Unassociated Document
As filed with the Securities and Exchange Commission on August 28, 2009
 
Registration No. 333-145949
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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PRE-EFFECTIVE AMENDMENT NO.  1 TO
POST-EFFECTIVE AMENDMENT NO. 5 TO
FORM S-11
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

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AMERICAN REALTY CAPITAL TRUST, INC.
(Exact Name of Registrant as Specified in Its Governing Instruments)  
106 York Road
Jenkintown, Pennsylvania 19046
(Address, Including Zip Code and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)  
Nicholas S. Schorsch
AMERICAN REALTY CAPITAL TRUST, INC.
106 York Road
Jenkintown, Pennsylvania 19046
(215) 887-2189
(Name and Address, Including Zip Code and Telephone Number, Including Area Code, of Agent for Service)  

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With a Copy to:  
Peter M. Fass, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
(212) 969-3000

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This Post-Effective Amendment No. 5 consists of the following:
 
 
·
Supplement No. 12, dated August 27, 2009, included herewith, which will be delivered as an unattached document along with the Prospectus.
 
 
·
Registrant’s final form of Prospectus dated March 18, 2008, previously filed pursuant to Rule 424(b)(2) on March 18, 2008 and refiled herewith.
 
 
·
Part II, included herewith.
 
 
·
Signatures, included herewith.
 
 

 
 
AMERICAN REALTY CAPITAL TRUST, INC.
SUPPLEMENT NO.  12 DATED August 27, 2009
TO THE PROSPECTUS DATED March 18, 2008

This prospectus supplement (this “Supplement No. 12”) is part of the prospectus of American Realty Capital Trust, Inc. (the “REIT”), dated March 18, 2008 (the “Prospectus”), and should be read in conjunction with the Prospectus. This Supplement No. 12 supplements, modifies or supersedes certain information contained in our Prospectus. This Supplement No. 12 consolidates, supersedes and replaces all prior Supplements and must be read in conjunction with our Prospectus. Unless otherwise indicated, the information contained herein is current as of the filing date of the prospectus supplement in which the Company initially disclosed such information. This Supplement No. 12 will be delivered with the Prospectus.

The purpose of this Supplement No. 12 is to consolidate the information contained in all previous supplements to the Prospectus and to update the financial information of the REIT.

TABLE OF CONTENTS
 
 
Supplement No. 12
Page No.
 
Prospectus
Page No.
Status of the Offering
1
 
N/A
Escrow Break
1
 
N/A
Shares Currently Outstanding
2
 
N/A
Selected Financial Data
2
 
N/A
Suitability Standards
2-3
 
i
Real Estate Investment Summary
3-4
 
84-89
Status of Distributions
4-5
 
9, 130-131
Status of Fees Paid and Deferred
5
 
6-9, 35-36
Real Estate Investments
5-21
 
84-89
Volume Discounts
21-23
 
145-147
Borrowing Policies
23-24
 
74-75
Annual or More Frequent Valuation Requirement
24
 
121
Share Repurchase Program
24-26
 
10,133-134
Other Revisions
26-29
 
Cover Page, ix, 40, 46, 50-51, 54
Financial Statements
30-83
 
152-163
 
Status of the Offering
 
We commenced our initial public offering of 150,000,000 shares of common stock on January 25, 2008. As of August 13, 2009, we had issued 6,437,921 shares of common stock, including 339,077 shares issued in connection with an acquisition in March 2008. Total gross proceeds from these issuances were $64,393,404. As of August 13, 2009, the aggregate value of all share issuances and subscriptions outstanding was $64,554,757 based on a per share value of $10.00 (or $9.50 per share for shares issued under the DRIP).  We will offer these shares until January 25, 2011, unless the offering is extended, provided that the offering will be terminated if all of the shares are sold before then.

Escrow Break

On July 1, 2009 the Company broke escrow on approximately $1.9 million of subscriptions from investors from Massachusetts and Pennsylvania, which were maintained at the Company’s third-party escrow agent, Boston Private Bank & Trust Company, until the Company had sold at least $45 million of shares of common stock.

1

 
Shares Currently Outstanding
 
As of August 13, 2009, there were approximately 119 million shares of our common stock outstanding, excluding shares available under the distribution reinvestment plan.
 
Selected Financial Data

The selected financial data presented below has been derived from our consolidated financial statements as of June 30, 2009 and December 31, 2008:


Balance Sheet Data:
 
Six Months Ended
June 30, 2009
   
Year Ended
December 31, 2008
 
Total investment in real estate assets, net
  $ 158,456,994     $ 161,714,182  
Cash
    3,429,763       886,868  
Restricted cash
    44,729       47,937  
Prepaid expenses and other assets
    5,150,018       2,293,464  
Total assets
    167,081,504       164,942,451  
Mortgage notes payable
    112,249,667       112,741,810  
Short-term bridge funds
    3,053,172       30,925,959  
Long-term notes payable
    13,000,000       1,089,500  
Investor contributions held in escrow
    30,824       30,824  
Total liabilities
    141,959,110       163,183,128  
Total stockholders’ equity
    25,122,394       1,759,323  
Total liabilities and stockholders’ equity
    167,081,504       164,942,451  
Operating Data:
               
Rental income
    5,862,009       5,546,363  
Property management fees to affiliate
    --       4,230  
Operating income
    2,204,580       2,105,615  
Interest expense
    (4,770,129 )     (4,773,593
Net loss
    (2,011,604 )     (4,282,784 )
Cash Flow Data
               
Net cash (used in) provided by operating activities
    (4,344,227 )     4,012,739  
Net cash used in investing activities
    (162,619 )     (97,456,132 )
Net cash provided by financing activities
    7,049,741       94,330,261  
 
Suitability Standards

The following description of suitability standards replaces the suitability standards described for Michigan, Massachusetts, Ohio, Iowa, Oregon and Pennsylvania on page (i) of the Prospectus.
 
Massachusetts, Ohio, Iowa, Pennsylvania and Oregon – Investors must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. The maximum investment in the issuer and its affiliates cannot exceed 10% of the Massachusetts, Ohio, Iowa, Pennsylvania or Oregon resident’s net worth.
 
Michigan - Investors must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. The maximum investment in the issuer cannot exceed 10% of the Michigan resident’s net worth.
 
Similarly, the description of suitability standards for the above states in the Item 5 of the Subscription Agreement is replaced with the following:
 
2

For residents of Massachusetts, Ohio, Iowa, Pennsylvania and Oregon – Investors must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. The investor’s maximum investment in the issuer and its affiliates cannot exceed 10% of the Massachusetts, Ohio, Pennsylvania or Oregon resident’s net worth.
 
For residents of Michigan – Investors must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. The investor’s maximum investment in the issuer cannot exceed 10% of the Michigan resident’s net worth.

Real Estate Investments Summary
 
The following summary of real estate investments as of the date of this Supplement No. 12 information is to supplement the section of our Prospectus captioned “Real Property Investments” on pages 84-89 of the Prospectus.

The REIT acquired a FedEx Cross-Dock facility in Snowshoe, Pennsylvania (the “FedEx Property”) as its initial investment on March 5, 2008; 15 Harleysville National Bank and Trust Company (“Harleysville National Bank”) bank branch properties in various Pennsylvania locations (the “Harleysville Properties”) on March 12, 2008; 18 Rockland Trust Company (the “Rockland Properties”) bank branch properties in various Massachusetts locations on May 2, 2008: 2 National City Bank branches in Florida (the “National City Properties”) from affiliated parties on September 16, 2008 and October 23, 2008; 6 Rite Aid properties in various locations in Pennsylvania and Ohio (the “Rite Aid Properties”) from affiliated parties on September 29, 2008; 50 PNC Bank, National Association bank branches in various locations in Pennsylvania, New Jersey and Ohio (the “PNC Properties”) on November 25, 2008; a Fed Ex Freight Facility (the “Fed Ex Freight Facility”) located in Houston, TX on July 8, 2009; and a Walgreens location (the “Walgreens Property”) located in Sealy, TX. The amount of the Year 1 yield based upon the contract purchase price of the acquired and to-be acquired properties as compared to the Year 1 total rent is approximately 7.99%, which excludes contractual rent increases occurring in future years.
         
Outstanding
                           
Base Rent
 
   
Purchase
   
Mortgage
   
Interest
   
Portfolio-Level
   
Rent
   
Increase
 
   
Price (1)
   
Debt
   
Rate (2)
   
Leverage
   
Year 1
   
Year 2
   
(Year 2) (3)
 
                                           
Federal Express Distribution Center (PA)
    10,207,674       6,965,000      
6.29%
            702,828       702,828        
Harleysville National Bank Portfolio
    41,675,721       31,000,000      
6.59%
            3,003,838       3,063,912        
Rockland Trust Company Portfolio
    33,117,419       23,880,175      
4.92%
            2,305,816       2,340,403        
PNC Bank (formerly National City Bank)
    6,853,419       4,447,953      
4.89%
            466,465       466,465        
Rite Aid Portfolio
    18,839,392       12,808,265      
6.97%
            1,404,226       1,404,226        
PNC Bank Portfolio
    44,813,074       33,148,274      
5.25%
            2,960,000       2,960,000        
Fed Ex Freight Facility (TX) (5)
    31,610,450       -                     2,580,315       2,580,315        
Walgreens Location
    3,817,733       1,550,000      
6.55%
            310,000       310,000        
                                                     
Total Portfolio
    190,934,882       113,799,667              
59.6%
      13,733,488       13,828,149      
0.69%
 
                                                         
                                                         
                                                         
                                                         
Investment Grade Tenants (based on Rent - S&P BBB- or better)
90.0%
                                 
                                                         
Average Remaining Lease Term (years) (4)
     
12.8%
                                 
 
(1) - Purchase Price includes capitalized closing costs and acquisition fees paid to American Realty Capital Advisors, LLC, as applicable.
(2) - Interest rate includes the effect of in-place hedges.
(3) - Increase does not take into account lease escalations that commence in future years (sixth or eleventh year of primary lease term).
(4) - Primary lease term only, excluding renewal option periods.
(5) - Company entered into a one-year bridge equity facility for approximately $15.9 million. The facility bears interest at an annual rate equal to 5.75%.
 
3

The following is a summary of lease expirations for the next ten years:
 
Year
 
Expiring
Revenues
   
Leases
Expiring (1)
   
Square
Feet
   
% of
Gross Rev
 
2009
   
$             –
     
  –
     
          –
     
         –
 
2010
   
              –
     
  –
     
          –
     
         –
 
2011
   
              –
     
  –
     
          –
     
         –
 
2012
   
              –
     
  –
     
          –
     
         –
 
2013
   
              –
     
  –
     
          –
     
         –
 
2014
   
              –
     
  –
     
          –
     
         –
 
2015
   
              –
     
  –
     
          –
     
         –
 
2016
   
     242,000
     
  2
     
  21,476
     
  1.67%
 
2017
   
     179,000
     
  1
     
  12,613
     
  1.24%
 
2018
   
$4,910,000
     
59
     
384,201
     
33.85%
 
 
(1)
The 62 leases listed above are with the following tenants:  Fed Ex, Rockland Trust Company, PNC Bank and Rite Aid.
 
Status of Distributions
 
The following information supplements the “Distribution Policy and Distributions” section on pages 9 and 130-131 of the Prospectus.
 
On February 25, 2008, our Board of Directors declared a distribution for each monthly period commencing 30 days subsequent to acquiring our initial portfolio of real estate investments.  We acquired our initial real estate investment on March 5, 2008.  Accordingly, our daily dividend commenced accruing on April 5, 2008.  The REIT’s initial distribution payment was paid to shareholders on May 21, 2008 representing dividends accrued from April 5, 2008 through April 30, 2008.  Subsequently, we modified the payment date to the 2nd day following each month end to stockholders of record at the close of business each day during the applicable period. The distribution is calculated based on stockholders of record each day during the applicable period at a rate of $0.00178082191 per day, and equals a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on the share price of $10.00. For the period from January 1, 2008 through August 27, 2009 distributions paid totaled $1,583,382, inclusive of $587,547 of common shares issued under the dividend reinvestment plan. Based on the terms of leases with FedEx, Harleysville National Bank, Rockland Trust Company, Rite Aid, National City Bank, PNC Bank and Walgreens, management anticipates income from such property leases is sufficient so that distributions on proceeds received through August 27, 2009 from the sale of shares of our common stock will be paid from cash flow from our operating activities. As of August 27, 2009, cash used to pay our distributions was entirely generated from funds received from operating activities and fee waivers from our Advisor.  Our distributions have not been paid from any other sources.  We have continued to pay distributions to our shareholders each month since our initial dividend payment.
 
On November 5, 2008, the Board of Directors of American Realty Capital Trust, Inc. (the “Company”) approved an increase in its annual cash distribution from $.65 to $.67, paid monthly. Based on a $10.00 share price, this 20 basis point increase, effective January 2, 2009, will result in an annualized distribution rate of 6.7%.
 
The following is a chart of monthly distributions declared and paid since the commencement of the offering:


   
Total
   
Cash
   
DRIP
 
                   
April, 2008
  $     $     $  
May, 2008
    30,260       22,007       8,253  
June, 2008
    49,637       35,283       14,354  
July, 2008
    55,043       34,788       20,255  
August, 2008
    57,583       36,519       21,064  
September, 2008
    61,396       39,361       22,035  
October, 2008
    61,425       41,078       20,347  
November, 2008
    65,496       43,646       21,850  
December, 2008
    64,444       42,877       21,567  
January, 2009
    69,263       46,227       23,036  
February, 2009
    76,027       50,214       25,813  
March, 2009
    74,915       49,020       25,895  
April, 2009
    101,281       64,375       36,906  
May, 2009
    128,867       78,604       50,263  
June, 2009
    180,039       106,741       73,298  
July, 2009
    217,476       127,475       90,001  
August, 2009 (through August 27)
    290,230       177,620       112,610  
    $ 1,583,382     $ 995,835     $ 587,547  
 
4

The Company, Board of Directors and Advisor share a similar philosophy with respect to paying the dividend. The dividend should principally be derived from cash flows generated from real estate operations. Specifically, funds from operations should equal or exceed distributions in a given period.  If needed, the Advisor is generally expected to waive its asset management fee and forego entitled reimbursements to ensure the full coverage of the Company’s distributions. The fees and reimbursement that are waived are not deferrals and accordingly, will not be paid by the Company.

Status of Fees Paid and Deferred
 
The following information is to be added to the “Estimated Use of Proceeds” section on pages 6-9 and 35-36 of the Prospectus.
 
Through December 31, 2008, the Company reimbursed the Advisor $0 and $1,507,369 for organizational and offering expenses and acquisition cost, respectively, and incurred:
 
 
·
acquisition fees of $1,507,369 paid to the Advisor
 
·
finance coordination fees of $1,131,015 paid to the Advisor
 
·
property management fees of $4,230 paid to the Property Manager
 
From January 1, 2009 through August 13, 2009, the Company reimbursed the Advisor $2,090,817 and $354,281 for organizational and offering expenses and acquisition cost, respectively. Such amounts includes $1,410,714 of offering cost incurred by the affliated Advisor and Dealer Manager that exceeds 1.5% of gross offering proceeds earned as of June 30, 2009. From January 1, 2009 through August 13, 2009, the Company incurred:
 
 
·
acquisition fees of $354,281 paid to the Advisor
 
·
finance coordination fees of $174,285 paid to the Advisor
 
·
property management fees of $0 paid to the Property Manager

The Company pays the Advisor an annualized asset management fee of 1.0% based on the aggregate contract purchase price of all properties. Through June 30, 2009, the Company paid no such fees to the Advisor and will determine if such fees will be waived in subsequent periods on a quarter-to-quarter basis. Such waived fees for the period ended December 31, 2008 and six months ended June 30, 2009 equal approximately $733,000 and $771,000, respectively.  If the Advisor had not agreed to waive the asset management fee, we would not have had sufficient cash to fund our distributions.  Had this been the case, additional borrowings would have been incurred to fund our monthly distributions.
 
Real Estate Investments
 
The following information is to replace the section of our Prospectus captioned “Real Property Investments” on pages 84-89 of the Prospectus.

5

 
FedEx Property1
 
The REIT acquired a FedEx Cross-Dock facility in Snowshoe, Pennsylvania (the “FedEx Property”) as its initial investment on March 5, 2008. On February 25, 2008, the REIT’s entire Board of Directors (with the two inside directors abstaining because the acquisition of the FedEx Property is an affiliated transaction) approved the acquisition of the FedEx Property, which acquisition closed on March 5, 2008.

The REIT acquired the FedEx Property at sellers’ cost, which does not exceed the fair market value of the FedEx Property as determined by an appraisal of a qualified independent appraiser. The purchase price for the FedEx Property is approximately $10.0 million. The FedEx Property is subject to approximately $7.0 million of existing debt. The REIT funded the balance of the purchase price by issuing 342,502 of shares of common stock to the sellers. Closing costs and fees aggregated approximately $215,000.
 
Our operating partnership, American Realty Capital Operating Partnership, L.P., entered into a purchase agreement to purchase the FedEx Property subject to customary due diligence and other conditions, as described above. The sellers of the FedEx Property are two unaffiliated parties, who own approximately 70% of indirect interest in the FedEx Property, and our sponsors, Nicholas S. Schorsch and William M. Kahane, who own approximately 30% of indirect interest in the FedEx Property. The FedEx Property is a shipping and distribution facility located at 401 E. Sycamore, Snowshoe, PA. Built in 2004, the FedEx Property has 55,440 square feet of warehouse space. The current sole tenant is FedEx and will remain the sole tenant on a double-net lease basis.
 
FedEx Property Location
 
Acquisition Date
 
Purchase Price (1)(2)
 
Compensation to
Advisor and Affiliates (3)
401 E. Sycamore
 
3/5/2008
 
$10,207,674
 
$170,125
 
(1)
Sellers are our sponsors, Nicholas S. Schorsch and William M. Kahane, and two unaffiliated parties.
 
(2)
Purchase price includes all closing costs inclusive of the acquisition fee, which equals 1% of the contract purchase price.
 
(3)
Amounts include acquisition and finance coordination fees paid to our advisor for acquisition and finance coordination services rendered in connection with the property acquisition.
 
The property acquisition is subject to a double-net lease, pursuant to which the landlord is responsible for maintaining the property’s roof and structure, and the tenant is required to pay all other expenses associated with the property in addition to base rent.
 
The table below provides leasing information for the tenant at the property:
 
FedEx
Property
Location
 
Number
of
Tenants
 
Tenant
 
Renewal Options
 
Current
Annual Base
Rent
 
Base Rent
per Square
Foot
 
Total Square
Feet Leased
 
Remaining
Lease Term
401 E. Sycamore
 
1
 
FedEx
Freight
East Inc.
 
13 year lease
2 five year
extension periods
 
$702,828
 
$12.68
 
55,440
 
10.75
 
The following table outlines the loan terms on the existing debt financing assumed in connection with acquisition of the FedEx Property.
 
FedEx Property Location
 
1st Mortgage Debt
 
Type
 
Rate
 
Maturity Date
401 E. Sycamore
 
$6,965,000
 
Interest only
 
6.29%
 
9/1/2037
 
FedEx Corporation, together with its subsidiaries, provides transportation, e-commerce, and business services. It operates in four segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Kinko's. The FedEx Express segment offers various shipping services for the delivery of packages and freight. This segment also provides international trade services specializing in customs brokerage and global cargo distribution; international trade advisory services; and publishes customs duty and tax information, as well as provides Global Trade Data, an information tool that allows customers to track and manage imports. The FedEx Ground segment provides business and residential money-back-guaranteed ground package delivery services. The FedEx Freight segment offers regional next-day and second-day, and interregional less-than-truckload (LTL) freight services, as well as long-haul LTL freight services. The FedEx Kinko's segment provides document services, such as printing, copying, and binding services; and business services, such as high-speed Internet access and computer rental, videoconferencing, signs and graphics production, and direct mail services. This segment also offers retail products, such as specialty papers, greeting cards, printer cartridges, stationery, and office supplies, as well as provides Web-based services. The company also offers supply chain solutions, including critical inventory logistics, transportation management, fulfillment, and fleet services. FedEx Corporation, formerly known as FDX Corporation, was founded in 1971 and is headquartered in Memphis, Tennessee. FedEx Corporation stock is listed on the New York Stock Exchange, and FedEx has a credit rating of BBB.
_______________________
1 Our operating partnership has transferred forty-nine percent (49%) interest in the FedEx Property to American Realty Capital DST, I, a Section 1031 Exchange Program.  Please see “Section 1031 Exchange Program” in this Supplement.
 
6

Because the FedEx Property is 100% leased to a single tenant on a long-term basis under a net lease, which transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant’s guarantor and affiliate, FedEx Corporation, are more relevant to investors than the financial statements of the individual property acquired in order to enable investors to evaluate the lessee’s credit-worthiness. Additionally, because the properties are subject to a net lease, historical property financial statements provide limited information other than rental income, which is disclosed above. Therefore, we have not provided audited financial statements of the properties acquired.
 
FedEx Corporation currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding FedEx Corporation are taken from the 2008 and 2009 annual reports and Form 10-Q.
 
 
For the Fiscal Year Ended
 
 
5/31/2009
   
5/31/2008
   
5/31/2007
 
Consolidated Statements of Operations (in thousands)
                 
Revenues
 
$
35,497,000
   
$
37,953,000
   
$
35,214,000
 
Operating Income
   
747,000
     
2,075,000
     
3,276,000
 
Net Income
   
98,000
     
1,125,000
     
2,016,000
 
 
   
As of the Fiscal Year Ended
 
   
5/31/2009
   
5/31/2008
   
5/31/2007
 
Consolidated Balance Sheets (in thousands)
                       
Total Assets
 
$
24,244,000
   
$
25,633,000
   
$
24,000,000
 
Long-term Debt
   
1,930,000
     
1,506,000
     
2,007,000
 
Stockholders’ Equity
   
13,626,000
     
14,526,000
     
12,656,000
 
                         
 
For more detailed financial information regarding FedEx Corporation, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.
 
Harleysville Properties
 
The REIT acquired 15 Harleysville National Bank and Trust Company (“Harleysville National Bank”) branch properties in various Pennsylvania locations (the “Harleysville Properties”) on March 12, 2008. On February 25, 2008, the REIT’s entire Board of Directors (with the two inside directors abstaining because the acquisition is an affiliated transaction) approved the acquisition of the Harleysville Properties.

7

The REIT acquired the Harleysville Properties at seller’s cost, which does not exceed the fair market value of the Harleysville Properties as determined by an appraisal of a qualified independent appraiser. The purchase price for the Harleysville Properties is approximately $41.0 million, which is subject to approximately $31.0 million of existing debt. The remainder of the purchase price was paid with proceeds from the offering and revolving equity investments. (4)   The seller of the Harleysville Properties is one of the REIT’s sponsors, Nicholas S. Schorsch. The Harleysville Properties are commercial bank branch locations throughout Pennsylvania with an aggregate of 178,000 square feet. The current sole tenant of the properties is Harleysville National Bank and will remain the sole tenant on a triple-net lease basis.
 
Harleysville
Property Location
 
Acquisition Date
 
Approximate
Purchase Price (1) (2)
 
Approximate
Compensation to
Advisor and Affiliates (3)
 
               
Harleysville, PA
   
3/12/2008
 
$
13,578,000
   
TOTAL FOR ALL PROPERTIES = $720,000
 
Lansdale, PA
   
3/12/2008
   
1,828,000
   
(Acquisition Fee + Finance
 
Lansdale, PA
   
3/12/2008
   
1,618,000
   
Coordination Fee)
 
Lansford, PA
   
3/12/2008
   
2,034,000
       
Lehighton, PA
   
3/12/2008
   
999,000
       
Limerick, PA
   
3/12/2008
   
1,694,000
       
Palmerton, PA
   
3/12/2008
   
3,319,000
       
Sellersville, PA
   
3/12/2008
   
1,162,000
       
Skippack, PA
   
3/12/2008
   
1,527,000
       
Slatington , PA
   
3/12/2008
   
1,194,000
       
Springhouse, PA
   
3/12/2008
   
4,071,000
       
Summit Hill , PA
   
3/12/2008
   
1,784,000
       
Walnutport, PA
   
3/12/2008
   
1,699,000
       
Wyomissing, PA
   
3/12/2008
   
1,552,000
       
Slatington , PA
   
3/12/2008
   
3,617,000
       
Total
       
$
41,676,000
       
 

(1) Seller is our sponsor, Nicholas S. Schorsch.
 
(2) Purchase price includes all closing costs inclusive of the acquisition fee, which equals 1% of the contract purchase price.
 
(3) Amounts include acquisition and finance coordination fees paid to our advisor for acquisition and finance coordination services rendered in connection with property acquisition.
 
(4) The proceeds from the offering totaled approximately $2,046,000 and the revolving equity investments totaled $3,954,000 and $4,000,000.
 
Each property acquired is subject to a triple-net lease, pursuant to which the tenant is required to pay substantially all operating expenses and capital expenditures in addition to base rent.

Property Location
 
Tenant
 
Guarantor
 
Total Square Feet Leased
 
% of Total Sq. Ft. Leased
Harleysville, PA
 
Harleysville National Bank
 
same
 
80,275
   
100%
Lansdale, PA
 
Harleysville National Bank
 
same
 
3,488
   
100%
Lansdale, PA
 
Harleysville National Bank
 
same
 
3,690
   
100%
Lansford, PA
 
Harleysville National Bank
 
same
 
7,285
   
100%
Lehighton, PA
 
Harleysville National Bank
 
same
 
2,868
   
100%
Limerick, PA
 
Harleysville National Bank
 
same
 
5,000
   
100%
Palmerton, PA
 
Harleysville National Bank
 
same
 
11,602
   
100%
Sellersville, PA
 
Harleysville National Bank
 
same
 
3,364
   
100%
Skippack, PA
 
Harleysville National Bank
 
same
 
4,500
   
100%
Slatington, PA
 
Harleysville National Bank
 
same
 
7,320
   
100%
Slatington, PA
 
Harleysville National Bank
 
same
 
19,872
   
100%
Spring House, PA
 
Harleysville National Bank
 
same
 
12,240
   
100%
Summit Hill, PA
 
Harleysville National Bank
 
same
 
5,800
   
100%
Walnutport, PA
 
Harleysville National Bank
 
same
 
5,490
   
100%
Wyomissing, PA
 
Harleysville National Bank
 
same
 
4,980
   
100%
Total
         
177,774
     
 
8

The table below provides leasing information for the tenant at each respective property:
 
Harleysville
Property Location
 
Number
of
Tenants
 
Tenant
 
Renewal Options
 
Current
Annual
Base Rent
 
Base
Rent per
Square
Foot
 
Remaining
Lease
Term
Harleysville, PA
 
1
 
Harleysville National Bank
 
See Footnote (1)
 
$996,100
   
$12.41
   
14.81
Lansdale, PA
     
Harleysville National Bank
     
130,200
   
37.33
   
14.81
Lansdale, PA
     
Harleysville National Bank
     
114,390
   
31.00
   
14.81
Lansford, PA
     
Harleysville National Bank
     
145,700
   
20.00
   
14.81
Lehighton, PA
     
Harleysville National Bank
     
68,832
   
24.00
   
14.81
Limerick, PA
     
Harleysville National Bank
     
120,000
   
24.00
   
14.81
Palmerton, PA
     
Harleysville National Bank
     
240,895
   
20.76
   
14.81
Sellersville, PA
     
Harleysville National Bank
     
80,755
   
24.01
   
14.81
Skippack, PA
     
Harleysville National Bank
     
108,000
   
24.00
   
14.81
Slatington, PA
     
Harleysville National Bank
     
83,540
   
11.41
   
14.81
Slatington, PA
     
Harleysville National Bank
     
261,566
   
13.16
   
14.81
Spring House, PA
     
Harleysville National Bank
     
295,920
   
24.18
   
14.81
Summit Hill, PA
     
Harleysville National Bank
     
127,600
   
22.00
   
14.81
Walnutport, PA
     
Harleysville National Bank
     
120,780
   
22.00
   
14.81
Wyomissing, PA
     
Harleysville National Bank
     
109,560
   
22.00
   
14.81
Total/Average
             
$3,003,838
   
$16.90
   
14.81
 

(1)
The lease agreement for each Harleysville Property contains a number of consecutive renewal options. After the initial contractual period, each lease may be renewed for two additional five-year terms. After both five-year renewal options have been exercised, each lease may be renewed for an additional three-year period, then for six additional five-year periods and finally, one additional two-year period.
 
9

The following table outlines the loan terms on the existing debt financing on the Harleysville Properties. The loan has a fixed rate of 6.59% for the first six (6) years of the loan term after which the rate resets to the then current five (5) year Treasury rate plus 2.25% (with a floor of 6.5%), with interest only payments for the first three (3) years of the loan term, principal and interest payments based on a twenty (20) year amortization period for years four (4) through ten (10) of the loan term and a 10-year maturity with a 5 year extension option.
 
Harleysville
Property Location
 
1st Mortgage Debt
 
Rate
 
Maturity Date
Harleysville, PA
 
$
10,104,229
   
6.59%
 
1/1/2018
Lansdale, PA
   
1,360,147
   
6.59%
 
1/1/2018
Lansdale, PA
   
1,203,780
   
6.59%
 
1/1/2018
Lansford, PA
   
1,513,258
   
6.59%
 
1/1/2018
Lehighton, PA
   
743,135
   
6.59%
 
1/1/2018
Limerick, PA
   
1,260,965
   
6.59%
 
1/1/2018
Palmerton, PA
   
2,469,757
   
6.59%
 
1/1/2018
Sellersville, PA
   
864,361
   
6.59%
 
1/1/2018
Skippack, PA
   
1,136,628
   
6.59%
 
1/1/2018
Slatington, PA
   
888,856
   
6.59%
 
1/1/2018
Spring House, PA
   
3,029,802
   
6.59%
 
1/1/2018
Summit Hill, PA
   
1,327,933
   
6.59%
 
1/1/2018
Walnutport, PA
   
 1,264,531
   
6.59%
 
1/1/2018
Wyomissing, PA
   
1,155,084
   
6.59%
 
1/1/2018
Slatington, PA
   
2,677,534
   
6.59%
 
1/1/2018
Total
 
$
31,000,000
         

Harleysville National Corporation operates as the holding company for Harleysville National Bank and Trust Company, which provides banking and financial products and services to individual and corporate customers primarily in eastern Pennsylvania. As of December 31, 2008, Harleysville had 85 branch offices located in Montgomery, Bucks, Chester, Berks, Carbon, Lehigh, Monroe and Northampton counties, Pennsylvania. The company was founded in 1909 and is headquartered in Harleysville, Pennsylvania. The company engages in commercial banking and trust business, including accepting time, demand, savings, and money market deposits; making secured and unsecured commercial, consumer, and real estate loans, as well as lease financing; financing commercial transactions; making construction and mortgage loans; and performing corporate pension and personal investment and trust services. It also offers retail banking and wealth management solutions. In addition, the company, through its subsidiary, provides wealth management, estate and succession planning and life insurance services and products for high-net-worth business owners and families.
 
Because the Harleysville Properties are 100% leased to a single tenant on a long-term basis under a net lease, which transfers substantially all of the operating costs to the tenant, we believe that the financial condition and results of operations of the tenant are more relevant to investors than the financial statements of the individual properties acquired in order to enable investors to evaluate the credit-worthiness of the lessee. Additionally, because the properties are subject to a net lease, historical property financial statements provide limited information other than rental income, which is disclosed above. Therefore, we have not provided audited financial statements of the properties acquired.
 
Harleysville National Corp. currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Harleysville National Corp. and subsidiaries are taken from the 2006, 2007 and 2008 annual reports and Form 10-Q for the period ended June 30, 2009:
 
   
Past Six Months Ended
   
For the Fiscal Year Ended
 
   
 6/30/09
   
12/31/2008
   
12/31/2007
   
12/31/2006
 
Consolidated Statements of Operations (in thousands)
                       
                         
Revenue
  $ 123,683     $ 206,294     $ 194,561     $ 178,941  
                                 
Net Operating Income
    67,506       134,790       115,222       124,321  
                                 
Net Income (Loss)
    (217,908 )     25,093       26,595       39,415  
 
10

 
   
As of
   
For the Fiscal Year Ended
 
   
 
 6/30/09
   
 
12/31/2008
   
 
12/31/2007
   
12/31/2006
 
Consolidated Balanced Sheets (in thousands)
                       
                         
Total Assets
  $ 5,210,327     $ 5,490,509     $ 3,903,001     $ 3,249,828  
                                 
Long-Term Debt
    694,586       759,658       321,785       239,750  
                                 
Shareholder's Equity
    248,685       474,707       339,310       294,751  
 
For more detailed financial information regarding Harleysville National Corp., please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.
 
Rockland Properties

On April 25, 2008, the REIT’s Board of Trustees approved the acquisition of certain property owned by Rockland Trust Company (the “Rockland Properties”). The REIT acquired the Rockland Properties on May 2, 2008.
 
The purchase price for the Rockland Properties is approximately $32.1 million. The Rockland Properties are subject to approximately $24.4 million of debt.  The remainder of the purchase price was funded with proceeds from the offering and revolving equity investments. (1) Rockland Trust, the seller of the Rockland Properties, is an unaffiliated third party. The Rockland Properties consist of commercial bank branches, bank branch/offices and operations centers throughout Southeastern Massachusetts and Cape Cod with an aggregate of approximately 121,000 square feet. The current sole tenant of the properties is Rockland Trust Company.
 
(1) The proceeds from the offering totaled approximately $2,205,000, the revolving equity investments totaled $2,500,000 and the short-term convertible redeemable preferred equity totaled $3,995,000.

Rockland Property Location
 
Approximate
Purchase Price (1)
 
Approximate
Compensation to
Advisor and Affiliates
 
Brockton, MA
 
$
643,000
   
TOTAL FOR ALL PROPERTIES =
 
Chatham, MA
   
1,500,000
   
$566,000
 
Hull, MA
   
692,000
   
(Acquisition Fee + Finance
 
Hyannis, MA
   
2,377,000
   
Coordination Fee)
 
Middleboro, MA
   
3,495,000
       
Orleans, MA
   
1,371,000
       
Randolph, MA
   
1,540,000
       
Centerville, MA
   
1,129,000
       
Duxbury, MA
   
1,323,000
       
Hanover, MA
   
1,320,000
       
Middleboro, MA
   
922,000
       
Pembroke, MA
   
1,546,000
       
Plymouth, MA
   
5,173,000
       
Rockland, MA
   
4,095,000
       
Rockland, MA
   
1,769,000
       
S. Yarmouth, MA
   
1,586,000
       
Scituate, MA
   
1,263,000
       
West Dennis, MA
   
1,384,000
       
Total
 
$
33,128,000
       
 

(1)  Approximate purchase price includes purchase price plus closing costs, inclusive of the acquisition fee, which equals 1% of the contract purchase price.
 
11

Each property is 100% leased on a triple-net basis to Rockland Trust Company, pursuant to which the tenant is required to pay substantially all operating expenses and capital expenditures in addition to base rent. The guarantor under the lease is Rockland Trust Company. Each location has four concurrent renewal options, each for a five-year term at the then prevailing market rate.
 
Rockland Property Location
 
Total Square
Feet Leased
   
Current
Annual
Base Rent
   
Base Rent per
Square Foot
   
Lease
Term (Years)
 
Middleboro, MA
   
18,520
   
$
250,020
   
$
13.50
     
10.0
 
Hyannis, MA
   
8,948
     
170,012
     
19.00
     
10.0
 
Hull, MA
   
1,763
     
49,364
     
28.00
     
10.0
 
Randolph, MA
   
3,670
     
110,100
     
30.00
     
10.0
 
Duxbury, MA
   
2,667
     
90,678
     
34.00
     
15.0
 
Brockton, MA
   
1,835
     
45,875
     
25.00
     
10.0
 
Centerville, MA
   
2,977
     
77,402
     
26.00
     
15.0
 
Chatham, MA
   
3,459
     
107,229
     
31.00
     
10.0
 
Orleans, MA
   
3,768
     
97,968
     
26.00
     
10.0
 
Pembroke, MA
   
3,213
     
106,029
     
33.00
     
15.0
 
S. Yarmouth, MA
   
4,727
     
108,721
     
23.00
     
15.0
 
Scituate, MA
   
2,706
     
86,592
     
32.00
     
15.0
 
Rockland, MA
   
18,425
     
280,981
     
15.25
     
15.0
 
Rockland, MA
   
11,027
     
121,297
     
11.00
     
15.0
 
Hanover, MA
   
2,828
     
90,496
     
32.00
     
15.0
 
Plymouth, MA
   
25,358
     
355,012
     
14.00
     
15.0
 
Middleboro, MA
   
2,106
     
63,180
     
30.00
     
15.0
 
West Dennis, MA
   
3,060
     
94,860
     
31.00
     
15.0
 
Total/Average
   
121,057
    $
2,305,816
   
$
19.05
     
13.2
 

The following table outlines the loan terms on the debt financing assumed in connection with acquisition of the Rockland Properties:
 
Mortgage Debt
Amount
 
Type
 
Rate
 
Maturity Date
             
       
30 Day LIBOR+
   
$24,412,500
 
Variable
 
1.375%(1)
 
May 2013
 

(1)  The Company entered into a rate lock agreement to limit its interest rate exposure. The LIBOR floor and cap are 3.54% and 4.125% (initial year), respectively.
 
Independent Bank Corp. (NYSE: INDB) operates as the holding company for Rockland Trust Company (the “Bank”), which provides commercial banking, retail banking, and investment management services in Massachusetts. Its Fitch credit rating is BBB-. It offers a range of demand deposits, interest checking, money market accounts, savings accounts, and time certificates of deposit. The Bank's loan portfolio comprises commercial loans, business banking loans and consumer loans. It also provides real estate loans, which comprise commercial mortgages that are secured by nonresidential properties, residential mortgages that are secured primarily by owner-occupied residences, and mortgages for the construction of commercial and residential properties. In addition, the Bank provides investment management and trust services to individuals, small businesses, and charitable institutions, as well as serves as executor or administrator of estates. As of December 31, 2008, it operated 58 full service and three limited service retail bank branches, 10 commercial banking centers, 4 investment management group offices, and 5 residential lending centers, which are located in Southeastern Massachusetts and Cape Cod. The Bank was founded in 1907 and is headquartered in Rockland, Massachusetts.
 
12

Independent Bank Corp. currently files its financial statement in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Independent Bank Corp. are taken from the 2006, 2007 and 2008 annual reports and Form 10-Q for the period ended June 30, 2009.
 
   
Past Six Months Ended
   
For the Fiscal Year Ended
December 31,
 
   
 6/30/09
   
2008
   
2007
   
2006
 
Consolidated Statements of Operations (in thousands)
                       
Interest Income
  $ 96,216     $ 176,388     $ 159,738     $ 167,693  
Net Interest Income after Provision for Loan Losses
    60,620       106,574       93,053       100,320  
Net Income
    7,047       28,084       28,381       32,851  
 
   
As of
   
As of the Fiscal Year Ended December 31,
 
   
 6/30/09
   
12/31/2008
   
12/31/2007
   
12/31/2006
 
Consolidated Balanced Sheets (in thousands)
                       
Total Assets
  $ 4,455,059     $ 3,628,469     $ 2,768,413     $ 2,828,919  
Long-Term Debt
    667,914       695,317       504,344       493,649  
Shareholder's Equity
    397,560       305,274       220,465       229,783  
 
For more detailed financial information regarding Independent Bank Corp., please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.

Rite Aid Properties
 
On September 29, 2008, American Realty Capital Trust Inc. (the “REIT”) acquired 6 Rite Aid properties (the “Rite Aid Properties”). The REIT acquired the Rite Aid Properties at sellers’ cost, which does not exceed the fair market value of the Rite Aid Properties as determined by an appraisal of a qualified independent appraiser. The purchase price for the Rite Aid Properties is approximately $18.6 million. The Rite Aid Properties are subject to approximately $12.8 million of assumed existing debt.  The remainder of the purchase price was funded with revolving equity investment of approximately $6,000,000 from a related party under an unsecured revolving equity facility.  The sellers of the Rite Aid Properties are two of the REIT’s sponsors, Nicholas S. Schorsch and William M. Kahane. The Rite Aid Properties are drug stores in Ohio and Pennsylvania with an aggregate of approximately 75,000 square feet. The current sole tenant of the properties is Rite Aid and will remain the sole tenant on a triple-net or double-net lease basis.
 
       
Approximate
 
   
  Approximate
 
Compensation to
 
Rite Aid Property Location
 
  Purchase Price (1)
 
Advisor and Affiliates
 
Lisbon, OH
 
$
1,515,000
   
TOTAL FOR ALL PROPERTIES =
 
East Liverpool, OH
   
2,249,000
   
$314,000
 
Carrollton, OH
   
2,376,000
   
(Acquisition Fee + Finance
 
Cadiz, OH
   
1,720,000
   
Coordination Fee )
 
Pittsburgh, PA
   
6,334,000
       
Carlisle, PA
   
4,640,000
       
Total
 
$
18,834,000
       

(1)   Approximate purchase price includes purchase price plus closing costs, inclusive of the acquisition fee, which equals 1% of the contract purchase price.
 
Two of the property acquisitions (the Pennsylvania properties) are subject to a triple-net lease, pursuant to which the tenant is required to pay all operating expenses and capital expenditures in addition to base rent. Four of the property acquisitions (the Ohio properties) are subject to double-net leases, pursuant to which the landlord is responsible for maintaining the property’s roof and structure, and the tenant is required to pay all other expenses associated with the property in addition to base rent. The guarantor under the lease is Rite Aid Corp. The Ohio locations have six concurrent renewal options, each for a five-year term. The Pennsylvania locations have eight concurrent renewal options, each for a five-year term. Renewal rates include certain increases for fixed percentages as well as market adjustments, as defined by the lease.
 
13

 
Rite Aid Property Location
 
Total Square
Feet
Leased
   
Current
Annual
Base Rent
   
Base Rent per
Square Foot
   
Remaining
Lease
Term
(Years) (1)
 
Lisbon, OH
    10,141     $ 113,174     $ 11.16       7.41  
East Liverpool, OH
    11,362       169,333       14.90       9.64  
Carrollton, OH
    12,613       179,177       14.21       9.22  
Cadiz, OH
    11,335       129,024       11.38       8.18  
Pittsburgh, PA
    14,766       469,790       31.82       19.10  
Carlisle, PA
    14,702       343,728       23.38       19.10  
Total/Average
    74,919     $ 1,404,226     $ 18.74       14.75  
 

(1) Remaining lease term as of June 30, 2008.

The following table outlines the loan terms on the debt financing assumed in connection with acquisition of the Rite Aid Properties.
 
Mortgage Debt Amount
 
Type
 
Rate
 
Maturity Date
$ 12,808,265
 
Fixed - Interest
Only
 
6.97%
 
September 2017
 
Rite Aid (“RAD”) is the third largest drug store chain in the U.S., operating about 5,100 stores. Its S&P credit rating is B. We estimate store locations average about 12,150 sq. ft. RAD locates its stores in what it believes are convenient locations in fast-growing metropolitan areas. Stores sell prescription drugs and a wide variety of general merchandise (front-end products), including OTC medications, health and beauty aids, personal care items, cosmetics, greeting cards, household items, convenience foods, photo processing services, and seasonal merchandise. Sales of prescription drugs accounted for 67% of total sales in fiscal year 2008. Over-the-counter medications and personal care items generated 10% of sales in fiscal year 2008. The company distinguishes its stores from other national chain drug stores through its emphasis on private label brands and a store-within-Rite Aid stores program with General Nutrition Companies, Inc. (GNC). The company sells 3,000 private label products in its stores, contributing about 13% of front-end sales in categories where private label products are offered. The company plans to continue increasing the number of private label products in fiscal year 2009. RAD had opened about 1,486 GNC stores-within-Rite Aid stores as of March 2008. RAD is implementing programs directed toward its pharmacy business, including faster prescription delivery and an increased focus on attracting and retaining managed care customers. RAD is focusing efforts and resources on improving operations in its existing store base. The company's new store prototype has 13,000 sq. ft. in average selling sq. ft. and has 15,900 in overall sq. ft. RAD's goal is to open or relocate about 1,000 stores by the end of fiscal year 2012 under the new prototype. To increase pharmacy sales, the company purchases pharmacy files from other drug stores and has recently added the capability to provide pharmacy benefit management services to employers, health plans, and insurance companies. RAD intends to offer 90-day prescription refills to its customers as an alternative to mail order.
 
14

 
Rite Aid currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding Rite Aid are taken from the 2006, 2007 and 2008 annual reports and Form 10-Q for the period ended May 30, 2009:
 
   
Past Thirteen
                   
   
Weeks
                   
   
Ended
   
For the Fiscal Year Ended
 
Consolidated Statements of Operations (in thousands)
 
May 30, 2009
   
Feruary 28, 2009
   
March 1, 2008
   
March 3, 2007
 
Revenues
  $ 6,531,178     $ 26,289,268       24,326,846     $ 17,399,383  
Operating Income (Loss)
    (46,084 )     (243,743 )     185,271       300,995  
Net Income (Loss)
    (98,446 )     (2,915,420 )     (1,078,990 )     26,826  
 
   
As of
   
As of the Fiscal Year Ended
 
Consolidated Balance Sheets (in thousands)
 
May 30, 2009
   
Feruary 28, 2009
 
March 1, 2008
 
March 3, 2007
 
Total Assets
  $
8,019,180
      $ 8,326,540     $ 11,488,023     $ 7,091,024  
Long-Term Debt
   
5,486,791
        5,801,230       5,610,489       2,909,983  
Stockholders’ Equity (Deficit)
   
(1,290,631
)       (1,911,652 )     1,711,185       1,662,846  

For more detailed financial information regarding Rite Aid, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.

National City Bank Properties
 
On August 29, 2008, the REIT’s Board of Trustees (with the two inside directors abstaining because the acquisition of 2 National City bank branches (the “National City Properties”) is an affiliated transaction) approved the acquisition of the National City Properties. The REIT acquired the branch located in Palm Coast, FL on September 16, 2008 (the “Palm Coast Property”)2 and the bank branch located in Pompano Beach, FL on October 23, 2008 (the “Pompano Beach Property”).
 
The purchase price for the National City Properties is approximately $6.7 million. The National City Properties are subject to approximately $4.5 million of debt, comprised of loans from TD Bank, N.A. in the amounts of approximately $2.1 million for the Palm Coast Property and $2.4 million for the Pompano Beach Property.  The remainder of the purchase price was funded with revolving equity investment of approximately $2,400,000 from a related party under an unsecured revolving equity facility.  The seller of the National City Properties is an affiliated party.  The National City Properties are two bank branches in Florida with an aggregate of approximately 8,500 square feet. The current sole tenant of the properties is National City Bank and will remain the sole tenant on a triple-net basis.  
 
       
Approximate
 
   
Approximate
 
Compensation to
 
National City Property Location
 
  Purchase Price
 
Advisor and Affiliates
 
Palm Coast, FL
    $ 3,100,000     $ 51,000  
Pompano Beach, FL
      3,800,000       61,000  
Total
    $ 6,900,000     $ 112,000  

The properties are triple-net leased to National City Bank, pursuant to which National City Bank is required to pay all operating expenses and capital expenditures in addition to base rent, and have primary lease terms of 20 years. Annual rent is $466,465 for each of the first five years of the initial lease term, increased by 12% every five years for the Palm Coast Property and 10% every five years for the Pompano Beach Property.

National City Property Location
 
Total Square
Feet
Leased
   
Current
Annual
Base Rent
   
Base Rent per
Square Foot
 
Palm Coast, FL
   
3,740
   
$
210,000
   
$
56.15
 
Pompano Beach, FL
   
4,663
     
256,465
     
55.00
 
Total
   
8,403
   
$
466,465
   
$
55.51
 
______________________________
2 American Realty Capital Operating Partnership, L.P. transferred forty-nine percent (49%) interest in the Palm Coast Property to American Realty Capital DST, I, a Section 1031 Exchange Program.  See “Section 1031 Exchange Program” in this Supplement.
15

The following table outlines the loan terms on the debt financing incurred in connection with acquisition of the National City Properties:
 
National City Property Location
 
Mortgage Debt Amount
 
Rate (1)
 
Maturity Date
Palm Coast, FL
   
$
2,062,500
   
30 day LIBOR + 1.50%
 
September 16, 2013
Pompano Beach, FL
     
2,437,500
   
30 day LIBOR + 1.50%
 
October 23, 2013
Total/Average
   
$
4,500,000
         
 
(1) We limited our interest rate exposure by entering into a rate lock agreement with a LIBOR floor and cap of 3.37% and 4.45% (initial year), respectively for a notional contract amount of approximately $4,115,000 and a fixed rate of 3.565% on a notional contract amount of approximately $385,000.
 
National City Corporation is a $152.5 billion financial holding company with $94.6 billion in deposits and $3.02 billion in revenues. It is based in Cleveland, OH, and as of December 31, 2007 had more than 1,400 branch banking offices in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, and Wisconsin. It is rated S&P A-. On October 24, 2008, PNC Financial Services Group announced that it would purchase National City Corporation in a stock transaction valued at $5.2 billion.
 
National City Corporation currently files its financial statements in reports filed with the Securities and Exchange Commission, and the following summary financial data regarding National City Corporation is taken from the 2005, 2006 and 2007 annual reports and Form 10-Q.
 
         
For the Fiscal Year Ended December 31,
 
   
Three
                   
   
Months
                   
   
Ended
                   
   
June 30,
                   
Consolidated Statements of Operations (in millions)
 
2008
   
2007
   
2006
   
2005
 
Revenues
  $ 1,880     $ 9,185       8,934     $ 7,732  
Operating Income
    1,015       4,396       4,604       4,696  
Net (Loss) Income
    (1,756 )     314       2,300       1,985  
 
   
As of the Fiscal Year Ended December 31,
 
Consolidated Balance Sheets (in millions)
 
2007
 
2006
 
2005
 
Total Assets
    $ 150,374     $ 140,191     $ 142,397  
Long-Term Debt
      25,992       25,407       30,496  
Stockholders’ Equity
      13,408       14,581       12,613  
 
For more detailed financial information regarding National City Corporation, please refer to its financial statements, which are publicly available with the Securities and Exchange Commission at http://www.sec.gov.

PNC Bank Properties

The REIT acquired 50 bank branches triple-net leased to PNC Bank, National Association (the “PNC Properties”) on November 25, 2008. On August 12, 2008, the REIT’s Board of Directors approved the acquisition of the PNC Properties and as of November 18, 2008 approved the financings with TD Bank, N.A. and KBC Bank, N.V., each described below.
 
The purchase price for the PNC Properties is approximately $42.3 million. The purchase price was paid with proceeds from the sale of common shares, first mortgage indebtedness, bridge equity from KBC Bank, N.V. (which bridge equity we expect to pay off during the first quarter of 2009), and funds from individuals of approximately $2,097,598, $33,398,902, $8,000,000 and $1,089,500 respectively. The PNC Properties are bank branches in Pennsylvania, New Jersey and Ohio with an aggregate of approximately 275,000 square feet. The current sole tenant of the properties is PNC Bank, National Association (“PNC Bank”) and will remain the sole tenant on a triple-net lease basis.
 
16

 
Address
 
City, State
 
Approximate
Purchase Price(1)
 
Approximate
Compensation to
Advisor and Affiliates
 
1001 East Erie Ave
   
Philadelphia, PA  
 
$
904,000
   
Total for All Properties =
$757,000   
 
108 East Main Street
   
Somerset, PA
   
1,206,000
   
(Acquisition fee +
 
114 West State Street
   
Media, PA
   
754,000
   
Finance coordination fee )
 
1152 Main Street
   
Paterson, NJ
   
829,000
       
1170 West Baltimore Pike
   
Media, PA
   
301,000
       
12 Outwater Lane
   
Garfield, NJ
   
1,206,000
       
1260 McBride Ave
   
West Paterson, NJ
   
678,000
       
141 Franklin Turnpike
   
Mahwah, NJ
   
829,000
       
1485 Blackwood-Clementon Rd
   
Clementon, PA
   
1,432,000
       
150 Paris Ave
   
Northvale, NJ
   
829,000
       
16 Highwood Ave
   
Tenafly, NJ
   
  754,000
       
1921 Washington Valley Road
   
Martinsville, NJ
   
1,432,000
       
1933 Borendtown Ave
   
Parlin, NJ
   
980,000
       
204 Raritan Valley College Drive
   
Somerville, NJ
   
1,281,000
       
207 S State St
   
Clarks Summit, PA
   
528,000
       
2200 Cottman
   
Philadelphia, PA
   
1,206,000
       
222 Ridgewood Ave
   
Glen Ridge, NJ
   
678,000
       
2431 Main Street
   
Trenton, NJ
   
1,507,000
       
294 Main Ave
   
Clifton, NJ
   
678,000
       
30 Main Street
   
West Orange, NJ
   
829,000
       
31 S Chester Rd
   
Swarthmore, PA
   
528,000
       
315 Haddon Ave
   
Haddonfield, PA
   
980,000
       
321 E 33rd St
   
Paterson, NJ
   
377,000
       
34 East Market Street
   
Blairsville, PA
   
678,000
       
359 Georges Rd
   
Dayton, NJ
   
1,206,000
       
36 Bergen St
   
Westwood, NJ
   
528,000
       
401 West Tabor Road
   
Philadelphia, PA
   
528,000
       
403 N Baltimore St
   
Dillsburg, PA
   
452,000
       
404 Pennsylvania Ave East
   
Warren, PA
   
678,000
       
410 Main Street
   
Orange, NJ
   
980,000
       
424 Broad Street
   
Bloomfield, NJ
   
829,000
       
425 Boulevard
   
Mountain Lakes, NJ
   
1,055,000
       
45 South Martine Ave
   
Fanwood, NJ
   
1,206,000
       
470 Lincoln Avenue
   
Pittsburgh, PA
   
678,000
       
49 Little Falls Road
   
Fairfield, NJ
   
1,959,000
       
501 Pleasant Valley Way
   
West Orange, NJ
   
528,000
       
555 Cranbury Road
   
East Brunswick, NJ
   
1,130,000
       
570 Pompton Ave
   
Cedar Grove, NJ
   
1,356,000
       
583 Kearny Ave
   
Kearny, NJ
   
829,000
       
588 Newark-Pompton Tnpk
   
Pompton Plains, NJ
   
301,000
       
5900 N Broad St
   
Philadelphia, PA
   
603,000
       
591 Route 33
   
Millstone, NJ
   
904,000
       
638 E Landis Ave
   
Vineland, NJ
   
754,000
       
6th & Spring Garden
   
Philadelphia, PA
   
980,000
       
7811 Tylersville Road
   
West Chester, OH
   
1,281,000
       
82 Greenbrook Road
   
Dunellen, NJ
   
1,155,000
       
8340 Germantown Ave
   
Philadelphia, PA
   
301,000
       
9 West Somerset Street
   
Raritan, NJ
   
1,306,000
       
Cooper & Delsea
   
Deptford, NJ
   
979,000
       
RR1 Box 640
   
Tannersville, PA
   
903,000
       
TOTAL
       
$
44,813,000
       
 (1)   Approximate purchase price includes purchase price plus closing costs, inclusive of the acquisition fee, which equals 1% of the contract purchase price.

17

The properties are triple-net leased to PNC Bank, pursuant to which PNC Bank will be required to pay substantially all operating expenses and capital expenditures in addition to base rent, simultaneously with the acquisition of the properties, and will have primary lease terms of ten years, expiring November 1, 2018. Annual rent is $2,960,000 for each of the first five years of the initial lease term, increased by 10% in year six. The leases provide for up to four extensions of successive five-year terms with an increase in the rental rate by 10% for each additional renewal term. Following the first year of the lease, the tenant has the right to terminate two leases within the PNC Properties each calendar year during the term of the lease, including renewal options, at any time upon at least twelve months'  prior written notice to the REIT.

 
Address
 
 
City, State
 
Total Square Feet Leased
 
Current Annual Base Rent
 
Rent Per
Square Foot
 
1001 East Erie Ave
   
Philadelphia, PA
   
3,653
 
$
60,000
 
$
16.42
 
108 East Main Street
   
Somerset, PA
   
7,322
   
80,000
   
10.93
 
114 West State Street
   
Media, PA
   
12,344
   
50,000
   
4.05
 
1152 Main Street
   
Paterson, NJ
   
4,405
   
55,000
   
12.49
 
1170 West Baltimore Pike
   
Media, PA
   
2,366
   
20,000
   
8.45
 
12 Outwater Lane
   
Garfield, NJ
   
7,372
   
80,000
   
10.85
 
1260 McBride Ave