Investor FAQs

REITs, in general

Real estate investment trusts or REITs are companies that own or finance income-producing real estate in a range of property sectors. These companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors. REITs are a practical way for all investors to invest in large-scale, income-producing, professionally managed companies that own commercial real estate such as office, industrial / distribution, warehouse, healthcare and retail properties. Some REITs invest throughout the country or, in some cases, throughout the world. Others specialize in one region or even a single metropolitan area.

REITs are real estate working for you. Through the diverse array of properties they own, finance and operate, REITs help provide the essential real estate we need to live, work and play. REITs of all types collectively own more than $3 trillion in gross assets across the U.S., with stock-exchange listed REITs owning approximately $2 trillion in assets. U.S. listed REITs have an equity market capitalization of more than $1 trillion. In addition, more than 80 million Americans invest in REIT stocks through their 401(k) and other investment funds. REITs are total return investments as they typically a) offer current income through the distributions they pay and b) offer the potential for moderate, long term capital appreciation.

Here are answers to fundamental questions about REITs.
 

REIT Basics

What is a real estate investment trust (“REIT”)?

A REIT is a company dedicated to owning, and in some cases, operating income-producing real estate, such as apartments, shopping centers, offices and warehouses. Some REITs also engage in financing real estate.

How many people invest in REITs?

An estimated 80 million American own REITs through their retirement savings and other investment funds.

How does a company qualify as a REIT?

To qualify as a REIT a company must:

  • Invest at least 75 percent of its total assets in real estate, cash, and government securities
  • Derive at least 75 percent of its gross income from rents from real property, interest on mortgages financing real property or from sales of real estate
  • Pay at least 90 percent of its taxable income in the form of shareholder dividends each year
  • Have a minimum of 100 shareholders
  • Have no more than 50 percent of its shares held by five or fewer individuals

REITs generally pay little or no U.S. corporate income taxes because they are able to deduct dividends they pay from their taxable earnings.

What should shareholders know about REIT tax reporting and the taxation of REIT dividends?

For REITs, dividend distributions for tax purposes are allocated to ordinary income, capital gains and return of capital, each of which may be taxed at a different rate. Currently, the maximum capital gains tax rate of 20 percent applies generally to the sale of REIT stock. All public companies, including REITs, are required early in the year to provide shareholders with information clarifying how the prior year's dividends should be allocated for tax purposes.

Tax information is reported on Form 1099-DIV. Shareholders should contact a tax professional for tax-related questions.

Commonly Used REIT Terms

What is a net lease REIT?

In commercial real estate, a net lease is a lease in which in addition to rent the tenant is required to pay a portion, or all, of the taxes, insurance and maintenance costs for a property during the lease term:

 

Property Taxes

Property Insurance

Property Maintenance and Repairs

Single Net Lease

Tenant Responsibility

 

 

Double Net or NN Lease

Tenant Responsibility

Tenant Responsibility

 

Triple Net or NNN Lease

Tenant Responsibility

Tenant Responsibility

Tenant Responsibility

AFIN owns and invests in commercial properties, throughout the United States, that are net leased to the tenant.

What is straight-line rent (“SLR”) and Why do REITs report it?

Real estate companies such as REITs "straight line" rents because generally accepted accounting principles require it. Straight-lining averages the tenant's rent payments over the life of the lease.

What is EBITDA?

Earnings Before Interest, Taxes, Depreciation and Amortization.

What is a capitalization rate or “cap” rate?

The capitalization rate (or "cap" rate) for a property is determined by dividing the property's net operating income by its purchase price.

What is Net Asset Value (NAV)?

Net Asset Value is a valuation method for a security. Assets and liabilities are appraised, usually by a qualified third party company, the valuations are presented to the company’s Board of Directors and a per share value is derived from the appraisal conclusion. NAV can differ widely from a traded security’s stock price, since NAV does not take into account any market conditions, only portfolio appraisal. It is not standard practice for a publicly traded company to publish an NAV for their own shares. This function is generally performed by third party analysts who cover a stock.

What is a Bid/Ask price?

A bid price is what buyers are willing to pay for shares of a stock. The ask price is what sellers are willing to take for their shares in a stock. Prices listed in the bid/ask are the best potential prices at which buyers and sellers are willing to transact. A transaction takes place when a either a potential buyer accepts the ask price or a potential seller accepts the bid price. The current price of a particular stock on any exchange is simply the actual price of the last executed trade.

What is an Institutional Investor?

An institutional investor is an organization that trades securities on behalf of its members. Generally, this organization trades securities in high quantities and/or large amounts of capital and as such, are a driving force behind supply and demand in the markets. These organizations are generally subject to different rules and commission structure. Institutional investors are generally commercial banks, mutual funds, hedge funds, pension funds and insurance companies.

What is a Retail Investor?

A retail investor is an individual, non-professional investor who buys and sells securities and funds through a brokerage firm.

What is an Inclusion trade?

Heightened trade volume in a particular stock that is the result of an announcement by an index provider that the stock will be included in the index for the first time.

What is a Record Date / Ex-dividend date / Payment Date?

The record date is the date you have to be a shareholder in order to receive an upcoming dividend. The ex-dividend date is the date after which people buying shares would not be entitled to the dividend. The ex-dividend date is usually 2 days prior to the record date in order to give the custodian time to register all new shareholders. If you buy shares prior to the ex-dividend date, you will receive the dividend. Payment date is the date on which a declared stock dividend is scheduled to be paid.

Questions Specific to AFIN and its Business

My American Finance Trust (AFIN) shares are now traded on the Nasdaq exchange. What does that mean for my investment?

This simply means that AFIN is no longer a non-traded, public real estate investment trust (REIT), but is now publically traded on a securities exchange. Shares now trade and investors may buy, sell and hold shares at their discretion. The underlying real estate and AFIN’s commitment to growth remain the same.

What is the difference between a non-traded REIT and a publically traded REIT?

A non-traded REIT is a public or private entity which invests in real estate or real estate debt, is not traded on a securities exchange and is illiquid for a period of time. A publically traded REIT is traded on a securities exchange, such as the Nasdaq, and shares may be bought and sold at the discretion of the investor. Traded REITs, like stocks, are subject to market conditions. Public non-traded REITs and listed REITs are subject to the same filing requirements.

Why did the price per share change on my AFIN investment?

AFIN is traded on a public securities exchange and is now subject to market conditions, which impact the stock price. AFIN no longer reports the NAV value. Instead they will report the trading price of the stock on the exchange. If you follow your account balances online, you will see an updated price per share each day, which reflects the closing price of the stock the previous business day.

Do I still have the same amount of shares of AFIN as I had before the listing?

Unless you have sold some of your shares after the listing on July 19, 2018 or your participate in DRIP and have received additional Class A shares as a result, you would have the same amount of shares. Prior to the listing, shares were split into three classes to accommodate a phased liquidity schedule. Your Class A AFIN shares (half of your total share count) are currently traded on the Nasdaq exchange. The Class B1 shares (one quarter of your total share count) converted to Class A AFIN shares on October 10, 2018 and are also now traded on the exchange. Class B2 shares (the final quarter of your share count) converted to Class A AFIN shares on January 9, 2019 and are also now traded on the exchange.

When does American Finance Trust’s fiscal year end?

AFIN’s fiscal year ends on December 31st each year.

How can I get a get a copy of American Finance Trust’s SEC filings?

AFIN’s SEC filings can be viewed within the “Investor Relations” section of the website (www.americanfinancetrust.com) under “Filings and Financials” or on the SEC’s website at www.SEC.gov.

How can I view American Finance Trust’s investor presentations?

AFIN’s Investor Presentations can be found within the “Investor Relations” section of the website under “Events and Presentations.”  Please click here: http://ir.americanfinancetrust.com/events-and-presentations/presentations. AFIN also generally furnishes all Investor Presentations as exhibits to SEC filings, which are available as described above.

Who is on the board and leadership team for American Finance Trust?

Board of Directors

Name

Role

Bio

Lisa Kabnick

Lead Independent Director

 

AFIN Board Members - Summary Bios

Leslie Michelson

Independent Director

Stanley Perla

Independent Director

Edward Rendell

Independent Director

Michael Weil

Chairman of the Board

Leadership Team

Name

Role

Bio

Michael Weil

Chief Executive Officer, President and Director

Michael Weil Bio

Katie Kurtz

Chief Financial Officer, Treasurer and Secretary

Katie Kurtz Bio

AFIN Leadership Team

Team Bios

What is AFIN’s CUSIP number?

AFIN’s CUSIP number is 02607T109

How can I purchase shares of AFIN common stock?

Please contact your financial advisor or broker to discuss investing in AFIN. Shares must be purchased through a registered broker-dealer.

Does American Finance Trust pay a distribution on its common stock? At what rate and how often are distributions paid?

Yes. AFIN pays distributions on a monthly basis at the rate of $1.10 per share, annualized.

Distributions on the Common Stock are paid on a monthly basis on the 15th day of each month (or, if not a business day, the next succeeding business day) to Common Stock holders of record on the applicable date each month. Distribution payments are dependent on the availability of funds. AFIN's board of directors may alter the amount of distributions paid or suspend distribution payments at any time and therefore distribution payments are not assured. There is no assurance that AFIN will continue to declare and pay distributions at the current rates.

Where will AFIN pay my common stock distributions?

If you hold your shares in your own name through AFIN's transfer agent, DST Systems, you will receive payment each month or quarter, as applicable, directly from DST. Checks are mailed to the address of record.

If you hold your shares in a brokerage account, your dividend will be deposited directly into your account by that brokerage firm.

Can AFIN’s distribution be used to buy more shares? If so, can this purchase happen automatically?

Yes. AFIN allows distributions to be reinvested into the purchase of additional shares each month through the direct reinvestment program (DRIP). If you are signed up as a DRIP participant, this takes place automatically every month.

Questions Specific to Tax Documents, Investor Accounts and Investor Relations

How can I get a copy of my Form 1099-DIV?

Shareholders who own AFIN shares in a brokerage account should contact that brokerage firm to request a Form 1099-DIV copy.

Shareholders whose shares are held on the books of AFIN’s transfer agent, DST Systems, Inc. (“DST”), may contact DST or our Investor Relations group to request a Form 1099-DIV. The number is 866-902-0063.

Who is AFIN’s stock transfer agent?

AFIN’s transfer agent is Computershare. Shareholders who hold shares directly on Computershare’s books may contact Computershare as follows:
Telephone: 866-902-0063

Written Inquiries:
Computershare
Attn: Alternative Investment Operations
P.O. Box 505013
Louisville, KY 40233-5013

How can I be notified of new developments at AFIN?

Please click here to set your AFIN E-Mail Notification Options to receive periodic communications and filing alerts from AFIN via e-mail. 

These notifications include including press releases, investor presentations, quarterly Forms 10-Q and annual Forms 10-K filings as well as quarterly earnings call announcements.

Who can I contact if I have additional questions about AFIN or changes to my account?

You may reach AFIN’s investor relations department as follows:

E-mail:                         investorrelations@americanfinancetrust.com
Telephone:                  866-902-0063
Mailing Address:         405 Park Avenue, 3rd Floor
                                    New York, NY  10022


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