VEREIT, Inc. - FORM 8-K - EX-99.4

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Exhibit 99.4

LOGO

American Realty Capital Properties, Inc.

Table of Contents

Third Quarter Ended September 30, 2014

Table of Contents


Introductory Notes			1

Company Information			2

Summary of Company and Financial Highlights			4

Consolidated Balance Sheets			5

Consolidated Statements of Operations			6

Segment Reporting			7

Reconciliation of GAAP Net Income to Normalized EBITDA			9

Funds From Operations and Adjusted Funds From Operations			10

Adjusted G&A			12

Financial and Operational Statistics and Ratios			13

Debt and Preferred Equity Summary			14

Mortgage Notes Payable			15

Bond and Line of Credit Covenants			18

Top 10 Concentrations			19

Tenants Comprising Over 1% of Annualized Rental Income			20

Tenant Industry Diversification			21

Property Geographic Diversification			22

Property Building Type Diversification			23

Lease Expirations			24

Unconsolidated Joint Venture Investment Summary			27

Managed Programs			28

Definitions			31

American Realty Capital Properties, Inc.

Introductory Notes

The financial data and other information described in this Quarterly Supplement are as of the date this Quarterly Supplement was filed or an earlier date where indicated. Future performance may not be consistent with past performance and is subject to change with inherent risks and uncertainties.

This Quarterly Supplement contains certain statements that are the Company’s (as defined below) and its management’s hopes, intentions, beliefs, expectations or projections of the future and might be considered to be forward-looking statements under Federal securities laws. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve inherent risks and uncertainties. The Company’s actual future results may differ significantly from the matters discussed in these forward-looking statements, and we do not undertake to, and may not, release revisions to these forward-looking statements to reflect changes after we have made the statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including, but not limited to, the Company’s Amended Annual Report on Form 10-K/A filed with the SEC, the Company’s Quarterly Reports on Form 10-Q and amendments thereto filed with the SEC, as well as other reports and Company press releases filed with the SEC.

This Quarterly Supplement includes certain combined consolidated financial information. We use the terms “on a combined basis” throughout this Quarterly Supplement. The consolidated financial information combines the historical financial statements of American Realty Capital Properties, Inc. (“ARCP”, the “Company”, “we”, “us” and “our”), American Realty Capital Trust III, Inc. (“ARCT III”) and American Realty Capital Trust IV, Inc. (“ARCT IV”) after giving effect to the mergers of ARCT III and ARCT IV with and into a wholly owned subsidiary of ARCP and ARCP’s operating partnership (the “ARCT III Merger” and “ARCT IV Merger”), respectively, using the carryover basis of accounting as ARCP, ARCT III and ARCT IV were considered to be entities under common control under United States generally accepted accounting principles (“U.S. GAAP”). The consolidated financial information should be read in conjunction with ARCP’s historical consolidated financial statements including the notes thereto, and the notes to the consolidated financial statements contained in its Quarterly Report on Form 10-Q for the period ended September 30, 2014.

The combined consolidated financial information is presented for illustrative purposes only and does not purport to be indicative of the results that would actually have occurred if the ARCT III Merger and the ARCT IV Merger had occurred as presented in such statements. In addition, future results may vary significantly from the results reflected in such statements.

Definitions of specialized terms can be found at the end of this presentation beginning on page 31.

American Realty Capital Properties, Inc.

Company Information

Company Profile

American Realty Capital Properties, Inc. is a self-managed and self-administered real estate company, incorporated in Maryland on December 2, 2010 that qualified as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning in the taxable year ended December 31, 2011. On September 6, 2011, the Company completed its initial public offering. Our business operates in two segments, Real Estate Investment (“REI”) and Cole Capital^®, the Company’s private capital management segment (“Cole Capital”). Through our REI segment, we acquire, own and operate single-tenant, freestanding commercial properties, primarily subject to long-term net leases with high credit quality tenants. We seek to acquire net lease assets granularly, by self-originating or purchasing such assets, or executing sale-leaseback transactions, small portfolio acquisitions and in connection with build-to-suit or forward take-out opportunities, to the extent they are appropriate in terms of capitalization rate and scale. Our high-quality property portfolio is generally net leased to corporate tenants. These tenants are primarily investment-grade rated (approximately 45% as of September 30, 2014), occupying properties located at the corner of “Main & Main” and in other strategic locations.

Cole Capital is responsible for raising capital for, managing the affairs of and identifying and making acquisitions and investments on behalf of non-traded REITs sponsored indirectly by the Company (the “Managed Programs”) on a day-to-day basis. We receive compensation and reimbursement for services relating to the Managed Programs’ offerings and the investment, management, financing and disposition of their respective assets, as applicable. Cole Capital allows us to generate earnings without the corresponding need to invest capital in that business or incur balance sheet debt in order to fund or expand operations. Cole Capital also develops new REIT offerings and coordinates receipt of regulatory approvals from the SEC, the Financial Industry Regulatory Authority, Inc. and various jurisdictions for such offerings. At the appropriate time, Cole Capital recommends to each of the Managed Program’s respective board of directors an approach for providing investors with liquidity.

ARCP’s common shares and Series F preferred shares trade on the NASDAQ Global Select Market under the tickers symbol “ARCP” and “ARCPP,” respectively.

Company Mission

Our mission is to provide our investors with income and growth potential while preserving investor capital through a professionally managed investment strategy focused on investment-grade corporate tenants occupying properties subject to medium-term and long-term net leases in strategic locations. We believe this approach enables us to generate attractive risk-adjusted returns for our investors. Management adheres to a strict code of industry best practices designed to put the investor first and to align the interests of our stockholders with those of management. These practices include a best of class management team, properly sized equity raises, pay-for-performance, prudent use of leverage and coverage of distributions from cash flows generated by operations. Our Company culture is established on ethical values and a commitment to approaching every decision through the eyes of the investors we serve.

Investment Strategy

Our investment strategy is designed to generate monthly dividends from a predictable level of monthly rents paid by primarily investment-grade rated and other credit worthy tenants under long-term leases. Our ongoing focus will be on actively managing our portfolio of high-quality, well located net leased properties diversified by tenant, industry and geography. We intend to strategically reinvest certain disposition process into core, single-tenant net lease real estate that maintains or improves the quality of our portfolio while seeking self-originated investment opportunities. Previously, we advanced our investment objectives by growing our net lease portfolio not only through granular self-originated acquisitions, but through strategic mergers and acquisitions. On February 28, 2013, ARCP completed its merger with ARCT III. On June 27, 2013, ARCP acquired a large portfolio from affiliates of GE Capital. On November 5, 2013, ARCP acquired CapLease, Inc. On January 3, 2014, ARCP acquired ARCT IV. On January 8, 2014, ARCP completed the acquisition of a large portfolio from affiliates of funds managed by Fortress Investment Group LLC. On February 7, 2014, ARCP acquired Cole Real Estate Investments, Inc. (“Cole”). On March 28, 2014, ARCP completed the acquisition of a large portfolio from Inland American Real Estate Trust, Inc. On May 19, 2014, ARCP acquired Cole Credit Property Trust, Inc. (“CCPT”). Finally, on July 30, 2014, ARCP completed the acquisition of the Red Lobster portfolio. As part of our focus on owing and managing single-tenant properties, we completed the sale of our multi-tenant shopping center portfolio to Blackstone-DDR joint venture on October 17, 2014.

American Realty Capital Properties, Inc.

Company Information


Senior Management		Board of Directors
William G. Stanley, Interim Chief Executive Officer		William G. Stanley, Interim Chairman

Michael J. Sodo, Executive Vice President, Chief Financial Officer and Treasurer		Thomas A. Andruskevich, Lead Independent Director

Gavin B. Brandon, Senior Vice President and Chief Accounting Officer		Governor Edward G. Rendell, Independent Director

Richard A. Silfen, Executive Vice President, General Counsel and Secretary		Leslie D. Michelson, Independent Director

		Bruce D. Frank, Independent Director

Corporate Offices and Contact Information


2325 E. Camelback Road, Suite 1100		1065 Avenue of the Americas, Floor 23

Phoenix, AZ 85016		New York, NY 10018

800-606-3610		212-413-9100

www.arcpreit.com

Trading Symbols: ARCP, ARCPP

Stock Exchange Listing: NASDAQ Global Select Market

Transfer Agent

Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

800-736-3001

American Realty Capital Properties, Inc.

Summary of Company and Financial Highlights

Company Highlights

Selected operating highlights for the quarter include:

Third Quarter 2014 Consolidated Highlights

•

Revenue increased $361.9 million to $457.1 million over restated prior year third quarter results

•

Net loss increased $200.2 million to ($280.4) million over restated prior year third quarter results, which includes a $256.9 million loss primarily due to the multi-tenant portfolio held for sale at September 30, 2014

•

FFO, on a gross method basis, increased $214.9 million to $195.8 million over restated prior year third quarter results

•

AFFO, on a gross method basis, per diluted share decreased $0.02 from the restated prior year third quarter to $0.26

•

Acquired $2.3 billion of real estate in the third quarter with a cash cap rate of 7.7%, including the approximate $1.7 billion Red Lobster sale-leaseback transaction

•

Sold seven properties for total net proceeds of $73.1 million

•

With proceeds from the line of credit, repaid $199.1 million of debt, with an average maturity of 5.9 years and a weighted average interest rate of 6.5%, and $316.1 million of Series D Preferred

•

Invested $1.1 billion in 228 properties on behalf of the Cole Capital^® managed funds

Third Quarter Real Estate Segment Highlights

•

Revenue and net loss of $397.3 million and ($289.1) million, respectively

•

AFFO, on a gross method basis, per diluted share decreased $0.05 to $0.23 over restated prior year third quarter results

•

Normalized EBITDA increased $288.8 million to $333.2 million over restated prior year third quarter results

•

Acquired $2.3 billion of real estate in the third quarter with a cash cap rate of 7.7%, including the approximate $1.7 billion Red Lobster sale-leaseback transaction and sold seven properties for total net proceeds of $73.1 million

•

With proceeds from the line of credit, repaid $199.1 million of debt, with an average maturity of 5.9 years and a weighted average interest rate of 6.5%, and $316.1 million of Series D Preferred

•

Total portfolio occupancy of 99.2%, investment grade tenancy of 45.0% and a weighted average remaining lease term of 11.5 years as of September 30, 2014

Third Quarter Cole Capital^® Segment Highlights

•

Revenue and net income of $59.8 million and $1.1 million, respectively

•

AFFO, on a gross method basis, of $0.03 per diluted share and normalized EBITDA of $30.8 million

•

Raised $260.8 million of capital on behalf of the managed REITs bringing the year to date total as of September 30, 2014, to approximately $1.3 billion

•

Structured $1.1 billion of real estate acquisitions and $700.1 million of real estate financing on behalf of the Cole Capital managed funds

•

The Company did not own Cole Capital in the prior year period

Dividends

ARCP is currently reviewing its dividend policy and determining a common stock dividend in line with its industry peers.

American Realty Capital Properties, Inc.

Consolidated Balance Sheets

(in 000’s)


	September 30, 2014			June 30, 2014 (as restated)¹			March 31, 2014 (as restated)¹			December 31, 2013 (as restated)¹			September 30, 2013 (as restated)¹
ASSETS
Real estate investments, at cost:
Land	$	3,487,824		$	3,343,235		$	3,224,257		$	1,380,308		$	1,013,888
Buildings, fixtures and improvements		12,355,029			12,420,626			11,836,655			5,297,400			3,549,272
Land and construction in progress		86,973			62,594			40,459			21,839			—
Acquired intangible lease assets		2,424,076			2,227,393			2,209,902			759,595			550,658

Total real estate investments, at cost		18,353,902			18,053,848			17,311,273			7,459,142			5,113,818
Less: accumulated depreciation and amortization		(828,624	)		(660,617	)		(428,566	)		(267,278	)		(179,016	)

Total real estate investments, net		17,525,278			17,393,231			16,882,707			7,191,864			4,934,802
Investment in unconsolidated entities		100,762			102,047			105,775			—			—
Investment in direct financing leases, net		57,441			62,094			65,723			66,112			75,403
Investment securities, at fair value		59,131			219,204			213,803			62,067			9,480
Loans held for investment, net		96,981			97,587			98,185			26,279			—
Cash and cash equivalents		145,310			195,529			83,216			52,725			188,226
Restricted cash		72,754			69,544			55,559			35,921			1,680
Intangible assets, net		323,332			347,618			371,634			—			—
Deferred costs and other assets, net		446,606			418,199			304,097			280,661			132,851
Goodwill		2,096,450			2,293,020			2,298,677			92,789			—
Due from affiliates		55,666			73,686			8,719			—			—
Assets held for sale		1,887,872			38,737			—			665			6,014

Total assets	$	22,867,583		$	21,310,496		$	20,488,095		$	7,809,083		$	5,348,456


LIABILITIES AND EQUITY
Mortgage notes payable, net	$	3,782,407		$	4,227,494		$	4,234,074		$	1,301,114		$	272,015
Corporate bonds, net		2,546,294			2,546,089			2,545,884			—			—
Convertible debt, net		976,251			975,003			973,737			972,490			300,975
Credit facilities		4,259,000			1,896,000			2,415,800			1,969,800			1,310,000
Convertible obligation to Series C Convertible Preferred stockholders		—			—			—			—			449,827
Contingent value rights obligation to preferred and common investors		—			—			—			—			49,314
Other debt, net		48,587			146,158			148,809			104,804			—
Below-market lease liabilities, net		318,494			281,954			286,579			77,169			3,580
Accounts payable and accrued expenses		180,338			174,942			149,542			730,571			670,972
Deferred rent, derivative and other liabilities		195,256			223,419			206,105			40,271			12,987
Distributions payable		9,927			10,779			11,233			10,903			10,318
Due to affiliates		2,757			3,184			2,614			103,434			6,107
Liabilities associated with assets held for sale		545,382			—			—			—			—

Total liabilities		12,864,693			10,485,022			10,974,377			5,310,556			3,086,095

Series D Preferred stock		—			269,299			269,299			269,299			—

Series F Preferred stock		428			427			427			422			422
Common stock		9,080			9,079			7,699			2,392			2,223
Additional paid-in capital		11,905,338			11,901,675			10,302,168			2,940,907			2,710,990
Accumulated other comprehensive income		8,600			7,058			8,463			7,666			4,885
Accumulated deficit		(2,182,731	)		(1,639,208	)		(1,358,743	)		(877,957	)		(599,793	)

Total stockholders’ equity		9,740,715			10,279,031			8,960,014			2,073,430			2,118,727
Non-controlling interests		262,175			277,144			284,405			155,798			143,634

Total equity		10,002,890			10,556,175			9,244,419			2,229,228			2,262,361

Total liabilities and equity	$	22,867,583		$	21,310,496		$	20,488,095		$	7,809,083		$	5,348,456

(1)	For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements in the relevant filing for such period made on March 2, 2015.

American Realty Capital Properties, Inc.

Consolidated Statements of Operations ⁽¹⁾

(in 000’s, except per share data)


	Quarter Ended
	September 30, 2014			June 30, 2014 (as restated)²			March 31, 2014 (as restated)²			December 31, 2013 (as restated)²			September 30, 2013 (as restated)²
Revenues:
Rental income	$	365,712		$	314,519		$	244,415		$	127,257		$	89,729
Direct financing lease income		625			1,181			1,006			1,043			1,201
Operating expense reimbursements		30,984			29,256			21,476			8,055			4,325
Cole Capital revenues		59,797			37,222			54,257			—			—

Total revenues		457,118			382,178			321,154			136,355			95,255

Operating expenses:
Cole Capital reallowed fees and commissions		15,398			7,068			34,436			—			—
Acquisition related		13,998			7,201			13,417			1,572			26,948
Merger and other non-routine transactions		7,632			7,422			160,298			76,809			4,301
Property operating		40,977			39,286			29,755			12,551			5,430
Management fees to affiliates		—			—			13,888			4,969			—
General and administrative		32,207			40,012			56,492			99,252			9,866
Depreciation and amortization		265,150			250,739			173,842			88,492			62,136
Impairment of real estate		2,299			1,556			—			1,272			2,074

Total operating expenses		377,661			353,284			482,128			284,917			110,755

Operating income (loss)		79,457			28,894			(160,974	)		(148,562	)		(15,500	)
Other (expense) income:
Interest expense, net		(101,643	)		(103,897	)		(120,951	)		(60,134	)		(27,189	)
Extinguishment of debt, net		(5,396	)		(6,469	)		(9,399	)		—			—
Other income, net		7,556			11,936			10,210			1,166			136
Loss on derivative instruments, net		(17,484	)		14,207			(7,121	)		1,884			(38,651	)
Loss on held for sale assets and disposition of properties, net		(256,894	)		(1,269	)		(17,605	)		—			—
Loss on sale of investments in affiliates		—			—			—			(411	)		—
Gain (loss) on sale of investments		6,357			—			—			—			(2,246	)

Total other expenses, net		(367,504	)		(85,492	)		(144,866	)		(57,495	)		(67,950	)

Net loss from continuing operations		(288,047	)		(56,598	)		(305,840	)		(206,057	)		(83,450	)
Discontinued operations:
Income from operations of held for sale assets		—			—			—			(193	)		96

Net income from discontinued operations		—			—			—			(193	)		96

Net loss		(288,047	)		(56,598	)		(305,840	)		(206,250	)		(83,354	)
Net loss attributable to non-controlling interests		7,649			1,878			14,396			8,434			3,153

Net loss attributable to the Company		(280,398	)		(54,720	)		(291,444	)		(197,816	)		(80,201	)


Basic and diluted net loss per share from continuing operations attributable to common stockholders	$	(0.35	)	$	(0.10	)	$	(0.58	)	$	(0.85	)	$	(0.36	)
Basic and diluted net loss per share from discontinued operations attributable to common stockholders	$	—		$	—		$	—		$	—		$	—

(1)	Certain historical balances have been restated to reflect discontinued operations.

(2)	For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements in the relevant filing for such period made on March 2, 2015.

American Realty Capital Properties, Inc.

Segment Reporting

The Company operates under two business segments - REI and Cole Capital. The following tables present a summary of the financial results and total assets for each business segment (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
				2013						2013
	2014			(as restated)¹			2014			(as restated)¹
REI:
Rental income	$	365,712		$	89,729		$	924,646		$	183,251
Direct financing lease income		625			1,201			2,812			1,201
Operating expense reimbursements		30,984			4,325			81,716			8,516

Total real estate investment revenues		397,321			95,255			1,009,174			192,968

Acquisition related		13,998			26,948			34,616			74,541
Merger and other non-routine transactions		7,613			4,301			173,406			133,734
Property operating		40,977			5,430			110,018			11,065
General and administrative		14,942			9,866			68,580			23,921
Management fees to affiliate		—			—			13,888			12,493
Depreciation and amortization		240,073			62,136			625,521			122,484
Impairment of real estate		2,299			2,074			3,855			2,074

Total operating expenses		319,902			110,755			1,029,884			380,312

Operating income (loss)		77,419			(15,500	)		(20,710	)		(187,344	)

Interest expense, net		(101,643	)		(27,189	)		(326,491	)		(45,414	)
Extinguishment of debt, net		(5,396	)		—			(21,264	)		—
Other income, net		8,508			136			16,799			2,658
Loss on derivative instruments, net		(17,484	)		(38,651	)		(10,398	)		(69,830	)
Loss on held for sale assets and disposition of properties, net		(256,894	)		—			(275,768	)		—
Gain (loss) on sale of investments		6,357			(2,246	)		6,357			(1,795	)

Total other expenses, net		(366,552	)		(67,950	)		(610,765	)		(114,381	)

Net loss from continuing operations		(289,133	)		(83,450	)		(631,475	)		(301,725	)

Discontinued operations:
Income from operations of held for sale assets		—			96			—			159

Net income from discontinued operations		—			96			—			159

Net loss	$	(289,133	)	$	(83,354	)	$	(631,475	)	$	(301,566	)


Cole Capital
Dealer manager and distribution fees, selling commissions and offering reimbursements	$	21,535		$	—		$	73,957		$	—
Transaction service fees		22,972			—			41,942			—
Management fees and reimbursements		15,290			—			35,377			—

Total Cole Capital revenues		59,797			—			151,276			—

Cole Capital reallowed fees and commissions		15,398			—			56,902			—
General and administrative expenses		17,265			—			60,131			—
Merger and other non-routine transactions		19			—			1,946			—
Depreciation and amortization		25,077			—			64,210			—

Total operating expenses		57,759			—			183,189			—

Total other income		(952	)		—			12,903			—

Net Income (Loss)		1,086			—			(19,010	)		—


Total Company:
Total revenues	$	457,118		$	95,255		$	1,160,450		$	192,968
Total operating expenses	$	377,661		$	110,755		$	1,213,073		$	380,312
Total interest and other expense, net	$	(367,504	)	$	(67,950	)	$	(597,862	)	$	(114,381	)
Loss from continuing operations	$	(288,047	)	$	(83,450	)	$	(650,485	)	$	(301,725	)
Income (loss) from discontinued operations	$	—		$	96		$	—		$	159
Net loss	$	(288,047	)	$	(83,354	)	$	(650,485	)	$	(301,566	)

(1)	For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements in the relevant filing for such period made on March 2, 2015.

American Realty Capital Properties, Inc.

Segment Reporting


	Total Assets as of
	September 30, 2014		December 31, 2013 (as restated)¹
REI	$	21,834,806	$	7,809,083
Cole Capital		1,032,777		—

Total company	$	22,867,583	$	7,809,083

(1)	For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements in the relevant filing for such period made on March 2, 2015.

American Realty Capital Properties, Inc.

Reconciliation of GAAP Net Income to Normalized EBITDA ⁽¹⁾

The calculations of EBITDA and Normalized EBITDA, and reconciliation to net income, which is the most directly comparable GAAP measure, are presented in the table below (in thousands):


	Three Months Ended September 30, 2014								Three Months Ended September 30, 2013 (as restated)²
	Total			REI			Cole Capital		Total			REI			Cole Capital
Net income (loss)	$	(288,047	)	$	(289,133	)	$	1,086	$	(83,354	)	$	(83,354	)	$	—
Adjustments:
Interest expense		101,643			101,643			—		27,189			27,189			—
Depreciation and amortization		265,150			240,073			25,077		62,136			62,136			—
Income tax expense		1,131			—			1,131		—			—			—

EBITDA		79,877			52,583			27,294		5,971			5,971			—

Management adjustments:
Loss on held for sale assets and disposition of properties, net		256,894			256,894			—		—						—
Acquisition related		13,998			13,998			—		26,948			26,948			—
Merger and other non-routine transactions		7,632			7,613			19		4,301			4,301			—
Equity based compensation		5,541			2,086			3,455		7,190			7,190			—

Normalized EBITDA	$	363,942		$	333,174		$	30,768	$	44,410		$	44,410		$	—

(1)	EBITDA and Normalized EBITDA are non-GAAP measures. See the Terms and Definitions section that begins on page 31 for a description of the Company’s non-GAAP measures.

(2)	For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements in the relevant filing for such period made on March 2, 2015.

American Realty Capital Properties, Inc.

Funds From Operations and Adjusted Funds From Operations ⁽¹⁾

(in 000’s, except per share data)


	Three Months Ended
	September 30, 2014			June 30, 2014 (as restated)²			March 31, 2014 (as restated)²			December 31, 2013 (as restated)²			September 30, 2013 (as restated)²
Total Company:
Net loss	$	(288,047	)	$	(56,598	)	$	(305,840	)	$	(206,249	)	$	(83,354	)
Dividends on Series F Preferred Stock		(17,974	)		(17,773	)		(17,374	)		—			—

Adjusted net loss		(306,021	)		(74,371	)		(323,214	)		(206,249	)		(83,354	)
Gain on disposition of property		256,894			1,269			17,605			—			—
Depreciation and amortization of real estate assets		240,046			225,940			159,461			88,320			62,136
Impairment of real estate		2,299			1,556			—			1,272			2,074
Proportionate share of adjustments for unconsolidated entities		2,580			2,573			1,344			—			—

FFO	$	195,798		$	156,967		$	(144,804	)	$	(116,657	)	$	(19,144	)


Acquisition related		13,998			7,201			13,417			1,572			26,948
Merger and other non-routine transaction related		7,632			7,422			160,298			76,809			4,301
Litigation insurance proceeds		(3,275	)		—			—			—			—
Gain (loss) on investment securities		(6,357	)		(14,207	)		—			411			2,246
(Gain) loss on derivative instruments, net		17,484			—			7,121			(1,884	)		38,651
Interest on convertible obligation to preferred investors		—			—			—			2,653			6,519
Amortization of premiums and discounts on debt and investments		(8,106	)		(4,606	)		(5,198	)		(347	)		347
Amortization of above- and below-market lease assets and liabilities, net		1,934			2,103			388			(382	)		68
Net direct financing lease adjustments		620			137			390			347			149
Amortization and write-off of deferred financing costs		12,486			10,985			44,976			20,798			4,267
Interest premium on settlement of convertible obligation to preferred investors		—			—			—			7,245			4,827
Amortization of intangible assets		24,288			24,024			13,992			—			—
Extinguishment of debt, net		5,396			6,469			9,399			—			—
Straight-line rent		(24,871	)		(17,413	)		(7,520	)		(6,461	)		(4,235	)
Non-cash equity compensation expense		5,541			5,690			21,574			86,280			7,190
Other amortization and non-cash charges		713			698			421			138			11
Proportionate share of adjustments for unconsolidated entities		1,268			464			318			—			—

AFFO	$	244,549		$	185,934		$	114,772		$	70,522		$	72,145


Weighted-average shares outstanding - basic		902,096,102			815,406,408			547,470,457			231,986,847			221,707,920
Effect of dilutive securities		44,970,255			52,613,117			51,151,928			37,448,611			39,359,194

Weighted-average shares outstanding - diluted		947,066,357			868,019,525			598,622,385			269,435,458			261,067,114

AFFO attributable to stockholders per share	$	0.26		$	0.21		$	0.19		$	0.26		$	0.28

REI:
Net loss	$	(289,133	)	$	(46,124	)	$	(296,218	)	$	(206,249	)	$	(83,354	)
Dividends on Series F Preferred Stock		(17,974	)		(17,773	)		(17,374	)		—			—

Adjusted net loss		(307,107	)		(63,897	)		(313,592	)		(206,249	)		(83,354	)
Gain on disposition of property		256,894			1,269			17,605			—			—
Depreciation and amortization of real estate assets		240,046			225,940			159,461			88,320			62,136
Impairment of real estate		2,299			2,573			1,344			(2,074	)		2,074
Proportionate share of adjustments for unconsolidated entities		2,580			1,556			—			3,346			—

FFO	$	194,712		$	167,441		$	(135,182	)	$	(116,657	)	$	(19,144	)

American Realty Capital Properties, Inc.

Funds From Operations and Adjusted Funds From Operations ⁽¹⁾

(in 000’s, except per share data)


	Three Months Ended
	September 30, 2014			June 30, 2014 (as restated)²			March 31, 2014 (as restated)²			December 31, 2013 (as restated)²			September 30, 2013 (as restated)²
Acquisition related		13,998			7,201			13,417			1,572			26,948
Merger and other non-routine transaction related		7,613			5,999			159,794			76,809			4,301
Litigation insurance proceeds		(3,275	)		—			—			—			—
Gain (loss) on investment securities		(6,357	)		—						411			2,246
(Gain) loss on derivative instruments, net		17,484			(14,207	)		7,121			(1,884	)		38,651
Interest on convertible obligation to preferred investors		—			—			—			2,653			6,519
Amortization of premiums and discounts on debt and investments		(8,106	)		(4,606	)		(5,198	)		(347	)		347
Amortization of above- and below-market lease assets and liabilities, net		1,934			2,103			388			(382	)		68
Net direct financing lease adjustments		620			137			390			347			149
Amortization and write-off of deferred financing costs		12,486			10,985			44,976			20,798			4,267
Interest premium on settlement of convertible obligation to preferred investors		—			—			—			7,245			4,827
Extinguishment of debt, net		5,396			6,469			9,399			—			—
Straight-line rent		(24,871	)		(17,413	)		(7,520	)		(6,461	)		(4,235	)
Non-cash equity compensation expense		2,086			3,575			20,640			86,280			7,190
Other amortization and non-cash charges		3			40			121			138			11
Proportionate share of adjustments for unconsolidated entities		1,268			464			318			—			—

AFFO	$	214,991		$	168,188		$	108,664		$	70,522		$	72,145


Cole Capital:
Net income (loss)	$	1,086		$	(10,474	)	$	(9,622	)	$	—		$	—

FFO	$	1,086		$	(10,474	)	$	(9,622	)	$	—		$	—


Merger and other non-routine transaction related		19			1,423			504			—			—
Amortization of intangible assets		24,288			24,024			13,992			—			—
Non-cash equity compensation expense		3,455			2,115			934			—			—
Other amortization and non-cash charges		710			658			300			—			—

AFFO		29,558			17,746			6,108			—			—

(1)	FFO and AFFO are non-GAAP measures. See the Terms and Definitions section that begins on page 31 for a description of the Company’s non-GAAP measures.

(2)	For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements in the relevant filing for such period made on March 2, 2015.

American Realty Capital Properties, Inc.

Adjusted G&A

The following table shows information regarding the Company’s general and administrative expenses (in thousands):


	Three Months Ended September 30, 2014									Three Months Ended September 30, 2013 (as restated)¹
	Total			REI			Cole Capital			Total			REI			Cole Capital
G&A	$	32,207		$	14,942		$	17,265		$	9,867		$	9,867		$	—
Less:
Stock-based compensation		(5,541	)		(2,086	)		(3,455	)		(7,190	)		(7,190	)		—
Expense reimbursements from Managed Programs ⁽²⁾		(6,896	)		—			(6,896	)		—			—			—

Adjusted G&A ⁽³⁾	$	19,770		$	12,856		$	6,914		$	2,677		$	2,677		$	—

(1)	For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements in the relevant filing for such period made on March 2, 2015.

(2)	Expense reimbursements from Managed Programs represents expenses incurred during the three months ended September 30, 2014 for which reimbursement revenue was recorded.

(3)	Adjusted G&A is a non-GAAP measure. See the Terms and Definitions section that begins on page 31 for a description of the Company’s non-GAAP measures.

American Realty Capital Properties, Inc.

Financial and Operational Statistics and Ratios

(in 000’s, expect share and per share amounts)

The following table presents certain financial and real estate portfolio information for the Company as of and for the three months ended September 30, 2014.


Financial Ratios:
Annualized Normalized EBITDA (thousands) ^{(1) (2)}	$	1,455,768
Net debt plus preferred equity to Annualized Normalized EBITDA		8.88
Net debt to Annualized Normalized EBITDA ^{(1) (2) (3)}		8.14
Gross real estate and related assets (thousands) ⁽⁴⁾	$	17,839,593
Debt to gross real estate and related assets ^{(4) (5)}		65.09	%
Unsecured debt to gross real estate and related assets ⁽⁴⁾		43.62	%
Interest coverage ratio ⁽⁶⁾		3.58
Weighted-average cost of debt ⁽⁷⁾		3.21	%
Weighted average years to maturity of debt		5.1
Owned Property Information:
Number of properties		4,714
Number of tenants		1,222
Total rentable square feet (thousands)		113,801
Occupancy ⁽⁸⁾		99.2	%
Weighted average lease term remaining (years) ⁽⁹⁾		11.5
Percentage of investment-grade tenants ⁽¹⁰⁾		44.75	%
Percentage of rated, non-investment grade tenants		27.56	%

(1)	Normalized EBITDA is a non-GAAP measure. See the Terms and Definitions section that begins on page 31 for a description of the Company’s non-GAAP measures and page 9 for reconciliation of net income to Normalized EBITDA.

(2)	Annualized three months ended September 30, 2014.

(3)	Net debt represents total GAAP-basis debt less cash.

(4)	Gross real estate and related assets represent total gross real estate and related assets, including investments in notes receivables, marketable securities and net investment in unconsolidated entities, net of gross intangible lease liabilities.

(5)	Debt represents total GAAP-basis debt.

(6)	Interest coverage ratio is calculated by dividing Annualized Normalized EBITDA by annualized interest expense.

(7)

Weighted average cost of debt is calculated based on the Company’s total GAAP-basis debt outstanding of $11.6 billion as of September 30, 2014. Rates ranging from 1.50% to 5.81% were used to calculate the variable debt payment obligations in future periods. These were the rates effective as of September 30, 2014.

(8)	Occupancy is the percent of rentable square feet for which there is a lease in place.

(9)	Weighted-average lease term remaining is calculated using the remaining non-cancelable lease terms.

(10)	Percentage of investment-grade tenants is based on annualized rental revenue from tenants with credit ratings of BBB- or higher. Tenant credit rating may reflect the credit rating of the parent company or guarantor.

American Realty Capital Properties, Inc.

Debt and Preferred Equity Summary

(in 000’s)


Principal Payments Due on Debt Maturities:	Total		October 1 - December 31, 2014		2015		2016		2017		2018		Thereafter
Mortgage notes payable	$	4,237,464	$	101,258	$	162,126	$	263,679	$	506,980	$	260,654	$	2,942,767
Corporate bonds		2,550,000		—		—		—		1,300,000		—		1,250,000
Convertible debt		1,000,000		—		—		—		—		597,500		402,500
Unsecured credit facility		4,259,000		—		—		—		—		4,259,000		—
Other debt		48,016		2,691		11,862		12,516		7,680		13,267		—

Total	$	12,094,480	$	103,949	$	173,988	$	276,195	$	1,814,660	$	5,130,421	$	4,595,267


Debt Type	Percentage of Total Debt			Weighted-Average Effective Interest Rate			Weighted-Average Years to Maturity
Mortgage notes payable		35.0	%		4.80	%		7.0
Corporate bonds		21.1	%		2.80	%		4.3
Convertible debt		8.3	%		3.30	%		4.8
Unsecured credit facility		35.2	%		1.82	%		3.8
Other debt		0.4	%		5.81	%		3.3

Total		100.0	%		3.21	%		5.1


Debt Type	Percentage of Total Debt			Weighted-Average Effective Interest Rate			Weighted-Average Years to Maturity
Total unsecured debt		64.6	%		2.33	%		4.1
Total secured debt		35.4	%		4.81	%		6.9

Total		100.0	%		3.21	%		5.1


Total fixed rate debt		72.7	%		3.84	%		5.3
Total floating rate debt		27.3	%		1.52	%		3.7

Total		100.0	%		3.21	%		5.1


Preferred Equity	Amount Outstanding		Percent of Total Preferred Equity			Weighted-Average Effective Interest Rate
Series F Preferred Stock	$	1,070,560		100.00	%		6.7	%

American Realty Capital Properties, Inc.

Mortgage Notes Payable


Lender	Maturity		Balance (in 000’s)		Coupon Rate			Effective Rate			Payment Terms ⁽¹⁾
Cantor Commercial Real Estate Lending, L.P.		1/6/2024	$	465,000		4.97	%		5.04	%		I/O
Wells Fargo Bank, National Association		8/10/2036		283,441		4.16	%		4.16	%		P&I
Cantor Commercial Real Estate Lending, L.P.		1/6/2024		155,000		4.97	%		5.04	%		I/O
Wells Fargo Bank, National Association		1/1/2018		133,025		5.61	%		5.69	%		I/O through 02/01/2016, then P&I
The Royal Bank of Scotland Plc		5/1/2023		124,300		3.84	%		3.89	%		I/O
JPMorgan Chase Bank, N.A.		9/1/2020		104,949		5.55	%		5.63	%		P&I
Bank of America, N.A.		1/1/2017		94,885		6.30	%		6.30	%		I/O
Wells Fargo Bank, National Association		7/1/2022		90,000		4.50	%		4.50	%		I/O
Wells Fargo Bank, National Association		3/1/2023		74,250		4.23	%		4.29	%		I/O
Wells Fargo Bank, National Association		7/1/2022		68,110		4.54	%		4.60	%		I/O
Wells Fargo Bank, National Association		1/1/2023		66,000		4.24	%		4.30	%		I/O
Goldman Sachs Commercial Mortgage Capital, L.P.		6/6/2020		63,600		5.73	%		5.81	%		I/O through 07/06/2015, then P&I
Wells Fargo Bank, National Association		5/1/2021		60,450		5.54	%		5.61	%		I/O
PNC Bank, National Association		1/1/2019		59,500		4.10	%		4.16	%		I/O
New York State Teachers’ Retirement System		3/1/2019		55,000		4.41	%		4.41	%		I/O
Citigroup Global Markets Realty Corp		5/6/2022		54,300		6.05	%		6.13	%		I/O
US Bank National Association		11/11/2014		53,857		5.23	%		5.30	%		I/O
Wachovia Bank, National Association		9/11/2015		53,798		5.32	%		5.39	%		P&I
Bank of America, N.A.		1/1/2017		51,836		5.90	%		5.90	%		I/O
Capital One, N.A.		11/20/2019		51,400		3.27	%		3.32	%		I/O through 11/01/2017, then P&I
American General Life Insurance Company		11/1/2021		51,250		5.25	%		5.25	%		I/O
The Royal Bank of Scotland Plc		4/11/2015		48,621		7.07	%		7.17	%		P&I
Wells Fargo Bank, National Association		2/1/2017		48,500		3.75	%		3.80	%		I/O
JPMorgan Chase Bank, N.A.		5/1/2021		46,910		5.53	%		5.61	%		I/O
Goldman Sachs Commercial Mortgage Capital, L.P.		5/6/2021		46,670		5.92	%		6.01	%		I/O
US Bank National Association		7/11/2016		43,700		6.03	%		6.11	%		I/O
JPMorgan Chase Bank, National Association		6/1/2023		43,500		3.75	%		3.80	%		I/O
Goldman Sachs Mortgage Company		12/6/2020		43,000		5.20	%		5.27	%		I/O
People’s United Bank		4/1/2021		42,500		5.55	%		5.63	%		I/O through 05/01/2016, then P&I
Wells Fargo Bank, National Association		12/1/2018		42,000		4.62	%		4.68	%		I/O
JPMorgan Chase Bank, N.A.		6/1/2020		41,610		5.71	%		5.79	%		I/O through 07/01/2015, then P&I
Wells Fargo Bank, National Association		6/1/2022		41,000		4.73	%		4.80	%		I/O
MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC		1/1/2023		40,800		4.46	%		4.52	%		I/O
US Bank National Association		7/1/2015		39,510		5.10	%		5.17	%		P&I
JPMorgan Chase Bank, N.A.		11/1/2019		38,500		4.10	%		4.15	%		I/O
LaSalle Bank National Association		1/1/2016		38,408		5.68	%		5.76	%		P&I
JPMorgan Chase Bank, N.A.		11/1/2017		38,315		6.34	%		6.34	%		I/O
Wells Fargo Bank, National Association		3/1/2017		36,600		3.76	%		3.81	%		I/O
PNC Bank, N.A.		9/1/2022		34,250		3.60	%		3.65	%		I/O
The Royal Bank of Scotland Plc		1/1/2021		34,000		5.48	%		5.56	%		I/O
The Prudential Insurance Company of America		7/5/2022		33,000		4.10	%		4.10	%		I/O
Goldman Sachs Mortgage Company		12/6/2020		31,500		5.25	%		5.32	%		I/O
BOKF, NA dba Bank of Oklahoma		7/29/2018		30,138		4.10	%		4.16	%		I/O
Oritani Bank		5/1/2024		30,050		3.25	%		3.30	%		I/O through 05/01/2019, then P&I
Goldman Sachs Mortgage Company		12/6/2020		30,000		5.25	%		5.32	%		I/O

American Realty Capital Properties, Inc.

Mortgage Notes Payable


Lender	Maturity		Balance (in 000’s)		Coupon Rate			Effective Rate			Payment Terms ⁽¹⁾
Jackson National Life Insurance Company		10/1/2021		29,450		4.25	%		4.25	%		I/O through 11/01/2018, then P&I
German American Capital Corporation		10/6/2022	$	29,160		4.48	%		4.54	%		I/O
PNC Bank, National Association		9/1/2022		28,956		4.00	%		4.00	%		P&I
LaSalle Bank National Association		1/1/2016		28,866		5.69	%		5.77	%		I/O through 02/01/2015, then P&I
German American Capital Corporation		10/6/2022		28,440		4.48	%		4.54	%		I/O
BOKF, NA dba Bank of Texas		7/31/2017		28,350		3.27	%		3.32	%		I/O
PNC Bank, National Association		6/1/2022		27,750		4.22	%		4.28	%		I/O
GS Commercial Real Estate LP		8/6/2019		27,725		4.73	%		4.79	%		I/O
Wells Fargo Bank, National Association		7/5/2017		27,400		3.52	%		3.57	%		I/O
Jackson National Life Insurance Company		7/1/2019		27,200		3.10	%		3.10	%		I/O
LaSalle Bank National Association		1/1/2017		25,620		5.81	%		5.89	%		I/O
Bank of America, N.A.		9/1/2017		25,099		5.28	%		5.35	%		P&I
Principal Life Insurance Company		3/1/2022		24,750		4.09	%		4.09	%		I/O through 04/01/2019, then P&I
Jackson National Life Insurance Company		2/1/2021		24,000		4.50	%		4.50	%		I/O through 03/01/2018, then P&I
Wells Fargo Bank, National Association		3/1/2017		24,000		5.34	%		5.41	%		I/O
Citigroup Global Markets Realty Corp		3/6/2022		23,400		5.49	%		5.57	%		I/O
UBS REAL ESTATE SECURITIES INC.		1/6/2023		22,700		4.27	%		4.33	%		I/O
John Hancock Life Insurance Company		10/1/2022		22,500		4.04	%		4.04	%		I/O
Bank of America, N.A.		11/14/2014		22,140		1mo. Libor + 2.25	%		2.40	%		I/O
BOKF, NA dba Bank of Texas		12/31/2018		21,766		3.57	%		3.62	%		I/O
EquiTrust Life Insurance Company		5/1/2019		20,796		4.85	%		4.85	%		I/O through 05/01/2015, then P&I
U.S. Bank National Association		12/14/2014		20,140		1mo. Libor + 2.50	%		2.69	%		I/O
German American Capital Corp		6/6/2022		19,973		4.60	%		4.66	%		P&I
Aviva Life and Annuity Company		7/1/2021		19,600		5.02	%		5.02	%		I/O through 08/01/2019, then P&I
The Variable Annuity Life Insurance Company		1/1/2023		19,525		4.00	%		4.00	%		I/O
MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC		5/10/2021		19,513		5.67	%		5.75	%		I/O
Oritani Bank		5/1/2024		18,889		3.25	%		3.30	%		I/O through 05/01/2019, then P&I
The Royal Bank of Scotland Plc		3/1/2021		18,100		5.88	%		5.96	%		I/O
US Bank National Association		12/11/2016		17,500		5.55	%		5.63	%		I/O
Life Insurance Company of the Southwest		7/10/2022		17,035		4.40	%		4.40	%		I/O
Life Insurance Company of the Southwest		1/10/2022		17,000		4.75	%		4.75	%		I/O
JPMorgan Chase Bank, National Association		5/1/2021		16,717		5.54	%		5.61	%		P&I
BOKF, NA dba Bank of Texas		7/31/2017		16,555		3.28	%		3.32	%		I/O
US Bank National Association		1/11/2017		16,200		5.48	%		5.56	%		I/O
Wachovia Bank, National Association		12/11/2016		16,043		5.63	%		5.71	%		I/O
Wells Fargo Bank, National Association		3/20/2023		15,820		3.23	%		3.23	%		I/O
Oritani Bank		1/1/2023		15,000		3.75	%		3.75	%		I/O through 01/01/2018, then P&I
US Bank National Association		5/1/2016		14,998		5.84	%		5.92	%		P&I
Morgan Stanley Mortgage Capital Holdings, LLC		6/1/2023		14,500		3.97	%		4.02	%		I/O
BOKF, NA dba Bank of Texas		12/31/2018		14,150		3.57	%		3.62	%		I/O
Wells Fargo Bank, National Association		3/1/2016		13,500		5.17	%		5.24	%		I/O
BOKF, NA dba Bank of Texas		12/31/2020		13,420		4.25	%		4.31	%		I/O
US Bank National Association		7/1/2016		13,144		6.05	%		6.13	%		P&I
BOKF, NA dba Bank of Texas		7/13/2017		12,725		3.43	%		3.48	%		I/O
TCF National Bank		3/1/2016		12,327		1mo. Libor + 2.75	%		2.91	%		I/O

American Realty Capital Properties, Inc.

Mortgage Notes Payable


Lender	Maturity		Balance (in 000’s)		Coupon Rate			Effective Rate			Payment Terms ⁽¹⁾
Goldman Sachs Commercial Mortgage Capital, L.P.		9/6/2017		12,270		3.70	%		3.75	%		I/O
Customers Bank		12/1/2016		11,940		3.75	%		3.80	%		I/O
JPMorgan Chase Bank, N.A.		7/1/2020	$	11,375		5.50	%		5.58	%		I/O through 08/01/2015, then P&I
US Bank National Association		2/11/2017		10,332		5.68	%		5.76	%		I/O
US Bank National Association		11/11/2016		10,137		5.50	%		5.58	%		I/O
40/86 Mortgage Capital, Inc.		1/1/2019		10,050		5.00	%		5.00	%		I/O
Monumental Life Insurance Company		4/1/2023		9,927		3.95	%		3.95	%		I/O through 05/01/2014, then P&I
Wachovia Bank, National Association		6/11/2016		8,625		6.56	%		6.65	%		I/O
Transamerica Life Insurance Company		8/1/2030		7,820		5.57	%		5.57	%		P&I
Transamerica Life Insurance Company		8/1/2030		6,987		5.32	%		5.32	%		P&I
US Bank National Association		5/11/2017		6,262		5.45	%		5.53	%		I/O
Customers Bank		8/16/2017		5,500		3.63	%		3.68	%		I/O
Amegy Bank, National Association		8/31/2016		5,365		1mo. Libor + 2.95	%		3.11	%		I/O
BOKF, NA dba Bank of Texas		10/31/2016		5,060		3.70	%		3.75	%		I/O
Wells Fargo Bank, National Association		12/1/2016		4,933		5.99	%		6.07	%		I/O through 01/01/2007, then P&I
Wells Fargo Bank, National Association		3/1/2017		4,800		3.76	%		3.81	%		I/O
Life Insurance Company of the Southwest		1/10/2022		3,025		4.75	%		4.75	%		I/O
Life Insurance Company of the Southwest		1/10/2022		2,940		4.75	%		4.75	%		I/O
US Bank National Association		4/15/2019		2,063		5.40	%		5.48	%		I/O
Capital Lease Funding, LLC		7/15/2018		1,968		7.20	%		7.20	%		P&I
Bear Stearns Commercial Mortgage, Inc.		9/1/2017		1,678		5.88	%		5.97	%		I/O
US Bank National Association		12/11/2016		1,576		6.18	%		6.27	%		I/O
BOKF, NA dba Bank of Texas		4/12/2018		1,562		3.39	%		3.44	%		I/O
US Bank National Association		12/11/2015		837		5.83	%		5.91	%		I/O
BOKF, NA dba Bank of Texas		4/12/2018		562		3.39	%		3.44	%		I/O
Transamerica Life Insurance Company		8/1/2030		395		5.93	%		5.93	%		P&I

			$	4,237,464		4.76	%		4.85	%

(1)	I/O means only interest is due monthly with the principal at due maturity; P&I means both principal and interest are due monthly.

American Realty Capital Properties, Inc.

Bond and Line of Credit Covenants

The following is a summary of key financial covenants for the Company’s unsecured credit facility and senior unsecured notes, as defined and calculated per the terms of the facility’s credit agreement and the notes⁽¹⁾ offering document, respectively. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show our ability to incur additional debt only and are not measures of our liquidity or performance.


Unsecured Credit Facility Key Covenants ⁽¹⁾	Required			September 30, 2014
Maximum leverage ratio	£	60	%		53.1	%
Minimum fixed charge coverage	>	1.5x			2.22
Secured leverage ratio	£	45	%		18.2	%
Total unencumbered asset value ratio	£	60	%		56.4	%
Minimum tangible net worth covenant	³	$5.50B		$	8.17B
Minimum unencumbered interest coverage ratio	³	1.75x			3.87

Senior Notes Key Covenants ⁽¹⁾	Required			September 30, 2014
Limitation on incurrence of total debt	£	65	%		57.4	%
Limitation on incurrence of secured debt	£	40	%		20.3	%
Debt service coverage	³	1.5x			2.22
Maintenance of total unencumbered assets	³	150	%		175.0	%

(1)	As of September 30, 2014, the Company was in compliance with all covenants based on the covenant limits and calculations in place at that time.

American Realty Capital Properties, Inc.

Top 10 Concentrations


Tenant Concentration	Number of Leases		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income (in 000’s)		Annualized Rental Income as a % of Total Portfolio			Investment Rating
Red Lobster		523		3,896,099		3.42	%	$	159,744		10.49	%	B-
CVS		181		2,482,501		2.18	%		53,545		3.52	%	BBB+
Walgreens		125		1,814,829		1.59	%		45,460		2.98	%	BBB
Dollar General		410		3,789,930		3.33	%		34,422		2.26	%	BBB-
Family Dollar		386		3,091,313		2.72	%		33,469		2.20	%	BBB-
FedEx		56		3,252,922		2.86	%		32,367		2.13	%	BBB
Albertson’s		34		1,973,485		1.73	%		24,714		1.62	%	B
Petsmart		43		1,312,119		1.15	%		24,490		1.61	%	BB+
AT&T		14		1,335,096		1.17	%		23,990		1.58	%	A-
General Service Administration		23		1,020,641		0.90	%		23,636		1.55	%	AA+

		1,795		23,968,935		21.05	%	$	455,837		29.94	%


Tenant Industry Concentration	Number of Leases		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income (in 000’s)		Annualized Rental Income as a % of Total Portfolio
Restaurants - Other		1,096		7,186,031		6.31	%	$	262,722		17.25	%
Restaurants - Quick Service		1,324		4,626,637		4.07	%		129,090		8.48	%
Manufacturing		69		19,173,932		16.85	%		127,160		8.35	%
Retail - Pharmacy		346		5,004,787		4.40	%		112,774		7.40	%
Retail - Discount		884		11,687,952		10.27	%		108,037		7.09	%
Retail - Grocery & Supermarket		105		6,492,758		5.71	%		71,887		4.72	%
Finance		348		3,220,779		2.83	%		70,215		4.61	%
Retail - Home & Garden		124		8,351,599		7.34	%		62,143		4.08	%
Professional Services		79		4,274,098		3.76	%		59,948		3.94	%
Insurance		25		2,177,674		1.91	%		41,173		2.70	%

		4,400		72,196,247		63.45	%	$	1,045,149		68.62	%


Geographic Concentration	Number of Leases		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income (in 000’s)		Annualized Rental Income as a % of Total Portfolio
Texas		807		12,999,040		11.42	%	$	191,118		12.55	%
Florida		496		6,452,809		5.67	%		96,146		6.31	%
California		230		6,703,583		5.89	%		94,694		6.22	%
Illinois		278		6,481,105		5.70	%		89,000		5.84	%
Georgia		375		6,102,386		5.36	%		84,290		5.53	%
Ohio		330		6,235,114		5.48	%		61,365		4.03	%
Pennsylvania		183		5,827,498		5.12	%		60,866		4.00	%
Arizona		182		3,479,465		3.06	%		60,646		3.98	%
Michigan		302		3,665,918		3.22	%		53,568		3.52	%
Virginia		202		2,801,864		2.46	%		48,422		3.18	%

		3,385		60,748,782		53.38	%	$	840,115		55.16	%

American Realty Capital Properties, Inc.

Tenants Comprising Over 1% of Annualized Rental Income


Tenant	Number of Leases		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income (in 000’s)		Annualized Rental Income as a % of Total Portfolio			Investment Rating
Red Lobster		523		3,896,099		3.42	%	$	159,744		10.49	%	B-
CVS		181		2,482,501		2.18	%		53,545		3.52	%	BBB+
Walgreens		125		1,814,829		1.59	%		45,460		2.98	%	BBB
Dollar General		410		3,789,930		3.33	%		34,422		2.26	%	BBB-
Family Dollar		386		3,091,313		2.72	%		33,469		2.20	%	BBB-
FedEx		57		3,258,340		2.86	%		32,444		2.13	%	BBB
Wendy’s		273		821,077		0.72	%		25,823		1.70	%	B+
Albertson’s		34		1,973,485		1.73	%		24,714		1.62	%	B
Petsmart		43		1,312,119		1.15	%		24,490		1.61	%	BB+
AT&T		14		1,335,096		1.17	%		23,990		1.58	%	A-
General Service Administration		23		1,020,641		0.90	%		23,636		1.55	%	AA+
Citizens Bank		190		973,241		0.86	%		22,872		1.50	%	A-
BJ’s Wholesale Club		15		2,461,520		2.16	%		21,984		1.44	%	B-
Applebee’s		91		455,566		0.40	%		20,289		1.33	%	NR
AON		8		1,203,066		1.06	%		18,154		1.19	%	A-
Wal-Mart		12		2,206,974		1.94	%		16,828		1.10	%	AA
Goodyear		10		4,727,594		4.15	%		16,550		1.09	%	BB-
Lowe’s		17		2,259,397		1.99	%		16,505		1.08	%	A-
Tractor Supply		61		1,284,894		1.13	%		16,201		1.06	%	NR
L.A. Fitness		19		839,001		0.74	%		16,070		1.06	%	NR

		2,492		41,206,683		36.20	%	$	647,190		42.49	%

American Realty Capital Properties, Inc.

Tenant Industry Diversification


Industry	Number of Leases		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income (in 000’s)		Annualized Rental Income as a % of Total Portfolio
Accommodation & Food Services		1		9,513		—	%	$	228		—	%
Administrative & Support Services		8		404,529		0.4	%		4,123		0.3	%
Agricultural		2		137,520		0.1	%		1,245		0.1	%
Construction		1		27,115		—	%		344		—	%
Education		10		1,909,118		1.7	%		21,016		1.4	%
Entertainment & Recreation		36		1,243,693		1.1	%		22,987		1.5	%
Finance		348		3,220,779		2.8	%		70,215		4.6	%
Government & Public Services		33		1,286,778		1.1	%		31,119		2.0	%
Healthcare		138		1,853,443		1.6	%		33,426		2.2	%
Information & Communications		51		1,589,586		1.4	%		30,489		2.0	%
Insurance		25		2,177,674		1.9	%		41,173		2.7	%
Logistics		67		4,729,382		4.2	%		41,158		2.7	%
Manufacturing		69		19,173,932		16.8	%		127,160		8.3	%
Mining & Natural Resources		16		736,172		0.6	%		14,744		1.0	%
Other Services		156		5,438,378		4.8	%		24,408		1.6	%
Professional Services		79		4,274,098		3.8	%		59,948		3.9	%
Real Estate		4		45,259		—	%		691		—	%
Rental		44		712,860		0.6	%		6,734		0.4	%
Restaurants - Other		1,096		7,186,031		6.3	%		262,722		17.3	%
Restaurants - Quick Service		1,324		4,626,637		4.1	%		129,090		8.5	%
Retail - Apparel & Jewelry		127		2,361,712		2.1	%		29,672		1.9	%
Retail - Automotive		167		1,199,067		1.1	%		21,777		1.4	%
Retail - Department Stores		28		2,264,148		2.0	%		15,021		1.0	%
Retail - Discount		884		11,687,952		10.3	%		108,037		7.1	%
Retail - Electronics & Appliances		38		1,028,469		0.9	%		14,541		1.0	%
Retail - Gas & Convenience		128		531,218		0.5	%		27,399		1.8	%
Retail - Grocery & Supermarket		105		6,492,758		5.7	%		71,887		4.7	%
Retail - Hobby, Books & Music		57		1,230,151		1.1	%		12,757		0.8	%
Retail - Home & Garden		124		8,351,599		7.3	%		62,143		4.1	%
Retail - Home Furnishings		62		668,971		0.6	%		10,869		0.7	%
Retail - Internet		3		3,048,444		2.7	%		14,159		0.9	%
Retail - Office Supply		22		400,714		0.4	%		5,937		0.4	%
Retail - Pet Supply		54		1,446,993		1.3	%		26,771		1.8	%
Retail - Pharmacy		346		5,004,787		4.4	%		112,774		7.5	%
Retail - Specialty (Other)		113		1,237,090		1.1	%		15,853		1.0	%
Retail - Sporting Goods		40		1,977,763		1.7	%		22,270		1.5	%
Retail - Warehouse Clubs		20		3,033,536		2.7	%		27,095		1.8	%
Transportation		1		49,920		—	%		6		—	%
Utilities		2		40,734		—	%		931		0.1	%
Other⁽¹⁾		178		962,313		0.8	%		62		—	%

		6,007		113,800,836		100.0	%	$	1,522,981		100.0	%

(1)	Includes billboard, parking and vacant assets.

American Realty Capital Properties, Inc.

Property Geographic Diversification


State/Possession	Number of Properties		Square Feet		Leased Square Feet as a % of Total Portfolio			Annualized Rental Income (in 000’s)		Annualized Rental Income as a % of Total Portfolio
Alabama		161		2,583,188		2.3	%	$	43,031		2.8	%
Alaska		4		110,426		0.1	%		2,140		0.1	%
Arizona		92		3,479,465		3.1	%		60,646		4.0	%
Arkansas		104		1,136,195		1.0	%		13,887		0.9	%
California		105		6,703,583		5.9	%		94,694		6.2	%
Colorado		61		2,436,971		2.1	%		38,519		2.5	%
Connecticut		19		466,318		0.4	%		6,652		0.4	%
Delaware		13		411,161		0.4	%		5,663		0.4	%
District of Columbia		1		3,210		—	%		44		—	%
Florida		311		6,452,809		5.7	%		96,146		6.3	%
Georgia		234		6,102,386		5.4	%		84,290		5.6	%
Idaho		20		146,935		0.1	%		4,542		0.3	%
Illinois		196		6,481,105		5.7	%		89,000		5.9	%
Indiana		147		5,969,301		5.2	%		46,597		3.1	%
Iowa		54		1,594,692		1.4	%		15,222		1.0	%
Kansas		54		2,387,037		2.1	%		16,893		1.1	%
Kentucky		95		2,242,251		2.0	%		27,364		1.8	%
Louisiana		103		1,685,842		1.5	%		23,878		1.6	%
Maine		25		648,410		0.6	%		8,527		0.6	%
Maryland		35		871,497		0.8	%		17,035		1.1	%
Massachusetts		41		2,398,900		2.1	%		30,975		2.0	%
Michigan		201		3,665,918		3.2	%		53,568		3.5	%
Minnesota		49		629,487		0.6	%		9,718		0.7	%
Mississippi		81		1,843,066		1.6	%		16,398		1.1	%
Missouri		174		1,937,124		1.7	%		27,588		1.8	%
Montana		11		87,577		0.1	%		1,701		0.1	%
Nebraska		25		679,351		0.6	%		12,485		0.8	%
Nevada		34		835,863		0.7	%		11,410		0.7	%
New Hampshire		19		241,460		0.2	%		4,265		0.3	%
New Jersey		38		1,689,825		1.5	%		37,309		2.5	%
New Mexico		58		945,135		0.8	%		14,640		1.0	%
New York		94		1,828,515		1.6	%		34,250		2.2	%
North Carolina		189		4,024,252		3.5	%		44,251		2.9	%
North Dakota		13		269,937		0.2	%		5,518		0.4	%
Ohio		307		6,235,114		5.5	%		61,365		4.0	%
Oklahoma		88		2,047,299		1.8	%		27,128		1.8	%
Oregon		17		319,773		0.3	%		4,433		0.3	%
Pennsylvania		177		5,827,498		5.1	%		60,866		4.0	%
Puerto Rico		3		87,550		0.1	%		2,429		0.2	%
Rhode Island		14		214,079		0.2	%		3,657		0.3	%
South Carolina		128		3,616,446		3.2	%		33,576		2.2	%
South Dakota		11		115,784		0.1	%		1,534		0.1	%
Tennessee		138		3,738,612		3.3	%		37,046		2.4	%
Texas		635		12,999,040		11.4	%		191,118		12.5	%
Utah		14		142,598		0.1	%		3,177		0.2	%
Vermont		8		36,749		—	%		734		—	%
Virginia		123		2,801,864		2.5	%		48,422		3.2	%
Washington		28		517,388		0.5	%		12,158		0.8	%
West Virginia		43		262,804		0.2	%		6,797		0.4	%
Wisconsin		89		1,636,736		1.4	%		20,209		1.3	%
Wyoming		11		70,058		0.1	%		1,709		0.1	%
Alberta		4		31,667		—	%		1,912		0.1	%
Manitoba		2		15,900		—	%		827		0.1	%
Ontario		11		77,885		0.1	%		4,242		0.3	%
Saskatchewan		2		16,800		—	%		796		0.1	%

		4,714		113,800,836		100.0	%	$	1,522,981		100.0	%

American Realty Capital Properties, Inc.

Property Building Type Diversification


Property Type	Number of Properties		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income (in 000’s)		Annualized Rental Income as a % of Total Portfolio
Owned
Retail		4,261		43,059,262		37.9	%	$	822,298		54.0	%
Office		163		17,175,677		15.1	%		312,782		20.5	%
Multi-Tenant Retail		85		12,925,924		11.4	%		172,243		11.3	%
Distribution		90		28,271,027		24.8	%		141,766		9.3	%
Industrial		77		11,654,405		10.2	%		66,763		4.4	%
Other⁽¹⁾		38		714,541		0.6	%		7,129		0.5	%

		4,714		113,800,836		100.0	%	$	1,522,981		100.0	%

(1)	Includes billboard, parking, construction in progress and vacant assets.

American Realty Capital Properties, Inc.

Lease Expirations


Year of Expiration	Number of Leases Expiring		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income Expiring (in 000’s)		Annualized Rental Income Expiring as a % of Total Portfolio
2014		282		2,213,381		1.9	%	$	9,552		0.6	%
2015		223		2,667,984		2.3	%		28,953		1.9	%
2016		283		4,336,053		3.8	%		49,213		3.2	%
2017		414		5,918,858		5.2	%		72,149		4.7	%
2018		428		4,445,265		3.9	%		63,715		4.2	%
2019		322		4,594,345		4.0	%		75,266		4.9	%
2020		226		4,202,481		3.7	%		52,648		3.5	%
2021		228		12,700,796		11.2	%		100,927		6.6	%
2022		310		10,111,571		8.9	%		88,560		5.8	%
2023		273		7,574,247		6.7	%		98,311		6.5	%


		2,989		58,764,981		51.6	%	$	639,294		42.0	%


Year of Expiration	Number of Leases Expiring		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income Expiring (in 000’s)		Annualized Rental Income Expiring as a % of Total Portfolio

2014
Retail		7		34,518		—	%	$	248		—	%
Office		27		271,527		0.2	%		1,326		0.1	%
Restaurant		69		292,944		0.3	%		4,253		0.3	%
Multi-Tenant Retail		170		602,427		0.5	%		1,577		0.1	%
Distribution		1		764,177		0.7	%		2,101		0.1	%
Industrial		—		—		—	%		—		—	%
Other⁽¹⁾		8		247,788		0.2	%		19		—	%

Total 2014		282		2,213,381		1.9	%		9,552		0.6	%


2015
Retail		7		77,926		0.1	%		985		0.2	%
Office		13		602,228		0.5	%		9,752		0.6	%
Restaurant		101		363,739		0.2	%		6,697		0.4	%
Multi-Tenant Retail		98		441,685		0.4	%		7,463		0.5	%
Distribution		3		1,122,406		1.0	%		3,945		0.2	%
Industrial		1		60,000		0.1	%		111		—	%
Other⁽¹⁾		—		—		—	%		—		—	%

Total 2015		223		2,667,984		2.3	%		28,953		1.9	%


2016
Retail		11		94,394		0.1	%		1,101		0.1	%
Office		15		947,222		0.8	%		15,809		1.0	%
Restaurant		96		357,957		0.3	%		8,731		0.6	%
Multi-Tenant Retail		154		1,115,574		1.0	%		14,979		1.0	%
Distribution		6		1,820,906		1.6	%		8,574		0.5	%
Industrial		—		—		—	%		—		—	%
Other⁽¹⁾		1		—		—	%		19		—	%

Total 2016		283		4,336,053		3.8	%		49,213		3.2	%

2017
Retail		106		663,082		0.6	%	$	14,609		0.9	%
Office		27		1,399,198		1.2	%		21,345		1.4	%

American Realty Capital Properties, Inc.

Lease Expirations


Year of Expiration	Number of Leases Expiring		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income Expiring (in 000’s)		Annualized Rental Income Expiring as a % of Total Portfolio
Restaurant		109		614,460		0.5	%		11,277		0.7	%
Multi-Tenant Retail		163		1,005,898		0.9	%		15,182		1.0	%
Distribution		6		2,144,988		1.9	%		9,268		0.7	%
Industrial		2		91,232		0.1	%		453		—	%
Other⁽¹⁾		1		—		—	%		15		—	%

Total 2017		414		5,918,858		5.2	%		72,149		4.7	%


2018
Retail		76		973,110		1.0	%		13,933		0.9	%
Office		12		341,746		0.3	%		7,524		0.5	%
Restaurant		117		427,211		0.4	%		10,157		0.7	%
Multi-Tenant Retail		209		1,637,898		1.3	%		26,846		1.6	%
Distribution		7		849,596		0.7	%		4,002		0.3	%
Industrial		6		215,704		0.2	%		1,241		0.1	%
Other⁽¹⁾		1		—		—	%		12		—	%

Total 2018		428		4,445,265		3.9	%		63,715		4.1	%


2019
Retail		55		1,345,082		1.2	%		15,266		1.0	%
Office		15		1,042,080		0.9	%		25,389		1.7	%
Restaurant		95		419,873		0.3	%		9,375		0.6	%
Multi-Tenant Retail		153		1,498,236		1.3	%		22,538		1.4	%
Distribution		2		220,643		0.2	%		2,212		0.1	%
Industrial		2		68,431		0.1	%		486		—	%
Other⁽¹⁾		—		—		—	%		—		—	%

Total 2019		322		4,594,345		4.0	%		75,266		4.8	%


2020
Retail		80		1,063,634		0.9	%		13,414		0.9	%
Office		18		1,673,139		1.4	%		20,149		1.3	%
Restaurant		71		278,226		0.2	%		7,016		0.5	%
Multi-Tenant Retail		51		681,297		0.6	%		8,863		0.6	%
Distribution		—		—		—	%		—		—	%
Industrial		5		497,785		0.4	%		3,205		0.2	%
Other⁽¹⁾		1		8,400		—	%		1		—	%

Total 2020		226		4,202,481		3.7	%		52,648		3.5	%


2021
Retail		76		1,526,594		1.3	%		22,361		1.4	%
Office		16		1,602,674		1.4	%		28,173		1.8	%
Restaurant		62		192,325		0.2	%		5,492		0.4	%
Multi-Tenant Retail		56		797,884		0.7	%		11,179		0.7	%
Distribution		15		7,555,709		6.7	%		29,934		1.9	%
Industrial		3		1,025,610		0.9	%		3,788		0.2	%
Other⁽¹⁾		—		—		—	%		—		—	%

Total 2021		228		12,700,796		11.2	%		100,927		6.4	%


2022
Retail		161		2,233,645		2.0	%	$	29,480		1.9	%
Office		9		665,954		0.6	%		13,436		0.9	%
Restaurant		63		370,553		0.3	%		8,078		0.5	%

American Realty Capital Properties, Inc.

Lease Expirations


Year of Expiration	Number of Leases Expiring		Square Feet		Square Feet as a % of Total Portfolio			Annualized Rental Income Expiring (in 000’s)		Annualized Rental Income Expiring as a % of Total Portfolio
Multi-Tenant Retail		50		791,558		0.7	%		10,095		0.7	%
Distribution		18		5,019,466		4.4	%		21,051		1.4	%
Industrial		9		1,030,395		0.9	%		6,420		0.4	%
Other⁽¹⁾		—		—		—	%		—		—	%

Total 2022		310		10,111,571		8.9	%		88,560		5.8	%


2023
Retail		120		1,865,950		1.6	%		23,352		1.5	%
Office		26		1,685,099		1.5	%		36,166		2.3	%
Restaurant		60		317,866		0.3	%		7,051		0.5	%
Multi-Tenant Retail		52		1,214,782		1.1	%		14,514		0.9	%
Distribution		8		2,194,833		1.9	%		14,110		0.9	%
Industrial		7		295,717		0.3	%		3,118		0.2	%
Other⁽¹⁾		—		—		—	%		—		—	%

Total 2023		273		7,574,247		6.7	%		98,311		6.3	%

Total 2014 - 2023		2,989		58,764,981		51.6	%	$	639,294		41.3	%

(1)	Includes billboard, parking and vacant assets.

American Realty Capital Properties, Inc.

Unconsolidated Joint Venture Investment Summary

($ in 000’s)

The following table shows certain information regarding the Company’s interests in unconsolidated joint ventures as of September 30, 2014:


Joint Venture	Partner	Ownership %			Pro rata Share of Purchase Price		Rentable Square Feet ⁽¹⁾		Annualized Rental Income ⁽¹⁾		Debt ^{(1) (2)}		Major Tenants
Cole/Mosaic JV South Elgin IL, LLC	Affiliate of Mosaic Properties and Development, LLC		50	%	$	17,000		232,000	$	2,897	$	20,400	Home Depot, Best Buy
Chandler Festival SPE, LLC	Propstra Chandler Trust & RED Development, LLC		45	%⁽³⁾		27,878		756,000		5,293		28,636	Nordstrom Rack, Buy Buy Baby, Ross, TJ Maxx
Chandler Village Center, LLC (AZ)	Propstra Chandler Trust & RED Development, LLC		45	%⁽³⁾		13,316		130,000		2,429		20,370	Sports Authority, Bed Bath & Beyond, DSW
Cole/LBA JV OF Pleasanton CA	Affiliate of LBA Realty		90	%		86,850		343,000		7,030		57,000	Clorox Companies
Chandler Gateway SPE, LLC	Propstra Chandler Trust & RED Development, LLC		45	%⁽³⁾		12,884		266,000		2,147		18,223	Hobby Lobby, Wal-Mart
Cole/Faison JV Bethlehem GA, LLC	Faison-Winder Investors, LLC		90	%		33,429		280,000		3,248		26,000	Publix, Belk

Total Unconsolidated Joint Ventures					$	191,357		2,007,000	$	23,044	$	170,629


Interest ⁽⁴⁾									$	15,140	$	115,153

(1)	Rentable square feet, annualized rental income and debt represent information for the total unconsolidated joint venture.

(2)	Debt represents secured fixed and variable rates ranging from 2.05% to 6.15% and maturities ranging from July 2015 to July 2021, with a weighted-average interest rate of 3.69% as of September 30, 2014 and a weighted-average years to maturity of 2.2 years as of September 30, 2014.

(3)	Represents the Company’s 90% interest in a consolidated joint venture, whose only assets are 50% interests in the respective unconsolidated joint ventures.

(4)	Represents the Company’s aggregate interest in unconsolidated joint ventures as of September 30, 2014.

American Realty Capital Properties, Inc.

Managed Programs

Program Summary

The following table shows the Managed Program’s cumulative activity summary information as of September 30, 2014 (dollars in 000’s):


Program	Capital Raised ⁽¹⁾		Number of Investments ⁽²⁾		Assets Under Management ⁽³⁾		Total Debt Outstanding
Open Programs:
Cole Credit Property Trust V, Inc. (“CCPT V”)	$	111,537		47	$	193,867	$	112,239
Cole Real Estate Income Strategy (Daily NAV), Inc. (“INAV”)		126,507		71		225,192		112,750
Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”)		185,799		17		306,681		207,635

Total Open Programs		423,843		135		725,740		432,624

Closed Programs:⁽⁴⁾
Cole Credit Property Trust IV, Inc. (“CCPT IV”)		302,275		671		3,578,720		1,172,563
Cole Corporate Income Trust, Inc. (“CCIT”)		1,974,423		87		2,663,728		1,012,616
Other Programs		372,617		65		737,515		370,865

Total Closed Programs		2,649,315		823		6,979,963		2,556,044

Total	$	3,073,158		958	$	7,705,703	$	2,988,668

(1)	Capital raised represents gross proceeds, including DRIP shares issued.

(2)	Number of investments includes properties owned through consolidated joint ventures.

(3)	Assets under management represents total gross real estate and related assets, including net investments in consolidated joint ventures, net of gross intangible lease liabilities.

(4)	The Closed Programs include CCPT IV and CCIT and Other Programs include tenant-in-common programs, Delaware statutory trust programs and Cole Growth Opportunity Fund I, L.P.

Offering Summary

The following table shows offering summary information for the Managed Programs as of September 30, 2014:

Program

Primary
Investment
Strategy

Offering
Commencement
Date

% of Outstanding
Shares Owned by
ARCP

Offering
Price/NAV

Annualized
Distribution

CCPT V

Retail

3/17/2014

2.40

25.00

6.30

INAV

Diversified

12/6/2011

⁽¹⁾

0.18

⁽²⁾⁽³⁾

⁽³⁾

CCIT II

Office and
industrial

9/17/2013

1.44

10.00

6.00

Closed Programs

Various

Prior to 2012

less than 0.01

Various

(1)

On August 26, 2013, INAV designated the existing shares of INAV’s common stock that were sold prior to such date to be Wrap Class shares (“W Shares”) of common stock and registered two new classes of INAV common stock, Advisor Class shares (“A Shares”) and Institutional Class shares (“I Shares”). As the existing class of common stock, W Shares were first issued on December 6, 2011, A Shares were first issued on October 10, 2013 and I Shares were first issued on November 19, 2013.

(2)

The Net Asset Value for each share class (“NAV per share”) is calculated daily as of the close of business using a process that reflects (i) estimated values of each of INAV’s commercial real estate assets, related liabilities and notes receivable secured by real estate provided periodically by INAV’s independent valuation expert in individual appraisal reports, (ii) daily updates in the price of liquid assets for which third party market quotes are available, (iii) accruals of INAV’s daily distributions and (iv) estimates of daily accruals, on a net basis, of operating revenues, expenses, debt service costs and fees.

(3)	Calculated using a daily distribution rate per share and NAV per share, for each share class, as of the close of business on September 30, 2014:


Share Class	Date of Offering	NAV Per Share		Daily Distribution Rate		Annualized Distribution
W Shares	12/6/2011⁽³⁾	$	17.10	$	0.002678692		5.72	%
A Shares	10/10/13⁽³⁾	$	17.05	$	0.002670741		5.72	%
I Shares	11/19/13⁽³⁾	$	17.14	$	0.002684700		5.72	%

American Realty Capital Properties, Inc.

Managed Programs

Fee Summary

The following table shows fee summary information for Cole Capital for certain of the Managed Programs as of September 30, 2014:


	Offering Fees						Transaction Fees						Management Fees
Program	Selling Commissions ⁽¹⁾			Dealer Manager and Distribution Fees ⁽²⁾			Acquisition Transactional Fees ⁽³⁾			Financing Transactional Fees			Property Management Fees ⁽⁴⁾			Asset Management / Advisory Fees			Performance Fees
Open Programs
CCPT V		7	%		2	%		2	%		—	%		—	%		0.65% - 0.75%	⁽⁶⁾		15	%⁽⁷⁾
INAV			⁽⁵⁾			⁽⁵⁾		—	%		—	%		—	%		0.90%			25	%⁽⁸⁾
CCIT II		7	%		2	%		2	%		—	%		—	%		0.65% - 0.75%	⁽⁶⁾		15	%⁽⁷⁾

Closed Programs
CCPT IV		7	%		2	%		2	%		—	%		—	%		0.65% - 0.75%	⁽⁶⁾		15	%⁽⁷⁾
CCIT		7	%		2	%		2	%		—	%		—	%		0.65% - 0.75%	⁽⁶⁾		15	%⁽⁷⁾
Other Programs		N/A			N/A			Various			Various			Various			Various			Various

(1)	The Company reallows 100% of selling commissions earned to participating broker-dealers.

(2)	The Company may reallow all or a portion of its dealer manager fee or applicable distribution fee to participating broker-dealers as a marketing and due diligence expense reimbursement.

(3)	Percent taken on gross purchase price.

(4)	Percent taken on gross revenues (leasing fees based on prevailing market rates with restrictions).

(5)	In connection with the INAV offering, the Company will receive selling commissions, an asset-based dealer manager fee and/or an asset-based distribution fee, as summarized in the table below for each class of common stock:


Share Class	Selling Commission ⁽¹⁾			Dealer Manager Fee⁽²⁾			Distribution Fee ⁽²⁾
W Shares		—			0.55	%		—
A Shares		up to 3.75	%		0.55	%		0.50	%
I Shares		—			0.25	%		—

(6)	Annualized fee based on the average monthly invested assets.

(7)

Performance fee paid only under the following events: (i) if shares are listed on a national securities exchange; (ii) if the respective Managed Program is sold or the assets are liquidated; or (iii) upon termination of the advisory agreement. In connection with such events, the performance fee will only be earned upon the return to investors of their net capital invested and an 8% annual cumulative, non-compounded return (6% in the case of CCPT V).

(8)	Performance fee paid for any year in which the total return on stockholders’ capital exceeds 6% per annum on a calendar year basis.

American Realty Capital Properties, Inc.

Managed Programs

Program Activity Summary

The following table shows the Managed Program’s activity summary information for the three-month period ended on September 30, 2014 (dollars in thousands):


Program	Capital Raised ⁽¹⁾		Number of Investments Acquired ⁽²⁾		Purchase Price ⁽³⁾		New Debt ⁽⁴⁾
Open Programs:
CCPT V	$	88,306		40	$	163,700	$	100,239
INAV		22,715		18		71,954		55,350
CCIT II		108,776		7		91,000		52,635

Total Open Programs		219,797		65		326,654		208,224

Closed Programs:
CCPT IV		28,064		162		724,446		424,876
CCIT		12,929		1		60,800		67,000
Other Programs		—		—		—		—

Total Closed Programs		40,993		163		785,246		491,876

Total	$	260,790		228	$	1,111,900	$	700,100

(1)	Capital raised represents gross proceeds, including DRIP shares issued.

(2)	Number of investments acquired includes properties owned through consolidated joint ventures.

(3)	Purchase price of properties includes pro rata share for consolidated joint ventures.

(4)	New debt may include (i) outstanding face value of new mortgage notes payable, (ii) total allowable borrowings under new credit facilities into which the Managed Programs entered and (iii) increases in allowable borrowings to existing credit facilities in accordance with amendments executed.

Revenue Summary

The following table shows the Managed Program’s revenue information for the three-month period ended September 30, 2014 (dollars in thousands):


Program	Offering Related Revenue and Reimbursements			Transaction Service Revenue		Management Service Revenue and Reimbursements		Total Managed Programs Revenue and Reimbursements
Open Programs:
CCPT V	$	9,518		$	3,279	$	1,037	$	13,834
INAV		603			—		455		1,058
CCIT II		11,466			1,827		704		13,997

Gross revenues - Open Programs		21,587			5,106		2,196		28,889
Less:
Reallowed revenues		15,384			—		—		15,384
Reimbursements		1,951			—		381		2,332

Adjusted Revenues ⁽¹⁾ - Open Programs		4,252			5,106		1,815		11,173


Closed Programs:
CCPT IV		(47	)		16,573		7,110		23,636
CCIT		(5	)		1,216		5,555		6,766
Other Programs		—			77		429		506

Gross revenues - Closed Programs		(52	)		17,866		13,094		30,908
Less:
Reimbursements		—			—		2,294		2,294

Adjusted Revenues ⁽¹⁾ - Closed Programs		(52	)		17,866		10,800		28,614

Total Adjusted Revenues ⁽¹⁾	$	4,200		$	22,972	$	12,615	$	39,787

(1)	Adjusted Revenues is a non-GAAP measure. See the Definitions section that begins on page 31 for a description of the Company’s non-GAAP measures.

American Realty Capital Properties, Inc.

Definitions

Adjusted Revenues is a non-GAAP financial measure that represents revenue on a GAAP basis adjusted to eliminate revenue recorded as reimbursement revenue in accordance with GAAP, of certain expense, which are included in reallowed fees and commissions and general and administrative expenses.

Annualized Adjusted EBITDA includes full-year real estate activities adjusted for mid-period acquisitions, normalized full-year activity for Cole Capital, less cash general and administrative expenses and property operating expenses.

Annualized Interest Expense is full-year interest expense based on outstanding debt balances as of quarter end.

Average Annual Rent is annualized rental income under our leases reflecting straight-line rent adjustments associated with contractual rent increases in the leases as required by GAAP, as further adjusted to reflect the effect of tenant concessions and abatements such as free rent.

Creditworthy Tenants are determined by us based on our own assessment of the tenant financial condition based on our underwriting criteria.

EBITDA, a non-GAAP measure, is defined as earnings before interest, taxes, depreciation and amortization, excluding one-time expenses for acquisition, merger and other transaction costs.

Funds from Operations and Adjusted Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”), an industry trade group, has promulgated a measure known as funds from operations (“FFO”), which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to our net income or loss as determined under U.S. GAAP.

We define FFO, a non-U.S. GAAP measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with U.S. GAAP, excluding gains or losses from sales of property but including asset impairment writedowns, plus depreciation and amortization, after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO. Our FFO calculation complies with NAREIT’s policy described above.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or is requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, since real estate values historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of U.S. GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in U.S. GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. However, FFO and adjusted funds from operations (“AFFO”), as described below, should not be construed to be more relevant or accurate than the current U.S. GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under U.S. GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-U.S. GAAP FFO and AFFO measures and the adjustments to U.S. GAAP in calculating FFO and AFFO.

We consider FFO and AFFO useful indicators of the performance of a REIT. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), they facilitate comparisons of operating performance between periods and between other REITs in our peer group. Accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.

American Realty Capital Properties, Inc.

Definitions

Changes in the accounting and reporting promulgations under U.S. GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that were put into effect in 2009 and other changes to U.S. GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses for all industries as items that are expensed under U.S. GAAP, that are typically accounted for as operating expenses. Management believes these fees and expenses do not affect our overall long-term operating performance. While certain companies may experience significant acquisition activity, other companies may not have significant acquisition activity and management believes that excluding costs such as merger and transaction costs and acquisition related costs from property operating results provides useful information to investors and provides information that improves the comparability of operating results with other companies who do not have significant merger or acquisition activities. AFFO is not equivalent to our net income or loss as determined under U.S. GAAP, and AFFO may not be a useful measure of the impact of long-term operating performance if we continue to have such activities in the future.

We exclude certain income or expense items from AFFO that we consider more reflective of investing activities, other non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our business plan. These items include unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments, gains or losses on contingent valuation rights, gains and losses on investments and early extinguishment of debt. In addition, by excluding non-cash income and expense items such as amortization of above and below market leases, amortization of deferred financing costs, straight-line rent and non-cash equity compensation from AFFO we believe we provide useful information regarding income and expense items which have no cash impact and do not provide us liquidity or require our capital resources. By providing AFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our ongoing operating performance without the impacts of transactions that are not related to the ongoing profitability of our portfolio of properties. We also believe that AFFO is a recognized measure of sustainable operating performance by the REIT industry. Further, we believe AFFO is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies that are not as involved in activities which are excluded from our calculation. Investors are cautioned that AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as it excludes certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

In addition, we exclude certain interest expenses related to securities that are convertible to common stock as the shares are assumed to have converted to common stock in our calculation of weighted average shares of common stock-fully diluted. As the Company’s convertible notes have a cash or stock settlement option and the Company has the ability and intent to settle its convertible notes in cash, the interest expense related to our convertible notes have not been excluded from AFFO, and accordingly, the shares are not assumed to have converted to common stock in our calculation of weighted average shares of common stock-fully diluted.

In calculating AFFO, we exclude expenses, which under U.S. GAAP are characterized as operating expenses in determining operating net income. These expenses are paid in cash by us, and therefore such funds will not be available to distribute to investors. All paid and accrued merger and acquisition fees and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property and certain other expenses. Therefore, AFFO may not be an accurate indicator of our operating performance, especially during periods in which mergers are being consummated or properties are being acquired or certain other expenses are being incurred. AFFO that excludes such costs and expenses would only be comparable to companies that did not have such activities. Further, under U.S. GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, we view fair value adjustments as items which are unrealized and may not ultimately be realized. We view both gains and losses from fair value adjustments as items which are not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe AFFO provides useful supplemental information.

As a result, we believe that the use of FFO and AFFO, together with the required U.S. GAAP presentations, provide a more complete understanding of our performance relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

American Realty Capital Properties, Inc.

Definitions

FFO and AFFO are non-U.S. GAAP financial measures and do not represent net income as defined by U.S. GAAP. FFO and AFFO do not represent cash flows from operations as defined by U.S. GAAP, are not indicative of cash available to fund all cash flow needs and liquidity, including our ability to pay distributions and should not be considered as alternatives to net income, as determined in accordance with U.S. GAAP, for purposes of evaluating our operating performance. Other REITs may not define FFO in accordance with the current NAREIT definition (as we do) or may interpret the current NAREIT definition differently than we do and/or calculate AFFO differently than we do. Consequently, our presentation of FFO and AFFO may not be comparable to other similarly titled measures presented by other REITs.

Investment Grade is a determination made by major credit rating agencies and, for these purposes, includes an affiliate of an entity with an investment-grade rating.

VEREIT, Inc. - FORM 8-K - EX-99.4 - March 2, 2015

Attached files

VEREIT, Inc. Reports