Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 2, 2023

The Necessity Retail REIT, Inc.

(Exact Name of Registrant as Specified in its Charter)

Maryland

001-38597

90-0929989

(State or other jurisdiction
of incorporation)

(Commission File Number)

(I.R.S. Employer
Identification No.)

650 Fifth Avenue, 30th Floor

New York, New York 10019

___________________________________________________________________________________________________________________________________________________________________________

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 415-6500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.01 par value per share

RTL

The Nasdaq Global Select Market

7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

RTLPP

The Nasdaq Global Select Market

7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share

RTLPO

The Nasdaq Global Select Market

Preferred Stock Purchase Rights

The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On August 2, 2023, The Necessity Retail REIT, Inc. (the “Company”) issued a press release announcing its results of operations for the quarter ended June 30, 2023, and supplemental financial information for the quarter ended June 30, 2023, attached hereto as Exhibits 99.1 and 99.2, respectively.

Item 7.01. Regulation FD Disclosure.

Press Release and Supplemental Information

As disclosed in Item 2.02 above, on August 2, 2023, the Company issued a press release announcing its results of operations for the quarter ended June 30, 2023, and supplemental financial information for the quarter ended June 30, 2023, attached hereto as Exhibits 99.1 and 99.2, respectively. The information set forth in Item 7.01 of this Current Report on Form 8-K and in the attached Exhibits 99.1 and 99.2 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.

The statements in this Current Report on Form 8-K that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” expects,” “plans,” “intends,” “would,” or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Any statements referring to the future value of an investment in the Company, including the adjustments giving effect to the Company merging with and into Osmosis Sub I, LLC, with Osmosis Sub I continuing as the surviving entity and wholly-owned subsidiary of GNL (the “REIT Merger”) and GNL and the Company becoming internally managed (the “Internalization Merger”) as described in this communication, as well as the potential success that the Company may have in executing the REIT Merger and Internalization Merger, are also forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause the Company's actual or anticipated results to differ materially from those contemplated by such forward-looking statements, including but not limited to: (i) the Company's ability to complete the REIT Merger and the Internalization Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approvals and satisfaction of other closing conditions to consummate the proposed transactions, (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Internalization Merger Agreement and REIT Merger Agreement, each dated as of May 23, 2023 relating to the proposed transactions, (iii) the Company's ability to obtain consents of applicable counterparties to certain of its lending agreements identified in the REIT Merger Agreement, (iv) failure to realize the expected benefits of the REIT Merger and the Internalization Merger, (v) significant transaction costs or unknown or inestimable liabilities, (vi) risks related to diverting the attention of the Company's management from ongoing business operations, (vii) the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay, (viii) the risk that the Company's business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected; (ix) risks related to the market value of the GNL's common stock to be issued in the proposed transactions; (x) potential adverse effects of the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, on the Company, the Company's tenants and the global economy and financial market, (x) the risk that one or more parties to the REIT Merger Agreement may not fulfil its obligations under the agreement, as well as the additional risks, uncertainties and other important factors set forth in the “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023, and all other filings with the SEC after that date, including, but not limited to, the Company's quarterly report on Form 10-Q as of and for the quarter ended June 30, 2023, as such risks, uncertainties and other important factors may be updated from time to time in the Company's subsequent reports. Further, forward-looking statements speak only as of the date they are made, and Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits


Exhibit No.						Description
99.1						Press release dated August 2, 2023

99.2						Quarterly supplemental information for the quarter ended June 30, 2023

104						Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL Document.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			THE NECESSITY RETAIL REIT, INC.

			By:			/s/ Edward M. Weil, Jr.
						Edward M. Weil, Jr.
						Chief Executive Officer and President (Principal Executive Officer)

Dated: August 2, 2023

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

THE NECESSITY RETAIL REIT ANNOUNCES SECOND QUARTER 2023 RESULTS

Company to Host Investor Webcast and Conference Call at 11:00 AM ET Today

New York, August 2, 2023 - The Necessity Retail REIT, Inc. (Nasdaq: RTL) (“RTL” or the “Company”), a real estate investment trust focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S., announced today its financial and operating results for the second quarter ended June 30, 2023.

Second Quarter 2023 and Subsequent Events Highlights

•Announced merger agreement with Global Net Lease, Inc. (NYSE:GNL), stockholder meeting to take place on September 8th and upon approval is expected to close in September, 2023

◦All stock transaction would represent a 35% premium to RTL’s 30-day volume-weighted average price, based on share prices as of the date of the transaction announcement on May 23, 2023

◦Anticipated 12% increase in quarterly dividend for RTL common stockholders

◦Expected to create the third largest publicly traded net lease REIT with a global presence

◦The combined company expected to benefit from increased size, reduced borrowing costs on existing credit facilities, and cost savings as a result of corporate synergies and the internalization of GNL’s and RTL’s management

•Revenue was $106.7 million compared to $116.9 million, including a non-recurring termination fee of $5.7 million, in the second quarter 2022

•Net loss attributable to common stockholders was $53.5 million versus $56.3 million for the second quarter 2022

•Cash net operating income (“Cash NOI”) was $81.3 million compared $86.3 million for the second quarter 2022, lower in part due to strategic dispositions in the first half of 2023

•Funds from Operations (“FFO”) was $0.5 million due in part to proxy-related expenses of $16.0 million and $4.9 million of merger and transaction costs, compared to $35.7 million in the second quarter 2022

•Adjusted Funds from Operations (“AFFO”) was $27.9 million, or $0.21 per share, compared to $38.5 million, or $0.29 per share, in second quarter 2022, which included a $5.7 million termination fee

•Paid dividends on common stock of $28.5 million or $0.21 per share

•Reduced net debt6 by approximately $74.0 million compared to net debt outstanding at the end of first quarter 2023

•Portfolio occupancy of 92.7% up 1.9% from 90.8% at the end of the second quarter of 2022, with Executed Occupancy plus Leasing Pipeline1 of 94.4%

•Leased over 710,000 square feet through 26 new leases and 41 renewed leases in the multi-tenant segment, and over 248,000 square feet through 17 renewed leases in our single-tenant segment, for a combined $13.3 million of annualized straight-line rent

•Positive spread of 4.6% on multi-tenant lease renewals compared to prior leases

•Dispositions of $100.8 million in the quarter bringing year to date dispositions to $172.2 million of non-strategic assets

“We continue to see strong demand for high-quality retail space across our portfolio from credit-worthy national tenants,” said Michael Weil, CEO of RTL. “During the quarter, we remained focused on our key strategic objectives for our necessity-based retail properties, including executing over 700,000 square feet of leasing and building a strong forward leasing pipeline. We also completed a $93 million strategic disposition that significantly reduced our portfolio exposure to casual dining, an industry we believe it is prudent to reduce our exposure to in a slowing economy, to less than 2% based on straight-line rent and contributed to a $74.0 million reduction in net debt since the end of the first quarter. As we continue to maximize the value of

our necessity-based retail properties, we are excited by the opportunities presented by the merger with GNL, including a reduction in leverage, greater access to capital, and expected earnings accretion in the first quarter after closing.”

Financial Results


	Three Months Ended June 30,
(In thousands, except per share data)	2023		2022
Revenue from tenants	$	106,700	$	116,929

Net loss attributable to common stockholders	$	(53,468)	$	(56,259)
Net loss per common share (a)	$	(0.40)	$	(0.43)

FFO attributable to common stockholders	$	458	$	35,717
FFO per common share (a)	$	—	$	0.27

AFFO attributable to common stockholders	$	27,923	$	38,485
AFFO per common share (a)	$	0.21	$	0.29

(a) All per share data based on 133,800,130 and 132,629,704 diluted weighted-average shares outstanding for the three months ended June 30, 2023 and 2022, respectively.

Real Estate Portfolio

The Company’s portfolio consisted of 991 net leased properties located in 46 states and the District of Columbia and comprised approximately 27.4 million rentable square feet as of June 30, 2023. Portfolio metrics include:

•92.7% leased, with 6.9 years remaining weighted-average lease term2

•64.9% of leases have weighted-average contractual cash rent increases of 1.0% based on annualized straight-line rent which increase the cash that is due under these leases over time

•66% and 37% of annualized straight-line rent in the single-tenant portfolio and from multi-tenant anchor tenants, respectively, was derived from investment grade or implied investment grade tenants3

•91% retail properties, 8% distribution properties and 1% office properties (based on an annualized straight-line rent)

•58% of the retail portfolio, based on straight line rent, is focused on either service4 or experiential retail5 giving the Company strong alignment with “e-commerce resistant” real estate

Property Dispositions

During the three months ended June 30, 2023, the Company disposed of 48 properties, for an aggregate contract sales price of $100.8 million.

Capital Structure and Liquidity Resources

As of June 30, 2023, the Company had a total borrowing capacity under the credit facility of $646.3 million based on the value of the borrowing base under the credit facility, and, of this amount, $604.0 million was outstanding under the credit facility as of June 30, 2023 and $42.3 million remained available for future borrowings. As of June 30, 2023, the Company had $59.2 million of cash and cash equivalents. The Company’s net debt6 to gross asset value7 was 51.0%, with net debt of $2.6 billion and its net debt to Adjusted EBITDA was 9.9x. The increase in this ratio is due to GAAP write-offs for lease rejections due to the tenant bankruptcies in the quarter. Excluding the impacts of these write-offs, Net Debt to Adjusted EBITDA would have been 9.3x.

The Company’s percentage of fixed rate debt was 77.5% as of June 30, 2023. The Company’s total combined debt had a weighted-average interest rate cost of 4.7%8, resulting in an interest coverage ratio of 2.1 times9.

Webcast and Conference Call

RTL will host a webcast and call on August 3, 2023 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the RTL website, www.necessityretailreit.com, in the “Investor Relations” section.

Dial-in instructions for the conference call and the replay are outlined below.

To listen to the live call, please go to RTL’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the RTL website at www.necessityretailreit.com.

Live Call

Dial-In (Toll Free): 1-877-407-0792

International Dial-In: 1-201-689-8263

Conference Replay*

Domestic Dial-In (Toll Free): 1-844-512-2921

International Dial-In: 1-412-317-6671

Conference Number: 13737312

*Available from 3:00 p.m. ET on August 3, 2023 through November 3, 2023.

Footnotes/Definitions

1.Includes (i) all leases fully executed by both parties as of June 30, 2023 but where the tenant has yet to take possession as of June 30, 2023, (ii) all leases fully executed by both parties as of July 31, 2023, but after June 30, 2023, (iii) all leases under negotiation with an executed nonbinding letter of intent (“LOI”) by both parties as of July 31, 2023, net of (iv) lease terminations effective as of July 31, 2023. There were 10 leases fully executed as of June 30, 2023 where the tenant had yet to take possession totaling approximately 122,000 square feet, 9 lease fully executed as of July 31, 2023, but after June 30, 2023 totaling approximately 184,000 square feet and 23 LOIs executed as of July 31, 2023 totaling approximately 286,000 square feet, and 6 lease terminations totaling approximately 129,000 square feet. There can be no assurance that LOIs will lead to definitive leases that will commence on their current terms, or at all. Leasing pipeline should not be considered an indication of future performance.

2.The weighted-average is based on annualized straight-line rent as of June 30, 2023.

3.As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade ratings. Implied investment grade ratings may include actual ratings of tenant parent or guarantor parent (regardless of whether the parent has guaranteed the tenant’s obligation under the lease) or a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of June 30, 2023. Based on annualized straight-line rent as of June 30, 2023, single-tenant portfolio tenants were 45.8% actual investment grade rated and 20.1% implied investment grade rated, top 20 tenants were 56.9% actual investment grade rated and 12.4% implied investment grade rated and anchor tenants in the multi-tenant portfolio were 29.7% actual investment grade rated and 6.8% implied investment grade rated.

4.Service retail is defined as single-tenant retail properties leased to tenants in the retail banking, restaurant, grocery, pharmacy, gas/convenience, healthcare, and auto services sectors.

5.Experiential retail is defined as multi-tenant properties leased to tenants in the restaurant, discount retail, entertainment, salon/beauty, and grocery sectors, among others. The Company also refers to experiential retail as e-commerce defensive retail.

6.Total debt of $2.7 billion less cash and cash equivalents of $59.2 million as of June 30, 2023. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.

7.Defined as the carrying value of total assets plus accumulated depreciation and amortization as of June 30, 2023.

8.Weighted based on the outstanding principal balance of the debt.

9.The interest coverage ratio is calculated by dividing Adjusted EBITDA by cash paid for interest (interest expense less amortization of deferred financing costs, net, and amortization of mortgage premiums on borrowings, net) for the quarter ended June 30, 2023.

About The Necessity Retail REIT, Inc.

The Necessity Retail REIT (Nasdaq: RTL) is the preeminent publicly traded real estate investment trust (REIT) focused on “Where America Shops”. RTL acquires and manages a diversified portfolio of primarily necessity-based retail single-tenant and open-air shopping center properties in the U.S. Additional information about RTL can be found on its website at www.necessityretailreit.com.

Supplemental Schedules

The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of RTL’s website at www.necessityretailreit.com and on the SEC website at www.sec.gov.

Important Notice

The statements in this communication that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” expects,” “plans,” “intends,” “would,” or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Any statements referring to the future value of an investment in the Company, including the adjustments giving effect to the Company merging with and into Osmosis Sub I, LLC, with Osmosis Sub I continuing as the surviving entity and wholly-owned subsidiary of GNL (the “REIT Merger”) and GNL and the Company becoming internally managed (the “Internalization Merger”) as described in this communication, as well as the potential success that the Company may have in executing the REIT Merger and Internalization Merger, are also forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause the Company’s actual or anticipated results to differ materially from those contemplated by such forward-looking statements, including but not limited to: (i) the Company’s ability to complete the REIT Merger and Internalization Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approvals and satisfaction of other closing conditions to consummate the proposed transactions, (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Internalization Merger Agreement and REIT Merger Agreement, each dated as of May 23, 2023 relating to the proposed transactions, (iii) the Company’s ability to obtain consents of applicable counterparties to certain of its lending agreements identified in the REIT Merger Agreement (iv) failure to realize the expected benefits of the REIT Merger and the Internalization Merger, (v) significant transaction costs or unknown or inestimable liabilities, (vi) risks related to diverting the attention of the Company’s management from ongoing business operations, (vii) the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay, (viii) the risk that the Company’s business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, (ix) risks related to the market value of the GNL’s common stock to be issued in the proposed transactions, (x) potential adverse effects of the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, on the Company, the Company’s tenants and the global economy and financial market and (xi) the risk that one or more parties to the REIT Merger Agreement may not fulfil its obligations under the agreement, as well as the additional risks, uncertainties and other important factors set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023, and all other filings with the SEC after that date, as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Further, forward-looking statements speak only as of the date they are made, and Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

Additional Information About the REIT Merger and Internalization Merger and Where to Find It

In connection with the proposed transactions, on July 6, 2023, GNL filed with the SEC a registration statement on Form S-4 (as amended on July 17, 2023), which includes a document that serves as a prospectus of GNL and a joint proxy statement of GNL and the Company (the “joint proxy statement/prospectus”). Each party also plans to file other relevant documents with the SEC regarding the proposed transactions. The Form S-4 became effective on July 18, 2023. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTIONS. The Company commenced mailing the definitive joint proxy statement/prospectus to stockholders on or about July 19, 2023. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus and other relevant documents filed by the Company with the SEC at the SEC’s website at www.sec.gov. Copies of the documents filed by the Company with the SEC are available free of charge on the Company’s website at www.necessityretailreit.com or by contacting the Company’s Investor Relations at ir@rtlreit.com.

Participants in the Proxy Solicitation

The Company and its respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transactions. Information about the directors and executive officers of the Company is available in the proxy statement for its 2023 Annual Meeting, as incorporated by reference in the joint proxy statement/prospectus. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC regarding the proposed transactions. Investors should read the joint proxy statement/prospectus carefully before making any voting or investment decisions. Investors may obtain free copies of these documents from the Company as indicated above.

Accounting Treatment of Rent Deferrals/Abatements

The majority of the concessions granted to the Company's tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable. The Company’s revenue recognition policy requires that it must be probable that the Company will collect virtually all of the lease payments due and does not provide for partial reserves, or the ability to assume partial recovery. In light of the COVID-19 pandemic, the Financial Accounting Standards Board (“FASB”) and SEC agreed that for leases where the total lease cash flows will remain substantially the same or less than those after the COVID-19 related effects, companies may choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract as a practical expedient and account for rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. As a result, rental revenue used to calculate Net Income and National Association of Real Estate Investment Trusts (“NAREIT”) FFO was not significantly impacted by these types of deferrals. In addition, since these deferral amounts were substantially collected, the Company has excluded from the increase in straight-line rent for AFFO purposes the amounts recognized under accounting principles generally accepted in the United States of America (“GAAP”) relating to these types of rent deferrals. Conversely, for abatements where contractual rent was reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and the Company has, accordingly, reduced its AFFO.

Contacts:

Investors and Media:

Email: investorrelations@necessityretailreit.com

Phone: (866) 902-0063

The Necessity Retail REIT, Inc.

Consolidated Balance Sheets

(In thousands. except share and per share data)


	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Real estate investments, at cost:
Land	$	956,506	$	996,293
Buildings, fixtures and improvements	3,369,177		3,467,463
Acquired intangible lease assets	567,722		644,553
Total real estate investments, at cost	4,893,405		5,108,309
Less: accumulated depreciation and amortization	(810,727)		(784,946)
Total real estate investments, net	4,082,678		4,323,363
Cash and cash equivalents	59,172		70,795
Restricted cash	23,373		17,956


Deferred costs, net	25,050		22,893
Straight-line rent receivable	59,890		66,657
Operating lease right-of-use assets	17,587		17,839
Prepaid expenses and other assets (including $2,651 of prepayments to related parties as of June 30, 2023)	67,510		66,551

Total assets	$	4,335,260	$	4,586,054

LIABILITIES AND EQUITY
Mortgage notes payable, net	$	1,553,688	$	1,808,433
Credit facility	604,000		458,000
Senior notes, net	492,987		492,319
Below market lease liabilities, net	123,900		133,876
Accounts payable and accrued expenses (including $901 and $1,838 due to related parties as of June 30, 2023 and December 31, 2022, respectively)	54,804		64,169
Operating lease liabilities	19,088		19,132

Deferred rent and other liabilities	16,531		16,815
Dividends payable	5,837		5,837
Total liabilities	2,870,835		2,998,581




7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 12,796,000 shares authorized, 7,933,711 shares issued and outstanding as of June 30, 2023 and December 31, 2022	79		79
7.375% Series C cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,536,000 shares authorized, 4,595,175 shares issued and outstanding as of June 30, 2023 and December 31, 2022	46		46
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 134,535,442 and 134,224,313 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	1,345		1,342
Additional paid-in capital	2,999,565		2,999,163

Distributions in excess of accumulated earnings	(1,565,425)		(1,435,794)
Total stockholders’ equity	1,435,610		1,564,836
Non-controlling interests	28,815		22,637
Total equity	1,464,425		1,587,473
Total liabilities and equity	$	4,335,260	$	4,586,054

The Necessity Retail REIT, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands, except share and per share data)


	Three Months Ended June 30,
	2023		2022
Revenue from tenants	$	106,700	$	116,929

Operating expenses:
Asset management fees to related parties	7,972		8,296
Property operating expenses	25,082		27,520
Impairments of real estate investments	—		58,954
Merger, transaction and other costs	4,931		206
Settlement costs	8,800		—
Equity-based compensation [1]	3,519		3,523
General and administrative	14,744		8,390
Depreciation and amortization	59,466		46,573
Total operating expenses	124,514		153,462
Operating income before gain on sale of real estate investments	(17,814)		(36,533)
Gain on sale of real estate investments	5,471		13,438
Operating income	(12,343)		(23,095)
Other (expense) income:
Interest expense	(35,945)		(28,329)
Other income	596		944
Gain on non-designated derivative	—		—
Total other expense, net	(35,349)		(27,385)
Net loss	(47,692)		(50,480)
Net loss attributable to non-controlling interests	61		58
Allocation for preferred stock	(5,837)		(5,837)
Net loss attributable to common stockholders	$	(53,468)	$	(56,259)

Basic and Diluted Net Loss Per Share:
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.40)	$	(0.43)
Weighted-average shares outstanding — Basic and Diluted	133,800,130		132,629,704

______

[1] Includes expense related to the Company’s restricted common shares and LTIP Units.

The Necessity Retail REIT, Inc.

Quarterly Reconciliation of Non-GAAP Measures (Unaudited)

(In thousands)


	Three Months Ended June 30,
	2023		2022
Adjusted EBITDA
Net loss	$	(47,692)	$	(50,480)
Depreciation and amortization	59,466		46,573
Interest expense	35,945		28,329
Impairments of real estate investments	—		58,954
Merger, transaction and other costs	4,931		206
Settlement costs	8,800		—
Equity-based compensation [1]	3,519		3,523
Gains on sales of real estate investments	(5,471)		(13,438)
Other income	(596)		(944)
Gain on non-designated derivatives	—		—
Expenses attributable to 2023 proxy contest and related litigation [2]	7,205		—
Adjusted EBITDA	66,107		72,723
Asset management fees to related parties	7,972		8,296
General and administrative	14,744		8,390
Expenses attributable to 2023 proxy contest and related litigation [2]	(7,205)		—
NOI	81,618		89,409
Amortization of market lease and other intangibles, net	(1,780)		(1,582)
Straight-line rent	1,429		(1,509)
Cash NOI	$	81,267	$	86,318

Cash Paid for Interest:
Interest expense	$	35,945	$	28,329
Amortization of deferred financing costs, net	(3,607)		(3,236)
Amortization of mortgage premiums and discounts on borrowings, net	(329)		(174)
Total cash paid for interest	$	32,009	$	24,919

______

[1] Includes expense related to the Company’s restricted common shares and LTIP Units.

[2] Amount relates to general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation. The Company does not consider these expenses to be part of its normal operating performance. Due to the increase in these expenses as a portion of its general and administrative expenses in the first quarter of 2023, the Company began including this adjustment to arrive at Adjusted EBITDA in order to better reflect its operating performance. The second quarter of 2022 did not have any of these expenses.

The Necessity Retail REIT, Inc.

Quarterly Reconciliation of Non-GAAP Measures (Unaudited)

(In thousands)


	Three Months Ended June 30,
	2023		2022
Net loss attributable to common stockholders (in accordance with GAAP)	$	(53,468)	$	(56,259)
Impairment of real estate investments	—		58,954
Depreciation and amortization	59,466		46,573
Gain on sale of real estate investments	(5,471)		(13,438)
Proportionate share of adjustments for non-controlling interest to arrive at FFO	(69)		(113)
FFO attributable to common stockholders [1]	458		35,717
Merger, transaction and other costs [2]	4,931		206
Settlement costs [3]	8,800		—
Legal fees and expenses — COVID-19 lease disputes [4]	—		58
Amortization of market lease and other intangibles, net	(1,780)		(1,582)
Straight-line rent	1,429		(1,509)
Straight-line rent (rent deferral agreements) [5]	(4)		(446)
Amortization of mortgage (premiums) and discounts on borrowings, net	329		174
Gain on non-designated derivatives	—		—
Equity-based compensation [6]	3,518		3,523
Amortization of deferred financing costs, net	3,607		3,236

Expenses attributable to 2023 proxy contest and related litigation [7]	7,205		—
Proportionate share of adjustments for non-controlling interest to arrive at AFFO	(25)		(5)
AFFO attributable to common stockholders [1]	$	27,923	$	38,485

______

[1] FFO and AFFO for the three months ended June 30, 2023 and 2022 include income from lease modification/termination revenue of $0.5 million and $5.7 million, respectively, which are recorded in Revenue from tenants in the consolidated statements of operations.

[2] Primarily includes costs associated with the proposed merger with GNL, prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the merger with American Realty Capital-Retail Centers of America, Inc. in February 2017.

[3] In the three months ended June 30, 2023, we recognized a settlement cost of $8.8 million, representing one-half of the reasonable, documented, out-of-pocket expenses (including legal fees) incurred by Blackwells Capital, LLC (“Blackwells Capital”), an affiliate of Blackwells Onshore I, LLC (together with Blackwells Capital, “Blackwells”), and certain others involved the Blackwells’ proxy solicitation (collectively and together with Blackwells, the “Blackwells/Related Parties”) in connection with the proxy contest and related litigation and the cooperation agreement, for which we agreed to reimburse the Blackwells/Related Parties.

[4] Reflects legal costs incurred related to disputes with tenants due to store closures or other challenges resulting from COVID-19. The tenants involved in these disputes had not recently defaulted on their rent and, prior to the second and third quarters of 2020, had recently exhibited a pattern of regular payment. Based on the tenants involved in these matters, their history of rent payments, and the impact of the pandemic on current economic conditions, the Company views these costs as COVID-19-related and separable from its ordinary general and administrative expenses related to tenant defaults. The Company engaged counsel in connection with these issues separate and distinct from counsel the Company typically engages for tenant defaults. The amount reflects what the Company believes to be only those incremental legal costs above what the Company typically incurs for tenant-related dispute issues. The Company may continue to incur these COVID-19 related legal costs in the future.

[5] Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on the Company's consolidated balance sheets but are considered to be earned revenue attributed to the current period for which rent was deferred for purposes of AFFO as they are expected to be collected. Accordingly, when the deferred amounts are collected, the amounts reduce AFFO. For rent abatements (including those qualified for FASB relief), where contractual rent has been reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and the Company has, accordingly reduced its AFFO. As of March 31, 2023, the Company has substantially collected all previously deferred rents.

[6] Includes expense related to the amortization of the Company's restricted common shares and LTIP Units related to its multi-year outperformance agreements for all periods presented.

[7] Amounts relate to general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation. The Company does not consider these expenses to be part of its normal operating performance and has, accordingly, increased its AFFO for this amount.

Non-GAAP Financial Measures

This release discusses non-GAAP financial measures we use to evaluate our performance, including FFO, AFFO, Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”) and Cash NOI. While NOI is a property-level measure, AFFO is based on total Company performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined herein, does not reflect an adjustment for straight-line rent but AFFO does include this adjustment. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, AFFO and NOI attributable to stockholders.

Caution on Use of Non-GAAP Measures

FFO, AFFO, Adjusted EBITDA, NOI and Cash NOI should not be construed to be more relevant or accurate than the current 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 GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.

Other REITs may not define FFO in accordance with the current NAREIT, an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may 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.

We consider FFO and AFFO useful indicators of our performance. Because FFO and AFFO 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), FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.

As a result, we believe that the use of FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends. Investors are cautioned that FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Funds from Operations and Adjusted Funds from Operations

Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.

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

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

Adjusted Funds from Operations

In calculating AFFO, we start with FFO, then we exclude certain income or expense items from AFFO that we consider to be more reflective of investing activities, such as non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our day to day operating business plan. These amounts include legal costs incurred as a result of certain litigation, portions of which have been and may in the future be reimbursed under insurance policies maintained by us. Insurance reimbursements are deducted from AFFO in the period of reimbursement. We believe that excluding certain litigation costs and subsequent insurance reimbursements related to litigation helps to provide a better understanding of the operating performance of our business. Other income and expense items also include early extinguishment of debt and unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains and losses on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market lease intangibles, amortization of deferred financing costs, straight-line rent, and share-based compensation related to restricted shares and the 2021 multi-year outperformance agreement with the Advisor from AFFO, we believe we provide useful information regarding those income and expense items which have a direct impact on our ongoing operating performance.

In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining net (loss) income, such as (i) merger, transaction and other costs, (ii) settlement costs related to our Blackwells litigation (iii) legal fees and expenses associated with COVID-19-related lease disputes involving certain tenants and (iv) certain other expenses, including general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation. These expenses negatively impact our operating performance during the period in which they are incurred or properties are acquired and will also have negative effects on returns to investors, but are excluded by us as we believe they are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net (loss) income. In addition, as discussed above, we view gains and losses from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the 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. By providing AFFO, we believe we are presenting useful information that can be used, among other things, to assess our performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) calculated in accordance with GAAP and presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay dividends. FFO and AFFO may include income from lease termination fees, which is recorded in revenue from tenants in our consolidated statements of operations.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.

We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, other non-cash items such as expense related to our multi-year outperformance agreement with the Advisor and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. All paid and accrued merger, acquisition and transaction related fees and certain other expenses, including general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation, negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors, but are not reflective of our on-going performance. Due to the increase in general and administrative expenses as a result of the 2023 proxy contest and related litigation as a portion of our total general and administrative expenses in the first quarter of 2023, we began including this adjustment to arrive at Adjusted EBITDA in order to better reflect our operating performance. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income (loss) as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operations of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). NOI excludes certain items included in calculating net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating

performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or our ability to pay dividends.

Cash NOI is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as NOI excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income (loss), as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs calculate and present Cash NOI.

Cash paid for interest is calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net. Management believes that cash paid for interest provides useful information to investors to assess our overall solvency and financial flexibility. Cash paid for interest should not be considered as an alternative to interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.

EXHIBIT 99.2

The Necessity Retail REIT, Inc.

Supplemental Information

Quarter ended June 30, 2023 (unaudited)


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)


Table of Contents

Item						Page
Non-GAAP Definitions						4
Key Metrics						7
Consolidated Balance Sheets						9
Consolidated Statements of Operations						10
Non-GAAP Measures						11
Debt Overview						13
Future Minimum Lease Rents						14
Top Ten Tenants						15
Diversification by Property Type						16
Diversification by Geography						17
Lease Expirations						18

Please note that totals may not add due to rounding.

Forward-looking Statements:

This supplemental package of The Necessity Retail REIT, Inc. (the “Company”) includes “forward-looking statements.” These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” expects,” “plans,” “intends,” “would,” or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Any statements referring to the future value of an investment in the Company, including the adjustments giving effect to the Company merging with and into Osmosis Sub I, LLC, with Osmosis Sub I continuing as the surviving entity and wholly-owned subsidiary of GNL (the “REIT Merger”) and GNL and the Company becoming internally managed (the “Internalization Merger”) as described in this communication, as well as the potential success that the Company may have in executing the REIT Merger and Internalization Merger, are also forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause the Company’s actual or anticipated results to differ materially from those contemplated by such forward-looking statements, including but not limited to: (i) the Company’s ability to complete the REIT Merger and the Internalization Merger on the proposed terms or on the anticipated timeline, or at all, including risks and uncertainties related to securing the necessary stockholder approvals and satisfaction of other closing conditions to consummate the proposed transactions, (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Internalization Merger Agreement and REIT Merger Agreement, each dated as of May 23, 2023 relating to the proposed transactions, (iii) the Company’s ability to obtain consents of applicable counterparties to certain of its lending agreements identified in the REIT Merger Agreement (iv) failure to realize the expected benefits of the REIT Merger and the Internalization Merger, (v) significant transaction costs or unknown or inestimable liabilities, (vi) risks related to diverting the attention of the Company's management from ongoing business operations, (vii) the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay, (viii) the risk that the Company’s business will not be integrated successfully or that such integration may be more difficult, time-consuming or costly than expected, (ix) risks related to the market value of the GNL’s common stock to be issued in the proposed transactions, (x) potential adverse effects of the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, on the Company, the Company’s tenants and the global economy and financial market and (xi) the risk that one or more parties to the REIT Merger Agreement may not fulfil its obligations under the merger agreement, as well as the additional risks, uncertainties and other important factors set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023, and all other filings with the SEC after that date, as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Further, forward-looking statements speak only as of the date they are made, and Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

Additional Information About the REIT Merger and Internalization Merger and Where to Find It


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

regarding the proposed transactions. The Form S-4 became effective on July 18, 2023. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTIONS. The Company commenced mailing the definitive joint proxy statement/prospectus to stockholders on or about July 19, 2023. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus and other relevant documents filed by the Company with the SEC at the SEC’s website at www.sec.gov. Copies of the documents filed by the Company with the SEC are available free of charge on the Company’s website at www.necessityretailreit.com or by contacting the Company’s Investor Relations at ir@rtlreit.com.

Participants in the Proxy Solicitation

Accounting Treatment of Rent Deferrals/Abatements

The majority of the concessions granted to the Company's tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable. The Company’s revenue recognition policy requires that it must be probable that the Company will collect virtually all of the lease payments due and does not provide for partial reserves, or the ability to assume partial recovery. In light of the COVID-19 pandemic, the Financial Accounting Standards Board ("FASB") and SEC agreed that for leases where the total lease cash flows will remain substantially the same or less than those after the COVID-19 related effects, companies may choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract as a practical expedient and account for rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. As a result, rental revenue used to calculate Net Income and NAREIT FFO (as defined below) was not significantly impacted by these types of deferrals. In addition, since these deferral amounts were substantially collected, the Company has excluded from the increase in straight-line rent for AFFO (as defined below) purposes the amounts recognized under generally accepted accounting principles ("GAAP") relating to these types of rent deferrals. Conversely, for abatements where contractual rent was reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and the Company has, accordingly, reduced its AFFO.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Non-GAAP Financial Measures

This section discusses non-GAAP financial measures we use to evaluate our performance, including Funds from Operations ("FFO"), Adjusted Funds from Operations ("AFFO"), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), Net Operating Income ("NOI") and Cash Net Operating Income ("Cash NOI"). While NOI is a property-level measure, AFFO is based on total Company performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined herein, does not reflect an adjustment for straight-line rent but AFFO does include this adjustment. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, AFFO and NOI attributable to stockholders.

Caution on Use of Non-GAAP Measures

Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may 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.

Funds from Operations and Adjusted Funds from Operations

Funds from Operations

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


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Adjusted Funds from Operations

In calculating AFFO, we start with FFO, then we exclude certain income or expense items from AFFO that we consider to be more reflective of investing activities, such as non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our day to day operating business plan. These amounts include legal costs incurred as a result of certain litigation, portions of which have been, and may in the future be, reimbursed under insurance policies maintained by us. Insurance reimbursements are deducted from AFFO in the period of reimbursement. We believe that excluding certain litigation costs and subsequent insurance reimbursements helps to provide a better understanding of the operating performance of our business. Other income and expense items also include early extinguishment of debt and unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains and losses on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market lease intangibles, amortization of deferred financing costs, straight-line rent, and share-based compensation related to restricted shares and the 2021 multi-year outperformance agreement with the Advisor from AFFO, we believe we provide useful information regarding those income and expense items which have a direct impact on our ongoing operating performance.

In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining net (loss) income, such as (i) merger, transaction and other costs, (ii) settlement costs related to our Blackwells litigation (iii) legal fees and expenses associated with COVID-19-related lease disputes involving certain tenants and (iv) certain other expenses, including general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation. These expenses negatively impact our operating performance during the period in which they are incurred or properties are acquired and will also have negative effects on returns to investors, but are excluded by us as we believe they are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net (loss) income. In addition, as discussed above, we view gains and losses from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management's analysis of our operating performance. Additionally, fair value adjustments, which are based on the 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. By providing AFFO, we believe we are presenting useful information that can be used, among other things, to assess our performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) calculated in accordance with GAAP and presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay dividends. FFO and AFFO may include income from lease termination fees, which is recorded in revenue from tenants in our consolidated statements of operations.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.

We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, other non-cash items such as expense related to our multi-year outperformance agreement with the Advisor and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. All paid and accrued merger, acquisition and transaction related fees and certain other expenses, including general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors, but are not reflective of our on-going performance. Due to the increase in general and administrative expenses as a result of the 2023 proxy contest and related litigation as a portion of our total general and administrative expenses in the first quarter of 2023, we began including this adjustment to arrive at Adjusted EBITDA in order to better reflect our operating performance. Adjusted EBITDA for the fourth quarter of 2022 (the only prior period with these types of costs) has been conformed to this presentation. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income (loss) as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

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


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Key Metrics

As of and for the three months ended June 30, 2023


Financial Results (Amounts in thousands, except per share data)
Revenue from tenants	$	106,700
Net loss attributable to common stockholders	$	(53,468)
Basic and diluted net loss per share attributable to common stockholders	$	(0.40)
Cash NOI [1]	$	81,267
Adjusted EBITDA [1]	$	66,107
AFFO attributable to common stockholders [1]	$	27,923
Dividends declared on common stock [2]	$	28,521

Balance Sheet and Capitalization (Amounts in thousands, except ratios and percentages)
Gross asset value [3]	$	5,145,987
Net debt [4] [5]	$	2,625,725
Total consolidated debt [5]	$	2,684,897
Total assets	$	4,335,260
Liquidity [6]	$	101,507

Common shares outstanding as of March 31, 2023	134,535

Net debt to gross asset value	51.0		%
Net debt to adjusted EBITDA [1] (annualized based on quarterly results)	9.9		x

Weighted-average interest rate cost [7]	4.7		%
Weighted-average debt maturity (years) [8]	3.9
Interest Coverage Ratio [9]	2.1		x


Real Estate Portfolio	Single-Tenant Portfolio			Multi-Tenant Portfolio			Total Portfolio
Portfolio Metrics:
Real estate investments, at cost (in billions)	$	2.2		$	2.7		$	4.9
Number of properties	882			109			991
Square footage (in millions)	11.0			16.4			27.4
Annualized straight-line rent (in millions) [10]	$	161.3		$	201.9		$	363.2
Annualized straight-line rent per leased square foot	$	15.3		$	13.7		$	14.4
Occupancy [11]	97.5		%	89.5		%	92.7		%
Weighted-average remaining lease term (years) [12]	9.3			4.9			6.9
% investment grade [13]	65.9		%	N/A			N/A
% of anchor tenants in multi-tenant portfolio that are investment grade [13] [14]	N/A			36.5		%	N/A
% of leases with rent escalators [15]	85.2		%	48.1		%	64.9		%
Average annual rent escalator [15]	1.4		%	0.7		%	1.0		%

——

[1] This Non-GAAP metric is reconciled below.

[2] Represents dividends declared on shares of the Company’s common stock payable to holders of record on the applicable record date.

[3] Defined as total assets plus accumulated depreciation and amortization as of June 30, 2023.

[4] Represents total debt outstanding less cash and cash equivalents.

[5] Excludes the effect of deferred financing costs, net and mortgage premiums, net.

[6] Liquidity includes cash and cash equivalents of $59.2 million as of June 30, 2023, and $42.3 million available for future borrowings under the Company's credit facility as of June 30, 2023.

[7] Weighted based on the outstanding principal balance of the debt as of June 30, 2023.

[8] Weighted based on the outstanding principal balance of the debt as of June 30, 2023 and does not reflect any changes to maturity dates subsequent to

June 30, 2023.

[9] The interest coverage ratio is calculated by dividing adjusted EBITDA for the applicable quarter by cash paid for interest (calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net). Management believes that Interest Coverage Ratio is a useful supplemental measure of our ability to service our debt obligations. Adjusted EBITDA and cash paid for interest are Non-GAAP metrics and are reconciled below.

[10] Calculated using the most recent available lease terms as of June 30, 2023.

[11] Only includes leases which have commenced and were taken possession by the tenant as of June 30, 2023.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

[12] The weighted-average remaining lease term (years) is based on annualized straight-line rent.

[13] As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade ratings. Implied investment grade ratings may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of June 30, 2023. The weighted averages are based on straight-line rent. Single-tenant portfolio tenants are 45.8% actual investment grade rated and 20.1% implied investment grade rated.

[14] Anchor tenants are defined as tenants that occupy over 10,000 square feet of one of the Company's multi-tenant properties. Anchor tenants are 29.7% actual investment grade rated and 6.8% implied investment grade rated.

[15] Based on annualized straight-line rent as of June 30, 2023. Contractual rent increases, which increase the cash that is due under these leases over time, include fixed percent or actual increases, or CPI-indexed increases.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023

Consolidated Balance Sheets

Amounts in thousands, except share and per share data


	June 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Real estate investments, at cost:
Land	$	956,506	$	996,293
Buildings, fixtures and improvements	3,369,177		3,467,463
Acquired intangible lease assets	567,722		644,553
Total real estate investments, at cost	4,893,405		5,108,309
Less: accumulated depreciation and amortization	(810,727)		(784,946)
Total real estate investments, net	4,082,678		4,323,363
Cash and cash equivalents	59,172		70,795
Restricted cash	23,373		17,956


Deferred costs, net	25,050		22,893
Straight-line rent receivable	59,890		66,657
Operating lease right-of-use assets	17,587		17,839
Prepaid expenses and other assets (including $2,651 of prepayments to related parties as of June 30, 2023)	67,510		66,551

Total assets	$	4,335,260	$	4,586,054

LIABILITIES, MEZZANINE EQUITY AND EQUITY
Mortgage notes payable, net	$	1,553,688	$	1,808,433
Credit facility	604,000		458,000
Senior notes, net	492,987		492,319
Below market lease liabilities, net	123,900		133,876
Accounts payable and accrued expenses (including $901 and $1,838 due to related parties as of June 30, 2023 and December 31, 2022, respectively)	54,804		64,169
Operating lease liabilities	19,088		19,132
Derivative liabilities, at fair value	—		—
Deferred rent and other liabilities	16,531		16,815
Dividends payable	5,837		5,837
Total liabilities	2,870,835		2,998,581

Mezzanine Equity:


7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 12,796,000 shares authorized, 7,933,711 shares issued and outstanding as of June 30, 2023 and December 31, 2022	79		79
7.375% Series C cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,536,000 shares authorized, 4,595,175 shares issued and outstanding as of June 30, 2023 and December 31, 2022	46		46
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 134,535,442 and 134,224,313 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	1,345		1,342
Additional paid-in capital	2,999,565		2,999,163
Accumulated other comprehensive income (loss)	—		—
Distributions in excess of accumulated earnings	(1,565,425)		(1,435,794)
Total stockholders' equity	1,435,610		1,564,836
Non-controlling interests	28,815		22,637
Total equity	1,464,425		1,587,473
Total liabilities, mezzanine equity and total equity	$	4,335,260	$	4,586,054


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Consolidated Statements of Operations

Amounts in thousands, except share and per share data


	Three Months Ended
	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenue from tenants	$	106,700	$	113,594	$	118,390	$	116,176

Operating expenses:
Asset management fees to related parties	7,972		7,956		7,965		7,939
Property operating expenses	25,082		26,913		26,848		28,051
Impairments of real estate investments	—		—		2,323		30,046
Merger, transaction and other costs	4,931		565		526		210
Settlement costs	8,800		—		—		—
Equity-based compensation [1]	3,519		3,567		3,555		3,857
General and administrative	14,744		10,492		8,643		8,499
Depreciation and amortization	59,466		54,182		54,099		57,494
Total operating expenses	124,514		103,675		103,959		136,096
Operating (loss) income before gains on sales of real estate investments	(17,814)		9,919		14,431		(19,920)
Gains (losses) on sale of real estate investments	5,471		11,792		(7,247)		1,608
Operating (loss) income	(12,343)		21,711		7,184		(18,312)
Other (expense) income:
Interest expense	(35,945)		(34,675)		(34,454)		(32,402)
Other income	596		27		1		25

Total other expense, net	(35,349)		(34,648)		(34,453)		(32,377)
Net loss	(47,692)		(12,937)		(27,269)		(50,689)
Net loss attributable to non-controlling interests	61		17		43		60
Allocation for preferred stock	(5,837)		(5,837)		(5,837)		(5,837)
Net loss attributable to common stockholders	$	(53,468)	$	(18,757)	$	(33,063)	$	(56,466)

Basic and Diluted Net Loss Per Share:
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.40)	$	(0.14)	$	(0.25)	$	(0.43)
Weighted-average shares outstanding — Basic and Diluted	133,800,130		133,715,627		133,716,340		133,115,729

——

[1] For the three months ended June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, includes equity-based compensation expense related to the Company's restricted common shares of $0.3 million, $0.4 million, $0.3 million and $0.7 million, respectively.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Non-GAAP Measures

Amounts in thousands


	Three Months Ended
	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
EBITDA:
Net loss	$	(47,692)	$	(12,937)	$	(27,269)	$	(50,689)
Depreciation and amortization	59,466		54,182		54,099		57,494
Interest expense	35,945		34,675		34,454		32,402
EBITDA	47,719		75,920		61,284		39,207
Impairment of real estate investments	—		—		2,323		30,046
Merger, transaction and other costs	4,931		565		526		210
Settlement costs	8,800		—		—		—
Equity-based compensation [1]	3,519		3,567		3,555		3,857
(Gain) loss on sale of real estate investments	(5,471)		(11,792)		7,247		(1,608)
Other income	(596)		(27)		(1)		(25)

Expenses attributable to 2023 proxy contest and related litigation [2]	7,205		2,181		788		—
Adjusted EBITDA	66,107		70,414		75,722		71,687
Asset management fees to related party	7,972		7,956		7,965		7,939
General and administrative	14,744		10,492		8,643		8,499
Expenses attributable to 2023 proxy contest and related litigation [2]	(7,205)		(2,181)		(788)		—
NOI	81,618		86,681		91,542		88,125
Amortization of market lease and other intangibles, net	(1,780)		(2,476)		(1,042)		(574)
Straight-line rent	1,429		(1,121)		(2,794)		(2,586)
Cash NOI	$	81,267	$	83,084	$	87,706	$	84,965

Cash Paid for Interest:
Interest expense	$	35,945	$	34,675	$	34,454	$	32,402
Amortization of deferred financing costs, net	(3,607)		(3,760)		(3,498)		(3,474)
Amortization of mortgage premiums and discounts on borrowings, net	(329)		(471)		(477)		(454)
Total cash paid for interest	$	32,009	$	30,444	$	30,479	$	28,474

——

[1] For the three months ended March 31, 2023, December 31, 2022, September 30, 2022 and June 30, 2022, includes equity-based compensation expense related to the Company's restricted common shares of $0.3 million, $0.4 million, $0.3 million and $0.7 million, respectively.

[2] Amounts relate to general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation. The Company does not consider these expenses to be part of its normal operating performance. Due to the increase in these expenses as a portion of its general and administrative expenses in the first quarter of 2023, the Company began including this adjustment to arrive at Adjusted EBITDA in order to better reflect its operating performance. Adjusted EBITDA for the fourth quarter of 2022 was conformed to this presentation. The third quarter of 2022 did not have any of these expenses.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Non-GAAP Measures

Amounts in thousands, except per share data


	Three Months Ended
	June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Funds from operations (FFO):
Net loss attributable to common stockholders (in accordance with GAAP)	$	(53,468)	$	(18,757)	$	(33,063)	$	(56,466)
Impairment of real estate investments	—		—		2,323		30,046
Depreciation and amortization	59,466		54,182		54,099		57,494
Gain on sale of real estate investments	(5,471)		(11,792)		7,247		(1,608)
Proportionate share of adjustments for non-controlling interest to arrive at FFO	(69)		(55)		(82)		(115)
FFO attributable to common stockholders [1]	458		23,578		30,524		29,351
Merger, transaction and other costs [2]	4,931		565		526		210
Settlement costs [3]	8,800		—		—		—
Legal fees and expenses — COVID-19 lease disputes [4]	—		(12)		55		7
Amortization of market lease and other intangibles, net	(1,780)		(2,476)		(1,042)		(574)
Straight-line rent	1,429		(1,121)		(2,794)		(2,586)
Straight-line rent (rent deferral agreements) [5]	(4)		(4)		(14)		(27)
Amortization of mortgage (premiums) and discounts on borrowings, net	329		471		477		454

Equity-based compensation [6]	3,518		3,567		3,555		3,857
Amortization of deferred financing costs, net	3,607		3,760		3,498		3,474
Gain on settlement of Prairie Towne liens [7]	(545)		—		—		—
Expenses attributable to 2023 proxy contest and related litigation [8]	7,205		2,181		788		—
Proportionate share of adjustments for non-controlling interest to arrive at AFFO	(25)		(8)		(13)		(6)
AFFO attributable to common stockholders [1]	$	27,923	$	30,501	$	35,560	$	34,160

Weighted-average common shares outstanding	133,800		133,716		133,716		133,116
Net loss per share attributable to common stockholders — Basic and Diluted	$	(0.40)	$	(0.14)	$	(0.25)	$	(0.43)
FFO per common share	$	—	$	0.18	$	0.23	$	0.22
AFFO per common share	$	0.21	$	0.23	$	0.27	$	0.26
Dividends declared on common stock	$	28,521	$	28,523	$	28,173	$	28,331

——

[1] FFO and AFFO for the three months ended March 31, 2023 includes income from a lease termination fee of $0.1 million, which is recorded in Revenue from tenants in the consolidated statement of operations.

[2] Primarily includes costs associated with the proposed merger with GNL, prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the Merger.

[3] In the three months ended June 30, 2023, we recognized a settlement cost of $8.8 million, representing one-half of the reasonable, documented, out-of-pocket expenses (including legal fees) incurred by Blackwells Capital LLC (“Blackwells Capital”), an affiliate of Blackwells Onshore I LLC (together with Blackwells Capital, “Blackwells”), and certain others involved the Blackwells’ proxy solicitation (collectively and together with Blackwells, the “Blackwells/Related Parties”) in connection with the proxy contest and related litigation and the cooperation agreement, for which we agreed to reimburse the Blackwells/Related Parties.

[5] Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on the Company's consolidated balance sheets but are considered to be earned revenue attributed to the current period for which rent was deferred for purposes of AFFO as they are expected to be collected. Accordingly, when the deferred amounts are collected, the amounts reduce AFFO. For rent abatements (including those qualified for FASB relief), where contractual rent has been reduced, the reduction is reflected over the remaining lease term for accounting purposes but represents a permanent reduction and the Company has, accordingly reduced its AFFO. As of March 31, 2023, the Company has substantially collected all previously deferred rents.

[6] Includes expense related to the amortization of the Company's restricted common shares and LTIP Units related to its multi-year outperformance agreements for all periods presented.

[7] Included in other income for the three months ended June 30, 2022 was a gain of $0.9 million on prior liens incurred on the Company's Prairie Towne property as a result of a settlement with the lien holder during the three months ended June 30, 2022. The Company does not consider this gain to be part of its normal operating performance and has, accordingly, reduced its AFFO for this amount.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

[8] Amounts relate to general and administrative expenses incurred for the 2023 proxy contest and related Blackwells litigation. The Company does not consider these expenses to be part of its normal operating performance and has, accordingly, increased its AFFO for these amounts.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Debt Overview

As of June 30, 2023

Amounts in thousands, except ratios and percentages


Year of Maturity	Number of Encumbered Properties	Weighted-Average Debt Maturity (Years) [3]	Weighted-Average Interest Rate [3][4]		Total Outstanding Balance [5]		Percent
Non-Recourse Debt
2023 (remainder)	11	0.2	4.0	%	$	96,498
2024	5	0.7	4.3	%	65,235
2025	363	2.1	3.8	%	706,777
2026	98	2.9	3.8	%	116,334
2027	—	4.2	3.8	%	611
Thereafter	293	5.9	3.8	%	595,442
Total Non-Recourse Debt	770	3.4	3.8	%	1,580,897		59	%

Recourse Debt [1]
Credit Facility [2]		3.8	7.2	%	604,000
Senior Notes		5.3	4.5	%	500,000
Total Recourse Debt		4.5	6.0	%	1,104,000		41	%

Total Debt		3.9	4.7	%	$	2,684,897	100	%

——

[1] Recourse debt is debt that is guaranteed by the Company.

[2] The maturity date of the Company's credit facility is April 2026. The Company has the right to extend the maturity date to April 2027.

[3] Weighted based on the outstanding principal balance of the debt.

[4] As of June 30, 2023, the Company’s total combined debt was 77.5% fixed rate and 22.5% variable rate.

[5] Excludes the effect of deferred financing costs, net and mortgage premiums and discounts.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Future Minimum Base Lease Rents Due to the Company

As of June 30, 2023

Amounts in thousands


	Future Minimum Base Rent Payments [1]
2023 (remainder)	$	171,304
2024	338,416
2025	313,653
2026	285,021
2027	246,173
2028	197,012
Thereafter	1,045,985
Total	$	2,597,564

——

[1] Represents future minimum base rent payments on a cash basis due to the Company over the next five years and thereafter. These amounts exclude tenant reimbursements and contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes among other items.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Top Ten Tenants (by annualized straight-line rent)

As of June 30, 2023

Amounts in thousands, except percentages


Tenant / Lease Guarantor	Property Type	Tenant Industry	Annualized SL Rent [1]		SL Rent Percent		Remaining Lease Term [2]	Investment Grade [3]
Imperial Reliance, LLC	Retail	Gas/Convenience	$	15,625	4	%	15.5	Yes
Fresenius	Retail	Healthcare	14,658		4	%	6.2	Yes
Home Depot	Retail	Home Improvement	12,987		4	%	6.6	Yes
AmeriCold	Distribution	Refrigerated Warehousing	12,720		3	%	4.2	Yes
Truist Bank	Retail	Retail Banking	12,001		3	%	6.0	Yes
Tenants 6 - 10	Various	Various	41,167		12	%	5.5	3 of 5 - Yes
Subtotal			109,158		30	%	7.0

Remaining portfolio			257,021		70	%

Total Portfolio			$	366,179	100	%

——

[1] Calculated using the most recent available lease terms as of June 30, 2023.

[2] Based on straight-line rent as of June 30, 2023.

[3] The top ten tenants are 69.8% actual investment grade rated and 14.3% implied investment grade rated (see page 7 for definition of Investment Grade).


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Diversification by Property Type

As of June 30, 2023

Amounts in thousands, except percentages


	Total Portfolio
Property Type	Annualized SL Rent [1]		SL Rent Percent		Square Feet	Sq. ft. Percent
Retail (including Power and Lifestyle Centers)	$	333,062	91	%	22,802	84	%
Distribution	29,469		8	%	4,230	15	%
Office	3,648		1	%	306	1	%
Total	$	366,179	100	%	27,338	100	%


	Retail Properties
Tenant Type	Annualized SL Rent [1]		SL Rent Percent		Square Feet [2]	Sq. ft. Percent
Single-Tenant:
Service-oriented [3]	$	108,406	33	%	3,602	17	%
Traditional retail [4]	23,824		7	%	2,557	12	%
Multi-Tenant:
Experiential/e-commerce defensive [5]	84,873		25	%	5,231	25	%
Other traditional retail	115,959		35	%	9,421	45	%
Total	$	333,062	100	%	20,811	100	%

——

[1] Calculated using the most recent available lease terms as of June 30, 2023.

[2] Represents total rentable square feet of retail properties occupied as of June 30, 2023.

[3] Includes single-tenant retail properties leased to tenants in the retail banking, restaurant, grocery, pharmacy, gas/convenience, fitness, healthcare, and auto services sectors.

[4] Includes single-tenant retail properties leased to tenants in the discount retail, home improvement, furniture, specialty retail, auto retail, sporting goods sectors, wireless/electronics, department stores and home improvement sectors.

[5] Represents multi-tenant properties leased to tenants in the restaurant, discount retail, entertainment, salon/beauty, and grocery sectors, among others.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Diversification by Geography

As of June 30, 2023

Amounts in thousands, except percentages


	Total Portfolio
Region	Annualized SL Rent [1]		SL Rent Percent		Square Feet		Sq. ft. Percent
Alabama	$	20,577	5.6	%	1,917		7.0	%
Alaska	409		0.1	%	9		—	%
Arizona	352		0.1	%	22		0.1	%
Arkansas	4,869		1.3	%	396		1.4	%
California	14,132		3.9	%	518		1.9	%
Colorado	792		0.2	%	52		0.2	%
Connecticut	1,801		0.5	%	98		0.4	%
District of Columbia	236		0.1	%	4		—	%
Florida	23,705		6.5	%	1,524		5.6	%
Georgia	37,628		10.3	%	2,589		9.5	%
Idaho	339		0.1	%	14		0.1	%
Illinois	19,472		5.3	%	1,597		5.8	%
Indiana	9,837		2.7	%	881		3.2	%
Iowa	2,698		0.7	%	166		0.6	%
Kansas	5,413		1.5	%	397		1.5	%
Kentucky	14,939		4.1	%	1,096		4.0	%
Louisiana	10,794		2.9	%	756		2.8	%
Maine	349		0.1	%	27		0.1	%
Maryland	4,548		1.2	%	299		1.1	%
Massachusetts	7,767		2.1	%	757		2.8	%
Michigan	9,723		2.7	%	604		2.2	%
Minnesota	3,441		0.9	%	379		1.4	%
Mississippi	6,455		1.8	%	351		1.3	%
Missouri	7,203		2.0	%	566		2.1	%
Montana	1,184		0.3	%	42		0.2	%
Nebraska	495		0.1	%	12		—	%
Nevada	7,142		2.0	%	408		1.5	%
New Hampshire	138		—	%	6		—	%
New Jersey	1,512		0.4	%	81		0.3	%
New Mexico	5,074		1.4	%	369		1.3	%
New York	3,590		1.0	%	313		1.1	%
North Carolina	27,917		7.6	%	2,354		8.6	%
North Dakota	923		0.3	%	146		0.5	%
Ohio	21,904		6.0	%	1,707		6.2	%
Oklahoma	13,263		3.6	%	1,079		3.9	%
Pennsylvania	13,424		3.7	%	879		3.2	%
Rhode Island	2,239		0.6	%	114		0.4	%
South Carolina	18,472		5.0	%	1,827		6.7	%
South Dakota	358		0.1	%	47		0.2	%
Tennessee	3,816		1.0	%	211		0.8	%
Texas	20,524		5.6	%	1,362		5.0	%
Utah	1,087		0.3	%	41		0.1	%
Vermont	102		—	%	22		0.1	%
Virginia	3,445		0.9	%	322		1.2	%
West Virginia	2,139		0.6	%	241		0.9	%
Wisconsin	8,633		2.4	%	664		2.4	%
Wyoming	1,319		0.4	%	72		0.3	%
Total	$	366,179	100	%	$	27,338	100	%

_____

[1] Calculated using the most recent available lease terms as of June 30, 2023.


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2023 (Unaudited)

Lease Expirations

As of June 30, 2023

Amounts in thousands, except ratios and percentages


Year of Expiration	Number of Leases Expiring	Annualized SL Rent [1]		Annualized SL Rent Percent		Leased Square Feet	Percent of Leased Square Feet Expiring
		(In thousands)				(In thousands)
2023 (Remaining)	73	$	5,610	1.5	%	404	1.6	%
2024	203	24,686		6.7	%	1,725	6.8	%
2025	226	33,265		9.1	%	2,483	9.8	%
2026	214	36,245		9.9	%	2,769	10.9	%
2027	242	51,254		14.0	%	4,914	19.4	%
2028	241	40,684		11.1	%	3,003	11.9	%
2029	185	33,110		9.0	%	2,233	8.8	%
2030	86	18,344		5.0	%	1,161	4.6	%
2031	81	19,036		5.2	%	1,202	4.7	%
2032	70	12,404		3.4	%	935	3.7	%
2033	79	14,292		3.9	%	793	3.1	%
2034	26	9,062		2.5	%	470	1.9	%
2035	6	2,320		0.6	%	191	0.8	%
2036	34	3,898		1.1	%	222	0.9	%
2037	35	4,633		1.3	%	98	0.4	%
2038	95	17,796		4.9	%	488	1.9	%
Thereafter (>2038)	187	39,540		10.8	%	2,242	8.8	%
Total	2,083	$	366,179	100	%	25,333	100	%

——

[1] Calculated using the most recent available lease terms as of June 30, 2023.

Cover	Aug. 02, 2023
Entity Information [Line Items]
Document Type	8-K
Document Period End Date	Aug. 02, 2023
Entity Registrant Name	The Necessity Retail REIT, Inc.
Entity Incorporation, State or Country Code	MD
Entity File Number	001-38597
Entity Tax Identification Number	90-0929989
Entity Address, Address Line One	650 Fifth Avenue
Entity Address, Address Line Two	30th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10019
City Area Code	212
Local Phone Number	415-6500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0001568162
Amendment Flag	false
Class A Common Stock, $0.01 par value per share
Entity Information [Line Items]
Title of 12(b) Security	Class A Common Stock, $0.01 par value per share
Trading Symbol	RTL
Security Exchange Name	NASDAQ
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share
Entity Information [Line Items]
Title of 12(b) Security	7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share
Trading Symbol	RTLPP
Security Exchange Name	NASDAQ
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share
Entity Information [Line Items]
Title of 12(b) Security	7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share
Trading Symbol	RTLPO
Security Exchange Name	NASDAQ
Preferred Stock Purchase Rights
Entity Information [Line Items]
Title of 12(b) Security	Preferred Stock Purchase Rights
No Trading Symbol Flag	true
Security Exchange Name	NASDAQ

Grafico Azioni Necessity Retail REIT (NASDAQ:RTLPP)
Storico
Da Apr 2024 a Mag 2024

Clicca qui per i Grafici di Necessity Retail REIT

Grafico Azioni Necessity Retail REIT (NASDAQ:RTLPP)
Storico
Da Mag 2023 a Mag 2024

RTLPP Necessity Retail REIT Inc

Notizie Necessity Retail REIT Inc - RTLPP

La tua Cronologia

Più Attivi

Toplist

RTLPP Necessity Retail REIT Inc

Notizie Necessity Retail REIT Inc - RTLPP

La tua Cronologia