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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): August 3, 2022
 
The Necessity Retail REIT, Inc.
(Exact Name of Registrant as Specified in its Charter)
Maryland 001-38597 90-0929989
(State or other jurisdiction
of incorporation)
 (Commission File Number) (I.R.S. Employer
Identification No.)

650 Fifth Avenue, 30th Floor
New York, New York 10019
___________________________________________________________________________________________________________________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 415-6500

 Former name or former address, if changed since last report: Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 par value per shareRTLThe Nasdaq Global Select Market
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per shareRTLPPThe Nasdaq Global Select Market
7.375% Series C Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per shareRTLPOThe Nasdaq Global Select Market
Preferred Stock Purchase RightsThe Nasdaq Global Select Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
                                         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 provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02. Results of Operations and Financial Condition.

On August 3, 2022, The Necessity Retail REIT, Inc. (the “Company”) issued a press release announcing its results of operations for the quarter ended June 30, 2022, and supplemental financial information for the quarter ended June 30, 2022, attached hereto as Exhibits 99.1 and 99.2, respectively.

Item 7.01. Regulation FD Disclosure.

Press Release and Supplemental Information

As disclosed in Item 2.02 above, on August 3, 2022, the Company issued a press release announcing its results of operations for the quarter ended June 30, 2022, and supplemental financial information for the quarter ended June 30, 2022, attached hereto as Exhibits 99.1 and 99.2, respectively. The information set forth in Item 7.01 of this Current Report on Form 8-K and in the attached Exhibits 99.1 and 99.2 is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in Items 2.02 and 7.01 of this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, regardless of any general incorporation language in such filing.

The statements in this Current Report on Form 8-K that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. The words “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “projects,” “plans,” “intends,” “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include (a) the potential adverse effects of (i) the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, and (ii) the geopolitical instability due to the ongoing military conflict between Russia and Ukraine, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on the Company, the Company’s tenants and the global economy and financial markets, and (b) that any potential future acquisition is subject to market conditions and capital availability and may not be completed on favorable terms, or at all, as well as those risks and uncertainties set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 24, 2022 and all other filings with the Securities and Exchange Commission after that date, as such risks, uncertainties and other important factors may be updated from time to time in the Company's subsequent reports. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required to do so by law.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits
Exhibit No. Description
Press release dated August 3, 2022
Quarterly supplemental information for the quarter ended June 30, 2022
104Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL Document.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 THE NECESSITY RETAIL REIT, INC.
By:/s/ Edward M. Weil, Jr.
  Edward M. Weil, Jr.
  Chief Executive Officer and President
(Principal Executive Officer)

Dated: August 3, 2022


Document


EXHIBIT 99.1
https://cdn.kscope.io/19f373026d7b15f8f8638da3e51af479-picture1a.jpg

FOR IMMEDIATE RELEASE
 

THE NECESSITY RETAIL REIT ANNOUNCES SECOND QUARTER 2022 RESULTS
Company to Host Investor Webcast and Conference Call at 11:00 AM ET Tomorrow
  
New York, August 3, 2022 - The Necessity Retail REIT, Inc. (Nasdaq: RTL) (“RTL” or the “Company”), a real estate investment trust focused on acquiring and managing a diversified portfolio of primarily service-oriented and traditional retail and distribution related commercial real estate properties in the U.S., announced today its financial and operating results for the second quarter ended June 30, 2022.
 
Second Quarter 2022 and Subsequent Events Highlights    

Revenue grew 43.3% to $116.9 million from $81.6 million for the second quarter 2021
Net loss attributable to common stockholders was $56.3 million as compared to net loss of $7.4 million for the second quarter 2021
Cash net operating income (“NOI”) rose 31.9% to $86.3 million from $65.4 million for the second quarter 2021
Funds from Operations (“FFO”) grew by 17.4% to $0.27 per share from $0.23 per share in the second quarter 2021
Adjusted Funds from Operations (“AFFO”) increased 31.7% to $38.5 million from $29.2 million in the prior year second quarter
AFFO per share increased 11.5% to $0.29 per share from $0.26 per diluted share in the prior year second quarter
AFFO per share increased 32% compared to the fourth quarter 2021, the period prior to the $1.3 billion open-air shopping center portfolio acquisition
Paid dividends on common stock of $28.6 million or $0.21 per share
Acquired 32 properties for $470.3 million at a cash capitalization rate1 of 7.2% and a weighted average capitalization rate2 8.6%
High quality portfolio with 52% of the single tenant portfolio, and 61.8% of top 20 tenants, investment grade rated or implied investment grade rated3
Occupancy at open-air assets grew to 87.4% from 86.6% at second quarter 2021 and Executed Occupancy and Leasing Pipeline4 at open-air shopping centers grew to 89.4% compared to 88.8% in the prior quarter
Subsequent to quarter-end, closed on acquisition of one property for $71.1 million, completing the previously announced $1.3 billion shopping center acquisition

“Our second quarter results reflect the anticipated accretion from the transformational $1.3 billion open-air shopping center portfolio acquisition that we recently completed,” said Michael Weil, CEO of RTL. “We had one of our best quarters since inception, with AFFO per share growing over 11% to $0.29 per share in the second quarter compared to a year ago and 32% over the fourth quarter of 2021, the last period prior to the acquisition of the open-air shopping center portfolio. Our diversified, necessity-based retail portfolio is pandemic-tested and well positioned to perform across all economic cycles. Additionally, given that we locked in attractive fixed rates on 83% of our debt, we have limited exposure to the current higher interest rate environment. Our attention is now focused on capitalizing on the upside potential in our portfolio through the lease up of available space and on the resumption of our deleveraging initiative while continuing to pay a compelling dividend. We believe these activities, along with our world-class portfolio, will support continued value creation over the near and long-term.”
1


Financial Results    
Three Months Ended June 30,
(In thousands, except per share data)20222021
Revenue from tenants$116,929 $81,577 
 
Net loss attributable to common stockholders$(56,259)$(7,405)
Net loss per common share (a)
$(0.43)$(0.07)
 
FFO attributable to common stockholders $35,717 $25,053 
FFO per common share (a)
$0.27 $0.23 
 
AFFO attributable to common stockholders$38,485 $29,224 
AFFO per common share (a)
$0.29 $0.26 
(a) All per share data based on 132,629,704 and 110,898,056 diluted weighted-average shares outstanding for the three months ended June 30, 2022 and 2021, respectively.
Real Estate Portfolio
The Company’s portfolio consisted of 1,056 net lease properties located in 47 states and the District of Columbia and comprised approximately 29.0 million rentable square feet as of June 30, 2022. Portfolio metrics include:
90.8% leased, with 7.2 years remaining weighted-average lease term5
61.6% of leases have weighted-average contractual rent increases of 1.0% based on annualized straight-line rent which increase the cash that is due under these leases over time
52% and 41% of annualized straight-line rent in the single tenant portfolio and from multi-tenant anchor tenants, respectively, was derived from investment grade or implied investment grade tenants
92% retail properties, 7% distribution properties and 1% office properties (based on an annualized straight-line rent)
60% of the retail portfolio focused on either service6 or experiential retail7 giving the Company strong alignment with “e-commerce resistant” real estate
Property Acquisitions
During the three months ended June 30, 2022, the Company acquired 32 properties for an aggregate contract purchase price of $470.3 million at a cash capitalization rate of 7.2% and a weighted average capitalization rate 8.6%.

Property Dispositions
During the three months ended June 30, 2022, the Company disposed of five properties, for an aggregate contract price of $30.4 million.

Capital Structure and Liquidity Resources
As of June 30, 2022 the Company had a total borrowing capacity under the credit facility of $526.6 million based on the value of the borrowing base under the credit facility, and, of this amount, $488.0 million was outstanding under the credit facility as of June 30, 2022 and $38.6 million remained available for future borrowings. Subsequent to quarter end, the Company borrowed additional funds under the credit facility to partially fund acquisitions.    As of June 30, 2022, the Company had $69.4 million of cash and cash equivalents. The Company’s net debt8 to gross asset value9 was 50.6%, with net debt of $2.7 billion.
The Company’s percentage of fixed rate debt was 82.5% as of June 30, 2022. The Company’s total combined debt had a weighted-average interest rate cost of 3.8%10, resulting in an interest coverage ratio of 2.9 times11.

Webcast and Conference Call

RTL will host a webcast and call on August 4, 2022 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the RTL website, www.necessityretailreit.com, in the “Investor Relations” section.
 
Dial-in instructions for the conference call and the replay are outlined below.

2


To listen to the live call, please go to RTL’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the RTL website at www.necessityretailreit.com.
 
Live Call
Dial-In (Toll Free): 1-877-407-0792
International Dial-In: 1-201-689-8263
 
Conference Replay*
Domestic Dial-In (Toll Free): 1-844-512-2921
International Dial-In: 1-412-317-6671
Conference Number: 13730900
*Available from 2:00 p.m. ET on August 4, 2022 through November 4, 2022.

3


Footnotes/Definitions
1.Cash capitalization rate is a rate of return on a real estate investment property based on the expected, annualized cash rental income during the first year of ownership that the property will generate under its existing lease or leases. Cash capitalization rate is calculated by dividing this annualized cash rental income the property will generate (before debt service and depreciation and after fixed costs and variable costs) by the purchase price of the property, excluding acquisition costs. The weighted-average cash capitalization rate is based upon square feet.
2.Capitalization rate is a rate of return on a real estate investment property based on the expected, annualized straight-line rental income that the property will generate under its existing lease or leases. Capitalization rate is calculated by dividing the annualized straight-lined rental income the property will generate (before debt service and depreciation and after fixed costs and variable costs) by the purchase price of the property, excluding acquisition costs. The weighted-average capitalization rate is based upon square feet.
3.As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent or guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of June 30, 2022. Based on annualized straight-line rent as of June 30, 2022, single-tenant portfolio tenants were 39.6% actual investment grade rated and 12.6% implied investment grade rated, top 20 tenants were 56.2% actual investment-grade rated and 5.6% implied investment-grade rated and anchor tenants in the multi-tenant portfolio were 30.7% actual investment grade rated and 10.4% implied investment grade rated.
4.Includes (i) all leases fully executed by both parties as of June 30, 2022 (ii) all leases fully executed by July 15, 2022, but after June 30, 2022 and (iii) all leases under negotiation with an executed nonbinding letter of intent (“LOI”) by both parties as of July 15, 2022. There were ten leases fully executed as of June 30, 2022 totaling approximately 119,000 square feet, six leases fully executed by July 15, 2022, but after June 30, 2022 totaling approximately 34,800 square feet and 13 LOIs executed totaling approximately 136,800 square feet.
There can be no assurance that LOIs will lead to definitive leases that will commence on their current terms, or at all. Leasing pipeline should not be considered an indication of future performance.
5.The weighted-average is based on annualized straight-line rent as of June 30, 2022.
6.Service retail is defined as single-tenant retail properties leased to tenants in the retail banking, restaurant, grocery, pharmacy, gas/convenience, healthcare, and auto services sectors.
7.Experiential retail is defined as multi-tenant properties leased to tenants in the restaurant, discount retail, entertainment, salon/beauty, and grocery sectors, among others. The Company also refers to experiential retail as e-commerce defensive retail.
8.Total debt of $2.8 billion less cash and cash equivalents of $69.4 million as of June 30, 2022. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.
9.Defined as the carrying value of total assets plus accumulated depreciation and amortization as of June 30, 2022.
10.Weighted based on the outstanding principal balance of the debt.
11.The interest coverage ratio is calculated by dividing Adjusted EBITDA by cash paid for interest (interest expense less amortization of deferred financing costs, net, and amortization of mortgage premiums on borrowings, net) for the quarter ended June 30, 2022.

4


About The Necessity Retail REIT, Inc.
 
The Necessity Retail REIT (Nasdaq: RTL) is the preeminent publicly traded real estate investment trust (REIT) focused on "Where America Shops". RTL acquires and manages a diversified portfolio of primarily necessity-based retail single tenant and open-air shopping center properties in the U.S. Additional information about RTL can be found on its website at www.necessityretailreit.com.
 
 Supplemental Schedules
 
The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of RTL’s website at www.necessityretailreit.com and on the SEC website at www.sec.gov.

Important Notice

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. The words “may,” “will,” “seeks,” “ “anticipates,” “believes,” “expects,” “estimates,” “projects,” “plans,” “intends,” “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include (a) the potential adverse effects of (i) the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, and (ii) the geopolitical instability due to the ongoing military conflict between Russia and Ukraine, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on the Company, the Company’s tenants, and the global economy and financial markets, and (b) that any potential future acquisition is subject to market conditions and capital availability and may not be completed on favorable terms, or at all, as well as those risks and uncertainties set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 24, 2022 and all other filings with the SEC after that date as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Forward looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results, unless required to do so by law.


5


Accounting Treatment of Rent Deferrals/Abatements  
The majority of the concessions granted to the Company's tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable. The Company’s revenue recognition policy requires that it must be probable that the Company will collect virtually all of the lease payments due and does not provide for partial reserves, or the ability to assume partial recovery. In light of the COVID-19 pandemic, the Financial Accounting Standards Board (“FASB”) and SEC agreed that for leases where the total lease cash flows will remain substantially the same or less than those after the COVID-19 related effects, companies may choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract as a practical expedient and account for rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. As a result, rental revenue used to calculate Net Income and National Association of Real Estate Investment Trusts (“NAREIT”) Funds From Operations (“FFO”) has not been, and the Company does not expect it to be, significantly impacted by these types of deferrals. In addition, since the Company currently believes that these deferral amounts are collectable, the Company has excluded from the increase in straight-line rent for Adjusted FFO (“AFFO”) purposes the amounts recognized under accounting principles generally accepted in the United States of America (“GAAP”) relating to these types of rent deferrals. Conversely, for abatements where contractual rent has been reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and the Company has, accordingly, reduced its AFFO.


Contacts:
Investors and Media:
Email: investorrelations@necessityretailreit.com
Phone: (866) 902-0063
6


The Necessity Retail REIT, Inc.
Consolidated Balance Sheets
(In thousands. except share and per share data)

June 30,
2022
December 31,
2021
(Unaudited)
ASSETS 
Real estate investments, at cost:
Land
$1,000,884 $729,048 
Buildings, fixtures and improvements
3,450,564 2,729,719 
Acquired intangible lease assets
616,870 402,673 
Total real estate investments, at cost
5,068,318 3,861,440 
Less: accumulated depreciation and amortization
(697,288)(654,667)
Total real estate investments, net
4,371,030 3,206,773 
Cash and cash equivalents69,431 214,853 
Restricted cash17,619 21,996 
Deposits for real estate acquisitions16,250 41,928 
Deferred costs, net19,565 25,587 
Straight-line rent receivable65,307 70,789 
Operating lease right-of-use assets17,946 18,194 
Prepaid expenses and other assets 33,666 26,877 
Assets held for sale80,779 187,213 
Total assets
$4,691,593 $3,814,210 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Mortgage notes payable, net $1,768,025 $1,464,930 
Credit facility488,000 — 
Senior notes, net491,651 491,015 
Below market lease liabilities, net132,523 78,073 
Accounts payable and accrued expenses (including $2,394 and $1,016 due to related parties as of June 30, 2022 and December 31, 2021, respectively)58,700 32,907 
Operating lease liabilities19,164 19,195 
Derivative liabilities, at fair value— 2,250 
Deferred rent and other liabilities
8,075 9,524 
Dividends payable
5,836 6,038 
Total liabilities
2,971,974 2,103,932 
Mezzanine Equity:
Shares subject to repurchase53,388 — 
7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 12,796,000 shares authorized, 7,933,711 issued and outstanding as of June 30, 2022 and December 31, 202179 79 
7.375% Series C cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,536,000 shares authorized, 4,595,175 and 4,594,498 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively46 46 
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 133,272,305(1) and 123,783,060 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively1,268 1,238 
Additional paid-in capital2,937,395 2,915,926 
Distributions in excess of accumulated earnings(1,289,400)(1,217,435)
Total stockholders’ equity
1,649,388 1,699,854 
Non-controlling interests16,843 10,424 
Total equity
1,666,231 1,710,278 
Total liabilities, mezzanine equity and total equity$4,691,593 $3,814,210 
7


The Necessity Retail REIT, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)

Three Months Ended June 30,
20222021
Revenue from tenants$116,929 $81,577 
Operating expenses: 
Asset management fees to related party8,296 7,922 
Property operating expense27,520 13,329 
Impairment of real estate investments58,954 91 
Acquisition, transaction and other costs 206 136 
Equity-based compensation [1]
3,523 5,283 
General and administrative8,390 3,540 
Depreciation and amortization46,573 32,428 
Total operating expenses
153,462 62,729 
          Operating (loss) income before gain on sale of real estate investments(36,533)18,848 
Gain on sale of real estate investments
13,438 11 
   Operating (loss) income(23,095)18,859 
Other (expense) income:
Interest expense(28,329)(20,361)
Other income944 20 
Total other expense, net
(27,385)(20,341)
Net loss(50,480)(1,482)
Net loss attributable to non-controlling interests58 
Allocation for preferred stock(5,837)(5,925)
Net loss attributable to common stockholders$(56,259)$(7,405)
Basic and Diluted Net Loss Per Share:
Net loss per share attributable to common stockholders — Basic and Diluted$(0.43)$(0.07)
Weighted-average shares outstanding — Basic 132,629,704 110,898,056 
Weighted-average shares outstanding — Diluted132,629,704 110,898,056 
______

[1] For the three months ended June 30, 2022 and 2021, includes expense related to the Company’s restricted common shares of $0.4 million and $0.4 million, respectively.
8


The Necessity Retail REIT, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)


Three Months Ended June 30,
20222021
Adjusted EBITDA
Net loss$(50,480)$(1,482)
Depreciation and amortization46,573 32,428 
Interest expense28,329 20,361 
Impairment of real estate investments58,954 91 
Acquisition, transaction and other costs 206 136 
Equity-based compensation [1]
3,523 5,283 
Gain on sale of real estate investments
(13,438)(11)
Other income (944)(20)
Adjusted EBITDA72,723 56,786 
Asset management fees to related party8,296 7,922 
General and administrative8,390 3,540 
NOI 89,409 68,248 
   Amortization of market lease and other intangibles, net(1,582)(1,041)
Straight-line rent(1,509)(1,759)
  Cash NOI $86,318 $65,448 
Cash Paid for Interest:
   Interest expense$28,329 $20,361 
   Amortization of deferred financing costs, net(3,236)(2,896)
   Amortization of mortgage premiums and (discounts) on borrowings, net(174)323 
   Total cash paid for interest$24,919 $17,788 
______

[1] For the three months ended June 30, 2022 and 2021, includes expense related to the Company’s restricted common shares of $0.4 million and $0.4 million, respectively.



9




The Necessity Retail REIT, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)
Three Months Ended June 30,Three Months Ended December 31,
202220212021
Net loss attributable to common stockholders (in accordance with GAAP) $(56,259)$(7,405)$(40,219)
Impairment of real estate investments58,954 91 28,616 
   Depreciation and amortization46,573 32,428 32,955 
   Gain on sale of real estate investments(13,438)(11)(3,982)
   Proportionate share of adjustments for non-controlling interest to arrive at FFO(113)(50)53 
FFO attributable to common stockholders [1]
35,717 25,053 17,423 
   Acquisition, transaction and other costs [2]
206 136 774 
   Legal fees and expenses — COVID-19 lease disputes [3]
58 109 200 
   Amortization of market lease and other intangibles, net(1,582)(1,041)(1,175)
   Straight-line rent(1,509)(1,759)(1,897)
   Straight-line rent (rent deferral agreements) [4]
(446)(1,124)(694)
   Amortization of mortgage (premiums) and discounts on borrowings, net174 (323)
Loss on non-designated derivatives [5]
— — 3,950 
   Equity-based compensation [6]
3,523 5,283 3,485 
   Amortization of deferred financing costs, net [7]
3,236 2,896 4,743 
   Gain on settlement of Prairie Towne liens [8]
(887)— — 
   Proportionate share of adjustments for non-controlling interest to arrive at AFFO(5)(6)
AFFO attributable to common stockholders [1]
$38,485 $29,224 $26,816 
______
[1] FFO and AFFO for the three months ended June 30, 2022 and 2021 includes income from lease termination fees of $5.7 million and $0.8 million, respectively, which is recorded in Revenue from tenants in the consolidated statements of operations.
[2] Primarily includes prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the merger with American Realty Capital-Retail Centers of America, Inc. in February 2017.
[3] Reflects legal costs incurred related to disputes with tenants due to store closures or other challenges resulting from COVID-19. The tenants involved in these disputes had not recently defaulted on their rent and, prior to the second and third quarters of 2020, had recently exhibited a pattern of regular payment. Based on the tenants involved in these matters, their history of rent payments, and the impact of the pandemic on current economic conditions, the Company views these costs as COVID-19-related and separable from our ordinary general and administrative expenses related to tenant defaults. The Company engaged counsel in connection with these issues separate and distinct from counsel the Company typically engages for tenant defaults. The amount reflects what the Company believes to be only those incremental legal costs above what the Company typically incurs for tenant-related dispute issues. The Company may continue to incur these COVID-19 related legal costs in the future.
[4] Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on the Company's consolidated balance sheets but are considered to be earned revenue attributed to the current period for rent that was deferred for purposes of AFFO as they are expected to be collected. Accordingly, when the deferred amounts are collected, the amounts reduce AFFO. For rent abatements (including those qualified for FASB relief), where contractual rent has been reduced, the reduction in revenue is reflected over the remaining lease term for accounting purposes but represents a permanent reduction in revenue and the Company has, accordingly reduced its AFFO.
[5] In the fourth quarter and year ended December 31, 2021, the Company recognized a charge $4.0 million for the change in value of an embedded derivative
(a 7.5% collar on the price of stock/units to be issued in connection with the CIM Portfolio Acquisition). Management does not consider this non-cash
charge for an embedded derivative fair value adjustment in connection with this transaction to be capital in nature and it is not part of recurring operations.
Accordingly, such charges are excluded for AFFO purposes.
[6] Includes expense related to the amortization of the Company's restricted common shares and LTIP Units related to its multi-year outperformance agreements for all periods presented.
[7] We issued $500.0 million in Senior Notes in October 2021. The Senior Notes pay semiannual interest which we accrue interest over time for GAAP purposes. Accordingly, to better reflect our operating performance, beginning with the year ended December 31, 2021 and for all periods thereafter, we have elected to remove the impact of the change in accrued interest from the calculation of AFFO, which was previously included in this line item. The impact to AFFO for the removal of the change in accrued interest included in this line for the three months ended June 30, 2021 was an increase to AFFO of $535,000.
[8] Included in other income for the three months ended June 30, 2022 was a gain of $0.9 million on prior liens incurred on our Prairie Towne property as a result of a settlement with the lien holder during the three months ended June 30, 2022. Management does not consider this gain to be part of our normal operating performance and has, accordingly, reduced our AFFO for this amount.

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The Necessity Retail REIT, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)



Same StoreAcquisitionsDisposalsNon-Property SpecificTotal
(In thousands)Single-TenantMulti-TenantSingle-TenantMulti-TenantSingle-TenantMulti-Tenant
Net income (loss) attributable to common stockholders (in accordance with GAAP)$6,337 $(44,854)$1,704 $456 $14,743 $— $(34,645)$(56,259)
Asset management fees to related party— — — — — — 8,296 8,296 
Impairment of real estate investments5,856 49,559 — 3,539 — — — 58,954 
Acquisition, transaction and other costs17 — — — — — 189 206 
Equity-based compensation— — — — — — 3,523 3,523 
General and administrative86 240 — 84 — — 7,980 8,390 
Depreciation and amortization17,938 10,976 1,544 16,040 75 — — 46,573 
Interest expense16,992 1,547 — 912 — — 8,878 28,329 
Gain on sale of real estate investments(3)— — — (13,435)— — (13,438)
Other income(17)(927)— — — — — (944)
Allocation for preferred stock— — — — — — 5,837 5,837 
Net income attributable to non-controlling interests— — — — — — (58)(58)
NOI$47,206 $16,541 $3,248 $21,031 $1,383 $ $ $89,409 
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Non-GAAP Financial Measures
This release discusses the non-GAAP financial measures we use to evaluate our performance, including FFO, AFFO, Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”) and Cash Net Operating Income (“Cash NOI”). While NOI is a property-level measure, AFFO is based on our total performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined herein, does not reflect an adjustment for straight-line rent but AFFO does. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, AFFO and NOI attributable to stockholders.
Caution on Use of Non-GAAP Measures
FFO, AFFO, Adjusted EBITDA, NOI and Cash NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.
Other REITs may not define FFO in accordance with the current NAREIT, an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate AFFO differently than we do. Consequently, our presentation of FFO and AFFO may not be comparable to other similarly titled measures presented by other REITs.
We consider FFO and AFFO useful indicators of our performance. Because FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.
As a result, we believe that the use of FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends. Investors are cautioned that FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.
Funds from Operations and Adjusted Funds from Operations
Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the NAREIT, an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from sales of certain real estate assets, gain and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our Operating Partnership) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

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Adjusted Funds from Operations
In calculating AFFO, we start with FFO, then we exclude certain income or expense items from AFFO that we consider to be more reflective of investing activities, such as non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our day to day operating business plan, such as amounts related to litigation arising out of the merger with American Realty Capital-Retail Centers of America, Inc. in February 2017 (the “Merger”). These amounts include legal costs incurred as a result of the litigation, portions of which have been and may in the future be reimbursed under insurance policies maintained by us. Insurance reimbursements are deducted from AFFO in the period of reimbursement. We believe that excluding the litigation costs and subsequent insurance reimbursements related to litigation arising out of the Merger helps to provide a better understanding of the operating performance of our business. Other income and expense items also include early extinguishment of debt and unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains and losses on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market leases intangibles, amortization of deferred financing costs, straight-line rent, and share-based compensation related to restricted shares, the 2018 multi-year outperformance agreement with the Advisor and the 2021 multi-year outperformance agreement with the Advisor from AFFO, we believe we provide useful information regarding those income and expense items which have a direct impact on our ongoing operating performance.
In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income (loss). All paid and accrued merger, acquisition and transaction related fees and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors but are not reflective of our on-going performance. In addition, legal fees and expense associated with COVID-19-related lease disputes involving certain tenants negatively impact our operating performance but are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss). In addition, as discussed above, we view gains and losses from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe AFFO provides useful supplemental information. By providing AFFO, we believe we are presenting useful information that can be used, among other things, to assess our performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) calculated in accordance with GAAP and presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay dividends. FFO and AFFO may include income from lease termination fees, which is recorded in revenue from tenants in our consolidated statements of operations.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.
We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, other non-cash items such as expense related to our multi-year outperformance agreement with the Advisor and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operations of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). NOI excludes certain items included in calculating net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or our ability to pay dividends.
Cash NOI is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as NOI excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease
13


revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs present Cash NOI.
Cash Paid for Interest is calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net. Management believes that Cash Paid for Interest provides useful information to investors to assess our overall solvency and financial flexibility. Cash Paid for Interest should not be considered as an alternative to interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.


14
Document

EXHIBIT 99.2






The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (unaudited)





The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Table of Contents
ItemPage
Non-GAAP Definitions3
Key Metrics6
Consolidated Balance Sheets8
Consolidated Statements of Operations9
Non-GAAP Measures10
Debt Overview13
Future Minimum Lease Rents14
Top Ten Tenants15
Diversification by Property Type16
Diversification by Geography17
Lease Expirations18
Please note that totals may not add due to rounding.

Forward-looking Statements:
This supplemental package of The Necessity Retail REIT, Inc. (the "Company") includes “forward looking statements." These forward-looking statements involve risks and uncertainties that could cause actual results or events to be materially different. The words “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “projects,” “plans,” “intends,” “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include (a) the potential adverse effects of (i) the ongoing global COVID-19 pandemic, including actions taken to contain or treat COVID-19, and (ii) the geopolitical instability due to the ongoing military conflict between Russia and Ukraine, including related sanctions and other penalties imposed by the U.S. and European Union, and the related impact on the Company, the Company’s tenants and the global economy and financial markets, and (b) that any potential future acquisition is subject to market conditions and capital availability and may not be completed on favorable terms, or at all, as well as those risks and uncertainties set forth in the Risk Factors section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed on February 24, 2022 and all other filings with the Securities and Exchange Commission (the "SEC") after that date, as such risks, uncertainties and other important factors may be updated from time to time in the Company's subsequent reports. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required to do so by law.
Accounting Treatment of Rent Deferrals/Abatements  
The majority of the concessions granted to the Company's tenants as a result of the COVID-19 pandemic are rent deferrals or temporary rent abatements with the original lease term unchanged and collection of deferred rent deemed probable. The Company’s revenue recognition policy requires that it must be probable that the Company will collect virtually all of the lease payments due and does not provide for partial reserves, or the ability to assume partial recovery. In light of the COVID-19 pandemic, the Financial Accounting Standards Board ("FASB") and SEC agreed that for leases where the total lease cash flows will remain substantially the same or less than those after the COVID-19 related effects, companies may choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract as a practical expedient and account for rent concessions as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. As a result, rental revenue used to calculate Net Income and NAREIT FFO (as defined below) has not been, and the Company does not expect it to be, significantly impacted by these types of deferrals. In addition, since the Company currently believes that these deferral amounts are collectable, the Company has excluded from the increase in straight-line rent for AFFO (as defined below) purposes the amounts recognized under generally accepted accounting principles ("GAAP") relating to these types of rent deferrals. Conversely, for abatements where contractual rent has been reduced, the reduction is reflected over the remaining lease term for accounting purposes but represents a permanent reduction and the Company has, accordingly, reduced its AFFO.
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The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Non-GAAP Financial Measures
This section discusses non-GAAP financial measures we use to evaluate our performance, including Funds from Operations ("FFO"), Adjusted Funds from Operations ("AFFO"), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), Net Operating Income ("NOI") and Cash Net Operating Income ("Cash NOI"). While NOI is a property-level measure, AFFO is based on total Company performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. Additionally, NOI as defined herein, does not reflect an adjustment for straight-line rent but AFFO does. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, AFFO and NOI attributable to stockholders.
Caution on Use of Non-GAAP Measures
FFO, AFFO, Adjusted EBITDA, NOI and Cash NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.
Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate AFFO differently than we do. Consequently, our presentation of FFO and AFFO may not be comparable to other similarly-titled measures presented by other REITs.
We consider FFO and AFFO useful indicators of our performance. Because FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.
As a result, we believe that the use of FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends. Investors are cautioned that FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.
Funds from Operations and Adjusted Funds from Operations
Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from sales of certain real estate assets, gains and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated, partially-owned entities (including our Operating Partnership) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
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The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Adjusted Funds from Operations
In calculating AFFO, we start with FFO, then we exclude certain income or expense items from AFFO that we consider to be more reflective of investing activities, such as non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our day to day operating business plan, such as amounts related to litigation arising out of the Company's 2017 merger with American Realty Capital - Retail Centers of America, Inc. (the "Merger"). These amounts include legal costs incurred as a result of the litigation, portions of which have been, and may in the future be, reimbursed under insurance policies maintained by us. Insurance reimbursements are deducted from AFFO in the period of reimbursement. We believe that excluding the litigation costs and subsequent insurance reimbursements related to litigation arising out of the Merger helps to provide a better understanding of the operating performance of our business. Other income and expense items also include early extinguishment of debt and unrealized gains and losses, which may not ultimately be realized, such as gains or losses on derivative instruments and gains and losses on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market lease intangibles, amortization of deferred financing costs, straight-line rent, and share-based compensation related to restricted shares, the 2018 multi-year outperformance agreement with the Advisor and the 2021 multi-year outperformance agreement with the Advisor from AFFO, we believe we provide useful information regarding those income and expense items which have a direct impact on our ongoing operating performance.
In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income (loss). All paid and accrued merger, acquisition and transaction related fees and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors but are not reflective of our on-going performance. In addition, legal fees and expense associated with COVID-19-related lease disputes involving certain tenants negatively impact our operating performance but are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss). In addition, as discussed above, we view gains and losses from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management's analysis of our operating performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, we believe AFFO provides useful supplemental information. By providing AFFO, we believe we are presenting useful information that can be used, among other things, to assess our performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) calculated in accordance with GAAP and presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to pay dividends. FFO and AFFO may include income from lease termination fees, which is recorded in revenue from tenants in our consolidated statements of operations.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.
We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, other non-cash items such as expense related to our multi-year outperformance agreement with the Advisor and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.
NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operations of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). NOI excludes certain items included in calculating net income (loss) in order to provide results that are more closely related to a property's results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction
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The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or our ability to pay dividends.
Cash NOI, is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as NOI excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs present Cash NOI.
Cash paid for interest is calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net. Management believes that cash paid for interest provides useful information to investors to assess our overall solvency and financial flexibility. Cash paid for interest should not be considered as an alternative to interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.

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The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Key Metrics
As of and for the three months ended June 30, 2022
Financial Results (Amounts in thousands, except per share data)
Revenue from tenants
$116,929 
Net loss attributable to common stockholders$(56,259)
Basic and diluted net loss per share attributable to common stockholders $(0.43)
Cash NOI [1]
$86,318 
Adjusted EBITDA [1]
$72,723 
AFFO attributable to common stockholders [1]
$38,485 
Dividends declared on common stock [2]
$28,599 
Balance Sheet and Capitalization (Amounts in thousands, except ratios and percentages)
Gross asset value [3]
$5,388,881 
Net debt [4] [5]
$2,725,004 
Total consolidated debt [5]
$2,794,435 
Total assets
$4,691,593 
Liquidity [6]
$108,046 
Common shares outstanding as of June 30, 2022133,272 
Net debt to gross asset value
50.6 %
Net debt to adjusted EBITDA [1] (annualized based on quarterly results)
9.4 x
Weighted-average interest rate cost [7]
3.8 %
Weighted-average debt maturity (years) [8]
4.6 
Interest Coverage Ratio [9]
2.9 x
Real Estate PortfolioSingle-Tenant PortfolioMulti-Tenant PortfolioTotal Portfolio
Portfolio Metrics:
Real estate investments, at cost (in billions)
$2.4 $2.7 $5.1 
Number of properties
944 112 1,056 
Square footage (in millions)
12.4 16.6 29.0 
Annualized straight-line rent (in millions) [10]
$185.7 $197.4 $383.1 
Annualized straight-line rent per leased square foot
$15.9 $13.6 $14.6 
Occupancy [11]
95.5 %87.4 %90.8 %
Weighted-average remaining lease term (years) [12]
9.9 4.6 7.2 
% investment grade [13]
52.2 %N/AN/A
% of anchor tenants in multi-tenant portfolio that are investment grade [13] [14]
N/A41.1 %N/A
% of leases with rent escalators [15]
82.2 %42.2 %61.6 %
Average annual rent escalator [15]
1.3 %0.7 %1.0 %
——
[1] This Non-GAAP metric is reconciled below.
[2] Represents dividends declared on shares of the Company’s common stock payable to holders of record on the applicable record date.
[3] Defined as total assets plus accumulated depreciation and amortization as of June 30, 2022.
[4] Represents total debt outstanding less cash and cash equivalents.
[5] Excludes the effect of deferred financing costs, net and mortgage premiums, net.
[6] Liquidity includes cash and cash equivalents of $69.4 million as of June 30, 2022, and $38.6 million available for future borrowings under the Company's credit facility.
[7] Weighted based on the outstanding principal balance of the debt as of June 30, 2022.
[8] Weighted based on the outstanding principal balance of the debt as of June 30, 2022 and does not reflect any changes to maturity dates subsequent to
June 30, 2022.
[9] The interest coverage ratio is calculated by dividing adjusted EBITDA for the applicable quarter by cash paid for interest (calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net). Management believes that Interest Coverage Ratio is a useful supplemental measure of our ability to service our debt obligations. Adjusted EBITDA and cash paid for interest are Non-GAAP metrics and are reconciled below.
[10] Calculated using the most recent available lease terms as of June 30, 2022.
6


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
[11] Only includes leases which have commenced and were taken possession by the tenant as of June 30, 2022.
[12] The weighted-average remaining lease term (years) is based on annualized straight-line rent.
[13] As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent" for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of June 30, 2022. The weighted averages are based on straight-line rent. Single-tenant portfolio tenants are 39.6% actual investment grade rated and 12.6% implied investment grade rated.
[14] Anchor tenants are defined as tenants that occupy over 10,000 square feet of one of the Company's multi-tenant properties. Anchor tenants are 30.7% actual investment grade rated and 10.4% implied investment grade rated.
[15] Based on annualized straight-line rent as of June 30, 2022. Contractual rent increases, which increase the cash that is due under these leases over time, include fixed percent or actual increases, or CPI-indexed increases.
7

The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022

Consolidated Balance Sheets
Amounts in thousands, except share and per share data
June 30,
2022
December 31,
2021
(Unaudited)
ASSETS 
Real estate investments, at cost:
Land$1,000,884 $729,048 
Buildings, fixtures and improvements3,450,564 2,729,719 
Acquired intangible lease assets616,870 402,673 
Total real estate investments, at cost5,068,318 3,861,440 
Less: accumulated depreciation and amortization(697,288)(654,667)
Total real estate investments, net4,371,030 3,206,773 
Cash and cash equivalents69,431 214,853 
Restricted cash17,619 21,996 
Deposits for real estate investments16,250 41,928 
Deferred costs, net19,565 25,587 
Straight-line rent receivable65,307 70,789 
Operating lease right-of-use assets17,946 18,194 
Prepaid expenses and other assets 33,666 26,877 
Assets held for sale80,779 187,213 
Total assets$4,691,593 $3,814,210 
LIABILITIES, MEZZANINE EQUITY AND EQUITY  
Mortgage notes payable, net $1,768,025 $1,464,930 
Credit facility488,000 — 
Senior notes, net491,651 491,015 
Below market lease liabilities, net132,523 78,073 
Accounts payable and accrued expenses (including $2,394 and $1,016 due to related parties as of June 30, 2022 and December 31, 2021, respectively)58,700 32,907 
Operating lease liabilities19,164 19,195 
Derivative liabilities, at fair value— 2,250 
Deferred rent and other liabilities8,075 9,524 
Dividends payable5,836 6,038 
Total liabilities2,971,974 2,103,932 
Mezzanine Equity:
Shares subject to repurchase53,388 — 
7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 12,796,000 shares authorized, 7,933,711 issued and outstanding as of June 30, 2022 and December 31, 202179 79 
7.375% Series C cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,536,000 shares authorized, 4,595,175 and 4,594,498 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively46 46 
Common stock, $0.01 par value per share, 300,000,000 shares authorized, 133,272,305 and 123,783,060 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively1,268 1,238 
Additional paid-in capital2,937,395 2,915,926 
Distributions in excess of accumulated earnings(1,289,400)(1,217,435)
Total stockholders' equity1,649,388 1,699,854 
Non-controlling interests16,843 10,424 
Total equity1,666,231 1,710,278 
Total liabilities, mezzanine equity and total equity$4,691,593 $3,814,210 

8


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Consolidated Statements of Operations
Amounts in thousands, except share and per share data
 Three Months Ended
June 30,
2022
March 31,
2022
December 31, 2021September 30,
2021
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenue from tenants$116,929 $94,943 $82,477 $91,915 
 Operating expenses:   
Asset management fees to related party8,296 7,826 7,681 9,880 
Property operating expense27,520 19,139 15,279 13,384 
Impairment of real estate investments58,954 5,942 28,616 4,554 
Acquisition, transaction and other costs
206 279 774 3,426 
Equity-based compensation [1]
3,523 3,498 3,485 4,149 
General and administrative8,390 6,833 5,278 5,589 
Depreciation and amortization46,573 37,688 32,955 32,762 
Total operating expenses
153,462 81,205 94,068 73,744 
Operating (loss) income before gain on sale of real estate investments(36,533)13,738 (11,591)18,171 
Gain on sale of real estate investments13,438 53,569 3,982 478 
Operating (loss) income(23,095)67,307 (7,609)18,649 
Other (expense) income:
Interest expense(28,329)(23,740)(22,857)(19,232)
Other income944 18 29 18 
Gain (loss) on non-designated derivative— 2,250 (3,950)— 
Total other expense, net
(27,385)(21,472)(26,778)(19,214)
Net (loss) income (50,480)45,835 (34,387)(565)
Net loss (income) attributable to non-controlling interests58 (64)(4)
Allocation for preferred stock(5,837)(5,837)(5,837)(5,837)
Net (loss) income attributable to common stockholders$(56,259)$39,934 $(40,219)$(6,406)
Basic and Diluted Net (Loss) Income Per Share:
Net (loss) income per share attributable to common stockholders — Basic and Diluted$(0.43)$0.31 $(0.33)$(0.06)
Weighted-average shares outstanding — Basic132,629,704 128,640,845 123,220,597 118,862,852 
Weighted-average shares outstanding — Diluted
132,629,704 130,048,111 123,220,597 118,862,852 
——
[1] For the three months ended June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, includes equity-based compensation expense related to the Company's restricted common shares of $0.4 million, $0.3 million, $0.3 million and $0.3 million, respectively.

9


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Non-GAAP Measures
Amounts in thousands
 Three Months Ended
June 30,
2022
March 31,
2022
December 31, 2021September 30,
2021
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
EBITDA:
Net (loss) income$(50,480)$45,835 $(34,387)$(565)
Depreciation and amortization46,573 37,688 32,955 32,762 
Interest expense28,329 23,740 22,857 19,232 
   EBITDA [1]
24,422 107,263 21,425 51,429 
Impairment of real estate investments58,954 5,942 28,616 4,554 
Acquisition, transaction and other costs
206 279 774 3,426 
Equity-based compensation [2]
3,523 3,498 3,485 4,149 
Gain on sale of real estate investments(13,438)(53,569)(3,982)(478)
Other income (944)(18)(29)(18)
(Gain) loss on non-designated derivatives— (2,250)3,950 — 
   Adjusted EBITDA [1]
72,723 61,145 54,239 63,062 
Asset management fees to related party8,296 7,826 7,681 9,880 
General and administrative8,390 6,833 5,278 5,589 
   NOI [1]
89,409 75,804 67,198 78,531 
   Amortization of market lease and other intangibles, net
(1,582)(1,098)(1,175)(1,474)
Straight-line rent(1,509)(1,114)(1,897)(1,392)
  Cash NOI [1]
$86,318 $73,592 $64,126 $75,665 
Cash Paid for Interest:
   Interest expense$28,329 $23,740 $22,857 $19,232 
   Amortization of deferred financing costs, net(3,236)(2,893)(4,743)(2,620)
   Amortization of mortgage premiums and (discounts) on borrowings, net(174)13 (4)328 
   Total cash paid for interest$24,919 $20,860 $18,110 $16,940 
——
[1] For the three months ended June 30, 2022, March 31, 2022 and September 30, 2021 includes income from a lease termination fee of $5.7 million, $4.5 million and $10.4 million, respectively, which is recorded in Revenue from tenants in the consolidated statements of operations.
[2] For the three months ended June 30, 2022, March 31, 2022, December 31, 2021 and September 30, 2021, includes equity-based compensation expense related to the Company's restricted common shares of $0.4 million, $0.3 million, $0.3 million and $0.3 million, respectively.







10


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Non-GAAP Measures
Amounts in thousands, except per share data
 Three Months Ended
June 30,
2022
March 31,
2022
December 31, 2021September 30,
2021
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Funds from operations (FFO):
Net (loss) income attributable to common stockholders (in accordance with GAAP)$(56,259)$39,934 $(40,219)$(6,406)
Impairment of real estate investments58,954 5,942 28,616 4,554 
Depreciation and amortization46,573 37,688 32,955 32,762 
Gain on sale of real estate investments (13,438)(53,569)(3,982)(478)
Proportionate share of adjustments for non-controlling interest to arrive at FFO(113)13 53 (150)
FFO attributable to common stockholders [1]
35,717 30,008 17,423 30,282 
Acquisition, transaction and other costs [2]
206 279 774 3,426 
Legal fees and expenses — COVID-19 lease disputes [3]
58 (8)200 44 
Amortization of market lease and other intangibles, net(1,582)(1,098)(1,175)(1,474)
Straight-line rent(1,509)(1,114)(1,897)(1,392)
Straight-line rent (rent deferral agreements) [4]
(446)(442)(694)(876)
Amortization of mortgage (premiums) and discounts on borrowings, net174 (13)(328)
(Gain) loss non-designated derivatives [5]
— (2,250)3,950 — 
Equity-based compensation [6]
3,523 3,498 3,485 4,149 
Amortization of deferred financing costs, net [7]
3,236 2,893 4,743 2,620 
Gain on settlement of Prairie Towne liens [8]
(887)— — — 
Proportionate share of adjustments for non-controlling interest to arrive at AFFO(5)(2)(18)
AFFO attributable to common stockholders [1]
$38,485 $31,751 $26,816 $36,433 
Weighted-average common shares outstanding 132,630 130,048 123,221 118,863 
Net (loss) income per share attributable to common stockholders — Basic and Diluted$(0.43)$0.31 $(0.33)$(0.06)
FFO per common share$0.27 $0.23 $0.14 $0.25 
AFFO per common share$0.29 $0.24 $0.22 $0.31 
Dividends declared on common stock$28,599 $26,677 $26,245 $25,190 
——
[1] FFO and AFFO for the three months ended June 30, 2022, March 31, 2022 and September 30, 2021 includes income from a lease termination fee of $5.7 million, $4.5 million and $10.4 million, respectively, which is recorded in Revenue from tenants in the consolidated statements of operations.
[2] Primarily includes prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the Merger.
[3] Reflects legal costs incurred related to disputes with tenants due to store closures or other challenges resulting from COVID-19. The tenants involved in these disputes had not recently defaulted on their rent and, prior to the second and third quarters of 2020, had recently exhibited a pattern of regular payment. Based on the tenants involved in these matters, their history of rent payments, and the impact of the pandemic on current economic conditions, the Company views these costs as COVID-19-related and separable from its ordinary general and administrative expenses related to tenant defaults. The Company engaged counsel in connection with these issues separate and distinct from counsel the Company typically engages for tenant defaults. The amount reflects what the Company believes to be only those incremental legal costs above what the Company typically incurs for tenant-related dispute issues. The Company may continue to incur these COVID-19 related legal costs in the future.
[4] Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on the Company's consolidated balance sheets but are considered to be earned revenue attributed to the current period for which rent was deferred for purposes of AFFO as they are expected to be collected. Accordingly, when the deferred amounts are collected, the amounts reduce AFFO. For rent abatements (including those qualified for FASB relief), where contractual rent has been reduced, the reduction is reflected over the remaining lease term for accounting purposes but represents a permanent reduction and the Company has, accordingly reduced its AFFO.
[5] In the quarter ended December 31, 2021, the Company recognized a charge $4.0 million for the change in value of an embedded derivative (a 7.5% collar on the price of stock/units to be issued in connection with the CIM Portfolio Acquisition). Management does not consider this non-cash charge for an embedded derivative fair value adjustment in connection with this transaction to be capital in nature and it is not part of recurring operations. Accordingly, such charges are excluded for AFFO purposes.
[6] Includes expense related to the amortization of the Company's restricted common shares and LTIP Units related to its multi-year outperformance agreements for all periods presented.
[7] We issued $500.0 million in Senior Notes in October 2021. The Senior Notes pay semiannual interest which we accrue interest over time for GAAP purposes. Accordingly, to better reflect our operating performance, beginning with the year ended December 31, 2021 and for all periods thereafter, we have elected to remove the impact of the change in accrued interest from the calculation of AFFO, which was previously included in this line item. The
11


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
impact to AFFO for the removal of the change in accrued interest included in this line for the three months ended June 30, 2021 was an increase to AFFO of $428,000.
[8] Included in other income for the three months ended June 30, 2022 was a gain of $0.9 million on prior liens incurred on our Prairie Towne property as a result of a settlement with the lien holder during the three months ended June 30, 2022. Management does not consider this gain to be part of our normal operating performance and has, accordingly, reduced our AFFO for this amount.
12


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Debt Overview
As of June 30, 2022
Amounts in thousands, except ratios and percentages
Year of MaturityNumber of Encumbered Properties
Weighted-Average Debt Maturity (Years) [3]
Weighted-Average Interest Rate [3][4]
Total Outstanding Balance [5]
Percent
Non-Recourse Debt
2022 (remainder)— — — %$3,066 
2023 20 3.9 %289,730 
2024 1.6 4.5 %26,590 
2025366 3.1 3.8 %707,808 
2026102 3.9 3.8 %116,866 
Thereafter 332 6.7 3.8 %662,375 
Total Non-Recourse Debt  824 4.1 3.8 %1,806,435 65 %
Recourse Debt [1]
   Credit Facility [2]
4.8 3.3 %488,000 
  Senior Notes6.3 4.5 %500,000 
Total Recourse Debt5.6 3.9 %988,000 35 %
Total Debt4.6 3.8 %$2,794,435 100 %
——
[1] Recourse debt is debt that is guaranteed by the Company.
[2] The maturity date of the Company's credit facility is April 2026. The Company has the right to extend the maturity date to April 2027.
[3] Weighted based on the outstanding principal balance of the debt.
[4] As of June 30, 2022, the Company’s total combined debt was 82.5% fixed rate and 17.5% floating rate.
[5] Excludes the effect of deferred financing costs, net and mortgage premiums and discounts.
13


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Future Minimum Base Lease Rents Due to the Company
As of June 30, 2022
Amounts in thousands
Future Minimum
Base Rent Payments
[1]
2022 (remainder)$183,939 
2023353,069 
2024323,368 
2025293,652 
2026264,890 
2027222,655 
Thereafter1,184,148 
Total$2,825,721 
——
[1] Represents future minimum base rent payments on a cash basis due to the Company over the next five years and thereafter. 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 among other items.

14


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Top Ten Tenants (by annualized straight-line rent)
As of June 30, 2022
Amounts in thousands, except percentages
Tenant / Lease GuarantorProperty TypeTenant Industry
Annualized SL Rent [1]
SL Rent Percent
Remaining Lease Term [2]
Investment Grade [3]
FreseniusRetailHealthcare$14,727 %6.4 Yes
Mountain ExpressRetailGas/Convenience13,237 %16.2 No
Home DepotRetailHome Improvement12,935 %6.9 Yes
AmeriColdDistributionRefrigerated Warehousing12,720 %5.2 Yes
Truist BankRetailRetail Banking12,190 %7.0 Yes
Tenants 6 - 10VariousVarious44,910 12 %6.3 3 of 5 - Yes
Subtotal    110,719 29 %7.5 
     
Remaining portfolio     272,316 71 %
     
Total Portfolio$383,035 100 %
——
[1] Calculated using the most recent available lease terms as of June 30, 2022.
[2] Based on straight-line rent as of June 30, 2022.
[3] The top ten tenants are 62.6% actual investment grade rated and 8.7% implied investment grade rated (see page 7 for definition of Investment Grade).






15


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Diversification by Property Type
As of June 30, 2022
Amounts in thousands, except percentages
Total Portfolio
Property Type
Annualized SL Rent [1]
SL Rent PercentSquare FeetSq. ft. Percent
Retail (including Power and Lifestyle Centers)
$353,865 92 %24,907 87 %
Distribution 25,104 %3,294 11 %
Office  4,066 %706 %
Total $383,035 100 %28,907 100 %
 
Retail Properties
Tenant Type
Annualized SL Rent [1]
SL Rent Percent
Square Feet [2]
Sq. ft. Percent
Single-Tenant:
Service-oriented [3]
$123,141 35 %4,116 18 %
Traditional retail [4]
 33,332 %4,003 18 %
Multi-Tenant:
Experiential/e-commerce defensive [5]
86,532 25 %5,255 23 %
Other traditional retail 110,860 31 %9,286 41 %
Total $353,865 100 %22,660 100 %
——
[1] Calculated using the most recent available lease terms as of June 30, 2022.
[2] Represents total rentable square feet of retail properties occupied as of June 30, 2022.
[3] Includes single-tenant retail properties leased to tenants in the retail banking, restaurant, grocery, pharmacy, gas/convenience, fitness, healthcare, and auto services sectors.
[4] Includes single-tenant retail properties leased to tenants in the discount retail, home improvement, furniture, specialty retail, auto retail, sporting goods sectors, wireless/electronics, department stores and home improvement sectors.
[5] Represents multi-tenant properties leased to tenants in the restaurant, discount retail, entertainment, salon/beauty, and grocery sectors, among others.





16


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Diversification by Geography
As of June 30, 2022
Amounts in thousands, except percentages
Total Portfolio
Region
Annualized SL Rent [1]
SL Rent PercentSquare FeetSq. ft. Percent
Alabama $15,885 4.2 %1,547 5.2 %
Alaska409 0.1 %0.1 %
Arizona352 0.1 %22 0.1 %
Arkansas5,375 1.6 %396 1.5 %
California13,386 0.1 %518 0.1 %
Colorado776 0.2 %52 0.2 %
Connecticut1,801 0.5 %98 0.4 %
Delaware176 0.1 %0.1 %
District of Columbia236 0.1 %0.1 %
Florida24,002 7.0 %1,537 5.8 %
Georgia37,621 9.7 %2,552 8.0 %
Idaho331 0.1 %14 0.1 %
Illinois19,287 5.2 %1,718 6.0 %
Indiana9,759 2.5 %898 3.1 %
Iowa2,698 0.8 %166 0.6 %
Kansas5,622 1.6 %397 1.5 %
Kentucky16,812 4.9 %1,194 4.6 %
Louisiana10,692 3.2 %756 2.9 %
Maine349 0.1 %27 0.1 %
Maryland4,534 1.3 %305 1.2 %
Massachusetts13,363 3.9 %1,326 5.1 %
Michigan11,237 3.3 %637 2.4 %
Minnesota10,555 3.1 %761 2.9 %
Mississippi7,008 1.7 %351 1.0 %
Missouri6,941 1.7 %566 1.9 %
Montana1,184 0.3 %42 0.2 %
Nebraska495 0.1 %12 — %
Nevada6,896 2.0 %408 1.6 %
New Hampshire127 — %0.1 %
New Jersey1,512 0.4 %81 0.4 %
New Mexico5,091 1.3 %369 1.4 %
New York4,017 1.0 %313 1.1 %
North Carolina27,365 6.9 %2,380 7.5 %
North Dakota1,222 0.4 %170 0.7 %
Ohio26,418 6.6 %1,821 5.7 %
Oklahoma12,799 3.7 %1,070 4.1 %
Pennsylvania13,052 3.8 %893 3.4 %
Rhode Island3,234 0.7 %177 0.6 %
South Carolina18,371 4.9 %1,807 6.4 %
South Dakota339 0.1 %47 0.2 %
Tennessee4,197 1.2 %226 0.9 %
Texas19,465 5.3 %1,414 5.0 %
Utah1,087 0.3 %41 0.2 %
Vermont84 0.1 %22 0.1 %
Virginia3,697 1.1 %343 0.8 %
West Virginia3,197 0.9 %271 1.0 %
Wisconsin8,661 1.4 %1,072 3.4 %
Wyoming1,318 0.4 %66 0.2 %
Total $383,035 100 %28,907 100 %
[1] Calculated using the most recent available lease terms as of June 30, 2022.  

17


The Necessity Retail REIT, Inc.
Supplemental Information
Quarter ended June 30, 2022 (Unaudited)
Lease Expirations
As of June 30, 2022
Amounts in thousands, except ratios and percentages
Year of ExpirationNumber of Leases Expiring
Annualized SL Rent [1]
Annualized SL Rent PercentLeased Square FeetPercent of Leased Square Feet Expiring
(In thousands)(In thousands)
2022 (Remaining)80$7,883 2.1 %861 3.3 %
202321628,005 7.3 %2,106 8.0 %
202423433,749 8.8 %2,487 9.5 %
202522033,350 8.7 %2,438 9.3 %
202619837,707 9.8 %2,786 10.6 %
202722351,174 13.4 %5,075 19.3 %
202814126,222 6.8 %2,051 7.8 %
202916228,520 7.4 %1,782 6.8 %
20308018,832 4.9 %1,313 5.0 %
20318620,269 5.3 %1,317 5.0 %
20326511,787 3.1 %880 3.4 %
2033477,105 1.9 %374 1.4 %
2034177,321 1.9 %276 1.1 %
2035165,356 1.4 %225 0.9 %
2036323,246 0.8 %196 0.7 %
20378213,267 3.5 %337 1.3 %
Thereafter (>2037)32249,242 12.9 %1,749 6.6 %
Total2,221$383,035 100 %26,253 100 %
——
[1] Calculated using the most recent available lease terms as of June 30, 2022.


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