UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2021


			OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from _________ to __________

Commission file numbers: 001-35263 and 333-197780


VEREIT, Inc.
VEREIT Operating Partnership, L.P.
(Exact name of registrant as specified in its charter)

Maryland

(VEREIT, Inc.)

45-2482685

Delaware

(VEREIT Operating Partnership, L.P.)

45-1255683

(State or other jurisdiction of incorporation or organization)

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

2325 E. Camelback Road, 9th Floor

Phoenix

85016

(Address of principal executive offices)

(Zip Code)


(800)			606-3610
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class:

Trading Symbol(s):

Name of each exchange on which registered:

Common Stock

$0.01 par value per share (VEREIT, Inc.)

VER

New York Stock Exchange

~~6.70% Series F Cumulative Redeemable Preferred Stock~~

~~$0.01 par value per share (VEREIT, Inc.)~~

~~VER PRF~~

~~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. VEREIT, Inc. Yes x No o VEREIT Operating Partnership, L.P. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). VEREIT, Inc. Yes x No o VEREIT Operating Partnership, 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

VEREIT, Inc.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

VEREIT Operating Partnership, L.P.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

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

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

VEREIT, Inc. Yes ☐ No x VEREIT Operating Partnership, L.P. Yes ☐ No x

There were ~~229,149,616~~229,152,001 shares of common stock of VEREIT, Inc. outstanding as of ~~July 30,~~October 26, 2021.

EXPLANATORY NOTE

Table of Contents

~~EXPLANATORY NOTE~~

Combined Reporting

This report combines the Quarterly Reports on Form 10-Q for the three and ~~six~~nine months ended ~~June~~September 30, 2021 of VEREIT, Inc., a Maryland corporation, and VEREIT Operating Partnership, L.P., a Delaware limited partnership, of which VEREIT, Inc. is the sole general partner. Unless otherwise indicated or unless the context requires otherwise, all references in this report to “we,” “us,” “our,” “VEREIT,” the “Company” or the “General Partner” mean VEREIT, Inc. together with its consolidated subsidiaries, including VEREIT Operating Partnership, L.P., and all references to the “Operating Partnership” or “OP” mean VEREIT Operating Partnership, L.P. together with its consolidated subsidiaries.

As the sole general partner of VEREIT Operating Partnership, L.P., VEREIT, Inc. has the full, exclusive and complete responsibility for the Operating Partnership’s day-to-day management and control.

We believe combining the Quarterly Reports on Form 10-Q of VEREIT, Inc. and VEREIT Operating Partnership, L.P. into this single report results in the following benefits:

•enhancing investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•eliminating duplicative disclosure and providing a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

•creating time and cost efficiencies through the preparation of one combined report instead of two separate reports.

There are a few differences between the Company and the Operating Partnership, which are reflected in the disclosure in this report. We believe it is important to understand the differences between the Company and the Operating Partnership in the context of how we operate as an interrelated consolidated company. VEREIT, Inc. is a real estate investment trust whose only material asset is its ownership of partnership interests of the Operating Partnership. As a result, VEREIT, Inc. does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing equity or debt from time to time and guaranteeing certain unsecured debt of the Operating Partnership and certain of its subsidiaries. The Operating Partnership holds substantially all of the assets of the Company and holds the ownership interests in the Company’s joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for net proceeds from public equity or debt issuances by VEREIT, Inc., which are generally contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s direct or indirect incurrence of indebtedness or through the issuance of partnership units. To help investors understand the significant differences between VEREIT, Inc. and the Operating Partnership, there are separate sections in this report that separately discuss VEREIT, Inc. and the Operating Partnership, including the consolidated financial statements and certain notes to the consolidated financial statements as well as separate disclosures in Item 4. Controls and Procedures and Exhibit 31 and Exhibit 32 certifications. As sole general partner with control of the Operating Partnership, VEREIT, Inc. consolidates the Operating Partnership for financial reporting purposes. Therefore, the assets and liabilities of VEREIT, Inc. and VEREIT Operating Partnership, L.P. are the same on their respective consolidated financial statements. The separate discussions of VEREIT, Inc. and VEREIT Operating Partnership, L.P. in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

Reverse Stock Split

The Company effected a one-for-five reverse stock split of shares of Common Stock after markets closed on December 17, 2020, whereby every five shares of VEREIT's issued and outstanding shares of common stock, $0.01 par value per share, were converted into one share of common stock, $0.01 par value per share. A corresponding reverse split of the outstanding common partnership interests in the Operating Partnership also took effect on December 17, 2020. All common stock/unit and per share/unit data for all periods presented in this Quarterly Report on Form 10-Q have been updated to give effect to the reverse stock split.

VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

For the quarterly period ended ~~June~~September 30, 2021


			Page
PART I
Item 1. Unaudited Financial Statements			4
Consolidated Balance Sheets of VEREIT, Inc. as of ~~June~~September 30, 2021 and December 31, 2020			4
Consolidated Statements of Operations of VEREIT, Inc. for the Three and ~~Six~~ Nine Months Ended ~~June~~September 30,, 2021 and 2020			5
Consolidated Statements of Comprehensive Income (Loss) of VEREIT, Inc. for the Three and ~~Six~~ Nine Months Ended ~~June~~ September 30,, 2021 and 2020			6
Consolidated Statements of Changes in Equity of VEREIT, Inc. for the Three and ~~Six~~ Nine Months Ended ~~June~~ 3 0 ,September 30, 2021 and 2020			7
Consolidated Statements of Cash Flows of VEREIT, Inc. for the ~~Six~~Nine Months Ended ~~June~~ 3 0 ,September 30, 2021 and 2020			911
Consolidated Balance Sheets of VEREIT Operating Partnership, L.P. as of ~~June~~September 30,, 2021 and December 31, 2020			1113
Consolidated Statements of Operations of VEREIT Operating Partnership, L.P. for the Three and ~~Six~~ Nine Months Ended ~~June~~September 30,, 2021 and 2020			1214
Consolidated Statements of Comprehensive Income (Loss) of VEREIT Operating Partnership, L.P. for the Three and ~~Six~~Nine Months Ended ~~June~~ 3 0 ,September 30, 2021 and 2020			1315
Consolidated Statements of Changes in Equity of VEREIT Operating Partnership, L.P. for the Three and ~~Six~~ Nine Months Ended ~~June~~ 3 0 ,September 30, 2021 and 2020			1416
Consolidated Statements of Cash Flows of VEREIT Operating Partnership, L.P. for the ~~Six~~Nine Months Ended ~~June~~ 3 0 ,September 30, 2021 and 2020			1619
Notes to Consolidated Financial Statements			1821
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3841
Item 3. Quantitative and Qualitative Disclosures About Market Risk			5457
Item 4. Controls and Procedures			5558
PART II
Item 1. Legal Proceedings			5659
Item 1A. Risk Factors			5659
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5659
Item 3. Defaults Upon Senior Securities			5659
Item 4. Mine Safety Disclosures			5659
Item 5. Other Information			5659
Item 6. Exhibits			5760
Signatures			6063

Table of Contents

VEREIT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data) (Unaudited)

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Real estate investments, at cost:	Real estate investments, at cost:					Real estate investments, at cost:
Land	Land	$	2,724,975	$	2,699,110	Land	$	2,724,709	$	2,699,110
Buildings, fixtures and improvements	Buildings, fixtures and improvements	9,912,886		10,032,055		Buildings, fixtures and improvements	9,916,070		10,032,055
Intangible lease assets	Intangible lease assets	1,908,178		1,872,461		Intangible lease assets	1,917,251		1,872,461
Total real estate investments, at cost	Total real estate investments, at cost	14,546,039		14,603,626		Total real estate investments, at cost	14,558,030		14,603,626
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	3,917,175		3,833,084		Less: accumulated depreciation and amortization	4,002,377		3,833,084
Total real estate investments, net	Total real estate investments, net	10,628,864		10,770,542		Total real estate investments, net	10,555,653		10,770,542
Operating lease right-of-use assets	Operating lease right-of-use assets	188,628		195,518		Operating lease right-of-use assets	185,443		195,518
Investment in unconsolidated entities	Investment in unconsolidated entities	80,487		81,639		Investment in unconsolidated entities	80,363		81,639
Cash and cash equivalents	Cash and cash equivalents	275,496		523,539		Cash and cash equivalents	5,874		523,539
Restricted cash	Restricted cash	9,584		13,842		Restricted cash	10,803		13,842
Rent and tenant receivables and other assets, net	Rent and tenant receivables and other assets, net	365,186		366,620		Rent and tenant receivables and other assets, net	371,911		366,620
Goodwill	Goodwill	1,337,773		1,337,773		Goodwill	1,337,773		1,337,773

Real estate assets held for sale, net	Real estate assets held for sale, net	28,977		65,583		Real estate assets held for sale, net	31,073		65,583
Total assets	Total assets	$	12,914,995	$	13,355,056	Total assets	$	12,578,893	$	13,355,056

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Mortgage notes payable, net	Mortgage notes payable, net	$	1,002,496	$	1,328,835	Mortgage notes payable, net	$	987,704	$	1,328,835
Corporate bonds, net	Corporate bonds, net	4,588,286		4,584,230		Corporate bonds, net	4,590,348		4,584,230

Credit facility						Credit facility	88,000		—
Below-market lease liabilities, net	Below-market lease liabilities, net	115,831		120,938		Below-market lease liabilities, net	111,140		120,938
Accounts payable and accrued expenses	Accounts payable and accrued expenses	117,445		117,015		Accounts payable and accrued expenses	137,626		117,015
Deferred rent and other liabilities	Deferred rent and other liabilities	64,371		63,204		Deferred rent and other liabilities	58,707		63,204
Distributions payable	Distributions payable	106,999		89,514		Distributions payable	105,958		89,514

Operating lease liabilities	Operating lease liabilities	199,561		209,104		Operating lease liabilities	196,671		209,104
Total liabilities	Total liabilities	6,194,989		6,512,840		Total liabilities	6,276,154		6,512,840
Commitments and contingencies (Note 10)	Commitments and contingencies (Note 10)	0		0		Commitments and contingencies (Note 10)	0		0
Preferred stock, $0.01 par value, 100,000,000 shares authorized and 14,871,246 and 18,871,246 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		149		189
Common stock, $0.01 par value, 1,500,000,000 shares authorized and 229,149,616 and 228,881,547 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		2,291		2,289
Preferred stock, $0.01 par value, 100,000,000 shares authorized with 18,871,246 issued and outstanding as of December 31, 2020.						Preferred stock, $0.01 par value, 100,000,000 shares authorized with 18,871,246 issued and outstanding as of December 31, 2020.	—		189
Common stock, $0.01 par value, 1,500,000,000 shares authorized and 229,152,001 and 228,881,547 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively						Common stock, $0.01 par value, 1,500,000,000 shares authorized and 229,152,001 and 228,881,547 issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	2,292		2,289
Additional paid-in capital	Additional paid-in capital	13,354,657		13,449,412		Additional paid-in capital	12,984,914		13,449,412
Accumulated other comprehensive income	Accumulated other comprehensive income	732		536		Accumulated other comprehensive income	831		536
Accumulated deficit	Accumulated deficit	(6,644,896)		(6,617,380)		Accumulated deficit	(6,692,338)		(6,617,380)
Total stockholders’ equity	Total stockholders’ equity	6,712,933		6,835,046		Total stockholders’ equity	6,295,699		6,835,046
Non-controlling interests	Non-controlling interests	7,073		7,170		Non-controlling interests	7,040		7,170
Total equity	Total equity	6,720,006		6,842,216		Total equity	6,302,739		6,842,216
Total liabilities and equity	Total liabilities and equity	$	12,914,995	$	13,355,056	Total liabilities and equity	$	12,578,893	$	13,355,056

The accompanying notes are an integral part of these statements.

Table of Contents

VEREIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share data) (Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020
Revenues:	Revenues:										Revenues:
Rental	Rental	$	290,567	$	278,576	$	580,876	$	577,162		Rental	$	289,671	$	293,692	$	870,547	$	870,854
Fees from managed partnerships	Fees from managed partnerships	700		421		1,200		1,017			Fees from managed partnerships	521		1,586		1,721		2,603
Total revenues	Total revenues	291,267		278,997		582,076		578,179			Total revenues	290,192		295,278		872,268		873,457
Operating expenses:	Operating expenses:										Operating expenses:
Acquisition-related	Acquisition-related	1,428		1,169		2,782		2,692			Acquisition-related	1,373		1,050		4,155		3,742
Merger, litigation and non-routine costs, net	Merger, litigation and non-routine costs, net	6,605		(118)		6,673		(8,682)			Merger, litigation and non-routine costs, net	9,445		105		16,118		(8,577)
Property operating	Property operating	29,174		29,098		59,779		59,588			Property operating	28,854		31,400		88,633		90,988
General and administrative	General and administrative	16,451		16,120		30,977		31,176			General and administrative	12,437		14,774		43,414		45,950
Depreciation and amortization	Depreciation and amortization	105,839		108,733		213,914		232,813			Depreciation and amortization	106,668		108,257		320,582		341,070
Impairments	Impairments	14,129		12,094		45,978		20,474			Impairments	13,272		16,397		59,250		36,871
Total operating expenses	Total operating expenses	173,626		167,096		360,103		338,061			Total operating expenses	172,049		171,983		532,152		510,044
Other expenses:	Other expenses:										Other expenses:
Interest expense	Interest expense	(59,291)		(65,613)		(120,027)		(130,309)			Interest expense	(59,768)		(66,935)		(179,795)		(197,244)
Gain (loss) on extinguishment and forgiveness of debt, net		35		(200)		(2,097)		(1,480)
(Loss) gain on extinguishment and forgiveness of debt, net											(Loss) gain on extinguishment and forgiveness of debt, net	(5)		61		(2,102)		(1,419)
Other income, net	Other income, net	3,089		778		6,755		953			Other income, net	346		73		7,101		1,026

Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	464		1,497		911		1,743			Equity in income of unconsolidated entities	463		663		1,374		2,406
Gain on disposition of real estate and real estate assets held for sale, net	Gain on disposition of real estate and real estate assets held for sale, net	16,896		8,795		92,970		34,044			Gain on disposition of real estate and real estate assets held for sale, net	3,369		42,814		96,339		76,858
Total other expenses, net	Total other expenses, net	(38,807)		(54,743)		(21,488)		(95,049)			Total other expenses, net	(55,595)		(23,324)		(77,083)		(118,373)
Income before taxes	Income before taxes	78,834		57,158		200,485		145,069			Income before taxes	62,548		99,971		263,033		245,040
Provision for income taxes	Provision for income taxes	(931)		(1,053)		(1,859)		(2,101)			Provision for income taxes	(935)		(1,054)		(2,794)		(3,155)
Net income	Net income	77,903		56,105		198,626		142,968			Net income	61,613		98,917		260,239		241,885
Net income attributable to non-controlling interests (1)	Net income attributable to non-controlling interests (1)	(7)		(31)		(83)		(86)			Net income attributable to non-controlling interests (1)	(48)		(51)		(131)		(137)
Net income attributable to the General Partner	Net income attributable to the General Partner	$	77,896	$	56,074	$	198,543	$	142,882		Net income attributable to the General Partner	$	61,565	$	98,866	$	260,108	$	241,748

Basic and diluted net income per share attributable to common stockholders	Basic and diluted net income per share attributable to common stockholders	$	0.31	$	0.20	$	0.81	$	0.54		Basic and diluted net income per share attributable to common stockholders	$	0.25	$	0.41	$	1.06	$	0.95

(1)Represents net income attributable to limited partners and a consolidated joint venture partner.

The accompanying notes are an integral part of these statements.

Table of Contents

VEREIT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands) (Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020
Net income	Net income	$	77,903	$	56,105	$	198,626	$	142,968		Net income	$	61,613	$	98,917	$	260,239	$	241,885
Total other comprehensive income (loss)	Total other comprehensive income (loss)										Total other comprehensive income (loss)
Unrealized (loss) on interest rate derivatives		0		(6,497)		0		(85,047)
Unrealized gain (loss) on interest rate derivatives											Unrealized gain (loss) on interest rate derivatives	—		3,666		—		(81,383)
Reclassification of previous unrealized loss on interest rate derivatives into net income	Reclassification of previous unrealized loss on interest rate derivatives into net income	98		4,604		196		6,552			Reclassification of previous unrealized loss on interest rate derivatives into net income	99		5,441		295		11,995
Total other comprehensive income (loss)	Total other comprehensive income (loss)	98		(1,893)		196		(78,495)			Total other comprehensive income (loss)	99		9,107		295		(69,388)

Total comprehensive income	Total comprehensive income	78,001		54,212		198,822		64,473			Total comprehensive income	61,712		108,024		260,534		172,497
Comprehensive income attributable to non-controlling interests (1)	Comprehensive income attributable to non-controlling interests (1)	(7)		(30)		(83)		(30)			Comprehensive income attributable to non-controlling interests (1)	(48)		(57)		(131)		(87)
Total comprehensive income attributable to the General Partner	Total comprehensive income attributable to the General Partner	$	77,994	$	54,182	$	198,739	$	64,443		Total comprehensive income attributable to the General Partner	$	61,664	$	107,967	$	260,403	$	172,410

(1)Represents comprehensive income attributable to limited partners and a consolidated joint venture partner.

The accompanying notes are an integral part of these statements.

Table of Contents

VEREIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data) (Unaudited)

Preferred Stock Common Stock
Number
of Shares Par
Value Number
of Shares Par
Value Additional Paid-In Capital Accumulated Other Comprehensive
Income Accumulated
Deficit Total Stock-holders’ Equity Non-Controlling Interests Total Equity
Balance, January 1, 2021 18,871,246 $ 189 228,881,547 $ 2,289 $ 13,449,412 $ 536 $ (6,617,380) $ 6,835,046 $ 7,170 $ 6,842,216
Issuance of Common Stock, net — — 35,710 — — — — — — —
Redemption of Series F Preferred Stock (4,000,000) (40) — — (99,960) — — (100,000) — (100,000)
Repurchases of Common Stock to settle tax obligation — — (49,237) — (1,681) — — (1,681) — (1,681)
Equity-based compensation, net — — 261,934 2 2,890 — — 2,892 — 2,892
Distributions declared on Common Stock — $0.462 per common share — — — — — — (105,858) (105,858) — (105,858)
Distributions to non-controlling interest holders — — — — — — — — (70) (70)
Dividend equivalents on awards granted under the Equity Plan — — — — — — (1,581) (1,581) — (1,581)
Distributions to preferred shareholders and unitholders — — — — — — (6,506) (6,506) (19) (6,525)
Net income — — — — — — 120,647 120,647 76 120,723
Other comprehensive income — — — — — 98 — 98 — 98
Balance, March 31, 2021 14,871,246 $ 149 229,129,954 $ 2,291 $ 13,350,661 $ 634 $ (6,610,678) $ 6,743,057 $ 7,157 $ 6,750,214
Redemption of Series F Preferred Stock — — — — (41) — — (41) — (41)
Repurchases of Common Stock to settle tax obligation — — (18,042) — (100) — — (100) — (100)
Equity-based compensation, net — — 37,704 0 4,137 — — 4,137 — 4,137
Distributions declared on Common Stock — $0.462 per common share — — — — — — (105,867) (105,867) — (105,867)
Distributions to non-controlling interest holders — — — — — — — — (70) (70)
Dividend equivalents on awards granted under the Equity Plan — — — — — — (20) (20) — (20)
Distributions to preferred shareholders and unitholders — — — — — — (6,227) (6,227) (21) (6,248)
Net income — — — — — — 77,896 77,896 7 77,903
Other comprehensive income — — — — — 98 — 98 — 98
Balance, June 30, 2021 14,871,246 $ 149 229,149,616 $ 2,291 $ 13,354,657 $ 732 $ (6,644,896) $ 6,712,933 $ 7,073 $ 6,720,006


	Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stock-holders’ Equity		Non-Controlling Interests		Total Equity
Balance, January 1, 2021	18,871,246	$	189	228,881,547	$	2,289	$	13,449,412	$	536	$	(6,617,380)	$	6,835,046	$	7,170	$	6,842,216
Issuance of Common Stock, net	—	—		35,710	—		—		—		—		—		—		—

Redemption of Series F Preferred Stock	(4,000,000)	(40)		—	—		(99,960)		—		—		(100,000)		—		(100,000)

Repurchases of Common Stock to settle tax obligation	—	—		(49,237)	—		(1,681)		—		—		(1,681)		—		(1,681)
Equity-based compensation, net	—	—		261,934	2		2,890		—		—		2,892		—		2,892

Distributions declared on Common Stock — $0.462 per common share	—	—		—	—		—		—		(105,858)		(105,858)		—		(105,858)
Distributions to non-controlling interest holders	—	—		—	—		—		—		—		—		(70)		(70)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—		—		(1,581)		(1,581)		—		(1,581)
Distributions to preferred shareholders and unitholders	—	—		—	—		—		—		(6,506)		(6,506)		(19)		(6,525)
Net income	—	—		—	—		—		—		120,647		120,647		76		120,723
Other comprehensive income	—	—		—	—		—		98		—		98		—		98
Balance, March 31, 2021	14,871,246	$	149	229,129,954	$	2,291	$	13,350,661	$	634	$	(6,610,678)	$	6,743,057	$	7,157	$	6,750,214



Redemption of Series F Preferred Stock	—	—		—	—		(41)		—		—		(41)		—		(41)

Repurchases of Common Stock to settle tax obligation	—	—		(18,042)	—		(100)		—		—		(100)		—		(100)
Equity-based compensation, net	—	—		37,704	—		4,137		—		—		4,137		—		4,137

Distributions declared on Common Stock — $0.462 per common share	—	—		—	—		—		—		(105,867)		(105,867)		—		(105,867)
Distributions to non-controlling interest holders	—	—		—	—		—		—		—		—		(70)		(70)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—		—		(20)		(20)		—		(20)
Distributions to preferred shareholders and unitholders	—	—		—	—		—		—		(6,227)		(6,227)		(21)		(6,248)

Net income	—	—		—	—		—		—		77,896		77,896		7		77,903
Other comprehensive income	—	—		—	—		—		98		—		98		—		98
Balance, June 30, 2021	14,871,246	$	149	229,149,616	$	2,291	$	13,354,657	$	732	$	(6,644,896)	$	6,712,933	$	7,073	$	6,720,006


Redemption of Series F Preferred Stock	(14,871,246)	(149)		—	—		(372,883)		—		—		(373,032)		—		(373,032)

Repurchases of Common Stock to settle tax obligation	—	—		(6,356)	—		(47)		—		—		(47)		—		(47)
Equity-based compensation, net	—	—		8,741	1		3,187		—		—		3,188		—		3,188

Distributions declared on Common Stock — $0.462 per common share	—	—		—	—		—		—		(105,868)		(105,868)		—		(105,868)
Distributions to non-controlling interest holders	—	—		—	—		—		—		—		—		(70)		(70)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—		—		(26)		(26)		—		(26)
Distributions to preferred shareholders and unitholders	—	—		—	—		—		—		(3,113)		(3,113)		(11)		(3,124)

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VEREIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data) (Unaudited)

Preferred Stock Common Stock
Number
of Shares Par
Value Number
of Shares Par
Value Additional Paid-In Capital Accumulated Other Comprehensive
Income Accumulated
Deficit Total Stock-holders’ Equity Non-Controlling Interests Total Equity
Balance, January 1, 2020 30,871,246 $ 309 215,369,197 $ 2,153 $ 13,260,577 $ (27,670) $ (6,372,710) $ 6,862,659 $ 7,535 $ 6,870,194
Conversion of OP Units to Common Stock — — 910 — 45 — — 45 (45) 0
Redemption of Series F Preferred Stock — — — — (27) — — (27) — (27)
Repurchases of Common Stock to settle tax obligation — — (48,218) — (2,378) — — (2,378) — (2,378)
Equity-based compensation, net — — 234,408 2 2,853 — — 2,855 — 2,855
Distributions declared on Common Stock — $0.6875 per common share — — — — — — (148,194) (148,194) — (148,194)
Distributions to non-controlling interest holders — — — — — — — — (105) (105)
Dividend equivalents on awards granted under the Equity Plan — — — — — — (1,628) (1,628) — (1,628)
Distributions to preferred shareholders and unitholders — — — — — — (12,928) (12,928) (19) (12,947)
Net income — — — — — — 86,808 86,808 55 86,863
Other comprehensive loss — — — — — (76,547) — (76,547) (55) (76,602)
Balance, March 31, 2020 30,871,246 $ 309 215,556,297 $ 2,155 $ 13,261,070 $ (104,217) $ (6,448,652) $ 6,710,665 $ 7,366 $ 6,718,031
Redemption of Series F Preferred Stock — — — — (25) — — (25) — (25)
Equity-based compensation, net — — 13,415 1 4,070 — — 4,071 — 4,071
Distributions declared on Common Stock — $0.385 per common share — — — — — — (82,997) (82,997) — (82,997)
Distributions to non-controlling interest holders — — — — — — — — (61) (61)
Dividend equivalents on awards granted under the Equity Plan — — — — — — (18) (18) — (18)
Distributions to preferred shareholders and unitholders — — — — — — (12,928) (12,928) (20) (12,948)
Repurchase of convertible notes — — — — (204) — — (204) — (204)
Net income — — — — — — 56,074 56,074 31 56,105
Other comprehensive loss — — — — — (1,892) — (1,892) (1) (1,893)
Balance, June 30, 2020 30,871,246 $ 309 215,569,712 $ 2,156 $ 13,264,911 $ (106,109) $ (6,488,521) $ 6,672,746 $ 7,315 $ 6,680,061


	Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stock-holders’ Equity		Non-Controlling Interests		Total Equity
Net income	—	$	—	—	$	—	$	—	—		$	61,565	$	61,565	$	48	$	61,613
Other comprehensive income	—	—		—	—		—		99		—		99		—		99
Balance, September 30, 2021	—	$	—	229,152,001	$	2,292	$	12,984,914	$	831	$	(6,692,338)	$	6,295,699	$	7,040	$	6,302,739

Table of Contents

VEREIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data) (Unaudited)


	Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stock-holders’ Equity		Non-Controlling Interests		Total Equity
Balance, January 1, 2020	30,871,246	$	309	215,369,197	$	2,153	$	13,260,577	$	(27,670)	$	(6,372,710)	$	6,862,659	$	7,535	$	6,870,194

Conversion of OP Units to Common Stock	—	—		910	—		45		—		—		45		(45)		—

Redemption of Series F Preferred Stock	—	—		—	—		(27)		—		—		(27)		—		(27)

Repurchases of Common Stock to settle tax obligation	—	—		(48,218)	—		(2,378)		—		—		(2,378)		—		(2,378)
Equity-based compensation, net	—	—		234,408	2		2,853		—		—		2,855		—		2,855

Distributions declared on Common Stock — $0.6875 per common share	—	—		—	—		—		—		(148,194)		(148,194)		—		(148,194)
Distributions to non-controlling interest holders	—	—		—	—		—		—		—		—		(105)		(105)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—		—		(1,628)		(1,628)		—		(1,628)
Distributions to preferred shareholders and unitholders	—	—		—	—		—		—		(12,928)		(12,928)		(19)		(12,947)

Net income	—	—		—	—		—		—		86,808		86,808		55		86,863
Other comprehensive loss	—	—		—	—		—		(76,547)		—		(76,547)		(55)		(76,602)
Balance, March 31, 2020	30,871,246	$	309	215,556,297	$	2,155	$	13,261,070	$	(104,217)	$	(6,448,652)	$	6,710,665	$	7,366	$	6,718,031



Redemption of Series F Preferred Stock	—��	—		—	—		(25)		—		—		(25)		—		(25)


Equity-based compensation, net	—	—		13,415	1		4,070		—		—		4,071		—		4,071

Distributions declared on Common Stock — $0.385 per common share	—	—		—	—		—		—		(82,997)		(82,997)		—		(82,997)
Distributions to non-controlling interest holders	—	—		—	—		—		—		—		—		(61)		(61)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—		—		(18)		(18)		—		(18)
Distributions to preferred shareholders and unitholders	—	—		—	—		—		—		(12,928)		(12,928)		(20)		(12,948)
Repurchase of convertible notes	—	—		—	—		(204)		—		—		(204)		—		(204)
Net income	—	—		—	—		—		—		56,074		56,074		31		56,105
Other comprehensive loss	—	—		—	—		—		(1,892)		—		(1,892)		(1)		(1,893)
Balance, June 30, 2020	30,871,246	$	309	215,569,712	$	2,156	$	13,264,911	$	(106,109)	$	(6,488,521)	$	6,672,746	$	7,315	$	6,680,061
Issuance of Common Stock, net	—	—		2,659,332	27		89,252		—		—		89,279		—		89,279

Redemption of Limited Partners' Common OP Units	—	—		—	—		—		—		—		—		(149)		(149)

Redemption of Series F Preferred Stock	(12,000,000)	(120)		—	—		(299,932)		—		—		(300,052)		—		(300,052)

Repurchases of Common Stock to settle tax obligation	—	—		(250)	—		(8)		—		—		(8)		—		(8)
Equity-based compensation, net	—	—		19,634	—		3,211		—		—		3,211		—		3,211

Distributions declared on Common Stock — $0.385 per common share	—	—		—	—		—		—		(84,026)		(84,026)		—		(84,026)
Distributions to non-controlling interest holders	—	—		—	—		—		—		—		—		(59)		(59)

Table of Contents

VEREIT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for share data) (Unaudited)


	Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stock-holders’ Equity		Non-Controlling Interests		Total Equity
Dividend equivalents on awards granted under the Equity Plan	—	$	—	—	$	—	$	—	$	—	$	(24)	$	(24)	$	—	$	(24)
Distributions to preferred shareholders and unitholders	—	—		—	—		—		—		(10,750)		(10,750)		(21)		(10,771)
Repurchase of convertible notes	—	—		—	—		(26)		—		—		(26)		—		(26)
Net income	—	—		—	—		—		—		98,866		98,866		51		98,917
Other comprehensive income	—	—		—	—		—		9,101		—		9,101		6		9,107
Balance, September 30, 2020	18,871,246	$	189	218,248,428	$	2,183	$	13,057,408	$	(97,008)	$	(6,484,455)	$	6,478,317	$	7,143	$	6,485,460

The accompanying notes are an integral part of these statements.

810

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VEREIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

Six Months Ended June 30,
2021 2020
Cash flows from operating activities:
Net income $ 198,626 $ 142,968
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 223,136 239,036
Gain on real estate assets, net (97,046) (34,303)
Impairments 45,978 20,474
Equity-based compensation 7,029 6,926
Equity in income of unconsolidated entities (911) (1,743)
Distributions from unconsolidated entities 911 861
(Gain) loss on other investments (672) 683
Loss on extinguishment and forgiveness of debt, net 2,097 1,480
Changes in assets and liabilities:
Investment in direct financing leases 741 736
Rent and tenant receivables, operating lease right-of-use and other assets, net 2,004 (30,158)
Accounts payable and accrued expenses (16,520) (13,870)
Deferred rent, operating lease and other liabilities (2,951) (12,138)
Net cash provided by operating activities 362,422 320,952
Cash flows from investing activities:
Investments in real estate assets (318,750) (147,121)
Capital expenditures and leasing costs (12,371) (15,665)
Real estate developments (6,599) (6,469)
Investments in unconsolidated entities (2,180) (10,066)
Return of investment from unconsolidated entities 3,330 970
Proceeds from disposition of real estate 360,587 204,114
Investment in leasehold improvements and other assets (125) (314)
Deposits for real estate assets (6,161) (1,420)
Investments in mezzanine position 0 (9,959)
Uses and refunds of deposits for real estate assets 5,760 4,036
Proceeds from the settlement of property-related insurance claims 1,123 48
Net cash provided by investing activities 24,614 18,154
Cash flows from financing activities:
Proceeds from mortgage notes payable 0 1,032
Payments on mortgage notes payable and other debt, including debt extinguishment costs (329,182) (135,036)
Proceeds from credit facility 0 902,000
Payments on credit facility, including swap termination payments 0 (1,052,000)
Proceeds from corporate bonds 0 594,864
Extinguishment costs related to the redemption of corporate bonds 0 (26)
Extinguishment costs related to the repurchases of convertible notes 0 (50,326)
Payments of deferred financing costs (1,195) (6,946)
Refunds of deferred financing costs 280 0
Repurchases of Common Stock to settle tax obligations (1,781) (2,378)
Proceeds from the issuance of Common Stock, net of underwriters’ discount and offering expenses 1,336 0
Redemption of Series F Preferred Stock (100,041) (52)
Distributions paid (208,754) (324,032)
Net cash used in financing activities (639,337) (72,900)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net income	$	260,239	$	241,885
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	334,483		350,600
Gain on real estate assets, net	(100,320)		(77,117)
Impairments	59,250		36,871
Equity-based compensation	10,217		10,137
Equity in income of unconsolidated entities	(1,374)		(2,406)
Distributions from unconsolidated entities	1,122		1,753
(Gain) loss on other investments	(691)		607

Loss on extinguishment and forgiveness of debt, net	2,102		1,419

Changes in assets and liabilities:
Investment in direct financing leases	1,125		1,117
Rent and tenant receivables, operating lease right-of-use and other assets, net	(1,781)		(38,277)
Accounts payable and accrued expenses	11,331		(9,645)
Deferred rent, operating lease and other liabilities	(11,505)		(2,936)
Net cash provided by operating activities	564,198		514,008
Cash flows from investing activities:
Investments in real estate assets	(419,139)		(147,121)
Capital expenditures and leasing costs	(22,722)		(21,102)
Real estate developments	(14,383)		(16,592)

Investments in unconsolidated entities	(2,180)		(21,348)
Return of investment from unconsolidated entities	3,706		1,961
Proceeds from disposition of real estate	420,171		346,675
Investment in leasehold improvements and other assets	(80)		(612)
Deposits for real estate assets	(8,661)		(1,973)
Investments in mezzanine position	—		(9,959)

Uses and refunds of deposits for real estate assets	7,060		4,036
Proceeds from the settlement of property-related insurance claims	1,148		654
Net cash (used in) provided by investing activities	(35,080)		134,619
Cash flows from financing activities:
Proceeds from mortgage notes payable	—		1,032
Payments on mortgage notes payable and other debt, including debt extinguishment costs	(344,459)		(197,382)
Proceeds from credit facility	192,000		902,000
Payments on credit facility, including swap termination payments	(104,000)		(1,052,000)
Proceeds from corporate bonds	—		594,864
Extinguishment costs related to the redemption of corporate bonds	—		(26)

Extinguishment costs related to the repurchases of convertible notes	—		(69,362)
Payments of deferred financing costs	(1,195)		(7,275)
Refunds of deferred financing costs	280		—

Repurchases of Common Stock to settle tax obligations	(1,828)		(2,386)
Proceeds from the issuance of Common Stock, net of underwriters’ discount and offering expenses	1,336		89,279
Redemption of Series F Preferred Stock	(473,073)		(300,104)
Redemption of Limited Partners’ Common OP Units	—		(149)

911

Table of Contents

VEREIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)

(In thousands) (Unaudited)


		Six Months Ended June 30,				Nine Months Ended September 30,
		2021		2020				2021		2020
Distributions paid							Distributions paid	(318,883)		(418,722)

Net cash used in financing activities							Net cash used in financing activities	(1,049,822)		(460,231)
Net change in cash and cash equivalents and restricted cash	Net change in cash and cash equivalents and restricted cash	(252,301)		266,206			Net change in cash and cash equivalents and restricted cash	(520,704)		188,396

Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	537,381		33,880			Cash and cash equivalents and restricted cash, beginning of period	537,381		33,880

Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	285,080		300,086			Cash and cash equivalents and restricted cash, end of period	16,677		222,276

Reconciliation of Cash and Cash Equivalents and Restricted Cash	Reconciliation of Cash and Cash Equivalents and Restricted Cash						Reconciliation of Cash and Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	$	523,539	$	12,921		Cash and cash equivalents at beginning of period	$	523,539	$	12,921
Restricted cash at beginning of period	Restricted cash at beginning of period	13,842		20,959			Restricted cash at beginning of period	13,842		20,959
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	537,381		33,880			Cash and cash equivalents and restricted cash at beginning of period	537,381		33,880

Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	275,496		278,883			Cash and cash equivalents at end of period	5,874		207,321
Restricted cash at end of period	Restricted cash at end of period	9,584		21,203			Restricted cash at end of period	10,803		14,955
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	285,080	$	300,086		Cash and cash equivalents and restricted cash at end of period	$	16,677	$	222,276

The accompanying notes are an integral part of these statements.

1012

Table of Contents

VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for unit data) (Unaudited)


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Real estate investments, at cost:	Real estate investments, at cost:					Real estate investments, at cost:
Land	Land	$	2,724,975	$	2,699,110	Land	$	2,724,709	$	2,699,110
Buildings, fixtures and improvements	Buildings, fixtures and improvements	9,912,886		10,032,055		Buildings, fixtures and improvements	9,916,070		10,032,055
Intangible lease assets	Intangible lease assets	1,908,178		1,872,461		Intangible lease assets	1,917,251		1,872,461
Total real estate investments, at cost	Total real estate investments, at cost	14,546,039		14,603,626		Total real estate investments, at cost	14,558,030		14,603,626
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	3,917,175		3,833,084		Less: accumulated depreciation and amortization	4,002,377		3,833,084
Total real estate investments, net	Total real estate investments, net	10,628,864		10,770,542		Total real estate investments, net	10,555,653		10,770,542
Operating lease right-of-use assets	Operating lease right-of-use assets	188,628		195,518		Operating lease right-of-use assets	185,443		195,518
Investment in unconsolidated entities	Investment in unconsolidated entities	80,487		81,639		Investment in unconsolidated entities	80,363		81,639
Cash and cash equivalents	Cash and cash equivalents	275,496		523,539		Cash and cash equivalents	5,874		523,539
Restricted cash	Restricted cash	9,584		13,842		Restricted cash	10,803		13,842
Rent and tenant receivables and other assets, net	Rent and tenant receivables and other assets, net	365,186		366,620		Rent and tenant receivables and other assets, net	371,911		366,620
Goodwill	Goodwill	1,337,773		1,337,773		Goodwill	1,337,773		1,337,773

Real estate assets held for sale, net	Real estate assets held for sale, net	28,977		65,583		Real estate assets held for sale, net	31,073		65,583
Total assets	Total assets	$	12,914,995	$	13,355,056	Total assets	$	12,578,893	$	13,355,056

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Mortgage notes payable, net	Mortgage notes payable, net	$	1,002,496	$	1,328,835	Mortgage notes payable, net	$	987,704	$	1,328,835
Corporate bonds, net	Corporate bonds, net	4,588,286		4,584,230		Corporate bonds, net	4,590,348		4,584,230

Credit facility						Credit facility	88,000		—
Below-market lease liabilities, net	Below-market lease liabilities, net	115,831		120,938		Below-market lease liabilities, net	111,140		120,938
Accounts payable and accrued expenses	Accounts payable and accrued expenses	117,445		117,015		Accounts payable and accrued expenses	137,626		117,015
Deferred rent and other liabilities	Deferred rent and other liabilities	64,371		63,204		Deferred rent and other liabilities	58,707		63,204
Distributions payable	Distributions payable	106,999		89,514		Distributions payable	105,958		89,514

Operating lease liabilities	Operating lease liabilities	199,561		209,104		Operating lease liabilities	196,671		209,104
Total liabilities	Total liabilities	6,194,989		6,512,840		Total liabilities	6,276,154		6,512,840
Commitments and contingencies (Note 10)	Commitments and contingencies (Note 10)	0		0		Commitments and contingencies (Note 10)	0		0
General Partner's preferred equity, 14,871,246 and 18,871,246 General Partner Series F Preferred Units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		141,520		254,294
General Partner's common equity, 229,149,616 and 228,881,547 General Partner OP Units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively		6,571,413		6,580,752
Limited Partner's preferred equity, 49,766 Limited Partner Series F Preferred Units issued and outstanding as of each of June 30, 2021 and December 31, 2020, respectively		1,747		1,787
Limited Partner's common equity, 152,033 Limited Partner OP Units issued and outstanding as of each of June 30, 2021 and December 31, 2020, respectively		4,183		4,209
General Partner's preferred equity, 18,871,246 General Partner Series F Preferred Units issued and outstanding as of December 31, 2020.						General Partner's preferred equity, 18,871,246 General Partner Series F Preferred Units issued and outstanding as of December 31, 2020.	—		254,294
General Partner's common equity, 229,152,001 and 228,881,547 General Partner OP Units issued and outstanding as of September 30, 2021 and December 31, 2020, respectively						General Partner's common equity, 229,152,001 and 228,881,547 General Partner OP Units issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	6,296,943		6,580,752
Limited Partner's preferred equity, 49,766 Limited Partner Series F Preferred Units issued and outstanding as of December 31, 2020.						Limited Partner's preferred equity, 49,766 Limited Partner Series F Preferred Units issued and outstanding as of December 31, 2020.	—		1,787
Limited Partner's common equity, 152,033 Limited Partner OP Units issued and outstanding as of each of September 30, 2021 and December 31, 2020, respectively						Limited Partner's common equity, 152,033 Limited Partner OP Units issued and outstanding as of each of September 30, 2021 and December 31, 2020, respectively	4,663		4,209
Total partners’ equity	Total partners’ equity	6,718,863		6,841,042		Total partners’ equity	6,301,606		6,841,042
Non-controlling interests	Non-controlling interests	1,143		1,174		Non-controlling interests	1,133		1,174
Total equity	Total equity	6,720,006		6,842,216		Total equity	6,302,739		6,842,216
Total liabilities and equity	Total liabilities and equity	$	12,914,995	$	13,355,056	Total liabilities and equity	$	12,578,893	$	13,355,056

The accompanying notes are an integral part of these statements.

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VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per unit data) (Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020
Revenues:	Revenues:										Revenues:
Rental	Rental	$	290,567	$	278,576	$	580,876	$	577,162		Rental	$	289,671	$	293,692	$	870,547	$	870,854
Fees from managed partnerships	Fees from managed partnerships	700		421		1,200		1,017			Fees from managed partnerships	521		1,586		1,721		2,603
Total revenues	Total revenues	291,267		278,997		582,076		578,179			Total revenues	290,192		295,278		872,268		873,457
Operating expenses:	Operating expenses:										Operating expenses:
Acquisition-related	Acquisition-related	1,428		1,169		2,782		2,692			Acquisition-related	1,373		1,050		4,155		3,742
Merger, litigation and non-routine costs, net	Merger, litigation and non-routine costs, net	6,605		(118)		6,673		(8,682)			Merger, litigation and non-routine costs, net	9,445		105		16,118		(8,577)
Property operating	Property operating	29,174		29,098		59,779		59,588			Property operating	28,854		31,400		88,633		90,988
General and administrative	General and administrative	16,451		16,120		30,977		31,176			General and administrative	12,437		14,774		43,414		45,950
Depreciation and amortization	Depreciation and amortization	105,839		108,733		213,914		232,813			Depreciation and amortization	106,668		108,257		320,582		341,070
Impairments	Impairments	14,129		12,094		45,978		20,474			Impairments	13,272		16,397		59,250		36,871
Total operating expenses	Total operating expenses	173,626		167,096		360,103		338,061			Total operating expenses	172,049		171,983		532,152		510,044
Other expense:	Other expense:										Other expense:
Interest expense	Interest expense	(59,291)		(65,613)		(120,027)		(130,309)			Interest expense	(59,768)		(66,935)		(179,795)		(197,244)
Gain (loss) on extinguishment and forgiveness of debt, net		35		(200)		(2,097)		(1,480)
(Loss) gain on extinguishment and forgiveness of debt, net											(Loss) gain on extinguishment and forgiveness of debt, net	(5)		61		(2,102)		(1,419)
Other income, net	Other income, net	3,089		778		6,755		953			Other income, net	346		73		7,101		1,026

Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	464		1,497		911		1,743			Equity in income of unconsolidated entities	463		663		1,374		2,406
Gain on disposition of real estate and real estate assets held for sale, net	Gain on disposition of real estate and real estate assets held for sale, net	16,896		8,795		92,970		34,044			Gain on disposition of real estate and real estate assets held for sale, net	3,369		42,814		96,339		76,858
Total other expense, net	Total other expense, net	(38,807)		(54,743)		(21,488)		(95,049)			Total other expense, net	(55,595)		(23,324)		(77,083)		(118,373)
Income before taxes	Income before taxes	78,834		57,158		200,485		145,069			Income before taxes	62,548		99,971		263,033		245,040
Provision for income taxes	Provision for income taxes	(931)		(1,053)		(1,859)		(2,101)			Provision for income taxes	(935)		(1,054)		(2,794)		(3,155)
Net income	Net income	77,903		56,105		198,626		142,968			Net income	61,613		98,917		260,239		241,885
Net loss attributable to non-controlling interests (1)	Net loss attributable to non-controlling interests (1)	28		8		31		15			Net loss attributable to non-controlling interests (1)	10		14		41		29
Net income attributable to the OP	Net income attributable to the OP	$	77,931	$	56,113	$	198,657	$	142,983		Net income attributable to the OP	$	61,623	$	98,931	$	260,280	$	241,914

Basic and diluted net income per unit attributable to common unitholders	Basic and diluted net income per unit attributable to common unitholders	$	0.31	$	0.20	$	0.81	$	0.54		Basic and diluted net income per unit attributable to common unitholders	$	0.25	$	0.41	$	1.06	$	0.95

(1)Represents net loss attributable to a consolidated joint venture partner.

The accompanying notes are an integral part of these statements.

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VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands) (Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020
Net income	Net income	$	77,903	$	56,105	$	198,626	$	142,968		Net income	$	61,613	$	98,917	$	260,239	$	241,885
Total other comprehensive income (loss)	Total other comprehensive income (loss)										Total other comprehensive income (loss)
Unrealized gain (loss) on interest rate derivatives	Unrealized gain (loss) on interest rate derivatives	0		(6,497)		0		(85,047)			Unrealized gain (loss) on interest rate derivatives	—		3,666		—		(81,383)
Reclassification of previous unrealized loss on interest rate derivatives into net income	Reclassification of previous unrealized loss on interest rate derivatives into net income	98		4,604		196		6,552			Reclassification of previous unrealized loss on interest rate derivatives into net income	99		5,441		295		11,995
Total other comprehensive income (loss)	Total other comprehensive income (loss)	98		(1,893)		196		(78,495)			Total other comprehensive income (loss)	99		9,107		295		(69,388)

Total comprehensive income	Total comprehensive income	78,001		54,212		198,822		64,473			Total comprehensive income	61,712		108,024		260,534		172,497
Comprehensive loss attributable to non-controlling interests (1)	Comprehensive loss attributable to non-controlling interests (1)	28		8		31		15			Comprehensive loss attributable to non-controlling interests (1)	10		14		41		29
Total comprehensive income attributable to the OP	Total comprehensive income attributable to the OP	$	78,029	$	54,220	$	198,853	$	64,488		Total comprehensive income attributable to the OP	$	61,722	$	108,038	$	260,575	$	172,526

(1)Represents comprehensive loss attributable to a consolidated joint venture partner.

The accompanying notes are an integral part of these statements.

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VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for unit data) (Unaudited)

Preferred Units Common Units
General Partner Limited Partner General Partner Limited Partner
Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital
Balance, January 1, 2021 18,871,246 $ 254,294 49,766 $ 1,787 228,881,547 $ 6,580,752 152,033 $ 4,209 $ 6,841,042 $ 1,174 $ 6,842,216
Issuance of common OP Units, net — — — — 35,710 — — — — — —
Redemption of Series F Preferred Stock (4,000,000) (100,000) — — — — — — (100,000) — (100,000)
Repurchases of common OP Units to settle tax obligation — — — — (49,237) (1,681) — — (1,681) — (1,681)
Equity-based compensation, net — — — — 261,934 2,892 — — 2,892 — 2,892
Distributions to Common OP Units and non-controlling interests —$0.462 per common unit — — — — — (105,858) — (70) (105,928) — (105,928)
Dividend equivalents on awards granted under the Equity Plan — — — — — (1,581) — — (1,581) — (1,581)
Distributions to Series F Preferred Units — (6,506) — (19) — — — — (6,525) — (6,525)
Net income (loss) — — — — — 120,647 — 79 120,726 (3) 120,723
Other comprehensive income — — — — — 98 — — 98 — 98
Balance, March 31, 2021 14,871,246 $ 147,788 49,766 $ 1,768 229,129,954 $ 6,595,269 152,033 $ 4,218 $ 6,749,043 $ 1,171 $ 6,750,214
Redemption of Series F Preferred Stock — (41) — — — — — — (41) — (41)
Repurchases of common OP Units to settle tax obligation — — — — (18,042) (100) — — (100) — (100)
Equity-based compensation, net — — — — 37,704 4,137 — — 4,137 — 4,137
Distributions to Common OP Units and non-controlling interests —$0.462 per common unit — — — — — (105,867) — (70) (105,937) — (105,937)
Dividend equivalents on awards granted under the Equity Plan — — — — — (20) — — (20) — (20)
Distributions to Series F Preferred Units — (6,227) — (21) — — — — (6,248) — (6,248)
Net income (loss) — — — — — 77,896 — 35 77,931 (28) 77,903
Other comprehensive income — — — — — 98 — — 98 — 98
Balance, June 30, 2021 14,871,246 $ 141,520 49,766 $ 1,747 229,149,616 $ 6,571,413 152,033 $ 4,183 $ 6,718,863 $ 1,143 $ 6,720,006


	Preferred Units						Common Units
	General Partner			Limited Partner			General Partner			Limited Partner
	Number of Units	Capital		Number of Units	Capital		Number of Units	Capital		Number of Units	Capital		Total Partners' Capital		Non-Controlling Interests		Total Capital
Balance, January 1, 2021	18,871,246	$	254,294	49,766	$	1,787	228,881,547	$	6,580,752	152,033	$	4,209	$	6,841,042	$	1,174	$	6,842,216
Issuance of common OP Units, net	—	—		—	—		35,710	—		—	—		—		—		—

Redemption of Series F Preferred Units	(4,000,000)	(100,000)		—	—		—	—		—	—		(100,000)		—		(100,000)

Repurchases of common OP Units to settle tax obligation	—	—		—	—		(49,237)	(1,681)		—	—		(1,681)		—		(1,681)
Equity-based compensation, net	—	—		—	—		261,934	2,892		—	—		2,892		—		2,892

Distributions to Common OP Units and non-controlling interests —$0.462 per common unit	—	—		—	—		—	(105,858)		—	(70)		(105,928)		—		(105,928)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—	(1,581)		—	—		(1,581)		—		(1,581)
Distributions to Series F Preferred Units	—	(6,506)		—	(19)		—	—		—	—		(6,525)		—		(6,525)
Net income (loss)	—	—		—	—		—	120,647		—	79		120,726		(3)		120,723
Other comprehensive income	—	—		—	—		—	98		—	—		98		—		98
Balance, March 31, 2021	14,871,246	$	147,788	49,766	$	1,768	229,129,954	$	6,595,269	152,033	$	4,218	$	6,749,043	$	1,171	$	6,750,214


Redemption of Series F Preferred Units	—	(41)		—	—		—	—		—	—		(41)		—		(41)

Repurchases of common OP Units to settle tax obligation	—	—		—	—		(18,042)	(100)		—	—		(100)		—		(100)
Equity-based compensation, net	—	—		—	—		37,704	4,137		—	—		4,137		—		4,137

Distributions to Common OP Units and non-controlling interests —$0.462 per common unit	—	—		—	—		—	(105,867)		—	(70)		(105,937)		—		(105,937)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—	(20)		—	—		(20)		—		(20)
Distributions to Series F Preferred Units	—	(6,227)		—	(21)		—	—		—	—		(6,248)		—		(6,248)
Net income (loss)	—	—		—	—		—	77,896		—	35		77,931		(28)		77,903
Other comprehensive income	—	—		—	—		—	98		—	—		98		—		98
Balance, June 30, 2021	14,871,246	$	141,520	49,766	$	1,747	229,149,616	$	6,571,413	152,033	$	4,183	$	6,718,863	$	1,143	$	6,720,006


Redemption of Series F Preferred Units	(14,871,246)	(138,407)		(49,766)	(1,736)		—	(233,381)		—	492		(373,032)		—		(373,032)

Repurchases of common OP Units to settle tax obligation	—	—		—	—		(6,356)	(47)		—	—		(47)		—		(47)
Equity-based compensation, net	—	—		—	—		8,741	3,188		—	—		3,188		—		3,188

Distributions to Common OP Units and non-controlling interests —$0.462 per common unit	—	—		—	—		—	(105,868)		—	(70)		(105,938)		—		(105,938)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—	(26)		—	—		(26)		—		(26)
Distributions to Series F Preferred Units	—	(3,113)		—	(11)		—	—		—	—		(3,124)		—		(3,124)
Net income (loss)	—	—		—	—		—	61,565		—	58		61,623		(10)		61,613
Other comprehensive income	—	—		—	—		—	99		—	—		99		—		99
Balance, September 30, 2021	—	$	—	—	$	—	229,152,001	$	6,296,943	152,033	$	4,663	$	6,301,606	$	1,133	$	6,302,739

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VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for unit data) (Unaudited)

Preferred Units Common Units
General Partner Limited Partner General Partner Limited Partner
Number of Units Capital Number of Units Capital Number of Units Capital Number of Units Capital Total Partners' Capital Non-Controlling Interests Total Capital
Balance, January 1, 2020 30,871,246 $ 460,504 49,766 $ 1,869 215,369,197 $ 6,402,155 157,343 $ 4,433 $ 6,868,961 $ 1,233 $ 6,870,194
Conversion of Limited Partners' Common OP Units to General Partner's Common OP Units — — — — 910 45 (910) (45) — — 0
Redemption of Series F Preferred Stock — (27) — — — — — — (27) — (27)
Repurchases of common OP Units to settle tax obligation — — — — (48,218) (2,378) — — (2,378) — (2,378)
Equity-based compensation, net — — — — 234,408 2,855 — — 2,855 — 2,855
Distributions to Common OP Units and non-controlling interests —$0.6875 per common unit — — — — — (148,194) — (105) (148,299) — (148,299)
Dividend equivalents on awards granted under the Equity Plan — — — — — (1,628) — — (1,628) — (1,628)
Distributions to Series F Preferred Units — (12,928) — (19) — — — — (12,947) — (12,947)
Net income (loss) — — — — — 86,808 — 62 86,870 (7) 86,863
Other comprehensive loss — — — — — (76,547) — (55) (76,602) — (76,602)
Balance, March 31, 2020 30,871,246 $ 447,549 49,766 $ 1,850 215,556,297 $ 6,263,116 156,433 $ 4,290 $ 6,716,805 $ 1,226 $ 6,718,031
Redemption of Series F Preferred Stock — (25) — — — — — — (25) — (25)
Equity-based compensation, net — — — — 13,415 4,071 — — 4,071 — 4,071
Distributions to Common OP Units and non-controlling interests —$0.3850 per common unit — — — — — (82,997) — (61) (83,058) —�� (83,058)
Dividend equivalents on awards granted under the Equity Plan — — — — — (18) — — (18) — (18)
Distributions to Series F Preferred Units — (12,928) — (20) — — — — (12,948) — (12,948)
Repurchase of convertible notes — — — — — (204) — — (204) — (204)
Net income (loss) — — — — — 56,074 — 39 56,113 (8) 56,105
Other comprehensive loss — — — — — (1,892) — (1) (1,893) — (1,893)
Balance, June 30, 2020 30,871,246 $ 434,596 49,766 $ 1,830 215,569,712 $ 6,238,150 156,433 $ 4,267 $ 6,678,843 $ 1,218 $ 6,680,061


	Preferred Units						Common Units
	General Partner			Limited Partner			General Partner			Limited Partner
	Number of Units	Capital		Number of Units	Capital		Number of Units	Capital		Number of Units	Capital		Total Partners' Capital		Non-Controlling Interests		Total Capital
Balance, January 1, 2020	30,871,246	$	460,504	49,766	$	1,869	215,369,197	$	6,402,155	157,343	$	4,433	$	6,868,961	$	1,233	$	6,870,194

Conversion of Limited Partners' Common OP Units to General Partner's Common OP Units	—	—		—	—		910	45		(910)	(45)		—		—		—

Redemption of Series F Preferred Units	—	(27)		—	—		—	—		—	—		(27)		—		(27)

Repurchases of common OP Units to settle tax obligation	—	—		—	—		(48,218)	(2,378)		—	—		(2,378)		—		(2,378)
Equity-based compensation, net	—	—		—	—		234,408	2,855		—	—		2,855		—		2,855

Distributions to Common OP Units and non-controlling interests —$0.6875 per common unit	—	—		—	—		—	(148,194)		—	(105)		(148,299)		—		(148,299)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—	(1,628)		—	—		(1,628)		—		(1,628)
Distributions to Series F Preferred Units	—	(12,928)		—	(19)		—	—		—	—		(12,947)		—		(12,947)

Net income (loss)	—	—		—	—		—	86,808		—	62		86,870		(7)		86,863
Other comprehensive loss	—	—		—	—		—	(76,547)		—	(55)		(76,602)		—		(76,602)
Balance, March 31, 2020	30,871,246	$	447,549	49,766	$	1,850	215,556,297	$	6,263,116	156,433	$	4,290	$	6,716,805	$	1,226	$	6,718,031



Redemption of Series F Preferred Units	—	(25)		—	—		—	—		—	—		(25)		—		(25)


Equity-based compensation, net	—	—		—	—		13,415	4,071		—	—		4,071		—		4,071

Distributions to Common OP Units and non-controlling interests —$0.3850 per common unit	—	—		—	—		—	(82,997)		—	(61)		(83,058)		—		(83,058)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—	(18)		—	—		(18)		—		(18)
Distributions to Series F Preferred Units	—	(12,928)		—	(20)		—	—		—	—		(12,948)		—		(12,948)
Repurchase of convertible notes	—	—		—	—		—	(204)		—	—		(204)		—		(204)
Net income (loss)	—	—		—	—		—	56,074		—	39		56,113		(8)		56,105
Other comprehensive loss	—	—		—	—		—	(1,892)		—	(1)		(1,893)		—		(1,893)
Balance, June 30, 2020	30,871,246	$	434,596	49,766	$	1,830	215,569,712	$	6,238,150	156,433	$	4,267	$	6,678,843	$	1,218	$	6,680,061
Issuance of common OP Units, net	—	—		—	—		2,659,332	89,279		—	—		89,279		—		89,279

Redemption of Limited Partners' Common OP Units	—	—		—	—		—	—		(4,400)	(149)		(149)		—		(149)

Redemption of Series F Preferred Units	(12,000,000)	(300,052)		—	—		—	—		—	—		(300,052)		—		(300,052)

Repurchases of common OP Units to settle tax obligation	—	—		—	—		(250)	(8)		—	—		(8)		—		(8)
Equity-based compensation, net	—	—		—	—		19,634	3,211		—	—		3,211		—		3,211

Distributions to Common OP Units and non-controlling interests — $0.3850 per common unit	—	—		—	—		—	(84,026)		—	(59)		(84,085)		—		(84,085)
Dividend equivalents on awards granted under the Equity Plan	—	—		—	—		—	(24)		—	—		(24)		—		(24)

Table of Contents

VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except for unit data) (Unaudited)


	Preferred Units						Common Units
	General Partner			Limited Partner			General Partner			Limited Partner
	Number of Units	Capital		Number of Units	Capital		Number of Units	Capital		Number of Units	Capital		Total Partners' Capital		Non-Controlling Interests		Total Capital
Distributions to Series F Preferred Units	—	$	(10,750)	—	$	(21)	—	$	—	—	$	—	$	(10,771)	$	—	$	(10,771)
Repurchase of convertible notes	—	—		—	—		—	(26)		—	—		(26)		—		(26)
Net income (loss)	—	—		—	—		—	98,866		—	65		98,931		(14)		98,917
Other comprehensive income	—	—		—	—		—	9,101		—	6		9,107		—		9,107
Balance, September 30, 2020	18,871,246	$	123,794	49,766	$	1,809	218,248,428	$	6,354,523	152,033	$	4,130	$	6,484,256	$	1,204	$	6,485,460

The accompanying notes are an integral part of these statements.

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VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


		Six Months Ended June 30,				Nine Months Ended September 30,
		2021		2020				2021		2020
Cash flows from operating activities:	Cash flows from operating activities:						Cash flows from operating activities:
Net income	Net income	$	198,626	$	142,968		Net income	$	260,239	$	241,885
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	223,136		239,036			Depreciation and amortization	334,483		350,600
Gain on real estate assets, net	Gain on real estate assets, net	(97,046)		(34,303)			Gain on real estate assets, net	(100,320)		(77,117)
Impairments	Impairments	45,978		20,474			Impairments	59,250		36,871
Equity-based compensation	Equity-based compensation	7,029		6,926			Equity-based compensation	10,217		10,137
Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	(911)		(1,743)			Equity in income of unconsolidated entities	(1,374)		(2,406)
Distributions from unconsolidated entities	Distributions from unconsolidated entities	911		861			Distributions from unconsolidated entities	1,122		1,753
(Gain) loss on other investments	(Gain) loss on other investments	(672)		683			(Gain) loss on other investments	(691)		607

Loss on extinguishment and forgiveness of debt, net	Loss on extinguishment and forgiveness of debt, net	2,097		1,480			Loss on extinguishment and forgiveness of debt, net	2,102		1,419

Changes in assets and liabilities:	Changes in assets and liabilities:						Changes in assets and liabilities:
Investment in direct financing leases	Investment in direct financing leases	741		736			Investment in direct financing leases	1,125		1,117
Rent and tenant receivables, operating lease right-of-use and other assets, net	Rent and tenant receivables, operating lease right-of-use and other assets, net	2,004		(30,158)			Rent and tenant receivables, operating lease right-of-use and other assets, net	(1,781)		(38,277)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(16,520)		(13,870)			Accounts payable and accrued expenses	11,331		(9,645)
Deferred rent, operating lease and other liabilities	Deferred rent, operating lease and other liabilities	(2,951)		(12,138)			Deferred rent, operating lease and other liabilities	(11,505)		(2,936)
Net cash provided by operating activities	Net cash provided by operating activities	362,422		320,952			Net cash provided by operating activities	564,198		514,008
Cash flows from investing activities:	Cash flows from investing activities:						Cash flows from investing activities:
Investments in real estate assets	Investments in real estate assets	(318,750)		(147,121)			Investments in real estate assets	(419,139)		(147,121)
Capital expenditures and leasing costs	Capital expenditures and leasing costs	(12,371)		(15,665)			Capital expenditures and leasing costs	(22,722)		(21,102)
Real estate developments	Real estate developments	(6,599)		(6,469)			Real estate developments	(14,383)		(16,592)

Investments in unconsolidated entities	Investments in unconsolidated entities	(2,180)		(10,066)			Investments in unconsolidated entities	(2,180)		(21,348)
Return of investment from unconsolidated entities	Return of investment from unconsolidated entities	3,330		970			Return of investment from unconsolidated entities	3,706		1,961
Proceeds from disposition of real estate	Proceeds from disposition of real estate	360,587		204,114			Proceeds from disposition of real estate	420,171		346,675
Investment in leasehold improvements and other assets	Investment in leasehold improvements and other assets	(125)		(314)			Investment in leasehold improvements and other assets	(80)		(612)
Investments in mezzanine position	Investments in mezzanine position	0		(9,959)			Investments in mezzanine position	—		(9,959)

Deposits for real estate assets	Deposits for real estate assets	(6,161)		(1,420)			Deposits for real estate assets	(8,661)		(1,973)
Uses and refunds of deposits for real estate assets	Uses and refunds of deposits for real estate assets	5,760		4,036			Uses and refunds of deposits for real estate assets	7,060		4,036
Proceeds from the settlement of property-related insurance claims	Proceeds from the settlement of property-related insurance claims	1,123		48			Proceeds from the settlement of property-related insurance claims	1,148		654
Net cash provided by investing activities		24,614		18,154
Net cash (used in) provided by investing activities							Net cash (used in) provided by investing activities	(35,080)		134,619
Cash flows from financing activities:	Cash flows from financing activities:						Cash flows from financing activities:
Proceeds from mortgage notes payable	Proceeds from mortgage notes payable	0		1,032			Proceeds from mortgage notes payable	—		1,032
Payments on mortgage notes payable and other debt, including debt extinguishment costs	Payments on mortgage notes payable and other debt, including debt extinguishment costs	(329,182)		(135,036)			Payments on mortgage notes payable and other debt, including debt extinguishment costs	(344,459)		(197,382)
Proceeds from credit facility	Proceeds from credit facility	0		902,000			Proceeds from credit facility	192,000		902,000
Payments on credit facility, including swap termination payments	Payments on credit facility, including swap termination payments	0		(1,052,000)			Payments on credit facility, including swap termination payments	(104,000)		(1,052,000)
Proceeds from corporate bonds	Proceeds from corporate bonds	0		594,864			Proceeds from corporate bonds	—		594,864
Extinguishment costs related to the redemption of corporate bonds	Extinguishment costs related to the redemption of corporate bonds	0		(26)			Extinguishment costs related to the redemption of corporate bonds	—		(26)

Extinguishment costs related to the repurchases of convertible notes	Extinguishment costs related to the repurchases of convertible notes	0		(50,326)			Extinguishment costs related to the repurchases of convertible notes	—		(69,362)
Payments of deferred financing costs	Payments of deferred financing costs	(1,195)		(6,946)			Payments of deferred financing costs	(1,195)		(7,275)
Refunds of deferred financing costs	Refunds of deferred financing costs	280		0			Refunds of deferred financing costs	280		—

Repurchases of Common Stock to settle tax obligations	Repurchases of Common Stock to settle tax obligations	(1,781)		(2,378)			Repurchases of Common Stock to settle tax obligations	(1,828)		(2,386)
Proceeds from the issuance of Common Stock, net of underwriters’ discount and offering expenses	Proceeds from the issuance of Common Stock, net of underwriters’ discount and offering expenses	1,336		0			Proceeds from the issuance of Common Stock, net of underwriters’ discount and offering expenses	1,336		89,279
Redemption of Series F Preferred Stock		(100,041)		(52)

Redemption of Series F Preferred Units							Redemption of Series F Preferred Units	(473,073)		(300,104)
Redemption of Limited Partners’ Common OP Units							Redemption of Limited Partners’ Common OP Units	—		(149)

Distributions paid	Distributions paid	(208,754)		(324,032)			Distributions paid	(318,883)		(418,722)

Net cash used in financing activities	Net cash used in financing activities	(639,337)		(72,900)			Net cash used in financing activities	(1,049,822)		(460,231)
Net change in cash and cash equivalents and restricted cash	Net change in cash and cash equivalents and restricted cash	(252,301)		266,206			Net change in cash and cash equivalents and restricted cash	(520,704)		188,396

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VEREIT OPERATING PARTNERSHIP, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)

(In thousands) (Unaudited)


								Nine Months Ended September 30,
		Six Months Ended June 30,				2021		2020
		2021		2020
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	$	537,381	$	33,880		Cash and cash equivalents and restricted cash, beginning of period	$	537,381	$	33,880

Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	285,080		300,086			Cash and cash equivalents and restricted cash, end of period	16,677		222,276

Reconciliation of Cash and Cash Equivalents and Restricted Cash	Reconciliation of Cash and Cash Equivalents and Restricted Cash						Reconciliation of Cash and Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	$	523,539	$	12,921		Cash and cash equivalents at beginning of period	$	523,539	$	12,921
Restricted cash at beginning of period	Restricted cash at beginning of period	13,842		20,959			Restricted cash at beginning of period	13,842		20,959
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	537,381		33,880			Cash and cash equivalents and restricted cash at beginning of period	537,381		33,880

Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	275,496		278,883			Cash and cash equivalents at end of period	5,874		207,321
Restricted cash at end of period	Restricted cash at end of period	9,584		21,203			Restricted cash at end of period	10,803		14,955
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	285,080	$	300,086		Cash and cash equivalents and restricted cash at end of period	$	16,677	$	222,276

The accompanying notes are an integral part of these statements.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited)

Note 1 – Organization

VEREIT is a Maryland corporation, incorporated on December 2, 2010, that qualified as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning in the taxable year ended December 31, 2011. The OP is a Delaware limited partnership of which the General Partner is the sole general partner. VEREIT’s common stock, par value $0.01 per share (“Common Stock”)~~, and its 6.70% Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share (“Series F Preferred Stock”) trade~~ trades on the New York Stock Exchange (“NYSE”) under the trading ~~symbols,~~symbol “VER” ~~and “VER PRF,” respectively.~~. As used herein, the terms the “Company,” “we,” “our” and “us” refer to VEREIT, together with its consolidated subsidiaries, including the OP.

VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. VEREIT’s business model provides equity capital to creditworthy corporations in return for long-term leases on their properties. The Company actively manages its portfolio considering a number of metrics including property type, concentration and key economic factors for appropriate balance and diversity.

Substantially all of the Company’s operations are conducted through the OP. VEREIT is the sole general partner and holder of 99.9% of the common equity interests in the OP as of ~~June~~September 30, 2021. Under the limited partnership agreement of the OP, as amended (the “LPA”), after holding common units of limited partner interests in the OP (“OP Units”) ~~or Series F Preferred Units of limited partnership interests in the OP (“Series F Preferred Units”),~~ for a period of one year and meeting the other requirements in the LPA, unless we otherwise consent to an earlier redemption, holders have the right to redeem the units for the cash value of a corresponding number of shares of Common Stock, ~~or Series F Preferred Stock,~~ as applicable, or, at our option, a corresponding number of shares of Common Stock, ~~or Series F Preferred Stock, as applicable,~~ subject to adjustment pursuant to the terms of the LPA. The remaining rights of the holders of OP Units are limited, however, and do not include the ability to replace the General Partner or to approve the sale, purchase or refinancing of the OP’s assets.

The actions of the OP and its relationship with the General Partner are governed by the LPA. The General Partner does not have any significant assets other than its investment in the OP. Therefore, the assets and liabilities of the General Partner and the OP are the same. Additionally, pursuant to the LPA, all administrative expenses and expenses associated with the formation, continuity, existence and operation of the General Partner incurred by the General Partner on the OP’s behalf shall be treated as expenses of the OP. Further, when the General Partner issues any equity instrument that has been approved by the General Partner’s Board of Directors, the LPA requires the OP to issue to the General Partner equity instruments with substantially similar terms, to protect the integrity of the Company’s umbrella partnership REIT structure, pursuant to which each holder of interests in the OP has a proportionate economic interest in the OP reflecting its capital contributions thereto. OP Units ~~and Series F Preferred Units~~ issued to the General Partner are referred to as “General Partner OP Units” ~~and “General Partner Series F Preferred Units,” respectively.~~. OP ~~Units and Series F Preferred~~ Units issued to parties other than the General Partner are referred to as “Limited Partner OP Units” ~~and~~. Series F Preferred Units issued to the General Partner were historically referred to as “General Partner Series F Preferred Units”. Series F Preferred Units issued to parties other than the General Partner were historically referred to as “Limited Partner Series F Preferred ~~Units,” respectively.~~Units”. The LPA also provides that the OP issue debt with terms and provisions consistent with debt issued by the General Partner. The LPA will be amended to provide for the issuance of any additional class of equivalent equity instruments to the extent the General Partner’s Board of Directors authorizes the issuance of any new class of equity securities.

Merger with Realty Income Corporation

On April 29, 2021, the Company and the OP entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Realty Income Corporation (“Realty Income”), Rams MD Subsidiary I, Inc., a wholly owned subsidiary of Realty Income (“Merger Sub 1”), and Rams Acquisition Sub II, LLC, a wholly owned subsidiary of Realty Income (“Merger Sub 2”) whereby Merger Sub 2 will be merged with and into the OP (the “Partnership Merger”), with the OP continuing as the surviving entity and, immediately thereafter, VEREIT will be merged with and into Merger Sub 1, with Merger Sub 1 continuing as the surviving corporation (the “Merger” and, together with the Partnership Merger, the “Mergers”).

Pursuant to the terms and subject to the conditions of the Merger Agreement, each VEREIT common stockholder will have the right to receive 0.705 of newly issued shares of Realty Income common stock (the “Realty Income Common Stock”), par value $0.01 per share. In addition, at the effective time of the Partnership Merger (i) each outstanding General Partner OP Unit will remain outstanding as a common unit of partnership interest in the surviving entity, and (ii) certain outstanding Limited Partner OP Units will be converted into 0.705 of a newly issued share of Realty Income Common Stock, subject to adjustment. Holders of the Limited Partner OP Units will receive cash in lieu of fractional shares.

In connection with the Merger, the Company and Realty Income intend to contribute some or all of their office real properties to a newly formed, wholly owned subsidiary ("~~OfficeCo"~~Orion"), and, following the Merger, Realty Income intends to distribute the outstanding voting shares of common stock in ~~OfficeCo~~Orion to the shareholders of the combined company on a pro rata basis (the "Spin-Off"). Following the consummation of the Spin-Off, the Company and Realty Income intend for Orion to

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited)

~~rata basis (the "Spin-Off"). Following the consummation of the Spin-Off, the Company and Realty Income intend for OfficeCo to~~ operate as a separate, publicly-traded REIT. Subject to the terms and conditions of the Merger Agreement, the Company and Realty Income may also seek to sell some or all of the ~~OfficeCo~~Orion business in connection with the closing of the Merger.

The Merger Agreement contains customary representations, warranties and covenants by each party. The Merger is subject to certain conditions which are set forth in the Merger ~~Agreement, including~~Agreement. Stockholders of VEREIT and Realty Income have both approved the ~~approval of both companies’ shareholders.~~Merger. The boards of directors of the Company and Realty Income have also unanimously approved the Merger Agreement. The ~~Mergers are~~Merger is expected to close ~~during~~on November 1, 2021 subject to the ~~fourth quarter~~satisfaction or waiver of ~~2021.~~other closing conditions specified in the Merger Agreement.

Series F Preferred Stock

On ~~July 16,~~August 15, 2021, the Company ~~announced that it intends to redeem~~redeemed all outstanding shares of Series F Preferred ~~Stock on August 15, 2021.~~Stock. Concurrently with the redemption of the Series F Preferred Stock, ~~the~~VEREIT OP ~~intends to redeem~~redeemed all outstanding Series F Preferred Units of VEREIT OP in accordance with the terms of ~~the~~VEREIT OP’s agreement of limited partnership. ~~From and after~~As a result, the ~~redemption date, the~~Company’s Series F Preferred Stock ~~and Series F Preferred Units will no longer be deemed outstanding and dividends shall cease to accrue.~~was de-listed from the NYSE effective August 16, 2021.

Note 2 – Summary of Significant Accounting Policies

Basis of Accounting

The consolidated financial statements of the Company presented herein include the accounts of the General Partner and its consolidated subsidiaries, including the OP. All intercompany transactions have been eliminated upon consolidation. The financial statements are prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods. The results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2021 are not necessarily indicative of the results for the entire year or any subsequent interim period.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 of the Company, which are included in the Company’s Annual Report on Form 10-K filed on February 24, 2021. Information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and U.S. GAAP.

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and a consolidated joint venture. The portion of the consolidated joint venture not owned by the Company is presented as non-controlling interest in VEREIT’s and the OP’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of changes in equity. In addition, certain third parties ~~have been~~were issued OP Units and Series F Preferred Units. Holders of OP Units are considered to be non-controlling interest holders in the OP and their ownership interest in the limited partner’s share is presented as non-controlling interests in VEREIT’s consolidated balance sheets, statements of operations, statements of comprehensive income (loss) and statements of changes in equity. Further, a portion of the earnings and losses of the OP are allocated to non-controlling interest holders based on their respective ownership percentages. Equity is reallocated between controlling and noncontrolling interests in the OP upon a change in ownership. At the end of each annual reporting period, noncontrolling interests in the OP are adjusted to reflect their ownership percentage in the OP through a reallocation between controlling and noncontrolling interests in the OP, as applicable. As of each of ~~June~~September 30, 2021 and December 31, 2020, there were approximately 0.2 million Limited Partner OP Units issued and outstanding, respectively. As of ~~each of June 30, 2021 and~~ December 31, 2020, there were 49,766 Limited Partner Series F Preferred Units issued and outstanding. In connection with the redemption of all shares of outstanding ~~respectively.~~Series F Preferred Stock on August 15, 2021 discussed above, the OP redeemed all outstanding Series F Preferred Units.

For legal entities being evaluated for consolidation, the Company must first determine whether the interests that it holds and fees it receives qualify as variable interests in the entity. A variable interest is an investment or other interest that will absorb portions of an entity’s expected losses or receive portions of the entity’s expected residual returns. The Company’s evaluation includes consideration of fees paid to the Company where the Company acts as a decision maker or service provider to the entity being evaluated. If the Company determines that it holds a variable interest in an entity, it evaluates whether that entity is a variable interest entity (“VIE”). VIEs are entities where investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support or where equity investors, as a group, lack one of the following

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited) – (Continued)

characteristics: (a) the power to direct the activities that most significantly impact the entity’s economic performance, (b) the obligation to absorb the expected losses of the entity, or (c) the right to receive the expected returns of the entity. The Company consolidates entities that are not VIEs if it has a majority voting interest or other rights that result in effectively controlling the entity.

The Company then qualitatively assesses whether it is (or is not) the primary beneficiary of a VIE, which is generally defined as the party who has a controlling financial interest in the VIE. Consideration of various factors include, but are not limited to, the Company’s ability to direct the activities that most significantly impact the entity’s economic performance and its obligation to absorb losses from or right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates any VIEs when the Company is determined to be the primary beneficiary of the VIE and the difference between consolidating the VIE and accounting for it using the equity method could be material to the Company’s consolidated financial statements. The Company continually evaluates the need to consolidate these VIEs based on standards set forth in U.S. GAAP.

Reverse Stock Split - Impact to Prior Period

The Company effected a one-for-five reverse stock split of Common Stock after markets closed on December 17, 2020, whereby every five shares of VEREIT's issued and outstanding shares of Common Stock, $0.01 par value per share, were converted into one share of Common Stock, $0.01 par value per share. A corresponding reverse split of the outstanding OP Units also took effect on December 17, 2020. Certain prior period amounts have been updated to reflect the reverse stock split including stock/unit and per share/unit amounts, additional paid-in capital, common stock and dividends on the consolidated statements of operations, consolidated balance sheets, consolidated statements of equity and notes to the financial statements. The reverse stock split did not affect the Company’s total stockholder’s equity, the common stock par value per share or the Company’s authorized shares of common stock. ~~NaN~~No fractional shares of common stock were issued as fractional shares were settled in cash.

Prior Period Correction

Subsequent to the issuance of the Company’s consolidated financial statements for the year ended December 31, 2020, the Company identified an overstatement in amounts recorded to depreciation expense. As a result, the Company revised the accompanying consolidated balance sheets as of December 31, 2020 to reduce accumulated depreciation and amortization and accumulated deficit and increase the General Partner's common equity by $30.6 million. The Company also revised the accompanying consolidated statements of operations to reduce depreciation and amortization by ~~$1.9~~$0.9 million for the three months ended ~~June~~September 30, 2020 and by ~~$1.9~~$2.8 million for the ~~six~~nine months ended ~~June~~September 30, 2020, which impacted total operating expenses, income before taxes, net income and net income attributable to the OP/General Partner. Basic and diluted net income per share attributable to common stockholders/unitholders (adjusted for the one-for-five stock split) for the three months ended ~~June~~September 30, 2020 changed from ~~$0.19~~$0.40 to ~~$0.20~~$0.41 and for the ~~six~~nine months ended ~~June~~September 30, 2020 ~~changed from $0.53 to $0.54.~~remained constant at $0.95. The Company also revised the accompanying consolidated statements of changes in equity to reduce the accumulated deficit balances and increase the General Partner’s common equity at January 1, 2021 and 2020 by $30.6 million and $26.9 million, respectively. For the periods in which the Company revised net income, it made corresponding changes to net income in the accompanying consolidated statements of comprehensive income (loss), consolidated statements of changes in equity and consolidated statements of cash flows. There was no impact to net cash provided by operating activities in the accompanying consolidated statements of cash flows due to the revisions. The Company determined that the correction is not material to the previously issued consolidated financial statements.

Revenue Recognition

Rental Revenue

The Company continually reviews receivables related to rent, straight-line rent and property operating expense reimbursements and determines collectability by taking into consideration 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 property is located. The review includes a binary assessment of whether or not substantially all of the amounts due under a tenant’s lease agreement are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term and the Company recognizes a general allowance on a portfolio-wide basis. For leases that are deemed not probable of collection, revenue is recorded as cash is received and the Company reduces rental revenue for any straight-line rent receivables. The Company recognizes all changes in the collectability assessment for an operating lease as an adjustment to rental revenue. During the three and ~~six~~nine months ended ~~June~~September 30, 2021, rental revenue

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited) – (Continued)

increased by ~~$2.5~~$1.1 million and ~~$0.8~~$1.9 million, respectively, as the Company deemed certain previously reserved receivables as collectible, which exceeded amounts deemed uncollectible during the three and ~~six~~nine months ended ~~June~~September 30, 2021.

Rental revenue also includes lease termination income collected from tenants to allow for the tenant to vacate their space prior to their scheduled termination dates, as well as amortization of above and below-market leases.

Merger, litigation and non-routine costs, net

The Company incurred costs for legal, investment banking and other services associated with the Merger, as well as legal fees and settlements associated with litigations and investigations resulting from the Audit Committee Investigation (defined below) and other corporate matters which are considered non-routine.

Merger, litigation and non-routine costs, net include the following costs and recoveries (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Merger, litigation and non-routine costs, net:	Merger, litigation and non-routine costs, net:									Merger, litigation and non-routine costs, net:

Merger costs	Merger costs	$	12,673	$	0	$	12,673	$	0	Merger costs	$	9,616	$	—	$	22,289	$	—
Legal fees and settlements (1) (2)	Legal fees and settlements (1) (2)	277		(118)		345		(6,211)		Legal fees and settlements (1) (2)	(171)		105		174		(6,106)
Insurance recoveries	Insurance recoveries	(6,345)		0		(6,345)		(2,471)		Insurance recoveries	—		—		(6,345)		(2,471)

Total	Total	$	6,605	$	(118)	$	6,673	$	(8,682)	Total	$	9,445	$	105	$	16,118	$	(8,577)

(1)Includes all fees and litigation settlements associated with various corporate matters and litigations and investigations prompted by the results of the 2014 investigation conducted by the audit committee (the “Audit Committee”) of the Company’s Board of Directors (the “Audit Committee Investigation”), net of accrual reversals.

(2)~~The negative balance for~~Negative balances are the ~~three and six months ended June 30, 2020 is a~~ result of estimated costs accrued in prior periods that exceeded actual expenses incurred.

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~~VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2021 (Unaudited)~~ – ~~(Continued)~~

Equity-based Compensation

The Company had a 2011 equity-based incentive award plan (the “2011 Equity Plan”) for non-executive directors, officers, other employees and advisors or consultants who provided services to the Company, as applicable, and a non-executive director restricted share plan, which were accounted for under U.S. GAAP for share-based payments. On June 3, 2021, the Company’s stockholders, upon the recommendation of the Board, approved the VEREIT, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), which replaced the Company’s 2011 Equity Plan and the non-executive director restricted share plan. All officers, employees, non-employee directors and consultants of the Company and its subsidiaries are eligible to receive awards under the 2021 Plan, which is accounted for under U.S. GAAP for share-based payments. The expense for equity-based incentive awards is recognized over the vesting period or when the requirements for exercise of the award have been met.

As of June 3, 2021, the General Partner had cumulatively awarded under its 2011 Equity Plan approximately 4.0 million shares of Common Stock, which was comprised of 0.8 million restricted share awards (“Restricted Shares”), net of the forfeiture of 0.7 million Restricted Shares through that date, 1.9 million restricted stock units (“Restricted Stock Units”), net of the forfeiture/cancellation of 0.4 million Restricted Stock Units through that date, 0.2 million deferred stock units (“Deferred Stock Units”), and 1.1 million stock options (“Stock Options”), net of forfeiture/cancellation of 0.1 million Stock Options through that date. As of June 3, 2021, the General Partner had cumulatively awarded a total of 9,000 shares under the non-executive director restricted share plan. As of ~~June~~September 30, 2021, the General Partner had cumulatively awarded ~~582~~1,173 Deferred Stock Units under its 2021 Plan.

As of ~~June~~September 30, 2021, approximately 9.1 million shares, including 0.3 million shares of Common Stock subject to awards granted under the 2011 Plan that may become available for issuance or reissuance, as applicable, under the 2021 Plan if such awards are forfeited, canceled or otherwise terminated (other than by exercise), were available for issuance under the 2021 Plan.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

The following is a summary of equity-based compensation expense for the three and ~~six~~nine months ended ~~June~~September 30, 2021 (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020

Time-Based Restricted Stock Units (1)	Time-Based Restricted Stock Units (1)	$	1,504	$	1,397	$	2,942	$	2,782		Time-Based Restricted Stock Units (1)	$	1,537	$	1,412	$	4,480	$	4,195
Long-Term Incentive-Based Restricted Stock Units	Long-Term Incentive-Based Restricted Stock Units	1,439		1,401		2,554		2,500			Long-Term Incentive-Based Restricted Stock Units	1,455		1,416		4,009		3,916
Deferred Stock Units	Deferred Stock Units	1,027		947		1,112		1,019			Deferred Stock Units	27		53		1,138		1,071
Stock Options	Stock Options	167		326		421		625			Stock Options	169		330		590		955
Total	Total	$	4,137	$	4,071	$	7,029	$	6,926		Total	$	3,188	$	3,211	$	10,217	$	10,137

(1)Includes stock compensation expense attributable to awards for which the requisite service period begins prior to the assumed future grant date.

As of ~~June~~September 30, 2021, total unrecognized compensation expense related to these awards was approximately ~~$24.3~~$21.2 million, with an aggregate weighted-average remaining term of ~~2.5~~2.3 years.

Recent Accounting Pronouncements

Reference Rate Reform

During the first quarter of 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Inter-Bank Offer Rate (“LIBOR”)-indexed cash flows to assume that the index applicable to future hedged transactions matched the index on the corresponding derivatives. During the fourth quarter of 2020, the Company terminated its interest rate swap agreements with an aggregate $900.0 million notional amount and terminated its forward starting interest rate swaps with a total notional amount of $400.0 million, both of which were designated as cash flow hedges, in connection with the early repayment of borrowings under the Credit Facility Term Loan (as defined in Note 6 – Debt), as discussed in Note 7 – Derivatives and Hedging Activities. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

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~~VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2021 (Unaudited)~~ – ~~(Continued)~~

Note 3 – Real Estate Investments and Related Intangibles

Property Acquisitions

During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company acquired controlling financial interests in ~~106~~134 commercial properties for an aggregate purchase price of ~~$318.9~~$419.2 million (the “2021 Acquisitions”), which includes ~~$3.1~~$4.0 million of external acquisition-related expenses that were capitalized. Additionally, the Company placed in service 1 build-to-suit development project in which the Company invested $45.5 million, including $0.9 million of external acquisition-related expenses and interest that were capitalized and the land parcel acquired during the year ended December 31, 2020.

During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company acquired controlling financial interests in 25 commercial properties for an aggregate purchase price of $147.1 million (the “2020 Acquisitions”), which includes the land parcel and capitalized external acquisition-related expenses and interest for the build-to-suit development discussed above.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

The following table presents the allocation of the fair values of the assets acquired and liabilities assumed during the periods presented (in thousands):


		Six Months Ended June 30,				Nine Months Ended September 30,
		2021		2020				2021		2020
Real estate investments, at cost:	Real estate investments, at cost:						Real estate investments, at cost:
Land	Land	$	61,668	$	19,953		Land	$	77,303	$	19,953
Buildings, fixtures and improvements	Buildings, fixtures and improvements	181,458		95,728			Buildings, fixtures and improvements	249,850		95,728
Total tangible assets	Total tangible assets	243,126		115,681			Total tangible assets	327,153		115,681
Acquired intangible assets:	Acquired intangible assets:						Acquired intangible assets:
In-place leases and other intangibles (1)	In-place leases and other intangibles (1)	29,708		15,739			In-place leases and other intangibles (1)	40,056		15,739
Above-market leases (2)	Above-market leases (2)	48,776		15,701			Above-market leases (2)	54,698		15,701
Assumed intangible liabilities:	Assumed intangible liabilities:						Assumed intangible liabilities:
Below-market leases (3)	Below-market leases (3)	(2,726)		0			Below-market leases (3)	(2,726)		—
Total purchase price of assets acquired	Total purchase price of assets acquired	$	318,884	$	147,121		Total purchase price of assets acquired	$	419,181	$	147,121

(1)The weighted average amortization period for acquired in-place leases and other intangibles is ~~15.5~~15.6 years and 18.1 years for 2021 Acquisitions and 2020 Acquisitions, respectively.

(2)The weighted average amortization period for acquired above-market leases is ~~17.4~~18.2 years and 20.1 years for 2021 Acquisitions and 2020 Acquisitions, respectively.

(3)The weighted average amortization period for assumed below-market leases is 19.9 years for 2021 Acquisitions.

Property Dispositions and Real Estate Assets Held for Sale

During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company disposed of 5283 properties, for an aggregate sales price of ~~$369.9~~$432.7 million. The dispositions resulted in proceeds of ~~$360.6~~$420.2 million after closing costs. The Company recorded a gain of ~~$93.2~~$96.5 million related to the dispositions, which is included in gain on disposition of real estate and real estate assets held for sale, net in the accompanying consolidated statements of operations.

During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company disposed of 4763 properties, including the sale of 23 consolidated properties to the office partnership, for an aggregate sales price of ~~$219.2~~$376.2 million, of which our share was ~~$216.7~~$373.4 million after the profit participation payments related to the disposition of 34 Red Lobster properties. The dispositions resulted in proceeds of ~~$204.1~~$346.7 million after closing costs, including proceeds from the contribution of properties to the office partnership. The Company recorded a gain of ~~$34.2~~$77.2 million related to the sales which is included in gain on disposition of real estate and real estate assets held for sale, net in the accompanying consolidated statements of operations.

As of ~~June~~September 30, 2021, there were 87 properties classified as held for sale with a carrying value of ~~$29.0~~$31.1 million, included in real estate assets held for sale, net, primarily comprised of land of ~~$4.8~~$6.6 million and building, fixtures and improvements, net of ~~$24.1~~$24.2 million, in the accompanying consolidated balance sheets, and are expected to be sold in the next 12 months as part of the Company’s portfolio management strategy. During ~~each of~~ the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, the Company recorded ~~a loss~~losses of $0.2 million and $0.3 million, respectively, related to held for sale properties.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited) – (Continued)

Intangible Lease Assets and Liabilities

Intangible lease assets and liabilities of the Company consisted of the following as of ~~June~~September 30, 2021 and December 31, 2020 (amounts in thousands, except weighted-average useful life):

Weighted-Average Useful Life June 30, 2021 December 31, 2020
Intangible lease assets:
In-place leases and other intangibles, net of accumulated amortization of $825,921 and $810,597, respectively 17.5 $ 715,226 $ 745,026
Leasing commissions, net of accumulated amortization of $8,679 and $7,565, respectively 9.7 16,471 16,042
Above-market lease assets and deferred lease incentives, net of accumulated amortization of $131,756 and $125,455, respectively 27.0 210,125 167,776
Total intangible lease assets, net $ 941,822 $ 928,844
Intangible lease liabilities:
Below-market leases, net of accumulated amortization of $111,352 and $106,504, respectively 20.0 $ 115,831 $ 120,938


	Weighted-Average Useful Life	September 30, 2021		December 31, 2020
Intangible lease assets:
In-place leases and other intangibles, net of accumulated amortization of $845,355 and $810,597, respectively	17.4	$	697,879	$	745,026
Leasing commissions, net of accumulated amortization of $9,352 and $7,565, respectively	9.9	17,347		16,042
Above-market lease assets and deferred lease incentives, net of accumulated amortization of $137,033 and $125,455, respectively	23.2	210,285		167,776
Total intangible lease assets, net		$	925,511	$	928,844

Intangible lease liabilities:
Below-market leases, net of accumulated amortization of $113,251 and $106,504, respectively	20.2	$	111,140	$	120,938

The aggregate amount of amortization of above-market and below-market leases and deferred lease incentives included as a net decrease to rental revenue was ~~$3.4~~$4.5 million and ~~$1.5~~$1.9 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. The aggregate amount of in-place leases, leasing commissions and other lease intangibles amortized and included in depreciation and amortization expense was ~~$56.8~~$84.7 million and ~~$73.3~~$103.5 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively.

The following table provides the projected amortization expense and adjustments to rental revenue related to the intangible lease assets and liabilities for the next five years as of ~~June~~September 30, 2021 (in thousands):


		Remainder of 2021		2022		2023		2024		2025		2026			Remainder of 2021		2022		2023		2024		2025		2026
In-place leases and other intangibles:	In-place leases and other intangibles:													In-place leases and other intangibles:
Total projected to be included in amortization expense	Total projected to be included in amortization expense	$	52,910	$	94,296	$	84,846	$	75,829	$	63,870	$	57,575	Total projected to be included in amortization expense	$	26,485	$	94,760	$	85,369	$	76,406	$	64,463	$	58,180
Leasing commissions:	Leasing commissions:													Leasing commissions:
Total projected to be included in amortization expense	Total projected to be included in amortization expense	1,421		2,666		2,375		2,162		1,902		1,667		Total projected to be included in amortization expense	753		2,878		2,441		2,212		1,953		1,736
Above-market lease assets and deferred lease incentives:	Above-market lease assets and deferred lease incentives:													Above-market lease assets and deferred lease incentives:
Total projected to be deducted from rental revenue	Total projected to be deducted from rental revenue	10,726		21,279		20,374		19,014		17,548		15,488		Total projected to be deducted from rental revenue	5,446		21,975		21,070		19,718		18,283		16,231
Below-market lease liabilities:	Below-market lease liabilities:													Below-market lease liabilities:
Total projected to be included in rental revenue	Total projected to be included in rental revenue	6,995		13,145		12,464		10,673		9,456		8,921		Total projected to be included in rental revenue	3,481		12,924		12,248		10,494		9,290		8,766

Consolidated Joint Venture

The Company had an interest in 1 consolidated joint venture that owned 1 property as of ~~June~~September 30, 2021 and December 31, 2020. As of ~~June~~September 30, 2021 and December 31, 2020, the consolidated joint venture had total assets of ~~$32.5~~$30.7 million and $33.0 million, respectively, of which ~~$28.3~~$27.8 million and $29.1 million, respectively, were real estate investments, net of accumulated depreciation and amortization at each of the respective dates. The property is secured by a mortgage note payable, which is non-recourse to the Company and had a balance of ~~$14.9 million and~~ $14.8 million as of ~~June~~December 31, 2020. During the three months ended September 30, 2021, the Company repaid the balance in full and ~~December 31, 2020, respectively.~~there were no amounts outstanding as of September 30, 2021. The Company has the ability to control operating and financing policies of the consolidated joint venture. There are restrictions on the use of these assets as the Company is generally required to obtain the approval of the joint venture partner in accordance with the joint venture agreement for any major transactions. The Company and the joint venture partner are subject to the provisions of the joint venture agreement, which includes provisions for when additional contributions may be required to fund certain cash shortfalls.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited) – (Continued)

Investment in Unconsolidated Entities

The following is a summary of the Company’s investments in unconsolidated entities as of ~~June~~September 30, 2021 and December 31, 2020 and for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (dollar amounts in thousands):


		Ownership % (1)		Number of Properties		Carrying Amount of Investment								Equity in Income									Ownership % (1)				Number of Properties		Carrying Amount of Investment							Equity in Income
					Six Months Ended																	Nine Months Ended
Investment	Investment		June 30, 2021									June 30, 2021				December 31, 2020				June 30, 2021					June 30, 2020				Investment		September 30, 2021									September 30, 2021					December 31, 2020					September 30, 2021	September 30, 2020
Industrial Partnership	Industrial Partnership	20%			7			$	42,697			$	45,378			$	501			$	347					Industrial Partnership		20%		7				$	42,949			$	45,378				$	753				$	584
Office Partnership (2)	Office Partnership (2)	20%		5		14,964				13,435				410				199						Office Partnership (2)			20%		5			14,588				13,435					621					380
Faison JV Bethlehem GA (3)	Faison JV Bethlehem GA (3)	0%		0		0				0				0				1,197						Faison JV Bethlehem GA (3)			—%		—			—				—					—					1,442
Total unconsolidated joint ventures	Total unconsolidated joint ventures					$	57,661			$	58,813			$	911			$	1,743					Total unconsolidated joint ventures								$	57,537			$	58,813				$	1,374				$	2,406
Preferred equity (4)	Preferred equity (4)					22,826				22,826				—				—						Preferred equity (4)								22,826				22,826					—					—
Total investment in unconsolidated entities	Total investment in unconsolidated entities					$	80,487			$	81,639			$	911			$	1,743					Total investment in unconsolidated entities								$	80,363			$	81,639				$	1,374				$	2,406

(1)The Company’s ownership interest reflects its legal ownership interest. Legal ownership may, at times, not equal the Company’s economic interest in the listed properties because of various provisions in certain joint venture agreements regarding capital contributions, distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns. As a result, the Company’s actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with its legal ownership interests.

(2)During the ~~six~~nine months ended ~~June~~September 30, 2021, the office partnership acquired 1 property from a third party for a purchase price of $26.4 million.

(3)During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company had a 90% ownership interest in 1 property. On October 30, 2020, the Company closed on the purchase of the joint venture partner’s 10% ownership interest.

(4)Represents a preferred equity interest in the development of 1 distribution center in which the Company is entitled to receive a cumulative preferred return of 9% per year on its contributions of $22.8 million. The Company has no further obligation to make additional contributions.

The aggregate debt outstanding of unconsolidated joint ventures and for the development of 1 distribution center in which the Company holds a preferred equity interest was ~~$652.6~~$673.8 million and $550.5 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively, which is non-recourse to the Company, as discussed in Note 6 – Debt.

The Company and the respective unconsolidated joint venture partners are subject to the provisions of the applicable joint venture agreements, which include provisions for when additional contributions may be required to fund certain cash shortfalls.

Note 4 – Rent and Tenant Receivables and Other Assets, Net

Rent and tenant receivables and other assets, net consisted of the following as of ~~June~~September 30, 2021 and December 31, 2020 (in thousands):


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Straight-line rent receivable, net	Straight-line rent receivable, net	$	284,003	$	278,831	Straight-line rent receivable, net	$	289,312	$	278,831
Accounts receivable, net	Accounts receivable, net	47,229		53,051		Accounts receivable, net	49,328		53,051

Deferred costs, net (1)	Deferred costs, net (1)	3,500		5,185		Deferred costs, net (1)	2,662		5,185
Investment in direct financing leases, net	Investment in direct financing leases, net	5,806		6,547		Investment in direct financing leases, net	5,422		6,547
Investment in Retained REITs (2)	Investment in Retained REITs (2)	7,929		7,255		Investment in Retained REITs (2)	7,948		7,255
Prepaid expenses	Prepaid expenses	5,646		3,850		Prepaid expenses	6,223		3,850
Leasehold improvements, property and equipment, net (3)	Leasehold improvements, property and equipment, net (3)	3,398		3,991		Leasehold improvements, property and equipment, net (3)	3,081		3,991
Other assets, net	Other assets, net	7,675		7,910		Other assets, net	7,935		7,910
Total	Total	$	365,186	$	366,620	Total	$	371,911	$	366,620

(1)Amortization expense for deferred costs related to the revolving credit facilities totaled $0.8 million for each of the three months ended ~~June~~September 30, 2021 and 2020, respectively, and ~~$1.7~~$2.5 million and ~~$1.5~~$2.3 million for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. Accumulated amortization for deferred costs related to the revolving credit facilities was ~~$54.6~~$55.4 million and $52.9 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited) – (Continued)

(2)On February 1, 2018, the Company sold certain of its equity investments to CCA Acquisition, LLC, an affiliate of CIM Group, LLC, retaining interests in Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”), Cole Office & Industrial REIT (CCIT III), Inc. (“CCIT III”) and Cole Credit Property Trust V, Inc. (“CCPT V” and, collectively with CCIT II and CCIT III, the “Retained REITs”). On December 21, 2020, CIM Real Estate Finance Trust, Inc. acquired CCIT III and CCPT V. On March 1, 2021, Griffin Capital Essential Asset REIT, Inc. acquired CCIT II. Subsequent to the Company’s sale of Cole Capital, it carries these investments at fair value, as it does not exert significant influence over the Retained REITs, and any changes in the fair value are recognized in other income, net in the accompanying consolidated statement of operations. During the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, the Company recognized a gain of $0.7 million and a loss of ~~$0.7~~$0.6 million, respectively, related to the change in fair value.

(3)Amortization expense for leasehold improvements totaled $0.1 million and ~~$0.3~~$0.4 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, with 0no related write-offs. Amortization expense for leasehold improvements totaled $0.1 million and ~~$0.3~~$0.4 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, with 0no related write-offs. Accumulated amortization was ~~$3.6~~$3.8 million and $3.4 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. Depreciation expense for property and equipment totaled ~~$0.3~~$0.2 million and ~~$0.5~~$0.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, ~~respectively.~~respectively, with no related write-offs. Depreciation expense for property and equipment totaled $0.3 million and ~~$0.6~~$0.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, ~~respectively.~~respectively, with no related write-offs. Accumulated depreciation was ~~$7.0~~$7.3 million and $6.5 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively.

Note 5 – Fair Value Measures

The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. U.S. GAAP guidance defines three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 – Unobservable inputs reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. Changes in the type of inputs may result in a reclassification for certain assets. The Company does not expect that changes in classifications between levels will be frequent.

Items Measured at Fair Value on a Recurring Basis

The fair value of the Investment in Retained REITs was $7.9 million and $7.3 million as of ~~June~~September 30, 2021 and December 31, 2020, respectively. The fair values were estimated using the net asset value per share, as most recently disclosed by each applicable REIT. Each of the Retained REIT’s share redemption programs includes restrictions that limit the number of shares redeemed by the respective Retained REIT.

The following are reconciliations of the changes in assets and liabilities with Level 3 inputs in the fair value hierarchy for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (in thousands):

Investment in Retained REITs

Beginning balance, January 1, 2021

7,255

Unrealized gain included in other income, net

~~674~~693

Ending Balance, ~~June~~September 30, 2021

~~7,929~~7,948

Beginning balance, January 1, 2020

7,552

Unrealized loss included in other income, net

~~(685)~~(609)

Ending Balance, ~~June~~September 30, 2020

~~6,867~~6,943

Table of Contents

VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

Items Measured at Fair Value on a Non-Recurring Basis

Certain financial and nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

~~Table of Contents~~

~~VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2021 (Unaudited)~~ – ~~(Continued)~~

Real Estate and Other Investments – The Company performs quarterly impairment review procedures for real estate investments, leasehold improvements and property and equipment, right of use assets and investments in unconsolidated entities, primarily through continuous monitoring of events and changes in circumstances that could indicate the carrying value of these investments may not be recoverable.

As part of the Company’s quarterly impairment review procedures, net real estate assets representing 3956 properties were deemed to be impaired resulting in impairment charges of ~~$46.0~~$59.3 million during the ~~six~~nine months ended ~~June~~September 30, 2021 that relate to certain office, retail and restaurant properties which, during the ~~six~~nine months ended ~~June~~September 30, 2021, were identified by management for potential sale or were determined would not be re-leased by the tenant. There were 0no impairment charges directly attributable to the COVID-19 pandemic during the ~~six~~nine months ended ~~June~~September 30, 2021.

During the ~~six~~nine months ended ~~June~~September 30, 2020, net real estate assets related to 3847 properties, were deemed to be impaired resulting in impairment charges of ~~$20.5~~$36.9 million. The impairment charges relate to certain retail and restaurant properties whose tenants filed for Chapter 11 bankruptcy during the ~~six~~nine months ended ~~June~~September 30, 2020, were identified by management for potential sale or were determined would not be re-leased by the tenant.

The Company estimates fair values using Level 3 inputs and uses a combined income and market approach, specifically using discounted cash flow analysis and recent comparable sales transactions. The evaluation of real estate assets for potential impairment requires the Company’s management to exercise significant judgment and make certain key assumptions, including, but not limited to, the following: (1) capitalization rate; (2) discount rates; (3) number of years property will be held; (4) property operating expenses; and (5) re-leasing assumptions including number of months to re-lease, market rental revenue and required tenant improvements. There are inherent uncertainties in making these estimates such as market conditions and performance and sustainability of the Company’s tenants. For the Company’s impairment tests for the real estate assets during the ~~six~~nine months ended ~~June~~September 30, 2021, the Company used a range of discount rates from 7.9% to ~~8.6%~~10.5% with a weighted-average rate of ~~8.4%~~8.6% and capitalization rates from 7.4% to ~~8.1%~~10.0% with a weighted-average rate of ~~7.9%~~8.1%.

Goodwill – The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. The Company performed the annual qualitative assessment for goodwill during the fourth quarter of 2020, which resulted in 0no impairments. The Company continues to monitor factors that may impact the fair value of goodwill including, but not limited to, market comparable company multiples, stock price, interest rates, and global economic conditions including the COVID-19 pandemic.

Fair Value of Financial Instruments

The fair value of short-term financial instruments such as cash and cash equivalents, restricted cash and accounts payable approximate their carrying value in the accompanying consolidated balance sheets due to their short-term nature and are classified as Level 1 under the fair value hierarchy. The fair values of the Company’s financial instruments are reported below (dollar amounts in thousands):


		Level	Carrying Amount at June 30, 2021		Fair Value at June 30, 2021		Carrying Amount at December 31, 2020		Fair Value at December 31, 2020			Level	Carrying Amount at September 30, 2021		Fair Value at September 30, 2021		Carrying Amount at December 31, 2020		Fair Value at December 31, 2020

Liabilities (1):	Liabilities (1):										Liabilities (1):
Mortgage notes payable and other debt, net	Mortgage notes payable and other debt, net	2	$	1,007,026	$	1,052,723	$	1,334,689	$	1,384,490	Mortgage notes payable and other debt, net	2	$	991,699	$	1,031,324	$	1,334,689	$	1,384,490
Corporate bonds, net	Corporate bonds, net	2	4,624,448		5,066,028		4,622,951		5,123,588		Corporate bonds, net	2	4,625,208		5,044,711		4,622,951		5,123,588

Credit facility											Credit facility	2	88,000		88,000		—		—
Total liabilities	Total liabilities		$	5,631,474	$	6,118,751	$	5,957,640	$	6,508,078	Total liabilities		$	5,704,907	$	6,164,035	$	5,957,640	$	6,508,078

(1)Current and prior period liabilities’ carrying and fair values exclude net deferred financing costs.

Debt – The fair value is estimated by an independent third party using a discounted cash flow analysis, based on management’s estimates of observable market interest rates. Corporate bonds are valued using quoted market prices in active markets with limited trading volume when available.

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~~June~~September 30, 2021 (Unaudited) – (Continued)

Note 6 – Debt

As of ~~June~~September 30, 2021, the Company had ~~$5.6~~$5.7 billion of debt outstanding, including net premiums (discounts) and net deferred financing costs, with a weighted-average years to maturity of ~~5.8~~5.5 years and a weighted-average interest rate of ~~3.89%~~3.86%. The following table summarizes the carrying value of debt as of ~~June~~September 30, 2021 and December 31, 2020, and the debt activity for the ~~six~~nine months ended ~~June~~September 30, 2021 (in thousands):


				Six Months Ended June 30, 2021											Nine Months Ended September 30, 2021
		Balance as of December 31, 2020		Debt Issuances		Repayments, Extinguishment and Assumptions		Accretion and Amortization		Balance as of June 30, 2021			Balance as of December 31, 2020		Debt Issuances		Repayments, Extinguishment and Assumptions		Accretion and Amortization		Balance as of September 30, 2021
Mortgage notes payable:	Mortgage notes payable:											Mortgage notes payable:
Outstanding balance	Outstanding balance	$	1,333,195	$	—	$	(326,087)	$	—	$	1,007,108	Outstanding balance	$	1,333,195	$	—	$	(341,392)	$	—	$	991,803
Net premiums (discounts) (1)	Net premiums (discounts) (1)	1,495		—		(1,043)		(534)		(82)		Net premiums (discounts) (1)	1,495		—		(1,041)		(558)		(104)
Deferred costs	Deferred costs	(5,855)		—		353		972		(4,530)		Deferred costs	(5,855)		—		349		1,511		(3,995)
Mortgage notes payable, net	Mortgage notes payable, net	1,328,835		—		(326,777)		438		1,002,496		Mortgage notes payable, net	1,328,835		—		(342,084)		953		987,704

Corporate bonds:	Corporate bonds:											Corporate bonds:
Outstanding balance	Outstanding balance	4,650,000		—		—		—		4,650,000		Outstanding balance	4,650,000		—		—		—		4,650,000
Discount (2)	Discount (2)	(27,049)		—		—		1,497		(25,552)		Discount (2)	(27,049)		—		—		2,257		(24,792)
Deferred costs	Deferred costs	(38,721)		—		—		2,559		(36,162)		Deferred costs	(38,721)		—		—		3,861		(34,860)
Corporate bonds, net	Corporate bonds, net	4,584,230		—		—		4,056		4,588,286		Corporate bonds, net	4,584,230		—		—		6,118		4,590,348

Credit facility												Credit facility	—		192,000		(104,000)		—		88,000

Total debt	Total debt	$	5,913,065	$	—	$	(326,777)	$	4,494	$	5,590,782	Total debt	$	5,913,065	$	192,000	$	(446,084)	$	7,071	$	5,666,052

(1)Net premiums (discounts) on mortgage notes payable were recorded upon the assumption of the respective mortgage notes in relation to the various mergers and acquisitions. Amortization of these net premiums is recorded as a reduction to interest expense over the remaining term of the respective mortgage notes using the effective-interest method.

(2)Discounts on the corporate bonds were recorded based upon the fair value of the respective debt instruments as of the respective issuance dates. Amortization of these discounts is recorded as an increase to interest expense over the remaining term of the respective debt instruments using the effective-interest method.

Mortgage Notes Payable

The Company’s mortgage notes payable consisted of the following as of ~~June~~September 30, 2021 (dollar amounts in thousands):

Encumbered Properties
Net Carrying Value of Collateralized Properties (1)
Outstanding Balance
Weighted-Average
Interest Rate (2)
Weighted-Average Years to Maturity (3)
Fixed-rate debt 216 $ 1,171,865 $ 992,195 4.88 % 2.1
Variable-rate debt 1 28,297 14,913 3.75 % (4) 0.1
Total (5)
217 $ 1,200,162 $ 1,007,108 4.86 % 2.1


	Encumbered Properties	Net Carrying Value of Collateralized Properties (1)		Outstanding Balance		Weighted-Average Interest Rate (2)		Weighted-Average Years to Maturity (3)
Fixed-rate debt	216	$	1,160,118	$	991,803	4.88	%	1.9

(1)Net carrying value is real estate assets, including investment in direct financing leases, net of real estate liabilities.

(2)Weighted average interest rate is computed using the interest rate in effect until the anticipated repayment date. Should the loan not be repaid at the anticipated repayment date, the applicable interest rate will increase as specified in the respective loan agreement until the extended maturity date.

(3)Weighted average years remaining to maturity is computed using the anticipated repayment date as specified in each loan agreement, where applicable.

~~(4)Weighted-average interest rate for variable-rate debt represents the interest rate in effect as of June 30, 2021.~~

~~(5)~~The table above does not include mortgage notes associated with unconsolidated joint ventures and preferred equity investments of ~~$652.6~~$673.8 million, which are non-recourse to the Company.

The Company’s mortgage loan agreements generally restrict corporate guarantees and require the maintenance of financial covenants, including maintenance of certain financial ratios (such as debt service coverage ratios and minimum net operating income). The mortgage loan agreements contain no dividend restrictions except in the event of default or when a distribution would drive liquidity below the applicable thresholds. As of ~~June~~September 30, 2021, the Company believes that it was in compliance with the financial covenants under the mortgage loan agreements and had no restrictions on the payment of dividends.

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~~June~~September 30, 2021 (Unaudited) – (Continued)

The following table summarizes the scheduled aggregate principal repayments due on mortgage notes subsequent to ~~June~~September 30, 2021 (in thousands):


		Total			Total
July 1, 2021 - December 31, 2021		$	15,705
October 1, 2021 - December 31, 2021				October 1, 2021 - December 31, 2021	$	399
2022	2022	239,201		2022	239,201
2023	2023	124,217		2023	124,217
2024	2024	621,021		2024	621,021
2025	2025	1,078		2025	1,078
2026	2026	1,138		2026	1,138
Thereafter	Thereafter	4,748		Thereafter	4,749
Total	Total	$	1,007,108	Total	$	991,803

Corporate Bonds

As of ~~June~~September 30, 2021, the OP had $4.65 billion aggregate principal amount of senior unsecured notes (the “Senior Notes”) outstanding comprised of the following (dollar amounts in thousands):


		Outstanding Balance June 30, 2021		Interest Rate		Maturity Date		Outstanding Balance September 30, 2021		Interest Rate		Maturity Date

Senior Notes due 2024	Senior Notes due 2024	$	500,000	4.600	%	February 6, 2024	Senior Notes due 2024	$	500,000	4.600	%	February 6, 2024
Senior Notes due 2025	Senior Notes due 2025	550,000		4.625	%	November 1, 2025	Senior Notes due 2025	550,000		4.625	%	November 1, 2025
Senior Notes due 2026	Senior Notes due 2026	600,000		4.875	%	June 1, 2026	Senior Notes due 2026	600,000		4.875	%	June 1, 2026
Senior Notes due 2027	Senior Notes due 2027	600,000		3.950	%	August 15, 2027	Senior Notes due 2027	600,000		3.950	%	August 15, 2027
Senior Notes due January, 2028	Senior Notes due January, 2028	600,000		3.400	%	January 15, 2028	Senior Notes due January, 2028	600,000		3.400	%	January 15, 2028
Senior Notes due June, 2028	Senior Notes due June, 2028	500,000		2.200	%	June 15, 2028	Senior Notes due June, 2028	500,000		2.200	%	June 15, 2028
Senior Notes due 2029	Senior Notes due 2029	600,000		3.100	%	December 15, 2029	Senior Notes due 2029	600,000		3.100	%	December 15, 2029

Senior Notes due 2032	Senior Notes due 2032	700,000		2.850	%	December 15, 2032	Senior Notes due 2032	700,000		2.850	%	December 15, 2032
Total balance and weighted-average interest rate	Total balance and weighted-average interest rate	$	4,650,000	3.685	%		Total balance and weighted-average interest rate	$	4,650,000	3.685	%

The Senior Notes are guaranteed by the General Partner. The OP may redeem all or a part of any series of the Senior Notes at any time, at its option, for the redemption prices set forth in the indenture governing the Senior Notes. Generally, 60 to 90 days prior to maturity, the redemption price will be equal to 100% of the principal amount of the Senior Notes. The Senior Notes are registered under the Securities Act of 1933, as amended (the “Securities Act”) and are freely transferable.

The indenture governing our Senior Notes requires us to maintain financial ratios which include maintaining (i) a maximum limitation on incurrence of total debt less than or equal to 65% of Total Assets (as defined in the indenture), (ii) maximum limitation on incurrence of secured debt less than or equal to 40% of Total Assets (as defined in the indenture), (iii) a minimum debt service coverage ratio of at least 1.5x and (iv) a minimum unencumbered asset value of at least 150% of the aggregate principal amount of all of the outstanding Unsecured Debt (as defined in the indenture). As of ~~June~~September 30, 2021, the Company believes that it was in compliance with the financial covenants of our Senior Notes based on the covenant limits and calculations in place at that time.

On October 8, 2021, Realty Income announced the commencement of exchange offers and consent solicitations for all of the outstanding series of unsecured notes issued by the OP and guaranteed by the General Partner. The exchange offers and consent solicitations are being conducted in connection with, and are conditioned upon, the completion of the Merger.

Credit Facility

On May 23, 2018, the General Partner, as guarantor, and the OP, as borrower, entered into a credit agreement with Wells Fargo Bank, National Association as administrative agent and other lenders party thereto (the “Credit Agreement”). The Credit Agreement provided for maximum borrowings of $2.9 billion, originally consisting of a $2.0 billion unsecured revolving credit facility (the “Revolving Credit Facility”) and a $900.0 million unsecured term loan facility (the “Credit Facility Term Loan,” together with the Revolving Credit Facility, the “Credit Facility”). Effective December 27, 2019, the Company reduced the amount available under its Revolving Credit Facility from $2.0 billion to $1.5 billion. On May 27, 2020, the Operating Partnership and the Company, entered into Amendment No. 1 to the Credit Agreement (the “Amendment”) which, among other things, modified the measurement period for certain financial covenants (and relevant associated definitions) from either the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

prior quarterly period annualized or the prior six month period to the four consecutive fiscal quarter period most recently ending. During the fourth quarter of 2020, the Company repaid the outstanding balance of $900.0 million on the Credit Facility Term Loan in connection with the termination of the related interest rate swap agreements discussed in Note 7 – Derivatives and Hedging Activities.

~~Table~~As of ~~Contents~~

~~VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June~~September 30, 2021, ~~(Unaudited)~~ – ~~(Continued)~~

~~As of June 30, 2021, 0 amounts were~~$88.0 million was outstanding under the Revolving Credit Facility. The maximum aggregate dollar amount of letters of credit that may be outstanding at any one time under the Credit Facility is $50.0 million. As of ~~June~~September 30, 2021, there were ~~$1.9~~$1.3 million of letters of credit outstanding.

The Revolving Credit Facility generally bears interest at an annual rate of LIBOR plus 0.775% to 1.55% or Base Rate plus 0.00% to 0.55% (based upon the General Partner’s then current credit rating). “Base Rate” is defined as the highest of the prime rate, the federal funds rate plus 0.50% or a floating rate based on one month LIBOR plus 1.0%, determined on a daily basis. The Credit Facility Term Loan generally bore interest at an annual rate of LIBOR plus 0.85% to 1.75%, or Base Rate plus 0.00% to 0.75% (based upon the General Partner’s then current credit rating). In addition, the Credit Agreement provides the flexibility for interest rate auctions, pursuant to which, at the Company’s election, the Company may request that lenders make competitive bids to provide revolving loans, which competitive bids may be at pricing levels that differ from the foregoing interest rates.

In the event of default, at the election of a majority of the lenders (or automatically upon a bankruptcy event of default with respect to the OP or the General Partner), the commitments of the lenders under the Credit Facility will terminate, and payment of any unpaid amounts in respect of the Credit Facility will be accelerated. The Revolving Credit Facility terminates on May 23, 2022, unless extended in accordance with the terms of the Credit Agreement. The Credit Agreement provides for 2 six-month extension options with respect to the Revolving Credit Facility, exercisable at the OP’s election and subject to certain customary conditions, as well as certain customary “amend and extend” provisions. At any time, upon timely notice by the OP and subject to any breakage fees, the OP may prepay borrowings under the Credit Facility (subject to certain limitations applicable to the prepayment of any loans obtained through an interest rate auction, as described above). The OP incurs a facility fee equal to 0.10% to 0.30% per annum (based upon the General Partner’s then current credit rating) multiplied by the commitments (whether or not utilized) in respect of the Revolving Credit Facility. The OP also incurs customary administrative agent, letter of credit issuance, letter of credit fronting, extension and other fees.

The Credit Facility requires restrictions on corporate guarantees, as well as the maintenance of financial covenants, including the maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios). The key financial covenants in the Credit Facility, as defined and calculated per the terms of the Credit Agreement, include maintaining (i) a maximum leverage ratio less than or equal to 60%, (ii) a minimum fixed charge coverage ratio of at least 1.5x, (iii) a secured leverage ratio less than or equal to 45%, (iv) a total unencumbered asset value ratio less than or equal to 60% and (v) a minimum unencumbered interest coverage ratio of at least 1.75x. The Company believes that it was in compliance with the financial covenants pursuant to the Credit Agreement and is not restricted from accessing any borrowing availability under the Credit Facility as of ~~June~~September 30, 2021.

Note 7 – Derivatives and Hedging Activities

Cash Flow Hedges of Interest Rate Risk

As of ~~June~~September 30, 2021 and December 31, 2020, the Company had 0no interest rate swaps that were designated as qualifying hedging relationships. The Company had interest rate swap agreements with an aggregate $900.0 million notional amount, which were designated as cash flow hedges, and forward starting interest rate swaps with a total notional amount of $400.0 million, which were designated as cash flow hedges, that were terminated during the fourth quarter of 2020.

During the three and ~~six~~nine months ended ~~June~~September 30, 2020, the Company recorded unrealized gains of $3.7 million and unrealized losses of ~~$6.5 million and $85.0~~$81.4 million for changes in the fair value of the cash flow hedges in accumulated other comprehensive income. There were 0no such gains or losses recorded during the three and ~~six~~nine months ended ~~June~~September 30, 2021.

The Company reclassified previous losses of $0.1 million and ~~$0.2~~$0.3 million for the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, and losses of ~~$4.6~~$5.4 million and ~~$6.6~~$12.0 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, from accumulated other comprehensive income (loss) into interest expense as a result of the hedged transactions impacting earnings.

During the next twelve months, the Company estimates that an additional $0.4 million will be reclassified from other comprehensive income (loss) as an increase to interest expense.

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~~June~~September 30, 2021 (Unaudited) – (Continued)

Note 8 – Supplemental Cash Flow Disclosures

Supplemental cash flow information was as follows for the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (in thousands):


		Six Months Ended June 30,				Nine Months Ended September 30,
		2021		2020				2021		2020
Supplemental disclosures:	Supplemental disclosures:						Supplemental disclosures:
Cash paid for interest	Cash paid for interest	$	118,443	$	126,173		Cash paid for interest	$	165,441	$	176,694
Cash paid for income taxes	Cash paid for income taxes	$	3,555	$	3,885		Cash paid for income taxes	$	4,017	$	5,601
Non-cash investing and financing activities:	Non-cash investing and financing activities:						Non-cash investing and financing activities:
Accrued capital expenditures, tenant improvements and real estate developments	Accrued capital expenditures, tenant improvements and real estate developments	$	18,205	$	13,513		Accrued capital expenditures, tenant improvements and real estate developments	$	10,499	$	8,831

Real estate contributions to industrial partnership and office partnership		$	0	$	7,494
Real estate contributions to office partnership							Real estate contributions to office partnership	$	—	$	17,240
Distributions declared and unpaid	Distributions declared and unpaid	$	106,999	$	85,231		Distributions declared and unpaid	$	105,958	$	85,421

Real estate investments received from lease related transactions	Real estate investments received from lease related transactions	$	4,076	$	259		Real estate investments received from lease related transactions	$	3,982	$	259
Note receivable for disposal of real estate investments	Note receivable for disposal of real estate investments	$	4,500	$	0		Note receivable for disposal of real estate investments	$	4,500	$	—

Note 9 – Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following as of ~~June~~September 30, 2021 and December 31, 2020 (in thousands):


		June 30, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Accrued interest	Accrued interest	$	39,856	$	44,164	Accrued interest	$	49,091	$	44,164
Accrued real estate and other taxes	Accrued real estate and other taxes	26,299		27,689		Accrued real estate and other taxes	32,032		27,689
Accrued merger costs, legal fees and litigation settlements	Accrued merger costs, legal fees and litigation settlements	4,798		11,245		Accrued merger costs, legal fees and litigation settlements	12,775		11,245
Accounts payable	Accounts payable	1,572		1,895		Accounts payable	1,363		1,895
Accrued other	Accrued other	44,920		32,022		Accrued other	42,365		32,022
Total	Total	$	117,445	$	117,015	Total	$	137,626	$	117,015

Note 10 – Commitments and Contingencies

The Company is party to various legal proceedings and claims which it believes are routine in nature and incidental to the operation of its business. Although we do not expect that these legal proceedings and claims will have a material adverse effect on our financial position, liquidity or results of operations, an adverse result in one or more matters could negatively affect our results in the period in which they occur, or in future periods.

As previously disclosed, on April 29, 2021, the Company entered into the Merger Agreement with Realty Income, Merger Sub 1 and Merger Sub 2. Pursuant to the terms and conditions of the Merger Agreement, upon the closing, (i) Merger Sub 2 will be merged with and into the OP, with the OP continuing as the surviving entity and, immediately following the Partnership Merger, (ii) VEREIT, Inc. will be merged with and into Merger Sub 1, with Merger Sub 1 continuing as the surviving corporation.

In connection with the proposed Mergers, Realty Income filed with the SEC a registration statement on Form S-4 containing a joint proxy statement/prospectus, as amended, and the Company filed a definitive proxy statement and Realty Income filed a definitive proxy statement/prospectus with the SEC, each dated June 29, 2021 (collectively, the “joint proxy statement/prospectus”), which the Company and Realty Income first mailed to their respective shareholders and stockholders on or about July 9, 2021.

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Following the announcement of the Merger Agreement, purported stockholders of the Company ~~have~~ filed 12 lawsuits challenging disclosures related to the Merger (the “Complaints”). The Complaints are Stein v. VEREIT, Inc., et al., Case No. 1:21-cv-01409 (D. Md. June 7, 2021) (the “Stein Complaint”); Bowles v. VEREIT, Inc., et al., Case No. 1:21-cv-00845 (D. Del. June 10, 2021) (the “Bowles Complaint”); Leach v. VEREIT, Inc., et al., Case No. 1:21-cv-05270 (S.D.N.Y. June 14, 2021) (the “Leach Complaint”); Jenkins v. VEREIT, Inc., et al., Case No. 1:21-cv-05286 (S.D.N.Y. June 15, 2021) (the “Jenkins Complaint”); Tacka v. VEREIT, Inc., et al., Case No. 1:21-cv-05357 (S.D.N.Y. June 17, 2021) (the “Tacka Complaint”); Congregation Zichron Moishe v. VEREIT, Inc., et al., Case No. 1:21-cv-01729 (D. Colo. June 24, 2021) (the “Congregation Zichron Moishe Complaint”); Mishra v. VEREIT, Inc., et al., Case No. 1:21-cv-01758 (D. Colo. June 28, 2021) (the “Mishra Complaint”); Walker v. VEREIT, Inc., et al., Case No. 1:21-cv-01791 (D. Colo. July 1, 2021) (the “Walker Complaint”); Ciccotelli v. VEREIT, Inc., et al., Case No. 2:21-cv-02983 (E.D. Pa. July 2, 2021) (the “Ciccotelli Complaint”); Upton v. VEREIT, Inc., et al., Case No. 1:21-cv-06129 (S.D.N.Y. July 16, 2021) (the “Upton Complaint”); Matten v. VEREIT, Inc., et al., Case No. 1:21-cv-06212 (S.D.N.Y. July 21, 2021) (the “Matten Complaint”); and Halberstam v. VEREIT, Inc., et al., Case No. 1:21-cv-02000 (D. Colo. July 23, 2021 (the “Halberstam Complaint”).

The Stein, Leach, Tacka, Matten and Halberstam Complaints name VEREIT, Inc. and the members of the Company’s board of directors as defendants. The Congregation Zichron Moishe, Mishra, Walker and Upton Complaints name VEREIT, Inc., the OP, and the members of the Company’s board of directors as defendants. The Bowles and Ciccotelli Complaints name VEREIT, Inc., the members of the Company’s board of directors, OP, Realty Income, Merger Sub 1 and Merger Sub 2 as defendants. The Jenkins Complaint names VEREIT, Inc., the members of the Company’s board of directors, Realty Income, Merger Sub 1 and Merger Sub 2 as defendants.

Each of the Complaints alleges that VEREIT, Inc. and the members of the Company’s board of directors violated Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-9 promulgated thereunder by preparing and disseminating a registration statement that misstates or omits certain allegedly material information. Each of the Complaints also alleges that the members of the Company’s board of directors violated Section 20(a) of the Exchange Act by causing the Company to disseminate a misleading registration statement. The Bowles and Ciccotelli Complaints further allege that Realty Income and the OP violated Section 20(a) of the Exchange Act. The Mishra, Congregation Zichron Moishe, Walker and Upton Complaints further allege that Realty Income and the OP violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The Jenkins Complaint further alleges that Realty Income, Merger Sub 1 and Merger Sub 2 violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, that the members of the Company’s board of directors have violated the fiduciary duties they owe towards the Company’s stockholders by causing the Company to enter into the Merger at an unfair price and through an unfair process, and that VEREIT, Inc., Realty Income, Merger Sub 1 and Merger Sub 2 aided and abetted this alleged breach of fiduciary duty.

Each of the Complaints seeks, among other things, injunctive relief enjoining the consummation of the Merger, if the Merger is consummated, rescission or rescissory damages and an award of the plaintiff’s costs, including attorneys’ and experts’ fees.

The Company and all of the individual defendants named in the Complaints believe that the claims asserted in the Complaints are entirely without merit. While the defendants believe that the disclosures set forth in the joint proxy statement/prospectus comply fully with applicable law, to moot plaintiffs’ disclosure claims and to avoid nuisance, potential expense and delay, on July 30, 2021, the Company voluntarily supplemented the joint proxy statement/prospectus with certain disclosures. In light of these additional disclosures, counsel for the plaintiffs who filed the Complaints agreed to dismiss, or seek authority from their clients to dismiss, their respective actions. ~~On August 2, 2021, plaintiff’s counsel in the Stein case voluntarily dismissed the Stein Complaint.~~ Nothing in the Company’s supplemental disclosures will be deemed an admission of the legal necessity or materiality under applicable law of any of the disclosures set forth therein or of the existence of any misrepresentations or omissions in the joint proxy statement/prospectus. To the contrary, the Company denies all allegations in the Complaints that any additional disclosure was or is required. Between August 2, 2021 and October 27, 2021, plaintiffs’ counsel in all of the cases voluntarily dismissed their respective complaints.

Purchase Commitments

In the normal course of business, the Company enters into various types of commitments to purchase real estate properties. These commitments are generally subject to the Company’s customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated to purchase the properties.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-

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compliance, liability or other claim, and is not aware of any other environmental condition, in each case, that it believes will have a material adverse effect on the results of operations.

Note 11 – Leases

Lessor

The Company is the lessor for its ~~3,885~~3,882 retail, restaurant, office and industrial properties. The Company’s operating and direct financing leases have non-cancelable lease terms of ~~0.04~~0.08 years to ~~24.8~~25.0 years. Certain leases with tenants include options to extend or terminate the lease agreements or to purchase the underlying asset. Lease agreements may also contain rent increases that are based on an index or rate (e.g., the consumer price index (“CPI”) or LIBOR). The Company believes the residual value risk is not a primary risk because of the long-lived nature of the assets.

The components of rental revenue from the Company’s operating and direct financing leases were as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020
Fixed:	Fixed:										Fixed:
Cash rent	Cash rent	$	272,136	$	253,117	$	535,477	$	522,702		Cash rent	$	264,466	$	255,996	$	799,943	$	778,697
Straight-line rent	Straight-line rent	4,613		3,404		8,832		5,458			Straight-line rent	3,560		12,595		12,392		18,053
Lease intangible amortization	Lease intangible amortization	(1,830)		(788)		(3,377)		(1,536)			Lease intangible amortization	(1,164)		(393)		(4,541)		(1,929)
Property operating cost reimbursements	Property operating cost reimbursements	1,285		1,363		2,672		2,791			Property operating cost reimbursements	1,373		1,581		4,045		4,372
Sub-lease (1)	Sub-lease (1)	4,755		5,279		9,724		10,543			Sub-lease (1)	4,898		5,175		14,623		15,718
Total fixed	Total fixed	280,959		262,375		553,328		539,958			Total fixed	273,133		274,954		826,462		814,911

Variable (2)	Variable (2)	9,483		16,039		27,290		36,852			Variable (2)	16,422		18,585		43,711		55,438
Income from direct financing leases	Income from direct financing leases	125		162		258		352			Income from direct financing leases	116		153		374		505
Total rental revenue	Total rental revenue	$	290,567	$	278,576	$	580,876	$	577,162		Total rental revenue	$	289,671	$	293,692	$	870,547	$	870,854

(1)The Company’s tenants are generally sub-tenants under certain ground leases and are responsible for paying the rent under these leases.

(2)Includes costs reimbursed related to property operating expenses, common area maintenance and percentage rent, including these costs reimbursed by ground lease sub-tenants.

The following table presents future minimum operating lease payments due to the Company over the next five years and thereafter as of ~~June~~September 30, 2021 (in thousands). These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indexes.


		Future Minimum Operating Lease Payments		Future Minimum Direct Financing Lease Payments (1)			Future Minimum Operating Lease Payments		Future Minimum Direct Financing Lease Payments (1)
July 1, 2021 - December 31, 2021		$	516,726	$	1,002
October 1, 2021 - December 31, 2021						October 1, 2021 - December 31, 2021	$	251,110	$	501
2022	2022	1,003,660		1,925		2022	1,009,650		1,925
2023	2023	941,664		1,565		2023	954,282		1,565
2024	2024	875,621		510		2024	890,154		510
2025	2025	775,240		169		2025	790,230		169
2026	2026	714,932		171		2026	730,788		171
Thereafter	Thereafter	4,410,979		484		Thereafter	4,532,336		484
Total	Total	$	9,238,822	$	5,826	Total	$	9,158,550	$	5,325

(1)Related to 18 properties which are subject to direct financing leases and, therefore, revenue is recognized as rental income on the discounted cash flows of the lease payments. Amounts reflect undiscounted cash flows to be received by the Company under the lease agreements on these respective properties.

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited) – (Continued)

Lessee

The Company is the lessee under ground lease arrangements and corporate office leases. All leases for which the Company is the lessee meet the criteria of an operating lease. The Company’s leases have remaining lease terms of 0.2 years to ~~78.1~~77.9 years, some of which include options to extend. The weighted average remaining lease term for the Company’s operating leases was ~~15.7~~15.6 years as of ~~June~~September 30, 2021. Under certain ground lease arrangements, the Company pays variable costs, including property operating expenses and common area maintenance, which are generally reimbursed by the ground lease sub-tenants. The weighted average discount rate for the Company’s operating leases was 4.91% as of ~~June~~September 30, 2021. As the Company’s leases do not provide an implicit rate, the Company used an estimated incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments.

The Company incorporated renewal periods in the calculation of the majority of ground lease right-of-use assets and lease liabilities. Pursuant to certain leases, the Company is required to execute renewal options available under the ground lease through the building lease term. No renewals were incorporated in the calculation of the corporate lease right-of-use assets and liabilities, as it is not reasonably certain that the Company will exercise the options. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table presents the lease expense components for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Operating lease cost (1)	Operating lease cost (1)	$	5,479	$	6,135	$	11,227	$	13,710	Operating lease cost (1)	$	5,704	$	5,933	$	16,932	$	19,643
Sublease income (2)	Sublease income (2)	$	(4,755)	$	(5,279)	$	(9,724)	$	(10,543)	Sublease income (2)	$	(4,898)	$	(5,175)	$	(14,623)	$	(15,718)

(1)No cash paid for operating lease liabilities was capitalized.

(2)The Company’s tenants are generally sub-tenants under certain ground leases and are responsible for paying the rent under these leases.

During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company reduced the right-of-use assets and operating lease liabilities by $0.6 million and $4.1 million, respectively, for non-cash activity related to dispositions and lease modifications. The Company increased the right-of-use assets and operating lease liabilities each by ~~less than $0.1~~$0.9 million during the ~~six~~nine months ended ~~June~~September 30, 2020.

The following table reflects the maturity analysis of payments due from the Company over the next five years and thereafter for ground lease obligations, which are substantially reimbursable by our tenants, and office lease obligations as of ~~June~~September 30, 2021 (in thousands).


		Future Minimum Lease Payments			Future Minimum Lease Payments
July 1, 2021 - December 31, 2021		$	10,950
October 1, 2021 - December 31, 2021				October 1, 2021 - December 31, 2021	$	5,649
2022	2022	21,115		2022	21,069
2023	2023	20,617		2023	20,571
2024	2024	19,988		2024	19,942
2025	2025	19,674		2025	19,644
2026	2026	18,241		2026	18,247
Thereafter	Thereafter	187,269		Thereafter	187,379
Total	Total	297,854		Total	292,501
Less: imputed interest	Less: imputed interest	98,293		Less: imputed interest	95,830
Total	Total	$	199,561	Total	$	196,671

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~June~~September 30, 2021 (Unaudited) – (Continued)

Note 12 – Equity

Reverse Stock Split

The Company’s one-for-five reverse stock split of its Common Stock took effect after markets closed on December 17, 2020, following the filing of amendments to its charter with the Maryland State Department of Assessments and Taxation whereby every five shares of VEREIT's issued and outstanding shares of Common Stock, $0.01 par value per share, were converted into one share of Common Stock, $0.01 par value per share. VEREIT’s Common Stock began trading on the NYSE on a split-adjusted basis beginning December 18, 2020. Fractional shares resulting from the reverse stock split were paid in cash based on the trailing average closing price of VEREIT’s Common Stock on the NYSE for a period of three days prior to the effective date. The reverse stock split affected all record holders of VEREIT’s Common Stock uniformly and did not affect any record holder’s percentage ownership interest, except for de minimus changes as a result of the elimination of fractional shares. Trading in the Common Stock continued on the NYSE under the symbol “VER” but the Common Stock was assigned a new CUSIP number. The reverse stock split reduced the number of shares of Common Stock outstanding but did not affect the number of VEREIT’s authorized shares of Common Stock. A corresponding reverse split of the outstanding OP Units also took effect on December 17, 2020.

Common Stock and General Partner OP Units

The General Partner is authorized to issue up to 1.5 billion shares of Common Stock.

As of ~~June~~September 30, 2021, the General Partner had approximately ~~229.1~~229.2 million shares of Common Stock issued and outstanding. Additionally, the Operating Partnership had approximately ~~229.1~~229.2 million General Partner OP Units issued and outstanding as of ~~June~~September 30, 2021, corresponding to the General Partner’s outstanding shares of Common Stock.

Common Stock Continuous Offering Program

On February 25, 2021, the Company established a new continuous equity offering program pursuant to which the Company can sell shares of Common Stock having an aggregate offering price of up to $1.5 billion in “at-the-market” offerings or certain other transactions (the “New ATM Program”). Under the New ATM Program, the Company may also enter into 1 or more forward transactions under separate master forward sale confirmations and related supplemental confirmations for the sale of shares of its common stock on a forward basis.

The New ATM Program replaced the Company’s prior continuous equity offering program, which was effective April 15, 2019 (the “Prior ATM Program” and collectively with the New ATM Program, the “ATM Program”). The proceeds from any sale of shares under the ATM Program have been and will be used for general corporate purposes, which may include funding potential acquisitions and repurchasing or repaying outstanding indebtedness.

During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company issued an aggregate of 35,710 shares under the Prior ATM Program, at a weighted average price per share of $37.90, for gross proceeds of $1.4 million. The weighted average price per share, net of commissions, was $37.42, for net proceeds of $1.3 million. As of ~~June~~September 30, 2021, the Company sold an aggregate of $572.2 million under the Prior ATM Program, which had an initial capacity of $750.0 million. ~~NaN~~No shares have been issued under the New ATM Program as of ~~June~~September 30, 2021.

Series F Preferred Stock and Series F Preferred OP Units

~~The~~On August 15, 2021, the Company redeemed all outstanding shares of Series F Preferred ~~Stock pays cumulative cash dividends at~~Stock. Concurrently with the ~~rate of 6.70% per annum on their liquidation preference of $25.00 per share (equivalent to $1.675 per share on an annual basis). The General Partner may, at its option, redeem shares~~redemption of the Series F Preferred Stock, in whole or from time to time in part, at a redemption price of $25.00 per share plus, subject to exceptions, any accrued and unpaid dividends thereon to the date fixed for redemption. The shares of Series F Preferred Stock have no stated maturity, are not subject to any sinking fund or mandatory redemption and will remainVEREIT OP redeemed all outstanding ~~indefinitely unless the General Partner redeems or otherwise repurchases them or they become convertible and are converted into Common Stock (or, if applicable, alternative consideration). The~~ Series F Preferred Units ~~contain~~of VEREIT OP in accordance with the ~~same~~ terms ~~as the Series F Preferred Stock.~~

~~During the six months ended June 30, 2021, the Company redeemed a total~~ of ~~4.0 million shares~~VEREIT OP’s agreement of ~~Series F Preferred Stock, representing approximately 21.20% of the issued and outstanding shares of Series F Preferred Stock as of the beginning of 2021.~~limited partnership. The shares of Series F Preferred Stock were redeemed at a redemption price of $25.00 per share. As of June 30, 2021, there were approximately 14.9 million shares of Series F Preferred Stock, approximately 14.9 million corresponding General Partner Series F Preferred Units and 49,766 Limited Partner Series F Preferred Units issued and outstanding.

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~~VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2021 (Unaudited)~~ – ~~(Continued)~~

Common Stock Dividends

On ~~May~~August 4, 2021, the Company’s Board of Directors declared a quarterly cash dividend for the ~~second~~third quarter of 2021 of $0.462 per share of Common Stock. The dividend was paid on ~~July~~October 15, 2021 to Common Stock stockholders of record as of ~~June~~September 30, 2021. An equivalent distribution by the Operating Partnership is applicable per OP Unit.

Share Repurchase Program

The Company has a share repurchase program (the “Share Repurchase Program”), that permits the Company to repurchase up to $200.0 million of its outstanding Common Stock through May 6, 2022. Under the Share Repurchase Program,

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

repurchases can be made through open market purchases, privately negotiated transactions, structured or derivative transactions, including accelerated stock repurchase transactions, or other methods of acquiring shares in accordance with applicable securities laws and other legal requirements. The Share Repurchase Program does not obligate the Company to make any repurchases at a specific time or in a specific situation and repurchases are influenced by prevailing market conditions, the trading price of the Common Stock, the Company’s financial performance and other conditions. Shares of Common Stock repurchased by the Company under the Share Repurchase Program, if any, will be returned to the status of authorized but unissued shares of Common Stock. As of ~~June~~September 30, 2021, there were 0no share repurchases under the Share Repurchase Program.

Note 13 – Net Income (Loss) Per Share/Unit

Net Income (Loss) Per Share

The following is a summary of the basic and diluted net income per share computation for the General Partner for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (dollar amounts in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Net income $ 77,903 $ 56,105 $ 198,626 $ 142,968
Net income attributable to non-controlling interests (7) (31) (83) (86)
Net income attributable to the General Partner 77,896 56,074 198,543 142,882
Dividends to preferred shares and units (6,248) (12,948) (12,773) (25,896)
Net income available to common stockholders used in basic net income per share 71,648 43,126 185,770 116,986
Income attributable to limited partners 35 39 114 101
Net income used in diluted net income per share $ 71,683 $ 43,165 $ 185,884 $ 117,087
Weighted average number of Common Stock outstanding - basic 229,251,460 215,673,313 229,205,720 215,630,437
Effect of Limited Partner OP Units and dilutive securities 740,106 237,300 534,391 274,191
Weighted average number of common shares - diluted 229,991,566 215,910,613 229,740,111 215,904,628
Basic and diluted net income per share attributable to common stockholders $ 0.31 $ 0.20 $ 0.81 $ 0.54

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~~VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~June 30, 2021 (Unaudited)~~ – ~~(Continued)~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	61,613	$	98,917	$	260,239	$	241,885
Net income attributable to non-controlling interests	(48)		(51)		(131)		(137)
Net income attributable to the General Partner	61,565		98,866		260,108		241,748
Dividends to preferred shares and units	(3,124)		(10,771)		(15,897)		(36,667)
Net income available to common stockholders used in basic net income per share	58,441		88,095		244,211		205,081
Income attributable to limited partners	58		65		172		166
Net income used in diluted net income per share	$	58,499	$	88,160	$	244,383	$	205,247

Weighted average number of Common Stock outstanding - basic	229,271,106		216,737,561		229,227,755		216,002,172
Effect of Limited Partner OP Units and dilutive securities	908,334		290,114		661,115		285,993
Weighted average number of common shares - diluted	230,179,440		217,027,675		229,888,870		216,288,165

Basic and diluted net income per share attributable to common stockholders	$	0.25	$	0.41	$	1.06	$	0.95

Net Income (Loss) Per Unit

The following is a summary of the basic and diluted net income per unit attributable to common unitholders, which includes all common General Partner unitholders and limited partner unitholders, for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (dollar amounts in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020
Net income	Net income	$	77,903	$	56,105	$	198,626	$	142,968		Net income	$	61,613	$	98,917	$	260,239	$	241,885
Net loss attributable to non-controlling interests	Net loss attributable to non-controlling interests	28		8		31		15			Net loss attributable to non-controlling interests	10		14		41		29
Net income attributable to the Operating Partnership	Net income attributable to the Operating Partnership	77,931		56,113		198,657		142,983			Net income attributable to the Operating Partnership	61,623		98,931		260,280		241,914
Dividends to preferred units		(6,248)		(12,948)		(12,773)		(25,896)
Dividends to preferred shares and units											Dividends to preferred shares and units	(3,124)		(10,771)		(15,897)		(36,667)
Net income used in basic and diluted net income per unit	Net income used in basic and diluted net income per unit	$	71,683	$	43,165	$	185,884	$	117,087		Net income used in basic and diluted net income per unit	$	58,499	$	88,160	$	244,383	$	205,247

Weighted average number of common units outstanding - basic	Weighted average number of common units outstanding - basic	229,403,494		215,829,747		229,357,754		215,786,986			Weighted average number of common units outstanding - basic	229,423,140		216,891,891		229,379,789		216,157,976
Effect of dilutive securities	Effect of dilutive securities	588,072		80,866		382,357		117,642			Effect of dilutive securities	756,300		135,784		509,081		130,189
Weighted average number of common units - diluted	Weighted average number of common units - diluted	229,991,566		215,910,613		229,740,111		215,904,628			Weighted average number of common units - diluted	230,179,440		217,027,675		229,888,870		216,288,165

Basic and diluted net income per unit attributable to common unitholders	Basic and diluted net income per unit attributable to common unitholders	$	0.31	$	0.20	$	0.81	$	0.54		Basic and diluted net income per unit attributable to common unitholders	$	0.25	$	0.41	$	1.06	$	0.95

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VEREIT, INC. and VEREIT OPERATING PARTNERSHIP, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 (Unaudited) – (Continued)

Note 14 – Subsequent Events

Common Stock Dividend

On ~~August 4,~~October 14, 2021, the Company’s Board of Directors declared a ~~quarterly~~monthly cash dividend of ~~$0.462~~$0.154 per share of Common Stock ~~(equaling an annualized dividend rate of $1.848 per share)~~ for the ~~third quarter~~month of October, which represents one-third of its prior quarterly dividend. The dividend will be payable on November 15, 2021 to ~~stockholders~~shareholders of record on November 2, 2021, only if the Merger has not closed prior to that date.

Unsecured Notes Exchange Offers

On October 8, 2021, Realty Income commenced offers to exchange all validly tendered and accepted notes of each of the series of notes issued by VEREIT Operating Partnership listed in the table in Note 6 – Debt, for notes to be issued by Realty Income (collectively, the “Realty Notes”). A Registration Statement on Form S-4 (File No. 333-260165) (the "Registration Statement") relating to the issuance of the Realty Notes was filed with the SEC on October 8, 2021 and was declared effective by the SEC on October 22, 2021. On October 25, 2021 Realty Income announced that as of ~~September 30,~~October 22, 2021, ~~which will be paid on October 15, 2021. An equivalent distribution by~~more than 95% of the ~~Operating Partnership is applicable per OP Unit.~~

~~Preferred Stock~~

~~On July 16, 2021,~~aggregate principal amount of each of the ~~Company announced that it intends to redeem all Series F Preferred Stock on August 15, 2021. Concurrently~~series of outstanding Senior Notes were validly tendered and not validly withdrawn in connection with the ~~redemption~~previously announced exchange offers. The exchange offers will expire on November 5, 2021, and are conditioned upon, among other things, the consummation of the Series F Preferred Stock, the OP intends to redeem all outstanding Series F Preferred Units of VEREIT OP in accordance with the terms of the OP’s agreement of limited partnership. From and after the redemption date, the Series F Preferred Stock and Series F Preferred Units will no longer be deemed outstanding and dividends shall cease to accrue.Merger.

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

The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. We make statements in this section that are forward-looking statements. Certain risks may cause our actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a complete discussion of such risk factors, see "Risk Factors" in Part I, Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Capitalized terms used herein, but not otherwise defined, shall have the meaning ascribed to those terms in the “Part I – Financial Information,” including the notes to the consolidated financial statements contained therein.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” which reflect our expectations and projections regarding future events and plans, future financial condition, results of operations, liquidity and business, including leasing and occupancy, acquisitions, dispositions, rent receipts, rent relief requests, rent relief granted, the payment of future dividends, the impact of the coronavirus (COVID-19) on our business, the Merger, ~~the Spin-Off~~ and the ~~redemption of the Series F Preferred Stock and the Series F Preferred Units.~~Spin-Off. Generally, the words “anticipates,” “assumes,” “believes,” “continues,” “could,” “estimates,” “expects,” “goals,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “targets,” “will,” and variations of such words and similar expressions identify forward-looking statements. These forward-looking statements are based on information currently available to us and involve a number of known and unknown assumptions and risks, uncertainties and other factors, which may be difficult to predict and beyond the Company’s control, that could cause actual events and plans or could cause our business, financial condition, liquidity and results of operations to differ materially from those expressed or implied in the forward-looking statements. These factors include, among other things, those discussed below. Information regarding historical rent collections should not serve as an indication of future rent collection. We disclaim any obligation to publicly update or revise any forward-looking statements, whether as a result of changes in underlying assumptions or factors, new information, future events or otherwise, except as may be required by law.

The following are some, but not all, of the assumptions, risks, uncertainties and other factors that could cause our actual results to differ materially from those presented in our forward-looking statements:

•Our ability to consummate the proposed Merger and the timing of the closing of the proposed Merger.

•The potential impact of the announcement of the proposed transactions or consummation of the proposed transactions on business relationships, including with tenants, clients, employees, customers and competitors.

•Litigation associated with the Merger.

•Costs, fees, expenses and charges related to the proposed transactions.

•We may be subject to risks as a result of restrictions imposed by operating covenants contained in the Merger Agreement restricting us generally from issuing equity, incurring or pre-paying debt and limitations on the use of our Revolving Credit Facility.

•The uncertain duration and extent of the impact of COVID-19 on our business and the businesses of our tenants (including their ability to timely make rental payments) and the economy generally.

•Federal, state or local legislation or regulation that could impact the timely payment of rent by tenants in light of COVID-19.

•We may be unable to renew leases, lease vacant space or re-lease space as leases expire on favorable terms or at all.

•We are subject to risks associated with tenant, geographic and industry concentrations with respect to our properties.

•We may be subject to risks accompanying the management of our industrial and office partnerships, in each of which we hold a non-controlling ownership interest.

•Our properties may be subject to impairment charges.

•We could be subject to unexpected costs or liabilities that may arise from potential dispositions, including related to limited partnership, tenant-in-common and Delaware statutory trust real estate programs and our management of such programs.

•We are subject to competition in the acquisition and disposition of properties and in the leasing of our properties including that we may be unable to acquire, dispose of, or lease properties on advantageous terms or at all.

•We are subject to risks associated with bankruptcies or insolvencies of tenants, from tenant defaults generally or from the unpredictability of the business plans and financial condition of our tenants, which are heightened as a result of the COVID-19 pandemic.

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•We have substantial indebtedness, which may affect our ability to pay dividends, and expose us to interest rate fluctuation risk and the risk of default under our debt obligations.

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•We may be subject to increases in our borrowing costs as a result of changes in interest rates and other factors, including the phasing out of the London Inter-Bank Offered Rate (“LIBOR”) starting in 2021.

•Our overall borrowing and operating flexibility may be adversely affected by the terms and restrictions within the indenture governing the senior unsecured notes (the “Senior Notes”), and the Credit Agreement governing the terms of the Credit Facility (as both terms are defined in Liquidity and Capital Resources), and compliance with such covenants and/or our ability to access capital markets (including on attractive terms) may be more difficult as a result of the impact of COVID-19.

•Our access to capital and terms of future financings may be affected by adverse changes to our credit rating.

•We may not generate cash flows sufficient to pay our dividends to stockholders or meet our debt service obligations.

•We may be affected by risks resulting from losses in excess of insured limits.

•We may fail to remain qualified as a real estate investment trust (“REIT”) for U.S. federal income tax purposes.

•Compliance with the REIT annual distribution requirements may limit our operating flexibility.

•We may be unable to retain or hire key personnel.

•We may be impacted by the continuation or deterioration of current market conditions.

All forward-looking statements should be read in light of the risks identified in Part I, Item 1A. Risk Factors within our Annual Report on Form 10-K for the year ended December 31, 2020 and Part II, Item 1A. Risk Factors within this Quarterly Report on Form 10-Q.

We use certain defined terms throughout this Quarterly Report on Form 10-Q that have the following meanings:

When we refer to “annualized rental income,” we mean the rental revenue under our leases on operating properties on a straight-line basis, which includes the effect of rent escalations and any tenant concessions, such as free rent, and our pro rata share of such revenues from properties owned by unconsolidated joint ventures. Annualized rental income excludes any adjustments to rental income due to changes in the collectability assessment, contingent rent, such as percentage rent, and operating expense reimbursements. Management uses annualized rental income as a basis for tenant, industry and geographic concentrations and other metrics within the portfolio. Annualized rental income is not indicative of future performance.

When we refer to a “creditworthy tenant,” we mean a tenant that has entered into a lease that we determine is creditworthy and may include tenants with an investment grade or below investment grade credit rating, as determined by major credit rating agencies, or unrated tenants. To the extent we determine that a tenant is a “creditworthy tenant” even though it does not have an investment grade credit rating, we do so based on our management’s determination that a tenant should have the financial wherewithal to honor its obligations under its lease with us. As explained further below, this determination is based on our management’s substantial experience performing credit analysis and is made after evaluating a tenant’s due diligence materials that are made available to us, including financial statements and operating data.

When we refer to a “direct financing lease,” we mean a lease that requires specific treatment due to the significance of the lease payments from the inception of the lease compared to the fair value of the property, term of the lease, a transfer of ownership, or a bargain purchase option. These leases are recorded as a net asset on the balance sheet. The amount recorded is calculated as the fair value of the remaining lease payments on the leases and the estimated fair value of any expected residual property value at the end of the lease term.

When we refer to properties that are net leased on a “long term basis,” we mean properties with remaining primary lease terms of generally seven to 10 years or longer on average, depending on property type.

Under a “net lease,” the tenant occupying the leased property (usually as a single tenant) does so in much the same manner as if the tenant were the owner of the property. There are various forms of net leases, most typically classified as triple net or double net. Triple net leases typically require that the tenant pay all expenses associated with the property (e.g., real estate taxes, insurance, maintenance and repairs). Double net leases typically require that the tenant pay all operating expenses associated with the property (e.g., real estate taxes, insurance and maintenance), but excludes some or all major repairs (e.g., roof, structure and parking lot). Accordingly, the owner receives the rent “net” of these expenses, rendering the cash flow associated with the lease predictable for the term of the lease. Under a net lease, the tenant generally agrees to lease the property for a significant term and agrees that it will either have no ability or only limited ability to terminate the lease or abate rent prior

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to the expiration of the term of the lease as a result of real estate driven events such as casualty, condemnation or failure by the landlord to fulfill its obligations under the lease.

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The real estate portfolio and economic metrics of our operating properties ~~omits the square feet of one redevelopment property and~~ includes the Company's pro rata share of square feet and annualized rental income from the Company's unconsolidated joint ventures, based upon the Company's legal ownership percentage, which may, at times, not equal the Company's economic interest because of various provisions in certain joint venture agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses and payments of preferred returns.

Overview

VEREIT is a full-service real estate operating company which owns and manages one of the largest portfolios of single-tenant commercial properties in the U.S. As of ~~June~~September 30, 2021, our portfolio, was comprised of 3,885 retail, restaurant, office and industrial real estate properties with an aggregate 89.1 million square feet, of which 97.0% was leased, with a weighted-average remaining lease term of 8.5 years. Omitting the square feet of one redevelopment property and including the pro rata share of square feet and annualized rental income from the Company’s unconsolidated joint ventures, ~~we owned~~was comprised of 3,882 retail, restaurant, office and industrial real estate properties with an aggregate ~~of 88.9~~88.7 million square feet, of which ~~97.1%~~97.6% was leased, with a weighted-average remaining lease term of ~~8.5 years as of June 30, 2021.~~8.4 years.

Merger with Realty Income Corporation

On April 29, 2021, the Company and the OP entered into a Merger Agreement with Realty Income, Merger Sub 1, and Merger Sub 2 whereby Merger Sub 2 will be merged with and into the OP, with the OP continuing as the surviving entity and, immediately thereafter, VEREIT will be merged with and into Merger Sub 1, with Merger Sub 1 continuing as the surviving corporation. Pursuant to the terms and subject to the conditions of the Merger Agreement, each share of Common Stock and Limited Partner OP Unit will be converted into 0.705 of a newly issued share of Realty Income Common Stock. The Merger Agreement contains customary representations, warranties and covenants by each party. The Merger is subject to certain conditions which are set forth in the Merger ~~Agreement, including~~Agreement. Stockholders of VEREIT and Realty Income have both approved the ~~approval of both companies’ shareholders.~~Merger. The boards of directors of the Company and Realty Income have also unanimously approved the Merger Agreement. The Merger is expected to close ~~during~~on November 1, 2021 subject to the ~~fourth quarter~~satisfaction or waiver of ~~2021.~~other closing conditions specified in the Merger Agreement.

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Operating Highlights and Key Performance Indicators

Activity through ~~June~~September 30, 2021

Operations

•Acquired controlling financial interests in ~~106~~134 commercial properties for an aggregate purchase price of ~~$318.9~~$419.2 million, which includes ~~$3.1~~$4.0 million of external acquisition-related expenses that were capitalized.

•Disposed of 5283 properties, for an aggregate sales price of ~~$369.9 million, of which two were office properties disposed of for an aggregate sales price of $35.3~~$432.7 million. The Company recorded a gain of ~~$93.2~~$96.5 million related to the sales.

Debt

•As of ~~June~~September 30, 2021, ~~no amounts were~~$88.0 million was outstanding under the Revolving Credit Facility.

•Total secured debt decreased by $~~326.1~~341.4 million, from $1.3 billion to $1.0 billion, which includes prepayment of ~~$232.2~~$247.1 million of mortgage notes.

Equity

•Issued an aggregate of 35,710 shares under the Prior ATM Program (as defined in Liquidity and Capital Resources), at a weighted average price per share of $37.90, for gross proceeds of $1.4 million. The weighted average price per share, net of commissions, was $37.42, for net proceeds of $1.3 million.

•Redeemed ~~a total of 4.0 million~~all outstanding shares of Series F Preferred ~~Stock, representing approximately 21.20% of the issued and outstanding preferred shares as of the beginning of the year.~~Stock. The shares of Series F Preferred Stock were redeemed at a redemption price of $25.00 per ~~share plus all accrued and unpaid dividends.~~share.

•Declared a quarterly dividend of $0.462 per share of Common Stock for each of the ~~first and second~~three quarters of 2021.

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Real Estate Portfolio Metrics

In managing our portfolio, we are committed to diversification by property type, tenant, geography and industry. Below is a summary of our operating property type diversification and our top ten concentrations as of ~~June~~September 30, 2021, based on annualized rental income of $1.1 billion.

~~(1)Includes redevelopment property, billboards, construction in progress, land and parking lots.~~

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Our financial performance is influenced by the timing of acquisitions and dispositions and the operating performance of our operating properties. The following table shows the property metrics of our operating properties as of ~~June~~September 30, 2021 and 2020:


		June 30, 2021	June 30, 2020		September 30, 2021	September 30, 2020
Portfolio Metrics	Portfolio Metrics			Portfolio Metrics
Operating properties	Operating properties	3,885	3,836	Operating properties	3,882	3,820
Rentable square feet (in millions)	Rentable square feet (in millions)	88.9	88.9	Rentable square feet (in millions)	88.7	88.9
Economic occupancy rate (1)	Economic occupancy rate (1)	97.1%	98.8%	Economic occupancy rate (1)	97.6%	98.5%
Investment-grade tenants (2)	Investment-grade tenants (2)	37.8%	37.0%	Investment-grade tenants (2)	38.0%	37.7%
Weighted-average lease term (in years)	Weighted-average lease term (in years)	8.5	8.5	Weighted-average lease term (in years)	8.4	8.4
Lease rollover: (3)	Lease rollover: (3)			Lease rollover: (3)
Annual average	Annual average	6.1%	6.0%	Annual average	5.9%	5.9%
Maximum for a single year	Maximum for a single year	10.6%	10.9%	Maximum for a single year	10.5%	11.1%

(1)Economic occupancy rate equals the sum of square feet leased (including space subject to month-to-month agreements) divided by rentable square feet.

(2)Based on annualized rental income of our real estate portfolio as of ~~June~~September 30, 2021 and 2020, respectively. Investment-grade tenants are those with a credit rating of BBB- or higher by Standard & Poor’s Financial Services LLC or a credit rating of Baa3 or higher by Moody’s Investor Service, Inc. The ratings may reflect those assigned by Standard & Poor’s Financial Services LLC or Moody’s Investor Service, Inc. to the lease guarantor or the parent company, as applicable.

(3)Through the end of the next five years as of the respective reporting date.

Operating Performance

In addition, management uses the following financial metrics to assess our operating performance (dollar amounts in thousands, except per share amounts).


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2021		2020		2021		2020
Financial Metrics	Financial Metrics									Financial Metrics
Total revenues	Total revenues	$	291,267	$	278,997	$	582,076	$	578,179	Total revenues	$	290,192	$	295,278	$	872,268	$	873,457
Net income	Net income	$	77,903	$	56,105	$	198,626	$	142,968	Net income	$	61,613	$	98,917	$	260,239	$	241,885
Basic and diluted net income per share attributable to common stockholders	Basic and diluted net income per share attributable to common stockholders	$	0.31	$	0.20	$	0.81	$	0.54	Basic and diluted net income per share attributable to common stockholders	$	0.25	$	0.41	$	1.06	$	0.95
FFO attributable to common stockholders and limited partners (1)	FFO attributable to common stockholders and limited partners (1)	$	175,652	$	155,943	$	354,640	$	337,765	FFO attributable to common stockholders and limited partners (1)	$	176,047	$	171,233	$	530,687	$	508,998
AFFO attributable to common stockholders and limited partners (1)	AFFO attributable to common stockholders and limited partners (1)	$	186,596	$	161,083	$	369,643	$	342,057	AFFO attributable to common stockholders and limited partners (1)	$	191,554	$	166,547	$	561,197	$	508,604
AFFO attributable to common stockholders and limited partners per diluted share (1)	AFFO attributable to common stockholders and limited partners per diluted share (1)	$	0.81	$	0.75	$	1.61	$	1.58	AFFO attributable to common stockholders and limited partners per diluted share (1)	$	0.83	$	0.77	$	2.44	$	2.35

(1)See the Non-GAAP Measures section below for descriptions of our non-GAAP measures and reconciliations to the most comparable measure in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).

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Results of Operations

Our business was not materially impacted during the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 by the COVID-19 pandemic. During the three months ended ~~June~~September 30, 2021 our rent collection was ~~99.4%~~99.1% of rental revenue and as of ~~July 21,~~October 20, 2021, we collected ~~$14.2~~$16.8 million of deferred rent, representing approximately 100% of the amounts due from January 1, 2021 through ~~June~~September 30, 2021. The full extent of the future impact of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations remains uncertain.

The table below sets forth, for the periods presented, revenue information and the dollar amount change year over year (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021		2020		2021 vs 2020 Increase/(Decrease)		2021		2020		2021 vs 2020 Increase/(Decrease)			2021		2020		2021 vs 2020 Increase/(Decrease)		2021		2020		2021 vs 2020 Increase/(Decrease)
Revenues:	Revenues:													Revenues:
Rental	Rental	$	290,567	$	278,576	$	11,991	$	580,876	$	577,162	$	3,714	Rental	$	289,671	$	293,692	$	(4,021)	$	870,547	$	870,854	$	(307)
Fees from managed partnerships	Fees from managed partnerships	700		421		279		1,200		1,017		183		Fees from managed partnerships	521		1,586		(1,065)		1,721		2,603		(882)
Total revenues	Total revenues	$	291,267	$	278,997	$	12,270	$	582,076	$	578,179	$	3,897	Total revenues	$	290,192	$	295,278	$	(5,086)	$	872,268	$	873,457	$	(1,189)

Rental

The ~~increase~~decrease in rental revenue of ~~$12.0~~$4.0 million and ~~$3.7~~$0.3 million during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, as compared to the same periods in 2020 was primarily due to real estate ~~acquisitions,~~dispositions, partially offset by real estate ~~dispositions.~~acquisitions. Subsequent to January 1, 2020, the Company acquired ~~157~~185 occupied properties for an aggregate purchase price of ~~$661.4~~$761.7 million and disposed of ~~129~~160 consolidated properties for an aggregate sales price of ~~$808.3~~$871.1 million.

Fees from Managed Partnerships

Fees from managed partnerships consist of fees earned for providing various services to the Company’s unconsolidated joint venture entities. The ~~increase~~decrease of ~~$0.3~~$1.1 million and $0.9 million during the three and nine months ended ~~June~~September 30, 2021, respectively, as compared to the same period in 2020 was primarily due to a $1.1 million acquisition ~~fees earned from~~fee recorded in 2020 for the ~~office partnership, which acquired~~purchase of one property ~~during~~in the three months ended June 30, 2021. The increase of $0.2 million during the six months ended June 30, 2021 as compared to the same period in 2020 was primarily due to management fees earned for the full six months ended June 30, 2021 related to a property acquired by the office partnership during the six months ended June 30, 2020.industrial partnership.

Operating Expenses

The table below sets forth, for the periods presented, certain operating expense information and the dollar amount change year over year (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021		2020		2021 vs 2020 Increase/(Decrease)		2021		2020		2021 vs 2020 Increase/(Decrease)			2021		2020		2021 vs 2020 Increase/(Decrease)		2021		2020		2021 vs 2020 Increase/(Decrease)
Acquisition-related	Acquisition-related	$	1,428	$	1,169	$	259	$	2,782	$	2,692	$	90	Acquisition-related	$	1,373	$	1,050	$	323	$	4,155	$	3,742	$	413
Merger, litigation and non-routine costs, net	Merger, litigation and non-routine costs, net	6,605		(118)		6,723		6,673		(8,682)		15,355		Merger, litigation and non-routine costs, net	9,445		105		9,340		16,118		(8,577)		24,695
Property operating	Property operating	29,174		29,098		76		59,779		59,588		191		Property operating	28,854		31,400		(2,546)		88,633		90,988		(2,355)
General and administrative	General and administrative	16,451		16,120		331		30,977		31,176		(199)		General and administrative	12,437		14,774		(2,337)		43,414		45,950		(2,536)
Depreciation and amortization	Depreciation and amortization	105,839		108,733		(2,894)		213,914		232,813		(18,899)		Depreciation and amortization	106,668		108,257		(1,589)		320,582		341,070		(20,488)
Impairments	Impairments	14,129		12,094		2,035		45,978		20,474		25,504		Impairments	13,272		16,397		(3,125)		59,250		36,871		22,379
Total operating expenses	Total operating expenses	$	173,626	$	167,096	$	6,530	$	360,103	$	338,061	$	22,042	Total operating expenses	$	172,049	$	171,983	$	66	$	532,152	$	510,044	$	22,108

Acquisition-Related Expenses

Acquisition-related expenses consist of allocated internal salaries related to time spent on acquiring commercial properties and costs associated with unconsummated deals. Acquisition-related expenses remained relatively constant during the three and ~~six~~nine months ended ~~June~~September 30, 2021, as compared to the same periods in 2020.

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Merger, Litigation and Non-Routine Costs, Net

Merger, litigation and non-routine costs, net increased ~~$6.7~~$9.3 million during the three months ended ~~June~~September 30, 2021, as compared to the same period in 2020, primarily due to ~~$12.7~~$9.6 million of costs incurred related to the Merger, offset by ~~insurance recoveries~~legal fees and settlements of ~~$6.3~~$0.2 million during the three months ended ~~June~~September 30, 2021, with no comparable expenses ~~or recoveries~~ during the same period in 2020.

Merger, litigation and non-routine costs, net increased ~~$15.4~~$24.7 million during the ~~six~~nine months ended ~~June~~September 30, 2021, as compared to the same period in 2020 primarily due to ~~$12.7~~$22.3 million of costs incurred related to the Merger during the ~~six~~nine months ended ~~June~~September 30, 2021, offset by ~~an increase in~~ insurance recoveries of ~~$3.9~~$6.3 million. In addition, during the ~~six~~nine months ended ~~June~~September 30, 2020, the Company reversed $6.8 million of prior period estimated costs recorded in 2019 that exceeded actual expenses incurred.

Property Operating Expenses

Property operating expenses such as taxes, insurance, ground rent and maintenance include both reimbursable and non-reimbursable property expenses. ~~Property operating expenses remained relatively constant~~The decrease of $2.5 million and $2.4 million during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, as compared to the same periods in ~~2020.~~2020 was primarily due to the impact of property dispositions.

General and Administrative Expenses

~~General~~The decrease of $2.3 million and ~~administrative expenses remained relatively constant~~$2.5 million during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, as compared to the same periods in ~~2020.~~2020 was primarily due to decreased compensation expense.

Depreciation and Amortization Expenses

The decrease in depreciation and amortization expenses of ~~$2.9~~$1.6 million and ~~$18.9~~$20.5 million during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, as compared to the same periods in 2020 was primarily due to the write off of intangible lease assets related to certain properties whose tenants filed for Chapter 11 bankruptcy during 2020 and real estate dispositions.

Impairments

Impairments of ~~$14.1~~$13.3 million and ~~$12.1~~$16.4 million were recorded during the three months ended ~~June~~September 30, 2021 and 2020, respectively. Impairments of ~~$46.0~~$59.3 million and ~~$20.5~~$36.9 million were recorded during the ~~six~~nine months ended ~~June~~September 30, 2021 and 2020, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2021, the impairment charges primarily related to certain office, retail and restaurant properties which were identified by management for potential sale or were determined would not be re-leased by the tenant.

Other (Expense) Income and Provision for Income Taxes

The table below sets forth, for the periods presented, certain financial information and the dollar amount change year over year (in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,						Nine Months Ended September 30,
		2021		2020		2021 vs 2020 Increase/(Decrease)		2021		2020		2021 vs 2020 Increase/(Decrease)			2021		2020		2021 vs 2020 Increase/(Decrease)		2021		2020		2021 vs 2020 Increase/(Decrease)
Interest expense	Interest expense	$	(59,291)	$	(65,613)	$	(6,322)	$	(120,027)	$	(130,309)	$	(10,282)	Interest expense	$	(59,768)	$	(66,935)	$	(7,167)	$	(179,795)	$	(197,244)	$	(17,449)
Gain (loss) on extinguishment and forgiveness of debt, net		$	35	$	(200)	$	235	$	(2,097)	$	(1,480)	$	617
(Loss) gain on extinguishment and forgiveness of debt, net														(Loss) gain on extinguishment and forgiveness of debt, net	$	(5)	$	61	$	(66)	$	(2,102)	$	(1,419)	$	683
Other income, net	Other income, net	$	3,089	$	778	$	2,311	$	6,755	$	953	$	5,802	Other income, net	$	346	$	73	$	273	$	7,101	$	1,026	$	6,075
Equity in income of unconsolidated entities	Equity in income of unconsolidated entities	$	464	$	1,497	$	(1,033)	$	911	$	1,743	$	(832)	Equity in income of unconsolidated entities	$	463	$	663	$	(200)	$	1,374	$	2,406	$	(1,032)

Gain on disposition of real estate and real estate assets held for sale, net	Gain on disposition of real estate and real estate assets held for sale, net	$	16,896	$	8,795	$	8,101	$	92,970	$	34,044	$	58,926	Gain on disposition of real estate and real estate assets held for sale, net	$	3,369	$	42,814	$	(39,445)	$	96,339	$	76,858	$	19,481
Provision for income taxes	Provision for income taxes	$	(931)	$	(1,053)	$	(122)	$	(1,859)	$	(2,101)	$	(242)	Provision for income taxes	$	(935)	$	(1,054)	$	(119)	$	(2,794)	$	(3,155)	$	(361)

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Interest Expense

The decrease in interest expense of ~~$6.3~~$7.2 million and ~~$10.3~~$17.4 million during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, as compared to the same periods in 2020 was primarily due to a decrease in average debt outstanding and

~~Table of~~ ~~Contents~~

weighted average interest rates. At ~~June~~September 30, 2021, the Company had ~~$5.6~~$5.7 billion of debt outstanding with a weighted average interest rate of ~~3.89%~~3.86%, as compared to ~~$6.0~~$5.9 billion of debt outstanding with a weighted average interest rate of ~~4.20%~~4.19% at ~~June~~September 30, 2020.

~~Gain (Loss)~~Loss on Extinguishment and Forgiveness of Debt, Net

~~Gain (loss)~~(Loss) gain on extinguishment and forgiveness of debt, net remained relatively constant during the three and ~~six~~nine months ended ~~June~~September 30, 2021, as compared to the same periods in 2020.

Other Income, Net

Other income, net remained relatively constant during the three months ended September 30, 2021, as compared to the same period in 2020. The increase of ~~$2.3 million and $5.8~~$6.1 million in other income, net during the ~~three and six~~nine months ended ~~June~~September 30, 2021, ~~respectively,~~ as compared to the same ~~periods~~period in 2020, was primarily due to gains of ~~$2.0 million and $4.1~~$4.0 million recorded during the ~~three and six~~nine months ended ~~June~~September 30, 2021, ~~respectively,~~ related to real estate investments received associated with site improvements performed by the tenant, with no comparable activity during the same periods in 2020.

Equity in Income of Unconsolidated Entities

The decrease of ~~$1.0~~$0.2 million and ~~$0.8~~$1.0 million in equity in income during the three and ~~six~~nine months ended ~~June~~September 30, 2021, respectively, as compared to the same periods in 2020 was primarily due to the Company’s purchase of the remaining interest in one unconsolidated joint venture during the fourth quarter of 2020.

Gain on Disposition of Real Estate and Real Estate Assets Held for Sale, Net

The ~~increase~~decrease in gain on disposition of real estate and real estate assets held for sale, net of ~~$8.1~~$39.4 million during the three months ended ~~June~~September 30, 2021, as compared to the same period in 2020 was due to the Company’s disposition of 2231 properties for an aggregate sales price of ~~$109.0~~$62.8 million which resulted in a gain of ~~$17.0~~$3.4 million during the three months ended ~~June~~September 30, 2021, as compared to the disposition of 1716 properties for an aggregate sales price of ~~$67.0~~$157.0 million during the same period in 2020, which resulted in a gain of ~~$9.0~~$42.9 million.

The increase in gain on disposition of real estate and real estate assets held for sale, net of ~~$58.9~~$19.5 million during the ~~six~~nine months ended ~~June~~September 30, 2021, as compared to the same period in 2020 was due to the Company’s disposition of 5283 properties for an aggregate sales price of ~~$369.9~~$432.7 million which resulted in a gain of ~~$93.2~~$96.5 million during the ~~six~~nine months ended ~~June~~September 30, 2021, as compared to the disposition of 4763 properties for an aggregate sales price of ~~$219.2~~$376.2 million during the same period in 2020, which resulted in a gain of ~~$34.2~~$77.2 million.

Provision for Income Taxes

The provision for income taxes consists of certain state and local income and franchise taxes. The provision for income taxes remained relatively constant during the three and ~~six~~nine months ended ~~June~~September 30, 2021, as compared to the same periods in 2020.

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Non-GAAP Measures

Our results are presented in accordance with U.S. GAAP. We also disclose certain non-GAAP measures, as discussed further below. Management uses these non-GAAP financial measures in our internal analysis of results and believes these measures are useful to investors for the reasons explained below. These non-GAAP financial measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP.

Funds from Operations and Adjusted Funds from Operations

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

Nareit defines FFO as net income or loss computed in accordance with U.S. GAAP adjusted for gains or losses from disposition of property, depreciation and amortization of real estate assets, impairment write-downs on real estate, and our pro rata share of FFO adjustments related to unconsolidated partnerships and joint ventures. We calculate FFO in accordance with Nareit’s definition described above.

In addition to FFO, we use adjusted funds from operations (“AFFO”) as a non-GAAP supplemental financial performance measure to evaluate the operating performance of the Company. AFFO, as defined by the Company, excludes from FFO non-routine items such as acquisition-related expenses, merger, litigation and non-routine costs, net and gains or losses on sale of investment securities or mortgage notes receivable. We also exclude certain non-cash items such as impairments of goodwill, intangible and right of use assets, straight-line rent, net direct financing lease adjustments, gains or losses on derivatives, gains or losses on the extinguishment or forgiveness of debt, equity-based compensation and amortization of intangible assets, deferred financing costs, premiums and discounts on debt and investments, above-market lease assets and below-market lease liabilities. Management believes that excluding these items from FFO provides investors with supplemental performance information that is consistent with the performance models and analysis used by management, and provides investors a view of the performance of our portfolio over time. AFFO allows for a comparison of the performance of our operations with other publicly-traded REITs, as AFFO, or an equivalent measure, is routinely reported by publicly-traded REITs, and we believe often used by analysts and investors for comparison purposes.

For all of these reasons, we believe FFO and AFFO, in addition to net income (loss), as defined by U.S. GAAP, are helpful supplemental performance measures and useful in understanding the various ways in which our management evaluates the performance of the Company over time. However, not all REITs calculate FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered as alternatives to net income (loss) and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the U.S. Securities and Exchange Commission (the “SEC”), Nareit, nor any other regulatory body has evaluated the acceptability of the exclusions used to adjust FFO in order to calculate AFFO and its use as a non-GAAP financial performance measure.

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The table below presents FFO and AFFO for the three and ~~six~~nine months ended ~~June~~September 30, 2021 and 2020 (in thousands, except share and per share data):


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020				2021		2020		2021		2020
Net income	Net income	$	77,903	$	56,105	$	198,626	$	142,968		Net income	$	61,613	$	98,917	$	260,239	$	241,885
Dividends on Series F Preferred Stock	Dividends on Series F Preferred Stock	(6,248)		(12,948)		(12,773)		(25,896)			Dividends on Series F Preferred Stock	(3,124)		(10,771)		(15,897)		(36,667)
Gain on disposition of real estate assets and interests in unconsolidated joint ventures, net	Gain on disposition of real estate assets and interests in unconsolidated joint ventures, net	(16,896)		(8,795)		(92,970)		(34,044)			Gain on disposition of real estate assets and interests in unconsolidated joint ventures, net	(3,369)		(42,814)		(96,339)		(76,858)
Depreciation and amortization of real estate assets	Depreciation and amortization of real estate assets	105,440		108,341		213,140		231,986			Depreciation and amortization of real estate assets	106,290		107,869		319,430		339,855
Impairment of real estate	Impairment of real estate	14,129		12,094		45,978		20,474			Impairment of real estate	13,272		16,397		59,250		36,871
Proportionate share of adjustments for unconsolidated entities	Proportionate share of adjustments for unconsolidated entities	1,324		1,146		2,639		2,277			Proportionate share of adjustments for unconsolidated entities	1,365		1,635		4,004		3,912
FFO attributable to common stockholders and limited partners	FFO attributable to common stockholders and limited partners	175,652		155,943		354,640		337,765			FFO attributable to common stockholders and limited partners	176,047		171,233		530,687		508,998
Acquisition-related expenses	Acquisition-related expenses	1,428		1,169		2,782		2,692			Acquisition-related expenses	1,373		1,050		4,155		3,742
Merger, litigation and non-routine costs, net	Merger, litigation and non-routine costs, net	6,605		(118)		6,673		(8,682)			Merger, litigation and non-routine costs, net	9,445		105		16,118		(8,577)

Loss (gain) on investments		22		142		(673)		683
(Gain) loss on investments											(Gain) loss on investments	(19)		(76)		(692)		607

Amortization of premiums (discounts) on debt and investments, net	Amortization of premiums (discounts) on debt and investments, net	555		(362)		642		(1,051)			Amortization of premiums (discounts) on debt and investments, net	837		(201)		1,479		(1,252)
Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities	Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities	1,830		788		3,377		1,536			Amortization of above-market lease assets and deferred lease incentives, net of amortization of below-market lease liabilities	1,164		393		4,541		1,929
Net direct financing lease adjustments	Net direct financing lease adjustments	374		372		740		737			Net direct financing lease adjustments	384		381		1,124		1,118
Amortization and write-off of deferred financing costs	Amortization and write-off of deferred financing costs	2,649		2,898		5,204		5,739			Amortization and write-off of deferred financing costs	2,677		3,114		7,881		8,853
(Gain) loss on extinguishment and forgiveness of debt, net		(35)		200		2,097		1,480
Loss (gain) on extinguishment and forgiveness of debt, net											Loss (gain) on extinguishment and forgiveness of debt, net	5		(61)		2,102		1,419
Straight-line rent	Straight-line rent	(4,613)		(3,404)		(8,832)		(5,458)			Straight-line rent	(3,560)		(12,595)		(12,392)		(18,053)
Equity-based compensation	Equity-based compensation	3,903		3,857		6,572		6,459			Equity-based compensation	2,941		2,991		9,513		9,450
Other adjustments, net	Other adjustments, net	(1,638)		441		(3,299)		669			Other adjustments, net	415		379		(2,884)		1,048
Proportionate share of adjustments for unconsolidated entities	Proportionate share of adjustments for unconsolidated entities	(136)		(843)		(280)		(512)			Proportionate share of adjustments for unconsolidated entities	(155)		(166)		(435)		(678)
AFFO attributable to common stockholders and limited partners	AFFO attributable to common stockholders and limited partners	$	186,596	$	161,083	$	369,643	$	342,057		AFFO attributable to common stockholders and limited partners	$	191,554	$	166,547	$	561,197	$	508,604

Weighted-average shares of Common Stock outstanding - basic	Weighted-average shares of Common Stock outstanding - basic	229,251,460		215,673,313		229,205,720		215,630,437			Weighted-average shares of Common Stock outstanding - basic	229,271,106		216,737,561		229,227,755		216,002,172
Effect of weighted-average Limited Partner OP Units and dilutive securities (1)	Effect of weighted-average Limited Partner OP Units and dilutive securities (1)	740,106		237,300		534,391		274,191			Effect of weighted-average Limited Partner OP Units and dilutive securities (1)	908,334		290,114		661,115		285,993
Weighted-average shares of Common Stock outstanding - diluted (2)	Weighted-average shares of Common Stock outstanding - diluted (2)	229,991,566		215,910,613		229,740,111		215,904,628			Weighted-average shares of Common Stock outstanding - diluted (2)	230,179,440		217,027,675		229,888,870		216,288,165

AFFO attributable to common stockholders and limited partners per diluted share	AFFO attributable to common stockholders and limited partners per diluted share	$	0.81	$	0.75	$	1.61	$	1.58		AFFO attributable to common stockholders and limited partners per diluted share	$	0.83	$	0.77	$	2.44	$	2.35

(1)Dilutive securities include unvested restricted stock units (“Restricted Stock Units”) and stock options (“Stock Options”).

(2)Weighted-average shares for all periods presented exclude the effect of the convertible debt, which was fully repaid in cash as of December 31, 2020 and the underlying Restricted Stock Units that would not have met the vesting criteria based on certain performance targets as of the end of the respective reporting period.

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Liquidity and Capital Resources

General

Our principal liquidity needs for the next twelve months and beyond are to:

•fund normal operating expenses;

•fund potential capital expenditures, tenant improvements and leasing costs;

•meet debt service and principal repayment obligations, including balloon payments on maturing ~~debt;~~debt and debt prepayments;

•pay dividends;

•~~fund the redemption of Series F Preferred Stock and Series F Preferred Units;~~

•pay merger costs and expenses; and

•fund property acquisitions.

We expect to be able to satisfy these obligations using one or more of the following sources:

•cash flow from operations;

•proceeds from real estate dispositions;

•utilization of the existing Revolving Credit Facility; and

•cash and cash equivalents balance.

COVID-19

We do not currently expect liquidity constraints. However, COVID-19 and related impacts on our financial performance and the financial performance of our tenants could still have a material and adverse effect on our results of operations, liquidity and cash flows, in particular due to the potential inability of our tenants to satisfy their rent obligations and inability of the Company to renew leases, lease vacant space or re-let space as leases expire on favorable terms, or at all. Impacts related to COVID-19 may also negatively impact our future compliance with financial covenants in our Credit Facility, indentures governing our Senior Notes and other debt agreements and result in a default and acceleration of indebtedness which could negatively impact our ability to make additional borrowings under our Credit Facility. The financial impact of COVID-19 could also negatively affect our ability to pay dividends or fund acquisitions in the future.

Disposition Activity

As part of our effort to optimize our real estate portfolio by focusing on holding core assets, during the ~~six~~nine months ended ~~June~~September 30, 2021, the Company disposed of 5283 properties for an aggregate sales price of ~~$369.9~~$432.7 million. We expect to continue to explore opportunities to sell additional properties to provide further financial flexibility, however, due to current economic circumstances, we may not be able to dispose of properties on advantageous terms or at all.

Credit Facility

Summary and Obligations

As of ~~June~~September 30, 2021, ~~no amounts were~~$88.0 million was outstanding under the Revolving Credit Facility. The maximum aggregate dollar amount of letters of credit that may be outstanding at any one time under the Credit Facility is $50.0 million. As of ~~June~~September 30, 2021, there were ~~$1.9~~$1.3 million of letters of credit outstanding.

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Credit Facility Covenants

The Credit Facility requires restrictions on corporate guarantees, as well as the maintenance of certain financial covenants. The key financial covenants in the Credit Facility, as defined and calculated per the terms of the Credit Agreement include maintaining the following:

Unsecured Credit Facility Key Covenants

Required

Ratio of total indebtedness to total asset value

≤ 60%

Ratio of adjusted EBITDA to fixed charges

≥ 1.5x

Ratio of secured indebtedness to total asset value

≤ 45%

Ratio of unsecured indebtedness to unencumbered asset value

≤ 60%

Ratio of unencumbered adjusted NOI to unsecured interest expense

≥ 1.75x

The Company believes that it was in compliance with the financial covenants pursuant to the Credit Agreement and is not restricted from accessing any borrowing availability under the Credit Facility as of ~~June~~September 30, 2021.

Corporate Bonds

Summary and Obligations

As of ~~June~~September 30, 2021, the Operating Partnership had $4.65 billion aggregate principal amount of Senior Notes outstanding. The indenture governing the Senior Notes requires that the Company be in compliance with certain key financial covenants, including maintaining the following:

Corporate Bond Key Covenants

Required

Limitation on incurrence of total debt

≤ 65%

Limitation on incurrence of secured debt

≤ 40%

Debt service coverage ratio

≥ 1.5x

Maintenance of total unencumbered assets

≥ 150%

As of ~~June~~September 30, 2021, the Company believes that it was in compliance with these financial covenants based on the covenant limits and calculations in place at that time.

Mortgage Notes Payable

Summary and Obligations

As of ~~June~~September 30, 2021, the Company had $1.0 billion of mortgage notes payable, which was collateralized by ~~217~~216 properties, reflecting a decrease from December 31, 2020 of ~~$326.1~~$341.4 million during the ~~six~~nine months ended ~~June~~September 30, 2021, primarily related to prepayments of mortgage notes payable. Our mortgage indebtedness bore interest at the weighted-average rate of ~~4.86%~~4.88% per annum and had a weighted-average maturity of ~~2.1~~1.9 years. We may in the future incur additional mortgage debt on the properties we currently own or use long-term non-recourse financing to acquire additional properties.

The payment terms of our loan obligations vary. In general, only interest amounts are payable monthly with all unpaid principal and interest due at maturity. Some of our loan agreements require that we comply with specific reporting and financial covenants mainly related to debt coverage ratios and loan-to-value ratios. Each loan that has these requirements has specific ratio thresholds that must be met.

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Restrictions on Loan Covenants

Our mortgage loan obligations generally restrict corporate guarantees and require the maintenance of financial covenants, including maintenance of certain financial ratios (such as specified debt to equity and debt service coverage ratios), as well as the maintenance of a minimum net worth. The mortgage loan agreements contain no dividend restrictions except in the event of default or when a distribution would drive liquidity below the applicable thresholds. The Company believes that it was in compliance with the financial covenants under the mortgage loan agreements and had no restrictions on the payment of dividends as of ~~June~~September 30, 2021.

Dividends

On May 4, 2021, the Company’s Board of Directors declared a quarterly cash dividend for the second quarter of 2021 of $0.462 per share of Common Stock to stockholders of record as of June 30, 2021, which was paid on July 15, 2021. An equivalent distribution by the Operating Partnership is applicable per OP Unit.

Our Series F Preferred Stock, as discussed in Note 12 – Equity to our consolidated financial statements, will pay cumulative cash dividends at the rate of 6.70% per annum on their liquidation preference of $25.00 per share (equivalent to $1.675 per share on an annual basis) through the previously announced redemption date of August 15, 2021 and thereafter dividends will cease to accrue.

On August 4, 2021, the Company’s Board of Directors declared a quarterly cash dividend for the third quarter of 2021 of $0.462 per share of Common Stock ~~consistent with last quarter’s dividend. The dividend will be paid on October 15, 2021~~ to ~~Common Stock~~ stockholders of record as of September 30, 2021, which was paid on October 15, 2021. An equivalent distribution by the Operating Partnership is applicable per OP Unit.

On October 14, 2021, the Company’s Board of Directors declared a monthly cash dividend of $0.154 per share of Common Stock for the month of October, which represents one-third of its prior quarterly dividend. The dividend will be payable on November 15, 2021 to shareholders of record on November 2, 2021, only if the Merger has not closed prior to that date.

Redemptions of Series F Preferred Stock and Series F Preferred OP Units

~~During the six months ended June 30,~~On August 15, 2021, the Company redeemed ~~a total of 4.0 million shares of Series F Preferred Stock, representing approximately 21.20% of the issued and~~all outstanding shares of Series F Preferred ~~Stock as~~Stock. Concurrently with the redemption of the ~~beginning~~Series F Preferred Stock, VEREIT OP redeemed all outstanding Series F Preferred Units of ~~2021.~~VEREIT OP in accordance with the terms of VEREIT OP’s agreement of limited partnership. The shares of Series F Preferred Stock were redeemed at a redemption price of $25.00 per share. As of June 30, 2021, there were approximately 14.9 million shares of Series F Preferred Stock, approximately 14.9 million corresponding General Partner Series F Preferred Units and 49,766 Limited Partner Series F Preferred Units issued and outstanding. On July 16, 2021, the Company announced that it intends to redeem all Series F Preferred Stock on August 15, 2021. Concurrently with the redemption of the Series F Preferred Stock, the OP intends to redeem all outstanding Series F Preferred Units of VEREIT OP in accordance with the terms of the OP’s agreement of limited partnership.

Common Stock Continuous Offering Program

On February 25, 2021, the Company established a new continuous equity offering program pursuant to which the Company can sell shares of Common Stock having an aggregate offering price of up to $1.5 billion in “at-the-market” offerings or certain other transactions (the “New ATM Program”). Under the New ATM Program, the Company may also enter into one or more forward transactions under separate master forward sale confirmations and related supplemental confirmations for the sale of shares of its common stock on a forward basis.

During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company issued an aggregate of 35,710 shares under the Prior ATM Program, at a weighted average price per share of $37.90, for gross proceeds of $1.4 million. The weighted average price per share, net of commissions, was $37.42, for net proceeds of $1.3 million. As of ~~June~~September 30, 2021, the Company sold an aggregate of $572.2 million under the Prior ATM Program, which had an initial capacity of $750.0 million. No shares were issued during the three months ended ~~June~~September 30, 2021. No shares have been issued under the New ATM Program as of ~~June~~September 30, 2021.

Share Repurchase Program

The Company has a share repurchase program (the “Share Repurchase Program”) that permits the Company to repurchase up to $200.0 million of its outstanding Common Stock through May 6, 2022. Under the Share Repurchase Program, repurchases can be made through open market purchases, privately negotiated transactions, structured or derivative transactions, including accelerated stock repurchase transactions, or other methods of acquiring shares in accordance with applicable securities laws and other legal requirements. The Share Repurchase Program does not obligate the Company to make any repurchases at a specific time or in a specific situation and repurchases are influenced by prevailing market conditions, the

~~Table of~~ ~~Contents~~

trading price of the Common Stock, the Company’s financial performance and other conditions. Shares of Common Stock repurchased by the Company under the Share Repurchase Program, if any, will be returned to the status of authorized but unissued shares of Common Stock. As of ~~June~~September 30, 2021, there were no share repurchases under the Share Repurchase Program.

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Contractual Obligations

The following is a summary of our contractual obligations as of ~~June~~September 30, 2021 (in thousands):


				Payments due by period											Payments due by period
		Total		Less than 1 year		1-3 years		4-5 years		More than 5 years			Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Principal payments - mortgage notes	Principal payments - mortgage notes	$	1,007,108	$	15,705	$	984,439	$	2,216	$	4,748	Principal payments - mortgage notes	$	991,803	$	399	$	984,439	$	2,216	$	4,749
Interest payments - mortgage notes ~~(1)~~	Interest payments - mortgage notes ~~(1)~~	102,032		24,783		76,122		640		487		Interest payments - mortgage notes ~~(1)~~	89,600		12,351		76,122		640		487

Principal payments - Credit Facility												Principal payments - Credit Facility	88,000		—		88,000		—		—
Interest payments - Credit Facility (1)												Interest payments - Credit Facility (1)	956		372		584		—		—
Principal payments - corporate bonds	Principal payments - corporate bonds	4,650,000		—		500,000		1,150,000		3,000,000		Principal payments - corporate bonds	4,650,000		—		500,000		1,150,000		3,000,000
Interest payments - corporate bonds	Interest payments - corporate bonds	1,054,828		85,669		493,250		249,936		225,973		Interest payments - corporate bonds	1,011,993		42,834		493,250		249,936		225,973

Operating and ground lease commitments	Operating and ground lease commitments	297,854		10,950		61,720		37,915		187,269		Operating and ground lease commitments	292,501		5,649		61,582		37,891		187,379
Other commitments (2)	Other commitments (2)	1,923		1,923		—		—		—		Other commitments (2)	1,293		1,293		—		—		—
Total	Total	$	7,113,745	$	139,030	$	2,115,531	$	1,440,707	$	3,418,477	Total	$	7,126,146	$	62,898	$	2,203,977	$	1,440,683	$	3,418,588

(1)Interest payments due in future periods on the ~~$14.9~~$88.0 million of variable rate debt were calculated using a forward LIBOR curve.

(2)~~Includes~~Represents letters of credit outstanding.

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Cash Flow Analysis for the ~~six~~nine months ended ~~June~~September 30, 2021

Operating Activities – During the ~~six~~nine months ended ~~June~~September 30, 2021, net cash provided by operating activities increased ~~$41.4~~$50.2 million to ~~$362.4~~$564.2 million from ~~$321.0~~$514.0 million during the same period in 2020. The increase was primarily due to ~~timing~~a decrease of ~~the receipt~~$19.4 million in tenant receivables, net of ~~tenant receivables.~~reserves, an increase in accounts payable and accrued expenses of $21.0 million and a decrease in cash interest payments of $11.3 million, offset by an increase in merger costs of $22.3 million. In addition, the Company had ~~$11.2~~$17.7 million of rent abatements during the ~~six~~nine months ended ~~June~~September 30, 2020, with no comparable activity during the same period in 2021.

Investing Activities – Net cash ~~provided by~~used in investing activities for the ~~six~~nine months ended ~~June~~September 30, 2021 increased ~~$6.5~~$169.7 million to ~~$24.6~~$35.1 million from ~~$18.2~~$134.6 million net cash provided by investing activities during the same period in 2020. The increase was primarily related to an increase in cash used for investments in real estate assets of $272.0 million, offset by an increase in cash proceeds from dispositions of real estate and joint ventures of ~~$156.5~~$73.5 million and a decrease in cash used for investments in unconsolidated entities of $19.2 million and mezzanine position of $10.0 ~~million, unconsolidated entities of $7.9 million and capital expenditures and leasing costs of $3.3 million, offset by an increase in cash used for investments in real estate assets of $171.6~~ million.

Financing Activities – Net cash used in financing activities for the ~~six~~nine months ended ~~June~~September 30, 2021 increased ~~$566.4~~$589.6 million to ~~$639.3 million~~$1.0 billion from ~~$72.9~~$460.2 million during the same period in 2020. During the ~~six~~nine months ended ~~June~~September 30, 2021, the Company ~~repaid $329.2 million of mortgage notes payable,~~ redeemed ~~$100.0~~$473.1 million of Series F Preferred Stock, ~~and paid $208.8~~repaid $344.5 million of ~~distributions.~~mortgage notes payable, paid $318.9 million of distributions and had net borrowings of $88.0 million on the Credit Facility. During the ~~six~~nine months ended ~~June~~September 30, 2020, the Company had net proceeds of $594.9 million from corporate bond offerings, paid $418.7 million of distributions, redeemed $300.1 million of Series F Preferred Stock, repaid $197.4 million of mortgage notes payable, had net repayments of $150.0 million on the Credit Facility, ~~repaid $135.0~~received $89.3 million of ~~mortgage notes payable,~~net proceeds from the issuance of Common Stock, and repurchased ~~$50.3~~$69.4 million of convertible ~~debt and paid $324.0 million of distributions.~~debt.

Election as a REIT

The General Partner elected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with the taxable year ended December 31, 2011. As a REIT, except as discussed below, the General Partner generally is not subject to federal income tax on taxable income that it distributes to its stockholders so long as it distributes at least 90% of its annual taxable income (computed without regard to the deduction for dividends paid and excluding net capital gains). REITs are subject to a number of other organizational and operational requirements. Even if the General Partner maintains its qualification for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, federal income taxes on certain income and excise taxes on its undistributed income. We believe we are organized and operating in such a manner as to qualify to be taxed as a REIT for the taxable year ending December 31, 2021.

The Operating Partnership is classified as a partnership for U.S. federal income tax purposes. As a partnership, the Operating Partnership is not a taxable entity for U.S. federal income tax purposes. Instead, each partner in the Operating Partnership is required to take into account its allocable share of the Operating Partnership’s income, gains, losses, deductions and credits for each taxable year. However, the Operating Partnership may be subject to certain state and local taxes on its income and property. Under the limited partnership agreement of the OP, as amended (the “LPA”), the Operating Partnership is required to conduct business in such a manner as to permit the General Partner at all times to qualify as a REIT.

The Company conducts all of its business in the United States and Puerto Rico and, as a result, it files income tax returns in the U.S. federal jurisdiction, Puerto Rico, and various state and local jurisdictions. Certain of the Company’s inter-company transactions that have been eliminated in consolidation for financial accounting purposes are also subject to taxation.

Inflation

We may be adversely impacted by inflation on any leases that do not contain indexed escalation provisions. However, net leases that require the tenant to pay its allocable share of operating expenses, including common area maintenance costs, real estate taxes and insurance, may reduce our exposure to increases in costs and operating expenses resulting from inflation.

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Critical Accounting Policies and Significant Accounting Estimates

Our accounting policies have been established to conform with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different assumptions or estimates that may impact comparability of our results of operations to those of companies in similar businesses. We believe the following critical accounting policies govern the significant judgments and estimates used in the preparation of our financial statements, which should be read in conjunction with the more complete discussion of our accounting policies and procedures included in our Annual Report on Form 10-K for the year ended December 31, 2020:

•Goodwill Impairment;

•Real Estate Investment Impairment; and

•Allocation of Purchase Price of Real Estate Assets

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market Risk

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our market risk arises primarily from interest rate risk relating to variable-rate borrowings. To meet our short and long-term liquidity requirements, we borrow funds at a combination of fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to manage our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, caps, collars, treasury locks, options and forwards in order to mitigate our interest rate risk with respect to various debt instruments. We would not hold or issue these derivative contracts for trading or speculative purposes.

Interest Rate Risk

As of ~~June~~September 30, 2021, our debt included fixed-rate debt, with a fair value and carrying value of $6.1 billion and $5.6 billion, respectively. Changes in market interest rates on our fixed rate debt impact the fair value of the debt, but they have no impact on interest incurred or cash flow. For instance, if interest rates rise 100 basis points, and the fixed rate debt balance remains constant, we expect the fair value of our debt to decrease, the same way the price of a bond declines as interest rates rise. The sensitivity analysis related to our fixed-rate debt assumes an immediate 100 basis point move in interest rates from their ~~June~~September 30, 2021 levels, with all other variables held constant. A 100 basis point increase in market interest rates would result in a decrease in the fair value of our fixed rate debt of ~~$305.0~~$291.5 million. A 100 basis point decrease in market interest rates would result in an increase in the fair value of our fixed-rate debt of ~~$329.0~~$314.9 million.

As of ~~June~~September 30, 2021, our debt included variable-rate debt with a fair value and carrying value of ~~$14.9~~$88.0 million. The sensitivity analysis related to our variable-rate debt assumes an immediate 100 basis point move in interest rates from their ~~June~~September 30, 2021 levels, with all other variables held constant. A 100 basis point increase or decrease in variable interest rates on our variable-rate debt would increase or decrease our interest expense by ~~$0.1~~$0.9 million annually. See Note 6 – Debt to our consolidated financial statements.

As the information presented above includes only those exposures that existed as of ~~June~~September 30, 2021, it does not consider exposures or positions arising after that date. The information presented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

These amounts were determined by considering the impact of hypothetical interest rate changes on our borrowing costs and assume no other changes in our capital structure.

In July 2017, the Financial Conduct Authority (“FCA”) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. In November 2020, the Federal Reserve Board announced that banks must stop writing new U.S. dollar LIBOR contracts by the end of 2021 and that, no later than June 30, 2023, when U.S. dollar LIBOR will no longer be published, market participants should amend legacy contracts to use the Secured Overnight Financing Rate ("SOFR"), or another alternative reference rate. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. The Company has contracts that are indexed to LIBOR and is monitoring and evaluating the related risks, which include interest amounts on our variable rate debt as discussed in Note 6 – Debt. See Item 1A. Risk Factors included in the Company’s Annual Report on Form 10-K for further discussion on risks related to changes in LIBOR reporting practices, the method in which LIBOR is determined, or the use of alternative reference rates.

Credit Risk

Concentrations of credit risk arise when a number of tenants are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions. The Company is subject to tenant, geographic and industry concentrations. Any downturn of the economic conditions in one or more of these tenants, geographies or industries could result in a material reduction of our cash flows or material losses to us.

The factors considered in determining the credit risk of our tenants include, but are not limited to: payment history; credit status and change in status (credit ratings for public companies are used as a primary metric); change in tenant space needs (i.e., expansion/downsize); tenant financial performance; economic conditions in a specific geographic region; and industry specific credit considerations. We believe that the credit risk of our portfolio is reduced by the high quality and diversity of our existing tenant base, reviews of prospective tenants’ risk profiles prior to lease execution and consistent monitoring of our portfolio to identify potential problem tenants. However, we continue to monitor the credit risk of our portfolio.

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Item 4. Controls and Procedures.

I. Discussion of Controls and Procedures of the General Partner

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.

In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of ~~June~~September 30, 2021 and determined that the disclosure controls and procedures were effective at a reasonable assurance level as of that date.

Changes in Internal Control Over Financial Reporting

No change occurred in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d -15(f) of the Exchange Act) during the three months ended ~~June~~September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

II. Discussion of Controls and Procedures of the Operating Partnership

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, we recognize that no controls and procedures, no matter how well designed and operated, can provide absolute assurance of achieving the desired control objectives.

Changes in Internal Control Over Financial Reporting

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

The information contained under the heading “Litigation” in Note 10 – Commitments and Contingencies to our consolidated financial statements is incorporated by reference into this Part II, Item 1. Except as set forth therein, as of the end of the period covered by this Quarterly Report on Form 10-Q, we are not a party to, and none of our properties are subject to, any material pending legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II, Item 1A. “Risk Factors” of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

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

Repurchases of Equity Securities


Period	Total Number of Shares/ Units Redeemed (1)	Redemption Price Per Share/Unit
July 1, 2021 - July 31, 2021	—	$	—
August 1, 2021 - August 31, 2021	14,871,246	25.00
September 1, 2021 - September 30, 2021	—	—
Total	14,871,246	$	25.00

(1) During the three months ended September 30, 2021, the Company redeemed all outstanding shares of its Series F Preferred Stock.

We are authorized to repurchase shares of the General Partner’s Common Stock to satisfy employee withholding tax obligations related to stock-based compensation. During the ~~second~~third quarter of 2021, there were no repurchased shares of Common Stock or corresponding OP Units made in order to satisfy the minimum tax withholding obligation for state and federal payroll taxes. There were also no share repurchases under the Share Repurchase Program during the second quarter of 2021. See Note 12 – Equity for further discussion.

~~As discussed in Note 14 – Subsequent Events, on July 16, 2021, the Company announced that it intends to redeem all Series F Preferred Stock on August 15, 2021.~~

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits

The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2021 (and are numbered in accordance with Item 601 of Regulation S-K):


Exhibit No.						Description


2.1						Agreement and Plan of Merger, dated April 29, 2021, by and among VEREIT, Inc., VEREIT Operating Partnership, L.P., Realty Income Corporation, Rams MD Subsidiary I, Inc., and Rams Acquisitions Sub II, LLC (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on April 30, 2021).
2.2						A ~~mendment~~Amendment No. 1 to Agreement and Plan of Merger,, dated June 25, 2021, by and ~~amo~~ngamong VEREIT, Inc., VEREIT Operating ~~Partnership,~~Partnership, L.P., Realty Income Corporation, Rams MD Subsidiary I, Inc., and Rams Acquisition Sub II, LLC (Incorporated by ~~referen~~cereference to the ~~Company~~’sCompany’s Report o non Form 8-K (File No. 001-35263), filed with the SEC on June 25, 2021).









3.1						Articles of Amendment and Restatement of VEREIT, Inc. (Incorporated by reference to the Company’s Pre-Effective Amendment No. 5 to Form S-11 (Registration No. 333-172205), filed with the SEC on July 5, 2011).
3.2						Articles Supplementary Relating to the Series A Convertible Preferred Stock of VEREIT, Inc., dated May 10, 2012 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on May 15, 2012).
3.3						Articles Supplementary Relating to the Series B Convertible Preferred Stock of VEREIT, Inc., dated July 24, 2012 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on July 30, 2012).
3.4						Articles Supplementary for the Series C Convertible Preferred Stock of VEREIT, Inc., dated June 6, 2013 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on June 12, 2013).
3.5						Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., effective July 2, 2013 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on July 9, 2013).
3.6						Articles Supplementary for the Series D Cumulative Convertible Preferred Stock of VEREIT, Inc., filed November 8, 2013 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on November 15, 2013).
3.7						Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., effective December 9, 2013 (Incorporated by reference to the Company’s Amended Current Report on Form 8-K/A (File No. 001-35263), filed with the SEC on December 20, 2013).
3.8						Articles Supplementary Relating to the 6.70% Series F Cumulative Redeemable Preferred Stock of VEREIT, Inc., dated January 2, 2014 (Incorporated by reference to the Company’s Registration Statement on Form 8-A (File No. 333-190056), filed with the SEC on January 3, 2014).
3.9						Articles of Amendment to Articles of Amendment and Restatement of VEREIT, Inc., dated July 28, 2015 (Incorporated by reference to the Company’s Form 8-K (File No. 001-35263), filed with the SEC on July 28, 2015).
3.10						Articles Supplementary to Articles of Amendment and Restatement of VEREIT, Inc., dated August 5, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
3.11						Articles of Amendment to the Articles of Amendment and Restatement of VEREIT, Inc., dated December 11, 2020 and effective December 17, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 17, 2020).
3.12						Articles of Amendment to the Articles of Amendment and Restatement of VEREIT, Inc., dated December 11, 2020 and effective December 17, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 17, 2020).
3.13						A ~~rticles~~Articles of Amendment to the Articles of Amendment and R ~~estatement~~Restatement of VEREIT, Inc., dated June 4, 2021 (Incorporated by reference to the ~~Company~~’sCompany’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 7, 2021).
3.14						A ~~mended~~Amended and Restated Bylaws of VEREIT, Inc., ef ~~fective~~effective June 4, 2021 (Incorporated by reference to t ~~he Company~~’sthe Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 7, 2021).







3.15						Certificate of Limited Partnership of VEREIT Operating Partnership, L.P. (Incorporated by reference to the Company’s Registration Statement on Form S-4 (Registration No. 333-197780-01), filed with the SEC on August 1, 2014).
3.16						Amendment to Certificate of Limited Partnership of VEREIT Operating Partnership, L.P., effective July 28, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
4.1						Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., effective January 3, 2014 (Incorporated by reference to the Company’s Amendment No. 2 to its Annual Report on Form 10-K/A (File No. 001-35263), for the year ended December 31, 2013 filed with the SEC on March 2, 2015).
4.2						First Amendment to Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., dated January 26, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).
4.3						Second Amendment to Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., dated July 28, 2015 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q (File No. 001-35263), for the quarter ended June 30, 2015 filed with the SEC on August 6, 2015).

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Exhibit No.						Description
4.4						Third Amendment to the Third Amended and Restated Agreement of Limited Partnership of VEREIT Operating Partnership, L.P., dated December 17, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 17, 2020).
4.5						Indenture, dated as of July 29, 2013, between American Realty Capital Properties, Inc. and U.S. Bank National Association, as trustee (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on July 29, 2013).



4.6						Indenture, dated as of February 6, 2014, among ARC Properties Operating Partnership, L.P., Clark Acquisition, LLC, the guarantors named therein and U.S. Bank National Association, as trustee (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 7, 2014).
4.7						Officers’ Certificate, dated as of February 6, 2014 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 7, 2014).

4.8						First Supplemental Indenture, dated as of February 9, 2015, by and among ARC Properties Operating Partnership, L.P., American Realty Capital Properties, Inc. and U.S. Bank National Association (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on February 13, 2015).
4.9						Officer’s Certificate, dated as of June 2, 2016 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).

4.10						Form of 4.875% Senior Notes due 2026 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 3, 2016).
4.11						Officers’ Certificate, dated as of August 11, 2017 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on August 11, 2017).
4.12						Form of 3.950% Senior Notes due 2027 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on August 11, 2017).
4.13						Officer’s Certificate, dated as of October 16, 2018 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on October 16, 2018).
4.14						Form of 4.625% Senior Notes due 2025 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on October 16, 2018).
4.15						Officer’s Certificate, dated as of December 4, 2019 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 4, 2019).
4.16						Form of 3.10% Senior Notes due 2029 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on December 4, 2019).
4.17						Officer’s Certificate, dated as of June 29, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 29, 2020).
4.18						Form of 3.400% Senior Notes due 2028 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 29, 2020).
4.19						Officer’s Certificate, dated as of November 17, 2020 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on November 17, 2020).
4.20						Form of 2.200% Senior Notes due 2028 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on November 17, 2020).
4.21						Form of 2.850% Senior Notes due 2032 (Incorporated by reference to the Company’s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on November 17, 2020).








~~10.1~~†						V ~~EREIT, Inc. 2021 Equity~~ ~~Incentive Plan (Incorporated by~~ ~~reference to the Company~~’~~s Current Report on Form 8-K (File No. 001-35263), filed with the SEC on June 7, 2021).~~
31.1*						Certification of the Chief Executive Officer of VEREIT, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of the Chief Financial Officer of VEREIT, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3*						Certification of the Chief Executive Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4*						Certification of the Chief Financial Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Written statements of the Chief Executive Officer of VEREIT, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Written statements of the Chief Financial Officer of VEREIT, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3**						Written statements of the Chief Executive Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4**						Written statements of the Chief Financial Officer of VEREIT, Inc., the sole general partner of VEREIT Operating Partnership, L.P., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.SCH*						Inline XBRL Taxonomy Extension Schema Document.
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

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Exhibit No.						Description
101.SCH*						~~Inline XBRL Taxonomy Extension Schema Document.~~
101.CAL*						~~Inline XBRL Taxonomy Extension Calculation Linkbase Document.~~
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*						Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*).

_____________________________

* Filed herewith

** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the federal securities laws, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

† Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, each registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.


			VEREIT, INC.
			By:			/s/ Michael J. Bartolotta
			Michael J. Bartolotta
			Executive Vice President and Chief Financial Officer (Principal Financial Officer)


			VEREIT OPERATING PARTNERSHIP, L.P.
			By: VEREIT, Inc., its sole general partner
			By:			/s/ Michael J. Bartolotta
			Michael J. Bartolotta
			Executive Vice President and Chief Financial Officer (Principal Financial Officer)

Dated: ~~August 4,~~October 29, 2021

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