Edgar Filing: American Realty Capital Trust, Inc.

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 September 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 x	(Do not check if a smaller reporting company)	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 November 11, 2010 was 51,381,974 shares.

AMERICAN REALTY CAPITAL TRUST, INC.

INDEX

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009	3
Consolidated Statements of Operations for the three months and nine months ended September 30, 2010 and 2009 (Unaudited)	4
Consolidated Statement of Equity for the nine months ended September 30, 2010 (Unaudited)	5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	46
Item 4. Controls and Procedures	46
PART II — OTHER INFORMATION	47
Item 1. Legal Proceedings	47
Item 1A. Risk Factors	47
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3. Defaults Upon Senior Securities	47
Item 4. Reserved	47
Item 5. Other Information	47
Item 6. Exhibits	47
Signatures	48

PART I - Financial Information

Item 1. Financial Statements

AMERICAN REALTY CAPITAL TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except share and per share data)

	September 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Real estate investments, at cost:
Land	$	114,219			$	37,779
Buildings, fixtures and improvements		483,068				261,939
Acquired intangible lease assets		78,529				38,838
Total real estate investments, at cost		675,816				338,556
Less accumulated depreciation and amortization		(25,379	)			(11,292	)
Total real estate investments, net		650,437				327,264

Cash and cash equivalents		4,406				5,010
Restricted cash		77				43
Prepaid expenses and other assets		8,700				4,458
Deferred financing costs, net		5,991				2,502
Total assets	$	669,611			$	339,277

LIABILITIES AND EQUITY

Short-term bridge equity funds	$	—		$	15,878
Mortgage notes payable		285,668			183,811
Long-term notes payable		12,790			13,000
Below-market lease liabilities, net		8,530			9,085
Derivatives, at fair value		6,880			2,768
Accounts payable and accrued expenses		3,546			1,536
Deferred rent and other liabilities		1,317			1,144
Distributions payable		2,380			1,499
Total liabilities		321,111			228,721

Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.01 par value; 240,000,000 shares authorized, 43,370,222 and 14,672,237 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively		433			147
Additional paid-in capital		366,033			122,506
Accumulated other comprehensive loss		(5,283	)		(1,737	)
Accumulated deficit		(28,750	)		(13,669	)
Total American Realty Capital Trust, Inc. stockholders’ equity		332,433			107,247
Noncontrolling interests		16,067			3,309
Total equity		348,500			110,556
Total liabilities and equity	$	669,611		$	339,277

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

AMERICAN REALTY CAPITAL TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Rental income:
Rental income	$	11,928		$	3,781		$	28,737		$	9,643
Total rental income		11,928			3,781			28,737			9,643

Operating expenses:
Asset management fees to affiliate		500			70			850			70
Acquisition and transaction related		785			347			1,766			347
General and administrative		250			110			811			307
Depreciation and amortization		5,731			2,084			14,237			5,544
Total operating expenses		7,266			2,611			17,664			6,268
Operating income		4,662			1,170			11,073			3,375

Other income (expense):
Interest expense		(4,724	)		(2,522	)		(12,511	)		(7,292	)
Interest income		35			18			67			22
Gain on disposition of property, net		143			—			143			—
Gains on sales to noncontrolling interest holders, net		67			—			419			—
Gains (losses) on derivative instruments		(177	)		(195	)		(568	)		354
Total other expenses		(4,656	)		(2,699	)		(12,450	)		(6,916	)
Net income (loss)		6			(1,529	)		(1,377	)		(3,541	)
Net (income) loss attributable to noncontrolling interests		(80	)		45			(76	)		45
Net loss attributable to American Realty Capital Trust, Inc.	$	(74	)	$	(1,484	)	$	(1,453	)	$	(3,496	)

Basic and diluted loss per share attributable to American Realty Capital Trust, Inc.	$	(0.00	)	$	(0.22	)	$	(0.06	)	$	(0.92	)

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

AMERICAN REALTY CAPITAL TRUST, INC.

CONSOLIDATED STATEMENT OF EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2010

(In thousands except share data)

(Unaudited)

	Common Stock															Total American Realty
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Capital Trust, Inc. Stockholders’ Equity			Non- controlling 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		27,546,792			275			273,122			—			—			273,397			—			273,397
Offering costs, commissions and dealer manager fees		—			—			(32,930	)		—			—			(32,930	)		—			(32,930	)
Common stock issued through distribution reinvestment plan		601,873			6			5,712			—			—			5,718			—			5,718
Common stock redemptions		(159,680	)		(2	)		(2,447	)		—			—			(2,449	)		—			(2,449	)
Share based compensation		709,000			7			70			—			—			77			—			77
Distributions declared		—			—			—			—			(13,628	)		(13,628	)		—			(13,628	)
Contributions from noncontrolling interests		—			—			—			—			—			—			13,966			13,966
Distributions to noncontrolling interests		—			—			—			—			—			—			(661	)		(661	)
Gain on sale of assets to noncontrolling interest holders		—			—			—			—			—			—			(623	)		(623	)
Designated derivatives fair value adjustment		—			—			—			(3,546	)		—			(3,546	)		—			(3,546	)
Net loss		—			—			—			—			(1,453	)		(1,453	)		76			(1,377	)
Total comprehensive loss		—			—			—			—			—			(4,999	)		76			(4,923	)
Balance, September 30, 2010		43,370,222		$	433		$	366,033		$	(5,283	)	$	(28,750	)	$	332,433		$	16,067		$	348,500

The accompanying notes are an integral part of this financial statement.

AMERICAN REALTY CAPITAL TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2010			2009
Cash flows from operating activities:
Net loss	$	(1,377	)	$	(3,541	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		11,415			4,412
Amortization of intangibles		2,822			1,131
Amortization of deferred finance costs		703			418
Amortization of restricted share grants		77			—
Accretion of below-market lease liability		(235	)		(236	)
Gain on disposition of property		(143	)		—
Gains on sales to noncontrolling interest holders		(623	)		—
Losses (gains) on derivative instruments		568			(354	)
Changes in assets and liabilities:
Prepaid expenses and other assets		(4,148	)		(2,830	)
Accounts payable and accrued expenses		2,010			(802	)
Due from affiliated entity		—			(2,013	)
Deferred rent and other liabilities		173			298
Net cash provided by (used in) operating activities		11,242			(3,517	)

Cash flows from investing activities:
Investment in real estate and other assets		(338,280	)		(76,321	)
Dispositions of real estate and other assets		757			—
Net cash used in investing activities		(337,523	)		(76,321	)

Cash flows from financing activities:
Proceeds on mortgage notes payable		105,378			25,300
Payments on mortgage notes payable		(3,521	)		(732	)
Proceeds on related party bridge facility		—			9,553
Payments on related party bridge facility		—			(18,030	)
Payments on short-term convertible redeemable preferred		—			(3,995	)
Proceeds on related party convertible bridge revolver		—			2,715
Payments on related party convertible bridge revolver		—			(9,215	)
Proceeds on short-term bridge funds		—			15,878
Payments on short-term bridge funds		(15,878	)		(11,954	)
Proceeds from long-term notes payable		—			11,910
Payments on long-term notes payable		(210	)		—
Contributions from noncontrolling interests		13,966			3,108
Distributions to noncontrolling interests		(661	)		(36	)
Proceeds from issuances of common stock, net		240,319			65,105
Payments of deferred financing costs		(4,196	)		(1,049	)
Distributions paid		(7,037	)		(920	)
Payments for share redemptions		(2,449	)		—
Restricted cash		(34	)		10
Net cash provided by financing activities		325,677			87,648

Net increase (decrease) in cash		(604	)		7,810
Cash, beginning of period		5,010			887
Cash, end of period	$	4,406		$	8,697

AMERICAN REALTY CAPITAL TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2010		2009

Supplemental Disclosures of Investing and Financing Activities:
Cash paid for income taxes	$	388	$	—
Cash paid for interest	$	14,541	$	7,418

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

AMERICAN REALTY CAPITAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 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 the Company’s 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 September 30, 2010, the Company issued 43.4 million shares of common stock. Total gross proceeds from these issuances were $422.2 million. As of September 30, 2010, the aggregate value of all share issuances and subscriptions outstanding was $426.2 million based on a per share value of $10.00 (or $9.50 for shares issued under the DRIP).

On August 5, 2010, the Company filed a registration statement on Form S-11 to register 32,500,000 shares of common stock in connection with the follow on offering to its initial public offering. The initial public offering was originally set to expire on January 25, 2011, three years after its effective date. However, as permitted by Rule 415 of the Securities Act, the Company will now continue its initial public offering until the earlier of July 24, 2011 or the date that the SEC declares the registration statement for the follow on offering effective. Total capital raised under the current registration and follow on offering will not exceed $1.5 billion.

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.

AMERICAN REALTY CAPITAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

(Unaudited)

The Company’s stock is not 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 is not listed 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.

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 nine months ended September 30, 2010 and 2009 (dollar amounts in thousands):

	Three Months Ended September 30,		Nine Months Ended September 30,		Three and Nine Months Ended September 30,
	2010		2010		2009
Real estate investments, at cost:
Land	$	46,662	$	76,561	$	8,332
Buildings, fixtures and improvements		93,271		221,813		58,483
		139,933		298,374		66,815

Intangibles and other assets:
In-place leases		16,163		39,906		9,506

Total assets acquired		156,096		338,280		76,321

Cash paid for acquired real estate investments	$	156,096	$	338,280	$	76,321
Number of properties purchased during period		62		103		34

AMERICAN REALTY CAPITAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 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 September 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 September 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	March 2008	1	55,440	51%	8.8	$	9,694	7.53%	$	730	$	10,208
First Niagara	March 2008	15	177,774	100%	12.3		40,976	7.48%		3,064		41,676
Rockland Trust	May 2008	18	121,057	100%	10.8		32,188	7.86%		2,530		33,117
PNC Bank (6)	September & October 2008	2	8,403	81%	18.4		6,664	8.21%		547		6,853
Rite Aid	September 2008	6	74,919	100%	12.8		18,576	7.79%		1,447		18,839
PNC	November 2008	49	266,188	100%	8.2		41,605	7.35%		3,060		44,132
FedEx II	July 2009	1	152,640	100%	13.1		31,692	8.84%		2,803		31,692
Walgreens	July 2009	1	14,820	56%	21.8		3,818	8.12%		310		3,818
CVS (7)(8)	September 2009 September 2010	10	131,105	72%	23.5		44,371	8.37%		3,713		44,371
CVS II	November 2009	15	198,729	100%	23.8		59,788	8.48%		5,071		59,788
Home Depot	December 2009	1	465,600	100%	19.3		23,532	9.31%		2,192		23,532
BSFS	December 2009 & January 2010	6	57,336	100%	13.6		15,041	9.24%		1,390		15,041
Advance Auto	December 2009	1	7,000	100%	11.2		1,730	9.25%		160		1,730
Fresenius	January 2010	2	140,000	100%	11.8		12,462	9.30%		1,159		12,462
Reckitt Benckiser	February 2010	1	574,106	85%	11.4		31,735	8.41%		2,668		31,735
Jack in the Box	February 2010 & April 2010	5	12,253	100%	19.4		10,010	7.80%		781		10,010
BSFS II (9)	February & March 2010	12	93,599	78%	13.3		26,414	8.70%		2,299		26,414
FedEx III	April 2010	1	118,796	85%	10.7		34,171	9.03%		3,087		34,171
Jared Jewelry	May 2010	3	19,534	100%	18.4		5,457	12.44%		679		5,457
Walgreens II	May 2010	1	14,820	100%	22.5		5,684	7.97%		453		5,684
IHOP	May 2010	1	5,172	100%	15.5		2,445	8.22%		201		2,445
Advance Auto II	June 2010	3	19,253	100%	12.8		3,674	8.38%		308		3,674

AMERICAN REALTY CAPITAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 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)
Super Stop & Shop	June 2010	1	59,032	100%	12.4		23,795	8.18%		1,946		23,795
IHOP II	June 2010	1	4,139	100%	11.5		2,300	8.87%		204		2,300
IHOP III	June 2010	1	5,111	100%	20.9		3,319	9.13%		303		3,319
Jared Jewelry II	June 2010	1	6,157	100%	16.4		1,635	12.78%		209		1,635
Jack in the Box II	June 2010	6	14,975	100%	19.8		11,396	7.83%		892		11,396
Walgreens III	June 2010	1	13,386	100%	23.6		5,062	7.61%		385		5,062
Dollar General	July 2010	1	8,988	100%	14.2		1,228	9.61%		118		1,228
Tractor Supply	July & August 2010	4	76,038	100%	14.7		11,198	8.73%		978		11,198
Advance Auto III	July 2010	3	19,752	100%	12.9		4,385	8.16%		358		4,385
CSAA/CVS	August 2010	1	15,214	100%	22.4		4,950	7.11%		352		4,950
CSAA/First Fifth Bank (10)	August 2010	2	8,252	100%	17.5		6,199	8.41%		520		6,199
CSAA/Walgreens	August 2010	5	84,263	100%	22.3		27,351	7.17%		1,961		27,351
CSAA/Chase Bank (10)	August 2010	2	8,030	100%	26.6		5,939	9.48%		604		5,939
CSAA/Home Depot (10)	September 2010	1	107,965	100%	17.4		8,720	7.25%		621		8,720
IHOP IV	September 2010	19	87,009	100%	14.1		30,818	9.19%		2,833		30,818
O’Reilly Auto	September 2010	1	9,500	100%	9.4		2,508	8.53%		214		2,508
Walgreens IV	September 2010	1	14,450	100%	24.5		6,546	7.62%		499		6,546
Walgreens V	September 2010	1	13,580	100%	23.7		4,850	7.81%		379		4,850
Kum & Go	September 2010	14	67,310	100%	14.5		23,043	8.98%		2,069		23,043
FedEx IV	September 2010	1	43,762	100%	9.8		3,649	8.11%		296		3,649
AutoZone	September 2010	4	28,900	100%	15.9		10,434	8.23%		859		10,434

Total		226	3,424,357		15.7	$	661,052	8.36%	$	55,252	$	666,174

AMERICAN REALTY CAPITAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

(Unaudited)

Note 3 — Real Estate Investments (continued)

(1)	-	Remaining lease term as of September 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 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 principles.
(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)	-	Includes the September 2010 purchase of a parcel of land with a ground lease which contains a previously purchased CVS pharmacy.
(9)	-	Ownership percentage of six properties is 55% and 100% of the remaining six properties.
(10)	-	Property is a parcel of land with a ground lease which contains a building that will be conveyed to the Company at the end of the ground lease. Square footage and number of buildings refers to the building that is constructed on the parcel of land owned by the Company.

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

	2010	2009
CVS	17%	—
FedEx	13%	14%
PNC Bank	7%	21%
First Niagara	6%	27%
Rockland Trust Company	5%	22%
Rite Aid	3%	13%

No other tenant represents more than 10% of the annualized rental income for the periods presented.

In September 2010, the Company sold one of the original 50 PNC properties acquired in November 2008 to an unaffiliated third party. The sales proceeds net of closing costs were $0.8 million. A gain of $0.1 million was recorded on the disposition of the property.

Note 4 — Short-Term Bridge Equity Funds and Lines of Credit

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. There were no short-term equity bridge funds outstanding at September 30, 2010. The Company’s short-term borrowings as of December 31, 2009, consisted 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 bore a floating interest rate based on the greater of prime rate plus 0.75% or 5.75%

AMERICAN REALTY CAPITAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

(Unaudited)

Note 4 — Short-Term Bridge Equity Funds and Lines of Credit (continued)

At September 30, 2010, the Company had 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 September 30, 2010 or December 31, 2009. There are no unused borrowing fees associated with this facility.

On July 27, 2010, the Company entered into a credit agreement with Capital One, N.A. to obtain a secured revolving credit facility in an aggregate maximum principal amount of $30 million. The proceeds of loans made under the credit agreement will be used to finance the acquisition of net leased, investment or non-investment grade properties. The initial term of the credit agreement is 30 months, which may be extended by 12 months, subject to satisfaction of certain conditions, including payment of an extension fee.

Any loan made under the Capital One credit agreement shall bear floating interest at per annum rates equal to either one month LIBOR plus 3.25% or three month LIBOR plus 3.25%, at the Company’s option. In the event of a default, Capital One has the right to terminate its obligations under the credit agreement, including the funding of future loans, and to accelerate the payment on any unpaid principal amount of all outstanding loans. The line of credit requires a 0.25% non-usage fee on the unused balance.

On August 5, 2010, the Company entered into a credit agreement with U.S. Bank, N.A. to obtain a secured revolving credit facility in an aggregate maximum principal amount of $20 million, which shall be increased to $30 million six months after closing. The proceeds of loans made under the credit agreement will be used to finance the acquisition of net leased, investment or non-investment grade properties. The initial term of the credit agreement is 24 months, with a one-time extension option of 12 months, subject to satisfaction of certain conditions, including payment of an extension fee.

Any loan made under the U.S. Bank credit agreement shall bear floating interest at a per annum rate equal to one month LIBOR plus 3.25%. In the event of a default, U.S. Bank has the right to suspend the funding of future loans and to accelerate the payment on any unpaid principal amount of the outstanding loans. The Company intends to collateralize the line of credit with certain properties which are currently owned or will be acquired. The line of credit requires a 0.25% non-usage fee on the unused balance.

The Company must collateralize the Capital One and U.S. Bank lines of credit with certain of its properties in addition to meeting certain minimum cash deposit requirements. The Company has not yet drawn on these lines of credit as of September 30, 2010.

AMERICAN REALTY CAPITAL TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2010

(Unaudited)

Note 5 — Mortgage Notes Payable

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

Property	Encumbered Properties		Outstanding Loan Amount		Effective Interest Rate				Interest Rate		Maturity

FedEx		1	$	6,965		6.29	%			Fixed		September 2037
First Niagara		15		31,000		6.59	%	(1)		Fixed		January 2018
Rockland Trust		18		23,292		4.92	%	(2)		Fixed		May 2013
PNC Bank		2		4,357		4.58	%	(3)		Fixed		September 2013
Rite Aid		6		12,808		6.97	%			Fixed		September 2017
PNC		49		32,078		5.25	%	(4)		Fixed		November 2013
FedEx II		1		16,139		6.03	%	(5)		Fixed		January 2015
Walgreens		1		1,550		6.64	%	(6)		Fixed		August 2019
CVS I		10		23,524		6.88	%	(7)		Fixed		October 2019
CVS II		15		32,820		6.64	%			Fixed		December 2014
Home Depot		1		12,150		6.03	%			Fixed		July 2015
BSFS		6		3,817		6.61	%	(8)		Fixed		June 2030
Fresenius		2		6,054		6.63	%			Fixed		February 2015
Reckitt Benckiser		1		14,923		6.23	%	(9)		Fixed		February 2017
Jack in the Box		4		4,373		6.45	%			Fixed		March 2015
Jack in the Box		1		968		6.26	%			Fixed		June 2015
FedEx III		1		15,000		5.57	%			Fixed		May 2015
Walgreens II		1		3,000		5.58	%