Document
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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): February 26, 2020
 
American Finance Trust, Inc.
(Exact Name of Registrant as Specified in 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, including zip code, of Principal Executive Offices)

Registrant’s telephone number, including area code: (212) 415-6500
 
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 class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Class A Common Stock, $0.01 par value
 
AFIN
 
The Nasdaq Global Select Market
7.50% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value
 
AFINP
 
The 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 February 26, 2020, American Finance Trust, Inc. (the “Company”) issued a press release announcing its results of operations for the quarter and year ended December 31, 2019, and supplemental financial information for the quarter and year ended December 31, 2019, 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 February 26, 2020, the Company issued a press release announcing its results of operations for the quarter and year ended December 31, 2019, and supplemental financial information for the quarter and year ended December 31, 2019, 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 include statements regarding the intent, belief or current expectations of the Company and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “strives,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements, including as a result of those factors set forth in the Risk Factors section of the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2018 filed on March 7, 2019 and all other filings with the Securities and Exchange Commission after that date. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, or revise forward-looking unless required by law.


Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.
 
 Description
 
Press release dated February 26, 2020
 
 
 
 
Quarterly supplemental information for the quarter and year ended December 31, 2019
 
 
 
104
 
Cover 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.
 
AMERICAN FINANCE TRUST, INC.
 
 
 
 
By:
/s/ Edward M. Weil, Jr.
 
 
Edward M. Weil, Jr.
 
 
Chief Executive Officer and President
(Principal Executive Officer)

Dated: February 26, 2020



Exhibit


EXHIBIT 99.1

https://cdn.kscope.io/464b2de006199880ad7de1390ea44c90-arct5logocolornotickera06.jpg

FOR IMMEDIATE RELEASE
 
American Finance Trust Announces Fourth Quarter and Full Year 2019 Results
  
New York, February 26, 2020 - American Finance Trust, Inc. (Nasdaq: AFIN) (“AFIN” 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 quarter and year ended December 31, 2019.

Full Year 2019 Highlights

Revenue increased 3% year-over-year to $299.7 million as compared to $291.2 million in prior year
Net loss attributable to stockholders was $3.1 million, or $0.03 per diluted common share, compared to a net loss of $37.4 million, or $0.35 per diluted common share in prior year
Funds from operations ("FFO") increased 7.7% year-over-year to $98.6 million, or $0.93 per diluted share from $91.6 million, or $0.87 per diluted share, in prior year
Adjusted funds from operations ("AFFO") increased 1.8% year-over-year to $104.9 million, or $0.99 per diluted common share from $103.0 million, or $0.98 per diluted common share, in prior year
Cash net operating income ("Cash NOI") increased 9% to $231.3 million as compared to $212.1 million in the prior year
Year-over-year acquisitions increased 77% to $423.0 million1 at a weighted average cash capitalization rate2 of 7.2% compared to $239.0 million at a weighted average cash capitalization rate of 7.1%
Strong acquisition pipeline of an additional 54 properties for an aggregate contract purchase price of $82.5 million with an 18.4 year weighted-average lease term remaining3 
Multi-tenant leasing pipeline of new leases and renewals under negotiation for an additional 86,000 square feet, bringing multi-tenant executed occupancy4 to 88.3%
High quality portfolio of investment grade or implied investment grade5 rated tenants in 100% of Top 10 tenants portfolio-wide, 81.6% of tenants in single-tenant portfolio and 37.3% of anchor tenants6 in multi-tenant portfolio
Contractually embedded rent growth with annual rent escalators7 averaging 1.3% per year in 80.3% of total leases
 
Fourth Quarter 2019 Highlights    

Revenue increased 2% to $76.2 million from $75.1 million in fourth quarter 2018
Net loss attributable to common stockholders was $4.8 million, or $0.04 per diluted common share, compared to a net loss of $13.5 million, or $0.13 per diluted common share for fourth quarter 2018
FFO was $22.4 million, or $0.21 per diluted share, compared to $27.9 million, or $0.26 per diluted share, for the fourth quarter 2018
AFFO increased 2% to $25.2 million, or $0.24 per diluted share, compared to $24.6 million, or $0.23 per diluted share in the prior year fourth quarter
Cash NOI grew by 9% to $57.7 million as compared to $52.9 million for the fourth quarter 2018
Closed on the acquisition of 53 properties for an aggregate contract purchase price of $62.0 million at a weighted average cash capitalization rate of 7.3% and a weighted average capitalization rate of 7.5%8  
Liquidity9 of $232.8 million to be used for future acquisitions, including current forward pipeline of $82.5 million


CEO Comments

Michael Weil, Chief Executive Officer, commented, "We are proud to report increases in revenue, cash NOI and AFFO per share. We continue to improve the portfolio by opportunistically acquiring service-oriented retail properties with long-term leases. Year over year acquisitions increased 77% to $423 million at a weighted average capitalization rate of 7.8% with over 85% of acquisitions leased to service-oriented retail tenants with lease durations averaging over 12.5 years. These acquisitions improve our portfolio's diversification, weighted-average lease term and property mix. We believe we are well positioned to continue our deliberate portfolio growth through high-quality, accretive acquisitions in 2020 and beyond."





Financial Results

 
 
Three Months Ended December 31,
 
Year Ended December 31,
(In thousands, except per share data)
 
2019
 
2018
 
2019
 
2018
Revenue from tenants
 
$
76,231

 
$
75,092

 
$
299,744

 
$
291,207

 
 
 
 
 
 
 
 
 
Net loss attributable to common stockholders
 
$
(4,827
)
 
$
(13,524
)
 
$
(3,101
)
 
$
(37,409
)
Net loss per common share (a)
 
$
(0.04
)
 
$
(0.13
)
 
$
(0.03
)
 
$
(0.35
)
 
 
 
 
 
 
 
 
 
FFO attributable to common stockholders
 
$
22,412

 
$
27,884

 
$
98,584

 
$
91,574

FFO per common share (a)
 
$
0.21

 
$
0.26

 
$
0.93

 
$
0.87

 
 
 
 
 
 
 
 
 
AFFO attributable to common stockholders
 
$
25,220

 
$
24,632

 
$
104,888

 
$
103,031

AFFO per common share (a)
 
$
0.24

 
$
0.23

 
$
0.99

 
$
0.98

(a) All per share data based on 107,286,620 and 106,096,401 diluted weighted-average shares outstanding for the three months ended December 31, 2019 and 2018, respectively, and 106,397,296 and 105,560,053 for the years ended December 31, 2019 and 2018, respectively.

Real Estate Portfolio

The Company’s portfolio consisted of 819 net lease properties located in 47 states and comprised of 18.5 million rentable square feet as of December 31, 2019. Portfolio metrics include:

94.6% leased with 8.8 years weighted-average remaining lease term
80.3% of leases have contractual rent increases of 1.3% on average based on annualized straight-line rent
81.6% of single-tenant portfolio and 37.3% of multi-tenant portfolio anchor tenant annualized straight-line rent derived from investment grade or implied investment grade tenants
79% retail properties, 11% industrial and distribution properties and 10% office properties (based on annualized straight-line rent) compared to 75% retail, 14% industrial and distribution and 12% office as of December 31, 2018
70.0% of the retail portfolio, based on straight line rent, is focused on either service10 or experiential retail11 giving the company strong alignment with "e-commerce resistant" real estate

Property Acquisitions

During the three months ended December 31, 2019, the Company completed the acquisition of 53 properties for an aggregate contract purchase price of $62.0 million at a weighted average capitalization rate of 7.5%.

For the year ended December 31, 2019, AFIN closed on the acquisition of 218 properties for an aggregate contract purchase price of $423.0 million with a weighted-average capitalization rate of 7.8% and 12.6 year weighted-average remaining lease term and with average annual rent increases of 1.6%.

The Company’s pipeline of acquisitions as of January 31, 2020 includes 54 properties for an aggregate purchase price of $82.5 million. There can be no assurance that all these acquisitions will be completed on their current terms, or at all.

Property Dispositions

The Company sold five properties during the fourth quarter of 2019 for $16.3 million, of which approximately $6.3 million was used to repay related mortgage debt.

The Company sold 25 properties during 2019 for $132.0 million, of which approximately $92.6 million was used to repay related mortgage debt.





Capital Structure and Liquidity Resources

As of December 31, 2019, the Company had a total borrowing capacity under its credit facility of $484.1 million. Of this amount, $333.1 million was outstanding under this facility as of December 31, 2019 and $150.9 million remained available for future borrowing12. As of December 31, 2019, the Company had $81.9 million of cash and cash equivalents. The Company’s net debt13 to gross asset value14 was 39.2%, with net debt of $1.6 billion.

The Company's percentage of fixed rate debt was 79.9% as of December 31, 2019. The Company’s total combined debt had a weighted-average interest rate cost of 4.3%15, resulting in an interest coverage ratio of 2.8 times16.

During the fourth quarter of 2019, the Company sold 881,174 shares of Series A preferred stock, generating gross proceeds of $22.4 million from sales through its Preferred Stock ATM program. Also, the Company sold 510,000 shares Class A common stock, generating gross proceeds of $7.4 million, through its Common Stock ATM program.

Footnotes/Definitions
 
1 Represents the contract purchase price and excludes acquisition costs which are not capitalized per GAAP.

2 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. For acquisitions, cash capitalization rate is calculated by dividing the annualized cash rental income the property will generate (before debt service and depreciation and after fixed costs and variable costs) and the purchase price of the property. The weighted-average cash capitalization rate is based upon square feet.
3 The weighted-average remaining lease term (years) is based on annualized straight-line rent as of December 31, 2019.
 
4 Includes all leases where the tenant has taken possession as of December 31, 2019 as well as all leases executed by both parties as of December 31, 2019 where the tenant has yet to take possession as of such date.

5 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. Ratings information is as of December 31, 2019. Single-tenant portfolio tenants are 46.0% actual investment grade rated and 35.6% implied investment grade rate. Anchor tenants in the multi-tenant portfolio are 23.4% actual investment grade rated and 13.9% implied investment grade rated.

6 Anchor tenants are defined as tenants that occupy over 10,000 square feet of one of the Company's multi-tenant properties.

7 Based on annualized straight-line rent as of December 31, 2019. Contractual rent increases include fixed percent or actual increases, or CPI-indexed increases.

8 Capitalization rate is a rate of return on a real estate investment property based on the expected, annualized straight-lined rental income that the property will generate under its existing lease. 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. The weighted-average capitalization rate is based upon square feet.

9 Liquidity includes the amount available for future borrowings under the Company’s credit facility of $150.9 million and cash and cash equivalents. The $150.9 million is net of any letters of credit posted against the amount available for future borrowings as of December 31, 2019. In accordance with the Company's credit facility, the Company is permitted to pay distributions in an aggregate amount not exceeding 105% of Modified FFO (as defined in the credit facility) for any applicable period if, as of the last day of the period, the Company is able to satisfy a maximum leverage ratio after giving effect to the payments and also has a combination of cash, cash equivalents and amounts available for future borrowings under the credit facility of not less than $60.0 million. The Company relied on this exception for the two consecutive fiscal quarters ended September 30, 2019 and the three consecutive fiscal quarters ended December 31, 2019. The Company also expects it will rely on this exception in future periods.






10 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.

11 Experiential retail is defined as multi-tenant properties leased to tenants in the restaurant, discount retail, entertainment, salon/beauty, and grocery sectors, among others.

12 The borrowing capacity and availability for future borrowings under the Company’s credit facility is based on the borrowing base thereunder, which is the pool of eligible otherwise unencumbered real estate assets as December 31, 2019.

13 Total debt of $1.6 billion less cash and cash equivalents of $81.9 million as of December 31, 2019. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.

14 Defined as the carrying value of total assets plus accumulated depreciation and amortization as of December 31, 2019.

15 Weighted based on the outstanding principal balance of the debt.

16 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 change in accrued interest and amortization of mortgage premiums on borrowings) for the quarter ended December 31, 2019.

Webcast and Conference Call

AFIN will host a webcast and call on February 27, 2020 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 AFIN website, www.americanfinancetrust.com, in the “Investor Relations” section.
 
Dial-in instructions for the conference call and the replay are outlined below.

To listen to the live call, please go to AFIN’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 AFIN website at www.americanfinancetrust.com.
 
Live Call
Dial-In (Toll Free): 1-888-317-6003
International Dial-In: 1-412-317-6061
Canada Dial-In (Toll Free): 1-866-605-3851
Participant Elite Entry Number: 9212654
 
Conference Replay*
Domestic Dial-In (Toll Free): 1-877-344-7529
International Dial-In: 1-412-317-0088
Canada Dial-In (Toll Free): 1-855-669-9658
Conference Number: 10138888 
*Available one hour after the end of the conference call through May 27, 2020.

About American Finance Trust, Inc.
 
American Finance Trust, Inc. (Nasdaq: AFIN) is a publicly traded real estate investment trust listed on the Nasdaq 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. Additional information about AFIN can be found on its website at www.americanfinancetrust.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 AFIN’s website at www.americanfinancetrust.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. Forward-looking statements may include, but are not limited to, statements regarding stockholder liquidity and investment value and returns. The words “anticipates,” “believes,” “expects,” “estimates,” “projects,” “plans,” “intends,” “may,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements, including those set forth in the Risk Factors section of AFIN’s Annual Report on Form 10-K for the year ended December 31, 2018 filed on March 7, 2019 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 AFIN’s subsequent reports. Further, forward-looking statements speak only as of the date they are made, and AFIN 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.

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






American Finance Trust, Inc.
Consolidated Balance Sheets
(In thousands. except share and per share data)
 
December 31,
 
2019
 
2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Real estate investments, at cost:
 
 
 
Land
$
685,889

 
$
629,190

Buildings, fixtures and improvements
2,681,485

 
2,441,659

Acquired intangible lease assets
448,175

 
413,948

Total real estate investments, at cost
3,815,549

 
3,484,797

Less: accumulated depreciation and amortization
(529,052
)
 
(454,614
)
Total real estate investments, net
3,286,497

 
3,030,183

Cash and cash equivalents
81,898

 
91,451

Restricted cash
17,942

 
18,180

Deposits for real estate acquisitions
85

 
3,037

Goodwill

 
1,605

Deferred costs, net
17,467

 
16,222

Straight-line rent receivable
46,976

 
37,911

Operating lease right-of-use assets
18,959

 

Prepaid expenses and other assets (including $503 and $0 due from related parties as of December 31, 2019 and 2018, respectively)
19,188

 
19,439

Assets held for sale
1,176

 
44,519

Total assets
$
3,490,188

 
$
3,262,547

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Mortgage notes payable, net
$
1,310,943

 
$
1,196,113

Credit facility
333,147

 
324,700

Market lease liabilities, net
84,041

 
89,938

Accounts payable and accrued expenses (including $1,153 and $2,634 due to related parties as of December 31, 2019 and 2018, respectively)
26,817

 
28,383

Operating lease liabilities
19,318

 

Derivative liabilities, at fair value

 
531

Deferred rent and other liabilities
10,392

 
13,067

Dividends payable
3,300

 
80

Total liabilities
1,787,958

 
1,652,812

 
 
 
 
7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 8,796,000 shares authorized, 6,917,230 issued and outstanding as of December 31, 2019 and no shares issued and outstanding as of December 31, 2018
69

 

Common stock, $0.01 par value per share, 300,000,000 shares authorized, 108,475,266 and 106,230,901 shares issued and outstanding as of December 31, 2019 and 2018, respectively
1,085

 
1,063

Additional paid-in capital
2,615,089

 
2,412,915

Accumulated other comprehensive (loss) income

 
(531
)
Distributions in excess of accumulated earnings
(932,912
)
 
(812,047
)
Total stockholders' equity
1,683,331

 
1,601,400

Non-controlling interests
18,899

 
8,335

Total equity
1,702,230

 
1,609,735

Total liabilities and equity
$
3,490,188

 
$
3,262,547







American Finance Trust, Inc.
Consolidated Statements of Operations (Unaudited)
(In thousands, except share and per share data)

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2019
 
2018
 
2019
 
2018
Revenue from tenants
$
76,231

 
$
75,092

 
$
299,744

 
$
291,207

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Asset management fees to related party
6,777

 
5,848

 
25,695

 
23,143

Property operating expense
14,344

 
14,059

 
52,715

 
54,068

Impairment of real estate investments

 
11,023

 
827

 
21,080

Acquisition, transaction and other costs [1]
3,022

 
1,616

 
6,257

 
7,557

Listing fees

 

 

 
4,988

Vesting and conversion of Class B Units

 

 

 
15,786

Equity-based compensation [2]
3,211

 
2,935

 
12,717

 
5,266

General and administrative
4,300

 
5,876

 
20,375

 
22,733

Depreciation and amortization
31,802

 
32,638

 
124,713

 
139,907

Goodwill impairment

 

 
1,605

 

Total operating expenses
63,456

 
73,995

 
244,904

 
294,528

Operating income (loss) before gain on sale of real estate investments
12,775

 
1,097

 
54,840

 
(3,321
)
Gain on sale of real estate investments
4,519

 
2,186

 
23,690

 
31,776

Operating income
17,294

 
3,283

 
78,530

 
28,455

Other income (expense):
 
 
 
 
 
 
 
Interest expense
(18,990
)
 
(17,623
)
 
(77,994
)
 
(66,789
)
Other income
367

 
794

 
3,627

 
863

Total other expense, net
(18,623
)
 
(16,829
)
 
(74,367
)
 
(65,926
)
Net (loss) income
(1,329
)
 
(13,546
)
 
4,163

 
(37,471
)
Net (income) loss attributable to non-controlling interests
(1
)
 
22

 
(16
)
 
62

Preferred stock dividends
(3,497
)
 

 
(7,248
)
 

Net loss attributable to common stockholders
$
(4,827
)
 
$
(13,524
)
 
$
(3,101
)
 
$
(37,409
)
 
 
 
 
 
 
 
 
Basic and Diluted Net Loss Per Share:
 
 
 
 
 
 
 
Weighted-average shares outstanding — Basic and Diluted
107,286,620

 
106,096,401

 
106,397,296

 
105,560,053

Net loss per share attributable to common stockholders — Basic and Diluted
$
(0.04
)
 
$
(0.13
)
 
$
(0.03
)
 
$
(0.35
)
______

[1] For the three months and year ended December 31, 2019, includes litigation costs related to AFIN’s 2017 merger with American Realty Capital - Retail Centers of America, Inc. (the “Merger”) of $0.7 million and $1.3 million, respectively. For the three months and year ended December 31, 2018, includes litigation costs related to the Merger of $0.4 million and $1.9 million, respectively, that were previously classified as general and administrative expenses.

[2] For the three months and year ended December 31, 2019, includes expense related to the Company’s restricted common shares of $0.3 million and $1.2 million, respectively. For the three months and year ended December 31, 2018, includes expense related to the Company’s restricted common shares of $0.3 million and $0.5 million, respectively, that was previously classified as general and administrative expenses.





American Finance Trust, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)

 
 
Three Months Ended
 
Year Ended December 31, 2019
 
 
March 31,
2019
 
June 30,
2019
 
September 30, 2019
 
December 31, 2019
 
Adjusted EBITDA
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(3,200
)
 
$
8,540

 
$
152

 
$
(1,329
)
 
$
4,163

Depreciation and amortization
 
32,086

 
30,924

 
29,901

 
31,802

 
124,713

Interest expense
 
18,440

 
21,995

 
18,569

 
18,990

 
77,994

Impairment of real estate assets
 
823

 
4

 

 

 
827

Acquisition, transaction and other costs [1]
 
854

 
1,892

 
489

 
3,022

 
6,257

 Equity-based compensation [2]
 
3,021

 
3,268

 
3,217

 
3,211

 
12,717

Gain on sale of real estate investments
 
(2,873
)
 
(14,365
)
 
(1,933
)
 
(4,519
)
 
(23,690
)
Other income
 
(2,545
)
 
(667
)
 
(48
)
 
(367
)
 
(3,627
)
Goodwill impairment
 

 
1,605

 

 

 
1,605

Adjusted EBITDA [3]
 
46,606

 
53,196

 
50,347

 
50,810

 
200,959

 Asset management fees to related party
 
6,038

 
6,335

 
6,545

 
6,777

 
25,695

General and administrative
 
6,061

 
6,441

 
3,573

 
4,300

 
20,375

NOI [3]
 
58,705

 
65,972

 
60,465

 
61,887

 
247,029

 Amortization of market lease and other intangibles, net
 
(1,839
)
 
(1,723
)
 
(2,503
)
 
(1,307
)
 
(7,372
)
Straight-line rent
 
(1,196
)
 
(1,566
)
 
(2,716
)
 
(2,847
)
 
(8,325
)
  Cash NOI [3]
 
$
55,670

 
$
62,683

 
$
55,246

 
$
57,733

 
$
231,332

 
 
 
 
 
 
 
 
 
 
 
Cash Paid for Interest:
 
 
 
 
 
 
 
 
 
 
   Interest expense
 
$
18,440

 
$
21,995

 
$
18,569

 
$
18,990

 
$
77,994

   Amortization of deferred financing costs, net and change in accrued interest
 
(1,329
)
 
(3,062
)
 
(725
)
 
(2,394
)
 
(7,510
)
   Amortization of mortgage premiums on borrowings
 
794

 
839

 
839

 
1,344

 
3,816

   Total cash paid for interest
 
$
17,905

 
$
19,772

 
$
18,683

 
$
17,940

 
$
74,300

——
[1] For the three months ended March 31, 2019, June 30, 2019, September 30, 2019 and December 31, 2019, includes litigation costs related to the Merger of $0.3 million, $0.2 million, $0.2 million and $0.7 million, respectively.

[2] Includes expense related to the amortization of the Company’s restricted common shares and LTIP Units.

[3] For the three months ended June 30, 2019 and year ended December 31, 2019 includes income from a lease termination fee of $7.6 million, which is recorded in Revenue from tenants in the consolidated statements of operations. While such termination payments occur infrequently, they represent cash income for accounting and tax purposes and as such management believes they should be included in both FFO and AFFO, consistent with what we believe to be general industry practice.











American Finance Trust, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)

 
 
Three Months Ended
 
Year Ended December 31, 2019
 
 
March 31,
2019
 
June 30,
2019
 
September 30,
2019
 
December 31, 2019
 
Net income (loss) attributable to common stockholders (in accordance with GAAP)
 
$
(3,227
)
 
$
7,884

 
$
(2,931
)
 
$
(4,827
)
 
$
(3,101
)
Impairment of real estate investments
 
823

 
4

 

 

 
827

Depreciation and amortization
 
32,086

 
30,924

 
29,901

 
31,802

 
124,713

Gain on sale of real estate investments
 
(2,873
)
 
(14,365
)
 
(1,933
)
 
(4,519
)
 
(23,690
)
Proportionate share of adjustments for non-controlling interests to arrive at FFO
 
(49
)
 
(27
)
 
(45
)
 
(44
)
 
(165
)
FFO attributable to common stockholders [1]
 
26,760

 
24,420

 
24,992

 
22,412

 
98,584

Acquisition, transaction and other costs [2]
 
854

 
1,892

 
489

 
3,022

 
6,257

Litigation cost reimbursements related to the Merger [3]
 
(1,833
)
 
(115
)
 

 
(316
)
 
(2,264
)
Amortization of market lease and other intangibles, net
 
(1,839
)
 
(1,723
)
 
(2,503
)
 
(1,307
)
 
(7,372
)
Straight-line rent
 
(1,196
)
 
(1,566
)
 
(2,716
)
 
(2,847
)
 
(8,325
)
Amortization of mortgage premiums on borrowings
 
(794
)
 
(839
)
 
(839
)
 
(1,344
)
 
(3,816
)
Equity-based compensation [4]
 
3,021

 
3,268

 
3,217

 
3,211

 
12,717

Amortization of deferred financing costs, net and change in accrued interest
 
1,329

 
3,062

 
725

 
2,394

 
7,510

Goodwill impairment [5]
 

 
1,605

 

 

 
1,605

Proportionate share of adjustments for non-controlling interests to arrive at AFFO
 
1

 
(7
)
 
3

 
(5
)
 
(8
)
AFFO attributable to common stockholders [1]
 
$
26,303

 
$
29,997

 
$
23,368

 
$
25,220

 
$
104,888

______

[1] FFO and AFFO for the three months ended June 30, 2019 and year ended December 31, 2019 includes income from a lease termination fee of $7.6 million, which is recorded in Revenue from tenants in the consolidated statements of operations. While such termination payments occur infrequently, they represent cash income for accounting and tax purposes and as such management believes they should be included in both FFO and AFFO, consistent with what we believe to be general industry practice.

[2] Primarily includes prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the Merger.

[3] Included in "Other income" in the Company's consolidated statement of operations.

[4] Includes expense related to the amortization of the Company’s restricted common shares and LTIP Units.

[5]  
This is a non-cash item and is added back as it is not considered indicative of operating performance.






American Finance Trust, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)

 
 
Three Months Ended December 31, 2018
 
Year Ended December 31, 2018
Net loss attributable to stockholders (in accordance with GAAP)
 
$
(13,524
)
 
$
(37,409
)
Impairment of real estate investments
 
11,023

 
21,080

Depreciation and amortization
 
32,638

 
139,907

Gain on sale of real estate investments
 
(2,186
)
 
(31,776
)
Proportionate share of adjustments for non-controlling interests to arrive at FFO
 
(67
)
 
(228
)
FFO attributable to stockholders
 
27,884

 
91,574

Acquisition, transaction and other costs
 
1,616

 
7,557

Listing fees
 

 
4,988

Vesting and conversion of Class B Units
 

 
15,786

Amortization of market lease and other intangibles, net
 
(6,054
)
 
(15,498
)
Straight-line rent
 
(2,119
)
 
(9,501
)
Amortization of mortgage premiums on borrowings
 
(1,097
)
 
(3,790
)
Mark-to-market adjustments
 

 
(72
)
Equity-based compensation
 
2,935

 
5,266

Amortization of deferred financing costs, net and change in accrued interest
 
1,461

 
6,740

Proportionate share of adjustments for non-controlling interest to
arrive at AFFO
 
6

 
(19
)
AFFO attributable to stockholders
 
$
24,632

 
$
103,031

































American Finance Trust, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands)


 
 
Three Months Ended December 31, 2018
 
Year Ended December 31, 2018
Adjusted EBITDA
 
 
 
 
Net (loss) income
 
$
(13,546
)
 
$
(37,471
)
Depreciation and amortization
 
32,638

 
139,907

Interest expense
 
17,623

 
66,789

Impairment of real estate assets
 
11,023

 
21,080

Acquisition, transaction and other costs
 
1,616

 
7,557

Listing fees
 

 
4,988

Vesting and conversion of Class B Units
 

 
15,786

 Equity-based compensation
 
2,935

 
5,266

Gain on sale of real estate investments
 
(2,186
)
 
(31,776
)
Other income
 
(794
)
 
(863
)
Adjusted EBITDA
 
49,309

 
191,263

 Asset management fees to related party
 
5,848

 
23,143

General and administrative
 
5,876

 
22,733

NOI
 
61,033

 
237,139

Amortization of market lease and other intangibles, net
 
(6,054
)
 
(15,498
)
Straight-line rent
 
(2,119
)
 
(9,501
)
  Cash NOI
 
$
52,860

 
$
212,140









Non-GAAP Financial Measures
This release discusses the 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 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 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, 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. 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.
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 fees related to the Listing, 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. 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, vesting and conversion of the Class B Units and share-based compensation related to restricted shares and the 2018 OPP 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 will also have negative effects on returns to investors 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 to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of 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) as 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.
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, fees related to the Listing, other non-cash items such as the vesting and conversion of the Class B Units, 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 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.



Exhibit
EXHIBIT 99.2






American Finance Trust, Inc.
Supplemental Information

Quarter ended December 31, 2019 (unaudited)


1

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

Table of Contents
 
 
 
 
 
Item
 
Page
Non-GAAP Definitions
 
3
Key Metrics
 
6
Consolidated Balance Sheets
 
8
Consolidated Statements of Operations
 
9
Non-GAAP Measures
 
10
Debt Overview
 
12
Future Minimum Lease Rents
 
13
Top Ten Tenants
 
14
Diversification by Property Type
 
15
Diversification by Geography
 
16
Lease Expirations
 
17
 
 
 
Please note that totals may not add due to rounding.
 
 
Forward-looking Statements:
 
This supplemental package includes “forward looking statements”. Forward-looking statements may be identified by the use of words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates,” “contemplates,” “aims,” “continues,” “would” or “anticipates” or the negative of these words and phrases or similar words or phrases. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: the factors included in (i) the Annual Report on Form 10-K for the year ended December 31, 2018 of American Finance Trust, Inc. (the “Company”) filed on March 7, 2019, including those set forth under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” and (ii) in future periodic reports filed by the Company under the Securities Exchange Act of 1934, as amended. While forward-looking statements reflect the Company’s good faith beliefs, they are not guarantees of future performance. The Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. For a further discussion of these and other factors that could impact the Company’s future results, performance or transactions, see the section entitled “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2018 filed on March 7, 2019, and other risks described in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Prospective investors should not place undue reliance on any forward-looking statements, which are based only on information currently available to the Company (or to third parties making the forward-looking statements).

2

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (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, 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.

3

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (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 fees related to the Listing, 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 AFIN'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 leases intangibles, amortization of deferred financing costs, straight-line rent, vesting and conversion of Class B Units and share-based compensation related to restricted shares and the multi-year outperformance agreement 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 will also have negative effects on returns to investors 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 to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of 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) as 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.
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, fees related to the Listing, other non-cash items such as the vesting and conversion of the Class B Units, 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.

4

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

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.


5

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

Key Metrics
As of and for the three months ended December 31, 2019
Financial Results (Amounts in thousands, except per share data, ratios and percentages)
 
 
Revenue from tenants
 
76,231

Net loss attributable to common stockholders
 
$
(4,827
)
Basic and diluted net loss per share attributable to common stockholders
 
$
(0.04
)
Cash NOI [1]
 
$
57,733

Adjusted EBITDA [1]
 
$
50,810

AFFO attributable to stockholders [1]
 
$
25,220

Dividends declared [2]
 
$
29,468

 
 
 
Balance Sheet and Capitalization (Amounts in thousands, except per share data, ratios and percentages)
 
 
Gross asset value [3]
 
$
4,019,240

Net debt [4] [5]
 
$
1,574,703

Total consolidated debt [5]
 
$
1,656,601

Total assets
 
$
3,490,188

Liquidity [6]
 
$
232,803

 
 
 
Common shares outstanding as of December 31, 2019
 
108,475

 
 
 
Net debt to gross asset value
 
39.2
%
Net debt to adjusted EBITDA [1] (annualized based on quarterly results)
 
7.7
x
 
 
 
Weighted-average interest rate cost [7]
 
4.3
%
Weighted-average debt maturity (years) [8]
 
3.8

Interest Coverage Ratio [9]
 
2.8
x
Real Estate Portfolio
 
Single-Tenant Portfolio
 
Multi-Tenant Portfolio
 
Total Portfolio
Portfolio Metrics:
 
 
 
 
 
 
Real estate investments, at cost (in billions)
 
$
2.3

 
$
1.5

 
$
3.8

Number of properties
 
786

 
33

 
819

Square footage (in millions)
 
11.3

 
7.2

 
18.5

Annualized straight-line rent (in millions) [10]
 
$
178.7

 
$
88.5

 
$
267.2

Straight-line rent per leased square foot
 
$
15.8

 
$
14.2

 
$
15.2

Occupancy [11]
 
99.3
%
 
87.1
%
 
94.6
%
Weighted-average remaining lease term (years) [12]
 
10.8

 
4.9

 
8.8

% investment grade [13]
 
81.6
%
 
%
 
N/A

% of anchor tenants in multi-tenant portfolio that are investment grade [13] [14]
 
N/A

 
37.3
%
 
N/A

% of leases with rent escalators [15]
 
86.6
%
 
67.7
%
 
80.3
%
Average annual rent escalator [15]
 
1.3
%
 
1.3
%
 
1.3
%
__________ 
[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 December 31, 2019.
[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 the amount available for future borrowings under the Company’s credit facility of $150.9 million and cash and cash equivalents. In accordance with the Company's credit facility, the Company is permitted to pay distributions in an aggregate amount not exceeding 105% of Modified FFO for any applicable period if, as of the last day of the period, the Company is able to satisfy a maximum leverage ratio after giving effect to the payments and also has a combination of cash, cash equivalents and amounts available for future borrowings under the credit facility of not less than $60.0 million. The Company relied on this exception for the two consecutive fiscal quarters ended September 30, 2019 and the three consecutive fiscal
quarters ended December 31, 2019. The Company also expects it will rely on this exception in future periods.
[7] 
Weighted based on the outstanding principal balance of the debt as of December 31, 2019.
[8] 
Weighted based on the outstanding principal balance of the debt as of December 31, 2019 and does not reflect any changes to maturity dates subsequent to December 31, 2019. The maturity date of the Company's credit facility is April 2022. The Company has the right to extend the maturity date to April 2023.

6

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

[9] 
The interest coverage ratio is calculated by dividing adjusted EBITDA by cash paid for interest (interest expense less amortization of deferred financing costs, net, change in accrued interest and amortization of mortgage premiums on borrowings) for the quarter ended December 31, 2019. 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 December 31, 2019.
[11] 
Only includes leases which have commenced and were taken possession by the tenant as of December 31, 2019.
[12] 
The weighted-average remaining lease term (years) is based on 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 (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. Ratings information is as of December 31, 2019. The weighted averages are based on straight-line rent. Single-tenant portfolio tenants are 46.0% actual investment grade rated and 35.6% 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 23.4% actual
investment grade rated and 13.9% implied investment grade rated.
[15] 
Based on annualized straight-line rent as of December 31, 2019. Contractual rent increases include fixed percent or actual increases, or CPI-indexed increases.


7

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

Consolidated Balance Sheets
Amounts in thousands, except share and per share data
 
December 31,
 
2019
 
2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Real estate investments, at cost:
 
 
 
Land
$
685,889

 
$
629,190

Buildings, fixtures and improvements
2,681,485

 
2,441,659

Acquired intangible lease assets
448,175

 
413,948

Total real estate investments, at cost
3,815,549

 
3,484,797

Less: accumulated depreciation and amortization
(529,052
)
 
(454,614
)
Total real estate investments, net
3,286,497

 
3,030,183

Cash and cash equivalents
81,898

 
91,451

Restricted cash
17,942

 
18,180

Deposits for real estate acquisitions
85

 
3,037

Derivative assets, at fair vale

 

Goodwill

 
1,605

Deferred costs, net
17,467

 
16,222

Straight-line rent receivable
46,976

 
37,911

Operating lease right-of-use assets
18,959

 

Prepaid expenses and other assets (including $503 and $0 due from related parties as of December 31, 2019 and 2018, respectively)
19,188

 
19,439

Assets held for sale
1,176

 
44,519

Total assets
$
3,490,188

 
$
3,262,547

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Mortgage notes payable, net
$
1,310,943

 
$
1,196,113

Credit facility
333,147

 
324,700

Market lease liabilities, net
84,041

 
89,938

Accounts payable and accrued expenses (including $1,153 and $2,634 due to related parties as of December 31, 2019 and 2018, respectively)
26,817

 
28,383

Operating lease liabilities
19,318

 

Derivative liabilities, at fair value

 
531

Deferred rent and other liabilities
10,392

 
13,067

Dividends payable
3,300

 
80

Total liabilities
1,787,958

 
1,652,812

 
 
 
 
7.50% Series A cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 8,796,000 shares authorized, 6,917,230 issued and outstanding as of December 31, 2019 and no shares issued and outstanding as of December 31, 2018
69

 

Common stock, $0.01 par value per share, 300,000,000 shares authorized, 108,475,266 and 106,230,901 shares issued and outstanding as of December 31, 2019 and 2018, respectively
1,085

 
1,063

Additional paid-in capital
2,615,089

 
2,412,915

Accumulated other comprehensive (loss) income

 
(531
)
Distributions in excess of accumulated earnings
(932,912
)
 
(812,047
)
Total stockholders' equity
1,683,331

 
1,601,400

Non-controlling interests
18,899

 
8,335

Total equity
1,702,230

 
1,609,735

Total liabilities and equity
$
3,490,188

 
$
3,262,547



8

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

`Consolidated Statements of Operations
Amounts in thousands, except share and per share data
 
 
Three Months Ended
 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31, 2019
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
 
 
 
 
 
 
 
Revenue from tenants
 
$
76,231

 
$
72,863

 
$
79,109

 
$
71,541

 
 
 
 
 
 
 
 
 
 Operating expenses:
 
 
 
 
 
 
 
 
Asset management fees to related party
 
6,777

 
6,545

 
6,335

 
6,038

Property operating expense
 
14,344

 
12,398

 
13,137

 
12,836

Impairment of real estate investments
 

 

 
4

 
823

Acquisition, transaction and other costs
 
3,022

 
489

 
1,892

 
854

Listing fees
 

 

 

 

Vesting and conversion of Class B Units
 

 

 

 

Equity-based compensation
 
3,211

 
3,217

 
3,268

 
3,021

General and administrative
 
4,300

 
3,573

 
6,441

 
6,061

Depreciation and amortization
 
31,802

 
29,901

 
30,924

 
32,086

Goodwill impairment
 

 

 
1,605

 

Total operating expenses
 
63,456

 
56,123

 
63,606

 
61,719

Operating income (loss) before gain on sale of real estate investments
 
12,775

 
16,740

 
15,503

 
9,822

Gain on sale of real estate investments
 
4,519

 
1,933

 
14,365

 
2,873

Operating income (loss)
 
17,294

 
18,673

 
29,868

 
12,695

Other (expense) income:
 
 
 
 
 
 
 
 
Interest expense
 
(18,990
)
 
(18,569
)
 
(21,995
)
 
(18,440
)
Other income
 
367

 
48

 
667

 
2,545

Total other expense, net
 
(18,623
)
 
(18,521
)
 
(21,328
)
 
(15,895
)
Net (loss) income
 
(1,329
)
 
152

 
8,540

 
(3,200
)
Net loss (income) attributable to non-controlling interests
 
(1
)
 
(4
)
 
(14
)
 
3

Preferred stock dividends
 
(3,497
)
 
(3,079
)
 
(642
)
 
(30
)
Net (loss) income attributable to common stockholders
 
$
(4,827
)
 
$
(2,931
)
 
$
7,884

 
$
(3,227
)
 
 
 
 
 
 
 
 
 
Basic and Diluted Net (Loss) Income Per Share:
 
 
 
 
 
 
 
 
Net (loss) income per share attributable to common stockholders — Basic and Diluted
 
$
(0.04
)
 
$
(0.03
)
 
$
0.07

 
$
(0.03
)
Weighted-average shares outstanding  Basic
 
107,286,620

 
106,139,668

 
106,075,741

 
106,076,588

Weighted-average shares outstanding  Diluted
 
107,286,620

 
106,139,668

 
106,394,277

 
106,076,588

__________ 
[1] 
For the three months ended December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, includes litigation costs related to the Merger of $0.7 million, $0.2 million, $0.2 million and $0.3 million, respectively.
[2] 
For the three months ended December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, includes equity-based compensation expense related to the Company's restricted common shares of $0.2 million, $0.3 million, $0.3 million and$0.3 million, respectively.


9

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

Non-GAAP Measures
Amounts in thousands
 
 
Three Months Ended
 
 
December 31,
2019
 
September 30,
2019
 
June 30,
2019
 
March 31, 2019
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
EBITDA:
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(1,329
)
 
$
152

 
$
8,540

 
$
(3,200
)
Depreciation and amortization
 
31,802

 
29,901

 
30,924

 
32,086

Interest expense
 
18,990

 
18,569

 
21,995

 
18,440

EBITDA [1]
 
49,463

 
48,622

 
61,459

 
47,326

Impairment of real estate investments
 

 

 
4

 
823

Acquisition, transaction and other costs [2]
 
3,022

 
489

 
1,892

 
854

Equity-based compensation [3]
 
3,211

 
3,217

 
3,268

 
3,021

Gain on sale of real estate investments
 
(4,519
)
 
(1,933
)
 
(14,365
)
 
(2,873
)
Other income
 
(367
)
 
(48
)
 
(667
)
 
(2,545
)
Goodwill impairment
 

 

 
1,605

 

Adjusted EBITDA [1]
 
50,810

 
50,347

 
53,196

 
46,606

Asset management fees to related party
 
6,777

 
6,545

 
6,335

 
6,038

General and administrative
 
4,300

 
3,573

 
6,441

 
6,061

   NOI [1]
 
61,887

 
60,465

 
65,972

 
58,705

   Amortization of market lease and other intangibles, net
 
(1,307
)
 
(2,503
)
 
(1,723
)
 
(1,839
)
Straight-line rent
 
(2,847
)
 
(2,716
)
 
(1,566
)
 
(1,196
)
Cash NOI [1]
 
$
57,733

 
$
55,246

 
$
62,683

 
$
55,670

 
 
 
 
 
 
 
 
 
Cash Paid for Interest:
 
 
 
 
 
 
 
 
   Interest expense
 
$
18,990

 
$
18,569

 
$
21,995

 
$
18,440

   Amortization of deferred financing costs, net and change in accrued interest
 
(2,394
)
 
(725
)
 
(3,062
)
 
(1,329
)
   Amortization of mortgage premiums and discounts on borrowings
 
1,344

 
839

 
839

 
794

Total cash paid for interest
 
$
17,940

 
$
18,683

 
$
19,772

 
$
17,905

__________ 
[1] 
For the three months ended June 30, 2019 includes income from a lease termination fee of $7.6 million, which is recorded in Revenue from tenants in the consolidated statements of operations.
[2] 
For the three months ended December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, includes litigation costs related to the Merger of $0.7 million, $0.2 million, $0.2 million and $0.3 million, respectively.
[3] 
For the three months ended December 31, 2019, September 30, 2019, June 30, 2019 and March 31, 2019, includes equity-based compensation expense related to the Company's restricted common shares of $0.2 million, $0.3 million, $0.3 million and$0.3 million, respectively.



10

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

Non-GAAP Measures
Amounts in thousands, except per share data
 
 
Three Months Ended
 
 
December 31,
2019
 
September 30,
2019
 
June 30, 2019
 
March 31, 2019
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
Funds from operations (FFO):
 
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders (in accordance with GAAP)
 
$
(4,827
)
 
$
(2,931
)
 
$
7,884

 
$
(3,227
)
Impairment of real estate investments
 

 

 
4

 
823

Depreciation and amortization
 
31,802

 
29,901

 
30,924

 
32,086

Gain on sale of real estate investments
 
(4,519
)
 
(1,933
)
 
(14,365
)
 
(2,873
)
Proportionate share of adjustments for non-controlling interest to arrive at FFO
 
(44
)
 
(45
)
 
(27
)
 
(49
)
FFO attributable to common stockholders [1]
 
22,412

 
24,992

 
24,420

 
26,760

Acquisition, transaction and other costs [2]
 
3,022

 
489

 
1,892

 
854

Litigation cost reimbursements related to the Merger [3]
 
(316
)
 

 
(115
)
 
(1,833
)
Amortization of market lease and other intangibles, net
 
(1,307
)
 
(2,503
)
 
(1,723
)
 
(1,839
)
Straight-line rent
 
(2,847
)
 
(2,716
)
 
(1,566
)
 
(1,196
)
Amortization of mortgage premiums and discounts on borrowings
 
(1,344
)
 
(839
)
 
(839
)
 
(794
)
Equity-based compensation [4]
 
3,211

 
3,217

 
3,268

 
3,021

Amortization of deferred financing costs, net and change in accrued interest
 
2,394

 
725

 
3,062

 
1,329

Goodwill impairment [5]
 

 

 
1,605

 

Proportionate share of adjustments for non-controlling interest to arrive at AFFO
 
(5
)
 
3

 
(7
)
 
1

AFFO attributable to common stockholders [1]
 
$
25,220

 
$
23,368

 
$
29,997

 
$
26,303

 
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (in thousands)
 
107,287

 
106,140

 
106,394

 
106,077

Net income (loss) per share attributable to common stockholders — Basic and Diluted
 
$
(0.04
)
 
$
(0.03
)
 
$
0.07

 
$
(0.03
)
FFO per common share
 
$
0.21

 
$
0.24

 
$
0.23

 
$
0.25

AFFO per common share
 
$
0.24

 
$
0.22

 
$
0.28

 
$
0.25

Dividends declared [6]
 
$
29,468

 
$
29,212

 
$
29,213

 
$
29,207

__________ 
[1] 
FFO and AFFO for the three months ended June 30, 2019 includes income from a lease termination fee of $7.6 million, which is recorded in Revenue from tenants in the consolidated statements of operations. While such termination payments occur infrequently, they represent cash income for accounting and tax purposes and as such management believes they should be included in both FFO and AFFO, consistent with what the Company believes to be general industry practice.
[2] 
Primarily includes prepayment costs incurred in connection with early debt extinguishment as well as litigation costs related to the Merger.
[3] 
Included in "Other income" in the Company's consolidated statement of operations.
[4] 
Includes expense related to the amortization of the Company's restricted common shares and LTIP Units.
[5] 
This is a non-cash item and is added back as it is not considered indicative of operating performance.
[6] 
Represents dividends declared to common stockholders.



11

American Finance Trust, Inc.
Supplemental Information
Quarter Ended December 31, 2019 (Unaudited)

Debt Overview
As of December 31, 2019
Amounts in thousands, except ratios and percentages
<
Year of Maturity
 
Number of Encumbered Properties
 
Weighted-Average Debt Maturity (Years) [3]
 
Weighted-Average Interest Rate [3][4]
 
Total Outstanding Balance [5]
 
Percent
Non-Recourse Debt
 
 
 
 
 
 
 
 
 
 
2020
 
245

 
0.8

 
4.5
%
 
$
538,411

 
 
2021
 
108

 
1.4

 
5.3
%
 
206,882

 
 
2022