(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.05 per share	SRC	New York Stock Exchange
6.000% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share	SRC-A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Spirit Realty Capital, Inc. Yes x☒ No o □	Spirit Realty, L.P. Yes o☒ No x □

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).



Spirit Realty Capital, Inc. Yes x☒ No o □	Spirit Realty, L.P. Yes x☒ No o □

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”,~~filer,” “smaller reporting ~~company” or an emerging growth company. See definitions of "large accelerated filer,", "smaller reporting~~ company,"” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Spirit Realty Capital, Inc.



Large accelerated filer x ☒	Accelerated filer o □	Non-accelerated filer o □



Smaller reporting company o ☐	Emerging growth company o ☐

Spirit Realty, L.P.



Large accelerated filer o □	Accelerated filer o □	Non-accelerated filer x ☒



Smaller reporting company o ☐	Emerging growth company o ☐

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.



Spirit Realty Capital, Inc. o □	Spirit Realty, L.P. o □

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Spirit Realty Capital, Inc. Yes o☐ No x ☒	Spirit Realty, L.P. Yes o☐ No x ☒

As of ~~October 31, 2017,~~May 1, 2020, there were ~~455,897,075~~102,939,952 shares of common stock, par value ~~$0.01,~~$0.05, of Spirit Realty Capital, Inc. outstanding.

~~Explanatory Note~~

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 of Spirit Realty Capital, Inc., a Maryland corporation, and Spirit Realty, L.P., a Delaware limited partnership. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” or the “Company” refer to Spirit Realty Capital, Inc. together with its consolidated subsidiaries, including Spirit Realty, L.P. Unless otherwise indicated or unless the context requires otherwise, all references to the “Operating Partnership” refer to Spirit Realty, L.P. together with its consolidated subsidiaries.

Spirit General OP Holdings, LLC ("OP Holdings") is the sole general partner of the Operating Partnership. The Company is a real estate investment trust ~~or REIT,~~("REIT") and the sole member of OP Holdings, as well as the special limited partner of the Operating Partnership. As sole member of the general partner of our Operating Partnership, our Company has the full, exclusive and complete responsibility for our Operating Partnership’s day-to-day management and control.

We believe combining the quarterly reports on Form 10-Q of our Company and Operating Partnership into a single report results in the following benefits:

•

enhancing investors’ understanding of our Company and Operating Partnership by enabling investors to view the business as a whole, reflective of how management views and operates the business;

~~enhancing investors’ understanding of our Company and Operating Partnership by enabling investors to view the business as a whole, reflective of how management views and operates the business;~~

•

eliminating duplicative disclosure and providing a streamlined presentation as a substantial portion of the disclosures apply to both our Company and Operating Partnership; and

~~eliminating duplicative disclosure and providing a streamlined presentation as a substantial portion of the disclosures apply to both our Company and Operating Partnership;~~

•

creating time and cost efficiencies by preparing one combined report in lieu of two separate reports.

~~creating time and cost efficiencies by preparing one combined report in lieu of two separate reports.~~

There are a few differences between our Company and Operating Partnership, which are reflected in the disclosures in this report. We believe it is important to understand these differences in the context of how we operate as an interrelated, consolidated company. Our Company is a REIT, the only material assets of which are the partnership interests in our Operating Partnership. As a result, our Company does not conduct business itself, other than acting as the sole member of the general partner of our Operating Partnership, issuing equity from time to time and guaranteeing certain debt of our Operating Partnership. Our Operating Partnership holds substantially all the assets of our Company. Our Company issued convertible notes and guarantees some of the debt of our Operating Partnership, see ~~footnote~~Note 4 to the consolidated financial statements included herein for further discussion. Our Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from ~~the issuance~~issuances of convertible notes and equity issuances by our Company, which are generally contributed to our Operating Partnership in exchange for partnership units of our Operating Partnership, our Operating Partnership generates the capital required by our Company’s business through our Operating Partnership’s operations or our Operating Partnership’s incurrence of indebtedness.

The presentation of stockholders’ equity and partners’ capital are the main areas of difference between the consolidated financial statements of our Company and those of our Operating Partnership. The partnership units in our Operating Partnership are accounted for as partners’ capital in our Operating Partnership’s consolidated financial statements. There are no non-controlling interests in the Company or the Operating Partnership.

To help investors understand the significant differences between our Company and our Operating Partnership, this report presents the consolidated financial statements separately for our Company and our Operating Partnership. All other sections of this report, including “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk,” are presented together for our Company and our Operating Partnership.

In order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that our Company and Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, or the Exchange Act, and 18 U.S.C. §1350, this report also includes separate ~~“Item~~“Part 1―Financial Information, Item 4. Controls and Procedures” sections and separate Exhibit 31 and 32 certifications for each of our Company and our Operating Partnership.

~~SPIRIT REALTY CAPITAL, INC.~~

INDEX



Glossary			3	4
PART I — FINANCIAL INFORMATION				6
	Item 1.	Financial Statements (Unaudited) ~~(Unaudited)~~	5	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36	33
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62	48
	Item 4.	Controls and Procedures	62	49
PART II — OTHER INFORMATION				50
	Item 1.	Legal Proceedings	63	50
	Item 1A.	Risk Factors	63	50
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65	51
	Item 3.	Defaults Upon Senior Securities	65	51
	Item 4.	Mine Safety Disclosures	65	52
	Item 5.	Other Information	65	52
	Item 6. ~~Exhibits~~	66Exhibits		53
~~Signatures~~		71Signatures		55

GLOSSARY

2015 Credit Agreement	Revolving credit facility agreement between the Operating Partnership and certain lenders dated March 31, 2015, as amended or otherwise modified from time to time, providing for an $800.0 million unsecured credit facility
2015 Term Loan Agreement	Term loan agreement between the Operating Partnership and certain lenders dated November 3, 2015, as amended or otherwise modified from time to time, providing for a $420.0 million unsecured term loan facility
~~Definitions:~~ 2017 Tax Legislation	Tax Cuts and Jobs Act of 2017
~~1031 Exchange~~ 2019 Credit Facility	~~Tax-deferred like-kind exchange of properties held for business or investment purposes,~~ $800.0 million unsecured revolving credit facility pursuant to ~~Section 1031 of~~ the ~~Code~~2019 Revolving Credit and Term Loan Agreement
2019 Facilities Agreements	2019 Revolving Credit and Term Loan Agreement and A-2 Term Loans
2019 Notes	$402.5 million convertible notes of the Corporation due in 2019
2019 Revolving Credit and Term Loan Agreement	Revolving credit and term loan agreement between the Operating Partnership and certain lenders dated January 14, 2019, as amended or otherwise modified from time to time
2020 Term Loans	$300.0 million senior unsecured term facility pursuant to the 2020 Term Loan Agreement
2020 Term Loan Agreement	Term loan agreement between the Operating Partnership and certain lenders dated April 2, 2020, as amended or otherwise modified from time to time
2021 Notes	$345.0 million convertible notes of the Corporation due in 2021
~~AFFO~~ 2026 Senior Notes	$300.0 million aggregate principal amount of senior notes issued in August 2016
2027 Senior Notes	$300.0 million aggregate principal amount of senior notes issued in September 2019
2029 Senior Notes	$400.0 million aggregate principal amount of senior notes issued in June 2019
2030 Senior Notes	$500.0 million aggregate principal amount of senior notes issued in September 2019
A-1 Term Loans	$420.0 million unsecured term loan facility pursuant to the 2019 Revolving Credit and Term Loan Agreement
A-2 Term Loans	$400.0 million unsecured term loan facility pursuant to a term loan agreement between the Operating Partnership and certain lenders dated January 14, 2019, as amended or otherwise modified from time to time
Adjusted Debt	Adjusted Debt is a non-GAAP financial measure. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
Adjusted EBITDAre	Adjusted EBITDAreis a non-GAAP financial measure. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
AFFO	Adjusted Funds From Operations. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
Amended Incentive Award Plan	Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan, as amended
AOCL	Accumulated Other Comprehensive Loss
ASC	Accounting Standards Codification
~~ASU~~ Asset Management Agreement	Asset Management Agreement between Spirit Realty, L.P. and Spirit MTA REIT dated May 31, 2018, subsequently assigned by Spirit Realty, L.P. to Spirit Realty AM Corporation on April 1, 2019 and terminated effective as of September 20, 2019
ASU	Accounting Standards Update
ATM Program	At the Market equity distribution program, pursuant to which the Corporation may offer and sell registered shares of common stock from time to time
CMBS	Commercial ~~Mortgage Backed~~Mortgage-Backed Securities
Code	Internal Revenue Code of 1986, as amended
~~Cole II~~ Company	~~Cole Credit Property Trust II, Inc.~~
~~Cole II Merger~~	~~Acquisition on July 17, 2013 of Cole II by the Company, in which the Company merged with and into the Cole II legal entity~~
~~Collateral Pools~~	~~Pools of collateral assets that are pledged to the indenture trustee for the benefit of the noteholders and secure obligations of issuers under the Spirit Master Funding Program~~
~~Company~~	The Corporation and its consolidated subsidiaries
Contractual Rent	~~Monthly~~ Represents monthly contractual cash rent and earned income from direct financing leases, excluding percentage rents, from our ~~properties~~ owned ~~fee-simple or ground leased,~~properties recognized during the final month of the reporting period, adjusted to exclude amounts received from properties sold during that period and adjusted to include a full month of contractual rent for properties acquired during that period. We use Contractual Rent when calculating certain metrics that are useful to evaluate portfolio credit, asset type, industry, and geographic diversity and to manage risk.
Convertible Notes	The 2019 Notes and 2021 Notes, together
Corporation	Spirit Realty Capital, Inc., a Maryland corporation
CPI	Consumer Price Index
~~Credit Agreement~~ EBITDAre	~~Revolving credit facility agreement between the Operating Partnership~~ EBITDAreis a non-GAAP financial measure and ~~certain lenders dated March 31, 2015, as amended or otherwise modified from time to time~~is computed in accordance with standards established by NAREIT. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations

~~EBITDA~~	~~Earnings Before Interest, Taxes, Depreciation and Amortization~~
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FFO	Funds From Operations. See definition in Management's Discussion and Analysis of Financial Condition and Results of Operations
~~Fitch~~ GAAP	~~Fitch Ratings, Inc.~~
~~GAAP~~	Generally Accepted Accounting Principles in the United States
~~LIBOR~~ Interim Management Agreement	Interim Management Agreement between Spirit Realty AM Corporation, a wholly-owned subsidiary of the Company, and Spirit MTA REIT dated June 2, 2019 and effective as of September 20, 2019
LIBOR	London Interbank Offered Rate
Master Trust 2013	The net-lease mortgage securitization trust established in December 2013 ~~under the Spirit Master Funding Program~~
Master Trust 2014	The net-lease mortgage securitization trust established in 2005 and amended and restated in 2014 ~~under the Spirit Master Funding Program~~
Master Trust Notes	Master Trust 2013 and Master Trust 2014, ~~notes,~~ together
Master Trust Release	Proceeds from the sale of assets securing the Master Trust Notes held in restricted accounts until a qualifying substitution is made or until used for principal reduction
~~Moody's~~ NAREIT	~~Moody's Investor Services~~
~~NAREIT~~	National Association of Real Estate Investment Trusts
Occupancy	The number of economically yielding owned properties divided by total owned properties
OP Holdings	Spirit General OP Holdings, LLC
Operating Partnership	Spirit Realty, L.P., a Delaware limited partnership


Property Management and Servicing Agreement	Second amended and restated agreement governing the management services and special services provided to Master Trust 2014 by Spirit Realty, L.P., dated as of May 20, 2014, as amended, supplemented, amended and restated or otherwise modified
~~Definitions:~~
~~REIT~~	Real Estate Investment ~~Trust~~Value	The gross acquisition cost, including capitalized transaction costs, plus improvements and less impairments, if any
~~Revolving Credit Facility~~ REIT	~~$800.0 million unsecured credit facility pursuant to the Credit Agreement~~ Real estate investment trust
S&P	~~Standard & Poor's Rating Services~~ S&P's Global Ratings
SEC	Securities and Exchange Commission
Securities Act	Securities Act of 1933, as amended
Senior Unsecured Notes	~~$300 million aggregate principal amount of senior notes issued in August 2016~~ 2026 Senior Notes, 2027 Senior Notes, 2029 Senior Notes, and 2030 Senior Notes, collectively
Series A ~~Cumulative Redeemable~~ Preferred Stock	6,900,000 shares of 6.000% Cumulative Redeemable Preferred Stock issued October 3, 2017, with a liquidation preference of $25.00 per share.
Shopko	Specialty Retail Shops Holding Corp. and certain of its affiliates
SMTA	Spirit ~~Master Funding Program~~MTA REIT, a Maryland real estate investment trust, or SMTA Liquidating Trust, a Maryland common law trust, as the context dictates. On January 1, 2020, Spirit MTA REIT transferred all of its assets (subject to all of its liabilities) to SMTA Liquidating Trust.
Spin-Off	~~The Company's asset-backed securitization program~~ Creation of an independent, publicly traded REIT, SMTA, through our contribution of properties leased to Shopko, assets that ~~comprises Master Trust 2013 and~~collateralize Master Trust 2014 and other additional assets to SMTA followed by the distribution by us to our stockholders of all of the common shares of beneficial interest in SMTA.
~~Term Loan~~ SubREIT	~~$420.0 million senior unsecured term facility pursuant to the Term Loan Agreement~~ Spirit MTA SubREIT, Inc., previously a wholly-owned subsidiary of SMTA. SubREIT was dissolved on October 1, 2019.
~~Term Loan Agreement~~ Total Debt	~~Term loan agreement between the Operating Partnership and certain lenders dated November 3, 2015, as amended~~ Principal debt outstanding before discounts, premiums or ~~otherwise modified from time to time~~deferred financing costs
TSR	Total Shareholder Return
U.S.	United States
Vacant	Owned properties which are not economically yielding

Unless otherwise indicated or unless the context requires otherwise, all references to the “registrant, the "Company," "Spirit Realty Capital," "we," "us" or "our" refer to the Corporation and its consolidated subsidiaries, including the Operating Partnership.

Unless otherwise indicated or unless the context requires otherwise, all references to the "Operating Partnership" refer to Spirit Realty, L.P. and its consolidated subsidiaries.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

SPIRIT REALTY CAPITAL, INC.

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Data)

(Unaudited)

	March 31, 2020			December 31, 2019
Assets
Investments:
Real estate investments:
Land and improvements	$	1,929,589		$	1,910,287
Buildings and improvements		3,953,335			3,840,220
Total real estate investments		5,882,924			5,750,507
Less: accumulated depreciation		(736,394	)		(717,097	)
		5,146,530			5,033,410
Loans receivable, net		30,849			34,465
Intangible lease assets, net		381,398			385,079
Real estate assets under direct financing leases, net		7,300			14,465
Real estate assets held for sale, net		3,126			1,144
Net investments		5,569,203			5,468,563
Cash and cash equivalents		216,692			14,492
Deferred costs and other assets, net		123,674			124,006
Goodwill		225,600			225,600
Total assets	$	6,135,169		$	5,832,661

Liabilities and stockholders’ equity
Liabilities:
Revolving credit facilities	$	500,000		$	116,500
Senior Unsecured Notes, net		1,484,473			1,484,066
Mortgages and notes payable, net		215,186			216,049
Convertible Notes, net		337,921			336,402
Total debt, net		2,537,580			2,153,017
Intangible lease liabilities, net		124,097			127,335
Accounts payable, accrued expenses and other liabilities		124,084			139,060
Total liabilities		2,785,761			2,419,412
Commitments and contingencies (see Note 6)
Stockholders’ equity:
Preferred stock and paid in capital, $0.01 par value, 20,000,000 shares authorized: 6,900,000 shares issued and outstanding at both March 31, 2020 and December 31, 2019		166,177			166,177
Common stock, $0.05 par value, 175,000,000 shares authorized: 102,942,162 and 102,476,152 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		5,147			5,124
Capital in excess of common stock par value		5,707,271			5,686,247
Accumulated deficit		(2,518,428	)		(2,432,838	)
Accumulated other comprehensive loss		(10,759	)		(11,461	)
Total stockholders’ equity		3,349,408			3,413,249
Total liabilities and stockholders’ equity	$	6,135,169		$	5,832,661

~~(Unaudited)~~

September 30,
2017 December 31,
2016
Assets

Investments:

Real estate investments:

Land and improvements $ 2,600,873

$ 2,704,010
Buildings and improvements 4,702,828

4,775,221
Total real estate investments 7,303,701

7,479,231
Less: accumulated depreciation (1,018,544 )
(940,005 )

6,285,157

6,539,226
Loans receivable, net 76,821

66,578
Intangible lease assets, net 429,857

470,276
Real estate assets under direct financing leases, net 24,883

36,005
Real estate assets held for sale, net 133,382

160,570
Net investments 6,950,100

7,272,655
Cash and cash equivalents 11,947

10,059
Deferred costs and other assets, net 218,400

140,917
Goodwill 254,340

254,340
Total assets $ 7,434,787

$ 7,677,971
Liabilities and stockholders’ equity

Liabilities:

Revolving Credit Facility $ 386,000

$ 86,000
Term Loan, net 419,091
418,471
Senior Unsecured Notes, net 295,242
295,112
Mortgages and notes payable, net 2,050,302

2,162,403
Convertible Notes, net 712,510

702,642
Total debt, net 3,863,145
3,664,628
Intangible lease liabilities, net 162,619

182,320
Accounts payable, accrued expenses and other liabilities 149,858

148,915
Total liabilities 4,175,622

3,995,863
Commitments and contingencies (see Note 7)

Stockholders’ equity:

Common stock, $0.01 par value, 750,000,000 shares authorized: 455,900,032 and 483,624,120 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 4,559

4,836
Capital in excess of par value 5,190,849

5,177,086
Accumulated deficit (1,936,243 )
(1,499,814 )
Accumulated other comprehensive income —

—
Total stockholders’ equity 3,259,165
3,682,108
Total liabilities and stockholders’ equity $ 7,434,787
$ 7,677,971

See accompanying notes.

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Operations

(In Thousands, Except Share and Per Share Data)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Revenues:
Rental income	$	121,363		$	104,067
Interest income on loans receivable		419			986
Earned income from direct financing leases		177			396
Related party fee income		250			6,927
Other income		511			217
Total revenues		122,720			112,593
Expenses:
General and administrative		13,490			13,181
Property costs (including reimbursable)		5,936			5,154
Deal pursuit costs		1,019			71
Interest		25,359			26,611
Depreciation and amortization		52,236			41,349
Impairments		40,774			3,692
Total expenses		138,814			90,058
Other income:
Gain on debt extinguishment		—			8,783
Gain on disposition of assets		388			8,730
Preferred dividend income from SMTA		—			3,750
Total other income		388			21,263
(Loss) income before income tax expense		(15,706	)		43,798
Income tax expense		(141	)		(220	)
Net (loss) income	$	(15,847	)	$	43,578
Dividends paid to preferred shareholders		(2,588	)		(2,588	)
Net (loss) income attributable to common stockholders	$	(18,435	)	$	40,990

Net (loss) income per share attributable to common stockholders:
Basic	$	(0.18	)	$	0.48
Diluted	$	(0.18	)	$	0.48

Weighted average shares of common stock outstanding:
Basic		102,230,147			85,497,093
Diluted		102,230,147			85,504,897

Dividends declared per common share issued	$	0.6250		$	0.6250

~~(Unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenues:
Rentals $ 159,799
$ 161,765
$ 479,506
$ 484,090
Interest income on loans receivable 1,003
1,042
2,769
4,326
Earned income from direct financing leases 483
660
1,613
2,082
Tenant reimbursement income 4,691
3,469
13,136
10,493
Other income 3,574
5,572
6,583
11,600
Total revenues 169,550
172,508
503,607
512,591
Expenses:
General and administrative 13,712
15,112
49,992
40,611
Restructuring charges —
3,264
—
5,726
Transaction costs 2,660
—
3,145
—
Property costs 8,080
6,916
26,763
20,854
Real estate acquisition costs 196
1,056
773
2,092
Interest 48,680
47,653
142,129
149,842
Depreciation and amortization 63,673
65,300
192,887
194,227
Impairments 37,737
15,407
88,109
41,396
Total expenses 174,738
154,708
503,798
454,748
(Loss) income before other income/(expense) and income tax benefit (expense) (5,188 ) 17,800
(191 ) 57,843
Other income (expense):
Gain (loss) on debt extinguishment 1,792
(8,349 ) 1,770
326
Total other income (expense) 1,792
(8,349 ) 1,770
326
(Loss) income before income tax benefit (expense) (3,396 ) 9,451
1,579
58,169
Income tax benefit (expense) 11
(12 ) (419 ) (932 )
(Loss) income before gain on disposition of assets (3,385 ) 9,439
1,160
57,237
Gain on disposition of assets 8,707
17,960
40,197
39,221
Net income attributable to common stockholders $ 5,322
$ 27,399
$ 41,357
$ 96,458

Net income per share attributable to common stockholders—basic $ 0.01
$ 0.06
$ 0.09
$ 0.21

Net income per share attributable to common stockholders—diluted $ 0.01
$ 0.06
$ 0.09
$ 0.21

Weighted average shares of common stock outstanding:
Basic 456,671,617
479,554,362
472,698,692
457,263,526
Diluted 456,671,617
480,598,610
472,698,692
457,301,623

Dividends declared per common share issued $ 0.1800
$ 0.1750
$ 0.5400
$ 0.5250

See accompanying notes.

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Comprehensive (Loss) Income

(In Thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Net (loss) income attributable to common stockholders	$	(18,435	)	$	40,990
Other comprehensive income (loss):
Net reclassification of amounts from (to) AOCL		702			(5,021	)
Total comprehensive (loss) income	$	(17,733	)	$	35,969

~~(Unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net income attributable to common stockholders $ 5,322
$ 27,399
$ 41,357
$ 96,458
Other comprehensive income:
Change in net unrealized losses on cash flow hedges —
28
—
(1,145 )
Net cash flow hedge losses reclassified to operations —
—
—
2,165
Total comprehensive income $ 5,322
$ 27,427
$ 41,357
$ 97,478

See accompanying notes.

SPIRIT REALTY CAPITAL, INC.

Consolidated ~~Statement~~Statements of ~~Stockholders’~~Stockholders' Equity

(In Thousands, Except Share Data)

(Unaudited)

Three Months Ended March 31, 2020	Preferred Stock					Common Stock
	Shares			Par Value and Capital in Excess of Par Value		Shares			Par Value			Capital in Excess of Par Value		Accumulated Deficit			AOCL			Total Stockholders’ Equity
Balances, December 31, 2019		6,900,000		$	166,177		102,476,152		$	5,124		$	5,686,247	$	(2,432,838	)	$	(11,461	)	$	3,413,249
Net loss		—			—		—			—			—		(15,847	)		—			(15,847	)
Dividends declared on preferred stock		—			—		—			—			—		(2,588	)		—			(2,588	)
Net loss attributable to common stockholders		—			—					—			—		(18,435	)		—			(18,435	)
Other comprehensive income		—	��		—		—			—			—		—			702			702
Dividends declared on common stock		—			—		—			—			—		(64,338	)		—			(64,338	)
Tax withholdings related to net stock settlements		—			—		(44,488	)		(2	)		—		(2,347	)		—			(2,349	)
Issuance of shares of common stock, net		—			—		362,481			18			17,580		—			—			17,598
Stock-based compensation, net		—			—		148,017			7			3,444		(470	)		—			2,981
Balances, March 31, 2020		6,900,000		$	166,177		102,942,162		$	5,147		$	5,707,271	$	(2,518,428	)	$	(10,759	)	$	3,349,408

~~(Unaudited)~~

Three Months Ended March 31, 2019	Preferred Stock				Common Stock
	Shares		Par Value and Capital in Excess of Par Value		Shares			Par Value			Capital in Excess of Par Value			Accumulated Deficit			AOCL			Total Stockholders’ Equity
Balances, December 31, 2018		6,900,000	$	166,177		85,787,355		$	4,289		$	4,995,697		$	(2,357,255	)	$	(7,159	)	$	2,801,749
Net income		—		—		—			—			—			43,578			—			43,578
Dividends declared on preferred stock		—		—		—			—			—			(2,588	)		—			(2,588	)
Net income attributable to common stockholders				—					—			—			40,990			—			40,990
Other comprehensive loss		—		—		—			—			—			—			(5,021	)		(5,021	)
Dividends declared on common stock		—		—		—			—			—			(54,254	)		—			(54,254	)
Tax withholdings related to net stock settlements		—		—		(17,800	)		(1	)		—			(703	)		—			(704	)
Issuance of shares of common stock, net		—		—		893,526			45			32,641			—			—			32,686
Other		—		—		—			—			(79	)		—			—			(79	)
Stock-based compensation, net		—		—		148,705			8			3,570			(309	)		—			3,269
Balances, March 31, 2019		6,900,000	$	166,177		86,811,786		$	4,341		$	5,031,829		$	(2,371,531	)	$	(12,180	)	$	2,818,636

Common Stock
Shares Par
Value
Capital in
Excess of
Par Value

Accumulated
Deficit

Total
Stockholders’
Equity
Balances, December 31, 2016 483,624,120
$ 4,836
$ 5,177,086
$ (1,499,814 ) $ 3,682,108
Net income —
—
—
41,357
41,357
Dividends declared on common stock —
—
—
(251,606 ) (251,606 )
Tax withholdings related to net stock settlements (430,429 ) (4 ) —
(3,454 ) (3,458 )
Repurchase of common shares (28,819,865 ) (288 ) (222,002 ) (222,290 )
Stock-based compensation, net 1,526,206
15
13,763
(724 ) 13,054
Balances, September 30, 2017 455,900,032
$ 4,559
$ 5,190,849
$ (1,936,243 ) $ 3,259,165

See accompanying notes.

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Operating activities
Net (loss) income	$	(15,847	)	$	43,578
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		52,236			41,349
Impairments		40,774			3,692
Amortization of deferred financing costs		1,142			2,031
Amortization of debt discounts		1,224			2,706
Amortization of deferred losses on interest rate swaps		702			—
Stock-based compensation expense		3,451			3,578
Gain on debt extinguishment		—			(8,783	)
Gain on dispositions of real estate and other assets		(388	)		(8,730	)
Non-cash revenue		(1,259	)		(4,110	)
Bad debt expense and other		233			799
Changes in operating assets and liabilities:
Deferred costs and other assets, net		(136	)		(700	)
Accounts payable, accrued expenses and other liabilities		(14,954	)		(4,057	)
Net cash provided by operating activities		67,178			71,353
Investing activities
Acquisitions of real estate		(205,818	)		(160,262	)
Capitalized real estate expenditures		(7,810	)		(19,612	)
Collections of principal on loans receivable and real estate assets under direct financing leases		1,163			3,653
Proceeds from dispositions of real estate and other assets, net		16,800			34,848
Net cash used in investing activities		(195,665	)		(141,373	)
Financing activities
Borrowings under revolving credit facilities		759,000			372,700
Repayments under revolving credit facilities		(375,500	)		(312,500	)
Repayments under mortgages and notes payable		(1,017	)		(2,906	)
Borrowings under term loans		—			420,000
Repayments under term loans		—			(420,000	)
Debt extinguishment costs		—			(1,009	)
Deferred financing costs		—			(11,266	)
Proceeds from issuance of common stock, net of offering costs		17,677			32,379
Repurchase of shares of common stock, including tax withholdings related to net stock settlements		(2,349	)		(704	)
Common stock dividends paid		(64,362	)		(53,615	)
Preferred stock dividends paid		(2,588	)		(2,588	)
Net cash provided by financing activities		330,861			20,491
Net increase (decrease) in cash, cash equivalents and restricted cash		202,374			(49,529	)
Cash, cash equivalents and restricted cash, beginning of period		26,023			77,421
Cash, cash equivalents and restricted cash, end of period	$	228,397		$	27,892

Cash paid for interest	$	29,145		$	17,052
Cash paid for income taxes	$	86		$	262

~~(Unaudited)~~

SPIRIT REALTY CAPITAL, INC.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

Supplemental Disclosures of Non-Cash Activities:	Three Months Ended March 31,
	2020		2019
Distributions declared and unpaid	$	64,338	$	54,254
Relief of debt through sale or foreclosure of real estate properties		—		10,368
Net real estate and other collateral assets sold or surrendered to lender		—		654
Cash flow hedge changes in fair value		—		5,021
Accrued interest capitalized to principal ⁽¹⁾		—		251
Accrued market-based award dividend rights		470		308
Accrued capitalized costs		1,015		1,142
Right-of-use lease assets		—		6,143
Lease liabilities		—		6,143
Reclass of residual value from direct financing lease to operating lease		6,831		—

⁽¹⁾	Accrued and overdue interest on certain CMBS notes that were intentionally placed in default.

Nine Months Ended
September 30,
2017 2016
Operating activities
Net income attributable to common stockholders $ 41,357
$ 96,458
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 192,887
194,227
Impairments 88,109
41,396
Amortization of deferred financing costs 7,274
6,706
Payment to terminate interest rate swaps —
(1,724 )
Derivative net settlements, amortization and terminations —
1,809
Amortization of debt discounts 9,663
3,354
Stock-based compensation expense 13,778
7,190
Gain on debt extinguishment (1,770 ) (326 )
Debt extinguishment costs —
(25,344 )
Gains on dispositions of real estate and other assets, net (40,197 ) (39,221 )
Non-cash revenue (20,642 ) (16,155 )
Other 4,902
(1,514 )
Changes in operating assets and liabilities:
Deferred costs and other assets, net (8,728 ) (8,911 )
Accounts payable, accrued expenses and other liabilities 5,726
1,346
Net cash provided by operating activities 292,359
259,291
Investing activities
Acquisitions of real estate (278,470 ) (424,468 )
Capitalized real estate expenditures (34,939 ) (8,307 )
Investments in corporate leasehold improvements —
(2,839 )
Investments in loans receivable (4,995 ) —
Collections of principal on loans receivable and real estate assets under direct financing leases 7,817
6,331
Proceeds from dispositions of real estate and other assets 342,032
245,921
Transfers of net sales proceeds from restricted accounts pursuant to 1031 Exchanges —
58,194
Transfers of net sales proceeds to Master Trust Release (64,941 ) (3,953 )
Net cash used in investing activities (33,496 ) (129,121 )

Nine Months Ended
September 30,
2017 2016
Financing activities
Borrowings under Revolving Credit Facility 781,200
828,000
Repayments under Revolving Credit Facility (481,200 ) (723,000 )
Repayments under mortgages and notes payable (76,403 ) (790,224 )
Borrowings under Term Loan —
746,000
Repayments under Term Loan —
(701,000 )
Borrowings under Senior Unsecured Notes —
298,134
Deferred financing costs (192 ) (4,017 )
Proceeds from issuance of common stock, net of offering costs —
446,613
Repurchase of shares of common stock (225,748 ) (739 )
Dividends paid (257,112 ) (238,926 )
Transfers (from) to reserve/escrow deposits with lenders 2,480
383
Net cash used in financing activities (256,975 ) (138,776 )
Net increase (decrease) in cash and cash equivalents 1,888
(8,606 )
Cash and cash equivalents, beginning of period 10,059
21,790
Cash and cash equivalents, end of period $ 11,947
$ 13,184

Cash paid for interest $ 121,166
$ 130,762
Cash paid for income taxes $ 872
$ 763

See accompanying notes.

SPIRIT REALTY, L.P.

Consolidated Balance Sheets

(In Thousands, Except ~~Share~~Unit and Per ~~Share~~Unit Data)

(Unaudited)

	March 31, 2020			December 31, 2019
Assets
Investments:
Real estate investments:
Land and improvements	$	1,929,589		$	1,910,287
Buildings and improvements		3,953,335			3,840,220
Total real estate investments		5,882,924			5,750,507
Less: accumulated depreciation		(736,394	)		(717,097	)
		5,146,530			5,033,410
Loans receivable, net		30,849			34,465
Intangible lease assets, net		381,398			385,079
Real estate assets under direct financing leases, net		7,300			14,465
Real estate assets held for sale, net		3,126			1,144
Net investments		5,569,203			5,468,563
Cash and cash equivalents		216,692			14,492
Deferred costs and other assets, net		123,674			124,006
Goodwill		225,600			225,600
Total assets	$	6,135,169		$	5,832,661

Liabilities and partners' capital
Liabilities:
Revolving credit facilities	$	500,000		$	116,500
Senior Unsecured Notes, net		1,484,473			1,484,066
Mortgages and notes payable, net		215,186			216,049
Notes payable to Spirit Realty Capital, Inc., net		337,921			336,402
Total debt, net		2,537,580			2,153,017
Intangible lease liabilities, net		124,097			127,335
Accounts payable, accrued expenses and other liabilities		124,084			139,060
Total liabilities		2,785,761			2,419,412
Commitments and contingencies (see Note 6)
Partners' capital:
Partnership units
General partner's capital: 797,644 units issued and outstanding as of both March 31, 2020 and December 31, 2019		21,752			22,389
Limited partners' preferred capital: 6,900,000 units issued and outstanding as of both March 31, 2020 and December 31, 2019		166,177			166,177
Limited partners' capital: 102,144,518 and 101,678,508 units issued and outstanding as of March 31, 2020 and December 31, 2019, respectively		3,161,479			3,224,683
Total partners' capital		3,349,408			3,413,249
Total liabilities and partners' capital	$	6,135,169		$	5,832,661

~~(Unaudited)~~

September 30,
2017 December 31,
2016
Assets
Investments:
Real estate investments:
Land and improvements $ 2,600,873
$ 2,704,010
Buildings and improvements 4,702,828
4,775,221
Total real estate investments 7,303,701
7,479,231
Less: accumulated depreciation (1,018,544 ) (940,005 )

6,285,157
6,539,226
Loans receivable, net 76,821
66,578
Intangible lease assets, net 429,857
470,276
Real estate assets under direct financing leases, net 24,883
36,005
Real estate assets held for sale, net 133,382
160,570
Net investments 6,950,100
7,272,655
Cash and cash equivalents 11,947
10,059
Deferred costs and other assets, net 218,400
140,917
Goodwill 254,340
254,340
Total assets $ 7,434,787
$ 7,677,971
Liabilities and partners' capital
Liabilities:
Revolving Credit Facility $ 386,000
$ 86,000
Term Loan, net 419,091
418,471
Senior Unsecured Notes, net 295,242
295,112
Mortgages and notes payable, net 2,050,302
2,162,403
Notes payable to Spirit Realty Capital, Inc., net 712,510
702,642
Total debt, net 3,863,145
3,664,628
Intangible lease liabilities, net 162,619
182,320
Accounts payable, accrued expenses and other liabilities 149,858
148,915
Total liabilities 4,175,622
3,995,863
Commitments and contingencies (see Note 7)

Partners' capital:
Partnership units
General partner's capital: 3,988,218 units issued and outstanding as of both September 30, 2017 and December 31, 2016 24,835
26,586
Limited partners' capital: 451,911,814 and 479,635,902 units issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 3,234,330
3,655,522
Total partners' capital 3,259,165
3,682,108
Total liabilities and partners' capital 7,434,787
7,677,971

See accompanying notes.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Revenues:
Rentals $ 159,799
$ 161,765
$ 479,506
$ 484,090
Interest income on loans receivable 1,003
1,042
2,769
4,326
Earned income from direct financing leases 483
660
1,613
2,082
Tenant reimbursement income 4,691
3,469
13,136
10,493
Other income 3,574
5,572
6,583
11,600
Total revenues 169,550
172,508
503,607
512,591
Expenses:
General and administrative 13,712
15,112
49,992
40,611
Restructuring charges —
3,264
—
5,726
Transaction costs 2,660
—
3,145
—
Property costs 8,080
6,916
26,763
20,854
Real estate acquisition costs 196
1,056
773
2,092
Interest 48,680
47,653
142,129
149,842
Depreciation and amortization 63,673
65,300
192,887
194,227
Impairments 37,737
15,407
88,109
41,396
Total expenses 174,738
154,708
503,798
454,748
(Loss) income before other income/(expense) and income tax benefit (expense) (5,188 ) 17,800
(191 ) 57,843
Other income (expense):
Gain (loss) on debt extinguishment 1,792
(8,349 ) 1,770
326
Total other income (expense) 1,792
(8,349 ) 1,770
326
(Loss) income before income tax benefit (expense) (3,396 ) 9,451
1,579
58,169
Income tax benefit (expense) 11
(12 ) (419 ) (932 )
(Loss) income before gain on disposition of assets (3,385 ) 9,439
1,160
57,237
Gain on disposition of assets 8,707
17,960
40,197
39,221
Net income $ 5,322
$ 27,399
$ 41,357
$ 96,458
Net income attributable to the general partner $ 44
$ 232
344
817
Net income attributable to the limited partners $ 5,278
$ 27,167
$ 41,013
$ 95,641

Net income per partnership unit - basic $ 0.01
$ 0.06
$ 0.09
$ 0.21

Net income per partnership unit - diluted $ 0.01
$ 0.06
$ 0.09
$ 0.21

Weighted average partnership units outstanding:

Basic 456,671,617
479,554,362
472,698,692
457,263,526
Diluted 456,671,617
480,598,610
472,698,692
457,301,623

Distributions declared per partnership unit issued $ 0.1800
$ 0.1750
$ 0.5400
$ 0.5250

SPIRIT REALTY, L.P.

Consolidated Statements of Operations

(In Thousands, Except Unit and Per Unit Data)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Revenues:
Rental income	$	121,363		$	104,067
Interest income on loans receivable		419			986
Earned income from direct financing leases		177			396
Related party fee income		250			6,927
Other income		511			217
Total revenues		122,720			112,593
Expenses:
General and administrative		13,490			13,181
Property costs (including reimbursable)		5,936			5,154
Deal pursuit costs		1,019			71
Interest		25,359			26,611
Depreciation and amortization		52,236			41,349
Impairments		40,774			3,692
Total expenses		138,814			90,058
Other income:
Gain on debt extinguishment		—			8,783
Gain on disposition of assets		388			8,730
Preferred dividend income from SMTA		—			3,750
Total other income		388			21,263
(Loss) income before income tax expense		(15,706	)		43,798
Income tax expense		(141	)		(220	)
Net (loss) income	$	(15,847	)	$	43,578
Preferred distributions		(2,588	)		(2,588	)
Net (loss) income after preferred distributions	$	(18,435	)	$	40,990

Net (loss) income attributable to the general partner	$	(143	)	$	380
Net (loss) income attributable to the limited partners	$	(15,704	)	$	43,198

Net (loss) income per partnership unit:
Basic	$	(0.18	)	$	0.48
Diluted	$	(0.18	)	$	0.48

Weighted average partnership units outstanding:
Basic		102,230,147			85,497,093
Diluted		102,230,147			85,504,897

Dividends declared per partnership unit issued	$	0.6250		$	0.6250

See accompanying notes.

SPIRIT REALTY, L.P.

Consolidated Statements of Comprehensive (Loss) Income

(In Thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Net (loss) income after preferred distributions	$	(18,435	)	$	40,990
Other comprehensive income (loss):
Net reclassification of amounts from (to) AOCL		702			(5,021	)
Total comprehensive (loss) income	$	(17,733	)	$	35,969

~~(Unaudited)~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net income $ 5,322
$ 27,399
$ 41,357
$ 96,458
Other comprehensive income:
Change in net unrealized losses on cash flow hedges —
28
—
(1,145 )
Net cash flow hedge losses reclassified to operations —
—
—
2,165
Total comprehensive income $ 5,322
$ 27,427
$ 41,357
$ 97,478

See accompanying notes.

SPIRIT REALTY, L.P.

Consolidated Statements of Partners' Capital

(In Thousands, Except Unit Data)

(Unaudited)

Three Months Ended March 31, 2020	Preferred Units				Common Units
	Limited Partners' Capital ⁽¹⁾				General Partner's Capital ⁽²⁾						Limited Partners' Capital ⁽¹⁾							Total Partnership
	Units		Amount			Units		Amount				Units			Amount				Capital
Balances, December 31, 2019		6,900,000	$	166,177			797,644	$	22,389				101,678,508		$	3,224,683			$	3,413,249
Net loss		—		—			—		(143	)			—			(15,704	)			(15,847	)
Partnership distributions declared on preferred units		—		—			—		—				—			(2,588	)			(2,588	)
Net loss after preferred distributions				—					(143	)						(18,292	)			(18,435	)
Other comprehensive income		—		—			—		5				—			697				702
Partnership distributions declared on common units		—		—			—		(499	)			—			(63,839	)			(64,338	)
Tax withholdings related to net settlement of common units		—		—			—		—				(44,488	)		(2,349	)			(2,349	)
Issuance of common units, net		—		—			—		—				362,481			17,598				17,598
Stock-based compensation, net		—		—			—		—				148,017			2,981				2,981
Balances, March 31, 2020		6,900,000	$	166,177			797,644	$	21,752				102,144,518		$	3,161,479			$	3,349,408

Three Months Ended March 31, 2019	Preferred Units				Common Units
	Limited Partners' Capital ⁽¹⁾				General Partner's Capital ⁽²⁾						Limited Partners' Capital ⁽¹⁾							Total Partnership
	Units		Amount			Units		Amount				Units			Amount				Capital
Balances, December 31, 2018		6,900,000	$	166,177			797,644	$	23,061				84,989,711		$	2,612,511			$	2,801,749
Net income		—		—			—		380				—			43,198				43,578
Partnership distributions declared on preferred units		—		—			—		—				—			(2,588	)			(2,588	)
Net income after preferred distributions				—					380							40,610				40,990
Other comprehensive loss		—		—			—		(47	)			—			(4,974	)			(5,021	)
Partnership distributions declared on common units		—		—			—		(504	)			—			(53,750	)			(54,254	)
Tax withholdings related to net settlement of common units		—		—			—		—				(17,800	)		(704	)			(704	)
Issuance of common units, net		—		—			—		—				893,526			32,686				32,686
Other		—		—			—		(1	)			—			(78	)			(79	)
Stock-based compensation, net		—		—			—		—				148,705			3,269				3,269
Balances, March 31, 2019		6,900,000	$	166,177			797,644	$	22,889				86,014,142		$	2,629,570			$	2,818,636

~~(Unaudited)~~

⁽¹⁾	Consists of limited partnership interests held by the Corporation and Spirit Notes Partner, LLC.

⁽²⁾	Consists of general partnership interests held by OP Holdings.

General Partner's Capital ⁽¹⁾

Limited Partners' Capital ⁽²⁾
Total Partnership Capital

Units Amount Units Amount
Balances, December 31, 2016 3,988,218
$ 26,586
479,635,902
$ 3,655,522
$ 3,682,108
Net income —
344
—
41,013
41,357
Partnership distributions declared —
(2,095 ) —
(249,511 ) (251,606 )
Tax withholdings related to net partnership unit settlements —
—
(430,429 ) (3,458 ) (3,458 )
Repurchase of partnership units —
—
(28,819,865 ) (222,290 ) (222,290 )
Stock-based compensation —
—
1,526,206
13,054
13,054
Balances, September 30, 2017 3,988,218
$ 24,835
451,911,814
$ 3,234,330
$ 3,259,165

⁽¹⁾ ~~Consists of general partnership interests held by OP Holdings.~~

⁽²⁾ ~~Consists of limited partnership interests held by the Corporation and Spirit Notes Partner, LLC.~~

See accompanying notes.

SPIRIT REALTY, L.P.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

	Three Months Ended March 31,
	2020			2019
Operating activities
Net (loss) income	$	(15,847	)	$	43,578
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		52,236			41,349
Impairments		40,774			3,692
Amortization of deferred financing costs		1,142			2,031
Amortization of debt discounts		1,224			2,706
Amortization of deferred losses on interest rate swaps		702			—
Stock-based compensation expense		3,451			3,578
Gain on debt extinguishment		—			(8,783	)
Gain on dispositions of real estate and other assets		(388	)		(8,730	)
Non-cash revenue		(1,259	)		(4,110	)
Bad debt expense and other		233			799
Changes in operating assets and liabilities:
Deferred costs and other assets, net		(136	)		(700	)
Accounts payable, accrued expenses and other liabilities		(14,954	)		(4,057	)
Net cash provided by operating activities		67,178			71,353
Investing activities
Acquisitions of real estate		(205,818	)		(160,262	)
Capitalized real estate expenditures		(7,810	)		(19,612	)
Collections of principal on loans receivable and real estate assets under direct financing leases		1,163			3,653
Proceeds from dispositions of real estate and other assets, net		16,800			34,848
Net cash used in investing activities		(195,665	)		(141,373	)
Financing activities
Borrowings under revolving credit facilities		759,000			372,700
Repayments under revolving credit facilities		(375,500	)		(312,500	)
Repayments under mortgages and notes payable		(1,017	)		(2,906	)
Borrowings under term loans		—			420,000
Repayments under term loans		—			(420,000	)
Debt extinguishment costs		—			(1,009	)
Deferred financing costs		—			(11,266	)
Proceeds from issuance of partnership units, net of offering costs		17,677			32,379
Repurchase of partnership units, including tax withholdings related to net settlement of common units		(2,349	)		(704	)
Common distributions paid		(64,362	)		(53,615	)
Preferred distributions paid		(2,588	)		(2,588	)
Net cash provided by financing activities		330,861			20,491
Net increase (decrease) in cash, cash equivalents and restricted cash		202,374			(49,529	)
Cash, cash equivalents and restricted cash, beginning of period		26,023			77,421
Cash, cash equivalents and restricted cash, end of period	$	228,397		$	27,892

Cash paid for interest	$	29,145		$	17,052
Cash paid for income taxes	$	86		$	262

~~(Unaudited)~~

SPIRIT REALTY, L.P.

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

Supplemental Disclosures of Non-Cash Activities:	Three Months Ended March 31,
	2020		2019
Distributions declared and unpaid	$	64,338	$	54,254
Relief of debt through sale or foreclosure of real estate properties		—		10,368
Net real estate and other collateral assets sold or surrendered to lender		—		654
Cash flow hedge changes in fair value		—		5,021
Accrued interest capitalized to principal ⁽¹⁾		—		251
Accrued market-based award dividend rights		470		308
Accrued capitalized costs		1,015		1,142
Right-of-use lease assets		—		6,143
Lease liabilities		—		6,143
Reclass of residual value from direct financing lease to operating lease		6,831		—

⁽¹⁾	Accrued and overdue interest on certain CMBS notes that were intentionally placed in default.

Nine Months Ended
September 30,
2017 2016
Operating activities
Net income attributable to partners $ 41,357
$ 96,458
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 192,887
194,227
Impairments 88,109
41,396
Amortization of deferred financing costs 7,274
6,706
Payment to terminate interest rate swaps —
(1,724 )
Derivative net settlements, amortization and terminations —
1,809
Amortization of debt discounts 9,663
3,354
Stock-based compensation expense 13,778
7,190
Gain on debt extinguishment (1,770 ) (326 )
Debt extinguishment costs —
(25,344 )
Gains on dispositions of real estate and other assets, net (40,197 ) (39,221 )
Non-cash revenue (20,642 ) (16,155 )
Other 4,902
(1,514 )
Changes in operating assets and liabilities:
Deferred costs and other assets, net (8,728 ) (8,911 )
Accounts payable, accrued expenses and other liabilities 5,726
1,346
Net cash provided by operating activities 292,359
259,291
Investing activities
Acquisitions of real estate (278,470 ) (424,468 )
Capitalized real estate expenditures (34,939 ) (8,307 )
Investments in corporate leasehold improvements —
(2,839 )
Investments in loans receivable (4,995 ) —
Collections of principal on loans receivable and real estate assets under direct financing leases 7,817
6,331
Proceeds from dispositions of real estate and other assets 342,032
245,921
Transfers of net sales proceeds from restricted accounts pursuant to 1031 Exchanges —
58,194
Transfers of net sales proceeds to Master Trust Release (64,941 ) (3,953 )
Net cash used in investing activities (33,496 ) (129,121 )

Nine Months Ended
September 30,
2017 2016
Financing activities
Borrowings under Revolving Credit Facility 781,200
828,000
Repayments under Revolving Credit Facility (481,200 ) (723,000 )
Repayments under mortgages and notes payable (76,403 ) (790,224 )
Borrowings under Term Loan —
746,000
Repayments under Term Loan —
(701,000 )
Borrowings under Senior Unsecured Notes —
298,134
Deferred financing costs (192 ) (4,017 )
Proceeds from issuance of partnership units, net of offering costs —
446,613
Repurchase of partnership units (225,748 ) (739 )
Dividends paid (257,112 ) (238,926 )
Transfers (from) to reserve/escrow deposits with lenders 2,480
383
Net cash used in financing activities (256,975 ) (138,776 )
Net increase (decrease) in cash and cash equivalents 1,888
(8,606 )
Cash and cash equivalents, beginning of period 10,059
21,790
Cash and cash equivalents, end of period $ 11,947
$ 13,184

Cash paid for interest $ 121,166
$ 130,762
Cash paid for income taxes $ 872
$ 763

See accompanying notes.

SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.

Notes to Consolidated Financial Statements

~~September 30, 2017~~

March 31, 2020

(Unaudited)

~~Note~~

NOTE 1. ~~Organization~~

~~Company~~ ORGANIZATION

Organization and Operations

Spirit Realty Capital, Inc. (the "Corporation" or "Spirit" or, with its consolidated subsidiaries, the "Company") operates as a self-administered and self-managed REIT that seeks to generate and deliver sustainable and attractive returns for stockholders by primarily investing ~~primarily~~ in and managing a portfolio of single-tenant, operationally essential real estate throughout theU.S.that is generally leased on a long-term, triple-net basis to tenants operating within ~~predominantly~~ retail, ~~but also~~industrial, office and ~~industrial~~other property types. Single tenant, operationally essential real estate generally refers to free-standing, commercial real estate facilities where tenants conduct activities that are essential to the generation of their sales and ~~profits.The Company began operations through a predecessor legal entity in 2003.~~

profits.

The Company’s operations are generally carried out through Spirit Realty, L.P. (the "Operating Partnership") and its subsidiaries. Spirit General OP Holdings, LLC, ~~("OP Holdings"),~~ one of the ~~Corporation's~~Corporation’s wholly-owned subsidiaries, is the sole general partner and owns approximately ~~1.0%~~ 1%of theOperating Partnership. The Corporation and a wholly-owned subsidiary ~~("Spirit~~(Spirit Notes Partner, ~~LLC")~~LLC) are the only limited partners and together own the remaining ~~99.0%~~99%of theOperating Partnership.

On May 31, 2018, the Company completed the spin-off (the "Spin-Off") of the ~~Operating Partnership.~~

~~On August 3, 2017, the Company announced a proposed spin-off of almost all of the~~assets that collateralized Master Trust 2014, properties leased to Shopko, ~~the assets that collateralize Master Trust 2014~~ and ~~potentially additional~~certain other assets into an independent, publicly traded ~~REIT. Transaction~~REIT, Spirit MTA REIT ("SMTA"). The Company formed Spirit Realty AM Corporation (“SRAM”), a wholly-owned taxable REIT subsidiary. The rights and obligations of the Asset Management Agreement were transferred to SRAM on April 1, 2019, which was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, effective as of September 20, 2019. The Company allocates personnel and other general and administrative costs ~~associated with the spin off~~to SRAM for the three and nine months ended September 30, 2017 totaled $2.7 million and $3.1 million, respectively, and are included within transaction costs on the accompanying consolidated statements of operations.

management services provided to SMTA.

~~Note~~

NOTE 2. ~~Summary of Significant Accounting Policies~~

SUMMARY OF SIGNIFICANT ACOUNTING POLICIES

Basis of Accounting and Principles of Consolidation

The accompanying consolidated financial statements of the Company and the Operating Partnership have been prepared pursuant to the rules and regulations of the SEC. In the opinion of management, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of the information required to be set forth therein. The results for interim periods are not necessarily indicative of the results for the entire year. Certain information and note disclosures, normally included in financial statements prepared in accordance with GAAP, have been condensed or omitted from these statements pursuant to SEC rules and regulations and, accordingly, these financial statements should be read in conjunction with the Company’s audited consolidated financial statements as filed with the SEC in its Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2019.

The consolidated financial statements of the Company include the accounts of the Corporation and its ~~wholly owned~~wholly-owned subsidiaries. The consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its wholly-owned subsidiaries. All significant ~~inter-company~~intercompany balances and transactions have been eliminated in consolidation.

All expenses incurred by the Company have been allocated to the Operating Partnership in accordance with the Operating Partnership's first amended and restated agreement of limited partnership, which management determined to be a reasonable method of allocation. Therefore, expenses incurred would not be materially different if the Operating Partnership had operated as an unaffiliated entity.

~~The Company has formed numerous~~

These consolidated financial statements include certain special purpose entities that were formed to acquire and hold real estate encumbered by indebtedness (see Note 4). Each special purpose entity is a separate legal entity and is the sole owner of its assets and responsible for its liabilities. The assets of these special purpose entities are not available to pay, or otherwise satisfy obligations to, the creditors of any affiliate or owner of another entity unless the special purpose entities have expressly agreed and are permitted to do so under their governing documents. ~~At September 30, 2017~~As of March 31, 2020 and December 31, ~~2016,~~2019, net assets totaling ~~$2.73~~$0.35 billion and ~~$2.95~~$0.38 billion, respectively, were held, and net liabilities totaling ~~$2.15 billion~~$0.22 and ~~$2.26~~$0.23 billion, respectively, were owed by these encumbered special purpose entities and are included in the accompanying consolidated balance sheets.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes its estimates are reasonable, actual results could differ from those estimates.

Segment Reporting

The Company views its operations as ~~one~~1 segment, which consists of net leasing operations. The Company has no other reportable segments.

Revenue Recognition

Rental Income: Cash and Straight-line Rent

The Company primarily leases real estate to its tenants under long-term, triple-net leases that are classified as operating leases. To evaluate lease classification, the Company assesses the terms and conditions of the lease to determine the appropriate lease term. The Company does not include options to extend, terminate or purchase in its evaluation for lease classification purposes or for recognizing rental income unless the Company is reasonably certain the tenant will exercise the option.

Another component of lease classification that requires judgment is the residual value of the property at the end of the lease term. For acquisitions, the Company assumes a value that is equal to the tangible value of the property at the date of the assessment. For lease modifications, the Company generally uses sales comparables or a direct capitalization approach to determine fair value.

The Company’s leases generally provide for rent escalations throughout the term of the lease. For leases with fixed rent escalators, rental income is recognized on a straight-line basis to produce a constant periodic rent over the term of the lease. Accordingly, accrued rental revenue, calculated as the aggregate difference between the rental revenue recognized on a straight-line basis and scheduled rents, represents unbilled rent receivables that the Company will receive only if the tenants make all rent payments required through the expiration of the initial term of the leases.

For leases with contingent rent escalators, rental income typically increases at a multiple of any increase in the CPI over a specified period and may adjust over a one-year period or over multiple-year periods. Because of the volatility and uncertainty with respect to future changes in the CPI and the Company’s inability to determine the extent to which any specific future change in the CPI is probable at each rent adjustment date during the entire term of these leases, increases in rental revenue from leases with this type of escalator are recognized when the changes in the rental rates have occurred.

Some of the Company’s leases also provide for contingent rent based on a percentage of the tenant’s gross sales, which the Company recognizes as rental income when the change in the factor on which the contingent lease payment is based actually occurs.

Rental income is subject to an evaluation for collectability, which includes management’s estimates of amounts that will not be realized based on an assessment of the risks inherent in the portfolio, considering historical experience, as well as the tenant's payment history and financial condition. The Company records a provision for losses against rental income for amounts that are not probable of collection.

Rental Income: Tenant Reimbursement Revenue

Under a triple-net lease, the tenant is typically responsible for all improvements and is contractually obligated to pay all property operating expenses, such as real estate taxes, insurance premiums and repair and maintenance costs. Certain leases contain additional amounts recoverable from tenants for common area maintenance expenses and certain other recoverable expenses, which are non-lease components. The Company has elected to combine all its non-lease components, which were determined to have the same pattern of transfer as the related operating lease component, into a single combined lease component. Tenant reimbursement revenue is variable and is recognized as revenue in the period in which the related expenses are incurred, with the related expenses included in property costs (including reimbursable) on the Company’s consolidated statements of operations. Tenant reimbursements are recorded on a gross basis in instances when our tenants reimburse us for property costs which we incur. Tenant receivables are carried net of the allowances for amounts that are not probable of collection.

Rental Income: Intangible Amortization

Initial direct costs associated with the origination of a lease are deferred and amortized over the related lease term as an adjustment to rental revenue. In-place lease intangibles are amortized on a straight-line basis over the remaining term of the related lease and included in depreciation and amortization expense. Above-market lease intangibles are amortized over the remaining term of the respective leases as a decrease in rental revenue, and below-market lease intangibles are amortized as an increase to rental revenue over the remaining term of the respective leases. The remaining term includes the initial term of the lease but may also include the renewal periods if the Company believes it is reasonably certain the tenant will exercise the renewal option. If the Company subsequently determines it is reasonably certain that the tenant will

not exercise the renewal option, the unamortized portion of any related lease intangible is accelerated over the remaining initial term of the lease. If the Company believes the intangible balance is no longer recoverable, the unamortized portion of any related lease intangible is immediately recognized in impairments in the Company’s consolidated statements of operations.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include cash and highly liquid investment securities with maturities at acquisition of three months or less. The Company invests cash primarily in money market funds of major financial institutions with fund investments consisting of highly-rated money market instruments and other short-term investments. Restricted cash is classified within deferred costs and other assets, net in the accompanying consolidated balance sheets. Cash, cash equivalents and restricted cash consisted of the following (in thousands):

	March 31, 2020		December 31, 2019		March 31, 2019
Cash and cash equivalents	$	216,692	$	14,492	$	9,376
Restricted cash:
Collateral deposits ⁽¹⁾		381		347		401
Tenant improvements, repairs and leasing commissions ⁽²⁾		11,324		10,877		9,539
Master Trust Release ⁽³⁾		—		—		7,413
Other ⁽⁴⁾		—		307		1,163
Total cash, cash equivalents and restricted cash	$	228,397	$	26,023	$	27,892

⁽¹⁾ Funds held in lender-controlled accounts generally used to meet future debt service or certain property operating expenses.

⁽²⁾	Deposits held as additional collateral support by lenders to fund improvements, repairs and leasing commissions incurred to secure a new tenant.

⁽³⁾	Proceeds from the sale of assets pledged as collateral under the Master Trust 2013 notes, which were held on deposit until a qualifying substitution was made or the funds were applied as prepayment of principal. The Master Trust 2013 notes were extinguished in June 2019.

⁽⁴⁾	Funds held in lender-controlled accounts released after scheduled debt service requirements are met.

Allowance for Doubtful Accounts

The Company reviews its rent and other tenant receivables for collectability on a regular basis, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates, and economic conditions in the area in which the tenant operates. ~~In the event that~~If the collectability of a receivable with respect to any tenant is in doubt, a provision for uncollectible amounts will be established or a direct write-off of the specific receivable will be made. The Company provided for reserves for uncollectible amounts totaling ~~$8.3~~$1.8 million and ~~$6.4~~$3.8 million at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively, against accounts receivable balances of ~~$22.4~~$8.5 million and ~~$25.3~~$11.4 million, respectively. Receivables are recorded within deferred ~~costs~~cost and other assets, net in the accompanying consolidated balance sheets. Receivables are written off against the reserves for uncollectible amounts when all possible means of collection have been exhausted.

For ~~deferred rental revenues~~receivable balances related to the straight-line method of reporting rental revenue, the collectability ~~review includes management’s estimates~~is generally assessed in conjunction with the evaluation of ~~amounts that will not be realized and an assessment of the risks inherent in the portfolio, giving consideration to historical experience and industry default rates for long-term receivables.~~rental income as described above. The Company ~~established~~has a reserve for losses of ~~$2.4~~$4.4 million and $0.4 million at ~~September 30, 2017~~March 31, 2020 and ~~$7.7 million at~~ December 31, ~~2016,~~2019, respectively, against ~~deferred rental revenue~~straight-line rent receivables of ~~$77.3~~$89.1 million and ~~$71.1~~$84.0 million, respectively. ~~Deferred rental revenue~~These receivables are recorded within deferred costs and other assets, net in the accompanying consolidated balance sheets.

~~Restricted Cash and Escrow Deposits~~

~~Restricted cash and deposits in escrow, classified within deferred costs and other assets, net in the accompanying consolidated balance sheets consisted of the following (in thousands):~~

September 30,
2017 December 31,
2016
Collateral deposits ⁽¹⁾
$ 1,229
$ 1,374
Tenant improvements, repairs, and leasing commissions ⁽²⁾
7,988
9,739
Master Trust Release ⁽³⁾
79,353
14,412
Loan impounds ⁽⁴⁾
330
670
Other ⁽⁵⁾
7,444
644
$ 96,344
$ 26,839

⁽¹⁾Funds held in reserve by lenders which can be applied at their discretion to the repayment of debt (any funds remaining on deposit after the debt is paid in full are released to the borrower). Balance changes are reflected in financing activities within the Statement of Cash Flows.

⁽²⁾Deposits held as additional collateral support by lenders to fund tenant improvements, repairs and leasing commissions incurred to secure a new tenant. Balance changes are reflected in financing activities within the Statement of Cash Flows.

⁽³⁾ Proceeds from the sale of assets pledged as collateral under the Spirit Master Funding Program, which are held on deposit until a qualifying substitution is made or the funds are applied as prepayment of principal. Balance changes are reflected in investing activities within the Statement of Cash Flows.

⁽⁴⁾ Funds held in lender controlled accounts generally used to meet future debt service or certain property operating expenses. Balance changes are reflected in financing activities within the Statement of Cash Flows.

⁽⁵⁾~~Primarily funds held in lender controlled accounts released after scheduled debt service requirements are met. Balance changes are reflected in operating activities within the Statement of Cash Flows.~~

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

Goodwill

Goodwill arises from business combinations and represents the excess of the cost of an acquired entity over the net fair value amounts that were assigned to the identifiable assets acquired and the liabilities assumed. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment by eliminating the Step 2 requirement to calculate the implied fair value of goodwill. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of each reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU 2017-04 effective January 1, 2020. Goodwill is tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. NaN impairment was recorded for the periods presented.

Income Taxes

The ~~Company~~Corporation has elected to be taxed as a REIT under the Code. As a REIT, the ~~Company~~Corporation generally will not be subject to federal income tax provided it continues to satisfy certain tests concerning the Company’s sources of income, the nature of ~~its~~the Company’s assets, the amounts distributed to ~~its~~the Corporation’s stockholders and the ownership of ~~Company~~Corporation stock. Management believes the ~~Company~~Corporation has qualified and will continue to qualify as a REIT and, therefore, no provision has been made for federal income taxes in the accompanying consolidated financial statements. Even if the ~~Company~~Corporation qualifies for taxation as a REIT, it may be subject to state and local income and franchise taxes, and to federal income tax and excise tax on its undistributed income.

Taxable income earned by any of the Company's taxable REIT subsidiaries, including from non-REIT activities, is subject to federal, state and local taxes. The rights and obligations of the Asset Management Agreement were transferred to SRAM, a wholly-owned taxable REIT subsidiary of Spirit, on April 1, 2019, which was subsequently terminated and simultaneously replaced by the Interim Management Agreement between SRAM and SMTA, effective as of September 20, 2019. Accordingly, commencing from April 1, 2019, all asset management fees, including the termination fee income, were subject to income tax.

The Operating Partnership is a partnership for federal income tax purposes. Partnerships are pass-through entities and are not subject to U.S. federal income taxes, therefore 0 provision has been made for federal income taxes in the accompanying financial statements. Although most states and cities where the Operating Partnership operates follow the U.S. federal income tax treatment, there are certain jurisdictions such as Texas, Tennessee and Ohio that impose income or franchise taxes on a partnership.

Franchise taxes are included in general and administrative expenses on the accompanying consolidated statements of operations. ~~Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiaries are subject to federal, state and local taxes, which are not material.~~

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or the SEC that are adopted by the Company as of the specified effective date. These new accounting pronouncements entail technical corrections to existing guidance or affect guidance related to specialized industries or entities. There are no updates to our prior disclosures regarding adoption of pronouncements that are not yet effective. Additionally, we have evaluated new accounting pronouncements issued subsequent to our most recent Annual Report on Form 10-K and have concluded that they are either not applicable or will not have a material impact on the Company's financial position or results of operations.

~~Changes in Accounting Principle~~

In ~~March~~June 2016, the FASB issued ASU ~~2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~2016-13, Measurement of Credit Losses on Financial Instruments, which ~~simplifies many aspects~~requires more timely recognition of ~~accounting~~credit losses associated with financial assets. ASU 2016-13 requires financial assets (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. ASU 2016-13 is effective for ~~share-based payment transactions under ASC Topic 718,~~ ~~Compensation - Stock Compensation~~,fiscal years beginning after December 15, 2019, including ~~income tax consequences, classification of awards~~interim periods within those fiscal years, and as ~~either equity or liability, forfeiture rate calculations and classification on~~such, the ~~statement of cash flows. The~~ Company adopted ~~this new guidance~~ASU 2016-13 effective January 1, ~~2017~~2020. Per the subsequently issued ASU 2018-19, receivables arising from operating leases are not within the scope of ASU 2016-13. As such, the Company reviewed receivables within the scope of ASU 2016-13 totaling $40.3 million, which were comprised of loans receivable and made an accounting policy election to recognize stock-based compensation forfeitures as they occur, whereas previously stock-based compensation forfeitures were estimated and recognized based on historical forfeiture rates. This change in accounting principle has been applied prospectively andreal estate assets held under direct financing lease. The Company determined the ~~change in accounting principle had no material impact on~~key credit quality indicator was the ~~financial statements~~credit rating of the ~~Company.~~

~~In January 2017,~~borrower, coupled with remaining time to maturity. As a result, the ~~FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition~~adoption of ~~a Business, which narrows the definition of a business. The Company early adopted the guidance effective January 1, 2017 and application is on a prospective basis. Under~~ the new guidance resulted in the ~~acquisition~~recognition of a ~~property with an in-place~~loss of $0.3 million on January 1, 2020, which is recorded in impairments on the accompanying consolidated statement of operations.

In April 2020, the FASB released a Staff Q&A regarding the accounting for lease ~~generally is no longer~~concessions related to the effects of the COVID-19 pandemic. The FASB noted that the underlying premise in requiring a modified lease to be accounted for as if it were a new lease under ASC 842 is that the modified terms and conditions affect the economics of the lease for the remainder of the lease term. As such, the FASB staff clarified that it would be acceptable for entities to make an ~~acquisition~~election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under ASC 842 as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract). The Company expects to make this election and account for rent deferrals by increasing the straight-line rent receivables as receivables accrue and continue to recognize income during the deferral period. Lease concessions other than rent deferrals will continue to be evaluated to determine if a ~~business, but instead as an asset acquisition, meaning~~substantive change to the ~~transaction costs of such an acquisition are now capitalized instead of expensed. Further, dispositions of properties generally no longer qualify~~consideration in the original contract lease contract has occurred and should be accounted for as a ~~disposition~~lease modification. Management will continue to evaluate any amounts recognized for collectability, regardless of whether accounted for as a ~~business~~lease modification or not, and ~~therefore do~~will record a provision for losses against rental income for amounts that are not ~~generate allocated goodwill when determining gain or loss on sale.~~

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~Note~~probable of collection.

NOTE 3. ~~Investments~~

~~Real Estate Investments~~

INVESTMENTS

Owned Properties

As of ~~September 30, 2017,~~March 31, 2020, the Company's gross investment in owned real estate properties ~~and loans~~ totaled approximately ~~$8.0 billion, representing investments in 2,511 properties, including 88 properties or other related assets securing mortgage loans.~~$6.3 billion. The gross investment is comprised of land, buildings, lease intangible assets and lease intangible liabilities, as adjusted for any impairment, and ~~the carrying amount of loans receivable,~~ real estate assets held under direct financing leases and real estate assets held for sale. The portfolio is geographically dispersed throughout 4948 states with Texas, at 11.4%, as the only ~~one~~ state ~~Texas,~~ with a ~~real estate~~gross investment ~~of 12.2%, accounting for more~~greater than ~~10%~~10.0% of the total ~~dollar amount~~gross investment of the ~~Company’s real estate investment~~Company's entire portfolio.

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company had the following real estate ~~and loan~~ activity, net of accumulated depreciation and ~~amortization:~~amortization (dollars in thousands):

	Number of Properties									Dollar Amount of Investments
	Held in Use			Held for Sale			Total			Held in Use			Held for Sale			Total
Gross balance, December 31, 2019		1,750			2			1,752		$	6,140,775		$	1,223		$	6,141,998
Acquisitions/improvements ⁽¹⁾		27			—			27			215,011			—			215,011
Dispositions of real estate ⁽²⁾		(5	)		(2	)		(7	)		(17,114	)		(1,223	)		(18,337	)
Transfers to Held for Sale		(5	)		5			—			(3,362	)		3,362			—
Transfers from Held for Sale		—			—			—			—			—			—
Impairments ⁽³⁾		—			—			—			(40,468	)		—			(40,468	)
Write-off of intangibles		—			—			—			(26,594	)		—			(26,594	)
Other		—			—			—			(1,330	)		—			(1,330	)
Gross balance, March 31, 2020		1,767			5			1,772			6,266,918			3,362			6,270,280
Accumulated depreciation and amortization											(855,787	)		(236	)		(856,023	)
Net balance, March 31, 2020 ⁽⁴⁾										$	5,411,131		$	3,126		$	5,414,257

⁽¹⁾	Includes investments of $7.6 million in revenue producing capitalized expenditures, as well as $1.6 million of non-revenue producing capitalized expenditures during the three months ended March 31, 2020.

⁽²⁾	For the three months ended March 31, 2020, the total gain on disposal of assets for properties held in use and held for sale was $0.6 million and $0.1 million, respectively.

Number of Properties Dollar Amount of Investments
Owned Financed Total Owned Financed Total
(In Thousands)
Gross balance, December 31, 2016 2,541
74
2,615
$ 8,181,076
$ 66,578
$ 8,247,654
Acquisitions/improvements ⁽¹⁾
43
15
58
314,141
19,190
333,331
Dispositions of real estate ⁽²⁾
(161 ) —
(161 ) (392,504 ) —
(392,504 )
Principal payments and payoffs —
(1 ) (1 ) —
(7,817 ) (7,817 )
Impairments —
—
—
(88,109 ) —
(88,109 )
Write-off of gross lease intangibles —
—
—
(64,766 ) —
(64,766 )
Loan premium amortization and other —
—
—
(4,847 ) (1,130 ) (5,977 )
Gross balance, September 30, 2017 2,423
88
2,511
7,944,991
76,821
8,021,812
Accumulated depreciation and amortization (1,234,978 ) —
(1,234,978 )
Other 647
—
647
Net balance, September 30, 2017 $ 6,710,660
$ 76,821
$ 6,787,481

⁽³⁾	Impairments on owned real estate is comprised of $40.2 million of real estate and intangible asset impairment and $0.3 million of allowance for credit losses on direct financing leases.

⁽¹⁾ ~~Includes~~

⁽⁴⁾	Reconciliation of total owned investments to the accompanying consolidated balance sheet at March 31, 2020 is as follows:

Operating lease held in use land and buildings, net	$	5,146,530
Intangible lease assets, net		381,398
Real estate assets under direct financing leases, net		7,300
Real estate assets held for sale, net		3,126
Intangible lease liabilities, net		(124,097	)
Net balance	$	5,414,257

Operating Leases

As of ~~$33.8 million~~March 31, 2020 and December 31, 2019, the Company held 1,760 and 1,745 properties under operating leases, respectively. The following table summarizes the components of rental income recognized on these operating leases in ~~revenue producing capitalized expenditures, as well as $1.2 million~~the accompanying consolidated statements of ~~non-revenue producing capitalized expenditures as of September 30, 2017.~~operations (in thousands):

	Three Months Ended March 31,
	2020		2019
Base cash rent	$	116,546	$	96,799
Variable cash rent (including reimbursables)		3,389		3,638
Straight-line rent, net of bad debt expense		1,094		2,907
Amortization of above- and below- market lease intangibles, net ⁽¹⁾		334		723
Total rental income	$	121,363	$	104,067

⁽²⁾ ~~The total accumulated depreciation and amortization associated with dispositions of real estate was $42.0 million as of September 30, 2017.~~

⁽¹⁾	Excludes amortization of in-place leases of $8.8 million and $6.7 million for the three months ended March 31, 2020 and 2019, respectively, which is included in depreciation and amortization expense in the accompanying consolidated statements of operations.

Scheduled minimum future contractual rent to be received under the remaining ~~non-cancelable~~non-cancellable term of ~~the~~these operating leases (including ~~realized~~contractual fixed rent increases occurring on or after ~~October~~April 1, ~~2017)~~2020) at ~~September 30, 2017~~March 31, 2020 are as follows (in thousands):

	March 31, 2020
Remainder of 2020	$	354,330
2021		461,791
2022		444,470
2023		423,969
2024		399,829
Thereafter		3,037,487
Total future minimum rentals	$	5,121,876

September 30,
2017
Remainder of 2017 $ 151,042
2018 597,808
2019 583,233
2020 566,864
2021 538,273
Thereafter 4,084,670
Total future minimum rentals $ 6,521,890

Because lease renewal periods are exercisable at the ~~option of the lessee,~~lessees' options, the preceding table presents future minimum lease payments due during the initial lease term only. In addition, the future minimum rentals do not include any contingent rentals based on a percentage of the lessees' gross sales or lease escalations based on future changes in the ~~CPI or other stipulated reference rate.~~

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~Loans Receivable~~

~~The following table details loans receivable, net of premium and allowance for loan losses (in thousands):~~

September 30,
2017 December 31,
2016
Mortgage loans - principal $ 62,833
$ 55,410
Mortgage loans - premium, net of amortization 5,568
7,194
Mortgages loans, net 68,401
62,604
Other note receivables - principal 8,420
4,474
Allowance for loan losses —
(500 )
Other note receivables, net 8,420
3,974
Total loans receivable, net $ 76,821
$ 66,578

The mortgage loans are secured by single-tenant commercial properties and generally have fixed interest rates over the term of the loans. There are four other notes receivable included within loans receivable, of which two notes totaling $6.5 million are secured by tenant assets and stock and the remaining two notes are unsecured.

~~Lease Intangibles, Net~~

CPI.

The following table details lease intangible assets and liabilities, net of accumulated amortization (in thousands):

	March 31, 2020			December 31, 2019
In-place leases	$	454,363		$	457,616
Above-market leases		97,296			95,002
Less: accumulated amortization		(170,261	)		(167,539	)
Intangible lease assets, net	$	381,398		$	385,079

Below-market leases	$	174,965		$	176,816
Less: accumulated amortization		(50,868	)		(49,481	)
Intangible lease liabilities, net	$	124,097		$	127,335

September 30,
2017 December 31,
2016
In-place leases $ 599,905
$ 624,723
Above-market leases 91,274
88,873
Less: accumulated amortization (261,322 ) (243,320 )
Intangible lease assets, net $ 429,857
$ 470,276

Below-market leases $ 222,078
$ 236,008
Less: accumulated amortization (59,459 ) (53,688 )
Intangible lease liabilities, net $ 162,619
$ 182,320

Direct Financing Leases

As of March 31, 2020, the Company held 1 property under a direct financing lease, which was held in use. As of March 31, 2020, this property had $4.0 million in scheduled minimum future payments to be received under the remaining non-cancellable terms of its lease. The Company evaluated the collectability of the amounts ~~amortized~~receivable under the direct financing lease, and recorded a reserve for uncollectible amounts totaling $0.3 million against the net investment balance of $7.6 million as of March 31, 2020, primarily as a ~~net increase to rental revenue for capitalized above-~~result of the borrower’s credit rating being non-investment grade and ~~below-market leases were $4.9~~the initial term extending until 2027.

Loans Receivable

As of March 31, 2020, the Company held 2 first-priority mortgage loans. The mortgage loans are secured by single-tenant commercial properties and have fixed interest rates over the term of the loans. There was 1 other note receivable as of March 31, 2020, which is secured by tenant assets and stock. As of March 31, 2020, these loans had an outstanding principal balance of $30.6 million and ~~$4.7~~an unamortized premium balance of $0.5 million. The Company evaluated the collectability of the amounts receivable under the loans receivable and recorded an allowance for loan losses of $0.3 million ~~for~~against the ~~nine months ended September 30, 2017 and 2016, respectively and $1.5 million and $1.8 million for the three months ended September 30, 2017 and 2016, respectively. The~~carrying value of ~~in-place leases amortized~~$31.1 million. The amount of the allowance was primarily driven by the borrowers’ having investment grade credit ratings and ~~included~~maturities in ~~depreciation~~2020.

Impairments and ~~amortization expense was $33.0 million and $35.1 million~~Allowance for ~~the nine months ended September 30, 2017 and 2016, respectively, and $10.8 million and $11.6 million for the three months ended September 30, 2017 and 2016, respectively.~~

~~Real Estate Assets Under Direct Financing Leases~~

~~The components of real estate investments held under direct financing leases were as follows (in thousands):~~

September 30,
2017 December 31,
2016
Minimum lease payments receivable $ 7,809
$ 9,456
Estimated residual value of leased assets 24,552
35,640
Unearned income (7,478 ) (9,091 )
Real estate assets under direct financing leases, net $ 24,883
$ 36,005

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~Real Estate Assets Held for Sale~~

~~The following table shows the activity in real estate assets held for sale for the nine months ended September 30, 2017 (dollars in thousands):~~

Number of Properties
Carrying
Value
Balance, December 31, 2016 44
$ 160,570
Transfers from real estate investments held and used 80
212,726
Sales (78 ) (157,156 )
Transfers to real estate investments held and used (8 ) (63,597 )
Impairments (19,161 )
Balance, September 30, 2017 38
$ 133,382

~~Impairments~~

Credit Losses

The following table summarizes total ~~impairment~~impairments and allowance for credit losses recognized onin the accompanying consolidated statements of operations (in thousands):

	Three Months Ended March 31,
	2020		2019
Real estate and intangible asset impairment	$	40,164	$	3,692
Allowance for credit losses on direct financing leases		304		—
Allowance for credit losses on loans receivable		306		—
Total impairment loss	$	40,774	$	3,692

Three Months Ended September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Real estate and intangible asset impairment $ 32,676
$ 13,894
$ 82,553
$ 35,236
Write-off of lease intangibles, net 5,061
1,491
5,556
6,463
Loans receivable recovery —
—
—
(324 )
Total impairments from real estate investment net assets 37,737
15,385
88,109
41,375
Other impairment —
22
—
21
Total impairment loss $ 37,737
$ 15,407
$ 88,109
$ 41,396

Impairments for the nine months ended September 30, 2017 were comprised of $22.6 million on properties classified as held for sale and $65.5 million on properties classified as held and used. Impairments for the nine months ended September 30, 2016 were comprised of $15.3 million on properties classified as held for sale and $26.1 million on properties classified as held and used.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~Note~~

NOTE 4. ~~Debt~~

DEBT

The debt of the Company and the Operating Partnership are the same, except for the presentation of the Convertible ~~Notes. The Convertible~~ Notes which were issued by the Company. Subsequently, an intercompany note between the Company and the Operating Partnership was executed with terms identical to those of the Convertible Notes. Therefore, in the consolidated balance sheet of the Operating Partnership, the amounts related to the Convertible Notes are reflected as notes payable to Spirit Realty Capital, Inc., net. The Company's debt is summarized ~~below:~~below (dollars in thousands):

	Weighted Average Effective Interest Rates ⁽¹⁾	Weighted Average Stated Interest Rates ⁽²⁾	Weighted Average Remaining Years to Maturity⁽³⁾		March 31, 2020			December 31, 2019
Revolving credit facilities	3.17%	2.26%		3.0	$	500,000		$	116,500
Senior Unsecured Notes	3.85%	3.73%		8.4		1,500,000			1,500,000
CMBS	5.81%	5.47%		3.6		217,320			218,338
Convertible Notes	5.63%	3.75%		1.1		345,000			345,000
Total debt	4.20%	3.59%		6.0		2,562,320			2,179,838
Debt discount, net						(8,047	)		(9,272	)
Deferred financing costs, net ⁽⁴⁾						(16,693	)		(17,549	)
Total debt, net					$	2,537,580		$	2,153,017

⁽¹⁾

The effective interest rates include amortization of debt discount/premium, amortization of deferred financing costs, facility fees, and non-utilization fees, where applicable, calculated for the three months ended March 31, 2020 and based on the average principal balance outstanding during the period.

Weighted Average Effective
Interest Rates ⁽¹⁾

Weighted Average
Stated
Rates ⁽²⁾

Weighted Average Maturity ⁽³⁾
September 30,
2017 December 31,
2016
(in Years) (In Thousands)
Revolving Credit Facility 3.43 % 2.49 % 1.5 $ 386,000
$ 86,000
Term Loan 2.83 % 2.59 % 1.1 420,000
420,000
Senior Unsecured Notes 4.59 % 4.45 % 9.0 300,000
300,000
Master Trust Notes 5.58 % 5.03 % 5.5 1,657,402
1,672,706
CMBS fixed-rate 5.85 % 5.89 % 3.9 426,583
528,427
Convertible Notes 5.32 % 3.28 % 2.5 747,500
747,500
Total debt 4.97 % 4.24 % 4.2 3,937,485
3,754,633
Debt discount, net (43,327 ) (52,894 )
Deferred financing costs, net ⁽⁴⁾
(31,013 ) (37,111 )
Total debt, net $ 3,863,145
$ 3,664,628

⁽²⁾	Represents the weighted average stated interest rate based on the outstanding principal balance as of March 31, 2020.

⁽¹⁾The effective interest rates include amortization of debt discount/premium, amortization of deferred financing costs and credit facility fees, where applicable, calculated for the three months ended September 30, 2017 and based on the average principal balance outstanding during the period.

⁽³⁾	Represents the weighted average remaining years to maturity based on the outstanding principal balance as of March 31, 2020.

⁽²⁾ ~~Represents the weighted average stated interest rate based on the outstanding principal balance as of September 30, 2017.~~

⁽³⁾~~Represents the weighted average maturity based on the outstanding principal balance as of September 30, 2017.~~

⁽⁴⁾

⁽⁴⁾	The Company records deferred financing costs for its revolving credit facilities in deferred costs and other assets, net on its consolidated balance sheets.

Revolving Credit ~~Facility in deferred costs and other assets, net on its consolidated balance sheets.~~

~~Revolving Credit Facility~~

Facilities

On ~~March 31, 2015,~~January 14, 2019, the ~~Company~~Operating Partnership entered into the 2019 Revolving Credit and Term Loan Agreement, comprised of the 2019 Credit Facility and the A-1 Term Loans, which replaced the 2015 Credit Agreement ~~among the Operating Partnership as borrower~~ and ~~the Company as guarantor, that established a new $600.0 million unsecured credit facility.~~2015 Term Loan Agreement, respectively. The ~~Revolving~~2019 Credit Facility ~~matures on March 31, 2019 (extendable at the Operating Partnership's option to March 31, 2020, subject to satisfaction~~is comprised of ~~certain requirements)~~$800.0 million of aggregate revolving commitments and ~~includes~~ an accordion feature ~~to increase the committed facility size up to $1.0 billion,~~providing for an additional $400.0 million of revolving borrowing capacity, subject to satisfying certain requirements and obtaining additional lender commitments. ~~On April 27, 2016, the Company expanded the borrowing capacity under the Revolving~~The 2019 Credit Facility ~~from $600.0 million to $800.0 million by partially exercising the accordion feature under the terms~~has an initial maturity date of ~~the Credit Agreement. The Revolving Credit Facility also~~March 31, 2023 and includes a $50.0 million sub-limit for swing-line loans and up to $60.0 million available for issuances of letters of credit. Swing-line loans and letters of credit reduce availability under the Revolving Credit Facility on a dollar-for-dollar basis. On November 3, 2015, the Company entered into a first amendment to the Credit Agreement. The amendment conforms certain of the terms and covenants to those in the Term Loan Agreement, including limiting the requirement of subsidiary guarantees to material subsidiaries (as defined in the Credit Agreement) meeting certain conditions. At September 30, 2017, there were no subsidiaries meeting this requirement.

~~Borrowings bear interest at either a specified base rate or LIBOR plus an applicable margin,~~2 six-month extensions that can be exercised at the ~~Operating Partnership's~~Company’s option. The Revolving Credit Facility bears interest at a rate equal to LIBOR plus 0.875% to 1.55% per annum or a specified base rate plus 0.00% to 0.55% and requires a facility fee in an amount equal to the aggregate revolving credit commitments (whether or not utilized) multiplied by a rate equal to 0.125% to 0.30% per annum, in each case depending on the Corporation's credit rating. As of September 30, 2017, the Revolving Credit Facility bore interest at LIBOR plus 1.25% based on the Company's credit rating and incurred a facility fee of 0.25% per annum.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~The Operating Partnership~~Borrowings may ~~voluntarily prepay the Revolving Credit Facility,~~be repaid, in whole or in part, at any time, without premium or penalty, but subject to applicable LIBOR breakage fees, if any. ~~Payment~~

As of March 31, 2020, the ~~Revolving~~outstanding loans under the 2019 Credit Facility ~~is unconditionally guaranteed~~bore interest at LIBOR plus an applicable margin of 0.90% per annum and the aggregate revolving commitments incurred a facility fee of 0.20% per annum, in each case, based on the Operating Partnership's credit rating, which was upgraded to BBB by S&P in May 2019. Prior to the ~~Corporation and material subsidiaries that meet certain conditions (as defined in~~upgrade, the ~~Credit Agreement). The Revolving~~2019 Credit Facility ~~is full recourse to the Operating Partnership~~bore interest at LIBOR plus an applicable margin of 1.10% per annum and the ~~aforementioned guarantors.~~

Asaggregate revolving commitments incurred a ~~result~~facility fee of 0.25% per annum.

Deferred financing costs incurred in connection with entering into the ~~Revolving~~2019 Credit Facility ~~and expanding the borrowing capacity, the Company incurred costs of $4.8 million. These deferred financing costs~~ are being amortized to interest expense over ~~the~~its remaining initial ~~term of the Revolving Credit Facility.~~term. The unamortized deferred financing costs ~~relating to the Revolving Credit Facility~~ were ~~$2.0 million and $2.9~~$3.4 million as of ~~September 30, 2017 and~~March 31, 2020, compared to $3.7 million as of December 31, ~~2016, respectively,~~2019, and are recorded in deferred costs and other assets, net on the accompanying consolidated balance sheets.

As of ~~September 30, 2017, $386.0 million was outstanding, no letters of credit were issued and $414.0~~March 31, 2020, $300.0 million of borrowing capacity was available under the ~~Revolving~~2019 Credit Facility. NaN outstanding letters of credit existed under the agreement as of March 31, 2020. TheOperating Partnership's ability to borrow under the ~~Revolving~~2019 Credit Facility is subject to ongoing compliance with a number of customary financial covenants and other customary affirmative and negative covenants. As of ~~September 30, 2017,~~March 31, 2020, the ~~Corporation~~Company and the Operating Partnership were in compliance with these financial covenants.

~~Term Loan~~

On November 3, 2015, the Company entered into a Term Loan Agreement among the Operating Partnership, as borrower, the Company as guarantor and the lenders that are parties thereto. The Term Loan Agreement provides for a $325.0 million senior unsecured term facility that has an initial maturity date of November 2, 2018, which may be extended at the Company's option pursuant to two one-year extension options, subject to the satisfaction of certain conditions and payment of an extension fee. In addition, an accordion feature allows the facility to be increased up to $600.0 million, subject to obtaining additional lender commitments. During the fourth quarter of 2015 and 2016, the Company exercised the accordion feature under the Credit Agreement and increased the term facility borrowing capacity from $325.0 million to $370.0 million and $420.0 million, respectively.

The Term Loan Agreement provides that borrowings bear interest at either LIBOR plus 1.35% to 1.80% per annum or a specified base rate plus 0.35% to 0.80% per annum, at the Operating Partnership's option. The borrowings bear interest at either LIBOR plus 0.90% to 1.75% per annum or a specified base rate plus 0.00% to 0.75% per annum, in each case depending on the Corporation’s credit ratings. As of September 30, 2017, the Term Loan bore interest at LIBOR plus 1.35% based on the Company's credit rating.

The Operating Partnership may voluntarily prepay the Term Loan, in whole or in part, at any time, without premium or penalty, but subject to applicable LIBOR breakage fees. Borrowings may be repaid without premium or penalty, and may be re-borrowed within 30 days up to the then available loan commitment and subject to occurrence limitations within any twelve-month period. Payment of the Term Loan is unconditionally guaranteed by the Corporation and, under certain circumstances, by one or more material subsidiaries (as defined in the Term Loan Agreement) of the Corporation. The obligations of the Corporation and any guarantor under the Term Loan are full recourse to the Corporation and each guarantor.

As a result of entering into the Term Loan, the Company incurred origination costs of $2.4 million. These deferred financing costs are being amortized to interest expense over the remaining initial term of the Term Loan. As of September 30, 2017 and December 31, 2016, the unamortized deferred financing costs relating to the Term Loan were $0.9 million and $1.5 million, respectively, and recorded net against the principal balance of the Term Loan on the accompanying consolidated balance sheets.

As of September 30, 2017, the Term Loan was fully drawn. The Operating Partnership's ability to borrow under the Term Loan is subject to ongoing compliance with a number of customary financial covenants and other customary affirmative and negative covenants. The Corporation has unconditionally guaranteed all obligations of the Operating Partnership under the Term Loan Agreement. As of September 30, 2017, the Corporation and the Operating Partnership were in compliance with these financial covenants.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

Senior Unsecured Notes

~~On August 18, 2016, the Operating Partnership completed a private placement of $300.0 million aggregate principal amount of senior notes, which are guaranteed by the Corporation.~~

The Senior Unsecured Notes were issued ~~at 99.378%~~by the Operating Partnership and guaranteed by the Company. The following is a summary of ~~their principal amount, resulting~~the Senior Unsecured Notes outstanding (dollars in ~~net proceeds of $296.2 million, after deducting transaction fees and expenses.~~ thousands):

	Maturity Date	Stated Interest Rate	March 31, 2020		December 31, 2019
2026 Senior Notes	September 15, 2026	4.45%	$	300,000	$	300,000
2027 Senior Notes	January 15, 2027	3.20%		300,000		300,000
2029 Senior Notes	July 15, 2029	4.00%		400,000		400,000
2030 Senior Notes	January 15, 2030	3.40%		500,000		500,000
Total Senior Unsecured Notes		3.73%	$	1,500,000	$	1,500,000

The Senior Unsecured Notes ~~accrue interest at a rate~~are payable on January 15 and July 15 of ~~4.45% per~~each year, except for the 2026 Senior Notes, which are payable on March 15 and September 15 of each year, until the maturity date of September 15, 2026. The Company filed a registration statement with the SEC to exchange the private Senior Unsecured Notes for registered Senior Unsecured Notes with substantially identical terms, which became effective April 14, 2017. All $300.0 million aggregate principal amount of private Senior Unsecured Notes were tendered in the exchange for registered Senior Unsecured Notes.

year. The Senior Unsecured Notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: ~~an amount equal to~~ 100% of the principal amount of the respective Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole ~~premium calculated in accordance with the indenture. Notwithstanding the foregoing, if~~premium. If any of the Senior Unsecured Notes are redeemed onthree months or ~~after June 15, 2026 (three~~less (or two months or less in the case of the 2027 Senior Notes) prior to ~~the~~their respective maturity ~~date of the Senior Unsecured Notes),~~dates, the redemption price will not include a make-whole premium.

Deferred financing costs and offering discounts incurred in connection with the ~~offering,~~issuance the ~~Operating Partnership incurred $3.4 million in deferred financing costs. This amount is~~Senior Unsecured Notes are being amortized to interest expense over the ~~life~~lives of the respective SeniorUnsecured Notes. As of ~~both September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the unamortized deferred financing costs ~~relating to~~were $12.6 million and $12.9 million, respectively, and the ~~Senior Unsecured Notes were $3.1~~unamortized discount was $2.9 million and $3.0 million, respectively. Both the deferred financing costs and offering discount are recorded net against the Senior Unsecured Notes principal balance on the accompanying consolidated balance sheets.

In connection with the issuance of the Senior Unsecured Notes, the ~~Corporation~~Company and Operating Partnership are subject to ongoing compliance with a number of customary financial covenants and other customary affirmative and negative covenants. As of ~~September 30, 2017,~~March 31, 2020, the ~~Corporation~~Company and the Operating Partnership were in compliance with these financial covenants.

~~Master Trust Notes~~

The Company has access to an asset-backed securitization platform, the Spirit Master Funding Program, to raise capital through the issuance of non-recourse net-lease mortgage notes collateralized by commercial real estate, net-leases and mortgage loans. The Spirit Master Funding Program consists of two separate securitization trusts, Master Trust 2013 and Master Trust 2014, each of which have one or multiple bankruptcy-remote, special purpose entities as issuers or co-issuers of the notes. Each issuer is an indirect wholly-owned special purpose entity of the Corporation.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~The Master Trust Notes are summarized below:~~

Stated
Rates ⁽¹⁾
Maturity September 30,
2017 December 31,
2016
(in Years) (in Thousands)
Series 2014-1 Class A1 5.1 % 2.7 $ 45,141
$ 53,919
Series 2014-1 Class A2 5.4 % 2.8 253,300
253,300
Series 2014-2 5.8 % 3.5 223,604
226,283
Series 2014-3 5.7 % 4.5 311,459
311,820
Series 2014-4 Class A1 3.5 % 2.3 150,000
150,000
Series 2014-4 Class A2 4.6 % 12.3 360,000
360,000
Total Master Trust 2014 notes 5.1 % 5.8 1,343,504
1,355,322
Series 2013-1 Class A 3.9 % 1.2 125,000
125,000
Series 2013-2 Class A 5.3 % 6.2 188,898
192,384
Total Master Trust 2013 notes 4.7 % 4.2 313,898
317,384
Total Master Trust notes 1,657,402
1,672,706
Debt discount, net (15,613 ) (18,787 )
Deferred financing costs, net (14,050 ) (16,376 )
Total Master Trust Notes, net $ 1,627,739
$ 1,637,543

⁽¹⁾ Represents the individual series stated interest rate as of September 30, 2017 and the weighted average stated rate of the total Master Trust Notes, based on the collective series outstanding principal balances as of September 30, 2017.

CMBS

As of September 30, 2017, the Master Trust 2014 notes were secured by 815 owned and financed properties issued by five indirect wholly-owned subsidiaries of the Corporation. The notes issued under Master Trust 2014 are cross-collateralized by the assets of all issuers within this trust. As of September 30, 2017, the Master Trust 2013 notes were secured by 295 owned and financed properties issued by a single indirect wholly-owned subsidiary of the Corporation.

~~CMBS~~

~~As of September 30, 2017,~~March 31, 2020, indirect wholly-owned special purpose entity subsidiaries of the ~~Corporation~~Company were borrowers under 105 fixed-rate non-recourse loans, ~~excluding six loans in default,~~ which have been securitized into CMBS and are secured by the borrowers' respective leased properties and related assets. The stated interest rates ~~of the loans~~ as of ~~September 30, 2017, excluding~~March 31, 2020 for the ~~defaulted~~ loans ranged from ~~3.90%~~5.23% to ~~6.52%~~6.00%, with a weighted average stated ~~interest~~ rate of ~~5.32%~~5.47%. As of ~~September 30, 2017, these fixed-rate~~March 31, 2020, the loans were secured by ~~113~~88 properties. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the unamortized deferred financing costs associated with ~~these fixed-rate~~the CMBS loans were ~~$4.2~~$2.4 million and ~~$4.7~~$2.6 million, respectively, and the unamortized net offering premium was $0.3 million as of both periods. Both the deferred financing costs and offering premium were recorded net against the principal balance of the mortgages and notes payable on the accompanying consolidated balance ~~sheets. The deferred financing costs~~sheets and are being amortized to interest expense over the term of the respective loans.

As of September 30, 2017, certain borrowers were in default under the loan agreements relating to six separate CMBS fixed-rate loans, where eight properties securing the respective loans were no longer generating sufficient revenue to pay the scheduled debt service. The default interest rate on these loans was between 7.53% and 10.62%. Each defaulted borrower is a bankruptcy remote special purpose entity and the sole owner of the collateral securing the loan obligations. As of September 30, 2017, the aggregate principal balance under the defaulted loans was $62.9 million, which includes $11.8 million of interest capitalized to the principal balance.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

Convertible Notes

In May 2014, the ~~Corporation~~Company issued $402.5 million aggregate principal amount of 2.875% convertible notes due in 2019 and $345.0 million aggregate principal amount of 3.75% convertible notes due in 2021. ~~Interest~~Proceeds from the issuance were contributed to the Operating Partnership and are recorded as a note payable to Spirit Realty Capital, Inc. on the ~~Convertible~~consolidated balance sheets of the Operating Partnership. The 2019 Notes matured on May 15, 2019 and were settled in cash. The 2021 Notes will mature on May 15, 2021 and interest is payable ~~semiannually~~semi-annually in arrears on May 15 and November 15 of each year.

The ~~2019 Notes will mature on May 15, 2019 and the~~ 2021 ~~Notes will mature on May 15, 2021.~~

~~The Convertible~~ Notes are convertible only during certain periods and, subject to certain circumstances, into cash, shares of the ~~Corporation's~~Corporation’s common stock, or a combination thereof. The initial conversion rate applicable to each series is 76.3636 per $1,000 principal note (equivalent to an initial conversion price of $13.10 per share of common stock, representing a 22.5% premium above the public offering price of the common stock offered concurrently at the time the Convertible Notes were issued). The conversion rate is subject to adjustment for certain anti-dilution events, including special distributions and regular quarterly cash dividends exceeding ~~$0.16625~~a current threshold of $0.73026 per share. As of ~~September 30, 2017,~~March 31, 2020, the conversion rate was ~~77.1889~~17.4458 per $1,000 principal ~~note.~~note, which reflects the adjustment from the SMTA dividend distribution related to the Spin-Off, in addition to the other regular dividends declared during the life of the Convertible Notes. Earlier conversion may be triggered if shares of the ~~Corporation's~~Corporation’s common stock ~~trades~~trade higher than the established thresholds, if the ~~Convertible~~2021 Notes trade below established thresholds, or certain corporate events occur.

Offering discount and deferred financing costs incurred in connection with the issuance of the Convertible Notes ~~the Company recorded a discount of $56.7 million, which represents the estimated value of the embedded conversion feature for each of the Convertible Notes. The discount is~~are being amortized to interest expense ~~using the effective interest method~~ over the term of ~~each of~~ the respective Convertible Notes and, as such, the amounts related to the

2019 Notes ~~and 2021 Notes.~~were fully amortized in May 2019. As of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, the unamortized discount was ~~$26.2~~$5.4 million and ~~$33.5~~$6.5 million, respectively. ~~The discount is~~As of March 31, 2020 and December 31, 2019, the unamortized deferred financing costs were $1.7 million and $2.1 million, respectively. These amounts are shown net against the aggregate outstanding principal balance of the Convertible Notes on the accompanying consolidated balance sheets. The equity component of the conversion feature was $55.1 million as of both March 31, 2020 and December 31, 2019 and is recorded in capital in excess of par value in the accompanying consolidated balance sheets, net of financing transaction costs.

In connection with the offering, the Company also incurred $19.6 million in deferred financing costs. This amount has been allocated on a pro-rata basis to each of the Convertible Notes and is being amortized to interest expense over the term of each note. As of September 30, 2017 and December 31, 2016, the unamortized deferred financing costs relating to the Convertible Notes were $8.8 million and $11.4 million, respectively, and recorded net against the Convertible Notes principal balance on the accompanying consolidated balance sheets.

Debt Extinguishment

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we did 0t extinguish any debt.

During the three months ended March 31, 2019, the Company extinguished a total of ~~$101.0~~$10.4 million aggregate principal amount of ~~senior mortgage~~CMBS indebtedness ~~with~~on 1 defaulted loan, which was secured by 1 property. The loan had a ~~weighted average contractual~~default interest rate of ~~5.84%. As~~9.85% and resulted in a ~~result of these transactions, the Company recognized a net~~ gain on debt extinguishment of ~~approximately $1.8~~$9.5 million. ~~Payment of any premium is included in debt extinguishment costs within operating activities in the consolidated statement of cash flows.~~

During the nine months ended September 30, 2016, the Company extinguished a total of $817.3 million aggregate principal amount of senior mortgage indebtedness with a weighted average contractual interest rate of 6.02%. AsAdditionally, as a result of ~~these transactions,~~the termination of the 2015 Credit Agreement and the 2015 Term Loan Agreement, the Company recognized a ~~net gain~~loss on debt extinguishment of ~~approximately $0.3~~$0.7 million.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

Debt Maturities

As of ~~September 30, 2017,~~March 31, 2020, scheduled debt maturities, ~~of the Company’s Revolving Credit Facility, Term Loan, Senior Unsecured Notes, Master Trust Notes, CMBS and Convertible Notes,~~ including balloon payments, ~~are~~were as follows (in thousands):

	Scheduled Principal		Balloon Payment		Total
Remainder of 2020	$	3,082	$	—	$	3,082
2021		4,365		345,000		349,365
2022		4,617		—		4,617
2023		3,074		697,912		700,986
2024		590		—		590
Thereafter		3,610		1,500,070		1,503,680
Total	$	19,338	$	2,542,982	$	2,562,320

Scheduled
Principal

Balloon
Payment
Total
Remainder of 2017 ⁽¹⁾
$ 7,538
$ 122,634
$ 130,172
2018 ⁽²⁾
41,954
569,800
611,754
2019 ⁽³⁾
44,325
798,500
842,825
2020 39,096
413,206
452,302
2021 30,658
554,753
585,411
Thereafter 219,000
1,096,021
1,315,021
Total $ 382,571
$ 3,554,914
$ 3,937,485

⁽¹⁾ The balloon payment balance in 2017 includes $62.9 million, including $11.8 million of capitalized interest, for the acceleration of principal payable following an event of default under six non-recourse CMBS loans with a stated maturity in 2017.

⁽²⁾ ~~2018 includes $420 million unsecured Term Loan that is extendible at borrower's option pursuant to two one-year extension options.~~

⁽³⁾ ~~2019 includes the Revolving Credit Facility which is extendible for one year at the borrower's option.~~

Interest Expense

The following table is a summary of the components of interest expense related to the Company's borrowings (in thousands):

	Three Months Ended March 31,
	2020		2019
Interest expense – revolving credit facilities ⁽¹⁾	$	2,056	$	2,178
Interest expense – term loans		—		3,979
Interest expense – Senior Unsecured Notes		13,988		3,338
Interest expense – mortgages and notes payable		3,013		6,252
Interest expense – Convertible Notes ⁽²⁾		3,234		6,127
Non-cash interest expense:
Amortization of deferred financing costs		1,142		2,031
Amortization of debt discount, net		1,224		2,706
Amortization of net losses related to interest rate swaps		702		—
Total interest expense	$	25,359	$	26,611

⁽¹⁾	Includes facility fees of approximately $0.4 million and $0.7 millionfor the three months ended March 31, 2020 and 2019, respectively.

⁽²⁾	Included in interest expense on the Operating Partnership's consolidated statements of operations are amounts paid to the Company by the Operating Partnership related to the notes payable to Spirit Realty Capital, Inc.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Interest expense – Revolving Credit Facility ⁽¹⁾
$ 3,075
$ 1,155
$ 5,632
$ 2,507
Interest expense – Term Loan 2,768
1,307
7,525
3,376
Interest expense – Senior Unsecured Notes 3,337
1,595
10,013
1,595
Interest expense – mortgages and notes payable 27,563
33,291
83,640
113,837
Interest expense – Convertible Notes ⁽²⁾
6,127
6,127
18,382
18,382
Non-cash interest expense:
Amortization of deferred financing costs 2,451
2,303
7,274
6,706
Amortization of net losses related to interest rate swaps —
28
—
85
Amortization of debt discount, net 3,359
1,847
9,663
3,354
Total interest expense $ 48,680
$ 47,653
$ 142,129
$ 149,842

⁽¹⁾~~Includes facility fees~~

NOTE 5. STOCKHOLDERS’ EQUITY AND PARTNERS' CAPITAL

Common Stock

During the three months ended March 31, 2020, portions of ~~approximately $0.5 million for both~~awards of restricted common stock and market-based share awards granted to certain of the ~~three month periods ended September 30, 2017~~Company's officers and ~~2016,~~other employees vested. The vesting of these awards, granted pursuant to the Amended Incentive Award Plan, resulted in federal and ~~approximately $1.6 million and $1.5 million~~state income tax liabilities for the ~~nine month periods~~recipients. As permitted by the terms of the Amended Incentive Award Plan and the award grants, certain executive officers and employees elected to surrender 44.5 thousand shares of common stock valued at $2.3 million, solely to pay the associated statutory tax withholdings during the three months ended ~~September 30, 2017~~March 31, 2020.

In November 2016, the Board of Directors approved a $500 million ATM Program. The agreement provides for the offer and ~~2016, respectively.~~

⁽²⁾~~Included~~sale of shares of the Corporation’s common stock having an aggregate gross sales price of up to $500.0 million through the agents, as its sales agents or, if applicable, as forward sellers for forward purchasers, or directly to the agents acting as principals. The Company may sell shares in ~~interest expense~~amounts and at times to be determined by the Company but has no obligation to sell any shares in the ATM program. Since inception of the ATM Program through March 31, 2020, 5.6 million shares of the Corporation’s common stock have been sold, of which 0.4 million were sold during the three months ended March 31, 2020 at a weighted average price per share of $49.30, generating $17.9 million in gross proceeds. 3.8 million of these sales were through forward sales agreements, of which 0.4 million were physically settled in shares during the three months ended March 31, 2020. There were 0 open forward sales agreements under the ATM Program as of March 31, 2020. Aggregate gross proceeds capacity of $246.3 million remained available under the program as of March 31, 2020.

Preferred Stock

As of March 31, 2020, the Company had 6.9 million shares of 6.00% Series A Preferred Stock outstanding. The Series A Preferred Stock pays cumulative cash dividends at the rate of 6.00% per annum on the ~~Operating Partnership's consolidated statements~~liquidation preference of ~~operations are amounts paid~~$25.00 per share (equivalent to ~~the Corporation by the Operating Partnership related to the notes payable to Spirit Realty Capital, Inc.~~

~~Note 5. Derivative and Hedging Activities~~

~~The Company uses interest rate derivative contracts to manage its exposure to changes in interest rates on its variable rate debt. These derivatives are considered cash flow hedges and are recorded~~$0.375 per share on a ~~gross~~quarterly basis ~~at fair value. Assessments~~and $1.50 per share on an annual basis).

Dividends Declared

For the three months ended March 31, 2020, the Company's Board of ~~hedge effectiveness are performed quarterly using regression analysis~~Directors declared the following dividends:

Declaration Date

Dividend Per Share

Record Date

Total Amount

(in thousands)

Payment Date

Common Stock

February 27, 2020

0.625

March 31, 2020

64,338

April 15, 2020

Preferred Stock

February 27, 2020

0.375

March 13, 2020

2,588

March 31, 2020

The common stock dividend declared on February 27, 2020 is included in accounts payable, accrued expenses and the measurement of hedge ineffectiveness is based on the hypothetical derivative method. The effective portion of changes in fair value are recorded in AOCL and subsequently reclassified to earnings when the hedged transactions affect earnings. The ineffective portion is recorded immediately in earnings in general and administrative expenses. The Company does not enter into derivatives contracts for speculative or trading purposes.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~The Company is exposed to credit risk~~other liabilities in the event of non-performance by its derivative counterparties. The Company evaluates counterparty credit risk through monitoring the creditworthiness of counterparties, which includes review of debt ratings and financial performance. To mitigate its credit risk, the Company enters into agreements with counterparties it considers credit-worthy, such as large financial institutions with favorable credit ratings.

~~The Company has terminated all existing derivative contracts~~consolidated balance sheets as of ~~June 30, 2016 and has not entered into any new derivative contracts as of September 30, 2017.~~

The following tables provide information about the amounts recorded in AOCL, as well as the loss recorded in operations, when reclassified out of AOCL or recognized in earnings immediately, for the nine months ended~~September 30, 2016 (in thousands):~~

Amount of Loss Recognized in AOCL on Derivative
(Effective Portion)
Derivatives in Cash Flow Hedging Relationships Three Months Ended Nine Months Ended
September 30, 2016
Interest rate swaps $ 28
$ (1,145 )

Amount of Loss Reclassified from AOCL into Operations
(Effective Portion)
Location of Loss Reclassified from AOCL into Operations Three Months Ended Nine Months Ended
September 30, 2016
Interest expense $ —
$ (459 )

Amount of Loss Recognized in Operations on Derivative
(Ineffective Portion)
Location of Loss Recognized in Operations on Derivatives Three Months Ended Nine Months Ended
September 30, 2016
General and administrative expense $ —
$ (1,706 )

Derivatives Not Designated as Hedging Instruments
Location of Loss Recognized in Operations on Derivatives Three Months Ended Nine Months Ended
September 30, 2016
General and administrative expense $ —
$ (18 )

March 31, 2020.

~~Note~~

NOTE 6. ~~Stockholders’ Equity and Partners' Capital~~

~~Issuance of Common Stock~~

During the nine months ended September 30, 2017, portions of awards of restricted common stock and performance share awards granted to certain of the Company's officers and other employees vested. The vesting of these awards, granted pursuant to the Amended Incentive Award Plan, resulted in federal and state income tax liabilities for the recipients. As permitted by the terms of the Amended Incentive Award Plan and the award grants, certain executive officers and employees elected to surrender 0.4 million shares of common stock valued at $3.5 million, solely to pay the associated statutory tax withholdings during the nine months ended September 30, 2017.

~~ATM Program~~

In November 2016, the Company's Board of Directors approved a new ATM Program and the Company terminated its existing program. As of September 30, 2017, no shares of the Company's common stock had been sold under the new ATM Program and $500.0 million in gross proceeds capacity remained available.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~Stock Repurchase Programs~~

In August 2017, the Company's Board of Directors approved a new stock repurchase program, which authorizes the Company to repurchase up to $250.0 million of its common stock. These purchases can be made in the open market or through private transactions from time to time over the 18 month time period following authorization, depending on prevailing market conditions and applicable legal and regulatory requirements. Purchase activity will be dependent on various factors, including the Company's capital position, operating results, funds generated by asset sales, dividends that may be required by those sales, and investment options that may be available, including acquiring new properties or retiring debt. The stock repurchase program does not obligate the Company to repurchase any specific number of shares and may be suspended at any time at the Company's discretion. As of September 30, 2017, 2,482,570 shares of the Company's common stock have been repurchased in open market transactions under the stock repurchase program, at a weighted average price of $8.75 per share, leaving $228.3 million in available capacity. Fees associated with the repurchase, of $49,700, are included in retained earnings.

In February 2016, the Company's Board of Directors approved a stock repurchase program, which authorized the Company to repurchase up to $200.0 million of its common stock over the 18 month time period following authorization. A total of 26,337,295 shares of the Company's outstanding common stock were repurchased in open market transactions under the stock repurchase program, at a weighted average price of $7.59 per share, equivalent to the full $200.0 million authorized. Fees associated with the share repurchase of $0.5 million are included in retained earnings.

~~Dividends Declared~~

~~For the nine months ended September 30, 2017, the Corporation's Board of Directors declared the following dividends:~~

Declaration Date Dividend Per Share Record Date Total Amount Payment Date
(in thousands)
March 15, 2017 $ 0.1800
March 31, 2017 $ 87,122
April 14, 2017
June 15, 2017 $ 0.1800
June 30, 2017 $ 82,422
July 14, 2017
September 15, 2017 $ 0.1800
September 29, 2017 $ 82,062
October 13, 2017

~~The dividend declared on September 15, 2017 was paid on October 13, 2017 and is included in accounts payable, accrued expenses and other liabilities as of September 30, 2017.~~

~~Note 7. Commitments and Contingencies~~

COMMITMENTS AND CONTINGENCIES

The Company is periodically subject to claims or litigation in the ordinary course of business, including claims generated from business conducted by tenants on real estate owned by the Company. In these instances, the Company is typically indemnified by the tenant against any losses that might be suffered, and the Company and/or the tenant are typically insured against such claims.

On September 8, 2015, Haggen Holdings, LLC and a number of its affiliates, including Haggen Operations Holdings, LLC (collectively, the "Debtors"), filed petitions for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. At the time of the filing, Haggen Operations Holdings, LLC ("Haggen") leased 20 properties on a triple net basis from a subsidiary of the Company under a master lease.

~~On November 25, 2015, Haggen and Spirit restructured the master lease in an initial settlement agreement with approved claims of $21.0 million.~~

~~On April 1, 2016, Spirit entered into a second settlement agreement with both Haggen and Albertsons, LLC for $3.4 million and $3.0 million, respectively.~~

As a result of the settlements, the leases for seven locations were rejected and the leases for thirteen locations were assumed by the Debtors and assigned to the following tenants: five locations to Albertsons, LLC, five locations to Smart & Final, LLC, two locations to Gelson’s Markets and one location to Safeway, Inc.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

As of September 30, 2017, the Company had sold seven of the properties for total proceeds of $58.3 million, including five of the original seven rejected locations, resulting in 11 locations with leases in-place under substantially the same terms and rent (inclusive of the $3.0 million settlement related to rent reduction for an amended lease with Albertsons, LLC) and two locations that remain vacant.

~~To date, the Company has collected $5.5 million of the total claims and there is no guaranty that the remaining claims will be paid or otherwise satisfied in full.~~

As of September 30, 2017, there were no outstanding claims against the Company that are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

As of September 30, 2017, the Company had commitments totaling $54.1 million, of which $11.3 million relates to future acquisitions with the majority of the remainder to fund revenue generating improvements on properties the Company currently owns. Commitments related to acquisitions contain standard cancellation clauses contingent on the results of due diligence. Of the total commitments of $54.1 million, $33.0 million is expected to be funded during fiscal year 2017. In addition, the The Company is contingently liable for $5.7 million of debt owed by ~~one~~1 of its former tenants until the maturity of the debt on March 15, 2022. The Company has accrued the full $5.7 million liability in accounts payable, accrued expenses and ~~is indemnified by that tenant for any payments~~other liabilities in the ~~Company may be required to make on such debt.~~

consolidated balance sheet as of both March 31, 2020 and December 31, 2019.

The Company estimates future costs for known environmental remediation requirements when it is probable that the Company has incurred a liability and the related costs can be reasonably estimated. The Company considers various factors when estimating its environmental liabilities, and adjustments are made when additional information becomes available that affects the estimated costs to study or remediate any environmental issues. When only a wide range of estimated amounts can be reasonably established and no other amount within the range is better than another, the low end of the range is recorded in the consolidated financial statements.

As of March 31, 2020, 0 accruals have been made.

As of March 31, 2020, there were 0 outstanding claims against the Company that are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Purchase and Capital Improvement Commitments

As of March 31, 2020, the Company had commitments totaling $20.4 million, of which $7.3 million relates to future acquisitions, with the remainder to fund improvements on properties the Company currently owns. Commitments related to acquisitions contain standard cancellation clauses contingent on the results of due diligence. $18.9 million of these commitments are expected to be funded during fiscal year 2020, with the remainder to be funded by 2021.

Lessee Contracts

The Company leases its current corporate office space and certain office equipment, which are classified as operating leases. The Company's lease of its corporate office space has an initial term that expires on January 31, 2027 and is renewable at the Company's option for two additional periods of five years each after the initial term. The corporate office

~~SPIRIT REALTY CAPITAL, INC.~~

lease contains a variable lease cost related to the lease of parking spaces and ~~SPIRIT REALTY, L.P.~~

~~Notes~~a non-lease component related to ~~Consolidated Financial Statements - (continued)~~

the reimbursement of certain common area maintenance expenses, both of which are recognized as incurred.

The Company is also a lessee under five long-term, non-cancellable ground leases under which it is obligated to pay monthly rent as of March 31, 2020. For all 5 of the ground leases, rental expenses are reimbursed by unrelated third parties, and the corresponding rental revenue is recorded in rental income on the accompanying consolidated statements of operations. All leases are classified as operating leases and have a weighted average remaining lease term of 7.3 years.

As of March 31, 2020, the Company had a right-of-use lease asset balance of $5.3 million and total operating lease liabilities of $7.2 million for these lessee contracts.

NOTE 7. DERIVATIVE AND HEDGING ACTIVITIES

The Company uses interest rate derivative contracts to manage its exposure to changes in interest rates on its variable rate debt. These derivatives are considered cash flow hedges and are recorded on a gross basis at fair value. Assessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach. The Company recognizes the entire change in the fair value in AOCL and the change is reflected as cash flow hedge changes in fair value in the supplemental disclosures of non-cash investing and financing activities in the consolidated statement of cash flows. Amounts will subsequently be reclassified to earnings when the hedged item affects earnings. The Company does not enter into derivative contracts for speculative or trading purposes and does not have derivative netting arrangements.

The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company evaluates counterparty credit risk through monitoring the creditworthiness of counterparties, which includes review of debt ratings and financial performance. To mitigate credit risk, the Company enters into agreements with counterparties it considers credit-worthy, such as large financial institutions with favorable credit ratings.

In December 2018, the Company entered into interest rate swap agreements.In the three months ended September 30, ~~2017~~2019, the Company terminated its interest rate swaps and accelerated the reclassification of a loss of $12.5 million from AOCL to termination of interest rate swaps as a result of a portion of the hedged forecasted transactions becoming probable not to occur. There were no events of default related to the interest rate swaps prior to their termination. Given that a proportion of the hedged transactions remained probable to occur, $12.3 million of the loss was deferred in other comprehensive loss and will be amortized over the remaining initial term of the interest rate swaps, which ends March 31, 2024. As of March 31, 2020, the unamortized portion of loss in AOCL related to terminated interest rate swaps was $10.8 million.

The following table provides information about the amounts recorded in AOCL, as well as the loss recorded in operations, when reclassified out of AOCL or recognized in earnings immediately, for the three months ended March 31, 2020(in thousands):

	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
Gross amount of loss recognized in AOCL on derivatives	$	—	$	(5,229	)
Amount of loss reclassified from AOCL to termination of interest rate swaps		—		208
Amount of loss reclassified from AOCL to interest⁽¹⁾		702		—
Net reclassification of amounts from (to) AOCL	$	702	$	(5,021	)

~~(Unaudited)~~

⁽¹⁾	Interest expense for the three months ended March 31, 2020 was $25.4 million.

During the next 12 months, we estimate that approximately$2.8 millionwill be reclassified as an increase to interest expense related to terminated hedges of existing floating-rate debt.

~~Note~~

NOTE 8. ~~Fair Value Measurements~~

~~Recurring Fair Value Measurements~~

~~The Company did not have any assets or liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016.~~

FAIR VALUE MEASUREMENTS

Nonrecurring Fair Value Measurements

Fair value measurement of an asset on a nonrecurring basis occurs when events or changes in circumstances related to an asset indicate that the carrying amount of the asset is no longer recoverable. ~~The following table sets forth the Company’s assets that were accounted for at fair value on a nonrecurring basis (in thousands):~~

Fair Value Hierarchy Level
Description Level 1 Level 2 Level 3
September 30, 2017
Retail $ —
$ —
$ 17,000
Industrial —
—
6,954
Office —
—
6,020
Long-lived assets held and used —
—
29,974
Long-lived assets held for sale —
—
47,748

December 31, 2016
Retail $ —
$ —
$ 37,934
Industrial —
—
3,741
Office —
—
8,538
Long-lived assets held and used —
—
50,213
Lease intangible assets —
—
6,384
Other assets —
—
27
Long-lived assets held for sale —
—
61,400

Real estate assets and their related intangible assets are evaluated for impairment based on certain indicators including, but not limited to: the asset being held for sale, vacant or non-operating, tenant bankruptcy or ~~the lease on the asset~~delinquency, and leases expiring in ~~twelve months~~60 days or less. The fair values of impaired real estate and intangible assets were determined by using the following information, depending on availability, in order of preference: signed purchase and sale agreements (“PSA”) or letters of ~~intent;~~intent (“LOI”); broker opinions of value (“BOV”); recently quoted bid or ask prices, or market prices for comparable properties; estimates of discounted cash ~~flow,~~flows, which consider, among other things, contractual and forecasted rental revenues, leasing assumptions, ~~and~~ expenses based

upon market ~~conditions;~~conditions and capitalization rates; and expectations for the use of the real estate. Based on these inputs, the Company determined that its valuation of the impaired real estate and intangible assets falls within Level 3 of the fair value hierarchy.

~~During~~ The following table sets forth the ~~nine months ended September 30, 2017 and~~Company’s assets that were accounted for at fair value on a nonrecurring basis as of their respective measurement dates (in thousands):

			Fair Value Hierarchy Level
Description	Fair Value		Level 1		Level 2		Level 3
Assets held at March 31, 2020
Impaired at March 31, 2020	$	54,688	$	—	$	—	$	54,688

Assets held at December 31, 2019
Impaired at June 30, 2019	$	1,893	$	—	$	—	$	1,893
Impaired at September 30, 2019	$	1,093	$	—	$	—	$	1,093
Impaired at December 31, 2019	$	11,594	$	—	$	—	$	11,594

As of March 31, 2020, the ~~year ended~~Company held 22 properties that were impaired during 2020. As of December 31, ~~2016, we determined~~2019, the Company held 16 properties that ~~16 and 33 long-lived assets~~were impaired during 2019. For 1 of the properties held ~~and used, respectively, were impaired. The~~at March 31, 2020, the Company estimated ~~the~~ fair value using a capitalization rate of ~~these~~10.06% based on comparative capitalization rates from market comparables. For 1 of the properties held at December 31, 2019, the Company estimated fair value using ~~weighted average sales~~a capitalization rate of 9.62% based on comparative capitalization rates from market comparables. For the remaining properties, the Company estimated property fair value using price per square foot offrom unobservable inputs and, for the properties valued using comparable properties ~~for 15 of~~at March 31, 2020, the ~~16 impaired properties during the nine months ended September 30, 2017 and for 16 of the 33 impaired properties during the year ended December 31, 2016.~~

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

~~The following table provides information about the weighted average sales~~ price per square foot includes a discount of ~~comparable properties used~~0-10% to ~~estimate fair value (price per square foot in dollars):~~

September 30, 2017 December 31, 2016
Description Range Weighted Average Square Footage Range Weighted Average Square Footage
Long-lived assets held and used by asset type
Retail $13.66 - 285.98 $ 53.99
355,428
$17.17 - $502.23 $ 58.78
290,770
Industrial — —
—
$26.43 $ 26.43
104,864
Office $24.82 - 244.86 $ 40.14
161,346
$35.00 $ 35.00
135,675

account for the market impact of COVID-19. The Company estimated the fair value on 1 of the 16 impaired properties using the weighted average listing price of comparable properties or broker opinion of value per square foot during the nine months ended~~September 30, 2017 and on 17 of the 33 impaired properties during the year ended December 31, 2016.~~unobservable inputs are as follows:

Unobservable Input	Asset Type	Property Count		Price Per Square Foot Range	Weighted Average Price Per Square Foot	Square Footage
March 31, 2020
Comparable Properties	Retail		14	$4.35 - $740.74	$47.89		533,803
PSA, LOI or BOV	Retail		5	$2.50 - $222.02	$33.27		338,484
PSA, LOI or BOV	Industrial		1	$13.79	$13.79		35,551
PSA, LOI or BOV	Office		1	$96.39	$96.39		4,310

December 31, 2019
Comparable Properties	Retail		4	$34.45 - $740.74	$104.84		35,885
PSA, LOI or BOV	Retail		10	$24.78 - $323.00	$50.71		165,773
PSA, LOI or BOV	Office		1	$99.37	$99.37		4,310

The following table provides information about the weighted average listing price and broker opinion of value per square foot of comparable properties used to estimate fair value (price per square foot in dollars):

September 30, 2017 December 31, 2016
Description Range Weighted Average Square Footage Range Weighted Average Square Footage
Long-lived assets held and used by asset type
Retail — $ —
—
$15.40 - $170.02 $ 40.80
516,916
Industrial $5.73 $ 5.73
370,824
$9.09 $ 9.09
149,627
Office — $ —
—
$56.81 $ 56.81
34,992

Estimated Fair Value of Financial Instruments

Financial assets and liabilities for which the carrying values approximate their fair values include cash and cash equivalents, restricted cash and escrow deposits, and accounts receivable and payable. Generally, these assets and liabilities are short-term in duration and are recorded at cost, which approximates fair value, on the accompanying consolidated balance sheets.

In addition, ~~to the disclosures for assets and liabilities required to be measured at fair value at the balance sheet date,~~ companies are required to disclose the estimated fair values of all financial instruments, even if they are not carried at their fair values. The fair values of financial instruments are estimates based upon market conditions and perceived risks at ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~2019. These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

The estimated fair values of ~~the following~~these financial instruments have been derived either based on (i) market quotes for ~~comparable~~identical or similar instruments in markets that are not active or (ii) discounted cash flow analyses using estimates of the amount and timing of future cash flows, market rates and credit spreads. These measurements are classified as Level 2 of the fair value hierarchy. The following table discloses fair value information for these financial instruments (in thousands):

September 30, 2017 December 31, 2016

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value
Loans receivable, net $ 76,821
$ 80,396
$ 66,578
$ 71,895
Revolving Credit Facility 386,000
385,993
86,000
87,718
Term Loan, net ⁽¹⁾
419,091
420,024
418,471
428,441
Senior Unsecured Notes, net ⁽¹⁾
295,242
300,039
295,112
283,473
Mortgages and notes payable, net ⁽¹⁾
2,050,302
2,068,788
2,162,403
2,282,142
Convertible Notes, net ⁽¹⁾
712,510
758,085
702,642
784,175

⁽¹⁾~~The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums.~~

	March 31, 2020				December 31, 2019
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Loans receivable, net	$	30,849	$	31,586	$	34,465	$	35,279
Revolving credit facilities		500,000		514,004		116,500		119,802
Senior Unsecured Notes, net⁽¹⁾		1,484,473		1,383,947		1,484,066		1,543,919
Mortgages and notes payable, net⁽¹⁾		215,186		230,834		216,049		235,253
Convertible Notes, net⁽¹⁾		337,921		326,267		336,402		356,602

⁽¹⁾	The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums.

~~Note 9. Significant Credit and Revenue Concentration~~

As of September 30, 2017 and December 31, 2016, the Company’s real estate investments are operated by 421 and 450 tenants, respectively, that operate within retail, office and industrial property types across various industries throughout the U.S. Shopko operates in the general merchandise industry and is the Company’s largest tenant as a percentage of rental revenue. Total rental revenues from properties leased to Shopko for the three months ended September 30, 2017 and 2016, contributed 7.5% and 8.3% of the rental revenue shown in the accompanying consolidated statements of operations. No other tenant contributed 4% or more of the rental revenue during any of the periods presented. As of September 30, 2017 and December 31, 2016, the Company's net investment in Shopko properties represents approximately 5.1% and 5.8%, respectively, of the Company’s total assets and the Company's real estate investment in Shopko represents approximately 7.0% and 7.7%, respectively, of the Company's total real estate investment portfolio.

~~Note 10. Supplemental Cash Flow Information~~

~~The following table presents the supplemental cash flow disclosures (in thousands):~~

Nine Months Ended
September 30,
2017 2016
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Reduction of debt in exchange for collateral assets —
47,780
Reduction and assumption of debt through sale of certain real estate properties 39,141
—
Reclass of residual value on expired deferred financing lease to operating asset 11,088
—
Net real estate and other collateral assets sold or surrendered to lender 35,008
22,728
Mortgage notes receivable transferred for real estate properties acquired —
26,609
Accrued interest capitalized to principal ⁽¹⁾
2,430
3,584
Accrued performance share dividend rights 699
340
Distributions declared and unpaid 82,062
84,730
Accrued deferred financing costs 1,373
4,043
Real estate properties acquired under 1031 exchange —
83,560
Real estate properties sold under 1031 exchange —
43,828
Financing provided in connection with disposition of assets 15,015
—

⁽¹⁾~~Accrued and overdue interest on certain CMBS notes that have been intentionally placed in default.~~

~~Note 11. Incentive Award Plan~~

NOTE 9. INCENTIVE AWARD PLAN

Restricted Shares of Common Stock

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Company granted ~~1.1 million~~116 thousand restricted shares under the Amended Incentive Award Plan to certain executive officers and employees. The Company recorded ~~$9.9~~$5.7 million in deferred compensation associated with these ~~grants, which~~grants. Deferred compensation for restricted shares will be recognized in expense over the requisite service ~~period of the awards.~~period. As of ~~September 30, 2017,~~March 31, 2020, there were approximately ~~1.5 million~~334 thousand unvested restricted shares outstanding.

~~Performance Share~~

Market-Based Awards

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the Board of Directors, or committee thereof, approved target grants of ~~0.9 million performance shares~~88 thousand market-based awards to executive officers of the Company. The performance period of these grants runs primarily through December 31, ~~2019.~~2022. Potential shares of the ~~Corporation's~~Corporation’s common stock that each participant is eligible to receive is based on the initial target number of shares granted, multiplied by a percentage range between 0% and ~~250%~~300%. Grant date fair value of the market-based share awards was calculated using the Monte Carlo simulation model, which incorporated stock price ~~correlation, projected dividend yields~~volatility of the Company and each of the Company’s peers and other variables over the time horizons matching the performance periods. Significant inputs for the calculation were expected volatility of the Company of 25.2% and expected volatility of the Company's peers, ranging from 18.1% to 27.3%, with an average volatility of 21.7% and a risk-free interest rate of 1.07%. The fair value of the market-based award per share was $67.30 as of the grant date. Stock-based compensation expense associated with unvested ~~performance~~market-based share awards is recognized on a straight-line basis over the minimum required service period, which is generally three years. ~~Based on the grant date fair value and as of September 30, 2017, the Corporation expects to recognize $8.7 million in compensation expense on a straight-line basis over the requisite service period.~~

Approximately ~~$0.7~~$2.8 million and ~~$0.5~~$2.7 million in dividend rights have been accrued ~~for non-vested performance share awards outstanding~~ as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, respectively. For outstanding non-vested awards at ~~September 30, 2017, no~~March 31, 2020, 0.4 million shares would have been released based on the ~~Corporation's~~Corporation’s TSR relative to the specified peer groups through that date.

Stock-based Compensation Expense

For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, the Company recognized ~~$2.3~~$3.5 million and ~~$3.4~~$3.6 million, respectively, in stock-based compensation expense, which is included in general and administrative expenses in the accompanying consolidated statements of operations. For the nine months ended September 30, 2017 and 2016, the Company recognized $13.8 million and $7.2 million, respectively, in stock-based compensation expense. Stock-based compensation expense for the nine months ended September 30, 2017 included $6.9 million related to the acceleration of Restricted Stock and Performance Share Awards upon the departure of the Chief Executive Officer.

As of ~~September 30, 2017,~~March 31, 2020, the remaining unamortized stock-based compensation expense ~~including amounts relating to the performance share awards,~~ totaled $20.6 million, ~~including $11.9~~comprised of $10.3 million related to both restricted stock awards and market-based awards. As of December 31, 2019, the unamortized stock-based compensation expense totaled $12.6 million, comprised of $6.6 million related to restricted stock awards and ~~$8.7~~$6.0 million related to ~~performance share awards, which~~market-based awards. Amortization is recognized ~~as the greater of the amount amortized~~ on a straight-line basis over the service period of each applicable ~~award or the amount vested over the vesting periods.~~

award.

~~Note 12. Income Per Share and Partnership Unit~~

NOTE 10. INCOME PER SHARE AND PARTNERSHIP UNIT

Income per share and unit has been computed using the two-class method, which is computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of shares of common stock outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both shares of common stock and participating securities based on the weighted average shares outstanding during the period. Classification of the Company's unvested restricted stock, which contain rights to receive ~~non-forfeitable~~nonforfeitable dividends, are deemed participating securities under the two-class method. Under the two-class method, earnings attributable to unvested restricted shares are deducted from income from continuing operations in the computation of net income attributable to common stockholders.

~~SPIRIT REALTY CAPITAL, INC. and SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

The table below is a reconciliation of the numerator and denominator used in the computation of basic and diluted netincomeper share and unit computed using the two-class method (dollars in thousands):

	Three Months Ended March 31,
	2020			2019
Basic and diluted (loss) income:
(Loss) income from continuing operations	$	(15,847	)	$	43,578
Less: dividends paid to preferred stockholders		(2,588	)		(2,588	)
Less: dividends attributable to unvested restricted stock		(207	)		(272	)
Net (loss) income attributable to common stockholders used in basic and diluted (loss) income per share	$	(18,642	)	$	40,718

Basic weighted average shares of common stock outstanding:
Weighted average shares of common stock outstanding		102,551,315			85,916,656
Less: unvested weighted average shares of restricted stock		(321,168	)		(419,563	)
Basic weighted average shares of common stock outstanding		102,230,147			85,497,093
Net (loss) income per share attributable to common stockholders - basic	$	(0.18	)	$	0.48

Diluted weighted average shares of common stock outstanding: ⁽¹⁾
Plus: unvested market-based awards		—			7,804
Diluted weighted average shares of common stock outstanding		102,230,147			85,504,897
Net (loss) income per share attributable to common stockholders - diluted	$	(0.18	)	$	0.48

Potentially dilutive shares of common stock
Unvested shares of restricted stock, less shares assumed repurchased at market		133,839			132,744
Unvested shares of market-based awards		377,449			—

⁽¹⁾	Assumes the most dilutive issuance of potentially issuable shares between the two-class and treasury stock method unless the result would be anti-dilutive.

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Basic and diluted income:
Net income 5,322
27,399

41,357
96,458
Less: income attributable to unvested restricted stock (265 ) (192 ) (682 ) (430 )
Net income attributable to common stockholders used in basic and diluted income per share $ 5,057
$ 27,207
$ 40,675
$ 96,028

Basic weighted average shares of common stock outstanding:
Weighted average shares of common stock outstanding 458,035,972
480,326,857
473,919,177
457,992,378
Less: unvested weighted average shares of restricted stock (1,364,355 ) (772,495 ) (1,220,485 ) (728,852 )
Weighted average shares of common stock outstanding used in basic income per share 456,671,617
479,554,362
472,698,692
457,263,526
Net income per share attributable to common stockholders—basic $ 0.01
$ 0.06
$ 0.09
$ 0.21

Diluted weighted average shares of common stock outstanding: ⁽¹⁾

Unvested performance shares —
67,506
—
33,938
Stock options —
4,688
—
4,159
Convertible debt —
972,054
—
—
Weighted average shares of common stock outstanding used in diluted income per share 456,671,617
480,598,610
472,698,692
457,301,623
Net income per share attributable to common stockholders—diluted $ 0.01
$ 0.06
$ 0.09
$ 0.21

Potentially dilutive shares of common stock
Unvested shares of restricted stock —
181,667
32,150
121,230
Total —
181,667
32,150
121,230

⁽¹⁾ ~~Assumes the most dilutive issuance of potentially issuable shares between the two-class and treasury stock method unless the result would be anti-dilutive.~~

The Corporation intends to satisfy its exchange obligation for the principal amount of the2021 Convertible Notesto the note holders entirely in ~~cash,~~cash; therefore, the "if-converted" method does not apply and the treasury stock method is being used. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and 2019, the ~~Corporation's~~Corporation’s average stock price was below the conversion price, resulting in ~~zero~~ 0potentially dilutive shares related to the conversion spread ~~for both periods.~~

of the 2021 Convertible Notes.

Note ~~13. Costs Associated With Restructuring Activities~~

~~On November 16, 2015,~~11. Related Party Transactions and Arrangements

Continuing Involvement

Subsequent to the ~~Company’s Board of Directors approved~~Spin-Off, the ~~strategic decision to relocate its headquarters from Scottsdale, Arizona to Dallas, Texas.~~Company has had continuing involvement with SMTA through related party agreements. The Company ~~began occupying temporary office space in~~had cash inflows from SMTA of $0.3 million and cash outflows to SMTA of $4 thousand for the ~~new headquarters building in~~three months ended March 31, 2020. The Company had cash inflows from SMTA of $11.0 million and cash outflows to SMTA of $18.9 million for the ~~spring of 2016, and finalized the move~~three months ended March 31, 2019.

Cost Sharing Arrangements

In conjunction with the ~~opening~~Spin-Off, the Company and SMTA entered into certain agreements, including the Separation and Distribution Agreement, Tax Matters Agreement, Registration Rights Agreement and Insurance Sharing Agreement. These agreements provide a framework for the relationship between the Company and SMTA after the Spin-Off, by which Spirit may incur certain expenses on behalf of SMTA that must be reimbursed in a timely manner. These agreements, except for the Tax Matters Agreement, were terminated in conjunction with the termination of the ~~new office space in late September 2016. As a result of moving its corporate headquarters,~~Asset Management Agreement. In conjunction with these arrangements, the Company ~~incurred~~had an accrued receivable balance of $0.3 million and 0 accrued payable balance as of March 31, 2020. As of December 31, 2019, the Company did not have material accrued receivable or payable balances in conjunction with these arrangements.

Asset Management Agreement and Interim Management Agreement

In conjunction with the Spin-Off, the Company entered into the Asset Management Agreement pursuant to which the Operating Partnership provided various ~~restructuring charges, including employee separation~~management services to SMTA. On June 2, 2019, concurrently with SMTA’s entry into an agreement to sell Master Trust 2014, the Company entered into a termination agreement of the Asset Management Agreement, which became effective on September 20, 2019. On June 2, 2019, the Company and ~~relocation costs. Restructuring charges~~SMTA also entered into

an Interim Management Agreement, which became effective on September 20, 2019, and which provides that the Company is entitled to an annual management fee of $1 million for the ~~nine~~initial one-year term thereof and $4 million per annum for any renewal term, in each case plus certain cost reimbursements. The Interim Management Agreement is terminable at any time by SMTA and may be terminated at any time upon 180 days’ prior written notice by the Company, in each case without payment of a termination fee. On March 18, 2020, the Company notified SMTA of its intention to terminate the Interim Asset Management Agreement effective as of September 14, 2020. Management fees of $0.3 million and $5.0 million were earned during the three months ended~~September 30, 2016 totaled $5.7 million,~~ March 31, 2020 and 2019, and are included ~~within restructuring charges on~~in related party fee income in the ~~accompanying~~ consolidated statements of operations. As of both March 31, 2020 and December 31, 2019, the Company did not have material accrued receivable balances related to the Interim Management Agreement.

Property Management and Servicing Agreement

Prior to September 20, 2019, the Operating Partnership provided property management services and special services for Master Trust 2014. The property management fees accrued daily at 0.25% per annum of the ~~nine~~collateral value of the Master Trust 2014 collateral pool less any specially serviced assets, and the special servicing fees accrued daily at 0.75% per annum of the collateral value of any assets deemed to be specially serviced per the terms of the Property Management and Servicing Agreement dated May 20, 2014. Property management fees of $1.5 million and special servicing fees of $0.4 million were earned during the three months ended March 31, 2019. These fees are included in related party fee income in the consolidated statements of operations. In conjunction with SMTA’s sale of Master Trust 2014 on September ~~30, 2017,~~20, 2019, the ~~Company no longer had any accrued restructuring charges~~notes were retired and ~~incurred no additional restructuring charges.~~

~~SPIRIT REALTY CAPITAL, INC.~~the Property Management and ~~SPIRIT REALTY, L.P.~~

~~Notes to Consolidated Financial Statements - (continued)~~

~~September 30, 2017~~

~~(Unaudited)~~

Servicing Agreement was terminated.

Note ~~14.~~12. Subsequent ~~Event~~

Events

2020 Term Loan

On ~~October 3, 2017,~~April 2, 2020, the ~~Company closed on~~Operating Partnership entered into an ~~offering~~unsecured term loan agreement (the “2020 Term Loan Agreement”). The Term Loan Agreement provides for $200 million of ~~6,900,000 shares of 6.000% Series A Cumulative Redeemable Preferred Stock~~term loans with a ~~liquidation preference~~maturity date of ~~$25.00 per share, for~~April 2, 2022 and an accordion feature to increase the available term loans up to an aggregate ~~net proceeds~~ of ~~166.5~~$400 million, ~~after deducting the underwriting discount~~subject to obtaining lender commitments and the ~~Company's estimated expenses.~~

satisfaction of certain customary conditions. On April 10, 2020, the Operating Partnership partially exercised the accordion feature to borrow an additional $100 million of term loans. Amounts outstanding under the 2020 Term Loans bear interest at LIBOR plus an applicable margin of 1.5% per annum. In addition, if any loans are outstanding after April 2, 2021, the Operating Partnership will be required to pay a one-time fee in an amount equal to 0.20% of the outstanding principal amount of loans. The proceeds from the 2020 Term Loans were used to reduce the amounts drawn under the 2019 Credit Facility.

Impact of COVID-19

Due to the onset of the COVID-19 pandemic later in the first quarter of 2020, certain of our tenants, especially those in industries considered “non-essential” under varying state “shelter-in-place” and “stay-at-home” orders and other restrictions on types of business that may continue to operate, may experience challenges or even closures. As such, we anticipate there to be an impact on their financial condition, results of operations, liquidity, ability to pay rent and creditworthiness. That impact may directly result in a reduction in our rental income and/or an increase in our property costs and impairments, as well as indirectly result in an increase in our general and administrative expenses, as we experience higher collectability issues and incur costs to negotiate rent deferrals, lease restructures, and/or lease terminations, as we deem appropriate on a case-by-case basis. Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful, particularly in the event that the COVID-19 pandemic and restrictions intended to prevent its spread continue for a prolonged period.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note Regarding Forward-looking Statements

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

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

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

•

industry and economic conditions;

~~industry and economic conditions;~~

•

volatility and uncertainty in the financial markets, including potential fluctuations in the CPI;

~~volatility and uncertainty in the financial markets, including potential fluctuations in the CPI;~~

•

our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate, integrate and manage diversifying acquisitions or investments;

~~our success in implementing our business strategy and our ability to identify, underwrite, finance, consummate, integrate and manage diversifying acquisitions or investments;~~

•

the financial performance of our retail tenants and the demand for retail space, particularly with respect to challenges being experienced by general merchandise retailers;

~~the financial performance of our traditional retail tenants and the demand for traditional retail space, particularly with respect to challenges being experienced by general merchandise retailers;~~

•

our ability to diversify our tenant base;

~~our ability to diversify our tenant base and reduce the concentration of our significant tenant;~~

•

the nature and extent of future competition;

~~the nature and extent of future competition;~~

•

increases in our costs of borrowing as a result of changes in interest rates and other factors;

~~increases in our costs of borrowing as a result of changes in interest rates and other factors;~~

•

our ability to access debt and equity capital markets;

~~our ability to access debt and equity capital markets;~~

•

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

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

•

our ability and willingness to renew our leases upon expiration and to reposition our properties on the same or better terms upon expiration in the event such properties are not renewed by tenants or we exercise our rights to replace existing tenants upon default;

•

the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us or our major tenants;

~~the impact of any financial, accounting, legal or regulatory issues or litigation that may affect us or our major tenants;~~

•

our ability to manage our expanded operations;

~~our ability to manage our expanded operations;~~

•

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

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

•

our ability to manage and liquidate the remaining SMTA assets;

~~uncertainties as to the completion and timing of our proposed spin-off, and the impact of the spin-off on our business;~~

•

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

•

other risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters, illiquidity of real estate investments and potential damages from natural disasters.

The factors included in this quarterly report, including the documents incorporated by reference, and documents we subsequently file with the SEC and incorporate by reference, are not exhaustive and additional factors could adversely affect our business and financial performance. ~~For a discussion~~Additional factors that may cause risks and uncertainties include those discussed in the sections entitled "Business", "Risk Factors" and "Management's Discussion and Analysis of ~~additional risk factors, see the factors included under the caption “Risk Factors”~~Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K ~~as well as those risk factors discussed in Part II Item 1a "Risk Factors" herein.~~and this report and subsequent filings with the SEC. All forward-looking statements are based on information that was available, and speak only, ~~as of~~to the date on which they were made. We disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by law.

Overview

Spirit Realty Capital, Inc. is a New York Stock Exchange listed company under the ticker symbol "SRC." We are a self-administered and self-managed REIT with in-house capabilities including acquisition, ~~portfolio management,~~credit research, asset management, ~~credit research,~~portfolio management, real estate research, legal, finance and accounting ~~and capital markets.~~functions. We primarily invest in single-tenant ~~operationally essential~~ real estate assets throughout the U.S., which are generally acquired through ~~strategic~~ sale-leaseback transactions and subsequently leased on a long-term, triple-net basis to high quality tenants with business operations within ~~predominantly~~ retail, ~~but also~~industrial, office and ~~industrial property types.~~ other industries.

Single tenant, operationally essential real estate consists of properties that are generally free-standing, commercial real estate facilities where our tenants conduct activities that are essential to the generation of their sales and profits. ~~In support of our primary business of owning~~Under a triple-net lease, the tenant is typically responsible for all improvements and ~~leasing~~is contractually obligated to pay all property operating expenses, such as real estate ~~we have also strategically originated or acquired long-term, commercial mortgage~~taxes, insurance premiums and ~~other loans to provide a range of financing solutions to our tenants.~~ repair and maintenance costs.

As of ~~September 30, 2017,~~March 31, 2020, our owned real estate represented investments in ~~2,423~~1,772 properties. Our properties are leased to ~~421~~298 tenants across 4948 states and 3028 retail industries. As of ~~September 30, 2017,~~March 31, 2020, our owned properties were approximately ~~99.1%~~99.4% occupied (based on the number of economically yielding properties). In addition, our investment in real estate includes commercial mortgage and other loans ~~receivable~~ primarily secured by ~~an additional 88~~43 real estate properties or other related assets.

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

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

On May 31, 2018, we ~~intend to continue operating in such~~completed a ~~manner.~~

~~On August 3, 2017, we announced a proposed spin-off~~Spin-Off of ~~almost~~ all of our interests in the assets that collateralized Master Trust 2014, our properties leased to Shopko, ~~assets that collateralize Master Trust 2014~~ and ~~potentially additional~~certain other assets into an independent, publicly traded REIT, ~~("SpinCo").~~SMTA. In conjunction with the Spin-Off, we entered into the Asset Management Agreement with SMTA, pursuant to which the Company acted as external asset manager for SMTA for an annual management fee of $20.0 million. In September 2019, SMTA sold the assets held in Master Trust 2014 and approved a plan of liquidation. The Asset Management Agreement was terminated, and the Interim Management Agreement with SMTA became effective. Pursuant to the ~~plan, if~~Interim Management Agreement, we are entitled to receive $1 million during the ~~spin-off is completed, our stockholders would receive a distribution~~initial one-year term and $4 million for any renewal one-year term, plus certain cost reimbursements, to manage and liquidate the remaining SMTA assets. On March 18, 2020, we provided notification that we intend to terminate the Interim Management Agreement, effective as of ~~stock issued by SpinCo. The spin-off is subject~~September 14, 2020.

Due to ~~certain conditions, including declaration by~~ the ~~U.S. Securities and Exchange Commission that SpinCo's registration statement on Form 10 is effective, customary third party consents, and final approval and declaration~~onset of the distribution by our Board of Directors. Such conditions and other unforeseen developments, including in the debt or equity markets or general market conditions, could delay or prevent the spin-off or cause the spin-off to occur on terms or conditions that are less favorable and/or different than those described herein. The transaction is expected to be completedCOVID-19 pandemic later in the first ~~half~~quarter of ~~2018. We may, at any time and for any reason until the proposed transaction is complete, abandon the spin-off or modify or change its terms, including the assets we plan to contribute to SpinCo.~~

~~Highlights~~

~~For the three months ended September 30, 2017:~~

~~Generated net income of $0.01 per share and AFFO of $0.23 per share.~~

~~Invested $73.4 million in four properties, including revenue producing capital expenditures.~~

~~Disposed of 56 properties for $124.1 million, including 42 vacant properties for $46.8 million and three revenue producing Shopko properties for $18.5 million.~~

~~Approved a new stock repurchase program under which we may repurchase up to $250 million~~2020, there was little impact on our first quarter 2020 results. However, as certain of our ~~outstanding common stock.~~

~~Commenced an underwritten public offering~~tenants, especially those in industries considered “non-essential” under varying state “shelter-in-place” and “stay-at-home” orders and other restrictions on types of ~~6.000% Series A Cumulative Redeemable Preferred Stock, which closed on October 3, 2017, for aggregate net proceeds of $166.6 million.~~

~~For the nine months ended September 30, 2017:~~

~~Generated net income of $0.09 per diluted share and AFFO of $0.64 per share, including $4.2 million in cash severance charges.~~

~~Acquired 39 properties for $314.2 million and disposed of 161 properties for $406.4 million, including 96 vacant properties for $138.4 million and 11 properties leased to Shopko for $65.0 million.~~

~~Extinguished $101.0 million of high coupon secured debt~~business that ~~had a 5.84% weighted average rate.~~

~~Factors that May Influence Our Operating Results~~

~~ACQUISITIONS AND LEASE STRUCTURE~~

Our principal business is acquiring commercial real estate properties, generally leased to tenants under triple-net leases. Our ability to grow revenue and produce superior risk adjusted returns depends on our ability to acquire additional properties at a yield sufficiently in excess of our cost of capital. We focus on opportunities to acquire attractive commercial real estate by providing capital to small and middle-market companies that we conclude have stable and proven operating histories and attractive credit characteristics. Small and middle-market companies are often willing to enter into leases with structures and terms that we consider appealing and that we believe increase the security of rental payments.

~~Portfolio Diversification~~

Our strategy emphasizes a portfolio that (1) derives no more than 10% of its Contractual Rent from any single tenant and no more than 2.0% of its Contractual Rent from any single property, (2) is leased to tenants operating in various industries and (3) is located across the U.S. without significant geographic concentration.

A core component of our business is investing in and managing a portfolio of single-tenant, operationally essential retail real estate throughout the U.S. Accordingly, our performance is substantially dependent on the performance of our retail tenants. The market for traditional retail space has previously been, and couldmay continue to operate, experience challenges or even closures, we anticipate there to be ~~adversely affected by weakness in the national, regional and local economies, the adverse~~an impact on their financial condition, of some traditional retail companies, the ongoing consolidation in the retail industry, the excess amount of retail space in a number of markets and increasing consumer purchases through catalogs or over the internet.

In particular, we have experienced and expect to continue to experience challenges with some of our retailers through increased credit losses. These credit losses resulted in lower revenues from non-performing leases and certain charges for the write-off of unrecoverable receivables. We expect the non-performance for certain of these leases to continue.

As of September 30, 2017, Shopko represents our most significant tenant. Currently we lease 101 properties to Shopko, pursuant to three master leases and two single site leases, under which we receive approximately $3.9 million in rental revenues per month. We reduced our Shopko tenant concentration to 7.8% at September 30, 2017 compared to 8.6% at September 30, 2016 (based on Contractual Rent). During the nine months ended September 30, 2017, we sold 11 Shopko properties for $65.0 million in gross proceeds as we continue our objective to reduce our exposure to Shopko.

~~As a result of the significant number of properties leased to Shopko, our~~ results of operations, liquidity, ability to pay rent and ~~financial condition~~creditworthiness. That impact may directly result in a reduction in our rental income and/or an increase in our property costs and impairments, as well as indirectly result in an increase in our general and administrative expenses, as we experience higher collectability issues and incur costs to negotiate rent deferrals, lease restructures and/or lease terminations, as we deem appropriate on a case-by-case basis. As of the date of this report, our discussions with tenants requesting rent deferrals (and other forms of relief) have been substantially focused on industries that are ~~significantly~~directly disrupted by the COVID-19 pandemic and restrictions intended to prevent its spread, particularly health and fitness, movie theaters, quick service and casual dining restaurants, entertainment, car washes, dealerships, home décor, home furnishings, department stores and education. These and other industries may be further impacted ~~by Shopko's performance under its leases. Shopko operates as a multi-department general merchandise retailer and retail health services provider primarily in mid-size and large communities~~ in the ~~Midwest, Pacific Northwest, North Central~~future depending on various factors, including the duration of the COVID-19 pandemic and ~~Western Mountain states.~~

~~Based on~~restrictions intended to prevent its spread, and even after certain of such restrictions are lifted or reduced, the willingness of customers to visit our ~~monitoring~~tenants’ businesses may be reduced due to lingering concerns regarding the continued risk of ~~Shopko's financial information~~COVID-19 transmission and ~~recent liquidity events~~heightened sensitivity to risks associated with the transmission of other diseases. We are not able to predict the duration of such customer behavior.

As of May 1, 2020, we have collected approximately 70% of April 2020 Contractual Rent of $39.3 million, including from nine of our top 10 tenants and other challenges, including bankruptcies, impacting the retail industry generally relative to recent years, we continue to be concerned about Shopko's ongoing ability to meet its obligations to us under its leases. Although Shopko is current on all17 of ~~its obligations to us under its lease arrangements with us~~our top 20 tenants. In addition, as of ~~September~~that date, we have granted rent deferral requests for tenants representing approximately 27% of our April 2020 Contractual Rent. Such rent deferrals generally defer rent payments from 30 ~~2017,~~to 90 days and require the tenant to repay the deferred rent within 12 months. Of the tenants who we ~~can give you no assurance that this will continue to be~~have

granted rent deferrals, 25% are public companies, and the case, particularly if Shopko (not just the stores subject to leases with us) experiences a further decline in its business, financial condition and results of operations or loses access to liquidity. If such events were to occur, Shopko may request discounts or deferrals on the rents it pays to us, seek to terminate its master leases with us or close certain of its stores, or file for bankruptcy, all of which could significantly decrease the amount of revenue we receive from it.

~~Operationally Essential Real Estate with Long-Term Leases~~

We seek to own properties that are operationally essential to our tenants, thereby reducing the risk that our tenants would choose not to renew an expiring lease or reject a lease in bankruptcy. We also seek to enter into leases with relatively long initial terms, typically 15 to 20 years, and renewal options with attractive rent escalation provisions. As of September 30, 2017, our leases had a weighted average remaining lease term of ~~10.1 years, compared~~leases for such tenants is 12.1 years. Although we are and will continue to ~~a weighted average remaining lease term of 11.0 years as of September 30, 2016 (based on Contractual Rent).~~

~~Rent Escalators~~

~~Our leases generally contain provisions contractually increasing the rental revenue over the term of the lease at specified dates by (1) a fixed amount or (2)the lesser of 1~~be actively engaged in rent collection efforts related to ~~1.25 times any increase in CPI over a specified period or a fixed amount (typically 1-2% per year). The percentage of our single-tenant properties containing~~uncollected rent, ~~escalators remained consistent at 89% as of both September 30, 2017 and September 30, 2016, respectively (based on Contractual Rent).~~

~~Master Lease Structure~~

Where appropriate, we seek to enter into master leases, whereby we lease multiple properties to a single tenant on an “all or none” basis. The master lease structure prevents a tenant from unilaterally giving up under-performing properties while retaining well-performing properties. Master lease revenue contributed approximately 44% of our Contractual Rent as of September 30, 2017, compared to approximately 47% as of September 30, 2016.

~~Triple-Net Leases~~

Our leases are predominantly triple-net leases, whereby the tenant pays all property operating expenses, including but not limited to real estate taxes, insurance premiums and repair and maintenance costs. As of September 30, 2017, approximately 82% of our properties (based on Contractual Rent) are subject to triple-net leases, compared to approximately 83% as of September 30, 2016.

~~ASSET MANAGEMENT~~

~~The stability of the rental revenue generated by our properties depends principally on our tenants’ ability to pay rent and our ability to:~~

~~collect rent due,~~

~~renew expiring leases or re-lease space upon expiration or other termination,~~

~~lease currently vacant properties and~~

~~maintain or increase rental rates.~~

Each of these could be negatively impacted by adverse economic conditions, particularly those that affect the markets in which our properties are located, downturns in our tenants’ industries, increased competition for our tenants at our property locations, or the bankruptcy of one or more of our tenants. We seek to manage these risks by using our developed underwriting and risk management processes to structure and manage our portfolio.

~~Active Management and Monitoring of Risks Related to Our Investments~~

We seek to measure tenant financial distress risk and lease renewal risk through various processes. Many of our tenants are required to provide corporate-level and/or unit-level financial information, which includes balance sheet, income statement and cash flow statement data on a quarterly and/or annual basis. Our underwriting and risk management processes are designed to structure new investments and manage existing investments to mitigate tenant credit quality risks and preserve the long-term return on our invested capital. Since our inception, our occupancy based on economically yielding properties has never been below 96.1% (based on number of properties), despite the economic downturn of 2008 through 2010. The percentage of our properties that were occupied increased to approximately 99.1% as of September 30, 2017 from approximately 98.4% as of September 30, 2016.

On September 8, 2015, Haggen Holdings, LLC and a number of its affiliates, including Haggen Operations Holdings, LLC, filed petitions for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. At the time of the filing, Haggen Operations Holdings, LLC leased 20 properties on a triple net basis from a subsidiary of ours under a master lease. For discussion of the related settlement and current status of these properties, see footnote 7 to the consolidated financial statements herein.

~~CAPITAL RECYCLING~~

We continuously evaluate opportunities for the disposition of properties in our portfolio when we believe such disposition is appropriate in view of our business objectives, considering criteria including, but not limited to, tenant concentration, tenant credit quality, local market conditions and lease rates, associated indebtedness, asset location and tenant operation type (e.g., industry, sector, or concept/brand), as well as potential uses of proceeds and tax considerations. As part of this strategy, we may enter into 1031 Exchanges to defer some or all of the taxable gains on the dispositions, if any, for federal and state income tax purposes. We can provide no assurance that we will dispose of any additional properties or that future acquisitions and/or dispositions, if any, will qualify as 1031 Exchanges. Furthermore,working with certain tenants who have requested rent deferrals, we can provide no assurance that wesuch efforts or our efforts in future periods will ~~deploy~~be successful, particularly in the ~~proceeds from future dispositions in~~event that the COVID-19 pandemic and restrictions intended to prevent its spread continue for a ~~manner that produces comparable or better yields. We plan~~prolonged period. Refer to ~~deliberately slow down our acquisition activity~~“Part II—Other Information, Item 1A. Risk Factors” for additional information about the ~~remainder of 2017 and be selective with our dispositions. Additionally, we expect lease termination fees, which are recognized when there is a signed lease termination agreement and all~~potential impact of the ~~conditions of the agreement have been met, may be less than in prior periods.~~

~~CAPITAL FUNDING~~

~~Our principal demands for funds are for property acquisitions, payment of principal~~COVID-19 pandemic and ~~interest~~restrictions intended to prevent its spread on our ~~outstanding indebtedness, operating~~business, financial condition, results of operations, cash flows, liquidity and ~~property maintenance expenses~~ability to satisfy our debt service obligations and make distributions to our stockholders. Generally, property acquisitions are temporarily funded through our Revolving Credit Facility, followed by permanent financing through asset level financing or issuance of debt or equity securities. Our remaining cash needs are typically met by cash flows from operations, which are primarily driven by the rental income received from our leased properties, interest income earned on loans receivable and interest income on our cash balances.

~~Interest Costs~~

Our fixed-rate debt structure provides us with a stable and predictable cash requirement related to our debt service. Any changes to our debt structure, including borrowings under our Term Loan and Revolving Credit Facility or debt financing associated with property acquisitions, could materially influence our operating results depending on the terms of any such indebtedness. A significant amount of our debt provides for scheduled principal payments. As principal is repaid, our interest expense decreases. Fluctuations in interest rates will affect the interest expense we incur on unhedged variable interest rate debt and may impact our ability to refinance maturing debt.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. We base estimates on the best information available to us at the time, our experience and various other assumptions deemed reasonable under the circumstances. From time to time, we re-evaluate our estimates and assumptions. In the event estimates or assumptions prove to be different from actual results, adjustments are made in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. A summary of our critical accounting policies is included in ~~our Annual Report on Form 10-K for the year ended December 31, 2016 in~~ the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.”~~Operations” of our Annual Report on Form 10-K for the year ended December 31, 2019. We have not made any material changes to these policies during the periods covered by this quarterly report.

Results of Operations

Comparison ofThree Months Ended ~~September 30, 2016~~ March 31, 2020toThree Months Ended ~~September 30, 2017~~March 31, 2019

	Three Months Ended March 31,
(In Thousands)	2020			2019			Change			% Change
Revenues:
Rental income	$	121,363		$	104,067		$	17,296			16.6	%
Interest income on loans receivable		419			986			(567	)		(57.5	)%
Earned income from direct financing leases		177			396			(219	)		(55.3	)%
Related party fee income		250			6,927			(6,677	)		(96.4	)%
Other income		511			217			294		NM
Total revenues		122,720			112,593			10,127			9.0	%
Expenses:
General and administrative		13,490			13,181			309			2.3	%
Property costs (including reimbursable)		5,936			5,154			782			15.2	%
Deal pursuit costs		1,019			71			948		NM
Interest		25,359			26,611			(1,252	)		(4.7	)%
Depreciation and amortization		52,236			41,349			10,887			26.3	%
Impairments		40,774			3,692			37,082		NM
Total expenses		138,814			90,058			48,756			54.1	%
Other income:
Gain on debt extinguishment		—			8,783			(8,783	)		(100.0	)%
Gain on disposition of assets		388			8,730			(8,342	)		(95.6	)%
Preferred dividend income from SMTA		—			3,750			(3,750	)		(100.0	)%
Total other income		388			21,263			(20,875	)		(98.2	)%
(Loss) income before income tax expense		(15,706	)		43,798			(59,504	)	NM
Income tax expense		(141	)		(220	)		79			(35.9	)%
Net (loss) income	$	(15,847	)	$	43,578		$	(59,425	)	NM

Three Months Ended September 30,
(In Thousands) 2017 2016 Change % Change
Revenues:
Rentals $ 159,799
$ 161,765
$ (1,966 ) (1.2 )%
Interest income on loans receivable 1,003
1,042
(39 ) (3.7 )%
Earned income from direct financing leases 483
660
(177 ) (26.8 )%
Tenant reimbursement income 4,691
3,469
1,222
35.2 %
Other income 3,574
5,572
(1,998 ) (35.9 )%
Total revenues 169,550
172,508
(2,958 ) (1.7 )%
Expenses:
General and administrative 13,712
15,112
(1,400 ) (9.3 )%
Restructuring charges —
3,264
(3,264 ) (100.0 )%
Transaction costs 2,660
—
2,660
100.0 %
Property costs 8,080
6,916
1,164
16.8 %
Real estate acquisition costs 196
1,056
(860 ) (81.4 )%
Interest 48,680
47,653
1,027
2.2 %
Depreciation and amortization 63,673
65,300
(1,627 ) (2.5 )%
Impairments 37,737
15,407
22,330
NM
Total expenses 174,738
154,708
20,030
12.9 %
(Loss) income from continuing operations before other income (expense) and income tax benefit (expense) (5,188 ) 17,800
(22,988 ) NM
Other income (expense):
Gain (loss) on debt extinguishment 1,792
(8,349 ) 10,141
NM
Total other income (expense) 1,792
(8,349 ) 10,141
NM
(Loss) income from continuing operations before income tax benefit (expense) (3,396 ) 9,451
(12,847 ) NM
Income tax benefit (expense) 11
(12 ) 23
NM
(Loss) Income from continuing operations $ (3,385 ) $ 9,439
$ (12,824 ) NM

Gain on disposition of assets $ 8,707
$ 17,960
$ (9,253 ) (51.5 )%

NM - Percentages over 100% are not displayed.

REVENUES

~~Rentals~~

Rental revenue for the comparative period remained relatively flat as decreases in contractual rent were offset by decreases in tenant credit losses. Our contractual rental revenue between periods decreased 2.3% as weincome

We were a ~~moderate disposer~~net acquirer of income producing real estate over the trailing ~~twelve month period. Our overall dispositions resulted~~twelve-month period, resulting in ~~a decrease~~an increase in ~~real estate investments, which totaled $7.9 billion at September 30, 2017~~, ~~compared to $8.3 billion at September 30, 2016.~~

~~Non-cash rentals~~our base cash rents between periods of 21.4%. Included in continuing operations for the ~~three~~trailing twelve months ended ~~September 30, 2017~~March 31, 2020 were acquisitions of 339 properties, with a Real Estate Investment Value of $1.34 billion, and ~~2016 were $6.9 million and $6.7 million, respectively. These amounts represent approximately 4.3% and 4.2%~~dispositions of ~~total~~44 properties, with a Real Estate Investment Value of $225.7 million.

Also included in rental ~~revenue for~~income are tenant reimbursements, where our tenants are obligated under the three months ended September 30, 2017 and 2016, respectively. Tenant credit losses decreased between periods due to a higher amount of nonperforming properties in the convenience store industry and restaurant - casual dining industry in the prior period.

~~Tenant reimbursement income~~

~~We have a number of leases that require our tenants~~lease agreement to reimburse us for certain property costs we ~~incur.~~incur, and non-cash rental income. Tenant reimbursement income was $3.1 million and $3.5 million for the three months ended March 31, 2020 and 2019, respectively, and is driven by the tenant reimbursable property costs described below.

~~Other~~ These amounts represent approximately 2.6% and 3.3% of rental income

~~The period-over-period decrease was due primarily to the receipt of $2.6 million in fee income associated with the prepayment of certain mortgage loans receivable in~~ for the three months ended ~~September 30, 2016,~~March 31, 2020 and ~~no comparative receipt~~2019, respectively.

Non-cash rental income consists of straight-line rental revenue, amortization of above- and below-market lease intangibles and bad debt expense. Non-cash rental income, net of bad debt expense, for the three months ended March 31, 2020 was $1.4 million, compared to $3.6 million for the three months ended March 31, 2019. The decrease in non-cash rental income was primarily driven by a write-off of straight-line rent due to a lease modification. These amounts represent approximately 1.2% and 3.5% of total rental income for the three months ended March 31, 2020 and 2019, respectively.

Related party fee income

In conjunction with the Spin-Off, we entered into the Asset Management Agreement with SMTA pursuant to which we provided a management team responsible for implementing SMTA ’s business strategy and performing certain services for SMTA. Under this agreement, we recognized $5.0 million of revenues during the three months ended March 31, 2019. This agreement was terminated in conjunction with SMTA’s sale of Master Trust 2014 on September ~~30, 2017.~~

20, 2019. We entered into an Interim Management Agreement for an initial annual fee of $1.0 million, under which we agreed to manage and liquidate the remaining SMTA assets. Under this agreement, we recognized $0.3 million of revenues for the three months ended March 31, 2020. On March 18, 2020, we provided notification to SMTA that we intend to terminate the Interim Management Agreement, effective as of September 14, 2020.

Additionally, we provided property management services and special services for Master Trust 2014, which was contributed to SMTA as part of the Spin-Off. As a result, for the three months ended March 31, 2019, we recognized $1.9 million in revenue under the terms of the Property Management and Servicing Agreement. This agreement was terminated in the third quarter of 2019 in conjunction with SMTA’s sale of Master Trust 2014.

EXPENSES

General and administrative

~~The period-over-period decrease in~~

Period-over-period general and administrative expenses isincreased, driven by an increase in professional fees of $0.6 million, primarily ~~due to~~as a ~~$1.7 million decrease in compensation~~result of increased legal and ~~benefits expenses, primarily due to severance costs following the departure of an executive officer recognized in the prior year.~~consulting fees. This increase was partially offset by a ~~$0.5~~decrease in compensation expenses of $0.4 million period-over-period.

Property costs (including reimbursable)

For the three months ended March 31, 2020, property costs were $5.9 million (including $3.6 million of tenant reimbursable expenses) compared to $5.2 million (including $4.1 million of tenant reimbursable expenses) for the same period in 2019. As such, reimbursable property costs decreased period-over-period, primarily due to less snow removal expenses and less reimbursable property taxes. The increase in ~~bad debt expense recorded period-over-period. The change~~non-reimbursable costs of $1.2 million was driven primarily by an increase in ~~bad debt expense increased primarily~~non-reimbursable property taxes as a result of certain sporting goods and restaurant - casual dining properties for which the rent has been determined to be uncollectible for the three months ended September 30, 2017, offset by a decrease in bad dent expenses related to convenience store properties period-over-period.

~~Transaction costs~~

In connection with the proposed spin-off almost all of our interests in our properties leased to Shopko, assets that collateralize Master Trust 2014 and potentially additional assets into an independent, publicly traded REIT ("SpinCo"), we have incurred $2.7 million in costs. These costs are comprised of $2.0 million in legal and financial adviser fees and $0.7 million in consulting and other costs.

~~Property costs~~

The increase in property costs is primarily due to a $1.2 million increase in reimbursable property taxes. Non-reimbursable property taxes were flat, with a decrease due to a reduction in vacant properties, offset by an increase in tenant credit issues. As of September 30, 2017 and 2016, respectively, 21 and 43 of our properties, representing approximately 0.9% and 1.6% of our owned properties, were vacant. Total tenant reimbursable property costs for the three months ended September 30, 2017 were $5.1 million, an increase from $4.3 million for the same period in 2016.

Interest

The ~~increase~~decrease in interest expense ~~is primarily due to increased borrowings under our Revolving Credit Facility and Term Loan, as well as interest on our Senior Unsecured Notes, which were issued in August 2016. This~~was driven by the following:

•

the extinguishment of $10.4 million aggregate principal amount of CMBS indebtedness on one defaulted loan in the first quarter of 2019, which had a default interest rate of 9.85%,

•

the maturity and repayment of the $402.5 million aggregate principal amount of 2.875% Convertible 2019 Notes on May 15, 2019,

•

the early repayment of the Master Trust 2013 notes on June 20, 2019, and

•

the repayment and termination of the A-1 Term Loans and A-2 Term Loans on September 16, 2019.

The decrease was partially offset by increased interest expenses due to the ~~extinguishment~~issuance of ~~$166.7 million of mortgage debt with a weighted average interest rate of 5.8%~~the 2027 Senior Notes, 2029 Senior Notes and 2030 Senior Notes during ~~the twelve months ended September 30, 2017.~~

2019.

The following table summarizes our interest expense on related borrowings:

	Three Months Ended March 31,
(In Thousands)	2020		2019
Interest expense – revolving credit facilities ⁽¹⁾	$	2,056	$	2,178
Interest expense – term loans		—		3,979
Interest expense – Senior Unsecured Notes		13,988		3,338
Interest expense – mortgages and notes payable		3,013		6,252
Interest expense – Convertible Notes		3,234		6,127
Non-cash interest expense		3,068		4,737
Total interest expense	$	25,359	$	26,611

⁽¹⁾	Includes facility fees of approximately $0.4 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively.

Three Months Ended
September 30,
(In Thousands) 2017 2016
Interest expense – Revolving Credit Facility ⁽¹⁾
$ 3,075
$ 1,155
Interest expense – Term Loan 2,768
1,307
Interest expense – Senior Unsecured Notes 3,337
1,595
Interest expense – mortgages and notes payable 27,563
33,291
Interest expense – Convertible Notes 6,127
6,127
Non-cash interest expense:
Amortization of deferred financing costs 2,451
2,303
Amortization of net losses related to interest rate swaps —
28
Amortization of debt discount, net 3,359
1,847
Total interest expense $ 48,680
$ 47,653

⁽¹⁾ ~~Includes facility fees of approximately $0.5 million for the three months ended September 30, 2017 and September 30, 2016, respectively.~~

Depreciation and amortization

During the twelve months ended September 30, 2017, we acquired 81 properties, representing an investment in real estate of $562.6 million, and we disposed of 292 properties with a gross investment of $726.2 million.

While we were a net ~~disposer~~acquirer during the period (based on investment in real estate), the impact to depreciation was relatively flat due to the timing of acquisition and disposition activity. Our real estate investment value was further reduced due to impairment charges during thetrailing twelve-month period ended September 30, 2017 on properties that remain in our portfolio. Additionally, our real estate held-for-sale increased period-over-period. Properties held for sale are no longer depreciated. As a result,of $1.11 billion of Real Estate Investment Value, depreciation and amortization ~~overall decreased minimally.~~increased to a lesser degree period-over-period as a result of timing of the acquisition/disposition activity, with about half of both the acquisitions and dispositions closings occurred in the last six months. The following table summarizes our depreciation and amortization expense:

	Three Months Ended March 31,
(In Thousands)	2020		2019
Depreciation of real estate assets	$	43,276	$	34,469
Amortization of lease intangibles		8,815		6,738
Other depreciation		145		142
Total depreciation and amortization	$	52,236	$	41,349

Three Months Ended
September 30,
(In Thousands) 2017 2016
Depreciation of real estate assets $ 52,698
$ 53,592
Other depreciation 143
145
Amortization of lease intangibles 10,832
11,563
Total depreciation and amortization $ 63,673
$ 65,300

~~Impairment~~

Impairment charges for the three months ended September 30, 2017 were $37.7 million. These charges included $4.8 million on properties held for sale, including $2.5 million on three education properties and $0.8 million on vacant held for sale properties. The remaining $32.9 million was recorded on properties held and used, primarily related to $31.7 million on vacant properties held and used. There was no significant impact as a result of Hurricanes Harvey and Irma.

For the same period in 2016, impairment charges included $9.5 million on underperforming properties within the restaurant-casual dining, distribution and drug store/pharmacy industries and $4.4 million on properties held for sale.

~~Gain (loss) on debt extinguishment~~

Impairments

During the three months ended ~~September 30, 2017,~~March 31, 2020, we recorded impairment losses of $40.8 million. $39.9 million of impairment was recorded on 18 underperforming properties held for use. $0.3 million was recorded on four Vacant properties held for use. Only two of the impaired properties had impairment triggers directly caused by the impacts of the COVID-19 pandemic. However, our evaluation of fair value as of March 31, 2020 for all properties tested for impairment was impacted by the overall downturn in markets as a result of the COVID-19 pandemic, resulting in increased impairment charges during the three months ended March 31, 2020. Additionally, we recorded allowances for credit losses of $0.3 million on our direct financing lease and $0.3 million on our two loans receivable.

During the three months ended March 31, 2019, we recorded impairment losses of $3.7 million. $1.2 million of the impairment was recorded on Vacant properties, comprised of $0.2 million recorded on one vacant held for use property and $1.0 million recorded on one vacant held for sale property. $3.0 million of impairment was recorded on eight underperforming properties. These impairment charges were partially offset by $0.5 million of impairment on lease intangible liabilities.

Gain on debt extinguishment

During the three months ended March 31, 2020, we did not extinguish any debt.During the three months ended March 31, 2019, we extinguished ~~$49.8~~$10.4 million aggregate principal amount of ~~mortgage debt related to two loans,~~CMBS indebtedness on one defaulted loan, which was secured by one property, resulting in a gain on debt extinguishment of ~~$1.8 million primarily related to debt forbearance. For the same period in 2016, we extinguished $322.1 million of mortgage debt related to 62 loans and recorded~~$9.5 million. This was partially offset by a loss on debt extinguishment of ~~$8.3 million.~~

$0.7 million as a result of the termination of the 2015 Credit Agreement and 2015 Term Loan Agreement in conjunction with entering into the 2019 Revolving Credit and Term Loan Agreement.

Gain on disposition of assets

During the three months ended March 31, 2020, we disposed of seven properties, resulting in net gains totaling $0.7 million. There were $0.7 million in net gains on the sale of three Vacant properties and minimal net gains on the sale of four active properties. These gains were partially offset by a $0.2 million loss recorded on the sale of a notes receivable and $0.2 million in other net losses.

For the same period in 2019, we disposed of seven properties and recorded net gains totaling $8.7 million. There were $8.8 million in net gains on the sale of four active properties, partially offset by $0.1 million in other net losses. One property was returned to the lender in conjunction with CMBS debt extinguishment, which did not result in a gain or loss on disposition.

Preferred dividend income fromSMTA

As part of the Spin-Off, SMTA issued to us 10% Series A preferred shares with an aggregate liquidation preference of $150.0 million. For the three months ended September 30, 2017, the gain on disposition of 56 properties included $0.5 million from the sale of three Shopko properties and $6.2 million from the sale of two building materials properties and one home improvement property. For the same period in 2016, the gain on disposition of 17 properties included $3.9 million from the sale of four Shopko properties and $10.3 million from the sale of one grocery property.

~~Results of Operations~~

~~Comparison of Nine Months Ended September 30, 2016 to Nine Months Ended September 30, 2017~~

Nine Months Ended September 30,
(In Thousands) 2017 2016 Change % Change
Revenues:
Rentals $ 479,506
$ 484,090
$ (4,584 ) (0.9 )%
Interest income on loans receivable 2,769
4,326
(1,557 ) (36.0 )%
Earned income from direct financing leases 1,613
2,082
(469 ) (22.5 )%
Tenant reimbursement income 13,136
10,493
2,643
25.2 %
Other income 6,583
11,600
(5,017 ) (43.3 )%
Total revenues 503,607
512,591
(8,984 ) (1.8 )%
Expenses:
General and administrative 49,992
40,611
9,381
23.1 %
Restructuring charges —
5,726
(5,726 ) (100.0 )%
Transaction costs 3,145
—
3,145
100.0 %
Property costs 26,763
20,854
5,909
28.3 %
Real estate acquisition costs 773
2,092
(1,319 ) (63.0 )%
Interest 142,129
149,842
(7,713 ) (5.1 )%
Depreciation and amortization 192,887
194,227
(1,340 ) (0.7 )%
Impairments 88,109
41,396
46,713
NM
Total expenses 503,798
454,748
49,050
10.8 %
(Loss) income from continuing operations before other income and income tax expense (191 ) 57,843
(58,034 ) NM
Other income:
Gain on debt extinguishment 1,770
326
1,444
NM
Total other income 1,770
326
1,444
NM
Income from continuing operations before income tax expense 1,579
58,169
(56,590 ) (97.3 )%
Income tax expense (419 ) (932 ) 513
(55.0 )%
Income from continuing operations $ 1,160
$ 57,237
$ (56,077 ) (98.0 )%

Gain on disposition of assets $ 40,197
$ 39,221
$ 976
2.5 %

~~NM - Percentages over 100% are not displayed.~~

~~REVENUES~~

~~Rentals~~

Rental revenue for the comparative period remained relatively flat as decreases in contractual rent and increases in tenant credit losses were partially offset by increases in non-cash rent. Our contractual rental revenue between periods decreased 1.1% asMarch 31, 2019, we ~~were a moderate disposer of~~recognized preferred dividend income producing real estate over the trailing twelve month period. Our overall dispositions resulted in a decrease in real estate investments, which totaled $7.9 billion at September 30, 2017, compared to $8.3 billion at September 30, 2016. Additionally, we had tenant credit losses in the first quarter of 2017, where the majority of our nonperforming properties were in the convenience store and movie theater industries.

These decreases were partially offset by increases in non-cash rentals over the comparative period. Non-cash rentals for the nine months ended September 30, 2017 and 2016 were $22.3 million and $19.9 million, respectively. These amounts represent 4.6% and 4.1% of total rental revenue for the nine months ended September 30, 2017 and 2016, respectively.

~~Interest income on loans receivable~~

While financed properties increased from 75 at September 30, 2016 to 88 at September 30, 2017, resulting in an increase of 1.2% in mortgage loans receivable balances for the comparative period, interest income on loans receivable decreased as a result of a timing of the change in financed properties. We held 144 financed properties at the beginning of 2016, of which 66 were paid off in mid-2016. Additionally, the new properties financed in 2017 were all originated at the end of the nine months ended September 30, 2017.

~~Tenant reimbursement income~~

We have a number of leases that require our tenants to reimburse us for certain property costs we incur. Tenant reimbursement income is driven by the tenant reimbursable property costs described below.

~~Other income~~

The period-over-period decrease was due primarily to the receipt of $5.5 million in fee income associated with the prepayment of certain mortgage loans receivable in the nine months ended September 30, 2016, and no comparative receipt during the nine months ended September 30, 2017. This was partially offset by a $0.7 million increase in lease termination income over the comparative period.

~~EXPENSES~~

~~General and administrative~~

The period-over-period increase in general and administrative expenses is primarily due to $11.1 million in severance related costs, comprising $4.2 million of cash compensation and $6.9 million of non-cash compensation, recorded in the nine months ended September 30, 2017 following the departure of our chief executive officer and an increase of $2.8 million in bad debt expense recorded period-over-period. The change in bad debt expense increased primarily as a result of certain sporting goods and restaurant - casual dining properties for which the rent has been determined to be uncollectible for the nine months ended September 30, 2017, offset by a decrease in bad debt expenses related to convenience store properties period-over-period. Finally, the period-over-period increase in general and administrative expenses was partially offset by the $1.7 million loss recognized in the comparable prior period related to swap termination fees.

~~Property costs~~

~~The increase in property costs is primarily due to an increase in non-reimbursable property taxes~~ of $3.8 million ~~and an increase~~from these shares. In September 2019, in reimbursable property taxes of $2.1 million. The increase in non-reimbursable property taxes resulted from an increase in average vacancy rates over the comparative periods, as well as tenant credit issues. Additionally, tenant reimbursable property costs for the nine months ended September 30, 2017 were $15.3 million, an increase from $13.4 million for the same period in 2016.

~~Interest~~

~~The decrease in interest expense is primarily due to the extinguishment of $166.7 million of mortgage debt~~conjunction with a weighted average interest rate of 5.8% during the twelve months ended September 30, 2017, in addition to the extinguishment of $322.1 million of mortgage debt in the third quarter of 2016 with a weighted average interest rate of 5.6%. This was partially offset by an increase in interest due to increased borrowings under our Revolving Credit Facility and Term Loan, as well as interest on our Senior Unsecured Notes, which were issued in August 2016.

~~The following table summarizes our interest expense on related borrowings:~~

Nine Months Ended
September 30,
(In Thousands) 2017 2016
Interest expense – Revolving Credit Facility ⁽¹⁾
$ 5,632
$ 2,507
Interest expense – Term Loan 7,525
3,376
Interest expense – Senior Unsecured Notes 10,013
1,595
Interest expense – mortgages and notes payable 83,640
113,837
Interest expense – Convertible Notes 18,382
18,382
Non-cash interest expense:
Amortization of deferred financing costs 7,274
6,706
Amortization of net losses related to interest rate swaps —
85
Amortization of debt discount, net 9,663
3,354
Total interest expense $ 142,129
$ 149,842

⁽¹⁾ ~~Includes facility fees of approximately $1.6 million and $1.5 million for the nine months ended September 30, 2017 and September 30, 2016, respectively.~~

~~Depreciation and amortization~~

During the twelve months ended September 30, 2017, we acquired 81 properties representing an investment in real estate of $562.6 million and we disposed of 292 properties with a gross investment of $726.2 million. While we were a net disposer (based on investment in real estate), the impact to depreciation was relatively flat due to the timing of acquisition and disposition activity. Our real estate investment value was further reduced due to impairment charges during the twelve-month period ended September 30, 2017 on properties that remain in our portfolio. Additionally, our real estate held-for-sale increased period-over-period. Properties held for sale are no longer depreciated. As a result, depreciation and amortization overall decreased minimally. The following table summarizes our depreciation and amortization expense:

Nine Months Ended
September 30,
(In Thousands) 2017 2016
Depreciation of real estate assets $ 159,510
$ 158,804
Other depreciation 420
335
Amortization of lease intangibles 32,957
35,088
Total depreciation and amortization $ 192,887
$ 194,227

~~Impairment~~

Impairment charges for the nine months ended September 30, 2017 were $88.1 million. These charges included $19.2 million on properties held for sale, including $14.7 million on vacant held for sale properties. The remaining $68.9 million was recorded on properties held and used, including $53.5 million on vacant properties held and used and $10.0 million of impairment on eight underperforming properties within the drug store/pharmacy and consumer electronics industries.

During the nine months ended September 30, 2016, impairment losses included $20.0 million on seven under-performing properties within the restaurant-casual dining, movie theatre, distribution and drug store/pharmacy industries. In addition, impairment losses of $14.1 million were recorded on properties held for sale and $6.5 million were recorded from intangible lease write-offs, which were partially offset by a $0.3 million impairment recovery on a loan receivable.

~~Gain on debt extinguishment~~

During the nine months ended September 30, 2017, we extinguished $101.0 million of mortgage debt related to four loans and recorded a $1.8 million gain. For the same period in 2016, we extinguished $817.3 million of mortgage debt and recognized a gain on debt extinguishment of $0.3 million. The gain was primarily attributable to the extinguishment of four defaulted mortgage loans upon transferring the properties collateralizing these loans to the lender, offset by losses from the defeasance fees on 391 properties.

~~Gain on disposition of assets~~

~~For the nine months ended September 30, 2017, the gain on disposition of 161 properties included $13.5 million from the~~SMTA’s sale of ~~eleven Shopko properties, $7.6 million from~~Master Trust 2014, SMTA repurchased the sale of five building materials properties, $7.4 million from the sale of 20 restaurant - casual dining and restaurant - quick service properties, and $9.0 million from the sale vacant properties. During the nine months ended September 30, 2016, we disposed of 82 properties and recorded gains totaling $39.2 million. These gains were primarily attributable to a $25.4 million gain from the sale of 21 properties within the restaurant - quick service industries, $10.3 million from the sale of one grocery property and a $8.4 million gain from the sale of nine Shopko properties.

preferred shares at their aggregate liquidation preference.

Property Portfolio Information



1,772	99.4%	48	298	28
Owned Properties	Occupancy	States	Tenants	Retail Industries

~~PROPERTY PORTFOLIO DIVERSIFICATION~~

2,423 99.1% 49 421 30
Properties Occupancy States Tenants Industries

Diversification By Tenant

Tenant concentration represents the tenant's contribution to Contractual Rent of our owned real estate properties as of ~~September 30, 2017:~~March 31, 2020:

Tenant ⁽¹⁾	Number of Properties		Total Square Feet (in thousands)		Percent of Contractual Rent
Cajun Global LLC		167		240		2.8	%
The Home Depot, Inc.		7		848		2.4	%
Walgreen Co.		36		517		2.3	%
Alimentation Couche-Tard, Inc.		77		232		2.3	%
GPM Investments, LLC		113		306		2.1	%
At Home Group Inc.		12		1,487		2.1	%
Dollar Tree, Inc.		106		927		2.0	%
CVS Caremark Corporation		34		422		1.9	%
Life Time Fitness, Inc		5		588		1.9	%
Party City Holdings Inc.		3		1,090		1.7	%
Other		1,201		29,103		78.5	%
Vacant		11		379		—
Total		1,772		36,139		100.0	%

Tenant
Number of
Properties
Total
Square Feet
(in thousands)
Percent of
Contractual Rent

Shopko (Specialty Retail Shops Holding Corp.)
101
6,812
7.8 %
AMC Entertainment, Inc. / Carmike Cinemas 18
917
2.6
Walgreen Company 42
622
2.4
Church's Chicken (Cajun Global, LLC)
186
264
2.2
Academy Sports + Outdoors (Academy, LTD )
6
1,805
1.9
Circle K (Alimentation Couche-Tard, Inc.)
82
248
1.9
Albertsons (AB Acquisition, LLC)
23
1,030
1.7
The Home Depot, Inc. 7
821
1.7
CVS Caremark Corporation 36
405
1.5
Carmax, Inc. 8
356
1.5
Other 1,893
34,119
74.8
Vacant 21
1,763
—
Total
2,423
49,162
100.0 %

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

~~Diversification By Asset Type~~

~~Asset type concentration represents the type of asset's contribution to Contractual Rent of our owned real estate properties among different asset types as of September 30, 2017:~~

Asset Type Number of Properties Total Square Feet
(in thousands)

Retail 2,235
36,913
Industrial 70
9,730
Office 118
2,519
Total 2,423
49,162

~~Diversification By Industry~~

~~Industry concentration represents the industry's contribution to Contractual Rent of our owned real estate properties as of September 30, 2017:~~

Industry
Number of Owned Properties Total
Square Feet
(in thousands) Percent of
Contractual Rent

General Merchandise 139
8,191
9.4 %
Restaurants - Casual Dining 306
1,830
8.6
Restaurants - Quick Service 586
1,364
8.1
Movie Theaters 62
3,115
7.4
Convenience Stores 318
1,026
7.0
Grocery 64
3,094
5.2
Drug Stores / Pharmacies 102
1,437
4.9
Medical / Other Office 120
1,268
4.8
Health and Fitness 44
1,775
4.1
Sporting Goods 18
2,547
3.4
Specialty Retail 42
2,175
3.3
Entertainment 26
1,199
3.1
Home Improvement 15
1,681
2.7
Education 55
821
2.7
Automotive Services 128
748
2.5
Home Furnishings 26
1,638
2.4
Building Materials 61
2,169
2.3
Automotive Dealers 23
665
2.3
Apparel 13
1,996
2.2
Distribution 12
1,239
2.1
Car Washes 41
231
1.9
Other 6
978
1.6
Manufacturing 17
2,289
1.4
Automotive Parts 61
523
1.2
Dollar Stores 77
788
1.2
Wholesale Clubs 5
512
1.1
Pet Supplies & Service 6
1,016
1.0
Financial Services 4
342
0.8
Office Supplies 18
488
0.8
Consumer Electronics 7
254
0.5
Vacant 21
1,763
—
Total
2,423
49,162
100.0 %

~~Diversification By Geography~~

~~Geographic concentration represents the geographic region's contribution to Contractual Rent of our owned real estate properties as of September 30, 2017:~~

Location
Number of Properties
Total Square Feet (in thousands)
Percent of Contractual Rent
Location (continued)
Number of Properties Total Square Feet (in thousands) Percent of Contractual Rent

Texas 305
5,933
11.9 % Arkansas 53
608
1.3
Georgia 182
2,080
6.0
Washington 14
578
1.2
Florida 155
1,579
5.7
Massachusetts 3
887
1.2
Illinois 112
2,890
5.7
Iowa 32
565
1.1
Ohio 124
2,448
5.2
New Jersey 14
883
1.1
California 37
1,421
4.3
Oregon 10
444
1.0
Michigan 137
2,105
3.9
Idaho 16
679
1.0
Wisconsin 45
3,054
3.9
Mississippi 41
360
0.9
Minnesota 50
2,169
3.5
New Hampshire 16
640
0.8
Arizona 60
940
3.0
Maryland 19
242
0.7
Tennessee 104
1,428
3.0
Louisiana 24
208
0.7
Missouri 91
1,369
2.9
South Dakota 8
390
0.7
Indiana 77
1,175
2.8
Montana 6
406
0.6
South Carolina 45
951
2.5
Connecticut 5
686
0.6
North Carolina 69
1,250
2.4
West Virginia 18
297
0.6
Alabama 106
726
2.2
Utah 7
618
0.5
Pennsylvania 55
1,174
2.0
Nebraska 12
363
0.4
Virginia 60
1,358
2.0
North Dakota 5
236
0.4
Colorado 29
993
1.9
Maine 25
68
0.4
New York 39
923
1.7
Rhode Island 4
117
0.3
New Mexico 38
548
1.7
Wyoming 8
180
0.2
Kansas 37
810
1.6
Alaska 5
63
0.1
Oklahoma 66
613
1.5
U.S. V.I. 1
38
0.1
Kentucky 47
564
1.5
Delaware 1
5
—
Nevada 5
1,099
1.3
Vermont 1
1
—

Lease Expirations

The following table sets forth a summary schedule of expiration dates for leases in place as of ~~September 30, 2017.~~March 31, 2020. As of ~~September 30, 2017,~~March 31, 2020, the weighted average remaining non-cancelable initial term of our leases (based on Contractual Rent) was ~~10.1~~10.0 years. The information set forth in the table assumes that tenants do not exercise renewal options and or any early termination rights:

Leases Expiring In:	Number of Properties		Contractual Rent Annualized (in thousands) ⁽¹⁾		Total Square Feet (in thousands)		Percent of Contractual Rent
Remainder of 2020		18	$	6,835		661		1.4	%
2021		75		22,203		1,933		4.7	%
2022		46		18,324		1,671		3.8	%
2023		116		34,414		3,079		7.2	%
2024		51		20,797		1,829		4.4	%
2025		43		15,516		1,216		3.3	%
2026		92		29,914		2,155		6.3	%
2027		125		37,234		2,473		7.8	%
2028		108		31,712		1,919		6.7	%
2029		323		42,081		2,752		8.8	%
Thereafter		764		217,329		16,072		45.6	%
Vacant		11		—		379		—
Total owned properties		1,772	$	476,359		36,139		100.0	%

Leases Expiring In:
Number of Properties
Contractual Rent Annualized
(in thousands) ⁽¹⁾

Total Square Feet
(in thousands)
Percent of Contractual Rent

Remainder of 2017
29

$ 8,230

1,013

1.4 %
2018
72

22,295

1,824

3.7
2019
103

19,193

1,758

3.2
2020
73

18,966

1,508

3.1
2021
186

44,525

3,861

7.3
2022
116

32,015

2,849

5.3
2023
107

31,318

3,330

5.1
2024
57

22,306

1,369

3.7
2025
77

35,704

2,078

5.9
2026
192

43,940

3,945

7.2
2027 and thereafter
1,390

330,082

23,864

54.1
Vacant
21

—

1,763

—
Total owned properties
2,423
$ 608,574
49,162

100.0 %

⁽¹⁾⁽¹⁾ Contractual Rent for the month ended ~~September 30, 2017~~March 31, 2020 for properties owned at ~~September 30, 2017~~March 31, 2020, multiplied by twelve.

Diversification By Asset Type and Tenant Industry

Asset type and tenant industry concentration represents the type of asset’s contribution to Contractual Rent of our owned real estate properties and, for retail asset types, the tenant industry's contribution to Contractual Rent of our owned properties as of March 31, 2020:

Asset Type	Tenant Industry	Number of Properties		Total Square Feet (in thousands)		Percent of Contractual Rent
Retail			1,662		25,243		81.2	%
	Convenience Stores		333		1,050		8.3	%
	Health and Fitness		45		2,308		7.2	%
	Movie Theaters		37		1,953		6.9	%
	Restaurants - Quick Service		367		800		6.9	%
	Restaurants - Casual Dining		136		967		6.2	%
	Drug Stores / Pharmacies		80		1,034		4.9	%
	Grocery		39		1,792		3.7	%
	Entertainment		24		1,022		3.5	%
	Car Washes		65		308		3.4	%
	Dealerships		24		796		3.1	%
	Home Improvement		15		1,605		3.1	%
	Dollar Stores		162		1,481		3.1	%
	Home Décor		15		2,049		2.6	%
	Specialty Retail		53		1,142		2.5	%
	Warehouse Club and Supercenters		12		1,319		2.4	%
	Automotive Service		70		592		2.3	%
	Department Stores		14		1,281		2.0	%
	Home Furnishings		18		865		1.9	%
	Sporting Goods		14		739		1.7	%
	Education		36		427		1.7	%
	Automotive Parts		55		388		1.2	%
	Office Supplies		16		351		0.8	%
	Other		8		251		0.6	%
	Medical Office		5		65		0.5	%
	Pet Supplies & Service		4		133		0.4	%
	Apparel		5		150		0.3	%
	Vacant		10		375		0.0	%
Industrial			67		8,881		11.2	%
Office and Other			43		2,015		7.6	%
	Total		1,772		36,139		100.0	%

Diversification By Geography

Geographic concentration represents the geographic region's contribution to Contractual Rent of our owned real estate properties as of March 31, 2020:

Location	Number of Properties		Total Square Feet (in thousands)		Percent of Contractual Rent			Location (continued)	Number of Properties		Total Square Feet (in thousands)		Percent of Contractual Rent
Texas		258		4,167		11.3	%	Louisiana		23		368		1.3	%
Florida		121		2,132		7.6	%	Utah		18		333		1.3	%
Georgia		123		1,985		6.5	%	Pennsylvania		20		488		1.2	%
Ohio		86		2,396		5.4	%	Alaska		9		319		1.1	%
California		24		1,236		4.7	%	New Hampshire		16		640		1.1	%
Tennessee		105		1,798		4.2	%	Idaho		16		273		1.0	%
Illinois		50		1,258		4.0	%	Kansas		18		345		0.8	%
Michigan		85		1,511		3.8	%	Connecticut		5		686		0.8	%
New York		30		1,895		3.6	%	Wisconsin		10		391		0.7	%
Arizona		46		834		3.0	%	Iowa		12		194		0.6	%
South Carolina		42		677		2.8	%	Washington		8		185		0.6	%
Missouri		65		966		2.7	%	Maine		26		76		0.5	%
North Carolina		57		1,138		2.6	%	Oregon		4		144		0.4	%
Virginia		44		1,335		2.6	%	West Virginia		13		202		0.4	%
Alabama		93		618		2.5	%	Nebraska		9		221		0.4	%
Maryland		9		714		2.5	%	Montana		3		152		0.4	%
Minnesota		25		936		2.3	%	Massachusetts		2		130		0.4	%
Colorado		25		978		2.3	%	North Dakota		3		105		0.3	%
Indiana		40		830		2.2	%	Rhode Island		3		95		0.3	%
New Mexico		28		583		1.7	%	Wyoming		1		35		0.1	%
Oklahoma		51		448		1.6	%	U.S. V.I.		1		38		0.1	%
Mississippi		50		421		1.6	%	South Dakota		1		20		0.1	%
Kentucky		37		482		1.6	%	Delaware		1		5		0.1	%
Arkansas		42		637		1.5	%	Vermont		1		2	*
New Jersey		13		717		1.4	%

*	Less than 0.1%

Liquidity and Capital Resources

~~SHARE REPURCHASE~~

ATM PROGRAM

In ~~August 2017, our~~November 2016, the Board of Directors approved a ~~new stock repurchase program,~~$500.0 million ATM Program. In February 2019, we updated the ATM Program, pursuant to which ~~authorizes the repurchase of up to $250.0 million of our common stock. These purchases can be made in the open market or through private transactions~~we may from time to time ~~over~~offer and sell shares of our common stock having an aggregate gross sales price of up to $500.0 million through the ~~18-month time period following authorization. Purchase activity will be dependent on various factors, including~~agents, as our ~~capital position, operating results, funds generated by asset~~ sales ~~dividends that~~agents or, if applicable, as forward sellers, or directly to the agents acting as principals. Sales of shares of our common stock under the ATM Program may be ~~required~~made in sales deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act.

The ATM Program contemplates that, in addition to the issuance and sale by ~~those~~us of shares of our common stock to or through the agents, we may enter into separate forward sale agreements with one of the agents or one of their respective affiliates (in such capacity, each, a “forward purchaser” and, collectively, the “forward purchasers”). When we enter into a forward sale agreement with any forward purchaser, we expect that such forward purchaser will attempt to borrow from third parties and sell, through the relevant agent, acting as sales agent for such forward purchaser, shares of our common stock to hedge such forward purchaser's exposure under such forward sale agreement. We will not initially receive any proceeds from any sale of shares of our common stock borrowed by a forward purchaser and ~~investment options that may be available, including acquiring new properties~~sold through a forward seller.

We currently expect to fully physically settle any forward sale agreement with the relevant forward purchaser on one or ~~retiring debt. The stock repurchase program does not obligate~~more dates specified by us on or prior to ~~repurchase any specific~~the maturity date of such forward sale agreement, in which case we expect to receive aggregate net cash proceeds at settlement equal to the number of shares specified in such forward sale agreement multiplied by the relevant forward price per share. However, subject to certain exceptions, we may also elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations under any forward sale agreement, in which case we may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and we may ~~be suspended at any time at~~owe cash (in the case of cash settlement) or shares of our ~~discretion. We intend~~common stock (in the case of net share settlement) to ~~fund any repurchases with~~ the ~~new proceeds from asset sales, cash flows from operations, existing cash on the balance sheet and other sources.~~ relevant forward purchaser.

As of ~~September 30, 2017, 2,482,570~~March 31, 2020, 5.6 million shares of our common stock have been ~~repurchased in open market transactions~~sold under the ATM Program. 3.8 million of the sales were sold by forward purchasers through agents under the ATM Program and pursuant to forward sales agreements. The forward sale price that we received upon physical settlement of the agreements was subject to adjustment for (i) a floating interest rate factor equal to a specified daily rate less a spread, (ii) the forward purchasers’ stock ~~repurchase program, at a weighted average~~borrowing costs and (iii) scheduled dividends during the term of the forward sale agreements. 0.4 million of the shares were sold during the three months ended March 31, 2020, all under forward sales agreements, for net proceeds of $17.6 million, after giving effect to sales agent commissions and other issuance fees of $0.3 million. As of March 31, 2020, we had physically settled our obligations under our existing forward sales agreements and there were no open forward sales agreements. As of March 31, 2020, and we had remaining capacity to sell common stock having an aggregate gross sales price of ~~$8.75 per share, leaving $228.3 million in available capacity. Fees associated with the repurchase, of $49,700, are included in retained earnings.~~

~~In February 2016, our Board of Directors authorized a share repurchase program, under which we may repurchase~~ up to ~~$200.0~~$246.3 million ~~of our outstanding common stock. Under~~under the prior program, we have repurchased, in open market transactions, 26.3 million shares of our outstanding common stock,at a weighted average price of $7.59 per share, equivalent to the $200.0 million authorized.

ATM Program.

SHORT-TERM LIQUIDITY AND CAPITAL RESOURCES

On a short-term basis, our principal demands for funds ~~are~~will be for ~~financing of~~operating expenses, acquisitions, distributions to stockholders and payment of interest and principal on ~~our indebtedness~~current and ~~operating expenses (including property improvements and re-leasing costs).~~any future debt financings. We expect to fund these demands primarily through cash provided by operating activities, ~~and~~ borrowings under the ~~Revolving~~2019 Credit ~~Facility.~~Facility and, when market conditions warrant, issuances of equity securities, including shares of our common stock under our ATM program. As of ~~September 30, 2017, $414.0 million borrowing capacity~~March 31, 2020, available liquidity was ~~available under the Revolving Credit Facility along with $96.3 million in cash reserves on deposit with lenders and $11.9~~comprised of $216.7 million in cash and cash equivalents, $300 million of borrowing capacity under the 2019 Credit Facility and $11.7 million in restricted cash and restricted cash equivalents.

We also have remaining capacity to sell common stock having an aggregate gross sales price of up to $246.3 million under our ATM Program as of March 31, 2020. We believe that this available liquidity makes us well positioned to navigate any macroeconomic uncertainty resulting from the COVID-19 pandemic restrictions intended to prevent its spread.

LONG-TERM LIQUIDITY AND CAPITAL ~~RESOURSES~~

RESOURCES

We plan to meet our long-term capital needs, including long-term financing of property acquisitions, by issuing registered debt or equity securities, by obtaining asset level financing and ~~occasionally~~ by issuing ~~fixed rate~~fixed-rate secured or unsecured notes and bonds.

We have a shelf registration statement on file with the SEC under which we may offer shares of our common stock from time to time in amounts, at prices and on terms to be announced when and if such shares are offered. We may issue common stock when we believe our share price is at a level that allows for any offering proceeds to be accretively invested into additional properties or to permanently finance properties that were initially financed by our Revolving Credit Facility, Term Loan or other indebtedness.

In the future, some of our property acquisitions could be made by ~~exchanging~~issuing partnership ~~units in~~interests of our Operating Partnership in exchange for property owned by third parties. These partnership ~~units~~interests would be exchangeable for cash or, at our election, shares of our common stock.

We continually evaluate ~~alternative~~ financing alternatives and believe that we can obtain financing on reasonable terms. However, we cannot ~~assure~~be sure that we will have access to the capital markets at times and on terms that are acceptable to us. Refer to “Part II—Other Information, Item 1A. Risk Factors” for additional information about the potential impact of the COVID-19 pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions

to our stockholders. We expect that our primary uses of capital will be for property and other asset acquisitions, the payment of tenant improvements, operating expenses, debt service payments and distributions to our stockholders.

DESCRIPTION OF CERTAIN DEBT

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

~~Spirit Master Funding Program~~

The Spirit Master Funding Program is an asset-backed securitization platform through which we raise capital by issuing non-recourse net lease mortgage notes collateralized by commercial real estate, net leases and mortgage loans. The commercial real estate is managed by the Company in our capacity as property manager. Rental and mortgage receipts with respect to the leases and mortgage loans are deposited with the indenture trustee, who first utilizes these funds to satisfy the debt service requirements on the notes and any fees and costs of administration of the Spirit Master Funding Program. Any remaining funds are remitted to the issuers on the monthly note payment date.

Upon satisfaction of certain conditions, we may, from time to time, sell or exchange real estate properties or mortgage loans from the Collateral Pools. Proceeds from the sale of these assets are held on deposit by the indenture trustee until a qualifying substitution is made or the amounts are distributed as an early repayment of principal. At September 30, 2017, $79.4 million was held on deposit and classified as restricted cash within deferred costs and other assets, net in our consolidated balance sheets.

The Spirit Master Funding Program consists of two separate securitization trusts that have one or multiple bankruptcy-remote, special purpose entities as issuers of the Master Trust 2013 and Master Trust 2014 notes. Each issuer is an indirect wholly-owned subsidiary of ours. All outstanding series of Master Trust Notes were rated investment grade as of September 30, 2017.

~~The Master Trust Notes as of September 30, 2017 are summarized below (principal in thousands):~~

~~Convertible Notes~~

~~The Convertible Notes are comprised of two series of notes: $402.5 million aggregate principal amount of 2.875% convertible notes maturing on May 15,~~

2019 and $345.0 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the Convertible Notes is payable semiannually in arrears on May 15 and November 15 of each year. Credit Facility

As of ~~September 30, 2017,~~March 31, 2020, the ~~carrying amount of the Convertible Notes was $712.5 million, which is net of discounts (for the value of the embedded conversion feature) and unamortized deferred financing costs.~~

Holders may convert notes of either series prior to November 15, 2018, in the case of the 2019 Notes, or November 15, 2020, in the case of the 2021 Notes, only under specific circumstances. On or after November 15, 2018, in the case of the 2019 Notes, or November 15, 2020, in the case of the 2021 Notes, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Convertible Notes, holders may convert the Convertible Notes of the applicable series at any time, regardless of the foregoing circumstances. If we undergo a fundamental change (as defined in the Convertible Notes supplemental indentures), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plusaccrued and unpaid interest. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock, at our election. As of September 30, 2017, the conversion rate was 77.1889 per $1,000 principal note.

~~Revolving Credit Facility~~

~~As of September 30, 2017, the borrowing capacity~~aggregate gross commitment under the ~~Revolving~~2019 Credit Facility was $800.0 million, which may be increased up to ~~$1.0~~$1.2 billion by exercising an accordion feature, subject to satisfying certain requirements and obtaining additional lender commitments. As of March 31, 2020, $500.0 million of the available gross commitment was drawn. The Revolving Credit Facility also includes a $50.0 million sub-limit for swing-line loans and up to $60.0 million available for issuances of letters of credit. Swing-line loans and letters of credit reduce availability under the Revolving Credit Facility on a dollar-for-dollar basis. the Revolving2019 Credit Facility has ~~an initial~~a maturity of March 31, ~~2019, which is extendable for one year~~2023 and includes two six-month extensions that can be exercised at our option.

We may voluntarily prepay the 2019 Credit Facility, in whole or in part, at any time without premium or penalty. Payment of the 2019 Credit Facility is unconditionally guaranteed by the Company and material subsidiaries that meet certain conditions (as defined in the 2019 Facilities Agreements). As of ~~September 30, 2017,~~March 31, 2020, there were no subsidiaries that met this requirement.

As of March 31, 2020, the ~~Revolving~~2019 Credit Facility bore interest at 1-Month LIBOR plus ~~1.25% based on our credit rating~~0.90% and ~~incurred~~ a ratings-based facility fee in the amount of ~~0.25%~~0.20% per annum. As of ~~September 30, 2017, $386.0 million in borrowings~~March 31, 2020, there were ~~outstanding and $414.0 million~~no letters of ~~borrowing capacity was available under the Revolving Credit Facility.~~

Amounts available for borrowing under the Revolving Credit Facility remain subject to compliance with certain customary restrictive covenants. As of September 30, 2017, the Corporation and the Operating Partnership were in compliance with these covenants.

~~Term Loan~~

As of September 30, 2017, the borrowing capacity under the Term Loan was $420.0 million and may be increased up to $600.0 million by exercising an accordion feature, subject to obtaining additional lender commitments. The Term Loan has an initial maturity date of November 2, 2018, which may be extended at our option pursuant to two one-year extension options, subject to the satisfaction of certain conditions and payment of an extension fee. As of September 30, 2017, the Term Loan bore interest at LIBOR plus 1.35% based on our credit ~~rating and the Term Loan was fully drawn.~~

Amounts available for borrowing under the Term Loan remain subject to compliance with certain customary restrictive covenants. As of September 30, 2017, the Corporation and the Operating Partnership were in compliance with these financial covenants.

outstanding.

Senior Unsecured Notes

As of March 31, 2020, we had the following Senior Unsecured Notes outstanding (dollars in thousands):

	Maturity Date	Stated Interest Rate	March 31, 2020
2026 Senior Notes	September 15, 2026	4.45%	$	300,000
2027 Senior Notes	January 15, 2027	3.20%	$	300,000
2029 Senior Notes	July 15, 2029	4.00%	$	400,000
2030 Senior Notes	January 15, 2030	3.40%	$	500,000
Total Senior Unsecured Notes		3.73%	$	1,500,000

The Senior Unsecured Notes are payable on January 15 and July 15 of each year, except for the ~~Operating Partnership have an aggregate principal amount of $300.0 million and~~2026 Senior Notes, which are ~~guaranteed by the Corporation. The Senior Unsecured Notes accrue interest at a rate of 4.45% per year,~~ payable on March 15 and September 15 of each year, until the maturity date of September 15, 2026. The Company filed a registration statement with the SEC to exchange the private Senior Unsecured Notes for registered Senior Unsecured Notes with substantially identical terms, which became effective April 14, 2017. All $300.0 million aggregate principal amount of private Senior Unsecured Notes were tendered in the exchange for registered Senior Unsecured Notes.

year. The Senior Unsecured Notes are redeemable in whole at any time or in part from time to time, at the Operating Partnership’s option, at a redemption price equal to the sum of: an amount equal to 100% of the principal amount of the respective Senior Unsecured Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and a make-whole premium calculated in accordance with the respective indenture. Notwithstanding the foregoing, if any of the Senior Unsecured Notes are redeemed onthree months or ~~after June 15, 2026,~~less (or two months or less in the case of the 2027 Senior Notes) prior to their respective maturity dates, the redemption price will not include a make-whole premium.

In connection with the issuance of the Senior Unsecured Notes, the Corporation and the Operating Partnership remain subject to compliance with certain customary restrictive covenants. As of September 30, 2017, the Corporation and the Operating Partnership were in compliance with these financial covenants.

CMBS

We may use long-term, fixed-rate debt to finance our properties on a “match-funded” basis. In such events, we generally seek to use asset level financing that bears annual interest less than the annual rent on the related lease(s) and that matures prior to the expiration of such lease(s).

In general, the obligor of our asset level debt is a special purpose entity that holds the real estate and other collateral securing the indebtedness. Each special purpose entity is a bankruptcy remote separate legal entity and is the sole owner of its assets and solely responsible for its liabilities other than typical non-recurring covenants.

As of ~~September 30, 2017,~~March 31, 2020, we had ~~16 fixed rate~~five fixed-rate CMBS loans with ~~$426.6~~$217.3 million of aggregate outstanding principal, a ~~weighted average~~weighted-average contractual interest rate of ~~5.89%~~5.47% and a ~~weighted average~~weighted-average maturity of ~~3.9~~3.6 years. Approximately ~~71%~~87.1% of this debt is partially amortizing and requires a balloon payment at maturity. ~~These balances include six CMBS fixed-rate loans that are in default, discussed further below.~~ The following table shows the ~~outstanding~~scheduled principal repayments, including amortization, of the CMBS fixed-rate loans ~~excluding the defaulted loans~~ as of ~~September 30, 2017~~March 31, 2020 (dollars in thousands):


Year of Maturity	Number of Loans	Number of Properties	Stated Interest Rate Range	Weighted Average Stated Rate		Scheduled Principal		Balloon		Total		Number of Loans		Number of Properties		Stated Interest Rate Range	Weighted Average Stated Rate			Scheduled Principal		Balloon		Total

Remainder of 2017	1	1	6.52%	6.50	%	$	51	$	39,830	$	39,881
2018	2	7	3.90% - 4.60%	4.21	%	—		44,550		44,550
2019	1	5	4.61%	4.61	%	—		10,000		10,000
2020	—	—	—	—		—		—		—
Remainder of 2020													—		—	—%		—	%	$	3,082	$	—	$	3,082
2021	—	—	—	—		—		—		—			—		—	—%		—			4,365		—		4,365
2022													—		—	—%		—			4,617		—		4,617
2023													3		86	5.23%-5.50%		5.46			3,074		197,912		200,986
2024													—		—	—%		—			590		—		590
Thereafter	6	100	4.67% - 6.00%	5.33	%	28,853		240,380		269,233			2		2	5.80%-6.00%		5.83			3,610		70		3,680
Total	10	113		5.32	%	$	28,904	$	334,760	$	363,664		5		88			5.47	%	$	19,338	$	197,982	$	217,320

~~CMBS Liquidity Matters~~

Convertible Notes

As of ~~September~~March 31, 2020, the Convertible Notes were comprised of $345.0 million aggregate principal amount of 3.75% convertible notes maturing on May 15, 2021. Interest on the 2021 Notes is payable semiannually in arrears on May 15 and November 15 of each year.

Holders may convert the 2021 Notes prior to November 15, 2020 only under specific circumstances: (1) if the closing price of our common stock for each of at last 20 trading days (whether or not consecutive) during the last 30 ~~2017,~~consecutive trading days in the quarter is greater than or equal to 130% of the conversion price for the Convertible Notes; (2) during the five business day period after any 10 consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last closing price of our common stock and the conversion rate for the Convertible Notes; (3) if we ~~are in default on six CMBS fixed-rate loans due~~call any or all of the Convertible Notes for redemption prior to the ~~underperformance~~redemption date; or (4) upon the occurrence of specified corporate events as described in the Convertible Notes prospectus supplement. On or after November 15, 2020, until the close of business on the second scheduled trading day immediately preceding the maturity date of the ~~eight properties securing~~2021 Notes, holders may convert the ~~loans. The aggregate principal balance under the defaulted loans was $62.9 million, including $11.8 million of accrued interest. We believe the value~~2021 Notes at any time, regardless of the ~~eight properties~~foregoing circumstances. Upon conversion, we will pay or deliver cash, shares of common stock or a combination of cash and shares of common stock, at our election.

The conversion rate is ~~less than~~subject to adjustment for some events, including dividends paid in excess of threshold amounts stipulated in the ~~related debt.~~agreement, but will not be adjusted for any accrued and unpaid interest. As of March 31, 2020, the conversion rate was 17.4458 per $1,000 principal note. If we undergo a ~~result, we have notified~~fundamental change (as defined in the ~~lender~~2021 Notes’ supplemental indenture), holders may require us to repurchase all or any portion of their notes at a repurchase price equal to 100% of the ~~special purpose entity that we anticipate either surrendering these properties~~principal amount of such notes to ~~the lender or selling them in exchange for relieving the indebtedness, including any~~be repurchased, plus accrued ~~interest, encumbering the properties.~~

~~The following table provides key elements of the defaulted mortgage loans as of September 30, 2017 (dollars in thousands):~~

Industry Properties Net Book Value Monthly Base Rent Pre-Default Outstanding Principal
Capitalized interest ⁽¹⁾
Total Debt Outstanding
Restricted Cash ⁽²⁾
Stated Rate Default Rate
Accrued Interest ⁽¹⁾

Manufacturing 2 $ 4,895
$ —
$ 5,460
$ 10,942
$ 16,402
$ —
5.85 % 9.85 % $ 135
Sporting Goods 1 3,098
—
6,321
251
6,572
57
5.62
10.62
58
Consumer Electronics 1 3,057
—
8,592
367
8,959
286
5.87
9.87
74
Multi-Tenant Retail 1 12,773
—
17,250
148
17,398
265
5.53
7.53
73
Sporting Goods 2 3,480
—
9,625
78
9,703
455
4.39
9.39
76
Sporting Goods 1 2,019
—
3,853
32
3,885
169
4.65
9.65
31
Total 8 $ 29,322
$ —
$ 51,101
$ 11,818
$ 62,919
$ 1,232
5.44 % 8.3 % $ 447

⁽¹⁾~~Interest capitalized to principal that remains unpaid.~~

⁽²⁾~~Represents restricted cash controlled by the lender that may be applied to reduce the outstanding principal balance.~~

and unpaid interest.

DEBT MATURITIES

Future principal payments due on our various types of debt outstanding as of ~~September 30, 2017~~March 31, 2020 (in thousands):

	Total		Remainder of 2020		2021		2022		2023		2024		Thereafter
2019 Credit Facility	$	500,000	$	—	$	—	$	—	$	500,000	$	—	$	—
Senior Unsecured Notes		1,500,000		—		—		—		—		—		1,500,000
CMBS		217,320		3,082		4,365		4,617		200,986		590		3,680
Convertible Notes		345,000		—		345,000		—		—		—		—
	$	2,562,320	$	3,082	$	349,365	$	4,617	$	700,986	$	590	$	1,503,680

Total Remainder of 2017 2018 2019 2020 2021 Thereafter

Revolving Credit Facility ⁽¹⁾
$ 386,000
$ —
$ —
$ 386,000
$ —
$ —
$ —
Term Loan ⁽²⁾

420,000
—
420,000
—
—
—
—
Senior Unsecured Notes 300,000
—
—
—
—
—
300,000
Master Trust Notes 1,657,402
6,589
163,262
40,420
448,202
236,046
762,883
CMBS - fixed-rate ⁽³⁾
426,583
123,583
28,492
13,905
4,100
4,365
252,138
Convertible Notes 747,500
—
—
402,500
—
345,000
—
$ 3,937,485
$ 130,172
$ 611,754
$ 842,825
$ 452,302
$ 585,411
$ 1,315,021

⁽¹⁾~~2019 includes~~

CONTRACTUAL OBLIGATIONS

On April 2, 2020, we entered into the ~~Revolving Credit Facility which is extendible for one year at the borrower's option.~~

⁽²⁾ ~~2018 includes the $420 million unsecured~~2020 Term Loan ~~that is extendible at borrower's option pursuant to two one-year extension options.~~

⁽³⁾ ~~The CMBS - fixed-rate payment balance in 2017 includes $62.9 million, including $11.8~~Agreement, which provides for $200.0 million of ~~capitalized interest, for the acceleration of principal payable following an event of default under six CMBS fixed-rate~~term loans with ~~stated maturities~~a maturity date of April 2, 2022. The 2020 Term Loan Agreement also includes an accordion feature to increase the available term loans up to an aggregate of $400.0 million, subject to obtaining lender commitments and the satisfaction of certain customary conditions. On April 10, 2020, we exercised $100.0 million of the accordion feature. Amounts outstanding under the 2020 Term Loans bear interest at LIBOR plus an applicable margin of 1.50% per annum. In addition, if any loans are outstanding after April 2, 2021, the Operating Partnership will be required to pay a one-time fee in ~~2017.~~

~~CONTRACTUAL OBLIGATIONS~~

an amount equal to 0.20% of the outstanding principal amount of loans. The proceeds from the 2020 Term Loans were used to reduce the amounts drawn under the 2019 Credit Facility.

There were no other material changes outside the ordinary course of business to the information regarding specified contractual obligations contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, as filed with the SEC.

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

DISTRIBUTION POLICY

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

2017 and before January 1, 2026. Distributions in excess of a stockholder’s federal income tax basis in our common stock are generally characterized as capital gain.

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

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

Any distributions will be at the sole discretion of our ~~board~~Board of ~~directors,~~Directors, and their form, timing and amount, if any, will depend upon a number of factors, including our actual and projected results of operations, FFO, liquidity, cash flows and financial condition, the revenue we actually receive from our properties, our operating expenses, our debt service requirements, our capital expenditures, prohibitions and other limitations under our financing arrangements, our REIT taxable income, the annual REIT distribution requirements, applicable laws and such other factors as our ~~board~~Board of ~~directors~~Directors deems relevant.

Refer to “Part II—Other Information, Item 1A. Risk Factors” for additional information about the potential impact of the COVID-19 pandemic and restrictions intended to prevent its spread on our business, financial condition, results of operations, cash flows, liquidity and ability to satisfy our debt service obligations and make distributions to our stockholders.

Cash Flows

The following table presents a summary of our cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~September 30, 2016, respectively:~~March 31, 2019, respectively (in thousands):

	Three Months Ended March 31,
	2020			2019			Change
Net cash provided by operating activities	$	67,178		$	71,353		$	(4,175	)
Net cash used in investing activities		(195,665	)		(141,373	)		(54,292	)
Net cash provided by financing activities		330,861			20,491			310,370
Net increase (decrease) in cash, cash equivalents and restricted cash	$	202,374		$	(49,529	)	$	251,903

Nine Months Ended
September 30,
2017 2016 Change
(in Thousands)
Net cash provided by operating activities $ 292,359
$ 259,291
$ 33,068
Net cash used in investing activities (33,496 ) (129,121 ) 95,625
Net cash used in financing activities (256,975 ) (138,776 ) (118,199 )
Net increase (decrease) in cash and cash equivalents $ 1,888
$ (8,606 ) $ 10,494

As of ~~September 30, 2017,~~March 31, 2020, we had ~~$11.9~~$228.4 million of cash, ~~and~~ cash equivalents and restricted cash as compared to ~~$10.1~~$26.0 million as of December 31, ~~2016.~~

2019 and $27.9 million as of March 31, 2019.

Operating Activities

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

The ~~increase~~decrease in net cash provided by operating activities was primarily attributable to decreases in debt extinguishment costs of $25.3 million, cash paid for interest of $14.5 million, restructuring charge payments of $7.9 million and net changes in operating assets and liabilities of $4.5 million, and payments to terminate interest rate swaps of $1.7 million . Thisthe following:

•

an increase in cash interest paid of $12.1 million,

•

a decrease in related party fee income of $6.7 million,

•

a decrease in preferred dividends received from SMTA of $3.8 million, and

•

an increase in deal pursuit costs of $0.9 million.

The decrease was partially offset by a ~~reduction~~net increase in cash rental revenue and interest on loans receivable of ~~$13.5 million, driven by tenant credit losses and the timing of acquisitions and dispositions, and increases in property costs of $5.9 million and general and administrative expenses of $2.8~~$19.2 million.

Investing Activities

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

Net cash used in investing activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 included ~~$278.5~~$205.8 million ~~to fund~~for the acquisition of 3927 properties ~~(one~~and $7.8 million of ~~which was acquired through a $2.7 million non-cash 1031 Exchange) and~~ capitalized real estate ~~expenditures of $34.9 million, and ,~~expenditures. These outflows were partially offset by the ~~transfer of $64.9~~$16.8 million in net ~~sales~~ proceeds ~~to restricted cash accounts, mostly offset by cash proceeds of $342.0 million~~ from the disposition of ~~161~~seven properties ~~(two~~and the sale of ~~which~~one loan receivable. Additionally, the outflows were ~~disposed~~further offset by the collection of ~~through a $2.7~~$1.2 million ~~1031 Exchange).~~of principal on loans receivable.

During the same period in ~~2016,~~2019, net cash used byin investing activities included ~~$424.5~~$160.3 million ~~to fund~~for the acquisition of ~~227~~22 properties ~~(33~~and $19.6 million of ~~which were acquired through a $83.6 million non-cash 1031 Exchange) and~~ capitalized real estate ~~expenditures of $8.3 million,~~expenditures. These outflows were partially offset by $34.8 million in net proceeds ~~of $245.9 million~~ from the disposition of 82six properties ~~(six of which were disposed of through a $43.7 million 1031 Exchange)~~ and ~~the transfer of $58.2~~$3.7 million in ~~net sales proceeds from restricted accounts pursuant to 1031 Exchanges.~~

collections of principal on loans receivable.

Financing Activities

Generally, our net cash provided by or used in financing activities is impacted by our ~~net borrowings and common stock offerings, including sales of our common stock under our ATM Program, common stock offerings,~~ borrowings under our ~~Revolving Credit Facility~~revolving credit facilities and ~~Term Loan, and~~term loans, issuances of net-lease mortgage notes, ~~under~~common stock and debt offerings and repurchases and dividend payments on our ~~Spirit Master Funding Program.~~

common and preferred stock.

Net cash ~~used in~~provided by financing activities during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was primarily attributable to net borrowings of $383.5 million under our revolving credit facilities and net proceeds from the issuance of common stock of $17.7 million. These amounts were partially offset by the payment of dividends to equity owners of ~~$257.1~~$67.0 million, ~~the repurchase~~repayment of ~~shares of common stock totaling $225.7~~$1.0 million ~~$3.5 million of which related to net settlement of restricted shares, and the repayment of~~on mortgages and notes payable and common stock repurchases totaling $2.3 million.

During the same period in 2019, net cash provided by financing activities was primarily attributable to net borrowings of ~~$76.4~~$60.2 million ~~all of which were paid primarily through sources from~~under our ~~operating cash flows~~revolving credit facilities and net ~~borrowings under our Revolving Credit Facility.~~proceeds from the issuance of common stock of $32.4 million. These amounts were partially offset by ~~net borrowings under our Revolving Credit Facility of $300.0 million.~~

~~During the same period in 2016, net cash used in financing activities was primarily attributable to repayment of our indebtedness of $790.2 million and~~ the payment of dividends to equity owners of ~~$238.9~~$56.2 million, ~~both~~repayment of ~~which were paid primarily through sources from our operating cash flows~~$2.9 million on mortgages and ~~net borrowings under our Revolving Credit Facility, Term Loan~~notes payable, deferred financing costs of $11.3 million, debt extinguishment costs of $1.0 million and ~~Senior Unsecured Notes. These amounts were partially offset by the issuance of 34.5 million shares of our~~ common stock through an underwritten public offering and sale of 6.3 million shares of our common stock under our ATM Program for aggregate net proceeds of $446.6 million, and net borrowings under our Revolving Credit Facility and Term Loan of $150.0 million and net proceeds of $296.2 million from the issuance of $300 million aggregate principal Senior Unsecured Notes (see Note 4).

share repurchases totaling $0.7 million.

Off-Balance Sheet Arrangements

As of ~~September 30, 2017,~~March 31, 2020, we did not have any material off-balance sheet arrangements.

New Accounting Pronouncements

See ~~footnote~~Note 2 to the consolidated financial statements herein.

Non-GAAP Financial Measures

~~FFO AND AFFO~~

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

AFFO: AFFO is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. ~~Accordingly, AFFO should be considered only as a supplement to net income (loss) attributable to common stockholders as a measure of our performance.~~ We adjust FFO to eliminate the impact of certain items that we believe are not indicative of our core operating performance, including restructuring costs, other general and administrative costs associated with relocation of our headquarters, transaction costs associated with our proposed spin-off, default interest on non-recourse mortgage indebtedness,such as debt extinguishment gains (losses), ~~transaction~~ costs ~~incurred in connection~~associated with ~~the acquisition~~termination of ~~real estate investments subject to existing leases~~interest rate swaps and certain non-cash items. These certain non-cash items include non-cash revenues (comprised of straight-line rents ~~amortization~~net of ~~above~~bad debt expense and ~~below market rent on our leases,~~ amortization of lease ~~incentives, amortization of net premium (discount) on loans~~and loan receivable ~~and amortization of capitalized lease transaction costs)~~intangibles), non-cash interest expense (comprised of amortization of deferred financing costs and ~~amortization of net~~ debt ~~discount/premium)~~discounts/premiums) and non-cash compensation ~~expense (stock-based compensation expense). In addition, other~~expense. Other equity REITs may not calculate FFO and AFFO as we do, and, accordingly, our FFO and AFFO may not be comparable to such other equity ~~REITs'~~REITs’ FFO and AFFO. FFO and AFFO ~~does~~do not represent cash generated from operating activities determined in accordance with GAAP, isare not necessarily indicative of cash available to fund cash needs and should ~~not~~only be considered asa supplement, and not an alternative, ~~to net income determined in accordance with GAAP as a performance measure. A reconciliation of our FFO and AFFO~~ to net income (loss) attributable to common stockholders (computed in accordance with GAAP) ~~is included~~as a performance measure.

Adjusted Debt: Adjusted Debt represents interest bearing debt (reported in accordance with GAAP) adjusted to exclude unamortized debt discount/premium and deferred financing costs and reduced by cash and cash equivalents and cash reserves on deposit with lenders as additional security. The result provides an estimate of the contractual amount of borrowed capital to be repaid, net of cash available to repay it. We believe this calculationconstitutes a beneficial supplemental non-GAAP financial ~~information accompanying this report.~~

disclosure to investors in understanding our financial condition.

~~Adjusted~~

EBITDA ~~and Annualized Adjusted EBITDA~~

~~Adjusted EBITDA represents EBITDA modified to include other adjustments to GAAP~~re: EBITDAre is computed in accordance with standards established by NAREIT. EBITDAre is computed as net income (loss) ~~attributable to common stockholders~~(computed in accordance with GAAP), plus interest expense, income tax expense (if any), depreciation and amortization, impairments of depreciated property and plus/(minus) losses/(gains) on the disposition of depreciated property.

Adjusted EBITDAre: Adjusted EBITDAre represents EBITDAre as adjusted for ~~restructuring charges, real estate acquisition costs, impairment losses, gains/losses from~~revenue producing acquisitions and dispositions for the ~~sale~~quarter as if such acquisitions and dispositions had occurred as of ~~real estate~~the beginning of the quarter and ~~debt transactions and other~~for certain items that we dobelieve are not ~~consider to be~~ indicative of our ~~on-going~~core operating ~~performance.~~performance, such as debt extinguishment gains (losses). We ~~focus our business plans to enable us to sustain increasing shareholder value. Accordingly, we~~ believe that excluding these items, which are not key drivers of our investment decisions and may cause short-term fluctuations in net income, provides a useful supplemental measure to investors and analysts in assessing the net earnings contribution of our real estate portfolio. Because these measures do not represent net income (loss) that is computed in accordance with GAAP, they should ~~not~~only be considered ~~alternatives~~a supplement, and not an alternative, to net income (loss) ~~or as an indicator of financial performance. A reconciliation of net income (loss) attributable to common stockholders~~ (computed in accordance with GAAP) ~~to EBITDA,~~as a performance measure.

Annualized Adjusted EBITDAre: Annualized Adjusted EBITDAre is calculated as Adjusted EBITDAre for the quarter, adjusted for items where annualization would not be appropriate, multiplied by four. Our computation of Adjusted EBITDAre and Annualized Adjusted ~~EBITDA is included in~~EBITDAre may differ from the ~~financial information accompanying this report.~~

methodology used by other equity REITs to calculate these measures and, therefore, may not be comparable to such other REITs.

Adjusted Debt

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

EBITDAre: Adjusted Debt to Annualized Adjusted ~~EBITDA~~EBITDAre is a supplemental non-GAAP financial measure we use to evaluate the level of borrowed capital being used to increase the potential return of our real estate investments, and a proxy for a measure we believe is used by many lenders and ratings agencies to evaluate our ability to repay and service our debt obligations over time. We believe the ratio is a beneficial disclosure to investors as a supplemental means of evaluating our ability to meet obligations senior to those of our equity holders. Our computation of this ratio may differ from the methodology used by other equity REITs, and, therefore, may not be comparable to such other REITs. ~~A reconciliation of interest bearing debt (reported in accordance with GAAP) to Adjusted Debt is included in the financial information accompanying this report.~~

~~Initial Cash Yield~~

We calculate initial cash yield from properties by dividing the annualized first month base rent (excluding any future rent escalations provided for in the lease) by the gross investment in the related properties. Gross investment for an acquired property represents gross acquisition costs including the contracted purchase price and related capitalized transaction costs. Initial cash yield is a measure (expressed as a percentage) of the contractual cash rent expected to be earned on an acquired property in the first year. Because it excludes any future rent increases or additional rent that may be contractually provided for in the lease, as well as any other income or fees that may be earned from lease modifications or asset dispositions, initial cash yield does not represent the annualized investment rate of return of our acquired properties. Additionally, actual contractual cash rent earned from the properties acquired may differ from the initial cash yield based on other factors, including difficulties collecting anticipated rental revenues and unanticipated expenses at these properties that we cannot pass on to tenants, as well as the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2016.

~~Capitalization Rate~~

We calculate the capitalization rate for disposed properties as the annualized cash rent on the date of disposition divided by the gross sales price. For multi-tenant properties, non-reimbursable property costs are deducted from the annualized cash rent prior to computing the capitalization rate. Annualized cash rent for a disposed property represents the annualized monthly contractual cash rent under the related lease at time of disposition.

FFO and AFFO

	Three Months Ended March 31,
(Dollars in thousands)	2020			2019
Net (loss) income attributable to common stockholders	$	(18,435	)	$	40,990
Portfolio depreciation and amortization		52,091			41,207
Portfolio impairments		40,774			3,692
Gain on disposition of assets		(388	)		(8,730	)
FFO attributable to common stockholders	$	74,042		$	77,159
Gain on debt extinguishment		—			(8,783	)
Deal pursuit costs		1,019			71
Non-cash interest expense		3,068			4,737
Accrued interest and fees on defaulted loans		—			285
Straight-line rent, net of related bad debt expense		(1,094	)		(2,907	)
Other amortization and non-cash charges		37			(325	)
Non-cash compensation expense		3,451			3,578
AFFO attributable to common stockholders	$	80,523		$	73,815

Net (loss) income per share of common stock - Diluted	$	(0.18	)	$	0.48
FFO per share of common stock - Diluted ⁽¹⁾	$	0.72		$	0.90
AFFO per share of common stock - Diluted ⁽¹⁾	$	0.78		$	0.86

Weighted average shares of common stock outstanding - Diluted		102,230,147			85,504,897
Weighted average shares of common stock outstanding for non-GAAP measures - Diluted⁽¹⁾		102,607,596			85,504,897

The following is a reconciliation of net income attributable to common stockholders (which we believe is the most comparable GAAP measure) to FFO and AFFO. Also presented is information regarding distributions paid to common stockholders and the weighted average shares of common stock outstanding used for the basic and diluted computations per share (dollars in thousands, except per share amounts):

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016
Net income attributable to common stockholders ^{(1) (2)}
$ 5,322

$ 27,399

$ 41,357

$ 96,458
Add/(less):

Portfolio depreciation and amortization 63,530

65,155

192,465

193,892
Portfolio impairments 37,737

15,384

88,109

41,693
Realized gains on sales of real estate (8,707 )
(17,960 )
(40,197 )
(39,221 )
Total adjustments to net income 92,560
62,579
240,377
196,364

FFO $ 97,882
$ 89,978
$ 281,734
$ 292,822
Add/(less):

(Gain) loss on debt extinguishment (1,792 )
8,349

(1,770 )
(326 )
Restructuring charges —

3,264

—

5,726
Other costs included in general and administrative associated with headquarters relocation —

1,501

—

3,442
Transaction costs 2,660
—
3,145
—
Real estate acquisition costs 196

1,056

773

2,092
Non-cash interest expense 5,810

4,178

16,937

10,144
Accrued interest and fees on defaulted loans 1,344

853

2,917

3,951
Swap termination costs (included in general and administrative) —
—
—
1,724
Straight-line rent, net of related bad debt expense ⁽⁴⁾
(3,217 )
(3,246 )
(13,427 )
(14,097 )
Other amortization and non-cash charges (743 ) (954 ) (2,447 ) (2,058 )
Non-cash compensation expense ⁽¹⁾
2,339

3,399

13,778

7,189
Total adjustments to FFO 6,597
18,400

19,906
17,787

AFFO $ 104,479
$ 108,378
$ 301,640
$ 310,609

Dividends declared to common stockholders $ 82,062

$ 84,606

$ 251,606

$ 246,151
Net income per share of common stock

Basic ⁽³⁾
$ 0.01

$ 0.06

$ 0.09

$ 0.21
Diluted ⁽³⁾
$ 0.01

$ 0.06

$ 0.09
$ 0.21
FFO per share of common stock

Diluted ⁽³⁾
$ 0.21

$ 0.19

$ 0.59

$ 0.64
AFFO per share of common stock

Diluted ⁽³⁾
$ 0.23

$ 0.22

$ 0.64

$ 0.68
Weighted average shares of common stock outstanding:

Basic 456,671,617

479,554,362

472,698,692

457,263,526
Diluted 456,671,617
480,598,610
472,698,692
457,301,623

⁽¹⁾Included in G&A balances for the nine months ended September 30, 2017 is $11.1 million of severance related costs, comprising $4.2 million of cash compensation and $6.9 million of non-cash compensation related to the acceleration of Restricted Stock and Performance Share Awards.

⁽²⁾For the nine months ended September 30, 2016, Net Income Attributable to Common Stockholders includes compensation for lost rent received from the Haggen Holdings, LLC settlement for 6 rejected stores as follows (in millions):

~~Contractual rent from date of rejection through either sale or September 30, 2016 $ 1.3~~

~~Three month of prepaid rent for the 3 stores subsequently sold~~ ~~0.5~~

~~Total included in AFFO~~ ~~$ 1.8~~

⁽³⁾For the three months ended September 30, 2017 and 2016, dividends paid to unvested restricted stockholders of $0.3 million and $0.2 million, respectively, and for the nine months ended September 30, 2017 and 2016, dividends paid to unvested restricted stockholders of $0.7 million and $0.4 million , respectively, are deducted from net income, FFO and AFFO attributable to common stockholders in the computation of per share amounts (see Note 12 to the consolidated financial statements herein).

⁽⁴⁾~~Straight-line bad debt expense totaled $2.4 million and $4.7 million for the three and nine months ended September 30, 2017, respectively.~~

⁽¹⁾

Weighted average shares of common stock for non-GAAP measures includes unvested market-based awards for the three months ended March 31, 2020, which are dilutive for the non-GAAP calculations. For the three months ended March 31, 2020, undistributed earnings (including dividends paid) allocated to unvested restricted stockholders of $0.2 million and $0.3 million are deducted from FFO and AFFO, respectively, attributable to common stockholders in the computation of per share amounts. For the three months ended March 31, 2019, undistributed earnings (including dividends paid) to unvested restricted stockholders of $0.3 million and $0.4 million are deducted from FFO and AFFO, respectively, attributable to common stockholders in the computation of per share amounts.

Adjusted Debt, Adjusted ~~EBITDA~~EBITDAre and Annualized Adjusted ~~EBITDA - Leverage~~EBITDAre

	March 31,
(Dollars in thousands)	2020			2019
Revolving credit facilities	$	500,000		$	206,500
Term loans		—			413,905
Senior Unsecured Notes, net		1,484,473			295,882
Mortgages and notes payable, net		215,186			450,534
Convertible Notes, net		337,921			733,412
Total debt, net		2,537,580			2,100,233
Unamortized debt discount, net		8,047			12,027
Unamortized deferred financing costs		16,693			19,220
Cash and cash equivalents		(216,692	)		(9,376	)
Restricted cash balances held for the benefit of lenders		(11,705	)		(18,516	)
Adjusted Debt	$	2,333,923		$	2,103,588

	Three Months Ended March 31,
(Dollars in thousands)	2020			2019
Net (loss) income	$	(15,847	)	$	43,578
Interest		25,359			26,611
Depreciation and amortization		52,236			41,349
Income tax expense		141			220
Gain on disposition of assets		(388	)		(8,730	)
Portfolio impairments		40,774			3,692
EBITDAre	$	102,275		$	106,720
Adjustments to revenue producing acquisitions and dispositions		1,967			2,644
Deal pursuit costs		1,019			71
Gain on debt extinguishment		—			(8,783	)
Adjusted EBITDAre	$	105,261		$	100,652
Adjustments for bad debt expense related to straight-line rent ⁽¹⁾		4,006			659
Other adjustments for Annualized EBITDAre ⁽²⁾		907			321
Annualized Adjusted EBITDAre	$	440,696		$	406,528
Adjusted Debt / Annualized Adjusted EBITDAre		5.3	x		5.2	x

~~The following provides a calculation of adjusted debt and a reconciliation of EBITDA and annualized adjusted EBITDA (dollars in thousands):~~

⁽¹⁾

Adjustment for the three months ended March 31, 2020 relates to $4.2 million of bad debt expense on straight-line rent receivable balances, where only $0.2 million of the expense relates to straight-line rent that would have been recognized during the three months ended March 31, 2020. As such, annualization of the $4.0 million of bad debt expense related to straight-line rental revenue recognized in previous periods would not be appropriate. Adjustment for the three months ended March 31, 2019 relates to $0.9 million of bad debt expense on straight-line rent receivable balances, where annualization would only be appropriate for $0.2 million.

⁽²⁾

Adjustments for the three months ended March 31, 2020 are comprised of certain other income and expenses where annualization would not be appropriate. Adjustments for the three months ended March 31, 2019 are comprised of compensation adjustments where annualization would not be appropriate.

September 30,
2017 2016
(Unaudited)
Revolving Credit Facility $ 386,000

$ 105,000
Term Loan, net 419,091
368,400
Unsecured Senior Notes, net 295,242
295,215
Mortgages and notes payable, net 2,050,302

2,241,783
Convertible Notes, net 712,510

699,465
3,863,145
3,709,863
Add/(less):

Unamortized debt discount, net 43,327

54,975
Unamortized deferred financing costs 31,013

38,812
Cash and cash equivalents (11,947 )
(13,184 )
Restricted cash balances held for the benefit of lenders (96,344 )
(39,038 )
Total adjustments (33,951 ) 41,565
Adjusted Debt $ 3,829,194
$ 3,751,428

Three Months Ended
September 30,
2017 2016
(Unaudited)
Net income attributable to common stockholders $ 5,322

$ 27,399
Add/(less):

Interest 48,680

47,653
Depreciation and amortization 63,673

65,300
Income tax expense (11 )
12
Total adjustments 112,342
112,965
EBITDA $ 117,664
$ 140,364
Add/(less):

Restructuring charges —
3,264
Other costs in general and administrative associated with headquarters relocation —

1,501
Transaction costs 2,660
—
Real estate acquisition costs 196

1,056
Impairments on real estate assets 37,737

15,384
Swap termination costs (included in general and administrative) —
—
Realized gain on sales of real estate (8,707 )
(17,960 )
Loss on debt extinguishment (1,792 )
8,349
Total adjustments to EBITDA 30,094
11,594
Adjusted EBITDA $ 147,758
$ 151,958
Annualized Adjusted EBITDA ⁽¹⁾
$ 591,032

$ 607,832

Adjusted Debt / Annualized Adjusted EBITDA 6.5 x
6.2 x

⁽¹⁾ Adjusted EBITDA of the current quarter multiplied by four.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to financial market risks, ~~especially~~including interest rate risk. Interest rates and other factors, such as occupancy, rental rates and the financial condition of our tenants, influence our performance more so than does inflation. Changes in interest rates do not necessarily correlate with inflation rates or changes in inflation rates. As described ~~in Item 2,~~above, we generally offer leases that provide for payments of base rent with scheduled increases and, to a lesser extent, contingent rent based on a percentage of the tenant’s gross sales to help mitigate the effect of inflation. Because the properties in our portfolio are generally leased to tenants under triple-net leases, our exposure to rising property operating costs due to inflation is mitigated.

Interest rates are highly sensitive to many factors, including governmental monetary policies and domestic and global economic and political conditions, which are beyond our control. Our operating results depend heavily on the difference between the revenue from our assets and the interest expense incurred on our borrowings. We may incur additional variable rate debt in the future, including amounts that we may borrow under our ~~Revolving~~2019 Credit ~~Facility and Term Loan.~~Facility. In addition, decreases in interest rates may lead to additional competition for the acquisition of real estate due to a reduction in desirable alternative income-producing investments, which may lead to a decrease in the yields on real estate we have targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations will be adversely affected. Significant increases in interest rates may also have an adverse impact on our earnings if we are unable to acquire real estate with rental rates high enough to offset the increase in interest rates on our borrowings.

In the event interest rates rise significantly or there is an economic downturn, defaults may increase and result in credit losses, which may adversely affect our liquidity and operating results. In a decreasing interest rate environment, borrowers are generally more likely to prepay their loans in order to obtain financing at lower interest rates. However, the vast majority of our mortgage notes payable have prepayment clauses that make refinancing during a decreasing interest rate environment uneconomical. Investments in our mortgage loans receivable ~~however,~~also have significant prepayment protection in the form of yield maintenance provisions, which provide us with substantial yield protection in a decreasing interest rate environment with respect to this portion of our investment portfolio.

~~The objective of our interest rate risk management policy is to match fund fixed-rate assets with fixed-rate liabilities.~~

As of ~~September 30, 2017,~~March 31, 2020, our assets were primarily long-term, fixed-rate leases (though most have scheduled rental increases during the terms of the leases). As of ~~September 30, 2017~~, ~~$3.1~~March 31, 2020, $2.1 billion of our indebtedness outstanding was fixed-rate, consisting of our ~~Master Trust Notes, fixed-rate CMBS loans,~~ Senior Unsecured Notes, mortgages and notes payable and Convertible Notes, with a weighted average stated interest rate of ~~4.67%~~3.92%, excluding amortization of deferred financing costs and debt discounts/premiums. As of ~~September 30, 2017~~, ~~$806.0~~March 31, 2020, $500.0 million of our indebtedness was variable-rate, consisting of our ~~Revolving~~2019 Credit Facility, ~~and Term Loan,~~ with a ~~weighted average~~ stated interest rate of 2.54%, excluding amortization of deferred financing costs and debt discounts/premiums. If one-month LIBOR as of September 30, 2017 increased by 100 basis points, or 1.0%, the resulting increase in annual interest expense with respect to the $806.0 million outstanding under the Revolving Credit Facility and Term Loan would impact our future earnings and cash flows by $8.1 million.

2.26%.

The estimated fair values of our debt instruments have been derived based on market quotes for comparable instruments or discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates and credit spreads. The debt instrument balances as of ~~September 30, 2017~~March 31, 2020 are as follows (in thousands):

	Carrying Value		Estimated Fair Value
2019 Credit Facility	$	500,000	$	514,004
Senior Unsecured Notes, net ⁽¹⁾		1,484,473		1,383,947
Mortgages and notes payable, net ⁽¹⁾		215,186		230,834
Convertible Notes, net ⁽¹⁾		337,921		326,267

⁽¹⁾	The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums.

Carrying
Value Estimated
Fair Value

Revolving Credit Facility $ 386,000
$ 385,993
Term Loan, net ⁽¹⁾
419,091
420,024
Senior Unsecured Notes, net ⁽¹⁾
295,242
300,039
Mortgages and notes payable, net ⁽¹⁾
2,050,302
2,068,788
Convertible Notes, net ⁽¹⁾
712,510
758,085

⁽¹⁾ ~~The carrying value of the debt instruments are net of unamortized deferred financing costs and certain debt discounts/premiums.~~

Item 4. Controls and Procedures

SPIRIT REALTY CAPITAL, INC.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of Spirit Realty Capital, Inc.'s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness as of ~~September 30, 2017~~March 31, 2020 of the design and operation of Spirit Realty Capital, Inc.'s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There were no changes to Spirit Realty Capital, Inc.'s internal control over financial reporting (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that occurred during the quarter ended ~~September 30, 2017~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, Spirit Realty Capital, Inc.'s internal control over financial reporting.

SPIRIT REALTY, L.P.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of Spirit Realty, L.P.'s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness as of ~~September 30, 2017~~March 31, 2020 of the design and operation of Spirit Realty, L.P.'s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There were no changes to Spirit Realty, L.P.'s internal control over financial reporting (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that occurred during the quarter ended ~~September 30, 2017~~March 31, 2020 that have materially affected, or are reasonably likely to materially affect, Spirit Realty, L.P.'s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

From time-to-time, we may be subject to certain claims and lawsuits in the ordinary course of business, the outcome of which cannot be determined at this time. We are not currently a party as plaintiff or defendant to any legal proceedings that we believe to be material or that individually or in the aggregate would be expected to have a material effect on our business, financial condition or results of operations if determined adversely to us.

Item 1A. Risk Factors.

~~Please review~~

There have been no material changes to the risk factors as disclosed in Part I, Item 1A. Risk Factors in our most recent Annual Report on Form 10-K, other than as set forth below, which supplements the above referenced risk factors disclosed in our most recent Annual Report on Form 10-K.

Actual or perceived threats associated with epidemics, pandemics or public health crises could have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity and ability to access the capital markets and satisfy debt service obligations and make distributions to our stockholders.

Epidemics, pandemics or other public health crises, including the recent spread of novel strain of coronavirus known as COVID-19, that impact economic and market conditions, particularly in markets where our properties are located, and preventative measures taken to alleviate any public health crises, including “shelter-in-place” or “stay-at-home” orders issued by local, state or federal authorities, may have a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, liquidity and ability to access capital markets and satisfy our debt service obligations and make distributions to our stockholders, and may affect our ability as a net-lease real estate investment trust to acquire properties or lease properties to our tenants, who may be unable, as a result of any economic downturn occasioned by public health crises, to make rental payments when due.

As certain of our tenants, especially those in industries considered “non-essential” under varying state “shelter-in-place” and “stay-at-home” orders and other restrictions on types of business that may continue to operate, experience challenges or even closures, we anticipate there to be an impact on their financial condition, results of operations, liquidity, ability to pay rent and creditworthiness. That impact may directly result in a reduction in our rental income and/or an increase in our property costs and impairments, as well as indirectly result in an increase in our general and administrative expenses, as we experience higher collectability issues and incur costs to negotiate rent deferrals, lease restructures and/or lease terminations, as we deem appropriate on a case-by-case basis. As of the date of this report, our discussions with tenants requesting rent deferrals (and other forms of relief) have been substantially focused on industries that are directly disrupted by the COVID-19 pandemic and restrictions intended to prevent its spread, particularly health and fitness, movie theaters, quick service and casual dining restaurants, entertainment, car washes, dealerships, home décor, home furnishings, department stores and education. These and other industries may be further impacted in the future depending on various factors, including the duration of the COVID-19 pandemic and restrictions intended to prevent its spread, and even after certain of such restrictions are lifted or reduced, the willingness of customers to visit our tenants’ businesses may be reduced due to lingering concerns regarding the continued risk of COVID-19 transmission and heightened sensitivity to risks associated with the transmission of other diseases. We are not able to predict the duration of such customer behavior.

As of May 1, 2020, we have collected approximately 70% of April 2020 Contractual Rent of $39.3 million, including from nine of our top 10 tenants and 17 of our top 20 tenants. In addition, as of that date, we have granted rent deferral requests for tenants representing approximately 27% of our April 2020 Contractual Rent. Such rent deferrals generally defer rent payments from 30 to 90 days and require the tenant to repay the deferred rent within 12 months. Of the tenants who we have granted rent deferrals, 25% are public companies, and the weighted average remaining lease term of leases for such tenants is 12.1 years. Although we are and will continue to be actively engaged in rent collection efforts related to uncollected rent, as well as working with certain tenants who have requested rent deferrals, we can provide no assurance that such efforts or our efforts in future periods will be successful, particularly in the event that the COVID-19 pandemic and restrictions intended to prevent its spread continue for a prolonged period.

The ongoing COVID-19 pandemic and restrictions intended to prevent its spread have already had a significant adverse impact in the first quarter of 2020 on economic and market conditions, including in the United States where our properties are located. Further, the ongoing COVID-19 pandemic and related restrictions could trigger a period of sustained global and U.S. economic downturn or recession. Moreover, the ongoing COVID-19 pandemic and restrictions intended to prevent its spread could have significant adverse impacts on our business, financial condition, results of operations, cash flows,

liquidity and ability to access the capital markets and satisfy our debt service obligations and make distributions to our stockholders in a variety of ways that are difficult to predict. Such adverse impacts could depend on, among other factors:

•

the financial condition and viability of our tenants – many of which are in the retail industry – and their ability or willingness to pay rent in full on a timely basis;

•

state, local, federal and industry-initiated efforts that may adversely affect landlords, including us, and their ability to collect rent and/or enforce remedies for the failure to pay rent;

•

our need to restructure leases with our tenants and our ability to do so on favorable terms or at all;

•

our ability to renew leases or re-lease available space in our properties on favorable terms or at all in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant, including as a result of a deterioration in the economic and market conditions in markets where our properties are located or due to restrictions intended to prevent the spread of COVID-19 that frustrate our leasing activities, particularly in light of the adverse impact to the financial health of many of our tenants or potential tenants that has occurred and continues to occur as a result of the COVID-19 pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate in future;

•

a severe and prolonged disruption and instability in the global financial markets, including the debt and equity capital markets, all of which have already experienced and may continue to experience significant volatility, or deteriorations in credit and financing conditions (or a refusal or failure of one or more lenders under the 2019 Revolving Credit and Term Loan Agreement or the 2020 Term Loan Agreement to fund their respective financing commitment to us), as well as the recent significant decline in our share price from prices prior to the spread of the COVID-19 pandemic, may affect our or our tenants’ ability to access capital necessary to fund our respective business operations or retire, replace or renew maturing liabilities on a timely basis, on attractive terms or at all and may adversely affect the valuation of financial assets and liabilities, any of which could affect our and/or our tenants’ ability to meet liquidity and capital expenditure requirements;

•

the broader impact of the severe economic contraction due to the COVID-19 pandemic and restrictions intended to prevent its spread, the resulting increase in unemployment that has occurred and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed;

•

complete or partial shutdowns of one or more of our tenants’ facilities or distribution centers, temporary or long-term disruptions in our tenants’ supply chains from local, national and international suppliers or delays in the delivery of products, services or other materials necessary for our tenants’ operations, which could force our tenants’ to reduce, delay or eliminate offerings of their products and services, reduce or eliminate their revenues and liquidity and/or result in their bankruptcy or insolvency;

•

the further utilization of e-commerce in certain industries as a result of the temporary closure of many retail properties, which may lead to the closure of underperforming properties by retailers;

•

our and our tenants’ ability to manage our respective businesses to the extent our and their management or personnel (including on-site employees) are impacted in significant numbers by the COVID-19 pandemic and are otherwise not willing, available or allowed to conduct work; and

•

our and our tenants’ ability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during the COVID-19 pandemic.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the COVID-19 pandemic or restrictions intended to prevent its spread, and we are not able to predict whether other epidemics, pandemics or other public health crises will occur in the future that may have similar impacts. Nevertheless, the ongoing COVID-19 pandemic and restrictions intended to prevent its spread and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties with respect to our business, financial condition, results of operations, cash flows, liquidity and ability to access the capital markets and satisfy our debt service obligations and make distributions to our stockholders and could also have a material adverse effect on the market value of our securities. Moreover, to the extent any of these risks and uncertainties adversely impact us in the ways described above or otherwise, they may also have the effect of heightening many of the other risks set forth in this “Risk Factors” section and in the section entitled ~~“Risk~~“Part I, Item 1A. Risk Factors” ~~beginning on page 13 of~~in our Annual Report on Form 10-K for the year ended December 31, 2016 and filed with the SEC on February 24, 2017, as well as the supplemental risk factors below. There were no other material changes to the risk factors as described in our Annual Report on Form 10-K.

~~A substantial number of our properties are leased to one tenant, which may result in increased risk due to tenant and industry concentration.~~

Currently, we lease 101 properties to Shopko, primarily pursuant to three master leases and two single-site leases. The Shopko leases are guaranteed by Specialty Retail Shops Holding Corp., the parent company of Shopko. Revenues generated from Shopko represented 7.8% of our Contractual Rent for the month ended September 30, 2017. Because a significant portion of our revenues are derived from rental revenues received from Shopko, any default, breach or delay in the payment of rent by Shopko may materially and adversely affect us.

As a result of the significant number of properties leased to Shopko, our results of operations and financial condition are significantly impacted by Shopko's performance under its leases. Shopko operates as a multi-department general merchandise retailer and retail health services provider primarily in mid-size and large communities in the Midwest, Pacific Northwest, North Central and Western Mountain states. Shopko is subject to the following risks, as well as other risks that we are not currently aware of, that could adversely affect its performance and thus its ability to pay rent to us:

The retail industry in which Shopko operates is highly competitive, which could impair its operations and liquidity, limit its growth opportunities and reduce profitability. Shopko competes with other discount retail merchants as well as mass merchants, catalog merchants, internet retailers and other general merchandise, apparel and household merchandise retailers. It faces strong competition from large national discount retailers, such as Walmart, Kmart and Target, and mid-tier merchants such as Kohl’s and J.C. Penney.

Shopko stores are geographically concentrated in the Midwest, Pacific Northwest, North Central and Western Mountain states. As a result, adverse economic conditions in these regions may materially and adversely affect its results of operations and retail sales.

~~The seasonality in retail operations may cause fluctuations in Shopko’s quarterly performance and results of operations and could adversely affect its cash flows.~~

Shopko stores are dependent on the efficient functioning of its distribution networks. Problems that cause delays or interruptions in the distribution networks could materially and adversely affect its results of operations.

~~Shopko stores depend on attracting and retaining quality employees. Many employees are entry-level or part-time with historically high rates of turnover.~~

Based on our monitoring of Shopko's financial information and recent liquidity events and other challenges, including bankruptcies, impacting the retail industry generally relative to recent years, we continue to be concerned about Shopko's ongoing ability to meet its obligations to us under its leases. Although Shopko is current on all of its obligations under its lease arrangements with us as of September 30, 2017, we can give you no assurance that this will continue to be the case, particularly if Shopko (not just the stores subject to leases with us) experiences a further decline in its business, financial condition and results of operations or loses access to liquidity. If such events were to occur, Shopko may request discounts or deferrals on the rents it pays to us, seek to terminate its master leases with us, close certain of its stores, or file for bankruptcy, all of which could significantly decrease the amount of revenue we receive from it.

While we seek to reduce the tenant concentration of Shopko, we may have difficulty in selling or leasing to other tenants the properties currently leased to Shopko, due to, among other things, market demand or tax constraints.

~~Furthermore, we can provide no assurance that we will deploy the proceeds from the disposition of any Shopko properties in a manner that would produce comparable or better yields.~~

~~Decrease in demand for retail and restaurant space may materially and adversely affect us.~~

As of September 30, 2017, leases representing approximately 33% and 17% of our Contractual Rent were with tenants in the retail and restaurant industries, respectively, and we may acquire additional retail and restaurant properties in the future. Accordingly, decreases in the demand for retail and/or restaurant spaces adversely impact us. The market for retail and restaurant space has previously been, and could continue to be, adversely affected by weakness in the national, regional and local economies, the adverse financial condition of some large retail and restaurant companies, the ongoing consolidation in the retail and restaurant industries, the excess amount of retail and restaurant space in a number of markets and, in the case of the retail industry, increasing consumer purchases through catalogs or over the Internet. In recent years a number of companies in the retail industry, including some of our tenants, have declared bankruptcy, have gone out of business or have significantly reduced the number of their retail stores. In particular, we have experienced, and expect to continue to experience, challenges with some of our general merchandise retailers through increased credit losses.

To the extent that the adverse conditions listed above continue, they are likely to negatively affect market rents for retail and restaurant space, thereby reducing rents payable to us, and they may lead to increased vacancy rates at our properties and diminish our ability to attract and retain retail and restaurant tenants.

The proposed spin-off of almost all of our properties leased to Shopko, assets that collateralize Master Trust 2014 and potentially other assets into an independent, publicly-traded REIT may not be completed on the currently contemplated timeline or terms, or at all, and may not achieve the intended benefits.

On August 3, 2017, we announced a plan to spin off our interests in almost all of our properties leased to Shopko, assets that collateralize Master Trust 2014 and potentially other assets into an independent, publicly traded REIT. If we complete the spin-off, we expect we would make a distribution of stock issued by SpinCo to our stockholders. We expect SpinCo to elect to be treated and qualify for taxation as a REIT for U.S. federal income tax purposes. We currently expect we would complete the spin-off in the first half of 2018, although there can be no assurance as to whether or when the spin-off will occur, or the final structure of the spin-off. The completion of the spin-off will be subject to various conditions, including declaration by the SEC that SpinCo's registration statement on Form 10 is effective, customary third-party consents and final approval and declaration of the distribution to our stockholders of SpinCo stock by our Board of Directors. Such conditions and other unforeseen developments, including in the debt or equity markets or general market conditions, could delay or prevent the spin-off or cause the spin-off to occur on terms or conditions that are less favorable and/or different than anticipated. We also expect to incur significant expenses in connection with the spin-off.

We may not be able to achieve the full strategic and financial benefits that we anticipate to result from the spin-off, or such benefits may be delayed or not occur at all. Additionally, we may experience negative reactions from financial markets if we do not complete the spin-off in a reasonable time period. Following the spin-off, the combined value of the common stock of the two publicly-traded companies may not be equal to or greater than what the value of our common stock would have been had the spin-off not occurred.

The assets that we would spin-off represent a significant portion of our gross real estate investment and annualized contractual rents. Under our current planning, we anticipate SpinCo would own over 915 properties, with a gross real estate investment of $2.7 billion to $2.9 billion. Additionally, we expect SpinCo would have approximately $220.0 million to $235 million in annualized contractual rent. As of June 30, 2017, the assets included in Master Trust 2014 secured $1,347.5 million of indebtedness and bore interest at a weighted average interest rate of 5.1% per annum. We expect the entire amount of this indebtedness would be transferred to SpinCo, and we are currently exploring issuing additional indebtedness in Master Trust 2014 prior to the spin-off, that would ultimately increase SpinCo’s leverage, with the net cash proceeds from any such incremental debt issuance by Master Trust 2014 to remain with our company. We are also currently exploring contributing additional assets to SpinCo that would be subject to mortgage debt. The identity of these assets and the amount of the mortgages that would encumber them has not yet been finally determined. While the number of properties, gross real estate investment and annualized contractual rents set forth above represent our current estimates, the number of properties that would be included in SpinCo and their related gross real estate investment and annualized contractual rent could change significantly. Moreover, gross real estate investment does not represent fair market value, and we expect that the fair market value of the assets that would be included in SpinCo could exceed our historical gross real estate investment in them.

2019.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

~~None.~~

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

~~None.~~

The discussion under the heading “Federal Income Tax Considerations” in Exhibit 99.1 hereto supersedes and replaces, in its entirety, (i) the discussion the heading “Federal Income Tax Considerations” in the prospectus dated September 25, 2017, which is a part of the Company’s and the Operating Partnership’s Registration Statement on Form S-3 (File Nos. 333-220618 and 333-220618-01) filed with the Securities and Exchange Commission (the “SEC”) on September 25, 2017 and (ii) the discussion under the heading “Item 8.01 Other Events, Federal Income Tax Considerations” in the Company’s and the Operating Partnership’s Current Reports on Form 8-K filed with the SEC on February 22, 2019 and November 13, 2018.

Item 6. Exhibits.



Exhibit No.	Description

~~2.1~~ 3.1	Agreement and Plan of Merger, dated as of January 22, 2013, as amended by the First Amendment to Agreement and Plan of Merger, dated as of May 8, 2013, by and among Spirit Realty Capital, Inc. (f/k/a Cole Credit Property Trust II, Inc.), a Maryland corporation, Spirit Realty Capital, Inc., a Maryland corporation, Cole Operating Partnership II, LP, a Delaware limited partnership and Spirit Realty, L.P., a Delaware limited partnership. Previously filed by Spirit Realty Capital, Inc. as an exhibit to the Company’s Form 8-K filed with the Securities and Exchange Commission on January 22, 2013 and Exhibit 2.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 9, 2013, respectively.

~~2.2~~	Articles of Merger by and between Spirit Realty Capital, Inc. (f/k/a Cole Credit Property Trust II, Inc.), a Maryland corporation, and Spirit Realty Capital, Inc., a Maryland corporation and the Amended and Restated Charter of Spirit Realty Capital, Inc. (f/k/a Cole Credit Property Trust II, Inc.) filed as Exhibit (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-51963), filed on July 17, 2013).

~~3.1~~	Articles of Restatement of Spirit Realty Capital, Inc. filed as Exhibit 3.1 to the Company's Registration Statement on Form S-3 on November 8, 2013 and incorporated herein by reference.

3.2	Articles of Amendment of Spirit Realty Capital, Inc. filed as Exhibit 3.1 to the Company's Form 8-K on May 13, 2014 and incorporated herein by reference.

3.3	Articles Supplementary of Spirit Realty Capital, Inc. filed as Exhibit 3.1 to the Company's Current Report on Form 8-K on March 3, 2017 and incorporated herein by reference.

3.4	Fifth Amended and Restated Bylaws of Spirit Realty Capital, Inc. filed as Exhibit 3.1 to the Company’s Form 8-K on August 15, 2017 and incorporated herein by reference.

~~3.4~~ 3.5	Second Amended and Restated Agreement of Limited Partnership of Spirit Realty, L.P. filed as Exhibit 3.1 to the Operating Partnership's Form 8-K on October 3, 2017 and incorporated herein by reference.

~~3.5~~ 3.6	Articles Supplementary designating Spirit Realty Capital, Inc.'s 6.000% Series A Cumulative Redeemable Preferred Stock filed as Exhibit 3.4 to the Company's Registration Statement on Form 8-A on October 2, 2017 and incorporated herein by reference.

~~4.1~~ 3.7	Certificate of Limited Partnership of Spirit Realty, L.P. dated September 25, 2012, filed as Exhibit 4.5 to the Company's Form S-4 on March 20, 2017 and incorporated herein by reference.

3.8	Articles of ~~Certificate for Common Stock~~Amendment of Spirit Realty Capital, Inc. filed as Exhibit ~~4.1 to the Registration Statement on Form S-4 on March 29, 2013 and incorporated herein by reference.~~

~~4.2~~	Specimen Certificate for Spirit Realty Capital Inc.'s 6.000% Series A Cumulative Redeemable Preferred Stock filed as Exhibit 3.6 to the Company's Registration Statement on Form 8-A on October 2, 2017 and incorporated herein by reference.

~~4.3~~	~~Second Amended and Restated Master Indenture among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 20, 2014 filed as Exhibit 4.1~~3.1 to the Company's Form 8-K on ~~May 20, 2014~~April 29, 2019 and incorporated herein by reference.

~~4.4~~ 10.1	~~Amendment No. 1 to the~~ Second Amended and Restated Master Indenture among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated November 26, 2014 filed as Exhibit 4.1 to the Company's Form 8-K on December 1, 2014 and incorporated herein by reference.

~~4.5~~	Series 2014-1 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 21, 2014 filed as Exhibit 4.2 to the Company's Form 8-K on May 2, 2014 and incorporated herein by reference.

~~4.6~~	Series 2014-2 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 21, 2014 filed as Exhibit 4.3 to the Company's Form 8-K on May 20, 2014 and incorporated herein by reference.

~~4.7~~	Series 2014-3 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Citibank, N.A., dated May 21, 2014 filed as Exhibit 4.3 to the Company's Form 8-K on May 20, 2014 and incorporated herein by reference.

~~4.8~~	Series 2014-4 Indenture Supplement among Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC, Spirit Master Funding VI, LLC, Spirit Master Funding VIII, LLC and Citibank, N.A., dated November 26, 2014 filed as Exhibit 4.2 to the Company's Form 8-K on December 1, 2014 and incorporated herein by reference.



~~Exhibit No.~~	~~Description~~
~~4.9~~	Master Indenture, between Citibank, N.A. and Spirit Master Funding VII, LLC, dated as of December 23, 2013. Previously filed by Spirit Realty Capital, Inc. as Exhibit 10.21 to the Company's Annual Report on Form 10-K on March 4, 2014 and incorporated herein by reference.

~~4.10~~	Series 2013-1 Supplement, between Citibank, N.A. and Spirit Master Funding VII, LLC, dated as of December 23, 2013, filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 4, 2014 and incorporated herein by reference.

~~4.11~~	Series 2013-2 Supplement, between Citibank, N.A. and Spirit Master Funding VII, LLC, dated as of December 23, 2013, filed as Exhibit 10.23 to the Company's Annual Report on Form 10-K on March 4, 2014 and incorporated herein by reference.

~~4.12~~	~~Indenture, dated May 20, 2014, between the Company and Wilmington Trust, National Association, filed as Exhibit 4.1 to the Company's Form 8-K on May 20, 2014 and incorporated herein by reference.~~

~~4.13~~	First Supplemental Indenture, dated May 20, 2014, by and between Spirit Realty Capital, Inc. and Wilmington Trust, National Association (including the form of 2.875% Convertible Senior Note due 2019) filed as Exhibit 4.2 to the Company's Form 8-K on May 20, 2014 and incorporated herein by reference.

~~4.14~~	Second Supplemental Indenture, dated May 20, 2014, by and between Spirit Realty Capital, Inc. and Wilmington Trust, National Association (including the form of 3.75% Convertible Senior Note due 2021) filed as Exhibit 4.3 to the Company's Form 8-K on May 20, 2014 and incorporated herein by reference.

~~4.15~~	Indenture, dated August 18, 2016, between Spirit Realty, L.P. and U.S. Bank National Association, filed as Exhibit 4.1 to the Company's Form 8-K on August 19, 2016 and incorporated herein by reference.

~~4.16~~	First Supplemental Indenture, dated August 18, 2016, among Spirit Realty, L.P., Spirit Realty Capital, Inc., and U.S. Bank National Association (including the form of 4.450% Senior Notes due 2026), filed as Exhibit 4.2 to the Company's Form 8-K on August 19, 2016 and incorporated herein by reference.

~~4.17~~	Registration Rights Agreement, dated August 18, 2016, by and among Spirit Realty, L.P., Spirit Realty Capital, Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. LLC, filed as Exhibit 4.3 to the Company's Form 8-K on August 19, 2016 and incorporated herein by reference.

~~10.1~~	Amended and Restated Spirit Realty Capital, Inc. and Spirit Realty, L.P. 2012 Incentive Award Plan filed as Appendix A within the Company’s Definitive Proxy Statement on Schedule 14A filed with the Commission on April 11, 2016 and incorporated herein by reference.

~~10.2~~	~~Form of 2012 Incentive Award Plan Restricted Stock Award Grant Notice and Agreement filed as Exhibit 10.8 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.~~

~~10.3~~	~~Form of 2012 Incentive Award Plan Stock Payment Award Grant Notice and Agreement filed as Exhibit 10.9 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.~~

~~10.4~~	Form of Performance Share Award Agreement. Previously filed by Spirit Realty Capital, Inc. as Exhibit 99.1 to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 6, 2013 and incorporated herein by reference.

~~10.5~~	Credit Agreement, by and among Deutsche Bank Securities Inc., Deutsche Bank AG New York Branch, Spirit Realty, L.P. and various lenders, dated as of July 17, 2013 filed as Exhibit 10.01 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.

~~10.6~~	Guaranty, by and among Spirit Realty Capital, Inc., Spirit General OP Holdings, LLC, Deutsche Bank Securities Inc. and various lenders, dated as of July 17, 2013 filed as Exhibit 10.2 to the Company’s Form 8-K filed on July 17, 2013 and incorporated herein by reference.

~~10.7~~	Security Agreement, by and among Spirit Realty Capital, Inc., Spirit General OP Holdings, LLC, Spirit Realty, L.P., Spirit Master Funding IV, LLC, Spirit Master Funding V, LLC, Deutsche Bank Securities Inc. and various lenders, dated as of July 17, 2013 filed as Exhibit 10.3 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.



~~Exhibit No.~~	~~Description~~
~~10.8~~	Omnibus Collateral Assignment of Material Agreements, Permits and Licenses, by and among Spirit Realty Capital, Inc., Spirit General OP Holdings, LLC, Spirit Realty, L.P., Spirit Master Funding IV, LLC, Spirit Master Funding V, LLC, Deutsche Bank Securities Inc. and various lenders, dated as of July 17, 2013. Previously filed by Spirit Realty Capital, Inc. as Exhibit 10.4 to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 17, 2013 and incorporated herein by reference.

~~10.9~~	Loan Agreement, between German American Capital Corporation and Spirit SPE Loan Portfolio 2013-2, LLC, dated as of July 17, 2013, filed as Exhibit 10.5 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.

~~10.10~~	Guaranty of Recourse Obligations of Borrower, by Spirit Realty, L.P. in favor of German American Capital Corporation, dated as of July 17, 2013, filed as Exhibit 10.6 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.

~~10.11~~	Loan Agreement, between Barclays Bank PLC and Spirit SPE Loan Portfolio 2013-3, LLC, dated as of July 17, 2013 filed as Exhibit 10.7 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.

~~10.12~~	Guaranty of Recourse Obligations of Borrower by Spirit Realty, L.P. in favor of Barclays Bank PLC, dated as of July 17, 2013, filed as Exhibit 10.8 to the Company’s Form 8-K on July 17, 2013 and incorporated herein by reference.

~~10.13~~	Second Amended and Restated Property Management and Servicing Agreement dated May 20, 2014, by and among Spirit Realty, L.P., Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Midland Loan Services, a division of PNC Bank, National Association filed as Exhibit 1.1 of the Company's Form 8-K on May 20, 2014 and incorporated herein by reference.

~~10.14~~	Amendment No. 1 to the Second Amended and Restated Property Management and Servicing Agreement dated November 26, 2014, by and among Spirit Realty, L.P., Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit Master Funding III, LLC and Midland Loan Services, a division of PNC Bank, National Association filed as Exhibit 1.2 of the Company's Form 8-K on December 1, 2014 and incorporated herein by reference.

~~10.15~~	Property Management and Servicing Agreement, between Midland Loan Services, Spirit Master Funding VII, LLC and Spirit Realty, L.P., dated as of December 23, 2013, filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K filed on March 4, 2014 and incorporated herein by reference.

~~10.16~~	Defeasance, Assignment, Assumption and Release Agreement, dated June 5, 2014, by and among Spirit SPE Portfolio 2006-1, LLC and Spirit SPE Portfolio 2006-2, LLC, U.S. Bank, National Association as Trustee for the Lender, Midland Loan Servicer, a division of PNC Bank, National Association as servicer and U.S. Bank, National Association as Securities Intermediary and Custodian filed as Exhibit 1.1 of the Company's Form 8-K on June 9, 2014 and incorporated herein by reference.

~~10.17~~	First Amended and Restated Agreement of Limited Partnership of Spirit Realty, L.P. dated as of September 12, 2014, filed as Exhibit 10.16 to the Company's Form 10-Q on November 5, 2014 and incorporated herein by reference.

~~10.18~~	Amended and Restated Master Lease between Spirit SPE Portfolio 2006-1, LLC and Spirit SPE Portfolio 2006-2, LLC, and Shopko Stores Operating CO., LLC, dated December 15, 2014 filed as Exhibit 1.2 of the Company's Form 8-K on December 16, 2014 and incorporated herein by reference.

~~10.19~~	~~Form of Indemnification Agreement of Spirit Realty Capital, Inc. filed as Exhibit 10.1 of the Company's Form 8-K on July 17, 2013 and incorporated herein by reference.~~

~~10.21~~	Amended and Restated Employment Agreement among Spirit Realty Capital, Inc. and Michael A. Bender, dated as of July 17, 2013 filed as Exhibit 10.3 of the Company's Form 8-K on July 17, 2013 and incorporated herein by reference.

~~10.23~~	Transition and Separation Agreement among Spirit Realty Capital, Inc. and Michael A. Bender dated as of August 27, 2015 and filed as Exhibit 10.4 of the Company's form 8-K on August 28, 2015 and incorporated herein by reference.

~~10.25~~	~~Director Compensation Program of Spirit Realty Capital, Inc. as of January 1, 2015 filed as Exhibit 10.25 of the Company's Form 10-Q on August 5, 2016 and incorporated herein by reference.~~



~~Exhibit No.~~	~~Description~~
~~10.26~~	Employment Agreement among Spirit Realty Capital, Inc. and Phillip D. Joseph, Jr., dated as of March 25, 2015 filed as Exhibit 10.1 of the Company's Form 8-K on March 27, 2015 and incorporated herein by reference.

~~10.27~~	Employment Letter Agreement between Spirit Realty Capital, Inc. and Philip D. Joseph, Jr. dated as of October 14, 2015 filed as Exhibit 10.27 of the Company's Annual Report on Form 10-K on February 26, 2016 and incorporated herein by reference.

~~10.28~~	First Amended and Restated Employment Agreement among Spirit Realty Capital, Inc. and Phillip D. Joseph, Jr, dated as of February 23, 2016 filed as Exhibit 10.28 of the Company's Annual Report on Form 10-K on February 26, 2016 and incorporated herein by reference.

~~10.29~~	Credit Agreement among Spirit Realty L.P., Wells Fargo Bank, N.A., as the administrative agent, and the various financial institutions as are or may become parties thereto, dated as of March 31, 2015, filed as Exhibit 10.1 of the Company's Form 8-K on April 2, 2015 and incorporated herein by reference.

~~10.30~~	Third Amended and Restated Employment Agreement among Spirit Realty Capital, Inc. and Gregg A. Seibert, dated as of August 27, 2015 filed as Exhibit 10.2 of the Company's Form 8-K on August 28, 2015 and incorporated herein by reference.

~~10.31~~	Second Amended and Restated Employment Agreement among Spirit Realty Capital, Inc. and Mark Manheimer, dated as of August 27, 2015 filed as Exhibit 10.3 of the Company's Form 8-K on August 28, 2015 and incorporated herein by reference.

~~10.32~~	Term Loan Agreement among Spirit Realty L.P., various financial institutions, as lenders, and Bank of America, N.A., as the administrative agent, dated as of November 3, 2015, filed as Exhibit 10.1 of the Company's Form 8-K on November 6, 2015 and incorporated herein by reference.

~~10.33~~	First Amendment to the Credit Agreement among Spirit Realty L.P., various financial institutions, as lenders, and Wells Fargo Bank, N.A., as the administrative agent, dated as of November 3, 2015, filed as Exhibit 10.34 of the Company's Annual Report Form 10-K on February 26, 2016 and incorporated herein by reference.

~~10.34~~	Credit Agreement Guaranty dated as of March 31, 2015 in favor of Wells Fargo Bank National Association, the Administrative Agent for the lenders, and among Spirit Realty, L.P., filed as Exhibit 10.35 of the Company's Annual Report on Form 10-K on February 26, 2016 and incorporated herein by reference.

~~10.35~~	The 2016 executive cash bonus program, was approved by the Compensation Committee of the Board of Directors of Spirit Realty Capital, Inc. on February 18, 2016 and filed as Exhibit 10.36 of the Company's Annual Report on Form 10-K on February 26, 2016 and incorporated herein by reference.

~~10.36~~	Employment Agreement among Spirit Realty Capital, Inc. and Boyd Messmann, dated as of June 3, 2016, filed as Exhibit 10.1 of the Company's Form 8-K on June 6, 2016 and incorporated herein by reference.

~~10.37~~	Employment Agreement among Spirit Realty Capital, Inc. and Jackson Hsieh, dated as of September 7, 2016 filed as Exhibit 10.1 of the Company's Form 8-K on July 27, 2016 and incorporated herein by reference.

~~10.38~~	Second Amendment among Spirit Realty L.P., various financial institutions, as lenders, and Wells Fargo Bank, National Association, as the administrative agent, dated as of April 28, 2017 and filed as Exhibit 10.40 on the Company's Quarterly Report on Form 10-Q on April 3, 2017 and incorporated herein by reference.

~~10.39~~	~~First~~ Amended and Restated Employment Agreement among Spirit Realty Capital, Inc. and Jackson Hsieh, dated ~~as of July 25, 2017,~~February 27, 2020, filed as Exhibit 10.1 ofto the ~~Company's~~Company’s Form 8-K on ~~July 25, 2017~~March 2, 2020 and incorporated herein by reference.

31.1* 10.2	Amendment to Employment Agreement, dated February 27, 2020, by and between Spirit Realty Capital, Inc. and Michael Hughes, filed as Exhibit 10.2 to the Company’s Form 8-K on March 2, 2020 and incorporated herein by reference.

10.3	Amendment to Amended and Restated Employment Agreement, dated February 27, 2020, by and between Spirit Realty Capital, Inc. and Jay Young, filed as Exhibit 10.3 to the Company’s Form 8-K on March 2, 2020 and incorporated herein by reference.

10.4	Amendment to Employment Agreement, dated February 27, 2020, by and between Spirit Realty Capital, Inc. and Kenneth Heimlich, filed as Exhibit 10.4 to the Company’s Form 8-K on March 2, 2020 and incorporated herein by reference.

31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty Capital, Inc.


31.2*
~~Exhibit No.~~	~~Description~~
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty Capital, Inc.

31.3*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty, L.P.

31.4*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Spirit Realty, L.P.

32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Spirit Realty Capital, Inc.

32.2*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Spirit Realty, L.P.

~~101.INS~~ 99.1*	Federal Income Tax Considerations

101.INS*	Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.


~~101.SCH~~ Exhibit No.	Description
101.SCH*	Inline XBRL Taxonomy Extension Schema

~~101.CAL~~ 101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase

~~101.DEF~~ 101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase

~~101.LAB~~ 101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase

~~101.PRE~~ 101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase

104.1*	Cover Page Interactive Data File - The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

*	Filed herewith.


*	~~Filed herewith.~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.



SPIRIT REALTY CAPITAL, INC. ~~(Registrant)~~
			(Registrant)
~~By:~~
By:		/s/ Prakash J. Parag
Name:		Prakash J. Parag
Title:	~~Chief Accounting Officer and~~	Senior Vice President and Chief Accounting Officer
		(Principal Accounting Officer)



SPIRIT REALTY, L.P. ~~(Registrant)~~
			(Registrant)
~~By:~~
By:		Spirit Realty Capital, Inc. in its capacity as sole member of Spirit General OP Holdings, LLC, as general partner and behalf of Spirit Realty, L.P.

		/s/ Prakash J. Parag
		Prakash J. Parag
	~~Chief Accounting Officer and~~	Senior Vice President and Chief Accounting Officer
		(Principal Accounting Officer)

Date: ~~November 2, 2017~~

May 5, 2020



Spirit Realty Capital, Inc.	Maryland	20-1676382
Spirit Realty, L.P.	Delaware	20-1127940
	(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

	2727 North Harwood Street, Suite 300, Dallas, Texas 75201	(972) 476-1900
	(Address of principal executive offices; zip code)	(Registrant’s telephone number, including area code)


☒
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Spirit Realty Capital, Inc.		001-36004
Spirit Realty, L.P.	333-216815-01



	September 30, 2017			December 31, 2016
Assets
Investments:
Real estate investments:
Land and improvements	$	2,600,873		$	2,704,010
Buildings and improvements	4,702,828			4,775,221
Total real estate investments	7,303,701			7,479,231
Less: accumulated depreciation	(1,018,544		)	(940,005		)
	6,285,157			6,539,226
Loans receivable, net	76,821			66,578
Intangible lease assets, net	429,857			470,276
Real estate assets under direct financing leases, net	24,883			36,005
Real estate assets held for sale, net	133,382			160,570
Net investments	6,950,100			7,272,655
Cash and cash equivalents	11,947			10,059
Deferred costs and other assets, net	218,400			140,917
Goodwill	254,340			254,340
Total assets	$	7,434,787		$	7,677,971
Liabilities and stockholders’ equity
Liabilities:
Revolving Credit Facility	$	386,000		$	86,000
Term Loan, net	419,091			418,471
Senior Unsecured Notes, net	295,242			295,112
Mortgages and notes payable, net	2,050,302			2,162,403
Convertible Notes, net	712,510			702,642
Total debt, net	3,863,145			3,664,628
Intangible lease liabilities, net	162,619			182,320
Accounts payable, accrued expenses and other liabilities	149,858			148,915
Total liabilities	4,175,622			3,995,863
Commitments and contingencies (see Note 7)
Stockholders’ equity:
Common stock, $0.01 par value, 750,000,000 shares authorized: 455,900,032 and 483,624,120 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	4,559			4,836
Capital in excess of par value	5,190,849			5,177,086
Accumulated deficit	(1,936,243		)	(1,499,814		)
Accumulated other comprehensive income	—			—
Total stockholders’ equity	3,259,165			3,682,108
Total liabilities and stockholders’ equity	$	7,434,787		$	7,677,971



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Rentals	$	159,799		$	161,765		$	479,506		$	484,090
Interest income on loans receivable	1,003			1,042			2,769			4,326
Earned income from direct financing leases	483			660			1,613			2,082
Tenant reimbursement income	4,691			3,469			13,136			10,493
Other income	3,574			5,572			6,583			11,600
Total revenues	169,550			172,508			503,607			512,591
Expenses:
General and administrative	13,712			15,112			49,992			40,611
Restructuring charges	—			3,264			—			5,726
Transaction costs	2,660			—			3,145			—
Property costs	8,080			6,916			26,763			20,854
Real estate acquisition costs	196			1,056			773			2,092
Interest	48,680			47,653			142,129			149,842
Depreciation and amortization	63,673			65,300			192,887			194,227
Impairments	37,737			15,407			88,109			41,396
Total expenses	174,738			154,708			503,798			454,748
(Loss) income before other income/(expense) and income tax benefit (expense)	(5,188		)	17,800			(191		)	57,843
Other income (expense):
Gain (loss) on debt extinguishment	1,792			(8,349		)	1,770			326
Total other income (expense)	1,792			(8,349		)	1,770			326
(Loss) income before income tax benefit (expense)	(3,396		)	9,451			1,579			58,169
Income tax benefit (expense)	11			(12		)	(419		)	(932		)
(Loss) income before gain on disposition of assets	(3,385		)	9,439			1,160			57,237
Gain on disposition of assets	8,707			17,960			40,197			39,221
Net income attributable to common stockholders	$	5,322		$	27,399		$	41,357		$	96,458

Net income per share attributable to common stockholders—basic	$	0.01		$	0.06		$	0.09		$	0.21

Net income per share attributable to common stockholders—diluted	$	0.01		$	0.06		$	0.09		$	0.21

Weighted average shares of common stock outstanding:
Basic	456,671,617			479,554,362			472,698,692			457,263,526
Diluted	456,671,617			480,598,610			472,698,692			457,301,623

Dividends declared per common share issued	$	0.1800		$	0.1750		$	0.5400		$	0.5250



	General Partner's Capital ⁽¹⁾				Limited Partners' Capital ⁽²⁾					Total Partnership Capital
	General Partner's Capital ⁽¹⁾				Limited Partners' Capital ⁽²⁾
	Units	Amount			Units		Amount
Balances, December 31, 2016	3,988,218	$	26,586		479,635,902		$	3,655,522		$	3,682,108
Net income	—	344			—		41,013			41,357
Partnership distributions declared	—	(2,095		)	—		(249,511		)	(251,606		)
Tax withholdings related to net partnership unit settlements	—	—			(430,429	)	(3,458		)	(3,458		)
Repurchase of partnership units	—	—			(28,819,865	)	(222,290		)	(222,290		)
Stock-based compensation	—	—			1,526,206		13,054			13,054
Balances, September 30, 2017	3,988,218	$	24,835		451,911,814		$	3,234,330		$	3,259,165



	Number of Properties						Dollar Amount of Investments
	Owned		Financed		Total		Owned			Financed			Total
							(In Thousands)
Gross balance, December 31, 2016	2,541		74		2,615		$	8,181,076		$	66,578		$	8,247,654
Acquisitions/improvements ⁽¹⁾	43		15		58		314,141			19,190			333,331
Dispositions of real estate ⁽²⁾	(161	)	—		(161	)	(392,504		)	—			(392,504		)
Principal payments and payoffs	—		(1	)	(1	)	—			(7,817		)	(7,817		)
Impairments	—		—		—		(88,109		)	—			(88,109		)
Write-off of gross lease intangibles	—		—		—		(64,766		)	—			(64,766		)
Loan premium amortization and other	—		—		—		(4,847		)	(1,130		)	(5,977		)
Gross balance, September 30, 2017	2,423		88		2,511		7,944,991			76,821			8,021,812
Accumulated depreciation and amortization							(1,234,978		)	—			(1,234,978		)
Other							647			—			647
Net balance, September 30, 2017							$	6,710,660		$	76,821		$	6,787,481



	September 30, 2017
Remainder of 2017	$	151,042
2018	597,808
2019	583,233
2020	566,864
2021	538,273
Thereafter	4,084,670
Total future minimum rentals	$	6,521,890



	September 30, 2017		December 31, 2016
Mortgage loans - principal	$	62,833	$	55,410
Mortgage loans - premium, net of amortization	5,568		7,194
Mortgages loans, net	68,401		62,604
Other note receivables - principal	8,420		4,474
Allowance for loan losses	—		(500		)
Other note receivables, net	8,420		3,974
Total loans receivable, net	$	76,821	$	66,578



	September 30, 2017			December 31, 2016
Minimum lease payments receivable	$	7,809		$	9,456
Estimated residual value of leased assets	24,552			35,640
Unearned income	(7,478		)	(9,091		)
Real estate assets under direct financing leases, net	$	24,883		$	36,005



	Number of Properties		Carrying Value
Balance, December 31, 2016	44		$	160,570
Transfers from real estate investments held and used	80		212,726
Sales	(78	)	(157,156		)
Transfers to real estate investments held and used	(8	)	(63,597		)
Impairments			(19,161		)
Balance, September 30, 2017	38		$	133,382



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Real estate and intangible asset impairment	$	32,676	$	13,894	$	82,553	$	35,236
Write-off of lease intangibles, net	5,061		1,491		5,556		6,463
Loans receivable recovery	—		—		—		(324		)
Total impairments from real estate investment net assets	37,737		15,385		88,109		41,375
Other impairment	—		22		—		21
Total impairment loss	$	37,737	$	15,407	$	88,109	$	41,396



	Weighted Average Effective Interest Rates ⁽¹⁾		Weighted Average Stated Rates ⁽²⁾		Weighted Average Maturity ⁽³⁾	September 30, 2017			December 31, 2016
					(in Years)	(In Thousands)
Revolving Credit Facility	3.43	%	2.49	%	1.5	$	386,000		$	86,000
Term Loan	2.83	%	2.59	%	1.1	420,000			420,000
Senior Unsecured Notes	4.59	%	4.45	%	9.0	300,000			300,000
Master Trust Notes	5.58	%	5.03	%	5.5	1,657,402			1,672,706
CMBS fixed-rate	5.85	%	5.89	%	3.9	426,583			528,427
Convertible Notes	5.32	%	3.28	%	2.5	747,500			747,500
Total debt	4.97	%	4.24	%	4.2	3,937,485			3,754,633
Debt discount, net						(43,327		)	(52,894		)
Deferred financing costs, net ⁽⁴⁾						(31,013		)	(37,111		)
Total debt, net						$	3,863,145		$	3,664,628



	Stated Rates ⁽¹⁾		Maturity	September 30, 2017			December 31, 2016
			(in Years)	(in Thousands)
Series 2014-1 Class A1	5.1	%	2.7	$	45,141		$	53,919
Series 2014-1 Class A2	5.4	%	2.8	253,300			253,300
Series 2014-2	5.8	%	3.5	223,604			226,283
Series 2014-3	5.7	%	4.5	311,459			311,820
Series 2014-4 Class A1	3.5	%	2.3	150,000			150,000
Series 2014-4 Class A2	4.6	%	12.3	360,000			360,000
Total Master Trust 2014 notes	5.1	%	5.8	1,343,504			1,355,322
Series 2013-1 Class A	3.9	%	1.2	125,000			125,000
Series 2013-2 Class A	5.3	%	6.2	188,898			192,384
Total Master Trust 2013 notes	4.7	%	4.2	313,898			317,384
Total Master Trust notes				1,657,402			1,672,706
Debt discount, net				(15,613		)	(18,787		)
Deferred financing costs, net				(14,050		)	(16,376		)
Total Master Trust Notes, net				$	1,627,739		$	1,637,543



	Amount of Loss Recognized in AOCL on Derivative (Effective Portion)
Derivatives in Cash Flow Hedging Relationships	Three Months Ended		Nine Months Ended
Derivatives in Cash Flow Hedging Relationships	September 30, 2016
Interest rate swaps	$	28	$	(1,145	)

	Amount of Loss Reclassified from AOCL into Operations (Effective Portion)
Location of Loss Reclassified from AOCL into Operations	Three Months Ended		Nine Months Ended
Location of Loss Reclassified from AOCL into Operations	September 30, 2016
Interest expense	$	—	$	(459	)

	Amount of Loss Recognized in Operations on Derivative (Ineffective Portion)
Location of Loss Recognized in Operations on Derivatives	Three Months Ended		Nine Months Ended
Location of Loss Recognized in Operations on Derivatives	September 30, 2016
General and administrative expense	$	—	$	(1,706	)

	Derivatives Not Designated as Hedging Instruments
Location of Loss Recognized in Operations on Derivatives	Three Months Ended		Nine Months Ended
Location of Loss Recognized in Operations on Derivatives	September 30, 2016
General and administrative expense	$	—	$	(18	)



	September 30, 2017				December 31, 2016
Description	Range	Weighted Average		Square Footage	Range	Weighted Average		Square Footage
Long-lived assets held and used by asset type
Retail	$13.66 - 285.98	$	53.99	355,428	$17.17 - $502.23	$	58.78	290,770
Industrial	—	—		—	$26.43	$	26.43	104,864
Office	$24.82 - 244.86	$	40.14	161,346	$35.00	$	35.00	135,675



	Nine Months Ended September 30,
(In Thousands)	2017			2016			Change			% Change
Revenues:
Rentals	$	479,506		$	484,090		$	(4,584	)	(0.9	)%
Interest income on loans receivable	2,769			4,326			(1,557		)	(36.0	)%
Earned income from direct financing leases	1,613			2,082			(469		)	(22.5	)%
Tenant reimbursement income	13,136			10,493			2,643			25.2	%
Other income	6,583			11,600			(5,017		)	(43.3	)%
Total revenues	503,607			512,591			(8,984		)	(1.8	)%
Expenses:
General and administrative	49,992			40,611			9,381			23.1	%
Restructuring charges	—			5,726			(5,726		)	(100.0	)%
Transaction costs	3,145			—			3,145			100.0	%
Property costs	26,763			20,854			5,909			28.3	%
Real estate acquisition costs	773			2,092			(1,319		)	(63.0	)%
Interest	142,129			149,842			(7,713		)	(5.1	)%
Depreciation and amortization	192,887			194,227			(1,340		)	(0.7	)%
Impairments	88,109			41,396			46,713			NM
Total expenses	503,798			454,748			49,050			10.8	%
(Loss) income from continuing operations before other income and income tax expense	(191		)	57,843			(58,034		)	NM
Other income:
Gain on debt extinguishment	1,770			326			1,444			NM
Total other income	1,770			326			1,444			NM
Income from continuing operations before income tax expense	1,579			58,169			(56,590		)	(97.3	)%
Income tax expense	(419		)	(932		)	513			(55.0	)%
Income from continuing operations	$	1,160		$	57,237		$	(56,077	)	(98.0	)%

Gain on disposition of assets	$	40,197		$	39,221		$	976		2.5	%



Tenant	Number of Properties	Total Square Feet (in thousands)	Percent of Contractual Rent

Shopko (Specialty Retail Shops Holding Corp.)	101	6,812	7.8	%
AMC Entertainment, Inc. / Carmike Cinemas	18	917	2.6
Walgreen Company	42	622	2.4
Church's Chicken (Cajun Global, LLC)	186	264	2.2
Academy Sports + Outdoors (Academy, LTD )	6	1,805	1.9
Circle K (Alimentation Couche-Tard, Inc.)	82	248	1.9
Albertsons (AB Acquisition, LLC)	23	1,030	1.7
The Home Depot, Inc.	7	821	1.7
CVS Caremark Corporation	36	405	1.5
Carmax, Inc.	8	356	1.5
Other	1,893	34,119	74.8
Vacant	21	1,763	—
Total	2,423	49,162	100.0	%



Industry	Number of Owned Properties	Total Square Feet (in thousands)	Percent of Contractual Rent

General Merchandise	139	8,191	9.4	%
Restaurants - Casual Dining	306	1,830	8.6
Restaurants - Quick Service	586	1,364	8.1
Movie Theaters	62	3,115	7.4
Convenience Stores	318	1,026	7.0
Grocery	64	3,094	5.2
Drug Stores / Pharmacies	102	1,437	4.9
Medical / Other Office	120	1,268	4.8
Health and Fitness	44	1,775	4.1
Sporting Goods	18	2,547	3.4
Specialty Retail	42	2,175	3.3
Entertainment	26	1,199	3.1
Home Improvement	15	1,681	2.7
Education	55	821	2.7
Automotive Services	128	748	2.5
Home Furnishings	26	1,638	2.4
Building Materials	61	2,169	2.3
Automotive Dealers	23	665	2.3
Apparel	13	1,996	2.2
Distribution	12	1,239	2.1
Car Washes	41	231	1.9
Other	6	978	1.6
Manufacturing	17	2,289	1.4
Automotive Parts	61	523	1.2
Dollar Stores	77	788	1.2
Wholesale Clubs	5	512	1.1
Pet Supplies & Service	6	1,016	1.0
Financial Services	4	342	0.8
Office Supplies	18	488	0.8
Consumer Electronics	7	254	0.5
Vacant	21	1,763	—
Total	2,423	49,162	100.0	%



Location	Number of Properties	Total Square Feet (in thousands)	Percent of Contractual Rent		Location (continued)	Number of Properties	Total Square Feet (in thousands)	Percent of Contractual Rent

Texas	305	5,933	11.9	%	Arkansas	53	608	1.3
Georgia	182	2,080	6.0		Washington	14	578	1.2
Florida	155	1,579	5.7		Massachusetts	3	887	1.2
Illinois	112	2,890	5.7		Iowa	32	565	1.1
Ohio	124	2,448	5.2		New Jersey	14	883	1.1
California	37	1,421	4.3		Oregon	10	444	1.0
Michigan	137	2,105	3.9		Idaho	16	679	1.0
Wisconsin	45	3,054	3.9		Mississippi	41	360	0.9
Minnesota	50	2,169	3.5		New Hampshire	16	640	0.8
Arizona	60	940	3.0		Maryland	19	242	0.7
Tennessee	104	1,428	3.0		Louisiana	24	208	0.7
Missouri	91	1,369	2.9		South Dakota	8	390	0.7
Indiana	77	1,175	2.8		Montana	6	406	0.6
South Carolina	45	951	2.5		Connecticut	5	686	0.6
North Carolina	69	1,250	2.4		West Virginia	18	297	0.6
Alabama	106	726	2.2		Utah	7	618	0.5
Pennsylvania	55	1,174	2.0		Nebraska	12	363	0.4
Virginia	60	1,358	2.0		North Dakota	5	236	0.4
Colorado	29	993	1.9		Maine	25	68	0.4
New York	39	923	1.7		Rhode Island	4	117	0.3
New Mexico	38	548	1.7		Wyoming	8	180	0.2
Kansas	37	810	1.6		Alaska	5	63	0.1
Oklahoma	66	613	1.5		U.S. V.I.	1	38	0.1
Kentucky	47	564	1.5		Delaware	1	5	—
Nevada	5	1,099	1.3		Vermont	1	1	—



Leases Expiring In:	Number of Properties	Contractual Rent Annualized (in thousands) ⁽¹⁾		Total Square Feet (in thousands)	Percent of Contractual Rent

Remainder of 2017	29	$	8,230	1,013	1.4	%
2018	72	22,295		1,824	3.7
2019	103	19,193		1,758	3.2
2020	73	18,966		1,508	3.1
2021	186	44,525		3,861	7.3
2022	116	32,015		2,849	5.3
2023	107	31,318		3,330	5.1
2024	57	22,306		1,369	3.7
2025	77	35,704		2,078	5.9
2026	192	43,940		3,945	7.2
2027 and thereafter	1,390	330,082		23,864	54.1
Vacant	21	—		1,763	—
Total owned properties	2,423	$	608,574	49,162	100.0	%



Industry	Properties	Net Book Value		Monthly Base Rent		Pre-Default Outstanding Principal		Capitalized interest ⁽¹⁾		Total Debt Outstanding		Restricted Cash ⁽²⁾		Stated Rate		Default Rate		Accrued Interest ⁽¹⁾

Manufacturing	2	$	4,895	$	—	$	5,460	$	10,942	$	16,402	$	—	5.85	%	9.85	%	$	135
Sporting Goods	1	3,098		—		6,321		251		6,572		57		5.62		10.62		58
Consumer Electronics	1	3,057		—		8,592		367		8,959		286		5.87		9.87		74
Multi-Tenant Retail	1	12,773		—		17,250		148		17,398		265		5.53		7.53		73
Sporting Goods	2	3,480		—		9,625		78		9,703		455		4.39		9.39		76
Sporting Goods	1	2,019		—		3,853		32		3,885		169		4.65		9.65		31
Total	8	$	29,322	$	—	$	51,101	$	11,818	$	62,919	$	1,232	5.44	%	8.3	%	$	447



	September 30,
	2017			2016
	(Unaudited)
Revolving Credit Facility	$	386,000		$	105,000
Term Loan, net	419,091			368,400
Unsecured Senior Notes, net	295,242			295,215
Mortgages and notes payable, net	2,050,302			2,241,783
Convertible Notes, net	712,510			699,465
	3,863,145			3,709,863
Add/(less):
Unamortized debt discount, net	43,327			54,975
Unamortized deferred financing costs	31,013			38,812
Cash and cash equivalents	(11,947		)	(13,184		)
Restricted cash balances held for the benefit of lenders	(96,344		)	(39,038		)
Total adjustments	(33,951		)	41,565
Adjusted Debt	$	3,829,194		$	3,751,428

	Three Months Ended September 30,
	2017			2016
	(Unaudited)
Net income attributable to common stockholders	$	5,322		$	27,399
Add/(less):
Interest	48,680			47,653
Depreciation and amortization	63,673			65,300
Income tax expense	(11		)	12
Total adjustments	112,342			112,965
EBITDA	$	117,664		$	140,364
Add/(less):
Restructuring charges	—			3,264
Other costs in general and administrative associated with headquarters relocation	—			1,501
Transaction costs	2,660			—
Real estate acquisition costs	196			1,056
Impairments on real estate assets	37,737			15,384
Swap termination costs (included in general and administrative)	—			—
Realized gain on sales of real estate	(8,707		)	(17,960		)
Loss on debt extinguishment	(1,792		)	8,349
Total adjustments to EBITDA	30,094			11,594
Adjusted EBITDA	$	147,758		$	151,958
Annualized Adjusted EBITDA ⁽¹⁾	$	591,032		$	607,832

Adjusted Debt / Annualized Adjusted EBITDA	6.5		x	6.2		x

⁽¹⁾ Adjusted EBITDA of the current quarter multiplied by four.