Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
 (Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    
   
EXCHANGE ACT OF 1934
    
         
   
For the quarterly period ended June 30, 2010
    
         
   
OR
    
         
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    
   
EXCHANGE ACT OF 1934
    

For the transition period from _________ to __________

Commission file number: 333-145949

AMERICAN REALTY CAPITAL TRUST, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
  
71-1036989
(State or other  jurisdiction
of incorporation or organization)
  
 (I.R.S. Employer Identification No.)
     
106 York Road
Jenkintown, PA    
  
 
19046
(Address of principal executive offices)
  
 (Zip Code)

 
(215) 887-2189  
(Registrant’s telephone number, including area code)

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. x Yes ¨ No

Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No

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

Large accelerated filer ¨
  
Accelerated filer ¨
Non-accelerated filer (Do not check if a smaller reporting company) x
Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ¨ Yes x No

The number of outstanding shares of the registrant’s common stock on August 11, 2010 was 35,333,928 shares.
 
 
 

AMERICAN REALTY CAPITAL TRUST, INC.
INDEX
 
PART I — FINANCIAL INFORMATION
  
Item 1. Financial Statements
  
Consolidated Balance Sheets as of June 30, 2010 (Unaudited) and December 31, 2009
3
Consolidated Statements of Operations for the three months and six months ended June 30, 2010 and 2009 (Unaudited)
4
Consolidated Statement of  Equity for the six months ended June 30, 2010 (Unaudited)
5
Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009 (Unaudited)
6
Notes to Consolidated Financial Statements (Unaudited)
7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
32
Item 3. Quantitative and Qualitative Disclosures About Market Risk
45
Item 4. Controls and Procedures
46
PART II — OTHER INFORMATION
46
Item 1. Legal Proceedings
46
Item 1A. Risk Factors
46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
46
Item 3. Defaults Upon Senior Securities
46
Item 4. Reserved
47
Item 5. Other Information
47
Item 6. Exhibits
47
Signatures
48
 
 
2
 

PART I - Financial Information
Item 1. Financial Statements
AMERICAN REALTY CAPITAL TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)

   
June 30,
2010
  
December 31,
2009
  
   
(Unaudited)
      
ASSETS
          
Real estate investments, at cost:
          
Land
  
$
67,678
    
$
37,779
  
Buildings, fixtures and improvements
    
390,481
      
261,939
  
Acquired intangible lease assets
    
62,581
      
38,838
  
Total real estate investments, at cost
    
520,740
      
338,556
  
Less accumulated depreciation and amortization
    
(19,758
)
    
(11,292
)
  Total real estate investments, net
    
500,982
      
327,264
  
                 
Cash and cash equivalents
    
8,979
      
5,010
  
Restricted cash
    
64
      
43
  
Prepaid expenses and other assets
    
7,231
      
4,458
  
Deferred financing costs, net
    
3,663
      
2,502
  
Total assets
  
$
520,919
    
$
339,277
  

           
             
Short-term bridge equity funds
  
$
—
    
$
15,878
  
Mortgage notes payable
    
245,855
      
183,811
  
Long-term notes payable
    
13,000
      
13,000
  
Below-market lease liabilities, net
    
8,928
      
9,085
  
Derivatives, at fair value
    
5,619
      
2,768
  
Accounts payable and accrued expenses
    
2,845
      
1,536
  
Deferred rent and other liabilities
    
1,614
      
1,144
  
Distributions payable
    
1,637
      
1,499
  
Total liabilities
    
279,498
      
228,721
  
                 
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding
    
—
      
—
  
Common stock, $.01 par value; 240,000,000 shares authorized, 30,069,412 and 14,672,237 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively
    
300
      
147
  
Additional paid-in capital
    
255,621
      
122,506
  
Unamortized restricted shares
    
(88)
      
—
  
Accumulated other comprehensive loss
    
(4,197
)
    
(1,737
)
Accumulated deficit
    
(22,260
) 
    
 (13,669
)
Total American Realty Capital Trust, Inc. stockholders’ equity
    
229,376
      
107,247
  
Noncontrolling interests
    
12,045
      
3,309
  
    Total equity
    
241,421
      
110,556
  
Total liabilities and equity
  
$
520,919
    
$
339,277
  
 



The accompanying notes are an integral part of these financial statements
 
3

AMERICAN REALTY CAPITAL TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)

 
   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2010
    
2009
    
2010
    
2009
  
Revenue:
                        
       Rental income
$
9,382
  
$
2,935
    
$
16,810
    
$
5,862
  
                             
Operating expenses:
                            
Asset management fees to affiliate
  
350
    
—
      
350
      
—
  
Acquisition and transaction related
  
640
    
—
      
981
      
—
  
General and administrative
  
340
    
72
      
562
      
198
  
Depreciation and amortization
  
4,721
    
1,730
      
8,506
      
3,460
  
Total operating expenses
  
6,051
    
1,802
      
10,399
      
3,658
  
Operating income
  
3,331
    
1,133
      
6,411
      
2,204
  
                             
Other income (expense):
                            
Interest expense
  
(4115
)
  
(2,319
)
    
(7,788
)
    
(4,770
)
Interest income
  
22
    
1
      
33
      
5
  
Gains on sales to noncontrolling interest holders, net
  
17
    
—
      
352
      
—
  
Gains (losses) on derivative instruments
  
(239
)
  
512
      
(391
)
    
549
  
Total other expenses
  
(4,315
)
  
(1,806
)
    
(7,794
)
    
(4,216
)
Net loss
  
(984
)
  
(673
)
    
(1,383
)
    
(2,012
)
       Net (income)loss attributable to noncontrolling interests
  
(8
)
  
—
      
4
      
—
  
Net loss attributable to American Realty Capital Trust, Inc.
$
(992
)
$
(673
)
  
$
(1,379
)
  
$
(2,012
)
                             
                             
Basic and diluted weighted average
                            
common shares outstanding
  
25,164,559
    
3,151,715
      
21,130,867
      
2,343,796
  
                             
                             
Basic and diluted loss per share attributable to
     American Realty Capital Trust, Inc.
$
(0.04
)
$
(0.21
)
  
$
(0.07
)
  
$
(0.86
)

 

The accompanying notes are an integral part of these financial statements

 
4
 
AMERICAN REALTY CAPITAL TRUST, INC.
CONSOLIDATED STATEMENTOF EQUITY
SIX MONTHS ENDED JUNE 30, 2010
(In thousands except share data)
 
   
Common Stock
    
Additional
  
Unamortized
    
Accumulated
Other
          
Total
American
Realty
Capital
Trust, Inc.
              
   
Number of
Shares
    
Par
Value
    
Paid-In
Capital
    
Restricted
Shares
     
Comprehensive
Loss
    
Accumulated
Deficit
    
Stockholders’
Equity
    
Noncontrolling
Interests
    
Total
Equity
  
Balance, December 31, 2009
    
14,672,237
    
$
147
    
$
122,506
   $ 
—
    
$
(1,737
)
  
$
(13,669
)
  
$
107,247
    
$
3,309
    
$
110,556
  
Issuance of common stock, net
    
15,133,086
      
152
      
150,404
    
—
      
—
      
—
      
150,556
      
—
      
150,556
  
Offering costs, commissions and dealer manager fees
    
—
      
—
      
(18,919
)
  
—
      
—
      
—
      
(18,919
)
    
—
      
(18,919
)
Common stock issued through distribution reinvestment plan
    
329,848
      
3
      
3,130
    
—
      
—
      
—
      
3,133
      
—
      
3,133
  
Common stock redemptions
    
(74,759
)
    
(2
)
    
(1,590
)
  
—
                      
(1,592
)
            
(1,592
)
Issuance of Restricted Shares
    
9,000
              
90
    
(90
)
                    
—
              
—
  
Amortization of Restricted Shares
                          
2
                      
2
               2  
Distributions declared
    
—
      
—
      
—
    
—
      
—
      
(7,212
)
    
(7,212
)
    
—
      
(7,212
)
Contributions from noncontrolling interests
    
—
      
—
      
—
    
—
      
—
      
—
      
—
      
9,627
      
9,627
  
Distributions to noncontrolling interests
    
—
      
—
      
—
    
—
      
—
      
—
      
—
      
(354
)
    
(354
)
Gain on sale of assets to noncontrolling interest holders
                          
—
                              
(533
)
    
(533
)
Designated derivatives fair value adjustment
    
—
      
—
      
—
    
—
      
(2,460
) 
    
—
      
(2,460
) 
    
—
      
(2,460
) 
Net loss
    
—
      
—
      
—
    
—
      
—
      
(1,379
)
    
(1,379
) 
    
(4
)
    
(1,383
)
Total comprehensive loss
    
—
      
—
      
—
    
—
      
—
      
—
      
(3,839
)  
    
(4
)
    
(3,843
)
Balance, June 30, 2010
    
30,069,412
    
$
300
    
$
255,621
   $
(88
)
  
$
(4,197
)
  
$
(22,260
)
  
$
229,376
    
$
12,045
    
$
241,421
  
 
 
The accompanying notes are an integral part of this financial statement
 
 
5
 

AMERICAN REALTY CAPITAL TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
   
Six Months Ended June 30,
  
   
2010
    
2009
  
Cash flows from operating activities:
            
Net loss
  
$
(1,383
)
  
$
(2,012
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                
Depreciation
    
6,842
      
2,764
  
Amortization of intangibles
    
1,664
      
696
  
Amortization of deferred finance costs
    
365
      
276
  
Amortization of restricted share grants
    
2
      
—
  
Accretion of below-market lease liability
    
(157
)
    
(157
) 
Gains on sales to noncontrolling interest holders
    
(533
)
    
—
  
Losses (gains) on derivative instruments
    
391
      
(549
) 
Changes in assets and liabilities:
                
Prepaid expenses and other assets
    
(2,603
)
    
(2,219
)
Accounts payable and accrued expenses
    
1,309
      
(935
) 
Due from affiliated entity
    
—
      
(2,223
) 
Deferred rent and other liabilities
    
470
      
15
  
Net cash provided by (used in) operating activities
    
6,367
      
(4,344
) 
                 
Cash flows from investing activities:
                
Investment in real estate and other assets
    
(182,184
)
    
(163
)
Net cash used in investing activities
    
(182,184
)
    
(163
)
                 
Cash flows from financing activities:
                
Proceeds on mortgage notes payable
    
76,687
      
—
  
Payments on mortgage notes payable
    
(14,643
)
    
(492
)
Payments on related party bridge facility
    
—
      
(5,424
) 
Payments on short-term convertible redeemable preferred
    
—
      
(3,995
)
Payments on related party convertible bridge revolver
    
—
      
(6,500
)
Payments on short-term bridge funds
    
(15,878
)
    
(11,954
) 
Proceeds from long-term notes payable
    
—
      
11,911
  
Contributions from noncontrolling interests
    
9,627
      
—
  
Distributions to noncontrolling interests
    
(354
)
    
—
  
Proceeds from issuances of common stock, net
    
131,425
      
24,850
  
Payments of deferred financing costs
    
(1,526
)
    
(954
)
Distributions paid
    
(3,939
)
    
(395
)
Payments for share redemptions
    
(1,592
)
    
—
  
Restricted cash
    
(21
) 
    
3
  
Net cash provided by financing activities
    
179,786
      
7,050
  
                 
Net increase in cash
    
3,969
      
2,543
  
Cash, beginning of period
    
5,010
      
887
  
Cash, end of period
  
$
8,979
 
 
$
3,430
  
                 
Supplemental Disclosures of Investing and Financing Activities:
                
Cash paid for income taxes
  
$
383
    
$
—
  
Cash paid for interest
  
$
7,636
    
$
4,909
  

 
 
6
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)


Note 1 — Organization
 
American Realty Capital Trust, Inc. (the “Company”), incorporated on August 17, 2007, is a Maryland corporation that qualifies as a real estate investment trust (“REIT”) for federal income tax purposes. On January 25, 2008, the Company commenced an initial public offering on a “best efforts” basis of up to 150,000,000 shares of common stock offered at a price of $10.00 per share, subject to certain volume and other discounts, pursuant to a Registration Statement on Form S-11 filed with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Offering”). The Registration Statement also covered up to 25,000,000 shares available pursuant to a distribution reinvestment plan (the “DRIP”) under which our stockholders may elect to have their distributions reinvested in additional shares of the Company’s common stock at the greater of $9.50 per share or 95% of the estimated value of a share of common stock. The Company sold 20,000 shares to American Realty Capital II, LLC (the “Sponsor”) on August 17, 2007, at $10.00 per share. As of June 30, 2010, the Company issued 30,069,412 shares of common stock. Total gross proceeds from these issuances were $296.7 million. As of June 30, 2010, the aggregate value of all share issuances and subscriptions outstanding was $300.5 million based on a per share value of $10.00 (or $9.50 for shares issued under the DRIP).

Substantially all of the Company’s business is conducted through American Realty Capital Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The Company is the sole general partner of and owns a 99.01% partnership interest in the OP. American Realty Capital Advisors, LLC (the “Advisor”), the Company’s affiliated advisor, is the sole limited partner and owner of 0.99% (noncontrolling interest) of the partnership interests of the OP. In March 2008, the OP issued to the Company 20,000 Operating Partnership units in exchange for $0.2 million. Additionally, in April 2008, the Advisor contributed $2 thousand to the OP in exchange for a 0.99% limited partner interest in the OP. The limited partner interests have the right to convert OP units into cash or, at the option of the Company, an equal number of common shares of the Company, as allowed by the limited partnership agreement. The remaining rights of the limited partner interests 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 Company is managed by the Advisor and American Realty Capital Properties, LLC, which serves as the Company’s property manager (the “Property Manager”). Realty Capital Securities, LLC (the “Dealer Manager”), an affiliate of the Sponsor, serves as the dealer manager of the Company’s Offering. These related parties receive compensation and fees for services related to the Offering and for the investment and management of the Company’s assets. These entities receive fees during the offering, acquisition, operational and liquidation stages. The compensation levels during the offering, acquisition and operational stages are discussed in Note 10 — Related Party Transactions and Arrangements.

The Company’s stock is not currently listed on a national securities exchange. The Company may seek to list its stock for trading on a national securities exchange only if a majority of its independent directors believe listing would be in the best interest of its stockholders. The Company does not intend to list its shares at this time. The Company does not anticipate that there would be any market for its common stock until its shares are listed for trading. In the event the Company does not obtain listing prior to the tenth anniversary of the completion or termination of the Offering, its charter requires that the Company either: (i) seek stockholder approval of an extension or amendment of this listing deadline; or (ii) seek stockholder approval to adopt a plan of liquidation of the corporation.

 
7
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

Note 2 — Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 to the consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2009. There have been no significant changes to these policies during 2010.
 
Note 3 — Real Estate Investments
 
The following table presents the allocation of the assets acquired during the three and six months ended June 30, 2010. No acquisitions were completed during the three or six months ended June 30, 2009 (dollar amounts in thousands):

Real estate investments, at cost:
  
Three Months Ended
June 30, 2010
    
Six Months Ended
June 30, 2010
  
Land
   $ 18,822     $ 29,899  
Buildings, fixtures and improvements
     69,502       128,542  
      88,324       158,441  
                 
Acquired intangibles:
                
In-place leases
     12,422       23,743  
Below-market lease liabilities, net
     —       —  
                 
Total assets acquired
     100,746       182,184  
                 
                 
Cash paid for acquired real estate investments
   $ 100,746     $ 182,184  
                 
Number of properties purchased during the period
     21       41  
 
 
8
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)
Note 3 — Real Estate Investments (continued)

The Company acquires and operates commercial properties. All such properties may be acquired and operated by the Company alone or jointly with another party. As of June 30, 2010, all of the properties the Company owned were 100% occupied by an investment grade or credit quality tenant on a long-term basis comprised of freestanding, single tenant commercial space. The Company’s portfolio of real estate properties is comprised of the following properties as of June 30, 2010 (dollar amounts in thousands):
 
 

Seller / Property 
Name
Acquisition 
Date
No. of
Buildings
Square
Feet
Ownership
Percentage
Remaining
Lease
Term (1)
  
Base
Purchase
Price (2)
  
Capitalization
Rate (3)
  
Net Operating Income (4)
     Total Purchase Price (5)
                                 
FedEx Distribution Center
March 2008
1
55,440
51%
8.4
  
$
9,694
  
7.53%
  
$
730
  
$
 10,208
First Niagara Bank (formerly Harleysville National Bank) Portfolio
March 2008
15
177,774
100%
12.5
    
40,976
  
7.48%
    
3,064
    
  41,676
Rockland Trust Company Portfolio
May 2008
18
121,057
100%
11.1
    
32,188
  
7.86%
    
2,530
    
  33,117
PNC Bank (formerly National City Bank)
September & October 2008
2
8,403
(6)
18.6
    
6,664
  
8.21%
    
547
    
  6,853
Rite Aid
September 2008
6
74,919
100%
13.0
    
18,576
  
7.79%
    
1,447
    
  18,839
PNC Bank Portfolio
November 2008
50
275,436
100%
8.4
    
 42,286
  
7.35%
    
3,108
    
    44,813
FedEx Distribution Center
July 2009
1
152,640
100%
13.3
    
31,692
  
8.84%
    
2,803
    
31,692
Walgreens
July 2009
1
14,820
56%
22.0
    
3,818
  
8.12%
    
310
    
3,818
CVS I
September 2009
10
131,105
(7)
23.8
    
40,649
  
8.48%
    
3,448
    
40,649
CVS II
November 2009
15
198,729
100%
24.1
    
59,788
  
8.48%
    
5,071
    
59,788
Home Depot
December 2009
1
465,600
100%
19.5
    
23,532
  
9.31%
    
2,192
    
23,532
Bridgestone Firestone I
December 2009 & January 2010
6
57,336
100%
13.9
    
15,041
  
9.24%
    
1,390
    
15,041
Advance Auto
December 2009
1
7,000
100%
11.4
    
1,730
  
9.25%
    
160
    
1,730
Fresenius
January 2010
2
140,000
100%
12.1
    
12,462
  
9.30%
    
1,159
    
12,462
Reckitt Benckiser
February 2010
1
574,106
85%
11.6
    
31,735
  
8.41%
    
2,668
    
31,735
Jack in the Box
February 2010 &
April 2010
5
12,253
100%
19.7
    
10,010
  
7.80%
    
781
    
10,010
Bridgestone
   Firestone II
February & March 2010
12
93,599
(8)
13.5
    
26,414
  
8.70%
    
2,299
    
26,414
 
 
9
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

 Note 3 — Real Estate Investments (continued)

 
Seller / Property 
Name
Acquisition
 Date
  
No. of
Buildings
    
Square
Feet
    
Ownership
Percentage
    
Remaining
Lease
Term (1)
    
Base
Purchase
Price (2)
    
Capitalization
Rate (3)
    
Net
Operating
Income (4)
    
Total
Purchase
Price (5)
  
FedEx Distribution Center
April 2010
     1       118,796       85 %     11.0     $ 34,171       9.03 %   $ 3,087     $ 34,171  
Jared Jewelry
May 2010
     3       19,534       100 %     18.6       5,457       12.44 %     679       5,457  
Walgreens II
May 2010
     1       14,820       100 %     22.8       5,684       7.97 %     453       5,684  
IHOP
May 2010
     1       5,172       100 %     15.8       2,445       8.22 %     201       2,445  
Advance Auto II
June 2010
     3       19,253       100 %     13.0       3,674       8.38 %     308       3,674  
Super Stop & Shop
June 2010
     1       59,032       100 %     12.7       23,795       8.18 %     1,946       23,795  
IHOP II
June 2010
     1       4,139       100 %     11.8       2,300       8.87 %     204       2,300  
IHOP III
June 2010
     1       5,111       100 %     21.1       3,319       9.13 %     303       3,319  
Jared Jewelry II
June 2010
     1       6,157       100 %     16.6       1,635       12.78 %     209       1,635  
Jack in the box II
June 2010
     6       14,975       100 %     20.0       11,396       7.83 %     892       11,396  
Walgreens III
June 2010
     1       13,386       100 %     23.9       5,062       7.61 %     385       5,062  
 
                                                                 
Total
       167       2,840,592               15.4     $ 506,193       8.37 %   $ 42,374     $ 511,315  
________________________

 
(1)
-
Remaining lease term as of June 30, 2010, in years. If the portfolio has multiple locations with varying lease expirations, remaining lease term is calculated on a weighted-average basis.
 
(2)
-
Contract purchase price excluding acquisition related costs.
 
(3)
-
Net operating income divided by base purchase price.
 
(4)
-
Annualized 2010 rental income less property operating expenses, as applicable.
 
(5) 
- 
Base purchase for acquisitions prior to January 1, 2009 include capitalized acquisition related costs. Effective January 1, 2009, acquisition and transaction related costs are required to be expensed as incurred in accordance with generally accepted accounting principals 
 
(6)
  
Ownership percentage is 51% of one property and 65% of one property.
 
(7)
  
Ownership percentage of three properties is 51% and 100% of the remaining seven properties.
 
(8)
  
Ownership percentage of six properties is 88% and 100% of the remaining six properties.
    
 
10
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)
 
Note 3 — Real Estate Investments (continued)

The following table lists tenants whose rental income represents greater than 10% of consolidated rental income on an annualized basis as of June 30, 2010 and 2009:

   
2010
    
2009
  
CVS
     20 %     —  
FedEx
     16 %     15 %
PNC Bank
     9 %     32 %
First Niagara
     7 %     27 %
Rockland Trust Company
     6 %     22 %
Rite Aid
     3 %     13 %
 
No other tenant represents more than 10% of the annualized rental income for the periods presented.

Note 4 — Short-Term Bridge Equity Funds

In connection with the purchase of real estate investments in 2009, the Company utilized short-term bridge equity funds to finance a portion of the acquisition price from time to time. The Company’s short-term borrowings as of December 31, 2009, consist of the following (dollar amounts in thousands):
 
Funds
  
Property
    
Bridge
Equity Amount (1)
  
Effective Interest Rate
    
Interest Rate
                     
Related party bridge facility
  
Various
  
 $
15,878 
  
5.75 
 %
  
Variable (2)
 
(1) Amount was repaid in January 2010
(2) Funds bear a floating interest rate based on the greater of prime rate plus 0.75% or 5.75%
 
There were no short-term equity bridge funds outstanding at June 30, 2010.

At June 30, 2010, the Company has available a $10.0 million revolving line of credit unsecured bridge facility with an affiliated entity. There were no amounts outstanding under this facility at June 30, 2010 or December 31, 2009.  
 
 
11
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)
 
Note 5 — Mortgage Notes Payable

The Company’s mortgage notes payable as of June 30, 2010 consist of the following (dollar amounts in thousands):

Property
  
Encumbered Properties
  
Outstanding
Loan Amount
  
Effective Interest Rate
  
Interest Rate
  
Maturity
                       
FedEx Distribution Center
  
1
  
 $
6,965
  
6.29
%
  
Fixed 
  
September 2037
First Niagara Bank (formerly Harleysville National Bank) Portfolio
  
15
    
31,000
  
6.59
%
(1) 
Fixed 
  
January 2018
Rockland Trust Company Portfolio
  
18
    
23,414
  
4.92
%
(2) 
Fixed
  
May 2013
PNC Bank (formerly National City Bank) Portfolio
  
2
    
 4,375 
  
4.58
%
(3) 
Fixed
  
September 2013
Rite Aid
  
6
    
     12,808
  
6.97
%
  
Fixed
  
September 2017
PNC Bank Portfolio
  
50
    
     32,704
  
5.25
%
(4) 
Fixed
  
November 2013
FedEx Distribution Center
  
1
    
16,184
  
6.03
%
(5)
Fixed
  
January 2015
Walgreens
  
1
    
1,550
  
6.64
% 
(6) 
Fixed 
  
August 2019
CVS I
  
10
    
23,587
  
6.88
%
(7)
Fixed
  
October 2019
CVS II
  
15
    
32,901
  
6.64
%
  
Fixed
  
December 2014
Home Depot
  
1
    
12,150
  
6.03
%
  
Fixed
  
July 2020
Bridgestone Firestone I
  
6
    
3,832
  
6.61
%
(8)
Fixed
  
June 2015
Fresenius
  
2
    
6,068
  
6.72
%
  
Fixed
  
February 2015
Reckitt Benckiser
  
1
    
14,962
  
6.23
%
(9)
Fixed
  
February 2017
Jack in the Box
  
4
    
4,384
  
6.45
%
  
Fixed
  
March 2015
Jack in the Box
  
1
    
971
  
6.26
%
  
Fixed
  
June 2015
FedEx Distribution Center
  
1
    
15,000
  
5.57
%
  
Fixed
  
May 2015
Walgreens II
  
1
    
3,000
  
5.58
%
  
Fixed
  
March 2015
Total
  
136
  
$
245,855
  
  6.10
% 
        


 
12
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

 

Note 5 — Mortgage Notes Payable (continued)

   The Company’s mortgage notes payable as of December 31, 2009 consist of the following (dollar amounts in thousands):

Property
  
Encumbered Properties
  
Outstanding
Loan Amount
  
Effective Interest Rate
  
Interest Rate
  
Maturity
                       
FedEx Distribution Center
  
1
  
 $
6,965
  
6.29
%
  
Fixed 
  
September 2037
First Niagara (formerly Harleysville National Bank) Portfolio
  
15
    
31,000
  
6.59
%
(1) 
Fixed 
  
January 2018
Rockland Trust Company Portfolio
  
18
    
23,649
  
4.92
%
(2) 
Fixed
  
May 2013
PNC Bank (formerly National City Bank) Portfolio
  
2
    
 4,412 
  
4.89
%
(3) 
Fixed
  
September 2013
Rite Aid
  
6
    
     12,808
  
6.97
%
  
Fixed
  
September 2017
PNC Bank Portfolio
  
50
    
     32,933
  
5.25
%
(4) 
Fixed
  
November 2013
Walgreens
  
1
    
1,550
  
6.64
% 
(6) 
Fixed 
  
August 2019
CVS I
  
10
    
23,710
  
6.88
%
(7)
Fixed
  
October 2019
CVS II
  
15
    
33,068
  
6.64
%
  
Fixed
  
December 2014
Home Depot
  
1
    
13,716
  
6.34
%
  
Fixed
  
December 2012
Total
  
120
  
$
183,811
  
  6.15
% 
        
 
(1)
-
The effective interest rate resets at the end of year five to the then current 5-year Treasury rate plus 2.25%, but in no event will be less than 6.5%.
-
Fixed as a result of entering into a rate lock agreement with a LIBOR floor and cap of 3.54% and 4.125%, respectively.
(3)
-
Fixed as a result of entering into a swap agreement with a rate of 3.565% for a notional amount of $0.3 million and a rate lock agreement on a notional amount of $4.1 million with a LIBOR floor and cap of 3.37% and 4.45%, respectively, in connection with the entering into the mortgage.
(4)
-
Fixed as a result of entering in a swap agreement for 3.6% plus a spread of 1.65% in connection with the entering into the mortgage.
(5)
-
Fixed as a result of entering in a swap agreement for 2.775% plus a spread of 3.18% in connection with the entering into the mortgage.
(6)
- 
The effective interest rate is fixed until 2014 then adjusts to the greater of 6.55% or the five-year U.S. Treasury rate plus 3.50%. The note can be prepaid with no less than 30 days notice with a 1% minimum premium of the then outstanding principal balance.
(7)
-
The effective interest rate adjusts at the discretion of the lender at the end of the sixth year.
(8)
-
The effective rate is fixed for five years then adjusts based on the five-year treasury rate plus 4.00%
(9)
-
Fixed as a result of entering in a swap agreement for 3.295% plus a spread of 2.85% in connection with the entering into the mortgage.

 
13
 
 
AMERICAN REALTY CAPITAL TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2010
(Unaudited)

Note 5 — Mortgage Notes Payable (continued)

The following table summarizes the scheduled aggregate principal repayments of the mortgage notes payable for the five years subsequent to June 30, 2010 (in thousands):

   
Total
  
July 2010 to December 2010
  
$
1,069
  
2011
    
3,039
  
2012
    
3,230
  
2013
    
60,133
  
2014
    
33,677
  
2015 and thereafter
    
144,707
  
Total
  
$