EX-99.2

EX-99.2 3 bnl-20210803ex99_2.htm EX-99.2 EX-99.2

Exhibit 99.2

Q2 2021 QUARTERLY SUPPLEMENTAL INFORMATION Broadstone Net Lease, Inc. (NYSE: BNL) is a Real Estate Investment Trust (REIT) that acquires, owns, and manages single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. www.broadstone.com

Table of Contents


Section	Page
About the Data	3
Company Overview	4
Quarterly Financial Summary	5
Balance Sheet	6
Income Statement Summary	7
Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO)	8
EBITDA, EBITDAre, and Other Non-GAAP Operating Measures	9
Lease Revenues Detail	10
Capital Structure	11
Equity Rollforward	12
Debt Outstanding	13
Net Debt Metrics	14
Covenants	14
Debt Maturities and Interest Rate Exposure	15
Acquisitions	16
Dispositions	16
Portfolio at a Glance: Key Metrics	17
Diversification: Tenants and Brands	18-19
Diversification: Property Type	20-21
Key Statistics by Property Type	22
Diversification: Tenant Industry	23
Diversification: Geography	24
Lease Expirations	25
Portfolio Occupancy	26
Definitions and Explanations	27-28

About the Data

This data and other information described herein are as of and for the three months ended June 30, 2021 unless otherwise indicated. Future performance may not be consistent with past performance and is subject to change and inherent risks and uncertainties. This information should be read in conjunction with Broadstone Net Lease, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, including the financial statements and the management's discussion and analysis of financial condition and results of operations sections.

Stock Split

All share and per share data as of June 30, 2020, contained herein, have been adjusted to reflect the four-for-one stock split that was effected on September 18, 2020.

Forward Looking Statements

Information set forth herein contains forward-looking statements, which reflect our current views regarding our business, financial performance, growth prospects and strategies, market opportunities, and market trends. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. All of the forward-looking statements herein are subject to various risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results, performance, and achievements could differ materially from those expressed in or by the forward-looking statements and may be affected by a variety of risks and other factors. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from such forward-looking statements. These factors include, but are not limited to, risks and uncertainties related to the COVID-19 pandemic and its related impacts on us and our tenants, general economic conditions, local real estate conditions, tenant financial health, and property acquisitions and the timing of these acquisitions. These and other risks, assumptions, and uncertainties are described in our filings with the SEC, which are available on the SEC’s website at www.sec.gov.

You are cautioned not to place undue reliance on any forward-looking statements included herein. All forward-looking statements are made as of the date of this document and the risk that actual results, performance, and achievements will differ materially from the expectations expressed or referenced herein will increase with the passage of time. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required by law.

Company Overview

Broadstone Net Lease, Inc. (NYSE:BNL) (the “Company,” “BNL,” “us,” “our” and “we”) is an internally-managed REIT, formed as a Maryland corporation in 2007 that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Since our inception, we have selectively invested in real estate across the industrial, healthcare, restaurant, retail, and office property types. We target properties with credit-worthy tenants in industries characterized by positive business drivers and trends, where the properties are an integral part of the tenants’ businesses and there are opportunities to secure long-term net leases. Through long-term net leases, our tenants are able to retain operational control of their strategically important locations, while allocating their debt and equity capital to fund their core business operations rather than real estate ownership.

Executive Team

Christopher J. Czarnecki

Chief Executive Officer, President, and Director

Ryan M. Albano

Executive Vice President and Chief Financial Officer

John D. Moragne

Executive Vice President and Chief Operating Officer

John D. Callan, Jr

Senior Vice President and General Counsel

Michael B. Caruso

Senior Vice President, Corporate Finance & Investor Relations

Timothy D. Dieffenbacher

Senior Vice President, Chief Accounting Officer and Treasurer

Kristen Duckles

Senior Vice President, Chief Administrative Officer

Kevin M. Fennell

Senior Vice President, Capital Markets & Credit Risk

Laurier James Lessard, Jr.

Senior Vice President, Asset Management

Roderick A. Pickney

Senior Vice President, Acquisitions

Molly Kelly Wiegel

Senior Vice President, Human Resources

Andrea T. Wright

Senior Vice President, Property Management

Board of Directors

Laurie A. Hawkes

Chairman of the Board

Christopher J. Czarnecki

Chief Executive Officer and President

Denise Brooks-Williams

Michael A. Coke

David M. Jacobstein

Agha S. Khan

Shekar Narasimhan

Geoffrey H. Rosenberger

James H. Waters

Company Contact Information

Michael Caruso
SVP, Corporate Finance & Investor Relations

michael.caruso@broadstone.com

585-402-7842

Transfer Agent

Computershare Trust Company, N.A.

250 Royall Street

Canton, Massachusetts 02021

800-736-3001

Quarterly Financial Summary

(unaudited, dollars in thousands, except per share data)


	Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020
Financial Summary
Investment in rental property	$	3,954,597		$	3,794,850		$	3,734,121		$	3,666,961		$	3,690,679
Less accumulated depreciation		(390,236	)		(369,683	)		(349,977	)		(332,057	)		(312,934	)
Investment in rental property, net		3,564,361			3,425,167			3,384,144			3,334,904			3,377,745
Cash and cash equivalents		78,987			10,205			100,486			101,787			9,241
Restricted cash		8,021			8,145			10,242			7,200			601
Total assets		4,423,611			4,206,045			4,258,483			4,204,469			4,144,055
Mortgage and notes payable, net		105,748			106,559			107,382			108,752			109,512
Unsecured term notes, net and revolver		1,383,631			1,398,283			1,433,796			1,433,495			1,921,392
Total liabilities		1,700,103			1,713,348			1,779,402			1,782,762			2,267,408
Total mezzanine equity		—			—			—			—			178,535
Total Broadstone Net Lease, Inc. stockholders' equity		2,554,653			2,312,532			2,299,105			2,191,794			1,591,633
Total equity (book value)		2,723,508			2,492,697			2,479,081			2,421,707			1,698,112
Revenues		84,759			82,698			82,291			80,744			80,371
General and administrative - other		7,704			8,864			8,039			6,418			5,700
Stock based compensation		951			1,769			1,193			796			—
General and administrative		8,655			10,633			9,232			7,214			5,700
Total operating expenses		44,452			47,963			46,078			57,496			50,345
Interest expense		15,430			16,108			17,123			18,511			19,513
Net income		22,820			23,960			17,619			9,711			17,098
Net earnings per common share, diluted	$	0.14		$	0.15		$	0.11		$	0.08		$	0.14
FFO		50,184			51,929			44,198			54,726			56,485
FFO per share, diluted	$	0.32		$	0.33		$	0.28		$	0.44		$	0.47
AFFO		52,024			49,410			46,894			47,077			46,056
AFFO per share, diluted	$	0.33		$	0.31		$	0.30		$	0.38		$	0.38
Net cash provided by operating activities		47,235			51,780			46,064			53,506			39,139
Net cash (used in) provided by investing activities		(175,051	)		(67,661	)		(76,443	)		5,469			6,264
Net cash (used in) provided by financing activities		196,474			(76,497	)		32,120			40,170			(132,273	)
Distributions declared		43,484			39,653			39,299			20,477			13,099
Distributions declared per diluted share	$	0.255		$	0.250		$	0.250		$	0.135		$	0.110

Portfolio Metrics
Properties		684			661			641			628			633
Rentable square feet	30.2M			28.4M			28.2M			27.3M			27.4M
Occupancy		99.7	%		99.7	%		99.2	%		99.8	%		99.6	%
Weighted average remaining lease term (years)		10.4			10.6			10.7			10.8			11.0

Balance Sheet

(unaudited, in thousands)


	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Assets
Accounted for using the operating method, net of accumulated depreciation	$	3,534,884		$	3,395,609		$	3,354,511		$	3,304,002		$	3,346,792
Accounted for using the direct financing method		28,911			28,991			29,066			30,902			30,953
Accounted for using the sales type method		566			567			567			—			—
Investment in rental property, net		3,564,361			3,425,167			3,384,144			3,334,904			3,377,745
Cash and cash equivalents		78,987			10,205			100,486			101,787			9,241
Accrued rental income		109,278			105,674			102,117			97,517			90,545
Tenant and other receivables, net		618			1,022			1,604			3,957			5,045
Prepaid expenses and other assets		18,846			18,862			22,277			19,522			9,819
Interest rate swap, assets		—			239			—			—			—
Goodwill		339,769			339,769			339,769			339,769			339,769
Intangible lease assets, net		296,134			288,592			290,913			288,971			298,741
Debt issuance costs – unsecured revolving credit facility, net		5,250			5,842			6,435			7,027			1,782
Leasing fees, net		10,368			10,673			10,738			11,015			11,368
Total assets	$	4,423,611		$	4,206,045		$	4,258,483		$	4,204,469		$	4,144,055
Liabilities and equity
Unsecured revolving credit facility	$	—		$	15,000		$	—		$	—		$	248,300
Mortgages and notes payable, net		105,748			106,559			107,382			108,752			109,512
Unsecured term notes, net		1,383,631			1,383,283			1,433,796			1,433,495			1,673,092
Interest rate swap, liabilities		46,335			43,662			72,103			81,326			85,678
Earnout liability		10,063			6,385			7,509			13,177			37,975
Accounts payable and other liabilities		75,463			71,072			74,936			55,339			25,550
Accrued interest payable		3,885			9,896			4,023			9,453			4,144
Intangible lease liabilities, net		74,978			77,491			79,653			81,220			83,157
Total liabilities		1,700,103			1,713,348			1,779,402			1,782,762			2,267,408
Mezzanine equity
Common stock		—			—			—			—			66,376
Non-controlling interests		—			—			—			—			112,159
Total mezzanine equity		—			—			—			—			178,535
Equity
Broadstone Net Lease, Inc. stockholders' equity:
Preferred stock, $0.001 par value		—			—			—			—			—
Common stock, $0.00025 par value		40			36			27			27			26
Class A Common Stock, $0.00025 par value		—			—			9			8			—
Additional paid-in capital		2,890,131			2,625,320			2,624,997			2,506,008			1,899,751
Cumulative distributions in excess of retained earnings		(293,622	)		(274,140	)		(259,673	)		(239,520	)		(229,531	)
Accumulated other comprehensive income		(41,896	)		(38,684	)		(66,255	)		(74,729	)		(78,613	)
Total Broadstone Net Lease, Inc. stockholders’ equity		2,554,653			2,312,532			2,299,105			2,191,794			1,591,633
Non-controlling interests		168,855			180,165			179,976			229,913			106,479
Total equity		2,723,508			2,492,697			2,479,081			2,421,707			1,698,112
Total liabilities, mezzanine and equity	$	4,423,611		$	4,206,045		$	4,258,483		$	4,204,469		$	4,144,055

Income Statement Summary

(unaudited, in thousands, except per share data)


	Three Months Ended
	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Revenues
Lease revenues, net	$	84,759		$	82,698		$	82,291		$	80,744		$	80,371
Operating expenses
Depreciation and amortization		31,225			30,713			30,182			31,363			39,921
Property and operating expense		4,572			4,605			4,986			4,187			4,190
General and administrative		8,655			10,633			9,232			7,214			5,700
Provision for impairment of investment in rental properties		—			2,012			1,678			14,732			534
Total operating expenses		44,452			47,963			46,078			57,496			50,345
Other income (expenses)
Interest income		6			5			4			—			11
Interest expense		(15,430	)		(16,108	)		(17,123	)		(18,511	)		(19,513	)
Cost of debt extinguishment		—			(126	)		(3	)		(392	)		—
Gain on sale of real estate		3,838			4,733			5,260			1,060			1,046
Income taxes		(301	)		(413	)		141			(129	)		(402	)
Internalization expenses		—			—			(182	)		(1,929	)		(389	)
Change in fair value of earnout liability		(5,604	)		1,124			(6,706	)		6,362			6,321
Other income (expenses)		4			10			15			2			(2	)
Net income		22,820			23,960			17,619			9,711			17,098
Net income attributable to non-controlling interests		(1,606	)		(1,737	)		(1,357	)		(961	)		(1,745	)
Net income attributable to Broadstone Net Lease, Inc.	$	21,214		$	22,223		$	16,262		$	8,750		$	15,353

Weighted average number of common shares outstanding
Basic1		146,119			145,338			143,916			111,155			107,422
Diluted1		157,430			156,724			155,956			123,381			119,648
Net earnings per common share2
Basic and diluted	$	0.14		$	0.15		$	0.11		$	0.08		$	0.14

1 Excludes 387, 334, 341 and 216 weighted average shares of unvested restricted common stock for the three months ended June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively.

2 Excludes $97, $104, $85 and $46 from the numerator for the three months ended June 30, 2021, March 31, 2021, December 31, 2020 and September 30, 2020, respectively, related to dividends declared on shares of unvested restricted common stock.

Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO)

(unaudited, in thousands, except per share data)


	Three Months Ended
	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Net income	$	22,820		$	23,960		$	17,619		$	9,711		$	17,098
Real property depreciation and amortization		31,202			30,690			30,161			31,343			39,899
Gain on sale of real estate		(3,838	)		(4,733	)		(5,260	)		(1,060	)		(1,046	)
Provision for impairment of investment in rental properties		—			2,012			1,678			14,732			534
FFO	$	50,184		$	51,929		$	44,198		$	54,726		$	56,485
Capital improvements / reserves		—			—			—			1,662			—
Straight-line rent adjustment		(4,979	)		(4,632	)		(5,125	)		(6,943	)		(6,151	)
Adjustment to provision for credit losses		—			(1	)		(6	)		(15	)		(110	)
Cost of debt extinguishment		—			126			3			392			—
Amortization of debt issuance costs		956			914			917			819			821
Amortization of net mortgage premiums		(37	)		(35	)		(36	)		(34	)		(37	)
Gain on interest rate swaps and other non-cash interest expense		(42	)		(41	)		(41	)		(42	)		(41	)
Amortization of lease intangibles		(641	)		(728	)		(1,150	)		151			1,019
Internalization expenses		—			—			182			1,929			389
Stock-based compensation		951			1,769			1,193			796			—
Severance		32			1,243			68			—			—
Change in fair value of earnout liability		5,604			(1,124	)		6,706			(6,362	)		(6,321	)
Other (income) expenses		(4	)		(10	)		(15	)		(2	)		2
AFFO	$	52,024		$	49,410		$	46,894		$	47,077		$	46,056

Diluted weighted average shares outstanding1		157,430			156,724			155,956			123,381			119,648
Net earnings per diluted share2	$	0.14		$	0.15		$	0.11		$	0.08		$	0.14
FFO per diluted share2		0.32			0.33			0.28			0.44			0.47
AFFO per diluted share2		0.33			0.31			0.30			0.38			0.38

EBITDA, EBITDAre, and Other-Non GAAP Operating Measures

(unaudited, in thousands)


	Three Months Ended
	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Net income	$	22,820		$	23,960		$	17,619		$	9,711		$	17,098
Depreciation and amortization		31,225			30,713			30,182			31,363			39,921
Interest expense		15,430			16,108			17,123			18,511			19,513
Income taxes		301			413			(141	)		129			402
EBITDA	$	69,776		$	71,194		$	64,783		$	59,714		$	76,934
Provision for impairment of investment in rental properties		—			2,012			1,678			14,732			534
Gain on sale of real estate		(3,838	)		(4,733	)		(5,260	)		(1,060	)		(1,046	)
EBITDAre	$	65,938		$	68,473		$	61,201		$	73,386		$	76,422
Adjustment for current quarter acquisition activity 1		2,761			1,365			1,703			—			—
Adjustment for current quarter disposition activity 2		(353	)		(278	)		(318	)		(78	)		(52	)
Adjustment to exclude non-recurring and other expenses (income) 3		—			2,100			182			1,929			389
Adjustment to exclude change in fair value of earnout liability		5,604			(1,124	)		6,706			(6,362	)		(6,321	)
Adjustment to exclude write-off of accrued rental income		—			442			242			—			—
Adjustment to exclude cost of debt extinguishments		—			126			—			392			—
Adjustment to exclude lease termination fees		—			—			—			—			(276	)
Adjusted EBITDAre	$	73,950		$	71,104		$	69,716		$	69,267		$	70,162
General and administrative		8,650			10,632			9,219			7,214			5,700
Adjusted Net Operating Income ("NOI")	$	82,600		$	81,736		$	78,935		$	76,481		$	75,862
Straight-line rental revenue, net		(5,245	)		(4,762	)		(5,339	)		(6,947	)		(6,151	)
Other amortization and non-cash charges		(642	)		(737	)		(1,170	)		1,810			911
Adjusted Cash NOI	$	76,713		$	76,237		$	72,426		$	71,344		$	70,622
Annualized EBITDAre	$	263,761		$	273,888		$	244,805		$	293,544		$	305,688
Annualized Adjusted EBITDAre		295,808			284,414			278,867			277,068			280,648
Annualized Adjusted NOI		330,410			326,944			315,743			305,924			303,448
Annualized Adjusted Cash NOI		306,863			304,948			289,704			285,376			282,488

1 Reflects an adjustment to give effect to all acquisition during the quarter as if they had been acquired as of the beginning of the quarter.

2 Reflects an adjustment to give effect to all dispositions during the quarter as if they had been sold as of the beginning of the quarter.

3 Amounts include $1.2 million of severance and $0.9 million of accelerated stock-based compensation associated with the departure of executive officers during the three months ended March 31, 2021, and expenses directly associated with the Internalization in 2020.

Lease Revenues Detail

(unaudited, in thousands)


	Three Months Ended
	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020		June 30, 2020
Contractual rental amounts billed for operating leases	$	75,011		$	73,245		$	72,558		$	69,270	$	67,342
Adjustment to recognize contractual operating lease billings on a straight- line basis		4,724			4,367			4,256			6,768		8,276
Variable rental amounts earned		114			91			455			234		51
Earned income from direct financing leases		728			730			756			757		855
Earned income from sales-type leases		15			14			5			—		—
Operating expenses billed to tenants		4,196			4,388			4,389			3,389		4,335
Other income from real estate transactions		28			5			(16	)		64		702
Adjustment to revenue recognized for uncollectible rental amounts billed		(57	)		(142	)		(112	)		262		(1,190	)
Total Lease revenues, net	$	84,759		$	82,698		$	82,291		$	80,744	$	80,371

Capital Structure

(unaudited, in thousands, except per share data)


EQUITY
Shares of Common Stock		158,583
OP Units		10,482
Common Stock & OP Units		169,065
Price Per Share / Unit at June 30, 2021	$	23.41
IMPLIED EQUITY MARKET CAPITALIZATION	$	3,957,800
% of Total Capitalization		72.6	%
DEBT
Unsecured Revolving Credit Facility - 2023	$	—
Unsecured Term Loan Facilities		915,000
Unsecured Term Loan - 2022		60,000
Unsecured Term Loan - 2023		265,000
Unsecured Term Loan - 2024		190,000
Unsecured Term Loan - 2026		400,000
Senior Unsecured Notes		475,000
Senior Unsecured Notes - 2027		150,000
Senior Unsecured Notes - 2028		225,000
Senior Unsecured Notes - 2030		100,000
Mortgage Debt - Various		106,004
TOTAL DEBT	$	1,496,004
% of Total Capitalization		27.4	%
% of Total Capitalization Floating Rate Debt		1.7	%
% of Total Capitalization Fixed Rate Debt		25.7	%

ENTERPRISE VALUE
Total Capitalization	$	5,453,804
Less: Cash and Cash Equivalents		(78,987	)
Enterprise Value	$	5,374,817

Equity Rollforward

(unaudited, in thousands)


	Shares of Common Stock			OP Units			Total Diluted Shares
Balance, January 1, 2021		145,609			11,399			157,008
Q1 2021 board of directors fees		12			—			12
Q1 2021 stock-based compensation activity		154			—			154
Q1 2021 OP Unit conversions		38			(38	)		—
Balance, March 31, 2021		145,813			11,361			157,174
Q2 2021 board of directors fees		13			—			13
Q2 2021 stock-based compensation activity		(15	)		—			(15	)
Q2 2021 OP Unit conversions		1,127			(1,127	)		—
Q2 2021 Earnout tranche 1 issuance		145			248			393
Q2 2021 Public follow-on equity offering		11,500			—			11,500
Balance, June 30, 2021		158,583			10,482			169,065
Percentage ownership of OP at June 30, 2021		93.8	%		6.2	%		100	%

Subsequent to quarter-end, on July 14, 2021, the Company achieved a 40-day VWAP of $23.75, thereby triggering tranche 2 of the earnout and the issuance of 217 shares of common stock and 372 OP Units.

Debt Outstanding

(unaudited, in thousands)


	Outstanding Balance
	June 30,			December 31,
	2021			2020			Interest Rate	Maturity Date
Revolving Credit Facility	$	—		$	—		one-month LIBOR + 1.00%	Sep. 2023
2022 Unsecured Term Loan		60,000			60,000		one-month LIBOR + 1.00%	Feb. 2022
2023 Unsecured Term Loan		265,000			265,000		one-month LIBOR + 1.10%	Jan. 2023
2024 Unsecured Term Loan		190,000			190,000		one-month LIBOR + 1.00%	Jun. 2024
2026 Unsecured Term Loan		400,000			450,000		one-month LIBOR + 1.00%	Feb. 2026
Senior Notes
Series A		150,000			150,000		4.84%	Apr. 2027
Series B		225,000			225,000		5.09%	Jul. 2028
Series C		100,000			100,000		5.19%	Jul. 2030
		475,000			475,000
Total, unsecured debt		1,390,000			1,440,000
Debt issuance costs, net		(6,369	)		(6,204	)
Total unsecured debt, net	$	1,383,631		$	1,433,796


	Origination	Maturity
	Date	Date	Interest	June 30,			December 31,
Lender	(Month/Year)	(Month/Year)	Rate	2021			2020
Wilmington Trust National Association	Apr-19	Feb-28	4.92%	$	47,357		$	47,945
Wilmington Trust National Association	Jun-18	Aug-25	4.36%		19,753			19,947
PNC Bank	Oct-16	Nov-26	3.62%		17,297			17,498
Sun Life	Mar-12	Oct-21	5.13%		10,252			10,469
Aegon	Apr-12	Oct-23	6.38%		6,650			7,039
M&T Bank	Oct-17	Aug-21	one - month LIBOR+3%		4,695			4,769
Total mortgages					106,004			107,667
Debt issuance costs, net					(256	)		(285	)
Mortgages, net				$	105,748		$	107,382


Year of Maturity	Revolving Credit Facility		Term Loans		Senior Notes		Mortgages		Total
2021	$	—	$	—	$	—	$	16,343	$	16,343
2022		—		60,000		—		2,907		62,907
2023		—		265,000		—		7,582		272,582
2024		—		190,000		—		2,260		192,260
2025		—		—		—		20,195		20,195
Thereafter		—		400,000		475,000		56,717		931,717
Total	$	—	$	915,000	$	475,000	$	106,004	$	1,496,004

Net Debt Metrics

(unaudited, in thousands)



	June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020			June 30, 2020
Debt
Revolving Credit Facility	$	—		$	15,000		$	—		$	—		$	248,300
Unsecured term notes, net		1,383,631			1,383,283			1,433,796			1,433,495			1,673,092
Mortgages and notes payable, net		105,748			106,559			107,382			108,752			109,512
Debt issuance costs		6,625			6,988			6,489			6,829			7,268
Gross Debt		1,496,004			1,511,830			1,547,667			1,549,076			2,038,172
Cash and cash equivalents		(78,987	)		(10,205	)		(100,486	)		(101,787	)		(9,241	)
Restricted cash		(8,021	)		(8,145	)		(10,242	)		(7,200	)		(601	)
Net Debt	$	1,408,996		$	1,493,480		$	1,436,939		$	1,440,089		$	2,028,330
Net Debt to Annualized EBITDAre	5.34x			5.45x			5.87x			4.91x			6.64x
Net Debt to Annualized Adjusted EBITDAre	4.76x			5.25x			5.15x			5.20x			7.23x

Covenants

(unaudited)

The following is a summary of key financial covenants for the Company’s unsecured credit facility and unsecured term loans and senior notes. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show that as of June 30, 2021, the Company believes it is in compliance with the covenants.


Covenants	Required	Revolving Credit Facility and Unsecured Term Loans		Senior Notes
Leverage ratio	≤ 0.60 to 1.00		0.33		0.33
Secured indebtedness ratio	≤ 0.40 to 1.00		0.02		0.02
Unencumbered coverage ratio	≥ 1.75 to 1.00		7.63	Not Applicable
Fixed charge coverage ratio	≥ 1.50 to 1.00		4.06		4.06
Total unsecured indebtedness to total unencumbered eligible property value	≤ 0.60 to 1.00		0.34		0.35
Dividends and other restricted payments	Only applicable in case of default	Not Applicable		Not Applicable

Debt Maturities and Interest Rate Exposure

(unaudited, dollars in millions)

Debt Maturities

The Company utilizes diversified sources of debt capital including unsecured bank debt, unsecured notes, and secured mortgages (where appropriate).

Interest Rate Exposure

The Company uses interest rate swaps, fixed-rate private placement notes, and fixed-rate mortgages to mitigate the impact of interest rate variability.

Interest rate exposure not inclusive of floating rate debt, as borrowings are short-term in nature.

Portfolio Activity

Acquisitions

(unaudited, square feet and dollars in thousands)

The following table summarizes the Company’s property acquisition activity during 2021.


Q1 2021
Property Type	Number of Properties		Square Feet ('000s)		Weighted Average Lease Term (years)		Acquisition Price ($'000s)
Retail		24		178		16.3	$	68,158
Healthcare		4		51		11.5		18,983
Restaurant 1		—		—		16.8		181
Total Properties		28		229		15.3	$	87,322
Weighted average initial cash cap rate								6.4	%

Q2 2021
Property Type	Number of Properties		Square Feet ('000s)		Weighted Average Lease Term (years)		Acquisition Price ($'000s)
Industrial		12		1,553		15.5	$	115,078
Healthcare		11		136		10.5		46,050
Retail		11		218		9.8		32,830
Total Properties		34		1,906		13.2	$	193,959
Weighted average initial cash cap rate								6.2	%

1 Acquisition of additional land to an existing property.

Dispositions

(unaudited, square feet and dollars in thousands)

The following table summarizes the Company’s property disposition activity during 2021.


Q1 2021
Property Type	Number of Properties		Square Feet ('000s)		Acquisition Price ($'000s)		Disposition Price ($'000s)		Net Book Value ($'000s)		Cash Cap Rate
Healthcare		5		31		12,420		14,689	$	10,773		7.4	%
Restaurant		3		14		6,965		8,181		6,599		6.4	%
Total Properties		8		45	$	19,385	$	22,870	$	17,373		7.0	%

Q2 2021
Property Type	Number of Properties		Square Feet ('000s)		Acquisition Price ($'000s)		Disposition Price ($'000s)		Net Book Value ($'000s)		Cash Cap Rate
Restaurant		10		36	$	17,973	$	20,876	$	15,694		6.4	%
Healthcare		1		6		1,689		1,400		1,506	N/A			2
Total Properties		11		42	$	19,662	$	22,276	$	17,200		6.4	%	3

2 Properties were vacant at the time of disposition.

3 Weighted average cash cap rate on tenanted properties sold.

Portfolio at a Glance: Key Metrics


Properties	684
States	42
Canada	1
Total Rentable Sq. Footage	30.2M
Tenants	192
Brands	179
Industries	55
Occupancy (based on SF)	99.7%
Top Ten Tenant Concentration	18.4%
Top Twenty Tenant Concentration	31.1%
Investment Grade (tenant/guarantor)	16.7%
Financial Reporting Coverage1	94.5%
Rent Coverage Ratio2	3.3x
Weighted Average Annual Rent Increases	2.0%
Weighted Average Remaining Lease Term	10.4 years

1 Includes 9.0% related to tenants not required to provide financial information under the terms of our lease, but whose financial statements are available publicly.

2 Represents rent coverage ratio for Restaurants property type only.

Diversification: Tenants & Brands

(unaudited)

Top 20 Tenants


Tenant	Property Type	# Properties		ABR ($'000s)		ABR as a % of Total Portfolio			Square Feet ('000s)		SF as a % of Total Portfolio
Red Lobster Hospitality & Red Lobster Restaurants LLC	Casual Dining		24	$	7,307		2.3	%		196		0.6	%
Jack's Family Restaurants LP	Quick Service Restaurants		43		7,026		2.2	%		147		0.5	%
Joseph T. Ryerson & Son, Inc	Distribution & Warehouse		11		6,395		2.0	%		1,537		5.1	%
Axcelis Technologies, Inc.	Flex and R&D		1		5,859		1.9	%		417		1.4	%
Hensley & Company	Distribution & Warehouse		3		5,756		1.8	%		577		1.9	%
BluePearl Holdings, LLC	Animal Health Services		13		5,308		1.7	%		160		0.5	%
Outback Steakhouse of Florida LLC	Casual Dining		22		5,192		1.7	%		140		0.5	%
Krispy Kreme Doughnut Corporation	Quick Service Restaurants/ Food Processing		27		5,034		1.6	%		156		0.5	%
Siemens Medical Solutions USA, Inc. & Siemens Corporation	Manufacturing/Flex and R&D		2		4,862		1.6	%		545		1.8	%
Big Tex Trailer Manufacturing, Inc.	Automotive/Distribution & Warehouse/Manufacturing/ Corporate Headquarters		17		4,860		1.6	%		1,302		4.3	%
Total Top 10 Tenants			163	$	57,599		18.4	%		5,177		17.1	%

Nestle' Dreyer's Ice Cream Company	Cold Storage		1	$	4,409		1.4	%		310		1.0	%
Arkansas Surgical Hospital	Surgical		1		4,260		1.4	%		129		0.4	%
Nationwide Mutual Insurance Company	Strategic Operations		2		4,248		1.4	%		407		1.3	%
Cascade Aerospace Inc.	Manufacturing		1		4,187		1.4	%		231		0.8	%
American Signature, Inc.	Home Furnishings		6		4,141		1.3	%		474		1.6	%
Tractor Supply Company	General Merchandise		15		3,872		1.2	%		300		1.0	%
Fresh Express Incorporated	Food Processing		1		3,869		1.2	%		335		1.1	%
Aventiv Technologies, LLC	Corporate Headquarters		1		3,819		1.2	%		154		0.5	%
Dollar General Corporation	General Merchandise		35		3,510		1.1	%		320		1.1	%
Centene Management Company, LLC	Strategic Operations		1		3,377		1.1	%		220		0.8	%
Total Top 20 Tenants			227	$	97,291		31.1	%		8,057		26.7	%

Top 20 Brands

(unaudited)


Brand	Property Type	# Properties		ABR ($'000s)		ABR as a % of Total Portfolio			Square Feet ('000s)		SF as a % of Total Portfolio
Red Lobster	Casual Dining		24	$	7,307		2.3	%		196		0.6	%
Jack's Family Restaurants	Quick Service Restaurants		43		7,026		2.2	%		147		0.5	%
Ryerson	Distribution & Warehouse		11		6,395		2.0	%		1,537		5.1	%
Axcelis	Flex and R&D		1		5,859		1.9	%		417		1.4	%
Hensley	Distribution & Warehouse		3		5,756		1.8	%		577		1.9	%
BluePearl Veterinary Partners	Animal Health Services		13		5,308		1.7	%		160		0.5	%
Bob Evans Farms	Casual Dining/Food Processing		21		5,246		1.7	%		282		1.0	%
Krispy Kreme	Quick Service Restaurants/ Food Processing		27		5,034		1.6	%		156		0.5	%
Siemens	Manufacturing/Flex and R&D		2		4,862		1.6	%		545		1.8	%
Big Tex Trailers	Automotive/Distribution & Warehouse/Manufacturing/ Corporate Headquarters		17		4,860		1.6	%		1,302		4.3	%
Total Top 10 Brands			162	$	57,653		18.4	%		5,319		17.6	%

Wendy's	Quick Service Restaurants		31	$	4,532		1.5	%		88		0.3	%
Outback Steakhouse	Casual Dining		20		4,492		1.4	%		126		0.4	%
Nestle'	Cold Storage		1		4,409		1.4	%		310		1.0	%
Arkansas Surgical Hospital	Surgical		1		4,260		1.4	%		129		0.4	%
Nationwide Mutual Insurance Co.	Strategic Operations		2		4,248		1.4	%		407		1.3	%
Cascade Aerospace	Manufacturing		1		4,187		1.4	%		231		0.8	%
Value City Furniture	Home Furnishings		6		4,142		1.3	%		474		1.6	%
Taco Bell	Quick Service Restaurants		31		4,101		1.3	%		80		0.3	%
Tractor Supply Co.	General Merchandise		15		3,872		1.2	%		300		1.0	%
Chiquita	Food Processing		1		3,869		1.2	%		335		1.1	%
Total Top 20 Brands			271	$	99,765		31.9	%		7,799		25.8	%

Diversification: Property Type

(unaudited, rent percentages based on ABR)

Diversification: Property Type (continued)

(unaudited)


Property Type	# Properties		ABR ($'000s)		ABR as a % of Total Portfolio			Square Feet ('000s)		SF as a % of Total Portfolio
Industrial
Distribution & Warehouse		42	$	46,668		14.9	%		8,950		29.6	%
Manufacturing		56		42,724		13.6	%		7,732		25.6	%
Food Processing		14		18,455		5.9	%		2,132		7.1	%
Flex and R&D		7		16,934		5.4	%		1,457		4.8	%
Cold Storage		4		12,600		4.0	%		933		3.1	%
Services		19		7,787		2.5	%		445		1.5	%
Industrial Total		142		145,168		46.3	%		21,649		71.7	%
Healthcare
Clinical		50		24,831		7.9	%		1,055		3.6	%
Animal Health Services		27		10,188		3.3	%		405		1.3	%
Surgical		11		9,592		3.1	%		316		1.0	%
Healthcare Services		27		7,829		2.5	%		315		1.0	%
Life Science		9		7,539		2.4	%		549		1.8	%
Untenanted		2		—		0.0	%		23		0.1	%
Healthcare Total		126		59,979		19.2	%		2,663		8.8	%
Restaurant
Quick Service Restaurants		148		24,468		7.8	%		505		1.7	%
Casual Dining		84		19,657		6.3	%		543		1.8	%
Untenanted		2		—		0.0	%		10		0.0	%
Restaurant Total		234		44,125		14.1	%		1,058		3.5	%
Retail
General Merchandise		82		14,472		4.6	%		1,072		3.5	%
Automotive		68		12,830		4.1	%		844		2.8	%
Home Furnishings		13		6,916		2.2	%		797		2.6	%
Untenanted		2		—		0.0	%		63		0.2	%
Retail Total		165		34,218		10.9	%		2,776		9.1	%
Office
Strategic Operations		7		13,835		4.4	%		1,021		3.4	%
Corporate Headquarters		6		10,167		3.3	%		671		2.2	%
Call Center		4		5,731		1.8	%		392		1.3	%
Office Total		17		29,733		9.5	%		2,084		6.9	%
Total		684	$	313,223		100.0	%		30,230		100.0	%

Key Statistics by Property Type


Industrial
Number of properties	142
Square feet (000s)	21,649
Weighted average lease term (years)	10.4
Weighted average annual rent escalation	2.0	%

Healthcare
Number of properties	126
Square feet (000s)	2,663
Weighted average lease term (years)	8.1
Weighted average annual rent escalation	2.2	%

Restaurants
Number of properties	234
Square feet (000s)	1,058
Weighted average lease term (years)	15.4
Weighted average annual rent escalation	2.0	%

Retail
Number of properties	165
Square feet (000s)	2,776
Weighted average lease term (years)	11.0
Weighted average annual rent escalation	1.6	%

Office
Number of properties	17
Square feet (000s)	2,084
Weighted average lease term (years)	6.9
Weighted average annual rent escalation	2.4	%

Diversification: Tenant Industry
(unaudited)


Industry	# Properties		ABR ($'000s)		ABR as a % of Total Portfolio			Square Feet ('000s)		SF as a % of Total Portfolio
Healthcare Facilities		99	$	47,073		15.0	%		1,874		6.2	%
Restaurants		234		44,788		14.3	%		1,082		3.6	%
Distributors		24		13,889		4.4	%		2,519		8.3	%
Food Distributors		7		12,957		4.1	%		1,556		5.1	%
Auto Parts & Equipment		39		12,396		4.0	%		2,387		7.9	%
Specialized Consumer Services		47		12,004		3.8	%		720		2.4	%
Packaged Foods & Meats		6		11,390		3.6	%		1,130		3.7	%
Metal & Glass Containers		8		9,686		3.1	%		2,206		7.3	%
Healthcare Services		18		9,018		2.9	%		515		1.7	%
Home Furnishing Retail		16		8,696		2.8	%		1,149		3.8	%
Specialty Stores		19		8,279		2.7	%		1,023		3.4	%
Aerospace & Defense		6		7,825		2.5	%		921		3.0	%
Electronic Components		2		6,658		2.1	%		466		1.6	%
Air Freight & Logistics		3		6,516		2.1	%		436		1.5	%
General Merchandise Stores		60		6,090		2.0	%		533		1.8	%
Other (40 industries)		90		95,958		30.6	%		11,617		38.4	%
Untenanted properties		6		—		—			96		0.3	%
Total		684	$	313,223		100.0	%		30,230		100.0	%

Diversification: Geography

(unaudited, rent percentages based on ABR)


State	# Properties		ABR ($'000s)		ABR as a % of Total Portfolio			Square Feet ('000s)		SF as a % of Total Portfolio			State	# Properties		ABR ($'000s)		ABR as a % of Total Portfolio			Square Feet ('000s)		SF as a % of Total Portfolio
TX		59	$	32,074		10.2	%		3,366		11.1	%	MO		10	$	4,781		1.5	%		959		3.2	%
IL		26	$	19,922		6.4	%		1,991		6.6	%	WA		15	$	4,185		1.3	%		150		0.5	%
FL		47	$	16,345		5.2	%		859		2.8	%	KY		18	$	4,110		1.3	%		338		1.1	%
CA		11	$	15,735		5.0	%		1,554		5.1	%	LA		3	$	3,128		1.0	%		175		0.6	%
WI		32	$	15,655		5.0	%		1,611		5.3	%	NE		6	$	2,967		0.9	%		509		1.7	%
MI		35	$	14,762		4.7	%		1,439		4.8	%	MD		4	$	2,903		0.9	%		293		1.0	%
OH		34	$	14,149		4.5	%		1,364		4.5	%	NM		8	$	2,764		0.9	%		96		0.3	%
NC		35	$	12,810		4.1	%		1,308		4.3	%	MS		8	$	2,736		0.9	%		334		1.1	%
MN		21	$	12,761		4.1	%		2,029		6.7	%	IA		4	$	2,704		0.9	%		622		2.1	%
IN		29	$	12,690		4.0	%		1,759		5.8	%	SC		13	$	2,466		0.8	%		308		1.0	%
PA		16	$	10,923		3.5	%		1,416		4.7	%	WV		16	$	2,456		0.8	%		109		0.4	%
TN		43	$	10,694		3.4	%		516		1.7	%	UT		3	$	2,328		0.7	%		280		0.9	%
NY		26	$	10,532		3.4	%		680		2.3	%	CT		2	$	1,690		0.5	%		55		0.2	%
MA		5	$	10,286		3.3	%		1,026		3.4	%	MT		7	$	1,544		0.5	%		43		0.1	%
AZ		8	$	8,553		2.7	%		761		2.5	%	CO		3	$	1,434		0.5	%		94		0.3	%
AL		44	$	7,981		2.5	%		186		0.6	%	NV		2	$	1,311		0.4	%		81		0.3	%
AR		11	$	7,385		2.4	%		282		0.9	%	DE		4	$	1,124		0.4	%		133		0.4	%
GA		21	$	7,334		2.3	%		1,056		3.5	%	ND		2	$	933		0.3	%		28		0.1	%
OK		20	$	7,080		2.3	%		944		3.1	%	WY		1	$	307		0.1	%		21		0.1	%
VA		17	$	5,364		1.7	%		204		0.7	%	VT		1	$	305		0.1	%		15		0.1	%
KS		10	$	4,925		1.6	%		639		2.1	%	Total US		683	$	309,036		98.6	%		29,999		99.2	%
NJ		3	$	4,900		1.6	%		366		1.2	%	Total Canada		1		4,187		1.4	%		231		0.8	%
													Grand Total		684	$	313,223		100.0	%		30,230		100.0	%

Lease Expirations

(unaudited, rent percentages based on ABR)


Expiration Year	# Properties		ABR ($'000s)		ABR as a % of Total Portfolio			Square Feet ('000s)		SF as a % of Total Portfolio
2021		2	$	294		0.1	%		37		0.1	%
2022		3		2,410		0.8	%		85		0.3	%
2023		6		4,848		1.5	%		515		1.7	%
2024		11		13,811		4.4	%		1,689		5.6	%
2025		19		7,872		2.5	%		682		2.3	%
2026		34		18,626		5.9	%		1,404		4.6	%
2027		27		23,148		7.4	%		2,010		6.7	%
2028		36		27,307		8.7	%		2,746		9.1	%
2029		66		20,638		6.6	%		2,647		8.8	%
2030		96		51,029		16.3	%		5,030		16.6	%
2031		23		7,527		2.4	%		737		2.4	%
2032		44		25,963		8.3	%		3,014		10.0	%
2033		42		16,858		5.4	%		1,717		5.7	%
2034		32		5,817		1.9	%		376		1.2	%
2035		16		11,461		3.7	%		1,552		5.1	%
2036		82		23,320		7.4	%		2,506		8.3	%
2037		24		17,256		5.5	%		1,367		4.5	%
2038		33		6,805		2.2	%		306		1.0	%
2039		12		9,066		2.9	%		933		3.1	%
2040		33		5,906		1.9	%		317		1.1	%
Thereafter		37		13,261		4.2	%		464		1.5	%
Untenanted properties		6		—		—			96		0.3	%
Total		684	$	313,223		100.0	%		30,230		100.0	%

Portfolio Occupancy

(unaudited, based on square feet)

Definitions and Explanations

Adjusted NOI, Annualized Adjusted NOI, Adjusted Cash NOI and Annualized Adjusted Cash NOI: Our reported results and net earnings per diluted share are presented in accordance with accounting principles generally accepted in the United States of America (GAAP). Adjusted NOI and Adjusted Cash NOI are non-GAAP financial measures that we believe are useful to assess property-level performance. We compute Adjusted NOI by adjusting Adjusted EBITDAre (defined below) to exclude general and administrative expenses incurred at the corporate level. Given the net lease nature of our portfolio, we do not incur general and administrative expenses at the property level. To compute Adjusted Cash NOI, we adjust Adjusted NOI to exclude non-cash items included in total revenues and property expenses, such as straight-line rental revenue and other amortization and non-cash items, based on an estimate calculated as if all investment and disposition activity that took place during the quarter had occurred on the first day of the quarter. We then annualize quarterly Adjusted NOI and Adjusted Cash NOI by multiplying each amount by four to compute Annualized Adjusted NOI and Annualized Adjusted Cash NOI, respectively, which are also non-GAAP financial measures. We believe Adjusted NOI and Adjusted Cash NOI provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis. We believe that the exclusion of certain non-cash revenues and expenses from Adjusted Cash NOI is a useful supplemental measure for investors to consider because it will help them to better assess our operating performance without the distortions created by non-cash revenues or expenses. You should not unduly rely on Annualized Adjusted NOI and Annualized Adjusted Cash NOI as they are based on assumptions and estimates that may prove to be inaccurate. Our actual reported Adjusted NOI and Adjusted Cash NOI for future periods may be significantly different from our Annualized Adjusted NOI and Annualized Adjusted Cash NOI. Additionally, our computation of Adjusted NOI and Adjusted Cash NOI may differ from the methodology for calculating these metrics used by companies in our industry, and, therefore, may not be comparable to similarly titled measures reported by other companies.

Annualized Base Rent (ABR): We define ABR as the annualized contractual cash rent due for the last month of the reporting period, excluding the impacts of the short-term rent deferrals and abatements agreed to as a result of tenant requests for rent relief related to the COVID-19 pandemic, and adjusted to remove rent from properties sold during the month and to include a full month of contractual cash rent for properties acquired during the last month.

Cash Cap Rate: Cash Cap Rate represents the estimated first year cash yield to be generated on a real estate investment property, which was estimated at the time of investment based on the contractually specified cash base rent for the first full year after the date of the investment, divided by the purchase price for the property.

EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre: EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre are non-GAAP financial measures. We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. EBITDA is a measure commonly used in our industry. We believe that this ratio provides investors and analysts with a measure of our performance that includes our operating results unaffected by the differences in capital structures, capital investment cycles and useful life of related assets compared to other companies in our industry. We compute EBITDAre in accordance with the definition adopted by Nareit. Nareit defines EBITDAre as EBITDA excluding gains (loss) from the sales of depreciable property and provisions for impairment on investment in real estate. We believe EBITDA and EBITDAre are useful to investors and analysts because they provide important supplemental information about our operating performance exclusive of certain non-cash and other costs. Adjusted EBITDAre represents EBITDAre, adjusted to reflect revenue producing acquisitions and dispositions for the quarter as if such acquisitions and dispositions had occurred as of the beginning of the quarter, and to exclude certain GAAP income and expense amounts that are either non-cash, such as cost of debt extinguishments or the change in fair value of our earnout liability, or that we believe are one time, or unusual in nature because they relate to unique circumstances or transactions that had not previously occurred and which we do not anticipate occurring in the future, and to eliminate the impact of lease termination fees, and other items that are not a result of normal operations. We then annualize quarterly Adjusted EBITDAre by multiplying it by four to compute Annualized Adjusted EBITDAre. Our reported EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre may not be comparable to similarly titled measures of other companies. You should not consider these measures as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.

Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO): FFO and AFFO are non-GAAP measures. We believe the use of FFO and AFFO are useful to investors because they are widely accepted industry measures used by analysts and investors to compare the operating performance of REITs. FFO and AFFO should not be considered alternatives to net income as a performance measure or to cash flows from operations, as reported on our statement of cash flows, or as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. We compute FFO in accordance with the standards established by Nareit, which defines FFO as GAAP net income or loss adjusted to exclude net gains (losses) from sales of certain depreciated real estate assets, depreciation and amortization expense from real estate assets, gains and losses from change in control, and impairment charges related to certain previously depreciated real estate assets. To derive AFFO, we modify the Nareit computation of FFO to include other adjustments to GAAP net income related to certain non-cash and non-recurring revenues and expenses, including straight-line rents, the change in fair value of our earnout liability, cost of debt extinguishments, amortization of lease intangibles, amortization of debt issuance costs, amortization of net mortgage premiums, (gain) loss on interest rate swaps and other non-cash interest expense, realized gains or losses on foreign currency transactions, internalization expenses, stock based compensation, severance, extraordinary items, and other specified non-cash items. We believe excluding such items assists management and investors in distinguishing whether changes in our operations are due to growth or decline of operations at our properties or from other factors.

Definitions and Explanations (continued)

Gross Debt: We define Gross Debt as total debt plus deferred financing costs.

Net Debt: Net Debt is a non-GAAP financial measure. We define Net Debt as our Gross Debt less cash and cash equivalents and restricted cash.

Occupancy: Occupancy or a specified percentage of our portfolio that is “occupied” means as of a specified date the quotient of (1) the total rentable square footage of our properties minus the square footage of our properties that are vacant and from which we are not receiving any rental payment, and (2) the total square footage of our properties.

Rent Coverage Ratio: Rent Coverage Ratio means the ratio of tenant-reported or, when available, management’s estimate, based on tenant-reported financial information, of annual earnings before interest, taxes, depreciation, amortization, and cash rent attributable to the leased property (or properties, in the case of a master lease) to the annualized base rental obligation as of a specified date.