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, particularly with respect to challenges being experienced by general


      merchandise retailers;


  • 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 most recent Annual Report
on Form 10-K 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.

                                       36

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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 real estate assets throughout
the U.S., which are generally acquired through sale-leaseback transactions and
subsequently leased on a long-term, triple-net basis to high quality tenants
with business operations within retail, industrial, office and other industries.

Single tenant, operationally essential real estate consists of properties that
are generally 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, 2020, our owned real estate represented investments in 1,778
properties. Our properties are leased to 296 tenants across 48 states and 28
retail industries. As of September 30, 2020, our owned properties were
approximately 99.3% occupied (based on the number of economically yielding
properties).

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. Although the Operating Partnership is wholly-owned
by us, in the future, we may issue partnership interests in the Operating
Partnership to third parties in exchange for property owned by such third
parties. In general, any partnership interests in the Operating Partnership
issued to third parties would be exchangeable for cash or, at our election,
shares of our common stock at specified ratios set when such partnership
interests in the Operating Partnership 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.



On May 31, 2018, we completed a Spin-Off of all our interests in the assets that
collateralized Master Trust 2014, our properties leased to Shopko, and certain
other assets into an independent, publicly traded REIT, SMTA. In conjunction
with the Spin-Off, we entered into the Asset Management Agreement with SMTA,
pursuant to which the Company acted as external asset manager for SMTA for an
annual management fee of $20.0 million. In September 2019, SMTA sold the assets
held in Master Trust 2014 and approved a plan of liquidation. The Asset
Management Agreement was terminated, and the Interim Management Agreement with
SMTA became effective. Pursuant to the Interim Management Agreement, we were
entitled to receive $1 million during the initial one-year term and $4 million
for any renewal one-year term, plus certain cost reimbursements, to manage and
liquidate the remaining SMTA assets. The Interim Management Agreement was
terminated effective September 4, 2020 and we have no further continuing
involvement with SMTA.

Given the timing of the onset in the U.S., the COVID-19 pandemic had a minimal
impact on our first quarter 2020 results and increased impact on our second
quarter 2020 results as certain of our tenants experienced business disruption,
especially those in industries considered "non-essential" under varying state
"shelter-in-place" and "stay-at-home" orders and other restrictions. As a
result, many of our tenants requested rent deferrals (and other forms of
relief). During the third quarter of 2020, the impact of the COVID-19 pandemic
has reduced as certain restrictions on our tenants' operations have been lifted.
As such, the majority of the impact to our third quarter 2020 results relates to
relief granted during the second quarter of 2020. 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 health and fitness, movie theaters, quick service and
casual dining restaurants, entertainment, car washes, dealerships, home décor,
home furnishings, department stores and education. These and other industries
may be further impacted in the future depending on various factors, including
the duration of the COVID-19 pandemic, the reinstitution of restrictions
intended to prevent its spread or the imposition of new, more restrictive
measures. Even after certain of 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 other
diseases. We are not able to predict the duration of such customer behavior or
the COVID-19 pandemic.

                                       37

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As of October 26, 2020, we have collected approximately 90% of third quarter
2020 Base Rent of $118.2 million, deferred approximately 7% and abated
approximately 1%. We currently expect to see continued reductions in the impact
of COVID-19 on our fourth quarter 2020 results, with expected rent deferrals of
$3.7 million (including the maximum impact of arrangements that have a sliding
scale based on performance of the underlying property) and rent abatements of
$0.1 million. For the deferred rent, the deferral periods range generally from
one to six months, with an average deferral period of three months and an
average repayment period of 13 months. Of the tenants who we have granted rent
deferrals, 22% are public companies and the weighted average remaining lease
term of leases with deferrals is 10.3 years (based on Base Rent). Although we
are and will continue to be actively engaged in rent collection efforts related
to uncollected rent, as well as working with certain tenants who have requested
rent deferrals, 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. Refer to "Part II-Other Information, Item 1A. Risk Factors"
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.

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, 2019. We have not made any material changes to these policies
during the periods covered by this quarterly report.

Results of Operations



Comparison of Three Months Ended September 30, 2020 to Three Months Ended
September 30, 2019

                                                       Three Months Ended September 30,
(In Thousands)                                 2020          2019         Change        % Change
Revenues:
Rental income                                $ 112,916     $ 109,511     $   3,405            3.1 %
Interest income on loans receivable                189           843          (654 )        (77.6 )%
Earned income from direct financing leases         131           267          (136 )        (50.9 )%
Related party fee income                           178        54,795       (54,617 )        (99.7 )%
Other income                                       327         1,531        (1,204 )        (78.6 )%
Total revenues                                 113,741       166,947       (53,206 )        (31.9 )%
Expenses:
General and administrative                      10,931        12,727        (1,796 )        (14.1 )%
Termination of interest rate swaps                   -        12,461       (12,461 )       (100.0 )%
Property costs (including reimbursable)          5,049         4,407           642           14.6 %
Deal pursuit costs                                 597           330           267           80.9 %
Interest                                        26,404        24,675         1,729            7.0 %
Depreciation and amortization                   52,170        43,907         8,263           18.8 %
Impairments                                      8,106         5,932         2,174           36.6 %
Total expenses                                 103,257       104,439        (1,182 )         (1.1 )%
Other income:
Loss on debt extinguishment                     (7,252 )      (5,580 )      (1,672 )         30.0 %
Gain on disposition of assets                   10,763        32,254       (21,491 )        (66.6 )%
Preferred dividend income from SMTA                  -         3,302        (3,302 )       (100.0 )%
Total other income                               3,511        29,976       (26,465 )        (88.3 )%
Income before income tax expense                13,995        92,484       (78,489 )        (84.9 )%
Income tax expense                                (197 )     (11,190 )      10,993          (98.2 )%
Net income                                   $  13,798     $  81,294     $ (67,496 )        (83.0 )%




                                       38

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REVENUES

Rental income

                                                          Three Months Ended September 30,
(In Thousands)                                               2020                   2019
Base Cash Rent                                         $        108,398       $        100,962
Variable cash rent (including reimbursables)                      3,051                  2,823
Straight-line rent, net of uncollectible reserve                    899                  4,770
Amortization of above- and below- market lease
intangibles, net                                                    568                    956
Total rental income                                    $        112,916       $        109,511


We were a net acquirer of income-producing real estate over the trailing
twelve-month period, resulting in an increase in our Base Cash Rent
period-over-period. During the trailing twelve months ended September 30, 2020,
we acquired 186 properties, with a Real Estate Investment Value of $1.0 billion,
and disposed of 31 properties, of which 15 were income producing, with a Real
Estate Investment Value of $98.1 million. The increase was partially offset by
an increase in net amounts deemed not probable of collection driven by tenant
credit issues from the COVID-19 pandemic from $0.2 million for the three months
ended September 30, 2019 to $6.5 million for three months ended September 30,
2020. The increase period-over-period was also reduced by $1.7 million of rent
abatements for the three months ended September 30, 2020, executed as relief due
to the COVID-19 pandemic. Finally, included in the Base Cash Rent for the three
months ended September 30, 2020 are rent deferrals deemed probable of collection
of $1.8 million, related to the effects of the COVID-19 pandemic.

The primary component of variable cash rent is tenant reimbursements, where our
tenants are obligated under the lease agreement to reimburse us for certain
property costs we incur, and non-cash rental income. Tenant reimbursement income
was $2.7 million and $2.8 million for the three months ended September 30, 2020
and 2019, respectively, and was driven by the tenant reimbursable property costs
described below. These amounts represented approximately 2.4% and 2.5% of rental
income for the three months ended September 30, 2020 and 2019, respectively.

Non-cash rental income consists of straight-line rental revenue, amortization of
above- and below-market lease intangibles and bad debt expense. Non-cash rental
income decreased period-over-period primarily as a result of a $4.3 million
increase in reserves on straight-line rental revenue due to increased tenant
credit issues.

Related party fee income

In conjunction with the Spin-Off, we entered into the Asset Management Agreement
with SMTA pursuant to which we provided a management team responsible for
implementing SMTA 's business strategy and performing certain services for SMTA.
Under this agreement, we recognized $4.4 million of revenues during the three
months ended September 30, 2019. Additionally, under the terms of this
agreement, we recognized $0.5 million of stock compensation awarded by SMTA to
an employee of Spirit for the three months ended September 30, 2019, which was
fully offset by $0.5 million in general and administrative expenses recognized
for other compensation. This agreement was terminated in conjunction with SMTA's
sale of Master Trust 2014 on September 20, 2019, resulting in a termination fee
of $48.2 million. We entered into an Interim Management Agreement for an initial
annual fee of $1.0 million, under which we agreed to manage and liquidate the
remaining SMTA assets. Under this agreement, we recognized $0.2 million of
revenues for the three months ended September 30, 2020. The Interim Management
Agreement was terminated effective September 4, 2020.

Additionally, we provided property management services and special services for
Master Trust 2014, which was contributed to SMTA as part of the Spin-Off. As a
result, for the three months ended September 30, 2019, we recognized $1.7
million in revenue under the terms of the Property Management and Servicing
Agreement. This agreement was terminated in the third quarter of 2019 in
conjunction with SMTA's sale of Master Trust 2014.

EXPENSES

General and administrative



Period-over-period general and administrative expenses decreased, driven by a
decrease in compensation expenses of $1.7 million, primarily as a result of
decreased accruals for market-based and merit-based compensation, as well as a
decrease of $0.3 million in professional fees and a decrease of $0.2 million in
travel expenses. These decreases were partially offset by $0.7 million of
expenses recognized during the three months ended September 30, 2020 related to
the COVID-19 pandemic, primarily as a result of increased legal fees for
executing rent deferral or abatement agreements.

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Property costs (including reimbursable)



For the three months ended September 30, 2020, property costs were $5.0 million
(including $3.4 million of tenant reimbursable expenses), compared to $4.4
million (including $3.6 million of tenant reimbursable expenses) for the same
period in 2019. As such, reimbursable property costs remained relatively flat
period-over-period. The increase in non-reimbursable costs of $0.8 million was
driven primarily by an increase in carrying costs of vacant properties of $0.7
million due to an increase in vacant properties over the comparative period.

Interest

The increase in interest expense was driven by the issuance of:

• the 2027 Senior Notes and 2030 Senior Notes in the third quarter of 2019,




  • the 2020 Term Loans in the second quarter of 2020 and


  • the 2031 Senior Notes in the third quarter of 2020.

The increase was partially offset by:

• the repayment and termination of the A-1 Term Loans and A-2 Term Loans in

the third quarter of 2019,

• the termination of the interest rate swaps in the third quarter of 2019, and

• the partial early repayment of $154.6 million of the Convertible 2021 Notes

in the third quarter of 2020.

The following table summarizes our interest expense on related borrowings:



                                                       Three Months Ended
                                                          September 30,
(In Thousands)                                          2020          2019

Interest expense - revolving credit facilities (1) $ 409 $ 473 Interest expense - term loans

                             1,128        

5,779


Interest expense - Senior Unsecured Notes                16,188        

8,446


Interest expense - mortgages and notes payable            3,016        

3,637


Interest expense - Convertible Notes                      2,473        

3,234


Interest expense - interest rate swaps/other                  -          

421


Non-cash interest expense                                 3,190        2,685
Total interest expense                               $   26,404     $ 24,675

(1) Includes facility fees of approximately $0.4 million for both the three

months ended September 30, 2020 and 2019.

Depreciation and amortization



We were a net acquirer during the trailing twelve-month period of $909.9 million
of Real Estate Investment Value, resulting in an increase period-over-period in
depreciation and amortization. The following table summarizes our depreciation
and amortization expense:

                                        Three Months Ended
                                           September 30,
(In Thousands)                           2020          2019

Depreciation of real estate assets $ 43,551 $ 36,525 Amortization of lease intangibles 8,473 7,239 Other depreciation

                           146          143

Total depreciation and amortization $ 52,170 $ 43,907

Impairments



During the three months ended September 30, 2020, we recorded impairment losses
of $8.1 million. Impairment of $5.6 million was recorded on Vacant properties,
comprised of $2.6 million on two Vacant properties held for use and $3.0 million
on one Vacant property held for sale. Impairment of $2.8 million was recorded on
underperforming properties, comprised of $1.2 million on three underperforming
properties held for use and $1.6 million on four underperforming properties held
for sale. Finally, we reversed $0.1 million of previously recorded allowance for
loan loss as a result of our loans being repaid in full and reversed $0.2
million of previously recorded allowance for credit loss on our direct financing
lease as a result of improved credit metrics of the borrower.

During the three months ended September 30, 2019, we recorded impairment losses
of $5.9 million. Impairment of $5.6 million was recorded on six underperforming
properties held for use. Impairment of $0.3 million was recorded on Vacant
properties, comprised of $0.2 million on two Vacant properties held for sale and
$0.1 million on one Vacant property held for use.

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Loss on debt extinguishment



During the three months ended September 30, 2020, we recorded a loss on debt
extinguishment of $6.2 million as a result of the partial early repayment of
$154.6 million aggregate principal amount of the Convertible 2021 Notes,
comprised of $4.1 million of cash premiums paid and $2.1 million of write-offs
of unamortized debt discounts and deferred financing costs related to the debt.
Additionally, we recorded a loss on debt extinguishment of $1.1 million for the
write-off of unamortized deferred financing costs as a result of the partial
repayment of the 2020 Term Loans.

During the three months ended September 30, 2019, we recorded a loss on debt
extinguishment of $5.3 million as a result of terminating the A-1 Term Loans and
A-2 Term Loans, which were repaid primarily with proceeds from the issuance of
the 2027 Senior Unsecured Notes and 2030 Senior Unsecured Notes. Additionally,
we recorded an additional $0.3 million of loss on debt extinguishment on the
retirement of the Master Trust 2013 notes, as a result of additional legal fees.

Gain on disposition of assets



During the three months ended September 30, 2020, we disposed of 11 properties,
resulting in net gains of $10.8 million. There were 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. For the same period in 2019, we disposed of
nine properties, resulting in net gains of $32.3 million. There were net gains
of $32.3 million on the sales of eight active properties and a negligible gain
on the sale of one Vacant property.

Preferred dividend income from SMTA



As part of the Spin-Off, SMTA issued to us 10% Series A preferred shares with an
aggregate liquidation preference of $150.0 million. For the three months ended
September 30, 2019, we recognized preferred dividend income of $3.3 million from
these shares. In September 2019, in conjunction with SMTA's sale of Master Trust
2014, SMTA repurchased the preferred shares at their aggregate liquidation
preference.

Income tax expense



Taxable income from non-REIT activities managed through any of the Company's
taxable REIT subsidiaries is subject to federal, state, and local taxes. As
such, income earned by a taxable wholly-owned subsidiary of Spirit pursuant to
the Asset Management Agreement was considered non-REIT activity and subject to
federal and state income tax. There was a decrease in income tax expense
period-over-period of $11.0 million, primarily as a result of the taxable
termination fee income of $48.2 million recorded in the third quarter of 2019.

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Comparison of Nine Months Ended September 30, 2020 to Nine Months Ended
September 30, 2019

                                                        Nine Months Ended September 30,
(In Thousands)                                 2020          2019          Change        % Change
Revenues:
Rental income                                $ 351,469     $ 320,084     $   31,385            9.8 %
Interest income on loans receivable                998         2,749         (1,751 )        (63.7 )%
Earned income from direct financing leases         439           971           (532 )        (54.8 )%
Related party fee income                           678        68,971        (68,293 )        (99.0 )%
Other income                                     1,401         2,510         (1,109 )        (44.2 )%
Total revenues                                 354,985       395,285        (40,300 )        (10.2 )%
Expenses:
General and administrative                      36,396        39,741         (3,345 )         (8.4 )%
Termination of interest rate swaps                   -        12,461        (12,461 )       (100.0 )%
Property costs (including reimbursable)         18,219        13,968          4,251           30.4 %
Deal pursuit costs                               1,630           574          1,056             NM
Interest                                        77,858        76,462          1,396            1.8 %
Depreciation and amortization                  157,566       126,598         30,968           24.5 %
Impairments                                     69,929        13,231         56,698             NM
Total expenses                                 361,598       283,035         78,563           27.8 %
Other income:
Loss on debt extinguishment                     (7,252 )     (11,473 )        4,221          (36.8 )%
Gain on disposition of assets                   11,809        70,760        (58,951 )        (83.3 )%
Preferred dividend income from SMTA                  -        10,802        (10,802 )       (100.0 )%
Total other income                               4,557        70,089        (65,532 )        (93.5 )%
(Loss) income before income tax expense         (2,056 )     182,339       (184,395 )           NM
Income tax expense                                (406 )     (11,730 )       11,324          (96.5 )%
Net (loss) income                            $  (2,462 )   $ 170,609     $ (173,071 )           NM

NM - Percentages over 100% are not displayed.



REVENUES

Rental income

                                                           Nine Months Ended September 30,
(In Thousands)                                               2020                   2019
Base Cash Rent                                         $        335,110       $        296,179
Variable cash rent (including reimbursables)                      8,843                  9,403
Straight-line rent, net of uncollectible reserve                  6,385                 12,162
Amortization of above- and below- market lease
intangibles, net                                                  1,131                  2,340
Total rental income                                    $        351,469       $        320,084


We were a net acquirer of income-producing real estate over the trailing
twelve-month period, resulting in an increase in our Base Cash Rent
period-over-period. During the trailing twelve months ended September 30, 2020,
we acquired 186 properties, with a Real Estate Investment Value of $1.0 billion,
and disposed of 31 properties, of which 15 were income producing, with a Real
Estate Investment Value of $98.1 million. The increase was partially offset by
an increase in net amounts deemed not probable of collection driven by tenant
credit issues from the COVID-19 pandemic from a net recovery of $0.8 million for
the nine months ended September 30, 2019 to a net reduction of $12.1 million for
nine months ended September 30, 2020. The increase period-over-period was also
reduced by $4.1 million of rent abatements for the nine months ended
September 30, 2020, executed as relief due to the COVID-19 pandemic. Finally,
included in the Base Cash Rent for the nine months ended September 30, 2020 are
rent deferrals deemed probable of collection of $24.1 million, related to the
effects of the COVID-19 pandemic.

The primary component of variable cash rent is tenant reimbursements, where our
tenants are obligated under the lease agreement to reimburse us for certain
property costs we incur, and non-cash rental income. Tenant reimbursement income
was $8.2 million and $9.1 million for the nine months ended September 30, 2020
and 2019, respectively, and was driven by the tenant reimbursable property costs
described below. These amounts represented approximately 2.3% and 2.8% of rental
income for the nine months ended September 30, 2020 and 2019, respectively.

                                       42

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Non-cash rental income consists of straight-line rental revenue, amortization of
above- and below-market lease intangibles and bad debt expense. Non-cash rental
income decreased period-over-period primarily as a result of a $10.7 million
increase in reserves on straight-line rental revenue due to increased tenant
credit issues.

Related party fee income

In conjunction with the Spin-Off, we entered into the Asset Management Agreement
with SMTA pursuant to which we provided a management team responsible for
implementing SMTA 's business strategy and performing certain services for SMTA.
Under this agreement, we recognized $14.4 million of revenues during the nine
months ended September 30, 2019. Additionally, under the terms of this
agreement, we recognized $0.9 million of stock compensation awarded by SMTA to
an employee of Spirit for the nine months ended September 30, 2019, which was
fully offset by $0.9 million in general and administrative expenses recognized
for other compensation. This agreement was terminated in conjunction with SMTA's
sale of Master Trust 2014 on September 20, 2019, resulting in a termination fee
of $48.2 million. We entered into an Interim Management Agreement for an initial
annual fee of $1.0 million, under which we agreed to manage and liquidate the
remaining SMTA assets. Under this agreement, we recognized $0.7 million of
revenues for the nine months ended September 30, 2020. The Interim Management
Agreement was terminated effective September 4, 2020.

Additionally, we provided property management services and special services for
Master Trust 2014, which was contributed to SMTA as part of the Spin-Off. As a
result, for the three months ended September 30, 2019, we recognized $5.5
million in revenue under the terms of the Property Management and Servicing
Agreement. This agreement was terminated in the third quarter of 2019 in
conjunction with SMTA's sale of Master Trust 2014.

EXPENSES

General and administrative



Period-over-period general and administrative expenses decreased, driven by a
decrease in compensation expenses of $4.2 million, primarily as a result of
decreased accruals for market-based and merit-based compensation, as well as a
decrease of $0.5 million in travel expenses as a result of the COVID-19
pandemic. These decreases were partially offset by $1.4 million of expenses
recognized during the nine months ended September 30, 2020 related to the
COVID-19 pandemic, primarily as a result of increased legal fees for executing
rent deferral or abatement agreements.

Property costs (including reimbursable)



For the nine months ended September 30, 2020, property costs were $18.2 million
(including $10.0 million of tenant reimbursable expenses) compared to $14.0
million (including $11.2 million of tenant reimbursable expenses) for the same
period in 2019. As such, reimbursable property costs decreased
period-over-period, primarily due to certain property taxes no longer being
considered recoverable. The increase in non-reimbursable costs of $5.4 million
was driven primarily by an increase in non-reimbursable property taxes of $3.6
million due to tenant credit issues from the COVID-19 pandemic, as well as
carrying costs of vacant properties of $1.4 million due to an increase in vacant
properties over the comparative period.

Interest

The increase in interest expense was driven by the issuance of:

• the 2029 Senior Notes in the second quarter of 2019,

• the 2027 Senior Notes and 2030 Senior Notes in the third quarter of 2019,




  • the 2020 Term Loans in the second quarter of 2020, and


  • the 2031 Senior Notes in the third quarter of 2020.

The increase was partially offset by:

• the extinguishment of $10.4 million aggregate principal amount of CMBS

indebtedness on one defaulted loan in the first quarter of 2019,

• the maturity and repayment of the Convertible 2019 Notes in the second

quarter of 2019,

• the early repayment of the Master Trust 2013 notes in the second quarter of

2019,

• the repayment and termination of the A-1 Term Loans and A-2 Term Loans in

the third quarter of 2019,

• the termination of the interest rate swaps in the third quarter of 2019, and

• the partial early repayment of $154.6 million of the Convertible 2021 Notes


      in the third quarter of 2020.


                                       43

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The following table summarizes our interest expense on related borrowings:



                                                       Nine Months Ended
                                                         September 30,
(In Thousands)                                         2020          2019

Interest expense - revolving credit facilities (1) $ 3,269 $ 4,449 Interest expense - term loans

                            2,799       15,448
Interest expense - Senior Unsecured Notes               44,163       15,299
Interest expense - mortgages and notes payable           9,027       15,168
Interest expense - Convertible Notes                     8,942       14,010
Interest expense - interest rate swaps/other                 -          972
Non-cash interest expense                                9,658       11,116
Total interest expense                               $  77,858     $ 76,462

(1) Includes facility fees of approximately $1.2 million and $1.6 million for the

nine months ended September 30, 2020 and 2019, respectively.

Depreciation and amortization



We were a net acquirer during the trailing twelve-month period of $909.9 million
of Real Estate Investment Value, resulting in an increase period-over-period in
depreciation and amortization. The following table summarizes our depreciation
and amortization expense:

                                          Nine Months Ended September 30,
(In Thousands)                              2020                   2019

Depreciation of real estate assets $ 131,187 $ 105,731 Amortization of lease intangibles

               25,942                 

20,441


Other depreciation                                 437                    

426

Total depreciation and amortization $ 157,566 $ 126,598




Impairments

During the nine months ended September 30, 2020, we recorded impairment losses
of $69.9 million. Impairment of $7.6 million was recorded on Vacant properties,
comprised of $4.6 million on seven Vacant properties held for use and $3.0
million on one Vacant property held for sale. Impairment of $44.0 million was
recorded on underperforming properties, comprised of $42.4 million on 22
underperforming properties held for use and $1.6 million on five underperforming
properties held for sale. Impairment of $18.2 million was recorded on lease
intangible assets, primarily as a result of a tenant bankruptcy that had credit
issues prior to the COVID-19 pandemic that resulted in the termination of the
lease for four properties. Finally, we recorded an allowance for credit loss on
our direct financing lease of $0.1 million.

During the nine months ended September 30, 2019, we recorded impairment losses
of $13.2 million. Impairment of $11.9 million was recorded on underperforming
properties, comprised of $8.1 million recorded on 11 underperforming properties
held for use and $3.8 million recorded on nine underperforming properties held
for sale. Impairment of $1.5 million was recorded on Vacant properties,
comprised of $0.3 million recorded on two Vacant held for use properties and
$1.2 million recorded on three Vacant held for sale properties. These impairment
charges were partially offset by $0.2 million of net impairment on lease
intangible liabilities.

Loss on debt extinguishment



During the nine months ended September 30, 2020, we recorded a loss on debt
extinguishment of $6.2 million as a result of the partial early repayment of
$154.6 million aggregate principal amount of the Convertible 2021 Notes,
comprised of $4.1 million of cash premiums paid and $2.1 million of write-offs
of unamortized debt discounts and deferred financing costs related to the debt.
Additionally, we recorded a loss on debt extinguishment of $1.1 million for the
write-off of unamortized deferred financing costs as a result of the partial
repayment of the 2020 Term Loans.

During the nine months ended September 30, 2019, we recorded a net loss on debt extinguishment of $11.5 million, comprised of:

• a $15.0 million loss on the retirement of the Master Trust 2013 notes,

primarily as a result of early repayment penalties,

• a $9.5 million gain on the extinguishment of $10.4 million aggregate


      principal amount of CMBS indebtedness on one defaulted loan, which was
      secured by one property,

• a $5.3 million loss on the termination of the A-1 Term Loans and A-2 Term


      Loans, which were repaid primarily with proceeds from the issuance of the
      2027 Senior Unsecured Notes and 2030 Senior Unsecured Notes, and

• a $0.7 million loss on the termination of the 2015 Credit Agreement and 2015

Term Loan Agreement in conjunction with entering into the 2019 Revolving


      Credit and Term Loan Agreement.


                                       44

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Gain on disposition of assets



During the nine months ended September 30, 2020, we disposed of 21 properties,
resulting in net gains of $11.8 million. There were net gains of $11.3 million
on the sales of 11 active properties and net gains of $0.9 million on the sales
of ten Vacant properties. These gains were partially offset by a $0.2 million
loss recorded on the sale of a notes receivable and $0.2 million in other net
losses.

For the same period in 2019, we disposed of 34 properties, resulting in net
gains of $70.8 million. There were net gains of $69.6 million on the sales of 20
active properties and net gains of $1.2 million on the sales of 11 Vacant
properties. One property was returned to the lender in conjunction with CMBS
debt extinguishment and two properties were leasehold interests that were
surrendered to the lessors, which did not result in a gain/loss on disposition.

Preferred dividend income from SMTA



As part of the Spin-Off, SMTA issued to us 10% Series A preferred shares with an
aggregate liquidation preference of $150.0 million. For the nine months ended
September 30, 2019, we recognized preferred dividend income of $10.8 million
from these shares. In September 2019, in conjunction with SMTA's sale of Master
Trust 2014, SMTA repurchased the preferred shares at their aggregate liquidation
preference.

Income tax expense

Taxable income from non-REIT activities managed through any of the Company's
taxable REIT subsidiaries is subject to federal, state, and local taxes. As
such, income earned by a taxable wholly-owned subsidiary of Spirit pursuant to
the Asset Management Agreement was considered non-REIT activity and subject to
federal and state income tax. There was a decrease in income tax expense
period-over-period of $11.3 million, primarily as a result of the taxable
termination fee income of $48.2 million recorded in the third quarter of 2019.


                                       45

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Property Portfolio Information

1,778 99.3% 48 296 28 Owned Properties Occupancy States Tenants Retail Industries

Diversification By Tenant

The following table sets forth a summary of tenant concentration for our owned real estate properties as of September 30, 2020:



                                  Number of        Total Square Feet       Percent of
Tenant (1)                        Properties        (in thousands)            ABR
Cajun Global LLC                          166                     238              2.7 %
The Home Depot, Inc.                        7                     848              2.3 %
At Home Group Inc.                         13                   1,597              2.3 %
Alimentation Couche-Tard, Inc.             76                     230              2.3 %
Walgreen Co.                               34                     487              2.1 %
GPM Investments, LLC                      112                     305              2.1 %
Life Time Fitness, Inc                      5                     588              2.0 %
Dollar Tree, Inc.                         106                     927              2.0 %
BJ's Wholesale Club, Inc.                   7                     789              2.0 %
CVS Caremark Corporation                   33                     409              1.8 %
Other                                   1,207                  30,215             78.4 %
Vacant                                     12                     594                -
Total                                   1,778                  37,227            100.0 %

(1) Tenants represent legal entities ultimately responsible for obligations under the lease agreements or affiliated entities. Other tenants may operate the same or similar business concepts or brands set forth above.

Lease Expirations



The following table sets forth a summary of lease expirations for our owned real
estate as of September 30, 2020. As of September 30, 2020, the weighted average
remaining non-cancelable initial term of our leases (based on ABR) was 9.9
years. The information set forth in the table assumes that tenants do not
exercise renewal options and or any early termination rights:

                                          Number of               ABR               Total Square Feet       Percent of
Leases Expiring In:                       Properties       (in thousands) (1)        (in thousands)            ABR
Remainder of 2020                                   3     $                738                     165              0.2 %
2021                                               55                   18,832                   1,817              3.9 %
2022                                               40                   16,075                   1,529              3.3 %
2023                                              112                   31,753                   2,936              6.6 %
2024                                               47                   17,899                   1,557              3.7 %
2025                                               52                   19,115                   1,527              4.0 %
2026                                              101                   32,186                   2,298              6.7 %
2027                                              130                   40,222                   2,954              8.3 %
2028                                              106                   28,685                   1,798              5.9 %
2029                                              323                   42,651                   2,840              8.8 %
Thereafter                                        797                  235,153                  17,212             48.6 %
Vacant                                             12                        -                     594                -
Total owned properties                          1,778     $            483,309                  37,227            100.0 %


(1) ABR is not adjusted for the impact of abatements provided as relief due to
the COVID-19 pandemic. As of the date of this report, SRC has agreed to a total
of $0.2 million of abatements for the period from October 1, 2020 - September
30, 2021.

                                       46

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Diversification By Asset Type and Tenant Industry



The following table sets forth a summary of asset types, and for retail assets
the tenant industry concentration, for our owned properties as of September 30,
2020:

                                                   Number of        Total Square Feet       Percent of
   Asset Type    Tenant Industry                  Properties         (in thousands)            ABR
Retail                                                   1,660                  25,517             79.8 %
                 Convenience Stores                        331                   1,047              8.0 %
                 Health and Fitness                         42                   2,185              6.9 %
                 Restaurants - Quick Service               366                     798              6.7 %
                 Restaurants - Casual Dining               134                     945              6.0 %
                 Movie Theaters                             37                   1,953              5.4 %
                 Drug Stores / Pharmacies                   77                     991              4.6 %
                 Dealerships                                27                     925              4.4 %
                 Entertainment                              24                   1,022              3.6 %
                 Grocery                                    38                   1,752              3.5 %
                 Car Washes                                 65                     308              3.3 %
                 Dollar Stores                             168                   1,538              3.2 %
                 Home Improvement                           14                   1,595              3.1 %
                 Home Décor                                 16                   2,159              2.9 %
                 Warehouse Club and Supercenters            13                   1,420              2.6 %
                 Specialty Retail                           53                   1,142              2.4 %
                 Automotive Service                         69                     578              2.3 %
                 Department Stores                          14                   1,281              2.0 %
                 Home Furnishings                           18                     783              1.7 %
                 Sporting Goods                             14                     739              1.7 %
                 Early Education                            35                     384              1.6 %
                 Automotive Parts                           55                     388              1.2 %
                 Office Supplies                            16                     351              0.8 %
                 Other                                       9                     294              0.7 %
                 Medical Office                              5                      65              0.5 %
                 Pet Supplies and Service                    4                     133              0.4 %
                 Apparel                                     5                     151              0.3 %
                 Vacant                                     11                     590              0.0 %
Industrial                                                  75                   9,695             12.6 %
Office and Other                                            43                   2,015              7.6 %
                 Total                                   1,778                  37,227            100.0 %


                                       47

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Diversification By Geography

The following map and table set forth a summary of geographic concentration for our owned real estate properties as of September 30, 2020:



                               [[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                      254                   4,421            11.7 %   Louisiana                    23                     368              1.3 %
Florida                    125                   2,371             8.8 %   Utah                         18                     333              1.2 %
Georgia                    122                   1,983             6.3 %   Pennsylvania                 20                     488              1.2 %
Ohio                        86                   2,396             5.4 %   Alaska                        9                     319              1.1 %
California                  24                   1,236             4.6 %   New Hampshire                16                     640              1.1 %
Tennessee                  104                   1,762             4.1 %   Idaho                        16                     273              1.0 %
Michigan                    86                   1,612             4.0 %   Kansas                       17                     341              0.8 %
New York                    30                   1,895             3.6 %   Connecticut                   5                     686              0.8 %
Illinois                    50                   1,258             3.6 %   Wisconsin                    10                     391              0.7 %
Arizona                     45                     824             3.0 %   Washington                    8                     185              0.6 %
South Carolina              44                     771             2.8 %   Maine                        26                      76              0.5 %
Alabama                     94                     715             2.6 %   Nebraska                      9                     221              0.4 %
Virginia                    44                   1,335             2.6 %   West Virginia                13                     202              0.4 %
North Carolina              59                   1,229             2.6 %   Montana                       3                     152              0.4 %
Maryland                     9                     714             2.5 %   Massachusetts                 2                     131              0.4 %
Missouri                    65                     966             2.4 %   Iowa                         12                     194              0.4 %
Minnesota                   25                     936             2.3 %   North Dakota                  3                     105              0.3 %
Colorado                    25                     978             2.1 %   Rhode Island                  3                      95              0.3 %
Mississippi                 51                     670             1.9 %   Oregon                        3                     104              0.3 %
New Mexico                  28                     583             1.7 %   Wyoming                       1                      35              0.1 %
Kentucky                    43                     538             1.7 %   U.S. V.I.                     1                      38              0.1 %
Indiana                     39                     830             1.6 %   South Dakota                  1                      20              0.1 %
Oklahoma                    50                     446             1.6 %   Delaware                      1                       5              0.1 %
Arkansas                    42                     637             1.5 %   Vermont                       1                       2                *
New Jersey                  13                     717             1.4 %


* Less than 0.1%


                                       48

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Liquidity and Capital Resources

FORWARD EQUITY OFFERING



In June 2020, we entered into forward sale agreements with certain financial
institutions acting as forward purchasers in connection with an offering of 9.2
million shares of common stock at an initial public offering price of $37.35 per
share, before underwriting discounts and offering expenses. The forward
purchasers borrowed and sold an aggregate of 9.2 million shares of common stock
in the offering. We did not receive any proceeds from the sale of our shares of
common stock by the forward purchasers at the time of the offering. We intend
(subject to our right to elect cash or net share settlement subject to certain
conditions) to deliver, upon physical settlement of the forward sale agreements
on one or more dates specified by us occurring no later than December 8, 2021,
an aggregate of 9.2 million shares of our common stock to the forward purchasers
in exchange for cash proceeds per share equal to the applicable forward sale
price. The forward sale price that we will receive upon physical settlement of
the agreements, which was initially $35.856 per share, will be 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, 2020, we had physically settled 2.8 million of these shares for
net proceeds of $99.7 million.

ATM PROGRAM



In November 2016, the Board of Directors approved a $500.0 million ATM Program.
In February 2019, we updated the ATM Program, pursuant to which we may from time
to time offer and sell shares of our common stock having an aggregate gross
sales price of up to $500.0 million through the agents, as our sales agents or,
if applicable, as forward sellers, or directly to the agents acting as
principals. Sales of shares of our common stock under the ATM Program may be
made in sales deemed to be "at the market offerings" as defined in Rule 415
under the Securities Act.

The 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" and, collectively, the
"forward purchasers"). When we enter into a forward sale agreement with any
forward purchaser, we expect that such forward purchaser will attempt to borrow
from third parties and sell, through the relevant agent, acting as sales agent
for such forward purchaser, shares of our common stock to hedge such forward
purchaser's exposure under such 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 relevant 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, 2020, 5.9 million shares of our common stock have been sold
under the ATM Program, of which 0.7 million shares were sold during the nine
months ended September 30, 2020. Of total shares sold since inception, 4.1
million of the sales were sold by forward purchasers through agents under the
ATM Program and pursuant to forward sales agreements, including all shares sold
during the nine months ended September 30, 2020. The forward sale price that we
received upon physical settlement of the agreements was 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. During the nine months
ended September 30, 2020, 0.4 million of the shares were physically settled for
net proceeds of $17.6 million. As of September 30, 2020, there were 0.3 million
shares remaining under open forward sales agreements. Assuming the full physical
settlement of those open forward sales agreements, we had remaining capacity to
sell common stock having an aggregate gross sales price of up to $234.8 million
under the ATM Program as of September 30, 2020.

                                       49

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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 ATM program.
As of September 30, 2020, available liquidity was comprised of $116.8 million in
cash and cash equivalents, $800.0 million of borrowing capacity under the 2019
Credit Facility and $12.7 million in restricted cash and restricted cash
equivalents. Assuming the full physical settlement of open forward sale
agreements under our ATM Program, we also had remaining capacity to sell common
stock having an aggregate gross sales price of up to $234.8 million under our
ATM Program as of September 30, 2020 and $231.1 million of expected proceeds
available assuming the full physical settlement of our open forward equity
contracts. We believe that this available liquidity makes us well positioned to
navigate any macroeconomic uncertainty resulting from the COVID-19 pandemic
restrictions intended to prevent its spread.

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 II, Item 1A. Risk Factors" 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.

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, 2020, 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 defined in the 2019 Facilities Agreements). As of
September 30, 2020, there were no subsidiaries that met this requirement.

As of September 30, 2020, the 2019 Credit Facility bore interest at 1-Month
LIBOR plus 0.90%, with no borrowings outstanding, and a ratings-based facility
fee in the amount of 0.20% per annum. As of September 30, 2020, there were no
letters of credit outstanding.

Term Loans



As of September 30, 2020, $178.0 million was outstanding under the 2020 Term
Loan Agreement. The 2020 Term Loans have a maturity of April 2, 2022 and bear
interest at a rate of LIBOR plus an applicable margin of 1.50% per annum. If any
loans are outstanding after April 2, 2021, the Operating Partnership will be
required to pay a one-time fee in an amount equal to 0.20% of the outstanding
principal amount of the loans.

                                       50

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Senior Unsecured Notes

As of September 30, 2020, we had the following Senior Unsecured Notes outstanding (dollars in thousands):



                                                         Stated          September 30,
                                   Maturity Date      Interest Rate           2020
2026 Senior Notes                September 15, 2026       4.45%         $        300,000
2027 Senior Notes                 January 15, 2027        3.20%         $        300,000
2029 Senior Notes                  July 15, 2029          4.00%         $        400,000
2030 Senior Notes                 January 15, 2030        3.40%         $        500,000
2031 Senior Notes                February 15, 2031        3.20%         $        450,000
Total Senior Unsecured Notes                              3.61%         $      1,950,000


The Senior Unsecured Notes are payable on January 15 and July 15 of each year,
except for the 2026 Senior Notes, which are payable on March 15 and September 15
of each year, and the 2031 Senior Notes, which are payable on February 15 and
August 15 of each year. 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) prior to their respective maturity dates, the
redemption price will not include a make-whole premium.

CMBS



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, 2020, we had five fixed-rate CMBS loans with $215.3 million
of aggregate outstanding principal, a weighted-average contractual interest rate
of 5.47% and a weighted-average maturity of 3.1 years. Approximately 86.99% of
this debt is partially amortizing and requires a balloon payment at maturity.
The following table shows the scheduled principal repayments, including
amortization, of the CMBS fixed-rate loans as of September 30, 2020 (dollars in
thousands):

                                                                          Weighted
                     Number of        Number of       Stated Interest     

Average Scheduled Year of Maturity Loans Properties Rate Range Stated Rate Principal Balloon Total Remainder of 2020

              -                -           -%                      - %   $      1,059     $       -     $   1,059
2021                           -                -           -%                      -            4,365             -         4,365
2022                           -                -           -%                      -            4,617             -         4,617
2023                           3               86       5.23%-5.50%              5.46            3,074       197,912       200,986
2024                           -                -           -%                      -              590             -           590
Thereafter                     2                2       5.80%-6.00%              5.83            3,610            70         3,680
Total                          5               88                                5.47 %   $     17,315     $ 197,982     $ 215,297

Convertible Notes



As of September 30, 2020, the Convertible Notes were comprised of $190.4 million
aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021.
Interest on the 2021 Notes is payable semiannually in arrears on May 15 and
November 15 of each year.

Holders may convert the 2021 Notes prior to November 15, 2020 only under
specific circumstances: (1) if the closing price of our common stock for each of
at last 20 trading days (whether or not consecutive) during the last 30
consecutive trading days in the quarter is greater than or equal to 130% of the
conversion price for the Convertible Notes; (2) during the five business day
period after any 10 consecutive trading day period in which the trading price
per $1,000 principal amount of the Convertible Notes for each trading day of the
measurement period was less than 98% of the product of the last closing price of
our common stock and the conversion rate for the Convertible Notes; (3) if we
call any or all of the Convertible Notes for redemption prior to the redemption
date; or (4) upon the occurrence of specified corporate events as described in
the Convertible Notes prospectus supplement. On or after November 15, 2020,
until the close of business on the second scheduled trading day immediately
preceding the maturity date of the 2021 Notes, holders may convert the 2021
Notes at any time, regardless of the foregoing circumstances. Upon conversion,
we will pay or deliver cash, shares of common stock or a combination of cash and
shares of common stock, at our election.

                                       51

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The conversion rate is subject to adjustment for some events, including
dividends paid in excess of threshold amounts stipulated in the agreement, but
will not be adjusted for any accrued and unpaid interest. As of September 30,
2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a
fundamental change (as defined in the 2021 Notes' supplemental indenture),
holders may require us to repurchase all or any portion of their notes at a
repurchase price equal to 100% of the principal amount of such notes to be
repurchased, plus accrued and unpaid interest.

DEBT MATURITIES

Future principal payments due on our various types of debt outstanding as of September 30, 2020 (in thousands):



                                           Remainder of
                              Total            2020           2021          2022          2023         2024       Thereafter
2019 Credit Facility       $         -     $          -     $       -     $       -     $       -     $     -     $         -
2020 Term Loans                178,000                -             -       178,000             -           -               -
Senior Unsecured Notes       1,950,000                -             -             -             -           -       1,950,000
CMBS                           215,297            1,059         4,365         4,617       200,986         590           3,680
Convertible Notes              190,426                -       190,426             -             -           -               -
                           $ 2,533,723     $      1,059     $ 194,791     $ 182,617     $ 200,986     $   590     $ 1,953,680




CONTRACTUAL OBLIGATIONS

As discussed above, during the nine months ended September 30, 2020, we entered
into the 2020 Term Loan Agreement to reduce the amounts drawn under the 2019
Credit Facility. Additionally, we issued the 2031 Senior Unsecured Notes and
used proceeds to partially repay borrowings outstanding under the 2020 Term
Loans and to partially redeem the 2021 Convertible Notes. There were no other
material changes 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, 2019, 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 II, Item 1A. Risk Factors" 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.

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Cash Flows



The following table presents a summary of our cash flows for the nine months
ended September 30, 2020 and September 30, 2019, respectively (in thousands):

                                                     Nine Months Ended September 30,
                                                       2020                   2019             Change

Net cash provided by operating activities $ 206,524 $

      259,353     $  (52,829 )
Net cash used in investing activities                    (352,766 )             (328,616 )      (24,150 )
Net cash provided by financing activities                 249,708                361,508       (111,800 )
Net increase in cash, cash equivalents and
restricted cash                                  $        103,466       $   

292,245 $ (188,779 )




As of September 30, 2020, we had $129.5 million of cash, cash equivalents and
restricted cash as compared to $26.0 million as of December 31, 2019 and $369.7
million as of September 30, 2019.

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.

The decrease in net cash provided by operating activities was primarily attributable to the following:

• a decrease in related party fee income of $70.3 million, which was primarily

attributable to the $48.2 million termination fee received in connection

with the termination of the Asset Management Agreement in September 2019,

which was replaced by the Interim Management Agreement,

• a decrease in preferred dividends received from SMTA of $14.6 million as a

result of SMTA repurchasing the preferred shares in September 2019, and

• an increase in cash interest paid of $13.5 million driven by the issuance of

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

The decrease was partially offset by the following:

• termination fee costs of $24.8 million paid for the termination of interest

rate swaps in 2019, and




   •  a net increase in cash rental revenue of $20.3 million, driven by net
      acquisitions over the trailing twelve month period, partially offset by
      $24.1 million of rent deferred and $4.1 million of rent abated during the

nine months ended September 30, 2020 as a result of the COVID-19 pandemic.




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,
2020 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 the $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.

During the same period in 2019, net cash used in investing activities included
$719.1 million for the acquisition of 195 properties and $32.9 million of
capitalized real estate expenditures. These outflows were partially offset by
$230.5 million in net proceeds from the disposition of 34 properties, $150.0
million in proceeds from the redemption of preferred equity investment in SMTA
and $42.8 million in collections of principal on loans receivable.

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.


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Net cash provided by financing activities during the nine months ended
September 30, 2020 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

During the same period in 2019, net cash provided by financing activities was
primarily attributable to borrowings of $1,198.3 million under senior unsecured
notes and net proceeds from the issuance of common stock of $538.0 million.
These amounts were partially offset by the net repayment of $420.0 million of
Term Loans, payment of dividends to equity owners of $172.0 million, repayment
of $198.6 million on mortgages and notes payable, net repayments of $146.3
million on our revolving credit facilities, repayment of $402.5 million on
convertible notes, deferred financing costs of $20.2 million, debt
extinguishment costs of $12.6 million and common stock share repurchases for
employee tax withholdings totaling $2.5 million

Off-Balance Sheet Arrangements

As of September 30, 2020, we did not have any material off-balance sheet arrangements.

New Accounting Pronouncements

See Note 2 to the consolidated financial statements herein.


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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 cash
reserves on deposit with lenders as additional security. 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 (if any), depreciation and amortization, impairments of depreciated property and plus/(minus) 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) 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 we use 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 over time. 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.

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FFO and AFFO

                                                Three Months Ended                 Nine Months Ended
                                                  September 30,                      September 30,
(Dollars in thousands)                        2020              2019             2020              2019
Net income (loss) attributable to
common stockholders                       $      11,211     $     78,707     $     (10,225 )   $    162,846
Portfolio depreciation and amortization          52,024           43,764           157,129          126,171
Portfolio impairments                             8,106            5,932            69,929           13,231
Gain on disposition of assets                   (10,763 )        (32,254 )         (11,809 )        (70,760 )
FFO attributable to common stockholders   $      60,578     $     96,149     $     205,024     $    231,488
Loss on debt extinguishment                       7,252            5,580             7,252           11,473
Deal pursuit costs                                  597              330             1,630              574
Non-cash interest expense                         3,190            2,685             9,658           11,116
Accrued interest and fees on defaulted
loans                                                 -                -                 -              285
Straight-line rent, net of related bad
debt expense                                       (899 )         (4,770 )          (6,385 )        (12,162 )
Other amortization and non-cash charges            (383 )           (574 )            (213 )         (1,169 )
Non-cash compensation expense                     2,967            3,534             9,726           10,995
Termination of interest rate swaps                    -           12,461                 -           12,461
Costs related to COVID-19(1)                        702                -             1,440                -
AFFO attributable to common
stockholders (2)                          $      74,004     $    115,395

$ 228,132 $ 265,061



Net income (loss) per share of common
stock - Diluted                           $        0.11     $       0.87     $       (0.11 )   $       1.85
FFO per share of common stock - Diluted
(3)                                       $        0.59     $       1.06     $        1.98     $       2.63
AFFO per share of common stock -
Diluted (3)                               $        0.72     $       1.27     $        2.21     $       3.01
AFFO per share of common stock -
Diluted, excluding AM termination fee
income, net of tax (4)                    $        0.72     $       0.87

$ 2.21 $ 2.59



Weighted average shares of common stock
outstanding - Diluted                       102,938,860       90,396,797       102,553,798       87,784,477
Weighted average shares of common stock
outstanding for non-GAAP measures -
Diluted (3)                                 102,938,860       90,396,797       103,132,749       87,784,477



(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 for the three and nine months ended September 30, 2020 includes $1.8

million and $24.1 million, respectively, 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 includes

unvested market-based awards and unsettled forward equity contracts for the

nine months ended September 30, 2020, 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 September 30,      Nine Months Ended September 30,
             2020                2019              2020               2019
 FFO     $0.2 million        $0.3 million      $0.6 million       $1.0 million
AFFO     $0.2 million        $0.4 million      $0.7 million       $1.1 million


(4)  AFFO attributable to common stockholders for the three months ended
     September 30, 2019, excluding $48.2 million of termination fee income, net

of $11.2 million in income tax expense. The termination fee was received in

conjunction with SMTA's sale of Master Trust 2014 in September 2019 and

termination of the Asset Management Agreement on September 20, 2019. On

September 20, 2019, the Company entered into the Interim Management

Agreement with SMTA. AFFO attributable to common stockholders has not been

adjusted to exclude the following:

- asset management fees of $4.4 million and $14.4 million earned during the

three and nine months ended September 30, 2019, respectively;

- property management and servicing fees of $1.7 million and $5.5 million


      earned during the three and nine months ended September 30, 2019,
      respectively;

- preferred dividend income from SMTA of $3.3 million and $10.8 million earned

during the three and nine months ended September 30, 2019, respectively;

- interest income on related party notes receivable of $0.3 million and $1.1

million earned during the three and nine months ended September 30, 2019,

respectively, and an early repayment premium of $0.9 million earned during

the three and nine months ended September 30, 2019; and

- interest expense on related party loans payable of $58 thousand and $0.2

million incurred during the three and nine months ended September 30, 2019,


      respectively.


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Adjusted Debt, Adjusted EBITDAre and Annualized Adjusted EBITDAre



                                                              September 30,
(Dollars in thousands)                                  2020                2019
Revolving credit facilities                        $             -     $             -
Term loans                                                 177,170                   -
Senior Unsecured Notes, net                              1,926,752           1,483,491
Mortgages and notes payable, net                           213,479             259,113
Convertible Notes, net                                     188,216             334,904
Total debt, net                                          2,505,617           2,077,508
Unamortized debt discount, net                               8,642          

10,664


Unamortized deferred financing costs                        19,464          

18,569


Cash and cash equivalents                                 (116,814 )          (358,440 )
Restricted cash balances held for the benefit of
lenders                                                    (12,675 )           (11,226 )
Adjusted Debt                                      $     2,404,234     $     1,737,075




                                                      Three Months Ended September 30,
(Dollars in thousands)                                   2020                   2019
Net income                                         $         13,798       $         81,294
Interest                                                     26,404                 24,675
Depreciation and amortization                                52,170         

43,907


Income tax expense                                              197         

11,190


Gain on disposition of assets                               (10,763 )              (32,254 )
Portfolio impairments                                         8,106                  5,932
EBITDAre                                           $         89,912       $        134,744
Adjustments to revenue producing acquisitions
and dispositions                                              2,688                  3,599
Deal pursuit costs                                              597                    330
Loss on debt extinguishment                                   7,252                  5,580
Costs related to COVID-19(1)                                    702                      -
Termination of interest rate swaps                                -         

12,461


Termination of Asset Management Agreement                         -                (48,156 )
Adjusted EBITDAre                                  $        101,151       $ 

108,558


Adjustments related to straight-line rent (2)                 4,942                      -
Other adjustments for Annualized EBITDAre (3)                 1,453                   (244 )
Annualized Adjusted EBITDAre                       $        430,184       $ 

433,256


Adjusted Debt / Annualized Adjusted EBITDAre (4)               5.6x                    4.0 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) Adjustment relates to $6.2 million of gross bad debt expense on

straight-line rent receivable balances, where only $1.3 million of the

expense relates to straight-line rent that would have been recognized during

the three months ended September 30, 2020. As such, annualization of the

$4.9 million of bad debt expense related to straight-line rental revenue

recognized in previous periods would not be appropriate.

(3) Adjustments for the three months ended September 30, 2020 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 where annualization would not be appropriate.

Adjustments for the three months ended September 20, 2019 are comprised of

certain other income where annualization would not be appropriate.

(4) Adjusted Debt / Annualized Adjusted EBITDAre would be 5.1x if the 6.7 million shares under open forward sales agreements had been settled as of September 30, 2020.









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