to these policies
during the periods covered by this quarterly report.

                                       27

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Results of Operations

Comparison of the three and nine months ended September 30, 2021 to the three and nine months ended September 30, 2020


                             Three Months Ended           Nine Months Ended
                                September 30,               September 30,               Increase / (Decrease)
(In Thousands)               2021          2020          2021          2020        Three Months       Nine Months
Revenues:
Rental income              $ 151,376     $ 112,916     $ 450,483     $ 351,469     $      38,460     $      99,014
Interest income on loans
receivable                         -           189             -           998              (189 )            (998 )
Earned income from
direct financing leases          131           131           394           439                 -               (45 )
Related party fee income           -           178             -           678              (178 )            (678 )
Other income                   1,061           327         1,458         1,401               734                57
Total revenues               152,568       113,741       452,335       354,985            38,827            97,350
Expenses:
General and
administrative                13,103        10,931        39,599        36,396             2,172             3,203

Property costs (including reimbursable) 5,862 5,049 17,633 18,219

               813              (586 )
Deal pursuit costs               361           597           860         1,630              (236 )            (770 )
Interest                      25,078        26,404        77,872        77,858            (1,326 )              14
Depreciation and
amortization                  63,061        52,170       180,222       157,566            10,891            22,656
Impairments                    4,435         8,106        18,965        69,929            (3,671 )         (50,964 )
Total expenses               111,900       103,257       335,151       361,598             8,643           (26,447 )
Other income:
Gain (loss) on debt
extinguishment                     1        (7,252 )     (29,186 )      (7,252 )           7,253           (21,934 )
Gain on disposition of
assets                           453        10,763        39,796        11,809           (10,310 )          27,987
Total other income               454         3,511        10,610         4,557            (3,057 )           6,053
Income (loss) before
income tax expense            41,122        13,995       127,794        (2,056 )          27,127           129,850
Income tax expense              (244 )        (197 )        (461 )        (406 )             (47 )             (55 )

Net income (loss) $ 40,878 $ 13,798 $ 127,333 $ (2,462 ) $ 27,080 $ 129,795

Changes related to operating properties

The components of rental income are summarized below:


                             Three Months Ended           Nine Months Ended
                                September 30,               September 30,                Increase / (Decrease)
(In Thousands)               2021          2020          2021          2020         Three Months         Nine Months
Base Cash Rent             $ 137,234     $ 108,398     $ 400,215     $ 335,110     $       28,836       $      65,105
Variable cash rent
(including
reimbursables)                 4,753         3,051        12,078         8,843              1,702               3,235
Straight-line rent, net
of uncollectible reserve       8,840           899        35,941         6,385              7,941              29,556
Amortization of above-
and below- market lease
intangibles, net                 549           568         2,249         1,131                (19 )             1,118

Total rental income $ 151,376 $ 112,916 $ 450,483 $ 351,469 $ 38,460 $ 99,014



                                       28

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Base Cash Rent; Depreciation and amortization


The increase in Base Cash Rent, the largest component of rental income, for both
comparative periods was driven by our net acquisitions, which also was the
driver for the increase in depreciation and amortization. We acquired 173
properties during the trailing twelve months ended September 30, 2021, with a
total of $84.5 million of annual in-place rent (monthly fixed rent at date of
transaction multiplied by 12). During the same period, we disposed of 36
properties, 21 of which were vacant and the remaining 15 had annual in-place
rents of $5.0 million. Our acquisition and disposition activity for the trailing
twelve months ended September 30, 2021 is summarized below (in thousands):

                               [[Image Removed]]

In addition, the recovery from the impact of the COVID-19 pandemic and related
decrease in tenant credit issues has continued. We reversed a significant amount
of reserves for Base Cash Rent previously deemed not probable of collection in
the second quarter of 2021 and had minimal reserves for Base Cash Rent in the
third quarter of 2021, resulting in an increase in rental income of $6.4 million
for the quarter-to-date comparative period and $17.7 million for the
year-to-date comparative period. Rent abatements executed as relief for the
COVID-19 pandemic also decreased by $1.3 million for the quarter-to-date
comparative period and $2.7 million for the year-to-date comparative period.

Variable cash rent; Property costs (including reimbursable)


Variable cash rent is primarily comprised of tenant reimbursement income, where
our tenants are obligated under the lease agreement to reimburse us for certain
property costs we incur, less reimbursements we deem not probable of collection.
For the three months ended September 30, 2021 and 2020, tenant reimbursement
income was $3.9 million and $2.7 million, respectively, while reimbursable
property expenses were $3.9 million and $3.4 million, respectively. For the nine
months ended September 30, 2021 and 2020, tenant reimbursement income was $10.6
million and $8.2 million, respectively, while reimbursable property expenses
were $10.4 million and $10.0 million, respectively. For both comparative
periods, the increase in variable cash rent and reimbursable property expenses
was due to increased property taxes. In addition, for both comparative periods,
variable cash rent also increased due to fewer tenant credit issues and
increased other variable rent.

While reimbursable property expenses increased for both comparative periods,
non-reimbursable property expenses increased for the quarter-to-date comparative
period and decreased for the year-to-date comparative period. For the three
months ended September 30, 2021 and 2020, non-reimbursable property costs were
$2.0 million and $1.6 million, respectively, with the change driven by increased
expenses from multi-tenant properties. For the nine months ended September 30,
2021 and 2020, non-reimbursable property costs were $7.2 million and $8.2
million, respectively, with the change driven by a decrease in non-reimbursable
property taxes due to fewer tenant credit issues in 2021.

Non-cash rental income


Non-cash rental income consists of straight-line rent, amortization of above-
and below-market lease intangibles and bad debt expense. In conjunction with the
reduction in tenant credit issues, in the second quarter of 2021 we reversed a
significant amount of reserves for straight-line rent previously deemed not
probable of collection and had minimal reserves for straight-line rent in the
third quarter of 2021, resulting in an increase in non-cash rental income of
$4.2 million for the quarter-to-date comparative period and $21.9 million for
the year-to-date comparative period. The remaining increase in non-cash rental
income for both comparative periods was primarily due to increases in
straight-line rent as a result of our net acquisitions described above and
certain lease modifications.

                                       29

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Impairments


The decrease in impairments for the quarter-to-date period was driven by reduced
impairment on vacant properties. While both periods had low vacancy rates,
vacancy dropped from 0.7% at September 30, 2020 to 0.3% at September 30, 2021.
For the three months ended September 30, 2021, we recorded $0.1 million of
impairment on one vacant property, compared to $5.6 million recorded on three
vacant properties for the comparative period. This decrease was partially offset
by impairment on underperforming properties, primarily driven by a lease
expiration in 2021. For the three months ended September 30, 2021, we recorded
$4.3 million of impairment on four underperforming properties, compared to $2.8
million recorded on seven underperforming properties for the comparative period.
Finally, we reversed $0.3 million of previously recorded allowances for credit
loss during the three months ended September 30, 2020. There were no allowances
or reversals of allowances for credit losses recognized during the three months
ended September 30, 2021.

The decrease in impairments for the year-to-date period was driven by a recovery
in the markets in 2021, after the downturn in early 2020 at the onset of the
COVID-19 pandemic, as well as a tenant bankruptcy during the second quarter of
2020, which resulted in the termination of a four-property master lease, with no
significant tenant bankruptcies in 2021. For the nine months ended September 30,
2021, we recorded $16.1 million of impairment on 17 underperforming properties,
compared to $44.0 million recorded on 27 underperforming properties for the
comparative period. Additionally, impairment of $18.2 million was recorded on
lease intangible assets for the nine months ended September 30, 2020,
respectively, primarily as a result of the tenant bankruptcy discussed above.
The slight decrease in vacancy rates also resulted in a decrease in impairment
on vacant properties for the year-to-date comparative period. For the nine
months ended September 30, 2021, we recorded $2.9 million of impairment on five
vacant properties, compared to $7.6 million recorded on eight vacant properties
for the comparative period. Finally, we recorded an allowance for credit loss
$0.1 million during the nine months ended September 30, 2020. There were no
allowances or reversals of allowances for credit losses recognized during the
nine months ended September 30, 2021.

Gain on disposition of assets


During the three months ended September 30, 2021, we recognized net gains of
$0.1 million on the sale of three vacant properties, a $0.3 million gain related
to a property reconstructed after previous fire damage and other net gains of
$0.1 million. During the three months ended September 30, 2020, we recognized
net gains of $11.3 million on the sales of seven active properties and net
losses of $0.5 million on the sales of four vacant properties.

During the nine months ended September 30, 2021, we recognized net gains of
$38.0 million on the sales of eight occupied properties, net gains of $0.7
million on the sale of 11 vacant properties, a $0.6 million gain on an asset
substitution, a $0.3 million gain related to a property reconstructed after
previous fire damage and other net gains of $0.2 million. During the nine months
ended September 30, 2020, we recognized net gains of $11.3 million on the sales
of 11 occupied properties, net gains of $0.9 million on the sale of ten vacant
properties, a $0.2 million loss on the sale of a note receivable and $0.2
million in other net losses.

Changes related to debt

Interest expense; Gain (loss) on debt extinguishment

Our debt is summarized below (in thousands):

                               [[Image Removed]]

                                       30

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During the first quarter of 2020, we did not issue or extinguish any debt.
During the second quarter of 2020, we entered into the 2020 Term Loans. During
the third quarter of 2020, we issued $450.0 million of 2031 Senior Notes, which
triggered a mandatory repayment of $222.0 million of the 2020 Term Loans that
resulted in a loss on debt extinguishment of $1.1 million. Remaining proceeds
from the 2031 Senior Notes issuance were primarily utilized to repurchase $154.6
million of Convertible 2021 Notes, resulting in a loss on debt extinguishment of
$6.2 million.

In January 2021, we repaid the 2020 Term Loan in full, resulting in a loss on
debt extinguishment of $0.7 million primarily due to the write-off of
unamortized deferred financing costs. In March 2021, we issued $800.0 million
aggregate principal amount of the 2028 and 2032 Senior Notes. Proceeds from
these issuances were used to extinguish $207.4 million of CMBS loans, resulting
in a loss on debt extinguishment of $28.5 million primarily due to pre-payment
penalties. The Convertible Notes matured in May 2021, at which time they were
settled in cash and the remaining discount and deferred financing costs were
fully amortized.

While these changes in our debt structure resulted in an overall increase in our
total debt outstanding, our interest expenses decreased as the issuance of new
debt at lower interest rates reduced our weighted average interest rate from
3.64% at September 30, 2020 to 3.21% at September 30, 2021. As such, due to the
timing of the debt issuances and extinguishments, interest expense decreased for
the quarter-to-date comparative period, but remained flat for the year-to-date
comparative period:

                                Three Months Ended          Nine Months Ended
                                   September 30,              September 30,                Increase / (Decrease)
(In Thousands)                   2021          2020         2021          2020        Three Months         Nine Months
Revolving credit facilities   $      765     $    409     $   2,118     $  3,269     $          356       $      (1,151 )
Term loans                             -        1,128            24        2,799             (1,128 )            (2,775 )
Senior Unsecured Notes            22,313       16,188        63,683       44,163              6,125              19,520
Mortgages payable                     81        3,016         2,427        9,027             (2,935 )            (6,600 )
Convertible Notes                      -        2,473         2,658        8,942             (2,473 )            (6,284 )
Non-cash interest expense          1,919        3,190         6,962        9,658             (1,271 )            (2,696 )
Total interest expense        $   25,078     $ 26,404     $  77,872     $ 77,858     $       (1,326 )     $          14

Changes related to general and administrative expenses


General and administrative expenses increased during 2021, primarily driven by
an increase in compensation expenses of $2.3 million for the quarter-to-date
comparative period and $3.8 million for the year-to-date comparative period. The
increase in compensation expenses was primarily driven by an increase in
accruals for merit-based compensation. This increase in merit-based compensation
is a result of lower executive bonuses in 2020 due to the impact of the COVID-19
pandemic on performance metrics, and the improvement of those performance
metrics in 2021 as our tenants and our results have recovered from the impact of
the COVID-19 pandemic. Additionally, IT software and licensing expenses
increased by $0.3 million for the quarter-to-date comparative period and $0.4
million for the year-to-date comparative period due to the implementation of
additional technology. These increases were partially offset by a decrease for
both comparative periods due to $0.7 million of expenses recognized during the
third quarter of 2020 related to the COVID-19 pandemic, primarily as a result of
increased legal fees for executing rent deferral or abatement agreements, with
no comparable expense in 2021.

                                       31

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Property Portfolio Information




  1,915      99.7%     48     312          27
Properties Occupancy States Tenants Retail Industries


Diversification By Tenant

The following is a summary of tenant concentration for our owned real estate properties as of September 30, 2021:

                               Number of        Total Square Feet       Percent of
Tenant Concept (1)             Properties        (in thousands)            ABR
Life Time Fitness                        8                     926              3.1 %
ClubCorp                                20                     941              3.1 %
Church's Chicken                       161                     232              2.3 %
BJ's Wholesale Club                      9                   1,028              2.3 %
At Home                                 14                   1,684              2.2 %
Home Depot                               8                     946              2.1 %
Circle K                                76                     230              2.0 %
GPM                                    109                     303              1.8 %
Dollar Tree / Family Dollar            108                     948              1.8 %
Walgreens                               33                     472              1.8 %
Other(2)                             1,364                  38,483             77.5 %
Vacant                                   5                     499                -
Total                                1,915                  46,692            100.0 %


(1) Tenant concentration represents concentration by the legal entities
ultimately responsible for obligations under the lease agreements or affiliated
entities. Concentration is shown by tenant concept, which represents the brand
or trade name under which the tenant operates. Other tenants may operate under
the same or similar brand or trade name.

(2) No tenants within other individually account for greater than 1.8% of ABR.

Lease Expirations


As of September 30, 2021, the weighted average remaining non-cancelable initial
term of our leases (based on ABR) was 10.3 years. The following is a summary of
lease expirations for our owned real estate as of September 30, 2021, assuming
that tenants do not exercise any renewal options or early termination rights:

                                          Number of             ABR             Total Square Feet       Percent of
Leases Expiring In:                       Properties       (in thousands)        (in thousands)            ABR
Remainder of 2021                                   9     $          1,583                     122              0.3 %
2022                                               36               15,170                   1,370              2.7 %
2023                                               84               25,398                   2,213              4.5 %
2024                                               48               17,125                   1,521              3.1 %
2025                                               50               18,414                   1,467              3.3 %
2026                                              124               41,939                   4,121              7.5 %
2027                                              137               43,322                   3,327              7.7 %
2028                                              112               31,792                   2,121              5.7 %
2029                                              315               41,786                   2,832              7.5 %
2030                                               77               22,324                   2,290              4.0 %
Thereafter                                        918              299,636                  24,809             53.7 %
Vacant                                              5                    -                     499                -
Total owned properties                          1,915     $        558,489                  46,692            100.0 %


                                       32
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Diversification By Geography

The following is a summary of geographic concentration for our owned real estate properties as of September 30, 2021:


[[Image Removed]]



                   Number of        Total Square Feet      Percent of      Location                Number of        Total Square Feet       Percent of
Location           Properties        (in thousands)            ABR         (continued)            Properties         (in thousands)            ABR
Texas                      258                   4,980            11.3 %   Louisiana                        26                     470              1.3 %
Florida                    159                   2,949             9.2 %   Utah                             18                     334              1.1 %
Georgia                    140                   2,739             6.3 %   Massachusetts                     3                     585              0.9 %
Ohio                        89                   3,409             5.6 %   Alaska                            9                     319              0.9 %
California                  27                   1,533             4.4 %   New Hampshire                    17                     645              0.9 %
Michigan                    90                   2,080             4.1 %   Wisconsin                        13                     700              0.9 %
Tennessee                  108                   2,081             3.9 %   Connecticut                       6                     860              0.8 %
New York                    36                   2,043             3.5 %   Idaho                            16                     273              0.8 %
Illinois                    51                   1,292             3.4 %   New Jersey                       12                     431              0.8 %
Arizona                     47                     955             3.1 %   Kansas                           17                     341              0.7 %
Missouri                    64                   1,563             3.0 %   Washington                        8                     136              0.5 %
North Carolina              71                   1,830             2.9 %   Maine                            27                      85              0.5 %
South Carolina              58                   1,089             2.9 %   West Virginia                    12                     191              0.4 %
Maryland                    11                   1,401             2.8 %   Delaware                          2                     128              0.4 %
Alabama                     95                     787             2.4 %   Nebraska                          8                     218              0.4 %
Virginia                    44                   1,335             2.3 %   Montana                           3                     152              0.4 %
Colorado                    29                   1,030             2.1 %   North Dakota                      3                     105              0.3 %
Minnesota                   24                     902             2.0 %   Rhode Island                      3                      95              0.2 %
Indiana                     40                   1,810             2.0 %   Oregon                            3                     105              0.2 %
Oklahoma                    54                   1,030             1.9 %   Iowa                             10                     140              0.2 %
Mississippi                 53                     753             1.8 %   South Dakota                      2                      30              0.2 %
New Mexico                  29                     622             1.6 %   Wyoming                           1                      35              0.1 %
Pennsylvania                30                     797             1.6 %   U.S. Virgin Islands               1                      38              0.1 %
Kentucky                    45                     627             1.6 %   Vermont                           1                       2                *
Arkansas                    42                     637             1.3 %


* Less than 0.1%



                                       33
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Diversification By Asset Type and Tenant Industry

The following is a summary of asset type concentration, the industry of the underlying tenant operations for our retail properties and the underlying property use for our non-retail properties as of September 30, 2021:

                                                 Number of        Total Square Feet       Percent of
Asset Type     Tenant Industry                  Properties         (in thousands)            ABR
Retail                                                 1,670                  26,745             72.2 %
               Health and Fitness                         46                   2,631              7.5 %
               Convenience Stores                        328                   1,046              7.1 %
               Restaurants - Quick Service               355                     778              5.7 %
               Restaurants - Casual Dining               131                     908              5.2 %
               Dealerships                                30                     993              4.3 %
               Movie Theaters                             37                   1,954              4.3 %
               Drug Stores / Pharmacies                   76                     976              3.9 %
               Entertainment                              25                   1,070              3.2 %
               Car Washes                                 67                     323              3.1 %
               Dollar Stores                             183                   1,680              3.0 %
               Warehouse Club and Supercenters            15                   1,660              2.8 %
               Home Improvement                           15                   1,692              2.8 %
               Grocery                                    36                   1,655              2.8 %
               Home Décor                                 17                   2,235              2.5 %
               Automotive Service                         77                     608              2.3 %
               Specialty Retail                           53                   1,198              2.2 %
               Sporting Goods                             18                   1,049              2.1 %
               Department Stores                          16                   1,424              1.9 %
               Home Furnishings                           17                     760              1.4 %
               Early Education                            36                     398              1.4 %
               Automotive Parts                           55                     388              0.9 %
               Office Supplies                            16                     351              0.7 %
               Other                                       8                     255              0.5 %
               Pet Supplies & Service                      4                     133              0.4 %
               Apparel                                     4                      81              0.2 %
               Vacant                                      5                     499                -
Non-Retail                                               245                  19,947             27.8 %
               Distribution                              131                   9,887             10.8 %
               Manufacturing                              48                   6,877              6.7 %
               Country Club                               20                     941              3.1 %
               Office                                      8                   1,090              2.9 %
               Medical                                    34                     601              2.7 %
               Data Center                                 3                     429              1.1 %
               Hotel                                       1                     122              0.5 %
Total                                                  1,915                  46,692            100.0 %




                                       34
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Liquidity and Capital Resources

ATM PROGRAM

In November 2020, the Board of Directors approved a new $500.0 million ATM Program, and we terminated the 2016 ATM Program. Sales of shares of our common stock under the 2020 ATM Program may be made in sales deemed to be "at the market offerings" as defined in Rule 415 under the Securities Act.


The 2020 ATM Program contemplates that, in addition to the issuance and sale by
us of shares of our common stock to or through the agents, we may enter into
separate forward sale agreements with one of the agents or one of their
respective affiliates (in such capacity, each, a "forward purchaser"). When we
enter into a forward sale agreement, we expect that the forward purchaser will
attempt to borrow from third parties and sell, through a forward seller, shares
of our common stock to hedge the forward purchaser's exposure under the forward
sale agreement. We will not initially receive any proceeds from any sale of
shares of our common stock borrowed by a forward purchaser and sold through a
forward seller.

We currently expect to fully physically settle any forward sale agreement with
the respective forward purchaser on one or more dates specified by us on or
prior to the maturity date of such forward sale agreement, in which case we
expect to receive aggregate net cash proceeds at settlement equal to the number
of shares specified in such forward sale agreement multiplied by the relevant
forward price per share. However, subject to certain exceptions, we may also
elect, in our sole discretion, to cash settle or net share settle all or any
portion of our obligations under any forward sale agreement, in which case we
may not receive any proceeds (in the case of cash settlement) or will not
receive any proceeds (in the case of net share settlement), and we may owe cash
(in the case of cash settlement) or shares of our common stock (in the case of
net share settlement) to the relevant forward purchaser.

As of September 30, 2021, 9.3 million shares of our common stock have been sold
under the 2020 ATM Program, of which 5.8 million shares were sold during the
nine months ended September 30, 2021. All of these sales were through forward
sales agreements. The forward sale price that we will receive upon physical
settlement of the agreements is subject to adjustment for (i) a floating
interest rate factor equal to a specified daily rate less a spread, (ii) the
forward purchasers' stock borrowing costs and (iii) scheduled dividends during
the term of the forward sale agreements. As of September 30, 2021, there were
1.6 million shares remaining under open forward sales agreements with a weighted
average forward price of $48.64. Assuming the full physical settlement of those
open forward sales agreements, we have $95.6 million remaining available under
the 2020 ATM Program as of September 30, 2021.

SHORT-TERM LIQUIDITY AND CAPITAL RESOURCES


On a short-term basis, our principal demands for funds will be for operating
expenses, acquisitions, distributions to stockholders and payment of interest
and principal on current and any future debt financings. We expect to fund these
demands primarily through cash provided by operating activities, borrowings
under the 2019 Credit Facility and, when market conditions warrant, issuances of
equity securities, including shares of our common stock under our 2020 ATM
program. As of September 30, 2021, available liquidity was comprised of $15.6
million in cash and cash equivalents and $750.7 million of borrowing capacity
under the 2019 Credit Facility. Also, as of September 30, 2021, we had $77.2
million of expected proceeds available assuming the full physical settlement of
our open forward equity contracts and remaining capacity of $95.6 million under
our 2020 ATM Program.

LONG-TERM LIQUIDITY AND CAPITAL RESOURCES


We plan to meet our long-term capital needs, including long-term financing of
property acquisitions, by issuing registered debt or equity securities, by
obtaining asset level financing and by issuing fixed-rate secured or unsecured
notes and bonds. In the future, some of our property acquisitions could be made
by issuing partnership interests of our Operating Partnership in exchange for
property owned by third parties. These partnership interests would be
exchangeable for cash or, at our election, shares of our common stock. We
continually evaluate financing alternatives and believe that we can obtain
financing on reasonable terms. However, we cannot be sure that we will have
access to the capital markets at times and on terms that are acceptable to us.
Refer to "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for
the year ended December 31, 2020 for additional information about the potential
impact of the COVID-19 pandemic and restrictions intended to prevent its spread
on our business, financial condition, results of operations, cash flows,
liquidity and ability to satisfy our debt service obligations and make
distributions to our stockholders. We expect that our primary uses of capital
will be for property and other asset acquisitions, the payment of tenant
improvements, operating expenses, debt service payments and distributions to our
stockholders.

                                       35
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DESCRIPTION OF CERTAIN DEBT

The following descriptions of debt should be read in conjunction with Note 4 to the consolidated financial statements herein.

2019 Credit Facility


As of September 30, 2021, the aggregate gross commitment under the 2019 Credit
Facility was $800.0 million, which may be increased up to $1.2 billion by
exercising an accordion feature, subject to satisfying certain requirements and
obtaining additional lender commitments. The 2019 Credit Facility has a maturity
of March 31, 2023 and includes two six-month extensions that can be exercised at
our option.

We may voluntarily prepay the 2019 Credit Facility, in whole or in part, at any
time without premium or penalty. Payment of the 2019 Credit Facility is
unconditionally guaranteed by the Company and material subsidiaries that meet
certain conditions. As of September 30, 2021, there were no subsidiaries that
met this requirement.

As of September 30, 2021, the 2019 Credit Facility bore interest at 1-Month LIBOR plus 0.90%, with $49.3 million in borrowings outstanding, and a ratings-based facility fee in the amount of 0.20% per annum. As of September 30, 2021, there were no letters of credit outstanding.

Senior Unsecured Notes

As of September 30, 2021, we had the following Senior Unsecured Notes outstanding (dollars in thousands):

                                                                       Stated
                                                                      Interest       September 30,
                      Maturity Date       Interest Payment Dates        Rate             2021
2026 Senior Notes   September 15, 2026   March 15 and September 15     4.45%        $       300,000
2027 Senior Notes    January 15, 2027     January 15 and July 15       3.20%                300,000
2028 Senior Notes     March 15, 2028     March 15 and September 15     2.10%                450,000
2029 Senior Notes     July 15, 2029       January 15 and July 15       4.00%                400,000
2030 Senior Notes    January 15, 2030     January 15 and July 15       3.40%                500,000
2031 Senior Notes   February 15, 2031    February 15 and August 15     3.20%                450,000
2032 Senior Notes   February 15, 2032    February 15 and August 15     2.70%                350,000
Total Senior Unsecured Notes                                           

3.25% $ 2,750,000



The Senior Unsecured Notes are redeemable in whole at any time or in part from
time to time, at the Operating Partnership's option, at a redemption price equal
to the sum of: an amount equal to 100% of the principal amount of the respective
Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and
liquidated damages, if any, up to, but not including, the redemption date; and a
make-whole premium calculated in accordance with the respective indenture.
Notwithstanding the foregoing, if any of the Senior Unsecured Notes are redeemed
three months or less (or two months or less in the case of the 2027 Senior Notes
and 2028 Senior Notes) prior to their respective maturity dates, the redemption
price will not include a make-whole premium.

Mortgages payable


In general, the obligor of our asset level debt is a special purpose entity that
holds the real estate and other collateral securing the indebtedness. Each
special purpose entity is a bankruptcy remote separate legal entity and is the
sole owner of its assets and solely responsible for its liabilities other than
typical non-recurring covenants. As of September 30, 2021, we had two fixed-rate
CMBS loans with $5.5 million of aggregate outstanding principal. One of the CMBS
loans, with principal outstanding of $4.8 million, matures in August 2031 and
has a stated interest rate of 5.80%. The other CMBS loan, with principal
outstanding of $0.7 million, matures in December 2025 and has a stated interest
rate of 6.00%. Both CMBS loans are partially amortizing and require a balloon
payment at maturity.

DEBT MATURITIES

Future principal payments due on our various types of debt outstanding as of September 30, 2021 (in thousands):

                                         Remainder of
                            Total            2021           2022         2023        2024        2025       Thereafter
2019 Credit Facility     $    49,300     $           -     $     -     $ 49,300     $     -     $     -     $         -
Senior Unsecured Notes     2,750,000                 -           -            -           -           -       2,750,000
Mortgages payable              5,476               126         525          556         590         626           3,053
                         $ 2,804,776     $         126     $   525     $ 49,856     $   590     $   626     $ 2,753,053




                                       36
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CONTRACTUAL OBLIGATIONS

During the three months ended March 31, 2021, we repaid the 2020 Term Loan in
full. Additionally, we issued the 2028 and 2032 Senior Unsecured Notes and used
the proceeds to extinguish three of our CMBS loans. During the three months
ended June 30, 2021, the Convertible Notes matured and were fully settled in
cash. There were no other material changes during the nine months ended
September 30, 2021 outside the ordinary course of business to the information
regarding specified contractual obligations contained in our Annual Report on
Form 10-K for the year ended December 31, 2020, as filed with the SEC.

We may enter into commitments to purchase goods and services in connection with
the operations of our properties. Those commitments generally have terms of
one-year or less and reflect expenditure levels comparable to our historical
expenditures.

DISTRIBUTION POLICY

Distributions from our current or accumulated earnings are generally classified
as ordinary income, whereas distributions in excess of our current and
accumulated earnings, to the extent of a stockholder's federal income tax basis
in our common stock, are generally characterized as a return of capital. Under
the 2017 Tax Legislation, U.S. stockholders that are individuals, trusts and
estates generally may deduct up to 20% of the ordinary dividends (e.g.,
dividends not designated as capital gain dividends or qualified dividend income)
received from a REIT for taxable years beginning after December 31, 2017 and
before January 1, 2026. Distributions in excess of a stockholder's federal
income tax basis in our common stock are generally characterized as capital
gain.

We are required to distribute 90% of our taxable income (subject to certain
adjustments and excluding net capital gains) on an annual basis to maintain
qualification as a REIT for federal income tax purposes and are required to pay
federal income tax at regular corporate rates to the extent we distribute less
than 100% of our taxable income (including capital gains).

We intend to make distributions that will enable us to meet the distribution
requirements applicable to REITs and to eliminate or minimize our obligation to
pay corporate-level federal income and excise taxes.

Any distributions will be at the sole discretion of our Board of Directors, and
their form, timing and amount, if any, will depend upon a number of factors,
including our actual and projected results of operations, FFO, liquidity, cash
flows and financial condition, the revenue we actually receive from our
properties, our operating expenses, our debt service requirements, our capital
expenditures, prohibitions and other limitations under our financing
arrangements, our REIT taxable income, the annual REIT distribution
requirements, applicable laws and such other factors as our Board of Directors
deems relevant. Refer to "Part I, Item 1A. Risk Factors" in our Annual Report on
Form 10-K for the year ended December 31, 2020 for additional information about
the potential impact of the COVID-19 pandemic and restrictions intended to
prevent its spread on our business, financial condition, results of operations,
cash flows, liquidity and ability to satisfy our debt service obligations and
make distributions to our stockholders.

Cash Flows

The following table presents a summary of our cash flows for the nine months ended September 30, 2021 and 2020 (in thousands):


                                                     Nine Months Ended 

September 30,

                                                       2021                   2020             Change

Net cash provided by operating activities $ 275,383 $

      206,524     $   68,859
Net cash used in investing activities                    (681,338 )             (352,766 )     (328,572 )
Net cash provided by financing activities                 338,221                249,708         88,513
Net (decrease) increase in cash, cash
equivalents and restricted cash                  $        (67,734 )     $   

103,466 $ (171,200 )



As of September 30, 2021, we had $15.6 million of cash, cash equivalents and
restricted cash as compared to $83.3 million as of December 31, 2020 and $129.5
million as of September 30, 2020.

Operating Activities


Our cash flows from operating activities are primarily dependent upon the
occupancy level of our portfolio, the rental rates specified in our leases, the
collectability of rent and the level of our operating expenses and other general
and administrative costs.

                                       37
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The increase in net cash provided by operating activities was driven by the net
increase in cash rental revenue of $88.8 million, driven by net acquisitions
over the trailing twelve month period, as well as the reversal of previous
reserves in 2021 as our tenants recover from the COVID-19 pandemic.

The increase in net cash provided by operating activities was partially offset by the following:

• an increase in cash interest paid of $13.9 million driven by the issuance of

the 2027 Senior Notes, 2029 Senior Notes, 2030 Senior Notes, and 2031 Senior

Notes, all of which pay interest semi-annually,

• a decrease of interest income of $1.0 million as a result of the collection

of principal on all loans receivable during 2020, and

• a decrease in related party fee income of $0.6 million driven by the

termination of the Interim Management Agreement effective September 4, 2020.



Investing Activities

Cash used in investing activities is generally used to fund property
acquisitions, for investments in loans receivable and for capital expenditures.
Cash provided by investing activities generally relates to the disposition of
real estate and other assets.

Net cash used in investing activities during the nine months ended September 30,
2021 included $769.0 million for the acquisition of 74 properties and $6.7
million of capitalized real estate expenditures. These outflows were partially
offset by $94.5 million in net proceeds from dispositions, comprised of $92.5
million for 19 properties sold in 2021 and $2.0 million that was collected from
a disposal that occurred in 2020.

During the same period in 2020, net cash used in investing activities included
$433.4 million for the acquisition of 47 properties and $9.9 million of
capitalized real estate expenditures. These outflows were partially offset by
$58.7 million in net proceeds from the disposition of 21 properties and the sale
of one loan receivable. Additionally, the outflows were further offset by the
collection of $31.8 million of principal on loans receivable, which includes
$28.7 million for the paydown of the outstanding loan balances.

Financing Activities

Generally, our net cash provided by or used in financing activities is impacted by our borrowings under our revolving credit facilities and term loans, issuances of net-lease mortgage notes, common stock and debt offerings and repurchases and dividend payments on our common and preferred stock.


Net cash provided by financing activities during the nine months ended
September 30, 2021 was primarily attributable to borrowings of $794.8 million
under Senior Unsecured Notes, net proceeds from the issuance of common stock of
$336.6 million and net borrowings of $49.3 million under our revolving credit
facilities. These amounts were partially offset by payment of dividends to
equity owners of $227.2 million, repayments of $208.8 million on mortgages
payable, repayments of $190.4 million on convertible notes, repayments of $178.0
million on term loans, debt extinguishment costs of $26.7 million, deferred
financing costs of $7.1 million and common stock repurchases for employee tax
withholdings totaling $4.4 million.

During the same period in 2020, net cash provided by financing activities was
primarily attributable to borrowings of $445.5 million under senior unsecured
notes, net borrowings of $178.0 million under term loans and net proceeds from
the issuance of common stock of $117.3 million. These amounts were partially
offset by payment of dividends to equity owners of $202.1 million, repayment of
$154.6 million on convertible notes, net repayments of $116.5 million on our
revolving credit facilities, deferred financing costs of $6.5 million, common
stock repurchases for employee tax withholdings totaling $4.4 million, debt
extinguishment costs of $4.1 million and repayment of $3.0 million on mortgages
and notes payable.

Off-Balance Sheet Arrangements

As of September 30, 2021, we did not have any material off-balance sheet arrangements.

New Accounting Pronouncements

See Note 2 to the consolidated financial statements herein.

                                       38

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Non-GAAP Financial Measures


FFO: We calculate FFO in accordance with the standards established by NAREIT.
FFO represents net income (loss) attributable to common stockholders (computed
in accordance with GAAP), excluding real estate-related depreciation and
amortization, impairment charges and net (gains) losses from property
dispositions. We use FFO as a supplemental performance measure because we
believe that FFO is beneficial to investors as a starting point in measuring our
operational performance. Specifically, in excluding real estate-related
depreciation and amortization, impairment charges and net (gains) losses from
property dispositions, which do not relate to or are not indicative of operating
performance, FFO provides a performance measure that, when compared year over
year, captures trends in occupancy rates, rental rates and operating costs. We
also believe that, as a widely recognized measure of the performance of equity
REITs, FFO will be used by investors as a basis to compare our operating
performance with that of other equity REITs. However, because FFO excludes
depreciation and amortization and does not capture the changes in the value of
our properties that result from use or market conditions, all of which have real
economic effects and could materially impact our results from operations, the
utility of FFO as a measure of our performance is limited.

AFFO: AFFO is a non-GAAP financial measure of operating performance used by many
companies in the REIT industry. We adjust FFO to eliminate the impact of certain
items that we believe are not indicative of our core operating performance, such
as debt extinguishment gains (losses), costs associated with termination of
interest rate swaps, costs related to the COVID-19 pandemic and certain non-cash
items. These certain non-cash items include non-cash revenues (comprised of
straight-line rents net of bad debt expense and amortization of lease and loan
receivable intangibles), non-cash interest expense (comprised of amortization of
deferred financing costs and debt discounts/premiums) and non-cash compensation
expense. Other equity REITs may not calculate FFO and AFFO as we do, and,
accordingly, our FFO and AFFO may not be comparable to such other equity REITs'
FFO and AFFO. FFO and AFFO do not represent cash generated from operating
activities determined in accordance with GAAP, are not necessarily indicative of
cash available to fund cash needs and should only be considered a supplement,
and not an alternative, to net income (loss) attributable to common stockholders
(computed in accordance with GAAP) as a performance measure.

Adjusted Debt: Adjusted Debt represents interest bearing debt (reported in
accordance with GAAP) adjusted to exclude unamortized debt discount/premium and
deferred financing costs and reduced by cash and cash equivalents and restricted
cash. The result provides an estimate of the contractual amount of borrowed
capital to be repaid, net of cash available to repay it. We believe this
calculation constitutes a beneficial supplemental non-GAAP financial disclosure
to investors in understanding our financial condition.

EBITDAre: EBITDAre is computed in accordance with standards established by
NAREIT. EBITDAre is computed as net income (loss) (computed in accordance with
GAAP), plus interest expense, income tax expense, depreciation and amortization,
impairments of depreciated property and losses/(gains) on the disposition of
depreciated property.

Adjusted EBITDAre: Adjusted EBITDAre represents EBITDAre as adjusted for revenue
producing acquisitions and dispositions for the quarter as if such acquisitions
and dispositions had occurred as of the beginning of the quarter and for certain
items that we believe are not indicative of our core operating performance, such
as debt extinguishment gains (losses), non-cash compensation and costs related
to the COVID-19 pandemic. We believe that excluding these items, which are not
key drivers of our investment decisions and may cause short-term fluctuations in
net income, provides a useful supplemental measure to investors and analysts in
assessing the net earnings contribution of our real estate portfolio. Because
these measures do not represent net income (loss) that is computed in accordance
with GAAP, they should only be considered a supplement, and not an alternative,
to net income (loss) (computed in accordance with GAAP) as a performance
measure.

Annualized Adjusted EBITDAre: Annualized Adjusted EBITDAre is calculated as
Adjusted EBITDAre for the quarter, adjusted for items where annualization would
not be appropriate, multiplied by four. Our computation of Adjusted EBITDAre and
Annualized Adjusted EBITDAre may differ from the methodology used by other
equity REITs to calculate these measures and, therefore, may not be comparable
to such other REITs.

Adjusted Debt to Annualized Adjusted EBITDAre: Adjusted Debt to Annualized
Adjusted EBITDAre is a supplemental non-GAAP financial measure used to evaluate
the level of borrowed capital being used to increase the potential return of our
real estate investments, and a proxy for a measure we believe is used by many
lenders and ratings agencies to evaluate our ability to repay and service our
debt obligations. We believe the ratio is a beneficial disclosure to investors
as a supplemental means of evaluating our ability to meet obligations senior to
those of our equity holders. Our computation of this ratio may differ from the
methodology used by other equity REITs, and, therefore, may not be comparable to
such other REITs.

                                       39
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FFO and AFFO


                                                    Three Months Ended                   Nine Months Ended
                                                       September 30,                       September 30,
(Dollars in thousands)                            2021              2020              2021              2020
Net income (loss) attributable to common
stockholders                                  $      38,291     $      11,211     $     119,570     $     (10,225 )
Portfolio depreciation and amortization              62,919            52,024           179,794           157,129
Portfolio impairments                                 4,435             8,106            18,965            69,929
Gain on disposition of assets                          (453 )         (10,763 )         (39,796 )         (11,809 )
FFO attributable to common stockholders       $     105,192     $      60,578     $     278,533     $     205,024
(Gain) loss on debt extinguishment                       (1 )           7,252            29,186             7,252
Deal pursuit costs                                      361               597               860             1,630
Non-cash interest expense                             1,919             3,190             6,962             9,658
Straight-line rent, net of uncollectible
reserve                                              (8,840 )            (899 )         (35,941 )          (6,385 )
Other amortization and non-cash charges                (714 )            (383 )          (2,249 )            (213 )
Non-cash compensation expense                         3,504             2,967            10,496             9,726
Costs related to COVID-19 (1)                            46               702               752             1,440
AFFO attributable to common stockholders
(2)                                           $     101,467     $      

74,004 $ 288,599 $ 228,132


Net income (loss) per share of common stock
- Diluted                                     $        0.32     $        0.11     $        1.02     $       (0.11 )
FFO per share of common stock - Diluted (3)   $        0.87     $        0.59     $        2.38     $        1.98
AFFO per share of common stock - Diluted
(3)                                           $        0.84     $        

0.72 $ 2.46 $ 2.21


Weighted average shares of common stock
outstanding - Diluted                           120,302,158       102,938,860       116,870,429       102,553,798
Weighted average shares of common stock
outstanding for non-GAAP measures - Diluted
(3)                                             120,302,158       

102,938,860 116,870,429 103,132,749

(1) Costs related to COVID-19 are included in general and administrative expense

and primarily relate to legal fees for executing rent deferral or abatement

agreements.

(2) AFFO includes $1.0 million and $12.8 million for the three and nine months

ended September 30, 2021, respectively, and $1.8 million and $24.1 million

for the three and nine months ended September 30, 2020 of deferred rental

income recognized in conjunction with the FASB's relief for deferral

agreements extended as a result of the COVID-19 pandemic.

(3) Weighted average shares of common stock for non-GAAP measures for the nine

months ended September 30,2020 includes unvested market-based awards, which

are dilutive for the non-GAAP calculations. Dividends paid and undistributed

earnings allocated, if any, to unvested restricted stockholders are deducted

    from FFO and AFFO for the computation of the per share amounts. The following
    amounts were deducted:


         Three Months Ended   Nine Months Ended
           September 30,        September 30,
          2021       2020      2021       2020
          $0.2       $0.2      $0.5       $0.6
   FFO   million    million   million    million
          $0.2       $0.2      $0.6       $0.7
  AFFO   million    million   million    million


                                       40
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Adjusted Debt, Adjusted EBITDAre and Annualized Adjusted EBITDAre

                                              September 30,
(Dollars in thousands)                    2021            2020
2019 Credit Facility                   $    49,300     $         -
2020 Term Loans                                  -         177,170
Senior Unsecured Notes, net              2,717,693       1,926,752
Mortgages payable, net                       5,687         213,479
Convertible Notes, net                           -         188,216
Total debt, net                          2,772,680       2,505,617
Unamortized debt discount, net              11,134           8,642
Unamortized deferred financing costs        20,962          19,464
Cash and cash equivalents                  (15,564 )      (116,814 )
Restricted cash                                  -         (12,675 )
Adjusted Debt                          $ 2,789,212     $ 2,404,234




                                                      Three Months Ended September 30,
(Dollars in thousands)                                   2021                   2020
Net income                                         $         40,878       $         13,798
Interest                                                     25,078                 26,404
Depreciation and amortization                                63,061         

52,170

Income tax expense                                              244                    197
Gain on disposition of assets                                  (453 )              (10,763 )
Portfolio impairments                                         4,435                  8,106
EBITDAre                                           $        133,243       $         89,912
Adjustments to revenue producing acquisitions
and dispositions                                              1,820         

2,688

Deal pursuit costs                                              361                    597
(Gain) loss on debt extinguishment                               (1 )       

7,252

Costs related to COVID-19 (1)                                    46                    702
Non-cash compensation expense (2)                             3,504                      -
Adjusted EBITDAre                                  $        138,973       $ 

101,151

Adjustments related to straight-line rent (3)                  (233 )       

4,942

Other adjustments for Annualized EBITDAre (4)                  (164 )       

1,453

Annualized Adjusted EBITDAre                       $        554,304       $ 

430,184

Adjusted Debt / Annualized Adjusted EBITDAre (5)                5.0 x                  5.6 x


(1) Costs related to COVID-19 are included in general and administrative expense

and primarily relate to legal fees for executing rent deferral or abatement

agreements.

(2) Non-cash compensation expense was not included as an adjustment to EBITDAre

during the three months ended September 30, 2020.

(3) Adjustment for the three months ended September 30, 2021 relates to prior

period straight-line rent recognized in the current period. For the same

period in 2020, adjustment relates to net straight-line rent receivable

balances recognized in prior periods deemed not probable of collection in

the current period.

(4) Adjustment for the three months ended September 30, 2021 is comprised of

certain other property costs, general and administrative expenses and

non-recurring revenue recognized in other income. For the same period in

2020, adjustments are comprised of certain other property costs, general and

administrative expenses, prior period rent recoveries, abatements and bad

debt expenses related to rental revenue in previous periods.

(5) Adjusted Debt / Annualized Adjusted EBITDAre would be 4.9x if the 1.6

million shares under open forward sales agreements had been settled as of

    September 30, 2021.






                                       41

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Analyst Recommendations on SPIRIT REALTY CAPITAL, INC.
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